2011 (1) TMI 1544 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 61.65 lakhs as undisclosed income.
2. Validity of retraction from the statement made u/s 132(4) of the Act.
3. Justification of the sources of cash payments for land purchase.
4. Chargeability of interest u/s 234A, 234B, and 234C of the Act.

Summary:

1. Addition of Rs. 61.65 lakhs as undisclosed income:
The primary grievance in this appeal is against the addition of Rs. 61.65 lakhs made by the Assessing Officer (AO) as undisclosed income based on a statement recorded u/s 132(4) of the Income Tax Act, 1961 during a search action. The AO noted that the assessee admitted to making cash payments of Rs. 70,11,000/- from undisclosed sources for the purchase of land, which was not declared in the return filed u/s 153A of the Act. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld this addition, leading to the present appeal.

2. Validity of retraction from the statement made u/s 132(4) of the Act:
The assessee contended that the admission made during the search was due to peculiar circumstances, including ill-health and the demise of his wife, and that the cash payments were from known sources. However, the AO and CIT(A) rejected this retraction, considering it an afterthought to avoid taxes. The Tribunal found that the original admission was detailed and specific, and the subsequent retraction lacked credibility and supporting evidence.

3. Justification of the sources of cash payments for land purchase:
The assessee claimed that the cash payments were from withdrawals from M/s Luthra Construction and cash balance with his wife. However, the Tribunal noted that there was a significant gap between the availability of funds and the actual payments, and the assessee failed to provide concrete evidence linking the withdrawals to the payments. The CIT(A) also highlighted that the firm and the assessee are separate legal entities, and the transactions were not satisfactorily explained.

4. Chargeability of interest u/s 234A, 234B, and 234C of the Act:
The issue of interest chargeability u/s 234A, 234B, and 234C of the Act was deemed consequential and required no separate adjudication.

Conclusion:
The Tribunal upheld the addition of Rs. 61.65 lakhs as undisclosed income, affirming the CIT(A)'s order. The appeal of the assessee was dismissed. The judgment was pronounced in the open Court on January 31, 2011.