Tribunal upholds CIT(A)'s order, dismisses Revenue's appeal on undisclosed income addition

The tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order that deleted the addition of Rs. 4,87,44,948/- on account of undisclosed income. The tribunal found the revised return filed by the assessee to be valid and concluded that the addition made by the AO lacked supporting evidence from the search. It was emphasized that additions cannot be solely based on statements recorded under section 132(4) without corroborating evidence.

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Issues Involved:
1. Deletion of addition of Rs. 4,87,44,948/- on account of undisclosed income.
2. Validity of retraction of the statement recorded under section 132(4) of the Income Tax Act.
3. Assessment based on the revised return of income.
4. Evidentiary value of the statement recorded under section 132(4) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 4,87,44,948/- on Account of Undisclosed Income:
The Revenue's appeal challenged the deletion of Rs. 4,87,44,948/- added by the AO as undisclosed income. The CIT(A) deleted the addition, noting that the disclosure made by the assessee during the search was not supported by any undisclosed asset or seized paper. The CIT(A) observed that the disclosure of Rs. 5.22 crores was a balancing figure and not based on any evidence found during the search. The CIT(A) concluded that the revised return filed by the assessee was in order and the addition made by the AO was erroneous.

2. Validity of Retraction of the Statement Recorded under Section 132(4) of the Income Tax Act:
The AO did not accept the retraction of the statement recorded under section 132(4), made after 132 days, considering it an afterthought. The assessee argued that the initial disclosure was made to buy peace and avoid litigation, and later, after examining records, it was found that the disclosed amount was incorrect. The CIT(A) accepted the assessee's retraction, noting that the disclosure was not supported by any evidence found during the search.

3. Assessment Based on the Revised Return of Income:
The assessee filed a revised return of income on 10.12.2013, reducing the declared income from Rs. 7,67,44,950/- to Rs. 2,85,82,880/-. The AO did not accept the revised return, considering the retraction of the statement recorded under section 132(4) as an afterthought. The CIT(A) held that the revised return was valid, as the initial disclosure was not supported by any evidence found during the search.

4. Evidentiary Value of the Statement Recorded under Section 132(4) of the Income Tax Act:
The Revenue argued that the statement recorded under section 132(4) has evidentiary value and the assessee had voluntarily disclosed the income. The CIT(A) and the tribunal held that without any corroborating evidence, no addition of income can be made solely based on the statement recorded under section 132(4). The tribunal upheld the CIT(A)'s order, finding no infirmity in the deletion of the addition made by the AO.

Conclusion:
The tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order that deleted the addition of Rs. 4,87,44,948/- on account of undisclosed income. The tribunal agreed with the CIT(A) that the revised return filed by the assessee was in order and that the addition made by the AO was not supported by any evidence found during the search. The tribunal reiterated that only on the basis of the statement recorded under section 132(4) and without any corroborating evidence, no addition of income can be made.

Order:
The appeal of the Revenue is dismissed. Order pronounced in the open court on 06.01.2023.

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