- DCIT Vs Falcon Bus Lines Private Limited (ITAT Mumbai)
- Facts and Assessment Proceedings
- Submissions Before the CIT(A)
- Arguments Before the ITAT
- Revenue's Submission
- Assessee's Submission
- ITAT Mumbai's Observations and Findings
- Reliance on Supreme Court Decision
- Books of Account and Disclosure of Surrendered Income
- Final Decision
- Cases Discussed
DCIT Vs Falcon Bus Lines Private Limited (ITAT Mumbai)
Summary: The Revenue appealed against the order dated 07.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2017-18, arising from the assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961. The assessee was engaged in operating bus services and ticket booking. A survey under section 133A was conducted at its business premises on 31.08.2016, during which the Director surrendered Rs.1,45,53,867/- as additional income. The assessee subsequently incorporated the surrendered amount in its regular books and disclosed it in the return of income. During reassessment proceedings, the Assessing Officer treated the surrendered amount as unexplained cash credit under section 68.
Before the Ld. CIT(A), the assessee contended that the addition was based merely on the survey statement and that no corroborative material had been brought on record. It was also submitted that although the proceedings were under section 133A, the statement was recorded under section 131 without satisfying the statutory conditions. The Ld. CIT(A), relying upon the judgment of the Hon’ble Supreme Court in CIT Vs S. Khader Khan Son [352 ITR 480 (SC)], held that a statement recorded during survey had no independent evidentiary value and that, in the absence of corroborative material, an addition could not be sustained merely on that basis.
Before the Tribunal, the Departmental Representative submitted that the Director had voluntarily admitted the undisclosed income during the survey and that the Assessing Officer was therefore justified in making the addition. The Authorised Representative supported the Ld. CIT(A)’s order and submitted that no independent material, apart from the survey statement, had been brought on record to justify the addition under section 68.
The ITAT Mumbai noted that the survey was admittedly conducted under section 133A and that the addition had been made solely on the basis of the statement recorded during the survey. The Tribunal also noted the Ld. CIT(A)’s finding that the statement was recorded by invoking section 131 during survey proceedings without material showing satisfaction of the statutory conditions. More importantly, the Assessing Officer had not referred to independent evidence establishing that the amount represented unexplained cash credit exigible to tax under section 68.
Following the legal position stated in CIT Vs S. Khader Khan Son (352 ITR 480), the Tribunal held that the Revenue had failed to bring independent material supporting the addition. It also noted that the survey took place on 31.08.2016, when the books for the relevant financial year had not been closed, and that the surrendered income was subsequently incorporated in the regular books and disclosed in the return. The Tribunal concurred with the Ld. CIT(A) that the addition based merely on the survey statement was unsustainable and dismissed the Revenue’s appeal.
Facts and Assessment Proceedings
The assessee was engaged in the business of operating bus services and ticket booking. A survey under section 133A of the Income-tax Act, 1961 was conducted on 31.08.2016 at the assessee’s business premises.
During the survey, the Director of the assessee company surrendered Rs.1,45,53,867/- as additional income. The assessee subsequently incorporated the surrendered amount in its regular books of account and disclosed the same in its return of income.
During reassessment proceedings, the Assessing Officer treated the surrendered amount as unexplained cash credit under section 68 of the Act and made an addition of Rs.1,45,53,867/-.
Submissions Before the CIT(A)
The assessee contended before the Ld. CIT(A) that the addition was made merely on the basis of the statement recorded during the survey and without any corroborative material.
It was further submitted that although the proceedings were conducted under section 133A, the statement was recorded under section 131 without satisfying the statutory conditions for exercising that power.
The Ld. CIT(A), after considering the submissions and relying upon the judgment of the Hon’ble Supreme Court in CIT Vs S. Khader Khan Son (352 ITR 480), held that a statement recorded during survey had no independent evidentiary value. In the absence of corroborative material, the Ld. CIT(A) held that no addition could be sustained merely on the basis of such statement and deleted the addition.
Arguments Before the ITAT
Revenue’s Submission
The Ld. Departmental Representative relied upon the assessment order and submitted that the Director had voluntarily admitted the undisclosed income during the survey. On that basis, it was submitted that the Assessing Officer was justified in making the addition.
Assessee’s Submission
The Ld. Authorised Representative supported the order of the Ld. CIT(A) and submitted that, except for the survey statement, no independent material had been brought on record to justify the addition under section 68.
ITAT Mumbai’s Observations and Findings
The Tribunal heard the rival submissions and perused the material available on record. It noted that the survey was conducted under section 133A on 31.08.2016 and that the addition had been made solely on the basis of the statement recorded during the survey.
The Tribunal noted that the Ld. CIT(A) had recorded a finding that the statement was recorded by invoking section 131 during the survey proceedings without there being any material to show that the statutory conditions for exercise of such power were satisfied.
The Tribunal further observed that, except for the statement of the Director, the Assessing Officer had not referred to any independent evidence establishing that the amount represented unexplained cash credit exigible to tax under section 68 of the Act.
Reliance on Supreme Court Decision
The Tribunal referred to the Hon’ble Supreme Court’s decision in CIT Vs S. Khader Khan Son (352 ITR 480), which, as stated in the order, affirmed the legal position that a statement recorded during survey under section 133A has no conclusive evidentiary value and that an addition cannot be sustained solely on the basis of such statement without corroborative evidence.
The Tribunal held that the Revenue had failed to bring any independent material to support the impugned addition.
Books of Account and Disclosure of Surrendered Income
The Tribunal also noted that the survey was conducted on 31.08.2016, when the books of account for the relevant financial year had not been closed.
It further noted that the surrendered income was subsequently incorporated in the regular books of account and disclosed in the return of income. In these circumstances, the Tribunal concurred with the findings of the Ld. CIT(A) that the addition made merely on the basis of the survey statement was unsustainable.
Final Decision
The ITAT Mumbai found no infirmity in the order of the Ld. CIT(A) and dismissed the grounds raised by the Revenue.
Accordingly, the appeal filed by the Revenue was dismissed. The order was pronounced in the open court on 30/06/2026.
Cases Discussed
- CIT Vs S. Khader Khan Son (352 ITR 480)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal is filed by the Revenue against the order dated 07.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the Ld. CIT(A)”] for the Assessment Year 2017-18 arising out of the assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (“the Act”) by the Deputy Commissioner of Income Tax, Circle-5(1)(2), Mumbai.
2. The Revenue has raised the following effective ground of appeal:
“Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,45,53,867/-made by the Assessing Officer under section 68 of the Act?”
3. Briefly stated, the facts are that the assessee is engaged in the business of operating bus services and ticket booking. A survey under section 133A of the Act was conducted on 31.08.2016 at the business premises of the assessee. During the course of survey, the Director of the assessee company surrendered a sum of Rs.1,45,53,867/- as additional income. The assessee, however, incorporated the surrendered amount in its regular books of account and disclosed the same in the return of income. During reassessment proceedings, the Assessing Officer treated the surrendered amount as unexplained cash credit under section 68 and made the impugned addition.
4. Before the Ld. CIT(A), the assessee contended that the addition was made merely on the basis of the statement recorded during survey without any corroborative material. It was also submitted that though the proceedings were under section 133A, the statement was recorded under section 131 without satisfying the statutory conditions. The Ld. CIT(A), after considering the submissions and relying upon the judgment of the Hon’ble Supreme Court in CIT vs. S. Khader Khan Son (352 ITR 480), held that a statement recorded during survey has no independent evidentiary value and, in the absence of corroborative material, no addition could be sustained merely on the basis of such statement. Accordingly, the addition was deleted.
5. The Ld. Departmental Representative relied upon the assessment order and submitted that the Director had voluntarily admitted the undisclosed income during survey and, therefore, the Assessing Officer was justified in making the addition. The Ld. Authorised Representative, on the other hand, supported the order of the Ld. CIT(A) and submitted that except the survey statement, no independent material had been brought on record to justify the addition under section 68.
6. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the survey was conducted under section 133A on 31.08.2016. The addition has been made solely on the basis of the statement recorded during the course of survey. The Ld. CIT(A) has recorded a finding that the statement was recorded by invoking section 131 during survey proceedings without there being any material to show that the statutory conditions for exercise of such power were satisfied. More importantly, except the statement of the Director, the Assessing Officer has not referred to any independent evidence to establish that the amount represented unexplained cash credit exigible to tax under section 68 of the Act.
7. The Hon’ble Supreme Court in CIT vs. 5. Khader Khan son (352 ITR 480) has affirmed the legal position that a statement recorded during survey under section 133A has no conclusive evidentiary value and an addition cannot be sustained solely on the basis of such statement without corroborative evidence. In the present case, the Revenue has failed to bring any independent material to support the impugned addition. We also note that the survey was conducted on 31.08.2016, when the books of account for the relevant financial year had not been closed, and the surrendered income was subsequently incorporated in the regular books and disclosed in the return of income. In these circumstances, we concur with the findings of the Ld. CIT(A) that the addition made merely on the basis of the survey statement is unsustainable.
8. Accordingly, we find no infirmity in the order of the Ld. CIT(A) and dismiss the grounds raised by the Revenue.
9. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 30/06/2026
