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2022 (5) TMI 939 - AT - Income TaxAssessment u/s 153A - amount at the time of search u/s. 132(4) - incriminating material found during the course of search or not? - addition on the basis of alleged statement recorded in search which has even being retracted by the assessee - HELD THAT - We find that the statement u/s. 132(4) has been recorded on 27.04.2012. The assessee has filed letter of retraction on 09.07.2012 before the ADIT(Inv.), Unit-II, Dehradun. We have endeavoured to examine any material that was found and seized with regard to disclosure of income and we find that no details about the seizure of any documents has been mentioned in the Assessment Order or the order of the Ld. CIT(A). The assessment has been concluded solely based on the statement recorded during the search which was also retracted before the authorities. Thus, we find that the assessment has been made solely based on the bare statement of the assessee. The various discrepancies confronted to him in the documents found at the time of search as mentioned in the Assessment Order have not brought to the fore. The revenue record is silent as to what are these documents and what are the discrepancies found and confronted to the assessee. Hence, keeping in view the retraction of the assessee, the circular of the CBDT, non-availability of the relevant seized material, judgments of the various Courts with regard to the validity of the statement and validity of the retraction thereof, we hereby hold that the addition made based on the statement u/s. 132(4) cannot be sustained. Unexplained cash u/s. 69A - AO held that the assessee has not furnished any evidence to prove the status of cash flow in the entire family between period 31.03.2013 to 26.04.2013 as on the date of search and the amount found at the premises was added as undisclosed income of the assessee - HELD THAT - We find that the cash in hand of Rs. 14,06,524/- has been determined by the AO who however chose to treat the cash of Rs. 4,58,700/- as undisclosed is contradictory as no evidence was found or could be gathered that the amount of Rs. 14,06,524/- stands spent or used for incurring any expenditure or for any other purpose. Since, the cash in hand has not been in dispute in the absence of any evidence contra, no addition is called for. Undisclosed jewellery - HELD THAT - We find that the assessee owns jewellery worth Rs. 60,000/- in the financial year 2006-07 which could prove that the assessee had jewellery of approximately 85 gms till the year 2007. The remaining 72 gms of jewellery has been acquired in a span of 5 years period which could be by the way of purchases or by the way of customary gifts. The gross total income of the assessee for Financial Year 2011-12 of Rs. 10,50,000/- and for the Financial Year 2012-13 of Rs. 7,00,000/-. The average price of the 72 gms of gold would be approximately Rs. 1,50,000/- over a period of five years. Keeping in view, the returned income and the general financial affairs of the assessee, customs practices of the geographical area and in the special peculiar circumstances of the case, we hold that the assessee can be deemed to have acquired 72 gms of gold by purchase and customary gifts. The circular of the CBDT and the various judgments of the Courts consider upto 100 gms of gold to a male member. Hence, keeping in view the entire facts and circumstances and in peculiarities of the case, we direct that the addition made on this head is liable to be deleted. Appeal of assessee allowed.
Issues Involved:
1. Validity of proceedings initiated under Section 153A. 2. Addition of Rs. 50 lakhs based on a retracted statement. 3. Addition of Rs. 75 lakhs based on a retracted statement. 4. Addition of Rs. 4,58,700 on account of unexplained cash. 5. Addition of Rs. 5,27,375 on account of unexplained jewelry. Issue-wise Detailed Analysis: 1. Validity of Proceedings Initiated Under Section 153A: The assessee challenged the initiation of proceedings under Section 153A of the Income Tax Act, 1961, arguing that the proceedings and subsequent orders were "bad in law and without jurisdiction." The Tribunal examined the procedural aspects and determined that the proceedings were initiated following a search under Section 132, which justifies the initiation under Section 153A. 2. Addition of Rs. 50 Lakhs Based on a Retracted Statement: The Assessing Officer (AO) added Rs. 50 lakhs to the assessee's income based on a statement recorded under Section 132(4) during the search, which the assessee later retracted. The Tribunal noted that the retraction letter indicated the statement was made "under duress." The Tribunal emphasized the CBDT circulars advising against relying solely on confessions without corroborative evidence. They also referenced judicial precedents, including the Delhi High Court's ruling in CIT Vs. Best Infrastructure (India) (P.) Ltd., which held that statements under Section 132(4) do not constitute incriminating material by themselves. Consequently, the Tribunal held that the addition based solely on the retracted statement could not be sustained. 3. Addition of Rs. 75 Lakhs Based on a Retracted Statement: Similar to the Rs. 50 lakh addition, the AO added Rs. 75 lakhs for a subsequent assessment year based on the same retracted statement. The Tribunal applied the same reasoning as in the previous issue, emphasizing the lack of corroborative evidence and the retraction of the statement. They reiterated that the assessment based solely on the retracted statement was unsustainable. 4. Addition of Rs. 4,58,700 on Account of Unexplained Cash: During the search, unaccounted cash of Rs. 4,58,700 was found at the assessee's residence. The AO added this amount to the assessee's income, arguing that the cash found exceeded the declared cash in hand. The Tribunal found that the AO's determination of the total cash in hand (Rs. 14,06,524) contradicted the addition, as there was no evidence that the cash had been spent or used. Therefore, the Tribunal concluded that no addition was warranted for the unexplained cash. 5. Addition of Rs. 5,27,375 on Account of Unexplained Jewelry: The search revealed jewelry worth Rs. 58,22,300, and the AO added Rs. 5,27,375 as unexplained income, arguing that the source of certain gold bullion and silver coins was not explained. The Tribunal noted that the assessee had disclosed some jewelry in earlier returns and that additional jewelry could reasonably be acquired through purchases or customary gifts over several years. They referenced the CBDT circular and judicial precedents that consider up to 100 grams of gold reasonable for a male member. Consequently, the Tribunal directed that the addition on this head be deleted. Conclusion: The Tribunal allowed the appeals of the assessee, concluding that the additions made by the AO based on retracted statements, unexplained cash, and jewelry were not sustainable due to lack of corroborative evidence and procedural lapses. The judgment emphasized the importance of credible evidence and adherence to CBDT guidelines in search and seizure operations.
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