Arun Kumar Goyal, Chandigarh v. ITO,, Chandigarh

ITA 205/CHANDI/2009 | 2000-2001
Pronouncement Date: 17-11-2011 | Result: Dismissed

Appeal Details

RSA Number 20521514 RSA 2009
Bench Chandigarh
Appeal Number ITA 205/CHANDI/2009
Duration Of Justice 2 year(s) 8 month(s) 8 day(s)
Appellant Arun Kumar Goyal, Chandigarh
Respondent ITO,, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 17-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 17-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2000-2001
Appeal Filed On 09-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA VICE PRESIDENT AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 205 & 206/CHD/2009 A.Y: 2000-01 & 2003-04 SHRI ARUN KUMAR GOYAL V ITO WARD 5(5) H.NO. 2172 CHANDIGARH. SECTOR 22-C CHANDIGARH. PAN: AAYPG-0284G & ITA NO. 203 & 204/CHD/2009 A.Y: 2000-01 & 2003-04 SMT. PARVEEN GOYAL V ITO WARD 5(5) H.NO. 2172 CHANDIGARH. SECTOR 22-C CHANDIGARH. PAN: AAYPG-0284G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR BATRA RESPONDENT BY : SMT.JAISHREE SHARMA DATE OF HEARING : 09.11.2011 DATE OF PRONOUNCEMENT : 17.11.2011 ORDER PER MEHAR SINGH AM THE PRESENT APPEALS FILED BY DIFFERENT ASSESSEES AR E AGAINST THE ORDER DATED 28.01.2009 PASSED BY THE LD . CIT(A) CHANDIGARH. 2. IN THESE APPEALS THE ASSESSEES HAVE RAISED THE SIMILAR GROUNDS OF APPEAL. HOWEVER THE GROUNDS OF APPEAL R AISED IN THE CASE OF SHRI ARUN KUMAR GOYAL (ITA NO. 205/CHD /2009) ARE REPRODUCED HEREUNDER: 1. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ASSUMPTION OF JURISDICTION BY THE LD. ITO 2 AGAINST THE MANDATORY REQUIREMENT U/S 147 R.W.S. 148 OF THE INCOME-TAX ACT 1961. CONSEQUENTLY THE RESULTANT ASSESSMENT ORDER DESERVES TO BE ANNULLED. 2. THE LD. CIT(A) AS WELL AS THE LD. ITO HAVE WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN HAVING GIVEN MISPLACED CREDENCE TO DOUBTFUL AGREEMENT TO SELL DATED 14.10.1999 AND ALSO IN IGNORING THE AGREEMENT TO SELL DATED 3.2.2000 ERRED IN MAKING AN ADDITION OF RS.2 00 000/- AS UNEXPLAINED INVESTMENT U/S 169 OF THE INCOME-TAX ACT 1961. THE ADDITION BE DELETED. 3. IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE US LD. 'AR' CONTENDED THAT THE AO FAILED TO APPLY HIS MIND TO THE REASONS RECORDED FOR THE PURPOSE OF INITIATING RE-A SSESSMENT PROCEEDINGS U/S 147 READ WITH SECTION 148 OF THE AC T. HE WAS OF THE OPINION THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P .LTD. (2007) 291 ITR 500 (S.C) IS NOT APPLICABLE TO THE F ACTS OF THE PRESENT CASE. ACCORDINGLY HE PRAYED THAT THE RE-O PENING OF THE CASE BE DECLARED AS BAD IN LAW. 3(I). IN GROUND NO.2 LD. 'AR' ARGUED THE CASE O N MERITS. HE ARGUED THAT AGREEMENT DATED 14.10.1999 IS THE OR IGINAL AGREEMENT AND THE SAME HAS NOT BEEN ACTED UPON BY T HE ASSESSEE APPELLANT. LD. 'AR' WAS OF THE OPINION TH AT THE AGREEMENT DATED 03.02.2000 IS THE AGREEMENT WHICH H AS BEEN ACTED UPON THEREFORE THE ADDITION MADE U/S 69 IS UNCALLED FOR. HE REFERRED TO THE STATEMENT OF MR.KULBHUSHAN AND J.D.GUPTA TO SUPPORT HIS CONTENTI ONS. 3 THE LD. 'AR' ALSO CONTENDED THAT SAME SUBMISSIONS M AY BE CONSIDERED IN OTHER APPEALS BEING ON SIMILAR ISSUE S. 4. LD. 'DR' ON THE OTHER HAND CONTENDED THAT THE O RIGINAL AGREEMENT DATED 14.10.1999 HAS BEEN DULY ACTED UPON BY THE ASSESSEE IN VIEW OF PAYMENT MADE IN PURSUANCE O F SUCH AGREEMENT. HE ALSO REFERRED TO THE STATEMENT OF TH E ASSESSEE WHEREIN CONTENTS OF THE IMPUGNED AGREEMENT HAVE BEEN CORROBORATED IN THE COURSE OF DEPOSITION MADE BY THE ASSESSEE. THE LD. 'DR' CONTENDED THAT AGREEMENT D ATED 03.02.2000 IS AFTER-THOUGHT AND SELF SERVING AGREEM ENT ENTERED INTO FOR THE PURPOSE OF TAX EVASION. THE LD . 'DR' PLACED RELIANCE ON THE ORDERS OF THE CIT(A). THE LD . 'DR' ALSO STATED THAT SUCH SUBMISSION IS ALSO APPLICABLE TO O THER APPEALS BEING ON SIMILAR ISSUES. 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS FACTS OF THE CASE AND THE RELEVANT MATERIAL BROUGHT ON RE CORD. WE HAVE ALSO PERUSED AND CONSIDERED THE CASE LAWS RELI ED UPON BY THE ASSESSEE. TO START WITH THE SYNOPSIS FILED BY THE ASSESSEE IS REPRODUCED HEREUNDER: FACTS FIRST AGREEMENT 14.10.1999 : FOR RS.85 LACS WITH 2/3 RD SHARE IN FAVOUR OF SHRI ARUN GOYAL AND SMT.PARVEEN GOYAL (NB THIS AGREEMENT WAS NOT IMPLEMENTED). SECOND AGREEMENT 03.02.2000 : FOR RS.1600 000/- WITH 5/6 TH SHARE FOR RS.1600000 (19.02.2000). SALE DEED DATED 13.09.2002 EXECUTED THROUGH LOCAL COMMISSIONER. REFERENCE TO THE STATEMENT AND CROSS EXAMINATION OF SHRI KULBHUSHAN GARG- THE SELLER THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04 AND 2001-02 IN THE CASE OF SHRI ARUN GOYAL 4 AND HIS SPOUSE SMT.PARVEEN GOYAL HAVE BEEN REOPENED U/S 147 R.W.S. 148 ON THE BASIS OF INFORMATION PROV IDED BY THE DDIT (INV.)-I CHANDIGARH BEING CONSEQUENT TO THE COMPLAINT FILED BY ONE SHRI J.D.GUPTA. AS PER THE COMPLAINANT WHO WAS THE PROPERTY DEALER SHRI ARUN GOYAL AND HIS WIFE ENTERED INTO A N AGREEMENT WITH FOUR PERSONS NAMELY SHRI PIARA LAL S /O LATE SHRI CHANAN RAM SMT. KAILASH DEVI W/O LATE MADAN LAL SMT.PREM LATA W/O SHRI PIARA LAL AND SHR I KULBHUSHAN GARG S/O LATE MADAN LAL FOR THE PURCHASE OF 5/6 TH SHARE IN SCO 60-61 SECTOR 17D CHANDIGARH FOR A CONSIDERATION OF RS.85 LACS VIDE AGREEMENT TO SEL L DT.14.10.99. FURTHER AS PER THE STATEMENT OF THE COMPLAINANT RECORDED BY THE ADI (INV.) ON 09.02.200 4 SHRI J.D.GUPTA WAS INSTRUMENTAL IN NEGOTIATING THE DEAL AND HAD SIGNED THE AGREEMENT AS WITNESS NO.1. SHRI ARUN GOYAL THOUGH HE ADMITS THAT THERE WAS AN AGREEMENT TO SELL DATED 14.10.99 BUT THIS AGREEM ENT WAS NEVER ACTED UPON AS THE COMPLAINANT HAD MISQUOTED THE SALE CONSIDERATION AT RS.85 LACS. THE COMPLAINANT HAD A VESTED INTEREST AND THEREFORE THE AGREEMENT WAS NEGOTIATED AFRESH FOR 5/6 TH SHARE AT A CONSIDERATION OF RS.1600000/- VIDE AGREEMENT TO SEL L DATED 3 RD FEB.2000 (03.02.2000). LATTER THE SALE DEED WAS EXECUTED ON 13 TH SEPT. 2002 FOR 2/3 RD SHARE FOR CONSIDERATION OF RS.12 80 000/- THROUGH LOCAL COMMISSION APPOINTED BY CIVIL JUDGE (JUNIOR DIVISIO N) CHANDIGARH. THE DROP IN THE SALE CONSIDERATION WAS ATTRIBUTED T O THE FOLLOWING FACTS; I) BECAUSE OF VIOLATION OF THE BUILDING LAW THE ESTATE OFFICE UT HAD RESUMED THE PROPERTY. II) APPEALS BEFORE THE ADVISOR TO THE ADMINISTRATOR WERE ALSO UNSUCCESSFUL. III) THE MATTER WAS SUBJUDICE AS APPEAL WAS PENDING BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. THE APPELLANT HAS TAKEN UP GROUND OF APPEAL FIRST CHALLENGING THE ACTION OF THE ITO U/S 47 R.W.S. 148 OF THE INCOME-TAX ACT 1961 AND SECOND IN SUSTAINING THE ADDITION OF RS.19 93 333/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME-TAX ACT FOR ASSESSMENT YEAR 2003-04. ON RE-OPENING OF ASSESSMENT A) THE LD. CIT(A) HAS NOWHERE IN HIS ORDER EXAMINED T HE APPROACH OF THE ITO IN RE-OPENING THE ASSESSMENT. HE HAS MERELY SUSTAINED THE RE-ASSESSMENT BY RELYING ON THE JUDGMENT OF THE APEX COURT IN RE; RAJESH JHAVERI STOCK BROKERS P.LTD. 291 ITR 500 (S.C). 1) THE ITO IS REQUIRED TO VERIFY THE CORRECTNESS OF THE INFORMATION RECEIVED BY HIM BUT HAS MERELY ACCEPTE D THE FRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. 5 2) THE ITO HAS NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATI ON OR HIS SATISFACTION THAT A CASE HAS BEEN MADE OUT F OR ISSUING THE NOTICE. THIS IS ESTABLISHED FROM THE FACT THAT HE RECEIVED THE DDIS DATED 11.2.05 ADD. COMMISSIONER OF IT 23.2.2005 AND ISSUED NOTICE U/S 147 DATED 9.3.2005. 3) THE AO SHOULD HAVE APPLIED HIS OWN MIND TO THE MATERIAL BEFORE HIM AND FORMED HIS OWN BELIEF REGARDING ESCAPEMENT S.K.GUPTA V ITO (2000) 246 ITR 560 (ALL). RELIANCE CIT V ATUL JAIN (2008) 299 ITR 383 (DEL) B) THE DDI AS WELL AS THE ITO HAVE PLACED ABSOLUTE RELIANCE ON THE STATEMENT OF A 3 RD PARTY VIZ MR.JD GUPTA THE COMPLAINANT WHO COULD NOT ESTABLISH THE FACT THE CONSIDERATION OF RS.85 LACS EVER EXCHANGED HANDS. RATHER HE HAS VEHEMENTLY DISASSOCIATED HIMSELF WITH FINAL EXECUTION OF THE AGREEMENT TO SE LL DT. 14.10.99. REFER EXAMINATION IN CHIEF OF JD GUPTA Q.NO.4 PAGE 34 OF PAPER BOOK AND CROSS EXAMINATION ? Q.NO. 9 PAGE 53-54. RELIANCE HINDUSTAN DORR OLIVER LTD.V P.K.KEDIA DY.CIT (2008) 305 ITR 282 (BOMBAY) SUSPICION MERE EXISTENCE FOR REASON OF SUSPICION WOULD NOT TENTAMOUNT TO EVIDENCE I) CIT V SMT.PARAMJIT KAUR (2009) 311 ITR 38 (P&H) II) ITO V LAKHMANI MEVAL DASS (1976) 103 ITR 437 (S.C) III) SHRI KRISHNA PVT.LTD. V ITO (1996) 221 ITR 538 (S.C) IV) RAYMOND WOOLLEN MILL LTD. V ITO (1999) A236 ITR 34 (S.C) V) CIT V VED PARKASH CHOUDHRY (2008) 305 ITR 245 (DEL) NB SPLLEAVE BY DEPTT. DISMMES (SLP) (C) NO.17329 OF 2008 UNEXPLAINED INVESTMENT REBUTTABLE PRESUMPTION 9.1.2009 THEIR LORDSHIPS S.B.SINHA AND DR.MUKLNDAK M.SHARMA JJ DSMISSED THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUDGMENT DATED FEB 19 2008 OF THE DELHI HIGH COURT ITA NO.903 OF 2007 REPORTED IN 305 ITR 245 WHEREBY THE HIGH COURT DISMISSED THE DEPARTMENTS APPEAL ON THE GROUND THAT THE RESPONDENT HAVING DENIED THE TRANSFER OF MONEY BETWEEN HIM AND THE RESPECTIVE VENDOR AND THE 6 VENDORS HAVING DENIED THE RECEIPT OF MONEY FROM THE RESPONDENT THERE OUGHT TO HAVE BEEN CORROBORATIVE EVIDENCE TO SHOW THAT THERE WAS INFACT SUCH A TRANSFER OF MONEY : CIT V VED PARKASH CHOUDHARY SLP (C) NO.17329 OF 2008 REPORTED IN VOL. 309 ITR (STATUTES) 19. ON MERITS 1. APPARENT IS REAL : THE ONUS IS ON THE DEPARTMENT TO PROVE THAT THE SALE DEED DT.13.9.2002 THROUGH COURT IS A SHOWN DOCUMENT. THIS HAS NOT BEEN DONE. NO MENTION OF THIS DOCUMENT IN THE ENTIRE ASSESSMENT ORDER. ONUS NOT DISCHARGED. 2. TOTAL RELIANCE HAS BEEN PLACED UPON THE STATEMENT OF THE COMPLAINANT SHRI J.D.GUPTA ALSO HIMSELF COULD NOT PROVE THE TRANSFER OF THE SALE CONSIDERATION OF RS.85 LACS. 3. THE STATEMENT OF SHRI KULBHUSHAN GARG THE SELLER HAS BEEN TOTALLY IGNORED. STATEMENT OF SELLER 1. THE SELLER STRAIGHT AWAY STATES THAT THE SALE CONSIDERATION IS RS.1920000/-. THERE WERE TWO REGISTERS I) FOR RS.12 80 000/- FOR 2/3 RD SHARE IN FAVOUR OF THE APPELLANT. II) NO QUESTION OF RS.85 LACS HAS BEEN POSED TO HIM III) DENIES THE AUTHENTICITY OF THE AGREEMENT TO SELL DATED 14.20.99. REFERENCE Q.NO. 18 19 20 21 PAGE 38 39 40 OF EXAMINATION IN CHIEF BY DI AND CROSS EXAMINATION Q.NO. 3 7 11. IV) NO COMMISSION PAID TO SHRI J.D.GUPTA : NO SUCH QUESTION POSED TO HIM IN EXAMINATION IN CHIEF. HOWEVER THERE IS A DENIAL OF THE COMMISSION HAVING BEEN PAID TO HIM IN CROSS EXAMINATION Q.NO. 10 PB PAGE 61. A) IN HIS EXAMINATION IN CHIEF : HE HAS ON BY/ADMITTED THE SIMILARITY OF THE SIGNATURES OF HIMSELF AND THE FAMILY MEMBERS BUT NOT THE VERACITY OF THE DOCUMENT-AS IT WAS ONLY A PHOTOSTAT. B) NO QUESTION OF THE AMOUNT OF SALE CONSIDERATION WAS EVER PUT TO HIM. HE HAS ADMITTED THE SALE CONSIDERATION OF RS.19 20 000/- IN HIS EX-IN-CHIEF AS WELL AS CROSS EXAMINATION. 7 C) HE HAS DENIED THE PAYMENT OF COMMISSION RS.1 70 000/- TO SHRI JD GUPTA IN THE CROSS EXAMINATION Q.NO. 10 PAGE 61. D) HE HAS PRODUCED THE BOOKS OF ACCOUNT AS WELL AS THE FILING OF ITR REFLECTING THE SHARE OF EACH C O- OWNER AT RS.4 80 000/-. NO PARALLEL ACTION HAS BEEN INITIATED IN THEIR CASES (Q NO. 3 & 11 PAGE 58-61). 4. SHRI P.C.SINGLA THE NOTARY HAS ONLY ADMITTED TO THE SIMILARITY OF HIS SIGNATURES AND NOT TO THE AUTHENTICITY OF THE DOCUMENT- SINCE IT WAS ONLY A PHOTOSTAT (JD GUPTA IS NOT AWARE OF THE NOTARIZATION PAGE 49) 5. I) THE LD. AO HAS MADE ONLY A PASSING REFERENCE IN PARA 3.2 OF THE ASSESSMENT ORDER. THAT THE SOURCE OF INVESTMENT COULD HAVE BEEN THROUGH PROPERTY DEALING- NO INSTANCE HAS BEEN ILLUSTRATED-ONLY INFERENCES-NO NEXUS ESTABLISHED. II) NO SUCH REFERENCE HAS BEEN MADE IN THE CASE OF SMT.PREM LATA THE WIFE. III) NO DEFECTS IN THE BANK STATEMENTS HAS BEEN POINTED OUT. NO CASH ENTRIES HAVE BEEN DEMONSTRATED. IV) IN PARA 3.1 OF THE ASSESSMENT ORDER AO HAS SAID THAT FIGURE OF RS.60 LACS APPEARS TWICE. THE FIGURE OF RS.16 LACS ALSO APPEARS TWICE. REFER TO ANSWER TO Q.NO. 4 & 5 OF THE PURCHASER AT PAGE 31 32. THEREFORE THE AFFIDAVIT WAS FILED. CONTRADICTION WITH RESPECT TO SIGNATURES ON AGREEMENT DT.14.10.1999 I) AS PER THE STATEMENT OF SHRI J.D.GUPTA THE BUYE RS I.E. SHRI ARUN AND SMT.PARVEEN GOYAL ACCOMPANIED HIM TO RAMPURAPHOOL WHERE THE SELLER AND BUYERS TOGETHER SIGNED THE STATEMENT. Q.NO. 4 OF EXAMINATION IN CHIEF AND CROSS EXAMINATION WHERE AS PER : A) THE SELLTER : I) MR.JD GUPTA ALONE COME TO RAMPURAPHOOL II) THERE WERE NO SIGNATURES OF BUYERS III) THEY HAD NEVER MET THE BUYERS IV) MP COPY OF THE AGREEMENT WAS GIVEN TO THE SELLER THEREFORE HE DENIED KNOWLEDGE OF THE ATTESTATION BY THE NOTARY SIGNATURES OF THE BUYERS ETC. V) THE AMOUNT MENTIONED FOR CONSIDERATION WAS RS.1920000/-. B) THE PURCHASER : HE SIGNED ON PERFORMA AGREEMENT TO SELL WHICH WAS SIGNED BY HIM AND HIS WIFE AT CHANDIGARH 8 STATEMENTS OF THE OTHER PURCHASER VIZ SANJEEV CHADHA AND SMT.VINOD KUMARI PROP. SHIVALIK BOOK DEPOT NOT EXAMINED. 6. THE BRIEF FACTS NECESSARY FOR THE DISPOSAL OF TH E PRESENT APPEAL ARE THAT THE ASSESSEE FILED HIS RETURN OF IN COME DECLARING ESTIMATED BUSINESS INCOME AT RS.69500/- A ND INCOME FROM HOUSE PROPERTY AT RS.35 000/-. THE RET URN WAS FILED BY THE ASSESSEE ON 31.3.2004 WHICH WAS PROCES SED ON 15.6.2004 AT THE RETURNED INCOME U/S 143(1) OF THE ACT. SUBSEQUENTLY IT WAS NOTICED BY THE AO THAT CERTAIN INCOME ESCAPED ASSESSMENT AND CONSEQUENTLY A NOTICE U/S 14 8 WAS ISSUED ON 9.3.2005. THE REASONS RECORDED U/S 148 O F THE ACT BY THE AO ARE REPRODUCED HEREUNDER : AS PER INFORMATION RECEIVED FROM DDIT (INV)-I CHANDIGARH VIDE HIS LETTER NO. DDIT-I/INV /2004- 05/2342 DATED 11.02.2005 RECEIVED THROUGH ADDL.CIT RANGE-III CHANDIGARH VIDE LETTER NO.7695 DATED 23.02.2005 SHRI ARUN KUMAR GOYAL AND HIS WIFE SMT.PARVEEN GOYAL RESIDENTS OF HOUSE NO.2172 SECTOR 22-C CHANDIGARH (2/3 RD SHARE) SMT.VINOD VIRMANI RESIDENT OF H.NO. 1033 SECTION 15B CHANDIGARH (1/6 TH SHARE) AND SMT.ANJU CHADHA RESIDENT OF HOUSE NO.3002 SECTOR 40B CHANDIGARH (1/6 TH SHARE) HAVE PURCHASED SCO NO. 60-61 SECTOR 17D CHANDIGARH FOR A CONSIDERATION OF RS.85 LACS AS PER AGREEMENT TO S ELL DATED 14.10.1999 (PLACED AS ANNEXURE-1). THE SALE DEED OF THIS PROPERTY WAS REGISTERED AT RS.19.20 LA CS IN THE YEAR 2002-03 (ASSESSMENT YEAR 2003-04) THUS THESE PERSONS HAD MADE UNDISCLOSED PAYMENT OF RS.63.80 LACS TO THE SELLERS SHRI PIARA LAL & OTHER S. THE ASSESSEE AND HIS WIFES SHARE IN THE PROPERTY I S 2/3 RD . THUS SHRI ARUN KUMAR GOYAL AND SMT.PARVEEN GOYAL HAVE INVESTED RS.43.87 LACS OUT OF THEIR UNDISCLOSED INCOME. SHRI ARUN KUMARS 50% SHARE 9 COMES TO RS.21.94 LACS. I HAVE THEREFORE REASONS T O BELIEVE THAT INVESTMENT TO THE EXTENT OF RS.21.94 L ACS REMAINED UNEXPLAINED IN THE HANDS OF SHRI ARUN KUMAR GOYAL. HENCE A NOTICE U/S 148 OF IT ACT 1961 IS BEING ISSUED FOR THE ASSESSMENT YEAR 2003-04. 7. THE CIT(A) DISMISSED THE GROUND OF THE ASSESSEE REGARDING RE-OPENING OF THE CASE AFTER PASSING A DE TAILED ORDER AND FOLLOWING THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P .LTD. (2007) 291 ITR 500 (S.C). IT WOULD BE PERTINENT TO REPRODUCE THE RELEVANT AND OPERATIVE PART OF THE DE CISION AS RECORDED BY THE CIT(A) IN PARA 4 AND 5 OF THE IMPU GNED APPELLATE ORDER FOR THE PURPOSE OF PROPER APPRECIA TION OF THE FACTUAL AND LEGAL POSITION OF THE ISSUE INVOLVE D IN THE FIRST GROUND OF APPEAL: 4. THE ONLY REQUIREMENT FOR RE-OPENING THE ASSESSMENT IS THAT THERE SHOULD BE SOME MATERIAL WITH THE AO THAT GIVES HIM REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. IN MY OPINION THE AO HAD SUFFICIENT MATERIAL TO REOPEN THE ASSESSMENT OF THE ASSESSEE. THE LAW IS SETTLED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI STOCK BROKERS P.LTD. 291 ITR 500 (S.C) THAT SUFFICIENCY OF THE REASONS IS NOT JUSTIF IABLE. THE RELEVANT PART OF THE DECISION IS AS UNDER : SECTION 147 AUTHORIZES AND PERMITS THE AO TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME 10 HAD ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE AO IS T O ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBL IC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V ITO (1991) 191 ITR 662 FOR INITIATION OF ACTION U/S 147 (A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS AT THE INITIATION STAG E WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF B Y THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTI ON (SEE ITO V SELECTED DALURBAND COAL CO.P.LTD. (1996) 217 ITR 597 (S.C) RAYMOND WOOLLEN MILLS LTD. V ITO (1999) 236 ITR 34 (S.C). THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED W.E.F. APRIL 1 1989 AS ALSO SECTION 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 147 SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS 11 COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDITIONS WE RE REQUIRED TO BE SATISFIED : FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE TH AT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSAR Y FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE TH E AO COULD HAVE JURISDICTION TO ISSUE NOTICE U/S 148 READ WITH SECTION 147(A) BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE AO FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. I T IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST B E FULFILLED IF THE CASE FAILS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. IN VIEW OF THE DISCUSSION ABOVE AND FOLLOWING THE R ATIO OF THE ABOVESAID DECISION OF THE HON'BLE SUPREME COURT THIS GROUND OF APPEAL IS DISMISSED. 8. IT IS UNDISPUTED FACT THAT THE CASE OF THE ASSES SEE WAS PROCESSED U/S 143(1) OF THE ACT ON 15.06.2004. THER EFORE THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF RAJESH JHAVERI STOCK BROKERS P.LTD. (SUPRA) SQUAREL Y COVERS THE ISSUE RAISED BY THE ASSESSEE AS IS CLEAR FROM T HE ENSUING DISCUSSION OF THE RELEVANT AND OPERATIVE PART OF THE SAID DECISION : RE-ASSESSMENT-INTIMATION-PROVISION FOR INITIATING R E- ASSESSMENT APPLIED-ONLY ONE OF TWO CONDITIONS TO BE COMPLIED WITH-ONLY REASON TO BELIEVE THAT INCOME 12 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT-REASON TO BELIEVE-FORMATION OF BELIEF WITHIN SUBJECTIVE SATISFACTION OF ASSESSING OFFICER-PRINCIPLE RELATIN G TO CHANGE OF OPINION NOT APPLICABLE-INCOME-TAX ACT 1961 SS. 143(1)(A) 147. INCOME ESCAPING ASSESSMENT-INTIMATION-CLAIM OF ASSESSEE FOR BAD DEBTS-NOTICE FOR RE-ASSESSMENT ON THE BASIS THAT CONDITIONS FOR ALLOWANCE WERE NOT FULFILLED-VALID-WITHIN JURISDICTION OF AO-INCOME-TA X ACT 1961 SS. 36(1)(VII) (2) 132(1)(A) 147 148. WORDS AND PHRASES _REASON TO BELIEVE ASSESSMENT INTIMATION MEANINGS OF. UNDER THE SCHEME OF SECTION 143(1) OF THE INCOME-TAX ACT 1961 AS SUBSTITUTED W.E.F. APRIL 19 89 AND PRIOR TO ITS SUBSTITUTION W.E.F. JUNE 1 1999 W HAT WERE PERMISSIBLE TO BE ADJUSTED UNDER THE FIRST PROVISO TO SECTION 143(1)(A) WERE : (1) ONLY APPARE NT ARITHMETICAL ERRORS IN THE RETURN ACCOUNTS OR DOCUMENTS ACCOMPANYING THE RETURN (II) LOSS CARRIED FORWARD DEDUCTION ALLOWANCE OR RELIEF WHICH WAS PRIMA FACIE ADMISSIBLE ON THE BASIS OF INFORMATION AVAILABLE IN THE RETURN BUT NOT CLAIMED IN THE RETU RN AND SIMILARLY (III) THOSE CLAIMS WHICH WERE ON THE BASIS OF THE INFORMATION AVAILABLE IN THE RETURN PRIMA FACIE INADMISSIBLE AND WERE TO BE RECTIFIED/ALLOWED/DISALLOWED. WHAT WAS PERMISSIBLE WAS CORRECTION OF ERRORS APPARENT ON THE BASIS OF T HE DOCUMENTS ACCOMPANYING THE RETURN. THE AO HAD NO AUTHORITY TO MAKE ADJUSTMENTS OR ADJUDICATE UPON ANY DEBATABLE ISSUES. IN OTHER WORDS THE AO HAD N O POWER TO GO BEHIND THE RETURN ACCOUNTS AND DOCUMENTS EITHER IN ALLOWING OR IN DISALLOWING DEDUCTIONS ALLOWANCE OR RELIEF. THOUGH TECHNICALL Y THE INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE UNDER SECTION 156 THAT DID NOT PRECLUDE THE 13 RIGHT OF THE AO TO PROCEED U/S 143(2) THAT RIGHT IS PRESERVED AND NOT TAKEN AWAY. WITH EFFECT FROM APRIL 1 1998 THE SECOND PROVISO TO SECTION 143(1)(A) WAS SUBSTITUTED. DURIN G THE PERIOD BETWEEN APRIL 1 1998 AND MAY 31 1999 SENDING OF AN INTIMATION WAS MANDATORY. THE LEGISLATIVE INTENT IS VERY CLEAR FROM THE USE OF TH E WORD INTIMATION AS SUBSTITUTED FOR ASSESSMENT THAT TWO DIFFERENT CONCEPTS EMERGE. WHILE MAKING AN ASSESSMENT THE AO IS FREE TO MAKE ANY ADDITION AFTER GRANT OF OPPORTUNITY TO THE ASSESSEE. BY MAKI NG ADJUSTMENTS UNDER THE FIRST PROVISO TO SECTION 143( 1) NO ADDITION WHICH IS IMPERMISSIBLE BY THE INFORMATION GIVEN IN THE RETURN COULD BE MADE BY TH E AO. THE INTIMATION U/S 143(1) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1) WITH EFFECT FROM JUNE 1 1999 EXCEP T AS PROVIDED IN THE PROVISION ITSELF THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION U/S 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE OR (B) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGEMENT IS NOT DONE BY ANY AO BUT MOSTLY BY MINISTERIAL STAFF. IT CANNOT THEREFORE BE SAID THAT AN ASSESSMENT IS DONE BY THEM. THE INTIMATION U/S 143(1) WAS DEEMED TO BE A NOTICE OF DEMAND U/S 156 FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISIONS. THEREFORE THERE BEING NO ASSESSMENT U/ S 143(1)(A) THE QUESTION OF CHANGE OF OPINION DOES N OT ARISE. THE EXPRESSION REASON TO BELIEVE IN SECTION 147 WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HA S CAUSE OR JURISDICTION TO KNOW OR SUPPOSE THAT INCOM E 14 HAD ESCAPED ASSESSMENT HE CAN BE SAID TO HAVE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FAC T BY LEGAL EVIDENCE OR CONCLUSION. WHAT IS REQUIRED I S REASON TO BELIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTI CE THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF THE BELIEF IS WITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE AO. ITO V SELECTED DALURBAND COAL CO. P.LTD. (1996) 217 ITR 597 (S.C) AND RAYMOND WOOLLEN MILLS LTD. V ITO (1999) 236 ITR 34 (S.C) FOLLOWED. TAKING INCOME ESCAPING ASSESSMENT IN THE CASE OF AN INTIMATION U/S 143(1)(A) IS COVERED BY THE MA IN PROVISION OF SECTION 147 AS SUBSTITUTED W.E.F. APRI L 1 1989 AND INITIATING RE-ASSESSMENT PROCEEDINGS IN THE CASE OF INTIMATION WOULD BE COVERED BY THE MAIN PROVISION OF SECTION 147 AND NOT THE PROVISO THERET O. ONLY ONE CONDITION HAS TO BE SATISFIED. FAILURE TO TAKE STEPS U/S 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE RE-ASSESSMENT PROCEEDINGS WHEN INTIMATION U/S 143(1) HAS BEEN ISSUED. ADANI EXPORTS V DEPUTY CIT (ASSESSMENT) (1999) 240 ITR 224 (GUJ) DISTINGUISHED. HELD ACCORDINGLY THAT THE AO HAD JURISDICTION TO ISSUE NOTICE U/S 148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT IN AN INTIMATION U/S 143(1)(A) N THE GROUND THAT THE CLAIM FOR BAD DEBTS BY THE ASSESSEE WAS NOT ACCEPTABLE AS THE CONDITIONS FOR 15 ALLOWANCE SPECIFIED IN SECTION 36(1)(VII) AND (2) W ERE NOT FULFILLED. DECISION OF THE GUJRAT HIGH COURT IN RAJESH JHAVERI STOCK BROKERS P.LTD. V. ASSTT.CIT (2006) 28 4 ITR 593 REVERSED. 9. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V ITO (1991) 191 I TR 662 FOR INITIATION OF ACTION U/S 147(A) (AS THE PROVISI ON STOOD AT THE RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE THE FIN AL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS AT THE INITIATION STAGE WHAT IS REQUIRED IS REASON TO BE LIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. A T THE STAGE OF ISSUE OF NOTICE THE ONLY QUESTION IS WHET HER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIA LS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCER N AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BEL IEF BY THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION ( SEE ITO V SELECTED DALURBAND COAL CO.P.LTD. (1996) 217 ITR 59 7 (S.C) RAYMOND WOOLEN MILLS LTD. V ITO (1999) 236 ITR 34 ( S.C). 10. AS DISCUSSED ABOVE THE CASE WAS PROCESSED U/S 143(1) OF THE ACT. THE GOVERNMENT OF INDIA REPOSED GREAT CONFIDENCE IN THE TAX-PAYERS AND INTRODUCED THE SUM MARY ACCEPTANCE OF RETURNS FILED BY THEM WITHOUT MAKIN G ANY INQUIRY AND REQUIRING THE PRESENCE OF THE TAX-PAYER S. IN THIS NOVAL EXPERIMENT WHILE PROCESSING THE RETURN U/S 1 43(1) OF THE ACT NO INQUIRIES ARE MADE AND THE RETURNS ARE ACCEPTED 16 AS SUCH. IT IS SETTLED LAW THAT THE AO HAS NO POWER OR JURISDICTION TO MAKE ANY INQUIRY WHILE PROCESSING R ETURNS U/S 143(1) OF THE ACT. IT IS FURTHER ADDED THAT IN SUCH TYPE OF PROCESSING OF RETURNS THERE IS NO FORMATION OF OPI NION BY THE AO. THEREFORE THE QUESTION OF CHANGE OF OPINION DO ES NOT ARISE. SIMILARLY NO OPINION WAS EVER EXPRESSED OR FORMED BY THE AO WHILE PROCESSING THE RETURN UNDER THE SAID SCHEME. THE CHANGE OF OPINION PRESUPPOSES THE EXISTENCE OF ANY OPINION FORMED BY THE AO IN THE EARLIER PROCEEDING S. THE FORMATION OF OPINION IS POSITIVE ACT ON THE PART OF THE AO. THUS AN OPINION CAN BE SAID TO HAVE BEEN FORMED WH ERE THERE IS APPLICATION OF MIND WITH REFERENCE TO THE MATER IAL ON RECORD AND THE RELEVANT PROVISIONS OF THE STATUTE. HENCE UNDER SUCH PROCEEDINGS NO SUCH OPINION IS FORMED BY THE AO AN D IF THERE IS AN ESCAPEMENT OF INCOME THEN IT CANNOT BE CONTE NDED THAT THE RE-ASSESSMENT PROCEEDINGS ARE INITIATED ON MERE CHANGE OF OPINION. 11. THE CASE LAWS CITED BY THE ASSESSEE IN THE SYN OPSIS REPRODUCED ABOVE ON THE ISSUE OF RE-OPENING THE CA SE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BE ING FACTUALLY DIFFERENT AND DISTINGUISHABLE. THE FACTS NARRATED IN THE PRESENT CASE BY THE AO WHILE RECORDING REASO NS U/S 148 OF THE ACT ARE DEFINITE RELEVANT CREDIBLE AN D HAVE DIRECT NEXUS TO THE FACTUM OF ESCAPEMENT OF INCOME. THESE REASONS ARE NOT BASED ON SURMISES AS CONTENDED BY T HE LD. 'AR' WHILE PLACING RELIANCE ON THE DECISIONS INDIC ATED IN THE SYNOPSIS IN THE MATTER. THUS WE ARE OF THE CONSID ERED OPINION THAT NONE OF THE CASE LAW IS APPLICABLE TO THE FACTS 17 OF THE PRESENT CASE. THE FACTS OF THE CASE ARE SQUA RELY COVERED BY THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P.LTD. (SUPRA) . 12. A BARE PERUSAL OF THE REASONS RECORDED BY TH E AO U/S 148 OF THE ACT CLEARLY REVEALS THAT THERE IS EXISTE NCE OF DOCUMENTARY EVIDENCE IN THE FORM OF AGREEMENT TO S ELL DATED 14.10.1999 AND REGISTERED SALE DEED WITH SPE CIFIC DETAILS AS IS EVIDENT FROM THE PERUSAL OF THE REAS ONS RECORDED AND REPRODUCED ABOVE. THERE IS A RATIONALE LIVE AND DIRECT NEXUS BETWEEN THE REASONS RECORDED BY TH E AO AND ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECT ION 147 READ WITH SECTION 148 OF THE ACT. IT IS A SETTL ED PROPOSITION THAT SOURCE OF INFORMATION IS DIFFERENT FROM APPLICATION OF MIND BY THE COMPETENT AUTHORITY WHI LE INVOKING THE PROVISIONS OF SECTION 148 OF THE ACT. IN THE PRESENT CASE THE SOURCE OF INFORMATION IS THE INVE STIGATION WING OF THE INCOME TAX DEPARTMENT CHANDIGARH AND T HE APPLICATION OF MIND IS OF THE AO WHO CATEGORICALLY RECORDED THAT IN VIEW OF THE FACTS OF THE CASE HE HAS REASO N TO BELIEVE THAT INVESTMENT TO THE EXTENT OF RS.21.94 LACS REMA INED UNEXPLAINED IN THE HANDS OF SHRI ARUN KUMAR GOYAL W HICH LED TO THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. IN THE PRESENT CASE THE AO HAS FURNISHED SPECIFIC DETAILS SUCH AS DATE OF AGREEMENT TO SELL AND DATE OF REGISTRATION INCLUDING THE CONSIDERATION INVOLVED THEREIN. SUCH VITAL RE LEVANT AND DEFINITE INFORMATION CANNOT BE TREATED AS VAGUE AND IRRELEVANT INFORMATION AS SOUGHT TO BE TERMED BY TH E LD. 'AR. THERE IS A COMPLETE APPLICATION OF MIND TO THE FAC TS OF THE 18 CASE AS IS EVIDENT FROM IN THE REASONS RECORDED U/S 148 OF THE ACT BY THE AO AND HENCE IT CANNOT BE SAID AS POINTED OUT BY THE LD. 'AR' THAT THERE IS NO APPLICATION OF MIND AT THE LEVEL OF THE AO WHO INVOKED PROVISIONS OF SECT ION 148 OF THE ACT. WE HOLD THAT IN THIS CASE THE AO APPLIED HIS MIND TO THE FACT SITUATION OF THE CASE AND VALIDLY INVOK ED THE PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT. WE FURTHER HOLD THAT THE FACTS OF THE PRESENT CAS E ARE SQUARELY COVERED BY THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF RAJESH JHAVERI BROKERS P.LTD. (SUPRA). THEREFORE HAVING REGARD TO THE FACT SITUATION OF T HE PRESENT CASE CLEAR FINDINGS OF THE CIT(A) AND TRUE RATIO O F THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI (SUPRA) WE UPHOLD THE FINDINGS OF THE CIT( A) AND CONSEQUENTLY THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. NOW WE TURN TO CONSIDER THE ISSUE OF ADDITION MADE BY THE AO AND CHALLENGED BY THE ASSESSEE IN GROUND NO. 2 ON MERIT. THE AO MADE AN ADDITION OF RS.2 LACS AS UNEX PLAINED INVESTMENT/ U/S 69 OF THE ACT. THE LD. CIT(A) UPH ELD THE SAID ADDITION BY PASSING A DETAILED AND SPEAKING OR DER. WE CONSIDER IT ESSENTIAL TO REPRODUCE THE FINDINGS OF THE LD. CIT(A) ON THE ISSUE IN QUESTION FOR THE PURPOSE OF PROPER APPRECIATION OF THE SAME : I HAVE CAREFULLY CONSIDERED THE ENTIRE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASSESSEE IS THAT AGREEMENT DATED 14.10.1999 IS NOT GENUINE. THE SEQUENCE OF EVENTS AND SURROUNDING CIRCUMSTANCES WOULD REVEAL THAT THE INFORMATION/DOCUMENTS IN 19 POSSESSION OF THE DEPARTMENT CAN BE RELIED UPON. TH E FOLLOWING FACTORS ARE RELEVANT : I) ORIGINAL ATTESTED TRUE COPY BY NOTARY CHANDIGARH WAS CONFRONTED TO THE ASSESSEE. II) THE ASSESSEE HAS NOT DENIED THAT THERE WAS NO AGREEMENT PRIOR TO ANOTHER AGREEMENT DATED 3.2.2000. III) THE ASSESSEE IN HIS STATEMENT AND ALSO IN WRITTEN SUBMISSIONS ACCEPTED THAT THE ASSESSEE HAD GREAT FAITH IN MR.J.D.GUPTA AND SIGNED ON THE DOTTED LINES. IV) THE ASSESSEE HAS ADMITTED THAT IT WAS IN THE KNOWLEDGE OF THE ASSESSEE THAT THE SALE CONSIDERATION WAS RS.85 LACS OUT OF WHICH RS.10 LACS WAS PAID AS EARNEST MONEY. IT ALSO BORE THE SIGNATURES OF THE ASSESSEE AND HIS WIFE. V) THE ASSESSEE WAS ALLOWED CROSS EXAMINATION OF SHRI J.D.GUPTA ON 23.4.2007 WHO STUCK TO HIS STAND BEING WITNESS NO.1 THAT THERE EXISTED AN AGREEMENT TO SELL DATED 14.10.1999. VI) FOUR DEMAND DRAFTS MENTIONED IN PARA-11 ABOVE ARE EXACTLY SAME AS IN THE REGISTERED SALE DEED. VII) SHRI P.C.SINGLA THE NOTARY PUBLIC ACCEPTED THAT THE PHOTOCOPY AGREEMENT DATED 14.10.99 BEARS HIS SIGNATURE. VIII) THE ASSESSEE WAS ALLOWED CROSS-EXAMINATION OF SHRI J.D.GUPTA (PLACED AS ANNEXURE-5). 18. IN THE BACKDROP OF THESE FACTORS IT IS TO BE DECIDED WHETHER THE COPY OF AGREEMENT HAS ANY EVIDENTIARY VALUE. IT IS TRUE THAT IN NORMAL COURSE ANY PHOTOCOPY OF DOCUMENT CANNOT BE ADMITTED AS AN EVIDENCE. IN THE PRESENT CASE SUFFICIENT CORROBORA TIVE EVIDENCE HAS BEEN BROUGHT ON RECORD. THE ASSESSEE HAS BEEN CONFRONTED WITH ORIGINAL ATTESTED COPY OF THAT AGREEMENT. THE OTHER CORROBORATIVE EVIDENCE IS THAT ULTIMATELY THE PROPERTY HAS BEEN BOUGHT BY TH E ASSESSEE AND HIS WIFE AND REGISTERED IN ASSESSMENT YEAR 2003-04. THE STATEMENTS OF SHRI J.D.GUPTA AND P.C.SINGLA ARE ALSO CORROBORATIVE EVIDENCES. WHAT CAN BE A GREATER EVIDENCE WHERE THE ASSESSEE HIMSELF ACCEPTS THE EXISTENCE OF THIS AGREEMENT WHEREIN THE CONSIDERATION MENTIONED ISRS.85 LACS AND PAYMENT OF EARNEST MONEY OF RS.10 LACS. 20 19. TAKING INTO ACCOUNT ALL FACTS AND CIRCUMSTANCES I AM OF THE VIEW THAT THIS AGREEMENT CAN BE TREATED AS DOCUMENT WHICH CAN BE RELIED UPON AS EVIDENCE. 20. THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED VARIOUS POINTS SAYING THAT SUCH DOCUMENTS CANNOT BE RELIED UPON. CERTAIN INCONSISTENCIES HAVE BEEN HIGHLIGHTED IN ITS REPLIES. THE MAIN CONTENTIONS ALONGWITH REMARKS ARE GIVEN AS BELOW : S.NO. REMARKS BY THE CIT(A) 1 PROPERTY IS A RESUMED PROPERTY THIS FACT HAS BEEN MENTIONED ON P-1 OF THE AGREEMENT. IT IS DESPITE THAT TOTAL CONSIDERATION IS RS.85 LACS. 2 BUYERS & SELLERS HAD GREAT FAITH IN SHRI J.D.GUPTA AND SIGNED ON DOTTED LINES THE BUYERS WOULD NOT SIGN BLINDLY. THE PRICE OF THE PROPERTY IS THE FIRST THING WHICH IS ASKED AND NOTED. ATLEAST PRICE MENTIONED IN THE AGREEMENT IS CHECKED. EVEN OTHERWISE THE DEPARTMENT HAS TO TAKE DECISION AS PER EVIDENCE ON RECORD. 3 THE AGREEMENT SHOWING CONSIDERATION OF RS.85 LACS NEVER EXISTED. THE COMPLAINANT CREATED AGREEMENT THE ASSESSEE HAS BEEN SHOWING A TRUE COPY OF AGREEMENT. THE ASSESSEE HIMSELF ACCEPTED THAT AGREEMENT WAS TORN. THAT MEANS THE AGREEMENT EXISTED. 4 THE SIGNATURES ON THE AGREEMENT HAS SAME SPACING & CHRONOLOGY THIS FACT WILL NOT AFFECT THE VALIDITY OF AGREEMENT. 5 SHRI ARUN GOYAL PUT SIGNATURE ON STAMP. IT IS NOT POSSIBLE. THE STAMP IS GENERALLY PUT ON THE PAPER WITHOUT AT TIMES LOOKING ON THE SIGNATURE. THIS FACT WILL NOT INVALIDATE THE AGREEMENT. 6 THE AGREEMENT TO SELL IS NOT RS.3 STAMP PAPER AS FAR AS INCOME TAX IS CONCERNED THIS FACT IS NOT MATERIAL 7 RECORD OF NOTARY PUBLIC NOT EXAMINED NO NEED OF SEEING THE RECORD OF NOTARY PUBLIC. STATEMENT OF NOTARY PUBLIC RECORDED. 8 RECEIPT APPEARING AS ANNEXURE. SIGNATURES APPEARING ON STAMP OF NOTARY THE STAMP IS GENERALLY PUT ON THE PAPER WITHOUT AT TIMES LOOKING ON THE SIGNATURE. THIS FACT WILL NOT INVALIDATE THE AGREEMENT. 9 AGREEMENT REQUIRES TO BE EXAMINED BY FORENSIC EXPERT NO NEED. THE ASSESSEE HIMSELF AGREES THAT THERE WAS AGREEMENT WHICH WAS TORN. THERE IS NO DENIAL OF SIGNATURES ON THE AGREEMENT. 10 THE AGREEMENT WAS WITHOUT MENTIONING THE AMOUNT THE AGREEMENT MENTIONS THE AMOUNTS IN FIGURES AS WELL AS IN WORDS AND IT HAS BEEN TYPED. MOREOVER THE ASSESSEE HAS ACCEPTED THAT THERE WAS CONSIDERATION OF RS.85 LACS. 21. THE NEXT QUESTION ARISES WHAT IS THE YEAR OF TAXABILITY. ONCE IT IS HELD THAT THIS AGREEMENT HAS EVIDENTIARY VALUE THEN THE ASSESSEE IS LIABLE TO T AX ON THE UNDISCLOSED INVESTMENT EITHER IN A.Y. 2000-01 O R A.Y. 2003-04. ONE THING IS CLEAR THAT THERE IS NO 21 ESCAPE FROM TAXABILITY OF INCOME. IN MY VIEW THE AO HAS RIGHTLY TAXED IN ASSESSMENT YEAR 2003-04 WHEN THE ASSESSEE GOT THE PROPERTY REGISTERED IN HIS NAM E. THERE WAS DISPUTE AND THAT IS WHY THE MATTER WENT INTO COURT. THAT MEANS WHEN THE LITIGATION CAME TO AN END THE ASSESSEE EXERCISED HIS FULL RIGHTS. THE RE NTAL INCOME SHOWN BY THE ASSESSEE FROM ASSESSMENT YEAR 2000-01 DOES NOT CONFER THE FULL OWNERSHIP. ALL THE PAYMENTS ARE FINALIZED AT THE TIME OF EXECUTION OF REGISTERED DOCUMENT. THE AGREEMENT TO SELL IS ONLY THE PROMISE TO EFFECT THE TRANSACTION. 22. IN VIEW OF THE ABOVE DISCUSSION THE ACTION OF THE AO IS JUSTIFIED AND IN RESULT APPEAL OF THE ASSESS EE IS DISMISSED. 13(I) IT IS PERTINENT TO HIGHLIGHT THAT THE AS SESSEE APPELLANT DULY CONFIRMED THE EXISTENCE OF AGREEMENT TO SELL DATED 14.10.1999 WHEREIN DEMAND DRAFTS ARE ALSO RE CORDED AS PAYMENT MADE IN PURSUANCE OF THE SAID AGREEMENT. THE IMPORTANT AND SIGNIFICANT FACTOR TO BE NOTED IS THA T THE SAME DEMAND DRAFTS ARE APPEARING IN THE SUBSEQUENT AGRE EMENT TO SELL DATED 03.02.2000 WHICH CAME INTO EXISTENC E AFTER FOUR MONTHS OF THE ORIGINAL AGREEMENT TO SELL DATED 14.10.1999. IT IS UNBELIEVABLE TO ACCEPT THAT SUCH DEMAND DRAFTS WERE PURCHASED IN PURSUANCE OF THE AGREEMENT TO SELL DATED 03.02.2000 EVEN PRIOR TO ITS EXISTENCE THESE DEMAND DRAFTS ARE DATED 12.10.1999 AND IT IS BEYOND COMPRE HENSION THAT ANY RATIONAL HUMAN BEING WOULD PREPARE SUCH DR AFTS AND RECORD THE SAME IN THE ORIGINAL AGREEMENT TO SE LL DATED 14.10.1999 AND THEN CLAIM THAT SUCH DRAFTS WERE PUR CHASED IN PURSUANCE TO THE AGREEMENT TO SELL DATED 03.02.2 000 22 WHICH WAS EXECUTED SUBSEQUENT TO THE ORIGINAL AGREE MENT. AS INDICATED EARLIER THE AGREEMENT TO SELL DATED 03.02.2000 EXISTED IN THE WOMB OF FUTURITY AND H ENCE SAID DRAFTS DATED 12.10.1999 CANNOT BE PURCHASED IN PURSUANCE OF SUCH AGREEMENT TO SELL. THE TIME LATC HES BETWEEN THE ORIGINAL AGREEMENT DATED 14.10.1999 AND THE PURCHASE OF SAID DRAFTS IS JUST TWO DAYS. WHEREAS IT IS ALMOST FOUR MONTHS IN RESPECT OF SUBSEQUENT AGREEMENT DATED 03.02.2000. THE SEQUENCE OF EVENTS IN THE CA SE RUNS CONTRARY TO THE PROBABILITY OF HUMAN CONDUCT AND SURROUNDING CIRCUMSTANCES OF THIS CASE. THE ASSESS EE FAILED TO EXPLAIN AND REBUT SUCH DOCUMENTARY EVIDENCE TO P ROVE THE GENUINENESS OF AGREEMENT TO SELL DATED 03.02.20 00 AND TO PROVE THE NON-GENUINENESS OF AGREEMENT DATED 14.10.1999. 14. THE AO AS ALSO THE CIT(A) APPRECIATED THE EXI STENCE OF DOCUMENTARY MATERIAL TO SUPPORT THEIR FINDINGS. IT IS UNDISPUTED FACT THAT ORIGINAL ATTESTED TRUE COPY BY NOTARY CHANDIGARH WAS CONFRONTED TO THE ASSESSEE. THE NOTA RY ALSO ACCEPTED IN HIS STATEMENT THE CONTENTS OF THE CERTI FIED AGREEMENT TO SELL DATED 14.10.1999 IN THE LIEU OF SUCH CERTIFICATION BY HIM. IN THIS CONNECTION IT IS PERTINENT TO HIGHLIGHT THAT THE AO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS AND HE IS ENTITLED TO AC T ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. (1954) 26 ITR 23 775/DHAKESHWARI COTTON MILLS V CIT (1955) 27 ITR 12 6 (S.C). FURTHER SUCH JUDICIAL PRECEDENT OF THE HON 'BLE APEX COURT STANDS VINDICATED BY A BARE PERUSAL OF THE PR OVISIONS OF SECTION 143 OF THE ACT. THE AO IS REQUIRED TO F RAME THE ASSESSMENT ON THE BASIS OF MATERIAL TO SUPPORT HIS FINDINGS WHEREAS THE ASSESSEE IS REQUIRED TO ADDUCE EVIDENCE TO SUPPORT THE CONTENTS OF HIS RETURN OF INCOME. THEREFORE THE CIT(A) TO SUPPORT HIS FINDINGS I N THE PRESENT CASE PLACED RELIANCE ON THE COGENT CRE DIBLE AND CORROBORATIVE MATERIAL IN THE FORM OF AGREEMENT DA TED 14.10.1999 STATEMENT OF SHRI J.D.GUPTA STATEMENT OF SH P.C.SINGLA NOTARY PUBLIC STATEMENT OF WITNESS AS ALSO STATEMENT OF THE ASSESSEE. THE ASSESSEE HAS FAILED TO REBUT THE CONTENTS OF SUCH DOCUMENTARY EVIDENCE AS ALSO THE DEPOSITION MADE BY VARIOUS PARTIES DIRECTLY CONNECT ED TO THE AGREEMENT DATED 14.12.1999. THE ASSESSEE HIMSELF ADMITTED THE EXISTENCE OF THE AGREEMENT PRIOR TO TH E SUBSEQUENT AGREEMENT DATED 03.02.2000. THE ASSESSEE HAS DULY ACCEPTED SIGNATURE ON THIS ORIGINAL AGREEMENT DATED 14.10.1999 AND CONSIDERATION RECORDED THEREIN. BARE ASSERTION ON THE PART OF THE ASSESSEE ABOUT THE IGN ORANCE OF THE CONTENTS OF THE SAID AGREEMENT IS NOTHING BUT A MERE PREVARICATION OF FACTUAL MATRIX OF THE IMPUGNED AGR EEMENT. SUCH ASSERTIONS PURELY FOUNDED ON SURMISES AND CONJECTURES CANNOT REBUT THE DOCUMENTARY CORROBORA TIVE AND CREDIBLE MATERIAL EVIDENCES AGAINST THE ASSESSE E. INCIDENTALLY IT IS POINTED OUT THAT COPIES WHICH A RE MADE FROM ORIGINAL BY MECHANICAL PROCESS WHICH IN THEMS ELVES 24 ASSURE THE ACCURACY OF THE COPY AND COPIES COMPARED WITH SUCH COPIES AS ALSO THE COPIES MADE FROM OR COMPARE D WITH THE ORIGINAL ARE EVIDENCE WITHIN THE MEANING OF SEC TION 63 OF THE INDIAN EVIDENCE ACT 1872. IN THE ORIGINAL AGRE EMENT TO SELL DATED 14.10.1992 THE CONSIDERATION OF THE IMP UGNED PROPERTY IS CLEARLY RECORDED AS RS.85 LACS WHEREAS THE CONSIDERATION OF THE SAME PROPERTY HAS BEEN RECORDE D AS RS.16 LACS IN THE SUBSEQUENT AGREEMENT DATED 03.02. 2000. THE SUBSEQUENT AGREEMENT DATED 03.02.2000 WAS EXECU TED AFTER FOUR MONTHS OF THE ORIGINAL AGREEMENT TO SELL DATED 14.10.1999. SUCH A DRASTIC DECLINE IN THE SALE CONS IDERATION VIZ-A-VIZ THESE TWO AGREEMENTS REMAINS INEXPLICABLE AND UN- REBUTTABLE BY THE ASSESSEE APPELLANT. IN THIS CONTE XT IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE APPELLA NT ADMITS THE EXISTENCE OF THE ORIGINAL AGREEMENT DATE D 14.10.1999 AND ALSO ADMITS THAT THE SAID ORIGINAL A GREEMENT WAS TORN BY HIM. BARE ASSERTIONS ON THE PART OF TH E ASSESSEE THAT HE HAS NOT SEEN THE CONTENTS OF THE O RIGINAL AGREEMENT DATED 14.10.1999 AND SIGNED THE SAME ACCORDINGLY IS A SPECIOUS AND SELF-SERVING EXPLANAT ION UNSUPPORTED BY ANY EVIDENCE BROUGHT ON RECORD BY TH E ASSESSEE. NO RATIONAL PERSON WOULD APPRECIATE THAT THE IMPUGNED AGREEMENT TO SELL DATED 14.10.1999 HAS BEE N SIGNED WITHOUT EVEN KNOWING CONTENTS OF THE SAME. H OWEVER SUCH ASSERTIONS CANNOT SUBSTITUTE THE CARDINAL MATE RIAL ON THE BASIS OF WHICH THE CIT(A) HAS UPHELD THE FINDIN GS OF THE AO. THE LD. CIT(A) HAS PASSED A DETAILED AND SPEAK ING ORDER 25 AFTER APPRECIATION OF THE RELEVANT MATERIAL AND SUB MISSIONS FILED BY THE ASSESSEE AS REPRODUCED ABOVE. 15. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSI ONS WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD . CIT(A) AND HENCE THE ORDER OF THE LD CIT(A) IS UPHELD. CONSEQUENTLY THIS GROUND OF APPEAL RAISED BY THE A SSESSEE ARE DISMISSED. 16. RESULTANTLY THE APPEAL FILED BY SHRI ARUN KUMA R GOYAL THE ASSESSEE APPELLANT IS DISMISSED. SIMILAR FINDINGS WOULD HOLD GOOD IN RESPECT OF APPEAL BY THE ASSESSE E APPELLANT VIDE ITA NO. 206/CHD/2009 AS SIMILAR ISS UES ARE INVOLVED. ITA NOS. 203 & 204/CHD/2009 - SMT.PARVEEN GOYAL 17. A BARE PERUSAL OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE-APPELLANT REVEALS THAT SUCH GROUNDS OF APP EAL ARE IDENTICAL TO THAT OF THE GROUNDS OF APPEAL RAISED B Y THE ASSESSEE SHRI ARUN KUMAR GOYAL HUSBAND OF THE PRES ENT APPELLANT IN ITA NOS. 205 & 206/CHD/2009. THE ADJUDICATION MADE BY US IN THE CASE OF SHRI ARUN K UMAR GOYAL HEREIN BEFORE IS ALSO APPLICABLE TO THESE APP EALS. CONSEQUENTLY THE GROUNDS OF APPEAL RAISED BY THE A SSESSEE- APPELLANT IN ITA NO. 203& 204/CHD/2009 ARE DISMISSE D. 18. IN THE RESULT APPEAL OF THE ASSESSEE APPELLANT SHRI ARUN KUMAR GOYAL BEARING ITA NOS. 205 & 206/CHD/200 9 A.Y. 2000-01 AND 2003-04 AND APPEALS OF SMT.PARVEEN GOYAL 26 BEARING ITA NOS. 203 & 204/CHD/2009 A.Y. 2000-01 A ND 2003-04 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH NOV. 2011. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMB ER DATED: 17 TH NOV. 2011. POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT D R ASSISTANT REGISTRAR ITAT CHANDIGARH