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Maheshwari Industries v. Asstt. CIT [2005]
148 Taxman 74 (Jodh) (Mag.) held that
additions should be considered on merits
rather than merely on the basis of the fact
that the amount was surrendered. It is
settled legal position that unless the
provision of statute warrant or there is a
necessary implication on reading of
section that the principles of natural
justice are excluded, the provision of
section should be construed in manner
incorporating principles of natural
justice and quasi-judicial bodies should
generally read in the provision relevant
section a requirement of giving a
reasonable opportunity of being heard
before an order is made which will have
adverse civil consequences for parties
effected.
8. Mode and Manner of Retraction:
Retraction of a statement later on, which
was made during the search operation is not
an easy way to escape the tax implications
and requires corroborative evidence and 9. Some decisions where Retraction of
documents to support the retraction and Statement was held VALID:
show the circumstances as to why the
person is retracting his statement made
earlier. The person has to go through
minute scrutiny by the tax authorities and
the Courts later on, if the need be. The
following aspects should be kept in mind:
a) Affidavit – A retraction should be made
on an affidavit along with supporting
evidences, if any;
b) Affidavit of witnesses – Additional
affidavit of the witnesses present during
search may also be filed. Such statement
holds good value and may aid the assessee
in getting relief.
c) Elaborate – It must clearly lay down the
facts of the case and detail the evidences
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showing inter alia use of force, coercion,
intimidation or any mistake of fact/law,
whatever may be the case.
d) Highlight Error – In case of a mistake
of fact or law, it must clearly lay down as to
what mistake took place in making the
statement, the reason for the same and the
actual correct position. Evidences in
support of the correct facts must also be
attached.
e) Inform Senior Officers – In addition to
the A.O., Authorised Officer (who
conducted the Search), a retraction which
is made on affidavit or otherwise should
also be communicated to higher
authorities.
f) Earlier the better – Any retraction
should be done at the earliest without any
delay. A retraction made immediately may
strengthen the case of the assessee
whereas a belated retraction will in most
cases would be seen as an afterthought.
a) Pullangode Rubber Produce Co. Ltd. v.
State of Kerala [1973] 91 ITR 18 (SC) :
Their Lordships while observing that
admission is an extremely important
piece of evidence, held that, it cannot be
said to be conclusive and the maker can
show that it was incorrect. [Also refer S.
Arjun Singh v. CWT [1989] 175 ITR
91/[1988] 41 Taxman 272 (Delhi)].
b) Avadh Kishore Das v. Ram Gopal AIR
1979 SC 861: The Supreme Court held
that evidentiary admissions are not
conclusive proof of the facts admitted
and may be explained or shown to be
wrong, but they do raise an estoppel and
shift the burden of proof on to the
person making them. The Supreme