MADHU SINGLA,DEHRADUN vs. DCIT, CENTRAL CIRCLE, DEHRADUN

The assessee is an individual, derived its income from salary, business, capital gain etc. Search u/s 132 was conducted on 22.07.2015 on Golden Manor Group. During search, documents belonging to assessee were found. Notice u/s 142(1) was issued on 30.03.2017. In response to which assessee filed return on 14.8.2017 of Rs. 576240/-. 3. During the course of search father of assessee Sri. Thackur Singla surrendered Rs. 20 lacs in the hands of the assessee in statement recorded u/s 132(4) on 22.07.2015. In response to Question No. 35, the assessee also agreed for the same and surrendered the above sum. However, while filing the return of income the assessee did not offer the above sum. On questioned, assessee submitted that vide letter dated 23.07.2015 to the Joint Director of Income Tax (Investigation), Dehradun he has already retracted the surrender. Subsequently, also on the same date his father has also retracted the above statement and further communicated to the respective authorities. According to the assessee such retraction of surrender is unchallenged by revenue. He further submitted that there is no material available with the revenue based on which the above surrender was extracted. He also submitted that there are no materials found during search which can even remotely connect to any undisclosed income of equivalent sum in the hands of the assessee. He submitted that even cheques handed over have not been deposited by revenue. Therefore it is apparent that surrender is bald. The AO rejected the contention of the assessee stating that the retraction is bad and without any evidence. Therefore, Rs. 20 lakhs were added in assessment order u/s 143(3) of the Act dated 31.12.2017 at the total income of Rs. 2576420/-. The assessee contested the above addition before the ldCIT (A) who rejected the explanation of the assessee and dismissed his appeal. Therefore, the assessee is in appeal before us. 4. The ld AR submitted that the surrender was made at the pressure of the search party and it does not have any evidence. The statement was retracted and therefore, could not have been relied upon by the ld AO to make the addition. He further relied upon the circular issued by CBDT as well as decision of the several courts to support his contention. Page | 2

The ld DR vehemently supported the order of the lower authorities. He submitted that when assessee has made this surrender in fact he is in possession of the evidence of the concealed income and therefore, burden cannot be put on the ld AO to show that surrender is based on the certain evidence. 6. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The fact is that the assessee disclosed a sum of Rs. 20 lacs in his hands under a statement made u/s 132(4) of the Act based on the statement of his father. Therefore, it is important to look at the statement made u/s 132(4) of Mr. Thackur Singla to determine whether the disclosure was based on some evidence or not. Apparently, in assessment order as well as in the appellate order no evidence was disclosed based on which the father of the assessee disclosed the sum. Further, in the statement u/s 132(4) of the Act of the assessee in reply to question No. 35, where assessee has disclosed Rs. 20 lacks on his own, also does not have any discussion about the material based on which the disclosure is made. No doubt the disclosure made for the firm of Golden Manor may have other evidence, however in the case of the impugned addition of Rs. 20 lakhs; we do not find any mention about evidence of unaccounted income. It is also admitted by revenue that the assessee has retracted the statement immediately after the search that is almost within 10 days of the search. Further the circular of CBDT dated 10.03.2003 also discourage revenue from making an addition merely on the basis of statement or confession without any evidence. Further had there been any evidence ld AO should have made addition of that amount and not Rs 20 Lakhs. In view of this, we do not find any reason to sustain the order of the lower authorities. Accordingly, the ld AO is directed to delete the addition of Rs. 20 lacs. Orders of the lower authorities are reversed and appeal of the assessee is allowed.