ITAT held that statement u/s 132(4) (of Income Tax Act, 1961) is binding but rebuttable

1. The assessee company is engaged in the business of real estate.. Search seizure operation was carried out by the department. Various assets/books of account and documents were found. The case was scrutinized U/s 153A (of Income Tax Act, 1961)/143(3) of the Income Tax Act, 1961 (In short the Act). The ld Assessing Officer issued notice on 06/09/2011 U/s 142(1) (of Income Tax Act, 1961) read with Section 153A (of Income Tax Act, 1961) for filing of return of income for the year under consideration and in its compliance, the return declared income of Rs. 13,67,790/- was e-filed on 24/01/2012. During the course of search, one of the main Director Shri Raj Kumar Mathur had admitted undisclosed income in his sworn statement recorded on 22/09/2010 U/s 132(4) (of Income Tax Act, 1961) to the tune of Rs. 47 lacs on account of undisclosed advance made to the different persons for purchase of land by the assessee company.

2. AO made addition of Rs. 34,90,000/- on account of undisclosed income not disclosed by the assessee in the return.

3. CIT(A) confirmed the addition by observing that the company advanced these money from the undisclosed source but it claimed that his advances were returned back thereafter subsequent advances were given.

4. On appeal, the ITAT held as under:

During the course of search, at the time of recording of statement, the main Director of the Company Shri Raj Kumar Mathur had categorically admitted that the company had made unaccounted payment to these persons on account of advance against the land purchased but transaction could not be materialized and advances returned back. The assessee by not disclosing the full disclosure in the return of Rs. 47 lacs had retracted from the statement given U/s 132(4) (of Income Tax Act, 1961). Further at the time of assessment proceedings the assessee filed affidavit to substantiate his returned income filed on account of disclosure. It is undisputed fact that these transactions were unrecorded/undisclosed but same time the cash has been returned back to these parties as admitted by the Director during the course of recording of statement itself. The affidavit was the further support against the contention made by the assessee during the course of search. It is also a fact that when unrecorded transactions are made, the concerned parties always become non-cooperative, therefore, it is difficult ITA No.685/JP/2014 M/s Shree Ram Balaji Developers Vs. ACIT to assessee either filed the confirmation or produced the concerned persons for verification with whom unaccounted transactions were made. The statement made U/s 132(4) (of Income Tax Act, 1961) is binding but rebuttable. As the Director of the company at the time of search in his statement had clear cut admitted these facts that he returned back the cash from these parties. The affidavit filed during the course of assessment proceedings is also an evidence as perEvidence Act. The case laws relied by the assessee for submission of affidavit are squarely applicable, therefore, we reverse the order of the ld CIT(A) and addition made by the ld Assessing Officer and confirmed by the ld CIT(A) is deleted.

5. In the result, the assessee's appeal is allowed. 

1 The assessee company is engaged in the business of real estate.. Search seizure operation was carried out by the department. Various assets/books of account and documents were found. The case was scrutinized U/s 153A (of Income Tax Act, 1961)/143(3) of the Income Tax Act, 1961 (In short the Act). The ld Assessing Officer issued notice on 06/09/2011 U/s 142(1) (of Income Tax Act, 1961) read with Section 153A (of Income Tax Act, 1961) for filing of return of income for the year under consideration and in its compliance, the return declared income of Rs. 13,67,790/- was e-filed on 24/01/2012. During the course of search, one of the main Director Shri Raj Kumar Mathur had admitted undisclosed income in his sworn statement recorded on 22/09/2010 U/s 132(4) (of Income Tax Act, 1961) to the tune of Rs. 47 lacs on account of undisclosed advance made to the different persons for purchase of land by the assessee company.

2 AO made addition of Rs. 34,90,000/- on account of undisclosed income not disclosed by the assessee in the return.

3 CIT(A) confirmed the addition by observing that the company advanced these money from the undisclosed source but it claimed that his advances were returned back thereafter subsequent advances were given.

4 On appeal, the ITAT held as under:

During the course of search, at the time of recording of statement, the main Director of the Company Shri Raj Kumar Mathur had categorically admitted that the company had made unaccounted payment to these persons on account of advance against the land purchased but transaction could not be materialized and advances returned back. The assessee by not disclosing the full disclosure in the return of Rs. 47 lacs had retracted from the statement given U/s 132(4) (of Income Tax Act, 1961). Further at the time of assessment proceedings the assessee filed affidavit to substantiate his returned income filed on account of disclosure. It is undisputed fact that these transactions were unrecorded/undisclosed but same time the cash has been returned back to these parties as admitted by the Director during the course of recording of statement itself. The affidavit was the further support against the contention made by the assessee during the course of search. It is also a fact that when unrecorded transactions are made, the concerned parties always become non-cooperative, therefore, it is difficult ITA No.685/JP/2014 M/s Shree Ram Balaji Developers Vs. ACIT to assessee either filed the confirmation or produced the concerned persons for verification with whom unaccounted transactions were made. The statement made U/s 132(4) (of Income Tax Act, 1961) is binding but rebuttable. As the Director of the company at the time of search in his statement had clear cut admitted these facts that he returned back the cash from these parties. The affidavit filed during the course of assessment proceedings is also an evidence as perEvidence Act. The case laws relied by the assessee for submission of affidavit are squarely applicable, therefore, we reverse the order of the ld CIT(A) and addition made by the ld Assessing Officer and confirmed by the ld CIT(A) is deleted.

7. In the result, the assessee's appeal is allowed. 

Case Reference-   BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM M/s Shree Ram Balaji Vs. Assistant Commissioner

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR