2013 (7) TMI 915 - HC - Income Tax

Issue notice on substantial question of law nos.1 to 6 as follows - 1. Whether the Hon ble ITAT has erred in law and on facts in ignoring the provisions of Section 292-C of the I.T. Act 1961 according to which the documents books of accounts money bullion jewellery and other valuable articles or things found in the possession or control of a person are presumed to be belonging to such persons and that the contents of such books of account are true. Accordingly as per provisions of law it was for the assessee to rebut the evidence found during the course of search and not for the AO to prove that the contents of documents were true and belonged to the assessee. 2. Whether the Hon ble ITAT has erred in law and on facts in ignoring the provisions of Section 132 (4A) of the I.T. Act 1961 which provides that the documents found in possession of asseessee would be presumed to be of the assessee and that the contents of such documents are true. Accordingly in view of the documents referred to by AO the contents were proved to be true by the AO. 3. Whether the Hon ble ITAT has erred in law in relying on various decisions of Supreme Court in the case of Sumati Dayal vs. CIT (1995 (3) TMI 3 - SUPREME Court ) which were delivered prior to insertion of Section 292C by Finance Act 2002 w.e.f. 01.10.1975 and accordingly did not represent the correct position of amended law. 4. Whether the Hon ble ITAT was justified in law as well as in the facts and circumstances of the case in deleting the addition of 53, 74, 850/- made u/s 69 of the I.T. Act 1961 without appreciating the facts that the addition was made on the basis of documents seized during the course of search operation as per which the amount was found to be unexplained money received by the assessee on family settlement. 5. Whether the Hon ble ITAT has erred in law as well as in the facts and circumstances of the case in deleting the addition of 75, 12, 500/- on account of unaccounted cash payment for purchase of property at Gurgaon without appreciating the facts that notings in the seized document represented the unaccounted cash payment made to the seller of the property over and above the amount mentioned in the sale deed. 6. Whether the Hon ble ITAT has erred in law as well as in the facts and circumstances of the case in deleting the addition of 2 92 387/- on account of rental income without appreciating the fact that the property was let out therefore the AO added the difference in the rental income declared by the assessee.

Summary

Issues involved:
1. Interpretation of Section 292-C of the Income Tax Act, 1961
2. Application of Section 132 (4A) of the Income Tax Act, 1961
3. Impact of pre-amendment judicial decisions on current law
4. Deletion of addition under Section 69 of the Income Tax Act, 1961
5. Deletion of addition for unaccounted cash payment for property purchase
6. Deletion of addition on account of rental income

Analysis:
1. The first issue revolves around the interpretation of Section 292-C of the Income Tax Act, 1961. The appellant questions the ITAT's decision, arguing that the ITAT erred in ignoring the provisions of Section 292-C. The section presumes that documents, books of accounts, and other valuable items found in a person's possession belong to that person unless proven otherwise. The appellant contends that it was the assessee's responsibility to rebut the evidence found during the search, not the Assessing Officer (AO).

2. The second issue concerns the application of Section 132 (4A) of the Income Tax Act, 1961. The appellant challenges the ITAT's decision for disregarding this section, which presumes that documents found in the possession of the assessee are considered to be true. The AO, based on the documents, asserted that the contents were accurate. The appellant contests the ITAT's oversight of this provision.

3. The third issue questions the ITAT's reliance on pre-amendment judicial decisions, specifically citing the Sumati Dayal case, which was decided before the insertion of Section 292C. The appellant argues that these decisions do not accurately represent the current law post the amendment by the Finance Act, 2002. The appellant highlights the need for a correct interpretation of the amended law.

4. Moving to the fourth issue, it involves the deletion of an addition under Section 69 of the Income Tax Act, 1961. The appellant challenges the ITAT's decision to remove the addition of a specific amount, contending that the addition was based on documents seized during a search operation, indicating unexplained money received by the assessee through family settlement. The appellant questions the ITAT's justification for deleting this addition.

5. The fifth issue pertains to the deletion of an addition for unaccounted cash payment made for purchasing property. The appellant contests the ITAT's decision to remove the addition, arguing that the seized document revealed unaccounted cash payment made beyond the documented amount in the property sale deed. The appellant questions the ITAT's understanding of the situation.

6. Finally, the sixth issue involves the deletion of an addition on account of rental income. The appellant challenges the ITAT's decision to remove this addition, stating that the property was rented out, and the AO added the variance in rental income declared by the assessee. The appellant questions the ITAT's rationale for deleting this addition.

The court has admitted the case and issued notices on the substantial questions of law raised by the appellant. The department is directed to serve the respondent and file an affidavit of service within six weeks.