2022 (4) TMI 1321 - HC - Income Tax

Analysis of Reliance on Statements under Section 132(4) of Income Tax Act

NAYYAR PATEL Versus THE ASSISTANT COMMISSIONER OF INCOME TAX (INV) CIRCLE 2, INCOME TAX OFFICER, COMMISSIONER OF INCOME TAX

The High Court analyzed issues regarding reliance on statements under Section 132(4) of the Income Tax Act, the need for corroborative evidence for ... Addition solely on the statement given by the appellant under Section 132(4) - search/seizure proceedings - whether the Tribunal in law and fact is entitled to rely on the statement by the assessee on 22.06.1998 and /or whether the assessee by referring to the judgments relied on in Kailashben Manharlal Chokshi [2008 (9) TMI 525 - GUJARAT HIGH COURT] and M.Narayanan and Bros. Cases [2011 (7) TMI 245 - MADRAS HIGH COURT] could be allowed to contend that the statement in Annexure-C should completely be excluded and additions made by the Assessment Officer are reversed? - HELD THAT:- We have perused the effect order given, statements and retracted statements of the assessee, evidentiary value given by the tribunal and the inescapable conclusion that could be drawn in respect of each one of the additions now confirmed by the Tribunal. The findings recorded cannot and could not be said as completely unavailable and illegal. As noted supra, due evidenciary value is given and no other material is placed by the assessee before the tribunal in spite of observation made by this Court to erase the impact of statement in Annexure-C. Unless and until illegality or infirmity is made out against the findings recorded by the tribunal, this Court if considers the substantial questions exclusively by referring to the judgments on which the assessee is relying upon, would virtually be disturbing what has been already recorded as a relevant circumstance by this Court in Annexure-I judgment between the parties. We are convinced that the grounds raised are not available in the circumstances of this case, the assessee failed to demonstrate existence of question of law against any of the findings confirmed by the Tribunal. Further with the affirmation of the findings by the Tribunal, the concurrent view taken by the Commissioner and the Tribunal is also kept in mind, we see no reason to interfere with the order under appeal. Excepting the answered ground, no other ground is urged by the assessee. - Decided in favour of revenue. Issues:1. Reliance on statement under Section 132(4) of the Income Tax Act for making additions in income.2. Requirement of corroborative evidence for additions based on statements under Section 132(4).3. Treatment of retracted statements by the authorities.Issue 1: Reliance on Statement under Section 132(4):The appellant challenged the reliance on the statement given under Section 132(4) of the Income Tax Act by the authorities, including the Tribunal. The appellant argued that the authorities erred in solely relying on this statement and disregarding Annexure D statement given by the assessee. The High Court noted the appellant's retraction of the statement and examined the circumstances surrounding it, emphasizing the need for corroborative evidence to support additions based on such statements.Issue 2: Corroborative Evidence for Additions:The appellant contended that additions based on statements under Section 132(4) should be supported by corroborative evidence, as mandated by the remand order. The High Court highlighted the importance of corroborative materials and the need for due evidentiary value to be attached to such statements. The Court criticized the Tribunal for not giving proper evidentiary value to the statements of the assessee and emphasized the requirement to consider other materials produced by the Revenue in deciding the appeal.Issue 3: Treatment of Retracted Statements:The appellant raised concerns about the authorities ignoring the retracted statements made by the appellant. The High Court examined the retracted statements and the reasons provided by the appellant for retracting them. The Court noted that the retraction should be substantiated with evidence and criticized the Tribunal for disregarding the statements of the assessee recorded under Section 132(4). The Court directed the Tribunal to reconsider the appeal with notice to the parties and in accordance with the law, emphasizing the importance of giving proper evidentiary value to the statements made by the assessee.In summary, the High Court analyzed the issues related to the reliance on statements under Section 132(4) of the Income Tax Act, the requirement of corroborative evidence for such additions, and the treatment of retracted statements. The Court emphasized the need for proper evidentiary value to be attached to the statements made by the assessee and criticized the Tribunal for not considering other materials produced by the Revenue. Ultimately, the Court answered the questions in favor of the revenue, dismissed the appeal, and made no order as to costs.