2014 (11) TMI 410 - HC - Income Tax

Undisclosed capital introduction Provisions of section 132(4A) not considered Held that - In the audited balance-sheet, there is no land and building whereas in the seized BDM/18, there is an item of land and building - if there is a land and building, such an asset cannot be hidden - even the search did not unearth any such land and building - the cash and bank balance show an amount as per the seized BDM/18 and as per the audited balance-sheet is ₹ 15,88,517.60 - the Revenue has not been able to identify any bank account, which is having a balance of ₹ 1,13,774.43 as shown in BDM/18 - the sundry debtors show an amount of ₹ 13,119/- as per BDM/18 whereas as per the audited balance-sheet, the figure is ₹ 11,36,148/-, which is a higher figure in the audited balance-sheet. On the liabilities side, the sundry creditors shown, as per BDM/18, is ₹ 1,95,965.43 whereas as per the audited balance-sheet, the figure is ₹ 35,84,244.42, which is again a higher figure and this includes an amount of ₹ 28,48,604/- in respect of Dutta Automobiles, which are on the basis of contemporaneous document and evidence - There is also a loan from Union Bank, which is shown in the audited balance-sheet at ₹ 4,01,437/- but does not find place in BDM/18 - All these figures clearly show that BDM/18 is clearly not a true and fair document for the purpose of making an addition much less a presumption of undisclosed income - revenue has been able to show any corroboration regarding the discrepancy arising from the document seized to show that the source of undisclosed document was attributable to the assessee thus, the order of the Tribunal is upheld Decided against revenue.

Issues Involved:
1. Formulation of questions by the revenue regarding deletion of addition made by the Assessing Officer.
2. Consideration of Section 132(4A) of the Income Tax Act, 1961.
3. Appreciation of seized documents marked as BDM/18.
4. Consideration of loose-sheet documents as evidence for making additions.
5. Assessment of the impugned order for being bad, arbitrary, and illegal.

Analysis:

1. Formulation of Questions:
The revenue sought formulation of specific questions related to the deletion of additions made by the Assessing Officer. The questions pertained to the error in law by the Income Tax Appellate Tribunal in deleting the addition of a certain amount without considering relevant sections and decisions.

2. Consideration of Section 132(4A):
The Assessing Officer relied on Section 132(4A) of the Income Tax Act, 1961 to raise a rebuttal presumption regarding the seized documents. The Jharkhand High Court's decision highlighted the importance of producing additional evidence to disprove entries made in the loose sheets. However, in this case, the assessee successfully raised a rebuttal against the presumption drawn by the Assessing Officer, which was accepted by both the Commissioner of Appeals and the Tribunal.

3. Appreciation of Seized Documents:
The Commissioner of Income Tax (A) and the Tribunal examined the seized documents marked as BDM/18 in detail. They found discrepancies between the audited balance-sheet and the seized documents, indicating that the seized balance sheet was not reliable for making additions. The Tribunal specifically noted various inconsistencies in the seized documents, such as missing entries, unverifiable liabilities, and discrepancies in asset values, leading to the conclusion that the seized document was not a true and fair representation.

4. Consideration of Loose-Sheet Documents:
The Tribunal further analyzed the loose-sheet documents and compared them with the audited balance-sheet. Discrepancies in the entries related to land and building, cash and bank balances, sundry debtors, and sundry creditors were highlighted. The Tribunal concluded that the loose-sheet document was not a reliable source for making additions or presuming undisclosed income, as it lacked credibility and failed to provide a clear link to the assessee.

5. Assessment of the Impugned Order:
After thorough examination of the evidence and arguments presented, the Tribunal dismissed the appeal, affirming the decisions of the Commissioner of Appeals. The Tribunal emphasized that the department failed to establish a connection between the discrepancies in the seized documents and the assessee. Additionally, the Jharkhand High Court's judgment was deemed inapplicable to this case due to the successful rebuttal raised by the assessee against the presumption drawn by the Assessing Officer.

In conclusion, the judgment highlighted the importance of corroborating evidence and the need for seized documents to be reliable and consistent for making additions in assessments. The successful rebuttal by the assessee played a crucial role in overturning the additions made by the Assessing Officer, leading to the dismissal of the appeal.

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