Y.R. Meena, J. - (1.) THIS appeal is directed against the order of Tribunal in case of Ram Jas Nawal vs. Asstt. CIT, Investigation, dt. 4th Jan., 1999.
(2.) THE search proceedings were conducted at the business and residential premises of the assessee on 18th Sept., 1996, and various lockers belonging to the assessee and his members of family were searched. THE search proceedings were continued from 18th Sept., 1996, to 25th Sept., 1996. Various items like valuables, assets, documents, jewellery and papers relating to investments were found and seized. THE statement of K.G. Nawal and members of his family were recorded at the time of search under s. 132(4) of the IT Act, 1961. THE statements were duly signed by the assessee Ram Jas Nawal and members of his family. Huge cash amount to the tune of Rs. 3,00,74,259 was found from various premises. Out of that assessee has explained Rs. 9,64,419 and balance amount of Rs. 2,97,09,940 was surrendered by the assessee for taxation. This amount was bifurcated into three hands i.e., Ram Jas Nawal and his two sons namely, K.G. Nawal and K.K. Maheshwari in equal proportion. THEreafter returns were filed. Though in the statement recorded during search, the assessee could not explain the profit of M/s Shree Products to the tune of Rs. 23,18,210 and also gifts shown in the papers seized but in the return the assessee retracted from his statement and claimed that Rs. 23,18,210 is income from the firm M/s Shree Products and gifts received were also genuine. THErefore, this amount was not offered from taxation in the income-tax returns. THE income pertains to the asst. yrs. 1987-88 to 1991-92 has been assessed. Before joining the business, assessee Ram Jaw Nawal was in service in the railway department. At the time of search, in the statement it was admitted that income of Rs. 23,18,210 shown as export profits of M/s Shree Products represents undisclosed income of Ram Jas Nawal, K.G. Nawal and K.K. Maheshwari-1/3rd share each. During the course of assessment it was enquired whether assessee has any evidence to support that the income of Rs. 23,18,210 from M/s Shree Products is genuine. As per AO, the assessee was unable to submit any documentary evidence at the time of recording of the statement under s. 132(4) of the IT Act, 1961, and after considering the submissions during the course of assessment, he was of the view that when assessee has surrendered the income of Rs. 23,18,210 as undisclosed income and subsequently retracted from his statements showing the entry to purchase export profit which is exempted and by making investment of only Rs. 4,500 in aggregate they arranged to receive export income of Rs. 23,18,210 and has also shown loan to the tune of Rs. 41,00,000 from M/s Alexcon Extrusions. The entries are made in the books which was utilised for payment against the purchase price of land property by the members of the family and the firm for its business purpose. Thus, there was no genuine firm in the name of M/s Shree Products. He further, found that the statements were given by the assessee Ram Jas Nawal and this sons of their own. No undue and coercive methods have been adopted by the Departmental authorities, therefore, the AO has made addition of Rs. 23,18,210 and apportioned it into three assessees i.e., Ram Jas Nawal and his two sons. The second addition relates to the gifts made to the assessee i.e., Rs. 10,00,000. This amount was also offered for tax in the statement during search but when assessee filed the return, the amount of gift has not been surrendered for tax and the AO taking into account the statements recorded during search and the material available on record held that gift shown by the assessee is not genuine. In appeal before the Tribunal, the Tribunal also found that the addition of Rs. 7,42,726 being one-third share of export profit from M/s Shree Products, the addition made in the asst. yr. 1996- 97 is justified. The claim of the assessee that M/s Shree Products claimed that M/s Shree Products has income of Rs. 23,18,210 and that income is from export, therefore, he claimed deduction under s. 80HHC, that was rejected. The Tribunal has referred the statements of the assessee which are signed by his two sons and wife. Thereafter, retracting from those statements was an afterthought and arranged affairs. The Tribunal also noticed that by making investment of Rs. 4,500, it can't be believed that firm has earned such huge profits to the tune of Rs. 23,18,210 and he affirmed the view taken by the AO.
(3.) HEARD learned counsel for the parties. In appeal before us, learned counsel for the appellant, Mr. Jhanwar, submits that though assessee has surrendered the income shown from export through M/s Shree Products and also gifts received were surrendered for tax at the time of search and the statements also made to this effect, but when the income from M/s Shree Products and the amount received in gifts which has been shown in the cash book of M/s Shree Products, which was found during search, that amount cannot be taxed under s. 158BB of the IT Act, 1961. Learned counsel submits that if any entry is made in the books of accounts, that should not be taxed in view of sub-cl. (B) of cl. (c) of s. 158BB. He further submits that M/s Shree Products also filed the return disclosing that income as income of M/s Shree Products. He further submits that if the statements are recorded under threat or duress, the assessee can retract from those statements and can claim that the surrendered income or part thereof should not be taxed in assessment proceedings, under Chapter `XIV-B' of the Act, if some entry is found to this effect in the books seized during search. ;