Income Tax Appellate Tribunal - Mumbai
Video Master vs Joint Commissioner Of Income Tax on 24 September, 2001
Equivalent citations: [2002]83ITD102(MUM), (2003)78TTJ(MUM)264
ORDER
Beharilal, A.M.
1. This appeal of the assessee has been directed against the order of the Jt. CIT, Spl. Range-21, Mumbai, dt. 29th March, 2000, for the block period 1st Jan., 1985, to 24th Aug., 1995. The various grounds of appeal taken up by the assessee are regarding the additions made by the AO of Rs. 1 crore and Rs. 83.5 lakhs, treating the same as undisclosed income of the assessee from share of profit from 'Humse Hai Muqabala' and 'Sabse Bada Khiladi' respectively.
2. The assessee is a registered firm started in 1983. Its activities are obtaining the video rights from producers and manufacturing of video cassettes and sales thereof. This firm is also engaged in the purchase and sale of royalty including Overseas royalty. The assessee-firm is also engaged in the production and distribution of films.
3. Search action under Section 132 of the IT Act was carried out in the cases of Time Video Group and as such, the assessee was also covered under search action on 24th Aug., 1995, and the last warrant of authorisation was executed on 25th Sept., 1995. The AO observed that during the course of search carried out at the premises of M/s Time Video (P) Ltd., it was found that there was suppression of production of video cassettes on a large scale. On the basis of enquiries carried out at M/s Time Magnetics (I) Ltd., and on the basis of statement recorded of Shri Pravin C. Shah and other materials, the AO found that there was suppression of production of audio cassettes on large scale. The statement of Shri Dhirajlal N. Shah, one of the partners of the firm was recorded under Section 132(4) of the Act and he declared undisclosed income of Rs. 3 crores from different activities as follows :
(i) 'Rs. 1 crore out of the undisclosed income from production and distribution of the film 'Humse Hai Muqabala.
(ii) Rs. 1 crore towards undisclosed income from the production and distribution of the film 'Sabse Bada Khiladi'.
(iii) Rs. 1 crore towards undisclosed income offered towards any discrepancy found in the books of account etc., in the case of any individual, firm or company.
Shri Dhirajlal N. Shah, however, retracted the disclosure of Rs. 3 crores vide his affidavit dt. 20th Sept., 1995. In his affidavit, he has stated that the statements recorded by the investigation authorities from time to time which were signed by him were not voluntary statements. The AO in his order has further mentioned that during the course of assessment proceedings, summons under Section 131 of the IT Act were issued to Shri Dhirajlal N. Shah for cross-examination regarding the retraction made by him, but there was no compliance-to the summons issued. His counsel informed that summons could not be complied with since Shri Dhirajlal N. Shah was out of Bombay. The AO also. observed that during the course of search at the premises of M/s Time Magnetics (I) Ltd., and at the premises of Shri Dhirajlal N. Shah, certain loose papers were found which indicated that the assessee firm had been making payments of unrecorded expenses on production of film etc., on a very substantial scale. It has also been stated by the AO that during the course of search at the residence of Shri Hasmukh N, Shah, a diary was seized from Shri R.N. Shah which recorded transaction in 6 foreign banks in Dubai and 2 NRE Accounts in India. The total deposits in the 6 foreign banks accounts were to the tune of 3,36,33,181 Dirhams against which the amounts have been withdrawn for personal and business expenses and loan repayment. The AO also found that Shri R.N. Shah, brother of Shri D.N. Shah had made gifts of Rs. 4.58 crores to different family members of the group. It is also pointed out by the AO that Shri R.N. Shah was also examined by FERA authorities and perhaps, he was also involved in money laundering with this group.and with others through hawala transactions. It was also found during the course of search that the group, had made investments in 21 immovable properties in and around Bombay. This group has also floated number of business units over a period of time.
4. In response to notice under Section 158BC of the Act, the assessee firm filed a return of income for the block period on 3rd Sept., 1996, declaring total undisclosed income of Rs. 39,37,150. The assessee , also filed, the details regarding the estimation of income for the asst. yrs. 1991-92 to 1995-96 at Rs. 39,37,150. The AO, however, did not accept this estimation. The AO referred to the statement of Shri Ashwin Visaria, employee of M/s Time Video (P) Ltd., which was recorded under the provisions of Section 132(4) of the Act. He stated that the recording capacity of the unit is ,1,600 cassettes per day for 6.00 video cassettes recorders. He also stated that the assessee was working for two shifts. In the, case of the assessee, he stated that it had 150 Nos. of VCRs. Relying on the statement of Shri Ashwin Visaria and keeping in view, the statement of month-wise electricity consumption and number of cassettes submitted during the course of assessment proceedings, the AO estimated the recording capacity at 80 per cent during the asst. yrs. 1993-94,1994-95 and 1995-96. According to the AO, the estimated production of video cassettes per year was 1,20,000 cassettes. Thus, he estimated the production of video cassettes for the asst. yrs. 1991-92 to 1995-96 at 5,08,000 as against 3,39,882 shown in the books of account of the assessee. He applied the average rate of profit at Rs. 60 per cassette and determined the total undisclosed, profit at Rs. 1,00,87,080 (5,08,000 - 3,39,882 = 1,68,118 X 60 = 1,00,87,080). The AO also made the addition of Rs. 1 crore towards the production of the film 'Humse Hai Muqabala' as the same was based on the voluntary disclosure made by Shri D.N. Shah one of the partner of the firm during the course of search under s; 132(4) of the Act. Regarding the retraction of the statement made by Shri D.N. Shah, the AO has stated that Shri D.N. Shah did not appear before him for cross-examination in response to the summons issued under Section 131 of the Act. Therefore, the retraction made was not considered by him. Similarly, the AO has stated that the disclosure made of Rs. 1 crore under Section 132(4) of the Act from the film 'Sabse Bada Khiladi' was voluntary. After giving the-set off of Rs. 16,50,000 which was reflected in the books of account, he determined the undisclosed income of Rs. 83,50,000 from the film 'Sabse Bada Khiladi', Thus, the AO computed the undisclosed income of the assessee for the block period as follows :
(i) Undisclosed income from the production and sale of video cassettes Rs. 1,00,87,080
(ii) Undisclosed income from the share of profit from 'Humse Hai Muqabala 1,00,00,000 (Hi) Undisclosed income from 'Sabse Bada Khiladi' 83,50,000 2,84.37,080
5. Aggrieved by the order of the AO, the assessee filed appeal before the Tribunal. The Tribunal vide their order dt. 29th Nov., 1997, observed that the statement of Shri Ashwin Visaria could not be relied upon to justify the addition of block assessments. Therefore, the Tribunal directed that income from production and sale of video cassettes as surrendered in the return should be accepted as there was no good material to show that the assessee earned more than what was disclosed in the return. The Tribunal, thus, deleted the addition of Rs. 1,00,87,080 made by the AO on account of undisclosed income from production and sale of video cassettes. The Tribunal set aside the additions relating to the films 'Humse Hai Muqabala and 'Sabse Bada Khiladi' and restored back the issue to the file of the AO with directions to give a fresh finding regarding the undisclosed income earned after considering the relevant material available on record. Before setting aside the issue, the Tribunal observed that the confession might not have been retracted in accordance with law and therefore, is still relevant but it cannot be treated as conclusive. According to the Tribunal, the admission/confession is to be considered with other evidence available on record and then properly appraised.
The Tribunal further observed that "It is settled law that a party to a proceeding can prove that admission made by him was erroneous and proper opportunity is to be provided to the person retracting from confession/admission. Merely because the assessee did not appear for cross-examination, it did not follow that admission has become conclusive and is not retractable. The admission could have been shown to be erroneous through other means without filing affidavit and without stepping into the witness-box. Its relative importance is to be judged with reference to other material available on record. Our above conclusion is supported by the decision of the Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala and Anr. (1973) 91 ITR 18 (SC). The relevant material except for statement of Shri Shah is not available to us, We are, therefore, unable to assess evidentiary value of admission made by Shri Shah and thus hold whether the same could be relied upon to make heavy additions of undisclosed income involved in the case."
6. In the reassessment proceedings, the AO referred to the statement of main partner, Shri D.N. Shah, recorded on 25th Aug., 1995, under, Section 132(4) of the Act. According to the AO, the statement given under Section 132(4) is having evidentiary value and has to be considered correct since the said was made by the main person of the group who handles the entire finance and administration of the group. The AO especially referred to answer to question Nos. 5, 8 and 9 which are given below ;
"Ans. 5 : Mr. Sudhir is the distributor for Mysore Territory (Bangalore). Shri Sudhir (N.R. Sudhir for full) has bought a picture Humse Hai Muqabala subsequently my company viz Video Master and Venus group became partners for 25 per cent each in the project and the remaining. 50 per cent to Shri Sudhir according to the evidence put forward by him in the form of a letter from the producer to him. He had paid or agreed to be paid Rs. 3 crores, the amount was divided into four parts and shares were divided in between Venus and myself.
Ans. 8 : I admit that because of the business constraints of having to pay in particular mode and other such constraints, the gross profit from these two pictures have not been properly disclosed. By ready and rough estimates the total concealment should be around Rs. 2 crores. I undertake to make payment of taxes accordingly. However, it is requested that on account of my voluntarily admitting suppression of profits, I may kindly be considered a co-operative assessee under the IT Act, 1961 and treat it accordingly.
Ans. 9 : I want to declare an amount of Rs. 3 crores as undisclosed income out of which an amount of Rs. 2 crores is in the form of suppression of profits from 2 films, viz Humse Hai Muqabala and Sabse Bada Khiladi. These films have been made/produced (negative purchased, from M/s Gentleman Film International) M/s Vasupradha Enterprises purchased rights of Humse Hai Muqabala in which M/s Video Master a partnership firm of which the following are members of my family as per (1) Shri Dhirajlal Nanji Shah, (2) Shri Hasmukh Nanji Shah, (3) Shri Shamji Nanji Shah and Sabse Bada Khiladi was purchased by M/s Time Magnetics (I) Ltd. in which myself, my brothers Shri Pravin Nanji Shah and Shri Hasmukh Nanji Shah are the directors and India Video rights are purchased by M/s Video Master where myself, my brother Shri Hasmukh Nanji Shah and Shri Shamji Nanji Shah are partners. The balance amount of Rs. 1 crore include the following : (1) Discrepancy on amount of the documents find seized from the office and factory and residential premises of all my family members, (2) invested in capital and the investment in jewellery and other miscellaneous household expenses."
The AO, thus, observed that from the above statements given on oath, it is quite evident that the disclosure of undisclosed income was made voluntarily and based on the facts known to him personally. According to him, subsequent retraction of statement by filing an affidavit after a month cannot dilute the evidentiary value of the statement of Shri D.N. Shah recorded on 10th March, 2000. The AO also stated that Shri D.N. Shah could not submit any evidence to prove that original statement given by him was under duress and threat, therefore; the retraction filed by him is not valid. Regarding the film 'Humse Hai Muqabala', the AO observed "that the assessee initially admitted that Video Master was negotiating 25 per cent stake in the picture but later on did not have any share was not correct because the statement was given by Shri D.N. Shah after two months of release of the picture. If he was not a partner at that time, he would not have accepted the same. He further referred to the loose papers seized from the assessee's premises on 25th Aug., 1995. Seized document A-1, pages 66 to 69 are typed statements of cash business of July, 1995 at various places. If the assessee was not interested, these papers could not have come to the assessee's possession. He further referred to p. 58 of the above Annexure which shows 10 weeks business of 'Humse Hai Muqabala'. This statement was explained to have been left by someone, but according to the AO, it is not convincing because if these papers are linked to the statement given by the main partner, clearly indicate the assessee's involvement in this film. The AO has further stated that the assessee's submission that the picture was a big flop and could not have done the total business of Rs. 1 crore is not relevant in view of the admission by the partner. The AO has also observed that other evidences submitted by the assessee such as affidavit from Shri N.R. Sudhir, copies of agreement between the distributors and Shri Sudhir directly indicate only arrangement on record. According to him, informal partnership in the picture cannot figure in these documents. Thus, the AO held that the assessee earned undisclosed income of Rs. 1 crore from the film 'Humse Hai Muqabala'. Regarding the film 'Sabse Bada Khiladi', the AO observed that the picture was produced in the name of D.M.S. Films, proprietor Shri Keshu Ramsay. The assessee-firm had officially financed Rs. 1,12,50,000. The assessee was entitled to 10 per cent. commission and 50 per cent overflow received by the producer. These facts were also, confirmed by Shri Keshu Ramsay in statement given under Section 131 in 1996. However, the agreement regarding financing is not available in seized documents. However, loose papers 1 to 11 seized in Annexure A-2 from assessee's office on 25th Aug., 1995, shows the business statement which was claimed by the assessee as received to know the overflow of the film financed by it. The AO has, thus, stated that all these papers linked with Shri D.N. Shah's statement recorded on 25th Aug., 1995, then it would become clear that the assessee had substantial interest in the production of that film and income earned by the assessee was not disclosed in the books of account. The AO further observed that in the books of account produced during assessment proceedings, assessee paid Rs. 1,12,50,000 to D.M.S. Films and till the date of search, received back Rs. 1,29,00,000. The excess received of Rs. 16,50,000 was accounted for in the books of account as income from the film. It is also pointed out by the AO that the assessee was specifically asked to show contemporary evidence to prove that its interest was limited to 10 per cent of commission and 50 per cent of overflow. The assessee failed to produce any such evidence as no entry was made in the books of account of the assessee till the date of search to show that the amount relates to the commission. Thus, the AO has stated that since the financing arrangement was not proved from seized papers or other contemporary documents, the income declared under Section 132(4) from the film by the partner has to be considered as correct. The AO has further mentioned that if the assessee would not have produced/co-produced the film, Shri D.N. Shah would not have accepted the earning in cash from this film. Regarding the contention; of the assessee that the film could not do well, therefore, there was no possibility of earning Rs. 1 crore from this film, the AO has stated that the estimated income offered by the partner was on. account of unaccounted sources and not the income shown in the books till the date of search, Thus, according to the AO, seized documents relating to the film are supporting the voluntary statement of Shri D.N. Shah. He, therefore, held that the undisclosed income of Rs. 83,50,000 was earned by the assessee and the same is taxable in block assessment. The AO has further observed that the statement of Shri D.N. Shah recorded under Section 132(4) during the course of search is quite relevant for deciding the undisclosed income of the assessee-firm. Shri D.N. Shah admitted that he was making certain payments "In a particular mode and other such constraints". Though Shri D.N. Shah did not explain the particular mode, but it obviously relates to cash. The AO has also mentioned that by making voluntary disclosure of Rs. 2 crores for the above two films, the assessee stopped further enquiries by the Investigation Wing at the time of search on these two pictures as the Department was satisfied that the undisclosed income relating to the pictures would not be more than 2 crores. Therefore, according to the AO, the assessee should not be allowed to take advantage of retraction of the statement recorded under Section 132(4) of the Act.
7. At the time of hearing, the learned counsel for the assessee pointed out that the additions had been made by relying on the statement of Shri D.N, Shah which was recorded under Section 132(4) of the Act during the course of search, but Shri D.N. Shah, in his cross-examination, categorically stated by giving reasons that the said statement made under Section 132(4) was under duress and the same was not a voluntary statement. He contended that the AO has failed to give any reason justifying his claim that the retraction filed by Shri D.N. Shah in the form of an affidavit is not valid. The learned counsel argued that the reassessment has been made without mustering any evidence or bringing on record any information or fresh evidence to justify the addition of undisclosed income from both the films to the extent of Rs. 1,83,50,000. The learned counsel referred to the order dt. 28th Nov., 1997, of the Tribunal wherein the Tribunal set aside the original assessment order, with certain directions. The AO was directed to give a fresh finding regarding the undisclosed income relating to films 'Humse Hai Muqabala' and 'Sabse Bada Khiladi', after considering all the relevant material available on record and to pass a speaking order justifying the addition proposed. The learned counsel also pointed out that the Tribunal has given an opinion in para 14 of their order that the statement under Section 132(4) of the Act of Shri D.N. Shah, partner of the firm, cannot be treated as conclusive and admission/confession is to be considered with other evidence available on record which is to be properly appraised. According to the learned counsel the AO has completed the reassessment proceedings without causing any further enquiries and without giving any further opportunity to the assessee on the basis of such enquiry required to be made under Section 142(2) of the IT Act. Regarding the comments of the AO. that. "The statement was given by Shri D.N. Shah after two months of release of picture. If he was not a partner at that time, he would not have accepted the same", the learned counsel argued that the statement under Section 132(4) of the IT Act was recorded when raid was extended and it has so happened that the picture was released two months prior to the raid. Thus, according to him, the statement under Section 132(4) was not a voluntary statement and the same was under duress. This was stated by making an affidavit before the conclusion of the raid and the retraction so made was valid.. He contended that the AO did not establish that the statement was voluntary and there was no corroboration in any material particularly such as any accounts, or proof of partnership, etc. Regarding the loose papers seized, the learned counsel argued that the same were not in the handwriting of the partners of the firm and therefore, such papers were not having any evidentiary value. He referred to answer to question No. 9 of the statement of Shri D.N. Shah wherein Shri D.N. Shah had stated that "First of all, I would like to make it clear that the hand writing appearing on the loose sheets is not mine, neither it looks like any of my partners. The question how this loose sheet is found in my premises, I would like to say that we are running an office and lot of film people including producers, distributors, agents are visiting to my office. It might be possible that any one of my visitors has lost this loose sheet in my office." He, thus, contended that the AO has not followed the direction given by the Tribunal in their order and the addition of .Rs. 1 crore as undisclosed income alleged from share of profit from 'Humse Hai Muqabala' was unwarranted as the same is not according to law and made without mustering any evidence for making such addition. Regarding the contention of the AO that the assessee had substantial interest in production of the film and the income earned by the assessee was not disclosed in the books of account, the learned counsel argued that it was never denied that the assessee had substantial interest but the same was in respect of the 10 per cent commission and 50 per cent overflow. He referred to loose papers 1 to 11 seized in Annexure A-2 for contemporaneous evidence. He also contended that letter dt. 25th Jan., 1994, addressed to D.M.S. Films constituted an understanding to finance the film 'Sabse Bada Khiladi' which was a covering letter along with a cheque of Rs. 50,000 being the first payment. According to him, there was no further agreements and the above letter of understanding itself was an agreement and it was in the office premises at the time, of search. He further stated that there were several other files and documents in the office premises and not all the files and documents were seized. He also pointed out that during the course of original assessment proceedings, the explanation for loose papers 1 to 11 was called for and detailed explanation was given which has not been rejected by the AO even in the reassessment proceedings, Regarding the contention of the AO that the assessee failed to produce any evidence to prove that his interest was limited to 10 per cent as no entry made in the books of account of the assessee till the date of search to show that the amount relates to commission, the learned counsel contended that the required explanation was filed vide letter dt. 28th March, 2000, and relevant entries in the assessee's books of account before search were also explained. He further argued that receipts from D.M.S. Films were posted in the books of account and journal entries in respect of commission were made at the end of the year as per normal accounting practice. Thus, the learned counsel contended that the assessee was not a producer/co-producer of the film 'Sabse Bada Khiladi' as alleged by the AO. He further contended that the question of earning income in cash has to be established with conclusive evidence by the AO himself. According to him, the AO cannot entertain a view that estimated income offered by the partner is on account of unaccounted sources, when a retraction made by the partner of statement made under s, 132(4) and further cross-examination made during the course of reassessment proceedings clearly show that the assessee has denied any unaccounted income from the aforesaid film 'Sabse Bada Khiladi'. The learned counsel reiterated his argument that the retraction made by Shri D.N. Shah was before the conclusion of the search, therefore, there was no question of taking any advantage of retraction at this distance of time. He pointed out that if the observations of the AO in his assessment order are considered with reference to the parawise replies given to the said observations, it will appear that the AO has not given any fresh findings regarding the undisclosed income and has not justified that the additions made are valid in accordance with the provisions of Chapter XIV of the Act. He further stated that the AO failed to obtain any information by making any enquiries which were necessary as per the provisions of Section 142(2) of the Act. In support of his contentions, the learned counsel relied on the following Court cases :
(i) Pullangode Rubber Produce Co. Ltd. v. state of Kerala and Anr. (supra);
(ii) Shri Krishan v. Kurukshetra University AIR 1976 SC 376; Civil Appeal No. 947 of 1975
(iii) Sunder Agencies v. Dy CIT [IT(SS)A No. 87/Mum/1996, dt. 6th May, 1997] [reported at (1997) 59 TTJ (Mumbai) 610--Ed.]:
(iv) Suresh Chandra Agarwal v. Asstt. CIT [ITA No. 7900 (Bom) of 1992 dt. 12th Aug., 1996]:
(v) Asstt. CIT v. Mrs. Sushiladevi S. Agaiwal (1994) 49 TTJ (Ahd) 663;
(vi) Deepchand & Co. v. Asstt. CIT (1995) 51 TTJ (Bom) 421; and
(vii) Gaurishankar Omkarmal v. ITO (1990) 37 TTJ (Ahd) 353.
8. The learned Departmental Representative contended that the statement of Shri D.N. Shah, one of the partners of the assessee-firm recorded under Section 132(4) of the Act, during the course of search operation was without any pressure or duress as has been contended by the learned counsel. He argued that while computing the undisclosed income, reliance has been placed on the seized material and not on the appraisal report prepared by the search party. He invited our attention to pp, 13 to 16 of the paper book filed by the Department. On page No. 13, the documents seized from the residence of Shri D.N. Shah have been discussed. Annexure-A is a bunch of 13 loose papers, pp. 1 and 2 contained rough scribblings which according to the learned Departmental Representative are connected with the films made by the group. He referred to the notings mentioned on the front side of page No. 1 as follows:
"10 Sargam-Bangalore 14,7 1.20 Pravin a/c 18.80 3.80 Salim -
Bombay 55.00 5.00 S.B.K. (Subse Bada Khiladi) 75.00 18.80 3.57 Maidane-E-Jung 55.00 Venus On the reverse of page No. 1, the following scribblings/notings are made in figures:235 75
Similarly, the learned Departmental Representative referred to figures mentioned on pp. 14, 15 and 16 which are as follows:
Page- 14
-55
-160
-13.5 105
-10
-6 Page-15 50 Bom.
15 Del.35 35 1
5- 5- 135 146 On page No. 1A of the seized paper, on the front side, the following notings are made:
14.76 Cash Dhiru 3.57 Sudhir Delhi Mandayung (illegible) 25 Ch. Sudha sa 15 Ch. Ch.55
Cash sending 113.33 Below that are
-12 Ch. Ram
-10 Ran 22 50 10 Page-
16 12 72 135/33On the reverse of page No. 1A are written the following notings : "Sudhir"
-50 Bombay
-15 Delhi 5 Nizam 5 CI 1 Raj 3.57 -
35 Ch.
35 Gan 149.57 Followed by the above, the following figures are written :
5 1503.80 75 8.80 225
-225 70 155 The learned Departmental Representative, thus, contended that the figures must be in lakhs because such dealings are among the persons who are dealing with the production and distribution of pictures. According to him, these figures cannot be Rs. 5, Rs. 75, Re. 1, Re. 0.50, Rs. 3.57, etc., which obviously looks illogical. The learned Departmental Representative also invited . our attention to page No. 63 of the Departmental paper book and contended that Shri D.N. Shah, in his statement recorded under Section 132(4) of the Act on 24th Aug., 1995, has stated in response to question No. 17 as follows :
Q. No. 17: During the course of search, a number of loose sheets were found in your bed room. I am showing page No. 1 of such loose paper i.e., the number of entries made in letter-heads of Cine Yug. Can you please explain the entries made therein and in whose hand writing the entries are made ?
Ans. : My office is an open place for all customers who wish to do business with my company and they leaving their proposals for various projects. When we discuss the various proposals at first meeting, we used to whatever like plans as per available or any other proposals I admit on page No. 1 i.e., written by myself by black ink is related to my company.
Thus, the learned Departmental Representative contended that Shri D.N. Shah admitted that the loose papers seized from his residence belongs to his business and all calculations made on the paper pertains to his business transactions. The learned Departmental Representative also made reference to question No. 18 wherein though Shri D.N. Shah has admitted that the papers are written in his own handwriting but regarding the contents, he did not make any categorical statement. Similarly, Shri D.N. Shah has not clearly mentioned regarding the entries on page No. 1 of the seized paper in response to question No. 20 when he was asked by the search party. The learned Departmental Representative contended that writing Rs. 5 or Rs. 3.5 on these papers are quite irrelevant. According to him, the assessee had not given proper answers to the questions put to him during the course of search which also goes to prove that the statement of Shri D.N: Shah was recorded without any duress or pressure, otherwise Shri D.N. Shah could not have escaped by giving irrelevant replies even to very straight questions. According to the learned Departmental Representative, the entries on the seized papers are nothing but cash collections from various territories. The learned Departmental Representative also invited our attention to page No. 34 of the Departmental paper book and contended that the assessee had made payment in cash of Rs. 3,91,800 as per Annexure-A of p. 97 of seized papers. He argued that it is obvious from the above that the assessee was making large amount of payment in cash which had not been reflected in the books of account. Shri D.N. Shah did not give any explanation regarding this cash payment and the explanation given after the search was only an after-thought. The learned Departmental Representative also made reference to p. 35 of the Departmental paper book and argued that Annexure A-2 of seized papers consists of internal debit vouchers serially numbered from 301 to 601 in the name of M/s Time Video (P) Ltd. on a similar pattern as the vouchers which have been identified in Annexure-A. Annexure-3 is a bunch of debit vouchers of M/s Time Video (P) Ltd. serially numbered , from 1 to 300 and these are made on the same pattern as the debit vouchers in Annexures A-1 and A-2. Annexure A-4 is a bunch of debit vouchers serially numbered from 261 to page No. 541. These are in the names of M/s Time Magnetic (India) Ltd. All the vouchers in the bunch do not have any details therein including the amount, dates, purpose or mode. Only some names are scribbled across column No. 3 and signatures have also been made across a revenue stamp affixed at the place meant for the receiver's signatures. Thus, the learned Departmental Representative contended that the books of account maintained by the assessee are defective. The learned Departmental Representative also referred to page No. 37 of the Departmental paper book and argued that the assessee was keeping blank vouchers for the purpose of introduction of bogus expenses whenever assessee desires and in the name of whichever entity of the group, they find convenient. He, therefore, contended that the assessee was in the practice of inflating expenses at their own convenience with the intention to avoid the payment of taxes. The statement of Shri D.N. Shah was also recorded on 13th Sept., 1995, under Section 132(4) of the Act. In question No. 24, he was asked to explain regarding the blank debit vouchers which were having stamps and signatures over them, Shri D.N. Shah did not give any explanation, instead he claimed that he was concluding his statement. Thus, the learned Departmental Representative contended that there was explanation whatsoever in the incriminating documents found by the Department. He further contended that under the circumstances, the allegation that the statement was recorded under duress is without any basis. The learned Departmental Representative also invit,ed our attention to p. 54 of the assessee's paper book and contended that the scribblings pertain to the film 'Humse Hai Muqabala' and the figures mentioned over there are regarding the payment in cash. He also referred to pp. 57 and 58 of the assessee's paper book and contended that there are cash payment of Rs. 1 lakh for the film 'Humse Hai Muqabala' on page No. 57 and on page No. 58, cash being received in connection with the same film. The learned Departmental Representative, therefore, Contended that as per the seized material, huge amount of cash has been paid and received. Therefore, the declaration made by Shri D.N. Shah of Rs. 2 crores of undisclosed, income in his statement under Section 132(4) of the Act was made in the background of seized material. He also argued that no pressure was applied on Shri D.N. Shah for making the declaration of undisclosed income from both the films. He invited our attention to pp: 59,13 and 22 of the Departmental paper book and contended that blank cheques were found during the course of search, cash payments have been made which runs into several lakhs, therefore, the disclosure is fully supported by these documents. The learned Departmental Representative also made reference to the film distribution in Dubai by the brother of Shri D.N. Shah who is staying in Dubai. He also referred to Rs. 15 to 20 crores hawala done by Shri D.N. Shah for which the evidence is available in the seized documents. He also referred to the blank debit vouchers with revenue stamps which were found during the course of search, cash written on various seized papers which had either been received or paid and contended that the assessee was indulging in the evasion of tax on large scale. The learned Departmental Representative also contended that the statements recorded from Shri D.N. Shah were quite evasive, Shri D.N. Shah also did not show any co-operation, hence, his statements were not properly recorded, Keeping in view all these facts, the learned Departmental Representative contended that the disclosure made of Rs. 2 crores is quite insignificant and the same should be confirmed. The learned Departmental Representative placed his reliance on the following Court cases :
(i) Surjit Singh Chhabra v. Union of India AIR 1997 SC 2560;
(ii) V. Kunhambu & Sons v. CIT (1996) 219 ITR 235 (Ker);
(iii) Rameshchandra & Co. v. CIT (1987) 168 ITR 375 (Bom): and
(iv) Param Anand Builders (P) Ltd. v. ITO (1996) 56 TTJ (Mumbai) 21 : (1996) 59 ITD 29 (Mumbai).
In his rejoinder, the learned counsel contended that 'Maidane-E-Jung' and 'Ganesh Jain', the names which are appearing in the seized paper were not connected with the assessee. He also argued that the assessee was never non-cooperative. Shri D.N. Shah replied to all the questions which were asked from him. So far as the cash amount appearing in the seized documents, the learned counsel contended that the same was accounted for in the books of account. He contended that such cash was paid to small time artists.
9. We have carefully considered the submissions made by the rival parties. We have also gone through the various documents produced before us. The search action under Section 132 was carried out in the case of Time Video group and as such the assessee was also covered under search action on 24th Aug., 1995. During the course of search, the search party recorded the statement of Shri D.N. Shah, who is the partner in the assessee-firm, under Section 132(4) of the Act. The search party also recorded the statement of Shri Ashvin Visaria, an employee of M/s Video Master. During the course of statement under Section 132(4), Shri D.N, Shah made the following disclosure :
Rs.
(i) Unaccounted earning from film 'Humse Hai Muqabala 1,00,00,000
(ii) Unaccounted earning from film 'Sabse Bada Khiladi' 1,00,00,000
(iii) Discrepancy in books of account, investment in capital, jewellery and household expenses 1,00,00,000 3,00,00,000 The AO passed the original order uder Section 158BC on 25th Sept., 1996, by determining the undisclosed income of the assessee at Rs. 2,84,37,080 comprising the following amounts:
Rs.
(i) Undisclosed income from production and sale of video cassettes 1,00,87,080
(ii) Undisclosed income from share of profits from 'Humse Hai Muqabala' 1,00,00,000
(iii) Undisclosed income from 'Sabse Bada Khiladi 83,50,000 2,84,37,080 On appeal, the Tribunal vide their order dt. 28th Nov., 1997, deleted the addition of Rs. 1,00,87,080 except the disclosed amount of Rs. 39,37,150 in the block return filed by the assessee. The other two additions were set aside by the Tribunal for fresh finding regarding the undisclosed income earned after consideration of all relevant material available on record. The AO passed the reassessment order on 29th March, 2000, retaining the above two additions. According to the Revenue, the additions have been made on the basis of the statement of Shri D.N. Shah, one of the partners of the assessee-firm which was recorded during the course of search under Section 132(4) of the Act. It is also the contention of the Department that the statement recorded under Section 132(4) was voluntary and the disclosure made was fully supported with various documents seized during the course of search. The learned counsel for the assessee, however, contended that the statement of Shri D.N. Shah was recorded under duress and the same was not a voluntary statement. He also contended that the statement recorded under duress and pressure during the course of search was later on retracted by Shri D.N. Shah, in the form of an affidavit. Now the main issues for consideration are as follows ;
(i) Whether the disclosure made by Shri D.N. Shah is voluntary or the same has been made under duress and pressure.
(ii) Whether the retraction made is valid in law or the same has been made to frustrate the efforts of the Revenue to sniff off the unaccounted funds.
(iii) Whether the disclosure made is supported by the documents seized during the course of search.
Regarding the first issue whether the statement recorded under Section 132(4) of the Act during the course of search on 24th Aug., 1995, was a voluntary statement or not, we would like to refer to certain questions put to Shri D.N. Shah and his answers, during the course of search. In response to question No. 5, he has stated as follows :
Ans.: Mr. Sudhir is the distributor for Mysore territory (Bangalore). Shri Sudhir (N.R. Sudhir for full) has bought a picture 'Humse Hai Muqabala'. Subsequently, my company, i.e., Video Master and Venus group became partners for 25 per cent each in the project and the remaining 50 per cent to -Shri Sudhir according to the evidence put forward by him in the form of a letter from the producer to him. He has paid or agreed to be paid Rs. 3 crores, the amount was divided into four parts and shares were divided in between Venus and myself.
The question put to Shri D.N. Shah was only regarding his relationship with Shri Sudhir but Shri D.N. Shah came out with various facts which were not known to the search party. He voluntarily disclosed facts like 25 per cent and 50 per cent in the project which facts nobody can force on him because such facts were not known to any one else except him. The fact that "He had paid or agreed to be paid Rs. 3 crores, the amount was divided into four parts and the shares were divided in between Venus and myself" is known to him only and the search party cannot come to know such facts unless there is an evidence available from seized documents. Therefore, the search party was not required to put any pressure on him for certain facts which were known to him only. The search party can put pressure, if any, for disclosure and not for certain facts which were known to him only. Therefore, the facts regarding undisclosed income of Rs. 3 crores/were disclosed by him spontaneously, without any duress or pressure. Again in question No. 6, when he was asked regarding the bunch of loose papers as per Annexure-A and the receipt of cash of Rs, 69.76 lakhs mentioned on such papers he simply stated that "Whatever written in p. 1A with blue ink is not my handwriting". If any pressure or duress would have been applied on him, his answer would not have been so simple and he would have been forced to accept the ownership of such papers along with the amount mentioned thereon. This clearly establishes that he was not forced to make any statement which was not true. He made the statement without any duress. The question Nos. 8 and 9 put to him make it abundantly clear that the disclosure was voluntary, and specific. These questions and answers are reproduced below:
"Q. No. '8 : During the course of search Sir K.K.S. have come to notice as already put you indifferent questions, the public revenue received from your pictures "Humse Hai Muqabala" and "Sabse Bada Khiladi". There have not been fully disclosed subscription amount of receipts in cash have been suppressed what you have to say about that ?
Ans.: I admit that because of the business correspondence of having to pay in particular mode and other such constraints the gross profit from the 2 pictures. We have not been properly disclosed. By wrongly and ring estimates the total concealments should be around 2 crores. I undertake to make payment to income-tax accordingly. However, it is requested that on account of my voluntarily admittance suppression of profit, I individually be considered a cooperative absence under Section 17 of the IT Act, 1961 avail treat it accordingly.
Q. No. 9 : I am explaining to you the provisions of Section 132(4) of the IT Act with Section 221(1)(6) of the IT Act, 1961. Do you have any declaration to make under the said premises ?
Ans. 9 : I want to declare that an amount of Rs. 3 crores as undisclosed income out of which an amount of Rs. 2 crores is in the form of suppression of profits from 2 films viz., Humse Hai Muqabala and Sabse Bada Khiladi. These films have been marked/produced (Negative purchased from M/s Gentleman Film International) M/E Vasupradha Enterprises purchased rights of Humse Hai Muqabala in which M/s Video Master a partnership firm of which the following are members of my family as per (1) Shri D.N. Shah, (2) Shri Hasmukh N. Shah (3) Shri Sharnji N. Shah and Sabse Bada Khiladi was purchased by M/s Time Magnetics (India) Ltd., in which myself, my brothers Shri Pravin N, Shah and Shri Hasmukh N. Shah are the directors and India Video rights are purchased by M/s Video Master where myself, my brothers Shri Hasmukh N. Shah, Shri Shamji N. Shah are partners. The balance amount of Rs. 1 crore include the following: (1) Discrepancy on amount of the documents file seized from the office and factory and residential premises of all my family members. (2) Invested in capital and the investment in jewellery and other miscellaneous household expenses."
The deposition made above is quite specific and in our opinion such specific replies cannot be dictated by anybody who is not aware of such specific details of the business, its conduct and sharing of profits. These facts were known to Shri D.N. Shah only and he voluntarily disclosed such facts before the search party. There is no indication whatsoever from the above answers given by Shri D.N. Shah that any duress or pressure was used by the search party. The statement of Shri D.N. Shah recorded on 24th Aug., 1995, is also quite relevant to support the contention of the Department that the search party did not use any duress or force while recording the statement. Shri D.N. Shah was asked to explain the nature of various documents seized from his residence. His replies were quite evasive which proves beyond doubt that the search party did not use any duress otherwise he would have not been allowed to give evasive answers. In reply to question No. 20, he explained that figure 10 against Sargam, Bangalore is Rs. 10 only. The transaction in film industry are not made in ten rupees or even in 10 thousand, they generally run into lakhs. Similarly, he explained that the following figures are only in two digits :
3.80 In Bombay 5.00 S.B.K. 55.0 Venus The explanation given by Shri D.N, Shah that Rs. 3.80, Rs. 5.00 and Rs. 55.00 are only proposals and digits are single or double is totally illogical. The transaction or even a proposal for the film 'Sabse Bada Khiladi' cannot be in five rupees. If the search party would have used the duress, the assessee would have definitely come out with the truth. This gives clear indication that Shri D.N. Shah made the statement without any duress or pressure. Similarly, Shri D.N. Shah gave reply to the various questions without any logical basis. Thus, the allegation levelled by the learned counsel that the statements recorded under Section 132(4) were not voluntary is without any basis and the same is rejected. The very fact that the subsequent retraction of statement by Shri D.N; Shah was after about a month makes it abundantly clear that the retraction was an afterthought and the original statement was given voluntarily without any duress or pressure. The statement of Shri D.N. Shah was recorded during the course of search in the presence of two independent witnesses. Shri D.N. Shah has not obtained any affidavits from, them to the effect that there was any irregularity in the search or that there was coercion or intimidation which resulted the disclosure of Rs. 3 crores. The statement under Section 132(4) of the Act was given voluntarily. The burden of proving that the statement was obtained by coercion and by duress has not been discharged by Shri D.N. Shah. There is nothing in the affidavit filed by Shri D.N. Shah which would prove that the search party intimidated him for making the disclosure of Rs. 3 crores. Thus, Shri D.N. Shah could not submit any evidence to prove that the original statement given by him was under duress and threat, therefore, the retraction filed by him is not valid. Even if we accept that the search party had given some threat to Shri D.N. Shah while recording his statement, there was nothing to stop him to either meet personally or through his authorised representative, the higher authorities to bring to their notice through written communications that any statement or admission made by him before the search party was on account of threat, coercion or undue influence. Moreover, merely writing would not have been enough. Shri D.N. Shah should have brought to the notice of the higher authorities what actual threat, coercion or undue influence was exercised by the search party so that the same could have been verified with the witnesses who were there at the time of search. Shri D.N. Shah never made any efforts to inform the higher authorities regarding the duress used by the search party for extracting the disclosure made by him and has filed the affidavit without any supporting evidence. It appears that Shri D.N. Shah has made an effort by filing the affidavit to frustrate the efforts of the Department to bring to tax the undisclosed income of the assessee which he admitted during the course of search. Under the circumstances, we are of the considered opinion that the Department did not use any force or coercion for recording the statement of Shri D.N. Shah and the same was made voluntarily.
10. So far as the arguments of the learned counsel regarding the retraction of the statements of Shri D.N. Shah recorded under Section 132(4) of the Act are concerned, we find nothing on record to indicate that IT authorities have employed third degree methods to force Shri D.N. Shah to make confession or admissions. To prove that whether the retraction made was valid or not, one has to consider the following factors :
(i) The time gap between the date of recording the statement under Section 132(4) of the Act and the date of filing the affidavit retracting the above statement.
(ii) The evidence of the witnesses who were present during the course of search.
(iii) Communication made with the higher authorities and the documents seized during the course of search.
So far as the first factor is concerned, the retraction of the statement was made by Shri D.N. Shah by filing an affidavit only after about a month. The statements under Section 132(4) of the Act were recorded on 24th and 25th Aug., 1995, whereas the affidavit for retraction by Shri D.N. Shah was filed on 20th Sept., 1995. If the statement of Shri D.N. Shah was recorded by using duress, intimidation or coercion, he would have immediately on the same day or on the following day filed the retraction. The very fact that he kept quiet for almost a month after recording the statement proves beyond doubt that the statement was not recorded by using any force by the search party. Therefore, the affidavit filed by Shri D.N. Shah was an afterthought and it was simply a device to frustrate the efforts of the Department to sniff off the unaccounted income of the assessee.
11. Corning to the factor of evidence of the witnesses who were present during the course of search, the issue cannot be decided merely because Shri D.N. Shah, one of the partners of the assessee-firm made a protest after the conduct of the search. There is nothing to show that the search was conducted out of any malice on, the part of the officer of the Department. There is nothing in the evidence to show that the search party intimidated Shri D.N. Shah to give a confession of Rs. 3 crores in the course of search. The assessee had not discharged the burden of proving coercion and use of force during the course of recording the statement of Shri D.N. Shah under Section 132(4) of the Act. The search is generally conducted in the presence of two independent witnesses preferably from the same locality. The assessee has failed to obtain any statement from the witnesses to the effect that there was any irregularity in the search or the statement of Shri D.N. Shah was recorded under coercion and by use of force by the search party which resulted in the disclosure of undisclosed income of Rs. 3 crores. The statement was given by Shri D.N. Shah voluntarily as we have discussed above. It is quite usual for persons whose premises are subjected to search to send complaints of unfounded allegation with the view to escape from the consequences and from disclosures made during the course of search. The assessee had not obtained any statement or affidavit from the witnesses in support of the plea that the statement of Shri D.N. Shah was obtained by coercion or intimidation. So the assessee has totally failed to discharge the burden of proving that fact. Therefore, we do not find any force in the retraction filed by Shri D.N. Shah.
12. Coming to the factor of communications made with higher authorities, we do not find anything on record which would indicate the efforts made by the assessee to bring into the notice of the higher authorities, the methods used by the search party to extract the disclosure of Rs. 3 crores from Shri D.N. Shah in his statement recorded under Section 132(4) of the Act. Section 132 of the IT Act deals with search and seizure of any books of account or other documents and to make a note or any inventory of any money, bullion, jewellery or other valuable articles or thing in the course of search of any premises. Sub-section (4) and the Explanation thereunder read as follows :
"(4) The authorised officer may, during the course of search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable articles or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceedings under the Indian IT Act, 1922 (11 of 1922) or under this Act.
Explanation : For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian IT Act, 1922 (11 of 1922) or under this Act."
Thus the authorised officer had the power to record statements on oath on all matters pertaining to the suppressed income. The statement cannot be confined only to the books of account. If Shri D.N. Shah, partner of the firm came forward to disclose Rs. 3 crores of undisclosed income of the firm during the course of search in his statement under Section 132(4) of the Act, there is no reason why the AO shall not make use of it even though there was no actual verification of the various documents seized during the course of search. The statement was made voluntarily. If there had been any irregularity or use of any force or intimidation, the assessee could have made correspondence with higher authorities immediately after recording such statement appraising them of the coercion or duress used for obtaining the statement. There is nothing to stop the assessee to meet either personally or through their authorised representative to higher authorities of bringing to their notice through written communication that any statement or admission made by them before the search party was on account of threat, coercion or under influence. Moreover, as we have stated above, merely writing would not be sufficient, but what actual threat, coercion or undue influence was exercised is also required to be spelt out so that its veracity could be verified with the witnesses who were there at the time of search. But in the present case, Shri D.N. Shah neither met the higher authorities personally nor he made any written communication with higher authorities immediately after recording his statement regarding the duress or coercion used by the search party for extracting the disclosure of undisclosed income of Rs. 3 crores. Shri D.N. Shah also did not bring into the notice of the higher authorities, the particular form of force or intimidation used by the search party. Under the circumstances, the retraction made by Shri D.N. Shah after about a month of recording the statement under Section 132(4) of the Act is an afterthought to cover up the undisclosed income. The affidavit filed by Shri D.N. Shah is not supported by any evidence whatsoever, therefore, the same has been rightly rejected by the AO as the same does not inspire any confidence. During the course of search, a number of documents were seized by the search party. The documents seized contains various types of financial transactions which runs into several crores. Shri D.N. Shah made the disclosure on the basis of such documents seized during the course of search. We find sufficient force in the arguments of the learned Departmental Representative that if the offer of settlement in the form of confessional statement is made and the same is accepted by the Department, the assessee cannot subsequently turn around and disown the settlement. If Shri D.N. Shah would not have made this confessional statement, the Department could have continued the search and thereafter, the Department could have investigated the entire matter on the basis of the various documents seized during the course of search. By making the disclosure of Rs. 3 crores, Shri D.N. Shah stopped the entire process of further investigation as the Department accepted the disclosure and closed further investigation. After making such an offer of settlement in the form of confessional statement which is also accepted by the Department, the retraction filed by Shri D.N. Shah after about a month from the date of confessional statement cannot be considered as a valid retraction and the same is nothing but a well planned device to frustrate the efforts of the Department to unearth unaccounted funds by resorting to action under Section 132(4) of the Act. In view of the discussion above, the retraction fried by the assessee is, therefore, an afterthought and the same is rejected.
13. Now the only point remains for consideration is whether the disclosure made is supported by the various documents seized during the course of search. Annexure-A is a bunch of 13 loose papers, pp. 1 and 2 contains rough scribblings which are actually connected with the films made by this group. These papers were seized from the residence of Shri D.N. Shah. Page No. 1, on the front side, contains certain notings as we have mentioned above. The nothings on this page indicate payment out of business receipts in India by Shri D.N. Shah. These figures cannot be in one or two digits as explained by Shri D.N. Shah. These transactions are among the film producers and distributors, therefore, such transactions must be in lakhs only as contended by the learned Departmental Representative. These accounts had been maintained very systematically. The various amounts mentioned appears to be collection made or to be made from various territories which would normally be in lakhs of rupees. Shri D.N. Shah also admitted in his statement that part of the writing on page Nos. 1 and 1A which are in blue ink are written by him. It appears from the notings that page Nos. 1 and 1A are related to each other as figures of 3.8 lakhs, 55 lakhs, 14 lakhs and 76 lakhs are there in both pages. This is quite obvious from these pages that the assessee is having unaccounted transactions running into crores in his film business. Annexure-A to p. 97 seized from Ratnajyoti Industrial Estate (Departmental paper book p. 34) indicates that the assessee, was making large amount of payment in cash which have not been reflected in the books of account. It was brought to our notice by the learned Departmental Representative that no explanation was given at the time of search with respect to these cash payments. This also supports the view that the assessee was indulging in cash transactions on a large scale. It was also found during the course of search that the assessee was having large number of vouchers for expenditure which were signed but the amount of disbursement was not mentioned. This evidence also establishes the modus operandi of the assessee for manipulating the expenditure. The assessee did not give any explanation of these vouchers during the course of search. Annexure-I, pp. 58, 66 to 69 (assessee's paper book, p. 54 to 58) also reveals large amount of transactions in cash being received and paid in cash on exhibition of films at various picture halls. Page No. 58 refers to assessee's paper book page 54. On the top of this page the name of the film is written as 'Humse Hai Muqabala' in front of 12 cinema halls Savitri and Alankar and against that 20 cash and 35 cash is written These are obviously the coded figures related to cash receipts on exhibition of picture at Savitri and Alankar picture halls. Similarly, page Nos. 68 and 69 of seized material pertains to cash receipts and payments with respect to the film 'Humse' Hai Muqabala'. It was also contended by the Department that the picture 'Sabse Bada Khiladi' was produced by Keshu Ramsae, proprietor of D.M.S. Films. The film was financed by Times Group and was controlled also by Times Group. During the course of search, it was found that M/s D.M.S. Film was a benami for Times Group. It was also ascertained that most of the expenditure for the film was done from the office of Times Group. All the cheques, drafts etc., were sent and received from the office of the Times Group. The papers seized from the residence of Shri Pravin Shah revealed the payment of Rs. 45,000 cash and Rs, 45,000 by cheque. Similarly, other papers seized also revealed the payments by the assessee group in cash. In view of the aforesaid discussion, it appears that the assessee-firm was indulging in cash transactions which run into crores. The documents seized during the course of search also revealed that Shri Ramesh N. Shah, brother of Shri D.N. Shah has a large number of bank accounts in Dubai and Zurich in which huge cash deposits are being made. The total deposits for certain period for which pass books were found at the time of search was in excess of Rs. 35 crores. Shri Ramesh N. Shah made a gift of Rs. 4.58 crores to various individuals and concerns of Times Group in India. The assessee group was having blank signed cheque books of Shri Ramesh N. Shah and amounts were withdrawn by them by filling in the amounts at will. Thus, the learned Departmental Representative contended that the assessee perhaps, was indulging in Hawala transactions i.e., the assessee was sending cash abroad and bringing the money back to India in the form of NRI gifts. It was also revealed that one of the main persons of the group was booked under FERA/COFEPOSA and was behind bar for a long-time. The various documents mentioned above are quite indicative regarding the large scale indulgence of the assessee in cash transactions which runs into crores of rupees. Therefore, the disclosure made by Shri D.N. Shah of Rs. 3 crores under Section 132(4) of the Act, is fully supported by the documents seized during the course of search. After going through the facts and circumstances of this case, we find that the addition made by the AO at Rs. 1,83,50,000 is quite insignificant and the same does not require any interference from our side.
14. The learned counsel also relied upon various Court cases to support his contention, as has been mentioned above. The first case relied upon by the learned counsel is Krishan v. The Kurukshetra University (supra). In this case, the Hon'ble Supreme Court has held that the admission made in ignorance of legal rights or under duress cannot bind the maker of the admission. We do not find any force in the contention of the learned counsel because in the present case, the admission has been made by Shri D.N. Shah, partner of the assessee-firm, voluntarily and the same has not been made either in ignorance of legal rights or under duress. Therefore, the facts of this case are entirely different from the facts of the present case. In the case of Pullangode Rubber Produce Co. Ltd. (supra), the Hon'ble Supreme Court held "Admission is an important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct set of facts." In the present case, the statement of Shri D.N. Shah was recorded without any duress or intimidation. The statements made are also fully supported with the various documents seized during the course of search. Therefore, the admission made by the assessee is. voluntary and was also supported by the financial transactions reflected in the seized documents. Therefore, the retraction made by Shri D.N. Shah later on, after about a gap of one month of recording the statement was not correct The facts of this case, therefore, have no application to the facts of the present case. In the case of Sunder Agencies (supra), nothing was found at the time of search which could have been utilised against the assessee for establishing that expenditure on sales promotion was the undisclosed income of the assessee. But, in the present case, as we have mentioned above, the Department seized a number of incriminating documents which contained financial transactions running into several crores. Therefore, the statement recorded in the present case under Section 132(4) was fully supported with the documents seized during the course of search. Therefore, the case of Sunder Agencies (supra) is entirely different on facts than the present case. Therefore, the same has no application to the facts of the present case. In the case of Suresh Chandra Agarwal (supra) the statement under Section 132(4) was recorded on 8th Sept., 1990, and the same was retracted on 10th Sept., 1990. But in the present case, the statement was retracted after about a month of recording the same. In the above case, the assessee also wrote a letter to the Dy. Director of Inspection on 10th Sept., 1990, wherein he explained how his statement was recorded under duress and pressure. But in the present case, the assessee never approached the higher authorities with the explanation, how his statement was recorded under coercion. The assessee filed only an affidavit after about a gap of one month, after recording the statement wherein he has mentioned that his statement was recorded under duress. There is a vast difference in filing the retraction after the gap of about one month and filing the same on the very next day from recording the statement. Therefore, we are unable to find any similarity between the facts of the present case and the facts of the case relied upon by the learned counsel mentioned above. Under the circumstances, this case is also not relevant for deciding the issues involved in the present case. In the case of Mrs. Sushiladevi S. Agarwal (supra), the AO made additions due to incoherence and variation in assessee's statements on different dates which the Tribunal found was not justified. It has also been pointed out in the above case that the assessee was unwell during the search. It has been further stated that in spite of persistent request vendor's books were not subjected to chemical examination which could reveal forgery. Thus, the facts in this case are entirely different from the facts of the present case. In the above case, the statement was recorded under different circumstances. There was also no material available to support the statement recorded under Section 132(4) of the Act. In the present case, the statement recorded under Section 132(4) of Shri D.N. Shah, partner of the assessee-firm, is fully supported with the various documents seized during the course of search, as we have discussed in the foregoing paragraphs.
Therefore, this case is also not relevant to the facts of the present case. In the case of Deepchand & Co. (supra), no supporting evidence to confirm the addition was found during the course of search except statement of two partners recorded at the time of search. Statement recorded during search continued for more than two days and two nights. Under these circumstances, the Tribunal held that the statements recorded cannot be considered to be free, fearless and voluntary. The Tribunal also found that there was no supporting evidence to confirm the1 additions except the statement of the partners. Under these circumstances, the Tribunal did not sustain the additions. But in the present case, as we have discussed in the foregoing paragraphs the statement of Shri D.N. Shah was recorded without using any force or intimidation, the statement of Shri D.N. Shah was also supported with the various documents seized during the course of search. Under the circumstances, we do not find any relevance of this case to the facts of the present case. In the case of Gaurishankar Omkarmal (supra), the statement was recorded when the assessee was undergoing great mental stress and strain. Further, the Department also could not support the statement recorded by any material seized during the course of search. Therefore, the Tribunal held that the statement recorded during the course of search should not be given any importance for deciding the genuineness of the firm. In the present case, Shri D.N. Shah gave the statement voluntarily and the same was based on the various documents seized during the course of search. Therefore, the statement recorded in the above case was entirely under different circumstance and therefore, this case also does not have any relevance to the facts of the present case.
15. In view of the above discussion, we do not find any relevance of the various cases relied upon by the learned counsel for the assessee as the facts and the circumstances of the present case are entirely different from the facts and circumstances of such cases. We, therefore, find full justification for making the addition of Rs. 1,83,50,000 and determining the total undisclosed income of Rs. 2,22,87,150 for the block period under Section 158BC, by the AO and the same is confirmed.
16. In the result, the appeal of the assessee is dismissed.