S.C: Survey Statement u/s 133A has no evidentiary value !

S.C: Survey Statement u/s 133A has no evidentiary value !Reviewed by Adminon Oct 3.Rating: Statement u/s 133A Alone Can't Be Reason for Addition !Supreme Court has quashed Special Levae Petition of the Income Tax department agains Madras High court judgement that statement u/s 133A has no evidentiary value value.

Supreme Court has dismissed the Special Leave Petition vide its order dated 20/09/2012  against the Madars High Court judgment in case of  

CIT vs S. Kader Khan 300 ITR 157 (MAD.)/[2008] 214 CTR 589 (MAD.) in which the Hon’ble high court had held that an ITO was not empowered u/s section 133A  to examine any person on oath and therefore  statement recorded  in a surveyunder section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition 

The exact  issue before High Court of Madras was

“whether the materials collected and the statement elicited during the survey operation under section 133A of the Act had any evidentiary value”

The High Court held on the  issue of evidentiary value of statement recorded during survey proceeding  as under :

 the following principles can be culled out:

(i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex court in Pulkngode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 ;

(ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.);

(iii) The expression “such other materials or Information as are available with the Assessing Officer” contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.) ;

(iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment,vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 (Mad.);

(v) Finally, the word “may” used in section 133A(3)(iii) of the Act, viz., “record the statement of any person which may be useful for, or relevant to, any proceeding under this Act”, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidenceby itself.

For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated March 10, 2003, extracted above, for arriving at the conclusion that the materials collected and the statement, obtained under section 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal.

Summing up on Survey Statements

When a survey u/s 133A is conducted , and any statement is recorded by the A.O , that statement itself can not be used for making any addition without any other material evidence in support of the said statement. Therefore, if at all under duress and pressure , a tax payer has signed a statement u/s 133A , he can very well retract from such statements without any legal consequences.