Shri Sahdevsinh V. Vaghela, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITSSA 56/RJT/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1772 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: HARISH 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 PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - CO URT AT AHMEDABAD] SHRI SAHADEVSINGH V. VAGHELA PRAYAG - B, 5 TH FLOOR, FLAT NO. B - 51, SHROFF ROAD, RAJKOT PAN:ABOPV3578M (APPELLANT) VS THE DCIT, CENTRAL CIRCLE - 2, RAJKOT (RES PONDENT) REVENUE BY : S H RI YOGESH PANDEY , D . R. ASSESSEE BY: S H RI HARISH RANPURA , A.R. DATE OF HEARING : 03 - 12 - 2 015 DATE OF PRONOUNCEMENT : 15 - 02 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE THREE ASSESSEE S APPEALS FOR A.Y. 2004 - 05 TO 2006 - 07 AR ISE FROM A COMMON ORDER OF THE CIT(A) - IV, AHMEDABAD DATED 29 - 06 - 2012 IN APPEAL NO S . CIT (A) - IV/56R/CC - 2/11 - 12, CIT (A) - IV/58R/CC - 2/11 - 12 AND CIT (A) - IV/57R/CC - 2/11 - 12 AFFIRMING I T A NO . 54 TO 56 / RJT /20 12 A SSESSMENT YEAR 200 4 - 05 TO 2006 - 07 I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 2 PENALTIES OF RS. 27,5 00/ - , RS. 31,000/ - AND RS. 28,000/ - RESPECTIVELY IMPOSED BY THE ASSESS ING OFFICER U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. FACTS OF THE THREE INSTANT CASES ON IDENTICAL FOOTIN G ARE STATED TO BE IN A NARROW COMPASS. THE ASSESSEE - INDIVIDUAL IS ENGAGED IN REAL ESTATE BUSINESS AND DERIVES INCOME FROM SHARES TRADING, SECURITIES AND DERIVATIVES ETC. HE FILED HIS REGULAR RETURN U/S. 139(1) DISCLOSING INCOMES OF RS. 41,450/ - , RS. 85,1 20/ - AND RS. 89,950/ - RESPECTIVELY QUA THE THE I R IMPUGNED ASSESSMENT YEARS. THE DEPARTMENT CARRIED OUT A SEARCH IN HIS CASE. THIS CULMINATED IN INITIATION OF SECTION 153A PROCEEDINGS. THE ASSESSEE APPEARS TO HAVE DISCLOSED ADHOC INCOME OF RS. 1 LAC EACH IN THE THREE ASSESSMENTS. THE ASSESSING OFFICER ACCORDINGLY ASSESSED HIS ASSESSEE S INCOME TO BE RS. 1,41,450/ - , RS 1,85,120/ - AND RS. 1,89,950/ - . HE INITIATED THE IMPUGNED PENALTY PROCEEDINGS U/S. 271(1)(C) ALLEGING CONCEALMENT AND FURNISHING OF INACCU RATE PARTICULARS OF INCOME. THE ASSESSE CONTESTED THIS PROPOSAL. THE ASSESSING OFFICER OBSERVED IN PENALTY ORDER THAT THE ABOVE STATED ADHOC INCOMES HAS SEEN LIGHT OF THE D AY ONLY BECAUSE OF THE SEARCH I N QUESTION. AND ALSO THAT THIS ASSESSEE S ACTION A MOUNTED TO CONCEALMENT AS PER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. HE PROCEEDED ON THIS REASONING TO LEVY THE IMPUGNED PENALTIES OF RS.27,500/ - , RS . 31,000/ - AND RS. 28,000/ - RESPECTIVELY IN QUESTION. I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 3 3. THE CIT(A) UPHOLDS THE ASSESSING OFFI CER S ACTION. THIS LEAVES THE ASSESSEE AGGRIEVED. 4. WE HAVE HEARD BOTH THE PARTIES. TH E LD. REPRESENTATIVES REITERATE THEIR RESPECTIVE PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED PENALTY ACTION. IT EMERGES FROM THE CASE FILE THAT BOTH THE LOWE R AUTHORITIES NOWHERE PIN POINT TOWARDS ANY INCRIMINATING MATERIAL OR SPECIFIC EVIDENCE CO - RELATING TO ADHOC INCOMES OF RS. 1 LAC EACH AS FOUND IN THE COURSE OF SEARCH. THEY SIMPLY REFERRED TO ASSESSEE S ADHOC DISCLOSURE T O TREAT IT AS A GROUND IMPOSING T HE IMPUGNED PENALTY. WE FIND IN THESE CIRCUMST ANCES THAT A CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SARVODAY ENGINEERING WORKS & M/S. SWASTIK ENGINEERS VS. DCIT ITA NOS. ITA NOS. 211 TO 216 /RJT/2012 & 220 TO 225 /RJT/2012 DATED 03 - 02 - 2016 HO LDS 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 ASSESSEE 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 A BOVE 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 INFER ENCE OF UNDISCLOSED WOULD BE DRAWN. IT ARGUES THAT THE MERE FACT THAT ITS PARTNERS ADMITTED ADDITIONAL 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 CO - ORDINATE BENCH OF THE TRIBUNAL IN IT(SS)A 46/RJT/2012 SHRI MANSUKHBHAI R. SORATHIA VS. I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 4 JCIT DECIDED ON 04 - 11 - 2015 DELETES AN IDENTICAL PENALTY FOR LACK OF SP ECIFIC INCRIMINATING EVIDENCE AS UNDER: - 8. A PERUSAL OF BOTH THESE SECTIONS TOGETHER WOULD INDICATE 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 APPENDED TO SECTION 271AAA PROVIDES THE DEFINITION OF UNDISCLOSED INCOME AND SPECIFIED 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 FI LING OF THE RETURN HAS NOT EXPIRED AND INCOME - TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. SINCE 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 SECTION 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 EXPLANATIO N 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNED, WE DO NOT FIND ANY ERROR. 9. AT THE COST OF REPETITION, WE WOULD LIKE TO OBSERVE THAT 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 VALUABLE 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 INC OME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DURING 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, I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 5 THEN, NOTWITHSTANDING SUCH INCOME IS DECLARED 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 INACCURATE PARTICULARS. THE MOOT QUESTION FOR ATTRACTING THIS EXPLANATION 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 OR 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 SECTIO N 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 AUTHORITIES 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 HA VE 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 ORDERS 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 T HE SEARCH ACTION, ISSUANCE OF NOTICE AND FILING OF THE RETURN, SERVICE OF NOTICE UNDER SECTION 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 DERI VES INCOME FROM AGRICULTURAL ACTIVITIES, REMUNERATION AND INTEREST FROM PARTNERSHIP FIRMS ETC. COPIES OF P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET, WAS FILED WITH THE RETURN. VARIOUS ISSUES WERE DISCUSSED AT LENGTH. I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 6 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSURE UNACCOUNTED INCOME OF RS 22,00,000/ - WHICH WAS NOT DISCLOSED IN THE RETURN FILED U/S. 139(1). THIS BEING CONCEALED INCOME, PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT IS BEING INITIATED. 3. AFTER VERIFICATION, THE TOTAL INC OME IS DETERMINED UNDER: - TOTAL INCOME AS PER RETURN OF INCOME RS 28,45,960/ - ASSESSED INCOME RS 28,45,960/ - INCOME FOR RATE PURPOSE RS.6,14,131/ - . ASSESSED U/S. 153A OF THE I T ACT, 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A, 234B AND 234C OF T HE I T ACT, IF ANY. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATION. 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 SUB MISSIONS MADE BY THE ASSESSES. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE 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 INC OME 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 SEAR CH ACTION INITIATED BY THE DEPARTMENT. IN THE CASE OF THE ASSESSEE, THE 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 I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 7 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 SEA RCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PURPOSE OF IMMUNITY 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 ASSESSEE 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 AVAILABLE 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 T HE COURSE OF SEARCH. WE HAVE EXTRACTED THE RELEVANT PART OF THE STATEMENT 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 13 2(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 THEREAFTER 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 T HAT 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 CON NECTED WITH ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 8 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 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 COURS E 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 OF 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 OFFICIALS 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 U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT 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 I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 9 INCOME TAX ACT ON 4.11.1988. THE STATEM ENT 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 MADE AN ADDITION OF RS.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBSERVED 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 TRIBUNAL 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 RETRACT ION 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 DISCLO SURE, ADDITION CANNOT BE MADE. THERE SHOULD BE SOME CORROBORATIVE 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 VI EW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINCING, HAS NOT 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 STATEM ENT WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE REVENUE 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. HENC E THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY 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 STATEME NT RECORDED BY THE ASSESSING OFFICER I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 10 UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMMITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. 27. IN THE ABOVE VIEW OF THE MATTER, ADDITION OF RS. 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS C ONFIRMED 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 CONCLUSIONS 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 CONSI DERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS JUST AND 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 QUESTIO N 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 P RESENT 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 UNDISCLOSE D 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 A SSESSEES 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 I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 11 IMMEDIATELY REFERRED THE DOCUMENTS, ENTRIES OR ANY ASSET FOUND W HICH IS RELEVANT TO THESE ASSESSMENT YEARS IN THE PENALTY PROCEEDINGS. 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 MON EY, BULLION, JEWELLERY OR INCOME BASED ON ENTRIES WAS NOT FOUND, 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 PEAC E 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. THUS, 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 DESERVE 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 INFERE NCE OF ANY UNDISCLOSED MONEY, BULLION OR ASSETS CANNOT BE DRAWN 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 TO 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 DELETED. ITA 221/RJT/2012 IS ALLOWED. THE REVENUE FAILS TO POINT OUT ANY EXCEPTION THERETO ON FACTS OR LAW. WE CONCLUDE IN THIS BACKDROP THAT BOTH THE LO W ER AUTHORITIES HAVE ERRED IN IMPOSING PE NALTY WITHOUT REFERRING TO ANY SPECIFIC MATERIAL POINTING OUT TOWARDS INCRIMINATING I .T.A NO S . 54 TO 56 /RJT /20 12 A.Y. 2004 - 05 TO 2006 - 07 PAGE NO SHRI SAHADEVSINGH V. VAGHELA VS. DCIT 12 EVIDENCE LEADING TO ANY UNDISCLOSED INCOME IN ASSESSEE S HANDS. THE SAME STANDS DELETED. 5. THESE THREE ASS ESSEE S APPEALS ARE ALLOWED ORDER PR ONOUNCED IN THE OPEN C OUR T ON 15 - 02 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 15 /02 /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