2016 (7) TMI 923 - HC - Income Tax

Evidence under section 158BB - statement of the respondent as well as of the employee alongwith the documents seized - Held that - The retraction of the statement was made by Shri Chimanlal Shah by making an affidavit which was filed in this office after about two to three months. The statements under section 132(4) of the Act were recorded on 18.06.2003 and 01.08.2003 where as the affidavit for retraction by Shri Chimanlal Shah was filed in this office on 26.09.2003. If the statement of Shri Chimanlal Shah was recorded by using duress intimidation or coercion they would have immediately on the same day or on the following day filed the retraction. The very fact that they kept quiet for almost 2-3 months after recording the statement proves beyond doubt that the statement was not recorded by using any force by the search party. Therefore the affidavit filed by and Shri Chimanlal Shah was an afterthought and it was simply advice to frustrate the efforts of the Department to sniff off the unaccounted income of the assessee Whether evidence found as a result of search or other such materials or information is sufficient enough to conclude that there was concealment of income? - Held that - When in respect of previous Assessment Year 2004-05 also the Tribunal had dismissed the HC-NIC Department s appeal on the ground that the addition in that year also was based on extrapolation it emerged beyond pale of doubt that for the addition made for the year 2005-06 there was no evidence whatsoever and the same was presumptive in nature. - Decided in favour of assessee

Summary

Issues:
1. Interpretation of evidence under section 158BB of the Income Tax Act.
2. Determination of concealment of income due to on-money transactions.

Issue 1: Interpretation of evidence under section 158BB of the Income Tax Act:
The appeals involved questions of law and similar factual backgrounds, thus heard together. The primary issue was whether the respondent's statement and documents seized would constitute evidence under section 158BB of the Income Tax Act. The search operation under section 132 revealed incriminating documents indicating receipt of on-money by the assessee. The Assessing Officer made additions based on this information. The CIT (Appeals) partly allowed the assessee's appeal, questioning the retraction of statements and the additions made. The Tribunal partly allowed the Revenue's appeal and dismissed the rest, leading to the current challenge. The Assessing Officer's reasons for the additions were examined, concluding that the retraction of statements was an afterthought, dismissing the first question.

Issue 2: Determination of concealment of income due to on-money transactions:
The second issue revolved around whether there was sufficient evidence to conclude concealment of income due to on-money transactions. The Tribunal's decision in a similar case was referenced, highlighting that the material seized during the search was limited to one flat, and the addition for subsequent years was deemed improper. The Tribunal's findings were upheld, emphasizing that the additions were based on guesswork and extrapolation, lacking concrete evidence. The Tribunal's decision was deemed proper and legal, dismissing the appeal as it raised no substantial legal questions. Consequently, the second question did not require consideration, leading to the dismissal of the appeal.

In summary, the judgment addressed the interpretation of evidence under the Income Tax Act and the determination of concealment of income related to on-money transactions. The court examined the Assessing Officer's reasons for additions, the validity of the retraction of statements, and the sufficiency of evidence for income concealment. The Tribunal's decision in a similar case was crucial in establishing the lack of concrete evidence for the additions made, leading to the dismissal of the appeal.