Prakash Narain Gattani v. Commissioner Of Income Tax, N.c.r. Building, Statue Circle, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 216 / 2005 Prakash Narain Gattani, Partner of M/s P.N. & Co., Gangauri Bazar,Jaipur. ----Appellant Versus 1. Commissioner of Income Tax, N.C.R. Building, Statue Circle, Jaipur. 2. The D.C.I.T., Central Circle-1, N.C.R. Building, Statue Circle, Jaipur. ----Respondents _____________________________________________________ For Appellant(s) : Mr. P.K. Kasliwal For Respondent(s) : Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 10/05/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department and partly allowed theappeal preferred by the assessee modifying the order of theAssessing Officer and the CIT(A). 2.This court while admitting the appeal on 19.07.2006 hasframed the following substantial questions of law: “(i)What should be the scope and extentof enquiry in regard to any documentwhich has been seized in course of a raidconducted by the IT. Department in orderto draw a presumption against theassessee under Section 132(4-A) of theIncome Tax Act, 1961? (ii)Whether a used paper under seizurewhich had been thrown in the dustbin bythe assessee indicating certain informationcould be treated as a transaction of sale ofemerald which could be presumed to havebeen suppressed by the assessee?” 3.The brief facts of this case are that the return of income forthe assessment year 1992-93 was filed on 2.11.1992 declaringincome of Rs.306690. The assessment was finalised at an incomeof Rs.3861310 vide order u/s 143(3) dated 24.3.1995. Vide orderin appeal No.83/95-96 dated 18.3.1996 the CIT(A) Rajasthan-I,Jaipur fully set aside the assessment. 3.1In response to the notices under sections 143(1) and 142(1),the assessee appeared from time to time and filed details. Duringthe course of proceedings, the seized material was examined andthe assessee’s statement was recorded. 3.2In the return filed assessee has disclosed share of incomefrom the firm which is a brokerage firm. The assessee has alsodisclosed interest income from money lending. 4.Counsel for the appellant Mr. Kasliwal has taken us to theorder of order of AO where the AO has observed as under: “DOCUMENTS USED IN THE CASE OF SHRIRAM SARAN GATTANI TO THE USED INASSESSEE’S CASE The CIT(A) vide his order dated18.2.1996 in the assessee’s own case hasobserved that the documents seized fromthe assessee’s premises were used in thecase of Shri Ram Sharan Gattani, son ofthe assessee even though he had notclaimed the ownership of the saiddocuments. It was further observed thatthe presumption in respect of documentsu/s. 132(4A) can be made only against the persons from whose custody they areseized u./s 132.Therefore, in view of the aboveobservations the assessee was required toexplain the entries relating to the seizedmaterial considered in the assessment ofShri Ram Sharan Gattani. UNDISCLOSEDINVESTMENTINEMERALDS- ANNEXURE B-3 PAGES 47 AND4B These papers were found from theresidence cum office premises of theassessee. It is stated that the papers werefound from the ‘Dustbin’ but thePanchnama does not mention any suchfact. The assessee in his submission dated19.10.98, the statement recorded on26.3.98disclaimedthedocumentaltogether. However, is the document wasrecovered from the premises of theassessee hence it is to be considered asbelonging to the assessee until and unlessestablished to the contrary by theassessee.” 4.1He has contended that merely that the note was found fromthe dustbin of the assesssee, the appellant has been assessed.The CIT(A) has also not appreciated the contentions which havebeen raised. The Tribunal sustained the order of CIT(A) and inpara 18 to 20 has observed as under: These papers were found from theresidence cum office premises of theassessee. It is stated that the papers werefound from the ‘Dustbin’ but thePanchnama does not mention any suchfact. The assessee in his submission dated19.10.98, the statement recorded on26.3.98disclaimedthedocumentaltogether. However, is the document wasrecovered from the premises of theassessee hence it is to be considered asbelonging to the assessee until and unlessestablished to the contrary by theassessee.” 4.1He has contended that merely that the note was found fromthe dustbin of the assesssee, the appellant has been assessed.The CIT(A) has also not appreciated the contentions which havebeen raised. The Tribunal sustained the order of CIT(A) and inpara 18 to 20 has observed as under: “18. During the course of search AnnexureB-3 pages 47 & 48 were found where thedetails of emerald purchase was mentioned.It was claimed by the assessee that thesaid papers were found from the dustbinbut this fact was neither emerging from thePanchnama nor from the order of theCIT(A) who categorically stated about thisfact. The assessee said that he hasn oknowledge about these papers and thesemight be rough papers. 19. On the other hand, the departmental plea is that the papers were found from thepossession of the assessee for which nosatisfactory explanation was given. 20. After hearing both the parties and onperusal of material available on record, itappears that the transaction pertaining toemerald was noted down. These paperswere recovered from the possession of theassessee. Presumption is that these papersbelonged to assessee unless provedcontrary. In the instant case, contrary hasnot been proved by the assessee.Therefore, without repeating, we uphold theorders of the lower augthorities who haverightly made the addition of Rs. 2,92,000/-.The orders of the lower authorities arehereby sustained alongwith the reasonsmentioned therein. This ground isdismissed.” 5.He has contended that Supreme Court in the case of Common Cause (A Registered Society) & Ors. vs. Union ofIndia (UIO) & Ors. 2017 (1) SCALE 573 in para 19 has observed as under: “19. With respect to evidentiary value ofregular account book, this Court has laiddown in V.C. Shukla, thus: 37. In Beni Vs. Bisan Dayal it was observedthat the entries in books of account are notby themselves sufficient to charge anyperson with liability, the reason being that aman cannot be allowed to make evidence forhimself by what he chooses to write in hisown books behind the back of the parties.There must be independent evidence of thetransaction to which the entires relate and inabsence of such evidence no relief can begiven to the party who relies upon suchentries to support his claim against another.In Hira Lal vs. Ram Rakha the High Court,while negativing a contention that it havingbeen proved that the books of account wereregularly kept in the ordinary course ofbusiness and that, therefore, all entriestherein should be considered to be relevantand to have been proved, said that the Ruleas laid down in Section 34 of the Act thatentries in the books of account regularlykept in the course of business ar relevant whenever they refer to a matter in which theCourt has to enquire was subject to thesalient proviso that such entries shall notalone be sufficient evidence to charge anyperson with liability. It is not, therefore,enough merely to prove that the books havebeen regularly kept in the course of businessand the entries therein are correct. It isfurther incumbent upon the person relyingupon those entries to prove that they werein accordance with facts.” 6.The Punjab and Haryana High Court in the case ofCommissioner of Income Tax vs. Ravi Kumar [2007] 294ITR 78 in para 4 has observed as under: “No one has appeared on behalf of theassessee to oppose the reference.” whenever they refer to a matter in which theCourt has to enquire was subject to thesalient proviso that such entries shall notalone be sufficient evidence to charge anyperson with liability. It is not, therefore,enough merely to prove that the books havebeen regularly kept in the course of businessand the entries therein are correct. It isfurther incumbent upon the person relyingupon those entries to prove that they werein accordance with facts.” 6.The Punjab and Haryana High Court in the case ofCommissioner of Income Tax vs. Ravi Kumar [2007] 294ITR 78 in para 4 has observed as under: “No one has appeared on behalf of theassessee to oppose the reference.” 7.Counsel for the respondent Mr. Mathur has contended that the price which was prevailing was in dollars and the price whichhas been applied is the minimum and taking into consideration theconcurrent findings of all the authorities, no interference is calledfor. 8.We have heard counsel for both the sides. 9.Taking into consideration the slip which was found, thecomplete reproduction of which has been made by the AssessingOfficer and thereafter he has observed as under: “The above entries clearly indicate thequantity of Emerald in baccarats as well asthe lot to which the emerald belongs both.The transaction has been done through RJ.As no explanation to the source of thisinvestment has been furnished by theassessee it is held that the emeralds werepurchased from undisclosed sources ofincome. The value of emerald ranges fromRs.100 to Rs.1 lac per cts. Since thequality, cut, colour, luster and clarity is notascertainable, the minimum value of carat is taken at Rs.100 and the unexplainedinvestment u/s 69A is determined atRs.292200 and added to the assessee’sincome.” 10.In the earlier appeal, the observations made by theAssessing Officer were confirmed by the CIT(A) and the Tribunal.In our considered opinion, since the assessee has not disclosedthe identity of ‘RJ’, no substantial question of law arises in thisappeal for consideration. 11.In that view of the matter, the issue is answered in favour of the department and against the assessee. 12.The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/169