Uncorroborated confession cannot sustain an income-tax addition where statutory immunity covers the remittance.

A tax addition based solely on an assessee's earlier statement before the Enforcement Directorate, alleging a bogus NRI gift under a foreign exchange immunity scheme, could not be sustained where the statement was later retracted and remained uncorroborated by independent evidence. The Tribunal noted that foreign exchange proceedings had been dropped for want of supporting material and that the relevant Board circular barred enquiry into such remittances in income-tax proceedings under the statutory immunity scheme. A confessional statement alone, particularly after a bona fide retraction, was insufficient to justify the addition. The addition was therefore deleted.

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Issues: Whether the addition of Rs. 22,50,000, based solely on the assessee's statement regarding a purported bogus NRI gift received under the foreign exchange immunity scheme, could be sustained in income-tax proceedings.

Analysis: The addition rested on the assessee's confessional statement before the Enforcement Directorate, but that statement was later retracted and was not supported by independent corroborative evidence. The proceedings under the foreign exchange law were dropped for lack of supporting material. The remittance had been received under the statutory immunity scheme, and the Board's circular clarified that such remittances were not to be enquired into in proceedings under the Income-tax Act, 1961. The Tribunal also held that a statement alone, without corroboration, could not validly sustain an addition, especially where the retraction appeared bona fide and the statutory immunity extended to proceedings arising out of the remittance.

Conclusion: The addition was not sustainable and was directed to be deleted.

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