2021 (12) TMI 1348 - AT - Income Tax

Assessment u/s 153A - Undisclosed/Unexplained income - withdrawal shown in the seized documents belonging to the partners in their personal capacity or firm - whether withdrawals in the name of the partners of the firm represents the unaccounted income of the firm? - whether these documents belong to the assessee? - HELD THAT - We find that the seized document was containing the name of the firm and the partners which was duly dated signed by all of them along with the witnesses. Thus, it appears that the firm is the owner of the documents and thus it is safe to infer that the document in question belongs to the assessee as envisaged under section 153C of the Act. Withdrawal shown in the seized documents represents the amount belonging to the partners in their personal capacity - Onus lies upon the assessee to prove that the transactions shown in the seized paper do not represent the true contents. On examination of the seized document, we note that it was duly signed and dated not only by all the partners but also by three witnesses. The name of the partnership firm along with partners was appearing. It was discernible from the seized document that there was withdrawal of money from the partnership firm. Generally, the withdrawal from the firm represents the withdrawal of the capital by the partners. This capital can either be in the form of money contributed by the partner or maybe the share of profit/remuneration/interest on the capital of the partner generated from the partnership firm. Likewise, all these transactions should have been duly recorded in the books of accounts of the firm as well as in the individual ledger of the partners maintained by the firm. But, on perusal of the financial statement of the firm and the capital account of the partners, we note that such figures are not appearing herein. The necessary details of the financial statement of the assessee and capital account of the partners. Thus, we find difficult to believe the version of the assessee that the impugned withdrawal represents the settlement of the partners account in their individual capacity. Addition was not made solely on the basis of the statement recorded in the course of search of Shri Lialchand Patel the father-in-law of Shri Himanshu Patel one of the partner of the firm. Therefore, it is not necessary to provide the opportunity of cross examination to the assessee of statement as discussed above. As there is nothing brought on record that such amount of transactions were recorded in the books of accounts of the individual partners we find that the assessee has not brought anything on record even in the present proceedings which is the 2nd innings. The assessee cannot escape from its liability in discharging the onus cast upon it under the provisions of law in the garb of the matter sub-judice in the court of law. In view of the above, we are of the opinion that the assessee failed to discharge its onus imposed under the provisions of law by furnishing the necessary documentary evidence. Thus, in such facts and circumstances, we are constrained and have no alternative except to confirm the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Legality of the addition of Rs. 61,01,104/- as unexplained income.
2. Whether the order passed on 22-3-2013 was barred by limitation.
3. Whether the documents seized from the premises of Shri Lilchand Patel belong to the assessee under section 153C of the Income Tax Act.
4. Whether the amount shown as withdrawals in the name of the partners represents the unaccounted income of the firm.

Detailed Analysis:

1. Legality of the Addition of Rs. 61,01,104/- as Unexplained Income:
The assessee argued that the addition of Rs. 61,01,104/- as unexplained income was illegal and against the principles of natural justice. The CIT(A) upheld this addition, stating that the assessee failed to provide sufficient evidence to prove that the amount belonged to the partners individually and not to the firm. The Tribunal noted that the seized document was signed by all partners and witnesses, indicating that the firm owned the document. The Tribunal concluded that the firm failed to rebut the presumption under section 292C of the Act that the contents of the seized document were true. Therefore, the Tribunal upheld the addition, agreeing with the CIT(A) that the amount represented unaccounted income of the firm.

2. Whether the Order Passed on 22-3-2013 Was Barred by Limitation:
The assessee contended that the order passed on 22-3-2013 was barred by limitation. However, this issue was not substantively addressed in the Tribunal's judgment, as the primary focus was on the merits of the addition and the applicability of section 153C.

3. Whether the Documents Seized from the Premises of Shri Lilchand Patel Belong to the Assessee Under Section 153C of the Act:
The Tribunal examined whether the documents seized from Shri Lilchand Patel's premises belonged to the assessee firm. The seized document contained the name of the firm and its partners, and it was signed by them along with witnesses. The Tribunal inferred that the document belonged to the assessee, satisfying the requirements of section 153C. The Tribunal dismissed the assessee's argument that the documents did not belong to the firm, noting that the document's contents were presumed to be true under section 292C unless rebutted with evidence.

4. Whether the Amount Shown as Withdrawals in the Name of the Partners Represents the Unaccounted Income of the Firm:
The assessee argued that the withdrawals represented personal transactions of the partners and not the firm's income. The Tribunal emphasized that the onus was on the assessee to prove that the transactions were personal and not related to the firm's income. The Tribunal found no evidence in the firm's financial statements or the partners' individual accounts to support the assessee's claim. The Tribunal also noted that the addition was based on the seized documents, not solely on statements made during the search. The Tribunal concluded that the assessee failed to discharge its burden of proof and upheld the addition as unaccounted income of the firm.

Conclusion:
The Tribunal dismissed the appeal, confirming the addition of Rs. 61,01,104/- as unaccounted income of the firm. The Tribunal held that the seized documents belonged to the firm and the assessee failed to provide sufficient evidence to rebut the presumption that the contents of the documents were true. The Tribunal also rejected the argument that the order was barred by limitation, focusing on the merits of the case.