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TaxTMI 
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TaxTMI 
2001 (9) TMI 1136
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....f films. 3. Search action under section 132 of the Income-tax Act was carried out in the cases of Time Video Group and as such, the assessee was also covered under search action on 24-8-1995 and the last warrant of authorisation was executed on 25-9-1995. The Assessing Officer observed that during the course of search carried out at the premises of M/s. Time Video (P.) Ltd., it was found that there was suppression of production of video cassettes on a large scale. On the basis of enquiries carried out at M/s. Time Magnetics (I) Ltd., and on the basis of statement recorded of Shri Pravin C. Shah and other materials, the Assessing Officer found that there was suppression of production of audio cassettes on large scale. The statement of Shri Dhirajlal N. Shah, one of the partners of the firm was recorded under section 132(4) of the Act and he declared undisclosed income of ₹ 3 crores from different activities as follows : (i) ₹ 1 crore out of the undisclosed income from production and distribution of the film 'Humse Hai Muqabala'. (ii) ₹ 1 crore towards undisclosed income from the production and distribution of the film 'Sabse Bada Khiladi'. (iii) ₹ 1 crore....
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....ssee also filed the details regarding the estimation of income for the assessment years 1991-92 to 1995-96 at ₹ 39,37,150. The Assessing Officer, however, did not accept this estimation. The Assessing Officer referred to the statement of Shri Ashwin Visaria, employee of M/s. Time Video (P.) Ltd., which was recorded under the provisions of section 132(4) of the Act. He stated that the recording capacity of the unit is 1600 cassettes per day for 600 video cassettes recorders. He also stated that the assessee was working for two shifts. In the case of the assessee, he stated that it had 150 Nos. of VCRs. Relying on the statement of Shri Ashwin Visaria and keeping in view the statement of month-wise electricity consumption and number of cassettes submitted during the course of assessment proceedings, the Assessing Officer estimated the recording capacity at 80% during the assessment years 1993-94, 1994-95 and 1995-96. According to the Assessing Officer, the estimated production of video cassettes per year was 1,20,000 cassettes. Thus, he estimated the production of video cassettes for the assessment years 1991-92 to 1995-96 at 5,08,000 as against 3,39,882 shown in the books of ac....
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....to give a fresh finding regarding the undisclosed income earned after considering the relevant material available on record. Before setting aside the issue, the Tribunal observed that the confession might not have been retracted in accordance with law and therefore, is still relevant but it cannot be treated as conclusive. According to the Tribunal, the admission/confession is to be considered with other evidence available on record and then properly appraised. The Tribunal further observed that "It is settled law that a party to a proceeding can prove that admission made by him was erroneous and proper opportunity is to be provided to the person retracting from confession/admission. Merely because the assessee did not appear for cross-examination, it did not follow that admission has become conclusive and is not retractable. The admission could have been shown to be erroneous through other means without filing affidavit and without stepping into the witness box. Its relative importance is to be judged with reference to other material available on record. Our above conclusion is supported by the decision of the Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co....
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....ng are members of my family as per (1) Shri Dhirajlal Nanji Shah (2) Shri Hasmukh Nanji Shah (3) Shri Shamji Nanji Shah and Sabse Bada Khiladi was purchased by M/s. Time Magnetics (I) Ltd. in which myself, my brothers Shri Pravin Nanji Shah and Shri Hasmukh Nanji Shah are the Directors and India Video rights are purchased by M/s. Video Master where myself, my brother Shri Hasmukh Nanji Shah and Shri Shamji Nanji Shah are partners. The balance amount of ₹ 1 crore include the following : (1) Discrepancy on amount of the documents find seized from the office and factory and residential premises of all my family members, (2) invested in capital and the investment in jewellery and other miscellaneous household expenses." The Assessing Officer, thus, observed that from the above statements given on oath, it is quite evident that the disclosure of undisclosed income was made voluntarily and based on the facts known to him personally. According to him, subsequent retraction of statement by filing an affidavit after a month cannot dilute the evidentiary value of the statement of Shri D.N. Shah recorded on 10-3-2000. The Assessing Officer also stated that Shri D.N. Shah could not....
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....ized in Annexure A-2 from assessee's office on 25-8-1995 shows the business statement which was claimed by the assessee as received to know the overflow of the film financed by it. The Assessing Officer has, thus, stated that all these papers linked with Shri D.N. Shah's statement recorded on 25-8-1995, then it would become clear that the assessee had substantial interest in the production of that film and income earned by the assessee was not disclosed in the books of account. The Assessing Officer further observed that in the books of account produced during assessment proceedings, assessee paid ₹ 1,12,50,000 to D.M.S. Films and till the date of search, received back ₹ 1,29,00,000. The excess received of ₹ 16,50,000 was accounted for in the books of account as income from the film. It is also pointed out by the Assessing Officer that the assessee was specifically asked to show contemporary evidence to prove that its interest was limited to 10% of commission and 50% of overflow. The assessee failed to produce any such evidence as no entry was made in the books of account of the assessee till the date of search to show that the amount relates to the commission. T....
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.... not a voluntary statement. He contended that the Assessing Officer has failed to give any reason justifying his claim that the retraction filed by Shri D.N. Shah in the form of an affidavit is not valid. The learned counsel argued that the reassessment has been made without mustering any evidence or bringing on record any information or fresh evidence to justify the addition of undisclosed income from both the films to the extent of ₹ 1,83,50,000. The learned counsel referred to the order dated 28-11-1997 of the Tribunal wherein the Tribunal set aside the original assessment order with certain directions. The Assessing Officer was directed to give a fresh finding regarding the undisclosed income relating to films 'Humse Hai Muqabala' and 'Sabse Bada Khiladi', after considering all the relevant material available on record and to pass a speaking order justifying the addition proposed. The learned counsel also pointed out that the Tribunal has given an opinion in para 14 of their order that the statement under section 132(4) of the Act of Shri D.N. Shah, partner of the firm, cannot be treated as conclusive and admission/confession is to be considered with other evidence availa....
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....t in production of the film and the income earned by the assessee was not disclosed in the books of account, the learned counsel argued that it was never denied that the assessee had substantial interest but the same was in respect of the 10% commission and 50% overflow. He referred to loose papers 1 to 11 seized in Annexure A-2 for contempora- neous evidence. He also contended that letter dated 25-1-1994 addressed to D.M.S. Films constituted an understanding to finance the film 'Sabse Bada Khiladi' which was a covering letter along with a cheque of ₹ 50,000 being the first payment. According to him, there was no further agreements and the above letter of understanding itself was an agreement and it was in the office premises at the time of search. He further stated that there were several other files and documents in the office premises and not all the files and documents were seized. He also pointed out that during the course of original assessment proceedings, the explanation for loose papers 1 to 11 was called for and detailed explanation was given which has not been rejected by the Assessing Officer even in the reassessment proceedings. Regarding the contention of the As....
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....245 (Bom.), (iv) Suresh Chandra Agarwal v. Asstt. CIT [IT Appeal No. 7900 (Bom.)] of 1992 dated 12-8-1996, (v) Asstt. CIT v. Mrs. Sushiladevi S. Agarwal [1994] 49 TTJ (Ahd.) 663, (vi) Deepchand & Co. v. Asstt. CIT [1995] 51 TTJ (Bom.) 421, (vii) Gaurishankar Omkarmal v. ITO [1990] 37 TTJ (Ahd.) 353. 8. The learned DR contended that the statement of Shri D.N. Shah, one of the partners of the assessee firm recorded under section 132(4) of the Act, during the course of search operation was without any pressure or duress as has been contended by the learned counsel. He argued that while computing the undisclosed income, reliance has been placed on the seized material and not on the appraisal report prepared by the search party. He invited our attention to pages 13 to 16 of the paper book filed by the Department. On page No. 13, the documents seized from the residence of Shri D.N. Shah have been discussed. Annexure-A is a bunch of 13 loose papers, pages 1 and 2 contained rough scribblings which according to the learned DR are connected with the films made by the group. He referred to the notings mentioned on the front side of page No. 1 as follows : "10 Sargam-Bangalore 14,....
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....o his business transactions. The learned DR also made reference to question No. 18 wherein though Shri D.N. Shah has admitted that the papers are written in his own hand-writing but regarding the contents, he did not make any categorical statement. Similarly, Shri D.N. Shah has not clearly mentioned regarding the entries on page No. 1 of the seized paper in response to question No. 20 when he was asked by the search party. The learned DR contended that writing ₹ 5 or ₹ 3.5 on these papers are quite irrelevant. According to him, the assessee had not given proper answer to the questions put to him during the course of search which also goes to prove that the statement of Shri D.N. Shah was recorded without any duress or pressure, otherwise Shri D.N. Shah could not have escaped by giving irrelevant replies even to very straight questions. According to the learned DR, the entries on the seized papers are nothing but cash collections from various territories. The learned DR also invited our attention to page No. 34 of the Departmental paper book and contended that the assessee had made payment in cash of ₹ 3,91,800 as per Annexure-A of page 97 of seized papers. He argu....
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....essee's paper book and contended that the scribblings pertains to the film 'Humse Hai Muqabala' and the figures mentioned over there are regarding the payment in cash. He also referred to pages 57 and 58 of the assessee's paper book and contended that there are cash payment of ₹ 1 lakh for the film 'Humse Hai Muqabala' on page No. 57 and on page No. 58, cash being received in connection with the same film. The learned DR, therefore, contended that as per the seized material, huge amount of cash has been paid and received. Therefore, the declaration made by Shri D.N. Shah of ₹ 2 crores of undisclosed income in his statement under section 132(4) of the Act was made in the background of seized material. He also argued that no pressure was applied on Shri D.N. Shah for making the declaration of undisclosed income from both the films. He invited our attention to pages 59, 13 and 22 of the Departmental paper book and contended that blank cheques were found during the course of search, cash payments have been made which runs into several lakhs, therefore, the disclosure is fully supported by these documents. The learned DR also made reference to the film distribution in Dubai ....
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....00,000 (ii) Unaccounted earning from film 'Sabse Bada Khiladi' ₹ 1,00,00,000 (iii) Discrepancy in books of account, investment in capital, jewellery ₹ 1,00,00,000 and household expenses ₹ 3,00,00,000 The Assessing Officer passed the original order under section 158BC on 25-9-1996 by determining the undisclosed income of the assessee at ₹ 2,84,37,080 comprising the following amounts : (i) Undisclosed income from production and sale of video cassettes ₹ 1,00,87,080 (ii) Undisclosed income from share of profits from 'Humse Hai Muqabala' ₹ 1,00,00,000 (iii) Undisclosed income from 'Sabse Bada Khiladi' ₹ 83,50,000 ₹ 2,84,37,080 On appeal, the Tribunal vide their order dated 28-11-1997 deleted the addition of ₹ 1,00,87,080 except the disclosed amount of ₹ 39,37,150 in the block return filed by the assessee. The other two additions were set aside by the Tribunal for fresh finding regarding the undisclosed income earned after consideration of all relevant material available on record. The Assessing Officer passed the reassessment order on 29-3-2000 retaining the above two additions. According to the Revenu....
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....t him. The fact that "He had paid or agreed to be paid ₹ 3 crores, the amount was divided into four parts and the shares were divided in between Venus and myself" is known to him only and the search party cannot come to know such facts unless there is an evidence available from seized documents. Therefore, the search party was not required to put any pressure on him for certain facts which were known to him only. The search party can put pressure, if any, for disclosure and not for certain facts which were known to him only. Therefore, the facts regarding undisclosed income of ₹ 3 crores were disclosed by him spontaneously, without any duress or pressure. Again in question No. 6, when he was asked regarding the bunch of loose papers as per Annexure-A and the receipt of cash of ₹ 69.76 lakhs mentioned on such papers he simply stated that "Whatever written in page 1A with blue ink is not my hand-writing". If any pressure or duress would have been applied on him, his answer would not have been so simple and he would have been forced to accept the ownership of such papers alongwith the amount mentioned thereon. This clearly establishes that he was ....
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....all my family members. (2) Invested in capital and the investment in jewellery and other miscellaneous household expenses." The deposition made above is quite specific and in our opinion such specific replies cannot be dictated by anybody who is not aware of such specific details of the business, its conduct and sharing of profits. These facts were known to Shri D.N. Shah only and he voluntarily disclosed such facts before the search party. There is no indication whatsoever from the above answers given by Shri D.N. Shah that any duress or pressure was used by the search party. The statement of Shri D.N. Shah recorded on 24-8-1995 is also quite relevant to support the contention of the Department that the search party did not use any duress or force while recording the statement. Shri D.N. Shah was asked to explain the nature of various documents seized from his residence. His replies were quite evasive which proves beyond doubt that the search party did not use any duress otherwise he would have not been allowed to give evasive answers. In reply to question No. 20, he explained that figure 10.00 against Sargam, Bangalore is ₹ 10 only. The transaction in film industry ar....
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....n account of threat, coercion or undue influence. Moreover, merely writing would not have been enough. Shri D.N. Shah should have brought to the notice of the higher authorities what actual threat, coercion or undue influence was exercised by the search party so that the same could have been verified with the witnesses who were thereat the time of search. Shri D.N. Shah never made any efforts to inform the higher authorities regarding the duress used by the search party for extracting the disclosure made by him and has filed the affidavit without any supporting evidence. It appears that Shri D.N. Shah has made an effort by filing the affidavit to frustrate the efforts of the Department to bring to tax the undisclosed income of the assessee which he admitted during the course of search. Under the circumstances, we are of the considered opinion that the Department did not use any force or coercion for recording the statement of Shri D.N. Shah and the same was made voluntarily. 10. So far as the arguments of the learned counsel regarding the retraction of the statements of Shri D.N. Shah recorded under section 132(4) of the Act are concerned, we find nothing on record to indicate tha....
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....f Shri D.N. Shah was recorded under coercion and by use of force by the search party which resulted in the disclosure of undisclosed income of ₹ 3 crores. The statement was given by Shri D.N. Shah voluntarily as we have discussed above. It is quite usual for persons whose premises are subjected to search to send complaints of unfounded allegation with the view to escape from the consequences and from disclosures made during the course of search. The assessee had not obtained any statement or affidavit from the witnesses in support of the plea that the statement of Shri D.N. Shah was obtained by coercion or intimidation. So the assessee has totally failed to discharge the burden of proving that fact. Therefore, we do not find any force in the retraction filed by Shri D.N. Shah. 12. Coming to the factor of communications made with higher authorities, we do not find anything on record which would indicate the efforts made by the assessee to bring into the notice of the higher authorities, the methods used by the search party to extract the disclosure of ₹ 3 crores from Shri D.N. Shah in his statement recorded under section 132(4) of the Act. Section 132 of the Income-tax ....
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.... threat, coercion or undue influence was exercised is also required to be spelt out so that its veracity could be verified with the witnesses who were there at the time of search. But in the present case, Shri D.N. Shah neither met the higher authorities personally nor he made any written communication with higher authorities immediately after recording his statement regarding the duress or coercion used by the search party for extracting the disclosure of undisclosed income of ₹ 3 crores. Shri D.N. Shah also did not bring into the notice of the higher authorities, the particular form of force or intimidation used by the search party. Under the circumstances, the retraction made by Shri D.N. Shah after about a month of recording the statement under section 132(4) of the Act is an afterthought to cover up the undisclosed income. The affidavit filed by Shri D.N. Shah is not supported by any evidence whatsoever, therefore, the same has been rightly rejected by the Assessing Officer as the same does not inspire any confidence. During the course of search, a number of documents were seized by the search party. The documents seized contains various types of financial transactions w....
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....ted in his statement that part of the writing on page Nos. 1 and 1A which are in blue ink are written by him. It appears from the notings that page Nos. 1 and 1A are related to each other as figures of 3.8 lakhs, 55 lakhs, 14 lakhs and 76 lakhs are there in both pages. This is quite obvious from these pages that the assessee is having unaccounted transactions running into crores in his film business. Annexure-A to page 97 seized from Ratnajyoti Industrial Estate (Departmental paper book page 34) indicates that the assessee was making large amount of payment in cash which have not been reflected in the books of account. It was brought to our notice by the learned DR that no explanation was given at the time of search with respect to these cash payments. This also supports the view that the assessee was indulging in cash transactions on a large scale. It was also found during the course of search that the assessee was having large number of vouchers for expenditure which were signed but the amount of disbursement was not mentioned. This evidence also establishes the modus operandi of the assessee for manipulating the expenditure. The assessee did not give any explanation of these vou....
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.... revealed that one of the main persons of the group was booked under FERA/COFEPOSA and was behind bar for a long time. The various documents mentioned above are quite indicative regarding the large scale indulgence of the assessee in cash transactions which runs into crores of rupees. Therefore, the disclosure made by Shri D.N. Shah of ₹ 3 crores under section 132(4) of the Act, is fully supported by the documents seized during the course of search. After going through the facts and circumstances of this case, we find that the addition made by the Assessing Officer at ₹ 1,83,50,000 is quite insignificant and the same does not require any interference from our side. 14. The learned counsel also relied upon various court cases to support his contention, as has been mentioned above. The first case relied upon by the learned counsel is Krishan (supra). In this case, the Hon'ble Supreme Court has held that the admission made in ignorance of legal rights or under duress cannot bind the maker of the admission. We do not find any force in the contention of the learned counsel because in the present case, the admission has been made by Shri D.N. Shah, partner of the assessee fi....
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....horities with the explanation, how his statement was recorded under coercion. The assessee filed only an affidavit after about a gap of one month, after recording the statement wherein he has mentioned that his statement was recorded under duress. There is a vast difference in filing the retraction after the gap of about one month and filing the same on the very next day from recording the statement. Therefore, we are unable to find any similarity between the facts of the present case and the facts of the case relied upon by the learned counsel mentioned above. Under the circumstances, this case is also not relevant for deciding the issues involved in the present case. In the case of Mrs. Sushiladevi S. Agarwal (supra), the Assessing Officer made additions due to incoherence and variation in assessee's statements on different dates which the Tribunal found was not justified. It has also been pointed out in the above case that the assessee was unwell during the search. It has been further stated that in spite of persistent request vendor's books were not subjected to chemical examination which could reveal forgery. Thus, the facts in this case are entirely different from the facts o....