Presumptive taxation and survey admissions: uncorroborated statements under section 133A cannot justify enhancement of income

In a presumptive taxation case under section 44AD, income cannot be enhanced beyond the statutory presumptive rate merely because a partner made an admission during a survey under section 133A. A statement recorded in survey proceedings does not have the evidentiary value of a sworn statement under section 132(4), and any alleged on-money addition requires corroborative material showing that it represents taxable income. Where the receipts remain within the statutory limit and the returned income already exceeds the deemed minimum, no further addition is warranted. The article therefore supports deletion of the entire alleged on-money addition in the absence of supporting evidence.

---

---

Issues: Whether, in a case governed by presumptive taxation under section 44AD, the entire amount of alleged on-money received during survey under section 133A could be added to income merely on the basis of a partner's statement recorded during survey.

Analysis: The assessee's business fell within the presumptive scheme of section 44AD, under which income is deemed at the prescribed percentage of gross receipts and the Assessing Officer cannot, without supporting material, fasten a higher income merely because an admission was made during survey. A statement recorded under section 133A does not carry the evidentiary value of a sworn statement under section 132(4), and an admission made during survey cannot by itself justify an addition in the absence of corroborative material showing that the alleged on-money represented taxable profit in its entirety. As the receipts did not exceed the statutory limit and the income returned was already more than the deemed minimum, no further addition was warranted.

Conclusion: The addition of the entire alleged on-money was not sustainable and was deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: In a presumptive taxation case, income cannot be enhanced beyond the statutory presumptive rate solely on the basis of an uncorroborated statement recorded during survey under section 133A.

---