Retraction of statement u/s 132(4) after months on the ground of coercion. Assessee must give justifiable reason and cogent material to show that admission was not voluntary.
ABCAUS Case Law Citation:
ABCAUS 2391 (2018) 07 ITAT
The instant appeal was preferred by the assessee against the order of Commissioner of Income Tax (Appeals) whereby he rejected the Retraction of statement u/s 132(4) of the Income tax Act, 1961 (the Act).
A search action u/s 132 of the Act was conducted at the business and residential premises of the assessee. Various documents/books of accounts were found and seized. Statement of assessee was recorded u/s 132(4) of the Act. At that time, the assessee made surrender of income represented by cash, unaccounted sales, unaccounted advances, cash in locker and jewellery.
Subsequently, in response to notices u/s 142(1) and 143(2) of the Act, the assessee filed the return of income including the additional income over and above the income filed in the original return.
However the assessee did not include the amount towards unaccounted advances as declared at the time of search, based on the jottings in the diary. On being questioned, assessee replied that the alleged declaration in the statement u/s 132(4) was retracted by him vide letter addressed to the Director of Income-tax (Investigation).
The AO did not accept the contention of the assessee that the alleged jottings in the diary had nothing to do with the present assessment year because such diary belonged to the year more than ten years back and jottings indicated the outstanding balances at that time, as such, they could not be brought to tax under law in the relevant assessment year.
On appeal by the assessee, the CIT(A), held that the contention of the assessee that the outstanding balance could not be brought to tax was not acceptable because of the statement u/s 132(4), which was sought to be retracted initially on the ground of coercion on the part of the authorized officer and subsequently, on the ground of mistaken understanding of fact or law.
Before the Tribunal, the assessee contended that the addition was based on the declaration made by the assessee in his statement recorded u/s 132(4) of the Act which the assessee had rightly retracted on the ground of mistaken understanding of the fact or law.
It was submitted that the entries on the diary of which the amount was calculated belongs to the year dated more than 10 years back and had nothing to do with the relevant AY.
The Tribunal noted that the the initial ground of retraction by the assessee was that the authorized officer coerced the assessee whereas after 1½ years the assessee had taken the plea of mistaken understanding of fact or law. There was no possibility of any mistaken understanding, because looking at the diary dates the assessee could have plainly explained that such an entry did not belong to the relevant year. However, for 1½ years, the assessee did not dispute the correctness of the declarations made in his statement u/s 132(4) of the Act. It was only on the advice that the assessee retracted the declaration, which was not acceptable and it did not fit in the statement recorded u/s 132(4) of the Act.
The Tribunal opined that when a document is found in the possession of the assessee, its ownership is not in dispute and the assessee makes a declaration in the statement under section 132(4) of the Act based on such entries, then when initially the assessee declared the amount and subsequently, desired to retract the same, it was for the assessee to explain the contrary, if any.
The tribunal opined that the CIT(A) had rightly relied on the various decisions/judgments and held that the assessee must give justifiable reason and material for the retraction to be acceptable and also give cogent material to show that the admission made in the statement was under pressure or coercion and was not voluntary.
The Tribunal further observed that when viewed from the ratio of the decisions, the retraction of the declaration initially after more than 1 ½ month on the ground of coercion and subsequently, after 1 ½ year on the ground of mistaken understanding of fact or law, did not appear to be justifiable. In the peculiarity of the circumstances, the burden was on the assessee to show that the entries in the alleged diary did not belong to the relevant Asstt. Year by producing cogent evidence to show they related to other years. Revenue cannot be expected to prove that these entries were relates to the relevant AY because of the nature of the entries, which were in the personal knowledge of the assessee.
The Tribunal held that in the absence of relevant material to show that those entries were not related to the relevant Asstt. Year it was difficult to accept the bald denial made by the assessee.
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