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2017 (11) TMI 1231 - AT - Income TaxUnexplained investment in gold/silver jewellery - retraction of the statement recorded u/s 132(4) - retraction of statement recorded was not proper being made after an inordinate delay.Held that - Once a statement is recorded under Section 132(4), such a statement can therefore be used as a strong evidence against the assessee in assessing the income. However, as held by the Hon ble High Court in case of Ravi Mathur (2016 (5) TMI 1304 - RAJASTHAN HIGH COURT) before the Assessing officer take a final view in the matter, he can travel beyond even the seized papers to come to a logical conclusion and can even examine the entries recorded in the books of account. The assessee has to offer an explanation even of the recorded transaction and the genuineness of the same is also required to be proved. In the instant case, the assessee claims that he has made detail explanation as to how the jewellery is fully disclosed and the AO, without pointing out any discrepancy in the explanation and evidence filed, brushed aside the same holding that since there is lapse of 357 days in filing the affidavit retracting the statement recorded u/s 132(4), the retraction is not possible and made the additions. We find that the said approach of the AO is not correct and the ld CIT(A) however has taken a correct approach. The ld CIT(A) in his order has stated that the addition cannt be made simply on the basis of the statement recorded in search. The same has to be decided on the basis of all the evidences on record. He accordingly, proceeded to decide the issue on the basis of the evidences filed and available on record before the AO. We donot firm any infirmity in the said approach of the ld CIT(A) and the same is in tune with the legal proposition laid down by the Hon ble Rajasthan High Court. - Decided against revenue
Issues Involved:
1. Deletion of addition of ?36,97,000/- on account of unexplained investment in gold/silver jewellery. 2. Validity of retraction of statement made under Section 132(4) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?36,97,000/- on Account of Unexplained Investment in Gold/Silver Jewellery: The facts of the case reveal that during a search on 26.09.2012, the assessee's gold jewellery/ornaments and silver items were found and valued. The assessee initially stated under Section 132(4) of the Income Tax Act that part of the jewellery was not disclosed and surrendered ?30 lakhs. However, upon verification, the assessee retracted this surrender through an affidavit dated 18.09.2013, explaining that the jewellery was fully disclosed. The Assessing Officer (AO) dismissed this retraction, emphasizing the delay of 357 days post-search and relying on the initial statement made under Section 132(4). The AO made an addition of ?36,97,000/- without addressing the merits of the explanation provided by the assessee. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, stating that additions cannot be based solely on statements recorded during a search but must consider all available evidence. The CIT(A) found that the gold jewellery was fully explained by the assessee through previous search records and purchases recorded in regular books. Regarding the silver jewellery, the CIT(A) noted that the assessee had already accounted for it in the surrendered amount of ?20 lakhs, thus avoiding double taxation. 2. Validity of Retraction of Statement Made Under Section 132(4) of the Income Tax Act: The primary contention was whether the retraction of the statement made under Section 132(4) was valid. The Revenue argued that the retraction was invalid due to the significant delay and lack of immediate action post-search. The CIT(A) and the Tribunal considered the retraction in light of the evidence provided by the assessee, which demonstrated that the jewellery was fully disclosed. The Tribunal referred to the Hon'ble Rajasthan High Court's decision in Ravi Mathur & others, which emphasized the evidentiary value of statements recorded under Section 132(4). The High Court held that retractions must be made promptly and supported by strong evidence. In this case, the Tribunal acknowledged the delay but also considered the detailed explanations and evidence provided by the assessee, which the AO failed to refute. Conclusion: The Tribunal concluded that while the retraction was delayed, the assessee provided substantial evidence to support the claim that the jewellery was disclosed. The CIT(A)'s approach to consider all evidence was deemed correct, and the deletion of the additions was upheld. The appeal of the Revenue was dismissed, affirming that additions cannot be solely based on initial statements without considering subsequent evidence. Order Pronounced: The appeal of the Revenue was dismissed, and the order was pronounced in the open court on 30/06/2017.
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