TaxTMI 
TaxTMI 
2023 (9) TMI 201
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....eizure operation u/s. 132 of the Act, was also carried out on 10.11.2017 at the premises of the Assessee as well and subsequent to that, notice u/s. 153A of the Act was issued to the Assessee on 23.08.2019 for filing his return of income for the AY under consideration as well, in response to which, the Assessee on dated 30.08.2019 e-filed his return of income, by declaring total income of Rs. 13,02,300/- derived from salary and other sources. 2.2 The Assessing Officer by perusing the said Annexures marked as D-6, D-1 and LP-4 (supra), found that Shri Ajay Kumar allegedly has given more than Rs. 6.00 crores as cash as extraneous consideration to the Assessee, and therefore show caused the Assessee to explain the cash alleged to have been received and also to explain the purposes of the same and as to why the said amount should not be added to the total income of the Assessee, as his undisclosed income. 2.3 The Assessee by filing its reply, in response to the said show cause, out rightly refused to have taken any type of money from Shri Ajay Kumar and in support of its claim furnished various details/ information/ documents including the statements of bank accounts, which were look....
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....he order passed by the Assessing Officer is ex-facie arbitrary, illegal and bad in law being against the provisions of the Act and principle of natural justice. Further the Assessing Officer has erred in making addition of Rs. 5,98,76,460/- u/s. 153A instead of section 153C of the Act as the documents were seized from the premises of third party and without following the mandate of circular No. 25/2015 of CBDT, the assessment order is in violation of the decision of the Tribunal at Delhi in the case of Lalit Mahajan (ITA No. 5585/Del/2015 decided on 19.03.2019 and thus, liable to be quashed. Further, the Assessing Officer erred in not allowing cross examination of Shri Ajay Kumar though specifically asked vide letter dated 23.11.2019 which is in violation of the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. CCE (2015) 62 taxmann.com 3, wherein, it has been held that not allowing cross examination results into nullity of the order. The Assessing Officer further erred in placing reliance on the documents seized from the residence of the third party without rebutting the case laws relied in submission vide para 19 dated 14.10.2019. The Assessing Office....
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....Assessee, as it is obvious that the aforesaid amount was received by the Assessee for favouring Shri Ajay Kumar by awarding him contracts. The AO ultimately made the addition of Rs. 5,98,76,460/- u/s 69 of the Act, in addition to making other addition(s) which are not in challenge before us. 6. The ld. Commissioner more or less affirmed the said addition, on the grounds: "That from the seized material LP-4, various ledger accounts are found, in which there are also detailed ledger accounts which are made for expenses incurred for the purpose "other than the site expenses". From these accounts, it has been categorically found that the payments have been made to various government servants, including the Assessee. The presumption of section 132(4A) and section 292C of the Act clearly applies in the matter of seized documents, therefore, the contents of these seized material cannot be doubted. From the detailed analysis of the seized material, it has been found that various projects relates to Shri Ajay Kumar and his family members who have been awarded the work of these projects as contractors. Since Shri Ajay Kumar is a contractor and has been doing the project work at various s....
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.... of Shri Ajay Kumar and addition of Rs. 20,27,19,855/- has been confirmed by the ld. CIT(A) for a document found and seized during the search proceedings conducted u/s. 132 of the Act for which two independent witnesses were engaged and detailed Panchnama was drawn, no plea of authentication can be taken. It is the bounden duty of the person in whose control and possession, the seized material has been found to disclose the name of the person, who has written the same and department cannot be expected to find out such person, who has written such detailed accounts and Shri Ajay Kumar has failed to reveal the name of such person. But the provisions of section 132(4A) and section 292C of the Act have been made as to how to handle such a situation. Therefore, in the assessment and the appellate proceedings of Shri Ajay Kumar, these seized materials i.e., 'site ke atirikt vyay', ledger accounts in LP-04 have been made the basis, to compute the undisclosed income in case of Shri Ajay Kumar. Same conclusion is made in case of the Assessee and the payments reflected in these ledger accounts in LP-04 are made the basis, for computing unaccounted income in the hands of the Assessee." 7. T....
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....ct for the purpose of making addition in the hands of the appellant in terms of sections 132(4A) and 292C of the Act failing to appreciate that there was no corroborative evidence of such addition found from the premises of the appellant." 7.1 By Grounds No. 1 to 3, the Assessee challenged the validity of Assessment Order on legal aspect, however, during the course of hearing, did not press these grounds specifically, hence, we are not adverting to decide the same and therefore, the judgment passed by the Hon'ble jurisdictional High Court in the case of Raj Kumar Arora (supra) as referred to by the ld. DR, do not require any consideration. 7.2 Grounds No. 4 to 9 pertains to the merit of the case, and in support of same, the Assessee reiterated its contentions as raised before the authorities below. Mr. Gaurav Jain Ld. Advocate, ld. AR of the Assessee specifically claimed that the ld. Commissioner in its order though referred five contracts awarded to Shri Ajay Kumar by the Irrigation Department, however, admittedly none of the said contracts was below than Rs. 40 lacs and therefore, Mr. Jain by drawing our attention to page No. 152 of the paper book wherein pecuniary powers of t....
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....he contrary, the ld. DR refuted the claim of the Assessee and supported the orders passed by the authorities below. With regard to grounds no. 1 to 3, relied upon Allahabad High Court judgment in the case of Commissioner of Income Tax Vs Sri Raj Kumar Arora {Income Tax Appeal No. 56 of 2011 decided on 11 July, 2014}. 8.1 The ld. DR further submitted that the addition in hand has been made on the basis of the papers found and seized from the residence of Shri Ajay Kumar (Contractor) and therefore, the presumption u/s. 132(4A) and section 292C of the Act is squarely applicable in the instant case. 8.2 The ld. DR further claimed that sometime complete names and sometimes short names have been recorded in documents, but that does not absolve the Assessee from the rigors of presumption, as laid down in section 132(4A)/292C of the Act. Further from page No. 155 of the paper book, as referred to by the Assessee, it is not clear that the persons referred are connected to the contract works. 8.3 The ld. DR further claimed that in the instant case, the search and seizure operation was carried out at the premises of the contractor on dated 16.06.2017, whereas the search in the premises of ....
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....t the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested." "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 the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasona....
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....n the course of search, no books of accounts, other documents, money, bullion, jewellery or other valuable articles etc. have been recovered ." 10.4 We observe that various Benches of the Tribunal in the cases of Strawpack (India) Pvt. Ltd. vs. DCIT (2003) 84 ITD 320 (Mum), Jai Kumar Jain vs. ACIT (2007) 11 SOT 61 (Jaipur)(URO)/(2006) 99 TTJ 744 (Jaipur) dated 23.09.2005, Sheth Akshya Pushpavandan vs. DCIT (2010) 130 TTJ 42 (Ahmedabad) (UO) dated 05.02.2010 and Pradeep Amritlal Runwal vs. Tax Recovery Officer, Range-3, Pune (2014) 47 taxmann.com 293 (Pune-Trib) dealt with the presumption prescribed u/s. 132(4A) and 292C of the Act and situation/issue wherein on the basis of some loose papers, the addition(s) in the hands of third person has been made. The Hon'ble Courts in the aforesaid cases clearly held that since the seized papers were not recovered during the course of search, from the possession and control of the third person (Assessee), the presumption u/s. 132(4A) and 292C of the Act, could not be invoked against the third person (Assessee) and the addition based on such documents is unjustifiable. 10.5 We further observe that in Seth Akshya Pushpvandan and Pradeep Amritl....
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....er the provisions of section 132(4A) and 292C of the Act, may be drawn against "such person" only from whose possession or control, the documents etc. as mentioned in the said provisions is/are found and seized or recovered but not against the third person from whose possession or control, no such document(s) etc. as mentioned in the said provisions, is/are found and seized or recovered. We answer question no. (i) accordingly. 10.10 Coming to the instant case, the alleged documents, have been found in the premises of Shri Ajay Kumar and therefore, the presumption as prescribed u/s. 132(4A) and 292C of the Act, can only be drawn against Shri Ajay Kumar, which infact has already been drawn by making the addition on the basis of the seized documents including Annexure LP-04 used in this case. It is also not the mandate of law that the addition can be made in two hands on substantive basis. Hence on the aforesaid analyzations, the addition is liable to be deleted in this count itself. 11. Next question relates to "Whether, a third person, from whose possession or control, no recovery of such documents etc. as referred to u/s 132(4A) and section 292C of the Act, has been effected, is ....
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....ce, unless the entries made in the documents so found are corroborated by the evidence. The Hon'ble High Court also taken note of the fact that the presumption as provided in section 132(4A) is not in absolute terms, but is subject to corroborative evidence. The Tribunal on the basis of presumption u/s. 132(4A) of the Act, reversed the finding of the ld. CIT(A), without recording any finding as to how the loose sheets, which were recovered during the search, were linked with the Assessee. In the absence of corroborative evidence, the Tribunal was not justified in reversing the finding by the CIT(A). 12.4 The Hon'ble jurisdictional High Court (Allahabad High Court) in the case of Pushkar Narain Sarraf vs. CIT (1990) SOT 213 has also laid down a dictum that where the department proposes to invoke section 69 of the Act, for taxing unexplained investments, it cannot harp on the presumption u/s. 132(4A) of the Act. It will first have to prove by independent evidence that the Assessee has, in fact, made investments which are not recorded in the books of account etc. and the onus of proving the source etc. will shift to the Assessee only, after the burden of establishing unexplained inve....
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....rawn, unless the entries made in the documents so found are corroborated by the independent evidence. The presumption as provided in section 132(4A) and 292C of the Act, is not in absolute terms, but is subject to corroborative evidence. Where the department proposes to invoke section 69 of the Act for taxing unexplained investments, it cannot harp on the presumption u/s. 132(4A) of the Act. It will first have to prove by independent evidence that the Assessee has, in fact, made investments, which are not recorded in the books of account etc. and this burden cannot be said to have been discharged merely on the basis of some entries found in the books of account or documents seized in the course of search. The onus of proving the source etc. will shift to the Assessee only, after the burden of establishing unexplained investment has been discharged by the Revenue Department. 12.9 The loose papers, on which entries of amounts are depicted, can not be used without corroborating evidences, hence we answer question no. (iii) accordingly. 12.10 Coming to the instant case, some loose papers were found from the premises of Shri Ajay Kumar (third party) alleged to be a contractor of the I....
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....ndisclosed income of the Assessee. Wherever, the Revenue Department wants to make use of dumb documents alike involved in the instant case, then the onus rests on the Revenue Department to collect cogent evidence qua the person whose name appears in notings, to corroborate the notings therein. Simply the reason "that cheques and RTGS shown in the said papers having been paid to various firms were also got verified and therefore, the transactions recorded in the said are true and correct, hence, authenticity of the page (LP-04) is beyond doubt," as considered in this case, is not sufficient to draw any adverse inference against such person (Assessee herein) whose short name depicted in the document. 12.14 The Hon'ble jurisdictional High court of Allahabad in the case of Mumar Trading Co. Vs. Commissioner of Trade Tax, 2008 taxmann.com 1672 (Allahabad) as well, also clearly held that it is settled principle of law that if the Revenue wants to rely upon the entries of the document, seized from the premises of third party, the burden lies upon the Revenue Authorities to prove the genuineness and authenticity of the said entries to connect the said entry with the dealer, in case the de....
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....tion is not final or conclusive, but is a rebuttable one that may be disproved by the person from whose possession and control, the items mentioned in section 132(4A) and Sec. 292C of the Act, have been recovered. For better understanding, we are quoting an example that if some documents are recovered during the search and seizure operation, then the presumption may be drawn that such documents are in the hand writing of the person, from whose possession and control, the said documents have been recovered, but still, the presumption can be disproved by declining and showing that such documents are not in the hand writing of that person. 13.4 It is not the mandate of law as provided u/s. 132(4A) and 292C of the Act that whenever the documents etc. as prescribed in the said provisions are seized with, the court shall necessarily bring the presumption irrespective of the other factors which may dissuade the court from doing so. 13.5 The question also arise, what kind of evidence would rebut a legal presumption in the given set of facts, in fact there is no rigid rule. In our opinion, the evidence can be direct or indirect or circumstantial or in combination, however, in certain case....