Retraction of statement recorded during Income Tax Search Proceedings: An Overview of Legal Provision
1. Admissibility of statements during search: Statements recorded under Section 132(4) of the Income Tax Act, during a search are admissible as evidence and can be used against the assessee. The explanation to Section 132(4) states that such statements may be used as evidence in any proceeding under the Act.
2. What is a retraction?
A retraction is the formal withdrawal or correction of a previously made statement. In the context of Income Tax proceedings, retractions are typically sought when:
The original statement was made under duress, coercion, or undue influence.
There was a misunderstanding or misinterpretation of facts.
The statement was based on incomplete or incorrect information.
3. Article 20(3) of the Indian Constitution:
This constitutional provision protects individuals from self-incrimination. If a statement is made involuntarily or under coercion, it can be challenged and retracted.
4. Rights during investigation proceedings:
A . Right to Retract
If a statement was made involuntarily or under pressure, taxpayers can retract it by submitting a written affidavit to the authority that recorded the original statement. This affidavit should clearly state the reasons for retraction and provide the correct information.
B. Right to Remain Silent
Taxpayers are not obligated to answer questions if they are unsure or lack knowledge about the subject matter. Exercising this right is constitutionally protected and cannot be construed as non-cooperation.
C. Right to Cross-Examine
If adverse statements from third parties are presented, taxpayers have the right to cross-examine those individuals to verify the authenticity and context of such statements.
5. Retraction in light of provisions of new Evidence Act (Bhartiya Sakshya Adhiniyam)
Section 24 of the new Act excludes from admissibility any confession or statement made under inducement, threat, or promise. Although framed for criminal confessions, its underlying rationale-that evidence must be voluntary-is applied by analogy in administrative proceedings.
• Application:
When an assessee later retracts a statement, arguing that it was made under coercion or undue influence, Section 24’s principle comes into play. A delayed retraction, however, may be seen as less spontaneous and thus less convincing unless supported by corroborative circumstances.
6. Key legal precedents on retraction of statements:
Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC)
Hon Supreme Court observed that a confession or admission is not conclusive, and it is open to the person making it to show that it was incorrect or made under mistaken belief or coercion.
Kishan Lal Shiv Chand Rai v. CIT (1973) 88 ITR 293 (P&H)
Confessions obtained under pressure or threat cannot be relied upon.
7. Conclusion:
Retractions are legally valid, but practically difficult, especially when made after significant delay or without credible supporting evidence.
