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Judgment
The appeal is directed against a judgment and order dated 10th August, 2007 passed by the learned Income Tax Appellate Tribunal "D" Bench, Kolkata in IT(SS) A. No. 24/K/07 by which an appeal preferred by the assessee was allowed.
The aggrieved revenue has come up in appeal. The following question of law was formulated on 20th February, 2008 when the appeal was admitted:
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in quashing the revision order passed by the Commissioner of Income-tax under Section 263 of the Income tax Act, 1961, setting aside the assessment and directing the Assessing Officer to examine the applicability of the provisions of section 40A(3) of the Act and to consider the land purchase deeds found at the time of the search, which the Assessing Officer had failed to examine and consider before passing the assessment order?"
The order passed by the CIT under Section 263 reads as follows:
"In view of the above discussion, it is held that the failure of the Assessing Officer to examine the applicability of Section 40A(3) and to examine the actual purchase price for land, paid by the assessee, has led to an erroneous assessment order which is prejudicial to the interest of the revenue. Therefore the Block Assessment order passed u/s 158BC is set aside on the above issues to be made after examination of the evidences, after giving the assessee a reasonable opportunity of being heard."
As regards applicability of Section 40A(3) to an assessment made on gross profit rate basis, we already have delivered a judgment on 26th July, 2016 in ITA No.149 of 2008 [C.I.T. [Centra] - I, Kolkata v. Mohanlal Agarwal]. Considering the view taken by us in the aforesaid matter for reasons indicated therein, we are of the opinion that the judgment of the learned Tribunal cannot be sustained.
With regard to the question as regards the supposed failure on the part of the Assessing Officer in examining the actual purchase price paid by the assessee for the land purchased by him, Mr. Agarwal, learned advocate appearing for the revenue, drew our attention to sub-Section 4A of Section 132 which reads as follows:
" [(4A) 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, it may 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."
He submitted that on the basis of the aforesaid sub-section, there is a presumption that the document, found in the possession or control of the assessee, belongs to the assessee. The view, taken by the learned Tribunal that "once an asset is found not to belong to the assessee, the quantum of investment therein cannot be a factor in the assessment of the assessee-company", is erroneous because the assessee did not lead any evidence to show that the land purchased did not belong to him.
Mr. Bagaria, learned advocate for the assessee-respondent, submitted that it is not a fact that no evidence was led with regard to that. He drew our attention to sub-paragraph 4 of paragraph 8.3 of the order passed under Section 263, which reads as follows:
"The seized document does not pertain to the assessee but is relating to other assessees and even if any addition is to be made, it is to be made in their respective hands."
He submitted that this was the case made out by the assessee before the CIT.
Mr. Agarwal pointed out the other submissions advanced on behalf of the assessee goes to show that the assessee was asserting right in respect of the property purchased. There is some substance in the submission of Mr. Agarwal.
In that view of the matter, the order passed by the learned Tribunal with regard to the land purchased allegedly at an under value is set aside and the order of the CIT is restored. It will, however, be open to the assessee to adduce appropriate evidence that the assessee was not connected with the land purchased, evidenced by the title deeds found during the course of search at the premises of the assessee.
In that view of the matter, the question, formulated above, is answered in the negative and in favour of the revenue.
The appeal is, thus, allowed.
Parties shall, however, bear their own costs.