Dr. Purvesh Mansukhlal Shah Vs ITO (ITAT Ahmedabad)
Conclusion: Assessee could not have been subjected to additions in case of search/survey operations merely on basis of statement recorded under section 132(4) unless and until some corroborative evidence was found in support of such admission.
Held: Assessee was subjected to a survey under Section 133A where he disclosed ₹14 crores as undisclosed income for the assessment year (AY) 2012-13. He admitted to earning this income through unaccounted cash from land dealings as a land broker. However, in the return filed for AY 2012-13, he declared only ₹94.19 lakhs and did not include the ₹14 crores. Earlier, for AY 2011-12, assessee had filed a return declaring ₹22.19 crores, which included ₹22 crores admitted during the survey as investments in the names of family members. This return was accepted by AO. Assessee later filed a writ petition before High Court, seeking access to documents from the survey. The court directed AO to provide the documents or explain their absence. During assessment, AO added ₹14 crores to assessee’s income for AY 2012-13, relying on his survey statement and citing frequent property transactions by him and his family as corroborative evidence. Assessee had retracted his statement, claiming it was made under coercion and lacked documentary support. However, AO rejected this retraction, noting it came after 16 months and lacked credibility. Judicial precedents, including Dr. Dinesh Jain v. Income Tax Officer, were cited to justify the addition. CIT(A) noted that assessee had previously disclosed ₹22 crores as unaccounted income from land dealings for AY 2011-12, aligning with the survey statement. Claims of coercion were dismissed, as the Gujarat High Court had already rejected them, and the delayed retraction was seen as an afterthought. The addition of ₹14 crores as undisclosed income was upheld, and the appeal was dismissed. Assessee dissatisfied by the order appealed before the tribunal. It was held that in the case of Kailashben Manharlal Chokshi vs. CIT 174 taxman 466 (Gujarat), it was concluded that no additions could be made merely on the basis of statement recorded under section 132(4). Despite the fact that the said statement was later on retracted, no evidence had been furnished by the revenue authority. Therefore, merely on the basis of admission, assessee could not have been subjected to such additions, unless and until some corroborative evidence was found in support of such admission. Further with Circular Number F. 286/2/2003-IT (Inv.) issued by CBDT, it was advised that there should be focus and on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be adversely. Further in respect of pending assessment proceedings also, AO should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Based on the lack of corroborative evidence, Tribunal held that the addition of ₹14 crores was unsustainable and directed its deletion.
