Sh. Surinder Singh Saini, Chandigarh V. DCIT, Chandigarh

ITA 104/CHANDI/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5210 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Fair market value
• Section: 153A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.104/CHD/2015 (ASSESSMENT YEAR : 2009-10) SH.SURINDER SINGH SAINI, VS. THE D.C.I.T., PROP. M/S SURINDRA BUILDERS, CENTRAL CIRCLE -1, CHANDIGARH. CHANDIGARH. PAN: AFCPS8196L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATUL GOYAL RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 06.02.2017 DATE OF PRONOUNCEMENT : 17.04.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(APPEALS)-3, GURGAON DATED 26.11.20 14 RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE WORTHY C1T(A) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE AND THUS AGAINST THE PROVISIONS OF THE ACT. 2. THAT THE WORTHY C1T(A), GURGAON ERRED ON FACTS & IN LAW IN UPHOLDING THE ADDITION OF RS.4060000/- MADE BY THE LD. ASSESSING OFFICER ON ASSUMPTION AND ESTIMATION BASI S DESPITE RECORDING THE FINDING 'EVEN THOUGH A PERUSA L OF THE CASH BOOK DOES NOT SHOW ANY OTHER USE OF SUCH WITHD RAWALS BEING MADE' & THUS THE ORDER BE SET ASIDE. 2 3. THAT THE ASSESSEE CRAVES LEAVE TO ADD/ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. THE ONLY ISSUE FOR ADJUDICATION IN THE PRESENT APPEAL PERTAINS TO ADDITION OF RS.40,60,000/- ON AC COUNT OF INVESTMENT MADE FROM UNEXPLAINED SOURCES U/S 69B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 4. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE S EARCH U/S 132(1) OF THE ACT WAS CONDUCTED ON MEHTA & ZEND ER GROUP OF CASES ON 18.02.2011. THE ASSESSEE WAS ALSO ONE OF THE PERSONS COVERED UNDER SEARCH. THE ASSESSEE, SH RI SURINDER SINGH, IS RUNNING A PROPRIETARY CONCERN DO ING CONTRACTOR BUSINESS IN THE NAME AND STYLE OF M/S SU RINDRA BUILDERS AND IS ALSO RUNNING A SCHOOL BY THE NAME O F M/S GURU TEG BAHADUR SCHOOL, ANANDPUR SAHIB. ACCORDI NGLY, NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESS EE, IN RESPONSE OF WHICH RETURN DECLARING INCOME OF RS.1,54,26,840/- WAS FILED BY THE ASSESSEE. THIS W AS ASSESSED AT RS.1,94,86,840/- AFTER MAKING ADDITION OF RS.40,60,000/- ON ACCOUNT OF INVESTMENT MADE FROM UNEXPLAINED SOURCES U/S 69B OF THE ACT. THE FACTS AND THE BACKGROUND RELATING TO THE ADDITION MADE WAS THAT D URING THE COURSE OF SEARCH, DOCUMENTS WERE SEIZED FROM TH E RESIDENCE OF THE ASSESSEE WHICH WAS AN AGREEMENT TO SELL A DENTAL COLLEGE M/S SATGURU FOUNDATION , SITUATED AT VPO UDHYA KARAN, DISTT MUKTSAR, DATED 31.07.2008, THRO UGH ITS PRESIDENT DR. ZORA SINGH, RESIDENT OF 1224, SECTOR 8C, CHANDIGARH FOR A TOTAL CONSIDERATION OF RS.21 CRORE S. AS PER 3 THE AGREEMENT THE ASSESSEE HAD MADE A PAYMENT OF RS .3 CRORES AS BIANA OUT OF WHICH RS.1.60 CRORES WAS STA TED TO HAVE BEEN PAID IN CASH. ON BEING ASKED TO EXPLAIN THE SOURCE OF THE PAYMENT MADE, THE ASSESSEE STATED THA T THE SAID PAYMENT IS DULY REFLECTED IN HIS BALANCE SHEET FOR THE IMPUGNED YEAR AND FURTHER SUBMITTED THAT THE SAME I S SOURCED FROM CASH WITHDRAWN FROM BANK, DETAIL OF WH ICH WAS ALSO SUBMITTED. THE ASSESSEE FURTHER SUBMITTED THA T THE AGREEMENT FOR PURCHASE OF THE DENTAL COLLEGE WAS LA TER ON CANCELLED ON 26.6.2009, DETAILS OF WHICH WERE ALSO SUBMITTED. TO VERIFY PLEA OF THE ASSESSEE, THE AO ISSUED SUMMONS TO THE SELLER, DR.ZORA SINGH, AND HIS STATE MENT WAS RECORDED ON OATH, IN WHICH HE CATEGORICALLY DEN IED RECEIVING ANY PAYMENT IN CASH AND ADMITTED TO RECEI PT OF RS.1.40 CRORES ONLY BY WAY OF CHEQUE ON ACCOUNT OF THE SAID AGREEMENT. THE ASSESSING OFFICER THEREAFTER HELD T HAT EVEN THOUGH BENEFIT OF DOUBT CAN BE GIVEN TO THE ASSESSE E THAT HE MADE THE STATED CASH PAYMENT TO DR.ZORA SINGH AND T HE LATTER WAS CONCEALING RECEIPT OF RS.1.60 CRORES, HO WEVER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS NOT AB LE TO CONCLUSIVELY PROVE THE SOURCE OF THE CASH PAYMENT M ADE OF RS.1.60 CRORES TO DR.ZORA SINGH AND AS PER THE BOO KS OF ACCOUNT OF M/S SURINDRA BUILDERS FOUND AT THE TIME OF SEARCH, THE SAME SHOWED THE ENTRY OF RS.1.60 CRORES IN THE SUSPENSE ACCOUNT. THE ASSESSING OFFICER DID NOT BE LIEVE THE EXPLANATION OF THE ASSESSEE OF THE CASH PAID AS BEI NG FROM WITHDRAWALS FROM VIJAYA BANK AND STATED THAT THOUGH THE CASH BOOK DID NOT SHOW ANY OTHER USE OF SUCH WITHDR AWALS 4 BEING MADE, YET THE SAME COULD NOT BE BELIEVED SINC E THE WITHDRAWALS WERE MADE IN SMALL AMOUNTS ON DIFFERENT DATES PRECEDING THE DATES ON WHICH THE PAYMENTS WERE MADE TO DR.ZORA SINGH. HE, THEREFORE, TREATED THE CASH PAY MENT MADE DURING THE IMPUGNED YEAR FOR THE LAND DEAL AMO UNTING TO RS.40,60,000/- AS INVESTMENT FROM UNEXPLAINED SO URCES AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESS EE. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS OF THE AS SESSEE UNDER SECTION 145(3) OF THE ACT BUT CONSIDERING THE PAST HISTORY OF THE ASSESSEE ACCEPTED THE NET PROFIT RAT E RETURNED BY THE ASSESSEE AND MADE NO ADDITION ON ACCOUNT OF THE SAME. 5. THE MATTER WAS CARRIED BEFORE THE CIT (APPEALS) , WHERE THE ASSESSEE REITERATED HIS SUBMISSIONS. THE LEARNED CIT (APPEALS) UPHELD THE ADDITION MADE CONCURRING W ITH THE FINDINGS OF THE ASSESSING OFFICER. THE RELEVANT FI NDINGS OF THE LEARNED CIT (APPEALS) AT PARA 6 OF HIS ORDER AR E AS FOLLOW: 6. 1 HAVE CONSIDERED THE ASSESSEE'S SUBMISSIONS AS WELL AS THE IMPUGNED ORDER. IT IS NOT IN DISPUTE THAT AN AGREEM ENT TO SELL DATED 31.7.2008 WITH SATGURU FOUNDATION THROUGH ITS PRESI DENT DR.ZORA SINGH WAS FOUND AT THE RESIDENCE OF THE ASSESSEE. A S PER THE AGREEMENT, TOTAL CONSIDERATION OF RS.21 CRORES WAS FOR THE LAND SITUATED AT VPO UDHYA KARAN OF 6 ACRES AND BUILDING CONSTRUCTED THEREON. THE ASSESSEE HAD MADE A PAYMENT OF RS.3 CR ORES AS BIANA OUT OF WHICH RS.1.60 CRORES WAS IN CASH. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXP LAINED THAT THE ENTIRE BIANA WAS MADE TO SATGURU FOUNDATIO N THROUGH ITS PRESIDENT DR ZORA SINGH AND PROVIDED DETAILS OF THE PAYMENTS. IT WAS ALSO STATED THAT THE AGREEMENT TO SELL WAS CANC ELLED ON 26.06.2009. IT IS FURTHER SEEN FROM THE IMPUGNED OR DER THAT THE AO RECORDED THE STATEMENT OF DR ZORA SINGH, WHO ADMITT ED TO RECEIPT OF CHEQUE FOR RS.1.40 CRORES ONLY WHILE DENYING RECEIP T OF ANY CONSIDERATION IN CASH. HE ALSO DENIED HAVING AFFIXE D HIS SIGNATURE ON 5 THE SEIZED AGREEMENT TO SELL AND THE RECEIPTS, CONT ENDING THAT HIS SIGNATURES WERE FORGED. THE STATEMENT OF DR ZORA WA S CONFRONTED TO THE ASSESSEE WHO SOUGHT AN OPPORTUNITY TO CROSS EXA MINE SHRI ZORA SINGH. THE AO FINALLY CONCLUDED THAT, TO QUOTE IT IS NON CONCLUSIVE TO THE EXTENT THAT EVEN THOUGH BENEFIT OF DOUBT CAN BE GIVEN TO THE ASSESSEE THAT HE MADE THE STATED CASH PAYMENT TO SH . ZORA SINGH AND THE LATTER WAS CONCEALING THE RECEIPT OF RS. 1.60 C RORE BECAUSE THERE WERE CERTAIN AGREEMENT SEIZED TO WHICH SH. ZORA SIN GH COULD NOT SATISFACTORILY DISOWN AND DID NOT GIVE ANY REASONAB LE EXPLANATION. HOWEVER, ASSESSEE WAS ALSO NOT ABLE TO CONCLUSIVELY PROVE THAT ALL THE PAYMENTS MADE TO SH. ZORA SINGH OF RS. 1,60,00,000/ - WAS FROM EXPLAINED SOURCES AND AS PER THE BOOKS OF ACCOUNTS OF M/S SURINDERA BUILDERS SINCE THE BOOKS OF ACCOUNTS FOUND AT THE T IME OF SEARCH SHOWED THE ENTRY OF RS. 1.60 CRORE IN THE SUSPENSE ACCOUNT. BESIDES THIS THE EXPLANATION GIVEN BY THE ASSESSEE OF THE ABOVE CASH TO BE FROM WITHDRAWALS FROM VIJAY BANK, CHANDI GARH ON DIFFERENT DATES RANGING FROM 17.04.2007 TO 25.10.2008 CANNOT BE ENTIRELY BELIEVED. EVEN THOUGH A PERUSAL OF THE CASH BOOK DO ES NOT SHOW ANY OTHER USE OF SUCH WITHDRAWALS BEING MADE. HOWEVER, THE FACT REMAINS THAT THE AGREEMENT TOOK PLACE IN JULY, 2008 . THE ASSESSEE COULD NOT GIVE ANY SATISFACTORILY EXPLANATION AS TO WHY THE WITHDRAWALS WERE MADE IN SMALL AMOUNT ON DIFFERENT DATES AS BACK AS APRIL 2008 NOW THE ASSESSEE HAS NOT SOUGHT TO REFUTE THE FINDI NGS OF THE AO DURING THE APPELLATE PROCEEDINGS. THE BOOKS OF A CCOUNTS, NO DOUBT HAVE BEEN REJECTED BY THE AO BUT FOR THE YEAR UNDER CONSIDERATION NO NET PROFIT ADDITION HAS BEEN MADE AS THE RATE OF 8.33% DECLARED WAS NOT INTERFERED WITH. I FIND THAT THE AO WAS NOT CONVINCED THAT THE AMOUNT OF RS.40,60,000/- WITHDRA WN IN THE MONTHS OF APRIL AND MAY 2008 WERE TOWARDS THE PURCH ASE OF THE LAND/BUILDING. THE AGREEMENT TO SELL IS DATED 31.7.2008, SO IT DEF IES LOGIC WHY CASH WAS WITHDRAWN IN LUMPSUM AT INTERVALS AS M ANY TIMES AS 12 AND AS EARLY AS APRIL 2008 FOR THE EARNEST MONEY PAYMENT. IN FACT DURING THE MONTH OF JUNE 2008, ASSESSEE HAS MADE 11 SUCH LUMPSUM WITHDRAWALS. IN MONTH OF JULY, THERE WAS ANOTHER 8 SUCH WITHDRAWALS. THIS MODUS INDULGED IN BY THE ASSESSEE TO EXPLAIN H IS CASE DOES NOT APPEAR TO BE PRUDENT FOR ANY BUSINESS MAN. THOU GH THE AO HAS MADE AN OBSERVATION THAT ON A PERUSAL OF THE PER CA SH BOOK THE WITHDRAWALS DID NOT APPEAR TO HAVE BEEN UTILISED FO R ANY OTHER USE, THE FACT OF THE MATTER IS THAT THE BOOKS WERE REJEC TED AS INCOMPLETE AND UNRELIABLE. IT IS A FACT THAT ASSESSEE IS CARRY ING ON VARIOUS CONTRACTUAL WORKS AND HAVE ALSO MADE INVESTMENT AT SCO 112-113, SEC-8C, CHANDIGARH AND SCO 18, LADOWAL JALANDER, BE SIDES THE 6 SCHOOL AT VILL JHANJIRI, TEHSIL KHARAR DURING AY 20 05-06 TO AY 2011- 12 AS INTIMATED BY HIM. THUS, IN THE ABSENCE OF ANY CONVINCING CLARIFICATION WITH SUPPORTING DOCUMENTS ON THE PART OF THE ASSESSEE, I AM STRONGLY INCLINED TO UPHOLD THE ADDITION MADE BY THE AO OF RS.40,60,000/-. 6. DURING THE COURSE OF HEARING BEFORE US, THE ASSESSEE MADE TWO FOLD ARGUMENTS AGAINST THE ADDITI ON MADE. FIRSTLY, THE ASSESSEE ARGUED THAT SINCE THE BOOKS OF ACCOUNT WERE REJECTED AND NET PROFIT RATE APPLIED, NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT COULD HAVE BEEN MADE. SECONDLY THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ADVANCE PAID IN ANY CASE WAS DULY E XPLAINED BY THE CASH WITHDRAWN FROM THE BANK ACCOUNT OF THE ASSESSEE AND THE ASSESSING OFFICER HAD GIVEN A FIND ING THAT THE CASH BOOK DID NOT SHOW ANY OTHER USE OF THE CAS H WITHDRAWALS MADE. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HAVING FOUND SO, THE ASSESSING OFFICER COULD N OT HAVE REJECTED ASSESSEES EXPLANATION THAT THE CASH WITH DRAWN WAS USED FOR THE PURPOSE OF GIVING ADVANCE FOR THE PURC HASE OF LAND AND MADE THE ADDITION MERELY ON THE BASIS OF S URMISES AND CONJECTURES THAT THERE WAS NO REASON FOR THE AS SESSEE TO HAVE WITHDRAWN CASH IN ADVANCE FOR A FUTURE DEAL. T HE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIO N OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. DINESH JAIN HUF REPORTED IN 352 ITR 629 IN THIS REGARD. LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE ENTIRE INVESTMEN T MADE IN THE SAID COLLEGE WAS OUT OF EXPLAINED SOURCES AS TH E ENTIRE AMOUNT OF RS.3 CRORES WAS DULY REFLECTED IN THE BAL ANCE SHEET OF THE ASSESSEE. LD.COUNSEL DREW OUR ATTENTIO N TO THE BALANCE SHEET OF THE ASSESSEE FOR THE IMPUGNED YEAR PLACED 7 AT PAPER BOOK PAGE NO.17 REFLECTING THE ADVANCE PAI D TO M/S SATGURU FOUNDATION AMOUNTING TO RS. 3 CRORES. 7. THE LEARNED D.R., ON THE OTHER HAND RELIED UPON THE ORDER OF THE CIT (APPEALS). 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND GON E THROUGH THE DOCUMENTS PLACED BEFORE US. THE UNDISP UTED FACTS IN THIS CASE ARE THAT THE ASSESSEE HAD MADE P AYMENT OF RS.3 CRORES AS ADVANCE FOR PURCHASE OF DENTAL COLLE GE THROUGH ITS PRESIDENT DR.ZORA SINGH. OUT OF THE A FORESAID ADVANCE OF RS.3 CRORES, RS.1.60 CRORES WERE PAID IN CASH. THIS FACT HAS BEEN ADMITTED TO BY THE ASSESSEE AND IS NOT DISPUTED. THE ONLY ISSUE IS RELATING TO THE EXPLAN ATION OF THE SOURCE OF THE IMPUGNED CASH ADVANCED OF RS.1.60 CRO RES, OF WHICH AN AMOUNT OF RS.40,60,000/- PERTAINS TO THE IMPUGNED YEAR, AND IN THE ABSENCE OF WHICH ADDITIO N U/S 69B OF THE INCOME TAX ACT,1961 HAS BEEN MADE. 9. WE FIND MERIT IN THE ARGUMENTS OF THE LD.COUNSE L FOR THE ASSESSEE. SECTION 69B CALLS FOR ADDITIONS T O BE MADE OF INVESTMENTS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE SAID SECTION STATES AS UNDER: AMOUNT OF INVESTMENTS, ETC., NOT FULLY DISCLOSED IN BOOKS OF ACCOUNT. 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AN D THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF 8 IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 10. IN THE PRESENT CASE THE IMPUGNED AMOUNT IS REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS P OINTED OUT TO US. LD DR HAS NOT CONTROVERTED THE SAME. THEREF ORE, FOR THIS REASON ALONE THE ADDITION MADE SHOULD BE DELET ED. 11. FURTHER, IN ANY CASE, WE FIND THAT THE ASSESSE E HAD EXPLAINED THE SOURCE OF CASH PAYMENT MADE BY WA Y OF CASH WITHDRAWALS FROM ITS BANK ACCOUNT IN VIJAYA BA NK. DETAILS OF THE SAME WERE PLACED BEFORE THE LOWER AU THORITIES AND ARE ALSO REPRODUCED IN THE ORDER OF THE CIT (AP PEALS) AT PAGES 3 TO 10. THE SAID DETAIL ADEQUATELY EXPLAIN THE AVAILABILITY OF CASH ON THE DATE ON WHICH CASH PAYM ENT WAS MADE TO DR.ZORA SINGH. THIS FACT STATED BY THE ASS ESSEE AND DEMONSTRATED BEFORE THE LOWER AUTHORITIES, HAS NOT BEEN CONTROVERTED AT ANY STAGE EITHER BY THE ASSESSING O FFICER OR BY THE CIT (APPEALS) OR EVEN BY THE LEARNED D.R. BE FORE US. NO INFIRMITY IN THE AFORESAID DETAILS HAS BEEN POIN TED OUT BY ANY OF THE AUTHORITIES. THEREFORE, IT CAN BE SAFEL Y STATED THAT THE ASSESSEE HAD DEMONSTRATED THE AVAILABILITY OF CASH WITH HIM AS BEING FROM WITHDRAWALS FROM HIS BANK AC COUNT FOR THE PURPOSE OF PAYMENT AS ADVANCE PAYMENT OF TH E DENTAL COLLEGE PURCHASE. FURTHER AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE ALSO, WE FIND THAT THE ASS ESSING OFFICER HAD GIVEN A CATEGORICAL FINDING THAT NO OTH ER USE OF 9 THE CASH WITHDRAWN WAS EVIDENT FROM THE CASH BOOK. IN SUCH CIRCUMSTANCES, THERE IS NO REASON TO DISBELIEV E THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF THE CASH PAID AS ADVANCE FOR THE PURPOSE OF DENTAL COLLEGE A MOUNTING TO RS.1.60 CRORES AS BEING FROM THE CASH WITHDRAWAL S FROM THE BANK ACCOUNT OF THE ASSESSEE. THE ONLY REASON, POINTED OUT BY THE LD.DR, FOR DISBELIEVING THE EXPLANATION OF THE ASSESSEE WAS THAT THE WITHDRAWALS WERE MADE IN SMAL L AMOUNTS ON DIFFERENT DATES AS EARLY AS IN APRIL, 20 08 WHILE THE AGREEMENT TOOK PLACE IN JULY, 2008. FOR THESE REASONS, THE EXPLANATION OF THE ASSESSEE WAS NOT BELIEVED SI NCE IT COULD NOT BE IMAGINED AS TO WHY THE ASSESSEE WOULD RETAIN CASH WITHDRAWN FOR A LONG PERIOD FOR MAKING PAYMENT IN FUTURE FOR A FUTURE DEAL. WE FIND NO MERIT IN THIS ARGUMENT OF THE REVENUE. THE FACT REMAINS THAT THE CASH WIT HDRAWALS FROM THE BANK ACCOUNT EXPLAIN THE AVAILABILITY OF CASH PAYMENT OF ADVANCE. NO OTHER USE OF THE CASH WITHD RAWALS HAS EITHER BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER AND IN FACT, THE ASSESSING OFFICER HAS ADMITTED THA T NO OTHER USE WAS EVIDENT FROM THE CASH BOOK ALSO. THE REASO N FOR REJECTING THE EXPLANATION OF THE ASSESSEE IS, THERE FORE, MERELY BASED ON SUSPICION WHICH CANNOT BE THE BASIS FOR MAKING ANY ADDITION, TOTALLY IGNORING THE FACTS BEF ORE US.THE RELIANCE PLACED BY THE LD.COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT VS DINESH JAIN HUF (2013) 352 ITR 629(D ELHI) IS APT WHEREIN THE HONBLE HIGH COURT HAS HELD THAT AD DITION U/S 69B CANNOT BE MADE ON THE BASIS OF ASSUMPTIONS. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER: 10 11.SECTION 69B DOES NOT PERMIT AN INFERENCE TO BE D RAWN FROM THE CIRCUMSTANCES SURROUNDING THE TRANSACTION THAT THE PURCHASER OF THE PROPERTY MUST HAVE PAID MORE THAN WHAT WAS ACTUALLY RECORDED IN HIS BOOKS OF ACCOUNT FOR THE SIMPLE REASON THAT SUCH AN INFERENCE COULD BE VERY SUBJECTIVE AND COULD INVOLVE THE DANGEROUS CON SEQUENCE OF A NOTIONAL OR FICTIONAL INCOME BEING BROUGHT TO TAX C ONTRARY TO THE STRICT PROVISIONS OF ARTICLE 265 OF THE CONSTITUTION OF IN DIA AND ENTRY 82 IN LIST I OF THE SEVENTH SCHEDULE THERETO WHICH DEALS WITH 'TAXES ON INCOME OTHER THAN AGRICULTURAL INCOME'. THIS WAS ON E OF THE MAJOR CONSIDERATIONS THAT WEIGHED WITH THE SUPREME COURT IN K.P. VARGHESE (SUPRA) IN WHICH CASE THE PROVISIONS OF SUB-SECTION (2) OF SECTION 52 FELL FOR INTERPRETATION. IT WAS OBSERVED THAT PARLI AMENT CANNOT CHOOSE TO TAX AS INCOME AN ITEM WHICH IN NO RATIONAL SENSE CAN BE REGARDED AS A CITIZENS INCOME OR EVEN RECEIPT. SECTION 52(2 ) (WHICH NOW STANDS OMITTED) APPLIED TO THE TRANSFEROR OF PROPERTY FOR A CONSIDERATION THAT WAS LESSER THAN THE FAIR MARKET VALUE BY 15 PERCENT OR MORE; IN SUCH A CASE, THE ASSESSING OFFICER WAS CONFERRED THE POWER TO ADOPT THE FAIR MARKET VALUE OF THE PROPERTY AS THE SALE PRICE AND COMPUTE THE CAPITAL GAINS ACCORDINGLY. THE SUPREME COURT HELD THAT IT W AS THE BURDEN OF THE ASSESSING OFFICER TO PROVE THAT THERE WAS UNDER STATEMENT OF CONSIDERATION AND ONCE THAT BURDEN WAS DISCHARGED I T WAS NOT REQUIRED OF HIM TO PROVE THE PRECISE EXTENT OF UNDERSTATEMEN T AND HE COULD ADOPT THE DIFFERENCE BETWEEN THE STATED CONSIDERATI ON AND THE FAIR MARKET VALUE OF THE PROPERTY AS THE UNDERSTATEMENT. THE SUB-SECTION WAS HELD TO PROVIDE FOR A 'STATUTORY BEST JUDGMENT' ONCE ACTUAL UNDERSTATEMENT WAS PROVED; IT OBVIATED THE NEED TO PROVE THE EXACT AMOUNT OF UNDERSTATEMENT. ADDITIONAL REASONS FOR TH E RESULT WERE (A) THAT THE MARGINAL NOTE TO THE SECTION REFERRED TO ' CASES OF UNDERSTATEMENT'; (B) THE SPEECH OF THE FINANCE MINIS TER WHILE INTRODUCING THE PROVISION; AND (C) THE ABSURD OR IR RATIONAL RESULTS THAT WOULD FLOW FROM A LITERAL INTERPRETATION OF THE SUB -SECTION, WHICH COULD NOT HAVE BEEN INTENDED BY THE LEGISLATURE. 12. WHILE THE OMITTED SECTION 52(2) APPLIED TO THE TRANSFEROR OF THE PROPERTY, SECTION 69B APPLIES TO THE TRANSFEREE - T HE PURCHASER - OF THE PROPERTY. IT REFERS TO THE MONEY 'EXPENDED' BY THE ASSESSEE, BUT NOT RECORDED IN HIS BOOKS OF ACCOUNT, WHICH IS A CLEAR REFERENCE TO UNDISCLOSED INCOME BEING USED IN THE INVESTMENT. AP PLYING THE LOGIC AND REASONING IN K.P. VARGHESE (SUPRA) IT SEEMS TO US THAT EVEN FOR THE PURPOSES OF SECTION 69B IT IS THE BURDEN OF THE ASSESSING OFFICER TO FIRST PROVE THAT THERE WAS UNDERSTATEMENT OF THE CO NSIDERATION (INVESTMENT) IN THE BOOKS OF ACCOUNT. ONCE THAT UND ERVALUATION IS ESTABLISHED AS A MATTER OF FACT, THE ASSESSING OFFI CER, IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION FROM THE ASSESSEE AS T O THE SOURCE OF THE UNDISCLOSED PORTION OF THE INVESTMENT, CAN PROCEED TO ADOPT SOME DEPENDABLE OR RELIABLE YARDSTICK WITH WHICH TO MEAS URE THE EXTENT OF UNDERSTATEMENT OF THE INVESTMENT. ONE SUCH YARDSTIC K CAN BE THE FAIR MARKET VALUE OF THE PROPERTY DETERMINED IN ACCORDAN CE WITH THE WEALTH TAX ACT. WE HOWEVER CLARIFY THAT THIS COURT IS NOT CONCLUDING THAT SUCH YARDSTICK IS DETERMINATIVE; IN VIEW OF TH E FINDINGS ARRIVED AT BY US THAT THE ASSESSING OFFICER DID NOT GATHER FOU NDATIONAL FACTS TO POINT TO UNDERVALUATION THE ADOPTION OF THE NORMS U NDER THE WEALTH TAX ACT IS NOT COMMENTED UPON BY US. 13. THE ERROR COMMITTED BY THE INCOME-TAX AUTHORITI ES IN THE PRESENT CASE IS TO JUMP THE FIRST STEP IN THE PROCESS OF AP PLYING SECTION 69B - THAT OF PROVING UNDERSTATEMENT OF THE INVESTMENT - AND APPLY THE MEASURE OF UNDERSTATEMENT. IF ANYTHING, THE LANGUAG E EMPLOYED IN SECTION 69B IS IN STRICTER TERMS THAN THE ERSTWHILE SECTION 52(2). IT DOES NOT EVEN AUTHORISE THE ADOPTION OF ANY YARDSTI CK TO MEASURE THE PRECISE EXTENT OF UNDERSTATEMENT. THERE CAN THEREFO RE BE NO COMPROMISE IN THE APPLICATION OF THE SECTION. IT WO ULD SEEM TO REQUIRE THE ASSESSING OFFICER EVEN TO SHOW THE EXACT EXTENT OF UNDERSTATEMENT OF THE INVESTMENT; IT DOES NOT EVEN GIVE THE ASSESS ING OFFICER THE 11 OPTION OF APPLYING ANY REASONABLE YARDSTICK TO MEAS URE THE PRECISE EXTENT OF UNDERSTATEMENT OF THE INVESTMENT ONCE THE FACT OF UNDERSTATEMENT IS PROVED. IT APPEARS TO US THAT THE ASSESSING OFFICER IS NOT ONLY REQUIRED TO PROVE UNDERSTATEMENT OF THE PURCHASE PRICE, BUT ALSO TO SHOW THE PRECISE EXTENT OF THE UNDERSTA TEMENT. THERE IS NO AUTHORITY GIVEN BY THE SECTION TO ADOPT SOME REASON ABLE YARDSTICK TO MEASURE THE EXTENT OF UNDERSTATEMENT. BUT SINCE IT MAY NOT BE POSSIBLE IN ALL CASES TO PROVE THE PRECISE OR EXACT AMOUNT OF UNDISCLOSED INVESTMENT, IT IS PERHAPS REASONABLE TO PERMIT THE ASSESSING OFFICER TO RELY ON SOME ACCEPTABLE BASIS OF ASCERTAINING THE MARKET VALUE OF THE PROPERTY TO ASSESS THE UNDISCLO SED INVESTMENT. WHETHER THE BASIS ADOPTED BY THE ASSESSING OFFICER IS AN ACCEPTABLE ONE OR NOT MAY DEPEND ON THE FACTS AND CIRCUMSTANCE S OF THE PARTICULAR CASE. THAT QUESTION MAY HOWEVER ARISE ON LY WHEN ACTUAL UNDERSTATEMENT IS FIRST PROVED BY THE ASSESSING OFF ICER. IT IS ONLY TO THIS EXTENT THAT THE RIGOUR OF THE BURDEN PLACED ON THE ASSESSING OFFICER MAY BE RELAXED IN CASES WHERE THERE IS EVID ENCE TO SHOW UNDERSTATEMENT OF THE INVESTMENT, BUT EVIDENCE TO S HOW THE PRECISE EXTENT THEREOF IS LACKING. 14. IN LALCHAND BHAGAT AMBICA RAM VS. COMMISSIONER OF INCOME TAX, BIHAR AND ORISSA (1959) 37 ITR 288, THE SUPREME COU RT DISAPPROVED THE PRACTICE OF MAKING ADDITIONS IN THE ASSESSMENTS ON MERE SUSPICION AND SURMISE OR BY TAKING NOTE OF THE NOTORIOUS PRAC TICES PREVAILING IN TRADE CIRCLES. AT PAGE 299 OF THE REPORT, IT WAS OB SERVED AS FOLLOWS : 'ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME- TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR S MUGGLING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY B OATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUN D OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN IND ULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE I N THAT BEHALF. ' THIS TAKES CARE OF THE ARGUMENT OF MR. SABHARWAL THA T JUDICIAL NOTICE CAN BE TAKEN OF THE PRACTICE PREVAILING IN THE PROP ERTY MARKET OF NOT DISCLOSING THE FULL CONSIDERATION FOR TRANSFER OF P ROPERTIES. 15. SINCE THE ENTIRE CASE HAS PROCEEDED ON THE ASSU MPTION THAT THERE WAS UNDERSTATEMENT OF THE INVESTMENT, WITHOUT A FIN DING THAT THE ASSESSEE INVESTED MORE THAN WHAT WAS RECORDED IN TH E BOOKS OF ACCOUNT, WE ARE UNABLE TO APPROVE OF THE DECISION O F THE INCOME-TAX AUTHORITIES. SECTION 69B WAS WRONGLY INVOKED. THE O RDER OF THE TRIBUNAL IS APPROVED; THE SUBSTANTIAL QUESTION OF L AW IS ANSWERED IN THE NEGATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE CIT. 12. IN VIEW OF THE SAME, WE HOLD THAT THE SOURCE O F CASH INVESTED BY WAY OF ADVANCE FOR PURCHASE OF DEN TAL COLLEGE STANDS EXPLAINED AND ADDITION MADE ON ACCOU NT OF THE SAME FOR THE IMPUGNED YEAR UNDER SECTION 69B OF THE ACT AMOUNTING TO RS.40,60,000/- IS, THEREFORE, DIRECTED TO BE DELETED. SINCE WE HAVE DELETED THE ADDITION MADE, AGREEING WITH THE ARGUMENTS MADE ON MERIT BY THE LD. COUNSEL FOR THE 12 ASSESSEE, WE FIND NO REASON TO DEAL WITH OTHER ARGU MENTS OF THE LD. COUNSEL FOR THE ASSESSEE AS IT BECOMES MERE LY ACADEMIC IN NATURE. 13. IN VIEW OF THE ABOVE, GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH APRIL, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH