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TMI Blog2009 (8) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... t in case any other additions are made as income of the assessee, then the same should be set off from the amount of Rs. 7.5 lakhs in each case – Held that:- assessee had failed to discharge the onus of proving that confession made by him under section 132(4) was as a result of intimidation, duress and coercion or that the same was made as a result of mistaken belief of law or facts, Assessing Officer was justified in assessing the income of the assessee on the basis of the surrender of undisclosed income made by the assessees under section 132(4) of the Act, orders passed by the Commissioner of Income-tax (Appeals) and the Tribunal are set aside and the order passed by the Assessing Officer is restored. - - - - - Dated:- 10-8-2009 - DHIRENDRA MISHRA, CHANDRAKAR R. N. JJ. JUDGMENT Dhirendra Mishra J.- 1. The aforesaid appeals are being disposed of by this common order, as the same pertain to the assessee, Hukum Chand Jain, and his three sons, who has been subjected to search and seizure operations between February 21, 2002, and February 23, 2002. 2. The appellant/Revenue has preferred these appeals against the order dated December 7, 2005, passed by the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee by holding that the amount of undisclosed income offered in the block return was more than the specific addition made in the case of Shri Hukum Chand Jain and Shri Kamal Chand Jain. In the case of Shri Ashok Kumar Jain, it was held that the addition relates to payment of fees and it was covered by total withdrawal of the family. In the case of Shri Lalit Kumar Jain, the addition was deleted holding that it was made on the basis of difference between the cost of construction incurred by the assessee and estimated by the registered valuer and was without any material. 5. The appeal of the appellant/Revenue was further dismissed by the Tribunal. While dismissing the appeal against the order of the Commissioner of Income-tax (Appeals), the Tribunal observed that confessional statements made during search are often vulnerable, as the person making such statements remains under great stress and strain, they also do not have relevant details, documents and books of account and in the absence of the same, precise computation relating to the mode of utilization of such income and year of investment cannot be clearly furnished. Therefore, the assessees are entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same to the notice of the Department through duly sworn affidavit along with relevant material relied upon by him. The explanation regarding cash, valuables, loose papers, etc., found during search were offered for the first time before the Assessing Officer in the month of January and February, 2004, i.e., after two years of the search and seizure operations. The allegations of duress for extracting statement during the search proceeding were made for the first time during the assessment proceeding. However, no complaint in this regard was made to the higher authorities supported by the affidavit of independent witnesses present during proceedings. Since the assessee and his other family members were unable to explain the items discovered during search, they made unconditional surrender against the searched unexplained assets and loose papers. 7. It was further argued that even during the assessment proceeding the assessee came up with an alternative pleading that if the amount offered during the search is treated as undisclosed income, then set off against all other additions may be given in the amount of Rs. 7,50,000, as surrender was made to cover up all the leakages. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect and the searched material did not disclose the correct state of facts. The admission was made in a bona fide mistake and the Revenue cannot seek to addition only on the basis of the admission in the first place. The statement was rebuttable since the assessee explained the same at a later stage. The Commissioner of Income-tax (Appeals) rightly deleted the addition to the extent of undisclosed income computed by the Assessing Officer over and above the undisclosed income returned by the individual assessees. 11. Reliance is placed in the matters of CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi), Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) and Chuharmal v. CIT [1988] 172 ITR 250 (SC). 12. The judgment of the Kerala High Court in the matter of V. Kunhambu and Sons' case [1996] 219 ITR 235 (Ker) is distinguishable, as in the cited judgment, the assessee could not justify his statement on the basis of return whereas in the instant case, the materials found during search were duly explained by the assessee in his return for the block period and the same were accepted by the appellate authority. 13. We have heard learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary statement and surrendered Rs.30 lakhs as undisclosed income, as he could not explain the recovery of cash, gold and silver ornaments and loose papers/documents seized from his business premises. He also expressed his willingness to pay the taxes against undisclosed income for the block period in order to avoid the dispute with the Income-tax Department and for mental peace. The Assessing Officer further observed that during the assessment proceeding in reply dated February 19, 2004, to the specific query as to why he did not disclose the surrendered amount in his return and the return of his other three family members, the assessee stated that the surrender was made under duress without verifying each and every paper found during the course of search. After verification of papers and documents, etc., he discovered that his undisclosed income eligible for surrender was much less and the amount was surrendered just to avoid litigation with the Department and to purchase mental peace. Not accepting the above explanation, the assessment was made on the basis of undisclosed income declared during search proceeding by rateably dividing the undisclosed income amongst four asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock admitted for income-tax purposes and such investment and the difference would amount to Rs. 3 lakhs each. The Assessing Officer in view of the statement and as a measure of compromise included total income of Rs. 3 lakhs each in the total turnover for the assessment years 1980-81 and 1981-82. In appeal, the Commissioner of Income-tax (Appeals) struck down the addition against the unexplained investment in construction of a cinema theatre and confirmed the order of the Income-tax Officer by including Rs. 1.5 lakhs towards unexplained excess stock in each year s turnover as income. The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and confirmed the order of the Assessing Officer with an observation that the Tribunal has clearly found that the statement was made voluntarily. The assessee has totally failed to discharge the burden of proving that the statement was obtained by coercion or intimidation. These are the concurrent findings of fact and the same cannot be interfered. 21. Referring to the observations of the Bombay High Court in the matter Rameshchandra and Co. v. CIT [1987] 168 ITR 375, 380 wherein "an assessee has made a statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther observed that declarations falling under section 115 do not require any corroboration and upheld the order of the Assessing Officer in rejecting the retraction and treating the impugned sum as undisclosed income. 24. In the matter of Ravi Kant Jain's case [2001] 250 ITR 141 (Delhi), the Delhi High Court, while considering the scope of block assessment and search and seizure under Chapter XIV-B of the Act has held that its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. Evidence found as a result of search is clearly relatable to sections 132 and 132A. In this case, it appears that search was conducted under section 132 of the Act and seizures of books of account were made in the block assessment proceedings. The seized materials and books of account were referred to the special auditor for its report and on the basis of the report of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach of the High Court in following the principle of section 110 of the Evidence Act was right in holding that the value of the watches represented the concealed income of the assessee. 27. From the principles of law laid down in the aforesaid judgments, it may be deduced that, admission is one important piece of evidence but it cannot be said that it is conclusive. It is rebuttable. It is open to the assessee who made the admission to establish that the confession was involuntary and the same was extracted under duress and coercion. The burden of proving that the statement was obtained by coercion or intimidation lies upon the assessee. Where the assessee claims that he made the statement under the mistaken belief of fact or law, he should have applied for rectification to the authority who passed the order based upon his statement. The retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evidence, oral or documentary, to substantiate the allegation that he was forced to make the statement in question involuntarily. 28. If we examine the facts of the present case in the light of the settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to accept the surrendered amount. Apart from this, the assessee made an alternative plea that in case any other additions are made as income of the assessee, then the same should be set off from the amount of Rs. 7.5 lakhs in each case, as the surrender was made to cover up all the possible leakages of the revenue and to cover all the unexplained loose papers, etc., and the same was accepted by the Assessing Officer. 29. From a perusal of the order of the Commissioner of Income-tax (Appeals) as also the Tribunal, we find that none of the forums have recorded a finding that the statement under section 132(4) was obtained under duress. The assessee has totally failed to discharge the burden of proving that the statement was obtained under coercion or intimidation. He did not make any complaint to the higher authorities alleging intimidation or coercion for retracting the statement under section 132(4). The Tribunal has confirmed the order of the Commissioner of Income-tax (Appeals) by observing that the surrender was made under a bona fide mistake though it was never the case of the assessee before any of the forums that the surrender was on account of a bona fide mistake. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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