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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 ..... 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 the aforesaid fax message, the total area of the property, that was purchased by the assessee, was 1327 square feet at the rate of Rs. 1,700/- per square feet, the AO calculated the cost of this property at this rate to be Rs. 22,55,900/- as against the declared payment of Rs. 13,40,630/-. Consequently, he took the difference of Rs. 8,84,750/- as unaccounted investment made by the assessee in this property. The assessee was given opportunity to explain, but the AO being not satisfied made an addition of this amount on account of "undisclosed investment in the property". For arriving at this conclusion, the AO in his order recorded as under:- "14. ............. The assessee was confronte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 letter dated 25th February, 1992 and confirming the findings of the AO, the CIT(A) recorded as under: "... This fax message was found during the course of search operations. The other letter purportedly dated 25.2.92 was later produced in assessment proceedings. If this letter had been written at the relevant time this would have been certainly found and seized at the time of search. Such a vital document could not have escaped the attention of the authorized officers. Secondly the letter itself is tailor made to retrieve the damage caused by the seizure of the earlier fax message. Even if the employee had quoted the wrong rate why should he be so apologetic on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 basis. He submitted that no documentary evidence was brought on record by the Department to show that the assessee had passed more money outside the account books with regard to the purchase of the property in question. He urged that no presumption could have been drawn under Section 132(4A) of the Act against the assessee in the absence of any documentary proof in this regard. He also submitted that the letter dated 25th February, 1992 was by the same person, viz., Shri R. Balajee, who had sent the fax message on 24th February, 1992 and both these are to be read together. He submitted that mere fact that the letter dated 25th February, 1992 was not seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 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 CIT(A) have, with cogent reasons, disbelieved the aforesaid letter dated 25th February, 1992. On the other hand, the Tribunal was of the view that mere fact that the said letter dated 25th February, 1992 had not been seized in the search operation does not mean that the said letter was merely an afterthought especially when AO had not examined R. Balajee. To arrive at a correct decision, it would be useful to reproduce the fax message dated 24th February, 1992 and the purported letter dated 25th February, 1992, which read as under: Fax Dated: 24.02.1992 "Respected Sri Nareshji; When I met Mr.Kalyanaraman of Mangaltirth Estates last week rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised 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. 11. When we read the purported letter dated 25th February, 1992, it would lead one to outrightly disbelieve the version of the assessee as there could not have been any occasion for R. Balajee to write such a letter on the very next day to the assessee. Since R. Balalji was none but the employee of the assessee, there could not have been any difficulty to procure such a letter at any time after the search and seizure to wriggle out of the fax message. 12. Section 132(4A) of the Act reads as under: "132. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 made by the AO to cross-examine the partners or the employees to extract the truth and, therefore, the explanation offered by them was to be believed. It was, in these circumstances that the High Court held that the approach of the Tribunal was in accordance with law and could not be interfered with. 15. The facts of the case of Mr. Rajpal Singh Ram Avtar (supra) are distinguishable from the present case. In the said case, the assessee was able to rebut the presumption by giving plausible explanation. However, in the present case, no effort seems to have been made by the assessee to rebut the presumption. R.Balajee was none but his own employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 same building @Rs.1200/- per sq. feet, is untenable in view of the noted fact from the fax message that it was on the sixth floor, whereas the property in question is on the first floor. There cannot be any dispute that the prices on first floor are certainly more than on higher floors. 17. Similarly, if the wife of the respondent-assessee has acquired some property in Bombay, and addition made by the AO was deleted by the Tribunal is also of no relevance to the present case. That was entirely on different set of facts. 18. At last it was also submitted by the learned counsel for assessee that in case addition is maintained, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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