Sh. Dalip Singh S/o. S. Jang Singh, Muktsar V. The Income-tax Officer, Muktsar

ITA 441/ASR/2013

• Counselvise Citation: 44120914 RSA 2013
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH BANSAL CA S; SSH ASHWANI KUMAR
• Keywords: Search and seizure; Principle of natural justice
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.441(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :DXLPS1371D SH. DALIP SINGH VS. INCOME TAX OFFICER, S/O SH. JANG SINGH, WARD-II(2), MUKTSAR. VILL. BARKANDI, MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH ASHWANI KUMAR & RAKESH BANSAL, CA S RESPONDENT BY: SH.MAHAVIR SINGH, DR DATE OF HEARING: 26/03/2014 DATE OF PRONOUNCEMENT:27/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), BATHINDA, DATED 28.03.2013 FOR THE ASSESSMENT YEAR 2006-07.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED TO UPHOLD THE VERY INITI ATION OF PROCEEDINGS U/S 148. ITA NO.441(ASR)/2013 2 2. THAT THE LD. CIT(A) GRAVELY ERRED IN QUASHING TH E ASSESSMENT AS WHILE FRAMING ASSESSMENT, PRINCIPLES OF NATURAL JUSTICE WERE GROSSLY VIOLATED. 3. THAT HE GRAVELY ERRED IN UPHOLDING THE ADDITION OF RS.55,93,517/- ON ACCOUNT OF ALLEGED LONG TERM CAPI TAL GAIN. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION U/S 132(1) WAS CARRIED OUT AT THE PREMISES OF ONE SH. R AJAN SETIA ON 24.10.2007 FROM WHERE CERTAIN DOCUMENTS WERE SEIZED AND PERUSA L THEREOF REVEALED THAT CERTAIN TRANSACTIONS OF LAND SITUATED IN VILLAGE CH AK BIR SARKAR BETWEEN ONE SH. BAWA LALI ALIAS YADWINDER SINGH AND HIS FAMILY MEMBERS WITH SH. GURCHARAN SINGH S/O SH. DALIP SINGH, SURJIT SINGH A ND THEIR FAMILY MEMBERS OF VILLAGE BARKANDI. THE STATEMENT OF SH. R AJA SETIA WAS RECORDED DURING THE COURSE OF SEARCH OPERATION WHILE THE STA TEMENT OF BAWA YADWINDER SINGH WAS RECORDED DURING POST SEARCH EN QUIRIES. THEREAFTER, SH. LALI BAWA FILED AN APPLICATION BEFORE THE INCOME TA X SETTLEMENT COMMISSION, NEW DELHI ADMITTING THEREIN THE TRANSF ER OF IMPUGNED LAND @ RS.19,837.50PER MARLA AS AGAINST RS.10,268/- PER MA RLA MENTIONED IN THE REGISTRATION DEEDS. THE SETTLEMENT COMMISSION , NEW DELHI ACCEPTED THE APPLICATION OF SH. LALI BAWA VIDE ORDER DATED 25.0 2.2009. THE DEPARTMENT ALSO COLLECTED INFORMATION REGARDING THE SALE OF LA ND IN THE IMPUGNED AREA BY THE ASSESSEE SH. DALIP SINGH, HIS BROTHER SH. SURJI T SINGH AND SH. GURCHARAN ITA NO.441(ASR)/2013 3 SINGH S/O SH. DALIP SINGH AND OTHER MEMBERS OF THEI R FAMILY WHICH REVEALED THAT THE ASSESSEE HAD ALSO SOLD LAND MEASURING 527. 25 MARLA. THE AO ALSO COLLECTED INFORMATION FROM THE TEHSIL OFFICE THAT THE LAND SOLD BY THE ASSESSEE FELL WITHIN A RADIOUS OF 11 K.M FROM THE M UNICIPAL LIMITS OF MUKTSAR TOWN. IN THE LIGHT OF THESE FACTS, REASONS FOR ISSUE OF NOTICE U/S 148 WERE RECORDED THAT INCOME CHARGEABLE TO TAX HAS ESC APED ASSESSMENT. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. WITH REGARD TO ISSUANCE OF NOTICE U/S 148 OF THE ACT. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. ASHWANI KU MAR ARGUED THAT THE DOCUMENTS ON THE BASIS OF WHICH NOTICE U/S 148 HAS BEEN ISSUED DO NOT BELONG TO THE ASSESSEE AND IT WAS ALSO ARGUED THAT AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS ON THE BASIS OF WHOSE STATEMENT NOTICE U/S 148 HAS BEEN ISSUED, WAS NOT AFFORDED AND FURTHER IN MAKING FISH ING ENQUIRIES AFTER ISSUANCE OF THE NOTICE U/S 148 WAS ALSO AGAINST THE PROVISIONS OF LAW. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE RE WAS A PRIMA FACIE CASE FOR ISSUE OF NOTICE U/S 148 AND IT HAS BEEN FOUND T HAT THE CASE REPORTED AT ITA NO.441(ASR)/2013 4 (2010) 328 ITR 515 HAS DIFFERENT FACTS AND IS THUS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. IN THE SAID CASE, THE AO HAD NOT APPLIED HIS MIND TO THE REPORT OF THE DVO. HOWEVER, IN THE PRES ENT CASE, THERE WAS SUFFICIENT SEIZED MATERIAL AVAILABLE WITH THE AO ON THE BASIS OF WHICH A BELIEF COULD BE FORMED THAT TAX CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT. PERUSAL OF THE REASONS RECORDED BY THE AO REVEAL T HAT THE SAME ARE BASED ON FACTS AND THE MATERIAL AVAILABLE WITH HIM AND ARE N OT BASED ON SUSPICION AND PRESUMPTIONS AS HAS BEEN CONTENDED BY THE COUNSEL O F THE ASSESSEE. IN THIS REGARD, IT MAY BE WORTHWHILE TO MENTION HERE THAT T HE PROVISIONS OF SECTION 147 AS AMENDED W.E.F. 01.04.1989 ARE CONTEXTUALLY D IFFERENT AND THE CUMULATIVE CONDITIONS SPELT OUT U/S 147(A) AND 147( B) PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISIONS. THE ONLY CONDITION FOR ACTION IS THAT THE AO SHOULD HAVE REASONS TO BELIEVE THAT INC OME HAS ESCAPED ASSESSMENT. SUCH BELIEF CAN BE REACHED IN ANY MAN NER AND IS NOT QUALIFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MATERIAL FACT BY AN ASSESSEE AS CONTEMPLATED IN THE PRE0AMENDED SECTION U/S147(A).VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSMENT IS MUCH WIDE R UNDER THE AMENDED PROVISIONS AND CAN BE EXERCISED EVEN AFTER THE ASSE SSEE HAS DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS BAWA ABHAL SINGH V. DY. CIT (2001) 117 TAXMAN 12 (DELHI)/ RAKESH AGGARWAL VS. ASSTT. CIT (1996) 87 TAXMAN 306 ITA NO.441(ASR)/2013 5 (DELHI). FURTHER, IT HAS BEEN FOUND THAT THE REMAN D REPORT SUBMITTED BY THE AO, HE HAD CONFRONTED THE ASSESSEE WITH THE ORDER O F THE SETTLEMENT COMMISSION WHEREIN SH. YADWINDER SINGH, ONE OF THE PURCHASES OF MAJOR CHUNK OF 18 ACRES OF LAND WAS ADMITTED TO HAVE BEEN PURCHASED THE LAND @ RS.19,837.50 PER MARLA . THE ASSESSEE WAS ALSO SHOW N THE LETTER OF TEHSILDAR WHEREIN IT WAS MENTIONED THAT THE IMPUGNED LAND FAL LS WITHIN A RADIOUS OF 11 KM FROM THE MUNICIPAL LIMITS OF MUKTSAR TOWN. SO FAR AS MAKING OF FISHING ENQUIRIES AFTER THE ISSUE OF NOTICE U/S 14 8 IS CONCERNED, IT HAS BEEN FOUND THAT ENQUIRIES WERE MADE BY THE AO IN CONNECT ION WITH THE MATERIAL ALREADY AVAILABLE ON RECORD. THUS, MAKING THE ENQUI RIES BY THE AO AFTER ISSUE OF NOTICE U/S 148 IS WELL WITHIN THE POWERS O F THE AO AND THERE IS NOTHING WRONG IN IT. HENCE, THE ACTION OF THE AO IN ISSUING NOTICE U/S 148 IN THIS CASE WAS LEGAL, JUSTIFIED AND IN ORDER. 6.1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, GROUNDS NO. 1 & 2 OF THE ASSESSEE ARE DISMISSED. 7. AS REGARDS GROUND NO.3 OF THE ASSESSEE WITH REGA RD TO ADDITION OF RS.55,93,517/- ON ACCOUNT OF ALLEGED LONG TERM CAPI TAL GAIN, THE BRIEF FACTS ITA NO.441(ASR)/2013 6 ARE THAT THE AO COMPUTED LONG GERM CAPITAL GAIN AT RS.55,93,517 BY APPLYING RATE OF RS.19,837.50 PER MARLA FOR APPARE NT CONSIDERATION MENTIONED IN THE REGISTRATION DEED. 8. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT AS MENTIONED HEREINABOVE, A SEARCH AND SEIZURE OPERATION U/S 132(1) WAS CARRI ED OUT AT THE PREMISES OF ONE SH. RAJAN SETIA ON 24.10.2007 FROM WHERE CERTA IN DOCUMENTS WERE SEIZED AND PERUSAL THEREOF REVEALED THAT CERTAIN TR ANSACTIONS OF LAND SITUATED IN VILLAGE CHAK BIR SARKAR (MUKTSA) BETWEEN ONE SH . BAWA LALI ALIAS YADWINDER SINGH AND HIS FAMILY MEMBERS WITH SH. GU RCHARAN SING S/O SH. DALIP SINGH, SURJIT SINGH AND THEIR FAMILY MEMBERS OF VILLAGE BARKANDI. THEREAFTER, SH. LALI BAWA FILED AN APPLICATION BEFO RE THE SETTLEMENT COMMISSION ADMITTING THEREIN THE TRANSFER OF IMPUGN ED LAND @ RS.19,837.60 PER MARLA AS AGAINST RS.10.268/- PER M ARLA MENTIONED IN THE REGISTRATION DEEDS. THE SETTLEMENT COMMISSION ACCEP TED THE APPLICATION OF SH. LALI BAWA VIDE ORDER DATED 25.02.2009. THE ASSE SSEE HAD ALSO SOLD HIS LANDS MEASURING 571.5 MARLAS IN THE SAME VICINITY W HERE THE LANDS WERE SOLD BY THE AFORESAID PERSON SH. YADWINDER SINGH. THE AO ACCORDINGLY APPLIED ITA NO.441(ASR)/2013 7 THE SALE RATE OF RS.19837.50 PER MARLA IN THE CASE OF THE ASSESSEE FOR WORKING OUT THE LTCG AS AGAINST THE APPARENT CONSID ERATION MENTIONED IN THE REGISTRATION DEEDS. WHILE APPLYING THE RATE OF RS.19837.50 PER MARLA, THE AO NOT ONLY TOOK INTO CONSIDERATION, THE ORDER OF THE SETTLEMENT COMMISSION IN THE CASE OF SH.YADWINDER SINGH BUT T HE ADMISSION OF SH.SURJIT SINGH (BROTHER OF THE ASSESSEE) DURING AS SESSMENT PROCEEDINGS MADE BEFORE THE AO WHEREIN HE HAD STATED THAT ON MO NEY OTHER THAN THE REGISTERED PRICE WAS RECEIVED BY HIM FURTHER, SH. BALDEV RAJ, SH. KISHORE CHAND AND SH. MALKEET SINGH (THE OTHER PERSONS WHO HAD PURCHASED PART OF THE LAND FROM THE SAME CHUNK OF LAND ON 16.05.2005 FROM THE ASSESSEE) ADMITTED THAT THE RATE OF RS.19837.50 PER MARLA MAY ALSO BE APPLIED IN THEIR CASES. ALL THESE FACTS GIVE A CLEAR CUT INDICATION THAT THE SALE PRICE MENTIONED IN THE REGISTRATION DEEDS DID NOT REFLECT THE TRUE MONEY THAT HAD EXCHANGED HANDS BETWEEN THE PURCHASERS AND THE SELLER. WHEN A CONCLUSION IS REACHED ON AN APPRECIATION OF A NUMBER OF FACTS, WHETHER TH AT IS SOUND OR NOT MUST BE DETERMINED, NOT BY CONSIDERING THE WEIGHT TO BE ATT ACHED TO EACH SINGLE FACT IN ISOLATION, BUT BY ASSESSING THE CUMULATIVE EFFEC T OF ALL THE FACTS IN THEIR SETTING AS A WHOLE. THE FACTS OF THE CASE LEAD TO T HE CONCLUSION THAT AN AMOUNT OF CONSIDERATION @ RS.19837.50 PER MARLA EX CHANGED HANDS BETWEEN THE SELLER AND THE PURCHASERS. AT THIS STA GE, IT MAY BE WORTHWHILE TO ITA NO.441(ASR)/2013 8 REFER TO THE JUDGMENT IN THE CASE OF JUGGILAL KAML APAT V. CIT (1969) 73 ITR 702 (SC) WHEREIN THE HONBLE APEX COURT HAS HELD T HAT IT IS WELL ESTABLISHED THAT THE INCOME TAX AUTHORITIES ARE ENT ITLED TO PIERCE THE VEIL OF CORPORATE ENTITY AND LOOK AT THE REALITY OF THE T RANSACTION. THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATION OR TO PERPETRATE FRAUD. S IMILARLY, THE HONBLE SUPREME COURT IN THE CASE OF WORKMEN OF ASSOCIATED RUBBER INDUSTRY LIMITED VS. ASSOCIATED RUBBER INDUSTRY LIMITED REPO RTED AT (1986) 157 ITR 77 (SC) HAS HELD THAT COURT CAN GO BEHIND AND LOOK INTO SUBSTANCE OF TRANSACTION. IT IS THE DUTY OF THE COURT, IN EVERY CASE WHERE INGENUITY IS EXPENDED TO AVOID TAXING AND WELFARE LEGISLATION T O GET BEHIND THE SMOKE SCREEN AND DISCOVER THE TRUE STATE OF AFFAIRS. THE COURT IS NOT TO BE SATISFIED WITH FORM AND LEAVE WELL ALONE THE SUBSTANCE OF A TRANSACTION. KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE AO IN DETERMINING THE LTCG AT RS.55,93,517/- IN THIS C ASE IS RIGHTLY UPHELD B THE LD. CIT(A). 9.1. THE SALE RATE HAS BEEN APPLIED ON THE BASIS OF CONCRETE MATERIAL AVAILABLE ON RECORD FOR WORKING OUT THE LONG TERM C APITAL GAIN BY THE A.O. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF ITA NO.441(ASR)/2013 9 THE LD. CIT(A), WHO HAS RIGHTLY REJECTED THE GROUND RAISED BY THE ASSESSEE. THUS, GROUND NO.3 OF THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.441(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. DALIP SINGH, MUKTSAR. 2. THE ITO WARD-II(2), MUKTSAR 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR