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2016 (5) TMI 289 - PATNA HIGH COURT

2016 (5) TMI 289 - PATNA HIGH COURT - [2016] 386 ITR 342 - Reopening of assessment - addition of peak credit as per the loose sheet - Held that:- The loose sheet marked KS-19 is the information on the basis of which the Assessing Officer has framed an opinion that income of the assessee has escaped assessment. Such information formed a reasonable basis for the authorities to believe that income chargeable has escaped assessment. Thus, the order as affirmed by the Tribunal is based upon correct a .....

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Sr. S.C. Mrs. Archana Prasad, Jr. S. C. JUDGMENT ( Per : Honourable Mr. Justice Hemant Gupta ) The assessee is in appeal under Section 260A of the Income-tax Act, 1961 (for short, the Act ) arising out of an order dated 31.12.2007 passed by the Income Tax Appellate Tribunal, Patna Bench, Patna (for short, the Tribunal ) in ITA No.128 (Pat)/05 relating to assessment year 1987-88. 2. The facts, in brief, are that a search was conducted in the premises of the father of the assessee on 11th Februar .....

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turn of the income before the assessing officer. The Assessing Officer, thereafter, proceeded to frame assessment to the best of his judgment. 3. The assessment officer took into consideration a loose sheet marked KS-19 taken in possession from the house of the father of the appellant. It is an account in the name of the assessee maintained by M/s Bhagwati Cold Storage (P) Ltd. of which the father of the assessee is the Managing Director and the assessee is a share holder. This account has sever .....

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that the paper recovered clearly shows his name written on it and if his father had taken out the money then his father s name should have been found on the paper. After observing so, the Assessing Officer held, the presumption u/s 132(4A) is also on the assessee . On the basis of such discussion, the unexplained investment of ₹ 1,70,000/- was added in the total income of the assessee and taxed accordingly. 5. In an appeal against the said order, the Commissioner of Income Tax (Appeals)-I .....

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f law for consideration: (a) If Section 132(4A) raises an absolute presumption against the person from whose possession the documents are recovered or is it a rebuttable presumption. (b) The presumption is raised against the person from whose possession it is recovered or is it raised against the person to whom it may relate. (c) If liability has been fastened in pursuance of a search, will procedures relating to the same govern the proceedings or will the provisions relating to regular assessme .....

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P. R. Metrani v. Commissioner of Income- Tax, [2006] 287 ITR 209(SC); and also Additional Commissioner of Income-Tax, Bombay City-I v. Miss Lata Mangeshkar, [1974] 97 ITR 696 (Bom). He relies on the judgment reported as Central Bureau of Investigation v. V.C. Shukla and others, (1998) 3 SCC 410 to contend that loose sheets of paper are not the books of account which can be relied upon to fasten any liability on the appellant. 8. On the other hand, learned counsel for the Revenue argued that in .....

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escaped income of the assessee. It was also argued that the judgment in V. C. Shukla case (supra) pertains to criminal trial where the rules of the Evidence Act, 1872 are strictly applicable as in such cases, proof beyond reasonable doubt is required, but in the case of assessment under the Act, the rules of evidence as contained in Evidence Act, 1872 are not applicable as the principles of natural justice alone are required to be complied with. 9. We have heard learned counsel for the parties .....

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ssessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in-his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, sub .....

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ch income has been assessed at too low a rate; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income- tax Act, 1922 (11 of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within .....

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he assessee has not filed any return for the assessment year 1987-88 even after notice was served upon him nor he responded to the questionnaire. He was asked to explain the entries in loose sheets marked as KS-19, but did not respond in respect of the relevant assessment year. However, he submitted response in the subsequent year that it was his father account. Since the assessee has not filed return nor answered questionnaire, therefore, the assessment has been framed in terms of Section 147 o .....

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f Dhakeswari Cotton Mills Ltd., v. Commissioner of Income Tax, West Bengal, AIR 1955 SC 65 held that Income Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law. The Court held to the following effect:- 8. As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of .....

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e of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab, AIR 1944 Lah 353 (2) (FB)(A). 9. In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to t .....

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reme Court held that the evidence of the respondent and his witnesses was not taken in the mode prescribed in the Evidence Act; but that Act has no application to enquiries conducted by tribunals, even though they may be judicial in character. The Court held to the following effect: 10. Now, it is no doubt true that the evidence of the respondent and his witnesses was not taken in the mode prescribed in the Evidence Act; but that Act has no application to enquiries conducted by tribunals, even t .....

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evant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them. If these rules are satisfied, the enquiry is not open to attack on the ground that the procedure laid down in the Evidence Act for taking evidence was not strictly followed. Vide the r .....

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