The ITAT, Kolkata bench has held that the addition made on the basis of statement made on oath by the assessee during the course of survey cannot be the sole reason for income tax addition unless the same is supported by evidence.
During the survey, the income tax team found discrepancy in stock of Rs. 22,62,597/- and made addition accordingly on estimate basis. Subsequently, the CIT(A) dismissed the appeal of the assessee by holding that the assessee has admitted on oath and signed the excess stock and unrecorded sales found during the course of survey and thus justified the additions made by the AO.
A bench comprising Shri Rajesh Kumar, Accountant Member and Shri SonjoySarma, Judicial Memberfound that the AO simply brushed aside the plea of the assessee that these stocks and sales as found during the survey were duly recorded in the books and income was determined and return of income was filed accordingly.
“We further find that the AO has not rejected the books of accounts of the assessee and AO failed to point out any defect or deficiency in the same. In our opinion, the AOcannot make the additions without rejecting the books of accounts and without pointed out specific defects. The assessee has been claiming that correct amount of stocks and sales were recorded in the books which were produced before the AO and the AO has failed to point out as to how the books of account were not correct,” the Tribunal observed
Concluding the order, the Tribunal held that “In our opinion, the addition of such types which are made during the course of survey on oath cannot be made unless there is a supporting material. In our opinion, the addition on estimated basis cannot be justified for reasons, the AO has not rejected the books of account. Under these circumstances, we are inclined to set aside the order of CIT(A) and direct the AO to delete the addition of Rs. 22,62,597/- in respect of stock discrepancy and Rs. 1,23,067/- in respect of suppressed sales.”
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