TaxTMI 
TaxTMI 
2008 (9) TMI 525
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....f the said firm and the partners thereof including the assessee on November 4, 1988. A statement of the assessee under section 132(4) was recorded and during the course of the statement, the assessee made a disclosure of Rs. 7 lakhs as follows : Rs. Unaccounted investment in house property 4,00,000 Unaccounted cash 1,00,000 Unaccounted investment in furniture 1,00,000 Unaccounted investment in gold ornaments 1,00,000 Total 7,00,000 3. Later on in January, 1989 the assessee retracted the disclosure and stated that the disclosure of Rs. 50,000 only was acceptable to him. It was submitted before the Assessing Officer that the disclosure of Rs. 7 lakhs was made under pressure and coercion and that no note should be taken of it while completing the assessment. Noting that the disclosure of Rs. 7 lakhs was made under section 132(4) in November, 1988 and the assessee retracted from the same only in January, 1989, i.e., after a lapse of two months, the Assessing Officer held that the assessee did not have any reason for retracting the disclosure made under section 132. Further, vide his detailed order, the Assessing Officer gave supporting reasons for making an ....
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....ellaneous Application No. 49/ Ahd/1997. 7. On the above premises the above referred question of law is referred for the opinion of this court. 8. Mr. J. P. Shah, learned advocate appearing for the applicant-assessee has strongly urged that all the three authorities have not considered the retraction made by the assessee in its true perspective. The said statement was not a voluntary statement and the assessee was tortured, coerced and under great tension and pressure the said statement was recorded. He has, therefore, submitted that the said statement was not a voluntary statement. He has further submitted that the statement recorded by the searching party under section 132(4) was subsequently retracted and detailed affidavit was filed by the assessee. An explanation was given for each and every item under which addition was made. Based on this explanation, which was not considered by both the appellate authorities, no addition could have been made. He has, therefore, submitted that the orders of all the three authorities below are required to be quashed and set aside, except an addition of Rs. 1,00,000 made and/or confirmed on account of unaccounted cash found during the cours....
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..... Usually telephone and all other connections are disconnected and all ingress 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 cannot be expected from a person to pre-empt the statement required to be given in law as a part of his defence. 13. He has further relied on the Instruction dated March 10, 2003, issued by the Central Board of Direct Taxes, which states that instances have come to the notice of the Board where assessees have claimed that they have forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based on credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. This instruction further states that it is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed bef....
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.... reported in [1997] 3 SCC 721, wherein it is held that there is no prohibition under the Evidence Act to rely upon a retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. Practice and prudence require that the court could examine the evidence adduced by the prosecution to find out whether there were any other facts and circumstances to corroborate the retracted confession. 18. She has further relied on the decision of the Kerala High Court in the case of V. Kunhambu and Sons v. CIT reported in [1996] 219 ITR 235, wherein it is held that the assessment was based on the statement of the assessee. Since no case had been made that the statement was made under a mistaken belief of fact or law and the statement being voluntary one there was no scope for the assessee to challenge the correctness of the assessment. 19. She has further relied on the decision of the hon'ble Supreme Court in the case of CIT v. D. L. F. United reported in [2000] 243 ITR 855, wherein it is held that the Income-tax Appellate Tribunal is the final fact finding authority and it had decided against the assessee. The High Court ought not to have entered into ....
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....afterthought and made under legal advice. However, if such retraction is to be viewed in the light of the evidence furnished along with the affidavit, it would immediately be clear that the assessee has given proper explanation for all the items under which disclosure was sought to be obtained from the assessee. So far as the amount invested in house property is concerned, the assessee has specifically stated in his explanation dated February 28, 1989, that there was absolutely no basis for making the disclosure on account of bungalow at 68, Sarjan Society, Athwa Lines, Surat. It was in the year 1964 that the assessee took one Plot No. 68 in Sarjan Co-operative Housing Society which was also constructing the bungalow for which the assessee claimed to have been made contribution from time to time. The assessee took possession of the bungalow in 1974 when only ground floor was constructed. Since then he has been living there. The assessee has constructed first floor during 1986 to 1988 and he has incurred the expenses for first floor structure to the tune of Rs. 2,03,185.65, but this amount has been withdrawn from the account of the firm in which the assessee is a partner. As per say....
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....making withdrawal from the firm's account. It is further submitted that the furniture on the first floor was partly received and paid out of withdrawals from the firm. At the time of the search additional furniture meant for the first floor was just received by way of parcel from Ahmedabad and was lying in bundles. A detailed source of investment of furniture purchased from Ahmedabad with a due confirmation from the party concerned have been filed by the assessee before the Assessing Officer. Since no payment of this additional furniture was made by the assessee till the date of search, no addition could have been made on this count. 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corro....