Addition Made Solely on Survey Statement Without Corroborative Material Under Section 68 Is Unsustainable
Issue
Whether an addition made under Section 68 of the Income-tax Act, 1961 solely on the basis of a statement recorded during a survey under Section 133A, without any independent corroborative evidence, is legally sustainable.
Facts
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Business & Survey: The assessee-company, engaged in operating bus services and ticket booking, was subjected to a survey under Section 133A for Assessment Year 2017-18.
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Surrender of Income: During the survey proceedings, the Director of the assessee-company surrendered ₹1.46 crores as additional income.
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Disclosure in Books & Return: The assessee subsequently incorporated the surrendered amount into its regular books of account and disclosed it in its return of income.
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Addition by AO: The Assessing Officer (AO) treated the surrendered sum as an unexplained cash credit under Section 68 and made a tax addition.
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Lack of Material: The addition was founded solely on the statement recorded during the survey, which was taken by invoking Section 131 without satisfying the statutory conditions for exercising such power.
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No Independent Evidence: The AO did not refer to or rely upon any independent documentary or tangible evidence to establish that the surrendered amount constituted unexplained cash credit under Section 68.
Decision
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Statements recorded during survey proceedings under Section 133A do not have evidentiary value on their own to sustain an assessment addition.
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The Revenue failed to bring any independent, corroborative material or evidence on record to substantiate the invocation of Section 68.
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An addition made merely on the basis of an uncorroborated survey statement is legally unsustainable and liable to be deleted in favor of the assessee.
Key Takeaways
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Survey Statements Lack Evidentiary Sole Basis: A statement recorded during a Section 133A survey cannot form the sole foundation for an addition under Section 68 without supporting physical or documentary evidence.
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Requirement of Independent Evidence: The Assessing Officer must independently prove the existence of unexplained cash credits through tangible records discovered during or after the survey.
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Strict Construction of Section 131 Powers: Invoking powers under Section 131 during a survey requires strict compliance with statutory preconditions; procedural lapses further weaken the Revenue’s reliance on such statements.
Bhupendra Shah, CA for the Appellant. Amit Gurav, Sr. DR for the Respondent.
ORDER
Jagadish, Accountant Member. – This appeal is filed by the Revenue against the order dated 07.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the Ld. CIT(A)”] for the Assessment Year 2017-18 arising out of the assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (“the Act”) by the Deputy Commissioner of Income Tax, Circle-5(1)(2), Mumbai.
2. The Revenue has raised the following effective ground of appeal:
“Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,45,53,867/-made by the Assessing Officer under section 68 of the Act?”
3. Briefly stated, the facts are that the assessee is engaged in the business of operating bus services and ticket booking. A survey under section 133A of the Act was conducted on 31.08.2016 at the business premises of the assessee. During the course of survey, the Director of the assessee company surrendered a sum of Rs.1,45,53,867/- as additional income. The assessee, however, incorporated the surrendered amount in its regular books of account and disclosed the same in the return of income. During reassessment proceedings, the Assessing Officer treated the surrendered amount as unexplained cash credit under section 68 and made the impugned addition.
4. Before the Ld. CIT(A), the assessee contended that the addition was made merely on the basis of the statement recorded during survey without any corroborative material. It was also submitted that though the proceedings were under section 133A, the statement was recorded under section 131 without satisfying the statutory conditions. The Ld. CIT(A), after considering the submissions and relying upon the judgment of the Hon’ble Supreme Court in CIT v. S. Khader Khan Son [2013] 352 ITR 480 (SC), held that a statement recorded during survey has no independent evidentiary value and, in the absence of corroborative material, no addition could be sustained merely on the basis of such statement. Accordingly, the addition was deleted.
5. The Ld. Departmental Representative relied upon the assessment order and submitted that the Director had voluntarily admitted the undisclosed income during survey and, therefore, the Assessing Officer was justified in making the addition. The Ld. Authorised Representative, on the other hand, supported the order of the Ld. CIT(A) and submitted that except the survey statement, no independent material had been brought on record to justify the addition under section 68.
6. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the survey was conducted under section 133A on 31.08.2016. The addition has been made solely on the basis of the statement recorded during the course of survey. The Ld. CIT(A) has recorded a finding that the statement was recorded by invoking section 131 during survey proceedings without there being any material to show that the statutory conditions for exercise of such power were satisfied. More importantly, except the statement of the Director, the Assessing Officer has not referred to any independent evidence to establish that the amount represented unexplained cash credit exigible to tax under section 68 of the Act.
7. The Hon’ble Supreme Court in S. Khader Khan Son (supra) has affirmed the legal position that a statement recorded during survey under section 133A has no conclusive evidentiary value and an addition cannot be sustained solely on the basis of such statement without corroborative evidence. In the present case, the Revenue has failed to bring any independent material to support the impugned addition. We also note that the survey was conducted on 31.08.2016, when the books of account for the relevant financial year had not been closed, and the surrendered income was subsequently incorporated in the regular books and disclosed in the return of income. In these circumstances, we concur with the findings of the Ld. CIT(A) that the addition made merely on the basis of the survey statement is unsustainable.
8. Accordingly, we find no infirmity in the order of the Ld. CIT(A) and dismiss the grounds raised by the Revenue.
9. In the result, the appeal filed by the Revenue is dismissed.