Survey: Section 133A of Income-tax Act, 1961: A.Y. 2005-06: An admission made during survey is not conclusive : It is subject to the other evidence explaining the discrepancy.

[CIT v. Dhingra Metal Works, 196 Taxman 488 (Del.)]

During the course of a survey at the business premises of the
assessee-firm, the tax officials noticed some discrepancies in stock. One of the
partners of the assessee could not explain the difference at that time and,
therefore, to get a peace of mind, certain additional income was offered for
assessment. Subsequently, the assessee submitted that the statement of the
partner about the stock was incorrect; and that the impugned discrepancy had
been reconciled as it was only a mistake. Consequently, the assessee withdrew
the offer of additional income for taxation on account of excess stock. However,
the Assessing Officer did not accept the assessee’s claim and made an addition
as per the statement recorded in the course of survey. The Tribunal deleted the
addition.

On appeal by the Revenue, the Delhi High Court upheld the
decision of the Tribunal and held as under :

“(i) From a reading of section 133A, it is apparent that it
does not mandate that any statement recorded u/s.133A would have an
evidentiary value. For a statement to have evidentiary value, the Survey
Officer should have been authorised to administer oath and to record sworn
statement. This would also be apparent from section 132(4).

(ii) It is apparent that while section 132(4) specifically
authorises an officer to examine a person on oath, section 133A does not
permit the same.

(iii) Moreover, the word ‘may’ used in section 133A(iii)
clarifies beyond doubt that the material collected and the statement recorded
during the survey are not conclusive piece of evidence by themselves.

(iv) In any event, it is a settled law that though an
admission is extremely important piece of evidence, it cannot be said to be
conclusive and it is open to the person, who has made the admission, to show
that it is incorrect.

(v) Since in the instant case, the assessee had been able
to explain the discrepancy in the stock found during the course of survey by
production of relevant record including the excise register of its associate
company, the Assessing Officer could not have made the aforesaid addition
solely on the basis of the statement made on behalf of the assessee during the
course of survey.

(vi) In view of the aforesaid, instant appeal being bereft of merit, was to
be dismissed.”