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2015 (8) TMI 373 - DELHI HIGH COURT

2015 (8) TMI 373 - DELHI HIGH COURT - TMI - Assessment of undisclosed income - addition on the basis of noting on the loose papers recovered during search or on account of a statement recorded of the Respondent Assessee during the course of search - ITAT deleted addition - Held that:- There is no retraction as such by the company of its letter dated 1st September 2006 or of any of the other statements made subsequently. Further, the statement made by the Respondent Assessee on 12th September 200 .....

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ot be said to be a categorical admission by the Respondent Assessee that the above income had been earned by him in his individual capacity. The cumulative effect of the letter dated 1st September, 2006 and both the statements rendered them unreliable. There was no other corroborative material. In the circumstances, the course adopted by the CIT (A), and concurred with by the ITAT, to determine the undisclosed income on the basis of loose papers found during the search does not appear to be erro .....

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he question sought to be urged is whether the ITAT erred in upholding the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which in turn held that the income of the Respondent Assessee was to be determined on the basis of the undisclosed income as per the noting on the loose papers recovered during search and consequently deleted the addition of ₹ 3,07,00,000/- which was made on account of a statement recorded of the Respondent Assessee during the course of search. 3. The central .....

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was being made by the company and not by the Respondent Assessee in his individual capacity. 4. It transpires that the above letter was followed by other letters and statements made on 8th and 12th September 2006. The ITAT has pointed out a contradiction in the answers given in the subsequent statements by the Respondent Assessee where he suggested that the said income of ₹ 7 crores was partly earned by him and partly by Mr. Mahesh Kumar Gupta. The ITAT in the impugned order has pointed ou .....

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n examining the loose papers the ITAT held that the only addition which can be sustained is ₹ 7, 90,000. 5. Mr. Rohit Madan, learned Senior Standing counsel for the Revenue placed reliance on the decision of the Allahabad High Court in S.C. Gupta v. Commissioner of Income Tax [2001] 248 ITR 782 (All) and submitted that even a retracted statement made during the course of search could form the basis of an assessment. 6. The Court finds that the said decision is distinguishable in its applic .....

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