1996 (10) TMI 119 - AT - Income Tax

Additions To Income Assessing Officer Assessment Year Partnership Firm Search And Seizure

Summary

Issues Involved:
1. Justification of taxing Rs. 20 lacs found during the search.
2. Validity of the order under section 154.
3. Rebuttal of presumption u/s 132(4A).

Summary:

1. Justification of Taxing Rs. 20 lacs Found During the Search:
The primary grievance of the assessee was the CIT(A)'s affirmation of the Assessing Officer's action in taxing Rs. 20 lacs found during a search at the assessee's residence. The assessee argued that the cash belonged to various partnership firms and was part of a total disclosure of Rs. 85 lacs made during the search. The CIT(A) and Assessing Officer rejected this claim, holding that the assessee had not provided sufficient evidence to support the bifurcation of the cash among different firms. They also noted the improbability of such a large amount of cash belonging to ten different entities being stored in the assessee's bedroom.

2. Validity of the Order u/s 154:
The CIT(A) observed that the appeal should have been against the order u/s 154 since the addition of Rs. 20 lacs was not initially included in the computation of total income in the order u/s 143(3). The Tribunal found this observation untenable, clarifying that the addition was discussed in the assessment order but was inadvertently omitted from the computation, which was later corrected by the order u/s 154.

3. Rebuttal of Presumption u/s 132(4A):
The Tribunal acknowledged that the presumption u/s 132(4A) that the cash belonged to the assessee could be rebutted. The assessee's brother had made a spontaneous statement during the search, declaring Rs. 85 lacs in the names of various firms and family members, which included the Rs. 20 lacs found. The Tribunal found that these statements, along with the fact that the family lived together and were partners in the firms, effectively rebutted the presumption. The Tribunal also noted that there was no motive to evade tax since the total tax payable by the firms and partners was higher than what would have been payable by the assessee alone.

Conclusion:
The Tribunal held that there was no justification for the addition of Rs. 20 lacs in the hands of the assessee and deleted the same, thereby allowing the appeal on this ground.