2019 (9) TMI 357 - HC - Income Tax

Evidentiary value of a statement made on oath by the assessee to the income tax authority in survey proceedings held under Section 133A - income tax authority got power to examine on oath any person during survey proceedings under Section 133A - HELD THAT - Merely by reason of the fact that the income tax authority has administered oath to an assessee and recorded his sworn statement during the survey proceedings under Section 133A it cannot be found that such statement has no evidentiary value at all and that it cannot be used in any manner against the assessee in any proceedings under the Act. As explained in Travancore Diagnostics 2016 (11) TMI 76 - KERALA HIGH COURT the statement on oath made by an assessee to the income tax authority during the survey proceedings under Section 133A is not conclusive. The assessee can explain or withdraw the admission, if any, made by him in such statement. Assessment of tax cannot be made solely on the basis of such sworn statement made by the assessee under Section 133A(3)(iii) of the Act. At the same time, such statement can be used to corroborate other materials before the assessing authority, including the contents of any document. In our view, the dictum laid down in Paul Mathews 2003 (2) TMI 25 - KERALA HIGH COURT and Hotel Samrat 2009 (11) TMI 269 - KERALA HIGH COURT and Travancore Diagnostics (supra) can be harmonised in this manner without any conflict. Thus, the substantial questions of law raised as items (1) and (3) are answered in favour of the assessee and against the revenue. Addition u/s 69 - The assessment of tax made by the authority concerned is not solely based on the sworn statement of the appellant given to the income tax authority. The basis of the assessment is the agreement executed by the appellant for purchase of property and also the circumstance that the appellant failed to establish his plea regarding the investment made. The sworn statement of the appellant only corroborates those materials. The fact that the assessing authority gave emphasis to the sworn statement of the appellant while passing the order of assessment does not change this fact situation. Tribunal has adverted to the factual aspects and confirmed the findings made by the assessing authority and the appellate authority. The conclusion reached by the Tribunal on a finding of fact cannot be interfered with by this Court unless it is shown that it is perverse or that the Tribunal had acted without any materials. In the instant case, the factual findings made by the Tribunal do not suffer from any such error or illegality or perversity.

Summary

Issues Involved:
1. Power of income tax authority to examine on oath during survey proceedings under Section 133A of the Income Tax Act, 1961.
2. Evidentiary value of a statement made on oath by the assessee during survey proceedings under Section 133A.
3. Permissibility of making tax assessment solely based on the sworn statement made by an assessee during survey proceedings under Section 133A.

Issue-wise Detailed Analysis:

1. Power to Examine on Oath:
The core issue is whether the income tax authority has the power to examine any person on oath during survey proceedings under Section 133A of the Income Tax Act, 1961. Section 133A(3)(iii) allows the income-tax authority to record the statement of any person which may be useful for or relevant to any proceeding under the Act. However, it does not explicitly authorize the authority to administer an oath. The judgment references the decision in Paul Mathews and Sons v. Commissioner of Income Tax, which held that Section 133A does not empower the income tax authority to take any sworn statement. This position was also supported by the Madras High Court in Commissioner of Income Tax v. Khader Khan Son.

2. Evidentiary Value of a Statement Made on Oath:
The judgment addresses whether a statement made on oath by the assessee during survey proceedings under Section 133A has any evidentiary value. It was noted that Section 133A does not authorize the income tax authority to administer an oath, and thus, such statements do not hold evidentiary value as per the decision in Paul Mathews. However, another Division Bench in Commissioner of Income Tax v. Hotel Samrat opined that statements recorded under Section 133A, though not independent evidence, have corroboratory value in assessment. The judgment harmonizes these views by stating that while such statements are not conclusive, they can be used to corroborate other materials before the assessing authority.

3. Assessment Based Solely on Sworn Statement:
The judgment considers whether it is permissible to make an assessment of tax solely based on the sworn statement made by an assessee during survey proceedings under Section 133A. It concludes that assessment cannot be made solely on such statements. However, these statements can be used to corroborate other evidence. The judgment refers to the case of Travancore Diagnostics (P) Limited v. Assistant Commissioner of Income Tax, which clarified that the assessee could withdraw from the statement or admission made under Section 133A. The judgment further explains that while such statements are not conclusive, they can support other materials or documents in the assessment process.

Conclusion:
The judgment concludes that the substantial questions of law regarding the power to examine on oath and the use of such statements in assessments are answered in favor of the assessee, while the question of the evidentiary value of such statements is answered in favor of the revenue. The assessment in the instant case was not based solely on the sworn statement but also on the agreement for purchase of property and the failure of the appellant to establish that the investment was made by the company. Consequently, the appeal is dismissed, and the Tribunal's findings are upheld.