“retraction of statement”
The decision most relied on for retraction of statement is Andaman Timber Industries v. CCE (281 CTR 241), cited in 1,335 judgments on BharatTax.
Leading authorities on retraction of statement
An assessee must be given an opportunity to cross-examine third parties whose statements are relied upon for adverse findings. Failure to provide this opportunity is a serious flaw rendering the order a nullity.
In search assessments under Section 153A, additions to income are permissible only if incriminating material is found during the search; in the absence of such material, completed assessments cannot be disturbed. A statement recorded under Section 132(4) and later retracted may not, on its own, constitute sufficient incriminating evidence for making additions.
An assessee is entitled to be confronted with evidence used against them and to an opportunity for cross-examination, especially when that evidence is from a third party or a retracted statement. Failure to provide such an opportunity violates the principles of natural justice.
A statement recorded under Section 132(4) of the Income Tax Act, 1961, does not by itself constitute incriminating material for making additions to income.
Admissions, whether made through entries in account books or statements, are important pieces of evidence but are not conclusive. An assessee has the right to demonstrate that an admission made by them is incorrect or can be retracted.
Statements recorded during a survey under Section 133A do not have evidentiary value as Section 133A does not empower examination on oath. Consequently, additions to income cannot be made solely based on such uncorroborated statements without other credible evidence.
A statement recorded under duress during a survey, if subsequently retracted, has no evidentiary value and cannot be the sole basis for an income-tax assessment; the assessment should instead rely on audited accounts.
Additions under the Income Tax Act cannot be made solely based on entries in loose sheets, dumb documents, or mere sworn statements without independent, reliable, and cogent corroborating evidence. Uncorroborated loose papers are not admissible evidence on their own, even if the original context was criminal investigation.
