TaxTMI 
TaxTMI 
2013 (1) TMI 159
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....nder the Act by the issue of notice u/s. 143(2), and the impugned assessment framed. The first appellate authority having allowed the assessee partial relief, both the assessee and the Revenue are in appeal. 2.2 The two additions for the current year are on the basis of the material in the form of print-outs of computer back up files found on the system at the assessee's premises, and addition/s based on which form the subject matter of the respective appeals, which we shall take up in seriatim. Assessee's Appeal (ITA No. 4076/Mum/2011) 3.1 The document under reference reads as: Funds received from Date Amount Funds used for Alliance Hotel Parvez sir White House Nawab Masjid Adi Enterprises Parvez sir 10.10.05 100000.00 100000.00 21.10.05 25000.00 25000.00 27.10.05 20000.00 20000.00 29.10.05 10000.00 10000.00 9.11.05 150000.00 119000.00 31000.00 11.11.....
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....26.12.05 10000.00 10000.00 27.12.05 4500.00 4500.00 30.12.05 49000.00 49000.00 01.02.06 80000.00 80000.00 TOTAL 477500.00 163000.00 14500.00 300000.00 Opening the arguments for and on behalf of the assessee, it was submitted by the ld. Authorized Representative (AR), its counsel, that though the assessee had all along denied any knowledge or the ownership of the document, it now wishes to take up a legal ground, that is, whether assuming the document to be true, could any addition be at all made on its basis. This is as all it says or speaks, in simplistic terms, is of 'A' giving loan to 'B'. If that be so, no addition in the hands of 'B', the recipient, could be made; the document itself explaining the source of the funds as 'A'. The Revenue could not take or adopt a segmented or disjointed approach, considering the document as true in-so-far as the destination of funds is concerned, i.e., the assessee, and n....
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....would not operate to discharge the burden of proof u/s. 68 on the assessee, placing reliance on the decisions in the case of Daya Chand v. CIT [2001] 250 ITR 327 (Delhi) and Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388 (All). That is, the assessee would yet have to satisfy the mandate of those sections i.e., ss. 68, 69A, etc. The nature and source of the funds being un-explained, the same could be applied. On being questioned as to whether the document could be construed to be the assessee's books of account, for section 68 to apply, he would submit that the assessee itself explains Mr. Parvez to be the source of funds, implying of him as being the person who ought to have been proceeded against. The deeming of section 68 would thus apply. 4. We have heard the parties, and perused the material on record, as well as the case laws cited. 4.1 The law in the matter is exquisitely clear, even as both the sides have relied on case laws. What all section 292C provides for is a presumption as to the truth of any document, etc., found during search or survey; of the moneys etc., recovered from him as belonging to the assessee. The same does not contradict; rather, compliments and s....
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....esumption as to the document being true and, thus, effectively places the burden of proving otherwise, or to the contrary to what is stated therein, on the assessee. Accordingly, the onus to lead denial by 'P', and to prove that no funds in fact emanated from him, its partner, is on the assessee. That having not been done, the statutory presumption shall hold. The next question is that, even so, could any addition be made in the hands of the assessee, the recipient or the beneficiary of these funds; the source having been apparently explained? Sections 68, 69 and 69A oblige the assessee to explain the nature and source of credit (recorded) and money, bullion, jewellery, etc., (not recorded) by the assessee in the books of accounts maintained by him for any source of income, to the satisfaction of the Assessing Officer (AO), lest it may be deemed as its income for the relevant year. Now, the transactions of availing monies from 'P' having not been recorded in the assessee's books of account, section 68 of the Act could not be said to be applicable. However, that would be to no consequence, as the admission of the transaction/s itself implies of the corresponding amount/s in the asse....
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....k of the assessee, which definitely does not form part of the assessee-bank account holder's books of account, is found during search/survey, reflecting deposit/s and/or credit/s therein. The amount/s may have been withdrawn subsequently, so that it cannot be said that a deposit/s is 'found' as on the date of search, yet it is so found on the relevant date/s (of deposit/s), so that the assessee is obliged to explain the same as to its nature and source, where not reflected in its regular books of account and the date/s fall in the year/s of assessment. In other words, the word 'found' occurring in the relevant sections is to be read meaningfully and purposively, in harmony with the scheme, as well as intent and purposes of the Act. The only difference would be, as aforesaid, that the deposit/s could only be, where so, deemed as income of the year of deposit/s. We, thus, find no legal hindrance or barrier to the invocation of the said sections, or s. 69A in the instant case. 4.3 We, next, consider the assessee's argument that the document itself explains the source of the money with it (as on the relevant dates), so that the mandate of the section is satisfied, and no addition co....
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....cable, and stand validly applied by the Revenue in the facts and circumstances of the case. Again, however, the same shall only extend to the 'money' with the assessee, and cannot, by any account, extend to the money provided by 'P' for persons other than the assessee. Whether the assessee has any connection with them; it clearly with-holding facts, is irrelevant, as in any case they are separate persons, and their income, if so, cannot be assessed in the assessee's hands merely because a document is recovered from its premises. The Revenue seems to have so done as the presumption of section 292C is available only in respect of the assessee. Be that as it may, the same by itself cannot be a ground or justification for extending the deeming, or the rule of evidence as provided therein, to persons not covered thereby. We have already held that the provision of section 292C and the deeming of provisions of Chapter VI are to be read in unison, being only in codification of the principles of common law jurisprudence. Accordingly, the assessee's income stands validly assesseed to the extent of Rs. 5,61,000/-, and the balance Rs. 12.83 lacs stands to be deleted. We direct accordingly. ....