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2018 (1) TMI 1616 - AT - Income TaxAddition u/s 69A on account of unexplained cash - additional income disclosed under the head income from other sources/undisclosed income/undisclosed investment - Retraction of Additional Income disclosed - Addition based on the disclosure made by one person in case of a group companies - statement u/s 132(4) relied upon - HELD THAT - In the present case the additions are involved based on statement u/s 132 (4) of the act as well as cash found during the course of search. The addition because of admissions is bald admission and which is partly retracted and corrected to the extent of Rs. 86 Crores. The statement was obtained by the revenue without collecting the evidences at the time of search. Neither the ld AO Nor investigation wing showed any evidence based on which the above disclosure of Rs. 150 crores was substantiated. Therfore there is no reason that matter can be set aside. No justification was alos showed before us in the above ground as to what inquiry ld Ao has failed to make which is now should be made by appellate forum. Furthermore the second addition on account of cash found was also substantiated by the assessee to show wealth tax returns of the family members as well as the cash position statement as on the date of search. AO has made the addition ignoring them. Now before us it is not stated that what else inquiry or evidences should have been inquired about the above issue. Therefore we reject the above grounds of the revenue. - Decided in favour of assessee.
Issues Involved:
1. Addition due to admission made by Capt. R.S. Sindhu in his statement under section 132(4) of the Income Tax Act, which was subsequently retracted. 2. Addition under section 69A of the Income Tax Act on account of unexplained cash. Issue-Wise Analysis: 1. Addition due to Admission Made by Capt. R.S. Sindhu: The primary contention revolves around the addition based on the statement made by Capt. R.S. Sindhu under section 132(4) of the Income Tax Act, which was later retracted. The Assessing Officer made the addition based on this statement, while the CIT(A) deleted it. The revenue argued that the CIT(A) erred in ignoring the admission made by Capt. R.S. Sindhu and other individual members of the group, and that the retraction was not valid. The CIT(A) was also accused of not offering an opportunity to the Assessing Officer to counter and cross-examine the statement. The CIT(A) found that the disclosure of Rs. 150 crores included Rs. 86 crores related to the waiver of a loan by Lehman Brothers to Cellcap Securities Ltd., which was not taxable in India. This linkage was communicated to the Investigation Wing through letters dated 11.06.2012 and 13.07.2012. The CIT(A) observed that the Assessing Officer did not provide any incriminating evidence to support the addition and that the revenue's attempt to tax the waiver in the hands of Cellcap Securities Ltd. was unsuccessful. The CIT(A) concluded that the retraction was valid as the disclosure was made under an erroneous impression of law. The tribunal upheld the CIT(A)'s decision, noting that the revenue failed to produce any evidence to substantiate the addition and that the disclosure was not backed by credible evidence as required by CBDT instructions. The tribunal emphasized that an erroneous admission cannot form the basis for an assessment if it is demonstrated that the income is not taxable. 2. Addition under Section 69A of the Income Tax Act on Account of Unexplained Cash: The second issue pertains to the addition of unexplained cash found during the search. The Assessing Officer made additions in the hands of various family members, which were deleted by the CIT(A). The CIT(A) found that the family members had provided a detailed explanation of the cash found, supported by wealth tax returns, bank statements, and cash flow statements. The CIT(A) noted that the family members were not maintaining day-to-day books of accounts but had satisfactorily explained the cash through other methods. The tribunal upheld the CIT(A)'s decision, agreeing that the cash found was fully explained by the family members and supported by documentary evidence. The tribunal noted that the Assessing Officer did not point out any discrepancies in the explanation provided by the family members. Judgment: The tribunal dismissed the revenue's appeals for all the assessment years involved and allowed the cross-objections filed by the assessees, which supported the order of the CIT(A). The tribunal concluded that the additions made by the Assessing Officer were not justified as they were based on an erroneous admission and the cash found during the search was satisfactorily explained by the family members.
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