Pinaki Chandra Ghose, J.@mdashThis instant appeal u/s 260A of the Income Tax Act, 1961 hereinafter referred to as the said Act involving the assessment year 1994-95 was admitted for hearing on the following substantial questions of law:
i) whether the Tribunal was justified in law in upholding the addition of Rs. 1,45,000/- for the assessment year 1994-95 on the basis of a seized paper without considering and/or deciding the appellant''s contention that the said paper bearing the date January 31, 1992 did not pertain to and could not be considered in the assessment year 1994-95 and no addition could be made on the basis thereof in the said assessment year?
ii) whether and in any event, the Tribunal was justified in law in upholding the addition of Rs. 1,45,000/- on the basis of a seized paper 1 by rejecting the written explanation and statement on oath u/s 131 of the said Act of the author thereof and its purported; findings in that behalf are arbitrary, unreasonable and perverse?
iii) whether and in any event, the Tribunal was justified in law in upholding the addition of Rs. 1,45,000/- without considering and/or dealing with the appellant''s alternative contention that in view of the acceptance by the Revenue of the amount of Rs.4,10,000/- offered for assessment by the appellant as representing the entire undisclosed investment in the pawn broking business as on the date of search and the principles laid down by the Commissioner of Income Tax in his order dated March 31, 1994 u/s 132(12) of the said Act, no separate or further addition could be made on the basis of the seized paper?
2. All the three questions are related to an addition of Rs. 1,45,000/- made against the assessee by the Income Tax Department on October 13/ 14, 1993 in the assessment on the basis of papers seized in course of a search conducted by the department.
3. It appear from the facts that the revenue pointed out that it would be evident from the papers signed by them that the jewellery, valued. Rs. 1,40,000/- was pawned by one Ashoke Kumar Samanta with the assessee against which the assessee advanced Rs. 1,00,000/-. The case of the revenue is that such advance was made out of an undisclosed income and, as such, the said sum of Rs. 1,00,000/- was added to the assessee''s income in the assessment year 1994-95, for which the relevant previous year was the financial year ended on March 31, 1994.Further addition of Rs. 45,000/- was made on account of interest said to have been received by the assessee on the said advance. The Assessing Officer had made an addition of Rs. 70,000/- on account of interest which was reduced to Rs.45.000/- by the Tribunal.
4. It further appears that during the search, the jewellery belonging to customers pawned with the assessee was seized and the same was valued by the Departmental valuer at Rs.9,07,135/-. The assessee accepted that the pawn broking business was undisclosed and offered to be assessed on the investment in the said business. The assessee took the stand that the income earned in the said business prior to the search stood reinvested in the said business and that assessment of the investment in the said business as on the date of search would result in complete taxation of the investment as well as income earned thereon till that date and on such basis the assessee quantified the undisclosed investment and income at Rs.4,10,000/-, being roughly 45% of the value of Rs.9,07,135/- attributed by the Departmental valuer to the pawned articles.
5. Furthermore, the Assessing Officer passed an order u/s 132(5) of the said Act to determine the undisclosed investment in the pawn broking business at 60% of Rs.9,07,135/- i.e. Rs.5,44,280/- and further estimated a sum of Rs.75,000/- as an income from the said business for the assessment year 1994-95.
6. The Commissioner of Income Tax did not accept the search on the part of the Assessing Officer and accepted the disclosure of Rs.4,10,000/- made by the assessee. The assessment of Rs.75,000/- made by the Assessing Officer towards the income for the assessment year 1994-95 was also set aside.
7. In the regular assessment u/s 143(3) of the said Act, the Assessing Officer ignoring the findings made in the Commissioner''s order u/s 132(12) of the said Act determined the amount invested in the pawn broking business by applying the rate of 55% to Rs.9,07,135/-. It was also accepted by the Commissioner of Income Tax (Appeals) that the Assessing Officer should have followed the Commissioner''s direction u/s 132(12) of the said Act.
8. The revenue accepted the said order and did not prefer any appeal. Subsequent thereto in the regular assessment u/s 143(3) of the said Act, the Assessing Officer made an addition of Rs. 1,00,000/- as undisclosed advance made to the said Ashoke Kumar Samanta and a further sum of Rs.70,000/- on account of interest.
9. It further appears that on appeal, the. Assessing Officer directed to examine the said Ashoke Kumar Samanta who appeared before the Assessing Officer being summoned and submitted a letter explaining that the list of ornaments, their approximate value of Rs. 1,40,000/-, his name, address, and date were written by him in Bengali on the seized paper. He had pawned some ornaments with a shop in Central Calcutta for obtaining loan, a part of which was also repaid. He also prepared a list of ornaments for discussion with one of the partners of the assessee for advice as to whether he should pay back the balance loan with interest or allow the pawned ornaments to be confiscated without paying any further amount.
10. Such statement of the said Ashoke Kumar Samanta was recorded by the Assessing Officer. Mr. Samanta further submitted that he had not taken any loan as mentioned in his written explanation which was prepared by a partner of the assessee and signed by him without verifying the contents
11. The Commissioner of Income Tax (Appeals) held that the said Ashoke Kumar Samanta had made contradictory statements in the statement on oath and in the written explanation filed before the Assessing Officer and as such the same were liable to be ignored. He also held that the statutory presumption was against the assessee and upheld the addition of Rs. 1,70.000/- made by the Assessing Officer.
12. It further appears from the fact that before the learned Tribunal, the assessee raised three-fold contentions as follows:
a) There was no transaction between the assessee and the said Ashoke Kuamar Samanta and as such no addition could be made in the assessee''s hands.
b) In any event, the seized paper clearly mentioned the date "31.1.. 1992" and as such did not pertain to the assessment year 1994-95 and could not be considered in the said year.
c) Admittedly, no jewellery belonging to the said Ashoke Kumar Samanta was found in course of the search. Even assuming that the said Samanta had pawned the ornaments with the assessee, the same were returned back upon repayment of the loan before the date of the search. The assessee had offered for assessment the entire undisclosed investment including the undisclosed income earned in the pawn broking business which stood reinvested in the said business as on the date of search amounting to Rs. 4,10,000/-. Having regard to the findings of the Commissioner of Income Tax in the order u/s 132(12) which had been accepted by the revenue, no separate addition could be made on the basis of the seized paper either on account of principal or interest.
13. According to the learned Tribunal, the ''appeal order'' only dealt with the first contention of the assessee and proceeded on the basis as if the said Ashoke Kumar Samanta was required to state the name of the pawn shop in Central Calcutta where he had pawned the ornaments but could not furnish the name, disbelieving such statement of the said Samanta, the Tribunal held that the addition on account of Rs. 1,00,000/- on principal was correct but with regard to the interest of Rs. 70,000/-, the Tribunal on the basis of the materials placed before it, upheld the addition on account of interest to the extent of Rs.45.000/-.
14. It is submitted on behalf of the appellant/assessee that the learned Tribunal had not decided the other two contentions of the assessee; hence, it filed a miscellaneous application u/s 254(2) of the said Act before the Tribunal and the Tribunal rejected the application on November 7, 2005 by observing that it could not review its order and that it had considered all the submissions of the assessee and there was no mistake apparent from the record which could be rectified u/s 254(2) of the said Act.
15. It is further submitted that perusal of the order passed by the Tribunal in the appeal would show that apart from recording the submission of the (sic) that the seized paper did not pertain to the assessment year 1994-fUgJthe. Tribunal did not discuss, the said submission of the assessee or give by finding thereon.
16. It is also submitted that the seized document carried the date 31.1.1992" is not is dispute. According to the Assessing Officer, the assessee earned interest of Rs.70,000/- on the advance of Rs. 1,00,000/ which has been reduced by the Tribunal to Rs.45,000/- since according to it the seized paper did not show the receipt of interest to the extent of Rs.25,000/-.
17. It is submitted that it is inconceivable that interest of Rs.70,000/- or Rs. 45,000/- could be earned on a sum of Rs. 1,00,000/- in course of one year. In fact the statement of the assessee''s partner on the date of search was to the effect that it charged interest at the rate of 2% per month. Thus, even if it is taken that the assessee had actually advanced the sum of Rs. 1,00,000/-, against pawn of ornaments, to the said Ashoke Kumar Samanta, the interest thereon would not be more than Rs.24,000 per annum.
18. It is, thus, evident that if the assessee had actually advanced Rs. 1,00,000/- to the said Ashoke Kumar Samanta, such advance was clearly not made during the financial year ended March 31, 1994 relevant to the assessment year 1994-95 as in that case the amount of interest could not have been more than Rs.24,000/-. The fact that interest was sought to be taken at Rs.70,000/- itself shows that the advance, if any, was made more than two years earlier.
19. It is further submitted that it is apparent from the seized paper that it does not pertain to the assessment year 1994-95 and, as such, it could not have been considered for the said assessment year. At least, there was no question of addition of the principal sum of Rs. 1,00,000/- in the assessment year 1994-95 since the assessee could not have advanced the said amount to the said Ashoke Kumar Samanta during the previous year relevant to the assessment year 1994-95 and earned interest of Rs.70,000/- in the same year.
20. The question further raised before us that the list of ornaments and their approximate value of Rs. 1,40,000/-, name, address and date were written in Bengali on the seized paper not by the assessee or its partners but by the said Samanta and none of the ornaments mentioned on the seized paper were found in the assessee''s possession at the time of search. The Assessing Officer even recorded in the assessment order at one place that the seized paper did not show that any money was advanced against the ornaments mentioned therein, though he sought to arrive at a different finding later on in his order.
21. The said Samanta had furnished a written explanation before the Assessing Officer stating that he had not pawned the ornaments in question nor had he received any loan from the assessee or partner and that he did not have any business or financial transaction with the assesee or its partner at any time. He had also stated that the ornaments were pawned by him and loan was obtained from another shop and that the seized paper was taken by him to the assessee''s partner for discussion in course of which some calculations were made and the paper was left behind.
22. It was only when the Assessing Officer queried the said Samanta a regards the source of the ornaments pawned by him and particulars of the loan taken and repaid and interest paid and the said Samanta, finding inconvenient to answer the questions, stated that he had not taken any (sic) as mentioned in his written explanation which was prepared by the assessee partner and signed by him without going through the contents.
23. Even if the written explanation of the said Samanta was to be ignored in his statement on oath before the Assessing Officer, while admitting that the handwritten matter in Bengali was in his hand, he did not say that he had pawned the ornaments with assessee or obtained any loan from it.
24. It further appears that the said Samanta was not directed in course of his examination by the Assessing Officer to furnish the name of the shop where he had pawned the ornaments. The Tribunal was not justified in disbelieving the explanation of the said Samanta on the assumption that he could not furnish the name of the pawn shop.
25. It is submitted that there was no material before the Tribunal to hold that the seized paper reflected lending of money by the assessee against ornaments and its purported findings upholding the addition of Rs. 1,00,000/- on account of principal and Rs.45,000/- on account of interest are arbitrary! unreasonable and perverse.
26. It is apparent from the order passed by the Tribunal in the appeal that it did not record or consider the alternative contention of the assessee based on the findings contained in the order passed by the Commissioner u/s 132(12). Admittedly, no jewellery belonging to the said Samanta was found in course of the search. Even assuming that the said Samanta had pawned the ornaments with the assessee, the same had to be taken as returned upon repayment of the loan before the date of the search. The ornaments would not have been returned unless the loan was repaid. Even if any loan was given by the assessee to the said Samanta, it had to be taken as squared up before the date of search, as otherwise the said ornaments would have been found in course of the search.
27. The assessee had offered for assessment the entire undisclosed investment including the undisclosed income earned in the pawn broking business which stood re-invested in the said business as on the date of search amounting to Rs.4,10,000/-. The said sum of Rs.4,10,000/- would have to be taken as the principal and interest relating to the said Samanta. No separate addition could have been made in respect of any pre-search transaction of the pawn broking business since the entire undisclosed investment and income of that business as on the date of the search had been offered for assessment. The income offered by the assessee was accepted by the Commissioner of Income Tax as well as the Commissioner of Income Tax (Appeals) and the revenue.
28. The Commissioner of Income Tax in his order u/s 132(12) while disapproving the action of the Assessing officer in estimating the sum of Rs. 75,000/- as the undisclosed income from the pawn broking business for the assessment year 1994-95, held that any income received by the assessee from the said business, prior to the search would have merged with the funds at the disposal of the assessee. He accepted that the assessee had offered to tax the entire investment in the pawn broking business as on the date of search for assessment. He held that any further income would arise only after the assessee received the same from its customers upon returning the pawned articles to them, which were then lying with the Department as seized articles.
29. Hence, it is respectfully submitted that the appeal should be allowed and the questions raised be answered in favour of the assessee.
30. On the contrary, it was submitted by the learned advocate appearing in support of the respondent that the Tribunal after considering the seized loose papers and it carne to the conclusion stating the valuation of the ornaments at Rs. 1,40,000/-. He further submitted that the said transactions were not recorded in the Regular Books of Accounts and the learned Tribunal remanded the matter back to the Commissioner of Income Tax (Appeals) and the assessee could not satisfy the genuineness of the entire amount. It was also submitted that a person who has pawned jewellery of Rs. 1.4 lakh, did not disclose the name of the ''pawn shop'' in Central Kolkata.
31. The Tribunal also found that the right side of the paper shows, the calculation of interest of Rs. 71,400/- on 4.7.1993 against which the receipts of Rs.25,000/- and Rs.20,000/- are recorded and the balance of Rs.26,400/ -is shown as due. Since the amount of Rs.26,400/- is due only and there is no material to show that this amount of Rs.26,400/- has actually been received by the assessee, and upheld the addition of interest of Rs.45,000/- only since the said amounts, Rs.25,000/- and Rs.20,000/-, received by the assessee out of Rs.70,000/- and, accordingly, the said amount was added by the Assessing Officer.
32. It is further submitted that the findings of the Tribunal are on the basis of the evidence and materials on records and there is no substantial question of law is involved in this appeal. The appeal is based on the materials on record and on facts only. Hence it is submitted that the appeal should be dismissed.
33. After considering the submissions made on behalf of the parties, it appears to us that the Tribunal came to the conclusion on the basis of the facts and the materials on record placed before it. We are of the opinion that the questions which have been put forward by the assessee in this appeal are nothing but on the facts only and it can not be said that a substantial question of law is involved in this appeal and, in our considered opinion, the Tribunal and the Commissioner of Income Tax (Appeals) after perusing the evidence and the materials on record came to the conclusion on the basis of the concurrent facts which was placed before it. Therefore, in our considered opinion, there is no substantial question of law involved in this matter and the point which has been sought to be raised by the assessee is noting but purely on questions of facts and in our considered opinion, the Tribunal duty considered the same and on the basis of the facts placed before it, came to the conclusion. Hence, we do not find any merit in this appeal.
34. For the reasons stated hereinabove, the appeal is dismissed.
Urgent Xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
Sankar Prasad Mitra, J.
35. I agree.
