2015 (4) TMI 874 - HC - Income Tax

Additions on the basis of statement made u/s 133A - Bogus income - duplication of income - Statement made voluntarily by the petitioner under Section 133A retracted - Held that - Admittedly, the petitioner's main income is generated from transport business. The income from loose papers, so seized, indicated that certain payments were made to Tarachand Munim from transport business. This statement is now being rescinded by the petitioner and a new stand is being taken indicating that this money was used by the petitioner through Tarachand Munim for buying betel nuts and, therefore, there is duplication of this income since this value was already shown in the stock of betel nuts. We find that no documents has been placed before the Commission nor before this Court to show that there has been duplication of the income on purchase or sale of betel nuts. We are of the opinion that a statement made voluntarily by the petitioner under Section 133A of the Act can form the basis of assessment. The mere fact that the petitioner retracts his statement could not make his statement unacceptable. The burden lay upon the petitioner to establish that the statement made by him at the time of survey was wrong and in fact there was no additional income. In our opinion, this burden has not been discharged since no cogent evidence has been brought on record. In Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala, (1971 (9) TMI 64 - SUPREME Court) the Supreme Court held that an admission is a piece of evidence though it is not conclusive. Consequently, a statement made voluntary under Section 133A of the Act cannot be retracted unless the assessee files evidence to show that the admission made in the statement at the time of survey was wrong and against the material on record. The mere fact that the Commissioner of Income Tax in his report has held that the statement given by the petitioner was on oath and therefore, it cannot be retracted is immaterial in the context of what we have said aforesaid. Levy of interest u/s 234B - In view of the decision of the Supreme Court in Brij Lal (2010 (10) TMI 8 - SUPREME COURT ) interest is chargeable till the date of entertaining the application for settlement under Section 245D(1) of the Act and not till the date of the order passed by the Settlement Commission - Decided against assessee.

Summary

Issues involved:
1. Assessment of income based on survey under Section 133A of the Income Tax Act.
2. Dispute settlement before the Settlement Commission under Section 245C of the Act.
3. Rectification of errors in the statement given under Section 133A.
4. Computation of income by the Settlement Commission.
5. Challenge to the order of the Settlement Commission and demand notice.
6. Interpretation of statements made under Section 133A of the Act.
7. Determination of betel nuts price for income computation.
8. Charging of interest under Section 234B of the Act.

Analysis:
1. The petitioner, engaged in trucking and betel nuts/catechu business, underwent an income tax survey revealing undisclosed income and cash. The petitioner voluntarily offered to surrender additional income for the assessment year 2007-08 based on seized documents and loose papers, leading to a notice under Section 142(1) of the Act and subsequent approach to the Settlement Commission.
2. The Settlement Commission, after due process, computed the petitioner's income and directed the Assessing Officer to levy tax, penalty, and interest. The petitioner challenged this decision through a writ petition, disputing the correctness of the surrendered amount and the computation of income by the Commission.
3. The petitioner argued for rectification of the surrendered amount, contending that the sum offered included funds used for betel nuts/catechu purchases already reflected in the stock value. The petitioner sought to retract the initial statement made under Section 133A, emphasizing the non-binding nature of such statements.
4. The court held that voluntary statements under Section 133A can form the basis of assessment, and retraction requires evidence disproving the initial admission. The burden lies on the petitioner to show the inaccuracy of the statement, which was not fulfilled in this case, as no evidence of duplication was presented.
5. Regarding the betel nuts price computation, the court upheld the Commission's decision to use an average price of Rs. 82 per kg, noting the absence of evidence supporting a lower purchase price claimed by the petitioner. The court refrained from interfering in factual findings.
6. On the issue of interest under Section 234B, the court clarified that interest is chargeable until the settlement application's acceptance, not the Commission's order date. However, as the petitioner did not specifically raise this in the writ petition, no relief was granted, suggesting a rectification application to address the matter.
7. Ultimately, the court dismissed the writ petition, finding no merit in the petitioner's contentions and upholding the Settlement Commission's decision on income computation and tax liabilities.