ITAT deletes section 68 addition ruling survey statements lack evidential value without corroborative evidence

The ITAT Surat ruled in favor of the assessee on multiple grounds. The tribunal deleted the addition under section 68, holding that statements recorded on oath during survey proceedings under section 133A have no evidential value without corroborative evidence, which the AO failed to provide. The penalty under section 271F was also deleted as the assessee showed sufficient cause for filing a belated return due to business losses. Regarding the assessment under section 144, the tribunal restored the matter to the AO for de novo adjudication, noting that the assessee was denied proper opportunity to be heard due to non-delivery of notices, violating principles of natural justice.

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Issues Involved:
1. Addition of Rs. 6,47,417/- as business loss.
2. Addition of Rs. 2,50,00,000/- as deemed income u/s 68.
3. Penalty of Rs. 5,000/- u/s 271F for AY 2015-16.
4. Assessment framed u/s 144 for AY 2015-16.
5. Penalty of Rs. 20,000/- u/s 271(1)(b) for AY 2015-16.
6. Assessment framed u/s 144 for AY 2017-18.

Summary:

1. Addition of Rs. 6,47,417/- as Business Loss:
The assessee's appeal regarding the addition of Rs. 6,47,417/- as business loss was remitted back to the Assessing Officer. The Tribunal directed the assessee to furnish an explanation/justification of the business loss before the Assessing Officer, who should then adjudicate the issue in accordance with the law.

2. Addition of Rs. 2,50,00,000/- as Deemed Income u/s 68:
The Tribunal deleted the addition of Rs. 2,50,00,000/- made by the Assessing Officer based on the statement taken during the survey proceedings. The Tribunal noted that no incriminating material or tangible evidence was found during the survey to support the addition. It was held that statements on oath taken during surveys have no evidential value without corroborative evidence, as per the judgments in Paul Mathews & Sons v. CIT-263 ITR 101 (Ker)(HC) and CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC). The assessee had also retracted the statement by not offering the amount in the Return of Income.

3. Penalty of Rs. 5,000/- u/s 271F for AY 2015-16:
The Tribunal deleted the penalty of Rs. 5,000/- imposed u/s 271F for failure to furnish the return of income within the due date prescribed u/s 139(1). The assessee had filed a belated return u/s 139(4) and explained the sufficient cause for the delay, which the Tribunal accepted.

4. Assessment Framed u/s 144 for AY 2015-16:
The Tribunal remitted the case back to the Assessing Officer for de novo adjudication. The assessee did not file the required details and documents before the Assessing Officer, and the CIT(A) passed an ex-parte order on merit based on the material available on record. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case.

5. Penalty of Rs. 20,000/- u/s 271(1)(b) for AY 2015-16:
The Tribunal remitted the case back to the Assessing Officer. The penalty was imposed for non-compliance with notices, and the CIT(A) confirmed the penalty ex-parte. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case.

6. Assessment Framed u/s 144 for AY 2017-18:
The Tribunal remitted the case back to the Assessing Officer. The assessee had not filed the return of income u/s 139(1) or in response to the notice u/s 148. The CIT(A) decided the appeal ex-parte based on the material available on record. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case.

Conclusion:
- ITA No. 809/SRT/2023 is partly allowed.
- ITA No. 798/SRT/2023 is allowed.
- ITA Nos. 799/SRT/2023, 800/SRT/2023, and 810/SRT/2023 are allowed for statistical purposes.

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