Bhagirath Aggarwal, V. DCIT Circle- 8,

ITA 1790/DEL/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4037 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PURI
• Assessee Lawyers: V K AGGARWAL
• Keywords: Gift; Business income; Income from undisclosed sources; Document seized; Corroborative evidences; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SH. G.E. VEERABHADRAPPA, HON'BLE VICE-PRESID ENT & SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO. 1790/DEL/2008 ASSESSMENT YEARS: 2006-07 BHAGIRATH AGGARWAL, VS. DEPUTY CIT, 47/1, EAST PATEL NAGAR, CENTRAL CIRCLE-8, NEW DELHI. NEW DELHI. (PAN: AAFPA1690K) (APPELLANT) (RESPONDENT) ITA NO. 2118/DEL/2008 ASSESSMENT YEARS: 2006-07 DEPUTY CIT, VS. BHAGIRATH AGGARWAL, CENTRAL CIRCLE-8, 47/1, EAST PATEL NAGAR, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VK AGGARWAL, AR RESPONDENT BY: SHRI SANJAY PURI, CIT(DR) ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS-APPEALS AGAI NST THE ORDER OF LEARNED CIT(APPEALS) DATED 10.3.2008 PASSED FOR ASS ESSMENT YEAR 2006-07. 2. THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS TH AT THE LEARNED CIT(APPEALS) HAS ERRED IN RESTRICTING THE ADDITION TO A SUM OF RS.13,20,950 AS AGAINST RS.1.75 CRORES ADDED BY THE ASSESSING OF FICER. IN GROUND NO. 2, REVENUE HAS FURTHER PLEADED THAT LEARNED CIT(APPEAL S) HAS ERRED IN 2 DIRECTING THE ASSESSING OFFICER TO TREAT GIFT OF RS .2,50,000 RECEIVED BY THE ASSESSEE FROM HUF AS PART OF THE CASH AMOUNTING TO RS.13,20,950 FOUND AT THE TIME OF SEARCH AND WHOSE ADDITION HAS BEEN CONF IRMED ON ACCOUNT OF UNEXPLAINED MONEY AVAILABLE WITH THE ASSESSEE. 3. IN THE APPEAL OF ASSESSEE, THE GROUNDS OF APPEAL S TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RUL ES, THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, THE ASSESSEE HAS PLEADED THAT DURING THE COURSE OF SEARCH, JEWELLERY OF 4682.33 GRAMS WA S FOUND WHICH BELONGS TO VARIOUS FAMILY MEMBERS. AS PER THE BOOKS OF ACCO UNT, JEWELLERY SHOULD BE 7012.56 GRAMS. IN THE BOOKS, JEWELLERY AGAINST THE NAME OF ASSESSEE WAS SHOWN AT 343.79 GRAMS BUT NOTHING WAS FOUND AT THE TIME OF SEARCH. LEARNED CIT(APPEALS) OBSERVED THAT THIS MUCH JEWELLERY MUST HAVE BEEN SOLD BY THE ASSESSEE AND A CAPITAL GAIN WOULD BE LEVIABLE UPON THE ASSESSEE. HE DIRECTED THE ASSESSING OFFICER TO VERIFY THIS ASPECT AND ASC ERTAIN THE MARKET VALUE OF THE JEWELLERY AS ON THE DATE OF THE SEARCH AND AFTE R ALLOWING INDEXATION FOR THE COST OF JEWELLERY CAPITAL GAIN WOULD BE ASSESSA BLE IN THE HANDS OF THE ASSESSEE. LEARNED CIT(APPEALS) FURTHER DIRECTED THE ASSESSING OFFICER TO CARRY OUT THIS EXERCISE IN RESPECT OF OTHER FAMILY MEMBERS. THE ASSESSEE IS AGGRIEVED WITH THIS DIRECTION. 3 3.1 THE NEXT GRIEVANCE OF THE ASSESSEE IS THAT AT T HE TIME OF SEARCH, CASH OF RS.18,99,640 WAS FOUND AT THE RESIDENCE AND RS.3,50 ,000 RECOVERED FROM THE LOCKER BELONGING TO SHRI SUSHIL AGGARWAL. APART FRO M THESE TWO AMOUNTS, THERE IS BALANCE OF RS.3,70,854 FROM DIFFERENT BUSI NESS PREMISES OF KALEVA GROUP. THE EXPLANATION OF THE ASSESSEE WAS THAT THE ENTIRE CASH FOUND IS ACCOUNTED IN THE BOOKS MAINTAINED BY VARIOUS ENTITI ES WHO ARE ALL ASSESSED TO TAX. THE ASSESSEE HAS PLEADED THAT LEARNED CIT(APPE ALS) ACCEPTED ITS EXPLANATION PARTLY. HE HAS REMITTED THE ISSUE IN RE SPECT OF CASH RELATING TO SHRI J.L. AGGARWAL. AS FAR AS THE ASSESSEE IS CONCE RNED, THE CASH OF RS.13,20,950 WAS FOUND IN THE PREMISES OF THE ASSES SEE WHEREAS CASH AS PER BOOKS IS ONLY RS.64,179 WHICH INCLUDES HIS HUF ALSO . LEARNED CIT(APPEALS) HAS DIRECTED TO ASSESS THE CASH OF RS. 13,20,950 AS INCOME OF THE ASSESSEE AFTER VERIFYING CASH BALANCE AS PER BO OKS MENTIONED BY HIM IN THE ORDER. ASSESSEE IS AGGRIEVED WITH THESE DIRECTI ONS OF THE LEARNED CIT(APPEALS). 4. THE SOLITARY GROUND OF APPEAL TAKEN BY THE REVEN UE IS INTER-CONNECTED WITH THE GRIEVANCE RAISED BY THE ASSESSEE IN VARIOU S GROUNDS. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND BELONGS TO KALEVA SWEETS GROUP OF CASES. SEARCH UNDER SEC. 132 OF THE INCOME-TAX ACT, 1961 WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE AS SESSEE ON 10.11.2005. IN 4 RESPONSE TO THE NOTICE SERVED UNDER SECTION 153A, T HE ASSESSEE HAS FILED THE RETURN OF INCOME ON 19.3.2007 DECLARING AN INCOME O F RS.2,89,966. DURING THE COURSE OF SEARCH, A CASH OF RS.18,99,640 WAS FO UND. SIMILARLY, JEWELLERY MORE THAN 4 KGS WAS FOUND. THE STATEMENT OF THE ASS ESSEE UNDER SEC. 132(4) OF THE ACT WAS RECORDED ON 10/11-11-2005. IN HIS ST ATEMENT, HE HAS DISCLOSED UNACCOUNTED INCOME OF RS.1 CRORE, BECAUSE SALES WER E MADE IN CASH. THE SEARCH COULD NOT BE CONCLUDED ON 11.11.2005. THE LA ST SEARCH AUTHORIZATION IN RESPECT OF ASSESSEES PREMISES WAS EXECUTED ON 2 1.11.2005. HIS STATEMENT UNDER SECTION 132(4) OF THE ACT WAS AGAIN RECORDED AND HE DISCLOSED AN ADDITIONAL INCOME OF RS.75 LACS. THE ASSESSEE THERE AFTER FILED A LETTER TO THE DDIT ON 9.1.2006 WHEREIN HE HAS ADMITTED THAT A DIS CLOSURE OF RS.1.75 CRORES WAS MADE BY HIM AT THE TIME OF SEARCH. OUT OF THE TOTAL SURRENDER MADE, A SUM OF RS.25 LACS WOULD BE ATTRIBUTED, ON T HE BASIS OF UNDISCLOSED INCOME FOUND AFTER VERIFICATION OF SEIZED MATERIAL IN THE HANDS OF DIFFERENT FAMILY MEMBERS OR BUSINESS CONCERN OF THE ASSESSEE GROUP AT THE TIME OF FILING OF THE RETURN. THE BALANCE ACCORDING TO THE ASSESSEE WOULD BE TREATED AS AN UNDISCLOSED BUSINESS INCOME IN HIS HANDS. IN THIS LETTER, ASSESSEE HAS PUT A CONDITION THAT THE SURRENDER WOULD BE SUBJECT TO VERIFICATION OF SEIZED MATERIAL. ASSESSING OFFICER PASSED THE ASSESSMENT O RDER ON 30.12.2007. HE DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT R. 1,80,39,960. ASSESSING 5 OFFICER HAS OBSERVED IN THE ASSESSMENT ORDER THAT A SSESSEE FAILED TO RETURN THE INCOME ADMITTED BY HIM DURING THE COURSE OF SEA RCH, HENCE, AN ADDITION OF RS.1,75,00,000 HAS TO BE MADE IN THE HANDS OF TH E ASSESSEE. ASSESSING OFFICER FOUND THAT ASSESSEE FAILED TO EXPLAIN THE S OURCE OF THE CASH FOUND AT THE TIME OF SEARCH BUT HE DID NOT DEEM IT NECESSARY TO MAKE SEPARATE ADDITION BECAUSE ADDITION OF RS.1,75,00,000 WOULD TAKE CARE OF THE CASH AVAILABLE AT THE RESIDENCE. ASSESSING OFFICER FURTHER FOUND A GI FT OF RS.2,50,000 RECEIVED FROM THE HUF. ACCORDING TO THE ASSESSING OFFICER, H UF DOES NOT FALL WITHIN THE AMBIT OF EXCLUSION OF RELATIVES PROVIDED IN SEC TION 56(2(V) OF THE INCOME-TAX ACT, 1961. HE MADE THE ADDITION OF RS.2, 50,000 ALSO. 5. ON APPEAL, LEARNED CIT(APPEALS) HAS DELETED THE ADDITION OF RS.1.75 CRORES ON THE GROUND THAT ASSESSING OFFICER HAS NOT MADE A REFERENCE TO THE SEIZED MATERIAL FOR SUBSTANTIATING THIS ADDITION. W ITH REGARD TO THE ALLEGED GIFT FROM THE HUF, HE OBSERVED THAT A CASH OF RS.13 ,20,950 HAS BEEN TREATED AS AN UNEXPLAINED. THIS TREATMENT IS SUBJECT TO VER IFICATION OF THE ACCOUNTS AT THE END OF THE ASSESSING OFFICER. HE FURTHER DIRECT ED THAT THE GIFT OF RS.2,50,000 HAS ALSO TO BE VERIFIED FROM THE BOOKS OF ACCOUNT AND NO SEPARATE ADDITION IS TO BE MADE, IN A WAY IF UNEXPL AINED CASH IS TO BE ADDED 6 IN THE HANDS OF THE ASSESSEE, THEN A TELESCOPING OF THIS AMOUNT WOULD BE GRANTED TO THE ASSESSEE. 6. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEA RNED CIT(APPEALS) CONTENDED THAT IN THIS CASE, ASSESSEE HAS MADE A VO LUNTARY DISCLOSURE AT THE TIME OF SEARCH. HE HAS SUFFICIENT TIME TO CONSIDER HIS DISCLOSURE AS WELL AS TAKE OPINION OF THE EXPERT, BUT ON 21.11.2005 I.E. ALMOST 10 DAYS OF THE FIRST DECLARATION HE ENHANCED THE VOLUNTARY DECLARATION. IN OTHER WORDS, ASSESSEE HAS NOT RETRACTED OR ALLEGED THAT THE EARLIER DECLA RATION WAS TAKEN UNDER FORCE OR DURESS, RATHER HE INCREASED THE SURRENDER BY A S UM OF RS.75 LACS. THIS HAS BEEN AFFIRMED BY WAY OF A LETTER WRITTEN ON 9.1.200 6 WHEREIN HE HAS PROVIDED THE BREAK UP ALSO. 7. LEARNED DR FURTHER CONTENDED THAT THE STATEMENT BY ITSELF MAY NOT BE A SUFFICIENT EVIDENCE BUT THE STATEMENT GIVEN BY TH E ASSESSEE IS COUPLED WITH THE FACT THAT ASSESSEE WAS FOUND IN POSSESSION OF U NACCOUNTED CASH AS ON THE DATE OF SEARCH AND THE FACT THAT THE ASSESSEE IS IN THE BUSINESS WHERE CASH SALES IS A NORM RATHER THAN EXCEPTION. THUS, IT CAN SAFELY BE PRESUMED THAT MULTIPLE DECLARATION MADE BY THE ASSESSEE REPRESENT ED CORRECT STATES OF AFFAIRS TILL HE THOUGHT THAT HE COULD WRIGGLE OUT O F THE SAME. WITH REGARD TO 7 THE LETTER OF ASSESSEE DATED 9.1.2006, HE POINTED O UT THAT THE ALLEGED CONDITIONAL OFFER ITSELF SUGGESTS THAT AS IF, THE A SSESSEE WAS DARING THE DEPARTMENT TO FIND SOMETHING (WHICH OTHERWISE IN HI S KNOWLEDGE) TO CLAIM THE CONDITIONAL OFFER. THAT SOMETHING INCRIMINATING EXISTED AND WAS QUANTIFIED BY THE ASSESSEE HIMSELF, IS A FACT THAT CANNOT BE IGNORED. HE ALSO POINTED OUT THAT THE DEPARTMENT HAS A LIMITED POWER S. IT CANNOT FIND EVERYTHING HIDDEN FROM AN ASSESSEE BUT THE ASSESSEE IS ALWAYS AWARE OF WHATEVER REMAINS HIDDEN. THE MULTIPLE STATEMENTS OF THE ASSESSEE ARE TO BE SEEN IN THE LIGHT OF WHAT WAS KNOWN TO THE ASSESSEE , WHATEVER INCRIMINATING IT WAS, AND HIS DESIRE TO COME CLEAN AT THE FIRST, SECOND AND THIRD INSTANCES AND AVOID FACING THE WRATH OF THE LAW. BASICALLY, A SSESSEE HAS NOT RETRACTED HIS STATEMENTS RATHER WHILE FILING THE RETURN, HE D ID NOT OFFER THE AMOUNTS SURRENDERED FOR TAXATION. THIS STAND OF THE ASSESSE E IS AFTER THOUGHT. FOR BUTTRESSING HIS CONTENTIONS, HE RELIED UPON THE ORD ER OF THE ITAT IN THE CASE OF OVERSEAS CHINESE CULSINE (INDIA) PVT. LTD. VS. DCIT(ASSESSMENT) REPORTED IN 218 ITR (AT) 80. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO ADDITION ON THE BASIS OF ALLEGED DISCLOSURE STATEMENT MADE UNDER SE C. 132(4) OF THE ACT CAN BE MADE. HE POINTED OUT THAT IT IS NOT ASCERTAINABL E WHETHER AUTHORIZED 8 OFFICER HAD SIGNED THE STATEMENT AT THE END, THE ST ATEMENT DOES NOT INDICATE THE NAMES AND DESIGNATION OF THE OFFICER WHO RECORD ED THE STATEMENT. WHEN ASSESSEE MADE THE STATEMENT HE WAS NOT HAVING OLD I NCOME-TAX RETURNS, RELEVANT DETAILS, DOCUMENTS AND BOOKS OF ACCOUNTS. THE ASSESSEE IS AN OLD ILLITERATE HALWAI AND DOES NOT UNDERSTAND THE INTRI CACIES OF THE TAX MATTERS. THE STATEMENT DOES NOT BEAR THE SIGNATURES OF THE W ITNESSES. ON THE STRENGTH OF HON'BLE GUJARAT HIGH COURTS DECISION IN THE CAS E OF KAILASH BEN MANHARLAL CHOKSHI VS. CIT REPORTED IN 328 ITR 411, HE CONTENDED THAT THE STATEMENTS RECORDED AT THE ODD HOURS CANNOT BE CONS IDERED AS VOLUNTARY STATEMENTS UNDER SEC. 132(4) OF THE ACT. HE FURTHER CONTENDED THAT NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT ONLY WITHOUT ANY CORROBORATIVE MATERIAL. FOR BUTTRESSING HIS CONTENT IONS, HE RELIED UPON THE FOLLOWING DECISIONS: SL.NO. CASE LAW 1 GYAN CHAND JAIN VS. ITO 73 TTJ (JD) 859 2 ACIT VS. MRS. SUSHILA DEVI S. AGGARWAL, 49 TTJ (A HD.) 663 3 ACIT VS. ANOOP KUMAR, 94 TTJ (ASR) 288 4 ACIT VS. JORAWAR SINGH M. RATHOD 94 TTJ (AHD) 867 5 S. CHANDRESH KUMAR MAHESHWARI VS. ACIT, IT(S.S)A. NO. 18/JP/1997 (JPR) 6 AMAR SINGH VS. ITO, (1995), 53 TTJ 692 (DEL.) 7 AMAR NATWARLAL VS. ACIT, 60 ITD 560 (AHD.) 9 9. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER DRE W OUR ATTENTION TOWARDS THE CBDT INSTRUCTIONS BEARING NO.286/2/2003 -IT-(INV) ISSUED ON 10.3.2003. IN THESE INSTRUCTIONS, CBDT HAS APPRAISE D ITS OFFICERS THAT INSTANCES WERE REPORTED TO THE CBDT ALLEGING THAT A SSESSEES HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSE SSEE WHILE FILING RETURN OF INCOME. IN THESE CIRCUMSTANCES, CONFESSION TAKEN DU RING THE COURSE OF SEARCH AND SURVEYS DO NOT SERVE ANY USEFUL PURPOSE, THEREF ORE, OFFICERS SHOULD FOCUS ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO AN INFORMATION ETC. INSTEAD OF TAKING THE CONFESSIONAL STATEMENTS. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THIS CIRCULAR AND SUBMITTED TH AT CONFESSION WITHOUT ANY SUPPORTING EVIDENCE CANNOT BE MADE THE BASIS FOR AN Y ADDITION. 10. WITH REGARD TO THE CASH FOUND, HE SUBMITTED THA T CASH BELONGS TO THE BUSINESS CONCERN. LEARNED CIT(APPEALS) HAS REJECTED THE CONTENTION OF ASSESSEE ON THE GROUND THAT BUSINESS CASH CANNOT BE FOUND AT THE RESIDENCE. THE BUSINESS CONCERNS ARE OWNED BY THE FAMILY MEMBE RS. THE SEARCH WARRANT WAS ISSUED FOR THE RESIDENCE IN THE NAME OF INDIVIDUALS AS WELL AS THREE BUSINESS CONCERNS. THEREFORE, POSSIBILITY OF CASH BELONGING TO THE 10 BUSINESS CONCERN, AVAILABLE AT THE RESIDENCE CANNOT BE RULED OUT. THE CASH FOUND AT THE RESIDENCE WAS NOT MORE THAN RECORDED I N THE BOOKS OF BUSINESS CONCERNS. NO ADDITION OUGHT TO HAVE BEEN CONFIRMED BY THE LEARNED CIT(APPEALS). SIMILARLY, HE POINTED OUT THAT JEWELL ERY NOT FOUND IN THE POSSESSION OF EACH INDIVIDUALS OUGHT TO HAVE NOT BE EN CONSIDERED AS SOLD. THE JEWELLERY IN THE BOOKS OF ACCOUNT WAS MORE THAN THE ONE FOUND AT THE TIME OF SEARCH. 11. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. ASSESSING OFFICER HAS REPRODUCED THE QUESTION AND THE REPLY OF THE ASSESSEE GIVEN ON 10.11.2005/11.11.200 5 AS WELL AS 21.11.2005 IN ENGLISH VERNACULAR. BOTH THESE QUESTIONS AND REP LIES HAVE A DIRECT BEARING ON THE CONTROVERSY HENCE IT IS IMPERATIVE TO TAKE N OTE OF THESE QUESTIONS AND REPLIES WHICH READ AS UNDER: 10-10/11/2005 S.13 DO YOU WANT TO SAY ANYTHING ELSE ANS: I, BHATIRATH S/O SHRI SHIV NARAIN HEREBY DECL ARE ADDITIONAL INCOME OF RS.1 CRORE FOR CURRENT FINANCI AL YEAR 05-06 ON ACCOUNT OF DOCUMENTS, JEWELLERY, CASH PROPERTY FOUN D DURING ACTION U/S 132 FOR BUYING PEACE OF MIND AND TO AVOID LITIG ATION. I REQUEST THE INCOME-TAX DEPARTMENT THAT NO PENALTY PROCEEDINGS B E INITIATED AGAINST ME. 11 21.11.2005: Q.4 DO YOU WANT TO SAY ANYTHING ELSE. ANS: YES, MY STATEMENT WAS RECORDED UNDER SEC. 132(4) OF THE INCOME-TAX ACT, 1961 ON 11.11.2005 WHEREIN I HA D VOLUNTARILY DECLARED A SUM OF RS. 1 CRORE AS MY ADDITIONAL INCO ME. THIS VOLUNTARILY DISCLOSURE WAS GIVEN FOR PEACE OF MIND AND TO AVOID LITIGATION AND ON ACCOUNT OF ALL SEIZED DOCUMENTS, JEWELLERY, CASH AND PROPERTY WHICH ALL FAMILY MEMBERS, FAMILY FIRMS AND COMPANIES HAVE ACQUIRED AT DIFFERENT TIMES. I VOLUNTARILY, KEEPING IN CONSIDERATION OR ISSUES, INCREASE THE TOTAL AMOUNT OF DISCLOSURE OF ADDITIONAL INCOME TO RS.1.75 CRORES ON BEHALF OF ALL FAMILY MEMBERS, FAM ILY FIRMS AND COMPANY. I REQUEST YOU THAT NO PENAL MEASURES LIKE PENALTY AND PROSECUTION BE INITIATED AGAINST MYSELF AND MY FAMI LY MEMBERS, FAMILY CONCERNS, COMPANY IN LIEU OF THIS VOLUNTARY DISCLOSURE OF ADDITIONAL INCOME. I PROMISE THAT AFTER RECEIVING A LL THE SEIZED DOCUMENTS FROM INCOME-TAX DEPARTMENT I WILL PROVIDE BREAK UP OF THIS VOLUNTARY DISCLOSURE OF RS.1.75 CRORE IN VARIO US HANDS. I ALSO PROMISE TO PAY THE DUE TAX AS SOON AS POSSIBLE. 12. IT IS ALSO NECESSARY TO TAKE COGNIZANCE OF THE ASSESSEES LETTER DATED 09.1.2006 WHICH READS AS UNDER: 09.01.2006 DDIT UNIT IV(2) NEW DELHI. SUB: PROCEEDINGS IN THE CASE OF KALEVA GROUP DATE OF SEARCH: 10/11/2005 12 HONBLE SIR IN RESPONSE OF THE ABOVE SAID PROCEEDINGS, IT IS HE REBY STATED THAT THE SURRENDER ORIGINALLY MADE OF RS. 1 CRORE WAS THEREA FTER INCREASED BY A SUM OF RS.75 LACS AGGREGATING TO RS.1.75 CRORES. OUT OF THE TOTAL SURRENDER MADE, A SUM OF RS.25 LACS WOULD BE ATTRIBUTED ON THE BAS IS OF UNDISCLOSED INCOME FOUND AFTER VERIFICATION OF SEIZED MATERIAL IN HAND S OF DIFFERENT FAMILY MEMBERS OR BUSINESS CONCERNS OF THE ASSESSEE GROUP AT THE TIME OF FILING OF RETURN AS PER THE PROVISIONS OF SECTION 153A OF THE ACT AND THE BALANCE OF RS.1.50 CRORES WOULD BE TREATED AS UNDISCLOSED BUSI NESS INCOME IN THE HANDS OF MR. BHAGIRATH AGGARWAL PENDING VERIFICATION OF S UCH SEIZED MATERIAL. THANKING YOU YOURS FAITHFULLY, SD/- ENCL: AS ABOVE BHAGIRATH AGGARWAL 13. BEFORE EMBARKING UPON AN INQUIRY AS TO WHETHER ADDITION IN THE HANDS OF THE ASSESSEE CAN BE MADE ON THE BASIS OF THE STA TEMENT GIVEN BY HIM UNDER SEC. 132(4) OF THE ACT OR NOT, IT IS SALUTARY UPON US TO TAKE NOTE OF SUB- SECTION (4) OF SECTION 132 OF THE ACT ALSO WHICH RE AD AS UNDER: (4). THE AUTHORIZED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN 13 POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCU MENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMI NATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDIN G UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. EXPLANATION.- FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER THIS SUB-S ECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, O THER DOCUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH , BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER T HE INDIAN INCOME-TAX ACT, 1922 ( 11 OF 1922 ), OR UNDER THIS ACT. 14. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE STATEMENTS CAREFULLY. THE FIRST OBJECTION OF T HE ASSESSEE IS THAT STATEMENTS ARE NOT SIGNED BY THE WITNESSES. WE DO N OT FIND ANY FORCE IN THIS CONTENTION BECAUSE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE NEVER TOOK THIS OBJECTION. THE ASSESSEE HAS NOT COM PLAINED TO THE HIGHER AUTHORITIES OR TO THE ASSESSING OFFICER THAT NO SUC H STATEMENT WAS EVER TAKEN. THE VERACITY OF THE STATEMENT IS NOT IN DOUBT. THE ASSESSEE HAS NOT CHALLENGED THIS STATEMENT BY WRITING ANY LETTER. HE HAS NOT RETRACTED THIS STATEMENT. THEREFORE, IT IS NOT ASCERTAINABLE AT TH IS STAGE WHETHER WITNESSES 14 WERE PRESENT AT THE TIME OF RECORDING THE STATEMENT OR NOT BUT THEIR PRESENCE IS IRRELEVANT FOR APPRECIATING THE STATEMENT BECAUS E ASSESSEE HAS NEVER REFUTED THE DEPOSITION MADE BY HIM BEFORE THE INCOM E-TAX AUTHORITIES. HE HAS NEVER ALLEGED THAT THIS WAS NOT THE DECLARATION MADE BY HIM RATHER SOMETHING ELSE HAS BEEN RECORDED BY THE OFFICER. TH E NEXT ARGUMENT RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT SIG NATURE AND DESIGNATION OF THE AUTHORIZED OFFICER IS NOT AVAILABLE ON THE STAT EMENT. AGAIN, WE DO NOT FIND ANY FORCE IN THIS SUBMISSION BECAUSE SIGNATURE OF THE AUTHORIZED OFFICER IS AVAILABLE ON THE STATEMENT, HOWEVER, HIS DESIGNA TION IS NOT DISCERNIBLE BUT AGAIN NO SUCH COMPLAINT WAS MADE BY THE ASSESSEE IN THE PAST. HE IS DISPUTING THE RELIABILITY OF THE STATEMENT ON DIFFE RENT LINES AND NOT ON THESE LINES. THE NEXT ARGUMENT ADVANCED BY THE LEARNED CO UNSEL FOR THE ASSESSEE IS THAT THE STATEMENT MADE AT ODD HOURS CANNOT BE CONS IDERED AS A VOLUNTARY STATEMENT. HE HAS ALSO SUBMITTED THAT NO ADDITION C AN BE MADE ON THE BASIS OF STATEMENT ONLY WITHOUT ANY CORROBORATIVE MATERIA L. THERE IS NO DISPUTE WITH REGARD TO THE PROPOSITION THAT DISCLOSURE OR A DMISSION MADE UNDER SEC. 132 OF THE ACT DURING THE SEARCH PROCEEDINGS IS AN ADMISSIBLE EVIDENCE BUT IT IS NOT CONCLUSIVE ONE. THIS PRESUMPTION OF ADMISSI BILITY OF EVIDENCE IS A REFUTABLE ONE AND IF AN ASSESSEE IS ABLE TO DEMONST RATE WITH THE HELP OF SOME MATERIAL THAT SUCH ADMISSION WAS EITHER MISTAKEN OR UNTRUE OR UNDER SOME 15 MISCONCEPTION OF FACTS THEN SOLELY ON THE BASIS OF SUCH ADMISSION, NO ADDITION IS REQUIRED TO BE MADE. THIS IS THE COMMON THREAD RUNNING INTO ALL THE DECISIONS RELIED UPON BY THE ASSESSEE. THE ADMI SSION IS A DECLARATION AGAINST AN INTEREST AND IT IS A GOOD EVIDENCE. A PA RTY IS ALWAYS AT LIBERTY TO WITHDRAW THE ADMISSION BY PROVING THAT SUCH ADMISSI ON WAS EITHER MISTAKEN OR UNTRUE. IT IS TO BE KEPT IN MIND THAT IN LAW EVE N RETRACTED CONFESSION MAY FORM THE LEGAL BASIS OF THE ADDITION, IF THE ASSESS ING OFFICER IS SATISFIED THAT IT WAS TRUE AND WAS VOLUNTARILY MADE. BUT BASING TH E ADDITION ON A RETRACTED DECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT ST RICT RULE OF LAW BUT IS ONLY A RULE OF PRUDENCE. AS A GENERAL RULE OF PRACTICE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE EVIDENCE . IN THE PRESENT CASE, ASSESSEE WAS FOUND IN POSSESSION OF UNEXPLAINED CAS H, JEWELLERY, BOOKS AND DOCUMENTS, HENCE AUTHORIZED OFFICER HAS RIGHTLY REC ORDED HIS STATEMENT UNDER SEC. 132(4) OF THE ACT. THE STATEMENT MADE BEFORE T HE OFFICER IS AN ADMISSIBLE EVIDENCE. THERE IS NO DISPUTE WITH REGAR D TO THIS PROPOSITION. THE SOLE QUESTION BEFORE US IS WHETHER THE STATEMENT IS SUFFICIENT TO MAKE THE ADDITION OR NOT. AS OBSERVED ABOVE, AS A GENERAL RU LE OF PRUDENCE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION AND JUDICIAL AS WELL AS QUASI-JUDICIAL AUTHORITIES OUGHT TO LOOK FOR CORROBORATIVE EVIDENC E. IN THE LIGHT OF THIS POSITION OF LAW, IF HE EXAMINES THE FACTS OF THE PR ESENT CASE, THEN IT WOULD 16 REVEAL THAT ASSESSEE FAIL TO BRING ANY EVIDENCE ON THE RECORD WHICH CAN SUGGEST THAT STATEMENT GIVEN BY HIM WAS UNDER SOME MISTAKEN BELIEF OR FACTS. HE HAS NOT RETRACTED THE STATEMENT RATHER AF TER TWO MONTHS AGAIN CONFIRMED THE STATEMENT BUT WITH A QUALIFICATION. W E COULD UNDERSTAND THE STAND OF THE ASSESSEE HAD HE RETRACTED THE STATEMEN T AND BROUGHT DEMONSTRATIVE EVIDENCE ON THE RECORD SHOWING THE CI RCUMSTANCES WHEN HE MADE THE DECLARATION. THERE IS NO ALLEGATION OF STR ESS, THREAT OR TEMPTATION AGAINST THE REVENUE AUTHORITIES. HE HAS MADE A FIRS T DECLARATION ON 10- 11/11/2005. THE NEXT DECLARATION WAS MADE ON 25 TH NOVEMBER. THERE WAS A GAP OF TEN DAYS IN BETWEEN. HE COULD HAVE EXPLAINED HIS POSITION ABOUT MAKING THE DECLARATION INSTEAD OF POINTING OUT ANY LAPSE OR IRREGULARITY IN THE FIRST DECLARATION HE HAS ENHANCED THE SURRENDERED A MOUNT. IN THE LETTER HE HAS ALLOCATED THE AMOUNT WHICH IS ATTRIBUTABLE TO HIS B USINESS OR THE FAMILY MEMBERS. THUS, THE STATEMENT IN THE CASE OF ASSESSE E, IS NOT AT PAR WITH THE RETRACTED STATEMENT CONSIDERED BY THE ITAT AS WELL AS HON'BLE HIGH COURT IN THE DECISIONS RELIED UPON BY THE ASSESSEE. THE ASSE SSEE HAS STOPPED THE REVENUE TO MAKE FURTHER INQUIRY BY OFFERING THE TAX ABLE INCOME. HE HAS REITERATED HIS OFFER AND INCREASED THE OFFER. NOW, AT THE TIME OF FILING THE RETURN, IT IS NOT OPEN FOR THE ASSESSEE TO ASK THE REVENUE FOR SUPPLY OF DOCUMENTARY EVIDENCE EXHIBITING THE UNDISCLOSED INC OME. THE DECLARATION 17 MADE BY HIM AGAINST HIS INTEREST PROHIBITS THE OTHE R SIDE TO MAKE FURTHER INQUIRY. ASSESSEE MUST BE KNOWING ALL HIDDEN DETAIL S WHEN HE WAS MAKING THE OFFER. BY SUCH AN OFFER, HE WAS SUCCESSFUL IN S TOPPING THE REVENUE IN CONDUCTING THE FURTHER INQUIRY. THEREFORE, LEARNED CIT(APPEALS) HAS COMMITTED AN ERROR IN DELETING THE ADDITION MADE ON THE BASIS OF THE STATEMENT GIVEN BY THE ASSESSEE. WE SET ASIDE THE O RDER OF THE LEARNED CIT(APPEALS) ON THE ISSUE AND RESTORE THAT OF THE A SSESSING OFFICER. 15. SINCE THE ASSESSING OFFICER HAS NOT MADE ANY SE PARATE ADDITION ON ACCOUNT OF UNEXPLAINED CASH FOUND AT THE TIME OF SE ARCH. ACCORDING TO THE ASSESSING OFFICER, THE DECLARATION MADE BY THE ASSE SSEE CAN TAKE CARE OF THE UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH. WE SE T ASIDE THE FINDING OF THE LEARNED CIT(APPEALS) FOR REMITTING AN INQUIRY IN RE SPECT OF UNEXPLAINED CASH AND RESTORE THAT OF THE ASSESSING OFFICER. 16. AS FAR AS THE ADDITION OF RS.2,50,000 IS CONCER NED, LEARNED CIT(APPEALS) HAS OBSERVED THAT THIS AMOUNT BE CONSI DERED AS PART OF THE CASH BALANCE AS PER BOOKS. ASSESSING OFFICER HAS MA DE THE ADDITION SIMPLY FOR THE REASONS THAT HUF DOES NOT FALL WITHIN THE E XCLUSION PROVIDED IN SEC. 56(2)(V) OF THE ACT WHICH ONLY RELATES TO THE BLOOD RELATIVES. WE FIND THAT OUT 18 OF THE TWO HUFS, ONE WHO HAS GIVEN GIFTS TO THE ASS ESSEE WAS CONSISTED HIS WIFE, TWO SONS AND ONE DAUGHTER, THE OTHER HUF, NAM ELY, SHIV NARAIN AGGARWAL COMPRISES OF FATHER, MOTHER AND TWO BROTHE RS. THEY ARE ALL RELATIVES. THE ASSESSEE HAD MADE A DECLARATION OF R S.1.75 CRORES, WE HAVE RESTORED THIS ADDITION. WE DIRECT THE ASSESSING OFF ICER TO GRANT A TELESCOPING BENEFIT OF RS.2,50,000 ALSO AGAINST THE DECLARATION . NO SEPARATE ADDITION DESERVES TO BE MADE. SIMILARLY, IN THE CASE OF ASSE SSEE, NO SEPARATE ADDITION HAS TO BE MADE ON ACCOUNT OF SHORTAGE OF JEWELLERY BECAUSE THE DECLARATION OF RS.1.75 CRORES CAN TAKE CARE OF NON-AVAILABILITY OF THE JEWELLERY WHICH IS OTHERWISE DISCLOSED IN THE BOOKS OF ACCOUNT. 17. IN THE RESULT, THE ORDER OF THE LEARNED CIT(APP EALS) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED SUBJECT TO CERTAIN CHANGES MENTIONED ABOVE. THE APPEAL OF THE REVENUE IS ALLOW ED WHEREAS THE APPEAL OF THE ASSESSEE IS REJECTED. DECISION PRONOUNCED IN THE OPEN COURT ON 06.05.201 1 SD/- SD/- (G.E. VEERABHADRAPPA ) ( RAJPAL YADAV ) VICE-PRESIDENT JUDICIAL ME MBER DATED: 06/05/2011 MOHAN LAL 19 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR