ASSIATENT COMMISSIONER OF INCOME TAX CIRCLE -1, AMRITSAR vs. SHRI MUKESH SHINGARI, 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 the retracted statement made during a survey under Section 133A has no evidentiary value without corroborative evidence. It deleted the entire addition of Rs. 266 Lacs for M/s Varun Traders, finding the CIT(A)'s partial confirmation based on a valuation report unsustainable as the core issue was undisclosed investment, not valuation. For other assessees, additions for undisclosed investments were deleted, while additions for cash differences and estimated profit on stock discrepancies were upheld.

Key Issues

Can an addition be sustained solely based on a retracted statement made during a Section 133A survey without corroborative evidence? Is a valuation report sufficient to confirm an addition for undisclosed investment when the initial surrender is retracted and no other evidence is found?