2019 (2) TMI 1219 - HC - Income Tax

Addition on account of estimation of profit on sales not recorded in the books of accounts - AO made additions relying on the documents seized during search and the statements of witnesses recorded - HELD THAT - Tribunal has arrived at conclusions which are purely factual in nature. The Tribunal concurrently came to the conclusion that there was no evidence in support of the additions made by the AO which was collected during search operations. The documents relied upon by the AO did not clearly bring about the on money transactions. During the remand report the parties to whom the property was sold were examined who clarified that no cash payments were made by the Assessee bringing on record no contrary material. In the absence of any perversity in the factual findings of the Tribunal, we see no question of law arises. - Decided against revenue.

Summary

Issues:
1. Deletion of addition on account of estimation of profit on sales not recorded in the books of accounts.
2. Interpretation of provisions of section 132(4A) regarding presumptions in seized documents.

Deletion of addition on account of estimation of profit on sales not recorded in the books of accounts:
The case involved a limited company engaged in construction business that underwent a search and seizure operation by Revenue Authorities, leading to the issuance of a notice under Section 153A of the Income Tax Act, 1961. The Assessing Officer made additions based on seized documents and witness statements, which were later deleted by the Commissioner (Appeals) after a remand report. The Revenue appealed this decision before the Tribunal, which upheld the Commissioner's view. The High Court observed that the Tribunal's conclusions were factual, emphasizing the lack of evidence supporting the additions made by the Assessing Officer from the search operations. The documents did not clearly establish on-money transactions, and examination of parties involved in property sales revealed no cash payments by the Assessee. As there was no perversity in the Tribunal's factual findings, the High Court dismissed the appeals, finding no question of law to address.

Interpretation of provisions of section 132(4A) regarding presumptions in seized documents:
The primary legal issue revolved around whether the ITAT was justified in deleting the addition on account of estimation of profit on sales not recorded in the books of accounts, considering the provisions of section 132(4A) of the Income Tax Act. The section creates presumptions that seized documents belong to the assessee and their contents are true unless rebutted. The Revenue argued that the ITAT failed to appreciate these presumptions, leading to the deletion of the addition. However, the High Court, after reviewing the factual findings, determined that the ITAT's decision was based on the lack of concrete evidence supporting the additions made by the Assessing Officer. The Court found no fault in the ITAT's analysis, as the documents did not conclusively prove on-money transactions, and witness statements did not contradict the Assessee's claims. Therefore, the Court upheld the ITAT's decision and dismissed the appeals filed by the Revenue.

This detailed analysis of the judgment provides insights into the legal issues addressed by the High Court and the reasoning behind the decision to dismiss the appeals.