Addition can’t be made based on statement u/s 133A of husband who was employee of assessee

No addition can be made on the basis of the statement recorded during survey u/s 133A from the husband who was also employee of the assessee.

In a recent judgment, ITAT Guwahati has held that addition can not be made on the basis of the statement recorded during survey proceedings u/s 133A from the husband who was employee of the assessee

ABCAUS Case Law Citation:
5066 (2026) (03) abcaus.in ITAT

The assessee is a retail trader of mustard oil. A survey u/s 133A of the Income Tax Act, 1961 (the Act) was conducted on the premises of the assessee. In the course of survey, the statement of the assessee’s husband, who is also an employee was taken. In the statement the survey team had found that there was shortfall of stock of and cash surplus.

The survey team took a statement from the said employee being a husband of the assessee that the there was a difference in respect of the cash. The difference in the value of stock and over and above that 1.30% of the total turnover was treated as the undisclosed of the income of the assessee.

However, in the return filed by the assessee, the alleged difference in cash and difference in the value of stock was not shown. The AO made an addition of the said two items as the undisclosed income of the assessee. The CIT(A) confirmed the addition.

Before the Tribunal the assessee submitted that the statement of the assessee’s husband would not, first of all, have been taken. The stock statement and cash availability statement clearly showed that the assessee had sold the products and the sales proceeds were found in cash. The reasons for the cash being found was also explained. The assessee having also disclosed a net profit further addition was not called.

The Revenue supported the order of the AO and CIT(A). It was submission that the wife being assessee was only a name lender and the actual business was being conducted by the assessee’s husband. It was submission that the statement given by the husband had also not been retracted. It was further submission that the statement should be considered in its entirety and the assessee’s husband having offered the additional income, the same should be brought a tax.

The Tribunal observed that in the statement recorded from the employee of the assessee it was specifically recorded as such that the said employee was husband of the assessee and, therefore, the addition cannot be made on the statement recorded from an employee of the assessee.

The Tribunal further observed that in reply to the question, the employee had explained the difference in the stock and the surplus cash found. It was also noticed that the statement recorded that an additional net profit is being offered of 1.3%, therefore, how an employee can give such declaration even if he was the husband of the assessee, does not stand to reason.

The Tribunal opined that as the addition having made on the basis of the statement recorded from the employee of the assessee, the same was unsustainable and liable to be deleted.

The ITAT further observed that it had categorically been admitted by the assessee that the bank accounts of the assessee were operated by assessee only even the cheque signing is done by the assessee only and not by the said employees, who is the husband of the assessee.

As a result, the Tribunal deleted addition as been made by the AO and as confirmed by the CIT(A).

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