SHRI PAWAN KUMAR,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 seized diary. The surrender was later retracted, claiming coercion. The Assessing Officer rejected the retraction and added the amount, which the CIT(A) reduced to Rs. 49.28 Lacs based on a valuation report.

Held

The tribunal held that statements recorded under Section 133A have no evidentiary value if retracted promptly and 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 investments unsustainable. For other assessees, additions for stock and cash discrepancies were partly confirmed or dismissed based on similar principles.

Key Issues

Can an addition be sustained solely based on a retracted statement made during a survey under Section 133A without corroborative evidence? Can a valuation report alone justify an addition for undisclosed investments when the primary allegation lacks supporting evidence?