2015 (12) TMI 1873 - AT - Income Tax

Undisclosed income u/s 69A - undisclosed cash receipt on sale of stone quarry is handwritten loose paper termed isar pawati signed by the partners and also signed on behalf of the buyers - addition assuming a piece of paper as constituting Issar Pavati i.e. advance receipt - piece of paper was found in survey action u/s 133 - as argued piece of paper i.e. Isar Pavati has been wrongly presumed as agreement to sell - HELD THAT - Since the concerned loose paper is found to be pertaining to the Appellants herein, seizure of the same in the hands of other corporate entity represented by one of the partners of the Appellant firms herein will not render it extraneous per se for assessment purposes. In our considered view, the Revenue is entitled to use the incriminating evidence against the assessee in the given facts. It is also pertinent to notice the other limb of the argument on behalf of the Assessee that impugned loose paper found in survey under S. 133A do not constitute evidence and can not give rise to presumption against the Assessee in the absence of any actual cash found as alleged to be unaccounted income. We have already observed that contents of loosed paper i.e. isar pawati impounded is entitled to great weight due to its substantial corroboration of payments with registered document, naturally without cash. We are of the opinion that once it is concluded on facts that the contents of the document found are relevant and true which establishes ownership, non-detection of physical cash or other equivalent asset per se would not be a handicap to invoke section 69A of the Act. Hence, notwithstanding nondeduction of physical cash, deeming provision of section 69A of the Act will apply. In the facts of the case, loose paper found in the drawer of the director of the company surveyed who is also the partner of the Assessee and contents found to have been vindicated, the presumption against the assessee is supportable in law. The loose paper or isar pawati in our opinion assumes the colour of valid evidence against the assessee on its corroboration by payment details of registered document. Thus, the plea of the Assessee in this regard does not hold water. Addition u/s 69A No merit in assessee contention since no unaccounted cash were actually found, nor any investment was found, section 69A of the Act is not attracted - The word owner employed has to be understood in the context. We have already observed that physical presence of cash or other corresponding unaccounted investment per se to support an entry found in the documents is not the pre requisite to support its ownership for assessment purposes under section 69A. We are alive to the fact that the scope in respect of coverage of premises under section 133A of the Act are limited. Also, the circumstances have to be weighed to come to conclusion about the alleged unaccounted money for assessment purposes. In the instant case, in our view, money in the form of cash was found to be attributable to the assessee as per the incriminating document i.e. Isar Pavati, nature and source whereof has not been explained satisfactorily. AO has sought explanation on alleged cash not founded to be recorded in book and found the explanation offered by the assessee as unsatisfactory. Therefore, we do not find merit in the plea of the Assessee with regard to non applicability of S. 69A. - We endorse the essence of the findings of the CIT(A) that in view of the speaking facts narrated in the loose paper found at the time of survey which clearly matches on material particulars with the registered sale deed executed subsequently, there is no room left to disbelieve the contents of the loose paper. It is trite that when a part of the document has been accepted, other part of the same document cannot be ignored in the absence of any tangible proof to the contrary. In our considered view, assessee failed to rebut the contents of the loose paper satisfactorily and thus failed to discharge the onus which lay upon it to prove what is apparent as per loose paper is not real. - Decided against assessee.

Summary

Issues Involved:
1. Validity of the "Isar Pavati" as an agreement to sell.
2. Applicability of the power of presumption under Section 132 versus Section 133A.
3. Justification of the addition of unaccounted cash receipts based on the "Isar Pavati".
4. Corroboration of evidence to support the addition.
5. Application of Section 69A of the Income-tax Act, 1961.
6. Relevance of case laws cited by the assessee.

Detailed Analysis:

1. Validity of the "Isar Pavati" as an Agreement to Sell:
The assessee argued that the "Isar Pavati" was merely a rough estimate or proposal and not a legally enforceable agreement to sell. The CIT(A) and the Tribunal found that the "Isar Pavati" contained several vital facts related to the sale of the property which were corroborated by the final sale deed. The Tribunal noted that the "Isar Pavati" was in the handwriting of one of the partners and signed by all parties involved, thus giving it substantial evidentiary value.

2. Applicability of the Power of Presumption under Section 132 versus Section 133A:
The assessee contended that the power of presumption under Section 132(4A) could not be applied to a survey action under Section 133A. The Tribunal, however, observed that the Finance Act, 2008, brought in Section 292C, which aligns the credibility of materials found during a survey with those found during a search. Thus, the presumption of ownership and truth of the documents found during the survey was justified.

3. Justification of the Addition of Unaccounted Cash Receipts Based on the "Isar Pavati":
The Tribunal upheld the addition of Rs.1,33,40,000/- in the hands of the assessee and Rs.96,00,000/- in the hands of Nitin Palekar & Co., based on the "Isar Pavati". The Tribunal noted that the cheque numbers and amounts mentioned in the "Isar Pavati" matched the registered sale deed, corroborating the document's contents. The Tribunal dismissed the assessee's argument that the transaction was not executed according to the terms mentioned in the "Isar Pavati".

4. Corroboration of Evidence to Support the Addition:
The Tribunal found substantial corroboration between the "Isar Pavati" and the registered sale deed, including the cheque numbers and amounts. The Tribunal held that the loose paper was not a "dumb document" but a speaking document that had been acted upon, except for the cash component, which was treated as undisclosed income.

5. Application of Section 69A of the Income-tax Act, 1961:
The Tribunal rejected the assessee's argument that Section 69A was not applicable in the absence of physical cash found during the survey. The Tribunal held that the contents of the "Isar Pavati" provided sufficient evidence of unaccounted cash receipts, and the burden of proof shifted to the assessee to explain the source of the money, which the assessee failed to do.

6. Relevance of Case Laws Cited by the Assessee:
The Tribunal reviewed the case laws cited by the assessee and found them distinguishable from the present case. The Tribunal noted that the facts in the cited cases did not involve corroborated evidence like the "Isar Pavati" in the present case. The Tribunal upheld the CIT(A)'s findings that the addition was justified based on the evidence available.

Conclusion:
Both appeals were dismissed. The Tribunal upheld the addition of undisclosed income based on the "Isar Pavati", corroborated by the registered sale deed, and justified the application of Section 69A. The Tribunal found no merit in the assessee's arguments against the evidentiary value of the "Isar Pavati" and the applicability of the power of presumption under Section 133A.