2020 (11) TMI 858 - AT - Income Tax

Addition on the basis of statement of son as recorded u/s 132(4) - documents as found and seized in search - HELD THAT - Addition was made on the basis of admission of assessee s son during the course of search. As contended before us, that all these documents were properly recorded in the regular books of accounts of the persons to which these documents actually pertained. However, we find that the assessing officer did not establish the fact that any of the documents as found and seized was not recorded in the books of accounts of the persons to which these documents actually pertained. Therefore, we find force in the contention of the assessee that without referring to any of the documents was not binding on the assessee and the same cannot be used against the assessee as an evidence and that too in search assessment proceedings. No adverse material was filed by the revenue to controvert the factual submission advanced before us, we direct the assessing officer to delete the addition - Decided in favour of assessee.

Summary

Issues:
1. Addition of ?10,00,000 to the total income based on a statement recorded under section 132(4) of the IT Act.
2. Maintenance of interest charged under sections 234A and 234B of the Act.

Analysis:

Issue 1: Addition of ?10,00,000 to the total income
The appeal contested the addition of ?10,00,000 to the total income of the assessee based on the statement of the assessee's son recorded under section 132(4) of the Income Tax Act during a search operation. The assessee argued that the addition was made solely on this basis without proper evidence corroborating the increase in income. The assessing officer did not establish that the documents found and seized were not already recorded in the regular books of accounts of the relevant persons. The tribunal referred to various judicial pronouncements, including M/s Ultimate Builders vs. ACIT and ACIT vs. Sudeep Maheshwari, to support the contention that such uncorroborated evidence cannot be used against the assessee in search assessment proceedings. As no adverse material was presented by the revenue to counter the factual submissions, the tribunal directed the assessing officer to delete the addition of ?10,00,000.

Issue 2: Maintenance of interest under sections 234A and 234B
The appeal also challenged the maintenance of interest as charged by the assessing officer under sections 234A and 234B of the Act. However, the judgment does not provide detailed analysis or discussion related to this issue, and the decision primarily focused on the addition of income based on the statement recorded during the search operation.

In conclusion, the tribunal allowed the appeal filed by the assessee, directing the assessing officer to delete the addition of ?10,00,000 to the total income. The order was pronounced on 22.10.2020.