M/S PRAVEEN MAHESHARI , HUF, Jaipur v. ACIT, Jaipur

ITA 630/JPR/2011 | 2008-2009
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 63023114 RSA 2011
Assessee PAN IEUOF4850S
Bench Jaipur
Appeal Number ITA 630/JPR/2011
Duration Of Justice 3 month(s) 6 day(s)
Appellant M/S PRAVEEN MAHESHARI , HUF, Jaipur
Respondent ACIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 23-09-2011
Assessment Year 2008-2009
Appeal Filed On 16-06-2011
Judgment Text
1 ITA 630(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 630/JP/2011 ASSTT. YEAR : 2008-09. SHRI PRAVEEN MAHESHWARI HUF VS. THE ACIT CIRCLE- 3 C-5 SAWAI JAI SINGH HIGHWAY JAIPUR. BANI PARK JAIPUR. ITA NO. 731/JP/2011 ASSTT. YEAR : 2008-09. THE ACIT CIRCLE-3 VS. SHRI PRAVEEN MAHESHWARI HUF JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI O.P. AGARWAL & MANISH A GARWAL DEPARTMENT BY : SHRI VINOD JOHARI DATE OF HEARING : 07.09.2011 DATE OF PRONOUNCEMENT : 23.9.2011 ORDER DATE OF ORDER : 23/09/2011. PER R.K. GUPTA J.M. THESE ARE TWO APPEALS BY THE ASSESSEE AND DEPARTME NT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A) HAS GROSSLY ERRED IN PASSING THE IMPUGNED ORDER BY GROS SLY FLOUTING THE CANNONS OF JUSTICE AND FAIR PLAY AS THE LD. CIT(A) HAS ASSUMED JURISDICTION OF RE-ASSESSMENT OVER THE CASE WHICH I S TOTALLY AGAINST THE CO- 2 TERMINUS POWERS VESTED UNDER THE CIT(A) IN U/S 251 OF THE INCOME TAX ACT 1961 THUS THE ORDER OF THE LD. CIT(A) DESERVE S TO BE QUASHED IN TOTO. 2. THAT THE LD. CIT(A) HAS GROSSLY FAILED TO UNDE RSTAND THE CONCEPT OF HUF UNDER THE INCOME TAX ACT AND THE SPECIAL TREATM ENT RECEIVED BY THE HINDU UNDIVIDED FAMILIES AS A SPECIAL STATUS AND HA S FURTHER FAILED TO UNDERSTAND THE BASIC TENETS OF INCOME TAX LAW WHICH DOES NOT ADMIT THE TECHNICALITIES OF EVIDENCE ACT. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CHANG ING THE WHOLE CONSPECTUS OF THE CASE AND THEREBY APPLYING THE PRO VISIONS OF SECTION 56 OF THE INCOME TAX ACT 1961 WITHOUT IN ANY MANNER CONS IDERING THE APPLICATION OF THE SAID SECTION FOR THE ASSESSMENT YEAR IN HAND THUS THE ADDITIONS UPHOLD BY THE LD. CIT(A) DESERVES TO BE D ELETED AND FURTHER SUCH AN ACTION DESERVES TO BE HOLD GROSSLY ILLEGAL AND UN-BONAFIDE. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDI NG THAT THE HUF OF SHRI PRAVEEN MAHESHWARI IS NOT THE LEGAL OWNER OF T HE PROPERTIES DEVOLVED UPON IT IN TERMS OF THE LAW FULL DECLARATION IN RES PECT TO THE PROPERTIES SETTLED THROUGH THE DECLARATION DATED 09.03.1998. 5. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDI NG THAT THE IMMOVABLE PROPERTY SITUATED AT AMRITSAR WHICH WAS S UBJECT MATTER OF EXCHANGE OF SAID PROPERTY WITH THE IMMOVABLE PROPER TY AT JAIPUR HAS NOT BEEN TRANSFERRED BY THE ASSESSEE HUF AND INSTEAD HA S BEEN TRANSFERRED BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND FURTHER ERRED IN HOLDING THAT THE TRANSFER OF AMRITSAR PROPERTY IS A TRANSFER BY THE COPARCENERS OF PRAKASH CHAND MAHESHWARI HUF. 6. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFI RMING THE ACTION OF THE LD. AO OF NOT ALLOWING DEDUCTION U/S 54 OF THE INCOME TAX ACT 1961 INSPITE OF THE MOST CLINCHING EVIDENCES ON RECORD I N THE SHAPE OF REGISTERED DOCUMENTS IN RELATION TO THE EXCHANGE OF IMMOVABLE PROPERTY PROVED BEYOND DOUBT. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS GROSSLY ERRED IN LEVY OF INTEREST U/S 234-A AND U/S 234-B OF THE INCOME TAX ACT 1961. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE INITIATING THE P ENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT 1961. 3 3. THE DEPARTMENT IN ITS APPEAL HAS TAKEN THE SOLIT ARY GROUND AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) IS JUSTIFIED IN DIRECTING TO AL LOW DEDUCTION OF RS. 67 50 000/- U/S 54 OF THE I.T. ACT 1961. 4. THE BRIEF FACTS AS NARRATED IN THE ORDER OF LD. CIT (APPEALS) IN PARA 3 TO 3.7 ARE AS UNDER :- 3. THE RE T URN OF I NCOME WAS FILED BY THE ASSESSEE ON 20 . 3 . 2010 DECLARING N I L I NCOME. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SC RUTINY . A S P E R TH E ASSESSMENT OR D ER A SURVEY U / S 133A OF THE I.T . ACT 1961 HAD BEEN CARR I ED OUT AT THE BUS I NESS PREMIS E S OF M /S P . R . R OLLING MILLS PVT . L TD . JAIPUR O N 8 . 3 . 2010 . DURING THE COURSE OF SURVEY TWO REGISTRATION DEED S IN RESP E CT O F HOUS E PROPERTIES SOLD AND PURCHASED WERE FOUND AT THE BU S INE SS PRE M ISES O F THE COMPAN Y SHRI P RAVEEN MAHESHWARI KARTA OF M / S PRAVEEN MAH E S HW AR I HUF IS ONE OF THE DIRECTORS IN M / S P.R . ROLLING MILLS P V T. LTD . JAIPU R . ONE R EGIS T RATION DEED DATED 2 8. 3.2 008 W A S ENTERED INTO BET WE EN M /S RAI BAHADU R KISHOR CHAND AND SON S ( P R OPE R TIES ) P VT. LTD. HAVING ITS REGISTERED OF F ICE AT RBKC TOWERS M C LEOD ROAD AMRITS AR THROUGH ITS DIRECTOR SHR I SANJA Y MAHESHWARI REFERRED IN THE S ALE DEED TO A S SELLERS OF THE F IRST PART AND BETWEEN SHRI PRAVEEN MAHESHWARI KARTA PRAVEEN MAHESHWARI HUF AND SHRI RAJ E E V MAHESHWARI KARTA RAJEEV MAHESHWARI HUF REFERRED IN THE SALE DEED A S PU R CHASER OF THE SECOND PART. VIDE THIS REGISTRATION D EED M / S RA I BAHADUR KI S HOR CHAND AND SONS (PROPERTIES) P V T . LTD. SOLD THE RESIDENTIAL PROPERT Y BE A RING NUMBER C-5 SITUATED AT SAWAI JAI SINGH HIGHWA Y BANI PARK JAIPU R F OR A CONSIDERATION OF RS . 1 35 00 000 / - TO M / S PRAVEEN MAHESH W A R I HU F A ND M / S RAJEEV MAHESHWARI HUF. 3.1 DURING THE COURSE OF SUR V EY PROCEEDINGS STATEMENT OF SHRI P R A V EEN MAHESHWARI DIRECTOR M/S P.R . ROLLING MILLS P V T. LTD. JAIPUR WAS RECORDED ON OATH . I N ANSWER TO QUESTION NO . 3 OF THE STATEMENT SHRI PRAVEEN MAHESH W A RI STATED THAT HE ALONGWITH HIS BROTHER SHRI RAJEEV MAHESHWAR I PURCHASED THE RESIDENTIAL PROPERTY SITUATED AT C-5 SAWAI JAI SINGH HIGHWAY BANI PARK JAIPUR IN THE 4 CAPACITY OF HUFS I . E . M / S PRA V EEN MAHESHWARI HUF AND M /S RAJEE V MAHESHWARI HUF FOR A CONSIDERATION OF RS.1 35 00 000 / - FROM M /S RAI BAHADUR KISHORE CHAND AND SONS (PROPERTIES) PVT . LTD . THE REGISTRATION DEED TO THIS EFFECT WAS MADE ON 28 . 3 . 2008. IN THIS PROPERTY HE ALONGWITH HI S BROTHER INVESTED RS. 67.5 LACS EACH I.E. 50 % OF TOTAL CONS I DERATION O F RS . 1 35 00 000 / - . IT WAS FURTHER STATED B Y HIM THAT HE WAS UNABLE TO EX PL A I N THE S OURCE OF THIS INVESTMENT AND THIS AMOUNT OF RS . 67.5 LAC S W A S TH E UNDISC L OSED INCOME OF M / S PRAVEEN MAHESHWARI HUF. THIS UNDISCLOSED INCOME OFRS.67.5 LACS WAS SUR RENDERED FOR INCOME TAX PURPOSE . 3.2 ANOTHER REGISTRATION DEED WAS EFFECTED BETWEEN SHRI PRAVEEN MAHESHWAR I & SHRI RAJEEV MAHESHWARI SONS OF LATE SHRI PRAKASH CHAND MAHESHWARI SMT . PRATIBHA MAHESHWARI W / O LATE SHRI PRAKASH CHAND MAHESHWARI ASHU MAHESHWARI AND RITU MAHESHWARI D/O LATE SHRI PRAKAS H CHAND MAHESHWARI AS SELLER AND M/S RAI BAHADUR KISHOR CHAND AND SONS (P ROPERTIES) PVT. LTD. AMRITSAR AS PURCHASER ON 6 . 2 . 2008. THIS RESIDENTIAL HOUSE PROPERTY WAS SITUATED AT 3-A THE MALL AMRITSAR . THIS PROPERTY WAS SOLD / TRANSFERRED FOR A CONSIDERATION OF RS. 1 35 00 000/-. 3.3 IN THE NOTES APPENDED WITH THE RETURN OF INCOM E THE ASSESSEE HUF IN PARA NO . 8 HAD STATED AS UNDER: A) MR. PRAVEEN MAHESHWARI AND MR. RAJEEV MAHESHWA RI ARE SONS OF LATE SHRI PRAKASH CHAND MAHESHWARI AND THEY ARE KARTA OF THEI R HUFS SEPARATELY. B) 1 / 4 T H SHARE OF RESIDENTIAL HOUSE P R OPERT Y A T 3 -A T HE M A LL AM RITSAR W AS O W NED JOINTL Y BY BOTH HUFS. C) ON 6 . 2.2008 THE SAID RESIDENTIAL HOUSE PROPERTY (AT 3-A THE MALL AMRITSAR) WAS TRANSFERRED TO M / S R.B . KISHOR CHAND & SONS (PROPERTIES ) P V T . LTD . THROUGH A REGISTERED DEED DATED 6.2 . 2008 AND IN EXCHANGE ANOTHER RESIDENTIAL HOUSE PROPERT Y (SITUATED AT C-5 SMS HIGHWAY BANI PARK JAIPU R) WA S ACQUIRED B Y BOTH THE SAID HUFS THE DEED OF WHICH WAS REGISTERED ON 28 . 3.2008 . 5 D) THE CAPITAL GAIN HAS BEEN CALCULATED ON THE BAS IS OF RS. 1 35 00 000 /- - MENTIONED IN THE DEED DATED 6 . 2 . 2008 (EACH HUF HAVING SHARE I. E . RS . 67 50 000 / -). AS A RESULT OF EXCHANGE BOTH THE SAID HUFS HAV E ACQUIRED ANOTHER RESIDENTIAL PROPERTY (IN EQUAL SHARE) COVERING THE WHOLE V ALUE O F RS . L 35 00 000/- (EACH HUF HAVING SHARE I.E. RS. 67 50 000/-) WITHIN THE ONE YEAR OF TRANSFER OF PROPERTY (AT 3-A THE MALL AMRITSAR) AS REQUIRED B Y PROVISION OF SECTION 54 AND THUS THE ASSESSEE IS ELIGIBLE AND ACCORDINGLY CLAIM ED DEDUCTION U/S 54 AND AFTER THE DEDUCTION THE TAXABLE INCOME UNDER THE HEAD 'C APITAL GAIN IS NIL . 3.4 THE ASSESSING OFFICER CONSIDERED THE ABOVE SUBMISSI ONS FILED ALONGWITH TH E RETURNS AND FOUND THEM UNACCEPTABLE ON THE GROUND T HAT DURING THE COURSE O F SURVEY SHRI PRAVEEN MAHESHWARI IN RESPONSE TO QUEST ION NO . 4 HAD ADMITTED THAT 1/8 TH SHARE EACH OF THE PROPERTY SITUATED AT AMRITSAR WA S INHERITED B Y HIS BROTHER AND HIM IN THEIR HUFS . THIS PROPERTY WAS SOLD B Y BOTH HUFS FOR A CONSI D ERATION OF RS . 1.35 CRORES ON WHICH NO CAPITAL GAIN TA X WAS PAID AND H E HAD STATED THAT HE WOULD DISCLOSE HALF OF HIS SHARE OF RS . 67 50 000/ - FOR CAPITA L GAIN PURPOSE. 3.5 THE AO HELD THE STATEMENT OF PRAVEEN MAHESHWAR I THAT THE PROPERTY WAS SOLD BY BOTH THE HUFS TO BE INCORRECT HE HELD THAT THE PROPERTY WAS NOT SOLD BY THE HUFS BUT IN THEIR INDIVIDUAL CAPACITY. HE FURTH ER HELD THAT KEEPING THIS FA C T IN VIEW THE ASSESSEES HUF IS NOT ENTITLED FOR CLAIMING DEDUCTION U/S 54 OF THE INCOME-TAX ACT 1961 ON THE FOLLOWING GROUNDS: I) THE PROPERTY SOLD AT AMRITSAR I . E. 3-A THE MALL AMRITSAR WAS NOT OWNED BY THE ASSESSEE HUF. II) THAT IS WHY THE REGISTRATION DEED HAS BEEN EFF ECTED BY SHRI PRAVEEN MAHESHWARI S/O LATE SHRI PRAKASH CHAND MAHESHWARI I N HIS INDIVIDUAL CAPACIT Y AND NOT AS KARTA OF M / S PRA V EEN MAHESHWARI HUF A S IS EVI D E NT F ROM THE REGISTRATION DEED DATED 6 .2.2 008 W HICH HAS BEEN PLACED ON RECORD. 6 III) THE IN V ESTMENT IN TH E HOUSE PROPERT Y PUR C HASED AT C-5 SMS HIGHWA Y B A N I PARK JAIPUR HAS BEEN MADE BY M / S PRAVEEN MAHESHWARI HUF AND NOT SHRI PRA V EEN MAHESHWARI AS INDIVIDUAL. IV) SHR I PRA V EEN MAHESHWARI HIMSELF SURRENDERED THE AMOUNT OF RS . 67 50 000 /- I .E . HIS SHARE FROM THE PROPERTY SOLD FOR CAPITAL GAIN T AX IN HIS STATEMENT DURING THE COURSE OF SUR V E Y U / S 133A OF THE I . T . ACT 1961 . 3.6. HE ALSO PLACED RELIANCE IN THE FOLLOWING JUDI CIAL PRONOUNCEMENT: I) ADDITION MADE ON THE BASIS OF ADMISSION BY ASSE SSEE JUSTIFIED. HIRA SINGH AND CO. VS. CIT (HP) 230 ITR 791. II) MANHARLAL KASTURCHAND CHOKSHI VS. ACIT (ITAT AHD.) 61 ITD 55 III) HIRALAL MANGANLAL & CO. VS. DCIT (ITAT MUM.) 96 ITD 113 IV) RAVINDRA D. TRIVEDI VS. CIT (RAJ.) 215 CTR 313 3.7 THEREAFTER HE MADE AN ADDITION OF RS . 67 50 OOOI- ON ACCOUNT OF INVESTMENT MADE BY THE ASSESSEE IN THE PURCHASE OF THE PROPERTY AT C-5 SAWAI JAI S I NGH HIGHWAY BANI PARK JAIPUR BEING 50% OF THE TOTAL CONSIDERATION OF RS.1 . 3 5 CRORES AS PER REGISTRATION DEED EFFECTED ON 28 . 3.2008 . HE DID NOT ALLOW THE ASSESSEE HUF THE DEDUCTION U / S 54 ON THE GROUNDS DISCUSSED ABOVE. 5. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) BEF ORE WHOM THE DETAILED WRITTEN SUBMISSIONS WERE FILED WHICH ARE RECORDED BY LD. CI T (A) IN PARA 4.1 TO 5.10 AT PAGES 4 TO 17 ARE AS UNDER :- 4.1 BRIEF FACTS REGARDING THE SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT 1961 AS CARRIED OUT AT THE BUSINESS PREMISES O F M/S P.R. ROLLING MILLS PVT. LTD. JAIPUR AND THE RESIDENTIAL PREMISES OF THE AS SESSEE HUF ON 08.03.2010 IN WHICH KARTA OF THE ASSESSEE HUF SH. PRAVEEN MAHESH WARI IS ONE OF THE DIRECTORS. DURING THE COURSE OF SURVEY TWO TRANSFER DEEDS IN R ESPECT OF PROPERTIES EXCHANGED 7 BY THE ASSESSEE HUF WERE FOUND AT THE BUSINESS PREM ISES OF THE COMPANY. DETAILS OF WHICH ARE AS UNDER: S. DATE OF REGI STRA TION DESCRIPTION OF PROPERTY SELLER BUYER CONSIDERATION STATED 1. 06.02.2008 HOUSE PROPERTY SITUATED AT 3A THE MALL AMRITSAR (APB 19-24) PRAVEN MAHESHWARI HUF AND RAJEEV MAHESHWARI HUF (THOUGH THE TRANSFER DEED WAS SIGNED BY ALL THE LEGAL HEIRS OF LATE SHRI PRAKASH CHAND MAHESHWARI I.E. SMT. PRATIBHA MAHESHWARI W/O LATE PRAKASH CHAND MAHESHWARI SHRI PRAVEEN MAHESHWARI RAJEEV MAHESHWARI SONS OF LATE SHRI PRAKASH CHAND MAHESHWARI ASHU MAHESHWARI RITU MAHESHWARI DS/O LATE PRAKASH CHAND MAHESHWARI) M/S RAI BAH ADUR KISH OR CHAN D AND SONS (PRO PERTI ES) PVT. LTD. 1 35 00 000/- 2. 28.03.2008 HOUSE PROPERTY SITUATED AT C-5 SAWAI JAI SINGH HIGHWAY BANIPARK JAIPUR (APB 25- 32) M/S RAI BAHADUR KISHOR CHAND AND SONS (PROPERTIES) PVT. LTD. SH. PRAVEEN MAH ESH WARI HU F AND SH. RAJV EEV MAH ESH WARI HU F 1 35 00 000/- 4.2 THE FAMILY PEDIGREE OF THE ASSESSEE IS AS UNDE R: RAI BAHADUR KISH ORE CHAND MAHESHWARI AMIR CHAND MAHESHWARI PRATAP CHAND MAHESHWARI KAILA SH CHAND MAHESHWARI PRAKASH CHAND MAHESHWARI SHASHIKANT MA HES HW ARI RAVIKANT MA HES HW ARI NISHIKANT MA HES HW ARI SANJAY MA HES HW ARI AJAY MA HES HW ARY SUNIL MA HES HW ARI SHARAD MA HES HW ARI PRAVEEN MA HES HW ARI RAJEEVH MA HES HW ARI 8 4.3 BRIEF BACKGROUND IN RESPECT OF THE ABOVE STATE D TRANSFER DEEDS IS AS UNDER: THAT THE PROPERTY SITUATED AT 3A THE MALL AMRITS AR WAS PURCHASED BY SHRI PRAKASH CHAND MAHESHWARI S/O LATE RAI BAHADUR KISHO RE CHAND MAHESHWARI IN THE CAPACITY OF KARTA OF HIS HUF JOINTLY WITH HIS B ROTHERS NAMELY SHRI AMIR CHAND MAHESHWARI KAILASH CHAND MAHESHWARI AND PRAT AP CHAND MAHESHWARI HAVING EQUAL SHARES IN THE YEAR 1970. THE SAID PROP ERTY WAS DULY DISCLOSED BY M/S PRAKASH CHAND MAHESHWARI HUF IN THE STATEMENT OF WEALTH AND IN THE RETURN OF WEALTH FILED REGULARLY WITH THE INCOME TAX DEPAR TMENT. THE WEALTH TAX ASSESSMENTS FOR VARIOUS ASSESSMENT YEARS IN RESPECT OF M/S PRAKASH CHAND MAHESHWARI HUF STOOD COMPLETED U/S 16(3) OF W. T. ACT WHEREIN THE SAID PROPERTY HAS BEEN CLAIMED AND ASSESSED AS BELONGING TO THE HUF M/S PRAKASH CHAND MAHESHWARI. COPIES OF THE WEALTH TAX ASSESSME NT ORDERS FOR A.Y. 1981-82 1985-86 1987-88 1988-89 1991-92 AND 1992-93 PASS ED IN RESPECT OF M/S PRAKASH CHAND MAHESHWARI HUF (THE ASSESSEE) AS SU BMITTED BEFORE THE LD. AO ARE ENCLOSED HEREWITH FOR READY REFERENCE. SHRI PRAKASH CHAND MAHESHWARI IN TERMS OF DECLARAT ION MADE ON 09.03.1998 HAD MADE THE PARTITION OF HIS HUF AND THE 1/4 TH SHARE IN THE PROPERTY SITUATED AT 3A THE MALL AMRITSAR WAS DISTRIBUTED TO THE SMALLER HUF OF SHRI PRAVEEN MAHESHWARI AND RAJEEV MAHESHWARI [CLAUSE 4(II)] ( E QUALLY AND ACCORDINGLY 1/4 TH SHARE IN THE PROPERTY I.E. 3A THE MALL AMRITSAR B ECAME THE PROPERTY AS BELONGING TO M/S PRAVEEN MAHESHWARI HUF THE APPEL LANT AND M/S RAJEEV MAHESHWARI HUF HAVING 1/8 TH SHARE EACH. THE SECOND PROPERTY I.E. C-5 SAWAI JAI SINGH HIGH WAY BANIPARK JAIPUR WAS ORIGINALLY PURCHASED BY SMT. PARWATI DEVI W/O LATE RAI BAHADUR KISHORE CHAND MAHESHWARI ALONGWITH SHRI RAVI KANT MAHESHWARI AND SHASHI KANT MAHESHWARI BOTH SONS OF LATE SHRI AMIR CHAND MAHESHWARI IN TER MS OF CONVEYANCE DEED EXECUTED ON 23.10.1979 AND VIDE AGREEMENT TO SALE E XECUTED ON 13.03.1981 IT WAS TRANSFERRED TO M/S RAI BAHADUR KISHORE CHAND AN D SONS (PROPERTIES) PVT. LTD. IN LIEU OF 4850 SHARES OF ` 100/- EACH OF THAT COMPANY. ACCORDINGLY THE 9 COMPANY M/S RAI BAHADUR KISHORE CHAND AND SONS (PRO PERTIES) PVT. LTD. BECAME THE ABSOLUTE OWNER OF THE PROPERTY SITUATED AT C-5 SAWAI JAI SINGH HIGHWAY BANIPARK JAIPUR ON AND W.E.F. 13.03.1981. IT IS PERTINENT TO MENTION HERE THAT SHRI PRATAP C HAND MAHESHWARI SHRI KAILASH CHAND MAHESHWARI LATE SHRI AMIR CHAND MAHESHWARI A ND LATE SHRI PRAKASH CHAND MAHESHWARI WERE THE REAL BROTHERS AND SONS OF LATE SHRI RAI BAHADUR KISHORE CHAND MAHESHWARI AND THE PROPERTY SITUATED AT AMRITSAR WAS OWNED BY THE HUFS OF THE SONS OF LATE SHRI PRAKASH CHAND MAH ESHWARI AND THE PROPERTY SITUATED AT JAIPUR WAS OWNED BY THE COMPANY PROMOTE D AND BELONGING TO THE FAMILY MEMBERS OF SHRI PRATAP CHAND MAHESHWARI. SIN CE THE FAMILY OF LATE SHRI PRAKASH CHAND MAHESHWARI WAS PERMANENT RESIDENT OF JAIPUR AND HAD ALWAYS PHYSICALLY OCCUPIED THE PROPERTY AT C-5 SAWAI JAI SINGH HIGHWAY BANIPARK JAIPUR AND THE FAMILY OF SHRI PRATAP CHAND MAHESHWA RI IS PERMANENT RESIDENT OF AMRITSAR AND PHYSICALLY OCCUPIED THE PROPERTY AT 3A THE MALL AMRITSAR THEREFORE AN UNDERSTANDING WAS REACHED BETWEEN THE PRESENT OWNERS OF BOTH THE PROPERTIES AND IT WAS MUTUALLY DECIDED BETWEEN THEM TO EXCHANGE THE RESPECTIVE PROPERTIES WITH EACH OTHER AND FOR THE PURPOSE OF N ECESSARY REGISTRATION WITH THE AUTHORITIES UNDER THE TRANSFER OF PROPERTY ACT THE CONVEYANCE DEEDS FINDS A MENTION OF CONSIDERATION AT ` 1 35 00 000/- EACH FOR BOTH THE PROPERTIES AND NOTHING WAS EITHER PAID OR RECEIVED BY ANY OF THE P ARTIES TO THE ABOVE TWO DEEDS OF CONVEYANCE AS IT WAS MUTUALLY AGREED UPON. WHICH IS EXPLICITLY PROVED BY THE RECITALS MADE IN THE RESPECTIVE CONVEYANCE DEEDS. ACCORDINGLY THE TWO CONVEYANCE DEEDS MADE AND EXE CUTED FOR THE TRANSFER OF THE PROPERTIES IN FAVOUR OF THE RESPECTIVE PARTIES SO A S TO MAKE THEM THE ABSOLUTE AND LEGAL OWNER OF THE PROPERTIES IN THEIR POSSESSION. THE CONVEYANCE DEED IN RESPECT OF THE PROPERTY AT AMRITSAR AND ITS LEGIBLE TRANSLA TED HINDI COPY IS AT AND THE CONVEYANCE DEED IN RESPECT OF THE PROPERTY AT JAIPU R WERE SUBMITTED. SINCE THE OWNERSHIP OF THE 1/4 TH SHARE OF THE PROPERTY SITUATED AT 3A THE MALL AMRITSAR CAME TO BE OWNED BY SHRI PRAVEEN MAHESHWAR I HUF AND RAJEEV 10 MAHESHWARI HUF IN TERMS OF THE PARTITION DEED DATE D 09.03.1998 OF M/S PRAKASH CHAND MAHESHWARI HUF AND THERE WAS NO LEGAL DOCUME NT EXCEPT THE DECLARATION / PARTITION DEED EXECUTED IN THIS REGARD AT THE TI ME OF TRANSFER OF THE SAME TO THE FAMILY MEMBERS OF LATE SHRI PRATAP CHAND MAHESHWARI THE CONVEYANCE DEED WAS MADE AND EXECUTED BY ALL THE FAMILY MEMBERS OF LATE SHRI PRAKASH CHAND MAHESHWARI THOUGH THEY WERE NEITHER THE LEGAL OWNER NOR THE BENEFICIAL OWNERS OF THE SAID PROPERTY BUT DUE TO INSISTENCE OF TRANS FEREE PARTIES AND TO AVOID ANY CONFUSION AND THE REAL OWNERS WERE M/S PRAVEEN MAHE SHWARI HUF AND RAJEEV MAHESHWARI HUF. 4.4. THE LD. AO WHILE MAKING THE ADDITION HAS MAIN LY MADE TWO ALLEGATIONS FIRSTLY THAT THE SHARE IN THE PROPERTY SITUATED AT AMRITS AR WAS TRANSFERRED BY INDIVIDUAL FAMILY MEMBERS OF LATE SHRI PRAKASH CHAN D MAHESHWARI AND NOT BY M/S PRAVEEN MAHESHWARI HUF AND RAJEEV MAHESHWARI HUF AS CLAIMED BY THE ASSESSEE THEREFORE THE EACH INDIVIDUAL MEMBER IS LIABLE TO BE ASSESSED FOR CAPITAL GAINS ARISING OUT OF SUCH TRANSFER SECONDLY THE INVESTMENT IN THE ACQUISITION OF THE PROPERTY SITUATED AT JAIPUR BY ASSESSEE HUF ALO NGWITH M/S RAJEEV MAHESHWARI HUF REMAINED UNEXPLAINED AND THEREFORE HE MADE THE ADDITION OF ` 67 50 000/- (BEING 1/2 SHARE OF ASSESSEE HUF) AS UN EXPLAINED INVESTMENT AND NO DEDUCTION OF THE SAME HAS BEEN HELD TO BE ALLOWABLE U/S 54 OUT OF THE CAPITAL GAINS ON THE TRANSFER OF THE PROPERTY AT AMRITSAR. THE LD . AO BASED HIS CONCLUSIONS SOLELY ON THE STATEMENTS OF SHRI PRAVEEN MAHESHWARI AND SHRI RAJEEV MAHESHWARI KARTA OF M/S PRAVEEN MAHESHWARI HUF AN D M/S RAJEEV MAHESHWARI HUF RESPECTIVELY RECORDED DURING THE C OURSE OF SURVEY WHEREIN A SURRENDER OF ` 67 50 000/- EACH TOWARDS THE UNEXPLAINED INVESTMEN T IN THE PURCHASE OF THE PROPERTY AT C-5 SAWAI JAI SINGH HI GHWAY BANIPARK JAIPUR WAS OBTAINED FROM THEM. 4.5 ATTENTION OF YOUR HONOUR IS INVITED TO THE FAC T THAT THE STATEMENTS OF THE KARTA SHRI PRAVEEN MAHESHWARI (APB 39-52) AND SHRI RAJEEV MAHESHWARI (APB 53-60) WERE RECORDED ON OATH THOUGH DURING THE SURVEY PRO CEEDINGS ALL FACILITIES WERE OFFERED TO THE SURVEY PARTY AND AT NO OCCASION ANY CONCEALMENT OF FACT 11 DISRESPECT OR MISBEHAVIOUR WAS NOTICED BY THE SURVE Y PARTY. THE INCOME TAX AUTHORITIES CAN EXAMINE ANY PERSON ON OATH AS PER P ROVISIONS CONTAINED U/S 131(1)(B) OF THE INCOME TAX ACT 1961. THUS IN NORM AL COURSE OF SURVEY PROCEEDINGS STATEMENT RECORDED ON OATH ARE UNWARRAN TED AND UNJUSTIFIED AND ARE ACADEMIC IN NATURE. NO COGNIZANCE THEREFORE CAN BE ATTACHED ON SUCH STATEMENTS. THE SAME THEREFORE DESERVES TO BE IGNORED. IN THIS REGARD RELIANCE IS PLACED ON FOLLOWING CASE LAW: PAUL MATHEWS AND SONS VS. CIT (KER.) 263 ITR 101 THE PROVISION ALSO ENABLES THE INCOME-TAX AUTHORIT Y TO IMPOUND AND RETAIN IN HIS CUSTODY FOR SUCH PERIOD AS HE THINKS FIT ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HIM PROVIDED THE AUTHORITY RECORDS HI S REASONS FOR DOING SO AND ALSO SHALL NOT RETAIN THE BOOKS OF ACCOUNT FOR A PERIOD NOT EXCEEDING 15 DAYS. SECTION 133A(3)(III) ENABLES THE AUTHORITY TO RECORD THE ST ATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDING U NDER THE ACT. SECTION 133A HOWEVER ENABLES THE INCOME-TAX AUTHORITY ONLY TO R ECORD ANY STATEMENT OF ANY PERSON WHICH MAY BE USEFUL BUT DOES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND WE FIND THAT SUCH A POWER TO EXA MINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORISED OFFICER ON LY UNDER SECTION 132(4) OF THE INCOME-TAX ACT IN THE COURSE OF ANY SEARCH OR SEIZU RE. ATTENTION OF YOUR GOODSELF IS ALSO INVITED TO THE BUDGET SPEECH GIVEN BY THE HONBLE FINANCE MINISTER ON 28.02.03 WHO WHILE PRES ENTING THE BUDGET BEFORE THE PARLIAMENT HAS PROPOSED TO SIMPLIFY THE PROCEDURE O F SEARCHES AND SURVEYS WHICH READS AS UNDER: PARA 151(I) SIMPLIFYING THE PROCEDURE AND METHODS EMPLOYED DU RING SEARCH AND SEIZURE AND DURING SURVEY BY THE INCOME TAX DE PARTMENT. FIRST HEREAFTER STOCKS FOUND DURING THE COURSE OF A SEARCH AND SEIZ URE OPERATION WILL NOT BE SEIZED UNDER ANY CIRCUMSTANCES. SECOND NO CONFESSION SHALL BE OBTAINED DURING SUCH SEARCH AND SEIZURE OPERATIONS. THIRD NO SURVEY OPERATION WILL BE AUTHORIZED BY AN OFFICER BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX. FINALLY BOOKS 12 OF ACCOUNT IMPOUNDED DURING SURVEY WILL NOT BE RETA INED BEYOND TEN DAYS WITHOUT THE PRIOR APPROVAL OF THE CHIEF COMMISSIONE R. 4.6 RELIANCE WAS ALSO PLACED ON THE CBDT VIDE INST RUCTIONS NO. F.NO. 286/2/2002-IT(INV.) DATED 10.03.03 WHICH READS AS U NDER: INSTANCES HAVE COME TO THE NOTICE OF THE BOARD W HERE ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH AND SEIZURE AND SURVEY OPERATION. SUCH CONFE SSION IF NOT BASED ON CREDIBLE EVIDENCE ARE TAKEN/RETRACTED BY THE CONCERNED ASSE SSES WHILE FILLING RETURN INCOME. IN THESE CIRCUMSTANCES CONFESSION DURING THE SEARC H AND SEIZURE AND SURVEY OPERATION DO NOT SERVE ANY USEFUL PURPOSE . IT IS THEREFORE ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTI ON OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT. SIMILARLY WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO ATTE MPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME 4.7 SINCE THE HONBLE SUPREME COURT IN THE FOLLOWI NG CASES HAS HELD THAT BENEFICIAL CIRCULARS / INSTRUCTIONS ISSUED BY THE C BDT ARE BINDING UPON THE INCOME TAX AUTHORITIES THUS THE ADDITIONS BASED ON THE ALLEGED SURRENDER STATED TO HAVE BEEN OBTAINED DURING THE COURSE OF SURVEY ARE IN CONTRAVENTION TO THE CIRCULARS AND INSTRUCTIONS OF THE CBDT AND THEREFOR E DESERVES TO BE DELETED. AND 292 ITR 209 TANNA AND MODI VS. CIT (SC) WE WOULD ALSO ACCEPT AND PARTICULARLY HAVING REGAR D TO A LARGE NUMBER OF DECISIONS OF THIS COURT OPERATING IN THE FIELD THAT EXECUTIVE CONSTRUCTION IS ORDINARILY ALLOWED TO PREVAIL AND SHALL BE BINDING ON THE AUTHORITIES UNDER THE ACT. A FORTIORI CLARIFICATORY CIRCULARS ISSUED BY THE C ENTRAL BOARD OF DIRECT TAXES MAY ALSO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF CONSTRUCTION OF THE STATUTE. 13 259 ITR 51 KERALA STATE INDUSTRIAL DEV. CORPN. LTD . VS. CIT (SC) INTERPRETATION OF TAXING STATUTES FINANCE MINIST ERS SPEECH BEFORE PARLIAMENT WHILE INTRODUCING BILL CAN BE RELIED ON TO THROW LIGHT ON OBJECT AND PURPOSE OF PROVISIONS. 273 ITR 305 CIT VS. DURGESH OIL MILLS (ALL.) CIRCULAR CBDT CIRCULAR BINDING ON INCOME TAX A UTHORITIES. IT IS WELL SETTLED THAT THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES IS BINDING ON AUTHORITIES. 291 ITR 172 CIT VS. ASHOK KUMAR SONI (RAJ.) ADMISSION IN STATEMENT DURING SEARCH NOT A CONCL USIVE PROOF OF FACT AND CAN ALWAYS BE EXPLAINED RETRACTED STATEMENT OF ASSESS EE SECOND STATEMENT TO BE READ TOGETHER TO EVALUATE WEIGHT OF ADMISSION FOR A PPRECIATING EVIDENCE. 4.8 MOREOVER SHRI PRAVEEN MAHESHWARI HAD CATEGORI CALLY STATED IN REPLY TO (A) NO. 10 OF THE TRANSACTIONS BEHIND BOTH THE CON VEYANCE DEEDS FOUND DURING THE COURSE OF SURVEY. IT IS ALSO RELEVANT TO MENTIO N HERE THAT THESE STATEMENTS ARE THE PRELIMINARY STATEMENTS RECORDED AT 3.50 P.M. ON 08.03.2010 I.E. AT THE TIME WHEN THE SURVEY PROCEEDINGS WERE COMMENCED. LATER O N IN THE SAME STATEMENTS A REFERENCE OF ANOTHER STATEMENTS RECORDED OF SHRI PR AVEEN MAHESHWARI AT THE FACTORY PREMISES AT VKIA IS MADE [PLEASE REFER REP LY Q.NO. 15 (APB-51) REPRODUCED BELOW] WHERE SHRI PRAVEEN MAHESHWARIS A LLEGED ADMISSION WAS OBTAINED. ALL THESE EVENTS INDICATE THAT THE ADMISS ION MADE BY SHRI PRAVEEN MAHESHWARI WAS NOT NATURAL AND VOLUNTARY BUT WAS MA DE UNDER CHARGED ATMOSPHERE AND AGAINST THE DOCUMENTARY EVIDENCES AV AILABLE WITH THE ASSESSEE HAVING A CLEAR CUT RECITAL ABOUT NON EXCHANGE OF AN Y MONETARY CONSIDERATION. THE RELEVANT PORTIONS OF THE STATEMENT OF SHRI PRAVEEN MAHESHWARI DIRECTOR ARE REPRODUCED BELOW FOR SAKE OF CLARITY. IZ'U10 VKI }KJK FN[KK X IZKSIVHZ DS DKXTKRSKA ES A D JFTLVMZ SALE DEED FNUKAD 28.09.2008 DH GS FTLESA M/S RAI BAHADUR KISHORE CHAND & CHAND & 14 SONS (PROPERTIES) PVT. LTD. }KJK C-5 SAWAI JAI SINGH HIGHWAY BANIPARK JAIPUR DH REGISTERED SALE DEED PRAVEEN MAHESHWARI HUF RFKK RAJEEV MAHESHWARI HUF DS FGR ESA DJH XBZ GSA BLDS VUQLKJ ;G LEIFK :- 1 35 00 000/- DS IZFRQY ESA FOFR GQBZ GS RFKK FTLDK VALUATION MI IATH;D -II }KJK : 8 05 10 712/- IJ FD;K X;K GS OE~ BL EWY; IJ :- 52 33 200/- DS EQNZKAD 'KQYD OLWY FD;K X;K GSA D`I;K CRK A LEIF K DS ISVS :- 1 35 00 000/- DK HKQXRKU OE~ EQNZKAD 'KQYD DS ISVS :- 52 33 200/- DK HKQXRKU FDLDS }KJK FD;K X;K OE~ BUDK D;K L=KSR GS \ MKJ ;G JFTLVH ESUS NS[K YH GSA BL LACA/K ESA ES A ;G DGUK PKGRK GW FD ;G IZKSIVHZ TKS FD C-5 SAWAI JAI SINGH HIGHWAY JAIPUR ESA FLFKR GS] OA GEKJS LFEEFYR IFJOKJ DH LEIFK FKHA IFJOKJ }KJK LEIFK;KSA DS CAV OKJSA ESA ;G LEIFR ESUS RFKK ESJS HKKBZ US VIUS HUF DS VUNJ IZKIR DJHA BL LACA/K ESA FD;K X;K MEMORANDUM OF UNDERSTANDING HKH ESA VKIDKSA FN[KK JGK GSA GEKJS IFJOKJ }KJK ;G LEIFK GEKJS RKMTH }KJK BL LEIFK ESA LS VI UK GD NKSMUS LS GES IZKIR GQBZ RFKK BL LECA/K ESA GEKJS IFJOKJ }KJK VE` RLJ FLFKR D VU; LEIFR IJ VIUK GD MUDS I{K ESA NKSM+K X;KA LEIFK DK EWY; :- 1 35 00 00/- VKIL ESA CSB DJ R; FD;K X;K OA BL LEIFK DS EWY; D S FGLKC LS GH VKADK X;K FKKA BLDK TKS HKH VK/KKJ GS] ESA VKIDKS CKN ESA ISK DJ NWAXKA BL LEIFK DS OT ESA FDLH HKH IZDKJ DH UXNH DK YSU NSU UGHA F D;K X;K FKKA BL FO; I= ESA TKS JKFK 1 35 00 00/- FT GS OG OKLRO ESA ML JKFK DKS BAFXR DJRK GS FTL EWY; DH JKFK DH LEIFK DK GD GEKJS }KJ K D NWLJS DS I{K ESA NKSM+K X;K FKKA STAMP DUTY DS ISVS :- 52 33 200/- DK HKQXRKU GE NKSUKSA HKKBZ;KSA DH HUF }KJK I`FKD&I`FKD FD;K X;K TKS GEKJH CFG;KSA ESA NTZ GSA SUB REGISTER }KJK BLDH TKS DHER VKADH XBZ GS BLDK EQ>S DKSBZ KKU UGHA GSA ESA FLQZ ;G DGUK PKGRK GS FD IKFJOKFJD LE>KSRS DS }KJK BL LEIFK DK VKNU&IZNKU GQVK GSA Q.NO. 15 (APB 51) OF THE STATEMENTS OF SHRI PRAVEEN MAHESHWARI RECORDED AT C-5 SAWAI JAI SINGH HIGHWAY BANIPARK JAIPUR 15 IZU15 VKT VKIDS O;OLKF;D IZFR'BKU IJ LOSZ ESA SLIP PAD FEYK GS RFKK DQN JFTFLV;KA FEYH GS FTUDS VUQLKJ VKI }KJK C-5 LOKBZ T;FLAG GKBZOS DH [KJHN DS ISVS :I;S 1 35 00 000/- DK HKQXRKU FD;K X;K GSA BLH IZDKJ SLK IZRHR GKSRK GS FD VE`RLJ DH D LEIFK DS ISVS VKIUS :I;S 1]35]00]000@& IZKIR FD;S GS OA VKIDS ;GKA TKS CASH FEYK GS MLDK LI'VHDJ.K NSOS OA CRK A FD MIJKSDR IZFOF'B;KSA DK BUNZKT VKIDH CFG;KSA ESA DGKA GS OA LEIFK [KJHN OA FO; DS ISVS TKS HKQXRKU FD;S X;S GS MUDS D;K L =KSR GS \ MKJ ESA VKIDKS ;GKA CRKUK PKGRK GW FD MIJKSDR I ZFOF'B;KSA DK BUNZKT ESJH YS[KK CFG;KSA ESA UGHA GS RFKK ESAUS VKI AREA FLFKR FACTORY IJ FN X VKUS C;KUKSA ESA M/S PRAVEEN MAHESHWARI HUF DS GLRS :I;S 1.35 DJKSM+ VK;DJ GSRQ LEFIZR FD;S GS FTLESA :I;S 67.50 YK[K] C-5 LOKBZ T;FLAG GKBZOS FLFKR EDKU DH [KJHN DS ISVS HKQXRKU ESA GS RFKK 'KS'K JKF K :I;S 67.50 YK[K VE`RLJ FLFKR PROPERTY CSPKU LS CAPITAL GAIN DS ISVS GSAA BLH IZDKJ ESJS HKKBZ JKTHO EKGSOJH US VIUS C;KUKSA ESA M/S RAJEEV MAHESHWARI HUF DS GLRS :I;S 1.35 DJKSM VK;DJ GSRQ LEFIZR FD;S GS FTLESA :I;S 67.50 YK[K C-5 LOKBZ T;FLAG GKBZOS] CUHIKDZ FLFKR EDKU DH [KJHN DS ISVS HKQXRKU ESA GS RFKK 'KS 'K JKFK :I;S 67.50 YK[K VE`RLJ FLFKR PROPERTY CSPKU LS CAPITAL GAIN DS ISVS GSA BLDS VFRFJDR ESUS EDKU FUEKZ.K DS ISVS :I;S 23.80 YK[K :I;S VK;DJ GSRQ LEFIZR FD GS RFKK :I;S 6 44 800/- VIUS LO;A DS GLRS V?KKSF'KR CASH VKF/KD; DS ISVS LEFIZR FD GS RFKK GEKJH DEIUH M/S P.R. ROLLING MILLS PVT. LTD. GLRS PKYW FOKH; O'KZ ESA RHU DJKSM :I;S DH VFRFJDR VKENUH IJ :I;S D DJKSM+ DK VFRFJDR DJ LEFIZR FD;K GSA Q.NO. 3 & 4 (APB 39) OF THE STATEMENTS OF SHRI PRAVEEN MAHESHWARI RECORDED AT VKIA JAIPUR IZU 3 VKT LOSZ DH DK;ZOKGH DS NKSJKU O;OLKF;D IF JLJ LS D REGISTERED PURCHASE DEED IZKIR GQBZ GS] FTLDS VUQLKJ VKIUS O VKIDS BROTHER US] HUF DH CAPACITY ESA C-5 SAWAI JAI SINGH HIGHWAY PROPERTY ` 1 35 00 000/- EWY; ESA [KJHNH GSA D`I;K BLDS FUOSK DH XBZ JKFK DK SOURCE CRK;S \ 16 MRRJ C-5 SAWAI JAISINGH HIGHWAY JAIPUR FLFKR EDKU (PROPERTY) ESUS OA ESJS HKKBZ JH JKTHO EKGSOJH US HUF DH CAPACITY ESA DQY ` 1 35 00 000/- ESA [KJHNH GS] FTLDH REGISTERY FNUKAD 28.03.2008 DKS DJOKBZ XBZ FKHA BL PROPERTY DH [KJHN ESA ESUS OA ESJS HKKBZ US 67.5-67.5 YK[K :- DK FUOSK FD;K FTLDK L=KSR ESA UGH CRK IKAXKA ;G JKFK 67.50 YK[K ESJH HUF IZOH.K EKGSOJH HUF) DH A.Y. 2008-09 DH UNDISCLOSED INCOME EKUDJ] VK;DJ DS FY;S DISCLOSED DJRK GWA ESA VIUH HUF DS KARTA DH CAPACITY LS A.Y. 2008- 09 VK;DJ FOOJ.KH HKJ PWDK GW VR% ESA ;G UNDISCLOSED INCOME ` 67.50 LAC DECLARE DJRS GQ;S VIUH FOOJ.KH REVISE DJ NWXKA IZU 4 D`I;K CRK;S FD FINYS 3 O'KKSZA ESA] VKI ;K VKIDS IFJOKJ US DKSBZ PROPERTY CSPH GS \ MRRJ ESJS FIRKTH DS FGLLS ESA ESJS FIRKTH DS FGLLS ESA ESJS FIRKTH DS FGLLS ESA ESJS FIRKTH DS FGLLS ESA AMRITSAR FLFKR D LEIFR ESA FLFKR D LEIFR ESA FLFKR D LEIFR ESA FLFKR D LEIFR ESA FGLLK FKK] FGLLK FKK] FGLLK FKK] FGLLK FKK] ;G LEIFR MUDS ;G LEIFR MUDS ;G LEIFR MUDS ;G LEIFR MUDS HUF DH FKHA TKS FD GE NKSUKSA HK DH FKHA TKS FD GE NKSUKSA HK DH FKHA TKS FD GE NKSUKSA HK DH FKHA TKS FD GE NKSUKSA HKKBZ;KSA DS FGLLS ESA KBZ;KSA DS FGLLS ESA KBZ;KSA DS FGLLS ESA KBZ;KSA DS FGLLS ESA 1/8 - 1/8 HKKX VK;H TKS GEKJH NKSUKSA HKKBZ;KSA DH HKKX VK;H TKS GEKJH NKSUKSA HKKBZ;KSA DH HKKX VK;H TKS GEKJH NKSUKSA HKKBZ;KSA DH HKKX VK;H TKS GEKJH NKSUKSA HKKBZ;KSA DH HUF ES VK XBZ FKHA MDR ES VK XBZ FKHA MDR ES VK XBZ FKHA MDR ES VK XBZ FKHA MDR PROPERTY DK DK DK DK CSPKU GE NKSUKSA HKKBZ;KSA DH CSPKU GE NKSUKSA HKKBZ;KSA DH CSPKU GE NKSUKSA HKKBZ;KSA DH CSPKU GE NKSUKSA HKKBZ;KSA DH HUF DS }KJK DS }KJK DS }KJK DS }KJK ` 1 35 00 000/- EAS EAS EAS EAS F.Y. 2007-08 ESA ESA ESA ESA DJ FN;K X;KA DJ FN;K X;KA DJ FN;K X;KA DJ FN;K X;KA OA BL PROPERTY DS CSPKU IJ DKSBZ CAPITAL GAIN TAX UGHA FN;K X;KA VR% ESA ESJH HUF DS BL AMRITSAR PROPERTY CSPKU LS IZKIR DQY JKFK ` 1 35 00 000/- DS FGLLS] VFKKZR ` 67.50 YK[K DKS FU;EKUQLKJ CAPITAL GAIN TAX DS HKQXRKU GSRQ DISCLOSED DJRK GWA ;G CAPITAL GAIN VIUS A.Y. 2008-09 DH FOOJ.KH REVISED DJRS GQ;S] ?KKSF'KR DJ NWXKA Q.NO. 19 & 20 (APB 59-60) OF THE STATEMENTS OF SHRI RAJEEV MAHESHWARI RECORDED AT VKIA JAIPUR IZU19 VKT LOSZ DH DK;ZOKGH DS NKSJKU VKIDS O;KOL KF;D IFJLJ LS D REGD. PURCHASE DEED IZKIR GQBZ GS FTLDS VUQLKJ VKIUS O VKIDS HKKBZ US HUF CAPACITY ESA C-5 SAWAI JAISINGH HIGHWAY PROPERTY :- 1 35 00 000/- EWY; ESA [KJHNH GSA D`I;K BLESA FUOSK DK L=KSR CRK;SA\ 17 MKJ C-5 SAWAI JAISINGH HIGHWAY BANIPARK JAIPUR FLFKR PROPERTY ESAUS O ESJS HKKBZ JH IZOH.K EKGSOJH US HUF CAPACITY ESA DQY :- 1 35 00 000/- ESA [KJHNH GS FTLDH JFTLVH 28 EKPZ 2008 DKS DJOKBZ XBZ FKHA BL LEIFK DH [KJHN ESA ESAUS O ESJS HKKBZ US :- 67 50 000/- + :- 67 50 000/- DK FUOSK FD;K GS FTLDK L=KSR ESA UGHA CRK IKAXKA ;G JKFK :- 67 50 000/- ESJH HUF M/S JKTHO EKGSOJH] HUF DH FU/KKZJ.K O'KZ 2008-09 DH V?KKSF'KR VK; EKUDJ VK;DJ DS FY LEFIZR DJRK GWA ESA VIUH HUF DRKZ DH GSFL;R LS DJ FU/KKZJ.K O'KZ 2008-09 DH VK;DJ FOOJ.KH HKJ PWDK GWA VR% ESA ;G V?KKSF'KR VK; 67]50]000@& DECLARE DJRS GQ VK;DJ FOOJ.KH LAKKSF/KR DJ NWAXKA IZU 20 D`IK;K VKI CRK;S FD VKIDS O VKIDS IFJOKJ ESA LNL;KS A US XR 3 O'KKSZA ESA DKSBZ PROPERTY CSPH GSA MKJ ESJS FIRKTH DS FGLLS ESA VE`RLJ FLFKR D PROPERTY ESA 1/4 FGLLK FKKA ;G LEIFK MUDH HUF DH FKH TKS FD GE NKSUKSA HKKBZ;KSA DH HUF ESA 1/8 1/8 FGLLK VK X;K FKKA MDR LEIFK DK CSPKU GE NKSUKSA HK KBZ;KSA DH HUF DS }KJK :- 1 35 00 000/- FOK O'KZ 2007-08 ESA DJ FN;K X;K O ML LEIFK ESA CSPKU IJ GEKJH HUF }KJK DKSBZ CAPITAL GAIN TAX UGHA FN;K X;KA VR% ESA ESJH HUF DS BL VE`RLJ LEIFK DS CSPKU LS IZKIR DQY JKFK :- 1 35 00 000/- DS VK/KS FGLLS VFKKZR :- 67 50 000/- DKS FU;EKUQLKJ CAPITAL GAIN TAX ESA HKQXRKU GSRQ LEFIZR DJRK GWA ;G CAPITAL GAIN ESA VIUS FU/KKZJ.K O'KZ 2008-09 DH FOOJ.KH REVISE DJRS GQ ?KKSF'KR DJ NWAXKA 4.9 THE LD. AO RELYING UPON THE ANSWER GIVEN IN RE PLY TO QUESTION NO. 3 BY SHRI PRAVEEN MAHESHWARI CONCLUDED THAT THE ASSESSEE HUF HAS MADE INVESTMENT IN PROPERTY PURCHASED BY IT AT JAIPUR O UT OF ITS UNDISCLOSED INCOME BY DELIBERATELY IGNORING THE FACT THAT NO CO NSIDERATION WHATSOEVER IN REAL MONEY WAS EXCHANGED IN HANDS BETWEEN THE PA RTIES AND THE ENTIRE TRANSACTION OF TRANSFER / EXCHANGE OF PROPERTIES UN DER REFERENCE WAS MADE UNDER FAMILY SETTLEMENT AS DESCRIBED IN MOU WHICH W ERE AVAILABLE DURING SURVEY. 18 4.10 THE LD. AO HAS ALSO IGNORED THE FACT THAT IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER APPEAL ON 30.03.2010 I.E. JUST AFTER FEW DAYS OF THE DATE OF SURVEY THE ASSESSEE CLARIFIED THE FACTUAL STATE OF AFFAIRS BY WAY OF A NOTE APPENDED TO THE RETURN OF INCOME AND THE NON INCLUS ION OF THE INCOME ACCEPTED DURING THE SURVEY HAD SINCE BEEN SUPPORTED WITH MOST LEGAL AND AUTHENTIC DOCUMENTS IN THE SHAPE OF CONVEYANCE DEED S THE ADDITIONS MADE WITHOUT IN ANY MANNER CONDUCTING ANY INQUIRIES IS N OTHING BUT A SERIOUS ILLEGALITY COMMITTED IN COMPLETING THE ASSESSMENT A S NONE OF THE PERSONS INTERESTED AS WELL AS THE WITNESSES AS STATED IN TH E TWO CONVEYANCE DEEDS WERE EITHER REQUIRED TO BE PRODUCED BEFORE THE LD. AO NOR THE LD. AO AT HIS OWN CONDUCTED INQUIRIES WHICH HE WAS LEGALLY BO UND TO COMPLETE A FAIR ASSESSMENT OF INCOME IN THE HANDS OF THE APPELLANT. 4.11 INFIRMITIES IN THE SURVEY PROCEEDINGS WARRANT ING THESE PROCEEDINGS TO BE HELD AS NON-EST AS WELL AS NULL AND VOID WERE AS FO LLOWS: (I) RECORDING OF STATEMENTS ON OATH AND OBTAINING SURRENDER IN VIOLATION TO THE BOARD CIRCULARS. (II) CONTRADICTIONS IN THE STATEMENTS RECORDED WIT H REFERENCE TO THE DATE OF RECORDING OF THE STATEMENTS AND THE CHRONOLOGY OF T HE TIME. (III) APPARENT FORCEFUL DICTUM BY THE DEPARTMENT F OR SURRENDER. (IV) TAKING THE ASSESSEE TO DIFFERENT PLACES FOR R ECORDING STATEMENTS. (V) CONTRADICTIONS WITH REFERENCE TO THE RECOVERY OF BASIC DOCUMENTS LEADING TO THE SURRENDER OF INCOME AS UNDISCLOSED. (VI) IGNORING THE RECITALS MADE IN THE TRANSFER DE ED WITH REFERENCE TO THE JAIPUR AS WELL AS AMRITSAR PROPERTIES. (VII) IGNORING THE WEALTH TAX ASSESSMENTS COMPLETE D IN THE CASE OF BIGGER HUF COMPLETED U/S 16(3) OF THE W.T. ACT WHEREIN THE EXC HANGED PROPERTIES FINDS A MENTION AND THE VALUATIONS PLACED BY THE AS SESSEE IN THE ASSESSMENTS COMPLETED BY THE DEPARTMENT THE RELEVA NT PORTIONS ARE HIGHLIGHTED. 19 (VIII) FAMILY PARTITION MADE BY METES AND BOUNDS B Y THE BIGGER HUF TO THE ASSESSEE HUF AND M/S RAJEEV MAHESHWARI HUF. (IX) NON OBSERVATION OF THE SUPREME COURT DECISION IN THE CASE OF ORISSA CEMENT CORPORATION VS. CIT REPORTED IN 159 ITR 78 ( SC) AND DHAKESHWARI COTTON MILLS REPORTED IN 26 ITR 775 (SC ) AS THE AO HAD MADE NO EFFORTS TO MAKE FURTHER INQUIRIES IN THE MA TTER AND SIMPLY PROCEEDING TO COMPLETE THE ASSESSMENT BASED ON THE STATEMENTS RECORDED DURING SURVEY. 4.12 RELIANCE IS ALSO PLACED ON FOLLOWING CASELAWS: 1. MUKUND V. KAPADIA V/S ITO 82 ITD 489 (MUM) 2. PULLANGODE RUBBER PRODUCTS CO . LTD. V/S STATE OF KERALA 91 ITR 18 (SC) 3. KRISHNAN V/S KURUKSHETRA UNIVERSITY AIR 1976 S C 377 4. JAGDISH NARAIN RATAN KUMAR V/S ACIT 22 TW 209 (JP) 5. SOHAN LAL JAIN V/S ACIT 22 TW 529 (JP) 6. DIT V/S POORANMALL & SONS.96 ITR 390 (SC) 7. MAYNAK POODAR (HUF) V/S WTO 262 ITR 633 (CAL. HC) 8. ITD 124 PART 3 (HYD.) B. RAMKRISHANA VS. ITO 9. 99 ITD 183 BANSAL STRIPS (P) LTD. VS. ASSTT. C IT (DELHI) 10. SAILDSP EMPLOYERS ASSOCIATIONS 1998 VS. UNION OF INDIA (2003) 262 ITR 638 647 11. CIT VS SIMON CARVES LTD. [1976] 105 ITR 212 ( SC). 12. CIT V/S RAMDAS MOTOR TRANSPORT 238 ITR 177 (A P) 13. 26 TW 135 ASHOK KUMAR SONI VS. ACIT (ITAT JD. ) 4.13 IT IS THEREFORE PRAYED THAT THE ADDITIONS AS MADE MAY KINDLY BE DIRECTED TO BE DELETED IN THE INTEREST OF JUSTICE. 5. ALLOWABILITY OF DEDUCTION U/S 54: WITH REGARD TO THE NON ALLOWABILITY OF DEDUCTION U/S 54 CLAIMED BY THE ASSESSEE HUF AVAILABLE ON INVESTMENT OF THE SALE CO NSIDERATION IN THE PURCHASE OF HOUSE PROPERTY IT IS SUBMITTED THAT TH E SALE CONSIDERATION OF ` 1 35 00 000/- TOWARDS THE TRANSFER OF 1/4 TH SHARE IN HOUSE PROPERTY AT AMRITSAR AS MENTIONED IN THE CONVEYANCE DEED DATED 06.02.2008 (ASSESSEE 1/2 SHARE IS ` 67 50000/-) AND AS A RESULT OF EXCHANGE / TRANSFER IN TERMS OF THE TRANSACTION AS EXPLAINED ABOVE BOTH THE HUFS HAVE ACQUIRED THE HOUSE PROPERTY AT JAIPUR FOR ` 1 35 00 000/- HAVING 1/2 SHARE OF EACH I.E. ` 20 67 50 000/- AND SINCE THE TRANSACTION HAS TAKEN PLA CE WITHIN THE ONE YEAR (DATE OF TRANSFER 06.02.2008 DATE OF OTHER TRANSFE R 28.03.2008) OF TRANSFER OF PROPERTY IN TERMS OF THE PROVISION OF SECTION 5 4 THE SAME IS ELIGIBLE FOR DEDUCTION U/S 54 AND ACCORDINGLY THE ASSESSEE HUF H AS CLAIMED THE DEDUCTION U/S 54 IN ITS RETURN OF INCOME FILED FOR THE YEAR UNDER APPEAL OUT OF THE INCOME DECLARED UNDER THE HEAD CAPITAL GAINS . 5.1 AS REGARDS TO THE OWNERSHIP OF THE PROPERTY S ITUATED AT AMRITSAR AS HAS ALREADY BEEN SUBMITTED ABOVE THE SAME WAS PURC HASED BY LATE SHRI PRAKASH CHAND MAHESHWARI IN THE CAPACITY OF HIS HUF JOINTLY WITH HIS BROTHERS AND WAS HOLDING 1/4 TH SHARE IN THE SAID PROPERTY ON BEHALF OF PRAKASH CHAND MAHESHWARI (HUF). THE SAID PROPERTY W AS CONTINUED TO BE ASSESSED AS THE WEALTH BELONGING TO M/S PRAKASH CHA ND MAHESHWARI HUF UNDER THE WEALTH TAX WHICH IS EVIDENT FROM THE WEAL TH TAX ASSESSMENT ORDERS PASSED IN CASE OF PRAKASH CHAND MAHESHWARI H UF. 5.2 AS THE 1/4 SHARE IN PROPERTY (BELONGED TO M/S PRAKASH CHAND MAHESHWARI HUF) WAS PARTITIONED IN FAVOUR OF M/S P RAVEEN MAHESHWARI HUF AND RAJEEV MAHESHWARI HUF IN EQUAL SHARE VIDE PARTITION/DECLARATION DEED DATED 09.03.1998 THEREFO RE THE TITLE OF SAID PROPERTY COULD HAVE NEVER BEEN TRANSFERRED IN FAVOU R OF THE LEGAL HEIRS ON DEMISE OF SH. PRAKASH CHAND MAHESHARI. THE TRANSFER EE I.E. M/S RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. INSISTED THAT THE CONVEYANCE DEED 06.02.2008 TO BE SIGNED BY ALL THE LEGAL HEIRS OF SH. PRAKASH CHAND MAHESHWARI SO AS TO RULE OUT THE POSS IBILITY OF ANY FUTURE DISPUTE BY ANY MEMBER OF HUF. THUS THE SAID DEED WA S EXECUTED BY THE PRAVEEN MAHESHWARI AND RAJEEV MAHESHWARI IN THEIR I NDIVIDUAL CAPACITY ALONGWITH OTHER LEGAL HEIRS THOUGH LEGAL OWNER OF P ROPERTY WERE PRAVEEN MAHESHWARI (HUF) AND RAJEEV MAHESHWARI (HUF) BY VIR TUE OF PARTITION DEED 09.03.1998. 21 5.3 THIS FACT IS FURTHER FORTIFIED FROM THE STATE MENT OF PRAVEEN MAHESHWARI GIVEN DURING THE COURSE OF SURVEY IN REP LY TO Q NO.4 THAT ESJS FIRKTH DS FGLLS ESA AMRITSAR FLFKR D LEIFR ESA FGLLK FKK] ;G LEIFR MUDS HUF DH FKHA TKS FD GE NKSUKSA HKKBZ;KSA DS FGLLS ESA 1/8 - 1/8 HKKX VK;H TKS GEKJH NKSUKSA HKKBZ;KSA DH HUF ES VK XBZ FKHA . 5.4 SHRI PRAVEEN MAHESHWARI NEVER STATED THAT SHA RE IN PROPERTY HELD BY HIM IN HIS INDIVIDUAL CAPACITY WHICH FACT WAS GR OSSLY IGNORED BY THE LD. AO WHO ACCEPTED THE PART OF STATEMENT WHICH SUI TED TO HIM AND IGNORED THE REST WITHOUT ANY COGENT REASON. 5.5 IT IS FURTHER SUBMITTED THAT THE SHARE IN THE AMRITSAR PROPERTY JOINTLY HELD BY PRAVEEN MAHESHWARI HUF AND RAJEEV M AHESHWARI HUF WAS TRANSFERRED IN PURSUANT TO AND TO GIVE EFFECT T O THE FAMILY SETTLEMENT / ARRANGEMENT. THIS FACT IS ALSO EVIDENT FROM MOU ENT ERED BETWEEN THE PARTIES (APB 33-37) WHICH CLEARLY INDICATE THE INTENTION OF THE PARTIES TO EXECUTE THE TWO SEPARATE CONVEYANCE DEEDS TO GIVE E FFECT THE AFORESAID FAMILY SETTLEMENT/ ARRANGEMENT SO AS TO PROVIDE THE UNDISTURBED AND LEGAL TITLE TO EACH OTHER. FOR THIS PURPOSE THE SALE CON SIDERATION FOR BOTH THE PROPERTIES WAS DECIDED TO BE AT ` 1 35 00 000/- WHEREAS THE FORMER CONVEYANCE DEED CLEARLY REFLECTS THAT ONE PROPERTY IS BEING TRANSFERRED FOR CONSIDERATION OF ANOTHER PROPERTY SO ALSO IS STIPUL ATED IN THE LATER CONVEYANCE DEED. THUS THE PROPERTY TRANSFERRED UNDE R FAMILY SETTLEMENT / ARRANGEMENT DOES NOT FALL WITHIN THE AMBIT OF TRANS FER THEREFORE NO CAPITAL GAIN IS CHARGEABLE IN RESPECT OF SUCH TRANSACTION. HOWEVER THE ASSESSEE HUF BY CONSIDERING THE TRANSFER AS LIABLE FOR CAPIT AL GAINS HAS DECLARED THE SAME UNDER THE HEAD CAPITAL GAINS AND CLAIMED EXE MPTION U/S 54 AS ALL THE CONDITIONS FOR AVAILING THE EXEMPTION STANDS CO MPLIED WITH BY THE ASSESSEE HUF. 5.6 IN VIEW OF ABOVE FACTS AND IN THE CIRCUMSTANC E OF CASE IT IS SUBMITTED THAT THE PROPERTY SOLD AT AMRITSAR WAS OW NED BY THE ASSESSEE 22 HUF AT 1/8 TH SHARE AND AS PER FAMILY SETTLEMENT SAME WAS TRANS FERRED AND PROPERTY AT JAIPUR ACQUIRED BY THE ASSESSEE WITHIN STIPULATED TIME SPECIFIED U/S 54 OF THE INCOME TAX ACT 1961 THEREFORE THE ASSESSEE HUF IS ELIGIBLE FOR DEDUCTION U/S 54 OF THE INCOME TAX ACT 1961. 5.7 WITH A VIEW TO FURTHER STRENGTHEN THE DEFENSE TAKEN BY THE APPELLANT IN THIS APPEAL AND ALSO TO RE-ASSERT THE CLAIM AND THE AVER SIONS MADE WITH REFERENCE TO THE FACTS DEPOSED DURING THE SURVEY A N AFFIDAVIT DULY SWORN IN BY THE KARTA OF ASSESSEE HUF IS ENCLOSED HEREWITH B Y FULLY UNDERSTANDING THE IMPLICATIONS OF MAKING STATEMENT ON OATH IN THE AFFIDAVIT BEFORE AN APPELLATE FORUM. 5.8 THE ASSETS UNDER QUESTION HAVE SIMPLY BEEN EXC HANGED I.E. THE AMRITSAR PROPERTY HAS BEEN TRANSFERRED IN CONSIDERATION OF T HE JAIPUR PROPERTY ACQUIRED WHICH IS CLEAR BEYOND DOUBT THAT NO MONEY HAS CHANGED HANDS IN THE ABOVE DEAL. HOWEVER THE NECESSARY EVIDENCE IS NOW TENDERED FOR YOUR KIND CONSIDERATION IN PROOF OF PAYMENT OF THE STAMP DUTY ON THE JAIPUR PROPERTY AS WAS AGREED. THE CONSIDERATION DECLARE I N RESPECT TO THE AMRITSAR PROPERTY IN THE TRANSFER DEED HAS BEEN FOU ND TO BE ACCEPTABLE BY THE REGISTERING AUTHORITY UNDER THE TRANSFER OF PRO PERTY ACT 1882 NO ADDITIONAL STAMP DUTY HAS BEEN CALLED FOR THUS IN T HE CIRCUMSTANCES OF THE CASE THE PROVISIONS OF SECTION 50C ARE NOT AT ALL A TTRACTED AS THERE WAS NO DIFFERENCE IN THE CONSIDERATION STATED IN THE DOCUM ENT AS AGAINST THE CONSIDERATION DETERMINED BY THE REGISTERING AUTHORI TY. 5.9 COPY OF RETURN OF INCOME IN THE CASE OF SHRI P RAVEEN MAHESHWARI (HUF) FOR A.Y. 2010-11 WHEREIN THE OTHER INCOME ADMITTED DURING THE SURVEY STANDS INCLUDED FOR TAXATION AS INCOME FROM OTHER S OURCES AND THE NECESSARY TAX STANDS DULY PAID. FOR THE SAKE OF VER IFICATION THE COPIES OF RETURN OF INCOME OF SHRI PRAVEEN MAHESHWARI HUF FO R A.Y. 2008-09 IS ALSO SUBMITTED HEREWITH. 23 5.10 SO FAR AS THE WEALTH TAX RETURNS ARE CONCERNE D THE TOTAL WEALTH OF ASSESSEE DID NOT ATTRACT ANY LIABILITY TO WEALTH TAX. NECESS ARY COMPUTATIONS OF THE TOTAL WEALTH ARE ATTACHED FOR ASSESSMENT YEARS 2006 -07 TO 2009-10 WHICH COMPUTATIONS ARE COMPANIED BY THE RELEVANT BALANCE SHEETS WHICH FACILITATES THE VERIFICATION OF ASSET ITEMS LIABLE TO BE INCLUDED COMPUTING THE NET WEALTH. 6. THEREAFTER THE LD. CIT (A) CONSIDERING THE SUBMI SSIONS AND PERUSING THE MATERIAL ON RECORD ALLOWED THE APPEAL OF THE ASSESSEE IN PA RT GIVING FOLLOWING FINDING RECORDED IN PARA 6 TO 8(G) :- 6. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO U /S 143(3) AND THE SUBMISSIONS OF THE AR ALONGWITH THE DOCUMENTS FILED . ON PERUSAL OF THE SAME IT IS SEEN THAT THE AO HAS BEEN SELECTIVE IN RELYING ON T HE STATEMENTS TAKEN DURING THE COURSE OF SURVEY. WHILE HE HAS ACCEPTED THE STATEM ENT THAT ASSESSEE PURCHASED THE PROPERTY AT C-5 SAWAI JAI SINGH HIGHWAY BANI PARK IN HIS CAPACITY OF HUF OF M/S PRAVEEN MAHESHWARI HE HAS NOT ACCEPTED THE POR TION OF STATEMENT WHERE HE SAID THAT HIS HUF HAD INHERITED THE PROPERTY AT AMR ITSAR. 6.1 MOREO V ER HE HAS TOTALLY DISR E G AR DED THE ASSESSEE ' S STATEMEN T DA T ED 8 . 3 . 2 010 TAKEN AT 3.50 PM ( PAGE 48 OF T H E PAPER BOOK ) I N RESPON S E T O QUE STION NO . 1 0 WHE R EIN HE HAS CATEGORICALL Y STAT E D THAT: *;G JFTLVH ESAUS NS[K YH GSA BL LACA/K ESA ESA ; G DGUK PKGRK GWW FD ;G IZKSIVHZ TKS FD C-5 SAWAI JAI SINGH HIGHWAY JAIPUR ESA FLFKR GS] OA GEKJS LFEEFYR IFJOKJ DH LEIFRR FKHA IFJOKJ }KJK LEIFRR;KSA DS CAVOKJSA ESA ;G LEIFR ESAUS RFKK ESJS HKKBZ US VIUS HUF DS VUNJ IZKIR DJHA BL LACA/K ESA FD;K X;K MEMORANDUM OF UNDERSTANDING HKH ESA VKIDKS FN[KK JGK GWWA GEKJS IFJOKJ }KJK ;G LEIFRR GEKJS RKMTH }KJK BL LEIFRR ES LS VIUK GD NKSMUS LS GES IZKIR GQBZ RFKK BL LECA/K ESA GEKJS IFJOKJ }KJK VE`RLJ FLFKR D VU; LEIFRR IJ VIUK GD MUDS I{K ES N KSM+K X;KA LEIFRR DK EWY; :- 1]35]00]00@& VKID ES CSBDJ R; FD;K X;K OA BL LEIFRR DS EWY; DS 24 FGLKC LS GH VKADK X;K FKKA BLDK TKS HKH VK/KKJ GS] ESA VKIDKS CKN ESA ISK DJ NWAXKA BL LEIFRR DS OT ESA FDLH HKH IZDKJ DH UXNH DK YSU NSU UGH FD;K X;K FKKA BL FO; I= ES TKS JKFK 1]35]00]00@& FT GS OG OKLRO E S ML JKFK DKS BAFXR DJRK GS FTL EWY; DH JKFK DH LEIFRR DK GD GEKJS }KJK D NWLJS DS I{K ES NKSM+K X;K FKKA STAMP DUTY DS ISVS :- 52]33]200@& DK HKQXRKU GE NKSUKS HKKBZ;K SA DH HUF }KJK I`FKD&I`FKDFD;K X;K TKS GEKJH CFG;KSA ESA NTZ GSA SUB-REGISTER }KJK BLDH TKS DHER VKADH XBZ GS BLDK EQ>S DKSBZ KKU UGHA GSA ESA FLQZ ;G DGUK PKGRK GWW FD IKFJOKFJD LE>KSRS DS }KJK BL LEIFRR DK VKNU&IZNKU GQVK GSA* 6.2 THE FACT T H A T TH E AO HAS NOT TAKEN COGNIZANCE OF THE STATEMENTS OF THE ASSESSEE HOLISTICA L LY AN D HAS PLACED HIS FAITH ONLY ON SOME PORTION OF STA T E M ENT AN D R EJECT E D T HE OTHER IMPLIES THA T T H E SE S TAT E M ENTS H AVE NOT BEEN HELD TO B E T OT A LL Y RE L IA BL E B Y HIM. 6.3 IF THE ST ATEM E NT S OF TH E ASSESSEE ARE H E LD TO BE N OT RE L IA BL E EVI D ENCE AS PER THE O B S ER VA T I ON S O F TH E A O HIMSE L F (PA R A 4 O F HIS ASSESS M ENT OR D ER) THEN THE IMPUGN ED C A SE W OU L D HAVE TO BE EXA M I N E D A ND VERI F I ED FR OM THE EVIDENCE AVA ILABLE ON RECORD A ND LA W. 6.4 FROM VERIFICATION OF THE RECORDS THE FOLLOWIN G FACTS EMERGE: A) 1/ 4 TH S HARE I N THE PROP E RT Y AT 3-A T H E MALL A M R IT SAR WAS BEING HELD BY PRAK A S H C H A ND MAHESH WARI HUF. T H IS PROPERT Y W A S S HO WN BY PRAKASH CH A N D MAHESHWARI HUF IN T H E RE TURN S FILED UNDER THE WE AL TH TAX ACT W H ICH W E RE R EGULARLY A S SES SED AN D W ER E A L S O ASSESSED U / S 1 6 (3) UN D ER THE WE A LTH TA X ACT FOR A . YR S . 1981 - 82 198 5- 86 198 7 - 88 19 88- 89 1991-92 AN D 1 99 2 -9 3. COPIE S O F THE SE ASS ES S MENT ORDERS W ER E FI L E D BE F O RE THE AO A N D HAVE NO W BEEN FILED BEF ORE ME. THI S I S ACCEPTABLE E V IDEN CE. B) A DECLARATION OF COMPLETE PARTI T I ON DATED 8 / 3 / 98 O F THE H UF OF P RAKASH CHAND MAHESHWARI (HUF ) WAS FI LED BEFORE ME . FROM ARTI C L E 4(2) OF THIS D E C L ARATION IT IS SEEN TH A T 1 / 4 TH UN D IVI DED S H ARE IN T HE I MMO VABLE PROPERTY SI TUATED AT AMRITSA R VA LUE D AT R S . L 73 1 3 9 / - W A S A LLO CATED TO PRAVEEN 25 MAHESHWARI HUF AND RAJE EV MA H ES HW A R I HUF I N EQUAL S HA RES TO BE HELD B Y T HE RESPECTI V E HUF S JOIN TLY IN T H E C APACIT Y AS KARTA S O F TH EIR HUF . THIS DE C LARATION W AS SIGNED B Y P RAKASH C H A ND MAHESH W ARI KART A O F T H E HUF AND A WI T NESS ONLY. TH E TR ANSFE R O F PROPERT Y AS MENTI ONED I N THE DE C L A RAT I O N WAS N O T REGISTERED UNDER THE INDIAN STAMP DU TY AC T OPERATIONAL I N RAJASTHAN ON THE DA T E OF DECLARATION OF PARTITION . C) A MEMORANDUM OF UNDER S T A ND I NG WAS SIGNED BETWEEN M/S RA I BAH A DU R KISHAN CHAND & SONS ( PROP ERTIES) P V T . LTD. & PRAVEEN MAHESH W A RI KARTA OF HIS (HUF) AND RAJEE V MAH ESHWARI KARTA OF HIS ( HUF ). T H E M OU CONTAINED THE FOLLOWING DETA I L S: (I) ' THE PROPERTY AT C - 5 SI T UATE D A T SA W AI JAI SINGH HIGHWA Y B ANIPARK JAIPUR WAS PURCHASED BY SM T . PARWATI DE V I W/O LATE RAI BAHADU R K IS HO R CHAND MAHESHWARI & SH RI RAV I KAN T MAHESHWAR I & S H ASH I KANT MAH E SHW A R I BOT H S O NS OF LAT E SBRI AMIR CHAN D M A H ESHWARI ON 2 1 / 11 / 1979 . THE PROPE R TY WAS TRANSFERRED BY T HEM TO M/S RAI BAHADUR KISHAN CHAND & SONS (PROPERTIES) P V T . LTD. I N LIEU O F 4 850 S HARES OF ` 100 / - EACH O F THIS CO . (II ) THE RESI D ENTIAL P ROP E R TY N O.3A MALL RO AD AMRITSAR WA S BOUGHT J OINTLY BY SHRI AMIR C H AN D MAHES HWARI PRATAP C H AND MAHESHWARI KAILASH CHAN D M AHESHWARI & P RAK AS H C HAN D MA H ES H WARI EQUALLY VIDE REGISTERED DEED D A T E D 21/12/1970 . (III) SHR I PRA KAS H C H AN D RA MAH ESHW A RI ( KARTA ) A FOR ESAID NOW DECEASED PAR T I TION E D /SE TTLED HI S U ND IVID E D 1 / 4 TH S H ARE O F 3 A T H E M ALL AMRITSAL BEING PRO PERT Y O F P R AKA S H C H AN D R A M A BESHWA R I H UF I N T H E NAME O F HIS SON SHRI PRAV EEN MA HE S H W AR I( H UF) A N D S H RI R AJE E V MAHESH WA R I (HUF) IN EQUAL S H ARES VI DE DEED DATED 09 / 0 3 / 1998 . 26 (IV) IT HAS BE E N MUTU A LL Y DEC ID E D B Y AN D BET WE E N THE PARTIES HERETO TO EXCH AN GE TH E RE S P E CT IVE PRO P E R TIES A B OVE - ME NTION E D WIT H EACH OTHER SO TO SAY T HE PAR TY OF TH E F I RS T P ART TO GIVE AND T RA N S F ER ITS PROPERTY AT 3A THE M A LL AMRIT S A1 TO THE S EC O ND PART A ND I N EXC HANG E T H E P ARTY OF THE SECOND P A R T TO GI V E AND TRANSF ER IT S PRO PERTY AT C-5 S ITUAT E D A T SAWAI JAI SINGH H IG H W A Y BANIPARK JA IP U R TO T HE P ARTY O F FIRST P AR T AND THAT EACH PARTY W OULD BECOME LE G AL O W N ER O F TH E RES PE C T IVE P R OPERT Y-IN-EXCHANGE .' 6 . 5 TH I S MO D W A S FOLLO WE D B Y RE G IS TRATI O N OF THE PR OP ERTIES AND STAMP DUTY WAS PAID ON THE TRANSFE R O F P ROPE RTY. TH E R EG IS TRAT I O N D EE D S HAVE BEEN FILED . T H E S ALE DEED OF AMRIT SA R PR OPERTY WAS REG I STERED O N 6/2/08 WHERE THE VALUE O F P ROPERT Y W AS ASSESSED AT R S . L 3 5 00 000 / - FOR STAMP D UTY PURPOSES . IT IS I NTEREST I NG TO NOTE THAT T HE TR A N S FE R S ALE D E ED W A S S I GNE D B Y SMT . PRATIBHA MAHESHWA R I W / O SHR I PR A K AS H C HAND MAHESH WARI SHRI PRAVEEN MAHESHWA R I AND SH RI R AJ E EV MAHES H WARI A SHU M AH ESHWARI & RITU MAHESHWA R I SON S AND DAU G H TE RS OF DECEASED S H RI PRAKASH CHANDRA MAHESHWA R I . 6.6 IT WAS ALSO MENTIONED IN THIS SALE DEED THAT: ------ VE`RLJ VJCU LDZHY UA- 110 VKCKNH EKY JKSM+ UTNHD VKCKNH TKS'KH DKYKSUH RGLHY O FTYK VE`RLJ ESA FEYDH;R JH IZDK'K P AN EGS'OJH DK 1@4 FGLLK FCUK FDLH _.K HKKJ DS GS JH IZDK'K PAN EG S'OJH DK LOXZOKL GKS X;K MUDS OKFJL GE JHERH IZFRHKK IFRU] IZOHU EGS'OJH ] JKTHO EGS'OJH LQIQ=] VK'KQ EGS'OJH] FJRQ EGS'OJH LQIQ=H LOXHZ; JH IZDK'K PAN EGS'OJH BU IKAPKSA DS CJKCJH FGLLS GSA ------- VC GE VIUH LW>&CW> ESA JGDJ MIJKSDR EDKU LK YE DQY JDCK 3950 OXZXT DK 1@4 FGLLK CDNJ 987-5 OXZXT] UYK] FCTYH] IK UH] LHOJST PKYW GKYR ESA GS VKSJ LELR VF/KDKJKSA LESR CSPKJ FD;K FT LDS CKCKR~ D DJKSM+ ISARHL YK[K :I;S ESA ESLLZ JK; CGKNQJ FD'KKSJ PAN .M LAL IZKIVHZT IZKBOSV FY- OKFD;K VKJ- CH- DS- LH- VKOJ ESDYKSM JKSM] JKUH DK CKX] VE`RLJ FO; DRBZ DJDS FY[K FN;K GS FD DQY JDE DS CNYS ;S GEUS [ KJHNNKJ DH RJQ 27 LS TK;NKN U- LH&5 OKFD;K CUHIKDZ T;FLAG GKBZOS T;IQ J ESA YS YH GS BL LKSNS ESA VKSJ DQN CDK;K UGHA JGK GS BL TK;NKN DK D CTK VKT LS BLDS [KJHNNKJ DKS LKSI FN;K X;K GSA------- 6.7 A NOTHER S A L E DEED WA S G O T REG I STERE D AT TH E OFFICE OF TH E SUB R EG I STRAR JAIP U R ON 2 8 /3 / 08 W H E R EIN T HE P RO P E R T Y A T C-5 SITUATE D AT SAWAI J AI SI N G H H I GH WAY B A NIP A RK J A IPUR WAS TRANSFERRED B Y M / S R AI B A HADUR K IS HAN CHA ND & SONS PROPERTI ES P VT . LTD. TO SHRI PR AV E E N MAHESHW A RI (H DF) & S H RI R AJ E E V MA H E S H W A R I KARTA RAJEE V MAHE S HWARI ( HUF ) BOTH RESI D E NT S O F T H E S AI D PRO P ER T Y . IT W A S MENTIONED IN THE D E ED : - ' THAT PURSUANT TO TH E R EC IT A L S T HE SELLE R DO HEREB Y CONVEY AND TRANSFER THE S AID P R OP E RT Y TO THE P U R C H A S E RS FOR A TOTAL CONSIDERATION OF RS . 1 35 00 000 / - ( RUPE ES ONE CR O RE THIRT Y F IVE LAC S ONL Y) W HICH IS ACKNOWLED GE D TO H AVE B E EN A PPROPR IA TED B Y THE SELLER . THUS THE SELLER DO HEREBY C ONFIRM T O R ECEIVE EN TIR E SALE C ONSIDERATION .' 6.8 THE EVI D E N TIARY V ALU E O F TH E DO C UMENT S PLACED BEFO RE ME (AS D I SCUS S ED ABO VE) NOW NEEDS TO BE EXA MINED WITHIN THE AMBIT O F L AW. T HE F I RST E V IDENCE IS B Y W A Y O F STATEMENT S OF THE ASSES S EE K ARTA ' OF HUF T AKEN DURIN G THE TIM E O F SUR V E Y . THE S E HA V E BEEN HELD TO B E U N RELIABLE B Y T H E A O H I M S EL F & THEREFORE C ANNOT B E R EL IE D U PON AS DIS C U SSE D IN PARAS 6 6 . 1 6 .2. THE DE C LARATION OF COMPLETE PARTIT I ON DT . 9 /3/ 98 B Y P R AKA SH C H A NDR A MAHESH W AR I KARTA OF HUF KNO W N AND A S SE S SED AS P R AKA S H C HAND RA MAHESHWARI HUF : THIS DECLARATION OF COMPLETE PARTITION O F T HE A S S ETS O F TH E HUF DOES NOT HAVE THE SIGNATURES OF AN Y C OPARCEN ERS O F TH E H UF . THE INDIAN STAMP ACT 1899 A D A PT ED BY RAJASTHAN STAMP LA WS ( AD A PT ATI O N) ACT 195 2 WAS OPERATIONAL ON THE DATE OF PARTITION I.E . 9 / 3 / 98 . SEC . 2( 1 5) OF THIS ACT DEF I NES INSTRUMENT OF PAR T ITION AS FOLLOWS:- INSTRUMENT OF PARTITION ' MEANS ANY INSTRUMENT WHEREB Y C O - O W NERS 28 O F ANY PROPER TY D IV IDE OR AGREE TO DIVIDE SUCH PROPERTY IN SE V ER A LT Y A ND I NCLUDE S : (I) A FINAL ORDER FOR E F FE C T I N G A P A RTI TI ON PA SSED B Y A N Y RE V ENUE AUTHORIT Y OR ANY CI V IL C OURT (II) AN AWARD B Y AN ARB I TRATOR D I R EC TIN G A PARTI TION AN D (III) W H E N A N Y PARTITION IS EFFECTED W I TH O UT EXEC UT ING A N Y S U C H IN STR U MENT AN Y INS T R UM E NT O F I N STR UMENT S S IGNED B Y TH E C O - O WN E RS AN D REC ORD I N G WH E T HER B Y WAY OF D E C LARA TI ON O F S UCH PAR T I T I ON O R O T HE RW I SE TH E TERM S O F S U C H P A RTITI ON AMON GS T THE C O-O W NER S; SEC . 3 OF TH IS ACT W HI C H I S THE C HARGIN G SE CT I ON RE A D W ITH A RT IC L E 45 O F SC H E DUL E- L S PECIFIES THE STAMP D UT Y REQUIRED TO BE C HAR G ED ON S U C H PA R T ITION AND TRANS F ER O F LAND W HICH I S TO B E PAID ON THE M A RK ET VA LU E OF THE SE PA R ATED S HAR E OF THE L A ND. 6.9 IT IS PERTIN E NT T O NOT E THAT THI S DE C LARATION OF PARTITION H AS N OT BEEN SIG N E D B Y TH E C O - OWNER S A S MENTIONED E ARLIE R AND NEITHE R H AS T H E STA M P D UTY B EE N PA I D A S PER THE INDIAN STAMP A CT O P ER ATIONAL IN T H E STATE. 6.10 SEC. 35 OF THIS ACT IS AS FOLLOWS:- INSTRUMENTS NOT D ULY STAMPED INADMISSIBLE IN EVIDENCE ETC. - N O INSTRUMENT CHARGEABLE WITH DULY SHALL BE ADMITTED IN E V IDEN CE F O R A N Y PURPOSE B Y ANY PE R S O N HAVING BY LAW OR CONSENT OF PARTIE S AUTHOR I T Y TO RECEI V E EVIDENCE OR SHA L L BE ACTED UPON REGISTERED OR AUTHENTICATED B Y A N Y S UCH PERSON OR BY ANY PUBLIC OFFICER UNLESS SUCH INSTRUMEN T I S DU LY STAMPED . T HU S THI S DECLARATION OF PARTITION C ANNOT BE HELD TO BE AD M ISSIBLE . EVI D E NC E AS P E R LAW. 6.11 FURTHERMORE SEC . 17 OF T H E REGIS T RATION ACT OF 1908 WHICH I S R EGARDIN G DOCUMENTS OF WHICH REGIS T RATION IS COMPULSORY LAYS DOWN IN 29 SUB - SEC. (1)( B ) THAT : OTHER NON-TESTAMENTARY INSTRUMENTS WHICH PURPORT OR OPERATE TO ` C REA T E DECLARE ASSIGN LI MIT OR EX TIN G U ISH WHETHER IN PRESENT OR IN FUTURE ANY RIGHT TITLE OR INTEREST WHE TH E R VES T E D OR CONTINGENT OR THE VALUE O F ONE HUND R ED RUPE E S A ND U P W ARD S T O O R IN I M M O VA B LE P ROPERTY'. 6.12 SEC . 49 OF REGISTRA T I O N ACT MENTIONS THE EFFECT OF NON-REGISTRAT I ON O F DOCU M ENTS REQU IR E D T O BE R E GISTERED AS FOLLOWS: NO DOCUMENT REQ U IRE D BY SEC . 17 [FOR ANY PRO V ISION O F THE T R AN S FE R O F PROPERT Y ACT 1882 (4 OF 1882)] TO BE REGISTERED SHALL- (A) AF F EC T A N Y IMMO V ABLE PR OPERTY CO MPRI S ED THER E IN OR ( B ) CO N FE R AN Y P O W ER TO A D OPT OR (C) BE RECEIVE D AS EV ID ENCE OR ANY TRANSACTION AFFECTING SUCH PROPERTY O R C ONFE R RING SUCH POWER U NLESS IT H AS BE EN R E GISTER E D . 6.13 I N T H E PR ESE NT C ASE THI S DE C LARATION OF P A RTITION EX TINGUISHES T HE RIGHT S OF TH E OT H ER CO -P A R C EN E R S OF TH E HUF NAM E L Y - SMT . PRAT I BHA M A H ES H WARI W/O PRA K AS H C HAND M A HESH W ARI AND HI S D A U G HT ERS M S . ASHU & R I TU T Y1 A H ES H WARI IN FAVO U R O F TH E H UFS OF SHRI PR AVEE N MA HESH W AR I & SH RI R AJEEV M A H ES H WA RI THAT WERE NOT E V EN THE COPARCENERS OF THE H UF O F PR A K AS H C H A ND MAHESHWARI SINCE ONLY INDIVIDUALS CAN BE COPARCENER S OF AN HU F. (I) AS PER LAW THIS DE C LARATION W A S REQUIRED TO BE SIG NED B Y ALL THE C OPARCENERS . ( I I ) STAMP DUTY WAS REQUIR E D TO BE PAID AS PER THE INDIAN ST AMP ACT U / S 3 SCHEDULE-I ARTI C LE 45 ( I I I ) IT W AS REQUIRED TO BE REGISTERED U / S 17 OF THE REGISTR A TION ACT TO BE ABLE TO CREATE ANY ENFORCEABLE RIGHT & ENTITLEM E NT IN T H E PROPERT Y I N FA V OUR OF H U F S O F PRA V EEN MAHESHWARI & R AJEEV MAHESHWARI RESPECTIVELY TO TH E EXCLUSION OF THE OTH ER CO PARCENERS . 6.14 THIS OBSERVATION IS ALSO SUPPORTED BY THE FO LLOWING CASELAWS:- 30 A FULL BENCH OF TH E ALL A HABAD HC IN R A M GO P AL VS. TULSHI RAM AIR 1928 AI1 . 641 649: 26A L595 HAS HELD THAT A FAMIL Y ARRANGEMENT CAN BE M A D E ORALLY IN WHICH CASE NO QUESTION OF REGISTRATION AR ISES . HOWEVER I F I T WA S IN F ACT REDUCED TO THE FORM OF A 'DOCUMENT' REGISTRATIO N IS NECESSAR Y. THIS FINDING WAS UPHELD BY THE HON ' BLE SC IN THE CASE OF KALE & OTHERS VS. DY . DIRECTOR OF CONSOLIDATI O N & OTHERS (1976) 3 SC CASES 119 . THE APE X COURT HELD THAT ' FAMILY ARRANGEMENT MAY BE EVEN ORAL IN WHICH C A S E NO REGISTRATION IS NECESSARY . REGISTRATION WOULD BE NECESSARY ONL Y I F THE HE I R S O F THE FAMILY ARRANGEMENT ARE RE D UCED INTO WRITING. HERE ALSO A DISTINCTION SHOULD BE MA D E BETWEEN THE D OCUMENT CONTAINING T H E TERMS AND RE C ITALS OF A FAMILY ARRANGEMENT MA D E U ND ER THE DOCUMENT AN D A MERE ARRANGEM E NT HAD ALREADY BEEN MADE EITHER FOR THE PURPOSE OF THE RECORD OR FOR INFORMAT I ON OF THE COURT FOR MAKING NECESSARY MUTATION . IN SUCH A CASE THE MEMORANDUM ITSELF DOES NOT CREATE OR EXTINGUISH AN Y RIGHTS IN IMMOVABLE PROP E RT IES & THEREFORE DO ES NOT FALL WITHIN THE MI S CHI EF OF SEC . 17 ( 2 ) OF T HE R EGIS T RA TIO N ACT.. T H E N IF A FA MIL Y ARRAN GEMENT W H ICH REQUIRED REGISTRATION WAS NOT REGISTERED IT WOULD OPERATE AS A C OM P L E T E EST OP PEL AGAINST THE PARTIES WHO HAVE TAKEN ADVANT A GE OF TH E FA MIL Y A RR A NGEM E N T. 6.15 FINALL Y NO OR D ER WAS P ASS ED U / S 171 ( 1 ) OF I.T . ACT 1 96 1 T A KING COGNIZANCE OF THE DECLARATI O N O F P A RTI T ION O F T H E H UF OF PR A KA S H C HAND M A H ESHWARI. T H EREF O RE PRAKA S H C HAND MA H ESHWA R I H UF C ANNOT BE ACC E PT E D T O HAVE BEE N P A R T ITIONED A ND I S REQUIRE D TO BE ASS E SSE D ACCORDINGL Y. T HI S FIN DI NG IS S U P P ORTE D B Y T HE S C DECI S ION I N TH E CASE OF C IT A SS AM VS. NA N D LAL AGA R WA L ( 1 9 66 ) 59 ITR 758. ' IT I S OP E N TO T H E MEMBER S OF A JOIN T FAMILY TO SEVE R E I N INTEREST IN RESPECT OF A PART OF THE JOINT ESTATE WHILE RETAININ G T H E IR S T ATUS OF A JOINT FAM ILY AND HOL D ING TH E RE ST AS THE PROPERTIE S O F AN 31 UNDI VI D E D FAMILY . U N TIL S OM E POSITIV E ACTION IS TAK E N TO HA V E PARTITION O F J O INT FAMILY PR OP ERTY I T W OULD REMAIN JOINT FAMIL Y PROP E RT Y. IN T H IS PART I CULAR CASE THE MEM B ER S OF TH E JO I NT FAMILY DID NOT S EPA RATE T H EIR I NTERE S T I N RE SPECT OF AN Y PART OF THE JOINT - E S TATE AN D NO V ALID EV ID E N CE WAS PRODUCED TO SHOW THAT THEY HAD DONE S O . THIS IS ALSO SUPPORTED B Y T H E FACT THA T ALL THE C OPARCENER S OF T H E HUF SI G NED T HE SALE DEED OF THE PRO P ERTY AT AMRIT S AR THER E FOR E I HOL D THE PROPERT Y AT NO .3 A MALL ROAD AMRITSAR TO BE T HE PROPERT Y O F PRAKASH CHA ND MA H ESHWARI HUF. AS PE R TH E ABOVE DISCUSSION THE D EC LARATION OF PARTITION OF PRAKASH C HAN D MAHE S HWARI (HUF ) DT . 9 / 3 / 98 I S NOT ADMITTED AS EVIDENCE THAT C AN B E RELI E D UPON. 6.16 REGARDING THE M O U SIGNED BETWEEN DIRECTOR OF R AI B AHADUR KISHO R CHAN D MAHESHWARI & KARTAS O F T H E HUF OF SHRI . PRAVEEN MAHESHWAR I & SHR I RAJEE V M AHES H WARI RESPECTIVELY IT IS PERTINENT TO N O TE THAT NO DATE HA S B EE N MENTIONED NOR HAS I T B EEN R EGISTERED OR NOTARISE D. MOREOVER AS PER THE D ISC U SSI O NS IN PARA 6 . 13 ABOVE LEGALL Y NO E XC LU SIVE RIGHT TO PROPERTY AT AMRI T S A R HAD DE V OLVED ON S H RI PRAVEEN MAHESH W AR I (HUF) & SH R I R AJEEV M A HE S H WARI (HUF) . THE PR OP ERTY WAS STILL OWNED AND WAS REQUIRE D TO BE ASS E S S E D IN THE HA ND S OF SHRI P R A KASH CHAND MAHESHWAR I ( HUF ) AND S O THEY WERE N O T LEGA L LY A U THORISED TO SIGN THIS MOU. A S TH E MOU I S BASED ON AN INVALID DOCUMENT I .E . THE DEC L ARATION OF PARTIT I ON IT CANNOT BE RELIED ON EITHER AND IS NOT ADMITTE D AS EVIDENCE. 7 . TO ENCAPSULAT E THE FACTS DISCUSSED ABO V E:- (I) TWO P R O P ERTIES WE R E EXCHA N GE D IN A FAMILY SETTLEMENT . VALUE OF BOTH THE PROPERTIES WAS D ETERMI NED A T R S. 1.35 CR . 32 (II) P R OPERTY AT AMRITS AR WAS TRANSFERRED B Y THE C OPARCENER S O F PR AKAS H CHAND HUF TO M/S RAI BAHADUR KISHOR CHAND & SON (PROPERTIE S) P VT. L T D . (III) PRO P ERTY AT J AIPUR W AS TRANSFE R R E D B Y M /S RAI BAHADUR K ISH O R C HAND & SON (PROPER T IES) PVT. LT D . NOT TO PRAKASH C HAND MAHESHWAR I ( H UF) W H O WAS THE LEGAL C L AI M A N T AS PE R THI S EX CH A N GE BU T T O PRAVEEN CHAND M A H ESH W ARI (HUF) & R AJEEV C H AN D MAHESHWAR I ( H UF) W HO HAD NO EX C LUS IVE L EG A L C L A I M ON THE PROPERTY. (IV) THUS W H ILE P RAKAS H CHAND MAHESHWARI (HUF) TR A NSFERRED ITS P ROP ERTY AT AM R ITSAR IT D ID NOT GE T ANYTH I NG I N RETURN . WHIL E PRA VEEN CHA N D MAH ES HWAR I ( HUF ) & R AJ EE V C H AND MAHESHWARI (HUF ) G O T RIG HT S IN THE P ROPERT Y AT JAIPUR WIT HOUT H AVI N G PAID A N Y COMPENSATION. 7.1 F OR I NC O M E TA X PURPOSES AS PER SECTION 171 THE SALE OF PROPER TY AT AMRITSAR IS R EQUIRED TO BE ASSESSED IN THE HAN D S OF SH . PRAKASH C HAND MAH ESHWARI H U F A N D CAPIT A L GAINS TO BE D ETERMI N ED THEREIN . THE COPARCENER S OF T H E HUF W OULD BE SEVERALLY AN D JOI NTL Y LIA B LE FOR TAX DUES. THI S VIEW I S E NDO RSED BY T H E JUD I CIAL PRONOUNCEMENTS IN CASE OF CIT AS S AM VS . NAND L A L AGARWAL ( 1966 ) I TR 758. 7.2 REG A RDING PROP ERTY TRANSFE R R E D TO S H E PRAKA S H CHA N D MA H ESHW ARI HUF I T IS HELD THAT IT GAINED RIGHTS IN PROPERT Y W O RTH R S. 6 75 000 /- IN THE S AID PROPERTY WITHOUT HAVING PAID AN Y THING I N C OMPENSAT IO N . THIS I S HELD TO BE INCOME BEING 'PROFIT AND GAINS ' U /S 2 (24) ( I ). IT WOULD BE C HARGED TO TA X U /S 56(1 ) BEING INCOME NOT TO BE E X C LUDED FROM TH E TOTAL I NCOME UNDE R THE I . T . ACT AND S HALL BE C HARGEABLE T O IN C OM E TAX UNDER T HE HEAD ' INCOME FROM OTHER S OURCE S' AS IT IS NOT C HARG E AB LE TO INCOME TAX UNDER ANY OF THE HEADS SPECIFIED IN SEC . 14 ITEM S A TO E. 8. SPEC I FIC FINDING S ARE BEING GIVEN TO THE GROUNDS OF APPEA L AS P ER THE DISCUSSION ABOVE 33 (A) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. AO HAS GROSSLY ERRED IN HOLDING THE ASSETS ACQUIRED UNDER FAMILY S ETTLEMENT AS UNDISCLOSED INVESTMENT THUS THE CONSEQUENT ADDITIONS DESERVES TO BE DELETED. HELD THAT T H E R E WA S N O UNDI SC LO SE D IN VES T E M E N T BY TH E ASSESSEE IN THE PROPER T Y AT C-5 S A WAI JAI S IN G H ROAD BANI PARK JAIPUR. (B) O N T H E F A C T S A ND IN TH E CIRCUM S TANCE S O F T H E C A S E TH E L D . AO HAS GROSSLY ER R E D I N MAKIN G AN ADDITION OF R S. 6 7 50 000 /- O N AC C O U NT OF U N DISCLOSE D I N VES TM E NT IN TH E ACQUI S ITION OF PROPERT Y S OL E L Y BA SED ON THE STATE M E NT S RECO RDED DURIN G TH E SURVE Y ( CONDUCTED A T MIS P . R . RO L LI N G MILLS PVT . L TD . IN WHICH SHRI PRAVEEN MAHESHW A RI I S A D I R ECTOR) WIT H O U T APPRECIATING TH E FACT THAT THE NO ACTUAL IN V ESTMENT W A S M ADE BUT T H E ASSET W AS A CQUIRED IN EXCHANGE O F PROPERTY TRANSFERR E D /SO L D UNDE R F AMIL Y S ETTLEMENT THU S THE ADDITION MADE DESERVES TO B E D E L E T ED. HELD TH A T TH E S TATEMENT S OF PRAVEEN MAHESHWARI TAKEN AT TH E TI M E OF S U RVEY IS UN R ELIABLE E V IDENCE. NO ACTUAL . INVESTMENT WA S M A D E IN AC QU IRI NG T H E A SSET . HOWEVER THE A S SESSEE WA S NOT LEGALL Y IN A PO SITION TO HAVE MADE THE FAMIL Y SETTLEMENT . THEREFORE THE ADDITION C ANN OT BE DELET E D BECAUSE BY ACQUIRING THE RIGHTS IN THE PROPERTY W ITHOUT GIVI N G A N Y THING IN COMPENSATION THE ASSESSEE MADE PROFIT AND GAINS U /S 2(2 4 )(I) O F R S. 67 50 000 /- THAT ARE REQUIRED TO BE TAXED U / S 56(1 ) A S INCOM E FROM O TH ER S OURCE S. (C) T H A T THE LD . A O HA S FURTHER ERRED IN IGNORING THE RETURN OF IN CO M E FILED W HEREIN DETAI L ED NOTES WITH RESPECT TO SAID INVESTMENT WAS DES CR IB E D . F URTHERMORE COMPUTATION OF TOTAL INCOME CONTAINING ALL TH E DESIRED DETAILS WAS S UBMITTED DURING ASSESSMENT PROCEEDING S W HICH WERE G R OSS L Y IGNORED . THEREFORE IN THE CI RCUM S TANCES TH E AD D ITION OF RS . 6 7 50 000 /- SO MADE DESERVES TO BE DELETED IN TOTO. HELD THAT THE NOTES APPENDED WITH THE RETURN OF IN COME WERE NOT BASED ON ADMISSIBLE EVIDENCE AS DISCUSSED EXTENSIVEL Y I N THE ORDER ABO VE A N D C ANNOT BE TAKEN COGNIZANCE OF. (D) THAT THE LD . AO HAS FURTHER ERRED IN OBSERVING THAT THE PROPERT Y SOLD AT AMRITSAR WAS NOT OWNED BY ASSESSEE HUF WHEN IN FACT ALL THE DE S I RE D DETAILS WITH RESPECT TO ITS OWNERSHIP WERE SUBMITTE D DURING ASSESSM E N T PROCEEDINGS WHICH WERE GROSSLY IGNORED. THEREFORE THE ADDITION SO MADE OF RS. 67 50 000/ - DESERVES TO BE DELETED. HELD THAT THE FINDING OF THE AO THAT THE PROPERTY ' AT AMR I T S AR WAS NOT OWNED B Y THE ASSESSEE HUF IS CORRECT A S PER THE DISCUSSION I N TH E M AI N BOD Y OF THE O R DER . THE PROPERTY AT AMRIT SA R BELONG TO PR A K AS H CHAND 34 MAHES H WA RI HUF A ND N O T T O P RAV E EN CHAND M AHE S H WA R I H UF AND RAJEEV C HAN D MAHESHWARI HUF. (E) THAT THE LD . AO HA S F U R THER ERRED IN NOT ALLOWI N G THE DEDUCTION U /S 54 WHEN IN FACT THE ASSESSE E HA S IN VES T ED T H E SA L E P RO CEEDS A S PER TH E S AID PROVISIONS HENCE THE SA ID DEDUCTION U / S 5 4 DESERVES TO BE ALLOWED. HELD T H AT TH E DECISION OF TH E A O IN N OT A LLO WI N G D ED U CTION U LS 54 TO THE ASSESS E E WAS CORRECT B E CAU S E A ~ PER TH E SA LE D E ED AVA IL A B LE T H E PROPERTY AT AMR IT SAR WA S NO T T RAN S FERRED B Y TH E ASSESS E E BU T BY PRAKASH CHAND MA H ES HW ARI HUF SO TH E BENEFIT O F DE DUCTION UND ER SEC.54 CANNOT BE CLAI M E D B Y T H E ASSESSEE. (F) ON THE FAC TS A ND IN THE C IRCUM S TANC ES O F T H E C A SE THE LD . AO HAS GROSS L Y E RR ED I N C H A RGING INTERE ST O F R S.1 22 3 60 /- U/ S 234A AND RS . 4 69 45 5/ - U /S 23 4B OF THE IT A CT 1 96 1. AS CHARG IN G OF INT E RE S T I S CONSEQUENT I AL I N NATU RE T H E AO IS DIRECTED TO RECA L C UL A T E I NT E RE S T AT THE TIME OF GI VI N G E FFEC T TO TH E A P PE LL ATE ORDER. (G) ON T H E FAC TS A ND IN THE CIRCUM S TAN C E S OF THE C A SE THE LD . AO HA S GROSSLY E RR E D I N I NITIATING PENALT Y PROC E EDING S U /S 271(1)(C) OF THE IT ACT 1 9 61. A S C AUSE OF A CTION DOES NOT ARISE FROM THE ORDER UNDER APPE AL THE SA M E IS PREMATURE AND H E NCE REJEC T ED. 7. NOW BOTH THE PARTIES ARE IN APPEAL HERE BEFORE T HE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE FILED WRITTEN S UBMISSIONS. 9. ON THE OTHER HAND LD. D/R PLACED RELIANCE ON TH E ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT LD. CIT (A) HAS EXAMINED THE ISSUE IN GREAT DETAIL AND HAS GIVEN HER FINDING ON EACH AND EVERY ASPECT. 10. REGARDING THE GROUND IN THE APPEAL OF THE DEPAR TMENT IT WAS SUBMITTED THAT THE SAME MAY BE DISPOSED OFF ON MERIT. 35 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIAL ON RECORD WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN ITS APPEA L AND THERE IS NO SUBSTANCE IN THE APPEAL OF THE DEPARTMENT. 12. THE DEPARTMENT IS OBJECTING WHETHER THE LD. CIT (A) WAS JUSTIFIED IN DIRECTING TO ALLOW DEDUCTION OF RS. 67 50 000/- UNDER SECTION 54 OF THE ACT. 13. THE LD. CIT (A) HAS NOT ALLOWED ANY DEDUCTION U NDER SECTION 54 AS HE HAS REJECTED THE GROUND OF THE ASSESSEE IN NOT ALLOWING DEDUCTIO N UNDER SECTION 54 AND ASSESSEE HAS RAISED A SPECIFIC GROUND IN RESPECT OF DEDUCTION UN DER SECTION 54. IN VIEW OF THESE FACTS AND CIRCUMSTANCES THE DEPARTMENTS APPEAL IS INFRU CTUOUS IN NATURE AND THEREFORE THE SAME IS DISMISSED. 14. REGARDING THE APPEAL OF THE ASSESSEE BRIEF FAC TS HAVE ALREADY BEEN DISCUSSED IN DETAIL. THE LD. CIT (A) HAS ALLOWED CERTAIN ISSUES IN FAVOUR OF THE ASSESSEE I.E. THAT THERE WAS NO MONEY TRANSACTION AS THIS CASE WAS OF TRANSF ER OF A PLOT. HOWEVER THE LD. CIT (A) AFTER DISCUSSING THE ISSUE IN DETAIL HAVE HELD THAT THE PLOT WAS SOLD BY HUF AND WHEREAS THE PLOT HAS BEEN PURCHASED BY THE COPARCENERS OF T HE BIGGER HUF I.E. PRAKASH CHAND MAHESHWARI HUF IN THEIR INDIVIDUAL CAPACITY. WE HA VE GONE THROUGH THE ENTIRE ORDER OF LD. CIT (A) AND FOUND THAT LD. CIT (A) HAS IGNORED CERTAIN VITAL ASPECTS OF THE CASE. FIRST VITAL ASPECT IS THAT STATEMENT OF SHRI PRAVEEN MAHE SHWARI WAS RECORDED ON OATH ON 8.3.2010 AT THE TIME OF SURVEY PROCEEDINGS WHEREIN IT HAS BEEN CATEGORICALLY ADMITTED BY SHRI PRAVEEN MAHESHWARI THAT THE PROPERTY SITUATED AT C-5 SAWAI JAI SINGH HIGHWAY BANI PARK JAIPUR BELONGS TO THEIR HUFS AND THIS PR OPERTY WAS ACQUIRED BY HIS HUF AND HIS BROTHERS HUF FROM THE BIGGER HUF. IT IS FURTH ER STATED THAT A MEMORANDUM OF UNDERSTANDING WAS ALSO ENTERED BETWEEN THEM I.E. PR AVEEN MAHESHWARI HUF AND RAJEEV 36 MAHESHWARI HUF WITH M/S. RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. AMRITSAR WHICH BELONGS TO THE ELDER BROTHER OF HIS FATHER TO EXCHANGE THE PROPERTY SITUATED AT 3-A THE MALL AMRITSAR IN LIEU OF PROP ERTY SITUATED AT C-5 SAWAI JAI SINGH HIGHWAY BANI PARK JAIPUR. THE CONSIDERATION OF BO TH THE PROPERTIES WAS MENTIONED AT RS. 1.35 CRORES. HOWEVER SINCE THERE WAS EXCHANGE OF PROPERTY NO MONEY WAS EXCHANGED. IT HAS BEEN CATEGORICALLY ADMITTED BY HI M THAT THERE WAS NO TRANSFER OF MONEY AS BOTH THE PROPERTIES WERE EXCHANGED BY MUTUAL CON SENT OF THE FAMILY MEMBERS. PROPERTY SITUATED AT JAIPUR BELONGED TO RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD WHEREAS PROPERTY SITUATED AT 3-A THE MALL ROAD AMRITSAR BELONGED TO TWO HUF I.E. PRAVEEN MAHESHWARI HUF AND RAJEEV MAHESHWA RI HUF. IT WAS ALSO MENTIONED THAT THE PROPERTY AT AMRITSAR WAS ACQUIRE D BY THESE TWO HUFS FROM THE BIGGER HUF OF THEIR LATE FATHER. THIS FACT WAS NOT ACCEPT ED BY THE AO OR BY THE LD. CIT (A) BY OBSERVING THAT WHILE GETTING REGISTERED THE DOCUMEN T IN RESPECT TO TRANSFER OF PROPERTY OF AMRITSAR WAS SIGNED BY ALL THE COPARCENERS OF LATE SHRI PRAKASH CHAND KARTA OF PRAKASH CHAND MAHESHWARI HUF. THE COPARCENERS ARE SHRI PRA VEWEN MAHESHWARI SHRI RAJEEV MAHESHWARI SMT. PRATIBHA MAHESHWARI WIFE OF LATE S HRI PRAKASH CHAND MAHESHWARI SHRI ASHU MAHESHWARI RITU MAHESHWARI DAUGHTER OF L ATE SHRI PRAKASH CHAND MAHESHWARI. THEY HAVE SIGNED AS SELLER AND M/S. RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. HAS SIGNED AS PURCHASER ON 6 .2.2008 WHEN THE REGISTRATION DEED WAS REGISTERED. ON THIS BASIS THE LD. CIT (A) HELD THAT THE PROPERTY WAS SOLD BY INDIVIDUALS WHEREAS THE PROPERTY HAS BEEN PURCHASED BY TWO HUFS I.E. PRAVEEN MAHESHWARI HUF AND RAJEEV MAHESHWARI HUF JOINTLY. THEREFORE THE LD. CIT (A) HAS NOT ALLOWED DEDUCTION UNDER SECTION 54 AND HAS DIRE CTED TO ASSESS THE CAPITAL GAIN EARNED 37 BY THE ASSESSEE IN HIS SHARING RATIO. IN OUR VIEW THE INFERENCE DRAWN BY LD. CIT D/R IS NOT CORRECT FOR THE SIMPLE REASON THAT NONE OF THE COPARCENERS MENTIONED ABOVE HAS RECEIVED ANY AMOUNT ON ACCOUNT OF SALE OF PROPERTY SITUATED AT AMRITSAR NEITHER THE TWO HUFS I.E. PRAVEEN MAHESHWARI HUF AND RAJEEV MAHESHW ARI HUF HAS PAID ANY AMOUNT. THIS IS A SIMPLE CASE OF EXCHANGE OF PROPERTY SITUA TED AT JAIPUR AND AT AMRITSAR. PROPERTY AT JAIPUR BELONGED TO M/S. RAI BAHADUR KISHORE CHAN D & SONS (PROPERTIES) PVT. LTD. AND PROPERTY AT AMRITSAR WAS BELONGING TO PRAVEEN MAHES HWARI HUF AND RAJEEV MAHESHWARI HUF. FOR THEIR CONVENIENCE AS SHRI PRAV EEN MAHESHWARI AND SHRI RAJEEV MAHESHWARI ARE RESIDING HERE AT JAIPUR. THEY TOOK THE PROPERTY SITUATED AT JAIPUR AND PROPERTY SITUATED AT AMRITSAR WAS TRANSFERRED TO M/ S. RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. AS SHRI RAI BAHADUR KISHORE CHAND MAHESHWARI WAS LIVING AT AMRITSAR. THEREFORE THIS IS NOT A CASE THAT TWO P ROPERTIES HAVE BEEN EXCHANGED BY TWO INDEPENDENT PARTIES AND IT IS NOT POSSIBLE BECAUSE IF IT IS HELD THAT PROPERTY SITUATED AT JAIPUR WAS ACQUIRED BY TWO HUFS AND PROPERTY SITUAT ED AT AMRITSAR WAS SOLD BY INDIVIDUAL THEN THERE MUST HAVE TRANSACTION OF MONE Y AND THIS IS UNDISPUTED FACT AND HAS ADMITTED BY LD. CIT (A) ALSO THAT THERE WERE NO EXC HANGE OF MONEY AS THERE WAS EXCHANGE OF PROPERTY ONLY. ALL THE COPARCENERS HAV E SIGNED FOR THE REASON THAT TO SAFEGUARD THE INTERESTS OF M/S. RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. SO THAT THERE MAY NOT BE ANY DISPUTE IN FUTURE WITH REFERENCE TO TRANSFER OF PROPERTY. 14.1. THERE WAS ONE MORE REASON THAT THE PROPERTY S ITUATED AT AMRITSAR WAS NOT TRANSFERRED IN THE NAME OF TWO HUFS AND THEREFORE FOR THIS REASON ALSO ALL THE COPARCENERS HAVE SIGNED THE REGISTERED DEED IN THEI R INDIVIDUAL CAPACITY. HOWEVER THE FACT REMAINS THAT THE PROPERTY SITUATED AT AMRITSAR WAS ALLOTTED TO THE COFFER OF TWO HUFS 38 I.E. PRAVEEN MAHESHWARI HUF AND RAJEEV MAHESHWARI H UF AND THIS FACT IS SUPPORTED BY DECLARATION MADE BY LATE SHRI PRAKASH CHAND MAHESH WARI WHEN HE WAS ALIVE AND AN APPLICATION FOR PASSING ORDER UNDER SECTION 171 OF THE ACT WAS FILED BEFORE THE AO ON 14.10.1998 AND COPY OF THIS DECLARATION IS PLACED A T PAGES 14 TO 18. IN THIS DECLARATION SHRI PRAKASH CHAND MAHESHWARI HAS CATEGORICALLY STA TED THAT HE HAS MANY SHARES OF MANY COMPANIES AND PROPERTY AT AMRITSAR. THE LIST OF SHARES HAS BEEN GIVEN AT PAGES 15 OF THIS DECLARATION AND WHICH HAVE BEEN ALLOTTED TO SMT. PRATIBHA MAHESHWARI WIFE OF LATE SHRI PRAKASH CHAND MAHESHWARI SHRI PRAVEEN MAHESH WARI HUF AND SHRI RAJEEV MAHESHRI HUF. THEREAFTER IN PARA 4.2 THE PROPERT Y SITUATED AT AMRITSAR HAS BEEN GIVEN TO SHRI PRAVEEN MAHESHWARI HUF AND SHRI RAJEEV MAHE SHWARI HUF. THEREAFTER A MEMORANDUM OF UNDERSTANDING WAS ARRIVED AT BETWEEN THE TWO HUFS AND RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. IN WHIC H ALSO IT HAS BEEN CLEARLY MENTIONED THAT THE SAME BELONGS TO TWO HUFS I.E. PRAVEEN MAHE SHWARI HUF AND RAJEEV MAHESHWARI HUF COPY OF MEMORANDUM IS PLACED AT PAG ES 19 ONWARDS. THEREFORE NO DOUBT REMAINS THAT THE PROPERTY SITUATED AT AMRITSA R BELONGS TO TWO HUF WHO IN LIEU OF THE PROPERTY SITUATED AT JAIPUR HAVE GIVEN TO M/S. RAI BAHADUR KISHORE CHAND & SONS (PROPERTIES) PVT. LTD. AS PER THEIR MEMORANDUM OF U NDERSTANDING. THIS IS ALSO A FACT THAT THE DECLARATION WAS FILED BEFORE THE INCOME-TAX AUT HORITIES. HOWEVER NO ORDER IN RESPECT TO PARTITION UNDER SECTION 171 HAS BEEN PASSED. TH EREFORE THIS IS NOT THE FAULT OF THE ASSESSEE THAT NO ORDER HAS BEEN PASSED. THIS EVIDE NCE HAS TO BE TAKEN INTO CONSIDERATION THAT THERE WAS A DECLARATION BY WHICH THE PROPERTY AT AMRITSAR WAS GIVEN TO THE TWO HUFS BY THEIR LATE FATHER SHRI PRAKASH CHAND MAHESHWARI TO WHOM THAT PROPERTY BELONGS. 39 14.2. A COPY OF WEALTH-TAX COMPUTATION IN CASE OF S HRI PRAVEEN MAHESHWRI HUF IS PLACED AT PAGE 76 AND IN THIS PROPERTY THE SHARES O F INDIAN COMPANIES I.E. PRATAP STEEL ROLLING MILLS LTD. AMRITSAR RAYON AND SILK MILLS L TD. PRATAP STEEL LTD. PRATAP RAJASTHAN SPE. STEEL LTD. R.B.K.C. & SONS P. LTD. AND STATUS LEASING & FINANCE LTD. HAS BEEN SHOWN AND AS PER DECLARATION OF SHRI PRAKA SH CHAND MAHESHWARI THE SHARES WERE OWNED BY HIM IN RESPECT TO PRATAP STEEL LTD. ARAVALI ISPAT LTD. PRATAP RAJASTHAN COPPER FOILS & LAMINATES LTD AND THESE SHARES WERE ALLOTTED TO SHRI PRAVEEN MAHESHWARI HUF AND SHRI RAJEEV MAHESHWRI HUF AND AS PER COMPUTATION OF WEALTH- TAX THESE SHARES HAVE BEEN SHOWN IN THEIR COMPUTAT ION MEANING THEREBY WHATEVER THE ASSETS WERE RECEIVED BY SHRI PRAVEEN MAHESHWARI HUF AND SHRI RAJEEV MAHESHWARI HUF THEY WERE SHOWN IN COMPUTATION OF WEALTH-TAX. HOWEVER THERE WAS NO WEALTH-TAX LIABILITY. THEREFORE NO WEALTH-TAX RETURN WAS FILE D. THE COMPUTATION OF WEALTH-TAX CLEARLY SHOWS THAT THE SHARES ALLOTTED BY SHRI PRAK ASH CHAND MAHESHWARI WERE ACQUIRED BY SHRI PRAVEEN MAHESHWARI HUF AND SHRI RAJEEV MAHE SHWARI HUF AND THEY ARE STILL OWNING THESE SHARES. PROPERTY AT AMRITSAR WAS NOT SHOWN IN THE COMPUTATION BECAUSE THE SAME HAS BEEN TRANSFERRED TO M/S. RAI BAHADUR KISHA RE CHAND & SONS (PROPERTIES) PVT. LTD. AND PROPERTY SITUATED AT JAIPUR HAS BEEN SHOWN AS EXEMPT UNDER SECTION 5(VI). FROM ALL THESE FACTS IT IS CLEARLY ESTABLISHED THAT THE PROPERTY OF JAIPUR AND PROPERTY OF AMRITSAR WERE EXCHANGED BY SHRI PRAVEEN MAHESHWARI HUF AND S HRI RAJEEV MAHESHWARI HUF WITH M/S. RAI BAHADUR KISHORE CHAND & SONS (PROPERT IES) PVT. LTD. THEREFORE IN OUR CONSIDERED VIEW NO CAPITAL GAIN TAX IS LIABLE TO B E PAID BECAUSE THE PROPERTIES WERE EXCHANGED AT THE SAME PERIOD AND THEREFORE ASSESS EE IS ENTITLED FOR DEDUCTION UNDER SECTION 54. ACCORDINGLY WE ALLOW THIS GROUND OF THE ASSESSEE. 40 15. NEXT ISSUE RELATES TO CHARGING OF INTEREST UNDE R SECTION 234A AND 234B WHICH IS CONSEQUENTIAL IN NATURE. 16. NEXT ISSUE RELATES TO CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). 17. THE LD. CIT (A) HAS REJECTED THIS GROUND BY HOL DING THAT ISSUE OF INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1) IS PRE MAT URE AND THEREFORE THE SAME IS REJECTED AND WE SEE NO INFIRMITY IN THE ORDER OF LD . CIT (A). THEREFORE THIS GROUND OF THE ASSESSEE IS DISMISSED. 18. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISM ISSED AND APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 19. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 .9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- M/S. PRAVEEN MAHESHWARI HUF JAIPUR. THE ACIT CIRCLE-3 JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 630(2)/JP/2011) BY ORDER AR ITAT JAIPUR.