The assessee an individual is engaged in the Manufacturing and Trading in Gold Ornaments. There was a survey conducted at the premises of the assessee. At the time of survey, it was noticed that there was gold bar weighing 736 gms in the books of accounts. However, the same was not found physically during the course of survey operation. At the time of survey, statement u/s 133A of the Act was recorded. The assessee during the assessment proceedings explained that the gold bar weighting 700 gms were purchased from Shyam Bullion dated 11-10-2011 and 12-10-2011. The remaining 36 gms of gold bar was carried forward from the previous balance. Further, the gold bars were given to the labors for the preparation of the ornaments. Thus, during the survey operation, the gold bar was very much available with the assessee. The assessee in support of his claim also produced the invoices for the purchase and the details of the ornaments which were subsequently sold to the parties. However, the AO disregarded the contention of the assessee. The AO treated the difference in the quantity of gold bar as undisclosed income of the assessee. On appeal, CIT(A) after considered the submission of the assessee confirmed the addition made by the AO.

Tribunal held that,

++ addition has been made by the AO on the statement given by the assessee during the course of survey operation. As such during the survey operation the closing stock of gold bars was shown as per books 736 gms whereas, there was not found any physical stock of gold bar. Therefore, the difference was treated as undisclosed closing stock and accordingly, the gross profit rate was applied to determine the income on such undisclosed stock. However, it was noted that the assessee has claimed that the gold bars were purchased from Shyam Bullion dated 11-10-2011 & 12-10-2011. It was also noted that the assessee was maintaining stock ledger of gold bars. It was noticed that the purchase of the gold bars was duly recorded in the stock register. Similarly when it was issued to the laborers for the purpose of conversion was duly recorded. The AO has alleged that there was contrary statement given by the assessee during the survey operation vis-à-vis during the assessment proceedings. But the contrary cannot lead to make any addition without bringing any material on record for the difference in the quantity of stock. It was further noted that the statement has been recorded u/s 133A of the Act which has no evidentiary value. Therefore, it was held that no addition can be made on the basis of statement. No shelter can be taken from the statement u/s 133A for deciding the issue on hand. It was also noted that in the absence of any documentary evidence, the addition cannot stand merely on the basis of statement recorded during survey proceedings. In this regard, CBDT has issued Instruction issued vide F. No. 286/98/2013-IT(Inv.II) dated 18th of December 2014. From the circular it is amply clear that the CBDT has emphasized to its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/undue influence. Keeping in view the guidelines issued by the CBDT from time to time regarding the statements obtained during search and survey operation, it is undisputedly clear that the lower authorities have not collected any other evidence to prove the impugned under valuation of stock other than the statement. Hence, the ground of appeal of the assessee is allowed.

(See 2019-TIOL-290-ITAT-AHM)