2016 (5) TMI 261 - AT - Income Tax

Undisclosed income of the assessee - statement recorded during the survey u/s. 133A - Held that - Addition made on the basis of the statement in the present case recorded u/s. 133A is not sustainable in the eyes of law, hence, we delete the addition of ₹ 1.25 crores made by the AO and confirmed by the Ld. CIT(A) - Decided in favour of assessee

Summary

Issues Involved
1. Validity of addition of ?1,25,00,000/- based on the statement recorded during the survey under Section 133A of the Income Tax Act, 1961.

Issue-wise Detailed Analysis

1. Validity of Addition of ?1,25,00,000/- Based on Statement Recorded During Survey Under Section 133A

Background and Facts:
The assessee filed a return of income declaring ?4,43,912/-. A survey under Section 133A was conducted on 20.10.2008, during which the assessee made a voluntary disclosure of additional income of ?1,25,00,000/-. However, this amount was not declared in the return filed. The Assessing Officer (AO) issued notices and conducted scrutiny, ultimately adding ?1.25 crores as undisclosed income, concluding that the retraction by the assessee was an afterthought and the surrender was not made under duress.

Assessee's Arguments:
The assessee argued that the declaration was made under pressure and no incriminating documents were found during the survey. The return was filed based on actual books of accounts. The assessee cited various judicial decisions, including the ITAT Delhi decision in the case of M/s IIBS Infonet (P) Ltd. vs. ACIT, which held that additions based solely on statements recorded under Section 133A without corroborative evidence are not sustainable.

Revenue's Arguments:
The Revenue contended that the addition should be upheld as the surrender was voluntary and not made under coercion, and the retraction was an afterthought.

Tribunal's Findings:
The Tribunal reviewed the records, including the declaration, withdrawal, and affidavit filed by the assessee. It noted the CBDT Instruction No. 286/2/2006/IT/(Inv) dated 10.3.2003, which advises against making additions based solely on confessions during surveys without credible evidence. The Tribunal found considerable merit in the assessee's reliance on judicial precedents and the CBDT instruction.

Judicial Precedents Cited:
- CIT vs. Khader Khan Sons (2008) 300 ITR 157 (Madras) and confirmed by the Supreme Court (2012) 25 taxmann.com 413 (SC): Held that statements recorded under Section 133A have no evidentiary value.
- Paul Mathew & Sons vs. CIT 263 ITR 101 (KER): Statements recorded during surveys are not evidence.
- Sanjeev Kumar Pandhi vs. CIT 305 ITR 101 (P&H): Additions based on survey statements without corroborative evidence are not valid.
- CBDT Instruction dated 10.3.2003: Advises against making additions based solely on survey statements.

Conclusion:
The Tribunal concluded that the addition of ?1.25 crores based solely on the statement recorded under Section 133A is not sustainable. It relied on the CBDT instruction and judicial precedents, emphasizing that statements recorded during surveys do not have evidentiary value unless corroborated by other evidence. The addition was deleted, and the appeal of the assessee was allowed.

Order:
The appeal filed by the assessee was allowed, and the addition of ?1.25 crores made by the AO and confirmed by the CIT(A) was deleted. The order was pronounced in the Open Court on 28/04/2016.