2014 (8) TMI 1201 - HC - Income Tax

Materials seized in the search - Whether Revenue was not justified in drawing the presumption under Section 132(4)(A) on the ground the assessee name was not reflected in any of the seized materials? - HELD THAT - They are not disputing the quantum of tax determined by the Authorities. As a consequence thereof, only if the presumption is held in favour of the Department, they would be entitled to the consequential claim regarding interest. The reason given by the Tribunal is, though there was a seizure and there were materials seized in the search, the said materials did not reflect the name of the assessee. Most of the cheques were stale and some other cheques were blank and some other cheques were in the name of the third parties. In the facts of these cases, we are of the view that the finding recorded by the Tribunal on this aspect cannot be found fault with and therefore, we are not going into the legal issue regarding the scope of presumption, which arises under Section 147 read with Section 143(3) and infact in other three appeals also, similar finding was recorded by the Tribunal. Undisclosed income - recipient of the income during the course of the search of the premises admitted the receipt of the said payment - Tribunal has not properly appreciated the case of the assessee and taking into consideration, a sum reflected in the statement of affairs filed on 31.03.1999 has granted the relief. The said statement was not put forth as a defence before the Assessing Authority or before the First Appellate Authority though an assessment order disclosing the said amount was placed before both the Authorities. Under these circumstances, it is not possible to affirm the said finding recorded by the Tribunal. The Tribunal shall re-hear the matter. Unaccounted money lending cheques - Though the Tribunal has set out in detail the facts regarding the said claim and the contention of the assessee explaining the same, it has not appreciated the material on record, heard the arguments and recorded the finding one way or the other. Therefore, when the Tribunal holds appeal is allowed, if that claim is also set aside without assigning any reasons, it cannot be sustained. Therefore, the said claim also requires to be considered by the Tribunal afresh. Cash found during the time of search - FAA has affirmed the finding recorded by the Tribunal. The assessee was in appeal. The Tribunal has not recorded any finding on this aspect of the matter. Again, in the operative portion of the order, states that the appeal is allowed, it cannot be construed as setting aside the order of the Appellate Authority as no reasons are given. Therefore, that aspect also requires to be considered by the Tribunal afresh.

Summary

Issues:
1. Challenge to the observation made by the Tribunal regarding presumption under Section 132(4)(A)
2. Undisclosed income claims of the assessee
3. Unaccounted money lending cheques
4. Cash found during the search
5. Lack of findings by the Tribunal on certain claims

Analysis:

1. The High Court considered the appeals by the Revenue challenging the Tribunal's observation on the presumption under Section 132(4)(A). The Tribunal held that the Revenue was not justified in drawing the presumption as the seized materials did not reflect the name of the assessee. The Court agreed with the Tribunal's finding, stating that most cheques were stale, blank, or in the name of third parties. The Court did not delve into the legal scope of the presumption, upholding the Tribunal's decision in multiple appeals.

2. Regarding the undisclosed income claims, the Court addressed three specific claims made by the assessee. The Tribunal granted relief based on a sum reflected in a statement of affairs, which was not presented as a defense earlier. The Court directed the Tribunal to re-examine this claim considering all relevant materials.

3. The Court analyzed the claim related to unaccounted money lending cheques. While the First Appellate Authority set aside the findings, the Tribunal did not provide a reasoned decision. The Court instructed the Tribunal to reconsider this claim thoroughly.

4. Concerning the cash found during the search, the Court noted that the First Appellate Authority affirmed the findings, but the Tribunal did not provide a conclusive decision. The Court directed the Tribunal to review this aspect with proper reasoning.

5. The Court highlighted a specific claim regarding an unaccounted amount based on a cheque found, where the Tribunal did not provide any findings. The Court directed the Tribunal to reconsider this claim. In conclusion, the Court dismissed certain appeals and allowed others, remanding the matter back to the Tribunal for fresh consideration based on the Court's observations.