Hitesh B. Patel v. ACIT

INCOME TAX ACT, 1961

--Assessment--Additions to income Loose papers found during survey and statement under sections 133A/131----Since statement recorded under section 133A had no evidentiary value, statement under section 131 was recorded at the back of assessee without giving opportunity of cross examining deposer and no conclusive evidence was collected during course of survey as to loose papers, addition made was to be deleted. --According to AO, during course of survey, various loose papers, small diaries were found and impounded. Statement of PSP, partner of M/s DD, was recorded under section 133A. Thereafter, his statement was further recorded under section 131. PSP had disclosed in his statement that he had made various payments to assessee. On confronting assessee by AO, assessee did not dispute certain payments. AO made addition on strength of loose papers as well as statement of PSP. CIT(A) confirmed addition. Held: (i) Clause (iii) of section 133A authorizes the authority to record a statement of any person which may be useful for or relevant to any proceedings under the Act. However, the officer is not authorized to record the statement on oath, and hence, the statement taken during the course of survey, has no evidentiary value. It is simply an information, which can be used for corroboration purpose for deciding any issue in favour or against the assessee. (ii) It was found that statement of PSP under section 131 was recorded on oath. This statement was recorded from the back of assessee and no opportunity to cross-examine the deposer was given to the assessee. Hence, this statement could not be used against the assessee. It was in post survey enquiry of his own case. Therefore, this piece of evidence was to be excluded. (iii) As regards evidence possessed by Revenue in shape of loose papers and small diaries impounded during survey it was found from possession of third person. The entries made in the diary were not in handwriting of assessee. In the present case, even at the premises of PSP, no search was conducted. There was no common documents executed between PSP and the assessee was found, which bears the signatures of both the parties. To the extent common document was found i.e., last entry where assessee had confirmed receipt and put his signatures in the diary of PSP, assessee has offered the amounts for taxation. If one evaluates the evidence collected by the AO in shape of loose paper impounded during the course of survey, in the light of the decision of the Gujarat High Court, in the case of CIT v. Abhalbhai Arjanbhai Jadeja (Tax Appeal No. 233 of 2013), then, it would reveal that conclusive evidence was not collected even during the course of survey demonstrating the payment made to the assessee. Therefore, ground of the appeal of the assessee allowed and the addition was deleted.