TMI Blog2013 (1) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchasers should have been added to the undisclosed income of the assessee alone particularly when the document related to entries concerning other purchasers mentioned therein as well. On the basis of documents which were seized from the possession of Assessee’s, son of the partner of the firm did not disclose any material to establish that undisclosed income, as deleted by the Tribunal, had arisen in this case. Thus, the plea relating to presumption available u/s 292C in respect of documents etc. seized u/s 132(4A) being available to the revenue, yet the revenue is unable to derive any benefit therefrom - In favour of assessee - ITA No. 208 of 2011 - - - Dated:- 12-9-2012 - MR. AJAY KUMAR MITTAL AND MR. G.S. SANDHAWALIA. JJ. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 9.9.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench A , Chandigarh (hereinafter referred to as the Tribunal) in IT (SS)A No. 44/Chandi/2002, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the present appeal as narrated therein are that the assessee is a partnership firm consisting of two partners, namely, Shri Rajesh Khosla and Shri Ved Parkash Khosla holding 95% and 5% shares respectively in the profits and losses of the firm which is engaged in the running of rice sheller. A search and seizure operation under Section 132(1) of the Act was conducted on 7.10.1998 at the residential and business premises of 'Khosla Group'. Notice under Section 158BC of the Act was issued on 21.6.1999 and in pursuance thereto, the assessee filed its return declaring nil income. During search, certain documents and material were found and the same were seized vide a Panchnama. The Assessing Officer vide order dated 30.10.2000 (Annexure A-1) completed the assessment at a total income of Rs. 27,65,690/-, after making various additions, as undisclosed income for the block period from 1.4.1988 to 7.10.1998. The particulars of additions made are as follows:- i) Addition of Rs.83,283/- on account of excess stock found at the time of search A.Y. 1999-2000. ii) Addition of Rs.5,95,900/- on account of unaccounted sale of rice A.Y. 1998-99 iii) Addition of Rs.11,17,596/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock was also assailed. 6. It was pointed out that Section 132(4A) of the Act provides for certain presumptions where the documents, books of account, money, bullion, jewellery and other articles are found during the course of search from the possession and control of any person. According to the aforesaid sub-section, presumption arises that the document recovered during search and seizure from a person belongs to him. It has further been provided that the contents of such books of account and other documents shall be true. By virtue of Section 292C of the Act which has been inserted by Finance Act, 2007 retrospectively from 1.10.1975, the presumption available under Section 132(4A) is available even during the assessment proceedings. On the strength of this amendment, it was urged that the Tribunal was not right in holding the documents D.No.-22 of Annexure A.18, D. No.24 and D-4 of Annexure 22 to be dumb documents and sustained the deletion of the addition in the hands of the assessee. 7. On the other hand, learned counsel for the assessee supported the order passed by the Tribunal. 8. After hearing learned counsel for the parties, we do not find any merit in the appeal. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rimary contention of the assessee is that the physical verification of stocks was carried out on estimation and therefore, the difference in stock does not establish any undisclosed income in the hands of the assessee. On this point, in our considered opinion, the learned CIT-DR has rightly contended that the physical inventory was tabulated in the course of search proceedings in the presence of the assessee firm or its representative and there is no material on record to show that any objections have been raised by the assessee at the earliest opportunity against such inventory. Even otherwise, we find ample force in the observation of the CIT(Appeals) that since there was loose heaps of rice and paddy, certain element of estimation in physical inventory could not be ruled out. Considering the fact position, we therefore are not inclined to entertain the present objection of the assessee that the physical inventory during search did not reveal any excess stock. Regarding the quantification of the addition, it is seen that the Assessing officer estimated the excess stock at 75.37 qtls. of rice and applied a rate of Rs. 2251/- per quintal to compute the addition at Rs. 83,287/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries in the said document reflect sales of rice and broken rice. Neither is there any material to show that such sales have been undertaken by the assessee outside the books of account. 18. Notably, the said document was found from the residence of Shri Pardeep Kumar Khosla, son of one of the partners of the assessee firm. In the course of hearing, learned CIT-DR has furnished a report of the Assessing Officer dated 14.10.2009 whereby it is pointed out that the said document was confronted to Shri Pardeep Kumar Khosla also during the course of search proceedings on 07.10.1998. A copy of the statement of Shri Pardeep Kumar Khosla recorded on 07.10.1998 has also been placed on record. In reply to a question, it has been deposed by Shri Pardeep Kumar Khosla that he had no knowledge about the document. No further questions have been put to Shri Pardeep Kumar Khosla on the stated document. During assessment proceedings, assessee firm was confronted with the said document and in response, it was contended that the said document did not pertain to the assessee firm. It was further contended that the entries made in the said document were neither in the handwriting of any of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any material to support the nature and ownership of the entries found in the seized document, no addition is permissible in the hands of the assessee as undisclosed income by merely arithmetically totaling various figures jotted down on such document. Thus, we are inclined to agree with the contentions raised by the assessee that the impugned addition is untenable. We hold so. 11. The Tribunal noted that the document D-22 of Annexure A- 18 did not give any clear picture about the nature and ownership of entries therein and, therefore, any addition in the hands of the assessee on the basis thereof would not be tenable. Learned counsel for the revenue made feeble attempt to show that document D-22 of Annexure A-18 clearly depicted undisclosed income but was unable to substantiate his plea. In the absence of any clear deciphering of document D-22 of Annexure A-18, the deletion of Rs. 5,95,900/- and Rs.11,17,596/- from undisclosed income cannot be held to be unjustified. 12. An addition of Rs. 8,20,065/- was made by the Assessing Officer on account of purchases of paddy made by the assessee outside the books of account as per document seized from the residence at Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee outside the books of account. In the assessment order, we do not find any reason advanced by the Assessing officer to infer that such entries reflect purchases effected by the assessee outside the books of account. There is neither a reference to any such deposition by the broker nor any other material has been referred by the assessing officer to support his hypothesis that such entries pertained to the assessee. On this basis itself, we find no justification for the impugned addition. Even otherwise, as per the factual appraisal made by the CIT(Appeals), the purchases in question do not pertain to the assessee firm. Though the learned CIT-DR may be correct in submitting that such explanation was not before the Assessing Officer, but the reasons of the same are not far to seek. Evidently, after having verified the entries in the seized document viz-zviz the books of account maintained by the assessee firm, there is nothing to show that the Assessing Officer show caused the assessee to explain any further entries of the seized document and in any case, the document belonged to Shri Sudesh Jain and it was his duty to explain the contents of the same. Therefore, the im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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