Bhola Nath, Khanna V. ITO, Khanna

ITA 362/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9088 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 12-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: PRIKSHIT AGGAWAL
• Keywords: Unexplained investment; Document seized; Documents seized
• Section: 143(3); 153A; 148; 263; 63; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 362/CHD/2016 ASSESSMENT YEAR: 2006-07 SH. BHOLA NATH, VS. THE ITO, WARD-1, KHANNA KHANNA PAN NO. AADFJ6803B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PRIKSHIT AGGAWAL RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 30.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-2, LUDHIANA DATED 22.03.2016 FOR ASSESSMENT YEAR 2006-07. 2. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS F OR GROUND NOS. 1, 2 AND 3 OF THE APPEAL, THE SAME ARE, THEREFORE, DISMI SSED AS NOT PRESSED. 3. BRIEFLY THE FACTS ARE THAT AS PER INFORMATION PA SSED FROM DCIT, CENTRAL CENTRAL-III, LUDHIANA THE ASSESSING OFFICER OBSERVED THAT IN THE COURSE OF SEARCH U/S 132 OF THE INCOME-TAX ACT, 19 61 (IN SHORT 'THE ACT') AT THE OFFICE PREMISES OF M/S NARAIN & CO., MANDI GOBI NDGARH, WAS CONDUCTED ON 30.6.2010 AND CERTAIN DOCUMENTS WERE I MPOUNDED AND IT WAS REVEALED THAT AN AGREEMENT TO SELL LAND HAD BEEN EX ECUTED BETWEEN SHRI 2 PAWAN KUMAR, SHRI RAJINDER PURI AND SH. RAM MURTI ( PARTY NO.1) AND SHRI BHOLA NATH, THE ASSESSEE (PARTY NO. 2). AS PER AGRE EMENT PARTY NO.1 HAD AGREED TO SELL 49 BIGHAS OF LAND IN VILLAGE SALANI, TEHSIL AMLOH, MANDI GOBINDGARH @ RS. 6,50,000/- PER ACRE. THE ASSESSEE (PARTY NO.2) HAD GIVEN ADVANCE OF RS. 40 LAKHS ON 14.12.2005. DURING ASSES SMENT PROCEEDINGS OF M/S NARAIN & CO., MANDI GOBINDGARH, STATEMENT OF TH E ASSESSEE WAS RECORDED ON 24.1.2013 IN WHICH THE ASSESSEE DENIED HAVING EXECUTED SUCH AGREEMENT. SUBSEQUENTLY, THE DCIT, CENTRAL CIRCLE-I II, LUDHIANA PASSED THIS INFORMATION TO VERIFY THE PAYMENT OF RS. 40 LA KHS MADE BY THE ASSESSEE. THE ASSESSING OFFICER ISSUED NOTICE U/S 1 48 AFTER RECORDING THE REASONS AND ASKED THE ASSESSEE TO PRODUCE THE SELLE R OF THE LAND AND WHITENESS TO THE AGREEMENT. THE ASSESSING OFFICER O N GOING THROUGH THE RECORDS CONSIDERED THAT THE SIGNATURE OF THE ASSESS EE MATCHED WITH THE SIGNATURE PUT ON THE AGREEMENT AND ASKED TO ASSESSE E TO EXPLAIN THE SAME. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE FAILED TO FURNISH THE EXPLANATION THEREFORE, ADDITION OF RS. 40 LAKHS WAS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND DETAILED SUBMISSIONS WERE MADE WHICH ARE INCORPORAT ED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE PRECISELY EXPLAINED THA T DOCUMENTS WHICH WERE SEIZED FROM M/S NARAIN & CO. IS A JUST PHOTOCOPY O F THE AGREEMENT TO SELL. THE ASSESSING OFFICER HAS FAILED TO DISCHARGE HIS O NUS TO PROVE THAT ASSESSEE HAD MADE INVESTMENT IN PROPERTY. THE DCIT, CENTRAL CIRCLE, LUDHIANA ADMITTED THAT THE LAND IN QUESTION WAS PUR CHASED BY M/S R.P. IMPORT AND EXPORT PVT LTD, MANDI GOBINDGARH DIRECTL Y FROM ACTUAL OWNERS 3 AND THAT IT WAS NOT PURCHASED BY THE ASSESSEE OR HI S AGENT OR FROM ALLEGED SELLER I.E. RAJINDER PURI AND OTHERS, THEREFORE, AD DITION IS UNJUSTIFIED. NO OTHER INCRIMINATING DOCUMENTS WERE FOUND AND NO PRO PER INQUIRY HAD BEEN DONE IN THIS CASE, THEREFORE, THE ADDITION IN UNJUS TIFIED. THE LD. CIT(A) NOTED THAT THE MAIN ISSUE IN APPEAL IS PAYMENT OF RS. 40 LAKHS AS PER AGREEMENT BY THE ASSESSEE WITH SH. RAJINDER PURI AN D OTHERS. THE LD. CIT(A) NOTED THAT ASSESSEE COULD HAVE PRODUCED THE NOTARY FROM WHERE STAMP PAPER WERE PURCHASED. SINCE ASSESSEE FAILED T O EXPLAIN THE TRANSACTIONS IN THE MATTER, THEREFORE, THE ADDITION WAS CONFIRMED AND THIS GROUND OF ASSESSEE WAS DISMISSED. 5. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO AGR EEMENT TO SELL IN QUESTION, COPY OF WHICH IS FILED AT PAGE 44 OF THE PAPER BOOK, WHICH IS A CANCELLED DOCUMENT AND ANOTHER COPY OF THE AGREEMEN T TO SELL IS AT PAGE 46 WHICH IS ATTESTED BY NOTARY AND THE TRANSLATION IS FILED AT PAGE 48. THE LD. COUNSEL HAS SUBMITTED THAT IN THE CASE OF SHRI RAJINDER PURI, ONE OF THE SELLER, THE LD. CIT(A) DELETED THE SIMILAR ADDITION OF RS. 40 LAKHS AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED BY THE TRIBU NAL IN ITA NO. 403/CHD/2015 FOR ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 19.4.2016, COPY OF THE ORDER IS PLACED ON RECORD. HE HAS ALSO FILED COPY OF THE ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF SH. RAJINDER P URI VS. THE PRINCIPAL CIT (CENTRAL) IN ITA NO. 292/CHD/2015 FOR ASSESSMEN T YEAR 2007-08 IN WHICH THE LD. PRINCIPAL CIT (CENTRAL) LUDHIANA INIT IATED PROCEEDING U/S 263 OF THE I.T. ACT AGAINST SHRI RAJIDNER PURI ON T HE BASIS OF SAME AGREEMENT TO SELL AND ATTESTED COPY OF THE AGREEMEN T TO SELL BY NOTARY WHICH WAS RECEIVED FROM THE INDEPENDENT SOURCE. THE TRIBUNAL HOWEVER, 4 SET ASIDE THE ORDER U/S 263 OF THE I.T. ACT IN THE CASE OF SHRI RAJINDER PURI VIDE ORDER DATED 22.3.2016. FINDINGS IN THIS ORDER FROM PARAS 10 TO 14 ARE REPRODUCED AS UNDER:- 10. ON CONSIDERATION OF THE FACTS OF THE CASE IN T HE LIGHT OF THE SUBMISSIONS OF PARTIES AND DECISION IN THE CASE OF M/S R.P. IMPORT & EXPORT (P) LTD. (SUPRA), WE ARE OF THE VIEW LD. PRINCIPAL CIT WAS NOT JUSTIFIED IN INITIATING THE PROCEEDING UNDER SECTION 263 OF THE ACT AGAINST THE ASSESEE. THE ENTIRE CASE IS SET UP ON T HE BASE OF AGREEMENT TO SELL DT. 14/12/2005, WHICH WAS RECO VERED DURING SEARCH FROM THE PREMISES OF M/S NARAIN & COMPANY. IT IS ADMITTED FACT THAT THIS DOCUMENT IS CANCELLED PAPER AND THE ORIGINAL OF THE SAME WAS NE VER PRODUCE FOR INSPECTION OF THE PARTIES. THE AO EXAMI NED THE IDENTICAL ISSUE AT ASSESSMENT STAGE ON THE BASI S OF THE AGREEMENT TO SELL DT. 14/12/2005. 11. THE AO RAISED SPECIFIC QUERY FROM THE ASSESSEE ON THE BASIS OF HIGHER CONSIDERATION AS NOTED IN THE AGREEMENT TO SELL DT. 14/12/2005. THE ASSESSEE FILE D SPECIFIC REPLY BEFORE THE AO SUBMITTING THEREIN THA T IT IS A FORGED DOCUMENT AND ASSESSEE NEVER SIGNED THIS AGREEMENT TO SELL. THE ASSESSEE DENIED TO HAVE PURC HASED OR SOLD ANY PROPERTY THROUGH THIS AGREEMENT TO SELL . THE STATEMENT OF SH. SUMIT GUPTA, SH. BHOLA NATH AND SH RI GURDEEP SINGH WERE RECORDED BY THE AO AT ASSESSMENT STAGE IN WHICH ALL THESE PERSONS HAVE DENIED TO HAV E ENTERED INTO ANY TRANSACTIONS OF SALE OR PURCHASE O F PROPERTY. IT MAY BE STATED THAT IN THIS AGREEMENT T O SELL SH. BHOLA NATH IS STATED TO BE A PURCHASER. HOWEVER IN STATEMENT HE HAS DENIED TO HAVE ENTERED INTO ANY AGREEMENT TO SELL PURCHASE ANY PROPERTY AT VILLAGE SALANI FOR RS. 6,50,000/- PER BIGHA. HE HAS DENIED TO HAVE PAID ANY EARNEST MONEY. HE HAS ALSO DENIED TO HAVE 5 SIGNED ANY SUCH AGREEMENT DT. 14/12/2005. THESE FAC TS AND MATERIAL ON RECORD CLEARLY PROVED THAT AO HAS R AISED SPECIFIC QUERY ON THIS MATTER IN ISSUE AT ASSESSMEN T STAGE AND CALLED FOR THE EXPLANATION OF ASSESSEE AND RECO RDED STATEMENT OF VARIOUS PERSONS INCLUDING THE STATEMEN T OF THE ALLEGED PURCHASER SH. BHOLA NATH. THEREFORE AO HAS EXAMINED THIS ISSUE AND VERIFY THE ENTIRE TRANSACTI ON IN ACCORDANCE WITH LAW AT THE ASSESSMENT STAGE. THEREF ORE LD. CIT WAS NOT JUSTIFIED IN HOLDING THAT AO HAS NO T VERIFIED THE TRANSACTIONS ON THE ALLEGED AGREEMENT TO SELL DT. 14/12/2005. 11.1 WE MAY ALSO NOTE HERE THAT LD. CIT INITIATED T HE PROCEEDING UNDER SECTION 263 OF THE ACT ON THE BASI S OF THE COPY OF THE AGREEMENT TO SELL RECEIVED FROM INDEPENDENT SOURCE IT WOULD THEREFORE SHOWS THAT CO PY OF THE SAID AGREEMENT AS IS REFERRED TO IN THE IMPUGNE D ORDER WAS NOT SEIZED DURING THE COURSE OF SEARCH. THEREFORE HOW THIS COULD BE RELEVANT IN PROCEEDING UNDER SECTION 153A OF THE ACT WAS NOT AT ALL EXPLAINED. T HIS ISSUE WAS ALSO EXAMINED IN DETAIL IN THE CASE OF M/ S R. P. IMPORT & EXPORT (P) LTD. AND NO ADVERSE VIEW HAVE B EEN TAKEN AGAINST ASSESSEE. 11.2 THE ISSUE IS THEREFORE COVERED IN FAVOUR OF TH E ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE C ASE OF M/S. R. P. IMPORT & EXPORT (P) LTD. (SUPRA) EXCE PT THE ISSUE OF MERGER OF THE ASSESSMENT ORDER WITH TH E APPELLATE ORDER OF THE LD. CIT(A). IT APPEARS FROM THE FACTS AND CIRCUMSTANCES ABOVE THAT AO AFTER MAKING DETAILED ENQUIRY ON THE MATTER IN ISSUE HAS ADOPTED ONE OF THE VIEW PERMISSIBLE IN LAW TO WHICH THE LD. PR INCIPAL CIT DOES NOT AGREE THEREFORE THE SAME WOULD NOT GI VE RISE TO OCCASION TO CONSIDER THE ASSESSMENT ORDER TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 6 12. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE ABOVE WE FIND THAT AO EXAMINED THE SEIZED DOCUMENTS AT ASSESSMENT STAGE AFTER MAKING DETAILED ENQUIRY AND RIGHTLY DID NOT TAKE ANY ADVERSE VIEW A GAINST THE ASSESSEE. IN THIS CASE WHEN SEIZED DOCUMENT ITS ELF CANNOT BE RELIED UPON WHICH IS A CANCELLED DOCUMENT , HOW, THE COPY OF THE SAME AGREEMENT AS RECEIVED THROUGH INDEPENDENT SOURCE WOULD BE ADMISSIBLE AGAI NST THE ASSESSEE. THE SAME WOULD NOT MAKE ANY DIFFERENT IN FAVOUR OF THE REVENUE. THE DECISION RELIED UPON BY THE LD. DR ARE THEREFORE CLEARLY DISTINGUISHED ON FACTS OF THIS CASE AND WOULD NOT SUPPORT THE CASE OF THE REV ENUE. 13. CONSIDERING THE ABOVE FACTS, WE ARE OF THE VIEW THAT PROCEEDING UNDER SECTION 263 OF THE ACT ARE CL EARLY BEYOND THE COMPETENCE OF THE LD. PRINCIPAL CIT AND WHOLE PROCEEDING ARE UNJUSTIFIED AND UN REASONABLE. THEREFORE THE IMPUGNED ORDER CANNOT BE SUSTAINED IN LAW. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER UN DER SECTION 263 OF THE ACT AND QUASHED THE SAME. RESULT ANTLY ASSESSMENT ORDER DATED 25/03/2013 UNDER SECTION 153 A / 143(3) IS RESTORED. 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . 6. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED T O ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF DCIT VS. M/S R.P. IMPORT & EXPORT (P) LTD., MANDI GOBINDGARH IN ITA NO.1135/CHD /2013 IN WHICH ON THE BASIS OF SIMILAR AGREEMENT, THE LD. CIT(A) DELETED THE AD DITION ON ACCOUNT OF UNEXPLAINED INVESTMENT AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 12.12.2014, COPY OF THE ORDER IS PLACED ON RECORD. HE, THEREFORE, SUBMITTED THAT ONCE AGREEMEN T TO SELL IN QUESTION 7 WAS NOT CONSIDERED FAVORABLY IN THE CASE OF ALLEGED ONE OF THE SELLER SHRI RAJINDER PURI, NO SIMILAR ADDITION SHOULD BE MADE I N THE HANDS OF THE ASSESSEE. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT COPY OF THE AGREEMENT WAS SIGNED BY THE ASSESSEE SHRI BHOLA NATH, PHOTOCOPY OF THE SAME IS ADMISSIBL E AS SECONDARY EVIDENCE UNDER SECTION 63 TO 65 OF THE EVIDENCE ACT . THE LD. DR SUBMITTED THAT ORDER DATED 19.4.2016 IN THE CASE OF SHRI RAJINDER PURI IN ITA NO. 403/CHD/2015, IS NOT RELEVANT BECAUSE THE A GREEMENT IS ATTESTED BY THE NOTARY PUBLIC. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ENT IRE CASE IS SET ON THE BASIS OF AGREEMENT TO SELL DATED 14.12.2005 WHICH W AS RECOVERED DURING THE SEARCH FROM THE PREMISES OF M/S NARAIN & CO. IT IS ADMITTED FACT THAT THOSE DOCUMENTS ARE CANCELLED PAPERS AND THE ORIGIN AL OF THE SAME WAS NEVER PRODUCED FOR INSPECTION OF THE PARTIES. ACCOR DING TO REVENUE DEPARTMENT, ONE MORE PHOTOCOPY OF THE AGREEMENT TO SELL WHICH IS ATTESTED BY THE NOTARY WAS RECEIVED FROM INDEPENDENT SOURCES . IT WOULD, THEREFORE, SHOW THAT THE SAME WAS NOT SEIZED DURING THE COURSE OF SEARCH. THE SIMILAR ISSUE OF ADDITION OF RS. 40 LAKHS, AMOUNT RECEIVED BY SHRI RAJINDER PURI (SELLER) WAS CONSIDERED BY THE ITAT, CHANDIGARH BEN CH IN THE CASE OF DCIT VS. RAJINDER PURI IN ITA NO. 403/CHD/2015 FOR ASSESSMENT YEAR 2006-07 AND THE DEPARTMENTAL APPEAL HAS BEEN DISMI SSED VIDE ORDER DATED 19.4.2016. THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) IN DELETING THE ENTIRE ADDITION. THE SIMILAR MATTER CAME UP FOR CON SIDERATION BEFORE ITAT CHANDIGARH IN THE CASE OF RAJINDER PURI U/S 263 OF THE I.T. ACT FOR 8 ASSESSMENT YEAR 2007-08 (SUPRA), THE TRIBUNAL SET ASIDE AND QUASHED THE ORDER U/S 263 OF THE I.T. ACT. THE FINDINGS ARE ALR EADY REPRODUCED ABOVE. THE ISSUE OF RECEIPT OF COPY OF THE AGREEMENT TO SE LL ATTESTED BY NOTARY PUBLIC WAS ALSO CONSIDERED AS ALLEGED TO HAVE RECEI VED FROM INDEPENDENT SOURCE, WAS NOT CONSIDERED IN FAVOUR OF THE REVENUE . SIMILAR ISSUE CAME UP BEFORE ITAT CHANDIGARH BENCH IN THE CASE OF M/S R. P IMPORT & EXPORT PVT LTD AND VIDE ORDER DATED 12.12.2014, WHEREIN TH E DEPARTMENTAL APPEAL WAS DISMISSED IN WHICH LD. CIT(A) DELETED THE SIMIL AR ADDITION. THE IDENTICAL ISSUE IS DECIDED IN THE ABOVE CASES REFER RED, INCLUDING THE ALLEGED SELLER SHRI RAJINDER PURI AND NO ADDITION HAVE BEEN MADE IN THEIR CASE. THEREFORE, THERE IS NO QUESTION OF ASSESSEE GIVING ANY ADVANCE TO SHRI RAJINDER PURI AND OTHERS THROUGH THE CANCELLED AGRE EMENT TO SELL DATED 14.12.2005. THE ISSUE IS, THEREFORE, COVERED IN FAV OUR OF THE ASSESSEE BY VARIOUS ORDERS OF THE TRIBUNAL REFERRED TO ABOVE. T HERE IS, THUS, NO JUSTIFICATION TO SUSTAIN ANY ADDITION AGAINST THE A SSESSEE. THE LD. DR CONTENDED THAT SECONDARY EVIDENCE I.E. PHOTOCOPY OF THE AGREEMENT TO SELL ATTESTED BY THE NOTARY PUBLIC IS ADMISSIBLE UNDER I NDIAN EVIDENCE ACT. THE RELIANCE OF THE LD. DR ON SECTIONS 63 TO 65 OF THE EVIDENCE ACT IS CLEARLY MISPLACED SINCE NO ORIGINAL AGREEMENT WAS SEIZED OR PRODUCED AT ANY POINT OF TIME. THERE IS NO PRIMARY EVIDENCE; THEREFORE, T HERE IS NO QUESTION OF CONSIDERING PHOTOCOPY OF AGREEMENT ATTESTED BY NOTA RY PUBLIC TO BE SECONDARY EVIDENCE. THE TRIBUNAL IN THE CASE OF SH. RAJINDER PURI VIDE ORDER DATED 22.3.2016 (SUPRA) ALSO DID NOT CONSIDER IT IN FAVOUR OF THE REVENUE. IN VIEW OF THE ABOVE DISCUSSION, WE FIND T HAT ENTIRE ADDITION IS UNJUSTIFIED IN THE HANDS OF THE ASSESSEE. I, THEREF ORE, CONSIDERING ABOVE 9 DISCUSSION AND FOLLOWING THE VARIOUS ORDERS REFERR ED TO ABOVE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 40 LAKHS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 14 TH SEPTEMBER, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR