2021 (10) TMI 77 - AT - Income Tax

Assessment u/s 153A - Whether incriminating documents found during the course of search u/s 132? - unexplained cash credit u/s 68 - addition based on statement - bogus long term capital gain in the statement made under section 132(4) - HELD THAT:- Assessee made reference to CBDT Circular Bearing no.286/2003 dated 103.2003 which has been further explained in the subsequent circulars. The Board has emphasised that no disclosure be taken from the assessee and endeavour be made for collection of the material because according to the Board the Department used to take voluntary disclosure under section 132(4) of the Act and stopped further investigation. This type of declaration later on retracted by the assessee nor honoured in the return filed by them, and the department failed to corroborate such disclosure. Thus, according to him, there is no disparity of such event on this point. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one.

It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of addition, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence.

As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The CBDT is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. It is pertinent to observe that in a large number of authoritative pronouncements, it has been held that merely on the basis of declaration addition should not be made. The alleged declaration should be supported with unexplained expenditure or assets discernible in the seized material during the course of search.

After going through well reasoned order in the light of material brought to our notice, we are of the view that issue in dispute in all these appeals is squarely covered by order of the Co-ordinate Bench in the case of Shri Brij Bhusan Singal and others [2019 (1) TMI 698 - ITAT DELHI], and hold that the long term capital gain declared by the assessee and claimed as exempt under section 10(38) are to be treated as genuine and they are not to be assessed as unexplained cash credit under section 68 of the Act. - Decided in favour of assessee.