2013 (2) TMI 235 - HC - Income Tax

Addition merely on the basis of statement u/s. 132(4) - unaccounted income - Held that - Not only that the initial confessional statement made by the assessee on 19.1.2006 was not retracted for months together, in between also he made one such similar statement. the fact remains that initial statement was not retracted for several months. In his retraction statement, the assessee made out a ground that the search had started at 8.30 in the morning and ended on the next day and thus it continued for a period of nearly 24 hours suggesting mental harassment and fatigue for having made such a disclosure. He did not suggest any undue pressure or allurement. And quite apart from such statement dated 19.1.06, at the time of search, the assessee had made yet another confessional statement on 28th March 2006. He had never referred to such a statement in his retraction. He did not offer any explanation why quite apart from the statement made at the time of search operation, he had two months later repeated his offer. The authorities have further recorded that both the statements were made in presence of the Chartered Accountant of the assessee. In addition to such circumstances, the Commissioner (Appeals) noted that the appellant was not maintaining personal books of accounts. Revenue authorities and the Tribunal on the basis of evidence on record came to the conclusion that the addition of Rs.50 lacs was justified. No question of law is arising. The entire issue rests solely on appreciation of evidence on record. Particularly when the assessee having made such a statement and repeated the same two months later and in the letter retracting the statement never offered any explanation as to the reason why he made a confessional statement two months after the search, no reason to interfere with the concurrent findings of facts of two Revenue authorities and the Tribunal - against assessee.

Issues:
1. Addition of Rs.50,00,000 based on a statement under section 132(4) of the Income Tax Act.
2. Retraction of the statement by the assessee after several months.
3. Discrepancy in dates of retraction letter.
4. Presence of Chartered Accountant during confessional statements.
5. Failure to maintain personal books of accounts.
6. Justification of the addition of Rs.50,00,000 by Revenue authorities and Tribunal.

Issue 1: Addition of Rs.50,00,000 based on a statement under section 132(4) of the Income Tax Act:
The assessee admitted to investing unaccounted income of Rs.50 lacs during a search operation but did not file any return offering this income for taxation. The Assessing Officer added Rs.50 lacs to the total income of the assessee. The CIT (Appeals) and the Tribunal upheld this addition, noting that the disclosure was made voluntarily in the presence of the Chartered Accountant. The Tribunal also mentioned the lack of personal books of accounts and rejected the explanation provided by the assessee regarding the source of investment.

Issue 2: Retraction of the statement by the assessee after several months:
The assessee retracted the initial statement after several months during the assessment proceedings, citing mental harassment and fatigue during the search operation. However, the retraction did not mention any undue pressure or coercion. The Tribunal emphasized that the retraction was made after a considerable period, and the assessee failed to explain why he repeated the confession two months later.

Issue 3: Discrepancy in dates of retraction letter:
There was a discrepancy in the date of the retraction letter, with uncertainty whether it was written on 26.9.07 or 26.9.06. Despite this discrepancy, the primary fact remained that the initial statement was not retracted for an extended period, raising questions about the timing and genuineness of the retraction.

Issue 4: Presence of Chartered Accountant during confessional statements:
Both the initial statement and the subsequent confession were made in the presence of the Chartered Accountant of the assessee. This fact was highlighted by the Revenue authorities and the Tribunal to emphasize the voluntary nature of the disclosure made by the assessee.

Issue 5: Failure to maintain personal books of accounts:
The appellant's failure to maintain personal books of accounts was noted by the authorities, casting doubt on the explanations provided by the assessee regarding the source of investment in furniture and fixtures. The rejection of the firm's books of accounts further weakened the assessee's claims.

Issue 6: Justification of the addition of Rs.50,00,000 by Revenue authorities and Tribunal:
The Revenue authorities and the Tribunal justified the addition of Rs.50 lacs based on the evidence and circumstances of the case. They concluded that the addition was warranted considering the voluntary nature of the initial statement, the lack of retraction for an extended period, and the absence of a plausible explanation for the repeated confession by the assessee.

In conclusion, the High Court upheld the decision of the Revenue authorities and the Tribunal, dismissing the Tax Appeal as no legal question arose from the facts presented. The judgment focused on the voluntary nature of the initial statement, the absence of a credible explanation for the retraction, and the overall lack of grounds to interfere with the concurrent findings of the Revenue authorities and the Tribunal.

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