ACIT Circle 37 (1), New Delhi V. Dr. Ashok Khurana, New Delhi

ITA 2327/DEL/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61635 (ITAT-DELHI)
• Duration Of Justice: 42 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: MRS GEETMALA MOHANAMY
• Assessee Lawyers: AMIT GOEL
• Keywords: Business income; Document seized; Retraction; Documents seized
• Section: 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NOS. 2327/DEL/2008 ASSESSMENT YEAR: 2006-07 ACIT, CIRCLE 37(1), ROOM NO. 401, N-BLOCK, VIKAS BHAWAN, I.P. ESTATE, NEW DELHI. VS. DR. ASHOK KHURANA, C-584, DEFENCE COLONY, NEW DELHI. AAGPK5547G (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. GEETMALA MOHANAMY, CIT(DR) RESPONDENT BY : SH. AMIT GOEL, CA O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE REVENUE AND DIRECTED AGAI NST THE ORDER OF LD. CIT(A) DATED 20.03.2008 FOR A.Y. 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION U/S 132 OF INCOME TAX ACT, 1961 WAS CARRIED OUT AT THE RESIDENTIAL CUM BUSINESS PREMISES OF DR. ASHOK KHURANA, A LEADING R ADIOLOGIST LOCATED AT C-584, DEFENCE COLONY, NEW DELHI ON 08.02.2006. TH E ASSESSEE FILED HIS RETURN OF INCOME ON 14.06.2007 DECLARING INCOME OF RS. 27,79,440/-. THE ASSESSING OFFICER OBSERVED THAT ON THE DATE OF SEARCH FOLLOWING QUESTIONS WERE RAISED AND THE CORRESPONDING REPLIES OF THE ASSESSEE WERE AS UNDER: - Q.NO. 20 (OF THE STATEMENT): DURING THE COURSE OF SEARCH A ND SEIZURE OPERATION THE RECEIPT BOOKS OF PATIENTS COM ING FOR EXAMINATION HAVE BEEN FOUND AND SEIZED AS ANNEXURE A-4 AND A-5 AND IT IS SEEN THAT THERE IS DISCREPANCIES IN RECEI PTS DURING THE YEAR ITA NO. 2327/D/2008 2 AND THOSE BOOKED IN THE BOOKS OF ACCOUNTS FOR WHICH A PRINTOUT WAS TAKEN, WHICH WAS SIGNED BY YOU? ANS: I AM UNABLE TO EXPLAIN THE DISCREPANCY AND IN ORDER TO SETTLE THE CASE AND TO BUY PEACE OF MIND AND IN ORDER TO COVER ALL THE ISSUES WHICH MIGHT ARISE IN YOUR INVESTIGATIONS. I AM DIS CLOSING A SUM OF RS. 50 LACS AND I AM AGREEABLE TO PAY TAXES THEREUPON. I HAVE GONE THROUGH MY RECORDS IN TOTALITY AND I HAVE COMPARED THIS THINGS WITH THE BOOKS OF ACCOUNTS, MAINTAINED FOR THE CURRENT Y EAR AND ALSO AFTER CONSIDERING THE SEIZED MATERIAL, I SEE THAT DISCREP ANCY COMES TO RS. 50 LACS. THEREFORE, I HAVE AGREED TO PAY TAXES THE REUPON. I AM ALSO MAKING THIS DISCLOSURE WITH A VIEW THAT THE CASE OF MY SISTER MRS. INDU PATNAIK MAY BE TREATED REASONABLY AND IT SHOULD NOT BE LINKED WITH MY CASE. Q.NO. 21 (OF THE STATEMENT) CONSIDERING THE REPLY IN RESPONS E TO QUESTION ASKED IT APPEARS THAT THERE ARE DISCREPANC IES. AS PER SEC. 132(4) READ WITH EXPLANATION 5 TO SEC. 271(1)(C) O F THE I.T. ACT, 1961, IF ANY INCOME OR ASSET IS DISCLOSED FOR TAXATION PU RPOSE WHICH HAS NOT BEEN DISCLOSED EARLIER, WILL NOT ATTRACT ANY PENAL INTEREST, PENALTY OR LEVELING OF PROSECUTION, DO YOU WISH TO AVAIL THIS OPPORTUNITY? ANS. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, I ACCEPT THAT AMOUNT OF RS. 50 LACS OF INCOME EARNED DURING THE C URRENT FINANCIAL YEAR HAS NOT DISCLOSED IN MY BOOKS OF ACCOUNTS. I OFFER THIS AMOUNT FOR TAXATION PURPOSE IN ADDITION TO MY REGULAR INCO ME. 2.2 AGAIN, THE ASSESSEE APPEARED BEFORE THE INVEST IGATION WING AND THE STATEMENT WAS RECORDED UNDER OATH ON 13.2.06 AN D THE FOLLOWING QUESTION WAS RAISED AND THE CORRESPONDING REPLY IS AS UNDER: - Q.NO. 2 (OF THE STATEMENT): DURING THE COURSE OF SEARCH OP ERATION U/S 132 AT YOUR PREMISES C-584, DEFENCE COLONY, NEW DEL HI CONDUCTED ON 8.2.06, YOUR STATEMENT ON OATH WAS RECORDED. IN THIS STATEMENT WHEN CONFRONTED WITH DISCREPANCIES FOUND IN BOOKS O F ACCOUNTS AND WITH OTHER MATERIAL FOUND AND SEIZED DURING THE COU RSE OF SEARCH, YOU HAD MADE A DISCLOSURE OF RS. 50 LACS (FIFTY LACS) I N THE CURRENT YEAR AND HAD AGREED TO PAY TAXES THEREUPON AS PER PLAN M ENTIONED THEREIN. THIS FACT WAS RECORDED IN THE PANCHNAMA DRAWN ON TH AT DATE. DO YOU CONFIRM THE DISCLOSURE MADE THAT DAY? ANS. YES SIR, I HAVE MADE THE DISCLOSURE BUT WITH THE CONDITION THAT NO PENALTY, PROSECUTION ETC. WOULD BE IMPOSED ON ME AS PER THE NEW SCHEME OF TAX. 3. THE AO NOTICED THAT ASSESSEE HAD DECLARED BUSINE SS INCOME OF RS. 20,74,431/- AND ADMITTED RS. 1,82,550/- AS INCOME F ROM OTHER SOURCES ON ACCOUNT OF CASH DEPOSITED IN SAVING BANK ACCOUNT. CONSIDERING THE CONTENTS OF STATEMENT NOTED ABOVE, THE AO CONCLUDED THAT ASSESSEE HAD ITA NO. 2327/D/2008 3 NEITHER DISCLOSED THE AMOUNT AS ADMITTED U/S 132(4) OF THE I.T. ACT IN FULL NOR AT ANY STAGE BEFORE THE FILING OF RETURN RETRAC TED THE STATEMENT FOR ANY REASONS. HE, THEREFORE, ISSUED SUMMONS U/S 131 AND RECORDED HIS STATEMENT ON OATH ON 19.12.2007. IN COURSE OF STAT EMENT, THE ASSESSEE STATED THAT HE HAD DISCLOSED THE FULL INCOME AS PER REGULAR BOOKS OF ACCOUNT IN THE RETURN OF INCOME. HE FURTHER STATED THAT AT THE TIME OF SEARCH, HE WAS UNDER TENSION. THE AO DID NOT ACCEP T THE ASSESSEES CONTENTION OBSERVING THAT ASSESSEE ADMITTED VIA HIS STATEMENTS ON 08.02.2006 AND ALSO ON 13.02.2006, BOTH ON OATH THA T HE HAD VOLUNTARILY SURRENDERED A SUM OF RS. 50 LACS ON ACCOUNT OF HIS BUSINESS INCOME AND UNDISCLOSED INCOME. ACCORDINGLY, THE AO MADE AN AD DITION OF RS. 27,43,019/- BEING THE INCOME SURRENDERED AT THE TIM E OF SEARCH (RS. 50 LACS) MINUS BUSINESS INCOME DECLARED IN THE RETURN OF INCOME (RS. 20,74,431/-) AND UNDISCLOSED CASH (RS. 1,82,550/-). 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT SUR RENDER OF RS. 50 LACS WAS MADE BECAUSE AT THE TIME OF RECORDING OF STATEM ENT, HE WAS INFORMED BY THE SEARCH PARTY THAT THERE WERE DISCRE PANCIES IN THE BOOKS OF ACCOUNT WHEN COMPARED WITH THE SEIZED MATERIAL B EING ANNEXURE A4 & A5 (COPIES OF PATIENTS REGISTER). HOWEVER, AFTER T HE SEARCH AND ON VERIFICATION OF SEIZED MATERIAL WITH REGULAR BOOKS OF ACCOUNT, IT WAS FOUND THAT THERE WERE NO DISCREPANCIES, AS ALLEGED. IT W AS FURTHER POINTED OUT THAT ASSESSEE SPECIFICALLY SUBMITTED BEFORE AO THAT IF THERE WERE ANY DISCREPANCIES OR UNDISCLOSED INCOME IN THE SEIZED M ATERIAL OR REGULAR BOOKS OF ACCOUNT, THE SAME SHOULD BE POINTED OUT. HOWEVER, THE AO DID NOT POINT OUT ANY DISCREPANCY OR INCOME NOT RECORDE D IN THE REGULAR BOOKS OF ACCOUNT. THE AO HAD ALSO NOT DISPUTED THE FACT THAT THERE WERE NO DISCREPANCIES IN THE BOOKS OF ACCOUNT VIS-A-VIS THE ENTIRE SEIZED MATERIAL. FURTHER, NO UNDISCLOSED INCOME HAD BEEN DETECTED. T HE AO HAD MADE THE ADDITION MERELY ON THE BASIS OF ADMISSION MADE IN COURSE OF ITA NO. 2327/D/2008 4 STATEMENT RECORDED U/S 132(4). IT WAS, INTER-ALIA, SUBMITTED THAT IT IS ALWAYS OPEN TO THE PARTY MAKING AN ADMISSION TO EXP LAIN, CLARIFY AND DEMONSTRATE UNDER WHAT CIRCUMSTANCES THE ADMISSION WAS MADE OR TO PROVE THAT WHAT WAS STATED WAS NOT CORRECT. 5. LD. CIT(A) DELETED THE ADDITION TAKING NOTE OF T HE FACT THAT THE AO HAD IN HIS POSSESSION, BOOKS OF ACCOUNT AS WELL AS SEIZED MATERIAL BUT DID NOT FIND ANY DISCREPANCY IN THE BOOKS VIS-A-VIS SEI ZED MATERIAL. THIS CLEARLY SHOWED THAT THE STATEMENT GIVEN ON 08.02.20 06 AND 13.02.2006 WERE ERRONEOUS AND BASED ON INCORRECT FACTS. 6. LD. DR REFERRED TO THE STATEMENT RECORDED U/S 13 2(4) IN COURSE OF SEARCH AND POINTED OUT THAT IN THE STATEMENT ASSESS EE HAD CLEARLY STATED THAT HE HAD GONE THROUGH HIS RECORDS IN TOTALITY AN D HAD COMPARED THE SAME WITH THE BOOKS OF ACCOUNT, MAINTAINED FOR THE CURRENT YEAR AND ALSO AFTER CONSIDERING THE SEIZED MATERIAL CONCLUDED THA T DISCREPANCY WAS TO THE TUNE OF RS. 50 LACS. SHE FURTHER REFERRED TO P AGE 3 OF THE PAPER BOOK SUBMITTED BY THE DEPARTMENT, WHEREIN FOLLOWING QUES TION AND ANSWER WAS RECORDED: - Q6. I AM SHOWING YOU PAGE NO. 12 OF ANNEXURE A1 PLEAS E STATE WHAT THIS DOCUMENT IS? ANS. THIS IS A CERTIFICATE OF ELIGIBILITY FOR NON-IMMIGR ANT STUDENT, ISSUED BY EMORY UNIVERSITY, ATLANTA, USA, BY THE SC HOOL AUTHORITIES. THIS IS FOR MY SONS EDUCATION, WHICH HE IS DOING T HERE. 7. WITH REFERENCE TO OTHER QUESTIONS AND ANSWERS, L D. DR SUBMITTED THAT SURRENDER WAS NOT ONLY WITH REFERENCE TO BUSIN ESS INCOME BUT ON VARIOUS COUNTS. SHE FURTHER REFERRED TO PAGE 55 OF ASSESSEES PAPER BOOK AND POINTED OUT THAT ASSESSEE HAD APPLIED FOR PHOTO COPIES OF SEIZED DOCUMENTS WHICH WERE SUPPLIED TO ASSESSEE IMMEDIATE LY ON 02.03.2007. THE ASSESSEE FILED RETURN ON 14.06.2007 BUT WITHOUT ANY WHISPER OF RETRACTION OF HIS EARLIER STATEMENT. LD. DR FURTHE R REFERRED TO PAGE 18 OF ASSESSEES PAPER BOOK, WHEREIN THE LETTER DATED 14. 12.2007 ADDRESSED TO ASSESSING OFFICER GIVEN IN RESPONSE TO SHOW-CAUSE N OTICE DATED ITA NO. 2327/D/2008 5 07.12.2007 IS CONTAINED. THE ASSESSEE SUBMITTED TH AT HE BEING NOT AN ACCOUNTING OR TAXATION PERSON AND BEING UNAWARE OF THE FACT THAT ALL THE SEIZED MATERIAL WERE DULY RECORDED IN BOOKS OF ACCO UNT, MADE OFFER UNDER MISBELIEVE. LD. DR SUBMITTED THAT WHILE MAKING DIS CLOSURE OF RS. 50 LACS THE ASSESSEE INSTALLED ALL FURTHER PROCEEDINGS. SH E SUBMITTED THAT NO EVIDENCE HAS BEEN FILED TO SUBSTANTIATE RETRACTION. SHE REFERRED TO THE DECISION OF HONBLE HIGH COURT OF CHATTISGARH IN TH E CASE OF ACIT VS. HUKUM CHAND JAIN, 191 TAXMANN 319 TO SUBMIT THAT BU RDEN OF PROVING THAT STATEMENT U/S 132(4) WAS OBTAINED BY COERCION OR INTIMIDATION LIES UPON THE ASSESSEE. THE RETRACTION SHOULD BE MADE A T THE EARLIEST OPPORTUNITY AND THE SAME SHOULD BE ESTABLISHED BY P RODUCING ANY CONTEMPORANEOUS RECORD OR EVIDENCE, ORAL OR DOCUMEN TARY, TO SUBSTANTIATE THE ALLEGATION THAT HE WAS FORCED TO M AKE HIS STATEMENT IN QUESTION IN-VOLUNTARILY. 8. LD. COUNSEL SUBMITTED THAT IT IS ALWAYS OPEN TO ASSESSEE TO EXPLAIN/ CLARIFY THE STATEMENT. HE SUBMITTED THAT BOOKS OF ACCOUNT AS WELL AS THE PATIENT REGISTER AS PER ANNEXURE A4 & A5 WERE SEIZE D BY THE DEPARTMENT AT THE TIME OF SEARCH AND ONLY ON GETTING THE PHOTO COPIES OF THE SAME ON 02.03.2007, ASSESSEE COULD FIND OUT THAT THERE WAS NO DISCREPANCY, AS STATED AT THE TIME OF SEARCH BY THE SEARCH PARTY. HE SUBMITTED THAT WHATEVER UNDISCLOSED INCOME WAS THERE, THE ASSESSEE HAD DULY DISCLOSED THE SAME IN HIS RETURN OF INCOME. HE RELIED ON FOL LOWING CASE LAWS: - R.P. LOCKS COMPANY VS. DCIT (2006) 67 TTJ (DEL.) 58 ; PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KER ALA (1973) 91 ITR 18(SC); KISHORI LAL VS. MT. CHALTIBAI, AIR 1959 SC 504, 511 ; KRISHAN LAL SHIV CHAND RAI VS. CIT, 88 ITR 293 (PUN .); CIT VS. DORIS S. LUIZ (1974) 96 ITR 646 (KER.); FEDRAL BANK LTD. VS. STATE OF KERALA, AIR 1995 KER. 62, 65. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. IT IS WELL SETTLED LAW THAT AD MISSION IS BINDING ON A PERSON UNLESS EXPLAINED, OTHERWISE BY HIM. THUS, I T IS ALWAYS OPEN TO AN ITA NO. 2327/D/2008 6 ASSESSEE TO EXPLAIN/ CLARIFY HIS STATEMENT MADE AT THE TIME OF SEARCH. THERE CAN NOT BE ANY QUARREL WITH THE PROPOSITION T HAT A PERSON CAN BE TAXED ONLY ON THE INCOME EARNED BY HIM AND NOT OTHE RWISE. THE SAME WILL GO AGAINST ARTICLE 265 OF THE CONSTITUTION OF INDIA. IN THE PRESENT CASE, THE ASSESSEE AT THE TIME OF SEARCH MADE A DIS CLOSURE OF RS. 50 LACS BUT WHEN HE GOT THE COPY OF SEIZED MATERIAL AND COM PARED THE SAME WITH THE BOOKS OF ACCOUNT WHICH WAS ALSO SEIZED, IT TRAN SPIRED THAT THERE WAS NO DISCREPANCY AS ALLEGED AT THE TIME OF SEARCH. L D. DR HAS REFERRED TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BACHITRA SINGH VS. CIT, 328 ITR 400 TO SUBMIT THAT SINCE THERE WAS A LONG GAP BETWEEN THE STATEMENT MADE ORIGINALLY AND THE S O CALLED RETRACTION THE SAME IS TO BE TREATED AS ONLY AND AFTER-THOUGHT . WE DO NOT FIND MUCH SUBSTANCE IN THIS PLEA. THE AO PROCEEDED SOLELY ON THE BASIS OF STATEMENT MADE AT THE TIME OF SEARCH DE-HORS THE AC TUAL STATE OF AFFAIRS AS PER SEIZED MATERIAL. THIS APPROACH CANNOT BE ACCEP TED. THE AO WAS REQUIRED TO SPECIFICALLY POINT OUT THE DISCREPANCY IN THE BOOKS OF ACCOUNT VIZ-A-VIZ ANNEXURE A4 & A5. LD. DR SUBMITTED THAT IT WAS NOT ONLY THE BUSINESS INCOME, BUT OTHER ITEMS ALSO WHICH WERE TH ERE IN THE SEIZED MATERIAL WITH REFERENCE TO WHICH ASSESSEE HAS MADE DISCLOSURE. THEREFORE, MERELY ON THE BASIS OF ANNEXURE A4 & A5 CREDIT COULD NOT BE GIVEN TO ASSESSEE. IN THIS REGARD SHE HAS, INTER-A LIA, REFERRED TO THE STATEMENT RECORDED ON 08.02.2007, A PART OF WHICH H AS BEEN REPRODUCED EARLIER. SHE THUS, SUBMITTED THAT CONTENTS OF ANNE XURE A1 TO A11 APART FROM A4 & A5 WERE ALSO THERE WHICH SHOULD HAVE BEEN CONSIDERED BY LD. CIT(A) BEFORE DELETING THE ADDITION. IN THIS REGAR D, LD. COUNSEL HAS SUBMITTED THAT SINCE THE ENTIRE SEIZED MATERIAL AND THE BOOKS OF ACCOUNT WERE WITH THE AO, THERE WAS NO QUESTION OF ANY OTHE R DISCREPANCY AS SUGGESTED. WE FIND SUBSTANCE IN THE PLEA OF LD. DR ON THIS COUNT. LD. CIT(A) HAS PROCEEDED SOLELY ON THE BASIS OF ALLEGED DISCREPANCY IN ITA NO. 2327/D/2008 7 ANNEXURE A4 & A5 BUT HAS NOT CONSIDERED OTHER SEIZE D MATERIAL PARTICULARLY, WHEN DISCLOSURE WAS MADE IN TOTALITY FOR ENTIRE UN-DISCLOSED INCOME. UNDER SUCH CIRCUMSTANCES, WE CONSIDER IT I N THE INTEREST OF JUSTICE TO SET ASIDE THE ORDER OF LD. CIT(A) AND RE STORE THE MATTER TO THE FILE OF AO TO VERIFY THE ENTIRE SEIZED MATERIAL VIZ-A-VI Z BOOKS OF ACCOUNT AND IF NO DISCREPANCY IS FOUND BETWEEN THE TWO, THEN THERE IS NO QUESTION OF ANY ADDITION BEING MADE. WE, THEREFORE, RESTORE THE MA TTER TO THE FILE OF AO FOR THE LIMITED PURPOSE OF VERIFICATION AS NOTED AB OVE. 10. IN THE RESULT, THE DEPARTMENTS APPEAL IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.04.2012 SD/- SD/- (U.B.S. BEDI) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 19.04.2012 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR ITA NO. 2327/D/2008 8