2017 (7) TMI 202 - AT - Income Tax

Unexplained investment - Statement made on oath - whether Statement made on oath can be retracted? - addition made on the basis of incriminating documents found during the course of search - Held that - As demonstrated the assessee s wife had sufficient resources funds to make the impugned investments of ₹ 6.30 lacs having filed return of income at ₹ 9.25 lacs during the year. The explanation of the assessee that the investments were made by the wife of the assessee is, therefore, reasonable enough. Further there is nothing on record to prove that the impugned investments were made by the assessee himself in the name of his wife other than the statement of the assessee which he has later on retracted. The basis for retraction having been explained and found to be reasonable enough by us, we hold the retraction to be valid and direct that no addition be made on account of surrender of ₹ 6.30 lacs made by the assessee. Thus we hold that the retraction made by the assessee of the surrender of ₹ 16.30 lacs is valid and, therefore, delete the addition made on account of the same. The grounds raised by the assessee are, therefore, allowed.

Issues Involved:
1. Validity of the retraction of surrender made by the assessee.
2. Addition of ?10,00,000 based on alleged discrepancies in documents.
3. Addition of ?6,30,000 on account of alleged investments in shares, units, or mutual funds.

Detailed Analysis:

1. Validity of the Retraction of Surrender Made by the Assessee:
The primary issue was whether the statement made on oath by the assessee could be retracted. The assessee contended that the surrender was made under coercion and undue pressure, and no incriminating documents were found to support the addition. The Revenue argued that no evidence of coercion or undue pressure was provided and that the retraction after 11 months was invalid.

The Tribunal referenced the Supreme Court decision in Pullangode Rubber Produce Co. Vs. State Of Kerala And Anr. (1973) 91 ITR 18 (SC), which stated that an admission is an important piece of evidence but not conclusive, and it is open to the person who made the admission to show that it is incorrect. This principle was reiterated by the Hon’ble Jurisdictional High Court in Krishan Lal Shiv Chand Vs. CIT (1973) 88 ITR 293.

The Tribunal found that the assessee failed to demonstrate coercion or pressure at the time of making the surrender. The surrender was made two days after the search, and no immediate complaint was made regarding coercion. Thus, the Tribunal concurred with the CIT (Appeals) that there was no pressure or coercion at the time of making the surrender.

2. Addition of ?10,00,000 Based on Alleged Discrepancies in Documents:
The assessee argued that no incriminating documents were found during the search and that all documents were explained. The Tribunal examined the documents referred to by the Assessing Officer and found that many of the transactions did not pertain to the relevant assessment year. For instance, deposit slips and fee deposit slips related to earlier years and were explained with evidence of cash withdrawals from bank accounts.

The Tribunal concluded that the documents at Annexure A-2 pages 4, 5, and 6 did not relate to the year in question and could not be treated as incriminating. The document at Annexure-2, page 3, though related to the impugned year, was explained as having been paid by the assessee's brother-in-law, supported by an affidavit. Thus, the Tribunal found that the addition of ?10,00,000 based on these documents was incorrect and deleted the addition.

3. Addition of ?6,30,000 on Account of Alleged Investments in Shares, Units, or Mutual Funds:
The assessee contended that the investments were made by his wife, who had her own sources of income. The Tribunal reviewed the assessment order of the assessee’s wife, which showed a returned income of ?9,23,100, assessed under section 143(3) of the Act. The Tribunal found the explanation reasonable and noted that there was no evidence to prove that the investments were made by the assessee in his wife's name.

The Tribunal held that the retraction of the surrender of ?6,30,000 was valid and directed that no addition be made on this account.

Conclusion:
The Tribunal held that the retraction made by the assessee of the surrender of ?16,30,000 was valid and deleted the addition made on account of the same. The appeal of the assessee was allowed, and the order was pronounced in the open court.

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