2019 (9) TMI 1172 - AT - Income Tax

Income addition based solely on post-search statement without corroboration deemed unjustified by Tribunal

The Tribunal held that the addition of Rs. 2,25,00,000/- to the assessee's income was not justified as it was solely based on a statement recorded after ... Additions based on declaration made during the course of search - undisclosed income surrendered during the course of search by the partner of the assessee firm - HELD THAT:- Section 4 of Section 132 of the Act starts with reference to “authorised officer”, which means that the Officer who is authorised to conduct search on the assessee. In the instant case it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are different. After the word the authorised officer it reads “during the course of search or seizure, examination of both the person”. During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee’s premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee’s business premises. Surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. Alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above except for the assessee i.e. M/s. Ultimate Builders. Addition made by the Ld. A.O on the basis of the statement but no reference been given to the incriminating material, we find that in the assessment order Ld. A.O has referred to various seized documents but none of them is directly related to the assessee. These seized documents are of the Signature Group and Ld. A.O has only mentioned the details of the seized document without uttering a word about their nexus with the business transaction carried out by the assessee or by pointing out assessee’s connection with the seized document in name or otherwise. Thus it can be safely concluded that the addition made by the Ld. A.O was not on the basis on the incriminating material found during the course of search but only on the basis of statement of Mr. Vipin Chouhan given on 02.02.2014. Additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. - Decided in favour of assessee. Issues Involved:1. Justification of addition based on a statement made during the course of a search.2. Validity of the statement under Section 132(4) of the Income Tax Act.3. Correlation of the statement with incriminating material.Issue-Wise Detailed Analysis:1. Justification of Addition Based on a Statement Made During the Course of a Search:The assessee argued that the addition of Rs. 2,25,00,000/- was made solely on the basis of a statement given by one of the partners during the search, without any corroborative evidence. The Tribunal noted that the Assessing Officer (AO) made the addition based on the statement recorded on 02.02.2014, after the search concluded on 31.01.2014. The Tribunal emphasized that addition cannot be sustained merely on the basis of a statement without correlating it with incriminating material found during the search. This position is supported by various judgments, including the Hon’ble Gujarat High Court in Kailashben Mangarlal Chokshi vs. CIT and the Hon’ble Jharkhand High Court in Shree Ganesh Trading Co. V/s CIT.2. Validity of the Statement Under Section 132(4) of the Income Tax Act:The Tribunal examined whether the statement recorded on 02.02.2014 could be considered a valid statement under Section 132(4) of the Income Tax Act. It was observed that the search in the case of the assessee concluded on 31.01.2014, and the statement was recorded after the conclusion of the search. The Tribunal held that the statement recorded on 02.02.2014 could not be considered as a statement under Section 132(4) for the assessee since the search had already concluded. The Tribunal noted that the statement was recorded by a different authorized officer and not during the course of the search at the assessee’s premises.3. Correlation of the Statement with Incriminating Material:The Tribunal found that the AO did not refer to any specific incriminating material directly related to the assessee. The seized documents mentioned by the AO were related to the Signature Group and not specifically to the assessee. The Tribunal concluded that the addition was made solely based on the statement of Mr. Vipin Chouhan without any correlation to incriminating material found during the search. The Tribunal emphasized that addition cannot be made merely on the basis of a statement without corroborative evidence, as held in various judgments, including ACIT(1) vs. Sudeep Maheshwari and CIT vs. Chandrakumar Jethmal Kochar.Conclusion:The Tribunal concluded that the addition of Rs. 2,25,00,000/- was not justified as it was based solely on a statement recorded after the conclusion of the search and without any corroborative incriminating material. The Tribunal allowed the appeal of the assessee and deleted the addition.