2022 (4) TMI 481 - AT - Income Tax

Undisclosed income - assessee has surrendered income by the statement recorded u/s 132(4) - Proof of incriminating material or documents which indicate concealment of income - HELD THAT - We find that the statement has been recorded on 23.07.2015 and the same has been retracted on 23.07.2015 and on 03.08.2015 vide letters addressed and posted to Joint Direct(Inv.) Dehradun - assessment has been completed summarily without any reference to the incriminating material or documents which indicate concealment of income. CBDT circular directs the field authorities that no assessment or surrender be extracted without having any relevance to the material found and seized during the search. In the instant case there was no material to connect the undisclosed income to the assessee. Similarly the additions made in the case of Yogesh Singla and Mahdu Singla which is a part of the statement given by the assessee with regard to the surrender has been deleted by the Coordinate Bench of the Tribunal 2020 (5) TMI 715 - ITAT DEHRADUN - Since there was no material before the revenue to attribute undisclosed income the facts and circumstances of the instant case we hereby allow the appeal of the assessee.

Summary

Issues:
Assessment of surrendered income during search operation.

Analysis:
The appeal was filed against the order of the ld. CIT(A)-IV, Kanpur, by an individual assessee deriving income from various sources. A search operation conducted in Golden Manor Group led to the discovery of certain information/documents belonging to the assessee. The assessee declared a total income of ?11,06,220 for the assessment under consideration, including exempt profit from M/s. Golden Manor. The AO questioned the non-inclusion of ?50,00,000 surrendered during the search operation in the ITR, leading to an explanation by the assessee citing coercion and undue influence during the surrender process.

The AO rejected the assessee's explanation, emphasizing that the surrender was voluntary and made after consultation with family members. The AO also highlighted the presentation of cheques for advance tax, indicating the surrender was meant for the relevant assessment year. The AO relied on the statement recorded u/s 132(4) and the decision in B. Kishore Kumar vs. DCIT, holding that tax should be levied based on the admission made during the search.

The ld. CIT(A) upheld the AO's decision, emphasizing the absence of undue pressure on the assessee during the surrender. Citing judicial pronouncements, the ld. CIT(A) reiterated that additions based on statements recorded during search operations cannot be deleted without proving them incorrect. The ld. CIT(A) stressed the evidentiary value of statements on oath and the need for substantiating claims of coercion with evidence.

The Tribunal observed that the assessment was completed summarily without reference to incriminating material or documents indicating income concealment. Referring to a CBDT circular, the Tribunal noted the lack of material connecting the undisclosed income to the assessee. Additionally, the Tribunal highlighted the deletion of additions in cases related to family members based on the assessee's statement. Considering these factors, the Tribunal allowed the appeal, as there was no material to attribute undisclosed income to the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the absence of relevant material connecting the surrendered income to the assessee and the deletion of additions related to family members in similar cases.