Retracted survey statements cannot support tax additions without corroborative evidence under income-tax law.

A retracted survey statement cannot, by itself, sustain additions or reassessment under the Income-tax Act, 1961. Although statements recorded during survey proceedings may be relied upon under section 132(4), their evidentiary value is diluted once retracted, and the Assessing Officer must support the proposed addition with corroborative material. Mere rejection of the retraction is insufficient where no independent evidence substantiates the alleged understatement. On the facts described, the additions rested entirely on the retracted statements, so the assessment orders were unsustainable.

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Issues: Whether a retracted statement recorded during survey could constitute the sole basis for making additions and completing reassessment under the Income-tax Act, 1961.

Analysis: Statements recorded during survey proceedings may be relied upon under section 132(4) of the Income-tax Act, 1961, but once the assessee retracts the statement, its evidentiary value stands diluted and it cannot by itself sustain an assessment. In such a situation, the Assessing Officer must rely on corroborative material; the mere rejection of retraction by the assessing authority is insufficient. On the facts found, no independent material supported the alleged understatement, and the additions rested entirely on the retracted statements.

Conclusion: A retracted statement could not be treated as the sole basis for fastening tax liability, and the assessment orders were unsustainable.

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