2022 (5) TMI 1695 - HC - Income Tax

Retracted Section 132(4) Search Statement Alone Cannot Justify Section 68 Addition, Revenue's Appeal Against ITAT Deletion Dismissed

HC dismissed the Revenue's appeal and upheld the ITAT's deletion of addition u/s 68, holding that an addition cannot rest solely on a retracted statement ... Addition based on statement recorded u/s 132(4) - statement recorded u/s 132(4) retracted after five months - addition u/s 68 - HELD THAT:- As decided in SHRI SANJAY CHHABRA [2022 (4) TMI 1418 - RAJASTHAN HIGH COURT] aspect of human probability, in the present case, only goes against the Revenue because in the present case, a raid was conducted and in that process, statement is said to have been recorded u/s 132(4) which was, later on, retracted by the Assessee. In a situation like this, where the office premises are sealed for many days and during that period, a statement is said to have been recorded under Section 132(4) of the I.T. Act, the Tribunal’s view that only the basis of such retracted statement, addition could not be justified without any other material admissible in evidence, warrants no interference as it is not a substantial question of law. Revenue filed income tax appeals concerning 'penny stock' additions. At the outset, revenue's counsel conceded that the controversy is identical to that decided earlier by a Coordinate Bench in D.B. Income Tax Appeal No. 22/2021, Principal Commissioner of Income Tax v. Sanjay Chhabra, and requested disposal on the same terms. The Court relied on its prior order dated 06.04.2022 in Sanjay Chhabra, which in turn applied the Supreme Court decision in Vijay Kumar Talwar v. CIT on what constitutes a 'substantial question of law.' It held that this was not a case where the Tribunal's findings suffered from 'ignorance of any material evidence,' were 'based on no evidence,' involved a 'wrong inference drawn from proved facts by erroneous application of law,' or where 'the Tribunal has wrongly cast the burden of proof.' The Tribunal's reliance on the retraction of a Section 132(4) statement, absent supporting material, was upheld. Finding no substantial question of law, the High Court dismissed the revenue's appeals.