PR. COMMISSIONER OF INCOME TAX vs. SHRI SANJAY CHHABRA

Order 06/04/2022 Heard on admission. Learned counsel for the appellant extensively argued to submit that a substantial question of law arises for consideration in this case as the Income Tax Appellate Tribunal while upholding the order of deletion, recorded perverse finding that without disclosing the material collected during the course of investigation and even without an opportunity given to the assessee, material could not be relied upon. He would next submit that the Tribunal did not take into consideration that no prudent investor would invest in such companies in which the assessee had invested. He would next submit that even if those materials weighed with the Tribunal, in any case, the Tribunal committed perversity and patent illegality in holding that statement recorded under Section 132(4) of the I.T. Act, retracted after five months, by itself could

(2 of 4) [ITA-22/2021] not be made a basis to pass an order of addition as was ordered by the Assessing Authority in the present case. The Tribunal by impugned order has categorically held that the material information received by the Assessing Officer from the investigation wing alongwith certain statements recorded by DBIT Investigation, Calcutta could not be taken into consideration as that material was not disclosed nor an opportunity was accorded for cross-examination of the Assessee. This finding recorded by the Tribunal cannot be said to be perverse or suffering from any patent illegality. Learned counsel for the Revenue could not satisfy us with reference to any judgment on this aspect that even without disclosing any material to the Assessee and without allowing him proper cross-examination, such undisclosed and unverified material could be taken into consideration for the purposes of addition. The other submission that the Tribunal interfered with the order of addition without due consideration that no prudent investor would invest in companies in which the assessee had invested, if we may say so, is essentially in the realm of appreciation of facts and circumstances and does not by itself a substantial question of law. It is essentially a matter relating to assessment of particular circumstance. As far as submission of learned counsel for the appellant that statement recorded under Section 132 (4) of the I.T. Act by itself, without anything more, even if retracted after five months, could be taken into consideration, also does not appeal to us. Reliance has been placed on the two decisions of the High Court of Delhi in the case of Suman Poddar Versus Income Tax Officer, ITA

(3 of 4) [ITA-22/2021] No.841/2019 and Bhagirath Aggarwal Versus CIT, ITA No.28/2012. In both the aforesaid decisions, the High Court considered the material on record on its own facts. It was not propounded as the principle of law that without there being any other material, only on the basis of statement recorded under Section 132 (4) of the I.T. Act even though retracted, the addition could be justified. The judgments are distinguishable on facts. Learned counsel for the Revenue relying upon the judgment passed by the Supreme Court in the case of Sumati Dayal Versus Commissioner of Income Tax, Bangalore reported in AIR 1995 SC 2109 would submit that the Tribunal has not examined the case on the touchstone of human probability. Reliance placed on the judgment of the Supreme Court in the case of Vijay Kumar Talwar Versus Commissioner of Income Tax, Delhi reported in (2011) 1 SCC 673, as to what would be substantial question of law, only demolishes the case of the appellant herein because on principles, which have been laid down by the Supreme Court in the aforesaid judgment as contained in Para 19 to 23 thereof, present is not a case where the finding of the Tribunal suffers from ignorance of any material evidence or based on no evidence much less “wrong inferences drawn from proved facts by erroneous application of law” or “where the Tribunal has wrongly cast the burden of proof”. The argument advanced on the basis of the principle propounded by the Supreme Court in the case of Sumati Dayal (supra), does not apply to the facts of the present case at all. The Tribunal’s findings are based on material placed on record. The aspect of human probability, in the present case, only goes

(4 of 4) [ITA-22/2021] against the Revenue because in the present case, a raid was conducted and in that process, statement is said to have been recorded under Section 132(4) of the I.T. Act, which was, later on, retracted by the Assessee. In a situation like this, where the office premises are sealed for many days and during that period, a statement is said to have been recorded under Section 132 (4) of the I.T. Act, the Tribunal’s view that only the basis of such retracted statement, addition could not be justified without any other material admissible in evidence, warrants no interference as it is not a substantial question of law. In the case of Commissioner of Income Tax Versus Harjeev Aggarwal reported in (2016) 290 CTR (Del) 263 and Kailashben Manharlal Chokshi Versus Commissioner of Income Tax reported in (2010) 328 ITR 411 (Guj) various High Courts have held that addition based solely on statement later on retracted, without anything more, could not be justified in law. Thus, the view taken by the Tribunal cannot be faulted.

In view of the above consideration, we are of the view that this appeal does not involve any substantial question of law and is, therefore, dismissed. (SAMEER JAIN),J (MANINDRA MOHAN SHRIVASTAVA),ACTING CJ Karan/21