NAYYAR PATEL vs. THE ASSISTANT COMMISSIONER OF INCOME TAX (INV)

ITA/13/2018HC KeralaKLHC01019129201830 September 2021Author: HONOURABLE MR.JUSTICE S.V.BHATTI,HONOURABLE MR.JUSTICE VIJU ABRAHAM14 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the grounds raised by the assessee were not available in the circumstances. The Court reiterated its previous observation in ITA No. 98/2009, which found the Tribunal's approach of excluding the original statement based on the retracted statement to be illegal and erroneous. The previous judgment directed that "due evidentiary value" be given to the statement made on June 22, 1998. Upon remand, the Tribunal gave due evidentiary value to the statement, and the assessee failed to place any other material before the Tribunal to displace the impact of the Annexure-C statement, despite the High Court's observation. The Court found no illegality or infirmity in the Tribunal's findings, which were affirmed by the concurrent view of the Commissioner and the Tribunal. Therefore, the Court saw no reason to interfere with the order under appeal. The questions were answered in favour of the revenue and against the assessee.

What were the facts?

The assessee, Nayyar Patel, is appealing an order of the Income Tax Appellate Tribunal (ITAT) dated January 15, 2018. The appeal concerns block assessment for the period 1989-90 to 1998-99 and a broken period from April 1, 1998, to June 22, 1998. A search and seizure operation was conducted at the assessee's residence on June 22, 1998, where a statement was recorded under Section 132(4) of the Income Tax Act. The assessee claims to have received a copy of this statement on July 27, 1999, and subsequently retracted it on July 28, 1999, citing it was recorded at an "unearthly hour" and under "fear and trepidation." The Assessing Officer made additions based on this statement. The CIT(Appeals) allowed the appeal partly. The ITAT initially deleted the additions, but this was set aside by the High Court in ITA No. 98/2009, which remitted the matter back to the ITAT for fresh consideration, directing it to give due evidentiary value to the Section 132(4) statement.

What were the issues?

1. Whether the authorities below, including the Tribunal, erred in relying solely on the statement given by the appellant under Section 132(4) of the Income Tax Act for making additions, and in discarding the retracted statement (Annexure-D) and the lack of corroborative material from the revenue? (Question of law and fact, concerning Section 132(4)). 2. Whether additions based on statements under Section 132(4) require corroborative evidence, especially in light of a previous remand order? (Question of law and fact, concerning Section 132(4)). 3. Whether the authorities below were correct in completely ignoring the retracted statements given by the appellant? (Question of law and fact, concerning Section 132(4)). Assessee's Contentions: The assessee argued that statements recorded at "wee hours" are not voluntary and that the retracted statement (Annexure-D) erases the basis for additions. Unless there is sufficient material, additions confirmed by the Tribunal based exclusively on the Section 132(4) statement are illegal. Reliance was placed on *Kailashben Manharlal Chokshi v. Commissioner of Income Tax* and *M. Narayanan and Bros. v. Assistant Commissioner of Income Tax*. Revenue's Contentions: The revenue contended that the High Court's previous judgment in ITA No. 98/2009 is relevant. The assessee's cited judgments are distinguishable. The High Court did not hold that the Section 132(4) statement should be entirely deleted but directed that "due evidentiary value" be attached to it. This implies the statement cannot be set aside solely because it was made at an odd hour, nor can it be the exclusive basis for additions. The assessee was free to place sufficient material before the Tribunal to displace reliance on the statement.

Which sections of the Income-tax Act were involved?

Section 132(4)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE VIJU ABRAHAM THUR AY, THE 30TH DAY OF SEPTEMBER 2021 / 8TH ASWINA, 1943 ITA NO. 13 OF 2018 AGAINST THE ORDER/JUDGMENT IN OTHERS 67/2005 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: NAYYAR PATEL PATEL COMPLEX, BASIN ROAD, ERNAKULAM - 682 031. BY ADVS. SRI.K.I.MAYANKUTTY MATHER SRI.R.JAIKRISHNA RESPONDENT/S: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX (INV) CIRCLE 2, DIVISION - I, ERNAKULAM - 682 018. 2 INCOME TAX OFFICER WARD 2(3), RANGE 2, KOCHI - 682 018. 3 COMMISSIONER OF INCOME TAX I.S PRESS ROAD, KOCHI - 682 018. BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX SC SR ADV. P.K. R. MENON THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 30.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA NO. 13 OF 2018 -2- JUDGMENT S.V.BHATTI,J. Heard learned Adv.K.I Mayankutty Mather and learned Senior Advocate Sri. P.K.R Menon for parties.

2.

Nayyar Patel/Assessee is the appellant. The Assistant Commissioner of Income Tax (Inv), Circle 2, Division- I, Ernakulam and two others/Revenue are the respondents. The assessee being aggrieved by the order dated

The order continues below.

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