A partner surrendered income during a survey and we have since reconciled the stock. Can we withdraw it?
Yes. Section 133A does not give a statement recorded in a survey evidentiary value, and an admission is not conclusive: the maker may show it to be wrong. Once the stock difference was reconciled from the records and the officer had made no independent enquiry, nothing was left to support the addition.
Decided by the High Court (Delhi High Court — Manmohan J (sitting singly)) on 2010-10-04, reported as (2010) 328 ITR 384 (Del); (2011) 196 Taxman 488 (Del); ITA No. 1111 of 2010, AY 2005-06. It bears on section 133A, section 132(4) of the Income Tax Act 1961, in Evidence & Burden of Proof and Search, Survey & Block Assessment matters.
This answers the standard line that a surrender made on the spot binds you and that the retraction is an afterthought. It matters most where the whole assessment rests on the survey statement and the officer never went behind it. Note the two limbs the court needed: the discrepancy actually explained from the books, and no independent enquiry by the Assessing Officer.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A survey under s.133A was carried out at the firm's business premises on 14 September 2004, and discrepancies were noticed in stock and in cash in hand. The firm surrendered Rs 99,50,000 in the course of the survey, of which Rs 45,00,000 related to excess stock; asked about the stock difference, a partner answered that he could not explain it then and was offering additional income of Rs 43 lakhs for the year to buy peace of mind. By letter of 29 November 2004 the firm said that statement about stock was incorrect and that the discrepancy had been reconciled, and withdrew the offer. In the assessment order of 31 December 2007 the Assessing Officer treated the retraction as an afterthought and made the addition on the strength of the survey statement. The Commissioner (Appeals) deleted it, finding that the Assessing Officer had made no independent enquiry and had not shown that the surrendered amount was left out of the final books; the Tribunal dismissed the Revenue's appeal on 4 January 2010, noting that the reconciliation with the associate concern was never controverted and that both concerns were separately assessed and kept audited books and statutory excise records.
The Revenue's appeal was dismissed as bereft of merit (para 17). Section 133A does not mandate that a statement recorded under it has evidentiary value: for a statement to have evidentiary value the officer must have been authorised to administer an oath and record a sworn statement, and s.133A, unlike s.132(4), gives no such power (paras 11-12). The word 'may' in s.133A(3)(iii) puts beyond doubt that material collected and statements recorded in a survey are not by themselves conclusive evidence (para 14). An admission is an extremely important piece of evidence but is not conclusive, and the person who made it may show that it is incorrect (para 15). Because the firm had in fact explained the stock discrepancy by producing relevant records, including the excise register of its associate company, the Assessing Officer could not make the addition solely on the strength of the survey statement (para 16).
The Court set out s.133A in full and read it against s.132(4). Section 132(4) expressly authorises the authorised officer to examine a person on oath and provides that the statement so made may be used in evidence; s.133A contains no such power. A statement carries evidentiary value only if it can be taken on oath, so a survey statement does not acquire that value from the section itself (paras 11-12). The permissive 'may' in s.133A(3)(iii), which allows the authority to record a statement that may be useful or relevant, confirms that neither the material collected nor the statement recorded is conclusive by itself (para 14). Beyond the section, it is settled law that an admission, however important as evidence, is not conclusive and the maker may show it to be wrong (para 15). The Court noted that the Kerala High Court in Paul Mathews & Sons and the Madras High Court in S. Khader Khan Son had taken a similar view, and set out the passage from Paul Mathews reasoning from the absence of a power to administer an oath (para 13). On the facts, the discrepancy had been explained by the excise register of the associate company, so nothing was left to support the addition (para 16).
it is 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.
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Handle my notice → Ask a CA on WhatsAppYes. Section 133A does not give a statement recorded in a survey evidentiary value, and an admission is not conclusive: the maker may show it to be wrong. Once the stock difference was reconciled from the records and the officer had made no independent enquiry, nothing was left to support the addition. This was decided by the High Court (Delhi High Court — Manmohan J (sitting singly)) and bears on section 133A, section 132(4) of the Income Tax Act 1961. It is reported as (2010) 328 ITR 384 (Del); (2011) 196 Taxman 488 (Del); ITA No. 1111 of 2010, AY 2005-06. This answers the standard line that a surrender made on the spot binds you and that the retraction is an afterthought. It matters most where the whole assessment rests on the survey statement and the officer never went behind it. Note the two limbs the court needed: the discrepancy actually explained from the books, and no independent enquiry by the Assessing Officer. If it applies to you, the first step is this: Reconcile the stock or cash difference from the books and file the working, because the retraction only bites once the discrepancy is explained on the record.
A survey under s.133A was carried out at the firm's business premises on 14 September 2004, and discrepancies were noticed in stock and in cash in hand. The firm surrendered Rs 99,50,000 in the course of the survey, of which Rs 45,00,000 related to excess stock; asked about the stock difference, a partner answered that he could not explain it then and was offering additional income of Rs 43 lakhs for the year to buy peace of mind. By letter of 29 November 2004 the firm said that statement about stock was incorrect and that the discrepancy had been reconciled, and withdrew the offer. In the assessment order of 31 December 2007 the Assessing Officer treated the retraction as an afterthought and made the addition on the strength of the survey statement. The Commissioner (Appeals) deleted it, finding that the Assessing Officer had made no independent enquiry and had not shown that the surrendered amount was left out of the final books; the Tribunal dismissed the Revenue's appeal on 4 January 2010, noting that the reconciliation with the associate concern was never controverted and that both concerns were separately assessed and kept audited books and statutory excise records. The matter was decided on 2010-10-04 by the High Court (Delhi High Court — Manmohan J (sitting singly)). On those facts the High Court held as follows. The Revenue's appeal was dismissed as bereft of merit (para 17). Section 133A does not mandate that a statement recorded under it has evidentiary value: for a statement to have evidentiary value the officer must have been authorised to administer an oath and record a sworn statement, and s.133A, unlike s.132(4), gives no such power (paras 11-12). The word 'may' in s.133A(3)(iii) puts beyond doubt that material collected and statements recorded in a survey are not by themselves conclusive evidence (para 14). An admission is an extremely important piece of evidence but is not conclusive, and the person who made it may show that it is incorrect (para 15). Because the firm had in fact explained the stock discrepancy by producing relevant records, including the excise register of its associate company, the Assessing Officer could not make the addition solely on the strength of the survey statement (para 16).
The Court set out s.133A in full and read it against s.132(4). Section 132(4) expressly authorises the authorised officer to examine a person on oath and provides that the statement so made may be used in evidence; s.133A contains no such power. A statement carries evidentiary value only if it can be taken on oath, so a survey statement does not acquire that value from the section itself (paras 11-12). The permissive 'may' in s.133A(3)(iii), which allows the authority to record a statement that may be useful or relevant, confirms that neither the material collected nor the statement recorded is conclusive by itself (para 14). Beyond the section, it is settled law that an admission, however important as evidence, is not conclusive and the maker may show it to be wrong (para 15). The Court noted that the Kerala High Court in Paul Mathews & Sons and the Madras High Court in S. Khader Khan Son had taken a similar view, and set out the passage from Paul Mathews reasoning from the absence of a power to administer an oath (para 13). On the facts, the discrepancy had been explained by the excise register of the associate company, so nothing was left to support the addition (para 16). In the words reproduced by the source cited on this page: "it is 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." The decision followed or applied Paul Mathews & Sons v. CIT [2003] 263 ITR 101 (Ker.) — similar view noted and quoted (para 13); CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad.) — similar view noted (para 13).
It was decided by the High Court on 2010-10-04 and is reported as (2010) 328 ITR 384 (Del); (2011) 196 Taxman 488 (Del); ITA No. 1111 of 2010, AY 2005-06. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 133A, section 132(4), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed as bereft of merit (para 17). Section 133A does not mandate that a statement recorded under it has evidentiary value: for a statement to have evidentiary value the officer must have been authorised to administer an oath and record a sworn statement, and s.133A, unlike s.132(4), gives no such power (paras 11-12). The word 'may' in s.133A(3)(iii) puts beyond doubt that material collected and statements recorded in a survey are not by themselves conclusive evidence (para 14). An admission is an extremely important piece of evidence but is not conclusive, and the person who made it may show that it is incorrect (para 15). Because the firm had in fact explained the stock discrepancy by producing relevant records, including the excise register of its associate company, the Assessing Officer could not make the addition solely on the strength of the survey statement (para 16). It arises in Evidence & Burden of Proof and Search, Survey & Block Assessment matters, on section 133A, section 132(4) of the Income Tax Act 1961, and was decided by Delhi High Court — Manmohan J (sitting singly). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask the officer in writing to identify what enquiry he made independently of the survey statement, and get the answer on file. Point out that s.133A carries no power to administer an oath, so what was said in the survey is not sworn testimony.
Validity check could not be completed. No later decision applying, following or affirming this judgment was established. The only later High Court decision traced that engages with it is Smt. Dayawanti v. CIT [2016] 75 taxmann.com 308 (Delhi), decided 27 October 2016, where it was cited at para 19 in a case the assessee lost; that case concerned statements recorded on oath under s.132(4) after a search and seizure, and the Court held that such sworn statements, never reasonably explained, had undeniable probative value. That is a distinction on the statutory footing, not a doubting of this decision, but it is not an application of it either. Nothing overruling or doubting the judgment was found. Absence of contrary authority is not good law, so the status has been left unverified. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read against the reported judgment. The particulars are now settled: Delhi High Court, Manmohan J sitting singly, 4 October 2010, ITA No. 1111 of 2010 for AY 2005-06, reported at (2010) 328 ITR 384. Two things to keep in view. The holding is expressly conditioned on the assessee having explained the discrepancy by producing records — the excise register of its associate company — so it is not authority that a survey statement can be retracted at large. And the reasoning turns on the absence of a power to administer an oath in s.133A: it does not carry across to a sworn statement recorded under s.132(4) in a search, as Smt. Dayawanti v CIT [2016] 75 taxmann.com 308 (Delhi) shows. The validity status has been reduced to unverified because no later decision applying or following this judgment could be traced. No later decision applying, following or affirming this judgment was traced, and no special leave petition against it was found. The judgment does not address a survey statement that the maker reaffirms, or one the assessee cannot explain from records. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed as bereft of merit (para 17). Section 133A does not mandate that a statement recorded under it has evidentiary value: for a statement to have evidentiary value the officer must have been authorised to administer an oath and record a sworn statement, and s.133A, unlike s.132(4), gives no such power (paras 11-12). The word 'may' in s.133A(3)(iii) puts beyond doubt that material collected and statements recorded in a survey are not by themselves conclusive evidence (para 14). An admission is an extremely important piece of evidence but is not conclusive, and the person who made it may show that it is incorrect (para 15). Because the firm had in fact explained the stock discrepancy by producing relevant records, including the excise register of its associate company, the Assessing Officer could not make the addition solely on the strength of the survey statement (para 16).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
They recorded your statement in a survey. Can the addition rest on that alone?
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You admitted something and now want to retract it. Does the admission end the matter?