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2009 (7) TMI 911 - AT - Income TaxAddition based on income surrendered during survey - Statement recorded during survey u/s 133A relied upon but later on retracted without any corroborating evidence at all - construction cost of building unexplained - real owner - difference in stock found during the survey - CIT(A) confirmed the addition. HELD THAT:- Nothing was found during the course of survey to indicate that assessee has either incurred himself any expenditure on the construction of building nor that he has advanced the money to his brother for construction of the building, which was not found to be recorded in the books of account. Even the CIT(A) while upholding the addition on account of surrender made on account of investment in building did not refer the matter to the DVO to find out if any excess investment was made in the building as compared to the investment shown by brother of the assessee who was separately assessed. Merely on the basis of statement having been recorded, no addition can be made unless the same can be corroborated by any material either found during the course of survey or subsequently brought on record by the department while framing the assessment. Even appellate proceedings are extension of the assessment proceedings and the CIT(A) has got co-terminus powers to do what the AO has failed to do. The fact that surrender on account of investment in building was not recorded on the day of survey, but the assessee was subsequently called to the office on the next date and he was forced to surrender the amount itself indicate that undue influence was exercised on the assessee to surrender the amount. As in the case of Paul Mathews & Sons v. CIT [2003 (2) TMI 25 - KERALA HIGH COURT] held that statement of assessee recorded during the course of survey under provisions of section 133A(3)(iii) can be said to be useful or relevant to the assessment proceedings only in the circumstances when there is a material on record to prove through the existence of any of the activities on the basis of which disclosure is stated to be made. It was categorically mentioned by the Hon’ble High Court that statement recorded u/s 133A cannot be given evidentiary value as such evidentiary value is not attached with the provisions of section 133A. The only basis for addition as per AO was the statement of the assessee without any corroborative material or documentary evidence on record. Hon’ble Madras High Court in the case of CIT v. S. Khandar Khan Chand [2007 (7) TMI 182 - MADRAS HIGH COURT] , observed that where assessee has admitted suppressed income but there was no documentary evidence in possession of the department, no addition can be made on the basis of such statement. The Hon’ble High Court reviewed all the available judgments on the point along with CBDT Instructions dated 10-3-2003, and went to the extent of holding that section 133A does not empower any IT authorities to examine any person on oath and hence, such statement has no evidentiary value and any admission made during such statement cannot by itself be made the basis for addition. The AO has also recorded a wrong fact to the effect that advance tax payment was made by the assessee on the surrendered amount. However, neither any tax was paid by the assessee nor the amount of surrender in the investment in the building was offered for tax in the return of income filed after the survey. Thus, it is crystal clear that the AO has made addition contrary to the Instruction of CBDT dated 10-3-2003 and also against clear ratio of the decision of Hon’ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd.[1971 (9) TMI 64 - SUPREME COURT]. Therefore, the addition made by the lower authorities merely on the basis of statement recorded during survey and thereafter, without bringing any corroborative material on record, was devoid of any merits. We are, therefore inclined to hold that no addition was warranted on account of mere surrender taken during survey by exercising undue influence and which was retracted while filing the return after survey. In the result, the appeal of the assessee is allowed.
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