M/S Shivam Investments v. Honourable Ms. Justice Nisha M. Thakore

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 192 of 2022 ========================================================== M/S SHIVAM INVESTMENTS Versus THE ASSTT. COMMISSIONER OF INCOME TAX ==========================================================Appearance:MR SN DIVATIA(1378) for the Appellant(s) No. 1 for the Opponent(s) No. 1========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 14/03/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1This appeal under Section 260A of the Income Tax Act, 1961 (forshort, “the Act, 1961”) is at the instance of an unsuccessful assessee andis directed against the order passed by the Income Tax AppellateTribunal dated 15[th] December 2021 in the IT (SS)A No.56/AHD/2015for the assessment year 2004-05. 2The assessee has proposed the following two questions of law forthe consideration of this Court: “A.Whether on the facts and in the circumstances of the case,Income-tax Appellate Tribunal, was right in law in confirming theaddition of Rs.61,01,104/- made by the Assessing Officer asunexplained income of the appellant firm for A.Y. 2004-05? B.Whether on the facts and in the circumstances of the case, theconclusion reached by the Income Tax Appellate Tribunal to uphold theaddition of Rs.61,01,104/- as unexplained income of the appellant firmfor A.Y. 2004-05 is such as could have been arrived at from the material on record or is reasonable which could be arrived?” 3The Income Tax Appellate Tribunal looked into the two issues forthe purpose of deciding the appeal filed by the writ applicant herein. Thetwo issues are as under: “i.Whether the documents seized from the premises of ShriLilchand Patel of “Vimal Group” belongs to the assessee as providedunder Section 153C of the Act. ii.Whether the amount shown as withdrawals in the name of thepartners of the firm represents the unaccounted income of the firm.” 4The controversy is not regarded the findings recorded so far as thefirst issue is concerned. The writ applicant seeks to question the findingsrecorded by the Tribunal so far as the issue No.2 is concerned. The issueNo.2 came to be answered as under: “9.2As regards the contention of the assessee on merit that theamount of withdrawal shown in the seized documents represents theamount belonging to the partners in their personal capacity. As per theassessee, the settlement was made among the partners for setting theirindividual accounts of the investments made in the shares through thepartnership firm. Thus, the impugned amount does not represent theincome of the firm. In this regard, we find that the provisions of Section292C of the Act contains the assumption with respect to the documentsfound in the course of search. The assumption says that the contents ofthe documents found during the course of search are true. Indeed thispresumption is rebuttable by the assessee based on the documentaryevidence. The relevant provisions of section 292 reads as under: “292C. (1) Whether any books of account, other documents,money, bullion, jewellary or other valuable article or thing are oris found in the possession or control of any person in the courseof a search under section 132 or survey under section 133A, itmay, in any proceeding under this Act, be presumed- (i) xxxxxxxxxxxxxxxxxxxxxxx ii) that the contents of such books of account and otherdocuments are true; and 9.3 In view of the above, there remains no ambiguity that the onus lies upon the assessee to prove that the transactions shown in the seizedpaper do not represent the true contents. “292C. (1) Whether any books of account, other documents,money, bullion, jewellary or other valuable article or thing are oris found in the possession or control of any person in the courseof a search under section 132 or survey under section 133A, itmay, in any proceeding under this Act, be presumed- (i) xxxxxxxxxxxxxxxxxxxxxxx ii) that the contents of such books of account and otherdocuments are true; and 9.3 In view of the above, there remains no ambiguity that the onus lies upon the assessee to prove that the transactions shown in the seizedpaper do not represent the true contents. 9.4 On examination of the seized document, we note that it was dulysigned and dated not only by all the partners but also by threewitnesses. The name of the partnership firm along with partners wasappearing. It was discernible from the seized document that there waswithdrawal of money from the partnership firm. Generally, thewithdrawal from the firm represents the withdrawal of the capital bythe partners. This capital can either be in the form of moneycontributed by the partner or maybe the share ofprofit/remuneration/interest on the capital of the partner generatedfrom the partnership firm. Likewise, all these transactions should havebeen duly recorded in the books of accounts of the firm as well as in theindividual ledger of the partners maintained by the firm. But, onperusal of the financial statement of the firm and the capital account ofthe partners, we note that such figures are not appearing herein. Thenecessary details of the financial statement of the assessee and capitalaccount of the partners are placed on pages 12 to 20 of the paper book.Thus, we find difficult to believe the version of the assessee that theimpugned withdrawal represents the settlement of the partners accountin their individual capacity. 9.5 It is also significant to note that the addition in the present casewas made based on the seized documents. In other words, the additionwas not made solely on the basis of the statement recorded in thecourse of search of Shri Lalchand Patel the father-in-law of ShriHimanshu Patel one of the partner of the firm. Therefore, it is notnecessary to provide the opportunity of cross examination to theassessee of statement as discussed above. 9.6 Be that as may be, let us assume that these transactions were notrecorded in the books of accounts of the firm. But in that situation, atleast such transactions was to be reflected in the individual accounts ofthe partners which are maintained by them in personal capacity tosupport the contention. But, we note that there is nothing brought onrecord that such amount of transactions were recorded in the books ofaccounts of the individual partners. In other words, we find that theassessee has not brought anything on record even in the presentproceedings which is the 2[nd] innings. The assessee cannot escape fromits liability in discharging the onus cast upon it under the provisions oflaw in the garb of the matter sub-judice in the course of law. In view ofthe above, we are of the opinion that the assessee failed to discharge itsonus imposed under the provisions of law by furnishing the necessarydocumentary evidence. Thus, in such facts and circumstances, we areconstrained and have no alternative except to confirm the order of theauthorities below. Hence the ground of appeal of the assessee is dismissed.” dismissed.” 5Thus, the principal contention of the writ applicant assesseebefore the Tribunal was that the amount of withdrawal reflected in theseized document represented the amount of the partners in theirpersonal capacity. The Tribunal first looked into Section 292C of the Actand thereafter, noticed from the materials on record that the note inquestion was duly signed not only by all the partners of the firm, butalso by three witnesses. The names of the partnership firm also figuredin it. The Tribunal also took notice of the fact that the withdrawal of themoney was from the firm. 6Thus, in view of the findings of fact recorded by the Tribunal asreferred to above, none of the two questions as proposed by the writapplicant could be termed as substantial question of law for the purposeof deciding this appeal under Section 260A of the Act. 7In view of the aforesaid, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) CHANDRESH (NISHA M. THAKORE,J)