Income Tax Appeal No. 586 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 586 of 2005 Date of decision: 30.11.2010 Commissioner of Income Tax-I Chandigarh --- Appellant Versus Jatinder Kumar, Sector 37, Chandigarh --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Urvashi Dhugga, Standing Counsel for the appellant. None for the assessee --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 13.5.2005, passed by the Income Tax Appellate Tribunal Chandigarh Bench ‘A’ Chandigarh (in short “the Tribunal”) in IT(SS)A No. 68/Chd./2002 and C.O. No. 38/Chd./2003 filed therein by the assessee, relating to the block assessment period from 1.4.1988 to 22.7.1998. The appeal was admitted for determination of the following substantial question of law by this Court: Income Tax Appeal No. 586 of 2005 2 “Whether in the facts and circumstances of the case, the Hon’ble ITAT is justified in holding that the statement of the assessee recorded on oath under Section 132 of the Income Tax Act, 1961 cannot be relied upon or used against the assessee in the absence of any corroborative material?” The facts, in brief, necessary for adjudication, as narrated in the appeal are that during the search and seizure operation at the business premises of the assessee carried out by the Department on 22.7.1998, it was noticed that the assessee had purchased a plot in Sector 16, Chandigarh for a sum of Rs. 12,00,000/-. The assessee made a statement before the Department that in respect of the plot a conveyance deed had been executed for a sum of Rs. 8,40,000/- and the balance amount of Rs.3,60,000/- had been received by him in cash. In the wake of the above, a notice under Section 158BC of the Act was issued to him. The assessee filed return declaring his income as nil. However, during the course of assessment proceedings, the assessee retracted from his statement made during the search operation. The assessing officer, after observing that the retraction from the statement was an after-thought and treated the investment of Rs. 3,60,000/- received by the assessee in cash as unexplained investment and the deemed income under Section 69B of the Act for the financial year 1997- 98. The assessing officer consequently made addition of Rs. 3,60,000/-, vide order dated 31.7.2000. The Commissioner of Income Tax (Appeals), [hereinafter referred to as “CIT(A)”] accepted the appeal of the assessee, vide order dated 27.3.2002 and deleted the addition of Rs. 3,60,000/- made by the assessing officer. It was observed by the CIT(A) that the assessee was Income Tax Appeal No. 586 of 2005 3 frightened and coerced to make statement that he had received a sum of Rs. 3,60,000/- in cash over and above the sale consideration of the plot. The Revenue took the matter in appeal before the Tribunal. The assessee also, filed cross-objections in the said appeal. The Tribunal upheld the order of the CIT(A) and dismissed the appeal, vide order dated 13.5.2005, holding that as per the conveyance deed, the cost of the plot had been mentioned at Rs. 8,40,000/- only and the Department had no proof that the assessee had received more amount than what was shown in the conveyance deed. We have heard learned counsel for the Revenue and perused the record. Learned counsel for the Revenue placed reliance on a decision of this Court in Income Tax Appeal No. 126 of 2003 (The Commissioner of Income Tax, Jalandhar-II v. Lekh Raj Dhunna) decided on 29.9.2010, to contend that once a statement had been made on oath under Section 132(4) of the Act at the time of search, the addition on that count was justified. It was further submitted that in case the assessee chose to retract from his statement made under Section 1324) of the Act, the onus was upon him to show that the statement was being disowned by him at the earliest opportunity available to him, and the reason for its retraction. Reliance was also placed on the decision of the Kerala High Court’s judgment in V. Kunhambu and sons v. Commissioner of Income-tax, (1996) 219 ITR 235 (Kerala). The point for determination in this appeal is, whether the statement made by the assessee under Section 132 sub section (4) of the Act, at the time of search which is recorded on oath, can form basis for making addition when the assessee is unable to rebut the same. Income Tax Appeal No. 586 of 2005 4 The scope and interpretation of Section 132(4) came up for consideration before this Court in Lekh Raj Dhunna’s case (supra) wherein it was observed as under: “Sub-section (4) of Section 132 enables the authorized officer to record on oath the statement of the persons who are found to be in possession or control of article or thing at the time of search. Under this provision, the Assessing Officer is empowered to use such statement against the assessee and base the assessment thereon. However, where the assessee is able to establish that the statement so made was not voluntary but was a result of coercion or inducement, the same may not be acted upon. The onus lies very heavy upon the assessee in such circumstances to prove such coercion or inducement. Further, the assessee can produce evidence to rebut the statement recorded under Section 132(4) of the Act. Explanation inserted by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1.4.1989 permits the examination of the persons under sub-section (4) not only in relation to the books of account, other documents or assets found as a result of search but also on any other matter relevant for any proceedings under this Act or the Income Tax Act, 1922.” In view of the above, where the assessee alleges that the statement which was recorded under sub-section (4) of Section 132, was not his voluntary statement, it is on the assessee to prove so and simplicitor retraction from that statement would not come to his rescue. Admittedly, in the present case, the search took place in the year 1998 Income Tax Appeal No. 586 of 2005 5 whereas the assessee sought to retract from the statement made by him on oath, in 2000 without there being any plausible explanation for allowing a long period of two years to be gone by, i.e. the period when the statement was made by the assessee and when he wanted to retract there from. The CIT(A) and the Tribunal were, thus, not right in deleting the additions on that basis. In view of the above, the substantial question of law is answered in favour of the Revenue and consequently, the appeal is allowed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 30, 2010 JUDGE *rkmalik*