Income Tax Appellate Tribunal - Amritsar
Assistant Commissioner Of Income Tax vs Anoop Kumar [Alongwith Ita No. ... on 28 December, 2004
Equivalent citations: (2005)94TTJ(ASR)288
ORDER
Joginder Pall, A.M.
1. These two appeals have been filed by the Revenue against the two orders of CIT(A), Jalandhar, in the cases of two assessees mentioned in the caption of this order for the asst. yr. 1993-94. Since the issue involved in both the appeals are identical, both the appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. The only common ground raised in both the cases is that the learned CIT(A) was not justified in ignoring the income disclosed in the statement recorded under Section 132(4) of the IT Act. The facts of the case are that the action under Section 132(1) was carried out by the IT authorities at the premises of the assessees' father late Shri Ravi Dutt Sharma on 26th March, 1993. During the course of such action, the authorised officer recorded joint statement of both the assessees and their father under Section 132(4) of the IT Act. In their joint statement, late Shri Ravi Dutt Sharma (father) disclosed income of Rs. 5 lakhs in his hands, Shri Anil Kumar (son) disclosed income of Rs. 3.5 lakhs and Shri Anoop Kumar (son) disclosed income of Rs. 3 lakhs for the asst. yr. 1993-94. Such disclosure was retracted thereafter as income was not disclosed in the respective returns of income filed. On the basis of seized material and other evidence found during the course of search, the AO estimated the income from property dealings at Rs. 1,60,000 in the case of Shri Anoop Kumar. In addition, he also found unexplained investment in plot purchased for Rs. 1 lakh. Besides, he also made an addition of Rs. 24,000 on account of household expenses. Thus, aggregate amount of such additions in the case of Shri Anoop Kumar worked out to Rs. 2,84,000 (Rs. 1,60,000 + 1,00,000 + 24,000). However, the AO observed that at the time of search he had surrendered income of Rs. 3 lakhs. Therefore, instead of computing the income of Rs. 2,84,000, the AO computed total income at Rs. 3,00,000, i.e., income surrendered at the time of search. As regards the case of Shri Anil Kumar, the AO estimated the commission from property dealings at Rs. 30,000, unexplained deposit of Rs. 1,50,000 with Shri Ashok Kumar Gupta, investment in plot of Rs. 39,000, unexplained cash of Rs. 11,600 found at the time of search and an addition of Rs. 20,000 made on account of household expenses. The aggregate amount of these additions worked out to Rs. 2,50,000.
3. Aggrieved with the order of the AO, both the assessees filed appeals before the learned CIT(A), where the action of the AO in reopening the assessment under Section 147 was inter alia, contested. It was further argued that search under Section 132 was carried out at the premises of his late father. No search was carried out at the premises of both the assessees. It was submitted that during the course of search, their late father developed chest pain and was feeling restless. Despite repeated requests made to the authorised officer, not to persist with the recording of statement, the authorised officer went ahead and somehow recorded the statement and obtained joint signatures of both the assessees and their father had signed the statements in order to save themselves from harassment. As their late father was not feeling well, ultimately such harassment also resulted in the death of their father. Such statements were duly retracted by both the assessees. Therefore, no addition could be made by relying on the statements recorded under Section 132(4). The learned CIT(A) considered these submissions. He upheld the action of the AO in reopening the assessments in both the cases. As regards the unexplained investment of Rs. 1 lakh and an addition of Rs. 24,000 made on account of household expenses, the learned CIT(A) upheld the additions in principle. However, he observed that the commission income of Rs. 1,60,000 was sufficient to cover the investments of Rs. 1 lakh and household expenses of Rs. 24,000. He, therefore, held that only addition of Rs. 1,60,000 was called for. He also deleted the addition of Rs. 1,40,000 made by the AO by relying on the statements recorded under Section 132(4) on the ground that there was no material available with the Department to justify such addition and merely because the assessee had disclosed such income under Section 132(4) did not justify such addition. While the assessee has accepted the estimate of income of Rs. 1,60,000, Revenue is aggrieved with the order of the CIT(A) in deleting the addition by ignoring the surrender made under Section 132(4) of the IT Act.
4. As regards the case of Shri Anil Kumar, the learned CIT(A) upheld the additions of Rs. 30,000 being income from property dealing, Rs. 1,50,000 being unexplained deposit with Shri Ashok Kumar Gupta, Rs. 39,000 being unexplained investment in the plot, Rs. 20,000 for household expenses. He also upheld the addition of Rs. 11,600 made on account of unexplained cash found at the time of search. Considering the fact that the assessee had shown income of Rs. 30,000, he allowed credit for the same against the total addition and household expenses and addition of Rs. 2,20,600 was upheld. However, he deleted the addition made by the AO by relying on the statement made under Section 132(4) of the IT Act. While the assessee has accepted the various orders of learned CIT(A) in sustaining various additions, the Revenue is aggrieved with the order of the learned CIT(A) in deleting the addition made on income disclosed at the time of search.
5. The learned Departmental Representative heavily relied on the orders of the AO. He brought my attention to pp. 1 to 4 of assessee's paper book, which is copy of joint statement of the aforesaid persons, where it was mentioned that income was disclosed voluntarily without any pressure from the Department. He submitted that CIT(A) should have accepted the income disclosed in the joint statement recorded at the time of search. He also relied on the judgment of the Hon'ble Kerala High Court in the case of V. Kunhambu & Sons v. CIT (1996) 219 ITR 235 (Ker), where it was held that income disclosed voluntarily at the time of search could rightly be included in the income of the assessee.
6. The learned counsel for the assessee, Shri Ravish Sood, on the other hand, heavily relied on the orders of the CIT(A) and reiterated the submissions, which were made before the authorities below. He vehemently argued that the assessees along with their father were subjected to unbearable harassment and high-handedness at the time of survey. He submitted that late father of the assessees developed chest pain right at the time of search. Repeated requests of the assessees that they should be allowed to attend to their father fell on the deaf ears of the Revenue authorities. Ultimately such action resulted in the death of their late father. He further submitted that during the course of search, nominal cash of Rs. 11,000 and so was found. No worthwhile valuables were found. The so-called surrender made by the assessees and their father was only with a view to save themselves from the harassment, There being no material to justify such disclosure, the assessees had rightly retracted from the same. No addition can be made merely by relying on the statements recorded under Section 132(4). He relied on the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT v. Shri Ramdas Motor Transport (1999) 238 ITR 177 (AP), where the Hon'ble High Court has held that confessional statement without there being any documentary proof cannot be used in evidence against the person, who made such statement. He further relied on the decision of the Tribunal, Delhi 'C' Bench, in the case of R.P. Locks v. Dy. CIT (2000) 67 TTJ (Del) 588, where it was held that the statement recorded under Section 132(4) surrendering certain amounts is legally relevant, but it is open to a party making an admission to explain clearly and demonstrate on the basis of positive material under and on what circumstances, the admission was made or to prove that what was stated was not correct. He further relied on the decision of the Tribunal, Jodhpur Bench, in the case of Maheshwari Industries v. Asstt. CIT (2003) 81 TTJ (Jd) 914, where it was held that in a case where disclosure was made under compulsion and not with free mind or that the addition is not warranted on the basis of available material, no addition can be sustained merely for the reason that such income was surrendered by the assessee under Section 132(4) of the IT Act.
7. I have heard both the parties at length and given my thoughtful consideration to the rival submissions with reference to facts, evidence and material available on record. Now the material question which requires to be decided by this Bench is whether addition made merely by relying on the statement recorded under Section 132(4) without there being any supportive material or evidence to justify such addition could be sustained in appeal. There is no quarrel on the issue that the provisions of Section 132(4) empowers the authorised officer, during the course of search to examine on oath any person and the statement recorded during the course of search and the statement made by such person during such examination may be used in evidence in any proceedings under the Indian IT Act. During the course of recording of such statement, the assessee can also disclose/surrender income which had not been disclosed in the returns of income filed earlier. Clause 2 of Expln. 5 of Section 271(1)(c) confers certain benefits on the person who had made a statement under Sub-section (4) to Section 132 surrendering income which had not been disclosed in the return of income in the form of immunity from penalty under Section 271(1)(c) subject to his disclosing the manner in which such income was derived and the payment of tax and interest in respect of such income. Thus, the income surrendered during the course of recording of statement under Section 132(4) is also for the benefit of the assessee. Now the question arises as to whether the income surrendered during the course of recording of statement under Section 132(4) could be retracted, if there is no material to justify such disclosure. It is not in dispute that income disclosed under Section 132(4) was subsequently retracted by the assessees. It was also not disclosed in the returns of income filed. Based on the seized documents and material, the AO has computed total income, which is below the income disclosed under Section 132(4) of the IT Act. In fact all the additions made by the AO based on the documents and evidence found during the search stand confirmed. It is also a fact that total income so computed by the AO falls below the income disclosed under Section 132(4). It is not the case of the Department that difference in the income assessed and income disclosed under Section 132(4) represents some other concealed income. Therefore, it is clear that there is no material available with the Department to justify the addition so far as the difference between the income computed by the AO and income disclosed under Section 132(4). In other words, the so-called disclosure under Section 132(4) is bald and has no legs to stand and in such a case retraction is justified. The decision of the Tribunal, Jodhpur Bench, in the case of Maheshwari Industries v. Asstt. CIT (supra), Tribunal, Delhi Bench, in the case of R.P. Locks Co. v. Dy. CIT (supra) and the judgment of the Hon'ble Andhra Pradesh High Court in the case of CIT v. Ramdas Motor Transport (supra) support this view. Thus, the view that emerges is that ultimate addition to be made in a case would depend on the facts and circumstances of the case and not purely on the disclosure made under Section 132(4), which also stood retracted subsequently. There could be a case where income disclosed under Section 132(4) was on the lower side than the income based on material and evidence found during the course of search or post-search enquiry. In such a case, the AO would be fully justified in completing the assessment on higher income, as such additions would be backed by evidence and material on record. The only implication would be that the assessee would not be entitled to immunity from penalty and prosecution in respect of income, which was not disclosed under Section 132(4) of the IT Act. In the light of these facts and circumstances of the case, I am of the considered opinion that no addition could be made merely by relying on the statement recorded under Section 132(4) when there is no evidence or material to justify such addition. The retraction to the extent of difference is fully warranted and justified. Thus, I find no justification to interfere with the impugned orders of the learned CIT(A). The same are upheld. Respective grounds of appeals of the Revenue are dismissed in both the cases.
8. In the result, both the appeals filed by the Revenue are dismissed.