The Commissioner Of Income Tax ... vs D.K. Gupta
2008 Latest Caselaw 1747 Del

              THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Judgment delivered on: 26.09.2008


+              ITA 1126/2008

THE COMMISSIONER OF INCOME
TAX DELHI (CENTRAL)-II                                   ...     Appellant


                                    - versus -


D.K. GUPTA                                               ... Respondent

Advocates who appeared in this case:

For the Appellant     : Mr R.D. Jolly
For the Respondent    : Dr Rakesh Gutpa with Ms Poonam Ahuja and Ms Aarti Saini


CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. This appeal is preferred by the revenue against the order

dated 18.01.2008 passed by the Income-tax Appellate Tribunal in

respect of the block period 01.04.1995 to 18.03.2002. The appeal

before the Tribunal had also been preferred by the revenue against the

order of the Commissioner of Income-tax (Appeals) dated 24.12.2004.

The ground raised by the revenue before the tribunal was that the

Commissioner of Income-tax (Appeals) had erred in deleting the

addition of Rs 7,53,55,000/- made on account of entries recorded in

two diaries seized from the assessee's premises holding these diaries as

dumb documents.

2. A search was conducted on 18.03.2002 at the assessee's

residential premises as well as the office of the company in which the

assessee was a director. Amongst other items, two diaries were seized

which were marked as Annexure A1 and A2 to the Panchnama. These

diaries apparently pertain to the calendar year 2001-02 and were found

at the business premises at D-31, First Floor, Green Park, New Delhi.

The assessee is a director in Aerens Buildwell Limited which is in the

business of property development and real estate agency. The notings

in these diaries included appointments, reminders, notings / jottings,

etc. The assessee had been asked to explain all the entries in these

diaries. The same were explained by the assessee through a letter dated

03.03.2004. Even the amounts mentioned were explained as to

whether they referred to 'thousands' or 'lakhs'. The tribunal noted that

the notings were also reconciled in terms of absolute figures from the

accounts seized during the search as indicated in paragraph 6 of the

impugned order. Paragraph 7 contains the details which indicate that

the notings were in lakhs of rupees. Paragraph 8 of the impugned order

reveals that the assessee had explained the notings indicated therein

were in connection with general property related discussion and had

nothing to do with actual transactions. This fact had been explained to

the Assessing Officer who had accepted the same. Again, in paragraph

9 of the impugned order, the notings relating to appointments for

discussion, as indicated in the said paragraph, were explained as having

nothing to do with the actual transactions. Paragraph 10 refers to

notings which indicate telephone numbers and are not related to actual

transactions. Paragraph 11 of the impugned order indicates that each of

the items in respect of which queries had been raised by the Assessing

Officer were responded to by the assessee. There were 36 such items.

3. According to the revenue, not all the entries have been

explained in the sense that the assessee has not produced any material

to show that the transactions themselves had not materialised. The plea

raised by the revenue was that a presumption is raised against the

assessee in view of the provisions of Section 132 (4A) of the Income-

tax Act, 1961 (hereinafter referred to as 'the said Act'). However, we

find that this aspect of the matter has also been considered in detail by

the tribunal. The tribunal has noted that after going through the

contents of the diaries and observations made by the Assessing Officer

and the replies filed by the assessee, the diaries found with the assessee

contained various reminders, appointments, notings / jottings which

any businessman in normal course would make note of in respect of

offers received and what he intends to look into. The tribunal was of

the view that merely because there were notings of offers does not

mean that the transactions had actually taken place and the tribunal was

of the view that the provisions contained in Section 132 (4A) of the

said Act did not authorise the Assessing Officer to raise such a

presumption, particularly when the assessee had offered the

explanation alongwith the documents and evidence and had also

furnished an affidavit to this effect and the Assessing Officer had also

made enquiries with respect to such replies given by the assessee. The

tribunal noted that in such a situation, the burden shifted on the revenue

to prove that the replies filed by the assessee were not correct and that

the notings / jottings had resulted into income which had not been

disclosed in the regular books of accounts. The tribunal returned a

finding of fact that there is no corroborative or direct evidence to

presume that the notings / jottings had materialised into transactions

giving rise to income not disclosed in the regular books of accounts.

4. Consequently, the tribunal upheld the findings of the

Commissioner of Income-tax (Appeals) and agreed with the view taken

by the latter that the assessee was liable to tax only on those receipts

which had been proved to be income in the hands of the recipient. As a

result thereof, the tribunal found no reason to interfere with the

findings recorded by the Commissioner of Income-tax (Appeals) on the

ground that the same were based on valid and cogent materials placed

on record and also produced before the Assessing officer during the

course of assessment proceedings. The tribunal also noted that all the

evidence, materials, explanations were furnished before the Assessing

Officer and it is on the basis of such material that the Commissioner of

Income-tax (Appeals) had arrived at the conclusion that no addition

was warranted on the basis of the seized diaries.

5. We have examined the impugned order in detail and have

also heard the counsel for the parties and we find that the issues sought

to be raised before us are purely issues of fact. The tribunal, being the

final fact finding authority, has returned a certain set of facts. We find

no perversity in such findings and, consequently, no question of law,

what to speak of a substantial question of law, arises for our

consideration.

The appeal is dismissed.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J September 26, 2008 dutt