Income Tax Appellate Tribunal - Amritsar
Income Tax Officer vs Bua Dass on 31 December, 2004
Equivalent citations: (2005)97TTJ(ASR)650
ORDER
Joginder Pall, A.M.
1. This is a bunch of seven appeals filed by the Revenue against the separate orders of the CIT(A), Jalandhar, all dt. 27th May, 2003, for the asst. yrs. 1994-95 to 2000-01, respectively. Since the issues involved in all these appeals are common, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. First we will take up appeal for the asst. yr. 1994-95. The only issue raised in this appeal is that the learned CIT(A) was not justified in deleting the addition of Rs. 1,00,000 made by the AO on the basis of confessional statement given by the assessee before the DDIT (Inv.) representing unexplained investment in the construction of two shops. The facts of the case are that the assessee was employed with Punjab State Electricity Board as meter reader. The DDIT (Inv.) summoned him on 26th March, 2001, and recorded the statement of the assessee. In his statement, the assessee admitted that he had purchased a plot in Sidh Mohalla, Sodal Nagar, Jalandhar, for a cost of Rs. 1,35,000 and had spent about Rs. 70,000 on construction of shops in the year 1993. It was also stated that the cost of construction of the shops was Rs. 55,000 and Rs. 45,000 and the plot was purchased for Rs. 35,000 at Naugaja Road and agreed to surrender the same in the relevant assessment year. Accordingly, the AO issued a notice under Section 148 and in response to such notice, the assessee filed the return of income. During the course of assessment proceedings, the statement of the assessee was recorded by the AO on 16th Aug., 2002, and 27th Aug., 2002 wherein he explained that at the time when DDIT (Inv.) recorded his Statement, he was under tremendous amount of mental stress and the statement was given in a confused state of mind. It was further stated that he was in a confused state of mind, which is evident from the fact that he had never purchased any plot at Naugaja Road. In fact, the plot was purchased at Gujja Peer, Globe Colony, on 24th Feb., 1990 instead of 1993 and registered deed relating to this property was also furnished before the AO. It was also stated that the assessee had wrongly stated that the construction of shops was made in the year 1993. In fact, the shops had been constructed prior to 4th July, 1991 for which the electric connection was provided by the PSEB on 4th July, 1991. Thus, it was stated that the assessee had neither acquired any plot nor constructed shops in the year 1993 and so called amount surrendered before the DDIT was in a state of confused mind for which no addition was liable to be made. However, the AO, though accepted that the assessee had not purchased any property at Naugaja Road and the property was on Gujja Peer Road, yet by relying on the confessional statement made before the AO, made an addition of Rs. .1,00,000.
2.1 Being aggrieved, the assessee carried the matter in appeal before the CIT(A). The submissions made before the AO that the statement had been given in a confused state of mind and that he had not purchased any property at Naugaja Road, property was purchased at Gujja Peer on 24th Feb., 1990 for which documentary evidence in the form of registered deed (a copy placed at pp. 10 to 13 of the paper book) was also furnished. It was also submitted that two shops on the plot purchased on 24th Feb., 1990 had been constructed before 4th July, 1991 and the electric connection was provided by the PSEB on 4th July, 1991 (a copy placed at p. 15 of the paper book). It was further submitted that he had wrongly stated before the DDIT (Inv.) that a commercial property was purchased from Smt. Harnam Kaur, whereas in reality the residential property was purchased by his two sons, namely, Sh. Naresh Kumar and Sh. Rakesh Kumar in Nov., 1996, for a cost of Rs. 75,000. The factory belonged to his son and the machinery was purchased by taking a loan from PNB. The necessary evidence in the form of loan taken from PNB, electric connection supplied and the statements of sons were also recorded by the AO where these facts were admitted. Relying on the decision of the Tribunal, Jodhpur Bench, 'in the case of Maheshwari Industries v. Asstt. CIT (2003) 81 TTJ (Jd) 914, decision of Tribunal, Delhi Bench, in the case of R.P. Locks Company v. Dy. CIT (2000) 67 TTJ (Del) 588 and the decision of the Tribunal, Chandigarh Bench, in the case of Karam Chand v. Asstt. CIT (2000) 68 TTJ (Chd) 789, it was contended that retraction was on a genuine ground. Accepting the contentions of the assessee, the learned CIT(A) deleted the impugned addition. The Revenue is aggrieved with the order of the CIT(A). Hence, this appeal before the Tribunal.
2.2 The learned Departmental Representative submitted that the AO has made an addition purely by relying on the confessional statement recorded by the DDIT (Inv.). He was fair enough to concede that there was no independent evidence to support the income surrendered before the DDIT (Inv.).
2.3 The learned Counsel for the assessee, on the other hand, reiterated the submissions, which were made before the authorities below. He submitted that the Department does not have any independent or corroborative evidence to support the income disclosed before the DDIT (Inv.). He further stated that the assessee had given the statement before the DDIT (Inv.) in a most confused state of mind as he could not face such a senior officer like DDIT (Inv.). The fact that such statement was given in a confused state of mind is fully evident from the other evidence about the purchase of property in different years, construction of shops and other property purchased by his sons. The learned Counsel further relied on the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT v. Shri Ramdas Motor Transport , where it has been held that mere confessional statement without there being any documentary proof was not to be used in evidence against the person who made such statement. Thus, he submitted that the order of the CIT(A) does not merit any interference.
2.4 I have heard both the parties at length and given my thoughtful consideration to the rival submissions. From the facts discussed above, it is obvious that apart from confessional statement, there is no evidence that the assessee had indeed made any investment in the property and in the shops in the assessment year under reference. The fact that the assessee had given the statement in a confused state of mind is amply proved by the assessee from the following facts :
(i) The assessee stated that he had purchased plot at Naugaja Road and constructed two shops in the year 1993. In fact, the AO had himself admitted in the assessment order that no property was purchased at Naugaja Road. The assessee had in fact purchased one plot at Gujja Peer for a cost of Rs. 35,000 on 24th Feb., 1990.
(ii) The fact that shops were constructed prior to July, 1991, is evident from the certificate given by the PSEB where it was mentioned that electric connection, was given on 4th July, 1991. If the shops had been constructed in the year 1993 as admitted in the confessional statement, how could electric connection be provided on 4th July, 1991.
(iii) The shops had been given on rent to two tenants on monthly rent of Rs. 300. The same had been subsequently increased during the last two years to Rs. 350 per month. However, in his statement, he stated that shops had been given on monthly rent of Rs. 3000.
(iv) In the confessional statement, the assessee stated that he purchased one commercial property from Smt. Harnam Kaur and the said property was at Sodal Nagar, Jalandhar. It was not a commercial property but constructed property with three rooms purchased from Sh. Dayal Singh, husband of Smt. Harnam Kaur. This property was purchased by his two sons, namely, Naresh Kumar and Rakesh Kumar and they were running the factory at the said premises. In their statements recorded by the AO, his sons admitted that investment in the said property had been made by them. Machinery was installed by taking loan from PNB. These facts are also supported by subsequent enquiries made by the AO. In the light of these facts stated, it is obvious that the assessee was indeed in confused state of mind when his statement was recorded by the DDIT (Inv.). Such income surrendered in the confessional statement is not supported by any independent and corroborative evidence. Thus, under these circumstances, addition could not have been made merely by relying on the confessional statement. Reliance in this regard, is placed on the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT v. Ramdas Motor Transport (supra), the decision of the Tribunal, Delhi Bench, in the case of R.P. Locks Company v. Dy. CIT (supra), decision of Tribunal, Jodhpur Bench, in the case of Maheshwari Industries v. Asstt. CIT (supra). In the present case, the assessee had demonstrated with positive material and documentary evidence that the statement given before the DDIT (Inv.) was factually not correct. Now the documentary evidence produced by the assessee shows that plot was purchased on 24th Feb., 1990 and a copy of registered deed was also placed before the AO. Two shops have been constructed before 4th July, 1991. Since the investment in the plot and shops did not fall in the accounting year relevant to the asst. yr. 1994-95, no addition for the same could have been made under Section 69 of the IT Act for the assessment year under reference because section refers to unexplained investment made in the financial year relevant to the assessment year under reference. It is not the case of the Revenue that the assessee had indeed made some investment in other property in the accounting year under reference. Thus, the income surrendered in the confessional statement is not based on any evidence and material on record for which no addition could have been made only by relying on such confessional statement. I am of the considered opinion, that the learned CIT(A) was justified in deleting the impugned addition. I confirm his order and reject all the grounds of appeal of the Revenue for the asst. yr. 1994-95.
3. The next common ground for the asst. yrs. 1996-97, 1997-98 and 1998-99 is that the learned CIT(A) was not justified in reducing the rental income from Rs. 36,000 to Rs. 7,200 each. The ground for the asst. yrs. 1999-2000 and 2000-01 is that the learned CIT(A) was not justified in reducing rental income from Rs. 36,000 to Rs. 8,400. The facts of the case are that the assessee had constructed two shops on the property at Gujja Peer, Jalandhar, which was given on rent. The detailed facts relating to these grounds have already been discussed while dealing with the appeal for the asst. yr. 1994-95. However, during the course of statement recorded by the DDIT (Inv.), the assessee stated that these shops had been given on monthly rent of Rs. 3,000. The AO by relying on such confessional statements assessed the rental income at Rs. 36,000. The assessee furnished certificate from the tenants, namely, Sh. Satish Kumar and Sh. Shiv Kumar that they were paying monthly rent of Rs. 300 per month each which was subsequently increased to Rs. 350 per month in the accounting years relevant to the asst. yrs. 1999-2000 and 2000-01. It was also stated that the assessee had clearly stated before the AO that he had not earned income from residential quarters. In fact, the statements of both the tenants were also recorded by the AO on 18th Oct., 2002, where they admitted that they had been paying monthly rent of Rs. 300 each which was subsequently increased to Rs. 350 during the last 2-1/2 years. Copies of these statements have also been placed on pp. 3 and 4 of the paper book. Accepting these contentions of the assessee, the learned CIT(A) reduced the addition to Rs. 7,200 for the earlier assessment years and Rs. 8,400 for the last two assessment years. The Revenue is aggrieved by the orders of the CIT(A). Hence, these appeals before the Tribunal.
3.1 The learned Departmental Representative stated that additions have been made by relying on the confessional statements given by the assessee made before the DDIT (Inv.) and there is no independent evidence to support the case of the Revenue.
3.2 The learned Counsel for the assessee reiterated the submissions made before the authorities below.
3.3 I have heard both the parties and given my thoughtful consideration to the rival submissions. I have already held that at the time when statement was recorded by the DDIT (Inv.), the assessee was indeed in a confused state of mind. Here also, the assessee has been able to establish that he had in fact received rent of Rs. 300 per month in respect of each shop from two tenants. No further independent enquiries have been made by the AO to find out prevailing rent in the market. On the other hand, the assessee had filed certificates from the two tenants stating that rent of Rs. 300 per month being paid and the same has been raised to Rs. 350 per month in the last two years. Moreover, the AO also summoned both the tenants and recorded their statements where they clearly admitted the above fact. Thus, in the absence of any evidence and material to justify the confessional statement, I am of the considered opinion that the learned CIT(A) was justified in reducing the additions to the aforesaid amounts for all the assessment years. His orders do not merit any interference. The same are upheld and the respective grounds of appeal of the Revenue for all the assessment years are dismissed.
4. The next ground of appeal for the asst. yr. 1997-98, relates to deletion of addition of Rs. 1,35,000 made by the AO by relying on the confessional statement given by the assessee before the Investigation Wing. The facts of the case are that during the course of statement recorded by the DDIT (Inv.), the assessee stated that he had purchased one commercial property at Sidh Mohalla, Sodal Road, Jalandhar, for a consideration of Rs. 1,35,000 and construction was made for Rs. 70,000. However, subsequently, the assessee explained that property was indeed purchased by his two sons S/Sh. Naresh Kumar and Rakesh Kumar from Sh. Dayal Singh and the said property was not a commercial property. It was also stated that both of his sons had purchased residential property in Nov., 1993. The details of the sources of investments made by the sons were also duly furnished and explained. It was further stated that property actually belonged to Wakf Board and was in possession of Sh. Dayal Singh. The payment was made to him for taking possession of the same. It was again submitted that the factory on the said property belonged to his son Sh. Naresh Kumar and the source was by taking a loan from PNB. The AO also made enquiry with PSEB to find out the ownership of electric connection and the PSEB confirmed that connection was in the name of Sh. Naresh Kumar, son of the assessee. Even the statements of the sons were recorded who confirmed these facts. The AO further made enquiries with Municipal Corporation, Jalandhar, who also confirmed that the water bills were being issued in the name of Sh. Naresh Kumar. It was also submitted that Sh. Naresh Kumar had been running a factory of pipe fitting and plastic goods in the name and style of Kamal Industries for which regular returns had also been filed. Thus, it was submitted that the confessional statement made before the DDIT (Inv.) should not be acted upon for the purpose of making the addition. However, the AO rejected such submissions and made the addition by relying on the confessional statements. On appeal, the learned CIT(A) deleted the addition. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before the Tribunal.
4.1 The learned Departmental Representative reiterated the submissions that this addition is based on the confessional statement recorded by the DDIT (Inv.) and, therefore, the same should be upheld.
4.2 The learned Counsel for the assessee, on the other hand, reiterated the submissions made before the authorities below and heavily relied on the order of the CIT(A).
4.3 I have heard both the parties and considered the rival submissions with reference to facts, evidence and material on record. I have already upheld the. contention of the assessee that the statement recorded by the DDIT (Inv.) was indeed in a confused state of mind. Here also, the assessee has amply proved that he had nothing to do with the investment in the said property and the same had been purchased by his two sons. The factory belonged to his son Sh. Naresh Kumar. Even the enquiries made by the AO With the PSEB and Municipal Corporation, Jalandhar, have confirmed the stand of the assessee. No independent or corroborative material has been placed on record to rebut the submissions of the assessee. In the absence of any corroborative material and evidence on record, I am of the considered opinion that the learned CIT(A) has rightly deleted the impugned addition. The order of the learned CIT(A) is upheld and this ground of appeal is dismissed.
5. The last ground for the asst. yr. 1998-99 relates to the deletion of addition of Rs. 70,000 made by the AO by relying on the confessional statement given before the DDIT (Inv.). Briefly stated, the facts of the case are that the assessee had stated before the DDIT (Inv.) that he made investment of Rs. 70,000 in commercial property at Sidh Mohalla, Sodal Road, Jalandhar. He also surrendered income of Rs. 70,000. The AO made the addition purely by relying on the confessional statement.
5.1 On appeal, the learned CIT(A) deleted the impugned addition for the reasons that there was no independent and corroborative evidence to support such confessional statement and the property had in fact been purchased by his two sons. The Revenue is aggrieved by the order of the CIT(A). Hence, this appeal before me.
5.2 The learned Departmental Representative submitted that the addition is based on the confessional statement and there is no independent evidence to support the finding of the AO.
5.3 The learned Counsel for the assessee, on the other hand, relied on the order of the CIT(A) and reiterated the submissions, which were made before the authorities below.
5.4 I have heard both the parties and considered the rival submissions. The facts relating to this ground have been discussed while sustaining the order of the CIT(A) in regard to an addition of Rs. 1,35,000 made for the asst. yr. 1997-98. The facts of this ground are the same. Here also, the Revenue has not been able to establish with any evidence that the assessee had indeed made such investments in the property. On the contrary, the assessee has placed sufficient evidence on record that this property was purchased by his two sons out of their sources. Subsequent enquiries made by the AO again confirmed the stand of the assessee. Therefore, I am of the considered opinion that the learned CIT(A) was justified in deleting the impugned addition. I do not find any justification to interfere with his order. The same is upheld and this ground of appeal is dismissed.
5.5 In the result, all the seven appeals filed by the Revenue for the asst. yrs. 1994-95 to 2000-01 are dismissed.