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TMI Blog2015 (9) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax passed under section 263 of the Income-tax Act, 1961 (hereinafter called "the Act"). I. T. A. No. 89 of 2014 is filed against the order of the Tribunal which sustained the regular assessment order of the Assessing authority after setting aside the order of the 1st Appellate Authority. I. T. A. No. 99 of 2014 is filed against the order of the Tribunal which dismissed the appeal of the assessee and sustained the order of the Assessing Officer passed pursuant to the remand order passed by the Income-tax Commissioner invoking his powers under section 263 of the Act, which order is the subject matter of I. T. A. No. 207 of 2012. 3. The common facts leading to the above appeals are as follows : The assessee, a public limited company, was engaged in the business of civil constructions. On receipt of information from the Central Bureau of Investigation (CBI), that unaccounted cash was being delivered from the office premises of the assessee in Safdarjung Enclave, New Delhi to one person named Anupkumar Saha/Shri Asok K. Singh, who was staying at Room No. 2231, Inter Continental Hotel, New Delhi, search action under section 132 of the Act was conducted on October 9, 2002, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal filed by the Revenue was allowed. In I. T. A. No. 89 of 2014, filed by the assessee, the following questions of law are raised for consideration : "Whether, on the facts and in the circumstances of the case, (i) the addition of the sum of money found in the possession of Sri Anupkumar Shah, the only occupant of the room No. 2231, Inter Continental Hotel, New Delhi, as the undisclosed income of the appellant in the assessment and confirmed by the Income-tax Appel late Tribunal is valid, justified in law and supported by section 132(4A) of the Income-tax Act, 1961, and material in evidence ? (ii) the Income-tax Appellate Tribunal is right in law in holding that the Assessing Officer was not under any compulsion to neces sarily invoke the provisions of the section 132(4A) of the Act ? (iii) the double presumptions indulged in by the Assessing Officer in arriving at an undisclosed income derived from the entries in the loose sheets unsupported and uncorroborated by anyone in the employment of the appellant including the unknown maker of the entries or by the alleged recipients of the payments, is valid under law ? (iv) the Income-tax Appellate Tribunal was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been omitted by the Assessing Officer and mentioned in the order of the Commissioner under section 263 to which the assessee filed objections. Rejecting the objections, additions were made and order dated December 31, 2007, was passed quantifying an amount of Rs. 1,01,69,712. 9. Aggrieved by the said order, the assessee preferred appeal and the same was partly allowed by the Commissioner of Income-tax (Appeals). Aggrieved by the order, both the assessee and Revenue preferred appeals before the Tribunal and the appeal preferred by the Revenue was allowed and the appeal preferred by the assessee was dismissed. Accordingly, this appeal is filed by the assessee and the following questions of law are raised : "Whether, on the facts and in the circumstances of the case, (i) the Income-tax Appellate Tribunal was correct in invoking sec tion 132(4A) and holding the loose sheets belong to the appellant and the entries therein are true ? (ii) the addition made by the assessing authority and sustained by the Income-tax Appellate Tribunal is valid, justified in law and sup ported by section 132(4A) of the Income-tax Act, 1961 ? (iii) the presumption indulged in by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from a person who was in control of the materials and documents. Learned senior counsel thereupon contended that in the facts and circumstances of the case at hand, the cash was recovered from a hotel premises and, therefore, the same could never presumed to be in the control of the assessee. So also it was contended that heavy reliance placed on certain paper slips recovered from the premises of the company which contained certain single or double digit arithmetical figures and certain initials were never substantiated by cogent and reasonable evidence required for treating the same as evidence so as to attract sub-section (4) of section 132 of the Act. According to him, the Assessing Officer baselessly presumed that these arithmetical figures were in progression of lakhs. Therefore, in the absence of cross-examination of witnesses whose sworn statements were taken under sub-section (4A) of section 132, no presumption can be drawn against the assessee. Therefore, it was contended that the whole exercise of block assessment done by the Assessing Officer could not be sustained under law. On that count, the learned senior counsel contended that the view taken by the first appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nesses whose sworn statements were recorded, it was declined and, therefore, no presumption could be drawn as provided under sub-section (4A) of section 132 of the Act. Learned senior counsel for the assessee has raised a point that since the Tribunal only reaffirmed the order of the Assessing Officer, there was no re-appreciation of the pleadings and evidence by the Tribunal and, therefore, on that count, the order passed by the Tribunal was vitiated. 15. In our view, if the assessee was keen in unearthing any issue involved in the case by cross-examining witnesses, it was free and open for the assessee to make the demand/request for cross-examination of the witnesses at the time when the proceedings were pending before the Assessing Officer. Neither in the assessment order nor in the order passed under section 263 and the re-done assessment, did we find that any such request made by the assessee. Having not done so, the assessee could not turn around and contend that its request for cross-examination was declined. On a reading of sub-section (4) of section 132, it was clear that during the course of search and seizure any person found in possession or control of any books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 132(4A) would be available. In our considered view, the High Court of Allahabad in Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388 (All) and the High Court of Delhi in Daya Chand v. CIT [2001] 250 ITR 327 (Delhi) have taken correct view in holding that the presumption under section 132(4A) is available only in regard to the proceedings for search and seizure under section 132. Such presumption shall not be available for fram ing the regular assessment." 18. Learned senior counsel for the Revenue, on the other hand, contended that consequent to the introduction of section 158BH by the Finance Act, 1995, with effect from July 1, 1995, all other provisions of this Act shall apply to the assessment made under this Chapter, i.e., Chapter XIV-B and, therefore, the block assessment carried out for the period April 1, 1996, to October 9, 2002 was concerned, the judgments supra cited by the learned senior counsel for the assessee were not applicable. 19. We find force in the contention of the learned senior counsel for the Revenue that consequent to the introduction of section 158BH, the presumption provided under sub-section (4A) of section 132 was available to the Revenue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has found that the evidence recorded by the Assessing Officer during the course of the search was corroborative in nature and, therefore, were acceptable in law. The Tribunal has also found that the amount recovered from the hotel premises was proved to be the amount belonging to the company and this conclusion is corroborated by the evidence taken on oath. So also, the Tribunal has found that the slips recovered from the office premises were not explained by the assessee and also that having regard to the quantum of contract work undertaken by the assessee, it would be reasonable to presume that the amounts noted in the seized materials represented amounts in lakhs. Therefore, so far as I T. A. No. 89 of 2014 was concerned, the Tribunal has sustained the order of the Assessing Officer by correctly verifying and approving the factual circumstances considered by the Assessing Officer and in our considered opinion, there are no illegalities or infirmities warranting our interference in the findings of the Tribunal. 22. So far as the order of the Tribunal concerning I. T. A. No. 207 of 2012 is concerned, the point raised by the learned senior counsel for the assessee was that the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount each and every circumstances discussed by the Commissioner and, therefore, the same can never be termed to be without any application of mind as contended by the learned senior counsel for the assessee. 26. Having evaluated the arguments advanced by the learned senior counsel for the parties, we are of the considered opinion that under section 263 of the Act, the Commissioner had every power to direct the Assessing Officer to take into account materials, accounts and other circumstances which were not considered when the original assessment order was prepared. 27. On a query from the Bench as to whether the reassessment done which was the subject matter of I. T. A. No. 99 of 2014 was on the basis of the materials which were not considered by the Assessing Officer in the original assessment, learned senior counsel has informed that so far as the assessment which gave effect to the order under section 263, the materials considered were entirely different. Therefore, we are of the considered opinion that the finding of the Tribunal that the order of the Commissioner of Income-tax invoking the power under section 263 was in order does not require any interference in this appea ..... 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