Income from undisclosed sources in survey under section 133A: retracted statement upheld as admissible where no contemporaneous books produced

Income from undisclosed sources during a survey and the admissibility of a retracted statement: the retraction, made after delay, cannot be relied on where the assessee failed to produce books of account or authentic contemporaneous evidence of agricultural income; diary entries were held insufficient to prove the earlier statement false, so the earlier admission recorded during the survey retained evidentiary value and could be acted upon. Consequently the Tribunals conclusion that the retraction was not established was a permissible view and the appeal against that conclusion was dismissed.

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Issues: (i) Whether the Tribunal was correct in sustaining an addition of Rs.19 lakhs based on a statement recorded during a survey which was later retracted; (ii) Whether the assessee's diary and other evidence seized during the survey sufficiently proved that the earlier statement was incorrect; (iii) Whether the Tribunal was justified in declining to follow a coordinate Bench decision arising from the same survey.

Issue (i): Whether the Tribunal could sustain the addition based on the voluntary survey statement despite subsequent retraction.

Analysis: The statement was given during a survey and retracted after more than two months without production of contemporaneous books of account or other definitive records proving the earlier statement to be false. The Tribunal placed weight on the voluntariness of the statement recorded in the presence of family members and counsel and observed that retraction must be made at the earliest opportunity or supported by contemporaneous evidence to succeed.

Conclusion: The Tribunal's finding that the retraction did not satisfactorily displace the earlier voluntary statement is upheld; the addition could be sustained.

Issue (ii): Whether entries in a seized diary and other material established that the earlier statement was erroneous.

Analysis: The diary entries and other evidence seized during the survey were not shown to be contemporaneous, complete books of account or otherwise sufficient to substantiate the claimed source of investment; absence of regular books or reliable contemporaneous records undermined the retraction.

Conclusion: The diary and seized material did not satisfactorily prove that the earlier statement was incorrect; the assessee failed to meet the onus of proof.

Issue (iii): Whether the Tribunal was wrong to decline to follow a coordinate Bench decision from the same survey.

Analysis: The Tribunal applied established principles regarding survey statements, retraction timing, and onus of proof, relying on relevant precedent; the Tribunal's approach was a possible and defensible view in the facts and therefore not amenable to interference for failure to follow a different view of a coordinate Bench.

Conclusion: The Tribunal was justified in its conclusion and in not following the coordinate Bench decision for the reasons recorded.

Final Conclusion: The Tribunal's determination that the assessee failed to prove that the voluntary survey statement was erroneous and that the retraction was not made at the earliest opportunity is upheld, resulting in dismissal of the appeal and confirmation of the addition.

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