Admission Made in Statement Recorded u/s 132(4) Has Evidentiary Value Unless Plea of Force is Made

Case Details: Smt. Konda Sanjeeva Rani vs. Assistant Commissioner of Income-tax - [2024] 169 taxmann.com 591 (Telangana)

Judiciary and Counsel Details

• Alok Aradhe, CJ & J. Sreenivas Rao, J.
• A.V. Krishna Koundinya, for the Appellant.
• P. Murali Krishna, for the Respondent.

Facts of the Case

The husband of the assessee was a partner in a partnership firm. A search under section 132 was conducted at the residence of the husband of the assessee as well as the office of the partnership firm. Certain material was found in the residential premises in respect of the expenditure incurred for the construction of residential-cum-shopping complex, which was seized.

During search operations, the husband of the assessee made statements under section 132(4) that the total investment in the construction was Rs. 15 lakhs, whereas only a sum of Rs. 7 lakhs was accounted for. The Assessing Officer (AO), based on admission made under section 132(4) during search proceedings, inter alia, held that there was no proof to the contrary and, accordingly, treated the difference amount of Rs. 8 lakhs as unexplained investment. Since the assessee had its share in the construction, he, therefore, treated Rs. 4 lakhs as an undisclosed investment for the block period in the hands of the assessee.

On appeal, the CIT(A) deleted the additions made by AO. Further, the Tribunal set aside the order passed by CIT(A) and restored the addition. Aggrieved-assessee filed an appeal before the Telangana High Court.

High Court Held

The High Court held that Section 132(4) provides that an authorised officer may, during search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Act. Explanation to section 132(4) provides that examination of any person referred to in section 132(4) may not be merely in respect of any books of account, other documents or assets found as a result of the search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act.

Thus, it was evident that a statement recorded under section 132(4) was evidence within the purview of evidence under section 158BD read with section 3 of the Indian Evidence Act, 1872 and section 131 and was admissible in evidence.

An admission is an extremely important piece of evidence, but it is not conclusive as it is open for the person making an admission to show that it is incorrect. In the instant case, the husband of the assessee made statements under section 132(4) during the course of the search. The fact that total cost of construction was Rs. 15 lakhs was reiterated by the assessee. Once the statements were recorded on oath, the statements had an evidentiary value. The presumption was that the statements made under section 132(4) were true and correct unless the assessees pleaded that the statements were obtained forcibly or by coercion or undue influence. Once the statements are recorded under section 132(4), the same can be used as evidence against the assessees. In such a case, the burden lies on the assessee to establish that the admission made in the statements is either incorrect or wrong.

Further, the assessee failed to discharge the said burden. It was not the assessee’s case that their husband made statements under coercion or undue influence. The assessee made no attempt to explain such an admission. Therefore, in the facts and circumstances of the case, the Tribunal rightly set aside the order passed by the CIT(A).

List of Cases Reviewed

• Pullangode Rubber Produce Co. Ltd v. State of Kerala (1973) 91 ITR 18 (SC) (Para 15) Followed
• Commissioner of Income-Tax vs. Harjeev Agarwal (2016) 70 taxmann.com 95 (Delhi)
• Commissioner of Income-Tax, Hyderabad vs. Naresh Kumar Agarwal (2015) 53 taxmann.com 306 (Andhra Pradesh) (Para 18) Distinguished.

List of Cases Referred to

• CIT v. Harjeev Aggarwal [2016] 70 taxmann.com 95/241 Taxman 199 (Delhi) (para 9)
• CIT v. Naresh Kumar Agarwal [2015] 53 taxmann.com 306/[2014] 369 ITR 171 (Andhra Pradesh) (para 9)
• Thiru. A.J. Ramesh Kumar v. Dy. CIT [2022] 139 taxmann.com 190/441 ITR 495 (Madras) (para 11)
• CIT v. Hotel Meriya [2010] 195 Taxman 459/[2011] 332 ITR 537 (Kerala) (para 11)
• Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) (para 15).