1991-VIL-127-ITAT-IND

Equivalent Citation: TTJ 040, 668,

Income Tax Appellate Tribunal INDORE

Date: 03.04.1991

BRIJLAL RUPCHAND.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : S. K. JAIN.

JUDGMENT

Survey operation under s. 133A of the IT Act was carried on by the IT authorities at the business premises of the assessee HUF on the 22nd Sept., 1980. During the said survey operation some loose papers were found which have been marked Annexure A,B,C and D. The statement of Shri Ishwarlal s/o Shri Brijlal Karta of the HUF, was then recorded by the ITO. In this statement Shri Ishwarlal expressed his inability to furnish any explanation in respect of those papers then and there. It is not definite as to what happened to those papers, however according to the AAC they were seized by the ITO at the time of the survey. At this juncture it may be mentioned that such seizure was unauthorised since the income-tax authority had no power to impound any document under s. 133A. These loose papers were made use of during the course of assessment proceedings for the asst. yr. 1981-82 for which the assessment was framed on the 14th March, 1984 i.e. to say nearly after 3 1/2 years of the survey. In the explanation dt. 27th Jan., 1984 it was stated by the assessee that these papers had got no connection with his business. It was indicated in the explanation that sometimes farmers use to come to his accountant for calculation of their personal accounts and the papers used to be left by them there. One of such papers (Annexure A) bore the name of Shri Dalpat Sampat. The assessee further furnished an explanation before the ITO on 13th March, 1984 which was to the effect that Shri Dalpat Sampat got prepared his personal accounts from his accountant, that Shri Dalpat Sampat used to sell produce of banana to M/s Srikrishna Kela Group in respect of which he had accounts with M/s Shrikrishna Kela Group. All that was not accepted by the ITO. The ITO observed that the assessee did not produce Shri Dalpat Sampat for verification. The ITO further observed to the effect that since the papers were found in the business premises of the assessee during the course of survey under s.133A, the only inference that could be drawn was that the papers belonged to the assessee and that the assessee could not furnish any explanation about the entries in the paper either at the time of survey or even thereafter. He also observed to the effect that the burden lay on the assessee to explain the entire of these papers which the assessee could not discharge and contents of none of these papers were found entered in his account books. He, therefore. made addition of Rs. 78,021 as detailed below:

2. Aggrieved by the said order, the assessee went in appeal before the AAC of Income-tax. The AAC deleted the entire addition of Rs. 78,021. The Department came in appeal before the Tribunal. The Tribunal held that the AAC of Income-tax did not properly deal with the matter in the light of the assessment order and the submissions of the assessee. The Tribunal, therefore, by order dt. 11th March, 1987 in ITR No. 810/Ind/84 set aside the order of the AAC with a direction to decide the appeal afresh. The AAC decided the appeal afresh by order dt. 30th Dec., 1987. He held that Annexure A bearing name of Shri Dalpat Sampat did not belong to the assessee. He therefore deleted the addition of Rs. 44,703 (It should be Rs. 46,103). He further held that in the Annexure B the entries amounting to Rs. 10,000 and Rs. 1,200 were dt. 8th March, 1976 to 7th Sept., 1979 which dates did not fall in the accounting period relevant to the instant assessment year. He, therefore, deleted Rs. 11,200 and confirmed addition of Rs. 2,197 (It should be Rs. 3,322) He, however confirmed the additions of Rs. 8,707(It should be Rs. 8,437) and Rs. 8,959 relating to Annexure C and D respectively. Aggrieved by the said order of the AAC of Income-tax the Department is in appeal challenging the correctness of the order of the deleting Rs. 44,703. The assessee is also in appeal challenging to the additions of Rs. 2,197 relating to the Annexure B, Rs. 8,707 relating to the Annexure C and Rs. 8,959 relating to the Annexure D.

3. The entire material on record has been minutely examined and considered in the light of the respective submissions of the parties. At the outset it may be stated that the tax authorities below looked at the Annexures A to D in a wrong perspective. There is a provision in s. 132(4A) that where any books of accounts other documents, money, etc. are found in possession or control of any person in the course of a search, it may be presumed that such books of accounts, other documents and money, etc., belong to such person and the contents of such books of accounts and other documents are true and that the signature and every other part of such books of accounts 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. This provision contained in s. 132(4A) exists in complete isolation of other provision of the Act. This cannot be stretched to the provisions contained in s. 133A. Even if any attempt is made to stretch the said provision contained in s. 132(4A),it needs to be borne in mind that its intent and purpose is restricted to the provisional adjudication contemplated under s.132(5) and not beyond. In this connection, reference may be to Pushkar Narain Sarraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All). That apart, the expression 'may presume' appearing in s. 132(4A) dose convey the same meaning as has been assigned to the similar expression in s. 4 of the Evidence Act. The said expression gives legal sanction for drawing such inferences as are possible and at the same time it allows a discretion which like any other such discretion, should be exercised in a judicial manner. It is not that such inference, as contemplated under s.132(4A) should necessarily be drawn and should be stretched too for without rhyme or reason. Care shall have to be taken that such presumptions may not ultimately turn out to be absurd and unreasonable in the light and common course of human conduct. The presumption, if at all, is required to be drawn one has to see that it makes out a sense, and it is meaningful.

4. Now coming to the facts of the instant case, it is to be seen that no case was taken by the ITO specify as to at what place and in what condition Annexure A to D were found in the business premises of the assessee. Suppose they were found in a receptacle under lock and key or inside the books of accounts of the assessee or on the person of the assessee or at a place and under such condition evincing intention to possess, much evidentiary value is to be attached to them and inference of them being in possession of the assessee can be safely drawn, 'Possession' in law consists of two elements, namely a corpus possession is and an animus possidendi. Mere possession of an article without intention to possess it cannot bring home the charge of possession. The assessee was-carrying on the business of purchase and sale of fertilisers and so also of money lending. Naturally, his customers were mostly agriculturists. It was explained by him that the agriculturists used to come to his accountant for getting prepared their personal accounts and they might have left their papers at his shop at the seat of the accountant. One of such papers (Annexure A) bore the name of Shri Dalpat Sampat. If such papers were lying in a shop without any care and in a condition not indicating intention to preserve them, possession thereof cannot be imputed to the assessee. Under the circumstances brought out in this case, the assessee cannot be burdened with the onus to explain the contents thereof.

5. It deserves mention that the ITO did not even care to know as to in whose handwriting those papers were. He simply assumed that the assessee was responsible for all that whatever relevant or irrelevant was found in his shop. But for depending upon the rule of presumption, no attempt was made to connect the assessee with those papers in any manner. Under these circumstances, it was not justified to throw burden of proof on the assessee and to expect that he should have produced Shri Dalpat Sampat for the satisfaction of the ITO that whatever was stated in the Annexure A did not relate to the assessee. Even then the assessee undertook the job and tried to connect some figures appearing in Annexure A with the transactions which Shri Dalpat Sampat had with M/s Shri Krishna Kela Group. The assessee was not fully successful in his attempt in doing so, but that is inconsequential.

6. Even if it is assumed that all the papers belonged to the assessee, it is difficult to make out the transactions contained therein. It may be repeated that the presumptions drawn out of certain set of facts and circumstances must carry sense. The ITO without caring all that picked up certain figures from these papers and assumed it as investment of the assessee in the business of moneylending outside the account books. At page 2 of the Annexure A certain amounts have been written in the names of Dalpat. Jagdev, Roopsingh, Shripat, Thansingh and Eknath. The ITO is silent about those entries. Yet there is an entry of Rs. 11,000 relating to sale of agricultural land. No enquiry was made as to whom such sale related. The ITO did not even specify as to which entries in Annexures A he took into account for reaching the conclusion that there was advancement of loan of Rs. 41,400 and an income of interest of Rs. 4,703. The other papers marked as Annexure B to D simply indicate some calculation of interest from certain date to certain date. Such calculation sheets without any indication have no probative value. Nothing can be made out therefrom. One cannot be permitted to draw freely any and every presumption unsupported by reason. It is necessary to bear in mind that the presumptions of fact are nothing more than logical inference of the existence of one fact drawn from the other proved or known facts without the help of mere surmises, conjectures and suspicions. In the instant case, the only known facts are that certain papers were found in the business premises of the assessee (at a place and under the conditions not known) and they contained certain calculations (origin and connection of which is not known) and no intelligible inference therefrom can be drawn. No sensible inference of any fact can be drawn from such known facts. In this view of the matter, all the additions made appear imaginary as a result of suspicion. The order of the AAC of income-tax deleting Rs. 44,704 is upheld though for the reasons other than recorded by him. The order of the AAC of Income-tax sustaining the additions of Rs. 19,863 is set aside. All these additions are deleted.

7. In the result, the appeal of the assessee is allowed and the appeal of the Department is dismissed.

 

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