Rashad Abdul Rehman Vs DCIT (ITAT Bangalore)
Addition for Suppressed Sales Based on KOT Data & Survey Statements Deleted – Loose Sheets & Admissions Without Corroboration Not Sufficient
The assessee, engaged in restaurant and catering business, was subjected to survey u/s 133A, during which the department analysed Kitchen Order Tickets (KOT), loose sheets and billing software data and alleged suppression of sales. Based on differences between KOT data and recorded sales, the AO estimated suppressed turnover and added gross profit of ₹1,60,167 on alleged unaccounted sales. The addition was confirmed by CIT(A), relying mainly on statements recorded during survey and loose sheets found during survey.
The ITAT noted that the addition was merely based on estimation, statements of employees/partners and handwritten loose sheets, without any corroborative evidence. The Tribunal observed that the loose sheets were “dumb documents” as they did not establish any nexus with actual sales of the assessee. Further, estimation of yearly sales based on random weekly KOT analysis was not reliable.
Relying on the Supreme Court ruling in S. Khader Khan Son, the Tribunal held that statements recorded during survey have limited evidentiary value and cannot be sole basis for addition without supporting evidence. Since the books were audited and no defects were found, the estimated addition was unsustainable.
Accordingly, ITAT deleted the addition and allowed the appeals for AY 2018-19 to 2020-21, holding that additions based purely on survey statements and uncorroborated loose papers cannot be sustained.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
