2010 (12) TMI 816 - AT - Income Tax

Presumption as to assets, books of account, etc - Section 292C - Undisclosed income - assessee firm is engaged in the business of land development i. e. purchase and sale of land after getting it developed and plotted - learned DR relied upon the orders of the authorities below and submitted that the assessee never retracted from his statement made on oath and the statement of the assessee s partner was based upon the seized document found during the course of survey - In the absence of any affidavit from the side of the assessee, no cognizance could be taken of any of the explanations of the assessee in this regard - assessee admitted unaccounted land development expenses incurred outside the regular books of accounts - assessee was playing hide and seek with the revenue authorities by concealing the original affidavit with the AO of this case as well as did not cooperate with the AO by not producing the concerned parties for examination and verification of the land deal between such parties and the assessee - it is not a case where addition is merely made on the basis of statement of the partner of the assessee firm but in fact based upon the loose paper found during the course of survey - Decided against the assessee

Summary

Issues Involved:
1. Legitimacy of the addition of Rs. 15,00,000/- to the assessee's income.
2. Validity of the partner's retraction from the statement made during the survey.
3. Applicability of Section 292C of the IT Act.
4. Admissibility of statements made during the survey under Section 133A.
5. Burden of proof and cooperation with the Assessing Officer (AO).

Detailed Analysis:

1. Legitimacy of the Addition of Rs. 15,00,000/- to the Assessee's Income:
The case revolves around the addition of Rs. 15,00,000/- to the income of the assessee, a partnership firm, based on a statement made by one of its partners during a survey conducted under Section 133A of the IT Act. The said partner admitted to undisclosed income of Rs. 15,00,000/- related to unaccounted land development expenses. The AO added this amount to the assessee's total income, which was challenged by the assessee on the grounds that the statement was made under duress and that the transaction for the purchase of land did not materialize. However, the AO and CIT(A) rejected these claims, emphasizing the voluntary nature of the statement and the absence of any evidence of coercion.

2. Validity of the Partner's Retraction from the Statement Made During the Survey:
The partner's retraction from his initial statement was made through an affidavit dated 19-01-2007, which was submitted to the AO. The AO and CIT(A) dismissed the retraction as an afterthought, noting that it was made 21 months after the original statement and lacked supporting evidence. The Tribunal also found that the original affidavit was never filed before the AO, and the assessee failed to provide any substantial proof of coercion or duress.

3. Applicability of Section 292C of the IT Act:
Section 292C of the IT Act, which presumes the contents of documents found during a survey to be true, was applicable in this case. The Tribunal upheld the AO's reliance on this section, stating that the presumption was not effectively rebutted by the assessee. The seized document, which detailed unaccounted land development expenses, was considered valid evidence against the assessee.

4. Admissibility of Statements Made During the Survey under Section 133A:
The Tribunal addressed the issue of whether statements made during a survey under Section 133A can be used as conclusive evidence. It was noted that while statements made under Section 133A are not conclusive proof, they can still be significant if corroborated by other evidence. In this case, the partner's statement was supported by the seized document, making it admissible.

5. Burden of Proof and Cooperation with the Assessing Officer (AO):
The Tribunal highlighted the assessee's lack of cooperation with the AO, particularly in producing relevant parties and documents for verification. This non-cooperation led to an adverse inference against the assessee. The Tribunal also noted that the assessee did not take any steps to contest the seized document or the statement at the earliest opportunity, further weakening their case.

Conclusion:
The Tribunal dismissed the appeal, confirming the addition of Rs. 15,00,000/- to the assessee's income. It was concluded that the partner's statement, corroborated by the seized document, was valid evidence of unaccounted income. The retraction was deemed an afterthought, and the assessee failed to rebut the presumption under Section 292C effectively. The Tribunal found no merit in the arguments presented by the assessee and upheld the findings of the AO and CIT(A).