Considering the addition made without any corroborative evidence, ITAT reversed the 8 Lakhs addition made by the AO

The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) reversed the addition made solely based on the survey statement under Section 133A of the Income Tax Act, 1961 without any corroborative evidence to prove the presence of any errors or omissions. Sheetal Collection, the assessee is a partnership firm involved in the retail trading business of readymade garments. A survey was conducted under Section 133A of the Income Tax Act, during which the partner of the firm declared certain undisclosed incomes related to excess cash, unpaid sundry creditors, excess stock, and gross profit. In addition to that, Rs.8,00,000 was declared as undisclosed income to cover potential errors and omissions. Get a Copy of Income Tax Rules, Click here The assessee filed its income tax return for the assessment year 2014-15 declaring Rs. 23,36,020 as total income which was selected for scrutiny. During the survey, the assessing officer found that Rs. 32,48,952 was declared as the total income, and the assessee should have disclosed the amount of Rs. 8,00,000. The AO added the same and framed the assessment. Aggrieved by the addition, the assessee appealed before the Commissioner of Income Tax (Appeals) which did not end up in favor of the assessee. Hence, the appeal before the ITAT, Pune where the assessee’s counsel argued that the addition made by the assessing officer was solely based on the recorded statement during the survey action and there was no corroborative evidence to support the same. Get a Copy of Income Tax Rules, Click here The two-member bench comprising G. D.Padmahshali ( Accountant Member ) and Vinay Bhamore ( Judicial Member ) heard both sides and perused material placed on record. The tribunal noted that the only substantial issue in this case was whether additions could be made based solely on a statement recorded during a survey action under Section 133A of the Income Tax Act, in the absence of any corroborative evidence or findings from the Revenue. The Tribunal further noted that Income tax Section 133A does not empower tax authorities to examine a person on oath, and thus, statements made under this section do not automatically bind the assessee. This was supported by legal precedents, including the Supreme Court’s ruling in the case of CIT Vs S. Khader Khan Son. Get a Copy of Income Tax Rules, Click here The ITAT observed that there was no corroborative evidence that supported the presence of any errors or omissions in the assessee’s records. Thus, the tribunal reversed the addition made by the assessing officer. The assessee’s appeal was allowed