ITAT Pune Deletes Perquisite Addition Already Included in Director’s Salary

Balasaheb Vitthalrao Kadam Vs ACIT (ITAT Pune)

ITAT Pune Deletes Perquisite Additions on Director’s Rent-Free Accommodation – Double Addition Found Unjustified- Statement Given in Survey Cannot Substitute Evidence; Statement Alone Cannot Justify Perquisite Addition When Contradicted by Evidence; ITAT Voids Addition Based on Erroneous Survey Admission

Pune ITAT allowed a group of appeals filed by Shri Balasaheb Vitthalrao Kadam, his family members, & co-directors of BSA Corporation Ltd., deleting additions made towards perquisite value of rent-free accommodation allegedly enjoyed by them. The additions had been made solely on the basis of statements recorded during a survey u/s 133A, without any corroborative evidence.

AO, relying on the statement of Shri Balasaheb V. Kadam, had added ₹5.94 lakh per year as perquisite value of rent-free accommodation, holding that company-owned guesthouses at Amanora & Castle Royale were used by directors for personal residence. Similar additions were made across different assessment years for all three family members. CIT(A) upheld the additions as well as the reopening u/s 147, observing that the statement under oath was binding.

Before the Tribunal, Assessees contended that the disclosure was made under duress, without verification of the salary structure, & that the perquisite value of ₹5.94 lakh was already included in the salary reflected in the company’s records & offered to tax in the returns. AO’s approach, they argued, resulted in double taxation of the same amount.

Tribunal examined the salary slips & annual salary statements of BSA Corporation, which clearly showed that ₹5.94 lakh had already been included in the taxable salary of each director. It observed that a mere statement during survey, especially when made without examining the books or payroll, cannot be the sole basis of addition. Since the perquisite was already taxed as part of salary, repeating the addition would amount to taxing the same income twice.

Accordingly, ITAT set aside the orders of CIT(A) & directed deletion of the perquisite additions for all assessees & all years. While upholding the validity of reassessment procedurally (for want of contrary evidence), Tribunal allowed the appeals partly on merits, holding that double addition was impermissible & that survey disclosures unsupported by records carry no evidentiary value.

The ruling reiterates that survey statements, unless corroborated by documentary proof, cannot justify additions, particularly when the alleged income is already part of disclosed salary. The ITAT’s decision affirms that factual verification overrides confession, ensuring that revenue cannot tax the same income twice under the guise of perquisite valuation.

FULL TEXT OF THE ORDER OF ITAT PUNE

ITA Nos.976/PUN/2025 to 978/PUN/2025 filed by the assessee are directed against the common order dated 19.02.2025 of the Ld. CIT(A), Pune-12 relating to assessment years 2016-17 to 2018-19 respectively. ITA Nos.979/PUN/2025, 980/PUN/2025, 1004/PUN/2025 & 1005/PUN/2025 filed by the assessee are directed against the common order dated 19.02.2025 of the Ld. CIT(A), Pune-12 relating to assessment years 2016-17, 2017-18, 2020-21 & 2018-19 respectively. ITA Nos.981/PUN/2025 to 983/PUN/2025 filed by the assessee are directed against the common order dated 19.02.2025 of the Ld. CIT(A), Pune-12 relating to assessment years 2016-17 to 2018-19 respectively. Since identical grounds have been raised by the respective assessees in all these appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order.

2. First we take up ITA No.979/PUN/2025 for assessment year 2016-17 in the case of Shri Balasaheb Vitthalrao Kadam as the lead case. Facts of the case, in brief, are that the assessee is an individual and director in the company BSA Corporation. He filed his original return of income on 09.10.2016 declaring total income of Rs.49,74,670/-. A survey action u/s 133A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was conducted in the case of BSA Corporation and its associate entities on 05.02.2020. Subsequently the case was transferred to ACIT, Central Circle 2(4), Pune in view of CBDT Notification dated 18.09.2020. The Assessing Officer reopened the case u/s 148 of the Act on 23.03.2021 after recording reasons and after taking due approval from the higher authorities u/s 151 of the Act. The assessee in response to the said notice uploaded the return of income on 16.08.2021 showing income of Rs.49,74,670/- which was the income declared in the original return filed on 09.10.2016. Subsequently statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. The assessee vide letter dated 18.02.2022 objected for reopening of the case u/s 148 of the Act. The Assessing Officer passed a detailed order rejecting the objections on 04.03.2022.

3. The Assessing Officer noted that during the survey action u/s 133A of the Act on 05.02.2020 various incriminating documents were impounded and the statement of Shri Balasaheb V Kadam, being director of M/s. BSA Corporation, was recorded. In the statement recorded on oath on 06.02.2020 Shri Balasaheb V Kadam, in his answer to question No.20, has admitted the income of Rs.5,94,000/-as perquisite value of the rent free accommodation under the head ‘salary’. He also admitted that the properties reflected in balance sheet of M/s. BSA Corporation as guest houses were being used by all the directors, who are his family members, for residential purpose and the perquisite value of the said rent free accommodation was not added in the total salary given by the company to the directors. The Assessing Officer, therefore, asked the assessee to explain as to why the perquisite value offered in survey action for taxation has not been offered in the return of income filed in response to notice u/s 148 of the Act.

4. The assessee submitted that he was a director in BSA Corporation and had given the statement under duress during the survey to get rid of the prolonged survey action and harassment and such income disclosure had been taken by the survey party after repeated insistence without pointing out any discrepancy in accounts and so also without impounding any incriminating documents revealing such additional income disclosed during the survey. It was stated that the assessee had not even examined the salary account and details of salary / remuneration in books of company before giving any statement in regard to salary / remuneration paid by the company. It was submitted that it was adhoc disclosure made @ 15% of salary and since salary has already been offered to tax in the return filed, therefore, the said amount of perquisite should be considered as included in salary already offered.

5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He observed from the return filed by the assessee that in schedule ‘S’ related to income from salary the assessee has shown salary income received from M/s. BSA Corporation. In the schedule under the head ‘Income from salary’, there is a para No.4 perquisite value which is shown as Nil. Since the assessee had admitted that he was staying in the company guest house for which he was not paying any rent. Therefore, the perquisite value of Rs.5,94,000/- was estimated in the statement recorded and admitted as income over and above the regular income which had remained to be taxed. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of the same and determined the total income of the assessee at Rs.54,70,960/-.

6. Similar additions on account of perquisite value have been made by the Assessing Officer for other years, the details of which are as under:

7. In case of other assessees the Assessing Officer has made addition on account of perquisite value. The details of which are as under:

8. Before the Ld. CIT(A) the assessee, apart from challenging the addition on merit, challenged the validity of re-assessment proceedings. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal.

9. So far as the validity of re-assessment proceedings are concerned, he dismissed the same by observing as under:

10. So far as the addition on merit is concerned, he dismissed the same by observing as under:

11. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the Assessment Order passed u/s.143(3) r.w.s 147 of the I.T. Act, 1961 dated 28/03/2022 by the Assessing Officer ignoring and without appreciating the fact that he should have passed the assessment order only after the expiry of 4 weeks from the date of order passed removing the objection against re-opening the case u/s 147/148 of the Act and not prior to that when in the case of the appellant the assessment order was passed on 28/03/2022 and the objection raised disposed of by the Assessing Officer on 04/03/2022 before the expiry of 4 weeks. Therefore, the Appellate Order passed by the Ld. CIT(A) ignoring the above and confirming the assessment order in violation of judicial precedence referred to before him of the Hon’ble Bombay High Court in the case of Asian Paint Ltd. Vs. Dy. CIT [2009] 308 ITR 195 (Bom-HC) and of the Hon’ble Delhi Tribunal in the case of Meta Plast Engineering P. Ltd. Vs. ITO in ITA No.5780/Del/2014, order dated 06/04/2018 being arbitrary, illegal and bad-in-law be quashed/set-aside.

2. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the addition made by the Ld. Assessing Officer of Rs.5,94,000/- in the assessment order on account of perquisite for the alleged use of the Amanora Property and Castle Royale Property of the company BSA Corporation Ltd by the appellant who happens to be the Director of the said company on the basis of merely the statement given by him u/s 131 of the I.T. Act, 1961 during survey in duress without any corroborative evidence that such assets had been used by the appellant for his personal purpose. The appellate order passed u/s. 250 of the Act by the Ld. CIT(A) confirming the said addition being arbitrary, illegal and bad-in-law be quashed and the addition made by the AO be deleted.

3. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the addition made by the Ld. Assessing Officer of Rs.5,94,000/- in the assessment order on account of perquisite for the alleged use of the Amanora Property and Castle Royale Property of the company BSA Corporation Ltd by the appellant who happens to be the Director of the said company on the basis of merely the statement given by him u/s 131 of the I.T. Act, 1961 during survey without any corroborative evidence ignoring and without appreciating the facts that no such addition could be made merely on the basis of statement given by him during survey u/s. 133A of the Act in the case of the company. The appellate order passed u/s. 250 of the Act by the Ld. CIT(A) confirming the said addition being arbitrary, illegal and bad in law be quashed and the addition made by the AO be deleted.

4. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the addition made by the Ld. Assessing Officer of Rs.5,94,000/- in the assessment order on account of perquisite for the alleged use of the Amanora Property and Castle Royale Property of the company BSA Corporation Ltd by the appellant being the Director of the said company on the basis of merely the statement given by him u/s.131 of the I.T. Act, 1961 during survey without any corroborative evidence and without considering the objection raised by the appellant against re-opening proceedings u/s.147/148 of the said Act and further ignoring totally the detailed submission made referring to various judicial decisions cited before both the authorities below in violation of provisions of section 250(6) of the Act. The appellate order passed u/s. 250 of the Act by the Ld. CIT(A) being arbitrary, illegal and bad in law be quashed and the addition made by the AO be deleted.

5. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the addition made by the Ld. Assessing Officer of Rs.5,94,000/- in the assessment order on account of perquisite for the alleged use of the Amanora Property and Castle Royale Property of the company BSA Corporation Ltd by the appellant who happens to be the Director of the said company on the basis of merely the statement given by him u/s.131 of the I.T. Act, 1961 during survey without any corroborative evidence during survey u/s.133A of the Act in the case of the company BSA Corporation Ltd. ignoring and without appreciating the facts that the said properties had been used wholly and exclusively for the business purpose of the said company and the appellant had used the same when required while carrying out the business activity of the said company in his capacity as Director and therefore there was no element of personal use of the properties and hence question of charging of perquisites in this regard did not arise as allegedly held by the Assessing Officer and upheld by the Ld. CIT(A). The appellate order passed u/s. 250 of the Act by the Ld. CIT(A) confirming the said addition being arbitrary, illegal and bad in law be quashed and the addition made by the AO be deleted.

6. The appellant craves leave to add, alter, delete, amend, withdraw, modify, change or substitute any ground or grounds of appeal or to add any new ground or grounds of appeal during or before the hearing of the appeal.

12. Ground No.1 by the assessee relates to the order of the Ld. CIT(A) upholding the validity of re-assessment proceedings initiated by the Assessing Officer u/s 147 of the Act.

13. After hearing both sides, we find the Ld. CIT(A) dismissed the ground challenging the validity of re-assessment proceedings, the reasons of which have already been reproduced in the preceding paragraphs. The Ld. Counsel for the assessee could not controvert the finding of the Ld. CIT(A) by producing any cogent evidence / material / arguments. In absence of any valid argument to negate the finding of the Ld. CIT(A) upholding the validity of re-assessment proceedings, the same is upheld and the ground raised by the assessee on the issue of validity of re-assessment proceedings is dismissed.

14. Identical grounds have been raised by the assessee in other years and other assessees for the respective years. Following similar reasoning, the grounds raised by the assessee as well as other assessees on the issue of validity of re-assessment proceedings are dismissed.

15. The remaining grounds raised by the assessee relate to the order of the Ld. CIT(A) upholding the addition of Rs.5,94,000/- made by the Assessing Officer on account of perquisite being rent free accommodation to directors.

16. The Ld. Counsel for the assessee at the outset submitted that the amount of perquisite has already been offered to tax in the return filed. Merely because the director in his statement recorded u/s 131 of the Act has erroneously accepted to pay taxes on the perquisite value, the same cannot be added as it will make double addition of the said amount. Referring to the copy of annual salary statement of M/s. BSA Corporation for the financial year 2015-16, he submitted that identical amount of Rs.5,94,000/- has already been considered in the salary slip while calculating the total salary and therefore, the addition of the same amounts to double addition. Referring to the letter addressed to the Assessing Officer on 18.02.2022, copy of which is placed at pages 108 to 115 of the paper book, he drew the attention of the Bench to para 2.2 of the same which reads as under:

“2.2 The assessee has already stated above that the entire salary income which even if considered to have included perquisite as deposed by him during survey had already been offered to tax in the return of income filed ”

17. Referring to para 3 of the said letter he drew the attention of the Bench to the following:

“3. In view of the facts of the case of the assessee as discussed and various judicial decisions cited and relied upon by the assessee above, it is reiterated by the assessee that there was no perquisite remained to be disclosed by the assessee and the entire salary income received from the company BSA Corporation Ltd had been disclosed in the Return of income filed for AY 2016-17, even if in the statement given by the assessee wherein he had stated that 15% of salary to be treated as perquisite for the use of guest house which in fact had been used for the business purpose of the company wherein the assessee was a Director. Therefore, based on merely the statement given by the assessee Shri Balasheb V. Kadam u/s. 131 of the Act during survey stating that perquisite in his hand should be treated of Rs.5,94,000/- as additional income, the assessee was not obliged to offer such additional income in the return of income filed, as no such income remained to be offered in the said return…………… ”

18. He accordingly submitted that merely because the director under misconception and without going through the salary statement and books of account of the company has erroneously admitted that 15% of the salary be treated as perquisite, the same should not be held against the assessee. He submitted that once the perquisite value has already been added in the salary income and merely because in the return form such perquisite value erroneously remained to be mentioned and has been stated as nil, the same cannot be a ground to make the addition. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be deleted.

19. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A). He submitted that the assessee in the return form under the particular column of perquisite has stated the same to be nil, therefore, the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be upheld. In his alternate contention, he submitted that the matter may be restored to the file of the Assessing Officer for due verification.

20. The Ld. Counsel for the assessee in his rejoinder submitted that this is a very small addition and the assessee has substantiated by producing the salary slip. Further during the course of assessment proceedings also it was categorically stated that such perquisite value has already been disclosed in the salary income. He accordingly submitted that this being a very small addition and relates to assessment year 2016-17, therefore, the same should be decided and need not be restored to the file of the Assessing Officer.

21. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case, on the basis of statement of the assessee recorded u/s 131 during the course of survey, wherein he had admitted to treat 15% of the salary as perquisite, made addition of Rs.5,94,000/- to the total income of the assessee being the perquisite value of the rent free accommodation given to the directors by the company. We find the Ld. CIT(A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that such perquisite is already a part of the salary income which has already been offered to tax and therefore, the addition of the same again amounts to double addition of the same amount. Further, merely because the director of the assessee company has erroneously admitted for such perquisite value, however, since the same has already been offered to tax in the return of income and merely because in the perquisite column in the return form it is stated nil, the addition of the same is not justified.

22. We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the annual salary statement of M/s. BSA Corporation for the period from 01.04.2015 to 31.03.2016 shows that an amount of Rs.5,94,000/-has already been considered in the salary. Therefore, merely because the director in his statement recorded u/s 131 of the Act during the course of survey has admitted erroneously and in the relevant clause of the return form for perquisite it has erroneously been mentioned as nil, the same cannot be a ground to make the addition again since it will amount to double addition i.e. addition of the same amount twice. Since the factual aspect is crystal clear and since the assessee during the course of assessment proceedings has also stated before the Assessing Officer that such amount has already been offered to tax and the assessment year involved is very old, therefore, to end the litigation, we do not feel it necessary to restore the matter to the file of the Assessing Officer. Since the perquisite amount of Rs.5,94,000/- is already a part of the salary income which has been offered to tax, therefore, the same in our opinion cannot be added again as it will amount to addition of the same amount twice. In this view of the matter, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly partly allowed.

23. Identical grounds have been raised by the assessee for other years as well as other assessees for different years challenging the addition of perquisite, the details of which have already been reproduced in the preceding paragraphs. Following similar reasoning, the above appeals filed by the assessee and other assessees are accordingly partly allowed.

24. In the result, all the appeals filed by the assessee are partly allowed.

Order pronounced in the open Court on 31^st October, 2025.