2023 (8) TMI 386 - HC - Income Tax

Addition made on the basis of a survey report - Reliance on the statement recorded u/s 133A of directors - HELD THAT - As it is not in dispute that the assessee was not furnished with a copy of the survey report. This is an aspect which the Tribunal has noted in the impugned order. Concededly, the directors were not confronted with the contents of the survey report. Given this position, the Tribunal, in our view, quite correctly has concluded that since there was no corroborative material available for making addition, the assessment order, qua this aspect, could not be sustained. As observed in S. Khader Khan Son s case 2013 (6) TMI 305 - SC ORDER , there is a qualitative difference between the statement recorded under Section 133A and Section 132(4) of the Act. The statement recorded u/s 133A of the Act has no evidentiary value, since the officer concerned is not authorized to administer oath and record a sworn statement. This is in contradiction with the statement recorded u/s 132(4) of the Act, which is recorded on oath by an officer who is vested with necessary powers. No corroborative evidence was found to support the addition, we are not inclined to interfere with the impugned order passed by the Tribunal. No substantial question of law arises.

Summary

Issues:
The appeal concerns Assessment Year (AY) 2009-10. The main issue is the addition of Rs. 10 crores to the taxable income of the respondent/assessee based on a statement made by its directors during a survey conducted by the appellant/revenue.

Facts:
The respondent/assessee, a developer and builder, entered into agreements for various projects in the National Capital Region of Delhi. Real Gain Estates (P) Ltd. acted as its sole agent for booking and selling commercial shops and flats, receiving brokerage at the rate of 6.5%. A survey conducted on the respondent/assessee led to impounding of documents and recording of statements of directors, resulting in the addition of Rs. 10 crores to taxable income based on a statement by one of the directors, Mr. Krishan Kumar.

CIT(A) Order:
The Commissioner of Income Tax (Appeals) deleted the additions made by the Assessing Officer (AO) in the assessment order dated 27.12.2011. The appeal by the appellant/revenue with the Tribunal was against this order, which was affirmed by the Tribunal.

Appellant's Argument:
The appellant/revenue contended that the addition was justified as it was based on the directors' statements made voluntarily during the survey, indicating receipt of consideration in cash.

Respondent's Argument:
The respondent/assessee argued that the statements were recorded during the survey without the power to administer oath, and since the survey report was not furnished, the AO could not rely on it. The addition lacked corroborative material and could not be sustained.

Court's Decision:
The High Court held that the addition of Rs. 10 crores was solely based on the directors' statements made during the survey without any corroborative evidence. The statements, made to "buy peace of mind," were not supported by the survey report or confrontation with its contents. The Tribunal correctly concluded that the addition lacked evidentiary value and could not be sustained. The Court noted the qualitative difference between statements recorded under different sections of the Income Tax Act, emphasizing the lack of evidentiary value in statements recorded under Section 133A. Since no substantial question of law arose, the appeal was closed, upholding the Tribunal's decision.