2019 (12) TMI 354 - AT - Income Tax

Unexplained investment u/s 69B - CIT(A) deleted the additions - indirect evidence - recording of statement by coercion or threat - HELD THAT - Shri Sanjay D Shah and Shri Jadavji Lalji Shah are not connected with the transaction or with the assessee. Further, no corresponding addition was made in the hands of Shri Narendra Kumar Sankla and Prem Kumar Sankla, even though the assessments in their cases were framed under section 143(3) by the ACIT, Hyderabad. Even the CIT(A) has categorically reproduced the remand reports of the respective AO s of Shri Narendra Kumar Sankla and Prem Kumar Sankla. Both, Shri Narendra Kumar Sankla and Prem Kumar Sankla retracted the statement of cash received of ₹1.50 crores on behalf of assessee. We noted that the additional amount received by Smt. Dhanalakshmi and family has been accepted by the assessee and assessee also disclosed the said amount of ₹3 crores in its return of income and paid the taxes accordingly. We noted that the CIT(A) based on submissions and evidences decided the issue in favour of assessee by deleting the addition of ₹1.50 crores which was made by AO just on conjunctures and surmises. Hence, we find no infirmity in the order of CIT(A) deleting the addition - Decided against revenue.

Issues Involved:
1. Deletion of addition of unexplained investment under section 69B of the Income-tax Act, 1961.
2. Validity of retraction of statements made by the assessee's representatives.
3. Reliance on statements made during survey proceedings.
4. Absence of incriminating material or evidence supporting the addition.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Unexplained Investment under Section 69B:
The primary issue in the appeal was the deletion by the Commissioner of Income Tax (Appeals) [CIT(A)] of an addition of ?1.50 crores made by the Assessing Officer (AO) under section 69B of the Income-tax Act, 1961. The AO had initially added ?4.50 crores as unexplained investment, which was later reduced by the CIT(A) to ?3.00 crores, granting a relief of ?1.50 crores to the assessee. The AO based this addition on information received from the Directorate of Income Tax (Investigation) [DIT(Inv.)], Hyderabad, indicating that the sellers had received a cash component of ?3 crores over and above the cheque component of ?10.50 crores for a property transaction. However, the CIT(A) found that there was no incriminating material or evidence to support the additional ?1.50 crores claimed by the AO.

2. Validity of Retraction of Statements:
The AO had relied on statements made by Shri Sanjay D Shah and Shri Jadavji Lalji Shah during survey proceedings, where they admitted to a cash component of ?4.50 crores. However, both individuals later retracted their statements, with Shri Jadavji Lalji Shah submitting a sworn affidavit stating that the initial declaration was made under pressure and incorrect representation by the Income Tax Authorities. The CIT(A) observed that retracted statements lose their evidentiary value and cited the legal principle "ALLEGANS CONTRARIA NON," meaning a person alleging contradictory facts should not be heard.

3. Reliance on Statements Made During Survey Proceedings:
The AO's addition was heavily reliant on statements made during the survey. However, the CIT(A) noted that these statements were not corroborated by any material evidence or incriminating documents found during the survey. The CIT(A) emphasized that the AO did not reject the books of accounts of the assessee and that no evidence was found to substantiate the additional ?1.50 crores. The Tribunal agreed with the CIT(A), noting that the AO's addition was based on conjectures and surmises rather than concrete evidence.

4. Absence of Incriminating Material or Evidence Supporting the Addition:
The CIT(A) and the Tribunal both highlighted the absence of any incriminating material or evidence to support the AO's addition of ?1.50 crores. The CIT(A) referred to the scrutiny assessment orders of the sellers, Shri Narendra Kumar Sankla and Shri Prem Kumar Sankla, which did not include any addition for the disputed cash transaction. The Tribunal also noted that the AO failed to bring any material evidence against the assessee to prove the alleged cash payment of ?1.50 crores. The Tribunal upheld the CIT(A)'s decision to delete the addition, finding no infirmity in the order.

Conclusion:
The Tribunal dismissed the appeal of the Revenue, confirming the order of the CIT(A) to delete the addition of ?1.50 crores. The Tribunal also dismissed the cross-objection of the assessee as infructuous, as it was supportive of the CIT(A)'s order. The judgment emphasized the importance of concrete evidence and the limited value of retracted statements in tax assessments.

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