Addition of ₹37.20 Lakh Undisclosed Automobile Parts & Goods Stock as Taxable Income: ITAT Rules Retraction Invalid [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Raipur Bench upheld the addition of ₹37.20 lakh made on account of undisclosed stock found during a survey under Section 133A of the Income Tax Act, 1961, rejecting the assessee’s subsequent retraction as an afterthought.

The assessee, Rajinder Singh Bhasin, proprietor of Bhasin Automobiles, was subjected to a survey on 25 January 2011, where the department discovered excess stock valued at ₹37.20 lakh beyond the books of account. During the survey, Bhasin voluntarily admitted that the excess stock represented unaccounted income and agreed to pay taxes before 31 March 2011.

While filing his return, he retracted the admission, claiming the statement was made under fear and pressure. The Assessing Officer rejected this explanation, noting that the retraction came ten months later and lacked any supporting evidence. The addition was confirmed by the CIT(A), Bhopal, who observed that the assessee’s declaration was voluntary and based on physical verification of stock.

Before the Tribunal, the assessee argued that the surrender was involuntary and unsupported by proper verification.

Read More:Taxpayer Fails to Respond to SCN due to Ill Health: ITATRestores Appeal Against Additions on Poultry Farm Lease Rent [Read Order]

The bench comprising Judicial Member Partha Sarathi Chaudhury and Accountant Member Avdhesh Kumar Mishra found no merit in the claim, holding that the retraction was “a camouflage to defraud the Revenue.”

The tribunal stated that the addition was not based merely on the statement but on corroborative evidence, the physical excess stock and cash found during the survey. Tribunal cited the Supreme Court judgments, including A.V. Papayya Sastry v. Government of Andhra Pradesh and Friends Trading Company v. Union of India.

The bench observed that “Reverting to the facts of the present case, the assessee himself admitted that such excess stock found was his undisclosed stock outside the books of account and he had admitted to pay taxes. But subsequently, he retracted saying that he made statement due to fear and coercion, for which, there is no evidence on record.

That on careful examination of the facts on record, it is held that such retraction is nothing but an afterthought of the assessee and this kind of conduct should be nipped in the bud itself since addition made by the Department is not only on the basis of statement but on the basis of physical excess stock/cash which was available in the premises of the assessee hence backed by corroborative evidences.”

Accordingly, the ITAT dismissed the appeal

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates