2020 (9) TMI 1290 - AT - Income Tax

Search and seizure operation u/s 132 - Survey operations were also carried out u/s 133A - addition based on statements recorded in search when retraction was during the course of search itself - At office premises of the assessee, the documents marked as GG/IO were found and seized - CIT-A deleted - HELD THAT - In this case, no corroborative evidence has been brought on record by the Assessing Officer in support of his findings that the notings made on the printouts of the balance sheets taken from the pen drive, are in fact the income of the assessee. Writing on a paper taken as a print out from a pen drive found during the course of search cannot be income by any stretch of imagination. When the assessee makes certain serious allegation during the search operations and denies the content of the statement recorded from him u/s 132(4) of the Act, the burden shifts to the revenue to prove that the same is income. CIT (A) in our view has correctly analyzed the factual and legal position in this case. Hence we uphold the same. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the addition of Rs. 25 Crores for Assessment Year 2013-14 and Rs. 15 Crores for Assessment Year 2015-16 based on seized documents and statements recorded during the search.
2. Validity of retraction of statements made during the search operation.
3. Applicability of Section 292C of the Income Tax Act, 1961.
4. Corroborative evidence supporting the addition made by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Validity of the Addition Based on Seized Documents and Statements:
The Assessing Officer (AO) made additions of Rs. 25 Crores for AY 2013-14 and Rs. 15 Crores for AY 2015-16 based on documents (GG/IO Page-28 and GG-2 Page-71) seized during the search operation. These documents contained handwritten notes indicating cash payments for arranging share capital/premium in the assessee company. The AO also relied on the statement of Shri Girdhari Lal Goenka recorded under Section 132(4) of the Act, where he admitted that the amounts represented unaccounted income. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted these additions, noting that the documents were old balance sheets from 2002-03 and 2004-05, and the handwritten notes were made 10 years later, which lacked evidentiary value.

2. Validity of Retraction of Statements:
Shri Girdhari Lal Goenka retracted his statement on the last day of the search operation, stating that his earlier admission was made under duress and coercion. The AO rejected this retraction, but the CIT(A) accepted it, noting that the retraction was made during the search itself and not after its closure. The CIT(A) emphasized that the retraction was supported by the lack of corroborative evidence linking the handwritten notes to the assessee company.

3. Applicability of Section 292C of the Income Tax Act, 1961:
The AO invoked Section 292C, presuming that the seized documents and entries belonged to the assessee. However, the CIT(A) found no evidence to support that the abbreviation "SKB" in the documents referred to the assessee company. The documents were printouts from a pen drive seized from an employee of a group concern, and the handwritten notes were allegedly made under coercion. Thus, the presumption under Section 292C was not applicable.

4. Corroborative Evidence Supporting the Addition:
The AO argued that the entries in the seized documents were corroborated by entries in other seized books of accounts. However, the CIT(A) found no direct evidence linking the handwritten notes to the assessee company. The CIT(A) noted that the AO failed to establish a cash trail or provide any corroborative evidence to substantiate the addition. The CIT(A) concluded that the handwritten notes on old balance sheets, allegedly made under duress, could not be considered income.

Conclusion:
The CIT(A) thoroughly analyzed the factual and legal aspects, finding no corroborative evidence to support the AO's additions. The retraction of the statement was considered valid, and the presumption under Section 292C was deemed inapplicable. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeals for both assessment years. The decisions relied upon by the revenue were found inapplicable to the facts of the case, as the retraction was made during the search, and no corroborative evidence supported the additions.