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TMI Blog2019 (8) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... alone and not the appellant. The respondent authorities in drawing presumption in terms of section 292C that the cash found and seized belongs to the appellant, have committed serious error in law as section 292C provides that if money is found in possession of any person in course of search u/s 132, it may in any proceeding under the Act be presumed that such money belongs to such person and thus in the instant case since the money/seized cash was found in possession of Deo Lal Sah, it could not have been presumed to belong to the appellant. The cash was found at the residence where not only Deo Lal Sah was residing but he also claimed the said cash and thus it will necessarily have to be presumed to be his undisclosed income in terms of section 292C. In view of the fact that Deo Lal Sah filed return of income for block assessment along with the cash flow statement explaining the seized cash, there remains no doubt that the refusal of the respondents to not accept the entire cash found in course of search to be the undisclosed income of Deo Lal Sah, in absence of any material to the contrary, is illegal. The substantial questions of law so framed, are answered accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Assessing Officer and held that the learned Commissioner of the Income Tax appeals was not justified in deleting the above addition as Section 292C had been introduced by the Finance Act, 2007 with retrospective effect from 01.10.1975 and the presumption under section 292C had not been disclosed by the assessee. It is against this order dated 14.12.2007 of the Appellate Tribunal that the instant appeal has been preferred by the assessee - appellant. As per the case of the appellant a search was conducted on 29.01.2002 in the residential premises of his father-in-law Deo Lal Sah situated at East Lohanipur, Patna. Besides papers and documents, cash to the tune of ₹ 6,18,850/- was found out of which a sum of ₹ 6 lacs was seized and the balance released. An inventory was prepared which is at Annexure 2 to the application which categorically states that the same has been found in the case of Deo Lal Sah (Father-in-law of the appellant) at East Lohanipur, Patna. At the same time, a search was also conducted at Machua Toli, the other premises of Deo Lal Sah, where the appellant, was residing and the Panchanama of which is Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tune of ₹ 6,18,850/-. However, for the reasons stated in paragraph 10.5 of the order dated 28.01.2004, the contention of the appellant with respect to the ownership of the cash being that of Deo Lal Sah was rejected inter alia on grounds that, the assessee s father-in-law never appeared in response to the two summons issued under section 131 of the IT Act; that his father-in-law never filed his return of income; that he failed to furnish a balance sheet or the cash flow statement for any assessment year falling in the block period and that it could not be expected that a 76 years old person would keep his entire life saving of ₹ 6,18,850/- in cash in view of the poor law and order condition. It was further stated that though the assessee was not the owner of the residential houses, his mother-in-law owned the house at Machuatoli where the assessee resided and father-in-law owned the house at Lohanipur where the parents-in-law resided and the cash was found. It was observed that the assessee used to live with his father-in-law and mother-in-law at Lohanipur and that when the cash was seized, the wife of the assessee was present in the house at Lohan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, with respect to the cash seized from the residential premises of the father-in-law of the appellant at Lohanipur, the learned Appellate Tribunal in paragraph 15 of its order dated 14.12.2007 was pleased to hold as here under :- 15. We find that the facts narrated by the AO have not been disproved by the assessee by producing any cogent evidence. It is also to be noted that section 292 C has been introduced by the Finance Act, 2007 with retrospective effect from 01.10.1975. Thus, the presumption of ownership is attracted. We have also gone through the assessment order in the case of Shri Deo Lal Sah. Considering the facts and circumstances of the case and also the assessment order of Shri Deo Lal Sah, we are of the considered view that the presumption u/s 292C has not been disclosed by the assessee. We, therefore, hold that the learned CIT (A) was not justified in deleting the above addition. We, therefore, set aside the order of the learned CIT(A) and restore that of the AO on this issue. This ground of the revenue is allowed . It was submitted by learned counsel for the appellant that admittedly both the houses at Lohani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l premises at East Lohanipur, Patna, but the appellant herein had in his statement on oath on 29.01.2002, which has been brought on record as Annexure 8 to the application admitted that he was Ghar-jamai and that besides his wife, his father-in-law has no other legal heir. Further the appellant s wife was present at her parent s place when the seizure of ₹ 6,18,850/- in cash took place from the house at East Lohanipur. It was further submitted that the assessment order had been rightly passed and there was no illegality in the same. The Commissioner of Income Tax (Appeals) in the appellate order dated 03.02.2005 had committed an error in relying upon the unsupported affidavit of the appellant. It was further submitted on behalf of the respondents that for good reasons as narrated in the assessment order, the cash found was held to be the amount belonging to the assessee - appellant and not of his father-in-law. Thus, this being unexplained money under section 69A of the IT Act, as the same had neither been explained by the appellant nor his father-in-law, it was correctly deemed to be the income of the assessee - appellant for such financial year. It was fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, determined under section 158B(C) shall be chargable to tax at the rate of 60 %. It is after having heard learned counsel for the parties, that this court by order dated 04.12.2014 condoned the delay in filing of instant appeal and by order dated 26.02.2015, the appeal was admitted for hearing on the following substantial questions of law: (i) Whether in view of ownership and possession of all immovable properties by Deo Lal Sah, cash found and seized in course of search at his residence are attributable to him alone particularly, in absence of any material or evidence having been found in course of search indicating derivation or ownership thereof by the appellant ? (ii) Whether the presumption by the respondent no. 1 under Section 292C of the Act that the cash found and seized belongs to the appellant stand rebutted by acceptance of ownership of such money as undisclosed income by Deo Lal Sah coupled with the ownership of all the immovable properties by him ? (iii) Whether in view of Section 292C of the Act cash found in the residence owned by Deo Lal Sah is necessarily presumed to be his undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 6,18,850/- was made from the house at Lohanipur; (d) Deo Lal Sah admitted that the seized cash belonged to him and also filed a tax return for block assessment along with the cash flow statement explaining the recovered cash (Annexure 10 to the application). All these facts go to show that the recovered cash in no case could be added to the total income of the appellant since not only it was recovered from a house which belonged to the appellant s father-in-law Deo Lal Sah, the father-in-law of the appellant also laid claim to it and there is no other evidence on record to attach the cash recovered, with the appellant. In such circumstances, it was Deo Lal Sah alone who would be chargeable to tax at the rate of 60 % as provided under section 113 of the IT Act after determination of the same under section 158 BC of the IT Act. A lot of stress has been laid by learned Sr. Standing Counsel appearing for the Income Tax Department on the fact that the father-in-law of the appellant Deo Lal Sah had no source of income which could explain the large-sum of ₹ 6,18,850/- in cash being recovered from his residential premises. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en statement has also claimed ownership of the said cash. Thus, even in law as per section 132 (4A) of the I.T. Act the cash seized at the Lohanipur residence would be presumed to belong to Deo Lal Sah and not the appellant. The judgments cited by the respondents are being dealt with herein below :- (1) Daya Chand v. Commissioner of Income Tax (supra) :- In this case the cash credit were found in the books of account seized under section 132. It was held that the requirement of section 68 has to be fulfilled by the assessee, even where cash credit are found in the books seized under section 132 (4A). The facts of the said case and the case in hand being absolutely different and distinguishable, the ratio of the said judgment has no applicability here. (2) Sukh Ram v. Assistant Commissioner of Income Tax (supra) : In this case large amount of cash was recovered from the residential premises of the assessee. The tribunal noted that the books of account did not show any connection with the cash recovered from the assessee. The tribunal held that the assessee had not been able to rebut the presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther-in-law of the appellant) belongs to Deo Lal Sah alone and not the appellant. (ii) The respondent authorities in drawing presumption in terms of section 292C of the IT Act that the cash found and seized belongs to the appellant, have committed serious error in law as section 292C provides that if money is found in possession of any person in course of search under section 132, it may in any proceeding under the Act be presumed that such money belongs to such person and thus in the instant case since the money/seized cash was found in possession of Deo Lal Sah, it could not have been presumed to belong to the appellant. (iii) The cash was found at the residence where not only Deo Lal Sah was residing but he also claimed the said cash and thus it will necessarily have to be presumed to be his undisclosed income in terms of section 292C of the IT Act. (iv) In view of the fact that Deo Lal Sah filed return of income for block assessment along with the cash flow statement explaining the seized cash, there remains no doubt that the refusal of the respondents to not accept the entire cash found in course of search to be the undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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