2011 (8) TMI 9 - HC - Income Tax

Search and seizure - Block assessment - no enquiry of any sort was made by the Assessing Officer from the persons named in the seized paper or for that matter from M/s. Jamshedpur Cement Ltd. Mr. Khaitan, contends that in the circumstances, the Tribunal should have accepted the position that the seized paper did not reflect any actual transaction of purchase or sale of shares - It is rightly pointed out by Mr. Shome that additional evidence can be adduced before the CIT (Appeals) on compliance of the statutory provisions for acceptance of the same and formal application must be filed and at the same time, specific order must be recorded by the CIT (Appeals) allowing such prayer and specifying the point on which such additional evidence should be taken - Tribunal rightly held that the admission made by the assessee at the time of search was not properly explained and thus, the principles laid down in the above decision where the finding was based on surmise cannot have any application to the facts of the present case - Decided against the assessee

Summary

Issues Involved:
1. Legitimacy of the addition of Rs.7,82,800/- based on a seized paper and the appellant's statement.
2. Consideration of the affidavit by the stock broker as evidence.
3. Justification of the Tribunal's decision to set aside the order of the Commissioner of Income-tax (Appeals).

Detailed Analysis:

1. Legitimacy of the Addition of Rs.7,82,800/-:
The appellant was subjected to a block assessment for the years 1987-88 to 1997-98 after a search by the Income-tax Department. During this search, the appellant made a statement about his investments in shares, including Rs.8 lac in shares of Jamshedpur Cement Ltd. which he later claimed were actually held by two companies, Fairdeal Automobiles Pvt. Ltd. and Usha Karna India Pvt. Ltd. The Assessing Officer added Rs.7,82,800/- to the appellant's income based on a seized paper that supposedly reflected share transactions. The appellant argued that the paper only contained stock exchange quotations, not actual transactions. However, the Tribunal upheld the addition, finding the seized paper corroborated the appellant's initial statement.

2. Consideration of the Affidavit by the Stock Broker:
The appellant presented an affidavit from a stock broker stating that the seized paper represented stock exchange quotations, not actual transactions. The Tribunal ignored this affidavit, as it was annexed to the written submission without being formally admitted as evidence. The Tribunal emphasized that additional evidence must be formally submitted and admitted, with an opportunity for the opposing party to rebut it. The CIT (Appeals) had not formally accepted the affidavit, nor did the appellant file an application for its admission before the Tribunal or the High Court.

3. Justification of the Tribunal's Decision:
The Tribunal found that the CIT (Appeals) had erred in deleting the addition of Rs.7,82,800/-. The Tribunal noted that the appellant's subsequent explanations did not match his initial statements made during the search. The Tribunal held that the CIT (Appeals) had made a perverse finding by deleting the addition without sufficient evidence. The Tribunal emphasized that the appellant's retraction of his initial statement was not supported by credible evidence and that the affidavit of the broker, not formally admitted, could not be considered. The High Court agreed with the Tribunal, stating that the appellant had not provided sufficient evidence to rebut his initial statement and that the Tribunal's decision was reasonable and justified.

Conclusion:
The High Court dismissed the appeal, affirming the Tribunal's decision to uphold the addition of Rs.7,82,800/-. The Court found no substantial question of law and emphasized the importance of formal procedures for admitting additional evidence. The decisions cited by the appellant's counsel were deemed inapplicable to the case at hand. The appeal was dismissed with no order as to costs.