Bachittar Singh v. The Commissioner Of Income Tax, Kurukshetra And Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.220 of 2010 Date of decision: 21.7.2010 Bachittar Singh -----Appellant Vs. The Commissioner of Income Tax, Kurukshetra and another ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Ms. Radhika Suri, Advocate for the appellant. Adarsh Kumar Goel,J. 1.This appeal has been preferred by assessee under section 260Aof the Income Tax Act, 1961 (for short, ‘the Act’) against order dated18.6.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Benchin ITA No.224/Chd/2007, for assessment year 2003-04, proposing to raisefollowing substantial questions of law:- “i) Whether in the facts and circumstances of the case,the ITAT was correct in law in sustaining the additionof Rs.19 lacs made solely on the basis of statement ofthe assessee recorded on 21.3.2003 which was retractedon 28.5.2003 which was recorroborated by evidencecollected during the course of survey, contrary to theratio of the SC in 91 ITR Page 18 in case of PullungodeRubber Product Company v. State of Kerala? ii) Whether the Hon’ble ITAT was correct in law insustaining the addition of Rs.19 lacs when the assesseewas able to explain the source of investment through entries made in his gatta diary which was seized duringthe course of survey and therefore could not befabricated? iii) Whether in the facts and circumstances of the case,the ITAT was correct in law in ignoring the decision ofits Coordinate Bench given in identical circumstancesarising out of the same survey conducted on21.3.2003?” 2.The assessee is an individual. In the course of survey undersection 133A of the Act, he gave a statement on 21.3.2003 surrendering fortaxation a sum of Rs.19 lacs. He stated that he had purchased Shop No.5-A,New Cloth Market, Ambala City for Rs.24 lacs jointly with his brother andsource of investment was not reflected in the books of account. Later, theassessee sought to resile from the said statement by taking a stand that hehad agricultural income to that effect and investment was from that source.He had done potato business which was evidenced by entries in a diaryfound during the survey. He also produced other evidence in support of hisclaim. The Assessing Officer rejected this stand holding that there was longgap between the statement made originally on 21.3.2003 and retraction ofthe said statement on 28.5.2003 and the stand taken was an after-thought.Reliance was placed on judgment of Allahabad High Court in Dr.S.C.Gupta v. CIT,248 ITR 782. On appeal, the CIT(A) upheld the plea ofthe assessee that earlier statement was incorrect and the resiled statementwas supported by diary recovered during the survey. On further appeal, theTribunal reversed the view taken by CIT(A). It was held that burden wason the assessee to establish that admission made by him during survey waswrong. The assessee had failed to produce the books of account or contemporaneous record of the period during which agricultural income wasearned. The statement having not been retracted at the earliest opportunity,voluntary statement made in the presence of family members was animportant piece of evidence which could not be brushed aside. It was heldthat statement of the assessee was material during survey and could bebasis of assessment when the assessee had not maintained regular books ofaccounts, as held by this Court in Surinder Kumar Charanjit Kumar v.CIT, (2006) 282 ITR 78. 3.We have heard learned counsel for the appellant-assessee. contemporaneous record of the period during which agricultural income wasearned. The statement having not been retracted at the earliest opportunity,voluntary statement made in the presence of family members was animportant piece of evidence which could not be brushed aside. It was heldthat statement of the assessee was material during survey and could bebasis of assessment when the assessee had not maintained regular books ofaccounts, as held by this Court in Surinder Kumar Charanjit Kumar v.CIT, (2006) 282 ITR 78. 3.We have heard learned counsel for the appellant-assessee. 4.Learned counsel for the assessee vehemently submitted thatstatement made during survey could be retracted and could be proved to bewrong. It was also submitted that the said statement was not at par with thestatement made under section 132(4) of the Act on oath. Reliance has beenplaced on judgment of the Hon’ble Supreme Court in Pullangode RubberProduce Co. Limited v.State of Kerala and another, (1973) 91 ITR 18 andjudgment of Delhi High Court in Ester Industries Limited v. CIT, (2009)316 ITR 260, in support of submission that admission wrongly made couldbe withdrawn. Reliance has also been placed on judgment of Madras HighCourt in CIT v. S.Khader Khan Son, (2008) 300 ITR 157, to submit thatstatement under Section 133A stands on different footing from statementmade under section 132(4) of the Act and had no evidentiary value, per se. 5.We do not find any merit in the submissions made. TheTribunal categorically held that in the facts and circumstances, the order ofCIT (A) could not be upheld as retraction from statement had to be at theearliest opportunity in absence of which voluntary statement recorded in thepresence of family members was an important material which could beacted upon. Relevant observations are:- “It is not the case that the assessee produced the records,books of account or the income tax record of the period whenthe assessee claimed to have done potato business byclaiming bad debt. As far as the question posed by the ld.CIT(A) in his order, ‘whether the assessee can retract hisstatement’ the obvious reply is ‘yes’ but that should be at theearliest opportunity when the statement was recorded oratleast within a reasonable time, consequently, the voluntarystatement that too recorded in the presence of familymembers and counsel is an important piece of evidencewhich simply cannot be brushed aside unless and untilotherwise is proved. Identical ratio was laid down by theHon’ble jurisdictional High Court in the case of SurinderKumar Charanjit Kumar v. CIT (2006) 282 ITR 78 (P&H),on surrender of amount during income tax survey operation,though on adoption of gross profit rate, the Tribunal was heldto be justified. Therefore, under the facts, onus is on theassessee and not on the revenue to substantiate its claim. Inthe light of the aforesaid facts and judicial pronouncements,on the impugned issue, we reverse the order of the ld CIT(A)and restore the stand of the ld. assessing officer. 6.It is not disputed that statement was made by the assessee at the time of survey, which was retracted on 28.5.2003 and he did not take anyfurther action for a period of more than two months. In such circumstances,the view taken by the Tribunal that retraction from the earlier statement wasnot permissible, is definitely a possible view. Mere fact that some entrieswere made in a diary could not be held to be sufficient and conclusive tohold that statement earlier made was false. The assessee failed to producebooks of account which may have been maintained during regular course ofbusiness or any other authentic contemporaneous evidence of agricultural income. In the circumstances, statement of the assessee could certainly beacted upon. 7.As regards judgments in Pullangode Rubber Produce Co. and time of survey, which was retracted on 28.5.2003 and he did not take anyfurther action for a period of more than two months. In such circumstances,the view taken by the Tribunal that retraction from the earlier statement wasnot permissible, is definitely a possible view. Mere fact that some entrieswere made in a diary could not be held to be sufficient and conclusive tohold that statement earlier made was false. The assessee failed to producebooks of account which may have been maintained during regular course ofbusiness or any other authentic contemporaneous evidence of agricultural income. In the circumstances, statement of the assessee could certainly beacted upon. 7.As regards judgments in Pullangode Rubber Produce Co. and Ester Industries Limited relied upon by the assessee, even though it may beopen to show an earlier statement or an entry to be erroneous, in the presentcase, the Tribunal was justified in holding that earlier statement was notproved to be incorrect. As regards judgment of the Madras High Court inS.Khader Khan,we are of the view that even if statement under section133A was not at par with statement under section 132(4) and did not havethat ‘evidentiary value, such statement cannot be held to be irrelevantmaterial so as to be ruled out of consideration in totality of facts,particularly in absence of regular books of account. The Tribunal rightlyfollowed observations of Allahabad High Court in Dr. S.C.Gupta and ofthis Court in Surinder Kumar. Thus, having regard to the facts andcircumstances of the case, the view taken by the Tribunal cannot be held tobe perverse or illegal. 8.No substantial question of law arises. 9.The appeal is dismissed. (Adarsh Kumar Goel) Judge July 21, 2010‘gs’ (Ajay Kumar Mittal) Judge