2022 (6) TMI 1419 - HC - Income Tax

Accrual of income - reliance on documents seized in search - as contented documents seized during the course of search and seizure proceedings and marked as A/1/MKP from the assessee reflected the amount collected on behalf of the co-operative societies and the said amount is not an income in the hands of the assessee. HELD THAT - To a pointed question of this Court, with regard to the above finding recorded by this Court, Shri Seshachala, in his usual fairness, did not deny that the judgment in 2016 (6) TMI 644 - KARNATAKA HIGH COURT and connected case, has attained finality. In view of the admitted facts, the Assessing Officer, the First Appellate Authority and ITAT having concurrently recorded findings of the fact against the assessee, the question of law framed in this appeal are answered in favour of the revenue and this appeal is dismissed.

Summary

Issues:
1. Reliability of entries in loose sheet for assessment years 2007-08 and 2008-09.
2. Treatment of principal sum and interest component as income of the assessee.

Analysis:

Issue 1:
The primary question before the court was the reliability of entries in a loose sheet marked as A/1/MKP for the assessment years 2007-08 and 2008-09. The appellant argued that the amount reflected in the documents seized during search and seizure proceedings did not constitute income in the hands of the assessee, as it was collected on behalf of cooperative societies. Conversely, the respondent contended that the contents of the documents, specifically regarding a payment of Rs. 15,00,000, had been admitted by the assessee. Moreover, referencing a previous judgment, the court noted that a finding of fact had been recorded confirming a transaction for payment for the assessment year 2009-10. Consequently, the court held that the findings against the assessee by the Assessing Officer, the First Appellate Authority, and ITAT were conclusive, leading to the dismissal of the appeal in favor of the revenue.

Issue 2:
The second issue revolved around the treatment of a principal sum of Rs. 1,56,78,000 and an interest component of Rs. 16,79,500 as income of the assessee. The appellant disputed the existence of the loose sheet A/1/MKP and the signatures on it, denying the inclusion of the mentioned amounts as income. However, the court, considering the admitted facts and the previous finality of a related judgment, upheld the concurrent findings of fact by the lower authorities against the assessee. Consequently, the court ruled in favor of the revenue, affirming the treatment of the principal sum and interest component as income of the assessee and dismissing the appeal.

In conclusion, the court's judgment emphasized the importance of factual findings and previous legal determinations in assessing the reliability and treatment of contested amounts as income in the present case.