High Court Of Punjab & Haryana
CIT vs. Lekh Raj Dhunna
Section : 132
Adarsh Kumar Goel And Ajay Kumar Mittal, JJ.
IT Appeal Nos. 126 & 127 Of 2003
September 29, 2010
JUDGMENT
Ajay Kumar Mittal, J. – This order shall dispose of IT Appeal Nos. 126 and 127 of 2003 as common question of law and facts are involved therein. For brevity, the facts are being taken from IT Appeal No. 126 of 2003.
2. This appeal was admitted on 22nd Jan., 2004 for determination of the following substantial question of law :
“Whether the Tribunal was right in law in ignoring the facts on records as also the provisions of ss. 132(4) and 132(4A) of the IT Act, 1961 and holding that the addition of Rs. 9,00,000 made by the AO on account of commission income and confirmed by the CIT(A) was without any basis ?”
3. Facts necessary for adjudication of the present appeal, as narrated therein, are that the search was conducted at the residence of the assessee on 15th April, 1993. The assessee being individual filed his return on 28th March, 1994 declaring an income of Rs. 2,00,000. The assessment was completed on 31st March, 1999 (Annex. A) by the Dy. CIT and the income was assessed at Rs. 13,02,440 by making addition of Rs. 9,00,000 on account of income from commission on sales. Feeling aggrieved, the assessee went in appeal and the CIT(A) vide order dt. 20th Dec., 1999 upheld the addition of Rs. 9,00,000 made by the AO. Still feeling aggrieved, the assessee approached the Tribunal who vide order dt. 28th Feb., 2003 deleted the addition of Rs. 9,00,000 holding that there was no evidence to conclude that the assessee had actually earned the commission on sale. Hence, the present appeal by the Revenue.
4. We have heard learned counsel for the parties.
5. Learned counsel for the Revenue submitted that the assessee during the course of search operation on 15th April, 1993 had made a statement under s. 132(4) of the Act admitting that he was selling agent of M/s P.M.S. Enterprises, Phagwara and had been getting commission @ 2 per cent on sales effected through him. According to the learned counsel, in the light of statement of the assessee under s. 132(4), the AO was justified in making addition of Rs. 9,00,000 on account of commission received from M/s P.M.S. Enterprises calculating by taking 2 per cent of Rs. 4,92,03,005, i.e., Rs. 9,84,060.10, and giving deduction of Rs. 84,060.10 on account of expenses incurred. He further submitted that the total sales of Rs. 4,92,03,005 is discernible from the documents, details of which are as under :
| “Annex. | Amount of sale (in Rs.) |
| A-1 | 45,47,388 |
| A-2 | 1,19,26,694 |
| A-3 | 1,07,301 |
| A-4 | 2,55,15,434 |
| A-5 | 22,67,750 |
| A-6 | 48,38,438 |
| Total | 4,92,03,005″ |
6. It was further urged that the said documents belong to the assessee in view of provisions of s. 132(4A) of the Act as the same were seized during the course of the search from the premises of the assessee. Learned counsel contended that the assessment order was rightly upheld by the CIT (A) but the Tribunal erred in deleting the addition of Rs. 9,00,000 on account of income from commission on sales received from M/s P.M.S. Enterprises, Phagwara.
7. Controverting the above submission, learned counsel for the assessee argued that the Revenue had failed to bring any material on record which could have substantiated their plea that the assessee had earned commission on sales from M/s P.M.S. Enterprises, Phagwara. In the absence of any tangible evidence produced by the Department, the addition of Rs. 9,00,000 was not justified. The order of the Tribunal was supported by the learned counsel for the assessee.
8. The point for consideration in this appeal is whether the addition of Rs. 9,00,000 made by the AO on account of commission income on the basis of admission of the assessee in his statement under s. 132(4) of the Act which was confirmed by the CIT(A) on appeal, was sustainable.
9. It would be advantageous to view provisions which are relevant and s. 132(4) reads thus :
“132(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian IT Act, 1922 (11 of 1922), or under this Act.
Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian IT Act, 1922 (11 of 1922) or under this Act.”
10. Sub-s. (4) of s. 132 enables the authorised officer to record on oath the statement of the persons who are found to be in possession or control of article or thing at the time of search. Under this provision, the AO is empowered to use such statement against the assessee and base the assessment thereon. However, where the assessee is able to establish that the statement so made was not voluntary but was a result of coercion or inducement, the same may not be acted upon. The onus lies very heavy upon the assessee in such circumstances to prove such coercion or inducement. Further, the assessee can produce evidence to rebut the statement recorded under s. 132(4) of the Act. Explanation inserted by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989 permits the examination of the persons under sub-s. (4) not only in relation to the books of account, other documents or assets found as a result of search but also on any other matter relevant for any proceedings under this Act or the IT Act, 1922.
11. Sub-s. (4A) of s. 132 raises certain presumptions. It reads as under :
“(4A) Where any books of account, other documents, money, bullion, jewellery, or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed –
(i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;
(ii) that the contents of such books of account and other documents are true; and
(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.”
12. Sub-s. (4A) was introduced by the Taxation Laws (Amendment) Act, 1975 w.e.f. 1st Oct., 1975 and it enacts certain presumptions. According to it, the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of a person, shall be presumed to belong to such person in whose possession or control they are found during the search. A similar presumption is raised regarding the truthfulness of the contents of the books of accounts which are found. Presumption also arises in respect of signatures and every other part of the books of account to be in the handwriting of the person by whom it is purported to have been written. Similarly, if they are stamped, executed or attested, a presumption may be made to be duly stamped and executed or attested by the persons by whom it purports to have been executed or attested. The aforesaid presumptions are rebuttable in nature and their strength is dependent upon the circumstances of each case. Further, the words used in this sub-section are “may be presumed” which are in contradistinction to the words “shall presume” or “conclusive proof”.
13. Now, the question that would require an answer would be whether the presumption under s. 132(4A) can be used for framing regular assessment.
14. Karnataka High Court in CIT v. P.R. Metrani (HUF) [2001] 169 CTR (Kar) 149 : [2001] 251 ITR 244 (Kar) had laid down in clear terms that the presumption under sub-s. (4A) of s. 132 cannot be restricted for passing an order under s. 132(5) only. It further recorded that the presumptive value is total insofar as s. 132(5) is concerned, but in respect of other proceedings, the presumption is rebuttable. However, the Delhi High Court in Daya Chand v. CIT [2001] 167 CTR (Del) 446 : [2001] 250 ITR 327 (Del) and Allahabad High Court in Pushkar Narain Sarraf v. CIT [1990] 86 CTR (All.) 110 : [1990] 183 ITR 388 (All.) have subscribed a different view. We are in respectful agreement with the view expressed by Karnataka High Court as to accord any other meaning to the aforesaid provision would be against the legislative intent as sub-s. (5) of s. 132 had been omitted by Finance Act, 2002 w.e.f. 1st June, 2002 whereas sub-s. (4A) of s. 132 still continues on the statute book.
15. Having crystalized legal position, it is now apt to delve on the factual situation of the present case. It is not in dispute that the assessee had made a statement under s. 132(4) of the Act whereby a surrender of Rs. 2,00,000 was made. Besides this, the assessee had admitted that he had earned commission from M/s P.M.S. Enterprises, Phagwara which was not disclosed in the return filed by him. The relevant portion of the statement reads as follows :
“I am selling agent of M/s P.M.S. Enterprises, Railway Road, Phagwara and get commission @ 2 per cent on the sales effected through me. I have no other source of income except interest from firm on deposit with the firm. My wife is a housewife and does tailoring work on a very small scale.”
16. Further, during search, certain sale documents were seized which bore the signatures of the assessee as well. The said documents depicted total sales of Rs. 4,92,03,005 as noticed earlier.
17. Thus, in view of sub-ss. (4) and (4A) of s. 132 of the Act, the AO was justified in drawing presumption against the assessee and had made addition of Rs. 9,00,000 in his income under s. 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement vide letters dt. 24th Nov., 1998 and 11th March, 1999 during the course of assessment proceedings. However, no value could be attached thereto in the present case. In case the statement which was made by the assessee at the time of search and seizure was under pressure or due to coercion, the assessee could have retracted from the same at the earliest. No plausible explanation has been furnished as to why the said statement could not be withdrawn earlier. In such a situation, the authenticity of the statement by virtue of which surrender had been made at the time of search cannot be held to be bad. The Tribunal, thus, erred in concluding otherwise. The Tribunal, therefore, was not justified in reversing the order of the AO which was affirmed by the CIT(A) also.
18. In view of the above, the substantial question of law is answered in favour of the Revenue and against the assessee.
19. The appeal stands allowed.
[Citation : 344 ITR 352]
