2025 (3) TMI 714 - AT - Income Tax

Assessment u/s 153A - Addition u/s 69 - HELD THAT - It is an undisputed fact of the case that the addition has been made in respect of a document seized during search from the premises of Aerens Groups and not of the assessee. It is a settled principle of law enunciated by Hon ble Apex Court that mere confession of accused cannot be a ground for conviction unless the same is supported by credible evidence on records. Accordingly and respectful compliance to the decision of Subhash Khattar 2017 (7) TMI 1091 - DELHI HIGH COURT and of Pilot Industries Ltd 2022 (10) TMI 1060 - DELHI HIGH COURT we are of the considered view that no addition is required to be made in the present case. Appeal of assesee allowed.

ISSUES PRESENTED and CONSIDERED

The primary issue in this appeal is the addition of Rs. 1,33,37,120/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961. The core legal questions considered include:

Whether the addition under Section 69 was justified based on the evidence available.
Whether statements recorded under duress can be used as evidence for making additions.
Whether the addition can be made in the absence of incriminating documents found during the search of the assessee's premises.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework involves Section 69 of the Income Tax Act, which pertains to unexplained investments. The Tribunal examined precedents including the decisions of the Delhi High Court in Subhash Khattar and Pilot Industries Ltd., which emphasize that additions under Section 153A can only be made based on incriminating documents found during a search.

Court's Interpretation and Reasoning

The Tribunal focused on the principle that mere confessions, especially those retracted or made under duress, cannot be the sole basis for additions unless supported by credible evidence. The Tribunal noted the absence of incriminating documents from the assessee's premises, which is a critical factor under Section 153A.

Key Evidence and Findings

The evidence primarily comprised statements recorded from the assessee and documents seized from the Aerens Group's premises, not the assessee's. The assessee retracted the statements, citing coercion and intimidation, which diminished their evidentiary value.

Application of Law to Facts

The Tribunal applied the legal principles from the cited precedents to the facts, concluding that the addition was not justified. The absence of incriminating documents from the assessee's premises was pivotal, aligning with the High Court's rulings that such additions require direct evidence from the assessee's premises.

Treatment of Competing Arguments

The Tribunal considered the Department's reliance on the statements and seized documents but found the assessee's arguments, supported by High Court precedents, more compelling. The Tribunal emphasized the need for corroborative evidence beyond retracted statements.

Conclusions

The Tribunal concluded that the addition under Section 69 was unwarranted due to the lack of incriminating evidence from the assessee's premises and the questionable nature of the statements obtained under duress.

SIGNIFICANT HOLDINGS

The Tribunal held that:

"No addition is required to be made in the present case" due to the lack of credible evidence supporting the retracted statements.
The order of the lower authority was set aside, and the AO was directed to delete the impugned addition of Rs. 1,33,37,120/-.

Core Principles Established

Additions under Section 153A require incriminating documents found during the search of the assessee's premises.
Statements made under duress and subsequently retracted lack evidentiary value unless corroborated by other credible evidence.

Final Determinations on Each Issue

The Tribunal allowed all grounds of appeal raised by the assessee, emphasizing the necessity of credible evidence for additions under the relevant sections of the Income Tax Act.

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