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TMI Blog2011 (2) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter referred to as "the Act") against the order of the Income Tax Appellate Tribunal (hereinafter referred to as "the Tribuna"l) dated 25th July, 2002. By the impugned order, the Tribunal set aside the order of the Commissioner of Income Tax (Appellate) [hereinafter, referred to as "CIT(A)] to the extent of addition of Rs. 8,84,750/- made by the Assessing Officer (hereinafter, referred to as the AO"). 2. The respondent-assessee is a Stock Broker and also involved in carrying on the broking business in his individual capacity. Apart from this, the assessee is also having other sources of income. A survey action was taken on 16th October, 1992 and search operation was conducted on 23rd October, 1992 resulting into recovery and seizure of some documents. One of such documents was a fax messaged dated 24th February, 1992. The assessee filed return of the assessment year 1992-93 on 6th February, 1993. During the assessment proceedings, it was found from the books maintained by the assessee that he had made payment of Rs. 13,40,630/- during the period 1990-91 and 1991-92 for the purchase of property at "Spencer Plaza" at Madras. However, since as per the details mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... highly confidential and access to the same would not be given to junior member of the staff. He was, therefore, mistaken about the purchase cost and the figures mentioned by him in fax, is pure guess work and conjecture on his part. I would also point out here that in the same fax, the person also mentions that fresh space in the same building was available at that time at Rs. 1,200/- per sq.ft. This would prove that he was either mistaken about the cost of the property or had made an error in drafting the fax .. "(14.3) The reply of the assessee and the statement is not at all convincing. Accordingly, the undisclosed investment of Rs. 8,84,750/- in the property mentioned above, is added in the hands of the assessee as income of the assessee from undisclosed sources. Penalty proceedings u/s 271(1)(c) have been initiated separately." 3. The assessee preferred an appeal against the order before the CIT(A). The CIT(A) confirmed the order of the AO in this regard and while doing so examined the letter dated 25th February, 1992 purportedly written by the same person, who had admittedly sent the fax message to the assessee on 24th February, 1992. While disbelieving the aforesaid le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 25/2/92 had not been seized during search does not mean that the said letter was merely an afterthought because the AO had not examined Mr.R. Balaji. Further the very flat having been sold for Rs. 15,26,150/- during the assessment year 1994-95 and such sale price having been accepted by the Revenue itself lends support to the appellant s case that the flat had been purchased for Rs. 13,40,630/- as reflected in the seized account books. On the above facts as found, we delete the addition of Rs. 8,84,750/-" 5. It is against this order of the Tribunal that the appeal has been admitted on the following substantial question of law: (i) Whether the I.T.A.T. has erred in law in interpreting the provisions of Section 132(4A) by ignoring the relevant facts on record that the FAX message seized during the course of search showed that the investment made in the flat was Rs. 22,50,900/- and not Rs. 13,40,630/- as shown by the assessee in the regular books of accounts?" 6. Learned counsel for the respondent-assessee submitted before us that the Tribunal rightly deleted the addition made by the AO since no addition could be made under Section 69 of the Act merely on presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailor-made document. He also submitted that it was for the assessee to examine his employee, R.Balaji, if at all he was interested to rebut the presumption and in the absence of the same, adverse inference was to be drawn against the assessee. With regard to the contention of the counsel for the assessee regarding the same property having been sold for Rs. 15,26,150/- during the assessment year 1994-95 and the acceptance of the same by the Department, it was submitted by the learned counsel that the said transaction is not reliable and does not have any relevance for the present reference. Likewise, he also submitted that the transaction entered into by his wife in respect of property at Bombay is also of no relevance to the facts and circumstances of the present case. 9. We have given our considered thought to the submissions of the learned counsel for the parties. Admittedly, R. Balajee was an employee of the assessee and had sent a fax message on 24th February, 1992 to the assessee. The assessee has been trying to come out of this fax message under the shelter of letter dated 25th February, 1992 purported to have been written by R. Balajee. As noted above, both the AO and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 10. Having read the fax message and also the letter, we are of the view that the AO and CIT(A) rightly came to the conclusion that the letter dated 25th February, 1992 was nothing but an afterthought and a created document to come out of the rigor of the fax message of 24th February, 1992. Reading of the fax message would clearly demonstrate that it cannot be believed that R. Balajee was a junior official, newly recruited by the assessee or that he was not aware of the transaction of the properties of the assessee. Reading the fax message leaves no iota of doubt that Mr.Balaji was not only instrumental in the deal of the property but also was authorised by the assessee to negotiate and finalise the deal with Mr.Kalyana Raman. He was also aware of the present market price of the property to be Rs. 2,300/- per square feet and had categorically informed the assessee about the profit that was to be made by procuring this property at the rate of Rs. 1700/- per square feet. So much so, he also informed the assessee about the availability of another space measuring 3683 square feet at the rate of Rs. 1,200/- per square feet on the 6th floor of the building for outright purchase. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re true, and, that the signatures and every other part of such books of account and other documents are signed by such person or are in the handwriting of that particular person. 14. In the case of Rajpal Singh Ram Avtar (supra), the Allahabad High Court observed that a paper was found and seized from the debris in the shop premises of the assessee. The AO was of the view that the entries in the paper denoted a principal sum of Rs. 1,35,000/- as advance to some person during the financial year 1982-83 and on which an interest of Rs. 14,645/- was earned. Accordingly, he added both these amounts to the income of the assessee. The Tribunal set aside the addition taking note of the presumption deemed under Section 132(4A) of the Act and held that the assessee had rebutted the presumption by giving plausible explanation that neither the partners nor their employees knew English and they could not read or write in English and further the said paper was found from the debris in the shop premises and might have been left by someone and it did not belong to them. He further recorded that when the partners and employees had made a statement that they do not know English, no attempt was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an apartment F-15B admeasuring 663 square feet and on 28th November, 1990 F-15A admeasuring 664 square feet on the first floor of the building Spencer Plaza and vide these deeds of assignment, the interest in the said two apartments, which were under construction, was transferred to the assignee, Mr.Syed Yassin, at the rate of Rs. 1,150/- per square feet on 18th February, 1994. These are the properties which were agreed to be purchased by the assessee from the builder in September and November, 1990 and were sought to be transferred to the assignee on 18th February, 1994. The property, which finds mentioned in the aforesaid fax message, was sought to be acquired in February 1992. If that was so, prima facie, it appears that the properties which were sought to be transferred by the aforesaid deeds of assignment and which appeared to be different from the property which was sought to be acquired in February 1992. In any case, even if the Department has accepted the transaction entered into by those deeds of assignment, that is a different matter and not relevant to the present controversy. The contention of the learned counsel for assessee that other property was available in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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