Shashi Kiran v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.129 of 2010 (O&M)Date of decision: 13.8.2010 Shashi Kiran. Vs. Commissioner of Income Tax. -----Appellant. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Ravi Shankar, Advocatefor the assessee.for the assessee. Mr. Yogesh Putney, Advocatefor the revenue. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order dated 24.6.2009 in I.T.A.No.341/CHANDI /2009 for the assessment year 2005-06, passedby the Income Tax Appellate Tribunal, Chandigarh, proposing toraise following substantial questions of law:- (i) Whether the Tribunal has misdirected itself in law aswell as on facts in affirming the orders passed both bythe CIT(A) as well as by the Assessing Officer, whichorders are totally illegal and without jurisdiction, whilesustaining the addition in the hands of the assessee-appellant.well as on facts in affirming the orders passed both bythe CIT(A) as well as by the Assessing Officer, whichorders are totally illegal and without jurisdiction, whilesustaining the addition in the hands of the assessee-appellant. (ii) Whether the notice issued under Section 153C of theAct, in the absence of the satisfaction note of theAssessing Officer of the seller, whose premises havebeen searched and the incriminating material i.e.Ikrarnama, having not been brought on the recordand/or confronted to the assessee-appellant, is illegaland without jurisdiction, in view of the judgmentrendered by the Hon’ble Supreme Court in the case ofManish Maheshwari Vs. ACIT (2007) 289 ITR 341 (SC)? (iii)Whether the Tribunal has traveled beyond the scopeof its jurisdiction and the assessment recordsincluding the reasons recorded by the AssessingOfficer while sustaining the addition merely on thereturned higher sale price shown by the seller in hiscomputation of income as compared to the saleconsideration shown in the registered sale deed,which sale deed was duly admitted to have beenexecuted on his own volition by the seller? (iv)Whether the impugned order passed by the Tribunalconfirming the order of assessment passed by theAssessing Officer, in utter violation of the mandatoryprovisions of Section 153C of the Income Tax Act,1961, is totally illegal and without jurisdiction andtherefore, void ab-initio? (v)Whether the Tribunal acted illegally and perversely inconfirming the addition made by the Assessing Officeron the basis of the self serving statement of the sellercontrary to the amount of sale consideration, whichwas shown in the Registered sale deed, much prior inpoint of time that too in the absence of anycorroborative material having been brought on recordby the Department/Revenue ?confirming the addition made by the Assessing Officeron the basis of the self serving statement of the sellercontrary to the amount of sale consideration, whichwas shown in the Registered sale deed, much prior inpoint of time that too in the absence of anycorroborative material having been brought on recordby the Department/Revenue ? (v)Whether the Tribunal acted illegally and perversely inconfirming the addition made by the Assessing Officeron the basis of the self serving statement of the sellercontrary to the amount of sale consideration, whichwas shown in the Registered sale deed, much prior inpoint of time that too in the absence of anycorroborative material having been brought on recordby the Department/Revenue ?confirming the addition made by the Assessing Officeron the basis of the self serving statement of the sellercontrary to the amount of sale consideration, whichwas shown in the Registered sale deed, much prior inpoint of time that too in the absence of anycorroborative material having been brought on recordby the Department/Revenue ? 2. The assessee purchased a piece of land alongwithher sister-in-law from one Inder Pal Garg vide sale deed dated18.6.2004 for ostensible consideration of Rs.5 lac. TheAssessing Officer served notice under Section 153-C of the Acton the basis of information received from Assistant Commissionerof Income Tax, Karnal that the value of land was shown to be lessthan the actual sale price which was Rs.11,90,000/-. The sourceof information was survey under Section 133A of the Act on thepremises of the firm of the seller on 7.9.2005 by the ADI Wingalongwith search in the premises of sons of the seller. After dueconsideration, the Assessing Officer passed order makingaddition of Rs.5,34,333/- in the hands of the assessee beingdifference in actual sale consideration and declared saleconsideration. This was affirmed on appeal by the CIT(A) as wellas by the Tribunal. The finding recorded by the Tribunal is asunder:- “In this connection, no doubt the uniform view ofthe Courts and also held by the Hon’ble SupremeCourt in the case of K.P.Virgese V ITO 131 ITR 597 isthat the burden of proving actual consideration in suchtransactions is that of the Revenue. Admittedly, inthis case, the consideration stated in the Deed ofRegistration is Rs. 5 lacs. However, having regard tothe return of income filed by the seller, in ourconsideration opinion, burden cast on the Revenue toestablish the actual consideration for the sale of theproperty at Rs.11,90,000/-stands discharged. In fact,even the subsequent investigations carried out as asequel to the assessment proceedings in assessee’scase also show that the Revenue has beensuccessful in discharging the burden cast on it. Theonly material which is sought to be relied upon by theassessee is an affidavit of Shri Inderpal dated12.12.2008 stating that the said property has beensold for Rs.5 lacs only. This affidavit was filed beforethe CIT (Appeals), which has been a matter ofverification by the Assessing Officer during theremand proceedings. The seller Shri Inderpal wasexamined by the Assessing Officer with reference tothe impugned affidavit and cross examination wasalso allowed. In the cross examination proceedings,the seller clearly disowned the affidavit dated12.12.2008. Further more, there is no contradiction orinconsistency in the stand of the seller Shri InderpalGarg. No doubt, the consideration recorded in theSale Deed dated 18.6.2004 is Rs. 5 lacs, which wasalso confirmed by the seller in affidavit dated29.6.2004, which was before the Assessing Officer inthe assessment proceedings. However, subsequent to the search on the seller on 7.9.2005, there is nomaterial to suggest any inconsistency in the stand ofthe seller in support of the sale consideration ofRs.11,90,000/-. The Assessing Officer has referred tothe income declared by the seller in his return for theassessment year 2005-06 based on the saleconsideration of Rs.11,90,000/-. Even during theexamination by the Assessing Officer conducted onthe directions of the CIT(Appeals) during remandproceedings, the seller confirmed the totalconsideration at Rs.11,90,000/-. Therefore, we areinclined to uphold the stand of the Revenue in thisregard. In any case, on the side of the assessee,there is no material to negate the admission made bythe seller except the Sale Deed which showed thestated consideration of Rs. 5 lacs. However, it wasfor this reason the CIT(Appeals) had allowed theassessee to cross examine Shri Inderpal Garg in theremand proceedings, which the assessee carried out.In the cross examination also, we find nothing whichwould require rejection of the statement tendered byShri Inderpal Garg in support of the actual saleconsideration of Rs.11,90,000/-. Considering thematerial on record, in our view, the consideration forthe purchase of the impugned property has beencorrectly taken by the Assessing Officer based on theadmission of the seller in his Income Tax Return. Theaddition made is hereby affirmed. The assessee hasto fail in her appeal”. 3. We have heard learned counsel for the assessee. 4. Learned counsel for the assessee submitted thatmere fact that the seller declared the sale consideration to bemere fact that the seller declared the sale consideration to be higher in his return, was not enough to accept the said saleconsideration when the sale deed mentioned the consideration tobe lesser. The sale consideration mentioned in the sale deed hasto accepted finally and conclusively, in absence of evidence to thecontrary. Burden of proving higher consideration was on therevenue which was not discharged. Reliance has been placed onjudgment of this Court dated 10.2.2010 inParamjit Singhv. ITO,PhagwaraI.T.A. No.401, holding that oral evidence could not beled to contradict terms of a document. 5. We are unable to accept the submission. 6. There is no doubt that burden of proving higherconsideration is on the revenue but the same can shift to theassessee by presumption of law and facts having regard to factsand circumstances of the case. The Assessing Authority maypresume existence of facts which may appear to have happened,having regard to common course of events or human conduct inthe facts of a particular case. 7. It may be worthwhile to refer to formulation of legalposition by the Hon’ble Supreme Court inKundan Lal Rallaramv. Custodian, Evacuee Property, BombayAIR 1961 SC 1316,para 5:- “5.............The rules of evidence pertaining to burdenof proof are embodied in Chapter VII of the EvidenceAct. The phrase "burden of proof" has two meaning -one the burden of proof as a matter of law andpleading and the other the burden of establishing a 7. It may be worthwhile to refer to formulation of legalposition by the Hon’ble Supreme Court inKundan Lal Rallaramv. Custodian, Evacuee Property, BombayAIR 1961 SC 1316,para 5:- “5.............The rules of evidence pertaining to burdenof proof are embodied in Chapter VII of the EvidenceAct. The phrase "burden of proof" has two meaning -one the burden of proof as a matter of law andpleading and the other the burden of establishing a case; the former is fixed as a question of law on thebasis of the pleadings and is unchanged during theentire trial, whereas the latter is not constant but shiftsas soon as a party adduces sufficient evidence toraise a presumption in his favour. The evidencerequired to shift the burden need not necessarily bedirect evidence, i.e. oral or documentary evidence oradmissions made by opposite party; it may comprisecircumstantial evidence or presumptions of law orfact. To illustrate how this doctrine works in practice,we may take a suit on a promissory note. Under S.101 of the Evidence Act, "Whoever desires any Courtto give judgment as to any legal right or liabilitydependent on the existence of facts which he asserts,must prove that those facts exist." Therefore, theburden initially rests on the plaintiff who has to provethat the promissory note was executed by thedefendant. As soon as the execution of thepromissory note is proved the rule of presumption laiddown in S. 118 of the Negotiable Instruments Acthelps him to shift the burden to the other side. Theburden of proof as a question of law rests, therefore,on the plaintiff; but as soon as the execution isproved, S. 118 of the Negotiable Instruments Actimposes a duty on the court to raise a presumption inhis favour that the said instrument was made forconsideration. This presumption shifts the burden ofproof in the second sense, that is, the burden ofestablishing a case shifts to the defendant. Thedefendant may adduce direct evidence to prove thatthe promissory note was not supported byconsideration, and if he adduced acceptableevidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely uponcircumstantial evidence and, if the circumstances sorelied upon are compelling, the burden may likewiseshift again to the plaintiff. He may also rely uponpresumptions of fact, for instance those mentioned inS. 114 and other sections of the Evidence Act. UnderS. 114 of the Evidence Act, "The Court may presumethe existence of any fact which it thinks likely to havehappened, regard being had to the common course ofnatural events, human conduct and public and privatebusiness, in their relation to the facts of the particularcase." Illustration (g) to that section shows that theCourt may presume that evidence which could be andis not produced would, if produced, be unfavourableto the person who withholds it. A plaintiff, who saysthat he had sold certain goods to the defendant andthat a promissory note was executed as considerationfor the goods and that he is in possession of therelevant account books to show that he was inpossession of the goods sold and that the sale waseffected for a particular consideration, should producethe said account books, for he is in possession of thesame and the defendant certainly cannot be expectedto produce his documents........” 8. In the present case, the seller declared the saleconsideration to be Rs.11,90,000/- in his return, as noticed abovein the finding recorded by the Tribunal. The seller confirmed thesaid consideration. The assessee was allowed to cross-examinethe said seller and the stand about valuation could not be shownto be wrong. The assessee did not lead any evidence to show 8. In the present case, the seller declared the saleconsideration to be Rs.11,90,000/- in his return, as noticed abovein the finding recorded by the Tribunal. The seller confirmed thesaid consideration. The assessee was allowed to cross-examinethe said seller and the stand about valuation could not be shownto be wrong. The assessee did not lead any evidence to show the probable value of the property on the date in question. Inthese circumstances, there is no error in the view consecutivelytaken by all the authorities that the revenue was able to dischargethe burden that sale consideration mentioned in the sale deedwas not real. 9. As regards judgment of this Court in Paramjit Singh,the observations therein are on facts of that case. Section 92 ofthe Evidence Act excluded oral evidence with regard to contentsof a document in relation to a lis between the parties and cannotbind any third person. This principle cannot be applied where itcan be inferred in the facts and circumstances that the partieshave by mutual self-serving agreement concealed taxableincome, which income could be found to be assessable on thebasis of material which may be available. InBai Hira Devi & ors. v.Official Assignee of BombayAIR 1958 SC 448, it was observed:- “5.........There is no doubt that S. 92 does not apply tostrangers who are not bound or affected by the termsof the document. Persons other than those who areparties to the document are not precluded from givingextrinsic evidence to contradict, vary, add to orsubtract from the terms of the document. It is onlywhere a question arises about the effect of thedocument as between the parties or theirrepresentatives in interest that the rule enunciated byS. 92 about the exclusion of oral agreement can beinvoked. This position is made absolutely clear by theprovisions of S. 99 itself. Section 99 provides that"persons who are not parties to a document or their representatives in interest, may give evidence of anyfacts tending to show a contemporaneous agreementvarying the terms of the document." Though it is onlyvariation which is specifically mentioned in S. 99,there can be no doubt that the third party's right tolead evidence which is recognized by S. 99 wouldinclude a right to lead evidence not only to vary theterms of the document, but to contradict the saidterms or to add to or subtract from them. If that be thetrue position, before considering the effect of theprovisions of S. 92 in regard to the appellants' right tolead oral evidence, it would be necessary to examinewhether S. 92 applies at all to the presentproceedings between the official assignee who is therespondent and the donees from the insolvent whoare the appellants before us.” 10. Contention raised on behalf of the appellant cannot, thus, be accepted. 11. No substantial question of law arises. 12. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 13, 2010MITTAL )ashwani ( AJAY KUMAR JUDGE