2013 (2) TMI 48 - HC - Income Tax

Income addition of Rs 1.75 crore upheld based on voluntary statements under section 132(4); assessee bears burden to disprove admission

HC upheld ITAT's reversal of CIT(A) and sustained an income addition of Rs.1.75 crore based on voluntary statements recorded u/s 132(4) and a subsequent ... Addition on the basis of statements made u/s 132 (4) during the course of search - Whether the ITAT was justified in law in reversing the decision of CIT(A) and sustaining the addition of Rs.1,75,00,000 made solely on the basis of statements recorded at the time of search and as modified vide subsequent letter dated 09.01.2006 in the absence of any evidence including corroborative evidence discovered during the course of search? Held that:- In the present case no material has been produced by the appellant/assessee to show that the admission made by him was incorrect in any way. On the other hand, it is the assessee who is insisting that it is for the department to corroborate the statement of admission made by him and until and unless the department corroborates the same, the statement cannot be relied upon. We are afraid that is not the correct position of law. The admission once made can certainly be retracted, if the circumstances permit, and it can also be shown to have been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. In this case it is the appellant/assessee who has admitted and surrendered a sum of Rs.1.75 crores as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the said admission was incorrect. He had access to all the documents which has been seized in as much as the copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. That being the position, the appellant/assessee cannot resile from his earlier statement made on 10-11.11.2005 and 21.11.2005. Although, appellant submitted that the letter dated 09.01.2006 was not an afterthought in as much as the ground for the same had been made in the statement recorded on 21.11.2005. We do not agree with this submission of the learned counsel for the appellant. The reason being that there is no mention of any documents in the letter dated 09.01.2006. As decided in statements recorded u/s 132 (4) are clearly relevant and admissible and they can be used as evidence. In fact, once there is a clear admission, voluntarily made, on the part of the assessee, that would constitute a good piece of evidence at the hands of the Revenue. See Pullangode Rubber Products Co. Ltd. Vs. State of Kerala [1971 (9) TMI 64 - SUPREME COURT]. Thus issues raised pertain merely to appreciation of evidence, which the Tribunal has appreciated correctly - against assessee. Issues:Appeal against Income Tax Appellate Tribunal's decision on addition of Rs.1.75 crores based on statements made by assessee during search.Detailed Analysis:1. Statement of Facts:The appellant filed an appeal against the Income Tax Appellate Tribunal's decision on the addition of Rs.1.75 crores based on statements made by the assessee during a search conducted in 2005. The Tribunal reversed the decision of the Commissioner, Income Tax (Appeals) and upheld the Assessing Officer's decision.2. Substantial Question of Law:The appellant proposed a question challenging the Tribunal's decision, questioning the justification of the addition solely based on the statements made during the search. However, the court found this question not to be substantial.3. Statements by the Assessee:The appellant made two statements during the search, surrendering Rs.1 crore initially and an additional Rs.75 lakhs later on behalf of family members and firms. The appellant requested no penal measures and promised to provide a breakdown of the disclosed income.4. Tribunal's Analysis:The Tribunal examined the statements and a subsequent letter by the appellant. It noted that the appellant did not retract the statements but added a qualification pending verification of seized documents. The Tribunal found no coercion or threat from revenue authorities and concluded that the statements were not retracted.5. Legal Position:The appellant contended that an admission could be retracted and sought corroboration from the department. However, the court emphasized that the onus was on the appellant to prove the admission was incorrect, which was not done in this case.6. Admissions and Evidence:The court referred to legal precedents stating that admissions are crucial evidence but not conclusive. The voluntarily made statements by the appellant were relevant and admissible as evidence.7. Circular and Bifurcation:The appellant argued based on a circular and sought bifurcation of the surrendered amount. However, the court found the circular irrelevant and emphasized that the letter requesting bifurcation was an afterthought.8. Conclusion:The court dismissed the appeal, stating that there was no substantial question of law. The issues raised were related to evidence appreciation, which the Tribunal had correctly assessed. The appellant failed to prove the admission was incorrect, leading to the dismissal of the appeal.9. Costs:The court made no order as to costs in this matter.This detailed analysis covers the key aspects of the judgment, including the statements made by the assessee, the Tribunal's analysis, legal positions on admissions and evidence, and the court's final decision to dismiss the appeal.