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| The Tax Publishers2020 TaxPub(DT) 5092 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 132(4)
AO could not make addition solely on the basis of statement under section 132(4) without any supportive material.
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Search and seizure - Statement recorded under section 132(4) - Evidentiary value without cogent material -
Search under section 132 was conducted in the 'Premier Group' cases. Premier group was in the business of construction of apartments and completed 18 projects in the brand name of 'Bommarillu'. In the case of HUF status also, assessee carried on construction activity in the name of M/s. Premier Projects and Paruchuru Satish Kumar was the main person of the group. During search, it was observed by department from Whatsapp messages of assessee's accountant Motamarri Naga Anil Kumar receipt of unaccounted sale consideration in respect of some flats. A statement under section 131 was recorded from accountant wherein he stated that Whatsapp messages represented the cash received by the group over and above sale consideration. Assessee explained that additional receipts were received for earning the additional work, however, AO made addition. Held: AO made addition solely on the basis of statement recorded under section 1322(4) without considering other issues and facts involved in construction with regard to the additional expenditure related to construction of flats. No other evidence was brought on record by AO to controvert the statement regarding receipt of additional receipts for additional work carried out by the assessee. This fact was supported by the information found from the table of the accountant indicating additional receipt as well as expenditure. Assessee had explained during the course of assessment proceedings that additional income of Rs. 750 per sq.ft. was accepted without taking into consideration of the land owners share. From assessee the beginning explained that additional receipts were received for earning the additional work. All these facts and circumstances supported that only profit was required to be brought to tax but not entire receipts. Assessee had admitted the income @ 30% on additional receipts which appears to be fair and reasonable. AO could not make addition solely on the basis of statement under section 132(4) without considering the entire facts and the expenditure.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16 & 2016-17
IN THE ITAT, VISAKHAPATNAM BENCH
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