Income Tax Appellate Tribunal - Mumbai
Udeyraja Goliya (Huf) vs Assistant Commissioner Of Income-Tax on 27 May, 1997
Equivalent citations: [1998]64ITD21(MUM), [1999]237ITR47(MUM)
ORDER
Bukte, J.M.
1. Assessee-HUF had filed both these appeals against separate orders of the CIT (Appeals) dated 23rd February 1994 and 10th March, 1992 for the same assessment year 1988-89. ITA 4448 is against the order under section 143(3) read with section 250 of the IT Act and ITA 4073 is against the order under section 143(3)/144A of the Act. As the grounds of appeal involved are common, they are disposed of by this common order for the sake of convenience.
2. At the time of hearing these appeals, Sri Y. P. Trivedi learned representative for the assessee, requested for withdrawal of the appeal in ITA No. 4073/Bom/92. This Appeal is treated as withdrawn and stands dismissed for want of prosecution.
3. The only ground challenged by the assessee in ITA No. 4448/Bom./94 is that the CIT (Appeals) erred in confirming the addition of Rs. 18,00,000.
4. According to the assessee, there was only a discussion between the broker and the assessee which took place regarding the purchase of land but actually no transaction was effected. Therefore the addition of Rs. 18 lakhs made by the Assessing Officer and confirmed by the CIT (Appeals) was without any basis and there is no controversial evidence on record to confirm the addition. In this view of the matter, the only point which has arisen for our consideration is whether the addition of Rs. 18 lakhs made by the Assessing Officer and confirmed by the CIT (Appeals) is just and proper.
5. To give an answer to the above posed question, it is necessary to consider the statement of an alleged broker Sri Shivkumar Vaid. His statement was recorded but no opportunity was given to the assessee to cross-examine the broker to find out the truth from the statement. The fact that the assessee was not given an opportunity of cross-examining Shri Shivkumar Vaid by the Assessing Officer cannot be ignored easily because on the basis of his statement alone, the addition of Rs. 18 lakhs was made. It was submitted that in the absence of any evidence for payment or purchase of land at Versova, the said addition should not have been made. It is a fact that Shri Shivkumar Vaid was not cross-examined by the assessee at the behest of the Assessing Officer. The CIT (Appeals) in para 5.1 of his order made an observation whether the assessee was competent to raise this ground in the appeal. The assessment was made against the assessee and assessee was an aggrieved party for making the addition of Rs. 18 lakhs on the basis of statement of Shri Shivkumar Vaid. Therefore, it would not be improper on his part to claim for a cross-examination of Shri Shivkumar Vaid and therefore the assessee was competent to raise this ground.
6. The CIT (Appeals) has mainly relied on the findings given by the earlier CIT (Appeals) in his order date 10-3-1992. He has reproduced the findings of the then - CIT (Appeals) which are as follows :-
"8.5. When one reads this documents in the natural presumption is that assessee had paid the amount stated therein. A specific project for making a profit of Rs. 3.5 crores by giving specific purchase rate per sq. ft. and sales rate per sq. ft. has been discussed in partnership with one physical person called Shri Maganlal. Obviously, the assessee is quite aware of facts of this land. The assessee is now required to prove the following :
1. Identify the broker who brought him this proposal;
2. Identify the land and land owner;
3. Identify Shri Maganlal;
4. Identify the man who, at that particular time had paid Rs.
18 lacs.
5. That man must prove that he had paid Rs. 18 lacs. 8.6. After all this evidence is produced, this addition will be deleted otherwise it will be deemed to have been confirmed by me in this order."
7. It would be seen that in para 8.5, the earlier CIT (Appeals) has drawn a presumption against the assessee and held that the assessee had paid the amount. In this view of the matter, it would be incorrect to say that the assessee was not competent to raise the ground of not giving an opportunity of being heard. The second and most important aspect of the matter is that the Department seized a paper containing certain notings on the letter-head of Udey Instruments. The same is placed at pg. 1 of the paper book. Firstly, a question arises whether this paper could be treated as a documents as it does not contain signature of any person. Certain dates i.e., 24-3-1988 and 22-3-1988 are there. Signatures are not identifiable. Some rough notings such as 2 crore to be paid Plus Rs. 18 lakhs already paid.
8. The earlier - CIT (Appeals) in his order extracted above had required to prove certain points, such as, - the assessee should identify the broker who brought him the proposal, the land and land owner, Shri Maganlal, the man who had paid Rs. 18 lakhs at that particular time and that man must prove that he had paid Rs. 18 lakhs. The Department is relying mainly on this piece of paper which is at pg. 1 of the paperbook. On the basis of that paper, the Department made an addition of Rs. 18 lakhs as income of the assessee. The assessee denied having paid the sum of Rs. 18 lakhs or having entered into any transaction. In that event it is for the Department to prove all these items and the contents to make an addition.
9. According to the CIT (Appeals), he held that except producing Shri Shivkumar Vaid, the other 4 conditions as laid down by his predecessor were not proved and if those conditions would not have been proved, the Assessing Officer was directed to delete the addition failing which the same was to be confirmed.
10. When the assessee has denied of having paid Rs. 18 lakhs, it was for the Assessing Officer to prove that the assessee paid Rs. 18 lakhs at a purchasing time to particular person and that too for the purpose of purchasing the land at Versova. Irrespective of not giving an opportunity to cross-examine the broker before making the aforesaid addition, it was necessary for the Assessing Officer to examine the individual Maganlal to know what were the other relevant facts. Therefore it cannot be attributed that it was for the assessee to prove the same for getting deleted the addition. There is no adequate evidence to prove that the assessee paid Rs. 18 lakhs as per page-1 of the paperbook. The said paper cannot be treated as a document and cannot be relied upon.
11. Mr. Y. P. Trivedi has relied on the decision of the Amritsar Bench of the Tribunal in ITO v. Prakash Chandra Mehra [1987] 27 TTJ (Asr.) 588 on identical facts for deleting the addition made herein. A decision of the Bombay Bench 'A' of the Tribunal in ITA Nos. 2512 to 2515/Bom./92 for assessment years 1984-85 to 1987-88 dated 17th July 1992 at p. 38 to 46 was relied upon in support of his contention. The present appeal is for the assessment years 1988-89. The Tribunal dismissed the department's appeals and allowed the assessee's appeal for the assessment years 1984-85 to 1987-88. Those appeals were also in assessee's own case. Para 8 of the said order deals with the appeals filed by the assessee.
They are in respect of the other nine concerns belonging to the assessee-HUF. However, those appeals were in respect of low withdrawals. It was submitted before us that a discussion took place with one Shri Prakash Golia who is a part and parcel of the assessee-HUF. If the broker's statement was to be believed that the vendor paid Rs. 18 lakhs to the owner, then it was necessary to allow him to cross-examine.
12. Another pertinent fact to be discussed herein is that Prakash Golia is a member of the assessee-HUF and he has his own independent unit. Therefore, it is not adduced that Prakash Golia acted for and on behalf of the assessee-HUF nor such evidence has been brought to our notice.
Therefore, if any transaction or dealing is made by the said Prakash Golia, then that dealing cannot be attributed to the assessee-HUF. Another fact as brought on the record is that there was a partnership firm. Whether the dealing was made on behalf of the partnership firm is also not established. Presuming that if any dealing was made on behalf of the partnership firm, then the attribution in respect of the disputed transaction can be made to the partnership firm. All these possibilities have not been firstly established and secondly considered.
13. We have gone through the facts and the case-law relied upon by the assessee. In the case of Prakash Chandra Mehra (supra), a search had taken place in August 1975 and yet additions have been made for assessment year 1975-76 on the basis of dumb note and vouchers. The Revenue had chosen to make additions out of expenses for the sole would continue to inflate on the basis of blank signed cash vouchers after search had taken place. The Tribunal held that the additions made were highly vexatious in nature and the AAC was right in deleting them. The Tribunal confirmed the action taken by the AAC and dismissed the Revenue's appeals.
14. We have heard the arguments of the rival parties.
We are of the considered opinion that the addition made is not justifiable, firstly, it was for the Department to prove the ingredients of page-1 of the paperbook (which was seized) and secondly to prove that Sri. Prakash Golia acted for and on behalf of the assessee-HUF or on behalf of the partnership. If at all, a transaction was established and in that event, in whose hands the addition could be made. The decision of the Amritsar Bench in Prakash Chandra Mehra's case (supra) supports the assessee's contention that the addition cannot be upheld. In this view of the matter, the appellant succeeds and the appeal is allowed.
15. In the result, appeal in ITA 4073/B/93 is dismissed for want of prosecution and appeal in ITA 4448 is allowed.
Garg, A.M.
1. I have had the privilege of going through the order proposed by my learned Brother, Judicial Member. I agree with him in dismissing the appeal in IT Appeal No. 4073/Bom/92 but I find myself unable to agree with him in allowing the appeal in IT. Appeal No. 4448/Bom/94 and deleting the addition of Rs. 18 lakhs made by the Assessing Officer and upheld by the CIT (Appeals). I proposed the following order of my own.
2. The addition of Rs. 18 lakhs on account of unexplained investment in Versova land was made by the Assessing Officer in the original assessment on the basis of certain document stated to be appearing at page 1 of file A-2 of seized records. This order was set aside by the CIT (Appeals) with the following remarks :-
"8.5. When one reads this document the natural presumption is that assessee had paid the amount stated therein. A specific project for making a profit of Rs. 3.5 crores by giving specific purchase rate per sq. ft. and sales rate per sq. ft. has been discussed in partnership with one physical person called Shri Maganlal. Obviously, the assessee is quite aware of facts of this land. The assessee is now required to prove the following :
1. Identify the broker who brought him this proposal;
2. Identify the land and land owner;
3. Identify Shri Maganlal;
4. Identify the man who, at that particular time, had paid Rs. 18 lacs;
5. That man must prove that he had paid Rs. 18 lacs. 8.6 After all this evidence is produced, this addition will be deleted otherwise it will be deemed to have been confirmed by me in this order."
3. Another opportunity was provided to the assessee by the Assessing Officer to furnish the said directed material. Except producing one Shivkumar Vaid, the alleged broker, nothing was brought on record by the assessee. The statement of Shri Shivkumar Vaid was recorded by the Assessing Officer on 28-8-1992 and he pointed out the following discrepancies/contradictions in the said statement :-
"(a) Shri Vaid is basically an agriculturist and hails from Bikaner. The assessee also comes from Bikaner.
(b) No property deal whatsoever has been finalised by Shri Vaid as broker.
(c) Shri Vaid is claimed to have been earing Rs. 500 to Rs. 600 per month on account of inspection charges. However, no evidence in support of this also has been furnished. The address where Shri Vaid was staying when he was claimed to be acting as broker has not been furnished by Shri Vaid. Shri Vaid had no office. Shri Vaid has not been able to identify the land and the land owner. He also does not know anything about Shri Maganlal.
(d) He has not been able to state as to on what basis the amount/working as mentioned in the seized documents like 2 crores, 18 lakhs etc. have been arrived by him.
(e) It is surprising that Shri Vaid did not pursue this proposal with Mr. Goliya although he could have earned substantial amount of brokerage and he was knowing that P. C. Goliya was interested in the proposal.
(f) This proposal was not given to anybody else by Shri Vaid.
(g) Shri Vaid has not been able to give the name, address, telephone No. of any other broker who is known to him.
(h) After this proposal Shri Vaid suddenly stopped his brokerage business and went back to home town.
(i) Shri Vaid has stated that he has now come from Bikaner and is staying in Flat No. 11, Siddharth Apartment, Adarsh Colony, Malad (W). This Flat is stated to be belonging to one Shri Chandulal Shah. It was stated by Shri Vaid that Shri Chandulal Shah is staying somewhere else and he does not know the address or Telephone No. of Shri Chandulal Shah though he was staying in his Flat. On enquiry, Ward Inspector has reported that his Flat belongs to Shri Chandulal Shah, who stays with his wife in the Flat. In view of the above discussion, it is clear that Shri Vaid is not the real broker who had brought the proposal to the assessee of the Versova land. Mr. Vaid in fact is a person known to Shri P. C. Goliya and both came from the same place i.e., Bikaner. In view of the above it is concluded that the assessee has not been able to even identify the real broker who had brought the proposal regarding Versova land. As the assessee has not been able to produce any of the evidences as directed by the CIT (Appeals) the addition of Rs. 18 lakhs made on the basis of transactions appearing on page 1 of file-A2 documents remains as it is."
In view of the above, the Assessing Officer repeated the addition of Rs. 18 lakhs to the income of the assessee and accordingly gave no relief to the assessee.
4. The assessee submitted before the first appellant authority that no opportunity was given to cross-examine Shri Shivkumar Vaid. The CIT (Appeals) rejected the assessee's contention and upheld the addition by observing in his order as under :-
"5.3. Before me the learned counsel has vehemently argued that the appellant was not given proper opportunity to confront the broker but at the same time it was also admitted that the other conditions laid down in para 8.5 of the order of CIT (Appeals) viz. identity of Shri Maganlal, identification of land and land owner, identification of man, who at that particular time had paid Rs. 18 lacs and the fact that he must prove that he had paid Rs. 18 lacs could not be shown before the Assessing Officer. Thus, notwithstanding the fact that the appellant was not given the opportunity of cross-examining the broker, I hold that as the appellant failed to comply to the conditions mentioned in the appellate order dated 10-3-1992 in which it was clearly mentioned that if the same are not produced the addition will be deemed to have been confirmed in that order, I hold that the appellant is not entitled to agitate the issue in this appeal as it is already concluded by the earlier order of CIT (Appeals) dated 10-3-1992. This ground of the appellant is, therefore, rejected as incompetent."
5. Shri Shivkumar Vaid was the witness produced by the assessee. No request seems to have been made, or was shown to have been made, by the assessee before the Assessing Officer for such cross-examination. He raised this question only before the CIT (Appeals) who rejected the same and rightly so, in my opinion, for the reasons extracted above from his order. Be that as it may, it was for the assessee to bring material on record in accordance with the direction of the CIT (Appeals) in the first order. Having accepted that order, it is now too late for the assessee to raise the objection for its non-compliance.
6. The assessee had has also raised an objection challenging the relevance of the documents for making the addition on that basis. The grounds taken by the assessee is that "it was not signed and that it was for P. C. Goliya to explain and not the HUF". In my opinion, the assessee cannot raise such objection in the second round of appeal, that too in the proceeding taken afresh in consequence of the directions of the CIT (Appeals) in his first order which was accepted by the assessee by not pressing the appeal in IT appeal No. 4073/Bom/92.
7. The order of the CIT (Appeals), in my opinion, therefore, does not call for any interference and is accordingly upheld. The appeal in IT Appeal No. 4448/Bom/92 is dismissed.
REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 :
As we have differed in our opinion on the following point, we request the Hon'ble President of the Income-tax Appellate Tribunal to refer the point of difference for hearing by a Third Member under section 255(4) of the Income-tax Act, 1961 :-
"Whether, on the facts and in the circumstances of the case, there is sufficient evidence on record to confirm the addition of Rs. 18,00,000 on account of unexplained investment in Versova land ?"
THIRD MEMBER ORDER
1. Since there was difference of opinion amongst the Members of the Division Bench who had heard this appeal, the President of the Tribunal has referred the under-mentioned point to me for opinion as third Member. The point is :-
"Whether, on the facts and in the circumstances of the case, there is sufficient evidence on record to confirm the addition of Rs. 18,00,000 on account of unexplained investment in Versova land ?"
2. Now I shall briefly refer to the relevant facts which gave rise to the difference of opinion. The assessee is an HUF of which Shri Udeyraj Goliya is the Karta. Search operations under section 132 of the Income-tax Act, 1961 were carried out at the premises of the assessee on 23rd March, 1988. During search operations, a paper was seized from the possession of Shri P. C. Goliya, who is a member of the assessee-HUF. That paper speaks about Versova land and it shows that a sum of Rs. 2 crores it to be paid for this land and that Rs. 18,00,000 have already been paid. The assessee-HUF did not disclose this payment. Hence the Assessing Officer had made an addition of Rs. 18 lakhs in the assessment of the HUF.
3. The assessee had preferred appeal against the said order of assessment. The Commissioner of Income-tax (Appeals), vide his order dated 18th March 1992, had set aside the assessment on the point with the following observations/findings :-
"8.5. When one reads this documents the natural presumption is that assessee had paid the amount stated therein. A specific project for making a profit of Rs. 3.5 crores by giving specific purchase rate per sq. ft. and sales rate per sq. ft. has been discussed in partnership with one physical person called Shri Maganlal. Obviously, the assessee is quite aware of facts of this land. The assessee is now required to prove the following :-
1. Identify the broker who brought him this proposal;
2. Identify the land and land owner;
3. Identify Shri Maganlal;
4. Identify the man who, at that particular time, had paid Rs. 18 lacs;
5. That man must prove that he had paid Rs. 18 lacs. 8.6. After all this evidence is produced, this addition will be deleted otherwise it will be deemed to have been confirmed by me in this order."
4. Against the aforesaid order of the CIT (Appeals) dated 18th March, 1992, the assessee had preferred an appeal before the Tribunal, which was registered as IT Appeal No. 4073/Bom/92. Variety of grounds were raised in this appeal but the ground relating to the addition of Rs. 18 lacs was to the following effect :-
"The learned Commissioner of Income-tax (Appeals) in making certain specific directions for evidence in respect of addition of Rs. 18 lacs."
5. IT Appeal No. 4073/Bom/92 had come up for hearing before the Tribunal on 5th July 1995 along with IT Appeal No. 4448/Bom/94, which is the appeal wherein reference has been made to me as a third Member. It appears that at the time of hearing the assessee had withdrawn IT Appeal No. 4073 of 92 and as such the said appeal was dismissed by the Bench which had heard the same. During hearing of present reference, the assessee had moved a miscellaneous application No. 22/Mum/97 alleging that a mistake has been committed by the Hon'ble Members in stating that the appellant's representative has withdrawn the appeal. After hearing the parties, the said application has been rejected by the Tribunal vide its order dated 28th February 1997.
6. In pursuance of the directions of the CIT (Appeals) dated 18th March 1992, a fresh assessment was completed. In these proceedings, the Assessing Officer had issued notices under Section 143(2) and 142(1) of the Act. The Assessing Officer has noted that the assessee has expressed its inability to identify the land, land owner and Shri Maganlal. He has also observed that the assessee has not been able to identify the person who, at that particular time, has paid Rs. 18 lacs.
The Assessing Officer also noted that the assessee has produced one Shivkumar Vaid, who is claimed to be the broker who had brought the proposal. The statement of Shivkumar Vaid was recorded by the Assessing Officer under Section 131 of the Act on 28th August 1992. The Assessing Officer noted that following discrepancies/contradictions in his statement :-
(a) Shri Vaid is basically an agriculturist and hails from Bikaner. the assessee also come from Bikaner.
(b) No property deal whatsoever has been finalised by Shri Vaid as broker.
(c) Shri Vaid is claimed to have been earned Rs. 500 to Rs. 600 per month on account of inspection charges. However, no evidence in support of this also has been furnished. The address where Shri Vaid was staying when he was claimed to be acting as broker has not been furnished by Shri Vaid. Shri Vaid had no office. Shri Vaid has not been able to identify the land and the land owner. He also does not know anything about Shri Maganlal.
(d) He has not been able to state as to on what basis the amount/working as mentioned in the seized documents like 2 crores, 18 lakhs etc. have been arrived by him.
(e) It is surprising that Shri Vaid did not pursue this proposal with Mr. Goliya although he could have earned substantial amount of brokerage and he was knowing that P. C. Goliya was interested in the proposal.
(f) This proposal was not given to anybody else by Shri Vaid.
(g) Shri Vaid has not been able to give the name, address, telephone No. of any other broker who is known to him.
(h) After this proposal Shri Vaid suddenly stopped his brokerages business and went back to home town.
(i) Shri Vaid has stated that he has now come from Bikaner and is staying in Flat No. 11, Siddharth Apartment, Adarsh Colony, Malad (W). This Flat is stated to be belonging to one Shri Chandulal Shah. It was stated by Shri Vaid that Shri Chandulal Shah is staying somewhere else and he does not know, the address or Telephone No. of Shri Chandulal Shah though he was staying in his Flat.
7. The Assessing Officer further observed as follows and repeated the addition of Rs. 18 lacs :-
"On enquiry, Ward inspector has reported that this flat belongs to Shri Chandulal Shah, who stays with his wife in the Flat. In view of the above discussion, it is cleared that Shri Vaid is not the real broker who had brought the proposal to the assessee of the Versova land. Mr. Vaid in fact is a person known to Shri P. C. Goliya and both came from the same place i.e., Bikaner. In view of the above it is concluded that the assessee has not been able to even identify the real broker who had brought the proposal regarding Versova land. As the assessee has not been able to produce any of the evidence as directed by the CIT (Appeals) the addition of Rs. 18 lakhs made on the basis of transaction appearing of page of file-A2 documents remains as it is."
8. The assessee appealed before the CIT (Appeals). This appeal was decided by him vide order dated 16th February 1993. In this order, the CIT (Appeals) has extracted the findings of the CIT (Appeals) in the order dated 18th March 1992, Which have already been extracted above by me. Thereafter, the CIT (Appeals) dealt with the stand of the assessee and confirmed the addition of Rs. 18 lacs with the following observation :-
"5.2 From the above findings of the appellate authority it is writ large that there was categorical finding that in case the 5 conditions laid down in para 8.5 were satisfied the Assessing Officer shall delete the addition otherwise it will be deemed to have been confirmed by her in the said order. The Assessing Officer in the order before me has found inter-alia that except for producing one Shivkumar Vaid, the alleged broker in the deal for the purchase of land wherein the addition of Rs. 18 lacs has been made, the remaining 4 conditions as listed in Sr. Nos. 2 to 5 were not complied with. In this view of the matter as directed by the CIT (Appeals) he has retained the addition of Rs. 18 lacs in this order.
5.3 Before me the learned counsel vehemently argued that the appellants was not given proper opportunity to confront the broker but at the same time it was also admitted that the other conditions laid down in para 8.5 of the order of CIT (Appeals) viz., identity of Shri Maganlal, identification of land and land owner, identification of man, who at that particular time had paid Rs. 18 lacs and the fact that he must prove that he had paid Rs. 18 lacs could not be shown before the Assessing Officer. Thus, notwithstanding the fact that the appellant was not given the opportunity of cross-examining the broker, I hold that as the appellant failed to comply to the conditions mentioned in the appellate order dated 10-3-1992 in which it was clearly mentioned that if the same are not produced the addition will be deemed to have been confirmed in that order, I hold that the appellant is not entitled to agitate the issue in this appeal as it is already concluded by the earlier order of CIT (Appeals) dated 10-3-1992. This ground of the appellant is, therefore, rejected as incompetent."
9. Against the above findings of the CIT (Appeals), the present appeal was filed by the assessee. It was contended by the Assessee that there was only a discussion between the broker and the assessee, which took place regarding the purchase of land but actually no transaction was effected and, therefore, the addition is not justified. It was also contended that no opportunity was provided to the assessee to cross-examine the broker. The learned Judicial Member has observed that it is a fact that Shri Shivkumar Vaid was not cross-examine by the assessee. He has also noted that the seized paper does not bear any signatures. He has also observed that when the assessee has denied payment of Rs. 18 lacs, it was for the Assessing Officer to prove that the assessee had paid that amount to a particular person and that too for purchasing the land at Versova. He has also observed that it was necessary for the Assessing Officer to examine Maganlal to know what were the other relevant facts. He, therefore, concluded that the addition made is not justified firstly because it for the department to prove the contents of the seized paper and secondly to prove that Shri Prakash Goliya has acted for and on behalf of the assessee-HUF or on behalf of the partner. The learned Judicial Member has also concluded that if at all a transaction is established, then in that even in whose hands the addition can be made ? Thus he opined that the appeal by the assessee has to be allowed.
10. On the other hand, dealing with the stand of the assessee that no opportunity was provided to cross examine the broker, Shri Shivkumar Vaid, the learned Accountant Member has observed that Shivkumar Vaid was the witness produced by the assessee. He has also observed that no request seems to have been made, or was shown to have been made, by the assessee before the Assessing Officer for such cross-examination. Therefore, since, according to him, this question was raised for the first time before the CIT (Appeals), he observed that it has been rightly rejected by him.
11. Dealing with the argument that the seized paper was not signed and it was for P. C. Goliya to explain the same and not the HUF, the learned Accountant Member opined that the assessee cannot raise such objection in the second round of appeal, that too in the proceeding taken afresh in consequence of the direction of the CIT (Appeals), in his first order, Which was accepted by the assessee by not pressing the appeal in IT Appeal No. 4073/Bom./92. The learned Accountant Member upheld the addition.
12. The learned counsel for the assessee invited my attention towards paragraph 5 of the statement of fact that was filed before the CIT (Appeals) and has argued that the assessee had stated before the CIT (Appeals) that the Assessing Officer has made the addition without giving sufficient opportunity to the Karta of the assessee to cross-examine the broker. It was also highlighted that in paragraph 5 of his order the CIT (Appeals) has also held that the assessee was not given opportunity of cross-examining the broker. The learned counsel for the assessee had also stated that Shivkumar Vaid was not produced by the assessee. According to her, the assessee had only furnished the address of the broker and the broker was examined by the Assessing Officer behind the back of the assessee. She has also stated that the Assessing Officer never intimated the assessee about the date on which the broker was to be examined by him. She has also stated that the copy of the statement of the broker was never given to the assessee.
13. The learned counsel has also pointed out that the assessee is an HUF and not an individual. She has also invited our attention towards the seized paper, a copy of which is available on record, and has pointed out that the document in question has been written on the letter head of 'Udey Instruments'. It was stated that Udey Instruments is a partnership firm wherein some members of the assessee-HUF are partners. She has also highlighted the point that this paper was seized from the possession of Shri P. C. Goliya who is a partner in the said firm and it was not seized from the possession of the Karta of the HUF. It was further submitted that Karta of the HUF was never examined by the Assessing Officer nor Shri P. C. Goliya was examined from whose possession the paper was seized.
Thus it was contended that proper opportunity to explain the said document has not been provided and in the absence of adequate opportunity no addition can be made on the basis of the seized paper, and in any event addition cannot be made in the hands of the assessee-HUF.
14. The learned counsel had also argued that the assessee had not taxable income. In that connection reference was made to the Tribunal's order dated 17th July 1992 passed in ITA Nos. 2512 to 2515 of 1992 passed in the assessee's own case pertaining to the assessment years 1984-85 to 1987-88. Thus it was contended that the assessee-HUF could not have thought of purchasing the Versova land and was not in a position to make payment of Rs. 18 lacs. The learned counsel had also argued that the directions of the CIT (Appeals) in his order dated 18th March 1992 are required to be carried out in proper manner and the assessee is entitled to raise all points in the present appeal. In that connection, reference was made to the decision of the Kerala High Court in K. P. Moideenkutty v. CIT [1981] 131 ITR 356/5 Taxman 218. The learned counsel had also argued that the principle of presumption enunciated in section 132(4A) of the Income-tax Act cannot be raised in the assessment proceedings. During arguments, the learned counsel had also referred to the undermentioned decisions :-
(1) Kishanchand Chellaram v. CIT [1980] 125 ITR 713/4 Taxman 29 (SC);
(2) Ram Lal Ganpat Rai v. CIT [1978] 112 ITR 462 (Bom.);
(3) Anil Kumar Roy Chowdhury v. CIT [1976] 102 ITR 12 (SC);
(4) Ashwani Kumar v. ITO [1991] 39 ITD 183 (Delhi);
(5) Raj Pal Singh Ram Autar v. ITO [1991] 39 TTJ (Delhi) 544;
(6) Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388/50 Taxman 213 (All.).
15. As against the above submissions of the assessee, the learned representative for the revenue had invited my attention towards ground No. 5 in IT Appeal No. 4073/Bom./92, which was filed by the assessee against the order of the CIT (Appeals) dated 18th March 1992. It was emphasised that in that appeal the grievance of the assessee was that the CIT (Appeals) while remanding the case has given specific directions. The learned representative has highlighted the point that the said appeal was withdrawn by the assessee and as such the order of the CIT (Appeals) dated 18th March 1992 has become final and it is no longer open to the assessee to challenge its correctness at this stage. It was further argued that where a part of the order has not been appealed against, it would become final. In that connection, reference was made to the decision of the Madras High Court in v. Ramaswamy Iyengar v. CIT [1960] 40 ITR 377 and of the Bombay High Court in Jivatlal Purtapshi v. CIT [1967] 65 ITR 261. Referring to the decision in CIT v. Sundaram & Co. (P.) Ltd. [1964] 52 ITR 763 (Mad.), it was contended that the subject matter of an appeal is the relief sought by the appellant in the appeal and objected to by the respondent. It is not proper to circumscribe the subject matter of appeal by taking into account the rival contentions or the reasons on the grounds which are put forward either by the department or by the assessee. The learned departmental representative had also referred to the decision in CED v. Smt. Ila Das [1981] 132 ITR 720/7 Taxman 325 (Cal.) and had argued that unlike civil courts the powers of the appellate authorities under the Income-tax Act are circumscribed by the subject matter of an appeal. It was contended that where an order has become final the fact that an appeal is pending on other matters will not affect the finality of the earlier order. In nutshell, the case of the revenue is that the order of the CIT (Appeals) dated 18th March 1992 has become final and therefore, the Tribunal cannot go behind it.
16. The learned departmental representative has pointed out that in the order dated 18th March 1992 the CIT (Appeals) has sent back the matter to the Assessing Officer with specific directions and in paragraph 8.6 it was categorically stated that after all the evidence is produced, the addition will be deleted, otherwise it will be deemed to have been confirmed by him in that order. It has been highlighted that the specific directions issued by the CIT (Appeals) in that order have not been complied with by the assessee and as such the addition of Rs. 18 lakhs stands confirmed by that order of the CIT (Appeals) and that addition cannot be agitated in the present appeal.
17. The learned departmental representative has also argued that the assessee was required to comply with the directions as issued by the CIT (Appeals) in his order dated 18th March 1992. It was contended that even if the statement of the broker has been recorded by the Assessing Officer at the back of the assessee and assessee was not provided an opportunity to cross-examine the broker, then too the other directions as specified in the order of the CIT (Appeals) dated 18th March 1992 remain uncomplied by the assessee and for that reason also the addition of Rs. 18 lakhs stands confirmed and the assessee cannot derive any advantage even if he has not been provided an opportunity to cross-examine the broker.
18. I have considered the submissions advanced before me as also the material placed on record. It is true that in his order dated 18th March 1992 the CIT (Appeals) had set aside the assessment order directing the assessee to prove the points specified in paragraph 8.5 of his order. One of the points was to identify the broken who brought the proposal to the assessee to purchase the land. It appears that the name and address of the broker were furnished by the assessee to the Assessing Officer and the Assessing Officer had actually summoned the broker and recorded his statement. Copy of the broker's statement has not been placed before the Tribunal. According to the assessee's counsel, the assessee was never intimated of the date on which broker was to be examined nor any opportunity was provided to him to cross-examine the broker. Since it is stated in the assessment order that the broker was produced by the assessee, I had directed the learned departmental representative to intimate whether the Assessing Officer had intimated the assessee the date on which the broker was to be examined, whether the assessee or his representative was present at the time examination of the broker and whether the assessee was provided an opportunity to cross-examine the broker. The learned departmental representative did not provide any information on the point. In the circumstances, there appears force in the stand of the assessee that the statement of the broker was recorded at the back of the assessee and the assessee had no opportunity to cross-examine the broker. In C. Vasantlal & Co. v. CIT [1962] 45 ITR 206, the Hon'ble Supreme Court has held that the Income-tax Officer is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. In the instant case, it appears that the assessee has not been provided any opportunity to explain the evidence collected in the shape of the statement of the broker. This being so, I am of the opinion that the statement of the broker cannot be relied upon by the revenue authorities have placed reliance on the paper seized during the search operations, which mentions the payment of Rs. 18 lakhs. In this paper, the name of the person who made the payment has not been indicated. Besides this, this paper was seized from the possession of Shri P. C. Goliya, who is a member of the assessee HUF, and the seized paper has been scribed on the letterhead of Uday Instruments. Shri P. C. Goliya happens to be a partner in the firm. Uday Instruments. Barring this paper, there is no evidence on record to suggest that the sum of Rs. 18 lakhs had been paid by the assessee-HUF. Taking into consideration the entire evidence available on the record, I am of the opinion that sufficient evidence is not available on record to confirm the addition of Rs. 18 lakhs on account of unexplained investment in Versova land.
19. As already noted earlier, the learned departmental representative has emphasised the point that since the conditions laid down by the CIT (Appeals) in his order dated 18th March 1992 have not been complied with by the assessee, the addition stands confirmed and this addition cannot be challenged in appeal before the Tribunal. I refrain myself from expressing any opinion on the point since this aspect of the matter has not been referred to me for opinion. In my view, the third Member can only answer the points that are referred to him for decision. Given the situation, this aspect of the matter can be looked into by the regular Bench while disposing of the appeal.
20. Now the record of the appeal should go back to the regular Bench for hearing and disposal of the appeal.