Ita/113/2000 Of Madan Lal Baasi v. Commissioner Of Income Tax

ITA No.113 of 2000 (O&M) 385IN THE HIGH COURT OF PUNJAB AND HARYANA|AT CHANDIGARH ITA No.113 of 2000 (O&M)Date of decision : 13.02.2020 Shri Madan Lal Bassi ...... Appellant VerTSU Commissioner of Income Tax, Ludhiana & anr. ...... Respondents CORAM: HON'BLE MR.JUSTICEKE AJAY TEWARIHON'BLE MR. JUSTICE AVNEESH JHINGA... Present :-Mr. Pankaj Jain, Sr. Advocate with|Mr. Divya Suri, Advocate,for the appellant. Mr. Rajesh Katoch, Sr. Standing Counsel with|Ms. Pridhi Jaswinder Sandhu, Jr. Standing Counselfor the respondents, ... AJAY TEWARI, J. (Oral) +The present appeal has been filed against the orders of theIncome Tax Appellate Tribunal upholding action of the Assessing Officerwhereby the following additions were made :- 1. Rs.76,66,115/ 2. Rs.5,09,480/ 3. Rs.3,00,000/ 4. Rs.3,00,000/- 2Though the substantial questions of law were framed as (a) to (k) in appealbut at the time of arguments the learned counsel for theappellant pressed questions No. (c), (g), (i) and (j). The substantial ITA No.113 of 2000 (O&M) questions of law are reproduced below :- “(a)Whether in the facts and circumstances of the case,orders Annexures P-1I and P-2 are legally sustainable(b)Whether in thefacts and circumstances of the case, theregular assessment can be framed inspite of violation ofmandatory provisions of not seeking the prior approval ofCommissioner of Income Tax as provided under the IncomeTax Act, 1961? (c)Whether in thefacts and circumstances of the case, theaddition ofRs.76,66,115/- on account ofalleged unexplainedinvestments in purchase of land at Village Kohara 1s legallysustainable the same being based on mere presumptions andsurmises without there being any independent evidence onrecord to corroborate the same? (d)Whether in thefacts and circumstances of the case, theconfirmation of the addition ofRs.76,66,115/- on account ofalleged unexplained investment in the purchase of land atVillage Kohara by the Income Tax Appellate Tribunal,Chandigarh Bench, Chandigarh can be sustained at lawwhere the agreement was not a valid agreement in law, thesame having never beingsignedby the assessee-appellant? (e)Whether in thefacts and circumstances of the case, thesustaining of the addition of Rs.76,66,115/- on account ofunexplained investment made by the assessee-appellantbased upon deposits made by the alleged sellers in theirbank accounts can be legally sustained in view of the factthat the sellers have not been confronted about the sameignoring the evidence put forth by the assessee-appellant inthis regard? ()Whether in thefacts and circumstances of the case, theaddition of Rs.76,66,115/- made on account of unexplainedinvestment in land at Village Kohara by the assessee-appellant can be sustained at law in as much as the Brokerwas never confronted that the same as _ being t considerationfor the alleged sale ofland? (g)Whether in thefacts and circumstances of the case, theaddition of Rs.5,09,480/- on account of alleged undisclosedinvestment in purchase of other land in village Kohara 1slegally sustainable the same being based on _ mepresumptions and surmises without there being anyindependent evidence on record to corroborate the same?(h)Whether in thefacts and circumstances of the case, theproceedings u/s 132 of the Income Tax Act were legal andvalid and consequently the issuance ofnotice u/s 156 BC canbe legally sustained? (1)Whether in thefacts and circumstances of the case, theaddition of Rs.3,00,000/-- on account of unexplaineinvestment in household expenses and household goods islegally sustainable the same being based on _ mepresumptions and surmises without there being anyindependent evidence on record to corroborate the same? (1)Whether in thefacts and circumstances of the case, theaddition of Rs.3,00,000/-- on account of unexplaineinvestment in household expenses and household goods islegally sustainable the same being based on _ mepresumptions and surmises without there being anyindependent evidence on record to corroborate the same? ()Whether in thefacts and circumstances of the case, theaddition of Rs.3,00,000/- on account of unexplained foreigngifts is legally sustainable the same being based on merepresumptions and surmises without there being anyindependent evidence on record to corroborate the same?(k)Whether in thefacts and circumstances of the case, theaddition of Rs.75,400/- being 20 percent of the amount foralleged cash purchases made after 25.7.95 u/s 40A SubClause 3 of the Act is legally sustainable the same beingbased on mere presumptions and surmises without therebeing any independent evidence on record to corroboratethe sqme?” 7Two of these i.e. the amount of Rs.76,66,115/- and amount of Rs.3,00,000/- was unexplained foreign gifts. 5The Tribunal has dealt with the additions in detail and therelevant paras are quoted below. With regard to addition ofRs.76,66,115/- it was held as follows :- “T0. We have considered rival submissions as also thematerial on record to which our attention was invited duringthe course of the hearing. The main thrust of the argumentsof the ld. Counsel 1s that the agreement of sale is an invalidone for various reasons but in our opinion all his argumentsin this respect are of no avail. Without going into thequestion ofvalidity it is not in dispute that the agreement hasbeen acted upon by the parties, the land transferred and saleconsideration passed and furthermore the assessee himselfaccepted the signing of the agreement by some of theco-owners and not all as in apparent from answer toQ.No.18 by Shri Bhagwan Singh on cross-examination byassessee's counsel. There is also merit in the submission ofthe ld. D.R. that the agreement was found from _ thepossession of the assessee and nothing prevented him fromsigning it himself, 10.1 Further, the statements of the “sellers” were recordedand they admitted selling the land and receiving aspecified amount of money which they deposited in theirbank accounts the latter being further substantiated bythe receiptsfoundfrom the assessee's premises. As notedby the AO at page 9 of the assessment order, receiptssigned by Satwant Singh and Bhagwan Singh totalledRs.80 lakhs and which tallied with the configuration ofnumbers appearing at page 27 of diary No.6 seizedduring the raid. It is a matter of record that the AO gaveopportunity of cross-examination to the assessee and ondoing so in the case ofBhagwan Singh the assessee couldnot dislodge any fact stated and it would be out ofplace to state that the revenue’s case in fact became stronger bythefollowing :- (1)Agreement was got typed by the assessee and broughtfor the signatures of the co-owners at their home (Qn.2).(2) Stamp papers for the separate registration deeds werpurchased by the assessee (Qn.8). (3) Objection of non-signing by some of the co-ownersgiven up by the assessee (Qn.20) and further BhagwanSingh had PA POA on behalfofsome ofthe co-owners.(4) Sellers admitted receiving cash as per registratiodeeds as also the balance amount (Qn.26) and furtherstating that there was no fresh agreementfor Rs.60 lakhsas against the agreement found showing saleconsideration of Rs.b0 lakhs and odd (Qns.28&, 40 an41). On re-examination ofShri Bhagwan Singh by the AO, thefollowing emerged :- (1) He confirmed signing the agreement, receiving Rs.lakhs initially and total consideration of Rs.60 lakhs asalso signing receiptsfor the consideration (Q.47 to 50).(2) He confirmed signing against a sum ofRs.80 lakhs butmaintaining these were rough calculations (Qn.53). (3) Objection of non-signing by some of the co-ownersgiven up by the assessee (Qn.20) and further BhagwanSingh had PA POA on behalfofsome ofthe co-owners.(4) Sellers admitted receiving cash as per registratiodeeds as also the balance amount (Qn.26) and furtherstating that there was no fresh agreementfor Rs.60 lakhsas against the agreement found showing saleconsideration of Rs.b0 lakhs and odd (Qns.28&, 40 an41). On re-examination ofShri Bhagwan Singh by the AO, thefollowing emerged :- (1) He confirmed signing the agreement, receiving Rs.lakhs initially and total consideration of Rs.60 lakhs asalso signing receiptsfor the consideration (Q.47 to 50).(2) He confirmed signing against a sum ofRs.80 lakhs butmaintaining these were rough calculations (Qn.53). (3)He confirmed selling the entire land (Qn.54) but statedthat Registration Deed No.29032 was cancelled by theassessee who confirmed receiving back the sum ofRs.16,4000/- on 9.1.95 (the AO in the assessment orderhas observed that the amount alleged to have beenreturned does not find place in the books of accounts ofassessee). (4) Fresh registration in the name of Mr.Bharat BhushaJindal was done at the behest of the assessee (Qns.55 to57). (5) Entire amount pertaining to the fresh registration wareceived by the sellers by Feb., 1995 (Qn.58) (Ld. counsel has argued that sale ofland to B.B.Jindal was in January,1996 1.e. outside the block period and therefore noaddition could be made.). T0.?Taking up the arguments of the parties inrespect of registration of land in the name of B.B.J/indalit becomes quite clear that the said person has acted atthe behest of the assessee and in fact he is the “benami”of the assessee. In his statement recorded he hascategorically stated that he is the close friend of theassessee who carried out the transaction ofpurchase ofland in his name (B.B>Jindal’s). Further, B.B./Jindal hasportrayed himself as the “owner of land ofpapers”. Asalready noted earlier copy of statement recorded wasgiven to the assessee with an opportunity to cross-examine but not availed off. It is further notedfrom thestatement of B.B.Jindal that he never met the sellers(Qn.7) and he denied any connection with the transactionexcept to oblige the assessee and Qn.8 further revealsthat the document was brought to B.B.Jindal by theassessee who asked him to affix his photograph and signit to complete the “statutory requirement”. 10.3As regard the stand of the assessee’s counselthat the amount mentioned in the registration deeds betreated as the investment in the land and alternatively theamount of Rs.35 lakhs be taken as admitted by HaripalSingh, the second alternative being that the addition inany case Should not exceed Rs.60 lakhs which the sellersadmitted having received and the sum of Rs.S0 lakhsalleged to have been paid by the assessee for thepurchase of land to the sellers being an incorrectfiguresand representing calculations only, in our opinion, thereceipts and other documents pertaining to the paymentscopies of which have been placed on record do not leadto the conclusion that these qre mere calculations and as noted by the AO thefigure ofRs.80 lacs stands proved bythe notings in the seized diary vis-a-vis the receipts forpaymentsfound with the assessee during the course of thesearch. There is no material on record to show that theoriginal agreementfor Rs.S0 lakhs and odd was modifiedto a lower figure and this has categorically been statedduring the course of cross-examination of the parties.Further, even if the alternative pleas were taken intoaccount, one cannot loose sight of the fact that theassessee was offering Rs.60 lakhs for assessment beforethe CIT but which she (the CIT) refused to accept nothingthat the agreement was for Rs.80 lakhs and odd andreceipts to this extent had been found at the premises ofthe assessee. In the light of these clear facts, we reallycannot understand as to how the assessee can succeed onany of its arguments, whether main or alternative,advanced before the Tribunal. The other arguments ofcounsel do not advance assessee's Case. 10.4In the final analysis, taking note of the ampleevidence brought on record by the tax authorities, theconclusion drawn from the statements recorded of thealleged sellers, the assessee and B.B.Jindal and theassessee either not availing of the facility of cross-examination given by the AO or wherever availed ofmaking no dent in the case made out by the revenue, weuphold the addition of Rs.76,66,115/- in respect of thepurchase ofland at village Kohara. ” 0So far as addition of Rs.5,09,480/- is concerned the relevantportion is as follows :- “12 We have considered the rival submissions qnd havealso perused the material on record to which our attentionwas invited during the course of the hearing. The Ld.Counsel, as already noted, contended before us that the ITA No.113 of 2000 (O&M) lower value was paid because the land was adjacent to agrave yard but no such submission was made before the AOand this therefore is considered to be an after-thought. Evenin the agreement filed before us, no such fact 1s mentioned.The AO has recorded a finding to the effect that the land inquestion 1s adjacent to the earlier land purchased and whichhas been the subject matter of the immediately precedingground. It definitely creates substantial doubt as to how theland in the same area can be sold at two different figuresshowing such large variation. We have already noticed thatthe affidavit of Shri Sajjan Singh confirming the sale atRs.40,000/- was left in the office of the AO on her table andshe very fairly issued summons u/s 131 which were servedbut nobody chose to appear. In otherwords the assesseecannot now say that no opportunity was given by the AO tosubstantiate the sale consideration of Rs.40,000/- and whiledeciding the earlier ground we have held that the figureshown in the books of accounts as the purchase of the landat Kohara does not depict the correct state of affairs and asubstantial money has been paid outside the books ofaccounts. As against a figure of few lakhs disclosed inrespect of the earlier ground we have confirmed an additionOf Rs.76,77,115/- which has been treated to be the amountpaid outside the books of accounts and which fact has beenamply proved by the AO. The ld. counsel during the courseof the hearing has also drawn our attention to the land ratesprevailing but arguments in this direction do not advancethe assessee case and in the final analysis we uphold theaddition of Rs.5,09,480/- made by the AO in respect of theother land at Kohara. /With regard to addition of Rs.3,00,000/- for householdexpenses it was held as follows :- “In that case, the Bench found as a fact that the AO /With regard to addition of Rs.3,00,000/- for householdexpenses it was held as follows :- “In that case, the Bench found as a fact that the AO had failed to bring on record any material whereas in thecase before us the assessee at the outset concededexpenditure outside the books of accounts to the tune ofRs.61,700/- and the AO in the assessment order made areference to the seized material which showed_ furtheexpenditure outside the books of accounts. The CIT in thehearing before her took into account all the relevantsubmissions made by the assessee and scaled down theexpenditure outside the books of accounts to Rs.3 lakhs. Asnoted in the assessment order the assessee's stand that someof the itemsfound were keptfor demonstration purposes wascompletely demolished when the AO summoned the person towhom these goods were stated to have belonged and evenafter being confronted the assessee kept quiet. Similarly, inthe other decision of the Ahmedabad Bench, Supra, reliedupon by the assessee, the Tribunal did sustain some additionand noted as a fact that there were sufficient withdrawalsand addition on account of low household expenses was tobe deleted. In other words, whatever relief the assessee gotin that case his withdrawals made were taken into accountand in the present case the AO has recorded as a findingthat the withdrawals during the block period were on thelower side. In none of these two decisions relied upon by theassessee do we find a proposition of law settled by theTribunal to the effect that in a block assessment such type ofaddition cannot be made. In the final analysis, we upholdthe addition made by the AO in respect of householdexpenses. .With regard to addition of Rs.3,00,000/- for foreign gifts, itwas held as follows :- “21.1 During the course of the hearing of the appeal the Idcounselfor the assessee was specifically confronted with theaforesaid documents but other than contending that the ITA No.113 of 2000 (O&M) assessee did not know Rajender Ji or that the letter-head ofthe hotel had nothing to do with the assessee, no othercogent explanation or submission cameforth. In this view ofthe matter, we have to consider the issue taking into accountthe totality of the facts and circumstances as also the factthat on being confronted even at the assessment stage nocogent explanation came forth from the assessee. We arealso ofthe view that the addition ofRs.3 lakhs pertains to thenotings, calculations and entries made in the variousdocuments discussed earlier and we, therefore, need not gointo the question about the nexus of any gifts being receivedby assessee’'s wife. If necessary, this aspect of the matter canbe taken care of while disposing off the appeal of theassessee'’s wife and which has already been heard anawaiting disposal. 21.2, In the final analysis, we uphold the addition of Rs.lakhs made in the hands of the assessee vis-a-vis thepurchase ofdollars out of unaccountedfunds.” 6All the four issues are pure questions of fact and theconclusion drawn by the Assessing Officer and the Tribunal are based onthe evidence and documents recovered during a search operationconducted at the premises of the appellant. Counsel for the appellant hasnot been able to show us that the findings of fact are based either on noevidence or based on such a perverse mis-reading of evidence so as tojustify the interference of this Court. 4No question of law, much less any substantial question oflaw, arises in this appeal. Appeal stands dismissed. ITA No.113 of 2000 (O&M) +2Since the main case has been decided, the pending civilmiscellaneous application, if any, also stands disposed of. (AJAY TEWARI )JUDGE February 13, 2020pooja sharma-l ( AVNEESH JHINGAN)JUDGE Whether speaking/reasonedWhether Reportable | Yes/NoYes/No