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Issues: (i) whether the addition of Rs. 42.69 lakh as unexplained investment based on seized digital records, whatsapp communications and the assessee's statement under search could be sustained despite a belated retraction; (ii) whether the addition of Rs. 9.25 lakh as unexplained expenditure should be upheld or restored for fresh examination of the supporting bank details and related evidence.
Issue (i): whether the addition of Rs. 42.69 lakh as unexplained investment based on seized digital records, whatsapp communications and the assessee's statement under search could be sustained despite a belated retraction
Analysis: The seized laptop excel sheet recorded the flat purchase particulars, the agreement value and the cash component, and the whatsapp chats were found to corroborate the transaction. The assessee had also admitted the cash payment in the statement recorded during search. The subsequent retraction was made after about eight months and was not supported by convincing evidence of coercion or any material showing the earlier admission to be incorrect. On these facts, the contemporaneous digital evidence and the statement under search carried evidentiary value and the retraction did not displace them.
Conclusion: The addition of Rs. 42.69 lakh was rightly sustained and the assessee's challenge failed.
Issue (ii): whether the addition of Rs. 9.25 lakh as unexplained expenditure should be upheld or restored for fresh examination of the supporting bank details and related evidence
Analysis: The assessee explained that the interior expenditure was met from cash withdrawals from his and his wife's bank accounts and partly through cheque payments. The assessment record did not afford adequate opportunity for verification of the supporting material, and the appellate record showed that the issue required examination of the bank statements and related particulars. In these circumstances, a fresh adjudication by the Assessing Officer was warranted.
Conclusion: The addition of Rs. 9.25 lakh was set aside for fresh consideration and the assessee obtained statistical relief on this issue.
Final Conclusion: The consolidated result leaves one addition sustained on merits and the other sent back for verification, so the assessee succeeds only in part and the proceedings are not finally concluded on the remanded issue.
Ratio Decidendi: A belated retraction does not dislodge an admission under search when it is supported by seized contemporaneous digital evidence and corroborative communications, while an expenditure addition requiring verification of supporting bank material may be restored for fresh inquiry.
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