2016 (11) TMI 715 - HC - Income Tax

Undisclosed investment - purchase of land - difference between the said seized paper and the seized ledger - The assessee has explained that difference amount was paid out of the cash of M/s. Barelia Coke Industries and since the transaction did not materialise, no entry was passed for the same in the books of the assessee. - Held that - We have repeatedly requested assessee to identify the evidence, which, according to him, was not taken into account by the learned Tribunal. But he was unable to draw our attention to any such piece of evidence, which the learned Tribunal did not consider or omitted to consider. We have also called upon Mr. Sen to identify the document which the learned Tribunal should not have taken into account. To that also he was unable to give any answer, except that the sum of ₹ 60,000 was not paid by the assessee before us. But he does not dispute that from the records seized marked A- 1/1, it appeared that the sum of ₹ 60,000 was invested for the purpose of buying the land for the assessee and this sum was not debited to the books of account of the assessee. Assessee has no answer to the question as to whether the sum of ₹ 60,000 was recovered from the vendor. We are, as such, of the opinion that the order passed by the learned Tribunal affirming the addition is an unimpeachable order. Therefore the challenge on the ground of perversity is altogether unmeritorious. - Decided against assessee

Summary

Issues:
Challenge to the order of the Income-tax Appellate Tribunal regarding undisclosed income addition.

Analysis:
The appellant contested the Tribunal's decision upholding the addition of undisclosed income amounting to ?4,82,750. The key legal question raised was whether the Tribunal's decision was lawful, considering the evidence presented by the appellant. The concept of a perverse order was extensively discussed, citing the case of Collector of Customs v. Biswanath Mukherjee. The court highlighted various scenarios where a finding by the Tribunal could be deemed perverse. The crux of the issue was to determine if the Tribunal's decision was indeed perverse based on the evidence and materials considered.

The court examined the appellant's arguments that the Tribunal's order could be considered perverse if irrelevant evidence was considered or relevant evidence was ignored. However, the court found that the appellant failed to demonstrate any such instances in this case. The Tribunal's decision was based on seized documents indicating investments not reflected in the appellant's books of account. The court reviewed the discrepancies in the investments made by the appellant, as per seized papers and ledger, and the explanations provided by the appellant regarding these investments.

The Commissioner of Income-tax (Appeals) upheld the additions based on evidence found during the search, supporting the investments made by the appellant. The court analyzed the arguments and evidence put forth by both parties, emphasizing the importance of corroborating evidence. The court found that the explanations provided by the appellant were insufficient to refute the additions made by the authorities. The court concluded that the Tribunal's decision was based on evidence and represented a plausible view, dismissing the appellant's challenge on grounds of perversity.

The court addressed the specific instance of ?60,000 allegedly paid by a sister concern of the appellant for land acquisition. The appellant's failure to provide evidence of recovery of this amount from the vendor raised doubts about the legitimacy of the transaction. The court highlighted the appellant's inability to substantiate key claims, leading to the affirmation of the Tribunal's order. Ultimately, the court ruled in favor of the Revenue, upholding the Tribunal's decision based on the evidence presented and the lack of substantial rebuttal by the appellant.

In conclusion, the court found no merit in the appellant's challenge regarding the undisclosed income addition. The judgment emphasized the importance of concrete evidence and proper documentation in tax matters, supporting the Tribunal's decision as a valid and reasonable interpretation of the facts presented.