INCOME TAX ACT, 1961

Section 133A

Survey - Addition on basis of statement recorded during survey - Evidentiary value -

Survey was carried out in assessee's case. During post-survey proceedings, statement of one of the directors, i.e., Saurabh Garg was recorded. In one of his statements he stated that assessee provided only bill entries and there was no actual transaction of purchase and sale. Subsequently, statement of other director Paras Jain was also recored. From the statement of Pras Jain, AO came to the conclusion that he was a person of no means and drew the inference that assessee was engaged in the activity of issuing accommodation bills for purchase and sale of diamonds coupled with acting as a dummy for importer. Holding the transactions as not reliable, AO rejected books of account of assessee and made addition.Held: Survey part did not find any incriminating evidence and material that could establish stand taken by AO, whereas assessee discharged the onus of providing transactions as genuine by furnishing relevant documents, such as, copies of bank statements, ledger copies of various purchases, xerox copies of purchase invoices, relevant copies of daily stock register, confirmation letters, etc. In such situation, statement of one of the directors that too recorded after 20-25 days of survey, could not be a basis for bringing into assessment and making any addition to income without further supporting or corroborative evidence.

Followed:CIT v. S. Khader Khan Sons (2012) 352 ITR 480 (SC) : 2012 TaxPub(DT0 3088 (SC)/i>.