2013 (12) TMI 1410 - AT - Income Tax

Addition on account of unexplained investment based on statement Held that - during the course of search statement u/s 132(4) was recorded of the assessee by which it was admitted that he will disclose a sum of Rs. 60 Lakh for the year in consideration and amount of Rs. 65 Lakh for assessment year 2008-09 - while filing the return no such amount was declared by the assessee as assessee retracted from the statement, for the reasons that no such investment was made in shares as only Rs. 2.50 lakh was given as advance on account of purchase of share - Neither there was any purchase was made by the assessee nor any incriminating documents were found. If there no shares were purchased and assessee has paid only 2.50 Lakh in advance then ofcourse, addition should not have been made only on the basis of statement made u/s 132(4) - there should be some corroborative evidence but there was no corroborative evidence found from which it can be said that assessee has made investment of Rs. 60 Lakh - Only on the basis of statement recorded u/s 132(4) this addition has been made and sustained - no addition could be made or sustained simply on the basis of statement recorded at the time of survey/search - AO made addition on the basis of statement recorded and no other enquiry has been made, neither case has been examined properly, nor the fact that the company in which the assessee is a director has surrendered additional income The matter should go back to the file of the Assessing Officer Decided in favour of Assessee.

Summary

Issues:
- Addition of Rs. 60 Lakh on account of unexplained investment in shares for assessment year 2007-08.
- Addition of Rs. 45 Lakh on account of unexplained investment in cash receipt, jewelry, and unaccounted income for assessment year 2008-09.

Analysis:
1. Issue 1 - Assessment Year 2007-08:
- The assessee contested the addition of Rs. 60 Lakh for unexplained investment in shares of a company.
- The Assessing Officer relied on a statement recorded under section 132(4) admitting to the unaccounted income.
- The CIT (A) upheld the addition stating that the amount was not disclosed in the return.
- The ITAT found that no shares were purchased, only an advance of Rs. 2.50 Lakh was given, and no corroborative evidence supported the investment.
- The matter was remanded to the Assessing Officer for proper examination considering the surrender of Rs. 3 Crore by the company and lack of evidence for the investment.

2. Issue 2 - Assessment Year 2008-09:
- The addition of Rs. 45 Lakh for unexplained investments was challenged by the assessee.
- The AO based the addition on a statement recorded under section 132(4) by the assessee.
- The CIT (A) restricted the addition on cash receipt but sustained the additions on jewelry and unaccounted income.
- The ITAT emphasized the need for corroborative evidence and remanded the issue back to the Assessing Officer for proper examination in light of the surrendered amount of Rs. 3 Crore by the company.

3. Overall Decision:
- The ITAT allowed both the assessee's and the department's appeals for statistical purposes.
- The cases were remanded to the Assessing Officer for re-examination considering the lack of concrete evidence supporting the additions and the surrender of income by the company, emphasizing the need for corroborative evidence before making such additions.

This detailed analysis highlights the key arguments, findings, and the ultimate decision of the Appellate Tribunal in the cited legal judgment.