Case Law Details
Brief of the Case
Bombay High Court held In the case of M/s Harish Textile Engrs. Ltd. vs. DCIT that Section 292 uses the word ‘may presume’ and not ‘shall presume’ or ‘conclusively presume’. The words ‘may presume’ are in the nature of discretionary presumption different from a compulsory presumption. In the present facts the documents found during the course of the search are uncompleted. It does not indicate the person to whom the payment has been made, the address of the recipient, the person by whom the payment is made and the documents itself indicates that it is prepared for either seeking of funds or reimbursement of funds. Therefore even if the presumption u/s 292 is to be applied and the documents are accepted as true, it would not lead to the conclusion that payments have been made in cash so as to claim the expenditure.
Facts of the Case
The appellant is a manufacturer of Textile Machinery. On 12 September 1996, there was a search action under Section 132 on the appellant. Its office premises, factory at Umargaon,Gujarat and residence of two of its Directors were searched by the officers of the revenue. During the course of the search, the stocks lying in premises of the appellant were inventorised. Besides various loose documents, newspapers and books of accounts were seized by the officers of the revenue.
Consequent to the search, a notice under Section 158BC was served on the appellant. Upon service of the above notice, the appellant filed its return of income disclosing its income at Rs.1.15 crores for the block period i.e. 1 April 1986 to 12 September 1996.This undisclosed income declared were interalia unaccounted cash, excess stock, seized jewellery, seized Indira Vikas Patra, seized Kisan Vikas Patra and investment in sundry assets. On 30 September 1997, the Assessing Officer passed an order under Section 158BC(c) determining the appellant’s total income for the block period 1 April 1986 to 12 March 1996 at Rs.6.1 crores. This income was determined by the Assessing Officer on account of the following addition :(i) Undisclosed income on account of on money on sale of textile machinery Rs.4,10,22,595 (ii) Expenditure disallowed Rs.1,82,38,330 (iii) Undisclosed Income on sale of scrap Rs. 8,78,085.
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