ITO, Ropar V. Sh. Vivek Mohan Mittal, Ropar

ITA 225/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77049 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 07-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained investment; Search and seizure; Document seized; Source of fund; Additional evidence; Difference of opinion; Reason to believe; Documents seized; Change of opinion
• Section: 143(3); 142(1); 131; 148; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.225, 226 & 227/CHD/2011 A.Y.: 2002-03, 2003-04 & 2004-05 THE INCOME TAX OFFICER, VS SHRI VIVEK MOHAN MI TTAL, WARD 2 (2), NEAR PUNJAB & SIND BANK, ROPAR. ROPAR. PAN : AHSPM7185M & C.O.NOS. 45,46 & 47/CHD/2011 IN ITA NOS.225,226 & 227/CHD/2011 A.YS : 2002-03, 2003-04 & 2004-05 SHRI VIVEK MOHAN MITTAL, VS THE INCOME TAX OFFI CER, NEAR PUNJAB & SIND BANK, WARD 2(2), ROPAR. ROPAR. ITA NOS.223 & 224/CHD/2011 A. Y.: 2002-03 & 2004-05 THE INCOME TAX OFFICER, VS SHRI ARVIND MOHAN M ITTAL, WARD 2 (2), NEAR PUNJAB & SIND BANK, ROPAR. ROPAR. PAN : AACPM1306P & C.O.NOS. 43 & 44/CHD/2011 IN ITA NOS.223 & 224/CHD/2011 A.Y : 2002-03, 2004-05 SHRI ARVIND MOHAN MITTAL, VS THE INCOME TAX OFF ICER, NEAR PUNJAB & SIND BANK, WARD 2(2), ROPAR. ROPAR. ITA NOS.221 & 222/CHD/2011 ASSESSMENT YEAR : 2002-03 THE INCOME TAX OFFICER, VS SMT. AMITA MITTAL, WARD 2 (2), NEAR PUNJAB & SIND BANK, ROPAR. ROPAR. PAN : AASPM1307N & C.O. 41 & 42/CHD/2011 IN ITA NO.221&222/CHD/2011 ASSESSMENT YEAR : 2002-03 SMT. AMITA MITTAL, VS THE INCOME TAX OFFICER, NEAR PUNJAB & SIND BANK, WARD 2(2), ROPAR. ROPAR. 2 & ITA NO.220/CHD/2011 ASSESSMENT YEAR : 2002-03 THE INCOME TAX OFFICER, VS SMT. VASUNDHRA MITT AL, WARD 2 (2), NEAR PUNJAB & SIND BANK, ROPAR. ROPAR. & C.O. 40/CHD/2011 IN ITA NO.220/CHD/2011 ASSESSMENT YEAR : 2002-03 SMT. VASUNDHRA MITTAL, VS THE INCOME TAX OFFIC ER, NEAR PUNJAB & SIND BANK, WARD 2(2), ROPAR. ROPAR. PAN : ABCPM0283A (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI AKHILESH GUPTA ASSESSEE BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 13.02.2014 DATE OF PRONOUNCEMENT : 09.05.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEALS BY THE REVENUE AND THE CROSS OBJECTIONS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST SEPARATE CONSOLIDATE D ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH DAT ED 20.09.2010 RELATING TO DIFFERENT ASSESSMENT YEARS AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE A CT' FOR SHORT). 2. COMMON GROUNDS HAVE BEEN RAISED IN DIFFERENT YEA RS BY DIFFERENT ASSESSEES AND REVENUE, WHICH ARE AS UNDER: 3 ITA 225/CHD/2011 :: REVENUES APPEAL (A.Y. 2002-03) 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN L AW IN DELETING THE ADDITION OF RS. 36,80,000/- AS ASSESSEE'S SHARE MA DE ON ACCOUNT OF INVESTMENT IN PURCHASE OF 23% SHARE OF PLOT NO. 70, I.A. CHANDIGARH WHEN THERE IS EVIDENCE THAT THE PART OF PLOT WAS PU RCHASED FOR RS. 3.20 CRORES BY THE ASSESSEE & OTHER CO-OWNERS. C.O. 45/CHD/2011 IN ITA 225/CHD/2011 :: ASSESSEE'S C.O. (A.Y. 2002-03) 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE RE-OPENING OF THE ALREADY COMPLETED ASSESSMENT RESORTING TO THE PROVISIONS OF SECTION 1 48 OF THE ACT WHICH IS ARBITRARY & UNJUSTIFIED. 2. THAT THE ORIGINAL ASSESSMENT HAVING BEEN FRAMED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AFTER DUE APPLICATION OF MIND BY THE ASSESSING OFFICER AND THEREAFTER AGAIN ISSUANCE OF ANOTHER NOTICE UNDER S ECTION 148 OF THE ACT FOR MAKING FISHING AND ROVING ENQUIRIES IS BARRED BY TI ME AS THERE HAS BEEN NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS. 3. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF T HE CASE AND IS, THUS, UNTENABLE. ITA 226/CHD/2011 :: REVENUES APPEAL (A.Y. 2003-04) WAS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) J USTIFIED IN DELETING THE ADDITION OF RS. 53,90,050/- AS ASSESSE E'S SHARE MADE ON ACCOUNT OF INVESTMENT IN PURCHASE OF 23% SH ARE OF PLOT NO. 70 I.A. CHANDIGARH. WHEN THERE IS EVIDENCE THAT THE PART OF PLOT WAS PURCHASED FOR RS.3.20 CRORES BY TH E ASSESSEE AND OTHER CO-OWNERS, AS ASSESSEE, WAS ONE OF THE DI RECTORS OF M/S SEPL. C.O. 46/CHD/2011 IN ITA 226/CHD/2011 :: ASSESSEE'S C.O. (A.Y. 2002-03 THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE RE-OPENING OF THE ALREADY COMPLETED ASSESSMENT RESORTING TO THE PROVISIONS OF SECTION 1 48 OF THE ACT WHICH IS ARBITRARY & UNJUSTIFIED. ITA 227/CHD/2011 :: REVENUES APPEAL (A.Y. 2003-04) 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING THE ADD ITION OF RS. 22,97,850/- AS ASSESSEE'S SHARE MADE ON ACCOUNT INV ESTMENT IN PURCHASE OF 23% SHARE OF PLOT NO. 70, I.A. CHANDIGA RH WHEN THERE IS EVIDENCE THAT THE PART OF PLOT WAS PURCHAS ED FOR RS. 3.20 CRORES BY THE ASSESSEE & OTHER CO-OWNERS AS AS SESSEE WAS ONE OF THE DIRECTOR OF M/S SEPL 2. WHETHER THE LD. CIT(APPEALS) WAS RIGHT IN DELETI NG THE ADDITION OF RS. 32,72,500/- WHEN SUFFICIENT MATERIA L HAS BEEN 4 FOUND DURING SEARCH THAT ASSESSEE ALONGWITH HIS WIF E PURCHASED # 3158, SECTOR 21-D, CHANDIGARH FOR A CONSIDERATION OF RS. 64,25,000/- INSTEAD OF RS. 20, 00,000/-. 3. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DIS POSED OFF. C.O. 47/CHD/2011 IN ITA 227/CHD/2011 :: ASSESSEE'S C.O. (A.Y. 2004-05) 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE RE-OPENING OF THE ALREADY COMPLETED ASSESSMENT RESORTING TO THE PROVISIONS OF SECTION 1 48 OF THE ACT WHICH IS ARBITRARY & UNJUSTIFIED. 2. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS.1,25,000/- BEING 1/ 4 TH SHARE TOWARDS INVESTMENT IN H./NO. 2202, SECTOR 21D CHANDIGARH WI THOUT BRINGING ON RECORD ANY MATERIAL FOR THE SAME WHICH IS ARBITRARY AND UNJUSTIFIED. 3. ALL THESE APPEALS ON SIMILAR ISSUE WERE HEARD TO GETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 4 FIRST REFERENCE IS BEING MADE TO THE APPEAL FILED IN ITA NO.225/CHD/2011 AND C.O.NO.45/CHD/2011 RELATING TO ASSESSMENT YEAR 2002-03 IN THE CASE OF VIVEK MOHAN MITTAL TO ADJUDI CATE THE ISSUE. 5 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FURNISHED RETURN OF INCOME ON 31.10.2002 DECLARING TOTAL INCO ME OF RS.2,47,875/- AND AGRICULTURAL INCOME OF RS.50,000/ -. THE ASSESSMENT UNDER SECTION 143(3) R.W.S.147 OF THE ACT WAS COMPL ETED ON 24.12.2007 AND THE RETURNED INCOME WAS ACCEPTED. A FTER SEARCH WAS CONDUCTED AT THE PREMISES OF SHRI MUKESH MITTAL AND HIS GROUP OF CASES, INFORMATION WAS RECEIVED BY THE ASSESSING OF FICER FROM THE ACIT, CENTRAL CIRCLE, CHANDIGARH AND AFTER RECORDIN G REASONS FOR REOPENING ASSESSMENT, NOTICE UNDER SECTION 148 OF T HE ACT WAS ISSUED ON 30.3.2009. THE ASSESSEE IN REPLY SUBMITTED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 5 148 OF THE ACT. THE ASSESSEE REQUESTED FOR COPY OF REASONS RECORDED WHICH WERE PROVIDED TO THE ASSESSEE BY THE ASSESSIN G OFFICER. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY ASSESSM ENT MAY NOT BE COMPLETED ON MERITS AND ON THE BASIS OF REASONS REC ORDED AND WHY ADDITION OF RS.36,80,000/- BE NOT MADE IN HIS HANDS . 6 THE ASSESSING OFFICER NOTED FROM THE INFORMATION RECEIVED FROM THE ACIT, CENTRAL CIRCLE, CHANDIGARH THAT M/S SHARV ILLA ESTATES PVT. LTD. (HEREINAFTER REFERRED TO SEPL) WAS A COMPANY FLOATED BY SHRI MUKESH MITTAL, WHO WAS A LAWYER IN DISTRICT COURTS, SPECIALIZED IN CASES RELATED TO PROPERTY DISPUTE. IN THE SAID CO MPANY HIS WIFE AND OTHER FAMILY MEMBERS WERE THE DIRECTORS ALONGWITH P ERSONS HAVING PETTY MEANS, WERE ASSOCIATED AS DIRECTORS ALONGWITH THE ASSESSEE. THE COMPANY THUS CONSTITUTED SMT.ALKA MITTAL, SHRI VIVE K MOHAN MITTAL, COUSIN BROTHER OF SHRI MUKESH MITTAL, ONE OF THE AS SESSEE BEFORE US AND SOME OTHER PERSONS OF PETTY MEANS. THE ASSESS ING OFFICER FURTHER NOTED THAT AS PER INFORMATION AVAILABLE SH.VIVEK MOHAN MITTAL & OTHER ARRANGED FOR THE PAYMENT TO BE MADE THROUGH M/S SHARVILLA ESTATES PVT. LTD. TO SMT.ERA OHRI BY MEANS OF CHEQU ES. CASH AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT OF M/S MORINDA O VERSEAS INDUSTRIES LTD. (A DEFUNCT COMPANY) BY THE PERSONS SUCH AS SH.ASHOK DUTTA, AJAY SINGH, CLOSE ASSOCIATES AND EMPLOYEES O F SH MUKESH MITTAL AND SH.VIVEK MOHAN MITTAL. ALMOST SIMULTANEO USLY PRE-SIGNED CHEQUES OF M/S MORINDA OVERSEAS INDUSTRIES LTD. WER E ISSUED AND DEPOSITED IN FAVOUR OF M/S SHARVILLA ESTATES PVT. L TD. FOR AVAILABILITY! OF FUNDS WITH M/S SHARVILLA ESTATES SO THAT IT COUL D ISSUE THE CHEQUES TO SMT.ERA OHRI/HER DAUGHTERS. FURTHER AS PER INFO RMATION AVAILABLE, THE SALE DEED WAS EXECUTED ON 07/05/2004 BEFORE THE SUB-REGISTRAR, U.T., CHANDIGARH BETWEEN SMT.ALKA MITTAL WIFE OF SH .MUKESH MITTAL 6 AND SH.VIVEK MOHAN MITTAL AND SH.ARVIND MITTAL BOTH SONS OF SH.MADAN MOHAN MITTAL, SMT.AMITA MITTAL W/O SH.VIVE K MOHAN MITTAL AND SMT.VASUNDHRA MITTAL W/O SHRI.ARRIND MITTAL, AL L RESIDENT OF H.NO.123, SECTOR-21-A, CHANDIGARH FOR RS.80 LACS ON LY FOR THE 23% SHARE IN THE ENTIRE INDUSTRIAL. PLOT NO.70,1.A., PH ASE-I, CHANDIGARH. WHEREAS AS PER INFORMATION COLLECTED BY THE ACIT CE NTRAL CIRCLE, CHANDIGARH, THIS PROPERTY WAS PURCHASED FOR RS.6.40 CRORES. SO ON PRO RATA BASIS 23% OF RS.6.40 CRORES (I.E.VALUE OF TOTAL PLOT NO.70,I.A., PHASE-I, CHANDIGARH WHICH WAS 50% HELD BY SMT.ERA.K.OHRI AND HER DAUGHTERS AND 50% BY SH.R.K. OHRI) COMES TO RS.14720000/-. ASSESSEE'S SHARE IN 14720000/- COMES TO RS.3680000/- (L/4 TH SHARE), DURING THE YEAR UNDER CONSIDERATION . THE MAIN PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE ASSESSEE WAS NOT PARTY TO THE ALLEGED AGREEMENT WHEREIN AN AMOUN T OF RS.3.20 CRORES IS MENTIONED. THE ASSESSEE, ON THE OTHER HA ND, HAD ONLY INVESTED SUM OF RS.80 LACS BEING REGISTERED VALUE O F THE PLOT OUT OF DECLARED SOURCE OF INCOME. THE ASSESSEE OBJECTED T O THE RE-ASSESSMENT PROCEEDINGS AS THE SAME WERE INITIATED TO MAKE FISH ING AND ROWING ENQUIRIES AS ALL THE NECESSARY INFORMATION REGARDIN G PURCHASE OF THE SAID SHARE IN THE PROPERTY WAS AVAILABLE ON RECORD. ANOTHER SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE WITH REGARD TO THE TRANSACTION WHICH IS REPRODUCED UNDER PARA 5 OF THE ASSESSMENT ORDER IN WHICH VARIOUS ASPECTS WERE ELABORATED UPON BY THE ASSESSI NG OFFICER. THE ASSESSEE FILED REPLY BUT THE ASSESSING OFFICER WAS OF THE VIEW THAT NO CONCRETE EVIDENCE WAS FURNISHED REGARDING THE SOURC E OF INVESTMENT OF RS.36,80,000/-. FURTHER RELIANCE WAS PLACED UPON THE STATEMENT OF SMT.ERA OHRI RECORDED ON 8.10.2004 PART OF WHICH IS REPRODUCED AT PAGE 5 OF THE ASSESSMENT ORDER IN WHICH SHE AGREES TO HAVE SOLD THE PROPERTY AT RS.3.20 CRORES THROUGH SHRI MUKESH MITT AL AND ALSO 7 ADMITTED TO HAVE RECEIVED THE PAYMENT AND REGISTERE D GPA IN FAVOUR OF SMT.ALKA MITTAL AND SHRI RAJIV AGGARWAL AND SPA IN FAVOUR OF SHRI MUKESH MITTAL. THE ASSESSING OFFICER THUS OBSERVED THAT WHERE THE PROPERTY WAS SOLD FOR RS.3.20 CRORES AND THE VALUE OF THE PROPERTY AS DECLARED BY THE ASSESSEE WAS ON THE LOWER SIDE, CON SEQUENTLY ADDITION OF RS.36,80,000/- WAS MADE IN THE HANDS OF THE ASSE SSEE. 7. THE CIT (APPEALS) UPHELD THE REOPENING OF ASSESS MENT UNDER SECTION 147/148 OF THE ACT AS THERE WAS REASONABLE BELIEF OF ESCAPEMENT OF INCOME. THE ASSESSEE FILED CROSS OBJ ECTION AGAINST THE SAID REOPENING OF ASSESSMENT UNDER SECTION 148 OF T HE ACT WHICH WOULD BE DEALT WITH HEREINAFTER. THE ISSUE ON MERI TS WAS DELIBERATED UPON BY THE CIT (APPEALS). THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED BY THE CIT (APPEALS) UNDER PARAS 17 AND 18 AT PAGES 9 TO 11 OF THE PAPER BOOK. THE ADDITIONAL EVIDENCE FILE D BY THE ASSESSEE WAS FORWARDED TO THE ASSESSING OFFICER, WHO IN TURN SUBMITTED REMAND REPORT, WHICH IS REPRODUCED UNDER PARA 19 OF THE A PPELLATE ORDER AND REJOINDER OF THE ASSESSEE IS REPRODUCED UNDER PARA 20 OF THE APPELLATE ORDER. ALL THE ABOVE SAID SUBMISSIONS ARE NOT BEI NG REPRODUCED FOR THE SAKE OF BREVITY. THE CIT (APPEALS) AFTER TAKIN G NOTE OF THE FACTUAL ASPECTS IN ENTIRETY IN RELATION TO THE SAID INDUSTR IAL PLOT NO.70, INDUSTRIAL AREA, PHASE-I, CHANDIGARH WHICH WAS SOLD BY/THROUGH SHRI MUKESH MITTAL TO FOUR GROUP OF PERSONS I.E. VOLCO I NDUSTRIES, SHRI RAJESH GUPTA & OTHERS, S/SHRI NARINDER MOHAN MITTAL HUF & OTHERS AND VIVEK MOHAL MITTAL & OTHERS, OUT OF THE SHARES SOLD BY SMT.ERA OHRI AND HER DAUGHTERS AND SHRI R.K. OHRI, NOTED TH AT NO ADDITION IN RESPECT OF THE SAID SALE OF PROPERTY BY SMT.ALKA MI TTAL, SHRI MUKESH MITTAL WAS MADE IN THE HANDS OF THE RESPECTIVE PERS ONS THOUGH THE INFORMATION WAS AVAILABLE WITH THE ASSESSING OFFICE R. ONLY ADDITION MADE IN THE HANDS OF SHRI MUKESH MITTAL WAS ON ACCO UNT OF 8 UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS RELATING TO M/S SEPL WHICH HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 2 8.11.2008. THE CIT (APPEALS) FURTHER NOTED THAT THE ADDITION IN TH E HANDS OF SHRI VIVEK MOHAN MITTAL & OTHERS WAS MADE ON THE BASIS O F SUBMISSION OF SMT.ERA OHRI WHICH WAS RECORDED ON 8.10.2004. THE CIT (APPEALS) OBSERVED THAT THE SAID RELIANCE WAS PLACED BY THE A SSESSING OFFICER ON THE SAID SUBMISSION WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. THE CIT (APPEALS) HELD THAT IN VIEW OF THE RATIO LA ID DOWN BY THE HON'BLE ORISA HIGH COURT IN CIT VS. BIJUPATNAYAK [1 90 ITR 396 (ORISA) WHEREIN IT HAS BEEN HELD THAT WHERE THE EVI DENCE OF WITNESS IS RECORDED EX-PARTE BY THE INCOME TAX AUTHORITIES UND ER SECTION 131 OF THE ACT, THE ASSESSEE HAS RIGHT OF REBUTTAL OF THE EVIDENCE BEFORE IT CAN BE USED AGAINST HIM. IF THE ASSESSEE INSISTED UPON THE CROSS EXAMINATION OF THE WITNESS, THE SAME SHOULD BE ALLO WED BEFORE THE EVIDENCE IS USED AGAINST THE ASSESSEE. THE CIT (AP PEALS) FURTHER NOTED THAT THE REASONS FOR ISSUE OF NOTICE UNDER SE CTION 148 OF THE ACT WERE RECORDED ON 3.11.2009, WHEREAS THE STATEMENT O F SMT.ERA OHRI WAS RECORDED ON 8.10.2004 AND THERE WAS WIDE GAP WH ICH WAS INTRIGUING. 8. THE CIT (APPEALS) ON THE MERITS OF THE ISSUE OBS ERVED THAT THE ISSUE RELATED TO THE 50% OF THE PLOT WHICH WAS SOLD BY SMT.ERA OHRI AND HER DAUGHTERS TO M/S SHARVILLA ESTATES PVT. LTD . (SEPL) THROUGH SHRI MUKESH MITTAL. THE 23% OF WHICH WAS FURTHER S OLD BY M/S SEPL THROUGH ITS DIRECTOR SMT.ALKA MITTAL TO THE APPELLA NT AND SHRI VIVEK MOHAN MITTAL, SHRI ARVIND MITTAL BROTHER OF SHRI VI VEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SHRI ARVIND MITTAL, RESIDE NT OF H.NO.123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21D, CHANDIGARH FOR CONSIDERATION OF RS.80 LACS. THE DETAILS OF PAYMEN T, MODE OF PAYMENT AND SOURCE OF PAYMENT FILED BY THE ASSESSEE ARE REP RODUCED BY THE CIT 9 (APPEALS) UNDER PARA 35 AT PAGES 22, 23 AND PARA 24 OF THE APPELLATE ORDER. THE CIT (APPEALS) NOTED THAT THE ADDITION O F RS.36,80,000/- HAD MAINLY BEING MADE IN VIEW OF THE STATEMENT OF S MT.ERA OHRI DATED 8.10.2004 WHEREIN SHRI ADMITTED HAVING RECEIVED RS. 3.20 CRORES FROM THE SALE OF PLOT. THE CIT (APPEALS) FROM QUESTION NO.3 OF THE STATEMENT OF SMT.ERA OHRI OBSERVED THAT THE AGREEME NT TO SELL WAS BETWEEN SMT.ERA OHRI, HER TWO DAUGHTERS AND MRS.ALK A MITTAL ON BEHALF OF SEPL AND MUKESH MITTAL, FIGURED AS A MEDI ATOR/BROKER IN THE AGREEMENT/DEAL. NOWHERE IN THE STATEMENT IS THERE IOTA OF EVIDENCE POINTING TOWARDS INVOLVEMENT OF SHRI VIVEK MOHAN MI TTAL, VASUNDHRA MITTAL, AMITA MITTAL OR ARVIND MITTAL. MOREOVER, N O ADDITION REGARDING RECEIPT OF MONEY OVER & ABOVE THE SALE CO NSIDERATION HAS BEEN MADE OR SUSTAINED IN THE HANDS OF SMT.ALKA MIT TAL, M/S SEPL OR SHRI MUKESH MITTAL. THE CIT (APPEALS) VIDE PARA 39 FURTHER OBSERVED THAT THE ASSESSMENT IN THE CASE OF M/S SEPL WAS COM PLETED UNDER SECTION 143(3) OF THE ACT AND RETURNED INCOME WAS A CCEPTED BY THE ASSESSING OFFICER OBSERVING AS UNDER: 'DURING THE COURSE OF ASSESSMENT IN THE CASES OF TH ESE DIRECTORS WHO ORIGINALLY FORMED THIS COMPANY AND LATER ON WITH THE COMMON IN TENTION USED THE CORPORATE VEIL OF THE ASSESSEE COMPANY ONLY AS A CONDUIT AND MERE PUPPET TO PURCHASE PLOT NO. 70 LA, PHASE I, CHANDIGARH. AH THE DEPOSITS MAD E IN THE ABOVE SAID BANK ACCOUNTS HAVE BEEN CONSIDERED IN THE CASE OF MUKESH MITTAL, ONE OF THE TWO FOUNDER DIRECTORS AND ARE TO BE CONSIDERED IN THE CASE OF V IVEK MITTAL WHO ALSO GOT THE GPA JOINTLY WITH MUKESH MITTAL IN RESPECT OF PLOT N O. 70, IND AREA PHASE I, CHANDIGARH. ' 9. THEREAFTER THE TRIBUNAL VIDE ORDER DATED 28.11.2 008 HAD DELETED THE ADDITIONS MADE IN THE HANDS OF SHRI MUKESH MITT AL ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT OF M/S SEPL. THE RELE VANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA 40 AT PAGES 25 TO 27 OF THE APPELLATE ORDER. THE CIT (APPEALS) THUS HELD VIDE PARA 41 AS UNDER : FROM THE ABOVE, IT CLEAR THAT THE AMOUNT OF CONSID ERATION OF RS.3.20 CRORES IS REQUIRED TO BE ACCOUNTED FOR IN THE CASE OF COMPANY M/S SEPL WHICH WAS NOT DONE BY THE AO. ON THE OTHER HAND ON THE STATEMENT OF SMT E RA OHRI, ADDITION OF RS.3 6, 10 80,000/- IS MADE BY THE AO, WHEN THE APPELLANT HAS NO DEALING WITH HER REGARDING SELLING OF THE PLOT NO. 70, I.A.PHASE I, CHANDIGARH . MOREOVER IN HER STATEMENT, SMT ERA OHRI SUBMITTED THAT SHE HAD SOLD 50% OF HER SHA RE, WHERE AS THE APPELLANT AND HER OTHER FAMILY MEMBERS PURCHASED 23% OF THE PLOT. AO HAS COMPUTED THE PURCHASE CONSIDERATION IN THE HANDS OF THE APPELLAN T ON PROPORTIONATE BASIS WITHOUT ANY AUTHENTIC EVIDENCE. KEEPING IN VIEW TH E VOLATILE NATURE OF REAL ESTATE, IT VERY DIFFICULT TO COMPUTE THE PURCHASE PRICE OF ANY LAND ON PROPORTIONATE BASIS AS IT IS EFFECTED BY VARIOUS FACTORS, SUCH AS LOCATION , DEMAND AND PURPOSE FOR WHICH LAND CAN BE PUT TO USE. 10. THE CIT (APPEALS) ALSO NOTED THE FACT THAT THE CIT (APPEALS), LUDHIANA VIDE ORDER DATED 2.6.2008 IN THE CASE OF S HRI NARINDER MOHAN MITTAL, HUF & OTHERS, WHO HAD PURCHASED 27% O F THE SAID PLOT AT THE COST OF RS.50 LACS, ACCEPTED THE SALE CONSID ERATION IN THE ABSENCE OF ANY CONCRETE EVIDENCE WHICH COULD PROVID E ANY IMPETUS TO THE THEORY OF ASSESSING OFFICER THAT SALE CONSIDERA TION OF RS.1 CRORE HAD BEEN PAID. THE CIT (APPEALS) HELD THAT IN THE INSTANT CASE UNDER APPEAL THE ASSESSEE ALONGWITH FAMILY MEMBERS HAD PU RCHASED 23% SHARE OF THE SAID PLOT FOR RS.80 LACS WHICH WAS RS. 30 LACS MORE THAN PAID BY SHRI NARINDER MOHAN MITTAL & OTHERS FOR PUR CHASE OF 27% SHARE OF SAID PLOT. THE CIT (APPEALS) FURTHER OBSE RVED THAT EVEN AFTER THE SEARCH AND SEIZURE OPERATION NO DOCUMENTARY EVI DENCE WAS FOUND WHICH COULD PROVIDE ANY EVIDENCE REGARDING NON GENU INENESS OF THE SALE DEED. THE CIT (APPEALS) HELD THAT THERE WAS N O BASIS FOR RELYING ON THIRD PARTY EVIDENCE THAT IS THE PAYMENT OF RS.3 .20 CRORES BEING MADE BY M/S SEPL TO SMT.ERA OHRI AND INSTEAD OF EXA MINING THE PAYMENT IN THE HANDS OF M/S SEPL, THE ASSESSING OFF ICER PROCEEDED ONE STEP FURTHER BY TAKING THE CONSIDERATION OF THE PLOT SOLD BY THE COMPANY M/S SEPL TO THE ASSESSEE AND OTHERS OF RS.3 .20 CRORES, IGNORING THE FACT THAT THE SALE CONSIDERATION OF 50 % OF THE PLOT HAD TO BE CONSIDERED AND ONLY EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER WAS THE STATEMENT OF THIRD PARTY I.E. SMT.ERA OHRI WHICH REFERRED TO THE TRANSACTION WITH M/S SEPL & COMPANY AND NOT WIT H THE ASSESSEE. THE CIT (APPEALS) RELIED UPON THE RATIO LAID DOWN I N CIT VS. 11 CONCORDE CAPITAL MANAGEMENT CO. LTD. (2009) 183 TAX MAN 172 (DELHI) WHICH DEALT WITH THE ISSUE OF ADDITION ON T HE BASIS OF THIRD PARTY. THE CIT (APPEALS) THUS HELD THAT THE ADDITI ON OF RS.36,80,000/- WAS BASED ON SUSPICION AND CONJECTURES AS NEITHER T HROUGH SEARCH & SEIZURE OPERATION, NOR DURING THE ASSESSING OFFICER , WAS ANY EVIDENCE COLLECTED WHICH COULD LEAD ONE TO CONCLUDE THAT THE INFERENCE REGARDING ON MONEY WAS PAID BY THE ASSESSEE FOR THE SAID PROPERTY. ACCORDINGLY, ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THE CIT (APPEALS). 11. THE REVENUE IS IN APPEAL AGAINST THE SAID DELET ION OF ADDITION ON MERITS. 12. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT. THE L EARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME WAS FI LED ON 31.10.2002 AND NOTICE UNDER SECTION 148 OF THE ACT WAS FIRST I SSUED TO THE ASSESSEE ON 23.3.2007 AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3)/148 OF THE ACT ON 24.12.2007 ON THE RETURNED INCOME. COPY OF THE REASONS FOR INITIATING RE-ASSESSMENT PROCEEDING S FILED BY THE LEARNED D.R. FOR THE REVENUE DURING THE COURSE OF H EARING. THEREAFTER, THERE WAS SEARCH ON SHRI MUKESH MITTAL ON 3.9.2004 AND SUMMONS WERE RECEIVED FROM THE DDI AND STATEMENT WA S RECORDED UNDER SECTION 131 OF THE ACT ON 14.9.2004. THEREAF TER RE-ASSESSMENT PROCEEDINGS WERE AGAIN INITIATED BY RECORDING REASO NS FOR REOPENING WHICH ARE PLACED AT PAGES 65 AND 66 OF THE PAPER BO OK. THE LEARNED A.R. FOR THE ASSESSEE FAIRLY ADMITTED THAT THOUGH T HERE WAS NO BAR ON THE SECOND REOPENING OF ASSESSMENT BUT IT COULD NOT BE ON SAME GROUND. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT ON SAME FACTS AND SAME PROPERTY THE RE-ASSESSMENT P ROCEEDINGS WERE 12 INITIATED AGAINST THE ASSESSEE AND IT WAS A CLEAR C ASE OF CHANGE IN OPINION. RELIANCE WAS PLACED IN CIT VS. KELVINATOR OF INDIA LTD. [320 ITR 561 (SC)] AND IN GENERAL INSURANCE CORPORATION OF INDIA VS DCIT & ANOTHER [342 ITR 27 (BOM)]. 13. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THERE WAS DIFFERENCE IN THE REASONS RECORDED FOR REOPENING IN THE FIRST AND SECOND PROCEEDINGS. IN THE FIRST REASONS RECORD FO R REOPENING, THE QUERY WAS IN RESPECT OF INVESTMENT OF RS.4,16,000/ - ONLY. HOWEVER, IN SECOND REASON RECORDED THERE WAS CLEAR CUT EVIDE NCE IN THE POSSESSION OF THE DEPARTMENT THAT UNACCOUNTED INVES TMENT HAD BEEN MADE IN THE PROPERTIES AND HENCE THERE IS ESCAPEMEN T OF INCOME. OUR ATTENTION WAS DRAWN TO THE COPY OF REASONS REPRODUC ED BY THE ASSESSING OFFICER AT PAGE 4 OF THE ASSESSMENT ORDER . THE ASSESSEE, ON THE OTHER HAND, HAD PLACED COPY OF REASONS AT PAGES 65 AND 66 OF THE PAPER BOOK AND THE LEARNED D.R. FOR THE REVENUE ADM ITTED FROM THE PERUSAL OF THE RECORD THAT THESE WERE THE REASONS R ECORDED BY THE ASSESSING OFFICER. 14. IN RESPECT OF THE ISSUE RAISED ON MERITS, THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT 23% OF THE SAID PROPERTY W AS PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBERS AND THE PAYMENT S WERE MADE OVER THE PERIOD OF THREE YEARS AS DETAILED IN THE APPELL ATE ORDER BY THE CIT (APPEALS). THE LEARNED D.R. FOR THE REVENUE POINT ED OUT THAT THE ISSUE IN THE CASE WAS REOPENED ON THE BASIS OF CERT AIN EVIDENCE AVAILABLE WITH THE DEPARTMENT I.E. THE STATEMENT OF SMT.ERA OHRI AND THE PARTICULARS OF THE ENTIRE TRANSACTION AS SUCH. THE LEARNED D.R. FOR THE REVENUE FURTHER POINTED OUT THAT THE CIT (APPEA LS) WHILE GIVING RELIEF TO THE ASSESSEE HAD IGNORED STATEMENT OF SMT .ERA OHRI. IT WAS STRESSED BY THE LEARNED D.R. FOR THE REVENUE THAT W HEN THERE WAS 13 MATERIAL DEFECT IN THE ORDER OF THE AUTHORITIES, TH EN THE MATTER SHOULD BE RESTORED BACK TO THE SAID AUTHORITIES FOR PROPER ADJUDICATION OF THE ISSUE. RELIANCE WAS PLACED IN ITO VS. M.PIRAI CHOO DI [334 ITR 262 (SC)] AND ON CHHATRASINGHJI KESARISINHJI THAKORE VS . CIT [59 ITR 562(SC)]. 15. THE LEARNED A.R. FOR THE ASSESSEE IN REPLY POIN TED OUT THAT THE CIT (APPEALS) HAD ELABORATELY DISCUSSED THE STATEME NT OF SMT.ERA OHRI, THE EXECUTION OF SALE DEED OF RS.80 LACS AND ALSO PAYMENT BEING MADE OVER A PERIOD OF THREE YEARS BY CHEQUE. NO AD DITION WAS MADE IN THE CASE OF SELLER OF THE SAID PROPERTY I.E. M/S SE PL. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THERE WAS ME RIT IN LIFTING OF CORPORATE VEIL BUT IN THE FACTS OF THE PRESENT CASE ASSESSMENT WAS COMPLETED IN THE CASE OF THE COMPANY M/S SEPL, SHRI MUKESH MITTAL, AND SMT.ALKA MITTAL, WHO WERE SELLERS OF THE SAID P ROPERTY FROM WHOM THE ASSESSEE HAD PURCHASED THE PROPERTY AND NO ADDI TION WAS MADE. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSE E THAT TWO TRANSACTIONS WERE AT THE SAME TIME. ANOTHER PLEA R AISED BY THE LEARNED A.R. FOR THE ASSESSEE WAS THAT THE ASSESSING OFFICE R IN THE REMAND REPORT HAD ACCEPTED THE SOURCES OF INVESTMENT BY TH E ASSESSEE AND OTHERS UPTO RS. 80 LACS. 16. IN ITA NO.226/CHD/2011 I.E. THE APPEAL FILED BY THE REVENUE AND C.O.NO.46/CHD/2011 I.E. CROSS OBJECTION FILED BY TH E ASSESSEE. IT WAS POINTED OUT BY BOTH THE AUTHORIZED REPRESENTATI VES THAT THE TRANSACTION WAS THE SAME EXCEPT THAT IN ASSESSMENT YEAR 2003-04 THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143 (1) OF THE ACT. THE LEARNED D.R. FOR THE REVENUE IN THIS REGARD POI NTED OUT THAT THE RATIO LAID DOWN IN ACIT VS. RAJESH JHAVERI STOCK BR OKERS (P) LTD. [291 ITR 500 (SC)] WAS SQUARELY APPLICABLE AND RE-A SSESSMENT 14 PROCEEDINGS INITIATED IN SUCH CASE MERITS TO BE UPH ELD. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE ADDITION IN THIS YEAR WAS MADE ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT OF M/S SEPL AS ASSESSEE WAS THE DIRECTOR IN THE SAID COMPANY. 17. IN ASSESSMENT YEAR 2004-05 I.E. IN ITA NO.227/C HD/2011 I.E. THE APPEAL FILED BY THE REVENUE AND C.O.NO.47/CHD/2011 I.E. CROSS OBJECTION FILED BY ASSESSEE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF THE ACT. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT IN ADDITION TO THE ISSUE RAISED AGAINST THE INVESTMENT IN PURCHASE OF 23% SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH, ANOTHER GROUND OF APPEAL HAS B EEN RAISED VIDE GROUND NO.2 OF CROSS OBJECTION IN ASSESSMENT YEAR 2 004-05, WHICH IS NOT PRESSED. THE CIT (APPEALS) HAD UPHELD THE ADDI TION OF RS.1,25,000/- BEING 1/4 TH SHARE TOWARD INVESTMENT IN HOUSE NO.2202, SECTOR 21D, CHANDIGARH. 18. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE ASSESSEE SHRI VIVEK MOHAN MITTAL WAS THE DIRECTOR IN THE COM PANY M/S SEPL AND THE ASSESSING OFFICER VIDE PARAS 3.1 AND 3.2 AN D PARA 7 HAS POINTED OUT THAT THERE WERE DEPOSITS IN THE BANK AC COUNT OF THE COMPANY WHICH WERE ATTRIBUTED TO THE ASSESSEE AND O UT OF THE SAID DEPOSITS THE PAYMENTS WERE MADE FOR PURCHASE OF THE PROPERTY. HOWEVER, THE ASSESSEE CLAIMS THAT IT WAS NOT AWARE OF THE TRANSACTION BETWEEN M/S SEPL AND SMT.ERA OHRI AND HER DAUGHTERS . 19. THE LEARNED A.R. FOR THE ASSESSEE FAIRLY ADMITT ED THAT IN THE YEAR 2001 THE COMPANY WAS STARTED. SHRI MUKESH MITTAL A ND SMT.ALKA MITTAL WERE THE DIRECTORS. THEREAFTER SHRI RAJESH AGGARWAL AND SHRI ALKA MITTAL WERE DIRECTORS AND BETWEEN THE PERIOD 1 6.7.2002 TO 26.8.2003, SHRI VIVEK MOHAN MITTAL AND SMT.ALKA MIT TAL WERE THE 15 DIRECTORS. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE ASSESSMENTS WERE NOT OPENED DURING THE PERIOD W HEN SHRI VIVEK MOHAN MITTAL WAS THE DIRECTOR. 20. ANOTHER ADDITION MADE IN THE HANDS OF ASSESSEE WAS REGARDING INVESTMENT IN HOUSE NO. 3158, SECTOR 21-D CHANDIGAR H. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE CIT (APPE ALS) IS NOT CORRECT IN SAYING THAT THE ASSESSING OFFICER HAD NOT SEEN T HE PARTICULARS OF THE TRANSACTION WHEREIN THE ASSESSING OFFICER HAD ASKED FOR VARIOUS DETAILS FROM THE ASSESSEE. THE LEARNED D.R. FOR TH E REVENUE FURTHER POINTED OUT THAT SIMILAR TRANSACTION OF PURCHASE OF PROPERTY IN THE HANDS OF SHRI NARINDER MOHAN MITTAL AROSE WHEREIN A COMPUTER PRINTOUT WAS TAKEN FROM THE COMPUTER OF SHRI MUKESH MITTAL IN WHICH THE SALE CONSIDERATION WAS RECORDED AT RS.1 CRORE A S AGAINST RS.50 LACS STATED IN THE SALE DEED EXECUTED BETWEEN THE PARTIE S. IT WAS FURTHER STATED THAT THERE WAS A PRESUMPTION THAT THE DOCUME NTS BELONG TO THE ASSESSEE AND THE SAID TRANSACTION HAD TO BE APPLIED TO THE FACTS OF THE PRESENT CASE. 21. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THERE WAS NO SEARCH AND NO SURVEY UPON THE ASSESSEE AND NO DOCUM ENT WAS FOUND FROM THE POSSESSION OF THE ASSESSEE. ITA NOS.223 & 224/CHD/2011 :: SHRI ARVIND MOHAN MIT TAL C.O. NOS. 43 & 44/CHD/2011 22. IT WAS POINTED OUT BY BOTH THE REPRESENTATIVES THAT THE ISSUE IN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FIL ED BY THE ASSESSEE IN ASSESSMENT YEAR 2002-03 WERE IDENTICAL TO THE IS SUE IN THE CASE OF SHRI VIVEK MOHAN MITTAL. THE ASSESSMENT IN THE CAS E WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT R.W.S.148 OF THE ACT AND THEREAFTER AGAIN REASONS WERE RECORDED FOR REOPENIN G OF ASSESSMENT 16 UNDER SECTION 148 OF THE ACT. COPIES OF BOTH THE R EASONS RECORDED FOR REOPENING OF ASSESSMENT WERE FILED ON RECORD. 23. SIMILARLY IN ASSESSMENT YEAR 2004-05 THE ISSUES RAISED IN REVENUES APPEAL AND CROSS OBJECTION FILED BY THE A SSESSEE WERE IDENTICAL TO THE ISSUES RAISED IN THE CASE OF SHRI VIVEK MOHAN MITTAL AND SMT.AMITA MITTAL IN ASSESSMENT YEAR 2004-05. ITA NOS.221 & 222/CHD/2011 :: SMT.AMITA MITTAL C.O.NOS. 41 & 42/CHD/2011 24. THE REVENUE IS IN APPEAL IN ASSESSMENT YEARS 20 02-03 AND 2004- 05 AND THE ASSESSEE HAS FILED CROSS OBJECTION IN TH E RESPECTIVE YEARS. THE ISSUES RAISED IN THE APPEALS FILED BY THE REVEN UE ARE LINKED TO THE ISSUES RAISED IN THE CASE OF SHRI VIVEK MOHAN MITTA L AND CROSS OBJECTION FILED BY THE ASSESSEE AND ARE AGAINST THE REOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE, WHEREAS TH E ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF TH E ACT. ITA NO.220/CHD/2011 :: SMT.VASUNDHRA MITTAL C.O.NO. 40/CHD/2011 25. THE APPEAL OF THE REVENUE IN ASSESSMENT YEAR 20 02-03 IS ON SIMILAR ISSUES AS RAISED IN THE CASE OF SHRI VIVEK MOHAN MITTAL. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE REOP ENING OF ASSESSMENT WHERE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(1) OF THE ACT. ITA NOS.225 TO 227/CHD/2011 :: SHRI VIVEK MOHAN MIT TAL 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED U NDER SECTION 143(3) R.W.S. 148 OF THE ACT. THE REASONS RECORDE D FOR RE-ASSESSMENT UNDER SECTION 147 OF THE ACT WERE AS UNDER: 17 REASONS FOR ISSUE OF NOTICE U/S 148 SH. VIVEK MOHAN MITTAL, NEAR PUNJAB & SIND BANK, ROPAR. PAN ASSTT, YEAR: 2002-03 STATUS : INDL THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 31-1 0-2002 WHICH WAS PROCESSED U/S 143(L)(A) OF THE I.T.ACT, 1961. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, CHANDIGARH DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN MITTAL GROUP CA SES HAS GATHERED INFORMATION ABOUT PURCHASE OF PLOT BEARING NUMBER 70,1.A., PHASE-1,CH ANDIGARH BY M/S SHARVILLA ESTATES PVT. LTD FROM; SMT. ERA K. OHRI AND HER DAUGHTERS. THE A GREEMENT TO SELL WITH M/S SHARVILLA ESTATES PVT. LTD. THOROUGH ONE OF ITS DIRECTORS SMT . ALKA MITTAL FOR RUPEES 3.20 CRORES THOUGH THE SALE DEED OF THIS PLOT WAS MADE FOR RUPEES 1.30 CRORES. THE ASSESSEE WHO IS ALSO THE OTHER DIRECTOR IN THE COMPANY HAS PAID AN AMOUNT OF RUPEE S 416000/- AS UNDER :- S.NO. DATE ______ AMOUNT PAID 1. 29-12-2001 300000/- 2. 18-01-2002 66000/- 3. 18 - 01 - 2002 50000/ - BUT THE ASSESSEE HAS NOT SHOWN THESE INVESTMENTS IN THE RETURN MEANING THEREBY THAT HE HAS PAID THIS AMOUNT OUT OF ITS UNACCOUNTED MONEY AND HAS NOT DECLARED IT TO THE DEPARTMENT FOR TAXATION. I, THEREFORE, HAVE REASONS TO BELIEVE THAT INCOME TO THE EXTENT OF RUPEES 4 , 16 , 000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T.ACT, 1961 AS DISCUSSED ABOVE. ISSUE NOTICE U/S 148. 27. THEREAFTER ASSESSMENT WAS COMPLETED AT THE RETU RNED INCOME PURSUANT TO SEARCH AT THE PREMISES OF SHRI MUKESH M ITTAL. THE ASSESSING OFFICER AGAIN RECORDED REASONS FOR REOPEN ING ASSESSMENT UNDER SECTION 147 OF THE ACT WHICH ARE AS UNDER: REASONS FOR RE-OPENING OF CASE U/S 147/148 OF THE I NCOME TAX ACT, 1961 NAME : SH. VIVEK MOHAN MITTAL ADDRESS : NEAR PUNJAB & SIND BANK, ROPAR ASSTT.YEAR : 2002-03 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, CHANDIGARH DURING THE COURSE OF ASSTT. PROCEEDINGS IN MUKESH MITTAL GROUP OF CASES GATHERED INFORMATION ABOUT THE PURCHASE OF PLOT BEARING NO.70-IA., PHASE-I, CH ANDIGARH BY M/S SARVILLA ESTATE PVT. LTD., CHANDIGARH FROM SMT. ERA. K.OHRI & HER D AUGHTERS FOR A CONSIDERATION OF 18 RS.3.20 CRORE. ASSTT. COMMISSIONER OF INCOME TAX CE NTRAL CIRCLE-I, SCO.98-99, SECTOR- 17-C, CHANDIGARH HAS SENT FURTHER INFORMATION VIDE LETTER DATED 24.03.2009 (PHOTOCOPY OF RELEVANT PAGES OF A.D.I, APPRAISAL REPORT.) REGARDI NG ABOVE PURCHASE. AS PER INFORMATION SMT.ERA K.OHRI & HER DAUGHTERS WERE HAVING 50% SHAR E IN ABOVE SAID PROPERTY AND 50% SHARE WAS HELD BY SH. R.K. OHRI. THIS 50% SHARE WAS GOT REGISTERED AT VALUE OF RS.50 LACS IN THE NAME OF NARINDER MOHAN MITTAL (HUF) GROUP (2 7% SHARE) AND RS.80 LACS IN THE NAME OF VIVEK MOHAN MITTAL GROUP (23% SHARE). AND 5 0% SHARE OF SH. R.K. OHRI WAS GOT REGISTERED AT VALUE OF RS.75 LACS ( 23% SHARE REGIS TERED ON 02.04.2003 IN THE NAME OF MS/. VISHNU ESTATES LTD.) AND 27% SHARE REGISTERED ON 02 .04.2003 IN THE NAME OF SH. RAJESH GUPTA / THREE OTHER FAMILY MEMBERS AT VALUE OF RS-9O LACS. THEREFORE, THE ENTIRE PROPERTY WAS GOT REGISTERED AT A TOTAL VALUE OF RS.2.95 CRORES. THE ACTUAL PRICE OF THE DEAL OF THE PROPERTY COMES TO' RS.6-40 CRORE S AS IS CLEAR FROM THE PAYMENT OF RS.3.20 CRORES MADE TO SMT. ERA OHRI AND HER DAUGHT ERS UPTO 31.01.2002 THROUGH M/S. SHARVILLA ESTATES PVT. LTD. FOR HER SHARE OF 50%, INFORMATION AVAILABLE WITH ACIT (CENTRAL CIRCLE)] . AS PER INFORMATION AVAILABLE, THE SALE DEED WAS EXE CUTED, ON 07.05.2004 BEFORE THE SUB-REGISTRAR, U.T., CHANDIGARH BETWEEN SMT. ALKA M ITTAL, W/O SH. MUKESH MITTAL AND SH. VIVEK MOHAN MITTAL AND SH. ARVIND MITTAL BOTH S ONS OF SH. MADAN MOHAN MITTAL, SMT. AMITA MITTAL, W/O SH.VIVEK MOHAN MITTAL AND SMT. VA SUNDHARA W/O SH. ARVIND MITTAL, ALL RESIDENT OF H.NO.123, SEC 21 A, CHANDIG ARH FOR RS.80 LACS ONLY FOR THE 23% SHARE IN THE ENTIRE INDUSTRIAL PLOT NO. 70, 1. AREA, PHASE -I, C HANDIGARH. SO, ON PRO RATA BASIS 23% OF RS.6.40 CRORES (I.E. VALUE OF TOTAL PLOT NO.70, I.A. -I, CHANDIGARH WHICH WAS 50% HELD BY SMT. ERA OHRI AND HER DAUGHTE RS AND 50% BY SH. R.K. OHRI) COMES TO RS.1,47,20,000/-. ASSESSEE'S SHARE IN 1,47,20,000 COMES TO RS.36,80,000 (1/4 TH SHARE). A PERUSAL OF RETURN FILED BY THE ASSESSE E REVEALS THAT NO WITHDRAWN HAS BEEN SHOWN. I HAVE THEREFORE, REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.36,80,000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. HENCE, NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 IS REQUIRED TO BE ISSUED. ISSUED NOTICE U/S.148. 28. WE FIRST TAKE UP CROSS OBJECTIONS FILED BY DIFF ERENT ASSESSEES. THE C.O.NO.45/CHD/2011 IN THE CASE OF SHRI VIVEK MO HAN MITTAL VS. ITO AND C.O.NO.43/CHD/2011 IN THE CASE OF SHRI ARVI ND MOHAN MITTAL VS. ITO ARE AGAINST INVOKING OF JURISDICTION UNDER SECTION 148 OF THE 19 ACT AFTER ASSESSMENT ORDER HAVING BEEN PASSED UNDER SECTION 143(3) OF THE ACT. HOWEVER, OTHER CROSS OBJECTIONS FILED BY DIFFERENT ASSESSEES I.E. C.O.NOS.46 & 47/CHD/2011 IN THE CASE OF SHRI V IVEK MOHAN MITTAL VS. ITO, C.O.NO.44/CHD/2011 IN THE CASE OF SHRI ARV IND MOHAN MITTAL VS. ITO, C.O.NOS.41&42/CHD/2011 IN THE CASE OF SMT. AMITA MITTAL VS. ITO AND C.O.40/CHD/2011 IN THE CASE OF SMT.VASU NDHRA MITTAL VS. ITO ARE AGAINST THE ORDER UNDER SECTION 143(1) OF T HE ACT R.W.S 148 OF THE ACT. IN VIEW OF THE RATIO LAID DOWN BY THE HO N'BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. [ 291 ITR 500 (SC)], WE UPHOLD THE ORDERS OF THE AUTHORITIES BELO W IN HOLDING THAT AS NO ASSESSMENT HAS BEEN FRAMED IN THE CASE AS INITIA L INTIMATION WAS ISSUED UNDER SECTION 143(1) OF THE ACT, THE ASSESSI NG OFFICER IS EMPOWERED TO RECORD REASON FOR REOPENING OF ASSESSM ENT AS THERE IS REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCO ME AND PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT. U PHOLDING THE SAME WE, DISMISS THE GROUNDS RAISED IN C.O.NOS.46,47,44, 41,42 & 40/CHD2011. 29. NOW COMING TO THE C.O.NOS.45 & 43/CHD/2011, THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT INITIALLY AND THEREAFTER AGAIN REASONS WERE RECORDED FOR REOP ENING OF ASSESSMENT AND FINAL ASSESSMENT WAS MADE UNDER SECT ION 148 R.W.S. 143 OF THE ACT. THE FACTS IN BOTH THE CASES ARE ID ENTICAL. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS OF C.O.45/CHD/ 2011 TO ADJUDICATE THE ISSUE. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT R.W.S. 148 OF THE ACT WAS MADE ON 24.12.2007 AND THE RETURNED INCOME WAS ACCEPTED IN TOTALITY. 30. THEREAFTER INFORMATION WAS RECEIVED BY THE ASSE SSING OFFICER FROM ACIT, CENTRAL CIRCLE, CHANDIGARH THAT SEARCH W AS CONDUCTED IN 20 THE CASE OF SHRI MUKESH MITTAL GROUP OF CASES AND T HERE WAS ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER RECORDED REASONS FOR REOPENING O F ASSESSMENT WHICH ARE ANNEXED AT PAGES 65 AND 66 OF THE PAPER BOOK AN D REPRODUCED HEREABOVE: 31. THE ASSESSING OFFICER AFTER RECORDING REASONS F OR REOPENING OF ASSESSMENT AND PERMISSION FROM CIT-I, CHANDIGARH VI DE LETTER DATED 27.3.2009, ISSUED NOTICE UNDER SECTION 148 OF THE ACT AND SERVED UPON THE ASSESSEE. THE ASSESSEE IN REPLY SUBMITTED THAT THE ORIGINAL RETURN FILED IN THE CASE MAY BE TREATED AS FILED IN RESPON SE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE SOUGHT REASON S FOR REOPENING OF ASSESSMENT WHICH WERE GIVEN TO THE ASSESSEE VIDE OR DER-SHEET DATED 8.6.2009. THEREAFTER THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS FROM DATE TO DATE AND ASSESSMENT IN THE CASE WAS COMPLETED BY THE ASSESSING OFFICER AND AN ADDITION OF RS.36,80,000/- WAS MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSE E OBJECTED TO THE REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE AC T AND THE GROUNDS OF APPEAL TO THE EFFECT WERE RAISED BEFORE THE CIT (APPEALS). THE CIT (APPEALS) RELYING ON VARIOUS DECISIONS FIRSTLY HELD THAT THE INFORMATION AND REASON TO BELIEVE CONSTITUTE ESSENT IAL REQUISITE AND BASIS OF FOUNDATIONS TO SET IN MOTION THE MACHINERY OF RE-ASSESSMENT UNDER SECTION 147(B) OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED UPON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S KUMAR ENGINEERS VS. CIT [223 ITR 18 (P&H). THE CIT (APPEALS) HELD THAT THERE WAS REASON TO BELIEVE HAV ING RATIONAL NEXUS WITH THE ASSESSMENT OF INCOME AND IN VIEW THEREOF, IT IS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY ISSUED NOTICE UNDER S ECTION 148 OF THE ACT. 21 32. THE MAIN PLEA OF THE ASSESSEE BEFORE US WAS THA T ON SAME FACTS AND ON SAME ISSUE OF INVESTMENT IN THE PROPERTY, RE -ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE TWI CE AND IT WAS CLEAR CASE OF CHANGE OF OPINION. THE LEARNED A.R. FOR TH E ASSESSEE, HOWEVER, ON THE OTHER HAND, ADMITTED THAT THERE WAS NO BAR ON THE SECOND REOPENING OF ASSESSMENT. HOWEVER, THE SAME COULD NOT BE ON THE SAME GROUND AS THE FIRST ONE. THE LEARNED D.R . FOR THE REVENUE POINTED OUT THAT THERE WERE DIFFERENT REASONS RECOR DED IN THE FIRST AND SECOND ROUND OF PROCEEDINGS AND THE RE-ASSESSMENT P ROCEEDINGS WERE JUSTIFIED. 33. IN THE FIRST ROUND OF REASONS RECORDED FOR RE-A SSESSMENT, IT TRANSPIRES THAT THE ASSESSING OFFICER, CENTRAL CIRC EL, CHANDIGARH DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN MITT AL GROUP OF CASES HAD GATHERED INFORMATION ABOUT PURCHASE OF PLOT NO. 70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. THE ASSESSEE WAS FOUND TO HAVE INVESTED RS.4,16,000/- DURING THE YEAR UNDER CONSIDERATION A ND SINCE THE SAID INVESTMENT WAS NOT SHOWN IN THE SAID RETURN OF INCO ME, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID AMOUNT HAS BE EN PAID BY THE ASSESSEE FROM UN-ACCOUNTED MONEY AND THE SAME HAD N OT BEEN DECLARED TO THE DEPARTMENT FOR TAXATION. THE ASSESSING OFFI CER THUS HAD REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.4,16 ,000/- HAD ESCAPED ASSESSMENT. 34. NOW COMING TO THE SECOND REASONS RECORDED BY TH E ASSESSING OFFICER FOR REOPENING OF ASSESSMENT UNDER SECTION 1 48 OF THE ACT, THE ASSESSING OFFICER CONSIDERED THE INFORMATION RECEIV ED FROM ACIT, CENTRAL CIRCLE, CHANDIGARH IN THE COURSE OF ASSESSM ENT PROCEEDINGS IN THE CASE OF MUKESH MITTAL GROUP OF CASES WHEREIN TH E PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH WAS SOLD BY SM T.ERA OHRI AND 22 HER DAUGHTERS FOR TOTAL CONSIDERATION OF RS.3.20 CR ORES. FURTHER INFORMATION WAS RECEIVED FROM ACIT, CENTRAL CIRCLE, CHANDIGARH VIDE LETTER DATED 24.3.2009, AS PER WHICH IT WAS INTIMAT ED THAT 50% SHARE IN THE PROPERTY IN THE NAME OF SHRI NARINDER MOHAN MIT TAL HUF & OTHERS WAS REGISTERED AT THE VALUE OF RS.50 LACS AND 23% S HARE IN THE PROPERTY IN THE NAME OF SHRI VIVEK MOHAN MITTAL & OTHERS WAS REGISTERED AT VALUE OF RS.80 LACS. THE ASSESSING OFFICER FURTHER NOTED THAT THE SHARE OF OTHER CO-OWNER SHRI R.K.OHRI WAS SOLD TO U LTIMATE BUYERS FOR RS.70 LACS AND RS.90 LACS AND ACCORDINGLY ENTIRE PR OPERTY WAS SOLD AT TOTAL VALUE OF RS.2.95 CRORE AS AGAINST THE ACTUAL PRICE OF THE DEAL AT RS.3.20 CRORES. THE SALE DEED WAS EXECUTED BETWEEN SMT.ALKA MITTAL WIFE OF SHRI MUKESH MITTAL AND SHRI VIVEK MOHAN MIT TAL AND OTHERS ON 7.5.2004 FOR RS.80 LACS. HOWEVER, ON PRORATA BASIS 23% OF 6.40CRORES WORKS OUT TO RS.1,47,20,000/-. AS PER THE ASSESSIN G OFFICER ASSESSEES SHARE IN THE SAID PROPERTY COMES TO RS.3 6,80,000/- I.E. 1/4 TH SHARE. AS THE ASSESSEE HAD FAILED TO REFLECT ANY W ITHDRAWAL FROM THIS ACCOUNT, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME TO THE EXTENT OF RS.36,80,000/- HAD ESCAPED ASSESSMENT AND CONSEQUENTLY PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT. 35. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, THE ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE ASSESSING OFFICER WAS CORRECT IN ISSUING THE SECOND NOTICE OF RE-ASSE SSMENT AGAINST THE ASSESSEE UNDER THE PROVISIONS OF SECTION 143(3) R.W .S. 148 OF THE ACT. 36. THE PERUSAL OF DIFFERENT REASONS RECORDED BY TH E ASSESSING OFFICER AT DIFFERENT JUNCTURE REFLECT THAT THOUGH I N BOTH THE PROCEEDINGS THE ISSUE WAS THE PURCHASE OF PROPERTY IN INDUSTRIAL PLOT NO.70, PHASE-1, CHANDIGARH BUT IN THE FIRST REASON RECORDED IN REOPENING OF ASSESSMENT THE LIMITED ISSUE OF THE I NVESTMENT AS SHOWN 23 BY THE ASSESSEE, WAS RAISED. HOWEVER, IN THE NEXT ROUND OF PROCEEDINGS, THE ISSUE WAS THOUGH EMANATING FROM SE ARCH AT THE PREMISES OF SHRI MUKESH MITAAL GROUP, HOWEVER, THE INVESTIGATION WAS WITH REGARD TO ESCAPEMENT OF INCOME VIS--VIS ON MO NEY PAID FOR PURCHASE OF THE SAID PROPERTY. IN THE ENTIRETY OF THE SAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSIN G OFFICER WAS JUSTIFIED IN RECORDING REASONS FOR REOPENING OF ASS ESSMENT UNDER SECTION 148 OF THE ACT IN THE SECOND ROUND OF PROCE EDINGS ON AN ISSUE WHICH WAS COMPLETELY DIFFERENT FROM THE ISSUE RAISE D IN THE FIRST ROUND OF PROCEEDINGS. IN THE ABOVE SAID FACTS AND CIRCU MSTANCES AND IN VIEW OF THE RELIANCE PLACED BY THE CIT (APPEALS) ON VARIOUS CASE LAWS, WE UPHOLD THE ORDER OF THE ASSESSING OFFICER IN INI TIATING THE PROCEEDINGS UNDER SECTION 148 OF THE ACT. THE GROU NDS RAISED IN THE CROSS OBJECTIONS ARE THUS DISMISSED. 37. NOW COMING TO THE ISSUE RAISED ON MERITS BY THE REVENUE, WE FIND THAT IN THE CASE OF ALL THE ASSESSEES BEFORE U S THE ADDITIONS HAVE BEEN MADE IN THE RESPECTIVE YEARS ON ACCOUNT OF THE ALLEGED INVESTMENT IN THE PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CH ANDIGARH. 38. BEFORE ADJUDICATING THE ISSUE RAISED IN THE PRE SENT BUNCH OF APPEALS, WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE. THE CAPTIONED APPEALS ARE IN RELATION TO THE PROPERTY N O.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. THE SAID PROPERTY WAS J OINTLY OWNED BY SHRI R.K.OHRI S/O LATE SHRI DWARKA NATH AND SMT.ERA OHRI DAUGHTER- IN-LAW OF SHRI DWARKA NATH AND HER TWO DAUGHTERS. THERE WERE CERTAIN LITIGATIONS BETWEEN THE TWO PARTIES ON ACCOUNT OF P ROPERTY DISPUTE VIS- -VIS PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHA NDIGARH AND HOUSE NO.342, SECTOR 9-D, CHANDIGARH. THE CASES REGARDIN G SETTLEMENT OF ESTATE OF LATE SHRI DWARKA NATH WERE PENDING IN CIV IL COURT AND 24 BEFORE THE DECISION OF THE CIVIL SUIT, ONE ADVOCATE SHRI MUKESH MITTAL, WHO WAS HANDLING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND ASKED IN OCTOBER, 2002 WHETHER HE WAS INTERESTE D IN OUT OF COURT SETTLEMENT. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT IN ANOTHER PROPERTY I .E. HOUSE NO.342, SECTOR 9-D, CHANDIGARH FOR CERTAIN CONSIDERATION. IN ORDER TO TAKE COMPLETE OWNERSHIP OF HOUSE NO.342, SECTOR 9, CHAND IGARH, HE INFORMED SHRI MUKESH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE. SHRI MUKESH MITTAL THROUGH ENTITY NAMED M/S SHARVILA ESTATES PVT. LTD. ENTERED INTO AN AGREEMENT WITH SHRI R.K,O HRI FOR SALE OF HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHAN DIGARH FOR TOTAL CONSIDERATION OF RS.2.25 CRORES. 39. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALONGWITH THE SHA RE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDUSTRIAL AREA, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORES. ON 18.6.2001 ADVA NCE PAYMENT OF RS.30 LACS WAS GIVEN TO THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXECUTED BETWEEN SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL, DIRECTOR OF M/S SEPL, ON THE OTHER SIDE. THE SAID PROPERTY THEREAFTER WAS FIN ALLY SOLD TO FOUR GROUPS OF PERSONS NAMELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU A SSOCIATES LTD.), 184, INDL. AREA, PHASE-I, CHANDIGARH (RESIDE NCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA, AJAY KR. GUP TA AND VIJAY KR. GUPTA IS H.NO.3007, SECTOR 19-D, CHANDIGARH) (23% SHARE OF PLOT WHOSE TOTAL SIZE IS AROUND 20000 SQ.Y DS.) 2. SH. RAJESH GUPTA, SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA, SMT. VEENU GUPTA W/O SH. YO GESH GUPTA, ALL RESIDENTS OF H.NO.1216, SECTOR 19-B, CHANDIGARH (27% SHARE OF PLOT). 25 3. SH. NARINDER MOHAN MITTAL HUF, SH. SURINDER MOHAN MITTAL HUF, SH. JATINDER MOHAN MITTAL HUF THROUGH ABOVE THREE KARTA S WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.389, SECTOR 30, CHAN DIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL, SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL, RESIDEN T OF H.NO. 123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21-D, CHANDI GARH (23% SHARE OF PLOT). 40. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA, SPA AND WILL F ROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHR I, HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF M/S SEPL DATED 1 8.6.2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES, AGAINST WHICH EARN EST MONEY OF RS.30 LACS WAS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGNED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2.90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WHICH EARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS R EGISTERED IN THE NAME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKESH MITTA L AND SHRI VIVEK MOHAN MITTAL, COUSIN OF SHRI MUKESH MITTAL AND ASSE SSEE BEFORE US, BOTH SHOWN AS RESIDENTS OF 1526, SECTOR 18-D, CHAND IGARH. THE WILL WAS REGISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHERS PURCHASED 23% SHARE OF THE SAID PROPERTY F OR RS.80 LACS AND SHRI NARINDER MOHAN MITTAL, HUF & OTHERS PURCHASED 27% SHARE OF THE SAID PROPERTY FOR ANOTHER RS.50 LACS. THE SHAR E OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI SURINDER MOHAN MITTAL HUF, JITENDER MOHAN MITTAL HUF AND NARINDER MOHAN MITTAL HUF IN JOINT F ROM SHRI MUKESH MITTAL THROUGH M/S SEPL FOR RS.50 LACS. THE BALANC E 23% SHARE IN THE SAID PROPERTY BELONGING TO THE SHARE OF SMT.ERA OHR I AND HER DAUGHTERS WAS PURCHASED FOR RS.80 LACS VIDE SEPARATE SALE DEE D BY SHRI VIVEK MOHAN MITTAL & OTHERS I.E. THE ASSESSEE BEFORE US. 26 41. THE OTHER 50% SHARE OF THE SAID PLOT OWNED BY S HRI R.K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHARE IN THE SAID PROPERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI, WHO IN TURN CLAIMED TO HAVE SOLD TO M/S VISHNU ASSOCIATES LTD.(NOW VALC O INDUSTRIES LTD.), S/SHRI ASHWANI KUMAR GUPTA, AJAY KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE AGREEMENT TO SELL BETWEEN SHRI R. K,.OHRI AND SHRI ANIL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY WAS EXECUTED ON 1.4.2003. THE ORIGINAL AGREEMENT TO SE LL WAS SEIZED FROM THE RESIDENCE OF SHRI R.K.OHRI AND WAS MARKED AS PA GES 73 TO 76 OF ANNEXURE-A/342, SECTOR 9, CHANDIGARH. AS PER THE SAID AGREEMENT TOTAL SALE PRICE PAID TO SHRI R.K,OHRI WAS RS.1.45 CRORES. ON THE DATE OF EXECUTION OF SALE I.E. 1.4.2003 GPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA AND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTER ED ON 1.4.2003. IN RESPECT OF THE SAID 23% SHARE OF THE SAID PROPER TY, SALE DEED WAS REGISTERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROU GH SHRI AJAY KUMAR GUPTA, DIRECTOR AND SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED TH E SALE CONSIDERATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAID BY WAY OF THREE DIFFERENT CHEQUES I.E. RS.5 LACS VI DE CHEQUE DATED 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS VIDE VHEQUE DATED 2.4.2003. 42. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS, NAMELY S/SHRI RAJESH GUPT A, YOGESH GUPTA, SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND SMT.VEEN A GUPTA W/O SHRI YOGESH GUPTA, ALL RESIDENTS OF HOUSE NO.12, SE CTOR 19B, CHANDIGARH. THE AGREEMENT TO SELL WAS SIGNED BETW EEN SHRI R,K.OHRI AND ALL THE FOUR PURCHASERS ON 1.4.2003 FOR SALE CO NSIDERATION OF RS.90 27 LACS. THE ASSESSEE PAID RS.1 LAC BY DIFFERENT FOU R CHEQUES EACH DATED 23.12.2002 AND THEN PAID RS.21.50 LACS BY FOUR DIFF ERENT CHEQUES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANUP GUPTA S/O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SHRI R.K.OHRI TO ALL THE FOUR PERSONS ON 1.4.2003 AND TH E SALE DEED WAS REGISTERED ON 2.4.2003 BETWEEN SHRI R.K.OHRI THROUG H SHRI ANUP GUPTA, GPA I.E. SON OF ONE OF THE PURCHASER AND ALL THE FOUR PURCHASERS. 43. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIONSWER E GROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SHRI R.K.OHRI, NARINDER MO HAN MITTAL GROUP, VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWITH SEARCH AGAINST SHRI MUKESH MITTAL AND OTHERS. DURING THE SEARCH OPERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND A ND AS PER THE SAID PAPER TOTAL SALE CONSIDERATION FOR SALE OF PLOT NO. 70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3,24,56,000/- WHICH WAS SPLITTED IN CASH/DD OF RS.2.25 CRORES AND CASH OF RS.99.56 LACS. THIS PAPER FURTHER CONTAINED THE DETAILS OF PAYMENT TO SMT.ERA OHRI AND OTHERS FOR PURCHASE OF HOUSE NO.342, SECTO R 9, CHANDIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS. 80 LACS WERE TO BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WA S RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT T HE SAID PAPER WAS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGA RDING CHEQUE/DD AS CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH INVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE PO SSESSION OF SHRI R.K.OHRI SHOWED THAT 50% SHARE OF SHRI R.K.OHRI WAS AGREED TO BE PURCHASED BY M/S SEPL FOR RS.3.24 CRORES. ON THE O THER HAND, SMT.ERA OHRI AND HER DAUGHTERS SOLD 50% SHARE IN T HE SAID PROPERTY 28 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES BY CHEQUE . AS AGAINST THE PURCHASE CONSIDERATION OF RS.6,44,56,000/- THE SHAR E OF SALE CONSIDERATION PAID TO SMT.ERA OHRI WAS RS.3.20 CROR ES AND TO SHRI R.K.OHRI WAS RS.3,24,56,000/-, BY M/S SEPL. THE DE CLARED SALE CONSIDERATION BY DIFFERENT PARTIES AGAINST THE PURC HASE OF RESPECTIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CROR ES ONLY, THE BREAK UP OF WHICH WAS AS UNDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL, ARVIND MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VASUNDRA MIT TAL W/O ARVIND MITTAL R/O 123, SEC-21A, CHANDIGARH FOR DECLARED CONSI DERATION OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL, SURINDER MOHA N MITTAL, JATINDER MOHAN MITTAL R/O 389, SEC-30, CHANDIGARH FOR DECLARED CONSIDERAT ION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007, SEC-19D, CHANDIGARH FOR DECLARED CONSIDERATION OF R S. 70 LACS. II) 27% PURCHASED BY SH. RAJESH GUPTA, YOGESH GUPTA , NEELAM GUPTA W/O RAJESH GUPTA, VEENU GUPTA W/O YOGESH GUPTA R/O 1216, SEC-1 9B, FOR DECLARED CONSIDERATION OF RS. 90 LACS. 44. THE CASE OF THE REVENUE WAS THAT THE PURCHASE C ONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORES. HOWEVER, T HE ADMITTED CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I.E. RS.3.20 CRORE S BY SMT.ERA OHRI AND RS.2.25 CRORES BY SHRI R.K.OHRI AS AGAINST THE DECLARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CRORES TO ULTIMATE BUYERS. 45. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN R ELATION TO THE SAID PURCHASE OF 27% SHARE BY THE ASSESSEES BEFORE US FO R TOTAL CONSIDERATION OF RS.50 LACS FROM THE COMPANY NAMED AS M/S SEPL, AS AGAINST THE PURCHASE MADE BY THE SAID M/S SEPL FROM SMT.ERA OHRI AND HER DAUGHTERS OF 50% SHARE AT TOTAL SALE CONSID ERATION OF RS.3.20 CRORES. THE SEARCH AND SEIZURE OPERATION WERE CARR IED OUT AT THE 29 PREMISES OF SHRI R.K.OHRI, CO-OWNER OF THE PROPERTY ALONGWITH SEARCH AT THE PREMISES OF SHRI MUKESH MITTAL, WHO WAS THE ADVOCATE LOOKING AFTER CIVIL DISPUTES OF THE PARTIES AND WAS THE INT ERMEDIARY IN THE SAID DEAL THROUGH PARTIES CONCERN M/S SEPL AND HIS WIFE SMT.ALKA MITTAL WERE ALSO SEARCHED ON 3.9.2004. THE OTHER PURCHASE RS OF THE RESPECTIVE SHARES OF THE PROPERTY WERE ALSO SEARCHE D BY THE INVESTIGATION TEAM ON 3.9.2004 AND VARIOUS DOCUMENT S WERE FOUND AND SEIZED. THE SAID DOCUMENTS REFLECTED THAT THE PURC HASERS THROUGH THE COMPANY NAMED AS M/S SEPL BY WAY OF CIRCUITOUS TRAN SACTION HAD PURCHASED THE RESPECTIVE SHARES IN THE PROPERTY FRO M THE SELLERS SMT.ERA OHRI & HER DAUGHTERS AND SHRI R.K.OHRI, WHO WERE THE JOINT OWNERS OF THE SAID PROPERTY. THE HAND WRITTEN DOCU MENTS WERE FOUND FROM THE POSSESSION OF SHRI R.K.OHRI IN WHICH THE S ALE REFLECTED WAS AT VARIANCE WITH THE DECLARED SALE CONSIDERATION. ANOTHER ASPECTS WHICH CAME TO LIGHT BY WAY OF THE SAID DOCUMENTS FO UND AND SEIZED FROM THE POSSESSION OF VARIOUS PERSONS THAT THE PRO PERTY WAS INITIALLY PURCHASED AT A HIGHER CONSIDERATION BUT THEN IT WAS SOLD AT MUCH LESSER CONSIDERATION BY THE INTERMEDIARY WITHIN A SHORT SP AN OF DAYS WHICH GAVE RISE TO THE SUSPICION THAT SOME ON MONEY HAD E XCHANGED HANDS BETWEEN THE ULTIMATE PURCHASER AND SO CALLED INTERM EDIARY. 46. THE OTHER CO-OWNER SHRI R.K.OHRI IN ORDER TO SA LE HIS SHARE IN THE PROPERTY ENTERED INTO AN AGREEMENT WITH M/S SEP L ON 1.4.2003 FOR TOTAL CONSIDERATION OF RS.1.45 CRORES. THEREAFTER ON 2.4.2003 SALE DEED IN RESPECT OF THE SAID 23% SHARE IN THE PROPER TY WAS EXECUTED BY SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPTA IN FAVOUR OF M/S VISHNU ASSOCIAT ES LTD. THROUGH ITS DIRECTOR SHRI AJAY KUMAR GUPTA S/O LATE SHRI VI SHNU KUMAR GUPTA, BOTH RESIDENTS OF 3307, SECTOR 19D, CHANDIGA RH. THE TOTAL SALE CONSIDERATION WAS FIXED AT RS.70 LACS OUT OF WHICH SUM OF RS.5 LACS 30 WAS PAID THROUGH CHEQUES DATED 23.12.2002, RS.50 LA CS VIDE CHEQUE DATED 10.2.2003, RS.75 LACS THROUGH CHEQUE DATED 2. 4.2003. THE PHYSICAL AND VACANT POSSESSION OF THE SAID PORTION OF THE PLOT WAS HANDED OVER TO THE VENDEE. IN THE SAID SALE DEED A LSO IT WAS ACKNOWLEDGED THAT THE VENDOR HAD OBTAINED NOC FROM ESTATE OFFICER, CHANDIGARH WHICH IS VALID UP TO 15.5.2003. THE TER MS OF THE SALE DEED CLEARLY REFLECTED THAT THE PAYMENTS AGAINST THE SAL E CONSIDERATION WERE MADE BY THE ASSESSEE PRIOR TO EXECUTING ANY AGREEME NT WITH ANY PERSON. SUM OF RS.55 LACS WAS PAID IN ADVANCE AND ONLY SUM OF RS.15 LACS WAS PAID VIDE CHEQUE DATED 2.4.2003. IN THE S AID TRANSACTION THE GPA WAS EXECUTED BY SHRI R.K.OHRI ON 1.4.2003 IN FA VOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA AND THE SALE DEED WAS ALSO EXECUTED BY THE SAID PERSON IN FAVOUR OF T HE COMPANY IN WHICH THEY WERE THE DIRECTORS. THE BALANCE 27% SH ARE IN THE SAID PROPERTY WAS SOLD BY SHRI R.K.OHRI THROUGH M/S SEPL TO SHRI RAJESH GUPTA AND HIS FAMILY MEMBERS. THE AGREEMENT TO SEL L BETWEEN SHRI R.K.OHRI AND M/S SEPL WAS EXECUTED ON 1.4.2003 ON W HICH DATE GPA WAS ALSO ISSUED IN FAVOUR OF THE FAMILY MEMBERS OF SHRI RAJESH GUPTA. THE SALE DEED WAS EXECUTED ON 2.4.2003 BY THE SAID FAMILY MEMBERS IN FAVOUR OF SHRI RAJESH GUPTA & OTHERS. 47. WE FIND THAT SMT.ERA OHRI ALONGWITH HER DAUGHTE RS SOLD 50% SHARE IN THE PROPERTY NO.70, INDUSTRIAL AREA PHASE- 1, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORES. THE AGREEM ENT TO SELL WAS EXECUTED BETWEEN SMT.ERA OHRI & HER DAUGHTERS ON TH E ONE SIDE AND COMPANY M/S SHARVILLA ESTATES PVT. LTD. ON THE OTHE R SIDE. SUM OF RS.30 LACS WAS PAID VIDE CHEQUES GIVEN ON 18.6.2001 . THEREAFTER M/S SEPL CLAIMED TO HAVE ENTERED INTO AN AGREEMENT TO S ELL DATED 21.12.2001 WITH SHRI NARINDER MOHAN MITTAL HUF, SHR I SURINDER MOHAN MITTAL HUF AND SHRI JATINDER MOHAN MITTAL HUF IN WHICH IT 31 WAS AGREED THAT 27% SHARE IN THE SAID PROPERTY WOUL D BE SOLD FOR RS.50 LACS. THE PARTIES ADMITTED THAT SUM OF RS.35 LACS WAS PAID AS EARNEST MONEY BY WAY OF DIFFERENT CHEQUES OF DATED 22.12.2001 AND 5.1.2002. SUM OF RS.14 LACS WAS PAID VIDE THREE DI FFERENT CHEQUES DATED 22.12.2001 AND SUM OF RS.14 LACS WAS PAID BY THREE DIFFERENT CHEQUES DATED 5.1.2002. THEREAFTER THE SALE DEED W AS EXECUTED BY SMT.ERA OHRI ALONGWITH HER DAUGHTERS THROUGH THEIR GPA SMT.ALKA MITTAL, W/O SHRI MUKESH MITTAL IN FAVOUR OF THREE P URCHASERS I.E. S/SHRI NARINDER MOHAN MITTAL HUF, SURINDER MOHAN MI TTAL HUF AND JATINDER MOHAN MITTAL HUF. THE BALANCE CONSIDERATI ON OF RS.15 LACS WERE ALREADY PAID VIDE THREE DIFFERENT CHEQUES DATE D 25.1.2002 AND AS PER THE AGREEMENT BETWEEN THE PARTIES THE SYMBOLIC TRANSFER WAS GIVEN VIDE SALE DEED DATED 9.12.2002. IT IS ALSO MENTION ED IN THE SAID AGREEMENT TO SELL THAT THE VENDOR HAD OBTAINED NOC FROM THE ESTATE OFFICER VIDE LETTER DATED 26.12.2002 WHICH WAS VALI D UP TO 31.12.2002. 48. SMT.ERA OHRI AND HER DAUGHTERS SOLD THE BALANCE SHARE OF 23% TO SHRI VIVEK MOHAN MITTAL AND HIS FAMILY MEMBERS VIDE SEPARATE SALE DEED AND THE TOTAL SALE CONSIDERATION WHICH WAS PAS SED BETWEEN THE PARTIES WAS RS.80 LACS. THE COPY OF THE SALE DEED DATED 7.5.2004 IS PLACED AT PAGES 3 TO 22 OF THE PAPER BOOK FILED BY THE ASSESSEE. AS PER THE COVENANTS OF THE SAID AGREEMENT TO SELL SMT .EAR OHRI AND HER DAUGHTERS THROUGH THEIR ATTORNEY SMT.ALKA MITTAL AG REED TO SELL 23% SHARE IN THE SAID PROPERTY IN FAVOUR OF FOUR ASSESS EES BEFORE US FOR TOTAL CONSIDERATION OF RS.80 LACS. BESIDES HAVING AGREED TO TRANSFER OF PROPERTY, IT WAS ALSO MENTIONED THAT THE VENDOR HAD OBTAINED NOC FROM THE ESTATE OFFICE DATED 18.2.2003. THE BREAK UP OF THE PAYMENTS MADE BY THE ASSESSEE YEAR-WISE RANGING OVER A PERIO D OF THREE YEARS, TOTALING RS.84,25,000/- IS TABULATED UNDER PARA 35 AT PAGES 22 AND 23 OF THE APPELLATE ORDER. THE PERUSAL OF THE SAID PA RA REFLECTS THAT THE 32 ASSESSEE FOR THE FIRST TIME MADE PAYMENT OF RS.9 LA CS ON 29.12.2001, RS.2 LACS ON 18.1.2001 AND RS.15 LACS ON 1.4.2001. THE YEAR-WISE BREAK UP OF THE INVESTMENT MADE BY THE ASSESSEES BE FORE US WAS AS UNDER: FINANCIAL YEAR AMOUNT 2001-02 RS.12,50,000/- 2002-03 RS.06,20,000/- 2003-04 RS.65,55,000/- TOTAL : RS.84,25,000/- 49. THE SALE CONSIDERATION AGREED BETWEEN THE PARTI ES WAS RS.80 LACS AND THE BALANCE WAS THE COST OF THE STAMP PAPERS AN D OTHER CHARGES. 50. ANOTHER FACTOR TO BE KEPT IN MIND AT THIS JUNCT URE IS THAT SMT.ERA OHRI WHO IS THE OWNER OF 23% SHARE IN PROPERTY SOLD TO THE ASSESSEE BEFORE US HAD AGREED TO SELL HER SHARE TO THE COMPA NY M/S SEPL ON 18.6.2001 AND SECOND AGREEMENT TO SELL WAS DATED 21 .12.2001, UNDER WHICH THE PAYMENT OF RS.3.20 CRORES WAS MADE TO HER . SHE ALSO EXECUTED GPA IN FAVOUR OF SMT.ALKA MITTAL AND HER B ROTHER AND SPA WAS EXECUTED IN FAVOUR OF THE ASSESSEE BEFORE US AN D SHRI MUKESH MITTAL WHO IS THE ADVOCATE INVOLVED IN PROPERTY DEA LS. THE ASSESSEE BEFORE US THUS RECEIVED SPA AS EARLY AS 21.12.2001 AND THE ASSESSEE ALSO FOR THE FIRST TIME MADE THE PAYMENT FOR PURCHA SE OF THE PROPERTY ON 29.12.2001 FOR RS.9 LACS. THE SALE DEED ADMITTE DLY WAS EXECUTED BETWEEN THE PARTIES ON 7.5.2004. HOWEVER, NO DOCU MENT EVIDENCING THE PAYMENTS MADE IN ADVANCE BY THE ASSESSEE BEFORE US EVEN TO M/S SEPL OR TO ANY OTHER PERSONS HAS BEEN FOUND DURING THE COURSE OF SEARCH AND NO DOCUMENT TO THAT EFFECT HAS BEEN FILE D BY THE ASSESSEE. 51. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN R ELATION TO THE SAID PURCHASE OF 23% SHARE BY THE ASSESSEES BEFORE US FO R TOTAL 33 CONSIDERATION OF RS.80 LACS THROUGH THE COMPANY NAM ED AS M/S SEPL, AS AGAINST THE PURCHASE MADE BY THE SAID M/S SEPL F ROM SMT.ERA OHRI AND HER DAUGHTERS OF 50% SHARE AT TOTAL SALE CONSID ERATION OF RS.3.20 CRORES. SEARCH AND SEIZURE OPERATION WAS CARRIED O UT AT THE PREMISES OF VARIOUS PERSONS ALONGWITH SEARCH AT THE PREMISES OF SHRI MUKESH MITTAL, WHO WAS THE ADVOCATE LOOKING AFTER CIVIL DI SPUTES OF THE PARTIES AND WAS THE INTERMEDIARY IN THE SAID DEAL THROUGH F AMILY CONCERN M/S SEPL AND HIS WIFE SMT.ALKA MITTAL WERE ALSO SEARCHE D ON 3.9.2004. THE OTHER PURCHASERS OF THE RESPECTIVE SHARES OF TH E PROPERTY WERE ALSO SEARCHED BY THE INVESTIGATION TEAM ON 3.9.2004 AND VARIOUS DOCUMENTS WERE FOUND AND SEIZED. THE SAID DOCUMENTS REFLECTE D THAT THE PURCHASERS THROUGH THE COMPANY NAMED AS M/S SEPL BY WAY OF CIRCUITOUS TRANSACTION HAD PURCHASED THE RESPECTIVE SHARES IN THE PROPERTY FROM THE SELLERS SMT.ERA OHRI & HER DAUGHT ERS AND SHRI R.K.OHRI, WHO WERE THE JOINT OWNERS OF THE SAID PRO PERTY. THE HAND WRITTEN DOCUMENTS WERE FOUND FROM THE POSSESSION OF SHRI R.K.OHRI IN WHICH THE SALE REFLECTED WAS AT VARIANCE WITH THE D ECLARED SALE CONSIDERATION. ANOTHER ASPECTS WHICH CAME TO LIGHT BY WAY OF THE SAID DOCUMENTS FOUND AND SEIZED FROM THE POSSESSION OF V ARIOUS PERSONS THAT THE PROPERTY WAS INITIALLY PURCHASED AT A HIGH ER CONSIDERATION BUT THEN IT WAS SOLD AT MUCH LESSER CONSIDERATION BY TH E INTERMEDIARY WITHIN A SHORT SPAN OF DAYS WHICH GAVE RISE TO THE SUSPICION THAT SOME ON MONEY HAD EXCHANGED HANDS BETWEEN THE ULTIMATE P URCHASER AND SO CALLED INTERMEDIARY. 52. WE FIND THAT SIMILAR ISSUE OF PURCHASE OF 23% S HARE BY FINAL BUYERS OUT OF SHARE HELD BY SHRI R.K.OHRI THROUGH M /S SEPL AROSE BEFORE THE TRIBUNAL IN ITA NOS.660 TO 663/CHD/2008 IN ACIT VS. SH.AJAY KUMAR GUPTA, ACIT VS. SH.VIJAY KUMAR GUPTA, ACIT VS. SH.ASHWANI KUMAR GUPTA AND ACIT VS. M/S VALCO INDUS TRIES LTD. 34 RESPECTIVELY, WHEREIN THE TRIBUNAL VIDE ORDER DATED 30.4.2014 HAD ELABORATELY TAKEN NOTE OF THE TRANSACTIONS EXECUTED BETWEEN THE PARTIES STARTING FROM THE SELLER TO THE INTERMEDIARY AND GP A/SPA ISSUED BY THE SELLER TO THE ULTIMATE PURCHASER/S AND SALE DEE D BEING EXECUTED BY THE INTERMEDIARY AFTER A GAP OF FEW DAYS AND THE PA YMENTS BEING MADE BY THE ULTIMATE PURCHASER/S MUCH IN ADVANCE TO THE EXECUTION OF ANY DOCUMENTS EVIDENCING TRANSACTION IN ITS FAVOUR AND ALSO THE FACTUM THAT THE SAID PAYMENTS WERE MADE ON DATE/S ON WHICH ADVANCES WERE MADE BY THE INTERMEDIARY TO THE SELLER OF THE PROPE RTY. THE TRIBUNAL AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES IN EN TIRETY CAME TO THE VIEW THAT THE PARTIES HAD INDULGED IN CIRCUITOUS TR ANSACTION AND USED THE COMPANY M/S SEPL AS A INTERMEDIARY TO PUT A SCR EEN ON THE REAL PICTURE. THE COMPANY M/S SEPL WHICH WAS USED AS A INTERMEDIARY, CONSISTED OF DIRECTORS WHO HAD MEAGER SOURCES OF IN COME AND ONE OF THE DIRECTORS IN THE SAID COMPANY WAS THE WIFE OF T HE ADVOCATE WHO WAS LOOKING AFTER THE CIVIL DISPUTES OF THE PARTIES . BUT THE PAYMENTS WERE MADE BY ULTIMATE PURCHASER IN THE ACCOUNT OF M /S SEPL WHO AT THE SIMILAR TIME ISSUED CHEQUES TO THE SELLER OF TH E PROPERTY. THE TRIBUNAL PLACED RELIANCE ON THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN IT WAS HELD THAT IT IS TRUE THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT APPARE NT IS NOT REAL BUT THEN THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT O N BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT , SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE T HE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES . 35 53. THE TRIBUNAL IN VIEW OF THE PROPOSITION LAID DO WN BY THE HON'BLE APEX COURT IN CIT V. DURGA PRASAD MORE (SUPRA) HELD THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAD TO BE SEEN IN THE PERSPECTIVE OF THE TOTAL EVENTS AND CAME TO THE FIN DING THAT THOUGH THE AGREEMENT TO SELL WAS EXECUTED BETWEEN THE SELLER A ND M/S SEPL ON 1.4.2003 EVIDENCING PAYMENT AGAINST THE SALE CONSID ERATION PRIOR TO 1.4.2003 AND THE SALE DEED BETWEEN M/S SEPL AND THE ULTIMATE PURCHASER DATED 2.4.2003 ALSO EVIDENCING CERTAIN PA YMENTS BEING MADE PRIOR TO THE DATE OF EXECUTION OF SALE DEED. FURTH ER GPA AND SPA/S WERE EXECUTED BY THE SELLER TO THE FAMILY MEMBERS O F THE ULTIMATE PURCHASER AND THE TRIBUNAL QUESTIONED THE CONTENTIO N OF THE ASSESSEE THAT THE ULTIMATE PURCHASER HAD COME INTO THE PICTU RE ONLY ON 1/2.4.2003 THEN HOW CAN PAYMENTS AGAINST THE SALE C ONSIDERATION WERE MADE IN DECEMBER, 2002. THE TRIBUNAL THUS HELD TH AT THIS CLEARLY SHOWS THAT M/S SEPL WAS JUST USED AS INTERMEDIARY T O CAMOUFLAGE THE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BE TWEEN THE SELLER AND ULTIMATE PURCHASE . IT WAS FURTHER HELD THAT ON MONEY HAD BEEN PAID BY THE ULTIMATE PURCHASER IN ORDER TO MEET THE SALE CONSIDERATION PAID TO THE SELLER OF THE PROPERTY . THE TRIBUNAL THUS CONCLUDED IN THE FACTS OF THAT THE CASE, THE PROPERTY WAS PURCHASED FOR A SUM OF RS.1.45 CRORES I.E. THE SALE PRICE CLAIMED TO BE PAID TO TH E SELLER BY M/S SEPL AS AGAINST ONE OF THE ULTIMATE PURCHASER WHO HAVE B OUGHT FOR RS.70 LACS BY WAY OF CIRCUITOUS TRANSACTION. THE TRIBUN AL IN THE SAID FACTS AND CIRCUMSTANCES FOUND IT TO BE A FIT CASE TO RAIS E CORPORATE VEIL IN ORDER TO DETERMINE THE NATURE OF TRANSACTIONS. IT WAS HELD BY THE TRIBUNAL THAT THE COMPANY M/S SEPL HAS BEEN USED AS INTERMEDIARY THROUGH DIRECTOR/S WHO HAD MEAGER SOURCES OF INCOME . IT WAS FURTHER NOTED THAT THOUGH NO ADDITION HAS BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR IN ONE OF ITS DIRECTOR 36 SMT.ALKA MITTAL, THE TRIBUNAL HELD BUT THAT ITSELF WOULD NOT SUPPORT THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . FURTHER THE TRIBUNAL FOUND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'B LE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILL S LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVE NT TAX OBLIGATION, HELD AS UNDER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DE SCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE V EIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTION. IT IS TRUE THAT FROM THE JURISTIC POINT OF VIEW THE CO MPANY IS A LEGAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED T O DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS M EMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOM IC REALITIES BEHIND THE LEGAL FAADE. FOR EXAMPLE, THE COURT HA S POWER TO DISREGARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATION. 54. THE TRIBUNAL VIDE PARA 72 HELD AS UNDER: 72. IN THE FACTS OF THE PRESENT CASE, WE HAVE FOUN D THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN OR DER TO COMPLETE THE TRANSACTION OF PURCHASE OF 23% SHARE I N THE PROPERTY FROM SHRI R.K.OHRI TO ITSELF. 55. THE TRIBUNAL THUS HELD THAT ON MONEY WAS TAXABL E IN THE HANDS OF ULTIMATE PURCHASER AS INCOME FROM UNDISCLOSED SO URCES. THE FACTUAL ASPECTS WERE CONSIDERED BY THE TRIBUNAL AND IT WAS HELD AS UNDER: 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE ADJUDICATING THE ISSUE RAISED IN T HE PRESENT BUNCH OF APPEALS, WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE. THE CAPTIONED APPEALS IS IN RELATION TO THE PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. THE SAID PRO PERTY WAS JOINTLY OWNED BY SHRI R.K.OHRI S/O LATE SHRI DWARKA NATH AND SMT.ERA OHRI DAUGHTER-IN-LAW OF SHRI DWARKA NATH AN D HER TWO DAUGHTERS. THERE WERE CERTAIN LITIGATIONS BETWEEN THE TWO PARTIES ON ACCOUNT OF PROPERTY DISPUTE VIS--VIS PR OPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH AND HOUSE NO.3 42, SECTOR 37 9-D, CHANDIGARH. THE CASES REGARDING SETTLEMENT OF ESTATE OF LATE SHRI DWARKA NATH WERE PENDING IN CIVIL COURT A ND BEFORE THE DECISION OF THE CIVIL SUIT, ONE ADVOCATE SHRI M UKESH MITTAL, WHO WAS HANDLING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND ASKED IN OCTOBER, 2002 WHETHER HE WAS INTERESTED IN OUT OF COURT SETTLEMENT. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT I N ANOTHER PROPERTY I.E. HOUSE NO.342, SECTOR 9-D, CHANDIGARH FOR CERTAIN CONSIDERATION. IN ORDER TO TAKE COMPLETE OWNERSHIP OF HOUSE NO.342, SECTOR 9, CHANDIGARH, HE INFORMED SHRI MUKE SH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70, INDUST RIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE. SH RI MUKESH MITTAL THROUGH ENTITY NAMED M/S SHARVILA ESTATES PV T. LTD. ENTERED INTO AN AGREEMENT WITH SHRI R.K,OHRI FOR SA LE OF HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHAN DIGARH FOR TOTAL CONSIDERATION OF RS.2.25 CRORES. 47. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALON GWITH THE SHARE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDU STRIAL AREA, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORE S. ON 18.6.2001 ADVANCE PAYMENT OF RS.30 LACS WAS GIVEN T O THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXECUTED BETWEE N SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL, DIRECTOR OF M/S SEPL, ON THE OT HER SIDE. THE SAID PROPERTY THEREAFTER WAS FINALLY SOLD TO FO UR GROUPS OF PERSONS NAMELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU ASSOCIATES LTD.), 184, INDL. AREA, PHASE-I, CHANDIG ARH (RESIDENCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA, AJAY KR. GUPTA AND VIJAY KR. GUPTA IS H.NO.3007, SECTOR 19-D, CHANDIGARH) (23% SHARE OF PLOT WHOSE T OTAL SIZE IS AROUND 20000 SQ.YDS.) 2. SH. RAJESH GUPTA, SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA, SMT. VEENU GUPTA W/O SH. YOGESH GUPTA, ALL RESIDENTS OF H.NO.1216, SECTOR 19-B, CHANDIGARH (27% SHARE OF PLOT). 3. SH. NARINDER MOHAN MITTAL HUF, SH. SURINDER MOHAN MITTAL HUF, SHRI JATINDER MOHAN MITTAL HUF THROUGH ABOVE T HREE KARTAS WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.3 89, SECTOR 30, CHANDIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL, SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL, RESIDEN T OF H.NO. 123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21-D, CHANDIGARH (23% SHARE OF PLOT). 48. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA, SPA AND WILL FROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHRI, HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF M/S SEPL DATED 18.6.2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES, AGAINST WHICH EARNEST MONEY OF RS.30 LACS W AS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGN ED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2.90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WH ICH 38 EARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS R EGISTERED IN THE NAME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKESH M ITTAL AND SHRI VIVEK MOHAN MITTAL, COUSIN OF SHRI MUKESH MITT AL BOTH SHOWN AS RESIDENTS OF 1526, SECTOR 18-D, CHANDIGARH . THE WILL WAS REGISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHERS PURCHASED 23% SHARE OF THE SAID PRO PERTY FOR RS.80 LACS AND SHRI NARINDER MOHAN MITTAL, HUF & OT HERS PURCHASED 27% SHARE OF THE SAID PROPERTY FOR ANOTHE R RS.50 LACS. THE SHARE OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI S URINDER MITTAL, JITENDER MOHAN MITTAL HUF AND NARINDER MOHA N MITTAL HUF IN JOINT FROM SHRI MUKESH MITTAL FOR RS.50 LACS . THE BALANCE 23% SHARE IN THE SAID PROPERTY BELONGING TO THE SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED FOR RS .80 LACS VIDE SEPARATE SALE DEED. 49. THE 50% SHARE OF THE SAID PLOT OWNED BY SHRI R. K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHARE IN THE SAID PROPERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI, WHO IN TURN CLAIMED TO HAVE SOLD TO M/S VISHNU ASSO CIATES LTD.(NOW VALCO INDUSTRIES LTD.). S/SHRI ASHWANI KUM AR GUPTA, AJAY KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE AGREEM ENT TO SELL BETWEEN SHRI R.K,.OHRI AND SHRI ANIL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY EXECUTED ON 1.4.20 03. THE ORIGINAL AGREEMENT TO SELL WAS SEIZED FROM THE RESI DENCE SHRI R.K.OHRI AND WAS MARKED AS PAGES 73 TO 76 OF ANNEXU RE-A/342, SECTOR 9, CHANDIGARH. AS PER THE SAID AGREEMENT T OTAL SALE PRICE PAID TO SHRI R.K,OHRI WAS RS.1.45 CRORES. ON THE DATE OF EXECUTION OF SALE I.E. 1.4.2003 GPA WAS GIVEN BY SH RI R.K.OHRI TO SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA A ND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. TH E SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTERED ON 1.4.2003. IN RESPECT OF THE SAID 23 % SHARE OF THE SAID PROPERTY, SALE DEED WAS REGISTERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROUGH SHRI AJAY KUMAR GUPTA, DIRE CTOR AND SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED THE SALE CONSIDER ATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAID BY WAY OF THREE DIFFERENT CHEDQUES I.E. RS.5 LACS VIDE CHEQUE DATED 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LA CS VIDE VHEQUE DATED 2.4.2003. 50. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS, NAMELY S/SHRI RAJESH GUPT A, YOGESH GUPTA, SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND S MT.VEENA GUPTA W/O SHRI YOGESH GUPTA, ALL RESIDENTS OF HOUSE NO.12, SECTOR 19B, CHANDIGARH. THE AGREEMENT TO SELL WAS SIGNED BETWEEN SHRI R,K.OHRI AND ALL THE FOUR PURCHASERS O N 1.4.2003 FOR SALE CONSIDERATION OF RS.90 LACS. THE ASSESSE E PAID RS.1 LAC BY DIFFERENT FOUR CHEQUES EACH DATED 23.12.2002 AND THEN PAID RS.21.50 LACS BY FOUR DIFFERENT CHEQUES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANUP GUPTA S /O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SH RI R.K.OHRI TO ALL THE FOUR PERSONS ON 1.4.2003 AND THE SALE DE ED WAS REGISTERED ON 2.4.2003 BETWEEN SHRI R.K.OHRI THROUG H SHRI ANUP 39 GUPTA, GPA I.E. SON OF ONE OF THE PURCHASER AND ALL THE FOUR PURCHASERS. 51. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIO NS WERE GROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDING S UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SHRI R. K.OHRI, VIVEK MOHAN MITTAL GROUP, VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWITH SEARCH AGAINST SHRI MUKESH MI TTAL AND OTHERS. DURING THE SEARCH OPERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND AND AS PER THE SAID PAPER TOTAL SALE CONSIDERATION FOR SALE OF PLOT NO.70, INDUSTRIAL AR EA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3,24,5 6,000/- WHICH WAS SPLITTED IN CASH/DD OF RS.2.25 CRORES AND CASH OF RS.99.56 LACS. THIS PAPER FURTHER CONTAINED THE DE TAILS OF PAYMENT TO SMT.ERA OHRI AND OTHERS FOR PURCHASE OF HOUSE NO.342, SECTOR 9, CHANDIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS.80 LACS WERE TO BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WAS RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT THE SAID PAPER W AS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGARDING CHE QUE/DD AS CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH INVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE PO SSESSION OF SHRI R.K.OHRI SHOWED THAT 50% SHARE OF SHRI R.K.OHR I WAS AGREED TO BE PURCHASED BY M/S SEPL FOR RS.3.24 CROR ES. ON THE OTHER HAND, SMT.ERA OHRI AND HER DAUGHTERS SOLD 50 % SHARE IN THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.3.2 0 CRORES BY CHEQUE. AS AGAINST THE PURCHASE CONSIDERATION OF RS.6,44,56,000/- THE SHARE OF SALE CONSIDERATION PA ID TO SMT.ERA OHRI WAS RS.3.20 CRORES AND TO SHRI R.K.OHRI WAS RS.3,24,56,000/-, BY M/S SEPL. THE DECLARED SALE C ONSIDERATION BY DIFFERENT PARTIES AGAINST THE PURCHASE OF RESPEC TIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CRORES ONLY, T HE BREAK UP OF WHICH WAS AS UNDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL, ARVIND MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VA SUNDRA MITTAL W/O ARVIND MITTAL R/O 123, SEC-21A, CHANDIGA RH FOR DECLARED CONSIDERATION OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL, SURINDER MOHA N MITTAL, JATINDER MOHAN MITTAL R/O 389, SEC-30, CHANDIGARH FOR DECLAR ED CONSIDERATION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007, SEC-19D, CHANDIGARH FOR DECLARED C ONSIDERATION OF RS. 70 LACS. II) 27% PURCHASED BY SH. RAJESH GUPTA, YOGESH GUPTA , NEELAM GUPTA W/O RAJESH GUPTA, VEENU GUPTA W/O YOGESH GUPTA R/O 1216 , SEC-19B, FOR DECLARED CONSIDERATION OF RS. 90 LACS. 52. THE CASE OF THE REVENUE WAS THAT THE PURCHASE CONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORE S. HOWEVER, THE ADMITTED CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I .E. RS.3.20 CRORES BY SMT.ERA OHRI AND RS.2.25 CRORES BY SHRI R .K.OHRI AS 40 AGAINST THE DECLARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CRORES TO ULTIMATE BUYERS. 53. THE FIRST ASPECT OF THE ISSUE RAISED BEFORE US IS IN RELATION TO THE ADDITIONAL EVIDENCE FILED BY THE RE VENUE VIDE APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLA TE RULES. THE SO CALLED ADDITIONAL EVIDENCE FILED BY THE REVE NUE CONSISTS OF TERMS OF PAYMENT FOR RP120 AND IND70 IN THE HAND WR ITING SHRI R.K.OHRI WHICH FOUND FROM HIS POSSESSION AT HIS RES IDENCE. THE OBJECTION OF THE LEARNED A.R. FOR THE ASSESSEE AGAI NST THE ADMISSION OF THE SAID ADMISSION THAT IT IS NOT FOUN D FROM HIS POSSESSION BUT THE SAID DOCUMENT WAS CONFRONTED TO SHRI ASHWANI KUMAR GUPTA DURING THE COURSE OF RECORDING OF HIS S TATEMENT AND THE SAME ONCE BEING CONFRONTED TO THE RESPECTIV E PARTIES CANNOT BE CALLED AN ADDITIONAL EVIDENCE AND MERITS TO BE ADMITTED. THE DOCUMENT AT SR.NO.2 GPA EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF M/S SEPL HAD ALSO BEEN REFERR ED TO BY THE ASSESSING OFFICER UNDER PARA 8.2 OF THE ASSESSMENT ORDER AS SIMILAR GPA HAD BEEN EXECUTED IN FAVOUR OF SHRI ASH WANI KUMAR GUPTA ALSO AND HENCE THE SAME IS NOT IN THE FORM OF ADDITIONAL EVIDENCE THOUGH SO CALLED. THE NEXT DOCUMENT IS SP A ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI AJAY GUPTA WHO IS O NE OF THE DIRECTOR OF M/S VALCO INDUSTRIES LTD. AND THE SAID DOCUMENT EVEN IF IT IS ADDITIONAL EVIDENCE NEEDS TO BE ADMITTED A S IT RELATES TO THE TRANSACTION. SIMILAR GPA HAD BEEN ISSUED IN F AVOUR OF SHRI RAJESH GUPTA AND SHRI YOGESH GUPTA BY SHRI R.K.OHRI ON 1.4.2003 WHICH IS NOT RELEVANT TO THE PRESENT ASSES SEE BUT IS RELEVANT TO OTHER GROUP CASES. THE NEXT DOCUMENTS I.E. REPLY TO NOTICE UNDER SECTION 142(1) OF THE ACT DATED 20.11. 2006 BY SHRI R.K.OHRI IS THE DOCUMENT PROCURED BY THE DEPARTMENT ON A LATER DATE FROM THE ASSESSING OFFICER OF SHRI R.K.OHRI IN WHICH HE ADMITS THAT HE HAD SOLD 50% SHARE IN HIS PROPERTY. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THIS WAS ONLY A REFERENCE MATERIAL. THE DOCUMENT AT SR.NO.6, IS NOT PRESSED FOR ADMISSION AND HENCE THE SAME IS DISMISSED. THE DOCUMENTS AT SR.NOS. 7 AND 8 ARE PART OF APPRAISAL REPORT AND AS PER THE LEARN ED D.R. FOR THE REVENUE THESE ARE PART OF THE ARGUMENTS OF THE DEPA RTMENT. HOWEVER, WE FIND NO MERIT IN THE SAID DOCUMENT AND THE SAID DOCUMENTS AT SR.NOS.7 AND 8 ARE NOT ADMITTED AS ADD ITIONAL EVIDENCE. THE DOCUMENT AT SR.NO.9 IS ADMITTEDLY N OTICE ISSUED BY THE DEPARTMENT UNDER SECTION 142(1) OF THE ACT I N THE CASE OF SHRI ASHWANI KUMAR GUPTA WHICH IS PART OF RECORD AN D IS TO BE CONSIDERED FOR ADJUDICATING THE ISSUE. THE LAST DO CUMENT AT SR.NO.10 IS SALE DEED OF HOUSE NO.164, SECTOR 27, C HANDIGARH WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE CASE OF SHRI AJAY GUPTA UNDER PARA 10 AT PAGE 8 OF THE ASSE SSMENT ORDER AND THE SAME IS TAKEN ON RECORD. THE LEARNED A.R. FOR THE ASSESSEE IN ANY CASE HAS STATED THAT BOTH THE DOCUM ENTS AT SR.NO.9 AND 10 WERE MATTER OF FACT AND WERE TO BE C ONSIDERED. THE LEARNED A.R. FOR THE ASSESSEE HAD ALSO OBJECTED TO ADMISSION OF THE WRITTEN NOTE ACCOMPANYING THE ADDITIONAL EVI DENCE BEING NOT SIGNED BY PROPER PERSON, HAS NOT MERIT AS THE S AME AT BEST CAN BE TAKEN WRITTEN ARGUMENTS AND THE SAME ARE ADM ITTED. 54. THE REVENUE HAS ALSO FILED ON RECORD THE STATEM ENT OF SHRI R.K.OHRI RECORDED DURING THE COURSE OF SEARCH AT HIS RESIDENCE ON 3.9.2004. FURTHER STATEMENT OF SHRI A NIL DUBEY RECORDED ON OATH UNDER SECTION 131 OF THE ACT ON 18 .10.2004 HAS 41 ALSO BEEN FILED ON RECORD BY THE LEARNED D.R. FOR T HE REVENUE. PAPER BOOK HAD ALSO BEEN FILED BY THE REVENUE WHICH CONSISTED OF SPA IN RESPECT OF SHRI ANIL DUBEY DATED 1.4.2003 , GPA OF SHRI R.K.OHRI IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY GUPTA DATED 1.4.2003 AND AN AGREEMENT TO SALE BY SH RI R.K.OHRI WITH M/S SEPL DATED 1.4.2003. FURTHER SALE DEED OF 23% SHARE WITH M/S VISHNU ASSOCIATES LTD. HAD BEEN FILED ALON GWITH SALE DEED OF HOUSE NO.164, SECTOR 27, CHANDIGARH. THE A SSESSEE HAS FILED VOLUMINOUS PAPER BOOK BUT AS POINTED OUT BY U S IN THE PARAS HEREINABOVE ONLY PAGE 459 HAS BEEN REFERRED T O BY THE ASSESSEE AND NO OTHER PAGE HAS BEEN REFERRED TO BY THE LEARNED A.R. FOR THE ASSESSEE. 55. SHRI R.K.OHRI IN ORDER TO SELL HIS SHARE IN THE PROPERTY HAD ENTERED INTO AN AGREEMENT WITH M/S SHARVILLA ES TATES LTD. ON 1.4.2003 WHICH IS AT PAGES 8 TO 11 OF THE PAPER BOO K FILED BY THE REVENUE. THE LEARNED A.R. FOR THE ASSESSEE, ON THE OTHER HAND, HAD FILED AN AGREEMENT TO SELL EXECUTED ON 23.12.20 02 BY SHRI R.K.OHRI WITH M/S SEPL WHICH IS MARKED AS ANNEXURE- A IN WHICH THE TOTAL CONSIDERATION IS MENTIONED AT RS.1.45 CRO RES. WE MAKE A REFERENCE TO VARIOUS COVENANTS IN THE TWO DIFFERE NT AGREEMENTS TO SELL IN ORDER TO UNDERSTAND THE TERMS AGREED UPO N BETWEEN THE PARTIES AND ALSO TO UNDERSTAND WHICH OF THE AGREEME NTS IS ACTUALLY EXECUTED BETWEEN THE PARTIES. ADMITTEDLY THE AGREEMENT TO SELL FILED BY THE ASSESSEE WHICH IS MARKED AS AN NEXURE-A WAS FILED BEFORE THE CIT (APPEALS) AND EVEN BEFORE US D URING THE COURSE OF HEARING SEPARATELY AND NOT AS PART OF VOL UMINOUS PAPER BOOK. THE SAID AGREEMENT TO SELL IS EXECUTED BETWE EN SHRI R.K.OHRI AND M/S SEPL FOR CONSIDERATION OF RS.1.45 CRORES. ONLY A PHOTOCOPY OF THE SAID AGREEMENT HAS BEEN FIL ED AND THE ORIGINAL AGREEMENT TO SELL HAS NOT BEEN PRODUCED BY THE ASSESSEE. EVEN THE BACK SIDE OF THE STAMP PAPERS HAS NOT BEE N PHOTOCOPIED AND FILED BEFORE US. THE SAID AGREEMENT MARKED AS ANNEXURE-A WAS FILED BEFORE THE CIT (APPEALS) WHO HAS ADJUDICA TED THE ISSUE AFTER MAKING REFERENCE TO THE SAME, BUT WITHOUT CAL LING FOR ANY REMAND REPORT IN RESPECT OF THE SAID ADDITIONAL EVI DENCE. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT SHRI R.K. OHRI HAD ISSUED RESPECTIVE SPAS AND GPAS IN FAVOUR OF DIFFER ENT PERSONS ON 1.4.2003 AND NO SUCH SPA AND GPA WAS ISSUED ON 2 3.12.2002 I.E. AS PER THE AGREEMENT TO SELL MARKED AS ANNEXUR E-A. 56. THE CONCISE TERMS OF AGREEMENT BETWEEN SHRI R.K .OHRI AND M/S SEPL VIDE AGREEMENT TO SELL DATED 1.4.2003 PLACED AT PAGES 8 TO 11 OF THE PAPER BOOK FILED BY THE REVENU E WERE AS UNDER : A) SHRI R.K.OHRI AGREED TO SELL 23% PORTION OF TOTA L OF 50% SHARE IN THE SAID PROPERTY ALONGWITH EXISTING BUILD ING CONSTRUCTED THEREUPON. B) THE FRONT PORTION OF THE SAID PLOT ALONGWITH BUI LDING WAS IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AN D THE REMAINING PORTION OF THE PLOT AS WELL AS THE EXISTI NG BUILDING ERECTED THEREOF WERE LYING VACANT AND SALE WAS OF BACK PORTION. 42 C) THE SELLER ADMITTED THAT THERE WAS DISPUTE WITH HIS BROTHERS AND SISTERS PENDING IN THE CIVIL COURTS AN D SOME AMOUNT HAD TO BE PAID TO THEM. D) THE SELLER FURTHER ACKNOWLEDGED THAT HE HAD AGRE ED TO SELL 23% SHARE IN THE PORTION OF PLOT I.E. PORTION BEHIND THE TENANTED PORTION WITH PASSAGE FOR ENTRY FROM TH E MAIN GATE VIDE AGREEMENT TO SELL DATED 23.12.2002. E) IN THE SALE DEED THE ASSESSEE ACKNOWLEDGED RECEI PT OF RS.1.45 CRORES AS THE SALE PRICE OF HIS 23% SHARE I N THE PLOT AND THE MODE OF PAYMENT WAS AS UNDER: F) THE SELLER ACKNOWLEDGED THAT AFTER RECEIVING SAL E CONSIDERATION HE HAD EXECUTED GPA AND SPA AND HAD ALSO HANDED OVER PHYSICAL AND VACANT POSSESSION OF THE AREA OF THE PLOT TO THE PURCHASER OF THE PLOT. G) THE PURCHASER WAS AT LIBERTY TO GET THE SALE EFF ECTED IN ITS OWN NAME OR IN THE NAME OF THE NOMINEE. H) THE ORIGINAL SALE DEEDS WERE HANDED OVER TO THE PURCHASER. I) THE EXPENSES OF THE STAMP AND REGISTRATION CHARG ES WERE TO BE BORNE BY THE PURCHASER ONLY. J) THERE WAS A CLAUSE AGAINST NON ENCASHMENT OF POS T DATED CHEUQES AND CANCELLATION OF TERMS OF AGREEMENT. 57. AFTER THE EXECUTION OF AGREEMENT TO SELL DATED 1.4.2003, ON 2.4.2003 THE SALE DEED IN RESPECT OF 23% SHARE I N THE SAID PROPERTY WAS EXECUTED BY SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPT A IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH ITS DI RECTOR SHRI AJAY KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPPTA, BOTH AT HOUSE NO.3307, SECTOR 19D, CHANDIGARH. THE TOTAL S ALE CONSIDERATION OF 23% SHARE IN THE SAID PLOT WAS FIX ED AT RS.70 LACS, OUT OF WHICH SUM OF RS.5 LACS WAS PAID THROUG H CHEQUE ON 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS THROUGH CHEQUE DATED 2.4.2003. VIDE CLAUSE 2 OF THE SAID AGREEMENT, IT WAS ACKNOWLEDGED THAT THE VENDOR HAD ALREADY HANDED OVER PHYSICAL AND VACANT POSSESSION OF THE P ORTION OF THE SAID PLOT TO THE VENDEE. THE EXPENSES OF SALE DEE D WERE BORNE BY THE VENDEE. BESIDES OTHER TERMS AND CONDITIONS AGREED UPON BETWEEN THE PARTIES, IT WAS ALSO ACKNOWLEDGED THAT THE VENDOR HAD OBTAINED NOC FROM THE ESTATE OFFICER, CHANDIGAR H WHICH WAS VALID UP TO 15.5.2003. THIS DOCUMENT WAS REGIS TERED ON 2.4.2003 AND IS PLACED AT PAGES 12 TO 20 OF THE PAP ER BOOK FILED BY THE DEPARTMENT. THE PERUSAL OF THE SAID SALE DE ED REFLECTS THAT THE PAYMENT FOR PURCHASE OF THE SAID 23% SHARE IN THE PROPERTY WAS MADE BY THE ASSESSEE PRIOR TO EXECUTIN G ANY AGREEMENT WITH ANY PERSON. THE ASSESSEE CLAIMS TO HAVE PAID RS.5 LACS ON 23.12.2002. RS.50 LACS VIDE CHEQUE DA TED 10.2.2003 AND ONLY BALANCE SUM OF RS. 15 LACS WAS PAID THROUG H CHEQUE DATED 2.4.2003. 43 58. THE REVENUE HAD ALSO PLACED ON RECORD COPY OF G PA ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI ASHWANI K UMAR GUPTA AND SHRI VIJAY KUMAR GUPTA DATED 1.4.2003 WHICH IS PLACED AT PAGES 4 TO 7 OF THE PAPER BOOK FILED BY THE REVENUE IN WHICH POWERS HAD BEEN GIVEN TO EXECUTE SALE DEED IN ADDIT ION TO VARIOUS OTHER POWERS. THE SPA WAS EXECUTED BY SHRI R.K.OHR I IN FAVOUR OF SHRI ANIL DUBEY IN WHICH HE WAS GIVEN CERTAIN LI MITED POWERS IN RESPECT OF THE SAID TRANSACTION. THE COPY OF TH E SAID SPA IS PALCED AT PAGES 1 TO 3 OF THE PAPER BOOK FILED BY T HE REVENUE. SHRI R.K.OHRI ALSO ISSUED GPA IN FAVOUR OF SHRI RAJ ESH KUMAR S/O SHRI KANGAN LAL, DIRECTOR OF SEPL WHICH WAS FIL ED AS AN ADDITIONAL EVIDENCE AND THE SPA IN FAVOUR OF SHRI A JAY KUMAR GUPTA TO DO CERTAIN ACTS WHICH WAS ALSO FILED BY T HE DEPARTMENT AS ADDITIONAL EVIDENCE. ANOTHER GPA WAS ISSUED IN FAVOUR OF SHRI RAJESH GUPTA AND FAMILY MEMBERS WHO HAVE PURCH ASED BALANCE 27% SHARE FROM SHRI R.K.OHRI. THE SAID GPA S ARE DATED 1.4.2003. IN ALL THE DOCUMENTS I.E. GPA AND SPA EX ECUTED BY SHRI R.K.OHRI THE WITNESSES WERE THE SAME I.E. SHRI P.K.DASS, ADVOCATE AND SHRI AJAY SINGH R/O DADU MAJRA COLONY, CHANDIGARH. IN THE AGREEMENT TO SELL DATED 1.4.200 3 THE SECOND WITNESS IS THE SAME I.E. SHRI AJAY SINGH. IN THE SALE DEED EXECUTED ON 2.4.2003 BOTH THE WITNESSES ARE SAME I. E. S/SHRI P.K.DASS, ADVOCATE AND AJAY SINGH. 59. THE ASSESSEE, ON THE OTHER HAND, PLACED RELIANC E ON AN AGREEMENT TO SALE DATED 23.12.2002 WHICH IS PLACED AS AN ANNEXURE-A IN THE APPEAL FOLDER IN WHICH HE POINTS OUT THAT THE VALUE OF THE PLOT AND STRUCTURE WAS FIXED AT RS.70 LACS AND VALUE OF MATERIAL AND MACHINERY WAS FIXED AT RS.75 LACS T OTALING RS.1.45 CRORES. THE SAID AGREEMENT TO SELL FILED B Y THE ASSESSEE HAS NO EVIDENTIARY VALUE AS FIRST THE ORIGINAL OF T HE SAID AGREEMENT HAS NOT BEEN FILED ON RECORD NOR PRODUCED AND THE ASSESSEE HAD NOT EVEN FILED THE SAID AGREEMENT TO S ELL BEFORE THE ASSESSING OFFICER AND EVEN MADE ANY SUBMISSION IN T HIS REGARD BEFORE THE ASSESSING OFFICER. FURTHER THE SO CALLE D AGREEMENT TO SELL WAS NOT FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF SHRI R.K.OHRI. THE ASSESSEE FILED COPY OF THE A GREEMENT TO SELL AS ADDITIONAL EVIDENCE BEFORE THE CIT (APPEALS ), WHO HAS ADMITTED THE SAME AND ADJUDICATED THE ISSUE PLACING EVIDENCE ON THE SAME, BUT WITHOUT FOLLOWING THE PROCEDURE LAID DOWN IN RULE 46A OF THE INCOME TAX RULES. THE PROVISIONS OF RUL E 46A OF IT RULES CLEARLY PROVIDE THAT BEFORE ADMITTING ANY ADD ITIONAL EVIDENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) MUST COME TO A FINDING THAT THE CONDITIONS PRESCRIBED IN RULE 46A HAVE BEEN SATISFIED. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS MANISH BUILDWELL PVT. LTD. IN 245 CTR (P&H) 397 HAD LAID DOWN THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTL Y COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THE HON'BLE HIGH COURT FURTHER HELD THAT WHERE THE COMMISSIONER OF INCOME TAX (APP EALS) WITHOUT BEING PROMPTED BY THE ASSESSEE WHILE DEALIN G WITH THE APPEAL CONSIDERED IT FIT TO CAUSE OR MAKE FURTHER E NQUIRY BY VIRTUE OF POWERS UNDER SECTION 250(4) OF THE ACT, T HEN THE REQUIREMENTS OF RULE 46A NEED NOT TO BE FOLLOWED BU T WHERE THE ASSESSEE INVOKES RULE 46A, THEN IT IS INCUMBENT UPO N THE COMMISSIONER OF INCOME TAX (APPEALS) TO COMPLY WITH THE 44 REQUIREMENTS OF THE RULE STRICTLY. THE AGREEMENT T O SELL MARKED AS ANNEXURE-A FILED BY THE ASSESSEE DOES NOT INSPIR E CONFIDENCE AND CANNOT BE RELIED UPON AS THE ASSESSEE HAD FAILE D TO BRING ON RECORD ANY EVIDENCE TO PROVE ITS VERACITY. 60. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD PURCHASED THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.70 LACS WHICH HAD BEEN DECLARED IN HIS ACCOUNT AND HENCE NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE PURSUANT TO SEARCH PROCEEDINGS CARRIED OUT IN THE CASE OF THE ASSESSEE . THE CASE OF THE REVENUE, ON THE OTHER HAND, IS THAT M/S VISHNU ASSOCIATES LTD. NOW M/S VALCO INDUSTRIES LTD. HAD PURCHASED TH E SAID PORTION OF PLOT FROM SHRI R.K.OHRI BY USING THE NAM E OF M/S SEPL WHO IS INTERMEDIARY. THE SEQUENCE OF EVENTS AND FUND FLOW RELATING TO THE TRANSACTION HAVE TO BE CONSIDERED F OR ADJUDICATING THE ISSUE RAISED IN THE PRESENT SET OF APPEALS. 61. DURING THE COURSE OF SEARCH AND SEIZURE OPERATI ON CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI R.K .OHRI ON 3/4.9.2003 AN AGREEMENT TO SELL EXECUTED BY SHRI R. K.OHRI WITH M/S SEPL DATED 1.4.2003 WAS FOUND. THE COPY OF THE SAID AGREEMENT TO SELL IS PLACED AT PAGES 8 TO 11 OF THE PAPER BOOK. AS REFERRED BY US IN THE PARAS HEREINABOVE THE SAID AGREEMENT WAS EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF M/S SEPL THROUGH HIS DIRECTOR SHRI ANIL DUBEY FOR TOTAL CONSIDERATION OF RS.1.45 CRORES. THE SAID DOCUMENT TALKS OF THE PAYMENT REC EIVED PRIOR TO THE DATE OF EXECUTION OF THE AGREEMENT TO SELL AND CERTAIN PAYMENTS RECEIVED BY WAY OF POST-DATED CHEQUES DATE D 1.5.2003. A SUM OF RS.71 LACS WAS RECEIVED BY SELLELR SHRI R. K.OHRI UP TO 15.2.2003 AND BALANCE SUM OF RS.74 LACS WAS RECEIVE D BY WAY OF POST-DATED CHEQUES. IN THE SAID AGREEMENT THOUGH T HERE IS A REFERENCE TO AN AGREEMENT TO SELL DATED 23.12.2002 BUT THE COPY OF THE SAID AGREEMENT WAS NOT FOUND DURING THE COUR SE OF SEARCH, NOR ANY COPY WAS PRODUCED BEFORE THE ASSESSING OFFI CER. THE RECITALS OF THE AGREEMENT OF SALE DATED 1.4.2003 TA LKS OF FRONT PORTION OF THE SAID PLOT ALONGWITH EXISTING BUILDIN G BEING IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AND R EMAINING PORTION OF THE PLOT ALONGWITH BUILDING ERECTED THER EUPON WAS CLAIMED TO BE LYING VACANT AND WAS IN EXCLUSIVE POS SESSION OF THE SELLER. THE SELLER WAS INTERESTED IN SELLING THE B ACK PORTION AS HE HAD TO SETTLE THE DISPUTE PENDING WITH HIS BROTH ERS AND SISTER IN THE CIVIL COURTS, CHANDIGARH. THE SELLER SHRI R .K.OHRI SPECIFIED IN THE AGREEMENT TO SELL THAT HE AFTER RE CEIVING FULL AND FINAL SALE CONSIDERATION HAD EXECUTED GPA AND SPA W HICH WERE IRREVOCABLE AND HAD ALSO HANDED OVER THE PHYSICAL A ND VACANT POSSESSION OF THE PROPERTY. IT WAS ALSO AGREED VID E CLAUSE-7 OF THE SAID AGREEMENT TO SELL THAT IN CASE THE POST-DA TED CHEQUES ISSUED BY THE PURCHASER IN FAVOUR OF THE SELLER BOU NCES, THE ENTIRE AMOUNT PAID BY THE PURCHASER TO THE SELLER S HALL STAND FORFEITED AND THE AGREEMENT WOULD BECOME NULL AND V OID. IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE POSSESS ION OF THE PROPERTY ALREADY GIVEN WOULD BE REVOKED AND TAKEN B ACK. IN CASE THE CHEQUES ARE WITHHELD FOR PRESENTATION BECAUSE O F ANY WRITTEN REQUEST OF THE PURCHASER, THEN THE PURCHASER WAS LI ABLE TO PAY TO THE SELLER INTEREST @ 12% W.E.F. 1.4.2003 TILL THE DATE OF ENCASHMENT OF POST-DATED CHEQUES. 45 62. THE AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K .OHRI AND INTERMEDIARY M/S SEPL IS DATED 1.4.2003 AND IT TALKS ABOUT HIS 23% SHARE IN THE INDUSTRIAL PLOT NO.70, INDUSTR IAL AREA, PHASE-1, CHANDIGARH BEING SOLD ALONGWITH EXISTING B UILDING CONSTRUCTED THEREUPON. THE SELLER SHRI R.K.OHRI HA D AGREED TO SELL BACK PORTION OF THE PROPERTY ALONGWITH CONSTRU CTED BUILDING THEREUPON TO THE SELLER FOR CONSIDERATION OF RS.1.4 5 CRORES AND AGAINST WHICH HAD RECEIVED CERTAIN PAYMENTS BY WAY OF POST- DATED CHEUQES. THE TERMS AND CONDITIONS OF THE SAI D AGREEMENT FURTHER PROVIDED THAT IN CASE OF NON-ENCASHMENT OF ANY OF THE POST-DATED CHEQUES, THE ENTIRE AMOUNT PAID TILL DAT E WOULD STAND FORFEITED AND THE PURCHASER WOULD HAND OVER THE POS SESSION OF THE PROPERTY AS THE AGREEMENT WOULD BECOME NULL AND VOID. THE SAID CLAUSE DOES NOT MAKE ANY REFERENCE TO RETURN O F ANY MACHINERY. THE SAID AGREEMENT HAVING BEEN FOUND FR OM THE POSSESSION OF THE SELLER SHRI R.K.OHRI DURING THE C OURSE OF SEARCH PROCEEDINGS AT HIS PREMISES AND HAVING BEEN ADMITTED BY HIM IS THE CONCLUSIVE PROOF OF SALE OF 23% SHARE OF THE PROPERTY BY SHRI R.K.OHRI. IT MAY BE MENTIONED HERE THAT A S PER CLAUSE-7 OF THE SAID AGREEMENT TO SELL, IN CASE AGREEMENT IS TERMINATED THEN THE MONEY ALREADY RECEIVED BY THE SELLER WOULD BE FORFEITED AND THE POSSESSION OF THE PROPERTY HANDED OVER BACK TO THE SELLER. THAT THE SAID AGREEMENT TO SELL DOES NOT TALK OF ANY MACHINERY BUT ONLY REFER TO RETURN OF POSSESSION OF PLOT OF LAND, BEHIND PORTION OCCUPIED BY THE TENANT AND BUILDING CONSTRUCTED THEREUPON. THE DIFFERENT COVENANTS OF THE AGREEMEN T TO SELL EXECUTED ON 1.4.2003 DO NOT MAKE MENTION OF ANY PLA NT AND MACHINERY. IN CASE THERE IS TRUTH IN THE PLEA OF T HE ASSESSEE THAT THE SAID SALE CONSIDERATION OF RS.1.45 CRORES CONSI STED OF VALUE OF MACHINERY ALSO, THEN THERE WOULD HAVE BEEN RECIT AL OF RETURN OF PLANT & MACHINERY, WHICH IS MISSING IN THE SAID AGREEMENT TO SELL. IT CANNOT BE CASE OF SELLER THAT HE RECEIVES BACK THE PROPERTY ON TERMINATION OF AGREEMENT, BUT DOES NOT RECEIVE BACK THE MACHINERY, WHICH HAD SUBSTANTIAL VALUE AS PER T HE CASE PUT UP BY THE ASSESSEE BEFORE US. IN THE ABSENCE OF SA ME, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THIS REGARD A ND HENCE THE SAME IS DISMISSED. 63. ANOTHER ASPECT OF THE TRANSACTION IS THAT ON 1. 4.2003 SHRI R.K.OHRI EXECUTED SPA IN FAVOUR OF S/SHRI ASHW ANI KUMAR GUPTA AND ANIL DUBEY AND GPA IN FAVOUR OF SHRI VIJA Y KUMAR GUPTA, COPIES WHICH ARE PLACED IN THE PAPER BOOK FI LED BY THE DEPARTMENT AT PAGES 1 TO 7. THE ASSESSING OFFICER MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND IT WAS FOUND THAT SHRI ANIL DUBEY ONE OF THE DIRECTORS M/S SEPL WAS A PERSON OF SMALL MEANS AND HE HAD NO KNOWLEDGE ABOUT THE WORKING OF THE COMPANY. THE GPA WAS EXECUTED IN FA VOUR OF S/SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA WH O WERE THE ULTIMATE BUYERS I.E. THE COMPANY IN WHICH THEY WERE THE DIRECTORS PURCHASED THE SAID 23% SHARE. 64. THE SALE DEED IN RESPECT OF 23% SHARE IN FAVOUR OF M/S VISHNU ESTATES LTD. WAS EXECUTED ON 2.4.2003 UNDER WHICH SHRI R.K.OHRI THROUGH GPA HOLDER SHRI ASHWANI KUMAR GUPT A REGISTERED ON 1.4.2003 SOLD THE PROPERTY IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMA R GUPTA. THE COPY OF THE SAID SALE DEED IS PLACED AT PAGES 1 2 TO 20 OF THE PAPER BOOK FILED BY THE REVENUE. AS PER THE COVENA NTS OF THE 46 SALE DEED IT WAS AGREED UPON THAT 23% SHARE IN THE SAID PROPERTY WOULD BE SOLD TO M/S VALCO INDUSTRIES LTD. FOR TOTA L CONSIDERATION OF RS.70 LACS. THE PURCHASER I.E. M/S VALCO INDUST RIES LTD. HAD PRIOR TO SIGNING THE SALE DEED, MADE PAYMENT TO THE EXTENT OF RS.55 LACS OUT OF TOTAL CONSIDERATION OF RS.70 LACS I.E. RS.5 LACS THROUGH CHEQUE DATED 23.12.2002 AND RS.50 LACS THRO UGH CHEQUE DATED 10.2.2003. THE BALANCE CONSIDERATION OF RS. 15 LACS WAS PAID VIDE CHEQUE DATED 2.4.2003. THE PHYSICAL POSS ESSION OF THE PROPERTY WAS HANDED OVER, AS PER RECITALS OF THE SA LE DEED, BEFORE THE EXECUTION OF THE SAID SALE DEED. THIS ESTABLIS HES THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS INVOLVE D IN THE TRANSACTION OF PURCHASE OF THE PROPERTY PRIOR TO TH E SIGNING OF THE SALE DEED AS THE SALE CONSIDERATION WAS PAID IN ADVANCE, WITHOUT EXECUTING ANY DOCUMENT. 65. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 3.4.2003 SHRI R.K.OHRI ADMITTED THAT HE HAD SOLD HI S SHARE IN THE PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGAR H THROUGH SHRI MUKESH MITTAL FOR SALE CONSIDERATION OF RS.2.3 5 CRORES BY WAY OF ACCOUNT PAYEE CHEQUES AND BANK DRAFTS. IT W AS FURTHER STATED BY SHRI R.K.OHRI THAT THE POWER OF ATTORNEY AND THE SALE DOCUMENTS WERE EXECUTED WITH TWO SEPARATE PARTIES I N WHICH ONE OF THEM WAS A GROUP OF INDIVIDUAL AND OTHER WAS BUS INESS CONCERN OF PRIVATE COMPANY LIMITED. SHRI R.K.OHRI ADMITTED THAT THE ORIGINAL AGREEMENT TO SELL WAS AVAILABLE A T PAGE NOS.73 TO 76 OF ANNEXURE-A-I OF SEIZED DOCUMENTS WHICH WAS FOR CONSIDERATION OF RS.1.45 CRORES. IT WAS FURTHER A DMITTED THAT ON THE SAME DATE HE GAVE GPA OF 23% SHARE TO SHRI ASHW ANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA. THIS FURTHER STR ENGTHENS THE POINT THAT M/S VALCO INDUSTRIES LTD. WAS INVOLVED I N THE TRANSACTION WITH SHRI R.K.OHRI, WHO IN ADDITION TO RECEIVING PART CONSIDERATION HAD ALSO EXECUTED GPA IN FAVOUR OF TH E CONCERNED PERSON. 66. THE STATEMENT OF SHRI ASHWANI KUMAR GUPTA, DIRE CTOR OF M/S VISHNU ESTATES LTD. WAS ALSO RECORDED ON 3.9.20 04 IN WHICH HE CLAIMED THAT NO PROPERTY DEALER OR AGENT WAS INV OLVED IN THE DEAL AND DIRECT DEAL WAS MADE WITH THE SELLER. HOW EVER, HE STATED THAT HE DID NOT REMEMBER THE NAME OF SELLER. HE WAS CONFRONTED WITH THE AGREEMENT OF SALE DATED 1.4.200 3 OF PROPERTY FOR SUM OF RS.1.45 CRORES TO WHICH HE REPLIED THAT HE HAD NO KNOWLEDGE OF THE SAME AND IT WAS NOT FOUND FROM HIS PREMISES OR POSSESSION. FURTHER HE WAS ALSO CONFRONTED WITH TH E HAND WRITTEN PAPER WHICH WAS FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI, WHICH CONTAINED DETAILS OF PAYMENT IN RES PECT OF THE PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH AN D HIS REPLY WAS THE SAME THAT HE HAD NO KNOWLEDGE OF THE TRANSA CTION SHOWN IN THE PAPER. FURTHER THE SAID PAPER WAS NOT FOUN D FROM HIS POSSESSION OR PREMISES. BUT IN THE STATEMENT RECOR DED ON 3.9.2004 HE ADMITTED THAT HE DOES NOT REMEMBER THE NAME OF THE SELLER AND THE DEAL WAS AS PER THE SALE DEED. HOWE VER, HE STATED THAT THE DEAL WAS NEGOTIATED WITH ONE SHRI R.K.OHRI R/O SECTOR 9/5, NOW I DO NOT REMEMBER HIS FULL NAME AND ADDRES S .. HE FURTHER CLAIMED THAT THE PAYMENTS WERE MADE IN THE ACCOUNT OF M/S SEPL AND NO PAYMENT WAS MADE BY HIM TO SHRI R.K .OHRI. HOWEVER, THE DATES AND PERIODS DURING WHICH THE AMO UNTS OF RS.70 LACS HAD BEEN PAID BY THE ASSESSEE AND THE PA YMENTS HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY REFLECT THAT NEG OTIATION FOR 47 PURCHASE OF THE PROPERTY HAD STARTED IN DECEMBER 20 02 AND THE PAYMENTS TO SHRI R.K.OHRI WERE MADE BY M/S SEPL OUT OF PAYMENTS RECEIVED FROM M/S VALCO INDUSTRIES LTD. T HE ENTIRE EXERCISE CLEARLY ESTABLISHES THE CASE OF THE ASSESS ING OFFICER THAT SHRI ANIL DUBEY WAS INTRODUCED AS DIRECTOR OF M/S S EPL AS PURCHASER IN ORDER TO CONCEAL THE REAL CONSIDERATIO N AMOUNT. FURTHER THE CHEQUES FOR PAYMENT TO SHRI R.K.OHRI WE RE SIGNED BY ONE SHRI NARESH KUMAR SHARMA, WHO HAS ALSO SIGNED A S DIRECTOR OF M/S SEPL (AS IS CLEAR FROM THE DOCUMENTS FOUND D URING THE COURSE OF SEARCH I.E. PAGES 4 TO 9 AND 43 TO 47 OF ANNEXURE- 1/342, SECTOR 9, CHANDIGARH). THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS INVESTIGATED AND FOUND THAT SHRI NARESH KUMAR SHARMA, R/O HOUSE NO.454, SECTOR 28, CHANDIGA RH WAS WORKING AS SMALL TIME MUNSHI IN DISTRICT COURTS AND WAS HAVING MEAGER INCOME. THIS PROVES THE STAND OF THE ASSESS ING OFFICER THAT M/S SEPL WAS MERELY A FAADE TO COVER UP THE R EAL TRANSACTION BETWEEN SHRI R.K.OHRI AND THE ASSESSEE. 67. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES ELABO RATE EXERCISE HAD BEEN CARRIED OUT BY THE ASSESSING OFFI CER TO COLLECT INFORMATION AND ALSO TO RECORD THE STATEMENT OF VAR IOUS CONNECTED PERSONS TO COME TO THE CONCLUSION THAT TH E SHARE IN THE PROPERTY HAD BEEN PURCHASED FOR RS.1.45 CROROES AGA INST THE REGISTERED VALUE OF RS.70 LACS. 68. THE STATEMENT OF SHRI ANIL DUBEY WHO HAS SIGNED AS DIRECTOR OF M/S SEPL WAS RECORDED ON 18.10.2004 AND WHEN HE WAS CONFRONTED WITH THE AGREEMENT TO SELL HE STATED THAT HE DOES NOT KNOW ANYTHING ABOUT THE AGREEMENT AS HE WAS INS TRUCTED BY SHRI VIVEK MOHAN MITTAL TO GO TO THE HOUSE OF SHRI R.K.OHRI. HE STATED THAT HE HAD NOT MADE ANY TALK TO SHRI R.K.OH RI AS HE HAD VERY MEAGER INCOME AND COULD NOT THINK TO PURCHASE ANY SUCH PROPERTY. HE FURTHER STATED THAT HE HAD PUT SIGNAT URE ON ALL THE PAPERS OF SHRI VIVEK MOHAN MITTAL AND FAMILY. 69. ALL THE ABOVE DOCUMENTS AND SEQUENCES OF EVENTS HAVE CLEARLY BEEN CREATED FOR SELF SERVING PURPOSES. IN OUR OPINION SAME CANNOT BE RELIED UPON AND IN THIS REGARD, WE W OULD REFER TO FAMOUS DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN IT WAS HELD THAT IT IS TRUE THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE A RE REASONS TO BELIEVE THAT APPARENT IS NOT REAL BUT THEN THE TA XING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HA VE FURTHER OBSERVED THAT, SCIENCE HAS NOT YET INVENTED ANY IN STRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES . 70. EXAMINED IN THE LIGHT OF THE PROPOSITION LAID D OWN BY THE HON'BLE APEX COURT IN CIT VS. DURGA PRASAD MORE (SU PRA), THE TRANSACTION ENTERED INTO BY THE ASSESSEE HAS TO BE SEEN IN THE PERSPECTIVE OF THE TOTAL EVENTS. THE CASE OF THE A SSESSEE IS THAT IT HAD PURCHASED THE SAID ASSETS AT THE DECLARED VALUE OF RS.70 LACS AND WAS NOT AWARE OF THE AGREEMENT TO SELL DATED 1. 4.2003 EXECUTED FOR RS.1.45 CRORES FOR THE SAID PROPERTY. ANOTHER PLEA 48 RAISED BY THE ASSESSEE WAS THAT THE AGREEMENT TO SE LL MARKED AS ANNEXURE A DATED 23.12.2002 TALKS ABOUT THE MACHI NERY, WHICH WAS NOT PURCHASED BY THE ASSESSEE AND HENCE THE SAL E VALUE DECLARED BY THE ASSESSEE WAS CORRECT. AS OBSERVED EARLIER THIS AGREEMENT TO SELL WAS NEVER FOUND DURING SEARCH OF THE PREMISES OF SHRI R.K.OHRI AND THE SAME WAS NOT PRODUCED BEFO RE THE ASSESSING OFFICER, HENCE THE SAME HAS NO EVIDENTIAR Y VALUE. THE CIT (APPEALS) HAS WRONGLY RELIED ON THE SAID DOCUME NT WITHOUT COMPLYING WITH THE PROCEDURE LAID DOWN IN RULE 46A AS ELABORATED BY THE HON'BLE PUNJAB & HARYANA HIGH COU RT IN CIT VS. MANISH BUILDWELL PVT. LTD. (SUPRA). TAKING INT O CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CA SE AND VARIOUS DOCUMENTS EXECUTED IN RELATION TO THE SALE OF 23% S HARE IN THE SAID PROPERTY, WHERE THE ASSESSEE HAD ENTERED INTO CIRCUITOUS TRANSACTION TO TRANSFER THE PROPERTY FROM THE SELLE R TO THE PURCHASER, THEN WE ARE OF THE VIEW THAT THE MODUS O PERANDI ADOPTED BY THE ASSESSEE IN INTRODUCING M/S SEPL AS AN INTERMEDIARY BUYER WAS WITH THE INTENTION TO CAMOUF LAGE THE REAL DEAL BETWEEN ORIGINAL SELLER TO THE PURCHASER/ ULTI MATE BUYER OF THE PROPERTY. THE ORIGINAL OWNER OF THE PROPERTY S HRI R.K.OHRI HAD EXECUTED THE AGREEMENT TO SELL ON 1.4.2003 WHIC H ADMITTEDLY WAS FOUND IN HIS POSSESSION AND WAS SEIZED BY THE I NVESTIGATION TEAM. ON THE SAME DATE IN RESPECT OF 23% OF THE S AID PROPERTY SHRI R.K.OHRI EXECUTED THE GPA IN FAVOUR OF SHRI AS HWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA ON 1.4.2003. THE SALE DEED WAS EXECUTED ON 2.4.2003 BY SHRI ASHWANI KUMAR GUPT A DIRECTOR OF M/S VISHNU ASSOCIATES LTD. AS GPA OF SHRI R.K.OH RI IN FAVOUR OF THE COMPANY OF WHICH HE IS THE DIRECTOR I.E. M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMA R GUPTA WHO IS THE BROTHER OF SHRI ASHWANI KUMAR GUPTA. HOWEVER , THE SALE CONSIDERATION FOR 23% SHARE IN THE PROPERTY IN THE AGREEMENT TO SELL WAS RS.1.45 CRORES AND IN THE SALE DEED WAS RS .70 LACS ONLY. THE ASSESSEE CLAIMED THAT IT HAD PURCHASED THE SAID PROPERTY FROM M/S SEPL, WHO IN TURN HAD PURCHASED THE SAME F ROM SHRI R.K.OHRI AND HE HAD NOT DIRECTLY PURCHASED FROM SHR I R.K.OHRI. WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE. UNDOUBTEDLY, THE AGREEMENT TO SELL WAS EXECUTED BETWEEN SHRI R.K .OHRI AND M/S SEPL ON 1.4.20203 EVIDENCING THE PAYMENTS MADE AGAINST THE SALE CONSIDERATION PRIOR TO 1.4.2003. FURTHER SALE DEED EXECUTED BETWEEN M/S SEPL AND M/S VALCO INDUSTRIES LTD. WAS DATED 2.4.2003, EVIDENCING PAYMENTS TOTALING RS.55 LACS O UT OF TOTAL CONSIDERATION OF RS.70 LACS HAVING BEEN MADE PRIOR TO THE DATE OF EXECUTION OF THE SALE DEED. THE DOCUMENT OF SALE D EED WAS EXECUTED AND REGISTERED BY SHRI ASHWANI KUMAR GUPTA , WHO IS ONE OF THE DIRECTORS OF M/S VALCO INDUSTRIES LTD. THE GPA IN HIS FAVOUR BY SHRI R.K.OHRI WAS MADE ON 1.4.2003. THE SALE CONSIDERATION PAID TO SHRI R.K.OHRI WAS BY WAY OF I SSUE OF CHEQUES THROUGH ACCOUNT OF M/S SEPL AND M/S VALCO I NDUSTRIES LTD. HAD ALSO MADE THE PAYMENTS IN THE ACCOUNT OF M /S SEPL. IN CASE WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE CAME INTO PICTURE ONLY ON 1/2.4.2003 THEN HOW PAYMENTS AGAINST SALE CONSIDERA TIONS WERE MADE BY M/S VALCO INDUSTRIES LTD. IN DECEMBER, 2002 . THIS CLEARLY SHOWS THAT THE M/S SEPL WAS JUST USED AS IN TERMEDIARY TO CAMOUFLAGE THE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BETWEEN SHRI R.K.OHRI AND M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE. IN THE ENTIRETY OF THE FACTS AND CIRCUM STANCES, WHERE 49 23% SHARE IN THE PROPERTY HAD BEEN AGREED TO BE SOL D FOR RS.1.45 CRORES AND WAS ULTIMATELY SOLD THROUGH REGISTERED S ALE DEED FOR RS.70 LACS CLEARLY ESTABLISHES THE STAND OF THE ASS ESSING OFFICER THAT ON MONEY HAD BEEN PAID IN THE SAID TRANSACTION BY M/S VALCO INDUSTRIES LTD. IN ORDER TO MEET THE PRICE OF RS.1. 45 CRORES. WE FIND NO MERIT IN THE DIFFERENT PLEAS OF THE LEARNED A.R. FOR THE ASSESSEE BEFORE US AS THE SAME ARE CONTRARY TO EACH OTHER. IN THE COURSE OF STATEMENT RECORDED DURING THE SEARCH PROC EEDINGS HE HAD STATED THAT NO PROPERTY DEALER WAS INVOLVED IN THE DEAL. HOWEVER, THE DATES AND PERIOD DURING WHICH THE SUM OF RS.70 LACS HAD BEEN PAID BY M/S VISHNU ASSOCIATES LTD. AN D PAYMENTS HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY REFLECT THA T THE NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY WERE MADE IN DECEMBER, 2002 AND THAT SHRI ANIL DUBEY WAS INTRODU CED AS DIRECTOR OF M/S SEPL WITH WHOM TRANSACTION WAS CARR IED OUT IN ORDER TO PUT A SCREEN ON THE REAL PICTURE. THE WHO LE TRANSACTION LEADS TO CONCRETE CONCLUSION THAT THE PROPERTY HAD BEEN PURCHASED BY M/S VOLCO INDUSTRIES LTD. FOR A SUM OF RS.1.45 CRORES AS AGAINST ITS CLAIM OF RS.70 LACS THROUGH C IRCUITOUS TRANSACTIONS. 71. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, IT IS A FIT CASE TO RAISE CORPORATE VEIL IN ORDER TO DETERM INE THE NATURE OF TRANSACTION. THE COMPANY M/S SEPL HAS BEEN USED AS INTERMEDIARY THROUGH DIRECTOR WHO HAD MEAGER SOURCE OF INCOME AND ONE OF THE DIRECTORS IN THE SAID COMPANY WAS TH E WIFE OF THE ADVOCATE WHO WAS LOOKING AFTER THE CIVIL DISPUTES O F SHRI R.K.OHRI. THOUGH NO ADDITION HAS BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR O NE OF ITS DIRECTOR SMT.ALKA MITTAL W/O SHRI MUKESH MITTAL, BU T THAT ITSELF WOULD NOT SUPPORT THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON 'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENA KSHI MILLS LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TA X EVASION OR TO CIRCUMVENT TAX OBLIGATION, HELD AS UNDER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DE SCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE V EIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTIO N. IT IS TRUE THAT FROM THE JURISTIC POINT OF VIEW THE COMPANY IS A LE GAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED TO DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS MEMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOMIC REALITIES BEHIND THE LEGAL FAADE. FOR EXAMPLE, THE COURT HAS POWER TO DISREGARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR T O CIRCUMVENT TAX OBLIGATION. 72. IN THE FACTS OF THE PRESENT CASE, WE HAVE FOUND THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN ORDER TO COMPLETE THE TRANSACTION OF PURCHASE OF 23% SHARE IN THE PRO PERTY FROM SHRI R.K.OHRI TO ITSELF. 50 73. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE INITIAL AGREEMENT BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR TO TAL CONSIDERATION OF RS.1.45 CRORES ALSO INCLUDED THE C OST OF MACHINERY AT RS.75 LACS WHICH IN TURN HAD NOT BEEN PURCHASED BY THE ASSESSEE M/S VALCO INDUSTRIES LTD. AND HENCE TH E SALE CONSIDERATION AGREED TO BETWEEN THE PARTIES WAS ONL Y RS.70 LACS I.E. THE COST OF THE PLOT AND BUILDING AND THE MACH INERY WAS WITHHELD BY M/S SEPL. THIS WAS THE PLEA RAISED BY THE ASSESSEE BEFORE US. HOWEVER, WE FIND NO MERIT IN THE SAID P LEA OF THE ASSESSEE AS THE TERMINATION CLAUSE IN THE ORIGINAL AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL FO R NON- ENCASHMENT OF CHEQUES TALKS OF HANDING BACK OF THE POSSESSION OF THE PROPERTY AND DOES NOT TALK ABOUT HANDING OVER B ACK MACHINERY WHATSOEVER. AS HELD BY US IN THE PARAS H EREINABOVE, THE SAID AGREEMENT TO SELL MARKED AS ANNEXURE-A PRO DUCED BY THE ASSESSEE BEFORE THE CIT (APPEALS) FOR THE FIRST TIM E IS JUST AN AFTER THOUGHT AND CANNOT BE RELIED UPON. WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN ALLOWING RELIEF TO TH E ASSESSEE BY PLACING RELIANCE ON SUCH AGREEMENT TO SELL, VERACIT Y OF WHICH HAS NOT BEEN ESTABLISHED. 74. RELIANCE OF THE LEARNED A.R. FOR THE ASSESSEE O N THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN SURAJ LAMP INDUSTRIES PVT. LTD. VS. STATE OF HARYANA REPORTED IN 2011-TIOL- 101-SC-MISC IN RESPECT OF SCOPE OF AGREEMENT ITSELF WORKS AGAINST THE ASSESSEE AS THE ASSESSEE HAS ALSO BUILT ITS CASE ON THE AGREEMENT TO SELL MARKED AS ANNEXURE-A AS BEING THE ORIGINAL AGREEMENT IN WHICH THE SALE PRICE OF THE LAND WAS F IXED AT RS.70 LACS AND SALE VALUE OF MACHINERY WAS FIXED AT RS.75 LACS. IN VIEW OF THE SEQUENCE OF EVENTS AND THE DOCUMENTS EXECUTE D IN RELATION TO THE SALE OF 23% SHARE OF THE PROPERTY, WE HOLD T HAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE M/S VALCO IN DUSTRIES LTD. FOR A CONSIDERATION OF RS.1.45 CRORES, AGAINST WHIC H IT HAD SHOWN SALE PRICE OF RS.70 LACS ONLY AND THE BALANCE ON MO NEY OF RS.75 LACS IS TO BE ASSESSED IN THE HANDS OF M/S VALCO I NDUSTRIES LTD. ON SUBSTANTIVE BASIS AS INCOME FROM UN-DISCLOSED SO URCES, IN VIEW OF THE CORPORATE ENTITY BEING A SEPARATE ENTIT Y HAVING PURCHASED THE SAID ASSETS. IN VIEW OF OUR HOLDING THAT THE ADDITION OF RS.75 LACS IS TO BE MADE IN THE HANDS O F THE COMPANY M/S VALCO INDUSTRIES LTD. NO SEPARATE ADDITION IS M ERITED IN THE HANDS OF THREE DIRECTORS S/SHRI AJAY KUMAR GUPTA, A SHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE GROUND OF A PPEAL NO.1 RAISED BY THE REVENUE IN ITA NO.663/CHD/2008 I S ALLOWED AND GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NOS.660 TO 662/CHD/2008 IS DISMISSED. 56. IN THE FACTS OF THE PRESENT CASE ALSO COMPANY M /S SEPL HAS BEEN USED AS AN INTERMEDIARY TO COMPLETE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BETWEEN SMT.ERA OHRI AND HER DAUGHT ERS AND THE ULTIMATE PURCHASER I.E. THE ASSESSEE BEFORE US WHO HAVE PURCHASED THE PROPERTY IN JOINT SHARE. APPLYING PRINCIPLE LAID DOWN BY THE TRIBUNAL IN THE CASE OF ACIT VS. SH.AJAY KUMAR GUPTA & OTHER S (SUPRA),WE ARE 51 OF THE VIEW THAT M/S SEPL HAS BEEN USED AS AN INTER MEDIARY IN THE PRESENT CASE ALSO. THE SAID INTERMEDIARY HAD PURCH ASED THE PROPERTY I.E. 50% SHARE IN THE PROPERTY FOR RS.3.20CRORES AN D, ON THE OTHER HAND, HAD SOLD 50% SHARE TO TWO DIFFERENT BUYERS I. E. 23% SHARE TO FOUR ASSESSEES BEFORE US FOR TOTAL CONSIDERATION OF RS.80 LACS AND BALANCE 27% SHARE HAD BEEN SOLD TO SHRI MUKESH MITT AL HUF FOR TOTAL CONSIDERATION OF RS.80 LACS. IN OTHER WORDS, IT ME ANS THAT THE ASSESSEE HAD PURCHASED THE PROPERTY FOR RS.3.20 CRORES WHICH WAS SOLD FOR ONLY RS.1.30 CRORES BY THE INTERMEDIARY. THE DATES OF THE TRANSACTION EXECUTED AND THE DATES OF PAYMENT REFLECT THAT THE ASSESSEE BEFORE US HAD USED CIRCUITOUS TRANSACTIONS IN ORDER TO PURCHA SE THE SAID PROPERTY FOR A LOWER CONSIDERATION AS AGAINST THE SALE PRICE PAID BY THE INTERMEDIARY TO PURCHASE THE SAID PROPERTY. ACCORD INGLY, WE HOLD THAT THE ASSESSEE HAD PAID ON MONEY TO PURCHASE THE SAID ASSET THROUGH CIRCUITOUS TRANSACTIONS BY FOLLOWING THE FINDINGS O F THE TRIBUNAL IN THE CASE OF ACIT VS. SH.AJAY KUMAR GUPTA & OTHERS VIDE PARAS 46 TO 74 OF THE ORDER. 57. IN THE FACTS OF THE PRESENT CASE, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2002-03 HAD MADE AN ADDITION OF RS. 36,80,000/-. THE CASE OF THE ASSESSING OFFICER WAS THAT SINCE MRS. ERA OHRI AND HER DAUGHTERS HAD SOLD 50% SHARE IN THE PROPERTY FOR RS.3.20 CR, 23% SHARE OF THE PROPERT Y WAS PURCHASED BY THE ASSESSEE, ACCORDINGLY WAS PURCHA SED FOR RS. 1,47,20,000/- ( 50% SHARE RS. 3.20 CR, 100% SHA RE RS. 6.40 CR AND 23% SHARE RS.1.47 CR ) THE ASSESSEE, ON THE OTHER HAND, CLAIMS THAT IT HAD PURCHASED THE PROPER TY FOR RS. 80 LACS ONLY OVER A PERIOD OF THREE YEARS IN WHICH IN FINANCIAL YEAR 2001-02, SUM OF RS. 12,50,000/- HAD BEEN PAID 52 BY ALL THE FOUR CO-OWNERS, RS. 6,20,000/-HAD BEEN P AID IN FINANCIAL YEAR 2002-03 AND RS. 65,55,000/- HAD BEEN PAID IN FINANCIAL YEAR 2004-05, TOTAL RS. 84,25,0007- I.E. SALE CONSIDERATION OF RS. 80,00,000/- + COST OF STAMP DU TY RS. 4.25 LACS. THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENT, HOWEVER HELD THE ASSESSEE TO HAVE NOT D ISCLOSED THE INVESTMENT IN THE PURCHASE OF THE SAID 23% SHAR E IN THE PROPERTY AND 174 TH OF RS. 1.47 CR I.E. RS. 36,80,000/- WAS ADDED IN THE HANDS OF EACH OF ASSESSEES. THEREAFTER , THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 WAS COMP LETED AND ADDITION OF RS. 22,97,850/- I.E. 174 TH OF RS. 65,55,000/- WAS ADDED IN ALL THE FOUR HANDS HOLDING THAT THE ASSESSEE HAD FAILED TO DISCLOSE THE SOURCE OF INVESTMENT OF THE AMOUNT PAID IN ASSESSMENT YEAR 2004-05. THE ASSESSING OFFI CER, THUS IN INDIVIDUAL HANDS MADE TWO ADDITIONS I.E. ON E OF RS. 36,80,000/- IN ASSESSMENT YEAR 2002-03 AND RS. 22.9 7 LACS IN ASSESSMENT YEAR 2004-05. BOTH THESE ADDITIONS HA VE BEEN DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST WHICH THE REVENUE IS IN APPEAL. 58. ANOTHER ASPECT OF THE SAID ISSUE IS THAT THE AS SESSING OFFICER IN THE REMAND PROCEEDINGS HAVE ACCEPTED THE SOURCES OF INVESTMENT OF RS. 80 LACS MADE BY ALL THE ASSESS EES BEFORE US. IN CASE THE SOURCES OF INVESTMENT ARE SO ACCEPTED BY THE ASSESSING OFFICER, THEN NO ADDITION TO THE E XTENT OF RS. 80 LACS IS TO BE MADE IN THE HANDS OF THE ASSES SEE. IN OTHER WORDS, AS AGAINST THE ALLEGATION OF THE ASSES SING OFFICER THAT ALL THE ASSESSEES HAD MADE AN INVESTME NT OF RS. 1,47,20,000/-, SOURCES TO THE EXTENT OF RS. 80 LACS STANDS EXPLAINED AND THE BALANCE UNACCOUNTED INVESTMENT TO TALS TO 53 RS. 67,20,000/-. FOLLOWING THE REASONING IN ACIT VS SH.AJAY KUMAR GUPTA & OTHERS (SUPRA), WE HOLD THAT ALL THE ASSESSEES BEFORE US WHO HAD JOINTLY PURCHASED 23% SHARE IN THE PROPE RTY HAD DECLARED VALUE OF RS.80 LACS WHICH IS IN ADDITION TO ON MONE Y PAID TO PURCHASE THE SAID ASSETS, WHICH HAS TO BE ASSESSED AS UNDISC LOSED INCOME IN THE HANDS OF THE ASSESSEE. 59. THE SEC OND ASPECT OF HOLDING THAT UNDISCLOSED INCOME IS TO BE ADDED IN THE HANDS OF THE ASSESSEE, THE ISSUE ARISING IN THE PRESENT SET OF APPEALS IS THE YEAR IN WHICH SUCH ADDITION IS TO BE MADE IN THE HANDS OF THE ASS ESSEE. ADMITTEDLY, THE ASSESSEE MADE THE FIRST INSTALLMENT FOR THE PURCHASE OF THE SAID ASSET ON 29.12.2001 AND A SUM OF RS. 12,50,000/- WAS JOINTLY PAID IN THE FINANCIAL YEAR 2001-02. THE AGREEMENT BETWEEN SMT. ERA K.OHRI AND HER DAUGH TERS AND THE INTERMEDIARY M/S SHARVILLA ESTATES PVT. LTD . THROUGH WHOM THE ASSESSEE CLAIMS TO HAVE PURCHASED THE PROP ERTY THROUGH ITS DIRECTOR SMT. ALKA MITTAL TO WHOM SPA W AS GIVEN BY SMT. ERA K.OHRI, WAS TRANSACTED IN THE YEA R 2001. THE SPA WAS ISSUED BY SMT. ERA K.OHRI IN FAVOUR OF THE ASSESSEE AND SHRI MUKESH MITTAL, AT THE TIME OF EXE CUTION OF THE SECOND AGREEMENT TO SELL IN THE YEAR 2001 AND T HE ASSESSEE THUS, WAS INVOLVED BOTH IN THE NEGOTIATION AND FINALIZATION OF THE DEAL BETWEEN SMT. ERA K. OHRI A ND THE INTERMEDIARY. ACCORDINGLY, WE HOLD THE ASSESSEE TO BE INVOLVED IN THE PURCHASE OF THE SAID PROPERTY FROM THE YEAR 2001. THOUGH IT IS DIFFICULT TO POINT OUT THE EXACT TIME AT WHICH THE CASH HAD PASSED HANDS, BUT IN THE ENTIRET Y OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE CASH ELEM ENT OF THE TRANSACTION WAS PAID AT THE TIME WHEN THE TRANSACTI ON WAS 54 ENTERED WITH SMT. ERA K. OHRI FOR THE PURCHASE OF H ER SHARE IN THE PROPERTY. WE HAVE HELD IN THE PARAS ABOVE T HAT THE ASSESSEE HAD PAID ON MONEY OVER AND ABOVE THE DECLA RED SALE CONSIDERATION, THE BALANCE IS TO BE ADDED AS UNDISC LOSED INCOME IN THE HANDS OF ASSESSEE. CONSEQUENTLY, WE DIRECT THE ASSESSING OFFICER TO MAKE AN ADDITION OF RS. 16 ,80000/- I.E. 1/4 TH OF RS. 67,20,000/- WHICH IS THE UNDISCLOSED CONSIDERATION PAID BY THE ASSESSEE. SIMILARLY, ADDITION OF RS. 16,80,000/- IS TO BE MADE IN THE HANDS OF THE OTHER CO- OWNERS OF THE PROPERTY, WHO ARE IN APPEAL BEFORE US . IN VIEW THEREOF, WE ALLOW THE GROUND OF APPEAL RAISED BY TH E REVENUE. HOWEVER, THE ADDITION IS TO BE RESTRICTED TO RS. 16,80,000/- ONLY AND NOT RS. 36,80,000/- AS HELD BY THE ASSESSING OFFICER, WHICH IS THE 1/4 TH SHARE OF TOTAL INVESTMENT MADE BY THE RESPECTIVE PURCHASERS. THE ASSESSING OFFICER IN REMAND PROCEEDINGS HAD ACCEPTE D THE SOURCES OF INVESTMENT TO THE EXTENT OF RS. 80 LACS, WHICH IN CASE WAS PAID OVER PERIOD OF THREE YEARS. THE GROU ND OF APPEAL NO. 1 RAISED BY THE REVENUE IS THUS, PARTLY ALLOWED. 60. IN ITA NO 227/CHD/2011 I.E. THE APPEAL OF THE ASSESSEE RELATING TO ASSESSMENT YEAR 2004-05, ADDI TION OF RS. 22,97,850/- WAS MADE BY THE ASSESSING OFFICER O N ACCOUNT OF NON-EXPLANATION OF THE SOURCES OF INVEST MENT IN THE PROPERTY BEING NOT EXPLAINED. HOWEVER, THE ASSE SSING OFFICER IN THE REMAND REPORT HAS ACCEPTED THE SOURC ES OF INVESTMENT AND IN VIEW THEREOF, THERE IS NO MERIT I N THE SAID GROUND OF APPEAL RAISED BY THE REVENUE IN ASSESSMEN T YEAR 2004-05. THUS, GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2004-05 IS DISMISSED. 55 61. THE REVENUE IN ITA NO. 226/CHD/2011 HAS ALSO RA ISED SIMILAR ISSUE OF DELETION OF ADDITION ON ACCOUNT OF THE UNEXPLAINED INVESTMENT IN THE PURCHASE OF IMMOVABLE PROPERTY. HOWEVER, THIS ISSUE DOES NOT ARISE FROM T HE ORDER OF THE ASSESSING OFFICER AND CONSEQUENTLY NOT FROM THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AS NO ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOU NT OF UNEXPLAINED INVESTMENT IN THE INDUSTRIAL PLOT NO. 9 0, INDUSTRIAL AREA, PHASE-I, CHANDIGARH. ON THE OTHER HAND, THE ASSESSING OFFICER HAD MADE THE ADDITION IN THE HAND S OF THE ASSESSEE ON ACCOUNT OF SOURCE OF DEPOSITS IN THE BA NK ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD. BEING NO T EXPLAINED. THE SAID ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE WAS ONE OF THE DIRECTOR OF THE SAID COMPANY DURING THE RELEVANT PERIOD. THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS DEALT WITH THIS ISSUE VIDE PARAS 39 TO 47 WHICH ARE NOT BEING REPRODUCED FOR THE SAKE O F BREVITY. 62. THE ID. DR FOR THE REVENUE HAS FAILED TO CONTRO VERT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ) AND IN THE ABSENCE OF ANY EVIDENCE FOUND THAT THE ASSES SEE WAS OPERATING THE SAID BANK ACCOUNTS OF M/S SHARVILLA E STATES PVT. LTD., WE FIND NO MERIT IN THE ADDITION BEING M ADE IN THE HANDS OF THE ASSESSEE. ADMITTEDLY, THE SAID COMPANY M/S SHARVILLA ESTATES PVT. LTD. WAS AN INTERMEDIARY IN THE SERIES OF TRANSACTIONS WITH DIFFERENT PARTIES FOR THE SALE OF DIFFERENT PORTIONS OF THE PROPERTY NO. 70, INDUSTRI AL AREA, PHASE-I CHANDIGARH AND THE TOTAL DEPOSITS IN THE BA NK ACCOUNT OF' M/S M/S SHARVILLA ESTATES PVT. LTD. DUR ING THE 56 RELEVANT YEAR CANNOT BE ATTRIBUTED TO THE ASSESSEE BEFORE US, IN THE ABSENCE OF ANY EVIDENCE. UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), WE DISMISS GR OUND OF APPEAL NO. 1 RAISED IN ASSESSMENT YEAR 2003-04. 63. THE ONLY ISSUE LEFT IS GROUND NO. 2 IN ITA NO. 227/CHD/2011 WHICH IS IN RELATION TO THE ADDITION M ADE ON ACCOUNT OF THE PURCHASE OF HOUSE NO. 358, SECTOR 21 -D, CHANDIGARH. THE ASSESSEE CLAIMS THAT HE ALONGWITH H IS WIFE HAD INVESTED A SUM OF RS. 60 LACS IN THE SAID PROPE RTY. HOWEVER, DURING THE COURSE OF SEARCH ON THE PREMISE S OF SHRI MUKESH MITTAL, AN AGREEMENT TO SELL SHOWING SA LE CONSIDERATION OF RS. 64,25,000/- FOR THE SALE OF TH E SAID PROPERTY WAS FOUND. THE ASSESSING OFFICER, ON THE B ASIS OF THE SAID DOCUMENT, MADE ADDITION OF 50% OF THE SAID CONSIDERATION IN THE HANDS OF THE ASSESSEE WITHOUT GIVING ANY CREDIT FOR THE AMOUNT DECLARED BY THE ASSESSEE HOLDING THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE SOURCE S OF INVESTMENT UPTO RS. 20 LACS. 64. WE FIND THAT SIMILAR ISSUE OF ADDITION MADE ON THE BASIS OF PHOTO COPY OF A DOCUMENT AROSE BEFORE THE TRIBUN AL IN THE CASE OF ACIT VS SHRI AJ AY KUMAR GUPTA (SUPRA) WHER EIN IT HAS BEEN HELD THAT IN THE ABSENCE OF ANY DOCUMENT F OUND, EVIDENCING THE PAYMENT OF AMOUNT OVER AND ABOVE THE DECLARED AMOUNT IN THE REGISTERED DOCUMENTS EXECUTE D BETWEEN THE PARTIES, NO ADDITION IS WARRANTED ON TH E BASIS OF AN UNSIGNED DOCUMENT DOWNLOADED FROM THE COMPUTER O F A LAWYER. APPLYING THE SAME RATIO TO THE FACTS OF THE PRESENT CASE, WE FIND NO MERIT IN THE ADDITION MADE BY THE ASSESSING 57 OFFICER AND WE CONFIRM THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE SAME. THE GROUND OF A PPEAL NO. 2 RAISED BY THE REVENUE IS THUS, DISMISSED. 65. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 225/CHD/2011 IS PARTLY ALLOWED, ITA NO. 226 & 227/CHD/2011 IS DISMISSED AND THE CO NOS. 45 TO 47/CHD/2011 ARE DISMISSED. 66. IN ITA NOS. 223 AND 224/CHD/201 1, THE FACTS AN D ISSUES RAISED ARE IDENTICAL TO THE ISSUES RAISED IN ITA NOS. 225 AND 227/CHD/2011. THEREFORE, OUR DECISION IN IT A NOS. 225 AND 227/CHD/2011 SHALL APPLY MUTATIS-MUTANDIS T O ITA NO. 223 AND 225/CHD/2011 ALSO. 67. THE FACTS AND ISSUES IN CO NOS. 43 AND 44/CHD/2 011 ARE IDENTICAL TO THE FACTS IN CO NO. 45 AND 47/CHD/2011 AND ARE DECISION IN CO NOS. 45 AND 47/CHD/2011 AND OUR DECI SION IN CO NOS. 45 AND 47/CHD/2011 SHALL APPLY MUTATIS-MUTA NDIS TO CO NOS. 43 AND 44/CHD/2011 ALSO. 68. THE FACTS AND ISSUES RAISED IN ITA NOS. 221 AND 222/CHD/2011 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NOS. 225 AND 227/CHD/2011 AND OUR DECISION IN ITA NOS. 225 AND 227/CHD/2011 SHALL APPLY MUTATIS- MUTANDIS TO ITA NOS. 221 AND 222/CHD/2011 ALSO. 69. THE FACTS AND ISSUES RAISED IN CO NOS. 41 AND 42/CHD/2011 ARE IDENTICAL TO THE FACTS AND ISSUES I N CO NO. 47/CHD/2011 AND OUR DECISION IN CO NO.47/CHD/201 1 SHALL APPLY MUTATIS-MUTANDIS TO CO NOS. 41 AND 42/CHD/201 1 ALSO. 58 70. THE FACTS AND ISSUES RAISED IN ITA NO NO. 220/CHD/2011 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.225/CHD/2011 AND OUR DECISION IN ITA NOS . 225/CHD/2011 SHALL APPLY MUTATIS-MUTANDIS TO ITA NO. 220/CHD/2011 ALSO. 71. THE FACTS AND ISSUES RAISED IN CO NO. 40/CHD/20 11 ARE IDENTICAL TO THE FACTS AND ISSUES IN CO NO. 47/CHD/ 2011 AND OUR DECISION IN CO NO,47/CHD/201 1 SHALL APPLY MUTA TIS- MUTANDIS TO CO NO. 40/CHD/2011 ALSO. 72. IN THE RESULT, ITA NOS. 225/CHD/2011, ITA NO. 223/CHD/2011, ITA NO. 221/CHD/2011 AND ITA NO. 220/CHD/2011 FILED BY THE REVENUE ARE PARTLY ALLOWE D, ITA NO. 226/CHD/2011, ITA NO. 227/CHD/2011, ITA NO. 224/CHD/2011 AND ITA NO. 222/CHD/2011 FILED BY THE REVENUE ARE DISMISSED. THE C.O. NOS. 45 TO 47/CHD/2 011, CO NO. 43 AND 44/CHD/2011, CO NOS. 41 AND 42/CHD/20 11 AND CO NO. 40/CHD/2011 RAISED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH