CIT Vs. O. ABDUL RAZAK

JUDGEMENT

(1.) The above appeal is filed by the Revenue against the order of the Tribunal in the appeal of the assessee deleting certain additions made by the Assessing Officer confirmed by the first appellate authority. The assessee, who was adjudged as a "resident not ordinarily resident" by the first appellate authority and confirmed by the Tribunal, was before the Tribunal challenging certain additions made by the Assessing Officer for the block period 1988-89 to 1998-99. Pursuant to a search conducted at the residential premises of the assessee on October 22, 1998, based on the seized records as also the statement recorded under section 132(4) of the Income-tax Act, the Assessing Officer proceeded to assess the assessee, for the block period 1988-89 to 1998-99. On the basis of the seized documents, recovered during search, relating to purchase of land as also the sworn statement recorded under section 132(4), the Assessing Officer computed the undisclosed income. The addition made with respect to the purchase of lands was on the strength of the admission made by the assessee regarding the actual amount paid as disclosed voluntarily in his sworn statement and the amounts disclosed in the cash flow statement corroborated by the recovery and seizure of title deeds. Personal expenses was estimated on the basis of the admissions made, again in the statement under section 132(4) and the attendant circumstances. The adoption of the statement made under section 132(4) as evidence for the purpose of assessment was substantially confirmed in first appeal. The Tribunal, however, finding the materials and the statement under section 132(4) as being devoid of evidentiary value deleted three of the additions.

(2.) The Revenue in the present appeal before this court challenges the findings of the Tribunal based on which the additions are deleted. Questions raised are on the evidentiary value of the statement recorded from the assessee under section 132(4) and also the materials seized in search based on which undisclosed income is computed. The Revenue's grievance is against the deletion by the Tribunal with respect to three additions made by the Assessing Officer and confirmed by the first appellate authority. The first of these is the addition made with regard to the actual money paid by the assessee for purchase of three properties respectively at Tirurangadi, Thenhipalam and Francis Road in the years 1993-94, 1994-95 and 1995-96 as also the actual money paid for the purchase and subsequent development of another property at Tirurangadi for the assessment year 1996-97. The total addition made with respect to these four transactions came to Rs. 35,37,227. The said additions were made by the Assessing Officer placing reliance on the title deed seized corroborated by the statement recorded under section 132(4) on October 22, 1998, both in the course of search made at the assessee's residence. The second addition was with respect to the personal expenses of the assessee estimated by the Assessing Officer, again on the strength of the statement made under section 132(4) of the Income-tax Act, as also the attendant circumstances at Rs. 5,11,000. Last of the additions disputed by the assessee and allowed by the Tribunal was an amount of Rs. 3,00,000 which the assessee claimed as an NRI loan in his cash flow statement and later in a reply stated to be a loan from his elder brother.

(3.) The first appellate authority made some modifications with respect to the addition with regard to one item of the property, which is not challenged by the Revenue and confirmed the additions under all other heads. The Tribunal, while considering the additions, made with respect to the purchase of properties held that the statement recorded under section 132(4) cannot be the sole ground for making addition and the Assessing Officer ought to have obtained sufficient evidence to make the additions especially in the context of the statement under section 132(4) of the Act having been retracted by the assessee. The addition made on account of personal expenses was deleted on the ground that since the Assessing Officer had made additions with respect to the costly items purchased, there cannot be any further addition on account of personal expenditure. The addition with respect to Rs. 3,00,000 was also deleted on the ground that nothing has been brought on record to show that any materials were seized in the course of search.