Tribunal quashes addition of undisclosed income based on coerced disclosure without evidence

The Tribunal set aside the Ld. CIT(A)'s order confirming the addition of Rs. 89,13,710 as undisclosed income. The Tribunal found that the addition based on a coerced disclosure without corroborating evidence was not sustainable. It was noted that the seized document could not be produced, and the retraction of disclosure in the return of income was considered valid. The Tribunal directed the AO to delete the addition, concluding that the Section 292C presumption could not apply without supporting evidence.

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Issues Involved:
1. Confirmation of addition of Rs. 89,13,710/- as undisclosed income.
2. Validity of addition based on ad hoc disclosure made under coercion.
3. Applicability of Section 292C presumption.
4. Non-production of seized document BSA/1 during assessment and appeal proceedings.
5. Retraction of disclosure in the return of income.

Issue-Wise Detailed Analysis:

1. Confirmation of Addition of Rs. 89,13,710/- as Undisclosed Income:
The main issue revolves around the confirmation of an addition amounting to Rs. 89,13,710/- by the Ld. CIT(A), which was initially made by the AO as undisclosed income surrendered by the assessee during a search operation. The search conducted on 16.09.2009 led to the seizure of documents marked BSA/1. A key person of the group, Shri Sambhunath Agrawal, admitted to an undisclosed income of Rs. 7.5 crores on behalf of family members, including Rs. 1 crore for the assessee, which was not declared in the return of income.

2. Validity of Addition Based on Ad Hoc Disclosure Made Under Coercion:
The assessee argued that the addition was based on a disclosure made under coercion and undue pressure, which was neither voluntary nor supported by any incriminating material. The Ld. Counsel for the assessee contended that the key person of the group, Shri Sambhunath Agrawal, could not make a valid disclosure on behalf of the assessee. Furthermore, the seized document BSA/1 was claimed to pertain to a customer of M/s Utsav Rice Mills Pvt. Ltd. and not to the assessee.

3. Applicability of Section 292C Presumption:
The Ld. CIT(A) and the AO applied the presumption under Section 292C, which assumes that documents found in possession of the assessee belong to them unless proven otherwise. The assessee failed to discharge the onus of proving that the seized documents did not belong to him, leading to the confirmation of the addition by the Ld. CIT(A).

4. Non-Production of Seized Document BSA/1 During Assessment and Appeal Proceedings:
During the proceedings, the assessee's counsel was unable to inspect the document BSA/1, as it was not found in the assessment folder. This non-production was admitted by the Ld. D.R. The Tribunal noted that no corroborating evidence was found during the search to justify the addition, and the document BSA/1 could not be produced before the Bench despite specific directions.

5. Retraction of Disclosure in the Return of Income:
The Tribunal considered the retraction of disclosure in the return of income as valid. It was noted that the search team did not find any cash, money, or other assets corroborating the addition. The Tribunal referenced the decision of the Co-ordinate Bench in the case of Shri Lalji Khimjibhai Patel, which held that no addition could be made solely on the basis of notings on a piece of paper without corroborative evidence.

Conclusion:
The Tribunal concluded that the addition based on the ad hoc disclosure made during the search or post-search proceedings, without corroborating evidence, was not sustainable. The presumption under Section 292C could not be applied due to the lack of corroborating evidence. The Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the addition of Rs. 89,13,710/-. The appeal of the assessee was allowed.

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