The ITAT has deleted an addition of ₹30 lakh arising from a survey surrender statement, holding that an uncorroborated oral admission during a survey cannot form the sole basis for a tax addition without supporting evidence.
ITAT Quashes ₹30 Lakh Addition from Uncorroborated Survey Statement
The Income Tax Appellate Tribunal (ITAT) has set aside a ₹30 lakh addition made on the basis of a statement recorded during a survey under Section 133A of the Income Tax Act, 1961, where the assessee had allegedly surrendered undeclared income. The tribunal ruled that a mere statement made during a survey, without independent verification or documentary support, cannot sustain an unexplained cash credit addition under Section 69 of the Act.
The department relied solely on a note from the survey record indicating that the assessee verbally admitted to handling unaccounted cash. However, no cash was recovered, and no books or electronic records substantiated the claim. The ITAT emphasized that while survey statements are admissible, they must be corroborated before being used to justify additions. The tribunal referred to Rayala Corporation (P) Ltd. v. CIT, affirming that oral statements in surveys lack evidentiary value unless supported by material evidence.
"A bald statement in a survey report, unaccompanied by recovery or record, cannot form the basis of a deemed income addition."
The decision strengthens taxpayer protections during departmental surveys and curbs the practice of making additions based on unsubstantiated claims. Practitioners should challenge additions rooted solely in survey statements by demanding independent evidence. This ruling may also influence future Department manuals on audit and detection procedures.
Citations
- Rayala Corporation (P) Ltd. v. CIT [2006] 285 ITR 47 (SC)
