Income Tax Appellate Tribunal - Ahmedabad
Income Tax Officer vs Bipin Farashkhana on 1 July, 1999
Equivalent citations: [2000]73ITD334(AHD)
ORDER
T. N. Chopra, A.M.
1. This appeal, filed by the Revenue, is directed against the order of the CIT(A) dt. 12th November, 1993 for asst. yr. 1991-92.
2. The only ground being agitated by the Revenue is regarding the action of the CIT(A) in restricting the addition to Rs. 50,000 from the figure of Rs. 4,62,882 added in the total income under the head 'income from undisclosed sources.'
3. The relevant facts in brief are that the assessee is a partnership firm engaged in the business of giving furniture, utensils, etc. on hire basis under the name and style of Bipin Faraskhana. Search operations were conducted by the IT Department under s. 132 at the business premises of the assessee-firm on 20th February, 1991 resulting in the seizure of documents and records etc. Statement of Shri Kantilal Rana, partners of the assessee-firm was recorded under s. 132 of the IT Act, 1961 wherein it was admitted that unaccounted receipts amounted to Rs. 5,00,000 for the period 1st April, 1990 to 20th February, 1991. Subsequently, the assessee-firm filed an affidavit of the said partner Shri Kantilal Rana retracting from the aforesaid statement dt. 20th February, 1991. The assessee filed the return of income for asst. yr. 1991-92 enclosing therewith a note to the following effect :
(1) "The partner of assessee, in his statement recorded on 20th February, 1991, made an estimate of assessee's income not taken in books. The said statement was given in a disturbed state of mind and was baseless as per letter dt. 12th April, 1991 addressed to ITO by the Chartered Accountants M/s. Jain & Hindocha, filed on 15th April, 1991.
(2) Subsequently, assessee had completed the books and also various receipts which were omitted in the books to be shown as income are now included income (sales) as under :
Date Amounts Rs.
4-4-1990 3,000
4-4-1991 3,000
4-4-1992 3,000
9-4-1990 2,000
10-4-1990 2,000
11-4-1990 3,000
30-4-1990 3,000
30-4-1990 4,000
23-3-1991 4,500
24-3-1991 8,500
24-3-1991 765
26-3-1991 3,350
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Total 37,115"
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4. During the assessment proceedings the AO took note of the fact that the books of account have not been properly maintained by the assessee and 165 blank vouchers found from the premises bearing signatures and thumb impressions indicated that expenses were being inflated by the assessee. The AO further referred to p. No. 45 of annexure A of the Panchnama indicating unaccounted receipts from various parties which are not reflected in the books of account of the assessee. In view of the statement made by the assessee under s. 132(4) the AO made an addition of Rs. 5,00,000 as income from undisclosed sources. Since the assessee had already included an amount of Rs. 37,115 in the return, the AO made an addition of the balance amount of Rs. 4,62,885.
5. The assessee carried the matter in appeal and the CIT(A) held that the statement of the assessee recorded at the time of search operations has been retracted from and cannot be relied upon by the AO. The CIT(A) sustained the addition to the extent of Rs. 50,000 as against Rs. 4,62,885 added by the AO. The Revenue is aggrieved and has come up in appeal before us.
6. The learned Departmental Representative, appealing on behalf of the Department, strongly urged that the statement of the assessee which contain the estimate of unaccounted income at Rs. 5 lakhs has been recorded under s. 132(4) on oath and therefore, forms a valid basis for making the assessment. The learned Departmental Representative placed reliance on the decision of the Supreme Court in the case of CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) and argued that the admission of the assessee duly corroborated by the seized documents and records cannot be brushed aside while making the assessment. The learned Departmental Representative further relied upon the decision of the Supreme Court in Bombay Gas Co. Ltd. vs. Its Workmen AIR 1961 SC 1165 and argued that the sworn testimony of the assessee admitting certain facts is binding and cannot be resiled from by the assessee.
7. The learned counsel for the assessee, on the other hand, submitted that the assessee filed an affidavit dt. 26th March, 1991 retracting from the statement recorded at the time of search. The learned counsel placed reliance on the decision of the Supreme Court in Pangambam Kalanjoy Singh vs. State of Manipur AIR 1956 SC 9 and argued that confession made by an accused is to be corroborated by independent evidence and cannot by itself form the sole basis for conviction. The learned counsel further referred to the decision of the Bombay Bench of the Tribunal in Pushpa Vihar vs. Asstt. CIT (1994) 48 TTJ (Bom) 389. The learned counsel further submitted that the extent and magnitude of assessee's business does not justify the estimate of Rs. 5 lakhs made by the AO. The learned counsel referred to the valuation report placed at p. 23 of the paper book and argued that there is no justification for the presumption that the assessee-firm has invested the unaccounted income in the construction of house property.
8. On careful consideration of the facts and circumstances of the case as well as the rival submissions made before us we are inclined to sustain the addition of Rs. 4,62,885 made by the AO on the basis of the sworn statement of the assessee dt. 20th February, 1991. During search operations incriminating documents and records have been seized by the IT Department which provide irrefutable evidence of inflation of expenses as well as suppression of receipts by the assessee-firm. 165 blank vouchers bearing signatures and thumb impressions have been recovered which have been owned up by the assessee as belonging to the firm. Further suppression of receipts from the customers is amply evidenced by the document bearing No. 45 of annexure A of the Panchnama. In the statement recorded under s. 132(4) it has been unequivocally admitted by the partner that the extra amounts reflected in the document are not recorded in the books of account.
9. In the statement the estimate of unrecorded receipts have been given at Rs. 5 lakhs for the accounting period relevant to asst. yr. 1991-92. There is no allegation at any stage of the proceedings before the IT authorities or before us that the statement of the partner has been procured by the inducement, threat or promise by the authorised officer at the time of search operation. Even while retracting from the statement, the assessee has not retracted admission regarding preparation of blank vouchers or suppression of receipts from the customers. The retraction is made only with regard to estimate of the concealed income being Rs. 5 lakhs. In our opinion the affidavit of the partner dt. 15th April, 1991 filed by the assessee is merely a self-serving document and does not deserve any weight. Admission made by the assessee during search operations constitute a substantial evidence in view of ss. 17 and 21 of the Evidence Act. The admission is fully corroborated by documents and records which are inculpatory in nature. The substantial portion of the sworn statement relating to admission of suppression of business receipts as well as inflation of expenses has not been retracted by the assessee at any stage. The retraction by means of an affidavit is merely in respect of estimate of suppressed receipts. In the facts and circumstances of the case we feel that the estimate of suppressed income at Rs. 5 lakhs, given by the assessee during the course of search operation constitute the valid basis for making the assessment by the AO. After the assessee has itself estimated its undisclosed income at Rs. 5 lakhs, it cannot be allowed to retract from the admission without adducing cogent evidence on record. A very heavy onus lay upon the assessee to refute and controvert the admission made at the time of search operation and the said onus has not been discharged in the instant case. A mere retraction of admission by filing an affidavit would not absolve the assessee from the consequences of the shorn testimony recorded under s. 132(4) which is fully corroborated by documents and records found at the business premises. The order of the CIT(A) sustaining the addition to the extent to Rs. 50,000 an ad hoc basis cannot be sustained. We would accordingly allow the appeal of the Revenue and restore the order of the AO with regard to the estimate of income from undisclosed sources.
10. In the result, the Revenue's appeal is allowed.