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Admission during I-T survey can be retracted

Started by pawansingla, December 20, 2010, 05:55:24 PM

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The Finance Minister (FM), in his Budget speech for the year 2003-04, said that one of his priorities concerning search and survey operations is that no confessions shall be obtained during search proceedings. Judicial opinion also is that admissions recorded during survey operations are invalid. Yet, this is being freely done and the latest decision of the Delhi High Court (HC) pronounced on October 4 in the case of Dhingra Metal Works supports this conclusion. In this decision, the court has said that Section 133A of the Income Tax Act, 1961 (Act), concerning survey, does not empower the I-T authority, carrying on the survey, to administer oath and record sworn statement. Hence, Earlier, this issue has been deliberated by other courts also. The Madras High Court in the case of S. Khadar Khan (2008) 300 ITR 157 (Mad), had laid down the following principles on the matter. According to the court: *An admission is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person, who made it, to show it has incorrectly been made and the person, making the statement should be given proper opportunity to show that it does not show the correct state of facts. *A statement u/s 133A is not given any evidentiary value because the officer, taking the statement, is not authorised to administer an oath and record a sworn statement. *The materials found in the course of the survey could not be the basis for making any addition in the assessment. The word 'may' used in section 133A(3)(iii) viz. "record the statement of any person, which may be useful for or relevant to, any proceeding under the Act" makes it clear that the material collected and statement recorded during the Survey u/s 133A are not conclusive piece of evidences by itself.



Kindly permit me to further up this discussion to  "Admission during Search and Survey proceedings and Retraction thereof."

1.   The object of Search and Survey proceedings under the Income Tax Act, are to unearth unaccounted income which has escaped tax liability and not to obtain admission / confession from the Assessee.

2.   No person can be found to be witness against himself for purpose of Conviction. Admission made a person cannot be used as evidence against himself in absence of corroborative evidence to admission.

3.   Admission of Income cannot be said to be conclusive to tax an income/amount. It is always open for the assessee to retract from the same. The onus lies on the Assessee to prove that why the Admission was made, How the admission is not true, why the admission should not be relied on. It is for the Assessee to show that whether the admission was not voluntary or was obtained under coercion/ threat or was under misconception of fact or law.  Since it is the Income of the Assessee that is being taxed, it is only the Assessee who knows his correct state of Affairs. 

4.   The Assessing Officer can act upon Confession of Assessee. The same becomes an evidence but it does not partake the role of Poof. The confession is only one element in the consideration of all the facts proved in the case; it can be put into the scale and weighed with the other evidence.

5.   To act upon the retracted Confession for taxing an amount, the Onus is on the department to prove that the statements made were voluntary and there was no coercion on Assessee.

6.   A statement unless administered on Oath has no evidentiary value. In the course of search proceeding u/s 132 of the Income Tax Act, Sec 132(4) specifically empowers the Investigating officer to obtain statement administered on Oath.  However no such authority is given by Law to obtain statement in survey proceedings u/s 133 of the Income Tax Act. As a primary fact, Admission/ Confession given u/s 133 has no evidentiary value.

Vinod Solanki vs. UOI Civil Appeal No. 7407 of 2008 arising out of SLP (C) No. 3537of 2008 dated 18th December, 2008  ( UOI (233) ELT 157 (S.C.)) Held that :-
(i)   The retracted statement must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon;
(ii)    The initial burden to prove that the confession was voluntary in nature would be on the Department.
(iii)    The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction.
(iv)   With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such.

CIT Vs. Uttamchand Jain (Bombay High Court), Income Tax Appeal No 634 of 2009, it was held the retracted confession can be reilied only there is independent and cognet evidence to corroborate the statement.

Abdul Qaymme Vs CIT (1990) 184 ITR 404 :-An admission or acquiescence can not be foundation of assessment when income is returned under an erroneous or misconception of law. it is always open to assessee to demonstrate and satisfy the authority concerned that a particular income is not taxable in his hands and it was returned under an erroneous impression of law.

2010-TIOL-693-HC-DEL-IT CIT Vs  M/s DHINGRA METAL WORKS,  the Hon. High Court held that,
      1. From a reading of Section 133A, it is apparent that it does not mandate that any statement recorded u/s 133A of the Act would have evidentiary value. In the High Court's view, for a statement to have evidentiary value, the survey officer should have been authorised to administer oath and to record sworn statement. This would also be apparent from Section 132(4) of the Act. From the perusal of section 132(4), it is apparent that while Section 132(4) of the Act specifically authorizes an officer to examine a person on oath, Section 133A does not permit the same;
         2. Moreover, the word 'may' used in Section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during the survey is not a conclusive piece of evidence by itself;
    3. In any event, it is settled law that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect;

Paul Mathews & Sons Vs. Commissioner of Income Tax, (2003) 263 ITR 101 (Kerala) and Madras High Court in CIT Vs. Kader Khan, (2008) 300 ITR 157 have also taken a similar view. The relevant portion of the Kerala High Court judgment in the case of Paul Mathews & Sons :-"The provision also enables the income-tax authority to impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him, provided the authority records his reasons for doing so and also shall not retain the books of account for a period not exceeding 15 days. Section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Section 133A, however, enables the income-tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this."

2009-TIOL-272-HC-DEL-FEMA, ABID MALIK Vs UNION OF INDIA Retracted confession can be a piece of corroborative evidence and not as the sole evidence on the basis which conviction can be ordered – Once confessional statement is retracted, burden is on the prosecution to prove that the statement was voluntary


Section 131(1) empower the assessing officer with 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,Income Tax Officer can administer oath


5.   To act upon the retracted Confession for taxing an amount, the Onus is on the department to prove that the statements made were voluntary and there was no coercion on Assessee.
In this case both parties(Income Tax department and assessee) have to prove  allegation and innocence with evidence.


 An important aspect is that during survey operation u/s 133A depatrment is not empowered to take statement on OATH. It is only during search operation that department can take statement on OATH.
Yes , statement can be retracted if there is nothing on record for the department to substantiate  that the statement given by the assessee was true.  ;)

chetan agarwal

i think rectraction should be in reasonable time limit after survey to support case in judicial forum