TMI Blog2017 (11) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... of 357 days in filing the affidavit retracting the statement recorded u/s 132(4), the retraction is not possible and made the additions. We find that the said approach of the AO is not correct and the ld CIT(A) however has taken a correct approach. The ld CIT(A) in his order has stated that the addition cannt be made simply on the basis of the statement recorded in search. The same has to be decided on the basis of all the evidences on record. He accordingly, proceeded to decide the issue on the basis of the evidences filed and available on record before the AO. We donot firm any infirmity in the said approach of the ld CIT(A) and the same is in tune with the legal proposition laid down by the Hon’ble Rajasthan High Court. - Decided against revenue - ITA No. 828/JP/16 - - - Dated:- 30-6-2017 - Shri Kul Bharat, JM And Shri Vikram Singh Yadav, AM Revenue by : Shri D.S. Kothari ( CIT) Assessee by : Shri P.C. Parwal (C.A.) ORDER Per Shri Vikram Singh Yadav, A. M. This is an appeal filed by the Revenue against the order of Ld. CIT(A)- 2, Udaipur dated 20.07.2016 for A.Y. 2013-14. The grounds of appeal taken by the Revenue are as under:- 1. Whether on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch was conducted on 26.09.2012 and affidavits were filed on 18.09.2013 after lapse of about 357 days from the date of search. Had the assessee committed mistake, the affidavit in this regard would have been filed immediately after completion of search. (b) The assessee was asked to match the jewellery released but the same was not done. (c) The AO further relied on various decisions as mentioned at page No. 7-111 of the order to hold that statement recorded during course of search u/s 132 of I.T. Act being in presence of independent witnesses has overriding effect over subsequent retraction. The AO made no discussion on the merits of the addition except reproducing the show cause notice and the reply filed by the assessee and thus, made an addition of ₹ 36,97,000/- on account of unexplained investment in gold and silver jewellery as stated in Q. No. 4 of statement dated 16.10.2012. 4. The Ld. CIT(A) deleted the addition holding that addition cannot be made simply on the basis of the statement recorded in search. The same is to be decided on the basis of all the evidences available. He held that the gold jewellery found is fully explained by the assessee as jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made under mistaken belief of fact or law or that statement given was not correct, than the admission binds the assessee despite the retraction. These cases are therefore distinguishable on facts in as much as the assessee has brought evidence on record to prove that the gold jewellery found from him is fully explained and the AO has not brought any material on record to negate the same. It is a settled law that no addition can be made only on the basis of the statement more particularly when the same is retracted. For this proposition reliance is placed on the following cases:- Pullangode rubber Produce Company Ltd. V. State of Kerala and Another (1973) 91 ITR 0018 (SC) CIT Vs. Ashok Kumar Soni (2007) 291 ITR 172 (Raj.) (HC) Chetnaben J. Shah LR of Jagdishchandra K. Shah Vs. ITO (2016) 140 DTR 235 (Guj.) (H.C.) Federal Bank Ltd. Vs. State of Kerala (1995) 124 CTR 355 (Ker.) (HC) M. Narayanan Bros. Vs. ACIT (2011) 339 ITR 192 (Mad.) (HC) Jugal Kishore Garg Vs. DCIT 34 Taxworld 201 (JP) DCIT Vs. Pramukh Builders (2008) 112 ITD 179 (Ahd.) (TM) In view of the above discussion, the addition made by the AO only relying on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 471099 Thus, the purchase of the gold jewellery is duly disclosed in the books of account. (c) Thus, the above jewellery totalling to 2193.593 gms ( 1667.26 +526.332) is duly disclosed. This disclosed jewellery is more than the jewellery of 2057.500 gms found in search. There is no material to hold that assessee and his family members have utilized the gold jewellery found in search dated 24.03.2000 or purchased thereafter. The observation of the AO that assessee could not link the jewellery found in earlier search with that found during the present search is misplaced in as such as the inventory of the jewellery found in earlier search is by aggregating the various items and the inventory of jewellery found in the present search is by aggregating the different items. However, the description of the items mentioned in the earlier search is also available in the present search. It is not the case of the AO that the jewellery found in earlier search or purchased thereafter has been utilized elsewhere. Hence, the entire jewellery found in search of the assessee is fully verifiable. Accordingly, the addition of ₹ 30,54,600/- made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue. 15. In our view, the statements recorded under Section 132(4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9.11.1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, the assessee on verification of the record claimsthat the gold jewellery was fully disclosed and he filed the return on 29.09.2013 without including the surrender made in respect of jewellery of ₹ 30,00,000/-. In assessment proceeding, the assessee filed the copy of the affidavit dated 18.09.2013 retracting the surrender made along with a detailed explanation as to how the jewellery is fully disclosed. The AO held that the search was conducted on 26.09.2012 and affidavits were filed on 18.09.2013 after lapse of about 357 days from the date of search and had the assessee committed mistake, the affidavit in this regard would have been filed immediately after completion of search. Therefore, in light of legal proposition laid down by the Hon ble Rajasthan High Court , there is clearly an inordinate delay in retraction and no justifiable explanation has been taken for such delay. Hence, the retraction of the statement recorded u/s 132(4) cannot be accepted in the instant case. 8. Once a statement is recorded under Section 132(4), such a statement can therefore be used as a strong evidence against the assessee in assessing the income. However, as held by the Hon ble High C ..... 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