Amritvarsha Industries Limited Vs ACIT (ITAT Delhi)
Survey Surrender Is No Substitute for Evidence: Unsupported Addition Deleted
The controversy
An assessee surrendered ₹1.50 crore during a survey, but subsequently offered only ₹1 crore in its return, explaining that the original statement was made under stress and that examination of its records did not justify the entire surrender.
Could the difference be added merely because the assessee had initially admitted a higher amount?
The Delhi ITAT held that a bare survey statement cannot, by itself, provide the foundation for an addition, particularly when the assessee subsequently contests it. Since the authorities had failed to establish any substantial discrepancy from the accounts, the Tribunal directed deletion of the surviving surrender-related addition.
It separately remanded three other additions to the CIT(A), who had failed to adjudicate them.
The background: ₹1.50 crore surrendered, ₹1 crore returned
A survey under section 133A was conducted on 3 February 2010. During the proceedings, the assessee surrendered ₹1,50,00,000 concerning certain expenses that could not be explained at that time.
However, the assessee accounted for only ₹1,00,00,000 in its return of income.
The Assessing Officer sought an explanation for the ₹50 lakh difference. The assessee submitted that the survey statement had been retracted because it was given under stress. It also maintained that there was no supporting material, apart from the statement itself, to justify the full surrender.
The Assessing Officer rejected this explanation. According to him, discrepancies in the books had prompted the surrender, and the assessee could not subsequently disregard its admission. He therefore added ₹50,00,000, representing the difference between the survey surrender and the amount offered in the return.
The first appeal: Partial relief, but the dispute survives
The CIT(A) accepted the addition in principle, observing that the assessee had not established how the disputed amount was available for incurring expenses.
As narrated in the Tribunal’s order, the CIT(A) granted relief of ₹30 lakh and sustained ₹20 lakh out of the original ₹50 lakh addition.
The assessee approached the Tribunal against the sustained addition. It also complained that the CIT(A) had not decided its grounds concerning a black diary entry, a section 43B disallowance and miscellaneous expenses.
The assessee’s explanation: Examine the records, not merely the confession
Before the Tribunal, the assessee explained that subsequent scrutiny of its vouchers, books and other records did not support the entire amount surrendered during the survey. Consequently, it offered ₹1 crore rather than ₹1.50 crore.
It relied on the CBDT instruction dated 11 March 2003, referred to in the order, to emphasise that assessment should rest on material collected during the survey rather than merely on a confessional statement.
The assessee also addressed the alleged accounting discrepancies. It submitted that it maintained three cash books, whereas the apparent discrepancy arose because only one had been examined. Its case was that examination of the complete records would explain the position.
Regarding the ₹1 lakh addition based on a black diary, the assessee stated that the diary belonged to its accountant and contained figures unrelated to the company’s actual accounts. It argued that the entries could not automatically be treated as its undisclosed transactions.
The Tribunal’s finding: No substantial discrepancy established
The Tribunal accepted the central objection concerning the surrender-related addition.
It observed that a bare statement recorded during survey does not independently justify an addition, especially where the assessee later disputes it.
More significantly, neither the Assessing Officer nor the CIT(A) had brought on record any substantial discrepancy between the accounts found during survey and the income declared in the return.
The Tribunal therefore directed deletion of the remaining addition arising from the ₹50 lakh surrender shortfall.
The relief rested on the absence of adequate supporting evidence. The Tribunal did not hold that every survey surrender can be withdrawn merely by asserting that the statement was made under stress.
Other additions: CIT(A) must decide the grounds
The Tribunal found that the CIT(A) had not adjudicated the remaining disputed additions despite grounds having been raised.
These concerned ₹1,00,000 relating to the black diary, ₹28,529 relating to section 43B, and ₹1,50,000 out of miscellaneous expenses.
The Tribunal remarked that the appeal grounds combined facts, arguments and grievances, which might have contributed to confusion. Nevertheless, those issues required adjudication.
It accordingly restored them to the CIT(A) for decisions on merits. The appeal was partly allowed.
Author’s comments
The ruling reinforces the distinction between an admission and an evidence-based assessment. A surrender deserves consideration, but the disputed amount must still have a factual foundation.
The order also contains a material numerical inconsistency: its factual narration says the CIT(A) sustained ₹20 lakh, while the operative paragraph directs deletion of the “remaining” ₹30 lakh. The intended relief is deletion of the surviving surrender-related addition, but the exact figure requires clarification.
The drafting observation is equally useful. Clear, separate grounds help ensure that each addition receives a decision.
A survey statement may begin the enquiry; it cannot replace the evidence needed to conclude it.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal arises from order dated 26.05.2026, passed by Ld. CIT(A), NFAC, u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”).
1.1 In this case, a survey was conducted u/s 133A of the Act on 03.02.2010. During the course of such survey the assessee had admittedly surrendered an amount of Rs.1,50,00,000/- on account of certain expenses which could not be explained at that point of time. Thereafter, in the return of income the assessee accounted for only Rs.1,00,00,000. The Ld. AO gave an opportunity to the assessee to explain why there was a shortfall in terms of the amount surrendered and the amount declared in the return of income. The assessee gave a detailed reply through which it was averred that the statement given during the course of survey proceedings was retracted as it was given under stress. The assessee also argued that except for the said statement there was no other material to justify the surrendered amount of Rs.1,50,00,000/-. However, the Ld. AO rejected the submissions of the assessee and gave a finding that there were a number of discrepancies in the books of accounts etc. which had prompted the assessee to surrender an amount of Rs.1,50,00,000/-. In the light of these findings the Ld. AO made an addition of Rs.50,00,000/-, being the differential between the amount surrendered and the amount offered in the return of income.
1.2 The aggrieved assessee approached the Ld. CIT(A) where also he could not succeed on the basis of finding recorded on pages 3 to 4 of the impugned order. It has been held by the Ld. CIT(A) that it was the responsibility of the assessee to prove that the amount added (Rs.50 lakhs) were actually available with the assessee for incurring expenses. Since the assessee did not show as to how such an amount was available with him, the Ld. AO had justifiably made the addition. The Ld. CIT(A) thereafter provided a relief of Rs.30,00,000/- and confirmed an addition of Rs.20,00,000/- (para 6.1 at pages 4 to 5 of the impugned order).
1.3 The aggrieved assessee has now approached the ITAT with grounds challenging the additions sustained by the Ld. CIT(A).
2. Before us the Ld. AR took us through the facts of the case and stated that while the amount of Rs.1,50,00,000/- was surrendered at the time of survey, but it was done under stress and thereafter on examining the vouchers, books, etc, it was found that the entire amount surrendered at the time of survey could not be justified. It was the submission that thereafter the assessee only offered Rs.1,00,00,000 in the return of income. The Ld. AR also drew our attention to CBDT Circular No.286/2/2003 dated 11.03.2003, to argue that it was the duty of the Assessing Officer to examine all the relevant material gathered during the course of survey and not merely rely on any so-called confessional statement of the assessee. The Ld. AR also relied on several authorities to canvass the point that a bald statement, without any supporting material, had no value. The Ld. AR also explained that the so-called discrepancies noticed by the survey party were easily explained by the fact that the assessee company maintained three cash books and the discrepancy was seen only because one such cash book was examined. Regarding the addition of Rs.1,00,000/- on account of some noting in a black diary found during the course of survey, it was explained that the said diary belonged to the accountant of the Company and had no link with actual accounts of the assessee. It was pointed out by the Ld. AR that there were several figures in that diary which had absolutely no linkage with the assessee’s accounts. The Ld. AR, thereafter, stated that the amount added with respect to the black diary and other additions u/s 43B of the Act and Rs.1,50,000/- out of miscellaneous expenses, were very much before the Ld. CIT(A) but were not adjudicated. It was pointed out that the only issue adjudicated by the Ld. CIT(A) was the issue pertaining to the alleged shortfall in the declared amount of Rs.1,00,00,000 and the surrendered amount of Rs.1,50,00,000/-.
2.1 The Ld. AR relied on the orders of the authorities below and stated that the discrepancies noticed during the course of survey were never satisfactorily explained by the assessee before the authorities below and the retraction of statement was merely an afterthought since the reconciliation of the books maintained at several places could not be done by the assessee. It was also pointed out that the remaining additions made by the Ld. AO were not adjudicated by the Ld. CIT(A).
3. We have considered the rival submissions and have gone through the records before us. It deserves to be appreciated that a bald statement recorded during the course of survey would not in itself be a foundation for any addition, especially if the same is contested at a later stage by the assessee. It is seen that while there has been some realization of this fact at the first appellate stage, we find that neither of the authorities below have managed to bring on record any substantial discrepancy as per the accounts found during the course of survey and the income declared in the return of income. Thus, we deem it fit to direct the deletion of the remaining addition of Rs.30,00,000/- with respect to Rs.50,00,000/- added by the Ld. AO.
3.1 Regarding the remaining additions, we find that these have not been adjudicated by the Ld. CIT(A), in spite of there being grounds to that effect. We may add that the grounds drafted by the assessee are such that they appear to be an amalgam of facts, arguments and grievances. Perhaps this may have led to the confusion and the grounds have not been adjudicated. Accordingly, we deem it fit to remand the remaining issues, as per additions of Rs.1,00,000/-, Rs.28,529/- and Rs.1,50,000/- back to the file of Ld. CIT(A) for adjudication on merits.
4. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 07.10.2026
