C.Raghu Purushottam Reddy, , Rajahmundry V. Assistant Commissioner of Income Tax, Central Circle - 1, Rajahmundry

ITA 494/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6506 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 28-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL
• Keywords: Income from undisclosed sources; Search and seizure; Validity of assessment; Assessment record; Retraction; Documents seized
• Section: 143(3); 142(1); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 493 & 494 /V IZ /201 8 ( / ASSESSMENT YEAR S : 20 1 3 - 1 4 AND 2014 - 15 ) DR.C.RAGHU PURUSHOTTAM REDDY D.NO.4 - 13 - 2, SANTARAM HOSPITAL MAIN ROAD DOWLESWARAM [PAN :A DYPC7354A ] VS. ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : SHRI D.K.SONOWAL , CIT DR / DATE OF HEARING : 02 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT : 31 .0 7 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 12, HYDERABAD VIDE APPEAL NOS.10187 & 10188/2017 - 18 DATED 31.07.2018 FOR THE ASSESSMENT YEARS (A.Y.) 2013 - 14 AND 2014 - 15. FOR THE SAKE OF CONVE NIENCE, THESE 2 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM APPEALS ARE CLUBBED, HEARD TOGETHER AND A COMMON ORDER IS BEING PASSED AS UNDER. I.T.A.493/VIZ/2018, A.Y.2013 - 14 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ISSUE OF NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME ORIGINALLY ON 31.10.2013 ADMITTING TOTAL INCOME OF RS.13,61,290/ - . SUBSEQUENTLY SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF M/S G.S.L.EDUCATIONAL SOCIETY, RAJAHMUNDRY ON 25.07.2013. DURING THE COURSE OF SEARCH IN THE CASE OF G.S.L.EDUCATIONAL SOCIETY, CERTAIN INCRIMINATING MATERIAL WAS FOUND RELATING TO THE ASSESSEE AT THE RESIDENCE OF SRI ADAPA RAMBABU, ACCOUNTANT OF THE SOCIETY. CONSEQUENT IAL SEARCH WAS ALSO CONDUCTED IN THE CASE OF THE ASSES SEE IN THE RESIDENCE CUM HOSPITAL PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH, SOME MORE MATERIAL WAS FOUND RELATING TO THE PROFESSIONAL INCOME OF THE ASSESSEE. LATER ON, THE ASSESSING OFFICER (AO) HAS ISSUED NOTICE U/S 153C AND COMPLETED THE A SSESSMENT U/S 143(3) R.W.S.153C ON TOTAL INCOME OF RS.93,95,210/ - APART FROM THE AGRICULTURAL INCOME OF RS.1,25,000/ - . IN THE ASSESSMENT, T HE AO MADE THE ADDITION OF RS.28,00,000/ - RELATING TO UNEXPLAINED GOLD AND CASH FOUND DURING THE COURSE OF SEARCH, W HICH WAS 3 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM ADMITTED AS ADDITIONAL INCOME AND A SUM OF RS.1,00,000/ - WAS ADDED RELATING TO SUPPRESSION OF PROFESSIONAL INCOME. THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.64,95,210/ - AND THE TOTAL INCOME WAS ASSESSED AT RS.93,95,210/ - . 3. AGAINST THE ORDER U/S 143(3) R.W.S. 153C, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND CHALLENGED THE VALIDITY OF ASSESSMENT MADE U/S 153C STATING THAT SEARCH U/S 132 WAS CONDUCTED IN THE ASSESSEES CASE, HENCE, THE AO OUGHT TO HAVE INITIATED PR OCEEDINGS U/S 153A INSTEAD OF U/S 153C. THE ASSESSEE ALSO CHALLENGED THE VALIDITY OF ISSUE OF NOTICE U/S 153C STATING THAT THERE WAS NO SATISFACTION RECORDED BY THE AO OF THE SEARCHED PERSON, HENCE, THERE IS NO CASE FOR ISSUE OF NOTICE U/S 153C OF THE ACT . ON THE FIRST ISSUE OF INITIATION OF PROCEEDINGS U/S 153A, THE LD.CIT(A) FOUND THAT WARRANT WAS ISSUED IN THE NAME OF G.S.L.EDUCATIONAL SOCIETY AND THE PREMISES TO BE SEARCHED WAS RESIDENCE OF THE ASSESSEE, DR.C.R.PURUSHOTTAM REDDY. HENCE SEARCH AND SE IZURE OPERATION U/S 132 WAS CONDUCTED IN THE CASE OF M/S G.S.L.EDUCATIONAL SOCIETY, BUT NOT IN THE CASE OF THE ASSESSEE. HENCE, HELD THAT THE NOTICE U/S 153C WA S VALID AND ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND. 4. WITH REGARD TO THE SECOND ISSUE OF NON RECORDING OF SATISFACTION, THE 4 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM CIT(A) AFTER CONSIDERING THE OBSERVATIONS OF HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. M/S S.SHETTY PHARMACEUTICALS & BIOLOGICALS LTD. IN ITTA NO.662 OF 2014 AND THE DECISION OF ITAT HYDERABAD IN THE CASE OF M/S MADHUCON INFRA LTD. IN I.T.A. NO.266/HYD/2015 DATED 31.03.2017 HELD THAT THE NOTICE ISSUED U/S 153C IS INVALID, ACCORDINGLY QUASHED THE NOTICE AND ANNULLED THE ASSESSMENT. HOWEVER, THE LD.CIT(A) HAS GIVEN A DIRECTION THAT THE INCOME TO BE DETERMINED CONSEQUENT TO CIT(A) ORDER SHOULD NOT BE BELOW THE INCOME RETURNED /ADMITTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE IN PURSUANCE OF NOTICE U/S 153C OF THE ACT . 5. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT ONCE THE NOTICE ISSUED U/S 153C IS QUASHED AND THE ASSESSMENT IS ANNULLED, CONSEQUENT PROCEEDINGS WOULD BE NON - EST AND ADMITTED INCOME HAS NO LEGS TO STAND. HENCE, REQUESTED TO MODIFY THE ORDER OF THE LD.CIT(A) TO HOLD THAT THE NOTICE IS INVALID AND TO REMOVE THE CONDITION OF THE LD.CIT(A) TO DETERMINE THE INCOME NOT BELOW THE RETURNED INCOME. 6. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON 5 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM RECORD. THERE IS NO DISPUTE THAT IN THE INSTANT CASE, THE AO HAD ISSUED THE NOTICE U/S 153C WITHOUT RECORDING SATISFACTION BY THE AO OF THE SEARCHED PERSON. THEREFORE, THE LD.CIT(A) HAS RI GHTLY HELD THAT THE NOTICE ISSUED U/S 153C IS INVALID. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) WHICH IS DISCUSSED IN DETAIL IN PARA NO.5.3.2. TO 5.3.3 WHICH READS AS UNDER. 5.3.2 . THE SECOND GROUND RAISED BY THE ASSESSEE'S AR REGARDING THE VALIDITY OF PROCEEDINGS U/S 153C IS THAT BEFORE INITIATING THE SAID PROCEEDINGS, SATISFACTION WAS NOT RECORDED BY THE AO HAVING JURISDICTION OVER THE ASSESSEE, AS WELL AS BY THE AO HAVING JURISDI CTION OVER THE SEARCHED PARTY. IN THIS REGARD, THE APPELLANT HAS RELIED UPON THE JUDICIAL DECISIONS INCLUDING THE DECISION OF JURISDICTIONAL HIGH COURT, AND THE NOTINGS REGARDING THE RECORDING OR NON - RECORDING OF REASONS HAVE ALSO BEEN CALLED FOR AND PERUS ED. THE SPECIFIC OBSERVATION OF HIGH COURT OF AP ON THIS ISSUE, IN THE CASE OF CIT VS. M /S . S.SHETTY PHARMACEUTICALS & BIOLOGICALS LTD., IN ITTA NO.662 OF 2014, RUNS AS UNDER: 'IT IS CLEAR FRO M SECTION 153C THAT FIRSTLY SATISFACTION HAS TO BE RECORDED BY THE ASSESSING - OFFICER WHO CONDUCTED SEARCH, THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. TH EREAFTER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THIRD PARTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOUNT OR DOCUMENT BEING HANDED OVER TO HIM SHALL RECORD HIS OWN SATISFACTION AFTER EXAMINING THE SAME INDEPENDENTLY WITHOUT BEING INFLUENCE D BY THE SATISFACTION OF THE SEIZING OFFICER. IN OTHER WORDS, IT IS NOT AN AUTOMATIC ACTION. SATISFACTION OF TWO OFFICERS IS MISSING. THE AFORESAID SECTION MANDATES RECORDING OF SATISFACTION OF THE ASSESSING OFFICER(S) IS A PRE - CONDITION FOR INVOKING JURIS DICTION AND IT IS NOT A MERE FO RM ALITY BECAUSE RECORDING OF SATISFACTION POSTULATES APPLICATION OF MIND CONSCIOUS L Y AS THE DOCUMENTS SEIZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. IT WAS CONTENDED TH A T T HE SAME ASSESSING OFFICER WAS INVOLVED IN THE MATTER. THIS FACT DOES NOT DISPENSE WITH ABOVE REQUIREMENT. IT IS SETTLED 6 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM POSITION OF LAW THAT WHEN A THING IS TO BE DONE IN ONE PARTICULAR MANNER UNDER LAW THIS HAS TO BE DONE IN THAT MANNER ALONE AND NOT OTHE R WAY. THE TRIBUNAL HAS CORRECTLY FOLLOWED THE PRINCIPLE. THERE WAS NO ELEMENT OF LAW TO BE DECIDED.'. AS PER THE APPELLANT, NO SATISFACTION WAS RECORDED BY THE AO OF THE SEARCHED PARTY TO INDICATE THAT INCRIMINATING MATERIAL SEIZED DURING SEARCH OPERATION S WAS HAVING MAY IMPACT ON THE INCOME OR AS S ESSMENT OF THE ASSESSEE HEREIN, AND THAT AS SUCH, THE PROCEEDINGS INITIATED U/S 153 C IN THIS CASE ARE VOID AB - I NITIO, AND ASSESSMENT PROCEEDINGS NEED TO BE QUASHED IT WAS FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF ITAT, HYDERABAD DATED 31.03 2017, IN THE CASE OF THE MIS MADHUCON INFRA LTD IN ITA NO 266 / HYD/2015, WHEREIN THE HONBL E ITAT HAS QUASHED THE PROCEEDINGS U/S 143(3) RWS 153C ON THE GROUND THAT THERE IS NO SATI SFACTION RECORDED BY THE A.0. THE RELEVANT PORTION OF THE HON'BLE ITAT'S ORDER IS REPRODUCED HEREWITH : IN ORDER TO VERIFY THE FACTS REGARDING THE ISSUES RAISED IN THE ADDITIONAL GROUNDS OF APPEAL, THE DR WAS DIRECTED TO VERIFY WHETHER ANY SATISFACTION WA S RECORDED U/S 1 53A OF THE ACT IN THE CASE OF THE PERSON SEARCHED IN ORDER TO INITIATE PROCEEDINGS U/S 153C OF THE ACT IN THE CASE OF THE ASSESSEE. THE LEARNED DR HAS FILED BEFORE US A COPY OF THE LETTER OF THE DCIT CENTRAL CIRCLE - 2(1) HYDERABAD DATED 29 .01.201 6 WHICH IS AS UNDER: 'OFFICE OF THE DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2(1), ROOM NO. 612, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEER BAGH, HYDERABAD. F.NO.DCIT/ CC2(11)/ SATISFACTION NOTE/2016 - 17 DATE 29/12/16 THE SENIOR AUTHORISED REPRESENTATIVE II INCOME TAX APPELLATE TRIBUNAL A - BENCH, HYDERABAD SUB : APPEAL IN THE CASE OF M/S MADHUCON INFRA LIMITED - PAN AAECM6443Q. FOR THE ASSESSMENT YEARS 2010 - 11 - ITA NO 266/HI 15 SUBMISSION REPORT - REGARDING REF. 1) LETTER IN F.NO SR.AR - II/ITAT/A BENCH/ 2661 15/2016 - 17 DATED 05.12.2016 RECEIVED FROM THE SRAR II, ITAT - II, A BENCH, HYDERABAD. 2) LETTER IN F.NO DCIT - C - 16(2)/ITAT 12016 - 17, DATED 07.12.2016 RECEIVED FROM THE DCIT, CIRCLE 16(2), HYDERABAD. PLEASE RE FER TO THE ABOVE 2. AS DIRECTED I AM HEREWITH SUBMITTING THAT AFTER VERIFICATION OF ASSESSMENT RECORD, IT IS FOUND THAT BEFORE TRANSMITTING RECORDS TO THE AO OF M/S MADHUCOM INFRA LIMITED, NO SATISFACTION WAS RECORDED BY THE A.O OF M/S MADHUCON PROJECTS L IMITED, WHO WAS SEARCHED, PARTY AND ASSESSED U/S 153A SINCE THE A,0. OF BOTH THE PERSONS WAS SAME 7 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM (SUNIL KUMAR PANDEY) DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1) HYDERABAD COPY 1) SUBMITTED TO THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD FOR FAVOUR OF INFORMATION. 2 ) SUBMITTED TO THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE 2, HYDERABAD FOR FAVOUR OF INFORMATION. 3 ) SUBMITTED TO THE DY.COMMISSIONER OF INCOME TAX, CIRCLE - 16(2) HYDERAB AD FOR FAVOUR OF INFORMATION.' 4. EVEN THOUGH THE AO OF THE PERSON SEARCHED AND THE ASSESSEE BEFORE US IS THE SAME THE REQUIREMENT OF LAW IS THAT THE SATISFACTION HAS TO BE RECORDED BEFORE INITIATING PROCEEDINGS U/S. I 53C OF THE ACT. THEREFORE, THE ADDITIONAL GROUNDS OF APPEAL BEING LEGAL GROUNDS AND THE FACTS ARE ALREADY ON RECORD, WE DEEM IT PROPER TO ADMIT THE GROUNDS . SINCE THE AO HAS REPORTED THAT THE SATISFACTION HAS NOT BEEN RECORDED AS REQUIRED UNDER THE LAW, WE ARE INCLINED TO ALLOW THE ADDI TIONAL GROUND OF APPEAL NO.7 AND HOLD THAT THE ASSESSMENT U/S. 153C IS NOT SUSTAINABLE. 5. SINCE THE ASSESSMENT ITSELF HAS BEEN HELD TO BE VOID AB INITIO, THE OTHER GROUNDS OF APPEAL NEED NO ADJUDICATION. 5.3.3 . I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE OBSERVATIONS OF THE AO IN THE IMPUGNED ORDER. THE REASONS FOR ISSUE OF 153C NOTICE HAVE BEEN OBTAINED FROM THE AO, AND PLACED ON RECORD. THE SAME HAVE ALREADY BEEN REPRODUCED I N PARA 5.2 ABOVE. AS CAN BEEN SEEN THERE FROM, APART FROM THE FACT THAT THIS ORDER - SHEET RECORDED BY THE ASSESSING OFFICER OF THE APPELLANT IS ALSO NOT A SATISFACTION NOTE' BUT ONLY AN ORDER - SHEET, THERE IS NO RECORDING O F SATISFACTION BY THE AO OF M/S. GS L EDUCATIONAL SOCIETY WHO WAS THE SEARCHED PARTY U/S.153A, THAT THE DOCUMENTS FOUND IN THAT CASE BELONG TO THE OTHER ASSESSEE UNDER REFERENCE I.E., DR. C.R. PURUSHOTTA M REDDY. IN ITS DECISION IN THE CASE OF M/S MADHUCON INFRA LTD, REPRODUCED IN PARA 5.3.2 ABOVE, THE I TAT, HYDERABAD, HAS QUASHED THE ORDER U/S. 143(3) RWS 153C, ON SIMILAR SET OF FACTS. IN LIGHT OF THE SAID ORDER OF I TAT, ON SIMILAR SET OF FACTS, I AM OF THE CONSIDERED OPINION THAT THE ORDER UNDER REFERENCE DOES NOT SURVIVE WITH NO VALID SATIS FACTION/ REASONS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PARTY. AS SUCH, THE PROCEEDINGS 8 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM U/S.153C ARE HELD TO B ANNULLED, ON THE RATIO AND THE SIMILAR FACTS OF THE DECISIONS BY THE JURISDICTIONAL HIGH COURT AND THE JURISDICTIONAL ITAT, AS REFERRE D TO IN THIS ORDER. THUS , THE PROCEEDINGS U/S.143(3) RWS 153 C ARE HELD TO HAVE NO LEGS TO STAND AND ARE HELD TO B E ANNULLED, FOR WANT OF RECORDING OF SATISFACTION/REASONS BEFORE ISSUE OF NOTICES SINCE THE ORDER UNDER REFERENCE IS HELD TO BE NON EXISTENT, T HE OTHER GROUNDS OF APPEAL, DO NOT REQUIRE SEPARATE ADJUDICATION ON THESE LINES, THE A PPEAL OF THE ASSESSEE AGAINST THE OR DER U/ S 143(3) RWS 153C, IS TREATED AS ALLOWED, SUBJECT TO THE CONDITION THAT THE ASSESSED INCOME WILL NOT GO BELOW, THE RETURNED/ ADM ITTED INCOME SHOWN IN RETURN OF INCOME FILED BY THE ASSESSEE, IN PURSUANCE OF NOTICE U/S. 153C. 7.1. THERE IS NO DISPUTE THAT THE NOTICE ISSUED U/S 153C IS INVALID AND O NCE THE NOTICE ISSUED U/S 153C IS QUASHED, THE ASSESSMENT GETS ANNULLED AND THE SUBSEQUENT PROCEEDINGS U/S 153C ALSO BECOMES INFRUCTUOUS. HENCE, THE LD.CIT(A) IS NOT CORRECT IN DIRECTING THE AO TO ASSESS THE INCOME NOT LESS THAN THE RETURNED / ADMITTED IN COME IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT. ACCORDINGLY, WE QUASH THE NOTICE ISSUED U/S 153C AND ANNUL THE ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. I.T.A. NO.494/VIZ/2018, A.Y.2014 - 15 7.2. IN THIS APPEAL, A LL THE GROUNDS OF APPEAL ARE RELATED TO THE SUSTAINING THE ADDITION OF RS.75,38,356/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 142(1) AND DECLARED TOTAL INCOME OF RS.5, 67,970/ - . DURING THE COURSE OF SEARCH U/S 132 IN G.S.L.EDUCATIONAL SOCIETY, INCRIMINATING 9 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM MATERIAL WAS FOUND AND SEIZED EVIDENCING THE ADDITIONAL INCOME. THE ASSESSEE HAS FILED CLARIFICATION LETTER DATED 10.02.2016, STATING THAT M/S G .S.L.EDUCATIONAL SOCIETY HAS TAKEN THE DECISION VIDE ITS CLARIFICATORY NOTE DATED 28.01.2016 TO THE EFFECT THAT THE UNPAID AMOUNT IF ANY SHALL NOT BE PAID ANY MORE AND THE DEBIT NOTE UND ER THE HEAD UG/PG SEAT SET OFF WA S WRONGLY MADE AND CLARIFIED THAT THE SAME FORMS PART OF THE TOTAL INCOME OF VARIOUS INDIVIDUALS MENTIONED IN THE SEIZED MATERIAL PAGE NO.85 OF ANNEXURE A/ARB/1 WHICH WAS ANNEXED IN PAGE NO.2 OF THE ASSESSMENT ORDER. THE ASSESSEE VIDE LETTER DATED 10.02.2016 HAS ADMITTED THE SUM OF RS.75,38, 356/ - AS ADDITIONAL INCOME IN HIS HANDS. DURING THE ASSESSMENT PROCEEDINGS AGAIN IT WAS CONFIRMED BY THE ASSESSEE THAT A SUM OF RS. 75,38,756/ - WAS DUE FROM M/S G.S.L.EDUCATIONAL SOCIETY AND REQUESTED THE AO TO CONSIDER THE SAME AS ADDITIONAL INCOME IN HI S HANDS. THEREFORE, THE AO MADE THE ADDITION OF RS.75,38,356/ - REPRESENTING THE RECEIVABLES FROM M/S G.S.L.EDUCATIONAL SOCIETY AS INCOME FOR WHICH THE ASSESSEE ALSO HAS AGREED. 8. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 9. AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS 10 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR RELIED ON THE GROUNDS OF APPEAL. 10. PER CONTRA, THE LD.DR RELIED ON THE ORDE RS OF THE LD.CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. DURING THE COURSE OF SEARCH OPERATION CONDUCTED IN THE RESIDENCE OF ADAPA RAMBABU, ACCOUNTANT OF M/S G.S.L.EDUCAITONAL SOCIETY, LOOSE SHEETS EVIDENCING THE PAYMENT OF CERTAIN AMOUNTS TO THE ASSESSEE WAS FOUND AND SEIZED VIDE PAGE NO.85 OF ANNEXURE A/ARB/1. THE AO HAS ASKED FOR THE EXPLANATION OF THE ASSESSEE AND THE ASSESSEE SUBMITTED HIS REPLY. IN PARA NO.2.1 AND 5.4 OF THE ASSESSMENT ORDER, THE AO GIVEN H IS FINDING WITH REGARD TO THE UNDISCLOSED INCOME OF RS.75,38,356/ - WHICH WAS EXTRACTED BY THE LD.CIT(A) IN H ER ORDER. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE CONSIDER IT IS RELEVANT TO EXTRACT THE SAME. THE RELEVANT PART IS AVAILABLE IN PARA NO.5.2 O F THE LD.CIT(A) ORDER WHICH READS AS UNDER : 2.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSES WAS ASKED TO SHOW HOW THE AFORESAID INCOME WAS SHOWN IN THE RETURN OF INCOME FOR AY 2013 - 14 AND 2014 - 15. IN RESPONSE, THE ASSESSEE HAS SUBMITTED COPY OF P&L A/C. 2014 - 15 WHEREIN HE HAD SHOWN THE RECEIPT OF RS. 2,00 ,000/ - . FURTHER, AS REGARDS, UG/PG SEAT, THE ASSESSES SUBMITTED VIDE LETTERDTD.10.02.2016 THAT M/S GSL EDUCATIONAL SOCIETY HAS TAKEN THE DECISION VIDE ITS CLARIFICATORY NOTE DTD.. 28 . 01.20 16 TO THE EFFECT THAT THE UNPAID AMOUNT IF ANY, SHALL NOT BE PAID ANY MORE AND THE DEBIT UNDER THE HEAD UG/PG SEAT SET OFF (HERE IN THIS CASE RS. 75 , 38 , 356 / - ) AS APPEARS IN THE SHEET ABOVE, IS WRONGLY MADE AND IT IS CLARIFIED THAT THE SAME FORMS PART OF THE TOTAL INCOME OF VARIOUS INDIVIDUALS. 11 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM BASING UPON THIS NOTE OF CLARIFICATION; THE ASSESSES VIDE ITS LETTER DT 10.02.2016 HAS ADMITTED THAT THE ABOVE RS.75,38,356/ - SHOULD BE ADDED TO THE TOTAL INCOME. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS AGAIN R EQUESTED BY THE ASSESSEE AND THE A.R. THAT THE AMOUNT ACTUALLY PAID MAY KINDLY BE CHARGED TO TAX. THIS FACT IS DISCUSSED IN DETAIL. ACCORDINGLY, THE ADMISSION OF RS.1,22,60,020/ - MADE BY THE ASSESSEE IN HIS STATEMENT W.R.T. THE SEIZED SHEET HAS BEEN SUBJEC T TO REVISION AND THE AMOUNT ACTUALLY PAID WHICH STANDS AT RS.53,22,664/ - (FOR BOTH THE YEARS) IS CONSIDERED FOR TAXATION ALONG WITH THE ADDITIONAL AMOUNT OF RS.75,38,356/ - AS DISCUSSED ABOVE. COPY OF THE ASSESSEE'S LETTER DT. 10.02.2016 IS AS WELL AS THE NOTE OF CLARIFICATION BY M/S GSL EDUCATIONAL SOCIETY ARE EXTRACTED HEREUNDER FOR AN INSTANT REFERENCE. 5.4 . THE ASSESSEE FURTHER STATED IN THE AFORESAID LETTER DT. 10.02.2016 THAT THE AMOUNT OF RS.75,38,356/ - UNDER THE UG/PG SEAT SET - OFF WHICH WAS ACTUALLY RECEIVABLE FROM M/S GSL EDUCATIONAL SOCIETY, MAY BE CONSIDERED AS INCOME FOR A.Y.2014 - 15 . THE SUBMISSION OF THE ASSESSEE HAS BEEN PERUSED AND CONSIDERED. ACCORDINGLY, TAKING INTO CONSIDERATION THE LETTER OF THE ASSESSE E AS WELL AS THE CLA RI FICATORY NOTE OF M / S GSL EDUCATIONAL SOCIETY, - IT IS ACCEPTED THAT THE SAME WOULD BE TREATED AS INCOME IN HIS HAND FOR THE A.Y.2014 - 1 5. MOREOVER, DURING THE COURSE OF HEARING, THE ASSESSES AND THE AR STATED THAT APART FROM THE ABOVE SET OFF AMOUNT, THE ACTUAL AMOUNT RECEIVED FROM M/S GSL EDUCATIONAL SOCIETY MAY BE CONSIDERED FOR TA XA TION. NOW, THE TOTAL AMOUNT AS DESCRIBED ABOVE IS FOUND TO BE TAXABLE AS UNDER: A.Y.2013 - 14 A.Y.2014 - 15 (I) AMOUNT ACTUALLY RECEIVED FROM M/S GSL EDUCATIONAL SOCIETY 51,22,664 AMOUNT ACTUALLY RECEIVED 2,00,000 (II) UNEXPLAINED GOLD FOUND DURING THE SEARCH AND ADMITTED IN THE STATEMENT 12,00,000 AMOUNT UNDER THE UG/PG SEAT SET OFF AS OFFERED TO TAX BY THE ASSESSEE 75,38,356 (III) UNEXPLAINED CASH FOUND DURING SEARCH AND ADMITTED IN THE STATEMENT 16,00,000 TOTAL 79,22,664 TOTAL 77,38,356 HOWEVER; THE ASSESSEE HAS DISCLOSED ONLY RS.200,000/ - IN THE RETURN OF INCOME FOR A.Y.2014 - 15 TOWARDS RECEIPTS FROM M/S GSL EDUCATIONAL SOCIETY. HENCE, THE BALANCE AMOUNT OF RS.75,38,356/ - (RS.77,38,356 RS..2,00,000) IS TREATED AS INCOME AS PER ADMISSION VIDE LETTER DATED 10.02.16 IS NOW ADDED TO THE TOTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 12 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM 11. 1 . T HE ASSESSEE HAD DISCLOSED ONLY RS.2,00,000/ - AGAINST THE INCOME OF RS. 77,38,356/ - IN THE RETURN OF INCOME TOWARDS THE RECEIPT FROM G.S.L.EDUCAITONAL SOCIETY, THEREFORE, THE BALANCE AMOUNT OF RS.75,38,356/ - WAS TREATED AS INCOME AS PER ADMISSION MADE BY THE ASSESSEE VIDE LETTER DATED 10.02.2016 AND IT WAS ADDED TO THE TOTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE FILED APPEAL CONTESTING THE ORDER OF THE AO AND THE LD.CIT(A) CONFIRMED THE ADDITION OBSERVING THAT IT IS AN AFTER THOUGHT TO WRIGGLE OUT THE TAX LIABILITY. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EX TRACT THE RELEVANT PART OF THE ORDER OF THE CIT(A) WHICH READS AS UNDER : 5. 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE ORDER OF THE ASSESSING OFFICER. THE SEIZED MATERIAL AND THE STATEMENTS RECORDED DURING SEARCH HAVE AL SO BEEN PERUSED. IN THE STATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH ON 12.09.2013, WHEN THE SEIZED DOCUMENT WAS CONFRONTED TO THE ASSESSEE, THE ASSESSEE STATED AS UNDER: Q.15. I AM SHOWING YOU A SLIP WHICH WAS FOUND DURING THE COURSE OF SEARCH IN GSL MEDICAL COLLEGE AND HOSPITAL, RAJAHMUNDRY, WHEREIN THE FOLLOWING TRANSACTIONS ARE RECORDED. DR.C.R.PURUSHOTTAM REDDY 33,33,300 INTEREST UPTO 30.04.2012 (+)92,19,942 UG/PG SHARE (+)28,23,256 1,53,76,498 MBBS / PG ( - )75,38,142 LESS : SHARE CAPITAL ( - )33,33,300 45,04,842 INT 1.5.2012 TO 15.10.2012 (+) 2,17,822 47,22,664 6.7.2012 ( - )33,00,000 13 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM 14,22,664 18.10.2012 PAID 18.10.2012 14,22,664 THUS INTEREST AMOUNT OF RS,94,37764/ - (RS.92,19,942/ - + RS.2,17,822/ - ) AND UG/PG SHARE RS.28 , 23,256/ - IN ALL RS.1 , 22,60,020/ - IS SAID TO HAVE BEEN RECEIVED BY YOU. PLEASE EXPLAIN. ANS: TO SAY THE TRUTH, I WAS NOT GIVEN THE SAID AMOUNT OF RS.1,22 , 60,020/ - BY SHRI GANNI BHASKAA RAO OF GSL MEDICAL COLLEGE. HOWEVER, I ADMIT TO PAY TAX ON THE WH OLE AMOUNT FOR THE ASST. YEAR 2013 - 14. THUS, THE ASSESSEE VOLUNTARILY UNDERTOOK TO PAY TAXES ON THE WHOLE AMOUNT OF RS.1,22,60,020/ - FOR AY:2013 - 14. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE AMOUNT HAD NOT BEEN SHOWN IN THE RETURNS OF INCOME FILED. WHEN QUESTIONED REGARDING THIS BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED A CLARIFICATORY LETTER ON 10.02.2016, STATING AS UNDER: 'DATE - 10 - 02 - 2016 THE ASST. COMMISSIONER OF INCOME TAX ASSESSING OFFICER, CENTRAL CIRCLE - I, RAJAHMUNDRY. IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS FOR THE AY 2008 - 09 TO 14 - 15, IN RESPONSE TO THE RELEVANT QUERY, IT IS CLARIFIED AS UNDER: - 1 . THE RELEVANT SEIZED SHEET OF THE DOCUMENT, NAMED A N NEXURE - A/ARB/ I SHOWING VARIOUS AMOUNTS PAID/PAYABLE BY THE G.S.L. EDUCATIONAL SOCIETY TO ME CONTAINS THEREIN A DEDUCTION (SUBTRACTION) UNDER THE HEAD ' U G/PG' SEAT SET OFF' . IN THIS CONNECTION IT IS CLARIFIED THAT THE RECEIPTS PAYABLE TO ME ARE WRONGLY DEBITED TO MY ACCOUNT. SO, THE SAME MAY BE TREATED AS A RECEIPT IN MY HAND. 2. SO, FOR THE PURPOSE OF TAXATION THE AMOUNT ACTUALLY RECEIVED BY ME FROM THE G. SL EDUCATIONAL SOCIETY AND THE SAID 'UG/PG' SEAT SET - OFF AMOUNT MAY BE CONSIDERED. IT IS ALSO REQUESTED THAT THE UNPAID AMOUNT BEING DEC LARED BY THE G.S.L.EDUCATION AL SOCIETY AS AMOUNT NOT BE PAID ANYMORE, SHOULD NOT KINDLY CONSIDERED TO ASSESSMENT ALONG WITH ANY ACCRUED INTEREST AS MAY BE DUE ON IT. RS.75,38,356/ - UNDER THE HEAD ( UG /PG SEAT SET - OFF MAY BE CHARGED TO TAX FAR THE ASSESSMENT YEAR 14 - 15.' 14 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM THUS, THE ASSESSEE HIMSELF REVISED THE DISCLOSURE MADE U/S.132(4) FOR AY.2013 - 14, AND REQUESTED THAT RS.75,38356/ - MAY BE CONSIDERED FOR TAXATION IN AY2014 - 15. THE ASSESSING OFFICER ACCEPTED THIS REQUEST OF THE ASSESSEE. NOW, DURING A PPELLATE PROCEEDINGS, THE ASSESSEE IS AGITATING THAT THE AMOUNT WAS NEITHER RECEIVED NOT ACCRUED DURING THE YEAR UNDER CONSIDERATION, LE., AY.2014 - 15, AND THAT THEREFORE, IT CANNOT BE BROUGHT TO TAX DURING THE YEAR UNDER CONSIDERATION THIS IS CLEARLY NOTHI NG BUT RETRACTION OF THE DISCLOSURE MADE DURING SEARCH, AND AN ATTEMPT TO WRIGGLE OUT OF THE TAX LIABILITY BY TAKING DIFFERENT STANDS IN DIFFERENT PROCEEDINGS. 5.5. DURING APPELLATE PROCEEDINGS, THE APPELLANT'S AR HAS ALSO TRIED TO ARGUE THAT THE DISCLOSU RE WAS MADE UNDER PRESSURE. IT IS SEEN THAT WHILE THE DISCLOSURE WAS MADE U/S. 132(4) ON 12.09.2013 THE CLARIFICATORY LETTER OF ADMISSION IS FILED ON 10.02.2016, AFTER A GAP OF 2 YEARS. IF THERE WAS SOME 'UNDUE PRESSURE', AS ALLEGED, WHAT PREVENTED THE A PPELLANT FROM FILING THE RETRACTION EARLIER? THE RETRACTION IS, THEREFORE, CLEARLY AN AFTER - THOUGHT. AS HELD BY THE P&H HIGH COURT IN THE CASE OF CHARANJIT KUMAR VS.CIT (2OO6) 201 CTR 37: RETRACTION SHOULD BE AT THE EARLIEST OPPORTUNITY OR AT L EAST WITHIN REASONABLE TIME'. THE ASSESSEE IN THIS CASE RETRACTED FROM ITS STATEMENT AFTER 2 YEARS AND THE MANNER OF FILING OF RETURN OF INCOME EXCLUDING THE SURRENDERED INCOME CLEARLY DEPICTS THAT THE SAID RETRACTION WAS AN AFTERTHOUGHT. IN THE CASE OF BA CHITTAR SINGH VS. CIT(2010) 236 CTR 587 (P&H) THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT THE STATEMENT RECORDED DURING THE SURVEY IS VALID. THE RETRACTION OF ADDITIONAL INCOME ON THE GROUND THAT THE STATEMENT WAS THE RESULT OF DURESS WAS NOT ACCEPTE D. SIMILAR VIEW WAS TAKEN IN THE CASE OF DR S.C.GUPTA VS. CIT(2001) 248 ITR 782, WHERE THE HON'BLE ALLAHABAD HIGH COURT HAS HELD THAT THE ADDITIONS MADE ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE DURING THE SURVEY WAS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE. THEREFORE, A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ADDITION. IN THE CASE OF S.S.RATANCHUND BHO L ANATH VS. CIT 210 ITR 682, THE HON'BIE M.P.HIGH COURT HAS HELD THAT WHEN ASSESSEE ADMITTED THAT A PARTICULAR INCOME IS LIABLE TO BE INCLUDED IN ITS TOTAL INCOME, ASSESSMENT MADE IN SUCH ADMISSION WAS V ALID. 15 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM THE HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF HIRASINGH CO. VS. CIT 330 ITR 791 HAS HELD THAT WHERE ADDITION WAS MADE ON THE BASIS OF ADMISSION MADE BY THE ASSESSEE, IT WAS HELD THAT THE ADDITION WAS JUSTIFIED. 5.6. AS REGARDS THE CONTENTION THAT NO EVIDENCE WAS FOUND BY THE DEPARTMENT, THIS CONTENTION ALSO DOES NOT HOLD WATER, SINCE IT WAS ONLY AFTER THE EVIDENCE WAS FOUND AND CONFRONTED, AND W HEN THE APPELLANT HAD NO EXPLANATION TO OFFER, THAT THE DISCLOSURE WAS MAD E. THE RETRACTION OF THE ASSESSEE CAN'T BE ACCEPTED AT THIS STAGE. RELIANCE MAY BE PLACED IN THE CASE OF ASST.CIT VS. EXPRESSO INVESTMENT, 2006, TAX PUBLICATION (DT) 1299 (M UMBAI TRIBUNAL, IN WHICH, THE HON'BLE TRIBUNAL HAS HELD THAT RETRACTIONS SOUGHT TO BE MADE BY THE ASSESSEE AFTER SEVERAL MONTHS OF DECLARATION AND ADMISSION U/S.132(4) IS A ONLY A WELL - THOUGHT OUT DEVISE TO SHUT THE DEPARTMENT FROM COLLECTING THE EVIDENCE TO HONOUR UNACCOUNTED INCOME, THEREFORE, ENTIRE SET OF SUBMISSION RELATING TO RETRA CTION DESERVED TO BE REJECTED. THE AR HAS ALSO TRIED TO ARGUE THAT THE STATEMENTS RELIED UPON, RECORDED U/S.132(4), DO NOT HAVE EVIDENTIARY VALUE. IN THIS REGARD, IT IS PERTINENT TO REFER TO A RECENT JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF S MT.DAY AWANTI VS. C1T ( 390 ITR 496 ) (DE1HI ) , WHEREIN SIMILAR ISSUE HAS BEEN DECIDED BY THE HIGH COURT, AFTER CONSIDERING ALL PREVIOUS DECISIONS ON THE MATTER. THE HEAD - NOTE OF THE SAID JUDGE M ENT IS REPRODUCED HEREWITH: 'IT: STATEMENTS RECORDED DURING SEARCH OPERA TIONS COULD BE RELIED UPON TO MAKE ADDITION TO ASSESSEE'S INCOME. IT : WHERE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME OF ASSESSEE WERE PROMISED ON MATERIALS FOUND AS WELL AS STATEMENTS RECORDED BY ASSESSEE'S SON IN COURSE OF SEARCH OPERATIONS AND ASSESSEE HAD NOT BEEN ABLE TO SHOW AS TO HOW ESTIMATION MADE BY ASSESSING OFFICER WAS ARBITRARY OR UNREASONABLE, ADDITIONS SO MADE BY ASSESSING OFFICER BY REJECTING BOOKS OF ACCOUNT WAS JUSTIFIED. SECTION 132, READ WITH SECTION 153A, OF THE INCOME - TAX ACT 1961 - SEARCH AND SEIZURE - GENERAL (STATEMENT MADE DURING SEARCH) - SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON ASSESSEE FIRM - VARIOUS MATERIALS, DOCUMENTS, AGREEMENTS, INVOICES AND STATEMENTS IN FROM OF ACCOUNTS AND CALCULATIONS WERE SEIZED - ASS ESSEE ALONG WITH HER FAMILY MEMBERS SURRENDERED A SUM OF RS 3 5 CRORES AS ADDITIONAL INCOME IN RESPECT OF BUSINESS CARRIED ON OUTSIDE BOOKS OF ACCOUNT - ASSESSING OFFICER REJECTED BOOKS OF ACCOUNT AND MADE ADDITIONS BY ESTIMATING SALES AND GROSS PROFIT RAT ES, INTER ALIA ON GROUND THAT IN COURSE OF SEARCH A STATEMENT WAS RECORDED BY ASSESSEE 'S SON ON BEHALF OF ASSESSES AND OTHER FWN4 MEMBERS - ASSESSEE SUBMITTED THAT STATEMENTS WERE NOT RECORDED DURING SEARCH 16 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM BUT LATER AND THAT THEY COULD NOT BE CONSIDERED OF ANY VALUE - WHETHER PROBATIVE OCCASION FOR - MAKING THEM AROSE BECAUSE OF SEARCH AND SEIZURE THAT OCCURRED - AND SEIZURE OF VARIOUS DOCUMENTS, ETC THAT POINTED TO UNDECLARED INCOME - HELD YES - WHETHER UNDER THESE CIRCUMSTANCES, ASSESSEE'S ARGUMENT THAT THEY COULD NOT BE ACTED UPON OR GIVEN ANY WEIGHT WAS INSUBSTANTIAL AND MERITLESS - HELD YES - WHETHER THUS ADDITION TO ASSESSEE'S INCOME COULD BE BASED ON THESE STATEMENTS - HELD YES [PARAS 18 & 2 0] [IN FAVOUR OF REVENUE] THE EVIDENTIARY VALUE OF THE STATEMENTS RELIED UPON IS, THEREFORE, UNDENIABLE. 5.7 THE HON'BLE SUPREME COURT DECISION IN THE CASE OF PULLANGODE RUBBER PRODUCTS CO. LTD. VS. STATE OF KERALA: (1973 ) 91 ITR 18 S C HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT WAS CONTENDED THAT IT WAS OPEN TO THE PERSON WHO MADE THE STATEMENT TO SHOW THAT IT WAS INCORRECT. THERE CANNOT BE ANY DOUBT ABOUT THIS POSI TION IN LAW, BUT, IN THE PRESENT CASE THE APPELLANT/ ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO SHOW THAT THE ADMISSIONS MADE WERE INCORRECT. THE STATEMENTS RECORDED U/S 132 (4) OF THE SAID ACT ARE CLEARLY RELEVANT AND ADMISSIBLE AND THEY CAN BE USED AS EVI DENCE. IN FACT, ONCE THERE IS A CLEAR ADMISSION, VOLUNTARILY MADE, ON THE PART OF ASSESSEE, THAT WOULD CONSTITUTE A GOOD PIECE OF EVIDENCE IN THE HANDS OF THE REVENUE. IN ASSTT.CIT VS. RAMESH CHANDRA R. PATEL [20041 89 ITD 203 (AHD.) (TM) IT WAS ACCEPTED THAT THE ASSESSEE HAD A RIGHT TO RETRACT BUT THAT HAS TO BE BASED ON EVIDENCE BROUGHT ON RECORD TO THE CONTRARY AND THERE MUST BE JUSTIFIABLE REASON AND MATERIAL ACCEPTING RETRACTION I.E., COGENT AND SUFFICIENT MATERIAL HAVE TO BE PLACED ON RECOR D FOR ACCEPTANCE OR RETRACTION.. IN DY.CIT VS. BHOGILAL MOOL CHAND [2005] 3 SOT 211 (AHD), THE TRIBUNAL STATED: IT IS SETTLED LAW THAT ADMISSION BY A PERSON IS A GOOD PIECE OF EVIDENCE THOUGH NOT CONCLUSIVE AND THE SAME CAN BE USED AGAINST THE PERSON WHO MAKES IT. THE REASON BEHIND THIS IS, A PERSON MAKING A STATEMENT STOPS THE OPPOSITE PARTY FROM MAKING FURTHER INVESTIGATION.' IT WOULD ALSO BE USEFUL TO REFER TO THE DECISION OF THE MADRAS BENCH OF THE INCOME - TAX APPELLATE TRIBUNAL IN T HE CASE OF T.S. KUMARASAMY VS. ASSTT.CIT [1998 ] 65 I TD 188 WHERE, TAKING NOTE OF THE FACT THAT ITOS ARE NOT POLICE OFFICERS AND, AS SUCH, THEY DO NOT USE OR RESORT TO, UNFAIR MEANS IN RECORDING 17 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM OATH STATEMENTS DURING THE SEARCH OPERATIONS OR DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM, IT WAS HELD THAT SUCH STATEMENTS, ADMISSIONS AND CONFESSIONS ARE BINDING AND CANNOT BE RETRACTED, UNLESS AND UNTIL IT IS PROVED BY LEGALLY ACCEPTABLE EVIDENCE THAT SUCH ADMISSION, CONFESSION OR OATH STATEMENT WAS INVOLUNTARY OR WAS TENDERED UNDER COERCION OR DURESS. DRAWING SUPPORT FROM THE DECISION OF THE SUPREME COURT IN THE CASE OF SURJEET SINGH CHHABRA VS. UNION OF INDIA [1997 ] 1 SCC 508 THE TRIBUNAL DISALL OWED PLEA OF RETRACTION OF THE ASSESSEE ON THE GROUND THAT NEITHER THE GROUND OF COERCION OR DURESS NOR THE GROUND OF INVOLUNTARY STATEMENT WAS PROVED TO HAVE EXISTED AT THE TIME OF RECORDING OF THE STATEMENT. THIS DECISION OF THE TRIBUNAL GOES TO INDICATE THAT ADMISSIONS OR CONFESSIONS MADE IN THE STATEMENTS RECORDED DURING SEARCH OR SURVEY, WITHOUT THERE BEING ANY OTHER EVIDENCE TO SUPPORT SUCH ADMISSIONS, CAN SUCCESSFULLY BE MADE USE OF TO ASSESS THE INCOME, UNLESS THEY ARE PROVED TO BE INVOLUNTARY OR AR E PROVED TO HAVE BEEN TAKEN UNDER DURESS, COERCION, MISCONCEPTION, ETC. IN ANOTHER SIMILAR CASE IN SRI KANTILAL C. SHAH VS. ACIT {IT (SS) A NO.21/AHD/20091 ITAT, AHEMADABAD RULED AS UNDER: '10.3. THE QUESTION OF EVIDENTIARY VALUE OF A STATEMENT RECORDED U/S. 132(4) OF THE ACT IS NO MORE RES INTEGRA. WHEN AN ASSESSEE HAD MADE A STATEMENT OF FACTS, HE CAN HAVE NO GRIEVANCE IF HE IS TAXED IN ACCORDANCE WITH THAT STATEMENT. THE REASONABLENESS OF THE AO'S APPROACH, AS APPRECIATED BY US, IS THAT HE HAD NOT MADE ANY ENHANCEMENT OR SUBSTITUTION IN THE AMOUNTS AS OFFERED/ DISCLOSED IN THE SAID STATEMENT. IT WAS A STATEMENT PERTAINING TO CERTAIN FACTS WHICH WERE IN THE EXCLUSIVE KNOWLEDGE OF THE ASSESS EE. THOSE FACTS WERE DISCLOSED TO THE REVENUE DEPTT. THEREUPON THOSE WERE ACCEPTED BY THE REVENUE DEPARTMENT. THOSE FACTS WERE OF SUCH NATURE THAT THERE WAS NO SCOPE OF EXISTENCE OF ANY OTHER EVIDENCE. AFFIRMATION OF FACTS AT BEST CAN ONLY BE DONE BY THE A SSESSEE IN HIS OWN VOLITION. IF THE ASSESSEE WANTED TO CORRECT THE SAID STATEMENT, THEN IT WAS OPEN FOR HIM TO SHOW THE EVIDENCES TO RETRACT THOSE FACTS. BUT NO SUCH EVIDENCE WAS FURNISHED THOUGH AN ANOTHER CHANCE WAS GRANTED BY THIS TRIBUNAL WHILE RESTORI NG THE ENTIRE ISSUES BACK TO THE ASSESSMENT STAGE WHICH MEANS THAT THE ASSESSEE HAD NO EVIDENCE AT ALL IN HIS POSSESSION. WE MAY LIKE TO CLARIFY THAT THE STATUTE PRESCRIBES THE POWER TO THE REVENUE AUTHORITIES FOR RECORDING A STATEMENT ON THE DAY OF SEARCH OPERATION. IN THIS CONTEXT, ID. AR HAS CITED FEW DECISIONS WHEREIN THERE WAS A DISCUSSION OF RETRACTION OF A STATEMENT OR THE LEGAL SANCTITY OF STATEMENT IN THE EYES OF INCOME - TAX LAWS.... 18 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM IN THIS CONTEXT SECTION 132(4) OF THE ACT ENABLES AN AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH. SUCH A SWORN STATEMENT MADE U/S. 132(4) OF THE ACT, THUS CAN BE USED AS ANEVIDENCE UNDER THE ACT................................................................................... ................................................ 10.4. IN THIS REGARD FROM THE SIDE OF THE REVENUE AN IMPORTANT DECISION OF HONOURABLE HIGH COURT OF CHHATTISGARH IN THE CASE OF ACIT VS. HUKWNCHAND JAIN REPORTED AT 191 TAXMAN HAS BEEN WHEREIN AND IT WAS HE LD THAT IF AN ALLEGATION OF DURESS OR COERCION WAS MADE ALMOST AFTER TWO YEARS, THEN SUCH ALLEGATION HAS TO BE OVERRULED. 10.5. IN THE LIGHT OF THE ABOVE DETAILED DELIBERATIONS, WE HEREBY DRAW A CONCLUSION THAT IN VIEW OF THE CONFESSIONAL STATEMENT WHICH WAS RECORDED AN THE DATE OF SEARCH HAD EVIDENTIARY VALUE, THEREFORE ) THE EXISTENCE OF THE ON - MONEY OUGHT NOT TO BE RULED OUT. THE CONFESSIONAL STATEMENT BEING RECORDED U/S. 132(4) OF THE I.T.ACT AND ALSO BEING CORROBORATED BY THE PHYSICAL PRESENCE OF FLATS , THEREFORE, RIGHTLY RELIED UPON BY THE REVENUE AUTHORITIES AND CORRECTLY MADE THE BASIS FOR THE IMPUGNED ADDITION OF ON - MONEY. THE RETRACTION BEING GENERAL AND VAGUE, THEREFORE DESERVES TO BE IGNORED. WE HEREBY CONFIRM THE ADDITION AND THIS GROUND IS DISM ISSED. 5.8 IN VIEW OF THESE PLETHORA OF JUDGEMENTS OF VARIOUS COURTS, IT IS HELD THAT THE RETRACTION BY THE APPELLANT, BEING GENERAL AND VAGUE, AND BEING UNSUPPORTED BY ANY EVIDENCE, IS MERELY AN AFTERTHOUGHT, AND WAS RIGHTLY IGNORED BY THE ASSESSING OFFI CER. NEITHER DOES THE RELIANCE PLACED ON THE DEPARTMENT CIRCULAR DATED APRIL 11, 1955 HELP THE CASE OF THE APPELLANT, SINCE THE DECLARATION IN THIS CASE IS FOUND TO BE VOLUNTARILY FILED, AFTER BEING DULY CONFRONTED WITH THE EVIDENCES FOUND DURING SEARCH. ALL THE GROUNDS RELATED TO THIS ISSUE ARE THEREFORE DISMISSED. 11. 2 . FROM THE ABOVE, IT IS EVIDENT THAT THE S UFFICIENT MATERIAL WAS AVAILABLE EVIDENCING THE COLLECTION OF AMOUNTS RELATING TO ADMISSIONS OF UG/PG SEATS FOUND DURING THE COURSE OF SEARCH WHICH WAS SET OFF TO THE INDIVIDUALS AND THE ASSESSEE IS ONE OF THEM WHO GOT THE BENEFIT. THE ASSESSEE HAS OFFERE D 19 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM THE ADDITIONAL IN COME OF RS.75,38,356/ - RECEIVED/RECEIVABLE FROM M/S . G.S.L.EDUCATIONAL SOCIETY AS ADDITIONAL INCOME IN HIS HANDS REPRESENTING THE AMOUNTS MENTIONED IN THE INCRIMINATING MATERIAL FOR THE A.Y.2013 - 14 AND SUBSEQUENTLY CHANGED THE STAND STATING THAT THE SAID AMOUNT WAS NOT RECEIVED FROM THE SOCIETY. HOWEVER, VIDE CLARIFICATORY LETTER DATED 10/02/2016 , THE ASSESSEE AGAIN ACCEPTED FOR CONSIDERING THE SAID AMOUNT OF RS. 75,38,356/ - AS INCOME FOR THE A.Y. 2014 - 15 . NO EVIDENCE WAS BROUGHT ON RECORD TO ESTABLISH THAT THE ADMISSION MADE BY THE ASSESSEE WAS ON ACCOUNT OF PRESSURE MADE BY THE DEPARTMENT . THE ASSESSEE ALSO DID NOT FILE ANY EVIDENCE TO SHOW THAT THE DEPARTMENT HAS PRESSURIZED THE ASSESSEE. THE ASSESSEE HAS NOT MADE ANY RETRACTION BEFORE THE INVESTIGATION WING . T HOUGH THE ASSESSEE CHANGE D HIS STAND DURING THE ASSESSMENT PROCEEDINGS OF A.Y. 2013 - 14 HE HAS FILED THE LETTER DATED 10/02/2016 BEFORE THE AO AND ADMITTED THE SAID ADDITIONAL INCOME FOR THE A.Y.2 014 - 15 . AGAIN BEFORE THE CIT(A) HE TOOK A DIFFERENT STAND WITHOUT ANY BASIS OR DOCUMENTARY EVIDENCE . I T IS EVIDENT FROM THE ABOVE THAT THE ASSESSEE IS NOT CONSISTENT IN HIS APPROACH AND ALLOWED THE GSL EDUCATIONAL SOCIETY TO WRIGGLE OUT THE TAX LIABILITY BY ACCEPTING THE ADDITIONAL INCOME RELATING TO THE SEIZED MATERIAL AND RETRACTED SUBSEQUENTLY, THEREBY TRYING 20 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM TO AVOID THE TAX LIABILITY IN HIS HANDS AS WELL AS THE G.S.L.EDUCATIONAL SOCIETY. HAD THE ASSESSEE DENIED THE ADDITIONAL INCOME IN HIS HANDS RELA TING TO THE SEIZED MATERIAL, THE DEPARTMENT WOULD HAVE PROCEEDED ON THE GSL EDUCATIONAL SOCIETY A S PER THE PROVISIONS OF INCOME - T AX ACT. SINCE THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME IN HIS HANDS, THE ASSESSEE HAS PREVENTED THE DEPARTMENT FROM TAK ING THE ACTION IN THE HANDS OF THE GSL EDUCATIONAL SOCIETY . THEREFORE, IT IS CLEAR THAT THE ASSESSEE ADOPTED THE AP P ROBATE AND REPROBATE METHODS WITH AN INTENTION TO EVADE THE TAX LIABILITY BOTH IN HIS HANDS AS WELL AS IN THE HANDS OF THE SOCIETY. SUCH, INCONSISTENCY IS UNACCEPTABLE. THE RETRACTION WAS NOT MADE BY THE ASSESSEE IN THE REASONABLE PERIOD AS OBSERVED BY THE LD.CIT(A). EVEN DURING THE ASSESSMENT PROCEEDINGS OF 20 1 4 - 15, THE ASSESSEE HAS ADMITTED THE ADDITIONAL INCOME VIDE LETTER DATED 10/02/2 016 AS DISCUSSED EARLIER . THEREFORE, WE HOLD THAT THE RETRACTION OF THE ASSESSEE IS NOTHING BUT AN AFTERTHOUGHT WITHOUT ANY BASIS . H ENCE, THE ORDER OF THE LD.CIT(A) IS CONFIRMED AND WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND AC CORDINGLY UPH O LD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. 21 I.T.A. NO S.493 & 494/VIZ/2018, A.Y.2013 - 14 & 2014 - 15 DR. C.RAGHU PURUSHOTTAM REDDY, DOWLESWARAM 13. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE A.Y.2013 - 14 IS ALLOWED AND THE APPEAL FOR THE A.Y.2014 - 15 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JUL Y, 2019. SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 31 .0 7 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - DR.C.RAGHU PURUSHOTTAM REDDY , D.NO.4 - 13 - 2, SANTARAM HOSPITAL , MAIN ROAD , DOWLESWARAM 2. / THE REVENUE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 RAJAHMUNDRY 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), VISAKHAPATNAM 4 . THE COMMISSIONER OF INCOME TAX ( APPEALS ) - 1 2 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM