2014 (1) TMI 1489 - HC - Income Tax

Retraction of admission / statement - at the time of assessment the assessee did not retract the aforesaid admission making voluntary disclosure - Held that - We fail to understand from where the case of retraction has been discovered by the Commissioner of Income Tax (Appeals) when the appellant has not stated in the grounds of appeal before it that it has retracted. - there must be distinction between the admission and the evidence collected during the course of survey. Admission is a very important piece of evidence unless it is explained or retracted - The assessee has not made any attempt to explain before the Commissioner of Income Tax (Appeals) suggesting not to accept the same - Instead of retracting the assessee called upon to act upon the same to pass assessment order and accordingly it was done and the tax was duly paid - The learned Tribunal has taken a correct decision that the same is without any factual basis and further unsupported by law - When a case is not made out before the Commissioner the assesee should not have made out so to say his own case basing on a lawyer s argument - A lawyer cannot improve the case of the litigant on fact unlike in case of law - Such an act is without jurisdiction - Decided against assessee.

Issues:
1. Justification of reversing the order of the learned CIT (Appeals) and restoring the addition of Rs.20 lakhs.
2. Validity of the appellant company retracting from its admission before the learned CIT (Appeals).
3. Refusal of the Hon'ble ITAT to examine facts related to expenditures in defective vouchers.
4. Basis for the conjecture of manipulation of evidence by the appellant company.
5. Validity of restoring the addition of Rs.20 lakhs based on a statement recorded under Section 133A.
6. Violation of natural justice due to lack of show cause notice and information provided to the appellant company.
7. Justification of sustaining the addition despite instructions against forcing confessions of undisclosed income.
8. Requirement for the appellant company to prove the negative regarding the statement of the Managing Director.

Analysis:

1. The High Court dismissed the appeal challenging the order of the Tribunal that restored the addition of Rs.20 lakhs, emphasizing that the questions raised were not substantial legal questions but arguments. The Court found that the appellant did not retract the voluntary disclosure made by the Managing Director during assessment, and the Commissioner of Income Tax (Appeals) did not consider any retraction claim. The Court upheld the Tribunal's decision to dismiss the appeal.

2. The Court addressed the issue of the appellant company retracting its admission, highlighting that the appellant did not dispute the voluntary disclosure during the assessment and even paid taxes based on it. The Commissioner of Income Tax (Appeals) wrongly assumed a retraction without factual basis, and the Court emphasized that admission is crucial unless explained or retracted properly.

3. The Court discussed the refusal of the Hon'ble ITAT to examine facts related to expenditures in defective vouchers. It emphasized that the admission made voluntarily by the Managing Director was a significant piece of evidence and that the appellant did not attempt to retract it before the Commissioner of Income Tax (Appeals).

4. The judgment addressed the conjecture of manipulation of evidence by the appellant company, emphasizing that the admission was voluntary and the appellant did not challenge it during the appeal process. The Court rejected the argument that the admission should not be considered as valid evidence.

5. The Court analyzed the validity of restoring the addition of Rs.20 lakhs based on a statement recorded under Section 133A. It emphasized that the admission made voluntarily by the Managing Director was crucial, and the Commissioner of Income Tax (Appeals) wrongly assumed a retraction without factual basis.

6. The Court discussed the violation of natural justice due to the lack of a show cause notice and information provided to the appellant company. It emphasized that retraction of admission is a factual matter that should be presented before the Court or Tribunal for consideration.

7. The judgment addressed the justification of sustaining the addition despite instructions against forcing confessions of undisclosed income. The Court emphasized that the voluntary admission by the Managing Director was crucial evidence and should not be disregarded without proper explanation or retraction.

8. The Court examined the requirement for the appellant company to prove the negative regarding the statement of the Managing Director. It emphasized that the admission made voluntarily was significant evidence and should be considered unless properly explained or retracted. The Court dismissed the appeal and imposed a cost of Rs.10,000 on the appellant for filing a frivolous appeal.

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