Gurdev Agro Engineers, Bhawanigarh v. Commissioner Of Income Tax, Patiala

ITA No. 396 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 396 of 2015 (O&M) Date of Decision: 3.2.2016 Gurdev Agro Engineers, Bhawanigarh ....Appellant. Versus Commissioner of Income Tax, Patiala ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment? 2.To be referred to the Reporters or not? YES 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE RAJ RAHUL GARG. PRESENT: Mr. Divya Suri, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This order shall dispose of two appeals bearing ITA Nos.396 and 407 of 2015 as according to learned counsel for the appellant,the issue involved therein is identical. For brevity, the facts are beingextracted from ITA No. 396 of 2015. 2.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 17.9.2014 (Annexure A-10) passed by the Income TaxAppellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 781/CHD/2009 for the assessment year 2006-07 claiming the following substantial questions of law:- I.Whether under the facts and circumstances ofthe case, the Tribunal order is sustainable,whereby the inferences drawn relying on theuncorroborated and unilateral statementrecorded during survey u/s 133A, can it formthe only basis for bringing to 'charge' (u/s 5) theamount as 'income'?the case, the Tribunal order is sustainable,whereby the inferences drawn relying on theuncorroborated and unilateral statementrecorded during survey u/s 133A, can it formthe only basis for bringing to 'charge' (u/s 5) theamount as 'income'? II.Whether under the facts and circumstances ofthe case, there is abuse and mis-utilization ofthe powers and jurisdiction u/s 133A(3)(iii) r.w.132(4) Section 292C [inserted by Finance Act,2007 w.e.f. 01.10.1975] and provisions ofSection 164 of Cr.P.C. and in pursuance toCBDT Instruction No. 286/2/2003-IT(Inv.) dated10.3.2003 while obtaining the statement and thesubsequent utilization thereof while arriving atthe chargeable income to tax? III. Whether under the facts and circumstances ofthe case on examination of the provisions u/s29, 44AA, 44AB, 139(1), 145 of the Income TaxAct, 1961, the chargeable income is sustainableon the basis of the statement recorded insurvey which is contradictory to the records ofthe return of income accepted by thethe case on examination of the provisions u/s29, 44AA, 44AB, 139(1), 145 of the Income TaxAct, 1961, the chargeable income is sustainableon the basis of the statement recorded insurvey which is contradictory to the records ofthe return of income accepted by the respondent department? III. Whether under the facts and circumstances ofthe case on examination of the provisions u/s29, 44AA, 44AB, 139(1), 145 of the Income TaxAct, 1961, the chargeable income is sustainableon the basis of the statement recorded insurvey which is contradictory to the records ofthe return of income accepted by thethe case on examination of the provisions u/s29, 44AA, 44AB, 139(1), 145 of the Income TaxAct, 1961, the chargeable income is sustainableon the basis of the statement recorded insurvey which is contradictory to the records ofthe return of income accepted by the respondent department? 3.A few facts necessary for adjudication of the instant appealas narrated therein may be noticed. The assessee is a partnership firmand is engaged in the business of manufacturing and selling ofagricultural implements. The method of accounting is mercantilewhereby the financial statements are being compiled on the basis ofcash book, ledger as required under Section 44AA of the Act which issupported with vouchers and necessary evidences to substantiate thesame. A survey under Section 133A of the Act was conducted on27.9.2005 at the business premises of the assessee and the statementsof Shri Gurvinder Singh and Shri Gurdev Singh (partner), Annexure A-1,was recorded. A retraction letter dated 6.1.2006 (Annexure A-2) wasaddressed to the Assessing Officer, i.e., Income Tax Officer, Sangrur,prior to the commencement of the assessment proceedings. Inpursuance to the initiation of the assessment proceedings, the assesseefiled return of income on 31.10.2006 declaring nil income andsubsequently on 27.7.2007 a notice under Section 143(2) of the Act wasissued to the assessee. The Assessing Officer vide order dated31.10.2008 (Annexure A-3) framed the assessment under Section 144 ofthe Act and made various additions amounting to ` 28,89,527/-. Feelingaggrieved, the assessee filed an appeal on 20.11.2008 (Annexure P-4)before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The assessee filed written pleadings dated 10.12.2008 (AnnexureA-5). The CIT(A) vide order dated 29.6.2009 (Annexure A-7) upheld theorder of the Assessing Officer and dismissed the appeal. The assesseeassailed the order, Annexure A-7, before the Tribunal by way of an appeal on 23.7.2009 (Annexure A-8). The assessee also filed writtensubmissions dated 7.8.2014 (Annexure A-9) before the Tribunal. TheTribunal vide order dated 17.9.2014 (Annexure A-10) affirmed thefindings of the CIT(A) and dismissed the appeal which gave rise to theassessee to approach this Court by way of instant appeal. 4.Learned counsel for the assessee-appellant relied upon thejudgment of the Madras High Court reported as Commissioner ofIncome Tax v. S. Khader Khan son (2008) 300 ITR 157 and thecircular of the Central Board of Direct Taxes dated 10.3.2003 asdiscussed in the said judgment (Annexure A-11). It was submitted thatsince the assessee had retracted from the statement on 6.1.2006whereas the addition has been sustained only on the basis of theconfessional statement/surrender made before the authorities during thesurvey on 27.9.2005, the addition was unsustainable. On the strength ofcircular dated 10.3.2003 and the notification dated 18.12.2014, it wasurged that the admissions of undisclosed income under coercion/pressure during search/survey is not to be acted upon. 4.Learned counsel for the assessee-appellant relied upon thejudgment of the Madras High Court reported as Commissioner ofIncome Tax v. S. Khader Khan son (2008) 300 ITR 157 and thecircular of the Central Board of Direct Taxes dated 10.3.2003 asdiscussed in the said judgment (Annexure A-11). It was submitted thatsince the assessee had retracted from the statement on 6.1.2006whereas the addition has been sustained only on the basis of theconfessional statement/surrender made before the authorities during thesurvey on 27.9.2005, the addition was unsustainable. On the strength ofcircular dated 10.3.2003 and the notification dated 18.12.2014, it wasurged that the admissions of undisclosed income under coercion/pressure during search/survey is not to be acted upon. 5.After hearing learned counsel for the appellant, we do notfind any substance in the said contention. The Tribunal has noticed thatadmittedly the evidence found against the assessee could not beexplained by the assessee and the surrender of ` 20 lacs was made.Once the assessee was unable to offer any plausible explanation for thesum surrendered during survey merely by relying on the retraction madeon a later date, it does not absolve the assessee from its liability.Further, the CIT(A) while upholding the order of the Assessing Officerhad recorded a finding that the surrender was made by the assessee based on the material alleged to be in the possession of the AssessingOfficer collected during the course of the survey and the said surrenderwas made voluntarily. Even the bills, cash and supporting documentswere found with the assessee which established that the assessee wasin possession of assets over and above the assets declared in the booksof account against which the surrender in question was made.Furthermore, the retraction is made after more than three months forwhich no satisfactory explanation has been furnished by the assessee.Retraction to be effective has to be made at the earliest opportunitywhen the pressure or coercion or undue influence on the person makingconfession ceases to be operative. Whenever there is delay inretracting from the concessional statement, the onus lies upon theperson retracting to show the circumstances that existed for him not toretract earlier. 6.The Assessing Officer, the CIT(A) and the Tribunal hadconcurrently adjudicated the issues against the assessee onappreciation of material on record. No illegality or perversity could bedemonstrated in the findings of fact recorded by the authorities belowwarranting interference by this Court. 7.Adverting to the judgment in Khader Khan Son's case(supra), circular dated 10.3.2003 and notification dated 18.12.1014suffice it to observe that in view of the factual matrix as noticedhereinbefore in the present case, they do not advance the case of theassessee-appellant. 8.In view of the above, there is no merit in the appeals and thesame are hereby dismissed. ITA No. 396 of 2015 9.There is a delay of 128 days in filing the appeal. CM No.23038-CII of 2015 in ITA No. 396 of 2015 has been filed for condonationof 128 days' delay in filing the appeal. Since the appeal has beendismissed on merits, no further orders are required to be passed in theapplication for condonation of delay in filing the appeal and the same isdisposed of as such. (AJAY KUMAR MITTAL)JUDGE February 3, 2016 gbs (RAJ RAHUL GARG)JUDGE