Allegation of Planting Register by Income Tax Department during survey rejected by ITAT

Allegation of Planting Register by Income Tax Department during survey rejected by ITAT as apparently an error occurred in recording correct number of pages

ABCAUS Case Law Citation
ABCAUS 2360 (2018) 06 ITAT

The instant appeal was filed by the appellant assessee agitating the Order passed by the Commissioner of Income Tax (Appeals), partly allowing the assessee’s appeal contesting its assessment under section 143(3) of the Income Tax Act, 1961 (‘the Act’).

Besides several other book/register, a register was impounded during the survey. The entries of purchases and sales recorded in the register did not agree with the assessee’s books of account, and on the basis of the said register addition had been made.

The main contention of the assessee was that CIT(A) had not accepted the assessee’s claim that the register impounded from the assessee’s business premises during survey proceedings u/s 133A, did not belong to the business of the assessee and the same had been planted.

The Tribunal observed that for earlier years, the tribunal had accepted the similar contention, and allowed relief to the assessee. When the assessee was asked to show the basis on which he claimed that the said register impounded from his business premises did not belong to him and, on the contrary, was a plant of a fabricated register by the Revenue , the assessee produced copy of the order u/s 133A(3)(ia) of the Act prepared at the conclusion of the survey.

It was observed that as per the aid order, the said register had 19 pages, while the register supplied by the Revenue to the assessee subsequently, on his request, contained as many as 39 pages.

The Tribunal observed that Section 292C of the Act, raises a presumption, of course rebuttable, as to the ownership of the document found during survey or search, as well as the truth of its contents.

The core of the assessee’s rebuttal was the difference in the number of pages in the register impounded and that supplied subsequently to him by the Revenue. The same contained the assessee’s signature at pages 1 and 37, affixed at the time of its receipt from the Revenue.

The ITAT opined that firstly, the charge of ‘planting’ a register was a very serious charge, which, to be admitted, was to be in the least supported by an affidavit. Secondly, if indeed it was, as alleged, why would the Revenue, defeat its own cause by supplying a register containing a different number of pages? It could easily fabricate – as alleged, a register containing 19 pages only. Further, why did not the assessee disclaim the register at the time of its receipt?

The Tribunal opined that under such circumstance, as a first thing, any person would state that the document being supplied was not the one that was recovered and impounded from its premises. However, in the instant case, not only the assessee accepted the same without demur, but when during the assessment proceedings, confronted with the register containing details of purchases and sales not recorded in his regular books of account, the assessee pleaded for an addition being made on peak basis.

The Tribunal opined that the argument given by the assessee that addition be made on peak basis in-as-much as it was the same capital that circulated the funds invested in purchase being recouped on sale of the goods itself was a tacit admission of the register belonging to the assessee. It was only in the appellate proceedings that the assessee raised this issue for the first time.

According to the Tribunal, the CIT(A) rightly rejected the contention as the assessee failed to rebut the statutory presumption u/s 292C, with his conduct in fact pointing to the contrary.

The Tribunal opined that apparently, there had occurred an error in recording the number of pages of the register, i.e., at ‘39’ instead of ‘19’ in the order u/s.133A(3)(ia). The decision by the tribunal for the earlier years was not applicable in-as-much as the material impounded for those years was not recovered from the assessee’s business premises, but from that of another. In fact, for those years, the assessments were reopened on the basis of the information in the possession of the Revenue through complaints by one of the assessee’s ex-employees.

The assessee’s appeal was dismissed accordingly.

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