Statement under Section 132(4) alone insufficient for additions under Section 68 without corroborative evidence

ITAT Guwahati dismissed revenue's appeal challenging deletion of additions made under section 68. The court held that additions cannot be made solely based on statements recorded under section 132(4) during search proceedings without corroborative material or evidence. Since the statement was subsequently retracted and no incriminating material was found during search establishing connection with the assessee, the Assessing Officer was not justified in making the addition. The CIT(A)'s decision deleting the additions was upheld.

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Issues Involved:
1. Whether the CIT(A) erred in allowing the appeal of the assessee without appreciating the facts of the case.
2. Whether the CIT(A) erred in deleting the addition of Rs. 4,50,00,000/- made under Section 68 of the Income Tax Act, 1961.
3. Whether the CIT(A) erred in holding that the addition was made solely on the basis of a confessional statement without corroborative evidence.

Summary of Judgment:

Issue 1: Allowing the Appeal of the Assessee
The revenue contended that the CIT(A) erred in allowing the appeal without appreciating the facts of the case. The CIT(A) extensively dealt with the merits of the case and found that the addition of Rs. 4,50,00,000/- was not justified, as it was based on a retracted statement without any corroborative material.

Issue 2: Deletion of Addition under Section 68
The CIT(A) deleted the addition of Rs. 4,50,00,000/- made under Section 68 by the Assessing Officer (AO). The AO had added this amount based on the disclosure made by Shri Kailash Chandra Lohia under Section 132(4) of the Act, which was later retracted. The CIT(A) noted that the disclosure was not supported by any incriminating material found during the search and was subsequently retracted through an affidavit.

Issue 3: Basis of Addition
The CIT(A) observed that the addition was made solely on the basis of the confessional statement of Shri Kailash Chandra Lohia, which was retracted. The CIT(A) held that statements recorded during the course of search must be backed by incriminating material, as per CBDT circulars and judicial precedents. The AO failed to provide any corroborative evidence or conduct further investigations to substantiate the addition.

Conclusion:
The Tribunal upheld the findings of the CIT(A) and dismissed the revenue's appeal. The Tribunal emphasized that no addition can be made solely on the basis of a retracted statement recorded under Section 132(4) without any corroborative material. The Tribunal relied on various judicial precedents and CBDT circulars to support this conclusion.

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