9911796707
TMI Blog2007 (1) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... expired on October 5, 2006. Thereafter Smt, Shraddha Wassan has been taken as legal heir on record. 3. The facts of the case are that the business and residential premises of Sri Satypal Wassan was searched in April, 1995. During the course of the search operations, various documents and books of account were seized. The impugned addition of Rs. 22,30,000 was based on a loose paper No. 7 of annexure A-T/1-4 which was seized from the residence of the late Sri Satyapal Wassan. The Assessing Officer required Sri Satyapal to explain the transactions. It was taken by the Assessing Officer that the documents in question reflected advancing of loans and therefore, he asked the assessee to explain these advances. The assessee denied to have advanced any amount to any person. Originally he disowned the paper seized from his residence. He also denied to have any concern with the document or the figures mentioned in that document. An affidavit to this effect was also filed. In that affidavit, Sri Satyapal Wassan averred that he did not know the persons whose names are appearing in that document. The Assessing Officer, however, took the view that once a document was seized from the residenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supply of 5 tons of iron. All the deponents have certified that they wanted to conduct business with Dharamveer Wassan and the figures noted in the affidavits prove the quantity of iron that they wanted to purchase from the late Dharamveer Wassan. Under such circumstances the entries in page No. 7 of the seized document stands explained. Therefore, the Assessing Officer was not justified in treating them as unexplained loans. The addition of Rs. 22,30,000 should be deleted. 9. Before me the appellant has submitted fresh evidence by way of affidavits from Smt. Nirmal Kanta the widow of the late Shri Dharam veer Wassan. He has also filed affidavits from the above persons who wanted to have business dealings with the late Shri Dharamveer Wassan. I am convinced with the argument of the appellant that these fresh evidences may be admitted in the interest of justice. In this regard, I rely on the judgment of the Supreme Court in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 wherein it has been held that the powers of the Commissioner of Income-tax (Appeals) are coterminous with those of the Assessing Officer and the entire assessment is open before the first appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has wrongly admitted fresh evidence without giving any opportunity of being heard to the Assessing Officer, which is a violation of rule 46A. In fact, Sri Satyapal Wassan did not file any evidence at the time of assessment and therefore, the learned Commissioner of Income-tax (Appeals) was not justified in admitting additional evidence in the form of affidavits. Thus, the matter should be restored back to the file of Assessing Officer for examining the veracity of evidence. The learned Departmental Representative also submitted that the addition can be made under section 68 or under section 69 of the Income-tax Act, 1961. 6. Against this the learned Authorised Representative for the assessee submitted that the Assessing Officer had not recorded any statement either during the course of search on document No. 7 or during the course of assessment proceedings. Thus, without giving any opportunity to the assessee, the Assessing Officer had inferred something and made the addition. In fact, the assessee had also given affidavit before the Assessing Officer which was not considered by him. The figures recorded on the seized document are not the advances of money but they are, at best, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. There was no specific or direct evidence available which could have supported the finding of the Assessing Officer. The word " commission" or the word " rupees" was not mentioned on the loose paper. Further, there was no exact date of receipt shown on the document. Therefore, the same could not have been taxed in the assessment year in question. Accordingly that document was treated as dumb document. On the other hand, if they were advances as taken by the Assessing Officer, they ought to have been added in the wealth of the assessee which has not been done. There is no finding or material with the Assessing Officer so as to show that the document did not belong to Dharamvir Wassan. The learned Authorised Representative also submitted that the impugned loose paper does not constitute books of account and therefore, no addition under section 68 can be made on that basis. Further, there is no charge that there are receipts of money by the assessee. The addition has been made only on the ground that they are unexplained advances made by the assessee. The learned Authorised Representative also argued that presumption under section 132(4A) cannot be imported for assessment purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer in this case. 1. The transaction belonged to the financial year 1988-89 relevant to the assessment year 1989-90. 2. Figures mentioned in the document are advances made by the assessee. 3. The transaction belonged to the assessee. 4. The transactions are in a code of lakh and unit is the rupee. 10. After going through the order of the Assessing Officer, we do not find any material, so as to draw these presumptions or inferences. 11. The argument of the learned Departmental Representative that the learned Commissioner of Income-tax (Appeals) has admitted fresh evidence in the form of affidavits is not tenable because the Revenue has not raised any ground to this effect. On the other hand, the learned Authorised Representative has also claimed that this explanation was even before the Assessing Officer. It was only in support of that explanation that the assessee had filed affidavits before the learned Commissioner of Income-tax (Appeals). He drew our attention to pages 42 and 43 which is an affidavit of Sri Satyapal Wassan dated February 7, 1999 (date of assessment order is March 30, 1999) according to which Sri Satyapal Wassan had disowned the document No. 7. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le any intelligent person to find out the nature of transaction, the year of transaction, the ownership of the transaction and quantum thereof. Even in that situation, it is necessary to give opportunity to the assessee to offer his explanation and investigation be carried out to strengthen the direct inference arising from this document. 13. Let us now examine how all these transactions are necessary for the purposes of levying tax on the basis of a seized document. 14. Section 4 relates to charge of income-tax. It reads as under : "S. 4.(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person : Provided that where by virtue of any provision of this Act income- tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income- tax shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own either from the reading of the document or from accompanying investigation that the transaction recorded in a document is of revenue character or is otherwise taxable under Income-tax Act. As a quasi-judicial authority, the Assessing Officer has to satisfy himself on the basis of cogent material, either found in the search or on post-search enquiries that transaction recorded in the impugned document is real one and not imaginary (i.e. an estimate or something which is to take place in future) and it has actually taken place. It has to be shown that the transaction recorded in the impugned document is sale or purchase, advance or loan, of capital or of interest whether it is a statement of existing assets, disclosed or undisclosed what is the commodity involved who are the people involved in the transaction if it is advance, then whether the debtors concerned are existing, their identity ; whether advance so taken is reflected in their books whether any interest is paid on such transaction, what are the documents executed for recovery of such advances or what arrangement the assessee has done for recovery of such advances ; whether there are any other related document found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or attested." 19. Thus the Legislature has used the words " may presume". A presumption is an inference drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from certain set of facts. This can be disproved by other evidence provided by other party. The words " may presume" leave it to the court to make or not to make the presumption according to the circumstances of the case. Such presumption is optional and the court is not bound to make it. Even if such presumption is made, it is only rebuttable one. A rebuttable presumption is, thus, clearly a rule of evidence which has the effect of shifting the burden of proof by leading the evidence. Initially the Assessing Officer would be justified to make such presumption, if drawn after judicial application of mind to the fact of the case. Thereafter, when the assessee leads the evidence, then the Assessing Officer has to consider it judicially. What amount of evidence one requires to rebut the evidence depends upon the facts of each case. There is no rigid rule in this behalf. Sometimes, the mere statement of the assessee may be enough. The hon'ble Rajasthan Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record to indicate in certain terms the period of transaction, it is not possible to infer that the transactions belonged to this year. 22. The last component is the quantum of income. As stated above, the Assessing Officer has failed to properly decode the figures mentioned in the document as to whether they are in thousands or in ten thousands or in lakhs and what is the unit of these transactions. The document does not tell anything about this. It could have been done only by way of investigation. It has not been done. Therefore, one cannot infer merely from the face of the document as to what is the total of those transactions and whether they are in rupees or in kilograms or something else. In the absence of such proper decoding and clarification of number/quantity involved, no charge of income-tax can be levied. If the figures in the documents are same these are the quantities then they have to be converted in terms of money. There has to be some basis for conversion. If it is money, then it has to be shown how much it is. The presumption that these figures are in lakhs is simply bald, wild and base-lsss. We have no option but to infer that the Assessing Officer has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books was found in the search, (ii) the assessee from the very inception denied having any nexus with the seized papers, (iii) the impugned papers did not constitute books of account, (iv) the said papers are unsigned and therefore, not sufficient to fasten the liability on the assessee, (v) the Assessing Officer did not carry out any enquiry by summoning the persons named in the seized papers although the assessee has furnished their addresses, (vi)some of the documents did not specify the year. The Revenue did not discharge the onus lying on them to prove that the documents pertained to the block period. On this basis, the Tribunal held that no addition could be made on the basis of the seized papers as material available with the Assessing Officer is grossly inadequate. 26. In Kay Cee Electricals v. Deputy CIT [2003] 87 ITD 35 (Delhi), it has been held in paragraph 21 that where the seized slips did not contain any amount the same can be treated only as dumb document and on that basis no addition can be made. In the same case, other slips were found alongwith the cash. The contents of the slips were correlated with the cash found and therefore, entries in the slips were treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Chand) that where a document found during the course of search is open to more than one possibility of interpretation and does not prove conclusively that any premium was given by the assessee or received by the seller then no addition in respect of premium could be paid on purchase of plot. From this decision it is clear that the document must unmistakably reflect the transaction without having any second interpretation. 30. In Elite Developers v. Deputy CIT [2000] 73 ITD 379 (Nag), it was held that where the seized documents evidencing receipt of on-money by the assessee were not speaking documents as they did not contain any narration or description about different figures noted thereon and the Department having failed to bring on record any material or evidence to corroborate allegation regarding receipt of on-money, then the presumption on the basis of the documents could not be raised. 31. Similar view was taken by the Tribunal in the case of Kishanchand Sobhrajmal v. Asst. CIT [1992] 41 ITD 7 (Jaipur) and Agrawal Motors v. Asst. CIT [1999] 68 ITD 407 (Jab). 32. The crux of these decisions is that a document found during the course of search must be a speaking one and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c) Explanation 5 was considered but it is equally relevant for the purposes of section 68 where the word " books" is used. It would be relevant to refer to the part of the headnote from that decision defining " books" and " books of account" . "If ' books of account' is considered in isolation, then it may mean books in which merchants, traders and businessmen generally keep their accounts and which are maintained for recording ; (a) all receipts and expenses with matters relating thereto ; (b) all sales and pur chases ; and (c) the assets and liabilities. They are the documents and ledgers which must be prepared and kept by the business entity including the profit and loss account and the balance-sheet. In traditional terms, ' books' means a correction of sheets of papers bound together with the intention that such binding shall be permanent and the papers used are kept collectively in one volume. It may also be assumed that it connotes the intention that it should serve as a permanent record. At the same time to account means to reckon, and it is difficult to conceive of any accounting which does not involve either additions or subtractions or both of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a volume, pamphlet, sheet of letter press, sheet of music, map, chart or plan separately published. This definition is not relevant for our purpose. For the purpose of explaining the meaning in the context of the Income-tax Act, in our opinion, the term ' book' is to be construed as it is understood in the common par lance. No special meaning can be assigned to that term. We are, therefore, of the opinion that the case of the assessee cannot be put within the ken of section 68 of the Act." 35. Since the facts of the present case are similar to the case of Kantilal and Bros. v. Asst. CIT [1995] 52 ITD 412 (Pune), we are of the view that no addition under section 68 of the Act can be made on the basis of loose sheet being document No. 7 found during the course of the search. 36. There is another aspect of the matter as to whether presumption lying under section 132(4A) can be raised against the assessee. In our considered view, such presumption is available to the proceedings under section 132(5). In section 278D, a separate presumption has been provided for invoking in prosecution proceedings. As no such presumption is provided in the assessment proceedings, we infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Legislature intended a presumption to continue, it has provided so. It has not been provided that the presumption available under section 132(4A) would be available for framing the regular assessment under section 143 as well. Whereas the Legislature under section 132(4A) has provided that the books of account, money, bullion, jewellery and other valuable articles or things and any statement made by such person during examination may thereafter be used as evidence in any other proceedings under the Act, it has not provided so under sub-section (4A) of section 132. It does not provide that the presumption under section 132(4A) would be available while framing the regular assessment or for that matter under any other proceeding under the Act except under section 278D. Being a complete code in itself section 132 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 pro visions." 37. Thus, the case of the Revenue is not assisted by section 132(4A) in any way. Even otherwise our considered view is that such presumption can only be raised when the documents is speaking one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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