Commissioner Of Income Tax-Ichandigarh v. Jatinder Kumar, Sector 37,Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 586 of 2005Date of decision: 30.11.2010 Commissioner of Income Tax-IChandigarh --- Appellant Versus Jatinder Kumar, Sector 37,Chandigarh --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Ms. Urvashi Dhugga, Standing Counselfor the appellant. None for the assessee --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961(for short “the Act”) has been filed by the Revenue against the orderdated 13.5.2005, passed by the Income Tax Appellate TribunalChandigarh Bench ‘A’ Chandigarh (in short “the Tribunal”) in IT(SS)A No.68/Chd./2002 and C.O. No. 38/Chd./2003 filed therein by the assessee,relating to the block assessment period from 1.4.1988 to 22.7.1998. The appeal was admitted for determination of the followingsubstantial question of law by this Court: “Whether in the facts and circumstances of the case, theHon’ble ITAT is justified in holding that the statement of theassessee recorded on oath under Section 132 of the IncomeTax Act, 1961 cannot be relied upon or used against theassessee in the absence of any corroborative material?” The facts, in brief, necessary for adjudication, as narrated in the appeal are that during the search and seizure operation at thebusiness premises of the assessee carried out by the Department on22.7.1998, it was noticed that the assessee had purchased a plot inSector 16, Chandigarh for a sum of Rs. 12,00,000/-. The assesseemade a statement before the Department that in respect of the plot aconveyance deed had been executed for a sum of Rs. 8,40,000/- andthe balance amount of Rs.3,60,000/- had been received by him in cash.In the wake of the above, a notice under Section 158BC of the Act wasissued to him. The assessee filed return declaring his income as nil.However, during the course of assessment proceedings, the assesseeretracted from his statement made during the search operation. Theassessing officer, after observing that the retraction from the statementwas an after-thought and treated the investment of Rs. 3,60,000/-received by the assessee in cash as unexplained investment and thedeemed income under Section 69B of the Act for the financial year 1997-98. The assessing officer consequently made addition of Rs. 3,60,000/-,vide order dated 31.7.2000. The Commissioner of Income Tax (Appeals), [hereinafterreferred to as “CIT(A)”] accepted the appeal of the assessee, vide orderdated 27.3.2002 and deleted the addition of Rs. 3,60,000/- made by theassessing officer. It was observed by the CIT(A) that the assessee was frightened and coerced to make statement that he had received a sum ofRs. 3,60,000/- in cash over and above the sale consideration of the plot. The Revenue took the matter in appeal before the Tribunal.The assessee also, filed cross-objections in the said appeal. TheTribunal upheld the order of the CIT(A) and dismissed the appeal, videorder dated 13.5.2005, holding that as per the conveyance deed, thecost of the plot had been mentioned at Rs. 8,40,000/- only and theDepartment had no proof that the assessee had received more amountthan what was shown in the conveyance deed. We have heard learned counsel for the Revenue andperused the record. frightened and coerced to make statement that he had received a sum ofRs. 3,60,000/- in cash over and above the sale consideration of the plot. The Revenue took the matter in appeal before the Tribunal.The assessee also, filed cross-objections in the said appeal. TheTribunal upheld the order of the CIT(A) and dismissed the appeal, videorder dated 13.5.2005, holding that as per the conveyance deed, thecost of the plot had been mentioned at Rs. 8,40,000/- only and theDepartment had no proof that the assessee had received more amountthan what was shown in the conveyance deed. We have heard learned counsel for the Revenue andperused the record. Learned counsel for the Revenue placed reliance on adecision of this Court in Income Tax Appeal No. 126 of 2003 (TheCommissioner of Income Tax, Jalandhar-II v. Lekh Raj Dhunna)decided on 29.9.2010, to contend that once a statement had been madeon oath under Section 132(4) of the Act at the time of search, theaddition on that count was justified. It was further submitted that in casethe assessee chose to retract from his statement made under Section1324) of the Act, the onus was upon him to show that the statement wasbeing disowned by him at the earliest opportunity available to him, andthe reason for its retraction. Reliance was also placed on the decision ofthe Kerala High Court’s judgment in V. Kunhambu and sons v.Commissioner of Income-tax, (1996) 219 ITR 235 (Kerala). The point for determination in this appeal is, whether thestatement made by the assessee under Section 132 sub section (4) ofthe Act, at the time of search which is recorded on oath, can form basisfor making addition when the assessee is unable to rebut the same. The scope and interpretation of Section 132(4) came up forconsideration before this Court in Lekh Raj Dhunna’s case (supra)wherein it was observed as under: “Sub-section (4) of Section 132 enables the authorizedofficer to record on oath the statement of the persons whoare found to be in possession or control of article or thing atthe time of search. Under this provision, the AssessingOfficer is empowered to use such statement against theassessee and base the assessment thereon. However,where the assessee is able to establish that the statement somade was not voluntary but was a result of coercion orinducement, the same may not be acted upon. The onus liesvery heavy upon the assessee in such circumstances toprove such coercion or inducement. Further, the assesseecan produce evidence to rebut the statement recorded underSection 132(4) of the Act. Explanation inserted by Direct TaxLaws (Amendment) Act, 1987, w.e.f. 1.4.1989 permits theexamination of the persons under sub-section (4) not only inrelation to the books of account, other documents or assetsfound as a result of search but also on any other matterrelevant for any proceedings under this Act or the IncomeTax Act, 1922.” In view of the above, where the assessee alleges that thestatement which was recorded under sub-section (4) of Section 132, wasnot his voluntary statement, it is on the assessee to prove so andsimplicitor retraction from that statement would not come to his rescue.Admittedly, in the present case, the search took place in the year 1998 whereas the assessee sought to retract from the statement made by himon oath, in 2000 without there being any plausible explanation forallowing a long period of two years to be gone by, i.e. the period whenthe statement was made by the assessee and when he wanted to retractthere from. The CIT(A) and the Tribunal were, thus, not right in deletingthe additions on that basis. In view of the above, the substantial question of law isanswered in favour of the Revenue and consequently, the appeal isallowed. (AJAY KUMAR MITTAL) JUDGE November 30, 2010*rkmalik* (ADARSH KUMAR GOEL) JUDGE