2016 (2) TMI 938 - HC - Income Tax

Addition made on the basis of the confessional statement/surrender made before the authorities during the survey - Held that - Once the assessee was unable to offer any plausible explanation for the sum surrendered during survey merely by relying on the retraction made on a later date it does not absolve the assessee from its liability. Further the CIT(A) while upholding the order of the Assessing Officer had recorded a finding that the surrender was made by the assessee based on the material alleged to be in the possession of the Assessing Officer collected during the course of the survey and the said surrender was made voluntarily. Even the bills cash and supporting documents were found with the assessee which established that the assessee was in possession of assets over and above the assets declared in the books of account against which the surrender in question was made. Furthermore the retraction is made after more than three months for which no satisfactory explanation has been furnished by the assessee. Retraction to be effective has to be made at the earliest opportunity when the pressure or coercion or undue influence on the person making confession ceases to be operative. Whenever there is delay in retracting from the concessional statement the onus lies upon the person retracting to show the circumstances that existed for him not to retract earlier. Assessing Officer the CIT(A) and the Tribunal had concurrently adjudicated the issues against the assessee on appreciation of material on record. No illegality or perversity could be demonstrated in the findings of fact recorded by the authorities below warranting interference by this Court.

Issues:
1. Interpretation of Section 260A of the Income Tax Act, 1961.
2. Validity of inferences drawn from uncorroborated statements during survey under Section 133A.
3. Abuse and mis-utilization of powers under Section 133A(3)(iii) and other relevant provisions.
4. Sustainability of chargeable income based on contradictory statements and records.
5. Effectiveness of retraction from confessional statements made during survey.
6. Adjudication of issues by Assessing Officer, CIT(A), and Tribunal.
7. Application of legal precedents and circulars in the case.

Analysis:
1. The appeals under Section 260A of the Income Tax Act, 1961, were disposed of by the High Court. The issue revolved around the sustainability of the Tribunal's order based on identical issues in both appeals.

2. The first substantial question of law raised whether inferences drawn from uncorroborated statements during a survey under Section 133A can form the sole basis for charging an amount as income. The Court held that the surrender made by the assessee during the survey, without a plausible explanation later, does not absolve the liability. The retraction made after a significant delay was deemed ineffective without proper justification.

3. The second issue questioned the abuse of powers under Section 133A(3)(iii) and related provisions during the survey. The Court found no substance in the contention that the admissions made under coercion should not be acted upon, especially when the surrender was voluntary and supported by evidence found with the assessee.

4. The third question examined the sustainability of chargeable income based on contradictory statements and records. The Court noted that the authorities had adjudicated the issues against the assessee after considering the material on record, finding no illegality or perversity in their decisions.

5. The effectiveness of retraction from confessional statements was a crucial aspect. The Court emphasized that delays in retracting such statements require a satisfactory explanation to be considered valid, placing the onus on the retracting party to prove the circumstances preventing earlier retraction.

6. The judgments by the Assessing Officer, CIT(A), and Tribunal were upheld, as no illegality or perversity was found in their factual findings, warranting interference by the High Court.

7. Regarding the application of legal precedents and circulars, the Court observed that in the factual context of the case, they did not support the appellant's case, leading to the dismissal of the appeals.

Conclusion:
The High Court dismissed the appeals, finding no merit in the contentions raised by the appellant. Additionally, a delay in filing the appeal was noted, but since the appeal was dismissed on merits, no further orders were required on the application for condonation of delay.

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