Search admission under section 132(4) sustained: belated retraction failed and addition for unexplained investment was upheld.

A clear admission in a search statement under section 132(4) that Rs. 1.5 crores was additional income in the assessee's individual capacity was treated as evidentiary and was not displaced by the later return of income or a belated explanation filed about 1.5 years later. The court held that this did not amount to a prompt retraction and that supporting material was required to overcome the admission. The finding was also supported by the existence of the convention hall and the absence of material showing investment by others. The addition for unexplained investment was therefore upheld and the assessee's challenge failed.

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Issues: Whether the addition towards unexplained investment could be sustained on the basis of the assessee's statement recorded during search under section 132(4), and whether the alleged retraction and absence of independent corroboration disentitled the Revenue from relying upon that admission.

Analysis: The assessee had made a clear and unequivocal admission in the statement recorded during search that Rs. 1.5 crores represented additional income in his individual capacity for the relevant assessment year. The filing of the return of income was held not to amount to a retraction. The subsequent explanation before the Assessing Officer was treated as a belated retraction, made about a year and a half later, without the promptness and supporting material required to displace an admission made during search. The statement under section 132(4) was held to carry evidentiary value, and the Tribunal's finding that the admission stood supported by the existence of the convention hall and the absence of material showing investment by others was accepted.

Conclusion: The addition of Rs. 1.5 crores as unexplained investment was upheld and the challenge by the assessee failed.

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