Sh Ram Narain Bansal, Haryana V. ITO, Bhiwani

ITA 701/DEL/2010

• Counselvise Citation: 70120114 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 27-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 16-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: V MOHAN C AS; VED JAIN SMT RANO JAIN
• Keywords: Reopening of assessment; Search and seizure; Corroborative evidences; Onus to prove
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM ITA NOS.699/DEL/2010, 700/DEL/2010 & 701/DEL/2010 ASSESSMENT YEARS : 2001-02, 2003-04 & 2004-05 SHRI RAM NARAIN BANSAL, HOUSE NO.160/7, WARD NO.10, RAM DASS COLONY, CHARKHI DADRI, DISTT. BHIWANI, HARYANA 127 306. PAN : AAGPN1452P. VS. INCOME TAX OFFICER, WARD-2, BHIWANI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN, SMT.RANO JAIN & SHRI V.MOHAN, CAS. RESPONDENT BY : SHRI SUDESH GARG, CIT-DR & SMT.PRATIMA KAUSHIK, SR.DR. ORDER PER R.P.TOLANI, JM : THESE ARE THREE APPEALS BY THE ASSESSEE FOR THE AY 2001-02, 2003-04 & 2004-05, AGAINST THE ORDERS OF CIT(APPEALS), ROHT AK. 2. VARIOUS GROUNDS ARE RAISED CHALLENGING ACTION OR REOPENING OF ASSESSMENTS AND ADDITIONS MADE TO INCOME ON THE BAS IS OF WORKING OUT PEAK OF INVESTMENT AND ESTIMATION OF PROFITS. RELEVANT P ORTIONS OF AOS WORKING THE PEAK AND ESTIMATING THE PROFITS ARE REPRODUCED HEREINAFTER. ITA 699, 700 & 701/DEL/10 2 2.1. LD COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING DID NOT PRESS THE GROUNDS RELATING TO THE REOPENING OF THE ASSESSMENT S, WHICH ARE DISMISSED ACCORDINGLY. CONSEQUENTLY WE ARE LEFT WITH THE FOLL OWING EFFECTIVE GROUNDS: I. WHETHER AO IS JUSTIFIED IN TREATING THE ASSESSEE AS BENAMI OWNER OF THE VARIOUS BUSINESS ENTITIES ENGAGED IN T HE PURCHASE OF MUSTARD SEEDS FROM NAFED, AND ITS SALE AS ALLEG ED. II. CALCULATION OF PEAK INVESTMENT IN BENAMI CONCER N AND PROFITS FROM BENAMI OPERATIONS OF MUSTARD SEEDS. 3. BRIEF FACTS ARE THAT NOTICES UNDER SECTION 148 W ERE ISSUED ON THE ASSESSEE ON THE BASIS OF AN INFORMATION RECEIVED FR OM ADIT, FARIDABAD THAT IN THE AREAS AROUND CHARKHI DADRI, REWARI AND NARNA UL, SOME CONCERNS WERE BEING OPERATED BY THE POOR PERSONS HAVING NO MEANS TO CARRY OUT SUCH BUSINESS. THESE CONCERNS WERE IN FACT BENAMI CONCE RNS OF THE ASSESSEE RAM NARAIN BANSAL (RNB). 4. THESE FRONT CONCERNS PURCHASED MUSTARD SEEDS FRO M NAFED THROUGH BANKING CHANNELS. THUS, THE BANK ACCOUNTS CONTAINE D HUGE DEPOSITS AND TRANSACTIONS. IN THE ADITS COMMUNICATION, IT WAS FURTHER ALLEGED THAT THESE BENAMI CONCERNS DID NOT FILE ANY RETURN OF INCOME. IT WAS ALLEGED THAT THE ASSESSEE GOT SIGNED ALL THE PAPERS RELATING TO SALE S TAX AND BANK FROM THE DUMMY PROPRIETORS OF THESE CONCERNS AND ON SUBSTANT IVE BASIS, THESE TRANSACTIONS BELONGED TO THE ASSESSEE AND WERE TO B E ASSESSED IN HIS HANDS. ON THE BASIS OF THESE REASONS, THE ASSESSEE WAS ISS UED ABOVE NOTICES. THE REASONS RECORDED ARE SUMMARIZED AS UNDER:- ITA 699, 700 & 701/DEL/10 3 SH.RAM NARAIN BANSAL S/O SH.MANGE RAM, BEHIND APPE JAY COLLEGE, CHARKHI DADRI, BHIWANI A.Y. 2001-02. THE AD(INV.) FARIDABAD VIDE HIS LETTER NO. ADIT(INV.)/FBD/2003-04/1195 DATED 20-01-2004, HAS INTIMATED THAT MANY BENAMI/BOGUS CONCERNS (DETAILED AS UNDER) WERE FLOATED BY SH.RAM NARAIN BANSAL S/O SH.MANGE R AM OF CHARKHI DADRI WHOSE PROPRIETORS WERE THE POOR PERSO NS TO WHOM A SMALL AMOUNT OF SALARY WAS PAID BY SH.RAM NA RAIN BANSAL. THE SO ALLEGED CONCERNS HAVE MADE PURCHASE S OF MUSTARD SEED FROM NAFED AND THERE ARE ALSO HUGE DEP OSITS IN THEIR BANK ACCOUNT. THESE CONCERNS HAD NOT FILED I NCOME TAX RETURNS. SR.NO. NAME OF THE CONCERNS PURCHASES DEPOSITS (000) NAME OF THE BANK/ACCOUNT NO. PERIOD IN WHICH DEPOSITED 1 M/S OM TRADING COMPANY, REWARI, PROP. SH. CHHAJU RAM -- 21869 REWARI CENTRAL COOP BANK, REWARI/463 09-12-00 TO 31-03- 01 2 M/S OM TRADING COMPANY, GANJ BAZAR, REWARI PROP. RAJ KUMAR -- 352 SBOP, NARNAUL/60348 31-01-01 TO 09-03- 01 TOTAL 22221 SH. R.N. BANSAL GOT SIGNED ALL THE PAPERS RELATING TO SALES TAX AND BANKS FROM THE PROPRIETORS OF AFORESAID CONCERN S. THE ASSESSMENT IS REQUIRED TO BE MADE ON SUBSTANTIVE BA SIS IN THE HANDS OF SH.RAM NARAIN BANSAL, CHARKHI DADRI AS HE WAS ITA 699, 700 & 701/DEL/10 4 LOOKING AFTER ALL THE BUSINESS ACTIVITIES OF THE SO CALLED BENAMI/BOGUS CONCERNS FROM THE BACK DOOR. THE DEPOSIT OF RS.22221.(000) WAS MADE BY SH. R.N. BANSAL IN THE ACCOUNTS OF DIFFERENT BENAMI/BOGUS CONCERNS AS STATED ABOVE, WHICH IS UNEXPLAINED. I HAVE THEREFORE, REA SONS TO BELIEVE THAT INCOME OF RS.22221(000) AND ANY OTHER INCOME WHICH MAY COME TO THE NOTICE SUBSEQUENTLY IN THE CO URSE OF THE ASSESSMENT PROCEEDINGS, HAS ESCAPED ASSESSMENT UNDE R SECTION 147. NECESSARY APPROVAL MAY KINDLY BE ACCORDED TO ISSUE THE NOTICE UNDER SECTION 148 READ WITH SECTION 147 OF THE INCO ME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2001-02. 5. SIMILAR REASONS WERE RECORDED FOR AYS 2003-04 & 2004-05 GIVING THE NAME OF RELEVANT DUMMY CONCERNS. IT IS OBSERVED BY ASSESSING OFFICER THAT AFTER VARIOUS REMINDERS, THE ASSESSEE FILED RETURNS OF INCOME ON 22.4.2008. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE ON 18 .11.2008 FILED OBJECTIONS ON THE REASONS RECORDED AND REQUESTED TO DROP PROCE EDINGS ON THE GROUND THAT ASSESSING OFFICER HAS NOT RECORDED PROPER BELI EF FOR ISSUING SUCH NOTICE. THE OBJECTION WAS REJECTED. ASSESSING OFFICER ISSU ED SUMMONS TO VARIOUS PERSONS CLAIMED TO BE OSTENSIBLE PROPRIETORS HOLDIN G THESE BANK ACCOUNTS. ACCORDING TO THE ASSESSING OFFICER, S/SHRI PURAN CH AND, DHARMENDER, BHUP SINGH, PURSHOTAM AND RAJ KUMAR STATED THAT THE ENTI RE BUSINESS OF BENAMI WAS OWNED BY THE ASSESSEE AND THEY WERE ONLY HIS WO RKERS. THE ASSESSEE THROUGHOUT THE PROCEEDINGS TOOK A CLEAR STAND THAT HE HAD NO CONCERN WHATSOEVER WITH THESE CONCERNS OR THESE PERSONS AND , THEREFORE, DID NOT FILE ANY APPLICATION IN REBUTTAL TO STATEMENTS OF SHRI R AMESH KUMAR AND SHRI SANJAY KUMAR RECORDED ON 22.12.2008. ACCORDING TO THE ASSESSING OFFICER, ITA 699, 700 & 701/DEL/10 5 THE ASSESSEE TOOK ONLY STAND THAT HE HELD NO BENAMI CONCERNS, WAS NOT VERY COOPERATIVE AND THE ASSESSMENT FOR AY 2002-03 WAS F RAMED EARLIER. 6. OUT OF 15 ALLEGED DUMMY PERSONS, 7 ATTENDED BEF ORE AO AND THEIR STATEMENTS WERE RECORDED. SIX OF THEM STATED THAT T HIS BUSINESS WAS NOT CARRIED BY THEM, ASSESSEE WAS THE REAL OWNER WHO U SED TO GET SOME BLANK PAPERS SIGNED FROM THEM. REMAINING ONE SHRI SANJAY STATED THAT ONE PURSHOTTAM WAS THE BENAMI OWNER AND NOT ASSESSEE. 7. AO WAS OF THE VIEW THAT ASSESSEE WAS THE BENAMI OWNER OF THESE CONCERNS AND CALLED ON THE ASSESSEE TO PRODUCE THE ACCOUNTS OF THESE CONCERNS. ASSESSEE REPLIED THAT SINCE IT IS NOT TH E OWNER OF THESE CONCERNS THERE WAS NO QUESTION OF HIS PRODUCING THE ACCOUNTS AS HE HAD NO CONNECTION WITH THESE OPERATIONS. 8. AO ON THE BASIS OF SEVEN STATEMENTS AND ADIT REP ORTS HELD THAT THE ASSESSEE WAS THE ACTUAL OWNER OF THESE BENAMI ENTIT IES AND THEIR TRANSACTIONS; PEAK INVESTMENTS AND ESTIMATED PROFITS WERE WORKED OUT AND ADDITIONS WERE MADE ACCORDINGLY. 9. THE ASSESSING OFFICER MADE THESE ADDITIONS IN RE SPECTIVE YEARS BY FOLLOWING OBSERVATIONS:- (I) AY 2001-02 :- FROM THE ABOVE DISCUSSION IT IS CONCLUDED THAT THE FIRMS DISCUSSED ABOVE AND THEIR BANK A/CS MENTIONED IN TH E REASONS RECORDED AND DISCUSSED IN ABOVE ORDER ARE OWNED BY SH.RAM ITA 699, 700 & 701/DEL/10 6 NARAIN BANSAL. VARIOUS OPPORTUNITIES WERE GIVEN TO HIM TO EXPLAIN THE ENTRIES IN THESE BANK A/CS BUT HE NEVER AVAILED THE OPPORTUNITY AND STUCK TO SINGLE ARGUMENT THAT HE HA S NO CONCERN WITH THESE FIRMS. THE BOOKS OF A/CS AS REQUIRED WE RE NOT PRODUCED. THE COPIES OF STATEMENTS OF VARIOUS PERS ONS RECORDED DURING THE ASSESSMENT PROCEEDINGS WERE GIVEN TO HIM FOR RE- BUTTAL. THOUGH THE A/C NUMBERS, NAME OF THE BANK, TOTAL DEPOSITS AND THE NAME OF FIRM WAS MENTIONED IN THE REASONS GIVEN TO HIM, THE ASSESSEE WAS ASKED VIDE ORDER SHE ET ENTRY DATED 23-12-2008 WHETHER HE WANTS DETAILED COPIES O F BANK A/CS OF THESE CONCERNS TO FILE RE-BUTTAL. THE ASSESSEE DENIED ON THE GROUND THAT THERE IS NO NEED AS IT DOES NOT RELATE TO HIM. BUT FROM THE ABOVE DISCUSSION IT IS AMPLE CLEAR THAT TH E OWNER OF THESE CONCERNS AND BANK A/CS OF THESE CONCERNS IS S H. RAM NARAIN BANSAL. AS DISCUSSED EARLIER IN THIS ORDER THE PERIOD OF TH ESE FIRMS AND THEIR BANK A/CS ARE SPREAD OVER THE PERIODS COVERED FOR ASSESSMENT YEAR 2001-02 TO 2004-05. THE ISSUES CON TAINED THEREIN WAS NECESSARY TO BE DISCUSSED IN ENTIRETY T O DRAW THE CONCLUSION AND IF THE ASSESSMENT YEARS HAVE BEEN DI SCUSSED IN ISOLATION, TRUE PICTURES WOULD NOT HAVE IMMERGED. NOW THE QUANTUM OF INCOME IS TO BE DETERMINED. HUGE DEPOSI T ARE MADE IN THESE BANK A/CS WHICH ARE NOTHING BUT THE SALE/P URCHASES OF THE GOODS. THE TOTAL DEPOSITS IN THE BANK A/CS CAN BE NOTHING BUT THE SALE PROCEEDS OR INVESTMENT OF THE FIRM. I N ABSENCE OF ANY EXPLANATION FROM THE ASSESSEE THE TOTAL DEPOSIT S IN THE BANK A/CS ARE TAKEN AS TOTAL TURNOVER AND THE NET PROFIT EARNED FROM THESE BUSINESS TRANSACTION IS TAKEN REASONABLY AT O NE PERCENT OF THIS TURNOVER, (AS ALSO TAKEN IN EARLIER ASSESSMENT YEAR 2002-03) AND THE PEAK AMOUNT IN THE BANK A/C IS TAKEN AS INV ESTMENT FOR THE BUSINESS. TOTAL INCOME OF THESE BENAMI CONCERN S, AS ALSO MENTIONED IN THE REASONS RECORDED, HELD TO BE OWNED BY SH. RAM NARAIN BANSAL, IN RESPECT OF THIS PARTICULAR AS SESSMENT YEAR IS CALCULATED BELOW:- INCOME AS PER INCOME-TAX RETURN FILED IN 67,092/ - RESPONSE TO NOTICE U/S 148 ADD : INCOME OF VARIOUS BENAMI FIRMS AS CALCULATED BELOW ITA 699, 700 & 701/DEL/10 7 M/S OM TRADING COMPANY, PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.463 OF CCB, REWARI. 12,00,288/- TOTAL TURNOVER AT RS.21869000/- 2,18,690/- PROFIT TAKEN AT 1% PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60348 OF SBOP, NARNAUL. 2,45,882/- TOTAL TURNOVER AT RS.3,52,000/- 3,520/- PROFIT TAKEN AT 1% TOTAL INCOME 17,35,472/-. (II) AY 2003-04 :- INCOME AS PER INCOME-TAX RETURN FILED IN RESPONSE TO NOTICE U/S 148 1,20,600/- ADD : INCOME OF VARIOUS BENAMI FIRMS AS CALCULATED BELOW. 1. M/S OM TRADING COMPANY PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60043 OF SBOP, CHARKHI DADRI 2,01 ,000/- TOTAL TURNOVER AT RS.2,00,000/- PROFIT TAKEN AT 1% 2,000/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.383 OF SB, INDORE REWARI 25,51,000/ - TOTAL TURNOVER AT RS.3,92,25000/- PROFIT TAKEN AT 1% 3,92,250/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.491 OF CCB, REWARI 18,95,000/- TOTAL TURNOVER AT RS.25585000/- ITA 699, 700 & 701/DEL/10 8 PROFIT TAKEN AT 1% 2,55,850/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.380 OF SBI, INDORE REWARI. 16,55,738/- TOTAL TURNOVER AT RS.2,12,85,127/- 2,12,851/- PROFIT TAKEN AT 1% 2. M/S BANSAL BROTHERS, PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60418 OF SBOP, NARNAUL. 7,02,50 6/- TOTAL TURNOVER AT RS.5005707/- PROFIT TAKEN AT 1% 50,057/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.433 OF SBI, INDORE, REWARI. 11,40,00 0/- TOTAL TURNOVER AT RS.17804000/- PROFIT TAKEN AT 1% 1,78,040/- 3. M/S SEEMA TRADING COMPANY DASS PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60405 OF SBOP, NARNAUL. 61,71,98 0/- TOTAL TURNOVER AT RS.162511723/- PROFIT TAKEN AT 1% 16,25,117/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60443 OF SBOP, NARNAUL. 2,72,75 1/- TOTAL TURNOVER AT RS.472751/- PROFIT TAKEN AT 1% 4,727/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.308 & 444 OF STATE BANK OF INDORE, REWARI. 20,60,204/- TOTAL TURNOVER AT RS.71273043/- ITA 699, 700 & 701/DEL/10 9 PROFIT TAKEN AT 1% 7,12,730/- 4. M/S PREM & COMPANY PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.9283 OF SBOP, NARNAUL. 30,53,806 /- TOTAL TURNOVER AT RS.54,78000/- PROFIT TAKEN AT 1% 54,780/- 5. M/S BUDH MAL & SONS PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60450 OF SBOP, NARNAUL. 7,42,568 /- TOTAL TURNOVER AT RS.3034440 PROFIT TAKEN AT 1% 30,344/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.499 OF CCB, REWARI. 32,83,552/- TOTAL TURNOVER AT RS.61567033/- PROFIT TAKEN AT 1% 6,15,670/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.343 OF STATE BANK, INDORE REWARI. 17,44,482/- TOTAL TURNOVER AT RS.34483201/- PROFIT TAKEN AT 1% 3,44,832/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.60392 OF SBOP, NARNAUL. 50,87,73 2/- TOTAL TURNOVER AT RS.91810013/- PROFIT TAKEN AT 1% 9,18,100/- 6. M/S S.K. TRADING COMPANY PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.512 OF CCB, REWARI. 8,00,850/- TOTAL TURNOVER AT RS.85,11,000/- ITA 699, 700 & 701/DEL/10 10 PROFIT TAKEN AT 1% 85,110/- PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.603 (OLD) & NEW NO.60377 OF SBOP, NARNAUL. 8,61,909/- TOTAL TURNOVER AT RS.3969994/- PROFIT TAKEN AT 1% 39,699/- 7. M/S SUNNY ENTERPRISES PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.382 OF STATE BANK INDORE, REWARI. 25,51,050/- TOTAL TURNOVER AT RS.35397000/- PROFIT TAKEN AT 1% 3,53,970/- 8. M/S RAJIV TRADING COMPANY BEING THE INVESTMENT MADE IN PURCHASE OF MUSTARD SEEDS AMOUNTING TO RS.12,55,860/- 12,55,860/- TOTAL INCOME 4,20,28,715/- (III) AY 2004-05 :- INCOME AS PER INCOME-TAX RETURN FILED IN RESPONSE TO NOTICE U/S 148 48,820/- ADD : INCOME OF VARIOUS BENAMI FIRMS AS CALCULATED BELOW 1. M/S OM TRADING COMPANY, PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.383 OF STATE BANK OF INDORE, REWARI. 18,01,165/- TOTAL TURNOVER AT RS.63,61,920/- PROFIT TAKEN AT 1% 63,619/- 2. M/S BANSAL BROTHERS, ITA 699, 700 & 701/DEL/10 11 PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.433 OF SBI, INDORE, REWARI. 10,4 8,870/- TOTAL TURNOVER AT RS.95,93,000/- PROFIT TAKEN AT 1% 95,930/- 3. M/S SUNNY ENTERPRISES, PEAK AMOUNT OF INVESTMENT AS PER BANK A/C NO.382 OF SBI, INDORE, REWARI 18,00 ,660/- TOTAL TURNOVER AT RS.63,50,000/- PROFIT TAKEN AT 1% 63,500/- TOTAL INCOME 49,22,564/- 10. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEALS WHE RE LEARNED CIT(A) UPHELD THESE ADDITIONS. AGGRIEVED, ASSESSEE IS IN APPEALS BEFORE US. 11. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ENTIRE ADDITIONS ARE BASED ON SURMISES AND CONJECTURES AND MISCONCEPTION OF THE ENTIRE FACTS. AS PER ADI REPORTS IN CHARKHI DADRA, REWARI AND NARNAU L AREA MUSTARD SEEDS WERE PURCHASED FROM NAFED IN BOGUS NAMES, NAFED AS A MATTER OF RULES SOLD THESE MUSTERED ONLY THROUGH ADVANCE BANK DRAF TS. THUS, THE PURCHASE OF MUSTARD SEEDS FROM NAFED IS THROUGH BANKING CHAN NELS ONLY. IF THE DEPARTMENT ALLEGED ANY SYSTEMATIC BENAMI BUSINESS A ND DESIRED TO UNEARTH IT, LOGICAL ENQUIRIES SHOULD HAVE BEEN CARRIED OUT FROM ALL SOURCES. FOR CONDUCTING SUCH WIDESPREAD OPERATIONS, THE BENAMI O PERATOR NEEDED TO POSSESS A COMPLETE WHEREWITHAL AND SYSTEM OF COMMAN D AND CONTROL OVER BENAMI ENTITIES AND OPERATIONS. THE ASSESSING OFFI CER WITHOUT CARRYING OUT LOGICAL ENQUIRES HELD THE ASSESSEE AS BENAMI OWNER ON HAPHAZARD FACTS, UNSUBSTANTIATED STATEMENTS AND UNBELIEVABLE PRESUMP TIONS. THERE IS NO ITA 699, 700 & 701/DEL/10 12 COGENT MATERIAL ON RECORD TO ATTRIBUTE SUCH SYSTEM ATIC OPERATIONS TO ASSESSEE. 12. IT IS A TRITE LAW THAT THE CHARGE OF BENAMI HAS TO BE PROVED BY THE DEPARTMENT AND SUCH BURDEN OF PROOF ENTIRELY LIES IT. RELIANCE IS PLACED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF USHA BHAR VS. SANAT KUMAR 135 TAXMAN 526 (CAL), WHICH LAID DOWN VARIOUS TESTS IN THIS BEHALF:- (I) THERE MUST BE THE COGENT AND SUFFICIENT EVIDENCE TO CONCLUDE THAT THE APPARENT IS NOT REAL. (II) THE BURDEN LIES ON THE PERSON ASSERTING TO PROVE SO I.E. DEPARTMENT. (III) SUCH BURDEN HAS TO BE STRICTLY DISCHARGED BY DEPART MENT THROUGH LEGAL EVIDENCE OF DEFINITE CHARACTER. (IV) SUCH EVIDENCE SHOULD EITHER PROVE DIRECTLY THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY. (V) THE INTENTIONS OF BENAMI AND OSTENSIBLE OWNER IS TO DEMONSTRATED BY THE DEPARTMENT FROM THE MATERIAL AV AILABLE ON RECORD. (VI) THE ALLEGATION OF BENAMI OWNERSHIP CAN NOT BE SOUGH T TO BE PROVED BY MERE CONJECTURE OR SURMISE AS SUBSTITUTE FOR PROOF. (VII) THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ASCERTAIN THE ISSUE AS ESTABLISHED BY EVIDENCE. 13. IN THIS BACKDROP, IT WAS IMPERATIVE FOR AO THAT :- (I) ENTIRE IS VERIFIED AND FACTS ARE ASCERTAINED PROP ERLY TO APPRECIATE WHETHER PROPER MATERIAL EXISTS AGAINST T HE ASSESSEE TO ITA 699, 700 & 701/DEL/10 13 SUGGEST THAT SYSTEMATIC BUSINESS TRANSACTIONS WERE CARRIED OUT BY ASSESSEE OVER A PERIOD OF 5 YEARS. (II) WHETHER THERE IS ANY PRIMA-FACIE SUBSTANCE IN ALLEG ATIONS. IN CASE OF PRIMA-FACIE SUBSTANCE, WHETHER ENOUGH MATER IAL HAS BEEN BROUGHT ON RECORD TO SUBSTANTIATE SUCH ALLEGAT IONS. (III) WHETHER SUFFICIENT MATERIAL HAS BEEN BROUGHT ON REC ORD TO PROVE THE ALLEGATION OF THE DEPARTMENT THAT ASSESSEE IN F ACT IS THE BENAMI OWNER OF THESE CONCERNS. (IV) TO APPRECIATE THAT NO SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AGAINST ASSESSEE AND NO DOCUMENT HAS BEEN RECOV ERED FROM ASSESSEES POSSESSION. 14. THE ASSESSEE DURING THE COURSE OF ENTIRE PROCEE DINGS CONSISTENTLY MAINTAINED THAT HE WAS NOT INVOLVED WITH THESE BENA MI CONCERNS AND SOMEBODY ELSE WAS INVOLVED. THE POLICE INVESTIGATI ONS HAVE IMPLICATED OTHER PERSONS ALSO WHICH THE SUBSEQUENT ARGUMENTS W ILL UNFOLD, AS THE SALES TAX AUTHORITIES AND OTHER GOVERNMENT DEPARTMENTS AL SO UNEARTHED THESE OPERATIONS. INCOME TAX DEPARTMENT WANTED ONE SCAPE GOAT TO PIN THE ENTIRE BLAME ON HIM TO BRING THE COMPLAINTS TO AN END. U NFORTUNATELY, ASSESSEE HAS BEEN CAUGHT IN THIS TANGLE AND ALL THESE HUGE A DDITIONS HAVE BEEN MADE WITHOUT PROPER JUSTIFICATION. 15. A.O. FORMALLY ISSUED A SHOW CAUSE NOTICE MAKING ALLEGATION ABOUT THE BENAMI CONCERNS. THE ASSESSEE IN RESPONSE THERETO MADE CATEGORICAL DENIAL. THE A.O. HAS REFERRED TO SOME STATEMENTS RECORDED B Y HIM WHICH WERE ITA 699, 700 & 701/DEL/10 14 PROVIDED TO THE ASSESSEE ON 19 TH DECEMBER, 2008. IT WAS SUBMITTED THAT THE STATEMENT OF ONLY FIVE PERSONS VIZ. SHRI PURAN CHAN D, SHRI DHARMENDER, SHRI BHUP SINGH, SHRI PUSHKAR AND SHRI RAJ KUMAR WERE RE CORDED ON 4 TH DECEMBER, 2008 AND THAT TOO AT THE BACK OF THE ASSE SSEE. COPIES OF THESE STATEMENTS WERE PROVIDED TO THE ASSESSEE ON19TH DEC EMBER, 2008 AND THE ASSESSEE AGAIN REITERATED THAT HE IS NOT THE OWNER OF THESE CONCERNS. THE A.O. MEANWHILE RECORDED THE STATEMENT OF TWO MORE P ERSONS VIZ., SHRI RAMESH KUMAR AND SHRI SANJAY KUMAR FOR WHICH DENIAL WAS ALSO FILED BY THE ASSESSEE. 16. IT WAS EXPLAINED THAT ALL THESE STATEMENTS HAVE BEEN RECORDED BY ASKING LEADING QUESTIONS. THE AO IN THE THESE ASSE SSMENT YEARS HELD ASSESSEE TO BE THE BENAMI OWNER OF 15 CONCERNS WHE REAS THE STATEMENTS OF ONLY 7 PERSONS ARE RECORDED OUT OF WHICH ONE PERSO N HAS CATEGORICALLY DEPOSED TO THE EFFECT THAT SHRI PURSHOTTAM AND NOT THE ASSESSEE WAS THE BENAMI OWNER. DESPITE THERE BEING NO OTHER CORROBO RATIVE MATERIAL OR EVIDENCE NOR ANY STATEMENTS IN RESPECT OF THE OTHER 8 PERSONS THE A.O. HAS HELD THE ASSESSEE TO BE THE BENAMI OWNER OF ENTIRE BUSINESS INCLUDING THESE 8 CONCERNS ALSO. NO ADDITION CAN BE MADE IN RESPECT O F THESE 8 CONCERNS AS THERE ARE NEITHER STATEMENTS NOR OTHER MATERIAL ON RECORD. ITA 699, 700 & 701/DEL/10 15 17. AS REGARDS THE STATEMENTS OF 7 PERSONS, THERE I S NO OTHER MATERIAL WHATSOEVER TO SUPPORT THE ALLEGATIONS OF BENAMI EXC EPT SELF CONTRADICTORY AND SKETCHY STATEMENTS. WHILE RELYING ON 6 STATEMEN TS AO HAS FAILED TO CONSIDER THE VARIOUS CRUCIAL ISSUES WHICH ARISES F ROM THESE STATEMENTS. 1. MR. RAM KUMAR (STATEMENT AT PG. 30-33 OF PAPER B OOK A.Y. 2001-02) HAS CONFIRMED DOING OWN RETAIL BUSINESS FO R LAST SIX YEARS AND ALSO HAVE DONE INDEPENDENT SUPPLY BUSINESS EARL IER. ALLEGES TO HAVE WORKED FOR ONLY 7-8 MONTHS FOR MR. R.N. BANSAL . ON PG.31 HE STATES THAT ONLY ONE SERVANT NAMELY MR SUBHASHWAS W ORKING WITH MR. R.N. BANSAL MEANING THEREBY THERE WERE NO EMPLOYEES OTHER THAN MR. SUBHASH WITH MR. R.N. BANSAL. ON PG. 33, MR. RAM KU MAR DOUBTS ABOUT MONEY IN BANK BEING THAT OF MR. R.N. BANSAL. 2. MR. PURSHOTTAM SHARMA (STATEMENT AT PG.27-29 OF PAPER BOOK A.Y. 2001-02) STATES THAT WITNESS WAS PROVIDED BY BROTHER OF MR. R.N. BANSAL ON SALES TAX. NO EFFORT WAS MADE TO FI ND OUT THE CREDENTIALS OF M/S SHIV SHANKAR & CO. OWNED BY BROT HER OF MR. R.N. BANSAL. NO QUESTION ASKED FROM ASSESSEES BROTHER, WHETHER HE HAS SIGNED AT THE BEHEST OF MR. R.N. BANSAL. IF NOT WHOSE BEHEST HE HAD SIGNED. PG.28 HE STATES HAVING WORKED FOR ONLY 4 MONTHS AN D THEN 6-7 MONTHS IN THE FIRM OF WHICH HE IS THE PROPRIETOR. NO CO-RELATION IS EXPLAINED BY AO BETWEEN THE PERIOD OF OPERATIONS OF SO ALLEGED BANK A/C WITH THE PERIOD OF HIS ALLEGED EMPLOYMENTS. ON PG. 28, HE HAS STATED DETAILS OF ALL BANK A/CS I .E. NAME, BRANCH, ETC. IF HE HAS SIGNED ON BLANK PAPER, HOW DOES HE KNOWS ALL THESE BANK DETAILS? ITA 699, 700 & 701/DEL/10 16 PG. 29 THE REASONS FOR SIGNING BLANK PAPERS WAS H IS REGARD FOR ASSESSEE AS AN ELDER BROTHER. NO PECUNIARY BENEFIT OR QUID PRO QUO EXPLAINED. 3. MR. PURAN CHAND( STATEMENT ON PG. 18, PG. 20 OF PAPER BOOK A.Y. 2001-02) HE WORKED FOR V.K. TRADERS. HE STARTED HIS OWN BUS INESS AS WELL. NEITHER BANK A/C NO., NOR BANK NAME STATED. NO EFFORT MADE BY AO TO CO-RELATE STATED PERIOD OF SERVICE WITH ALLEGED OPERATION OF BANK A/C. NO ALLEGATION OF BENAMI AGAINST THIS MR. RAM NARAI N BANSAL MADE IN STATEMENT. 4. MR. DHARMENDER ( STATEMENT ON PG. 21 OF PAPER BO OK A.Y. 2001-02) STATED - - WORKING AS DRIVER FOR LAST 1-1/2 YEARS WITH AN AD VOCATE & EARLIER AS CASUAL DRIVER. - WORKED EARLIER FOR 1-1/2-2 YEARS WITH MR. R.N. BA NSAL - - NO EFFORT MADE BY AO TO CO-RELATE THE PERIOD OF B ENAMI RELATIONSHIP AND BANK A/C NO QUESTION ASKED WHICH VEHICLE HE O PERATED AND WHAT WAS THE NATURE OF HIS JOB. WHETHER HE WAS DRIVING A PASSENGER VEHICLE OR GOODS CARRIER(TRUCK, ETC.). NO QUESTION ASKED AB OUT THE NATURE OF BUSINESS OF MR. RAM NARAIN BANSAL. STATEMENT RECOR DED IN THE PRESENCE OF THE EMPLOYEES OF MR. KULDEEP JOSHI, WHI CH INDICATES SOME BODYS INFLUENCE. - NO ALLEGATION IN THE STATEMENT THAT THESE FIRMS A RE BENAMI OF RAM NARAIN BANSAL. - ON PG. 22 HE SHOWS IGNORANCE OF THESE BANK ACCOUN TS. ITA 699, 700 & 701/DEL/10 17 5. MR. BHUP SINGH( STATEMENT ON PG. 24 OF PAPER BOO K A.Y. 2001-02) -NO EFFORT MADE TO CO-RELATE THE PERIOD AS DRIVER. -IT IS IMPORTANT TO NOTE THAT THIS PERIOD IS THE SA ME TAKEN BY AO AS THAT OF MR. DHARMENDER, MEANING THEREBY THAT MR. R.N. BA NSAL WAS HAVING MANY DRIVERS AT THE SAME POINT OF TIME. -NO QUESTION ASKED AS TO WHO WERE OTHER DRIVERS OR ASSOCIATED PERSONS. NO QUESTION ASKED WHICH VEHICLE HE WAS DRIVING? WH O OWNED THE VEHICLE? - HE STATED TO BE GETTING RS.1000/- AS SALARY. PERI OD SERVED IS ALLEGED TO BE 10-11 MONTHS. NO RELATION BETWEEN THE PERIOD OF OPERATION OF BANK A/C AND THIS SALARY. 6. MR. SANJAY KUMAR( STATEMENT ON PG. 34-38 OF PAPE R BOOK A.Y. 2001-02) -CLEARLY STATES THAT MR. PURSHOTTAM IS THE ACTUALLY BENAMI OWNER OF HIS BUSINESS. NO ALLEGATION AGAINST THE ASSESSEE IN THI S BEHALF. - NO EFFORT MADE BY AO TO CROSS-VERIFY THIS STATEME NT FROM PURSHOTTAM OR TO INITIATE BENAMI ENQUIRIES AGAINST PURSHOTTAM ALSO. - HE CATEGORICALLY DENIED RAM NARAIN BANSALS NAME. 7. ASSESSEE EXPLAINED THE TRUTH THAT HE HAS NOTHING TO SAY EXCEPT THAT THE SO CALLED BENAMI CONCERNS DO NOT RELATE TO HIM. WHEN A PERSON DOES NOT KNOW ABOUT THESE CONCERNS H OW CAN HE SAY ANY OTHER THING ABOUT THEM? - AO HAS SUSTAINED THE ADDITIONS BY HOLDING THAT S TATEMENTS OF VARIOUS PERSONS AND ALSO FROM THE SPOT INQUIRY, INFORMATION SUPPLIED BY SOME OTHER PERSONS AT THE ADDRESSES OF THESE CONCERN. ITA 699, 700 & 701/DEL/10 18 - THERE IS NO REFERENCE OR RELIANCE ON SUCH OTHER PERSONS, WHAT WAS THE OUTCOME OF SPOT ENQUIRIES AND WHAT WAS THE OTHER IN FORMATION ALL THESE THINGS WERE NEITHER IN THE PRESENCE OF THE AS SESSEE NOR WERE CONFRONTED TO HIM. - AO HAS TRIED TO RELY ON SOME CONCLUSION DERIVED BY HIM IN A.Y. 2002-03 EACH YEAR BEING DISTINCT WITH DIFFERENT CONCERN, THESE FINDINGS CANNOT BE APPLIED TO 2003-04 AND 04-05 WIT HOUT CORROBORATION. - AO WENT ON INSISTING THAT THE ASSESSEE SHOULD PR ODUCE THOSE PERSONS ONCE THE ASSESSEE HAD DENIED THEN HOW CAN HE BE EXP ECTED TO PRODUCE THEM. ADVERSE INFERENCE HAS BEEN DRAWN ON ASSESSEE S REQUEST TO AO FOR ISSUING SUMMONS AND CALLING THEM? - AO HAS RELIED ON THE STATEMENTS RECORDED IN EARL IER YEAR THEY ARE NOT RELEVANT FOR THESE YEARS. - THE VYOPAR MANDALS PRESIDENT STATEMENT HAS BEEN RELIED THAT NO CONCERNS OF BENAMI NAMES EXISTED AT THE ADDRESSES. HE VERY WELL, COULD HAVE BEEN CALLED ON FOR ASSISTANCE IN FINDING THE A CTUAL PERSONS, THEIR RIGHT ADDRESSES. AO HAS FAILED TO UNDERTAKE AS TO WHAT LOGICAL INQUIRIES ACTUALLY FLOATED THE SAID CONCERN. - AO HAS DISCUSSED THE STATEMENT OF ONE SH. RAMESH KUMAR S/O SH. RATTAN LAL, CHARKHI DADRI, RECORDED AT ASSESSEES BACK AND HAS NOT CONFRONTED. IN THAT CASE ADVERSE INFERENCE CAN BE D RAWN MERELY ON THE FACT OF HIS JUST BEING A RELATIVE, ON SUCH STATEMEN T. - STATEMENT OF SH. PURAN CHAND S/O SH. ISHWAR DASS , CHARKHI DADRI STATED THAT HE WORKED FOR ONE YEAR 6 MONTHS TO 2 YE ARS; NO SPECIFIC PERIOD WAS STATED, ONLY BECAUSE HE IS POOR AND CLAI MS TO BE UNAWARE OF CERTAIN FACTS, IT CANNOT BE HELD THAT UNTOLD FACTS ARE AGAINST ASSESSEE AND HE IS SPEAKING TRUTH. ITA 699, 700 & 701/DEL/10 19 - STATEMENT OF SH. PURSHOTTAM SHARMA S/O SH. MANOHA R LAL HAS BEEN RELIED. THE CLAIM THAT THE OFFICE OF OM TRADING COM PANY WAS AT THE RESIDENCE OF THE ASSESSEE IS TOTALLY BASED ON CONJE CTURE AND SURMISES. THE ADDRESS IS STATED TO BE BEHIND A.P.J. COLLEGE , NO HOUSE NO., ROAD, LANE NO. ETC. IS MENTIONED. A.P.J. COLLEGE IS A VE RY POPULATED AREA OF SMALL TOWN. - STATEMENT OF SH. DHARMENDER S/O SH. HARI RAM HAS BEEN DISCUSSED. HE CLAIMS TO BE A DRIVER, NO EFFORTS WERE MADE TO E STABLISH THIS FACT BY ASKING HIS LICENSE. THE MENTION OF HIS SIGNING DOCU MENTS UNDER THE INFLUENCE OF LIQUOR ARE PURE SURMISES. AO CANNOT D RAW A POSITIVE INFERENCE ON THE BASIS OF SILLY REASONS OF AN ILLIT ERATE PERSONS STATEMENT THAT NONE OTHER THAN THE ASSESSEE BE THE OWNER OF S AID CONCERN. - STATEMENT OF SH. SANJAY KUMAR S/O SH. OM PRAKASH GIVES TWO CONTRARY STATEMENTS. AO HAS USED THE ONE AGAINST T HE ASSESSEE AND IGNORED THE PART WHICH FAVOURS THE ASSESSEE. A.O. H IMSELF OBSERVES THAT HE HAS CHANGED HIS STATEMENT ONLY TO SAVE THE ASS ESSEE. - INVESTIGATIONS DONE BY ADI HAVE BEEN USED AGAINST HIM WITHOUT CONFRONTING TO THE ASSESSEE. - WHEN ANOTHER PERSON CONFIRMS SANJAY KUMARS STATE MENT THAT RAJIV TRADING CO. & BANSAL BROS. ARE OWNED BY ONE PURSHO TTAM AND NOT THE ASSESSEE, IS CONVENIENTLY IGNORED BY AO AS UNRELIAB LE, ONLY BECAUSE IT IS IN FAVOUR OF THE REVENUE. IT CLEARLY DEMONSTRATES T HE FACT THAT AO WILLY- NILLY WANTED TO HOLD THE ASSESSEE AS BENAMIDAR OF THESE CONCERNS. - AO REPEATEDLY ALLEGED THAT THE ASSESSEE HAS NOT B EEN ABLE TO EXPLAIN THE ALLEGED BENAMI BANK ACCOUNTS. WHEN THE ACCOU NTS DO NOT BELONG TO THE ASSESSEE, HOW CAN BE EXPECTED TO EXPLAIN THE M. REGARDING PRODUCTION OF BENAMI CONCERNS BOOKS OF ACCOUNTS, W HEN THE ASSESSEE ITA 699, 700 & 701/DEL/10 20 DOES NOT OWN SUCH BENAMI BUSINESSES OR CONCERN, HOW CAN HE PRODUCE THESE BOOKS, WHICH DO NOT EXIST. IF THIS ALLEGATIO N WAS TO BE PROVED BY NECESSARY MATERIAL TO SUPPORT THE CLAIM OF EXISTENC E OF BOOKS SHOULD HAVE BEEN BROUGHT ON RECORD. 17.1. THE LEARNED AR FURTHER SUBMITTED THAT IT IS I MPORTANT TO APPRECIATE THAT I. STATEMENT OF MR. RAM NARAIN BANSAL WAS NEITHER INSI STED NOR RECORDED BY ADI OR THE A.O. AT ANY STAGE OF PROCEED INGS. II. THE A.O. NEVER CONFRONTED THE ASSESSEE WITH HI S INTERPRETATION OF BENAMI WHAT IS PROPOSITIONS FOR THE ASSESSMENT. III. AT NO STAGE A.O. ASKED AS TO WHY ASSESSEE SHOULD NOT BE TREATED AS BENAMI OWNER OF ALL CONCERNS. NO SUCH ALLEGATION W AS MADE DURING THE ASSESSMENT PROCEEDINGS, THE ADDITION SURFACED ONLY WHEN THE ASSESSMENT ORDER WAS RECEIVED. IV. A.O. INSISTED FOR PRODUCTION OF BOOKS OF ACCOUN TS OF BENAMI CONCERNS, WHICH ACCORDING TO ASSESSEE NEVER EXISTED, THERE WA S NO REASON FOR A.O. TO DRAW ADVERSE INFERENCE FOR NON PRODUCTION OF SUC H BOOKS AND MAKE ADDITIONS ASSUMING ASSESSEE WAS DELIBERATELY NOT PR ODUCING THEM. V. A.O. NEVER ASKED ALLEGED DUMMY PERSONS DURING TH E COURSE OF THE STATEMENTS TO PRODUCE FURTHER INFORMATION TO SUPPO RT OF THEIR DEPOSITION THAT ASSESSEE WAS BENAMI OWNER. VI. A.O. NEVER CONFRONTED THEM CONTRARY STATEMENTS OF MR. SANJAY, PROPRIETOR, RAJEEV TRADING CO. AND MR. OM PRAKASH W HEREBY THEY DEPOSED THAT PURSHOTHAM WAS THE ACTUAL OWNER/ PROP RIETOR BEHIND ALL THESE CONCERNS AND NOT MR. RAM NARAIN BANSAL. ITA 699, 700 & 701/DEL/10 21 VII. A.O. HAD TWO CONTRADICTORY STATEMENTS OF MR. S ANJAY, ONE BEFORE THE ADI AND ANOTHER BEFORE HIMSELF. HE CONVENIENTLY IGN ORED THE SUBSEQUENT STATEMENT RECORDED BEFORE HIM AND RELIED ON THE ONE BEFORE ADI THUS HE HAD NO CONFIDENCE ON HIS ENQUIRES. VIII. AO SHOULD HAVE IMPARTIALLY CROSS VERIFIED AND CORROBORATED THESE STATEMENTS AND IN ALL FAIRNESS SHOULD HAVE S UMMONED ALLEGED MR. PURSHOTHAM TO VERIFY THE STATEMENT OF SHRI SANJAY. IT DEMONSTRATES THAT REVENUE WAS NOT KEEN IN FAIR AND LOGICAL ENQUIRY. IX. STATEMENTS HAVE BEEN RECORDED BY ASKING LEADING QUESTIONS ABOUT ASSESSEE ONLY AND THEIR ACCEPTED VERSION WITHOUT F URTHER CORROBORATION OR VERIFICATION. X. THESE STATEMENTS CREATE ONLY SOME SUSPICION AND WITHOUT FURTHER CORROBORATION THEY ARE NOT SUFFICIENT TO DISCHARGE THE ONUS CAST UPON THE DEPARTMENT. WITHOUT SUFFICIENT AND REASONABLE MATE RIAL ASSESSEE CANNOT BE ASSUMED TO BE BENAMI OWNER OF SUCH HUGE OPERATI ONS OVER A PERIOD OF 5 YEARS. XI. THE ALLEGATION OF BEING BENAMI OWNER IS A SERIO US NATURE AND IT CANNOT BE HELD TO BE PROVED MERELY BY SURMISES AND CONJEC TURES. XII. EACH REFERS TO SOME SHORT PERIOD OF EMPLOYMENT WITH THE ASSESSEE. NO EFFORTS HAVE BEEN MADE BY THE A.O. TO ASCERTAIN THE ACTUAL PERIOD AND CO-RELATE IT WITH THE BENAMI OPERATIONS. XII. AO HAS MADE A CASUAL REFERENCE TO THE CHAIN OF ALLEGED BANK ACCOUNTS WITHOUT ANY LOGIC OR MATERIAL WHICH AMOUNT ONLY TO SURMISESAND CONJECTURES. 18. THE LEARNED AR HAS FURTHER STATED THAT TO PROVE THE ALLEGATION OF BENAMI AND THE ENTIRE ONUS IS ON THE PERSONS WHO AL LEGES IT . TO PROVE A ITA 699, 700 & 701/DEL/10 22 PERSON AS BENAMI, VARIOUS COURTS HAVE ENUNCIATED IN MANY OF THE CASES LAYING DOWN SUCH TESTS WHICH NEED TO BE APPLIED TO HOLD A TRANSACTION TO BE A BENAMI. 19. RELIANCE IS PLACED ON THE PRINCIPLES LAID DOWN BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF USHA BHAR VS SANAT KUMAR 135 TAXMAN 526 (CAL) FOR BURDEN OF PROOF ON DEPARTMENT TO BRING HOME THE CHARGE OF BENAMI AGAINST ASSESSEE. 20. THE MAIN CONTENTIONS OF THE AR ARE TO THE EFFEC T THAT: (I) MERELY ON THE BASIS OF SKETCHY ORAL STATEMENTS, AS SESSEE CANNOT BE HELD TO BE THE BENAMI OWNER. (II) NO SUPPORTING EVIDENCE HAS BEEN BROUGHT ON RECORD T O CORROBORATE THE ALLEGATIONS OF BENAMI. (III) THE A.O. HAD BANK ACCOUNTS OF THE ALLEGED BENAMI C ONCERNS, CONTAINING VARIOUS DEBIT AND CREDIT ENTRIES. THERE IS NO EFFORT TO FIND OUT AND LINK ANY SUCH ENTRIES WITH THE ACCOUNT OR S OURCES RELATABLE TO THE ASSESSEES FINANCES. (IV) NEITHER INQUIRY HAS BEEN CARRIED OUT FROM NAFED OR MARKET/ CUSTOMERS THAT ASSESSEE WAS DEALING WITH THEM ON B EHALF OF BENAMI CONCERNS. (V) ADDITIONS HAVE BEEN MADE IN RESPECT OF 15 CONCERNS WHEREAS ONLY 7 STATEMENTS ARE RECORDED BY THE A.O; OUT OF WHICH ON E PERSON HAS CATEGORICALLY STATED THAT SHRI PURSHOTTAM AND NOT ASSESSEE IS BENAMI OWNER ITA 699, 700 & 701/DEL/10 23 (VI) THE STATEMENTS REFER TO MEAGER SALARIES, CONFUSED F ACTS, LACK OF ANY DIRECT EVIDENCE EXCEPT CASUAL AND NON SPECIFIC MENT ION OF ASSESSEE. (VII) THESE DEPONENTS HAVE BEEN ASSUMED TO BE ANGELS KNOW ING NOTHING ABOUT THE REALITIES OF LIFE. THEY HAVE POSED TO BE OBEYING LIKE ROBOTS AND INDULGING IN HUGE TRANSACTIONS WITHOUT RHYME AN D REASON. (VIII) THE STATEMENTS LACK CREDENCE AND A CHARGE OF BENAMI IS SOUGHT TO BE PROVED ON THIS BASIS WITHOUT FILLING THE HUGE GAPS, INCONSISTENCIES AND CONTRADICTIONS, IN STATED FACTS. 21. ALLEGED PURCHASES OF MUSTARD SEEDS, SPREAD OVE R A PERIOD OF FIVE YEARS FROM A GOVT. AGENCY NAFED WILL CALL FOR VAR IOUS TRANSACTIONS IN THE MARKET; TRANSPORTATION, LOADING AND UNLOADING OF SE EDS; REQUIREMENT OF STORAGE GODOWNS; EMPLOYMENT OF SUPERVISORY AND MARK ETING STAFF; MAINTENANCE OF ACCOUNTS AND COORDINATION OF VARIOUS ENTITIES WHICH ARE ALLEGED TO BE NEARLY 15; OPENING & OPERATING BANK ACCOUNTS; ISSUING CHEQUES AND VARIOUS DEPOSITS IN THE BANKS; GOODS C ANNOT BE SOLD ON CASH ONLY CONSEQUENTLY RECORD OF OUTSTANDING TRADE DEBIT BALANCES AND THEIR PERIODICAL RECOVERIES; SALES TAX REGISTRATIONS OF T HESE ENTITIES, MONTHLY RETURNS, PAYMENT OF SALES TAX AND THEIR ASSESSMENTS ; FILING OF DECLARATIONS. THERE IS NEITHER ANSWER TO ANY SUCH QUESTION NOR C ONSIDERATION OF THESE VITAL ASPECTS WHICH ARE NECESSARY TO PROVE BENAMI. ITA 699, 700 & 701/DEL/10 24 22. AO HAS ADMITTED THAT 7 PERSONS WHO WERE SUMMON ED ARE ILLITERATE PERSONS WORKING AS DRIVERS OR DECKHAND AND HAD NO IDEA AS TO WHAT THEY WERE DOING. WHICH CLEARLY MEANS THAT THEY COULD NOT HAVE- I. OPERATED THE BANK ACCOUNT, FILLED CHEQUES, PAY I N SLIPS, CHECKED BALANCES AND POSITION OF CLEARANCE OF CHEQUES IN TH E RESPECTIVE BANKS. II. COULD NOT HAVE TRANSACTED WITH GOVT. OFFICERS O F NAFED IN FACILITATING THE PURCHASE OF MUSTARD SEED, THEY DO NOT EVEN CLAIM THE SAME EITHER. III. THEY DID NOT HELP IN ANY MARKETING ACTIVITIES, TRANSPORTATION, LOADING, UNLOADING ETC. IV. EXCEPT CLAIMING THEMSELVES TO BE ILLITERATE, IN DIGENT AND UNASSUMING PERSONS THE INCOHERENT STATEMENTS ARE T O THE EFFECT THAT THEY ARE SOME HOW FRIENDS OF ASSESSES RELATIVES AND THEY WERE SIGNING WHATEVER ASSESSEE ASKED LIKE - BLANK PAPERS, SOME F ORMS ETC. SOME BODY ELSE WENT TO INTRODUCE THEM FOR OPENING OF BAN K A/C WHO WAS FRIENDS OR RELATIVE OF ASSESSEE. THESE STATEMENTS P ROVE NOTHING ON REMOTE HUMAN LOGIC LOOKING AT THE ENTIRE BUSINESS. 23. THE ENTIRE BASIS OF INVESTIGATION SHOULD HAVE BEEN TO FIND OUT ALL CORRECT AND MATERIAL FACTS INSTEAD EXCEPT THESE SHA KY STATEMENTS NO OTHER INVESTIGATION WAS CARRIED OUT. 24. THE IMPORTANT MISSING ISSUES FROM AOS INVEST IGATIONS ARE: I. NO ENQUIRY FROM NAFED AUTHORITIES WERE CARRIED OUT AS TO ACTUAL PURCHASER OF MUSTER SEEDS; WHO APPEARED BEFORE THEI R AUTHORITIES ENTERED GODOWNS, COUNTED THE GOODS AND SIGNED DELIV ERY VOUCHERS. ITA 699, 700 & 701/DEL/10 25 II. TRANSPORT AGENTS, LABOUR AGENCIES FOR LOADINGS/ UNLOADING FROM TIME TO TIME, TRANSPORTATION OF GOODS, PAYMENT OF LABOUR , FREIGHT CHARGES, CASH/CREDIT PURCHASES AND PAYERS OF TRANSPORTATION CHARGES, NAMES OF CONSIGNOR- CONSIGNEES ETC. II. NO IDENTIFICATION OF MUSTERED SEEDS PURCHASER WAS E VER MADE OUT FROM MARKET. THIS INVOLVED PARALLEL UNACCOUNTED PU RCHASE TRANSACTIONS BY THIRD PARTIES; IN TRANSACTIONS OF T ENS OF CRORES NOT A SINGLE PURCHASER OF MUSTERED SEEDS COULD BE IDENTIF IED FROM MARKET BY AO RECORD STATEMENT, COLLECT SOME MORE EVIDENCE, ASK FOR THE IDENTITY OF SELLER ,DELIVERED THE GOODS OR COLLECTE D PAYMENTS ON BEHALF OF ASSESSEE. III. NO ENQUIRY FROM BANKS HAVE BEEN CARRIED OUT AS TO W HO ACTUALLY OPERATED OR OWNED THESE ACCOUNTS; WHO CHECKED THE B ALANCES PERIODICALLY, COLLECTED RELEVANT INFORMATION AND R EPRESENTED ON THEIR BEHALF. IV. NO ENQUIRY HAS BEEN MADE FROM SALES TAX AUTHORITIES TO VERIFY WHO GOT ENTITIES REGISTERED, COLLECTED DECLARATIONS, FI LED RETURNS, PAID TAXES, ATTENDED ASSESSMENT PROCEEDINGS ETC. 25. LD AO HAS NOT INQUIRED ANY ASPECT OF ENQUIRY O R INVESTIGATION, WHICH COULD HAVE UNEARTHED THESE OPERATIONS IN LOGICAL MA NNER. EXCEPT 7 GULLIBLE PERSONS STATEMENTS, WHICH RAISE MORE QUESTIONS THAN THE ANSWERS, NO MATERIAL HAS BEEN BROUGHT ON RECORD. 6 SKETCHY AND INCONCLUSIVE STATEMENTS ARE PROJECTED AS THE SOLE BASIS TO HOLD THE ASSESSE E AS BENAMI OWNER OF 15 CONCERNS FOR THEIR VOLUMINOUS TRANSACTIONS SPREADIN G OVER ABOUT 5 YEARS. THE ADVERSE INFERENCES ARE - ASSESSEE WAS NOT COOPERATI NG; HE DID NOT CHOOSE TO ITA 699, 700 & 701/DEL/10 26 CROSS EXAMINE THE 6 WITNESSES; AND NO BOOKS OF BEN AMI CONCERNS WERE PRODUCED. 26. IT IS VEHEMENTLY ARGUED THAT THE THIS EPISODE BECAME A NIGHT MARE FOR THE ASSESSEE, AS APART FROM INCOME TAX PROCEEDINGS, POLICE & SALES TAX DEPARTMENT ALSO STARTED CHASING SOME PERSONS INCLU DING ASSESSEE AND HE HAD TO COPE UP WITH VARIOUS AGENCIES WHICH CAUSED VARIO US DELAYS. AO HAS NOT RELIED ON ANY OTHER DEPARTMENTS ENQUIRIES; AS A MAT TER OF FACT, NOTHING SO FAR HAS BEEN DONE BY OTHER DEPARTMENTS AGAINST ASSESSEE . SINCE ASSESSEE HAD NOTHING TO DO WITH BENAMI CONCERNS, HE EMPHATICALLY DENIED IT, CONSEQUENTLY NO PURPOSE COULD HAVE BEEN SERVED BY C ROSS EXAMINING 6 WITNESSES. THE STATEMENTS WERE CONFUSING, CROSS EXA MINATION WOULD HAVE COMPOUNDED THE CONFUSION. SINCE ASSESSEE IS NOT A B ENAMI OWNER THERE WAS NO QUESTION OF ASSESSEE POSSESSING ANY ACCOUNT OR PRODUCING THEM BEFORE AO. 27. THE SKETCHY STATEMENTS OF 6 WITNESSES MAY RAISE SOME SUSPICION BUT IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL, ASSES SEE CAN NOT BE HELD TO BENAMI OWNER OF 15 CONCERNS. 28. IN THE LIGHT OF VARIOUS TESTS LAID DOWN BY JUDI CIAL PRONOUNCEMENTS, NOT A SINGLE TEST HAS BEEN MET BY THE AO. NEITHER A SIN GLE SUPPLIER OR CUSTOMER HAS BEEN FOUND NOR ANY BANK OFFICER HAS ALLEGED THA T ASSESSEE WAS A BENAMI ITA 699, 700 & 701/DEL/10 27 OWNER. AO HAS NOT BEEN ABLE TO LINK A SINGLE BANK T RANSACTIONS WITH THE ASSESSEES BANK A/C, ASSETS OR AFFAIRS. NOTHING IS ON RECORD TO SUPPORT THAT ASSESSEE WAS ACTUAL BENEFICIARY AND HAS WITHDRAWN A NY MONEY FROM THE BENAMI BANK ACCOUNTS. NO MATERIAL IS ON RECORD THAT CHEQUES WERE WRITTEN BY ASSESSEE OR DEPOSITED BY HIM. ENTIRE ONUS WHICH IS ON THE AO TO PROVE THE ALLEGATIONS OF THE BENAMI REMAIN UNCOMPLIED. TH US, ADDITIONS HAVE NO LEGS TO STAND. 29. LD COUNSEL RELIED ON FOLLOWING CASE LAWS: - PRAKASH NARAIN VS. (1982) 134 ITR 364 (ALL) (II) ONE OF THE IMPORTANT CRITERIA FOR DECIDING TH E CONTROVERSY ABOUT BENAMI IS THE MOTIVE FOR THE BENAMI PURCHASE. IN THE INSTANT CASE, NO MOTIVE HAS BEEN SUGGESTED WHY THE ASSESSEE DESIRED TO PURCHASE THE THREE PROPERTIES IN DISPUTE IN THE BENAMI NAME OF HIS FATHER-IN-LAW AND WIFE AND IN THE JOINT NAMES OF HIS FATHER-IN-LAW AND HIS WIFE. - RAKESH R. PUROHIT VS. ACIT (2008) 14 DTR (JP) (TRIB ) 414 IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE ON RE CORD TO PROVE THAT THE BUSINESS CONCERNS BELONGING TO THE A LLEGED BENAMIDARS WERE FUNDED, MANAGED OR CONTROLLED BY TH E ASSESSEE OR HIS ASSOCIATES OR THAT THEY ARE THE BENEFICIAL O WNERS OF THESE CONCERNS, ASSESSEE AND HIS PARTNERS CANNOT BE HELD TO BE INVOLVED IN ANY MANNER IN THE BUSINESS OF THESE PER SONS AND, THEREFORE, ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE AND HIS PARTNERS IN RESPECT OF ALLEGED COM MISSION INCOME OF THOSE CONCERNS. - ITO VS. M.R. DHANALAKSHMI AMMAL & ORS. (1978) 112 I TR 413 (MAD) ITA 699, 700 & 701/DEL/10 28 IN EVERY BENAMI TRANSACTION THE INTENTION OF THE PARTIES IS, THE ESSENCE, THAT IS TO SAY, THE TRUE TEST TO DETER MINE WHETHER THE TRANSACTION IS BENAMI AS SUCH OR WHETHER IT WAS MEANT TO BE COLOURABLE; IF COLOURABLE, THE TRANSACTION IS BE NAMI, OTHERWISE, THE TRANSACTION IS NOT BENAMI, AND THAT THIS ISSUE CANNOT BE DISPLACED BY MERE CONJECTURE OR SUSPICION AS TO THE VARIOUS CIRCUMSTANCES SURROUNDING THE TRANSACTION S INCE THE VERY OBJECT OF A BENAMI TRANSACTION IS SECRECY 30. LEARNED DR ON THE OTHER HAND VEHEMENTLY ARGUES THAT: I. IN CASE OF BENAMI TRANSACTION THOUGH BURDEN OF P ROOF IS ON REVENUE, THE SAME IS NOT IN THE NATURE OF CAST IRON PROOF. I N INCOME TAX PROCEEDINGS SURROUNDING CIRCUMSTANCES, HUMAN CONDUC T AND PREPONDERANCE OF PROBABILITIES ARE TO BE CONSIDERED . RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF SU MATI DAYAL 214 ITR 801 FOR THIS PROPOSITION. WHILE ASCERTAINING TH E DISCHARGE OF BURDEN BY REVENUE, THESE CONCEPTS ARE TO BE CONSIDE RED. AO WHILE HOLDING THE ASSESSEE AS BENAMI OWNER OF THE ALLEGED TRANSACTION HAS GATHERED SUFFICIENT EVIDENCE AND BY APPLYING THESE FACTS AND CAME TO PROPER CONCLUSION THAT ASSESSEE IN FACT WAS THE ACT UAL OWNER OF THESE TRANSACTIONS. II. AO SUMMONED VARIOUS PERSONS AND FOLLOWING OF TH EM STATED THAT THE THEY HAD NOTHING WITH THESE CONCERNS, BRIEF CONTENT S OF THE STATEMENT ARE AS UNDER: (I) SHRI RAMESH KUMAR S/O SHRI RATTAN LAL, CHARKHI DADR I CLAIMED THAT THE ASSESSEE IS GRANDSON OF HIS MATERN AL UNCLE AND OPENED THE FIRM M/S SEEMA TRADING COMPANY IN HIS NA ME AND SOME COMMISSION WAS GIVEN TO RAMESH KUMAR. HE CLAI MED THAT HE DID NOT KNOW ANYTHING ABOUT THE BUSINESS BE ING ITA 699, 700 & 701/DEL/10 29 CONDUCTED IN SEEMA TRADING COMPANY AND ANOTHER ACCO UNT WAS OPENED IN THE NAME OF SHRI GHANSHYAM S/O SHRI RAM A VTAR AS SBOP, NARNAUL AND SOMEWHERE SHRI SATBIR HAS BEEN SH OWN AS ITS PROPRIETOR. SHRI RAMESH KUMAR DENIED TO HAVE K NOWN THESE PERSONS AND AGAIN MADE A STATEMENT THAT SHRI RAM NA RAIN BANSAL PUT HIS NAME AS PROPRIETOR OF PREM & COMPANY IN SBOP, NARNAUL. HE STATED THAT NO MONEY WAS DEPOSIT ED BY HIM IN HIS BANK ACCOUNT. (II) SHRI PURAN CHAND S/O SHRI ISHWAR DASS, CHARKHI DADR I HE WORKED FOR ONE AND HALF YEARS TO TWO YEARS ON A SAL ARY OF `3500 TO 4000 PER MONTH AND CLAIMS THAT THE ASSESSEE OBTA INED HIS SIGNATURES AND HE WAS POOR AND ALL FACTS WERE KNOWN TO THE ASSESSEE. IT WAS CLAIMED THAT HE LOOKED AFTER THE ASSESSEES BUSINESS OF OIL CAKE AND COTTON SEEDS. (III) SHRI PURSHOTAM SHARMA S/O SHRI MANOHAR LAL HE STA TED THAT ASSESSEES YOUNGER BROTHER WAS HIS FRIEND. THE ASS ESSEE OPENED AN ACCOUNT IN THE NAME OF OM TRADING COMPANY AND OB TAINED SALES TAX REGISTRATION. HE DID NOT KNOW WHERE FROM THE MONEY WAS DEPOSITED IN SBOP NARNAUL, SBOP, CHARKHI DADRI, CCB, REWARI AND STATE BANK OF INDORE, REWARI. HE ALSO C LAIMED THAT ASSESSEE OPENED BANK ACCOUNT IN THE NAME OF DIFFERE NT PERSONS SHOWING THEM AS PROPRIETOR OF OM TRADING COMPANY LI KE DHARMENDER (DRIVER) AND SHRI RAM DASS. (IV) STATEMENT OF SHRI RAJ KUMAR S/O SHRI OM PARKASH H E WAS WORKING AT A PLACE WHERE ASSESSEES BROTHER USED TO TAKE CARE OF THE BUSINESS AND HE HAS NO CONNECTION WITH OM TRADI NG COMPANY. SOME PAPERS WERE GOT SIGNED BY THE ASSESS EE. ITA 699, 700 & 701/DEL/10 30 (V) STATEMENT OF SHRI DHARMENDER S/O SHRI HARI RAM HE STATED TO HAVE WORKED WITH THE ASSESSEE AS A DRIVER AT A SALA RY OF `2,000/- PER MONTH. HE HAS NO CONNECTION WITH BUDH MAL & SO NS, CHARKHI DADRI AND HAS NOT SIGNED AS INTRODUCER IN T HE CAPACITY OF PROPRIETOR OF VIKASH TRADING COMPANY. (VI) STATEMENT OF SHRI BHUP SINGH S/O SHRI TARA CHAND, C HARKHI DADRI HE ALSO STATED TO BE WORKING AS A DRIVER IN THE PAST AT A SALARY OF `2,000/- PER MONTH AND THAT THE ASSESSEE GOT HIS SIGNATURES FROM HIM AND HE WAS THE ACTUAL OWNER. (VII) STATEMENT OF SHRI SANJAY KUMAR S/O SHRI OM PARKASH, GANDHI NAGAR, CHARKHI DADRI HE CLAIMED BEFORE ADI EARLIE R THAT RAJIV TRADING COMPANY WAS OPENED IN THE NAME OF SHR I PURSHOTAM AND THE BUSINESS BELONGED TO RAM NARAIN B ANSAL I.E. THE ASSESSEE. HOWEVER, IN A STATEMENT BEFORE AO IN AY 2002- 03, HE CLAIMED THAT THE BUSINESS OF RAJIV TRADING C OMPANY BELONGED TO SHRI PURSHOTAM AND NOT ASSESSEE. THE A SSESSING OFFICER RIGHTLY HELD THAT SHRI SANJAY KUMAR HAD CHA NGED HIS STATEMENT TO HELP THE ASSESSEE, THEREFORE, IT WAS H ELD THAT RAJIV TRADING COMPANY WAS A BENAMI CONCERN OF THE ASSESSE E. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE PURCHA SED MUSTARD SEEDS USING ITS FUNDS FOR PREPARING DRAFTS AND GIVING TO NAFED IN THE NAME OF RAJIV TRADING COMPANY. (VIII) THE STATEMENTS WERE PROVIDED TO ASSESSEE WHO DID NO T CHOSE TO CROSS EXAMINE THESE WITNESSES. AO WAS JUSTIFIED IN HOLDING THAT THESE WERE THE BENAMI CONCERNS OF ASSESSEE. THERE I S SUFFICIENT MATERIAL ON RECORD WHICH DISCHARGES THE BURDEN OF P ROOF. ITA 699, 700 & 701/DEL/10 31 (IX) AO HAS ADOPTED A REASONABLE VIEW OF THE MATTER BY W ORKING OUT THE PEAK OF MONEY INVOLVED IN SUCH TRANSACTIONS AND APPLYING THE PROFIT THEREON. (X) IT IS NOT OBLIGATORY ON AO TO SUPPLY EACH AND EVER Y MATERIAL TO ASSESSEE AS HE IS IN THE KNOW OF THE THINGS. ASSESS EE DID NOT OPT TO CROSS EXAMINES ABOVE WITNESSES AND WAS SEEKING F REQUENT ADJOURNMENTS. IN THESE CIRCUMSTANCES AO HAS TO APPL Y HIS JUDGMENT AND FRAME THE ASSESSMENT . HE HAS NOT TAKE N AN ARBITRARY VIEW IN THE MATTER OF ASSESSEE. (XI) IN CASE OF SUCH BENAMI TRANSACTIONS IT IS IMPOSSIBL E TO FIND DEMONSTRATIVE PROOF OF FACTS AND THE ISSUES ARE TO BE DECIDED ON THE BASIS OF SURROUNDING CIRCUMSTANCES, HUMAN CONDU CT AND PREPONDERANCE OF PROBABILITIES. ORDERS AND FINDINGS OF AO AND CIT(A) ARE RELIED ON. IF FURTHER INQUIRES ARE DEEME D NECESSARY, IN THE CASE OF 8 PERSONS WHOSE STATEMENTS ARE NOT R ECORDED, THE MATTER MAY BE SET ASIDE BACK TO THE FILE OF AO IN T HIS BEHALF. 31. LD COUNSEL FOR THE ASSESSEE IN REJOINDER CO NTENDS THAT THERE IS NO JUSTIFICATION IN THE LD DRS PLEA THAT IN CASE OF RE MAINING 8 PERSONS WHOSE STATEMENTS ARE NOT RECORDED THE MATTER MAY BE SET A SIDE TO AO TO CALL THIS PURPOSE. IT AMOUNTS TO GIVING THE AO A NEW INNING, AS IT IS, CONSIDERABLE TIME WAS TAKEN BY AO FOR COMPLETION OF ASSESSMENTS. RELIANCE IS PLACED ON - ACIT VS. ANIMA INVESTMENT LTD. (2000) 73 ITD 125 (D EL) (T.M) AO HAVING DECIDED NOT TO MAKE ENQUIRIES FROM MAJORI TY OF THE SHAREHOLDERS OF THE ASSESSEE-COMPANY DESPITE DIRECT IONS FROM CIT TO MAKE ENQUIRIES INTO THE GENUINENESS OF SHARE CAPITAL ITA 699, 700 & 701/DEL/10 32 RAISED THROUGH PUBLIC ISSUE, MATTER CANNOT BE RESTO RED BACK TO AO TO MAKE UP HIS EARLIER DEFICIENT WORK; CIT WAS J USTIFIED IN DELETING ADDITION UNDER S. 68. - RAJ KUMAR JAIN VS. ACIT 50 ITD 1 (TM) UNDER THE IT AUTHORITIES STIPULATED UNDER THE IT A CT, THE TRIBUNAL IS NOT ONE OF THEM. IT IS PURELY AN APPEL LATE AUTHORITY. THEREFORE, THE OBJECT OF THE APPEAL BEFORE THE TRIB UNAL IS WHETHER THE ADDITION OR DISALLOWANCE SUSTAINED WAS IN ACCORDANCE WITH LAW AND SUPPORTED BY MATERIAL. IF THERE IS NO SUFFICIENT MATERIAL, THE ADDITION MUST BE DELETED. THE TRIBUNAL CANNOT ORDER FURTHER ENQUIRY WITH A VIEW TO SUSTAIN THE ADDITION. THIS WILL AMOUNT TO TAKING SIDES WITH THE PARTIES W HICH IS NOT THE FUNCTION OF A JUDICIAL AUTHORITY LIKE THE TRIBU NAL. - CIT VS. HARIKISHAN JETHALAL PATEL (1987) 168 ITR 47 2 (GUJ) IT IS NOT THE CASE OF THE REVENUE THAT IT HAS COME INTO POSSESSION OF FRESH FACTS WHICH CAST A DOUBT ON THE GENUINENESS OF THE FIRM AND/OR THE TRANSACTION. THE REVENUE WA NTS TO TAKE A SHOT IN THE DARK HOPING THAT IT MAY ON REMAND BE AB LE TO DIG OUT FRESH FACTS WHICH MAY CAST DOUBT ON THE GENUINENESS OF THE FIRM AND/OR THE TRANSACTION. IT IS MERELY A POSSIBILITY AND THAT TOO NOT SUPPORTED BY AN IOTA OF MATERIAL. THE REVENUE DESI RES TO ENTER UPON A MERE FISHING INQUIRY HOPING THAT IN THE COUR SE OF THE INQUIRY SOME MATERIAL MAY FALL INTO ITS HANDS WHICH , MAY THROW A DOUBT ON THE GENUINENESS OF THE FIRM AND/OR THE T RANSACTION. WE ARE AFRAID THAT SUCH A FISHING INQUIRY WHICH WOU LD CAUSE CONSIDERABLE HARASSMENT, HARDSHIP AND EXPENDITURE T O THE ASSESSEE CANNOT BE PERMITTED ON THE MERE POSSIBILIT Y OR HOPE THAT SOME FACTS MAY EMERGE WHICH MAY CAST A DOUBT O N THE GENUINENESS OF THE FIRM AND/OR THE TRANSACTION. WE ARE, THEREFORE, OF THE VIEW THAT SUCH A FINISHING INQUIR Y OUGHT NOT TO BE ALLOWED. (A) STATEMENT OF MR.RAM NARAIN BANSAL NOT SOUGHT T O BE RECORDED BY ADI OR THE ASSESSING OFFICER AT ANY STAGE. ITA 699, 700 & 701/DEL/10 33 (B) THE ASSESSING OFFICER NEVER CONFRONTED THE ASS ESSEE WITH HIS INTERPRETATION OF BENAMI AND WHAT HE PROPOSED FOR THE ASSESSMENT. (I) AT NO STAGE A.O. ASKED THE ASSESSEE THAT WHY HE SHO ULD NOT BE TREATED AS BENAMI OF THESE PERSONS. NO ALLEGATI ON WAS MADE DURING THE ASSESSMENT PROCEEDINGS, IT CAME TO NOTICE ONLY WHEN THE ASSESSMENT ORDER WAS RECEIVED. (II) ASSESSEE ALREADY STATED THAT HE HAD NOTHING TO DO WITH THESE BENAMI CONCERNS. THERE WAS NO REASON FOR A.O. TO I NSIST FOR BOOKS OF ACCOUNTS OF THESE BENAMI CONCERNS FROM ASS ESSEE. (III) DURING THE COURSE OF STATEMENTS, AO. DID NOT ASK THESE PERSONS FURTHER QUESTION OR INFORMATION TO SUPPORT THEIR CONTENTION THAT RAM NARAIN BANSAL WAS ACTUAL OWNER. (IV) A.O. NEVER CONFRONTED THESE WITNESSES ABOUT CONTRAR Y STATEMENTS OF MR. SANJAY, PROPRIETOR, RAJEEV TRADIN G CO. AND MR. OM PRAKASH THAT ONE PURSHOTTAM WAS THE BENAMI O WNER AND THE PERSON BEHIND ALL THESE CONCERNS AND NOT M R.RAM NARAIN BANSAL. (V) A.O. HAVING TO TWO CONTRADICTORY STATEMENTS OF MR. SANJAY, ONE BEFORE THE ADI AND ANOTHER BEFORE HIMSELF. WITH OUT FURTHER QUESTION HE SIMPLY DISCARDED HIS THE STATE MENT RECORDED BEFORE HIM ONLY AND RELIED ON THE ONE RE CORDED BY ADI. THUS AO DID NOT HAVE FAITH IN HIS OWN INVESTI GATION. (VI) A.O., IN ORDER TO FIND TRUTH, HAS TO ACT IMPARTIALL Y, THESE STATEMENTS CALLED FOR FURTHER CORROBORATION AND NOT TO DISCARD THE SAME. HE SHOULD HAVE CALLED MR. PURSHOTTAM AS WITNESS AND ASKED RELEVANT QUESTIONS, ONCE MR. SANJAY HAD M ADE ALLEGATIONS AGAINST HIM. ITA 699, 700 & 701/DEL/10 34 (VII) A.O. HAS INTERPRETED THESE STATEMENTS AS CONCLUSIVE EVIDENCE WHICH HAVE BEEN RECORDED BY ASKING LEADING QUESTION S WITHOUT ANY CORROBORATION AND WITHOUT ANY STRICT P ROOF. (VIII) A.O. NEVER EXAMINED THE ISSUE WITH FACT FINDING MI ND AS IS EVIDENT FROM THESE STATEMENTS. LEADING QUESTIONS A BOUT MR.RAM NARAIN BANSAL WERE ASKED WITHOUT FURTHER CORROBORATION. (IX) REVENUE DOES NOT HAVE ADEQUATE MATERIAL TO MEET ITS OBLIGATION THAT RAM NARAIN BANSAL IS THE BENAMI OWN ER OF THESE CONCERNS. (X) NO SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT OR PREPONDERANCE OF PROBABILITIES HAVE BEEN PROVED ON THE BASIS OF ANY INVESTIGATION EXCEPT 6 UNRELIABLE STATEMENTS . 32. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE CASE RECORD. FACTS HAVE BEEN NARRATED IN DETAILS ABOVE. THE PARA METERS FOR MAKING ASSESSMENTS IN THE CASES OF BENAMI ALLEGATIONS ARE BY NOW SETTLED. HONBLE CALCUTTA HIGH COURT IN THE CASE OF USHA BHAR (SUPRA ) HAS LAID DOWN SOME IMPORTANT ASPECTS IN THIS REGARD. 33. IT CLEARLY EMERGES FROM THE FACTS THAT AO WHIL E CARRYING OUT ENQUIRIES OR INVESTIGATIONS HAS NOT COLLECTED ADEQUATE MATERI AL, EVIDENCE TO ASCERTAIN THE ALLEGED BENAMI TRANSACTIONS WHICH ARE CLAIMED T O BE VOLUMINOUS, SPREADING TO NEARLY 5 YEARS AND AS RIGHTLY POINTED OUT BY LD COUNSELS INVOLVE VARIOUS AGENCIES, RECORD AND HUMAN EFFORTS. THESE M ATERIAL AGENCIES ARE- ITA 699, 700 & 701/DEL/10 35 NAFED DEPARTMENT, RECORD AND STAFF, TRANSPORTERS, L ABOUR AGENCIES, BANK STAFF, PURCHASERS OF MUSTARD SEED, SALES TAX AUTHOR ITIES ETC. NO EFFORT HAS BEEN MADE FROM ANY OF THESE DEPARTMENTS WHICH WOULD HAVE IMMENSELY HELPED THE AO IN INVESTIGATION. 34. THE BENAMI CHARGE IS ONLY 7 STATEMENTS OUT OF W HICH ONE DENIES ASSESSEE BEING A BENAMI OWNER. THUS THERE ARE NEIT HER STATEMENTS ON RECORD IN RESPECT OF REMAINING 8 PERSONS, NOR FURTHER EVID ENCE COLLECTED BY AO BY INVESTIGATIONS OR ENQUIRIES ON ANY OTHER MATERIAL A SPECT. LD DR CONTENDS THAT LOOKING AT THE NATURE OF TRANSACTION IT SHOULD BE HELD THAT THESE 8 PERSONS WOULD HAVE ANY WAY DEPOSED AGAINST ASSESSEE, LIKE 6 OTHER WITNESSES, THEREFORE THE AOS ADDITIONS MAY BE UPHELD IN VIEW O F HONBLE SUPREME COURT JUDGMENT IN THE CASE OF SUMATI DAYAL (SUPRA), OR IN ALTERNATE, MATTER MAY BE SET ASIDE BACK TO AO FOR FRESH EXAMINATIONS. 35. WE ARE UNABLE TO AGREE TO THE REVENUES PROPO SITION ABOUT SET ASIDE. THIS WILL AMOUNT TO GIVING AO FRESH INNINGS FOR INQ UIRY WITHOUT ANY LAWFUL JUSTIFICATION, AFTER A PERIOD OF TEN YEARS, WHICH I S AGAINST PRINCIPLES OF JUSTICE. AO WAS NOT PREVENTED TO CARRY OUT FURTHER INVESTIGA TIONS. IN THESE FACT S AND RESPECTFULLY FOLLOWING CASE LAWS, RELIED ON BY ASSE SSEE, WE DECLINE THIS REQUEST. ITA 699, 700 & 701/DEL/10 36 36. THE ONLY MATERIAL EVIDENCE RELIED ON BY AO BEIN G THESE STATEMENTS, ADDITIONS IN RESPECT OF 8 PERSONS WHOSE STATEMENTS ARE NOT RECORDED, CAN NOT BE UPHELD. SUMATI DAYAL DECISIONS LAYS DOWN HUMAN C ONDUCT, SURROUNDING CIRCUMSTANCES AND PREPONDERANCE OF PROBABILITIES ON THIS BASIS OF MATERIAL AVAILABLE ON RECORD. IT DOES NOT MANDATE TO APPLY T HEM WHEN NO RECORD EXISTS AT ALL LIKE IN RESPECT OF THESE 8 PERSONS. THEY WER E AOS WITNESSES AND HE WAS NOT PREVENTED BY ANY REASONS TO SUMMON THEM. S IMILARLY OUT OF 7 IT IS CLAIMED THAT 1 WITNESSED DENIED ASSESSES ROLE AS BE NAMI OWNER. IT IS PLEADED BY LD DR THAT HE TRIED TO PROTECT ASSESSEE. LD COUN SEL CONTENDS THAT CONVERSE MAY ALSO BE TRUE THAT 6 WITNESSES MAY HAVE TRIED TO WRONGLY IMPLICATE THE ASSESSEE. 37. IN THESE CIRCUMSTANCES, WHAT REMAINS ON RECOR D ARE 6 STATEMENTS ALLEGING ASSESSEE SANS THE CORROBORATING EVIDENCE. ON FACTS WE HAVE TO DECIDE WHETHER THESE 6 STATEMENTS CONSTITUTE SUFFIC IENT MATERIAL TO HOLD THE ASSESSEE AS BENAMI OWNER THUS LIABLE FOR THESE ADDI TIONS WHICH ARE CALLED IN QUESTION. 38. IT IS TRITE PROPOSITION THAT THE BURDEN OF PRO OF IS ON THE REVENUE TO BRING HOME THE CHARGE OF BENAMI OWNERSHIP AGAINST A NY PERSONS. LOOKING AT THE MATERIAL AND FACTS ON RECORD, NO FURTHER EVIDEN CE OR MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE IN RESPECT OF NAFE D RECORD; TRANSPORTER; ITA 699, 700 & 701/DEL/10 37 PURCHASERS OF MUSTARD SEED; STAFF OF VARIOUS BANKS; SALES TAX AUTHORITIES, MARKET INQUIRES. MERE 6 STATEMENTS, WHICH ARE SHAKY , LEADING TO NO CONCLUSIVE ASCERTAINMENT OF ANY FACT CAN NOT BE SOL ELY APPLIED AGAINST ASSESSEE WITHOUT ANY CORROBORATIVE MATERIAL. THE SA ME COULD HAVE BEEN COLLECTED BY AO FROM VARIOUS SOURCES AND AGENCIES A S MENTIONED ABOVE. THESE 6 STATEMENTS AT BEST ONLY CREATE A SUSPICIO N THAT ASSESSEE WAS OBTAINING SOME BLANK PAPERS OR SOME FORMS AND CANNO T BE DECISIVE OF BENAMI ON PREPONDERANCE OF PROBABILITIES. THE STAT EMENTS ARE REPLETE WITH INCONSISTENCIES ABOUT THE SALARY, VOCATION, NO OF V EHICLES POSSESSED BY ASSESSEE (IT IS CLAIMED BY ASSESSEE THAT HE DOES NO T OWN A CAR). THESE INCONSISTENCIES COULD HAVE BEEN FURTHER FILLED IN B Y PROPER CORROBORATIVE EVIDENCE, ENQUIRIES AND INVESTIGATION BY REVENUE AU THORITIES. 39. IN CONSIDERATION OF ENTIRE MATERIAL AVAILABLE F ROM RECORD, FACTS, CIRCUMSTANCES AND RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT ALLEGATION OF BENAMI HAS NOT BEEN PROVED BY THE REVENUE AGAINST A SSESSEE ON COGENT MATERIAL OR EVIDENCE. NO CORRELATION OF HUMAN CONDU CT, PREPONDERANCE OF PROBABILITIES AND HUMAN CONDUCT WITH MATERIAL AVAIL ABLE ON RECORD HAS BEEN ESTABLISHED. 6 SHAKY STATEMENTS AGAINST ASSESSEE ON THEIR OWN DO NOT CONSTITUTE MATERIAL ENOUGH TO PROVE THAT ASSESSEE W AS BENAMI OWNER OF THESE CONCERNS. NO ADEQUATE & COGENT MATERIAL IS ON RECOR D FROM NECESSARY ITA 699, 700 & 701/DEL/10 38 AGENCIES WHICH ARE MENTIONED ABOVE. IN ABSENCE OF SUCH MATERIAL EVIDENCE OR ENQUIRIES THESE STATEMENTS CAN NOT BE HELD TO PR OVING THE FACT OR CHARGE THAT ASSESSEE IS A BENAMI OWNER OF ALLEGED CONCERNS . THEREFORE, ALL THE ADDITIONS OF PEAK INVESTMENT AND ESTIMATED PROFITS FROM THESE ALLEGED BENAMI CONCERNS ARE DELETED. 40. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2012. SD/- SD/- (B.C.MEENA) (R.P.TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 .01.2012 MP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR