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TMI Blog2016 (9) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... ry course of business and supporting material was also not maintained by Assessee, the alleged explanation of Assessee has rightly been rejected by Assessing Officer and Tribunal has also rightly affirmed the same. In the present case, Assessing Officer has not made additions merely on such statement. It was looked into the explanation, account books and other material placed before it and then made addition of certain amount which is admittedly less than the amount of disclosure under Section 132(4) of Act, 1961. Tribunal has rightly affirmed the same. - Decided against assessee. - INCOME TAX APPEAL No. - 250 of 2000 - - - Dated:- 26-9-2016 - HON'BLE SUDHIR AGARWAL AND HON'BLE DR. KAUSHAL JAYENDRA THAKER, JJ. For the Appellant : Manu Ghildiyal, S P Gupta, S.D. Singh For the Respondent : C.S.C.,A N Mahajan, B.J. Agrawal, Dhananjai Awasthi, R.K. Upadhyay ORDER 1. This is an appeal under Section 260-A of Income Tax Act, 1961 (hereinafter to be referred as 'Act, 1961') arising from the judgment and order dated 26.07.1999, passed in Income Tax Appeal No. 1885 (Alld) of 1992, by Income Tax Appellate Tribunal, Allahabad Bench, Allahabad (hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed as Above Rs. 55,838/- 8 Addition as per Annnexure AK-5 as discussed above Rs. 7,030/- 9 Addition as per Annnexure AK-4 as discussed above Rs. 30,030/- 10 Amount surrendered as discussed above Rs. 4,30,367/- 11 Stock surrendered as discussed above Rs. 10,000/- 12 Profit surrendered U/s 132(4) Rs. 50,000/- Rs. 8,71,873/- Total Income b/f ₹ 8,71,873/- Less: Admissible depreciation as under: Depreciation as claimed ₹ 63,725/- Less: 1/4th disallowed on car UGW-7115 ₹ 4,210/- ₹ 59,515/- ₹ 8,12,358/- or ₹ 8,12,360/- Thus the total income comes to ₹ 8,12,360/- on which assessment was completed. Tax eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year 1990-91. Copy of this order has been filed as Annexure No. 4 to the memo of appeal. 9. The counsel for Revenue on the contrary submitted that statement given during search operation is admissible in evidence and if there is nothing otherwise, such statement can be relied on for the purpose of making assessment against Assessee. 10. We have heard counsel for the parties at length and perused record. 11. It is not disputed before us that Assessee M/s. Vertex Chemical Industries is a partnership firm in which Sri Brij Lal Bhatia and his wife Smt. Usha Bhatia are partners. At the time of search and seizure, Sri Brij Lal Bhatia, one of the partner, made a statement, recorded by Authorized Officer under Section 132(4) of Act, 1961, and relevant extract thereof reads as under: 12. Various additions were made by Assessing Officer in the light of aforesaid statement wherein he ultimately found justification of addition of ₹ 8,12,360/- for Assessment Year in question. Contention of learned counsel for appellant is that on such statement, addition is not justified. 13. Section 132(4) of Act, 1961 reads as under: Section 132(4) The authorised officer may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted etc. It is founded on the objective consideration by Assessing Authority and in every case neither it can be said that mere statement is sufficient to draw an inference nor it can be said that corroboration is always required. 15. Tribunal has found substance in approving finding of Assessing Officer with regard to additions of different amount, and has held that there was a transaction of ₹ 63,030/- which sought to be explained by stating that it represented receipts of M/s. Vikram Chemical Industries from customers in the capacity of Karta but that explanation was not found correct in view of noting in papers (AK-5) showing that amount have been received in excess. Tribunal has also noted that Sri Brij Lal Bhatia surrendered a sum of ₹ 50,000/- being undisclosed profit from the Firm, M/s. Vertex Chemicals i.e. Assessee for five years from A.Y. 1985-86 to 1989-90 and also surrendered ₹ 10,000/- as unexplained stock found at the time of search. On the date of search, ledger was found written upto June 1989 and same was the position of sale register of firm. Cash book was written up to 21.08.1989. Assessee was not maintaining stock register and bills in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of learned Senior Counsel that accounts were found duly maintained and in order, is not correct. It is coupled with fact that there was voluntary disclosure by one partner of Assessee Firm. Hence, there was no reason, not to act upon evidence collected under Section 132(4) of Act, 1961. 19. There is no material on record to show that statement was obtained by Authorized Officer under any duress or during odd hours or there was any other justification in infer that statement recorded was not voluntary. 20. Various authorities cited on behalf of Assessee, we find, have considered the matter in the light of particular facts involved in those cases, hence do not help appellant in any manner. 21. In Pullangode Rubber Produce Co. Ltd. (supra) there was no issue with regard to a voluntary statement recorded by Authorized Officer during search and seizure operation. The question was, whether entries contained in the account books on the face of it could have been accepted. Therein entries contained in the accounts maintained by Assessee sought to be explained by Assessee differently, so as to reduce his liability. Court held that entries in the account books of Assessee amounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that penalty proceedings under Section 271(1)(c) may not be applicable where additional income is discovered as the said income stood surrendered in the statement under Section 132(4) of Act, 1961 for which returns were due to be filed within statutory period. Since penalty still was levied hence dispute was with regard to justification of imposition of penalty. Court considered applicability of explanation 5 of Section 271(c) viz-a-viz the statement made under Section 132(4) of Act, 1961 and thereafter held as under: From a perusal of Explanation 5, it is evident that in circumstances, which otherwise did not attract the penalty provisions of section 271 (1)(c) of the Act, now a deeming provision was introduced as to attract the penalty provisions to those cases as well. But an exception is provided in clause (2) of Explanation 5 where the deeming provision will not apply if during the course of search the Assessee makes the statement under sub-section (4) of section 132 of the Act that the money, bullion, jewellery etc. found in his possession has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be inferred that such undisclosed income was derived from the business, which he was carrying on or from other sources. The object of the provision is achieved by making the statement admitting the nondisclosure of money bullion, jewellery etc. Thus, we are of the opinion that much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make Explanation 5 (2) inapplicable. 25. Real dispute was, when explanation 5(2) would be attracted. Court said, when a statement was recorded under Section 132(4) of Act, 1961, the person making statement is not expected to disclose on his own one or more facts but basically such a person replies to the questions asked by Authorized Officer since he examines such person on oath. It cannot be said that such person would state those things which are not asked by Authorized Officer. In absence of any question specifically raised by Authorized Officer with regard to the manner in which disclosed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded at odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded in such odd hours, particularly when such statement is retracted. Observations to this effect in the judgment are reproduced as under: So far as the case on hand is concerned, the glaring fact required to be noted is that the statement of the Assessee was recorded under section 132(4) of the Act at midnight. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. (Emphasis added) 28. Court held that mere fact that statement was not retracted immediately but later on, may be an afterthought and might have come after legal advice but still retraction has to be viewed, may be in the light of statement furnished by Assessee along with affidavit and if a proper explanation comes in respect of all the items under which disclosure was made, the same has to be considered and if no discre ..... 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