The Delhi High Court has reiterated that a statement recorded during an income tax search cannot, by itself, justify additions under Section 153A of the Income Tax Act, 1961, without supporting incriminating material discovered during the search.

A Division Bench of Justice Subramonium Prasad and Justice Renu Bhatnagar has observed that the issue was squarely covered against the tax department by the court’s earlier decision in PCIT (Central)-3 v. Anand Kumar Jain (HUF). The order was passed on September 28, 2026.

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The Principal Commissioner of Income Tax (Central)-3, New Delhi, approached the High Court under Section 260A of the Income Tax Act against an Income Tax Appellate Tribunal order dated October 8, 2024.

The Tribunal had allowed the company’s appeals concerning Assessment Years 2012–13 and 2014–15 and deleted additions made in assessments framed under Section 153A.

After hearing counsel for the Revenue, the High Court relied on its existing precedent concerning the evidentiary value of search statements and the requirement of incriminating material for additions in search assessments.

The Bench reproduced relevant portions of the judgment in Anand Kumar Jain (HUF), where a statement recorded under Section 132(4) formed the foundation of the assessment.

In that earlier case, the court had found that the Revenue failed to produce corroborative material supporting the additions. It held that a statement alone could not justify the Assessing Officer’s action.

The precedent also explained that the Tribunal’s deletion of additions, based on its assessment of the evidence, did not warrant interference under Section 260A. The High Court cannot reappreciate evidence while exercising that jurisdiction.

Applying this precedent, the Bench found the issue in the appeals concerning the assessee to be covered against the Revenue.

The judgment relied upon by the Bench referred to CIT v. Kabul Chawla, which sets out the scope of assessments under Section 153A.

Under that principle, where assessments have already become final, additions pursuant to a search require incriminating material found during the search. In the absence of such material, additions cannot be made in respect of those completed assessments.

The court also referred to Principal Commissioner of Income Tax, Delhi v. Best Infrastructure (India) P. Ltd., which recognised that statements recorded under Section 132(4) do not, by themselves, constitute incriminating material.

The distinction is significant: a search statement may have evidentiary value, but its relevance does not automatically make it sufficient to sustain an addition without supporting search material.

The Bench further reproduced the reasoning in Commissioner of Income Tax v. Harjeev Aggarwal, which addressed statements recorded during searches in the context of block assessments.

That decision explained that a statement may be used as evidence when it relates to documents or other incriminating material discovered during the search. There must be a nexus between the statement and the evidence unearthed.

The earlier judgment also cautioned against assessments resting solely on statements that may have been obtained under undue influence or coercive circumstances and subsequently retracted. These observations formed part of the precedent reproduced by the Bench; the present order does not record a separate finding of coercion or retraction concerning the assessee.

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