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2017 (10) TMI 873 - AT - Income TaxAddition on basis of statement recorded under oath of one of the partners of the assessee firm which did not exist on the date of survey - department’s survey u/s. 133A - Discontinued business - whether the discrepancy in the stock of pig iron, scrap and cash can be assessed in the hands of the assessee firm, when undisputedly it has been taken-over from 01.09.2008 by a Private Limited Company? Held that:- Admittedly, when the survey was conducted on 29.09.2008, the assessee firm’s business including the stock in trade has been taken-over by the company and if any discrepancy is found when physical verification is done on 29.09.2008 it should have been answered by the company which is an artificial juristic person and is assessed as a separate assessee. When the department was aware of the takeover when the survey has happened, we do not understand why the company was not proceeded against. We note that the entire addition has been based on the statement given by the one of the partner of the firm which has been taken on oath. There are two deficiencies/flaw for this. Firstly, the partner is not there in the eyes of law, when the firm is not existing . Secondly, the survey team does not have power to record statement on oath. The Hon’ble Supreme Court in CIT Vs. S. Kader Khan & Son (2013 (6) TMI 305 - SUPREME COURT) has held that during survey the statement cannot be taken on oath and, therefore, there is no evidentiary value given on the recorded statement on oath during survey and additions cannot be made solely on the basis of statement recorded under oath. We find that the sole basis of addition is the statement recorded under oath of one of the partners of the assessee firm which did not exist on the date of survey on 29.09.2008 cannot be the basis for making the addition. Therefore, we find force in the grounds raised by the assessee and we allow the appeal of the assessee.
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