The Income-tax Officer, Amritsar. V. Sh Jagjit Singh S/o. Sh. Amrik Singh, Amritsar.

ITA 363/ASR/2011

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3912 (ITAT-AMRITSAR)
• Duration Of Justice: 7 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAUTAM DEB
• Assessee Lawyers: P N ARORA
• Keywords: Capital asset; Business income; Salary income; Additional evidence; Cost of acquisition; Onus to prove
• Section: 143(3)

Judgement Text

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. 363/(ASR)/2011 ASSES SMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD-4(2), AMRITSAR VS. JAGJIT SINGH S/O AMRIK SINGH GALI GUJJRAN, JANDIALA GURU, AMRITSAR [PAN: AWNPS 5528A] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GAUTAM DEB (D.R .) RESPONDENT BY: SH. P. N. ARORA (ADV.) DATE OF HEARING: 08.08.2018 DATE OF PRONOUNCEMENT: 31.10.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), AMRITSAR (CI T (A) FOR SHORT) DATED 05.04.2011, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREI NAFTER) DATED 30.12.2009 FOR ASSESSMENT YEAR (AY) 2007-08. 2. THE ISSUE ARISING IN THE INSTANT APPEAL IS THE S USTAINABILITY IN LAW, AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF THE ADDITIO N IN THE SUM RS. 80 LACS MADE BY THE ASSESSING OFFICER (AO) IN THE HANDS OF THE ASSE SSEE. ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-INDIVIDUAL RETURNED HIS INCOME FOR THE YEAR AT, BESIDES AGRICULTURAL INCOME OF RS.90,000, RS.93,800/-, COMPRISING, IN THE MAIN, SALARY INCOME (AT RS.96,00 0) FROM M/S. AMRITSAR GAS SERVICE, PUTLIGHAR, AMRITSAR (AGS), ON 27/03/2008. THE LIST OF THE EMPLOYEES OF AGS (AS ON 31/03/2007) OBTAINED BY THE ASSESSING OF FICER (AO) DURING THE ASSESSMENT PROCEEDINGS, HOWEVER, DID NOT MENTION TH E NAME OF THE ASSESSEE, SO THAT, APPARENTLY, THE SALARY CERTIFICATE FROM AGS A S FURNISHED BY THE ASSESSEE WAS FALSE. THE ASSESSEE BEING UNABLE TO EXPLAIN THE SAM E, THE RETURNED TAXABLE INCOME WAS ASSESSED AS BUSINESS INCOME. THE ASSESSEE HAD F URTHER RECEIVED RS.80 LACS DURING THE YEAR. THE SAME WAS EXPLAINED TO BE ON TH E SALE OF THE BUSINESS OF AGS TO SH. SADA SINGH S/O LT. SH. BUDHA SINGH (HALF SHA RE) AND S/SH. NIRMALJEET SINGH AND SAWINDER PAL SINGH, SONS OF SH. BALBIR SINGH (H ALF SHARE) ON THE BASIS OF A GENERAL POWER OF ATTORNEY (GPOA) DATED 24/07/2006, ISSUED IN THE ASSESSEES FAVOUR BY ONE, SH. PARAMDEEP SINGH, THE OWNER OF AG S (AT PB PGS. 1/1A, 2 TO 2C). THE ASSESSEE HAD, IT WAS EXPLAINED, IN PURSUANCE OF THE GPOA, ENTERED INTO AN AGREEMENT TO SELL DATED 29/08/2006 WITH THE PAYERS FOR THE TRANSFER OF THE GAS AGENCY FOR A CONSIDERATION OF RS.80 LACS, AND THE A MOUNT RECEIVED WHICH WAS BOTH IN CASH (RS. 46.30 LACS) AND PER CHEQUES (RS. 33.70 LACS), IN RESPECT OF THE SAID SALE, DULY PAID OVER TO AGS. THE SAME DID NOT FIND FAVOUR WITH THE AO. WHY WOULD SH. PARAMDEEP SINGH GIVE POA TO THE ASSESSEE, A LAYMAN, WHO HAD NO RELATION WITH HIM, I.E., WITHOUT ANY CONSIDERATION. THEN, THE PAYMENT OF THE AMOUNT (RS.80 LACS) TO PARAMDEEP SINGH WAS NOT EVIDENCED. SH. PARAMDEEP SINGH WAS REQUIRED TO BE PRODUCED BY THE AO, BUT COULD NOT BE DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD, WITHOUT DOUBT, RECEI VED THE MONEY. THE ONLY INFERENCE THAT, THEREFORE, IN HIS VIEW, ARISES IS T HAT THE ASSESSEE FIRST PURCHASED THE GAS AGENCY (FROM SH. PARAMDEEP SINGH), I.E., AT A COST, AND THEN TRANSFE RRED IT TO ANOTHER THROUGH AN AGREEMENT (AGAIN, AT A CONSIDERA TION). THE PURCHASE COST, IN THE ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 3 ABSENCE OF ANY DEFINITE INFORMATION IN ITS RESPECT , WAS INFERRED TO BE THE SAME AS THE AMOUNT AT WHICH THE AGENCY WAS SOLD, I.E., RS.8 0 LACS, WHICH SUM WAS ACCORDINGLY DEEMED AS THE ASSESSEES INCOME BY WAY OF UNEXPLAINED MONEY/INVESTMENT TOWARD ACQUISITION COST OF AGA THR OUGH GPOA. IN APPEAL, IT WAS EXPLAINED THAT THE ASSESSEE IS A MAN OF NO MEANS. THE NON- PRODUCTION OF SH. PARAMDEEP SINGH IN THE ASSESSMENT PROCEEDINGS WAS ON ACCOUNT OF HIS BEING ABROAD (USA) AT THE RELEVANT TIME. THE NON-PRODUCTION OF ANY CORROBORATIVE EVIDENCE TOWARD THE SAME, VIZ, PASSPO RT, ETC., WAS FOR THE REASON THAT THE SAME WAS NOT INSISTED UPON BY THE AO. IN FACT , THE GPOA IN THE ASSESSEES FAVOUR WAS SUBSEQUENTLY REVOKED BY ANOTHER, ALSO RE GISTERED, GPOA DATED 17/11/2006 IN FAVOUR OF ONE, SH. HALDALBIR SINGH S/ O SH. SADA SINGH, AN EMPLOYEE OF AGS. THE LD. CIT(A), WHO UNDERSTOOD THE REVENUE S CASE AS OF THE COST OF THE AGENCY IN THE ASSESSEES HANDS AT NIL, WAS OF THE O PINION THAT THE AO HAD BEEN SWAYED BY DOUBTS, MISCONCEPTIONS, AND ARRIVED AT HA LF BAKED CONCLUSIONS, WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD TO ESTABLI SH HIS CONCLUSION/S. SHE COULD HAVE VERIFIED THE GENUINENESS OF THE SAID AGREEMENT BY RECORDING THE STATEMENTS OF THE VENDEES, TO CONFIRM IF THEY HAD THE CAPACITY TO PAY THE SUM, AS WELL AS THE GENUINENESS OF THE TRANSACTION/S. THEN, AGAIN, THE AO OUGHT TO HAVE EXAMINED THE BOOKS OF ACCOUNT OF AGA TO VERIFY THE FACT OF THE R EPAYMENT OF RS.80 LACS BY THE ASSESSEE THERETO . THE AO HAD CLEARLY FAILED TO MAKE OUT A SOUND CAS E IN FAVOUR OF THE REVENUE (REFER PARA 7, PGS. 79, OF THE IMPUGNE D ORDER). THE ADDITION OF RS.80 LACS WAS, ACCORDINGLY, DELETED, WHILE CONFIRMING TH E ASSESSMENT OF RS.93,800/- AS BUSINESS INCOME. AGGRIEVED, THE REVENUE IS IN APPEA L, RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), AMRITSAR IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 80 LACS MADE BY THE ASSESSING OFFICER, WITHOUT APPRECIATING THE FACTS T HAT THE ASSESSEE HAS TRANSFERRED THE AMRITSAR GAS SERVICE AFTER OBTAINING THE POWER OF A TTORNEY FROM THE ORIGINAL ALLOTTEE. ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 4 2. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS N OT JUSTIFIED IN DELETING THE ADDITION IGNORING THE FACTS THAT THE GAS AGENCY IS NOT SALEA BLE BY THE ORIGINAL ALLOTTEE WITHOUT THE PERMISSION OF PRINCIPAL AUTHORITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE COMMISSIONER OF INCOME TAX (APPEAL) HAS IGNORED THE FACTS THAT THE ASSESSEE FA ILED TO PRODUCE THE DOCUMENTARY EVIDENCE OF MONEY TRANSFERRED TO THE ORIGINAL ALLOTTEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE COMMISSIONER OF INCOME TAX (APPEAL) HAS IGNORED THE FACTS THAT IN THE ABSENCE OF ORIGINAL ALLOTTEE WHO RECEIVED THE MONEY TRANSFERRED BY THE ASSESSEE. 4. BEFORE US, THE THRUST OF THE REVENUES CASE, REL YING ON THE ASSESSMENT ORDER, WAS THAT THERE WAS NOTHING TO SHOW THAT THE PAYMENT OF RS.80 LACS HAD BEEN MADE TO SH. PARAMDEEP SINGH, WHICH WAS, IN ANY CASE, NOT SUBSTANTIATED. THERE BEING NO BASIS FOR THE GRANT OF GPOA IN FAVOUR OF THE ASSESS EE, AN OUTSIDER, THE INFERENCE THAT THE ASSESSEE OWNED THE GAS AGENCY PRIOR TO ITS SALE TO THIRD PARTIES, I.E., THROUGH THE GPOA, WAS THE ONLY LOGICAL INFERENCE TO BE DRAW N UNDER THE CIRCUMSTANCES. THE LD. COUNSEL, SH. P. N. ARORA, ADVOCATE, WOULD, ON THE OTHER HAND, TAKE US THROUGH THE ASSESSEES BANK ACCOUNT WITH ORIENTAL B ANK OF COMMERCE (OBC) TO SHOW THAT THE PAYMENTS RECEIVED BY THE ASSESSEE STA ND TRANSFERRED TO AGS. SH. PARAMDEEP SINGH HAD SINCE REVOKED THE GPOA, SO THAT A DIRECT CONFIRMATION FROM HIM BY THE ASSESSEE WAS, UNDER THE CIRCUMSTANCES, N OT POSSIBLE. THE IMPUGNED ORDER NEEDS TO BE, UNDER THE CIRCUMSTANCES, UPHELD. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 5.1 OUR FIRST OBSERVATION IN THE MATTER IS THAT THI S IS THE SECOND ROUND BEFORE THE TRIBUNAL, A FACT WHICH UNFORTUNATELY WAS NOT BROUGH T TO OUR NOTICE BY EITHER SIDE DURING HEARING. THIS, EQUALLY VALID FOR BOTH THE PA RTIES, IS PARTICULARLY SO FOR THE ASSESSEE, AT WHOSE INSTANCE THE TRIBUNAL RECALLED I TS EARLIER ORDER (DATED 11/9/2012) ALLOWING THE REVENUES APPEAL (VIDE ORDE R DATED 16/6/2016, IN MA NO. 04 /ASR/2013). THE TRIBUNAL HAD FOUND IT STRANGE TH AT THE LD. CIT(A), WITHOUT THERE ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 5 BEING ANYTHING ON RECORD TO SHOW THAT SH. PARAMDEEP SINGH HAD RECEIVED THE SALE CONSIDERATION (RS.80 LACS), AS IN THE FORM OF HIS C ONFIRMATION OR AFFIDAVIT OR HIS INCOME TAX RETURN DECLARING THE RECEIPT, HAD ACCEPT ED THE ASSESSEES CONTENTION AND DELETED THE ADDITION BY MAKING SOME ALLEGATIONS, SU CH AS THAT THE AO SHOULD HAVE QUESTIONED THE BANK (IN WHICH THE PAYMENT OF RS. 80 LACS HAD BEEN RECEIVED); EXAMINED THE VENDEES, AND PASSED ON THE INFORMATION TO THE AO OF SH. PARAMDEEP SINGH AND THE THREE VENDEES (FOR VERIFICATION OR NE CESSARY ACTION). IN RECTIFICATION PROCEEDINGS, IT WAS CONTENDED THAT THE BASIC FACT T HAT SH. PARAMDEEP SINGH WAS THE OWNER OF THE GAS AGENCY TRANSFERRED, AND THAT THE A GREEMENT TO SELL, WHICH WAS REGISTERED , WAS ENTERED INTO BY THE ASSESSEE ONLY FOR AND ON BEHALF OF THE OWNER, ACTING AS AN ATTORNEY HOLDER, WAS NOT DISCUSSED OR CONSIDERED BY THE TRIBUNAL, WHICH AMOUNTED TO A MISTAKE APPARENT FROM RECORD (REFER P ARA 4 OF THE ORDER U/S. 254(2)). THE TRIBUNAL, NOTING THE SAME, RECALLED ITS ORDER. IT WAS THUS INCUMBENT ON THE ASSESSEE TO, IN THE INSTANT PROCEEDINGS, SHOW THE D OCUMENT (OR THE FACT EXHIBITED THEREBY) NOT CONSIDERED EARLIER, I.E., THE NON-CONS IDERATION OF WHICH RENDERED THE TRIBUNALS ORDER AS MISTAKEN. THE TRIBUNALS STATIN G IN ITS ORDER UNDER SECTION 254(1) (DATED 11.9.2012) THAT THERE WAS NOTHING ON RECORD TO EXHIBIT THAT SH. PARAMDEEP SINGH (THE OWNER) HAD RECEIVED THE ENTIRE SALE CONS IDERATION IS PREMISED ON THE FACT THAT THE ASSESSEE IS STATEDLY NOT THE OWNER BUT THE POA, HAVING RECEIVED THE AMOUNT ONLY AS AN AGENT FOR AND ON BEHALF OF THE SAID PRIN CIPAL, WHICH IS EVEN OTHERWISE APPARENT FROM THE DISCUSSION OF THE FACTS AT PARA 7 .1 OF ITS ORDER U/S. 254(1), WHICH PRECEDES ITS FINDINGS/CONCLUSIONS AND, IN FACT, ST ANDS REPRODUCED BY THE TRIBUNAL (AT PARA 3, PGS. 34) OF ITS ORDER UNDER SECTION 254(2 ) DATED 16.6.2016. AGAIN, THERE WAS NO REFERENCE BEFORE US TO ANY OF THE PAGES OF T HE 38 PAGE PAPER-BOOK (PB), FILED EARLIER, WHICH WERE STATED TO HAVE BEEN OMITT ED TO BE CONSIDERED BY THE TRIBUNAL WHILE PASSING ITS, SINCE RECALLED, ORDER. ALSO, THE AGREEMENT TO SELL DATED 29/8/2006 (AT PB PGS. 3-5, 5A-5B), AS ALSO CONFIRMED BY SH. ARORA DURING HEARING, ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 6 IS NOT A REGISTERED DOCUMENT , AS THE TRIBUNAL WAS GIVEN TO UNDERSTAND IN THE RECTIFICATION PROCEEDINGS. BE THAT AS IT MAY, THE R ELEVANCE OF THE FOREGOING IS ONLY TO EMPHASIZE THE CONDUCT OF THE ASSESSEE, AS WELL A S THE PREPARATION/REPRESENTATION BY THE REVENUE BEFORE US, BOTH DEPLORABLE. WE, ACCO RDINGLY, PROCEED TO ADJUDICATE THE MATTER AFRESH. 5.2 THE FIRST THING THAT STRIKES ONE, AS INDEED IT DID THE TRIBUNAL IN THE FIRST ROUND, IS THAT THERE IS NO CONFIRMATION FROM THE OWNER, SH . PARAMDEEP SINGH, OF HAVING RECEIVED THE SALE CONSIDERATION. THE PROOF OF THE P UDDING, AS THE SAYING GOES, LIES IN ITS EATING. RATHER, IF HE WAS IN INDIA, I.E., AT THE RELEVANT TIME, AS APPEARS FROM THE ASSERTION OF HE HAVING BEEN PAID CASH BY THE AS SESSEE, WITHOUT RETENTION, I.E., AS RECEIVED FROM THE THREE VENDEES, WHERE, ONE WONDERS , WAS THE NEED FOR THE ASSESSEE TO ACCEPT THE CASH, BEING SO ONLY FOR AND ON BEHALF OF THE OWNER, I.E., INASMUCH AS THE SAME COULD BE RECEIVED DIRECTLY BY THE OWNER. FURTHER, IN ANY CASE, WOULD BE RECEIVED, AS WELL AS TENDERED BY THE ASSES SEE IN DISCHARGE OF HIS OBLIGATION AS AN ATTORNEY HOLDER, AGAINST DULY ISSUED RECEIPTS , WHICH ARE CONSPICUOUS BY THEIR ABSENCE. WHY, THE VENDEES THEM SELVES WOULD NOT PAY CASH WITHOUT BEING ISSUED RECEIPT/S BY THE REGISTERED AT TORNEY HOLDER. THIS IS PRECISELY WHY THE LD. CIT(A) HIMSELF OBSERVES THAT THE AO OUG HT TO HAVE EXAMINED THE VENDEES OR CONFIRMED THE PAYMENT FROM THEIR TAX RET URNS, SHARING THE INFORMATION WITH THEIR AO/S. THE TRANSACTION, IN HIS VIEW, OUGH T TO HAVE BEEN CONFIRMED (BY THE AO) FROM THE TAX RECORD OF THE OWNER, SH. PARAMDEEP SINGH, OR OTHERWISE, PER HIS CONFIRMATION/AFFIDAVIT. THIS IS AS THIS ONLY WOULD PROVE THE TRANSACTION, I.E., WHEN BOTH THE PAYERS AND THE PAYEE CONFIRM THE SAME. NOT SO DOING BY THE AO, THEREFORE, IMPLIES THAT THE TRANSACTION CANNOT BE R EGARDED AS PROVED OR ESTABLISHED. APPELLATE PROCEEDINGS BEING ONLY A CONTINUATION OF THE ASSESSMENT PROCEEDINGS, WITH THE LD. CIT(A) ENJOYING CO-TERMINUS POWERS (WI TH THE ASSESSING AUTHORITY), HE ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 7 SHOULD HAVE HIMSELF COMPLETED, OR CAUSED TO BE COMP LETED, AS BY WAY OF A REMAND, THE SAID PROCESS OF VERIFICATION. IN KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC), THE APEX COURT CLARIFIED THAT AN APPELLATE AU THORITY HAS THE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERRORS IN THE PROCE EDINGS UNDER APPEAL AND TO ISSUE, WHERE NECESSARY, APPROPRIATE DIRECTIONS TO THE AUTH ORITY (AGAINST WHOSE DECISION THE APPEAL IS PREFERRED) TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FROM DOING SO BY THE STATUTE. THIS IS PARTICULARLY SO IN THE PRESENT CASE AS THE AO HAD CALLED UPON THE ASSESSEE TO PROD UCE SH. PARAMDEEP SINGH, WHICH WAS NOT, AND WITHOUT ANY EXPLANATION FOR THE SAME BEFORE HIM, AND WHICH HAS BEEN FOUND AS EXTREMELY RELEVANT BY ALL, THE AO ; THE FIRST APPELLATE AUTHORITY, AS WELL AS THE SECOND APPELLATE AUTHORITY ON BOTH THE OCCASIONS. IT ALSO NEEDS TO BE APPRECIATED THAT THE AO COULD NOT ANTICIPATE THI NGS, AND IT MAY WELL HAVE BEEN THAT THE OWNER DEPOSED BEFORE HIM, EITHER CONFIRMIN G OR RESILING THE TRANSACTION, WHOSE EVIDENCE, WHERE ADVERSE, WOULD HAVE TO BE CON FRONTED TO THE ASSESSEE, ENABLING PROVING OR, AS A CASE MAY BE, DISPROVING T HE TRANSACTION, ARRIVING AT, IN EITHER CASE, THE TRUTH OF THE MATTER. IN APPEAL, IT WAS SUBMITTED, WITHOUT LEADING ANY EVIDENCE TO THAT EFFECT, THAT SH. PARAMDEEP SINGH C OULD NOT BE PRODUCED (BEFORE THE AO) AS HE WAS AWAY TO CALIFORNIA (USA) AT THE R ELEVANT TIME. EVEN SO, BEING THE ASSESSEES WITNESS, WHY, ONE WONDERS, COULD HE BE NOT PRODUCED IN THE APPELLATE PROCEEDINGS, DEPOSING BEFORE THE LD. CIT( A) HIMSELF OR, IN COMPLIANCE WITH RULE 46A, REQUIRING HIS EXAMINATION BY THE AO. THAT IS, THE CONSIDERATION OF THE COMPLETION OF THE VERIFICATION PROCESS OUGHT TO HAVE BEEN UPPER MOST IN THE MIND OF THE LD. CIT(A), WITH THE SAID EXAMINATION B EING ALSO AN OPPORTUNITY TO CLARIFY ALL THE QUERIES WHICH THE AO MAY HAVE IN TH E MATTER, AND TOWARD WHICH SUPPLEMENTARY EVIDENCE IN THE FORM OF BANK ACCOUNT/ S; THE COPIES OF ACCOUNT OF AGS; THE TAX RETURN, ETC., AS ALSO OF THE VENDEES, COULD HAVE BEEN CALLED FOR. FURTHER, IN CASE OF ANY INCONSISTENCY, EVEN THE VEN DEES MAY HAVE TO BE EXAMINED ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 8 AND, IN ANY CASE, COULD LEAD CORROBORATIVE EVIDENCE /S. AS SUCH, TO SAY THAT THE TRANSACTION IS PROVED WITHOUT SUCH POSITIVE MATERIA L, THE DEFICIENCY OF WHICH THE LD. CIT(A) HIMSELF RECOGNIZES IN FACT, AN ASPECT OF T HE MATTER ON WHICH HE HAS OUR CONCURRENCE, AS WELL AS IN FACT OF THE TRIBUNAL IN THE FIRST ROUND, IS WHOLLY INCORRECT. THE ASSESSEE BEING IN RECEIPT OF MONEY, THE CONSEQU ENCE OF NON-PROVING HIS CLAIM WOULD NOT LEAD TO THE INFERENCE OF THE TRANSACTION BEING PROVED, AS INFERRED BY THE LD. CIT(A). THE BURDEN TO PROVE HIS CLAIMS IS ON TH E ASSESSEE. IT IS THIS ABSENCE OF PRIMARY MATERIAL IN THE FORM OF CONFIRMATION OF THE TRANSACTION AND RECEIPT BY THE OWNER, SH. PARAMDEEP SINGH, THAT LED THE TRIBUNAL ( IN THE FIRST ROUND) TO REGARD ALL OTHER THINGS, VIZ. GPOA; AGREEMENT TO SELL; ETC., O F WHICH, AS APPARENT, IT WAS ACUTELY AWARE, AS SECONDARY, AND WHICH WEIGHED WITH IT IN ALLOWING THE REVENUES APPEAL. 5.3 BEFORE US, IT WAS EMPHASIZED THAT RS. 27.64 LAC S (OUT OF RS. 80 LACS) HAD BEEN RECEIVED DIRECTLY IN THE ASSESSEES SAVING BAN K ACCOUNT (WITH OBC), WHICH STANDS TRANSFERRED TO AGS (PB PGS. 28,31). THE QUES TION IS: WHAT ABOUT THE BALANCE RS. 52.36 LACS? IN FACT, OUT OF RS. 27.64 L ACS, ONLY RS. 18.70 LACS IS PER CHEQUES, AND THE BALANCE RS.8.94 LACS IS BY WAY OF DEPOSIT OF CASH, WITH THE AMOUNT (RS. 27.64 LACS) STATED TO BE TRANSFERRED TO AGS BEING ONLY CASH WITHDRAWALS, STATED TO BE PAID OVER TO AGS. THEN, A GAIN, HOW HAS THE AMOUNT TRANSFERRED BEEN ACCOUNTED FOR? IF THE ENTIRE AMOUN T STANDS ACCOUNTED FOR AS A SALE OR TRANSFER OF BUSINESS, NOTHING SURVIVES. OF COURS E, THIS MUST BE CORROBORATED BY THE ACTUAL TRANSFER OF THE GAS AGENCY WHICH, AS THE REVENUE POINTS OUT PER ITS GD. 2 BEFORE US, IS NOT, REQUIRING PERMISSION A FACT WH ICH CAN BE READILY ASCERTAINED FROM THE CONCERNED COMPANY. WHERE THE FACTS SO FOUN D ARE NOT CONSISTENT WITH THE ASSESSEES CLAIMS, THE MATTER WOULD PERHAPS NEED TO BE EXAMINED/PROBED FURTHER OR, IN ANY CASE, THE ASSESSEE REQUIRED TO SUBSTANTIATE HIS STAND. AS SUCH, NOTHING MUCH ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 9 TURNS ON THE LD. COUNSEL, WHO ALSO CONFIRMED BEFORE US THAT THE AGREEMENT TO SELL IS NOT A REGISTERED DOCUMENT , STATING, WITH REFERENCE TO THE ASSESSEES BANK AC COUNT, OF A PART OF THE ENTIRE AMOUNT AS HAVING BEEN RECEI VED ON BEHALF OF, AND PAID TO, AGS. AN AGREEMENT TO SELL IS NOT THE SAME AS AN AGREEMENT OF SALE, AND ONLY ENVISAGES AN UNDERSTANDING TO, SUBJECT TO CERTAIN P RECONDITIONS, VIZ., THE PERMISSIONS AFORE-REFERRED, UNDERTAKE SALE, A MATTE R SUBSEQUENT. THE AGENCY CHANGING HANDS, THE AMOUNT SHOULD HAVE RATHER BEEN TRANSFERRED TO THE PERSONAL ACCOUNT OF THE EX-PROPRIETOR (SH. PARAMDEEP SINGH), AND NOT TO THE ACCOUNT OF AGS. IT IS THIS THAT LED US TO SAY THAT THE TREATME NT ACCORDED TO THE RECEIPT, ASSUMING SO, IN ACCOUNTS OF AGS (OR ITS PROPRIETOR ), IS ALSO RELEVANT. THE ASSESSEE BEFORE US WOULD STATE (THROUGH THE LD. COUNSEL, SHR I ARORA) THAT THE GPOA STANDS SINCE REVOKED (ON 17/11/2006) AS THE REASON FOR THE NON-PRODUCTION OF SH. PARAMDEEP SINGH. HOW, WE WONDER, IS THE SAME RELEVANT ? THE REVOCATION BEING SUBSEQUENT TO THE TRANSACTION OF SALE (OF BUSINESS) , I.E., ASSUMING SO, IS OF NO CONSEQUENCE. RATHER, THE AGENCY HAVING BEEN TRANSFE RRED, WHY, AND FOR WHAT PURPOSE, WE WONDER, SHOULD SH. PARAMDEEP SINGH ISSU E ANOTHER GPOA? THE FACT OF THE MATTER, AND THE POINT IS, EVEN AS STATED BY THE AO, THE ASSESSEE IS A LAY MAN WITH NO STATED ASSOCIATION/RE LATION WITH SH. PARAMDEEP SINGH. THERE IS, FURTHER, NOTHING TO SHOW OF HIS EXPERIENC E OR EXPERTISE IN MANAGING OR RUNNING A GAS AGENCY, OR IN FACT EVEN A BUSINESS. WHY WOULD, THEN, AN OWNER ISSUE A GENERAL POWER OF ATTORNEY IN HIS FAVOUR ? THE DOUBTS EXPRESSED BY THE AO IN THIS REGARD ARE VALID, SERIOUS, AND CREDIBLE. IN FACT, A POWER OF ATTORNEY IS ORDINARILY GIVEN TO MANAGE THE AFFAIRS OF THE BUSINESS, WHILE IN THE PRESENT CASE THE ATTORNEY HOLDER REALIZES THE BUSINESS, THE CAPITAL ASSET, TO MANAGE WHICH IT IS GIVEN, ITSELF. IT IS IN FACT NOT EVEN SHOWN THAT THE OWNER WAS AT THE RELEVANT TIME, I.E., ENTERING THE AGREEMENT TO SELL AND THE RECEIPT OF PAYMENT TH ERE-AGAINST, NOT AVAILABLE. VALUATION OF BUSINESSES, ITSELF A HIGHLY SENSITIVE AND EXPERT JOB, ALSO REQUIRES ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 10 BALANCING OF INTERESTS OF THE OPPOSING SIDES, AND O FTEN THE VALUE AGREED UPON A RESULT OF A LONG PROCESS OF NEGOTIATIONS. THERE IS NOTHING TO SHOW THAT THE ASSESSEE IS IN ANY WAY COMPETENT FOR THE SAME, OR UNDERTOOK THE EXERCISE, BEING BY OWN ADMISSION, A LAYMAN, DOING PALTRY JOBS, AND A MAN O F NO MEANS. THE WHOLE NARRATIVE OF THE POA THUS APPEARS TO BE ONLY A RUSE . THE SAME, HOWEVER, WOULD ONLY BE WITH SOME PURPOSE. THE INFERENCE OF THE POA IN ASSESSEES FAVOUR AS BEING NOT WITHOUT CONSIDERATION, AS INFERRED BY THE AO FO R WANT OF DEFINITE INFORMATION, CANNOT, UNDER THE CIRCUMSTANCES, BE SAID TO BE WITH OUT MERIT. IT, YET, HOWEVER, SUFFERS FROM THE NON-CONSIDERATION OF A BASIC FACT THAT THE ASSESSEE IS A MAN OF NO MEANS, WITH NO ASSETS, A FACT SOUGHT TO BE EMPHASIZ ED BEFORE THE LD. CIT(A) WHO, HOWEVER, DID NOT EXAMINE THE SAME. THIS IS THOUGH A PPARENT FROM THE FACT THAT HE DOES NOT APPEAR TO HAVE ANY REGULAR SOURCE OF INCOM E, I.E., OTHER THAN, PERHAPS, AGRICULTURE INCOME; HIS BANK BALANCE, WHICH AFTER T HE TRANSFER OF FUNDS RECEIVED FROM THE VENDEES, IS AT A PALTRY SUM OF RS. 1234/-. IN FACT, THE ASSESSMENT OF THE SALARY INCOME AS BUSINESS INCOME, GIVEN THE FACT TH AT THERE IS NO FINDING AS TO WHAT THAT BUSINESS IS, IS PERHAPS ALSO NOT APPROPRIATE, SO THAT THE SAME OUGHT TO HAVE BEEN, IN THE STRICT SENSE, ASSESSED AS INCOME FROM OTHER SOURCES. AT THE SAME TIME, THE DEMAND RAISED UPON ASSESSMENT STANDS SATISFIED. HOW COULD IT BE, IF THE ASSESSEE IS INDEED, AS CLAIMED, A MAN OF NO MEANS ? THOUGH CIRCUMSTANTIAL EVIDENCE CONSTITUTES A GOOD G ROUND FOR INFERENCE AS TO OWNERSHIP OF AN ASSET, I.E., OF BELONGING TO THE ASSESSEE, OR INVESTMENT THEREIN BY HIM ( C.K. SUDHAKARAN V. CIT [2005] 279 ITR 533 (KER)), THE OTHER, OVERWHELMING INFERENCE THAT ARISES IS OF THE ASSESSEE BEING, ON THE CONTRARY, A FRONT MAN FOR OTHERS. THE MONEY, AFTER ALL, COULD DIRECTLY HAVE E XCHANGED HANDS BETWEEN THE OWNER AND THE VENDEES. THE AMOUNT DISCLOSED AS SALA RY INCOME COULD WELL BE THE COMMISSION INCOME ALLOWED TO HIM FOR BEING AN ATTOR NEY, OR FOR ACTING AS A CONDUIT OF FUNDS. THE REVENUE HAS NOT CAUSED PROPER VERIFIC ATION OR AN INVESTIGATION INTO ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 11 THE FACTS, WITH THE LD. CIT(A), RATHER THAN COMPLET ING THE PROCESS INITIATED BY THE AO, MERELY PROCEEDED BY, AS IT WERE, BLAMING THE AO , WHOSE EFFORTS WERE HAMPERED BY THE LACK OF PROPER ASSISTANCE BY THE AS SESSEE, CONSTRAINING HIM TO DRAW INFERENCES ON THE BASIS OF THE MATERIAL BEFORE /INFORMATION AVAILABLE WITH HIM. THE MATTER, THUS, WHICHEVER WAY ONE MAY LOOK AT IT, IS FACTUALLY INDETERMINATE . 5.4 THE QUESTION THAT NEXT ARISES IS IF ANY INCOME COULD, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE ASSESSED IN THE ASSES SEES HANDS. THE ASSESSEES CASE IS PRIMARILY BASED ON THE GPOA, SO THAT THE CONSIDE RATION (FOR THE TRANSFER OF THE GAS AGENCY) RECEIVED BY HIM IS NOT IN HIS OWN RIGHT BUT ONLY AS AN AGENT, FOR AND ON BEHALF OF ANOTHER, THE OWNER. HOWEVER, THE ASSES SEES CLAIMS OF BEING A LAYMAN, WITH NO MEANS AND, ADMITTEDLY, NO BUSINESS EXPERIEN CE, WITH THE STATED RELATIONSHIP OF BEING AN EMPLOYEE (OF AGS) BEING FOUND FALSE, CO NTRADICT HIS CASE OF BEING A GENUINE POWER OF ATTORNEY HOLDER AND, THUS, THE GEN UINENESS OF THE TRANSACTION. BE THAT AS IT MAY, IF THERE INDEED HAS BEEN A TRANSFER OF THE GAS AGENCY DURING THE RELEVANT YEAR, I.E., AS PER THAT STATED, WHICH COUL D BE VERIFIED FROM THE REGISTERING AUTHORITY, THE TRUTH OF THE ASSESSEES ASSERTION WO ULD STAND BORNE OUT, AND THE GENUINENESS OF THE TRANSACTION AND, THUS, THE EXPLA NATION FURNISHED BY THE ASSESSEE, ESTABLISHED. NO INCOME IN SUCH A CASE WOULD BE ASSE SSABLE IN THE ASSESSEES HANDS, I.E., DESPITE OUR OBSERVATION AS TO THE GPOA APPEAR ING TO BE A RUSE; THE ASSESSEE BEING A LAYMAN AND, AS STATED, A MAN OF NO MEANS WI TH NO BUSINESS EXPERIENCE OR ASSOCIATION WITH THE PRINCIPAL, ABSENCE OF RECEIPTS /CONFIRMATION, ETC. THE ASSESSEE BEING IN RECEIPT OF MONEY COULD HAVE BEEN AT BEST A SSESSED ON A PROTECTIVE BASIS, ASSESSING THE INCOME SUBSTANTIVELY IN THE HANDS OF THE PRINCIPAL (OWNER). THERE IS, IT NEEDS TO BE APPRECIATED, NO BASIS FOR THE REVENU E TO HOLD THAT THE ASSESSEE ACQUIRED THE GAS AGENCY, I.E., PRIOR TO ITS SALE, AND AT A COST. RATHER, THIS MAY ALSO PROVIDE A BASIS FOR THE INCOME (RS.96,000/-) ALLOWE D TO THE ASSESSEE BY AGS, AS ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 12 BEING BY WAY OF COMMISSION, AND WHICH STANDS RETURN ED BY HIM AS SALARY INCOME THERE-FROM. IF, HOWEVER, ON THE OTHER HAND, THE FAC TS FOUND ARE NOT CONSISTENT WITH THAT STATED, I.E., THE TRANSFER OF THE AGENCY FROM THE STATED OWNER TO THE STATED VENDEES, THE ASSESSEE WOULD BE REQUIRED TO BE CONFR ONTED THEREWITH; HIS EXPLANATION BEING PROVED FALSE OR INCORRECT. THE AS SESSSEE SHALL, IN THAT CASE, BE REQUIRED TO STATE THE TRUTH; RATHER, SUBSTANTIATE I T. IT IS IN SUCH AN EVENTUALITY THAT THE ASSESSEES CLAIM OF BEING A MAN OF NO MEANS, A CONT ENTION RAISED FOR THE FIRST TIME BEFORE THE LD. CIT(A) WHO DID NOT EITHER EXAMINE OR CAUSE TO EXAMINE THE SAME AND, BESIDES, OUR OBSERVATIONS OF THE ARRANGEMENT A PPEARING TO BE A RUSE FOR SOME ULTERIOR PURPOSE; THE ASSESSEE BEING A LAYMAN WITH NO BUSINESS EXPERIENCE, ETC. SHALL ASSUME SIGNIFICANCE. IT COULD ALSO BE THAT TH ERE ARE SOME CONDITIONS ATTACHED ON THE TRANSFER OF A GAS AGENCY, HINDERING A FREE T RANSFER THEREOF. THE SAME, IF SO, SHOULD HAVE BEEN STATED UPFRONT. FURTHER, EVEN SO, SURELY IT IS THE VENDEES WHO, AS THE NEW OWNERS, WOULD BE RUNNING THE BUSINESS, IF ONLY BENAMI, WHICH FACT IS ALSO RELEVANT. AND WHICH MAY PERHAPS ALSO EXPLAIN THE SE COND GPOA BY THE OWNER, I.E., EVEN AS THE GAS AGENCY STANDS TRANSFERRED. CL EARLY, THEREFORE, SOME EXPLAINING IN SUCH A CASE WOULD BE REQUIRED. IN SHORT, THE TAXABILITY OF THE IMPUGNED SUM IN THE ASSESSEES HANDS IS DEPENDENT ON THE BASIC FACTS, INCLUDING THE TRANSFE R OF THE GAS AGENCY ITSELF, YET UNASCERTAINED, THE PRIMARY ONUS TO LEAD WHICH IS ON THE ASSESSEE. NO FETTERS ARE PLACED ON EITHER SIDE, EVEN AS THE BURDEN TO PROVE HIS RETURN, AND THE CLAIMS PREFERRED THEREBY, IS ON THE ASSESSEE, WHO IN THE P RESENT CASE IS IN RECEIPT OF MONEY [ CIT V. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 (SC); CIT V. R. VENKATA SWAMY NAIDU [1956] 29 ITR 529 (SC)]. THE AO SHALL ADJUDICATE A FRESH, ISSUING DEFINITE FINDINGS OF FACT, IN ACCORDANCE WITH LAW, AND AFTER ALLOWING THE ASSESSEE PROPER OPPORTUNITY TO STATE HIS CASE. THE MATTER, ACCORDIN GLY, SETTING ASIDE THE IMPUGNED ORDER, IS RESTORED TO THE FILE OF THE AO FOR THE PU RPOSE. ITA NO. 363/ASR/2011 (AY 2007-08) ITO V. JAGJIT SINGH 13 BEFORE PARTING, WE MAY CLARIFY THAT OUR DECISION, I N ANSWERING THE ISSUE ARISING, IS GUIDED PRIMARILY BY, APART FROM THE DEC ISION IN THE CASE OF KAPURCHAND SHRIMAL (SUPRA), WITH WHICH JUDGMENT THE IMPUGNED ORDER IS IN CONFLICT, THE DECISION IN CIT V. WALCHAND & CO. PVT. LTD . [1967] 65 ITR 381 (SC), CLARIFYING THAT THE TRIBUNAL IS TO DEAL WITH AND DETERMINE ALL THE QUESTIONS WHICH ARISE OUT OF THE SUBJECT MATTER OF THE APPEAL, IN LIGHT OF THE E VIDENCE AND CONSISTENTLY WITH THE JUSTICE OF THE CASE (PG. 384). TAX PROCEEDINGS, IT MAY BE NOTED, ARE NOT ADVERSARIAL IN NATURE. 5.5 WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 31, 2 018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.10.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INCOME TAX OFFICER, WARD-4(2 ), AMRITSAR (2) THE RESPONDENT: JAGJIT SINGH S/O AMRIK SING H GALI GUJJRAN, JANDIALA GURU, AMRITSAR (3) THE CIT(APPEALS), AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY B Y ORDER