Shri Janakkumar H. Gor, Bhuj V. The Assistant Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 330/RJT/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2201 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: MJ RANPURA
• Keywords: Income from undisclosed sources; Retraction; Documents seized
• Section: 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SHRI VASANT H. GOR , JILLA PANCHAYAT ROAD, BHUJ PAN: ABNPR7464H (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 2, RAJKOT (RESPONDENT) JANAKKUMAR HARISHANKAR GOR, HARI RATNA PALACE, MUNDRA ROAD, BHUJ PAN: ABNPR7465B (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 2, RAJKOT (RESPONDENT) I T A NO . 329 / RJT /20 12 A SSESSMENT YEAR 200 8 - 09 ITA NO. 330 / RJT /20 12 AS SESSMENT YEAR 200 8 - 09 ITA NO. 331 / RJT /20 12 ASSESSMENT YEAR 200 8 - 09 I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 2 SHRI ASHWIN H. AJANI (GOR), A - 46, KRISHNA BHAVAN, GARBI CHOWK, BHUJ PAN: AMFPG9887L (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 2, RAJKOT (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA , D . R. ASSESSEE BY: S H RI M.J. RANPURA , A.R. DATE OF HEARING : 16 - 03 - 2 016 DATE OF PRONOUNCEMENT : 22 - 03 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE THREE ASSESSEES HAVE FILED INSTANT APPEALS FOR ASSESSM ENT YEAR 2008 - 09 AGAINST A COMMON ORDER OF THE CIT(A) - IV, AHMEDABAD DATED 22 - 03 - 2012, UPHOLDING PENALTIES OF RS. 13,000/ - , RS. 17,000/ - AND RS. 40,000/ - ; RESPECTIVELY IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. BOTH PARTIES STATE AT THE OUTSET THAT RELEVANT FACTS AND CIRCUMSTANCES LEADING TO THE IMPOSITION OF THE IMPUGNED PENALTY ARE IDENTICAL IN ALL CASES. WE TREAT ITA 329/RJT/2012 IN CASE OF ASSESSEE, SHRI VASANT H. GOR AS THE LEAD CASE. I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 3 3. THIS ASSE SSEE DERIVES REMUNERATION AND INTEREST FROM HIS FIRM. HE ALSO HAS INCOME FROM OTHER SOURCES SALARY AND HOUSE PROPERTY. IT EMERGES THAT HE HAD NOT FILED HIS RETURN BEFORE THE IMPUGNED SEARCH ON 15 - 09 - 2008. MAIN PERSON OF HIS FAMILY SHRI ANIL H. AJANI MAD E A DISCLOSURE STATEMENT DURING SEARCH ON 16 - 09 - 2008 AND ADMITTED UNDISCLOSED INCOME OF RS. 1 CRORE TO COVER ALL HIS FAMILY MEMBERS/HUF S/FIRMS ETC. THE SAME STOOD RETRACTED ON 18 - 09 - 2008. THIS CULMINATED IN SECTION 153A NOTICE ON 29 - 01 - 2 009. THE ASSESSE E FILED RETURN ON 18 - 02 - 2010 SHOWING INCOME OF RS. 1,92,350/ - . THE ASSESSING OFFICER ACCEPTED THE SAME IN ASS ESSMENT ORDER DATED 30 - 03 - 2010. HE INITIATED THE IMPUGNED PENALTY PROCEEDINGS AS WELL ALLEGING CONCEALMENT OF PARTICULARS OF INCOME. QUANTUM PROC EEDINGS ATTAINED FINALITY AT THIS STAGE. 4. WE COME TO PENALTY PROCEEDINGS. THE ASSESSEE FILED HIS REPLY ON 08 - 09 - 2010 INTER ALIA HIGHLIGHTING THE FACT THAT HIS INCOME DECLARED STOOD ACCEPTED IN TOTO, THE RELEVANT INCOME WAS PART OF SEARCH STATEMENT A ND HE DESERVE D IMMUNITY UNDER SECTION 271(1)(C) EXPLANATION 5 OF THE ACT. THE ASSESSING OFFICER INVOKED EXPLANATION 5A THEREOF ON THE GROUND THAT THE IMPUGNED SEARCH WAS CONDUCTED AFTER 01 - 06 - 2007 AND THE DEEMED CONCEALMENT PRINCIPLE SQUARELY APPLY IN FAC TS OF THE INSTANT CASE SINCE THE ASSESSEE HAD OFFERED HIS UNDISCLOSED INCOME AFTER SECTION153A NOTICE ONLY. THIS RESULTED IN THE IMPUGNED PENALTY OF RS. 13,000/ - . THE CIT(A) AFFIRMS ASSESSING OFFICER S ACTION. I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 4 5 . WE HAVE HEARD RIVAL SUBMISSIONS. RELE VANT FACTS NARRATED IN THE PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. BOTH PARTIES REITERATE THEIR RESPECTIVE PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED PENALTIES. THERE IS NO DISPUTE THAT THE LOWER AUTHORITIES HAVE PENALIZED T HE ASSESSEE ON THE BASIS OF HIS BROTHER S SEARCH STATEMENT RETRACTED WITHIN A WEEK (SUPRA). THERE IS NO IOTA IN ANY OF THE LOWER ORDERS SPECIFYING ANY INCRIMINATING MATERIAL IN THE SHAPE OF MONEY, BULLION OR JEWELLERY FOUND IN THE COURSE OF THE IMPUGNED S EARCH. WE FIND THAT A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA 211 TO 216/RJT/2012 DECIDED ON 03 - 02 - 2016 DELETES SIMILAR PENALTIES ON THIS VERY GROUND BY HOLDING AS UNDER: - 5. WE HAVE HEARD BOTH THE PARTIES. RELEVANT FACTS ALREADY STAND NARRATED IN THE PRECEDING PARAGRAPHS. THERE IS NO DISPUTE THAT THE ASSESSEE S PARTNER MADE A DISCLOSURE STATEMENT ADMITTING ITS UNDISCLOSED INCOME TO THE TUNE OF RS. 50,000/ - IN THE IMPUGNED ASSESSMENT YEAR AND OTHER SUCH SUMS IN THE REMAINING ASSESSMENT YEAR. THE ASSES SEE HAD NOT DECLARED THE SAME IN ITS ORIGINAL RETURN (SUPRA). BOTH THE AUTHORITIES BELOW INVOKE PENALTY PROVISION U/S. 271(1)(C) OF THE ACT TO HOLD THAT THE ABOVE STATED ADDITIONAL INCOME OF RS. 50,000/ - DECLARED IN POST SEARCH RETURN AMOUNTS TO CONCEALED INCOME. THE ASSESSEE S SOLE ARGUMENT RAISED BEFORE US THAT THERE IS NO SPECIFIC INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH BASED ON WHICH ANY INFERENCE OF UNDISCLOSED WOULD BE DRAWN. IT ARGUES THAT THE MERE FACT THAT ITS PARTNERS ADMITTED ADDI TIONAL INCOME WITHOUT SPECIFICALLY REFERRING TO ANY EVIDENCE IN THE FORM OF MONEY, BULLION, OR JEWELERY ETC DOES NOT ATTRACT THE IMPUGNED PENALTY SECTION. THE REVENUE STRONGLY SUPPORTS THE LOWER APPELLATE ORDER. WE FIND IN THIS BACKDROP OF FACTS THAT A C O - ORDINATE BENCH OF THE TRIBUNAL IN IT(SS)A 46/RJT/2012 SHRI MANSUKHBHAI R. SORATHIA VS. JCIT DECIDED ON 04 - 11 - 2015 DELETES AN IDENTICAL PENALTY FOR LACK OF SPECIFIC INCRIMINATING EVIDENCE AS UNDER: - 8. A PERUSAL OF BOTH THESE SECTIONS TOGETHER WOULD INDI CATE THAT THE IMMUNITY AKIN TO EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE UNDER EXPLANATION - 5A ALSO, IF HE FULFILLS THE CONDITIONS NARRATED IN SECTION 271AAA. THE EXPLANATION I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 5 APPENDED TO SECTION 271AAA PROVIDES THE DEFINITION OF UNDISCLOSED INCOME AND SPE CIFIED PREVIOUS YEAR. A PERUSAL OF THE EXPRESSION SPECIFIED PREVIOUS YEAR WOULD INDICATE THAT THE YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR, IF DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME - TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. S INCE THE ASSESSMENT YEARS INVOLVED BEFORE US ARE THE ASSTT.YEARS 2008 - 09 AND 2009 - 10, THE DUE DATE FOR FILING OF THE RETURN FOR THE ASSTT.YEAR 2009 - 10 WAS EXPIRED BEFORE THE SEARCH ACTION. THUS, BOTH THESE YEARS DO NOT FALL WITHIN THE AMBIT OF SPECIFIED YEARS . SINCE THE PERIOD OF THESE TWO ASSESSMENT YEARS DOES NOT FALL WITHIN THE EXPRESSION SPECIFIED YEAR PROVIDED IN SECTION 271AAA, THEREFORE, WE DO NOT DEEM IT NECESSARY TO CONSTRUE AND EXPLAIN THE MEANING OF EXPLANATION 5A WITHIN THE SCOPE OF SECTIO N 271AAA. THE ASSESSEES AS SUCH CANNOT CLAIM IMMUNITY AKIN TO ONE AVAILABLE IN SUB - CLAUSE (1) AND (2) OF THE EXPLANATION 5, MORE PARTICULARLY, ON THE STRENGTH OF THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA). THE LD.FIRST APPELLATE AUTHORITY HAS DEALT WITH THESE SITUATION IN AN ANALYTICAL MANNER AND IN RIGHT PERSPECTIVE. AS FAR AS THE CONSTRUCTION OF MEANING OF EXPLANATION 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNED, WE DO NOT FIND ANY E RROR. 9. AT THE COST OF REPETITION, WE WOULD LIKE TO OBSERVE THAT AS PER EXPLANATION 5A, IF IN THE COURSE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE OR THINGS AND THE ASSESSEE CLAIMS SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILSING THE WHOLE OR PARTLY OF HIS INCOME FROM ANY PREVIOUS YEAR OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DUR ING THE COURSE OF SEARCH, AND THE ASSESSEE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME FROM ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH, THEN, NOTWITHSTANDING SUCH INCOME IS DECLA RED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECTION BE DEEMED TO HAVE BEEN CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURAT E PARTICULARS. THE MOOT QUESTION FOR ATTRACTING THIS EXPLANATION I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 6 IS THAT IN THE COURSE OF SEARCH MONEY, BULLION, JEWELLERY OR INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OUGHT TO HAVE BEEN FOUND. IN A GIVEN SITUATION, NO MONEY O R BULLION OR JEWELLERY OR INCOME MIGHT HAVE FOUND FROM THE ASSESSEES FOR THE ASSESSMENT YEARS WHICH WERE NOT PART OF SPECIFIED PREVIOUS YEAR CONTEMPLATED IN SECTION 271AAA OR IMMUNITY AVAILABLE TO THE ASSESSEES UNDER SUB - CLAUSE (A) AND (B) OF EXPLANATION 5A, THEN ALSO, IF IN RESPONSE TO THE NOTICE UNDER SECTION 153A, THE ASSESSEE DISCLOSED SOME ADDITIONAL INCOME VOLUNTARILY, WOULD HE BE DEEMED TO HAVE CONCEALED THE INCOME FOR VISITING HIM WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ? THE LD.REVENUE A UTHORITIES HAD DRAWN INFERENCE THAT SINCE THE ASSESSEE HAS NOT DISCLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS, MEANING THEREBY, IT IS TO BE ASSUMED THAT THEY HAVE DISCLOSED THIS AMOUNT ONLY WHEN SOME INCRIMINATING MATERIAL WAS FOUND. TO OUR MIND THIS ASSUMPTION OUGHT TO BE SUPPORTED WITH REFERENCE OF THAT INCRIMINATING MATERIAL. LET US SEE THE FINDING IN THE ASSESSMENT ORDER. 10. WE HAVE PERUSED THE ASSESSMENT ORDER OF SHRI MANSUKHBHAI R. SORATHIA IN THE ASSTT.YEAR 2008 - 09. ALL OTHER ASSESSMENT ORD ERS ARE ALSO SIMILARLY WORDED. IT IS A VERY BRIEF ASSESSMENT ORDERS RUNNING ONE - AND - HALF PAGES. IN THE FIRST PAGE, THE LD.AO HAS NARRATED PROCEDURAL ASPECT ABOUT THE SEARCH ACTION, ISSUANCE OF NOTICE AND FILING OF THE RETURN, SERVICE OF NOTICE UNDER SECT ION 143(2) ETC. IN THE NEXT PAGE FINDING OF THE AO READ AS UNDER: 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION AND ENGINEERING JOB WORK AND ALSO DERIVES INCOME FROM AGRICULTURAL ACTIVITIES, REMUNERATION AND INTEREST FROM PARTNERSHIP FIRMS E TC. COPIES OF P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET, WAS FILED WITH THE RETURN. VARIOUS ISSUES WERE DISCUSSED AT LENGTH. 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSURE UNACCOUNTED INCOME OF RS 22,00,000/ - WHICH WAS NOT DISCLOSED IN THE RET URN FILED U/S. 139(1). THIS BEING CONCEALED INCOME, PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT IS BEING INITIATED. I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 7 3. AFTER VERIFICATION, THE TOTAL INCOME IS DETERMINED AS UNDER: - TOTAL INCOME AS PER RETURN OF INCOME RS 28,45,960/ - TOTAL ASS ESSED INCOME RS 28,45,960/ - AGRICULTURAL INCOME FOR RATE PURPOSE RS.6,14,131/ - 4. ASSESSED U/S. 153A OF THE I T ACT, 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A, 234B AND 234C OF THE I T ACT, IF ANY. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATIO N. DEMAND NOTICE AND CHALLAN ISSUED ACCORDINGLY. ISSUE NOTICE U/S. 271(1)(C)OF THE IT ACT. 11. WE HAVE PERUSED THE PENALTY ORDER ALSO. THERE ARE ONLY THREE PARAGRAPHS I.E. PARA - 4, 6 AND 7, WHERE THE AO HAS MADE SOME OBSERVATION AT HIS OWN, OTHERWISE, IN REST OF THE PARAGRAPHS HE REPRODUCED THE SUBMISSIONS OR THE HEAD - NOTES OF THE CASE LAWS. THE OBSERVATION OF THE AO IN THESE PARAS READ AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSES. THE CONTENTION OF THE ASSESSEE IS NOT A CCEPTABLE BECAUSE, THE ADDITIONAL INCOME OFFERED BY THE ASSESSES ONLY SURFACED DUE TO THE SEARCH ACTION CARRIED BY THE DEPARTMENT. HAD THERE BEEN NO SEARCH, THE PORTION OF ADDITIONAL INCOME WOULD HAVE REMAINED CONCEALED ETERNALLY. IF IN A REGULAR CASE, ON DETECTION OF CONCEALMENT, PENALTY U/S. 271(1)(C) IS LEVIABLE, HOW MUCH MORE PENALTY BECOMES TRUE AND POTENT IN A CASE WHERE THE CONCEALMENT HAS BEEN DETECTED ON ACCOUNT OF PROACTIVE SEARCH ACTION INITIATED BY THE DEPARTMENT. IN THE CASE OF THE ASSESSEE, TH E ASSESSEE HAS NOT RECORDED DETAILS OF HIS INCOME AND THE SAME WAS WORKED OUT ONLY DURING SEARCH AND THAT TOO ON THE BASIS OF THE SEIZED MATERIALS. IN FACT, IT IS AN ESTABLISHED JUDICIAL DECISION THAT 'DOCUMENTS SEIZED DURING THE SEARCH CANNOT BE SAID THE BOOKS OF ACCOUNTS MAINTAINED FOR ANY SOURCE OF INCOME, FOR THE PURPOSES OF EXPLANATION 5 (CIT VS GLAMOUR RESTAURANT (2003) 80 TTJ (MUM) 763. DIARIES FOUND AND SEIZED DURING COURSE OF SEARCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSE E FOR THE PURPOSE OF IMMUNITY I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 8 TO BE GRANTED TO HIM UNDER THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) - DR T P KULKARNI VS CIT (2003) 86 ITD 696 (MUM). IT HAS ALSO BEEN HELD THAT ONLY BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE CAN MAKE THE A SSESSEE ELIGIBLE FOR GRANT OF IMMUNITY FROM PENALTY AND NOT JUST ANY OF SUCH BOOKS, WHICH HAVE NOT BEEN MAINTAINED IN REGULAR COURSE OF BUSINESS - BRIJ LAL GOYAL VS CIT (2004) 88 ITD 413 (DELHI). 12. IN THIS BACKGROUND, IF WE APPRECIATE THE EVIDENCES AVA ILABLE ON THE RECORD, THEN IT WOULD REVEAL THE WHOLE CASE OF THE REVENUE FOR VISITING THE ASSESSEE WITH PENALTY IS BASED ON THE STATEMENT OF SHRI JAYANTILAL R. SORATHIA RECORDED DURING THE COURSE OF SEARCH. WE HAVE EXTRACTED THE RELEVANT PART OF THE STATE MENT IN THE FOREGOING PARAGRAPHS OF THIS ORDER. THE EVIDENTIARY VALUE OF SUCH STATEMENT HAS BEEN EXPLAINED IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS. LET US FIRST TAKE NOTE OF SECTION 132(4) OF THE ACT. THE AUTHORISED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY TH EREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER THIS SUB - SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, OTHER 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 THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. 13. A BARE PERUSAL OF SECTION WOULD REVEAL THAT IT EMPOWERS THE AUTHORIZED OFFICER TO EXAMINE DURING THE COURSE OF SEARCH OR SEIZURE ANY PERSON ON OATH. THE DISCLOSURE MADE DURING THE STATEMENT RECORDED UNDER THIS SECTION WILL BE ADMITTED IN I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 9 THE EVIDENCE AND CAN BE USED AGAINST THE ASSESSEE IN THE PROCEEDING. 14. NO DOUBT, THE DISCLOSURE OR ADMISSION MADE UNDER SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH PROCEEDINGS IS AN ADMISSIBLE EVIDENCE BUT NOT CONCLUSIVE ONE. THIS PRESUMPTION OF ADMISSIBILITY OF EVIDENCE IS A REBUTTABLE ONE, AND IF AN ASSESSEE IS ABLE TO DEMONSTRATE WITH THE HELP OF SOME MATERIAL THAT SUCH ADMISSION WAS EITHER MISTAKEN, UNTRUE OR BASED ON MISCONCEPTION OF FACTS, THEN SOLELY ON THE BASIS O F SUCH ADMISSION NO ADDITION IS REQUIRED TO BE MADE. IT IS TRUE THAT ADMISSION BEING DECLARATION AGAINST AN INTEREST ARE GOOD EVIDENCE, BUT THEY ARE NOT CONCLUSIVE, AND A PARTY IS ALWAYS AT LIBERTY TO WITHDRAW THE ADMISSION BY DEMONSTRATING THAT THEY ARE EITHER MISTAKEN OR UNTRUE. IN LAW, THE RETRACTED CONFESSION EVEN MAY FORM THE LEGAL BASIS OF ADMISSION, IF THE AO IS SATISFIED THAT IT WAS TRUE AND WAS VOLUNTARILY MADE. BUT THE BASING THE ADDITION ON A RETRACTED DECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT A STRICT RULE OF LAW, BUT ONLY RULE OF PRUDENCE. AS A GENERAL RULE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE EVIDENCE. DUE TO THIS GREY SITUATION, CBDT HAS ISSUED CIRCULAR NO.286/2/2003 PROHIBITING THE DEPARTMENTAL O FFICIALS FROM TAKING CONFESSION IN THE SEARCH. THE BOARD IS OF THE VIEW THAT OFTEN THE OFFICIALS USED TO OBTAIN CONFESSIONS FROM THE ASSESSEE AND STOP FURTHER RECOVERY OF THE MATERIAL. SUCH CONFESSIONS HAVE BEEN RETRACTED AND THEN THE ADDITION COULD NOT WITHSTAND THE SCRUTINY OF THE HIGHER APPELLATE AUTHORITY, BECAUSE NO MATERIAL WAS FOUND SUPPORTING SUCH ADDITION. 15. AN ISSUE WHETHER ADDITION SOLELY ON THE BASIS OF STATEMENT U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF KIALASHBEN MANHARLAL CHOKSHI VS. CIT, 220 CTR (GUJ) 138. IN THIS CASE, SEARCH WAS CONDUCTED UPON THE ASSESSEE UNDER SECTION 132 OF THE INCOME TAX ACT ON 4.11.1988. THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE ACT. HE MADE DISCLOSURE OF RS.7 LAKHS. LATER ON, IN JANUARY, 1989, THE ASSESSEE RETRACTED FROM THE DISCLOSURE AND STATED THE DISCLOSURE OF RS.50,000/ - WAS ACCEPTABLE TO HIM. THE LD.AO I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 10 MADE AN ADDITION OF RS.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBS ERVED THAT THE RETRACTION WAS MADE AFTER A LAPSE OF 2 MONTHS. THE ASSESSEE DID NOT HAVE ANY REASON FOR RETRACTING FROM THE DISCLOSURE. THE LD.FIRST APPELLATE AUTHORITY CONCURRED WITH THE AO AND CONFIRMED THE ADDITION OF RS.7 LAKHS TO HIS INCOME. THE TRI BUNAL HAS ALSO CONFIRMED THE ADDITION BY OBSERVING THAT THERE WAS NOTHING ON RECORD WHICH INDICATED THAT THE DISCLOSURE WAS TAKEN FROM THE ASSESSEE UNDER DURESS, PRESSURE OR COERCION. THE RETRACTION AFTER LAPSE OF TWO MONTHS FROM THE DATE OF DISCLOSURE BY THE ASSESSEE WAS CONSIDERED AS AFTER - THOUGHT. THE ISSUE TRAVELLED BEFORE THE HON BLE HIGH COURT. THE HON BLE HIGH COURT HAS DELETED THE ADDITION BY OBSERVING THAT MERELY ON THE BASIS OF DISCLOSURE, ADDITION CANNOT BE MADE. THERE SHOULD BE SOME CORROBO RATIVE MATERIAL. THE FOLLOWING OBSERVATIONS IN PARA - 26 OF THE JUDGEMENT OF HON BLE COURT ARE WORTH TO NOTE. IT READS AS UNDER: 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINCING, HAS NO T BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITIONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE THE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE R EVENUE AUTHORITY. WE ARE, THEREFORE, OF THE VIEW THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTED TO SUCH ADDITIONS UNLESS AND UNTIL, SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VIEW THAT FROM THE STATEMENT RECORDED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE B Y THE ASSESSING OFFICER AND EXPLANATION DULY SUPPORTED BY THE EVIDENCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING OFFICER UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMMITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 11 27. IN THE ABOVE VIEW OF THE MATTER, ADDITION OF RS. 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE ADDITION OF RS. 6 LAKHS IS HEREBY DELETED. 16. THIS DECISION HAS BEEN FOLLOWED BY THE HON BLE HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR, 55 TAXMANN.COM 292 (GUJ). THE HON BLE HIGH COURT HAS REPRODUCED THE DISCUSSION MADE BY THE TRIBUNAL, AND THEREAFTER, CONCURRED WITH THE CON CLUSIONS OF THE TRIBUNAL BY OBSERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE PRINCIPAL LAID DOWN IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI (SUPRA),WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS JUST AN D PROPER. WE ARE NOT CONVINCED WITH THE SUBMISSIONS MADE BY MR. MEHTA, LEARNED ADVOCATE FOR THE APPELLANT THAT THE TRIBUNAL HAS NOT GIVEN COGENT REASONS. THEREFORE, THE ANSWER TO THE FIRST QUESTION WOULD BE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE . THE SECOND QUESTION WILL ALSO ENURE FOR THE BENEFIT OF THE ASSESSEE AS FROM THE RECORD IT IS CLEAR THAT OTHER CONCERNS WERE NOT BENAMI CONCERNS OF THE ASSESSEE. 7. FOR THE FORGING REASONS, THE PRESENT APPEAL IS DISMISSED. ACCORDINGLY, BOTH THE QUESTIONS WHICH WERE REFERRED TO THIS COURT ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. HAD THIS STATEMENT BEEN RETRACTED BY THE ASSESSEE, AND THEY HAVE NOT OFFERED THIS UNDISCLOSED INCOME, FORGET TO TAKE ACTION OF LEVYING THE PENALTY, EVEN ADDITIONS WOULD NOT HAVE BEEN SUSTAINED. THE INFERENCE OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, TO OUR MIND, OUGHT NOT TO BE BASED ON THIS STATEMENT. WHEN THE ASSESSEES HAVE TAKEN SPECIFIC PLEA THAT NO MONEY, BULLION OR JEWELLERY OR INCOME BASED ON ANY ENTRIES FOR THESE TWO ASSESSMENT YEARS WAS FOUND DURING THE COURSE OF SEARCH, THE AO OUGHT TO HAVE IMMEDIATELY REFERRED THE DOCUMENTS, ENTRIES OR ANY ASSET I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 12 FOUND WHICH IS RELEVANT TO THESE ASSESSMENT YEARS IN THE PENALTY PR OCEEDINGS. HE SHOULD HAVE REJECTED THE EXPLANATION OF THE ASSESSEE BY DEMONSTRATING IT AS FACTUALLY INCORRECT. RATHER, THE AUTHORITIES HAVE PROCEEDED ON THE ASSUMPTION THAT HAD THERE BEEN NO MONEY, BULLION, JEWELLERY OR INCOME BASED ON ENTRIES WAS NOT FO UND, THE ASSESSEE WOULD HAVE NOT MADE VOLUNTARY DISCLOSURE OF THE INCOME IN THESE RETURNS. THEY FAILED TO NOTE THE QUESTION NO.25 ALSO, WHERE THE ASSESSEES CLAIMED IMMUNITY FROM PENALTY, AND PEACE FROM LITIGATION. TO OUR MIND INFERENCE OF AVAILABILITY OF MONEY, BULLION OR ASSETS EMBEDDED IN THE ENTRIES CANNOT BE DRAWN FROM THE STATEMENT OF THE ASSESSEE (EXTRACTED SUPRA). THEY SHOULD HAVE BEEN FOUND IN PHYSICAL FORM AND PERTAINING TO THESE YEARS, ONLY THEN, DEEMING FICTION OF CONCEALMENT WOULD TRIGGER. TH US, THE REVENUE AUTHORITIES HAVE NOT REFERRED ANY DOCUMENTARY EVIDENCES DEMONSTRATING THE FACT THAT VOLUNTARY INCOME OFFERED BY ASSESSEES IN THESE TWO YEARS ACTUALLY UNEARTHED DURING THE COURSE OF SEARCH. THEREFORE, TO OUR MIND, THE ASSESSEES DO NOT DESER VE TO BE VISITED WITH PENALTIES. WE ALLOW ALL THE APPEALS OF THE ASSESSEES AND DELETE PENALTIES. THE LEARNED CO - ORDINATE BENCH IN ITS ABOVE EXTRACTED PORTION OF THE ORDER CONCLUDES THAT INFERENCE OF ANY UNDISCLOSED MONEY, BULLION OR ASSETS CANNOT BE DR AWN MERELY ON THE BASIS OF A SEARCH STATEMENT IN ABSENCE OF SPECIFIC MATERIAL AS PER BOARD S CIRCULAR NO. 286/02/2003 AS WELL AS HON BLE JURISDICTIONAL HIGH COURT DECISION IN KAILASHBEN MANHARLAL CHOCKSHI VS. CIT 220 CTR (GUJ) 138. THE REVENUE IS UNABLE T O POINT OUT ANY DISTINCTION ON FACTS OR LAW SO IN THE ABOVE EXTRACTED DECISION VIS - - VIS IN THE INSTANT CASE. WE ACCEPT ASSESSEE S CORRESPONDING ARGUMENT AND HOLD THAT THE AUTHORITIES BELOW HAVE WRONGLY IMPOSED PENALTY OF RS. 17,850/ - . THE SAME STANDS DE LETED. ITA 221/RJT/2012 IS ALLOWED. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION THERETO. WE HOLD IN THESE FACTS AND CIRCUMSTANCES THAT THE IMPUGNED PENALTIES HAVE BEEN WRONGLY IMPOSED IN ALL THREE CASES. THE SAME STANDS DELETED. I.T.A NO S . 329 TO 331 /RJT /20 12 A.Y. 2008 - 09 PAGE NO SHRI VASANT H. GOR, JANAKKUMAR HARISHANKAR GOR & SHRI ASHWIN H. AJANI (GOR) VS. ACIT 13 6 . THESE THREE ASSESSEES SUCC EED IN THEIR RESPECTIVE APPEALS. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 22 - 03 - 201 6 SD/ - SD/ - (ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 22 /03 / 2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT