2012 (4) TMI 758 - AT - Income Tax

Summary

Issues involved:
The issues involved in this judgment include income escaping assessments u/s 143(3) read with sec.147, validity of reopening assessments based on statements obtained during a survey u/s 133A, legal grounds challenging the reopening of assessments, and the evidentiary value of statements obtained during a survey.

Income Escaping Assessments:
The appeals were filed by a husband and wife, both regularly assessed to income tax. The husband, a surgeon running a hospital, filed appeals for six assessment years, including appeals arising from income escaping assessments u/s 143(3) read with sec.147 and assessments from revision orders. The wife, running a pharmacy business, filed appeals for seven consecutive assessment years related to income escaping assessments u/s 143(3) read with sec.147.

Validity of Reopening Assessments:
The assessees challenged the validity of reopening assessments based on statements obtained during a survey u/s 133A. The assessees contended that statements obtained during a survey do not have evidentiary value and cannot be the sole basis for reopening assessments. They argued that the assessments were ab initio void in law due to the reliance on such statements.

Evidentiary Value of Survey Statements:
The assessees argued that statements obtained during a survey u/s 133A, later retracted by the assessees, do not hold evidentiary value. They cited legal precedents to support their contention that no reliance can be placed on such statements for making additions in assessments. The Tribunal held that reopening assessments based on retracted survey statements is impermissible in law, as it lacks a valid reason to believe income has escaped assessment.

Decision and Outcome:
The Tribunal found that the substratum to believe income had escaped assessment was vitiated in these cases due to reliance on survey statements without evidentiary value. Consequently, the reassessments and revision orders were set aside as not sustainable in law. The appeals filed by the assessees were allowed, and the orders were pronounced on April 23, 2012, at Chennai.