Back
2003 Supreme(Raj) 768
High Court Of Rajasthan
Judgename : Y.R. Meena,Shashi Kant Sharma
Chain Sukh Rathi - Appellant
Versus
Commissioner of Income Tax - Respondent
Income Tax Appeal No. 23 of 2000
Decided On : 09/09/2003
Appearance :
Sanjay Jhanwar, Advocate, for the Appellant.
Parinitoo Jain, Advocate, for the Respondents.
The main legal point established in the judgment is the computation and taxation of concealed income in accordance with the provisions of the IT Act, 1961, particularly Section 158BB.
Headnote:
Section 158BD - Block assessment - IT Act, 1961 - The court discussed and referenced various sections of the IT Act, 1961 including Section 158BD, Section 158BB, and Section 132. The court analyzed the additions made in block assessment proceedings, unexplained capital, household expenses, and gifts, and considered the evidentiary value of statements recorded during the search. The court also interpreted the provisions of Section 158BB and emphasized the computation and taxation of concealed income in accordance with the Act.
Fact of the Case:
The search and seizure under Section 132 of the IT Act, 1961 was carried out at the business premises and residential premises. The Tribunal sustained additions on account of unexplained capital, household expenses, and gifts. The appellant challenged the order of the AO, arguing that the additions were based on material seized during the search and should not be considered concealed income.
Finding of the Court:
The court found that the additions on account of unexplained household expenses and unexplained capital were justified based on the statements recorded during the search. The court also upheld the addition on account of unexplained gifts from the father, emphasizing that the tax exemption limit should be considered in computing concealed income.
Issues: The issues included the justification of sustained additions in block assessment proceedings, the treatment of entries made in regular books of accounts, the reliance on statements recorded during the search, and the computation and taxation of concealed income in accordance with the provisions of the IT Act, 1961.
Ratio Decidendi: The court held that the additions based on statements recorded during the search were justified and not perverse. The court also emphasized the computation and taxation of concealed income in accordance with the provisions of Section 158BB of the IT Act, 1961.
Final Decision: The appeal was disposed of with directions to compute and tax concealed income in accordance with the provisions of the IT Act, 1961.
1. The appeal was admitted in terms of the following questions:
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining additions made in block assessment proceedings under Section 158BD of the Act, irrespective of the fact that the entries were made in the regular books of accounts?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining addition on account of alleged low withdrawal/gift/opening capital of appellant/inclusion of income of wife, on the basis of statement recorded during the course of search, and without considering the entire material on the record?
(iii) Whether taking of any ‘alternative’ ground/plea by the appellant should be treated as confessionladmission by the appellant in respect of the main ground/plea?
(iv) Whether appellant can be said to have forgone/withdrawn the grievances contended in main ground/plea, simply because of taking an alternative ground/plea?
(v) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in correctly applying the test of human probabilities while sustaining addition on account of gift?
(vi) Whether gift received by the appellant from his father can be equated with other gifts received from strangers and can be said to be non-genuine by applying the test of human probabilities, particularly when the resources of father are not in dispute?
(vii) Whether a case of cash credit/gift from stranger or unrelated party can be compared/equated with a case of normal gift received by a son from his father?
(viii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing heavy reliance on the statement recorded during the course of search than the affidavits submitted, which is on higher pedestal, while arriving at the conclusion?
(ix) Whether tax can be levied on the basis of estimation of income when the estimation is too arbitrary and irrational based on surmises and conjectures?
(x) Whether, on the facts and circumstances of the case the Tribunal could ignore the documentary evidence, available on the record and place reliance on the purported statement recorded during the course of search, while sustaining additions?
(xi) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing reliance on statement which are not free from doubt and ambiguity and without corroborated with an evidence, while coming to the conclusion?
(xii) Whether finding arrived at by the Tribunal is not perverse ?, which is not supported by complete document placed on the record by the appellant?
(xiii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining addition in respect of capital and income of wife relying on the sole statement of appellant and his wife irrespective of the fact that wife is being separately assessed and income so added is duly recorded in the books of account of wife?
(xiv) Whether statement recorded during the course of search can be sole basis of sustaining the addition particularly considering the evidenciary value of these statements recorded in the environment of fear, mental torture, harassment, inconvenience, pressure and other adverse circumstances ?“
2. The search and seizure under Section 132 of the IT Act, 1961, was carried out at the business premises of IVJIs Rajan Products and residential premises of its partners. At the time of the search cash book and ledger belonging to the assessee were also seized from the premises. Thereafter notice issued under Section 142(1) nw Section 158BD on 12th Aug., 1998. In compliance of the said notice, the assessee filed rNill return for the block period in question i.e., 1986-87 to 1996-97. He computed total undisclosed income to the tune of Rs. 12,27,958. The assessee has challenged the order of the AO. The Tribunal after considering the material on record, sustained the addi
