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2013 (1) TMI 159 - AT - Income TaxUnaccounted Cash Credit - survey u/s. 133A - computer back up files found on the system at the assessee s premises - could any addition be made in the hands of the assessee, the recipient or the beneficiary of these funds? - Held that - The transactions of availing monies from P having not been recorded in the assessee s books of account, section 68 could not be said to be applicable. However, that would be to no consequence, as the admission of the transaction/s itself implies of the corresponding amount/s in the assessee s hands in the form of cash on the relevant date/s and sections 69, 69A, etc., will apply. CIT(A) has relied on the decisions in the case of Sunil K. Malhotra v. CIT 1995 (7) TMI 60 - ALLAHABAD HIGH COURT and Laxmi Narain Gupta v. CIT 1979 (10) TMI 41 - PATNA HIGH COURT . The document to be considered as true, admittedly reflects the transaction/s of money being provided by P for their use by, among others, the assessee. That is, it shows an effective or constructive receipt of money by or on assessee s behalf. Where it was used can only be explained by the assessee, and which it has chosen not to. The receipt of money by the assessee is manifest per the document, which is, rather, not denied by the assessee. The acquisition of money by the assessee as at the relevant date/s, thus, cannot be and, in any case, is not in question. The same (money, in the form of cash), which is covered by section 69A, being not recorded in the assessee s books of account, the said provision would apply to the transaction. Consider this a bank pass book of the assessee, which definitely does not form part of the assessee-bank account holder s books of account, is found during search/survey, reflecting deposit/s and/or credit/s therein. The amount/s may have been withdrawn subsequently, so that it cannot be said that a deposit/s is found as on the date of search, yet it is so found on the relevant date/s (of deposit/s), so that the assessee is obliged to explain the same as to its nature and source, where not reflected in its regular books of account and the date/s fall in the year/s of assessment. Thus, find no legal hindrance or barrier to the invocation of the said sections, or s. 69A in the instant case. It is only when both the nature and source of the money has been satisfactorily explained, that the assessee s obligation under the deeming provision stands discharged and which, thus, cannot be said to be in the facts and circumstances of the present case. The deeming of section 69A would, thus, be clearly applicable, and stand validly applied by the Revenue in the facts and circumstances of the case. However, the same shall only extend to the money with the assessee, and cannot, by any account, extend to the money provided by P for persons other than the assessee. Whether the assessee has any connection with them; it clearly with-holding facts, is irrelevant, as in any case they are separate persons, and their income, if so, cannot be assessed in the assessee s hands merely because a document is recovered from its premises. Accordingly, the assessee s income stands validly assessed to the extent of Rs. 5,61,000/-, and the balance Rs. 12.83 lacs stands to be deleted - partly in favour of assessee. Addition u/s. 69 C effected on the basis of print-outs of computer back up file - CIT(A) deleted the addition - assessee s contested that its name being reflected neither in the payments nor toward receipt of money - Held that - Presumption u/s. 292C can only result in the document being read as what it would convey to a normal, un-interested person of ordinary prudence. Of course, in a given case, the reading may yield grotesque situations, as where the person/s stated in the document does not exist, or (say) the person/s stated to be providing the material resources is admittedly a man of no means, so that the document could not be considered as a valid piece of information. However, in such a case, the onus to show so would be on the person so alleging. The AO has done no such exercise. The Revenue has also not brought on record any interest of the assessee in the relevant properties. The document, as we see it, has no bearing on the assessee. The document may be true, and the assessee may well be in know of its contents, as it would only have been prepared by or under its supervision and knowledge, and only for some purpose. However, if the assessee doe not choose to divulge the same, it cannot be in consequence applied to it. Under the circumstances, CIT(A) had rightly deleted the impugned addition - against revenue.
Issues Involved:
1. Validity of additions based on documents found during survey. 2. Applicability of Sections 68, 69, and 69A of the Income Tax Act, 1961. 3. Presumption under Section 292C of the Income Tax Act, 1961. 4. Burden of proof regarding unexplained income. 5. Relevance of documents to the assessee. Detailed Analysis: 1. Validity of Additions Based on Documents Found During Survey: The case involves cross-appeals by the Assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals)-23, Mumbai, which partly allowed the assessee's appeal contesting its assessment under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07. The additions for the current year are based on print-outs of computer backup files found on the assessee's premises during a survey action under Section 133A of the Act. The document in question detailed funds received and used, implicating the assessee in unexplained transactions. 2. Applicability of Sections 68, 69, and 69A of the Income Tax Act, 1961: The assessee argued that no addition could be made based on the document, as it merely indicated 'A' giving a loan to 'B'. The Revenue contended that the document's presumption under Section 292C does not discharge the burden of proof under Sections 68, 69, and 69A, which require the assessee to explain the nature and source of the funds. The Tribunal held that the transactions of availing monies from 'P' (a partner in the assessee-firm) were not recorded in the assessee's books, invoking Sections 69 and 69A, which apply to unrecorded transactions and unexplained money. 3. Presumption under Section 292C of the Income Tax Act, 1961: Section 292C provides a presumption as to the truth of any document found during a survey, supporting the rule of evidence in Sections 68, 69, et al. The Tribunal emphasized that the presumption is rebuttable, and the onus is on the assessee to prove otherwise. The document's contents were presumed true unless proven otherwise, and the assessee failed to disprove the presumption. 4. Burden of Proof Regarding Unexplained Income: The Tribunal noted that the assessee's explanation was silent on the nature of the funds, only indicating 'P' as the source. The assessee did not provide evidence to rebut the presumption or explain the nature and source of the funds satisfactorily. The Tribunal upheld the Revenue's non-satisfaction with the assessee's explanation, applying Section 69A for unexplained money. 5. Relevance of Documents to the Assessee: The Tribunal found that the document indicated money received from 'P' for the use of the assessee and others. However, the addition could only extend to the money with the assessee, not to funds provided for other persons. The Tribunal directed that the assessee's income be assessed to the extent of Rs. 5.61 lakhs, deleting the balance Rs. 12.83 lakhs. Revenue's Appeal: The Revenue's appeal involved the deletion of an addition of Rs. 368.10 lakhs under Section 69C, based on computer backup files reflecting payments made by two entities. The Tribunal held that the document did not pertain to the assessee, as its name was not reflected in the transactions. The presumption under Section 292C could not be applied to the assessee without evidence of its involvement. The Tribunal upheld the CIT(A)'s decision to delete the addition. Conclusion: The assessee's appeal was partly allowed, with the income assessed to the extent of Rs. 5.61 lakhs, and the Revenue's appeal was dismissed. The Tribunal emphasized the importance of explaining both the nature and source of funds and upheld the statutory presumption under Section 292C, placing the burden of proof on the assessee.
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