ASHOK KUMAR PODDAR,KOLKATA V. ACIT, CC-XXXII, KOLKATA

ITSSA 26/KOL/2005

AI Insights

The case involves cross-appeals by the assessee, Ashok Kumar Poddar, and the revenue against the order of the Commissioner of Income Tax (Appeals)-XXXI, Kolkata, concerning a block assessment period from April 1, 1988, to December 19, 1998. The primary issues revolved around the deletion of additions made by the Assessing Officer based on documents seized during a search operation. The Tribunal had to re-adjudicate the matter following a remand from the Calcutta High Court, which directed a fresh examination of the issues after the initial appeals were decided in favor of the assessee and the revenue.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 298975 (ITAT-KOLKATA)
• Duration Of Justice: 19 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-09-2024
• Assessment Year: misc
• Appeal Filed On: 14-02-2005
• Other Referred Cases: Pushkar Narayan Saraf Vs. CIT, CBI Vs. V.C. Shukla, S.P. Goyal Vs. DCIT, Ashwani Kumar Vs. ITO, Bannalal Jat Constructions Fvt. Ltd. vs. Assistant Commissioner of Income-Tax, Surjeet Singh Chhabra vs. Union of India and Ors., Nirmal Fashions Pvt. Ltd. vs. DCIT, ACIT Vs. Smt. Prema Poddar, CIT vs. Babu Mohanlal Arya Smarak Educational Trust, Principal Commissioner of Income Tax vs. Delco India Pvt. Ltd., Nirmal Fashions Pvt. Ltd. vs. DCIT, ACIT vs. Buldana Urban Co-operative Credit Society Ltd., Satnam Singh Chhabra vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SOME CLIENT. ADMITTEDLY; NO EVIDENCE OF ANY
• Keywords: Set aside; Corroborative evidences; Income from undisclosed sources; Document seized; Documents seized; Search and seizure; Block assessment; Loose papers; Assessment record; Co-operative Credit Society
• Section: 250; 153; 132; 131; 158BC; 20

Judgement Text

"आयकर अपीलीय अिधकरण, कोलकाता पीठ ‘बी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B”BENCH KOLKATA ᮰ी संजय गगᭅ, ᭠याियक सद᭭यएवं ᮰ी मनीष बोरड, लेखा सद᭭य के समᭃ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.(SS)A. No.26/Kol/2005 Block Period: 01.04.88 to 19.12.98 Ashok Kumar Poddar…..….…….…............................…...…….………....Assessee 6, Lyons Range, Kolkata -700001. [PAN: AFTPP2389D] vs. DCIT, CC-XXIII, Kolkata.......…...................................................…..…..... Revenue I.T.(SS)A. No.32/Kol/2005 Block Period: 01.04.88 to 19.12.98 DCIT, CC-XXIII, Kolkata …..….…….…......................…...……………....Revenue vs. Ashok Kumar Poddar.......……………............................................…..…..... Assessee 6, Lyons Range, Kolkata -700001. [PAN: AFTPP2389D] Appearances by: ShriMiraj D. Shah, AR, appeared on behalf of the appellant. Shri Abhijit Kundu, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing :September 11, 2024 Date of pronouncing the order :October 21 ,, 2024 आदेश / ORDER संजय गगᭅ, ᭠याियकसद᭭य᳇ारा/ Per Sanjay Garg, Judicial Member: The present are the cross-appeals, one by the assessee and the other by the revenue against the order dated 30.11.2004 of the Commissioner of Income Tax (Appeals)-XXXI, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) for block assessment period 01.04.88 to 19.12.98. I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 2 2. This is the second round of appeal before us. Earlier the appeal of the assessee relating to these matters were decided by this Tribunal vide common order dated 18.01.2008 passed in IT(SS) No.32/Kol/2005 (revenue’s appeal) and IT(SS) No.26/Kol/2005 (assessee’s appeal). Against the common order of the Tribunal, the revenue preferred appeal before the Hon’ble Jurisdictional Calcutta High Court. Though there were separate issues involved in the respective appeals of the assessee as well as of the department, however, the Hon’ble High Court admitted the appeal only two issues, which read as under: “Whether on the facts and in the circumstances of the case, the findings of facts and the appraisal of evidence by the tribunal leading to the deletion of the addition of Rs.3,25,37,586/- and Rs.17,29,25,670/- as referred to in paragraph 4(i) and (ii) of the stay petition were perverse? “whether on the facts and in the circumstances of the case Tribunal was justified and the conclusion at arrived by it in deleting addition of Rs.17,29,25,670/- as undisclosed profit made on the basis of seized documents and in view of presumption under Section 132(4A) of the Income Tax Act, 1961, is perverse?” 2.1 The matters were heard by the Division Bench of the Hon’ble High Court and the judgment was passed on 19.10.2023 restoring the aforesaid issues to the Tribunal for a fresh decision. It is pertinent to mention here that both the Hon’ble Judges constituting the Division Bench of the Hon’ble High Court have passed their separate orders. The operating part of the order authored by Hon’ble Mr. Justice I. P. Mukerji is reproduced as under: “Our View:- A presumption may be rebuttable or irrebuttable. If it is irrebuttable, it is conclusive proof of the fact. The court will not admit any evidence to disprove the presumption. Take for example, the common law presumption that a child under 7 years of age is incapable of committing a crime. It is an irrebuttable presumption. Or the fact that the sun rises in the east. When a fact may be presumed by the court or shall be I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 3 presumed by the court makes the presumption rebuttable. The assertion of fact is taken to be true till it is disproved. The question is who has the onus of disproving the presumed fact. One who challenges the presumption has the onus to disprove the fact. Therefore, the adjudicating authority has two options, either not to presume that the papers and other documents seized during search and seizure belonged to the assessee, the contents are true and that the signatures appearing thereon are that of the assessee or not to presume so. In this case, the assessing officer has made the presumption and proceeded accordingly. Now, the drawing of a presumption by the assessing officer in terms of Section 292C, in our opinion, is based on assessment of facts and discretionary and should not ordinarily be interfered with by an appellate authority. Once this presumption had been made, the onus squarely shifted to the respondent assessee to disprove those facts. The tribunal was enjoined with a duty to appreciate this law and to examine whether the assessee had been able to discharge the burden. Now, look at the reasons given by the tribunal. It cast a duty on the Revenue to prove the handwriting of the assessee. It accepted the contention of the assessee that the documents did not belong to him instead of requiring him to prove it. It allowed the assessee to retract the admission made by him during the course of the proceedings, by a statement dated 9th March, 1999 that the trial balance for the period 1st April, 1997 to 31st March, 1998 “summarizes my entire business operation for 1997-1998”. A division bench of the Rajasthan High Court in the case of Bannalal Jat Constructions Fvt. Ltd. vs. Assistant Commissioner of Income- Tax reported in (2019) 418 ITR 291 remarked:- “17.……….The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income……….” Since Income Tax officers are not police officials, the view of the Supreme Court in Surjeet Singh Chhabra vs. Union of India and Ors. reported in I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 4 (1997) 1 SCC 508 that even if a confession was retracted it was to be taken as an admission and binding on the maker is very relevant in this case. The tribunal ought not to have disregarded the admission merely on the ground that later on the assessee had withdrawn the admission, without scrupulously examining whether there were any substantial grounds enabling the assessee to resile from such admission. In those circumstances, the order of the tribunal with regard to the above issues is set aside. We remand the matter back to the tribunal with a direction upon it to reexamine the same on the basis of evidence on record by a detailed order within six months of communication of this order. The appeal is disposed of accordingly. Certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.” 2.2 The Hon’ble Mr. Justice Biswaroop Chowdhury passed a separate order, the operating part of the said order is reproduced as under: “Much is submitted on the admission made by respondent/assesse. Before placing any reliance on the admission of the assessee it would have been just and reasonable on the part of assessing officer to ascertain as to whether the admission made by assessee before DDIT on 09-03-1999 was voluntary or not. Secondly it should have ascertained as to the contends of the documents/account papers which are seized by the Authority, whether those are within knowledge of the respondent Although it is not the requirement of law but it is an act of prudence on the part of the Income Tax Authority and shows reasonableness and bona-fide. It is not unusual that when a raid takes place in an establishment or house of an assessee, the assessee out of confusion and stress may make many statements in haste in order to complete the interrogation process. However necessary verification should be made to ascertain the statements made by the assessee. Now the question for consideration is whether the Income Tax Authority acted correctly in putting question to assessee with regard to Trial balance and other accounts papers seized from the establishment of assessee. It is a common practice that in a business establishment of a businessman business accounts are prepared by accountant or chartered accountant and the same are audited. The preparation of accounts requires special knowledge and skill. Thus it is the accountant or I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 5 charactered accountant having special knowledge are entrusted with the preparation of accounts which are audited. Hence it is the accountant or chartered accountant who are in a position to give statement regarding statement of accounts or Trial balance. The business man who has engaged accountant or chartered accountant cannot be said to have knowledge and cannot be expected to make statement on the preparation of accounts, which are prepared by Accountant or Chartered Accountant. A business man can admit his signature if it appears on any accounts or other documents and anything prepared in his own handwriting. Apart from his own handwriting he cannot admit any document prepared by others. Thus the Income Tax Authority ought to have interrogated the Accountant of the establishment regarding documents seized. Thus there was an error on the part of the Assessing Officer. This issue was not considered by the Learned Tribunal. Thus, this matter should be remitted to the Tribunal for reconsideration.” 2.3 With the separate orders of both the Hon’ble Judges, the matter has been restored to the Tribunal. 3. We, therefore, proceed to adjudicate the appeals as per the separate directions given by the Hon’ble Judges of the Hon’ble High Court. IT(SS) No.26/Kol/2005: 4. So far as the appeal of the assessee bearing IT(SS) No.26/Kol/2005 is concerned, none of the issues as directed by the Hon’ble High Court to re-adjudicate, forms part of this appeal of the assessee. Therefore, there is no need to adjudicate any grounds of appeal in IT(SS) No.26/Kol/2005. The findings arrived at by the Tribunal in the common order dated 18.01.2008 on this issue will remain as such and binding upon the parties without any disturbance or modification. With the above observation, IT(SS) No.26/Kol/2005 is dismissed as infructuous having been restored by the Registry under misimpression. The dismissal of the aforesaid appeal will not, in any I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 6 way, effect any findings of the Tribunal given in assessee’s appeal vide order dated 18.01.08. IT(SS) No.32/Kol/2005: 5. Now, coming to the revenue’s appeal in IT(SS) No.32/Kol/2005. The two issues as restored by the Hon’ble High Court are the grounds of appeal of the revenue, which read as under: “1. That on the facts and in the circumstances of the case Ld. CIT(A) erred on facts as well in law in deleting the addition Rs.3,25,37,586/- made on account of Trial Balance after analysing the seized bunch of papers marked PP/37, without appreciating the detailed reasons given by the A.O in his assessment order. 2. That on the facts and in the circumstances of the case Ld. CIT(A) erred on facts as well in law in deleting the addition Rs.17,29,25,670/- made as undisclosed profits from page 19 to 21 of seized bunch of papers marked PP/38, without appreciating the details reasons given by the A.O in his assessment order.” 5.1 The Tribunal while adjudicating the first issue of the appeal in relation to addition of Rs.3,25,37,586/- vide its common order dated 18.01.2008, observed as under: “On appeal, it was argued before the Ld. CITA) that the AO himself has not considered all the entries appearing in the loose sheets, but has chosen only few pages of the trial balance. If it was a trial balance, all the entries in all the pages should have been considered and not only a few pages and few entries. It was further submitted that none of the entries in the seized test run trial balance tally with the entries in the regular books of account of the assessee. Some of the expenses shown in the trial balance, such as stamp charges, building expenses, trading expenses and telephone expenses for examples show credit balances, from which it is clear that the entries made in the test run trial balance does not reflect the reality. The AO has picked up only a few selected credit and debit entries according to his random choice without any basis whatsoever and added the difference between those credit and debit entries as assessee's undisclosed income without bringing any material or evidence on record in support of his action. I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 7 The Ld. CIT(A) after considering the facts of the case and explanation of the assessee and the seized trial balance, did not subscribe to the views of the AO and the pick and choose method adopted by him in determining' the undisclosed income on the basis of such trial balance which was prepared on trial / test run basis by assessee's employees in which the entries not even relevant for the trial balance had found places. The Ld. CIT(A) accordingly deleted the addition in full having been fully satisfied with the facts of the case. The decision of the Ld. CIT(A) is wholly justified on facts and in law. In the course of search, the search party found some assets in the form of jewellery, cash, shares, investment etc. which were fully explained by the assessee and accepted by the department. In addition to such assets, no other assets in the form of shares, jewellery, cash, other investments etc. were found to match the addition of Rs. 3.25 crores. The addition of Rs. 3.25.37.586/- made by the AO is wholly imaginary and baseless and hence not liable to be sustained. The appeal of the department on this issue is therefore liable to be wholly rejected in appeal before us. The Ld. D.R. on the on the other hand fully supported the order of the AO. We have heard the rival parties and the submissions made by them and also perused the records. The veracity and correctness of the entries in the trial balance could not be established by the AO through any material or evidence brought on record. The assessee's contention that it is only a test run trial balance containing imaginary figures could not be rebutted by the AO through any piece of evidence. No enquiry in this regard was made by the AO as appears from record to justify his action and belief. Mere tally of certain code numbers in the trial balance with those in the regular books cannot prove the AO's case. The pick and choose method adopted by the AO in selecting without any basis certain credit and debit entries in the trial balance, ignoring all other entries therein. itself proves that the entries in the said trial balance are liable to be ignored altogether in absence of any material or evidence in support thereof. On these facts we uphold the decision of the Ld. CIT(A) in deleting the addition of Rs. 3,25,37,586/- in full. This ground of the department is rejected.” 5.2 On the second issue relating to the addition of Rs.17,29,25,670/-, the relevant part of the order of the Tribunal on this issue is reproduced as under: I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 8 “ On appeal, in addition to the submission already made before the AO, the assessee further submitted that the mention of an account of Sumerji\" in the seized document PP-38 and also in another seized document is of no relevance and does not prove anything against the assessee. The said loose sheets do not corroborate with any valuable seized asset of the assessee. Neither any enquiry was made nor any material or evidence could be brought on record to substantiate the entries in the loose sheets. The contention of the assessee could not be rebutted by the AO by making any verification of the hand writing of the entries in the loose sheets through experts. The AO has made the addition only on the basis of presumption. Mere presumption u/s. 132(4A) cannot empower an AO to make an addition unless it is proved through corroborative evidences as held in the case of Pushkar Narayan Saraf Vs. CIT, 183 ITR 388 (All.). Loose sheets are not books of account and consequently no addition can be added only on the basis of loose sheets or papers unless substantial evidence is therefore to prove that the entries really represented undisclosed income of the assessee. Several court decisions were cited by the assessee in support including the decision in the cases of (1) CBI Vs. V.C. Shukla (1998) AIR Volume -III (SC) 410 (ii) S.P. Goyal Vs. DCIT, 82 ITD 85 (Mumbai) (TM) and (ii) Ashwani Kumar Vs. ITO, 39 ITD 183 (Delhi). 12. The Ld. CIT(A) after considering all the facts of the case and the explanation of the assessee held that thought the assessee failed to rebut the presumption of section 132(4A) and also failed to substantiate the allegation of those loose papers having been planted in his office, still the action of the AO in making the addition simply relying on the presumption u/s. 132(4A) cannot be held to be justified. In the background of complete denial by the assessee, such papers cannot be thrust upon the assessee merely by invoking section 132(4A). The AO had not taken any step either to examine the assessee in person even at the remand stage to verify the handwriting of the assessee or any member of his family or staff or obtain any opinion from an handwriting expert. The Ld. CIT(A) also observed that no matching asset or investment could be detected to have come out of the alleged income determined on the basis of loose sheets marked PP-38. The Ld. CIT(A) finally concluded that the addition made on the seized papers marked PP-38 was premature and without any basis and accordingly deleted the addition in full. 13. In appeal before us, the ld. D.R. for the revenue has relied heavily on the order of the AO. The Ld. D.R, stated that the seized documents I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 9 marked PP-38 on page- 19 (back) indicated the name of AKP i.e. Ashok Kumar Poddar, the assessee and the documents were found from the office of the assessee. The assessee could not explain the contents of the documents and took an unacceptable plea that those documents were not written either by him or any of his staff or family member and the same were planted by somebody in his office with an ulterior motive. The addition made by the AO because of assessee's failure to explain the documents was wholly justified and hence it should be confirmed in favour of the revenue. 14. The Ld. AR on the other hand assailed that the decision of the ld. CIT(A) is wholly justified on facts and in law. In the course of search no asset or investment acquired or made out of the alleged undisclosed income computed by the could be found or detected by the department. The addition of Rs. 17,29,25,670/- made by the AO is wholly imaginary and baseless and hence not liable to be sustained. The appeal of the department on this issue should be wholly dismissed. It is submitted that in the said seized bunch of paper are lose sheet was allegedly relating to Smt. Prema Poddar wife of the assessee and similar addition was made. The AR has filed the decision in the case of ACIT Vs. Smt. Prema Poddar in IT(SS) No. 31/Kol/2005 wherein such additions were deleted. 15. We have heard both the parties and perused the records. We have perused materials available on record and the case laws relied upon. There is no dispute that the AO has made the addition only on the presumption made u/s. 132(4A) that the sheets belong to the assessee without verifying the handwriting and without making enquiry or bring any material on record to substantiate that the assessee had actually earned the income recorded in those loose sheets. It is a fact that there was no substantial seizure in the form of any investment in any movable or immovable property as reflected in the Annexures to the panchnamas. If the assessee had so much of undisclosed income, such income should have been reflected in some investment in one form or the other. But no such investment or asset was found during the course of search and therefore the action of the AO in making the addition on the basis of the loose sheets without any matching assets found on search cannot be held to be justified. Various courts have also held that addition on the basis of entries in the loose sheets without bringing any corroborative evidence in the form of matching assets cannot be sustained. This issue has also been dealt by this ITAT in the case of Smt. Prema Poddar (Supra) wife of the assessee wherein similar additions made were deleted. The action of the ld. CIT(A) in deleting the addition was wholly I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 10 justified. We do not see any reason to interfere with his order and therefore uphold the same. The ground raised by the revenue is dismissed.” 5.3 However, as observed above, the Hon’ble High Court has set aside the aforesaid order of the Tribunal on both issues and restored the issues to this Tribunal for adjudication afresh. 5.4 In the order of the Hon’ble Mr. Justice, I. P. Mukherji, it has been observed that the Assessing Officer u/s 292C of the Income Tax Act (the ‘Act’) has made a presumption that the documents seized during the search and seizure belonged to the assessee and that the contents of the same are true and that the signatures appearing thereon are that of the assessee. That the Assessing Officer having made presumption u/s 292C of the Act, the onus squarely shifted upon the assessee to disprove those facts. It has been further observed that the Tribunal enjoined with a duty to appreciate this law and to examine whether the assessee had been able to discharge the burden. 5.5 On the other hand, in the words of Hon’ble Mr. Justice, Biswaroop Chowdhury, it has been observed that before placing any reliance on the admission of the assessee, it would have been just and reasonable on the part of Assessing Officer to ascertain as to whether the admission made by assessee before DDIT on 09.03.1999 was voluntary or not. That it should have also been ascertained by the Assessing Officer as to whether the contents of the seized papers were within the knowledge of the assessee or not. It has been observed that although it was not the requirement of law but it was an act of prudence on the part of the Income Tax Authority to show reasonableness and bona-fide. The Hon’ble Mr. Justice Biswaroop Chowdhury has also observed that it is not unusual that when a raid takes place in an establishment or house of an assessee, the assessee out of confusion and stress may I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 11 make many statements in haste in order to complete the interrogation process, however necessary verification should be made to ascertain the statements made by the assessee. Hon’ble Mr. Justice Biswaroop Chowdhury has further observed that it is also a question for consideration as to whether the Income Tax Authority acted correctly in putting question to assessee with regard to trial balance and other accounts/ papers seized from the establishment of assessee. His Lordship has further observed that it is a common practice that in a business establishment of a businessman, business accounts are prepared by accountant or chartered accountant and that it is the accountant who is having special knowledge and is entrusted with the preparation of accounts which are audited. Hence, it is the accountant or chartered accountant who is in a position to give statement regarding statement of accounts or trial balance. Hon’ble Justice Chowdhury has further observed that the businessman who has engaged accountant or chartered accountant cannot be said to have knowledge and cannot be expected to make statement on the preparation of accounts. That a businessman can admit his signature if it appears on any accounts or other documents and anything prepared in his own handwriting. That however, apart from his own handwriting, he cannot admit any document prepared by others. Observing so, Hon’ble Justice Chowdhury has concluded that the Income Tax Authority ought to have interrogated the Accountant of the establishment regarding documents seized and that on this account, there was an error on the part of the Assessing Officer. That this issue was not considered by the Tribunal and the matter was accordingly restored to the Tribunal for reconsideration. 6. At this stage, it is pertinent to observe here that the aforesaid order of the Hon’ble High Court had neither been communicated to the I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 12 Tribunal by the Registry of the Hon’ble High Court not by the assessee or the revenue. However, a letter dated 16.11.2023 was received from the revenue bringing to the notice of the Registrar of the Tribunal regarding the aforesaid order of the Hon’ble High Court. However, later on, the Registrar put a note that since no party had communicated the factum of filing of the appeal before the Hon’ble High Court, therefore, as per the office manual, the record of this appeal was weeded out. Thereafter, the directions were issued by the this Tribunal directing the parties to supply the necessary documents including assessment order, copy of ld. CIT(Appeals)’s order, Form no.35, Form No.36 and any other details, which the Department wished to rely upon, so that the appeal file may be reconstructed and the matter may be disposed of within a time bound period. Thereafter, the file was reconstructed. 6.1 The matter in this appeal came up for consideration on 01.02.2024 before the Coordinate Division Bench of the Tribunal constituting of Shri Sonjoy Sarma, Judicial Member and Shri Girish Agrawal, Accountant Member, whereupon, the following directions were passed: “Both the parties are present before this Tribunal. At the time of hearing, the ld. AR submitted before the bench that the instant appeals are remand back to the Tribunal in terms of the order passed by the Hon’ble Jurisdictional High Court, Calcutta vide order dated 19.10.2023 comprising Hon’ble Justice I.P. Mukherji and Hon’ble Justice Biswaroop Chowdhury by stating, contained in the relevant paragraph of the order “Now the question for consideration is whether the Income Tax Authority acted correctly in putting question to assessee with regard to Trial balance and other accounts papers seized from the establishment of assessee. It is a common practice that in a business establishment of a businessman business accounts are prepared by accountant or chartered accountant and the same are audited. The preparation of accounts requires special knowledge and skill. Thus it is the accountant or charactered accountant having special knowledge are entrusted with the preparation of accounts which are audited. Hence it is the accountant or I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 13 chartered accountant who are in a position to give statement regarding statement of accounts or Trial balance. The business man who has engaged accountant or chartered accountant cannot be said to have knowledge and cannot be expected to make statement on the preparation of accounts, which are prepared by Accountant or Chartered Accountant. A business man can admit his signature if it appears on any accounts or other documents and anything prepared in his own handwriting. Apart from his own handwriting he cannot admit any document prepared by others. Thus the Income Tax Authority ought to have interrogated the Accountant of the establishment regarding documents seized. Thus there was an error on the part of the Assessing Officer. This issue was not considered by the Learned Tribunal. Thus, this matter should be remitted to the Tribunal for reconsideration.” We after going through the above directions passed by the Hon’ble Jurisdictional High Court and after hearing the parties of the cases direct the ld. A.O to furnish a remand report before this Tribunal as directed by the High Court in its above referred order on or before 07.03.2024 by providing a copy of such report to the assessee and in the case of the assessee feels it necessary file any objection to such report furnished by the A.O. In that event, the assessee may file his objection on or before 12.03.2024 before the bench by providing a copy of the same to the ld. DR. Accordingly, registry is directed to refix the matter on 13.03.2024 for hearing of the cases. The registry is also directed to furnish a copy of the order to both the parties for their information.” 6.2 As per the directions of the Coordinate Bench of the Tribunal, a remand report was sent by the concerned Assessing Officer, ACIT, Circle-43, Kolkata to the ld. CIT-DR vide letter dated 18.03.2024, which has been further placed before the Bench by the CIT-DR vide his letter dated 19.03.2024. It has been mentioned by the Assessing Officer/ACIT, Circle-43, Kolkata in his letter dated 18.03.2024 that the assessment records of this case were not readily available with him (Assessing Officer) and that the report has been formed by way of restructuring the records. It has been further mentioned that the assessee, Mr. Ashok Kr. Poddar and his accountant Mr. Manish Agarwal were summoned u/s 131 of the Act and their statements were recorded under oath. The Assessing Officer thereafter along with the I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 14 said letter sent the remand report along with copies of the statements recorded under oath by him of the assessee as well as his accountant. The relevant/concluding part of the remand report of the Assessing Officer is reproduced as under: “Statement of Mr. Agarwal has been recorded under oath and he has also denied of the ownership of the documents under ID Marks PP/38 and as regards PP/37 and he asserted that the Trial Balance seized was not a document written by him and the document was not of a Mr. Poddar or his business either. Therefore, it is clear from the facts narrated above neither the assessee Mr. Poddar nor his accountant Mr. Manish Agarwal accepted the documents under ID Marks PP/37 & PP/38 anyway related to business. In respect of both the documents they have asserted that documents under ID marks PP/38 may have been left over in their office premises, by any person who used to visit their office and therefore, they categorically denied of any connection of the said documents (PP/38) with their business. While in respect of document under ID Mark PP/37, the Trial Balance is claimed to be a mock/dummy trial balance printed out of a new trial software running and devoid of any real data. Therefore, the observation of the Assessing Officer as apparent from order of assessment u/s. 158BC pertaining to impounded documents under ID Mark PP/37 & PP/38, is found to have been under challenge by the unqualified denial of the account Mr. Manish Agarwal and Mr. Ashok Kumar Poddar. However, the undersigned is duty bound to take any steps if it is required in future in pursuance of any direction of Hon'ble ITAT in this case.” 7. At this stage, it will also be relevant to reproduce query and the answer thereof, recorded in the statement of Shri Ashok Kumar Poddar (the assessee) on 27.02.2024 under oath, as under: “12) I'm showing you Xerox of documents bundle marked PP/37 which was inventoried and seized during the course of search on 19/12/1998. Please offer your comment on the same. I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 15 Ans. Sir, I submit that on the date of search, I was not in Calcutta. I had gone to Baijnath Dham to seek blessing of Lord Baba Baijyanath. On my return the search had concluded. I had clarified during the course of my assessment that the subject trial balances were an outcome of test data. We had decided to computerize our account department, and in the process data was imputed in a new to be tested software. The outcome was a failure and we dispensed with the adaptation of that software. 13) I'm showing you Xerox of documents bundle marked PP/38 which was inventoried and seized during the course of search on 19/12/1998. Please offer your comment on the same. Are the documents prepared and maintained by you or by your accountant? Ans. As I have stated in my reply to earlier question, I was out of Kolkata during the search and I do not remember from whom the documents were collected or from whom it was seized. I submit that I was a stock broker and during those time, clients were not given access to online trading. My clients used to visit my office for trading and giving delivery and taking delivery. Giving payments, delivery instruction and collecting cheques. At any point of time on a trading day around 100-150 clients & their staff visited my office and on trading holiday delivery work, settlements of accounts, bad delivery settlement, etc. were generally done. There was also movements of clients, their staff were involved. I can only say that the documents do not belong to me and the same is not in my handwriting. I am not aware about the content of the documents and the same do not relates to me in any manner whatsoever. 14) You have said that the documents are not in your handwriting. Ans. Yes Sir. The documents are not written by me.” 7.1 The relevant part of the statement of the accountant, Shri Manish Kumar Agarwal recorded under oath on 12.03.2024 is reproduced as under: “15. I'm showing you photocopy of documents under identification mark PP/37 which was inventoried and seized during the course of search conducted on 19/12/1998. The word \"run date is July, 1998 \" is written. Please state what is meant by the term 'run'. Please offer your comment on the same. Ans. Sir, you will find that the documents on the top right mentions the word 'run' this means the date on which the software was run and report I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 16 was generated. The report in question is a trial balance and relates to period 01-04-1997 to 31-03-1998. Sir, during my tenure in 1998, we were in the process of computerizing our accounting data and we had tested many software and accounting package. It may be that the same are test data of one such accounting software. However, due to my age and in view of the long time gap, I will not be able to explain much. 16. Being an accountant it is reasonable to hold that you made the trial balance for the period w.e.f. 01-04-1997 to 31-03-1998 and naturally it reflects the affairs of your business. Please make a comment on it. Ans. Sir, the trial balance was made based on sample dummy data. The software team of the vendor picked up ledger names from our regular trial and then entered various dummy trial data and then generated the report to show us how this software works. Thus, this data was purely imaginary and was merely used to prepare the trial in the new software and have nothing to do with our day to day business affairs. This fact is also apparent from the Trial balance where all the ledger have NIL opening balance, this itself shows that this account does not reflect the regular books of accounts otherwise there would have been opening balance entries in this Trial balance. Further you will observe that the name of the person whose trial balance is reflected shows XXXXXXXX. This also proves that this trial balance was merely a dummy data and not business data of the assessee. 17) I'm showing you photocopy of documents bearing identification mark PP/38 which was inventoried and seized during the course of search conducted on 19/12/1998. The documents under identification mark PP- 38 comprising page 19 (back), 20 & 21 relates to Ashok Kumar Poddar. This document reflects undisclosed profit amounting to Rs.2,55,76,576/-, Rs.4,27,48,989/- and Rs.10,46,00,105/- relevant to A.Y. 1995-96, 1996- 97 & 1997-98 respectively. What is your comment on it ? Ans. Sir, the same do not relates to me nor does it belong to Shri. Ashok Kumar Poddar or his transaction. On two pages where the total amount of Rs.4,27, 48,989/- and Rs.10,46,00,105/- is stated, I find that there is no mention of the name Shri Ashok Kumar Poddar or AKP therefore, there is no reason or basis to hold that this documents and the transaction mentioned therein belong to Ashok Kumar Poddar. Further the third document where the amount Rs.2,55,76,576/- is mentioned I find that the word AKP is scribbled on the top of the said sheet. However, the pen with which AKP İs written and the handwriting of the rest of the I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 17 document is written is absolutely different and therefore, this work AKP appear to be written at a later point of time. These documents do not belong to our organization and there is high chance that the document has been left behind by some other persons which is likely due to the fact that our stock broking concern had many clients who used to come to our office for trading and for other transactions like giving delivery of physical shares, taking delivery of physical shares, giving and receiving payments, delivery instructions, bad delivery, etc, may be some client or their staff may have forgotten the same in our office and at the time of search the same got seized by the department. 18) The documents under identification mark PP/38 comprising pages 19 (back) 20 & 21 are all hand written and the entries appear to represent the affairs of the business. You said earlier that you were the accountant and entrusted with the task of accounting. Therefore, the written entries on these pages 19(back) 20 & 21 are reasonably held to be connected with your business and written by you. Please offer your comment. Ans. Sir, I state that the handwriting on these pages do not belong to me and therefore, the assumption made in your question is not relevant. 19) In view of your reply to the above question I take it that you are denying the documents and the contents therein and asserting that these documents and transactions do not relate to Ashok Kumar Poddar. Please make your comment. Ans. Yes, I state that that the documents and the contents therein do not relate to Ashok Kumar Poddar.” 8. In the light of the aforesaid remand report as well as the statement recorded under oath of the assessee as well as of the accountant of the assessee, it is evident on the file that though the aforesaid alleged documents marked as PP/37 & PP/38 were found and seized from the premises of the assessee, however, the fact on the file is that on the date of search action, the assessee was not present in the premises that was searched. The alleged incriminating documents were seized in the absence of the assessee. None of the documents bear, the signatures of the Assessee or his accountant. I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 18 8.1 So far as the seized documents under ID mark PP/37 are concerned, it has been explained by the assessee that the trial balance written there in, was a dummy trial balance/test data which was outcome of the testing checking of the new accounting software. That the said data was not representing the actual accounts of the assessee. Even the accountant of the assessee has reiterated the aforementioned averments and there is no contradiction in the statement made by the assessee and that of his accountant. As held by the hon’ble High Court, in the words of hon’ble Mr. Justice I. P. Mukharjee, that once the assessing officer makes presumption that the said documents belong to the assessee and the contents are true, and the signatures, appearing their upon, are that of the assessee, then the onus squarely shifted on the asses to disprove those facts. In the case in hand, the assessee, in our view, has discharged the initial onus shifted upon him by explaining that the said documents P/37 was the generated while test checking the new accounting Software on test and run basis. The accountant of the assessee, who actually generated the said document, has duly explained in this respect. Even it has also been demonstrated that the entries mentioned in the said seized document do not establish any correlation whatsoever, with the actual accounts of the assessee. In our view, once it was explained by the assessee that the contents of the said document did not represent the actual accounts of the assessee nor they represented the unaccounted income of the assessee and even the assessing officer could not find any defect or infirmity in the said explanation nor could establish any correlation between the said seized data and the actual account of this assessee, the assessee, under the circumstances, in our view, has discharged the onus shifted upon him. 8.2 So far as the document P/38 is concerned, the said document does not bear the signatures either of the assessee or of his accountant. I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 19 Even the said document is not in the handwriting of the assessee or his accountant. The assessee as well as his accountant have denied that the said document belong to them. The Ld. A.R. of the assessee has submitted that the facts on the file, itself, speak that neither any asset nor any cash was recovered from the premises or possession of the assessee nor any such evidence was found which may show that the assessee had ever earned such income. That the said dumb document did not belong to assessee. It was also explained to the assessing officer that a number of clients visit the office of the assessee, who is a sharebroker, and that the said document might have been left in the office of the assessee by some client. Admittedly, no evidence of any holding, asset, valuable property or cash in the possession of the assessee had been found during search action or even during post survey investigations. 8.3 Now coming to the presumption under section 292C of the Act, the provisions of the said section for the sake of convenience are reproduced as under: “(1) 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 under section 132 or survey under section 133A, it may, in any proceeding under this Act, 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 executed or attested by the person by whom it purports to have been so executed or attested.” I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 20 8.4. A perusal of the above provisions shows that section 292C states that where any books of accounts, other documents etc. are found in possession or control of any person in the course of search action under section 132 or survey action under 133A; it may be presumed that such books of account, other documents etc. belong to such person and that the contents of such books of account and other documents are true. 8.5. We find that the wording of the section 292C which supposes the presumption to be taken is qualified with the words ‘may be’, hence, it may or may not be presumed that such documents belong to the person searched. Firstly, the section uses the word ‘may presume’ and not ‘shall presume’, hence the presumption of facts under section 292C is not a mandatory or compulsory presumption, but, a discretionary presumption; secondly, such a presumption is not a conclusive presumption but is a rebuttable presumption because it is a presumption of fact not a presumption of law. Under the circumstances, it is to be examined by the competent authorities as to whether the presumption under the section is attracted owing to the nature of the documents and the contents of such documents found during search/survey action. Such a presumption, thus, is not an absolute or conclusive presumption, but, it has to be taken in the light of any corroborative, correlating or circumstantial evidence found during the search or survey action. It has been held time and again by various courts of law that where, the Revenue Authorities are vested with any discretionary power, the same is to be exercised judicially. 8.6. In the case in hand, there was no question of any presumption regarding the signatures as there weren’t any signatures on the side document. The assessee as well as his accountant had also stated that I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 21 the same was not in handwriting of any of them. Once the assessee and his accountant had stated that the said document was not in their handwriting, the onus shifted upon the assessing officer to correlate or compare the writing on the said document with the handwriting of the assessee and to point out if the same match with each other. Admittedly, the assessing officer did not mention in his report that the handwriting on the said document matched with the handwriting of the assessee or of his accountant. Under the circumstances, there is no mechanism with which the assessee may prove the negative to the effect that the handwriting on the seized document did not belong to him. 8.7. Now coming to the presumption that the said document belong to the assessee as it was found from his premises , we have to examine as to what should be the degree and evidence to be produced by the assessee to rebut such presumption. The assessee in this case has denied any knowledge or link or connectivity with the said document or the contents of the said document. Now under such circumstances, the question is that, how an assessee or the person searched can prove that the said document does not belong to him or that he has no connectivity with such a document, when, he, himself, is not aware of any of the contents/transactions or persons named therein. He, under such circumstances, is left with no alternative then to specifically deny the said document and to show from his accounts, books, other evidences and business documents and from all other material gathered during the search action that he has no concern or relation with the said document or that any evidence found in his premises or possession is not suggestive of any link of him or any person or employee related to him with the alleged document/loose paper found during the search/survey action. The AO may also call upon or make enquiries I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 22 whether such a relation of the assessee can be established with any of the transactions mentioned in such document; which course has, in fact, been adopted by the AO in this case even during the remand proceedings, but he could not find any evidence or of any relation of the assessee with the transactions mentioned in the seized document. The assessee is not supposed to prove the negative when under the circumstances, it seems impossible to do so. The assessee in this case, has, from the very beginning, denied his link or relation with the said seized document or with any of the transaction made therein. As observed above, no corroborative, correlating or circumstantial evidence has been found either during the search action or during the post search investigations, which may make a connection with the accounts or other details or assets of the assessee with the transactions mentioned in the seized document. Hence the nature of document seized does not point any strong/reliable and standalone presumption under section 292C of the Act against the assessee. It has been held time and again that a sole and bald presumption, without any correlating or corroborating evidence, is not sufficient for making the additions. 8.9. In the case in hand, the assessing officer has made the presumption on the basis that the on the said document word “AKP” has been written, which denotes the name of the assessee ‘Ashok Kumar Poddar’. However, when confronted in this respect, the accountant of the assessee has stated before the assessing officer that out of the three documents containing the impugned entries, there was not any such mention of words “AKP” on the two documents. On the third document, which contained the entry of ₹25576576/-, the word AKP was scribbled on the top of the said sheet, however, the pen with which AKP was written and the handwriting of the rest of the document I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 23 was absolutely different and therefore it was apparent that the word ‘AKP’ was written on the said document at a later point of time. It was also explained that the said document did not belong to the assess organisation at all. The assessee and his accountant having explained the above, and considering the fact that the said document did not bear the signatures of the assessee or of his accountant, the same was even not in handwriting of either of them and further figures mentioned in the document could not be correlated with any of the documents or accounts of the assessee to show that the said figures represent the uncounted income of the assessee and the assessee having further explained that many clients visit his office and the document might have been left by any of his clients, in our view, the assessee has duly discharged the onus shifted upon him in respect of the said document also. Even the assessing officer in his remand report and even during the cross examination of the assessee and his accountant could not establish the link of the assessee with the said documents. Under such circumstances, the additions in this case solely on the basis of presumption under section 292C, which stands rebutted by the assessee as discussed above, cannot be held to be justified. The Hon’ble Allahabad High Court in the case of “CIT vs. Babu Mohanlal Arya Smarak Educational Trust” (2014) 42 taxman.com 255 (Allahabad) has observed that where in a case no evidence of actual receipt of own money/capitation was found during the search action, no incriminating evidence or corroborative evidence was found; The presumption under section 292C stands rebutted by denial of the assessee under such circumstances. The Hon’ble Delhi High Court in the case of “Principal Commissioner of Income Tax vs. Delco India Pvt. Ltd.” (2016) 67 taxman.com 357 (Del.) has observed that where the assessee had clearly denied having any dealing with the concern I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 24 mentioned in the loose papers found and has also produced all necessary details before AO to make necessary enquiries in this respect and the AO has made such enquiries, then, under such circumstances, such presumption stands rebutted. The Kolkata Bench of the Tribunal in the case of “Nirmal Fashions Pvt. Ltd. vs. DCIT” (2008) 25 SOT 387 (Kol.) has held that section 292C is a presumptive provision but same is a rebuttable presumption and the document found during the search action has to be considered, considering the totality of the facts of the case. The deeming provision cannot be applied mechanically ignoring the facts of the case and the surrounding circumstances of the facts are to be considered before the drawing and inference of undisclosed income on the basis of loose papers. Where the Revenue has searched the business premises as well as residential premises of the firm/partners and not a single evidence of purchase or sale outside the books of account was found, and, under the circumstances, it seems impossible to carry on business on a huge scale outside the books unless there is some unrecorded stock, cash, debtors etc.; when no significant asset outside the books or no evidence of ostensible expenditure is found outside the books, under such circumstances, additions made on the basis of loose papers by making certain presumptions, which were found to be untenable or contrary to other evidence on record, cannot be held to be justified and deserved to be deleted. The co-ordinate Nagpur bench of the Tribunal in the case of “ACIT vs. Buldana Urban Co-operative Credit Society Ltd.” (2013) 153 TTJ (Nag) 728 in somewhat similar circumstances has observed that presumption given under section 292C is not conclusive but is rebuttable. The assessee, since, in the beginning has denied that the loose papers found to be belonged to him and the same were not in the handwriting of any of the employees; there being no corroborative I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 25 evidence available on record of found during the course of search which may prove wrong the contention of the assessee that the said paper does not belong to him and the assessee offers a plausible explanation regarding the recovery of such a document in his premises, then under the circumstances the additions in the absence of any corroborative evidence cannot be held to be justified. The Lucknow bench of the Tribunal in the case of “Satnam Singh Chhabra vs. DCIT” (2002) 74 TTJ 976 (Lucknow) has held that the uncorroborated loose papers found during search action cannot be taken as a sole basis for the determination of undisclosed income. The circumstantial evidences in the case in hand, such as there being no soft copy/data available in the computer systems of the assessee in relation to the alleged document or correlating any transaction as mentioned in the said document; no recovery of any valuable asset, bullion money or jewellery or any other evidence of any investment at the premises of the assessee; no discovery of any incriminating evidence despite thorough investigations of the books of account, bank accounts and other evidences during the search action and post search investigations and during the assessment proceeding constitute good rebuttal to the initial presumption u/s 292C in this case. 9. In view of the above, discussion, we do not find any infirmity in the order of the CIT(A) in deleting the impugned additions. The order of the Ld. CIT(A) is upheld. Appeal of the revenue stands dismissed. 10. In the result, the appeal of the assessee IT(SS) No.26/Kol/2005 is dismissed as infructuous having been restored by the Registry under misimpression. The dismissal of the aforesaid appeal will not, in any I.T.(SS)A. No.26 & 32/Kol/2005 Block Assessment Year: 01.04.88 to 19.12.98 Ashok Kumar Poddar 26 way, effect any findings of the Tribunal given in assessee’s appeal vide order dated 18.01.08 and the same will remain as such and binding upon the parties without any disturbance or modification. However, in view of the discussion made above, the appeal of the revenue stands dismissed. Kolkata, the 21st October, 2024. Sd/- Sd/- [डॉ᭍टरमनीष बोरड /Dr. Manish Borad] [संजय गगᭅ/Sanjay Garg] लेखा सद᭭य /Accountant Member ᭠याियक सद᭭य/Judicial Member Dated: 21 .10..2024. Rs. Copy of the order forwarded to: 1. Ashok Kumar Poddar 2. DCIT, CC-XXIII, Kolkata 3.CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches 1. "