2013 (7) TMI 542 - HC - Income Tax

Validity of statement made during survey u/s 133A - Whether the Tribunal erred in confirming and not appreciating the facts the order of Respondent solely on the basis of statement made during the survey under section 133A which has no evidentiary value - Held that - explanation of the assessee was found to be completely not acceptable - Assessing Officer as well as higher authorities have given cogent reasons for rejecting such theory - assessees explanation that such amount was being carried for being deposited and that same was withdrawn from the account of a sister concern few days back - When cash was admittedly found in possession of the employee of the assessee, it cannot be stated that additions were made on the basis of bare statement recorded under section 133A - If assessee was to pay any sum he could have paid the same through cheque as both the parties were having their bank accounts and there was no need to withdraw any sum in cash and then deposit the same to the account - assessee has failed to give any cogent evidence in support of his contention that a sum of money robbed was actually out of money withdrawn from the bank appeal decided against assesse.

Summary

Issues:
1. Addition of Rs.20 lakh as undisclosed income based on a statement made during a survey under section 133A.
2. Whether the statement made by the assessee during the survey can be the sole basis for confirming the addition of income.

Issue 1: Addition of Rs.20 lakh as undisclosed income

The case involved the addition of Rs.20 lakh as undisclosed income of the assessee. The incident leading to this addition occurred when the employees of the assessee firm were robbed of cash amounting to Rs.20 lakh while traveling on a scooter. Subsequently, during a survey conducted under section 133A of the Income Tax Act, the assessee disclosed additional income of Rs.50 lakh, including the Rs.20 lakh in question. The assessee agreed during the survey that the cash of Rs.20 lakh represented unaccounted money. The Tribunal confirmed this addition, noting that the explanation provided by the assessee regarding the origin of the cash was not accepted as it lacked concrete evidence. The Tribunal found that the assessee's explanation was an afterthought and failed to provide sufficient evidence to support the claim that the amount was withdrawn from a bank account.

Issue 2: Validity of the statement made during the survey

The main contention raised by the assessee was regarding the evidentiary value of the statement made during the survey under section 133A. The assessee argued that the statement alone cannot be the sole basis for making additions to the income, especially when retracted later with supporting evidence. However, the Tribunal upheld the addition, emphasizing that the assessee's explanation was not acceptable and lacked credibility. The Tribunal pointed out discrepancies in the assessee's claims, such as the absence of an account for the alleged recipient of the cash. The Tribunal concluded that the assessee failed to provide substantial evidence to substantiate the claim that the cash amount was withdrawn from a bank account as stated.

In conclusion, the High Court dismissed the tax appeal, stating that no question of law arose in this case. The Court upheld the Tribunal's decision to add the Rs.20 lakh as undisclosed income, emphasizing the lack of concrete evidence and credibility in the assessee's explanation. The judgment highlights the importance of providing substantial evidence to support claims during income tax assessments and the significance of the credibility of statements made during surveys under section 133A of the Income Tax Act.