TaxTMI 
TaxTMI 
2023 (9) TMI 201
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....Pradesh). 2.1 Subsequently, the search and seizure 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 includi....
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....see before the ld. Commissioner mainly emphasised: That the 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....
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....i Ajay Kumar, held that the circumstantial evidences are against the 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 ....
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.... LP-04 for "site ke atirikt vyay", the additions have been made by the Assessing Officer in case 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 ....
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....lant before the Ld. AO. 9. That the Ld. CIT(A) erred on facts and in law in holding that the contents of loose papers were to be presumed to be correct 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 ....
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....as not empowered to grant contact solely, but in fact the same were required to be approved by the Superintending Engineer as well. Therefore, the allegations of extraneous consideration, are based on conjectures and surmises. 8. On the 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 refer....
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....course of a search, it may 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 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 ....
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....n" may be drawn against "such person" from whose possession or control of, in the course of a search, such documents etc. found. 10.3 But the question evolve "whether the presumption as enumerated in the provisions of section 132(4A) and section 292C of the Act can be drawn against a third person from whose possession and control, in 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 recov....
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.... "that it is a sell settled statutory principle, if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner." 10.9 From the bare provisions of the Act, decisions of Hon'ble Courts and the discussion held, we are of the considered view that the presumption as prescribed, under 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 addit....
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.... the Assessee, while the entries on the papers remained uncorroborated. The Hon'ble High Court also taken into consideration the judgment of the same High Court in the case of CIT vs. Shadiram Ganga Prasad, 2010 UPTC 840, wherein it was held that the loose purchas found during the search at the most could lead to a presumption but the department cannot draw inference, 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, f....
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....and the statement of scriber of nothings etc. and such person, undoubtedly should be confronted to the Assessee and the Assessee has to be allowed to cross examine such persons and an opportunity to rebut the evidence. Unless the statement/document is tested under the cross examination, the same cannot be read in evidence against the Assessee and no adverse inference can be drawn, 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 un....
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....e/document related to the Assessee, which could be connected with the documents relied by the Revenue Department, found from the possession or control of the Assessee, in spite of certain search and seizure operation carried out in his premises. 12.13 It is also well settled law that the dumb documents having no evidentiary value and cannot be taken as sole basis for determination of undisclosed 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. Comm....
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.... of section 132(4A) and 292C of the Act is "may be presumed" which has been defined in section 4 of the Evidence Act, which reads as under: "Whenever it is provided by this Act that the court may presume a fact, it may either regard such fact as proved, unless and until it is disproved or may call for proof of it." 13.3 From the provision of section 4 of the Evidence Act, it is clear, the presumption 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 pro....
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....blishing the addition under the substantive provisions of section 69 of the Act as involved in this case and before fulfilling the conditions of section 69 independently, the presumption cannot be drawn, which in the instant case is missing. Hence, on this aspect as well the addition in hand is unsustainable. 16. We further observe that the Assessing Officer has also observed in the assessment order that the circumstantial evidences are against the Assessee, as it is obvious that the aforesaid amount was received by the Assessee for favouring Shri Ajay Kumar by awarding him contracts. As we have already considered the circumstantial evidence, and it is admitted fact that the Assessee was not empowered to grant any contract of value of more than Rs. 40 lacs and as alleged contracts were of more than the prescribed limit of Rs.40 lacs, then the circumstantial evidence as construed by the Assessing Officer having no value, as the same is based on surmises and conjectures. 17. The Assessing Officer while making addition, also relied upon the judgment in the case of CIT vs. Durga Prasad More (supra), wherein, the Assessee was actually found to be owner of money which was treated a....