Facts of the Case

The assessee, engaged in real estate and construction business, was subjected to survey proceedings under Section 133A of the Income Tax Act. During the survey, one of its Directors made a statement disclosing additional income of ₹15,00,55,000/- outside the regular books of accounts and also furnished details relating to such undisclosed income.

However, the assessee did not disclose this amount in its return of income and later claimed that the surrender was not voluntary and had been obtained under coercion and arbitrary circumstances. The assessee sought to retract the disclosure.

The Assessing Officer rejected the explanation and made additions. The CIT(A) granted partial relief after allowing certain expenditure adjustments. The ITAT upheld the addition to the extent of ₹63,33,260/-. The assessee challenged the order before the Delhi High Court under Section 260A.

Issues Involved

  1. Whether an addition made on the basis of a statement recorded during survey under Section 133A is legally sustainable?
  2. Whether a retracted disclosure made during survey proceedings can be ignored without immediate and proper evidence of retraction?
  3. Whether materials found during survey coupled with admission by the Director constitute sufficient basis for making additions?

Petitioner’s Arguments (Assessee’s Contentions)

  • The surrender of income during survey was not voluntary or bona fide.
  • The disclosure was allegedly obtained illegally and arbitrarily.
  • In absence of corroborative evidence, rough notings and survey materials could not be treated as conclusive evidence.
  • Reliance was placed on judicial precedents:
    • CIT vs Anil Bhalla (2010) 322 ITR 191 (Delhi)
    • CIT vs Dhingra Metal Works (2010) 328 ITR 384 (Delhi)
    • CIT vs Akme Projects (ITA 596/2012)
  • It was argued that statements recorded during survey do not have conclusive evidentiary value.

Respondent’s Arguments (Revenue’s Contentions)

  • The Director of the assessee voluntarily disclosed the undisclosed income during survey proceedings.
  • The disclosure was based on materials and rough receipts found during survey.
  • The assessee failed to retract the statement immediately.
  • The alleged retraction was vague, delayed, and unsupported by proper documentary evidence.
  • The addition was rightly sustained after adjusting expenditure.

Court Findings / Order

The Delhi High Court dismissed the appeal and upheld the addition of ₹63,33,260/-

Important Clarification

  • Statement under Section 133A may not be “conclusive evidence,” but it remains relevant and admissible material.
  • The term “conclusive evidence” used in Dhingra Metal Works must not be understood in strict legal sense.
  • Revenue authorities can draw adverse inference from survey materials and statements.
  • Delayed retraction weakens the assessee’s case significantly.

Sections Involved

  • Section 133A – Survey Proceedings
  • Section 260A – Appeal before High Court
  • Section 132(4) – Statement during Search
  • Section 132(4A) – Presumption as to Assets/Documents
  • Section 69C – Unexplained Expenditure
  • Section 114, Indian Evidence Act – Presumption of Fact

Link to Download the Order https://delhihighcourt.nic.in/app/case_number_pdf/2015:DHC:802-DB/SRB27012015ITA242015.pdf

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