Assessment – Supreme Court dismissed the Special Leave Petition arising from the order of the High Court in view of concurrent finding of facts where the High Court had held that statements recorded during survey operation do not have any evidentiary value when the same are subsequently retracted and no addition could be made solely on the basis of such statement.

A survey action was conducted u/s. 133A of the Act on 24th July, 2001, in the premises of the assessee at 90, Syed Mada Street, Shevapet Salem, and one of the partners of the firm, by name Asif Khan. In his sworn statement Asif Khan offered an additional income of Rs. 20,00,000 for the assessment year 2001-02 and Rs. 30,00,000 for the assessment year 2002-03. However, the said statement was retracted by the assessee through its letter dated 3rd August 3, 2001, stating that the partner Asif Khan, from whom a statement was recorded during the survey operation u/s. 133A, was new to the management and he could not answer the enquiries made and as such, he agreed to an ad hoc addition, which could never be achieved by the business owing to the competition and to the legislation by the Government prohibiting smoking in public places.

The assessee filed its return of income for assessment year 2001-02 on 29th October, 2001, disclosing an income of Rs. 12,640/-.

The Assessing Officer found that certain books were not produced during the course of survey action and that certain entries in the books were made subsequent to the survey action and at the time of survey action, the assessee had come forward with the admission. The Assessing Officer rejected the book, viz., “branch contractors’ agent book” produced after the survey to support the claim of manufacturing process and based on the admission made by the assessee, which according to him were directly relatable to the defects noticed during the action u/s. 133A of the Act, recomputed the assessment by his assessment order dated 30th March, 2004.

Aggrieved by the said assessment order dated 30th March, 2004 the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who, by order dated 30th November,2006, held the issue in favour of the assessee. On appeal, at the instance of the Revenue, the Appellant Tribunal holding that there was no infirmity in the order of the Commissioner, dismissed the Revenue’s appeal.

The High Court dismissed the appeal of the revenue holding that no substantial question of law arose since the Commissioner and Tribunal had followed Circular of CBDT dated 10th March, 2003 for arriving at the conclusions that the material collected and the statement obtained u/s. 133A would not automatically bind upon the assessee.