IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI THURSDAY, 05TH DAY OF SEPTEMBER 2019 / 14TH BHhttps://lexlegis.com/admin/judgment/mis_sla.phpADRA, 1941 ITA.No.19 OF 2019 AGAINST ORDER IN ITA 248/Coch/2016 DATED 31-05-2018 OF I.T.A.TRIBUNAL,COCHIN BENCH FOR A.Y.2010-11 APPELLANT/ASSESSEE: C.K.ABDUL AZEEZ CHEENATHAM KUZHIYIL HOUSE, MALAYAMMA P.O., KOZHIKODE 673 639. BY ADV. SRI.S.ARUN RAJ RESPONDENT/REVENUE: COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, CIRCLE, CALICUT 673 001. SRI JOS JPSEPJ SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05.08.2019, COURT ON 05.09.2019 DELIVERED FOLLOWING: "CR" C.K.ABDUL REHIM & R.NARAYANA PISHARADI, JJ I.T.A.No.19 of 2019 Dated this 5th day of September, 2019 JUDGMENT R.Narayana Pisharadi, J What is evidentiary value of statement made on oath by assessee to income tax authority in survey proceedings held under Section 133A of Income Tax Act, 1961 (hereinafter referred to as 'the Act')? This is core issue for consideration in this appeal. 2. search under Section 132 of Act was conducted at residential premises of Mr.Sainul Abdheen, one of Directors of company by name 'Parathode Granites Private Limited' (hereinafter referred to as 'the company'). During search, agreement executed by appellant/assessee, who was Managing Director of company, for purchase of land having I.T.A.No.19/2019 3 extent of 28.75 acres, was found and seized. This document revealed that appellant had given 90 lakhs rupees as advance for purchase of property. Thereafter, survey proceedings under Section 133A of Act were conducted at premises of company. During survey proceedings, assessee gave statement on oath on 11.03.2011 to income tax authority that he had given amount of 95 lakhs rupees as advance for purchase of property. Subsequently, appellant sent letter dated 04.03.2013 to department. In that letter he took plea that he had executed agreement in capacity as Managing Director of company and that amount of 95 lakhs rupees was invested out of funds of company and that he had not made any personal investment in deal and also that deal was subsequently cancelled by company. 3. assessing officer did not accept explanation given by appellant regarding nature and source of amount. assessing officer found that books of accounts of company did not reveal that amount of 95 lakhs rupees was invested by company in such deal. Therefore, aforesaid amount was brought to I.T.A.No.19/2019 4 tax by assessing authority as unexplained investment. 4. appellant took up matter in appeal before Commissioner of Income Tax (Appeals). appellate authority agreed with view taken by assessing officer and dismissed appeal. appellant filed further appeal before Income Tax Appellate Tribunal. Tribunal confirmed findings made by assessing officer and appellate authority and dismissed appeal. aforesaid order of Tribunal is under challenge in this appeal filed by assessee. 5. We have heard Sri.Arun Raj.S, learned counsel for appellant and also Sri.Jose Joseph, learned Standing Counsel for department. 6. Learned counsel for appellant contended that agreement for purchase of property was executed by appellant in his capacity as Managing Director of company and that investment was made out of funds of company and that he had not made any personal investment. Learned counsel has also contended that no assessment could have been made based solely on sworn statement given by assessee before income tax authority during survey proceedings. Learned counsel I.T.A.No.19/2019 5 has further contended that, during survey proceedings, income tax authority has no power to examine on oath any person and that such statement made on oath by assessee has got no evidentiary value. 7. Per contra, learned Standing Counsel for department would contend that appellant had admitted in sworn statement given before income tax authority that he had invested 95 lakhs rupees in deal. Learned Standing Counsel for department would also contend that appellant/assessee failed to establish his plea that amount was invested not by him but by company and in such circumstances, assessing authority was right in bringing amount to tax as unexplained investment under Section 69 of Act. 8. No question regarding evidentiary value of statement made on oath by assessee to income tax authority during survey proceedings under Section 133A of Act was raised by assessee before assessing officer or appellate authority or even before Tribunal. No such question of law has been raised by appelant/assessee in memorandum of appeal filed in this Court also. However, in view of submissions made by I.T.A.No.19/2019 6 learned counsel for appellant/assessee, we are inclined to raise and consider following substantial questions of law: (1) Has income tax authority got power to examine on oath any person during survey proceedings under Section 133A of Act? (2) Is it correct proposition of law that statement made on oath by assessee before income tax authority during survey proceedings under Section 133A of Act has no evidentiary value at all? (3) Is it permissible under law to make assessment of tax solely on basis of statement made on oath by assessee before income tax authority during survey proceedings under Section 133A of Act? 9. Section 133A of Act deals with survey proceedings. Section 133A(3)(iii) of Act provides that income-tax authority acting under Section 133A may record statement of any person which may be useful for, or relevant to, any proceeding under Act. It is evident from this provision that, during survey proceedings, income- tax authority has got power to record statement of any I.T.A.No.19/2019 7 person. expression any person in this provision includes assessee. 10. Learned counsel for appellant relied upon decision of Division Bench of this Court in Paul Mathews and Sons v. Commissioner of Income Tax : (2003) 263 ITR 101 in support of his contention that income tax authority has got no power to examine on oath any person or to record any sworn statement of person. Learned counsel has also pointed out that decision in Paul Mathews (supra) has been relied upon by Madras High Court in Commissioner of Income Tax v. Khader Khan Son : (2008) 300 ITR 157. 11. In Paul Mathews (supra), Division Bench has held as follows: "Section 133A(3)(iii) enables authority to record statement of any person which may be useful for, or relevant to, any proceeding under Act. Section 133A, however, enables income-tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On other hand, we find that such power to examine person on oath is specifically conferred on authorised officer only I.T.A.No.19/2019 8 under Section 132(4) of Income Tax Act in course of any search or seizure. Thus, Income Tax Act, whenever it thought fit and necessary to confer such power to examine person on oath, same has been expressly provided whereas Section 133A does not empower any Income Tax Officer to examine any person on oath. Thus, in contradistinction to power under Section 133A, Section 132(4) of Income Tax Act enables authorised officer to examine person on oath and any statement made by such person during such examination can also be used in evidence under Income Tax Act. On other hand, whatever statement is recorded under Section 133A of Income Tax Act it is not given any evidentiary value obviously for reason that officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in argument of learned counsel for appellant that statement elicited during survey operation has no evidentiary value . 12. It can be seen that in Paul Mathews (supra), Division Bench had categorically held that, whatever statement is recorded under Section 133A of Act, it is not I.T.A.No.19/2019 9 given any evidentiary value obviously for reason that officer is not authorised to administer oath and to take any sworn statement. 13. At this juncture, we may notice that another Division Bench of this Court in Commissioner of Income Tax v. Hotel Samrat : (2010) 323 ITR 353, stated that view taken in Paul Mathews (supra) does not lay down correct law. However, issue was not referred to Full Bench as it was not necessary to do so in that case. In Hotel Samrat (supra), it was observed as follows: During hearing, we felt that decision of this Court in Paul Mathews and Sons reported in [2003] 263 ITR 101 above referred to does not lay down correct position of law because, in our view, statement recorded under Section 133A(3)(iii) though cannot be treated as independent evidence like evidence recorded under Section 132(4), has corroboratory value in assessment and statement recorded under said provision can be even relied on by assessee. In other words, decision of this Court that statement recorded under above provision does not have evidentiary value, in our view, does not lay down correct law. However, since counsel for respondent- I.T.A.No.19/2019 10 assessee does not rely on above decision, we proceed to consider these cases on merits without referring matter for consideration to Full Bench because by operation of latter part of section, such statement has relevance for assessment and other proceeding under Act . 14. Another Division Bench of this Court considered issue in Travancore Diagnostics (P) Limited v. Assistant Commissioner of Income Tax: 2016 (5) KHC 580 : 2016 (4) KLT 350. In that case, Division Bench clarified dictum laid down in Paul Mathews (supra) as follows: For purpose of this case, we do not think that it is necessary to venture into question as to whether Paul Mathew and Sons lays down right law. Even taking dicta in Paul Mathew and Sons as correct law, it is clear from judgment that what this Court had said is that statement made by assessee under Section 133A of Act is not conclusive and that it is open to person who made admission to resile from it and to state same to be incorrect, in which event, assessee should be given opportunity to show that books of account discloses correct statement of facts. We draw support for our opinion from judgment of Hon'ble Supreme Court in Pullangode Rubber Produce Co. Ltd. v. I.T.A.No.19/2019 11 State of Kerala, 1973 (91) ITR 18 (SC). position appears to be clear that person making admission or statement will be at liberty to withdraw from statement or admission, since such statement had not been made under Section 132(4), which provides for sworn statement, but one under Section 133A of Act . (emphasis supplied). 15. Section 133A(3)(iii) of Act empowers income tax authority to record statement of person including assessee. Section 133A of Act, unlike Section 132(4) of Act, does not specifically empower income tax authority to examine person on oath. There can be no quarrel with this proposition laid down in Paul Mathews (supra). However, Section 133A of Act does not also prohibit income tax authority to administer oath to person. As in case of accused in criminal proceedings, there is no specific prohibition as contained in Section 4(2) of Oaths Act, 1969 against administering oath to assessee in proceedings under Section 133A of Act. status of assessee in proceedings under Section 133A of Act cannot be equated to status of accused in criminal case. Therefore, merely by reason of I.T.A.No.19/2019 12 fact that income tax authority has administered oath to assessee and recorded his sworn statement during survey proceedings under Section 133A of Act, it cannot be found that such statement has no evidentiary value at all and that it cannot be used in any manner against assessee in any proceedings under Act. As explained in Travancore Diagnostics (supra), statement on oath made by assessee to income tax authority during survey proceedings under Section 133A of Act is not conclusive. assessee can explain or withdraw admission, if any, made by him in such statement. Assessment of tax cannot be made solely on basis of such sworn statement made by assessee under Section 133A(3)(iii) of Act. At same time, such statement can be used to corroborate other materials before assessing authority, including contents of any document. In our view, dictum laid down in Paul Mathews (supra) and Hotel Samrat (supra) and Travancore Diagnostics (supra) can be harmonised in this manner without any conflict. Thus, substantial questions of law raised as items (1) and (3) are answered in favour of assessee and against revenue. substantial question of law raised I.T.A.No.19/2019 13 as item No.(2) is answered in favour of revenue and against assessee. 16. Section 69 of Act provides that, where in financial year immediately preceding assessment year, assessee has made investments which are not recorded in books of account, if any, maintained by him for any source of income, and assessee offers no explanation about nature and source of investments or explanation offered by him is not, in opinion of Assessing Officer, satisfactory, value of investments may be deemed to be income of assessee of such financial year. 17. burden is on assessee to prove or explain source of money or investment. Where assessee fails to prove satisfactorily source and nature of investment, Income Tax Officer is entitled to draw inference that amount is of assessable nature (See Govindarajulu Mudaliar v. Commissioner of Income Tax : AIR 1959 SC 248). law is well settled that onus of proving source of sum of money received by assessee is on him. Where nature and source of receipt, whether it be of money or of other property, cannot be I.T.A.No.19/2019 14 satisfactorily explained by assessee, it is open to revenue to hold that it is income of assessee and no further burden lies on revenue to show that income is from any particular source (See Roshan Di-Hatti v. Commissioner of Income Tax : AIR 1977 SC 1605). question whether source of investment should be treated as income or not under Section 69 has to be considered in light of facts of each case. In other words, discretion has been conferred on Income tax Officer under Section 69 of Act to treat source of investment as income of assessee if explanation offered by assessee is not found satisfactory and said discretion has to be exercised keeping in view facts and circumstances of particular case (See Commissioner of Income Tax v. P.K.Noorjahan : AIR 1999 SC 1600). 18. In instant case, there is no dispute with regard to fact that appellant had paid 95 lakhs rupees as advance for purchasing property. His plea is that investment was made by him in his capacity as Managing Director of company and not in his personal capacity and that amount came out of funds of company. books of account of company did not reveal any such I.T.A.No.19/2019 15 transaction or investment made by company. Therefore, assessing officer was not satisfied about explanation given by appellant/assessee. assessee is none other than Managing Director of company. He could have easily produced records or materials to show that amount was actually invested by company and not by him in his personal capacity. In absence of any such materials produced, assessing officer was justified in rejecting explanation given by appellant and in bringing amount to tax as unexplained investment. 19. assessment of tax made by authority concerned is not solely based on sworn statement of appellant given to income tax authority. basis of assessment is agreement executed by appellant for purchase of property and also circumstance that appellant failed to establish his plea regarding investment made. sworn statement of appellant only corroborates those materials. fact that assessing authority gave emphasis to sworn statement of appellant while passing order of assessment does not change this fact situation. 20. Tribunal has adverted to factual aspects I.T.A.No.19/2019 16 and confirmed findings made by assessing authority and appellate authority. conclusion reached by Tribunal on finding of fact cannot be interfered with by this Court unless it is shown that it is perverse or that Tribunal had acted without any materials. In instant case, factual findings made by Tribunal do not suffer from any such error or illegality or perversity. In such circumstances, we find no sufficient ground to interfere with findings of Tribunal. appeal is liable to be dismissed. Consequently, appeal is dismissed. No costs. (sd/-) C.K.ABDUL REHIM, JUDGE (sd/-) R.NARAYANA PISHARADI, JUDGE lsn/jsr I.T.A.No.19/2019 17 APPENDIX PETITIONER'S EXHIBITS: ANNEXURE TRUE COPY OF ASSESSMENT ORDER DATED 30.3.2013 FOR ASSESSMENT YEAR 2010-11. ANNEXURE B TRUE COPY OF COMMISSIONER APPEALS ORDER DATED 24.2.2016 FOR AY 2010-11. ANNEXURE C TRUE COPY OF IMPUGNED ORDER DATED 31.5.2018 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH FOR AY 2010-11. RESPONDENT'S EXHIBITS: NIL TRUE COPY PS TO JUDGE C.K. Abdul Azeez v. Commissioner of Income-tax, Central Circle, Calicut