2018 (6) TMI 1172 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - Held that - No doubt, the presumption under section 132 (4A) is first upon assessee to discharge its onus of rebutting the documents not belonging to, but once sufficient materials have been provided to assessing officer regarding the same, it was the duty of assessing officer to investigate upon the material/evidences in order to corroborate it with seized materials. As apparent from records that no such investigations have been conducted by Ld.AO - we hold that the burden had shifted to revenue to show the basis of some reliable and tangible material which could indicate undisclosed receipts out of books of accounts in the hands of assessee. We do not wish to comment upon the documents seized are dumb or not. Ld. AO was in a much better position during assessment proceedings to investigate upon the facts and to corroborate the materials obtained during the course of investigation with the seized materials. However now with the passage of time being almost 6 years from the date of search, relating to 6 assessment years prior to the date of search, we cannot improve upon what AO could have done himself - delete the addition made by AO on account of alleged receipts of cash for assessment years 2005-06 and 2006-07. - Decided in favour of assessee. Unreported cash - data maintained on laptop relied - Held that - As receipts are neither entered in regular cash book nor in IBM laptop data and that the data received from laptop has been partly ignored by Assessing Officer. Assessing Officer has wrongly taken cash balance as per IBM laptop as a positive figure as on the year ending 2005, whereas cash balance as per laptop was in negative which has been categorically observed by CIT (A). AO failed to establish the laptop data to be a duplicate set of books of accounts maintained by assessee. DR has also not been able to controvert these differences that have been categorically observed by CIT (A) by way of any material/evidences on record. No infirmity in the observations of CIT (A) in deleting the addition. - Decided in favour of assessee.

Issues Involved:
1. Addition towards alleged underreporting of sale receipts (Assessment Years 2005-06 and 2006-07).
2. Deletion of addition made under Section 68 of the IT Act on account of underreporting of income received in cash (Assessment Years 2006-07 to 2008-09).
3. Presumption under Section 292C of the IT Act regarding seized documents.
4. Admissibility of the appeal under Section 249(4)(a) of the IT Act (Assessment Year 2007-08).
5. Examination of seized laptop data and its implications on cash balance discrepancies (Assessment Year 2006-07).

Detailed Analysis:

1. Addition towards alleged underreporting of sale receipts (Assessment Years 2005-06 and 2006-07):
The assessee challenged the addition of ?8,40,500/- for AY 2005-06 and ?66,53,450/- for AY 2006-07, arguing that the findings were based on assumptions without supporting material. The documents seized were termed "dumb documents" by the assessee, as they did not conclusively prove the receipt of unaccounted money. The tribunal noted that the Assessing Officer (AO) did not cross-verify the notings on the seized receipts with the parties mentioned. The tribunal also observed that the AO failed to investigate the details provided by the assessee regarding transactions and investors. Consequently, the tribunal deleted the additions made by the AO, allowing the assessee's appeal for these years.

2. Deletion of addition made under Section 68 of the IT Act on account of underreporting of income received in cash (Assessment Years 2006-07 to 2008-09):
The revenue's appeal contested the deletion of ?10,72,500/- out of the total addition of ?77,25,950/- for AY 2006-07. The tribunal dismissed this ground as it had already deleted the entire addition in the assessee's appeal. For AY 2007-08 and 2008-09, the tribunal upheld the CIT(A)'s order, dismissing the revenue's appeals, as the grounds were identical to those in AY 2006-07.

3. Presumption under Section 292C of the IT Act regarding seized documents:
The revenue argued that the seized documents should be presumed to belong to the assessee under Section 292C. The tribunal noted that the AO did not summon the individuals whose names appeared on the receipts for verification. The tribunal emphasized that once the assessee provided sufficient material, the burden shifted to the revenue to corroborate the seized documents with tangible evidence. The tribunal found that the AO failed to conduct a thorough investigation, leading to the deletion of the additions.

4. Admissibility of the appeal under Section 249(4)(a) of the IT Act (Assessment Year 2007-08):
The revenue questioned the admissibility of the assessee's appeal under Section 249(4)(a), as the assessee had not deposited the full tax on returned income. The tribunal did not specifically address this issue in the detailed analysis, focusing instead on the substantive grounds of the appeal.

5. Examination of seized laptop data and its implications on cash balance discrepancies (Assessment Year 2006-07):
The AO identified discrepancies between the cash balance recorded in the seized laptop and the balance sheet. The tribunal noted that the AO selectively used the laptop data without considering the entire context, leading to absurd results. The CIT(A) observed that the laptop data was not a duplicate set of books and that the AO's approach was unjustified. The tribunal upheld the CIT(A)'s deletion of the addition, finding no infirmity in the observations.

Conclusion:
The tribunal allowed the assessee's appeals for AY 2005-06 and 2006-07, deleting the additions made by the AO. The revenue's appeals for AY 2006-07 to 2008-09 were dismissed, upholding the CIT(A)'s order. The tribunal emphasized the need for thorough investigation and corroboration of seized documents before making additions. The order was pronounced on 08th June 2018.

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