2023 (4) TMI 371 - AT - Income Tax

Assessment u/s 153A - offer of income by the appellant without corroborative incriminating material in search - Income surrendered u/s 132(4) during search - HELD THAT - For the purposes of the present proceedings, we have held that the surrender admittedly on facts was made on mistaken belief of facts and law and in the face of the voluminous plethora of evidences countering each of the factors considered relevant by the Revenue for addition and that reliance was only placed upon statement of the Director and employees. In the instant case, no evidences countering/rebutting the argument of assessee on each of the factors considered relevant by the Revenue, particularly no incriminating material for addition. We have found that merely reliance is only placed upon statement of the assesse taken at the time of locker operation without confronting the incriminating material or any other corroborative evidence either at the time of recording statement u/s 132(4) or in the assessment proceedings. Such statement has no evidentiary value u/s 292C of the act as being not supported with any incriminating material/evidence. CBDT circular is binding on the revenue authorities as also followed by the CIT(A) in one of the Assessment year as above. The order of the CIT(A) is perverse to the facts on record. Accordingly, the addition made in respect of Assessment Year 2011-12 and 2012-13 is deleted. Addition of amount against bearer cheque - assessee s signatures were appearing on the backside of this alleged cheque - HELD THAT - CIT(A) failed to establish or prove in the light of the remand report of the AO and any other material evidence such as, report of the forensic expert, to corroborate the fact of fake/authenticity of the signatures on the back side of the disputed bearer cheque and its encashment by the assessee at a later date. In view of the matter, we hold that the order of the Ld. CIT(A) has infirmity and perversity to the facts on record on the issue of addition on account of amount against bearer cheque having fake/forged signatures of the appellant assessee. We accept the grievance of assessee as genuine and hold that the Id. CIT(A) was not justified confirming the aforesaid addition - Decided in favour of assessee.

Summary

Issues Involved:

1. Addition of Rs. 10 lakhs based on the assessee's offer during search for AY 2010-11.
2. Addition of Rs. 30 lakhs based on the assessee's offer during search for AY 2012-13.
3. Addition of Rs. 41 lakhs based on the alleged encashment of a bearer cheque.

Detailed Analysis:

1. Addition of Rs. 10 lakhs for AY 2010-11:

The assessee contested the addition of Rs. 10 lakhs, arguing that the CIT(A) erred in confirming the addition based on the assessee's offer during the search, without any corroborating evidence. The AO had stated that the surrender was made during the search operation and was correlated to the expense of court fee incurred by the assessee. The CIT(A) upheld the addition, noting that the surrender was made voluntarily after the assessee had sufficient time to review the seized material. The Tribunal, however, found that no incriminating document or material was referred to by the AO to corroborate the addition and that the statement recorded u/s 132(4) lacked evidentiary value without supporting evidence. The Tribunal deleted the addition of Rs. 10 lakhs, finding the order of the CIT(A) perverse to the facts on record.

2. Addition of Rs. 30 lakhs for AY 2012-13:

Similar to the first issue, the assessee argued against the addition of Rs. 30 lakhs, stating that the CIT(A) erred in confirming the addition based on the assessee's tentative offer during the search. The CIT(A) had upheld the addition, stating that the surrender was made voluntarily and without coercion. The Tribunal, however, noted that there was no incriminating material to support the addition and that the surrender was made on a mistaken belief of facts and law. The Tribunal deleted the addition of Rs. 30 lakhs, following the same rationale as in the first issue.

3. Addition of Rs. 41 lakhs based on bearer cheque:

The assessee challenged the addition of Rs. 41 lakhs, arguing that the CIT(A) erred in confirming the addition based on the alleged encashment of a bearer cheque. The CIT(A) had inferred that the assessee's signatures were on the backside of the cheque, despite the assessee's denial and the AO's report suggesting the signatures were forged. The Tribunal found that the CIT(A) had inconsistently accepted the AO's remand report partially and rejected it partially without seeking a forensic expert's report to verify the authenticity of the signatures. The Tribunal held that the CIT(A) failed to establish the authenticity of the signatures and the encashment of the cheque by the assessee. Consequently, the Tribunal deleted the addition of Rs. 41 lakhs.

Conclusion:

The Tribunal allowed the appeals of the assessee, deleting the additions of Rs. 10 lakhs and Rs. 30 lakhs for AY 2010-11 and 2012-13, respectively, as well as the addition of Rs. 41 lakhs based on the alleged encashment of a bearer cheque. The Tribunal found that the CIT(A)'s order was perverse to the facts on record and lacked corroborative evidence.