2005 (3) TMI 59 - HC - Income Tax

Addition made on the basis of books found during the course of search and seizure operation - plea raised by the respondent that the books in question did not belong to him but to his father who had owned up the same by filing an affidavit - presumption that the seized books belonged to the person from whose possession they have been seized has been discharged and it was upon the Department to prove by cogent material and evidence that the entries in the said books were that of the respondent. No such material has been brought on record by the Department - Tribunal was in law justified in deleting the addition

Summary

Issues:
1. Justification of deletion of addition based on books found during search and seizure operation.

Analysis:
The High Court of Allahabad was presented with a question of law regarding the deletion of an addition of Rs. 1,36,911 made based on books discovered during a search and seizure operation for the assessment year 1983-84. The respondent, assessed as an individual, denied ownership of the books found during the search, which were in the names of his father and deceased mother. The assessing authority added the amount as income, but the Commissioner of Income-tax (Appeals) disagreed and deleted the addition. The Commissioner noted that the father had admitted ownership of the books and found no evidence linking them to the respondent. The Revenue appealed to the Tribunal, which upheld the deletion of the addition, emphasizing the lack of merit in the appeal and agreeing with the Commissioner's reasoning.

The Revenue contended that since the books were found at the respondent's premises during the search, they belonged to him, and the additions were justified. However, the High Court highlighted that the father had acknowledged owning the books, and there was no evidence linking the entries in the books to the respondent. The court noted that the presumption that seized books belong to the person from whose possession they were seized had been discharged by the father's ownership claim. The court emphasized that it was the Department's burden to prove the entries in the books belonged to the respondent, which they failed to do. Therefore, the Commissioner's decision to accept the respondent's plea that the books did not belong to him was upheld by the Tribunal and the High Court.

In conclusion, the High Court found no legal flaw in the Tribunal's decision and ruled in favor of the assessee, stating that the deletion of the addition was justified. The court emphasized the importance of evidence and burden of proof in establishing ownership of seized books, ultimately leading to the dismissal of the Revenue's appeal.