2025 (3) TMI 1232 - HC - Income Tax

Addition of cash found during the search - whether Tribunal misdirected itself by sustaining the addition without giving a clear finding that the said amount was separate different from the amount(s) declared by the Appellant in his returns for A.Y. 2005-06 and 2006-07? - HELD THAT - Three authorities concluded that the Assessee could not co-relate the amount of cash seized with the amount noted in the documents. ITAT also referred the Assessee s statement about using code figures regarding his consultancy fees . Assessee accepted all these documents. In these circumstances we cannot find fault with the concurrent findings recorded by the AO CIT (Appeals) and ITAT. Addition was made on a substantive basis in the hands of Bharati Vidyapeeth and on a protective basis in the hands of the Appellant-Assessee. Since the addition in the hands of Bharati Vidyapeeth has been deleted the addition in the hands of the Appellant-Assessee has been confirmed. This is not disputed by the Appellant-Assessee. ITAT, has discussed the issue regarding this addition in great detail and quite correctly has held that no case was made out to disturb the concurrent findings of fact recorded by the AO and CIT (Appeals). The questions now proposed do not arise. In any event the questions give rise to no substantial question of law.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

(a) Whether the Tribunal erred in concluding, based on conjectures and surmises, that the cash found during the search did not include the amount of Rs. 2,00,50,000/- added in the hands of the Appellant.

(b) Whether the Tribunal misdirected itself by sustaining the addition of Rs. 2,00,50,000/- without a clear finding that the said amount was separate and different from the amounts declared by the Appellant in his returns for the assessment years 2005-06 and 2006-07.

ISSUE-WISE DETAILED ANALYSIS

(a) Tribunal's Conclusion on Cash Found During Search

Relevant legal framework and precedents: The issue revolves around the interpretation of evidence found during a search and the correlation of this evidence with the declared income. The legal framework involves the assessment of whether the findings of fact by the lower authorities are based on conjectures and surmises.

Court's interpretation and reasoning: The Court found that the Tribunal, along with the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals), reached concurrent findings of fact. The Court emphasized that no perversity or error was demonstrated in these findings.

Key evidence and findings: The Appellant's statements during the search and the documents seized were crucial. The Appellant admitted to collecting money from students for admissions, which was not adequately correlated with the cash seized.

Application of law to facts: The Court applied the principle that factual findings by lower authorities should not be disturbed unless there is a clear error or perversity. The evidence was deemed adequately considered by the authorities.

Treatment of competing arguments: The Appellant argued that the authorities failed to consider the entire admissions and relevant documents. However, the Court found these arguments insufficient to establish any substantial question of law.

Conclusions: The Court concluded that the Tribunal's findings were not based on conjectures and surmises but were supported by evidence.

(b) Sustaining Addition Without Clear Finding

Relevant legal framework and precedents: The issue involves whether the Tribunal needed to establish a clear distinction between the amounts declared and the amount added by the AO.

Court's interpretation and reasoning: The Court noted that the Tribunal and the lower authorities had adequately considered the Appellant's admissions and the evidence on record.

Key evidence and findings: The Tribunal found that the Appellant could not correlate the cash seized with the amounts declared in the returns. The Appellant's admissions regarding the misuse of his position were significant.

Application of law to facts: The Court held that the Tribunal's findings were based on a proper evaluation of evidence and admissions, and no separate finding was necessary.

Treatment of competing arguments: The Appellant contended that the Tribunal failed to provide a clear finding. However, the Court found that the existing findings were sufficient and supported by evidence.

Conclusions: The Court concluded that the Tribunal did not err in sustaining the addition without a separate finding.

(c) Consideration of the Principle of Telescoping

Relevant legal framework and precedents: Telescoping involves the adjustment of unexplained investments or expenditures against unexplained income of the same assessment year.

Court's interpretation and reasoning: The Court found that the Tribunal and lower authorities had considered the Appellant's explanations and admissions adequately.

Key evidence and findings: The Tribunal noted the Appellant's admissions and the lack of correlation between the seized cash and declared income.

Application of law to facts: The Court held that the principle of telescoping was not applicable as the Appellant failed to establish a connection between the cash seized and the declared income.

Treatment of competing arguments: The Appellant argued for the application of telescoping, but the Court found no basis for this in the evidence.

Conclusions: The Court concluded that the Tribunal did not err in its consideration of the principle of telescoping.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Court stated, "Upon a detailed evaluation of the material on record, the three authorities in this case have reached and recorded concurrent findings of fact. No perversity is demonstrated or made out."

Core principles established: The judgment reinforces the principle that factual findings by lower authorities should not be disturbed unless there is a clear error or perversity. It also highlights the importance of correlating evidence with declared income.

Final determinations on each issue: The Court determined that no substantial question of law arose from the issues presented, and the appeal was dismissed without costs.

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