Facts of the Case

The assessee, Sujit Arya, is engaged in the business of transportation of goods. A survey under Section 133A was conducted at his business premises on 08.11.2013 during which certain documents were impounded and statements were recorded. One computer printout, marked as page 33 of bundle SA-5, allegedly reflected date-wise cash receipts and was treated by the Assessing Officer as evidence of undisclosed income. In the statement recorded during survey on 09.11.2013, the assessee admitted an amount of ₹4,41,61,742 as undisclosed income. However, within two days, on 11.11.2013, the assessee filed a sworn affidavit retracting the statement, alleging that it was made under pressure and coercion. Despite the retraction and absence of corroborative evidence, the Assessing Officer made an addition of ₹4,41,61,742 as undisclosed income for Assessment Year 2014-15. The CIT(A) deleted the addition after detailed examination. Aggrieved, the Revenue filed an appeal before the Tribunal with a delay of 190 days, which was condoned.

Issues Involved

Whether an addition for undisclosed income can be sustained solely on the basis of a statement recorded during survey under Section 133A which was promptly retracted, whether an unsigned and uncorroborated computer printout constitutes valid evidence for making an addition, and whether the CIT(A) was justified in deleting the addition relying on settled judicial precedents.

Petitioner’s Arguments

The Revenue contended that the assessee had voluntarily admitted undisclosed income during survey proceedings and that the Assessing Officer was justified in making the addition based on the statement and the impounded document. It was argued that the retraction was an afterthought and should not be accepted.

Respondent’s Arguments

The assessee submitted that the statement recorded during survey had no evidentiary value and was immediately retracted by filing a sworn affidavit. It was argued that the impounded document was a dumb document as it did not mention any names, details, signatures or linkage to the assessee’s business and was not corroborated by any other evidence. The assessee relied on the Supreme Court decision in CIT vs. S. Khader Khan Son and various Tribunal decisions holding that additions cannot be made solely on the basis of retracted survey statements.

Court Order / Findings

The ITAT Kolkata observed that the addition was made entirely on the basis of a statement recorded during survey under Section 133A, which was retracted by the assessee within two days by way of an affidavit. The Tribunal noted that no corroborative evidence such as unaccounted cash, investments, books of account or other incriminating material was found during the survey. The Tribunal agreed with the findings of the CIT(A) that the computer printout relied upon by the Assessing Officer was a dumb document, incapable of independently establishing undisclosed income. Relying on the Supreme Court judgment in S. Khader Khan Son and CBDT instructions discouraging confessional statements during survey, the Tribunal held that the addition was unsustainable. The Tribunal also upheld the CIT(A)’s order deleting the disallowance made under Section 40A(3), noting that the CIT(A) had examined the payments in detail and allowed relief based on facts and evidence.

Important Clarification

The Tribunal clarified that statements recorded during survey proceedings under Section 133A do not have evidentiary value and any admission made therein cannot be the sole basis for making additions unless supported by credible corroborative evidence. Dumb documents, which do not speak for themselves and lack necessary particulars, cannot form the basis of addition in income-tax proceedings.

Final Outcome

The appeal filed by the Revenue was dismissed. The order of the CIT(A) deleting the addition of ₹4,41,61,742 made on account of alleged undisclosed income and granting relief in respect of disallowance under Section 40A(3) for Assessment Year 2014-15 was upheld in full.

Source Link- https://itat.gov.in/public/files/upload/1767169842-HcSPMy-1-TO.pdf

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