:1: [ASN] [ASN] [ASN] IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.583 OF 2005 M/s. Hiralal Maganlal & Co. ..Appellant. Vs. The Dy. Commissioner of Income tax. ..Respondent. Mr.P.R.Toprani with Mr. Y.P.Trivedi and Ms. Usha Dalal for the Appellant. Mr. A.S. Shivsharan with Mr.P.S.Sahadevan for the Respondent. CORAM : F.I.REBELLO & R.S.MOHITE, JJ. DATE : 2ND MARCH, 2009. PC : 1. The assessee is in appeal against the order of the Tribunal dated 20.9.21004 whereby the appeal preferred by the assessee has been dismissed. 2. The learned counsel for the assessee has submitted the reframed substantial questions of law, which are as under. 1. Whether on the facts and in the circumstances of the case and in law, was it not obligatory for the Assessing Officer either to seize the alleged undisclosed stock under Section 132(1)(iii) of the Act or atleast issue a prohibitory order under Section 132(4) of the Act? 2. Whether by not doing so, was it established :2: as urged by the Assessee that in fact there was no such undisclosed stock in existence? 3. Whether the Income tax Tribunal was justified in applying the provisions of Section 132 (4A) only to the front part of the documentary evidence and not to the backside narration found on Sheet No.16 which was seized by them and thereafter was in their exclusive possession? 4. Whether the Tribunal was justified in relying on part of the seized material and disregarding the other part seized at the same time? 5. Whether the Income tax Tribunal should have sent the matter back for examining the veracity of the writing on the back of sheet No.126 by sending it to the hand writing experts without rejecting it? 6. Whether the addition made on the admission of assessee who was a sick person with suicidal tendency and who later retracted his admission substainable in law? 7. Whether the Tribunal ought to have held that :3: the seized sheet No.16 was only projection of purchases to be made in the next season? 8. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the CBDT circular F.No.286/2/2003-IT(inv) dated 10.3.2003, has no application to the facts of the Appellant’s case? 9. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in treating the alternative ground of appeal taken by the Appellant as a contradictory statement, warranting the dismissal of the Appellant’s appeal? 10. Whether on the facts and in the circumstances of the case and in la, was the A.O. justified in rejecting the Affidavit of Navinchandra Mehta without examining him in view of the judgment of the Supreme Court in the case of Mehta Parikh & Co. Vs. CIT reported in 30 ITR 181. 3. At the time of hearing of the appeal on behalf of the appellant the learned counsel submits that firstly :4: the statement recorded of the partner could not have been accepted as the same was subsequently retracted. It is secondly contended that though loose papers were found, no stock was found and consequently the writing on the loose papers and the admissions, if any, could not have been accepted. It is therefore, submitted that the impugned order of the tribunal ought to be set aside. 4. We have carefully gone through the findings recorded by the Tribunal. From the record, we find that on 22.11.1995 business premises of the assessee were searched. In the course of the search, various papers were found. We are concerned with Pages 13 to 16 in the matter of undeclared stock. Two statements were recorded on the very same day. Firstly, the statement of the Chief Accountant of the assessee firm Javerchand K. Momaya was recorded at 7.a.m. on 22.11.1995 at the business premises of the assessee-firm. With reference to these papers, the Chief Accountant clearly set out that these are daily stock statements lying at various godowns. Similarly, pages 17 to 23 have also been explained. Pages 10 and 11 pertain to purchase of majuri bills of jewellery which were paid by cheques. He was asked where the stock is lying to which he replied that stock is lying in various godowns and he has no further details. It was further stated that the stock sheets are prepared on day to day basis and are :5: not preserved and he was not aware whether stock has been accounted for. 5. The statement of Pratap Maganlal Sanghavi the partner was also recorded. He was confronted with the papers and his statement was recorded on 11.11.1996 after statement of the Chief Accountant. In so far as pages 13 to 16 are concerned, he explained that these are stock statements of stock lying in various godowns. He was asked to elaborate and he stated that on checking with the books with the officer at Vashi on telephone he was unable to find the same in books. The statement recorded of the Chief Accountant was shown to him and the only answer was to give him some time for checking. With reference to the stock, he stated that he has consulted with the Chief Accountant as also Shantilal Momaya of Vashi Office and thereafter said that the stock statements in Pages 13 to 16 are unaccounted and are other than the stock found in the premises referred to. Thereafter, he offered unaccounted stock of Rs.1.99 Crores to buy peace with the department and offered a sum of Rs.2/- Crores as unaccounted income of the assessee firm for the year 1996-97. 6. These statements which were made on the day of the search were not rescinded immediately. At the enquiry the statements recorded were of Jhaverchand K. Momaya and of Navinchandra S. Mehta. A declaration of :6: Navinchandra S. Mehta was also filed. The further statements recorded are in Sept. 1996, was an attempt made to resile from the earlier statements on the ground that the earlier statements were made under force. In our opinion, the Tribunal rightly rejected the said submission. One could have understood that if the statements were taken were under force they were immediately or within reasonable time at the first opportunity rescinded. No such steps were taken until further statements were recorded sometime in Sept.1996. Merely because further statement is recorded by itself is of no reason not to consider the statement of the Chief Accountant as also of the Partner who was managing the affairs of the assessee firm. We are clearly of the opinion that the tribunal has rightly rejected the contention. 7. In so far as the contention that stock was not discovered, the Tribunal has noted that considering the statement made by Prataprai Sanghvi at the time of search , the search party, acting upon the same, did not make further investigation with regard to unaccounted stock. The failure, if any, to recover the unaccounted stock of the assessee cannot be held against the revenue, considering the fact that the statements of the Prataprai Sanghavi and Jhaverchand Momaya were recorded and they were voluntary. :7: 8. We are clearly of the opinion that the order does not give rise to any substantial questions of law. The findings are findings of fact. 9. Clearly therefore, no questions of law as framed would arise. Consequently, appeal dismissed. (R.S. MOHITE, J.) (F.I. REBELLO, J.)