No Addition on the Basis of Statements recorded under S. 133A Income Tax Act: ITAT [Read Order]

The Indore Bench of Income Tax Appellate Tribunal ( ITAT ) in the case of Shri Ashok Vani v. ITO, Ratlam disposing of the appeal completely in favor of the assessee held that there shall be no additions on the basis of statements of assessee recorded under Section 133A of the Income Tax Act.

The appellant – assessee Mr. Ashok Vani is an individual aged nearly 35 years residing in a tribal village started his earning career by becoming a collection agent in the year 1993-94, shifted to the business of brokerage of kirana, cotton and grain and then shifted to earning by starting a retail kirana shop. The appellant made a first-time disclosure of accumulated capital uptil 2003 along with required documents. A survey under Section 133A of the Income Tax Act was carried on the appellant’s business premises wherein certain books, documents and loose papers were found. Further, during the course of statement he made a declaration of additional income pertaining to previous year.

The assessee challenged the additions made by the Assessing Officer on account of unexplained cash, unexplained investment in stock, addition made by the estimation of total sale, addition made solely on the basis of oral evidence, additions on account of cash advances and kirana debtors and on account of undisclosed purchases of ‘Mahua’.

Considering the contentions of both the appellant and the revenue, the Tribunal bench comprising of Judicial Member Kul Bharat and Accountant Member Manish Borad has held that, the statement of the appellant recorded during the course of survey u/s 133A of the Act, without considering the explanation with evidences offered by the appellant, cannot be the sole ground for addition. Further, relying upon various decisions, it was held that a statement on oath cannot be recorded during the course of proceedings under Section 133A of the Act. It can only be recorded under Sections 131 or 132(4) of the Income Tax Act.­ Furthermore, even the Central Board of Direct taxes (CBDT) in its instruction dated 10^th March 2003 had warned all Assessing Officers (AO) not to obtain any confession of additional income during the course of search and seizure and survey operations.

The stock was built up out of his past savings and activities and hence shall be deleted.

The appellant was not required to maintain any books of accounts according to the IT Act and therefore a difference between the amount estimated and his turnover is not warranted and deserves to be deleted.

Hence, on the above grounds, the appeal was allowed.

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