The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 55 lakh as undisclosed income, ruling that the addition could not be made solely on a retracted statement without corroborating evidence.
Harish Jain,appellant-assessee,was part of a search and seizure operation on 07.09.2017 related to the Resonance Group, Kota. Following the search, his case was transferred to the Central Circle-Kota. The assessee, who earned income from salary, house property, and other sources, filed a return of income on 18.07.2018, declaring Rs. 15,67,000.
During the search, an agreement for the sale of a property, Plot No. 2-PA-8, was found at the appellant’s premises. The sale price in the agreement was Rs. 40 lakh, but a previous agreement showed the property was purchased for Rs. 90 lakh. The assessee admitted that the property was bought for Rs. 95 lakh, with Rs. 40 lakh paid by cheque and Rs. 55 lakh paid in cash from undisclosed sources.
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The assessee acknowledged the Rs. 55 lakh as unreported income for FY 2011-12. A notice was issued to the assessee, asking why the amount should not be added as unaccounted investment. The assessee later retracted his statement, claiming it was made under pressure. However, the Assessing Officer(AO) rejected the retraction, as the appellant, being a Chief Finance Officer, should have been familiar with the legal process.
The AO relied on a Supreme Court decision that upheld statements made during a search with independent witnesses present. As a result, the Rs. 55 lakh in cash was added as undisclosed income for AY 2012-13.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee aggrieved by the order of AO appealed before the Commissioner of Income Tax(Appeals) [CIT(A)], who later dismissed the appeal.The assessee then appealed before the tribunal.
The two member bench comprising Dr.S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) heard the arguments and reviewed the records and found them to be separate transactions. The first, executed in 2008, involved a ₹95,00,000 sale with payments linked to a bank loan. The second, from 2011, showed a sale at ₹40,00,000, with ₹35,00,000 paid directly to the bank and ₹5,00,000 to the seller.
The bench noted that no incriminating material was found, and the AO did not conduct an independent inquiry. Since the assessment year was 2012-13, the ITAT held that no addition could be made without incriminating evidence.
Citing Supreme Court and jurisdictional High Court rulings, the ITAT ruled that no addition could be made based solely on a retracted statement without corroborating evidence. Accordingly, the addition was deleted.
In short,the appeal filed by the assessee was allowed.
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