Varun Traders Vs DCIT (ITAT Amritsar)
Survey Surrender & Diary Entries Held Insufficient – ₹266 Cr Addition Deleted – Statements u/s 133A Have No Evidentiary Value Without Corroboration – ITAT Amritsar
During survey u/s 133A, the assessee allegedly surrendered ₹266 lakh based on entries in a diary titled “Building Account.” The surrender was later retracted claiming coercion. AO treated the surrender as undisclosed investment and made addition, which was partly sustained by CIT(A) based on valuation report.
ITAT held that statement recorded during survey has limited evidentiary value and cannot be sole basis for addition, especially when retracted promptly. Relying on S. Khader Khan Sons and CBDT instructions, the Tribunal observed that diary entries were “dumb documents” without corroborative evidence or independent enquiry. Accordingly, the entire addition of ₹266 lakh was deleted and Revenue’s appeal dismissed.
In connected cross-appeals of other assessees arising from the same survey, undisclosed investment additions were deleted on similar reasoning, while limited additions relating to stock/cash discrepancies were partly sustained where supported by evidence.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
1. Aforesaid cross-appeals for Assessment Year (AY) 2013-14 with respect to three different assessees have substantially identical facts and issues. First, we take up cross-appeals of M/s Varun Traders which arises out of an order passed by Ld. Commissioner of Income Tax (Appeals)-1, Amritsar [CIT(A)] on 21-09-2017 in the matter of an assessment framed by Ld. AO u/s 143(3) on 30-03-2016. The sole subject matter of appeal is quantum addition of Rs.266 Lacs.
