Statement given during the course of survey is not a statement on oath and has no evidentiary value
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Case Details: |
Alankar Jewelers vs. DCIT |
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Appeal No.: |
ITA No. 992/Ind/2019 |
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Order pronounced by: |
ITAT Indore |
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Date of order: |
30-04-2021 |
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Assessment Year: |
2016-17 |
Brief Facts:
- The assessee is a partnership firm engaged in the business of trading of gold, sliver jewellery and pawning. Survey u/s 133A of the Act was conducted at the premises of the firm on 16-12-2015. Statement was recorded and surrender of Rs. 1.75 crores were made on account of excess stock of jewellery & excess cash etc.
- Return of income was filed on 16.02.2016 declaring total income of Rs. 11,45,390/- and Retraction letter was filed stating that surrender of Rs. 1.75 crores during the course of survey were made under stress.
- During assessment the assessee again contended that surrender was made under stress and after necessary reconciliation and examining records only discrepancy was for Rs. 11,04,901/-. It was also contended that statement given during survey are not on oath and thus do not have any evidential value.
- However, the A.O. rejected the plea of the assessee and assessed income at Rs. 1,75,40,496/-. The assessee preferred an appeal before CIT(A) but could not succeed. Aggrieved, the assessee preferred an appeal before Tribunal.
Submission by assessee:
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It is submitted that it is a trite law that surrender without any basis cannot be a basis of making addition in the hands of the assessee. Assessee places reliance on the judgement of Hon’ble ITAT, Indore Bench in the case of Ajit Singh Melhotra vs. ACIT {Central}, IT{SS}A 63/IND/2019, order dated 22.10.2020, whereby the Hon’ble ITAT has held that no addition can be made merely on the basis of statement recorded during the search. |
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It is further submitted that, the present case is on a much better footing, as the statement was recorded during survey u/s 133A. Statement u/s 132(4) recorded during the search is recorded on oath; whereas statement u/s 133A recorded during survey is not on oath. |
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It is a settled proposition of law that the statement during survey has no evidentiary value [reliance placed on S.Khader Khan Son {2012) 25 taxmann.com 413 (SC) confirming CIT vs. S. Khadar Khan Son 300 ITR 157 (Mad.)] |
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In the instant case, the very basis of the lower authorities is the statement recorded during survey. The L’d Lower Authorities have simply brushed aside the explanation given for the retraction and merely based the entire addition on the mere surrender during the survey and nothing else. |
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It is therefore prayed that the appeal of the assessee may kindly be allowed. |
Observation of Tribunal:
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In the case relied by the assessee CIT vs. S. Khadar Khan Son (2008) 300 ITR 157 (Mad.), the Hon’ble Apex Court had dismissed the Special Leave Petition filed by the department and affirmed the decision of Madras High Court as below: “An admission is extremely an important piece of evidence but it cannot be said that it is conclusive; and it is open to the person who made admission to show that it is incorrect. The word ‘May’ used in section 133A(3)(iii) viz. ‘record the statement of any person which may be useful for or relevant to any proceeding under this Act’ makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by themselves. The statement obtained u/s 133A would not automatically bind upon the assessee, Section 133A does not empower any ITO to examine any person on oath in contradiction to the power under section 132(4). Statements recorded u/s 133A is not given evidentiary value therefore, admission made during such statement cannot be made the basis of any addition.” Also, referred: Decision of Hon’ble High court of Kerala in the case of Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Kerala)
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The Hon’ble High Court of Gujarat in the case of CIT vs. M.P. Scrap Traders [2015] 60 taxmann.com 205 (Gujarat) ruled: “Section 69, read with section 133A of the IT Act, 1961- Unexplained investments (Retraction of statements)- Assessment year 2007-08- Assessing officer made addition in the hands of assessee firm as well as its partner, as unexplained investments solely relying upon the statement of partner recorded at the time of survey, which was subsequently retracted- Except said statement, there was no other material or corroborative material with A.O. to justify said addition- Whether addition made by A.O. were to be deleted- Held, Yes.” |
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The CBDT vide its Circular F.No. 286/2/2003-IT(Inv.) dated 10th March 2003 has issued an advisory to its field officer regarding confession of additional income during the course of search and survey operations. Relevant portion of the above said circular is as below: “Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of search and seizure and survey operations. Such confessions are not based on credible evidence are later retracted by the concerned assessees while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is therefore, advised that there should be locus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-Tax department. Similarly, while recording statement during the course of search and seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. An action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, the A.O. should rely upon the evidences/ materials gathered during the course of search/ survey operations or thereafter while framing the relevant assessment orders.” |
Further, the Tribunal examined the evidences placed by the assessee while retracting the statements. On the basis of its examination of evidences and on the basis of the judgements and CBDT circular as quoted above, the Tribunal decided in favour of the assessee.
Conclusion:
From perusal of the judgement as well as the CBDT circular it opines that the statement given during the course of survey is not a statement on oath as given u/s 132(4) of the Act and therefore has no evidentiary value. Efforts should have been made by power authorities to examine the incriminating material to verify the correctness of various quantity details and books of accounts as filed by the assessee. Reliance should be placed upon the evidence/ materials gathered during the course of survey while framing the assessment orders. Therefore, the findings of Ld. CIT(A) that the assessee was required to honour income surrendered during the course of survey at Rs. 1.75 crores and offer it to tax finds no merit.
Read Complete Order: M/s Alankar Jewelers ITAT Indore
