ACIT Cen Cir 1 [1] Pune., V. Jayant Hiralal Shah, Pune

ITA 546/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67050 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: MAHENDRA MEHTA
• Keywords: Unexplained investment; Unexplained expenditure; Retraction
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.546/PN/2012 (ASSESSMENT YEAR : 2008-09) ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1), PUNE . APPELLANT VS. JAYANT HIRALAL SHAH 11, SANJAY GARDEN, 12 MUKUNDNAGAR, PUNE 411 037 PAN : AEGPS3036L . RESPONDENT APPELLANT BY : MR. MUKESH VERMA RESPONDENT BY : MR. MAHENDRA MEHTA DATE OF HEARING : 30-05-2013 DATE OF PRONOUNCEMENT : 25-06-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 15.09.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.12.2009 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) READ WITH SECTION 153 A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESS MENT YEAR 2008-09. 2. IN THIS APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.20,00,000/- MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTM ENT IN RESIDENTIAL FLATS EVEN WHEN ASSESSEE HAD DECLARED S UCH INCOME IN A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. 3. IN BRIEF, THE FACTS RELEVANT FOR ADJUDICATING TH E PRESENT CONTROVERSY ARE AS FOLLOWS. THE ASSESSEE, AS A PART NER IN VARIOUS ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 FIRMS, IS ENGAGED IN THE BUSINESS OF PROMOTERS, BUI LDERS AND DEVELOPERS AND IS ALSO A PARTNER IN THE CONCERNS EN GAGED IN THE BUSINESS OF TRADING IN AGRICULTURE COMMODITIES. A S EARCH ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED IN TH E GROUP CASES OF ASSESSEE ON 08.08.2007. CONSEQUENTLY, FOR ASSESSMEN T YEAR 2008-09, ASSESSEE FILED A RETURN OF INCOME ON 29.09 .2008 DECLARING TOTAL INCOME OF RS.3,49,33,170/-. THE RETURN FILED BY THE ASSESSEE WAS SUBJECT TO A SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT WHEREBY THE TOTAL INCOME WAS ASSESSED AT RS.3,6 9,33,170/-, THEREBY MAKING AN ADDITION OF RS.20,00,000/- TO THE RETURNED INCOME. THE ASSESSING OFFICER NOTICED THAT DURING THE COURS E OF SEARCH IN A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT ON 16.08.2007 ASSESSEE HAD AGREED TO DECLARE AN UNACCOUNTED INVES TMENT TO THE EXTENT OF RS. 20,00,000/- IN THE FURNITURE AND FITT INGS IN THE FLATS AT DHWANI RESIDENCY, PUNE. IN THE RETURN OF INCOME, AS SESSEE HAD NOT DISCLOSED THE INCOME IN RELATION TO THE AFORESAID U NACCOUNTED INVESTMENT AND THEREFORE THE ASSESSING OFFICER ADDE D SUM OF RS.20,00,000/- AS AN UNDISCLOSED INCOME OF THE ASSE SSEE BY INVOKING SECTION 69B OF THE ACT. 4. THE AFORESAID ADDITION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE DELETED THE ADDITION. IN APPEA L BEFORE THE CIT(A), ASSESSEE HAD CONTENDED THAT THE ADDITION WA S MADE BY THE ASSESSING OFFICER SOLELY ON THE BASIS OF THE STATEM ENT RECORDED DURING THE COURSE OF SEARCH, WHICH WAS IMMEDIATELY RETRACTED FOR THE REASON THAT THE DECLARATION OF ADDITIONAL INCOME WA S OBTAINED DURING THE COURSE OF SEARCH UNDER SEVERE MENTAL PRESSURE B Y THE SEARCH PARTY. IT WAS CONTENDED THAT THERE WAS NO BASIS FOR THE DECLARATION AND THERE WAS NO EVIDENCE FOUND OF ANY UNACCOUNTED INVESTMENT IN FLATS. THE CIT(A) ANALYZED THE TOTAL DECLARATION MA DE BY THE ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 ASSESSEE AT THE TIME OF SEARCH AND FOUND THAT THE S UBSEQUENT RETRACTIONS BY THE ASSESSEE WERE SELECTIVELY ACCEPT ED BY THE ASSESSING OFFICER. THEREFORE, AS PER THE CIT(A) SIN CE THE CREDIBILITY OF THE DECLARATION WAS LOST AND IN THE ABSENCE OF A NY OTHER MATERIAL TO JUSTIFY THE ADDITION THE SAME WAS DELETED. AGAIN ST THE AFORESAID DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED CIT(DR) HAS SUBMITTED THA T THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION BY CONTE NDING THAT THE ASSESSEE WAS NOT JUSTIFIED IN RETRACTING FROM THE D ISCLOSURE MADE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. IT IS SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN TH E CASE OF HOTEL KIRAN VS. ACIT (2002) 82 ITD 453 (PUNE) HAS HELD TH AT A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CANNOT BE RETRACTED BY THE ASSESSEE UNLESS IT IS PROVED THAT THE STATEMENT WAS TAKEN UNDER COERCION, THREAT, DURESS OR UNDUE INFLUENCE. IN THI S MANNER, THE DELETION MADE BY THE CIT(A) HAS SOUGHT TO BE ASSAIL ED. 6. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE RESPONDENT-ASSESSEE GAVE A CHART SHOWING A CHRONOLO GICAL LIST OF EVENTS STARTING FROM THE DATE OF THE SEARCH ON 09.0 8.2007 AND THEREAFTER, IN THE COURSE OF WHICH CERTAIN DECLARAT IONS OF ADDITIONAL INCOME WAS MADE. THE ASSESSEE ALSO SUBMITTED THAT A FTER THE DECLARATION MADE ON 17.08.2007 WITH REGARD TO THE I MPUGNED ADDITION, THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE INVESTIGATION WING THE FACT THAT THE DECLARATION WAS OBTAINED BY THE SEARCH PARTY UNDER DURESS, MENTAL AGONY, COERCION AND ON MIS-REP RESENTATION OF FACTS. THE LEARNED REPRESENTATIVE POINTED OUT THAT THE CIT(A) HAS BROUGHT OUT THE CHRONOLOGY OF THE DECLARATIONS MADE BY THE ASSESSEE AND ITS RETRACTION IMMEDIATELY, I.E. WITHI N 11 DAYS AND THE ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 PART-ACCEPTANCE OF SUCH RETRACTIONS BY THE DEPARTM ENT. CONSIDERING THE ENTIRETY OF FACTS, THE CIT(A) HAS RIGHTLY DELET ED THE ADDITION AND ACCORDINGLY, THE LEARNED REPRESENTATIVE PLACED RELI ANCE ON THE ORDER OF THE CIT(A) TO SUPPORT THE CASE OF THE ASSESSEE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING, IT IS NOT IN DISPUTE THAT THE SOLITARY RE ASON FOR MAKING THE ADDITION OF RS.20,00,000/- ON ACCOUNT OF ALLEGED UN ACCOUNTED INVESTMENT IN FLATS, IS THE STATEMENT RECORDED DURI NG THE SEARCH. THE POINT SOUGHT TO BE MADE BY THE ASSESSEE IS THAT OTH ER THAN THE SAID STATEMENT, NEITHER IN THE COURSE OF SEARCH AND NOR IN THE SUBSEQUENT INVESTIGATION OR ASSESSMENT PROCEEDINGS, THERE IS A NY EVIDENCE TO SUPPORT THE ALLEGED UNACCOUNTED INVESTMENT IN FLATS . WITH REGARD TO THE CREDIBILITY OF THE STATEMENT RECORDING DURING T HE COURSE OF SEARCH, A BRIEF BACKGROUND IS NECESSARY, WHICH IS A S FOLLOWS. A SEARCH ACTION UNDER SECTION 132(1) OF THE ACT WAS C ONDUCTED ON THE ASSESSEE ON 08.08.2007 AND STATEMENT WAS RECORDED O N 09.08.2007 DURING THE COURSE OF SEARCH IN WHICH ASSESSEE DECLA RED AN ADDITIONAL INCOME OF RS.1,90,00,000/-. THE BREAK-UP WAS AS FOLLOWS UNACCOUNTED EXPENDITURE ON MARRIAGE OF RS. 80,00,000/-; UNACCOUNTED INVESTMENT IN RESIDENTIAL BUNGLOW OF RS .95,00,000/-; AND, UNACCOUNTED SILVER UTENSILS OF RS.15,00,000/-. THE DECLARATION OF RS.1,90,00,000/- WAS ALSO RETAINED IN THE COURSE OF CONCLUDING STATEMENT RECORDED AT THE TIME OF SEARCH ON 17.08.2 007 BUT THE BREAKUP WAS VARIED, WHICH WAS AS FOLLOWS UNACCOUNT ED EXPENDITURE ON MARRIAGE OF RS.80,00,000/-; UNACCOUN TED INVESTMENTS IN RESIDENTIAL BUNGLOW OF RS.75,00,000/ -; FURNITURE WORK FOR FLAT AT MODEL COLONY OF RS.20,00,000/-; AND, UN ACCOUNTED SILVER UTENSILS OF RS.15,00,000/-. IT TRANSPIRES THAT VIDE LETTER DATED 17.08.2007 WHICH WAS SUBMITTED TO THE ADDITIONAL DI RECTOR OF INCOME ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 TAX (INV.-1), PUNE ON 27.08.2007, ASSESSEE RETRACTE D FROM THE DECLARATION OF ADDITIONAL INCOMES EXCEPT TO THE EXT ENT OF UNACCOUNTED SILVER UTENSILS OF RS.15,00,000/-. SUBS EQUENTLY IN THE RETURN OF INCOME FILED UNDER SECTION 153A NO INCOME WAS RETURNED ON ACCOUNT OF DECLARATION MADE FOR UNACCOUNTED EXPE NDITURE ON MARRIAGE OF RS.80,00,000/-; UNACCOUNTED INVESTMENT IN RESIDENTIAL BUNGLOW OF RS.75,00,000/-; AND, UNACCOUNTED FURNITU RE WORK FOR FLAT AT MODEL COLONY OF RS.20,00,000/- BECAUSE THE SAME WERE SAID TO HAVE BEEN RETRACTED. ONLY AN AMOUNT OF RS.15,00,000 /- REPRESENTING UNACCOUNTED SILVER UTENSILS WAS DECLARED IN THE RET URN FILED UNDER SECTION 153A FOR THE ASSESSMENT YEAR 2008-09. FOR T HE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER WAS NOT SATISFI ED AND MADE ADDITIONS OF RS.32.45 LACS AND RS.6.80 LACS ON ACCO UNT OF UNACCOUNTED EXPENDITURE ON MARRIAGE AND UNACCOUNTED INVESTMENT IN RESIDENTIAL BUNGLOW RESPECTIVELY WHICH WERE ORIG INALLY DECLARED BY THE ASSESSEE DURING THE SEARCH AT RS.80,00,000/- AN D RS.75,00,000/- RESPECTIVELY BUT LATER RETRACTED. FO R ASSESSMENT YEAR 2008-09, WHICH IS THE YEAR BEFORE US, ASSESSING OFF ICER ADDED A SUM OF RS.20,00,000/- ON ACCOUNT OF FURNITURE WORK FOR FLAT AT MODEL COLONY, FOR THE REASON THAT THE SAME WAS DECLARED A S ADDITIONAL INCOME IN THE STATEMENT CONCLUDED DURING THE SEARCH ON 17.08.2007. THE AFORESAID SEQUENCE SHOWS THAT THE ASSESSING OFF ICER IS NOT CONSISTENT IN MAKING THE ADDITIONS ON THE BASIS OF THE DECLARATIONS MADE BY THE ASSESSEE AT THE TIME OF SEARCH AND WHIC H WERE SUBSEQUENTLY RETRACTED BEFORE THE INVESTIGATION WIN G. FOR ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF ITEMS WHICH WERE EARLIER DECLARED BUT THE AMOUNTS HAVE BEEN SCALED DOWN. THE AFORESAID ASPECT HAS BEE N BROUGHT OUT BY THE CIT(A) AND INTERPRETED TO MEAN THAT THE MAJO R AMOUNTS DECLARED BY THE ASSESSEE AND WHICH WERE THEREAFTER RETRACTED BEFORE ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 THE INVESTIGATION WING ITSELF, HAVE ALSO BEEN PARTL Y ACCEPTED BY THE ASSESSING OFFICER. THE AFORESAID GOES TO SHOW THAT THE DECLARATION MADE BY THE ASSESSEE IN THE STATEMENT RECORDED DURI NG THE COURSE OF SEARCH IS NOT CONSIDERED AS SACROSANCT BY THE AS SESSING OFFICER HIMSELF, BUT THE SAME HAS BEEN SELECTIVELY ACCEPTED . THEREFORE, IN THE BACKGROUND OF THE FACT THAT THE DECLARATION WAS PROMPTLY RETRACTED BY THE ASSESSEE BEFORE THE INVESTIGATION WING WITHIN 11 DAYS; SELECTIVE ACCEPTANCE OF RETRACTIONS BY THE AS SESSING OFFICER; AND, THAT THERE IS NO OTHER MATERIAL EXCEPT THE STA TEMENT OF THE ASSESSEE, THE ADDITION MADE BY THE ASSESSING OFFICE R OF RS. 20,00,000/- ON ACCOUNT OF UNACCOUNTED INVESTMEN TS IN FURNITURE WORK FOR FLAT AT MODEL COLONY, HAS BEEN RIGHTLY DEL ETED BY THE CIT(A). WE HEREBY AFFIRM THE SAID ACTION OF THE CIT(A). 8. THE RELIANCE PLACED BY THE LEARNED CIT(DR) ON TH E DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HOTEL KIRAN (SUPRA) FOR THE PROPOSITION THAT STATEMENT RECORDED UNDER SECTI ON 132(4) OF THE ACT CANNOT BE RETRACTED UNLESS IT IS PROVED TO BE T AKEN UNDER COERCION, THREAT, DURESS OR UNDUE INFLUENCE IS CONC ERNED, THE SAME DOES NOT HELP THE REVENUE IN THE PRESENT CASE ON AC COUNT OF PECULIAR FACTS AND CIRCUMSTANCES. IN THE PRESENT CA SE, IT IS AMPLY CLEAR THAT THE BONA-FIDES OF THE STATEMENT MADE BY THE ASSESSEE IN THE COURSE OF SEARCH HAS BEEN RENDERED SUSPECT. FIR STLY, THE ASSESSEE HIMSELF RETRACTED IT IMMEDIATELY AFTER THE SEARCH AND SUCH RETRACTIONS HAVE BEEN SELECTIVELY ACCEPTED BY THE D EPARTMENT ALSO. WE HAVE PERUSED THE LETTER OF THE ASSESSEE ADDRESSE D TO THE ADDITIONAL DIRECTOR OF INCOME TAX (INV.-1), PUNE DA TED 07.08.2007 (RECEIVED BY THE DEPARTMENT ON 27.08.2008) AND FIND THE AVERMENTS OF COERCION, DURESS, MENTAL AGONY, AND OF MIS-REPRE SENTATION OF FACTS, ETC. HAVE BEEN ALLEGED. BE THAT AS IT MAY, W E ARE NOT GOING ITA NO.546/PN/2012 JAYANT HIRALAL SHAH A.Y. 2008-09 FURTHER ON THIS ASPECT, HOWEVER HAVING REGARD TO TH E TOTALITY OF THE CIRCUMSTANCES, IN OUR VIEW, THE RATIO OF THE JUDGEM ENT OF THE TRIBUNAL IN THE CASE OF HOTEL KIRAN (SUPRA) IS NOT APPLICABL E IN THE PRESENT CASE, HAVING REGARD TO ITS PECULIAR FACTS AND CIRCU MSTANCES WHICH HAVE BEEN APPROPRIATELY APPRECIATED BY THE CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JUNE, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE