A bald statement recorded during survey can not be basis for any addition

A bald statement recorded during survey would not in itself be a foundation for any addition – ITAT

In a recent judgment, ITAT Delhi has held that a bald statement recorded during the course of survey would not in itself be a foundation for any addition, especially if the same is contested at a later stage by the assessee.

ABCAUS Case Law Citation:
5241 (2026) (10) abacus.in ITAT

The appellant assessee had admittedly surrendered an amount of Rs. 1,50,00,000/- on account of certain expenses which could not be explained at that point of time.  Thereafter, in the return of income the assessee accounted for only Rs. 1,00,00,000.

The AO gave an opportunity to the assessee to explain why there was a shortfall in terms of the amount surrendered and the amount declared in the return of income. The assessee stated that the statement given during the course of survey proceedings was retracted as it was given under stress.

The assessee also argued that except for the said statement there was no other material to justify the surrendered amount of Rs.1,50,00,000/-. However, the AO rejected the submissions of the assessee and gave a finding that there were a number of discrepancies in the books of accounts etc. which had prompted the assessee to surrender an amount of Rs. 1,50,00,000/-.

The AO made an addition of Rs. 50,00,000/-, being the differential between the amount surrendered and the amount offered in the return of income.

The aggrieved assessee approached the CIT(A) where also he could not succeed. The CIT(A) held that it was the responsibility of the assessee to prove that the amount added (Rs.50 lakhs) were actually available with the assessee for incurring expenses.  However, the CIT(A) provided a relief of Rs. 30,00,000/- and confirmed an addition of Rs.20,00,000/-.

Before the Tribunal, the assessee submitted that while the amount of Rs.1,50,00,000/- was surrendered at the time of survey, but it was done under stress and thereafter on examining the vouchers, books, etc, it was found that the entire amount surrendered at the time of survey could not be justified.

The assessee also drew attention to CBDT Circular No. 286/2/2003 dated 11.03.2003, to argue that it was the duty of the Assessing Officer to examine all the relevant material gathered during the course of survey and not merely rely on any so-called confessional statement of the assessee.

The assessee explained that the so called discrepancies noticed by the survey party were easily explained by the fact that the assessee company maintained three cash books and the discrepancy was seen only because one such cash book was examined. Regarding the addition of Rs.1,00,000/- on account of some noting in a black diary found during the course of survey, it was explained that the said diary belonged to the accountant of the Company and had no link with actual accounts of the assessee. It was pointed out that there were several figures in that diary which had absolutely no linkage with the assessee’s accounts.

The Tribunal opined that a bald statement recorded during the course of survey would not in itself be a foundation for any addition, especially if the same is contested at a later stage by the assessee.

The Tribunal observed that neither of the authorities below had brought on record any substantial discrepancy as per the accounts found during the course of survey and the income declared in the return of income.

Accordingly, the Tribunal directed the deletion of the remaining addition of Rs. 30,00,000/- with respect to Rs.50,00,000/- added by the AO.  

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