Delhi High Court
Malik Bros. Pvt. Ltd. vs Commissioner Of Income Tax on 19 April, 2007
Equivalent citations: (2007)212CTR(DEL)469
Author: V.B. Gupta
Bench: Madan B. Lokur, V.B. Gupta
JUDGMENT V.B. Gupta, J.
1. Appellant has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as Act) challenging the order dated 23rd September, 2005 passed by Income Tax Appellate Tribunal (hereinafter referred to as Tribunal), New Delhi in ITA No. 981/Del/2001 for the assessment year 1991-92 vide which the appeal filed by the Appellant against the order of Commissioner of Income Tax (Appeals) was dismissed.
2. The facts of this case are that the assessed filed return of income on 30th December, 1991 at "nil income". Later on, information was received that the assessed had purchased property No. 4B/16, Tilak Nagar, New Delhi for Rs. 6 lacs plus registration charges on 5th October, 1990. A search was conducted in the business and residential premises of sister concern M/s B.K.Jewellery House and its partners. After that a survey was also conducted at the business premises of Sh. Gajender Seth, husband of Smt. Pushpa Seth who had sold the above stated property to the assessed-company. Smt.Pushpa Seth in her statement confirmed that the total sale consideration for the sale of the said property was Rs. 45 lacs. In fact this amount was disclosed by her in her return of income tax. Another statement of Smt. Pushpa Seth was recorded on 29th July, 1996 in which the sale consideration was admitted at Rs. 45 lacs and the copy of the statement was sent to the assessed by the Assessing Officer on 9th January, 1997. The assessed responded that the property was purchased only for Rs. 6 lacs. However, the Assessing Officer made addition of Rs. 39 lacs.
3. Aggrieved by this order, the assessed filed an appeal before the Commissioner of Income Tax (Appeals) and the matter was set aside by the Commissioner of Income Tax (Appeals) for fresh examination.
4. Accordingly the fresh notice under Section 143(2) of the Act was issued on 4th August, 1999. None attended in response of this notice and the case was later on fixed for various other dates but no compliance was made. However, on few dates adjournments were sought on behalf of the assessed on one pretext or the other. Finally, the assessed responded on 23rd March, 2000 asking the Assessing Officer to give documents submitted by Smt. Pushpa Seth and asking to fix the time for cross-examination.
5. It was also pointed out by the assessed that the company was incorporated only on 29th September, 1990 that means the assessed-company had no source of income till the date of purchase of property and, therefore, the additional alleged consideration could not be assessed in the hands of Assessing-company. Further, it was stated by the assessed that the group of assessed has already approached the Settlement Commission and the issues regarding investment in the said property was also pending and, therefore, the request was made to keep the assessment proceedings pending till the proceedings before the Settlement Commission become final.
6. The Assessing Officer observed that the assessment was getting time barred on 31st March, 2000 and, therefore, the same had to be completed and it was further observed by the Assessing Officer that the assessed has not been able to furnish any evidence that amount of Rs. 39 lacs being the additional sale consideration was not assessable in the hands of the company. The Assessing Officer, thus, made the addition of Rs. 39 lacs. This action of Assessing Officer was confirmed by the Commissioner of Income Tax (Appeals).
7. Being aggrieved with the order of Commissioner of Income Tax (Appeals), the assessed preferred an appeal before the Tribunal, who also confirmed the finding of the Commissioner of Income Tax (Appeals).
8. It has been argued by learned Counsel for the assessed that the sale consideration at the higher amount has been fixed solely relying upon the statement of this seller and without conducting any independent enquiry relating to the value of the property. In support of this contention, learned Counsel for the assessed has cited a decision of Madras High Court reported as Commissioner of Income Tax v. P.V. Kalyanasundram (2006) 282 ITR 259.
9. On the other hand, it has been contended by the learned Counsel for the Revenue that due opportunity was given to the assessed but assessed never asked for the cross-examination of Smt. Pushpa Seth and sought adjournments on one pretext or the other and also requested that assessment be kept pending as the matter was also pending before the Settlement Commission.
10. In the present case, the Assessing Officer has recorded the statement of Smt. Pushpa Seth. During the assessment proceedings, certain questions were put to her. The relevant questions and answers with regard to the sale of the property in question read as under:
Q. Please tell when did you sell the property give full details of the transaction.
Ans. I sold property No. 4-B/16 Tilak Nagar to M/s Malik Brothers (P) Ltd. for Rs. 45 lacs on 5th Oct. 1990. Though the sale consideration was for Rs. 45 lacs but the sale Deed was got registered only for Rs. 6 lacs. The balance amount of Rs. 39 lacs was received by me in cash. I have disclosed this fact in my return for the Asstt. Year 1990-91 and I have paid all the taxes for this disclosure as per the asstt. Order dt. 31.12.92 by DCIT (Asstt.) Spl. Range 13, New Delhi Q. I again put to you whether the sale consideration declared by you for the House Property No. 4-B, Tilak Nagar, New Delhi was received by you from M/s Malik Bros. Pvt. Ltd. in cash.
Ans. Yes, I confirm and declare that I have received Rs. 39 lacs in cash for the sale consideration of the House Property No. 4-B/16, Tilak Nagar, New Delhi. All the due taxes on the capital gains have been paid by me after the asstt.
11. Reasonable opportunity was given to the assessed to cross-examine the vendor Smt. Pushpa Seth which is apparent from the assessment order. The relevant portion of the assessment order reads as under:
3. During the course of assessment proceedings, statement of Smt. Pushpa Seth was also recorded where-in she had admitted that she had transferred the property for Rs. 45 lakhs and she had disclosed the sale consideration in her Income-tax return and paid the tax accordingly. She had also filed the copy of the assessment order. assessed was confronted with the statement of smt. Pushpa Seth and asked to explain the source of payment of additional consideration of Rs. 39 lakhs. Copy of the statement of Smt. Pushpa Seth was made available to the assessed. Shri Ramesh Sardana, CA on behalf of the assessed attended and submitted that the firm M/s. BK Jewellery House, an associated concern had filed the petition before the Settlement Commission. The facts of the under statement of sale consideration to the extent of Rs. 39 lakhs is also under consideration of the Settlement Commission. Even the Settlement Commission had observed "Even for the investment in the property at Tilak Nagar, New Delhi in the name of M/s. Malik Bros. (P) Ltd., certainly raises a controversy as regards the quantum of investment for purchase of property and sources of funds so invested in the name of the company. To resolve such controversy again complex investigation will be involved.
4. On the basis of these remarks, the assessed requested to stay the assessment proceedings in the case of the assessed till final orders are passed by the Settlement Commission in the firm M/s. B.K. Jewellery House. The assessed did not explain the source of Rs. 39 lakhs Regarding the stay of assessment proceedings, the contention of the assessed is not acceptable as the petition had not been filed in the case of the assessed. In the absence of any explanation on the part of the assessed, investment of Rs. 39 lakhs is to be treated as Un-explained investment in the hands of the assessed and assess it under Section 69 of the Income-Tax Act, 1961 as income of the assessed company.
12. According to these proceedings, it is clear that the assessed did not avail of the opportunity granted to it and the assessed just wanted to delay the assessment proceedings.
13. Further, the assessed tried to avoid the vendor Smt. Pushpa Seth, which is apparent from the order dated 22nd January, 2001 passed by the Commissioner of Income Tax (Appeals) and relevant portion of the same reads as under:
I have gone through the order of the Assessing Officer, the case records and the arguments advanced by the Ld. Representative of the appellant. The appellant"s claim that the matter should be kept pending till the decision of the Settlement Commission comes is not tenable. As per the I.T. records before me appellant M/s. Malik Brothers is not a party before the Settlement Commission. M/s. B.K. Jewellery House, Wazirpur is the petitioner before the Settlement Commission. The Assessing Officer has sent a copy of the Statement of Smt. Pushpa Seth, W/o Sh. Gajender Seth to the assessed vide letter dated 9th January, 1997. So, it is evident that the appellant has been given adequate opportunity before the completion of assessment and before the completion of proceedings before me to consider her statement as it is on this ground that this order has already been once set-aside by CIT(A).
The appellant is trying to avoid her when confronted with the full facts that the concealment of income has been detected. This is a clear case where the amount other than the apparent consideration has clearly changed hands as has been confessed by Smt. Pushpa Seth. The Supreme Court in the case of ICICI India 83 ITR 710 has pointed out that only if there is any cogent material on which the ITO could have reason to believe that the transfers effected with the object of avoidance or reduction of liability to tax. In the instant case, it is abundantly clear that an amount other than the apparent consideration has exchanged hands and the person who has received this money has clearly confessed that she has received this money and paid tax thereon. The appellant company is taking recourse to this fictional myth to avoid their liability to tax.
14. So, the records of this case show that the assessed was afforded reasonable opportunity and was also given opportunity that he can ask for documents, if any, but in spite of that the assessed did not ask for any documents for cross-examination till 22nd March, 2000 which goes to show that the assessed had nothing to explain and he was not interested to cross-examine Smt. Pushpa Seth. A number of opportunities were provided by the Assessing Officer to the assessed-company but the assessed-company was indulging in delaying tactics and only when the assessment was getting time barred on 31st March, 2000, it responded for the first time on 23rd March, 2000 when the documents furnished by Smt. Pushpa Seth were sought for the first time. Naturally, at that stage the Assessing Officer could not give any further opportunity because the assessment was getting time barred on 31st March, 2000. It is also apparent from the record that, the assessed-company was not a party before the Settlement Commission and, therefore, the proceedings could not be kept in abeyance by the Assessing Officer when the same were getting time barred.
15. The decision of Commissioner of Income Tax v. P.V. Kalyanasundram (supra) cited by learned Counsel for the Appellant is not applicable to the facts of the present case since, in the present case, the Assessing Officer has given more than sufficient opportunity to the assessed to cross-examine vendor or to produce documents in support of its case. Since, assessed did not avail of the opportunities granted by the Assessing Officer, as such the facts of the case cited by learned Counsel are clearly distinguishable.
16. There are concurrent findings of three statutory authorities with regard to this fact that sufficient opportunities have been granted to the assessed to cross-examine the vendor Smt. Pushpa Seth but the assessed did not avail of the opportunity granted to it. So, we do not find any infirmity in the order passed by the authorities below and there is no reason to disagree with the finding given by the Tribunal on this regard.
17. The above being the position, no fault can be found with the view taken by the Tribunal. Thus, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to fall within the limited purview of Section 260-A of the Act, which is confined to entertaining only such appeals against the order which involves a substantial question of law.
18. Accordingly, the present appeal filed by the assessed is, hereby, dismissed.