13. A. Thangavel Nadar
Stores vs. ITO; [2019] 417 ITR 50 (Mad.) Date of order: 25th
February, 2019 A.Ys.: 2013-14 to
2015-16
Reassessment – Survey –
Sections 133A, 147 and 148 of ITA, 1961 – Notice of reassessment based only on
statement recorded during income-tax survey – No material to show escapement of
income – Notice not valid
For the A.Ys. 2013-14 to 2015-16 the assessee, a partnership firm, filed
returns of income and the returns were processed u/s 143(1) of the Income-tax
Act, 1961. Subsequently, survey u/s 133A of the Act was conducted at the
premises of the assessee and a statement of a partner was recorded. On the
basis of the statement, and without any corroborating material, the AO issued
notices u/s 148 of the Act for reopening the assessments for the three years.
The assessee filed writ petitions and challenged the validity of the
notices. The Madras High Court allowed the writ petitions and held as under:
‘(i) A statement recorded u/s 133A
of the Income-tax Act, 1961 in the course of survey is different and distinct
from a statement recorded u/s 132(4) in the course of search and seizure and
the evidentiary value ascribed to the two is not the same. Whereas u/s 132(4) a
statement recorded by a searching officer is specifically permitted to be used
as evidence in any proceedings under either the 1922 or the present Act, there
is no such sanctity conferred on a statement recorded u/s 133A(3)(iii).
(ii) The utility of a statement
recorded in the course of survey is limited to the extent to which it is useful
or relevant to any proceedings under the Act. Thus, a statement recorded in the
course of survey can, at best, support a proceeding for reassessment. It cannot
be a sole basis for reassessment.
(iii) There was no dispute that
the survey initiated by the Department had yielded no tangibly incriminating
material. In fact, the Mahazarnama of even date revealed as much.
Notwithstanding this, the Department had gone ahead with the proceedings for
reassessment based solely upon the sworn statement recorded u/s 133A from one
of the partners which he had retracted later. The notices of reassessment were
not valid.’
