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2024 (2) TMI 862 - AT - Income TaxAddition based on statement recorded during the course of search u/s 132(4) - addition u/s 68 - HELD THAT - It is settled law that no addition can be made solely on the basis of statement recorded u/s 132(4) of the Act in the absence of any corroborative material or evidence to support the disclosure or the addition. We, therefore, respectfully following the decision of M/s. Ultimate Builders 2019 (9) TMI 1172 - ITAT INDORE , and under the given facts and circumstances of the case find that the ld. AO was not justified in making addition only on the basis of statement recorded during the course of search u/s 132(4) of the Act which has subsequently been retracted and no other incriminating material was found during the course of search which could have a live link with the addition made in the hands of the assessee. We thus, uphold the findings of the ld. CIT(A) deleting the additions made by the Assessing Officer and dismiss all the grounds of appeals raised by the revenue.
Issues Involved:
1. Whether the CIT(A) erred in allowing the appeal of the assessee without appreciating the facts of the case. 2. Whether the CIT(A) erred in deleting the addition of Rs. 4,50,00,000/- made under Section 68 of the Income Tax Act, 1961. 3. Whether the CIT(A) erred in holding that the addition was made solely on the basis of a confessional statement without corroborative evidence. Summary of Judgment: Issue 1: Allowing the Appeal of the Assessee The revenue contended that the CIT(A) erred in allowing the appeal without appreciating the facts of the case. The CIT(A) extensively dealt with the merits of the case and found that the addition of Rs. 4,50,00,000/- was not justified, as it was based on a retracted statement without any corroborative material. Issue 2: Deletion of Addition under Section 68 The CIT(A) deleted the addition of Rs. 4,50,00,000/- made under Section 68 by the Assessing Officer (AO). The AO had added this amount based on the disclosure made by Shri Kailash Chandra Lohia under Section 132(4) of the Act, which was later retracted. The CIT(A) noted that the disclosure was not supported by any incriminating material found during the search and was subsequently retracted through an affidavit. Issue 3: Basis of Addition The CIT(A) observed that the addition was made solely on the basis of the confessional statement of Shri Kailash Chandra Lohia, which was retracted. The CIT(A) held that statements recorded during the course of search must be backed by incriminating material, as per CBDT circulars and judicial precedents. The AO failed to provide any corroborative evidence or conduct further investigations to substantiate the addition. Conclusion: The Tribunal upheld the findings of the CIT(A) and dismissed the revenue's appeal. The Tribunal emphasized that no addition can be made solely on the basis of a retracted statement recorded under Section 132(4) without any corroborative material. The Tribunal relied on various judicial precedents and CBDT circulars to support this conclusion.
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