AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1508
X X X X Extracts X X X X
X X X X Extracts X X X X
....er of Income Tax (Appeals) has erred in law in sustaining the addition of Rs.l,36,3J3,501/- as made by the learned Assessing Officer merely relying upon the statement of the appellant recorded u/sec. 132(4) of the Income Tax Act, 1961 which was subsequently retracted. ii) That the Hon'ble Commissioner of Income Tax (Appeals) while sustaining the aforesaid addition of Rs. 1,36,30,501/- has failed to appreciate that "though the statement rendered at the time of search may be used as evidence in any proceedings, but that by itself, cannot become the sole material to rest the assessment, more so, when the assessee sought to withdraw the same by producing material evidence in support of such retraction. It is always open to the person who has made the admission to show that the statement to offer income is incorrect". iii) That the Hon'ble Commissioner of Income Tax (Appeals) has himself confirmed in his order that the appellant has partially retracted the surrender which has been made in clandestine manner but while deciding the appeal, he altogether has ignored this fact and confirmed the entire additions of Rs. 1,36,30,501/- merely relying upon the statement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urely on the basis of suspicious and surmises with a pre-determined mind in not accepting the submissions of the appellant about retraction of statement which was made with due bonafide reasons. viii) That the Hon'ble Commissioner of Income Tax (Appeals) has erroneously held that the retraction of statement after a month is not sustainable in law. The Hon'ble Commissioner of Income Tax (Appeals) while holding so has failed to appreciate that the appellant had filed a letter dated 27.03.2009 along with her own affidavit retracting her statement given u/sec. 132(4) of the Act dated 26.02.2009. This letter was filed before the learned Additional Director of Income Tax (Investigation) Unit-I(2), New Delhi just after two days of opening of bank locker which was opened on 25.03.2009 and last Panchnama was made. Thus the retraction of statement followed by an Affidavit of the appellant was just after two days of the last Panchnama when the search was completed and not after one month as alleged by the Hon'ble Commissioner of Income Tax (Appeals). ix) That the Hon'ble Commissioner of Income Tax (Appeals) has further erred in law as much as on the facts of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ash, unexplained jewellery, foreign exchange and value of unexplained loose paper found during the search and the same they have disclosed in their revised return of income filed after the search pursuant to notice u/s. 142(1)/143(2) read with section 153A. The AO however, did not accept the assessee's contention that the undisclosed income is to the tune of Rs. 13,60,000/- only, but he considered Rs. 1,50,00,000/- at the assessee's undisclosed income, which the assessee had surrendered in their statement given under section 132(4) of the Act during the search, on account of unexplained cash, jewellery and excess stock and unexplained loose papers, foreign exchange etc. found during the search. Aggrieved with the AO's action, the assessee appealed before the Ld. CIT(A), who vide his impugned order has dismissed the appeal of the assessee. Against the impugned order, the assessee is in appeal before us. 5. Ld. Counsel for the assessee that Ld. CIT(A) has wrongly sustained the addition of Rs. 1,36,3J3,501/-as made by the Assessing Officer merely relying upon the statement of the assessee recorded u/sec. 132(4) of the Income Tax Act, 1961 which was subsequently retracted. It was fu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fully substantiated by the direct evidences which were already available on record with the learned Assessing Officer since been filed with him during the course of hearing of the case and the same were also made available with him during the course of hearing of the appeal. It was further stated that Ld. CIT(A) is wrong in holding that the retraction of statement after a month is not sustainable in law. However, the assessee had filed a letter dated 27.03.2009 along with her own affidavit retracting her statement given u/sec. 132(4) of the Act dated 26.02.2009. This letter was filed before the Ld. Additional Director of Income Tax (Investigation) Unit-I(2), New Delhi just after two days of opening of bank locker which was opened on 25.03.2009 and last Panchnama was made. Thus the retraction of statement followed by an Affidavit of the assessee was just after two days of the last Panchnama when the search was completed and not after one month as alleged by the Ld. CIT(A). He further submitted that it is not disputed fact that the statement recorded u/sec. 132(4) of the Act was later retracted but the revenue department did not place any tangible material on record to reject the cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dras High Court confirmed. ii) Bhagirath Aggarwal vs. CIT 31 taxmann.com 274, 215 taxman. 229, 351 ITR 143). iii) CIT vs. MS Aggarwal (2018) 93 taxmann.com 247 Delhi iv) Smt. Dayawanti Vs. CIT (2016) 75 taxmann.com 308. v) M/s Peeble Investment and Finance Ltd. vs. ITO (2017-TIOL-238-SC-IT). M/s Peeble Investment and Finance Ltd. vs. ITO (2017-TIOL-188-HC)-Mum-IT) Bombay High Court confirmed. vi) Raj Hans Towers (P) Ltd. vs. CIT 56 taxmann.com 67 vii) PCIT vs. Avinash Kumar Setia (2017) 81taxmann.com 476 (Delhi.) viii) ACIT vs. Hukum Chand Jain (2010) 191 Taxman 319 (Chhatisgarh) ix) Greenview Restaurant vs. ACIT (2003) 133 Taxman 432 (Gauhati). 7. We have heard both the parties and perused the records, especially the impugned order and the written submission and the Paper Book and the case laws relied upon by both the parties as well as the CBDT Instructions on the subject in dispute. We find that the only issue in the present appeal is against the action of the AO in making an addition of Rs. 1,50,00,000/- to the total income of the assessee on the ground that that assessee had surrendered the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thinking on the part of a person searched, which squarely covers the issue in dispute, hence, we draw support from the same. - CIT v. Naresh Kumar Agarwal, (2014) 369 ITR 171, High Court of Andhra Pradesh "The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under Section 94 of Cr.P.C by operation of sub-section (13) of Section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non-existent ". Dy. Commisioner Of Income Tax vs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o have some basis to come to the conclusion of concealment. It has also been held in the following judicial decisions that the addition made solely based upon the statement cannot be sustained and reliance is placed on the following judicial decisions. Shree Ganesh Trading Co.v.CIT, (2013) 257 CTR 159, High Court of Jharkhand Section 132 of the Income-tax Act, 1961 - Search and seizure - Statement on oath - Assessment year 1988-89 - Whether statement on oath of an assessee under section 132(4) is a piece of evidence and when there is incriminating admission against himself, then it is required to be examined with due care and caution - Held, yes - During course of search conducted under section 132 upon assessee-firm, a partner made a statement under section 132(4) and surrendered a sum ofRs. 20 lakhs for assessment year 1988-89 as income - In return fded after search assessee-firm did not declare income of Rs. 20 lakhs on plea that declaration made by partner was misconceived and divorced from real facts and that firm or individual had no undisclosed income - Lower authorities did not accept asses see's said retraction on ground that statement given ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ales was invested in purchase of agricultural land-Said statement was subsequently retracted on ground that same was made under mistaken belief-AO made addition of entire unaccounted/suppressed sales in addition to gross profit- CIT(A) affirmed addition made by AO-Held, entire unaccounted sale price could not be treated as undisclosed income-Only gross profit embedded in the suppressed or unaccounted sale could be added-AO was thus not justified in making addition of entire unaccounted/suppressed sales- Addition of undisclosed income was made solely on basis of statement of director of assessee company without corroborating same with material unearthed by search was also unjustified- Since admission made by assessee u/s 132(4) is an important piece of evidence but same is not conclusive-Assessee had produced all evidences in respect of investment in agricultural land-No evidence was found in course of search action or post search enquiries to show that assessee has made any investment over and above sale price with regards to agricultural land transaction- Revenue authorities failed to establish nexus between unrecorded sale with investment in agricultural land- Assessee has accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and reasoning as above, the addition made is deleted." KailashbenManharlal Chokshi v. CIT, (2008) 220 CTR 138, High Court of Gujarat Section 143, read with Section 132 of the Income-tax Act, 1961 - Assessment - Additions to income Assessment year 1989-90 - Whether a statement recorded under section 132(4) at mid night can be considered to be a voluntary statement, if it is subsequently retracted by assessee and necessary evidence is led contrary to such admission - Held, no - During search conducted at assessee's premises, his statement was recorded under section 132(4) wherein he disclosed certain undisclosed income - After two months, he retracted from said disclosure contending that it was made at mid night under pressure and coercion - He also gave proper evidence in support of his retraction - Assessing Officer, however, made addition on basis of disclosure made by assessee in statement recorded under section 132(4) - Whether merely on basis of admission, assessee could be subjected to such addition, when despite retraction revenue could not furnish any corroborative evidence in support of . such admission - Held, no Deepchand& Co.v. ACIT, (1995) 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it has been made clear that reliance shall not be solely placed on statements recorded in search survey. Relevant extracts of the same are reproduced as under; "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Incometax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. " 7.2 We also note that following pleadings and evidences were made in this regard before AO and L....