2021 (7) TMI 944 - AT - Income Tax

Tribunal upholds CIT(A)'s decision, emphasizes corroborative evidence & avoids double taxation

The Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s decision to delete the additions made by the AO. The Tribunal emphasized the ... Undisclosed income admitted in the statement made u/s 132(4) - CIT-A deleted the addition - HELD THAT:- From perusal of finding of Ld. CIT(A) and the facts placed before us it is clear that firstly surrender was on an estimate/tentative basis since no reference was made to specific assessment year, any undisclosed asset or unexplained expenditure or seized records. Secondly, disclosure was made before M/s Ramani Group could get the copies of seized records. Thirdly, after analyzing and examining the seized records M/s. Ramani Group has offered undisclosed income in the name of five assessees namely M/s. Ramani Ice-cream Company Ltd., Shri Girish Awatramani, Shri Vijay Hariramani, M/s. Windsor Infra & M/s. Ishaan Builders and Developers. Fourthly, the impugned addition is made merely on the basis of statement given u/s 132(4) of the Act without making any reference or placing any nexus with any incriminating material found during the course of search u/s 132 of the Act. In case no incriminating material was found during the course of search whether the Assessing Officer can make addition merely on the basis of statement u/s 132(4) ? - Following the decision of this Tribunal in the case of Signature Builders [2021 (1) TMI 945 - ITAT INDORE] and also respectfully following the decisions referred hereinabove find no inconsistency in the finding of Ld. CIT(A) which is based on the examination of facts, settled judicial precedence and direction given in circular issued by Central Board of Direct Taxes and thus hold that he has rightly deleted the addition made by the Ld. AO solely based on the statement given u/s 132(4) of the Act without referring or placing any nexus to the incriminating material seized during the course of search u/s 132(4) of the Act. Thus, revenue fails to succeed in the sole ground - Ground no.1 of revenue’s appeal stands dismissed. Issues Involved:1. Deletion of addition on account of undisclosed income admitted in the statement made u/s 132(4) of the Income Tax Act 1961.2. Validity of addition based on statements without corroborative evidence.3. Application of judicial precedents and CBDT circulars regarding statements made under coercion or duress.4. Double taxation concerns due to the Settlement Commission's acceptance of the undisclosed income.Detailed Analysis:Issue 1: Deletion of Addition on Account of Undisclosed Income Admitted in the Statement Made u/s 132(4) of the Income Tax Act 1961The primary issue revolves around the deletion of additions made by the Assessing Officer (AO) based on statements recorded under section 132(4) of the Income Tax Act during a search operation. The AO made these additions without corroborating the statements with any incriminating material found during the search. The Tribunal observed that the statements were vague, bald, and made without reference to any specific seized documents or assessment years. The Tribunal noted that the statements were tentative and subject to modification, which were later adjusted in the application filed before the Income Tax Settlement Commission.Issue 2: Validity of Addition Based on Statements Without Corroborative EvidenceThe Tribunal emphasized that mere statements, without corroborative evidence, cannot be a basis for making additions. The Tribunal referred to multiple judicial precedents, including the Supreme Court's ruling in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), which held that an admission is not conclusive and can be retracted. The Tribunal also cited the Gujarat High Court's decision in Kailashben Mangarlal Chokshi v. CIT [2008] 14 DTR 257 (Guj.), which stated that merely on the basis of admission, additions cannot be made unless corroborated by evidence.Issue 3: Application of Judicial Precedents and CBDT Circulars Regarding Statements Made Under Coercion or DuressThe Tribunal referred to CBDT Circular No. 286/2/2003-IT(Inv) dated 10.03.2003 and Circular No. 286/98/2013-IT(Inv.II) dated 18.12.2014, which advise against obtaining confessions during search operations under coercion or duress. The Tribunal also cited various judicial precedents that support the view that statements made under duress or without corroborative evidence should not be the sole basis for additions. The Tribunal highlighted that the statements made during the search were retracted and that the retraction was supported by the absence of any incriminating material.Issue 4: Double Taxation Concerns Due to the Settlement Commission's Acceptance of the Undisclosed IncomeThe Tribunal noted that the undisclosed income of Rs. 24,27,91,005 was offered to tax and accepted by the Income Tax Settlement Commission. The taxes were duly paid on this amount. The Tribunal observed that making additions again in the hands of the appellants would result in double taxation, which is not permissible. The Tribunal referred to the case of Vaibhav Lakhi v. DCIT, where it was held that once the income is taxed in the hands of one entity, it cannot be taxed again in the hands of another.Conclusion:The Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s decision to delete the additions made by the AO. The Tribunal emphasized the need for corroborative evidence to support statements made during search operations and highlighted the importance of adhering to judicial precedents and CBDT circulars. The Tribunal also addressed the issue of double taxation, ensuring that the same income is not taxed twice.