Here I am presenting the "Pullangode Rubber Produce Co. ITD v. State of Kerala & Anr 1972 CTR (SC)) 253: (1973) 91 ITR" case study.
" BACHITTAR SINGH vs. COMMISSIONER OF INCOME TAX & ANR.
HIGH COURT OF PUNJAB & HARYANA
Adarsh Kumar Goel & Ajay Kumar Mittal, JJ.
IT Appeal No. 220 of 2010
21st July, 2010
(2010) 236 CTR (P&H) 587 : (2010) 328 ITR 400 : (2010) 48 DTR 236
Section 69, 133A,
Asst. Year 2003-04
Decision in favour of Revenue
Counsel appeared :
Ms. Radhika Suri, for the Appellant
JUDGMENT
Adarsh Kumar Goel, J. :
This appeal has been preferred by assessee under s. 260A of the IT Act, 1961 (for short, 'the Act') against the order dt. 18th June, 2008 passed by the Tribunal, Chandigarh Bench in ITA No. 224/Chd/2007, for the asst.yr. 2003-04, proposing to raise following substantial questions of law : "(i) Whether in the facts andcircumstances of the case, the Tribunal was correct in law in sustaining the addition of Rs. 19 lakhs made solely on the basis of statement of the assessee recorded on 21st March, 2003 which was retracted on 28th May, 2003, which was recorroborated by evidence collected during the course of survey, contrary to the ratio of the Supreme Court in Pullangode Rubber & Produce Co. Ltd. vs. State of Kerala 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC) ? (ii) Whether the Hon'ble Tribunal was correct in law in sustaining the addition of Rs. 19 lakhs when the assessee was able to explain the source of investment through entries made in his gatta diary which was seized during the course of survey and therefore could not be fabricated ? (iii) Whether in the facts and circumstances of the case, the Tribunal was correct in law in ignoring the decision of its Coordinate Bench given in identical circumstances arising out of the same survey conducted on 21st March, 2003 ?"
The assessee is an individual. In the course of survey under s. 133A of the Act, he gave a statement on 21st March, 2003 surrendering for taxation a sum of Rs. 19 lakhs. He stated that he had purchased Shop No. 5-A, New Cloth Market, Ambala City for Rs. 24 lakhs jointly with his brother and source of investment was not reflected in the books of account. Later, the assessee sought to resile from the said statement by taking a stand that he had agricultural income to that effect and investment was from that source. He had done potato business which was evidenced by entries in a diary found during the survey. He also produced other evidence in support of his claim. The AO rejected this stand holding that there was long gap between the statement made originally on 21st March, 2003 and retraction of the said statement on 28th May, 2003 and the stand taken was an afterthought. Reliance was placed on judgment of Allahabad High Court in Dr. S.C. Gupta vs. CIT (2001) 170 CTR (All) 421 : (2001) 248 ITR 782 (All). On appeal, the CIT(A) upheld the plea of the assessee that earlier statement was incorrect and the resiled statement was supported by diary recovered during the survey. On further appeal, the Tribunal reversed the view taken by CIT (A). It was held that burden was on the assessee to establish that admission made by him during survey was wrong. The assessee had failed to produce the books of account or contemporaneous record of the period during which agricultural income was earned. The statement having not been retracted at the earliest opportunity, voluntary statement made in the presence of family members was an important piece of evidence which could not be brushed aside. It was held that statement of the assessee was material during survey and could be basis of assessment when the assessee had not maintained regular books of account, as held by this Court in Surinder Kumar Charanjit Kumar vs. CIT (2006) 201 CTR (P&H) 37 : (2006) 282 ITR 78 (P&H).
We have heard learned counsel for the appellant-assessee. Learned counsel for the assessee vehemently submitted that statement made during survey could be retracted and could be proved to be wrong. It was also submitted that the said statement was not at par with the statement made under s. 132(4) of the Act on oath. Reliance has been placed on judgment of the Hon'ble Supreme Court in Pullangode Rubber & Produce Co. Ltd. vs. State of Kerala 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC) and judgment of Delhi High Court in Ester Industries Ltd. vs. CIT (2009) 226 CTR (Del) 112 : (2009) 20 DTR (Del) 233 : (2009) 316 ITR 260 (Del), in support of submission that admission wrongly made could be withdrawn. Reliance has also been placed on judgment of Madras High Court in CIT vs. S. Khader Khan Son (2008) 214 CTR (Mad) 589 : (2008) 300 ITR 157 (Mad), to submit that statement under s. 133A stands on different footing from statement made under s. 132(4) of the Act and had no evidentiary value, per se.
We do not find any merit in the submissions made. The Tribunal categorically held that in the facts andcircumstances, the order of CIT(A) could not be upheld as retraction from statement had to be at the earliest opportunity in absence of which voluntary statement recorded in the presence of family members was an important material which could be acted upon. Relevant observations are : "It is not the case that the assessee produced the records, books of account or the IT record of the period when the assessee claimed to have done potato business by claiming bad debt. As far as the question posed by the learned CIT(A) in his order, 'whether the assessee can retract his statement' the obvious reply is 'yes' but that should be at the earliest opportunity when the statement was recorded or at least within a reasonable time, consequently, the voluntary statement that too recorded in the presence of family members and counsel is an important piece of evidence which simply cannot be brushed aside unless and until otherwise is proved. Identical ratio was laid down by the Hon'ble jurisdictional High Court in the case of Surinder Kumar Charanjit Kumar vs. CIT (2006) 201 CTR (P&H) 37 : (2006) 282 ITR 78 (P&H), on surrender of amount during income-tax survey operation, though on adoption of GP rate, the Tribunal was held to be justified. Therefore, under the facts, onus is on the assessee and not on the Revenue to substantiate its claim. In the light of the aforesaid facts and judicial pronouncements, on the impugned issue, we reverse the order of the learned CIT(A) and restore the stand of the learned AO." It is not disputed that statement was made by the assessee at the time of survey, which was retracted on 28th May, 2003 and he did not take any further action for a period of more than two months. In suchcircumstances, the view taken by the Tribunal that retraction from the earlier statement was not permissible, is definitely a possible view. Mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold that statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances, statement of the assessee could certainly be acted upon.
As regards judgments in Pullangode Rubber & Produce Co. Ltd. (supra) and Ester Industries Ltd. (supra) relied upon by the assessee, even though it may be open to show an earlier statement or an entry to be erroneous, in the present case, the Tribunal was justified in holding that earlier statement was not proved to be incorrect. As regards judgment of the Madras High Court in S. Khader Khan Son (supra), we are of the view that even if statement under s. 133A was not at par with statement under s. 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in absence of regular books of account. The Tribunal rightly followed observations of Allahabad High Court in Dr. S.C. Gupta (supra) and of this Court in Surinder Kumar (supra). Thus, having regard to the facts and circumstances of the case, the view taken by the Tribunal cannot be held to be perverse or illegal. No substantial question of law arises.
The appeal is dismissed. "
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