2015 (9) TMI 1657 - AT - Income Tax

Undisclosed income admitted in the statement recorded u/s 132(4) - surrender of income - 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 28/08/2008. 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) 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). - Revenue s appeal is dismissed.

Summary

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

Detailed Analysis:

1. Issue of Deletion of Addition of Undisclosed Income:
The appeal was filed by the revenue against the deletion of the addition of Rs. 15,00,000 on account of undisclosed income admitted during a search under section 132(4) of the Income Tax Act, 1961. The Assessing Officer observed that the assessee, a commission agent and CNF agent of medicine, had offered additional income during the search. The assessee's group had disclosed cash from the medical business but only a portion was offered for taxation. The group later retracted the disclosure, claiming it was made under pressure, mental tension, and duress. The Assessing Officer did not accept this retraction, considering it an afterthought. The Assessing Officer relied on various decisions to support the addition of the undisclosed income.

2. Decision of the CIT(A):
The CIT(A) deleted the addition based on the argument that the retraction of the statement made during the search was valid and satisfied the necessary conditions. The CIT(A) referred to a similar case involving the group of the appellant where the addition was deleted by the ITAT. The CIT(A) concluded that the addition of Rs. 15 lakh, solely based on the statement without corroborating evidence, was not justified.

3. Arguments in the Appeal:
In the appeal before the tribunal, the Senior DR contended that the statement recorded under section 132(4) had evidentiary value and was not made under duress. The Senior DR argued that the addition should be upheld based on the statement recorded during the search. The Senior DR also relied on legal precedents to support the position that the surrender made by the assessee should be honored.

4. Tribunal's Decision:
After hearing both parties, the tribunal noted that no incriminating documents were found during the search apart from the statement under section 132(4). The tribunal considered the retraction made by the assessee and the lack of evidence linking the disclosure to unaccounted assets found during the search. The tribunal upheld the CIT(A)'s decision to delete the addition, emphasizing that the statement under section 132(4) is evidentiary but rebuttable. The tribunal also referred to a CBDT circular that does not support disclosure made under section 132(4) in the absence of incriminating documents or undisclosed assets.

5. Conclusion:
The tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the addition of the undisclosed income admitted during the search under section 132(4) of the Income Tax Act, 1961.

This detailed analysis provides a comprehensive overview of the legal judgment, covering the issues involved, arguments presented, and the tribunal's decision on the matter.