Deciphering Legal Judgments: A Comprehensive Analysis of Case Law on Evidentiary Value of Statements Recorded During Survey

Reported as:

2024 (9) TMI 505 - ITAT JAIPUR

Introduction

This article analyzes a recent judgement by the Income Tax Appellate Tribunal (ITAT) that delved into the evidentiary value of statements recorded during a survey operation u/s 133A of the Income Tax Act, 1961. The judgement clarifies the distinction between statements recorded during a survey and those recorded during a search operation u/s 132(4) of the Act, and the implications of this distinction on the admissibility of such statements as evidence.

Arguments Presented

The Revenue's primary contention was that the disclosure made by an individual in a statement recorded u/s 133A during a survey operation should be construed as incriminating material, allowing the reopening of assessments for various assessment years by invoking Section 153A of the Act.

The assessee, on the other hand, argued that statements recorded u/s 133A cannot be treated as conclusive evidence and relied on various judicial precedents to support this position.

Discussions and Findings of the Tribunal

Distinction Between Statements u/ss 132(4) and 133A

The ITAT highlighted the significant difference between statements made during a search u/s 132(4) and those made during a survey u/s 133A. Section 132(4) allows the authorized officer to examine any person on oath during a search and seizure operation, and any statement made during such examination can be used as evidence in subsequent proceedings under the Act.

However, Section 133A does not mention the recording of statements on oath. u/s 133A(3)(iii), the Income Tax Authority can only "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act."

Evidentiary Value of Statements Recorded During Survey

The ITAT referred to various judicial precedents, including the decisions of the Kerala High Court in PAUL MATHEWS AND SONS VERSUS COMMISSIONER OF INCOME-TAX. - 2003 (2) TMI 25 - KERALA HIGH COURT, the Madras High Court in COMMISSIONER OF INCOME-TAX VERSUS S. KHADAR KHAN SONS - 2007 (7) TMI 182 - MADRAS HIGH COURT (affirmed by the Supreme Court in COMMISSIONER OF INCOME-TAX VERSUS S. KHADER KHAN SON - 2013 (6) TMI 305 - SC ORDER), and its own decision in Dhingra Metal Works. These cases clarified that the word "may" in Section 133A(3)(iii) implies that the material collected and statements recorded during a survey are not conclusive evidence by themselves.

The ITAT also noted the CBDT's instructions dated 10th March 2003 and 18th December 2014, emphasizing that statements should not be recorded during search/seizure/other proceedings under undue pressure or coercion.

Analysis and Decision by the Court

Based on the above discussions, the ITAT held that it would be wrong for the Revenue to characterize a statement made during a survey u/s 133A as incriminating material that could be used for making additions in all assessment years apart from the year of search.

The ITAT found support from various decisions, including Paul Mathews & Sons v. CIT, S. Khader Khan Son, and M/S. UNIQUE ART AGE VERSUS THE ACIT, JAIPUR - 2014 (1) TMI 1075 - ITAT JAIPUR, which upheld the principle that no admission made in a statement recorded u/s 133A on oath during a survey can be relied upon as evidence against the maker or the assessee.

Doctrine or Legal Principle Discussed

The judgement primarily discussed and reaffirmed the legal principle that statements recorded during a survey operation u/s 133A of the Income Tax Act, 1961, do not have the same evidentiary value as statements recorded during a search operation u/s 132(4). The word "may" in Section 133A(3)(iii) implies that such statements are not conclusive evidence by themselves and cannot be solely relied upon for making additions or assessments.

Comprehensive Summary

The ITAT's judgement clarified the distinction between statements recorded during a survey u/s 133A and those recorded during a search operation u/s 132(4) of the Income Tax Act, 1961. The court held that statements recorded during a survey u/s 133A do not have the same evidentiary value as those recorded during a search and cannot be solely relied upon for making additions or assessments.

The ITAT relied on various judicial precedents and CBDT instructions to emphasize that the word "may" in Section 133A(3)(iii) implies that the material collected and statements recorded during a survey are not conclusive evidence by themselves. The court found it wrong for the Revenue to characterize such statements as incriminating material that could be used for making additions in all assessment years apart from the year of search.

The judgement reaffirmed the legal principle that no admission made in a statement recorded u/s 133A on oath during a survey can be relied upon as evidence against the maker or the assessee.

Full Text:

2024 (9) TMI 505 - ITAT JAIPUR