S.C. Gupta,, v. ITO, Ward-18(3),,

ITA 2607/DEL/2004 | 2000-2001
Pronouncement Date: 29-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 260720114 RSA 2004
Bench Delhi
Appeal Number ITA 2607/DEL/2004
Duration Of Justice 5 year(s) 8 month(s) 1 day(s)
Appellant S.C. Gupta,,
Respondent ITO, Ward-18(3),,
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 29-01-2010
Date Of Final Hearing 01-09-2009
Next Hearing Date 01-09-2009
Assessment Year 2000-2001
Appeal Filed On 28-05-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI A.D. JAIN AND SHRI A.K. GARODIA ITA NO. 2607(DEL)2004 ASSESSMENT YEAR: 2000-01 SHRI S.C. GUPTA INCOME TAX OFFICER C-276 SARITA VIHAR NEW DELHI. V. WARD 18(3) NEW DELHI. ITA NO. 454(DEL)2008 ASSESSMENT YEAR: 2000-01 INCOME TAX OFFICER V. SHRI S.C. GUPTA WARD 18(3) NEW DELHI. C-276 SARITA VIHAR N.DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY: S/SHRI AJAY VOHRA ACHIT JAIN&R.P. MU NJAL CA DEPARTMENT BY: SHRI G.S. SAHOTA SR. DR ORDER PER A.D. JAIN J.M. ITA NO. 2607( DEL)2004: THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2000-01 TAKING THE FOLLOWING GROUNDS:- 1. THE PROCEEDINGS U/S 147 ARE INVALID AND WITHOUT JURISDICTION. 2. THERE ARE NO MATERIALS BEFORE THE ASSESSING OFF ICER AND THE ALLEGED MATERIALS ARE IRRELEVANT TO HAVING R EASONS TO BELIEVE THAT ITA 2607(DEL)04 & 454(DEL)08 2 INCOME HAS ESCAPED ASSESSMENT THE PROCEEDING S U/S 147 ARE WITHOUT JURISDICTION. 3. THE CONFESSIONAL STATEMENT ALLEGED IS NOT A FACT OR EVIDENCE AND AFTER RETRACTION OF THE SAME IT CEASES TO BE RELEVANT THUS THE PROCEEDINGS U/S 147 ARE IRRELEVANT. 4. THE LOWER AUTHORITIES HAVE ERRED IN INCLUDING RS . 40 32 507.00 AS INCOME OF THE APPELLANT. 5. THE AFORESAID INCLUSION IS PERVERSE NOT BASED O N EVIDENCES AND BASED ON IRRELEVANT CONSIDERATION. 6. THERE ARE NO EVIDENCES ON RECORD TO SHOW THAT TH E APPELLANT HAD ACQUIRED US $ 84 000 AND THUS THE INCLUSION OF RS. 40 32 507.00 IN INCOME IS WRONG. 7. THE POSSESSION OF US $ 84 000 WAS HELD AND THE F OREIGN CURRENCY CONFISCATED U/S 110 OF THE CUSTOMS ACT 1962 BY CUSTOMS AUTHORITIES AND IN SUCH CIRCUMSTANCES THE AO R ELYING ON CERTAIN STATEMENTS ALONE CANNOT INFER INCOME OF THE APP ELLANT. THEREFORE THE INCLUSION OF RS. 40 32 507.00 IS WRONG. 8. THE WHOLE DETERMINATION OF ALLEGED INCOME OF RS. 40 32 507.00 BASED ON THE ALLEGATION INFERENCES CONCLUSIONS BY AN EXTRANEOUS AUTHORITY NAMELY CUSTOMS AUTHORITIES CANNOT C LOTHE THE AO WITH THE JUDICIAL POWER TO INCLUDE RS. 40 32 507.00 AS INCOME OF APPELLANT. 9. SHRI S.C. TULI HAS NOT BEEN OFFERED TO BE CROSS EXAMINED BY THE APPELLANT SO ANY RELIANCE ON THE SAME IS INADM ISSIBLE IN LAW AND THEREFORE THE INCLUSION OF RS. 40 32 507.00 IN TOTAL INCOME IS WRONG. 10.THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC E TO ONE ANOTHER AND NO PART OF THE SAME SHOULD BE TREATED AS AD MISSION OF THE APPELLANT. 11.THE INTEREST PROVISION OF SECTION 234 B IS NOT A PPLICABLE AT ALL AND LEVY OF INTEREST MAY BE ANNULLED. ITA 2607(DEL)04 & 454(DEL)08 3 12.THE MECHANICAL LEVY OF INTEREST U/S 234 B MAY PL EASE BE CANCELLED. 13.THE PROVISION OF SECTION 234 C IS NOT APPLICABLE AT ALL AND THE LEVY OF INTEREST MAY BE ANNULLED. 2. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSES SEE HAS STATED THAT GROUND NOS. 1 TO 3 ARE NOT PRESSED. REJECTED AS N OT PRESSED. 3. GROUND NOS. 4 TO 10 RELATE TO THE ADDITION OF RS . 40 32 507/-. THE FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION ON 27.6.2000 DECLARING INCOME OF RS. 10 08 220/-. THIS RETURN WAS PROCESSED U/S 143(1)(A) OF THE I.T. ACT. SUBSEQUENTLY THE AO RECEIVED INFORMATION FROM THE CUSTOMS AUTHORITIES T HAT A SEARCH HAD BEEN CARRIED OUT ON ONE SHRI SUBHASH CHAND TULI AT IGI A IRPORT NEW DELHI AND IN THE SEARCH US $ 84 000 EQUIVALENT TO INDIAN RUP EES 35 25 000/- HAD BEEN RECOVERED FROM HIS POSSESSION. SHRI TULI HAD STA TED BEFORE THE CUSTOMS AUTHORITIES THAT HE GOT THE US $ 84 000 FROM HIS FR IEND SHRI S.C . GUPTA RESIDENT OF C/276 SARITA VIHAR NEW DELHI I.E. T HE ASSESSEE. THE CUSTOMS AUTHORITIES HAD ALSO RECOVERED FROM THE POSSESSION OF SHRI TULI TWO LOOSE SHEETS CONTAINING SOME CURRENCY TRANSACTION WHEREO N SOME CURRENCY TRANSACTIONS WERE MENTIONED AND PHOTO COPIES OF DE CLARATION OF GIFTS AND RELATED AFFIDAVITS IN RESPECT OF THE ASSESSEE AND H IS FAMILY. THE ASSESSEE WAS ALSO QUESTIONED BY THE CUSTOMS AUTHORITIES. HE HAD ADMITTED BEFORE ITA 2607(DEL)04 & 454(DEL)08 4 THEM THAT THE SAID US $ 84 000 HAD BEEN ARRANGED BY HIM. HE HAD ALSO EXPLAINED THE SOURCE OF ARRANGING THESE DOLLARS BEF ORE THE CUSTOMS AUTHORITIES DEPOSING THAT OVER THE YEARS HE HAD A CCUMULATED UNACCOUNTED CASH WORTH ABOUT RS. 36 LAKHS AND WHEN HIS FRIEND SHRI TULI WANTED US $ THE ASSESSEE TOOK THE OPPORTUNITY TO MAKE THE MONEY LYING WITH HIM WHITE AND LEGAL; THAT THIS WAS WHY HE TOLD SHRI TULI TO ISSUE CHEQUE BOOK FROM HIS ACCOUNT IN RETURN OF WHICH THE ASSESSEE SPENT TH E CASH LYING WITH HIM TO ACQUIRE THE US $ FROM THE BLACK MARKET; THAT CASH O F ABOUT RS. 36 LAKHS WAS LYING WITH HIM FROM HIS BUSINESS OPERATIONS OVER HI S EARNINGS; THAT HE PURCHASED FOREIGN CURRENCY OF US $ 84 000 IN PIECEM EAL OVER MORE THAN A WEEKS PERIOD ON DIFFERENT DATES; AND THAT THE AVA ILABILITY OF FOREIGN CURRENCY IN CHANDNI CHOWK AREA WAS COMMON KNOWLEDGE . 4. A NOTICE U/S 148 OF THE INCOME TAX ACT WAS ISSUE D TO THE ASSESSEE BY THE AO ON RECEIPT OF THE AFORESAID INFORMATION FRO M THE CUSTOMS AUTHORITIES AND IN VIEW OF THE CATEGORICAL STATEMEN T MADE BY THE ASSESSEE BEFORE THE CUSTOMS AUTHORITIES AS ABOVE. BY VIRT UE OF THE ASSESSMENT ORDER THE ASSESSMENT WAS COMPLETED AT RS. 50 40 73 0/-. VIDE THE IMPUGNED ORDER THE LEARNED CIT(A) CONFIRMED THE ADDITION. THIS IS HOW THE ASSESSEE IS IN APPEAL BEFORE US. ITA 2607(DEL)04 & 454(DEL)08 5 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE; T HAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAD ACQUIRED US $ 84 000; THAT THE FOREIGN CURRENCY WAS CONFISCATED UNDER THE CUSTOMS ACT BY THE CUSTOMS AUTHORITIES; THAT AS SUCH THE AO RELYING ON CERTA IN STATEMENTS ALONE COULD NOT INFER THIS FOREIGN CURRENCY TO BE THE INCOME OF THE ASSESSEE; THAT THE ADDITION IS BASED MERELY ON THE ALLEGATIONS INFERE NCE AND CONCLUSIONS OF THE CUSTOMS AUTHORITIES; THAT SHRI S.C. TULI FROM WHOM THE FOREIGN CURRENCY WAS RECOVERED BY THE CUSTOMS AUTHORITIES WAS NOT G OT CROSS EXAMINED BY THE ASSESSEE; THAT UNDER THE PROCEEDINGS BEFORE THE CUSTOMS AUTHORITIES THE ASSESSEE WAS ACQUITTED (COPY OF ORDER DATED 4.8.200 9 BY THE ADDITIONAL CHIEF METROPOLITAN MAGISTRATE 01[ACMM FOR SHORT] NEW DELHI PLACED ON RECORD); THAT IN FACT DURING THE YEAR THE ASSE SSEE AND THE MEMBERS OF HIS FAMILY HAD RECEIVED A GIFT OF RS.34 11 478/- FROM HIS FRIEND SHRI S.C. TULI AN NRI; THAT SHRI TULI MADE A STATEMENT BEFORE THE CUSTOMS AUTHORITIES TO THE EFFECT THAT THE US $ 84 000 WHICH HAD BEEN RECO VERED FROM HIS POSSESSION HAD BEEN GIVEN TO HIM BY THE ASSESSEE I N LIEU OF ISSUE OF CHEQUES AS GIFT TO THE ASSESSEE AND HIS FAMILY MEM BERS; THAT A SEARCH WAS ITA 2607(DEL)04 & 454(DEL)08 6 CONDUCTED BY THE CUSTOMS ENFORCEMENT DEPARTMENT ON THE ASSESSEE; THAT THE ASSESSEES STATEMENT WAS RECORDED BY THE CUSTOMS AU THORITIES WHEREIN THE STATEMENT OF SHRI S.C. TULI HAD BEEN CONFIRMED BY T HE ASSESSEE; THAT BOTH THESE STATEMENTS WERE RETRACTED BY SHRI TULI AND TH E ASSESSEE RESPECTIVELY BEFORE THE ACMM AT THE EARLIEST POSSIBLE OPPORTUNIT Y I.E. ON 26.5.99 WHEREAS THE SEARCH HAD BEEN CONDUCTED ON 25.9.99; T HAT IT HAD BEEN STATED WHILE RETRACTING THE STATEMENTS THAT THESE STATEME NTS HAD BEEN RECORDED UNDER THREAT DURESS AND COERCION AND WERE NOT VOLU NTARY STATEMENTS; THAT THE AO WRONGLY MADE THE ADDITION RELYING SOLELY ON THE STATEMENTS ORIGINALLY MADE BY SHRI S.C. TULI AND THE ASSESSEE ON 25.5.199 9; THAT THE AO ERRONEOUSLY IGNORED THE RETRACTION OF THESE STATEME NTS; THAT THE STATEMENTS HAVING BEEN SUCCESSFULLY RETRACTED THEY COULD NOT HAVE BEEN MADE THE SOLE BASIS FOR MAKING ANY ADDITION; THAT THE AO FURTHER WRONGLY OVERLOOKED THE AFFIDAVITS FILED BY THE ASSESSEE BEFORE HIM THE CO NTENTS OF WHICH AFFIDAVITS HAD NOT BEEN REBUTTED BY ANY AUTHORITY; THAT MOREOV ER THE PROCEEDINGS AGAINST THE ASSESSEE UNDER THE CUSTOMS ACT HAVE SI NCE BEEN DROPPED BY THE ACMM VIDE ORDER DATED 4.8.2009 (SUPRA); THAT PROCE EDINGS UNDER FERA HAVE ALSO BEEN DROPPED BY THE ADJUDICATING OFFICER DIRECTORATE OF ENFORCEMENT VIDE ORDER DATED 06.10.2004; THAT THE AO DID NOT MAKE ANY INDEPENDENT ENQUIRY FROM THE TWO PERSONS FROM WHOM THE ASSESSEE IS ITA 2607(DEL)04 & 454(DEL)08 7 ALLEGED TO HAVE PURCHASED THE FOREIGN CURRENCY; THA T THE AO ERRED IN PLACING RELIANCE ON SURJEET SINGH CHHABRA V. UNION OF INDI A [1997] 89 ELT 646(SC) (COPY PLACED ON RECORD); THAT SURJEET SING H CHHABRA (SUPRA) HAS BEEN DISTINGUISHED BY THE HONBLE SUPREME COURT IN VINOD SOLANKI V. UNION OF INDIA [2009] 239 ELT 157 (SC) (COPY PLACE D ON RECORD) HOLDING THAT EVIDENCE BROUGHT BY CONFESSION IF RETRACTED MUST BE CORROBORATED BY INDEPENDENT AND COGENT EVIDENCE; THAT THIS HAS ALSO BEEN HELD FOLLOWING THE HONBLE SUPREME COURT BY THE AMRITSAR TRIBUNAL IN RISHI GROVER V. ACIT (COPY PLACED ON RECORD); THAT IN THE FOLLOWIN G CASES IT HAS BEEN HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF A RET RACTED STATEMENT: 1. DCIT V. RATAN CORPN. 197 CTR 536(GUJ); 2. CIT V. UTTAMCHAND JAIN ITA NO. 634 OF 2009 3. G. KANAGARAJ V. DCIT 73 TTJ 731(CHENNAI) 4. GOVIND RAM CHHUGANI V. ASSTT. CIT 77 TTJ 339(JODH) ; 5. SURINDER PAL VERMA V. ACIT 89 ITD 129(CHD.)(TM); 6. DINESHCHANDRA J. DINA V. ITO 112 TAXMAN 107(AHD.). 6. THE LEARNED COUNSEL HAS FURTHER SUBMITTED THAT IN THE FOLLOWING DECISIONS IT HAS BEEN HELD THAT IF THE BASIS OF TH E ASSESSMENT ORDER DIMINISHES THE ADDITION MADE BY THE AO IS NOT SUST AINABLE:- 1. CIT V. SOMANI PILKINGTONS LIMITED 266 ITR 388(P&H ); 2. FARRUKHABAD GRAMIN BANK V. ITO 273 ITR 113 (ALL.); AND 3. CIT V. RAMACHANDRA HATCHERIES 305 ITR 117/215 CTR 370(MAD.). ITA 2607(DEL)04 & 454(DEL)08 8 7. IT HAS ALSO BEEN SUBMITTED ON BEHALF OF THE ASS ESSEE THAT THE STATEMENT OF SHRI TULI FORMED THE BASIS FOR THE PROCEEDINGS U/S 148 OF THE I.T. ACT; THAT HOWEVER THIS STATEMENT WAS NEVER FURNISHED TO THE ASSESSEE; THAT NO OPPORTUNITY TO CROSS EXAMINE SHRI TULI WAS PROVIDED TO THE ASSESSEE IN SPITE OF REPEATED REQUESTS IN THIS REGARD; AND THAT TH EREFORE THE SAID STATEMENT OF SHRI TULI OUGHT NOT TO HAVE BEEN TAKEN AS THE BASIS FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. 8. CONTROVERTING THE AFORESAID STAND TAKEN BY THE A SSESSEE THE LD. DR STRONGLY SUPPORTING THE IMPUGNED ORDER SUBMITTED T HAT THE ADDITION IN QUESTION IS NOT BASED SOLELY ON THE STATEMENT OF SH RI TULI BUT IT IS BASED ALSO ON THE SURROUNDING CIRCUMSTANCES ATTENDING THE CASE ; THAT SUCH SURROUNDING CIRCUMSTANCES ARE CLEARLY DISCERNABLE FROM THE RESP ECTIVE ORDERS OF THE AUTHORITIES BELOW; THAT SHRI TULI HAD RS. 1 LAKH A NON REPATRIABLE AMOUNT WHICH HE COULD NOT TAKE ABROAD; THAT THE RETRACTION WAS ONLY AN AFTERTHOUGHT IN THE LIGHT OF THE FACTS OF THE CASE; AND THAT THE STATEMENTS MADE WERE FREE OF COERCION FORCE OR THREAT. 9. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. AN AMOUNT OF RS. 34 11 478/- WAS RECEIVED BY THE AS SESSEE FROM HIS NRI FRIEND SHRI S.C. TULI. AFTER THE ASSESSEES RETU RN OF INCOME WAS PROCESSED ITA 2607(DEL)04 & 454(DEL)08 9 THE AO RECEIVED INFORMATION FROM THE CUSTOMS AUTHOR ITIES THAT ONE SHRI SUBHASH CHAND TULI HAD BEEN SEARCHED AT IGI AIRPOR T NEW DELHI AND RECOVERY OF US $ 84 000 EQUIVALENT TO INDIAN RUPEES 35 25 000/- HAD BEEN MADE FROM HIS POSSESSION. SHRI TULI STATED BEFORE THE CUSTOMS AUTHORITIES TO HAVE RECEIVED THE US $ 84 000 FROM THE ASSESSEE. THE ASSESSEE WAS ALSO QUESTIONED BY THE CUSTOMS AUTHORITIES AND VIDE HIS STATEMENT DATED 25.5.1999 THE ASSESSEE ADMITTED THAT THIS AMOUNT O F US $ 84 000 HAD BEEN ARRANGED BY HIM. HE ALSO EXPLAINED THE SOURCE THER EOF. HE AS SUCH ADMITTED THE CASE OF THE CUSTOMS AUTHORITIES AS DIS CUSSED IN THE OPENING PORTION OF THIS ORDER. THE AO ISSUED A NOTIC E U/S 148 OF THE ACT TO THE ASSESSEE. THE ASSESSMENT WAS COMPLETED AT RS.50 40 730/-. THE ASSESSEES UNDISCLOSED INCOME U/S 69 C OF THE ACT W AS DETERMINED AT RS.40 32 507/-. 10. BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED T HAT THE STATEMENT BEFORE THE CUSTOMS AUTHORITIES HAD NO EVIDENTIARY V ALUE SINCE IT HAD BEEN RETRACTED BEFORE THE MAGISTRATE WITHIN JUST A FEW D AYS OF MAKING OF SUCH STATEMENT. IT WAS ALSO CONTENDED THAT SUCH STATEME NT COULD NOT BE RELIED ON AND HENCE THE INCOME TAX PROCEEDINGS AGAINST THE A SSESSEE WERE WITHOUT AFFORDING DUE OPPORTUNITY TO CROSS EXAMINE THE PART Y; AND THAT THE STATEMENT ITA 2607(DEL)04 & 454(DEL)08 10 HAD BEEN MADE BEFORE AN AUTHORITY ENTIRELY DIFFERE NT FROM THE INCOME TAX DEPARTMENT. 11. THE LEARNED CIT(A) SUSTAINED THE ADDITION OF RS . 40 32 507/-. IT WAS OBSERVED INTER ALIA THAT THE ASSESSEE HAD MADE A CATEGORICAL STATEMENT BEFORE THE CUSTOMS AUTHORITIES IN WHICH PURCHASE O F THE DOLLARS HAD BEEN CONFESSED; THAT SUCH PURCHASE HAD BEEN CONFESSED BY THE ASSESSEE FROM HIS UNDISCLOSED FUNDS; THAT THE STATEMENT WAS MADE IN T HE PRESENCE OF SHRI TULI AND SO NO CROSS EXAMINATION OF SHRI TULI WAS RELEV ANT; THAT THE AO HAD CORRECTLY RELIED ON SURJEET SINGH CHHABRA V. UNION OF INDIA [1996] 135 TAXATION 711(SC) TO HOLD THAT THE CONFESSION MADE B EFORE THE CUSTOMS AUTHORITIES WERE BINDING. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE OR ANY MATERIAL OR REASO N TO SHOW THAT THE FIRST STATEMENT BEFORE THE CUSTOMS AUTHORITIES WAS WRONG AND THE RETRACTION THEREOF WAS CORRECT; THAT UNLESS A PROPOSED RETRACT ION IS SUPPORTED BY COGENT MATERIAL THE ORIGINAL STATEMENT CANNOT BE ALLOWED TO BE RETRACTED; THAT THE STATEMENT HAVING BEEN GIVEN BY THE ASSESSEE BEFORE THE CUSTOMS AUTHORITIES AND NOT BEFORE THE POLICE ANY ELEMENT OF PRESSURE OR HARASSMENT WAS ENTIRELY RULED OUT; AND THAT IF IT WAS THE RETRACTI VE STATEMENT WHICH WAS CORRECT THE ASSESSEE WOULD HAVE DEPOSED THE CONTEN TS THEREOF BEFORE THE ITA 2607(DEL)04 & 454(DEL)08 11 CUSTOMS AUTHORITIES IN THE FIRST PLACE RATHER THAN HAVING MADE HIS ORIGINAL STATEMENT. THE LEARNED CIT(A) UPHELD THE ASSESSME NT ORDER IN THIS MANNER. 12. THE QUESTION BEFORE US IS AS TO WHETHER THE AUT HORITIES BELOW HAVE CORRECTLY DEALT WITH AND DECIDED THE MATTER AT HAND . NOW IT IS SEEN THAT THE STATEMENTS GIVEN BY SHRI S.C. TULI AND THE ASSESSEE TO THE CUSTOMS AUTHORITIES ON 25.5.1999 WERE RETRACTED ON THE VERY NEXT DATE I.E. ON 26.5.1999 BEFORE THE ADDITIONAL CHIEF METROPOLITAN MAGISTRATE (ACMM FOR SHORT) . WHILE SO RETRACTING THESE STATEMENTS IT WAS ASSERTED THAT THESE STATEMENTS HAD BEEN RECORDED UNDER THREAT DURESS A ND COERCION AND THEY WERE NOT THE VOLUNTARY STATEMENTS OF THE DEPONENTS. THE AO HOWEVER WAS OF THE VIEW THAT THE STATEMENTS HAD NOT BEEN RETRAC TED. HE MADE ADDITION OF RS. 40 32 507/- U/S 69 C OF THE ACT. WHILE DOING SO THE AO PLACED RELIANCE ON SURJEET SINGH CHHABRA V. UNION OF INDIA (SUPR A). 13. IN SURJEET SINGH CHHABRA V. UNION OF INDIA (SUPRA) SHRI CHHABRA WAS IN AN SLP BEFORE THE HONBLE SUPREME COURT AGAI NST AN ORDER OF CONFISCATION OF GOLD KARA. HE HAD CONFESSED BEFORE THE CUSTOMS AUTHORITIES ON HAVING PURCHASED GOLD AND HAVING CONVERTED IT IN TO A KARA IN CONTRAVENTION OF THE CUSTOMS DUTY ACT AND THE FERA. SHRI CHHABRA CHALLENGED THE ORDER OF CONFISCATION FOR THE REASON OF HAVING NOT BEEN ALLOWED CROSS EXAMINATION OF THE WITNESSES WHO HA D STATED THAT RECOVERY ITA 2607(DEL)04 & 454(DEL)08 12 HAD BEEN MADE FROM HIM. IT WAS BROUGHT TO THE NOTI CE OF THE HONBLE SUPREME COURT THAT SHRI CHHABRA HAD RETRACTED HIS C ONFESSION. IT WAS HELD INTER ALIA THAT THE CUSTOMS OFFICIALS ARE NOT POLI CE OFFICIALS. IT WAS FURTHER HELD THAT THE CONFESSION THOUGH RETRACTED WAS AN ADMISSION AND BOUND SHRI CHHABRA. 14. IN VINOD SOLANKI V. UNION OF INDIA 2009 [2 33] ELT 157 (SC) RELIED ON BY THE ASSESSEE (COPY PLACED AT PAGES 15 TO 21 OF THE CASE LAWS PAPER BOOK) POST SURJEET SINGH CHHABRA V. UNION O F INDIA (SUPRA) THE HONBLE SUPREME COURT HELD THAT EVIDENCE BROUGHT BY CONFESSION IF RETRACTED MUST BE SUBSTANTIALLY CORROBORATED BY OT HER INDEPENDENT AND COGENT EVIDENCE WHICH WOULD LEND ADEQUATE ASSURANCE TO THE COURT THAT IT MAY SEEK TO RELY THEREUPON. 15. VINOD SOLANKI V. UNION OF INDIA(SUPRA) ALSO H OLDS THAT REGARDING CONFESSION STATEMENT THE INITIAL BURDEN TO PROVE T HAT SUCH CONFESSION WAS VOLUNTARY IS ON THE DEPARTMENT. WHERE RELIANCE HAS BEEN PLACED ON SUCH CONFESSION THE BURDEN IS ON THE PROSECUTION TO PR OVE THAT IT WAS NOT OBTAINED BY THREAT. IN THE PRESENT CASE THE ORIG INAL STATEMENTS HAVE BEEN WITHDRAWN BY THE ASSESSEE AND SHRI S.C. TULI BEFORE THE ACMM A JUDICIAL AUTHORITY AND COURT OF LAW AND THE CUSTOMS PROCEEDI NGS AS WELL AS THE FERA PROCEEDINGS HAVE BEEN DROPPED. ITA 2607(DEL)04 & 454(DEL)08 13 16. VINOD SOLANKI V. UNION OF INDIA(SUPRA) ALSO H OLDS THAT WHILE ASCERTAINING THE VOLUNTARY NATURE OF A STATEMENT SU BSEQUENTLY RETRACTED THE COURT MUST BEAR IN MIND THE ATTENDING CIRCUMSTANCES THE TIME OF RETRACTION THE NATURE AND MANNER OF RETRACTION AND THE OTHER R ELEVANT FACTORS. IN THE PRESENT CASE THE ATTENDING CIRCUMSTANCES AS WE S HALL PRESENTLY SEE CLEARLY POINT OUT TO THE STATEMENTS BEING NOT VOLUNTARY IN NATURE. AS FOR THE RETRACTION IT WAS MADE ON THE VERY SUCCEEDING DAY AS ON WHICH THEY WERE MADE. AS FOR THE NATURE AND MANNER OF RETRACTION SUCH RETRACTION WAS IN THE COURT OF THE ADDITIONAL CHIEF METROPOLITAN MAGISTR ATE A COURT OF LAW. 17. VINOD SOLANKI V. UNION OF INDIA(SUPRA) ALSO H OLDS THAT THE MERE RETRACTION OF A CONFESSION IS NOT SUFFICIENT TO MAK E THE CONFESSIONAL STATEMENT IRRELEVANT AND THAT THE COURT IS TO CONSIDER IMPLIC ATIONS OF BOTH THE CONFESSION AND ITS RETRACTION. AS IT PROCEEDS OU R DISCUSSION HEREIN WILL MAKE IT AMPLY CLEAR AS TO WHY THE RETRACTION OF THE STATEMENT OF THE ASSESSEE AND SHRI TULI RENDERS THE CONFESSIONAL STATEMENT EN TIRELY IRRELEVANT. IT IS ALSO IN CONSONANCE WITH VINOD SOLANKI V. UNION OF INDIA (SUPRA) THAT WHERE A CONFESSION IS RETRACTED THE CONFESSION MUST BE COR ROBORATED BY OTHER INDEPENDENT COGENT EVIDENCES. HEREIN THOUGH THE CONFESSION DOES STAND ITA 2607(DEL)04 & 454(DEL)08 14 RETRACTED THERE IS NO EVIDENCE MUCH LESS INDEPEND ENT AND COGENT EVIDENCE TO CORROBORATE THE CONFESSION. 18. IN RISHI GROVER V. ACIT A DECISION DATED 26 .6.2009 OF THE AMRITSAR BENCH OF THE TRIBUNAL IN ITA NOS. 198 TO 2 02(ASR)2006 FOR ASSESSMENT YEARS 1998-99 TO 2002-03 (COPY OF RELEVA NT PORTION OF THE ORDER PLACED AT PAGES 23 TO 41 OF THE CASE LAW PAPER BOOK ) IT HAS BEEN OBSERVED HAVING CONSIDERED SURJEET SINGH CHHABRA V. UNION O F INDIA (SUPRA) AND VINOD SOLANKI V. UNION OF INDIA(SUPRA) THAT THE RATIO OF THESE DECISIONS IS THAT ONCE A STATEMENT IS RETRACTED THE CONTENTS OF THE RETRACTED STATEMENT MUST BE SUBSTANTIALLY CORROBORATED BY INDEPENDENT A ND COGENT EVIDENCE; THAT SURJEET SINGH CHHABRA V. UNION OF INDIA (SUPRA) DOES NOT LAY DOWN THAT EVEN A RETRACTED STATEMENT CAN BE INDEPENDENTLY USE D FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE; AND THAT THO UGH A STATEMENT BINDS THE ASSESSEE ONCE IT IS RETRACTED IT CANNOT BE THE SO LE BASIS FOR MAKING THE ASSESSMENT. 19. AFFIDAVITS DATED 27.3.2002 AND 10.3.2003 WERE F ILED BY THE ASSESSEE BEFORE THE AO. THEREIN IT WAS STATED THAT THE AS SESSEES RESIDENCE WAS SEARCHED ON 25.5.2009 AT ABOUT 6.30 A.M.; THAT THE ASSESSEE WAS FORCEABLY TAKEN TO THE AIRPORT; THAT THE SHIRT OF THE ASSESSE E WAS STRIPPED OFF; THAT THE ASSESSEE WAS THREATENED WITH THIRD DEGREE MEASURES; THAT THE ASSESSEE WAS ITA 2607(DEL)04 & 454(DEL)08 15 THREATENED THAT HIS WIFE AND CHILDREN WOULD ALSO B E CALLED IF HE DID NOT FALL IN LINE AND AGREE TO WRITE WHATEVER HE WAS ASKED TO WRITE; AND THAT THE ASSESSEE WAS DICTATED THE CONTENTS TO BE WRITTEN IN HIS STATEMENT BY THE CUSTOMS AUTHORITIES. IT IS PERTINENT THAT NEITHER OF THESE AFFIDAVITS HAS EVER BEEN REBUTTED. 20. IN THE CROSS EXAMINATION OF SHRI VINOD BAREL C USTOMS SUPERINTENDENT RECORDED BEFORE THE AO IN THE ASSES SMENT PROCEEDINGS HE STATED THAT THOUGH HE REMEMBERED THAT SUMMONS WERE ISSUED TO THE ASSESSEE HE COULD NOT RECALL AS TO THROUGH WHOM THEY WERE SE NT AND AS TO WHERE THEY WERE SERVED ON THE ASSESSEE; THAT THE SEARCH WAS CO NDUCTED ON THE ASSESSEE ON 25.5.99 IN THE MORNING; THAT HE HAD NOT SEEN ANY PASS ISSUED TO THE ASSESSEE BY THE DELHI POLICE FOR ENTERING THE AIRPO RT ARRIVAL HALL; THAT IT WAS NOT CORRECT THAT THE ASSESSEE HAD BEEN FORCEABLY WH ISKED AWAY FROM HIS RESIDENCE ON 25.5.99; THAT NO WITNESS WAS PRESENT A T THE TIME OF RECORDING OF THE STATEMENT OF THE ASSESSEE; AND THAT SINCE THE A SSESSEE HAD HIMSELF VOLUNTARILY TENDERED DETAILS WHICH WERE SUFFICIENT FOR THE INVESTIGATION IT WAS NOT NECESSARY TO RECORD THE STATEMENTS OF THE A SSESSEE IN A QUESTION AND ANSWER FORM. THIS STATEMENT OF SHRI VINOD BAREL WAS ALSO RELIED ON BY THE AO DESPITE THE SAID INACCURACIES THEREIN. THESE INACCURACIES RENDERED THE SAID CROSS EXAMINATION OF SHRI VINOD BAREL NOT WORT HY OF RELIANCE. ITA 2607(DEL)04 & 454(DEL)08 16 21. FURTHER A STATEMENT OF THE ASSESSEE WAS RECORD ED U/S 40 OF THE FERA ON 5.12.2000. THEREIN HE DENIED THE ALLEGATION O F HAVING GIVEN FOREIGN EXCHANGE TO SHRI TULI. 22. THE AO RECORDED THE ASSESSEES STATEMENT ON OAT H ON 22.3.2002. IN THAT STATEMENT THE ASSESSEE GAVE DETAILS OF HIS CL OSE RELATIONSHIP WITH SHRI TULI. HE STATED THAT THE GIFTS HAD BEEN MADE BY SH RI TULI VOLUNTARILY AND WITHOUT ANY CONSIDERATION. HE REPEATED THAT HIS O WN STATEMENT AS WELL AS THAT OF SHRI TULI HAD BEEN RECORDED UNDER COERCION THREAT DURESS AND FORCE AND THAT BOTH OF THEM HAD BEEN FORCED TO SIGN ON WH ATEVER HAD BEEN WRITTEN BY THE CUSTOMS AUTHORITIES. HE ASSERTED THAT AT T HE TIME OF RECORDING OF THE STATEMENT NO WITNESS AT ALL WAS PRESENT. THIS ST ATEMENT HOWEVER WAS NOT GIVEN DUE CREDENCE BY THE AO WITHOUT COGENT REASON PARTICULARLY WHEN THE ONUS OF THE AUTHORITIES TO PROVE NO COERCION OR THR EAT DID NOT STAND DISCHARGED. 23. FURTHER IT IS A MATTER OF RECORD THAT NO INDEP ENDENT ENQUIRY INTO THE ALLEGED ACQUISITION OF US $ 84 000 BY THE ASSESSEE WAS MADE BY THE AO. THE ASSESSEE IS SAID TO HAVE DISCLOSED THE SOURCE O F THIS ACQUISITION AS NAVEEN OR TWO AFGHANIS. THE AO DID NOT DEEM IT NE CESSARY TO MAKE ANY INVESTIGATION WITH THESE PEOPLE. ITA 2607(DEL)04 & 454(DEL)08 17 24. IT IS ALSO PERTINENT TO MENTION THAT BEFORE THE ACMM VIDE ORDER DATED 4.8.2009 (COPY PLACED ON RECORD) PROCEEDINGS UNDER THE CUSTOMS ACT HAVE BEEN DROPPED. PROCEEDINGS UNDER THE FERA WER E ALSO BEEN DROPPED BY THE ADJUDICATING OFFICER DIRECTORATE OF ENFORC EMENT VIDE ORDER DATED 6.10.2004 A COPY WHEREOF HAS ALSO BEEN FURNISHED. 25. IN THE FOLLOWING DECISIONS IT HAS BEEN HELD TH AT IF THE BASIS OF THE ASSESSMENT ORDER DIMINISHES THE ADDITION MADE IS NOT SUSTAINABLE:- 1. CIT V. SOMANI PILKINGTONS LIMITED 266 ITR 388(P&H ); 2. FARRUKHABAD GRAMIN BANK V. ITO 273 ITR 113 (ALL.); AND 3. CIT V. RAMACHANDRA HATCHERIES 305 ITR 117/215 CTR 370(MAD.). 26. IN THE PRESENT CASE OBVIOUSLY THE BASIS OF TH E ASSESSMENT ORDER HAS DIMINISHED . THE STATEMENTS INITIALLY MADE HAVE B EEN SUCCESSFULLY RETRACTED. THE PROCEEDINGS UNDER THE CUSTOMS ACT AS WELL AS UNDER THE FERA HAVE BEEN DROPPED. THE DEPARTMENT HAS NOT BE EN ABLE TO DISCHARGE ITS BURDEN OF PROOF THAT THE STATEMENTS WERE NOT RE CORDED UNDER FORCE THREAT AND COERCION. IN THIS REGARD AFFIDAVITS FILED BY THE ASSESSEE BEFORE THE AO HAVE NOT BEEN REBUTTED. MOREOVER THE STATEMENT OF SHRI VINOD BAREL CUSTOMS SUPERINTENDENT DOES NOT INSPIRE ANY CONFID ENCE. IT HAS BEEN GIVEN UNDUE WEIGHTAGE BY THE AO. ALSO UNDENIABLY NEIT HER WAS THE STATEMENT OF SHRI TULI FORMING THE BASIS OF INITIATION OF THE P ROCEEDINGS AGAINST THE ITA 2607(DEL)04 & 454(DEL)08 18 ASSESSEE U/S 148 OF THE I.T. ACT FURNISHED TO THE ASSESSEE NOR WAS HE ALLOWED ANY OPPORTUNITY TO CROSS EXAMINE SHRI TULI INSPITE OF REPEATED REQUESTS IN THIS REGARD. THE ACTION OF THE AO IN M AKING THE STATEMENT OF SHRI TULI THE BASIS FOR THE ADDITION IN THE ASSESSE ES HANDS ALSO AS SUCH FALLS. NOT CONFRONTING THE ASSESSEE WITH SUCH A STATEMENT AND NOT ALLOWING AN OPPORTUNITY TO CROSS EXAMINE THE WITNESS IS IN STAR K VIOLATION OF THE NATURAL JUSTICE PRINCIPLE OF AUDI ALTEREM PARTEM. THE FOL LOWING AUTHORITIES ARE RELEVANT IN THIS REGARD:- 1. KISHANCHAND CHELLARAM V. CIT 125 ITR 713(SC); 2. SARASWATI INDUSTRIAL SYNDICATE LTD. V. CIT 237 ITR 1(SC); 3. STATE OF PUNJAB V. BHAGAT RAM AIR 1974 SC 2335; 4. KALRA GLUE FACTORY V. SALES TAX TRIBUNAL 167 ITR 4 98(SC); 5. CIT V. PRADEEP KUMAR GUPTA 303 ITR 95(DEL); AND 6. CIT V. SMC SHARE BROKERS LIMITED 288 ITR 345(DEL). IN THE PRESENT CASE EVIDENTLY THE SUBSTANTIAL RIG HT OF THE ASSESSEE TO KNOW AND REBUT THE EVIDENCE TO BE USED AGAINST HIM HAS B EEN STARKLY VIOLATED RENDERING THE ADDITION UNSUSTAINABLE IN THE EYE OF LAW. 27. THE FOLLOWING DECISIONS HAVE ALSO CONSISTENTLY HELD THAT NO ADDITION CAN BE BASED ON A RETRACTED STATEMENT:- 1. DCIT V. RATAN CORPN. 197 CTR 536(GUJ); 2. CIT V. UTTAMCHAND JAIN ITA NO. 634 OF 2009 3. G. KANAGARAJ V. DCIT 73 TTJ 731(CHENNAI) 4. GOVIND RAM CHHUGANI V. ASSTT. CIT 77 TTJ 339(JODH) ; ITA 2607(DEL)04 & 454(DEL)08 19 5. SURINDER PAL VERMA V. ACIT 89 ITD 129(CHD.)(TM); 6. DINESHCHANDRA J. DINA V. ITO 112 TAXMAN 107(AHD.). 28. IN VIEW OF THE ABOVE FINDING THE GRIEVANCE RAI SED BY THE ASSESSEE BY WAY OF GROUND NOS. 4 TO 10 TO BE JUSTIFIED THE SAM E IS HEREBY ACCEPTED. THE ORDER UNDER APPEAL IS QUASHED QUA THESE GROUNDS . 28 A. GROUND NOS. 11 TO 13 ARE CONSEQUENTIAL. ITA NO. 454(DEL)2008: 29. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2000-01 CONTENDING THAT THE LEARNED CIT(A) HAS ERRED IN DEL ETING THE PENALTY OF RS.10 54 260/- ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME TAX ACT. 30. THIS PENALTY IS CONSEQUENTIAL TO THE ADDITION D EALT WITH HEREINABOVE IN ITA NO. 2607(DEL)2004. THOUGH THE LD. CIT(A) HAS CANCELLED THE LEVY OF PENALTY FOR THE REASON THAT IN THE ASSESSMENT OR DER THE AO HAD NOWHERE ARRIVED AT A SATISFACTION REGARDING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SINCE WE HAVE QUA SHED THE CIT(A)S ORDER QUA GROUND NOS. 4 TO 10 IN THE ASSESSEES QUANTUM A PPEAL AND THEREBY THE ADDITION FORMING THE BASIS OF LEVY OF PENALTY NO LO NGER EXISTS CANCELLATION OF THE PENALTY BY THE LD. CIT(A) IS CONFIRMED FOR THIS REASON ON MERITS. ITA 2607(DEL)04 & 454(DEL)08 20 31. IN THE RESULT THE QUANTUM APPEAL OF THE ASSESS EE IN ITA NO. 2607(DEL)2004 IS PARTLY ALLOWED WHEREAS THE PENAL TY APPEAL OF THE DEPARTMENT IN ITA NO. 454(DEL)2008 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2010. SD/- SD/- (A.K. GARODIA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29.01.2010 *RM COPY FORWARDED TO: 1. SHRI S.C. GUPTA C-276 SARITA VIHAR NEW DELHI. 2. ITO WARD 18(3) NEW DELHI. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR