TaxTMI 
TaxTMI 
Precautions to be taken while recording statements u/s 132(4) of the income Tax Act, 1961 including admission of undisclosed income
X X X X Extracts X X X X
X X X X Extracts X X X X
....d seizure is one of the most important and potent tool for collection of valuable evidence of undisclosed income. It is expected that assessments in search cases would normally not only result in detection of undisclosed income but also culminate in levy of penally for concealment of income and prosecution for willful attempt to evade taxes and thus, such actions would act as a deterrent against tax evasion. 2. It has been observed that undisclosed incomes reported initially in some of the searches as "admission" did not result in sustainable additions, much less levy of penalty and launching of prosecution. One of the reasons for such a situation appears to be undue emphasis of admission on undisclosed income rather than collection of e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e made to bring out maximum possible information which will be relevant not only in the proceedings in the case of the searched person, but also in respect of consequential/connected cases of other persons with whom such undisclosed transactions have been detected during the course of search. 5.2 Admission of undisclosed income. if any, by a person should invariably be based upon material/cogent evidence [documents, assets seized and/or found or statements of connected persons or results of enquiries or any other discrepancy noticed during search]. A mere statement making admission of undisclosed income without specifying and substantiating the manner in which the admitted income has been derived may not serve the intended purpose.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able financial years and persons concerned. 6. Besides the above, the following issues need also to be kept in view in respect of recording of statements u/s 132(4) of the Act: 6.1 Statements u/s 132(4) of the Act must be recorded from all the persons in whose names warrants of authorization have been issued. Where the searched person is a HUF/ Company/Firm/AOP/BOl/Trust, etc, the identity and designation of the person making the statement must be recorded. Further if such person is not the one who is mentioned in Sec 140 of the Act with regard to the HUF/Company/Firm/AOP/BOI/Trust, etc., such statements, in so far as they relate to disclosures and other crucial issues, must be got confirmed u/s 132(4) by a person competent to d....