TaxTMI 
TaxTMI 
2016 (5) TMI 1304
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.... Tribunal, with the consent of the parties all the appeals are being decided by this common order for the sake of convenience. 2. The brief facts are that a search and seizure operation was carried on 9.11.1995 under Section 132(1) of the Income Tax Act, 1961, at the residential and business premises of the above assessees situate at A-8, Shyam Nagar, Jaipur. During the course of search, bank lockers standing in the name of various family members were also searched on 14.11.1995. As a result, cash, FDRs and incriminating documents were found, seized and taken in possession by the authorised officers of the Revenue. Statements of various members of the family were recorded by the officers under Section 132(4) of the Act. In the statements recorded, Ravi Mathur, who is the key person involved in the various business activities, admitted and surrendered undisclosed investment in the various on-going projects and admitted receipt of un-accounted money from various purchasers of plots. It appears that though the assessee agreed to surrender certain amount on the basis of incriminating documents, cash, jewellery etc., in statements recorded under Section 132(4) on 9.11.1995 and later, h....
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....year out of undisclosed investment in Dream House Developers and Colonizers (DHD&C) [Smt. Prem Kumari Mathur was said to be the Proprietor of the said concern]. 4.1 Learned counsel for the Revenue contended that Ravi Mathur, who himself is one of the biggest builders of Jaipur and is a highly experienced and qualified person, a civil engineer by profession, during the course of investigation clearly depicted that total investment, is of an amount of Rs. 73,50,000/- as the building Ashiyana Apartment is 75% complete and only Rs. 45 lakh was recorded in the books of account and, therefore, he agreed to surrender an amount of Rs. 28,50,000/-. The matter was referred to the District Valuation Officer, who valued the property as on the date of search at Rs. 87,70,000/- and, since there was wide gap in between the value as per District Valuation Officer on the one hand and the value disclosed in the books of account on the other hand, therefore, the addition was rightly made. He contended that the Tribunal, on assumption and presumptions, came to the conclusion that the valuation was made on a later date when the Valuation Officer himself had in the Valuation Report clearly stated that ....
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.... later-on partitioned and Tribunal merely considering the contention of the assessee without going into detail has accepted the contention of the assessee and has deleted the addition on account of capital gain either in the hands of R.B. Mathur or even in the hands recipient, the three alleged co-owners Ravi Mathur, Smt. Prem Kumari Mathur and Anuj Mathur, therefore, he contended that the addition was rightly made and has wrongly been deleted by the Tribunal. Alternatively he contended that capital gain arose on transfer/contribution on 24.7.1994 and at-least capital gain arose in either hands. 4.4 Per contra, learned counsel for the assessee vehemently contended that the valuation was made on a later date, by which time further construction had taken place and there being no other material, the addition was rightly deleted by the Tribunal. He further contended that in a case of block assessment, whatever undisclosed income/asset is found, is required to be considered and not what has been disclosed in the books of account. He further contended that insofar as the property is concerned, the District Valuation Officer assessed the value as on 7.3.1996 and not as on 9.11.1995, and....
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.... have been allowed and insofar as the balance Jewellery is concerned, the same was received at the time of wedding by the wives of Ravi and Anuj Mathur. 5.2 Per contra, learned counsel for the assessee contended that the addition in respect of Jewellery was rightly deleted. He contended that admittedly Smt. Prem Kumari Mathur is an existing Wealth Tax assessee, and other than Smt. Prem Kumari Mathur there were two more female members who under the customs and tradition certainly received Jewellery at the time of wedding as the same is being given by both sides and which is quite reasonable, not excessive or unreasonable. Insofar as loose papers depicting Jewellery are concerned, they were also part of the same Jewellery relating to the other two female members, and thus the addition was rightly deleted. c . Medical expenses : Addition of Rs. 99,880/- 6. Another addition made by the AO is on account of medical treatment in London undertaken by Smt. Prem Kumari Mathur, mother of Ravi Mathur and wife of R.B. Mathur, who was accompanied by few family members and during the course of investigation the AO noticed Annexure - 'P' of panchnama dated 9.11.1995 where eight p....
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....ven raw food from India like flour, oil, ghee etc. with them for cooking on their own, which could not have been accepted by any plausible explanation and at-least from the members of the status of appellants. Thus, he contended that addition was just and proper and Tribunal wrongly deleted the same on a perverse finding. 6.2 Per contra, learned counsel for the assessee contended that there was no material before the AO to assume any expenditure over and above the incriminating material, and thus the Tribunal was just and proper in deleting the assumed/estimated addition. He further contended that all the family members stayed in one-room apartment and had carried all the raw food - like flour, oil, ghee etc., and including cost of tickets, and other expenditure not exceeding Rs. 20,000/- was incurred per head and when the members were going for treatment then certainly the focus was only on treatment. He further contended that in block assessment the AO cannot travel beyond the material found in search and estimated addition or assumption is uncalled for, therefore, the Tribunal had rightly deleted the addition. d . Seized documents : Addition of Rs. 44,28,500/- 7. The learned....
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....e No.552/7 at Raja Park, purchased by the family members of the assessee. It was found noticed that three sale-deeds were executed. It was noticed by the AO that though the property was said to have been purchased for a consideration of Rs. 10,80,000/-, however, the Sub-Registrar at the time of registration of the document, took into consideration the DLC value of Rs. 17,56,500/- and an additional stamp duty was charged by the Sub- Registrar. The AO was of the view that on or about the date when the said property was purchased, another property which was known as 'Ashiyana Apartment', D-29, Shanti Path, Patrakar Colony, Jaipur, was valued @ Rs. 4600/- per sq.yd., by the assessee's own approved valuer Shri S.K. Gupta vide report dated 1.2.1995, and taking into consideration the fact that the property 552/7, Raja Park, measuring 508.33 sq.yd. the value of the same was shown at Rs. 2,125/- per sq.yd., which was almost half the value shown of 'Ashiyana Apartment' and within the same locality and near vicinity, and AO noticed that the instant property at Raja Park was also equally, if not better in a posh colony/locality, was not encumbered with any statutory tenancy....
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....ave a few instances depicted in the above annexures to bring home about transactions made on regular basis and found that such instances were not disclosed in the regular returns of family members. 9.1 Learned counsel for the Revenue contended that clear instances were given by the AO based on the incriminating documents itself found at the residential and business premises of the assessee and when specific instances were there, the Tribunal in a summary manner ought not to have deleted the addition. How and on what basis Tribunal came to a conclusion that the transactions are recorded, when neither during the course of block assessment nor even before Tribunal it was proved, how the transactions were recorded. He contended that finding by Tribunal is wholly perverse and Tribunal has merely deleted the addition without any basis. 9.2 Per contra, learned counsel for the assessee contended that reasonable and plausible explanation was offered and addition could have been made only if specific instance of undisclosed/unexplained expenditure was found and not otherwise, and thus contended that finding of the Tribunal that in a block assessment, addition if at all, could be made, if s....
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....give our own view on questions posed by the Revenue. 15. In our view, the statements recorded under Section 132(4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9.11.1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In ou....
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....ered for taxation a sum of Rs. 19 lakh stating therein that he had purchased shop no.5-A, New Cloth Market, Ambala City, for Rs. 24 lakh jointly with his brother and source of investment was not reflected in the books of account. Later the assessee sought to resile from the said statement by taking stand that he had agricultural income to that effect, the investment was from that source, he had done potato business which was evidenced by entries in a diary found during the survey, he also produced other evidence in support of his claim. The AO rejected the stand holding that there was a long gap between the statement made originally on 21.3.2003 and retraction of the said statement on 28.5.2003 (less than three months), and the stand taken was afterthought. It was also claimed that the said statement was not at par with the statement made under Section 132(4) of the Act on oath. However, the Tribunal held that retraction from the statement had to be at the earliest opportunity in the absence of which voluntary statement recorded in the presence of family members was an important material, which could be acted upon. The Punjab & Haryana High Court upheld the finding of the Tribunal,....
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....ed that the assessee would retain documents regarding the concealment of income. If documents for every concealment are insisted to be searched, practically the provision for block assessment would be defeated. We cannot shut our eyes to the legislative intent. Here, what was disclosed that for sale, no bills are issued, but paper slips are issued with the price. Though carbon copy is retained it did not contain the sale price. Sale slips are destroyed then and there. Cash books are maintained by recording the 80 per cent of the price of liquor at a later date. When such practices are adopted, nobody can expect evidence for every year in a block period. What is possible is only to have a best judgment assessment on the basis of the evidence collected during search. The Assessing Officer is authorised and empowered to make block assessment in a judicious manner on the basis of the materials disclosed during the search under section 132 of the Income-tax Act." 15.6 In the case of CIT v. O. Abdul Razak (supra), on the basis of seized documents recovered during search, addition was made with respect to purchase of lands on the strength of the admission made by the assessee regarding t....
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....original or at the appellate stage that the assessee had only paid amounts as disclosed in the documents for the various property transactions entered into by him. The assessee having not proved any threat or coercion and further having failed to prove that the amounts shown in the documents were the only payments made, the Tribunal was not right in casting a burden on the Department. The assessee, in the instant case, has failed to successfully disprove the admissions made by him and the admissions made in a statement under section 132(4), by the clear provisions in the statute has to be considered to have evidentiary value. In the circumstances, we proceed to answer the first question of law in favour of the Revenue and against the assessee. 13. The sustainability of the additions made by the Assessing Officer with respect to undisclosed income vis-à-vis the property transactions as also that made on account of personal expenditure has to be decided with reference to the answer in the first question, since both additions are on account of admissions made in section 132(4) statement corroborated by documents recovered in search and the attendant circumstances. The Tribunal....
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....the assessee thereafter too participated in the enquiry until 2003 and he had no doubt about the truthfulness of the statement made. However, for some reason best known to him, the assessee in the letter on 26.6.2003, took a plea that the statement were not recorded in the presence of Dy. Director of IT (Inv.) and statements were not given voluntarily. It may be seen that the assessee is stated to have written letters on 12th June, 2003 and 26th June, 2003 and it is relevant to point out that the so-called retraction came to be made only in the letter dt. 26th June, 2003, which clearly shows that it is merely an afterthought to say that he made the statement under threat or coercion. Consequently, this ground fails." 15.8 The Apex Court in the case of Surjeet Singh Chhabra v. Union of India & Others AIR 1977 SC 2560, which was a case of Customs Act, where even the retraction was made within six days from the confession, held as under :- "3. It is true that the petitioner had confessed that he purchased the gold and had brought it. He admitted that he purchased the gold and converted it as a Kara. In this situation, bringing the gold without permission of the authority is in cont....
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....turn till the date of search and even after search the assessee had shown the income as "nil" for the assessment year 1993-94. When the assessee was asked to prove the genuineness of the cash credit, it had failed to discharge its burden. When the assessee had filed the return in response to the notice after search, the income which had not been taxed or shown can be assessed as "undisclosed income" of the assessee. Admittedly, Rs. 41,400 had never been offered for tax and it was never shown as income of the assessee, the entries of these deposits were found in the regular cash books maintained by the assessee. When the entries were found in the books of the assessee, the assessee could not explain the genuineness of the deposits, this amount was never disclosed, it is an undisclosed income of the assessee. The Tribunal has committed an error in holding that as the entries were found in the regular books of account, therefore, it cannot be treated as undisclosed income. The view is contrary to the provisions of Chapter XIV-B of the Income Tax Act, 1961. In Chapter XIV-B of the Act, special provisions for assessment in search cases have been given and if any amount of income has n....
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....ssession of the property was given to M/s. DHD&C, a sister concern or a firm floated by the family members, and the same was valued at Rs. 45 lakh and a formal agreement was made on 24.7.1994 and possession handed over. While the AO, after cost inflation index held capital gain to the tune of Rs. 40,51,153/- in the hand of R.B. Mathur on substantive basis and out of abundant pre-caution since it was claimed to be belonging to Ravi Mathur, Smt. Prem Kumari Mathur and Anuj Mathur on protective basis assessed in their respective hands to the extent of 1/3 each. However, Tribunal has in a cursory manner deleted the addition holding that the property was part of HUF of R.B. Mathur and though there was an agreement with Smt. Prem Kumari Mathur of DHD&C but no capital gain has been charged as property was not sold and whenever the same shall be sold, the property will invite capital gain. We fail to understand the finding of the Tribunal in this regard. It was argued that the Tribunal has gone wrong in proceeding to consider Section 45(2) of the Act when the property was taken in stock in trade by the owner himself and argued that in the instant case the provisions of Section 45(3) of th....
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....o the extent of 500 gram per married lady, 250 gram per unmarried lady and 100 gram per male member need not be seized at the time of search but in our considered opinion the same is not restrictive for seizure purposes but can be held to be a reasonable explanation even for the purposes of assessment and thus we hold the jewellery found was reasonable and the Tribunal is justified in deleting the addition and this question is answered against the Revenue and in favour of the assessee. Medical expenses : Addition of Rs. 99,880/- in four hands 16.4 Taking into consideration the facts, we are not persuaded with the way the claim has been put forth that all the family members of the status of the family to which it belongs, could practically stay in a single room apartment and on top of it, could have carried raw food like flour, oil, ghee etc. from India for cooking by the family members in London, though the Tribunal observes in para 17 "In our considered view assessee and his family enjoying a very high status and they are the persons of very good repute. Therefore, they will not ask for any help or assistance from friends, relatives and Jaycees members." In our view, this findi....
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....way the Tribunal has deleted the said addition. Admittedly, the documents were found in the custody, control and possession of the assessee, who had also during the course of search, given statement under Section 132(4) of the Act and it is not the case of the assessee that immediately after the search, the said statements were retracted. During the course of hearing, we inquired from the learned counsel for the assessee as to in what manner retraction was made, but he was unable to bring on record the manner in which retraction, if any, was made before the AO. We have already reproduced the relevant para of learned AO in para 15, where the learned AO observes that retraction is now attempted to be made, and thus we have discarded the theory of retraction. 16.6 Since the learned counsel for the assessee has not placed any material or even a letter, if any, of coercion/pressure or/and the manner of retraction, we fail to understand as to how the Tribunal came to the aforesaid conclusion in deleting the addition. In our view, the deletion of addition merely because the statements on oath under Section 132(4) were retracted at the time of assessment, is perverse. 16.7 It would also ....
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....onstituted as partly having been received along with the advance at the time of booking of the flats and balance was to be received subsequently towards full consideration of the property under construction. 16.10 The AO on page 21, has explained the manner in which the statements were given by Ravi Mathur, and it would be appropriate to quote few lines of the Assessment Order which reads ad infra :- "...in the preliminary statement (answer to Q. No.15 page 13) as coded in lakhs; these were explained (refer final statement Q. No.1) to be constituted as partly received along with the advance at the time of booking of the flats and the balance was to be received subsequently as towards full consideration of the property under construction. This was done by the assessee in the final statement after considerable thought, and after refering to the various documents such as the Valuers Report which had been drawn at the time the project was still at a concept stage, i.e. it must have formed part of the project report.." Thus, the AO has found that Ravi Mathur who himself is a technical person, a Civil Engineer and one of the big builders, after analysing the various documents, agreed....
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....was torn on the day of search relating to this property. Thus, Tribunal would redecide this issue afresh in accordance with law. Purchase & sale of plots : Addition of Rs. 2,29,533/- in various hands 16.14 We have taken note of the submissions. In our view, the AO gave several instances and referred to many annexures which have been taken into consideration by the AO and the AO pin-pointedly observed about many agreements/notings/papers depicting purchase/sale of many plots in question and the AO had clearly pointed out that they are neither recorded nor disclosed and are undisclosed/unexplained investment/ expenditure and, therefore, the addition of Rs. 2,29,533/- in the hands of various assessees was made. We notice from the order of the Tribunal, which is reproduced hereunder :- "30. We have gone through the facts of the case and rival submissions. We are in agreement with the argument that the generalisation cannot be permitted on the basis of one small instance particularly when it is a case of block assessment. The study of the instances quoted revealed that in one case there is an evidence of investing Rs. 50,000/- over and above the recorded consideration. Though all t....
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....rned AO, are duly explained/found reference in the recorded books of account, then the Tribunal will pass a speaking order in accordance with law and taking into consideration the judgments referred to hereinbefore. 16.16 We have gone through the only judgment relied by learned counsel for the assessee in the case of CIT v. Ashim Krishna Mondal (supra) which in our view is distinguishable and not applicable on facts. Conclusion 17. In view of what we have analysed hereinbefore, the findings of the Tribunal that the AO cannot travel beyond the material found during the course of search, in our view, is not proper. To come to a reasonable and plausible conclusion in case the seized papers do not show a correct picture, the AO can certainly travel beyond even the seized papers to come to a logical conclusion and the AO can even examine the entries recorded in the books of account and such entries or other material have to be taken note of by the AO and the assessee has to offer a satisfactory explanation even of the recorded transactions and the genuineness of the same is also required to be proved. 18. For the reasons aforesaid :- i) the additions relating to : (a) Ashiyana Ap....