TaxTMI 
TaxTMI 
2016 (9) TMI 1607
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....ssessing Authority was justified in estimating sales and taking out average gross profit of Assessee firm. (d) Whether Tribunal was justified in holding that assessment should be made on the amount surrendered by Assessee on estimation basis at the time of search." 3. Appellant Assessee (hereinafter to be referred as 'Assessee') filed return for the Assessment Year (hereinafter to be referred as 'A.Y.') 1990-91, showing total income of Rs. 1,83,750/-. 4. Assessing Authority took into consideration the material collected in search and seizure operation conducted at the residential and business premises of Assessee on 22.08.1989 and 23.08.1989 wherein cash, jewellery and some incriminating documents were seized. An order under Section132(5) of Act, 1961 was passed on 15.12.1989 creating a tax liability of Rs. 19,08,468/- including penalty under Section 271(1)(c) of Act, 1961. Assessing Officer examined seized books and loose papers in the light of explanation submitted by Assessee and thereafter, computed income vide order dated 07.03.1992 as under: S.N. Particulars Amount in Rupees Net profit as per P & L A/c. Rs. 71,049/- ....
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....ing on the statement of one of the partner of Assessee firm during search and seizure operation, though, subsequently Assessee retracted and took the stand that such statement was incorrect. He argued that on mere statement of Assessee given during search and seizure operation, additions could not have been made unless corroborated, since such statement per-se is not admissible in evidence. Reliance is placed on judgments in (2010) 328 ITR 411 (Guj) Kailashben Manharlal Chokshi Vs. Commissioner of Income Tax, (2013) 14 Taxman 262 (Jhar) Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Dhanbad, (1973) 91 ITR 18 (SC) Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another and (2005) 278 ITR 454 (AII) Commissioner of Income Tax Vs. Radha Kishan Goel. 8. Learned Senior Counsel stressed upon the fact that no discrepancy in books of account of Assessee was found by Assessing Officer. With regard to Rs. 9 lacs, satisfactory explanation was furnished. No discriminating evidence regarding purchase or stocks was found, other than shown by Assessee in its return. He also pointed out that in similar circumstances in the case of M/s. Vertex Organics (a sister concern of As....
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....h, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested." 14. Aforesaid provision makes it very clear that statement recorded on oath during the course of search and seizure by Authorized Officer may be used in evidence in any proceeding under Act, 1961. When something can be used as an evidence, meaning thereby, it is a relevant material to support a finding to be recorded in a particular manner. Such evidence, however, by itself, may not be a conclusive proof of everything, in eve....
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....es not appear to be justified in deleting the balance amount merely because the A.O. could find unexplained stock to the extent of Rs. 4,69,633/- whereas the surrender was not only with reference to investment in stock but also with reference to immovable property and other assets and during the course of search, surrender was in view of cash, jewellery and incriminating documents seized. Therefore, without referring the same, the learned CIT(A) is not justified in deleting the balance amount of Rs. 4,30,367/- as to that extent, the A.O. not find unexplained investment in stock. Similarly, the CIT(A) failed to appreciate than the amount of Rs. 50,000/- was surrendered by the Assessee being the profit of the firm M/s. Vertex Chemicals for five years from the Assessment Year 1985-86 to 1989-90 and the same could not be proved by the documentary evidence, therefore, the surrender was rightly considered as pertaining to the year of search and the same holds true in respect of Rs. 10,000/- being unexplained stock surrendered at the time of search. Under the facts and circumstances, the learned CIT (A) is not justified in deleting Rs. 4,30,363/- and Rs. 50,000/- and Rs. 10,000/-. Therefo....
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....hority who has to assess evidence, for valid reasons, can prefer to rely on admission and reject explanation. 23. In the present case, account books having not being found maintained in ordinary course of business and supporting material was also not maintained by Assessee, the alleged explanation of Assessee has rightly been rejected by Assessing Officer and Tribunal has also rightly affirmed the same. The judgment in Pullangode Rubber Produce Co. Ltd. (supra) therefore of no help to Assessee. 24. Then comes Division Bench judgment of this Court in CIT Vs. Radha Kishan Goel (supra). Therein question up for consideration was whether Tribunal was justified in holding that conditions laid down in explanation 5(2) of Section 271(1)(c) were fulfilled and no penalty was leviable therein. It was not a case where any statement was recorded by Authorized Officer during search and seizure operation under Section 132(4) of Act, 1961. In fact, after search and seizure conducted at the premises of Assessee on 30.08.1988, when cash, jewellery and other articles and things were found and seized, Assessee during the course of assessment proceedings, moved an application before Commissioner ....
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....cted from the person to state those things, which are not asked by the authorised officer. It is a matter of common knowledge, which can not be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. 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 can not be expected from a person to pre-empt the statement required to be given in law as a part of his defence. In these circumstances, we are of the view that under section 132 (4) of the Act unless authorised officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance of Explanation 5(2) of the Act. We are also of the opinion that in case there is nothing to the contrary in the st....
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....should be taken while making assessment. Assessing Officer held that Assessee cannot retract from its disclosure, and made addition. In appeal, CIT(A) confirmed such addition and Tribunal also concurred. It is in these circumstances substantial question of law, came up for consideration before Gujrat High Court in Kailashben Manharlal Chokshi (supra), was: "Whether on the facts and circumstances of the case, the Tribunal was right in law in confirming the addition of Rs. 7 lakhs as disclosed in the statement under section 132(4) of the Act but retracted thereafter?" 27. Gujarat High Court held that in normal circumstances, it would not interfere in the findings of fact recorded by Revenue Authorities and Tribunal, but it can always look into the facts whether explanation tendered by Assessee at the time of assessment has been considered by authorities below or not. An addition, if made merely on the basis of statement recorded under Section 132(4) of Act, 1961 and no cognizance taken of subsequent explanation or retracted statement, such approach on the part of Revenue Authorities is not legal. Court found as a matter of fact, therein, that statement of Assessee w....
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....lue of statement recorded under Section 132(4) of Act, 1961 and manner in which it has to be considered, Court has said as under: "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) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution." (Emphasis added) 31. The aforesaid judgments therefore, unequivocally lay down an exposition of law consistently that a statement recorded under Section 132(4) of Act, 1961 is an admission of Assessee and an important piece of evidence, but if subsequently Assessee provides an explanation or retracts from his earlier statement by supporting material to show....