Commissioner of Income Tax vs D.R. Bansal and Others

Dhirendra Mishra, J.—In IT Ref. No. 17 of 2002 the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur (in short "the Tribunal") has made this reference u/s 256(1) of the IT Act, 1961 at the instance of CIT, Jabalpur and referred the following question of law arising out of order dt. 28th June, 1985 of the Tribunal in ITA No. 822/Nag/1984 for our opinion:

Whether under the facts and circumstances of the case, the Tribunal is justified in law in not giving finding in its order with regard to applicability of presumption u/s 132(4A) of the IT Act, 1961 to the assessment proceedings?

The other connected Income Tax references and Income Tax appeals are also being disposed of by this common order as appeals preferred by the Revenue in the connected cases, have been dismissed by the Tribunal in view of the order dt. 28th June, 1985 passed in ITA No. 822/Nag/1984, D.R. Bansal v. CIT, and the question of law involved in all the references and appeals is the same, which has been referred by the Tribunal for our opinion in IT Ref. No. 17 of 2002.

In this order reference shall be made to the facts of IT Ref. No. 17 of 2002, being the leading case.

Briefly stated, facts of the case are that a search operation u/s 132 of the IT Act, 1961 (in short "the Act") was conducted in the business and residential premises of the respondents-assessees'' group on the basis of warrant of authorization issued by the CIT, Jabalpur in the month of July, 1982. During search operations, various documents, books of accounts relating to the firm M/s Bansal Brothers and its sister concerns including the business transactions, the income which is not disclosed by the assessee in their return of income, were seized. 47 loose sheets, typed copy of the financial statement of partnership firms, a bunch of loose papers containing 105 sheets recording cash transactions of partnership firm M/s Chhattisgarh Iron & Steel Works - a sort of cash book for the financial year 1981-82 and 178 loose sheets recording cash transaction of partnership firm M/s Bansal Brothers (in short "M/s BB") - a sort of cash book for financial year 1981-82, were seized from the residence of one partner Smt. C.R. Bansal from the briefcase of her spouse Shri K.K. Bansal. Smt. C.R. Bansal and Shri K.K. Bansal were not present at the time of seizure.

In the course of proceedings u/s 132(5) in the case of M/s BB, the documents seized during search proceedings were shown to the assessee as desired and its explanation was sought. In its written explanation, the assessee sought to plead that the papers containing some accounts are fictitious, false and unreliable and non-genuine being irrelevant to the transactions of the assessee firm M/s BB. Since the papers are typed papers found in the residential premises of Mr. K.K. Bansal, therefore, it is not possible for the assessee to understand how and where the papers were found by the searching party unless a copy of the ITO''s report or Addl. Director of IT''S report to the CIT concerning the raid is made available to it. Subsequently, copies of the affidavits of the accountants of the group Shri N.B. Lalson and Shri P. Rajan dt. 23rd Oct., 1982 along with a joint confession letter addressed to Shri K.K. Bansal were filed. They also filed affidavits of Shri Lalson and Shri Rajan, who affirmed on oath that they have planted these fabricated documents at the residence of Shri K.K. Bansal when he and his wife had gone to Delhi.

Shri Lalson affirmed on oath that he is serving M/s BB as accountant for the last 10 years, he also helps friends and colleagues in other firms; he was a trusted employee and guide of the firm, and he was entrusted with full responsibility the work of maintenance of accounts and other related matters concerning the Income Tax and sales-tax etc. He prepared the loose papers and other documents in connivance with other accountant Shri P. Rajan and placed the same in the residential premises of Shri K.K. Bansal in his absence on the advice of a friend. The loose papers contained bogus and absolutely false, baseless entries in the form of loose sheets typed and handwritten by him and his colleague Shri P. Rajan, pertaining to the firm M/s BB and M/s Chhattisgarh Iron & Steel Works and partners (in short "M/s CISW"), and the same were seized by the IT Department on 20th July, 1982 mentioned in Annex. Al to Panchanama in respect of seizure and search made in the residential premises of Shri K.K. Bansal, partner of M/s CISW. The same are not real, but false and bogus. Similar affidavit was sworn by Shri P. Rajan, accountant of the firm M/s CISW.

The assessee on the strength of confession and affidavits of those accountants contended that these papers were false and fabricated and it was humanly not possible to explain something, which was written by someone without any basis.

The AO made enquiries and most of the persons, whose names were shown as creditors, denied to have any such transactions with the assessee group. The AO proposed addition of Rs. 5,06,071.81 u/s 144B of the Act. However, on approval from the IAC, an addition of Rs. 2,08,904 was made and it was observed that filing of the affidavits and the documents in the form of confirmation letters from various persons for the alleged gifts in marriage and alleged loan, is an afterthought of the assessee with the sole motive to escape the burden of taxation. Shri D.R. Bansal, Shri N.B. Lalson, Shri P. Rajan and Shri K.K. Bansal did not disclose in their statements recorded during the raid regarding alleged preparation of fabricated documents. Even during the course of proceedings u/s 132(5), the above fact was not disclosed. They claimed that they fabricated the documents on the advice of one Shri Baxi, who only knew the intricacies as to how the documents could be used for blackmailing the party. However, the said Baxi was never produced before the AO on the pretext that he is no more alive. They also stated that the fabricated documents were prepared and given to Shri K.K. Bansal''s daughter for placing it with other important papers in his alrnirah and the raid took place a few days after placing the fabricated papers in the alrnirah.

The AO has viewed the above act with suspicion on the ground that Shri Lalson or his friend could not have predicted action u/s 132 in the premises of the assessee. It has also been observed in the order that if the names and figures in the seized papers were imaginary, then how the same can be used for blackmailing the party. It has been further observed that the accountants are experienced and educated persons and represent the parties before the IT and sales-tax authorities. Had they thought of blackmailing through fabricated documents, they could have handed over the same to the proper authorities instead of keeping it in the alrnirah. In view of their admissions that the accounts were regularly supervised/checked by Shri D.R. Bansal and Shri K.K. Bansal so that no transactions could take place without their knowledge, the AO doubted their affidavits, in which they claimed that they expected to blackmail the party on the strength of fabricated and unreal financial affairs by placing it in the alrnirah. It has also been observed that instead of placing the original document in the alrnirah, they would have placed photocopy of the same and kept the originals with them, if their intention was to blackmail the party on the basis of fabricated documents.

Taking note of the fact that the accountants were still in service of M/s BB and M/s CISW and no police action has been launched against them for fabricating the documents, the affidavits of the accountants have been disbelieved, and it has been observed in his order dt. 16th Oct., 1982 u/s 132(5) in the case of M/s BB, where the assessee is also a partner, it has been held that the papers found and seized from the residential premises of Smt. C.R. Bansal depict the true financial state of affairs of business of M/s BB. Accordingly, addition of Rs. 5,06,071.81 u/s 144B was proposed. However, as per direction of the IAC, Range-II issued u/s 144B, addition of Rs. 2,08,904 was made and total income of the assessee was assessed at Rs. 2,20,194.

In appeal filed by the assessee, the CIT(A) dealing with four issues formulated for its consideration in para 4 of its order, observed that the proceedings against the assessees were not criminal or quasi criminal; they are plain and simple assessment proceedings; the provisions of Indian Evidence Act and the case laws in connection thereto were not applicable; the loose sheets have neither been signed by any of the partners nor there is any material to show that they have been written by the partners; they were written and prepared by the accountants, their evidence is, therefore, vital to the issue as to their fabricated nature or as to their real nature. It is their evidence, which requires to be weighed, considered and decided upon. The strict proof of evidence does not apply to the Income Tax proceedings. Apart from the evidence of the two accountants, other evidences brought on record go to prove that three sets of loose sheets are only fabricated documents containing fabricated and imaginary figures devoid of realities much less even remotely indicating the existence of any number two business. The inferences of the Department are based on conjectures, surmises and apprehensions. It has not been able to bring on record any evidence of specific item showing inflation of purchase/expenses or any understatement of income for the asst. yr. 1980-81 whereas the assessee has successfully rebutted the presumptions, apprehensions and conjectures by explaining that all the entries and items of transactions in the three set of loose sheets are simply false and bogus.

The CIT(A) concluded by recording a finding that the three sets of loose papers are fabricated and bogus sheets designed and implanted with ulterior motives and the same do not reflect the record of number two business of the group. Repelling the arguments of the Revenue that in view of provisions of Section 132(4A), it should be presumed that all these papers belong to them and those contained correct entries, it was observed that the papers were not recovered from any business premises, these were recovered from the residence of Smt. C.R. Bansal placed in the briefcase of her spouse Shri K.K. Bansal in the absence of both of them, then presumption should be against whom? None of the three sets of loose sheets contained signatures of the partners of the firm and none of them has been written by any one of them. Section 132 is a part of provision of Chapter XIII of the Act, which deals with the IT authority''s jurisdiction, power regarding discovery, production of evidence etc. and search and seizure. The assessment proceedings are contained in Chapter XTV. Procedure for assessment of Chapter XIV lays down complete code about the assessment. Thus, the presumption u/s 132(4A) of the Act is circumscribed by the subject for which it has been provided for and does not extend to regular assessment proceedings. With these observations, deciding the first issue framed by it for adjudication of the appeal in favour of assessee, it was held that three sets of loose sheets are fabricated documents, they do not show true and correct record of business dealings and transactions by the groups (M/s BB, M/s CISW or even SHM & Co.) nor they record the true and correct income shown as divided amongst the partners inclusive of the appellant. They do not show any income earned by the group over and above which is truly and correctly recorded in the regular books of accounts maintained and produced before the IT Department.

It has been further held that two accountants namely, Lalson and Raj an had hatched conspiracy and planned to prepare fabricated documents showing incorrect and inflated transactions as well as figures in different sets of papers and it is they who had planted such papers at the residence of Smt. C.R. Bansal when they were out to Delhi. These papers do not show any true or correct position and do not show number two business dealings as assumed by the Revenue. The true and correct income of the assessee cannot be determined on the basis of these three sets of loose papers and the assessments made relying on such papers are not sustainable in law and on facts. Accordingly, addition of Rs. 2,08,904 based on the loose sheets was deleted and the ITO was directed to modify the assessment accordingly.

The Tribunal dismissed the appeals filed by the Revenue and confirmed the order of the CIT(A). Referring to the arguments of the respective parties with respect to presumption attached u/s 132(4A) in detail in para 16 of its judgment, the Tribunal did not record any finding with respect to seizure of three sets of loose papers from the premises of assessee in the light of presumption u/s 132(4A). Dealing with the issue�whether three sets of papers seized by the Department during search from the residential premises of Smt. C.R. Bansal, w/o Shri K.K. Bansal, are genuine or false and fabricated - it has been observed that this issue would be very material for giving finding whether the CIT(A) has rightly deleted the addition made by the ITO or not. It was observed that Shri K.K. Bansal enquired into the matter on the advice of his advocate and got himself satisfied that the bogus accounts were in the handwriting of Shri Lalson and Shri Rajan; they were confronted with the similarity of their admitted writing with the writing in the bogus sheets and at this stage, the accountants Shri Lalson and Shri Rajan admitted their guilt and gave a joint confessional letter addressed to the group. They also affirmed this fact by their affidavits. It has been further held that from the aforesaid facts, it can be safely presumed that the confession was obtained by the accountants not by gaining over them but they had to confess their guilt in the circumstances in which they were placed. The accountants have maintained their stand throughout and they stuck to it even in the cross-examination made by the ITO and thus, their confession cannot be brushed aside. Accordingly, it was held that in the light of confession made by two accountants, the plea taken by the assessees that three sets of loose sheets are false and fabricated and planted at the residence of Smt. C.R. Bansal by the accountants, appears to be probable.

The Tribunal finally concluded that the three sets of sheets seized are false and fabricated. The case of the Department is based purely on presumptions, surmises and conjectures. To prove genuineness of the seized three sets of loose papers, the Department failed to prove the interlacing and inter linking between the entries found in three sets of loose sheets seized and the entries in the regular books of accounts. Only on the basis of entries found in three sets of sheets, the Revenue wanted to build up the case that the assessees are doing number two business. The assessees have proved beyond doubt that three sets of sheets seized are false and fabricated. Further, the CIT(A) has dealt with the points raised by the IAC, senior Department Representative and Addl. Director of IT effectively and given his finding. Thus, the Tribunal held that we fully agree with the findings given by the CIT(A) that the loose sheets are false and fabricated and in deleting the addition made by the ITO, the CIT(A) has not committed any illegality or infirmity.

Shri S. Rajeshwara Rao, learned Counsel for the appellant would submit that the Tribunal did not give any finding regarding applicability of presumption u/s 132(4A) of the Act. The loose sheets were seized from the residence of Smt. C.R. Bansal, partner of M/s BB and her husband Shri K.K. Bansal, who was effectively looking after the affairs of the group. The above fact is established from the statements of Shri K.K. Bansal, Shri N.B. Lalson and Shri D.R. Bansal. The assessees have failed to discharge the burden cast upon them to rebut the presumption available u/s 132(4A). Throughout their defence was that their two accountants fabricated the loose sheets and planted the same for eliciting undue advantage. To establish their above defence, they have relied upon the confessional statements and the affidavits of the two fabricators N.B. Lalson and P. Rajan. It was argued that the CIT(A) as well as the Tribunal have conjointly glossed over the following improbability and absurdity in the stand of the assessees:

(i) that the story of planting the loose sheets just two days before the search at the residence of the partner by the accountants in anticipation of reward is highly improbable, unbelievable and bogus,

(ii) that there was no reason for the accountants to foresee that the Revenue would conduct search only two days after planting of the forged loose sheets;

(iii) the loose sheets were final account statements of the firms for 1978-79 to 1980-81 and weekly cash books of the firms M/s BB and M/s CISW for the financial year 1981-82;

(iv) had the accountants planted the loose sheets by fabricating the same to take undue advantage, they would have fabricated the documents for the current assessment year, which would be more relevant and helpful to serve their purpose, if any. From close examination of the loose sheets, it would be seen it contained consolidated figures of both actual and clandestine business transactions carried on by the group and accordingly, part of the transaction tallied with the transaction in the regular books of accounts/financial statements disclosed to the Department;

(v) that it also revealed that the cash accounts were meticulously maintained on weekly basis with ledger folio numbers containing minutest details including tips etc. paid to the peons of the Government Departments to air tickets purchased by the partners for attending marriages etc. The entries are self-explanatory that the loose sheets contained accounts of clandestine number two business;

(vi) that from perusal of the entries in the loose sheets, it could be safely inferred that the same were recorded over a period of time in the regular course during the relevant accounting year;

(vii) that on close examination of the evidence of the two accountants namely, Shri N.B. Lalson and Shri P. Rajan, Shri Girijan, Shri D.R. Bansal and Shri K.K. Bansal, it is clear that the accountants were working with the group for a pretty long time, they were exercising substantial powers of taking decision including appointing employees; they were the most trusted employees and were aware of the secrets of the firms including unrecorded sales, issue of false and accommodative delivery challans etc., which activities were accepted by them and also by Shri K.K. Bansal, husband and power of attorney holder of Smt. C.R. Bansal, partner of M/s BB and M/s CISW;

(viii) that there is admission of Shri K.K. Bansal of issuance of false challans in the name of a party of Jabalpur including admission of dispatch of truck load goods to the same party without recording dispatch in the account. The two accountants were throughout present during search proceedings but they did not disclose to the search party regarding the availability of such loose sheets at the partner''s residential premises. This belies their claim that they planted the documents in expectation of reward from the IT Department. Their claim that they wanted to blackmail and harass the assessees'' group is also belied from the fact that original loose sheets were found in the briefcase of Shri K.K. Bansal. They could not have taken undue advantage by blackmailing without possessing the original papers;

(ix) that the group in proceedings u/s 132(5) disowned the loose sheets by stating that the same are fictitious and not related to them. The story of planting was revealed only on 8th Oct., 1982. The group has submitted only photocopies of the extra judicial confession/photocopy of stereotype affidavits, without signature of any witness to exhibit that they were genuine and were made voluntarily.

(x) that from the tenor of the joint confession letter, it can be safely inferred that the confession was made in reference to some inducement, threat or promise. This is further fortified by the fact that the assessees did not initiate any criminal action against the two accountants for planting fabricated and forged loose sheets. The confession was made by them with the sole object to help their employer and the same falls within the purview of Section 24 of the Indian Evidence Act.

In appeal before the Tribunal, presumption available u/s 132(4A) with respect to recovery of loose sheets was raised by the Revenue, however, the Tribunal did not give its finding on this issue. The observations of the CIT(A) that no defects were found in the books of accounts, are contrary to the evidence available on record. The evidence of issuing false challans, fabricated invoices, unrecorded sale of goods by the group have been brought on record both by way of corroborative material as well as the evidence of two accountants recorded on 24th July, 1982.

The CIT(A) has also given weightage to denial of the credit entries by the parties. However, number two entries are made in business transactions in connivance with the parties to the transactions and therefore, the question of admission by the persons with respect to the said entries does not arise, it is for the assessees to explain the entries in the loose sheets by leading cogent and reliable evidence and in the absence thereof, presumption u/s 132(4A) is attracted.

Reliance is placed on the judgments in the matters of The Commissioner of Income Tax, Bihar and Orissa, Patna Vs. S.P. Jain, and COMMISSIONER OF Income Tax Vs. SOUTH INDIAN RUBBER PRODUCTS., .

On the other hand, Shri Shravan Agrawal, learned Counsel for the respondent-assessees, argued that the CIT(A) has elaborately discussed the material, including documentary and oral evidence, available on record and has reached to the conclusion that three sets of loose sheets have neither been signed by any of the partners nor there is any material to show that they have been written by the partners since they were prepared by the accountants. Their evidence is vital to the issue as to their fabricated nature or as to their real nature. Apart from the evidence of the two accountants, other evidences brought on record go to show that three sets of loose sheets are fabricated documents containing fabricated and imaginary figures. The inferences of the Department are based on conjectures, surmises and apprehensions and the assessees successfully rebutted the presumption available u/s 132(4A) of the Act.

He further submitted that the CIT(A) has discussed the availability of presumption u/s 132(4Aj of the Act in detail, though the Tribunal has not considered the availability of presumption u/s 132(4A) in its order, however, the Tribunal has affirmed the finding recorded by the CIT(A) on facts after considering the overall evidence available on record and therefore, no purpose would be served if the matter is remanded to the Tribunal for giving its finding after considering the availability of presumption u/s 132(4A) of the Act.

Reliance is placed on the judgment in the matters of Meenakshi Mills, Madurai Vs. The Commissioner of Income Tax, Madras, .

We have heard learned Counsel for the parties and perused the orders of the both the Tribunals including the order of the AO.

The only issue referred to us for our opinion by the Tribunal is:

Whether the Tribunal was justified in law in not giving finding in his order with regard to applicability of presumption u/s 132(4A) to the assessment proceedings?

Section 132 deals with search and seizure. It deals with the circumstances, in which category of officers, mentioned in this Section may, authorize Asstt. Director or Dy. Director, Asstt. CIT or Dy. CIT or ITO, to enter and effect seizures. Sub-section (4) of Section 132 empowers the authorized officers that he may during the course of search or seizure examine on oath any person whose premises is being searched and such examination may thereafter be used in evidence in any proceedings under the IT Act. Sub-section (4A) of Section 132 reads as under:

(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed-

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person''s handwriting, and in the case of a document stamped, executed, or attested that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

It was further brought to our notice that Section 292C was inserted by Finance Act, 2007 (22 of 2007) with retrospective effect from 1st Oct., 1975, which provides for presumption as to assets, books of account etc., which reads as under:

292C. Presumption as to assets, books of account, etc.- (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search u/s 132 or survey u/s 133A, it may, in any proceedings under this Act, be presumed-

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person''s handwriting, and in the case of a document stamped, executed, or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of Section 132A, then, the provisions of Sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, of Sub-section (1) of Section 132A, had been found in the possession or control of that person in the course of a search u/s 132.

It is not in dispute that during the search proceedings, three sets of loose sheets, one containing 47 loose sheets typed copies of financial statement of partnership firm, a bunch of loose papers containing 105 loose sheets recording cash transactions of partnership firm M/s CISW - a sort of cash book for the financial year 1981-82, and the other 117 cash loose sheets recording cash transactions of partnership firm M/s BB - a sort of cash book for the financial year 1981-82, were seized from the residence of one partner Smt. C.R. Bansal from the briefcase of her spouse Shri K.K. Bansal. The assessees have admitted that the same were in the handwriting of their two accountants namely Shri N.B. Lalson and Shri P. Raj an. The AO has disbelieved the explanation offered by the assessees based on confessions of the two accountants given on oath by assigning reasons in detail, which have been reproduced in the foregoing paras.

The CIT(A) has reversed the finding of the AO and accepted the evidence of the assessees in this regard that three sets of loose sheets were, in fact, planted by their accountants on the advice of some third person with a purpose to blackmail the assessees for some pecuniary gain. The CIT(A) has also observed that the presumption attached u/s 132(4A) falls under Chapter XIII of the Act, which deals with search and seizure and the same cannot be extended to regular assessment proceedings. The above finding is mainly based on the confessional statements given on oath by the two accountants.

The Tribunal has also accepted the explanation of the assessees in this regard by giving similar reasoning as given by the CIT(A), and held that the loose sheets are forged and fabricated documents planted by the two accountants for some ulterior motives and pecuniary gain. The Tribunal has not adverted to the applicability of presumption u/s 132(4A) attached to the documents found in possession or control of any person in the course of seizure under Sub-section (4A) of Section 132. Both the appellate forums have reached to the conclusion by relying upon the confessional statements of the two accountants for accepting the explanation of the assessees, that the same were planted to cause them harm by their own accountants. The appellate forums have not discussed the reasoning of the AO in disbelieving the explanation of the assessees in this regard. The accountants were trusted employees of the assessees and they served assessees for number of years and enjoyed their utmost confidence, as is evident from the evidence available on record. We find substance in the arguments of learned Counsel for the appellant that the assessees procured confessions of their accountants to escape from the consequences of seizure of incriminating three sets of loose papers, which reveal their clandestine business. The fact that the accountants were not prosecuted by the assessees and they continued in the service of the assessees further strengthens the stand of the Revenue that the accountants made confessional statements at the instance of the assessees to protect them.

In any case, the Tribunal should have considered the discovery of three sets of loose papers from the premises of the assessee during search and, seizure proceedings u/s 132(1) of the Act and ought to have given findings in its order with regard to applicability of presumption u/s 132(4A) to the assessment proceedings.

In S.P. Jain''s case (supra), the question before the Hon''ble Supreme Court was - whether the Department has satisfactorily explained that the shares were purchased in the fictitious name benami. for the assessee, relying upon the circumstances that there was no evidence to show that the benami purchaser was in a position to purchase the shares in question; the benami purchaser did not come forward before the authorities despite several opportunities afforded to him to explain the circumstances under which he purchased those shares; the purchase price of the shares amounting to several lakhs of rupees was not paid by cheque or cheques and the same was paid in cash; that he did not enter into any correspondence with the companies concerned; that the benami purchaser was not in possession of the share scrips and the same were in possession of AM company; that he did not take any step to get the shares registered in his name for nearly 1-1/2 years etc., and it was held that finding of the IT authorities that shares were purchased benami for the assessee was justified and the Tribunal was not justified in reversing the conclusion of IT authorities for no good reasons.

In the matter of South Indian Rubber Products (supra) the High Court of Kerala considering that the Tribunal deleted the addition made by the ITO without giving any cogent reasons for upsetting the findings of the ITO, and that its conclusion was against the evidence available on record by wrongly placing burden of proof on the Revenue, held that the order of the Tribunal was vitiated and accordingly, set aside the same.

In the instant case also, the AO after considering the overall evidence available on record rejected the explanation of the assessee that three sets of loose sheets were fabricated and unreal documents by giving cogent reasons for disbelieving the confessional statements of the two accountants. The reasons assigned by the AO have been briefly mentioned in paras 6 and 7 of this order. The circumstances brought to our notice by learned Counsel for the appellant, detailed in the foregoing para, underline the improbability and irrationality in the stand of the assessee. The reasoning assigned by the CIT(A), which has been subsequently affirmed by the Tribunal for accepting the explanation of the assessee and reversing the finding of the AO, is devoid of logic.

In the matter of Sree Meenakshi Mills Ltd. (supra) while dealing with the reference under the IT Act, it has been held by the Hon''ble Supreme Court that it is only the question of law that can be referred for decision of the Court. A finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse; but where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, has come to the same conclusion if it had the power to substitute its own judgment.

It has been further held that when a conclusion has been reached on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole.

In the instant case, the CIT(A) has accepted the explanation of the assessee that three sets of loose sheets seized during search from the premises of Smt. C.R. Bansal, from the briefcase of her husband Shri K.K. Bansal, partners of the firm, were forged and fabricated and planted by the two accountants with an intention to get undue pecuniary benefit from their employers by blackmailing them and in expectation of reward from the Revenue Department. The above finding is mainly based on the confessional statements made by the two accountants. The CIT(A) has accepted the explanation without meeting the cogent reasons given by the AO to reject the above explanation. The version of the accountants in confessing their criminal act defies all logic, and the AO has rightly held that they made those confessional statements at the instance of assessees with a sole object to save them from the consequences of seizure of the three sets of loose sheets, which were, in fact, details of accounts of their clandestine business.

In any case, the Tribunal was legally bound to record its findings with regard to applicability of presumption u/s 132(4A) of the Act to the assessment proceedings. This aspect becomes all the more significant in view of the provisions contained in Section 292C, which was inserted by Finance Act, 2007 and has been given retrospective effect from 1st Oct., 1975 and provides for legal presumptions, as detailed in the provisions reproduced hereinabove.

We are unable to accept the argument advanced by learned Counsel for the respondents that the finding of fact recorded by the CIT(A) has been subsequently confirmed by the Tribunal. We have already observed that both the forums below have reversed the findings of the AO without meeting the reasoning given by him, by which he rejected the explanation of the assessees with regard to seizure of three sets of loose papers during search proceedings.

On the basis of aforesaid discussions, we answer the question of law referred to us by the Tribunal in IT Ref. Nos. 17 of 2002, 10 of 2002 and 11 of 2002 in the negative, that is to say, in favour of the Revenue and against the assessees, and we hold that the Tribunal was not justified in law in not giving finding in its order with regard to the applicability of presumption u/s 132(4A) to the assessment proceedings.

Accordingly, we also allow the appeals preferred by the Revenue and set aside the impugned orders of the Tribunal confirming the orders of the CIT(A) in each appeal. The appeals preferred by the Revenue are remanded to the Tribunal with a direction to decide the same afresh in accordance with law after recording its finding with regard to applicability of presumption u/s 132(4A) of the Act to the assessment proceedings.