2019 (10) TMI 653 - AT - Income Tax

Addition towards un-disclosed jewellery declared by the assessee during the search proceedings u/s 132 - HELD THAT - Necklace was found during the course of search u/s.132(4) of the Act, which was offered as undisclosed income in the statement recorded u/s.132(4) of the Act. However, at the time of filing the returns in response to notice u/s.153A assessee did not offer the same to tax on the ground that the said statement u/s.132(4) of the Act was given under tremendous pressure and mental strain was wrong. The said diamond jewellery stood disclosed in the return of wealth of Mrs. Alpana Dangi wife of the assessee. The assessee also produced sale bills of the seller along with payment details. Thus, the assessee has completely explained the purchase of jewellery with reference to bills, vouchers and payment details. We are not in conclusion with the CIT(A) that the non disclosure was an after thought. In our opinion where assessee has offered the income in the statement recorded u/s.132(4) of the Act but when the same is explained with reference purchase bills and payment details then the same cannot be treated as un-disclosed income . The case of assessee is also squarely covered by the decision of CIT Vs. S.Khader Khan Son 2007 (7) TMI 182 - MADRAS HIGH COURT wherein it has been held that the statement has no evidentiary value unless corroborating evidences are there to support the same. Even the case of assessee is fully supported by the Instruction F.No.286/2/2003IT(Inv-II) issued by CBDT which states no confession of additional income during the course of search and seizure and survey operations to be taken by the officers without credible evidences. The order passed by CIT(A) is wrong and can not be sustained. Accordingly we is set aside the order of CIT(A) and direct the AO to delete the addition so made. Appeal of assessee is allowed.

Summary

Issues:
Confirmation of addition of undisclosed jewellery during search proceedings under section 132 of the Income Tax Act.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax(Appeals) confirming the addition of undisclosed jewellery worth &8377; 1,22,66,225 by the Assessing Officer. The search operation under section 132(1) of the Income Tax Act revealed that the jewellery was not disclosed in the return filed after a notice under section 153A. The Assessing Officer issued a show cause notice based on the statement recorded under section 132(4), where the assessee admitted purchasing the jewellery with unaccounted cash. The assessee claimed the jewellery was purchased from a specific entity and payment was made through a bank cheque. However, the Assessing Officer added the amount as undisclosed income under section 143(3) of the Act.

In the appellate proceedings, the CIT(A) upheld the addition, emphasizing that the jewellery was not declared in the return filed after the notice under section 153A. The CIT(A) considered the bill provided by the assessee, but discrepancies were noted between the bill and the valuation report. The CIT(A) relied on the importance of admission as evidence, placing the onus on the assessee to prove the earlier statement wrong. The CIT(A) dismissed the appeal, stating the assessee failed to demonstrate the earlier statement's inaccuracy.

The appellant argued that the jewellery was disclosed in the statement under section 132(4) and explained the discrepancy during assessment and remand proceedings. The appellant contended that the departmental valuer's estimation caused the weight differences in the jewellery. The appellant cited various legal decisions to support the argument that the jewellery was duly explained and should not be treated as undisclosed income.

After considering the arguments, the Tribunal observed that the jewellery was disclosed in the statement under section 132(4) and later explained with purchase bills and payment details. The Tribunal disagreed with the CIT(A) that the non-disclosure was an afterthought. Relying on legal precedents and CBDT instructions, the Tribunal directed the Assessing Officer to delete the addition, as the jewellery was adequately explained with supporting evidence.

In conclusion, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the deletion of the addition made by the Assessing Officer.