ITAT Guwahati: Additions Based Solely on Employee-Husband's Statement During Survey u/s 133A Deemed Invalid

In the realm of income tax assessments, the evidentiary value of statements recorded during survey operations remains a highly contested subject. A recent judicial pronouncement by the Income Tax Appellate Tribunal (ITAT), Guwahati Bench, has reinforced the legal position that additions to income cannot be sustained when they rely exclusively on a statement recorded under Section 133A of the Income Tax Act 1961, particularly when such statements lack independent corroborative material.

The case of Supriya Roy Vs ITO serves as a critical precedent regarding the limitations of the Revenue's power to make additions based on statements provided by employees or relatives during a survey, absent concrete evidence.

Case Background and Facts

The dispute arose from the assessment proceedings for the Assessment Year (AY) 2018-19. The assessee in this matter was engaged in the business of retail trading, specifically dealing in mustard oil.

The sequence of events commenced when the tax authorities conducted a survey operation under the provisions of Section 133A of the Income Tax Act 1961 at the business premises of the assessee. At the time of the survey, the assessee’s husband, who was employed by the business, was present. Consequently, the survey team recorded his statement.

The Assessing Officer's Action

During the course of the survey, specific discrepancies were allegedly noted by the survey team, and the statement of the husband (acting as an employee) was utilized as the primary basis for the subsequent assessment order. Based on this statement, the Assessing Officer (AO) proceeded to make significant additions to the returned income of the assessee: