Addition merely based on statement u/s 132(4) without collaborative evidence is unsustainable

DCIT Vs Sudhir Kumar Agarwal (ITAT Indore)

ITAT Indore held that addition on the standalone basis of statement of assessee u/s 132(4) of the Income Tax Act cannot be held as sustainable in absence of collaborative evidence found in support of such addition.

Facts- A search u/s 132 was conducted on 21.10.2011 upon one “Sagar Group” of Bhopal and the assessee is also clubbed as a part of that group. Pursuant to search, assessments of six years from AY 2006-07 to 2011-12 were framed u/s 153A/143(3) and AY 2012-13 was framed u/s 143(3). Present appeal relates to AY 2012-13 for which the AO made assessment u/s 143(3) at a total income of Rs. 5,65,65,450/- after making several additions. The assessee carried matter in appeal, contested those additions and succeeded. Now, the revenue has come in next appeal before us assailing the order of first appellate authority.

Conclusion- The assessee has also placed on record the copy of cash-book of firm which has been verified by Ld. CIT(A) according to which the firm had a total cash balance of Rs. 13,50,334/- on the date of search. This finding given by Ld. CIT(A) could not be controverted by revenue. We find that the balance of Rs. 13,50,334/-shown by cash-book is sufficient to cover the imprest cash of Rs. 4,71,000/­. Thus, there is no infirmity in the explanation given by assessee to lower-authorities. Therefore, in our view, the CIT(A) is fully justified in deleting the addition.

Hon’ble High Court of Gujarat in the case of Kailasben Mangarlal Choksh vs. CIT held that merely on the basis of admission of assessee, the assessee could not have been subjected to addition, unless and until some collaborative evidence is found in support of such admission. Meaning thereby addition on the standalone basis of statement of assessee u/s 132(4) of the Act cannot be held as sustainable in absence of collaborative evidence found in support of such addition.

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