2026 (4) TMI 177 - AT - Income Tax

Voluntary search statement supported by seized material can sustain an addition when not effectively retracted or rebutted.

A voluntary statement recorded under section 132(4), when supported by seized material, can justify an addition in search assessment if it is not promptly ... Addition u/s 69A based on the assessee's statement under section 132(4) and the seized document - Corroboration by seized material - Unretracted admission HELD THAT: - The Tribunal held that the case was not one of a bare confession. The seized document recovered during search, which the assessee had attempted to destroy, formed the underlying incriminating material, and the assessee thereafter gave a detailed statement explaining the cash loan, its source, the interest arrangement, and the proposed mode of recovery through a land transaction. That statement was not retracted for a long period, and even the later explanation that the figure represented cheque recoveries from Mr. Vasudev was found inconsistent with the ledger account, which showed no outstanding receivable as on the date of search. The Tribunal therefore held that where a statement under section 132(4) is linked to actually seized material and the assessee fails to rebut it with credible evidence, the addition can validly be sustained. [Paras 24, 26, 27, 29, 30] The addition was upheld and the grounds challenging it were dismissed. Final Conclusion: The Tribunal dismissed the appeal and sustained the addition for the assessment year 2017-18. It held that the assessee's detailed and unretracted statement, being supported by the seized material and not displaced by the later explanation or ledger account, furnished adequate basis for the addition. Issues: (i) Whether the addition of Rs. 2 crores under section 69A of the Income-tax Act, 1961, based on the assessee's statement under section 132(4) and the seized document, was sustainable.Issue (i): Whether the addition of Rs. 2 crores under section 69A of the Income-tax Act, 1961, based on the assessee's statement under section 132(4) and the seized document, was sustainable.Analysis: The seized paper was treated as incriminating material and the assessee's contemporaneous statement under section 132(4) specifically admitted that he had advanced Rs. 2 crores in cash to Mr. Vasudev and explained the source as unaccounted income. The statement was not retracted in time and was not displaced by credible documentary evidence. The later explanation based on the ledger account did not satisfactorily rebut the admission, and the confirmation by the recipient only of cheque transactions did not negate the cash transaction admitted by the assessee. In these circumstances, the evidentiary value of the search statement, read with the seized material, was sufficient to sustain the addition.Conclusion: The addition of Rs. 2 crores under section 69A was rightly sustained and is against the assessee.Ratio Decidendi: A voluntary statement under section 132(4), when supported by seized material and not effectively retracted or rebutted by cogent evidence, can form a valid basis for addition in search assessment proceedings.