Mumbai ITAT Rules Retracted Statements Alone Cannot Sustain Section 153A Additions

The Mumbai bench of the Income Tax Appellate Tribunal ruled that additions made under section 153A of the Income Tax Act cannot be upheld on the sole basis of statements that the deponent later retracted, unless independent incriminating material is unearthed during the search. In tax administration, search assessments under section 153A require concrete evidence discovered during operations to justify altering previously concluded assessments.

While authorities often rely on initial admissions during questioning, a subsequent retraction strips those statements of evidentiary value unless backed by corroborative documents or physical records found on site, preventing arbitrary additions. Tax practitioners and chartered accountants representing clients in search proceedings should scrutinize assessment orders for unsupported additions reliant purely on retracted testimonies.

Professionals must advise clients to challenge such orders before appellate authorities while maintaining robust documentation of all statements made during search operations. Bottom line: this ruling protects taxpayers from arbitrary additions unsupported by tangible seized evidence.