2018 (6) TMI 33 - HC - Income Tax

Unaccounted payment made for purchase of land - addition on the basis of material found during the search - Held that - As during the year under consideration assessee has purchased only 7.4 vighas of land - also the undisclosed amount was covered under the total disclosure of ₹ 5 lakhs made by the assessee in the return pursuant to search - thus no question of law arises - appeal is dismissed.

Summary

Issues:
1. Addition made by Assessing Officer for unaccounted payment of purchase of land.
2. Proper appreciation of documents seized during search and seizure.
3. Interpretation of section 292C of the Act regarding presumption of correctness of entries.
4. Application of principle of preponderance of probability in Income Tax assessment proceedings.
5. Reliance on primary documents seized during search versus requirement of further corroborative evidence.

Analysis:

Issue 1:
The appeal concerns the additions made by the Assessing Officer regarding the unaccounted payment for the purchase of land. The Assessing Officer estimated the cost of land purchased by the assessee at a higher rate per vigha compared to what was disclosed by the assessee. This resulted in an alleged undisclosed amount. However, the Commissioner of Income Tax (Appeals) found that the assessee had actually purchased a lesser amount of land during the relevant year. The undisclosed amount, even based on the Assessing Officer's estimate, was covered under the total disclosure made by the assessee. The Tribunal upheld this finding, leading to the dismissal of the appeal.

Issue 2:
The second question raised in the appeal was about the proper appreciation of the documents seized during the search and seizure. The Tribunal confirmed the Commissioner of Income Tax (Appeals)'s observation that the disclosed amount by the assessee covered the alleged undisclosed amount, considering the actual land purchase. Therefore, the Tribunal found no error in the appreciation of the seized documents, leading to the dismissal of the appeal.

Issue 3:
Regarding the interpretation of section 292C of the Act, which deals with the presumption regarding the correctness of entries in seized documents, the Tribunal did not find any fault with the application of this provision. The Tribunal's decision was based on the actual land purchase by the assessee and the disclosure made, which aligned with the provisions of section 292C. Consequently, this issue did not lead to a reversal of the Tribunal's decision.

Issue 4:
The appeal also raised a question about the principle of preponderance of probability in Income Tax assessment proceedings. The Tribunal's decision was in line with this principle, as it considered the actual facts of the case, including the amount of land purchased and the disclosure made by the assessee. The Tribunal's decision was not based on proof beyond doubt but on the preponderance of probability, which was found to be correctly applied.

Issue 5:
Lastly, the appeal questioned the Tribunal's reliance on primary documents seized during the search and seizure, as well as the requirement for further corroborative evidence. The Tribunal's decision to rely on the primary documents and not insist on additional corroborative evidence was upheld. The Tribunal found the primary documents and the disclosed amount to be sufficient in determining the correctness of the transaction, leading to the dismissal of the appeal.

In conclusion, the High Court dismissed the Tax Appeal based on the findings and reasoning provided by the Tribunal, which considered the actual land purchase, disclosure made by the assessee, and the application of relevant legal provisions in reaching its decision.