KANWALJEET KAUR KOCHAR,NEW DELHI vs. DCIT, NEW DELHI

This is an appeal filed by the assessee against the order of the ld CIT (A)- XXXIII, New Delhi [ The Ld CIT A] dated 30.06.2014 for the Assessment Year 2007-08 wherein the learned CIT – A has confirmed the assessment u/s 153A of The Income Tax Act [ The Act] and upheld the addition of INR 1629600/– being unexplained investment u/s 69A of The Act contained in two seized receipts found from residence of the assessee during search. .

The assessee has raised the following grounds of appeal:- “1. Action of the CIT(A) in upholding the assessment made by the DYCIT u/s 153A of the IT Act purely on the basis of assumptions, conjectures and surmises based on a unsigned paper (Annexure-A2 pages 4 and 5) and ignoring the facts and circumstances of the case/ submission made by the appellant is, unjust, illegal arbitrary and against the facts and circumstances of the case.

The learned assessing officer rejected the contention of the assessee. He noted that as per the evidences gathered during the course of search the dates mentioned on the receipt pertain to financial year 2006 – 07 and the said transaction of the above shares has been taken place during this year only. He further held that merely because the receipts are unsigned, it could not be held as a mere coincidence as no prudent person would issue receipts acknowledging the transfer of shares, which one does not own. Accordingly, he treated the entire receipt of INR 1629600/– as unaccounted income of the assessee and made an addition u/s 69A of the income tax act. Accordingly the assessment order u/s 153A of the income tax act was passed on 18/2/2014 determining the total income of the assessee at INR 1 900631/–.

Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT – A, who confirmed the addition. Therefore, assessee aggrieved with that order has preferred appeal before us.

The learned authorised representative referred to page number 4 and 5 of the seized material, which are placed at page number 1 and 2 of the paper book. He submitted that both these papers are not signed by any of the party. He further stated that the Parasnath commercial private limited is a closely held private limited company having only 10,000 equity shares. Up to 25/03/2005 entire shareholding were held by two shareholders one assessee and another Husband Shri Santa singh Kochar. On 25/03/2005 entire shareholding of this company were transferred in the name of Mr. Sunil Jain and Ashish Bansal. He further stated that the date of sale is 25/3/2005 and the date of registration in the company record of the transfer of share is 25/4/2005. He further stated that both these shareholders have resigned from the directorship of that particular company and other persons were appointed as the director. Therefore, he stated that 3880 shares of Parasnath commercial private limited were sold in the assessment year 2005 – 06 for the consideration of Rs. 77600 and the sale are duly disclosed in the return of income for that assessment year. He further stated that the seized papers are not signed by the assessee or the other party and are merely typed papers. He stated that assessee has not issued any such paper to anybody. He further stated that the assessing officer could have verified the same from other party mentioned in these receipts but it has not been corroborated. In view of this, he submitted that the assessee has never issued such receipt to anybody and has not received any such sum from anybody and therefore the addition made by the learned assessing officer is devoid of any merit. He therefore submitted that the addition made by the learned assessing officer and confirmed by the learned CIT – A deserves to be deleted.

The learned CIT DR vehemently objected to the argument of the learned authorised representative and submitted that the sale has taken place during the year as mentioned in para number 9 of the assessment order where before the learned CIT – A the assessee produced the bank statement which shows that the cheques have been received on 9/4/2005 which pertains to the assessment year 2006 – 07 and therefore the claim of the learned authorised representative that the transaction is taken place in assessment year 2005 – 06 and the claim that no amount could have been received after 25/3/2005 fails on this ground. He therefore referred to the order of the learned CIT – A, who confirmed the addition at page number 10 of his order. He submitted that there is no dispute that the shares were sold by the assessee to two different persons and the receipts and seized from the residence of the assessee on the letterhead of the assessee. The name of the company in the number of shares sold in the name and address of the buyer submitting with the transactions recorded in the books by the assessee. The date of receipt is 25/5/2006 and the words for and final settlement are mentioned on those receipts and therefore it cannot be stated that the assessee has not received the above sum. He further stated that the sale value per share is recorded at INR 4 20 per share in those receipts whereas the sale shown by the assessee is of a minuscule amount. He further stated that assessee has failed to explain that for what purpose these receipts were prepared by him and now this has been found from his place. He further referred that during the course of search proceedings any document is found from the residence of or possession of the assessee the assessee is bound to explain its position. He further stated that merely the argument that the document is unsigned does not absolve the assessee to explain it possession. He further referred to the decision of the honourable Bombay High Court in 321 ITR 254 wherein it has been held that considering the language of section 292C of the Act, there was a presumption that the contents of the documents are true, the document is seas from the premises and control of the assessee and the said document belongs to the assessee. He therefore submitted that the addition has been correctly confirmed by the learned CIT – A.

We have carefully considered the rival contention and perused the orders of the lower authorities. The brief fact shows that to documents were seized from the residence of the assessee which are placed at page number 1 and 2 of the paper book. Both these receipts are dated 25/05/2006. Both the receipts are also on the letterhead of the assessee showing the correct address of the assessee. At the bottom of both the receipts, the name of the assessee is mentioned. The documents are also titled as receipt. The content of the document is as under:- “received with thanks a sum of INR 8 35800 (Rs. Eight Lakhs Thirty Five Thousands Eight Hundred only) from Mr. Sunil Jain resident of C – 61, 33 ha, Delhi – 110092 towards cost of 1990 shares at the rate of rupees for 20 (face value is INR 10/– each) per share of Messer is Paras not commercial private limited is full and final settlement.”

The second receipt is also identically worded except the sum of INR 7 93800 being 1890 shares at the rate of rupees for 20/– per share to Mr. Ashish Bansal. Now the claim of the assessee is that assessee has sold the shares in assessment year 2005 – 06 and for this, he relied on the computation of the total income filed with the return of income. On careful perusal of the statement of income wherein under the head income from capital gains the assessee has had shown sale of 3880 equity shares of power is not commercial private limited having the sale consideration of rupees 77600 per share and the indexed cost of such shares is INR 6 70272/– and resulted into a capital loss of INR 5 92672/–. Therefore, the income from capital gain shown by the assessee is nil. Thus working out the sale consideration shown by the assessee in the computation of the total income the transacted value of the share is only INR 20 per share. However in the receipt shown the transacted value of the share is mentioned at INR 4 20/– per share. The documents have been found at the residence of the assessee and therefore the assessee is duty-bound to explain the content of those documents. According to the provisions of section 292C of the act, wherein documents et cetera are found in the possession or control of any person in the course of search u/s 132 of the act, it is presumed that such document belongs to such person. It is further presumed that the contents of such books and accounts and documents are true and further the signature and every part of such document is purported to have been duly executed or attested. Such presumption is rebuttable by stronger evidences. Assessee has offered only meek explanation/excuses for the same. As these documents have been found from the possession of the assessee he it is the duty of the assessee to rebut the above presumption. In the present case, the assessee has merely denied the content of the document saying that they do not belong to the assessee and therefore not signed by the parties. However nowhere it is contested that the doctor content of the documents are not true. The assessee has also failed to explain that why the shares are shown to have been sold at the rate of Rs. 420/- per share when actual consideration received by the assessee as claimed by her is only INR 20 per share. Further, the names mentioned in the receipt as well as the version of the assessee are also matching. Therefore, only those two persons Mr. Sunil Jain and Ashish Bansal have purchased the shares. The assessee has also failed to explain that why these two receipts have been prepared and found in the possession of the assessee.

Ld AR has also raised an issue that ld AO should have called the parties mentioned in those receipt for checking veracity of those receipts. In fact, the presumption of section 292C o the act demands that assessee should have produced them before ld AO to rebut the presumption of section 292 C of the act. Assessee failed to do so. It did not make any effort to rebut the presumptions.

Before us, also assessee did not rebut that presumption but relied on various judicial precedents. Hon supreme court in (2002) 255 ITR 147 ( SC) PADMASUNDARA RAO (DECD.) AND OTHERS v. STATE OF TAMIL NADU AND OTHERS has held that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morrin in Herrington v. British Railways Board [1972] 2 WLR 537 (HL). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. The ld AR could not show that how the facts of various judicial precedents relied up on fits in the facts of case before us.

The learned CIT – A has rendered his decision in para number 3.3 of his order as under:- “3.3 Decision:- I have perused carefully the assessment order, written submission, and oral arguments of the learned AR. I have carefully considered both the seized documents, which are part of paper book. Addition has been made by the learned assessing officer on the basis of 2 seized paper which are receipt dated 25/05/2006 Acknowledging the receipt of INR 8 35000/– from Mr. Sunil Jain resident of C – 61, Preet Vihar , Delhi – 92 towards the cost of 1990 shares at the rate of Rs. 420/– (face value of INR 10 each) per share of M/s Parasnath commercial private limited as full and final settlement and INR 793800/– from Sri Ashish Bansal resident of Vasundhara , Ghaziabad towards cost of 1890 shares at the rate of Rs. 420/– per share of M/s Parasnath commercial private limited as full and final settlement. Main arguments of learned that AR is that the said receipt is unsigned and the said shares of M/s Parasnath commercial private limited was sold on 25/3/2005 by the appellant to the above persons. The learned A.R. has enclosed the report filed by M/s Parasnath commercial private limited to the Ministry of corporate affairs in support of such transfer during FY 2004 – 05. Therefore, question of receiving any sum on 25/05/2006 does not arise, as the transactions of sale of shares were already complete on 25/3/2005. To prove that the appellant has sold sales on 25/3/2005, learned A.R. has filed share transfer form of annual report filed before Ministry of corporate affairs of M/s Parasnath commercial private limited showing the said a transfer.