The addition rests only on an entry operator's search statement. Is that enough to assess me?
No. A s.132(4) statement has evidentiary value, but standing alone and without any other material found in the search it cannot support the assessment. Where the statement came out of a search of a third party, s.153C is the route and cannot be bypassed, and the deponent must be offered for cross-examination.
Decided by the High Court (Delhi High Court — Rajiv Sahai Endlaw J and Sanjeev Narula J) on 2021-02-12, reported as ITA 23/2021 and connected appeals (Del), decided 12 February 2021; reported at [2021] 432 ITR 384 (Delhi). A companion order disposing of ITA Nos. 32 and 34 of 2021 in the same terms was passed on 15 February 2021 and is reported at [2021] 133 taxmann.com 288 (Delhi).. It bears on section 132(4), section 153A, section 153C of the Income Tax Act 1961, in Search, Survey & Block Assessment and Evidence & Burden of Proof matters.
This is the case to reach for when the entire search assessment is built on an accommodation entry operator's confession and nothing was recovered from your own premises. It gives you two independent lines: no incriminating material of your own, and the wrong statutory machinery where the statement came from someone else's search. It also treats the failure to produce the deponent as fatal where the whole case rests on his word.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee bought shares of an unlisted company in 2010; after a merger and listing the shares were sold in 2014 and the gain was claimed as exempt long-term capital gain. On 18 November 2015 a search under s.132 was carried out on the Sajan Kumar Jain and Pradeep Kumar Jindal group of cases, in the course of which Pradeep Kumar Jindal, an accommodation entry operator, gave a statement under s.132(4) admitting that he had provided bogus entries to beneficiaries including the assessee's family. The Assessing Officer framed a s.153A assessment resting essentially on that statement, without pointing to incriminating material recovered from the assessee. The Tribunal, by a common order dated 30 July 2019, deleted the additions and the Revenue appealed.
The appeals were dismissed. A statement recorded under s.132(4) has evidentiary value, but it cannot, standing alone and without reference to any other material discovered in the search, empower the Assessing Officer to frame the assessment. Where the statement is that of a third party recorded in a search of that third party, the correct route is s.153C, and the assessee must be given the opportunity to cross-examine.
The Court distinguished between a statement having evidentiary value and a statement being sufficient to support an assessment. Incriminating material found in the search is a sine qua non for an addition in a search assessment of a concluded year, and a bare statement is not such material. Where the department relies on a statement recorded during a search of another person, the machinery of s.153C is attracted and cannot be bypassed by using s.153A against the assessee. Although there is no unqualified statutory right of cross-examination, where the entire case rests on the third party's word, the failure to produce him for cross-examination is fatal to the reliance placed on him. The absence of any incriminating document recovered from the assessee's own premises meant there was nothing to corroborate Jindal's account. The additions therefore could not survive.
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Handle my notice → Ask a CA on WhatsAppNo. A s.132(4) statement has evidentiary value, but standing alone and without any other material found in the search it cannot support the assessment. Where the statement came out of a search of a third party, s.153C is the route and cannot be bypassed, and the deponent must be offered for cross-examination. This was decided by the High Court (Delhi High Court — Rajiv Sahai Endlaw J and Sanjeev Narula J) and bears on section 132(4), section 153A, section 153C of the Income Tax Act 1961. It is reported as ITA 23/2021 and connected appeals (Del), decided 12 February 2021; reported at [2021] 432 ITR 384 (Delhi). A companion order disposing of ITA Nos. 32 and 34 of 2021 in the same terms was passed on 15 February 2021 and is reported at [2021] 133 taxmann.com 288 (Delhi).. This is the case to reach for when the entire search assessment is built on an accommodation entry operator's confession and nothing was recovered from your own premises. It gives you two independent lines: no incriminating material of your own, and the wrong statutory machinery where the statement came from someone else's search. It also treats the failure to produce the deponent as fatal where the whole case rests on his word. If it applies to you, the first step is this: Establish the date on which the search was initiated before relying on this at all, because it decides whether the s.153A and s.153C framework applied here governs or the reintroduced block assessment scheme does, and therefore whether the authority is usable.
The assessee bought shares of an unlisted company in 2010; after a merger and listing the shares were sold in 2014 and the gain was claimed as exempt long-term capital gain. On 18 November 2015 a search under s.132 was carried out on the Sajan Kumar Jain and Pradeep Kumar Jindal group of cases, in the course of which Pradeep Kumar Jindal, an accommodation entry operator, gave a statement under s.132(4) admitting that he had provided bogus entries to beneficiaries including the assessee's family. The Assessing Officer framed a s.153A assessment resting essentially on that statement, without pointing to incriminating material recovered from the assessee. The Tribunal, by a common order dated 30 July 2019, deleted the additions and the Revenue appealed. The matter was decided on 2021-02-12 by the High Court (Delhi High Court — Rajiv Sahai Endlaw J and Sanjeev Narula J). On those facts the High Court held as follows. The appeals were dismissed. A statement recorded under s.132(4) has evidentiary value, but it cannot, standing alone and without reference to any other material discovered in the search, empower the Assessing Officer to frame the assessment. Where the statement is that of a third party recorded in a search of that third party, the correct route is s.153C, and the assessee must be given the opportunity to cross-examine.
The Court distinguished between a statement having evidentiary value and a statement being sufficient to support an assessment. Incriminating material found in the search is a sine qua non for an addition in a search assessment of a concluded year, and a bare statement is not such material. Where the department relies on a statement recorded during a search of another person, the machinery of s.153C is attracted and cannot be bypassed by using s.153A against the assessee. Although there is no unqualified statutory right of cross-examination, where the entire case rests on the third party's word, the failure to produce him for cross-examination is fatal to the reliance placed on him. The absence of any incriminating document recovered from the assessee's own premises meant there was nothing to corroborate Jindal's account. The additions therefore could not survive.
It was decided by the High Court on 2021-02-12 and is reported as ITA 23/2021 and connected appeals (Del), decided 12 February 2021; reported at [2021] 432 ITR 384 (Delhi). A companion order disposing of ITA Nos. 32 and 34 of 2021 in the same terms was passed on 15 February 2021 and is reported at [2021] 133 taxmann.com 288 (Delhi).. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 132(4), section 153A, section 153C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were dismissed. A statement recorded under s.132(4) has evidentiary value, but it cannot, standing alone and without reference to any other material discovered in the search, empower the Assessing Officer to frame the assessment. Where the statement is that of a third party recorded in a search of that third party, the correct route is s.153C, and the assessee must be given the opportunity to cross-examine. It arises in Search, Survey & Block Assessment and Evidence & Burden of Proof matters, on section 132(4), section 153A, section 153C of the Income Tax Act 1961, and was decided by Delhi High Court — Rajiv Sahai Endlaw J and Sanjeev Narula J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask in writing for the incriminating material recovered from your own premises, as distinct from anything said in another person's statement. Apply formally for the deponent to be produced for cross-examination and keep the refusal or the silence on record. Where the statement came from a search of a third party, take the objection that proceedings had to be routed through s.153C.
Still good law. Followed by the Delhi Bench of the Tribunal in Divya Exim (P.) Ltd. v. Dy. CIT [2024] 159 taxmann.com 1370 (Delhi - Trib.), decided 15 January 2024, whose case review records both Pr. CIT v. Abhisar Buildwell (P.) Ltd. and CIT v. Anand Kumar Jain HUF [2021] 432 ITR 384 (Delhi) as followed; that case arose from the same search and the same deponent, and the Tribunal recorded that the High Court had held that the statement of Pradeep Kumar Jindal extracted in his own search cannot be construed as incriminating material in the case of another assessee. The 'no addition without incriminating material' premise was confirmed by the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 / 293 Taxman 141 / 454 ITR 212 (SC). The Revenue's challenge is nonetheless live, and the order has now been read in the original: in Pr. CIT v. Anand Kumar Jain [2021] 133 taxmann.com 289 / [2022] 284 Taxman 633 (SC), SLP Appeal (C) No(s). 11698 of 2021, Vineet Saran and Dinesh Maheshwari, JJ., on 9 September 2021 made an order of three lines - issue notice; notice accepted for the respondent; tag with SLP(C) Nos. 5254-5265 of 2016 and other connected matters. Notice issued is not leave granted, no stay is recorded and nothing was decided, so the judgment stands - but the point is before the Supreme Court in a tagged batch, and no order disposing of that batch is recorded. Two details to keep straight. The report of that Supreme Court order is tagged as being in favour of the revenue, which reflects only that notice was issued and is not a decision on anything. And its case review shows the special leave petition is directed against Pr. CIT v. Anand Kumar Jain (HUF) [2021] 133 taxmann.com 288 (Delhi), the companion order of 15 February 2021 in IT Appeal Nos. 32 and 34 of 2021, which does no more than dispose of those appeals in terms of the operative order of 12 February 2021 in ITA 23/2021. Three further Tribunal decisions cite the judgment - Bhaijee Commodities (P.) Ltd. v. ACIT [2023] 154 taxmann.com 292 (Delhi - Trib.), 7 August 2023; Gurucharan Singh Hora v. Dy. CIT (Central); and Dy. CIT v. Aachman Vanijya (P.) Ltd. [2025] 173 taxmann.com 391 (Mumbai - Trib.), 21 March 2025 - but how each treats it has not been checked. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The operative judgment is that of 12 February 2021 in ITA 23/2021 and connected appeals, reported at [2021] 432 ITR 384 (Delhi); the order of 15 February 2021 in ITA Nos. 32 and 34 of 2021, which is what a database search returns at [2021] 133 taxmann.com 288 (Delhi), merely disposes of those appeals in the same terms and says so in two sentences. The operative judgment itself could not be found in a subscription case-law database on three searches in this pass, including a search on its own law report citation, so its reasoning as summarised here has not been checked against the numbered paragraphs; the sentence previously carried as a quotation from it came from a commentary blog and has been removed. What is independently confirmed is that the High Court held that a statement recorded in the search of a third person cannot be treated as incriminating material found in the search of the assessee - that is how the Delhi Tribunal, in a case arising from the same search, records the holding. The summaries relied on differ on whether cross-examination was described as a right or as a requirement of fairness; plead it as fairness in the circumstances of a case resting wholly on one man's word rather than as an unqualified statutory right. On the Supreme Court: the order of 9 September 2021 has been read in the original and it decides nothing. It reads, in full, that notice is to issue, that the respondent's advocate on record accepts notice, and that the matter is to be tagged with SLP(C) Nos. 5254-5265 of 2016 and other connected matters. No stay was granted and no order disposing of that batch is recorded as at August 2026. Do not be misled by the outcome tag on the report of that order, which reads as favouring the revenue: that reflects only that notice was issued. The Delhi High Court judgment of 12 February 2021 was not read in the original - it is not carried as a document in a subscription case-law database, which holds only the companion order of 15 February 2021 and the Supreme Court's notice order, both of which have been read. The paragraph numbers, the exact reasoning on cross-examination and any verbatim sentence therefore remain unverified, and the entry carries no quotation. The Revenue's special leave petition, tagged with SLP(C) Nos. 5254-5265 of 2016, has produced no recorded order since notice was issued on 9 September 2021, so its outcome is unknown nearly five years on. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were dismissed. A statement recorded under s.132(4) has evidentiary value, but it cannot, standing alone and without reference to any other material discovered in the search, empower the Assessing Officer to frame the assessment. Where the statement is that of a third party recorded in a search of that third party, the correct route is s.153C, and the assessee must be given the opportunity to cross-examine.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
When must the satisfaction note be recorded before proceedings are taken against a third party?
They recorded your statement in a survey. Can the addition rest on that alone?
The seized documents say nothing about the years being assessed. Can s.153C still be used for them?
The search was before June 2015 but the notice came later. Which version of s.153C applies?