DCIT, Chandigarh V. Sh. Rajesh Gupta, Chandigarh

ITA 703/CHANDI/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77055 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 31-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH; MANJIT SINGHDR
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Unexplained investment; Search and seizure; Document seized; Fair market value; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.659/CHD/2008 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF VS SHRI YOGESH GUPTA, INCOME TAX, 15, TIMBER MARKET, CENTRAL CIRCLE, SECTOR 26, CHANDIGARH.. CHANDIGARH. PAN : ACBPG0702G & ITA NO.703/CHD/2008 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF VS SHRI RAJESH GUPTA, INCOME TAX, 15, TIMBER MARKET, CENTRAL CIRCLE, SECTOR 26, CHANDIGARH.. CHANDIGARH. PAN : ABHPG6272G & ITA NO.704/CHD/2008 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF VS MRS. VEENA GUPTA, INCOME TAX, 15, TIMBER MARKET, CENTRAL CIRCLE, SECTOR 26, CHANDIGARH.. CHANDIGARH. PAN : AATPG9515F & ITA NO.705/CHD/2008 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF VS MRS. NEELAM GUPTA, INCOME TAX, 15, TIMBER MARKET, CENTRAL CIRCLE, SECTOR 26, CHANDIGARH.. CHANDIGARH. PAN : AATPG9445J (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH & SHRI.MANJIT SINGH,DR RESPONDENT BY : SHRI HARISH NAYYAR DATE OF HEARING : 20.02.2014 DATE OF PRONOUNCEMENT : 09.05.2014 2 O R D E R PER SUSHMA CHOWLA, JM THE CAPTIONED FOUR APPEALS BY THE REVENUE AGAINST D IFFERENT ASSESSEES ARE AGAINST SEPARATE ORDERS OF THE COMMIS SIONER OF INCOME TAX (APPEALS)-I, LUDHIANA DATED 14.04.2008/2 6.05.2008 AGAINST THE ORDER PASSED UNDER SECTION 153A R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. IN ALL THE APPEALS, THE REVENUE HAS RAISED THE F OLLOWING IDENTICAL GROUND OF APPEAL : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETING AN ADDITION OF RS. 22,39,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE PURCHASE OF IMMOVABLE PROPERTY (PLOT). 3. ALL THESE FOUR APPEALS RELATING TO RELATIVE PERS ONS ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEALS) IN DELETING AN ADDITION OF RS. 22,39,000/- IN THE HANDS OF EACH OF THE ASSESSEE. 5. THE FACTS OF ALL THE FOUR APPEALS ARE SAME AND W E PROCEED TO DISPOSE OF THE PRESENT BUNCH OF APPEALS BY REFERRIN G TO THE FACTS IN ITA NO. 659/CHD/2008. 6. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH & SE IZURE OPERATIONS WERE CONDUCTED ON THE PREMISES OF THE AS SESSEE ON 03.09.2004. THEREAFTER, NOTICE UNDER SECTION 153A WAS SERVED 3 UPON THE ASSESSEE TO FILE THE RETURN OF INCOME. TH E ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDING S NOTED THAT OUT OF 50% SHARE OF PLOT NO. 70, INDUSTRIAL AREA, P HASE I, CHANDIGARH, 27% SHARE IN THE SAID PROPERTY WAS SOLD BY ONE SHRI R.K.OHRI TO FOUR PERSONS I.E. SHRI RAJESH GUPTA, SH RI YOGESH GUPTA, SMT. VEENU GUPTA AND SMT. NEELAM GUPTA. AN AGREEMENT WAS SIGNED BETWEEN SHRI R.K.OHRI AND FOUR PERSONS O N 01.04.2003 FOR RS. 90 LACS. THE ASSESSEE HAD PAID RS. 4 LACS V IDE FOUR CHEQUES DATED 23.12.2002 AND RS. 86 LACS AGAIN BY F OUR CHEQUES DATED 01.05.2003. THE SALE DEED WAS REGISTERED ON 0 2.04.2003 BETWEEN SHRI R.K.OHRI THROUGH GENERAL POWER OF ATTO RNEY SHRI ANOOP GUPTA S/O SHRI RAJESH GUPTA AND ALL THE FOUR PURCHASERS. THE TOTAL SALE CONSIDERATION OF THE PROPERTY, AS PE R THE SALE DEED WAS RS. 90 LACS. THE STATEMENT OF SHRI RAJESH GUPTA , ONE OF THE CO-PURCHASERS WAS RECORDED ON THE DATE OF SEARCH I. E. 03.09.2004. HE STATED THAT JOINTLY 27% SHARE IN THE SAID PROPER TY WAS PURCHASED IN MAY,2003. IN HIS STATEMENT HE STATED T HAT HE CAME TO KNOW ABOUT THE SALE OF THE PROPERTY THROUGH NEWSPAP ER AND HE CONTACTED SHRI R.K.OHRI DIRECTLY. THE PORTION PURCH ASED BY FOUR CO-PURCHASERS WAS OCCUPIED BY THE STATE BANK OF IND IA ON MONTHLY BASIS AND COMPRISED OF 5000 SQ.YDS. AS PER HIM, TH E TOTAL SALE CONSIDERATION WAS RS.90 LACS WHICH WAS ACCEPTED BY SHRI R.K. OHRI. 7. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS W ERE FOUND AND SEIZED FROM THE RESIDENCE OF SHRI R.K. OHRI I.E . PAGE NOS. 7 AND 66 OF A-1/342 SECTOR 9, CHANDIGARH. THE CONTEN TS OF THE SAID DOCUMENTS ARE REPRODUCED UNDER PARA 3.3 AT PAGE 2 O F THE ASSESSMENT ORDER. THE SAID DOCUMENTS REFLECTED BOT H CHEQUE AND 4 CASH PAYMENTS IN RESPECT OF IND 70 AND RP-120. THE STATEMENT OF SHRI R.K.OHRI WAS RECORDED WITH REGARD TO THE TWO D OCUMENTS AND HE ACCEPTED THAT ONLY CHEQUE/DD PAYMENT OF THE AMOU NT WAS TRUE AND CORRECT AND HE DENIED HAVING RECEIVED ANY CASH AND ADMITTEDLY NO OTHER EVIDENCE OF CASH RECEIVED HAD B EEN FOUND DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS NOT POSSIBLE THAT ONLY CASH COMPON ENT WRITTEN ON THE DOCUMENTS WAS NOT CORRECT AND REMAINING ALL THE DETAILS WERE ABSOLUTELY CORRECT. THEREFORE, ACTUAL CASH OF RS. 99,56,000/- AS PER THE ASSESSING OFFICER, HAD BEEN RECEIVED BY SHR I OHRI FROM BUYER PARTIES. IT MAY BE CLARIFIED THAT 27% OF THE SHARE IN 50% OF THE PLOT NO. 70, INDUSTRIAL AREA, PHASE-I, CHANDIGA RH WAS PURCHASED BY SHRI YOGESH GUPTA AND OTHERS AND THE B ALANCE 23% SHARE WAS PURCHASED BY M/S VISHNU ASSOCIATES LTD. N OW KNOWN AS VALCO INDUSTRIES LTD. 8. THE STATEMENT OF OTHER CO-PURCHASER SHRI RAJESH GUPTA WAS ALSO RECORDED AND HE WAS CONFRONTED WITH THE AGREEM ENT TO SELL FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI WHICH WAS ENCLOSED AS ANNEXURE-I AND ALSO THE DOCUMENT AT PAGE 7 OF A-I W AS CONFRONTED TO HIM. HE WAS ASKED TO EXPLAIN AS THE SAID PAPER FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI DEPICTED CASH OF RS. 99, 56,000/- FROM THE SALE OF HIS SHARE I.E. 50% IN INDUSTRIAL PLOT N O. 70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH AND THAT AS PER THE COPY OF AGREEMENT DATED 01.04.2003, THE SALE CONSIDERATION FOR 23% SH ARE OF PLOT WAS RS.1.45 CR THEN HOW THE FAMILY MEMBERS COULD HA VE PURCHASED THE PROPERTY TO THE EXTENT OF 27% FOR RS. 90 LACS. IN REPLY, HE STATED THAT HE ONLY KNEW OF THE PURCHASE DEAL BETWEEN SHRI R.K.OHRI AND HIS FAMILY WHEREIN 27% SHARE IN T HE SAID 5 PROPERTY WAS PURCHASED FOR RS. 90 LACS ONLY. HE HAD NO COMMENTS REGARDING PAGE NO. 7 AND ALSO REGARDING THE SALE OF 23% SHARE IN THE SAME PROPERTY. ON THE OTHER HAND, SHRI R.K.OHR I IN HIS STATEMENT ADMITTED THAT HE HAD NEVER NEGOTIATED WIT H THE ULTIMATE BUYERS I.E. SHRI RAJESH GUPTA AND OTHERS AND ALL TH E DEALS WERE HANDLED BY ONE SHRI MUKESH MITTAL AND HE GAVE GENER AL POWER OF ATTORNEY TO WHOEVER PERSON, AS PER THE DIRECTIONS O F SHRI MUKESH MITTAL. THE ASSESSING OFFICER, IN THIS BACKGROUND WAS OF THE VIEW THAT THE CLAIM OF SHRI RAJESH GUPTA THAT HE HI MSELF HAD NEGOTIATED THE DEAL WAS NOT CORRECT AS HE, IN CONNI VANCE WITH SHRI MUKESH MITTAL HAD FABRICATED THE FALSE SUIT OF INJU NCTION OF THE SAID PROPERTY AND THUS, THEY WERE KNOWN TO EACH OTH ER. THE ASSESSING OFFICER FURTHER NOTED THAT THOUGH 27% OF THE SAID PROPERTY WAS LEASED OUT BY SHRI R.K. OHRI TO STATE BANK OF INDIA, BUT THE SAME WAS BEING VACATED BEFORE 31.03.2003, W AS IN THE KNOWLEDGE OF SHRI R.K. OHRI. THE PREMISES WERE VAC ATED IN DECEMBER, 2003 THEREFORE, AT THE TIME OF PURCHASE O F THE SAID PROPERTY IN APRIL, 2003 THERE WAS NO ENCUMBRANCE ON THE SAID PROPERTY. THE SAID PROPERTY WAS FETCHING RENTAL INC OME OF MORE THAN RS. 18.24 LACS PER ANNUM. THE ASSESSING OFFIC ER, THUS ASSUMED THAT THE ENTIRE 50% SHARE SOLD BY SHRI R.K. OHRI HAD BEEN SOLD FOR A CONSIDERATION OF RS. 3.24 CR AND OUT OF THIS, 23% SHARE HAD BEEN PURCHASED BY M/S VISHNU ASSOCIATES LTD. FO R A CONSIDERATION OF RS. 1.45 CR I.E. SALE DEED REGISTE RED AT RS. 70 LACS AND CASH PAYMENT OF RS. 75 LACS, AND THE REMAI NING 27% HAD BEEN PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBE RS FOR A TOTAL CONSIDERATION OF RS. 1,79,56,000/- THOUGH THE SALE DEED WAS REGISTERED AT RS.90 LACS. THUS, THE CONCEALMENT AS PER THE SAID TRANSACTION WAS TO THE TUNE OF RS. 89,56,000/- AND SINCE ASSESSEE 6 HAD 1/4 TH SHARE, RS. 44,89,000/- WAS TO BE EXPLAINED BY THE ASSESSEE. THE PAYMENT OF ON MONEY WAS SPECIFICALLY DENIED BY THE ASSESSEE IN THE REPLY FILED BEFORE THE ASSESSIN G OFFICER. HOWEVER, IN THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES AND THE CIRCUMSTANTIAL EVIDENCE, THE ASSESSING OFFICER WAS OF THE VIEW THAT AS AGREEMENT TO SELL FOR RS.1.45 CR WAS FOUND DURING THE SEARCH FROM THE POSSESSION OF THE SELLER, WHO WAS P ARTY TO THE SALE OF PROPERTY IN QUESTION AND AS THE SAID AGREEMENT W AS SIGNED BY THE SELLER SHRI R.K. OHRI, THE SAID DOCUMENT HAD EV IDENTIARY VALUE AND THE SAME COULD BE USED IN THE CASE OF THE PURCH ASER ALSO. CONSEQUENTLY, ADDITION OF RS. 22,39,000/- WAS MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ON MONEY PAID BEING 1 /4 TH SHARE OF THE PROPERTY PURCHASED. THE ASSESSEE HAD EXPLAINED THE SOURCE OF PAYMENT OF RS.22,50,000/- EACH. 9. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE FILED WRITTEN SUBMISSIONS WHICH ARE REPROD UCED AT PAGES 4 TO 8 OF THE APPELLATE ORDER. ANOTHER PLEA RAISED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT IN THE CASE OF ONE SHRI MADAN MOHAN MITTAL WHO HAD ACQUIRE D SAME SIZE OF PLOT IN THE SAME COMPLEX FOR RS. 50,00,000/-, TH E ASSESSING OFFICER HAD ESTIMATED THE PRICE OF THE PLOT AT RS. 1 CRORE WHEREAS ON THE OTHER HAND, THE ASSESSEE ALONGWITH THE CO-OW NERS HAD PURCHASED THE SAME SIZE OF PLOT IN THE SAME COMPLEX AT RS. 90 LACS AND THE MARKET VALUE OF THE SAID PROPERTY WAS ESTIMATED BY THE ASSESSING OFFICER AT RS.1.79 CR WHICH WAS APPRO XIMATELY DOUBLE. ANOTHER PLEA RAISED BY THE LD. AR FOR THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT S INCE THE CASH RECEIPT HAD BEEN SPECIFICALLY DENIED BY THE SE LLER IN THE 7 STATEMENT RECORDED DURING THE COURSE OF SEARCH WHIC H HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARA 3.4 OF HIS ASSESSMENT ORDER AND IN THE ABSENCE OF ANY OTHER MATERIAL, THE RE WAS NO REASON TO DISBELIEVE THE AFFIRMATIVE STATEMENT OF T HE ASSESSEE. 10. THE COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT 27% OF THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE ALONGWITH HIS THREE OTHER FAMILY MEMBERS FROM ONE SHRI R.K.OHRI. ANOTHER 27% OF THE SAME PROPERTY WAS PURCHASED BY SHRI NARI NDER MOHAN MITTAL, HUF AND HIS FAMILY MEMBERS FROM THE CO-OWNE R OF THE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 50 LACS. IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT IN THE HANDS OF SHRI NARINDER MOHAN MITTAL, HUF THE SALE P RICE HAS BEEN ADOPTED BY THE ASSESSING OFFICER AT RS. 1 CR WHEREA S IN THE CASE OF THE ASSESSEE AND HIS FAMILY MEMBERS, THE ASSESSI NG OFFICER HAS ADOPTED THE VALUE OF RS. 1.79 CR. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ASSESSING OFFICER WAS NOT J USTIFIED IN TAKING THE FAIR MARKET VALUE OF THE PROPERTY OF THE SAME AREA DURING THE SAME PERIOD IN ONE CASE AT RS. 1 CR AND IN THE OTHER CASE AT RS. 1.79 CR. THE SECOND OBJECTION OF THE AS SESSING OFFICER WAS ALSO NOT ACCEPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS THE DOCUMENT ON THE BASIS OF WHICH ADD ITION HAS BEEN MADE WAS FOUND FROM THE POSSESSION OF SHRI R.K .OHRI WHO HAD DENIED HAVING RECEIVED ANY CASH PAYMENTS IN RES PECT OF THE SALE OF THE SAID PROPERTY. IN VIEW OF THE CATEGORI CAL DENIAL OF THE SELLER OF THE PROPERTY, FROM THE RESIDENCE OF WHOM THE DOCUMENTS RELIED UPON BY THE ASSESSING OFFICER WERE SEIZED, A ND IN THE ABSENCE OF ANY OTHER EVIDENCE, FOUND DURING THE COU RSE OF SEARCH, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THERE WAS NO 8 BASIS FOR THE AFORESAID ADDITION. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT FOR MAKING THE SAID ADDITION, THE ASSESSING OFFICER HAD RELIED UPON CERTAIN DECIS IONS TO HOLD THAT THE CIRCUMSTANTIAL EVIDENCE COULD BE MADE THE BASIS FOR SUCH ADDITION. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT IN VIEW OF THE RATIO OF VARIOUS DECISIONS, SUCH INFERE NCE COULD BE DRAWN. HOWEVER, THE CIRCUMSTANTIAL EVIDENCE SHOULD BE CONCLUSIVE. RELIANCE WAS PLACED UPON THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS B.C.G UPTA & SONS LTD.182 ITR 240 THAT SUSPICION HOWEVER STRONG DOES NOT CONSTITUTE ANY EVIDENCE AND IN VIEW THEREOF THE COM MISSIONER OF INCOME TAX (APPEALS) HELD THAT THERE WAS NO JUSTIFI CATION IN CONSIDERING THE PURCHASE PRICE OF THE PROPERTY AT R S.1.79 CR AND AS THE ASSESSEE HAD SHOWN THE PURCHASE PRICE OF THE PROPERTY AT RS. 90 LACS AS AGAINST THAT OF RS. 50 LACS SHOWN BY SHRI NARINDER MOHAN MITTAL, HUF AND HIS FAMILY MEMBERS, THERE WAS NO BASIS FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSE E. IN VIEW THEREOF, THE ADDITION MADE BY THE ASSESSING OFFICER AT RS. 22,39,000/- WAS DELETED IN EACH HAND. 11. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS). 12. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE AGREEMENT TO SELL WAS EXECUTED ON 01.04.2003 AND THE SALE DEED W AS EXECUTED ON 02.04.2003. THE PLEA OF THE ASSESSEE THAT THERE WAS A DIRECT DEAL BETWEEN THE SELLER AND THEIR FAMILY MEMBERS, W AS NOT CORRECT. IT WAS POINTED OUT THAT DURING THE COURSE OF SEARCH , PAGE NO. 7 OF ANNEXURE A-1 WAS SEIZED WHICH TALKED OF CASH PORTIO N OF THE SAID DEAL WHICH WAS ADDED IN THE HANDS OF THE ASSESSEE 9 PROPORTIONATELY. THE LD. DR FOR THE REVENUE POINTE D OUT THAT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AT PAGE 10 WERE INCORRECT AS HE HAD RELIED UPON THE DEAL OF SH RI NARINDER MOHAN MITTAL, HUF AND OTHERS AND NOT ON THE DEAL OF VALCO GROUP WITH SHRI R.K.OHRI. IT WAS VEHEMENTLY PUT BY THE LD . DR FOR THE REVENUE THAT COMMISSIONER OF INCOME TAX (APPEALS) H AD MISLED HIMSELF IN THIS REGARD AND THE BASIS OF GIVING RELI EF BY COMMISSIONER OF INCOME TAX (APPEALS) WAS INCORRECT AS THE TRANSACTION WITH THE VALCO GROUP WAS MORE APPROXIMA TE AND NOT THE DEAL WITH SHRI NARINDER MOHAN MITTAL, HUF AND O THERS. IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE THAT SMT. ERA OHRI, THE OTHER CO-OWNER OF 50% SHARE OF THE INDUSTRIAL P LOT HAD SOLD THE SAID PROPERTY FOR RS. 3.20 CR IN 2001. SO THE SHARE OF SHRI R.K. OHRI IN THE SAID PROPERTY SHOULD BE VALUED AT THE SAME VALUE. 13. THE NEXT PLEA RAISED BY THE LD. DR FOR THE REVE NUE THAT THE STATEMENT OF SHRI RAJESH KUMAR GUPTA, ASSESSEE BEFO RE US AND SHRI R.K.OHRI WAS AT VARIANCE. HE FURTHER POINTED O UT THAT THOUGH SHRI R.K.OHRI DENIES HAVING RECEIVED CASH BUT THE D OCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH AT HIS PREMISES WAS IN HIS HAND-WRITING AND ONE OF THE FIGURE OF PAYING BUYER FEE OF RS. 75,000/- WAS ADMITTED BY SHRI R.K.OHRI AND SO T HE TRANSACTION ON THE SAID DOCUMENT HAS TO BE RELIED UPON IN TOTAL ITY AS CORRECT. ANOTHER PLEA RAISED BY THE LD. DR FOR THE REVENUE W AS THAT AGREEMENT TO SELL 23% SHARE OF THE SAID PROPERTY BY SH R.K.OHRI AT RS.1.45 CR WAS FOUND AND EXECUTED, EVEN IF THERE WAS NO CASH COMPONENT BUT AGREEMENT OF RS.1.45 CR WAS FOUND. T HE LD. DR FOR THE REVENUE CONCLUDED BY STATING THAT THE REASO NING OF THE 10 COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITION WAS ON WRONG ASSUMPTION OF FACTS. 14. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT IN HIS CASE, THE AGREEMENT TO SELL AND THE SALE DEED, RECORDED SALE CONSIDERATION OF RS. 90 LACS WHICH WAS THE HIGHEST. IT WAS FURTH ER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT SALE DEEDS WERE ISSUED AT HIGHER VALUE IN THE TRANSACTION WITH M/S SHERVILLA STATE LTD. BUT THEREAFTER, IN ALL THE AGREEMENTS TO SELL, THE SAID PROPERTY IN DIFFERENT PORTIONS WERE SOLD AT LESSER VALUE. IT W AS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE AGREEMENT EVIDENCING RS. 1.45 CR TALKS OF MACHINERY BUT WE AR E NOT CLEAR AS TO WHY HIGHER VALUE WAS ACCEPTED BETWEEN THE PARTIE S. ANOTHER PLEA RAISED BY THE LD. AR FOR THE ASSESSEE WAS THAT SIMILAR PORTION OF 27% OF THE SAME PROPERTY WAS VALUED BY THE ASSES SING OFFICER AT RS.1 CR WHEREAS THEY HAVE PURCHASED THE SAME FOR RS. 90 LACS. FURTHER, HE DENIED THE AVAILABILITY OF THE LOOSE DO CUMENTS AND THERE WAS NO MERIT IN ANY PRESUMPTION THAT CASH HAS BEEN PAID. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSES SEE THAT THE TOTAL DEAL OF RS.1.45 CR AND RS. 90 LACS I.E. RS. 2 .35 CR HAS BEEN DECLARED BY SHRI R.K. OHRI. IT WAS POINTED OUT TO L D. AR FOR THE ASSESSEE THAT IN THE REVISED COMPUTATION OF INCOME FILED BY SHRI R.K. OHRI, THE SALE CONSIDERATION HAD BEEN DECLARED AT RS. 3.25 CR TO WHICH HE HAD NO REPLY. 15. IN THE REJOINDER, THE LD. DR FOR THE REVENUE PO INTED OUT THAT IN HIS STATEMENT SHRI R.K.OHRI HAD ADMITTED THAT HE HAD RECEIVED CHEQUE OF RS. 2.35 CR AND NO CASH HAD BEEN RECEIVED BY HIM, BUT HE FURTHER ADMITTED THAT THE CASH MAY HAVE BEEN REC EIVED BY SHRI MUKESH MITTAL. 11 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELAT ION TO PURCHASE OF 27% SHARE IN PLOT NO. 70, INDUSTRIAL AREA, PHASE -I CHANDIGARH. ALL THE ASSESSEES BEFORE US HAD JOINTLY VENTURED IN TO THE PURCHASE OF SAID 27% SHARE IN THE SAID PROPERTY. 17. BEFORE ADJUDICATING THE ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS, WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE. THE CAPTIONED APPEAL IS IN RELATION TO THE PROPERTY NO. 70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. THE SAID PROPERTY WAS J OINTLY OWNED BY SHRI R.K.OHRI S/O LATE SHRI DWARKA NATH AND SMT. ERA OHRI DAUGHTER-IN-LAW OF SHRI DWARKA NATH AND HER TWO DAU GHTERS. THERE WERE CERTAIN LITIGATIONS BETWEEN THE TWO PART IES ON ACCOUNT OF PROPERTY DISPUTE VIS--VIS PROPERTY NO.70, INDUS TRIAL AREA, PHASE-1, CHANDIGARH AND HOUSE NO.342, SECTOR 9-D, CHANDIGARH. THE CASES REGARDING SETTLEMENT OF ESTATE OF LATE SH RI DWARKA NATH WERE PENDING IN CIVIL COURT AND BEFORE THE DECISION OF THE CIVIL SUIT, ONE ADVOCATE SHRI MUKESH MITTAL, WHO WAS HAND LING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND AS KED IN OCTOBER, 2002 WHETHER HE WAS INTERESTED IN OUT OF C OURT SETTLEMENT. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT IN ANOTHER PR OPERTY I.E. HOUSE NO.342, SECTOR 9-D, CHANDIGARH FOR CERTAIN CO NSIDERATION. IN ORDER TO TAKE COMPLETE OWNERSHIP OF HOUSE NO.342 , SECTOR 9, CHANDIGARH, HE INFORMED SHRI MUKESH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE. SHRI MUKESH MITTAL THROUG H ENTITY NAMED M/S SHARVILA ESTATES PVT. LTD. ENTERED INTO A N AGREEMENT WITH SHRI R.K,OHRI FOR SALE OF HIS SHARE IN PLOT NO .70, INDUSTRIAL 12 AREA, PHASE-1, CHANDIGARH FOR TOTAL CONSIDERATION O F RS.2.25 CRORES. 18. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALONGWITH TH E SHARE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDUSTRIAL AREA, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORES. ON 18.6.200 1 ADVANCE PAYMENT OF RS.30 LACS WAS GIVEN TO THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXECUTED BETWEEN SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL, DIRECTOR OF M/S SEPL, ON THE OTHER SIDE. THE SAID PROPERTY THEREAFTER WAS FINALLY SOLD TO FOUR GROUPS OF PERSONS NAMELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU A SSOCIATES LTD.), 184, INDL. AREA, PHASE-I, CHANDIGARH (RESIDE NCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA, AJAY KR. GUPTA AND VIJAY KR. GUPTA IS H.NO.3007, SECTOR 19-D, CHANDIGARH) (23% SHARE OF PLOT WHOSE TOTAL SIZE IS AROUND 20000 SQ.YDS.) 2. SH. RAJESH GUPTA, SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA, SMT. VEENU GUPTA W/O SH. YO GESH GUPTA, ALL RESIDENTS OF H.NO.1216, SECTOR 19-B, CHANDIGARH (27% SHARE OF PLOT). 3. SH. NARINDER MOHAN MITTAL HUF, SH. SURINDER MOHAN MITTAL HUF, SH. JATINDER MOHAN MITTAL HUF THROUGH ABOVE THREE KARTA S WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.389, SECTOR 30, CHAN DIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL, SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL, RESIDEN T OF H.NO. 123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21-D, CHANDIGARH (23% SHARE OF PLOT). 19. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA, SPA AND WILL FROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHRI, HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF 13 M/S SEPL DATED 18.6.2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES, AGAINST WHICH EARNEST MONEY OF RS.30 LACS W AS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGN ED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2.90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WHICH E ARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS REGISTERE D IN THE NAME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. 20. THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKE SH MITTAL AND SHRI VIVEK MOHAN MITTAL, COUSIN OF SHRI MUKESH MITTAL BOTH SHOWN AS RESIDENTS OF 1526, SECTOR 18-D, CHANDIGARH . THE WILL WAS REGISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHERS PURCHASED 23% SHARE OF THE SAID PRO PERTY FOR RS.80 LACS AND SHRI NARINDER MOHAN MITTAL, HUF & OT HERS PURCHASED 27% SHARE OF THE SAID PROPERTY FOR ANOTHE R RS.50 LACS. THE SHARE OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI S URINDER MITTAL, JITENDER MOHAN MITTAL HUF AND NARINDER MOHA N MITTAL HUF IN JOINT FROM SHRI MUKESH MITTAL THROUGH M/S SE PL FOR RS.50 LACS. THE BALANCE 23% SHARE IN THE SAID PROP ERTY BELONGING TO THE SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED FOR RS.80 LACS VIDE SEPARATE SALE DEED BY SHRI VIVEK MO HAN MITTAL . 21. THE OTHER 50% SHARE OF THE SAID PLOT OWNED BY S HRI R.K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHA RE IN THE SAID PROPERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI, WHO IN TURN CLAIMED TO HAVE SOLD TO M/S V ISHNU ASSOCIATES LTD.(NOW VALCO INDUSTRIES LTD.). S/SHRI ASHWANI KUMAR GUPTA, AJAY KUMAR GUPTA AND VIJAY KUMAR GUPTA . THE AGREEMENT TO SELL BETWEEN SHRI R.K.OHRI AND SHRI AN IL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY WAS E XECUTED ON 14 1.4.2003. THE ORIGINAL AGREEMENT TO SELL WAS SEIZE D FROM THE RESIDENCE OF SHRI R.K.OHRI AND WAS MARKED AS PAGES 73 TO 76 OF ANNEXURE-A/342, SECTOR 9, CHANDIGARH. AS PER THE SAID AGREEMENT TOTAL SALE PRICE PAID TO SHRI R.K,OHRI WA S RS.1.45 CRORES. ON THE DATE OF EXECUTION OF SALE I.E. 1.4. 2003 GPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA AND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTERED ON 1.4.2003. IN RESPECT OF THE SAID 23% SHARE OF THE SAID PROPERTY, SALE DEED WAS REGIS TERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROUGH SHRI AJAY KUMAR GUPTA, DIRECTOR AND SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED THE SALE CONSIDERATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAI D BY WAY OF THREE DIFFERENT CHEDQUES I.E. RS.5 LACS VIDE CHEQUE DATED 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS VIDE VHEQUE DATED 2.4.2003. 22. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS, NAMELY S/SHRI RAJESH GUPT A, YOGESH GUPTA, SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND S MT.VEENA GUPTA W/O SHRI YOGESH GUPTA, ALL RESIDENTS OF HOUSE NO.12, SECTOR 19B, CHANDIGARH. THE AGREEMENT TO SELL WAS S IGNED BETWEEN SHRI R,K.OHRI AND ALL THE FOUR PURCHASERS O N 1.4.2003 FOR SALE CONSIDERATION OF RS.90 LACS. THE ASSESSEE PA ID RS.1 LAC BY DIFFERENT FOUR CHEQUES EACH DATED 23.12.2002 AND TH EN PAID RS.21.50 LACS BY FOUR DIFFERENT CHEQUES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANUP GUPTA S /O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SHR I R.K.OHRI 15 TO ALL THE FOUR PERSONS ON 1.4.2003 AND THE SALE DE ED WAS REGISTERED ON 2.4.2003 BETWEEN SH. R.K.OHRI THROUGH SH. ANUP GUPTA, GPA I.E. SON OF RAKESH GUPTA AND ALL THE FOU R PURCHASERS. 23. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIO NS WERE GROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SH. R.K.OHRI, NARINDER MOHAN MITTAL GROUP, VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWITH SEARCH AGAINST SHRI MUKESH MITTAL AND OTH ERS. DURING THE SEARCH OPERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND AND AS PER THE SAID PAPER TOTAL SALE CONSIDER ATION FOR SALE OF PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3,24,56,000/- WHICH WAS SPLITTED I N CASH/DD OF RS.2.25 CRORES AND CASH OF RS.99.56 LACS. THIS PAP ER FURTHER CONTAINED THE DETAILS OF PAYMENT TO SMT.ERA OHRI AN D OTHERS FOR PURCHASE OF HOUSE NO.342, SECTOR 9, CHANDIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS.80 LACS WERE TO BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WAS RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT THE SAID PAPER WAS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGARDIN G CHEQUE/DD AS CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH INVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE PO SSESSION OF SHRI R.K.OHRI SHOWED THAT 50% SHARE OF SHRI R.K.OHR I WAS AGREED TO BE PURCHASED BY M/S SEPL FOR RS.3.24 CRORES. ON THE OTHER HAND, SMT.ERA OHRI AND HER DAUGHTERS SOLD 50% SHARE IN THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.3.20 CRORES BY CHEQUE. AS AGAINST THE PURCHASE CONSIDERATION OF RS.6,44,56,00 0/- THE SHARE OF SALE CONSIDERATION PAID TO SMT.ERA OHRI WAS RS.3 .20 CRORES AND 16 TO SHRI R.K.OHRI WAS RS.3,24,56,000/-, BY M/S SEPL. THE DECLARED SALE CONSIDERATION BY DIFFERENT PARTIES AG AINST THE PURCHASE OF RESPECTIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CRORES ONLY, THE BREAK UP OF WHICH WAS AS U NDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL, ARVIND MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VASUNDR A MITTAL W/O ARVIND MITTAL R/O 123, SEC-21A, CHANDIGARH FOR DE CLARED CONSIDERATION OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL, SURINDER MOHA N MITTAL, JATINDER MOHAN MITTAL R/O 389, SEC-30, CHANDIGARH FOR DECLARED CON SIDERATION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007, SEC-19D, CHANDIGARH FOR DECLARED CONSIDERATIO N OF RS. 70 LACS. II) 27% PURCHASED BY SH. RAJESH GUPTA, YOGESH GUPTA , NEELAM GUPTA W/O RAJESH GUPTA, VEENU GUPTA W/O YOGESH GUPTA R/O 1216, SEC-1 9B, FOR DECLARED CONSIDERATION OF RS. 90 LACS. 24. THE CASE OF THE REVENUE WAS THAT THE PURCHASE C ONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORES. HOWEVER, T HE ADMITTED CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I.E. RS.3.20 C RORES BY SMT.ERA OHRI AND RS.2.25 CRORES BY SHRI R.K.OHRI AS AGAINST THE DECLARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CROR ES TO ULTIMATE BUYERS. 25. THE ASSESSEE BEFORE US CLAIMS THAT IT HAD PURCH ASED THE FRONT PORTION OF THE PROPERTY BELONGING TO SHRI R.K.OHRI WHICH WAS OCCUPIED BY STATE BANK OF INDIA ON MONTHLY RENTAL B ASIS. THE AGREEMENT TO SELL WAS EXECUTED BETWEEN SHRI R.K.O HRI ON ONE SIDE AND SHRI RAJESH GUPTA, SHRI YOGESH GUPTA, MRS. NEELAM GUPTA AND MRS. VEENU GUPTA ON THE OTHER SIDE. AS P ER THE TERMS OF THE SAID AGREEMENT PLACED AT PAGES 9 TO 12 OF TH E PAPER BOOK 17 FILED BY THE REVENUE, THE ASSESSEE BEFORE US AGREED TO PURCHASE THE FRONT PORTION OF THE SAID PLOT ALONGWITH THE EX ISTING BUILDING WHICH WAS IN OCCUPATION OF THE TENANT I.E. STATE BA NK OF INDIA. THE REMAINING PORTION OF THE PLOT AS WELL AS THE EX ISTING BUILDING ERECTED THEREUPON WAS LYING VACANT AND THE SELLER A GREED TO SELL THE 27% SHARE OUT OF HIS HOLDING OF 50% SHARE IN PL OT NO. 70, INDUSTRIAL AREA PHASE-I CHANDIGARH. THE SALE CONSI DERATION AGREED UPON BETWEEN THE PARTIES WAS RS. 90 LACS OUT OF WHICH A SUM OF RS. 4 LACS WAS PAID VIDE DIFFERENT CHEQUES D ATED 23.12.2002. IT WAS FURTHER AGREED THAT RS. 21,50,0 00/- X 4 I.E. RS. 86,00,000/- WAS PAID THROUGH POST-DATED CHEQUES ALL DATED 01.05.2003. THE SELLER SHRI R.K.OHRI EXECUTED GENE RAL POWER OF ATTORNEY IN FAVOUR OF THE PURCHASER AND SPECIAL POW ER OF ATTORNEY IN FAVOUR OF SHRI ANOOP GUPTA S/O SHRI RAJ ESH GUPTA. THE COVENANT TO THE EFFECT WAS MENTIONED IN THE AGR EEMENT TO SELL. IT WAS FURTHER AGREED THAT THE EXPENSES OF S TAMP PAPERS AND THE REGISTRATION CHARGES WOULD BE BORNE BY THE PURC HASERS. IT WAS FURTHER AGREED VIDE CLAUSE (5) OF THE SAID AGREEME NT TO SELL THAT THE SELLER SHALL NOT BE ENTITLED FOR ANY RENT FROM THE TENANT AS THE SELLER HAD GOT ADJUSTED THE SECURITY AMOUNT RECEIVE D BY HIM TOWARDS THE RENTAL UPTO 31.3.2003. HOWEVER, IT WAS FURTHER AGREED BETWEEN THE PARTIES THAT THE PURCHASERS SHAL L BE ENTITLED TO RECEIVE THE RENT FROM THE TENANT W.E.F. 01.04.2003 ONWARDS. THE ORIGINAL PURCHASE DEEDS WERE ALSO HANDED OVER TO TH E PURCHASERS. IT WAS OFFICIALLY AGREED BETWEEN THE PARTIES THAT I N CASE ANY OF THE POST-DATED CHEQUES ISSUED BY THE PURCHASERS BOUNCES , THEN THE ENTIRE AMOUNT PAID BY THE PURCHASERS WOULD BE FORFE ITED AND THE AGREEMENT WOULD BECOME NULL AND VOID AND ALSO THE P OSSESSION OF THE TENANTED PORTION OF THE PROPERTY WOULD BE GIVEN TO THE 18 PURCHASERS. IN CASE THE PURCHASERS MADE ANY REQUES T TO THE SELLER TO WITHHOLD THE PRESENTATION OF ANY POST-DATED CHEQ UES, THEN INTEREST @ 12% PER ANNUM WOULD BE CHARGED. PURSUANT TO THE AGREEMENT TO SELL EXECUTED BETWEEN THE PARTIES, SAL E DEED WAS EXECUTED BY THE SPECIAL POWER OF ATTORNEY SHRI ANOO P GUPTA S/O SHRI RAJESH GUPTA ON BEHALF OF THE SHRI R.K.OHRI IN FAVOUR OF THE PURCHASERS I.E. SHRI RAJESH GUPTA, SHRI YOGESH GUPT A, SMT. NEELAM GUPTA AND SMT. VEENU GUPTA. THE COPY OF THE SALE DEED IS PLACED AT PAGES 13 TO 23 OF THE PAPER BOOK FILED BY THE REVENUE. THE TERMS AS AGREED UPON BETWEEN THE PART IES VIDE AGREEMENT TO SELL WERE INCORPORATED IN THE SAID SAL E DEED. THE COPY OF THE SPECIAL POWER OF ATTORNEY BETWEEN SHRI R.K.OHRI IN FAVOUR OF SHRI RAJESH GUPTA AND SHRI YOGESH GUPTA DATED 01.04.2003 IS PLACED AT PAGES 24 TO 27 OF ANOTHER P APER BOOK FILED BY THE ASSESSEE. 26. SHRI R.K.OHRI HAD ENTERED INTO ANOTHER AGREEMEN T WITH M/S SHARVILLA ESTATES PVT. LTD. DATED 01.04.2003 FOR TH E SALE OF BALANCE 23% SHARE IN THE SAID PROPERTY FOR RS.1.45 CR. DURING THE COURSE OF SEARCH OPERATION ON THE PREMISES OF SHRI R.K.OHRI THE SAID AGREEMENT OF SELL WAS FOUND FROM HIS POSSESSIO N. FURTHER HE HAD EXECUTED SPECIAL POWER OF ATTORNEY IN FAVOUR OF THE ULTIMATE BUYERS I.E. THE DIRECTORS OF M/S VALCO INDUSTRIES L TD. WHICH WERE ALSO FOUND AND SEIZED DURING THE COURSE OF SEARCH O PERATIONS. ANOTHER AGREEMENT TO SELL WAS EXECUTED BETWEEN M/S SHARVILLA ESTATES PVT. LTD., THE INTERMEDIARY, WITH THE ULTIM ATE PURCHASER I.E. M/S VALCO INDUSTRIES LTD. FOR A TOTAL CONSIDER ATION OF RS. 70 LACS. THE SAID TRANSACTION BETWEEN THE TWO PARTIES I.E. SHRI R.K.OHRI AND M/S VALCO INDUSTRIES THROUGH THREE DIF FERENT 19 DIRECTORS WAS ALSO INVESTIGATED BY THE INCOME TAX D EPARTMENT AS SEARCH OPERATION HAD ALSO BEEN CARRIED OUT ON THEIR PREMISES. THE ISSUE OF THE SALE CONSIDERATION PAID BY M/S VALCO I NDUSTRIES LTD. IN ORDER TO PURCHASE HIS 23% SHARE IN THE PROPERTY AROSE BEFORE THE TRIBUNAL IN ITA NOS. 660 & 663/CHD/2008 IN THE CASES OF SHRI AJAY KUMAR GUPTA, SHRI VIJAY KUMAR GUPTA, SHRI ASHW ANI KUMAR GUPTA AND M/S VALCO INDUSTRIES LTD. AND THE TRIBUNA L AFTER GOING THROUGH THE FACTS AND VARIOUS DOCUMENTS EXECUTED BE TWEEN THE PARTIES CONCLUDED THAT THE SELLER, THE INTERMEDIARY AND THE ULTIMATE PURCHASER IN ADDITION TO VARIOUS OTHER PER SONS HAD ENTERED INTO CIRCUITOUS TRANSACTIONS, IN ORDER TO C AMOUFLAGE THE REAL DEAL BETWEEN THE SELLER AND THE ULTIMATE PURCH ASER. THE TRIBUNAL VIDE ORDER DATED 30.04.2004 CONCLUDED ON T HE BASIS OF THE VARIOUS DOCUMENTS AND THE EVIDENCES FOUND DURIN G THE COURSE OF SEARCH HELD AS UNDER : 62. THE AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K.OHRI AND INTERMEDIARY M/S SEPL IS DATED 1.4.2003 AND IT TALKS ABOUT HIS 23% SHARE IN THE INDUSTRIAL PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH BEING SOLD ALONGWITH EXISTING BUILDING CONSTRUCTED THEREUPON. THE SELLER SHRI R.K.OHRI HA D AGREED TO SELL BACK PORTION OF THE PROPERTY ALONGWI TH CONSTRUCTED BUILDING THEREUPON TO THE SELLER FOR CONSIDERATION OF RS.1.45 CRORES AND AGAINST WHICH HAD RECEIVED CERTAIN PAYMENTS BY WAY OF POST-DATED CHEUQES. THE TERMS AND CONDITIONS OF THE SAID AGREEMENT FURTHER PROVIDED THAT IN CASE OF NON- ENCASHMENT OF ANY OF THE POST-DATED CHEQUES, THE ENTIRE AMOUNT PAID TILL DATE WOULD STAND FORFEITED AND THE PURCHASER WOULD HAND OVER THE POSSESSION OF THE PROPERTY AS THE AGREEMENT WOULD BECOME NULL AND VOID. THE SAID CLAUSE DOES NOT MAKE ANY REFERENCE TO RETURN OF ANY MACHINERY. THE SAID AGREEMENT HAVING BEEN FOUND FROM THE POSSESSION OF THE SELLER SHRI R.K.OHRI DURING THE COURSE OF SEARCH PROCEEDINGS AT HIS PREMISES AND HAVING BEEN ADMITTED BY HIM IS THE CONCLUSIVE PROOF OF SALE OF 23% SHARE OF THE PROPER TY BY SHRI R.K.OHRI. IT MAY BE MENTIONED HERE THAT A S PER CLAUSE-7 OF THE SAID AGREEMENT TO SELL, IN CASE AGREEMENT IS TERMINATED THEN THE MONEY ALREADY RECEIVED BY THE SELLER WOULD BE FORFEITED AND THE 20 POSSESSION OF THE PROPERTY HANDED OVER BACK TO THE SELLER. THAT THE SAID AGREEMENT TO SELL DOES NOT TALK OF ANY MACHINERY BUT ONLY REFER TO RETURN OF POSSESSION OF PLOT OF LAND, BEHIND PORTION OCCUPIED BY THE TENANT AND BUILDING CONSTRUCTED THEREUPON. THE DIFFERENT COVENANTS OF THE AGREEMENT TO SELL EXECUT ED ON 1.4.2003 DO NOT MAKE MENTION OF ANY PLANT AND MACHINERY. IN CASE THERE IS TRUTH IN THE PLEA OF T HE ASSESSEE THAT THE SAID SALE CONSIDERATION OF RS.1.4 5 CRORES CONSISTED OF VALUE OF MACHINERY ALSO, THEN THERE WOULD HAVE BEEN RECITAL OF RETURN OF PLANT & MACHINERY, WHICH IS MISSING IN THE SAID AGREEMENT T O SELL. IT CANNOT BE CASE OF SELLER THAT HE RECEIVES BACK THE PROPERTY ON TERMINATION OF AGREEMENT, BUT DOES NOT RECEIVE BACK THE MACHINERY, WHICH HAD SUBSTANTI AL VALUE AS PER THE CASE PUT UP BY THE ASSESSEE BEFORE US. IN THE ABSENCE OF SAME, WE FIND NO MERIT IN TH E CLAIM OF THE ASSESSEE IN THIS REGARD AND HENCE THE SAME IS DISMISSED. 63. ANOTHER ASPECT OF THE TRANSACTION IS THAT ON 1.4.2003 SHRI R.K.OHRI EXECUTED SPA IN FAVOUR OF S/SHRI ASHWANI KUMAR GUPTA AND ANIL DUBEY AND GPA IN FAVOUR OF SHRI VIJAY KUMAR GUPTA, COPIES WHICH ARE PLACED IN THE PAPER BOOK FILED BY THE DEPARTMENT AT PAGES 1 TO 7. THE ASSESSING OFFICER MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IT WAS FOUND THAT SHRI ANIL DUBEY ONE OF THE DIRECTORS M/S SEPL WAS A PERSON OF SMALL MEANS AND HE HAD NO KNOWLEDGE ABOUT THE WORKING OF THE COMPANY. THE GPA WAS EXECUTED IN FAVOUR OF S/SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA WHO WERE THE ULTIMATE BUYERS I.E. THE COMPANY IN WHICH THEY WERE THE DIRECTORS PURCHASED THE SAID 23 % SHARE. 64. THE SALE DEED IN RESPECT OF 23% SHARE IN FAVOUR OF M/S VISHNU ESTATES LTD. WAS EXECUTED ON 2.4.2003 UNDER WHICH SHRI R.K.OHRI THROUGH GPA HOLDER SHRI ASHWANI KUMAR GUPTA REGISTERED ON 1.4.2003 SOLD THE PROPERTY IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMAR GUPTA. THE COPY OF THE SAID SALE DEED IS PLACED AT PAGES 12 TO 20 OF THE PAPER BOOK FILED BY THE REVENUE. AS PER THE COVENANTS OF THE SALE DEED IT WAS AGREED UPON THAT 23% SHARE IN THE SAID PROPERTY WOULD BE SOLD TO M/S VALCO INDUSTRIES LTD. FOR TOTAL CONSIDERATION OF RS .70 LACS. THE PURCHASER I.E. M/S VALCO INDUSTRIES LTD. HAD PRIOR TO SIGNING THE SALE DEED, MADE PAYMENT TO THE EXTENT OF RS.55 LACS OUT OF TOTAL CONSIDERATION OF RS.70 LACS I.E. RS.5 LACS THROUGH CHEQUE DATED 23.12.2002 AND RS.50 LACS THROUGH CHEQUE DATED 10.2.2003. THE BALANCE CONSIDERATION OF RS.15 LAC S WAS PAID VIDE CHEQUE DATED 2.4.2003. THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER, AS PER RECITALS OF THE SALE DEED, BEFORE THE EXECUTION OF THE SAID SALE DEED. THIS ESTABLISHES THE CASE OF THE 21 ASSESSING OFFICER THAT THE ASSESSEE WAS INVOLVED IN THE TRANSACTION OF PURCHASE OF THE PROPERTY PRIOR T O THE SIGNING OF THE SALE DEED AS THE SALE CONSIDERAT ION WAS PAID IN ADVANCE, WITHOUT EXECUTING ANY DOCUMENT . 65. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 3.4.2003 SHRI R.K.OHRI ADMITTED THAT HE HAD SOLD HIS SHARE IN THE PROPERTY NO.70, INDUSTRIA L AREA, PHASE-1, CHANDIGARH THROUGH SHRI MUKESH MITTAL FOR SALE CONSIDERATION OF RS.2.35 CRORES BY WAY OF ACCOUNT PAYEE CHEQUES AND BANK DRAFTS. IT WAS FURTHER STATED BY SHRI R.K.OHRI THAT THE POWER OF ATTORNEY AND THE SALE DOCUMENTS WERE EXECUTED WITH TWO SEPARATE PARTIES IN WHICH ONE OF THEM WAS A GROUP OF INDIVIDUAL AND OTHER WAS BUSINESS CONCERN OF PRIVATE COMPANY LIMITED. SHRI R.K.OHRI ADMITTED THAT THE ORIGINAL AGREEMENT TO SELL WAS AVAILABLE A T PAGE NOS.73 TO 76 OF ANNEXURE-A-I OF SEIZED DOCUMENTS WHICH WAS FOR CONSIDERATION OF RS.1.45 CRORES. IT WAS FURTHER ADMITTED THAT ON THE SAME DATE HE GAVE GPA OF 23% SHARE TO SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA. THIS FURTHER STRENGTHENS THE POINT THAT M/S VALCO INDUSTRIES LTD . WAS INVOLVED IN THE TRANSACTION WITH SHRI R.K.OHRI, WHO IN ADDITION TO RECEIVING PART CONSIDERATION HAD ALSO EXECUTED GPA IN FAVOUR OF THE CONCERNED PERSON . 66. THE STATEMENT OF SHRI ASHWANI KUMAR GUPTA, DIRECTOR OF M/S VISHNU ESTATES LTD. WAS ALSO RECORD ED ON 3.9.2004 IN WHICH HE CLAIMED THAT NO PROPERTY DEALER OR AGENT WAS INVOLVED IN THE DEAL AND DIRECT DEAL WAS MADE WITH THE SELLER. HOWEVER, HE STATED THAT HE DID NOT REMEMBER THE NAME OF SELLER. HE WA S CONFRONTED WITH THE AGREEMENT OF SALE DATED 1.4.200 3 OF PROPERTY FOR SUM OF RS.1.45 CRORES TO WHICH HE REPLIED THAT HE HAD NO KNOWLEDGE OF THE SAME AND IT WAS NOT FOUND FROM HIS PREMISES OR POSSESSION. FURTHER HE WAS ALSO CONFRONTED WITH THE HAND WRITTE N PAPER WHICH WAS FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI, WHICH CONTAINED DETAILS OF PAYMENT IN RESPECT OF THE PLOT NO.70, INDUSTRIAL AREA, PHASE-1 , CHANDIGARH AND HIS REPLY WAS THE SAME THAT HE HAD N O KNOWLEDGE OF THE TRANSACTION SHOWN IN THE PAPER. FURTHER THE SAID PAPER WAS NOT FOUND FROM HIS POSSESSION OR PREMISES. BUT IN THE STATEMENT RECORDED ON 3.9.2004 HE ADMITTED THAT HE DOES NOT REMEMBER THE NAME OF THE SELLER AND THE DEAL WAS AS PER THE SALE DEED. HOWEVER, HE STATED THAT THE DE AL WAS NEGOTIATED WITH ONE SHRI R.K.OHRI R/O SECTOR 9/ 5, NOW I DO NOT REMEMBER HIS FULL NAME AND ADDRESS .. HE FURTHER CLAIMED THAT THE PAYMENTS WERE MADE IN THE ACCOUNT OF M/S SEPL AND NO PAYMENT WAS MADE BY HIM TO SHRI R.K.OHRI. HOWEVER, THE DATES AND PERIODS DURING WHICH THE AMOUNTS OF RS.70 LACS HAD BEEN PAID BY THE ASSESSEE AND THE PAYMENTS HAVE BEE N MADE TO SHRI R.K.OHRI CLEARLY REFLECT THAT NEGOTIAT ION FOR PURCHASE OF THE PROPERTY HAD STARTED IN DECEMBE R 22 2002 AND THE PAYMENTS TO SHRI R.K.OHRI WERE MADE BY M/S SEPL OUT OF PAYMENTS RECEIVED FROM M/S VALCO INDUSTRIES LTD. THE ENTIRE EXERCISE CLEARLY ESTABLISHES THE CASE OF THE ASSESSING OFFICER THAT SHRI ANIL DUBEY WAS INTRODUCED AS DIRECTOR OF M/S SEPL AS PURCHASER IN ORDER TO CONCEAL THE REAL CONSIDERATION AMOUNT. FURTHER THE CHEQUES FOR PAYMENT TO SHRI R.K.OHRI WERE SIGNED BY ONE SHRI NARESH KUMAR SHARMA, WHO HAS ALSO SIGNED AS DIRECTOR OF M/S SEPL (AS IS CLEAR FROM THE DOCUMENT S FOUND DURING THE COURSE OF SEARCH I.E. PAGES 4 TO 9 AND 43 TO 47 OF ANNEXURE-1/342, SECTOR 9, CHANDIGARH). THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS INVESTIGATED AND FOUND THAT SHRI NARESH KUMAR SHARMA, R/O HOUSE NO.454, SECTOR 28, CHANDIGARH WAS WORKING AS SMALL TIME MUNSHI IN DISTRICT COURTS AND WAS HAVING MEAGER INCOME. THI S PROVES THE STAND OF THE ASSESSING OFFICER THAT M/S SEPL WAS MERELY A FAADE TO COVER UP THE REAL TRANSACTION BETWEEN SHRI R.K.OHRI AND THE ASSESSEE. 67. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES ELABORATE EXERCISE HAD BEEN CARRIED OUT BY THE ASSESSING OFFICER TO COLLECT INFORMATION AND ALSO T O RECORD THE STATEMENT OF VARIOUS CONNECTED PERSONS T O COME TO THE CONCLUSION THAT THE SHARE IN THE PROPER TY HAD BEEN PURCHASED FOR RS.1.45 CROROES AGAINST THE REGISTERED VALUE OF RS.70 LACS. 68. THE STATEMENT OF SHRI ANIL DUBEY WHO HAS SIGNED AS DIRECTOR OF M/S SEPL WAS RECORDED ON 18.10.2004 AND WHEN HE WAS CONFRONTED WITH THE AGREEMENT TO SELL HE STATED THAT HE DOES NOT KNOW ANYTHING ABOUT THE AGREEMENT AS HE WAS INSTRUCTED BY SHRI VIVEK MOHAN MITTAL TO GO TO THE HOUSE OF SHRI R.K.OHRI. HE STATED THAT HE HAD NOT MADE ANY TALK TO SHRI R.K.OH RI AS HE HAD VERY MEAGER INCOME AND COULD NOT THINK TO PURCHASE ANY SUCH PROPERTY. HE FURTHER STATED THAT HE HAD PUT SIGNATURE ON ALL THE PAPERS OF SHRI VIVEK MOHAN MITTAL AND FAMILY. 69. ALL THE ABOVE DOCUMENTS AND SEQUENCES OF EVENTS HAVE CLEARLY BEEN CREATED FOR SELF SERVING PURPOSES . IN OUR OPINION SAME CANNOT BE RELIED UPON AND IN TH IS REGARD, WE WOULD REFER TO FAMOUS DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN IT WAS HELD THAT IT IS TRU E THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOW N THAT THERE ARE REASONS TO BELIEVE THAT APPARENT IS NOT REAL BUT THEN THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT, SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE T HE 23 EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. 70. EXAMINED IN THE LIGHT OF THE PROPOSITION LAID DOWN BY THE HON'BLE APEX COURT IN CIT VS. DURGA PRASAD MORE (SUPRA), THE TRANSACTION ENTERED INTO B Y THE ASSESSEE HAS TO BE SEEN IN THE PERSPECTIVE OF T HE TOTAL EVENTS. THE CASE OF THE ASSESSEE IS THAT IT HAD PURCHASED THE SAID ASSETS AT THE DECLARED VALUE OF RS.70 LACS AND WAS NOT AWARE OF THE AGREEMENT TO SE LL DATED 1.4.2003 EXECUTED FOR RS.1.45 CRORES FOR THE SAID PROPERTY. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THE AGREEMENT TO SELL MARKED AS ANNEXURE A DATED 23.12.2002 TALKS ABOUT THE MACHINERY, WHICH WAS NOT PURCHASED BY THE ASSESSEE AND HENCE THE SALE VALUE DECLARED BY THE ASSESSEE WAS CORRECT . AS OBSERVED EARLIER THIS AGREEMENT TO SELL WAS NEVE R FOUND DURING SEARCH OF THE PREMISES OF SHRI R.K.OHR I AND THE SAME WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER, HENCE THE SAME HAS NO EVIDENTIARY VALUE. THE CIT (APPEALS) HAS WRONGLY RELIED ON THE SAID DOCUMENT WITHOUT COMPLYING WITH THE PROCEDURE LAID DOWN IN RULE 46A AS ELABORATED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. MANISH BUILDWELL PVT. LTD. (SUPRA). TAKING INTO CONSIDERAT ION THE FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS DOCUMENTS EXECUTED IN RELATION TO THE SALE OF 23% SHARE IN THE SAID PROPERTY, WHERE THE ASSESSEE HAD ENTERED INTO CIRCUITOUS TRANSACTION TO TRANSFER THE PROPERTY FROM THE SELLER TO THE PURCHASER, THEN WE ARE OF THE VIEW THAT THE MODUS OPERANDI ADOPTED BY THE ASSESSEE IN INTRODUCING M/S SEPL AS AN INTERMEDIARY BUYER WAS WITH THE INTENTION TO CAMOUFLAGE THE REAL DEAL BETWEEN ORIGINAL SELLER TO THE PURCHASER/ ULTIMATE BUYER OF THE PROPERTY. THE ORIGINAL OWNER OF THE PROPERTY SHRI R.K.OHRI HAD EXECUTED THE AGREEMENT TO SELL ON 1.4.2003 WHICH ADMITTEDLY WAS FOUND IN HIS POSSESSION AND WAS SEIZED BY THE INVESTIGATION TEAM. ON THE SAME DATE IN RESPECT O F 23% OF THE SAID PROPERTY SHRI R.K.OHRI EXECUTED THE GPA IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA ON 1.4.2003. THE SALE DEED WAS EXECUTED ON 2.4.2003 BY SHRI ASHWANI KUMAR GUPTA DIRECTOR OF M/S VISHNU ASSOCIATES LTD. AS GPA OF SH RI R.K.OHRI IN FAVOUR OF THE COMPANY OF WHICH HE IS TH E DIRECTOR I.E. M/S VISHNU ASSOCIATES LTD. THROUGH HI S DIRECTOR SHRI AJAY KUMAR GUPTA WHO IS THE BROTHER O F SHRI ASHWANI KUMAR GUPTA. HOWEVER, THE SALE CONSIDERATION FOR 23% SHARE IN THE PROPERTY IN THE AGREEMENT TO SELL WAS RS.1.45 CRORES AND IN THE SAL E DEED WAS RS.70 LACS ONLY. THE ASSESSEE CLAIMED THA T IT HAD PURCHASED THE SAID PROPERTY FROM M/S SEPL, WHO IN TURN HAD PURCHASED THE SAME FROM SHRI R.K.OHRI AND HE HAD NOT DIRECTLY PURCHASED FROM SHR I R.K.OHRI. WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE. UNDOUBTEDLY, THE AGREEMENT TO SELL WAS EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL ON 24 1.4.20203 EVIDENCING THE PAYMENTS MADE AGAINST THE SALE CONSIDERATION PRIOR TO 1.4.2003. FURTHER SALE DEED EXECUTED BETWEEN M/S SEPL AND M/S VALCO INDUSTRIES LTD. WAS DATED 2.4.2003, EVIDENCING PAYMENTS TOTALING RS.55 LACS OUT OF TOTAL CONSIDERATION OF RS.70 LACS HAVING BEEN MADE PRIOR TO THE DATE OF EXECUTION OF THE SALE DEED. THE DOCUME NT OF SALE DEED WAS EXECUTED AND REGISTERED BY SHRI ASHWANI KUMAR GUPTA, WHO IS ONE OF THE DIRECTORS OF M/S VALCO INDUSTRIES LTD. THE GPA IN HIS FAVOUR BY SHRI R.K.OHRI WAS MADE ON 1.4.2003. THE SALE CONSIDERATION PAID TO SHRI R.K.OHRI WAS BY WAY OF ISSUE OF CHEQUES THROUGH ACCOUNT OF M/S SEPL AND M/S VALCO INDUSTRIES LTD. HAD ALSO MADE THE PAYMENT S IN THE ACCOUNT OF M/S SEPL. IN CASE WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT M/S VALCO INDUSTRIE S LTD. I.E. THE ASSESSEE CAME INTO PICTURE ONLY ON 1/2.4.2003 THEN HOW PAYMENTS AGAINST SALE CONSIDERATIONS WERE MADE BY M/S VALCO INDUSTRIES LTD. IN DECEMBER, 2002. THIS CLEARLY SHOWS THAT TH E M/S SEPL WAS JUST USED AS INTERMEDIARY TO CAMOUFLAGE THE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BETWEEN SHRI R.K.OHRI AND M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE. IN THE ENTIRET Y OF THE FACTS AND CIRCUMSTANCES, WHERE 23% SHARE IN THE PROPERTY HAD BEEN AGREED TO BE SOLD FOR RS.1.45 CRORES AND WAS ULTIMATELY SOLD THROUGH REGISTERED SALE DEED FOR RS.70 LACS CLEARLY ESTABLISHES THE ST AND OF THE ASSESSING OFFICER THAT ON MONEY HAD BEEN PAI D IN THE SAID TRANSACTION BY M/S VALCO INDUSTRIES LTD . IN ORDER TO MEET THE PRICE OF RS.1.45 CRORES. WE FIND NO MERIT IN THE DIFFERENT PLEAS OF THE LEARNED A.R. FO R THE ASSESSEE BEFORE US AS THE SAME ARE CONTRARY TO EACH OTHER. IN THE COURSE OF STATEMENT RECORDED DURING THE SEARCH PROCEEDINGS HE HAD STATED THAT NO PROPERTY DEALER WAS INVOLVED IN THE DEAL. HOWEVER, THE DATE S AND PERIOD DURING WHICH THE SUM OF RS.70 LACS HAD BEEN PAID BY M/S VISHNU ASSOCIATES LTD. AND PAYMENT S HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY REFLECT THA T THE NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY W ERE MADE IN DECEMBER, 2002 AND THAT SHRI ANIL DUBEY WAS INTRODUCED AS DIRECTOR OF M/S SEPL WITH WHOM TRANSACTION WAS CARRIED OUT IN ORDER TO PUT A SCREE N ON THE REAL PICTURE. THE WHOLE TRANSACTION LEADS T O CONCRETE CONCLUSION THAT THE PROPERTY HAD BEEN PURCHASED BY M/S VOLCO INDUSTRIES LTD. FOR A SUM OF RS.1.45 CRORES AS AGAINST ITS CLAIM OF RS.70 LACS THROUGH CIRCUITOUS TRANSACTIONS. 71. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT IS A FIT CASE TO RAISE CORPORATE VEIL IN O RDER TO DETERMINE THE NATURE OF TRANSACTION. THE COMPA NY M/S SEPL HAS BEEN USED AS INTERMEDIARY THROUGH DIRECTOR WHO HAD MEAGER SOURCE OF INCOME AND ONE OF THE DIRECTORS IN THE SAID COMPANY WAS THE WIFE OF T HE ADVOCATE WHO WAS LOOKING AFTER THE CIVIL DISPUTES O F SHRI R.K.OHRI. THOUGH NO ADDITION HAS BEEN MADE IN 25 THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR ONE OF ITS DIRECTOR SMT.ALKA MITTAL W/O SHRI MUKESH MITTAL, BUT THAT ITSELF WOULD NOT SUPPO RT THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TA X EVASION OR TO CIRCUMVENT TAX OBLIGATION, HELD AS UN DER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DESCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE VEIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTION. IT IS TRUE THAT FROM T HE JURISTIC POINT OF VIEW THE COMPANY IS A LEGAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED TO DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS MEMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOM IC REALITIES BEHIND THE LEGAL FAADE. FOR EXAMPLE, TH E COURT HAS POWER TO DISREGARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATION. 72. IN THE FACTS OF THE PRESENT CASE, WE HAVE FOUND THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN ORDER TO COMPLETE THE TRANSACTION OF PURCHASE OF 23 % SHARE IN THE PROPERTY FROM SHRI R.K.OHRI TO ITSELF. 73. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE INITIAL AGREEMENT BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR TOTAL CONSIDERATION OF RS.1.45 CRORES ALSO INCLUDED THE COST OF MACHINERY AT RS.75 LACS WHICH IN TURN HAD NOT BEEN PURCHASED BY THE ASSESSEE M/S VALCO INDUSTRIES LTD. AND HENCE THE SALE CONSIDERATION AGREED TO BETWEEN THE PARTIES WAS ONL Y RS.70 LACS I.E. THE COST OF THE PLOT AND BUILDING A ND THE MACHINERY WAS WITHHELD BY M/S SEPL. THIS WAS THE PLEA RAISED BY THE ASSESSEE BEFORE US. HOWEVER , WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE A S THE TERMINATION CLAUSE IN THE ORIGINAL AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL FO R NON-ENCASHMENT OF CHEQUES TALKS OF HANDING BACK OF THE POSSESSION OF THE PROPERTY AND DOES NOT TALK AB OUT HANDING OVER BACK MACHINERY WHATSOEVER. AS HELD BY US IN THE PARAS HEREINABOVE, THE SAID AGREEMENT TO SELL MARKED AS ANNEXURE-A PRODUCED BY THE ASSESSEE BEFORE THE CIT (APPEALS) FOR THE FIRST TIME IS JUST AN AFTER THOUGHT AND CANNOT BE RELIED UPON. WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN ALLOWING RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON SUCH 26 AGREEMENT TO SELL, VERACITY OF WHICH HAS NOT BEEN ESTABLISHED. 74. RELIANCE OF THE LEARNED A.R. FOR THE ASSESSEE O N THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN SURAJ LAMP INDUSTRIES PVT. LTD. VS. STATE OF HARYANA REPORTED IN 2011-TIOL-101-SC-MISC IN RESPECT OF SCOPE OF AGREEMENT ITSELF WORKS AGAINST THE ASSESSEE AS THE ASSESSEE HAS ALSO BUILT ITS CASE ON THE AGREEMENT TO SELL MARKED AS ANNEXURE-A AS BEING THE ORIGINAL AGREEMENT IN WHICH THE SALE PRICE OF THE L AND WAS FIXED AT RS.70 LACS AND SALE VALUE OF MACHINERY WAS FIXED AT RS.75 LACS. IN VIEW OF THE SEQUENCE O F EVENTS AND THE DOCUMENTS EXECUTED IN RELATION TO TH E SALE OF 23% SHARE OF THE PROPERTY, WE HOLD THAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE M/S VALCO INDUSTRIES LTD. FOR A CONSIDERATION OF RS.1.4 5 CRORES, AGAINST WHICH IT HAD SHOWN SALE PRICE OF RS .70 LACS ONLY AND THE BALANCE ON MONEY OF RS.75 LACS IS TO BE ASSESSED IN THE HANDS OF M/S VALCO INDUSTRIES L TD. ON SUBSTANTIVE BASIS AS INCOME FROM UN-DISCLOSED SOURCES, IN VIEW OF THE CORPORATE ENTITY BEING A SEPARATE ENTITY HAVING PURCHASED THE SAID ASSETS. IN VIEW OF OUR HOLDING THAT THE ADDITION OF RS.75 LACS IS TO BE MADE IN THE HANDS OF THE COMPANY M/S VALCO INDUSTRIES LTD. NO SEPARATE ADDITION IS MERITED IN THE HANDS OF THREE DIRECTORS S/SHRI AJAY KUMAR GUPTA, ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NO.663/CHD/2008 IS ALLOWED AND GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NOS.660 TO 662/CHD/2008 IS DISMISSED. 27. NOW COMING TO THE FACTS OF THE PRESENT CASE, IT TRANSPIRED THAT DURING THE COURSE OF SEARCH, HAND WRITTEN DOCU MENTS EVIDENCING THE TERMS OF PAYMENT OF THE SAID PROPERT Y WERE FOUND FROM THE POSSESSION OF SHRI R.K.OHRI , THE SELLER, WHICH CONTAINED THE TERMS OF PAYMENT FOR RP 120 AND IND 70 I.E. TWO PROPERTIES OWNED BY SHRI R.K.OHRI. THE SAID DOCUMENT TABULATE D BOTH THE CHEQUE/DD PAYMENTS AND ALSO CASH PAYMENTS. THE DOC UMENT WAS CONFRONTED TO SHRI R.K.OHRI DURING THE COURSE OF SE ARCH AND HE ADMITTED THAT HE HAD RECEIVED THE CHEQUE/DDS AS MEN TIONED IN THE SAID DOCUMENT BUT HAD NOT RECEIVED ANY CASH DURING THE SALE TRANSACTION. HE ADMITTED TO HAVE RECEIVED 2.35 CR THROUGH 27 CHEQUES FROM M/S SHARVILLA ESTATES PVT. LTD. I.E. R S.1.45 CR FOR ONE TRANSACTION AND RS. 90 LACS FOR THE OTHER TRANS ACTION. 23% SHARE IN THE PROPERTY WAS SOLD BY SHRI R.K.OHRI THR OUGH M/S SHARVILLA ESTATES PVT. LTD. TO M/S VALCO INDUSTRIES LTD. BUT IN THE TRANSACTION BETWEEN M/S SHARVILLA ESTATES PVT. LTD. AND M/S VALCO INDUSTRIES LTD. THE DECLARED SALE CONSIDERATION WAS RS. 70 LACS. HOWEVER, SHRI R.K.OHRI THE ORIGINAL SELLER HAD ADM ITTEDLY SOLD THE SAID SHARE OF 23% FOR RS.1.45 CR IN VIEW OF TH E CIRCUITOUS TRANSACTIONS ENACTED BETWEEN SHRI R.K.OHRI, M/S SHA RVILLA ESTATES PVT. LTD., M/S VALCO INDISTRIES LTD. AND ITS DIRECT ORS AND VARIOUS PERSONS ON BEHALF OF THE M/S SHARVILLA ESTATES PVT. LTD., THE TRIBUNAL IN ITA NO. 663/CHD/2008 IN THE CASE OF M/S VALCO INDISTRIES LTD. AND ITA NOS. 660 TO 662/CHD/2008 IN THE CASE OF THE DIRECTORS DELIBERATED UPON THE ISSUE AT LENGTH AND AFTER CONSIDERING VARIOUS TRANSACTIONS, IT WAS HELD THAT THE PROPERTY HAS BEEN PURCHASED BY M/S VALCO INDISTRIES LTD. FOR RS. 1.45 CR THOUGH IN THE DOCUMENTS, THE SALE CONSIDERATION HAS BEEN DEPICTED AT RS. 70 LACS. ACCORDINGLY, ON MONEY OF RS. 75 LA CS WAS HELD AS ASSESSABLE IN THE HANDS OF M/S VALCO INDISTRIES LTD . ON SUBSTANTIVE BASIS. 28. THE SECOND PART OF THE PORTION OWNED BY SHRI R. K.OHRI I.E. 27% OF THE PROPERTY WAS SOLD BY HIM FOR TOTAL CONSI DERATION OF RS. 90 LACS. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT 23% SHARE WAS SOLD FOR RS. 1 .45 CR AND THE BALANCE BEING SOLD FOR RS. 90 LACS WAS NOT ACCEPTAB LE. IN VIEW OF THE HAND WRITTEN DOCUMENT FOUND DURING THE COURSE O F SEARCH, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT CASH AMOUNT HAD PASSED BETWEEN SHRI R.K.OHRI AND THE ASSESSEES BEFO RE US. 28 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE HANDS OF THE ASSESSEE, THE SAID DOCUMENT WAS CONFRONTED TO THE A SSESSEE, WHICH WAS NOT ADMITTED BY THE ASSESSEE. ANOTHER ASPECT C ONSIDERED BY THE ASSESSING OFFICER WAS THAT WHEN SHRI R.K.OHRI W AS CONFRONTED WITH THE HAND WRITTEN SHEET, HE FURNISHE D REVISED COMPUTATION OF INCOME AND SUBMITTED THAT IN HIS HAN DS, NO CAPITAL GAINS AROSE BECAUSE OF HIS INVESTMENT IN A NEW PROP ERTY AND ALSO BECAUSE OF PURCHASE OF THE BONDS AS ADMISSIBLE AT T HE RELEVANT TIME. HOWEVER, THE SAID REVISED COMPUTATION OF INC OME WAS FILED WITHOUT PREJUDICE TO HIS CLAIM THAT HE HAD NOT RECE IVED ANY CASH. THE ASSESSING OFFICER, HOWEVER DID NOT ACCEPT THE V ARIOUS PLEAS OF THE ASSESSEE AND HELD THAT THE PRESENT SET OF BU YERS OF 27% OF THE PROPERTY HAD PAID CASH FOR THE PURCHASE OF THE PROPERTY. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS AGAINST D ECLARED SALE CONSIDERATION OF RS. 90 LACS, THE SALE CONSIDERATIO N TO BE ADMITTED IN THE HANDS OF THE PURCHASER WAS RS. 1.79 CRS. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVER DELETED THE SAID A DDITION ON ACCOUNT OF VARIOUS REASONS AS REFERRED TO BY US IN THE PARAS HEREIN ABOVE. 29. THE FIRST ASPECT OF THE ISSUE TO BE CONSIDERED IN THE PRESENT CASE IS THAT NEITHER THE SELLER SHRI R.K.OHRI NOR T HE PURCHASER I.E. THE FOUR ASSESSEES BEFORE US HAVE ADMITTED THAT THE RE WAS ANY CASH TRANSACTION FOR THE PURCHASE OF THE SAID PROPERTY. THE SELLER SHRI R.K.OHRI HAD VEHEMENTLY STATED THAT HE HAD ONLY REC EIVED CHEQUE/DDS FOR THE SALE OF HIS 27% SHARE IN THE PRO PERTY AND HAD NOT RECEIVED ANY CASH. THE HAND WRITTEN DOCUMENT F OUND FROM HIM WAS CLAIMED TO BE A MERE CALCULATION BUT THE SA ME WAS NOT ACTED UPON AS WAS CLEAR FROM THE FACT THAT IN THE S AID HAND WRITTEN 29 DOCUMENT, THE SALE CONSIDERATION THROUGH CHEQUES WA S MENTIONED AT RS.2.25 CR WHEREAS SHRI R.K.OHRI HAD RECEIVED SU M OF RS. 2.35 CR IN ALL FOR THE SALE OF HIS 50% SHARE IN THE PROP ERTY. FURTHER, WE FIND THAT NO OTHER EVIDENCE HAD BEEN FOUND DURIN G THE COURSE OF SEARCH PROCEEDINGS BOTH AT THE RESIDENCE OF THE SELLER SHRI R.K.OHRI OR THE PURCHASERS I.E. THE ASSESSEE BEFORE US EVIDENCING ANY PAYMENT HAVING BEEN MADE OVER AND ABOVE THE TRA NSACTION RECORDED IN THE AGREEMENT TO SELL AND THE SALE DEED . IN THE CASE BEFORE US, THE DEAL HAD BEEN STRUCK DIRECTLY BETWEE N SHRI R.K.OHRI AND THE ULTIMATE PURCHASERS AND WITHOUT AN Y INTERMEDIARY. THE PURCHASERS HAD MADE CERTAIN ADVAN CE PAYMENTS TO SHRI R.K.OHRI PRIOR TO THE DATE OF EXECUTION OF AGREEMENT TO SELL BUT THAT ITSELF DOES NOT ESTABLISH THAT ANY ON MONEY HAD BEEN PAID BY THE ASSESSEE, IN THE ABSENCE OF ANY DOCUMEN T FOUND TO THE CONTRARY. FURTHER, NO ADDITION HAS BEEN MADE IN TH E HANDS OF SHRI R.K.OHRI ON ACCOUNT OF THE SALE CONSIDERATION AND E VEN ON ACCOUNT OF THE SO CALLED REVISED COMPUTATION OF INC OME. THE SAID PROPERTY WAS IN THE OCCUPATION OF THE TENANT STATE BANK OF INDIA, WHICH AS PER THE AGREEMENT TO SELL WAS TO BE VACATE D ON 31.03.2004 BUT WAS NOT VACATED TILL 31.12.2004. TH E ASSESSEE HAD MADE CERTAIN PAYMENTS THROUGH ADVANCE CHEQUES AND T HE SAME WERE WITHHELD BECAUSE THE TENANT DID NOT VACATE THE PROPERTY. HOWEVER, THE SAME WERE ENCASHED AFTER A GAP OF FEW MONTHS. FURTHER, THE PRESENT TRANSACTION IS NOT ROUTED THRO UGH ANY INTERMEDIARIES WHICH HAD PLAYED A ROLE IN THE SALE OF THE OTHER 23% SHARE OF THE PROPERTY. EVEN THE GENERAL POWER OF ATTORNEY AND SPECIAL POWER OF ATTORNEY HAVE BEEN ISSUED TO T HE ULTIMATE PURCHASERS IN THE FIRST GO ITSELF. IN THE ABSENCE O F ANY EVIDENCE FOUND TO PROVE THAT ANY CASH HAD BEEN PAID OR IN TH E ABSENCE OF 30 ANY PAYMENT FOUND TO ESTABLISH THAT THE ASSESSEES B EFORE US HAD USED ANY CIRCUITOUS ROUTE TO PURCHASE THE PROPERTY, NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE MERELY ON TH E BASIS THAT THE OTHER PORTION OF THE PROPERTY HAD BEEN SOLD AT A HIGHER CONSIDERATION. FURTHER, THE PARTIES THEMSELVES HAV E STATED THAT THE PORTION PURCHASED BY THE ASSESSEES BEFORE US WA S IN THE OCCUPATION OF A TENANT WHICH IN-TURN MAY AFFECT THE VALUE OF THE PROPERTY. 30. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRC UMSTANCES, IN THE ABSENCE OF ANY EVIDENCE OR THE DOCUMENTS FOUND, WE DO NOT FIND ANY MERIT IN THE ORDER OF ASSESSING OFFICER IN HOLDING THAT THE TOTAL SALE CONSIDERATION IN THE HANDS OF THE FO UR ASSESSEES BEFORE US WAS RS.1.79 CR RESULTING IN ADDITION OF R S. 22,39,000/- IN THE HANDS OF EACH OF THE PURCHASER ON ACCOUNT OF ON MONEY PAID FOR 1/4 TH SHARE OUT OF THE TOTAL ON MONEY PAID OF RS. 89,56, 000/-. UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX ( APPEALS), WE DISMISS GROUNDS OF APPEAL RAISED BY THE REVENUE. 31. THE FACTS IN ITA NOS. 703 TO 705/CHD/2008 ARE I DENTICAL TO THE FACTS IN ITA NO. 659/CHD/2008 AND OUR DECISION IN ITA NO. 659CHD/2008 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS . 703 TO 705/CHD/2008. 32. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: .9 TH MAY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRARITAT,CHD ITA T,CHD.