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In a recent judgment, Delhi High Court has rejected the plea of the assessee who retracted and denied to have made any statement u/s 132(4) during search when the statement in original was not available in the file of the Income Tax Department.

Case Details:
ITA No. 132/2008
Vinod Kumar Khatri (Appellant) vs Dy. Commissioner of Income Tax (Respondent)
Date of Order : 23-11-2015
Coram: Justice S. Muralidhar and Justice Vibhu Bakhru

Facts of the Case(s):
A search was conducted in the premises of the Assessee on 17th February 1992. Thereafter, on 31st August 1992 the Assessee for the first time filed his original return of income for the AY 1992-93 and later a revised return dated 19-01-1993. During the assessment proceedings u/s 143(2), the assessee also filed his statement of affairs. In the said balance sheet, the assessee has shown an opening capital of Rs. 60,500 and on the liabilities side, a sum of Rs. 12,91,42,945.72 was shown towards advances received from Russia for exports. On the assets side, the Assessee showed loans and advances in the names of Dr. Gopal (Rs. 61,26,000), Mr. Deepak Jain (Rs. 30 lakhs), Mr. H.R. Shiv (Rs. 1.50 crores) and Mr. P.C. Sharma (Rs. 1 crore). He also showed cash with Income Tax Department (Rs. 8,94,10,873.72) and a further cash with the income tax department in account of Mr. P.C. Sharma (Rs. 55,74,912). As stated in the assessment order, two statement of the assessee were also recorded on 26th and 27th February 1992 under Section 132 (4) wherein the assessee had surrendered the deposits in the bank accounts totalling to Rs. 13.314 crores thereby claiming immunity from penalty and prosecution proceedings. Also the Assessee requested that the seized amount should be adjusted towards his existing liability on account of advance tax on the amount declared by him under Section 132 (4).

However, the statement in original made by the Assessee was not available in the file of the Income Tax Department and the assessee retracted and denied to have made any such statement u/s 132(4).

ITAT observed that although the statement was not available in the records, its existence was never denied by the Assessee in the course of assessment proceedings. The ITAT declined to accept the contention of the Assessee that no such statement under Section 132 (4) of the Act was recorded. The ITAT referred to Rule 10 of the Income Tax (Appellate Tribunal) Rules, 1963 in terms of which an affidavit had to be filed stating clearly and concisely about an alleged fact which cannot be borne out by, or is contrary to, the records. No such affidavit had been filed by the Assessee. The ITAT observed that “the onus is on the person retracting to demonstrate that the amount surrendered was not an income rather than the duty of the AO to bring evidence for accepting the admission made.” The ITAT noted that “till today the Assessee has never supplied any such goods nor refunded the amount. This shows the conduct of the Assessee and also demonstrates that the amount received was never for supply of goods under the so called contract. These are merely an eye wash.”

The High Court observed as under:

  • At no stage of the assessment proceedings, or even in the memo of appeal filed before the CIT (A), was it urged by the Assessee that he had not made any statement of declaration under Section 132 (4) of the Act in the course of the search.
  • In the absence of any affidavit filed and at any point in time, in terms of Rule 10 of the ITAT Rules, categorically stating that what has been set out in the assessment order was not the statement made by him, the Assessee cannot be said to have discharged the onus of showing that a fact not borne by the record was stated in the order of the AO or the CIT (A).
  • The assessee failed to discharge the onus of showing even prima facie that he was compelled to make a statement during the search.
  • Adjournments were granted to the assessee as and when requested. Apart from the fact that he was represented in the assessment proceedings by a CA or an AR, he also had sufficient time and opportunity to reflect on what had been stated by him during the search proceedings

Download Full Judgment Click Here >>

Delhi HC Rejects Retraction of Statement Recorded u/s 132(4) not challenged during assessment stage and not supported by Affidavit under ITAT Rules | 23-11-2015 |

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