SHRI MUKESH SHINGARI,AMRITSAR vs. DEPUTY COMMISSIONER OF INCOME TAX, AMRITSAR

Facts

During a survey, the assessee, M/s Varun Traders, surrendered Rs. 266 Lacs for undisclosed investments based on a diary. This surrender was later retracted, claiming coercion. The Assessing Officer (AO) rejected the retraction and added the amount as undisclosed income. The CIT(A) reduced the addition to Rs. 49.28 Lacs based on a valuation report.

Held

The tribunal held that a statement recorded under Section 133A has no evidentiary value if retracted shortly after, especially without corroborative evidence. It deleted the entire addition of Rs. 266 Lacs for M/s Varun Traders, finding the CIT(A)'s reliance on a valuation report for undisclosed investment unsustainable. For Shri Pawan Kumar, the tribunal confirmed additions for cash discrepancy and estimated profit on deficit stock, while deleting the undisclosed investment. For Shri Mukesh Shingari, the tribunal confirmed the CIT(A)'s decision regarding estimated profit on deficit stock and cash difference.

Key Issues

The key legal issues were the evidentiary value of a retracted statement made during a survey under Section 133A and whether an addition for undisclosed investment could be sustained solely based on such a statement or a valuation report without corroborative evidence.