“Section 132(4)”
The decision most relied on for Section 132(4) is Pr. CIT v. Abhisar Buildwell (P.) Ltd. (149 Taxmann.com 399), cited in 2,379 judgments on BharatTax.
Leading authorities on Section 132(4)
An assessment under section 153A is without jurisdiction if there is an absence of incriminating material for an unabated assessment year.
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.
A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.
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.
The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.
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.
Assessment based solely on a statement recorded under Section 132(4) of the Income Tax Act requires the statement to be relatable to incriminating material or evidence found during the search, especially when considering Section 158BB(1) which restricts computation of undisclosed income to evidence found during search.
