TMI Blog2023 (9) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... d person from whose possession or control, no such document(s) etc. as mentioned in the said provisions, is/are found and seized or recovered. We answer question no. (i) accordingly. Coming to the instant case, the alleged documents, have been found in the premises of Shri Ajay Kumar and therefore, the presumption as prescribed u/s. 132(4A) and 292C of the Act, can only be drawn against Shri Ajay Kumar, which infact has already been drawn by making the addition on the basis of the seized documents including Annexure LP-04 used in this case. It is also not the mandate of law that the addition can be made in two hands on substantive basis. Hence on the aforesaid analyzations, the addition is liable to be deleted in this count itself. Whether, a third person, from whose possession or control, no recovery of such documents etc. as referred to u/s 132(4A) and section 292C has been effected, is still required to rebut the presumption as prescribed section 132(4A) and 292C? - Our answer is no because as we already held that presumption u/s 1324A and 292C cannot be drawn against third party from whose possession, no documents etc. found and seized and therefore in our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been made. It is also a fact that the Assessee was never provided an opportunity to cross examine the scriber of the notings and even the other persons whose names have also been narrated in short form and Mr. Ajay Kumar from whose possession and control, the alleged documents were recovered. On the aforesaid analyzations as well, the addition in hand is also un-sustainable. Where the presumption is rebuttable, then how and in what mode, the presumption can be rebutted by the third person? - It is not the mandate of law as provided u/s. 132(4A) and 292C of the Act that whenever the documents etc. as prescribed in the said provisions are seized with, the court shall necessarily bring the presumption irrespective of the other factors which may dissuade the court from doing so. The question also arise, what kind of evidence would rebut a legal presumption in the given set of facts, in fact there is no rigid rule. In our opinion, the evidence can be direct or indirect or circumstantial or in combination, however, in certain cases/ situation, a mere statement of the Assessee (third person) can suffice or may be enough to rebut the legal presumption. We answer question no. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 132 of the Act, was also carried out on 10.11.2017 at the premises of the Assessee as well and subsequent to that, notice u/s. 153A of the Act was issued to the Assessee on 23.08.2019 for filing his return of income for the AY under consideration as well, in response to which, the Assessee on dated 30.08.2019 e-filed his return of income, by declaring total income of Rs. 13,02,300/- derived from salary and other sources. 2.2 The Assessing Officer by perusing the said Annexures marked as D-6, D-1 and LP-4 (supra), found that Shri Ajay Kumar allegedly has given more than Rs. 6.00 crores as cash as extraneous consideration to the Assessee, and therefore show caused the Assessee to explain the cash alleged to have been received and also to explain the purposes of the same and as to why the said amount should not be added to the total income of the Assessee, as his undisclosed income. 2.3 The Assessee by filing its reply, in response to the said show cause, out rightly refused to have taken any type of money from Shri Ajay Kumar and in support of its claim furnished various details/ information/ documents including the statements of bank accounts, which were looked into by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by the Assessing Officer is ex-facie arbitrary, illegal and bad in law being against the provisions of the Act and principle of natural justice. Further the Assessing Officer has erred in making addition of Rs. 5,98,76,460/- u/s. 153A instead of section 153C of the Act as the documents were seized from the premises of third party and without following the mandate of circular No. 25/2015 of CBDT, the assessment order is in violation of the decision of the Tribunal at Delhi in the case of Lalit Mahajan (ITA No. 5585/Del/2015 decided on 19.03.2019 and thus, liable to be quashed. Further, the Assessing Officer erred in not allowing cross examination of Shri Ajay Kumar though specifically asked vide letter dated 23.11.2019 which is in violation of the decision of Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE (2015) 62 taxmann.com 3, wherein, it has been held that not allowing cross examination results into nullity of the order. The Assessing Officer further erred in placing reliance on the documents seized from the residence of the third party without rebutting the case laws relied in submission vide para 19 dated 14.10.2019. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee, as it is obvious that the aforesaid amount was received by the Assessee for favouring Shri Ajay Kumar by awarding him contracts. The AO ultimately made the addition of Rs. 5,98,76,460/- u/s 69 of the Act, in addition to making other addition(s) which are not in challenge before us. 6. The ld. Commissioner more or less affirmed the said addition, on the grounds: That from the seized material LP-4, various ledger accounts are found, in which there are also detailed ledger accounts which are made for expenses incurred for the purpose other than the site expenses . From these accounts, it has been categorically found that the payments have been made to various government servants, including the Assessee. The presumption of section 132(4A) and section 292C of the Act clearly applies in the matter of seized documents, therefore, the contents of these seized material cannot be doubted. From the detailed analysis of the seized material, it has been found that various projects relates to Shri Ajay Kumar and his family members who have been awarded the work of these projects as contractors. Since Shri Ajay Kumar is a contractor and has been doing the project work a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer in case of Shri Ajay Kumar and addition of Rs. 20,27,19,855/- has been confirmed by the ld. CIT(A) for a document found and seized during the search proceedings conducted u/s. 132 of the Act for which two independent witnesses were engaged and detailed Panchnama was drawn, no plea of authentication can be taken. It is the bounden duty of the person in whose control and possession, the seized material has been found to disclose the name of the person, who has written the same and department cannot be expected to find out such person, who has written such detailed accounts and Shri Ajay Kumar has failed to reveal the name of such person. But the provisions of section 132(4A) and section 292C of the Act have been made as to how to handle such a situation. Therefore, in the assessment and the appellate proceedings of Shri Ajay Kumar, these seized materials i.e., site ke atirikt vyay , ledger accounts in LP-04 have been made the basis, to compute the undisclosed income in case of Shri Ajay Kumar. Same conclusion is made in case of the Assessee and the payments reflected in these ledger accounts in LP-04 are made the basis, for computing unaccounted income in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contents of loose papers were to be presumed to be correct for the purpose of making addition in the hands of the appellant in terms of sections 132(4A) and 292C of the Act failing to appreciate that there was no corroborative evidence of such addition found from the premises of the appellant. 7.1 By Grounds No. 1 to 3 , the Assessee challenged the validity of Assessment Order on legal aspect, however, during the course of hearing, did not press these grounds specifically, hence, we are not adverting to decide the same and therefore, the judgment passed by the Hon ble jurisdictional High Court in the case of Raj Kumar Arora (supra) as referred to by the ld. DR, do not require any consideration. 7.2 Grounds No. 4 to 9 pertains to the merit of the case, and in support of same, the Assessee reiterated its contentions as raised before the authorities below. Mr. Gaurav Jain Ld. Advocate, ld. AR of the Assessee specifically claimed that the ld. Commissioner in its order though referred five contracts awarded to Shri Ajay Kumar by the Irrigation Department, however, admittedly none of the said contracts was below than Rs. 40 lacs and therefore, Mr. Jain by drawing our attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v in the document recovered from the possession and control of third party, but not from the Assessee herein, can be attributed to the Assessee only. The Assessee further claimed that as the presumption is rebuttable and hence, cannot be used against the Assessee only. 7.3 The ld. Counsel by drawing our attention to pages No. 67- 73 of the paper book, which pertains to bills of quantity for construction of four lane of bridge over Agra Canal in respect of tenders dated 04.09.2015 and 05.12.2014, claimed that the Assessee was not empowered to grant contact solely, but in fact the same were required to be approved by the Superintending Engineer as well. Therefore, the allegations of extraneous consideration, are based on conjectures and surmises. 8. On the contrary, the ld. DR refuted the claim of the Assessee and supported the orders passed by the authorities below. With regard to grounds no. 1 to 3, relied upon Allahabad High Court judgment in the case of Commissioner of Income Tax Vs Sri Raj Kumar Arora {Income Tax Appeal No. 56 of 2011 decided on 11 July, 2014}. 8.1 The ld. DR further submitted that the addition in hand has been made on the basis of the papers found and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act can be drawn against a third person from whose possession and control, in the course of search, no books of accounts, other documents, money, bullion, jewellery or other valuable articles etc. have been recovered, let us peruse the provisions of section 132(4A) and section 292C of the Act, which reads as under: 132 (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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. 10.2 From the provisions referred to above, it is clear that presumption that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to a person may be drawn against such person from whose possession or control of, in the course of a search, such documents etc. found. 10.3 But the question evolve whether the presumption as enumerated in the provisions of section 132(4A) and section 292C of the Act can be drawn against a third person from whose possession and control, in the course of search, no books of accounts, other documents, money, bullion, jewellery or other valuable articles etc. have been recovered . 10.4 We observe that various Benches of the Tribunal in the cases of Strawpack (India) Pvt. Ltd. vs. DCIT (2003) 84 ITD 320 (Mum), Jai Kumar Jain vs. ACIT (2007) 11 SOT 61 (Jaipur)(URO)/(200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption u/s. 292C of the Act. The presumption u/s. 292C of the Act was rebutted by denial of the Assessee. No incriminating evidence or corroborating evidence was found. Therefore, the impugned order on the basis of un-corroborative documents/seized papers and drawing presumption u/s. 292C of the Act, was set aside by the Tribunal and the action of the Tribunal was affirmed by the Hon ble High Court. 10.8 The Hon ble Apex Court in the case of Chandra Kishore Jha vs. Mahavir Prasad Ors. (1999) 8 SCC 266 also reminded that it is a sell settled statutory principle, if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. 10.9 From the bare provisions of the Act, decisions of Hon ble Courts and the discussion held, we are of the considered view that the presumption as prescribed, under the provisions of section 132(4A) and 292C of the Act, may be drawn against such person only from whose possession or control, the documents etc. as mentioned in the said provisions is/are found and seized or recovered but not against the third person from whose possession or control, no such document(s) etc. as me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which will enable him to look into the same, whenever the need arises to do for his future purpose. 12.3 The Hon ble jurisdictional High Court in the case of Ajay Gupta vs. CIT {2020} 114 taxmann.com 577(Allahabad) while dealing with the similar and identical situation qua applicability of the presumption u/s. 132(4A) of the Act has also clearly held that the Assessing Officer while passing the assessment order had, only on the basis of loose papers found during the search, made the addition to the disclosed income of the Assessee, while the entries on the papers remained uncorroborated. The Hon ble High Court also taken into consideration the judgment of the same High Court in the case of CIT vs. Shadiram Ganga Prasad, 2010 UPTC 840, wherein it was held that the loose purchas found during the search at the most could lead to a presumption but the department cannot draw inference, unless the entries made in the documents so found are corroborated by the evidence. The Hon ble High Court also taken note of the fact that the presumption as provided in section 132(4A) is not in absolute terms, but is subject to corroborative evidence. The Tribunal on the basis of presumption u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be corroborated by other evidences, which include the statement of scriber of nothings etc., if the names and figures are mentioned in abbreviated forms or short forms or in certain letter(s) as the same would be in the knowledge of scriber only and a person, whose name though is recorded in the note book/diary/loose papers etc. but nothing found and recovered from such person. The statements of scriber of nothings etc. and such person from whose possession and control such documents were recovered, having more importance and the statement of scriber of nothings etc. and such person, undoubtedly should be confronted to the Assessee and the Assessee has to be allowed to cross examine such persons and an opportunity to rebut the evidence. Unless the statement/document is tested under the cross examination, the same cannot be read in evidence against the Assessee and no adverse inference can be drawn, unless the entries made in the documents so found are corroborated by the independent evidence. The presumption as provided in section 132(4A) and 292C of the Act, is not in absolute terms, but is subject to corroborative evidence. Where the department proposes to invoke section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of assessment proceedings. 12.12 We observe further that the Revenue neither recorded the statement of the scriber of the notings on the loose sheets, nor even inspite on specific request made vide letter dated 23.11.2019, allowed any opportunity to the Assessee to cross examine Shri Ajay Kumar, from whose possession such documents have been recovered. Admittedly, the documents relied upon by the Revenue Department are neither in the handwriting of the Assessee nor has signature of Assessee and no corroborative evidence/document related to the Assessee, which could be connected with the documents relied by the Revenue Department, found from the possession or control of the Assessee, in spite of certain search and seizure operation carried out in his premises. 12.13 It is also well settled law that the dumb documents having no evidentiary value and cannot be taken as sole basis for determination of undisclosed income of the Assessee. Wherever, the Revenue Department wants to make use of dumb documents alike involved in the instant case, then the onus rests on the Revenue Department to collect cogent evidence qua the person whose name appears in notings, to corroborat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case, however, shall presume leaves no option with the courts not to make the presumption and the court is bound to take the fact as proof until evidence is given to disprove it. In this sense, such a presumption is also a rebuttable. But conclusive proof gives an artificial probative effect by the law to certain facts and to controvert, no evidence is allowed to produce with a view to combating that fact. Meaning thereby, it is an irrebuttable presumption. 13.2 We observe that the phrase used in the provisions of section 132(4A) and 292C of the Act is may be presumed which has been defined in section 4 of the Evidence Act, which reads as under: Whenever it is provided by this Act that the court may presume a fact, it may either regard such fact as proved, unless and until it is disproved or may call for proof of it. 13.3 From the provision of section 4 of the Evidence Act, it is clear, the presumption is not final or conclusive, but is a rebuttable one that may be disproved by the person from whose possession and control, the items mentioned in section 132(4A) and Sec. 292C of the Act, have been recovered. For better understanding, we are quotin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessee. Though authenticity of said document ( Pg. 155 of PB) remained un-substantiated, however the Assessee prima facie rebutted the presumption . Hence, in our considered opinion, though the Assessee is not liable to rebut the presumption drawn by the Assessing Officer, however, still rebutted the same by raising aforesaid pleas and therefore, the presumption drawn against the Assessee is un-sustainable. 15. We also observe as held by the Hon ble Courts that presumption can only be drawn after establishing the addition under the substantive provisions of section 69 of the Act as involved in this case and before fulfilling the conditions of section 69 independently, the presumption cannot be drawn, which in the instant case is missing. Hence, on this aspect as well the addition in hand is unsustainable. 16. We further observe that the Assessing Officer has also observed in the assessment order that the circumstantial evidences are against the Assessee, as it is obvious that the aforesaid amount was received by the Assessee for favouring Shri Ajay Kumar by awarding him contracts. As we have already considered the circumstantial evidence, and it is admitted fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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