2015 (4) TMI 135 - AT - Income Tax

Existence of HUF - genuineness of investment made in KVP/NSC - Held that - Some of the evidences on which the assessee has relied were part of the seized record. The Bank account details were seized as per Annexure F of panchnama. The investment in NSCs/KVPs were from these bank accounts and M/s. Trilok Prakash Agarwal HUF had made investment in several years in FDR/NSC and on maturity, the same has been reinvested in subsequent years. These investments were made in the name of coparcener/karta. The income-tax return of HUF could not be filed due to income being below the taxable limit. Thus no fault in the order of the CIT (A) in this regard. We also hold that the certificate of Post Master with regard to the maturity of the KVP/NSC was only in support of the already existing evidences which prove the existence of HUF and source of the investment. - Decided against revenue. Unaccounted investment - CIT(A) deleted the addition made on money payment of ₹ 30 lacs for purchase of property at Shivalik Malviya Nagar, New Delhi on the basis of statement made u/s 132(4) of the Income-tax Act, 1961 during the course of search operation - Held that - The property in respect of which the assessee has made a statement is not owned by him. The ownership of the property is in his wife s name, Smt. Mukul Aggarwal, therefore, the provisions of section 69B of the Income-tax Act, 1961 cannot be invoked in assessee s case. Further, no evidence of any on money was found or seized during the search operation. The statement was recorded at the odd hours in the night. The assessee has submitted an affidavit before the Director General (Inv.), U.P., Lucknow on 07.11.2005 stating that the search party confronted him at around 3.00 AM in the morning of 28.10.2005 when he was too tired and weak and in that situation, he was not having any other option but to obey raiding party and he kept on signing whatever document which has been put before him and he made it clear that any surrender recorded in the statement is baseless, false and without his knowledge. He denied absolutely his legal consent by the discloser. Revenue has not made any effort to disprove the contents of this affidavit. We also find that this addition was made only on the basis of statement and there is no corroborative evidence whatsoever found and seized during the search operation. The assessee has categorically retracted from this statement. There is no evidence whatsoever on the record to substantiate that any on money was paid for the purchase of the property. CBDT Instruction No.286/2/2003 IT (Inv.) dated 10.03.2003 also discourages such confessions where concurrence is taken without any supportive evidence. Such forced admission without any support of documents cannot be treated as admission when same are also retracted immediately by way of filing affidavit. In view of the facts, we confirm the deletion of addition. - Decided against revenue. Disallowance restricted of car deprecation of 1/8th on account of personal use by CIT(A) - Held that - assessee is not maintaining log book for the use of car. He has not debited car running expenses which show that the car was being used for personal purposes also. No log book is being maintained. Therefore, we find that the CIT (A) was justified and sustaining the disallowance of part depreciation on the car expenses. - Decided against assessee.

Summary

Issues:
1. Existence of HUF bank account and investment genuineness
2. Addition based on statement u/s 132(4) for property purchase

Issue 1: Existence of HUF bank account and investment genuineness

The case involved appeals and cross objections arising from orders of the CIT (Appeals) regarding the existence of an HUF bank account and the genuineness of investments made. The revenue contended that the CIT (A)'s findings were based on wrong facts regarding the HUF bank account and investments. The revenue also argued that the CIT (A) failed to consider the surrender of investments during the search and violated Rule 46A by admitting additional evidence without giving the AO an opportunity to examine it. On the other hand, the assessee maintained that the HUF existed for a long time, investments were made from HUF funds, and the seized records supported these claims. The investments were made in the name of coparcener/karta, and the income was below the taxable limit, justifying the non-filing of HUF income tax returns. The ITAT held that the CIT (A)'s order was correct as the seized records and Post Master's certificates supported the existence of the HUF and the source of investments. The grounds of appeal related to this issue were dismissed.

Issue 2: Addition based on statement u/s 132(4) for property purchase

In another aspect of the case, the revenue challenged the deletion of an addition made on a money payment of Rs. 30 lakhs for property purchase based on a statement under section 132(4) during a search operation. The revenue argued that the statement had evidentiary value, placing the onus on the assessee to prove otherwise. The CIT (A) deleted the addition, citing lack of corroboratory evidence and different circumstances from the case laws referenced by the revenue. The ITAT upheld the CIT (A)'s decision, noting that the property was not owned by the assessee, no on-money evidence was found during the search, and the statement was retracted immediately by the assessee through an affidavit. The ITAT emphasized that forced admissions without supportive evidence cannot be treated as valid, especially when retracted promptly. Consequently, the addition was deleted, and the grounds related to this issue were dismissed.

Conclusion:

The ITAT dismissed all appeals and cross objections related to the issues of the existence of HUF bank account and investment genuineness, as well as the addition based on a statement under section 132(4) for property purchase. The judgments were based on a thorough analysis of the facts, evidence, and legal principles, ensuring a fair and just resolution of the tax matters at hand.