AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 91
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....out at his residential premises. During the course of search, statements of the assessee were recorded u/s 132(4), wherein in reply to Question No. 51, assessee has admitted that he had received INR 10.5 crores in cash as commission on total GST refund received by the company and was utilized this cash to buy jewellery and was deposited in the bank accounts of his family members. Accordingly, the assessee had admitted additional undisclosed income of INR 10.5 crores. Thereafter, assessee though letter dated 05.01.2022 filed before DDIT, Investigation, Unit-3, Delhi had retracted from such statements. However, the AO based on such admission of the assessee in the statements recorded during the course of search, had made the addition of INR 10.5 crores as unexplained receipt u/s 69A of the Act and total income of the assessee was assessed at INR 10,99,07,440/-. 3. Against the said order, the assessee has filed an appeal before Ld.CIT(A) wherein the assessee has claimed that the statements were recorded u/s 132(4) during the search wherein the assessee under pressure and due to prolonged search, had admitted the additional undisclosed income which was later retracted. Ld. CIT(A) by....
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....ded by various Officials as well as Police Officials. The assessee is a patient with high blood pressure and was taken to Medanta Hospital during the course of search. As per ld. AR these facts are borne out from the record itself and for this, medical reports of the assessee are also placed at pages 70 to 84 of the Paper Book. Ld.AR also drew our attention to the retraction letter filed by the assessee before the ADIT dated 03.01.2022 alongwith the affidavit of reaffirming the facts stated in retraction letter which was filed on 05.01.2022. Ld.AR further submits that as a result of search, there was no material found, indicating any unexplained investment in acquisition of jewellery or deposit of cash in the bank accounts of any of the family members as was admitted in the statements recorded during the search wherein in reply to Question No.51 where the additional income of INR 10.5 crores was admitted, it was further admitted by the assessee that the said income was used for acquisition of jewellery and some cash was deposited in the bank accounts. The relevant question and reply are reproduced at page 3 of the assessment order. Ld. AR submits that Hon'ble Delhi High Court in th....
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....assessment under S. 153(A) of the Act. A reading of the impugned order reveals that the statement of Mr. Jindal recorded under Section 132(4) forms the foundation of the assessment carried out under Section 153A of the Act. That statement alone cannot justify the additions made by the AO. Even if we accept the argument of the Revenue that the failure to cross-examine the witness did not prejudice the assessee, yet, we discern from the record that apart from the statement of Mr. Jindal, Revenue has failed to produce any corroborative material to justify the additions. On the contrary we also note that during the course of the search, in the statement made by the assessee, he denied having known Mr. Jindal. Since there was insufficient material to support the additions, the ITAT deleted the same. This finding of fact, based on evidence calls for no interference, as we cannot re-appreciate evidence while exercising jurisdiction under section 260A of the Act." 11. Ld. CIT(A) appreciated these facts and deleted the additions by making following observations in para 7 of its order:- 7. "Ground no 1 to 8: This appeal pertains to the assessment order dated 14.02.2023, issued by....
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....a threshold that must be met before shifting the onus to the assessee to explain its source. Here, the AO has failed to discharge this burden, as no physical or documentary evidence of the alleged Rs. 10.50 crores was unearthed. The appellant has consistently denied receiving any such commission after search and has offered plausible explanations for cash deposits in his and his family members' bank accounts attributing these to previously accumulated savings. The AO neither refuted these explanations with counter-evidence nor demonstrated a nexus between the appellant and the alleged cash transaction. Judicial precedents, such as CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC) and PCI v. Anand Kumar Jain HUF (Delhi HC. 12.02.2021), unequivocally hold that statements recorded during search operations lack standalone evidentiary weight absent corroboration, particularly when retracted promptly. Furthermore, CBDT Circular No. 286/2/2003-IT(Inv.) cautions against basing assessments on directive flouted by the AO in this case. The retracted statement, extracted confessions elicited during searches unless supported by credible evidence a under evident duress and contradicted by me....
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....and jewelry acquisitions-stand unrebutted, with the AO offering no material to challenge their veracity or to connect thein to the alleged commission. This evidentiary vacuum further weakens the foundation of the addition. 7.6 The appellant submitted a comprehensive retraction letter, denying the commission, and medical evidence, alongside references to binding judicial precedents and CBDT guidelines. Yet, the assessment order sidesteps these submissions, offering no reasoned rebuttal or engagement with the cited authorities. This silence contravenes the requirement for a speaking order that transparently addresses the assessee's arguments, as mandated under the Act. The AO's failure to justify the addition beyond the retracted statement, while ignoring the appellant's cogent defenses, constitutes a denial of natural justice and renders the assessment unsustainable. 7.7 In view of the foregoing, the addition of Rs. 10,50,00,000 under section SPA is hereby deleted. The initiation of penalty proceedings (Ground no 9) under section 271AAC, being contingent on the now-nullified addition, is consequently quashed. The appeal in partly allowed." 12. It is ....
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....s undisclosed investments - Held, yes [Paras 10-11] 1In favour of assessee]. Para 10 & 11 of the order is as under: 10. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. 11. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT(A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal." 15. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. 16. Further, Hon'ble Delhi High Court in case of Harjeev Agarwal reported in 241 Taxman 199 (Del) held as under: "...A plain reading of Section 132(4....
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....32(4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra)." 18. The Hon'ble Rajasthan High Court in the case of PCIT vs Shri Sanjay Chhabra in Income Tax Appeal No. 22/2021 vide order dt. 06/04/2022 has held that addition solely based on statement later on retracted, without anything more, could not be justified in law and thus had not admitted the appeal filed by the department. The relevant observations of the hon'ble court are as under: "The argument advanced on the basis of the principle propounded by the Supreme Court in the case of Sumati Dayal (supra), does not apply to the facts of the present case at all. The Tribunal's findings are based on material placed on record. The aspect of human probability, in the present case, only goes against the Revenue because in the present case, a raid was conducted and in that process, statement is said to have been recorded under Section 132(4) of the I.T. Act, which was, later on, retracted by the Assessee. In a situation like this, where the office premises are sealed for many days and during that period, a statement is said to have....
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....ssessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of an asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year. Hence, the Legislature in their wisdom has introduced new provisions to mean that for assessing or re- assessing any year beyond 3 years, consequent to search on or after 1st April, 2021, the requirement of incriminating material is mandatory. In the instant case, the search was conducted on 21.12.2021 and the year under appeal before us is AY 2021-22 thus as per the new scheme, the assessment should have been completed after reopening the assessment u/s 148 of the Act and not u/s 143(3) as has been done in the present case. 21. After considering the overall facts that the assessee has retracted from the statements of admitting additional undisclosed income of INR 10.50 crores within the short period less than 15 days and further, no corroborative material/evidence was found as a result of search or brought on record to support the allegation that assessee has earned such undisclosed income which was sta....
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....and the amount recieved for GST Refund Wa kept by the undersigned and no amount was shared with anyone this in the process I recieved fe 10 crores additional Income Which I wrongly disclosed/ mentioned in the said Statement. Further during the search proceedings the fear was continously pressurising me that you will be going to be in deep trouble, you being one the Shareholder of OMIPL and being directors Th M/S Tegna Electronics Private limited and in HIS Kash Gar financial Solutions Private limited, so under illusion I as a defence mechanism decided to give a statement ( I am not associated directly with the company, I wrongly stated that I am a dumany Shareholder and durmy director. once the Search was concluded I, realis Document 4 the gravity of the situation and was not able. to sleep for the rest of 2 days, Than I decided that I should tell the truth to the department, whatever may be the consequences I have deliberated over the issue again are apain and finally through this letter decides to retract part of my earlier statement as discussed in the above preceding par I want to make it clear that I had not recieved any cash from Zed/Jason Delores or from any oth....