2017 (5) TMI 311 - SC - Income Tax

Undisclosed investment - statement u/s 132(4) at the time of search - whether no statement of the vendor of the assessee was recorded at the time of raid as required under Section 132(4)? - Held that - On a perusal of the order passed by the Tribunal and that of the High Court 2015 (7) TMI 364 - KERALA HIGH COURT it is not clear whether a statement so recorded under Section 132(4) at the time of search was available on record and that apart we do not notice anything or any analysis made by the Tribunal or the High Court with regard to the effect or revised returns filed by the vendor. The findings have been recorded written on the basis of the sworn affidavits in the statement. We are not satisfied with the analysis made by the Tribunal or that by the High Court. In our considered opinion this material on record should have been adverted to by the Tribunal as the final fact finding authority in a proper perspective keeping in view the law in the field. We remand the matter back to the Tribunal for reconsideration.

Summary

Issues:
Challenge to orders passed by High Court in ITA No.201 of 2011 and R.P.No.650/2014 regarding Income Tax Act, 1961.

Analysis:
The Supreme Court granted leave to hear the appeals challenging the orders of the Division Bench of the High Court of Kerala. The appellant's counsel argued that the High Court erred in overturning findings in favor of the assessee based on new documents filed by the revenue, emphasizing that the vendor's statement was not recorded during the raid as required under Section 132(4) of the Income Tax Act. The vendor filed revised returns post-raid, indicating receiving more money for the land, absolving the assessee from liability. The counsel contended that all materials should have been sent to the assessing officer in due time. On the other hand, the revenue's counsel supported the High Court's judgment, citing analysis in para 12 of the impugned judgment and referring to the statement under Section 132(4). The Supreme Court noted the absence of clarity regarding the recorded statement under Section 132(4) and the lack of analysis on the effect of revised returns by the vendor. The Court found the Tribunal and High Court's analysis unsatisfactory and emphasized the importance of considering all material on record properly. Consequently, the appeals were allowed, the High Court and Tribunal orders were set aside, and the matter was remanded back to the Tribunal for addressing all raised issues within six months without expressing any opinion on the merits. No costs were awarded in this matter.