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TMI Blog2015 (11) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... al Singh? 3. The background to the present appeal is that the Respondent Assessee is engaged in the business of plastic raw material and is carrying on the business in the names of two proprietorship concerns, M/s Polychem Traders and M/s Petrochem Overseas (India). In addition, the Assessee was a Director in Petro Impex (India) P. Ltd and Par Petrochem Ltd. 4. A search and seizure operation was conducted on 20th June 1996 at the residential and business premises of the Assessee as well as his associate concerns and it continued till 30th July 1996. The case of the Revenue is that despite notice issued on 30th September 1996 to the Assessee under Section 158BC of the Act, requiring him to file a return of total income including the undisclosed income for the block period, the Assessee failed to do so. Ultimately, after a gap of eight months, he filed a return on 9th June 1997. In this return, the Assessee declared an income of Rs. 24,50,310 for the various assessment years of the block period. The assessment was completed under Section 158 BC (1) at an undisclosed income of Rs. 3,71,79,576. 5. In the assessment order, it was recorded by the Assessing Officer ("AO") that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had introduced fictitious debtors in his books of accounts and had deposited the cash realized on sale of the raw material into the bank accounts of those fictitious debtors. However, the explanation of the Assessee for certain other cash deposits found in the books of accounts in other accounts was accepted by the AO and no additions were made in that regard. 8. The other major addition made by the AO was on account of a purported loan of Rs. 45,00,000 received from M/s Nice International, the proprietor of which was Mr. Sant Kumar Sharma of Bombay. Mr. Sant Kumar Sharma, during the course of enquiry, stated on oath that he arranged export orders in the sum of Rs. 1.36 crores and the alleged purchase of garments were received from M/s Ambica Agency of Delhi and M/s H.T. Avia of Delhi. The payments received from Russia were credited to the accounts of M/s Nice International and from the said account the said amount was deposited in the account of the Assessee and three other persons showing the amount as loan advanced to the said persons. The AO after setting out the entire statement of Mr. Sant Kumar Sharma concluded that the Assessee was the main person who arranged the said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed reference of the matter to the third member who by an order dated 31st May 2002 concluded that the observation made by Mr. Syal was superfluous and that once the two members had agreed that addition of Rs. 1.36 crores could not have been made, then "there was no need to make any further observation". The resultant order was passed by the ITAT on 8th August 2002 allowing the appeal of the Assessee. 12. It was submitted by Mr. Raghvendra Singh, learned counsel for the Revenue, that the ITAT failed to appreciate that the evidentiary value of the statement on oath recorded by the Assessee under Section 132(4) of the Act carries more weight than a statement made during a survey under Section 133A. He accordingly submitted that the reliance by the ITAT on the decision of its co-ordinate Bench in Pushpa Vihar v. ACIT, 48 TTJ 389(Bom.) was misplaced, since that decision dealt with a statement recorded during a survey under Section 133A of the Act. In this context, he also placed reliance on the decision of this Court in CIT v. Dhingra Metal Works (2010) 328 ITR 384 (Del.) which in turn relied upon the decision of the Kerala High Court in Paul Mathews & Sons Vs. Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement. Of course, where the retraction is not for any convincing reason, or where it is not shown by the Assessee that he was under some coercion to make the statement in the first place, or where the retraction is not followed by the Assessee producing material to substantiate his defence, the AO might be justified in make additions on the basis of the retracted statement. 15. In the present case, the Assessee had an explanation for not retracting the statement earlier. He also furnished an explanation for the cash that was found in the hands of his employee and this was verifiable from the books of accounts. In the circumstances, it was unsafe for the AO to proceed to make additions solely on the basis of the statement made under Section 132(4) of the Act, which was subsequently retracted. 16. Consequently, the Court is unable to find any legal infirmity in the conclusion reached by the ITAT that the addition of Rs. 86 lakhs to the income of the Assessee was not justified. Question (B) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. 17. Turning now to Question (A), the Court finds that indeed no opportunity was given to the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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