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Income Tax

Started by advsuhail, February 13, 2011, 08:06:46 PM

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Any Confessional statement made before the I.T. Officer by an assesee is how much valid in the eyes of settled law.


depends on the facts of the case. But recently in most cases ,appellate authorities are taking a stand that a cnfessional statement without anything will not make assessee liable to py tax on that income.


During a survey u/s 133A IT authorities are not empowered to record a statement on oath.Therefore, it has no evidentiary value as has been held by various high courts which are reported in 300 ITR  157,263 ITR 101,308 ITR 83, 29 sot 449, 174 Taxman 466, 46 DTR 406 and 328 ITR 384.Statement recorded on oath u/s 132(4) can also be retracted if it is recorded during midnight and is not supported with any corroborative evidence as has been held in the case reported in 328 ITR 411. Therefore, it can be concluded that if the statement is not corroborated with any other documentary evidence, the same had no evidentiary value by itself.




ITA No.3250/Ahd/2008
Assessment Year: 2005-2006




Bhavnesh Saini, JM and D C Agrawal, AM

Dated: December 30, 2010

Appellant Rep by: Shri R N Vepari, AR
Respondent Rep by: Shri R K Dhanistha, DR

Income tax – Sections 133A, 143(3), 292C – Whether when there is no evidence to indicate coercion, retraction of the statement recorded of the partner of the assessee after more than two years can be taken on the face value.

Assessee firm was formed in the year 1994-95 for the business of land dealings and real estate business – the firm made advances for purchase of land – these advances were shown as advance given in the balance sheet – a survey u/s 133A was conducted and one of the partners of the firm disclosed an undisclosed income of Rs. 15 lacs – the said amount was not shown as income while filing the return of income – proceedings u/s 143(3) were initiated – the income of the firm was assessed at Rs. 20 lacs against the returned income at Nil making addition towards unaccounted land development charges and profit earned from sale of development land – in the assessment proceedings, the partner retracted from his statement through an affidavit – AO did not consider the same stating that there was nothing on record that the said disclosure was made by the assessee under duress and pressure and retraction of disclosure after a lapse of 2.5 years from the date of survey was an afterthought.

In appellate proceedings, it was contended by the assessee that the statement was retracted as it was given under duress and coercion and was running very high blood pressure – further the transaction regarding the purchase of land did not materialize because permission for sale of the land was denied by the Collector of Dadra & Nagar Haveli - since they never had any land, therefore, question of developing the same and incurring the development expenses would not arise - the survey team exceeded their right to record the statement on oath which is beyond their powers.

CIT (A) dismissed the appeal of the assessee observing that the statement given by the partner of the firm was voluntary statement and was given with application of mind after having looked at the notings on the loose paper and specific declaration was made and that retraction was made after 21 months from what has been stated on oath. Therefore, it was an afterthought.

After hearing both the parties, the ITAT held: -

++ that the statement of one of the partners of the assessee was voluntary and recorded without any coercion and threat etc. which is evident from the fact that the assessee or its partner never retracted the statement and the seized material after conclusion of the survey proceedings. The assessee or its partner never filed any complaint to the senior authorities of the Income Tax Department for any alleged fabrication of the seized material or for recording statement under duress or coercion. The assessee and its partner remained silent for about 2 years and did not object to the seizure of the incriminating document or material;

++ that the assessee never filed the original copy of the affidavit given by the partner of the firm. Though the assessee stated that the original was filed in any other proceedings of the same group, it also failed to produce the details in which it was filed. Unless the original affidavit is filed before the AO, no retraction could be made from the earlier statement. Even there is no explanation why the original affidavit was not filed before any of the specific authorities. In the absence of any affidavit from the side of the assessee, no cognizance could be taken of any of the explanations of the assessee in this regard;

++ that no evidence is filed to prove that the seized document was planted by the survey party. Since serious allegation has been leveled against the survey party, therefore, it was incumbent on the part of the assessee to have agitated this issue before senior Income Tax Department Authorities and should have retracted from the statement and the seized material at the earlier instance and opportunity. But no such step has been taken in the matter and the assessee never disputed the correctness of the seized material and the statement made during the course of survey;

++ that section 292C of the IT Act raises a presumption that the contents of documents found during survey proceedings are true. However, such presumption can be rebutted. There was a presumption that contents of the seized document were true as the document was seized from the premises in control of the assessee and the seized document belonged to the assessee. A reading of the document would make it clear that the document in fact was unaccounted land development expenses incurred by assessee firm as is noted by the authorities below. The presumption ought to have been rebutted by the assessee. However, the assessee at the available earliest opportunity did not deny the existence of the document and even did not deny at the stage of the assessment before the AO. The assessee was playing hide and seek with the revenue authorities by concealing the original affidavit with the AO of this case as well as did not cooperate with the AO by not producing the concerned parties for examination and verification of the land deal between such parties and the assessee;

++ that it is not a case where addition is merely made on the basis of statement of the partner of the assessee firm but in fact based upon the loose paper found during the course of survey. Therefore CBDT Circular dated 10-03-2003 was not applicable;

++ that since the assessee did not file any proper explanation before the AO and did not cooperate in finding out the truth in the transaction, the burden upon the assessee is not discharged to rebut the presumption u/s 292C of the IT Act.

Assessee's appeal dismissed


In continuation of discussion I would like to submit that  Section 131(1) empower the assessing officer as the powers vested in a court under the Code of Civil Procedure,95 of 1908 in connection discovery and inspection etc. The section 2(17)(d) the Code of Civil Procedure,1908 discussed about powers of officer of  court to administer oath along with other judicial power. therefore, an income tax officer can administer oath during any proceeding.