2024 (8) TMI 177 - AT - Income Tax

Addition solely on the basis of statement recorded during the course of survey action u/s 133A - whether no corroborative evidences/findings were brought on record by the Revenue? - HELD THAT - There is no definition in the Act as to what constitutes a 'statement'. The dictionary meaning of 'statement' is 'something that is said formally and officially either orally on in written form which either confirms or denies any fact The clause (iii) of s/s (3) of section 133A of the Act empowers an income tax authority to record statement of any person which may be useful for or relevant in connection with ongoing survey proceedings. This provision however does not specify as to whether such statement is to be recorded on oath or otherwise, because a Statement recorded on oath carries evidential value and automatically binds the assessee unlike the statement recorded otherwise than on oath. In the instant case, admittedly the partner of the assessee firm in a statement recorded u/s 133A has admitted the impugned sum as an additional income of his firm towards probable errors omissions which was unknown to both the rival parties at the time of survey. The said disclosure/admission was simply made under the pretext that the Revenue may at any time thereafter would discover the same and probably tax it as non-business income of the assessee. As in the ITR filed the assessee offered all the additional income admitted by it in the statement recorded u/s 133A of the Act but the impugned sum, for the reasons that both the parties could neither discover any error or omission nor there was any in the records, books documents etc., came to surface. Insofar as the retraction of statement is concerned, unlike admission made in statement recorded u/s 133A of the Act, the assessee may specifically be required in writing to retract the admission made on statement on oath u/s 132 of the Act. The non-inclusion of admitted sum/amount in the return of income filed by the assessee itself solitarily sufficient to constitutes retraction from the admission so made while recording the statement u/s 133A of the Act. There is no separate written retraction requirement is fastened upon assessee either u/s 133A or any other provisions of the Act, therefore such requirement cannot be created one for the purpose of assessment/adjudication. The impugned addition made by the AO and sustained in appeal by the Ld. CIT(A) is founded merely on the basis of admission made u/s 133A of the Act but it badly lacked by corroborative evidence of presence of any errors or omissions in the records, hence deserves to be reversed, ordered accordingly. Assessee appeal allowed.

Summary

Issues:
Appeal against addition of undisclosed income based on statement recorded during survey action under section 133A of the Income-tax Act, 1961 without corroborative evidence.

Detailed Analysis:
1. Facts of the Case: The assessee, a partnership firm engaged in retail trading, had a survey action under section 133A of the Act resulting in the partner admitting undisclosed income. The Assessing Officer (AO) added the undisclosed income to the total business income declared by the assessee, leading to an assessment under section 143(3) of the Act.

2. Grounds of Appeal: The assessee contested the addition of undisclosed income in the first appeal, arguing that the AO erred in confirming the addition solely based on the statement recorded during the survey action without any corroborative evidence.

3. Legal Position: The main issue in the appeal was the permissibility of adding undisclosed income based on a statement recorded during a survey action under section 133A without corroborative evidence. The absence of a specific definition of 'statement' in the Act was noted, and the significance of recording statements on oath for evidential value was highlighted.

4. Precedent: The judgment referred to a High Court case and a Supreme Court decision clarifying that section 133A of the Act does not empower tax authorities to examine a person on oath, thus statements recorded under this section do not automatically bind the assessee.

5. Decision: The Tribunal found that the addition of undisclosed income was solely based on the admission made during the survey action without any corroborative evidence of errors or omissions in the records. As the assessee had included all additional income admitted in the statement except the disputed sum in the return, the Tribunal held that the non-inclusion constituted a retraction from the admission made during the survey. Therefore, the addition lacked sufficient evidence and was ordered to be reversed.

6. Outcome: The appeal of the assessee was allowed, and the addition of undisclosed income was reversed based on the lack of corroborative evidence supporting the admission made during the survey action.

This detailed analysis of the judgment highlights the key issues, legal arguments, precedents, and the ultimate decision rendered by the Appellate Tribunal ITAT Pune in the case.