Commissioner of Incom-Tax - VI, vs. M.Narasimha Reddy

HIGH COURT OF JUDICATURE FOR RAJASTHAN JODHPUR D.B. Income Tax Appeal No. 182/2013 C.I.T. Central, Jaipur ----Appellant Versus Bharat Kumar Azad ----Respondent For Appellant(s) : Mr. K.K.Bissa. For Respondent(s) : Mr. Anil Bhansali. HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment Date of Pronouncement : 15/03/2019 The instant Income Tax Appeal has been preferred by the Revenue (C.I.T. Central, Jaipur) being aggrieved of the judgment dated 22.3.2013 passed by the learned Income Tax Appellate Tribunal, Jodhpur Bench (I.T.A.T.) in connection with Income Tax Appeal No.255 & 277/JU/2012 for the assessment year 2008-09. Shri K.K.Bissa learned counsel representing the Revenue vehemently and fervently urged that from a plain and simple reading of the I.T.A.T’s order dated 22.3.2013, following substantial question of law arises in the instant matter: “Whether findings of I.T.A.T. were perverse on facts while holding that the additions were based only on the statement recorded during search, when the fact is that the addition on account of on-money of Rs.3 crore was made on the basis of the seized documents (Annexure A-1, Pages 57 to 63), which was upheld by CIT(A) to the extent of Rs.2.66 crore?”

(2 of 5) [ITA-182/2013] He urged that the confessional statements which the assessee made during the search and survey proceedings were retracted after significant delay and thus, the burden would be upon the maker of the statement to prove that the statement given by him was factually incorrect or was untenable in law. He urged that a confession of additional undisclosed income made during the course of search/seizure and survey proceedings, is admissible in law without any corroboration and as such, the I.T.A.T. was absolutely unjustified in holding that the confessional statement of the assessee could not be relied upon for want of corroboration. He thus urged that the appeal deserves to be admitted on this substantial question of law. Per contra, Shri Anil Bhansali learned counsel representing the respondent assessee vehemently and fervently urged that the confession of the assessee was extracted illegally and by coercion and thus, the same was rightly discarded because no corroborative, credible substantive proof was collected nor such evidence led by the department to substantiate the allegation that there was any additional undisclosed income of the assessee over and above what was disclosed by him in the return. He relied upon the instruction dated 10.3.2003 issued by the Central Board of Direct Taxes (CBDT), which is reproduced hereinbelow for the sake of ready reference: “3. That apart it is further clarified that so far as obtaining of surrender of income during the course of search and survey is concerned, the board has already come out with its instructions dated10.03.2003 which is reproduced for your kind perusal:- “Confession of additional income during the course of search and seizure and survey operation

(3 of 5) [ITA-182/2013] Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Instruction:F.No.286/2/2003-IT(Inv.II),dated 10.3.2003” He urged that it has clearly been provided in the above statutory guideline that confessions extracted during the course of search/seizure and survey operations shall not be relied upon if not based on credible evidence and if the same has been retracted by the assessee. He urged that the assessee retracted the confession at the earlier possible opportunity and hence, the A.C.I.T. Central, Circle Jodhpur and the CIT(A), Jaipur while deciding the matter against the assessee acted capriciously while passing the orders dated 29.12.2010 and 27.03.2012 which are in

(4 of 5) [ITA-182/2013] total contravention of the settled legal principles and that the judgment dated 22.3.2013 passed by the I.T.A.T. is absolutely justified and warrants no interference because no substantial question of law is involved in the appeal. He thus craved dismissal of the appeal. We have given our thoughtful consideration to the submissions advanced at the bar and have gone through the impugned judgment and the material available on record. It is not in dispute that the entire case of the appellant Revenue is based on the confession of the assessee which was extracted during the search/seizure and survey proceedings. It is also not in dispute that the assessee retracted the confession on 27.7.2009. It is also an admitted position from the record that the allegation of the Revenue that the assessee had undisclosed income over and above what was mentioned in the return, is based sheerly on the confession and no corroborative material or substantive proof was collected by the Revenue during the search/seizure and survey proceedings. In this background, we are of the firm opinion that the circular No.286/2/2003-IT (Inv.II) dated 10.3.2003 which has been reiterated in circular F.No.286/98/2013-IT (Inv.II) dated 18.12.2014 issued by the Board and the general principles of appreciation of evidence would definitely come into play and while appreciating the rival contentions, the Court would definitely require corroboration of the confessional statement by credible and tangible evidence failing which, it will be considered totally unsafe to rely solely upon the confession for upholding the liability fastened upon the assessee by the ACIT. Since, in the case at hand, admittedly, the Income Tax Authorities did not collect any tangible, corroborative

(5 of 5) [ITA-182/2013] evidence so as to substantiate the allegation of undisclosed income, manifestly, the view taken by the I.T.A.T. in the impugned judgment that the department failed to provide cogent, tangible and satisfactory evidence regarding the additional undisclosed income of the assessee, is absolutely justified and the impugned judgment cannot be termed to be illegal or perverse by any stretch of imagination warranting interference therein in exercise of the appellate jurisdiction of this Court. We are duly satisfied that no substantial question of law is involved in the matter so as to question the legality or validity of the impugned judgment. Hence, the appeal being devoid of merit is hereby dismissed. (VINIT KUMAR MATHUR),J (SANDEEP MEHTA),J /tarun goyal/