Commissioner Of Income Tax [(C)-Iii v. I-Fiorur Kumar Subbha

* IN THE HIGH COURT OF DELHI AT NEW + ITA 569 0F 20r.r. ludament Delivered On: 28.9.2077 % COMMISSIONER OF INCOME TAX [(C)-III ]. . . APPELLANT Through: Mr. N.P. Sahni, Sr, Standing Counselwith Mr. Ruchesh Sinha, Advocate. VERSUS i-fiorur KUMAR SUBBHA . ..RESPoNDENT Through: Mr. Manish Sharma, Advocate withMr. Vishal Malhotra, Advocate. CORAM :- HON',BLE MR. JUSTICE A.K. SIKRIHON',BLE MR. JUSTTCE STDDHARTH MRTDUL 1. Whether Reporters of Local newspapers may be allowed to seethe Judgment?Judgment?the Judgment?Judgment? the Judgment?Judgment?2. To be referred to the Reporter or not?not? Reporter or not?not?3. Whether the Judgment should be reported in the Digest? A.K. SlKRl, I [(Oral)] 1, [t ]Admit. 2. Following substa ntia I q uestions of law a re proposed for consideration:- "I. Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wascorrect in law n deleting the addition of t 32.50lakhs made by the U/s 69 of the lncome Tax Act,1961 on account of unexplained investment inproperty?the case, the Income Tax Appellate Tribunal wascorrect in law n deleting the addition of t 32.50lakhs made by the U/s 69 of the lncome Tax Act,1961 on account of unexplained investment inproperty? rrA 569/11 Page 1 of 8 2.Whether on the facts and circumstances of thecase the order of Income Tax Appellate Tribunalis not perverse as it has failed to appreciate thatthe assessee has not discharged the rebuttablepresumption cast on him by virtue of provisionsof section 132(44) of the Income Tax Act, 1961?" 3. With the consent of the learned counsel for the parties, we haveheard the arguments finally at this stage itself and proceed to dictatethe order. 1 4. Having regard to the nature of the order we propose to pass, it is not necessary to discuss the facts in detail. At the same time, wedeem it proper to state the bare facts which are necessary for thedisposal of this appeal.disposal of this appeal. The assessee is an individual and derives income from house property, business of transportation, short term capital gains, incomefrom other sources and agricultural income etc. A search and seizuretoperation was conducted at the various premises of the assessee on23'o June, 1999 under Section 132 of the Income-Tax Act (hereinafterreferred to as'the Act'). These premises were located in Delhi andAssam. During the course of search, several loose papers whichshowed investment in properties and these documents were seized.Thereafter, notice under Section 1588C of the Act was issued pursuantrTA 569/11Page 2 of 8 to which the assessee filed return of [income ][for ][the ][relevant ][block]period l't April, 1989 to 23d )une, 1999 declaring'Nil'undisclosedincome. The Assessing Officer did not accept [the ][return ][as ][filed.]During the course of assessment [proceedings ][he went ][through ][the]seized documents and on that basis, number of additions [were ][made.]In respect of various additions, the Tribunal has remitted the [case]back to the Assessing Officer for fresh consideration and [we ][are ][not]aioncerned with those additions. The Tribunal, has however, deletedone addition of { 32.50 lacs as unexplained investment under [Section]69 of the Income-Tax Act and this appeal concerns only that [part ]ofthe order of the Tribunal. The assessee had purchased one property in Adchini near Mehrauli. Consideration shown in the Sale Deed was t 9,50,000/- apartfrom t 85,000/- for other charges. lt was purchased from one Smt.Dalopadi Devi w/o Tulsidas . During the search, the documents whichwere seized included document no.28 which showed ['earnest ]moneyreceipt'. As per this receipt purportedly signed by Smt.Daropadi Deviand witnessed by one Mr. Harish Arora. The price for the said propertywas settled at < 42 lacs and the assessee had paid t 4 lacs vide thatreceipt and agreed to pay the balance amount of t 38 lacs by 22notTA 569/11Page 3 of 8of 88 Page 3 of 8of 88 The assessee had purchased one property in Adchini near Mehrauli. Consideration shown in the Sale Deed was t 9,50,000/- apartfrom t 85,000/- for other charges. lt was purchased from one Smt.Dalopadi Devi w/o Tulsidas . During the search, the documents whichwere seized included document no.28 which showed ['earnest ]moneyreceipt'. As per this receipt purportedly signed by Smt.Daropadi Deviand witnessed by one Mr. Harish Arora. The price for the said propertywas settled at < 42 lacs and the assessee had paid t 4 lacs vide thatreceipt and agreed to pay the balance amount of t 38 lacs by 22notTA 569/11Page 3 of 8of 88 Page 3 of 8of 88 June, [1993 on ][seller ][undertaking ][to ][handover ][the ][vacant ][possession ][by]that date. An Agreement to Sell dated [21't ][May, 1993 ][was ][found ][in]respect of this very [property ]showing consideration [of ][< ][42 ][lacs which]was purportedly singed by Smt. Dropadi Devi and [witnessed ][by ][Mr.]Harish Arora and Tulsidas, husband of the seller. On the basis [of these]documents, the Assessing Officer formed the view that the [actual]consideration paid by the assessee to Smt. Dropadi Devi for [purchase]Iof aforesaid property was < 42 lacs and not < 9.50 lacs as reflected inthe sale deed. He accordingly made addition of t 32.50 lacs underSection 69 of the Act. We may also record that the Assessing Officerhad recorded the statement of Mr. Tulsidas, husband of the seller andas per the said statement, Mr. Tulsidas had confirmed thatconsideration received from the aforesaid [property ]from the assesseewas t 42 lacs and not 9.5 lacs. The assessee, however, denied theownership of document no.28. Before the Assessing Officer he alsofileC Affidavit dated 22"d September, 2006 before the CIT [(A) ]statingthat he had purchased the property only for t 9,50 lacs and thedocuments no. 28 to 33 which included the aforesaid agreement tosell and receipt were not signed by him, The Affidavit of Smt. DropadiDevi dated 29'n )uly, 2006 was also filed stating that she had sold theproperty only at < 9.50 lacs and denied her signature on documentrTA 569/11Page 4 of 8of 88 Page 4 of 8of 88 ,.{) ,.{)( [,l)]V no.28 i,e ['.earnest ][money ][receipt'. ][The ][clT ][(A) ][affirmed the ][order of the]Officer [on ][these ][aspect holding ][that ][these ][affidavits ][were]assessing executed after [the ][assessment ][orders ][were ][passed ][by the ][Assessing]Officer and [were nothing but ][self-serving ][device' ][He ][also ][observed]that smt. Dropadi [Devi was ][an ][illiterate ][lady and ][did not ][know even the]consequences [of ][filing ][such ][an ][affidavit. ][He also concluded ][that ][the]assessee had [not ][discharged ][rebuttal ][presumption ][cast ][upon ][him ][by]Ivirtue of [provisions ][of ][section ] [(4A) ][of ][the ][Act. ][The ][documents]were, admittedly [seized ][from ][the farm ][house ][of ][the ][assessee ][and ][no]plausible explanation [was ][offered ][as ][to ][how ][it ][came in ][the ][possession]and [personal ]custody [of ][the ][assessee.] The ITAT, as [pointed above, deleted ][the ][addition ][by ][giving ][its]reasons which can [be culled out ][from ][reading of ][the ][impugned order ][as]under:- | (i)The registration deed [was also ][seized ][which]showed [purchase ][consideration ][of ][{ ][9'5 ][lacs']There is no evidence [in the ][possession ][of ][the]Revenue that actual [money ][of ][t ][32.50 lacs ][have]been paid. The [inference ][drawn ][is ][only on ][the]basis of documents [which ][have been ][denied ][by]the assessee as [well ][as ][the ][seller ][by ][fling ][their]affidavits. The seller [has ][denied ][even ][her]signatures.showed [purchase ][consideration ][of ][{ ][9'5 ][lacs']There is no evidence [in the ][possession ][of ][the]Revenue that actual [money ][of ][t ][32.50 lacs ][have]been paid. The [inference ][drawn ][is ][only on ][the]basis of documents [which ][have been ][denied ][by]the assessee as [well ][as ][the ][seller ][by ][fling ][their]affidavits. The seller [has ][denied ][even ][her]signatures. (ii)The Revenue had [recorded ][the ][statement ][of ][Sh']Tulsidas, husband of [the ][seller. ][However, ][no]Tulsidas, husband of [the ][seller. ][However, ][no] opportunity of cross-examination was afforded tothe assessee even when he specifically asked forthe same. (iii) The CIT (A) had asked for remand report fromthe Assessing Officer on the issue of affidavit bythe assessee denying the signatures on thedocuments. The Assessing Officer had given thesuggestion that verification of the signatures canbe done from Government Examiner of QuestionDocument, Chandigarh. However, subsequently,the Assessing Officer took an opposite stand bythe Assessing Officer on the issue of affidavit bythe assessee denying the signatures on thedocuments. The Assessing Officer had given thesuggestion that verification of the signatures canbe done from Government Examiner of QuestionDocument, Chandigarh. However, subsequently,the Assessing Officer took an opposite stand by. suggesting that no useful purpose would beI served the documents toby sending I served the documents toby sending Government Examine. The CIT (A) has notconsidered this aspect at all.considered this aspect at all. 5. Insofar as first reason is concerned, the approach of the Tribunal does not seem to be justified. The seized documents, if are genuine,than on the basis of these documents itself it can be safely concludedthat the actual consideration paid for the property was t 42 lacs andnot t 9.50 lacs as shown in the sale deed. The CIT (A) was right to thisextent that it was for the assessee to discharge the onus once thesetdocuments were found from his possession and pertain to the sameproperty. 6. fn K.P. VargheseVarghese Vs. Income Tax Officer, Ernakulam and Another, 131 ITR 597,the Supreme Court has held that burden ofprove is on the Revenuewhen there are allegations of understatementrrA 569/11Page 6 of 8 on concealment in the consideration shown and it is for the Revenueto show that some more money not reflected in the documentsexecuted between the parties pass-hands. This is an onerous burdenand it is not easy for the Revenue authorities to prove suchunderstatement of price as in case of sale purchase transactions, boththe parties would be interested in not disclosing the real considerationif actual consideration is more than what is reflected in the sale deed.It?s seldom for such type of documents comes in the possession of therevenue as in the instant case, as a result of search and seizureoperation. lt is for this reason, we have made remarks that once thisdocument is found to be genuine i.e. signatures of the personsappearing on these documents are genuine than it can be said that theRevenue has discharged the initial burden and onus shifts on theassessee. 7. lMere denial of signatures by the assessee and the seller wouldnot be of any consequence. At the same time, we are of the opinionthat once the signatures were denied, the Department should havesent the documents for the examination by experts to verify thegenuineness of the signatures. Further, the assessee was also entiiledto cross-examine Mr. Tulsidas when he specifically made a request rTA 569/11 Page 7 of 8 thereof. lf the cross-examination is not allowed than the statement ofMr. Tulsidas cannot be taken into consideration. 8. We are of the view that matter should be remitted back to the 7. lMere denial of signatures by the assessee and the seller wouldnot be of any consequence. At the same time, we are of the opinionthat once the signatures were denied, the Department should havesent the documents for the examination by experts to verify thegenuineness of the signatures. Further, the assessee was also entiiledto cross-examine Mr. Tulsidas when he specifically made a request rTA 569/11 Page 7 of 8 thereof. lf the cross-examination is not allowed than the statement ofMr. Tulsidas cannot be taken into consideration. 8. We are of the view that matter should be remitted back to the assessing Officer for adjudication of the issue afresh. The AssessingOfficer shall get the documents examined for verification of thesignatures appearing thereupon from the Government Examiner oftestlon [Document, ]Chandigarh or any authorized Laboratory. Theassessee will cooperate with the Assessing Officer in this behalf. TheOfficer shall get the documents examined for verification of thesignatures appearing thereupon from the Government Examiner oftestlon [Document, ]Chandigarh or any authorized Laboratory. Theassessee will cooperate with the Assessing Officer in this behalf. TheAssessing Officer if wants to rely upon the statement of Mr. Tulsidasshall also afford an opportunity to the assessee for his crossexamination.shall also afford an opportunity to the assessee for his crossexamination. 9. The questions are answered in the aforesaid manner, as a result,the impugned order passed by the Tribunal is set aside and the matteris qmitted back to the Assessing Officer for adjudication afresh in thelight of our observation made in this order. (A.K. SrKRr)JUDGE SEPTEMBER 28,201|lskb (STDDHARTH MRTDUL)JUDGE Page 8 of 8