2013 (6) TMI 723 - AT - Income Tax

Assessment u/s 153A - unexplained investment - Held that - The pattern of the questions put to the assessee during the search of the premises shows that whatever recorded in these statements is not true. Only on the basis of presumption that large scale construction was going on at the school building of the trust and hospital of the trust cannot be made a basis for addition. The Assessing Officer should have ascertained the investment by way of referring the case to the DVO if he has any doubt in this regard. No evidence regarding any anonymous donation by the trust was found and seized and nothing has been made out by the Assessing Officer in the assessment. The other assessments u/s 153A of the Act in assessee s case for Assessment Year 2001-02 to 2006-07 have been made without any addition. Thus in our considered view no incriminating evidence was found against the assessee which could suggest or show that unexplained investment has been made to the tune of Rs. 15 crores and such income has been utilized or invested as stated by the assessee in the retracted statement. Nothing of such sort borne out of the facts. In our considered view no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assessee - Decided in favour of assessee

Issues Involved:
1. Validity of addition based on retracted statement under Section 132(4) of the Income-tax Act, 1961.
2. Evidentiary value of statements made during search operations.
3. Requirement of corroborative evidence for additions.
4. Impact of retraction on the validity of the statement.
5. Role of the CBDT instructions regarding confessions during search and seizure operations.

Issue-wise Detailed Analysis:

1. Validity of Addition Based on Retracted Statement under Section 132(4):
The primary issue was whether the addition of Rs. 15 crores based on the statement recorded during the search operation under Section 132(4) of the Income-tax Act, 1961, could be sustained. The CIT (A) deleted the addition, noting that the statement was retracted within six days, and no incriminating material justifying such an addition was found during the search. The Tribunal upheld this view, emphasizing that the addition could not be sustained without corroborative evidence.

2. Evidentiary Value of Statements Made During Search Operations:
The revenue argued that statements recorded during search operations have significant evidentiary value, citing the Supreme Court's decision in the case of Surjeet Singh Chhabra vs. UOI. However, the Tribunal observed that the statement in question was recorded after a prolonged search of 28 hours, which could have led to the assessee being tired and frustrated. The Tribunal also noted the lack of incriminating documents or evidence found during the search to support the statement.

3. Requirement of Corroborative Evidence for Additions:
The Tribunal relied on several judicial precedents, including the case of Kailashben Mangarlal Chokshi vs. CIT, which held that mere admission without corroborative evidence cannot justify additions. The Tribunal found that no documents or evidence were seized during the search to corroborate the statement regarding speculative business and investments in shares and gold. The Tribunal emphasized that additions based solely on statements without supporting evidence are not sustainable.

4. Impact of Retraction on the Validity of the Statement:
The assessee retracted the statement within six days of the search, and the Tribunal noted that the Assessing Officer did not pursue further investigation to disprove the retraction. The Tribunal highlighted that the retraction was valid in the absence of any incriminating documents or evidence. The Tribunal also referred to the case of CIT, Ranchi vs. Ravindra Kr. Jain, which held that the Assessing Officer must collect more evidence if part of the admission is found incorrect.

5. Role of the CBDT Instructions Regarding Confessions During Search and Seizure Operations:
The Tribunal referred to the CBDT Instruction No.F.No.286/2/2003-IT (Inv.II) dated 10.03.2003, which advises against obtaining confessions of undisclosed income without credible evidence during search and seizure operations. The Tribunal noted that the instruction emphasizes the collection of evidence rather than relying on confessions. The Tribunal found that the search party did not focus on collecting evidence to support the statement, and no credible evidence was found to justify the addition.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT (A)'s order to delete the addition of Rs. 15 crores. The Tribunal concluded that no incriminating evidence was found during the search to support the statement, and the retraction was valid. The Tribunal emphasized the need for corroborative evidence for additions and referred to judicial precedents and CBDT instructions to support its decision. The appeal was dismissed, and the order was pronounced on June 20, 2013.

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