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DATE: June 12, 2018 (Date of pronouncement)
DATE: June 20, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 68: Addition of undisclosed income cannot be made on the basis of (a) entries in dairy found during survey & (b) admission of director in s. 133A survey if assessee has filed a retraction and alleged that the entries/ statement were recorded under pressure. A s. 133A statement is merely information simplicitor and not evidence per se. Addition cannot be sustained if the Dept has not investigated the matter and find material to support the addition

The Tribunal in its detailed order noted that the directors during the course of survey, had retracted the statements by filing affidavits. They also claimed that the diaries were created under the pressure of the survey party. The Tribunal noted decision of the Supreme Court in case of Paul Mathews & Sons v Commissioner Of Income Tax reported in [2003] 263 ITR 101 (Ker) and of Supreme Court in case of The Commissioner Of Income Tax vs M/S.S.Khader Khan Son reported in (2012) 25 taxmann.com 413 (Supreme Court), in which, it was highlighted that the statement under section 133A of the Act was not on oath and would have at best a coroborative value

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DATE: February 23, 2018 (Date of pronouncement)
DATE: April 14, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 133A: An admission of estimated income made during survey has no evidentiary value and is not binding on the assessee. The income has to be assessed as per the return of income and books of account. Hiralal Maganlal 97 TTJ Mum 377 distinguished. CBDT Circular No. 286/2/2003 (Inv.) II dated 10.03.2003 referred

The Hon’ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. vs State of Kerala & Anr., 91 ITR 18 (SC) recognised the trite law that it was open to the assessee who made the admission to show that it was incorrect. As per the Hon’ble Supreme Court, it was imperative that in such a situation assessee ought to be given a proper opportunity to show the correct state of facts. In fact, in the case before the Hon’ble Supreme Court, assessee was attempting to show that the entries made by it in the account books did not disclose the correct state of facts. The Hon’ble Supreme Court recognised the right of the assessee to do so on the premise that it was open to the assessee who made the admission to show that the same was incorrect. In other words, as per the Hon’ble Supreme Court, the admission made on an anterior date, which was not based on correct state of facts, was not conclusive to hold the issue against the assessee

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DATE: January 16, 2018 (Date of pronouncement)
DATE: January 25, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 68: If an admission of undisclosed income is made by the assessee after reference to the material found during search and seizure, it cannot be said that the admission is not based on incriminating material. The retraction of such admission of undisclosed income is not permissible especially when the retraction is by the mother and not by the assessee

As evident in the material obtained by the Revenue during search and seizure, it was only with reference to the search and seizure material that Smt. Madhu Chopra gave a specific amount to various heads wherein the undisclosed income had been utilized. The assessee had also separately accepted the same. Hence, it cannot be said that this addition is not based upon any incriminating material found or searched. Furthermore, the so called retraction is by the mother of the assessee and the Assessing Officer is correct in finding that there is no retraction whatsoever by the assessee

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DATE: November 15, 2017 (Date of pronouncement)
DATE: December 2, 2017 (Date of publication)
AY: 2010-11
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CITATION:
Undisclosed income found in search: Law on whether statement obtained u/s 132(4) admitting earning of undisclosed income, which is allegedly retracted, can be used for making assessment explained in the light of P.V. Kalyanasundaram 294 ITR 49 (SC), S. Kadar Khan 352 ITR 480 (SC) and CBDT’s Circular

From the above, it is apparent that the ld. Commissioner of Income Tax (Appeals)’s reliance upon the so called retraction of the admission during search is not cogent. Similarly, the ld. Commissioner of Income Tax (Appeals) reliance upon the CBDT Circular of not obtaining confession is also out of place. It is clear that the registers were found which clearly detailed about undocumented surgeries performed by Dr. Ashok Chopra and unaccounted cash receipts. Based upon this Dr. Ashok Chopra has admitted offer of Rs.1.74 crores. Dr. Ashok Chopra had also accepted the working of this figure. As already noted there was never any retraction whatsoever by Dr. Ashok Chopra. The said admission of Dr. Ashok Chopra was also duly accepted and corroborated by Smt. Madhu Chopra, the director of the company. Under these circumstances, the ld. Commissioner of Income Tax (Appeals)’s contradictory acceptance that no incriminating documents were found, is not at all acceptable

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DATE: August 1, 2017 (Date of pronouncement)
DATE: August 12, 2017 (Date of publication)
AY: 2005-06 to 2009-10
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CITATION:
S. 68: Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assessees. The onus is on the Revenue to ensure his presence

A copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the AO before the CIT(A) unmistakably showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr. Tarun Goyal, whom the Assessees clearly stated that they did not know, could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross-examination is sufficient to discard his statement. Statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra)

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DATE: July 14, 2016 (Date of pronouncement)
DATE: August 5, 2016 (Date of publication)
AY: 1994-95
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CITATION:
S. 132(4): Mere voluntary disclosure of undisclosed income by assessee cannot form basis of addition if no evidence is detected in search. Fact that retraction of statement is late is irrelevant. CBDT Circular No. F.No.286/2/2003-IT (In) dated 10.03.2003 bars addition on the basis of confession

It is a normal presumption that statement under section 132(4) is given voluntarily unless it is proved otherwise. There is no evidence on record to show that this statement was given in any coercion. But this statement was subject to variation on either side after verification i.e. assessee could reduce the disclosure made or the Assessing Officer could enhance the same if the facts and evidence so warranted. May be, even if this fact is not mentioned in the statement itself, the point will still remain since it is no body’s case to get say any extra tax then is due. The reality remains that there is no evidence what-so-ever with the department even in consequence of a serious action like search and seizure followed by detailed security which could support the earning of speculation income of Rs.10,50,000/- in this year. In other words, there is no evidence to support the very existence of this income except the so called statement u/s 132(4) of the Act. It defies logic that an assessee will or should admit any income which he had not earned and which the department had not found out

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DATE: July 20, 2016 (Date of pronouncement)
DATE: August 3, 2016 (Date of publication)
AY: 1991-92
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CITATION:
S. 132(4): Admission of undisclosed income by assessee is not conclusive if no evidence is found to support the admission. A retraction, though belated, is valid. Failure to provide cross-examination to assessee of persons whose statements are relied up is fatal to the addition. CBDT Directive F.No.286/98/2013 IT (INV.II] dated 18/12/2014 prohibits additions on the basis of confession

Admission made by the assessee is not a conclusive proof and such admission can be used as an evidence unless it is not retracted. The assessee in this case has already retracted the statement which in our opinion is a valid retraction. Although there had been search in the case of Gokul Corporation and its partner Shri Suresh A Patel on which the Revenue has relied for making the additions in the case of the assessee but the Revenue could not bring any evidence or material except the statement of the assessee which was recorded on 8.1.96 and also the statements of Shri Subhash Pandey and Shri Kashyap Thakore and these statements were although recorded at the back of the assessee. When the assessee has asked for their cross-examination, the cross examination was not given to the assessee, although the statement of the assessee was recored in consequence of the said statement

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DATE: May 29, 2015 (Date of pronouncement)
DATE: June 2, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 143(3)/153A: Addition made solely on the basis of a disclosure and without any incriminating material is not sustainable if facts show that disclosure was under duress. CBDT Instruction dated 10.03.2003relied upon

A perusal of the CBDT instruction reveals that even Board is aware of such laconic disclosures and expects its officers to rely on incriminating evidence. Thus CBDT also is not in favor of search assessments being based only on such disclosures; it wants them to be based on incriminating material. In view the facts, circumstances, CBDT instruction and various case laws relied on by the assessee we are unable to uphold the additions solely on the basis of disclosure which doesn’t meet the eye and have been held by us to involuntary

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DATE: March 19, 2015 (Date of pronouncement)
DATE: March 23, 2015 (Date of publication)
AY: 2006-06 to 2008-09
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CITATION:
(i) Modification to client code of client is not necessarily a mala fide act, (ii) Disclosure made in a statement recorded at unearthly hours cannot be given credence, (iii) if a voluntary disclosure is retracted, the AO has to make addition on the basis of documentary evidence

If a statement is recorded at midnight, much credence cannot be given to such statement because the person would not be in a position to make any correct or conscious disclosure in a statement recorded at odd hours. When the statement made during the course of search has been retracted, then it is duty of the Assessing Officer to make further inquiries

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