Saaras Agro Industries Vs ACIT (ITAT Indore)
The Income Tax Appellate Tribunal (ITAT) Indore issued a ruling on appeals filed by Saaras Agro Industries against the orders of the Commissioner of Income Tax (Appeals)-II, Indore. The case revolved around additions made under Sections 68, 69, and 115BBE of the Income Tax Act, 1961, based on a survey conducted under Section 133A. The primary contention was the validity of an income surrender during the survey, later retracted by the assessee. ITAT partly allowed the appeal, considering judicial precedents and CBDT circulars.
The dispute arose from a survey conducted on September 22, 2015, at Saaras Agro’s premises. During the survey, the firm’s partner allegedly surrendered ₹4.11 crore, including discrepancies in stock and cash. However, in its income tax return, the firm disclosed only ₹1 crore as additional income. The Assessing Officer (AO) added the remaining ₹3.11 crore as undisclosed income under Section 69, rejecting the firm’s retraction. The AO also imposed tax at a higher rate under Section 115BBE and disallowed certain business expenses, treating them as fringe benefits. The CIT(A) upheld the AO’s decision, leading to the present appeal before ITAT.
ITAT examined the validity of statements recorded during the survey and their evidentiary value. The tribunal referred to the Supreme Court ruling in CIT v. S. Khader Khan & Son (2012) and the Madhya Pradesh High Court’s decision in CIT v. Digambar Kumar Jain HUF (2013), both of which held that statements recorded under Section 133A have no evidentiary value unless corroborated by independent evidence. The tribunal also cited CBDT Circular No. 286/98/2013-IT(INV-II), which cautioned against making additions based solely on survey statements. Given the lack of corroborative evidence, ITAT found the additions based on the survey surrender unsustainable.
