PCIT-1 Vs Hassan Ali Khan (Bombay High Court)
Summary: The Bombay High Court dismissed the Revenue’s appeal concerning additions made in the assessment of Hassan Ali Khan for Assessment Year 2000-01. During a search at the residence of Kashinath Tapuriah, three bank drafts of Union Bank of Switzerland were found and seized, including a US$2 million draft in favour of Pan Asian Distribution Ltd. and another US$2 million draft in favour of the assessee. The Assessing Officer added the rupee equivalent of the amounts in the assessee’s hands. The Tribunal confirmed the addition relating to the draft in the assessee’s name but deleted the addition relating to the draft payable to Pan Asian Distribution Ltd. The Revenue contended that the presumptions under Section 132(4A) and Section 292C of the Income-tax Act applied because documents concerning the draft were seized during the search.
Read SC Judgment in this case: Bank Draft Seized From Third Party Cannot Establish Assessee Ownership: SC
The High Court noted that the search was not conducted at the assessee’s premises, the disputed draft was payable to Pan Asian Distribution Ltd., and there was no material establishing that the company did not exist or showing a link between the company and the assessee. The Court further held that a bank letter concerning revalidation of the draft did not establish a relationship between the payable amount and the assessee, particularly when the draft was in favour of a limited company and the documents were recovered from a third party. The issue was therefore factual and no question of law arose. The second issue, concerning reduction of unexplained lifestyle expenditure, was likewise held to be factual. The appeal was dismissed.
