TMI Blog2009 (8) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 2007 and has been given retrospective effect from October 1, 1975 and provides for legal presumption. The Tribunal was not justified in law in not giving finding in its order with regard to the applicability of the presumption under section 132(4A) to the assessment proceedings. - 17, 10, 11, 19 and others - - - Dated:- 31-8-2009 - DHIRENDRA MISHRA, CHANDRAKAR R. N. JJ Income-tax References Nos. 17, 10, 11, 19, 20, 21, 28 of 2002, 1, 2 of 2003 and 47 of 2004. S. Rajeshwara Rao for the Commissioner. Shravan Agrawal for the assessee. JUDGMENT The judgment of the court was delivered by 1. Dhirendra Mishra J.- In I. T. R. No. 17 of 2002 the Income-tax Appellate Tribunal, Nagpur Bench, Nagpur (in short "the Tribunal") has made this reference under section 256(1) of the Income-tax Act, 1961 at the instance of the Commissioner of Income-tax, Jabalpur and referred the following question of law arising out of the order dated June 28, 1985 of the Tribunal in I. T. A. No. 822/Nag/1984 for our opinion : "Whether under the facts and circumstances of the case, the Tribunal is justified in law in not giving finding in its order with regard to the applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. K. K. Bansal, there-fore, it is not possible for the assessee to understand how and where the papers were found by the searching party unless a copy of the Income-tax Officer's report or the ADI's report to the Commissioner of Income-tax concerning the raid is made available to it. Subsequently, copies of the affidavits of the accountants of the group Shri N. B. Lalson and Shri P. Rajan dated October 23, 1982 along with a joint confession letter addressed to Shri K. K. Bansal were filed. They also filed affidavits of Shri Lalson and Shri Rajan, who affirmed on oath that they have planted these fabricated documents at the residence of Shri K. K. Bansal when he and his wife had gone to Delhi. 6. Shri Lalson affirmed on oath that he is serving M/s. BB as accountant for the last 10 years, he also helps friends and colleagues in other firms ; he was a trusted employee and guide of the firm, and he was entrusted with full responsibility the work of maintenance of accounts and other related matters concerning the income-tax and sales tax, etc. He prepared the loose papers and other documents in connivance with other accountant Shri P. Rajan and placed the same in the residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 9. The Assessing Officer has viewed the above act with suspicion on the ground that Shri Lalson or his friend could not have predicted action under section 132 in the premises of the assessee. It has also been observed in the order that if the names and figures in the seized papers were imaginary, then how the same can be used for blackmailing the party. It has been further observed that the accountants are experienced and educated persons and represent the parties before the income-tax and sales tax authorities. Had they thought of blackmailing through fabricated documents, they could have handed over the same to the proper authorities instead of keeping it in the almirah. In view of their admissions that the accounts were regularly supervised/checked by Shri D. R. Bansal and Shri K. K. Bansal so that no transactions could take place without their knowledge, the Assessing Officer doubted their affidavits, in which they claimed that they expected to blackmail the party on the strength of fabricated and unreal financial affairs by placing it in the almirah. It has also been observed that instead of placing the original document in the almirah, they would have placed photocopy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-81 whereas the assessee has successfully rebutted the presumptions, apprehensions and conjectures by explaining that all the entries and items of transactions in the three set of loose sheets are simply false and bogus. 12. The Commissioner of Income-tax (Appeals) concluded by recording a finding that the three sets of loose papers are fabricated and bogus sheets designed and implanted with ulterior motives and the same do not reflect the record of number two business of the group. Repelling the arguments of the Revenue that in view of the provisions of section 132(4A), it should be presumed that all these papers belong to them and those contained correct entries, it was observed that the papers were not recovered from any business premises, these were recovered from the residence of Smt.C.R. Bansal placed in the briefcase of her spouse Shri K. K. Bansal in the absence of both of them, then the presumption should be against whom ? None of the three sets of loose sheets contained signatures of the partners of the firm and none of them has been written by any one of them. Section 132 is a part of provisions of Chapter XIII of the Act, which deals with the income-tax authority's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three sets of papers seized by the Department during search from the residential premises of Smt. C. R. Bansal, w/o Shri K. K. Bansal, are genuine or false and fabricated-it has been observed that this issue would be very material for giving finding whether the Commissioner of Income-tax (Appeals) has rightly deleted the addition made by the Income-tax Officer or not. It was observed that Shri K. K. Bansal enquired into the matter on the advice of his advocate and got himself satisfied that the bogus accounts were in the handwriting of Shri Lalson and Shri Rajan ; they were confronted with the similarity of their admitted writing with the writing in the bogus sheets and at this stage, the accountants Shri Lalson and Shri Rajan admitted their guilt and gave a joint confessional letter addressed to the group. They also affirmed this fact by their affidavits. It has been further held that from the aforesaid facts, it can be safely presumed that the confession was obtained from the accountants not by gaining over them but they had to confess their guilt in the circumstances in which they were placed. The accountants have maintained their stand throughout and they stuck to it even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e defence, they have relied upon the confessional statements and the affidavits of the two fabricators N. B. Lalson and P. Rajan. It was argued that the Commissioner of Income-tax (Appeals) as well as the Tribunal have conjointly glossed over the following improbability and absurdity in the stand of the assessees : (i) that the story of planting the loose sheets just two days before the search at the residence of the partner by the accountants in anticipation of reward is highly improbable, unbelievable and bogus ; (ii) that there was no reason for the accountants to foresee that the Revenue would conduct search only two days after planting of the forged loose sheets ; (iii) the loose sheets were final account statements of the firms for 1978-79 to 1980-81 and weekly cash books of the firms M/s. BB and M/s. CISW for the financial year 1981-82 ; (iv) had the accountants planted the loose sheets by fabricating the same to take undue advantage, they would have fabricated the documents for the current assessment year, which would be more relevant and helpful to serve their purpose, if any. From a close examination of the loose sheets, it would be seen it contained consoli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e group in the proceedings under section 132(5) disowned the loose sheets by stating that the same are fictitious and not related to them. The story of planting was revealed only on October 8, 1982. The group has submitted only photocopies of the extra judicial confession/ photocopy of stereotype affidavits, without the signature of any witness to exhibit that they were genuine and were made voluntarily ; (x) that from the tenor of the joint confession letter, it can be safely inferred that the confession was made in reference to some inducement, threat or promise. This is further fortified by the fact that the assessees did not initiate any criminal action against the two accountants for planting fabricated and forged loose sheets. The confession was made by them with the sole object to help their employer and the same falls within the purview of section 24 of the Indian Evidence Act. 17. In appeal before the Tribunal, the presumption available under section 132(4A) with respect to recovery of loose sheets was raised by the Revenue, however, the Tribunal did not give its finding on this issue. The observations of the Commissioner of Income-tax (Appeals) that no defects were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all evidence available on record and, therefore, no purpose would be served if the matter is remanded to the Tribunal for giving its finding after considering the avail-ability of presumption under section 132(4A) of the Act. 22. Reliance is placed on the judgment in the matters of Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC). 23. We have heard learned counsel for the parties and perused the orders of the both the Tribunals including the order of the Assessing Officer. 24. The only issue referred to us for our opinion by the Tribunal is : Whether the Tribunal was justified in law in not giving finding in its order with regard to the applicability of the presumption under section 132(4A) to the assessment proceedings ? 25. Section 132 deals with search and seizure. It deals with the circum-stances, in which category of officers, mentioned in this section may, authorize Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, to enter and effect seizures. Sub-section (4) of section 132 empowers the authorized officer that he may during the course of search or seizure examine on oath any person whose premises is bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts 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 assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132." 27. It is not in dispute that during the search proceedings, three sets of loose sheets, one containing 47 loose sheets typed copies of financial statement of partnership firm, a bunch of loose papers containing 105 loose sheets recording cash transactions of partnership firm M/s. CISW-a sort of cash book for the financial year 1981-82, and the other 117 cash loose sheets recording cash transactions of partnership firm M/s. BB-a sort of cash book for the financial year 1981-82, were seized from the residence of one partner Smt. C. R. Bansal from the briefcase of her spouse Shri K. K. Bansal. The assessees have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine business. The fact that the accountants were not prosecuted by the assessees and they continued in the service of the assessees further strengthens the stand of the Revenue that the accountants made confessional statements at the instance of the assessees to protect them. 30. In any case, the Tribunal should have considered the discovery of three sets of loose papers from the premises of the assessee during search and seizure proceedings under section 132(1) of the Act and ought to have given findings in its order with regard to the applicability of presumption under section 132(4A) to the assessment proceedings. 31. In S. P. Jain's case [1973] 87 ITR 370 (SC), the question before the hon'ble Supreme Court was-whether the Department has satisfactorily explained that the shares were purchased in the fictitious name benami for the assessee, relying upon the circumstances that there was no evidence to show that the benami purchaser was in a position to purchase the shares in question ; the benami purchaser did not come forward before the authorities despite several opportunities afforded to him to explain the circum-stances under which he purchased those shares ; the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where there is evidence to consider, the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. 35. It has been further held that when a conclusion has been reached on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole. 36. In the instant case, the Commissioner of Income-tax (Appeals) has accepted the explanation of the assessee that the three sets of loose sheets seized during the search from the premises of Smt. C. R. Bansal, from the briefcase of her husband Shri K. K. Bansal, partners of the firm, were forged and fabricated and planted by the two accountants with an intention to get undue pecuniary benefit from their employers by blackmailing them and in expectation of reward from the Revenue Department. The above finding is mainly based on the confessional statements made by the two accountants. The Commissioner of Income- ..... 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