Chhattisgarh High Court Rules Survey Statements Have No Evidentiary Value, Quashes Additions on Excess Stock and Cash
Court relies on Supreme Court precedent, says survey statements cannot justify income additions without independent proof
Judges stress that Section 133A of Income Tax Act does not empower officers to record statements on oath
By Our Legal Reporter
New Delhi: November 21, 2025:
The Chhattisgarh High Court has delivered a significant judgment in the field of income tax law, ruling that statements recorded during survey proceedings under Section 133A of the Income Tax Act, 1961 have no evidentiary value. The court quashed additions made by tax authorities on alleged excess stock and cash, citing the Supreme Court’s earlier decision in Commissioner of Income Tax v. S. Khader Khan Sons.
Background of the Case
The case arose when income tax officials conducted a survey under Section 133A at the premises of a business in Chhattisgarh. During the survey, statements were recorded from the assessee admitting to excess stock and cash. Based on these statements, the assessing officer made additions to the taxable income.
The assessee challenged the additions, arguing that survey statements cannot be treated as conclusive evidence. The matter eventually reached the Chhattisgarh High Court, where the Division Bench of Justice Rajani Dubey and Justice Amitendra Kishore Prasad examined the issue.
Court’s Observations
The High Court noted that Section 133A empowers income tax authorities to conduct surveys and collect information, but it does not authorize them to record statements on oath. As a result, any statement made during a survey cannot be treated as binding or conclusive evidence.
The judges relied heavily on the Madras High Court ruling in S. Khader Khan Sons, which was later affirmed by the Supreme Court in 2012. In that case, the apex court held that statements recorded during surveys lack evidentiary value and cannot form the sole basis for income additions.
Quoting the Supreme Court’s decision, the Chhattisgarh High Court emphasized:
- Survey statements are not sworn statements and therefore cannot be treated like evidence recorded under oath.
- Additions must be supported by independent evidence, such as books of accounts, documents, or other verifiable material.
- Mere admission during a survey, without corroboration, is insufficient to justify additions.
Impact on Excess Stock and Cash Additions
In the present case, the assessing officer had relied solely on the assessee’s survey statement to make additions for excess stock and cash. The High Court ruled that this approach was legally unsustainable.
The judges observed that no independent evidence was produced to support the claim of excess stock or cash. Without such corroboration, the additions could not stand. Consequently, the court quashed the additions, providing relief to the assessee.
Importance of the Ruling
This judgment reinforces the principle that tax assessments must be based on evidence, not mere admissions. It protects taxpayers from arbitrary additions made solely based on survey statements, which are often recorded under pressure or confusion.
Legal experts note that the ruling will have wide implications:
- It strengthens the position of assessees in disputes involving survey proceedings.
- It compels tax authorities to rely on documentary evidence rather than verbal admissions.
- It aligns with the Supreme Court’s precedent, ensuring consistency across jurisdictions.
Section 133A and Its Limitations
Section 133A of the Income Tax Act allows tax officials to enter business premises, inspect books of accounts, and collect information. However, unlike Section 132 (search and seizure), it does not empower officials to administer oaths or record sworn statements.
This distinction is crucial. Statements recorded during surveys are considered informal disclosures, not formal evidence. Courts have repeatedly held that such statements cannot be the sole basis for additions.
Supreme Court Precedent
The Supreme Court’s ruling in CIT v. S. Khader Khan Sons (2012) remains the cornerstone of this principle. In that case, the apex court upheld the Madras High Court’s view that survey statements lack evidentiary value.
The Supreme Court clarified that:
- Section 133A does not empower officers to examine persons on oath.
- Statements recorded during surveys are not conclusive.
- Additions must be supported by corroborative material.
The Chhattisgarh High Court’s recent judgment reaffirms this precedent, ensuring that lower authorities follow the same principle.
Reactions from Tax Professionals
Tax professionals have welcomed the ruling, calling it a “taxpayer-friendly judgment”. They argue that survey proceedings often lead to hasty admissions, which are later used against assessees. The judgment ensures that such admissions cannot be misused without supporting evidence.
At the same time, experts caution that taxpayers must maintain proper records and documentation. While survey statements alone cannot justify additions, authorities can still rely on documentary evidence to make valid assessments.
Broader Implications
The ruling is expected to influence ongoing and future disputes involving survey proceedings across India. It sends a clear message to tax authorities: evidence, not admissions, must form the basis of assessments.
For businesses, the judgment provides reassurance that they cannot be penalized solely based on statements made during surveys. However, it also underscores the importance of maintaining accurate records to avoid genuine discrepancies.
Conclusion
The Chhattisgarh High Court’s ruling that survey statements have no evidentiary value marks a significant development in tax jurisprudence. By quashing additions based solely on such statements, the court has reinforced the principle of evidence-based assessments.
Relying on the Supreme Court’s precedent in S. Khader Khan Sons, the judgment ensures consistency and fairness in tax proceedings. For taxpayers, it offers protection against arbitrary additions, while for authorities, it serves as a reminder to base assessments on solid evidence.
As India continues to modernize its tax system, this ruling highlights the importance of balancing enforcement with fairness, ensuring that justice prevails in tax administration.
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