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2019 (2) TMI 1671 - ITAT AHMEDABADPenalty u/s 271(1)(c) - return filed disclosing higher income u/s 153A (vis-àvis earlier return filed u/s 139) solely on the basis of certain statement recorded u/s 139(4) without any reference to and without corroboration of any incriminating material to support such declaration - HELD THAT:- There can be no manner of doubt that statutory discretion vested with the AO ought to have been exercised in favour of the assessee and not against the assessee for such unproved income. The Revenue could not lay hands on any tangible material except conditional and tacit averments, which confession in itself is seen to be non-admission of any ingenuity. In the circumstances, we have no hesitation to hold that such confession cannot be the basis for imposition of onerous penalty. An incidental but a pertinent question would arise also as to whether a statement recorded u/s 132(4) can be treated as evidence found in the course of search per se. As noted, except for an oral evidence under s.132(4) of abstract nature with distinguishing features, no incriminating material has been found to support the assertions made therein. To reiterate, the assertions made are highly qualified and without any admissions of undisclosed income per se. The Hon’ble Delhi High Court in the case of CIT vs. Harjeev Agrawal [2016 (3) TMI 329 - DELHI HIGH COURT] has ruled that oral statements on a ‘standalone basis’ without reference to any other material discovered during search would not empower the AO to make additions in a block assessment (which is peri materia with the present scheme of search assessment u/s 153A). Hon’ble Delhi High Court in CIT vs. Rajpal Bhatia [2010 (11) TMI 1010 - DELHI HIGH COURT] has also echoed that an oral evidence is neither ‘books of accounts etc.’ or ‘assets’. It was a document which came to be created owing to search and not found in the course of search. In the circumstances, where a judicial view has been taken that addition itself on such statement is without authority of law, it is rather difficult to appreciate the action of the Revenue towards imposition of penalty on such additions in affirmative. Needless to say, the penalty provision stands on a very stringent pedestal qua the quantum proceedings. Action of Revenue is clearly bereft of merits. Consequently, we hold the first proposition framed above in favour of the assessee and against the Revenue.
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