Statement recorded during Survey u/s 133A has no evidentiary value – Any admission made merely on the basis of statement is illegal
ITAT Kolakata has reiterated that the addition on the basis of statement recorded has no evidentiary value without any incriminating material.
The case details is as under:
ITAT KOLKATA:- DCIT, CENTRAL CIRCLE-1 (1) , KOLKATA VERSUS PRAGATI AGRI PRODUCTS PVT. LTD. No.- I. T. A. No. 1708/Kol/2024
Dated.- November 8, 2024
Let us have a short overview of the case:
1. The income tax survey was conducted on assessee’s premises and during the course of survey statement u/s 133A was recorded.
2. The assessee filed provisional records including provisional profit and loss account before the survey party.
3. According to AO, the assessee has not furnished purchase bills thereby during the assessment proceedings for the want of which necessary verification could not be carried out.
4. The Ld. A.R of the assessee took us through the order sheet entries copies of which are available at page nos. 78-79 of Paper Book. In the order sheet entry dated 28.12.2018 the AO noted that the assessee has produced cash book, sale register, bank book, laboratory test report, ledger, daily production register, purchase register sale tax and purchase tax registers which were test checked.
5. We note that during the course of survey, a statement was recorded by the survey team, however, no incriminating material was found during the course of survey.
6. Therefore, in absence of having any incriminating material, the statement recorded has no evidentiary value as in the held by the CIT vs. S Kader Khan Sons (supra) wherein it has been held that the statement recorded u/s 133A has no evidentiary value and any admission made during the course of survey cannot be the basis for making the addition.
7. The AO has mainly harped on GP declared during the course survey proceedings.
8. We even note that ld CIT(A) has specifically mentioned that the AO has not mentioned any basis for taking G.P. rate of 17.43% whereas overall GP was 13.08%.
9. In our opinion, it is not open to AO to make the addition merely on the basis of surmises and conjectures unless the books of account are rejected which was also observed by the ld CIT(A) while allowing the appeal of the assessee.
10. The ld CIT(A) even examined the comparative gross profit rate from AY 2014-15 to 2016- 17 and find that the G.P. Rate during the year is more or less consistent.
11. Therefore, the addition made by the AO was deleted by the Ld. CIT(A).
12. Further, the Ld. CIT(A) noted that the AO has not disallowed the purchases or disbelieved the purchases but only enhanced the closing stock which could have the effect the enhancing the opening stock in the subsequent assessment year. It was noted to be tax neutral addition by the Ld. CIT(A) in the appellate order. Considering these facts, we do not find any reasons to interfere in the order passed by the Ld. CIT(A).
13. Consequently the appellate order is upheld by dismissing the appeal of the revenue.
The copy of the order is as under:
