The Income-tax Officer, Jammu V. Lt. Col. Chunni Lal, Jammu

ITA 297/ASR/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9375 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-04-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Search and seizure; Additional evidence; Reassessment proceedings; Set aside
• Section: 143(3); 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 297/ASR/2015 ASS ESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-1(1), JAMMU VS. LT. CDR. CHUNNI LAL (DECEASED), (THRO JEETO DEVI & ORS., LRS) R/O VILLAGE MAMKA, P.O. KHOUR DEONIAN, MIRAN SAHIB, THE R.S. PURA, JAMMU [PAN: AAHPL 9611M] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. CHARAN DASS (D .R.) RESPONDENT BY: SH. JOGINDER SINGH (C.A.) DATE OF HEARING: 10.04.2019 DATE OF PRONOUNCEMENT: 02.07.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU (CIT(A ) FOR SHORT) DATED 27.03.2015, ALLOWING THE ASSESSEES APPEAL CONTESTI NG HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 08.03.2013 FOR ASSESSMENT YEAR (AY) 2009-10. 2. IN THIS CASE THE AUTHORIZATION ON RECORD WAS IN FAVOUR OF CA JOGINDER SINGH BY ONE, SH. SURESH KUMAR, AS THE LEGAL HEIR OF THE ASSESSEE, SINCE DECEASED, DATED 27.12.2015. AS THE CERTIFICATE FROM THE ASSESSING O FFICER (AO) DATED 26/2/2018 ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 2 (COPY ON RECORD) MENTIONED ONLY SMT. JEETO DEVI, WI FE OF LATE ASSESSEE, AS HIS LEGAL HEIR, WHO THEREFORE WAS UNREPRESENTED, I.E., AS AGA INST ONLY SH. SURSESH KUMAR, EARLIER (VIDE LETTER DATED 31/01/2017/COY ON RECORD ), SH. SINGH WAS, VIDE ORDER SHEET DATED 30.01.2019, REQUIRED TO OBTAIN AUTHORIZ ATION IN HIS FAVOUR FROM JEETO DEVI. AN AFFIDAVIT DATED 23.9.2017 FROM SMT. JEETO DEVI, CONFIRMING OF HER BEING THE ONLY LEGAL HEIR OF THE LATE ASSESSEE, AS WELL A S POWER OF ATTORNEY DATED 08.04.2019 IN FAVOUR OF SH. JOGINDER SINGH, STANDS SINCE PLACED ON RECORD. THE HEARING WAS ACCORDINGLY PROCEEDED WITH. 3. THE ISSUE ARISING IN THIS APPEAL IS THE SUSTAINA BILITY IN LAW, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF THE ADDITION IN THE S UM OF RS.70,88,240 RECEIVED BY OR ON BEHALF THE ASSESSEE DURING THE RELEVANT YEAR (I.E., F.Y. 2008-09) FROM ONE, SH. SHARAD MADAN, SINCE DELETED BY THE LD. CIT(A). 4.1 THE FACTS OF THE CASE, WHICH ARE NOT DISPUTED, ARE THAT THE ASSESSEE, A RETIRED NAVAL OFFICER, RETURNED HIS INCOME FOR THE RELEVANT YEAR ON 30.7.2009 AT RS.1,31,179. REASSESSMENT PROCEEDINGS WERE INITIATE D VIDE NOTICE U/S. 148 DATED 23.9.2011 ON THE BASIS OF THE INFORMATION WITH THE REVENUE AS TO THE ASSESSEE, A BENEFICIARY OF ADARSH CO-OPERATIVE HOUSING SOCIETY LTD., MUMBAI, HAVING BEEN ALLOTTED A RESIDENTIAL FLAT BY THE SAID SOCIETY IN A BUILDING AT COLABA, MUMBAI (I.E., FLAT NO.1402, 14 TH FLOOR, BLOCK NO.6, PLOT-652, CUFFE PARADE, COLABA, MUMBAI) ON PAYMENT OF RS.60.39 LACS, CONFIRMED BY THE ASSESSEE BEFORE THE AO ON 26.7.2011. THE ASSESSEE RESPONDED (TO THE NOTICE U/S. 148) BY DECLARING AN INCOME OF RS. 1,82,210 (BESIDES AGRICULTURAL INCOME AT RS. 45,000 ) VIDE RETURN FURNISHED ON 20/12/2011. AN EXAMINATION OF THE SOURCE/S OF THE P AYMENT/S OF RS. 60.39 LACS TO THE SOCIETY DURING ASSESSMENT PROCEEDINGS, IT TRANS PIRED THAT THE ASSESSEE HAD RECEIVED A TOTAL OF RS.81,78,240 FROM ONE, SH. SHAR AD MADAN, A NRI, RESIDENT OF ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 3 UK, OF WHICH RS.21,78,240, DETAILED AS UNDER, WAS I N FACT DIRECT TO THE HOUSING SOCIETY, FOR AND ON BEHALF OF THE ASSESSEE, FORMING PART OF THE COST OF THE FLAT (AT RS.60,39,240): SR. NO. SOCIETY RECEIPT DATE INSTRUMENT AMOUNT (RS. ) (I) 942 DT.04/06/2008 CH. NO.910618 DT. 29/05/2008 ON SYNDICATE BANK, NDLI 5,38,240/- (II) 100 DT. 17/11/2008 DD NO.015253 DT. 06/10/2008 ON HDFC, NDLI 5,50,000 10,88,240 (III) 1298 DT.11/12/2009 CH. NO.315710 DT. 9/12/2009 ON SBI, NDLI 5,45,000 5,45,000 (IV) 1416 DT. 28/07/2010 CH. NO.483022 DT. 26/07/2010 ON SBI, MUMBAI 5,45,000 5,45,000 TOTAL 21,78,240 THAT A PART, SH. SHARAD MADAN (SM) HAD PAID RS.60 L ACS TO THE ASSESSEE BY WAY OF SECURITY DEPOSIT (RS.35 LACS) AND FOR FURNISHING TH E SAID FLAT (RS.25 LACS) VIDE CHEQUE NO.12789 DATED 27.6.2008 (DRAWN ON HSBC BANK , NEW DELHI). ALL THESE PAYMENTS WERE STATED TO BE MADE BY SM IN PURSUANCE OF A LEAVE AND LICENSE AGREEMENT DATED 25/06/2008 (LLA HEREINAFTER) (AT PB PAGES 4-13), RESERVING A RENT (LICENSE FEE) OF RS.35,000/- PER MONTH FOR A P ERIOD OF 60 MONTHS COMMENCING THE DATE OF THE RECEIPT OF THE OCCUPATION CERTIFICA TION (OC) BY THE SOCIETY AND FURNISHING OF THE LICENSED PREMISES, THE ASSESSEES FLAT (CLAUSE 2(A) OF THE LLA). NO FURNISHING OF THE FLAT WAS, HOWEVER, DONE, ON TH E RECEIPT OF THE OC MUCH LATER ON 01/10/2009. IN FACT, THE TRANSACTION COULD NOT B E CARRIED OUT BECAUSE OF THE ENSUING LITIGATION IN RELATION TO THESE FLATS, THOU GH NO AMOUNT, WHETHER PAID TO THE ASSESSEE OR DIRECTLY TO THE SOCIETY (FOR AND ON BEH ALF OF THE ASSESSEE), BY THE LICENCEE/S, WAS REPAID TO HIM BY THE ASSESSEE. ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 4 4.2 THE AO DID NOT FIND THE SAME AS REPRESENTING A GENUINE TRANSACTION. THE INITIAL PAYMENT WAS MADE ON 29/5/2008 I.E., EVEN AS THE LLA WAS EXECUTED ONLY ON 25.6.2008 , WHICH WAS AN UNREGISTERED AGREEMENT. THEN, AGAIN, THE PARTIES BEING UNRELATED, WHY WOULD ANYONE PAY TO ANOTHER WITHOUT SECURITY AND INTEREST, I.E., WITHOUT CONSIDERATION? FURTHER, WHY DID NOT SM RECA LL HIS MONEY, I.E., ON THE ASSESSEE HAVING NOT, AND INDEED UNABLE TO DELIVER P OSSESSION OF SAID FLAT, MUCH LESS FURNISH THE SAME? THE AMOUNT RECEIVED DURING THE YE AR, I.E., RS.70,88,240/- (RS.60,00,000 + RS.10,88,240/-) WAS BROUGHT OT TAX BY THE AO FOR THE CURRENT YEAR. THE BALANCE TWO PAYMENTS OF RS.5.45 LACS EACH WERE BROUGHT TO TAX BY HIM FOR THE RELEVANT YEARS, I.E., AY 2010-11 AND AY 2011-12. 4.3 IN APPEAL, THE ASSESSEE EXPLAINED SHARAD MADAN, A BRITISH CITIZEN, TO BE A LONDON-BASED BUSINESS-MAN, IN READYMADE GARMENTS BU SINESS. HE FREQUENTED INDIA FOR HIS BUSINESS AND WAS, ACCORDINGLY, INTERESTED F OR A GUEST HOUSE FOR HIS COMPANY XTC CLOTHING CO. LTD. (XTC FOR SHORT). THE SECU RITY DEPOSIT AND ADVANCE FOR FURNISHING WAS JUSTIFIED ON THE BASIS OF THE LOW RE NTAL RESERVED, I.E., RS. 35,000/- P.M. IT WAS FURTHER NOT UNUSUAL TO PAY A TOKEN AMOU NT IN ADVANCE, AND WHICH EXPLAINED THE PAYMENT OF RS.5.38 LACS ON 29.5.2008. THE REGISTRATION OF THE LLA WAS, IN TERMS OF THE AGREEMENT ITSELF, ONLY ON THE HANDING OVER THE POSSESSION, WHICH DID NOT MATERIALIZE AS, SOON AFTER THE ISSUE OF OCCUPATION CERTIFICATE ON 01/10/2009, LITIGATION STARTED AND, RESULTANTLY, WATER AND ELEC TRICITY WAS WITHDRAWN FROM THE SAID PREMISES . ADDITIONAL EVIDENCE TOWARDS THE CREDITWORTHINESS OF THE LICENCEE, SM, BEING THE FINANCIAL STATEMENTS OF XTC FOR THE YEARS ENDING 30/6/2005, 30/6/2006, 31/12/2007 TO 31/12/2010, AS WELL AS AFFIDAVIT-CUM- DECLARATION DATED 25.11.2014, DULY NOTARIZED, CONFI RMING TO HAVE ENTERED INTO A LEAVE AND LICENSE AGREEMENT DATED 25.6.2008 WITH TH E ASSESSEE, PAYING RS.81,78,240 DETAILED THEREIN (INCLUDING THE PURP OSE FOR WHICH THE DIFFERENT ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 5 PAYMENTS WERE MADE), AND WHICH AGREED WITH THAT AS STATED BY THE ASSESSEE, WAS FURNISHED (PB PAGES 15-17, 20-59). IT WAS FURTHER S TATED IN THE AFFIDAVIT THAT IT WAS BEING ISSUED ON THE REQUEST OF MR. RAMESH KUMAR, LE GAL HEIR OF SH. CHUNNI LAL, WHO HAD BEEN INFORMED TO HAVE EXPIRED IN APRIL, 201 4, AND THAT HE (THE DEPONENT, SM) HAS INITIATED PROCEEDINGS FOR RECOVERY OF THE A MOUNT PAID BY HIM TO THE LATTER (ASSESSEE). IN VIEW THEREOF, THE LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE, HOLDING AS UNDER: 6.4 AS REGARDS THE ADDITION MADE BY THE A.O. FOR R S. 70,88,240/-, I AM OF THE VIEW THAT THERE IS A MERIT IN THE CONTENTION OF THE A.R. OF THE APPELLANT. I HAVE CONSIDERED THE AO'S ORDER, THE REMAND REPORT, REJOINDER TO THE REMAND REPORT AND THE CONTENTIONS OF THE APPELLANT ALONGWI TH MATERIALS ON RECORD PLACED BEFORE ME. CONCERNING THE EXPLANATION PLACED ON RECORD FOR THE RECEIPT TOWARDS SECURITY DEPOSITS AND ADVANCE FOR FURNISHING COST AMOUNTING TO RS. 70,88,240/- DURING THE A.Y. 2009-10 AND RS. 5,45,000/- DURING T HE A.Y. 2010-11 AND RS. 5,45,000/- DURING THE A.Y. 2011-12 THE APPELLANT HA S PROVED THE CREDIT WORTHINESS OF THE MR. SHARAD MADAN BY SUBMITTING AD DITIONAL EVIDENCES BY WAY OF ORIGINAL AFFIDAVIT CUM DECLARATION SIGNED BE FORE HIGH COMMISSION OF INDIA-LONDON DATED 25.11.2014 OF MR. SHARAD MADAN A LONG WITH EVIDENCE OF HIS INCOME FOR THE RELEVANT YEARS WHICH HAD BEEN GI VEN TO THE APPELLANT. THE A.O. HAS MADE ADDITION ON THE BASIS OF MERE ASSUMPT ION THAT SUCH A BIG SECURITY DEPOSITS AND OTHER ADVANCE CANNOT BE GIVEN DISREGARDING THE EVIDENCES PLACED ON RECORD BY THE APPELLANT. IN VIEW OF THE ABOVE DISCUSSION AND THE DOCUMENTARY EVIDENCES PLACED ON RECORD, I AM OF THE VIEW THAT THE ADDITION CANNOT B E SUSTAINED. THE AO IS DIRECTED TO DELETE THE ADDITION AMOUNTING TO RS. 70 ,88,240/- MADE AS UNEXPLAINED INVESTMENTS U/S. 69 OF THE INCOME TAX A CT. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL AVAILABLE ON RECORD. AS AFORE-NOTED, THE PRIMARY FACTS OF THE CASE ARE L ARGELY UNDISPUTED. IT IS THE INFERENCES ARISING FROM THESE FACTS, WHICH IS AGAIN A FINDING/S OF FACT, THAT IS THE BONE OF CONTENTION, AND THE REASON FOR THE DIFFEREN CE OF THE OPINION BETWEEN THE AO AND THE LD. CIT(A) IN THE INSTANT CASE. THE ADDI TIONAL EVIDENCES FURNISHED BY THE ASSESSEE BEFORE THE FIRST APPELLANT AUTHORITY, AND SINCE ADMITTED BY HIM, ARE QUA ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 6 THE IDENTITY OF SH. SHARAD MADAN AND HIS CAPACITY I N ADVANCING THE IMPUGNED SUMS TO THE ASSESSEE. IT IS, HOWEVER, NOT THESE TWO, BUT THE GENUINENESS OF THE TRANSACTION, THAT HAS BEEN DOUBTED, AND CONSIDERED AS NOT REPRESENTING A GENUINE TRANSACTION BY THE AO, WHO REGARDED THE LLA A FAKE DOCUMENT. WHAT, THEREFORE, IS TO BE SEEN IS WHETHER THERE IS, IN THE FACTS AND CI RCUMSTANCES OF THE CASE, SUBSTANCE IN DOUBTING THE GENUINENESS OF THE TRANSACTION (AS BY THE AO), OR NO BASIS THERETO, I.E., IN DISREGARDING THE EVIDENCES PLACED ON RECOR D, MERELY BECAUSE A SECURITY DEPOSIT AND ADVANCE AT A HIGH AMOUNT HAD BEEN GIVEN , I.E., AS STATED BY THE LD. CIT(A). WITHOUT DOUBT, MERELY RAISING A DOUBT, UNLESS THER E ARE COGENT REASONS TO DO SO, WOULD NOT OUST THE ASSESSEES CASE OF THE TRANS ACTION BEING A GENUINE TRANSACTION. THIS IS PARTICULARLY SO AS THE BURDEN TO SHOW THAT THE APPARENT IS NOT REAL IS ON THE ONE WHO SO ALLEGES. IN THIS REGARD, THE FIRST THING THAT THE LD. COUNSEL FOR THE ASSESSEE, SH. SINGH, WAS ASKED BY THE BENCH DURING HEARING WAS IF THE ASSESSEE REFUNDED THE SECURITY DEPOSIT OR THE ADVAN CE (FOR FURNISHING), I.E., ON BEING UNABLE TO PERFORM HIS PART OF THE CONTRACT, WHICH I S ADMITTEDLY SO IN-AS-MUCH AS THE TRANSACTION OF ALLOTMENT OF FLATS TO EX-SERVICEMEN, AS PER THE INFORMATION IN THE PUBLIC DOMAIN, BEEN FOUND TO BE MIRED IN A FRAUD AN D A SUBJECT MATTER OF INVESTIGATION BY THE CBI AS WELL AS COURT PROCEEDIN GS. THERE WAS, UNDER THE CIRCUMSTANCES, THUS, NO, AT BEST A REMOTE, POSSIBIL ITY OF THE ASSESSEE BEING ABLE TO FURNISH THE FLAT AND DELIVER ITS LEGAL, PEACEFUL P OSSESSION, I.E., IN AN INHABITABLE STATE, TO THE LICENCEES. SH. SINGH WOULD REPLY IN T HE NEGATIVE, EVEN AS THERE IS NOTHING ON RECORD TO SHOW, NOR EVEN A CONTENTION TO THAT EFFECT, THAT THE SUM/S HAD BEEN REPAID, I.E., EVEN TO DATE. FURTHER, ON BEING ASKED THE REASON FOR THE SAME, HE COULD NOT FURNISH ANY ANSWER, MUCH LESS SATISFACTOR Y. NOW, IT IS POSSIBLE THAT ONE MAY HAVE BEEN ABLE TO OBTAIN A TIDY SUM, COVERING T HE COST OF THE FLAT, TOWARDS ITS FURNISHING AND SECURITY DEPOSIT, BUT WHY, HOWEV ER, WHEN IT BECAME APPARENT ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 7 THAT THE SAME COULD NOT BE SPENT FOR THE STATED PUR POSE, I.E., HIS PART OF THE CONTRACT BECAME NOT POSSIBLE TO BE PERFORMED, RETURNED FORTH WITH, WHICH WOULD FOLLOW IN THE CASE OF A BONA FIDE AND GENUINE TRANSACTION. NO DISHONESTY OF PURPOSE, AFTER ALL, COULD ORDINARILY BE ASCRIBED TO THE ASSESSEE, A RET IRED NAVAL OFFICER . HERE IT MAY BE PERTINENT TO STATE THAT THE SECURITY DEPOSIT IS AT ONE HUNDRED (100) TIMES THE MONTHLY RENT, WHICH MAKES LITTLE BUSINESS SENSE. IT EVEN EXCEEDS THE AGGREGATE RENT OVER THE TERM OF THE AGREEMENT, I.E., 60 MONTHS. AN D WHICH FACT BY ITSELF IS SUFFICIENT TO HAVE AROUSED GENUINE DOUBTS AS REGARD S THE BONA FIDES OF THE TRANSACTION. CONTINUING FURTHER, A READING OF THE L LA MAKES IT CLEAR THAT THE OC HAD NOT BEEN OBTAINED (BY THEN), AND NEITHER DID TH E PARTIES HAD ANY FAIR IDEA AS TO WHEN THE SAME WOULD BE RECEIVED (BY THE SOCIETY), WHICH IS THE STARTING POINT OF THE AGREEMENT . IT IS, AFTER ALL, ONLY THEREAFTER THAT THE FLAT C OULD FURNISH AND, IN ANY CASE, ITS POSSESSION DELIVERED. WHERE, THEN, ONE MA Y ASK, WAS THE HURRY TO ADVANCE THE SUMS? THE AGREEMENT BECAME OPERATIVE, AND THE O BLIGATION ON THE ASSESSEE TO FURNISH THE FLAT CRYSTALLIZED, ONLY THEREAT, I.E., THE RECEIPT OF OC BY THE SOCIETY. WHY, THEN, WAS THE SECURITY DEPOSIT AND FURNISHING ADVANCE GIVEN EVEN BEFORE THE AGREEMENT CAME INTO EFFECT OR BECAME OPERATIVE. THE SAME, THUS, AS ON 27/6/2008, THE DATE OF ADVANCE, IS WITHOUT ANY LEGAL BASIS . THIS IS FURTHER ACCENTUATED BY THE FACT THAT THE PARTIES ARE STRANGERS, INTRODUCED, AD MITTEDLY, FOR THE PURPOSE OF THIS TRANSACTION, BY A COMMON FRIEND, WHO IS THOUGH UNSP ECIFIED. FURTHER, EVEN PRESUMING THAT THE ASSESSEE MAY HAVE (MIS)REPRESENTED TO THE LICENCEES (SM AND HIS WIFE, SIMRIT SINGH MADAN), TH AT THE OC WAS, IN JUNE, 2008, I.E., WHEN THE AGREEMENT WAS ENTERED INTO, IMMINENT , SO THAT THE NON-RESIDENT LICENCEES, IN INDIA (MUMBAI) AT THE RELEVANT TIME, OUGHT NOT TO LOOSE TIME WHICH THOUGH AGAIN PROJECTS THE ASSESSEE IN POOR LIGHT IN -AS-MUCH AS THE OC WAS IN FACT ISSUED MUCH LATER IN OCTOBER, 2009, WHERE, IN ANY C ASE, IS THE QUESTION OF THE LICENCEE/S MAKING PAYMENTS TO THE SOCIETY, WHICH CO MMENCED EVEN PRIOR TO THE ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 8 EXECUTION OF THE AGREEMENT ON 25.6.2008, I.E., 29.5 .2008, CONTINUING UP TO JULY, 2010, I.E., EVEN AFTER OBTAINING THE OC ON 01.10.20 09. WHY? SH. SINGH, THE ASSESSEES COUNSEL, ON BEING ASKED ABOUT THE SAME D URING HEARING, COULD NOT FURNISH ANY ANSWER, AND NEITHER DO WE FIND ANY FROM THE MATERIAL ON RECORD. THERE IS, FUTHER, NO REFERENCE TO THESE PAYMENTS, AGGREGA TING TO RS.21.78 LACS, IN THE SAID AGREEMENT (LLA). WHY, ONE WONDERS, BEING NOT OBLIGED TO, DID, THEN, SM PAY THESE SUMS ? FURTHER, SM PAYING THESE SUMS TO THE SOCIETY IMPL IES THAT HE WAS AWARE OF THE ASSESSEE HAVING YET TO PAY A SUBSTANTIAL SUM TO THE SOCIETY, AND FOR WHICH HE, THE ASSESSEE, ADMITTEDLY EITHER DID NOT HAVE THE NE CESSARY RESOURCES, OR OTHERWISE AN INTENTION TO PAY? AGAIN, WHY, IN ANY CASE, IF HI S RELATIONSHIP WITH THE ASSESSEE, AND IN RESPECT OF THE PREMISES BEING LICENCED THERE BY, GOVERNED BY THE AGREEMENT, SHOULD NOT THESE PAYMENTS FIND REFERENCE THEREIN? THERE ARE NO ANSWERS TO THESE QUESTIONS STARING ONE IN THE FACE AND EMANATING FRO M THE MATERIAL ON RECORD AS WELL AS THE ADMITTED FACTS . THE IDENTITY AND THE CREDITWORTHINESS OF SM IS, AS ALSO AFORE-NOTED, NOT IN OR AN ISSUE, AS SOUGHT TO BE EMPHASIZED BEFORE THE LD. CIT(A), AS ALSO BEFORE US. WE IN FACT OBSERVE OTHER INCONSISTENCIES AS WELL, ALL OF WHICH MAKE IT ABUNDANTLY CLEAR THAT THE LLA, EVEN AS STATED BY THE AO, IS FAKE. IT IS SAID THAT SM, A NRI BUSINESS MAN FREQUENTED INDIA AND, ACCORDINGLY, WAS INTEREST ED TO LICENSE THE SUBJECT PROPERTY AS A GUEST-HOUSE FOR HIS BUSINESS CONCERN. THERE IS NOTHING ON RECORD TO EXHIBIT NOR EVEN A CONTENTION TO THAT EFFECT, OF HI S COMPANY (XTC) BEING ENGAGED IN EXPORT TO OR IMPORT FROM INDIA. AND, IN ANY CASE , OF HE, OR THE COMPANY OFFICIALS, FREQUENTLY VISITING MUMBAI FOR BUSINESS PURPOSES. T HAT IS, INCURRING, ACCORDINGLY, EXPENDITURE ON TRAVEL, AS WELL AS ON THEIR STAY AT MUMBAI, TO SAVE ON WHICH, AS WELL AS, PERHAPS, A HIGHER COMFORT LEVEL, THAT PROMPTED THE LICENCEE ARRANGEMENT. WE HIGHLIGHT THIS ASPECT AS THE SAME IS THE STATED REA SON FOR SM BEING INTERESTED TO ACQUIRE THE ASSESSEES PROPERTY ON LICENSE BASIS. T HAT IS, THE BUSINESS PURPOSE THAT ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 9 SUPPOSEDLY INFORMS THE SAID TRANSACTION, DOES NOT, STRANGELY, FIND REFLECTION IN THE AGREEMENT, AND EVEN IN THE ASSESSEES CASE AS MADE OUT. WHY, IN THAT CASE, THE PAYMENTS TO THE SOCIETY WHICH ARE ITSELF, AS OBSE RVED EARLIER, QUIZZICAL INDEED AND INEXPLICABLE, AS WELL AS TO THE ASSESSEE, WHETHER A S SECURITY DEPOSIT OR TOWARD FURNISHING, WOULD BE BY THE COMPANY UNDER THE AEGIS OF WHICH THE BUSINESS IS CARRIED OUT, I.E., XTC. THERE IS CLEARLY NO REFEREN CE THERETO IN THE ANNUAL ACCOUNTS OF THE SAID COMPANY ON RECORD (PB PGS. 20-59), FOR WHICH WE HAVE PERUSED THE NOTES TO THE ACCOUNTS AS WELL. ALL THE PAYMENTS (I. E., FOR RS. 81.78 LACS) ARE, HOWEVER, BY THE SM, FROM HIS DIFFERENT BANK ACCOUNT S. RATHER, IN SUCH A CASE THE AGREEMENT ITSELF WOULD BE WITH THE COMPANY (XTC), W HICH THOUGH MAY AUTHORIZE SM FOR THE PURPOSE INASMUCH AS A CORPORATE ENTITY C OULD FUNCTION ONLY THROUGH THE AGENCY OF HUMAN BEINGS; SM BEING A DIRECTOR . IN FACT, HIS WIFE IS ALSO A LICENCEE, WHOSE LOCUS STANDI ; SM ACTING FOR AND ON BEHALF OF THE COMPANY - A SE PARATE LEGAL ENTITY, IS, IN THAT CASE, NOT UNDERSTOOD. IN FACT, BOTH THE LICENCEES (I.E., SM AND HIS WIFE, SIMRIT SINGH MADAN) HAVE ENTERED INTO AND EXE CUTED THE AGREEMENT IN THEIR INDIVIDUAL CAPACITIES, PUT PAYING THE ASSESSEES CL AIMS IN THIS RESPECT. NEEDLESS TO ADD, THERE IS NO REFERENCE TO EITHER XTC OR TO ANY BUSINESS PURPOSE/INTEREST, MUCH LESS OF THE SUBJECT PREMISES BEING PROPOSED TO BE U SED AS A GUEST HOUSE, IN THE LLA. WHY? THE STATED REASON FOR LICENSING THE FLAT, I.E., AS A GUEST HOUSE FOR HIS COMPANY BY SM, AND THE FACT OF HE (AND HIS WIFE) BEING THE LINCENCEES IN THEIR INDIVIDUAL CAPACITY, PAYING FROM THEIR PERSONAL SOU RCES, WITH FURTHER NO REFERENCE TO THE BUSINESS PURPOSE OF THE LLA (AND THE CONSEQU ENT NON-MENTION OF THESE PAYMENTS IN THE ACCOUNTS OF XTC), ARE INCONSISTENT AND CONTRADICTORY AND, IN ANY CASE, UNEXPLAINED. NOW, SURE, IT MAY NOT BE NECESSA RY FOR A PARTY TO AN AGREEMENT TO SPELL OUT THE REASON/S FOR ENTERING THE SAME, BU T, EQUALLY, THERE IS NO REASON TO STATE UNTRUTH. THE SUO MOTU STATEMENT OF THE REASON IS NOT WITHOUT BASIS, BUT WITH VIEW TO PROVIDE THE ECONOMIC JUSTIFICATION FOR THE TRANSACTION, WHICH THOUGH IS ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 10 FOUND TO NOT OBTAIN. ABSENCE OF ANY BASIS FOR ENTER ING THE AGREEMENT, OR THE FINDING OF THE STATED PURPOSE AS NON-EXISTENT, DOES THOUGH IMPACT THE GENUINENESS ASPECT OF THE TRANSACTION. FURTHER STILL, THE LICENSE AGREEME NT IS NOT WITNESSED, AGAIN, SERIOUSLY UNDERMINING ITS EVIDENTIARY VALUE. BESID ES, THIS IS ALSO INEXPLICABLE AND QUIZZICAL IN THE NORMAL COURSE OF EVENTS AS THE PAR TIES ARE, AS AFORE-NOTED, RELATIVELY STRANGERS, I.E., UNKNOWN TO EACH OTHER PRIOR TO THI S TRANSACTION, STATED TO BE INTRODUCED BY A COMMON FRIEND, ALBEIT UNSPECIFIED. THIS, COUPLED WITH THE FACT THAT THE AGREEMENT IS NEITHER REGISTERED NOR NOTORIZED, MAKES ITS EVIDENTIARY VALUE HIGHLY SUSPECT. FINALLY, DESPITE THE ASSESSEE APPRO PRIATING THE AMOUNT, GIVEN IN LUMP-SUM, WITHOUT EVEN SPECIFYING THE FURNISHING DE TAILS WHICH IN FACT MAKES IT INOPERABLE, THE LICENCEES DO NOT ACT IN ANY MANNER UPON THE SAID APPROPRIATION. THIS IS MOST SURPRISING AS, AS EXPLAINED, SM, AS A DIRECTOR OF XTC, AND OTHER PERSONNEL THEREOF, VISITING MUMBAI REGULARLY THAT BEING THE PREMISE FOR ACQUIRING AN ACCOMMODATION THEREAT (AS A GUEST-HOUSE), THEY W OULD THEREFORE ONLY BE CURRENT WITH THE DEVELOPMENTS IN-SO-FAR AS THE AFFAIRS OF T HE SOCIETY AND THE PROGRESS OF THE BUILDING IS CONCERNED, BEING EVEN OTHERWISE PRESUMA BLY IN TOUCH WITH THE ASSESSEE. IN FACT, THE CONDUCT OF IMMEDIATE PAYMENT QUIZZIC AL INDEED AND UNEXPLAINED, MAY BE EXPLAINED ON THE BASIS OF BEING GIVEN TO U NDERSTAND OF THE BUILDING BEING IN NEAR COMPLETION STAGE; COMPLETE FAITH IN THE ASS ESSEES CONTENTIONS; AND THE SUBSTANTIAL SAVINGS THAT ARE EXPECTED TO ARISE ON T HE USER OF THE PREMISES AS A GUEST HOUSE, THE COMPLETELY NONCHALANT AND INDIFFERENT AT TITUDE, AS BORNE OUT BY COMPLETE INACTION (ON THE PART OF THE LICENCEES) ON THE ASSE SSEE PROCEEDING TO, WITHOUT EITHER DELIVERING POSSESSION OF THE FLAT, OR UNDERTAKING A NY FURNISHING, APPROPRIATED THE AMOUNT WHICH EXCEEDS THE COST OF THE FLAT ITSELF (R S. 60.39 LACS), IS COMPLETELY INCREDULOUS AND INCOMPREHENSIBLE, PARTICULARLY CONS IDERING THAT SM SEEMED TO BE A MAN IN A HURRY, PRACTICAL AND DECISIVE, AS INDEED A NY SUCCESSFUL MAN OF BUSINESS, WOULD BE. WHY, THE AGREEMENT ITSELF PROVIDES FOR TH E REFUND OF SECURITY DEPOSIT ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 11 WHERE THE POSSESSION OF THE FLAT IS NOT PROVIDED WI THIN NINE MONTHS OF THE RECEIPT OF OC (CL. 4(B) OF THE LLA). FURTHER, THE AGREEMENT IT SELF PROVIDES FOR INTEREST AT THE RATE OF 18% PER ANNUM FROM THE DATE IT BECOMES PAYA BLE, TO THE DATE OF ACTUAL PAYMENT. JUXTAPOSE THIS WITH THE LACKADAISICAL ATTI TUDE WITH THE UNDUE HASTE IN ADVANCING THE SECURITY DEPOSIT AND FURNISHING ADVAN CE IN MAY, 2008 ITSELF. THE SAME INDICATE THAT TWO DIFFERENT CONSIDERATIONS WER E AT WORK AT THESE TWO POINTS OF TIME, I.E., WHILE ENTERING THE CONTRACT AND EXECUTI NG IT, AND SUBSEQUENTLY. IN FACT, A MAN IN HURRY WOULD RETRACT THE MOMENT HE DISCOVERS THAT SUBSTANTIVE PAYMENT TOWARD THE COST OF THE BUILDING IS YET TO BE MADE B Y THE OWNER, WHILE HERE WE FIND THE FIRST PAYMENT ITSELF IS TO THE HOUSING SOCIETY! WHY SHOULD A LICENCEE, ONE MAY ASK, BEAR THE COST OF THE PREMISES BEING LICENCED? CLEARLY, THE COST AND THE RISK BORNE BY SM WHO WAS PAID THE ENTIRE AMOUNT, IS CO MPLETELY OUT OF PROPORTION, I.E., STATED CAPACITY AS A LICENCEE. RATHER, AS OB SERVED HEREINBEFORE, THE PAYMENT OF THE SECURITY DEPOSIT IN MAY, 2008 ITSELF IS WITHOUT BASIS AS THE AGREEMENT COMES INTO EFFECT ONLY ON THE RECEIPT OF THE OC BY THE SO CIETY, I.E., ON 01.10.2009. LIKEWISE, FOR THE FURNISHING ADVANCE, AS THERE IS N O QUESTION OF FURNISHING UNLESS OC IS RECEIVED. THE ENTIRE PAYMENT, I.E., RS. 21.7 8 LACS, AS WELL AS RS.60 LACS, IS THUS WITHOUT A LEGAL BASIS. THE FACTUM OF THE HUGE PAYMENT, EVEN IF UNDER A LEGAL ARRANGEMENT, WOULD IMPLY A FORMIDABLE RELATIONSHIP, BASED ON TRUST OR CONFIDENCE, BETWEEN THE PARTIES, WHICH NORMALLY TAKES YEARS TO BUILD, WHILE IN FACT THEY ARE RELATIVELY STRANGERS AND, FURTHER, THE PAYMENT, WIT HOUT A LEGAL BASIS. ANY NORMAL PERSON WOULD, RATHER, ON THE OC NOT FORT HCOMING, PURSUE THE MATTER FOR IMMEDIATE REFUND, I.E., ACT WITH THE SAM E ALACRITY AS HE DID WHILE ENTERING THE AGREEMENT, INDEED RUING THE FACT THAT HE DID SO, EVEN ASSUMING THAT HE DID IT BONA FIDE , HAVING BEEN ASSURED OF THE ASSESSEES CREDENTIALS AS WELL AS THE PROGRESS OF THE BUILDING BY THE UNSPECIFIED FRIEND. HOWEVER, IN THE INSTANT CASE, NO LEGAL NOTICES HAVE ADMITTEDLY BEEN SENT EVEN UP TO 25.11.2014, THE DATE OF THE ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 12 AFFIDAVIT, I.E., EVEN OVER FIVE YEARS AFTER THE REC EIPT OF OC. READING THEREOF (AFFIDAVIT) MAKES IT CLEAR THAT SM WAS NOT EVEN AWA RE OF THE ASSESSEES DEATH IN APRIL, 2014, AND CAME TO KNOW ABOUT IT ONLY UPON BE ING REQUESTED FOR AN AFFIDAVIT BY THE ASSESSEES LEGAL HEIR (I.E., FOR BEING FURNI SHED IN THE FIRST APPELLATE PROCEEDINGS). THAT IS, HE WAS NOT IN TOUCH WITH THE ASSESSEE, OR PURSUING THE MATTER WITH HIM, A FACT, EVEN OTHERWISE APPARENT FROM THE CONDUCT AS BORNE OUT OF THE MATERIAL ON RECORD. THAT THE PARTIES, HOWEVER, CONT INUED TO SHARE GOOD RELATIONS, IS APPARENT FROM THE FACT OF SM, UPON BEING ASKED TO F URNISH AN AFFIDAVIT FOR BEING SUBMITTED IN THE APPELLATE PROCEEDINGS IN INDIA, OB LIGED. SO MUCH FOR HIS INTEREST IN HAVING OWN ACCOMMODATION FOR BOARDING AND LODGING A T MUMBAI, AS WELL AS, SUBSEQUENTLY; ON THE SAME BECOMING NOT FEASIBLE, IN RECEIVING BACK HIS MONEY ! IN FACT, SH SINGH COULD NOT DURING HEARING ANSWER IF A NY LEGAL PROCEEDINGS FOR RECOVERY, EVEN AS STATED IN THE AFFIDAVIT DATED 25. 11.2014 ITSELF, HAD BEEN INITIATED; THERE BEING IN ANY CASE NO MATERIAL ON RECORD TOWAR D THE SAME. IT IS ABUNDANTLY CLEAR THAT THE LEGAL PROCEEDINGS, IF INITIATED, WOU LD, BESIDES LEGAL EXPENSES, INFLICT HEAVY COST ON THE ASSESSEE WHO HAS NO CASE; THE A GREEMENT ITSELF PROVIDING FOR A INTEREST OF 18% P.A., WHICH, BY ITSELF, WOULD BE GR EAT DETERRENT TO THE INDIFFERENT AND NONCHALANT ATTITUDE BY THE ASSESSEE TOWARD HIS CONT RACTUAL OBLIGATIONS, INDICATING, AGAIN, TO A COMPLICITY BETWEEN THE PARTIES. WHY, HE COULD, FOR REASONS MORE THAN ONE, CHARGED WITH MISREPRESENTATION AND FRAUD, I.E. , FOR CRIMINAL LIABILITY AS WELL. THE AGREEMENT, AS MADE, WE CONCUR WITH THE AO, IS F AKE, A MAKE BELIEVE. THOUGH NO INVESTIGATION IN THIS RESPECT HAS BEEN MADE, AS IT APPEARS, THE ASSESSEE, RATHER THAN MAKING PROVISION FOR REPAYMENT, IF NOT ACTUALL Y DOING SO, THE COST OF THE FLAT BORNE BY SM (RS.21.78 LACS), BEING ONLY IN THE NATU RE OF, AS WE PRESUME, A TEMPORARY ACCOMMODATION, HAS NOT SET ASIDE THE AMOU NT RECEIVED BY HIM UNDER TRUST (RS.60 LACS), AS (SAY) IN A BANK DEPOSIT, AS ANY NORMAL PERSON WOULD, BEING RECEIVED FOR BEING SPENT UNDER THE CONTRACT OR, AS THE CASE MAY BE, REFUNDED UNDER ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 13 THE CONTRACT, I.E., THE ASSESSEES CONDUCT DOES NOT AGREE WITH HIS STATED POSITION AS A LICENSOR. AS EXPLAINED PER ITS SEVERAL DECISIONS BY THE APEX COURT, VIZ. CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC), THAT IN A CASE OF SELF SER VING RECITALS IN DOCUMENTS, IT WAS FOR THE PARTY TO ESTABLISH THE TRUTH OF THOSE RECITALS, AND THAT IT WAS THE TAXING AUTHORITIES, AS INDEED THE TRIBUNAL, WAS ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND THE REALITY OF SU CH RECITALS. THE IMPUGNED PAYMENTS, HOWEVER, HAVE BEEN MADE, I.E ., BY SM TO THE ASSESSEE. THE PURPORT OF THE FOREGOING IS TO UNDERS CORE THE NON-GENUINENESS OF THE LEAVE AND LICENSE AGREEMENT. IT DOES NOT QUESTION T HE FACTUM OF THE PAYMENT OR THE FINANCIAL CAPACITY OF THE PAYER, BUT HIS CAPACITY A S A LICENCEE. THE IRRESISTIBLE INFERENCE THAT ARISES IN THE GIVEN FACTS AND CIRCUM STANCES, ALL OF WHICH ARE LARGELY ADMITTED AND UNDISPUTED, INCLUDING THE FACT OF THE PAYMENTS, BESIDES THE ASSESSEE, TO THE SOCIETY AS WELL, IS THAT SM (AND HIS WIFE), HAD IN EFFECT ACQUIRED THE ASSESSEES RIGHTS IN THE SUBJECT PROPERTY FOR A CON SIDERATION. THE TRANSFER BEING NOT PERMISSIBLE UNDER THE RULES IN-AS-MUCH AS THE BENEF ICIARY OF THE SOCIETY COULD ONLY BE AN EX-SERVICEMAN, AN AGREEMENT WAS ENTERED INT O TO PROVIDE A LEGAL COVER TO THE TRANSACTION. THE ASSESSEE HAD, THUS, IN EFFECT, TRANSFERRED HIS SUBSTANTIVE RIGHTS IN THE SUBJECT PROPERTY, A CAPITAL ASSET, FOR A CON SIDERATION, I.E., RS.81,78,240, AS AGAINST A COST OF RS.60,39,240, I.E., AT A NEAT PRO FIT OF RS.21.39 LACS. TRUE, SOME OF THE PAYMENTS INCLUDED IN RS.81.78 LACS ARE DIRECTL Y TO THE SOCIETY, BUT THEN THE SAID SUMS ARE ALSO INCLUDED IN THE COST PRICE (RS.60.39 LACS), SO THAT THE DIFFERENCE, I.E., EVEN UPON EXCLUDING SUCH PAYMENTS (BEING AT RS.21,7 8,240), WOULD REMAIN THE SAME. IT IS THIS EXCESS AMOUNT WHICH IS LIABLE TO B E ASSESSED AS CAPITAL GAIN IN THE HANDS OF THE ASSESSEE FOR THE CURRENT YEAR, I.E., O N THE RECEIPT OF THE FIRST PAYMENT ON 29.5.2008, WHICH COULD ONLY BE REGARDED AS IN PU RSUANCE OF A TACIT AGREEMENT BETWEEN THE PARTIES, FOR WHICH THEY CONJURED A LEAV E AND LICENCE AGREEMENT, EXECUTING IT ON 25.6.2008. THE FIRST PAYMENT TO THE SOCIETY BY THE ASSESSEE BEING ON ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 14 08.9.2004, THE INCOME WOULD BE A LONG-TERM CAPITAL GAIN, SO THAT THE INDEXATION BENEFIT U/S. 48 WOULD ENSUE, WHICH WOULD BE UP TO 2 9.5.2008, THE DATE OF PAYMENT. THE COST AND THE RECEIPT AFTER THAT DATE SHALL GET NETTED. NEEDLESS TO ADD, THE SUMS RECEIVED IN THE FOLLOWING TWO YEARS, I.E., AT RS.10 .90 LACS, FORMING PART OF THE SALE CONSIDERATION (RS.81.78 LACS), SHALL NOT BE SUBJECT TO TAX SEPARATELY FOR THE YEARS OF THEIR RECEIPT BY THE ASSESSEE, AS THE MEMBER OF THE HOUSING SOCIETY. THIS MAY ACCORDINGLY BE REGARDED AS A DIRECTION U/S. 150 R/W S. 153 (INCLUDING EXPLANATIONS THERETO). 6. WE, ACCORDINGLY, IN VIEW OF THE FORE-GOING, FIND NO MERIT IN THE ASSESSEES CASE, I.E., OF THE IMPUGNED TRANSACTION BEING A GEN UINE TRANSACTION. AS WOULD BE APPARENT THEREFROM, THERE ARE COGENT REASONS TO DOU BT THE VERACITY OF THE ASSESSEES VARIOUS CONTENTIONS, FOUND CONTRARY TO HIS CONDUCT, NAY, OF THE PARTIES, BESIDES BEING INEXPLICABLE AND INDEED OPPOSED TO THE NORMAL COURSE OF HUMAN BEHAVIOR. NONE OF THE SEVERAL CONTENTIONS, WHICH ARE APLENTY, FOR WHICH REFERENCE MAY BE MADE TO THE DIFFERENT SUB-PARAS OF PARA 5 OF THIS O RDER, ARE PROVED; RATHER, ARE UNPROVED, IF NOT DISPROVED. THE LD. CIT(A) HAS, IN DECIDING THE ASSESSEES APPEAL, NOT APPLIED HIMSELF TO THE FACTS OF THE CASE, NOR I NDEED THE MATERIAL ON RECORD. HE HAS TAKEN, WE ARE AFRAID TO SAY, A VERY SUPERFICIAL VIEW OF THE WHOLE MATTER, NOT ISSUING ANY FINDING QUA THE GENUINENESS OF THE TRANSACTION, WHICH IS THE F ACT-IN- ISSUE, AND NOT THE CREDITWORTHINESS OF SM, ON WHICH NO QUESTIONS HAVE BEEN RAISED BY THE AO AND, IN FACT, NOT IN ISSUE. HE, IN FACT, QUESTIONS THE AOS FINDING, ON THE STRENGTH OF THE FACTUM OF PAYMENTS (BY SM), ONLY ON THE NON-SATISFACTORY EXPLANATION AS TO NATURE THEREOF, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS THE BASIS OF HIS REGARDING THE TRANSACTION AS NOT GENUI NE. THE ADDITION MADE BY THE AO, DELETED BY HIM, IS NOT TOWARD UNEXPLAINED INVESTMEN T U/S. 69, AS STATED BY HIM, BUT QUA UNEXPLAINED RECEIPT AND, FURTHER, NOT AS TO ITS SOURCE , BUT NATURE , U/S. 68. ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 15 MOST, NAY, ALL, THE QUESTIONS RAISED HEREINBEFORE, RAISING SERIOUS CONCERN REGARDING THE GENUINENESS OF THE LICENSE ARRANGEMENT, DOUBTED BY THE AO, CALLING IT FAKE, ARISE DIRECTLY FROM THE MATERIAL ON RECORD, LOOKING AT THE MATTER, INCLUDING THE ASSESSEES EXPLANATION FOR THE VARIOUS RECEIPTS, TA XABILITY OF WHICH UNDER THE ACT IS IN ISSUE, FROM THE STAND POINT OF THE NORMAL COURSE OF EVENTS, IN A HOLISTIC AND PLAUSIBLE MANNER, TO FIND SEVERAL INTERNAL INCONSIS TENCIES, CONTRADICTIONS, BORDERING ON THE LUDICROUS. THE TRANSACTION, HOWEVER, HAVING BEEN UNDERTAKEN, S O THAT, TO THAT EXTENT, IT IS AN UNDENIABLE FACT, THE LEGAL IMPORT OF WHICH, C ONSISTENT WITH THE FACTS AS BORNE OUT, AND THE PREPONDERANCE OF PROBABILITIES, HAS BE EN ARRIVED AT, HOLDING THE IMPUGNED SUMS TO BE THE CONSIDERATION FOR TRANSFER OF THE ASSESSEES CAPITAL ASSET IN THE FORM OF MEMBERSHIP RIGHTS IN THE SOCIETY, REPRE SENTED BY THE VALUE OF THE UNDERLYING ASSET, THE RESIDENTIAL FLAT ALLOTTED TO HIM. THE UNMISTAKABLE INFERENCE ARISING IS OF THE SAID AMOUNTS HAVING BEEN RECEIVED BY THE ASSESSEEE IN HIS OWN RIGHT, AND NOT BY WAY OF ASSUMING LIABILITY, AS PRO JECTED, OR TOWARD OBLIGATIONS UNDER THE CONTRACT, NO PART OF WHICH HAS BEEN IN FA CT SPENT BY HIM ON OR TOWARD THE SAID FLAT, WITH THE PAYMENTS FALLING DUE TO THE SOC IETY HAVING BEEN ALSO MADE BY THE SO-CALLED LICENCEES, FOR WHICH THEY WERE IN FACT NO T EVEN CONTRACTUALLY OBLIGED TO. THAT IS, AS A CONSIDERATION FOR HIS FLAT. THE AMOUN T BEING RECEIVED IN LIEU OF A CAPITAL ASSET, WOULD WARRANT BEING ASSESSED AS CAPI TAL GAINS. WE DECIDE ACCORDINGLY. 7. IN THE RESULT, THE REVENUESS APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 02, 2019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 02.07.2019 /GP/SR/ PS. ITA NO. 297/ASR/2015 (AY 2009-10) I TO V. LT. CDR. CHUNNI LAL 16 COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INCOME TAX OFFICER, WARD-1(1 ), JAMMU (2) THE RESPONDENT: LT. CDR. CHUNNI LAL, R/O VI LLAGE MAMKA, P.O. KHOUR DEONIAN, MIRAN SAHIB, THE R.S. PURA, JAMM U 181 114. (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER