2015 (3) TMI 1347 - AT - Income Tax

Addition based on seized papers - taxation from undisclosed income of seized document being fastened on assessee - HELD THAT - Seized document found from the possession of Sh Kinda, belong to them and if it is claimed that said document belong to assessee, then in that event the onus of proof vest with the AO. CIT(A) has rightly found that this onus has not been discharged by the AO, in so far as there is no corroborative evidence brought on record to substantiate that document or transactions mentioned therein belong to assessee except conjectures and presumptions and what to talk of any liability for taxation from undisclosed income of seized document being fastened on assessee. CIT(A) as per the trite law that there must be something more than suspicion to support an assessment, the assessment based on pure suspicion is bound to be quashed . CIT(A) has rightly concluded that the attempt of the AO to connect seized paper with assessee has failed and finding given in the assessment order is erroneous on facts and is perverse and whimsical and stands vitiated and any addition based thereon deserves to be deleted. CIT(A) has rightly deleted the addition. No reason to interfere with the well reasoned order of the CIT(A), accordingly, we uphold the same and decide the issue against the Revenue by rejecting the ground of appeal filed by the Revenue. - Appeals filed by the Revenue stands dismissed.

Summary

Issues:
Appeal against deletion of addition based on computer printout seized during search for assessment years 2007-08 & 2008-09.

Analysis:
1. Common Issues in Appeals:
- The Revenue challenged the deletion of additions made by the Assessing Officer based on a computer printout seized during a search operation.
- The appeals for assessment years 2007-08 and 2008-09 were consolidated due to common issues.

2. Grounds Raised for AY 2007-08:
- The Revenue contested the deletion of an addition of Rs. 1,00,00,000 based on a computer printout seized from a third party's premises during the search.
- The contention was that the payee was a business associate of the assessee, and a payment in cash was made to the assessee.

3. Grounds Raised for AY 2008-09:
- Similar to the previous year, the Revenue disputed the deletion of an addition of Rs. 1,10,00,000 based on a computer printout seized during the search operation.
- The argument included the relationship between the payee and the assessee.

4. Assessment and Appeal Details:
- The Assessing Officer initially assessed the income at Rs. 13,85,600, later increasing it to Rs. 1,13,75,600 by adding the amount from the seized document.
- The First Appellate Authority partially allowed the appeal, deleting Rs. 1 crore from the addition.
- The Revenue appealed to the Tribunal against the order of the First Appellate Authority.

5. Judicial Analysis:
- The Tribunal considered whether a legal presumption could be drawn against the assessee based on a computer printout seized from a third party.
- Emphasized that the document was not found in the possession of the assessee, lacked handwriting or signature, and had no adverse statement from the third party regarding the transaction.
- Cited legal precedents to support that presumptions cannot be made against an assessee based on documents seized from third parties.
- Noted that the Assessing Officer's addition lacked supporting evidence or opportunity for the assessee to respond.
- Upheld the First Appellate Authority's decision based on principles of jurisprudence and the burden of proof in taxation proceedings.
- Concluded that the addition based on suspicion without concrete evidence was erroneous and deserved deletion.

6. Decision:
- The Tribunal dismissed the Revenue's appeals, upholding the deletion of the additions made by the Assessing Officer.
- The order of the First Appellate Authority was affirmed based on the lack of substantiating evidence and the failure to meet the burden of proof.

In conclusion, the Tribunal's judgment focused on the lack of concrete evidence linking the seized document to the assessee, emphasizing the principles of burden of proof and legal precedents disallowing presumptions against the assessee based on documents seized from third parties.