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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 ..... les and taking out average gross profit of Assessee firm. (d) Whether Tribunal was justified in holding that assessment should be made on the amount surrendered by Assessee on estimation basis at the time of search." 3. Appellant Assessee (hereinafter to be referred as 'Assessee') filed return for the Assessment Year (hereinafter to be referred as 'A.Y.') 1990-91, showing total income of Rs. 1,83,750/-. 4. Assessing Authority took into consideration the material collected in search and seizure operation conducted at the residential and business premises of Assessee on 22.08.1989 and 23.08.1989 wherein cash, jewellery and some incriminating documents were seized. An order under Section132(5) of Act, 1961 was passed on 15.12.1989 creating a tax liability of Rs. 19,08,468/- including penalty under Section 271(1)(c) of Act, 1961. Assessing Officer examined seized books and loose papers in the light of explanation submitted by Assessee and thereafter, computed income vide order dated 07.03.1992 as under: S.N. Particulars Amount in Rupees Net profit as per P & L A/c. Rs. 71,049/- 1 Depreciation for separateConsideration Rs. 63,725/- 2 Income Tax R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure operation, additions could not have been made unless corroborated, since such statement per-se is not admissible in evidence. Reliance is placed on judgments in (2010) 328 ITR 411 (Guj) Kailashben Manharlal Chokshi Vs. Commissioner of Income Tax, (2013) 14 Taxman 262 (Jhar) Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Dhanbad, (1973) 91 ITR 18 (SC) Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another and (2005) 278 ITR 454 (AII) Commissioner of Income Tax Vs. Radha Kishan Goel. 8. Learned Senior Counsel stressed upon the fact that no discrepancy in books of account of Assessee was found by Assessing Officer. With regard to Rs. 9 lacs, satisfactory explanation was furnished. No discriminating evidence regarding purchase or stocks was found, other than shown by Assessee in its return. He also pointed out that in similar circumstances in the case of M/s. Vertex Organics (a sister concern of Assessee firm) where also raid was conducted on same dates, Tribunal accepted contention of Assessee and confirmed order of CIT(A) and rejected Revenue's appeal for Assessment Year 1990-91. Copy of this order has been filed as Annexure No. 4 to the memo o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested." 14. Aforesaid provision makes it very clear that statement recorded on oath during the course of search and seizure by Authorized Officer may be used in evidence in any proceeding under Act, 1961. When something can be used as an evidence, meaning thereby, it is a relevant material to support a finding to be recorded in a particular manner. Such evidence, however, by itself, may not be a conclusive proof of everything, in every case. Whether such statement by itself is credit worthy to draw an inference or requires some further corroboration, depends on facts and circumstances of each case, the documentes and material collected etc. It is founded on the objective consideration by Assessing Authority and in every case neither it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in view of cash, jewellery and incriminating documents seized. Therefore, without referring the same, the learned CIT(A) is not justified in deleting the balance amount of Rs. 4,30,367/- as to that extent, the A.O. not find unexplained investment in stock. Similarly, the CIT(A) failed to appreciate than the amount of Rs. 50,000/- was surrendered by the Assessee being the profit of the firm M/s. Vertex Chemicals for five years from the Assessment Year 1985-86 to 1989-90 and the same could not be proved by the documentary evidence, therefore, the surrender was rightly considered as pertaining to the year of search and the same holds true in respect of Rs. 10,000/- being unexplained stock surrendered at the time of search. Under the facts and circumstances, the learned CIT (A) is not justified in deleting Rs. 4,30,363/- and Rs. 50,000/- and Rs. 10,000/-. Therefore, his order cannot be sustained with regard to the same." 18. These findings are not shown incorrect. The contention 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by Assessing Officer and Tribunal has also rightly affirmed the same. The judgment in Pullangode Rubber Produce Co. Ltd. (supra) therefore of no help to Assessee. 24. Then comes Division Bench judgment of this Court in CIT Vs. Radha Kishan Goel (supra). Therein question up for consideration was whether Tribunal was justified in holding that conditions laid down in explanation 5(2) of Section 271(1)(c) were fulfilled and no penalty was leviable therein. It was not a case where any statement was recorded by Authorized Officer during search and seizure operation under Section 132(4) of Act, 1961. In fact, after search and seizure conducted at the premises of Assessee on 30.08.1988, when cash, jewellery and other articles and things were found and seized, Assessee during the course of assessment proceedings, moved an application before Commissioner of Income Tax (hereinafter to be referred as 'CIT') agreeing to settle dispute. Thereupon, CIT made an endorsement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngress and egress are blocked. During the course of search person is so tortured, harassed and put to a mental agony that he loses his normal mental state of mind and at that stage it can not be expected from a person to pre-empt the statement required to be given in law as a part of his defence. In these circumstances, we are of the view that under section 132 (4) of the Act unless authorised officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance of Explanation 5(2) of the Act. We are also of the opinion that in case there is nothing to the contrary in the statement recorded under section 132 (4) of the Act, in the absence of any specific statement about the manner in which such income has been derived, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether on the facts and circumstances of the case, the Tribunal was right in law in confirming the addition of Rs. 7 lakhs as disclosed in the statement under section 132(4) of the Act but retracted thereafter?" 27. Gujarat High Court held that in normal circumstances, it would not interfere in the findings of fact recorded by Revenue Authorities and Tribunal, but it can always look into the facts whether explanation tendered by Assessee at the time of assessment has been considered by authorities below or not. An addition, if made merely on the basis of statement recorded under Section 132(4) of Act, 1961 and no cognizance taken of subsequent explanation or retracted statement, such approach on the part of Revenue Authorities is not legal. Court found as a matter of fact, therein, that statement of Assessee was recorded under Section 132(4) of Act, 1961 at mid night. In such circumstances, it was too much, to give any credit to statement 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the Assessee. The statement on oath of the Assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution." (Emphasis added) 31. The aforesaid judgments therefore, unequivocally lay down an exposition of law consistently that a statement recorded under Section 132(4) of Act, 1961 is an admission of Assessee and an important piece of evidence, but if subsequently Assessee provides an explanation or retracts from his earlier statement by supporting material to show that disclosure made in statement under Section 132(4) of Act, 1961 should not be accepted, Revenue Authorities are bound to consider such explanation or retraction or material brought on record by Assessee and thereafter, decide whether any addition is to be made in the light of statement under Section 132(4) of Act, 1961 or it require some dilution or a total rejection by accepting explanation or re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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