INCOME TAX ACT, 1961

Section 153A read with Section 132(4)

Search and seizure - Assessment under section 153A - Evidentary value of statement recorded under section 132(4) though retracted -

A search under section 132 was conducted in the residential and commercial premises of the assessee group on 5-9-2013. During the search operations, incriminating materials related to suppression in Sales and Incomes of the assessee group were unearthed in the various premises of the assessee group. Statements given by T.K. Abdul Karim, Anub Sha and Ahmed Faizal Sha and their employees confirmed the practices of the assessee group in doing so. From the statements given by the Directors and the Employees, it was seen that the assessee group in the Wheat flour-manufacturing front, resorted to different methodologies to generate unaccounted sales and income from the trade. The assessee had used P.K. Kunjumoideen (PAN- AHDPK83Q1E) as a front. P.K. Kunjumoideen was shown as the proprietor of M/s. Teekay Rice Mill. A similar deposition was given by Accountant of the assesses. On the basis of statement though retracted AO reached the conclusion that assessee did not sell the raw-material to M/s. Teekay Rice Mill and it was used only for the name sake. In fact, finished products like Maida, Sooji, etc., was sold and the resultant profit was pocketed by the assessee without routing through the books of the assessee with a purpose to evade taxes. CIT(A) also confirmed AO's view however, taking an overall view, if the profit was restricted to 50% of the profit estimated by the assessing officer, it shall meet the ends of justice. Thus, the Commissioner (Appeals) restricted the additions to 50% of the additions made by the AO on this account and balance 50% was deleted. The addition was based on the statements recorded from various persons and seized documents. Held: Statement recorded under section 132(4) cannot be independently used for making any addition in the hands of the assessee and the said statement cannot, be the sole basis for making any addition and must be independently corroborated by evidences. Thus, on a careful reading of the decisions of the Supreme Court the legal position that emerges is that a sworn statement, though binds the assessee, it cannot be the sole basis for making the assessment. It is open to the assessee to show the circumstances in which confessional statements were recorded and once the assessee proves that confessional statements were recorded under threat and coercion and retracts from the same, the confessional statements cannot be the sole basis for making assessments or for making any addition in the hands of the assessee. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. The statement of P.K. Kunjumoideen cannot be the basis to hold that he had acted and carried on business of wheat products on behalf of the assessee. On the other hand, the evidence brought on record by the assessee shows that P.K. Kunjumoideen was not carrying on business on behalf of the assessee.

Relied:Vinod Solanki (2009) (233) ELT 157 (SC) : 2009 TaxPub(EX) 0036 (SC); Romesh Chandra Mehta v. State of West Bengal (1969) 2 SCR 461 : 1999 TaxPub(EX) 1531 (SC); K.T.M.S. Mohd. & Anr. v. Union of India (1992) 197 ITR 196 (SC) : 1992 TaxPub(DT) 1274 (SC) and CIT v. S. Khader Khan Son (2008) 300 ITR 157 (Mad) : 2008 TaxPub(DT) 0787 (Mad-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 to 2014-15

INCOME TAX ACT, 1961

Section 153A Section 132

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