Income Tax Appellate Tribunal - Chandigarh
Sh. Tarsem Singla S/O Sh. Jagdish Rai ... vs Department Of Income Tax on 21 January, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B' CHANDIGARH
BEFORE Ms.SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No.68&69/CHD/2012
A.Y. 2008-09 & 2009-10
DCIT, CC-III, V Shri Tarsem Singla,
Ludhiana. S/o Shri Jagdish Rai Singh,
3206, Phase II,
Urban Estate, Dugri,
Ludhiana.
PAN: ADVPS-7247M
&
C.O.No.11/CHD/2012
In ITA No. 68/CHD/2012
Shri Tarsem Singla, V DCIT, CC-III,
S/o Shri Jagdish Rai Singh, Ludhiana.
3206, Phase II,
Urban Estate, Dugri,
Ludhiana.
(Appellant) (Respondent)
Assessee by : Shri Satish Kumar Gupta
Department by : Shri Manjeet Singh
Date of Hearing : 21.01.2013
Date of Pronouncement :
ORDER
PER BENCH The revenue filed the above captioned appeals, for the assessment year 2008-09 and 2009-10 against the order each dated, 18.11.2011, passed by the CIT(Appeals) u/s 250(6) of the Income-tax Act,1961 ( in short 'the Act'). The assessee Shri Tarsem Singla filed Cross Objection, in ITA No.68/Chd/2012, for the assessment year 2008-09. The 2 grounds of appeal raised in I TA No.68/Chd/2012 by the appellant, for the assessment year 2008-09, alongwith the C.O. raised by the assessee in ITA No.68/Chd/2012 are reproduced hereunder :
ITA No.68/Chd/2012
"1. The Ld. CIT(A) has erred both in law and on facts of the case in deleting the additions amounting to Rs.77,00,000-.
2. The Ld. CIT(A) has erred both in law and on facts of the case in deleting the additions amounting to Rs.77,00,000/- on the ground that the assessee was not given the opportunity to cross examine one of the purchaser, which was not considered necessary looking at the facts of the case" at the time of assessment. The Ld. CIT(A) had also not issued such directions during remand report proceedings.
3. The Ld. CIT(A) has erred both in law and on the facts of the case by ignoring the vital evidence i.e. the surrender made by one of the purchasers admitting the value of land @ Rs.2750/- per sq. yd. whereas the same was declared by the assessee @ Rs.800/- per sq.yd.
4. The Ld. CIT(A) has erred in law and on the facts of the case by holding that the documents of mortgage cannot be taken to be sufficient evidence so as to substitute the sale consideration as per books of account, thus completely ignoring the facts regarding rate of land mentioned in such documents impounded from the business premises of the company in which the assessee is a Director.
5. The Appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off.
6. It is prayed that the order of the Commissioner of Income Tax (Appeals) be set-aside and that of the A.O. be restored."C.O.No.11/Chd/2012
"1. That the Hon'ble CIT(Appeals) as well as ld. DCIT is wrong in not appreciating the facts that it is a time barred 3 assessment. The respondent filed income-tax return on 30.01.2009. Notices under section 143(2)/142(1) were issued on 10.6.2010. While making an assessment under section 153A service of notice under section 143(2) within the prescribed time is mandatory.
2. That the respondent reserve the right to add, amend, delete any ground of cross-objection before the same is heard or disposed of."
2. The main ground of appeal, raised by the revenue, in ITA No.69/Chd/2012, for the assessment year 2009-10, except variation in figure, is similar to the grounds of appeal raised, in ITA No.68/Chd/2012, for the assessment year 2008-09. However, the grounds of appeal are reproduced hereunder, for the sake of ready reference and proper appreciation of the same:
"1. The Ld. CIT(A) has erred both in law and on facts of the case in deleting the additions amounting to Rs.13,66,94,340/-.
2. The Ld. CIT(A) has erred both in law and on facts of the case in deleting the additions amounting to Rs.13,66,94,340/- on the ground that the assessee was not given the opportunity to cross examine one of the purchaser, which was not considered necessary looking of the facts of the case at the time of assessee. The Ld. CIT(A) had also not issued such directions during remand report proceedings.
3. The Ld. CIT(A) has erred both in law and on the facts of the case by ignoring the vital evidence i.e. the surrender made by one of the purchasers admitting the value of land @ Rs.2750/- per sq. yd. whereas the same was declared by the assessee @ Rs.800/- per sq.yd.
4. The Ld. CIT(A) has erred in law and the facts of the case by holding that the documents of mortgage cannot be taken to be sufficient evidence so as to substitute the sale consideration as per books of account, thus completely ignoring the facts regarding rate of land mentioned in such documents impounded from the business premises of the company in which the assessee is a Director.
5. The Appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off.
6. It is prayed that the order of the Commissioner of Income Tax 4 (Appeals) be set-aside and that of the A.O. be restored."
3. We deem it fit, to firstly consider and adjudicate the preliminary issue raised by the assessee, in the ground of appeal raised, in the said C.O. 3(i) Ld. 'AR' for the assessee raised preliminary objection, as highlighted in the C.O. No.11/Chd/2012, in ITA No.68/Chd/2012, for the assessment year 2008-09, as to the non-issue of notice u/s 143(2) of the Act, within the prescribed time limit, before finalization of the assessment order, dated 30.12.2010 u/s 153A of the Act. It was contended, in the said C.O. that the assessee filed return of income, for the assessment year 2008-09, on 30.01.2009 and notice u/s 143(2), was issued, on 10.06.2010. It was, further, contended that the service of notice u/s 143(2), of the Act, within the prescribed time limit while framing the assessment u/s 153A of the Act, is mandatory in nature. To support his contentions, raised in the said C.O. ld. 'AR' placed reliance on certain decisions of various Benches of the Tribunal. Consequently, it was contended that such assessment order is illegal and without valid jurisdiction. The decisions relied upon by the assessee are listed hereunder:
"1. M/S K.M.Sugar Mills Limited,Kanpur vs. ACIT,CC-III,Kanpur Decided by Hon'ble ITAT, B-Bench, Lucknow 2 M/S Vikrant Chemico Industries P. Ltd. vs. ACIT,CC-II,Kanpur Decided by Hon'ble ITAT,A-Bench, Lucknow
3. ACIT vs. Dinesh Chand Agrawal,Bhopal decided by Hon'ble ITAT, Indore Bench, Indore
4. Shyam Manohar Agarwal,Bhopal vs. ACIT, Bhopal decided by Hon'ble ITAT, Indore Bench, Indore 5
5. ACIT vs. M/S Vijay Traders, Sagar decided by Hon'ble ITAT, Indore Bench, Indore
6. Ramratan SonLPune vs. ACIT,CC-II,Pune decided by Hon'ble ITAT, Pune Bench "B", Pune
7. DCIT vs. Nicco Uco Alliance Credit Ltd.,Kolkata decided by Hon'ble ITAT, Bench "B", Kolkata."
3(ii) The main contention of ld. 'AR' revolves around the assertion that the issue of statutory notice u/s 143(2) of the Act, within prescribed limit, is mandatory while framing assessment u/s 153A of the Act.
4. Ld. 'DR', on the other hand, contended that issue and service of notice u/s 143(2) of the Act is not mandatory while framing assessment u/s 153A of the Act, in view of the clear and express language, employed by the legislature in section 153A of the Act. Ld. 'DR' supported his contentions, by placing reliance, on the direct decision of the Hon'ble Delhi High Court, in Ashok Chaddha V I TO (2011) 337 I TR 399 (Del). Ld. 'DR', further, stated that decision of Hon'ble Delhi High Court directly covers the issue raised in C.O., by the appellant and, hence, the ratio laid down in this decision would prevail over the decisions of various Benches of the Tribunal, cited and relied upon by the ld. 'AR' for the assessee. The ld. 'DR' stated that the said decision is the sole decision on the subject under consideration, as no decision has been rendered in the matter by any other High Court and consequently such decision would hold the field being binding in nature, having regard to the judicial hierarchy.
6
5. We have carefully perused the facts of the case, rival submissions and the decisions relied upon by the contending parties. The brief and undisputed facts of the case, as culled out from the relevant records, are that a search & seizure operation u/s 132(1) of the Act, was conducted, on 07.05.2008, in the case of the assessee appellant Shri Tarsem Singla. The AO issued notice, dated 05.12.2008, u/s 153A of the Act and consequently, the assessee filed return of income, on 30.01.2009, declaring income at Rs.48,43,370/-. The A.O. framed the assessment order, dated 30.12.2010, u/s 153A of the Act, for the assessment year 2008-09.
5(i) The findings of the CI T(Appeals), as contained in para 11(i) are reproduced hereunder :
"11. I have considered the basis of addition made by the Assessing Officer and the submissions of the AR of the appellant on the issue. The specific issues and arguments of the AR have been sent to the AO for his comments which in turn were given to the AR for affording him an opportunity of putting on record any objections/explanation with reference to same. The following issues need to be addressed and deliberated upon in order to adjudicate the grounds of appeal preferred by the appellant.
i) The AR during the course of appellate proceedings claimed that the assessment framed by the AO had become barred because of time limitation. Since the search in this case was conducted on 7/5/2008, the assessment had to be completed within 21 months from the end of the F.Y. i.e. 31/3/2009 and the time barring date could be 31/12/2010. The assessment having been framed on 30/12/2010 does not become time barred as claimed by the AR. It seems that the AR had proceeded to calculate the period of 21 months from the date of execution of the warrant i.e. 7/5/2008 rather than from the last date of the F.Y. in which the warrant was executed i.e. 31/3/2009. As such there is no merit in the claim of the appellant and same is therefore dismissed."
5(ii) A bare perusal of the above findings of the CI T(Appeals) reveals that the issue of time limitation, for the purpose of finalization of assessment u/s 153A of the Act has been dealt 7 with by the CI T(Appeals) and held that the said assessment was been completed, within the prescribed time limit. 5(iii) The core issue involved in the present C.O. is "whether issue of notice u/s 143(2) of the Act is mandatory for finalization of the assessment u/s 153A of the Act ?" A careful perusal of the decisions relied upon by the ld. 'AR', reveals that the same have been rendered by the Hon'ble respective Benches of the Tribunal, in the specific context of section 158BC of the Act. Clause (b) of section 158BC clearly provides, "That the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB of the Act and the provisions of section 142, sub-section (2) and (3) of section 143, 144 and 145, shall so far as may be, apply." The language of the provisions of section 153A of the Act is patently different from the language of section 158BC(b) of the Act. The relevant text of the provisions of section 158BC of the Act is reproduced hereunder, for the purpose of proper appreciation of the same vis-à-vis the text of the provisions of section 153A of the Act :
"158BC. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person then-
(a) the Assessing Officer shall -
(i) ----
(ii) ----
(b) The Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply".
5(iv) A bare reading of the provisions of section 153A of the Act would reveal that no such clause (b), as enshrined u/s 8 158BC of the Act, has been incorporated by the legislature, in the provisions of section 153A of the Act. The relevant provisions of section 153A of the Act are reproduced hereunder:
"153A. (l)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall--
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made-
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this (sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or re- assessment has abated under the second proviso), specify the class or classes of cases in which the AO shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made."
5(v) A bare perusal of the relevant provisions of section 158BC(b) and the provisions of section 153A of the Act, clearly reveals that there is no semblance of resemblance with the language employed by the legislature, in both these provisions.
Therefore, the case-laws cited and relied upon by the ld. 'AR', rendered in the specific context of section 158BC(b) of the Act ( now repealed provisions of Chapter XIVB of the Act) and also in the context of Block Assessment u/s 158BC(c) of the Act, are not applicable to the assessment framed under the 9 provisions of section 153A of the Act, as clearly held by the decision of the Hon'ble Delhi High Court, in Ashok Chaddha V ITO (supra). Similarly, the decisions rendered by the Hon'ble High Court and the Hon'ble Supreme Court, in the context of section 158BC(c)/158BC(b) are not applicable to the assessment framed u/s 153A of the Act. It is specifically mentioned here that the Bench raised a query to ld. 'AR', as to the availability of any other decision, of any other High Court, on the issue in question and the Ld. 'AR', categorically, replied in negative, stating that no such decision of any High Court is available on the issue in question, raised in the present C.O. He, further, stated to have relied upon only on the decisions of the Tribunal.
5(vi) We have carefully perused the decisions relied upon by ld. 'AR' and found that the same were rendered, in the specific context of the provisions of section 158BC(b)/158BC(c) of the Act and, hence, the same are not applicable to the assessment finalized under the provisions of section 153A of the Act. This view has been duly supported by the direct decision of the Hon'ble Delhi High Court, in the case of Ashok Chaddha V ITO (supra). The Hon'ble Delhi High Court, in the said decision distinguished the decision of Hon'ble Supreme Court, in CIT (Asstt.) V Hotel Blue Moon (2010) 321 I TR 362 (S.C), by holding that the Hon'ble Apex Court rendered the decision, in the context of provision of section 158BC of the Act and, hence, the Hon'ble Delhi High Court found that the law laid down in Hotel Blue Moon (supra) is not applicable to the facts of that case. It is pertinent to reproduce the direct question, for 10 consideration and adjudication before the Hon'ble Delhi High Court, in the said case as under :
"(a) Whether the issue of notice u/s 143(2) of the Income-tax Act is mandatory for finalization of assessment u/s 153A ?"
5(vii) The Hon'ble Delhi High Court, after detailed analysis of the various decisions, including the decision of Hon'ble Supreme Court, in Hotel Blue Moon (supra) and after interpreting the provisions of section 158BC(b)/158BC(c) of the Act and the provisions of section 153A, in the context of issue of notice u/s 143(2) of the Act, decided the issue against the assessee, by holding that issue of notice u/s 143(2) of the Act, while finalizing the assessment u/s 153A of the Act, is not mandatory. The relevant and operative part of the decision of the Hon'ble Delhi High Court is reproduced hereunder :
"5. Aggrieved from the order of CIT(A), the assessee preferred an appeal before the Tribunal. The Tribunal did not find any fault in the findings recorded by CIT(A) regarding framing of assessment under s. 153A on the alleged ground of non-issuance of notice under s. 143(2) of the Act. With regard to the addition of Rs. 10 lakhs also, the Tribunal rejected the plea of assessee and observed as under : "...It becomes clear from this conduct of the Thana Prabhari that Shri Rawat held out before him that the money belongs to the assessee. Thereafter, the money was taken over by the IT Department under s. 132A. The assessee or Shri Sudhir Chadha did not do anything further in the matter till the passing of the assessment order on 31st Dec., 2007. After this date, Shri Sudhir Chadha submitted a claim that the money belongs to him and it was sent through Shri Rawat for purchase of some land, the details of which have not been mentioned. Shri Sudhir Chadha has not been produced for examination before the AO. No proposal to have been made for his production before the learned CIT(A). No such suggestion has been made even before us. Therefore, evidence on record suggests that the claim is an afterthought made by the nephew to accommodate the assessee. If the money really belonged to the nephew, action to claim the money would have been taken soon after its seizure by the police. Therefore, the evidence arising very much belatedly lacks the ring of truth in it. Any person of normal prudence, while seeing such an evidence, will come to a conclusion that it is only an accommodating claim. Therefore, we agree with the learned CIT(A) and hold that this amount has been rightly included in the total income of the assessee."11
6.. It is against this order of the Tribunal that the assessee has preferred appeal before us. Learned counsel for the assessee contends before us that to examine or verify any return filed under s. 153A, the issuance of notice under s. 143(2) of the Act is a mandatory requirement. He submits that it cannot be construed as an empty formality or a procedural defect which can be cured, but goes to the root of the matter and fatal to the validity of the assessment. He contends that the law laid down by the Hon'ble Supreme Court in Asstt. CIT vs. Hotel Blue Moon (2010) 229 CTR (SC) 219 : (2010) 35 DTR (SC) 1 : (2010) 321 ITR 362 (SC) is equally applicable to the cases where return has been filed under s. 153A of the Act. He also relies upon the judgments of R. Dalmia & Anr. vs. CIT (1999) 152 CTR (SC) 383 : (1999) 236 ITR 480 (SC); CIT vs. Pawan Gupta & Ors. (2009) 223 CTR (Del) 487 : (2009) 22 DTR (Del) 291 : (2009) 318 ITR 322 (Del); CIT vs. Lunar Diamond Ltd. (2005) 197 CTR (Del) 312 : (2006) 281 ITR 1 (Del); CIT vs. Vardhman Estates (2007) 208 CTR (Del) 251 : (2006) 287 ITR 368 (Del); CIT vs. Bhan Textiles (P) Ltd. (2007) 208 CTR (Del) 253 : (2006) 287 ITR 370 (Del) and Raj Kumar Chawla & Ors. vs. ITO (2005) 92 TTJ (Del)(SB) 1245 : (2005) 277 ITR 225 (Del)(SB)(AT)
7. On the other hand, learned counsel for the Revenue argues that the assessment being under s. 153A, there is no requirement of issue of notice under s. 143(2) of the Act. He submits that in any case, there is no prescribed proforma for issuing the notice. The notice is usually issued in the proforma marked as "ITNS-33". It is a communication by the AO to the assessee giving him the opportunity as required under s. 143(2). Therefore, once the assessee has been put to notice and given opportunity to attend the office, the requirement of s. 143(2) is complete whether notice is issued in proforma "ITNS-33" or in any other format. In the present case, the AO had communicated his intention to scrutinize the return by way of two letters and afforded opportunity to the assessee to produce necessary accounts, documents or evidence. Therefore, the requirement, if any, of s. 143(2) has been satisfied.
8. ------
9. There is no specific provision in the Act requiring the assessment made under s. 153A to be after issue of notice under s. 143(2) of the Act. Learned counsel for the assessee places heavy reliance on the judgment of the Hon'ble Supreme Court in Asstt. CIT vs. Hotel Blue Moon (supra) wherein it was held that where an assessment has to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) must be issued and omission to do so cannot be a procedural irregularity and the same is not curable. It is to be noted that the above said judgment was in the context of s. 158BC. Clause (b) of s. 158BC expressly provides that "the AO shall proceed to 158BB and the provisions of s. 142, sub-ss (2) and (3) of s. 143, s. 144 and s. 145 shall, so far as may be, apply. This is not the position under s. 153A. The law laid down in Hotel Blue Moon (supra), is thus not applicable to the facts of the present case.
10. The decision of Lunar Diamond Ltd. (supra); Vardhman Estates (supra) and Bhan Textiles (supra) relied upon by learned counsel for the assessee related to the requirement of service of notice upon the assessee within a prescribed time and thus not applicable to the present case. The case of Pawan Gupta (supra) related to mandatory issue of notice under s. 143(2) of the Act in the case of regular assessment as also on block assessment. This being a case of assessment based on search under s. 153(A), the same is not applicable to the present case. In the case of Raj Kumar Chawla (supra) relied upon by learned counsel for the assessee was that of the Tribunal, wherein, a view was taken that if a return filed under s. 148 of the Act is sought to be scrutinized, the compliance of provision contained in proviso under s. 143(2) of the Act is 12 mandatory. The issue of requirement of notice under s. 143(2) for an assessment under s. 147 came up for consideration before this Court recently in CIT vs. Madhya Bharat Energy Corpn. Ltd., IT Appeal No. 950 of 2008 decided on 11th July, 2011 [reported at (2011) 62 DTR (Del) 37--Ed.]. In that case also, this Court has held that in the absence of any specific provision under s. 147 of the Act, the issuance of notice under s. 143(2) cannot be held to be a mandatory requirement.
11. It is also to be noted that s. 153A provides for the procedure for assessment in case of search or requisition. Sub-s. (1) starts with non-obstante clause stating that it was "notwithstanding" anything contained in ss. 147, 148 and 149, etc. Clause (a) thereof provides for issuance of notice to the person searched under s. 132 or where documents etc are requisitioned under s. 132(A), to furnish a return of income. This clause nowhere prescribes for issuance of notice under s. 143(2). Learned counsel for the assessee/appellant sought to contend that the words, "so far as may be applicable" made it mandatory for issuance of notice under s. 143(2) since the return filed in response to notice under s. 153A was to be treated as one under s. 139. Learned counsel relies upon R. Dalmia vs. CIT (supra) wherein the question of issue of notice under s. 143(2) was examined with reference to s. 148 by the Supreme Court in the context of s. 147. The Apex Court held as under :
"As to the argument based upon ss. 144A, 246 and 263, we do not doubt that assessments under s. 143 and assessments and reassessments under s. 147 are different, but in making assessment and reassessments under s. 147 the procedure laid down in sections subsequent to s. 139, including that laid down by s. 144B, has to be followed."
12. The case of R. Dalmia vs. CIT (supra) primarily was with regard to applicability of s. 144B and s. 153 (since omitted w.e.f. 1st April, 1989) to the assessment made under ss. 147 and 148 and thus cannot be said to be the decision laying down the law regarding mandatory issue of notice under s. 143(2).
13. The words 'so far as may be' in cl. (a) of sub s. (1) of s. 153A could not be interpreted that the issue of notice under s. 143(2) was mandatory in case of assessment under s. 153A. The use of the words, 'so far as may be' cannot be stretched to the extent of mandatory issue of notice under s. 143(2). As is noted, a specific notice was required to be issued under cl. (a) of sub-s. (1) of s. 153A calling upon the persons searched or requisitioned to file return. That being so, no further notice under s. 143(2) could be contemplated for assessment under s. 153A."
5(viii) The AO passed the impugned assessment order, for assessment year 2008-09, u/s 153A of the Act, as highlighted earlier and not u/s 143(3), or u/s 147 read with section 148 or u/s 158BC(c) of the Act. Consequently, in view of the ratio laid down by the Hon'ble Delhi High Court, in case of Ashok Chaddha V ITO (supra), issue and service of notice u/s 143(2), while finalizing assessment u/s 153A of the Act is 13 not mandatory. In view of the above legal and factual discussions, the ground raised, in the C.O., by the assessee appellant cannot be sustained.
6. In this context, it is pertinent to refer to the express and clear language of section 153A of the Act and the interpretation of the same, in the light of judicial precedents. The golden principle of interpretation of statutory provision is that ordinarily, the legislature expresses its intention in the words, and, if the words are plain and susceptible of no doubt or ambiguity, the intention manifested by the words alone could be given effect. The legislative intent cannot be inferred, to mean otherwise, when the language is plain and clear, as held by the Hon'ble Supreme Court, in the case of Orissa State Warehousing Corporation V CIT (1999) 237 ITR 589 (S.C); Federation of Andhra Pradesh Chambers of Commerce & Industry V State of Andhra Pradesh (2001) 247 I TR 36 (S.C) and Commissioner of Income Tax Agriculture V Plantation Corporation of Kerala Ltd. (2001) 247 I TR 155 (S.C). This view is, further, supported by the Hon'ble Apex Court, in the following decisions:
"i) In Union of India v. Deoki Nandan Aggarwal [1992] Supp 1 SCC 323, a three judge Bench of this court held that it is not the duty of the court either to enlarge the scope of legislation or the intention of the Legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there.
ii) In State of Kerala v. Mathai Verghese [1986] 4 SCC 746, this court has reiterated the well-settled position that the court can merely interpret the section ; it cannot rewrite, recast or redesign the section. In interpreting the provision the exercise undertaken by the court is to make explicit the intention of the Legislature which enacted the legislation. It is not for the court to reframe the legislation for the very good reason that the powers 14 to "legislate" have not been conferred on the court.
iii). In Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990] (Supp) SCC 785, the court rightly observed that in seeking legislative intention judges not only listen to the voice of the Legislature but also listen attentively to what the Legislature does not say.
The House of Lords in Pinner v. Everett [1969] 3 All ER 257 aptly observed that we have been warned again and again that it is wrong and dangerous to proceed by substituting some other words for the words of the statute.
iv) The Hon'ble Supreme Court (by Three Judge Bench) in the case of Britannia Industries Ltd. V CIT & another (2005) 278 ITR 546 (S.C) clearly held that when the language of Statute is clear, unambiguous, the Courts are to interpret the same in its literal sense and not to give a meaning which would cause violence to the provisions of the Statute.
v) The Hon'ble Supreme Court (by Five Judge Bench) in Padma Sundara Rao (Decd.) and others V State of Tamil Nadu and others (2002) 255 ITR 147 clear held as under :
"The court cannot read anything into a statutory provision which is plain and unambiguous. A statute is the edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself.
The court only interprets the law and cannot legislative. If a provision of law is misused and subjected to the abuse of the process of law, it is for the Legislature to amend, modify or repeal it, if deemed necessary.
Legislative casus omissus cannot be supplied by judicial interpretative process.
RISHABH AGRO INDUSTRIES LTD. V. P.N.B. CAPITAL SERVICES LTD. (2001) 101 Comp Cas 284 (S.C);
(2000) 5 SCC 515 followed.
A casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself. A casus omissus should not be readily inferred and for the purpose of all the parts of the statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if a literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. An intention to produce an unreasonable result is not to be imputed to a statute if there is some other construction available. Where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result the court must do some violence to the words so 15 as to achieve that obvious intention and produce a rational construction."
7. In view of the unambiguous and clear language employed by the legislature, containing clear legislative intent in the provisions of section 153A of the Act, the decisions of the Tribunal relied upon by ld. 'AR', are not applicable to the facts of the present case, as the same were rendered in the specific context of section 158BC(b)/158BC(c) of the Act. Therefore, the legislative intent cannot be defeated by placing reliance, on the decisions, which are patently different and distinguishable, on facts and relevant provisions of the Act. The Hon'ble Supreme Court, clearly held, on how to apply the judicial precedents, in the case of Padama Sundara Rao (deced.) & others V State of Tamil Nadu and others (supra) as "Courts should not place reliance on decisions without discussing ho w the f actual situation f its in with the f act situation of the decision on which reliance is placed. There is al ways peril in treating the words of a speech or judgment as though they were words in a legislative enactment. Judicial utterances are made in the setting of the f acts of particular cases. Circumstantial flexibil ity, one additional or different f act may make a word of diff erence between conclusions in two cases." It is, pertinent to state here that direct decision of the Hon'ble Delhi High Court, in the case of Ashok Chaddha V I TO (supra), rendered in the context of section 153A of the Act is preferable vis-à-vis the decisions of the Tribunal, rendered in the context of statutory provisions of section 158BC(b)/158BC(c) of the Act. It is, further, added that there is no contrary decision of any other 16 High Court, on the issue in question, as admitted by ld. 'AR'. In this context, it is mentioned that the Hon'ble Tribunal in Third Member judgement, in the case of Sanghvi V.Doshi Enterprises V Income-tax Officer, I.T.A.T. Chennai (Third Member Bench) (2011) 131 I TD 151 held that if there is no decision of jurisdictional High Court on the relevant issue, Tribunal is bound by the judgement of any other High Court, which is available directly on the subject.
8. In view of the above legal and factual discussions and having regard to the direct decision of the Hon'ble Delhi High Court in the case of Ashok Chaddha V I TO (supra), as also the clear and express language of the provisions of section 153A of the Act, the ground raised by the appellant in the said C.O. is dismissed.
ITA 68 & 69/Chd/2012(A.Y. 2008-09 & 2009-10)
9. As the main grounds of appeal and factual position, in both these appeals, for the assessment year 2008-09, and 2009-10 are similar, the same are adjudicated together, for the sake of convenience.
9(i) In the grounds of appeal, in ITA 68/Chd/2012 for the asstt.year 2008-09, the revenue contended that CIT(Appeals), erred both in law and on facts of the case, in deleting the addition of Rs.77,00,000/-, on the ground of non-providing of opportunity by the AO, to the assessee, for the purpose of cross-examination of one of the purchasers, having regard to the facts and circumstances of the case. It was, further, 17 contended by the revenue that having regard to the facts and circumstances of the case, the CIT(Appeals) erred in law and on facts, in disregarding the surrender made by one of the purchasers, admitting the value of land purchased @ Rs.2750/- per sq.yds., whereas the same was declared by the assessee @ Rs.800/- per sq.yd.
9(ii) The brief facts of the case, as culled out from the relevant records are that the assessee is engaged in the business of developing Real Estate Projects, like residential colonies etc. A search & seizure operation u/s 132(1) of the Act was conducted, in the case of the assessee, on 07.05.2008. Consequently, the AO issued notice u/s 153A of the Act, on 05.12.2008, for the assessment year 2008-09. The assessee filed return of income, on 30.01.2009, for the said assessment year declaring income at Rs.48,43,370/-. The returned income included a surrender of Rs.31,00,000/-, made by the assessee. A notice u/s 143(2) and 142(1) alongwith questionnaire, was issued to the appellant on 10.06.2010, fixing the case, for 05.07.2010. The findings of the AO are recorded, in para 3 and 4 of the impugned assessment order. The AO placed reliance on the statement of Shri Anil Kumar Modi, recorded on 29.12.2008 u/s 132(4) of the Act, while making the addition of Rs.77 lacs, to the income of the appellant. The notices were served upon the assessee on 29.06.2010. The AO indicated sale of land measuring 4040 Square Yards @ Rs.800/- per Square Yard. The assessment was completed on 30.12.2010 u/s 153A of the Act, at the income of Rs.2,85,62,620/-.
18
10. The AO vide assessment order, dated 30.12.2010, for the assessment year 2009-10, in terms of para 3 thereof, clearly indicated sale of land during assessment year at 70461 sq.yd., at the rate of Rs.560/- per square yard, representing various plots in village Dolon Khurd. The AO, placed reliance on the deposition, made by Shri Anil Modi, in his statement recorded u/s 132 of the Act, on 29.12.2008, pertaining to the purchase rate of the plot measuring 1370 sq.yd., in village Dolon Khurd, vide registration deed dated, 11.08.2008, for a consideration of Rs.7,65,000/-. The AO, in the assessment year 2009-10, by placing reliance on the statement of Shri Anil Kumar Modi, recorded on 29.12.2008, made addition of Rs.13,66,94,340/-, by taking the market rate at Rs.2500/-, per sq.yd. of the land sold to various other parties, during assessment year, in question.
10(i) During the assessment year 2009-10, the assessee sold both residential plots and agricultural land, measuring 74971 sq.yd., as is evident from the details filed by the appellant, at page 18 of the Paper Book. However, for the sake of ready reference and proper appreciation of the factual matrix of the case, contents of page No.18 of the Paper Book is reproduced hereunder :
Total Residential / Agricultural Land Sold During the Assessment Year 2009-2010 as Per Audited Trading Account 120079.630 sq.yds. (Audit Report dated 22.08.2009 is enclosed) Detail of Land sold in different villages;-
VILLAGE DOLON KHURD -
Residential Plots Sold 37423 Sq. Yds
Agricultural Land Sold 37548 Sq. Yds 74971.000 sq.yd.
19
VILLAGE LALTON KALAN
AND VILLAGE MANSURAN -
Residential & Agricultural
Land sold during the
Assessment Year 2009-2010 45108.630 sq.yd. 120079.630 sq.yds."
10(ii) The assessee has filed details of sale of residential plots during the assessment year 2009-10, measuring 37423 sq.yd., as is evident from page 18, 19 & 20 of the Paper Book filed by the appellant. It is evident from a perusal of the said details furnished at page 19 of the Paper Book that, on 11.08.2008, Smt.Chhavi Modi w/o Shri Anil Kumar Modi, purchased residential plot measuring 1370 square yards, vide Sale Deed Registration No. 17730, for a consideration of Rs.7,65,000/-, as recorded in the Registered Sale Deed. The assessee has furnished details of agricultural plots, sold during the assessment year 2009-10, to various parties, measuring 37548 sq.yd., as is evident from the details furnished at page 18 and 21 of the Paper Book. The assessee has, further, filed details of the land, sold during the assessment year 2009-10, indicating therein location of the land, nature of land, area, amount, circle rate and detail of sale deed, registration number etc., as is evident from perusal of page 22 to 24 of the Paper Book, filed by the assessee. The sale of land during the assessment year 2009-10, has also been reflected at page 35 of the Paper Book, in the audited report, filed by the assessee appellant.
11. In the course of assessment proceedings, the assessee filed revised return of income, for the assessment year 2008-09, on 16.12.2010, declaring an income of 20 Rs.2,08,62,620/-. The AO, observed in para 3 of the impugned assessment order that the assessee sold plots, in village Dholon Khurd. The total land sold by the assessee, during the assessment year under reference has been worked out to 4040 sq.yds. by the AO, on the basis of detail supplied by the assessee. The said land was sold @ 800/- per sq.yd. approximately. One of the purchasers, Ms.Chhavi Modi w/o Shri Anil Kumar Modi, purchased 1370 sq.yd. of land, in village Dholon Khurd, vide registered sale deed dated 11.08.2008, for Rs.7,65,000/- as indicated earlier. However, in the course of search operation on 29.12.2008, u/s 132(1) of the Act, at the residence of Shri Anil Kumar Modi, he admitted that he had purchased the above land, in the name of his wife, for Rs.37,65,000/-, for which Sale Deed was registered for Rs.7,65,000/- and the balance amount of Rs.30,00,000/- was paid in cash, from undisclosed sources. He admitted in the said statement that rate of land was Rs.2750/- per sq.yd. It is pertinent to add here that the above observations have been recorded by the AO, in para 3 of the impugned assessment order, as reproduced hereinafter. 11(i) The contents of the statement, alongwith copy of statement of Shri Anil Kumar Modi. was confronted, to the assessee by the AO, vide order-sheet entry dated 24.12.2010 The assessee filed written submissions, on 29.12.2010, wherein it was stated that third party statement is not sufficient to sustain any addition in the absence of tangible evidence. The assessee also placed reliance on the decision of the Hon'ble Supreme Court, in the case of Dhakeshwari Cotton 21 Mills Ltd. V CIT (1954) 26 ITR 775, wherein it was held that no addition could be made, on the basis of surmises and suspicion. The AO, considered the submission filed by the assessee, and after placing reliance on the statement of Shri Anil Kumar Modi made addition by applying the sale rate at Rs.2500/- per square yard and consequently, a difference of Rs.77,00,000/- was added, to the income of the assessee. The AO also referred to the land mortgaged by M/s Singla Enclave Developers (P) Ltd. By the PUDA, in the matter. The observations and findings of the AO, as contained in the impugned assessment order, are reproduced hereunder :
"3. The assessee had sold various plots in Village Dolon, Teh.& Distt. Ludhiana. As per list supplied by the assessee alongwith registration deeds for sale of land, total land sold during the year comes to 4040 sq. yds. and the sale rate of the above land has been declared Rs.800/- per sq.yd. approximately. One of the purchaser of the above land is Mrs. Chhavi Modi w/o Sh.Anil Kumar Modi, 100-C, Udham Singh Nagar, Ludhiana, who had purchased 1370 sq.yds. of land in Village Dolon on 11/08/2008 and the registration was got done at Rs.7,65,000/-, It is worthwhile to mentioned hare that search u/s 132 was conducted at the residence of Sh. Anil Kumar Modi on 29/12/2008 and during his statement recorded u/s 132 he admitted that he had purchased the above plot in the name of h i s wife for Rs.37,65,000/- for which registration was done for Rs.7,65,000/- and balance amount of Rs.30,00,000/- was paid in cash from undisclosed sources. Further he had admitted that the rate of land Rs.2,750/- per sq.yd. in the above colony at Village Dolon.
This rate of land further gets supports from the fact that the company M/s Singla Enclave Developers (P) Ltd., of which Sh.Tarsem Singla, the assessee, is a Director had mortgaged 400 sq. yds. of land (four SCFs measuring 100 sq. yds each) to PUDA for Rs.20,00,000/- on 17/08/2006. These documents was found and seized during survey at the business premises of the above company on 07/05/2008 vide page Nos 28 to 3 1 of Annexure A-l. Sh. Tarscm Singla, the assessee, is a Director of the above company. This shows that the rate of land declared by the assessee in the above mortgage deed was Rs.5,000/- per sq. yd. as on 17/08/2006. Keeping in view that the rate of SCFs is always on higher side, the rate of Rs. 2,750/- per sq. yd. seems to be reasonable as stated by Sh. Anil Kumar Modi and he had also surrendered the over & above payments made to Sh.Tarsem Singla. This fact was confronted to the assessee vide order sheet entry dated 24/12/2010 alongwilh copy of statement of Sh. Anil Kumar Modi as mentioned above. The assessee filed written reply on 29/12/2010, in which he has stated that third party statement is not sufficient to sustain any addition unless supported by tangible evidence. He has also mentioned judgments of various Courts including the judgment of Hon'ble Supreme Court of India in the case of Dhakeshwari Cotton Mills Ltd. Vs 22 CIT(1954) 26 1TR 775 that ITO is no entitled to make a pure guess and make an assessment without reference to any material or evidence. There must be something more than bare suspicion to support the assessment.
4. The reply of the assessee has been considered and I come to the conclusion that there are following two evidences which show that the rate of land was much higher as mentioned in the registration deeds filed by the assessee :-
i) Statement of Sh. Anil Kumar Modi and surrendered made by him.
ii) The documents of M/s Single Enclave Developers P. Ltd. of which the assessee Sh. Tarsem Sing/a is Director in which the company itself had mentioned the fair market rate of the property at Rs.5,000/-
per sq.yd.
Looking at the area of land sold by the assessee during the year which is 4040 sq. yds., some land may be on the front side or some may be on the back side, the market rate prevalent during the year is taken at Rs.2,500/- per sq. yd. and this conclusion is not only barely suspicion but based on the above two evidences. As such the same rate is applied for all the land sold by the assessee at Village Dolon during the year. The assessee sold total land of 4040 sq.yds. for which total sale amount comes to Rs.24,00,000/- as per registration deeds. However total sale amount comes to Rs. 1,01,00,000/- by appl yi ng s al e rat e of Rs.2,500/ - per s q. yd. and t he dif f er ence of Rs.77,00,000/- is added back to the total income of the assessee. Penalty proceedings u/s 271AAA are separately initiated for concealing the particulars of income."
11(ii) It is also apt to reproduce hereunder, the deposition of Shri Anil Kumar Modi, as made in the statement recorded, on 29.12.2008:
"Co n cl u d i n g s t ate m e n t of Sh ri A n il K um ar Mo di , Pr op M/ s J ai p u r D i am o nd Je we l e rs, Col l eg e Ro ad , Ro y al Pl az a re co rd ed d u r i n g th e se ar c h o pe r ati o n c o n d uc te d u /s 1 3 2 o n 2 9. 1 2 . 2 0 0 8 a t th e b us i ne ss pre m ise s o n o a th :
Q. As p er ph ysi c al v e r i fi c at i o n of st o c k a n d as p er bo ok s, t h e f ol l o wi n g di s c r ep a n c y w as fo u n d . Do y o u a gr e e wi t h t hi s di f f er e n c e of cl osi n g st o c k ?
N ame of item As pe r p h ys ic al S tock as pe r D if f erence
Ve r if icati o n book s
----------------- ------------------ --------------- -------------
1. 2 2 C t or n a- 1 8 2 0 4 g ms . 1 3 4 4 3. 3 8 gm s 4 7 5 8. 6 2 gm s
Me n ts
2. 1 4 & 1 8 C t 1 0 9 7 4 g ms 4 6 4 5. 4 2 gm s 6 2 3 8. 5 7 gm s
Gol d ,d i am o n d
S tu d d ed
3. O r n am e n t 2 3 9 1. 0 5 C t 1 9 0 7. 1 5 C t 978.9 Ct
S tu d d ed d i am o n d 4 9 5 C t
L oos e
4. Di am o n d sol i d 8. 5 C t 3. 3 1 0 5. 1 9 C t
An s. Ye s. I a gr e e wi t h t h e di ff er e n c e .
23
Q. 2 As p er v a l u at i o n of cl osi n g st o c k, a s p er bo oks of
a c co u nt a n d as p er v al u at i o n r ep or t , pr e p ar e d b y t h e ap pr ov e d val u er , t h er e i s di f fer e n c e of Rs . 1. 7 5 Cr or e . ( i . e . R s. 4 5 9 7 1 5 4 1 ( - ) 2 8 4 7 1 5 4 1 ) Do y ou a gr e e wi t h t h e v al u at i o n r e por t pr e par e d by t h e ap pr ov e d v al u er a n d t h e di ff er e n c e wi t h t h e v a l u at i o n of cl osi n g st o c k . ?
An s. Ye s.
Q. 3 As p er R e gi st r at i o n D e e d , yo u h av e p u r c h as e d a gr i c ul t ur e l a n d of 1 3 7 0 s q y d , w h er e as t hi s l a n d i s co mm er ci al i . e . F a r m Ho us e b ei n g a d e v el op e d f a ci l i t y, l i k e l i g ht a n d r o a ds . T h e m ar k et v al u e p er s q .y d i s Rs . 2 7 5 0 p er sq .y d . Do yo u a gr e e t h at t h e v al u e o f l a n d t o b e a dopt e d at Rs . 2 7 5 0/ - p er s q y d b ei n g a d e v el op e d l oc al i t y.
An s. Y es . I a gr e e t h at t h e cost of t h e l a n d t o b e t a k e n @ Rs . 2 7 5 0/ - p er s q .y d .
Q. 4 Do y o u w a nt t o s a y a n yt hi n g m or e ?
An s. To b uy p e a c e of mi n d a n d a voi d l i t i g at i o n a n d s ubj e ct t o no p e n al t y u n d er a ny s e ct i o n , sp e ci al l y s e ct i o n 2 7 1 ( 1 ) ( c ) & 2 7 1A AA I h av e s u r r e n d er a n a mo u n t of Rs . 2 , 2 5, 0 0 , 0 0 0/ - ( Rs .
T wo Cr or e t w e nt y fi v e l a c s ) o nl y , bi f ur c at i o n o f w hi c h i s as u n d er :
i) S ur r e n d er e d o n a c c ou nt o f e x c e ss st o c k Rs . 1 , 7 5, 0 0 0 /-
ii) S ur r e n d er t o c ov er i nv e st m e nt i n p ur c h as e R s. 3 0 , 0 , 0 0 0/ -
of f ar m h o us e .
iii) S ur r e n d er t o c ov er a ny ot h er Rs . 2 0 , 0 0, 0 0 0/ -
di s cr e p a n cy er r or /i nv e st m e nt
fo u n d i n l o os e p ap e r /boo ks
Tot al Rs . 2 , 2 5, 0 0 , 0 0 0/ -
Al l t hi s s ur r e n d er h as b e e n m a d e i n r es p e ct of fi n a n ci a l ye ar 2 0 0 8 - 0 9 r el e v a nt t o as s ess m e nt y e ar 2 0 0 9 - 1 0.
S d/ -
( A ni l Mo di ) "
11(iii) In the above factual back-drop, the findings of the CIT(Appeals), for the assessment year 2008-09, are reproduced hereunder :
"11. I have considered the basis of addition made by the Assessing Officer and the submissions of the AR of the appellant on the issue. The specific issues and arguments of the AR have been sent to the AO for his comments which in turn were given to the AR for affording him an opportunity of putting on record any objections/explanation with reference to same. The following issues need to be addressed and deliberated upon in order to adjudicate the grounds of appeal preferred by the appellant.24
i) The AR during the course of appellate proceedings claimed that the assessment framed by the AO had become barred because of time limitation. Since the search in this case was conducted on 7/5/2008, the assessment had to be completed within 21 months from the end of the F.Y i.e. 31/3/2009 and the time barring date could be 31/12/2010.
The assessment having been framed on 30/12/2010 does not become time barred as claimed by the AR. It seems that the AR had proceeded to calculate the period of 21 months from the date of execution of the warrant i.e. 7/5/2008 rather than from the last date of the F.Y. in which the warrant was executed i.e. 31/3/2009. As such there is no merit in the claim of the appellant and same is therefore dismissed. The AR during the course of appellate proceedings made a claim that income from trading of agricultural land could not lead to taxable income as the same is in the nature of agricultural income and hence exempt from income tax. He placed reliance on various judicial pronouncements which have been perused and it becomes apparent that all of them are on the subject of levy of capital gain ,and the issue to be considered was whether the asset sold was capital asset within the definition of section 2(14). The AR's argument is that since the asset purchased and sold by the assessee is an agricultural land presumably 8 km away from the municipal limits, therefore its sale would not lead to any capital gain. Here it would be important to appreciate that assessee had filed his return of income wherein the income returned has been shown to be on account of profit resulting from the business of developing residential colony by acquiring the land and turning into plots after following the due procedure as laid down by PUDA. The books of accounts prepared by the assessee and summarized in the form of profit and loss account/balance sheet clearly show that the activity of purchase and sale of land is in the nature of regular business being carried out to earn profits. In the/ circumstances the contention of the AR that the same may be treated as capital gain is against the facts and circumstance's of the case. Even if the land in question is in the nature of agricultural land beyond 8 km from the municipal limits of Ludhiana, the development of same into residential/commercial colony cannot be in the nature of anything but business and thus profits arising from the same taxable under the head "business and profession" only. This ground of appeal is therefore dismissed.
12. The next issue raised by the appellant is that the statement of Sh. Anil Modi cannot be relied upon to make addition in the case of the assessee especially when no documents had been seized in the case of the assessee or in the case of Sh. Anil Modi evidencing the receipt/payment of any amounts other than as recorded in the books of accounts. It has also bee 'claimed that books of accounts of the assessee have not been rejected by the AO before estimating the sale consideration in respect of plots sold. The perusal of submissions of the appellant and the remand report of the AO on this issue make it clear that the statement of Sh. Anil Modi had been confronted to the assessee for the first time only on 24/12/2010 and the assessee's request to cross examine Sh. Anil Modi was denied. I would go deeper into this issue of denial of an opportunity to cross examine and its impact on the legal validity of assessment framed in later part of the order. As of now the evidentiary value of statement of Sh. Anil Modi needs to be examined. The Assessing Officer in the assessment order has recorded that Sh. Anil 25 Modi had admitted that the plot purchased from the assessee was for a consideration of Rs. 37,65,000/- for which registration was done for Rs. 7,65,000/- and the balance amount of Rs. 30 lacs had been paid in cash from undisclosed sources. The AO further observed that Sh. Anil Modi admitted that the rate of land in the colony developed by the assessee at village dolon was Rs. 2750/- per square yard. However the perusal of the statement of Anil Modi shows that his statement has been twisted out of context by the AO, apparently to attribute more weight to the statement than it actually had. The specific question asked by the authorized Officer from Sh. Anil Modi at the time of conclusion of search operation at his business premises and his answer were as follows: -
"Question:- As per registration deed you have purchased agricultural land of 1370 sq. yards whereas this land is commercial i.e. FARM HOUSE having a developed facility like light & roads. The market value per sq. yard is Rs. 2,750/- per sq. yard. Do you agree that the value of land to be adopted at Rs. 2,750/- per sq. yard being a developed locality?
i Ans: Yes, I agree that the Cost of the land to be taken at the rate of Rs 2,750/- per sq. yard."
The perusal of above detailed question/answer shows that the authorized officer asked a leading question wherein the market value per square yard of the plot purchased by Sh. Anil Modi/Chhavi Modi was proposed to be Rs. 2750/- per square yard and the assessee agreed to the proposition to buy peace of mind and avoid litigation. Iti is apparent that the acceptance of the market value of the plot purchased as on the date of search at Rs. 2750/- per square yard was not bas ed upon any document f ound dur ing t he cours e of search/survey in the case of Sh. Anil Modi and therefore the observation of the AO in the case of the assessee that Sh. Anil Modi admitted to have paid cash of Rs. 30 lacs to Sh. Tarsem Singla for the purchase .of plot is absolutely unwarranted and against the facts of the case. The AO during the remand report on this issue has clearly admitted that Sh. Anil Modi did not state to have paid cash of Rs. 30 lacs but it was only a presumption of the Assessing Officer. This presumption by itself cannot be attributed directly to the statement of Sh. Anil Modi as he had only agreed that the market value of the plot purchased by him may be taken at Rs. 2750/-. As such this unilateral statement of third party which by itself is not based upon any documentary evidence cannot be termed as evidence in the case of the assessee to conclude that he had sold the impugned plot of land @ Rs. 2750/- per square yard. Further the AO has relied upon a mortgage document-filed by the assessee with PUDA as part of the procedure to place certain guarantee of minimum amount @ Rs. 5000/- per square yard. The AR in this regard has pointed out factual -mistakes in the AO's observation on the issue and has clarified that the plot sold to Chhavi Modi was sold by Sh. Tarsem Singla and not by M/s Singla Enclave Developers (P) Ltd. and the said plot of land is in village dolon khurd which is completely undeveloped and unapproved colony having no street light, sewerage etc. and the land developer by M/s Singla Enclave Developers (P) Ltd. is approved by PUDA and is nearer to Pakhowal and is in village Lalton Kalan. It was further clarified by the AR that village 26 dolon was about a kilometer away from village Lalton Kalan. The AO with reference to this claim of the AR accepted that the plots of land mortgaged to PUDA by M/s Singla Enclave Developers (P) Ltd. was in village Lalton and the plot purchased by Mrs. Chhavi Modi was in village Dolon and both are separated by about 300 meters. The AO did not contradict the contention of the AR that the property sold to Chhavi Modi was in a colony unapproved by PUDA and lacking in civic amenities and therefore the question of the authorized officer at the business premises of Sh. Anil Modi posing a leading- proposition that the plot purchased by him/his wife was in a "developed colony is factually incorrect. As regards, the distance between the plot mortgaged to PUDA and plot sold to Mrs. Chhavi Modi, the AR submitted in his rejoinder that the distance physically measured comes to about 920 meter. The AO with reference to this claim submitted that the distance was actually about 700 meters by road but aerial distance was about 300 meter.
13. It is apparent that the Assessing Officer has made observations which are factually incorrect and these have been proved to be so during the remand proceedings as detailed above. The AO has also recorded the wrong facts with reference to admission of Sh. Anil Modi that he had paid cash of Rs. 30 lacs for purchase of plot. It only means that the evidence relied upon by the AO is based upon incorrect appreciation of facts and the same have been interpreted to project a scenario which is not warranted from the same. The AO has proceeded "to make a presumption from the statement of Sh. Anil Modi which has been further relied upon to make another presumption that the assessee would have sold all other plots at the presumed rate of Rs. 2500/- per square yard. A logical presumption based upon fact could be a reliable basis for arriving at a conclusion but a presumption based upon another presumption makes the conclusion arbitrary, weak leading to a situation where the conclusion has no relationship with the original facts. It is a matter of fact that search had been conducted in ' the case of the assessee as well as of Sh. Anil Modi, but no evidence of payment/receipt of sale consideration in excess of what was recorded in the books of accounts, had been found which further lends strength to the claim of the appellant that sale consideration as recorded in the books of accounts was actually bargained between the buyer and seller. The statement of Sh. Anil Modi, wherein he has accepted the proposition of the authorized officer regarding the market price of the plot purchased at Rs. 2750/- per square yard, is only meant to settle his own affairs and in no way it can be taken/to mean that the assessee had received sale consideration which had not been recorded in the books of accounts. If this kind of evidence is allowed to be relied upon then one may also propose that addition should be made in the case of all the buyers of plots from the assessee for having paid sale consideration @ Rs. 2500/- per square yard. The addition made by the AO is therefore based upon a piece of information which can not be termed as an evidence. There are catena of judgements on the issue as to whether a sustainable addition can be made in the case of an assessee based upon evidence found from the third party or on the basis of statement of a third party. The Hon'ble Delhi High Court in the case of CIT Vs. Smt. Suraj Devi reported in 328 ITR 604 held:-
"The primary burden of proof to prove understatement or concealment of income is on the revenue and it is only when such ..burden is discharged that it would be permissible to rely upon the valuation given by the Valuation Officer. In any event, the opinion of the Valuation Officer, per 27 se, was not information and could not be relied upon without the books of account being rejected which had not been done in the present case. Moreover, no evidence much less incriminating evidence was found as a result of the search to suggest that the assessee had made any payment over and above the consideration mentioned in the registered purchase deed."
The Hon'ble High Court of Rajasthan in the case of COMMISSIONER OF INCOME TAX vs. BHANWARLALMURWATIYA reported in (2008) 215 CTR (Raj) 489, held:-
"The question as to what was the price of the land at the relevant time is a pure question of fact. Apart from the fact, that even if it were to be assumed, that the price of the land* was different than the one, recited in the sale deed, unless it is established on record by the Department, that as a matter of fact, the consideration, as alleged by the Department, did pass to the seller from the purchaser, it cannot be said, that the Department had any right to make any additions. It is a different story as to, to what extent and how, the statement of S, as given before different authorities, at different times, can be used against the assessee. More so, when none of the witnesses was examined before the AO, and the assessee did not have any opportunity to cross examine them. In any case, the question as to whether the consideration of Rs. 61 lacs, or any other higher consideration than the one, mentioned in the sale deed, did pass from the assessee to the seller or not, does non the less remain a question of fact, and it is not shown by the Department, that any relevant material has been ignored, or misread by the CIT(A), or the Tribunal. In that view of the matter, the questions, as framed, cannot be even said to be arising, and in any case, are required to be answered against the revenue, and in favour of the assessee."
The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in the case of I.T.O. v. Shri Mohinder Singh reported in (2008) ITR 118 (ITAT, Chd), held:-
"Addition made under capital gain on the ground that income by way of sale received by the assessee was more than what it was shown in the deed of registration on the basis of report of investigation wing of the department based on a photocopy of an agreement disowned by the assessee. No evidence on record to show that assessee had received more than what was disclosed on the registered instrument, the burden for which is on revenue. No addition can be made on the basis of the photocopy of a document when the transaction is separately evidenced by a registered sale deed."
The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in the case of I.T.O. v. Shri Manjit Singh reported in (2010) 128 TTJ (Chd)(UO) 82, held:-
"In the absence of any evidence to show that the assessee had received any consideration over and above what is stated in the sale deed, addition could not be made by disregarding the 'full value of the consideration' declared by the assessee simply because another portion of land has been sold by the assessee along with his brother at a higher rate."28
In view of the above, the action of the AO in estimating the sales of the assessee without rejecting the books of accounts and on the basis of statement of Sh. Anil Modi as discussed/above, can not be sustained. It is further apparent that the AO has merely relied upon the valuation of SCFs as pledged by the assessee before the PUDA and has not gone beyond this point to conduct any enquiry to bring on cord any evidence of actual sale of SCFs @ Rs. 5000/- per square as against Rs. 1200/- per square yard recorded in the books of accounts. The Hon'ble Apex Court in the case of CIT Vs. George Handerson & Company Limited 66 ITR 622 has observed that full value of consideration for which the sale, exchange or transfer of the capital et is made appearing in section 12B of Indian Income Tax Act, 1922 (corresponding to the present section 48 of the Income Tax Act, 1961), does not mean the market value of the asset transferred but the price bargained for by the parties to the sale, etc. The consideration for the transfer of the capital asset is/what the transferor receives in lieu of the asset he parts with, viz., money or money's worth. The expression "full consideration" in the main part of section 12B(2) can not be construed as having a reference to the market value of the asset transferred. The Hon'ble Madras High Court in the case of CIT Vs. P. Suryanaraina 88 ITR 321 held that the full value of consideration in the said section meant only the actual value received by the assessee. However the market value may also be taken in place of full value of consideration only in the event of the consideration as per registered document being less than the value fixed by revenue authorities for the purpose of collection of stamp duty. It means that the full value of consideration as evidenced by the' registered document can be substituted for the value meant for the purposes of stamp duty as per section 50C. This section has been introduced by Finance Act 2002 w.e.f. 1.4.2003 and has been titled "special provision for full value of consideration in certain cases" which means that the full value of consideration can be substituted only if the conditions as stipulated in the provisions of section 50C are fulfilled. Apart from the provisions of section 50C, the sale consideration as reflected in the registered document can be substituted by a higher figure if there is evidence on record to suggest that amount over and above the one recorded in the registered documents had passed on from the buyer to the seller. The issue under consideration is therefore whether the document relied upon by the AO can be taken to be evidence enough to reject the book results of the assessee and substitute the sales price on estimate basis. It has been held in catena of judgements as highlighted by the AR that the valuation of stocks can not be a reliable basis to make an addition by holding that the assessee was actually in possession of stocks as per valuation submitted to the bank. The view of jurisdictional high court on the issue is clearly detailed in the judgement in the case of COMMISSIONER OF INCOME TAX v. SIDHU RICE AND GENERAL MILLS decided by Hon'ble Punjab & Haryana High Court reported in (2006) 281 ITR 428 (P&H). The Hon'ble court held:- 29
"That the concurrent findings showed that except for the photocopy of the stock statement furnished to the bank, the Assessing Officer had not brought any material on record to show that the assessee possessed stocks as reflected in the said statement as against the stocks depicted in the balance-sheet. It was also found that the books of account were regularly maintained by the assessee and had been accepted by the Department. On the basis of the material on record, the Commissioner (Appeals)and the Tribunal took a possible view which had not been shown to be perverse. Thus, there was to be no interference with the concurrent findings."
The claim of the appellant that the valuation of SCFs was artificially inflated to meet the requirements of PUDA seems probable as by doing so fewer number of SCFs had to be mortgaged. The conduct of the assessee in doing so may invite suitable action by PUDA authorities in terms misrepresentation, but the same can not be taken to be the value of the SCFs so as to reject the sale consideration as recorded in the registered deeds which are in accordance with the stamp duty regulation. This means that the document of mortgage can not be taken to be sufficient evidence so as to substitute the sale consideration as per books of accounts. The addition made is therefore directed to be deleted.
14. The appellant is aggrieved against the action of the AO in relying upon the statement of Sh. Anil Modi without allowing the assessee to cross examine him. It has been claimed that the order passed by the I AO in contravention of principle of natural justice was nullity in the/ eyes of law. It is seen that the AO confronted the statement of Sh. Anil Modi on 24/12/2010 and proceeded to pass the assessment order on 30/12/2010 without allowing any opportunity to cross examine as requested by the assessee. The AO has also reported in the remand report dated 27/7/2011 that the said statement of Sh. Anil Modi was communicated to the AO of Sh. Tarsem Singla/Singla Estate Developers (P) Ltd. on 25/11/2010. It only means that the department was in possession of the statement of Sh. Anil Modi as the Assessing Officer having jurisdiction over Sh. Anil Modi/Chhavi Modi also had 'jurisdiction over the cases of assessee group. In the circumstances the action of the AO in using the statement of Sh. Anil Modi against the assessee on 24/12/2010 i.e. one week before the date of time barring case, reflects the casual attitude in using whatever evidence the in his possession. So much so that no further possible action on the basis of statement of Sh. Anil Modi was taken in the case of the assessee so as to bring on record any evidence of unaccounted sales as presumed by the AO. The AO in the remand report has commented that there was no need to allow an opportunity to the assessee to cross-examine Sh. Anil Modi as Sh. Anil Modi had already surrendered Rs. 30 lacs. The AO relied upon the judgement of Hon'ble Madras High Court in the case of T.Davasahaya Nadar vs. CIT 51 ITR 20 to support his case for refusal to allow an opportunity to cross examine. It is seen that the judgement relied upon by the AO is with reference to refusal to produce an informant for cross examination and not with reference ' to a buyer of the property. While it has been held in several judgments that the CIT(A) has plenary jurisdiction and can do, what the AO failed to do (e.g. in the judgment in the case of CIT vs. Nirbheram Daluram 224 ITR 610 (SC), the jurisdiction does not extend to correction of errors relating to denial of natural justice. The principle of audi alteram partem state that no person will be punished unless he is informed of the charges that lie against him, he is confronted with all the materials the prosecution 30 wants to rely on the prove the charges, and he is given a fair and reasonable opportunity of defending himself. It has been held by the Hon'ble Apex Court that these principles must be read into the statute unless there is a mandate to the contrary [Sahara India (Firm vs. CIT 300 ITR 403 (SC)]. Even if an adverse inference is sought to be drawn from some information submitted by the assessee himself, he is required to be informed of the proposed inference from this material so that he can defend himself [CIT vs. Ashish Rajpal 23 DTR (Del) 266] and it is not sufficient that a post-decisional "opportunity is available to the assessee. This principle has been held to be valuable and additions made in violation of the-principles of natural justice are liable to be set aside e.g. in the case of Kishinchand Chellaram relied upon by the appellant in which case the addition was deleted since the material relied upon by the ITO was not confronted to the assessee. The principles of natural justice have also been incorporated in the Income Tax Act in sub-section (3) of section 142 and the AO is required to confront the assessee with the material which has been collected by the AO and is proposed to be used in q assessment. The object of this principle is to give the assessee an opportunity of giving his explanation and disabusing the AO of any wrong impression that he might have formed against the assessee. When the material relied upon is not enclosed with the show cause notice, there is no sufficient opportunity [Appropriate Authority vs. Vijay Kumar Sharma 249 ITR 554 (SC)].
Defect on account of denial of natural justice cannot be cured by the appellate authority, as held by the Hon'ble Supreme Court in the case of Tin Box Co vs. CIT 249 ITR 216. It was held in this case that the fact that the assessee could place evidence before the first appellate authority or before the Tribunal was of no consequence for it was the assessment order that mattered and that order must be made after giving a reasonable opportunity to the assessee. The order curing the defect can be passed only by the person who passed the original order, and in the case of Tin Box Co the Hon'ble Apex Court remanded the matter to the AO to decide the matter afresh. The CIT(A) now has no power to set-aside the assessment to the file of the AO. In the remand report the AO has accepted that opportunity to cross examine had not been granted to the assessee as it was not warranted, which implies that the appellant's contention that he was not confronted in this regard is correct. In my opinion, under these circumstances, the Inferences drawn from such material cannot be upheld. Section 143(3) of the Act empowers the AO to make an order pf assessment after hearing the evidence which the assessee may produce and such other evidence that the AO may require on specified points taking into account all the relevant material which he has gathered. Thus, section 143(3) specifically requires the AO to ask the assessee to produce evidence on specified points. This, read with section 142(3), naturally requires the AO to give the assessee an opportunity to rebut any evidence or issue which the AO may have in his possession or may be considering and which he proposes to use against the assessee. As noted earlier, even if the information given by the assessee is proposed to be used .against him, the assessee should be made known of any proposed usage of the information against himself so that a cogent rebuttal can be made.
31
"15. The Hon'ble Punjab & Haryana High Court in the case of COMMISSIONER OF INCOME TAX v M/S RADHEY SHAM SITA RAM reported in (2003) 22 I.T.Reps. 667 (P&H), held:-
"While completing the assessment in the case of the assessee, the Assessing Officer made an addition of Rs.l,77,000/- on account of bogus purchases. It is not in dispute that the assessee had shown some purchases made from M/S S & A Steel Industries and M/S Sunshine Steel Sales. The purchases made from these two concerns were treated as bogus on the statement made by one Som Nath who was stated to be the proprietor of the two firms. He made a confessional statement before the Assessing Officer that he had made fictitious sales to the assessee. The Assessing Officer relied upon the statement of Som Nath and made the addition. This addition was upheld by the Commissioner of Income Tax (Appeals). The matter was taken in appeal before the Tribunal and it was, pleaded that the Assessing Officer and the Commissioner of Income/Tax (Appeals) were in error in placing reliance on the statement of Som Nath because the assessee had not been offered opportunity of cross examining the said Som Nath. The Tribunal found that the assessee had no opportunity of cross examining the said Som Nath and, therefore, it came to the conclusion that the Assessing Officer could not place reliance on his statement. The argument of the learned counsel for the petitioner is that the Tribunal was not right in holding that the assessee had not been afforded any opportunity of cross examining Som Nath because several opportunities had been given to him. The Tribunal held to the contrary. The state of Som Nath has also been placed on the record and we find there from that the assessee had not cross examined Som Nath. In view of the finding recorded by the Tribunal that the assessee had not been afforded opportunity of cross examining Som Nath, we are clearly of the view that no question of law arises from the order of Tribunal and, therefore, it was right in dismissing the petition filed by the Department under section 256(1) of the Act. There is, thus no merit in these petitions and the same stand dismissed."
The Hon'ble Delhi High Court in the case of COMMISSIONER OF INCOME TAX vs. ASHWANI GUPTA reported in (2010) 322 ITR 396 (Delhi), held:-
"The Tribunal confirmed the order passed by the Commissioner (Appeals) which held the entire addition made by the Assessing Officer to be invalid and had deleted it on the ground that the Assessing Officer had passed the assessment order in violation of the principle of natural justice in as much as he had neither provided copies of the seized material to the assessee nor had he allowed the assessee to cr os s -exami ne t he per son on t he basi s of w hos e s tat ement t he addition was made. On Appeal-held;-dismissing the appeal, that the Revenue had accepted the findings of the Tribunal on facts as also the position that there had been a violation of the principle of natural justice. However, its plea was that the violation of the principle of natural justice was not fatal so as to jeopardize the entire proceedings. The Tribunal correctly held that once there was a violation of the principles of natural justice in as much as seized material was not provided to as assessee nor was cross-examination of the person on whose statement the Assessing Officer relied upon, granted, then, such deficiency would amount to a 32 denial of opportunity and, consequently, would be fatal to the proceedings. No substantial question of law arose."
Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar e case of G.S.BUILDERS AND ENGINEERS,JALANDHAR v. A.C.I.T. reported in (2011) 44 I.T.Reps. 150 (ITAT,Asr), held:-
"The assessee has a right to know and rebut all the material relied upon by the revenue against him. If the material consists only of circumstances as opposed to the say of persons, this would be disclosed to the assessee so that he should rebut the same. If the material consists of the say of persons, which may be in the form of statements or letters, the assessee has right to cross examine the concerned person. All witnesses who deposed to the relevant facts and whose statements are relied upon by the Revenue have to be offered for cross examination. The principle of law requires that is a statement or material is an integral part of the case of the Department or is ID draw an adverse inference, cross examination of person making the statement must be given. The Hon'ble Apex Court in the case of Kerala v. K.T.Shaduli Grocery Dealer, AIR 1977 (SC) 1627 made it clear that cross examination has to be afforded where statement/material relied upon form an integral part of the material on the basis of which the order by the Taxing Authorities has been passed."
16. In view of the above detailed analysis of facts of the case on the issue and the judicial view on the same, the action of the AO in not allowing the assessee an opportunity to cross examine has rendered the impugned statement of Sh. Anil Modi devoid of any evidentiary value at all. As such the addition made by the AO is directed to be deleted as already held in para No. 12 of this order.
In the result, the appeal is partly allowed"
12. In the course of present appellate proceedings, before the Bench, ld. 'AR' filed Paper Book and referred to various pages of the same with a view to indicating the details of land sold in village Dholon Khurd, during the assessment year 2008-09, which was duly reflected in the audit account statements. Ld. 'AR', further, contended that no addition can be made on the basis of statement of third party, namely Shri Anil Kumar Modi, husband of Ms.Chhavi Modi, in the absence of other corroborative evidences. Ld. 'AR' referred to para 12 of the CIT(Appeals)'s order and contended that no opportunity, to cross-examine Shri Anil Kumar Modi was provided by the AO, 33 as requested by the assessee appellant. However, the AO chose to rely upon the statement of Shri Anil Kumar Modi, recorded on 29.12.2008, in the course of search operation, at his residential premises, for the purpose of making addition. The said statement of Shri Anil Kumar Modi was confronted to the assessee, for the first time, on 24.12.2010. The assessee filed his reply, on 29.12.2010 and the assessment was completed on 30.12.2012. The relevant part of said reply, as appearing at page 15 of the Paper Book, filed by the assessee is reproduced hereunder :
"In reply to above it is most humbly submitted that in order to meet ends of justice, your honour is requested to produce the above party for cross examination by the assessee. It has been repeated held by various courts including ITAT Chandigarh that mere third party statement recorded in assessee's absence is not sufficient to sustain any addition unless supported by tangible evidence. The onus lies on the department to prove that the assessee has received something under hand from the buyer and in the present case merely on the basis of statement of the buyer , that too u/s 132 no such huge addition of Rs. 30.00 lacs can be made in assessee's hand in the absence of details of utilisation of above amount in cash.
Assessee's affidavit to the effect that nothing over and above consideration declared in sale deed has been received by him is enclosed."
13. A bare perusal of the reply submitted by the assessee appellant reveals that he requested for cross-examination of Shri Anil Kumar Modi, on whose deposition, the impugned addition was made by the AO. However, such opportunity was denied by the AO, as is evident from the remand report, as reproduced by CIT(Appeals), in para 5 of his order, which is reproduced hereunder:
"In this regard it is submitted that Sh. Anil Modi, one of the purchasers of plot had been examined by the Investigation Wing during search in his own case where he had admitted that he had purchased plot from the assessee company @ of Rs. 2750/- per square yard on 11.8.2008 for Rs.34
37,50,000/- whereas Rs. 7,50,000/- was mentioned in the registration deed. As such Rs. 30 lacs was given on money to the seller and Sh. Anil Modi had surrendered Rs. 30 lacs on his account which was duly reflected in the return of income filed by him for the A.Y. 2009-10 Sh. Anil Modi was never examined by the Assessing Officer. Further as per documents seized from the premises of the assessee during search show that the assessee had mortgaged the plots of same land to the Govt. Authority i.e. PUDA on 17.8.2006 @ of Rs. 5000/- per square yard. If the rates of land were Rs. 5000/- in the F.Y. 2006-07, then certainly these were much higher during the F.Y. 2007-08. The above documents i.e. statements of Sh. Anil Modi and documents regarding mortgaging the land were duly confronted to the assessee during the assessment proceedings. Instead of giving the explanation regarding these documents, the counsel sought cross examination of Sh. Anil Modi which was not allowed because Sh. Anil Modi had already surrendered Rs. 30 lacs as mentioned above and shown in his return of income. Further he was not examined by the A.O. during the assessment proceedings. This action of A.O. is supported by the judgement Hon'ble Madras High Court in the case of T. Davasahaya Nadar Vs. CIT (1964) 51 ITR 20 (Mad), in which it was held as under:-
It is not an universal rule that any evidence upon which the department may rely should have been subjected to cross-examination. If the Assessing Officer refuses to produce an informant for cross-examination by the assessee there cannot be any violation of natural justice. However, where a witness is examined in the presence of the assessee, the assessee must be allowed the right to cross-examine him."
13(i) The factum of denial of opportunity, to the assessee, to cross-examine, Shri Anil Kumar Modi has also been highlighted by the CI T(Appeals), in para 14 of his appellate order. The factum of denial of opportunity, to the assessee for cross-examination of Shri Anil Kumar Modi is undisputed fact, in view of the date of request for cross-examination made by the appellant and the date of assessment order passed by the AO. The appellant made a request for cross-examination, in his submission, dated 29.12.2010, and the assessment order was passed, on the next date i.e. 30.12.2010. Moreover, 35 AO has categorically justified denial of opportunity, to the assessee, for cross-examination of Shri Anil Kumar Modi, as discussed earlier.
14. Ld. 'DR' referred to para 3 and 4 of the assessment order, for the assessment year 2008-09 and justified the impugned addition made by the AO, on the basis of admission made by Shri Anil Modi, in his statement recorded, in the course of search operation. It was, further, contended that Shri Anil Modi has categorically admitted the payment of Rs.30 lacs over and above the sale consideration, specified in the registered sale deed, in respect of the land purchased by him, in the name of his wife Smt.Chhavi Modi, as recorded in the impugned assessment order. Ld. 'DR' was fair enough to admit that no such statement has been recorded in the course of search operation, in respect of other purchasers of the land from the appellant. It was also contended by the ld. 'DR' that Shri Anil Kumar Modi made a surrender of Rs.30 lacs, in the course of search operation and returned the same, in his return of income and paid tax thereon. Consequently, the AO, is justified, in applying the rate, as admitted by Shri Anil Kumar Modi, in his statement. Ld. 'DR', further, referred to para 14, at page 47 of the impugned order passed by CIT(Appeals). The ld. 'DR' placed reliance on the decision in B.T.Steel Ltd.V CIT 328 ITR 471 (P&H). Ld. 'DR', further, stated that the same submission may be considered for the appeal, for the assessment year 2009-10, filed by the revenue.
36
15. We have carefully perused and considered the rival submissions, facts of the case, including judicial precedents, relevant Paper Book and other material available, on record in the form of assessment order and the appellate order passed by the CI T(Appeals). A perusal of page 1 of the Paper Book filed by ld. 'AR', furnished details of agricultural/residential plot sold in village Dolon Khurd, Ludhiana, during assessment year 2008-09 and for the same of ready reference, same is reproduced hereunder :
"DETAILS OF AGRICULTURAL / RESIDENTIAL PLOTS SOLD IN VILLAGE DOLON KHURD, LUDHIANA DURING THE ASSESSMENT YEAR 2008-2009 IN APPEAL No.68 & 69/CHANDI/2012 FIXED FOR HEARING ON 21.01.2013 IN CASE OF Sh.TARSEM SINGLA s/o SH.JAGDISH RAI SINGLA, 3206-PHASE -II, URBAN ESTATE, DUGRI, LUDHIANA.
Date of Sale-deed Plot Area in
Registration Registration No. sq.yards
25.2.2008 18771 1490 Agricultural
28.2.2008 19785 1490 Agricultural
27.3.2008 20891 2000 Agricultural
TOTAL AREA SOLD IN DIFFERENT VILLAGES
1. Village Lalton Kalan 6478
2. Village Mansuran 24119
3. Village Dolon Khurd 4980
35577
Total land sold as per Audited Trading Account : 35577 sq. yards (Audit report dated 20.08.2008 is enclosed.)"
15(i) Page 2 and 3 of the Paper Book, contain details of agricultural land sold, to various parties, in three villages, namely Lalton Kalan, Mansuran & Dolon Khurd, indicating location, nature and area of the land including details of consideration, circle rate and sale deed registration number. Thus, total of the area sold, comes out to 35577, as evidenced at page 2 & 3 (i.e. 6478 + 29099 sq.yds.). In village Dolon 37 Khurd, agricultural land has been sold to three parties, namely Smt.Suman Malhotra, Smt.Shelly Garg and S.Balwinder Singh Gill, on 25.02.2008, 28.02.2008 and 27.03.2008 respectively. The agricultural land measuring 1490 sq.yd. was sold, on 25.02.2008, to Smt.Suman Malhotra, located in village Dolon Khurd, for consideration of Rs.10 lacs, circle rate at Rs.4,49,375/-, vide Registration Deed No. 18771. Further, Agricultural land measuring 1490 sq.yd. sold, on 28.02.2008, to Smt.Shelly Garg, in the same village, for Rs.4,49,500/-, circle rate at Rs.4,59,375/-. The sale was effected vide registration No.19785. Similarly, the sale of agricultural land was made, on 27.03.2008, to S.Balwinder Singh Gill, in village Dolon Khurd, measuring 2000 sq.yd., for an amount of Rs.8,00,000/-, circle rate is indicated at Rs.6,18,750/-, and the sale was effected, vide Registration Deed No. 20891. During assessment year 2009-10, residential plots were sold to various parties, in village Dolon Khurd, as is evident from page No. 22, 23 & 24 of the Paper Book filed by the assessee appellant, including a residential plot, in the same village, measuring 1370 sq.yd., for consideration of Rs.7,65,000/- circle rate Rs.7,53,500/- vide registration No.17730, dated 18.11.2008, sold to Smt.Chhavi Modi, w/o Shri Anil Kumar Modi. During assessment year 2008-09, no residential plot was sold, in village Dolon Khurd, as is evident from page 1, 2 & 3 of the Paper Book filed by the appellant. The agricultural plots were sold to three parties, as indicated earlier.
38
16. Natural justice is a potent weapon for securing substantive justice, which is not fettered by technicality, grammatical pedantry or logical prevarication. The doctrine of natural justice and its first principle was first planted in the Garden of Eden. Natural justice has several facets and primarily it means fair play in action, coupled with age old magazine that none should be condemned unheard. Such principles of natural justice are engrained into the conscience of men and are cardinal canon of civilized jurisprudence. It is a part of public policy and is a guaranty for justice to all the citizens. The rule of natural justice must be read into the statutory provisions unless expressly excluded. Quasi-judicial or administrative decision rendered in violation of audi alteram partem rule cannot be sustained.
17. In the present case, it is undisputed fact that the AO did not provide opportunity, for cross-examination of Shri Anil Kumar Modi, as requested by the assessee. The AO, rather, defended his action of violation of concept of natural justice, by way of specious reasons. However, the AO placed reliance, on the said statement of Shri Anil Kumar Modi and drew adverse inferences against the assessee appellant, without providing any opportunity, to cross-examine the said deponent. The Hon'ble Supreme Court, in a plethora of decisions has frown upon such tendency of the AO and did not approve of such action of any quash-judicial authority. This proposition is clearly laid down by the Hon'ble Supreme Court in the 39 following decisions :
i) ITO V M.Pirai Choodi 334 ITR 262 (S.C) "Assessment-Order passed without granting opportunity to cross- examine-High Court-Writ petition-High Court ought not to set aside entire assessment order-Ought only to direct AO to grant opportunity to cross-examine.
Where an order had been passed by the AO without granting the assessee an opportunity to cross-examine and the assessee preferred a writ petition : Held, that the High Court ought not to have set aside the order of assessment but to have only granted the assessee an opportunity to cross-examine the witness."
ii) Tin Box Company V CIT 249 ITR 216 (S.C) Held, reversing the decision of the High Court, that once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, that the assessee could have placed the evidence before the appellate authority or before the Tribunal was really of no consequence for it was the assessment order that counted : that order had to be made after the assessee had been given a reasonable opportunity of being heard.
(That Supreme Court accordingly set aside the orders of the High Court, the Tribunal and the Commissioner (Appeals) and remanded the matter to the Income-tax Officer for fresh consideration.)
iii) Sahara India (Firm) V Commissioner of Income-tax & another 300 ITR 403(S.C) The exercise of power under section 142(2A) leads to serious civil consequences, and, therefore, even in the absence of any express provision for affording an opportunity of pre-decisional hearing to the assessee and in the absence of any express provision in section 142(2A) barring the giving of reasonable opportunity to the assessee, the requirement of observance of the principles of natural justice is to be read into the said provision.
Rajesh Kumar v. Deputy CIT (2006) 287 ITR 91 (S.C) reaffirmed.
iv) Kishinchand Chellaram V CIT 125 ITR 713 (S.C) Income-tax Proceedings-Evidence to be used against assessee - Letter from Manager of Bank through which money remitted-Not shown to assessee-Not admissible-Opportunity to controvert should be given to assessee.
v) The Hon'ble Supreme Court (Five Judge Bench) in the case of Dhakeshwari Cotton Mills Ltd. V CIT (1954) 26 ITR 775 (S.C), has reiterated the strict observance of the principle of natural justice as under :
"In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assesses what information had been supplied to it by the 40 departmental representative. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing. The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. It is not known whether the mills which had disclosed these rates were situate in Bengal or elsewhere, and whether these mills were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to the appellant, but it refused even to look at the trunk load of books and papers which Mr. Banerjee produced before the Accountant Member in his chamber. No harm would have been done if after notice to the department the trunk had been opened and some time devoted to see what it contained. The assessment in this case and in the connected appeal, we are told, was above the figure of Rs. 55 lakhs and it was meet and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub-Divisional Officer, Narayanganj. We think that both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It is thus a fit case for the exercise of our power under Article 136.
In the result we allow this appeal, set aside the order of the Tribunal and remand the case to it with directions that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it has before the Tribunal, whether it is found in the books of account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the Income-tax Officer if it is intended to make the estimate on the foot of those enquiries. lt will also be open to the department to place any evidence or material on the record to support the estimate made by the Income-tax Officer or by the Tribunal in its judgment, The Tribunal if it thinks fit may remit the case to the Income-tax Officer for making a fresh assessment after taking such further evidence as is furnished by the assessee or by the department."41
17(i) In this specific context, the decision of the jurisdictional High Court, in the case of Shashi Kiran V CI T (2010) 195 Taxman 332 (P&H), is relevant as the facts of the present case have resemblance, to the facts of the case decided by the jurisdictional High Court, except material difference of undisputed fact that the assessee appellant was not afforded opportunity, for the cross-examination of Shri Anil Kumar Modi, whose statement was made, as the basis for drawing adverse inference against the appellant. The decision of the Hon'ble jurisdictional High Court is squarely applicable to the facts of this case, subject to the outcome of the cross- examination of Shri Anil Kumar Modi. In this case, the Hon'ble jurisdictional High Court has upheld the findings of the Tribunal and consequently, appeal of the assessee appellant was dismissed. The relevant findings of the Tribunal as reproduced in the said decision, are reproduced hereunder :
" In t hi s connect i on, no doubt t he uni f or m vi ew of t he C our t s and al s o hel d by t he Hon' bl e Supr em e C our t i n t he cas e of K .P.Vi r ges e V IT O, 131 IT R 597 i s t hat t he bur den of pr ovi ng act ual cons i der at i on i n s uch tr ans act i ons i s t hat of the Revenu e. Admi t t edl y, i n t hi s cas e, t he cons i der at i on s t at ed i n t he Deed of Regi s t r at i on i s Rs .5 l acs . How ever , havi ng r e gar d to t he r et ur n of i ncome f i l ed by t he s el l er , in our cons i der at i on opi ni on, bur den cas t on t he Re venue t o es t ab l i s h t he act ual cons i der at i on f or t he s ale of t he pr oper t y at Rs .11,90,000/ - s t ands di s char ged. In f act , even t he s ubs eq uent i nves t i gat i ons car ri ed out as a s equel t o t he as s es sment pr oceedi ngs i n as s e s s ee' s cas e al s o s how t hat t he Revenue has been s uc ces s f ul i n d i s char gi ng t he bur d en cas t on i t . T he o nl y mat er i al w hi ch i s s ought t o be r el i ed upon by t h e as s es s e e i s an af f i davi t of Shr i Inder pal dat ed 12.12.1008 s t at i ng t hat t he s ai d pr oper t y has been s ol d f or Rs .5 l acs onl y. T hi s af f i davi t 42 w as f i l ed bef or e t he C IT (App eal s ), w hi c h has be en a mat t er of ver i f i cat i on by t h e As s es s i ng Of f i c e r dur i ng t he r e m and pr oceedi ngs . T he s el l er Shr i Inder pa l w as exami ned by t he As s es s i ng Of f i cer w i t h r ef er ence t o t he i mpugned af f i davi t and cr os s exami nat i on w as al s o all ow ed. In t he cr os s exami nat i on pr oceedi ngs , t he s e l l er cl ear l y di s ow n ed t he af f i davi t da t ed 12.12.2008. Fur t her mor e, t her e i s n o cont r adi ct i on or i n- cons i s t ency i n t he s t and of t he s el l er Shr i Inder pal Gar g. N o doubt , t he cons i de r at i on r ecor ded i n t he Sal e Deed d at ed
18.6.2004 i s Rs .5 l acs , w hi ch w as al s o conf i r med by t he s el l er i n af f i davi t dat ed 29.6.2004, w hi ch w as bef or e t he As s es s i ng Of f i cer i n t he as s es s ment pr oce edi ngs . How ever , s ubs eque nt t o t he s ear ch on t he s el l er on 7.9.2005, t her e i s no mat er i al t o s ugges t any i n-cons i s t ency i n t he s t and of t he s el l er i n s uppor t of t he s al e cons i der at i on of Rs .11,90,000/ -. T he As s es s ing Of f i cer has r ef er r ed t o t he i ncome decl a r ed by t he s el l er i n hi s r et ur n f or t he as ses s ment year 2005 -06 bas ed on t he s al e cons i der at i on of Rs .11,90,000/ -. Even dur i ng t he exami nat i on by t he As s es s i ng Of f i cer conduct ed on t he di r ect i ons of the C IT (Appeal s ) dur i ng r emand pr oc eedi n gs , t he s el l er conf i r med t he t ot al cons i der at i on at Rs .11,90,000 / -. T her ef or e, w e ar e i ncl i ned t o uphol d the s t and of t he Revenue i n t hi s r egar d. In any cas e, on t he s i de of t he as s es s ee, t her e i s no mat er i al t o negat e t he admi s s i on made by t he s el l e r except t he Sal e D eed w hi ch s how ed t he s t at ed cons i der at i on of Rs .5 l acs . How e v er , i t w as f or t his r eas on t he C IT (Appe al s ) had al l ow ed t he as s es s ee t o cr os s -e xami ne Shr i Inder pal Gar g i n t he r emand pr oceedi ngs , w hi ch t he as s es s ee car r i ed out . In t he cr os s - exami nat i on al s o, we f i nd not hi ng w hi ch w oul d r e qui r e r ej ect i on of t he s t at ement t ender ed by Shr i Inder pal Gar g i n s uppor t of t he actual s al e cons i der at i on of Rs .11,90,000/ -. C ons i der i ng t he mat er i al on r ecor d, in our vi ew , t he cons i der at i on f or the pur chas e of t he i mpugned pr oper t y has been cor r e ct l y t ake n by t he As s es s i ng Of f i cer bas ed on t he admi s s i on of t he s el l er i n hi s Incom e T a x Ret ur n. T he addi t i on made i s her eb y af f i r med. T he as s es s ee has t o f ai l i n her appeal ."
4317(ii) In view of the above legal and factual discussions and having regard to the clear ratio(s) laid down by the Hon'ble Supreme Court, in the decisions referred to above, on the issue of providing proper and reasonable opportunity, including providing the opportunity for cross-examination, we are of the considered opinion that the appellant must be afforded opportunity, for cross-examination of Shri Anil Kumar Modi, whose statement, in respect of land/plot, purchased by his wife Smt.Chhavi Modi was made as the basis for drawing adverse inference against the appellant. The AO relied upon the statement dated 29.12.2008 u/s 132(4) of the Act of Shri Anil Kumar Modi, who made a surrender of Rs.2.25 Crores including a sum of Rs.30 lacs, against purchase of farm house, as is evident from the statement reproduced earlier. The amount of such surrender was disclosed in the relevant return of income and paid tax thereon. The plot/land was purchased by his wife, measuring 1370 square yards, vide Registered Sale Deed dated 11.08.2008, such transaction falls under the assessment year 2009-10. The addition made by the AO, referable to this land, purchased by the wife of Shri Anil Kumar Modi, was made the basis of statement of Shri Anil Kumar Modi, as discussed earlier, without providing opportunity to the appellant, for cross-examination of Shri Anil Kumar modi. Therefore, having regard to the factual matrix of the case, as discussed earlier, and respectfully following the decisions of the Apex Court, in cases cited above, the only issue pertaining to this sale of land/plot to Smt.Chhavi Modi, wife of Shri Anil Kumar Modi, by the appellant, which is the 44 subject matter of assessment year 2009-10, deserves to be restored to the file of the AO, with direction to afford proper and reasonable opportunity, to the appellant, for cross- examination of Shri Anil Kumar Modi, and adjudicating the issue in question, afresh, in accordance with the relevant provisions of the Act and the relevant case laws. The assessee- appellant is also directed to rendered necessary cooperation to the revenue, in the matter.
18. During the assessment year 2008-09, the appellant sold agricultural land in village Lalton Kalan, Mansuram and Village Dholon Khurd, as is evident from the perusal of page No.1 of the Paper Book, filed by ld. 'AR'. The relevant details of the sale of agricultural land, to various purchasers, had been furnished, in para 15 and 15(i) of this order. The AO, made an addition of Rs.77,00,000/-, in the assessment year in question, by placing reliance, on the statement of Shri Anil Kumar Modi recorded on 29.12.2008 u/s 132(4) of the Act, pertaining to the purchase of the residential plot measuring 1370 sq.yd. by his wife, in village Dholon Khurd, vide Registration Deed dated 19.08.2008, for a consideration of Rs.7,65,000/-. However, the AO, in the impugned assessment order for assessment year 2008-09 applied the rate at Rs.2500/- per sq.yd., based on the statement of Shri Anil Kumar Modi, observing in para 3 of the assessment order that in his statement of Shri Anil Kumar Modi, admitted that a plot, measuring 1370 sq.yd., in village Dholon Khurd, was purchased on 11.8.2008, in the name of his wife which falls under the assessment year 2009-10. for Rs.37,65,000/-, for 45 which registration was done for Rs.7,65,000/- and the balance amount of Rs.30,00,000/- was paid, in cash from undisclosed sources. Further, he admitted that the rate of land was at Rs.2750/- per sq.yd., in the above village. Such findings of the AO are factually incorrect, having regard to the statement, dated 29.12.2008, of Shri Anil Kumar Modi, which is reproduced in para 11(ii) of this order. However, for the sake of ready reference, relevant para is reproduced hereunder :
"Q . 3 A s p er R e gi st r at i o n D e e d , yo u h av e p ur c h as e d a gr i c ul t ur e l a n d of 1 3 7 0 s q y d , w h er e as t hi s l a n d i s co mm er ci al i . e . F a r m Ho us e b ei n g a d e v el op e d f a ci l i t y, l i k e l i g ht a n d r o a ds . T h e m ar k et v al u e p er s q .y d i s Rs . 2 7 5 0 p er sq .y d . Do yo u a gr e e t h at t h e v al u e o f l a n d t o b e a dopt e d at Rs . 2 7 5 0/ - p er s q y d b ei n g a d e v el op e d l oc al i t y.
An s. Y es . I a gr e e t h at t h e cost of t h e l a n d t o b e t a k e n @ Rs . 2 7 5 0/ - p er s q .y d .
Q. 4 Do y o u w a nt t o s a y a n yt hi n g m or e ?
An s. To b uy p e a c e of mi n d a n d a voi d l i t i g at i o n a n d s ubj e ct t o no p e n al t y u n d er a ny s e ct i o n , sp e ci al l y s e ct i o n 2 7 1 ( 1 ) ( c ) & 2 7 1A AA I h av e s u r r e n d er a n a mo u n t of Rs . 2 , 2 5, 0 0 , 0 0 0/ - ( Rs . T wo Cr or e t w e nt y fi v e l a c s ) o nl y , bi f ur c at i o n o f w hi c h i s as u n d er :
i) S ur r e n d er e d o n a c c ou nt o f e x c e ss st o c k Rs . 1 , 7 5, 0 0 0 /-
ii) S ur r e n d er t o c ov er i nv e st m e nt i n p ur c h as e R s. 3 0 , 0 , 0 0 0/ -
of f ar m h o us e .
iii) S ur r e n d er t o c ov er a ny ot h er Rs . 2 0 , 0 0, 0 0 0/ -
di s cr e p a n cy er r or /i nv e st m e nt
fo u n d i n l o os e p ap e r /boo ks
Tot al Rs . 2 , 2 5, 0 0 , 0 0 0/ -
Al l t hi s s ur r e n d er h as b e e n m a d e i n r es p e ct of fi n a n ci a l ye ar 2 0 0 8 - 0 9 r el e v a nt t o as s ess m e nt y e ar 2 0 0 9 - 1 0. "
19. A bare perusal of Question No. 3, addressed to Shri Anil Kumar Modi and answer thereto, reveals that the revenue has put its conclusion in the mouth of the deponent and, accordingly, recorded the answer thereto. Both, the question and the answer, speaks volume about the quality, nature and 46 credibility of such statement, as evidentiary value, particularly in the context of drawing adverse inference, based on such statement, against the appellant, for the assessment year 2008-09, and the assessment year 2009-10 without bringing independent, corroborative and relevant material on record. In the assessment year 2008-09, the appellant had sold only agricultural land and not the residential plots. Therefore, residential plot, which is mentioned in the said statement, cannot be compared, with agricultural land sold by the appellant, to various purchasers, during the assessment year 2008-09. A bare perusal of the statement reproduced above clearly reveals that in the said statement, the deponent has nowhere stated that he had purchased the said plot, in the name of his wife, for Rs.37,65,000/-, and registration deed was executed for Rs.7,65,000/- and the balance amount of Rs.30,00,000/-, was paid in cash, from undisclosed sources.
Therefore, such observations have been imported and recorded by the AO, in the impugned assessment order from the source best known to him.
20. It is trite law that only like must be compared with like for the purpose of drawing meaningful, rational and valid conclusions. In this case, the AO, has compared the residential plot sold, in the assessment year 2009-10, with agricultural land sold in assessment year 2008-09. Thus, the AO treated the unequal as equal and drew adverse inference therefrom, which would certainly vitiate his findings. The AO, failed to adopt a standard approach, based on rational and intelligible comparable cases. Such age-old principle of 47 comparing like with like, was not adhered to by the AO, and, hence, the twin-criteria of fairness and reasonableness was observed in its breach. In view of this, the AO cannot substitute his own version in place of book-version of the appellant. The AO, has not rejected the book-version of the appellant u/s 145(3) of the Act for the assessment years 2008- 09 and 2009-10. Therefore, it is not legally tenable, to make addition, without rejecting the books of account. Further, such wrong comparison, would lead to distorted conclusions.
Moreover, no land was sold by the appellant to the wife of Shri Anil Kumar Modi, during the assessment year 2008-09.
21. The agricultural land, sold by the appellant, was purchased by various buyers, @ Rs.800/- per sq.yd. The assessee has filed necessary details of land, as reproduced earlier in this order. The revenue has failed to bring on record any cogent, corroborative and credible material, to support the impugned addition, made by the AO. The case of Smt.Chhavi Modi w/o Shri Anil Kumar Modi, cannot be applied to the facts of the appellant, as obtaining in the assessment year 2008-09.
In this assessment year, revenue has failed to make any enquiry, within the parameters of the scheme of the Act, with a view to establishing that the appellant sold land/plot in excess of the sale consideration specified in the registered sale deeds and actually received such excess sale consideration.
The revenue has not brought on record any statement of the purchasers of agricultural land, during the assessment year 2008-09, contradicting the sale consideration, as specified in the registered sale deeds. Similarly, the revenue also failed to 48 bring on record, any amount of surrender, made by such purchasers, in the said assessment year, in their return of income and paid tax on such surrender, representing excess sale consideration over and above, the sale consideration specified, in their respective Registered Sale Deeds. No enquiry was made from such purchasers, by the AO, to support his findings for the assessment years 2008-09 and 2009-10.
The revenue failed to bring on record any evidence, to establish that the purchasers had paid and appellant had received sale consideration of such agricultural land, over and above the sale consideration, as specified in their respective Registered Sale Deeds. The revenue, merely placed reliance, on the statement of Shri Anil Kumar Modi, in respect of residential plot purchased by his wife during the assessment year 2009-10 and drew adverse inference against the appellant. Needless to say, as indicated in detail, in earlier part of this order, that the revenue failed, to provide opportunity to the appellant, as requested by him, to cross-examine, Shri Anil Kumar Modi.
Thus, it is trite law that no addition can be made or sustained, without allowing proper opportunity for cross-examination, to the appellant. The AO, even failed to apply his mind, to the different fact-situation of purchase of residential plot by Smt.Chhavi Modi vis-à-vis the purchase of agricultural land by various purchasers. The facts of case of the purchaser, Smt.Chhavi Modi, is patently different and distinguishable vis-
à-vis other purchasers of agricultural land, in the assessment year 2008-09.49
22. Further, no incriminating documents seized during search had been brought on record for the purpose of establishing the receipt of excess sale consideration, by the appellant vis-à-vis the sale consideration as specified in the respective registered sale deeds. The issue of mortgage of plots, by appellant, which was cited by the AO, as one of the reasons, for making such addition, had been duly considered by the Bench in I TA No. 66 & 67/Chd/2012 A.Y. 2008-09 and 2009- 10 ( CI T, CC-III, Ludhiana V M/s Singla Enclave Developers (P) Ltd. ,Dugri, Ludhiana ) vide order dated 27.09.2012, and the issue was decided against the revenue. Further, reliance placed by ld. 'DR' on the decision in the case of B.T. Steels Ltd (supra) is misplaced, being different and distinguishable.
Similarly, the affidavit filed by the appellant, before AO, was rejected by the AO, without cross-examination of the deponent, with a view to ascertaining the veracity of the contents of such deposition made in the affidavit as held by the Hon'ble Supreme Court in Mehta Parikh & Co. v CI T 30 I TR 181 (SC).
23. It is well established legal proposition that taxing authorities, exercise quasi-judicial powers and in doing so, they must act in a fair and not partisan manner, although it is part of their duty to ensure that no tax which is due from the assessee, should remain unrecovered, they must also, at the same time, not act in a manner as might indicate that scales are weighed against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power, in a manner, most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed to have 50 exercise it in a proper and judicious manner, as held in CI T V Simon Carves Ltd. (1976) 105 I TR 212 (S.C).
24. The Hon'ble Supreme Court in the case of PULLANGODE RUBBER PRODUCTS CO.LTD. V State of Kerala and another (1973) 91 I TR 18 (Ker) has held that "Admission is an expressly important piece of evidence but it cannot be said that it is conclusive. Hence, no addition can be made purely on the admission of the third party, without following the principle of natural justice and bringing corroborative material on record.
25. In the specific context of the facts of this case, it is evident that the revenue has failed, to discharge the onus of proof cast on it, to justify the impugned addition by bringing supporting evidence / material on records. The general rule is that 'burden of proof' is always on the party, who asserts a proposition or fact, which is not self-evident. The burden of proof has two shades of meaning. In the primary sense, it means, the burden of establishing the case. The second meaning of 'burden of proof' is on the principle of evidence. In the second sense, the burden would be shifted from one party to the other, as and when adequate evidence to discharge the burden, that lay on a party, is being produced, by that party. 25(I) The onus to prove that apparent, is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT V Daulat Ram Rawatmull (1973) 87 I TR 349 (S.C) and CIT V Durga Prasad More (1971) 82 ITR 540 (S.C). In the case of CIT V Durga Prasad More (supra), it has been held by the Apex Court that though an 51 apparent statement must be considered real, until it was shown that there were reasons to believe that apparent was not the real, in a case where an authority relied on self serving recitals in documents. It was for the party to establish the proof of those recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out reality of such recitals.
25(II) It is also a settled legal proposition, if no evidence is given by the party on whom the burden is cast, the issue must be found against him. In this case, the onus lies on the revenue, to prove the receipt of sale consideration, in excess of what is specified in the registered sale deeds and the revenue has failed to discharge such onus cast on it.
25(iii) The assessee declared the sale consideration for the purpose of taxation, under the Act, as duly specified in the registered sale deeds of various purchasers of land in village Dolon Khurd. The registered sale deeds are documentary evidence demonstrating terms of the sale transactions between the seller and the purchaser and such documentary evidence has evidentiary value under the Evidence Act.
The Hon'ble Supreme Court, in the case of Chuhar Mal V CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules of evidence, as held by the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills v CIT (1954) 26ITR 775. The Hon'ble Supreme Court, in the case of 52 Chuhar Mal V CIT (supra) held that what was meant by saying that Evidence Act did not apply to the proceedings under Income-tax Act,1961, was that the rigors of Rules of evidence, contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of Evidence Act, in proceedings before them, they were prevented from doing so.
25(IV) However, it is well-established proposition that direct documentary evidence, in the shape of validly executed sale deed, if pitted against the mere oral evidence, the documentary evidence would certainly prevail. This view is supported by the Hon'ble Supreme Court, in the case of Motors and General Stores (P) Ltd. (1967) 66 ITR 692 (S.C) by holding that, where statutorily the parties have to reduce a certain transaction into writing, it is not open to Court or any authority to permit oral evidence to be adduced by the parties or to entitle them to go behind the statements made in the document. Income Tax Authorities are under the ordinary law. No greater power or authority is vested in them, except that which the law confers. A bare perusal of Section 91 to 94 of the Evidence Act limits the power, subject of course to the exceptions stated in Section 91 and 92 of the Evidence Act. It is settled proposition that the Revenue could either accept the documents as representing genuine transactions or reject it on valid and substantial grounds which are tenable in law, but they cannot, while accepting that it is a genuine transaction, rewrite the document, contrary to what the parties 53 have in-fact effected, or gave a construction by reference inadmissible in evidence.
26. In the present case, the AO accepted the sale transaction as recorded in the impugned sale deed, as genuine, but the sale consideration specified therein was rejected as non- genuine and, further, enhanced that sale consideration, on the basis of statement of Shri Anil Kumar Modi, as discussed earlier. Thus, the AO disregarded the valid documentary evidence, various judicial pronouncements and undertook the exercise of rewriting the sale deeds and substituting his own sale consideration in place of the sale consideration as specified in the sale deed. Needless to state here that the sale deed was voluntarily entered and executed by the parties thereto.
26(I) The AO has failed to establish the factum of physical receipt of money, in excess of the consideration, specified in the sale deeds, by bringing on record credible and corroborative evidences. When a transaction has been reduced to writing either by agreement of the parties or by requirement of law, the writing becomes the exclusive memorial thereof, as no evidence shall be given to prove the transaction, except the document itself or secondary evidence of its contents, where such evidence is admissible. Section 91 of law of evidence relates to evidence of terms of contract, grants and other disposition of properties reduced to form of document. This Section merely forbids proving the contents of writing otherwise than by writing itself; it is covered by the 54 ordinary rule of evidence, applicable not merely to solemn writing of the sort named but to others known sometimes as the "best evidence rule". In Bai Hira Devi V Official Assignee of Bombay AIR 1958 S.C. 448, the Supreme Court observed that Section 91, is based on what is sometimes described, as the best evidence rule. The best evidence about contents of a document is the document itself and it is the production of the document that is required by Section 91, in proof of its contents. It is after the document has been produced to prove its terms under Section 91 that the provision of Section 91 came into operation for the purpose of excluding evidence of any oral agreement or statement, for the purpose of contradicting, varying, adding to or subtracting from its terms. In a nutshell, when the terms of a contract are reduced in writing, the intention of the parties thereto can be gathered from such written document. It is, further, stated that the rule with regard to writings is that oral proof cannot be substituted for the written evidence of any contract which the parties have put into writing. And the reason is that the writing is considered by the parties themselves as the only repository and the appropriate evidence of their agreement. 26(II) The issue in the present appeals is directly covered in favour of the appellant, in view of the clear ratio laid down therein, as is evident from the following discussions.
i) The Hon'ble Punjab & Haryana High Court, in the case of Paramjit Singh V I TO (2010) 323 ITR 588 (P&H) has held that the assessee, had purchased a property from his 55 uncles, for a consideration, specified in the registered sale deed, but the assessee claimed that no amount was paid on the basis of oral evidence of uncles. The inference of the AO, that the amounts shown to have been paid in the sale deed was actually paid, was upheld by the Hon'ble High Court. The Hon'ble High Court pointed out that oral evidence is not conclusive as against documentary evidence u/s 91 and 92 of the Indian Evidence Act, 1872 and upheld the inference of the AO. The relevant part of the decision of the Hon'ble Punjab & Haryana High Court in the case of Paramjit Singh V ITO, 323 ITR 588 (P&H) is reproduced hereunder :
"We have thoughtfully considered the submissions made by the learned counsel and are of the view that they do not warrant acceptance. There is well known principle that no oral evidence is admissible once the document contains all the terms and conditions.
Sections 91 and 92 of the Indian Evidence Act, 1872 (for brevity 'the 1872 Act') incorporate the aforesaid principle. According to Section 91 of the Act when terms of a contracts, grants or other dispositions of property has been reduced to the form of a documents then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the of the 1872 Act once the document is tendered in evidence and proved as per the requirements of Section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting, varying, adding to or subtracting from its terms. According to illustration 'b' to Section 92 if there is absolute agreement in writing between the parties where one has to pay the 56 other a principal sum by specified date then the oral agreement that the money was not to be paid till the specified date cannot be proved. Therefore, it follows that no oral agreement contradicting/ varying the terms of a document could be offered. Once the aforesaid principal is clear then ostensible sale consideration disclosed in the sale deed dated 24.9.2002 (A.7) has to be accepted and it cannot be contradicted by adducing any oral evidence.
Therefore, the order of the Tribunal does not suffer from any legal infirmity in reaching to the conclusion that the amount shown in the registered sale deed was received by the vendors and deserves to be added to the gross income of the assessee- appellant."
ii) The Hon'ble Punjab & Haryana High Court, in the case of CI T V Chandni Bhochar (2010) 323 ITR 510 has held that the purchase price disclosed in the sale deed at Rs.17,06,700/- cannot be adopted as the purchase price for Rs.30,32,000/- by the AO, which is assessed for the purpose of stamp duty. The AO, accordingly, held that assessee must have paid Rs.13,25,300/-, over and above the purchase price disclosed in the Sale Deed and made the addition as income from undisclosed sources. The AO has failed to bring on record positive evidence, supporting the price assessed by the State Govt. for the purpose of stamp duty. Therefore, the provision of Section 50C of the Act cannot be applied in the case of a purchaser. The addition made by the AO u/s 69B on unexplained investment in the property, cannot be based on the provisions of Section 50C of the Act. Therefore, the apparent consideration disclosed in the Sale Deed 57 would remain unrebutted, unless displaced by credible documentary evidence.
iii). The Hon'ble Punjab & Haryana High Court, in the case of CIT V Satinder Kumar (2001) 250 ITR 484 clearly held that AO is not competent to make addition in the absence of credible evidence, in respect of investment made over and above the consideration recorded, in the sale deed. The head-note of the decision is reproduced hereunder :
"Appeal to High Court-Substantial question of law- Search and Seizure-Additions to income-Income f rom undisclosed sources-No material evidence to establish that assessee made investment over and above that recorded in sale deed-Tribunal deleting additions made under Section 69-Justif ied-No question of law arises-Income-tax Act,1961 ss.69, 260A."
iv). The Hon'ble Supreme Court, in the case of CI T V Motor & General Stores Pvt. Ltd. 66 ITR 692 (S.C) held that "it is, therefore, obvious that it is not open to the income tax authorities to deduce the nature of the document from the purported intention, by going behind the document or to consider the substance of the matter or to accept it in part and reject it in part or to rewrite the document, merely to suite purpose of revenue.
v) The Hon'ble Supreme Court in the case of K.P.Varghese V ITO, Ernakulam and another, 131 ITR 597 (S.C.) has held as under :
58
"Capital gains-Understatement-Scope of provisions-Difference between market value and consideration declared not sufficient-Assessee must be shown to have received more than what is declared or disclosed by him as consideration- Burden of proof on the Department-Computation-Only that income which has accrued or been received-Circulars of Central Board-Circulars dated July 7,1964, and January 14,1974-Binding on Deptt. - "Declared", meaning and effect of - Income-tax Act,1961, ss. 48. 52(1), 52(2).
vi) The Hon'ble Madras High Court, in the case of CIT V P.V.Kalyanasundaram, 282 ITR 259 (Mad) has held as under :
"Search & seizure - Block Assessment -
Undisclosed income-Property purchased by
assessee - Burden on revenue to prove that price had been understated-No enquiry and no evidence except conflicting statements of seller- Amount not assessable as undisclosed income -
Income-tax Act, 1961, s. 158BC."
Assessment was made on the assessee under Section 158BC of the Income-tax Act, 1961, for the period April 1,1988 to December 8,1988. The assessee has purchased land on October 26,1998. The land was registered for Rs.4,10 lakhs. During the course of the search certain notings had been found. The assessee stated that he did not remember for what purpose he had made notings, which was confirmed by the assessee in a subsequent statement recorded on December 11,1998. The land was purchased from one R. The purchasers' statement was also recorded on the date of search, i.e. December 59 8,1998. R admitted that he had received Rs.34.85 lakhs but subsequently in an affidavit he mentioned that the sale consideration received was Rs.4.10 lakhs. In a further sworn statement R again stated that he had received Rs.34.85 lakhs. In the cash flow statement for the assessment year 1999-2000, i.e. block period April 1,1988, to December 8,1998, the AO adopted the sum in the cash flow relating to purchase of land at Rs.35.45 lakhs as against Rs.4,69,995/- disclosed by the assessee in his cash flow statement. This resulted in an addition of Rs.30,75,005 as undisclosed income for the block period. The Commissioner (Appeals) noted that due to the conflicting nature of the statements given by the seller, his statement could not be relied upon and hence he deleted the addition made by the AO. Aggrieved by the order of the Commissioner(Appeals) the Revenue filed an appeal before the Income-tax Appellate Tribunal. The Tribunal dismissed the Revenue's appeal and confirmed the order of the Commissioner(Appeals). On appeal to the High Court:
Held, that the burden of proving actual consideration in such a transaction was that of the Revenue. The AO did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. The deletion of the addition was justified.
K.P.Varghese v. ITO (1981) 131 ITR 597 (S.C) referred to."
vii) Hon'ble Supreme Court in the case of CIT V P.V.Kalyanasundram (2007) 294 I TR 49 (S.C) has held as under :
60
"Held, affirming the decision of the High Court, that the implication of contradictory statements made by the vendor or whether reliance could be placed on the loose sheets recovered in the course of the raid were all questions of fact, and no question of law arose out of the order of the Appellate Tribunal.
Decision of the Madras High Court in CIT v.
P.V.Kalyanasundaram (2006) 282 ITR 259 affirmed."
viii) In the case of V.Ramchandra Construction Pvt. Ltd. V ACI T (2011) 131 ITD 71(TM), it has been held that the statement recorded u/s 131 of the Act will not affect evidence on record, in the form of agreement to sell and Power of Attorney executed by the assessee. The statement can be an after-thought. In income tax proceedings, oral evidences are not to be so relevant as written evidences". Oral evidence, no doubt has evidentiary value so far criminal proceedings are concerned, but in the income tax proceedings, the oral evidences have to be looked into when written evidences are not available on record and oral evidences can be accepted only when they are corroborated by the written evidences.
27. The question in the present appeal is squarely covered by the decision of the Hon'ble Kerala High Court in the case of CIT V Smt. K.C.Agnes & Others (2003) 262 ITR 354 (Kerala), wherein the Hon'ble High Court held that when a document shows fixed price, there will be a presumption that, that is correct price agreed upon by the parties. It is not necessary that the price stated in the agreement will be the price shown in the sale deed. Sometimes, it my be 61 higher and sometimes it may be lower. Sometimes, intentionally a lesser value may be shown in the sale deed. Even if it is assumed to be so, unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for sale, the court cannot come to the conclusion that the price mentioned in the sale deed is not correct. In this case, appeal of the Revenue was dismissed. It is seen that the Hon'ble High Court has gone a step ahead and even considered the existence of both the agreement to sell and the sale deed and upheld the validity and sanctity of the sale deed.
28. During the assessment year 2009-10, the assessee- appellant sold both the residential plots and agricultural land measuring 74971 square yards, comprising of residential plots measuring 37423 sq yards and agricultural land measuring 37548 square yards, as is evident from the details extracted and reproduced, from the paper book page 18, filed by the assessee and reproduced in para 10.1 of this order. The AO substituted the sale rate at Rs. 560/- per square yard, as declared by the assessee-appellant by Rs. 2,500/- per square yard, following the same reasoning as given in the assessment year 2008-09, in respect of both the agricultural land and residential plot sold by the appellant, as is evident from para 3 of the assessment order dated 30.12.2010, for the assessment year 2009-10. Therefore, the AO worked out the sale consideration specified in the registered sale deeds and also worked out the sale consideration by applying his rate at Rs. 2,500/- per square yard and consequently made the addition of the differential amount in the 62 assessment year 2009-10. The AO merely relied upon the statement of Shri Anil Kumar Modi, in respect of the residential plot purchased by his wife during assessment year 2009-10, for making such addition. Smt. Chavi Modi wife of Shri Anil Kumar Modi purchased a residential plot on 11.2.2008 measuring 1370 square yards for the sale consideration of Rs 7,65,000/- as per the registered sale deed. The issue of reliance placed by the AO on the statement of Shri Anil Kumar Modi; for making the addition has been discussed, in detail, in the foregoing paras of this order, while considering the issue of addition made by the AO, in the assessment year 2008-09. The AO made the addition in the respective assessment years 2008-09 and 2009-10, on the basis of statement of Shri Anil Kumar Modi. The AO has not brought any cogent and credible material on record, to substantiate the additions made in the assessment year 2009-
10. No independent inquiry has been made from the respective purchasers of the residential plots / agricultural land during the assessment year 2009-10. It is also not a case where any of the purchasers made voluntary disclosure of excess consideration, paid over and above, the sale consideration specified in the respective sale deed and paid tax thereon, by disclosing the same, in the return of income. The AO has merely applied a thumb rule, founded on the statement of Shri Anil Kumar Modi. The quality and credibility of the statement of Shri Anil Kumar Modi has been discussed in detail, in the earlier part of this order. Needless to say that the appellant was not afforded opportunity, for the cross examination of the deponent namely Shri Anil Kumar Modi, whose statement was 63 used by the AO, to draw adverse inference against the assessee. It is undisputed fact, as discussed earlier that the assessee- appellant requested for examination of Shri Anil Kumar Modi, which was denied by the AO. The AO recorded his findings, for the assessment year 2009-10, on similar lines, as that of findings recorded, in assessment year 2008-09. Such findings of the AO are recorded in para 3 of the assessment year 2009-
10. Therefore, we do not find it necessary to reproduce the same. The ld. CIT(A) reversed the findings of the AO, for both the assessment years 2008-09 and 2009-10 each dated 18.11.2011 passed u/s 250(6) of the Act. The findings of the ld. CIT(A), are similar to the findings recorded, in his appellate order, for the assessment year 2008-09, passed on 18.11.2011. The relevant part of the appellate order dated 18.11.2011, for the assessment year 2008-09, has been reproduced in this order. In view of this, we do not consider, it proper, to reproduce the findings, of the ld. CIT (A), on identical issue, for the assessment year 2009-10.
29. The AO made the addition, for the assessment years 2008- 09 and 2009-10, arbitrarily and by applying a thumb rule, as discussed in detail earlier. In both assessment years under consideration, the issue involved and the findings recorded by the AO are similar. However, in both the assessment years, CIT(A) reversed the findings of the AO. Therefore, findings of the Bench as recorded earlier in this order, are applicable to both the assessment years.
30. In view of the above legal and factual discussions and having regard to the direct decisions of the Hon'ble Tribunal, 64 Jurisdictional High Court including the decision of various High Courts and the Hon'ble Supreme Court, in the matter, we hold that the sale consideration specified in the impugned sale deeds cannot be substituted, without bringing corroborative, credible and concrete material on records.
30(i) Consequently, the findings of the CIT(A), for the assessment year 2008-09 are upheld. Accordingly, the appeal of the revenue, in ITA No. 68/CHD/2012, is dismissed and the Cross Objection raised by the assessee vide C.O. No.11/Chd/2012 (in I TA No. 68/CHD/2012) is also dismissed. The findings of the ld. CIT(A), for the assessment year 2009- 10, are upheld except the issue involved, in the purchase of residential plot by Smt Chavi Modi wife of Shri Anil Kumar Modi, on 11.8.2008, measuring 1370 square yards, for the sale consideration of Rs. 7,65,000/-, as recorded in the registered sale deed, being restored to the file of the AO, for fresh adjudication, as discussed earlier in this order. Thus, both the appeals of the Revenue for assessment years 2008-09 & 2009-10 and the said Cross Objection filed by the assessee, for assessment year 2008-09 stand disposed off, as indicated above.
Order pronounced in the Open Court on 02.04.2013.
Sd/- Sd/-
(SUSHMA CHOWLA) (MEHAR SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 2 n d April, 2013.
'Poonam'
65
Copy to:
The Appellant, The Respondent, The CI T(A), The CI T,DR Assistant Registrar, I TAT Chandigarh