2018 (1) TMI 333 - AT - Income Tax

Additions on the basis of forced statements made during survey action u/s. 133A - addition on account of alleged discrepancies in the books - addition on the basis of loose paper - unaccounted expenditure - cash transactions - retracted statements - Held that - CIT-A has rightly appreciated the stand of the assessee in deleting the additions as the revenue has no cogent incriminating materiel with it to justify the addition of ₹ 1.2 crores apart from the forced confessional statement which is involuntary in nature. The loose document impounded being page no 175 during survey operations is held by us to be dumb document which is alleged by the assessee to have been prepared at the time of survey itself at the behest of survey team to justify surrender of concealed income. The said statement as well material on record keeping in view the entire factual spectrum of the case does not inspire confidence to justify the additions as was made by the AO and in our considered view the learned CIT(A) has rightly appreciated the entire factual matrix of the case and deleted the additions vide his appellate order. In the instant case, if we eschew the said retracted forced confession from record, then we are afraid there are no incriminating material on record to justify additions as was made by the AO which learned CIT(A) has rightly appreciated in deleting the additions vide his appellate orders. The Revenue in the instant case has not even bothered to cross examine the partner of the assessee post retraction of his statement. The retraction has been made by the assessee within 10 days of the aforesaid alleged forced statement and writ petition has also been filed with Hon‟ble Bombay High Court. There are several letters written by the assessee to various authorities within Income Tax Department including CBDT alleging that the statement was obtained forcibly by survey team . These correspondences/writ petition sans absence of cogent incriminating material on record to prejudice the assessee speak loudly and points to one and only one irresistible conclusion that Revenue has obtained forced confession from the assessee to surrender income of ₹ 1.20 crores and we have no hesitation in confirming the well reasoned order of the Ld. CIT-A which we affim/sustain. - Decided against revenue

Summary

Issues Involved:
1. Validity of the statement recorded under Section 133A of the Income Tax Act during the survey.
2. Retraction of the statement by the assessee and its acceptance.
3. Evidentiary value of the statement and impounded documents.
4. Justification of additions made by the Assessing Officer (AO) based on the statement and impounded documents.

Issue-wise Analysis:

1. Validity of the Statement Recorded Under Section 133A:
The primary issue was the validity of the statement recorded under Section 133A during a survey conducted on 19.09.2008. The partner of the assessee firm, Shri Inderjit Singh Khokhar, admitted an additional income of ?1.20 crores in his statement. The AO relied on this statement to make additions to the income of the assessee. However, the assessee contended that the statement was not given voluntarily and was recorded under threat and coercion by the Revenue officials. The assessee argued that the statement was forcibly obtained and, therefore, should not be considered valid.

2. Retraction of the Statement by the Assessee:
The assessee retracted the statement nearly a month later, on 16.10.2008, claiming that the statement was made under duress. The CIT(A) accepted this retraction, noting that the assessee had consistently maintained that the statement was obtained through coercion. The CIT(A) emphasized that the AO did not provide any cogent evidence to refute the assessee's claim of coercion. The Tribunal concurred with the CIT(A), noting that the retraction was made promptly and was supported by detailed accounts of the events during the survey.

3. Evidentiary Value of the Statement and Impounded Documents:
The CIT(A) and the Tribunal both held that statements recorded under Section 133A do not have conclusive evidentiary value. The Tribunal cited various judicial precedents, including the Supreme Court's decision in Pullangode Rubber Produce Co. Ltd. vs. State of Kerala, which held that an admission is an important piece of evidence but not conclusive. The Tribunal also referred to the CBDT's instructions, which advised against relying solely on confessions obtained during surveys. The impounded document (page 175), which was a loose paper with notations, was deemed a "dumb document" without any corroborative evidence to substantiate the addition of ?62 lakhs.

4. Justification of Additions Made by the AO:
The AO made additions totaling ?1.20 crores based on the statement and the impounded document. The CIT(A) found that these additions were made purely on the basis of the statement recorded during the survey, without any supporting evidence. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not conduct any independent investigation to corroborate the statement. The Tribunal emphasized that the AO should have relied on tangible evidence rather than the retracted statement. The Tribunal also noted that the AO failed to cross-examine the partner of the assessee after the retraction, which further weakened the AO's case.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the additions of ?1.20 crores. The Tribunal held that the statement recorded under Section 133A, which was subsequently retracted, did not have sufficient evidentiary value to justify the additions. The Tribunal emphasized the need for corroborative evidence and independent investigation by the AO, which was lacking in this case. The Tribunal's decision was based on the principles of natural justice and the need for credible evidence to support additions to the income of the assessee.