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Income Tax Appellate Tribunal, DELHI BENCHES: “G” New Delhi
Before: SHRI J.SUDHAKAR REDDY & SHRI SUDHANSHU SRIVASTAVA
PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER
This Department’s appeal is filed against the order dated 5.1.2012 passed by the Ld. CIT(Appeals-1), New Delhi. The facts in brief are that a search and seizure action u/s 132 of the Income Tax Act was conducted at the resident of assessee on 22.11.2006. The assesee had filed return of income declaring an income of Rs. 5,90,430/- on 13.11.2007. During the course of search proceedings at the residence of the assessee, the statement of the assessee was recorded u/s 132(4) of the Income Tax Act, 1961 wherein he was shown Annexure A-1 found and seized from his residence which contained various documents relating to properties in the name of his wife and self. The assessee thereafter surrendered a sum of Rs. 2 crores in his statement recorded during search and seizure proceedings. However, the asessee retracted the statement of surrender on 28.11.2006. In the assessment proceedings, u/s 143(3) the AO however added the sum of Rs. 2 crores and made an assessment at an income of Rs. 2,05,90,430/- . In the first appeal the Ld. CIT(A) given a categorical finding that the addition was made merely on the basis of the surrender made during the search and retracted subsequently. He also noted that although in the assessment order, the AO had stated that many incriminating evidences were found, however according to the remand report no such addition had been made in any of the form on this count. He further added that when no additions have been made in the case of partnership firm then that amount could not be made the basis for making additions in the hands of the appellant who drew salary from the partnership firm. The Ld. CIT(A), in conclusion, stated that the addition of Rs. 2 crores could not be sustained because no incriminating material justifying such an addition had been found during the search and further the assessee had retracted the statement within a period of 6 days, therefore if the investment wing had any grievance, it could have carried out further investigation in this regard.
In the appeal before us the Ld. DR strongly relied on the assessment order and also placed reliance on the decision of Hon’ble Supreme Court in a SLP (C) No. 14028 in the case of Surjeet Singh Chhabra vs. Union of India and others . He pleaded that revenue officials are not police officers and the confession though retracted is an admission and binds the assessee. He also relied on the decision of Hon’ble Punjab & Haryana High Court in the case of Rakesh Mahajan vs. CIT 214 CTR 218 and submitted that admissions constitute best piece of evidence because admissions are self-harming statements made by the maker believing it to be based on truth. He further submitted that no one will tell a lie especially harming one’s own interest unless such a statement was true. Ld. Dr accordingly pleaded for the quashing of order of the Ld. CIT(A).
On the other hand, the Ld. AR relied on the order of the Ld. CIT(A) and drew attention to page 12 of the paper book which is a copy of the retraction statement dated 28.11.2006 wherein the assessee had submitted that the statement u/s 132 (4) of the Act was recorded under pressurised mental state of mind although no corresponding investments / income were found. Ld. AR also submitted that his case is squarely covered by the decision of ‘B’ Bench of the ITAT New Delhi in in the case of ACIT vs. Shri Dharam Pal Gulati.
We have carefully gone through the facts of the case and the documents related to it. The return filed by the assessee declaring income of Rs. 5,90,430/- filed after the date of search did not include the amount of Rs. 2 crores which was surrendered u/s 132(4) of the Act. This amount was added back to the income of the assessee by the AO on the basis of a surrender which was recorded on 22.11.2006 and retracted on 28.11.2006. We also find that some papers and documents were seized. However the issue has not been dealt in the assessment order. This shows that the addition was not based on any calculation of undisclosed income on the basis of seized papers and documents.
The CBDT has issued instructions with regard to the confession of additional income during the course of search and seizure and survey operations. Instruction No. F. No. 286/2/2003-IT(Inv .II) dated 10.3.2003 discusses additions without any credible evidence during the course of search and seizure which is quoted as under: ”Instances have come to the notice of the Board where assesses 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.”
In our considered view, no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assesee. Instruction No. F. No. 286/2/2003-IT(Inv. II) dated 10.3.2003 (reproduced herein above) is has made the position very clear on the issue. Reference may also be made the following cases :
• Kailashben Mangarlal Chokshi vs. CIT (2008) 174 Taxmann 466 (Guj.) / 2008 14 DTR 257 (Guj.) :”Merely on the basis”of admission, the assessee could not have been subjected to additions, unless and until some corroborative evidence was found in support of such admission. Further statement recorded at such odd hours (at midnight) could not be considered to be voluntary statement, it was subsequently retracted and necessary evidence was led contrary to such admission. Addition was deleted.“
• Arun Kumar Bhansali vs DCIT (2006)10 SOT 46 (Bang) (URO): “Block period 1990-91 to 1999-2000 - Whether while computing undisclosed income of assessee, Assessing Officer should take cognizance of such correct income as depicted in books of account as well as in seized material,' and should not adopt a figure merely as per admission of assessee - Held, yes.”
• Shree Chand.Soni Vs DCIT (2006) 101 TTJ (JD) 1028: “Search and seizure - Block assessment - computation of undisclosed income - Addition based on the assessee's statement under s. 132 (4) – Admittedly, no incriminating document was found to support the impugned addition regarding bogus capital - Statement recorded under s. 132(4) does not tantamount to unearthing any incriminating evidence during the course of search - Therefore, no addition could be made only on the basis of such statement.”
• Rajesh Jain vs. DCIT (2006)100 TTJ (Del) 929 : “Search and seizure - Block assessment - Retraction of statement - Addition of Rs.2S Lakhs made solely on the basis of confessional statement of assessee that he earned the sa1d amount in the last Ten years was not justified - Confessional statement should be corroborated with some material to show that assessment made is just and fair”
Thus in our considered view and respectfully following the ratio of judgments as mentioned herein above, we have no hesitation in holding that no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assesee. We would also like to state that the assessee had retracted by filing a written submission before the DIT, Inv.-I, New Delhi on 28.11.2006 which is 6 days after the search. There was sufficient time with the Investigation Wing to carry on the investigation and to collect the evidence against the retraction. However, records show that nothing has been done in this regard. In such a situation, the retraction of the assessee cannot be said to be invalid in absence of any incriminating documents. In view of these facts, we uphold the order of the CIT(A).
In the result, the appeal of the Department is dismissed.
Order pronounced in the open court on 14th October, 2015. sd/- sd/- (SUDHANSHU SRIVASTAVA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: the 14. 10. 2015 ‘veena’ Copy of the Order forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File By order Dy. Registrar
Sl. Description Date No. 1. Date of dictation by the Author 07.10.2015 2. Draft placed before the Dictating Member 07.10.2015 3. Draft placed before the Second Member 4. Draft approved by the Second Member 5. Date of approved order comes to the Sr. PS 6. Date of pronouncement of order 7. Date of file sent to the Bench Clerk 8. Date on which file goes to the Head Clerk 9. Date of dispatch of order