No Additions Can Be Made Without Incriminating Evidence: ITAT [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) ruled that no additions can be made to an assessee’s income without incriminating evidence.

Dr. Purvesh Mansukhlal Shah,appellant-assessee,was subjected to a survey under Section 133A on June 1, 2011, where he disclosed ₹14 crores as undisclosed income for the assessment year (AY) 2012-13. He admitted to earning this income through unaccounted cash from land dealings as a land broker. However, in the return filed for AY 2012-13, he declared only ₹94.19 lakhs and did not include the ₹14 crores.

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Earlier, for AY 2011-12,the assessee had filed a return declaring ₹22.19 crores, which included ₹22 crores admitted during the survey as investments in the names of family members. This return was accepted by the Assessing Officer (AO). The assessee later filed a writ petition before the Gujarat High Court, seeking access to documents from the survey. The court directed the AO to provide the documents or explain their absence.

During assessment, the AO added ₹14 crores to the assessee’s income for AY 2012-13, relying on his survey statement and citing frequent property transactions by him and his family as corroborative evidence. Dr. Shah retracted his statement, claiming it was made under coercion and lacked documentary support. However, the AO rejected this retraction, noting it came after 16 months and lacked credibility. Judicial precedents, including Dr. Dinesh Jain v. Income Tax Officer, were cited to justify the addition.

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The assessee appealed to the CIT(A), claiming his survey statement was made under pressure and lacked evidence to support the addition. He argued the ₹14 crores disclosed related to a previous year, not A.Y. 2012-13, and relied on a Gujarat High Court ruling that additions without proof are invalid.

The CIT(A) rejected these arguments, noting the assessee had previously disclosed ₹22 crores as unaccounted income from land dealings for AY 2011-12, aligning with the survey statement. Claims of coercion were dismissed, as the Gujarat High Court had already rejected them, and the delayed retraction was seen as an afterthought.

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The addition of ₹14 crores as undisclosed income was upheld, and the appeal was dismissed.

The assessee dissatisfied by the order appealed before the tribunal.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) reviewed the rival contentions and examined the material on record. It observed that the addition of ₹14 crores to the assessee’s income was based solely on the statement recorded during the survey under Section 133A, without any corroborative evidence.

The tribunal noted that no specific land transactions, parties involved, or details about the ₹14 crores were provided to substantiate the claim of undisclosed income from land brokerage.

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Citing judicial precedents, the tribunal referred to cases such as DCIT vs. Real Strips Ltd., CIT vs. M.P. Scrap Traders, and Kailashben Manharlal Chokshi vs. CIT, which stated that statements made during surveys, without supporting evidence, cannot form the sole basis for additions. It also referenced a Central Board of Direct Taxes (CBDT) circular advising against making additions based only on confessions obtained during search or survey operations.

Based on the lack of corroborative evidence, the tribunal held that the addition of ₹14 crores was unsustainable and directed its deletion.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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