2017 (12) TMI 65 - HC - Income Tax

Search and seizure proceedings under Section 132 - whether the statements made in the course of the search and seizure operations, having regard to Section 132(4), could not be binding upon it? - Held that - CIT(A) view that the statement under Section 132(4) could not bind the assessee is, in the opinion of this Court, correct. The text of Section 132(4), clarifies that the presumption arises in the case of the searched party. In case the statements by the party whose premises are searched, or to be attributed to a third party as in the case of the assessee, there has to be a connect or corroboration. Clearly, there was none in the present case. On this score, the addition made by the AO was unsustainable; the CIT(A) correctly directed the cancellation. The other factual detail is that no incriminating material was found from the assessee s premises. In the circumstances, the ruling in Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) squarely applies. - Decided against revenue

Summary

Issues: Revenue's grievance with deletions ordered by CIT(A) and affirmed by ITAT.

In this case, the Revenue's main grievance was regarding the deletions ordered by the CIT(A) and affirmed by the ITAT. The search assessment was conducted in relation to a particular group, and the assessee contended that statements made during the search proceedings should not be binding on them as they were made by a third party. The AO disregarded this contention and made additions to the tax based on those statements. The CIT(A) ruled in favor of the assessee, stating that statements made by a third party during a search could not lead to adverse consequences for the assessee without corroborative material. The ITAT upheld this view and referred to a previous court decision. The High Court agreed with the CIT(A)'s view that statements under Section 132(4) could not bind the assessee, especially when there was no corroboration in the present case. Additionally, since no incriminating material was found at the assessee's premises, the court applied the ruling from a previous case. Consequently, the court dismissed the appeals, stating that no substantial question of law arose in this matter.