INCOME TAX ACT, 1961

Section 143(3) Section 153A

Search and seizure - Assessment under section 153A - Computation of undisclosed income - Cash found during search allegedly out of sales recorded in books of account

A letter, dated 29-11-2006 was written by one Mr. Hulas Sharma of 'Sudama Singh & Sons', of Purani Gurhati, Chapra, Saran, and reference was made to a bank draft of Rs. 1 lakh, bearing No. TEU 617290(0091/2006) drawn on PNB, Chapra, dated 29-11-2006 being sent to assessee and request was made to acknowledge the receipt and send proper accounts. There was also mention of payment of Rs. 1 lakh in cash in the said letter to assessee, and said Mr. Hulas Sharma had asked for receipt of said cash payment by them to assessee. The assessee had explained that payment of Rs. 1 lakh by bank draft is accounted for in its books of account. Copy of ledger account of said M/s. Sudama Singh and Sons and bank statement of the assessee reflecting receipt of draft of Rs. 1 lakh were filed. This was disbelieved by the AO and additions were made by the AO even with respect to payment made by M/s. Sudama Singh & Sons to assessee by Bank draft to the tune of Rs. 1,00,000. CIT(A) accepted contentions of the assessee and deleted this addition. Regarding other transactions of Rs. 1 lakh in cash payment made to assessee as was recorded in seized material No. LP-19/page 41 against which said Mr. Hulas Sharma of M/s. Sudama Singh & Sons asked for receipt of Rs. 1 lakh, was disbelieved by AO and also by CIT(A) who confirmed the addition to income of the assessee. Assessee had raised invoice of Rs. 1,00,002 bearing No. 126, dated 28-11-2006 for supply of chaff cutter and spare parts in favour of Mr. Mukesh Kumar Singh of Purani Gurhatti, Chhapra, Bihar. The said bill was entered into books of account of assessee. The assessee had clarified that both the parties M/s. Sudama Singh and Sons and M/s. Mukesh Kumar and Company were related parties, having even the same address. The assessee had shown that cash of Rs. 1,00,000 was received by it against invoice No. 126, dated 28-11-2006 which receipt of cash was entered in its books of account on various dates from 8-11-2006 to 5-12-2006 and offered for taxation. The assessee might not have accounted for Rs. 1 lakh allegedly received from said Mr. Mukesh Kumar and Company (claimed to be Group concern of M/s. Sudama Singh & Sons) in one go but fact as recorded in books of account (ledger account of M/s. Mukesh Kumar & Company remains that Rs. 1 lakh had been duly entered in the books of accounts to have been received in cash on various dates. Held: The contention of the assessee on the touchstone of preponderance of probabilities was accepted. The assessee had discharged its primary onus and it was for the revenue to have brought evidence to demolish the story set up by assessee in order to unravel the truth, which revenue failed to do so. Thus, in the result, the appeal of the assessee was allowed because on touchstone of preponderances of probability, the assessee had accounted for sale of Rs. 1 lakh and also cash of Rs. 1 lakh as was mentioned in the seized documents was received by assessee and was duly recorded in the books of account of the assessee and offered for taxation, thus, the contention of the assessee to this effect was accepted. Assessee's appeal was, therefore, allowed on this ground.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08, 2009-10 & 2010-11

INCOME TAX ACT, 1961

Section 143(3) Section 153A

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