2021 (2) TMI 329 - AT - Income Tax

Addition u/s 69 - On-money payment for purchase of property - admission in a statement recorded u/s.132(4) - during the course of search executive diary maintained by assessee was found and seized which indicates on-money payment for purchase of property and same has been confirmed by assessee in the statement recorded u/s.132(4) - assessee has filed retraction statement with necessary evidence and retracted from his earlier statement regarding on-money payment - HELD THAT - No doubt, addition cannot be made only on the basis of statement recorded during the course of search. But, if admission in a statement recorded u/s.132(4) is corroborated with evidences collected during the course of search, then authorities are empowered to make additions on the basis of such statements. However, in this case, before making any addition, the Assessing Officer should have examined the claim of assessee in light of report/order of Chief Revenue Officer /Inspector General of Registration, Chennai or determine value of the property by conducting further enquiry or referring valuation to Departmental Valuation Officer (DVO). In this case, although assessee has filed order of Chief Revenue Officer /Inspector General of Registration, Chennai, but the Assessing Officer as well as learned CIT(A) has not taken said order into cognizance, while adjudicating the issue. Even the Tribunal has not considered the plea of assessee in light of the said evidences. In our considered view, order of Chief Revenue Officer /Inspector General of Registration, Chennai is not a relevant criteria to decide whether assessee has paid on-money or not, but it may be one piece of evidence to ascertain correct facts with regard to value of property Since, the assessee has taken a plea in light of said order/report of Chief Revenue Officer /Inspector General of Registration, the Assessing Officer ought to have considered the order before arriving at conclusion that assessee has paid on-money payment for purchase of property, even though the Assessing Officer is not bound to accept the order of Chief Revenue Officer /Inspector General of Registration, Chennai. Appeal needs to be set aside to the file of Assessing Officer to reconsider the issue - Appeal filed by the assessee is treated as allowed for statistical purposes.

Issues Involved:
1. Determination of the actual cost paid for the purchase of a residential house.
2. Validity of the noting in the seized diary as evidence of on-money payment.
3. Justification of the addition based on a retracted confession statement.
4. Consideration of the statement recorded at odd hours as voluntary.
5. Acceptance of retracted confession by higher courts in similar cases.
6. Requirement for independent enquiries on the market value of the property.
7. Prohibition of extracting tentative confessions as per Board’s Circular.
8. Justification of requiring evidence that on-money was not paid.
9. Assessment of the entire excess amount as the income of the co-owner.

Detailed Analysis:

1. Determination of the Actual Cost Paid for the Purchase of a Residential House:
The assessee challenged the Commissioner of Income Tax (Appeals) for holding that the cost paid for the purchase of a residential house was ?90 lakhs against ?42 lakhs as per the sale document. The Tribunal noted that the Assessing Officer made additions based on the incriminating materials found during the search and the statement recorded from the assessee, which indicated an undisclosed income due to on-money payment for the property purchase.

2. Validity of the Noting in the Seized Diary as Evidence of On-Money Payment:
The seized diary during the search contained entries that suggested a larger amount was paid for the property purchase. The Tribunal upheld the addition, stating that the diary entries clearly indicated payment over and above the apparent consideration mentioned in the sale deed, corroborated by the assessee's statement during the search.

3. Justification of the Addition Based on a Retracted Confession Statement:
The assessee argued that the addition was based on a confession made at about 2 am, which was retracted in a return of income. The Tribunal, however, emphasized that the addition was not solely based on the statement but was supported by the diary entries, thus justifying the addition.

4. Consideration of the Statement Recorded at Odd Hours as Voluntary:
The assessee contended that the statement recorded at odd hours should not be considered voluntary. The Tribunal referenced the decision of the Hon’ble Madras High Court in S. Shyam Kumar, which supported the validity of the statement when corroborated by other evidence.

5. Acceptance of Retracted Confession by Higher Courts in Similar Cases:
The assessee cited cases where retracted confessions were accepted by higher courts, arguing that the addition based on the retracted statement was unjust. The Tribunal distinguished these cases, emphasizing the presence of corroborative evidence in the current case.

6. Requirement for Independent Enquiries on the Market Value of the Property:
The assessee argued that the Department should have conducted independent enquiries on the market value of the property. The Tribunal acknowledged this but noted that the Assessing Officer had relied on the seized diary and the assessee's statement, which were deemed sufficient evidence.

7. Prohibition of Extracting Tentative Confessions as per Board’s Circular:
The assessee referred to a Board’s Circular prohibiting the extraction of tentative confessions. The Tribunal did not directly address this point but reiterated the corroborative nature of the evidence found during the search.

8. Justification of Requiring Evidence that On-Money was Not Paid:
The assessee argued that requiring evidence to prove that on-money was not paid was unlawful. The Tribunal maintained that the evidence found during the search justified the addition, and the burden of proof lay with the assessee to disprove the on-money payment.

9. Assessment of the Entire Excess Amount as the Income of the Co-Owner:
The assessee contended that as a co-owner with a 50% share, the entire excess amount should not be assessed as his income. The Tribunal did not specifically address this issue in the judgment, focusing instead on the overall evidence supporting the addition.

Separate Judgments:
The Tribunal noted that the case was remanded by the Hon’ble Madras High Court for fresh consideration, particularly regarding the order of the Chief Revenue Officer/Inspector General of Registration, which was not initially considered. The Tribunal directed the Assessing Officer to reconsider the issue in light of this order and the arguments presented by the assessee.

Conclusion:
The appeal was allowed for statistical purposes, and the matter was remanded to the Assessing Officer to reconsider the issue, taking into account the order of the Chief Revenue Officer/Inspector General of Registration and any other relevant evidence.

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