| SooperKanoon Citation | sooperkanoon.com/70529 |
| Court | Income Tax Appellate Tribunal ITAT Agra |
| Decided On | May-25-1999 |
| Reported in | (1999)65TTJAgra338 |
| Appellant | Assistant Commissioner of Income |
| Respondent | Dr. Prakash NaraIn Gupta |
2. The assessee, a doctor by profession and politician was subject of search operation carried out at his house and residential premises, on 13th Sept., 1985, under section 132(1) of the Income Tax Act, 1961 (hereinafter referred to as "the AcC). During search operation large number of incriminating documents were found. It appears that Sr. No.14 of "G" Annexure to Panchnama prepared at the residence of the assessee was a note book which contained receipt of cash and expenditure on electioneering during the period 12th June, 1977 to 30th June, 1977. As per entry at p. 2 from the end of the book, it was noted by the assessing officer that total election expenditure was Rs. 1,24,500. The said amount was added to the assessee's income as unexplained expenditure in the order under S. 132(5) of the Act for assessment year 1978-79. During assessment proceedings for assessment year 1978-79 the assessee was called upon to explain the source of this amount of Rs. 1,24,500. The assessee submitted reply on 27th Feb., 1990 and also filed an affidavit to the effect that in the year 1977 the assessee contested the election and spent Rs. 14,000 on the election and bad filed return regarding the same before the Election Tribunal, which has got wide powers in that regard. He denied having spent the amount of Rs. 1,24,500 on the election. The note book was said to be not written in the handwriting of the assessee or any members of his family. It was also the case of the assessee that during election it was not the candidate only who spent money on election but most of the expenditure was incurred by party workers who collected the amount themselves and spent it for the benefit of their party. He stated to have received Rs. 1,000 from one Shri V.K. Gupta. The assessing officer considered the submissions of the assessee and did not find force in the same on the ground that no details of the person who spent the amount was given in the affidavit and he made the addition of that amount in assessment year 1978-79.
3. The assessee came in appeal before the Commissioner (Appeals) and it was submitted that he had submitted a detailed affidavit giving out the names of the persons who have contributed the amount by themselves and also the list of those persons who were working against him during the election but the assessing officer did not care to interrogate any one of them to find out the actual truth. He further reiterated that except Rs. 14,000 spent by him in the election, which was duly accepted by the Election Tribunal, rest of the amount was not spent by him but by his wellwishers and that amount cannot be treated as income of the assessee. The Commissioner (Appeals) noted that Election Officer has accepted the amount of Rs. 14,000 spent by the assessee but rest of the amount was stated to have been spent by his well-wishers and the assessing officer did not care to examine any of them whose names were appearing in the list submitted by the assessee in his affidavit.
Accordingly, the Commissioner (Appeals) deleted the addition of Rs. 1,24,500 against which the revenue is in appeal for assessment year 1978-79.
4. In the said search the assessing officer noted that at Sr. No. 103 of Annexure T there was a paper bunch found at the time of the search and in this bunch papers, the papers No. 8 to 11 relate to computation of compound interest at the rate of 18 per cent per month for the period November, 1978 to August, 1980, on some deposits which were intially at Rs. 90,000. The assessee was called upon to explain the contents of this paper and source of this investment of Rs. 90,000, while completing the assessment for assessment year 1978-79 as the said date did fall in the previous year relevant to assessment year 1979-80.
The assessee took the plea before the assessing officer that he was having no concern with the said paper as it was not in the handwriting of the assessee nor in the handwriting of any person of his family. The said paper was not indicating that the assessee had made any investment or received any amount. It was also the plea of the assessee that the said paper was not considered by the assessing officer while passing order under section 132(5). However, the assessing officer did not accept the version of the assessee and made the addition after placing reliance on the provisions of s. 132(4A) of the Act. Addition of Rs. 90,000 was made plus interest which came to Rs. 96,955. The assessee came in appeal before the Commissioner (Appeals) and submitted that the provisions of s. 132(4A) of the Act are applicable where any books of accounts or other documents found in possession or control of any person during the course of search. No cognizance of the said paper was taken in the order under section 132(5). It is also the case of the assessee that the said paper was written on the pad of Satikari Grah Nirman Samiti (P) Ltd. and it does not contain the name of the assessee. The assessing officer has not made any effort to link the said document with the assessee. No. addition was warranted. Thus, the Commissioner (Appeals) duly found force in the submissions of the assessee and concluded that there is nothing on record to link the assessee with the pad of the said co-operative housing society or the said cooperative housing society belonged to the assessee. He also noted that the assessee was leading political life and there were several persons visiting him and that paper cannot be taken as belonging to the assessee without making necessary investigation, which the assessing officer failed to carry out and the deleted the addition of Rs. 96,955, and the Revenue is in appeal before us.
5. In asst. yrs. 1980-81 and 1981-82 the assessing officer made the addition in respect of interest on Rs. 90,000 which was calculated on the pad of Satikari Garh Nirman Samiti (P) Ltd. and the Commissioner (Appeals) deleted the addition and Revenue is in appeal before us for those two years.
6. During search the assessing officer noted that at Sr. No. 48 of Annexure "G" to the Panchnama was a bunch of loose paper which contained counterfoil of two cheques dt. 26th July, 1983, of Indian Overseas Bank, Agra for withdrawal of Rs. 5,000 from Account No. 27969.
The assessee was called upon to give copy of this account and explain the source of credit entry in the account books. The assessee submitted that he never had any account with IOB nor was there any account of his family members and that cheque did not relate to him and the holder of that cheque was not knowp to him. The assessing officer considered the facts and after noting that counterfoil of cheque was found from the residence of the assessee, he held the assessee as benamidar of that account and addition of Rs. 10,000 in respect of amount of deposit in that account was made in the hands of the assessee. He further noted that p. No, 7 of serial No. 18 to Annexure "G" was Dharam Kanta receipt dt. 5th Aug., 1983, of Shri Sarrafa Committee, Kinari Bazar, Agra for weight of 80.550 gms. The assessee was called upon to explain the same as the assessing officer was of the opinion that the assessee must have acquired jewellery weighing 80.550 gms. During the previous year relevant to assessment year 1984-85. The assessee denied having any concern with the receipt or Dharam Kanta and also denied having acquired any jewellery. It was also the case of the assessee that Dharam Kanta receipt alone does not mean that he had purchased or acquired any jewellery as the Dharam Kanta receipt shows"that any jewellery had been weighted and does not show any acquisition. The assessing officer concluded that the assessee has failed to explain the Dharam. Kanta receipt and made an addition of Rs. 1,51,837 as the price of 80.550 gms. of gold in the hands of the assessee while completing the assessment for assessment year 1984-85 and in appeal, the Commissioner (Appeals) deleted both the additions on the ground that the assessing officer had failed to carry out the necessary enquiry as to find out as to who was the owner of the account No. 27969 of IOB, Agra and also failed to carry out the necessary enquiry from the party, who had issued the Dharam Kanta receipt. The Revenue is in appeal against the action of the Commissioner (Appeals).
7. The learned departmental Representative placing reliance on the order of the assessing officer submitted that it was during the search that relevant papers were found from the possession of the assessee and were seized on the basis of which the assessing officer had made the addition. The onus was on the assessee to disprove the entries contained in each of the documents, which had been vaguely explained.
About the entry relating to note book showing expenditure incurred for contesting the election during the previous year relevant to assessment year 1978-79, the contention of the assessing officer was that necessary details of receipt and expenditure were shown in the said note book and the assessee had filed affidavit to show that he had not spent the amount beyond Rs. 44,000 for which he submitted written explanation but he was under obligation to take out the necessary details of donations, details of expenditure incurred by friends, relatives and party workers, which he failed. No doubt list of persons was there but the assessing officer did not summon them and in case the Commissioner (Appeals) was of the opinion that necessary enquiries were to be made, the matter should have been restored back to the file of the assessing officer by the Commissioner (Appeals) for finding out the truth. He also submitted that now it would be in the fitness of things to restore the matter to the assessing officer to examine the persons and to find out the truth. The same was argument of the learned departmental Representative in respect of calculation of interest on investment of Rs. 90,000 appearing on the pad of Sahkari Grah Nirman Samiti Ltd., Agra and it was contended that necessary enquiries have not been made by the assessing officer from the concerned persons of said Sahkari Grah Nirman Samiti Ltd. and matter be restored back for necessary investigation.
7.1. About counterfoil of the cheque as well as about the Dharam Kanta receipt, it was submitted that the assessee was benami of account No.27969 of IOB, Agra and addition of Rs. 10,000 had rightly been made.
Same was the argument in respect of the Dharam Kanta receipt, which the assessee failed to disprove. It cannot be said that the assessee was keeping that Dharam Kanta receipt in his possession without any purpose. It was submitted that additions were rightly made by the assessing officer.
8. As against this the learned counsel for assessee submitted that approach of the learned Commissioner (Appeals) in deleting the additions was justified. Presumption under section 132(4A) is rebuttable one and the assessee had discharged the onus about note book containing the election expenses, etc., it was submitted that a detailed affidavit was filed by the assessee explaining each and every entry. Our attention was drawn to copy of the affidavit appearing at p.
19 of the paper book and particular pp. 11 to 13, which contain the list of workers of two categories and it was submitted that names and addresses of party workers, who donated the amount and spent the amount at their own in the election campaign of the assessee was submitted by the assessee before the assessing officer but he failed to examine any of the persons out of category-I, who were supporters of the assessee.
Accordingly, this list of workers in category-R was those who were against the assessee and they were the opponent's persons to come forward and depose against the assessee in case he had spent the amount beyond the limits prescribed by the Election Commission. It was also the case of the assessee that the assessee had submitted list of election expenses to the Election Returner, which was duly accepted and in case he had spent more amount, then the assessee's election could have been challenged by the opposition party for violation of election rules. As nothing has been done, it is wrong to conclude that the amount of expenses was more than Rs. 14,000 as shown by the assessee and no basis for making the addition in the case of the assessee on the basis of that note book. The presumption under section 132(4A) of the Act has been rebutted by the assessee and no addition is warranted and the Commissioner (Appeals) has rightly deleted the addition.
8.1. About addition on the basis of calculation of interest on Rs. 90,000 on the pad of Sahkari Grah Samiti Ltd. Agra, it was also the case of the assessee that there were so many persons visiting the assessee as the assessee was a politician and some person might have left the paper with him but in the absence of any evidence from the assessing officer to link the assessee with that paper, the addition was rightly deleted by the Commissioner (Appeals) along with the interest.
8.2. About the cheque counterfoil, it was submitted the assessee was having no account with IOB, Agra and if the addition was to be made, the assessing officer was under obligation to find out the actual person, who was owner of Account No. 27969 and in the absence of anything on record, addition was not warranted.
8.3. About the Dharam Kanta receipt, the same were the arguments as were taken before the lower authorities and in the end, it was submitted that weight mentioned in the Dharm Kanta receipt is 80.550 gms. and in case addition is to made, the assessing officer be directed to calculate the amount of 80.550 gms. at the prevailing rate as the assessing officer had applied excess rate.
9. We have considered the submissiods of the learned representatives of both the parties and also perused the record. It is settled position that presumption under section 132(4A) is to be applied in respect of documents, etc. found at the time of the search. Admittedly, all the documents were found from the residential premises of the assessee and the assessee was under obligation to explain those papers. In this case, the assessee had explained that note book containing election expenses for the period 12th June, 1977 to 30th June, 1977, relevant to assessment year 1978-79 were not incurred by him but by his friends and relatives and party workers. Affidavit to that effect was filed before the assessing officer himself giving over the list of persons who spent and even another list of persons who were opposing the election of the assessee was also given. It was incumbent on the assessing officer to summon those persons to find out the veracity of the version of the assessee, which he failed. Same thing is in respect of calculation of interest on investment of Rs. 90,000 on the pad of Sahkari Grah Nirman Samiti Ltd. No doubt on perusal of papers 6 to 9 of the paper book relevant to assessment year 1979-80 shows that Rs. 90,000 had been shown as the actual amount and thereafter calculation of interest from the month of November, 1978, onwards is there. It was the duty of the assessing officer to summon the necessary person from the Sahkari Garh Nirman Samiti Ltd., Agra and to find out as to who had invested Rs. 90,000 and what is the details of interest calculation. Therefore, as the assessee denied his involvement in this paper, it has also not been done. In view of these facts, we are of the considered opinion that the assessing officer had failed to carry out the necessary investigation in respect of asst. yrs. 1978-79 to 1981-82 in respect of these documents and to find out the correct facts on record, it will be justifiable in the interest of justice to restore the matter back to the file of the assessing officer who is directed to summon the concerned persons from the list given in the affidavit by the assessee as well as from the Sahkari Garh Nirman Samiti Ltd., Agra and after necessary investigation by giving opportunity to the assessee to cross-examine the relevant persons to decide the issue afresh in respect of the additions of Rs. 1,24,500 in asst. yrs. .1978-79, about Rs. 90,000 and interest in asst. yrs. 1979-80 to 1981-82.
10. In respect of assessment year 1984-85, additions were of Rs. 10,000 on the basis of counterfoil of cheque and Rs. 1,51,837 on account of Dharam, Kanta receipt. Our attention has been drawn by the learned counsel for the assessee to page No. 34 of appeal for assessment year 1984-85, which is report from the assessing officer to CIT, Kanpur, in which it has been mentioned by the assessing officer that on necessary enquiry it has been found that Account No. 27969 belonged to Shri Moin Uddin, S/o Shri Nadim Uddin, r/o 18/144, Mantola, Agra. It has not been controverted by the department nor anything on record to show that the assessee was having any link with the said Moin Uddin. We accordingly, delete the addition of Rs. 10,000 and so far as the additions on the basis of Dharam Kanta receipt are concerned, it was the duty of the assessee to explain as to how he was preserving Dharam Kanta receipt of old ornaments weighing 80.550 gms. He failed to explain the same and we are of the considered opinion that the addition was quite justified and confirm the same. But we direct the assessing officer to calculate the value of 80.550 gms. at the prevailing rate of Dharam Kanta receipt dt.
5th Aug., 1983 and to make necessary addition.
11. In the result, the appeal in ITA Nos. 4524, 4525, 4526(Del)/1999 and 3198(Del)/1993 are allowed for statistical purposes and appeal in ITA No. 4527(Del)/1991 is allowed in part.