2021 (7) TMI 11 - AT - Income Tax

Substantive protective additions - substantive and protective additions - Additional income - admissions or confessions made during the course of a search or survey - HELD THAT - Since there is no even an iota of evidence; except the assessee s survey statement forming basis of the impugned additions. Mr.Naik vehemently reiterated Revenue s stand once again that the same are very much based on the documentary evidence found during the course of the survey. We, however, notice from a perusal of the survey statement(s) duly extracted in the corresponding assessment order(s) that the assessee(s) had made it clear that their admission was only based on rough estimation in order to avoid litigation and to purchase peace than in view of any material found/seized by the departmental authorities. CIT(A) has already placed reliance on the CBDT circulars that such admissions or confessions; as the case may be, made during the course of a search or survey does not carry any evidentiary value since it has to be only to the evidence collected only. We thus find no reason to interfere with the learned CIT(A) s impugned conclusion deleting substantive and protective additions in issue after appreciation all the facts considered in law of the CBDT circular(s) as well as various judicial precedents quoted at the assessee s behest. Its identical sole substantive ground in all these six cases fail therefore.

Issues Involved:
1. Validity of addition of income based on statements made during survey proceedings.
2. Admissibility and evidentiary value of statements made under coercion or undue influence.
3. Compliance with CBDT circulars regarding survey operations and admission of income.
4. Justification for the addition of ?2,00,00,000 to the assessee's income for AY 2013-14.

Issue-Wise Detailed Analysis:

1. Validity of Addition of Income Based on Statements Made During Survey Proceedings:
The primary issue is whether the addition of ?2,00,00,000 to the assessee's income based on statements made during survey proceedings is justified. The assessee argued that the addition was made solely based on a statement given by the managing partner under pressure and without any supporting evidence. The statement was retracted later, and it was contended that the firm had only sold one plot for ?1,96,000 during the relevant financial year, earning a net profit of ?9,307. The CIT(A) found that the Assessing Officer did not find any incriminating material or evidence during the survey to support the addition of ?2,00,00,000 and thus deleted the addition.

2. Admissibility and Evidentiary Value of Statements Made Under Coercion or Undue Influence:
The assessee contended that the statement made during the survey was under coercion and undue influence, citing CBDT circulars that emphasize the need for evidence collection during surveys and to avoid obtaining admissions through coercion. The CIT(A) agreed with the assessee, noting that the statement alone, without corroborative evidence, cannot be the sole basis for an addition. The Tribunal upheld this view, reiterating that statements made under coercion do not carry evidentiary value and cannot be the sole foundation for income addition.

3. Compliance with CBDT Circulars Regarding Survey Operations and Admission of Income:
The assessee referred to CBDT Circulars No. 286/98/2013-IT(INV.II) dated 18.12.2014 and No. 286/2/2003-IT(INV) dated 10.03.2003, which state that admissions of undisclosed income under coercion during surveys should not be relied upon without corroborative evidence. The CIT(A) and the Tribunal found that the Assessing Officer did not comply with these circulars, as the addition was made solely based on the retracted statement without any supporting evidence.

4. Justification for the Addition of ?2,00,00,000 to the Assessee's Income for AY 2013-14:
The Tribunal noted that the Assessing Officer did not find any evidence of suppression of sales, undisclosed income, or other discrepancies in the assessee's records for the relevant financial year. The CIT(A) had deleted the addition, citing the lack of corroborative evidence and the retracted statement. The Tribunal upheld this decision, finding no merit in the Revenue's arguments and reiterating that the addition was not justified without supporting evidence.

Conclusion:
The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s decision to delete the addition of ?2,00,00,000. The Tribunal emphasized that statements made under coercion during survey proceedings do not carry evidentiary value and cannot be the sole basis for income addition without corroborative evidence. The decision was based on compliance with CBDT circulars and various judicial precedents.

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