2015 (9) TMI 1656 - AT - Income Tax

Undisclosed income admitted in the statement recorded u/s 132(4) - case was scrutinized u/s 153A read with Section 143(3) - HELD THAT - It is undisputed fact that besides statement u/s 132(4), no incriminating documents were found during the course of search including undisclosed cash/assets as revealed from the assessment order of the assessee. The search was conducted on 27-28/08/2008 and statement was recorded u/s 132(4) on 27/08/2008. Copy of statement was provided by the AO on 13/3/2009 even various requests had been made by the assessee before the DDIT(In) to provide the copy of statement. After considering the assessee s own statement and copy of seized material, he decided to retract the statement given u/s 132(4) on 31/3/2009, which was supported by the affidavit filed by the assessee dated 31/3/2009. The Coordinate Bench has considered the statement recorded u/s 132(4) in case of Shri Radhey Shyam Mittal 2013 (8) TMI 936 - ITAT JAIPUR in group cases and held that disclosure taken U/s 132(4) of the Act during course of search under pressure or duress where no incriminating documents/unrecorded valuables were found is to be held invalid and cannot be sustained. The assessee filed affidavit on 31/3/2009 before the AO but he remained silent on the face of it and had not carried out any inquiry to verify the correctness of the affidavit. AO also had not cross examined on the points of retraction and not asked to produce any evidence. It is held by the various Hon'ble High Courts as well as Hon'ble Supreme Court that the statement recorded U/s 132(4) has evidentiary value but rebuttable. In CBDT circular No. F.NO. 286/2/2003- IT(Inv) does not support any disclosure made U/s 132(4), in absence of any incriminating document/undisclosed assets. Therefore, we upheld the order of the ld CIT(A). - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition of undisclosed income admitted in statement under section 132(4) of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed by the revenue challenging the deletion of an addition of Rs. 14,00,000 on account of undisclosed income admitted in a statement recorded under section 132(4) of the Income Tax Act, 1961 for the assessment year 2009-10. The assessee, a commission agent and CNF agent of medicine, had initially declared a total income of Rs. 3,28,120 and later revised it to Rs. 4,04,570. During a search conducted on 27/08/2008, the assessee admitted additional income of Rs. 14 lacs earned from medicine business in his individual capacity. The Assessing Officer observed discrepancies between the disclosed income and the undisclosed cash generated by the group. The group retracted the disclosure citing pressure and duress, but subsequent statements reaffirmed the initial admission. The Assessing Officer made the addition based on the original admission.

2. The CIT(A) deleted the addition by relying on a related case where retraction of a statement made during a search was considered valid. The CIT(A) found no correlation between the disclosed income and unaccounted assets found during the search. The appellant argued that the statement was made under duress and mental tension, and retracted before the end of the financial year. The appellant also highlighted the delay in providing a copy of the statement by the department. The appellant cited various case laws to support the argument that the statement's retraction was valid and that the statement lacked evidentiary value.

3. The Tribunal upheld the CIT(A)'s decision, emphasizing that no incriminating documents were found during the search besides the statement under section 132(4). The Tribunal noted the timing of the retraction and the lack of inquiry by the Assessing Officer to verify the retraction's correctness. The Tribunal held that the statement under section 132(4) has evidentiary value but is rebuttable, especially in the absence of incriminating documents. Referring to CBDT circulars, the Tribunal dismissed the revenue's appeal and upheld the CIT(A)'s order to delete the addition.

4. The Tribunal's decision was based on the lack of incriminating evidence found during the search, the timing of the retraction, and the failure of the Assessing Officer to conduct a thorough inquiry into the retraction. The Tribunal emphasized the need for corroborating evidence to support additions based on statements made under section 132(4) and held that such statements are rebuttable and not conclusive in the absence of incriminating material. The appeal by the revenue was dismissed, affirming the deletion of the addition of undisclosed income.