ITAT Erred in Accepting Retraction of Admission Without Testing Credibility: Calcutta HC

CIT Vs Ashok Kumar Poddar (Calcutta High Court)

The appeal arose under Section 260A of the Income-tax Act, 1961, where the Revenue challenged the decision of the Income Tax Appellate Tribunal deleting additions of ₹3,25,37,586 and ₹17,29,25,670 made on the basis of seized documents during a search operation. The appeal was maintainable only if it involved a substantial question of law, particularly where findings of fact were alleged to be perverse.

A search and seizure operation was conducted on 19 December 1998 at the residential premises and bank locker of the assessee, resulting in seizure of jewellery, cash, and loose papers. Block assessment covered the period from 1 April 1988 to 19 December 1998. During proceedings, the Assessing Officer relied on loose sheets allegedly reflecting undisclosed transactions and a trial balance, invoking the statutory presumption under Sections 132(4A) and 292C of the Act. Based on these documents, additions were made as undisclosed income.

The assessee denied ownership and authorship of the seized documents and later retracted an earlier statement admitting that certain papers summarized business operations. The Commissioner (Appeals) held that the Revenue failed to prove that the documents belonged to the assessee, noting absence of handwriting verification and lack of corresponding assets acquired from alleged undisclosed income. The presumption under Section 132(4A) was held to be either wrongly applied or successfully rebutted. The Tribunal affirmed this view, observing that no “matching assets” were found and that reliance on statutory presumption alone was insufficient.