2024 (12) TMI 1280 - HC - Income Tax

High Court upholds tax addition under Section 69B for unexplained share certificates found during search operations

Shri Gyan Kumar Agarwal HUF Versus The Asst. Commissioner of Income Tax

The Telangana HC upheld ITAT's decision confirming addition under Section 69B where share certificates were found during search operations. The assessee ... Addition u/s 69B - assessee had not discharged the burden of proof and rebutted the presumption available to the revenue u/s 132(4A) - ITAT held that the assessee was found to be the owner of the valuable article and the amount of investment on such valuable article shall be deemed to be the income of the assessee in the financial year in which such valuable article was found. HELD THAT:- Admittedly, the search operation took place on 21.01.2003 and the revenue authorities found the share certificates and the assessee was the owner of the valuable article i.e., share certificates. Record discloses that the assessee has not placed any iota of evidence to establish that the investment was made in the year 1994. It is trite law that the initial burden lies upon the assessee to prove the claim that the investment was made in the year 1994 and the same is not pertaining to the block period. The findings of fact recorded by the authorities under the Act are based on meticulous appreciation of evidence on record. Tribunal while dismissing the appeal, confirmed the order of the CIT (Appeals) as well as the order of the Assessment Officer, by giving cogent reasons taking into account of the provisions of the Act. This Court in an appeal u/s 260A of the Act cannot interfere with the findings of fact until and unless the same are shown to be perverse or based on no evidence. The findings of fact recorded by the authorities cannot be termed as perverse. Decided against assessee. Issues:Appeal against common order of Income Tax Appellate Tribunal, Hyderabad Bench 'A' and 'B' under Section 260A of the Income Tax Act, 1961.Detailed Analysis:1. Background and Factual Overview:The case involves appeals filed against common orders passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'A' and 'B'. The appeals were admitted based on the substantial question of law regarding the burden of proof and presumption under Section 132(4A) of the Income Tax Act, 1961. The appeals were heard together due to a common substantial question of law.2. Search and Seizure Operations:Search and seizure operations were conducted in 2003 at the residential premises of the assessee and family members. The issue revolved around share certificates of a company held by the assessee and his family members. The Assessing Officer determined undisclosed income for the block period, leading to subsequent appeals.3. Assessment and Appeals:The Assistant Commissioner of Income Tax passed an assessment order holding the assessee liable for undisclosed income and penalty. The appeal before the Commissioner of Income Tax (Appeals) and subsequently to the Income Tax Appellate Tribunal were dismissed, leading to the present appeal before the High Court.4. Arguments by the Assessee and Revenue:The assessee contended that the investment in shares was made in 1994, falling outside the block period, and that the authorities erred in determining undisclosed income. On the other hand, the Revenue argued that the orders passed by the authorities were based on thorough verification and should not be interfered with.5. Judicial Analysis and Findings:The High Court analyzed the submissions and upheld the findings of the lower authorities. It was noted that the assessee failed to provide evidence that the investment was made in 1994 and not within the block period. The Court emphasized the initial burden of proof on the assessee and the application of relevant provisions of the Income Tax Act by the Tribunal.6. Decision and Conclusion:The High Court concluded that the findings of fact by the lower authorities were not perverse and, therefore, declined to interfere with the same. The substantial question of law was answered in favor of the Revenue, leading to the dismissal of the appeals. The Court highlighted that interference with findings of fact is only warranted in specific circumstances, which were not present in this case.7. Final Verdict:Ultimately, the appeals were dismissed, and no costs were awarded. The judgment closed any pending miscellaneous petitions related to the case.