2021 (4) TMI 405 - HC - Income Tax

Voluntary admission made by the Assessee during the course of search - Whether in the absence of any material evidence produced by the assessee to the effect of sale of jewelry (difference in jewellery found and jewellery admitted in the W.T return) would the onus shift from the assessee to that of the department for proving that utilization of the sale proceeds for the purpose other than investment into money lending business is sustainable? - HELD THAT - On a perusal of the order passed by the Tribunal in the earlier round 2017 (9) TMI 1925 - ITAT CHENNAI there was a positive direction to the Assessing Officer to grant certain reliefs to the assessee set aside the order of the CIT(Appeals) and remit the matter to the Assessing Officer with a direction to examine the search document carefully and verify whether cash was available with the assessee and sale proceeds from sale of jewellery etc have been used for acquiring other assets and if not found so, then corresponding credit should be given towards unaccounted money lending business. Assessing Officer is bound to follow the same. Admittedly, the Revenue did not prefer any appeal against the above said order passed by the Tribunal. Therefore, the order and direction binds the Revenue. This fact was noted by the Tribunal in the impugned order and in our opinion, the Tribunal rightly dismissed the appeal filed by the Revenue.

Summary

Issues:
1. Validity of voluntary admission and subsequent retraction during search.
2. Burden of proof regarding sale of jewelry and utilization of sale proceeds.

Issue 1: Validity of voluntary admission and subsequent retraction during search
The appeal before the Madras High Court under Section 260A of the Income Tax Act, 1961 challenged an order made in the block assessment period 1997 to 2003. The Revenue raised the issue of whether a voluntary admission made by the assessee during a search, which was later retracted, loses its evidentiary value and validity. The Court noted that the Assessing Officer had completed the block assessment, and the assessee had appealed. The CIT(A) allowed the appeal by referring to a previous Tribunal order directing certain reliefs to the assessee. The Tribunal upheld the CIT(A)'s decision. The Court observed that the Tribunal's direction to grant credit for the sale value of jewelry against investment in money lending business was binding on the Assessing Officer as the Revenue did not appeal against it. Consequently, the Court found no grounds to interfere with the Tribunal's order and dismissed the appeal, answering the substantial questions of law against the Revenue.

Issue 2: Burden of proof regarding sale of jewelry and utilization of sale proceeds
The second issue raised by the Revenue was whether, in the absence of material evidence regarding the sale of jewelry, the burden shifts from the assessee to the department to prove the utilization of sale proceeds for purposes other than investment in a money lending business. The Court's analysis primarily focused on the Tribunal's direction to grant credit for the sale value of jewelry against the investment in the money lending business. As the Tribunal's order was not appealed by the Revenue and thus binding, the Court found no reason to interfere with the Tribunal's decision. Therefore, the Court dismissed the Tax Case Appeal, answering the substantial questions of law against the Revenue and imposing no costs.

In conclusion, the Madras High Court upheld the Tribunal's decision, emphasizing the binding nature of the Tribunal's directions on the Assessing Officer and dismissing the Revenue's appeal based on the lack of grounds to interfere with the Tribunal's order.