IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.671 of 2009 Date of decision: 7.7.2010 Dr. S.S. Gulati. -----Appellant. Vs. Deputy Commissioner of Income Tax, Sirsa. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Avneesh Jhingan, Advocate for the assessee. Ms. Urvashi Dhugga, Standing counsel for the revenue. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (for short, the Act), proposing to raise following substantial questions of law:- “i) Whether in the facts and circumstances of the case, the orders Annexure A-1 to A-3 making and upholding additions of Rs.15,00,000/- and Rs.2,00,000/- are sustainable in law? ii) Whether in the facts and circumstances of the case, once the gift accounted for by the son of the appellant and those returns accepted by the department could be added to the income of the appellant? iii) Whether in the facts and circumstances of the case, even if the gifts were doubted could be proceedings be taken against the appellant instead of his son? I.T.A. No.671 of 2009 iv) Whether in the facts and circumstances of the case, the department having accepted the returns and computation of the son of the appellant for the relevant year and still the same figure are being added to the income of the appellant, is the stand of the department not contradictory? v) Whether in the facts and circumstances of the case, the gift given by the wife of Sh. Manmeet Singh to him could be doubted as compensatory? vi) Whether in the facts and circumstances of the case, the appellant having been forced to make surrender is thereafter barred to even produce the evidence or to show that the addition being made on the basis of that forced statement is illegal?” 2. The assessee is a medical practitioner and is running a Nursing Home. On survey being conducted at his premises, the assessee surrendered additional income of about 30 lacs. However, in the return for the assessment year in question, the assessee declared income of about Rs.9 lacs. He sought to retract from his statement leading to surrender. His stand was that the source of his income was gifts. This stand was rejected by the Assessing Officer, CIT(A) as well as the Tribunal. The Tribunal held:- “7. We have carefully considered the rival stands on this aspect. The first and the foremost issue to be examined is the veracity of the retraction made by the assessee at the time of filing return of income on 30.3.2005 whereby the incomes on account of Rs.15,00,000/- and Rs.2,00,000/- representing surrender made during survey on 11.9.2003 on account of unexplained expenditure for admission of 2 I.T.A. No.671 of 2009 son in MDS and unexplained educational expenses respectively were not offered for taxation. It is note worthy that the additional income of Rs.30,10,000/- inclusive of the aforesaid amounts was offered for disclosure by the assessee on 11.9.2003. The retraction has been made at the time of filing of return on 30.3.2005. In this connection, we find that at the time of surrender, the assessee also handed over cheques dated 15.9.2003, 14.12.2003 and 15.3.2004 for Rs.3,31,000/-each towards payment of taxes on the amount surrendered. There is no material to suggest that the said cheques have not been honoured. In fact, it only goes to show that as late as 15.3.2004, the assessee was standing by his admission to surrender the additional income of Rs.30,10,000/- declared on 11.9.2003. It is only on 30.3.2005, when the return of income has been filed, that the assessee retracted and the aforesaid amounts were not declared. The Revenue has sought to tax the impugned amounts surrendered during the survey but not declared in the return of income. No doubt, admission by the assessee by itself cannot be a ground to sustain an addition. The admission may not be a conclusive, but certainly it is a relevant piece of evidence. Moreover, the onus is clearly on the assessee to establish that the admission made was wrong or was based on an incorrect appreciation of facts or law. In fact, in this very case, at the time of survey a surrender of Rs.3,70,000/-was made on account of excess stock of medicines which was scaled down to Rs,2,11,000/-in the return of income. The assessee sought to justify the same on the basis of bills, vouchers, quotations etc. produced at the time 3 I.T.A. No.671 of 2009 of assessment proceedings. The assessee was able to satisfy the Assessing Officer that the excess stock computed at the time of survey, which led to a surrender of Rs.3,70,000/-was not the correct state of affairs. It is on this basis, the Assessing Officer computed the excess stock of medicines of Rs.3,10,920/-as against Rs.3,70,000/-declared at the time of survey. We are only trying to point out that the surrender made during the survey can be explained by the assessee to be erroneously made, but the onus in this regard is on the assessee. In so far as the surrender of Rs.15,00,000/-for admission of the son in MDS is concerned, the same was based on the plea that the gifts received by the son of the assessee in the past to raise funds for payment of admission fees etc. have been returned by the assessee to the respective donors during the year from sources outside the books of account. The factum of the assessee having returned such amounts outside the books of account can only be in the knowledge of the assessee. It is a specialized knowledge to which only the assessee is privy. Such admission made at the time of survey could only be in the personal knowledge of the assessee. The assessee has set up a case that the donors making the gifts have confirmed the veracity of gifts and have also confirmed that no amounts have been received by them in lieu of such gifts. This exercise has been conducted in the remand proceedings before the CIT (Appeals). In our view, the admission of the assessee made at the time of survey cannot be dis-regarded. If such was the position, as is being claimed by the assessee, it would have taken steps to rectify the 4 I.T.A. No.671 of 2009 situation immediately after the survey on 11.9.2003. As seen earlier, there is nothing to show that the assessee took any steps to retract the admission upto 30.3.2005, which was after a long gap. Considering the aforesaid aspects, we find enough justification for he CIT (Appeals), to conclude as under :- “(ii) As regards the evidentiary value of the statement recorded during survey and the allegation of the appellant that it was given under coercion and duress, the allegation cannot be accepted at this stage. The appellant had himself surrendered the amount voluntarily, paid the taxes in advance on the surrendered amount as noted in para 5 of the assessment order (it could have stopped the payment of cheques given in advance to the Department, had it been convinced that the statement has been given under coercion and duress). The allegation of coercion and duress is baseless and it is an after thought. (iii) As regards the amounts being paid during the previous year relevant to the assessment years 2002- 03 and 2003-04, it may be mentioned that the amount passed hands during these assessment years i.e. the alleged gifts were given during the assessment year 2002-03 and 2003-04 to Dr. Manmeet Singh; but it is the appellant’s own confession that he returned the money in cash to the donors from the income of the previous year relevant to the assessment year under consideration. (iv) Above all, it is the appellant who is aware of its financial affairs better than any body else. Whether the amounts were returned to the donors in cash from undisclosed income, it was the person who made the statement who knew it better. The statement given in a spontaneous and natural manner, cannot be ignored keeping in view the facts and circumstances of the case. There3 does not appear to be any reason for the appellant for retracting from the surrender, which it has already made during survey and on which it has already paid advance tax voluntarily. Therefore, the action of the A.O. in making the addition of Rs.15,00,000/-is in order and the same is confirmed. The ground of appeal is dismissed.” 5 I.T.A. No.671 of 2009 3. We have heard learned counsel for the parties. 4. Learned counsel for the assessee submits that the Tribunal should have accepted the genuineness of the gifts and alternatively, addition should have been made in the hands of the son of the assessee. 5. We are unable to accept the submission. There is concurrent finding of fact recorded that the assessee had unexplained income, which fact was corroborated by surrender made by the assessee. It has been further held that there was no justification to retract from the statement leading to surrender. Gifts pleaded by the assessee were not genuine as the assessee returned the amount to donors from sources outside the books of account. The assessee had undisclosed income which was liable to be added to the declared income. The findings are not shown in any manner to be perverse. 6. No substantial question of law arises for consideration. 7. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 07, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 6