2010 (6) TMI 862 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 41,51,054/- made by the AO based on seized documents RK-8 u/s 292C of the I.T. Act.

Summary:

Issue 1: Deletion of addition of Rs. 41,51,054/- made by the AO based on seized documents RK-8 u/s 292C of the I.T. Act

The Revenue appealed against the order of the CIT(A), Central-II, Kolkata, which deleted the addition of Rs. 41,51,054/- made by the AO based on seized documents RK-8 under the provisions of section 292C of the I.T. Act. The assessee, a practicing Chartered Accountant and Director in Richfield Financial Services Ltd., had his premises searched, and documents RK/1 to RK/25 were seized. The AO observed transactions in document RK/8, which the assessee denied knowledge of, leading the AO to add Rs. 41,51,054/- to the assessee's income as undisclosed sources based on the presumption u/s 292C.

On appeal, the CIT(A) deleted the addition, stating that the presumption u/s 292C is rebuttable and the document did not conclusively prove the transactions belonged to the assessee. The CIT(A) noted that the document was an old computer printout found among 411 pages of seized papers, and the assessee was justified in being unable to explain its contents. The CIT(A) emphasized that the presumption under section 292C does not lead to conclusive evidence and the assessee has the right to rebut the presumption.

The Revenue argued that the CIT(A) ignored the AO's observations and unjustifiably gave relief to the assessee. The assessee's counsel contended that the document was not found from the residence but brought from the office premises, and the assessee was denied natural justice as his request to examine witnesses was rejected. The counsel also argued that the presumption u/s 292C is not mandatory but rebuttable, and the addition was based on inadequate material.

The Tribunal, after hearing both sides, upheld the CIT(A)'s order, agreeing that the presumption u/s 292C is rebuttable and the assessee was not in a position to explain the contents of the document after five years. The Tribunal found no infirmity in the CIT(A)'s decision and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the addition of Rs. 41,51,054/-.

THIS ORDER IS PRONOUNCED IN OPEN COURT ON Dt. 25.06.10.