By TIOL News Service

CHENNAI, AUG 22, 2018: THE ISSUE IS - Whether merely based non sworn statement contained in the caveat petition filed before the Civil Court, in absence of any other supporting evidence, addition can be made. NO IS THE VERDICT.

Facts of the case

There was a search in the premises of one Shri A.R. Santhakumar. A simultaneous survey was conducted u/s 133A of the Act in the business premises of the assessee. During the course of assessment proceeding, it was found by the AO that there was a civil dispute between the assessee-firm and owner of the land. The assessee has also filed a caveat before a Civil Court at Salem in respect of development of land. The assessee had spent Rs. 20.2 lakhs towards development. However, in the caveat it was claimed that more than Rs. 50 lakhs was invested in the property. The AO made an addition of Rs .27,80,000/-, the difference between the investment disclosed in the books of account and what was disclosed in the caveat petition. On appeal, the CIT(A) deleted the addition made by the AO. Aggrieved Revenue filed appeal before the Tribunal.

Tribunal held that,

++ the addition was made based on the caveat petition filed before the Civil Court at Salem. It is not the case of the Revenue that a statement was also recorded. Other than the caveat petition, no other material is available on record to suggest that the assessee has invested more than Rs.50 lakhs. The contention of the assessee that the market rate after considering the inflation may be equal to Rs.50 lakhs cannot be brushed aside. It was noted that since the statement made in the caveat petition is not a sworn statement, there cannot be any addition only on the basis of the statement contained in the caveat petition filed before the Civil Court. Therefore, the CIT(A) has rightly deleted the addition made by the AO.

(See 2018-TIOL-1326-ITAT-MAD)