Tribunal upholds addition of unexplained money under Income-tax Act, rejects retracted statement

The Tribunal dismissed the appeal, confirming the addition of Rs. 49,00,000/- as unexplained money under Section 69A of the Income-tax Act. The retraction of the earlier statement by the assessee's Managing Partner was deemed not credible, with the Tribunal upholding the addition and rejecting the claim of mental pressure during the initial admission. The jurisdictional issue regarding the CIT(A) was also dismissed as not pressed by the assessee.

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Issues Involved:
1. Jurisdiction of CIT(A)
2. Confirmation of addition of Rs. 49,00,000/- as unexplained money u/s 69A
3. Retraction of earlier statement by the assessee

Summary:

1. Jurisdiction of CIT(A):
The assessee initially raised the issue that the CIT(A)-11, Pune, adjudicated the appeal without jurisdiction as it fell within the jurisdiction of CIT(A), Ahmedabad. However, during the proceedings before the Tribunal, the assessee chose not to press this ground, and it was dismissed as not pressed.

2. Confirmation of Addition of Rs. 49,00,000/- as Unexplained Money u/s 69A:
The core issue was the confirmation of the addition of Rs. 49,00,000/- as unexplained money under Section 69A of the Income-tax Act, 1961. The Police Department conducted a search at the assessee's branch office and seized cash amounting to Rs. 70,15,390/-. The Managing Partner of the assessee firm initially admitted that the firm would pay tax on Rs. 70,10,000/- as income. However, during the assessment proceedings, the assessee retracted this statement, claiming that the Managing Partner was under mental pressure when he made the admission.

The Tribunal observed that the Managing Partner had sufficient time (14 days) between the police search and the recording of his statement by the Income-tax Department to seek legal assistance and was not under undue pressure. The Tribunal also noted that the assessee could not provide satisfactory explanations or evidence regarding the source of the cash. The Tribunal upheld the addition of Rs. 49,00,000/- as unexplained money, rejecting the retraction made by the assessee.

3. Retraction of Earlier Statement by the Assessee:
The Tribunal found that the retraction of the statement made by the Managing Partner was not credible. The retraction was made 21 months after the initial admission and during the assessment proceedings. The Tribunal noted that the assessee's claim of transporting cash from Ahmedabad to Kalaburgi for purchasing a shop was not substantiated with any evidence. The Tribunal concluded that the retraction was an attempt to avoid tax liability and upheld the addition made by the AO.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, confirming the addition of Rs. 49,00,000/- as unexplained money under Section 69A and rejecting the retraction of the earlier statement made by the Managing Partner. The Tribunal also dismissed the jurisdictional issue as not pressed by the assessee.

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