2010 (7) TMI 211 - HC - Income Tax

Income addition upheld based on survey statement under Section 133A; delayed, unsupported retraction and diary entries rejected

BACHITTAR SINGH Versus COMMISSIONER OF INCOME-TAX AND ANOTHER

HC upheld the Tribunal's addition of income from undisclosed sources based on the assessee's statement recorded during survey u/s 133A. The assessee's ... Income from undisclosed sources - course of survey u/s 133A - retracted statement - assessee failed to produce the books of account or contemporaneous record of the period during which agricultural income was earned - HELD THAT:- It is not disputed that the statement was made by the assessee at the time of survey, which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months.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 circum-stances, 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. As regards the judgments in Pullangode Rubber Produce Co. [1971 (9) TMI 64 - SUPREME COURT] and Ester Industries Limited [2009 (3) TMI 11 - DELHI HIGH COURT] relied upon by the assessee, even though it may be open to show an earlier statement or an entry to be erroneous, in the present case, the Tribunal was justified in holding that the earlier statement was not proved to be incorrect. As regards the judgment of the Madras High Court in S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT], we are of the view that even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. The Tribunal rightly followed the observations of the Allahabad High Court in Dr. S. C. Gupta [1999 (11) TMI 9 - ALLAHABAD HIGH COURT] and of this court in Surinder Kumar [2005 (12) TMI 57 - PUNJAB AND HARYANA HIGH COURT]. Thus, the view taken by the Tribunal cannot be held to be perverse or illegal. Appeal is dismissed. Issues:1. Addition of Rs. 19 lakhs based on a statement during survey and subsequent retraction.2. Explanation of source of investment through entries in a diary seized during survey.3. Ignoring decision of co-ordinate Bench in similar circumstances.Analysis:1. The appeal involved the assessment year 2003-04 under the Income-tax Act, 1961. The assessee, an individual, surrendered Rs. 19 lakhs during a survey under section 133A, claiming it was from the purchase of a property jointly with his brother. However, he later retracted this statement, citing agricultural income as the source. The Assessing Officer rejected this, relying on the long gap between the statements and case law. The Commissioner of Income-tax (Appeals) accepted the retraction, but the Tribunal disagreed, emphasizing the importance of the initial voluntary statement and lack of contemporaneous evidence for the claimed agricultural income. The Tribunal held the burden was on the assessee to prove the original statement wrong, citing case law like Surinder Kumar Charanjit Kumar v. CIT [2006] 282 ITR 78.2. The appellant argued that the retracted statement could be proven wrong, citing relevant judgments. However, the Tribunal upheld its decision, emphasizing the need for early retraction and the significance of the initial voluntary statement. The Tribunal reasoned that the mere existence of diary entries was insufficient to disprove the original statement, especially in the absence of proper accounting records or evidence of agricultural income. The Tribunal's decision was supported by case law and deemed reasonable and legally sound.3. The appellant's reliance on judgments like Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 and Ester Industries Ltd. v. CIT [2009] 316 ITR 260 was deemed unconvincing by the Tribunal. The Tribunal found the earlier statement was not proven incorrect and held that the statement under section 133A, though not equivalent to section 132(4), was still relevant in the absence of proper records. The Tribunal's decision aligned with legal precedents and was considered valid. Ultimately, the court dismissed the appeal, stating no substantial question of law arose from the case.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the court's reasoning behind its decision.