Statement recorded u/s 133A has No Evidentiary Value if made by a person who has no connection with Assessee’s Business: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench presided by Challa Nagendra Prasad, Judicial Member held that statement recorded u/s 133A has no evidentiary value if made by a person who has no connection with assessee’s business.

The Counsel for the assessee, Manoj Kumar submitted that Late Rakesh Kumar Jain was an individual carrying on his business activity in the trading of utensils and manufacturing of utensils having factory premises at Delhi and that he filed a return of income declaring income of Rs.4,07,660/-. The assessee also declared stock of Rs.88,16,413/- in his audited financials. The Counsel submits that the case was selected for scrutiny and in the course of assessment proceedings the assessee Rakesh Kumar Jain died and the assessment order was passed in the name of Sh. Madhur Jain, assessee the legal heir of Late Rakesh Kumar. The assessment was completed u/s 143(3)determining the income of the assessee at Rs.27,05,510/-. The Counsel submitted that while completing the assessment the Assessing Officer added Rs.22,72,050/- as the difference in valuation of stock and Rs.25,800/- was disallowed on account of labour charges paid by the assessee for making furniture for his godown.

The stocks were valued by the Assessing Officer on the basis of the statement given by Rajat Jain son of assessee Late Sh. Rakesh Kumar Jain, wherein Sh. Rajat Jain had stated that the valuation was made taking the average value of Rs.225 to 230/- per kg. The Counsel submitted that there is no evidentiary value of the statement of Rajat Jain recorded on oath during the survey as the law does not authorize the Officer to record a statement on oath and further, this is the statement of Rajat Jain and not the assessee. Rajat Jain has no locus stand with respect to the business of the assessee as he is not in any way authorized person in the case.

The Tribunal said ”there is no justification for adopting the value of Rs.230/- to value all the stocks of the assessee including the scrap at this rate. Therefore, I direct the AO to delete the addition of Rs.22,72,050/- made on account of difference in valuation of stocks as there is no basis for such valuation at all.”

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