2023 (5) TMI 367 - HC - Income Tax

Addition u/s 68 - unexplained cash credit - AO treating the sum received by the assessee by way of share application money as the assessee s undisclosed income - HELD THAT - On going through the order passed by CIT(A) and Tribunal, we find that the assessment was so completed by the assessing officer solely relying upon a statement which was recorded from the assessee on 17th March, 2015. It is not disputed that during the course of search operations, that is, on the last date of authorisation on 21st April, 2015, the assessee had retracted the statement given earlier as well as the affidavit filed by him earlier. That apart, the assessee has also filed another affidavit contending that coercive measures were resorted to and a statement from him was obtained. This retraction was taken note of by the CIT(A) and it has been factually recorded that there was very elaborate evidence available before the Assessing Officer to treat the said sum as undisclosed income of the assessee. The learned Tribunal on its part re-appreciated the factual position and has affirmed the order passed by the CIT(A). We find that the entire matter revolves on facts which has been appreciated and re-appreciated by the CIT(A) and the Tribunal respectively and we find that there is no substantial question of law arising for consideration in this appeal.

Issues Involved:
1. Addition made under section 68 of the Income Tax Act for unexplained cash credit.
2. Interpretation of judgments by Madras High Court and Rajasthan High Court regarding the reliability of admission made during search proceedings.
3. Burden of proof when the assessee denies the content of a statement recorded under section 132(4) of the Income Tax Act.

Analysis:
1. The primary issue in this case was whether the assessing officer was justified in treating a sum of Rs.25 crores received by the assessee as undisclosed income. The revenue challenged the deletion of this addition made under section 68 of the Income Tax Act. The Tribunal and the CIT(A) both considered the retraction of the statement by the assessee during search operations, where coercive measures were alleged to have been used. The Tribunal affirmed the CIT(A)'s decision based on the elaborate evidence available to the assessing officer. The High Court found no substantial question of law in this regard, as the matter was based on factual appreciation by the authorities.

2. The second issue raised by the revenue related to the interpretation of judgments by the Madras High Court and Rajasthan High Court regarding the reliability and importance of admissions made during search proceedings. The revenue argued that the Tribunal erred in distinguishing these judgments. However, the High Court found that the decisions were distinguishable on facts, particularly noting the presence of supporting documents and the timing of the retraction in a different case. Therefore, the High Court upheld the Tribunal's decision in this regard.

3. The final issue involved the burden of proof when the assessee denies the content of a statement recorded under section 132(4) of the Income Tax Act. The revenue contended that the burden shifted to them to prove the income when the assessee made certain allegations during search proceedings. The High Court, after considering the arguments and factual background, found no merit in this contention. The burden of proof remained on the assessee to establish the source of income, and in this case, the assessing officer's decision was upheld based on the available evidence.

In conclusion, the High Court dismissed the appeal filed by the revenue, as no substantial question of law was found in the issues raised. The decision was based on the factual findings and legal interpretations by the Tribunal and the CIT(A), emphasizing the importance of evidence and the burden of proof in income tax assessments.

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