ITAT Raipur Confirms ₹37,20,800 Addition for Undisclosed Stock Found During Survey — Late Retraction Held as Afterthought

Overview of the Case

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, delivered a significant ruling in the matter of Rajinder Singh Bhasin Vs DCIT, dismissing the appeal filed by the assessee and affirming an addition of ₹37,20,800 representing unaccounted excess stock detected during a survey operation conducted under Section 133A of the Income Tax Act, 1961. The Tribunal held that where a voluntary admission is corroborated by physical evidence and subsequently retracted without any supporting material — and that too after an inordinate delay — such retraction deserves no evidentiary weight.

Background and Survey Proceedings

A survey was conducted on 25 January 2011 at the business premises of the assessee under Section 133A of the Income Tax Act, 1961. During the course of the survey, the survey team observed a complete absence of proper registers, bills, vouchers, and supporting documentation pertaining to stock and business transactions. Physical verification of both stock and cash was undertaken on-site in the presence of the assessee and his staff, all of whom were in agreement with the inventory details compiled by the survey team.

Upon quantification, the survey team identified excess stock valued at ₹37,20,800. The assessee was subjected to a structured questionnaire. In response to Question No. 3, which specifically sought an explanation for the excess stock, the assessee unambiguously stated that the excess stock worth ₹37,20,800 represented goods maintained outside the books of account. He further affirmed that he would pay all applicable taxes on this amount, that the declaration was being made entirely voluntarily without any fear or pressure, and that the excess stock belonged solely to him with no pending bills awaiting accounting entries.

The relevant extract of the statement (in Hindi) was reproduced in the assessment order and formed a critical part of the evidentiary foundation for the proceedings.

Filing of Return and Retraction of Admission

The assessee filed his return of income on 02.12.2011 for Assessment Year 2011-12, declaring total income at ₹11,11,690. Notably, the surrendered amount of ₹37,20,800 was conspicuously absent from the return — the assessee chose not to offer it for taxation. When the case was selected for manual scrutiny, the Assessing Officer noted this inconsistency.

The assessee subsequently retracted his earlier admission through a reply dated 17.01.2014, claiming that the statement made during the survey was extracted under conditions of fear, pressure, and coercion. He also sought to introduce bills from Ravindra Auto Distributors Pvt. Ltd. and Rason Auto Products — both entities related to the assessee's own firm, Bhasin Automobiles — purportedly to explain certain stock entries.

Findings of the Assessing Officer

The Assessing Officer systematically rejected every aspect of the retraction on the following grounds: