2022 (7) TMI 732 - AT - Income Tax

Addition for cash component of interest - Reliance on statement of the assessee during survey proceedings - HELD THAT - The only basis for making addition for cash component of interest is the statement of 'Sh Mahendra Kumar R Patel', which was not in respect of loan given by the assessee. The said envelope was in respect of the loan given by 'Ms. Meenakshi N Shah'. On the basis of said statement of 'Sri Mahendra R Patel', statement of the assessee was recorded in survey proceedings under section 133A of the Act. The contention of the Ld. Assessing Officer that said statement was recorded under section 131 of the Act is incorrect. On perusal of the copy of statement of Sh Nitin A shah i.e. the assessee on 06/10/2013, it is clear that said was recorded under section 133A proceedings. The Hon'ble Supreme Court in the case of CIT Vs S Khader Khan Son 2013 (6) TMI 305 - SC ORDER has held that section 133A does not empower any ITO to examine any person on oath and so statement recorded under section 133A does not have any evidencing of value and any admission made during such a statement cannot be made basis for addition. There is no other evidence on record except the statement of the assessee recorded during survey proceedings, which has already been retracted by the assessee. The action of the Ld. CIT(A) in sustaining the addition made by the Assessing Officer is not justified and we accordingly set aside the said finding of the Ld. CIT(A). The ground of the Assessee appeal is accordingly allowed.

Summary

Issues:
- Assessment year 2013-14: Confirmation of assessed income, jurisdiction under section 153C, cross-examination opportunity, addition of interest without corroborative evidence.
- Assessment year 2014-15: Identical issue of addition of interest.

Assessment Year 2013-14:
The appeal for assessment year 2013-14 challenged the confirmation of assessed income, jurisdiction under section 153C, denial of cross-examination opportunity, and addition of interest without corroborative evidence. The case involved a survey action on the assessee's premises following searches on another individual. The Assessing Officer added interest income based on statements obtained during the survey. The Assessing Officer rejected the retraction of the statement by the assessee, leading to the addition of interest income. The CIT(A) upheld the addition, citing the statement made by the assessee during the survey proceedings. However, the ITAT found the basis for the addition inadequate as it relied solely on the retracted statement without corroborative evidence. Referring to a Supreme Court decision, the ITAT emphasized that statements recorded under section 133A do not hold evidentiary value for making additions. Consequently, the ITAT allowed the appeal for assessment year 2013-14, overturning the addition of interest income.

Assessment Year 2014-15:
In the appeal for assessment year 2014-15, the same issue of addition of interest income was raised by the assessee. The CIT(A) decision mirrored that of assessment year 2013-14, upholding the addition based on the assessee's statement during survey proceedings. Following the decision on the 2013-14 appeal, the ITAT allowed the appeal for assessment year 2014-15 as well to maintain consistency in its decision-making. Consequently, both appeals for assessment year 2013-14 and 2014-15 were allowed by the ITAT, setting aside the additions of interest income made by the Assessing Officer.

In conclusion, the ITAT overturned the additions of interest income in both assessment years, emphasizing the lack of corroborative evidence and the inadmissibility of statements recorded under section 133A for making additions. The decisions highlight the importance of substantiating additions with concrete evidence and adherence to legal procedures during assessments.