Income Tax Act, 1961

--Income from undisclosed sources--Addition under section 69Addition on basis of statement recorded during search--During the course of search, the statement of partner of assessee-firm was recorded where he surrendered Rs. 20 lacs as income on which tax would be paid. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by partner was not declared by assessee-firm. Assessee contended that declaration was made after persuasion which was because of coercion exerted by the search officers thus the firm had no undisclosed income. Assessee's said retraction was not accepted by any of the authorities below as the statement given by assessee appeared to be voluntarily given statement disclosing undisclosed income. Held : The statement recorded under section 132(4) was evidence but its reliability depended upon the facts of the case and particularly surrounding circumstances. None of the authorities gave any reason as to why assessing officer did not proceed further to enquire into the undisclosed income as admitted by assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also had not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from assessee, in that situation what had prompted assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee was not the assessment of evidentiary value of the evidence when such statement was self-incriminating.

Income Tax Act, 1961, Section 69 & Section 132(4)

IN THE Jharkhand High Court

Prakash Tatia, C.J. & P. P. Bhatt, J.

Shree Ganesh Trading Co. v. CIT