INCOME TAX ACT, 1961

Section 133A Section 131(1)

Survey - Addition to income - Addition based on statement recorded during survey - No corroborative material

During survey at premises of assessee-firm statement of partner was recorded under section 131 wherein he stated that he sold land admeasuring 76,788 square yard in the year 2007 @ 550 per square yard to the firm and received consideration of Rs. 4.22 crore. Further, he disclosed that land was purchased for a net consideration of Rs. 4.16 crore which was disclosed as his unaccounted receipt. AO further recorded that payment by the assessee firm was not accounted in the regular books of accounts, therefore, same was treated as unaccounted investment in the hand of firm. On the retraction of statement, AO concluded that retraction was made after 540 days of survey preceedings and no clenching evidence was furnished. Thus, AO made addition in the hand of assessee firm of Rs. 4.22 crore on account unexplained investment. Held: There was no sale of land by partner to assessee-firm, rather said land was introduced as capital contribution, and no money was paid by assessee firm to the partner. There was no evidence on record about unexplained investment by assessee-firm in the impugned land rather it was a part of capital contribution by partner. If there was any remote chance of unexplained investment in the land, it might have been made by partner who purchased land in his individual capacity in financial year 2007-08. No such investigation was carried out either by AO or CIT(A) No addition was made in the hand of purchaser of land, though; it was informed to AO at the initial stage that said land was purchased by individual partner. Statement recorded during the survey action has no evidentiary value unless it is corroborated with material evidence, when the statement made during the survey stand retracted. Recording of statement by survey team under section 131(1) was not valid. Thus, no cognizance of such statement could be taken. Hence, addition which was solely based on the statement was not legally sustainable.

Relied:CIT-III v. Golden Finance (2013) 40 Taxmann.com 329 (Guj-H) : 2012 TaxPub(DT) 3402 (Guj-HC), CIT v. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Guj) : 2015 TaxPub(DT) 2842 (Guj-HC) and Pawan Kumar Goel v. UOI (2019) 107 Taxmann.com 21 (P&H) : 2019 TaxPub(DT) 4793 (P&H-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

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