Statement recorded during search on standalone basis has no evidentiary value and cannot be acted upon to fasten any liability on the assessee – ITAT
In a recent judgment, ITAT Hyderabad has held that a statement of assessee recorded at the time of search on standalone basis has no evidentiary value and cannot be acted upon to fasten any liability on the assessee.
ABCAUS Case Law Citation:
5043 (2026) (02) abcaus.in ITAT
A search and seizure operation under section 132 of the Income Tax Act, 1961 (“the Act”) was carried out on in a group cases. The search was also conducted in the case of son of the appellant assessee, on the same date, and his statement was recorded under section 132(4) of the Act. Subsequently, the case of the assessee was selected for scrutiny and a notice under section 143(2) of the Act.
During the year under consideration, the assessee had purchased agricultural land. Based solely on the statement recorded under section 132(4) of the assessee’s son, the Assessing Officer (AO) computed the purchase price of the land thereby estimating the total purchase cost of the land
As a result, the AO made an addition being the difference between the estimated purchase cost and the registered consideration, under section 69A of the Act. The said addition was sustained by CIT(A).
Before the Tribunal the assessee submitted that the addition had been made solely on the basis of the statement of the assessee’s son, who was admittedly a third party in the assessee’s case. It was contended that no incriminating material whatsoever was found or seized from the possession of the assessee during the course of the search. That the AO also failed to substantiate the third-party statement with any corroborative evidence. Further, the assessee was never confronted with the statement of his son during the assessment proceedings, thereby violating the principles of natural justice.
It was further submitted that the son had merely stated that the land was purchased at a price ranging between Rs. 5 lakhs to Rs.10 lakhs per acre, and had also categorically stated that he would verify the records and submit the exact consideration paid. Thus, the statement itself was uncertain and inconclusive.
The Revenue contended that the AO had relied upon the WhatsApp messages related to the purchase of the impugned land which were found from the mobile phone of the assessee’s son. According to the Revenue those WhatsApp messages constituted corroborative evidence, and therefore, the contention of the assessee that no corroborative material was brought on record was factually incorrect.
The Revenue placed reliance on the judgment of the Hon’ble Supreme Court wherein it was held that electronic evidence such as WhatsApp messages can be relied upon as corroborative evidence.
The Tribunal observed that CIT(A) had categorically recorded that the AO had not relied upon the WhatsApp chats, but has relied solely on the statement recorded under section 132(4) of the Act. Therefore, the contention of the Revenue that WhatsApp messages constituted corroborative evidence and were relied upon by the lower authorities was contrary to the record.
The Tribunal further observed that in the decisions of relied upon by the Revenue, the Hon’ble Supreme Court categorically held that in the absence of the corresponding device in which the original digital evidence was first recorded, the certificate under section 65B of the Evidence Act is must with regards to the digital evidence relied upon. However, no such certificate under section 65B of the Evidence Act qua the WhatsApp messages had been produced by the Revenue. Accordingly, the reliance of Revenue on the decisions of the Hon’ble Supreme Court was of no use.
The Tribunal observed that no corroborative material or independent evidence had been brought on record by the Revenue to substantiate the alleged on-money payment. The addition had been made solely on the basis of the statement of a third party, which itself was uncertain and tentative, as the deponent had stated that he would verify the records and submit the correct figures later.
The Tribunal opined that it is a settled proposition of law, as held by various courts, that a statement of a third party, in the absence of any corroborative evidence, cannot be the sole basis for making an addition in the hands of the assessee. Even the courts have held that the statement of the assessee recorded under section 132(4) of the Act, in the absence of any corroborative evidence, cannot be the sole basis for making an addition in the hands of the assessee.
The Tribunal noted that Delhi High Court held that statements recorded under Section 132(4) of the Act do not, by themselves, serve as incriminating material. The court emphasized that these statements must be supported by independent evidence to be admissible for making assessments.
The Tribunal held that in view of the decisions of the Delhi High Courts, it is evident that, a statement of assessee at the time of search on standalone basis has no evidentiary value and cannot be acted upon to fasten any liability on the assessee.
Accordingly, following the judgement of Hon’ble Delhi High court, the Tribunal held that a statement of a third party recorded under section 132(4) of the Act, in the absence of any corroborative evidence, cannot be the sole basis for making an addition in the hands of the assessee.
Therefore, it was held that the addition made under section 69A of the Act was unsustainable in law and was accordingly deleted.
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