GROWMORE ENTERPRISES PVT. LTD.,VADODARA vs. THE DCIT, CIRCLE-1(2) NOW CIRCLE-1(1)(1), VADODARA

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ITSSA 30/AHD/2023Status: DisposedITAT Ahmedabad21 June 2024AY 2010-1111 pages
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What did the Tribunal hold?

The Tribunal held that the addition of Rs. 15,00,000/- cannot be sustained solely based on the statement recorded under section 132(4) of the Act without any corroborative evidence. The Tribunal considered the judgment of the Hon'ble Gujarat High Court in *Kailashben Manoharlal Choksi Vs. CIT* (Supra), which states that no addition can be made merely on a section 132(4) statement unless supported by corroborative evidence. The AO and CIT(A) did not point out any independent evidence to substantiate the addition. The Tribunal also noted that the assessee had consistently provided explanations for some details and showed that the admission made during the search was not entirely correct. Considering the alternate plea and the explanations provided for receipts and expenses, the Tribunal directed the AO to add only the net difference of Rs. 1,63,600/- to the income of the assessee for AY 2010-11. The issue of whether the statement under section 132(4) is applicable in section 153C proceedings was implicitly addressed by finding that it cannot be the sole basis for addition without corroboration.

What were the facts?

A search and seizure operation was conducted on February 11, 2011, under section 132(1) of the Income Tax Act, 1961, on the Dhanani Group. The residential premises of Shri Salim Sherani, Director of the assessee-company, Growmore Enterprises Pvt. Ltd., were also searched. During the search, Shri Salim Sherani voluntarily disclosed an additional income of Rs. 15,00,000/- for Financial Year 2009-10 in the hands of the assessee-company, stating it was to cover unexplained expenses and cooperate with the department. The Assessing Officer (AO) added this amount to the total income. The Commissioner of Income Tax (Appeals) confirmed the addition. The assessee is appealing this order for Assessment Year 2010-11.

What were the issues?

1. Whether the statement recorded under section 132(4) of the Income Tax Act, 1961, is applicable in proceedings under section 153C read with section 143(3) of the Act, and can form the sole basis for addition without corroborative evidence? (Question of law) - Assessee's contention: The addition of Rs. 15,00,000/- was made solely on the basis of a statement under section 132(4) without supporting evidence. The disclosure was made to buy peace and avoid litigation, and some documents did not pertain to the relevant financial year or the assessee. Relied on *Kailashben Manoharlal Choksi Vs. CIT* (2007) 220 CTR 138 (Guj). - Revenue's contention: The statement given under section 132(4) has substantial evidentiary value and cannot be retracted without credible evidence. The disclosure was made voluntarily in the presence of the Chartered Accountant. 2. If the addition is sustained, should it be the net difference between receipts and expenses (Rs. 1,63,600/-) instead of the entire disclosed amount of Rs. 15,00,000/-? (Question of mixed law and fact) - Assessee's contention: Alternatively, if the addition is sustained, only the net difference of Rs. 1,63,600/- should be added.

Which sections of the Income-tax Act were involved?

Section 132(4),Section 153C,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER

For Appellant: Ms. Urvashi Sodhan, AR
Hearing: 13/06/2024Pronounced: 21/06/2024

आदेशानुसार/ BY ORDER,

स�या�पत ��त //True Copy//

सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, ITAT, Ahmedabad

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