TaxTMI 
TaxTMI 
2022 (12) TMI 1568
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....t of the assessee recorded u/s 132(4) and that there was no evidence of mistake of estimation or wrong interpretation of law justifying retraction according to the various court decision, by the assessee after a substantial period of time." 3. The brief facts of the case as emanating from records are: The assessee is engaged in business of dealing in Bullion. A search action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was carried out on NIBR Bullion group including its Directors and Associates on 25/09/2008. During the course of search, following incriminating materials were found and seized: "i) Loose paper files A-1 to A-5 seized from the residence of Shri Ajay C. Arora. ii) Documents inventorised in A-1 and back up of pen-drive taken on CD seized from the residence of Shri Shrawan Kumar Bajaj, a close associate of this group." 4. During search proceedings, statement of Ajay C. Arora, Director of the assessee company was recorded u/s 132(4) of the Act. In his disclosure statement, he offered Rs. 12 crores towards undisclosed income in financial year 2008-09 to cover up discrepancies in the seized documents, digital data, stock, excess jeweller....
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.... of the company and the disclosure was reiterated in the subsequent statement, there is no valid reason for the assessee to retract from the said statement. The learned DR prayed for reversing the findings of the CIT(A) on this issue and confirming the addition based on the disclosure. 6. Per Contra, Shri Dharmesh Shah appearing on behalf of the assessee vehemently defended the findings of CIT(A) in deleting the addition solely made on the basis of disclosure statement without any corroborative evidence. The learned Authorised Representative (AR) submits that a perusal of the assessment order would show that the AO made addition of Rs. 3,81,80,119/- on the basis of seized material. The learned AR asserted that once the addition has been made by the AO separately under different heads after examining the seized material, no further addition on disclosure was required to be made. The disclosure was made to cover all the discrepancies. The learned AR submitted that the retraction was made by the assessee only after the assessee was provided copy of the documents seized during search. In retraction statement, the assessee restricted disclosure to Rs. 3.75 crores which is approximately....
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.... regularized through entry operators 4,19,836 7 Out of expenses 2,02,204 8 Out of entertainment exp. 1,64,960 Total 3,81,80,119/- 9. The assessee by way of an affidavit dated 06/05/2009 restricting the disclosure to Rs. 3.75 crores. The primary reason for retraction of the disclosure amount mentioned in statement recorded u/s 132(4) of the Act was, the assessee was not having copies of the seized documents. It was only after the assessee received copies of seized documents, the assessee revised the amount of declaration. Apart from the additions mentioned above, the AO made further addition of Rs. 8,18,19,881/- (12,00,00,000 - 3,81,80,119) on account of disclosure u/s 132(4) of the Act. The addition made u/s 132(4) of the Act is merely on the basis of statement and is not corroborated by any documentary evidence. It is not denying the fact that statement recorded u/s 132(4) of the Act, is on oath and can be used as evidence. However, mere statement cannot be the basis of addition. The Board vide instruction F.N. 286/2/2003 dated 10/03/2003 has clearly instructed that the confessions if not based upon credible evidence are letter retracted by the concerned assessee....
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.... The Hon'ble High Court answered the said question by observing as under: "6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his a....
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....not have such material then it would reflect upon the very perfunctory nature of the survey. For holding so their Lordships have referred to the aforementioned circular dated 10/3/2003, wherein CBDT has clearly given the mandate to the officers that during the course of search, seizures and survey no attempt should be made to obtain confession as to the undisclosed income and such instructions to CBDT were applicable when the search and seizure was made and assessment was framed. CBDT has further mandated that in respect of pending assessment also AO should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing relevant assessment order. The addition made in the present case is contrary to the aforementioned decision of Hon'ble Telangana & Andhra Pradesh High Court as well as aforementioned circular of CBDT as the assessment is entirely based upon the statement recorded during the course of search and no independent material has been brought on record by the AO to show that the income returned was incorrect. 6.2 The other decisions which have been relied upon by Ld. AR also supports similar proposition and these ha....
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....rial was available and not otherwise. AO's attempt to make the differential amounts of undisclosed strictly relying on the sworn statement of Mr. Kiran Patil, MD of the company is unsustainable considering the written submission of the assessee and the order of the Tribunal in the case of M/s. Avishkar Infrastructure Pvt. Ld. (supra). Therefore, we hold that the relief granted by the CIT(A) in his order is fair and reasonable and it does not call for any interference. Accordingly, the common ground raised by the Revenue in the grounds of appeal has to be decided against the Revenue and in favour of the assessee. 11. The Revenue on contrary has placed reliance on the decision in the case of Bhagirath Agarwal Vs. CIT (supra). In the said case, the Hon'ble High Court held that the appellant/assessee has not produced any material to show that the admissions made by him were incorrect. The statements recorded u/s 132(4) of the said Act are clearly relevant and admissible and they can be used as evidence. In fact, once there is a clear admissions, voluntarily made, on part of the assessee, that would constitute good piece of evidence at the hands of the Revenue. We find that the Hon'bl....