2022 (1) TMI 846 - HC - Income Tax

Assessment solely on the basis of the statement recorded u/s 132(4) - admissibility, relevance and evidentiary value of the statement recorded at the time of search under Section 132(4) - HELD THAT - On a careful reading of the findings rendered by the Tribunal, it could be seen that the assessing officer did not make assessment solely on the basis of the statement recorded u/s 132(4) but also placed reliance on the material evidence seized during the course of search as well as at the time of assessment. After having found that the appellant gave different explanations at different stages, none of which was supported by any cogent material evidence to dislodge the presumption u/s 132(4) and 132(4A)Tribunal rightly set aside the order of the First Appellate Authority and restored the order of the assessing officer. Therefore, the plea of the appellant that assessment was made solely on the basis of the statement obtained under Section 132(4) of the Income Tax Act, 1961, cannot be accepted by this court, as it is contrary to the facts of the case. Coming to the substantial questions of law relating to admissibility, relevancy and evidentiary value of statement obtained under Section 132(4) this court is of the view that the same are no longer res integra. As per decision of the Supreme Court in the case of Banalal Jat Constructions Private Limited 2019 (7) TMI 137 - SC ORDER after referring to the judgment of Pullangode Rubber Produce Co. Ltd 1971 (9) TMI 64 - SUPREME COURT we are of the opinion that once a statement is recorded, it is open to the assessing officer to rely and proceed on the basis that such statement is correct and represents the true state of affairs and the burden is on the deponent to demonstrate by letting cogent, convincing and material evidence that the statement was incorrect. Therefore, the statement made under Section 132(4) of the Income Tax Act, 1961 has a strong evidentiary value and is binding on a person, who makes it. As pointed out by the Tribunal that there was no material evidence let in by the appellant to retract the statement made under section 132(4) and the affidavits of his mother-in-law were unreliable as they were interested and self-serving testimonies. We are of the view that any retraction by the appellant should be made at the earliest point of time with sufficient, credible and corroborative evidence to support his claim and not by mere assertion as done in this case. Therefore, we do not find any reason to differ with the findings so rendered by the Tribunal. We have come to a conclusion that the case projected by the appellant is only on the facts and the same does not give rise to any question of law much less substantial question of law.

Summary

Issues Involved:
1. Admissibility, relevance, and evidentiary value of the statement recorded under Section 132(4) of the Income Tax Act, 1961.
2. Validity of additions made by the assessing officer based on seized materials and statements.
3. Justification of the appellate authority's modifications and deletions in the assessment.
4. Tribunal’s decision to restore the order of the assessing officer.

Issue-wise Detailed Analysis:

1. Admissibility, Relevance, and Evidentiary Value of the Statement Recorded Under Section 132(4):
The court examined the admissibility and evidentiary value of statements recorded during a search under Section 132(4) of the Income Tax Act, 1961. It was highlighted that such statements carry significant evidentiary value and can be used as corroborative evidence along with documentary evidence unearthed during the search. The court referred to Sections 132(4) and 132(4A) of the Income Tax Act, which establish a statutory presumption that items found during a search belong to the person in possession. The court also cited the Supreme Court’s decision in Banalal Jat Constructions Private Limited v. Assistant Commissioner of Income-Tax, which affirmed that a voluntary statement made under Section 132(4) can form the basis of assessment, and mere retraction without strong evidence does not invalidate the statement.

2. Validity of Additions Made by the Assessing Officer Based on Seized Materials and Statements:
The assessing officer made additions based on the seized materials and the appellant's statements during the search, which included cash balance, unexplained gold and silver, and advances made. The Tribunal found that the assessing officer did not rely solely on the statements but also on material evidence seized during the search. The appellant's different explanations at different stages were unsupported by cogent material evidence, failing to dislodge the presumption under Sections 132(4) and 132(4A).

3. Justification of the Appellate Authority's Modifications and Deletions in the Assessment:
The Commissioner of Income Tax (Appeals) had modified the cash balance and value of silver articles and deleted the value of gold jewellery and advance made to Sampathkumar. However, the Tribunal found that the explanations provided by the appellant, including affidavits from his mother-in-law, were self-serving and lacked corroborative evidence. The Tribunal restored the assessing officer's order, finding that the appellant’s retractions were mere assertions without credible evidence.

4. Tribunal’s Decision to Restore the Order of the Assessing Officer:
The Tribunal’s decision to restore the assessing officer's order was based on the finding that the appellant failed to provide convincing evidence to support his claims. The Tribunal emphasized that the appellant did not make timely retractions with sufficient evidence and that the affidavits provided were unreliable. The Tribunal concluded that the assessment was not solely based on the statement under Section 132(4) but also on corroborative material evidence.

Conclusion:
The court concluded that the appellant's case was based on facts and did not raise any substantial question of law. The Tax Case Appeal was dismissed, affirming the Tribunal’s decision to restore the assessing officer's order. The court reiterated that statements made under Section 132(4) have strong evidentiary value and are binding unless convincingly rebutted with credible evidence.