Survey Statements Are Not Evidence: Additions Based Solely on Section 133A Disclosure Quashed by HC

 

 

Smt. Neetu Sharma Vs. PCIT 1(1) (TAXC No. 176 of 2023)

Facts:

1.  The assessee, engaged in trading of car accessories, was subjected to survey proceedings under Section 133A on 03.03.2011.

2.  During survey, she disclosed ₹29.49 lakh, comprising:

Excess cash – ₹3.40 lakh

Excess stock – ₹16.09 lakh

Unexplained investment – ₹10 lakh

3.  Subsequently, the assessee retracted the survey statement and did not offer the disclosed amounts to tax in the return.

4.  The Assessing Officer completed assessment u/s 143(3) and made additions of ₹19.43 lakh on account of excess cash and stock, relying primarily on the statement recorded during survey.

5.  The additions were upheld by CIT(A) and ITAT, leading to appeal before the High Court.

Substantial Question of Law:

Whether ITAT was justified in sustaining additions towards alleged excess stock and excess cash solely on the basis of a statement recorded under Section 133A of the Income-tax Act, 1961?

Hon Chattisgarh HC held as below:

1.  There is a clear distinction between Sections 133A and 132(4). Section 132(4) expressly permits examination on oath, and statements have evidentiary value. Section 133A does not empower the officer to administer oath.

2.  Statements recorded during survey are not conclusive evidence. Additions cannot be sustained solely on such statements without corroborative material.

3.  In the present case, the AO’s additions were substantially founded on the survey statement itself. No independent incriminating material was brought on record.

4.  The substantial question of law is answered in favour of the assessee. The tax appeal is allowed, with no order as to costs.

The copy of the order is as under:

202700001762023_9