ACIT 19(3), MUMBAI V. SUNILKUMAR O KOCHHAR, MUMBAI

ITA 5360/MUM/2009

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2704 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Retraction
• Section: 143(3); 133A; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SAKTIJIT DEY(JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5360/MUM/2009 ASSESSMENT YEAR: 2006 - 07 ACIT , TAX 19|(3) VS. SHRI SUNIL KUMAR O KOCHHAR MUMBAI 6, GELEKI ONGC BUILDING OPP. LILAWATI HOSPITAL, BANDRA KURLA RECLAMATION, BANDRA (WEST). MUMBAI - 400050 PAN NO. AAOPK8359B ITA NO. 5261/MUM/2009 ASSESSMENT YEAR: 2006 - 07 ITO 19(3)(2) VS. SMT. RENU S. KOCH H AR R.NO. 306, 3 RD FLOOR 6, GELEKI ONGC BUILDING PIRAMAL CHAMBERS OPP. LILAWATI HOSPITAL, MUMBAI - 400012 BANDRA KURLA RECLAMATION, BANDRA (WEST). MUMBAI - 400050 PAN NO. AAPPK5797D (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. AMRITA SINGH RESPONDENT B Y: SHRI. M. SUBRAMANIAM DATE OF HEARING: 10 /08/2016 DATE OF PRONOUNCEMENT : 23/ 0 9 /2016 ORDER PER N.K. PRADHAN, A.M THE CAPTIONED APPEAL S HAVE BEEN FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2006 - 07. THE APPEAL S ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - X IX, MUMBAI AND THESE ARISE OUT OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 2 TAX ACT, 1961 (HEREINAFTER THE ACT). IN THIS BATCH OF APPEALS, THE CONTROV ERSY RAISED BEING SIMILAR, THEY WERE HEARD ANALOGOUSLY AND ARE DISPOSED OF BY A COMMON ORDER. 2. THE FIRST TWO GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,00,10,000/ - MADE IN THE CASE OF MR. S UNIL KUMAR O KOCHHAR AND RS.85,50,000/ - IN THE CASE OF MRS. RENU S KOCHHAR . 3 . BRIEFLY STATED THAT FACTS ARE THAT A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS PREMISES OF THE ASSESSEES O N 23/09/2005. A STATEMENT WAS RECORDED UNDER SECTION 133A ON 23 /09/2005 WHEREIN A DISCLOSURE OF RS. 1,00, 10, 000/ - WAS MADE BY MR . KOCHHAR AND RS. 85,50,000/ - BY MRS. KOCHAAR . R EGISTER SUNLIFE ACCOUNT BOOK IN THE CASE OF MR. KOCHHAR AND SUNNY DELUXE ACCOUNTS BOOK IN T HE CASE OF MRS. KOCHHAR WERE IMPOUNDED DURING THE COURSE OF SURVEY. MR. KOCHHAR IS ENGAGED IN THE BUSINESS OF RECRUITMENT OF MAN POWER PARTICULARLY TO G ULF COUNTRIES IN THE NAME & STYLE OF AMBE CONSULTANCY SERVICES, A PROPRIETARY CONCERN IN WHICH HE IS HOL DING THE LICENSE ISSUED BY THE MINISTRY OF GOVT. OF INDIA . THE NATURE OF BUSINESS OF MRS. KOCHHAR IS RENDERING SERVICES FOR TOURS AND TRAVELS. THE AO DURING THE ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE S TO EXPLAIN AS TO WHY DISCLOSURE MADE DURING COURSE OF SURVEY ON 23/09/2005 SHOULD NOT BE ADDED BACK TO THE IR INCOME . THE ASSESEE S SUBMITTED THAT THE DISCLOSURE WAS NOT VOLUNTARY BUT A FORCED ONE WHICH HAS BEEN IMMEDIATELY RETRACTED. 3.1 MR. KOCHHAR REFER RED TO HIS AFFIDAVIT DT. 27/09/2005 TOGETHER WITH THE LETTER OF THE SAME DATE. HE ALSO RELIED ON THE AFFIDAVITS OF HIS THREE EMPLOYEES NAMELY (I) BHASKAR P. PAWAR, (II) ANAND M. RAORA NE , AND (III) MR. VIKAS BAPA T , ALL FILED BEFORE THE AO. IT WAS ALSO STATED BY HIM THAT THE ENTRIES F ROM SL. NO. 1 - 1400/ - ON PAGE 1 TO 4 3 SHOWING NAMES, PASS PORT NUMBERS, CATEGORIES AND AMOUNT IN REGISTER WERE GOT WRITTEN AND ENTERED IN THE REGISTER BY THE SURVEY OFFICERS AND THE SAME ARE THEREFORE FABRICATED AND FALSE ONES. TH E AO HOWEVER, RELIED ON THE STATEMENT RECORDED ON 23/09/2005 UNDER SECTION 133A. HE CAME TO A FINDING THAT THE ASSESSEE HAD GIVEN DECLARATION OF ADDITIONAL INCOME OF RS. 1,00,10,000/ - O F INCOME AND CHEQUES FOR THE PAYING THE TAX ON THE SA ID INCOME HAVE AL SO BEEN GIVEN AND THEREFORE, MADE AN ADDITION OF THE ABOVE AMOUNT TO THE TOTAL INCOME OF THE MR. KOCHHAR DURING THE YEAR UNDER CONSIDERATION. ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 3 3.2 MRS. KOCHHAR FILED AN AFFIDAVIT BEFORE THE AO ON 2 6 / 09 /200 5 MAKING A RETRACTION OF THE DISCLOSED INCOME. SHE ALSO FILED ANOTHER AFFIDAVIT ON 29/11/2008 STATING THAT THE DISCLOSURE FROM HER WAS A FORCED O NE BASED ON FABRICATED ENTRIES. THE AO CAME TO A FINDING THAT MRS. KOCHHAR HAD OFFERED RS.85,50,000/ - DECLARED IN THE COURSE OF SURVEY AND THEREFORE, HE MADE AN ADDITION OF THE ABOVE AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 3.3 WHILE MAKING THE ABOVE ADDITIONS, T HE AO HAS REFER RED TO THE DECISIONS STATING THAT THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY / SEARCH ACTION IS BINDING ON HIM AND ANY RETRACTION MADE BY HIM HAS NO MEANING AT ALL. IN THIS REGARD HE RELIED ON THE DECISION IN THE CASE OF HIRALAL MAGAN LAL AND CO. V S. D CIT 96 ITD 113 ( MU M); RAMESH CHANDRA AND CO . V S. CIT 168 ITR 375(BOM), HOTEL KIRAN V S. ACIT 82 ITD 453 PUNE; VIDEO MASTER V S. JCIT 83 ITD 102 (BOM); RAMESH T. SALVE V S. ACIT 75 ITD 75 ( MU M); SMT. BASANTI SETHI V S. ACIT ; RAM JAS N A WAL VS. CIT 183 CTR (RAJ) 144; DR. S.C. GUPTA V S. CIT 248 ITR 782 (ALL). 4 . THE LD. CIT(A) NOTED THE FOLLOWING SUBMISSION MADE BY THE ASSESSEE BEFORE HIM. (I) THE SURVEY U/S 133A WAS CONDUCTED IN AN ILLEGAL AND IRREGULAR MANNER. THE SURVEY PARTY RESORTED TO BRA ZEN ABUSE OF POWERS AND ACTED IN A HIGH - HANDED MANNER. (II) THE SURVEY PARTY FABRICATED THE EVIDENCE IN THE SUNLIFE ACCOUNT BOOK AND SUNNY DELUXE ACCOUNT BY MAKING BOGUS ENTRIES. THE STATEMENT RECORDED U/S 133A WAS A FORCED ONE OBTAINED UNDER DURESS. (III) THE STATEMENT RECORDED U/S 133A HAS NO EVIDENTIARY VALUE. (IV) THE STATEMENT RECORDED U/S 133A IS UNCORROBORATED, NOT CREDIBLE AND SO CANNOT BE TREATED AS EVIDENCE. MOREOVER, THE APPELLANT HAS FILED TWO AFFIDAVITS OF RETRACTION, WHICH REMAIN UNCONTR OVERTED. THE LD. CIT(A) FOUND THAT THE ASSESSEE S HAD WRITTEN TO THE THEN CHIEF COMMISSIONER OF INCOME TAX AND SOUGHT REDRESSAL OF THEIR GRIEVANCES. HE CAME TO A FINDING THAT THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE S THAT THE SURVEY PARTY FABRICATED EVIDENCE IN THE FORM OF ENTRIES IN THE SUNLIFE ACCOUNT BOOK AND SUNNY DELUXE ACCOUNT BOOK . HE HAS MENTIONED IN HIS APPELLATE ORDER THAT THERE IS TRUTH IN THIS CHARGE IF ONE PERUSES THE ENTRIES IN SUNLIFE ACCOUNT BOO K AND SUNNY DELUXE ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 4 ACCOUNT BOOK ON THE BASIS OF EVIDENCE. HE HAS SUMMED UP HIS FINDING THAT NOT ONLY STATEMENT HAS BEEN RECORDED UNDER DURESS BUT EVIDENCE HAS BEEN PLAN T ED. THE FACT THAT CHEQUES WERE OBTAINED IN PURSUANT TO STATEMENT UNDER SECTION 133A ALSO STRENGTHENS THE BELIEVE THAT IT WAS OBTAINED UNDER DURESS AND COERCION. 4.1 THE L D. CIT(A) ALSO FOUND THAT CERTAIN PORTION OF THE ENTRIES (981 TO 1400) IN SUNLIFE ACCOUNT BOOK HAS BEEN ENTERED BY THE SURVEY PARTY THEMSELVES. HE ALSO OBSERVED THAT T HE ENTRIES IN SUN DELUXE ACCOUNT BOOK WERE ENTERED BY THE SURVEY PARTY. THUS, THE VERY BASIS ON WHICH THE CONFESSION WAS OBTAINED GETS KNOCKED OUT. THE GENUINENESS OF THE ENTRY IN THE ABOVE BOOK STANDS EXPOSED. THE AO HAS SIMPLY GONE BY THE SANCTITY OF THE STATEMENT RECORDED UNDER SECTION 133A WHICH STANDS IMPEACHED. A STATEMENT RECORDED IN THE COURSE OF THE SURVEY CAN BE MADE THE BASIS OF ASSESSMENT ONLY IF IT IS LINKED TO CORROBORATIVE EVIDENCE. IN THE PRESENT CASE, THERE IS A PLANTED EVIDENCE WHI CH CANNOT BE A SUBSTITUTE FOR CORROBORATIVE EVIDENCE. IN VIEW OF THE ABOVE FACTS , THE L D. CIT(A) DELETED THE ADDITION OF RS. 1,00,1 0,000/ - MADE BY THE AO IN THE CASE OF MR. KOCHHAR AND RS.85,50,000/ - IN THE CASE OF MRS. KOCHHAR FOR THE IMPUGNED ASSESSMENT YEAR. 5 . THE L D. DR RELIED ON THE ASSESSMENT ORDER PASSED BY THE AO. SHE MADE A SPECIFIC REFERE NCE TO QUESTION NO. 10 AND ITS ANSWER RECORDED FROM MR. KOCHHAR U/S 133A DURING THE COURSE OF SURVEY ACTION ON 23/09/2005. ALSO SHE MADE SPECIFIC REFERENCE TO QUESTION NO. 7 AND ITS ANSWER RECORDED FROM MRS. KOCHHAR U/S 133A DURING THE COURSE OF SURVEY ACTION ON 23/9/2005. 6 . THE L D. COUNSEL OF THE ASSESSEE RELIED ON THE AFFIDAVIT OF MR. KOCHHAR FILED ON 27/09/2005 AND THE LETTER OF RETRACTION FILED ON THE SAME DATE . A LSO HE RELIED UPON THE AFFIDAVIT OF THE THREE STAFF MEMBERS NAMELY (I) BHASKAR P. PAWAR, (II) ANAND M. RAORANE, AND (III) MR. VIKAS BAPAT, FILED ON 27/09/2005 BEFORE THE AO . HE ALSO REFERRED TO THE AFFIDAVIT DATED 26/09/2005 AND 29/11/2008 FILED BY MRS. KOCHHAR BEFORE THE AO . HE FURTHER STATED THAT THE DECISIONS REFER RED TO BY THE AO IN HIS ASSESSMENT ORDER RELATES TO STATEMENT RECORDED UNDER SECTION132(4) OF THE ACT, NOT TO SECTION 133 A . IT WAS FURTHER STATED BY HIM THAT STATEMENT CAN BE RECORDED UNDER SECTION 131 NOT UNDER SECTION 133A. ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 5 6 .1 THE L D. COUNSEL REFER RED TO THE APPLICATION FILED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES 1963 DEFENDING THE ORDER PASSED BY THE L D. CIT(A) . 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAR EFULLY AND ALSO PERUSED THE MATERIAL PLACED ON RECORD BEFORE US. WE FIND THAT THE ASSESSEE S FILED , IMMEDIATELY AFTER THE SURVEY ACTION, RETRACTION LETTER ADDRESSED TO THE AO ENCLOSING THEREWITH THE AFFIDAVIT . THE ONUS THEN SHIFTED TO THE D EPARTMENT. WHAT W E FIND HERE IS THAT THE ASSESSEE S SIMULTANEOUSLY FILED LETTER ON 27/09/2005 ADDRESSED TO CCIT - I , CCIT - X AND CIT - 1 9 MUMBAI, ADDRESSING HIS /HER GRIEVANCES. THE CIT - 19 SENT A LETTER TO THE ASSESSEE S ON 28/09/2005 CALLING FOR A MEETING ON 04/10/2005. THE CHE QUES TAKEN BY THE SURVEY OFFICIALS WERE RETURN ED BACK TO THE ASSESSEE S . 7.1 BE IT STATED THAT THE DECISIONS RELIED ON BY THE AO DO NOT RELATE TO THE IMPORT OF STATEMENT RECORDED UNDER SECTION 133A OF THE ACT. 7. 2 IN THE PRESENT CASE STATEMENT HAS BEEN RECORDED UNDER SECTION 133A OF THE ACT. IN PAUL MATHEWS & SONS V S. CIT (2003) 263 ITR 101, 108 (KER.), IT HAS BEEN HELD THAT SECTION 133A(3)(III) ENABLES THE AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE INCOME - T AX ACT. SECTION 1 33A, HOWEVER, ENABLES THE INCOME - T AX AUTHORITY ONLY TO RECORD ANY STATEMENT OF ANY PERSON WHICH MAY BE USEFUL, BUT DOES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, ONE FINDS THAT SUCH A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORIZED OFFICER ONLY UNDER SECTION 132(4) IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS, THE INCOME - T AX ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SU CH POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVIDED WHEREAS SECTION 133A DOES NOT EMPOWER ANY OFFICER TO EXAMINE ANY PERSON ON OATH. THEREFORE WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIO USLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORIZED TO ADMINISTER OATH A ND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER THE LAW. THEREFORE THE CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE DECISIONS RELIED ON BY THE AO. ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 6 7. 3 AN ASSESSEE MAY TENDER AN AFFIDAVIT BEFORE THE AO. IT MAY POINT TO SOME EVIDENCE. SUCH EVIDENCE CAN BE ACTED UPON BY THE AO. SHOULD THE AO REGARD THE SAME AS NOT SUFFICIENT PROOF OF THE CONTENTS THEREOF, THEN HE SHOULD CROSS EXAMINE THE DEPONENT AND, IF DISSATISFIED , CALL UPON THE ASSESSEE TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF THE CONTENTS OF THE AFFIDAVIT. IF NO SUCH THING IS DONE, THE AFFIDAVIT BY ITSELF SHOULD BE REGARDED AS SUFFICIENT PROOF. THIS WAS SO HELD BY THE HONBLE SUP REME COURT IN MEHTA PARIKH & CO. V S. CIT (1956) 30 ITR 181 (SC). WE FIND THAT IN THE PRESENT CASE THE DEPONENT HAS NOT BEEN SUBJECTED TO CROSS EXAMINATION FOR BRINGING OUT THE FALSITY OF HIS STATEMENT. THEREFORE , WE SHOULD NOT DOUBT THE CORRECTNESS OF THE STATEMENT MADE BY THE DEPONENT IN THE AFFIDAVIT IN THE INSTANT CASE . 7. 4 TO SUM UP, A SURVEY U/S 133A WAS CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23/09/2005. IN THE STATEMENT RECORDED U/S 133A ON THE SAME DAY A DISCLOSURE OF RS.1,00,10,000/ - WAS MADE BY MR. KOCHHAR AND RS. 85,50,000/ - BY MRS. KOCHHAR. AN AFFIDAVIT WAS FILED BY MR. KOCHHAR ON 27/9/2005 AND BY MRS. KOCHHAR ON 26/09/2005 BEFORE THE AO MAKING A RETRACTION OF THE DECLARATION OF THE ABOVE AMOUNT. T HE ASSESSEES SIMULTANEOUSLY FILED LETTER ON 27/09/2005 ADDRESSED TO CCIT - I , CCIT - X AND CIT - 1 9 MUMBAI, ADDRESSING HIS/HER GRIEVANCES. THE CIT - 19 SENT A LETTER TO THE ASSESSEES ON 28/09/2005 CALLING FOR A MEETING ON 04/10/2005. THE CHEQUES TAKEN BY THE SURVEY OFFICIALS WERE RETURNED BACK TO THE ASSESSEES. THE LD. CIT(A) HAS OBSERVED THAT THE ENTRIES IN SUNLIFE ACCOUNT BOOK SUNNY DELUXE ACCOUNT BOOK WERE FABRICATED BY THE SURVEY TEAM. THE LD. DR HAS NOT PRODUCED ANY MATERIAL TO REFUTE THE ABOVE FINDINGS OF THE LD. CI T(A). THE SURVEY PROCEEDINGS IN THE PRESENT CASE FALL IN THE REALM OF ILLEGALITY . 7. 5 IN VIEW OF THE ABOVE FACTS , WE UPHOLD THE DELETION MADE BY THE L D. CIT(A) OF THE ADDITION OF RS. 1,00,10,000/ - MADE BY THE AO IN THE CASE OF MR KOCHHAR AND RS.85,50,000/ - IN THE CASE OF MRS. KOCHHAR . THEREBY, WE DISMISS THE APPEAL FILED BY THE R EVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON THE ABOVE TWO GROUNDS. ITA NO. 5360/MUM/2009 & ITA NO.5261/MUM/2009 7 8 . THE THIRD GROUND RAISED BY THE REVENUE IN THE CASE OF MR. KOCH HAR IS THAT THE LD. CIT(A) ERRED IN ACCEPTING AN ARGUMENT OF THE ASSESSEE REGARDING BUSINESS RECEIPT OF RS. 36,000/ - WHICH WAS NEVER MADE BEFORE THE AO AND WHICH IS IN VIOLATION OF RULE 46A OF THE INCOME TAX RULE. 8.1 . WE FIND THAT THE L D. CIT(A) HAS COME TO A FINDING THAT IN THE PRESENT CASE THE BUSINESS RECEIPT OF RS. 36,000/ - WAS EARNED AND THE BUSINESS IS STILL GOING ON AS A PROPRIETARY CONCERN. THEREFORE, HE WAS CONVINCED THAT THERE IS SUBSTANCE IN THE ARGUMENT OF THE ASSESSEE THAT T HERE IS NO LEGAL CASE F OR ANY DISALLOWANCE. WE AGREE WITH THE ABOVE FINDINGS OF THE L D. CIT(A) AS IT IS BASED ON FACTS AND NO INTERFERENCE IS CALLED FOR. 9 . IN VIEW OF THE ABOVE THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /09 /2016. SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 23 /0 9 /2016 A KV (ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI