Income Tax Appellate Tribunal - Mumbai
Dy. Cit vs Ms. Aishwarya K. Rai on 8 March, 2007
ORDER
R.P. Tolani, Judicial Member
1. This is revenues MA against order of Third Member passed on 30-6-M05 in IT(SS) No. 677/Mum./2003 in the case of Ms. Ais warya Rai v. Dy. CIT
2. At the outset, learned Counsel for the assessee contends that issue about credit in State Bank of India account was not referred to for opinion of Third Member. Revenue while filing this MA has inadvertently referred to mistake in respect of credit in SBI Account, since the issue was not before 1hird Member, there can be no mistake in present order, therefore, MA on-this issue is not maintainable.
3. Learned Departmental Representative concedes.
4. I have heard rival submissions and perused record. Since issue about credit in SBI Account was not before the undersigned, as Third Member. There can be no mistake in the order passed consequently, issue about credit in SBI Account raised in this MA is dismissed accordingly.
5. Issue of mistake as raised by the revenue contending it to be apparent from record and rectifiable under Section 254(2) of the Income Tax Act, arising out of the Third Member's order is, as under:
3. Unaccounted investment in La-Mer property of Rs. 50 lakhs : An addition of Rs. 50 lakhs was made on account of cash payment for purchase of flat in La-Mer building by the assessee. The assessee along with her father, mother and brother purchased a flat on 12th Floor in La-Mer building at Bandra. The flat was purchased for an agreement value of Rs. 90 lakhs from Jay Construction Co. and the date of agreement was 25-5-1999. During the course of search, a loose papermarked as Annexure A3 was seized, in which page Nos. 5,44 & 45 were relevant to the purchase of the flat. Shri Krishnaraj Rai, father of the assessee, in his statement recorded under Section 132(4) of the Act admitted that they have paid additional amount of cash of Rs. 50 lakhs for purchase of flat in La-Mer building. This statement was recorded on 26-9-2000. Thereafter, vide letter dated 29-11-2000, the father of the assessee retracted the said admission of payment of on money of Rs. 50 lakhs. There was a difference of opinion between the learned Judicial Member and the learned Accountant Member on this issue and the learned Judicial Member vide his order dated October, 2004 deleted this addition and the learned Accountant Member vide his dissenting judgment (pages 60 to 64 of the order dated 11-11-2004) confirmed this addition. The matter was referred to the 3rd Member, who vide order dated 30-6-2005 agreed with the Judicial Member and accordingly, the ITAT 'H' Bench vide its order dated 18-7-2005 decided this issue in favour of the assessee.
A perusal of the order dated 30-6-2005 of the learned Judicial Member, i.e., the Third Member, shows that certain factual errors have crept in while deciding the issue in favour of the appellant. While the Hon'ble Third Member has interpreted the seized loose paper No. 44, as showing a cash payment of '84'(Rs. 84 lakhs), the assessing officer and the Commissioner (Appeals) have taken the figure of cash payment as mentioned in page No. 44 as Rs. 50 lakhs only. In the figure of Rs. 84 lakhs, Rs. 50 lakhs was taken as cash component and Rs. 34 lakhs was taken as cheque component, which was evident from analysis of page 44 as given in the assessment order.
It is also seen from the assessment order of the assessing officer, wherein from page No. 25 to page No. 43 the issue of unaccounted investment of Rs. 50 lakhs in the La-Mer property is discussed. On page No. 27, the extract of page No. 44, which is crucial to the issue, is given. From page No. 30 to page No. 34 the co-relation of the figures written on this page with the actual transaction is also given. On page No. 35, at top, the assessing officer has given a categorical finding that the total payment was made of Rs. 84 lakhs which included payments by cheque at Rs. 34 lakhs and the balance amount of Rs. 50 lakhs is cash component.
The assessee agitated the issue before the Commissioner (Appeals) and the Commissioner (Appeals) vide his order dated 29-8-2003 dismissed the appeal of the assessee on this ground. In para 9.11 of the order the learned Commissioner (Appeals) has confirmed the findings of the assessing officer and has held that 'as seen in the impugned assessment order, the assessing officer could make accurate assessments of all the entries that could broadly correlate with one another to establish that there was on money payment of Rs. 50 lakhs to the builder.
Now coming to the decision of the Hon'ble Judicial Member vide his original order undated October 2004, on this issue, while deleting the addition, it is seen that he also considered the total payment on this page as being 84 lakhs out of which Rs. 34 lakhs was paid by cheque. The learned J.M. in para 36 of his original order, on page 42 held that the sum represented on this page was 'promise'to pay 84 lakhs by May 1999 but in fact, only Rs. 34 lakhs was paid. The following excerpt from p. No. 42 illuminates the issue.'But we find force in the argument of the learned AR that the figures mentioned on this page after the first line were the amounts promised to be paid as the word promise is written on this page. According to him the promise was made for payment of Rs. 84 lakhs by May 99 but in fact Rs. 34 lakhs were paid. Payment of Rs. 34 lakhs is reflected in the accounts and is also accepted by the assessing officer.' Accordingly he held that the balance of Rs. 50 laklis was only a promise and the addition was only a suspicion of the assessing officer that the amount might have been paid in cash. In the very same order the learned Accountant Member in his dissenting judgment in para 7 (page 62) has again analysed this page and has held that the payments were aggregating to Rs. 84 lakhs out of which 34 lakhs represents payments made by cheque and the contention of the assessee that these figures represent mere'promise'of payments is not acceptable. The following are the relevant excerpts from page 62 of his order.
The + sign shows that it is in addition to what is written on its left hand side in the first column. Similarly, the next figure of +34 represents payment of Rs. 34,00,000 made by cheque from 17-5-1998 to 29-3-1999. The details of these payments appear at page 33 of the order of my learned brother. The subsequent figures in the above mentioned second column represent cheque payments of Rs. 10,00,000, Rs. 12,00,000, Rs. 10,00,000 and Rs. 12,00,000 made in June 1999, October 1999, December 1999 and in June 2000. The details of these payments appear at page 11 of the order of my learned brother. The figures appearing in the left hand column, in my considered opinion, represent cash payments of Rs. 5,00,000, Rs. 4,00,000, Rs. 5,00,000, Rs. 2,00,000 and Rs. 9,00,000 made on/in January 1999, 4-2-1999, 13-2-1999, 2-3-1999, May 1999 respectively. The mentioning of dates of 4-2-1999,13-2-1999 and 2-3-1999 are strong indications of actual payments having been made on these dates and therefore the plea of the learned AR of the assessee that these figures represent mere'promise'of payments is not acceptable. The payments aggregating to Rs. 84,00,000 are mentioned once again on the extreme left and the payments aggregating to Rs. 56,00,000 made up to October 1999 are written on the extreme right in the form of coded figures of 84 and 56 respectively. The sum total of these two figures of Rs. 84,00,000 and Rs. 56,00,000 is Rs. 1,40,00,000 and is mentioned as 1.40 between the two figures of 84 in the extreme left and 56 on the extreme right. The above analysis interpretation of the transactions appearing in the aforesaid seized paper provides strong corroboration of the statement given by assessee's father under Section 132(4).
Accordingly in para 9 of his order he upheld the addition of Rs. 50 lakhs.
Due to the difference of the opinion between the members who heard the appeal, the question of addition of Rs. 50 lakhs made by the assessing officer and confirmed by the Commissioner (Appeals), was referred to the Third Member. The learned Third Member while addressing the issue has travelled beyond the terms of reference and reinterpreted the seized material which was already interpreted by the Judicial Member and the Accountant Member in their order. The learned Third Member in para 36 page 21 has given a fresh finding that the page 44 represents cash payment of Rs. 84 lakhs, if the contention of the revenue are accepted and not Rs. 50 lakhs. On this basis he has held that the loose paper does not support the case of the revenue. The relevant finding is as under:
36. Coming to loose paper, the same was written in coded manner. One interpretation of the revenue is that extreme right column of figure totalling "78" represents cheque payments and the middle column represents cash payments and cheque payments. Apropos that, assessee's contentions is, the word "promise" is clearly written on the side of inscription, therefore, these were promises made, actual payments are duly recorded in the books of account, which have been verified. Oral agreement for the property was executed in March, 1998 and till December, 1998 an amount of Rs. 59 lakhs was promised to be paid. The assessee's contention is, words written had to be given proper effect, therefore, the word "promise" has to be given proper meaning, entries in the middle column represent only promises, as and when payments are made they are reflected. If the departmental explanation is considered, then all the middle column entries are cash payments which totals up to "84" and adding Rs. 90 lakhs being the agreement value, the cost of flat comes to Rs. 174 lakhs resulting in addition of Rs. 84 lakhs, whereas the lower authorities have taken only Rs. 50 lakhs, which shows the contradictory stand.
Thus, it can be seen that the learned Third Member has put forth an entirely new dimension to the interpretation of page 44, by holding that the sum of Rs. 84 lakhs is the cash component and it does not include cheque payment of Rs. 34 lakhs and has totally negated the findings of the assessing officer, the Commissioner (Appeals), learned Judicial Member and the Accountant Memberin the original order. Therefore, it can be seen that a factual error has crept in the order of the Third Member.
It will not be out of place to mention here that the Hon'ble ITAT has accepted the delayed retraction of the father of the assessee regarding on money payment on the basis of contentions made by him regarding his mental state. It is also seen that the attention of the Tribunal was not drawn to certain decisions while deciding the issue of 'evidentiary value' of the statement made under Section 132(4) of the Act. It was held in Dr. S.C Gupta v. CIT (2001) 248 ITR 782 that:
As regards the assessee's contention that the statement having been retracted the assessing officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could from the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. Similarly, P.K. Palwankar v. CGT and CIT v. Mrs. Doris S. Luiz on which also learned Counsel for the assessee placed reliance are of no help to the assessee. The Tribunal's order is concluded findings of fact and in our view no question of law arises. The-Kapplications are, accordingly, rejected.
Similarly, in the case of Dy. CIT v. Bhogilal Mulchand, the ITAT Ahmedabad Bench 'B'in the IT Appeal Nos. 4780 (Ahd) of 1996,51, 960 (Ahd) of 1977 and 2455 (Ahd) of 1999 (2005-TIOL-I 73-ITAT-AHM) held that statement given under Section 132(4) is an important piece of evidence against assessee in search & seizure assessment. The ITAT, Ahmedabad Bench held that-
9. Thus the above sub-section empowers the Authorised Officer to examine an oath any person during the course of search provided such person is found in possession of any books of account, documents or any valuable article or thing. The above statement can be used against the assessee in the proceedings under the Income Tax Act. It is a settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. Moreover under the Income Tax Act the Legislature itself has provided that the statement given under Section 132(4) can be used against the person given such statement. Therefore, the statement under Section 132(4) is an important piece of evidence against the assessee. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances (i). The first circumstance is where the statement is not given voluntarily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorised Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not, (ii) The other circumstance is where the statement was given under the mistaken belief of either f act or law. Here again the burden is upon the person giving the statement to prove that the statement given by him was factually incorrect or was untenable in law.
Hence, the evidentiary value of the statement of the fatherof the assessee, who was competent and well qualified person, needs to be considered in the light of the above judgments, afresh.
Hence, it is prayed that the order of the Commissioner (Appeals), confirming the order of the assessing officer regarding the addition of Rs. 50 lakhs on account of on-money paid for the La-Mer flat, be upheld and the appeal of the assessee on this count be dismissed.
4. In view of the discussion as above, it is requested that the Hon'ble Tribunal may kindly amend its order under reference under Section 254(2) of the Income Tax Act, 196 L
6. Learned Departmental Representative, at the outset, raised preliminary technical objection that the notice of this hearing has not been issued on the department, therefore, adjournment should be granted and if the same is not allowed, I then technical objection of the department may be noted.
Learned Counsel for the assessee contends that notice has been issued to the department as per the due procedure in respect of MA.
7. I have heard rival submissions and perused record. I find that notice was issued to department by the registry as per due procedure on 19-1-2007. Copy of notice is on record. Notice has been issued as per the procedure regularly followed by the registry with income-tax department in respect of MA matters, in view thereof. I see, no stance in the technical objections raised by the learned Departmental Representative, which is rejected.
8. Coming to the merits of the case, learned Departmental Representative reiterated the arguments raised in the petition which has been reproduced in details above and contends that:
(i) Third Member has misinterpreted entries made in the loose papers.
(ii) Third Member has travelled beyond terms of reference and re-interpreted entries in manner which was not interpreted by JM and AM in the original order.
(iii) Third Member has given a fresh finding about cash payment of Rs. 84 lakhs. Thus by giving new dimension to the interpretation of the loose paper, Third Member has travelled beyond his jurisdiction.
(iv) Third Member should not have accepted retraction of the statement by thefather of the assessee. The same is binding in view of Section 115 of Evidence Act, though technical rules of evidence are not applicable to the Income Tax Act, statement and its binding nature is not a technical rule of evidence, but a general rule as per natural justice.
(v) Father of the assessee is a well qualified person andjudgment should have been held to be binding on him. Second statement of the assessee's father was at variance from first statement, in that case, the person having given contradictory statements, both statements should have been discarded. Once a person has given two contradictory statements on oath, his reliability becomes questionable and subsequent clarification should not have been accepted. Therefore, reliance on subsequent statement by the assessee's father was not tenable under law.
(vi) Addition, though, seemingly, made on the basis of comparable case of Shri Sachin Tendulkar was not the sole basis and it was only corroborative evidence. In fact, addition has been made on the basis of loose paper, statement of assessee's father to support its case, assessing officer has further referred to flat purchased by Shri Sachin Tendulkar. It was contended that these mistakes are apparent from record and rectifiable under Section 254(2) of the I.T. Act. Reliance was placed on
(i) CIT v. P.R. Metrani (HUF) (2001) 251 ITR 2441 (Kar)
(ii) Ichalkaranji Co-op. Spining Mills Ltd. v. Dy. CIT (2006) 102 ITD 177 (Pune)(TM)
(iii) Chuharmal v. CIT (1988) 172 ITR 2501 (SC)
(iv) Mange Ram Mittal v. Asstt. CIT (2006) 103 ITD 389 (Delhi) (SB)
9. Learned Counsel for the assessee, in reply, contends that arguments raised by the learned Departmental Representative did not make out a case of mistake apparent from record and tantamount to review of order passed by Third Member, which is not possible under Section 254(2) for the following reasons:
(i) As far as interpretation of loose paper is concerned, allegation that Third Member himself interpreted loose papers itself makes out a matter of review of the order and does not constitute mistake apparent from record. Third Member has not made out a new case or travelled beyond his jurisdiction, inasmuch as, view of both JM and AM who dissented on the issue were before Third Member. Entire issue about the impugned addition was open for the Third Member to examine the same on the basis of material available on record and to agree either with learned JM or learned AM. While doing so, Third Member has unfettered power to examine material and has to agree with one of the views. In the instant case, Third Member went through each and every entry from all possible angles and ultimately held his view in favour of the order of JM on the issue. Therefore, it cannot be held that Third Member travelled beyond the subjectmatter and interpretation made by him of the loose paper amounts to mistakes apparent from record. in any case, department, though, has referred to the loose papers, in the course of assessment as well as before Third Member in original arguments as well now, ultimately, the loose paper has not been relied on by the department, addition finally has been made on the basis of comparison between flat purchased by Shri Sachin Tendulkar. Therefore, interpretation of loose paper by Third Member is one of the possibilities and it cannot be called a mistake apparent from record only because the department holds a different interpretation of the paper. In any case, issue does not make any impact on the addition, inasmuch as, addition ultimately has not been made on the basis of loose paper, but on the above comparison. Consequently, views of Third Member, under totality of the circumstances, facts and material available on record, cannot be called a mistake apparent from record about entries in the loose paper. Third Member has not travelled beyond his jurisdiction as the interpretation of entries of loose paper is one of the possible views. Similarly, no fresh finding has been given in respect of entry of payment of Rs. 84 lakhs, as the same has been interpreted on the basis of other entries.
(ii) Coming to the retraction/clarification of the statement of "KRR", learned Counsel contends that Third Member by a detailed order has considered all the legal aspects of nature of statement and its clarification while doing so, reliance has been placed on the Hon'ble Supreme Court judgment in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala . Views, have been expressed after considering all the relevant aspects and circumstances of the issue. It has been held that subsequent retraction is a clarification given by the father of the assessee during the course of search proceedings itself. Therefore, order of Third Member on this issue cannot be termed suffering from any mistake apparent from record. Hon'ble Supreme Court'sjudgment itself makes it clear that assessee has right to amend its statement by giving proper reasons therefor, which has been done in this case and have been duly considered by the Third Member, while dealing with these aspects in para-35 of his order. Since the matter is decided on the basis of Supreme Court judgment issue of Section 115 of Evidence Act does not arise.
(iii) Coming to arguments of the learned Departmental Representative that both statements of assessee's father should be discarded. Learned Counsel contends that these arguments itself make the issue a debatable one and amounts to review of the order. Even if both the statements are discarded, it will have no effect, inasmuch as, Third Member has decided the issue not only on this fact but by following parameters at Pg. No. 18 of his order which are as under:
(i) Evidentiary value of the statement made under Section 132(4) and subsequent corrections/retraction in statement under Section 131.
(ii) Interpretation of loose paper seized.
(iii) Inquiries conducted at builders'end and its eff ect on the aspect Nos. (z) and (ii) above and merits of the case.
(iv) Reliance on the comparable case cited by the revenue i.e., flats purchased by Shri Sachin Tendulkar to make the same as a basis of addition.
(iv) Coming to Shri Sachin Tendulkar's case also, it was contended that Third Member has dealt with these aspects and has held that Shri Sachin Tendulkar purchased flats after a time gap of 15 months, whereas the assessee booked flats as original buyer at the stage of construction, therefore, the case of Shri Sachin Tendulkar cannot be held to be comparable.
It was contended that all the averments made in MA and contentions raised during hearing clearly amount to review of the order, there is no mistake which is glaring and apparent from record. Pleadings of the department, therefore, amount to review/reconsideration of the order of Third Member, which is not permissible under Section 254(2).
Coming to case laws cited by learned Departmental Representative it was contended that reliance placed on CIT v. P.R. Metrani (HUF) (2001) 251 ITR 2441 (Kar) is of no avail as this judgment has been reversed by Hon'ble Supreme Court in P.R. Metrani v. CIT . Other case are of no avail as they all refer to various interpretations and raise pleas which make the MA amounting to asking for review of order of Third Member.
10. I have heard rival submissions and perused material available on record. Facts arguments and contentions have been narrated in details above. Coming to first aspect of the matter i.e., interpretation of entries in loose-paper, interpretation has been given by factual and detailed observations in the order and mistake which is proposed in the order may at best amount to another interpretation which may be held by the department in this behalf. Difference in interpretation about facts of entries in loose paper cannot be called a mistake apparent from record, same rather, amounts to asking for review of the order. Loose paper has been interpretated on the basis of arguments given by both parties, views of both learned Members and Third Member has carried out its duty by agreeing with one of the views Le., of JM after considering entirety of the material and facts. In these circumstances, it cannot be held that Third Member has travelled beyond jurisdiction and made a new case. In any case, department harping on the interpretation of the loose papers does not serve worth-while purpose as ultimately addition has been made not on the basis of difference in loose paper, but on the basis of comparative case of Shri Sachin Tendulkar. Consequently, there is no mistake in Third Member's which can be held as apparent from record in terms of Section 254(2). Pleadings of the department amount to review of the order, which is not permissible under Section 254(2).
Coming to statement of assessee's father, entire matter has been dealt in details by the undersigned giving circumstances and relying on Hon'ble Supreme Court judgment in the case of Pullangode Rubber Produce Co. Ltd. (supra) and taking note of the fact that subsequent statement was clarification as the search proceedings had not concluded. Consequently, contentions of the department to hold it as a mistake apparent from record cannot be entertained. Technical plea about applicability of Section 115 of the Evidence Act also cannot be entertained, inasmuch as all the aspects about presumption of statement have been duly considered while passing the order. Consequently, plea of the department in this behalf that this is a mistake apparent from record is dismissed as amounting to review of order.
Coming to plea of the department that Shri Sachin Tendulkar's case has been taken by the assessing officer to support its case also does not raise any mistake which is apparent from record. The distinction in purchases by assessee and Shri Sachin Tendulkar has been duly dealt with and examined. Time gap and fact that the assessee was original purchaser, besides, ignoring inquiry made by the department from builders of the flats, consequently, plea in this behalf by the department also cannot be called to be a mistake apparent from record, as the same clearly amounts to review of the order. Learned Departmental Representative's reliance on Karnataka High Court's case i.e., P.R. Metrani (HUF) (supra) is of no avail as the same has been reversed by the Hon'ble Supreme Court in P.R. Metrani v. CIT . Other case laws cited by the learned Departmental Representative may be good in the original appellate pleadings as they are based on peculiar facts of those cases. As far as scope of power under Section 254(2) is concerned, the same is limited only to the mistakes and not reviewing the observations, findings arrived at in the original order, after due consideration of facts, material and judicial precedents cited. In the entire facts and circumstances of the case, observation and findings given above, I hold that MA preferred by the department against order of the Third Member dated 30-6-2005 amounts to review of the said order, which is not permissible under Section 254(2), consequently, department's MA is dismissed.