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 retracted or rebutted by cogent evidence. Here, the assessee admitted advancing cash and identifying it as unaccounted income, while the seized paper corroborated the admission. A later explanation based on ledger entries and a recipient's confirmation limited to cheque transactions did not displace the cash admission. The evidentiary value of the statement, read with the seized document, was therefore sufficient to sustain the addition under section 69A.

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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.

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