Pr. Commissioner Of Income Tax (Central), Jaipur v. Shri Roshan Lal Sancheti, Prateek

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D. B. Income Tax Appeal No. 47/2018 Pr. Commissioner of Income Tax (Central), Jaipur ----Appellant Versus Shri Roshan Lal Sancheti, Prateek-13, Milan Talkies Road, AshokNagar, Hari Sewa Marg, Bhilwara (Raj.) ----Respondent For Appellant(s) : Mr. Siddharth Bapna on behalf of Mr. Anil Mehta. For Respondent(s): Mr. Prakul Khurana on behalf of Mr. Sanjay Jhanwar. HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR REPORTABLEJudgment 30/10/2018 (Per Hon’ble Mr. Justice Mohammad Rafiq) This income tax appeal pertaining to assessment year2013-14 under Section 260A of the Income Tax Act, 1961 hasbeen filed by the appellant-revenue assailing judgment dated15.09.2017 passed by the Income Tax Appellate Tribunal, JaipurBench, Jaipur (for short ‘the Tribunal’) whereby the appeal filed bythe respondent-assessee was allowed and appeal filed by theappellant was dismissed. This appeal was admitted by this Court vide order dated10.04.2018 on the following substantial question of law: “(1) Whether on the facts and circumstances ofthe case of in law the Hon’ble ITAT was correctin upholding the decision of the CIT(A) andfurther deleting the addition of surrenderedincome by observing that affidavit of retraction filed by the assessee on 19.05.2013 has notbeen examined by the AO at any stage despitethe facts that income surrendered in thestatement under Section 132(4) of the IncomeTax Act, 1961 dated 26.09.2012 was affirmed bythe assessee in the statement recorded u/s 131of the Income Tax Act on 15.10.2012?” The skeletal facts essential for deciding the appeal are that search and seizure proceedings under Section 132 of the Actwere carried out on 26.09.2012 at the residential premises of theassessee group and his family members. According to therevenue, certain incriminating documents/lose papers/books ofaccounts, etc. were found there, which were inventorized. Some ofthem were also seized at the time of search/survey under Section132 of the Act. Thereafter, statement of the assessee wasrecorded on 27.09.2012, where a surrender of Rs. 2,28,44,545/-was extracted from the assessee and his statement was concludedat 9.00 P.M. on 27.09.2012. This statement surrendering theincome was again reconfirmed from the assessee before the ADITin statement under Section 131 of the Act on 15.10.2012 and17.12.2012. However, these statements were later retracted bythe assessee by filing an affidavit on 20.05.2013. The case of theassessee was selected for scrutiny and the assessee submittedreturn of income on 26.09.2013 declaring income of Rs.36,81,840/- and agriculture income of Rs. 1,27,066/-. Noticesunder Section 143(2) and 143(1) of the Act were served on theassessee and after considering the response, assessment orderwas passed by the Assessing Officer on 25.03.2015 wherebyadditions were made in respect of the purchase of properties andconstructions on the basis of seized material and admissions made by the assessee, total amounting to Rs. 3,42,05,891/- andagricultural income of Rs. 1,27,066/-. The assessee being aggrieved by order of assessmentpreferred appeal before the Commissioner of Income Tax(Appeals)-2, Udaipur [for short ‘the CIT(A)’]. The CIT(A)considering the fact that the assessee retracted from thestatement recorded during the course of search by filing affidaviton 20.05.2013 explained reasons of surrender, vide its order dated30.03.2016 and deleted various additions details of which are as under: “The additions of Rs. 24,11,588/- in respect of plot at Luv Gardenand investment and construction thereof were deleted on the basisthat the actual cost incurred were duly debited in the books ofaccounts and no discrepancies were found except surrender madeby the assessee. The assessee being aggrieved by order of assessmentpreferred appeal before the Commissioner of Income Tax(Appeals)-2, Udaipur [for short ‘the CIT(A)’]. The CIT(A)considering the fact that the assessee retracted from thestatement recorded during the course of search by filing affidaviton 20.05.2013 explained reasons of surrender, vide its order dated30.03.2016 and deleted various additions details of which are as under: “The additions of Rs. 24,11,588/- in respect of plot at Luv Gardenand investment and construction thereof were deleted on the basisthat the actual cost incurred were duly debited in the books ofaccounts and no discrepancies were found except surrender madeby the assessee. Addition of Rs. 1,37,725/- in respect of plot at Mahendra SEZ werealso deleted on the ground of retractions which could not berebutted by the Assessing Officer. Additions of Rs. 36,56,632/- in respect of land in MahapragyaNagar, Asind, Bhilwara were also similarly deleted. Additions of Rs. 78,35,000/- in respect of investment in AnandCity, Arjia, Ajmer Road, Bhilwara in Shop No. 12 were alsodeleted. Additions of Rs. 88 lacs as advance since purchase of land weredeleted to the extent of Rs. 73 lacs. The third ground of appeal in respect of addition of Rs. 20 lacs onaccount of unexplained advances were deleted considering to beknown. The fourth ground of appeal in respect of addition of Rs.15,90,350/- was deleted. The fifth ground of appeal in respect of addition of Rs. 33,12,000/-on the basis of page-73 of Annexure-AS-2 relating to someconstructions of plots, was deleted. However, in respect ofcommission charges to the extent of 33,000/- were upheld. The six ground of appeal in respect of addition of Rs. 7,77,000/-was also deleted.” The revenue preferred appeal against the aforesaidorder of CIT(A) before the Tribunal whereas the assessee alsopreferred appeal against the part of order of CIT(A). The Tribunalvide judgment dated 15.09.2017 dismissed the appeal of therevenue, however, allowed the appeal of the assessee in respect ofaddition upheld by the CIT(A) amounting to Rs. 15,00,000/- asadvance to one Kaluram Gurjar. Hence this appeal. Mr. Siddharth Bapna, learned counsel for the appellant- revenue, submitted that there is no material whatsoever on recordto suggest that surrender was made by the assessee under anypressure, coercion or threat. Search proceedings were carried outat the residential premises of the assessee on 26.09.2012 and27.09.2012. Statement under Section 132(4) of the assessee wasrecorded in the presence of two witnesses, who were called at thechoice of the assessee from his own locality. This statement wasagain confirmed by the assessee in front of ADIT in the statementunder Section 131 of the Act recorded on 15.10.2012 and later instatement dated 17.12.2012. In the search, on the basis of sevenlose papers which were seized on which the assessee had writtenvarious amounts showing undisclosed investment in construction,purchase and advances the assessee agreed to surrender amountof Rs. 2,28,44,545/-. Thereafter, the statement of the assessee onthese seven papers was recorded on 27.09.2012 where surrenderof the aforesaid amount was made by the assessee. The assesseeagain confirmed the statement of surrender before ADIT in hisstatement under Section 131 of the Act on 15.10.2012 andthereafter in his further statement dated 17.12.2012 when hemade additional surrender of Rs. 10,00,000/-. Learned counselargued that the surrender was retracted by the assessee in the affidavit filed on 20.05.2013, after the long lapse of 237 days fromthe date of search. The very fact that the respondent-assesseetook almost eight months to file affidavit of retraction means thatthere was neither any pressure nor any coercion on him to makeany surrender. In fact, the entries of unrecorded businesstransactions were explained by none other than the assesseehimself and it was on that basis that he made disclosure duringsearch proceedings or post search proceedings. Subsequently, heprocured affidavits of Shri Suresh, Shri Ashok Jat and Shri PadamKumar Jain, which were of no help in the absence of anydocumentary evidence. Learned counsel argued that the statement recordedunder Section 132 of the Act in the presence of the witnesseswould have overriding effect over any subsequent retraction.Learned counsel referred to Para 5 to 9 of the retraction affidavitdated 20.05.2013 to argue that the assessee has therein alsoadmitted having made the surrender and given the statements.Learned counsel in support of his arguments relied upon thejudgments in M/s. Bannalal Jat Constructions Pvt. Ltd. Vs.ACIT, Central Circle-2, Ajmer (D.B. Income Tax Appeal No.140/2018 decided on 31.08.2018) and CIT, Bikaner Vs.Ravi Mathur, 2017 (1) WLC (Raj.) 387;Rameshchandra andCompany Vs. Commissioner of Income-Tax – 1987 SCCOnLine Bom 596 of High Court of Bombay at Nagpur, Dr.S.C. Gupta Vs. Commissioner of Income-Tax – (2001) 248ITR 782 of the Allahabad High Court,Bachittar Singh Vs.Commissioner of Income-Tax and Another – (2010) 328ITR 400of the Punjab and Haryana High Court,Commissioner of 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 352of the Punjab and Haryana High Court,The Commissioner of Income Tax Vs. O. Abdul Razak –(2013) 350 ITR 71of the High Court of Kerala, andACTO,Anti Evasion-I, Alwar Vs. M/s. Khandelwal Foods Products,Station Road, Alwar – 2017 (1) RLW 612 (Raj.)of thisCourt. Per contra, Mr. Prakul Khurana, learned counsel for therespondent-assessee submitted that the surrender was extractedfrom the assessee by income tax authorities during the searchproceedings by use of coercion, duress and threat, which factshave been explained by the assessee in greater detail in theaffidavit of retraction. It is argued that affidavits of Shri Suresh,Shri Ashok Jat and Shri Padam Kumar Jain were also filed, inwhich they have stated on oath that they did not own any landand therefore there did not arise any question of their acceptingany advance from the assessee. Learned counsel referred toInstruction No. 286/2003-IT(Inv.) dated 10.03.2003 issued by theCentral Board of Direct Taxes which acknowledges the fact that incertain cases, assessees are forced to disclosed the income duringthe course of search, seizure and survey operations. It wasadvised therein that there should be focus and concentration oncollection of evidence of income which lead to information of whathas not been disclosed or is not likely to be disclosed before theIncome Tax Department, and no attempt should be made toobtain confession as to any disclosed income. Circumstances inwhich the assessee had to give the statements under Section132(4) and/or under Section 131 of the Act have been explained in the affidavit filed on 20.05.2013. The very fact that the searchcontinued for as long as 36 hours indicates that coercion andundue influence were exercised by the authorities of the appellant-department for making surrender. The affidavit filed by theassessee on 20.05.2013 explained in minute details thecircumstances which led to surrender and how the surrender wasextracted from the assessee from the aforesaid seven papers.The assessee has not brought any evidence on record to prove thefacts mentioned by the assessee in the affidavit. The personswhose names were mentioned on the papers seized by thedepartment have also denied any amount having been received bythem from the assessee as advance against the sale of theproperties/land. Learned counsel argued that the Assessing Officer hasnot given any reason in the assessment order as to why theexplanation given by the assessee in the affidavit was notacceptable. Learned CIT(A) has given detailed reasons in respectof each deletion of the addition made by the Assessing Officer.Learned counsel in support of his arguments relied upon thejudgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, (1973) 91 ITR0018 (SC) and submitted that the Supreme Court therein heldthat the admission is an extremely important piece of evidencebut it cannot be said that it is conclusive. It is open to theassessee who made admission to show that it is incorrect and theassessee should be given proper opportunity to show the correctstate of affairs. Reliance is also placed on the judgment of MadrasHigh Court inM. Narayan 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 additions cannot be made merely on the basis ofstatements which are subsequently retracted even belatedly asheld by Delhi High Court in CIT Vs. Sunil Aggarwal, (2015) 64 Taxmann.com 107 (Delhi). Learned counsel relied on thejudgment of this Court in Escorts Heart Institute andResearch Centre Limited Vs. DCIT (TDS) JP, (2017) 87Taxmann.com 184 Rajasthan; Commissioner of Income TaxVs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) andargued that if two views are possible, the view in favour of theassessee should be preferred. Reliance is also placed on thejudgments in Commissioner of Income Tax Vs. K.Y. Pilliah &Sons, (1967) 63 ITR 411 (SC); Deputy Commissioner ofIncome Tax Vs. Ratan Corpn., (2005) 197 CTR 536(Gujarat); The Assistant Commissioner of Income Tax,Central Circle, Ajmer Vs. Shri Devendra Kumar Choudhary,2-S-10 to 2-S-18, Basant Vihar, Bhilwara, ITA No.828/JP/16; Commissioner of Income Tax Vs. Ashok KumarSoni, (2007) 291, ITR, 172 (Raj.); Kailashben ManharlalChokshi Vs. Commissioner of Income Tax, (2008) 174Taxman 466 (Gujarat); Commissioner of Income Tax,Central-II, Mumbai Vs. Omprakash K. Jain, (2009) 178Taxman 179 (Bombay); Mehta Parikh & Co. Vs.Commissioner of Income Tax, (1956) 30 ITR 181 (SC);Shree Ganesh Trading Co. Vs. Commissioner of Income-Tax, Dhanbad, (2013) 257 CTR 159 (Jharkhand);Commissioner of Income Tax, Karnataka Vs. Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (AndhraPradesh); Chetnaben J. Shah Vs. Income Tax Officer, Ward-10(3), (2016) 288 CTR 579 (Gujarat). We have given our anxious consideration to rivalsubmissions and carefully perused the material on record. Motor Transport Ltd. (2015) 230 Taxman 187 (AndhraPradesh); Chetnaben J. Shah Vs. Income Tax Officer, Ward-10(3), (2016) 288 CTR 579 (Gujarat). We have given our anxious consideration to rivalsubmissions and carefully perused the material on record. Statement of the assessee under Section 132(4) of theAct was recorded on 26.09.2012 when the search was carried outat his residential premises. This statement was recorded in thepresence of two witnesses who were called at the choice of theassessee from his own locality. The assessee in the proceedingsof search agreed to surrender Rs. 2.25 crores as per seven papersfound during the search by the Department. Five out of thoseseven papers were marked as Annexure AS-1 and other two weremarked as Annexure AS-2. Various amounts disclosinginvestments and constructions amounting to Rs. 2,28,44,545/-were written on these papers. Therefore, statement of theassessee about these papers was recorded on 27.09.2012,wherein he surrendered the aforesaid amount. This statementwas again reconfirmed by the assessee in his statement recordedunder Section 131 of the Act on 15.10.2012 and 17.12.2012before the ADIT. In this statement, the assessee confirmed theentries made on the papers seized as AS-1 and AS-2. In fact, theassessee in his statement dated 25.10.2012 acknowledged furthersurrender of Rs. 10,00,000/- which he again confirmed insubsequent statement dated 17.12.2012. The affidavit ofretraction was filed by the assessee with inordinate delay of 237days on 20.05.2013. The said affidavit runs into four pages. Inpara 5 of the affidavit, the assessee admitted that therepresentative of the department prepared list of 28 exhibits, which were mostly original sale deeds etc. and pressurised him tomake surrender of Rs. 5 crores. It was stated that if the originaldocuments were to be taken away by the department, it wouldhave created a difficulty for the assessee to depose them of,therefore, he under pressure had to agree for the surrender. Inpara 6 of the affidavit also he admitted that after longdeliberations and arguments, a consensus was arrived at forsurrender of Rs. 2.25 crores on the condition that therepresentative of the department would not carry the originaldocuments of the sale deeds. In para 8 of the affidavit, it wasalleged that the representative of the department got sevenpapers prepared for surrender of Rs. 2.25 crores on account ofwhich he was made to surrender a sum of Rs. 2,28,44,545/-. Inpara 9 of the affidavit it was stated that the aforesaid surrenderwas got verified by him in subsequent statement under Section131 on 15.10.2012 followed by 17.10.2012. On the basis ofaforesaid seven papers, further surrender of Rs. 10,00,000/- wasalso extracted from the assessee. Confirmation statement givenby the assessee under Section 131 of the Act was recorded on25.10.2012 wherein details of various transactions of sale andpurchase of the land and property by the appellant was made. Inpara 15 of the affidavit, the assessee alleged that on the basis oftwo documents marked as AS-2, advance amount of Rs. 25 lacswas shown to have been given as loan and a sum of Rs.21,00,000/- was shown to have been given to Shri Ashok Jat forhis land ad-measuring 8 bigha in village Suwan. In para 16 of theaffidavit, advance of Rs. 15,00,000/- was shown to have beengiven in papers AS-2 to Shri Kalu Ji Gurjar and further advance ofRs. 27,00,000/- was shown to be given to Shri Padam Kumar Jain. All these transactions were in fact fictitious. These persons hadgiven affidavits that they did not have any such land, argued thelearned counsel for the assessee. All these transactions were in fact fictitious. These persons hadgiven affidavits that they did not have any such land, argued thelearned counsel for the assessee. This court in CIT, Bikaner Vs. Ravi Mathur, supra, whichjudgment has been relied by the ITAT in the present case, afterconsidering catena of previous decisions, held that the statementsrecorded under Section 132(4) of the IT Act have greatevidentiary value and they cannot be discarded summarily andcryptic manner, by simply observing that the assessee retractedfrom his statement. One has to come to a definite finding as to themanner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after suchstatement has been recorded by filing a complaint to the higherofficials or otherwise brought to the notice of the higher officialsby way of duly sworn affidavit or statement supported byconvincing evidence, stating that the earlier statement wasrecorded under pressure, coercion or compulsion. We deem itappropriate to reproduce para 15 of the said judgment, whichreads 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 otherwise132(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 otherwise brought 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 theassessee 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.” The judgment of the Delhi High Court in CIT Vs. SunilAggarwal, supra, relied on by the assessee does not in anymanner extend any assistance to him because that was a case inwhich the 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 of the 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 hisincome 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 Taxman 179 (Bombay) was that the assessing officer,while considering whether retraction was under duress orcoercion, had also to consider genuineness of documentsproduced 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:- 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 theSection 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 the aforesaid 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,held as 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 Tax Vs. 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 in documents 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. documents 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 anybooks 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:- “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 thestatement 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.” All the aforementioned judgments were considered by All the aforementioned judgments were considered by this Court in M/s. Bannalal Jat Constructions Pvt. Ltd.(supra) wherein also the assessee retracted from his statementinitially given under Section 132(4) of the Act on 10.10.12014followed by confirmation statement under Section 131 on04.12.2014 and made the following observations: “Reverting back to the present case, the ITAT, onthe basis of such statement of Shri Bannalal Jat,concluded that he was managing his businessaffairs of both his proprietary concern as well asappellant-company from his residence and that inthe absence of individual cash-book of respectiveconcerns and other details maintained by him, it isnot possible to identify whether the cash so foundbelongs to the proprietary concern or to theassessee company. Subsequently, when the statement under Section 132(4) of the IT Act wasrecorded on 10.10.2014, which was concluded athis residence, Shri Bannalal Jat categoricallyadmittedthatthecashamountofRs.1,21,43,210/- belonged to his company M/s.Bannalal Jat Construction Private Limited and thesame was its undisclosed income. Thereafteranother statement under Section 132(4) of the ITAct was recorded at his business premises on11.10.2014. In reply to question No. 8, he wasasked to explain the source of cash amounting toRs.3,380/-foundathisofficeandRs.1,21,43,210/- found at his residence, hesubmittedregardingtheamountofRs.1,21,43,210/- found at his residence that hewas unable to give any explanation and admittedthat he was in the business of civil constructionand in such business, various expenses have beeninflated and shown in the books of accounts, andthat the income so generated on account of suchinflation in expenses is represented in the form ofcash was found at his residence. This undisclosedincome belonged to his company M/s Bannalal JatConstruction Pvt. Ltd. In response to questionno.11 wherein he was asked to provide any otherexplanation which he wishes to provide, hesubmitted that pursuant to search operationswhere various documents, loose papers, entries,cash, investment, advances and individualexpenditure details have been found and taking allthat into consideration, he surrenderedRs.4,01,43,210/- as his undisclosed income. Healso categorically stated that the said disclosure isin the hands of M/s Bannalal Jat ConstructionPrivate Limited in respect of unexplained cashamountingtoRs.1,21,43,210/-andRs.2,50,00,000 and Rs.30,00,000/- totalling toRs.2,80,00,000 in his individual capacity.” In view of the law discussed above, it must be held that statement recorded under Section 132(4) of the Act and laterconfirmed in statement recorded under Section 131 of the Act,cannot be discarded simply by observing that the assessee hasretracted the same because such retraction ought to have beengenerally made within reasonable time or by filing complaint tosuperior authorities or otherwise brought to notice of the higherofficials by filing duly sworn affidavit or statement supported byconvincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner byobserving that the assessee in a belatedly filed affidavit hasretracted from his statement. Such retraction is required to bemade as soon as possible or immediately after the statement ofthe assessee was recorded. Duration of time when such retractionis made assumes significance and in the present case retractionhas been made by the assessee after almost eight months to beprecise, 237 days. In view of above discussion, we are persuaded to allow the appeal of the revenue which is accordingly allowed. Thesubstantial question of law formulated by this Court vide orderdated 10.04.2018 is answered in favour of the revenue andagainst the assessee in the aforesaid terms. (GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J Manoj/