TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 1172
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.... and Developer. A search u/s 132 of the Act was initiated on Signature Group as well as the business associates on 29.1.2014. Assessee firm being part of Signature Group was also covered under the search action. In the case of the assessee search action commenced on 29.1.2014 and was concluded on 31.1.2014. However search u/s 132 of the Act in the case of Signature Group and other concerns concluded on a later date. Subsequent to search, notice u/s 153A of the Act was served upon the assessee. Return of income declaring Rs. 1,10,38,030/- was filed on 29.9.2014. In order to scrutinize the records notices u/s 143(2) and 142(1) of the Act was served upon the assessee. After considering the statement and search material of Signature Group, Ld. Assessing Officer (In short 'Ld.A.O') came to know that one of the partner of the assessee firm Mr. Vipin Chauhan gave a statement on 2.2.2014 u/s 132(4) of the Act. In this statement he surrendered undisclosed income of Rs. 2,25,00,000/- on behalf of the firm. On perusal of the return income Ld. A.O found that the assessee has not offered the surrendered undisclosed income of Rs. 2,25,00,000/- for tax. During the course of hearing the assessee....
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....n absence of any satisfactory explanation, the main persons of the group admitted additional income of the group in the hands of various concerns during statement recorded on oath. The additional income was declared after consulting the other partners and related persons of various concerns of the group. The brief detail of additional income admitted by the assessee is as under:- (Rupees in Lakhs) Sr.No Concern/F. Y. 2011-12 2012-13 2013-14 Total l. Signature Infrastructure 50 300 350 2. Signature Builders 25 300 325 3. Signature Builders and Colonizers 25 300 325 4. Signature Developers 100 100 TOTAL liDO 5. Om Builders 275 275 6. Om Construction 50 750 800 7. Sainath Infrastructure P Ltd 25 25 TOTAL 1100 8. Ultimate Builders 225 225 9. Virasha Infrastructure 225 225 TOTAL 450 10. Mls Sainath Colonizers Pvt. Ltd. 110 110 1l. Shri Anil Khilwani 40 40 TOTAL 150 Assessee during assessment proceedings before AO retracted from the disclosu....
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.... the Evidence Act is material in this respect which stipulates that when the question is. whether any person is owner of anything of which he is shown to be in possession, the onus of proving that he is not the owner is on the person who affirms that he is not the, owner. In other words, it follows from the well-settled principle of law that normally, unless contrary is established, title always follows possession. It is evident from above discussion that the assessee has to discharge onus for retraction of surrendered income. The assessee failed to do so. Retraction without having reasonable cause and without any supporting evidences is not acceptable. The question of evidentiary value of a statement recorded u/s.132 (4) of the Act is no more res integra. When an assessee had made a statement of facts, he can have no grievance if he is taxed in accordance with that statement. The reasonableness of the AO's approach may be appreciated that he had not made any enhancement or substitution in the amounts as offered/disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to t....
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....hen assessee retracted statement made under section 13 2( 4) after three and a half months of disclosure and there was not an iota of evidence to support retraction then AO was justified in not accepting assessee's retraction The decision held in the case of Carpenters Classics (Exim) (P) Ltd. Vs DCIT ( ITAT, Bang) 108 ITD 142 squarely applicable in the case .It is held that :- "When statement was made voluntary and was not alleged to have been obtained urider threat or coercion, onus was on assessee to prove that said declaration was made under any misconception of facts - Since assessee had not taken any steps to rectify its declaration before authorities before whom such declaration was made, there was no valid reason for retraction of same after a gap of about two and a half months." As regards to the evidentiary value of the disclosure statement, Sections 17 to 31 of the Indian Evidence Act, 1872 deal with admission. As defined in section 17, it is a "statement, (oral or documentary or contained in electronic form) which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the person, and under the circumstances, hereinafter ment....
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....sion made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. d)Thus, it is a clear and settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances: (i) The first circumstance is where the statement is not given voluntarily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorized Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not. (....
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.... as the assessee has not produced any evidence in that behalf. Once the statement of the assessee is voluntary and there has been no pressure,the same is binding on the assessee. i)In the case of council of Institute of Chartered Accountants of India vs. Mukesh R. Shah (2004) 186 CTR (Guj) 579, the High Court of Gujarat has held that "a retraction, so as to dislodge the admission made, should come about at the earliest point of time. It goes without saying that a retraction made after a considerable length of time, would not have the same efficacy in law as a retraction made at the earliest point of time from the day of admission. A belated retraction would fall in the category of afterthought instead of being retraction. That apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is on the person making such admission and retraction." Thus the legal position about the assessee's belated retraction is clear that it is an after - thought. j) Thus, from the above analysis it emerges that: i. The retraction was made after a period of eight months. i....
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....der). Necessary details which were asked were furnished with the supporting documents which were perused by the Ld. A.O. (para 2 of the Asst. order). The Ld. A.O. discussed at length about the incriminating documents in para 5 from Pg.3 to Pg.9. At Pg.10 he mentioned the various documents which according to him were incriminating. This list of document has been reproduced in more than 10 cases (Pg.87-117). The details of these documents have also been mentioned in the list which were found at different premises and were not pertaining to the assessee. The Ld. A.O. raised a specific query about the cash receipts which were answered with all necessary details on 18.02.2016 (Pg.78-86 of PB). While passing the order the Ld. A.O. did not refer to any of the incriminating material but made the addition only on the basis of the statement made after the search with the remark that the retraction made from the confession is not acceptable as the statement recorded u/s 132(4) is an evidence and the confession has been made without any coercion and force. He therefore, made the addition of Rs. 2,25,00,000/- as undisclosed income on the basis of admission made by the assessee. 2. In appeal....
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....ne on oath any person who is found to be in possession or control of any books of account, documents, money, bullion jewellery or other valuable article or thing and any statement made by such person during such examination, may thereafter be used in evidence in any proceeding under the Income Tax act. It may be appreciated that as per provisions of section 132(4), a statement u/s 132(4) is valid and can be used as evidence only if all the conditions mentioned herein below are cumulatively satisfied. a. the statement is recorded by the authorized officer AND b. the statement is recorded during the course of search or seizure AND c. the statement is made by the person who is found to be in the possession or control of the books of account, documents. (It may be mentioned that the assessee has not been found to be in possession of any cash or other valuable and accordingly the requirement of the section to this effect has no relevance in the case of the assessee) Thus in the case of the assessee it needs to be adjudicated that: i. whether the statement is recorded by the authorized officer ii. whether the statement is recorded during the course of search iii. Wh....
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....were also different from the persons who have attended the search in the case of the assessee. Thus the statement recorded is after the completion of the search and seizure at the premises of the assessee. The said statement was recorded on 02.02.2014 during search and seizure operation at 18- 19 Kolar Castle, Chuna Bhatti Square, Kolar Road, Bhopal in the case of Signature group, as such it can be concluded that the said statement was not in connection with the search operation carried on in the case of the assessee at E-2/21, Arera Colony Bhopal from where the entire seizure in the case of the assessee was made. Thus the statement under consideration cannot be said to have been recorded during the course of search in the case of the assessee. iii. Whether the statement is of the person who is found to be in possession of the books of account and other records During the course of search the books of accounts were found to be in possession of Mr. Manvendra Singh who was the in-charge of the accounts department of the assessee, and his statement u/s 132(4) was recorded by the authorized officer on 29.01.2014. During the course of statement specific questions regarding the pap....
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....uch person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such person under the Act. Thus, question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under s. 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, ....
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....me undisclosed income. The details of the illustrative cases mentioned by the AO are given hereunder for ready reference: Sr. No (i) Paper reference (ii) Seized from (iii) Relates to (iv) A LPS 3 Office premises of signature group at 18-19 kolar castle Chuna Bhatti Square Signature Colonisers B LPS 72 Page 43-68 .......do....... Signature Colonisers C LPS 65/41-43 .......do....... RajkumarKhilwani/Palash Associates D LPS 1/85-87 Residence of P Raju P.Raju, Nitin Agarwal, Shri. Lilwani E LPS 3/28-41 Office of Swadesh Group Lilwani family F LPS 2/24-26 Residence of P Raju Golden City, P.Raju, Amarjeet Singh G Statement of P. Singh Project office Raipur Om Builders H LPS 11/34 Office premises of signature Group at Chuna Bhatti Cash receipt in various projects I LPS 6/39-41 Project office of Saphire Green Raipur Cash receipt in various projects J LPS 71 Office at Chuna Bhatti Diff in price of flats in different project K Valuation of 5 properties NA Does not relate to the assessee firm Or any of its partner L Huge Jewellery Various residential premises Relates to individuals from whom It was se....
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....f context. Section 17 relates to any admission in a statement which suggests any inference to any fact in issue or relevant fact. Thus the said section is with reference to any facts or issue and the inference on the issue. In the case of the assessee in the statement recorded no reference was made to any specific paper or asset and as such section 17had no applicability. Section 110 of the evidence act states that unless proved otherwise the person in possession of the thing is presumed to be its owner. Thus the provisions of this section also have no relevance to the issue under consideration as there is no dispute regarding the ownership or possession of anything. The AO had also placed reliance on various decisions which are totally irrelevant and out of place. iii. It has been held by various courts that the addition is not permissible solely on the basis of a retracted statement without finding any collaborative evidence. Reliance in this regard is placed on the judgment of the (i) Very recently the Hon'ble Indore Tribunal in the case of ACIT(1) vs. Sudeep Maheshwari in ITA No.524/IND/2013 vide order dated 13.02.2019 held in para 6 that during the course of the ....
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....urt of India in the case of B. Kishore Kumar V/s DCIT (2015) 62 taxmann.com 215 (SC) (iii) Hon'ble Supreme Court of India in the case of CIT-II V/s Continental Warehousing Corporation (Nhava Sheva) Ltd (2015) 64 taxmann.com 34 (SC) (iv) Hon'ble Delhi High Court in the case of Smt. Dayawanti V/s Commissioner of Income Tax (2016) 75 taxmann.com 308(Delhi) 9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group. Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee's association with the Signature group is on account of the common partners in various concerns....
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....were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that "no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search". 13. So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference t....
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.... force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. 20. We ....
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.... made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before ....
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....nod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) ....