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TMI Blog2019 (4) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. A bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of accounts. The appellant-company in response to the show cause notice, submitted written reply on 02.12.2016 contending that withdrawals were made from the account with Bank of Baroda and State Bank of Bikaner and Jaipur between the period from 20.09.2014 to 30.09.2014, which was kept at the residence and out of that amount, he kept a sum of ₹ 70 lakh in the morning in the car for making payment to labour, tractor, material etc. Thus, in the survey the appellantcompany explained the amount of ₹ 98.92 lakh (70+19.92+9) pertained to his business. The extract from the account maintained in the computer books for the financial year 2014-15 was submitted. It was also stated that the print out of incomplete books of account in computer was taken by the ADI (Investigation) team, according to which cash balance of ₹ 4,21,691/- only was unaccounted in the balance-sheet of M/s. Bannalal Jat Construction Private Limited. The survey was converted into search and the statement of the assessee under Section 132(4) was recorded on 10.10.2014 at 10:15 PM and thereafter search was concluded on 11.10.2014 in the morning and the assessee stated that such cash belong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident that the aforesaid cash balance of ₹ 1,21,41,528/- was available in the books of accounts of M/s. Bannalal Jat and that the cash found belonged to the said proprietorship concern and not the appellant-company. Accordingly, this amount was not offered in the return of income filed by the appellant-company thereby retracting the statement of the company recorded under Section 132(4) of the IT Act. There is thus no dispute of whatsoever kind regarding the form and manner of retraction. Reference is made to Instruction No.286/2/2003-IT (INV-II) dated 10.03.2003 to show that non-disclosure in the return of income is considered as retraction by the department. Reliance is placed on a judgment of the High Court of Madras in M. Narayanan and Bros. Vs. Assistant Commissioner of Income-tax, Special Investigation Circle, Salem (2011) 13 Taxmann.com 49 (Madras) , wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. It is argued that it was not a case of simple retraction but backed by books of accounts of M/s. Bannalal Jat, wherein no discrepancy was found by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of this Court in Ravi Mathur , supra, upheld the deletion of the addition accepting the explanation by relying on CBDT Instruction No.286/2003-IT/INV dated 10.03.2003, which prohibits the department from obtaining confessions as to undisclosed income during the course of search and seizure and survey operations. It is argued that this Court in Ravi Mathur, supra, had no occasion to consider the CBDT Instruction. Learned counsel submitted that no material has been placed by the Department in rebuttal of the appellant that the cash found belonged to Shri Bannalal Jat. The authorities being the fact finding authorities are obligated to objectively consider the explanation of the assessee on merits and evaluate supporting material. Reliance is also placed on the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala and Another (1973) 91 ITR 0018 (SC) . It is argued that Section 132(4A)(i) and Section 292C of the IT Act also provide statutory presumption that when a document/money is found in the possession or control of any person in the course of search, the same is considered to belong to the same person. The onus is on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements recorded under Section 132(4) of the IT Act have great evidentiary value and cannot be discarded in a summary manner by simply observing that the assessee has retracted the same. The retraction has to be genuinely made within reasonable time and immediately after such a statement has been recorded either by filing a complaint to the superior authority of otherwise brought to the notice of the higher officials, duly sworn affidavit or statements supported by convincing evidence. Nothing has been done by the assessing officer in the present case. Learned counsel, in support of his argument, has also relied on the judgments in Rameshchandra and Company Vs. Commissioner of Income-Tax 1987 SCC OnLine Bom 596 of High Court of Bombay at Nagpur, Dr. S.C. Gupta Vs. Commissioner of Income-Tax (2001) 248 ITR 782 of the Allahabad High Court, Bachittar Singh Vs. Commissioner of Income-Tax and Another (2010) 328 ITR 400 of the Punjab and Haryana High Court, Commissioner of Income Tax Vs. M/s. Hotel Meriya (2011) 332 ITR 537 of the Kerala High Court, Commissioner of Income-Tax Vs. Lekh Raj Dhunna (2012) 344 ITR 352 of the Punjab and Haryana High Court, The Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns individual cash books being the proprietor of M/s. Bannalal Jat Contractor and also the Director in M/s Bannalal Jat Construction Pvt. Ltd., he submitted that he does not maintain individual cash books. This court in CIT, Bikaner Vs. Ravi Mathur, supra, which was relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under Section 132(4) of the IT Act have great evidentiary value and it cannot be discarded in a summary and cryptic manner, by simply observing that the assessee retracted from his statement. One has to come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after such statement has been recorded by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials by way of duly sworn affidavit or statement supported by convincing evidence, stating that the earlier statement was recorded under pressure, coercion or compulsion. We deem it appropriate to reproduce para 15 of the said judgment, which reads thus, 15. In our view, the statements recorded under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement u/s 132(4) was not correct and these amounts are in ITA No.720/JP/2017 M/s Bannalal Jat Construction Pvt. Ltd., Bhilwara vs. ACIT, Central Circle-Ajmer thousands, not lakhs i.e. it is now attempted to retract from the statements made at the time of S S operations. Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized i.e. almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material. The judgment of the Delhi High Court in CIT Vs. Sunil Aggarwal, supra, relied by the assessee does not in any manner extend any assistance to him because that was a case in which the court found that the assessee, apart from retracting the statement, also discharged the onus on him through cogent material to rebut the presumption that stood attracted in view of the statement made under Section 132(4) of the IT Act with reference to the entries in the books of accounts of the sales made during the year and the stock position. Similar was the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise. The Tribunal, therefore, was not justified in reversing the order of the Assessing Officer which was affirmed by the Commissioner of Income-tax (Appeals) also. The Punjab and Haryana High Court in Bachittar Singh Vs, Commissioner of Income-Tax, supra, in para 7 of the report, held as under:- 7. It is not disputed that the statement was made by the assessee at the time of survey, which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months. In such circumstances, the view taken by the Tribunal that retraction from the earlier statement was not permissible, is definitely a possible view. The mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold that the statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances, the statement of the assessee could certainly be acted upon. The High Court of Kerala in The Commissioner of Income Tax Vs. O. Abdul Razak, supra, in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 3 of the Evidence Act and Section 131 of the Income Tax Act. Based on the above finding, it was also held that such evidence would be admissible for the purpose of block assessments too. The explanation to Section 132(4) of the Income Tax Act was also noticed by the Division Bench to further emphasise that the evidence so collected would be relevant in all purposes connected with any proceedings of the Income Tax Act. The Allahabad High Court in Dr. S.C. Gupta Vs. Commissioner of Income-Tax, supra, in para 7 of the report, held as under:- 7. As regards the assessee s contention that the statement having been retracted the Assessing Officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullan-gode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18 an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered ₹ 4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to ₹ 1,21,43,210/- and ₹ 2,50,00,000 and ₹ 30,00,000/- totalling to ₹ 2,80,00,000 in his individual capacity. Subsequently, on 04.12.2014 during the post-search proceedings, statement of Shri Bannalal Jat was again recorded under Section 131 of the IT Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to ₹ 1,21,43,210/- and ₹ 1,35,00,000/-. It is in this background that we have to view his reply to the show-cause notice submitted on 02.12.2016. This show-cause notice was issued to him by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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