Iapl/357/2010 Of Ajay Gupta v. Commissioner Of Income Tax Appeals Meerut And Another

AFR Reserved on 18.10.2019Delivered on 13.11.2019 Court No. - 35 Case :- INCOME TAX APPEAL No. - 357 of 2010 Appellant :- Ajay Gupta Respondent :- Commissioner Of Income Tax Appeals Meerut And Another Counsel for Appellant :- Parv Agarwal,Parv Agarwal Counsel for Respondent :- C.S.C.,Krishna Agarawal,Shubham Agarwal Hon'ble Bharati Sapru,J.Hon'ble Rohit Ranjan Agarwal,J. (Delivered by Hon'ble Rohit Ranjan Agarwal,J.) This appeal under Section 260-A of the Income Tax Acthas been filed by the assessee challenging the order of theIncome Tax Appellate Tribunal Delhi Bench “A” New Delhi(hereinafter called as ITAT) dated 12.03.2010, partly allowingthe appeal of the department. This appeal was admitted on 22.11.2010 on the following questions of law: “1. Whether the presumption under Section 132(4A) of theIncome Tax Act can be raised in the assessment proceeding?2. Whether apart from from section 132(4A) of the IncomeTax Act, the burden to explain the documents seized from thepossession of the assessee during search is upon him and ifit so, then has he discharge the burden.” Brief facts of case are that residential premises of theassessee was searched under Section 132 of Income TaxAct (hereinafter called as the 'Act') on 28.02.2000. LockerNo. 64 Dena Bank, Abu Lane Branch, Meerut, which is in thejoint name of assessee and his wife Smt. Aneeta Gupta, was also searched. During search, jewellery worth Rs.7.44 lakhswas found from the assessee, while jewellery worthRs.13.55/- lakhs was found in the locker of assessee, out ofwhich, jewellary worth Rs.8.87/- lakhs was seized. Notice under Section 158-BC was issued to theassessee on 03.12.2001 for filing return of income. Incompliance thereof, assessee filed return of incomedeclaring NIL undisclosed income. Assessment for blockperiod was completed on 27.03.2002 on undisclosedincome. CIT, Kanpur on 23.05.2003 passed order underSection 263 of the Act. In compliance to the order underSection 263, notices under Section 142 (1) of the Act wasissued on 25.08.2003 and questionnaire on 04.08.2003. Incompliance of the said notice, assessee appeared throughhis legal representatives and filed his detailed reply. TheAssessing Officer passed order under Section 158-BC readwith Section 263 of the Act, assessing the undisclosedincome at Rs.65,33,302/- as against the declaredundisclosed income of NIL. Aggrieved by the said order, assessee filed appealbefore CIT (Appeals) Meerut under Section 250 of the Act on20.01.2009. CIT (Appeals) Meerut partly allowed the appealof the assessee. Against said order, the revenue filed appeal before ITATon two grounds, firstly, that CIT (A) had erred in law and factin deleting the addition of Rs.51,432/- made by A.O. onaccount of undisclosed jewellery. The second ground was fordeletion made by CIT (A) of Rs.5,58,870/- on account ofpapers found during search from premises of the assessee, and the CIT had overlooked the provisions of Section 132(4A) of the Act. The ITAT while partly allowing the appeal ofrevenue rejected the first ground of appeal taken by revenueand upheld the order passed by CIT (A), while decidingground no. 2 it reversed the order of the CIT (A) and restoredthat of A.O. Sri Parv Agarwal, learned counsel appearing for theassessee submitted that Tribunal while deciding the appealfailed to consider that revenue did not establish anyconnection between the entries recorded in loose papersfound during search with the books of accounts. Further, theassessee on 29.11.2004 had made written submission thathe does not have any knowledge about persons mentionedin the papers, as well as categorically denied the transaction.It was also submitted that the assessee denied both thepapers before DDI investigation in his statement recordedunder Section 131, which is part of the record at page 42 ofpaper book. Sri Parv Agarwal, learned counsel appearing for theassessee submitted that Tribunal while deciding the appealfailed to consider that revenue did not establish anyconnection between the entries recorded in loose papersfound during search with the books of accounts. Further, theassessee on 29.11.2004 had made written submission thathe does not have any knowledge about persons mentionedin the papers, as well as categorically denied the transaction.It was also submitted that the assessee denied both thepapers before DDI investigation in his statement recordedunder Section 131, which is part of the record at page 42 ofpaper book. It was also contended that Tribunal while reversing thefinding of CIT (A) has only considered the three judgmentsrelied upon by First Appellate Authority, and it being the lastfact finding authority did not record any finding as to how thepapers found during search corroborated with the findingsrecorded by the A.O., and on the basis of presumptionavailable to the revenue under Section 132 (4A) reversed theorders of CIT (A). Per contra Sri Krishna Agarawal, learned counselappearing for the department submitted that the assesseefailed to rebut the presumption under Section 132 (4A) regarding correctness of the documents found and seizedduring search. He further contended that the documentsrelied upon by A.O. was found during search, as such theTribunal had rightly reversed the finding of CIT (A) andrestored the order of A.O., as far as addition of Rs.5,58,870/-is concerned which was made on account of papers foundfrom the premises of assessee during search. We have heard counsel for the parties and perused thematerial on record. It is not in dispute that two loose paperswere found during search from the premises of assessee,however, during block assessment proceedings, theassessee had denied the documents and statement wasrecorded by Deputy Director of Investigation, he hadsubmitted that he had no concern with the said documents,so seized. Further, the A.O. while passing the assessmentorder had only on basis of the loose papers found duringsearch made addition to the undisclosed income of assesseewhile the entries of said papers remained uncorroborated. This Court, in the case of CIT, Kanpur Vs. ShadiramGanga Prasad, 2010 UPTC 840 has held that the looseparchas found during search at the most could lead to apresumption, but the department cannot draw inferenceunless the entries made in the documents, so found arecorroborated by evidence. As, Section 132(4A) of the Act provides that any booksof account, documents, money, bullion, jewellary or othervaluable articles or things found in possession or in control ofany person in course of search may be presumed to bebelonging to such person, and further, contents of such books of account and documents are true. But thispresumption is not provided in absolute terms and the wordused is “may” and not “shall”, as such the revenue has tocorroborate the entries made in the seized documents beforepresuming that transactions so entered were made by theassessee. Presumption so provided is not in absolute termsbut is subject to corroborative evidence. In the present case, Tribunal only on basis ofpresumption under Section 132 (4A) of the Act, reversed thefinding of CIT (A), without recording any finding as to how theloose sheets which were recovered during search, werelinked with the assessee. In the absence of corroborativeevidence, the Tribunal was not justified in reversing thefinding by the CIT (Appeals). books of account and documents are true. But thispresumption is not provided in absolute terms and the wordused is “may” and not “shall”, as such the revenue has tocorroborate the entries made in the seized documents beforepresuming that transactions so entered were made by theassessee. Presumption so provided is not in absolute termsbut is subject to corroborative evidence. In the present case, Tribunal only on basis ofpresumption under Section 132 (4A) of the Act, reversed thefinding of CIT (A), without recording any finding as to how theloose sheets which were recovered during search, werelinked with the assessee. In the absence of corroborativeevidence, the Tribunal was not justified in reversing thefinding by the CIT (Appeals). In view of the above, we are of the considered view thatorder passed by Tribunal reversing the finding of CIT (A) inregard to deletion of addition made of Rs.5,58,870/- andrestoring the order of A.O. on mere presumption isunsustainable. The order dated 12[th] March, 2010 is set asideto that extent, and the matter is remitted back to Tribunal todecide afresh, as far as addition of Rs.5,58,870/- isconcerned, within a period of three months from today. The appeal stands partly allowed. Order Date :- 13.11.2019M. ARIF