Ita/25/2015 Of Vikrant Dutt Chaudhary v. Commissioner Of Income Tax, Panchkula (Haryana)

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 25 of 2015 (O&M)Date of decision: 17.9.2015 Vikrant Dutt Chaudhary .....- Appe Commissioner of Income lax, Panchkula (Haryana) ....mesponden CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MR. JUSTICE RAMENDRA JAIN 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest? Present: Mr. Divya Suri, Advocate with Mr. Madhur Sharma, Advocate, Mr. Deepanshu Jain, Advocate|and Mr. Sachin Bhardwaj, Advocate for the appellant. Mr. Yogesh Putney, Advocate for the revenue. Ajay Kumar Mittal,J, 1.There is a delay of 1214 days in filing the appeal. The groundnarrated in the application seeking condonation of delay is that against theimpugned order dated 29.4.2011, an application under Section 254(2) of theAct was filed on 12.9.2011 which was rejected by the Tribunal on30.6.2014. It was in these circumstances that delay in filing the presentappeal impugning order dated 29.4.2011 has occurred. For the reasonsstated in the application and after hearing learned counsel for the parties, thedelay in filing the appeal 1s condoned, ).This order shall dispose of ITA Nos.25, 38 and 83 of 2015 aslearned counsel for the parties are agreed that the issue involved 1n all theseappeals is identical. However, the facts are being extracted from ITA No.25of 2015. 3.ITA No.25 of 2015 has been filed by the assessee underSection 260A of the Income Tax Act, 1961 (in short, “the Act”) against theorder dated 29.4.2011, Annexure A.11 passed by the Income Tax AppellateTribunal Chandigarh ‘A’ Bench (in short, “the Tribunal’) in ITANo.978/CHD/2009 for the assessment year 2001-02, claiming followingsubstantial questions of law:- 1) Whether under the facts and circumstances of the case, thesignatory of the document can be a ‘witness of himself’, underArticle 20(3) of the Constitution, as the ‘morphed/photocopy'document never produced for examination in adyudicationproceedings, hence the action 1s contrary to ‘chargeability ofincome under section 5 of the Income Tax Act, 1961?signatory of the document can be a ‘witness of himself’, underArticle 20(3) of the Constitution, as the ‘morphed/photocopy'document never produced for examination in adyudicationproceedings, hence the action 1s contrary to ‘chargeability ofincome under section 5 of the Income Tax Act, 1961? 11) Whether the ‘hypothetical income’ can be brought to chargeunder section 5 of Income Tax Act, 1961 dehors the provisionsof section 2(c) read with section 10 (Indian Contract Act,1872), Section 5 (Transfer of Property Act, 1882), Section 17(The Registration Act, 1908) and the provisions of IndianStamp Act, 1899?"under section 5 of Income Tax Act, 1961 dehors the provisionsof section 2(c) read with section 10 (Indian Contract Act,1872), Section 5 (Transfer of Property Act, 1882), Section 17(The Registration Act, 1908) and the provisions of IndianStamp Act, 1899?" 4.A few facts relevant for the decision of the controversyinvolved as available on the record of ITA No.25 of 2015 may be noticed. The property in dispute 1.e. H.No.146, Sector 8 Chandigarh was sold byVijay Dutt Chaudhary (mother), Prashant Dut Chaudhary (son) and VikrantDutt Chaudhary(son) through registered sale deeds dated 29.9.2000 for an amount ofLT39 lacs (LT13 lacs each) vide receipt dated 15.9.2000, Annexure ITA No.25 of 2015 (O&M) 4.A few facts relevant for the decision of the controversyinvolved as available on the record of ITA No.25 of 2015 may be noticed. The property in dispute 1.e. H.No.146, Sector 8 Chandigarh was sold byVijay Dutt Chaudhary (mother), Prashant Dut Chaudhary (son) and VikrantDutt Chaudhary(son) through registered sale deeds dated 29.9.2000 for an amount ofLT39 lacs (LT13 lacs each) vide receipt dated 15.9.2000, Annexure ITA No.25 of 2015 (O&M) A.|l. Report of ADI (Inv.) dated 11.3.2004 Annexure A.4 was forwarded tthe DIT(Inv.) which formed the basis of initiation of reassessmentproceedings. Notice dated 19.7.2006 was issued and served on the assesseeunder section 148 of the Act for initiation of re-assessment proceedings andon the basis of the reasons recorded, the appellant filed his income taxreturn on 5.11.2007. On 5.11.2007 and 15.11.2007, the appellant furnishedwritten pleadings before the Assessing Officer stating that he, his brotherand mother never signed any receipt/document qua Yi..%--%---=>Bsignatures were either forged/morphed from some other document;L9,90,000/- were received through Account payee cheques in June 2000 andLV28,10,000/- were received in October 2000; the appellant was only awitness in the alleged receipt of<a55,00,000/-; mere photo copy of anydocument could not be taken as admissible evidence under section 102 ofthe Indian Evidence Act, 1872; the appellant purchased new H.No.162,Sector 2, Panchkula within one month after the sale of house 1n question.Not satisfied with the contentions raised by the appellant, the reassessmentproceedings were concluded by the Assessing Officer on 22.11.2007 andlong term capital gain on sale of House No.146, Sector 18A, Chandigarhwas determined at =a12,23,334/-. Aggrieved by the order, the appellant wentin appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Videorder dated 24.8.2009, Annexure A.8, the CIT(A) dismissed the appealrelying on the forged/morphed receipt ofa55,00,000/-. The assessee wentin appeal before the Tribunal. Vide order dated 29.4.2011, Annexure A.11,the Tribunal dismissed the appeal inter alia on the ground that the receipt indispute was not produced in original and no material was produced to ITA No.25 of 2015 (O&M) contend that the receipt was forged. Aggrieved by the order, the appellantfiled an application under Section 254(2) of the Act before the Tribunal forrectification of the order dated 29.4.2011. Vide order dated 30.6.2014,Annexure A.14, the said application was dismissed. Hence the instantappeals by the appellant-assessees. 4 We have heard learned counsel for the parties.6]A perusal of the findings recorded by the authorities belowshows that three co-owners 1.e. two brothers - Prashant Dutt Chaudhary &Vikrant Dutt Chaudary and their mother — Smt.Viyay Dutt Chaudhary hadsold House No.146, Sector 8A, Chandigarh for consideration of ||39 lacsin September 2000 in which share of each co-owner was shown at TL13 lacs,The mother and the two sons had failed to furnish return of income on theground that the income was below the taxable limit. However, InvestigationWing of the Income Tax Department received tax evasion petition andenquiries were initiated against the three applicants. During the course ofenquiries, the applicants were confronted with the photo copy of the receiptduly issued and signed by Smt.Vijay Dutt Chaudhary and her two sonsPrashant Dutt Chaudhary and Vikrant Dutt Chaudhary as witnesses. As perthe receipt, sum Of=a55 lacs was received as part payment towards sale ofthe house. The said receipt was dated 15.9.2000 and carried the signaturesof Smt.Vijay Dutt Chaudhary on the revenue stamp affixed thereon andsignatures of both the sons as witnesses. The Assessing Officer in theassessment order observed that in the return of income the assessee claimedto have received.TL13 lacs as 1/3[rd]share of the sale consideration on the saleof the house in question. However, the ADIT(Inv.) was in possession of ITA No.25 of 2015 (O&M) ITA No.25 of 2015 (O&M) receipt dated 15.9.2000 which had been signed by assessee's mother andwitnessed by Vikrant Dutt Chaudhary and Prashant Chaudhary. The saidreceipt is relevant to the fact in issue and establishes in unambiguous termsthe receipt ofL35 lakhs in cash over the apparent consideration. The ADIT(Inv.) recorded the statements of Vijay Chaudhary and Prashant Chaduahrywho confirmed the receipt of=a55 lacs by them in cash for the sale of theproperty 1n question. In so far as retraction of statement of PrashantChaudhary and Vijay Chaudhary is concerned as not having signed thereceipt, a close examination of the handwriting on the revenue stampshowed similarity between the signatures on the revenue stamp and that ofSmt.Vijay Chaudary and they were one and the same. After taking intoconsiderationa55 lakhs received by the assessee in cash on 15.9.2000, itwas concluded by the Assessing Officer that the house in question had beensold for a total consideration oT <93 lacs and share of each assessee came to1/3[rd]of total of |LT93 lakhs 1.e.=a31 lakhs. The CIT(A) upheld the findingsrecorded by the Assessing Officer. TdThe Tribunal in its order dated 29.4.2011 had affirmed thefindings recorded by the Assessing Officer and the CIT(A). The Tribunal inpara 9 of its order noticed the plea of the assessee as under:- “QO, At this stage, 1t may be relevant to reproduce the lettedated 1.12.2003 written by Smt.Vijay Dutt Chaudhary to theADIT(Inv.) by which she 1s reported to have retracted herstatement as given before the ADIT(Inv.) on 4.11.2003. Acopy of the said letter has been filed before us. It reads asunder:- “With respect to my statement recorded by you on4.11.2003 at my residence and in relation to the receipt of|= 55,00,000/- purportedly signed by me and by my mother andbrother, | hereby submit as follows: | had not recetved |Lv55,00,000/- or any amount asmentioned in that receipt in cash from Mr. Joginder Singhand Mrs. Harjinder Kaur on 15.9.2000. I or my sons Parshant and Vikrant have never signed anysuch receipt/document. The said document is a forged andfrivolous document and signatures on such receipt are eitherforged or scanned from some other documents etc. andcreated just to harass me and my tamily members. As per that receipt the total consideration of sale of theH.No.146, Sector 8, Chandigarh 1s —Ly93,00,000/-,455,00,000/- were received on 15.9.2000 andLv38,00,000/-Shall be paid at the time of registry. Whereas | would like topoint out that LV9,90,000/- was received through Accountpayees cheques in June 2000/- as part payment and only|L28,10,000/- were pending to be received on 15.9.2000 andthat was received in October 2000. This shows that the saidreceipt 1s just a false document created without fullknowledge of facts. Photo copy of such receipt does notdefine the status of Mrs. Vijay Chaudhary, Mr. VikrantChaudhary and Mr. Parshant Chaudhary. It shows that onlyMrs. Vijay Chaudhary has taken the whole payment as sellerand Mr. Parshant and Vikram Chaudhary are just witnesses. Itnowhere shows them as co-owners. Sir, how 1s this possiblethat the proposed buyer would make such a heavy paymentwithout taking the consent of two other co-owners? This doesnot show that other co owners have taken any amount. Thisfurther cements the facts that this very receipt 1s just afigment of imagination and just created to harass us andwaste the precious time of Income tax department. The receipt is incomplete and imaginary 1s further confirmedby the fact that proposed buyers and sellers have notidentified fully as to their father's name and address. There 1s also no reference to any agreement to sell made for thatpurpose. This proves that the fact 1s just a crude receiptcreated by some childish brain and even the spelling of wordreceipt are shown as receipt 1n that. The receipt is incomplete and imaginary 1s further confirmedby the fact that proposed buyers and sellers have notidentified fully as to their father's name and address. There 1s also no reference to any agreement to sell made for thatpurpose. This proves that the fact 1s just a crude receiptcreated by some childish brain and even the spelling of wordreceipt are shown as receipt 1n that. I request that original document should be shown to me formy verification and signature verification from forensiclaboratory should please be carried out to confirm thatsignatures on that receipt are a forged one. Ageing ofhandwriting, Ageing of paper used for such receipt andAgeing of revenue stamp affixed on this should also be doneto confirm that the document was signed on 15.9.2000. I request you to fully investigate the matter. Matter may further be investigated as to who had sent the wrongcomplaint to waste the precious time of IT department andmislead the senior officers. Proper action may please betaken against the sender of the receipt so that no one shoulddare to mislead the IT department.” I further confirm that this statement taken from me on4.11.2003 at my residence was taken forcibly and undercoercion and I totally disown my statement given on41120003... I further want to ask as for what reasons Summons wereissued to me for 10.11.2003 when no statement of mine wassupposed to be taken. Was it just to mark my attendance inthe IT office.’ However, the Tribunal after examining the facts of the case rejected the contention of the assessee and dismissed the appeal, observing as under:- “18. We have heard both the parties and carefully consideredtheir submissions including the authorities referred to by them.The case of the AO 1n making the impugned addition 1s built onthe photo copy of the receipt evidencing payment of=a55 lacsin cash and the statements of the assessees as recorded byADIT (Unv.) on oath in which they have confirmed the authenticity of the said receipt including its contents as well astheir signatures appearing on it. It is however, the case of theassessee that photostat copy of the receipt in the possession ofthe income tax department has no evidentiary value as theAssessing Officer 1s not in the possession of the said receipt inoriginal. Therefore, the crucial issue that needs adjudication atthe outset 1s whether photo copies of the relevant documentslike the receipt in the present case can at all be taken intoaccount, in the absence of the original documents, by the AOfor making the assessment. It 1s true that photostat copies of thedocuments, in the absence of their original have littleevidentiary value under the law of evidence. However, therelevant question 1s not whether photostat copies, in theabsence of their original, have any evidentiary value under theIndian Evidence Act. The relevant question 1s whether the AOis at all required by the provisions of the IT Act to act on thebasis of what 1s technically called “evidence” under the IndianEvidence Act. In our view, the issue is fairly well established.While making as assessment, the AO does not act merely onwhat is technically described as “evidence” in the IndianEvidence Act. It can well be seen from sections 142 and 143 ofthe IT Act that the AO may also act on “the relevant materialwhich he has gathered” for the purpose of making assessment,In common parlance, the expression “material” would coveranything that may have influence or effect on the decision orthe merits of the case. The very use of the word “material” insection 143(3) clearly shows that the AO 1s not fettered by thetechnical rules of evidence and the like and that he may act onmaterial which may not, strictly speaking, be accepted asevidence in a court of law. Though the aforesaid proposition 1swell brought out by sections 142 and 143 and therefore noauthority 1s needed to support them, there 1s nevertheless seriesof authorities laying down the proposition that an AssessingOfficer can act on such materials and information, which are not strictly “evidence” under the Evidence Act. They are e.g,Vimal Chandra Golecha vs. ITO, 134 ITR 119, 130, 131 (Raj.),Additional CIT vs. Jay Engineering Works, 113 ITR 389, 391-2(Del.) and Seth Gurmukh Singh vs. CIYT, Punjab, 12 ITR 393,425 (Lah.). However, the material proposed to be used by theAQ should be relevant to the fact 1n issue before the AO canuse them for making the assessment. We therefore hold thatphotostat copies of documents, in the absence of their originalconstitute material in the hands of the AO 1f they are relevantfor the purpose of assessment and if they are not successfullyrebutted by the assessee. What is the value of the photo copyof a document as “material” for the purpose of assessmentdepends essentially upon the nature of documents, contents ofthe document and the facts surrounding the case. It cannot belaid down as a general proposition that the photo copy of adocument will always constitute relevant “material” for thepurpose of assessment or that it will never constitute relevantmaterial for assessment. In this view of the matter, thesubmission of the assessee that the AO cannot take into accountphoto copy of the receipt for the purpose of assessment 1srejected, 19. Turning to the facts of the case before us, the photocopy ofthe receipt 1s specific 1n that it evidence receipt of=a55 lakhs jscash from Shri Joginder Singh and Mrs. Harjinder Kaur, beingthe purchasers, on 15.9.2000. It 1s duly signed by all theassessees 1n token of having received the aforesaid sum ofmoney in cash. The name of the purchasers as also the date ofreceipt of the aforesaid sum of money are also mentioned in thereceipt in unambiguous terms. The fact that the receipt carriessignature of the recipient of the aforesaid money on the revenueStamp affixed on the receipt further establishes the genuinenessof the contents of the receipt. If the AO had the original of thereceipt in his possession and shown the same to the assessees,the assessees could have done no better than what they have done by seeing the photo copy of the receipt. Besides, thereceipt is relevant to the fact in issue and establishes inunambiguous terms the receipt of|=a55 lakhs in cash over theapparent consideration. Secondly, the authenticity of thereceipt, the authenticity of the signatures of the assessees on thereceipt, and the fact that a sum of Lv55 lakhs was actuallyreceived by them in cash have been confirmed by the assesseesin their respective statements recorded on oath by the ADIT(Inv.). In other words, the genuineness of the receipt and alsothe contents thereof are duly corroborated by all the assesseesin their respective statements. It 1s not a case where thedepartmental authorities are acting merely on the basis of photocopy of the receipt. Thirdly, and more importantly, theassessees have not placed any evidence on record to rebut thecontents of the receipt or even the contents of their statements.In this factual setting, we are unable to hold that the saidreceipt is irrelevant material for the purpose of makingassessment. We therefore hold that the Assessing Officer hasrightly acted upon the contents of the receipts which are dulycorroborated by the assessees in their respective statements,for making the assessment under challenge before us.” 8.The findings recorded by the authorities below are purefindings of fact which have not been shown to be illegal or perverse 1n anymanner which may call for interference by this Court. Consequently, nosubstantial question of law arises. The appeals stand dismissed. (Ajay Kumar Mittal)Judge September 17, 2015<:$< (Ramendra Jain)Judge|