Delhi HC rules Oral statement in response to summons has full evidentiary value

The Hon’ble Delhi HC in the case of Narinder Kr. Budhiraja Vs. CIT decided on 01.07.2014 has laid down an important proposition that Oral statement before Tax Authorities in response to summons u/s 131 have full evidentiary value. The Court held as under :

“The statement made by the assessee on 18.11.2005 in pursuance of the summons under Section 131 of the Act was apparently voluntary and there was no allegation that any undue influence or coercion had been used by the Income Tax Authorities. Even in the letter dated 24.11.2005 whereby the assessee sought to resile from his statement, the only reason given by the assessee was that he was suffering from high fever and had signed the papers without properly applying his mind or appreciating the contents or issue. The said letter was disbelieved by the Assessing Officer as well as by the CIT (Appeals) and in our view, rightly so. The Assessing Officer and CIT (Appeals) held that the retraction was merely an afterthought as during the recording of the statement, the assessee had not made any statement that he was unwell or was under any medication. It is relevant to note that the statement made by the assessee was not during any raid or search and seizure operations or even during a survey conducted by the Income Tax Authorities but was in response to summons that had been issued by the Income Tax Authorities. It was also open for the assessee to seek an adjournment of the proceedings before the Income Tax Authorities in the event, he was unwell to attend the same.”

The court also laid down as under :
“The price discovered in an open auction is undoubtedly one of the most reliable indicators of the market value of an asset and the same could not be ignored. The difference in the disclosed consideration and the value as
estimated by the DVO is so large that even if the valuation was not considered accurate, it nonetheless indicated that the recorded consideration was understated and the DVO’s report could be relied upon to corroborate the statement of the assessee, that he had paid an additional sum of `55 lacs in cash. “

While coming to the above conclusion and deciding the case against the assessee, the court distinguished the cases of CIT v Kalyansundaram: 294 ITR 49 (SC) and Paramjit Singh v Income Tax Officer: 323 ITR 588 (P&H).

To view complete text of judgement, click hereNarinder Budhiraja-Delhi HC

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