Income Tax Appellate Tribunal - Chandigarh
Sh. Rakesh Jain, Chandigarh vs Acit, Chandigarh on 16 December, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.773/Chd/2014
(Assessment Year : 2008-09)
Sh.Rakesh Jain, Vs. The A.C.I.T.,
SCO 24, Sector 17-E, Central Circle-1,
Chandigarh. Chandigarh.
PAN: ABBPJ3253G
(Appellant) (Respondent)
Appellant by : Shri Vineet Krishan
Respondent by : Shri Sushil Kumar, CIT DR
Date of hearing : 27.09.2016
Date of Pronouncement : 16.12.2016
O R D E R
PER ANNAPURNA GUPTA, A.M. :
This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)(Central), Gurgaon dated 6.6.2014 relating to assessment year 2008-09.
2. Brief facts relating to the case are that search was conducted on the residential premises of the assessee on 28.11.2007. Cash amounting to Rs.4,75,000/- and some incriminating documents were seized. No disclosure was made by the assessee while recording statement during the search operation. On 30.11.2007, the assessee 2 surrendered the following , by way of letter addressed to the DDIT(Investigation), Panchkula :
a) Rs.10 lacs to cover discrepancies in documents seized.
b) Rs.6,30,000/- on account of amount invested by the wife in shares, mutual funds, units etc.
3. Thus, a total surrender of Rs.16,30,000/- was made by the assessee in his individual capacity. Thereafter return was filed and the disclosure made was not considered in the same. During the course of assessment proceedings, the assessee retracted the surrender made vide letter dated 29.12.2009 stating that the reason for retraction is that the surrender was obtained under coercion and undue pressure and no investments were made by him. The Assessing Officer rejected the retraction of surrender since no evidence of undue pressure exercised was filed by the assessee and also for the reason that having admitted to the investments made by him on account of his wife the denial by the assessee of having himself made no investments had no meaning. The Assessing Officer thereafter made addition on account of surrender made by the assessee of Rs.16,30,000/-.
4. The Ld. CIT (Appeals) upheld the order of the Assessing Officer.
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5. Aggrieved by the same, the assessee has now come up in appeal before us, raising following grounds :
"2. That in the facts and circumstances of the case, the Id.
Commissioner of Income Tax (Appeals) gravelly erred in sustaining the addition of Rs.16,33,000/- made by the Assessing Officer solely on the basis of surrender made by the assessee under duress, coercion which was retracted by the assessee.
3. That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) gravelly erred in sustaining the addition of Rs. 10,00,000/- made by the Ld Assessing officer on the basis of alleged discrepancy in documents, when no unexplained or incriminating document was found during search and seizure operations.
4. That in the facts and circumstances of the case, the Id.
Commissioner of Income Tax (Appeals) gravelly erred in sustaining the addition of Rs.6,30,000/- made by the Assessing Officer on account of alleged investment in shares, units or mutual funds when no such investment was made in shares, units or mutual funds.
5. That in the facts and circumstances of the case, the Id.
Commissioner of Income Tax (Appeals) gravelly erred in sustaining the additions made by the Assessing Officer solely on the basis of surrender made by the assessee under duress, coercion which was retracted by the assessee."
6. In the above grounds raised, the assessee has challenged the rejection of retraction of surrender made by him as also the addition made on the basis of incriminating documents found during the course of search.
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7. Before us, the learned counsel for the assessee contended that the retraction was valid since the surrender had been made under pressure and further since no incriminating documents as such were found to support the addition. The learned counsel for the assessee stated that all documents found were totally explained before the Ld. CIT (Appeals) and, therefore, the retraction was valid for this reason also.
8. The Ld. DR, on the other hand, stated that since no evidence of exercise of coercion or undue pressure has been brought on record the arguments of the assessee cannot be accepted. The Ld. DR stated that the fact that retraction took place 11 months after the surrender itself, makes the retraction invalid. The Ld. DR relied upon the following case laws in support of its above contentions :
a) Navdeep Dhingra Vs. CIT,
56 TAxmann.com 75 (P&H)
b) B.Kishore Kumar Vs. DCIT
52 Taxmann.com 449 (Mad)
c) B.Kishore Kumar Vs. DCIT
62 Taxmann.com 215 (SC)
9. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. It is not dispute that the assessee had surrendered an amount of Rs.16.33 lacs, two days after the conclusion of search as follows :
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a) Rs.10 lacs to cover discrepancies in documents seized.
b) Rs.6,30,000/- on account of amount invested by the wife in shares, mutual funds, units etc.
10. The same is therefore, to be treated as admission of undisclosed income of the assessee with evidentiary value at par with the disclosure made under oath under section 132(4) of the Act.
11. Thereafter the assessee has retracted the surrender after 11 months citing existence of pressure and coercion and absence of any incriminating material as the reason for retraction.
12. The first issue before us is whether the statement made on oath can be retracted. While the learned counsel for the assessee has stated that since the statement was extracted under pressure and there was no incriminating material relating to the surrender made, the same could be retracted. The Ld. DR, on the other hand, has stated that the retraction of surrender after long time gap cannot be made. The Ld. DR relied upon judicial decisions in this regard.
13. On this issue, we find that the Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Vs. State Of Kerala And Anr. (1973) 91 ITR 18 (SC) has stated that the retraction from surrender of income made under 6 section 132(4) of the Act may be accepted on the facts of the case. The Hon'ble Apex Court held as under :
" A n a d m i s s i o n i s a n e x t r e me l y i m p o r t a n t p i e c e o f evidence but it cannot be said that it is c o n c l u s i v e . I t i s o p e n t o t h e p e r s o n wh o m a d e t h e ad mission to show that it is incorrect".
14. This proposition was reiterated by the Hon'ble Jurisdictional High Court in the case of Krishan Lal Shiv Chand Vs. CIT (1973) 88 ITR 293 wherein the Hon'ble High Court held as under :
"It is an established principle of law that a party is entitled to sho w and prove that the admission made by him previously is in f act not correct and true".
15. Therefore, it is settled law that if the facts so warrant even a surrender made on oath under section 132(4) of the Act may be retracted. The reliance placed by the Ld.DR on the decision in the case of B.Kishore Kumar (supra), with reference to retraction from statement after a long time gap, we find is misplaced since in that case the Hon'ble court had found that there was a clear and categorical admission of undisclosed income which was not demonstrated as incorrect or mistake of fact and therefore was held to constitute a good piece of evidence.
16. Having said so, this ratio has to be applied to the facts of the present case. We find that the contention of the assessee that the surrender was made under 7 coercion, is unacceptable as held by the Ld. CIT (Appeals) also. It is true that the assessee has not been able to demonstrate the existence of any coercion or pressure while making the surrender. In fact, as rightly pointed out by the Ld. CIT (Appeals) the assessee has made the surrender two days after conclusion of the search and not during the continuation of search. While the search was conducted on 20.11.2007, the assessee had made surrender vide letter dated 30.11.2007. The assessee has not demonstrated, least of all with any evidence, as to how after the search team had left, pressure was exercised on him to make the surrender. If at all there was any pressure, the assessee ought to have brought the same to the notice of the Department immediately after the surrender bringing out the circumstances and manner in which the pressure was exercised. The assessee, we find, has not done the same but has in fact taken 11 months to state that the search was made under pressure and even now he has not demonstrated the circumstances and manner in which the statement was given under pressure. We, therefore, concur with the Ld. CIT (Appeals) that there was no pressure or coercion at the time of making surrender.
17. Having said so, we find that it is the contention of the assessee that the surrender was being retracted since no incriminating material was found during search and the documents found were all explained to the Ld. CIT 8 (Appeals) as most of them related to the preceding year and source of expense incurred was explained. It is the contention of the learned counsel for the assessee that in the absence of any incriminating material, there was no reason to make any surrender at all. LD.Counsel for the assessee pointed out that surrender and consequent addition was made to the extent of Rs.10 lacs on account of certain incriminating documents found. The learned counsel for the assessee took us through each document referred by the Assessing Officer in his order and explained why it could not be treated as incriminating as follows :
Explanation of Incriminating documents:
Annexure Description of P.B. Assessee' P.B. A-2 document Explanation Page 4 Deposit slip of Max 23 (a)Cash withdrawn from 27 New York Life Insurance Andhra Bank on 17.3.06 for Rs.6000/- & 24.3.06. Rs.1,30,000 dated 26.12.06
(b) Transaction does not Pertain to the year.
Page 5 Deposit slip of Max 26,28 (a)Cash withdrawn from 29 New York Life Insurance Andhra Bank on for Rs.6000/- 17.3.06, 24.3.2006 dated 26.12.06 Rs.1,30,000/-
(b) Transaction does not pertain to the year.
Page 6 Fee Deposit slip
Mayo College, 31 (a) Through Bank 29,32
Ajmer dated 1.4.06 (b) Transaction does
pertain to the year
Page 3 Max New York Life 43 Paid by Ashwani Bansal 43,44
Insurance Rs.24,000
Dt.7.8.07
18. Submissions to the above effect explaining the above documents was filed before the Ld.CIT(A) reproduced at para 5 of the order as follows: 9
"In the case of the appellant the addition has been made only on the basis of the alleged surrender and not on the basis of the evidence or material gathered during the search/seizure operations. The Id. Assessing Officer has alleged at page number 11 and 12 of the assessment order that incriminating documents were found during the search operations but no such document has been pointed out. The annexure A-2 to which the Id. Assessing Officer has referred to at page 12 of the assessment order are not incriminating documents and most of the transactions pertain to earlier assessment years. The Assessing Officer has alleged that the appellant incurred expenses in cash. There is no bar/restriction under the Income Tax Act that personal expenses cannot be incurred in cash. The only thing which the Assessing Officer can probe is the source of such expense. In the case of the appellant for each expense incurred he had sufficient cash and was incurred after making withdrawal from bank. The documents/expenses mentioned at page number 11 and 12 of assessment order pertaining to annexure A-2 page are explained with evidence, the same were incurred after withdrawing the amount from Bank account.
ANNEXURE A-2 Page No.4: is a deposit slip issued by M/s Max Newyork Life Insurance Co. Ltd. for Rs.6,000/- dated 26.12.2006. The amount of Rs. 9,612/- as on 26.12.2007 is market value of fund on that date. The said payment was made by Sh. Rakesh Jain by withdrawing the cash from his Saving Bank Account No. 18089 with Andhra Bank,,Sector 17, Chandigarh. The bank statement from where the withdrawal was made is attached as Anneuxre-l. Further the transaction does not pertain to the A.Y. 2008-09.
Page No.5: is a deposit slip issued by M/s Max Newyork Life Insurance Co. Ltd. for Rs.6,000/- dated 26.12.2006. The amount of Rs. 9,612/- as on dated 26.12.2006 is market value of fund on that date. The said payment was made by Sh. Rakesh Jain by withdrawing the cash from Saving Bank Account No. 18089 with Andhra Bank,Sector 17, Chandigarh. The bank statement is attached as Anneuxre-II . Further the transaction does not pertain to the A.Y. 2008-09. 01.04.2006 for Rs. 1,12,625/. The amount for payment of fees was withdrawn from saving bank account No. 18089 with Andhra Bank, sector 17, Chandigarh. The bank statement is attached as Annexure-lll.. Further the transaction does not pertain to A, Y. 2008-09. Page No. 3: is a premium deposit slip issued by M/s Max Newyork Life Insurance Co. Ltd. for Rs. 24,000/- dated 7.8.2007, the amount was paid by Mr. Ashwani Bansal (brother-in-law of Sh. Rakesh Jain) resident of House No. 1308, Sector 19, Chandigarh. The address mentioned on the deposit slip is that of Mr. Ashwani Bansal. The confirmation of Shri Ashwani Bansal is attached.10
Further Rs. 82,967/- was paid by assessee on 31-01-2007 and not 21- 05-2007 to Mayo College as fees of his son the payment was made after withdrawing Rs. 80,000/- 24-01-2007 from Andhra Bank. The details of transaction, bank statement and school fees deposit statement are attached as annexure 4. Further the deposit slip bearing number 10 and 11 amounting to Rs. 43,702/- Rs. 49,000/- have duly been withdrawn from assessee's saving bank account number 22914 with Andhra Bank, Sector 17, Chandigarh. The details of which are attached as Annexure-IV.
The assessee has deposited Rs. 40,000/- on 16.6.2006 and Rs. 40,230/- on 17.06.2006 as fees in Mayo College. These amounts have been withdrawn by the assessee from his saving bank account No. 18091 with Andhra Bank, Sector 17, Chandigarh. The details of which are attached as Annexure-V. The transactions do not pertain to A.Y. 2008-09.
The copy of the document and copy of bank account from where the withdrawals were made are attached. Each and every expense has source duly supported by evidence in the shape of withdrawal from bank account. There is no transaction which remained unexplained.
In view of the above submissions it is humbly prayed that the addition of Rs. 16,33,000/- made by the assessing may kindly deleted."
19. The Ld. DR, we find has not controverted the above facts. Clearly, what emerges from the above therefore, is that the documents at Annexure A-2 pages 4, 5, and 6 do not relate to the year at all. Therefore, for this reason alone, they cannot be treated as incriminating documents for the purpose of making addition or even surrender for the year. As for documents at Annexure-2, page 3 though undeniably the same pertains to the impugned year, it has been explained as having been paid by Mr.Ashwani Bansal, the brother-in-law of the assessee, which fact is evidenced from his name being mentioned in the deposit slip issued by Max New York Life Insurance and further by the affidavit submitted by Mr.Ashwani Bansal in this regard. These facts, we find, have not been 11 controverted by the Ld. DR. For this reason, the aforestated documents cannot treated as incriminating for the purpose of making either addition or surrender in the hands of the assessee during the year. The other documents found relating to cash payments made have also been duly explained as sourced from the assessee bank accounts and due evidences were also filed before the CIT (Appeals). The CIT (Appeals) has not controverted these facts.
20. Thus to the extent stated above, the assessee has proved with evidence that the surrender made by him was wrong/incorrect on facts and, therefore, retraction made to this extent was valid and as a consequence no addition could be made on this account. The addition made to the extent of Rs.10 lacs on account of the surrender made by the assessee is, therefore, deleted.
21. As far as the surrender of Rs.6.30 lacs made on account of investment made by the wife of the assessee, which was later on retracted, the learned counsel for the assessee stated that the assessee's wife had her own sources for making the investment. The learned counsel for the assessee filed the assessment order of assessee's wife for the impugned assessment year and pointed out that her returned income for the impugned year was Rs.9,23,100/- which has been assessed as such under section 143(3) of the Act. Copy of the same was filed before us. The learned counsel for the assessee contended 12 that the investments were made out of the funds available with assessee's wife and could not be treated as made by the assessee.
22. The Ld. DR, on the other hand, argued that since the assessee had surrendered the impugned amount in his own hands the same had been rightly included in the income of the assessee and the same could not be retracted now by the assessee.
23. We find that it has been demonstrated before us that the assessee's wife had sufficient resources\funds to make the impugned investments of Rs.6.30 lacs having filed return of income at Rs.9.25 lacs during the year. The explanation of the assessee that the investments were made by the wife of the assessee is, therefore, reasonable enough. Further there is nothing on record to prove that the impugned investments were made by the assessee himself in the name of his wife other than the statement of the assessee which he has later on retracted. The basis for retraction having been explained and found to be reasonable enough by us, we hold the retraction to be valid and direct that no addition be made on account of surrender of Rs.6.30 lacs made by the assessee.
24. In view of the above, we hold that the retraction made by the assessee of the surrender of Rs.16.30 lacs is valid and, therefore, delete the addition made on account 13 of the same. The grounds raised by the assessee are, therefore, allowed.
25. In the result, the appeal of the assessee stands allowed.
Order pronounced in the open court.
Sd/- Sd/-
(BHAVNESH SAINI) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 16 t h December, 2016
* Rat i*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh