Sh. Anil Kumar Singhal, Agra V. I.T.O., Ward-1(1), Agra

ITA 413/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0364 (ITAT-AGRA)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 24-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: K C AGARWAL
• Keywords: Reopening of assessment; Gift; Recovery proceedings; Search and seizure; Question of law; Fair market value; Difference of opinion; Assessment record; Onus to prove; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 133(6); 147; 148; 132; 15; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA BEFORE SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.413/AGR/2012 ASSESSMENT YEAR: 2001-02 SHRI ANIL KUMAR SINGHAL, VS. INCOME TAX OFFICER 50, BAGH FARZANA, WARD 1(1), AGRA. AGRA. (PAN: AGAPS 0041 D). ITA NO.408/AGR/2012 ASSESSMENT YEAR: 2001-02 SHRI ANIL KUMAR SINGHAL, HUF VS. INCOME TAX OFFI CER 50, BAGH FARZANA, WARD 1(1), AGRA. AGRA. (PAN: AADHA 1612 B). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. AGARWAL, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R . DATE OF HEARING : 05.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.02.2013 ORDER THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TWO DIFFERENT ORDERS, BOTH DATED 28.02.2012, PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEARS 2001-02. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 2 1. BECAUSE IN ANY, VIEW, THE LD. C.I.T. (A) HAS ER RED IN CONFIRMING THE PROCEEDINGS U/S 147, AND THE ORDER PASSED U/S 1 47/143(3) OF THE INCOME-TAX ACT. 2. BECAUSE IN ANY VIEW, THE ADDITION CONFIRMED BY L D. CIT(A) OF RS.1,00,000/- MADE U/S 68 OF GIFT RECEIVED IS PERVE RSE, ARBITRARY, UNJUST, WRONG, ILLEGAL AND AGAINST THE FACTS AND LA W OF THE CASE. 3. BECAUSE IN ANY VIEW, THE ADDITION CONFIRMED BY T HE LD. CIT(A) OF RS.2,000/- AS SO CALLED COMMISSION @ 2% ON ABOVE IMPUGNED ADDITION F RS.1,00,000/- ON MERE SURMISES AND CONJE CTURES IS WRONG AND ILLEGAL. 4. BECAUSE IN ANY VIEW, AND WITHOUT PREJUDICE TO TH E ABOVE GROUNDS, ADDITIONS MADE, INTEREST CHARGED U/S 234A AND 234B, AND THE ASSESSMENT ORDER PASSED ARE WRONG, ILLEGAL, WIT HOUT PROPER OPPORTUNITY, BAD IN LAW AND AGAINST THE FACTS AND L AW OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) AFTER RECORDING FOLLOWING REASONS:- (PAGE NO.1) AN INFORMATION HAS BEEN RECEIVED FROM THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, AGRA VIDE LETT ER F.NO. LTCG/ADDL. CIT/R-1/AGRA/2007-08/1933 DATED 20-3-200 8 REGARDING BOGUS ENTRIES OF LONG TEM/SHORT TERM CAPITAL GAIN A ND BOGUS GIFTS ETC. HAS BEEN FOUND BOGUS AS A RESULT OF ENQUIRIES MADE BY THE INV. WING. ON ENQUIRIES IT HAS BEEN FOUND THAT THE BANK ACCOUNTS FROM WHICH MONEY HAS BEEN TRANSFERRED TO VARIOUS BENEFIC IARIES HAVE BEEN OPERATED BY CERTAIN STOCK BROKERS WHO HAVE BEEN PRO VIDING ENTRIES TO THE BENEFICIARIES BY SHOWING THEM TRANSACTION MADE BY THEM IN PURCHASE AND SALE OF SHARES OF CERTAIN COMPANIES, G IFTS FROM CERTAIN PERSONS, WHICH IN FACT NEVER TOOK PLACE. THE ASSESSEE IS ALSO ONE OF THE BENEFICIARIES FIGUR ING IN THE LIST SUPPLIED AS STATED ABOVE AND AN AMOUNT OF RS.1,00,2 50/- HAS BEEN REMITTED TO THE ASSESSEE FROM LAL CHAND. THE SAID AMOUNT IS FOUND ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 3 CREDITED IN THE ACCOUNT NO.45 OF SHREYASH GRAMIN BA NK, RAM BAGH, AGRA OF THE ASSESSEE VIDE DRAFT NO.93782 DATED 11-6 -2000. SINCE THE TRANSACTION OF SHARE TRADING FOUND TO BE BOGUS AND THE ENTIRE AMOUNT OF THE SAME CLAIMED TO HAVE BEEN RECEIVED BY THE AS SESSEE BY BANK DRAFT IS THE ASSESSEES INCOME FROM UNDISCLOSED SOU RCES, WHICH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE I.T. ACT, 1961. HENCE I HAVE REASON TO BELIEVE THAT THE ABOV E INCOME OF RS.1,00,250/- HAS ESCAPED ASSESSMENT WITHIN THE MEA NING OF SECTION 147 OF THE I.T. ACT, 1961. 4. THE ASSESSEE SUBMITTED IN RESPONSE TO NOTICE UND ER SECTION 148 THAT THE RETURN ALREADY FILED IS TREATED AS RETURN IN COMPLI ANCE TO NOTICE UNDER SECTION 148 OF THE ACT. THE A.O. ASKED THE ASSESSEE TO FURNISH DE TAILS. THE ASSESSEE FILED OBJECTION IN ISSUE OF NOTICE UNDER SECTION 148 WHIC H WAS REJECTED BY THE A.O. THE ASSESSEE FURNISHED COPY OF GIFT DEED AND AN AFFIDAV IT FROM SHRI SANJEEV GOYAL STATING THAT HE GIFTED A SUM OF RS.1,00,000/- TO SH RI ANIL KUMAR SINGHAL. THE COPY OF INCOME TAX RETURN OF DONOR, SHRI SANJEEV GOYAL W AS ALSO FILED WHICH SHOWS INCOME AT RS.89,434/-. THE A.O. ISSUED SUMMONS UND ER SECTION 133(6) TO SHRI SANJEEV GOYAL BUT NO COMPLIANCE OF THE SAME WAS MAD E. THE COPY OF BANK ACCOUNT OF DONOR WAS NOT PRODUCED. THE ASSESSEE ST ATED ON THE RELATIONSHIP WITH DONOR THAT HE HAS NO BLOOD RELATION WITH THE DONOR. THE AO NOTICED THAT THERE IS NO RELATION BETWEEN THE DONOR AND DONEE EXISTS IN THIS CASE. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE GIFTS HAVE BEEN RECEIVED B Y BANKING CHANNEL, THE AO NOTICED THAT IT IS WORTHWHILE TO MENTION THAT EVEN IF THE DEPOSITOR WAS PRODUCED , WHO HAD ADMITTED THE TRANSACTION, THEY WERE ASSESSE D TO TAX, THE DEPOSIT CAN STILL BE ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 4 TREATED AS UNEXPLAINED IN VIEW OF THE DECISIONS OF VARIOUS HONBLE HIGH COURTS RELIED UPON BY THE WHEREIN IT WAS HELD THAT MERE PAYMENT BY CHEQUE/DD IS NOT SACROSANCT AS IT WOULD NOT MAKE A NON-GENUINE TRANS ACTION AS GENUINE. 5. THE A.O. RELIED UPON JUDGEMENT OF THE HONBLE AP EX COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC) AND CAME TO THE CONCLUSION THAT HUMAN PROBABILITIES, SURROUNDING CIRCUMSTANCES, CIR CUMSTANTIAL EVIDENCES, ETC. ARE TO BE CONSIDERED WHILE DECIDING THE TAXATION MATTER S. THE INCOME-TAX AUTHORITIES CAN PENETRATE THE VEIL AND GO BEHIND THE FAADE TO ASCERTAIN THE TRUTH. THEY CANNOT PUT BLINKERS ON THEIR EYES WHILE EXAMINING THE GENU INENESS OF TRANSACTION. AT THE PRESENT CONDITIONS OF THE SOCIETY WHEN NO PERSON WO ULD PART WITH EVEN A SMALL AMOUNT AS GIFT WITHOUT ANY REASON, OCCASION AND EVE N RELATIONSHIP, HOW IT CAN BE ACCEPTED THAT A PERSON IN DELHI CAN GIVE GIFT TO TH E STRANGERS HAVING NO RELATIONSHIP OR CONSIDERATION? THE AO HELD THAT IT IS A CLEAR CUT EXAMPLE OF A TAX AVOIDANCE, WHICH IS NOT PERMISSIBLE AS PER THE DECISIONS OF TH E HONBLE SUPREME COURT MENTIONED ABOVE. 6. THE A.O. MADE ADDITION AS UNDER:- IN VIEW OF THE ABOVE COURT DECISION AND THE FACTS OF THE CASE THAT THE ASSESSEE HAS INTRODUCED HIS UNACCOUNTED MO NEY TO THE TUNE OF RS.1,00,000/- UNDER THE GARB OF BOGUS GIFT ENTRY AN D THE SAME IS, THEREFORE, ADDED UNDER SECTION 68 OF THE I.T. ACT, 1961 UNDER THE HEAD INCOME FROM OTHER SOURCES TO THE INCOME OF THE ASSE SSEE FROM UNDISCLOSED SOURCES. SINCE IT HAS BEEN HELD THAT T HE ASSESSEE HAS ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 5 TAKEN GIFT ENTRIES, A COMMISSION @ 2% AMOUNTING TO RS.2,000/- IS ALSO BEING ADDED TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S.271(1)(C) ARE ALSO INITIATED FOR THIS ACT OF TH E ASSESSEE SEPARATELY. 7. BEFORE THE CIT(A) REOPENING WAS CHALLENGED BY TH E ASSESSEE WHICH WAS REJECTED BY THE CIT(A) AS UNDER :- ON GOING THROUGH THE ASSESSMENT RECORD, I FIND THA T THE NOTICE U/S 148 DATED 26.03.2008 WAS ISSUED AFTER RECORDING OF REASONS AND OBTAINING NECESSARY APPROVAL FROM THE ADDL. CIT RAN GE-I AGRA AND THIS NOTICE WAS SENT BY POST ON 27.03.2008 AND ALSO SERVED PERSONALLY TO THE ASSESSEE (APPELLANT) PERSONALLY ON 28.03.200 8. NOTICE SENT BY POST WAS ALSO NOT RECEIVED BACK UN-SERVED. THEREFO RE, THE NOTICE U/S. 148 HAS BEEN FOUND TO BE SERVED IN ACCORDANCE WITH LAW AND CONTENTION OF THE APPELLANT RAISED IN GROUND NO.1 I N THIS REGARD HAS NOT BEEN FOUND CORRECT. THE NEXT CONTENTION OF THE APPELLANT THAT IN ABSENC E AND WITHOUT CONSIDERING THE INITIAL RETURN OF INCOME OF RELEVANT ASSESSMENT YEAR FILED ON 28.11.2001, THE PROCEEDING S U/S. 147 IS WRONG, ILLEGAL AND BAD IN LAW HAS ALSO NOT BEEN FOU ND TO BE CORRECT BECAUSE NO SUCH EVIDENCE HAS BEEN PRODUCED DURING T HE APPEAL PROCEEDING SHOWING THAT THE AO HAS NOT CONSIDERED T HE ORIGINAL RETURN AND FROM THE RECORD, I FIND THAT AFTER RECEI VING THE REPORT OF THE ADDL. CIT, THE AO HAD IN HIS POSSESSION DETAILS OF MATERIAL PROVIDED BY THE INVESTIGATION WING ABOUT THE ENTRIES OF BOGU S CAPITAL GAINS AND GIFT PROVIDED BY CERTAIN BROKERS FROM CERTAIN BANK ACCOUNTS BEING OPERATED BY THEM. THEREFORE, ON THE BASIS OF SUCH INFORMATION RECEIVED BY THE AO, HE VALIDLY FORMED HIS BELIEF TH AT THE PAYMENT OF AMOUNT OF RS.1,00,250/- FROM SUCH ACCOUNTS OPERATED BY BROKERS IN THE NAME OF THE APPELLANT WAS HIS UNDISCLOSED INCOM E RECEIVED IN THE FORM OF ENTRY. ON EXAMINATION OF THE COPY OF THE RETURN ON RECORD, I FIND THAT IN THIS RETURN, NO SUCH RECEIPT OF AMOUNT OF RS.1,0 0,000/- OR RS.1,00,250/- (IN FACT THE ACTUAL AMOUNT PAID TO TH E ASSESSEE WAS RS.1,00,000/- TROUGH DRAFT BECAUSE THE AMOUNT OF RS .250/- IS THE PAYMENT MADE TO THE BANK FOR MAKING OF DRAFT) HAS B EEN DECLARED OR ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 6 ANY INFORMATION ABOUT RECEIPT OF ANY GIFT WAS GIVEN . THEREFORE, I DO NOT AGREE WITH THE ARGUMENT TAKEN BY THE LD. AR THA T THE AO RECORDED THE REASONS WITHOUT CONSIDERING THE MATERIAL ON REC ORD AND WITHOUT CONSIDERING THE ORIGINAL RETURN FILED BY THE APPELL ANT IN WHICH THE ALLEGED GIFT HAS NOT BEEN SHOWN. IN THIS REGARD, I WOULD LIKE TO RELY ON FOLLOWING DECISIONS OF THE HONBLE SUPREME COURT AN D JURISDICTIONAL HIGH COURT IN WHICH THE REOPENING OF ASSESSMENT ON THE BASIS OF REPORT OF THE INVESTIGATION WING AND OTHER OFFICERS OF THE INCOME TAX DEPARTMENT WAS HELD TO BE VALID:- 1. PHOOL CHAND BAJRANG LAL VS ITO (1993) 203 ITR 4 50 (SC) 2. ITO VS. PURSHOTTAM DASS BANGUR & ORS 224 ITR 36 2 (SC) 3. BRIJ MOHAN AGARWAL VS. ACIT (2004) 268 ITR 400 (AII) HERE, IT MAY ALSO BE NOTED THAT THE INITIAL RETURN FILED BY THE ASSESSEE (APPELLANT) FOR THE RELEVANT ASSESSMENT YE AR WAS ONLY PROCESSED U/S. 143(1)(A) AND NO SCRUTINY OF THIS RE TURN WAS CARRIED OUT BY THE DEPARTMENT U/S. 143(3). THEREFORE, THE GENU INENESS OF THE GIFT RS.1,00,000/- CLAIMED TO HAVE BEAN RECEIVED BY THE ASSESSEE FROM SHRI SANJEEV GOYAL COULD NOT BE EXAMINED BEFORE THE RECE IPT OF THE ABOVE INFORMATION. IT HAS ALREADY BEEN HELD BY THE HON'B LE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERY STOCK BROKERS PVT. LTD. (2007) 161 TAXMAN 316 THAT THE RETURN PROCESSED U/S. 143(1)(A) IS NOT AN ASSESSMENT ORDER AND THEREFORE, THERE BEING NO ASSESSMENT U/S. 143(3), QUESTION OF CHANGE OF OPINION ABOUT THIS RE CEIPT BEING VALID GIFT OR NOT DOES NOT ARISE. THEREFORE, I DO NOT FI ND ANY FORCE IN THE CONTENTION OF THE APPELLANT RAISED IN GROUND NO.1 T HAT THE INITIATION OF PROCEEDINGS U/S. 147 IS BAD IN LAW TAKING THE VIEW THAT THE PROCEEDING HAS BEEN REOPENED WITHOUT CONSIDERING THE INITIAL R ETURN, WHICH HAS NOT BEEN FOUND CORRECT AS DISCUSSED ABOVE. TO SUPP ORT MY VIEW, I AM PRODUCING THE RELEVANT PORTION OF THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI (SUPRA ) :- IT MAY BE NOTED ABOVE THAT UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1), WITH EFFE CT FROM 1.6.1999, EXCEPT AS PROVIDED IN THE PROVISION ITSEL F, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER SECTION 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGEMENT IS NOT D ONE BY ANY ASSESSING OFFICER, BUT MOSTLY BY MINISTERIAL ST AFF. ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 7 CAN IT BE SAID THAT ANY ASSESSMENT IS DONE BY THE M? THE REPLY IS AN EMPHATIC NO. THE INTIMATION UNDE R SECTION 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMA ND UNDER SECTION 156, FOR THE APPARENT PURPOSE OF MAKI NG MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDI CATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. AND NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISION. THEREFORE, THERE BEING NO ASSESSMENT UN DER SECTION 143(1)(A), THE QUESTION OF CHANGE OF OPINI ON, AS CONTENDED, DOES NOT ARISE. THEREFORE, IN VIEW OF THE ABOVE DECISION OF THE HON 'BLE SUPREME COURT, JUST BECAUSE OF DISCLOSURE OF THE PARTICULAR S OF A GIFT IN THE RETURN OF INCOME WOULD NOT PREVENT THE DEPARTMENT F ROM REOPENING OF THE CASE OF THE APPELLANT U/S. 147 IN CASE ANY INFO RMATION IS RECEIVED ON THE BASIS OF ANY ENQUIRY CONDUCTED BY THE INVEST IGATION WING OF THE DEPARTMENT THAT SUCH PAYMENTS ARE BEING MADE BY CER TAIN BROKERS IN FORM OF ENTRIES OF CAPITAL GAINS AND GIFTS. HOWEVE R, THE FACT OF THIS CASE IS THAT THE ASSESSEE IN THIS CASE HAS NOT EVEN DISCLOSED THE RECEIPT OF THE AMOUNT OF RS.1,00,000/- AS GIFT IN HIS INITI AL RETURN OF INCOME FILED BY HIM ON 28.11.2007 AND HENCE, THE AO IS VER Y MUCH JUSTIFIED IN INITIATING PROCEEDING U/S 147 AFTER RECEIVING THE I NFORMATION OF THE NATURE AS DISCUSSED IN THE ASSESSMENT ORDER AND ALS O DISCUSSED IN PARA NO.3 OF THIS ORDER KEEPING IN VIEW THE DECISIO N OF THE HONBLE SUPREME COURT IN CASE OF CLT VS. RAJESH JHAVERI STO CK BROKERS PVT. LTD. (SUPRA). NOW, THE NEXT QUESTION TO BE EXAMINED WITH REGARD T O VALIDITY OF PROCEEDING U/S.147 IS THAT WHETHER THE AO WAS JUSTI FIED IN REOPENING THE PROCEEDING AFTER RECEIVING INFORMATION FROM ADD L. CIT, RANGE-1 AND WHETHER THE CONTENTION RAISED BY THE APPELLANT IN THIS REGARD THAT THE REASONS RECORDED ARE ON UNTRUE FACTS IS CORRECT OR NOT. IN THIS REGARD ALSO, I RELY ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUP RA) IN WHICH THE HON'BLE SUPREME COURT HAS ANALYZED THE SC OPE OF NEWLY SUBSTITUTED SECTION 147 IN THE INCOME TAX ACT, 1961 W.E.F. 01.04.89. THE RELEVANT PORTION OF THIS DECISION IS REPRODUCED AS UNDER :- ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 8 THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM 1.4.89, AS ALSO SECTIONS 148 TO 15 2 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIO NS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMEN T FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 1 47(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTL Y THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME TAX HA VE ESCAPED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER (I) OMISSION OR FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH TH ESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIE D BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTIO N TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 14 7(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFE RS JURISDICTION TO REOPEN THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTI ON 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION A ND NOT THE PROVISO. IN VIEW OF THE ABOVE DECISION, IT IS CLEAR THAT THE SUPREME COURT HAS HELD CLEARLY THAT UNDER THE SUBSTITUTED SECTION 147 APPLICABLE W.E.F. 01.04.1989, EXISTENCE OF ONLY THE FIRST COND ITION SUFFICES TO REOPEN THE ASSESSMENT, WHICH IS FURTHER EXPLAINED B Y THE HONBLE SUPREME COURT THAT IN OTHER WORDS, IF THE AO FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT, IF THE ASSES SMENT IS BEING REOPENED UNDER THE MAIN PROVISIONS OF SECTION 147 A ND NOT IN PROVISO FOR WHICH BOTH CONDITIONS ARE REQUIRED TO BE SATISF IED. IN THE PRESENT CASE ALSO, THE ASSESSMENT WAS REOPENED UNDER THE MA IN PROVISIONS OF THE SECTION 147 BECAUSE NO ASSESSMENT ORDER U/S. 14 3(3) WAS PASSED ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 9 EARLIER ON THE BASIS OF THE RETURN OF INCOME FILED BY THE APPELLANT AND HENCE, ONLY FIRST CONDITION IS REQUIRED TO BE SATIS FIED. IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUP RA) , THE CASE WAS REOPENED ON THE BASIS OF REVENUE AUDIT OBJECTIO N. THE AUDIT DEPARTMENT IS OUTSIDE THE INCOME TAX DEPARTMENT, EV EN THEN THE HONBLE SUPREME COURT IN THE ABOVE CITED CASE HELD THAT REOPENING OF THE CASE U/S. 147 WAS VALID BECAUSE THE AUDIT OBJEC TION GAVE A CAUSE OR JUSTIFICATION FOR REOPENING OF THE CASE. IN THE PRESENT CASE, THE AO IS ON MORE STRONG FOOTING BECAUSE IN THIS CASE, THE RE WAS NO OBJECTION FROM ANY AUTHORITY OUTSIDE THE DEPARTMENT ON THE IN COME DISCLOSED BY THE APPELLANT BUT PROPER INFORMATION WAS GATHERED B Y THE INCOME TAX DEPARTMENT ON THE BASIS OF INVESTIGATION CARRIED OU T BY ITS INVESTIGATION WING THAT CERTAIN BROKERS WERE FOUND INVOLVED IN GIVING ENTRIES OF BOGUS CAPITAL GAIN AND BOGUS GIFT AND TH E NAME OF THE ASSESSEE (APPELLANT) WAS ALSO FOUND FROM THEIR RECO RDS AS BENEFICIARIES OF SUCH ENTRY. THEREFORE, THE PRINCI PLE LAID DOWN BY THE HONBLE SUPREME COURT FOR REOPENING OF THE ASSESSME NT U/S. 147 IN CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUP RA) IS FOUND TO BE MORE APPROPRIATE IN THE PRESENT CASE BE CAUSE THE SUPREME COURT HAS HELD IN THIS DECISION THAT IF THE AO FOR WHATEVER REASON (HERE THE REASON WITH THE AO IS THAT HE GOT INFORMA TION FROM THE INVESTIGATION WING THROUGH HIS RANGE ADDL. CIT THAT THIS ASSESSEE HAS RECEIVED AN ENTRY SHOWING PAYMENT OF RS.1,00,250/- FROM THE BANK ACCOUNT MAINTAINED BY SUCH BROKERS WHO WERE FOUND I NVOLVED IN GIVING ENTRY OF BOGUS CAPITAL GAIN AND BOGUS GIFT) HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, IT CONF ERS JURISDICTION TO REOPEN THE ASSESSMENT. IN THE ABOVE CITED CASE OF THE ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA) , THE HONBLE SUPREME COURT HAS ALSO ANALYZED THE TERM REASON TO BELIEVE AND THE RELEVANT PORTION OF THIS DECISION IS REPRODUCED AS UNDER:- SECTION 147 AUTHORIZES AND PERMITS THE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESS MENT YEAR HAS ESCAPED ASSESSMENT. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION . IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 10 ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON T O BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT . THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSIN G OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESS ING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUD E FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS T O TAXPAYERS.' IN VIEW OF THE ABOVE DECISION OF THE HON'BLE SUPREM E COURT, I FIND THAT IN THE PRESENT CASE, THE AO HAS CAUSE FOR REOPENING THE CASE. THE CAUSE IS PROVIDED BY THE INFORMATION RE CEIVED BY HIM FROM THE INVESTIGATION WING OF THE DEPARTMENT AND S UCH INFORMATION WAS NOT VERIFIABLE FROM THE RETURN FILED BY THE ASS ESSEE FOR THE RELEVANT ASSESSMENT YEAR BECAUSE NO SUCH RECEIPT OF MONEY WA S DISCLOSED IN THE RETURN OF INCOME AND THIS RETURN WAS PROCESSED BY THE DEPARTMENT U/S. 143(1)(A) ONLY AND NO SCRUTINY U/S. 143(3) WAS CARRIED OUT. AS IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT PRO CESSING U/S.143(1)(A) IS NOT ASSESSMENT, SUCH INFORMATION A LSO PROVIDED JUSTIFICATION TO THE AO TO RECORD THE REASON TO BELIEVE THAT IN COME TO THE EXTENT OF RS.1,00,250/- HAS ESCAPED ASSESSME NT. IT IS TRUE THAT THE CORRECT AMOUNT RECEIVED BY THE ASSESSEE IS RS.1 ,00,000/- BUT THE AMOUNT OF RS.1,00,250/- IN FACT REPRESENTED THE AMO UNT OF RS.1,00,000/- WHICH WAS RECEIVED BY THE ASSESSEE BE CAUSE THIS AMOUNT WAS DEBITED IN THE BANK ACCOUNT BEING OPERATED BY B ROKERS (WHICH WAS EXAMINED BY THE INVESTIGATION WING) ALONG WITH DRAFT MAKING CHARGES OF RS.250/- PAID TO THE BANK OUT OF WHICH, A DEMAND DRAFT DATED 11.06.2000 OF RS.1,00,000/- WAS PREPARED AND GIVEN TO THE ASSESSEE WHICH WAS LATER DEPOSITED IN HIS BANK ACCO UNT BY CLEARING ON 17.06.2000 AND SUBSEQUENTLY, DURING THE PROCEEDING U/S.147, THIS AMOUNT WAS CLAIMED TO HAVE BEEN RECEIVED BY THE ASS ESSEE AS GIFT BUT GENUINENESS OF SUCH GIFT COULD NOT BE SUBSTANTIATED BY HIM BECAUSE OF HIS FAILURE TO PRODUCE THE DONOR AS WELL AS TO EXPL AIN HIS RELATIONSHIP WITH THE DONOR AND OCCASION OF RECEIVING THE GIFT A ND FOUND TO BE JUST ENTRY AS PER THE INFORMATION OF THE INVESTIGATION W ING. THEREFORE, SUCH INFORMATION ON THE BASIS OF WHICH THIS CASE WA S REOPENED CANNOT BE SAID TO BE UNTRUE AT LEAST IN SUBSTANCE, THOUGH THERE MAY BE SLIGHT MISTAKE IN RECORDING THE NAME OF THE PERSON IN WHOS E NAME THE ALLEGED BANK ACCOUNT EXISTED FROM WHERE THE ALLEGED MONEY WAS PAID CLAIMED TO BE GIFT BY THE ASSESSEE (APPELLANT). AT THE TIME OF RECORDING ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 11 THE REASONS, THE AO WAS NOT REQUIRED TO MAKE ALL TH E ENQUIRIES AND THE INFORMATION GIVEN IN THE REPORT OF THE INVESTIGATIO N WING WAS SUFFICIENT FOR HIM TO DRAW SUCH CONCLUSION THAT THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE AS NOT DECLARED IN THE RETURN OF INCOME, WAS IN FORM OF ENTRY OF GIFT RECEIVED FROM SUCH BROKERS ENGAGED IN PROVIDING SUCH ENTRIES BECAUSE THE INFOR MATION PROVIDED BY THE INVESTIGATION WING WAS BASED ON THE ENQUIRIE S CONDUCTED BY THE OFFICERS OF THE INCOME-TAX DEPARTMENT AND IT WA S A SUFFICIENT PRIMA FACIE MATERIAL FOR HIM TO REOPEN A CASE U/S. 147, MORE PARTICULARLY BECAUSE THE INITIAL RETURN WAS ONLY PR OCESSED U/S.143(1)(A). IT HAS ALSO BEEN HELD BY THE HONBL E SUPREME COURT IN CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO [1999] 236 ITR 3 4 (SC) THAT AT THE TIME OF REOPENING OF A CASE U/S.147, I T HAS TO BE SEEN THAT THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH, THE DEPARTMENT COULD REOPEN THE CASE AND THE SUFFICIENC Y OR CORRECTNESS OF THE MATERIAL WAS NOT A THING TO BE CONSIDERED AT THIS STAGE. IN VIEW OF THE ABOVE LEGAL POSITION AND FACTS OF TH E CASE, NONE OF THE CONTENTIONS RAISED BY THE ASSESSEE (APPELLANT) HAS BEEN FOUND TO BE VALID AND JUSTIFIED AND HE HAS NOT EVEN TRIED TO SUBSTANTIATE THEM DURING THE APPEAL PROCEEDING DESPITE HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE ME FROM TIME TO TIME JUST TO SEEK A DJOURNMENT BUT NEVER FILED ANY WRITTEN SUBMISSIONS IN THIS RESPECT . THEREFORE, GROUND NO.1, CHALLENGING THE VALIDITY OF PROCEEDING U/S.147 AND SUBSEQUENT ORDER PASSED U/S. 147/143(3), IS DISMISS ED. 8. ON MERIT, THE CIT(A) HELD AS UNDER :- (PARA NOS. 6.10 TO 6.12) 6.10 IN VIEW OF THE FACTS AND CIRCUMSTANCES AN D VARIOUS CASE LAWS SO FAR DISCUSSED FROM PARA NOS.6.1 TO 6.9 THAT THER E IS NO RELATIONSHIP BETWEEN THE DONOR AND DONEE ASSESSEE, THERE IS NO O CCASION FOR GIVING OF GIFT, THE DONOR IS NEITHER PRODUCED BY THE ASSES SEE (APPELLANT) FOR EXAMINATION, NOR IT IS PRESENTLY TRACEABLE AT THE GIVEN ADDRESS BY THE AO TO VERIFY THE CORRECTNESS OF THE GIFT DEED AND A FFIDAVIT PURPORTED TO HAVE BEEN ISSUED BY HIM, WHICH IS ONLY A PHOTOCOPY AS FILED BY THE ASSESSEE (APPELLANT) DURING THE ASSESSMENT PROCEEDI NG, CREDITWORTHINESS OF DONOR AS WELL AS THE GENUINENES S OF THE GIFT IS NOT ESTABLISHED AND RELYING ON THE DECISION OF HONBLE SUPREME COURT IN ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 12 THE CASE OF CIT VS. P. MOHANKALA (SUPRA), AND OTHER DECISIONS OF DELHI HIGH COURT AND DELHI BENCH OF HONBLE ITAT IN CASES OF SAJJAN DAS & SONS VS. CIT REPORTED IN 264 ITR 435, CIT VS. ANIL KUMAR (2001) 292 ITR 552 (DEL), SANDEEP KUMAR (HUF) VS. C IT (2007) 293 ITR 294 (DEL), RAJEEV TANDON VS ACIT 294 ITR 488 (D EL), & ITO VS. NAVEEN KUMAR AGARWAL [2008] 25 SOT 253 (DELHI) AND THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF TIRAT H RAM GUPTA VS. CIT 304 ITR 145 AND THE DECISION OF HONBLE ITAT, A GRA IN THE CASE OF SMT. SATYAWATI SINGHAL VS. ITO, AGRA VIDE ITA NO .04/AGR/2006 DATED 27.04.2007, I AM OF THE CONSIDERED OPINION TH AT THE GIFTS OF RS.1,00,000/- SHOWN BY THE APPELLANT IS NOT GENUINE GIFT AND HENCE, THEY ARE RECEIPT OF MONEY OF AN INCOME NATURE AS HE LD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANKAFA (SUPRA) AND HENCE, THIS AMOUNT IS CORRECTLY ADDED BY THE AO IN THE INCOME OF THE ASSESSEE (APPELLANT) HOLDING IT HIS UNACCOUNTED MON EY UNDER THE GARB OF BOGUS GIFT ENTRY AND THEREFORE, 1 CONFIRM THE AD DITION OF RS.1,00,000/- MADE IN THE ASSESSMENT ORDER. 6.11 AS REGARDS TO ADDITION OF RS.2,000/- ON ACCOUN T OF COMMISSION PAID FOR OBTAINING THE ENTRY OF GIFT CHALLENGED IN GROUND NO.2 IS CONCERNED, I HAVE CONFIRMED THE DECISION OF THE AO HOLDING RECEIPT OF RS.1,00,000/- IN THE HAND OF THE APPELLANT AS UNEXP LAINED GIFT BEING HIS UNACCOUNTED MONEY, I FIND THAT THE AO HAS MADE THIS ADDITION BECAUSE HE FOUND THAT THE GIFT OF RS.1,00,000/- SHO WN BY THE APPELLANT WAS NOT A REAL GIFT BUT A RECEIPT OF MONEY IN FORM OF INCOME AND SUCH ENTRIES ARE GIVEN BY THE ENTRY GIVER ONLY AFTER CHA RGING OF SOME COMMISSION. THOUGH THERE IS NO DIRECT EVIDENCE AGAI NST THE APPELLANT THAT SHE HAS PAID COMMISSION FOR OBTAINING THIS ENT RY BUT ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, IT IS CONCLUSIVELY PROVED THAT THE AMOUNT OF RS.1,00,000/- RECEIVED BY THE APPELLANT I S NOT A REAL GIFT AND IT IS AN ENTRY OF BOGUS GIFT, NOW THE QUESTION ARISES WHETHER SUCH ENTRY WOULD BE GIVEN BY SOMEONE WITHOUT CHARGING AN Y COMMISSION. AS PER HUMAN CONDUCT AND COMMON MARKET PRACTICE OF GIVING OF ENTRY, IT IS NOT POSSIBLE TO TAKE ENTRY WITHOUT PAYING COM MISSION. UNDER SUCH CIRCUMSTANCES, SECTION 114 OF THE EVIDENCE ACT CAN BE INVOKED. THE RELEVANT PROVISION OF THIS SECTION IS REPRODUCE D AS UNDER:- THE COURT MAY PRESUME THE EXISTENCE OF ANY FACT WHICH IT THINKS LIKELY TO HAVE HAPPENED, REGARD BEI NG HAD TO THE COMMON COURSE OF NATURAL EVENTS, HUMAN CONDU CTS ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 13 AND PUBLIC AND PRIVATE BUSINESS IN THEIR RELATION T O THE FACTS OF PARTICULAR CASE. SUCH PRESUMPTION CAN BE MADE UNDER CERTAIN CIRCUMST ANCES AS PROVIDED IN THIS SECTION FROM (A) TO (I) OUT OF WHI CH IT IS PROVIDED IN SL. NO.(G) THAT THIS PRESUMPTION CAN BE APPLIED IN CASE S WHERE THE EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, IF PRODUCED BE UN-FAVOURABLE TO THE PERSON WHO WITHHOLD IT. IN TH E PRESENT CASE ALSO, THE APPELLANT HAS FAILED TO GIVE EVIDENCE AS TO IF THE RECEIPT OF RS.1,00,000/- WAS NOT A REAL GIFT, THEN FOR WHAT PU RPOSES THIS AMOUNT WAS RECEIVED BY HIM. HAD HE GIVEN SUCH DETAILS, IT WOULD HAVE NOT BEEN FAVOURABLE TO HIM AND THEREFORE, HE CONCEALED THE FACT ABOUT THE REAL NATURE OF THE AMOUNT OF RS.1,00,000/- AND ALSO DID NOT APPEAR WHEN HE WAS CALLED BY THE AO DURING THE REMAND STAG E TO EXPLAIN THE NATURE OF RECEIPT OF THIS AMOUNT. EVEN DURING THE APPEAL PROCEEDING, NO DETAILS WERE FILED IN SUPPORT OF THIS GROUND IN WHICH THIS ADDITION WAS CHALLENGED. IN VIEW OF THESE FACTS AND CIRCUMS TANCES, BY INVOKING SECTION 114 OF EVIDENCE ACT, 1872, IT CAN BE PRESUM ED THAT THE APPELLANT HAS PAID A COMMISSION OF CERTAIN AMOUNT T AKING INTO ACCOUNT THE HUMAN CONDUCT AND PUBLIC AND PRIVATE BU SINESS PRACTICE. SINCE THE DETAILS OF REAL AFFAIRS RELATING TO RECEI PT OF RS.1,00,000/- WAS NOT PROVIDED BY THE APPELLANT, SUCH PRESUMPTION IS JUSTIFIED IN VIEW OF SECTION 114 OF THE EVIDENCE ACT, 1872. THEREFORE, I ALSO CONFIRM THE DECISION OF THE AO TO ESTIMATE THIS AMOUNT AT 2% WH ICH COMES TO RS.2000/-. THE ADDITION OF THIS AMOUNT OF COMMISSI ON OF RS.2000/- IS CONFIRMED BY ME AS THE ADDITION OF THE GIFT BEING U NEXPLAINED MONEY IS CONFIRMED BY ME. 6.12 AS BOTH THE ADDITION OF RS.1,00,000/- AND RS.2 ,000/- AS CHALLENGED IN GROUND NO.2 HAS BEEN CONFIRMED BY ME AS DISCUSSED ABOVE, THE GROUND NO.2 IS DISMISSED. 9. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS NOT DEALING IN SHARES. THE DETAILS GIVEN IN REASONS RE CORDED AND FINALLY ADDITION MADE IS DIFFERENT. THE LD. AUTHORISED REPRESENTATIVE SU BMITTED THAT WRONG/INCORRECT REASONS HAVE BEEN RECORDED. THE LD. AUTHORISED REP RESENTATIVE SUBMITTED THAT ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 14 REASONS CANNOT BE SUPPLEMENTED. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE IS NO REASON TO BELIEVE, THEREFORE, REOPENING ITSELF IS BAD IN LAW. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENT ION RELIED UPON FOLLOWING DECISIONS:- 1) NDT SYSTEM VS. ITO 2013 255 CTR PAGE 113 BOMBAY 2) JAI BHARAT MARUTI LIMITED VS. CIT, 223 CTR PAGE 269 DELHI 3) ARVIND POLY COT LIMITED VS. ACIT, 222 ITR PAGE 2 80 GUJARAT 4) TIN MANUFACTURING CO. VS. CIT 222 ITR PAGE 323 5) CIT VS. P.R. GANPATHY 2012 254 CTR SC PAGE 336 6) CIT VS. ARUN KUMAR KOTHARI 2012 254 CTR RAJASTHA N 648 10. ON MERIT, THE LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT THE A.O. DID NOT EXAMINE THE DONOR WHEREAS THE ASSESSEE HAS PROVED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. HE RELIED UPON THE FOLLOWING DECISIONS:- 1) CIT VS. S.K. JAIN 2012 254 CTR PAGE 652 ALLAHABA D 2) KANCHAN SINGH VS. CIT 2009 221 CTR PAGE 456 ALLA HABAD 3) CIT VS. RAM DEV KUMAR 2009 315 ITR PAGE 435 11. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T BURDEN IS ON THE REVENUE WHICH THE REVENUE HAS FAILED TO DISCHARGE. IN SUPP ORT OF HIS CONTENTION, THE LD. AUTHORISED REPRESENTATIVE RELIED UPON THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TIN MANUFACTURING COMPANY OF I NDIA VS. CIT & ANOTHER, 222 ITR 323 (ALL.) ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 15 12. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF CIT(A) AND THE FOLLOWING JUDGEMENTS:- I) ITO VS. PURUSHOTTAM DAS BANGUR & ANOTHER, 224 IT R 362(SC) II) CIT VS. P. MOHANAKALA, 291 ITR 278 (SC) III) RAM LAL AGARWAL VS. CIT, 280 ITR 547 (ALL.) 13. I HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES, RECORD PERUSED AND GONE THROUGH THE DECISIONS CITED. IN RESPECT OF GROUND NO.1, REOPENING OF COMPLETED ASSESSMENT, I WOULD LIKE TO REFER FOLLOWING JUDGEME NTS:- BRIJ MOHAN AGARWAL VS. ASSISTANT COMMISSIONER OF IN COME-TAX, 268 ITR 400 (ALL) -- THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE IN HIS RETURN FOR ASSESSMENT YEAR 2001-02 SHOWED SALE OF CERTAIN SHARES. THE PRO FITS EARNED ON SALE OF SAID SHARES WERE OFFERED TO TAX AS LONG-TERM CAPITAL GA IN. ON BASIS OF INFORMATION, HIS ASSESSMENT WAS COMPLETED. SUBSEQUENTLY, A NOTICE UN DER SECTION 148 WAS ISSUED TO HIM. THE ASSESSEE BY FILING PETITION CHALLENGED THE VALIDITY OF SAID NOTICE. IN THE COUNTER-AFFIDAVIT FILED BY THE RESPONDENT, IT WAS S TATED THAT INVESTIGATION WING OF THE DEPARTMENT CONDUCTED SEARCH AND SEIZURE OPERATI ONS UNDER SECTION 132 AGAINST SOME SHARE BROKERS. IT WAS REVEALED IN SAID OPERATI ON THAT THE ASSESSEE WAS INVOLVED IN BOGUS TRANSACTIONS OF SHARES WITH SOME SHARE BROKERS, AND SALE OF SHARES SHOWN BY HIM IN HIS RETURN OF INCOME WAS INC ORRECT. IT WAS THUS ALLEGED BY THE RESPONDENTS THAT IN SUCH CIRCUMSTANCES, THEY HA D A REASONABLE GROUND TO BELIEVE ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 16 THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT FOR WHICH PROCEEDINGS UNDER SECTION 148 WERE TO BE INITIATED.3. THE ASSESSEE WA S A HUF AND BRIJ MOHAN AGARWAL IS THE KARTA OF THE FAMILY. THE RELEVANT AS SESSMENT WAS YEAR 2001-02. IT WAS ALLEGED IN PARA 6 OF THE PETITION THAT THE MAIN SOURCE OF INCOME OF THE PETITIONER IS FROM HOUSE PROPERTY. THE ASSESSEE ENJ OYS INCOME FROM THE HOUSE PROPERTY WHICH IS SAID TO BE COMMERCIAL PREMISES. IT IS ALLEGED IN PARA 7 OF THE PETITION THAT DURING FINANCIAL YEAR 1999 THE PETITI ONER PURCHASED 8,400 SHARES OF M/S. CHARISMATIC TRADE LINKS LTD. AND THE PURCHASE OF THESE SHARES WAS DULY SHOWN IN THE RELEVANT INCOME-TAX RETURN FOR THAT YE AR. IT IS ALLEGED IN PARA 8 OF THE PETITION THAT DURING ASSESSMENT YEAR 2001-02, THE A FORESAID SHARES WERE SOLD TO ONE M/S. YADAV & CO. IN PARA 9 OF THE PETITION IT IS ST ATED THAT THIS SALE OF SHARES WAS DULY SHOWN IN THE RETURN OF INCOME. SUBSEQUENTLY, T HE ASSESSEE RECEIVED A SUMMONS FROM THE ADDL. DIRECTOR OF IT (INVESTIGATIO N) UNIT-I, NEW DELHI, VIDE SUMMON DATED 17TH JAN., 2002 BY MEANS OF WHICH CERT AIN INFORMATION WAS REQUIRED FROM THE ASSESSEE. THEREAFTER THE ASSESSEE AGAIN RE CEIVED A SUMMONS DATED 14 TH /15 TH FEB., 2002 BY WHICH CERTAIN MORE INFORMATION WAS R EQUIRED. HOWEVER, THE ASSESSEE WAS SURPRISED TO RECEIVE THE IMPUGNED NOTI CE UNDER SECTION 148 OF THE ACT. ON 14TH FEB., 2003 THE ASSESSEE RECEIVED NOTIC E UNDER SECTION 142 OF THE INCOME-TAX ACT WITH CERTAIN QUERIES. THE ASSESSEE R EPLIED THAT THE TIME PERIOD FOR ISSUING THE NOTICE UNDER SECTION 143(2) HAS EXPIRED HENCE THE AO 1 WAS NOT ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 17 AUTHORIZED TO INITIATE THE PROCEEDINGS. IT IS ALLEG ED THAT THE AO DID NOT POINT OUT ANY REASON TO BELIEVE UNDER SECTION 148. IT WAS ALS O NOT INFORMED BY THE RESPONDENTS THAT THE RECEIPTS IN RESPECT OF SALE OF SHARES WAS DOUBTFUL ACCORDING TO THE RESPONDENTS. IN COMPLIANCE TO THE NOTICE UNDER SECTION 148 THE ASSESSEE REQUESTED THAT THE RETURN ALREADY FILED BY HIM MAY BE TREATED AS COMPLIANCE OF THE SAID NOTICE. HE ALSO REQUESTED THAT COPY OF THE REA SONS RECORDED FOR INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTION 148 MAY BE S UPPLIED TO HIM. ON 24TH DEC., 2003 THE AO HAS SUPPLIED THE REASONS. IN THAT CASE ON PERUSAL OF THE REASONS SHOWS THAT I NFORMATION RELATING TO BOGUS ENTRIES FOR LONG-TERM CAPITAL GAINS/LOSS, SHA RE DEALINGS, ETC., WAS RECEIVED FROM THE DIRECTOR OF IT (INV.) UNIT-I, NEW DELHI, V IDE LETTER DATED 9TH JULY, 2002 ALONGWITH THE INVESTIGATION REPORT PREPARED BY THE ADDL. DIRECTOR OF IT (INV.) UNIT- I, NEW DELHI. SEARCH AND SEIZURE OPERATION UNDER SE CTION 132 OF THE INCOME-TAX ACT WAS CONDUCTED IN THE CASES OF THE BROKERS NAMEL Y, M/S. YADAV & CO., RAKESH NAGAR & CO., SRI SURENDRA SINGH MEHTA. DURING THE C OURSE OF INVESTIGATION IT WAS FOUND THAT BOGUS ENTRIES OF SALE OF SHARES AMOUNTIN G TO RS.5,98,800 HAS BEEN ISSUED TO BRIJ MOHAN AGARWAL, HUF AS PER SL. NO.63 OF THE LIST OF THE INVESTIGATION WING ENCLOSED WITH THE REPORT. FROM A PERUSAL OF TH E RECORD OF THE ASSESSEE IT IS REVEALED THAT THE ASSESSEE IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 18 HAS CLAIMED PROFIT OF RS.7,62,282 FOR LONG-TERM CAP ITAL GAIN ON SALE OF 8,400 SHARES FOR RS.7,89,180 AND HAS CLAIMED INCOME-TAX CHARGEAB LE @ 10 PER CENT AS SPECIAL RATE. FROM THE FINDING OF THE INVESTIGATION WING AN D AS PER THE RECORD THE RESPONDENT HAD REASON TO BELIEVE THAT THE ASSESSEE HAS DIVERTED AND HAS CONCEALED HIS INCOME OF RS.5,98,800 BY DISCLOSING IT TO BE SA LE PROCEEDS OF SHARES WHICH IS NOT CORRECT AS NO REAL TRANSACTION OF DEALING IN SH ARES HAD EVEN TAKEN PLACE. THE ASSESSEE ALLEGED IN PARA 20 OF THE WRIT PETITIO N THAT THE PURCHASE OF SHARES IS NOT IN DISPUTE, THE SALE OF THESE SHARES IS ALSO NOT IN DISPUTE. THE AFORESAID SHARES HAVE NOT BEEN TRANSFERRED IN FAVOUR OF M/S. YADAV & CO. BY THE CONCERNED COMPANY. MERELY ON THE BASIS OF THE STATEMENT OF A THIRD PERSON, REASSESSMENT PROCEEDINGS CANNOT BE INITIATED AGAINST THE PETITIO NER. IT IS ALLEGED IN PARA 22 OF THE WRIT PETITION THAT THE SALE VALUE OF SHARES HAVE BE EN DISCLOSED AND HAS BEEN ACCEPTED AND THERE IS NO DISPUTE IN RESPECT OF SALE VALUE OF THE SHARES. THE COMPLETE SALE VALUE HAS BEEN SHOWN IN THE ORIGINAL RETURN OF INCOME FILED BY THE PETITIONER AND HENCE IT CANNOT BE SAID TO BE A CASE OF ESCAPED ASSESSMENT. IN PARA 8 OF THE COUNTER-AFFIDAVIT, IT IS STATED TH AT THE ASSESSEE FURTHER INDULGED IN BOGUS TRANSACTIONS IN PURCHASE ALSO WHE REBY HE PURCHASED SHARES ON BOGUS TRANSACTION FROM M/S. J.R.D. STOCK BROKER (P. ) LTD. THE DIRECTOR OF M/S. ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 19 J.R.D. STOCK BROKER (P.) LTD. MR. ASHOK GUPTA HAS A DMITTED IN HIS STATEMENT THAT HE WAS ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENT RIES IN EXCHANGE OF CASH/CHEQUES FOR CERTAIN COMMISSION. THE COPIES OF THE STATEMENT OF MR. ASHOK GUPTA ARE ANNEX CA-5, 7 AND 8 TO THE COUNTER-AFFIDA VIT. IN PARA 10 OF THE COUNTER- AFFIDAVIT IT IS STATED THAT THE PETITIONER IS THE R ECIPIENT OF SEVERAL LAKHS OF RUPEES ARISING FROM THE BOGUS TRANSACTIONS ENTERED INTO TH ROUGH YADAV & CO. AND THROUGH M/S. J.R.D. STOCK BROKER (P.) LTD. THE PETITIONER H AS CONCEALED ALL THESE RELEVANT MATERIALS. THE EARLIER ASSESSMENT WAS DONE UNDER SE CTION 143(1) OF THE INCOME-TAX ACT, IN WHICH THERE WAS NO SCRUTINY OF THE MATERIAL . IN PARA 21 OF THE COUNTER-AFFIDAVIT IT IS STATED TH AT THE PETITIONER HAS CONCEALED INCOME IN HIS RETURN. A SUM OF RS.7,88,29 8 WAS TAXABLE UNDER THE NORMAL RATE UNDER THE HEAD INCOME FROM OTHER SOURC ES BUT IT HAD BEEN SHOWN UNDER THE HEAD LONG-TERM CAPITAL GAIN AND WAS TAX ED AT SPECIAL RATE OF 10 PER CENT. HENCE, THE ASSESSEE HAS FURNISHED INACCURATE INCOME AND HAS ALSO SHOWN LESSER INCOME AND HAS BEEN ASSESSED AT A LOWER RATE . THE CONTENTION OF THE ASSESSEE THAT DEPARTMENT HAS ACCEPTED THE SALE OF SHARES IS MISLEADING. THERE IS NO FINDING OF THE ASSESSING OFFICER THAT THE SALE OF SHARES EV ER TOOK PLACE. WHATEVER, IS SHOWN ARE BOGUS ENTRIES. UNDER THE FACTS AND CIRCUMSTANC ES, THE COURT HELD AS UNDER: - (PAGES NOS. 404 & 405) ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 20 FROM THE FACTS STATED IN THE COUNTER-AFFIDAVIT IT IS EVIDENT THAT THE PETITIONER HAS BEEN SUPPRESSING HIS CORRECT INC OME AND HAS BEEN INDULGING IN BOGUS TRANSACTIONS AS STATED IN THE CO UNTER-AFFIDAVIT. THE CONTENTION OF THE LEARNED COUNSEL FOR THE PETITIONE R THAT IT IS A MERE CHANGE OF OPINION CANNOT BE ACCEPTED. VERY IMPORTAN T MATERIALS HAVE COME BEFORE THE INCOME-TAX AUTHORITIES TO SHOW THAT THE PETITIONER WAS SUPPRESSING HIS INCOME BY INDULGING IN BOGUS TRANSA CTIONS. 16. IT MAY BE MENTIONED THAT AT THIS STAGE WE ARE NOT PRONOUNCING A FINAL VERDICT ABOUT THE ALLEGATIONS IN THE COUNTER- AFFIDAVIT. ALL THAT THE COURT HAS TO SEE AT THIS STAGE AS TO WHETHER IT CAN BE SAID THAT THE AUTHORITY CONCERNED HAD REASON TO BELIEVE THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR THAT THE CORRECT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN VIEW OF THE INVESTIGATION MA DE BY THE INVESTIGATION WING OF THE DEPARTMENT, RELEVANT AND VERY MATERIAL FACTS HAVE COME BEFORE THE RESPONDENT NO. 1 THAT TH E PETITIONER WAS CONCEALING HIS INCOME BY INDULGING IN BOGUS TRANSAC TIONS. ALL THAT IS REQUIRED AT THE STAGE OF ISSUING OF NOTICE UNDER SE CTION 148 IS THAT THE BELIEF OF THE ITO MUST BE THAT OF AN HONEST AND REA SONABLE PERSON BASED UPON REASONABLE GROUNDS AND NOT ON MERE SUSPI CION, GOSSIP OR RUMOURS. 17. IN THE PRESENT CASE, WE ARE OF THE OPINION THA T THE BELIEF OF THE RESPONDENT NO. 1 WAS AN HONEST AND REASONABLE BELIE F ON THE MATERIAL WHICH HE HAD RECEIVED FROM THE INVESTIGATION WING O F THE DEPARTMENT. IN RANBIR ENGG. MILLS STORE V. ITO [1980] 126 ITR 5 121 (PUNJ. & HAR.), CONSEQUENT UPON CRAIDS CONDUCTED BY THE INCO ME-TAX DEPARTMENT ON CERTAIN BROKERS AND EXAMINATION OF TH E BOOKS OF A CERTAIN PERSON, IT WAS FOUND THAT MANY OF THE TRANS ACTIONS RECORDED IN THE BOOKS OF THE ASSESSEE AS LOANS WERE ACCOMMODATI ON ENTRIES IN WHICH NO MONEYS HAD PASSED AND THE SO-CALLED LENDER S WERE NAME- LENDERS ONLY. IT WAS HELD THAT THE PROCEEDINGS UNDE R SECTION 148 BY THE ASSESSING OFFICER HAD BEEN VALIDLY INITIATED. S IMILAR VIEW HAS BEEN TAKEN IN FRONTIER TRADING CO. V. P.N. CHAUDHRY, ITO [1982] 136 ITR 503 (PUNJ. & HAR.), JASH BHAI F. PATEL V. CIT [198 2] 136 ITR 7992 (PUNJ. & HAR.), KRIPA RAM RAMJI DASS V. ITO [1982] 135 ITR 68 3 (PUNJ. & HAR.), M. VARADARAJULU NAIDU V. CIT [1978] 111 ITR 301 (MAD.) AND HAZI AMIR MOHD. MIR AHMED V. CIT [1977] 110 ITR 630 (PUNJ. & HAR.). ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 21 THUS THERE IS NO MERIT IN THIS PETITION AND IT IS D ISMISSED. INCOME-TAX OFFICER VS. PURUSHOTTAM DAS BANGUR, 22 4 ITR 362 [1997] 90 TAXMAN 541 (SC) -- THE BRIEF FACTS OF THIS CASE ARE THAT DURING THE AC COUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR 1969-70 THE ASSESSEE CLAIMED THAT H E HAD SUFFERED LONG-TERM CAPITAL LOSS ON SALE OF SHARES OF MSUL DURING THE P ERIOD 5-3-1969 AND 30-3-1969 AT THE PRICE QUOTED IN THE OFFICIAL REPORT AND QUOT ATIONS OF THE CALCUTTA STOCK EXCHANGE ASSOCIATION. ACCORDING TO THE ASSESSEE, HE HAD INCURRED A LOSS OF RS.1,57,792. THE SAID CLAIM OF THE ASSESSEE WAS ACC EPTED BY THE ITO 'C' WARD, JODHPUR WHILE MAKING THE ASSESSMENT AND THE SAME WA S AFFIRMED IN APPEAL BY THE AAC. SUBSEQUENTLY, THE ITO RECEIVED A LETTER DATED 21-3-1974 FROM DEPUTY DIRECTOR, DIRECTORATE OF INSPECTOR (INVESTIGATION), SPECIAL CELL, NEW DELHI, WHEREIN IT WAS STATED THAT ON INFORMATION OBTAINED FROM THE BOMBAY STOCK EXCHANGE DIRECTORY THE BOOK VALUE PER EQUITY SHARE OF MSUL ROSE FROM RS.318.55 FOR THE YEAR ENDING 21-12-1965 TO RS.401 FOR THE YE AR ENDING 31-12-1970 AND THE EARNING PER SHARE ROSE FROM RS.8.37 PER SHARE TO RS .44 PER SHARE DURING THE ABOVEMENTIONED PERIOD AND THAT THE DIVIDEND PERCENT AGE ALSO ROSE FROM 2 PER CENT TO 10 PER CENT FOR THE SAME PERIOD, BUT THE QUOTATI ONS OF THE SHARES IN CALCUTTA STOCK EXCHANGE FELL FROM RS.168 TO RS.85 PER SHARE DURING THIS PERIOD. IN THE SAID LETTER IT WAS STATED THAT IT WAS CLEAR FROM THESE F ACTS THAT THE QUOTATIONS APPEARING ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 22 WERE AS A RESULT OF CERTAIN MANIPULATED TRANSACTION S BETWEEN THE GROUP AND IT COULD NOT BE SAID TO REFLECT THE FAIR MARKET VALUE OF THE COMPANY. ALONG WITH THE SAID LETTER HE HAD ANNEXED THE INFORMATION WHICH WAS GAT HERED BY HIM ON THE BASIS OF THE BOMBAY STOCK EXCHANGE DIRECTORY AND OTHER INFOR MATION. THE SAID LETTER WAS RECEIVED BY THE ITO ON 26-3-1974. ON 27-3-1974, HE ISSUED A NOTICE UNDER SECTION 147(B) WHEREBY THE ASSESSEE WAS INFORMED THAT THE I TO HAD THE REASON TO BELIEVE THAT ASSESSEE'S INCOME CHARGEABLE TO TAX FOR THE AS SESSMENT YEAR 1969-70 HAD ESCAPED ASSESSMENT AND, THEREFORE, THE ASSESSING AU THORITY PROPOSED TO REASSESS THE INCOME FOR THE SAID ASSESSMENT YEAR AND THE ASSESSE E WAS REQUIRED TO DELIVER TO HIM A RETURN IN THE PRESCRIBED FORM OF HIS INCOME FOR T HE SAID YEAR. FEELING AGGRIEVED BY THE SAID NOTICE, THE ASSESSEE FILED WRIT PETITIO N. THE HIGH COURT HAD HELD THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IT COULD NOT BE SAID THAT THE ITO HAD IN HIS POSSESSION INFORMATION IN CONSEQUENCE OF WHI CH HE COULD HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED A SSESSMENT FOR THE RELEVANT ASSESSMENT YEARS. THE NOTICES WERE, THEREFORE, QUAS HED. ON APPEAL TO SUPREME COURT HELD AS UNDER :- THE HIGH COURT HAS PROCEEDED ON THE BASIS THAT THE SAID LETTER OF SHRI BAGAI DID NOT CONTAIN ANY INFORMATION AND T HAT THERE WAS NEITHER EVIDENCE OF MANIPULATION NOR EVIDENCE OF CO LLUSIVE TRANSACTIONS REFERRED TO IN THE LETTER AND THAT NO INQUIRIES WERE MADE BY THE ITO AFTER THE RECEIPT OF THE LETTER SO AS TO CONSTITUTE INFORMATION. WE ARE UNABLE TO AGREE WITH THE SAID V IEW OF THE HIGH COURT. THE CONTENTS OF PARAGRAPH 2 OF THE LETTER OF SHRI BAGAI REFER TO THE STATEMENT CONTAINING FINANCIAL INFORMATION REGA RDING MAHARAJA ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 23 SHREE UMAID MILLS LTD. WHICH WAS ANNEXED TO THE LET TER OF SHRI BAGAI. THE SAID STATEMENT CONTAINED INFORMATION DERIVED FR OM THE BOMBAY STOCK EXCHANGE DIRECTORY ABOUT THE FINANCIAL CONDIT ION OF MAHARAJA SHREE UMAID MILLS LTD. DURING THE PERIOD 1965-70 WH ICH INDICATED THAT DURING THIS PERIOD, THE COMPANY HAS PROSPERED AND THAT THE BOOK VALUE PER EQUITY SHARE HAD ARISEN FROM RS.318.55 FO R THE YEAR ENDING 31-12-1965 TO RS.401 FOR THE YEAR ENDING 31-12-1970 , THE EARNING PER SHARE ROSE FROM RS.8.37 PER SHARE TO RS.44 PER SHAR E AND THAT DIVIDEND PERCENTAGE HAD ALSO RISEN FROM 2 PER CENT TO 10 PER CENT FOR THE SAME PERIOD. ON THE BASIS OF THE INFORMATION CONTAINED IN THE L ETTER OF SHRI BAGAI AND THE DOCUMENTS ANNEXED TO IT, THE ITO COUL D HAVE HAD REASON TO BELIEVE THAT THE FAIR MARKET VALUE OF THE SHARES WAS FAR MORE THAN THE SALE PRICE AND THE MARKET QUOTATIONS FROM CALCUTTA STOCK ASSOCIATION SHOWN BY THE ASSESSEE AT THE TIME OF OR IGINAL ASSESSMENT WERE MANIPULATED ONES AND AS A RESULT INCOME CHARGE ABLE TO TAX HAD ESCAPED ASSESSMENT. IT COULD NOT BE SAID THAT THE I NFORMATION THAT WAS CONTAINED IN PARAGRAPH 2 OF THE LETTER OF SHRI BAGA I WAS NOT DEFINITE INFORMATION AND IT COULD NOT BE ACTED UPON BY THE I TO FOR TAKING ACTION UNDER SECTION 147(B). MS. GAURI RASTOGI, THE LEARNED COUNSEL APPEARING F OR THE RESPONDENTS, HAS URGED THAT THE LETTER OF SHRI BAGA I WAS RECEIVED BY THE ITO ON 26-3-1974 AND ON THE VERY NEXT DAY, THAT IS, ON 27-3-1974, HE ISSUED THE IMPUGNED NOTICE UNDER SECTION 147(B) AND THAT HE DID NOT HAVE CONDUCTED ANY INQUIRY OR INVESTIGATION INT O THE INFORMATION SENT BY SHRI BAGAI. MERELY BECAUSE THE IMPUGNED NOT ICE WAS SENT ON THE NEXT DAY AFTER RECEIPT OF THE LETTER OF SHRI BA GAI DOES NOT MEAN THAT THE ITO DID NOT APPLY HIS MIND TO THE INFORMATION C ONTAINED IN THE SAID LETTER OF SHRI BAGAI. ON THE BASIS OF THE SAID FACTS AND INFORMATION CONTAINED IN THE SAID LETTER, THE ITO, WITHOUT ANY FURTHER INVESTIGATION, COULD HAVE FORMED THE OPINION THAT T HERE WAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE HIGH COURT, IN OUR OPINION, WAS IN ERROR IN PROCEEDING ON THE BASIS THAT IT COULD NOT BE SAID T HAT THE ITO HAD IN HIS POSSESSION INFORMATION ON THE BASIS OF WHICH HE COULD HAVE REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE CHAR GEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR S. FOR THE REASONS ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 24 AFOREMENTIONED, WE ARE UNABLE TO UPHOLD THE IMPUGNE D JUDGMENT OF THE HIGH COURT. THE APPEAL IS, THEREFORE, ALLOWED, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE WRI T PETITIONS FILED BY THE RESPONDENTS ARE DISMISSED. NO ORDER AS TO COSTS . 14. IN THE LIGHT OF THE ABOVE DISCUSSIONS AND JUDGE MENTS, IF I CONSIDER THE FACTS OF THE CASE UNDER CONSIDERATION, I DO NOT SEE ANY S UBSTANCE IN THE SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE THAT THE REASONS RECORDED ON ACCOUNT OF SALE OF SHARES AND ADDITION MADE ON DIFFERENT ACCOUNT OF GI FT, IS DIFFERENT BECAUSE IN THE REASONS RECORDED IT IS CLEARLY STATED ABOUT BOTH TY PES OF TRANSACTIONS BOGUS ENTRIES OF LONG TERM/SHORT TERM CAPITAL GAIN AND BOGUS GIFT S. IT IS ALSO RELEVANT TO STATE THAT INFORMATION RECEIVED FROM ADDL. COMMISSIONER OF INC OME, TAX RANGE-1, AGRA AND AFTER APPLYING MIND THE A.O. FOUND THAT THERE IS ES CAPEMENT OF INCOME. THE INFORMATION WAS RECEIVED ON 20 TH MARCH 2008 AND THE A.O. ISSUED NOTICE UNDER SECTION 148 ON 26.03.2008. THUS, THERE WAS SUFFICI ENT TIME WITH THE A.O. TO APPLY HIS MIND. THE HONBLE APEX COURT IN THE CASE OF IN COME-TAX OFFICER VS. PURUSHOTTAM DAS BANGUR, 224 ITR 362 (SC) HELD THAT NOTICE ISSUED ON NEXT DAY AFTER RECEIPT OF LETTER FROM DEPUTY DIRECTOR, THE N OTICE ISSUED UNDER SECTION 148 WAS A VALID NOTICE. SIMILARLY THE HONBLE ALLAHABA D HIGH COURT IN THE CASE OF BRIJ MOHAN AGARWAL VS. ASSISTANT COMMISSIONER OF INCOME- TAX, 268 ITR 400 (ALL) HELD THAT THE A.O. HAS AN HONEST AND REASONABLE BEL IEF ON THE MATERIAL WHICH HAD RECEIVED FROM THE INVESTIGATION WING. THEREFORE, N OTICE ISSUED UNDER SECTION 148 ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 25 OF THE ACT WAS A VALID NOTICE. THE FACTS OF THE CA SE UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF THE CASE OF BRIJ MOHAN AG ARWAL VS. ASSISTANT COMMISSIONER OF INCOME-TAX (SUPRA). THE JUDGEMENT IS OF JURISDICTIONAL HIGH COURT AND BOUND TO FOLLOW THE SAME. ACCORDINGLY I FOLLOW THE SAME AND FIND THAT THE A.O. HAS RIGHTLY ISSUED NOTICE UNDER SECTION 14 8 OF THE ACT. SINCE WE FOLLOWED THE JUDGEMENTS OF THE HONBLE APEX COURT AND THE HO NBLE JURISDICTIONAL HIGH COURT AND IN VIEW OF THAT THE JUDGEMENTS CITED BY T HE LD. AUTHORISED REPRESENTATIVE DOES NOT HELP TO THE ASSESSEE. 15. ON MERIT I FIND THAT THE CIT(A) HAS RECORDED A FACT THAT THE ASSESSEE DID NOT DISCLOSE THE RECEIPT OF AMOUNT OF RS.1,00,000/- GIF T IN HIS INITIAL RETURN OF INCOME FILED ON 28.11.2007. THEREFORE, THE A.O. HAS RIGHT LY TAKEN ACTION UNDER SECTION 148 OF THE ACT. 16. NOW I COME TO THE MERIT OF THE CASE. THE ORDIN ARY MEANING OF THE GIFT IS A TRANSFER BY ONE PERSON TO ANOTHER OF ANY EXISTING M OVABLE OR IMMOVABLE PROPERTY MADE VOLUNTARILY OR WITHOUT CONSIDERATION OF MONEY OR MONEY WORTH. IN LEGAL EFFECT, THERE CANNOT BE A GIFT WITHOUT A GIVING A ND TAKING. THE GIVING AND TAKING ARE THE TWO CONTEMPORANEOUS RECIPROCAL ACTS WHICH C ONSTITUTE A GIFT. IN ORDER TO MAKE A VALID GIFT, THERE MUST BE PERFECT KNOWLEDGE IN THE MIND OF THE PERSON ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 26 MAKING THE GIFT OF THE EXTENT OF THE BENEFICIAL INT EREST INTENDED TO BE CONFERRED, AND OF WHICH MAKING IT. DONOR GIVES GIFT IN MONEY OR MO NEYS WORTH AND TAKING LOVE AND AFFECTION FROM DONEE. TO EXAMINE THE ISSUE FRO M POINT OF VIEW OF THE PROVISIONS OF INCOME TAX ACT WE ARE TO SEE THE NATU RE OF THE TRANSACTION. GIFT, ITS NATURE IS CREDIT IN THE HANDS OF THE DONEE BECAUSE DONEE CREDITED GIFT AMOUNT HIS/HER CAPITAL ACCOUNT AND BEING TREATED AS OWN MO NEY/CAPITAL. NORMALLY SUCH CREDIT ENTRY IN CAPITAL ACCOUNT CAN BE MADE ONLY OF THE TRANSACTION WHICH HAS BEEN PROCESSED THROUGH THE PROVISIONS OF THE INCOME TAX ACT. IT APPEARS FROM READING OF SECTION 68 OF THE ACT THAT WHENEVER A SUM IS FOU ND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THEN, IRRESPECTIVE OF THE C OLOUR OR THE NATURE OF THE SUM RECEIVED WHICH IS SOUGHT TO BE GIVEN BY THE ASSESSE E, THE INCOME-TAX OFFICER HAS THE JURISDICTION TO ENQUIRE FROM THE ASSESSEE THE N ATURE AND SOURCE OF THE SAID AMOUNT. WHEN AN EXPLANATION IN REGARD THERETO IS G IVEN BY THE ASSESSEE THEN, IT IS FOR THE INCOME-TAX OFFICER TO BE SATISFIED WHETHER THE SAID EXPLANATION IS CORRECT OR NOT. IT IS IN THIS REGARD THAT ENQUIRIES ARE USUALL Y MADE IN ORDER TO FIND OUT AS TO WHETHER, FIRSTLY THE PERSONS FROM WHOM MONEY IS AL LEGED TO HAVE BEEN RECEIVED ACTUALLY EXISTED OR NOT. SECONDLY DEPENDING UPON T HE FACTS OF EACH CASE, THE INCOME-TAX OFFICER MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE OF THE DEPOSITOR, ASSUMING HE IS IDENTIFIED, IN ORDER TO D ETERMINE WHETHER THAT DEPOSITOR IS A MERE NAME LENDER OR NOT. BE THAT AS IT MAY, IT IS CLEAR THAT THE INCOME-TAX ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 27 OFFICER HAS JURISDICTION TO MAKE ENQUIRIES WITH REG ARD TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE AND IT WOULD BE IMMATERIAL AS TO WHETHER THE AMOUNT SO CREDITED IS GIVEN THE COLO UR OF A LOAN OR A SUM REPRESENTING THE SALE PROCEEDS OR EVEN RECEIPT OF G IFT. THE USE OF THE WORDS ANY SUM FOUND CREDITED IN THE BOOKS IN SECTION 68 INDI CATES THAT THE SAID SECTION IS VERY WIDELY WORDED AND AN INCOME-TAX OFFICER IS NO T PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SOURCE THEREOF E VEN IF THE SAME IS CREDITED AS GIFT. WHAT IS CLEAR, HOWEVER, IS THAT SECTION 68 CLEARLY PERMITS AN INCOME-TAX OFFICER TO MAKE ENQUIRIES WITH REGARD TO THE NATURE AND SOURCE OF ANY OR ALL THE SUMS CREDITED IN THE BOOKS OF ACCOUNT OF THE COMPANY IRRESPECTIVE OF THE NOMENCLATURE OR THE SOURCE INDICATED BY THE ASSESSEE. IN OTHER WORDS, T HE TRUTHFULNESS OF THE ASSERTION OF THE ASSESSEE REGARDING THE NATURE AND THE SOURCE OF THE CREDIT IN ITS BOOKS OF ACCOUNT CAN BE GONE INTO BY THE INCOME-TAX OFFICER. THERE IS NO QUARREL WITH THE PROPOSITION THAT A MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNELS IS NOT SUF FICIENT TO PROVE THE GENUINENESS OF THE GIFT AND SINCE THE CLAIM OF A GIFT IS MADE B Y THE ASSESSEE THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE DONOR BUT HIS CAPACITY TO MAKE SUCH A GIFT. THE ASSESSEE IS REQUIRED TO PROVE THREE IMPORTANT C ONDITIONS, NAMELY, (I) THE IDENTITY OF THE CREDITOR, (II) THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY, AND (III) THE GENUINENESS OF THE TRANSACTION. WHAT EVID ENCE WOULD BE SUFFICIENT TO ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 28 ESTABLISH THE SAID CONDITIONS OR WHAT MATERIAL WOUL D BE RELEVANT IN A PARTICULAR CASE, WOULD DEPEND ON THE FACTS OF EACH CASE. THER E CANNOT BE ONE GENERAL GUIDING YARDSTICK IN THE MATTER. 17. GENERALLY THE ASSESSEE IS FURNISHING VARIOUS TY PES OF MATERIAL/EVIDENCE GIFT DEED, CONFIRMATION AND OTHERS, TO APPRECIATE THOSE MATERIAL/EVIDENCES WE WOULD LIKE TO REFER ONE OF THE JUDGMENTS OF THE APEX COUR T IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC) WHEREIN THE COURT HELD THAT SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HA VE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. I T HAS BEEN FURTHER HELD AS UNDER:- IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO REL IES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUME NTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME REC ITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS N OT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLIN KERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE EN TITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 29 18. I WOULD ALSO LIKE TO REFER ONE MORE JUDGMENT O F HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. P. MOHANAKAL A, 291 ITR 278 (SC). IN THIS CASE, FOLLOWING QUESTIONS HAVE BEEN ANSWERED B Y THE HIGH COURT IN FAVOUR OF THE ASSESSEES AND AGAINST THE REVENUE :- (A) WHETHER, IN THE FACTS AND CIRCUMSTANCES, THE IN COME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW TO ACCEPT THE PRINCIPLE OF PREPO NDERANCE OF PROBABILITIES IN HOLDING THAT THE CLAIM OF THE APPELLANT THAT THE SU M OF RS.15,62,500** RECEIVED HIM BY WAY OF GIFTS THROUGH NORMAL BANKING CHANNEL S WAS NOT GENUINE AND THAT IT WAS LIABLE TO BE ASSESSED UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 ? (B) WHETHER, IN THE LIGHT OF THE LAW ESTABLISHED AN D BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOME-TAX A PPELLANT TRIBUNAL IS LEGALLY JUSTIFIED IN CONCLUDING THAT BURDEN OF PROOF CAST ON THE APPELLANT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 HAS NOT BEEN DISCHARGE D AND THE INGREDIENTS FOR INVOKING SECTION 68 OF THE INCOME-TAX ACT ARE PRESE NT ? (C) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CONCLUSION OF THE TRIBUNAL THAT THE CLAIM OF GIFT IS NOT GENUINE IS R EASONABLE AND BASED ON RELEVANT MATERIAL AND NOT PERVERSE ? ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 30 19. THE DISPUTE IN ALL THESE APPEALS RELATES TO TH E ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SEVERAL FOREIGN GIF TS STATED TO HAVE BEEN RECEIVED BY THE ASSESSEES FROM ONE COMMON DONOR NAMELY SAMPA TH KUMAR. THE GIFTS RECEIVED WERE FROM ONE ARIAVAN THOTAN AND SUPROTOMA N. DRING THE ENQUIRY BY THE REVENUE IT IS ASSERTED THAT THEY WERE THE ALIAS ES OF SAMPATHKUMAR. THESE GIFTS WERE MADE TO A. SRINIVASAN AND HIS WIFE, SMT. S. KA LAVATHY, HIS SON, S. BALAJI MANIKANDAN AND TO ONE OF HIS BROTHERS, RAJENDRAN AN D SMT. MOHANAKALA. IN ALL THE AGGREGATE GIFTS RECEIVED BY THE ASSESSEES IS TO THE EXTENT OF RS.1,79,27,703. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF FERED BY THE RESPECTIVE ASSESSEES THAT THE AMOUNT OF CREDIT IS A GIFT FROM NRI AND PROCEEDED TO ADD IT AS THE INCOME OF THE ASSESSEES FROM UNDISCLOSED SOURCES. T HE CREDIT ENTRIES HAVE BEEN MADE DURING THE PERIOD FROM JULY 8, 1992 TO OCTOBER 19, 1995. THERE IS NO DISPUTE THAT THE PAYMENTS WERE MADE BY INSTRUMENTS ISSUED B Y A FOREIGN BANK AND CREDITED INTO THE RESPECTIVE ASSESSEES ACCOUNT BY NEGOTIATI ON THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT FROM ABROAD WERE DRAWN ON CITIB ANK, N.A. SINGAPORE. THE ASSESSING OFFICER DEALT WITH THE CONTROVERSY AS REG ARDS THE CASH CREDIT ENTRIES RECEIVED FROM THE FOREIGN DONOR. HE NOTICED THAT TH E GIFTS HAVE BEEN SENT IN THE NAME OF ARIAVAN THOTTAN AND RECEIVED BY A. SRIN IVA SAN AND OTHERS WHO ARE ALL HIS FAMILY MEMBERS. EACH ONE OF THEM IS AN INDIVIDUAL A SSESSEE. ALL THE ASSESSEES WERE SUMMONED AND THEIR STATEMENTS HAVE BEEN RECORD ED BY THE ASSESSING OFFICER. ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 31 SRINIVASAN WHO IS THE KEY PERSON IN HIS STATEMENT S AID THAT HE KNEW SAMPATHKUMAR FOR THE LAST 20 YEARS AND HE HAD BEEN HELPING SAMPA THKUMAR PRIOR TO 1985 BY PAYING RS. 100 TO 200 EVERY MONTH AS HE HAD NO SOU RCE OF INCOME TO GET HIMSELF EDUCATED. SAMPATHKUMAR IN HIS OWN STATEMENT STATED THAT HE WAS IN INDONESIA UP TO THE YEAR 1992 AND EMPLOYED AS AN ENGINEER. THEREAFT ER, HE SHIFTED TO ENGLAND AND STARTED CONSULTANCY PROFESSION THERE. LATER IN THE END OF THE YEAR 1994-95, HE JOINED NEW CENTURY MACHINERY LTD., CHESHIRE, SK 16 4XS AND BECAME ITS DIRECTOR IN 1996. IT IS IN HIS STATEMENT THAT HE IS PAYING T AXES IN ENGLAND FROM HIS INCOME EARNED IN ENGLAND. AS FAR AS HIS INDIAN INCOME IS C ONCERNED, HE STATED THAT HE FILED THE RETURNS FOR THE ASSESSMENT YEARS 1996-97 AND 19 97-98 BEFORE THE INCOME-TAX OFFICER, WARD 1(4), CBE ONLY ON OCTOBER 23, 1997. H IS INVESTMENT IN INDIAN COMPANIES ACCORDING TO HIM WILL BE AROUND RS. 5 CRO RES AND MADE OUT OF HIS INCOME EARNED IN THE FOREIGN COUNTRIES. HE DID NOT REVEAL THE DETAILS OF HIS BANK ACCOUNT IN INDIA AND STATED THAT HE WOULD BE SUBMIT TING THE DETAILS THROUGH HIS AUDITOR WHICH HE DID NOT. EXCEPT THE SELF SERVING S TATEMENT THERE IS NO MATERIAL EVIDENCE AS REGARDS HIS FINANCIAL STATUS. HE STATED FROM 1972-73 HE KNEW SRINIVASAN, RAJENDRAN AND THEIR FAMILIES. HIS FATHE R WAS A TAXI DRIVER, AND WAS VERY POOR. SRINIVASAN AND HIS FAMILY MEMBERS WERE SUPPOR TING HIM WHEN HE WAS IN INDIA. TO A POINTED QUERY AS TO WHETHER THERE IS AN Y EVIDENCE TO SHOW THAT HE WAS ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 32 ALSO KNOWN BY ANY OTHER NAME OTHER THAN SAMPATHKUMA R, HE STATED THAT NO EVIDENCE. ONLY MR. SRINIVASAN USED TO CALL ME AS SU PROTOMAN. 20. THE ASSESSING OFFICER IN THE CIRCUMSTANCES CAME TO THE CONCLUSION THAT THE GIFTS THOUGH APPARENT ARE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS CREDITED IN THE BOOKS OF THE ASSESSEES AS THE INCOM E OF THE ASSESSEES. ON APPEAL THE COMMISSIONER OF INCOME-TAX CONCLUDED THAT THE STORY SET UP BY THE ASSESSEES IS UNACCEPTABLE AND HARD TO BELIEVE AND THE PREPONDER ANCE OF PROBABILITIES, THE COMMON COURSE OF HUMAN LIVINGS POINT TO THE CONTRAR Y. THE APPEALS WERE ACCORDINGLY DISMISSED. THE ITAT CONCURRED WITH THE FINDINGS AND CONCLUSIONS ARRIVED AT BY THE ASSESSING OFFICER AND THE COMMISS IONER OF INCOME-TAX. THE TRIBUNAL NOTICED THAT THE LETTERS EXCHANGED BY THE PER- SON WHO HAD SENT FOREIGN EXCHANGE TO THE ASSESSEES ONLY INDICATE THAT THERE IS NO LOVE AND AFFECTION BETWEEN THEM AND THAT HE IS CLEARLY MATERIALISTIC AND HIS S TATEMENT OF ACCEPTING A RECIPROCATION IS ALSO AN INDICATION TO THE FACT THA T HE IS NOT DOING ANYTHING FREE BUT CLEARLY THE COMPENSATION WAS A ROUNDABOUT MANNER OF SHOWING OF HE HAVING BEEN COMPENSATED EITHER IN INDIA OR ABROAD. THE TRIBUNA L ALSO TOOK NOTE OF THE VARIOUS OTHER ATTENDING CIRCUMSTANCES AND FOUND IT DIFFICUL T TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEES. THE HIGH COURT CAME TO T HE CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL AND OTHER AUTHORITIES ARE IN THE REALM OF SURMISES, ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 33 CONJECTURES AND SUSPICIONS. THE AUTHORITIES UNDER T HE ACT HAVE FAILED TO DRAW THE ONLY CONCLUSION THAT IS POSSIBLE LEGALLY AND LOGICA LLY. 21. THE APEX COURT HELD AS UNDER:- EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSE SSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON R ECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. ALL THE DECISIONS CITED AND REFERRED TO HEREINABOVE ARE REQUIRED TO B E APPRECIATED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI DAYAL [1995] SUPP 2 SCC 453. WHETHER THE HIGH COURT WAS JUSTIFIED IN INTERFERIN G WITH THE CONCURRENT FINDING OF FACT ARRIVED AT BY ALL THE AU THORITIES INCLUDING THE TRIBUNAL? THE ASSESSING OFFICER FOUND THAT ALL THE SO-CALLED GIFTS CAME FROM ARIAVAN THOTAN AND SUPROTOMAN. THE ASSESS EES DID NOT DECLARE THAT THEY ARE THE ALIASES OF SAMPATHKUMAR. IT IS ONLY AN AFTERTHOUGHT THEY HAVE COME FORWARD WITH THE SAID P LEA. THE ASSESSING OFFICER ALSO FOUND THAT THE GIFTS WERE NO T REAL IN NATURE. VARIOUS SURROUNDINGS CIRCUMSTANCES HAVE BEEN RELIED UPON BY THE ASSESSING OFFICER TO REJECT THE EXPLANATION OFFERED BY THE ASSESSEES. THE COMMISSIONER OF APPEALS CONFIRMED THE FINDINGS AND CONCLUSION DRAWN BY THE ASSESSING OFFICER. THE TRIBUNAL SPEAKI NG THOUGH ITS SENIOR VICE PRESIDENT CONCURRED WITH THE FINDINGS O F FACT. THE FINDINGS IN OUR CONSIDERED OPINION ARE BASED ON THE MATERIAL AVAILABLE ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THE Y ARE NOT IMAGINARY AS SOUGHT TO BE CONTENDED. RELYING ON THE DECISIONS OF THIS COURT IN BEJOY GO PAL MUKHERJI V. PRATUL CHANDRA GHOSE, AIR 1953 SC 153 AND ORIEN T DISTRIBUTORS V. BANK OF INDIA LTD. AIR 1979 SC 867, SHRI IYER, LEARNED SENIOR COUNSEL CONTENDED THAT THE ISSUE RELATING TO THE P ROPRIETY OF THE LEGAL CONCLUSION THAT COULD BE DRAWN ON THE BASIS OF PRO VED FACTS GIVES RISE ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 34 TO A QUESTION OF LAW AND, THEREFORE, THE HIGH COUR T IS JUSTIFIED IN INTERFERING IN THE MATTER SINCE THE AUTHORITIES BE LOW FAILED TO DRAW A PROPER AND LOGICAL INFERENCE FROM THE PROVED FACTS. WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SUBMISSION. THE FI NDINGS OF FACT ARRIVED AT BY THE AUTHORITIES BELOW ARE BASED ON PR OPER APPRECIATION OF THE FACTS AND THE MATERIAL AVAILABLE ON RECORD A ND SURROUNDING CIRCUMSTANCES. THE DOUBTFUL NATURE OF THE TRANSACTI ON AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN DULY TAKEN IN TO CONSIDERATION BY THE AUTHORITIES BELOW. THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONES. MAY BE THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSAC TION BUT THAT ITSELF IS OF NO CONSEQUENCE. NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUESTI ON OF LAW HAD ARISEN FOR CONSIDERATION OF THE HIGH COURT. THE HIGH COURT MISDIRECTED ITSELF AND COMMITTED AN ERROR IN DISTUR BING THE CONCURRENT FINDINGS OF FACT. 22. IN THE LIGHT OF ABOVE JUDGMENTS IF I CONSIDERE D THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE THAT THE A.O. DID NOT EXA MINE DONOR, IT IS RELEVANT TO NOTE THAT THE A.O. ISSUED SUMMON UNDER SECTION 133( 6) OF THE ACT TO THE DONOR SHRI SANJEEV GOYAL BUT HE DID NOT COMPLY TO THAT SUMMON. BEFORE THE CIT(A), THE A.O. CONTENDED THAT ON SENDING NOTICE UNDER SECTION 133(6) TO THE DONOR IT WAS RETURNED BACK UN-SERVED WITH THE REMARKS OF POSTAL AUTHORITY THAT NOBODY OF THE NAME OF SHRI SANJEEV GOYAL LIVES ON THAT ADDRESS. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE DONOR. UNDER THE CIRCUMST ANCES, THE A.O. HAS DISCHARGED HIS ONUS BUT THE ASSESSEE FAILED IN THIS REGARD, TH EREFORE, THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE IS REJECTED. DURING THE HEARING, THE LD. AUTHORISED ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 35 REPRESENTATIVE REFERRED A COPY OF GIFT DEED WHICH I S AT PAGE NO.6 OF ASSESSEES PAPER BOOK. A QUESTION WAS ASKED THAT IN THE GIFT DEED IT IS STATED THAT THE GIFT WAS GIVEN OUT OF LOVE AND AFFECTION , THEREFORE, WHAT EVIDENCES HAVE BEEN FILED BY THE ASSESSEE. THE LD. AUTHORISED REPRESENTATIVE FAILED TO POINT OUT ANY MATERIAL OR EVIDENCE IN THIS REGARD THAT THE GIFT WAS GIVEN OUT OF LOVE AND AFFECTION. APART FROM THE ABOVE, I FIND THAT THE CIT(A) HAS GIVEN HI S FINDING THAT THERE IS NO RELATIONSHIP BETWEEN THE DONOR AND DONEE ASSESSEE. THERE IS NO OCCASION FOR GIVING OF GIFT. THE DONOR IS NEITHER PRODUCED BY T HE ASSESSEE FOR EXAMINATION, NOR IS TRACEABLE AT THE GIVEN ADDRESS BY THE A.O. TO VE RIFY THE CORRECTNESS OF THE GIFT DEED AND AFFIDAVIT PURPORTED TO HAVE BEEN ISSUED BY HIM, WHICH IS ONLY A PHOTOCOPY AS FILED BY THE ASSESSEE. DURING THE ASS ESSMENT PROCEEDING, CREDITWORTHINESS OF DONOR AS WELL AS THE GENUINENES S OF THE GIFT IS NOT ESTABLISHED. THE CIT(A) HELD THAT, THIS AMOUNT IS CORRECTLY ADDE D BY THE A.O. IN THE INCOME OF THE ASSESSEE HOLDING IT HIS UNACCOUNTED MONEY UNDER THE GARB OF BOGUS GIFT ENTRY AND THEREFORE, HE CONFIRMED THE ADDITION OF RS.1 ,00,000/- MADE IN THE ASSESSMENT ORDER. AS REGARDS TO ADDITION OF RS.2,000/- ON ACC OUNT OF COMMISSION PAID FOR OBTAINING THE ENTRY OF GIFT, THE CIT(A) HELD THAT S INCE HE HAS CONFIRMED THE DECISION OF THE A.O. HOLDING RECEIPT OF RS.1,00,000 /- IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED GIFT BEING HIS UNACCOUNTED MONEY, THE C IT(A) FOUND THAT THE A.O. HAS MADE THIS ADDITION BECAUSE HE FOUND THAT THE GIFT O F RS.1,00,000/- SHOWN BY THE ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 36 ASSESSEE WAS NOT A REAL GIFT BUT A RECEIPT OF MONEY IN THE FORM OF INCOME AND SUCH ENTRIES ARE GIVEN BY THE ENTRY GIVER ONLY AFTER CHA RGING OF SOME COMMISSION. THE CIT (A) HELD THAT THAT THE AMOUNT OF RS.1,00,000/- RECEIVED BY THE APPELLANT IS NOT A REAL GIFT AND IT IS AN ENTRY OF BOGUS GIFT, NOW T HE QUESTION ARISES WHETHER SUCH ENTRY WOULD BE GIVEN BY SOMEONE WITHOUT CHARGING AN Y COMMISSION. AS PER HUMAN CONDUCT AND COMMON MARKET PRACTICE OF GIVING OF ENTRY, IT IS NOT POSSIBLE TO TAKE ENTRY WITHOUT PAYING COMMISSION. I DID NOT FI ND ANY ERROR IN THE ORDER OF THE CIT(A) 23. THE JUDGEMENTS CITED BY THE LD. AUTHORISED REPR ESENTATIVE ARE DISTINGUISHABLE ON FACTS. THOSE JUDGEMENTS HAVE BE EN DECIDED BY THE COURT CONSIDERING FACTS OF RESPECTIVE CASES WHICH ARE NOT SIMILAR TO THE FACTS OF THE CASE UNDER CONSIDERATION. IN THE CASE OF CIT VS. S.K. J AIN, 254 CTR 652 (ALL.), THE CREDITWORTHINESS WAS ESTABLISHED BY FILING RETURN O F INCOME OF DONOR AND HIS WIFE BUT IN THE CASE UNDER CONSIDERATION THE RELEVANT RE TURN FOR THE YEAR UNDER CONSIDERATION WAS NOT FILED. THE CASE OF KANCHAN S INGH VS. CIT, 221 CTR 456 (ALL.) IS ALSO DISTINGUISHABLE ON FACTS AS IN THAT CASE THE AMOUNT WAS OF FOUR RESURGENT INDIAN BONDS PURCHASED BY K, AN NRI IN OC TOBER 1998 AND GIFTED TO THE ASSESSEE ON 10.07.1999. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAM DEV KUMAR CHITLANGIA, 315 ITR 435 (RAJ.) HELD T HAT WHETHER GIFT IS GENUINE ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 37 OR NOT IS ESSENTIALLY BE A QUESTION OF FACT. IN TH AT CASE THE A.O. MADE ADDITION ON PRESUMPTION AND ASSUMPTION. 24. ONE MORE GROUND OF THE APPEAL IS IN RESPECT O F CHARGING OF THE INTEREST UNDER SECTION 234B AND 234C OF THE ACT WHICH IS CONSEQUEN TIAL IN NATURE. THE A.O. IS DIRECTED ACCORDINGLY. 25. IN THE LIGHT OF ABOVE DISCUSSIONS, I DO NOT FIN D ANY ERROR IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) IS CONFIRMED. I TA NO.408/AGR/2012 BY THE ASSESSEE 26. THE LD. REPRESENTATIVES SUBMITTED THAT FACTS OF THE CASE IN ANIL KUMAR SINGHAL, HUF AND ANIL KUMAR SINGHAL, INDIVIDUAL ARE IDENTICAL AND THE GROUNDS RAISED ARE ALSO SIMILAR EXCEPT FOR DIFFERENCE IN AM OUNT. THE AMOUNT OF ADDITION IN THIS CASE IS RS.1,50,000/- FROM DONOR SHRI LAL CHAN D AND RS 2000/- ON ACCOUNT OF COMMISSION. SINCE THE FACTS OF ANIL KUMAR SINGHAL, HUF ARE IDENTICAL TO THE CASE OF ANIL KUMAR SINGHAL, INDIVIDUAL, FOLLOWING THE AB OVE DISCUSSIONS MADE IN THE CASE OF ANIL KUMAR SINGHAL, INDIVIDUAL, ORDER OF TH E CIT(A) IS CONFIRMED IN CASE OF ANIL KUMAR SINGHAL, HUF ALSO. ITA NOS.413 & 408/AGR/2012 A.YS. 2001-02 38 27. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY