2023 (9) TMI 1223 - AT - Income Tax

Addition u/s. 68 as unexplained cash credit of investment - Gift received by the assessee from his father - HELD THAT - On going to the facts of the instant case, we observe that it is not disputed that the assessee had received the aforesaid gift from his father as Gift . Further, it is also observed that the aforesaid amount of gift had been declared by the assessee in his return of income for the impugned assessment year. Further, since the gift received by the assessee from his father is below the exemption limit of Rs. 50,000/-prescribed under Section 56 of the Act, looking into the facts of the instant case,the aforesaid addition is directed to be deleted. Unexplained income u/s 68 - addition based on retracted statement - HELD THAT - As statement of the assessee on the basis of which additions were made dated 23.05.2008 was also subsequently retracted by the assessee on July 5, 2008. It is a well established law that no additions can be sustained in the hands of the assessee on the basis of a statement which has been reacted by the assessee. In the case of Chandrakumar Jethmal Kochar 2015 (11) TMI 285 - GUJARAT HIGH COURT held that merely on basis of admission that few benami concerns were being run by assessee, assessee could not be subjected to addition when assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such admission. Therefore, merely on the basis of the statement of the assessee, in our considered view, the additions cannot be sustained especially in light of the fact that the assessee has subsequently retracted the statement and further, the Department has not brought forth any corroborative evidences to sustain the additions in the hands the assessee during the impugned Assessment Year. Thus in respect of certain additions it is seen that there is concurrent inflow and outflow of Rs. 2 lakhs as evident from the from the statement made by the assessee, and the same being cross entries, therefore no addition can be sustained with respect to the amount of Rs. 2 lakhs. Further, on a perusal we agree with assessee that the sum of Rs. 50,000/- only represents an outstanding amount and does not mean that it is the disclosed income of the assessee. Accordingly, even on merits, certain additions are not sustainable in the hands of the assessee. Appeal of the assessee is allowed.

Issues Involved:
1. Addition under Section 68 as unexplained cash credit of investment and income.
2. Addition under Section 68 as unexplained cash credit of gift received from father.
3. Addition under Section 68 as unexplained cash credit from documents found during search.
4. General contention against the addition based on surmises and conjectures.

Summary:

Issue 1: Addition under Section 68 as unexplained cash credit of investment and income

The assessee contested the addition of Rs. 11,80,800/- and Rs. 2,70,000/- under Section 68 of the Income Tax Act, claiming these amounts pertained to Financial Year 2001-02. The Tribunal observed that a search under Section 132 revealed certain documents, leading to an initial admission of Rs. 61 lakhs by the assessee, which was later retracted. The Tribunal noted the Department's inconsistency in the year of taxability, as the same income was taxed in both Assessment Years 2003-04 and 2009-10. The Tribunal cited precedents where retracted statements without corroborative evidence could not sustain additions. Therefore, the Tribunal directed deletion of these additions.

Issue 2: Addition under Section 68 as unexplained cash credit of gift received from father

The assessee argued that the gift of Rs. 45,142/- from his father was exempt under Section 56 of the Act as it was below Rs. 50,000/-. The Tribunal noted that the gift was declared in the return of income and, given the exemption limit, directed deletion of this addition.

Issue 3: Addition under Section 68 as unexplained cash credit from documents found during search

The Tribunal observed that the Department made additions based on a statement recorded during the search, which the assessee later retracted. The Tribunal emphasized that additions could not be sustained solely on retracted statements without substantive evidence. Additionally, certain amounts were found to be cross entries or outstanding amounts, not indicative of undisclosed income. Thus, these additions were also directed to be deleted.

Issue 4: General contention against the addition based on surmises and conjectures

The Tribunal noted that the Department's reliance on conjectures without concrete evidence violated principles of natural justice. The Tribunal underscored the necessity of corroborative evidence to substantiate additions, especially when the initial statements were retracted.

Conclusion:

The Tribunal allowed the appeal, directing deletion of all contested additions, and emphasized the need for corroborative evidence in sustaining additions based on retracted statements.

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