Law:

Section:

Section 143, read with section 132, of the Income-tax Act, 1961 - Assessment - Additions to income - Assessment years 1992-93 and 1993-94 - Whether Assessing Officer cannot take note of any materials beyond those contained in return to assess income in excess of that reflected in return or to enhance assessee's tax liability without affording assessee an opportunity to produce evidence in support of return - Held, yes FACTS The appellant was a partnership firm carrying on the business of running a restaurant. On 22-9-1993 a search was conducted in its premises and in the course of which the books of account of the appellant were seized by the authorized officer under the Act. During the search and seizure made under section 132(1), the authorized officer recorded certain statements of one of its partners of the firm. The case of the appellant-firm was that the said partner was not a literate person and the income-tax authorities used force and coercion to compel him to sign the said statements which the said person did out of fear and compulsion. A copy of said statement as alleged by appellant was made available only in November 1993, whereafter said partner addressed a letter to the Assessing Officer retracting the statements made by him contending that in course of search neither any money, jewellery or other valuable articles were found, nor had remained unexplained or unaccounted for, thus, question of making any disclosure of such assets for availing immunity, therefor, under section 271(1)(c), read with section 132(4), did not arise at all. The Assessing Officer, however, while computing the total income of the appellant and to assess its tax liability, added Rs. 4 lakhs for relevant assessment years by way of an undisclosed income on the basis of statement made to that effect by the said partner of the appellant-firm at the time of search. On appeal the Commissioner (Appeals) deleted the addition made by the Assessing Officer. On appeal by the revenue, the Tribunal held that the appellant's partner had made his statementssuo motu under section 132(4) and on facts it was clear that there was neither an inducement or threat at the time of making the…

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