M/S SHIVAM INVESTMENTS V. THE ASSTT. COMMISSIONER OF INCOME TAX

TAXAP/192/2022

AI Insights

The case involves M/S Shivam Investments appealing against the order of the Income Tax Appellate Tribunal, which had confirmed the addition of Rs. 61,01,104 as unexplained income for the assessment year 2004-05. The primary legal questions addressed were whether the Tribunal was correct in law in confirming the addition made by the Assessing Officer and whether the conclusions reached by the Tribunal were reasonable based on the material on record. The Tribunal had examined the documents seized during a search operation and found discrepancies in the accounts maintained by the firm and its partners. The High Court, after reviewing the submissions and evidence, agreed with the Tribunal's findings and dismissed the appeal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 761918 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 14-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: S N DIVATIA
• Keywords: Assessment Year; Income tax appeal; Seized documents; Unexplained income
• Section: 153C; 260A; 292C

Judgement Text

"C/TAXAP/192/2022 ORDER DATED: 14/03/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 192 of 2022 ========================================================== M/S SHIVAM INVESTMENTS Versus THE ASSTT. COMMISSIONER OF INCOME TAX ========================================================== Appearance: MR SN DIVATIA(1378) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 14/03/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 T h i s a p p e a l u n d e r S e c t i o n 2 6 0 A o f t h e I n c o m e T a x A c t , 1 9 6 1 ( f o r s h o r t , “ t h e A c t , 1 9 6 1 ” ) i s a t t h e i n s t a n c e o f a n u n s u c c e s s f u l a s s e s s e e a n d i s d i r e c t e d a g a i n s t t h e o r d e r p a s s e d b y t h e I n c o m e T a x A p p e l l a t e T r i b u n a l d a t e d 1 5 t h D e c e m b e r 2 0 2 1 i n t h e I T ( S S ) A N o . 5 6 / A H D / 2 0 1 5 f o r t h e a s s e s s m e n t y e a r 2 0 0 4 - 0 5 . 2 T h e a s s e s s e e h a s p r o p o s e d t h e f o l l o w i n g t w o q u e s t i o n s o f l a w f o r t h e c o n s i d e r a t i o n o f t h i s C o u r t : “ A . Wh e t h e r o n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a s e , I n c o m e - t a x A p p e l l a t e T r i b u n a l , w a s r i g h t i n l a w i n c o n f i r m i n g t h e a d d i t i o n o f R s . 6 1 , 0 1 , 1 0 4 / - m a d e b y t h e A s s e s s i n g O f f i c e r a s u n e x p l a i n e d i n c o m e o f t h e a p p e l l a n t f i r m f o r A . Y . 2 0 0 4 - 0 5 ? B . Wh e t h e r o n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a s e , t h e c o n c l u s i o n r e a c h e d b y t h e I n c o m e T a x A p p e l l a t e T r i b u n a l t o u p h o l d t h e a d d i t i o n o f R s . 6 1 , 0 1 , 1 0 4 / - a s u n e x p l a i n e d i n c o m e o f t h e a p p e l l a n t f i r m f o r A . Y . 2 0 0 4 - 0 5 i s s u c h a s c o u l d h a v e b e e n a r r i v e d a t f r o m t h e m a t e r i a l Page 1 of 4 C/TAXAP/192/2022 ORDER DATED: 14/03/2022 o n r e c o r d o r i s r e a s o n a b l e w h i c h c o u l d b e a r r i v e d ? ” 3 T h e I n c o m e T a x A p p e l l a t e T r i b u n a l l o o k e d i n t o t h e t w o i s s u e s f o r t h e p u r p o s e o f d e c i d i n g t h e a p p e a l f i l e d b y t h e w r i t a p p l i c a n t h e r e i n . T h e t w o i s s u e s a r e a s u n d e r : “ i . Wh e t h e r t h e d o c u m e n t s s e i z e d f r o m t h e p r e m i s e s o f S h r i L i l c h a n d P a t e l o f “ V i m a l G r o u p ” b e l o n g s t o t h e a s s e s s e e a s p r o v i d e d u n d e r S e c t i o n 1 5 3 C o f t h e A c t . i i . Wh e t h e r t h e a m o u n t s h o w n a s w i t h d r a w a l s i n t h e n a m e o f t h e p a r t n e r s o f t h e f i r m r e p r e s e n t s t h e u n a c c o u n t e d i n c o m e o f t h e f i r m . ” 4 T h e c o n t r o v e r s y i s n o t r e g a r d e d t h e f i n d i n g s r e c o r d e d s o f a r a s t h e f i r s t i s s u e i s c o n c e r n e d . T h e w r i t a p p l i c a n t s e e k s t o q u e s t i o n t h e f i n d i n g s r e c o r d e d b y t h e T r i b u n a l s o f a r a s t h e i s s u e N o . 2 i s c o n c e r n e d . T h e i s s u e N o . 2 c a m e t o b e a n s w e r e d a s u n d e r : “ 9 . 2 A s r e g a r d s t h e c o n t e n t i o n o f t h e a s s e s s e e o n m e r i t t h a t t h e a m o u n t o f w i t h d r a w a l s h o w n i n t h e s e i z e d d o c u m e n t s r e p r e s e n t s t h e a m o u n t b e l o n g i n g t o t h e p a r t n e r s i n t h e i r p e r s o n a l c a p a c i t y . A s p e r t h e a s s e s s e e , t h e s e t t l e m e n t w a s m a d e a m o n g t h e p a r t n e r s f o r s e t t i n g t h e i r i n d i v i d u a l a c c o u n t s o f t h e i n v e s t m e n t s m a d e i n t h e s h a r e s t h r o u g h t h e p a r t n e r s h i p f i r m . T h u s , t h e i m p u g n e d a m o u n t d o e s n o t r e p r e s e n t t h e i n c o m e o f t h e f i r m . I n t h i s r e g a r d , w e f i n d t h a t t h e p r o v i s i o n s o f S e c t i o n 2 9 2 C o f t h e A c t c o n t a i n s t h e a s s u m p t i o n w i t h r e s p e c t t o t h e d o c u m e n t s f o u n d i n t h e c o u r s e o f s e a r c h . T h e a s s u m p t i o n s a y s t h a t t h e c o n t e n t s o f t h e d o c u m e n t s f o u n d d u r i n g t h e c o u r s e o f s e a r c h a r e t r u e . I n d e e d t h i s p r e s u m p t i o n i s r e b u t t a b l e b y t h e a s s e s s e e b a s e d o n t h e d o c u m e n t a r y e v i d e n c e . T h e r e l e v a n t p r o v i s i o n s o f s e c t i o n 2 9 2 r e a d s a s u n d e r : “ 2 9 2 C . ( 1 ) Wh e t h e r a n y b o o k s o f a c c o u n t , o t h e r d o c u m e n t s , m o n e y , b u l l i o n , j e w e l l a r y o r o t h e r v a l u a b l e a r t i c l e o r t h i n g a r e o r i s f o u n d i n t h e p o s s e s s i o n o r c o n t r o l o f a n y p e r s o n i n t h e c o u r s e o f a s e a r c h u n d e r s e c t i o n 1 3 2 o r s u r v e y u n d e r s e c t i o n 1 3 3 A , i t m a y , i n a n y p r o c e e d i n g u n d e r t h i s A c t , b e p r e s u m e d - ( i ) x x x x x x x x x x x x x x x x x x x x x x x i i ) t h a t t h e c o n t e n t s o f s u c h b o o k s o f a c c o u n t a n d o t h e r d o c u m e n t s a r e t r u e ; a n d 9 . 3 I n v i e w o f t h e a b o v e , t h e r e r e m a i n s n o a m b i g u i t y t h a t t h e o n u s Page 2 of 4 C/TAXAP/192/2022 ORDER DATED: 14/03/2022 l i e s u p o n t h e a s s e s s e e t o p r o v e t h a t t h e t r a n s a c t i o n s s h o w n i n t h e s e i z e d p a p e r d o n o t r e p r e s e n t t h e t r u e c o n t e n t s . 9 . 4 O n e x a m i n a t i o n o f t h e s e i z e d d o c u m e n t , w e n o t e t h a t i t w a s d u l y s i g n e d a n d d a t e d n o t o n l y b y a l l t h e p a r t n e r s b u t a l s o b y t h r e e w i t n e s s e s . T h e n a m e o f t h e p a r t n e r s h i p f i r m a l o n g w i t h p a r t n e r s w a s a p p e a r i n g . I t w a s d i s c e r n i b l e f r o m t h e s e i z e d d o c u m e n t t h a t t h e r e w a s w i t h d r a w a l o f m o n e y f r o m t h e p a r t n e r s h i p f i r m . G e n e r a l l y , t h e w i t h d r a w a l f r o m t h e f i r m r e p r e s e n t s t h e w i t h d r a w a l o f t h e c a p i t a l b y t h e p a r t n e r s . T h i s c a p i t a l c a n e i t h e r b e i n t h e f o r m o f m o n e y c o n t r i b u t e d b y t h e p a r t n e r o r m a y b e t h e s h a r e o f p r o f i t / r e m u n e r a t i o n / i n t e r e s t o n t h e c a p i t a l o f t h e p a r t n e r g e n e r a t e d f r o m t h e p a r t n e r s h i p f i r m . L i k e w i s e , a l l t h e s e t r a n s a c t i o n s s h o u l d h a v e b e e n d u l y r e c o r d e d i n t h e b o o k s o f a c c o u n t s o f t h e f i r m a s w e l l a s i n t h e i n d i v i d u a l l e d g e r o f t h e p a r t n e r s m a i n t a i n e d b y t h e f i r m . B u t , o n p e r u s a l o f t h e f i n a n c i a l s t a t e m e n t o f t h e f i r m a n d t h e c a p i t a l a c c o u n t o f t h e p a r t n e r s , w e n o t e t h a t s u c h f i g u r e s a r e n o t a p p e a r i n g h e r e i n . T h e n e c e s s a r y d e t a i l s o f t h e f i n a n c i a l s t a t e m e n t o f t h e a s s e s s e e a n d c a p i t a l a c c o u n t o f t h e p a r t n e r s a r e p l a c e d o n p a g e s 1 2 t o 2 0 o f t h e p a p e r b o o k . T h u s , w e f i n d d i f f i c u l t t o b e l i e v e t h e v e r s i o n o f t h e a s s e s s e e t h a t t h e i m p u g n e d w i t h d r a w a l r e p r e s e n t s t h e s e t t l e m e n t o f t h e p a r t n e r s a c c o u n t i n t h e i r i n d i v i d u a l c a p a c i t y . 9 . 5 I t i s a l s o s i g n i f i c a n t t o n o t e t h a t t h e a d d i t i o n i n t h e p r e s e n t c a s e w a s m a d e b a s e d o n t h e s e i z e d d o c u m e n t s . I n o t h e r w o r d s , t h e a d d i t i o n w a s n o t m a d e s o l e l y o n t h e b a s i s o f t h e s t a t e m e n t r e c o r d e d i n t h e c o u r s e o f s e a r c h o f S h r i L a l c h a n d P a t e l t h e f a t h e r - i n - l a w o f S h r i H i m a n s h u P a t e l o n e o f t h e p a r t n e r o f t h e f i r m . T h e r e f o r e , i t i s n o t n e c e s s a r y t o p r o v i d e t h e o p p o r t u n i t y o f c r o s s e x a m i n a t i o n t o t h e a s s e s s e e o f s t a t e m e n t a s d i s c u s s e d a b o v e . 9 . 6 B e t h a t a s m a y b e , l e t u s a s s u m e t h a t t h e s e t r a n s a c t i o n s w e r e n o t r e c o r d e d i n t h e b o o k s o f a c c o u n t s o f t h e f i r m . B u t i n t h a t s i t u a t i o n , a t l e a s t s u c h t r a n s a c t i o n s w a s t o b e r e f l e c t e d i n t h e i n d i v i d u a l a c c o u n t s o f t h e p a r t n e r s w h i c h a r e m a i n t a i n e d b y t h e m i n p e r s o n a l c a p a c i t y t o s u p p o r t t h e c o n t e n t i o n . B u t , w e n o t e t h a t t h e r e i s n o t h i n g b r o u g h t o n r e c o r d t h a t s u c h a m o u n t o f t r a n s a c t i o n s w e r e r e c o r d e d i n t h e b o o k s o f a c c o u n t s o f t h e i n d i v i d u a l p a r t n e r s . I n o t h e r w o r d s , w e f i n d t h a t t h e a s s e s s e e h a s n o t b r o u g h t a n y t h i n g o n r e c o r d e v e n i n t h e p r e s e n t p r o c e e d i n g s w h i c h i s t h e 2 n d i n n i n g s . T h e a s s e s s e e c a n n o t e s c a p e f r o m i t s l i a b i l i t y i n d i s c h a r g i n g t h e o n u s c a s t u p o n i t u n d e r t h e p r o v i s i o n s o f l a w i n t h e g a r b o f t h e m a t t e r s u b - j u d i c e i n t h e c o u r s e o f l a w . I n v i e w o f t h e a b o v e , w e a r e o f t h e o p i n i o n t h a t t h e a s s e s s e e f a i l e d t o d i s c h a r g e i t s o n u s i m p o s e d u n d e r t h e p r o v i s i o n s o f l a w b y f u r n i s h i n g t h e n e c e s s a r y d o c u m e n t a r y e v i d e n c e . T h u s , i n s u c h f a c t s a n d c i r c u m s t a n c e s , w e a r e c o n s t r a i n e d a n d h a v e n o a l t e r n a t i v e e x c e p t t o c o n f i r m t h e o r d e r o f t h e a u t h o r i t i e s b e l o w . H e n c e t h e g r o u n d o f a p p e a l o f t h e a s s e s s e e i s Page 3 of 4 C/TAXAP/192/2022 ORDER DATED: 14/03/2022 d i s m i s s e d . ” 5 T h u s , t h e p r i n c i p a l c o n t e n t i o n o f t h e w r i t a p p l i c a n t a s s e s s e e b e f o r e t h e T r i b u n a l w a s t h a t t h e a m o u n t o f w i t h d r a w a l r e f l e c t e d i n t h e s e i z e d d o c u m e n t r e p r e s e n t e d t h e a m o u n t o f t h e p a r t n e r s i n t h e i r p e r s o n a l c a p a c i t y . T h e T r i b u n a l f i r s t l o o k e d i n t o S e c t i o n 2 9 2 C o f t h e A c t a n d t h e r e a f t e r , n o t i c e d f r o m t h e m a t e r i a l s o n r e c o r d t h a t t h e n o t e i n q u e s t i o n w a s d u l y s i g n e d n o t o n l y b y a l l t h e p a r t n e r s o f t h e f i r m , b u t a l s o b y t h r e e w i t n e s s e s . T h e n a m e s o f t h e p a r t n e r s h i p f i r m a l s o f i g u r e d i n i t . T h e T r i b u n a l a l s o t o o k n o t i c e o f t h e f a c t t h a t t h e w i t h d r a w a l o f t h e m o n e y w a s f r o m t h e f i r m . 6 T h u s , i n v i e w o f t h e f i n d i n g s o f f a c t r e c o r d e d b y t h e T r i b u n a l a s r e f e r r e d t o a b o v e , n o n e o f t h e t w o q u e s t i o n s a s p r o p o s e d b y t h e w r i t a p p l i c a n t c o u l d b e t e r m e d a s s u b s t a n t i a l q u e s t i o n o f l a w f o r t h e p u r p o s e o f d e c i d i n g t h i s a p p e a l u n d e r S e c t i o n 2 6 0 A o f t h e A c t . 7 I n v i e w o f t h e a f o r e s a i d , t h i s a p p e a l f a i l s a n d i s h e r e b y d i s m i s s e d . (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) CHANDRESH Page 4 of 4 "