2014 (2) TMI 472 - AT - Income Tax

Deletion made u/s 68 of the Act Search u/s 132(1) of the Act made Held that - Nothing was found incriminating against interest of assessee during the course of survey - The additions were made merely on the basis of surrender made by the assessee on the basis of statement recorded during the survey - No material is also referred during the course of statement to show if assessee earned any unaccounted income for the assessment years under appeals - it was mere statement of assessee without any basis for making surrender - The assessee in reply to show cause notice u/s. 142(1) with regard to surrendered income also explained that he is maintaining regular books of accounts and vouchers and no material discrepancy was found to make any surrender - Thus, there is nothing on record to prove that any material was found to indicate earning of undisclosed income Relying upon Paul Mathews And Sons Versus Commissioner of Income-Tax 2003 (2) TMI 25 - KERALA High Court and on Board s circular apply in favour of the assessee Decided against Assessee.

Summary

Issues:
Challenging deletion of addition of Rs.10 lacs and Rs.15 lacs under section 68 of the IT Act for assessment years 2006-07 and 2007-08.

Analysis:
The case involves appeals by the Revenue against orders of the ld. CIT(A)-I, Agra, challenging the deletion of additions made under section 68 of the IT Act for the assessment years 2006-07 and 2007-08. The assessee, connected with Shanker Gutkha group of cases, admitted unexplained income of Rs.10 lacs and Rs.15 lacs during a survey operation. However, the assessee did not show these amounts in the return of income, leading to re-assessment proceedings being initiated. The AO relied on the statement recorded during the survey to make the additions. The assessee contested the additions, arguing that no unaccounted income or corroborative evidence was found, and relied on various legal precedents to support the contention that a mere statement during a survey is not sufficient for an addition. The ld. CIT(A) also found that the statement of surrender lacked evidentiary value and deleted the additions based on the absence of material to substantiate the surrender.

The Tribunal considered the submissions and material on record and upheld the CIT(A)'s decision to delete the additions. It noted that no incriminating evidence was found against the assessee during the survey, and the additions were solely based on the assessee's surrender without any supporting basis. The Tribunal found that the surrender was correctly retracted as it was not based on factual grounds. The assessee maintained regular books of accounts with no discrepancies, and no undisclosed income was indicated from the impounded documents during the survey. The Tribunal agreed with the CIT(A) that the statement recorded during the survey lacked evidentiary value, and the Board's circular emphasizing the need for corroborative evidence supported the assessee's position. Ultimately, the Tribunal dismissed the departmental appeals, concluding that there was no error in deleting the additions.

In conclusion, the Tribunal upheld the deletion of additions of Rs.10 lacs and Rs.15 lacs for the assessment years 2006-07 and 2007-08 under section 68 of the IT Act. The decision was based on the lack of incriminating evidence during the survey, the absence of material to substantiate the surrender made by the assessee, and the legal precedents supporting the insufficiency of a mere statement during a survey for making additions.