2025 (1) TMI 33 - AT - Income Tax

Undisclosed income - difference of income voluntarily offered for taxation during the survey and income declared in the return of income - HELD THAT - Assessee has been able to demonstrate its case for declaring the income below than the disclosure made by one of the directors in the survey operation u/s 133A of the Act and even otherwise the Hon ble Co-ordinate Bench of the Tribunal in the case referred to above pertaining to AY 2017-18 2023 (1) TMI 757 - ITAT MUMBAI has analyzed the identical facts and circumstances as involved in the instant case and by giving clear cut finding approved the Assessee s income as declared, hence, the addition under consideration is liable to be deleted, thus the same is deleted. Assessee appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the delay of 5 days in filing the appeal by the Assessee should be condoned.
Whether the addition of Rs. 10,19,848/- as undisclosed income by the Assessing Officer (AO) was justified.
Whether the Assessee's explanation regarding the reduction in declared income due to additional expenses was valid and substantiated.
Whether the statement recorded during the survey under section 133A of the Income Tax Act holds sufficient evidentiary value to support the addition made by the AO.
Whether the Assessee's income declared under section 44AD of the Act, which was lower than the voluntary declaration made during the survey, was justified.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Appeal

Relevant Legal Framework and Precedents: The Tribunal considered the principles of condonation of delay, emphasizing that minor delays, if justified, should be condoned to allow substantive justice.
Court's Interpretation and Reasoning: The Tribunal found the Assessee's explanation for the delay-due to the accountant's illness-genuine and bona fide.
Key Evidence and Findings: The Assessee provided a sworn affidavit supporting the claim.
Application of Law to Facts: The Tribunal applied the principle of substantial justice over procedural technicalities.
Treatment of Competing Arguments: The Revenue's objection was considered but outweighed by the Assessee's explanation.
Conclusions: The delay was condoned.

Addition of Undisclosed Income

Relevant Legal Framework and Precedents: The addition was based on discrepancies between declared income in the return and the income voluntarily declared during the survey.
Court's Interpretation and Reasoning: The Tribunal examined whether the Assessee's explanation for the discrepancy was reasonable and substantiated.
Key Evidence and Findings: The Assessee provided documentation of additional expenses that were not considered during the survey.
Application of Law to Facts: The Tribunal assessed the legitimacy of the expenses claimed post-survey.
Treatment of Competing Arguments: The AO's reliance on the survey statement was weighed against the Assessee's documented expenses.
Conclusions: The Tribunal found the Assessee's explanation plausible and deleted the addition.

Evidentiary Value of Survey Statement

Relevant Legal Framework and Precedents: The Tribunal referenced the Supreme Court's ruling that statements recorded under section 133A lack evidentiary value.
Court's Interpretation and Reasoning: The Tribunal emphasized that additions cannot solely rely on such statements without corroborative evidence.
Key Evidence and Findings: The Tribunal noted the absence of corroborative evidence supporting the AO's addition.
Application of Law to Facts: The Tribunal applied the Supreme Court's precedent to the facts of the case.
Treatment of Competing Arguments: The Tribunal distinguished between the evidentiary value of survey statements and documented evidence.
Conclusions: The Tribunal held that the survey statement alone was insufficient to justify the addition.

Declaration under Section 44AD

Relevant Legal Framework and Precedents: Section 44AD allows presumptive taxation for eligible businesses.
Court's Interpretation and Reasoning: The Tribunal considered whether the Assessee's declared income aligned with the presumptive taxation provisions.
Key Evidence and Findings: The Assessee declared income at a rate higher than the statutory 8% under section 44AD.
Application of Law to Facts: The Tribunal evaluated the Assessee's compliance with section 44AD.
Treatment of Competing Arguments: The Tribunal recognized the AO's authority to assess beyond section 44AD but required substantial evidence.
Conclusions: The Tribunal upheld the Assessee's declaration under section 44AD.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The statement recorded u/s. 133A has no evidentiary value and that the same cannot be the only basis for making the addition."
Core Principles Established: Survey statements under section 133A lack evidentiary value; minor procedural delays should be condoned if justified; section 44AD allows for presumptive taxation, but AO must substantiate deviations.
Final Determinations on Each Issue: The delay in filing the appeal was condoned; the addition of Rs. 10,19,848/- was deleted; the Assessee's income declaration under section 44AD was upheld.

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