2011 (2) TMI 1606 - AT - Income Tax

Summary

Issues Involved:
1. Justification of deletion of addition based on the statement recorded during the survey u/s 133A.
2. Evidentiary value of statements recorded during the survey u/s 133A.
3. Retraction of statements made during the survey.

Summary:

1. Justification of Deletion of Addition Based on the Statement Recorded During the Survey u/s 133A:
The revenue challenged the deletion of an addition of Rs. 1,91,00,000/- made by the A.O. based on a statement recorded during a survey u/s 133A. The A.O. found discrepancies in the assessee's books and recorded a statement from a partner, Shri Shakir Husain Qureshi (SHQ), who offered Rs. 1,90,00,000/- as additional income. However, the assessee later filed a return without including this amount, explaining that the discrepancies were due to pending entries and that all transactions were recorded correctly. The Ld. CIT (A) accepted the assessee's explanation and deleted the addition, noting that no incriminating material was found during the survey to support the addition.

2. Evidentiary Value of Statements Recorded During the Survey u/s 133A:
The A.O. argued that statements made during the survey have high evidentiary value unless proven otherwise. However, the Ld. CIT (A) and the Tribunal noted that statements recorded u/s 133A do not have the same evidentiary value as those recorded u/s 132(4), which can be used as evidence. The Tribunal cited various judgments, including Paul Thomas & Sons vs. CIT and Premsons, to support the view that statements recorded during surveys cannot be the sole basis for additions unless corroborated by other evidence.

3. Retraction of Statements Made During the Survey:
The assessee retracted the statement made during the survey, explaining that it was made under confusion and without proper verification of records. The Ld. CIT (A) found that the assessee provided all necessary documents and explanations in post-survey proceedings, which were not disputed by the A.O. The Tribunal upheld this view, noting that the retraction was supported by credible evidence and that the A.O. failed to provide any material to counter the assessee's claims.

Conclusion:
The Tribunal dismissed the revenue's appeal, affirming that the addition of Rs. 1,91,00,000/- based solely on the statement recorded during the survey u/s 133A was not justified without corroborating evidence. The Tribunal emphasized that statements made during surveys do not have conclusive evidentiary value and can be retracted if supported by credible evidence. The order was pronounced on 15th February 2011.