Gujarat High Court
Commissioner Of Income Tax vs Shardaben K on 30 April, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
COMMISSIONER OF INCOME TAX....Appellant(s)V/SSHARDABEN K MODI....Opponent(s) O/TAXAP/123/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 123 of 2013 ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus SHARDABEN K MODI....Opponent(s) ================================================================ Appearance: MR MANAV A MEHTA, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 30/04/2013 ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI) The revenue has challenged order of the Income Tax Appellate Tribunal dated 20.07.2012 proposing following substantial question of law for our consideration:
A. Whether the Hon ble ITAT is justified in holding that the statements recorded under Section 133A of the Act has no evidentiary value?
B. Whether the ITAT erred in law in not appreciating the provisions under Section 133A (iii) which empowers an Income Tax Authority to record the statement of any person which may be useful for, or relevant to, any proceedings under the Income Tax Act?
C. Whether in law and on the facts of the case, the Hon ble ITAT, Ahmedabad has erred in deleting the addition made by AO amounting to Rs. 36 lacs made on account of undisclosed income during the course of survey based on the statements recorded in question to discrepancies found and admitted by the assessee?
As could be noted from the record, during the course of survey proceedings carried out at the premise of Ganesh Hall u/s. 133A of the Income Tax Act (hereinafter referred to as the Act ), the statement of the son of the assessee-respondent had been recorded during the course of survey. The survey was carried out on 03.01.2006.
In response to the notice issued under Sections 143(2) and 142(1). Mr. Tarun Modi, the son of the assesee, had attended the proceedings where certain details were called for from the assessee. It also further appears that after the statement of Mr. Tarun Modi had been recorded on the 03.01.2006 itself (on the day of survey) the same was confirmed by the assessee on 06.02.2006. However, vide its communication dated 07.12.2007 and 17.12.2007.
She retracted the disclosure made, the question proposed before us in the present tax appeal by the revenue concerns the evidentialry value of the statement made under Section 133A of the Act.
We have heard learned counsel Mr. Manav Mehta for the revenue who has urged before us that the statement recorded of the son of the assessee-respondent had been retracted after a span of three years. The Tribunal ought to have permitted the revenue to make use of the material derived from such statement. He further urged that the assessee-respondent also had initially confirmed the details revealed by the son. However, later on through the communication dated 17.12.2007, when the said statement was retracted that itself should not be the ground not to rely upon the relevant material since it is permissible under the law.
It would be necessary to take into account, the findings of the Tribunal on the point at the outset. It would be apt to reproduce some of the relevant aspects:
15. From the facts of the present case before us, it is apparent that the revenue has not come out with any corroborative evidence to support the statement obtained from the assessee s son in order to establish that an amount of Rs. 36,00,000/- to be the undisclosed income of the assessee. The Circular of the CBDT which is binding on the revenue supports the argument of the assessee. Further, the decision cited by the assessee squarely establishes the facts that the addition made on mere statement on oath obtained at the time of survey cannot be relied upon to make addition without bringing forth any other materials on record to support the stand of the revenue.
Considering the facts and circumstances of the case, we hereby delete the addition of Rs. 36,00,000/- made by the learned AO which was further sustained by the learned CIT(A). Thus, all the grounds raised in this appeal by the assessee are decided in its favour.
It thus appears from the order of the Tribunal that it has essentially relied on two vital aspects namely that, there is no evidence except the statement recorded under Section 133A of the Act of the respondent s son, Mr. Tarun Modi and secondly, the circular of the Board dated 10.03.2003 being 286/2/2003 to conclude in favour of the assessee and against the Revenue. The Assessing Officer and the CIT(A) both though have concurred on the aspect of additions made on the basis of the statement recorded of the son of the assessee. In our opinion, the Tribunal was justified in not relying on such statement which had no other independent evidence worth the name for sustaining the say of the revenue.
On enquiring from the revenue even while deciding this appeal no other evidence worth the name could be brought on record to indicate any independent corroboration of the statement recorded of the son of the assessee. It was also further justified in basing reliance on the board s circular which has insisted upon independent evidence during the course of survey instead of relying on the confession or the statements given by the assessee which has an inherent risk of being retracted at a later date.
8.1 As the question raised before us is the evidentiary value of the statement recorded of the person during the course of survey proceedings undertaken u/s. 133A. Wide powers are given of survey including at which business as profession is carried on by the assessee. Sub-section (iii) of Section 133A(3) of the Act gives discretion to the income tax authority to record the statement of any person which may be useful for, and relevant to, any proceeding under this Act.
8.2 This provision does not authorize any income tax authority to examine anyone on oath and any statement recorded of any person during the survey. Words used is that it may be useful or relevant to, any proceeding under the Act, however, in absence of any power to administer oath or taken sworn statement evidentiary value of such statement would not be there under the law and therefore, no addition can be made on the strength of such statement alone.
8.3 Board s circular dated 10.03.2003 also has rightly emphasized on concentrating on collection of evidence during the survey and such seizure rather than on getting confessional versions without any corroborative evidence as retracted versions would surely loose further its use and relevance.
8.4 Madras High Court examined question of scope of admission during survey proceedings in case of Commissioner of Income Tax vs. S. Khader Khan Son reported in [2008] 300 ITR 157 and held thus:
14.
From the foregoing discussion, the following principles can be culled out:-
(i) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode Rubber Produce Co. Ltd. v.
State of Kerala [(1973) 91 I.T.R. 18];
(ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. Commissioner of Income-tax [(2003) 263 I.T.R. 101];
(iii) The expression "such other materials or information as are available with the Assessing Officer" contained in Section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under Section 133A, vide Commissioner of Income-tax v. G.K.Senniappan [(2006) 284 I.T.R. 220];
(iv) The material or infomration found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this Court in T.C.(A) No.2620 of 2006 (between Commissioner of Income-tax v. S.Ajit Kumar);
(v) Finally, the word "may" used in Section 133A (3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself.
8.5 This decision come to be confirmed by the Apex Court when challenged by the revenue as reported in 352 ITR page 480 in case of Commissioner of Income Tax vs. Khader Khan Son. Following this decision, we see no reasons to interfere.
8.6 Moreover, in the case on hand, it is the statement of the son of the assessee which was depended upon. Of course it was confirmed by the assessee but, retracted later by her by a written communication, without any corroborative evidence, when Tribunal upheld the version of the assessee, appeal merits no consideration.
Since other questions raised by the revenue in this tax appeal are also not addressed to by the Tribunal, we are not examining those questions at this stage. Tax appeal is, therefore, dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Jyoti Page 7 of 7