Section 132(4) of the Income Tax Act

Income-tax Act, 2025: ss.247, 249, 251

Section 132(4) falls under section 132 of the Income-tax Act, 1961, which corresponds to section 247 (Search and seizure), section 249 (Reasons not to be disclosed) and section 251 (Copying, extraction, retention and release of books of account and documents seized or requisitioned) of the Income-tax Act, 2025.

Read section 247 of the 2025 ActRead section 249 of the 2025 ActRead section 251 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

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 of the 3,819 judgments on BharatTax that turn on this section.

Leading authorities on Section 132(4)

Pr. CIT v. Abhisar Buildwell (P.) Ltd.
149 Taxmann.com 399 · 2023 · Supreme Court
2,379
citing judgments

An assessment under section 153A is without jurisdiction if there is an absence of incriminating material for an unabated assessment year.

Andaman Timber Industries v. CCE
281 CTR 241 · 2015 · Supreme Court
1,335
citing judgments

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.

Pr. CIT v. Meeta Gutgutia
395 ITR 526 · 2017 · High Court
1,226
citing judgments

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.

Dhakeshwari Cotton Mills Ltd. v. CIT
26 ITR 775 · 1954 · Supreme Court
1,061
citing judgments

Corroborative evidence is essential to support evidence found on third-party premises, and an assessment cannot be based on suspicion, surmises, or conjecture.

Kishanchand Chellaram v. CIT
125 ITR 713 · 1980 · Supreme Court
962
citing judgments

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.

CIT v. SSA’s Emerald Meadows
73 Taxmann.com 248 · 2016 · Supreme Court
953
citing judgments

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.

PCIT v. Best Infrastructure (India) (P.) Ltd.
397 ITR 82 · 2017 · High Court
786
citing judgments

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.

McDowell & Co. Ltd. v. CTO
154 ITR 148 · 1985 · Supreme Court
741
citing judgments

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.

Pullangode Rubber Produce Co. Ltd. v. State of Kerala
91 ITR 18 · 1973 · Supreme Court
666
citing judgments

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.

Commissioner of Income Tax v. Harjeev Aggarwal
290 CTR 263 · 2016 · High Court
583
citing judgments

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.

Judgments on Section 132(4)

DCIT Cen Cir 1(3), Mumbai vs. Studio Aesthetic Health & Hospitality P.Ltd, Mumbai

In the result, the appeals by the Revenue are allowed and the cross objection by the assessee stands dismissed

ITA 2525/MUM/2015[2010-11]Status: DisposedITAT Mumbai15 Nov 2017AY 2010-11

Bench: Shri Shamim Yahya, Am & Shri Sandeep Gosain, Jm आयकर अपील सं./I.T.A. Nos. 2525 & 2526/Mum/2015 ("नधा"रण वष" / Assessment Years: 2010-11 & 2011-12) Dy. Cit-Central Circle-1(3), Studio Aethetic Health & Room No. 905, Old Cgo Building Hospitality Pvt. Ltd. बनाम/ Annex, M. K. Road, Mumbai-20 No.1, Home Worth, 7Th Cross Road, Gulmohar Colony, Vs. Jvpd Scheme, Vile Parle (W), Mumbai-400 056 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aancs 6615 D (Revenue) : (Assessee) C.O. Nos. 232 & 233/Mum/2017 (Arising Out Of Ita Nos. 2525 & 2526/Mum/2015) ("नधा"रण वष" / Assessment Years: 2010-11 & 2011-12) Studio Aethetic Health & Hospitality Dy. Cit-Central Circle-1(3), Pvt. Ltd. Room No. 905, Old Cgo Building बनाम/ No.1, Home Worth, Annex, M. K. Road, Mumbai-20 7Th Cross Road, Gulmohar Colony, Vs. Jvpd Scheme, Vile Parle (W), Mumbai-400 056 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aancs 6615 D (Assessee) (Revenue) : Revenue By : Shri Rahul Raman : Shri Naresh Kumar With Assessee By Shri Yogesh Joijode सुनवाई क" तार"ख / : 12.09.2017 Date Of Hearing घोषणा क" तार"ख / : 15.11.2017 Date Of Pronouncement C.O. Nos. 232 & 233/Mum/2017 आदेश / O R D E R Per Shamim Yahya, A. M.: These Are Appeals By The Revenue & The Cross Objections By The Assessee Emanating Out Of The Respective Orders Of The Commissioner Of Income Tax (Appeals), Mumbai (‘Cit(A)’ For Short) For The Assessment Years 2010-11 & 2011-12. Since The Issues Are Identical & The Appeals Were Heard Together, These Are Being Consolidated & Disposed Off By This Common Order.

For Respondent: Shri Rahul Raman
Section 132Section 132(4)Section 133ASection 143(3)Section 153D