Pankaj 
24 August 2023 
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While hearing a matter involving additions framed in the hands of an Assessee pursuant to Search and Survey operations under the Income Tax Act 1961, the High Court of Delhi observed that a statement recorded under Section 133A of the Act had no evidentiary value.
This was because, the officer concerned is not authorized to administer oath and record a sworn statement, added the Court.
The High Court further held that a statement recorded under Section 133A contradicted the provisions of Section 132(4) of the Act, which vested in the officer concerned, the necessary powers to record statements on oath.
In this regard, the Court observed – “…The statement recorded under Section 133A of the Act has no evidentiary value, since the officer concerned is not authorized to administer oath and record a sworn statement. This is in contradiction with the statement recorded under Section 132(4) of the Act, which is recorded on oath by an officer who is vested with necessary powers…” (Para 26)
A Division Bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalia underscored the ‘qualitative difference’ between a statement recorded under Section 133A and a statement recorded under Section 132(4).
To arrive at such a conclusion, the Division Bench relied on a judgment passed by the High Court of Madras in S. Khader Khan Sons [(2008) 300 ITR 157 (Mad.)].
The Appellant-Revenue was represented by Mr Abhishek Maratha, Senior Standing Counsel, while the Respondent-Assessee was represented by Mr Ruchesh Sinha, Advocate.
As per the brief facts, the Assessee-company is engaged in the construction industry and had undertaken several projects in Delhi NCR region. For this purpose, the Assessee entered into various agreements, including an agreement dated 30.06.2006 with a company going by the name M/s Real Gain Estates (P) Ltd., who served as the Assessee’ sole and exclusive agent for booking and selling commercial shops and flats. For rendering such service, M/s Real Gain Estates (P) Ltd. received brokerage @ 6.5%. Subsequently, the Assessee was subjected to Survey proceedings under Section 133A of the Act and in course of which, several documents were impounded. Statements were recorded of directors in the Assessee-company, one of whom gave a statement, based on which the Revenue proceeded to frame additions of Rs 10 Crores, to the Assessee’s income. On appeal, the CIT(A) quashed the additions. When the Revenue approached the ITAT, the order passed by the CIT(A) were sustained.
On hearing the arguments of both sides, the Bench observed that the additions of Rs 10 Crores were based entirely on the statement given by the Assessee-company’s directors. The Bench noted – “…Although the statements appear to have been categorized as voluntary, what emerges is that these statements were made to “buy peace of mind”. Thus, Rs.10 crores was surrendered by the directors during survey, which was added to the taxable income of the respondent/assessee….”. (Para 20)
The Bench went on to punch more holes in the case made out by the Revenue. It observed – “…It is also not in dispute that the respondent/assessee was not furnished with a copy of the survey report. This is an aspect which the Tribunal has noted in the impugned order…”. (Para 22)
Noticing another lacuna, the Bench observed – “…Concededly, the directors were not confronted with the contents of the survey report…” (Para 23)
Since, the Bench made out that the statements had been given by the Directors to ‘buy peace of mind’ and that neither the Assessee-company nor its directors were access to the Survey report, the Bench sustained the order of the ITAT in quashing the additions framed, while also observing there to be a lack of corroborative evidence for framing the additions. (Para 24)
Cause Title: The Principal Commissioner of Income Tax Vs. ARN Infrastructure Ltd. [ITA 37/2019 / 2023-Enterslice-1-HC-Del-IT]
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