$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 27.01.2015
+ ITA 24/2015
C.M. No.621/2015
RAJ HANS TOWERS PVT. LTD. ..... Appellant
Through: Mr. R.P. Garg, Advocate.
versus
COMMISSIONER OF INCOME TAX-V ..... Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K. GAUBA
S.RAVINDRA BHAT, J. (OPEN COURT)
1. Since 23.01.2015 was declared holiday, this matter is being
taken up today, i.e., 27.01.2015.
2. The assessee in this appeal under Section 260A urges that the
impugned order of the Income Tax Appellate Tribunal (hereafter
referred to as ITAT) requires interference. It is aggrieved by an order
of the ITAT dated 12.06.2014 in ITA Nos.4922/del/2011 and
4257/Del/2011. The question of law sought to be urged is whether, in
the circumstances, the addition of Rs.63,33,260/- is legally
sustainable.
3. The assessee engaged itself in real estate and constructions
activities. It was subjected to survey operation under Section 133A of
the Income Tax Act. During the course of survey, the statement of one
of its Directors was recorded, wherein he disclosed that a sum of
ITA-24/2015 Page 1
Rs.15,00,55,000/- is an additional income outside the regular books of
accounts and furnished details in this regard. These amounts were split
into three parts and have been reflected in a tabular statement in
paragraph 6 of the impugned order. The assessee had not disclosed
this income in its returns, but declared it at the time of survey. It was
asked to show cause why the said unaccounted amount, disclosed by
Mr. Goyal on its behalf, should not be added back to the total income.
The assessee alleged that the surrendered amounts were not voluntary
and bona fide and the same was obtained in illegal and arbitrary
manner, and in the absence of any evidence or material in relation to
the surrender, the surrender made during the course of survey was also
retracted. The Assessing Officer, however, rejected the explanation
and added back the amounts. The CIT (A) gave partial relief by
taking into account the debit entries from the gross receipts, thus
reducing the total taxable income.
4. The assessee appealed; the Revenue too cross appealed. The
assessee's appeals were rejected. In support of its appeal, reliance
was placed upon three decisions of this Court in CIT v. Anil Bhalla
(2010) 322 ITR 191 (Delhi), CIT v. Dhingra Metal Works (2010) 328
ITR 384 (Delhi) and CIT v. Akme Projects (judgment of this Court in
ITA 596/2012, dated 2.5.2013). It is contended that the Revenue
could not have included the amount merely on the basis of some rough
noting and brought them to tax. Counsel particularly relied upon the
decision in Dhingra Metal Works (supra) to say that the material
which the Revenue comes by, during the course of survey, can at best
be used in the order and cannot be considered as a conclusive piece of
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evidence by itself. Likewise, it was submitted that the other decisions
have emphasised that in the absence of corroborative objective
material, the Revenue authorities cannot rely exclusively upon the
materials gathered during the course of survey to hold them to be
receipts.
5. In Dhingra Metals, the Court no doubt noticed that unlike
Section 132 (4), Section 133A (3) (iii) merely enables the AO to use
its discretion to record a statement, but does not empower the AO to
take a sworn statement on oath. The existence of that discretion was
highlighted to say that the recording of a statement is not compulsory,
and, therefore, that the statement obviously lacks evidentiary value.
Consequently, adverse inferences cannot be drawn from the statement
and due regard is to be given to the explanations offered as well as the
existence or otherwise of other materials. The Court then went on to
hold as follows in the facts and circumstances of that case:
"16. Since in the present case, the respondent-assessee has
been able to explain the discrepancy in the stock found during
the course of survey by production of relevant record including
the excise register of its associate company, namely, M/s.
D.M.W.P. Ltd., we are of the opinion that the AO could not
have made the aforesaid addition solely on the basis of the
statement made on behalf of the respondent-assessee during the
course of survey."
6. We notice that in Anil Bhalla (supra), the Court was concerned
with search and seizure operations. It dealt with an addition made
under Section 69C of the Act. The Court apparently - as is evident
from a plain reading of the text of the judgment - takes note of Section
132 (4A), which raises a presumption as to certain facts. Besides, we
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notice that the judgment has briefly touched upon and dealt with the
facts of the case. Likewise, in Akme (supra) too, the Court refused to
draw into any discussion considering concurrent nature of the findings
and did not frame the question of law.
7. We notice that Section 132 (4) also enables the AO to use his
discretion as is evident from the term "may". The discussion in
Dhingra Metals, as is evident from paragraph 11 of the judgment, is
upon the evidentiary value of the statement recorded in the course of a
search and seizure operation. The Court had occasion to interpret
Section 133(A). That was not a case where the Court analysed
Section 132 (4) or dealt with the presumption enabled under that
provision. In the present case, the extent of amounts which the AO
took into consideration in adding back on the basis of the receipts and
rough jottings was Rs.1,11,12,860/-. The assessee's Director stated
this in the course of survey in the statement recorded by the Revenue.
Though the assessee claims - in the reply to the questionnaire given to
it on 27.11.2010 - that the statement was not voluntary and the
surrender was not binding, we notice that the reply dated 21.12.2010
itself does not give the date when such retraction letter was given to
the assessee.
8. This Court is of the opinion that in the circumstances of the
case, the approach of the CIT - as affirmed by the ITAT - cannot be
faulted. The discretion vested in the Revenue authorities in content
and character is not radically different in the case of a survey or in the
case of search and seizure operations as is evident from a plain reading
of Section 133A (3) and 132(4). Whereas the latter uses the expression
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"may examine on oath", the former says that the authority "may
record statement which may be useful for, or relevant to" in
proceedings under the Act. This provision, Section 133A (3) had
undergone further amendment inasmuch as the Revenue is precluded
from taking any action under Section 133A (3) (ia) or Section 133A
(3) (ii), i.e., from impounding and taking into custody any books of
account, etc. or making an inventory of any cash, stock or other
valuable item verified by him while acting under Section 133 (2A) by
the Finance Act 2 of 2014. The obvious inference, therefore, is that in
respect of statement which fall in Section 133A (3) (iii), the discretion
to use it as a relevant material continues.
9. This Court is conscious that in Dhingra Metal, the Division
Bench used the expression "conclusive evidence". Now, that
expression has to be understood in its common parlance and not in a
legal sense, i.e., it cannot be understood to mean something which is
to be proved beyond reasonable doubt. Such burden does not arise and
cannot be expected to be discharged by the Revenue. Instead, the
reference to the presumption under Section 132 (4A) refers to
presumption of fact of the genre Section 114 of the Evidence Act deals
with it. Likewise, the relevance and admissibility follow the same
train of thought conceptually, when one comes to Section 133A (3)
(iii). All that this provision enables to the authority concerned to do is
to draw an adverse inference by relying upon materials which are
seized, or dealt with in the course of the survey.
10. In the present case, the admitted facts are that during the survey,
a Director of the assessee - who was duly authorized to make a
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statement about the materials and the undisclosed income, did so on
20.11.2007. The Company did not retract it immediately or any time
before the show cause was issued to it. For the first time, in reply to
the show cause notice it faintly urged that the statement was not
voluntary and sought to retract it. The reply, a copy of which has been
placed on record, undoubtedly makes reference to some previous letter
retracting the statement. Learned counsel urged that that letter was
written on 21.12.2007. However, the actual reply to the show cause
notice is silent as to the date. This itself casts doubt as to whether the
retraction was in fact made or was claimed as an afterthought.
11. Furthermore, this Court is of the opinion that in the
circumstances of the case both the CIT (A) and ITAT were correct in
adding back the amount of Rs.63,33,260/- after adjusting the
expenditure indicated. The explanation given by the assessee, in the
course of the appellate proceedings, that the surrender was in respect
of a certain portion of the receipt which had remained undisclosed or
that some parts of it were supported by the books, is nowhere borne
out as a matter of fact, in any of the contentions raised by it before the
lower authorities. For these reasons, this Court is of the opinion that
no substantial question of law arises. The appeal is accordingly
dismissed.
S. RAVINDRA BHAT, J
R.K. GAUBA, J
JANUARY 27, 2015/vikas/
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