2017 (11) TMI 912 - AT - Income Tax

Undisclosed income worked out in sheets seized during the search - whether the addition is not based upon incriminating material found during search and, hence, the same is bad in law? - statement obtained u/s.133A in case of a survey - Held that - There was clear admission and statement of oath u/s. 132(4) by the director of the company that the assessee was receiving income which was not disclosed in the books of account. Furthermore, the Assessing Officer has duly recorded in his order that the assessee s representative was duly called upon to verify the seized documents and the assessee appeared on 02.03.2012 and he has been provided with the documents seized. Upon this, the assessee has not made any comment before the Assessing Officer whatsoever. Incriminating materials were found during search. There was clear admission u/s. 132(4). Hence, it cannot be said that the addition in the present case is not based upon incriminating material found during search. Hence, the cross objection filed by the assessee challenging the validity of the jurisdiction, is dismissed. In the statement of oath u/s. 132(4) of the Act recorded on 24.1.2011, i.e., the date of search, Smt. Madhu Chopra, the director of the company has clearly admitted to the estimate of such unaccounted income already made by Dr. Ashok Chopra said to be to the tune of ₹ 1.74 crores for two years. This admission during search corroborates the statement given by Dr. Ashok Chopra the performing surgeon which was duly based upon register found by the Revenue which disclosed surgeries performed and unaccounted cash payments. From the above, it is amply evident that the additions in this case are based upon cogent materials found during search. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition of undisclosed income by CIT(A).
2. Validity of assessment orders under Section 143(3) read with Section 153C.
3. Condonation of delay in filing cross objections.
4. Retraction of statements made during search and their evidentiary value.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Undisclosed Income by CIT(A):
The Revenue challenged the CIT(A)'s decision to delete the addition of ?75.85 lakhs (?98.15 lakhs for AY 2011-12) as undisclosed income. The addition was based on sheets seized during a search and statements made by the directors under Section 132(4), which were later retracted. The CIT(A) held that no incriminating documents were found during the search, and the addition was based solely on the directors' statements, which were made under pressure. The CIT(A) emphasized that in the absence of corroborative evidence, the statements alone could not justify the addition. The Tribunal, however, disagreed, noting that the statements were corroborated by seized registers detailing unaccounted surgeries and cash receipts. The Tribunal found the retraction unconvincing and upheld the addition, emphasizing that the statements under Section 132(4) were made voluntarily and were not immediately retracted.

2. Validity of Assessment Orders under Section 143(3) read with Section 153C:
The assessee contended that the assessment orders for AY 2010-11 and 2011-12 were invalid as no documents or valuable assets belonging to the appellant were seized under Section 132. The documents relied upon were impounded during a survey under Section 133A. The Tribunal dismissed this argument, noting that the incriminating materials were found during the search, and the statements made under Section 132(4) provided a valid basis for the assessments. The Tribunal emphasized that the statements were corroborated by the seized registers, which detailed unaccounted surgeries and cash receipts.

3. Condonation of Delay in Filing Cross Objections:
The assessee filed cross objections with a delay of 382 days, attributing the delay to incorrect advice from their Chartered Accountants, who initially advised that no appeal or cross objection was necessary. The Tribunal condoned the delay, accepting the explanation provided in the affidavit by the director of the company. The Tribunal noted that the delay did not adversely affect the revenue's interest and accepted the reasonable cause for the delay.

4. Retraction of Statements Made During Search and Their Evidentiary Value:
The directors initially admitted to unaccounted income during the search but later retracted their statements, claiming the admissions were made under pressure and without corroborative evidence. The Tribunal found the retraction unconvincing, emphasizing that the statements were made voluntarily and were corroborated by seized registers. The Tribunal noted that the directors' statements detailed the modus operandi of unaccounted cash receipts and payments, which were not reflected in the books of accounts. The Tribunal held that the retraction did not diminish the evidentiary value of the statements, especially since the directors did not provide a credible explanation for the retraction or dispute the discovery of unaccounted income.

Conclusion:
The Tribunal upheld the addition of undisclosed income, dismissed the cross objections challenging the validity of the assessment orders, and condoned the delay in filing the cross objections. The Tribunal emphasized the corroborative evidence found during the search and the voluntary nature of the statements made under Section 132(4), rejecting the retraction as unconvincing. The appeals by the Revenue were allowed, and the cross objections by the assessee were dismissed.