2012 (8) TMI 738 - HC - Income Tax

Unaccounted Investments - documents recovered from another assessee s premises - Held that - Tribunal recorded that the seized documents even contained the signature of the assessee. The dates on which the alleged payments were made towards the partnership firm also tallies with the date on which such partnership was entered into - The first of such payments made by the assessee is on 5.4.1995 and the last is dated 8.5.1995 the partnership deed was entered on 28.4.1995 and the retirement deed on 12.4.1996 thus none of the payments with respect to which the additions were made related to the period after the retirement of the assessee - As the entire issue turns on facts and the Tribunal have elaborately considered the same and the findings cannot at all be termed as perverse - no question of law arises from the order of the Tribunal - against assessee.

Summary

Issues:
Challenge to Tribunal's order on block proceedings for the period 1.4.1988 to 30.7.1998; Addition of undisclosed investments in partnership firm; Allegation of surviving partnership without cogent material; Legality of Assessing Officer's addition based on seized documents from another assessee's premises.

Analysis:
The appellant contested the Tribunal's decision confirming lower authorities' orders on block proceedings. Initially, the appellant's residential premises were searched, leading to proceedings for the block period 1.4.1986 to 12.12.1996. Subsequently, investments made by various partners, including the appellant, in a partnership firm were revealed from documents seized from another entity's business premises. The Assessing Officer added Rs.4,20,000/- to the appellant's income, which the appellant disputed, claiming to have invested only Rs.1,50,000/- as per partnership deeds and subsequently retired from the partnership, receiving the amount back. However, the Assessing Officer rejected this contention, citing seized documents indicating higher investments and partnership details recorded by the firm's manager.

The appellant raised legal questions regarding the addition made by the Assessing Officer based on seized documents, arguing against the assumption of a surviving partnership without sufficient evidence. The appellant alleged that the Tribunal's decision was erroneous and based on a flawed understanding of facts. The court carefully considered the arguments presented, emphasizing the timing of investments vis-a-vis partnership deeds and retirement documents. It was found that all investments by the appellant predated the retirement deed, with some made before the partnership deed, indicating pooled funds for the partnership's establishment. The court noted that the seized documents were detailed minutes books, not casual notes, with the appellant's signature present, and the dates of investments aligned with the partnership's formation.

The court concluded that the Tribunal's findings were not perverse, as the seized documents, including the appellant's signature, supported the Assessing Officer's addition. The investments in question were made before the appellant's retirement from the partnership, and no post-retirement payments were included in the additions. As the issue hinged on factual considerations, no legal questions arose from the Tribunal's decision, leading to the dismissal of the appeal.