2021 (10) TMI 396 - AT - Income Tax

Assessment passed u/s.153A - Presumption in case of seized documents - Addition based on the said seized document - joint search in the name of assessee and his son - HELD THAT - There was a joint search warrant in the name of Shri Rajinder Sharma and Shri Akash Sharma on the same premises in which the said document was found, then how the presumption has been drawn that it belongs to the assessee when the other person searched has himself owned up the document and has given his explanation. There is no reason as to why this document which has been denied by the assessee and accepted by the other searched person, adverse inference has been drawn in the case of the assessee and presumption is made in terms of Section 132(4A) and Section 292C. As incorporated above the assessee s son Shri Akash Sharma was also subjected to assessment u/s.153A, that means no adverse inference has been drawn despite Mr. Akash Sharma has owned up that these document belongs to him. Simply because the house is registered in the name of his father, i.e., assessee, it does not lead to inference that document which pertain to son residing in the same premises belongs to the assessee. Without going into the merits of the explanation given and also whether it is in nature of the dump document or not because the very premise of drawing an adverse presumption against the assessee is not tenable and we hold that addition is unsustainable in the hands of the assessee. Assessee s son was also covered under the search in the same premises and the document found from the said premises has been categorically owned by his son, Shri Akash Sharma who has given his explanation, then instead of drawing any inference in his assessment u/s.153A, no presumption has been made in the case of the assessee. Thus, once this document does not belong to the assessee nor there is any mention of any name of the seized document, presumption u/s. 132(4A) and Section 292C cannot be made against the assessee. Accordingly, no addition based on the said seized document can be made and same is directed to be deleted. - Decided in favour of assessee.

Issues Involved:

1. Validity of addition of ?1.5 crores as unaccounted investment.
2. Ownership and relevance of the seized document (diary).
3. Application of presumption under sections 132(4A) and 292C of the Income Tax Act.
4. Assessment of the assessee's son's involvement and his statement.
5. Justification of the addition by the Assessing Officer and CIT(A).

Issue-wise Detailed Analysis:

1. Validity of addition of ?1.5 crores as unaccounted investment:

The primary issue revolves around the addition of ?1.5 crores as unaccounted investment based on a seized document during a search and seizure operation. The Assessing Officer proposed the addition stating that the payment of ?1.5 crores was not explained by the assessee and treated it as unaccounted investment under section 69 of the Income Tax Act.

2. Ownership and relevance of the seized document (diary):

The assessee contended that the seized document, a diary, belonged to his son, Mr. Akash Sharma, who was a real estate agent. The diary contained details of prospective buyers and sellers, and the entry of ?1.5 crores was merely a proposal for a customer, unrelated to the assessee's income. The Assessing Officer, however, rejected this claim and attributed the document to the assessee, leading to the addition of ?1.5 crores.

3. Application of presumption under sections 132(4A) and 292C of the Income Tax Act:

The Assessing Officer invoked sections 132(4A) and 292C, presuming that the contents of the seized document were true and belonged to the assessee. The CIT(A) upheld this presumption, stating that the document was seized from the assessee's premises, thus presumed to belong to him. However, the Tribunal found this reasoning flawed, noting that the document was part of a joint search warrant involving both the assessee and his son, and the son had admitted ownership of the diary.

4. Assessment of the assessee's son's involvement and his statement:

The assessee's son, Mr. Akash Sharma, was examined under section 131 and admitted that the diary belonged to him and pertained to his real estate business. Despite this, the Assessing Officer and CIT(A) did not consider this admission and continued to attribute the document to the assessee. The Tribunal highlighted that the son's statement was crucial and should have been considered, especially since the son was also assessed under section 153A for the same period.

5. Justification of the addition by the Assessing Officer and CIT(A):

The Tribunal found that the Assessing Officer and CIT(A) failed to justify the addition adequately. They did not correlate the entries in the seized document with any unaccounted investment by the assessee. The Tribunal noted that the property in question was purchased through a registered sale deed, and there was no evidence of any underhand dealings. Moreover, the document was considered a "dump document" with no corroborative evidence to support the addition.

Conclusion:

The Tribunal concluded that the addition of ?1.5 crores was unsustainable. The presumption under sections 132(4A) and 292C was incorrectly applied against the assessee, especially when the son had admitted ownership of the diary. The Tribunal directed the deletion of the addition, allowing the assessee's appeal.

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