Vildirect: IncomeTax-caselaws-1996-VIL-01-ITAT-AHM

1996-VIL-01-ITAT-AHM

Income Tax Appellate Tribunal AHMEDABAD

Date: 23.09.1996

MANOHARLAL KASTURCHAND

ASSISTANT COMMISSIONER OF INCOME TAX

BENCH

B. L. Chibber, A. M.

JUDGMENT

B. L. Chibber, A. M.

1. The main grievance projected in this appeal by the assessee is that the learned CIT(A) is not justified in confirming addition of Rs. 7 lacs.

2. The assessee, an individual, is a partner of M/s Chokshi Kasturchand Dolaji & Sons. A search under s. 132 was conducted on the premises of the said firm and the partners thereof including the assessee on 4th Nov., 1988. A statement of the assessee under s. 132(4) was recorded and during the course of this statement the assessee made a disclosure of Rs. 7 lacs as follows :

	Rs.
Unaccounted investment in house property	4,00,000
Unaccounted cash	1,00,000
Unaccounted investment in furniture	1,00,000
Unaccounted investment in gold ornaments	1,00,000
Total	7,00,000

Later on, in January, 1989 the assessee retracted from the disclosure and stated that the disclosure of Rs. 50,000 only was acceptable to him. It was submitted before the AO that the disclosure of Rs. 7 lacs was made under pressure and coercion and that no note should be taken of it while completing the assessment. Noting that the disclosure of Rs. 7 lacs was made under s. 132(4) in November, 1988 and the assessee retracted from the same only in January, 1989, i.e., after a lapse of two months, the AO held that the assessee did not have any reason for retracting from the disclosure made under s. 132(4). Further vide his detailed order, the AO gave supporting reasons for making an addition of Rs. 7 lacs representing income disclosed by the assessee under s. 132(4). Thus, an addition of Rs. 7 lacs was made by the AO to the income declared by the assessee.

3. On appeal, the CIT(A) confirmed the addition observing as under :

"I have considered the facts and the appellant's submissions. As discussed supra, the appellant has voluntarily disclosed an income of Rs. 7 lacs on various counts under s. 132(4). It is not the appellant's claim that the disclosure of income under s. 132(4) had been made under duress. The AO has also discussed in detail how the appellant's explanation relating to the various items covered by the additions are just in the nature of an afterthought. In case, the appellant had made any mistake in his statement under s. 132(4), he could have retracted from his statement the very next day. However, it is seen that the appellant has retracted from his statement under s. 132(4) after a gap of over two months. In the circumstances the retraction from his statement cannot help the appellant. Moreover, it is also relevant to note that the appellant has made the disclosure of Rs. 7 lacs under specific heads. It is relevant to note that the facts which are voluntarily admitted by the assessee need no further proof. Considering the facts and circumstances discussed in detail in the impugned assessment order, the AO's action in making the addition of Rs. 7 lacs representing the unaccounted investment in house property (Rs. 4 lacs), unaccounted cash (Rs. 1 lac) and unaccounted investment in gold ornaments (Rs. 1 lac) stands confirmed. Thus, all the additions aggregating to Rs. 7 lacs stand confirmed."

4. Shri R. N. Vepari, the learned counsel for the assessee drew our attention to the affidavit filed by the assessee while retracting from his admission made under s. 132(4) (placed at pages 22 to 25 of the paper book). He submitted that the search operation started at the residence of the assessee on 4th Nov., 1988 at 5-30 AM and was completed on 5th Nov., 1988 at 2-30 AM. The assessee was under a great mental agony and he was compelled to make disclosure of Rs. 7 lacs. He was not permitted discussion with his partners, was denied an opportunity of consultation with his Accountant and Chartered Accountant and was threatened that if he did not make disclosure, the raid would continue even on Dhanterash, i.e., next day and other festival days of Diwali and in the process harming his business to a great extent. The learned counsel for the assessee accordingly submitted that since the admission was got under duress, pressure and coercion, the same ought to have not been used against the assessee and in support of these contentions he relied upon the decision of the Bombay 'C' Bench of the Tribunal in the case of Deepchand & Co. vs. Asstt. CIT (1995) 51 TTJ (Bom) 421. The learned counsel for the assessee further submitted that there was no justification for making addition of Rs. 4 lacs being unaccounted investment in construction of first floor admeasuring about 1200 sq. ft. when the expenditure incurred was supported by withdrawals made by the assessee from his capital account during S. Ys. 2042, 2043 and 2044. He further submitted that there was no justification in making the addition of Rs. 1 lac in respect of unaccounted investment in furniture and fixture on the upper floor when there was no basis for such addition. He further submitted that there was no justification for making addition of Rs. 1 lac in respect of gold ornaments when there was no justification for such addition and when the entire amount was explained. Similarly, there was no justification for making the addition of Rs. 1 lac on account of unaccounted cash. The learned counsel, therefore prayed for the deletion of the impugned additions of Rs. 7 lacs.

5. Shri R. K. Gupta, the learned Departmental Representative strongly supported the order of the authorities below. He submitted that the assessee during the course of search spontaneously made a disclosure of Rs. 7 lacs and there was no reason for the assessee for retraction from the admission. The learned Departmental Representative further relied upon the detailed reasons given by the AO correlating the additions with the disclosure made by the assessee.

6. We have considered the rival submissions and perused the facts on record. There was a search at the residential premises of the assessee and during the course of search the assessee made a spontaneous statement making a disclosure of Rs. 7 lacs under four specific heads, viz. (1) unaccounted investment in house property - Rs. 4 lacs; (2) unaccounted cash - Rs. 1 lac; (3) unaccounted investment in furniture - Rs. 1 lac; and (4) unaccounted investment in gold ornaments - Rs. 1 lac. It is well-settled in law that an admission by a party is the best evidence of a point in issue and, though not conclusive is decisive of the matter unless successfully withdrawn or proved erroneous. What is admitted by a party to be true must be presumed to be true unless the contrary is shown. We do admit that on account of search operations which is an invasion on the privacy of a citizen, the searched person is put to suffer inconveniences and harassment and on account of that, there can be mental turm oil, uneasiness and tension. This Tribunal has taken a similar view in the case of Asstt. CIT vs. Mrs. Sushiladevi S. Agarwal (1994) 49 TTJ (Ahd) 663 : (1994) 50 ITD 524 (Ahd) to which one of us (A. M.) was a party. But in the instant case when during the course of search, cash of Rs. 1 lac was recovered from the residence of the assessee; unexplained gold ornaments were also found; articles of furniture packed in bundles were found and it was discovered that the assessee had constructed first floor of the house property and for the cost incurred thereon, the assessee had no satisfactory explanation, the assessee came forward with a voluntary disclosure of Rs. 7 lacs under four different heads enumerated supra. Thus it was not for the fun of it that the assessee came forward with a disclosure of Rs. 7 lacs. Further, there is nothing on record that the said disclosure was made by the assessee under duress, pressure and/or coercion. The retraction after a lapse of over two months from the date of disclosure by the assessee was an afterthought and the affidavit filed by the assessee on which much reliance has been placed by the assessee's counsel, was a self-serving statement. We can, therefore, say that the assessee has failed to prove and establish that he was tortured by searching party but nonetheless it cannot be ignored that the assessee retracted from the earlier statement made on search date and upon retraction he rendered himself untrustworthy and unreliable in the eyes of law and accordingly the addition of Rs. 7 lacs to the income declared is fully justified.

6.1. Coming to the decision in the case of Deepchand & Co. (supra) relied upon by the learned counsel for the assessee, we find that the facts of that case are distinguishable from the facts of the present case. In that case the statements of the two partners were recorded during the search which continued for more than two days and two nights and there was evidence to the effect that the statements were recorded under pressure and force. In the case before us as elaborated in the preceding paragraphs, the statement of the assessee under s. 132(4) was recorded in free and fair conditions and the assessee voluntarily surrendered a sum of Rs. 7 lacs under four specific heads and there was supporting evidence to the effect that the disclosure was to declare unaccounted/unexplained assets.

7. In the light of the above discussion, we hold that the addition on account of Rs. 7 lacs surrendered by the assessee during the course of search is fully justified and no interference is called for. This ground fails and is accordingly dismissed.

8. The next grievance of the assessee relates to the addition of Rs. 15,000 for low withdrawals or household expenses. The assessee had shown a sum of Rs. 54,000 for household expenses. The AO noted that the family of the assessee was constituted of five persons. Keeping in view the status of the assessee and the size of the family he estimated household expenses at Rs. 69,000 and thus made an addition of Rs. 15,000 for low household expenses.

9. On appeal, the CIT(A) confirmed the addition stating that the estimate made by the assessee could not be said to be unreasonable.

10. Shri R. N. Vepari, the learned counsel for the assessee submitted that full details of household expenses were filed before the AO and the withdrawals for house-hold expenses shown at Rs. 54,000 were reasonable. The learned Departmental Representative relied upon the orders of the authorities below.

11. After considering the submissions made by both the sides we do not see any justification or the impugned action of the CIT(A). The AO has made pure estimate of the expenses and the CIT(A) has confirmed the same without any cogent reasons. In our view the withdrawals shown at Rs. 54,000 were fair and reasonable and the same ought to have been accepted. The addition of Rs. 15,000 is accordingly deleted. This ground succeeds and the assessee gets relief of Rs. 15,000.

12. The next grievance of the assessee is that the CIT(A) ought to have deleted interest under ss. 234A, 234B and 234C. The CIT(A) rejected the ground raised before him with the following remarks :

"The appellant has objected to the charging of interest under ss. 234A, 234B and 234C. The appellant has not mentioned anything as to how the charging of interest under ss. 234A, 234B and 234C can be faulted. It may also be mentioned that the wording of ss. 234A, 234B and 234C makes the charging of interest under these sections mandatory. Accordingly, the charging under the said sections stands confirmed."

After hearing both the sides, we do not find any infirmity in the above remarks of the CIT(A) and confirm his action. This ground fails and is accordingly dismissed.

13. In the result, the appeal is allowed in part.

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