Navdeep Dningra v. Commissioner Of Income Tax, Karnal

a IN THE HIGH COURT OF PUNJAB AND HARYANAAl CHANDIGARH ITA No. 178 of 2013.Date of Decision : 70.01.7015. Navdeep Dningra ..Appellant Versus Commissioner of Income Tax, Karnal ...Respondent CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA.FON BLE MR. JUSTICE B.S. WALIA. Present:Mr. Pankaj Jain, Senior Advocate with Mr. Divya Suri, Advocate, Mr. Sachin Bhardwa], Aavocate and Mr. Radhe Mohan Garg, Advocate|for the appellant. for the appellant. Mr. Yogesn Putney, Advocatefor the respondent. ;;; Rajive Bhalla, /.(Oral) Tne appellant-assessee Is before us challenging order dated31.07.2012 passed by the Income Tax Appellate Tribunal, (nereinafterreferred to as ‘the ITAT'), Chandigarn, Bench ‘A’, order passed by theCommissioner of Income Tax(Appeals) (hereinafter referred to as ‘theCIT(A)') aS well as the assessment orders. During a survey, under Section 133A of the Income Tax Act,1961 (hereinafter referred to as ‘the Act') on the business premises ofM/s Oscar Remedies Pvt. Ltd., on 18.01.2006, the assessee who isadmittedly a Director, declared additional income of 30 lacs relatableto unaccounted investment towards construction of the premises of M/sOscar Remedies Pvt. Ltd. This apart, the assessee declared anadditional amount of 750 lacs attributable to excess cash, unaccountedInvestment In buliding and unaccountea Investment In machinery ITA No. 178 of 2013 2 relating to the company. After the survey, the assessee filed a return on31.03.2007 declaring an income of %1,99,8/2/-. The return wasprocessed and eventuality in scrutiny proceedings initiated after servingnotices under Section 143(2) and 142(1) of tne Act and afterappropriating requisite information namely, tne account books videorder dated 26.12.2008, the assessee's statements, the assessment wasconciuded by aading <30 lacs to tne Income of the assessee. Aggrieved by this order, the assessee filed an appeal, wnicnwas dismissed by the CIT(A). The assessee thereafter filed an appealbefore the ITAT which was also dismissed. Counsel for the assessee submits that as admittedly theappellant retracted his admissions, the retracted admissions/statementcould not form the basis of additions without any corroborativeevidence. Counsel for the assessee draws attention to Office Note(Annexure-A6) dated 26.12.2008, wherein, the Deputy Commissioner ofIncome Tax nas recorded that no other incriminating qocument excepttne slip paaq nas been recovered by the revenue. Counse! for theassessee submits that though an admission is the best evidence of afact but wnere an aamission Is made under coercion and pressure and Isretracted, the revenue cannot place rellance upon such an admissionana must, therefore, look for otner evidence to prove its case. Theabsence of any other evidence renders the impugned orders which arebased upon retracted statements made by the assessee null and void. Counsel for the revenue submits that admissions made bythe assessee were recorded on 18.01.2006, during a search. Theassessee thereafter addressed a letter dated 19.01.2006 makingfurther admissions. The assessee retracted these admissions, on04.12.2008 almost two years after the admissions and then also a fewweeks before the passing of the assessment order on 26.12.2008. The ITA No. 178 of 2013 S retractions being highly belated and without reference to any materialthat could raise an inference that the statements were coerced or madeunder pressure, the statements have been rightly relied by the revenuewhile making aaaitions. Counsel for tne revenue aiso submits thatgeneral allegations of coercion or pressure, cannot enure to the benefitof an assessee particularly where the retraction Is belated. We have heard counsel for the parties, perused theImpugned orders. ITA No. 178 of 2013 S retractions being highly belated and without reference to any materialthat could raise an inference that the statements were coerced or madeunder pressure, the statements have been rightly relied by the revenuewhile making aaaitions. Counsel for tne revenue aiso submits thatgeneral allegations of coercion or pressure, cannot enure to the benefitof an assessee particularly where the retraction Is belated. We have heard counsel for the parties, perused theImpugned orders. A survey under Section 133(A) of tne Act was conducted on18.01.2006. The assessee, who is the Director of M/s Oscar RemediesPvt. Ltd., declared an additional income of 750 lacs on behalf of thecompany and 30 lacs on his own behalf. The assessee made thefollowing admissions on 18.01.2006 which read as follows :- “Ques.19, lt has come to our notice there Is someconstruction Is going on at Kala Amb in HimachalPradgesn. Ans. Construction 1s going on at Kala Amb./am instating a unit for manutacturing of medicines atKala Amb (H.P.). Seoarate books for the unit arebeing maintained.construction Is going on at Kala Amb in HimachalPradgesn. Ans. Construction 1s going on at Kala Amb./am instating a unit for manutacturing of medicines atKala Amb (H.P.). Seoarate books for the unit arebeing maintained. Ques. 20/ am snowing you a slio pad of Neelgagan InWhich few entries pertaining to Kala Amb appears.Please explain the same. As per page 1 to 5 the totalof amounts appearing in these pages comes to Rs. 30lacs. Explain these entries and sources thereof.Which few entries pertaining to Kala Amb appears.Please explain the same. As per page 1 to 5 the totalof amounts appearing in these pages comes to Rs. 30lacs. Explain these entries and sources thereof. Ans. This amount was used by me for construction ofbuilding at kala Amb. This is my individual incomeand the same will be added in my income from mySalary and interest for the F.Y. 2005-06. ThisSurrender is made to buy mental peace and is madevoluntarily, without any pressure and is subject to nopenal action. Separate fetter for surrender is beingsubmitted. building at kala Amb. This is my individual incomeand the same will be added in my income from mySalary and interest for the F.Y. 2005-06. ThisSurrender is made to buy mental peace and is madevoluntarily, without any pressure and is subject to nopenal action. Separate fetter for surrender is beingsubmitted. The admissions were followed by a letter dated 19.01.2006, ITA No. 178 of 2013 “During the course ofsurvey operation at the premises|of Oscar Remedies (P) Ltd. certain documents relatingfo construction at Kala Amb factory premises havebeen found. | hereby, offer to surrender a sum of Rs.30,00,000/- as additional income for Financial Year2005-06 as my income. The amount was used forconstruction of factory building. This surrender hasbeen made voluntarily subject to no penal action.” The assessee filed a return of income, for assessment year2006-07 without reflecting the additional income of Rs.30 lacs admittedin nis statement dated 18.01.2006 ana letter dated 19.01.2006. Theassessing officer, therefore, askea tne assessee to explain thisdiscrepancy in the return. Tne assessee filed a reply on 04.12.2006retracting the aamissions. Tne retractions read as follows: - “3.Tne statement of the assessee allegedly avaliable onrecord was obtained employing coercion by the survey teamand does not relate to the business activities of thedeponent; 4 That the ‘slip pad' was got prepared by the surveyteam from the assessee exerting pressure. The slip paidcontains imaginary figures and do not have any nexus withthe business activities and do not represent either income orInvestment of the deponent.” “3.Tne statement of the assessee allegedly avaliable onrecord was obtained employing coercion by the survey teamand does not relate to the business activities of thedeponent; 4 That the ‘slip pad' was got prepared by the surveyteam from the assessee exerting pressure. The slip paidcontains imaginary figures and do not have any nexus withthe business activities and do not represent either income orInvestment of the deponent.” Tne assessing officer after taking Into considerationaamissions made by tne assessee on 18.01.2006 and 19.01.2006 heldtnat as no plea was raised with respect to force or coercion, at the timeof the survey, at the time of fillng the return or during pendency ofassessment proceedings, the belated retraction does not detract fromthe voluntary nature of the admissions and, therefore, proceeded toinclude the admitted amount in the Income of the assessee and frameassessment on 26.12.2008. Aggrieved by this order, the assessee filed ITA No. 178 of 2013 5 an appeal. The CITI(A), dismissed the appeal. The ITAT has alsodismissed the assessee's appeal and as a consequence, affirmed theOpinion recorded by the assessing officer. The assessee has framed foursubstantial questions of law but In essence the questions that arise foradjudication and regarding which arguments Nave been adaressed are: - LIWhether admissions made during a survey can formtne sole basis for making aaaitions?tne sole basis for making aaaitions? 2.Wnetner retracted admissions can form tne basis of anInference enabling an assessing officer to aad IncomeInference enabling an assessing officer to aad Income to the income of an assessee? The onus to prove concealment of income lies upon therevenue. Admissions are an integral part of assessments and as theyare the best evidence of a fact, within the personal knowledge of anassessee may if the admission is voluntary and not extracted bycoercion or force, be read against an assessee. The relevance of anaamission aamits to another exception namely if the aamission Isretracted within reasonable time and by assigning valid reasons. Aperusal of tne Impugned orders reveals tnat the assessee made anaamission, on 18.01.2006 and followed it up by a written admission on19.01.2006 but while filing his return did not retract the admission. Atno stage of the survey or assessment proceedings except at Its fag endon 4.12.2008 |.e. almost two years after the admissions and a few weeksbefore finalisation of the assessment, did the assessee raise a plea thathe was coerced and forced into making admissions. The belatedretracting of the admissions on 04.12.2008, nearly two years after theadmissions and then also without any facts to support the allegation ofcoercion or pressure, cannot enure to the benefit of the assessee. Anaamission Is substantial evidence of a fact, within the special Knowleageof an assessee and if not retracted immediately or within reasonable ITA No. 178 of 2013 6 time is substantive evidence of a fact and may be read against anassessee. We, therefore, answer the above questions against theassessee and as we find no reason to hold that the revenue has erred Inrelying upon admissions made by the assessee, dismiss the appeal. (RAJIVE BHALLA)JUDGE| (B.S. WALIA)JUDGE. January 20, 2015.kanchan