2015 (2) TMI 636 - HC - Income Tax

Additional income declared by Director on behalf of company - survey under Section 133(A) - Whether admissions made during a survey can form the sole basis for making additions? - Whether retracted admissions can form the basis of an inference enabling an assessing officer to add income to the income of an assessee? - Held that - Onus to prove concealment of income lies upon the revenue. Admissions are an integral part of assessments and as they are the best evidence of a fact, within the personal knowledge of an assessee may if the admission is voluntary and not extracted by coercion or force, be read against an assessee. The relevance of an admission admits to another exception namely if the admission is retracted within reasonable time and by assigning valid reasons. A perusal of the impugned orders reveals that the assessee made an admission, on 18.01.2006 and followed it up by a written admission on 19.01.2006 but while filing his return did not retract the admission. At no stage of the survey or assessment proceedings except at its fag end on 4.12.2008 i.e. almost two years after the admissions and a few weeks before finalisation of the assessment, did the assessee raise a plea that he was coerced and forced into making admissions. The belated retracting of the admissions on 04.12.2008, nearly two years after the admissions and then also without any facts to support the allegation of coercion or pressure, cannot enure to the benefit of the assessee. An admission is substantial evidence of a fact, within the special knowledge of an assessee and if not retracted immediately or within reasonable time is substantive evidence of a fact and may be read against an assessee. Answer the above questions against the assessee and find no reason to hold that the revenue has erred in relying upon admissions made by the assessee - Decided in favour of revenue.

Issues:
1. Challenge to order passed by Income Tax Appellate Tribunal, Commissioner of Income Tax(Appeals), and assessment orders.
2. Validity of admissions made during a survey under Section 133A of the Income Tax Act, 1961.
3. Retraction of admissions by the assessee and its impact on assessment proceedings.
4. Whether retracted admissions can be the basis for adding income to the assessee's total income.

Analysis:
1. The appellant-assessee challenged the order passed by the Income Tax Appellate Tribunal, Commissioner of Income Tax(Appeals), and assessment orders. The appellant, a Director of a company, declared additional income during a survey under Section 133A of the Income Tax Act. The appellant admitted to unaccounted investments related to the company's premises and machinery. The assessing officer added the admitted amount to the appellant's income. The CIT(A) and ITAT dismissed the appeals. The appellant contended that the retracted admissions could not be the basis for additions without corroborative evidence. However, the revenue argued that the belated retractions without evidence of coercion or pressure were rightly relied upon. The court held that if an admission is voluntary and not extracted by coercion, it may be used against the assessee. As the appellant did not retract the admission in a reasonable time and without valid reasons, the court dismissed the appeal, upholding the reliance on the admissions made by the assessee.

2. The issue regarding the validity of admissions made during a survey was addressed. The appellant made admissions during the survey, followed by a written admission. However, upon filing the return, the appellant retracted the admissions, alleging coercion and pressure. The assessing officer included the admitted amount in the income of the assessee, considering the belated retraction without a plea of coercion earlier. The court emphasized that admissions are integral to assessments and are the best evidence of a fact if voluntary. The belated retraction without supporting evidence did not benefit the assessee. The court held that admissions not retracted immediately or within a reasonable time can be substantive evidence and may be used against the assessee. Consequently, the court dismissed the appeal, affirming the reliance on the admissions made during the survey.

3. The retraction of admissions by the assessee and its impact on assessment proceedings were examined. The appellant retracted the admissions almost two years after making them and shortly before the assessment order. The assessing officer considered the belated retraction without any reference to coercion or pressure. The court noted that the appellant did not raise coercion allegations during the survey or assessment proceedings. The court emphasized that a belated retraction without valid reasons does not detract from the voluntary nature of the admissions. As the retraction was untimely and lacked supporting evidence, the court upheld the inclusion of the admitted amount in the assessee's income. The appeal was dismissed based on these findings.

4. The question of whether retracted admissions can be the basis for adding income to the assessee's total income was deliberated. The court highlighted that the onus to prove concealment of income lies with the revenue. Admissions, if voluntary and not coerced, can be used against the assessee. The court emphasized that a retracted admission must be done within a reasonable time and with valid reasons to be considered. As the appellant's belated retraction lacked supporting evidence of coercion or pressure, the court upheld the reliance on the admissions made during the survey. The court dismissed the appeal, concluding that the revenue did not err in relying on the admissions and adding the admitted amount to the assessee's income.

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