Even if assessee admits different sums of undisclosed income on two different days, and then retracts one of its statements, no addition can be sustained for having recorded wrong disclosure statements during the search

M/s M Narayanan & Bros Vs ACIT (Madras High Court)- In the decision reported in (2006) 287 ITR 209 (P.R. Metrani Vs Commissioner of Income-Tax), dealing with the scope of Section 132(4A), the Supreme Court considered the conclusive character of the statement made in a search operation. The Apex Court held that Section 132 is a complete code by itself. Under Section 132(4), in the case of search, the authorised officer can examine any person who is found to be in possession or control of any books of accounts, documents, money, jewellery or other valuable article and any statement made by such person during the examination may thereafter be used in evidence in any proceedings.

Sub section (4A) enables an Assessing Officer to raise a rebut table presumption that such books of accounts, money, jewellery, etc., belonged to such person that the contents of books of accounts and the documents are true and the signature found therein are in the handwriting of the particular person. The Supreme Court held that the presumption is rebut table and is available only in regard to the proceedings for search and seizure and for the purpose of Section 132(5) and 132B.  However, the presumption under sub-section (4A) to Section 132 of the Income Tax Act would not be available for the purpose of framing a regular assessment.  However, retention of books etc., can be used as a piece of evidence for the purposes of framing of the regular assessment. Thus going by the above-said decision, while the statement rendered at the time of search under Section 132(4) may be used in evidence in any proceeding, yet, that by itself, does not become the sole material to rest the assessment more so when the assessee seeks to withdraw the same by producing material evidence in support of such retraction.

M/s. M. Narayanan & Bros. Vs Asst. Commissioner of Income Tax

Decide by – Madras High Court

Tax Case (Appeal) No. 81 of 2005

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