Income Tax Appellate Tribunal - Jaipur
Acit, Ajmer vs Devendra Kumar Choudhary, Bhilwara on 30 June, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No.828/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2013-14
The Asst. Commissioner of cuke Shri Devendra Kumar
Income-tax, Vs. Choudhary, 2-S-10 to 2-S-
Central Circle, Ajmer. 18, Basant Vihar, Bhilwara.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AANPC7334C
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@Revenue by : Shri D.S. Kothari ( CIT)
fu/kZkfjrhdh vksj ls@Assessee by : Shri P.C. Parwal (C.A.)
lquokbZ dh rkjh[k@Date of Hearing : 01.05.2017
?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/06/2017.
vkns'k@ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the Revenue against the order of Ld. CIT(A)-
2, Udaipur dated 20.07.2016 for A.Y. 2013-14. The grounds of appeal taken by the Revenue are as under:-
"1. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 36,97,000/- made by the AO on account of unexplained investment in gold/silver jewellery on the basis of statement made u/s 132(4) of the Income Tax Act without appreciating the facts that assessee filed retraction affidavit 357 days after the search & seizure action.ITA No. 828/JP/16
ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
2. Whether on the facts and in the circumstances of the case the CIT(A) was right in not appreciating that had there been any omission in the statement made u/s 132(4) of the Income Tax Act, the assessee had not taken so long in retracting from the statement made u/s 132(4) of the Act."
2. Briefly the facts of the case are that the assessee is a commission agent and selling synthetics fabrics on commission basis. A search was carried out on 26.09.2012. In search 2057.500 gms of gold jewellery/ ornaments valued at Rs. 63,79,272/- and 13.494 kg of silver items valued at Rs. 6,42,314/- was found. The assessee in the statement recorded u/s 132(4) on 26.09.2012 in reply to question no. 4 stated the source of jewellery found in search as being received at the time of marriage in the year 1972, on marriage of son in the year 2003, on various occasions received from relatives and out of ornaments seized in search carried out in the year 2000 which was released to him only a month before the date of search. Thereafter, the assessee in reply to question no. 8 of the statement u/s 132(4) stated that out of the gold jewellery found, the jewellery value at Rs. 30 lacs is not disclosed and surrendered the same. He also disclosed Rs. 20 lacs on account of miscellaneous discrepancies in the books. The same was reiterated in reply to Q. No. 3 & 4 of the statement u/s 131 dated 16.10.2012.
3. Subsequent to these statement, the assessee on verification of the record noted the gold jewellery is fully disclosed. Accordingly, he filed the return on 29.09.2013 without including the surrender made in respect of jewellery of Rs. 30,00,000/-. In assessment proceeding, the assessee filed the copy of the affidavit dated 18.09.2013 retracting the surrender made along with a detailed explanation as to how the jewellery is fully disclosed. The AO without pointing out any discrepancy in the explanation and evidence filed, brushed aside the same by making the following observation:-
2 ITA No. 828/JP/16ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
(a) Search was conducted on 26.09.2012 and affidavits were filed on 18.09.2013 after lapse of about 357 days from the date of search. Had the assessee committed mistake, the affidavit in this regard would have been filed immediately after completion of search.
(b) The assessee was asked to match the jewellery released but the same was not done.
(c) The AO further relied on various decisions as mentioned at page No. 7-111 of the order to hold that statement recorded during course of search u/s 132 of I.T. Act being in presence of independent witnesses has overriding effect over subsequent retraction.
The AO made no discussion on the merits of the addition except reproducing the show cause notice and the reply filed by the assessee and thus, made an addition of Rs. 36,97,000/- on account of unexplained investment in gold and silver jewellery as stated in Q. No. 4 of statement dated 16.10.2012.
4. The Ld. CIT(A) deleted the addition holding that addition cannot be made simply on the basis of the statement recorded in search. The same is to be decided on the basis of all the evidences available. He held that the gold jewellery found is fully explained by the assessee as jewellery found in earlier search dated 24.03.2000 at 1667.26 gms and jewellery purchased thereafter & recorded in regular books at 5226.332 gms aggregate to 2193.592 gms whereas the jewellery found in search is 2057.500 gms. In respect of silver jewellery he held that assessee has already considered the same while filing the return in the amount surrendered of Rs. 20 lacs and further addition tantamount to double taxation of the same.
5. At the outset, the ld. AR submitted that only reason given by the AO for making the above addition is that assessee retracted from the surrender after 357 days of the date of search. It is submitted that no addition can be made 3 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
even when assessee has not retracted from the statement of surrender made u/s 132(4) provided that the assessee brings material on record to prove that the statement so made is incorrect. The CBDT in Instruction No. 286/2003- IT(Inv.) dated 10.03.2003 has also accepted that instances have come to the notice of the Board where assesses have claimed that they have been forced to confess the undisclosed income during the course of search & seizure and survey operations. Such confession is not based upon reliable evidences and not considered by the concerned assessee while filing returns of income. In these circumstances, a confession during the course of search & seizure and survey operation does not serve any useful purpose. It is therefore, advised that there should be focus and concentration on collection of evidence of income which lead to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Department. Similarly, while recording statement during the course of search & seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income.
5.1 It may be noted that apart from retraction of the surrender by filing the affidavit, the assessee has also filed evidences to prove that the jewellery found is duly disclosed. After filing these evidences, the AO did not found any defect on the same. The AO by referring to certain decisions at page 7 to 11 of this order has held that the statement recorded u/s 132(4) in presence of independent witnesses has overriding effect over the subsequent retraction. However, he has ignored that in all these cases the court has held that if no case has been made out that the statement was made under mistaken belief of fact or law or that statement given was not correct, than the admission binds the assessee despite the retraction. These cases are therefore distinguishable on facts in as much as the assessee has brought evidence on record to prove that the gold jewellery found from him is fully explained and the AO has not brought any material on record to negate the same. It is a 4 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
settled law that no addition can be made only on the basis of the statement more particularly when the same is retracted. For this proposition reliance is placed on the following cases:-
• Pullangode rubber Produce Company Ltd. V. State of Kerala and Another (1973) 91 ITR 0018 (SC) • CIT Vs. Ashok Kumar Soni (2007) 291 ITR 172 (Raj.) (HC) • Chetnaben J. Shah LR of Jagdishchandra K. Shah Vs. ITO (2016) 140 DTR 235 (Guj.) (H.C.) • Federal Bank Ltd. Vs. State of Kerala (1995) 124 CTR 355 (Ker.) (HC) • M. Narayanan & Bros. Vs. ACIT (2011) 339 ITR 192 (Mad.) (HC) • Jugal Kishore Garg Vs. DCIT 34 Taxworld 201 (JP) • DCIT Vs. Pramukh Builders (2008) 112 ITD 179 (Ahd.) (TM) In view of the above discussion, the addition made by the AO only relying on the statement of the assessee u/s 132(4) is uncalled for.
5.2 On merit, we may point out that the AO has not pointed out any discrepancy in the explanation furnished by the assessee. He only harped upon the statement of the assessee for making the addition instead of negating the explanation of the assessee on merit. The explained of the assessee in this regard is as under:-
Explanation on addition of Rs. 30,54,600/- in respect of Gold Jewellery
(i) In search gold jewellery/ornaments of 2057.500 gms valued at Rs.
63,79,272/- was found. The same is fully explained as per the following discussion:-
(a) In search dated 24.03.2000, gold jewellery of 1667.26 gms was found out of which gold jewellery of 445.47 gms was seized. Copy of the panchanama dated 24.03.2000. The seized jewellery was released on 5 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
22.05.2012 i.e. just before the present search. In earlier search, the assessee offered gold ornaments to the extent of 445.47 gms value at Rs. 1,83,824/- for tax. Thus, the gold jewellery to the extent of Rs. 1667.26 gms is fully verifiable as found in the earlier search dated 24.03.2000.
(b) The assessee and his family members purchased 526.332 gms of gold jewellery in the year 2003-2004 and duly disclosed in the individual balance sheet. The payment for these purchases was made by account payee cheque. Copy of the purchase bills were filed before the AO. The details of jewellery purchased is tabulated as under:
Date Purchase of jewellery in the Weight (gms) Amount name of 17.01.2003 Devendra Kumar Chaudhary 49.632 158000 17.01.2017 Snehlata Chaudhary 119.750 78911 11.02.2003 Snehlata Chaudhary 144.530 92971 17.01.2003 Unnat Chaudhary 116.400 81496 28.01.2003 Unnat Chaudhary 54.200 35461 2003-04 Monika Chaudhary 41.820 24260 526.332 471099 Thus, the purchase of the gold jewellery is duly disclosed in the books of account.
(c) Thus, the above jewellery totalling to 2193.593 gms ( 1667.26 +526.332) is duly disclosed. This disclosed jewellery is more than the jewellery of 2057.500 gms found in search. There is no material to hold that assessee and his family members have utilized the gold jewellery found in search dated 24.03.2000 or purchased thereafter. The observation of the AO that assessee could not link the jewellery found in earlier search with that found during the present search is misplaced in as such as the inventory of 6 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
the jewellery found in earlier search is by aggregating the various items and the inventory of jewellery found in the present search is by aggregating the different items. However, the description of the items mentioned in the earlier search is also available in the present search. It is not the case of the AO that the jewellery found in earlier search or purchased thereafter has been utilized elsewhere. Hence, the entire jewellery found in search of the assessee is fully verifiable. Accordingly, the addition of Rs. 30,54,600/- made by the AO is rightly deleted by CIT(A).
Explanation on addition of Rs. 6,42,400/- in respect of silver jewellery:-
(i) In search, assessee made surrender of Rs. 20 lacs towards any defect or discrepancy that may be found at the time of assessment in the books of the assessee and family members. In the return filed, assessee offered for tax Rs.
20 lcas being silver jewellery of Rs. 6,42,400/- and for discrepancies in the bokks Rs. 13,57,600/-
(ii) The AO accepted the amount of Rs. 20 lacs offered in the return. However, he further made addition of Rs. 6,42,400/- since separate surrender for the same was made in the statement recorded u/s 132(4).
(iii) It is further submitted that assessee made surrender of Rs. 20 lacs on account of possible defects that may be found in books. However, no such defect was found. Still the assessee while filing the return considered the surrender as made by him at Rs. 20 lacs. Therefore, in assessment proceedings assessee explained that the silver jewellery so surrender should be considered as part of the amount of Rs. 20 lacs offered in the return. The AO, however, again made addition of Rs. 6,42,400/- which has resulted into double addition. The same is therefore rightly appreciated by the ld. CIT(A) in deleting the addition.
7 ITA No. 828/JP/16ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
5.3 Otherwise also, AO has not found any discrepancy/defect in the books of accounts for which an amount of Rs. 20 lacs was surrendered in the statement and offered in the return by the assessee. Therefore, any addition on account of the unexplained silver jewellery needs to be covered against the amount so offered in the return.
In view of above, the order of CIT(A) be upheld and ground of the department be dismissed.
6. Before we proceed further, it would be relevant to refer to the decision of the Hon'ble Rajasthan High Court in case of Ravi Mathur & others (D.B Appeal No. 67/2002 & others) where Hon'ble High Court has laid down the following proposition in law in respect of retraction of statement recorded under section 132(4) of the Act vide its order dated 13.05.2016:
"14. Having noticed the arguments of the learned counsel for the parties, we deem it proper at the outset to take into consideration the finding of the Tribunal about retraction/resiling of the statements recorded under Section 132(4) as the Tribunal has primarily come to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue.
15. In our view, the statements recorded under Section 132(4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9.11.1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a 8 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, loses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under Section 132(4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under Section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the AO in the Assessment Order observes:-
"Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement u/s 132(4) was not correct and these amounts are in thousands, not lakhs i.e. it is now attempted to retract from the statements made at the time of S & S operations."
Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized i.e. almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material.
15.1 Thus, in our view, the Tribunal in a summary manner has held that retraction is proper, without going in detail and manner, time of retraction, the addition deleted, is wholly on a perverse finding.
9 ITA No. 828/JP/16ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
15.2 This Court in Raj kumar Sodhani vs The CIT (D.B ITA No. 15/2015 decided on 28.4.2016) has taken this very view that retraction after a sufficient long gap loses its sanctity."
7. In the present case, the statement of the assessee u/s 132(4) was recorded on 26.09.2012. Thereafter, the assessee on verification of the record claimsthat the gold jewellery was fully disclosed and he filed the return on 29.09.2013 without including the surrender made in respect of jewellery of Rs. 30,00,000/-. In assessment proceeding, the assessee filed the copy of the affidavit dated 18.09.2013 retracting the surrender made along with a detailed explanation as to how the jewellery is fully disclosed. The AO held that the search was conducted on 26.09.2012 and affidavits were filed on 18.09.2013 after lapse of about 357 days from the date of search and had the assessee committed mistake, the affidavit in this regard would have been filed immediately after completion of search. Therefore, in light of legal proposition laid down by the Hon'ble Rajasthan High Court , there is clearly an inordinate delay in retraction and no justifiable explanation has been taken for such delay. Hence, the retraction of the statement recorded u/s 132(4) cannot be accepted in the instant case.
8. Once a statement is recorded under Section 132(4), such a statement can therefore be used as a strong evidence against the assessee in assessing the income. However, as held by the Hon'ble High Court in case of Ravi Mathur (supra), before the Assessing officer take a final view in the matter, he can travel beyond even the seized papers to come to a logical conclusion and can even examine the entries recorded in the books of account. The assessee has to offer an explanation even of the recorded transaction and the genuineness of the same is also required to be proved. In the instant case, the assessee claims that he has made detail explanation as to how the jewellery is fully disclosed and the AO, without pointing out any discrepancy in 10 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
the explanation and evidence filed, brushed aside the same holding that since there is lapse of 357 days in filing the affidavit retracting the statement recorded u/s 132(4), the retraction is not possible and made the additions. We find that the said approach of the AO is not correct and the ld CIT(A) however has taken a correct approach. The ld CIT(A) in his order has stated that the addition cannt be made simply on the basis of the statement recorded in search. The same has to be decided on the basis of all the evidences on record. He accordingly, proceeded to decide the issue on the basis of the evidences filed and available on record before the AO. We donot firm any infirmity in the said approach of the ld CIT(A) and the same is in tune with the legal proposition laid down by the Hon'ble Rajasthan High Court.
9. On merits, we have gone the material available on record and the following findings of the ld CIT(A) who has taken into consideration the explanation of the assessee and evidences filed. His findings remain uncontroverted before us and are hereby confirmed: -
"2.3.2.A The addition of Rs. 30,54,600/-lacs was made by the AO on the basis of jewellery of 2057.575 gms found in search. This jewellery was explained by the Ld. AR as mentioned in para 2.2.5(i) above as jewellery found in earlier search dated 24.03.2000 at 1667.26 gms. The AO has not found any discrepancy on the quantum of jewellery already declared. Thus the gold jewellery found is fully explained by the appellant. Following the ratio of case laws mentioned in para 2.2.4 above, the addition of Rs. 30,54,600/- made by the AO on the basis of the statement recorded in search which was retracted is not sustainable and the same stands as deleted.
2.3.2.B So far as addition of Rs. 6,42,400/- made in respect of silver jewellery concerned, it is seen that the assessee has already considered the same while filing the return in the amount of surrender of Rs. 20,00,000/- made by him. This fact is also mentioned by the AO in the assessment order at page 3. Thus, when this amount is already considered in the return, the further 11 ITA No. 828/JP/16 ACIT, CC, Ajmer vs Shri Devendra Kumar Choudhary, Bhilwara.
addition made by the AO tantamount to double taxation of the same. Accordingly the same is not sustainable and the same stands as deleted."
10. In light of above discussions, we are of the view that though retraction of statement recorded u/s 132(4) was not proper being made after an inordinate delay. At the same time, after taking into consideration all the relevant evidences on record, the ld CIT(A) has rightly deleted the additions in the hands of the assessee.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 30/06/2017.
Sd/- Sd/-
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(Kul Bharat) (Vikram Singh Yadav)
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Santosh*
Jaipur
Dated:- 30/06/2017
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The ACIT, Central Circle, Ajmer.
2. izR;FkhZ@The Respondent- Shri Devendra Kumar Choudhary, 2-S-10 to 2-S-18, Basant Vihar, Bhilwara
3. vk;dj vk;qDr@CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT,
6. xkMZ QkbZy@Guard File (ITA No.828/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.12