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TMI Blog2011 (7) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners of the firm are (i) Mr. K. A. Velayudhan ; (ii)Mr. K. V. Sukumaran ; and (iii) Mr. K. V. Vijayaraghavan, the latter two being the sons of the first named. It also manufacturers various items of eatables and sells it through their branches. Search and seizure action under section 132 of the Income-tax Act, 1961, (in short "the Act"), were conducted on March 16, 1999, in the business premises of the assessee as well as the residential premises of the partners. Simultaneously, survey operations under section 133A of the Act were also initiated in seven branches of the assessee. During the course of the search, it was found from the seized material that the partners of the firm had acquired certain immovable and movable properties. In one of the partners' diary it was found that a property was purchased for Rs. 29 lakhs, but it was stated by the assessee that the property was purchased for Rs. 14.32 lakhs only, but the Assessing Officer proceeded to include the difference being Rs. 16.30 lakhs as unexplained investment in the block assessment. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as P. R. Metrani v. CIT [2006] 287 ITR 209 (SC) and CIT v. Mukundray K. Shah [2007] 290 ITR 433 (SC). In this context, it is also contended that the Tribunal while passing the impugned order has not taken into consideration the effect of section 132(4A) of the Act. 5. Learned counsel for the respondent-assessee has contended that when the purchase of the lands were already declared by the partners of the firm, namely, Shri K. A. Velayudhan, K. V. Sukumaran and K. V. Vijayaraghavan in their respective returns of income for the assessment years 1992-93 and 1993-94, there is no occasion for the Assessing Officer to add the difference amount as found in the diary seized in the search. It is also contended by him that the extent of the land and the sale consideration found in the seized diary are not correct when it is compared to the actual extent and price and, therefore, the seized diary should not be considered as document under section 132(4A) of the Act. Learned counsel has also contended that the property has been purchased by the partners in their names in individual status and the assessee as a firm is no way connected to the purchase and, therefore, the order of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. 8. The Assessing Officer, on the basis of the diary seized in view of the search made on March 16, 1999, called upon the assessee to explain the entries found in the diary, a copy of which had also been enclosed along with the notice, wherein it is indicated as follows : Rs. "Cost of the land (29 cents) 29,00,000 Registration fee 1,40,000 Brokerage 60,000" 9. On the hearing held on February 7, 2000, one of the partners of the assessee-firm, namely, Mr. Vijayaraghavan, father of the other partners along with the chartered accountant appeared before the Assessing Officer and stated that the amount should not be taken as Rs. 29 lakhs against Rs.14 lakhs. In the letter dated February 16, 2000, the assessee had stated that the documents reflect only Rs. 14.32 lakhs and the scribbling in the diary have no connection with the transaction. However, in the letter dated June 21, 2001, the assessee was informed that the entries in the diary are not merely scribbling and it gives the real picture of the transaction with regard to the construction of Ambika Arcade by drawing the attention of the assessee to various transactions made in the diary with support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the assessee that the assessee is not liable to pay tax on the addition as the same had already been disclosed in the return submitted by the partners cannot be accepted. 12. Coming to the contention with regard to the entries in the seized diary, it is the case of the assessee that the author of the diary is no way connected with the assessee-firm and since there is difference in the actual extent and the value of the land, the entries made therein should be treated as scribbling and should not be taken as an evidence as contemplated under the Indian Evidence Act. In this connection, he has also submitted that since the Assessing Officer has not tested the notings made in the diary by an enquiry with the sellers, it should not be taken as an incriminating evidence to warrant addition of any amount as undisclosed investment. 13. The main reason for denying the entries made in the diary with regard to purchase of the land by the Commissioner of Income-tax (Appeals) and the Tribunal is that no enquiry was made by the Intelligence Wing with the seller to prove the alleged passing on of the money, which had violated the principles of natural justice. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and other documents are signed by such person or are in the handwriting of that particular person. 16. The nature, scope and object of section 132(4A) has been elaborately dealt with by the apex court in P. R. Metrani v. CIT [2006] 287 ITR 209 (SC) as under (pages 220 to 222) : "A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorised to draw a particular inference from a particular fact. It is of three types, (i) 'may presume', (ii) 'shall presume', and (iii) 'conclusive proof'. 'May presume' leaves it to the discretion of the court to make the presumption according to the circumstances of the case. 'Shall presume' leaves no option with the court not to make the presumption. The court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. 'Conclusive proof' gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combatting that effect. In this sense, this is an irrebuttable presumption. The words in sub-section (4A) are 'may be presumed'. The presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Section 132 being a complete code in itself cannot intrude into any other provision of the Act. Similarly, other provisions of the Act cannot interfere with the scheme or the working of section 132 or its provisions. The presumption under section 132(4A) is available only in regard to the proceedings for search and seizure and for the purpose of retaining the assets under section 132(5) and their application under section 132B. It is not available for any other proceeding except where it is provided that the presumption under section 132(4A) would be available." 17. In CIT v. Mukundray K. Shah [2007] 290 ITR 433 (SC), the Supreme Court approved the act of the Assessing Officer to the effect that the information collected from the diary seized under the search proceedings can be used as a valid document under the provisions of the Act. 18. Applying the aforesaid principle laid down by the Supreme Court to the present case on hand it can be held that the presumption, raised by the Assessing Officer with regard to the seized diary is a valid one and it was very much available to be raised under section 132(4A) as the presumption under section 132(4A) is ava ..... X X X X Extracts X X X X X X X X Extracts X X X X
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