Gauhati H.C : the inclusion of the said amount to the income of the assessee is illegal

High Court Of Gauhati

CIT vs. Chandmal Sarawgi & Co.

Section 69, 132

K. Sreedhar Rao, Actg. Cj. And P. K. Saikia, J.

IT Appeal No. 9 Of 2011

February 5, 2015


K. Sreedhar Rao, Actg. CJ. – A search of the house of the resident of the respondent was conducted on November 27, 1998, by the Income-tax Officers. One diary was found described as GD No. 8 in the said diary, the name of the employee working as accountant under the assessee and his family members and relatives were found with details of the investment of money in different shares. The amount shown in the diary was Rs. 13,73,136. The Assessing Officer considered the said amount as undisclosed income of the assessee and passed assessment order. The Commissioner of Income-tax (Appeals) set aside the order of the Assessing Officer and held that the inclusion of the said amount to the income of the assessee is illegal. The Department filed an appeal before the appellate Tribunal. The Tribunal, in its order in paragraphs 23, 24, 25 and 29 has made the following observations :

“23. As regards ground No. 2-addition of Rs. 13,73,136, Rs. 1,25,000, Rs. 38,500, Rs. 30,000 and Rs. 1,00,000.

The Assessing Officer has discussed the addition in the order on pages 3 to 5. The assessee has brought on record the copy of submission dated June 12, 2000, placed on page 45, in reply to the Assessing Officer’s letter placed on pages 126 and 127, dated May 10, 2000, and June 19, 2000, deposition recorded on November 27, 1998, on pages 131 to 134 and deposition recorded on July 4, 2000, placed on pages 135 to 139 which makes clear that the seized documents GD-8 to GD-12 were found and provided to Shri Hazarimal Bajaj who is an employee. The documents seized contained the details of investment in shares in the name of Hazarimal Bajaj and his family members and money/gift received by some others. The statement under section 132(4) recorded by the Assessing Officer dated November 27, 1998, and July 4, 2000, during the assessment and during search wherein Hazarimal Bajaj submitted that he is taxpayer and admitted that the seized documents belonged to him (question No. 9) and using the folders GD-9 to GD-12 being an employee and GD-8 relates to the note book of Gupta business diary and further in the submission dated June 12, 2000, the assessee confirmed the same. Since Shri Hazarimal Bajaj is a taxpayer with the Revenue admitting that the investment belongs to him and his family. The Assessing Officer admitted that the investment reflected in the returns of Hazarimal and his family members (Assessing Officer page 4) and examined and opined being found investment in his and family members’ name cannot be easily brushed out unless there is documents showing that the investment belongs to the assessee with corroborative evidence. The seizure of the documents from the custody of Hazarimal Bajaj does not lead to addition without justification since Mr. Hazarimal Bajaj accepted that the investment belongs to him and his family members. Therefore, we are of the opinion that the addition of Rs. 13,73,136 is not justified since no specific evidence has brought on record by the Assessing Officer that this investment based on the seized documents GD-8 to GD-12 relates to the assessee and not Mr. Hazarimal Bajaj.

24. In the case of gift received by Mishrilal Bajaj and withdrawal from the bank Rs. 1,25,000, he is the assessee. The return filed on July 30, 1998, for the assessment year and afterwards, deposition dated July 4, 2000, the seized documents belong to him and his family members (pages 137/138). The deposition cannot be ruled out unless the seized documents show that the gift and the loan were from the undisclosed income of the assessee.

25. In the case of the gift/loan received by Vijay Kumar Bajaj Rs. 38,500 seized documents the Assessing Officer discussed the addition on pages 3 to 5. The deposition dated February 26, 1999, which was before the Assessing Officer and on July 21, 2000, was placed on record on pages 179 to 183 along with the return, computation, details of source and confirmation. Not related to the assessee he is a family member of Hazarimal Bajaj. Mr. Hazarimal Bajaj admitted that the seized documents belong to him and family members. Mr. Vijay Kumar Bajaj admitted the loan given by him (question No. 6). He is a taxpayer filing the returns. The return for the assessment year 1998-99 filed on October 16, 1998 (paper book page 184), therefore, for want of cogent evidence no addition is called for. . . .

29. It is a fact that the abovementioned ladies are the taxpayers filed the returns of income on July 30, 1998, and October 22, 1998, not controverted by the learned Departmental representative. Their statements were recorded under section 132(4) placed on record. The documents seized, i.e., GD-8 to GD-12 are admitted and belongs to Hazarimal Bajaj and not the assessee, therefore, such admission being evidenced has to be controverted by the Revenue on the basis of evidence found during the search. Not doing so, the addition for the name sake cannot be justified.”

2. The Tribunal based on the oral and documentary evidence has come to the conclusion that the addition of the amount of the income of the assessee was illegal and upheld the order of the Commissioner of Income-tax (Appeals) with elaborate discussion with reference to the evidence.

3. Upon considering the order of the Appellate Tribunal, we do not find that there is any perversity in appreciating the materials on record and in coming to the conclusion.

4. The only possible question, the Revenue could urge that the finding of the Appellate Tribunal is perverse and contrary to the evidence and material on record, however, such question would not arise in the light of the above observations extracted above made by the Tribunal in coming to the conclusion while upholding the order of the Commissioner of Income-tax (Appeals).

5. In that view of the matter, the appeal stands dismissed.

[Citation : 373 ITR 309]

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