Dr. S.s. Gulati v. Deputy Commissioner Of Income Tax, Sirsa

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.671 of 2009Date of decision: 7.7.2010 Dr. S.S. Gulati. Vs. Deputy Commissioner of Income Tax, Sirsa. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Avneesh Jhingan, Advocatefor the assessee. for the assessee. Ms. Urvashi Dhugga, Standing counselfor the revenue.for the revenue. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assesseeunder Section 260A of the Income Tax Act, 1961 (for short, the Act), proposing to raise following substantial questions of law:- “i)Whether in the facts and circumstances of the case,the orders Annexure A-1 to A-3 making and upholdingadditions of Rs.15,00,000/- and Rs.2,00,000/- aresustainable in law?the orders Annexure A-1 to A-3 making and upholdingadditions of Rs.15,00,000/- and Rs.2,00,000/- aresustainable in law? ii)Whether in the facts and circumstances of the case,once the gift accounted for by the son of the appellantand those returns accepted by the department couldbe added to the income of the appellant?once the gift accounted for by the son of the appellantand those returns accepted by the department couldbe added to the income of the appellant? iii)Whether in the facts and circumstances of the case,even if the gifts were doubted could be proceedingsbe taken against the appellant instead of his son?even if the gifts were doubted could be proceedingsbe taken against the appellant instead of his son? 2. iv)Whether in the facts and circumstances of the case,the department having accepted the returns andcomputation of the son of the appellant for therelevant year and still the same figure are beingadded to the income of the appellant, is the stand ofthe department not contradictory? the department having accepted the returns andcomputation of the son of the appellant for therelevant year and still the same figure are beingadded to the income of the appellant, is the stand ofthe department not contradictory? v)Whether in the facts and circumstances of the case,the gift given by the wife of Sh. Manmeet Singh to himcould be doubted as compensatory?the gift given by the wife of Sh. Manmeet Singh to himcould be doubted as compensatory? vi)Whether in the facts and circumstances of the case,the appellant having been forced to make surrender isthereafter barred to even produce the evidence or toshow that the addition being made on the basis of thatforced statement is illegal?”the appellant having been forced to make surrender isthereafter barred to even produce the evidence or toshow that the addition being made on the basis of thatforced statement is illegal?” The assessee is a medical practitioner and is running a Nursing Home. On survey being conducted at his premises,the assessee surrendered additional income of about 30 lacs.However, in the return for the assessment year in question, theassessee declared income of about Rs.9 lacs. He sought toretract from his statement leading to surrender. His stand wasthat the source of his income was gifts. This stand was rejectedby the Assessing Officer, CIT(A) as well as the Tribunal. TheTribunal held:- “7. We have carefully considered the rival standson this aspect. The first and the foremost issue to beexamined is the veracity of the retraction made by theassessee at the time of filing return of income on30.3.2005 whereby the incomes on account ofRs.15,00,000/- and Rs.2,00,000/- representingsurrender made during survey on 11.9.2003 onaccount of unexplained expenditure for admission of “7. We have carefully considered the rival standson this aspect. The first and the foremost issue to beexamined is the veracity of the retraction made by theassessee at the time of filing return of income on30.3.2005 whereby the incomes on account ofRs.15,00,000/- and Rs.2,00,000/- representingsurrender made during survey on 11.9.2003 onaccount of unexplained expenditure for admission of son in MDS and unexplained educational expensesrespectively were not offered for taxation. It is noteworthy that the additional income of Rs.30,10,000/-inclusive of the aforesaid amounts was offered fordisclosure by the assessee on 11.9.2003. Theretraction has been made at the time of filing of returnon 30.3.2005. In this connection, we find that at thetime of surrender, the assessee also handed overcheques dated 15.9.2003, 14.12.2003 and 15.3.2004for Rs.3,31,000/-each towards payment of taxes onthe amount surrendered. There is no material tosuggest that the said cheques have not beenhonoured. In fact, it only goes to show that as late as15.3.2004, the assessee was standing by hisadmission to surrender the additional income ofRs.30,10,000/- declared on 11.9.2003. It is only on30.3.2005, when the return of income has been filed,that the assessee retracted and the aforesaidamounts were not declared. The Revenue has soughtto tax the impugned amounts surrendered during thesurvey but not declared in the return of income. Nodoubt, admission by the assessee by itself cannot bea ground to sustain an addition. The admission maynot be a conclusive, but certainly it is a relevant pieceof evidence. Moreover, the onus is clearly on theassessee to establish that the admission made waswrong or was based on an incorrect appreciation offacts or law. In fact, in this very case, at the time ofsurvey a surrender of Rs.3,70,000/-was made onaccount of excess stock of medicines which wasscaled down to Rs,2,11,000/-in the return of income.The assessee sought to justify the same on the basisof bills, vouchers, quotations etc. produced at the time of assessment proceedings. The assessee was ableto satisfy the Assessing Officer that the excess stockcomputed at the time of survey, which led to asurrender of Rs.3,70,000/-was not the correct state ofaffairs. It is on this basis, the Assessing Officercomputed the excess stock of medicines ofRs.3,10,920/-as against Rs.3,70,000/-declared at thetime of survey. We are only trying to point out that thesurrender made during the survey can be explainedby the assessee to be erroneously made, but theonus in this regard is on the assessee. In so far asthe surrender of Rs.15,00,000/-for admission of theson in MDS is concerned, the same was based on theplea that the gifts received by the son of the assesseein the past to raise funds for payment of admissionfees etc. have been returned by the assessee to therespective donors during the year from sourcesoutside the books of account. The factum of theassessee having returned such amounts outside thebooks of account can only be in the knowledge of theassessee. It is a specialized knowledge to which onlythe assessee is privy. Such admission made at thetime of survey could only be in the personalknowledge of the assessee. The assessee has set upa case that the donors making the gifts haveconfirmed the veracity of gifts and have alsoconfirmed that no amounts have been received bythem in lieu of such gifts. This exercise has beenconducted in the remand proceedings before the CIT(Appeals). In our view, the admission of the assesseemade at the time of survey cannot be dis-regarded. Ifsuch was the position, as is being claimed by theassessee, it would have taken steps to rectify the situation immediately after the survey on 11.9.2003.As seen earlier, there is nothing to show that theassessee took any steps to retract the admission upto30.3.2005, which was after a long gap. Consideringthe aforesaid aspects, we find enough justification forhe CIT (Appeals), to conclude as under :- “(ii)As regards the evidentiary value of thestatement recorded during survey and the allegationof the appellant that it was given under coercion andduress, the allegation cannot be accepted at thisstage. The appellant had himself surrendered theamount voluntarily, paid the taxes in advance on thesurrendered amount as noted in para 5 of theassessment order (it could have stopped the paymentof cheques given in advance to the Department, hadit been convinced that the statement has been givenunder coercion and duress). The allegation ofcoercion and duress is baseless and it is an afterthought. (iii)As regards the amounts being paid during theprevious year relevant to the assessment years 2002-03 and 2003-04, it may be mentioned that the amountpassed hands during these assessment years i.e. thealleged gifts were given during the assessment year2002-03 and 2003-04 to Dr. Manmeet Singh; but it isthe appellant’s own confession that he returned themoney in cash to the donors from the income of theprevious year relevant to the assessment year underconsideration. (iv)Above all, it is the appellant who is aware of itsfinancial affairs better than any body else. Whetherthe amounts were returned to the donors in cash fromundisclosed income, it was the person who made thestatement who knew it better. The statement given ina spontaneous and natural manner, cannot beignored keeping in view the facts and circumstancesof the case. There3 does not appear to be anyreason for the appellant for retracting from thesurrender, which it has already made during surveyand on which it has already paid advance taxvoluntarily. Therefore, the action of the A.O. inmaking the addition of Rs.15,00,000/-is in order andthe same is confirmed. The ground of appeal isdismissed.” 3. We have heard learned counsel for the parties. 4. Learned counsel for the assessee submits that theTribunal should have accepted the genuineness of the gifts andalternatively, addition should have been made in the hands of theson of the assessee. 5. We are unable to accept the submission. There isconcurrent finding of fact recorded that the assessee hadunexplained income, which fact was corroborated by surrendermade by the assessee. It has been further held that there was nojustification to retract from the statement leading to surrender.Gifts pleaded by the assessee were not genuine as the assesseereturned the amount to donors from sources outside the books ofaccount. The assessee had undisclosed income which was liableto be added to the declared income. The findings are not shownin any manner to be perverse. 6. No substantial question of law arises forconsideration. 7.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 07, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE