AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1474
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....lso in the case of the assessee on 09.11.2017. A notice under section 153A of the Act was issued requiring the assessee to file return of income. The assessee filed return of income declaring a total income of Rs..1,98,51,970/- on 27.11.2019. The Assessing Officer, considering the assessee's statement recorded under section 132(4) of the Act, determined the income of the assessee at Rs..4,73,51,970/- vide his order dated 26.12.2019 passed under section 143(3) r.w.s. 153A of the Act by treating Rs..2,75,00,000/- as undisclosed income of the assessee under section 68 of the Act. Thereafter, by considering the rectification application of the assessee under section 154 of the Act, the Assessing Officer assessed the total income of the assessee at Rs..4,40,51,970/- vide his order dated 24.06.2020. 4. Having aggrieved by the order made under section 69A of the Act, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) held that there is no corroborative evidence to substantiate the addition made under section 69A of the Act and deleted the addition by holding that the action of the Assessing Officer in making the addition, lacks merits. That is how; the Revenue is in....
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....53A of the IT Act, the assessee admitted only a sum of Rs 1.5 crores and not Rs. 4.25 crores. During the course of assessment proceedings, the assessee filed a reply on 20.11.2019, stating that he was under severe stress and mental agony on the date of search and hence, the statement was not recorded the way he wanted to. As per the retraction letter, the assessee stated before the AO that he had advanced the Seed Capital of only Rs. 15 crores from his undisclosed sources. However, the AO did not accept the retraction statement by holding that statement recorded u/s 132(4) of the IT Act on the basis of the seized document cannot be retracted without any substance. Hence, he has added the balance sum of Rs. 2.75 crores as unexplained money u/s 69A of the IT Act. 2. Aggrieved by the addition made by the AO, the assessee filed appeal before the CIT(Appeals) and he filed a detailed written submission also. In the written submission, the assessee made a similar plea. The assessee referred to a statement recorded from Shri Gubendran u/s 131(1) of the IT Act and stated that Shri Gubendran also admitted the receipt of Rs. 1.5 crores only from the assessee. The CIT(Appeals....
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....ized from the assessee's own email correspondences and it is placed in Page No.14 of the ANN/AA/JV/LS/1 to 25. The relevant page of the seized document printout taken on 9.11.2017 is scanned and reproduced below: came to t. nagar office on march-03-2017, we planned to transfer this fund in -------ventures for timing later we will transfer to various accounts as per your instructions, and rest will start to pay once we start supply to tasmac (as monthly -----) so my outstanding will get cleared in 4 month, and you agreed the same. On April 2017 you called me and said, you need all in single payment, I pulled the document from bank, (for the bank loan process paid 2 percent as advance out of 5% towards the commission for processing my loan) then went to VD for out rate sale, It's under process, I know i am delayed badly, and it's like dead investment. Now if i want to arrange private finance, i need to get the documents from VD, brother please trust me, am not testing your patience brother, i know i paid Interest only till this march 2017 after that nothing I have done, (from 2016 may till 2017 march) I paid interest rupees 33 L, for 11 months (....
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....M the assessee has explained the transactions very clearly without any confusion and admitted the entire transaction of Rs. 4.25 crores. Such statement recorded at 11.30 AM after two days of search cannot be considered as statement given under stress and mental agony. Upon perusal of this statement, few questions were asked and the assessee was allowed to take rest. This is also clearly recorded by the DDIT (Inv.) and that was signed by the assessee. The statement resumed on next day i.e. 12.11.2017. Hence, there was sufficient time given to the assessee during the course of search proceedings. 4.4 Admission of part of the undisclosed income in the return filed: The case was centralised for the purpose of assessment u/s 153A of the IT Act vide Notification Order passed by PCIT, Trichy dated 07.03.2019. Accordingly, a notice u/s 153A of the IT Act was issued on 12.09.2019 (after two years). In the return of income, the assessee admitted Rs 1.5 crores as undisclosed income. 4.5 Filing of retraction statement: The retraction statement /reply was filed by the assessee before the AO only on 20.11.2019. Hence, it is evident that it was not an immediate....
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....ted a part of the sum of Rs. 1.50Cr as undisclosed income while filing the ITR after receipt of the notice issued u/s 153A of the IT Act. It means the rest of the sum recorded in the seized document and the admission given in sworn statement recorded u/s 132(4) of the IT Act cannot be held as invalid. The CIT(A) failed to appreciate the evidentiary value of the seized document and the sworn statements recorded u/s 132(4) of the IT Act. The CIT(AO) ought not to have admitted the retraction statement given two years later 4.8 Retraction statement and the validity: Hon'ble Madras High Court, in the case of Commissioner of Income Tax Vs. MAC Public Charitable Trust [2022] in 144 taxmann.com 54 held that statement recorded u/s 132(4) of the IT Act cannot be discarded simply on account of retraction statement made by the assessee after eight months. The relevant portion of the decision of the Jurisdictional High Court is as under: 61. In view of the law discussed above, it must be held that statement recorded under section 132(4) of the Act and later, confirmed in statement recorded under section 131 of the Act, cannot be discarded simply by observing that ....
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....ch. The CIT(Appeals) ought not to have allowed the appeal in favour of the assessee on the basis of such retraction statements recorded u/s 131 of the IT Act after 15 months and two years respectively 4.10 Ground no. 2.3 of the Revenue: 4.10.1 Hon'ble Madras High Court in the case of Thiru A.J. Ramesh Kumar Vs. DCIT [2022] in 139 taxmann.com 190 clearly ruled that statement made u/s 132(4) has a strong evidentiary value and is binding on a person, who makes it. This decision of the Hon'ble Madras High Court is binding on the lower authorities also. The CIT(Appeals) ought not to have allowed the appeal in favour of the assessee on the basis of some retraction statements recorded u/s 131 of the IT Act much later. 4.10.2 Hence, ground no. 2.3 may also be allowed in favour of Revenue. 4.11 Sanctity of statement recorded u/s 132(4) of the IT Act: 4.11.1 Hon'ble Madras High Court in the case of B. Kishore Kumar Vs. DCIT, Central Circle-IV(1), Chennai [2014] in 52 taxmann.com 449 held that where the assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on the bas....
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....9 to the respondent calling for a return of income and the respondent herein filed Return of Income in response to the same on 27.11.2019 admitting total income of Rs. 1,98,51,970/-. In the return so filed, the respondent admitted an additional income of Rs. 1,50,00,000/- towards the transaction relating to an email communication found during the course of search. 2. The email communication was from one Mr.Gubendran to the respondent herein. At the time of search the said email communication was placed before the respondent and sworn statement was recorded u/s.132(4) of the Act on 10.11.2017. According to the appellant herein, the respondent had admitted to the entire transaction of Rs. 4.25 crores and on the basis of the same the assessment was completed. 3. During the post-search proceedings, statement was recorded from Mr. Gubendiran u/s.131(1) of the Act on 19.02.2019 and he deposed that he had borrowed only a sum of Rs. 1.50 crores from the respondent herein. The respondent retracted his statement dt.09.11.2017 at the time of recording his statement u/s.131(1) during post-search proceedings. 4. However, the Assessing Officer chose to ignore the state....
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....liked the said Proposal, I gave him Rs. 4.25 crores to him. The said amount of 4.25 crores was given out of Rs. 3.25 crores that Mr. Gubendiran gave me plus one crore of my own cash that I had with me. Hence, as on date Mr. Gubendiran owes me Rs. 4.25 crores. I wish to state that the said amount of Rs. 4.25 crores was given by me out of my unaccounted sources. I admit the same as my unaccounted investment and offer it in my hands for tax for the respective period." The transaction mentioned in the sworn statement is for the period of May 2016 to September 2016, which pertains to Financial Year 2016-17 (AY 2017-18), whereas the Assessment in dispute is for AY 2016-17 (F.Y. 2015-16). Thus, the Assessment which made solely based on the transaction mentioned in the sworn statement does not relate to the AY in question. Based on the submissions made above, it is therefore most to respectfully prayed that this Hon'ble Tribunal may be pleased to dismiss the above appeal and thus render justice. 7. Heard both the parties and perused the material available on record. We note that admittedly, the statement of the assessee was recorded by search team on 09.11.2017. Th....