2004 (12) TMI 293 - AT - Income Tax

Tribunal dismisses Revenue appeals for lack of evidence, upholds CIT(A)'s decisions. Confessional statements alone insufficient.

INCOME TAX OFFICER. Versus Bua Dass.

INCOME TAX OFFICER. Versus Bua Dass. - TTJ 097, 650, Issues Involved:1. Deletion of addition of Rs. 1,00,000 based on a confessional statement for the assessment year 1994-95.2. Reduction of rental income from Rs. 36,000 to Rs. 7,200 and Rs. 8,400 for various assessment years.3. Deletion of addition of Rs. 1,35,000 based on a confessional statement for the assessment year 1997-98.4. Deletion of addition of Rs. 70,000 based on a confessional statement for the assessment year 1998-99.Detailed Analysis:1. Deletion of Addition of Rs. 1,00,000 for Assessment Year 1994-95:The primary issue was whether the CIT(A) was justified in deleting the addition of Rs. 1,00,000 made by the AO based on a confessional statement by the assessee. The facts revealed that the assessee, a meter reader with the Punjab State Electricity Board, was under mental stress when he made the confessional statement to the DDIT (Inv.). The statement included admissions about purchasing a plot and constructing shops in 1993, which were later proven incorrect. The assessee provided documentary evidence that the property was purchased in 1990 and the shops were constructed before July 1991, supported by an electric connection provided on 4th July 1991. The Tribunal found no independent evidence to support the AO's addition based solely on the confessional statement. Citing various precedents, the Tribunal upheld the CIT(A)'s decision to delete the addition, confirming that the statement was given in a confused state of mind and lacked corroborative evidence.2. Reduction of Rental Income for Various Assessment Years:The CIT(A) reduced the rental income from Rs. 36,000 to Rs. 7,200 for the assessment years 1996-97, 1997-98, and 1998-99, and to Rs. 8,400 for the assessment years 1999-2000 and 2000-01. The AO had relied on the confessional statement where the assessee claimed the shops were rented out at Rs. 3,000 per month. However, the assessee provided certificates from tenants and their statements confirming a rent of Rs. 300 per month, later increased to Rs. 350. The Tribunal found no independent evidence to support the AO's higher rental income assessment and upheld the CIT(A)'s reduced figures.3. Deletion of Addition of Rs. 1,35,000 for Assessment Year 1997-98:The AO added Rs. 1,35,000 based on the assessee's confessional statement about purchasing a commercial property and spending on construction. The assessee clarified that the property was purchased by his sons, not him, and provided evidence of the sons' ownership and investment. The AO's independent enquiries with PSEB and Municipal Corporation confirmed the sons' ownership. The Tribunal upheld the CIT(A)'s deletion of the addition, finding no corroborative evidence against the assessee.4. Deletion of Addition of Rs. 70,000 for Assessment Year 1998-99:The AO added Rs. 70,000 based on the confessional statement about investment in a commercial property. The CIT(A) deleted the addition, citing a lack of independent evidence and confirming that the property was purchased by the assessee's sons. The Tribunal upheld the CIT(A)'s decision, noting that subsequent enquiries supported the assessee's claims.Conclusion:The Tribunal dismissed all seven appeals filed by the Revenue for the assessment years 1994-95 to 2000-01, upholding the CIT(A)'s decisions to delete or reduce the additions based on the lack of independent corroborative evidence and the confused state of mind under which the confessional statements were made.