2017 (1) TMI 1258 - HC - Income Tax

Addition on account of undisclosed income - addition made relying upon the retracted statement of the Managing Director of the assessee recording during the course of survey - excluding undisclosed income from the book profit computed under Section 115JB - Held that - In the present case, there is no other material / evidence with the Assessing Officer while making addition of ₹ 2 crores as undisclosed income. Assessing Officer solely relied upon the statement of the Managing Director which was recorded during the survey conducted on 18.12.2006 which was subsequently retracted on 03.01.2007. In view of the above, it cannot be said that both the learned CIT (A) as well as learned Tribunal have committed any error in deleting amount of ₹ 2 crores. Under the circumstance, present appeal deserves to be dismissed and is accordingly dismissed. - Decided in favour of assessee

Summary

Issues:
Challenge to the addition of undisclosed income and exclusion from book profit under Section 115JB.

Analysis:
The High Court considered the appeal challenging the addition of ?2 crores as undisclosed income and its exclusion from the book profit under Section 115JB. The Assessing Officer relied solely on the Managing Director's retracted statement during a survey, leading to the addition. However, the Court noted that the statement was retracted shortly after its recording. The Court referred to previous decisions where it was held that additions based solely on retracted statements without further evidence were not sustainable. The Court emphasized that in this case, there was no additional evidence supporting the addition, and the Assessing Officer's reliance on the retracted statement was insufficient. Therefore, the Court found no error in the decisions of the CIT (A) and the Tribunal to delete the ?2 crores from the assessment. Consequently, the Court dismissed the appeal, upholding the deletion of the amount from the assessment and book profit calculation under Section 115JB.