2019 (4) TMI 1947 - HC - Income Tax

Search proceedings - addition on account of cash payment for purchase of shops - ITAT deleted the addition as seized papers were not found from the premises of the assessee and hence presumption u/s. 132(4A), u/s. 292C - HELD THAT - Assessee is an individual. He was the partner of the firm. The Income Tax Department had carried out search and seizure operation during which certain loose papers were collected. On the basis of loose papers additions were made in the hands of the individual partners and on protective basis on the hand of the firm. While deleting such addition in case of the present assessee the Tribunal noted that the documents nowhere show that any payments were made by same persons, no enquiry or verification was made with the seller of the shops or the developer. Tribunal therefore concluded that entries of the loose papers were not corroborated with any other evidence on record. The entire issue is based on appreciation of evidence on record. The Tribunal noted that the loose papers entries were not clear and not corroborated by any independent evidence. No question of law therefore arises.

Summary

Issues involved:
Challenge to ITAT judgment regarding deletion of addition on account of cash payment for purchase of shops based on seized papers found during search operation.

Comprehensive Analysis:

Issue 1: Challenge to ITAT judgment
The appeal was filed by the revenue challenging the judgment of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of addition on account of cash payment for the purchase of shops based on seized papers. The main question presented for consideration was whether the ITAT was justified in deleting the addition without appreciating the relevance of the seized papers found during a search operation at the premises of one of the partners of the firm. The tribunal noted that the loose papers did not clearly show payments made by the same individuals, and no verification was conducted with the sellers or developers. As a result, the tribunal concluded that the entries on the loose papers lacked corroboration with other evidence on record.

Issue 2: Evidence and Corroboration
The crux of the matter revolved around the appreciation of evidence on record. The tribunal highlighted that the loose paper entries lacked clarity and were not substantiated by independent evidence. The absence of verification with the sellers or developers, coupled with the lack of clear connections between the payments and the individuals involved, led the tribunal to dismiss the addition made in the case of the present assessee. The tribunal emphasized the importance of corroborating evidence to support the entries on the seized papers, which were deemed insufficient to justify the addition in question.

Conclusion:
In conclusion, the High Court upheld the ITAT judgment, emphasizing that the entire issue hinged on the evaluation of evidence on record. Since the loose paper entries were found to be unclear and unsupported by independent verification or corroboration, the court found no legal question of relevance to warrant further consideration. As a result, the Income Tax Appeal was dismissed, affirming the decision to delete the addition based on the lack of sufficient corroborative evidence.