D.b. Income Tax Appeal v. Acit, Central Circle-2, Ajmer

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No.140/2018 M/s Bannalal Jat Constructions Pvt. Ltd., Bus Stand, Jahajpur,District Bhilwara Through Its Authorized Signatory Shri BannalalJat S/o Shri Harji Ram Jat, Designated as Director, Aged About63 Years, Resident of Village Bhopalpura, Tehsil - Jahajpur,District Bhilwara, Rajasthan ----Appellant Versus ACIT, Central Circle-2, Ajmer ----Respondent For Appellant(s) : Mr. Prakul Khurana for Mr. Sanjay Jhanwar For Respondent(s): Mr. Siddharth Bapna for Mr. Anil Mehta HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Judgment //Reportable// 31/08/2018Per Hon’ble Mr. Justice Mohammad Rafiq This appeal under Section 260A of the Income Tax Act, 1961,which seeks to challenge the order dated 29.12.2017 of theIncome Tax Appellate Tribunal, Jaipur bench, Jaipur, was admittedto hearing on following substantial question of law:- “Whether under the facts and circumstances of thecase and in law the ld. ITAT was justified in upholdingthe additions made by the Assessing Officer merely onthe basis of statements recorded u/S 132(4) of theIncome Tax Act, 1961 ignoring the presumption laiddown u/S 292C of the Income tax Act, 1961 and theevidences brought on record by the Appellant? Briefly stated, the facts of the case are that a search wasconducted at the business/residential premises of Shri Banna LalJat, the Director of appellant company - M/s. Bannalal JatConstructions Private Limited, on 10.10.2014, in which he wasalso operating his proprietary concern in the name of M/s.Bannalal Jat Contractor. During the search proceedings atresidential premises of Shri Bannalal Jat, a cash worth ofRs.1,21,43,210/- was found and inventorised as per Annexure CFof Panchnama dated 11.10.2014. He, in his statement, recordedunder Section 132(4) of the Income Tax Act, 1961 (for short ‘theIT Act’) during the course of search and even subsequentstatement recorded under Section 131 of the IT Act, admitted thesame as undisclosed income of the appellant-company. However,subsequently while filing the return of income for the relevantassessment year, the appellant-company did not offer the saidundisclosed income to tax. The assessing officer therefore servedupon the appellant-company a show cause notice as to why it hasfailed to disclose the said income and also to get the cash verifiedfrom the regular books of accounts. The appellant-company inresponse to the show cause notice, submitted written reply on02.12.2016 contending that withdrawals were made from theaccount with Bank of Baroda and State Bank of Bikaner and Jaipurbetween the period from 20.09.2014 to 30.09.2014, which waskept at the residence and out of that amount, he kept a sum ofRs.70 lakh in the morning in the car for making payment tolabour, tractor, material etc. Thus, in the survey the appellant-company explained the amount of Rs.98.92 lakh (70+19.92+9)pertained to his business. The extract from the accountmaintained in the computer books for the financial year 2014-15 was submitted. It was also stated that the print out of incompletebooks of account in computer was taken by the ADI(Investigation) team, according to which cash balance ofRs.4,21,691/- only was unaccounted in the balance-sheet of M/s.Bannalal Jat Construction Private Limited. was submitted. It was also stated that the print out of incompletebooks of account in computer was taken by the ADI(Investigation) team, according to which cash balance ofRs.4,21,691/- only was unaccounted in the balance-sheet of M/s.Bannalal Jat Construction Private Limited. The survey was converted into search and the statement ofthe assessee under Section 132(4) was recorded on 10.10.2014 at10:15 PM and thereafter search was concluded on 11.10.2014 inthe morning and the assessee stated that such cash belonged tothe appellant-company as undisclosed income. The assesseethereafter maintained that the subsequent statement of assesseeunder Section 132(4), whereby cash was surrendered wasincorrect and obtained under pressure. In case, this cash balanceseized from Shri Bannalal Jat belonged to his proprietary concernand cash balance of the company was only Rs.4,21,691/- on thedate of survey/search. The assessing officer rejected thestatement of the assessee observing that on examination of booksof account it was found that at several places there were instancesof unaccounted incomes/profit, some of which were evensurrendered by the assessee during the post search proceedings.In the statement of Shri Bannalal Jat recorded on 10.10.2014, hein reply to question no.6 admitted that the books of account of theappellant-company has been written up to 09.10.2014 butexpenses for last 3-4 months were yet to be entered. ShriBannalal Jat, in reply to question no.8, admitted that in hisbusiness of civil construction, he inflated various expenditure andincome so generated by inflating the expenditure is in form ofcash which was found at his residence and the same was notrecorded in his books of accounts and he surrendered the cash so found amounting to Rs.1,21,43,210/-. During the course of postsearch proceedings and after three months of search action, ShriBannalal Jat, vide statement recorded under Section 131 on04.12.2014 again confirmed the admission of undisclosed cash ofRs.1,21,43,210/- as has already been offered under Section132(4) of the IT Act. In view thereof, the Assessing Officer madean addition of Rs.1,21,43,210/- as unaccounted income of theappellant-company. The CIT (Appeals) concurred with the findingsrecorded by the Assessing Officer and dismissed the appeal filedby the appellant-company. The second appeal filed by theappellant-company was again dismissed by the Income Taxappellate Tribunal (for short, ‘the ITAT’) vide impugned judgmentdated 29.12.2017. Mr. Prakul Khurana, learned counsel for the appellant-company, has submitted that the appellant-company on updatingthe books of accounts of M/s. Bannalal Jat (Proprietorship concernof Shri Bannalal Jat), which was stated to be incomplete duringthe course of statement recorded under Section 132(4) of the ITAct, it was reconciled and it became evident that the aforesaidcash balance of Rs.1,21,41,528/- was available in the books ofaccounts of M/s. Bannalal Jat and that the cash found belonged tothe said proprietorship concern and not the appellant-company.Accordingly, this amount was not offered in the return of incomefiled by the appellant-company thereby retracting the statement ofthe company recorded under Section 132(4) of the IT Act. There isthus no dispute of whatsoever kind regarding the form andmanner of retraction. Reference is made to InstructionNo.286/2/2003-IT (INV-II) dated 10.03.2003 to show that non-disclosure in the return of income is considered as retraction by the department. Reliance is placed on a judgment of the HighCourt of Madras in M. Narayanan and Bros. Vs. AssistantCommissioner of Income-tax, Special Investigation Circle,Salem – (2011) 13 Taxmann.com 49 (Madras), whereinretraction made during the course of assessment proceedings wasentertained and relief was granted on merits of the explanation. the department. Reliance is placed on a judgment of the HighCourt of Madras in M. Narayanan and Bros. Vs. AssistantCommissioner of Income-tax, Special Investigation Circle,Salem – (2011) 13 Taxmann.com 49 (Madras), whereinretraction made during the course of assessment proceedings wasentertained and relief was granted on merits of the explanation. It is argued that it was not a case of simple retraction butbacked by books of accounts of M/s. Bannalal Jat, wherein nodiscrepancy was found by the Assessing Officer and cash balanceas on 31.03.2015 has been accepted by the department coupledwith the fact that in the initial statement recorded under Section133A of the IT Act during the course of survey Shri Bannalal Jathimself stated the cash found was out of the withdrawals from hisbank account. The appellant-company has clarified the reason forthe delay in completion of books of M/s. Bannalal Jat by plausiblereasoning duly explained in its reply dated 02.12.2016 for notincluding the cash found of Rs.1,21,41,528/- in the return. Theauthorities below have wrongly disbelieved the explanation of theappellant duly supported by other corroborating evidence. TheITAT has rejected all the arguments without objectively dealingwith the same being unduly influenced by the notion that theappellant cannot be allowed to retract from the statement at thisstage. The findings of the ITAT that the assessee carries businessactivities of the appellant-company from both residence andofficial premises, are not based on any material and are perverse.Further, the argument of the assessee relating to statutorypresumption under Section 292C of the IT Act was also based onthe ‘panchnama’ drawn of cash seized in the hands of ShriBannalal Jat and statement recorded under Section 133A of the IT Act and not entirely on the factum of residence of Shri BannalalJat, where the amount was seized. The ITAT has not dealt with thecontentions raised neutrally and without being influenced by thefact of admission recorded under Section 132(4) of the IT Act. Shri Prakul Khurana, learned counsel for the appellant,argued that reliance placed by the ITAT on the judgment of thisCourt in CIT, Bikaner Vs. Ravi Mathur – 2017 (1) WLC (Raj.)387, is wholly misconceived as the aforesaid judgment isdistinguishable on facts. Learned counsel submitted that the sameBench of the ITAT constituting of same members in the case titledAssistant Commissioner Income Tax, Central Circle, Ajmer Vs. ShriDevendra Kumar Choudhary (ITA 828/JP/16), has taken adramatically opposite view. Therein initially jewellery worth Rs.30lakh was surrendered as undisclosed income in the statementrecorded under Section 132(4) of the IT Act but subsequently thesame was not offered for taxation while filing the return of incomeafter a gap of 357 days. The ITAT despite taking note of thejudgment of this Court in Ravi Mathur, supra, upheld the deletionof the addition accepting the explanation by relying on CBDTInstruction No.286/2003-IT/INV dated 10.03.2003, whichprohibits the department from obtaining confessions as toundisclosed income during the course of search and seizure andsurvey operations. It is argued that this Court in Ravi Mathur,supra, had no occasion to consider the CBDT Instruction. Learnedcounsel submitted that no material has been placed by theDepartment in rebuttal of the appellant that the cash foundbelonged to Shri Bannalal Jat. The authorities being the factfinding authorities are obligated to objectively consider theexplanation of the assessee on merits and evaluate supporting material. Reliance is also placed on the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. Stateof Kerala and Another – (1973) 91 ITR 0018 (SC). material. Reliance is also placed on the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. Stateof Kerala and Another – (1973) 91 ITR 0018 (SC). It is argued that Section 132(4A)(i) and Section 292C of theIT Act also provide statutory presumption that when adocument/money is found in the possession or control of anyperson in the course of search, the same is considered to belongto the same person. The onus is on the department to rebut thepresumption by leading cogent evidence. Reliance is placed on thejudgment of the Delhi High Court in Pepsi Food (P) Ltd. Vs. ACIT –(2014) 52 Taxmann.com 220 (Delhi). The additions cannot besolely based on the statements, which are subsequently retractedeven if belatedly, as held by the Delhi High Court in CIT Vs. Sunil Aggarwal – (2015) 64 taxmann.com 107 (Delhi). It is argued that it is a settled position of law that if in thefacts and circumstances of the case and evidence, if two views arepossible, the view in favour of the assessee should be preferred.Reliance in support of this argument is placed on the judgment ofthis Court in Escorts Heart Institute and Research CentreLimited Vs. DCIT (TDS) JP – (2017) 87 taxmann.com 184Rajasthan. Per contra, Mr. Siddharth Bapna, learned counsel for therespondent-revenue, submitted that Shri Bannalal Jat, theDirector of the appellant-assessee produced the books of accountsand disclosed several instance of unaccounted income/profit.Although, in the initial statement, Shri Bannalal Jat, the Directorof the appellant-company, admitted that the cash belonged to himand the source of such cash was withdrawal from the bankaccount between 20.09.2014 to 30.09.2014, however, the same was not offered to tax. The subsequently produced copy of cash-book of M/s. Bannalal Jat Contractor, a proprietorship concern ofShri Bannalal Jat, incorporated number of pending entries, whichitself proves that the cash-book and books of accounts of ShriBannalal Jat were incomplete on the date of search. Thecorrectness and completeness of such cash-book was not acceptedby the assessing officer. There was a time gap of more than 10-15days from the respective dates of withdrawal and the date ofsearch, which defies the argument of the assessee. Even if the‘panchnama’ of the cash was found and seized in the name of ShriBannalal Jat, the same was voluntarily admitted in his statementunder Section 132(4) as belonging to the appellant-company.Subsequently, again on 04.12.2014 in his statement recordedunder Section 131 of the IT Act, Shri Bannalal Jat admittedsurrender of undisclosed income of the M/s. Bannalal JatConstruction Pvt. Ltd. Learned counsel for the respondent-revenue, relying on thejudgment of this court in Ravi Mathur, supra, argued that thestatements recorded under Section 132(4) of the IT Act havegreat evidentiary value and cannot be discarded in a summarymanner by simply observing that the assessee has retracted thesame. The retraction has to be genuinely made within reasonabletime and immediately after such a statement has been recordedeither by filing a complaint to the superior authority of otherwisebrought to the notice of the higher officials, duly sworn affidavit orstatements supported by convincing evidence. Nothing has beendone by the assessing officer in the present case. Learnedcounsel, in support of his argument, has also relied on thejudgments in Rameshchandra and Company Vs. Commissioner of Income-Tax – 1987 SCC OnLine Bom 596 of High Court of Bombayat Nagpur, Dr. S.C. Gupta Vs. Commissioner of Income-Tax –(2001) 248 ITR 782 of the Allahabad High Court, Bachittar SinghVs. Commissioner of Income-Tax and Another – (2010) 328ITR 400 of the Punjab and Haryana High Court, Commissionerof Income Tax Vs. M/s. Hotel Meriya – (2011) 332 ITR 537of the Kerala High Court, Commissioner of Income-Tax Vs.Lekh Raj Dhunna – (2012) 344 ITR 352 of the Punjab andHaryana High Court, The Commissioner of Income Tax Vs. O.Abdul Razak – (2013) 350 ITR 71 of the High Court of Kerala,and ACTO, Anti Evasion-I, Alwar Vs. M/s. Khandelwal FoodsProducts, Station Road, Alwar – 2017 (1) RLW 612 (Raj.) ofthis Court. We have given our thoughtful consideration to rivalsubmissions and perused the material on record. The ITAT in its impugned judgment dated 29.12.2017 hastaken note of the fact that the appellant-company carries out hisbusiness activities from both his residence as well as the officialpremises and these business activities pertains to both of hisconcerns, namely, M/s. Bannalal Jat Construction Private Limitedand M/s. Bannalal Jat Contractor, the proprietary concern of ShriBannalal Jat. The ITAT, therefore, rejected the argument regardingpresumption under Section 292C of the IT Act that cash so foundat the residence belongs to him and not to the appellant-company.The ITAT noted that Shri Bannalal Jat in the statement recordedunder Section 133A of the IT Act during the course of survey, inreply to question no.11, submitted the cash amounting toRs.28,92,500/- belonged to his business and the same can beverified from the books of accounts maintained at his Head Office at Jahajpur. In reply to question no.14 with regard to source ofRs.70,00,000/- found in the car registered in his name, hesubmitted that he used the car for his business purposes and hehad withdrawn this amount from the Branch of Bank of Barodasituated at Jahajpur and Branch of State Bank of Bikaner andJaipur situated at Jahajpur between the period 20.09.2014 and30.09.2014 and the same could be verified from the recordsmaintained at his Head Office at Jahajpur. Further, in answer toquestion no.16 with regard to the amounts of cash ofRs.70,00,000/-, Rs.19,92,500/- and Rs.9,00,000/- found at hisresidence, he submitted that Rs.70,00,000/- was withdrawn by hisclerk (‘munshi’) and his sons from the Bank Account and given tohim. However, it could not be explained as to from whichparticular bank the withdrawal was made. RegardingRs.19,92,500/- which was stated to be given by Shri Satya Narain,he submitted that there is no supporting evidence available withhim; and, in respect of the amount of Rs.9,00,000/-, he stated thesame to be his business receipts. In reply to question no.22whether he maintains individual cash books being the proprietor ofM/s. Bannalal Jat Contractor and also the Director in M/s BannalalJat Construction Pvt. Ltd., he submitted that he does not maintainindividual cash books. This court in CIT, Bikaner Vs. Ravi Mathur, supra, which wasrelied by the ITAT in the present case, after considering catena ofprevious decisions, held that the statements recorded underSection 132(4) of the IT Act have great evidentiary value and itcannot be discarded in a summary and cryptic manner, by simplyobserving that the assessee retracted from his statement. One hasto come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon aspossible and immediately after such statement has been recordedby filing a complaint to the higher officials or otherwise brought tothe notice of the higher officials by way of duly sworn affidavit orstatement supported by convincing evidence, stating that theearlier statement was recorded under pressure, coercion orcompulsion. We deem it appropriate to reproduce para 15 of thesaid judgment, which reads thus, retraction takes place. Such retraction should be made as soon aspossible and immediately after such statement has been recordedby filing a complaint to the higher officials or otherwise brought tothe notice of the higher officials by way of duly sworn affidavit orstatement supported by convincing evidence, stating that theearlier statement was recorded under pressure, coercion orcompulsion. We deem it appropriate to reproduce para 15 of thesaid judgment, which reads thus, “15. In our view, the statements recorded under Section132(4) have great evidentiary value and it cannot bediscarded as in the instant case ITA No.720/JP/2017 M/sBannalal Jat Construction Pvt. Ltd., Bhilwara vs. ACIT,Central Circle-Ajmer by the Tribunal in a summary or ina cryptic manner. Statements recorded under Section132(4) cannot be discarded by simply observing thatthe assessee retracted the statements. One has to cometo a definite finding as to the manner in which retractiontakes place. On perusal of the facts noticedhereinbefore, we have noticed that while the statementswere recorded at the time of search on 9.11.1995 andonwards but retraction, is almost after an year and thattoo when the assessment proceedings were being takenup in November 1996. We may observe that retractionshould be made as soon as possible and immediatelyafter such a statement has been recorded, either byfiling a complaint to the higher officials or otherwisebrought to the notice of the higher officials, either byway of a duly sworn affidavit or statements supportedby convincing evidence through which an assessee coulddemonstrate that the statements initially recorded wereunder pressure/coercion and factually incorrect. In ourview, retraction after a sufficient long gap or point oftime, as in the instant case, loses its significance and isan afterthought. Once statements have been recordedon oath, duly signed, it has a great evidentiary valueand it is normally presumed that whatever stated at thetime of recording of statements under Section 132(4),are true and correct and brings out the correct picture,as by that time the assessee is uninfluenced by externalagencies. Thus, whenever an assessee pleads that thestatements have been obtained forcefully/bycoercion/undue influence without material/contrary tothe material, then it should be supported by strongevidence which we have observed hereinbefore. Once astatement is recorded under Section 132(4), such astatement can be used as a strong evidence against the assessee in assessing the income, the burden lies onthe assessee to establish that the admission made inthe statements are incorrect/wrong and that burden hasto be discharged by an assessee at the earliest point oftime and in the instant case we notice that the AO inthe Assessment Order observes:- "Regarding the amount of Rs. 44.285 lakhs, it isnow contended that the statement u/s 132(4) wasnot correct and these amounts are in ITANo.720/JP/2017 M/s Bannalal Jat Construction Pvt.Ltd., Bhilwara vs. ACIT, Central Circle-Ajmerthousands, not lakhs i.e. it is now attempted toretract from the statements made at the time of S& S operations." Therefore, what we gather from the Assessment Orderand on perusal of the above finding that the retractionwas at the stage when the assessment proceedingswere being finalized i.e. almost after a gap of more thanan year. Such a so-called retraction in our view is noretraction in law and is simply a self-serving statementwithout any material.” "Regarding the amount of Rs. 44.285 lakhs, it isnow contended that the statement u/s 132(4) wasnot correct and these amounts are in ITANo.720/JP/2017 M/s Bannalal Jat Construction Pvt.Ltd., Bhilwara vs. ACIT, Central Circle-Ajmerthousands, not lakhs i.e. it is now attempted toretract from the statements made at the time of S& S operations." Therefore, what we gather from the Assessment Orderand on perusal of the above finding that the retractionwas at the stage when the assessment proceedingswere being finalized i.e. almost after a gap of more thanan year. Such a so-called retraction in our view is noretraction in law and is simply a self-serving statementwithout any material.” The judgment of the Delhi High Court in CIT Vs. SunilAggarwal, supra, relied by the assessee does not in any mannerextend any assistance to him because that was a case in whichthe court found that the assessee, apart from retracting thestatement, also discharged the onus on him through cogentmaterial to rebut the presumption that stood attracted in view ofthe statement made under Section 132(4) of the IT Act withreference to the entries in the books of accounts of the sales madeduring the year and the stock position. Similar was the position inKailashben Manharlal Chokshi Vs. Commissioner of Income-tax –(2008) 174 Taxman 466 (Gujarat), wherein the High Court ofGujarat found that the assessee gave proper evidence in supportof his retraction. The High Court of Madras in M. Narayanan andBros. Vs. Assistant Commissioner of Income-tax, supra, held thatwhen assessee had explained his statement as not correct incontext of materials produced, no amount could be added to his income on the basis of his statement. Similarly, what has beenheld by the High Court of Bombay in Commissioner of Income-tax,Central-II, Mumbai Vs. Omprakash K. Jain – (2009) 178 Taxman179 (Bombay) was that the assessing officer, while consideringwhether retraction was under duress or coercion, had also toconsider genuineness of documents produced before him. The Punjab and Haryana High Court in Commissioner ofIncome-Tax Vs. Lekh Raj Dhunna, taking note of the fact that theassessee had made a statement under Section 132(4) of the ITAct whereby a surrender of Rs.2 lakh was made and further thatthe assessee had admitted that he had earned commission from aparty, which was not disclosed in the return filed by him andcertain documents were seized which bore the signature of theassessee, held in para 16 of the report as under:- “16. Thus, in view of sub-sections (4) and (4A) ofSection 132 of the Act, the Assessing Officer wasjustified in drawing presumption against the assesseeand had made addition of Rs.9 lakhs in his incomeunder Section 68 of the Act. The onus was upon theassessee to have produced cogent material to rebut theaforesaid presumption which he had failed to displace.The assessee retracted from the said statement, videletters dated November 24, 1998, and March 11, 1999,during the course of assessment proceedings. However,no value could be attached thereto in the present case.In case the statement which was made by the assesseeat the time of search and seizure was under pressureor due to coercion, the assessee could have retractedfrom the same at the earliest. No plausible explanationhas been furnished as to why the said statement couldnot be withdrawn earlier. In such a situation, theauthenticity of the statement by virtue of whichsurrender had been made at the time of search cannotbe held to be bad. The Tribunal, thus, erred inconcluding otherwise. The Tribunal, therefore, was notjustified in reversing the order of the Assessing Officerwhich was affirmed by the Commissioner of Income-tax(Appeals) also.” The Punjab and Haryana High Court in Bachittar Singh Vs,Commissioner of Income-Tax, supra, in para 7 of the report, heldas under:- The Punjab and Haryana High Court in Bachittar Singh Vs,Commissioner of Income-Tax, supra, in para 7 of the report, heldas under:- “7. It is not disputed that the statement was made bythe assessee at the time of survey, which was retractedon May 28, 2003, and he did not take any furtheraction for a period of more than two months. In suchcircumstances, the view taken by the Tribunal thatretraction from the earlier statement was notpermissible, is definitely a possible view. The mere factthat some entries were made in a diary could not beheld to be sufficient and conclusive to hold that thestatement earlier made was false. The assessee failedto produce books of account which may have beenmaintained during regular course of business or anyother authentic contemporaneous evidence ofagricultural income. In the circumstances, thestatement of the assessee could certainly be actedupon.” The High Court of Kerala in The Commissioner of Income TaxVs. O. Abdul Razak, supra, in para nos.8, 9 and 10 of the report,held as under:- “8. It cannot be doubted for a moment that the burdenof proving the undisclosed income is squarely on theshoulders of the department. Acquisition of propertiesby the assessee are proved with the documents seizedin search. Since under statement of consideration indocuments is the usual practise the officer questionedthe assessee on payments made over and above theamounts stated in the documents. Assessee gavesworn statement honestly disclosing the actualamounts paid. The question now to be considered iswhether the sworn statement constitutes evidence ofundisclosed income and if so whether it is evidencecollected by the department. In our view the burden ofproof is discharged by the department when theypersuaded the assessee to state details of undisclosedincome, which the assessee disclosed in his swornstatement, on being confronted with the title deedsseized in search. 9. Section 132 of the Income tax Act deals with searchand seizure and sub-Section (4) of Section 132empowers the authorised officer during the course ofthe search and seizure to examine on oath any personwho is found to be in possession or control of any books of account, documents, money or valuablearticles or things etc. and record a statement made bysuch person which can be used in evidence in anyproceedings under the Income Tax Act. The explanationappended to Clause (4) also makes it clear that suchexamination can be in respect of any matters relevantfor the purpose of any investigation and need not beconfined to matters pertaining to the material found asa result of the search. A plain reading of Section 132(4)would clearly show that what was intended byempowering an officer conducting the search to take astatement on oath was to record evidence ascontemplated in any adjudication especially sinceSection 131 confers on all officers empowered thereinwith the same powers as vested in a court under theCode of Criminal Procedure, for the purpose of theIncome Tax Act. 10. A Division Bench of this Court in C.I.T. v. HotelMeriya, (2011) 332 ITR 537 considered the scope of astatement recorded under Section 132(4) and foundthat such statement recorded by the officer as well asthe documents seized would come within the purviewof evidence under Section 158(BB) of the Income-taxAct read with Section 3 of the Evidence Act and Section131 of the Income Tax Act. Based on the above finding,it was also held that such evidence would be admissiblefor the purpose of block assessments too. Theexplanation to Section 132(4) of the Income Tax Actwas also noticed by the Division Bench to furtheremphasise that the evidence so collected would berelevant in all purposes connected with anyproceedings of the Income Tax Act.” The Allahabad High Court in Dr. S.C. Gupta Vs.Commissioner of Income-Tax, supra, in para 7 of the report, heldas under:- The Allahabad High Court in Dr. S.C. Gupta Vs.Commissioner of Income-Tax, supra, in para 7 of the report, heldas under:- “7. As regards the assessee’s contention that thestatement having been retracted the Assessing Officershould have independently come to a conclusion thatthere was additional income as sought to be assessedand that there was no material to support that therewas such income, this contention in our view is notcorrect. As held by the Supreme Court in Pullan-godeRubber Produce Co. Ltd. v. State of Kerala, (1973) 91ITR 18 an admission is an extremely important piece ofevidence though it is not conclusive. Therefore, astatement made voluntarily by the assessee could formthe basis of assessment. The mere fact that theassessee retracted the statement could not make thestatement unacceptable. The burden lay on theassessee to establish that the admission made in the statement at the time of survey was wrong and in factthere was no additional income. This burden does noteven seem to have been attempted to be discharged.Similarly, P.K. Palwankar v. CGT, [1979] 117 ITR 768(MP) and CIT v. Mrs. Doris S. Luiz, [1974] 96 ITR 646(Ker) on which also learned counsel for the assesseeplaced reliance are of no help to the assessee. TheTribunal’s order is concluded by findings of fact and inour view no question of law arises. The applicationsare, accordingly, rejected.” Reverting back to the present case, the ITAT, on the basis ofsuch statement of Shri Bannalal Jat, concluded that he wasmanaging his business affairs of both his proprietary concern aswell as appellant-company from his residence and that in theabsence of individual cash-book of respective concerns and otherdetails maintained by him, it is not possible to identify whetherthe cash so found belongs to the proprietary concern or to theassessee company. Subsequently, when the statement underSection 132(4) of the IT Act was recorded on 10.10.2014, whichwas concluded at his residence, Shri Bannalal Jat categoricallyadmitted that the cash amount of Rs.1,21,43,210/- belonged tohis company M/s. Bannalal Jat Construction Private Limited andthe same was its undisclosed income. Thereafter anotherstatement under Section 132(4) of the IT Act was recorded at hisbusiness premises on 11.10.2014. In reply to question No. 8, hewas asked to explain the source of cash amounting to Rs.3,380/-found at his office and Rs.1,21,43,210/- found at his residence, hesubmitted regarding the amount of Rs.1,21,43,210/- found at hisresidence that he was unable to give any explanation andadmitted that he was in the business of civil construction and insuch business, various expenses have been inflated and shown inthe books of accounts, and that the income so generated onaccount of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed incomebelonged to his company M/s Bannalal Jat Construction Pvt. Ltd.In response to question no.11 wherein he was asked to provideany other explanation which he wishes to provide, he submittedthat pursuant to search operations where various documents,loose papers, entries, cash, investment, advances and individualexpenditure details have been found and taking all that intoconsideration, he surrendered Rs.4,01,43,210/- as his undisclosedincome. He also categorically stated that the said disclosure is inthe hands of M/s Bannalal Jat Construction Private Limited inrespect of unexplained cash amounting to Rs.1,21,43,210/- andRs.2,50,00,000 and Rs.30,00,000/- totalling to Rs.2,80,00,000 inhis individual capacity. cash was found at his residence. This undisclosed incomebelonged to his company M/s Bannalal Jat Construction Pvt. Ltd.In response to question no.11 wherein he was asked to provideany other explanation which he wishes to provide, he submittedthat pursuant to search operations where various documents,loose papers, entries, cash, investment, advances and individualexpenditure details have been found and taking all that intoconsideration, he surrendered Rs.4,01,43,210/- as his undisclosedincome. He also categorically stated that the said disclosure is inthe hands of M/s Bannalal Jat Construction Private Limited inrespect of unexplained cash amounting to Rs.1,21,43,210/- andRs.2,50,00,000 and Rs.30,00,000/- totalling to Rs.2,80,00,000 inhis individual capacity. Subsequently, on 04.12.2014 during the post-searchproceedings, statement of Shri Bannalal Jat was again recordedunder Section 131 of the IT Act, wherein he was again confrontedwith the various documents seized and cash found during thecourse of search and the consequent surrender made by him inrespect of his two concerns and in response thereto, he againconfirmed the surrender of undisclosed income amounting toRs.1,21,43,210/- and Rs.1,35,00,000/-. It is in this backgroundthat we have to view his reply to the show-cause notice submittedon 02.12.2016. This show-cause notice was issued to him by theassessing officer when the appellant-company offered the saidundisclosed income to tax. The reliability, importance and sanctityof admission made during search could be refuted only by cogentand convincing evidence. We may in this connection refer toearliest judgment of the Supreme Court in Pullangode RubberProduce Company Ltd., supra, wherein it was held that admission is an extremely important piece of evidence but it can't be saidthat it is conclusive. It is open to the person, who made admissionto show that it is incorrect. The assessee should be given properopportunity to show the correct state of affairs. The law withregard to this has developed much thereafter. There is no gainsaythe fact that admission made during the search can be disputedby the assessee and at the same time however it is equally wellsettled that the statement made voluntarily by the assessee couldform the basis of assessment. Mere fact that the assesseeretracted the statement at later point of time could not make thestatement unacceptable. The burden lay on the assessee to showthat the admission made by him in the statement earlier at thetime of survey was wrong. Such retraction, however, should besupported by a strong evidence stating that the earlier statementwas recorded under duress and coercion, and this has to havecertain definite evidence to come to the conclusion that indicatingthat there was an element of compulsion for assessee to makesuch statement. However, a bald assertion to this effect at muchbelated stage cannot be accepted. The assessee indulged inmaintaining transaction on diaries and loose papers which was notpermissible in any of the method of accounting. The assessee,while filing the return of income, has not disclosed anyundisclosed income and hence, retracted from the admissionmade by him during the course of search. Subsequent retractionfrom the surrender without having evidence or proof of retractionis not permissible in the eyes of law. The statement recordedduring the course of search action which was in presence ofindependent witnesses has overriding effect over the subsequentretraction. In view of the above discussion, the question formulated videorder dated 09.05.2018 is answered in favour of the revenue andagainst the assessee. The appeal is accordingly dismissed. (GOVERDHAN BARDHAR),J(MOHAMMAD RAFIQ),J //Jaiman//