Voluntary disclosure u/s132(4) upheld; delayed, unsupported retraction rejected as afterthought, income addition sustained accordingly

ITAT Ahmedabad-C upheld the addition to the assessee's income based on the voluntary disclosure made under s.132(4) during search proceedings. The Tribunal reiterated that an admission is the best evidence and is binding unless successfully withdrawn or shown to be erroneous. Finding no material indicating that the disclosure was obtained under duress, pressure or coercion, the ITAT held that the subsequent retraction, made after more than two months and supported only by a self-serving affidavit, was an afterthought. The assessee's failure to prove torture or coercion rendered the retraction unreliable, and the addition in line with the original disclosure was sustained.

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Issues Involved:
The main grievance is the addition of Rs. 7 lacs to the income declared by the assessee, based on a disclosure made under section 132(4) during a search operation.

Summary:

Issue 1 - Disclosure under section 132(4):
The assessee, a partner in a firm, made a disclosure of Rs. 7 lacs during a search operation under section 132. The Assessing Officer added this amount to the declared income, as the assessee retracted the disclosure after two months. The CIT(A) upheld this addition, stating that the disclosure was voluntary and not made under duress. The tribunal noted that the retraction was an afterthought and the assessee failed to prove coercion, thus justifying the addition.

Issue 2 - Justification for additions:
The assessee argued that the disclosure was made under pressure and coercion during the search operation. The counsel contended that there was no basis for the additions related to unaccounted investments in house property, furniture, gold ornaments, and cash. However, the tribunal found that the disclosure was voluntary, supported by findings of cash, gold ornaments, and construction at the premises, justifying the additions.

Separate Judgement:
A detailed analysis was conducted to determine the validity of the disclosure and subsequent retraction. The tribunal emphasized the importance of voluntary admissions and the lack of evidence supporting coercion. The retraction after two months was deemed unreliable, leading to the confirmation of the addition of Rs. 7 lacs to the declared income.

This judgment highlights the significance of voluntary disclosures during search operations and the burden of proof on the assessee to establish coercion or duress in such situations.

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