2017 (4) TMI 1251 - AT - Income Tax

Unexplained investment - whether the money in question belongs to the appellant or not? - statement have been recorded u/s.161 relied - Held that - We are sitting in a summary proceedings case wherein the necessary procedure follows preponderance of probability rather than strict rules of evidence law. We also take note of the fact that it was for the assessee to discharge all the primary onus of not having any business relation with the Mumbai based alleged payee in order to come clean out of the impugned addition. There is further no attempt on his part to allege any threat or coercion in challenging veracity of above section 161 statement. We therefore treat the same as sufficient opportunity for the assessee to contradict all the relevant information in challenging correctness of the said complainant s statements who could not have substantiated his misappropriation allegation without producing him. We thus conclude in view of all these facts that non examination of the above complainant at assessee s instance is in any way not fatal to the impugned addition. We accordingly hold that the abovestated hon ble apex court s decision in Andaman Timber Industries vs. CIT 2015 (10) TMI 442 - SUPREME COURT does not apply to facts of the instant case. The assessee s second plea raised in the course of hearing that neither he had appeared before the police authorities nor made any statement is also found to be devoid of merit in view of our discussion in preceding paragraphs. We further take note of Section 114(e) of the Indian Evidence Act to presume that once the assessee himself admits the above statement to have been recorded u/s.161 of the Code of Criminal Procedure it was an official act performed in due process of law in taking the assessee as a witness at the abovestated complainant s behest. We thus see no reason to interfere in well reasoned lower appellate findings extracted hereinabove. The same are confirmed. Assessee s appeal is dismissed.

Summary

Issues:
Appeal against unexplained investment addition of ?15,06,500 - Violation of principles of natural justice - Rejection of detailed statement of facts - Alleged unexplained investment.

Issue 1: Unexplained Investment Addition
The appeal arises from an order confirming the Assessing Officer's addition of ?15,06,500 as unexplained investment for the assessment year 2006-07. The addition stemmed from an FIR registered against the assessee, alleging misappropriation of funds sent through an angadia firm. The complainant provided a receipt indicating receipt of the money in the assessee's name. The Assessing Officer considered the criminal case, the complainant's statement, and subsequent inquiry proceedings to reject the assessee's explanation. The CIT(A) upheld the addition, stating that the money belonged to the appellant based on police records and corroborative evidence. The appellant's defense was considered inadequate, and the CIT(A) dismissed the appeal, emphasizing the appellant's business relation with the alleged payee and the lack of evidence to refute ownership of the funds.

Issue 2: Violation of Principles of Natural Justice
The appellant contended that there was a violation of natural justice as he was not given an opportunity to cross-examine the complainant. The appellant cited the Andaman Timber Industries case to challenge the assessment. However, the appellant's statement before the police authorities, supporting the complainant's version, was considered during the hearing. The appellant denied making the statement, claiming it lacked evidentiary value due to procedural aspects. The tribunal rejected this argument, stating that in summary proceedings, the preponderance of probability guides the decision. The tribunal found the appellant had the opportunity to contest the complainant's statement and deemed the absence of cross-examination not fatal to the addition.

Issue 3: Rejection of Detailed Statement of Facts
The appellant argued that the CIT(A) erred in rejecting the detailed statement of facts submitted, along with other documents, while accepting the AO's version. The CIT(A) based the decision on police records, the appellant's admission before authorities, and the angadia's involvement. The tribunal found the appellant's failure to disprove the business relation with the alleged payee and the absence of coercion or threat allegations significant. The tribunal upheld the lower appellate findings, citing the Indian Evidence Act's presumption regarding the appellant's statement recorded under Section 161 of the Criminal Procedure Code. The tribunal dismissed the appeal, confirming the lower authorities' decision.

In conclusion, the tribunal dismissed the appeal against the unexplained investment addition, ruling in favor of the Assessing Officer's decision and upholding the CIT(A)'s findings. The issues of violation of natural justice and the rejection of the detailed statement of facts were carefully analyzed, with the tribunal emphasizing the importance of evidence, business relations, and procedural considerations in the assessment process.