Statement Under S.133A Survey Has No Evidentiary Value, Can't Be Sole Basis for Addition: ITAT Jaipur Deletes ₹1.27 Cr Addition

Jaipur: The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has delivered a significant ruling, holding that a statement recorded during a survey operation under Section 133A of the Income Tax Act, 1961, lacks evidentiary value and cannot, by itself, form the basis for an income tax addition. The bench, comprising Accountant Member Shri Gagan Goyal and Judicial Member Shri Narinder Kumar, deleted additions totaling over ₹1.27 crore, which were based on a "surrendered income" statement and jottings on loose papers found during a survey.

The Tribunal strongly distinguished the powers under a survey (Section 133A) from those under a search and seizure operation (Section 132), noting that officials conducting a survey are not authorized to record statements on oath.

Case Background

The case involved Shri Shailesh Goyal, whose business premises were subjected to a survey operation under Section 133A on December 10, 2015, following a search conducted on the RT Group. The survey concluded two days later, at 4:00 AM on December 12, 2015.

During this survey, the assessee purportedly offered an additional income of ₹1 crore. Subsequently, the Assessing Officer (AO) made the following additions to his income:

- ₹1,00,00,000: Based on the income surrendered during the survey.

- ₹26,34,939: Based on rough, undated jottings allegedly related to a property scheme.

- ₹1,50,000: As unexplained expenditure based on other loose papers.

The Commissioner of Income Tax (Appeals) [CIT(A)] largely upheld these additions, prompting Shri Goyal to appeal before the ITAT.

Arguments of the Parties

The appellant, represented by Advocate Jaideep Malik, argued that the surrender of ₹1 crore was not voluntary but was obtained under "force, coercion and compulsion" during the prolonged survey. It was contended that a statement recorded during a survey under Section 133A is not legally maintainable as evidence and that the assessee had subsequently retracted his statement. Furthermore, the additions based on loose papers were challenged on the grounds that these were "deaf and dumb" documents—undated, unsigned, and lacking any corroborative evidence to link them to actual transactions or undisclosed income.

The Revenue, represented by Senior Departmental Representative Mrs. Anita Rinesh, relied on the surrendered income and the impounded documents as the basis for the additions.

Tribunal's Analysis: Survey vs. Search

The ITAT's decision pivoted on the crucial legal distinction between the powers and procedures of a survey under Section 133A and a search under Section 132.

The Tribunal observed:

"A power to examine a person on oath is specifically conferred on the authorities only under section 132(4) of the Act in the course of any search or seizure... whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence..."

Citing the Supreme Court's decision in CIT, Salem vs. S. Khader Khan Son and the Kerala High Court's ruling in Paul Mathews and Sons v. CIT , the bench reiterated the established principle that a statement recorded under Section 133A has no evidentiary value.

Key Excerpts from the Judgment

On the validity of the survey and the surrendered income, the bench remarked:

"Considering the facts of the matter and relying on the legal position as discussed (supra), we are of the firm view that whole exercise of survey carried u/s. 133A of the Act was void without any legal force. Hence, statement recorded were also of no use to the Revenue and addition of Rs. 1 Cr. made (based on this statement without authority of law is not sustainable and the whole exercise of survey declared to be illegal), deleted."

Regarding the additions based on loose papers, the Tribunal classified them as "Deaf and Dumb" documents:

"In the present proceedings carried out u/s. 133A of the Act, these documents will be categorised as “Deaf and Dumb” documents only, without evidentiary value... we hold that addition based on Deaf and Dumb documents are not sustainable, and as such addition made by the AO and further confirmed by the Ld. CIT(A) is directed to be deleted."

Final Decision and Implications

The ITAT allowed the assessee's appeal, directing the AO to delete all three additions amounting to ₹1,27,84,939.

This judgment reinforces the legal position that tax authorities cannot solely rely on confessions or statements obtained during survey operations to make additions to an assessee's income. It underscores the necessity for corroborative evidence to substantiate any findings from a survey. The ruling also serves as a check on procedural overreach, clarifying that the stringent powers of a search cannot be implicitly applied during a survey operation.