DCIT, C.C.XIX, Kolkata V. Shri Rajesh Kr. Kankaria, Kolkata

ITA 70/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2543 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 16-01-2009
• Court: TRIBUNAL
• Department Lawyers: NEERAJ SINGH
• Assessee Lawyers: J P KHAITAN
• Keywords: Income from undisclosed sources; Document seized; Principle of natural justice; Retrospective amendment; Documents seized
• Section: 142(1); 133A; 132

Judgement Text

1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL, BE NCH C, KOLKATA () BEFORE . . . . . . . . , , , , , SHRI D.K.TYAGI, JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. .! !! ! , # C.D. RAO, ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO . 70 (KOL) OF 2009 %&' !() / ASSESSMENT YEAR : 2002-03 (+, / APPELLANT ) THE DCIT, CC-XIX, KOLKATA - !& - - VERSUS -. (.+,/ RESPONDENT ) SHRI RAJESH KR. KANKARIA, KOLKATA (PAN: AFSPK 9586L) +, / 0 / FOR THE APPELLANT: / SHRI NEERAJ SINGH .+, / 0 / FOR THE RESPONDENT : / SHRI J.P.KHAITAN 1 / ORDER ( . .. . . .. .! !! ! ) # PER SHRI C.D.RAO, A.M . THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE C.I.T.(A), CENTRAL-II, KOLKATA DATED 31.10.2008 FOR THE ASSESS MENT YEAR 2002-03. 2. THE ONLY EFFECTIVE ISSUE RAISED BY THE REVENUE I N THIS APPEAL IS RELATING TO THE DELETION OF ADDITION OF RS.41,51,054/- MADE BY THE AO ON THE BASIS OF SEIZED DOCUMENTS RK-8 UNDER THE PROVISIONS OF SECTION 292C OF THE I.T.ACT. 3. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE I S A PRACTICING CHARTERED ACCOUNTANT AND ALSO A DIRECTOR IN A COMPANY NAMED R ICHFIELD FINANCIAL SERVICES LTD. IN HIS PROFESSIONAL CAPACITY. THE ASSESSEE ALSO ALL OWED THE COMPANY TO USE THE PORTION OF HIS OFFICE AS A CHARTERED ACCOUNTANT AT 33, BRAB OURNE ROAD, 5 TH FLOOR, KOLKATA 700 001 AS ITS REGISTERED OFFICE. A SEARCH AND SEIZ URE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT CD-73, SALT LAKE. A SURVEY OPERATION WAS ALSO CARRIED OUT IN THE OFFICE PREMISES OF THE ASSESSEE AT 33, BRABOURNE ROAD, 5 TH FLOOR, KOLKATA 700 001 ON THE BASIS OF NOTICE UNDER SECT ION 133A ISSUED IN THE NAME OF RICHFIELD FINANCIAL SERVICES LTD. IN RESPONSE TO NO TICE UNDER SECTION 153A, THE 2 ASSESSEE FILED THE RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION DECLARING THE TOTAL INCOME AT RS.1,50,929/-. THEREAFTER, NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED. IN RESPONSE TO THESE NOTICES, THE ASSESSEE HIMSELF APPEARED AND FILED THE DETAILS AS SOUGHT FOR. IN THE COURSE OF THE SEARCH AND SEIZ URE OPERATIONS, THE BOOKS/DOCUMENTS AND PAPERS MARKED AS RK/1 TO RK/25 WERE SEIZED FROM THE ASSESSEES PREMISES. DURING THE COURSE OF INQUIRY BEFORE ASSESSMENT, THE ASSESSEE FURNISHED PAGE-WISE SUBMISSIONS WHICH WERE EXAMINED ALONG WITH OTHER DE TAILS. DURING THE COURSE OF INQUIRY BEFORE ASSESSMENT, THE AO OBSERVED FROM THE SEIZED DOCUMENT THAT PAGE-3 OF RK/8 CONTAINED VARIOUS TRANSACTIONS OF RECEIPTS AND PAYMENTS UNDER THE NAME AND STYLE OF A/C BGT.ANOTHER ACRONYM BPRL IS OFTEN FOUND APPEARING AGAINST SEVERAL TRANSACTIONS. THIS ACCOUNT SHOWED TOTAL REC EIPTS OF RS.71,35,235/- INCLUDING INTEREST OF RS.1,87,704/- WHICH INCLUDED MANY CASH TRANSACTIONS. THE ASSESSEE WAS ASKED TO GIVE FULL DETAILS OF THE ACRONYMS BGT AN D BPRL INCLUDING THE NATURE AND SOURCE OF THE TRANSACTIONS. BUT IN REPLY, THE A SSESSEE HAS DENIED THESE TRANSACTIONS AS HIS OWN. THE TRANSACTIONS ARE BOTH IN CASH AND C HEQUE. THE ASSESSEE ALSO REPLIED THAT HE IS IN NO POSITION TO RECALL ANYTHING WHICH CAN EXPLAIN THESE TRANSACTIONS, INCLUDING THE NAMES OF THE ENTRIES RECORDED AS ACRO NYM AGAINST EACH OF THE RECEIPTS AND PAYMENTS TRANSACTIONS. THE AO OPINED THAT THE M EMORY LOSS WAS DELIBERATE. THE TRANSACTIONS APPEAR TO HAVE BEEN CARRIED OUT VERY S YSTEMATICALLY. THERE IS A PRESUMPTION UNDER SECTION 292C OF THE ACT THAT THE DOCUMENT FOUND IN THE POSSESSION OF THE ASSESSEE MAY BE TREATED AS BELONGING TO THE ASSESSEE. BEING DISSATISFIED WITH THE REPLY OF THE ASSESSEE AND BASED ON THE PRESUMPTION UNDER PROVISIONS OF SECTION 292C, THE AO TOOK THE HIGHEST PEAK TO BE OF RS.37,63,350/ - AND ADDED TO THE INCOME OF THE ASSESSEE ALONG WITH INTEREST OF RS.1,87,704/-. THE AO ALSO ADDED RS.2,00,000/- ON ACCOUNT OF NEGATIVE PEAK TO BE INCOME OF THE ASSESS EE. THUS, THE AO ADDED THE AGGREGATE SUM OF RS.41,51,054/- TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. 4. ON APPEAL, THE LD. CIT(A), AFTER TAKING INTO CON SIDERATION THE SUBMISSIONS OF THE ASSESSEE AND ALSO THE FACTS OF THE CASE, HAS DE LETED THE ADDITION OF RS.41,51,054/- MADE BY THE AO BY OBSERVING AS UNDER: 3 7. THE SUBMISSIONS ARE CAREFULLY CONSIDERED. AS FAR THE CLAIM THAT THE SEIZED PAPERS ON THE BASIS OF WHICH THE PRESENT DIS PUTED ADDITION IS MADE WAS FOUND DURING THE SURVEY OF THE OFFICE PREMISES OF T HE COMPANY IN WHICH THE APPELLANT IS A DIRECTOR IN HIS PROFESSIONAL CAPACIT Y IS CONCERNED, THE ARGUMENT NO LONGER REMAINS RELEVANT IN THE LIGHT OF AMENDMEN T IN THE LANGUAGE SECTION 292C BY WHICH THE PRESUMPTION UNDER THAT PROVISION IS PERMISSIBLE IN THE CASE OF DOCUMENTS ETC. FOUND DURING THE SEARCH U/S. 132 AS WELL AS SURVEY U/S. 133A. IT IS SEEN THAT THE AMENDMENT IS WITH RETROSPECTIVE EFFECT FROM 01.06.2002. SECONDLY, THE ARGUMENTS THAT THE APPELLANT WAS DENI ED NATURAL JUSTICE SINCE THE APPELLANT SHOULD HAVE BEEN ALLOWED TO BRING THE WIT NESSES IN THE PANCHNAMA AS WITNESSES TO THE CLAIM THAT DOCUMENTS AND PAPERS FO UND DURING THE SEARCH AT THE BUSINESS PREMISES WERE BROUGHT AT THE RESIDENCE WHERE THE SEARCH WAS CONTINUING FOR THE PURPOSE OF COMMON PANCHNAMA, DOE S NOT REQUIRE ANY CONSIDERATION AT THIS STAGE. 7.1. THE ONLY POINT IS WHETHER THE PRESUMPTION U/S. 292C SHALL BE TREATED AS MANDATORY UNDER THE LAW OR WHETHER IT SHALL BE TREA TED AS A REBUTTABLE PRESUMPTION AND WHETHER, EVEN MANDATORY PRESUMPTION ABOUT THE DOCUMENTS AS BELONGING TO THE APPELLANT HAS THE CONCLUSIVE CO NSEQUENCE OF MAKING THE ADDITION IN THE MANNER IN WHICH THE ASSESSMENT ORDE R HAS DONE IT PAGE 3 IS AN ACCOUNT OF BGT/BPRL, CLIENTS OF SHRI KANKARIA FO R THE MONTH OF FEBRUARY, 2002. THE ACCOUNT GIVES A TOTAL RECEIPTS OF RS. 71, 35,235/- (INCLUSIVE OF INTEREST OF RS.22,415/-) IN THE HANDS OF BGT AND BP RL, WHICH INCLUDES MANY CASH TRANSACTIONS. PLEASE EXPLAIN THE PAPER ALONG W ITH EVIDENCE. ALSO GIVE FULL NAME, ADDRESS AND PAN OF THESE CLIENTS, FAILING WHI CH IT WILL BE PRESUMED THAT THE ENTIRE RECEIPTS ALONG WITH INTEREST BELONG TO Y OU ONLY. (PAGE 48 AT 54 OF THE PAPER BOOK, VOL. 1). IN THIS CONTEXT THE FOLLOW ING OBSERVATIONS OF THE APEX COURT IN THE CASE OF P.R. METRANI VS. CIT (287 ITR 209, 220 ABOUT THREE TYPES OF PRESUMPTIONS UNDER THE LAW ARE RELEVANT A PRESU MPTION IS AN INFERENCE OF FACT DRAWN FROM OTHER KNOWN OR PROVED FACTS. IT IS A RULE OF LAW UNDER WHICH COURTS ARE AUTHORIZED TO DRAW A PARTICULAR INFERENC E FROM A PARTICULAR FACT. IT IS OF THREE TYPES, (I) MAY PRESUME, (II) SHALL PRES UME AND (III) CONCLUSIVE PROOF. MAY PRESUME LEAVES IT TO THE DISCRETION O F THE COURT TO MAKE THE PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF THE C ASE. SHALL PRESUME LEAVES NO OPTION WITH THE COURT NOT TO MAKE THE PRE SUMPTION. THE COURT IS BOUND TO TAKE THE FACT AS PROVED UNTIL EVIDENCE IS GIVEN TO DISPROVE IT. IN THIS SENSE SUCH PRESUMPTION IS ALSO REBUTTABLE. CONCLUS IVE PROOF GIVES AN ARTIFICIAL PROBATIVE EFFECT BY THE LAW TO CERTAIN F ACTS. NO EVIDENCE IS ALLOWED TO BE PRODUCED WITH A VIEW TO COMBATING THAT EFFECT. I N THIS SENSE, THIS IS AN IRREBUTTABLE PRESUMPTION. THE WORDS IN SUB-SECTION (4A) ARE MAY BE PRESUMED . THE PRESUMPTION UNDER SUB-SECTION (4A), THEREFORE, IS A REBUTTABLE PRESUM PTION. AS A MATTER OF FACT THIS IS THE JUDGEMENT WHICH MAD E THE INTRODUCTION OF SECTION 292C WITH RETROSPECTIVE EFFECT NECESSARY AS A MATTE R OF CLARIFICATION. 4 NEVERTHELESS, THE LIMITED CONCLUSION IS THAT THE LA NGUAGE OF SECTION 132(4A) AND OF SECTION 292C USE THE COMMON EXPRESSION MAY BE PRESUMED. CONSEQUENTLY THE OPINION OF THE HONBLE SUPREME COU RT ABOUT THE PRESUMPTION BEING A REBUTTABLE PRESUMPTION IN THE LIGHT OF SUCH EXPRESSION IS APPLICABLE TO SECTION 292C AS WELL. 7.2 WE HAVE TO CONSIDER WHAT PRESUMPTION IS PERMITT ED IN RESPECT OF THE SEIZED DOCUMENTS UNDER CONSIDERATION. THE SEIZED DO CUMENTS ARE SEEN. IT RECORDS TRANSACTIONS OF RECEIPTS AND PAYMENTS BOTH IN CASH AND BY CHEQUE. THE NAMES OF THE RELATED PARTIES ARE STATED IN ACRONYMS AS BPRL/MUKESH AND BGT/MUKESH. THE DATES ARE GIVEN IN RESPECT OF EACH TRANSACTIONS. THEREFORE, THERE CAN BE NO DISPUTE ABOUT THE FACT THAT THEY TO OK PLACE IN THE FINANCIAL YEAR 2001-02. THE PAPER DOES NOT REFER TO THE APPELLANT AND THERE IS NO WAY IN WHICH THE EXPRESSIONS ABOUT THE PARTIES IN THE DOCU MENTS CAN BE RELATED TO THE APPELLANT. UNDER THE CIRCUMSTANCES THE ASSESSING OF FICER MADE THE FOLLOWING OBSERVATIONS. THE ASSESSEE HAS DELIBERATELY OMITTE D TO GIVE THE DETAILS OF VARIOUS ACRONYMS WRITTEN AGAINST EACH OF THE RECEIP T-PAYMENT TRANSACTIONS. THE ASSESSEES ACTION PUTS HINDRANCE TO ANY FURTHER INVESTIGATION THAT COULD HAVE BEEN TAKEN UP BY THE DEPARTMENT OF THE MATTER. THE VERY FACT THAT THE DOCUMENT WAS RECOVERED FROM THE CONTROL AND POSSESS ION OF THE ASSESSEE ALSO GOES TO PROVE THAT THE TRANSACTIONS CONTAINED THERE IN BELONG TO THE ASSESSEE WITHIN THE MEANING OF PROVISIONS OF SECTION 292C. P RESSURE OF WORK, FORGETFULNESS, SHORT MEMORY RECALL, ETC. ARE ONLY A LIBI IN ORDER TO DERAIL INVESTIGATION ON THE MATTER BY THE INVESTIGATING/AS SESSING AUTHORITY. THE ASSESSING OFFICER ARRIVED AT THE ABOVE CONCLUSION A FTER ISSUE OF THE NOTICE IN WHICH IT WAS STATED THAT THE APPELLANT MUST GIVE DE TAILS OF THE NAMES AND ADDRESSEES AND PAN OF THE PERSONS TO WHOM THE TRANS ACTIONS RECORDED ON PAGE NO. 3 OF RK/8 RELATE, AND THAT THE FAILURE OF THE A PPELLANT WOULD RESULT IN ACTION ON THE PRESUMPTION THAT THE ENTIRE RECEIPTS ALONG W ITH INTEREST BELONGED TO THE APPELLANT. 7.3 THE PRESUMPTIONS U/S. 292C ARE THAT THE DOCUMEN T BELONGS TO THE PERSONS FROM WHOSE POSSESSION AND CONTROL IT WAS FOUND. THE SECOND PRESUMPTION IS THAT THE CONTENTS OF SUCH DOCUMENTS ARE TRUE. THE T HIRD PRESUMPTION IS THAT THE SIGNATURE AND HANDWRITING SHALL BE TAKEN TO BE THAT OF THE PERSON FROM WHOM THE DOCUMENTS WERE FOUND. SINCE THE DOCUMENTS ARE A COMPUTER PRINT OUT, REFERENCE TO PRESUMPTION ABOUT THE SIGNATURE AND HA NDWRITING IS NOT RELEVANT. HOW TO DEAL WITH THE DOCUMENTS WITH THE FIRST TWO P RESUMPTIONS? THE DOCUMENTS BELONG TO THE APPELLANT. THE CONTENTS ARE ALSO TRUE. THE DISPUTE IS : WHAT ARE THE CONTENTS? IS IT PERMISSIBLE TO DRAW TH E INFERENCE AGAINST THE APPELLANT ON HIS FAILURE TO EXPLAIN THE CONTENTS OF THE DOCUMENTS AFTER PRESUMING THAT THE CONTENTS ARE CORRECT? THIS QUEST ION IS OUTSIDE THE REBUTTABLE PRESUMPTION MADE UNDER SECTION 292C. THE LEGAL PRES UMPTION DOES NOT PERMIT THE INFERENCE THAT BPRL/MUKESH OR BGT/MUKESH IS NON E OTHER THAN THE APPELLANT OR HIS REPRESENTATIVES. THE SEARCH ACTION AT THE RESIDENCE OF THE APPELLANT AND THE SURVEY AT THE OFFICE PREMISES HAV E NOT YIELDED ANY MATERIAL 5 WHICH MIGHT JUSTIFY SUCH INFERENCE. IT IS NOT LEGAL LY CORRECT TO HOLD THAT AN ADVERSE INFERENCE AGAINST THE APPELLANT IS PERMISSI BLE UNLESS THE APPELLANT EXPLAINED THE CONTENTS OF THE DOCUMENTS. IT IS AN O LD DOCUMENTS AND WAS FOUND IN THE PILE OF PAPERS, 411 PAGES OF WHICH WERE SEIZ ED. IN MY OPINION THE APPELLANT WAS JUSTIFIED IN STATING THAT HE IS NOT I N A POSITION TO EXPLAIN THE CONTENTS OF THE ONLY PAGE ABOUT WHICH THE DISPUTE H AS ARISEN. IT IS SO, IN MY OPINION, EVEN AFTER PRESUMPTION APPLIED TO THE FACT S UNDER SECTION 292C, THERE WAS NOT ADEQUATE MATERIAL TO CONCLUDE THAT THE TRAN SACTIONS IN THE SEIZED DOCUMENTS ARE THE TRANSACTIONS OF THE APPELLANT WHI CH REMAINED UNDISCLOSED. THE OTHER ASPECTS OF THE MATTER IS THAT THE PRESUMP TION UNDER SECTION 292C ARE REBUTTABLE PRESUMPTION AND THEY DONT LEAD TO CONCL USIVE EVIDENCE. THE APPELLANT, UNDER THE PRINCIPLES OF NATURAL JUSTICE, HAS THE RIGHT TO REBUT THE PRESUMPTION. UNDER THAT RIGHT ALSO HE IS ENTITLED T O STATE THAT THE TRANSACTIONS BELONGING TO HIM ARE NOT RECORDED UNDER THE ACRONYM S BPRL/MUKESH OR BGT/MUKESH. IN MY OPINION THE INFORMATION ABOUT THE UNDISCLOSED INCOME OF THE APPELLANT IS BASED ON INADEQUATE OR IRRELEVANT MATERIAL. UNDER THE CIRCUMSTANCES THE GROUNDS OF APPEAL ARE ALLOWED AND THE APPEAL IS ALLOWED. 5. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, THE LD. DR POI NTED OUT THAT THE OBSERVATIONS MADE BY THE AO IN THE ASSESSMENT ORDER HAVE BEEN IG NORED BY THE LD. CIT(A) AND BASED ON THE SUBMISSIONS OF THE ASSESSEE, HE HAS GI VEN RELIEF TO THE ASSESSEE WHICH IS NOT JUSTIFIABLE IN THE FACTS AND CIRCUMSTANCES OF T HE CASE. THE LD. DR ALSO SUBMITTED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.41,54,054/- MADE ON THE BASIS OF SEIZED DOCUMENTS RK-8, WHICH WAS SEIZED FROM THE POSSESSION OF THE ASSESSEE IN THE COURSE OF SEARCH & SEIZURE OPERATION. THEREFORE , HE REQUESTED TO SET ASIDE THE ORDERS OF THE LD. CIT(A) AND RESTORE THAT OF THE AO . 7. ON THE OTHER HAND, THE LD. COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, HAS RELIED ON THE ORDERS OF THE LD. CIT(A) AND FURTHER POINTED OUT THAT THE ASSESSEE HAD NO KNOWLEDGE ABOUT THE ENTRIES RECORDED IN THE SEIZED PAPER RK-8 OR ABOUT THE TRANSACTIONS. THE ASSESSEE FILED A SWORN AFFIDAVIT DATED 26.11.07 STATING THAT THE DOCUMENT IS A COMPUTER GENERATED SHEET WITH FIGURES INDICATING WORKING OF INTEREST INVOLVED IN NON-DESCRIPT CASH TRANSFERS AND THE DAT ES IN THE TRANSACTION SHOW THAT THEY OCCURRED IN THE FIRST QUARTER OF CALENDAR YEAR 2002 FOR WHICH THE ASSESSEE WAS UNABLE TO RECALL ANY EXPLANATION AS THESE TRANSACTIONS ARE RELATED TO THE PERIOD OF ABOUT FIVE YEARS BACK. THE LD. COUNSEL ALSO SUBMITTED THAT O N ACCOUNT OF SEARCH ACTION AT THE 6 RESIDENCE OF THE ASSESSEE, THE ASSESSEE REMAINED AT THE RESIDENCE FROM THE MORNING OF 12-01-2006 TILL EARLY MORNING OF THE NEXT DAY. THE LD. COUNSEL STATED THAT THE OFFICIALS CONDUCTING SURVEY AT THE OFFICE PREMISES BROUGHT BU NDLES OF DOCUMENTS, NOTE PADS, LOOSE SHEETS ALLEGEDLY FOUND AT THE OFFICE IN THE E VENING OF 12-01-2006 FOR OBTAINING EXPLANATION IN RESPECT OF THOSE PAPERS, WHICH WERE GROUPED AND IDENTIFIED AS RK/1 TO RK/24 UNDER THE PANCHNAMA DRAWN AT THE ASSESSEES R ESIDENCE. THE PANCHNAMA DRAWN AT THE ASSESSEES RESIDENCE DOES NOT CORRECTLY RECO RD THE PLACE FROM WHICH SEIZED DOCUMENTS WERE FOUND. THE LD. COUNSEL AGAIN SUBMIT TED THAT THE SURVEY PARTY BROUGHT WITH THEM THE CPU OF THE OFFICE COMPUTER AN D THIS WAS SEALED AT THE RESIDENCE AND SEIZED UNDER THE PANCHNAMA DRAWN AT T HE RESIDENCE. THE LOOSE SHEETS PAGE NO.3 OF RK/8 WHICH IS THE BASIS FOR DETERMINAT ION OF UNDISCLOSED INCOME WAS ALLEGEDLY BROUGHT FROM THE OFFICE PREMISES OF THE A SSESSEE IN THE MANNER MENTIONED ABOVE. IT WAS NOT FOUND FROM THE RESIDENCE OF THE A SSESSEE. MOREOVER, THE CONTENTS OF THE PAPER WERE NOT CORROBORATED BY ANY ENTRIES IN T HE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE DENIED ANY CONNECTION WITH THIS PAPER. THE LD. COUNSEL FURTHER SUBMITTED THAT IN THE ASSESSMENT ORDER, THE AO MENT IONED THAT THIS PAPER WAS FOUND FROM HIS RESIDENCE IS FACTUALLY INCORRECT AND THE A SSESSEES REQUEST FOR EXAMINATION OF WITNESSES TO THE PANCHNAMA WAS REJECTED. HENCE, THE LD. COUNSEL SUBMITTED THAT IF THE PAPER WAS NOT FOUND FROM THE RESIDENCE OF THE ASSES SEE, THE PRESUMPTION UNDER SECTION 292C IN RESPECT OF THIS PAPER HAVE NO BASIS AT ALL AND IT IS ILLEGAL. THERE ARE SURROUNDING CIRCUMSTANCES INDICATING THAT THE PAPER WAS BROUGHT FROM THE OFFICE PREMISES TO THE RESIDENCE. MOREOVER, THE ASSESSEE W AS DENIED NATURAL JUSTICE WHEN HIS REQUEST FOR EXAMINATION OF THE WITNESSES WAS REJECT ED. THIS IS VERY IMPORTANT SINCE THE PRESUMPTION UNDER SECTION 292C IS PERMITTED ONLY IN RESPECT OF THE DOCUMENTS IN POSSESSION OR CONTROL OF THE ASSESSEE. IN THIS CA SE, THE PAPER WAS NOT SEIZED FROM THE ASSESSEES CONTROL AND POSSESSION. MOREOVER, SUCH P RESUMPTION IS NOT MANDATORY. CONSEQUENTLY, THIS IS REBUTTABLE PRESUMPTION. THE L D. COUNSEL ALSO RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE C ASE OF ITO VS- T. ABDUL MAJEED REPORTED IN 169 ITR 440. THEREFORE, ON THE BASIS O F SUCH PRESUMPTION, THE ADDITION OF RS.41,51,054/- IS NOT JUSTIFIED. HENCE, HE REQUESTE D TO UPHOLD THE ORDER OF THE LD. CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 7 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT THE LD. CI T(A), AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE LD. COUNSEL AND THE FACTS OF THE CASE, HAS GIVEN AN ELABORATIVE FINDING, WHILE DELETING THE ADDITION MADE BY THE AO . IT IS ALSO OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE CONTENTS OF THE DOCUMENT WHICH IS AN OLD DOCUMENT AND WAS FOUND IN THE PILE OF PAPERS, 411 P AGES OF WHICH WERE SEIZED. IN OUR OPINION, THE ASSESSEE WAS NOT WRONG IN STATING THAT HE IS NOT IN A POSITION TO EXPLAIN THE CONTENTS OF THE ONLY ONE PAGE ABOUT WHICH THE DISPU TE HAS ARISEN AFTER ABOUT FIVE YEARS. IT IS FURTHER OBSERVED THAT THE AO ARRIVED AT THE C ONCLUSION AFTER ISSUING OF THE NOTICE UNDER SECTION 142(1) WHEREIN IT WAS STATED THAT THE ASSESSEE MUST GIVE DETAILS OF THE NAMES AND ADDRESSEES AND PAN OF THE PERSONS TO WHOM THE TRANSACTIONS RECORDED AT PAGE NO.3 OF RK/8 RELATE, AND THAT THE FAILURE OF T HE ASSESSEE WOULD RESULT IN ACTION ON THE PRESUMPTION THAT THE ENTIRE RECEIPTS ALONG WITH INTEREST BELONGED TO THE ASSESSEE. THUS, THE AO ACTED WITH THE PRESUMPTION ABOUT WHICH THE ASSESSEE HAS BEEN WARNED IN THE NOTICE UNDER SECTION 142(1). IN THIS CONTEXT, T HE LD. COUNSEL SUBMITTED THAT SUCH PRESUMPTION IS NOT MANDATORY BUT OF REBUTTABLE NATU RE. THE LD. COUNSEL REBUTTED THE AOS OBSERVATION BY STATING THAT THE PAPER WAS NOT SEIZED FROM THE ASSESSEES CONTROL AND POSSESSION DURING THE COURSE OF SEARCH. IT WAS FOUND DURING THE SURVEY OF A COMPANY HAVING ITS REGISTERED OFFICE AT THE OFFICE OF THE ASSESSEE AS A PROFESSIONAL CHARTERED ACCOUNTANT. THE EXACT STATUS OF THE PAPER IS NOT KNOWN TO THE ASSESSEE. THIS PAPER WAS BROUGHT FROM THE OFFICE PREMISES TO THE R ESIDENCE OF THE ASSESSEE WHICH IS A COMPUTER PRINT OUT AND REFERENCE TO PRESUMPTION ABO UT THE SIGNATURE AND HANDWRITING IS NOT RELEVANT HERE BECAUSE AS PER THE PRESUMPTION UNDER SECTION 292C, THE SIGNATURE AND HANDWRITING SHALL BE TAKEN TO BE THAT OF THE PE RSON FROM WHOM THE DOCUMENTS WERE FOUND. WE FIND FORCE IN THE ARGUMENTS OF THE L D. COUNSEL THAT THE PRESUMPTION UNDER SECTION 292C IS PERMITTED ONLY IN RESPECT OF THE DOCUMENTS IN POSSESSION OR CONTROL OF THE ASSESSEE. THE ASSESSEE CANNOT BE SA ID TO BE IN POSSESSION OR CONTROL OF EVERY STRAY PAPERS IN THIS PREMISES. THE LD. COUNSE L RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF ITO VS- T . ABDUL MAJEED REPORTED IN 169 ITR 440 WHEREIN IT HAS BEEN HELD THAT PRESUMPTION T HAT ENTRIES IN ACCOUNT BOOKS ARE 8 TRUE, CAN BE REBUTTED. IT IS ALSO OBSERVATION THAT THERE WAS NOT ADEQUATE MATERIAL IN THE POSSESSION OF THE AO TO CONCLUDE THAT THE TRANSACTI ONS IN THE SEIZED DOCUMENTS ARE THE TRANSACTIONS OF THE ASSESSEE WHICH REMAINED UNDISCL OSED. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE CASE LAW RELIED UPON BY THE LD. COUNSEL, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO PRESUMABLY ON THE BASIS OF PROVISIONS UNDER SECTION 292C OF THE I.T. ACT AND THE LD. COUNSEL HAS CORREC TLY REBUTTED THE PRESUMPTION BY HIS SUBMISSIONS WHICH HAVE ALSO BEEN CONSIDERED BY THE LD. CIT(A) IN HIS ELABORATIVE OBSERVATIONS. HENCE, WE FIND NO INFIRMITY IN THE OR DERS OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 9 IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . 2 1 #3 4 3& 25 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 25.06 .10. SD/- SD/- 6 6 6 6. . . . . . . . , , , , , D.K.TYAGI, JUDICIAL MEMBER. . .. . . .. .! !! ! , # C.D. RAO, ACCOUNTANT MEMBER ( (( (# # # #) )) ) DATE: 25.06.2010 1 / .%%7 87(9- COPY OF THE ORDER FORWARDED TO: 1. SHRI RAJESH KR. KANKARIA, 33, BRABOURNE ROAD, 3 RD FLOOR, KOLKATA 001. 2 THE DCIT, CC-XIX, KOLKATA 3. THE CIT, 4. THE CIT(A), 5. DR, KOLKATA BENCHES, KOLKATA 7 .%/ TRUE COPY, 1&3/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES MST(SR.P.S.) 9