1992 (8) TMI 135 - AT - Income Tax

Summary

Issues Involved:
1. Ownership of 'Sahi Bhai' marked as Ex-C-28.
2. Recovery and possession of documents marked as Ann.C-1/46.
3. Ownership of documents marked as Ex-C-1/46 and related additions.
4. Application of Section 69 of the IT Act concerning unrecorded transactions as per Ann. C-26.
5. Deletion of additions related to estimated interest income on unrecorded transactions.

Detailed Analysis:

Issue 1: Ownership of 'Sahi Bhai' marked as Ex-C-28
The Tribunal was tasked with determining whether the 'Sahi Bhai' marked as Ex-C-28 belonged to the assessee-firm or to its partner, Shri Kishanchand. The Revenue argued that the document, found at the firm's premises, indicated unrecorded transactions totaling Rs. 4,60,290. The Tribunal, however, accepted the partner's claim that the document was personal and not related to the firm. It was noted that the presumption under Section 132(4A) of the IT Act is rebuttable. The Tribunal concluded that the evidence provided by Shri Kishanchand, including statements and affidavits, satisfactorily proved that the transactions were personal. Consequently, the addition to the firm's income was deleted.

Issue 2: Recovery and Possession of Documents Marked as Ann.C-1/46
The Tribunal had to decide if the documents marked as Ann.C-1/46 were recovered from the assessee-firm's premises. The Revenue's claim was contradicted by the assessee, who asserted that the documents were found at a sister concern, M/s Sobhraj Cold Storage. The Tribunal noted that the Revenue failed to provide a copy of the panchnama to the assessee or submit an affidavit to counter the assessee's claim. The Tribunal found no satisfactory evidence to establish that the documents were recovered from the firm's premises. Thus, the Tribunal held that the additions based on these documents could not be sustained.

Issue 3: Ownership of Documents Marked as Ex-C-1/46 and Related Additions
The Tribunal examined whether the documents marked as Ex-C-1/46 belonged to the assessee-firm or M/s Sobhraj Cold Storage. The Revenue's presumption under Section 132(4A) was found to be rebuttable. The Tribunal noted that the documents were likely related to the cold storage business rather than the firm's 'Adat' business. The Tribunal concluded that the investments indicated in the documents were satisfactorily explained by the assessee on behalf of M/s Sobhraj Cold Storage. Therefore, the additions based on these documents were deleted.

Issue 4: Application of Section 69 of the IT Act Concerning Unrecorded Transactions as per Ann. C-26
The Tribunal addressed whether Section 69 of the IT Act applied to unrecorded transactions found in the 'Sahi Bhai' marked Ex-C-26. The Revenue had added Rs. 24,000 based on these transactions. The Tribunal held that since the transactions were recorded in the assessee's books, Section 69, which applies to unrecorded investments, was not applicable. Moreover, the Tribunal noted that the Assessing Officer did not require the assessee to explain the nature and source of these investments. Consequently, the addition of Rs. 24,000 was deleted.

Issue 5: Deletion of Additions Related to Estimated Interest Income on Unrecorded Transactions
The Tribunal considered the deletion of Rs. 1 lakh and Rs. 1,02,988 on account of estimated interest income on unrecorded transactions of potatoes and money advanced. Since the primary additions regarding unrecorded investments and sales were deleted, the Tribunal held that there was no basis for sustaining any addition related to interest income or profits from unrecorded sales. Therefore, this question was also rejected.

Conclusion:
The Tribunal concluded that no referable question of law arose from its orders in either case. The Tribunal found that its decisions were based on factual evidence and detailed examination, which did not warrant a reference to the High Court. Consequently, both reference applications filed by the Revenue were dismissed.