2019 (3) TMI 2067 - HC - Income Tax

Additions based only on the statement recorded during search - addition on account of on-money on the basis of the seized documents - entire case of the appellant Revenue is based on the confession of the assessee which was extracted during the search/seizure and survey proceedings - assessee later retracted from the confession made HELD THAT - The circular No. 286/2/2003-IT (Inv.II) dated 10.3.2003 which has been reiterated in circular F.No.286/98/2013-IT (Inv.II) dated 18.12.2014 issued by the Board and the general principles of appreciation of evidence would definitely come into play and while appreciating the rival contentions Court would definitely require corroboration of the confessional statement by credible and tangible evidence failing which, it will be considered totally unsafe to rely solely upon the confession for upholding the liability fastened upon the assessee by the ACIT. Since, in the case at hand, admittedly, the Income Tax Authorities did not collect any tangible, corroborative evidence so as to substantiate the allegation of undisclosed income, manifestly, the view taken by the ITAT in the impugned judgment that the department failed to provide cogent, tangible and satisfactory evidence regarding the additional undisclosed income of the assessee, is absolutely justified and the impugned judgment cannot be termed to be illegal or perverse by any stretch of imagination warranting interference therein in exercise of the appellate jurisdiction of this Court. We are duly satisfied that no substantial question of law is involved in the matter so as to question the legality or validity of the impugned judgment.

Summary

Issues:
1. Appeal against judgment of the Income Tax Appellate Tribunal for the assessment year 2009-2010.
2. Reliability of confessional statements made during search and survey proceedings.
3. Admissibility of confessional statements without corroboration.
4. Interpretation of statutory guidelines regarding confessions during search and seizure operations.
5. Burden of proof on the maker of the statement to prove its correctness or legality.
6. Requirement of tangible evidence to substantiate allegations of undisclosed income.

Analysis:
The High Court heard an Income Tax Appeal by the Revenue against the judgment of the Income Tax Appellate Tribunal (I.T.A.T.) for the assessment year 2009-2010. The main contention raised by the Revenue was the reliability of confessional statements made by the assessee during search and survey proceedings. The Revenue argued that the confessions, even if retracted later, should be admissible without corroboration. The appellant urged that the confessional statement of the assessee formed the basis of the additions made, and the I.T.A.T. erred in not relying on it. The respondent, on the other hand, contended that the confession was extracted illegally and should not be relied upon without credible evidence. The respondent cited statutory guidelines issued by the Central Board of Direct Taxes, emphasizing the need for credible evidence to support confessions made during search and seizure operations.

The Court considered the submissions and examined the evidence on record. It noted that the entire case of the Revenue was based on the confession of the assessee during the search and survey proceedings. The assessee had retracted the confession, and the Revenue had not collected any corroborative material to support the allegation of undisclosed income. The Court referred to statutory guidelines and principles of evidence appreciation, emphasizing the need for corroboration of confessional statements with tangible evidence. Since the Revenue failed to provide substantial evidence regarding the additional undisclosed income, the Court upheld the I.T.A.T.'s judgment that the department lacked satisfactory evidence. The Court concluded that no substantial question of law was involved, and the appeal lacked merit, leading to its dismissal.

In summary, the High Court dismissed the Income Tax Appeal, highlighting the importance of tangible evidence to substantiate allegations of undisclosed income and emphasizing the need for corroboration of confessional statements with credible evidence. The Court upheld the I.T.A.T.'s judgment, stating that the department's failure to provide sufficient evidence rendered the appeal devoid of merit.