(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1) The assessee has filed this appeal challenging the legality of the judgment of Income-tax Appellate Tribunal, Rajkot (hereinafter to be referred to as “the Tribunal) dated 25.2.2000. At the time of admission of the appeal, the Division Bench of this Court had formulated following question for consideration:
“Whether on the facts and in the circumstances of the case the Tribunal is justified in restoring addition of Rs.27,31,165/- as concealed income of the appellant without taking into consideration the evidentiary value of the seized paper for making such huge addition?”
2) We may record the facts in brief. The appellant- assessee is an individual and is engaged in manufacturing activities. At the relevant time, he was owning one Saurashtra Industries, a proprietary concern. On 18.7.1987, the Revenue Authorities carried out a search operation at the residential and commercial premises of the assessee at Ahmedabad and Bhavnagar. During the course of such search, some cash, gold ornaments and a loose paper was seized. Such loose paper contained reference to several amounts. Names of persons connected with such amounts were also written. During the search operation, a detailed statement of the assessee was recorded on 18.7.1987. A further statement was recorded on 4.11.1987.
3) The assessee filed the return of income for the assessment year under consideration, that is, 1987-88 on 3.11.1987 and disclosed an amount of Rs.6 lacs as his extra income, which according to the assessee, was found during the course of the search.
4) The Assessing Officer framed an assessment under section 143(3) of the Income-tax Act, 1961 (hereinafter to be referred to as “the Act”) on 26.3.1990. In addition to Rs.6 lacs already disclosed by the assessee in the return filed, he made addition of further sum of Rs.31,31,165/- under the head of “income from undisclosed sources”. He made further dis-allowances of sundry nature, such as petrol expenses, depreciation etc. and computed the income of the assessee at Rs.38,09,353/-. He gave benefit of deduction under sections 80(G), 80(L) and 80(C) of the Act for a total sum of Rs.9,927/- and thereby worked out a total income of the assessee for the year under consideration at Rs.37,99,430/-.
5) The assessee preferred an appeal against such order of the Assessing Officer. His appeal was allowed by the Commissioner of Income-tax (Appeals) by his order dated 25.9.1990. The Revenue Authority, thereupon, approached the Tribunal. The Tribunal allowed the Revenue's appeal in part and set aside the order of the Commissioner of Income-tax (Appeals), but granted certain reliefs to the assessee as compared to what the Assessing Officer had computed the total income. In effect, the Tribunal reduced the income of the assessee by a sum of Rs.10 lacs. With respect to undisclosed income, the Tribunal computed the same at Rs.27,31,165/- inclusive of Rs.6 lacs disclosed by the assessee in the return.
6) It is this order of the Tribunal which the assessee has challenged before us on various grounds. Mr. R.K. Patel, learned counsel for the appellant- assessee took us through the detailed discussion on record contained in the orders passed by the Revenue Authorities as well as by the Tribunal. He pointed out that the main ground on which the Assessing Officer and the Tribunal sustained the addition under the head of undisclosed income was the loose paper found during the search and the statement of the assessee recorded during such search. The learned counsel pointed out that the assessee had retracted such a statement at a later stage, which fact was totally ignored by the Tribunal. The counsel drew our attention to the contents of the assessee's statement to contend that the Tribunal had misinterpreted the assessee's answers to various questions put by the search officer. In short, his main contention was that the findings of fact arrived at by the Tribunal were wholly perverse. On such basis, the learned counsel raised following contentions:
6.1) A loose paper seized during the search operation cannot be relied on for making additions. He submitted that there was no material to support such undisclosed income. In that view of the matter, the additions were not justified. In this respect, he relied on an order dated 24.6.2009 passed in Tax Appeal No.370 of 1999 by the Division Bench of this Court in which while dismissing the Revenue's appeal and confirming the order of the Tribunal, the Court noted that the Tribunal had dealt with the question of additions pursuant to search operation in detail. No material was available to show that the assessee had concealed an amount of Rs.85 lacs. On the basis of such observation, the Court dismissed the Revenue's appeal. This decision, however, is based purely on the facts of the case and in our opinion does not lay down any ratio which can be applied in the present case.
6.2) The learned counsel contended that the statement of the assessee recorded during the search operation cannot be relied upon. He relied on the decision of this Court in the case of Kailashben Manharlal Chokshi Vs. Commissioner of Income-tax, 328 ITR 411 to contend that such statement having been recorded in odd hours, the assessee would be understandably under considerable pressure. The learned counsel further contended that the Tribunal has confirmed the additions on mere presumption. Such additions are not backed by any evidence adduced by the Revenue. In this respect, the learned counsel relied on the decision of the Division Bench of the Orissa High Court in the case of Commissioner of Wealth Tax, Orissa Vs. Ramniklal D. Mehta, 136 ITR 729. The learned counsel further submitted that in the loose paper, reference was made to one Shri Bhanwarlal H. Shah. The assessee had produced the letter of said Shri Bhanwarlal H. Shah stating that he had not received any amount through cheque or cash from the assessee. The counsel submitted that such statement remained uncontroverted. No attempt was made by the Revenue to examine said Shri Bhanwarlal H. Shah.
6.3) The counsel further submitted that the seized paper cannot be a conclusive proof for making the addition. In this respect, he relied on the decision of the Apex Court in the case of Sreelekha Banerjee & Ors. Vs. Commissioner of Income-Tax, Bihar and Orissa, 49 ITR 112 (SC).
6.4) The counsel lastly submitted that there were certain items in the loose paper (Annexure-12, Item No.30) which were scored out. Even such entries have been taken into account while computing the undisclosed income of the assessee.
7) On the other hand, learned counsel Mr. Pranav G. Desai for the respondent-department opposed the appeal contending that the entire issue is factual in nature. The Tribunal has taken into account all relevant factors. To the extent the explanation of the assessee was found acceptable, relief has been granted. The counsel submitted that while dealing with an appeal under section 260A of the Act, such findings of fact cannot be disturbed.
8) The counsel also took us to the decision of the Assessing Officer as well as the Tribunal to contend that all issues have been properly examined. Evidence on record suggests that the assessee had concealed income. There was sufficient material to come to such conclusion.
9) Having thus heard the learned counsel for the parties, at the outset we may remind ourselves that in the present appeal we are examining the legality of the judgment of the Tribunal which is well recognized as a final fact finding authority. The scope of interference at the hands of this Court in factual findings arrived at by the Tribunal is very narrow. Unless it is found that the findings are perverse, in the sense that there is no evidence on record which would support such findings, the Court would not interfere with such factual conclusions. The law is too well settled requiring any authority on the point. However, we may notice one such decision of the Apex Court. The Apex Court in the case of Commissioner of Customs, Mumbai Vs. Bureau Veritas & Ors., (2005) 3 SCC 265, examined the scope of the High Court with respect to factual findings arrived at by the Tribunal. This, of course, was an appeal arising out of the Customs Act, 1962, however, the appellate powers of the High Court have been expressed in the statute in similar language. In this respect, the apex Court observed as under:
“The scope for interference with findings recorded by the Tribunal if it has kept in view the correct legal position, has been dealt with by this Court in many cases. The position was illuminatingly stated by this Court in Collector of Customs Vs. Swastic Woollens (P) Ltd as follows: (SCC pp.801-02, para 9) “9.The expression 'wool wastes' is not defined in the relevant Act or in the notification. This expression is not an expression of art. It may be understood, as in most of financial measures where the expressions are not defined, not in a technical or any preconceived basis but on the basis of trade understanding of those who deal with these goods as mentioned hereinbefore. The Tribunal proceeded on that basis. The Tribunal has not ignored the Technical Committee's observations. We have noted in brief the Tribunal's handling of that report. The Tribunal has neither ignored the observations of CCCN nor the Board's Tariff Advice. These observations have been examined in the light of the facts and circumstances of the case. One of the basic factual disputes was long length of silver tops. Having regard to the long length, we find that the Tribunal was not in error. Whether a particular item and the particular goods in this case are wool wastes, should be so considered or not is primarily and essentially a question of fact. The decision of such a question of fact must be arrived at without ignoring the material and relevant facts and bearing in mind the correct legal principles. Judged by these yardsticks the finding of the Tribunal in this case is unassailable. We are, however, of the view that if a fact-finding authority comes to a conclusion within the above parameters honestly and bona fide, the fact another authority be it the Supreme Court or the High Court may have a different perspective of that question, in our opinion, is no ground to interfere with that finding in an appeal from such a finding. In the new scheme of things, the Tribunals have been entrusted with the authority and the jurisdiction to decide the questions involving determination of the rate of duty of excise or of the value of goods for purposes of assessment. An appeal has been provided to this Court to oversee that the subordinate tribunals act within the law. Merely, because another view might be possible by a competent court of law is no ground for interference under Section 130-E of the Act though in relation to the rate of duty of customs or to the value of goods for purposes of assessment, the amplitude of appeal is unlimited. But because the jurisdiction is unlimited, there is inherent limitation imposed in such appeals. The Tribunal has not deviated from the path of correct principle and has considered all the relevant factors. If the Tribunal has acted bona fide with the natural justice by a speaking order, in our opinion, even if superior court feels that another view is possible, that is no ground for substitution of that view in exercise of power under clause(b) of Section 130-E of the Act.”
10) With above legal principles in mind, we may peruse the orders on record more closely with reference to the evidence on record. Firstly, we may notice that in the loose paper seized during the search operation (Annexure-12, Item No.30), the assessee had made several entries. Such entries included some amounts and the names of persons opposite such amounts. On both sides of the page such entries were made. In connection with such entries, the Revenue asked several questions to the assessee during the search operation itself. During such questioning, the assessee admitted that the contents of the documents were written by him. We find that not only had the assessee himself thus in his own handwriting made those entries, full figures were written on such document. This was therefore, not a case where the document required decoding. We also find that at the bottom of the page on each side, the assessee had himself made separate totals of all amounts written on the page. On the front side of the page such total came to Rs.12,31,165/-. On the reverse side, such total came to Rs.25,50,000/-. Total of these two figures come to Rs.37,81,165/-. It is true that such totaling (of the two totals) was not done by the assessee on the loose paper. However, it is clear that the Assessing Officer added up the two amounts and considered that the assessee had made entries worth Rs.37,81,165/- in the said document. After giving benefit of Rs.6 lacs disclosed by the assessee in the return, he computed the assessee's undisclosed income at Rs.31,31,165/-.
11) In his statement during the search recorded on 18.7.1987, in addition to admitting that the document contained entries in his own handwriting, the assessee further stated that two amounts totaling to Rs.5,86,000/- are the amounts pertaining to Shri Bhanwarlal H Shah. He gave detailed explanation in respect to each entry when asked. He explained that he had given such amounts to various peoples mentioned in the document.
12) With respect to entry of Rs.7,50,000/-, of
13) We may notice that the assessee's further statement was recorded on 4.11.1987, in which he tried to retract his previous statement to some extent. In a question with respect to such document (Annexure 12 , Item No.30), he stated that 'yes I want to say that because of the raid I had become mentally disturbed. Without understanding the question and without understanding the distinction between capital, income, assets, outstanding. Consequently the my signature for income which has been declared, my capital is not that of 1/3rd of it. Therefore it is my humble request that the assessment of income, wealth may be made judicially.
14) The Assessing Officer took in account the above material computed the undisclosed income of the assessee on the basis of the entries made in the loose paper, but gave credit of Rs.6 lacs disclosed by the assessee in the return.
15) The Commissioner of Income-tax (Appeals) deleted all the additions primarily observing that the Assessing Officer made additions completely ignoring not only the principles of Accountancy but also the detailed explanation offered by the assessee. He further observed that the very Assessing Officer had assessed the assessee for the assessment year 1985-86 on a net wealth of Rs.2,91,907/-. He was of the opinion that the return filed by the assessee disclosing sum of Rs.6 lacs would include all possible omissions. We may record that no specific details are available in such order of the Commissioner of Income- tax (Appeals), on the basis of which he made above observations.
16) The Tribunal took note of the evidence in considerable detail. In the impugned order, the Tribunal considered all the contentions of the assessee but came to the conclusion that the theory of retraction of the statement cannot be accepted. The Tribunal was also of the opinion that the declaration made by Shri Bhanwarlal H. Shah was not in tune with the entries made in the loose paper. The Tribunal gave further reasons for not basing any reliance on such statement of Shri Bhanwarlal H. Shah. The Tribunal noted that the assessee had admitted having paid the amount in cash to other parties, with whom assessee was dealing over a period of time in relation to his business transaction.
17) The Tribunal, however, accepted the assessee's version that entry of Rs.7,50,000/- was a mere error. Such entry pertained to purchase of Maruti Car. The Tribunal, therefore, found it believable that instead of a sum of Rs.75,000/-, the assessee had, due to error, filled the figure of 7,50,000/-. The Tribunal also found that such expenditure on the purchase of Maruti Car was duly reflected in the book maintained by the assessee. The Tribunal thus, deleted entire sum of Rs.7,50,000/- from the assessee's undisclosed income. The Tribunal, thereafter, gave further benefits on different heads. In total, the Tribunal reduced a total undisclosed income of the assessee by sum of Rs.10 lacs.
18) We do not find that the Tribunal committed any error which can be corrected in exercise of appellate powers under section 260A of the Act. As already noted, there was sufficient evidence on record with respect to undisclosed income of the assessee. The Revenue Authority seized a document from the office premises of the assessee. The assessee in his statement during the search, admitted that entries in the said document were made by him in his own handwriting. Such document contained full figures of various amounts and also showing names of various persons who were connected with each entry. In addition to the document, the assessee's own statement recorded on 18.7.1987 was sufficiently clear. Such statement of the assessee was never fully retracted. It is true that in his further statement recorded on 4.11.1987, the assessee did contend that during the raid he was mentally disturbed and without understanding the question, he had given the answers and that his real undisclosed income is not even 1/3rd of what he had disclosed on that day. However, he gave no further elaboration on the question of retraction. Even in such further statement, the assessee did contend that the statement was recorded under coercion, duress and pressure. We may also notice that other than the above noted contents of his statement dated 4.11.1987, till the assessing proceedings started before the Assessing Officer there was no attempt on the part of the assessee to retract his original statement. In other words, except for the above answers that he gave on 4.11.1987, the assessee had not written any letter or made any representation to any of the Revenue Authorities to contend that his statement on the date of search was either under pressure or duress. Even in his statement dated 4.11.19897, he gave no explanation or reconciliation for the different amounts found written in the document (Annexure-12, Item No.30) and the names of persons written opposite each such amount.
19) In view of the above position, it can be seen that the Revenue had considerable material at its command to make addition in the income of the assessee under the head of undisclosed income. The Tribunal took note of the contents of the documents and also the detailed statement of the assessee recorded on 18.7.1987. We do not find that the Tribunal's finding can be stated to be perverse. Quite apart from detailed reasons given by the Tribunal, we ourselves noted that on both the sides of the said document, the assessee had made a total of all figures appearing on the page. On the front side, the total came to Rs.12,31,165/-. On the reverse side of the page said total came to Rs.25,50,000/-. This is significant for our purpose. Firstly, if this amount mentioned in the loose paper did not pertain to only credit entries as was contended by the assessee before the Tribunal and by his counsel before us, there was no need for the assessee to total all figures together. Surely, the person keeping even loose account would not total up the debit and credit entries as the same would give a completely distorted total. This is also significant from the context of the assessee's contention before us that even the scored items have been taken into account by the Assessing Officer and confirmed by the Tribunal. We believe that the assessee wants to contend that a figure which is scored out would represent the amount which the assessee has received back, and in that manner, reentered the circulation of the amount at the disposal of the assessee and in that way there would be duplication of the same amount. We are however afraid, such contention cannot be accepted. If the amount have already been returned by a particular person to whom it was lent and that is how it had reentered the circulation of the fund available to the assessee, there was no need for the assessee to take into account such amount also while adding up all figures appearing on a page. The assessee himself had not ignored such scored out items while making a total of all amounts on both the sides of the page.
20) To summarize, during the search operation, a note was seized from the business premises of the assessee. Such note was written in his own handwriting. In the note several amounts were written and against each figure, names of persons connected with such amount was mentioned. On both sides of the page, all figures were totaled up. In his statement during the search, the assessee admitted that such amounts represented unaccounted money. He also gave reference to persons whose names were mentioned in the note. After the search was over, the assessee did not retract the statement for a long time. Only during his further statement recorded on 4.11.1987, he made an attempt to suggest that the amount contained in the note did not represent unaccounted money. He, however, gave no further explanation with respect to different figures found in the note and the names of persons mentioned therein. He also did not explain his previous statement recorded during the search. Thereafter, there was no further retraction. Only during the course of the assessment proceeding, the assessee produced a note written by Shri Bhanwarlal suggesting that he had never received any money from the assessee.
21) The Tribunal has taken into account all these factors and come to the conclusion that the addition of unaccounted money made by the Assessing Officer was justified and the Commissioner of Income-tax (Appeals) committed an error in interfering with such findings. We also find that the Commissioner of Income-tax had given brief and unconvincing reasons for interfering with the order of the Assessing Officer. We may recall that the Tribunal, to the extent, found the explanation of the assessee believable, granted relief. In particular, when the assessee explained that entry of Rs.7,50,000/- was written by mistake and the real figure was Rs.75,000/- expended for purchase of Maruti Car, the Tribunal accepted such an explanation. Further finding that such amount of Rs.75,000/- was also reflected in the books, deleted the entire figure of 7,50,000/-. With respect to the note of Shri Bhanwarlal H. Shah, the Tribunal observed, and in our opinion rightly so, that the said Shri Bhanwarlal H. Shah claims to have lent money to the assessee and not received the same. He, however, does not remember when and what amount was lent. When the amount involved was in excess of Rs.5,00,000/-, the Tribunal found it difficult to believe that a person making loan of such a large amount in cash would have no recollection of the same. The contention of the counsel for the assessee that such statement of Shri Bhanwarlal H. Shah has gone uncontroverted, cannot be accepted. In the present case, such statement was not made on affidavit. If the assessee had procured affidavit of Shri Bhanwarlal H. Shah, we would have perhaps expected the Revenue to either accept the contents of such affidavit or to controvert the same as permissible under the law. In the present case, a mere note purported to have been given by Shri Bhanwarlal would not dislodge other voluminous and material evidence. The Tribunal found that the contents of the note cannot be readily believed.
22) In short, we are of the opinion that the Tribunal had taken into account all relevant factors, examined evidence on record and came to the conclusions which are purely factual in nature. In absence of any perversity in such factual findings, it would not be possible for us, in exercise of appellate jurisdiction under section 260A of the Income-tax Act to upturn such findings. We may remind ourselves of the finality of the tribunal's factual findings. In the case of M/s. Karam Chand Thapaf & Bros. Pvt. Ltd. Vs. The Commissioner of Income-tax (Central), Calcutta (1972)4 SCC 124, the Apex Court reiterated that the Income-tax Tribunal is a final fact finding authority and the High Court would not be justified in reexamining the material on record and reversing the Tribunal's finding of fact. It was held as under:
“In our opinion, it was wholly impermissible for the High Court to disturb the findings of fact reached by the tribunal. The tribunal was the final fact final authority. The facts found by it could have been challenged only on certain recognised grounds. Neither the High Court nor this Court has jurisdiction to re-appreciate the material on record to find out whether the facts found by the tribunal are correct or not. The High Court should not have taken upon itself the responsibility to go into the question whether the findings of facts reached by the tribunal are correct. The only question that the High Court was called upon to determine was whether on the facts found by the tribunal, the receipt in question should not have been considered by the tribunal as Revenue receipt.”
23) In the case of M/s. Sir Shadi Lal Sugar & General Mills Ltd. & Anr. Vs. Commissioner of Income-tax, Delhi, (1987) 4 SCC 722 (168 ITR 705), the Apex Court observed that the High Court was in error in holding that the Tribunal had acted incorrectly. It was further observed that in preferring one view to another view of factual appreciation, the High Court transgressed the limits of its jurisdiction under the Income-tax reference in answering the question of law. The Court referred to and relied upon the observation of the earlier decision in the case of Meenakshi Mills Ltd. Vs. CIT, reported in 31 ITR 28, wherein it was reiterated that findings on questions of pure fact arrived at by the Tribunal were not to be disturbed by the High Court on a reference unless it appeared that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come; and this was so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal. In other words, such a finding could be reviewed only on the ground that there was no evidence to support it or that it was perverse.
24) Learned counsel for the assessee has argued before us that the Tribunal committed an error in appreciating the evidence on record and in particular the answers given by the assessee in his statement recorded by the Revenue Authority during the search and thereafter. Even if two views were possible, in view of the decisions noted above, it would not be possible for us to overturn the findings of fact arrived at by the Tribunal particularly when we find that the Tribunal had taken into consideration all relevant evidence. It is not a case of no evidence and in that view of the matter, the findings of the Tribunal cannot be categorized as perverse.
25) In the result, we answer the question in the affirmative, that is, against the assessee and in favour of the Revenue. Tax Appeal is dismissed.
(AKIL KURESHI,J.) (HARSHA DEVANI,J.) Vahid