TaxTMI 
TaxTMI 
2019 (8) TMI 993
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....rch and seizure operation carried out on the residential premises of the father-inlaw of the appellant namely, Deo Lal Sah, notice under section 158BC of the Income Tax Act, 1961 (hereinafter referred to as 'the IT Act') was issued to the assessee i.e. the appellant herein. The assessment order dated 28.01.2004 (Annexure 3 to the writ application) was passed by the Assistant Commissioner of Income Tax holding that the undisclosed income for the block period is assessed under section 158BC read with section 144 of IT Act to be Rs. 14,79, 897/- and tax on the total undisclosed income to be Rs. 8, 87,938/-. It is against this order dated 28.01.2004, that the appellant herein preferred an appeal before the Commissioner of Income Tax (Appeals) - 1, Patna which was registered as Appeal no. 264/A-I/03-04. By order dated 03.02.2005 (Annexure 4 to the writ application), the Commissioner of Income Tax (Appeals)-1, Patna was pleased to hold that the parents-in-law of the appellant had substantial rental income and possession being evidence of ownership and this presumption being strongest in case of cash found, the addition of Rs. 6,18,850/- was deleted. The respondent no. 3 preferred an a....
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....ises where he was living belongs to his mother-in-law and father-in-law. Besides this, written submissions were also filed on behalf of the appellant. A return of income for block assessment was filed on behalf of Deo Lal Sah for the period from 01.04.1995 to 29.01.2002 i.e. for assessment year from A.Y 1996-97 to 2002- 03. Along with the return of income dated 25.03.2004 (Annexure 10 to the application), a cash flow statement was enclosed. It was explained by Deo Lal Sah in reference to his cash flow statement as to how he had accumulated the sum of Rs. 6,13,000/- from his rental income. The Assessing Officer was pleased to pass assessment order dated 28.01.2004 in case of the appellant for the assessment year from A.Y 1996-97 to 2002-03. From perusal of the order dated 28.01.2004 of the Assessing Officer it would transpire that with respect to the cash so found, the appellant in his submission dated 09.05.2003 had asserted that the cash to the tune of Rs. 6,18,850/- had been found at the East Lohanipur residence of his father-in-law Deo Lal Sah; that the seized money belonged to Deo Lal Sah and that the assessee-appellant was not residing with his father-in-law at Lohanipur....
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.... evidence of ownership and this presumption is strongest in the case of the cash found. For this view the reliance placed on Ashok Kumar v CIT 160 ITR 497(MP), CIT v. K.T.M.S. Mahmood 228 ITR 130 (Mad), Kantilal Chandulal & Company v CIT 130 ITR 898 (Kol) and Chuharmal v. CIT 172 ITR 250 (SC). In view of the above judgments, it cannot be said that the assesse was merely in possession without background proof of ownership potential. The rental income from the immovable property and the fact that the appellant's parents-in-law never opened any bank a/c in their life time go to show that the appellants parents-in-law had the potential to accumulate cash out of their income earned not only during the Block Period but also before the Block Period. In view of this position of facts and circumstances, the addition of Rs. 6,18,850/- is deleted. ..." The respondent no. 3 feeling aggrieved by the order dated 03.02.2005 of the C.I.T (A), Patna preferred an appeal before the Income Tax Appellate Tribunal, Patna Bench. A cross objection was also filed on behalf of the assessee. Both the appeals of the revenue and cross objections filed by the assessee were partly allowed by orde....
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....r dated 03.02.2005 of the CIT(A), Patna. However, not taking the material fact into consideration that the recovery of cash to the tune of Rs. 6,18,850/- had taken place from the house of the appellant's father-in-law at Lohanipur where admittedly the appellant was not residing and that the appellant's father-in-law had filed the return of income for the block period explaining the said cash by a cash flow statement showing the same to have been accumulated from the rental income, nevertheless the Income Tax Appellate Tribunal committed an error in holding that pursuant to the introduction of section 292C of the IT Act, the presumption of ownership was attracted and that the appellant not having disclosed the same the C.I.T (A) was not justified in deleting the above addition of the recovered cash to the tune of Rs. 6 lacs. On the other hand, Ms. Archana Sinha, learned Sr. Standing Counsel for the Income Tax Department contended that the wife of the appellant happens to be the only child of her parents. Although on the search and seizure, the cash to the tune of Rs. 6,18,850/- of which Rs. 6 lacs was seized is said to have been recovered from the residential premises at East Loh....
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....pearing for the appellant submitted that Chapter 14-B deals with the special procedure for assessment in search cases. Section 158B defines block period to mean the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted. Further, section 158B(b) defines undisclosed income to include any money which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false. The learned counsel also relied on the judgments in the case of Chuharmal v. Commissioner of Income Tax, MP reported in 172 ITR 25 and Commissioner of Income Tax v. Ravikant Jain reported in 250 ITR 141. It was further submitted that although the father-in-law of the appellant could not appear before the A.O. for reasons already explained, nevertheless he had filed his written submissions through his advocate. Concluding it is submitted that even for the sake of argument if the charge made is accepted, section 113 of the IT Act provides that the total undisclosed income of the block period, determined under section 158B(C) shall be chargable to tax at th....
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....t on record as Annexure 2 to the writ application, it would transpire that a total sum of Rs. 6,18,850/- in cash was found out of which Rs. 6 lacs in cash was seized and the balance sum of Rs. 18,850/- was released. It would also be relevant to state that Deo Lal Sah, in response to summons issued under section 131 of the IT Act filed his written submissions categorically stating that the cash found at his Lohanipur residence belonged to him. The written submissions so filed, while admitting ownership of the cash of Rs. 6,18,850/-, also explained the same with reference to cash flow statement. It would be relevant to take note of the fact that admittedly both the houses, at East Lohanipur as also at Machuatoli belonged to Deo Lal Sah and he had rental income from the same. The undisputed facts which emerge in this case are: (a) the house at Lohanipur belonged to Deo Lal Sah; (b) Deo Lal Sah was residing in the said house at Lohanipur; (c) the recovery of Rs. 6,18,850/- was made from the house at Lohanipur; (d) Deo Lal Sah admitted that the seized cash belonged to him and also filed a tax return for block assessment along with the cash flow ....
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.... his family is residing does not belong to the appellant's mother-in-law. As such, where the appellant admittedly is living in the house belonging to his mother-in-law, it was natural for him to make the statement on oath on 29.01.2002 that he was a "Ghar-jamai" meaning thereby, that the appellant was living in a property/residential premises in Machuatoli which belonged to his parent's-in-law. In our opinion nothing more can be drawn/deduced from the said statement of the appellant. In view of the above as also in view of the substantial question of law framed, it would be relevant to quote section 292C herein below for ready reference :- "Presumption as to assets, books of account, etc.' 292C. [(1)] Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that th....
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.... also categorically stated that the said cash was of his father-in-law Deo Lal Sah. In so far as section 158BB(3) is concerned, the undisclosed income had already been disclosed in the return of income filed by Deo Lal Sah who also accepted it in his written submissions. In our opinion thus, this section 158BB(3) has no applicability in the present case. Section 132 (4A) of the I.T. Act provides that where any books of Accounts, other documents, money etc. is found in possession or control of any person in course of search, it may be presumed that the same belongs to such person. It is apparent from the facts of the present case that not only has the seized cash been found from the house of Deo Lal Sah, father-in-law of the appellant, the said Deo Lal Sah in his written statement has also claimed ownership of the said cash. Thus, even in law as per section 132 (4A) of the I.T. Act the cash seized at the Lohanipur residence would be presumed to belong to Deo Lal Sah and not the appellant. The judgments cited by the respondents are being dealt with herein below :- (1) Daya Chand v. Commissioner of Income Tax (supra) :- In this case the cash credit were found in the boo....
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....dence Act, the seized cash cannot be presumed to be that of the appellant as he was not in possession thereof, and as such the onus of proving that he is not the owner would also not be on the appellant. Having considered the submissions made on behalf of the appellant and the respondents and on going through the materials available on the record of the case, we, in absence of any evidence present connecting the money seized with the appellant, come to the following conclusions : (i) The cash found and seized in course of search on 29.01.2002 at the East Lohanipur residential premises of Deo Lal Sah (father-in-law of the appellant) belongs to Deo Lal Sah alone and not the appellant. (ii) The respondent authorities in drawing presumption in terms of section 292C of the IT Act that the cash found and seized belongs to the appellant, have committed serious error in law as section 292C provides that if money is found in possession of any person in course of search under section 132, it may in any proceeding under the Act be presumed that such money belongs to such person and thus in the instant case since the money/seized cash was found in possession of Deo Lal Sah....