Shri Sanjay Parwal, New Delhi V. ACIT, Haryana

ITA 892/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91026 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 22-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Invalid notice; Business income; Document seized; Principle of natural justice; Opportunity of cross examination; Additional evidence; Documents seized; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 133A; 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 892 /DEL/201 5 ASSESSMENT YEAR: 2008 - 09 SANJAY PARWAL, C - 25, VS. ACIT, JANAKPURI COMMUNITY CENTRE, SONEPAT CIRCLE, NEW DELHI HARYANA (PAN: ACIPP0 7 0 7 H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR, CA DEPARTMENT BY: SH. VIKRAM SAHAY, SR. DR DATE OF HEARING: 22.04.2015 DATE OF PRONOUNCEMENT: 15.05.2015 ORDER PER INTURI RAMA RAO, A.M. : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 IMPUGNING THE ORDER OF LEARNED CIT(A), ROHTAK, DATED 09.12.2014 RAISING THE FOLLOWING GROUNDS OF APPEAL: I. THAT ORDER DATED 09.12.2014 PASSED U/S 250(6) OF THE INCOME - TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ROHTAK IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO UPHOLD THE ADDITION MADE BY THE LD ASSISTANT COMMISSIONER OF INCOME - TAX, SONEPAT CIRCLE TO THE EXTENT OF RS. 8,33,59,871/ - , AFTER ALLOWING A PARTIAL RELIEF OF RS. 36 ,40,129/ - , ON ACCOUNT OF ALLEGED UNDISCLOSED SHORT TERM CAPITAL GAINS FROM SALE OF SHARES OF M/S SMRITI BUILDCON PVT LTD. THE LD.CIT (A) HAS UPHELD THE ADDITION BY IGNORING THE FACTUAL AND LEGAL POSITION AND SUMMARILY REJECTING THE EXHAUSTIVE SUBMISSIONS M ADE BY THE APPELLANT. 2 II. THAT THE ORDER DATED 09.12.2014 PASSED U/S 250 OF THE INCOME TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ROHTAK IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO REJECT THE APPLICATION FILED UNDER RULE 46A OF THE INCOME - TAX RULES, 1962 FOR SUBMISSION OF FOLLOWING DOCUMENTS AS AN ADDITIONAL EVIDENCE ON THE UNJUSTIFIED AND ARBITRARY GROUND THAT THE SAME ARE NOT COVERED UNDER RULE 46A(1) OF THE INCOME - TAX RULES, 1962 AND THAT THE SAME ARE M ERE AFTER THOUGHTS IN ORDER TO OBFUSCATE THE ISSUE AND IN ANY CASE, HAVE NO BEARING ON THE TRANSACTIONAL ASPECT OF THIS CASE: - COPY OF MEMORANDUM & ARTICLES OF ASSOCIATION OF MLS SMRITI BUILDCON PVT LTD; COPY OF AUDITED FINANCIAL STATEMENT AS ON 31.03.20 07 IN THE CASE OF M/S SMRITI BUILDCON PVT LTD; COPY OF ORDER OF ASSESSMENT DATED 28.12.2010 IN THE CASE OF M/S SMRITI BUILDCON PVT. LTD. FOR ASSESSMENT YEAR 2008 - 09; COPY OF ORDER OF ASSESSMENT DATED 31.12.2010 IN THE CASE OF SMT RITU PARWAL FOR ASSESSME NT YEAR 2008 - 09; COPY OF SUBMISSION IN THE CASE OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF ORDER OF CIT(A) DATED 23.10.2012 IN THE CASE OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF MEMO OF APPEAL BEFORE HON'BLE TRIBUNAL IN THE CAS E OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF BANK STATEMENT OF THE APPELLANT; COPY OF NOTICE U/S 148 DATED 9.12.2011 IN THE CASE OF M/S ELECOM EXPORTS PVT. LTD FOR ASSESSMENT YEAR 2008, - 09 ALONGWITH REASONS RECORDED; VALUATION OF THE PROPERT Y BASED ON CIRCLE RATE AND INDEPENDENT SALE DEED; COPY OF NOTIFICATION NO. F (12)/FIN.(E.I)/PART FILENOL.1 (II)/3548 DATED 18.07.2010; COPY OF SALE DEED FOR A SUM OF RS. 35,00,000/ - ; COPY OF LEASE DEED DATED 12.07.2006. III. THAT THE ORDER DATED 09.12.2014 PASSED U/S 250(6) THE INCOME - TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ROHTAK IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO REJECT THE CONTENTION OF THE APPELLANT THAT THE PROCEEDINGS U/S 147 OF THE ACT AND CONSEQUENT COMPLETION OF ASSESSMENT U/S 147/143(3) OF THE ACT, ARE WITHOUT JURISDICTION AND THEREFORE, DESERVE TO BE QUASHED AS SUCH BY UNJUSTIFIEDLY HOLDING THAT THERE IS NO INFIRMITY IN THE ISSUE OF NOTICE U/S 147 OF THE INCOME - TAX ACT, 1961 AND IN THE PROCEDURE FOLLOWED PRECEDING THE ASSESSMENT. 3 IV. THAT THE ORDER DATED 09.12.2014 PASSED U/S 250(6) OF THE INCOME - TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ROHTAK IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTI FIED TO REJECT THE STAND OF THE APPELLANT THAT THE ASSESSMENT HAS BEEN FRAMED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND IS ACCORDINGLY VITIATED AND NOT IN ACCORDANCE WITH LAW BY UNJUSTIFIEDLY AND ERRONEOUSLY HOLDING THAT ENOUGH OPPORTUNITIES HA VE BEEN GIVEN TO HIM DURING THE ASSESSMENT AND REMAND 'PROCEEDINQS WHICH IS CONTRARY TO THE FACTUAL POSITION. 2. THE BRIEF FACTS OF CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME UNDER THE HEADS BUSINESS INCOME, INCOME FROM HOUSE PROPERTY, INCOME FROM SHORT TERM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED ON 19 TH AUGUST, 2008, DECLARING INC OME OF RS. 22,13,680/ - . THE SAID RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) . SUBSEQUENTLY, ON RECEIPT OF INFORMATION FROM INVESTIGAT ION WING OF THE DEPARTMENT, NEW DELHI, ON 10.11.2009 ABOUT THE ALLEGED ON M ONEY RECEIPT ON ACCOUNT OF SALE OF SHARES OF M/S SMRITI BUILDCON PVT. LTD. FOR A SUM OF RS. 8.70 CRORES PAID BY ONE GROUP OF COMPANIES CALLED HBN. CONSEQUENT TO THIS INFORMATION, A SURVEY OPERATION UNDER SECTION 133A OF THE ACT WAS CONDUCTED BY THE INVESTI GATION WING AT THE OFFICE PREMISES OF THE APPELLANT , B ASED ON THE STRENGTH OF THIS INFORMATION FURNISHED BY THE OFFICIALS OF HPN GROUP OF COMPANIES THAT ON MONEY WAS PAID TO THE APPELLANT AND HIS SPOUSE, NAMELY, MRS. RITU PARWAL. A NOTICE UNDER SECTION 14 8 OF THE ACT WAS ISSUED ON 23 RD AUGUST, 2011. IN RESPONSE TO THIS NOTICE, THE APPELLANT SUBMITTED ON 21.09.2011 THAT THE ORIGINAL RETURN FILED ON 19.08.2008 SHOULD BE TREATED AS RETURN FILED INCOMPLIANCE OF THE NOTICE UNDER 4 SECTION 148 OF THE ACT. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED AT RS. 8,93,13,680/ - VIDE ORDER DATED 24 TH SEPTEMBER, 2012 UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. WHILE DOING SO THE LEARNED ASSESSING OFFICER MADE THE ADDITION OF RS. 8,70,00,00/ - ON ACCOUNT OF UNDISCLOSED SHORT TERM CAPITAL GAIN FROM SALE OF SHARES IN M/S SMRITI BUILDCON PVT. LTD. THE FACTUAL MATRIX LEADING TO THE ADDITION BY THE ASSESSING OFFICER IS AS FOLLOWS: A SURVEY OPERATION U/S 133A OF THE I.T. ACT WAS CONDUCTED BY THE INVE STIGATION WING ON 08.12.2009 AT THE OFFICE PREMISES OF THE ASSESSEE SH. SANJAY PARWAL, DIRECTOR IN VARIOUS COMPANIES HAVING REGISTERED OFFICE AT C - 25 JANAKPURI, NEW DELHI. THIS ACTION U/S 133A OF THE INCOME TAX ACT 1961 WAS CONSEQUENTIAL TO THE SEARCH ON H BN GROUP CONDUCTED BY THE INVESTIGATION WING, NEW DELHI ON 10.11.2009. DURING THE SEARCH OPERATION ON B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI, THE HEAD OFFICE OF HBN GROUP ON 20.11.2009, SOME DOCUMENTS REGARDING PAYMENT IN RESPECT OF PROPER TY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WERE FOUND AND SEIZED WHICH WERE ANNEXURIZED AS ANNEXURE A - I. THIS PROPERTY WAS IN THE NAME OF M/S SMRITI BUILDCON PVT. LTD. DETAILS WRITTEN ON THESE PAPERS SHOWED THAT THE PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WAS PURCHASED BY HBN GROUP FROM SH. SANJAY PARWAL AND SMT. RITU PARWAL THROUGH TRANSFER OF SHARES OF M/S SMRITI BUILDCON PVT LTD FOR A TOTAL CONSIDERATION OF RS. 12.95 CRORES, AND AN AMOUNT OF RS. 8.70 CRORES WAS PAID IN CASH BY HBN GROUP. SEIZED COPIES OF SOME OF THE RELEVANT DOCUMENTS SEIZED DURING THE COURSE OF THE SEARCH. WHILE RECORDING THE STATEMENT OF SH. ANIL MAHAJAN, CHIEF REAL ESTATE OF HBN GROUP BY THE INVESTIGATION WING, IT WAS REVEALED THAT THIS PROPERTY WAS PURCHASED BY HBN GROUP FROM SH. SANJAY PARWAL THROUGH TRANSFER OF SHARES OF M/S SMRITI BUILDCON PVT. LTD. IN THE FINANCIAL YEAR 2007 - 08. SH. MAHAJAN ALSO ADMITTED THAT A CASH PAYMENT OF RS. 8.70CRORES WAS MADE TO SH. SANJAY PARWAL AND SMT. RIT U PARWAL (BOTH ERSTWHILE DIRECTORS AND MAJOR - SNAREHOLDERS OF MLS SMRITI BUILDCON PVT. LTD.) IN RESPECT OF THE AFORESAID DEAL. RELEVANT PORTION OF STATEMENT OF SH. ANIL MAHAJAN, CHIEF REAL ESTATE OF HBN GROUP GIVEN TO THE INVESTIGATION WING IS REPRODUCED H EREUNDER. 5 RELEVANT PORTION OF STATEMENT OF SIT. ANIL MAHAJAN, CHIEF REAL ESTATE OF HBN GROUP RECORDED ON 21.11.2009 BY TLTE INVESTIGATION WING: QUE: 23 I AM SHOWING YOU PAGES 42, 45, 50, 51, 52, 115, 116 & 121 OF THE DOCUMENTS COMPRISED IN ANNEXURE A - I REFER TO ABOVE (RECORDED FROM THIS PREMISE). A PERUSAL OF THESE DOCUMENTS REVEALS THAT THE PROPERTY AT B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI HAS ACTUALLY BEEN PURCHASED FOR RS. 12.95CRORES. THE GIST OF THE PAYMENTS IS MENTIONED IN PAGE NO. 116 ITSELF, WHICH IS REPRODUCED AS BELOW: DETAILS OF PAYMENTS' PAYMENT PAYABLE PAID BALANCE TOTAL PAYMENTS 12.95 9.5 3.45 CASH 8.70 6.95 1.75 BY CHEQUE 4.25 2.55 1.70 DETAILS OF CHEQUE PAID FROM HBN DAIRIES A/C SMRITI BUILDCON 2.15 SANJAY PARWAL 0.20 RITU PARWAL 0.20 TOTAL 2.55 BALANCE TO BE PAID 1.70' PLEASE ACKNOWLEDGE THE SAME AND ALSO EXPLAIN THE SOURCES OF PAYMENT MADE IN CASH ANS: YES, I ACKNOWLEDGE THE SAME AS ALSO THE FACT THAT THE PROPERTY WAS PURCHASED FOR RS. 12.95 CRORE, WHICH INCLUDES A CASH PAYMENT OF RS. 8.70 CRORE. THE PROPERTY WAS PURCHASED IN THE ACCOUNT OF M/S SMRITI BUILDCON PVT. LTD. THROUGH TRANSFER OF SHARES. THE SOURCES O F CASH PAYMENT OF RS. 8.70 IS KNOWN TO PROMOTERS & DIRECTORS ONLY. THE ABOVE MENTIONED SEIZED DOCUMENTS WERE ALSO SHOWN TO SH. PANKAJ TETARWAY , GENERAL MANAGER OF HBN GROUP BY THE INVESTIGATION WING. WHILE RECORDING HIS STATEMENT DURING SEARCH PROCEEDING, HE ALSO ADMITTED THAT A CASH PAYMENT OF RS. 8.70 CRORES WAS MADE IN THIS DEAL. RELEVANT PORTION OF STATEMENT OF SH. PANKAJ TETARWAY, GENERAL M ANAGER OF HBN GROUP IS REPRODUCED HEREUNDER: - RELEVANT PORTION OF STATEMENT OF SH. PANKAJ TETARWAY, GENERAL MANAGER OF HBN GROUP RECORDED ON 20121.11.2009 BY THE INVESTIGATION WING: QUE: 23 I AM SHOWING YOU PAGES 42, 45, 50, 51, 52, 115, 116 & 121 OF THE DOCUMENTS COMPRISED IN ANNEXURE A - L(CONSISTING OF 153 NUMBER OF PAGE FOUND & SEIZED FROM THE PREMISE). A PERUSAL OF THESE DOCUMENTS REVEALS THAT THE 6 PROPERTY AT B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI HAS ACTUALLY BEEN PURCHASED FOR RS. 12.95 CRO.RES. THE GIST OF THE PAYMENTS IS MENTIONED IN PAGE NO. 116 IS REPRODUCED AS UNDER: DETAILS OF PAYMENTS' PAYMENT PAYABLE PAID BALANCE TOTAL PAYMENTS 12.95 9.5 3.45 CASH 8.70 6.95 1.75 BY CHEQUE 4.25 2.55 1. 70 DETAILS OF CHEQUE PAID FROM HBN DAIRIES ALC SMRITI BUILDCON 2.15 SANJAY PARWAL 0.20 RITU PARWAL 0.20 TOTAL 2.55 BALANCE TO BE PAID 1. 70' PLEASE ACKNOWLEDGE THE SAME AND ALSO EXPLAIN THE SOURCES OF PAYMENT MADE IN CASH. PLEASE ALSO S TATE WHETHER YOU RECOGNIZE THE HANDWRITING ON PAGE 121 OF THE ABOVE ANNEXURE. ANS: YES, I ACKNOWLEDGE THE SAME. I ALSO ACKNOWLEDGE THE FACT THAT THE PAYMENT OF RS. 8.70 CRORES WAS MADE IN CASH. THE PURCHASE OF PROPERTY WAS EFFECTED THROUGH THE BOOKS O F M/S SMRITI BUILDCON PVT. LTD. THROUGH TRANSFER OF SHARE. THE SOURCE OF CASH PAYMENT OVER AND ABOVE THE PAYMENT MADE THROUGH CHEQUES FOR TRANSFER OF SHARES CAN BE EXPLAINED BY SH. H. S. SRAN ONLY. AS REGARDS PAGE NO. 121, I ACKNOWLEDGE THE HANDWRITING TO BE MINE. QUE: 24 IN THE ABOVE PAGE (PAGE NO. 121) IS ADMITTEDLY IN YOUR OWN HAND WRITING PLEASE ALSO EXPLAIN THE NATURE OF THE ENTRIES AND NARRATION AGAINST MADE THEREIN, WHICH IS REPRODUCED BELOW: '12.76 - B - 53 PARWAL B - 53 - 12.95 12.95 - B - 53 NEHR A SHOP. .55 12.20 - ALREADY PAID TO PARWAL COMM. .13 13.63 50L -- NEHRA 19L PARWAL 12.20 31L - PARWAL .31 55L SHOP .25 1 3 PAY TO TYAGI -- 55 (31 - 13) 24 L WE WILL PAY TO NEHRA' 7 ANS: THE NAME' PARWAL ' ON THE SAID PAGE REFERS TO SH. SANJAY PARWAL, 'THE OWNER' OF THE PROPERTY THROUGH HIS SHARE HOLDING IN M/S SMRITI BUILDCON PVT LTD. THE DEAL OF TRANSFER OF PROPERTY THROUGH TRANSFER OF SHARES IN THE SAID COMPANY WAS TO BE STRUCK WITH HIM FOR A CONSIDERAT ION OF RS. 12.76 CRORES. HOWEVER, THE MIDDLEMAN SH. NEHRA INSISTED THAT HE HAD ALREADY FIXED THE AMOUNT OF DEAL WITH. SH. NEHRA AT RS. 12.95 CRORES CONVEYED BY SH. NEHRA, IN BETWEEN ANOTHER DEAL FOR THE PURCHASE OF A SHOP FOR RS. 50 LAKHS WAS PROPOSED BY S H. NEHRA TO PARTLY MAKE - UP FOR THE DIFFERENCE BETWEEN THE ABOVE TWO AMOUNTS. HOWEVER, THE PROPOSAL REGARDING THE SHOP DID NOT MATERIALIZED AND THE DEAL FOR TRANSFER OF PROPERTY THROUGH TRANSFER OF SHARES FOR RS. 12.95 CRORES ONLY. THE DIFFERENCE WAS APPRO PRIATED BY SH. NEHRA AS HIS COMMISSION. QUE: 25 I AM SHOWING YOU PAGE NO. 105 TO 108 OF ANNEXURE NO. A - I REFERRED TO ABOVE WHICH PURPORT TO BE THE DETAILS OF SOME WORK DONE ON THE PROPERTY AT B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI., PAG E NO. 106 ALSO CONTAINS A MEMORANDUM IN YOUR OWN HANDWRITING(ALSO BEARING YOUR SIGNATURES) REGARDING THE PAYMENTS OF RS. 80,00,000/ - + RS. 25,00,000/ - . THE MEMORANDUM IN YOUR HANDWRITING IS REPRODUCED BELOW: 'PAYMENT MADE TILL DATE: 80,00,000/ - PAYMENT MA DE TODAY : 25,00,000/ - ' PLEASE EXPLAIN THE NATURE OF TRANSACTION? ANS: I ACKNOWLEDGE THE ABOVE DOCUMENTS. THE DOCUMENTS CONTAIN THE WORKING REGARDING THE WORKING OF EXPENDITURE MADE ON B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI. THE FIGURE S PRINTED IN BLACK REPRESENT THE AMOUNTS QUOTED BY THE CONTRACTORS' WHEREAS ONES IN RED ARE THE AMOUNTS ACTUALLY SANCTIONED AND PAID. OUT OF THE PAYMENTS RS. 80,00,000/ - , THE AMOUNT OF RS. 31 LAKHS WAS PAID IN CASH. AS REGARDS, THE FURTHER PAYMENT OF RS 25 LAKHS, AS I RECALL THE SAME WERE PAID THROUGH CHEQUE ONLY. THE SOURCE OF THE CASH PAYMENTS OF RS. 31 LAKHS CAN BE EXPLAINED BY SH. BHAVNANI OR SH. SRAN ONLY. SIMILARLY, STATEMENT OF SH. SO BHAVNANI, CFO OF HBN GROUP WAS ALSO RECORDED DURING THE SEARCH OPERATION BY THE INVESTIGATION WING. HE ALSO CORROBORATED THAT PURCHASE OF PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WAS MADE THROUGH TRANSFER OF SHARES OF M/S SMRITI BUILDCON PVT. LTD. IN VIEW OF THE ABOVE STATEMENTS, THE ASSES SING OFFICER IS OF THE OPINION THAT THE PROPERTY NO. 8 - 53, 8 - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WAS PURCHASED BY M/S HBN DAIRIES & ALLIED LTD. FOR A TOTAL CONSIDERATION OF RS. 12.95 CRORES THROUGH TRANSFER OF SHARES OF M/S SMIRITI BUILDCON PV T. LTD. THROUGH ITS DIRECTORS NAMELY SH. SANJAY PARWAL AND SMT. RITU PARWAL WHO HAD MAJOR SHARE HOL DING IN THE SAID COMPANY. IT HAD ALSO BEEN REVEALED THAT IN THIS 8 DEAL A CASH PAYMENT OF RS. 8.70 CRORES WAS MADE TO SH. SANJAY PARWAL AND SMT. RITU PARWAL BY HBN GROUP. THE ABOVE DOCUMENTS WERE CONFRONTED TO SH. HARMENDER SINGH SRAN CHAIRMAN OF HBN GROUP BY THE INVESTIGATION WING AND HE WAS ASKED TO EXPLAIN THE SOURCE OF CASH OF RS. 8.70 CRORES AS PAID TO SH. SANJAY PARWAL AND SMT. RITU PARWAL FOR PURCHASE O F PROPERTY NO. B - 53, B - BLOC1K, COMMUNITY CENTRE, JANAK PURI, NEW DELHI. HE WAS ALSO ASKED TO EXPLAIN THE SOURCE OF RS. 31 LAKHS PAID IN CASH FOR THE PURPOSE OF INTERIORS AND OTHER WORK IN THE AFORESAID PROPERTY. SH. HARMENDER SINGH SRAN COULD NOT EXPLAIN T HE SAME AND ADMITTED RS. 9.00 CRORES AS TOTAL INVESTMENT MADE IN PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI FROM UNDISCLOSED SOURCES AND OFFERED THE SAME FOR TAXATION IN ASSESSMENT YEAR 2008 - 09. ON THE BASIS OF THE DOCUMENTS SEI ZED DURING THE SEARCH OPERATION RELATED TO DEAL IN RESPECT OF B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI AND STATEMENT GIVEN BY THE PERSON OF MANAGERIAL LEVEL OF HBN GROUP INVOLVED IN THE SAID DEAL, A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT 1961 WAS CONDUCTED ON 08.12.2009 BY THE INVESTIGATION WING ON THE BUSINESS PREMISES I.E. C - 25, COMMUNITY CENTRE, JANAK PURI, NEW DELHI OF SH. SANJAY PARWAL (THE THEN DIRECTOR OF M/S SMRITI BUILDCON PVT LTD) AND THE DIRECTOR OF M/S VIJAY SHREE BUILDERS PVT. LTD. HOWEVER, DURING THE COURSE OF RECORDING HIS STATEMENT ON OATH BEFORE THE INVESTIGATION WING, HE DID NOT ACCEPT THE FACT THAT ANY CASH WAS RECEIVED BY HIM AND/OR HIS WIFE IN RESPECT OF THE SALE OF PROPERTY IN QUESTION. FURTHER, DURING THE COURS E OF SEARCH OPERATION ON HBN GROUP U/S 132 OF THE INCOME TAX ACT, 1961 BY THE INVESTIGATION WING, 14(FOURTEEN) LOCKERS RELATED TO HBN GROUP AND FAMILY MEMBERS OF SH H S SRAN WERE RESTRAINED. DURING THE COURSE OF OPERATING THE LOCKER NO. 409 IN THE NAME OF SH. H S SRAN, LOCATED AT CANARA BANK, VIKAS PURI, NEW DELHI ON 15.01.2010 SOME DOCUMENTS INCLUDING AGREEMENT TO SALE RELATED TO PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WERE SEIZED. THE AFORESAID AGREEMENT TO SELL WAS MADE ON 14.01.2008 BETWEEN MR VIRENDRA NEHRA S/O SH. PARTAP SINGH NEHRA RIO A - 1/84, CHANKYA PLACE, OPP. C - L, JANAKPURI, NEW DELHI - 110059 AND SH. HARMENDER SINGH SRAN S/O SH. BALDEV SINGH SRAN R/O M - 105, GURU HARKISHAN N AGAR, PASCHIM VIHAR, NEW DELHI 110067. THIS AGREEMENT TO SELL IS RELATED TO PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAKPURI, NEW DELHI ADMEASURING AREA OF 145.67 SQ METER ON WHICH A BUILDING STRUCTURE COMPRISING OF A BASEMENT, GROUND, FIRST , SECON D AND THIRD FLOOR HAVING A SUPER AREA OF 8612 SQ FT. IS EXISTING. IT HAS ALSO BEEN MENTIONED IN THE SAID AGREEMENT TO SELL DATED 14.01.2008 THAT THE SAID PROPERTY IS IN THE NAME OF AND REGISTERED ON M/S SMRITI BUILDCON PVT LTD, C - 25, 9 COMMUNITY CENTRE, NEW DELHI THROUGH ITS DIRECTORS NAMELY SH. SANJAY PARWAL AND SH. ANUJ PURI. IT HAD CLEARLY BEEN MENTIONED IN THIS AGREEMENT THE TOTAL CONSIDERATION OF PROPERTY IN QUESTION WILL BE RS. 12.95 CRORES AND AS PER TERMS AND CONDITION A SUM OF RS. 25 LAKHS WAS TO BE PAID TO THE FIRST PARTY AS TOKEN MONEY. THIS AGREEMENT TO SELL IS WITNESSED BY FOUR PERSONS. ALONGWITH THIS AGREEMENT TO SELL, A RECEIPT DATED 14.01.2008 WAS ALSO ENCLOSED IN WHICH IT IS CLEARLY MENTIONED THAT SH. VIRENDRA NEHRA (THE FIRST PARTY) HAD REC EIVED RS. 25,00,001 - IN CASH FROM SH. HARMENDER SINGH SRAN AS TOKEN AMOUNT AGAINST THE SALE CONSIDERATION OF BUILDING CONSTRUCTED AT PLOT NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI. IT HAS ALSO BEEN WRITTEN ON THE RECEIPT THAT 'THIS MONEY IS RECEIVED BY ME ON BEHALF OF M/S SMRITI BUILDCON PVT LTD ON WHOSE NAME THE PROPERTY IS REGISTERED.' A COPY OF THE AGREEMENT TO SALE AND THE RECEIPT OF RS. 25 LAKHS AS DISCUSSED, IS PLACED AS ANNEXURE - B( 3 SCANNED PAGES.) TO THE ASSESSMENT ORDER . IT IS W ORTHWHILE TO MENTION HERE THAT THE NAME OF VIRENDRA NEHRA WAS ALSO MENTIONED ON PAGE NO. 121 OF ANNEXURE A - I SEIZED FROM THE OFFICE OF THE HBN GROUP COMPANIES A SCAN COPY OF WHICH IS AT ANNEXURE - A TO THE ASSESSMENT ORDER . THE STATEMENT OF SH. PANKAJ TETAR WAY IN WHOSE HANDWRITING THIS PAGE WAS WRITTEN HA D BEEN REPRODUCED ABOVE. FROM THE VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEARCH OPERATION ON THE HB GROUP, THEREFORE THE A.O. WAS OF THE OPINION THAT THERE WAS SOME RELATIONSHIP BETWEEN SH. VIRENDRA E HRA AND SH. SANJAY PARWAL SO FAR AS THE SALE OF THE PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI TO HBN GROUP IS CONCERNED. CONSIDERING THE FACT THAT SH. SANJAY PARWAL HAD REFUSED TO ACCEPT THE FACT THAT A CASH OF RS. 8.70 CRORES WAS TRANSACTED IN THE DEAL IN QUESTION OVER AND ABOVE THE CHEQUE AMOUNT, A SURVEY U/S 133A OF THE INCOME TAX ACT 1961 WAS CONDUCTED AT THE PREMISE M/ S DELHI FASHION EXPORTS PROP. SH. VIRENDRA NEHRA, A - 1I84 CHANKYA PLACE, JANKPURI, NEW DELHI ALSO ON 02.02.21 0. DURING THE COURSE OF SURVEY PROCEEDINGS, STATEMENT OF SH. VIRENDRA NEHRA WAS RECORDED ON OATH BY THE INVESTIGATION WING WHEREBY HE ADMITTED THAT HE ACTED ON BEHALF OF SH. SANJAY PARWAL / SMRITI BUILDCON PVT LTD IN SELLING THE PROPERTY AT B - 53, B - BLOC K, COMMUNITY CENTRE, JANAK PURI, NEW DELHI TO MLS HBN DAIRIES & ALLIED LTD. HE CONFIRMED THE FACT THAT THE TOTAL CONSIDERATION OF THE SAID PROPERTY WAS FIXED AT RS. 12.95 CRORES OUT OF WHICH RS. 8.70 CRORES WAS GIVEN IN CASH TO SANJAY PARWAL / RITU PARWAL. RELEVANT PORTION OF HIS STATEMENT IS REPRODUCED HEREUNDER: RELEVANT PORTION OF STATEMENT OF SH. VIRENDRA NEHRA RECORDED ON 02.02.2010 BY THE INVESTIGATION WINE . 10 QUE: 23 WHAT IS YOUR RELATIONSHIP WITH MR. SANJAY PARWAL? ANS: I DO NOT KNOW SH. SANJAY PARWAL MUCH. HOWEVER, I HELPED/ACTED ON BEHALF OF SH. SANJAY PARWAL IN SELLING HIS PROPERTY AT B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI TO M/S HBN DAIRIES & ALLIED LTD. QUE: 24 KINDLY GIVE THE DETAILS OF THE PROPERTY IN QUESTION AND THE DEAL AS MENTIONED BY YOU IN YOUR EARLIER ANSWER. ANS: THE PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI WAS REGD. IN THE NAME OF M/S SMRITI BUILDCON PVT. LTD. SH. SANJAY PARWAL, HIS WIFE SMT. RITU PAR WAL HAD THE MAJORITY SHARE HOLDING IN THE SAID COMPANY. SH. SANJAY PARWAL APPROACHED ME FOR SELLING OF THE SAID PROPERTY IN QUESTION, TO SOME PARTY. I WAS ABLE TO LOCATE A BUYER FOR THE SAID PROPERTY AT B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELH I WHICH WAS IN THE NAME OF M/S SMRITI BUILDCON PVT. LTD. THE PROSPECTIVE BUYER OF THE SAME PROPERTY WAS M/S HBN DAIRIES & ALLIED LTD, I ENTERED INTO AN AGREEMENT TO SALE WITH SH. HARMENDRA SINGH SRAN WHO WAS REPRESENTING M/S HBN DIARIES & ALLIED LTD., I WA S ACTING ON BEHALF OF M/S SMRITI BUILDCON PVT. LTD. ON WHOSE NAME THE SAID PROPERTY WAS REGISTERED. THE AGREEMENT TO SALE WAS MADE ON 14.01.2008. TOTAL CONSIDERATION OF THE PROPERTY WAS FIXED AT RS. 12.95 CRORES. I RECEIVED AN AMOUNT OF RS. 25 LAKHS IN CAS H FROM SH. HARMENDER SINGH SRAN AS TOKEN AMOUNT AGAINST SALE CONSIDERATION OF BUILDING AT PLOT NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI AND HANDED OVER THE SAME TO MR. SANJAY PARWAL ON THE SAME DAY. QUE.25 KINDLY EXPLAIN AS TO HOW THE TO TAL CONSIDERATION OF RS. 12.95 CRORES WAS TRANSACTED IN THE PROCESS OF SALE OF PROPERTY IN QUESTION. ANS: AS PER THE DEAL, THE PROPERTY IN QUESTION WAS TO BE TRANSFERRED TO M/S HBN DAIRIES & ALLIED LTD. THROUGH TRANSFER OF SHARES OF M/ S SMRITI BUILDCON PVT LTD OF WHICH SH. SANJAY PARWAL AND MRS RITU PARWAL WERE THE MAJORITY SHARE HOLDERS. AS PER THE DEAL, OUT OF TOTAL CONSIDERATION OF RS. 12.95 CRORES, RS. 8.70 CRORES WAS PAID IN CASH TO SH. SANJAY PARWAL AND RITU PARWAL BY HBN DAIRIES & ALLIED LTD. THE REMAINING AMOUNT OF RS. 4.25 CRORES WAS TRANSFERRED THROUGH CHEQUES BY HBN DAIRIES & ALLIED LTD. TO SH. SANJAY PARWAL AND MRS RITU PARWAL. QUE. 26 I AM SHOWING YOU THE PAGE NUMBER 56 - 57 AND 58 OF ANNEXURE A - 5 WHICH WAS SEIZED FROM LOCKER NO. 409 IN THE NAME OF HBN GROUP. KINDLY ACKNOWLEDGE THEM AS SEEN AND EXPLAIN THE CONTENTS. 11 ANS: PAGE 56 AND 57 AS SHOWN TO ME IS AN AGREEMENT TO SALE OF PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI. THIS AGREEMENT WAS ENTERED BY ME ON BEHALF O F M/S SAMRITI BUILDCON PVT LTD WITH MR. H S SRAN OFHBN DAIRIES & ALLIED LTD. PAGE NO. 58 IS THE ACKNOWLEDGMENT SIGNED BY ME FOR RECEIVING RS. 25 LAKHS IN CASH FROM SH. H S SRAN AS TOKEN AMOUNT AGAINST THE SALE CONSIDERATION OF PROPERTY IN QUESTION. THIS AM OUNT I.E. 25 LAKHS WAS HANDED OVER TO SH. SANJAY PARWAL ON THE SAME DAY. THE DETAILS IN R/O PAGE NO. 56 TO 58 SHOWN TO ME HAVE ALREADY BEEN EXPLAINED BY ME IN RESPONSES TO YOU EARLIER QUESTION. FURTHER, TO VERIFY AND CONFRONT THE CONTENTS OF AGREEMENT TO SELL IN RESPECT OF PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAK PURI, NEW DELHI, ALL OF THE FOUR WITNESS NAMELY SH. N. S. TYAGI (WITNESS NO. 1), SH. PRAMOD SINGHAL (WITNESS NO.2) SH. PANKA J TETARWAY( WITNESS NO. 3) AND SH. G S CHAUHAN (WITNESS NO. 4) WERE SUMMONED BY THE INVESTIGATION WING AND THEIR STATEMENTS WERE RECORDED ON OATH. AMONG THESE WITNESSES SH. PANKAJ TETARWAY (WITNESS NO. 3) AND SH. G.S. CHAUHAN (WITNESS NO. 4) ARE THE EMPLOY EES OF HBN GROUP AND WERE LOOKING AFTER THE AFFAIRES OF THIS DEAL ON BEHALF OF HBN GROUP. DURING THE PROCEEDINGS OF RECORDING THE STATEMENT, ALL OF THEM WERE SHOWN THE AGREEMENT TO SELL OF PROPERTY IN QUESTION AND ASKED THEM TO RECOGNIZE THEIR SIGNATURES O N THE SAID AGREEMENT TO SELL. ALL OF THE FOUR WITNESSES ADMITTED TO HAVE PUT THEIR SIGNATURES ON THE SAID AGREEMENT TO SELL IN RESPECT OF PROPERTY NO, B - 53, B - 1, COMMUNITY CENTRE, JANAKPURI, NEW DELHI ON 14.01.2008. RELEVANT PORTIONS OF THEIR STATEMENTS RE CORDED ON OATH ARE REPRODUCED HEREUNDER: RELEVANT PORTION OF STATEMENT OF SH. PANKAJ TETARWAY (WITNESS NO. 3) RECORDED ON OATH ON 03.02.2012 BY THE INVESTIGATION WING. QUE:3 DO YOU KNOW MR. VIRENDRA NEHRA S/O SH. P.S. NEHRA R/O RAJOURI GARDEN. NEW DE LHI? ANS: I CAME TO KNOW MR. NEHRA DURING THE DEAL OF PROPERTY BEARING NO, B - 53, B - BLOCK, COMMUNITY CENTRE, JANAKPURI, NEW DELHI IN THE YEAR 2008 OR SO. HE WAS REPRESENTING THE THEN OWNER OF THE SAID PROPERTY. MR. SANJAY PARWAL / RITTU PARWAL. QUE : 4 KINDLY EXPLAIN REGARDING THE DEAL OF PROPERTY IN QUESTION? ANS : PROPERTY WAS IN THE NAME OF M/S SMRITI BULDCON PVT. LTD. HAVING DIRECTORS MR. SANJAY PARWAL & RITU PARWAL. I ALONG WITH MR. G.S CHAUHAN, SR. MANAGER (COMMERCIAL) AND MR. ANIL MAHAJAN, CHIEF REAL ESTATE OF HB GROUP WAS ENTRUSTED BY THE MANAGEMENT TO ENQUIRE INTO PROPERTY IN QUESTION. AFTER 12 GETTING THE WHOLE IDEA, WE GAVE REPORT TO THE MANAGEMENT AND HENCE, THE DEAL WAS STRUCK THROUGH AN A TS (AGREEMENT TO SELL) BY MR. H.S.SRAN, CHAIRMAN OF HBN GROUP WITH MR. VIRENDRA NEHRA WHO WAS ACTING ON BEHALF OF SMRITI BUILDCON PVT. LTD. ON 14.01.2008. IN BETWEEN IN THIS DEAL, I MET MR. VIRENDRA NEHRA A COUPLE OF TIMES AS WELL AS MR. SANJAY PARWAL AT HIS OFFICE AT JANAKPURI, NEW DELHI. QUE:5 PLEAS E EXPLAIN THAT WHAT WAS THE TOTAL SALE CONSIDERATION AND MODE OF PAYMENT IN THIS DEAL? ANS: AS PER ATS, SHARES OF SMRITI BUILDCON PVT. LTD. WERE TO BE TRANSFERRED TO HBN DAIRIES & ALLIED LTD. AND OTHERS FOR A TOTAL CONSIDERATION OF RS. 12.95 CRORES OUT OF WHICH RS. 4.25CRORES WAS PAID BY CHEQUES AND BALANCE RS. 8.70 CRORES WAS PAID IN CASH TO MR. SANJAY PARWAL / RITU PARWAL. QUE:6 I AM SHOWING YOU PAGES NO 56 AND 57 OF ANN. A - 5 WHICH WAS SEIZED FROM LOCKER NO. 409, CANARA BANK, VIKAS PURI, NEW DELHI IN THE NAME OF HBN GROUP/DIRECTORS. KINDLY ACKNOWLEDGE THEM AS SEEN & EXPLAIN THE CONTENTS OF THE SAME. ANS: YES, I ACKNOWLEDGE THESE PAGES AS SEEN. THIS IS AN AGREEMENT TO SALE MADE ON 14.01.2008 AS IS MENTIONED IN MY PREVIOUS REPLY, FOR PROPERTY NO. B - 5 3, B - 1, COMMUNITY CENTRE, JANAKPURI, NEW DELHI BETWEEN VIRENDRA NEHRA AND SH. H.S.SRAN. I WAS A WITNESS TO THIS AGREEMENT TO SALE AND HAD SIGNED ALSO ON ATS AS MY WITNESS NO. 3. QUE:7 ARE YOU SURE THAT SIGNATURES PUT AS WITNESS NO. 3 ARE YOURS ON ATS? ANS: YES, I AM SURE, THESE ARE MY SIGNATURES. QUE:9 PLEASE EXPLAIN WHETHER THE REMAINING PAYMENT OUT OF RS. 12.95 CRORES WAS MADE TO SH. VIRENDRA NEHRA OR SANJAY PARWALL RITU PARWAL? ANS: BESIDES, THE PAYMENT OF RS, 25,00,0001 - WHICH WAS GIVEN TO MR. VIRENDRA NEHRA IN CASH ON 14.0 L.2008, REST OF THE TOTAL CONSIDERATION I.E. RS. 12.70 CRORES WAS PAID TO MR. SANJAY PARWAL AND RIITU PARWAL PARTLY BY CHEQUES AND PARTLY BY CASH ON DIFFERENT OCC ASIONS. RELEVANT PORTION OF STATEMENT OF SH. G.S.CHAUHAN (WITNESS NO. 4) RECORDED ON OATH ON 03.02.2012 BY THE INVESTIGATION WING: QUE:3 DO YOU KNOW MR. VIRENDRA NEHRA S/O SH. P.S. NEHRA R/O RAJOURI GARDEN. NEW DELHI? 13 ANS: YES, I KNOW HIM IN RELATI ON OF A PROPERTY DEAL FOR B - 53, B - BLOCK, COMMUNITY CENTRE, JANAKPURI, NEW DELHI. HE WAS REPRESENTING MR. SANJAY PARWAL / RITU PARWAL WHO OWNED THE SAID PROPERTY WHICH WAS PURCHASED BY HBN GROUP. DURING THE COURSE OF THIS DEAL FOR THE SAID PROPERTY, I USED TO MEET HIM I.E. SH. VIRENDRA NEHRA. QUE:4 KINDLY EXPLAIN IN DETAILS OF THIS DEAL RELATED TO THE PROPERTY NO. B - 53, B - BLOCK, COMMUNITY CENTRE, JANAKPURI, NEW DELHI. ANS: THE PROPERTY IN QUESTION WAS REGISTERED IN THE NAME OF M/S SMIRITI BUILDCON PVT. L TD.WHICH WAS OWNED BY SANJAY PARWAL & RITU PARWAL. SH. VIRENDRA NEHRA APPROACHED THE HBN GROUP FOR THE SALE OF THE SAID PROPERTY ON BEHALF OF M/S SMRITI BUILDCON PVT. LTD. I SANJAY PARWAL & RITU PARWAL. I WAS DIRECTED BY SH. HARMENDER SINGH SRAN TO ENQUIRE ABOUT THE PROPERTY IN QUESTION. IN THIS CONNECTION, MYSELF ALONG WITH SH. PANKAY TETARWAY, G.M HBN GROUP AND SH. ANIL MAHAJAN, CHIEF REAL ESTATE OF HBN GROUP HAD MET WITH SH.VIRENDRA NEHRA AND SH. SANJAY PARWAL VARIOUS TIMES......THEREAFTER AN ATS WAS ENT ERED IN R/O THE PROPERTY IN QUESTION BY SH. HARMENDER SINGH SRAN AND SH. VIRENDRA NEHRA WHO WAS ACTING ON BEHALFOFSMRITI BUILDCON PVT. LTD ON 14.01.2008. I WAS ONE OF THE WITNESS TO THE SAID AGREEMENT TO SALE AS MENTIONED ABOVE ..... QUE. 7 ARE YOU ARE THAT SIGNATURES MENTIONED ON PAGE NO. 56 AS WITNESS NO. 4 SHOWN TO YOU, ARE YOURS? YES, I AM SURE, I SIGNED THESE DOCUMENTS AS WITNESS NO. 4 QUE. 10. HOW DO YOU KNOW THAT SH. VIRENDRA NEHRA WAS REPRESENTING M/S SMRITI BUILDCON PVT. LTD. / SANJAY PARW AL/ RITU PARWAL? ANS. I EARLIER MENTIONED THAT DURING THE COURSE OF INQUIRIES REGARDING PROPERTY IN QUESTION, I ALONG WITH SH. PANKA] TETARWAY AND SH. ANIL MAHAJAN MET WITH VIRENDRA NEHRA AND SANJAY PARWAL MANY TIMES. DURING THE COURSE OF THESE MEETINGS AND OTHER INQUIRIES, WE WERE SURE THAT SH. VIRENDRA NEHRA WAS ACTING ON BEHALF OF MZS SMRITI BUILDCON PVT. LTD/ SANJAY PARWAL. THERE WAS NO DOUBT IN THIS REGARD AND BECAUSE OF THIS THE AGREEMENT WAS MADE WITH SH. VIRENDRA NEHRA AND A TOKEN PAYMENT OF RS. 25,00,000/ - WAS GIVEN TO HIM AGAINST THE SALE CONSIDERATION OF THE BUILDING IN QUESTION. SIMILARLY, OTHER TWO WITNESSES NAMELY SH. NARDEV SINGH TYAGI (WITNESS NO. 1) AND SH. PARMOD SINGHAL (WITNESS NO. 2) ALSO ADMITTED AT THE TIME OF RECORDING THEIR STAT EMENTS ON OATH BEFORE THE INVESTIGATION WING THAT THEY HAD 14 PUT THEIR SIGNATURES AS WITNESS TO THE AGREEMENT TO SELL DATED 14.01.2008 IN RESPECT OF THE PROPERTY NO. B - 53, B - 1, COMMUNITY CENTRE, JANAKPURI, NEW DELHI ENTERED BETWEEN SH. VIRRENDRA NEHRA (FIRS T PARTY) AND SH. HARMENDER SINGH SRAN (SECOND PARTY). THEY ALSO CONFIRMED THAT SH. VIRENDRA NEHRA WAS ACTING ON BEHALF OF M/S SMRITI BUILDCON PVT. LTD / SANJAY PARWAL . 3. THE APPELLANT WAS AFFORDED AN OPPORTUNITY TO CROSS EXAMINE THOSE FOUR WITNESSES, NAMEL Y, SH. N.S. TYAGI (WITNESS NO. 1), SH. PRAMOD SINGHAL (WITNESS NO. 2), SH. PANKAJ TETARWAY (WITNESS NO. 3) AND SH. G.S. CHAUHAN (WITNESS NO. 4) ON 24.02.2010 ABOUT THE SAID RECEIPT OF MONEY FROM HPL GROUP OF COMPANIES. ACCORDING TO THE ASSESSING OFFICER TH E APPELLANT REFUSED TO CROSS EXAMINE THEM. THEREFORE, THE LEARNED ASSESSING OFFICER HELD THAT THE APPELLANT RECEIVED MONEY OF RS. 8.70 CRORES FROM THE HPN GROUP OF COMPANIES AND THUS HE BROUGHT THE SAID AMOUNT TO TAX. BEING AGGRIEVED BY THIS ASSESSMENT ORD ER, AN APPEAL WAS FILED BEFORE THE LEARNED CIT(A), ROHTAK. BEFORE THE LEARNED CIT(A), THE APPELLANT FILED AN APPLICATION UNDER RULE 46A OF THE INCOME - TAX RULES, 1962 FOR ADMISSION OF THE FOLLOWING ADDITIONAL EVIDENCE: COPY OF MEMORANDUM & ARTICLES OF ASSOCIATION OF MLS SMRITI BUILDCON PVT LTD; COPY OF AUDITED FINANCIAL STATEMENT AS ON 31.03.2007 IN THE CASE OF M/S SMRITI BUILDCON PVT LTD; COPY OF ORDER OF ASSESSMENT DATED 28.12.2010 IN THE CASE OF M/S SMRITI BUILDCON PVT. LTD. FOR ASSESS MENT YEAR 2008 - 09; COPY OF ORDER OF ASSESSMENT DATED 31.12.2010 IN THE CASE OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF SUBMISSION IN THE CASE OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF ORDER OF CIT(A) DATED 23.10.2012 IN THE CAS E OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF MEMO OF APPEAL BEFORE HON'BLE TRIBUNAL IN THE CASE OF SMT RITU PARWAL FOR ASSESSMENT YEAR 2008 - 09; COPY OF BANK STATEMENT OF THE APPELLANT; 15 COPY OF NOTICE U/S 148 DATED 9.12.2011 IN THE CASE OF M/ S ELECOM EXPORTS PVT. LTD FOR ASSESSMENT YEAR 2008, - 09 ALONGWITH REASONS RECORDED; VALUATION OF THE PROPERTY BASED ON CIRCLE RATE AND INDEPENDENT SALE DEED; COPY OF NOTIFICATION NO. F (12)/FIN.(E.I)/PART FILENOL.1 (II)/3548 DATED 18.07.2010; COPY OF SAL E DEED FOR A SUM OF RS. 35,00,000/ - ; COPY OF LEASE DEED DATED 12.07.2006. 4. THE APPELLANT SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ADDITIONAL EVIDENCE IS CRUCIAL FOR REND ERING THE DECISION ON THE ISSUE IN APPEAL AND THEREFORE IT WAS PLEADED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED AND CONSIDERED. FOR THIS PURPOSES HE PLACED RELIANCE ON THE FOLLOWING DECISION: I. CIT VS. VIRGIN SECURITIES & CREDITS (P) LTD., 332 ITR 396 (DEL.); II. CIT VS. DLF UNIVERSAL LTD., 197 TAXMANN.COM 250 (DEL); III. CIT VS . IMPERIAL CABLES (P) LTD., 159 TAXMANN.COM 328; IV. PRABHAVATI S. SHAH VS. CIT, 231 ITR 1 (BOM.) ; AND V. ELECTRA JAIPUR (P.) LTD. VS. IAC, 26 ITD 236 (DEL.) 5. HOWEVER, THE LEARNED CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER ON THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE. THE ASSESSING OFFICER STRONGLY OBJECTED ON THE GROUND THAT THE CRITERIA MENTIONED UNDER RULE 46A IS NOT FU LFILLED THEREFORE HE OBJECTED THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE. THE LEARNED CIT(A) DECLINED TO ADMIT THE SAME BY HOLDING THAT THIS IS ONLY AFTER THOUGH T AND HAD NO BEARING ON THE ISSUE IN APPEAL. ON THE MERITS OF THE ISSUE, THE APPELLANT CONTENDED THAT NO OPPORTUNITY TO CROSS EXAMINE THE WITNESSES WAS GIVEN AND RAISED GROUNDS CHALLENGING THE REASSESSMENT PROCEEDINGS . THE APPELLANT ARGUED THAT THE NOTICE UNDER SECTION 148 OF THE ACT, DATED 9 TH AUGUST, 2011 IS NOT VALID UNDER THE LAW FOR THE REASON THAT THE APPROVAL FROM THE COMMI SSIONER OF INCOME TAX, ROHTAK, WAS OBTAINED, WHICH WAS OBTAINED 16 INSTEAD OF JOINT COMMISSIO NER OR ADDITIONAL COMMISSIONER AND THEREFORE IT IS A CASE OF ISSUANCE OF INVALID NOTICE WITHOUT JURISDICTION. IN THIS REGARD, RELIANCE WAS PLACED ON THE FOLLOWING CASES: I. ANIRUDHSINHJI KARANSINHJI ADEJA AND ANOTHER VS. THE STATE OF GUJARAT, 1995 AIR 2390 (SC) II. CIT VS. SPL S SIDDHARTHA LTD., 345 ITR 223 (DEL.) III. DR. NALINI MAHAJAN VS. DIT(INV.), 257 ITR 123 (DEL.) IV. HIRDAY NARAIN VS. ITO, 78 ITR 26 (SC) V. ANUPAM SUSHIL GARG VS. CIT, 265 ITR 474 (ALL.) 6. IT WAS FURTHER CONTENDED BEFORE THE LEARNED CIT(A) THAT THE REASONS RECORDED UNDER SECTION 148 OF THE ACT DO NOT CONFER VALID JURISDICTION, INASMUCH AS, THE ASSESSING OFFICER MERELY ACTED UPON THE INFORMATION RECEIVED FROM INVESTIGATION WING WITHOUT APPLYI NG HIS MIND INDEPENDENTLY. HE FURTHER CONTENDED BEFORE THE LEARNED CIT(A) THAT THE REASONS RECORDED UNDER SECTION 148 OF THE ACT WERE BASED ON THE ASSUMPTIONS, PRESUMPTIONS AND FACTUALLY INCORRECT INFORMATION. IN THIS REGARD, HE RELIED UPON THE FOLLOWING D ECISIONS: I. SHIPRA SRIVASTAVA VS. ACIT, 319 ITR 221 II. LAKSHYA EXIM (P) LTD. VS. ITO, 12 ITR (TRIB.) 303 (DEL.) III. ITO VS. BIDBHANJAN INVESTMENT & TRADING & CO. (P) LTD., 132 ITD 51 (MUM.) ITO. IV. CIT VS. SMT. PARAMJIT KAUR, 311 ITR 38 (P&H) V. DCIT VS. MRS. RAINEE SIN GH, 125 TTJ 816 (DEL), UPHELD BY DELHI HIGH COURT IN THE CASE OF CIT VS. RAINEE SINGH, REPORTED IN 330 ITR 417, VI. CIT VS. ATUL JAIN, 199 ITR 383 (DEL.) VII. JASWINDER KAUR VS. ITO, ITA NO. 1511/D/2011, A.Y. 2002 - 03, DATED 07.10.2011 VIII. SARTHAK SECURITIES CO. P. LTD. VS. ITO, 329 ITR 110; IX. CIT VS. ATUL JAIN, 299 ITR 383 (DEL.) X. SIGNATURE HOTELS PVT. LTD. VS. ITO, 338 ITR 51; XI. CIT VS. SFIL STOCK BROKING LTD., 325 ITR 285 (DEL.); XII. SMT. MEENA KAPOOR VS. COMMOSSIONER OF INCOME TAX, ITA NO. 1395/2008 17 XIII. MOHINDER SINGH MALIK VS. C CIT, 267 ITR 716 (P&H) ; XIV. CIT VS. SUPREME PLYPROPOLENE, ITA NO. 266/2011, DT. 30.10.2012; XV. CIT VS. BATRA BHATTA & CO., 321 ITR 526 (DEL.); XVI. ALPINE ELECTRONICS ASIA PTE LTD. VS. DIRECTOR GENERAL OF INCOME TAX, 341 ITR 247 (DEL.) XVII. CIT VS. PRADEEP KR. GUPTA, 207 CTR 115 (DEL.) XVIII. JASWINDER KAUR VS. ITO, ITA NO. 1511/D/2011, A.Y. 2002 - 03, DT. 07.10.2011. 7. HOWEVER, LEARNED CIT(A) HAD TURNED DOWN THE PLEA AND HELD THAT CIT HAS NOT ISSUED DIRECTION TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT, THEREFORE, THE NOTICE BECOME VALID. THUS, HE HELD THAT THE REASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED. 8. THE APPELLANT FURTHER CONTENDED BEFORE THE CIT(A) THAT NO VALID AND PROPER OPPORTUNITY WAS GRANTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO CROSS EXAMIN E THE WITNESSES AND THE ASSESSMENT WAS COMPLETED IN HASTE AND HUR RY IN A VERY SHORT SPAN OF TIME. THE ASSESSING OFFICER, B ASED ON THE FOLLOWING INFORMATION , MADE THE ADDITION : I. COPY OF DOCUMENTS SEIZED FROM HBN GROUP AND MARKET AS ANNEXURE A - 1 (PAGES 1 - 153 INCLUDING PAGE 42, 45,50,51,105 - 108,115,116 SPECIFICALLY REFERRED IN THE STATEMENT); II. COPY OF STATEMENT OF SH. ANIL MAHAJAN RECORDED BY THE INVESTIGATION WING DATED 21.11.2009 (PAGE 3 OF THE ORDER OF ASSESSMENT); III. COPY OF STATEMENT OF SH. PANKAJ TETARWAY REC ORDED BY THE INVESTIGATION WING, DATED 20/21.11.2009 (PAGES 4 - 6 OF THE ORDER OF ASSESSMENT); IV. COPY OF STATEME OF SH. S.G. BHAVNANI RECORDED BY THE INVESTIGATION WING (PAGE 6 OF ORDER OF ASSESSMENT); V. COPY OF STATEMENT OF SH. HARMINDER SINGH SRAN RECORDED BY THE INVESTIGATION WING (PAGE 7 OF ORDER OF ASSESSMENT); VI. COPY OF STATEMENT OF SH. VIRENDRA NEHRA RECORDED BY THE INVESTIGATION WING DATED 02.02.2010 (PAGES 9 - 11 OF ORDER OF ASSESSMENT); 18 9. HE FURTHER CONTENTED THAT T HE ABOVE DOCUMENTS WERE NOT CONFRONTED TO T HE APPELLANT. THEREFORE, HE ARGUED THAT THE ASSESSMENT WAS MADE IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THUS, HE PRAYED THAT THE ASSESSMENT ORDER SHOULD BE DECLARED NULL AND VOID. 10. T HESE SUBMISSION S OF THE APPELLANT WERE TURNED DOWN BY THE CIT(A) . ON THE MERITS OF THE ADDITION, LEARNED CIT(A) AFTER CONSIDERING THE SEIZED MATERIAL AS WELL AS THE AGREEMENT TO SELL HAD COME TO THE CONCLUSION THAT THE APPELLANT HA D RECEIVED ON MONEY OF RS. 8.7 CRORES. HE FURTHER HELD THAT THE SUBMISSION S MADE BY THE APPELLANT ARE CONTRARY TO THE EVIDENCE ON RECORD. THEREFORE, HE UPHELD THE ACTION OF THE ASSESSING OFFICER. HE FURTHER H ELD THAT THE SHARES HELD B Y M/S ELECOM EXPORTS PVT. LTD. AND M/S SJ SECURITIES PVT. LTD. HAVE NOT BEEN PROVED AND THEREFORE HE HAD NOT A TTRIBUTED ANY CONSIDERATION OUT OF RS. 12.95 CRORES. IN RESPECT OF SHARES HELD BY THE APPELLANT HE CONFIRMED THE ADDITION @ RS. 439.43 PER SHARE HELD BY THE APPELLANT AND THEREBY CONFIRMED THE ADDITION TO RS. 8,33,59,871/ - . AGGRIEVED, THE APPELLANT COME UP WITH THE PRESENT APPEAL. 11. THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED ON THE PRELIMINARY GROUND THAT THE REASSESSMENT PROCEEDINGS INITIATED ARE BAD IN LAW, INASMUCH AS, THE APPROVAL OF CIT, ROHTAK, WAS OBTAINED, WHICH WAS NOT NECESSARY UNDER THE PROVISION S OF SECTION 151 OF THE ACT AND HE FURTHER RAISED OBJECTION THAT THE REASSESSMENT PROCEEDINGS WERE MERELY INITIATED ON THE D IRECTIONS OF INVESTIGATION WING OF THE DEPARTMENT, NEW DELHI, WITHOUT THE ASSESSING 19 OFFICER APPLYING HIS MIND INDEPENDENTLY ON THIS ISSUE. IN THIS CONNECTION, HE RELIED UPON THE FOLLOWING DECISIONS: I. CIT VS. SPL S SIDDHARTHA LTD., 345 ITR 223 (DEL.) II. GHANSHYAM K. KHABRANI VS. ACIT & OTHERS, 346 ITR 443 (BOM.) III. SARTHAK SECURITIES CO. P. LTD. VS. ITO, 329 ITR 110 (DEL.) IV. SIGNATURE HOTELS P. LTD. VS. ITO & OTHERS , 338 ITR 51 (DEL.) V. CIT VS. SFIL STOCK BROKING LTD., 325 ITR 285 (DEL.) VI. CIT VS. ANUPAM KAPOOR, 299 ITR 179 (P&H) VII. CIT VS. SMT. PARAMJIT KAUR, 311 ITR 38 (P&H) 12. IT WAS ARGUED ON BEHALF OF THE APPELLANT THAT THE LEARNED CIT(A) HAD ACTED BEYOND THE SCOPE OF RULE 46A IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED BEFORE HIM. LEARNED AUTHORIZED REPRESENTATIVE MADE VEHEMENT SUBMISSION THAT THE LEARNED CIT(A) OUGHT NOT H AVE CONFIRMED THE ADDITION BASED ON THE PHOTOCOPY OF AGREEMENT TO SALE ENTERED INTO AMONG THREE PARTIES, MADE AS ANNEXURE - A TO THE ASSESSMENT ORDER, INASMUCH AS, ORIGINAL OF WHICH WAS NOT FOUND, NOR PRODUCED BY THE LOWER AUTHORITIES. THE APPELLANT HA D DENI ED TO HAVE SIGNED SUCH AGREEMENT AND HE RELIED UPON THE DECISION OF HON BLE PUNJAB & HARYANA HIGH COURT CIT VS. SIDHU RICE & GENERAL MILLS, (2005) 142 TAXMAN 335 (P&H) FOR THE PROPOSITION THAT THE PHOTOCOPY OF DOCUMENT CANNOT BE BASIS FOR MAKING ADDITION. THE LEARNED AUTHORIZED REPRESENTATIVE ALSO CONTENDED THAT THE APPELLANT ONLY SOLD THE SHARES I N M/S SMRITI BUILCON PVT. LTD. TO HBN GROUP OF COMPANIES . THE LAND AND BUILDING STANDING IN THE NAME OF M/S SMRITI BUILDCOM PVT. LTD. WAS NOT SOLD BY HIM T O DRIVE HOME THE POINT THAT THE M/S SMRITI BUILDING PVT. LTD. IS DIFFERENT FROM THE APPELLANT, HE BROUGHT TO OUR NOTICE THAT THE APPELLANT WAS NOT AUTHORIZED BY M/S S MRITI BUILDCON PVT. LTD. TO SELL THE 20 PROPERTY BY THE COMPANY . HE ALSO SUBMITTED THAT APART FROM T HE APPELLANT AND HIS SPOUSE , THERE ARE OTHER SHARE HOLDERS IN THE M/S SMRITI BUILDON PVT. LTD., MEANING THEREBY, HE ALONE CANNOT DECIDE ON THE ISSUE OF SELLING THE PROPERTY STANDING IN THE NAME OF M/S SMRITI BUILDCON PVT. LTD. OTHER CONTENTION OF THE APPEL LANT IS THAT HE WAS NOT AFFORDED AN OPPORTUNITY OF CROSS EXAMINATION TO THE WITNESSES AND THE ALLEGED ADVERSE MATERIAL HA D NEVER BEEN PUT TO HIM EITHER BY THE INVESTIGATING WING OR BY THE ASSESSING OFFICER. HENCE, HE PRAYED THAT THE ASSESSMENT MADE MAY BE DECLARED NULL AND VOID. 13. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT WAS MADE BASED ON THE CONCRETE INFORMATION AND THE APPELLANT HAD NOT AVAILED THE OPPORTUNITY TO CROSS EXAMINE THE WITNESSES THEREFORE, HE CANN OT COMPLAIN AT THIS STAGE ABOUT THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. HE STRONGLY PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. HENCE, HE PRAYED FOR THE DISMISSAL OF THE APPEAL. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PE RUSED THE MATERIAL ON RECORD. AT FIRST INSTANCE, WE SHALL DEAL WILL THE PRELIMINARY GROUND RAISED BY THE APPELLANT REGARDING THE CHALLENGING OF REASSESSMENT PROCEEDINGS. IT WAS THE CONTENTION OF THE APPELLANT THAT THE REASSESSMENT PROCEEDINGS ARE INVALID F OR THE REASONS THAT THE APPROVAL OF CIT, ROHTAK, WAS OBTAINED, WHICH WAS NOT NECESSARY, IN OUR OPINION, THIS SHALL NOT VITIATE THE REASSESSMENT PROCEEDINGS, INASMUCH AS, THE REASSESSMENT PROCEEDINGS WERE LAUNCHED BY THE ASSESSING OFFICER THAT IS THE ASSIST ANT COMMISSIONER OF INCOME TAX, WHO IS COMPETENT TO 21 DO SO AS PER THE PROVISIONS OF SECTION 147 OF THE ACT. SINCE THE PERIOD OF FOUR YEARS HAD NOT EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 14 3(1) OF THE ACT . THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE APPELLANT TO SAY THAT THE ASSESSING OFFICER INITIATED THE PROCEEDINGS BASED ON THE BORROWED SATISFACTION OF CIT. HENCE, THIS CONTENTION CANNOT BE ACCEPTED. IN THE CASES RELIED UPON BY THE LEARN ED AUTHORIZED REPRESENTATION, THE PERMISSION WAS OBTAINED FROM THE COMMISSIONER INSTEAD OF JOINT COMMISSIONER, THEREFORE, THE COURTS HAVE HELD THAT THE JURISDICTION E XERCISED BY THE COMMISSIONER IS INVALID, INASMUCH AS, HE IS NOT COMPETENT TO DO SO. IN THE PRESENT CASE, THE ASSESSING OFFICER H IMSELF IS COMPETENT TO INITIATE THE REASSESSMENT PROCEEDINGS. THEREFORE, THE RATIO LAID DOWN IN THE ABOVE THOSE CASES IS NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE. 15. HAVING HELD THAT THE ASSESSMENT PROCEEDINGS ARE VALIDLY INITIATED WE SHALL NOW DEAL WITH THE MERITS OF THE ADDITION. THE SECOND GROUND OF APPEAL DEALS WITH THE REJECTION OF ADDITIONAL EVIDENCE BY THE CIT(A) UNDER RULE 46A OF THE INCOME - TAX RULES, 1962. THE APPELLANT FILED AN APPLICATION FOR SUBMISSION O F DOCUMENTS AS ADDITION AL EVIDENCE. LEARNED CIT(A) DENIED THE ADMISSION OF ADDITIONAL EVIDENCE BY HOLDING THAT THE APPELLANT HA D NOT FULFILLED THE REQUIREMENTS OF RULE 46A. HON BLE KERALA HIGH COURT IN THE CASE OF C. UNNIKRISHNAN VS. CIT [1997 ] 140 CTR 552 (KER) HA D LAID DOWN THAT IN THE MATTER OF PRODUCTION OF ADDITIONAL EVIDENCE , THE ASSESSEE HAS TO SHOW THAT (I) THE ASSESSING OFFICER HAD REFUSED TO ADMIT THE EVIDENCE, (II) ALTERNATIVELY, THAT HE 22 WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDEN CE BEFORE THE ASSESSING OFFICER, (III) THAT THE EVIDENCE WAS RELEVANT TO THE GROUNDS OF APPEAL, AND (IV) THAT THE ASSESSING OFFICER DID NOT AFFORD HIM SUFFICIENT OPPORTUNITY. IN THE INSTANT CASE, THE APPELLANT HAD NOT PRODUCED ANY EVIDENCE IN SUPPORT OF FU LFILLING THE ABOVE CRITERIA E VEN BEFORE US, THEREFORE WE UPHO LD THE ORDER OF THE LEARNED CIT(A) ON THIS GROUND. 16. THE NEXT GROUND URGED BEFORE US ON BEHALF OF THE APPELLANT IS THAT THE ASSESSMENT HA D BEEN FRAMED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUS TICE, INASMUCH AS, THE ASSESSING OFFICER HAD NOT AFFORDED AN OPPORTUNITY OF CROSS EXAMINING THE WITNESSES, NOR CONFRONTED THE EVIDENCE GATHERED BY THE INVESTIGATION WING OF THE DEPARTMENT . IN OUR OPINION, THIS IS CONTRARY TO THE EVIDENCE ON RECORD. THE INV ESTIGATION WING OF THE DEPARTMENT HAD SUMMONED FOUR WITNESSES AS WELL AS MR. VIRENDERA NEHRA WHO HAD GIVEN STATEMENT THAT ON MONEY WAS PAID ON BEHALF OF THE HBN GROUP OF COMPANIES TO THE APPELLANT ON 24 TH FEBRUARY, 2010 ON WHICH DATE, THE APPELLANT WAS ASKED TO CROSS EXAMINE THEM. THE APPELLANT HAD NOT AVAILED THE OPPORTUNITY OF CROSS EXAMINATION THAT APART THE APPELLANT IS VERY MUCH AWARE OF THE ADVERSE INFORMATION AGAINST HIM AS THE SAME WAS CONFRONTED TO HIM DURING TH E COURSE OF THE STATEMENT RECORDED FROM HIM BY THE INVESTIGATION WING. HON BLE SUPREME COURT IN A CASE OF SH. VASANTLALA AND CO. VS. CIT, (1962) 45 ITR 206 (SC) HAS HELD THAT DIRECT CROSS EXAMINATION MAY NOT BE NECESSARY, IF THE FACTS OF THE CASE SHOW THAT THE ASSESSEE WAS IN KNOWLEDGE OF THE FACTS AND THE EVIDENCE IS AGAINST HIM. THEREFORE, THIS 23 RATIO IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE SINCE THE APPELLANT WAS CONFRONTED TO THE ADVERSE INFORMATION GIVEN AGAINST HIM BY THE SAID FOUR WITNESSES. M OREOVER, THE APPELLANT HAD NOT AVAILED THE OFFER OF CROSS EXAMINATION WHICH AMOUNTS TO WAIVER OF RIGHT TO CROSS EXAMINE THE WITNESS AS HELD BY THE CIT VS. CHANDRAVILA S , [1987] 164 ITR 102 (GUJ.) . IN IN ROGER ENTERPRISES P. LTD. V. DCIT [2004] 88 ITD 95 (DE LHI), THE ASSESSEE CLAIMED PAYMENT OF COMMISSION. HOWEVER, ON THE BASIS OF THE STATEMENTS OF TWO PARTIES, THE CASE WAS REOPENED. IN THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO CROSS - EXAMINE THE TWO WITNESSES. THIS WAS DECLINED ON THE PLEA THAT THE WITNESSES WERE STRANGERS TO THE TRANSACTION. IT WAS HELD THAT IT IS FOR THE COURT TO DECIDE WHETHER THE WITNESS IS A STRANGER OR WITNESS OF FACTS BUT NOT THE ASSESSEE. IT WAS FURTHER HELD THAT MERELY BECAUSE ONE OF THE WITNESS ES WAS NOT TRACEABLE, IT WOULD NOT RENDER HIS EVIDENCE TOTALLY REDUNDANT. IT CAN BE MADE USE OF PROVIDED THE FACTS COMPLY WITH THE PROVISIONS OF SECTION 33 OF THE EVIDENCE ACT. THIS SECTION ENVISAGES THAT EVIDENCE GIVEN BY A WITNESS IN A JUDICIAL PROCEEDI NG, OR BEFORE ANY PERSON AUTHORISED BY LAW TO TAKE IT, IS RELEVANT FOR THE PURPOSE OF PROVING, IN A SUBSEQUENT JUDICIAL PROCEEDING, OR IN A LATER STAGE OF THE SAME JUDICIAL PROCEEDING, THE TRUTH OF THE FACTS WHICH IT STATES, WHEN THE WITNESS IS DEAD OR CAN NOT BE FOUND, OR IS INCAPABLE OF GIVING EVIDENCE, OR IS KEPT OUT OF THE WAY BY THE ADVERSE PARTY, OR IF HIS PRESENCE CANNOT BE OBTAINED WITHOUT AN AMOUNT OF DELAY. IT WAS ALSO HELD THAT WHEN THE OFFER OF CROSS - EXAMINATION IS DECLINED, IT CAN BE CONSTRUED T HAT THE ASSESSEE ACQUIESCED TO THE 24 STATEMENT OF THE ADVERSE PARTY AND CHOSE NOT TO CROSS - EXAMINE HIM. THE CASE WAS DECIDED IN FAVOUR OF REVENUE. IN AEG CARAPIET V. A.Y DERDERIAN AIR 1961 CAL. 1359, IT WAS OBSERVED THAT - THE LAW IS CLEAR ON THE SUBJECT. WHEREVER THE OPPONENT HAS DECLINED TO AVAIL HIMSELF OF THE OPPORTUNITY TO PUT HIS ESSENTIAL AND MATERIAL CASE IN CROSS EXAMINATION, IT MUST FOLLOW THAT HE BELIEVED THAT THE TESTIMONY GIVEN COULD NOT BE DISPUTED AT ALL. IT IS WRONG TO THINK THAT THIS IS ME RELY A TECHNICAL RULE OF EVIDENCE. IT IS A RULE OF ESSENTIAL JUSTICE. THERE IS NO EVIDENCE ON RECORD THAT THE APPELLANT HAD REQUESTED FOR CROSS EXAMINATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHEN NO CROSS - EXAMINATION IS ASKED FOR AT THE STAGE OF THE ASSESSMENT PROCEEDINGS, THE PLEA OF DENIAL OF NATURAL JUSTICE CANNOT BE TAKEN LATER. THIS WAS THE DECISION IN THE CASE OF M. K. THOMAS V. STATE OF KERALA [1977] 40 STC 278. THE DECISION IN THE CASE HINDUSTAN TOBACCO V. CIT [2012] 211 TAXMAN 111 (CAL ) IS ALSO TO THE SAME EFFECT. 17. THEREFORE IN THE LIGHT OF THE ABOVE DECISION, THE ARGUMENTS ADVANCED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSMENT WAS MADE IN UTTER DISREGARD OF THE PRINCIPLES OF NATURAL JUSTICE CANNOT BE ACCEPTED. ACCORDINGL Y, GROUND NO. 4 IS DISPOSED OF. 18. NOW, WE SHALL DEAL WITH GROUND NO. 1 WHICH ASSAILS THE VERY ADDITION OF RS. 8.70 CRORES IN THE HANDS OF THE APPELLANT. THE ARGUMENTS OF THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE APPELLANT HAD NOT SOLD THE PROPERTY CANNOT BE ACCEPTED SINCE IT IS JUDICIALLY WELL KNOWN THAT IN THE CASE OF A COMPANY THE ENTIRE 25 PROPERTY HELD IN THE NAME OF C OMPANY CAN BE TRANSFERRED THROUGH THE MODE OF TRANSFER OF SHARES. THIS IS APPROVED BY THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF BHORUKA ENGINEERS VS. D CIT, 356 ITR 25. MOREOVER, WE NOTICED THAT M/S SMRITI BUILDCON PVT. LTD. OWNS ONLY THE PROPERTY IN QUESTION. THEREFORE, THE UNDERLYING OBJECT OF TRANSFER OF SHARES IS ONLY THE TRANSFER OF PROPERTY IN QUESTION. IT IS WELL KNOWN SETTLED PRINCIPLE OF LAW THAT THE SUBSTANCE OF A TRANSACTION SHOULD BE CONSIDERED RATHER THAN THE FORM OF THE TRANSACTION. THIS PRINCIPLE IS REITERATED BY THE HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. EKL APPLIANCES LTD., (2012) 250 CTR (DEL.) 264 . THEREFORE, THE ARGUMENT OF LEARNE D COUNSEL THAT THE APPELLANT HAD NOT TRANSFERRED ANY PROPERTY TO THE HBN GROUP OF COMPANIES CANNOT BE ACCEPTED. 19. OTHER GROUND URGED BY THE LEARNED AUTHORIZED REPRESENTATIVE IS THAT THE ADDITION WAS MADE PURELY BASED ON THE PH OTOCOPY OF THE AGREEMENT TO SELL ENTERED INTO AMON G THREE PARTIES , NAMELY, MR. VIRDNERA NEHRA AND MR. HARMANDER SINGH SRAN AND MR. SANJAY PARWAL I.E. APPELLANT. F ROM THE PERUSAL OF THE ASSESSMENT ORDER , IT IS CLEAR THAT THE PHOTOCOPY OF THIS AGREEMENT HAD BEEN CORROBORATED BY THE STATEMENTS RECORDED FROM THE WITNESSES TO THE AGREEMENT. THE APPELLANT HAD ALSO NOT AVAILED THE O PPORTUNITY OF CROSS EXAMINATION. THE STATEMENTS RECORDED FROM THE WITNESSES ARE CLEAR, CATEGORIC AND THEY DO NOT SUFFER FROM ANY CONTRADICTIONS ARE SUFFICIENT WHEN READ ALONG WITH THE FACT OF SALE OF SHARES IN SMRITI BUILDCON PVT. LTD. HELD BY THE APPELLAN T WITH THE UNDERLYING OBJECT OF SALE OF PROPERTY HELD BY THE SAID COMPANY. WHEN THE 26 ASSESSING OFFICER IS POSSESSED OF THIS INFORMATION THAT RAISES A PRESUMPTION THAT ON MONEY OF 8.70 CRORES WAS PAID TO THE APPELLANT. THE BURDEN TO REBUT THIS PRESUMPTION SH IFTS TO THE APPELLANT. THE APPELLANT FAILED TO REBUT THE SAME. THEREFORE, THAT IT STANDS CORROBORATED. I T IS EQUALLY SETTLED PRINCIPLE OF LAW THAT STRICT TECHNICAL RULES OF EVIDENCE ARE NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS . THE ASSESSING OFFICER MAY ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT, (1954) 26 ITR 775 (SC); VASANTLAL & CO. (C) VS. CIT (1962) 45 ITR 206 (SC) AND CIT VS. EAS T COAST COMMERCIAL CO LTD., (1967) 63 ITR 449 (SC ). 20. THE OTHER ARGUMENT OF THE LEARNED AUTHORIZED REPRESENTATIVE IS THAT THE BASIS OF ADDITION IS ONLY A PHOTOSTAT COPY OF AN AGREEMENT TO SELL SUPPOSEDLY TO HAVE BEEN ENTERED AMONG THREE PERSONS, NAMELY, THE APPELLANT, MR. VIRENDRA NEHRA AND MR. HARMANDER SINGH SRAN THE ORIGINAL OF WHICH IS NOT TRACED CANNOT BE FORM THE BASIS FOR MAKING ADDITION. THIS SUBMISSION CANN OT BE ACCEPTED BECAUSE IT IS SETTLED PRINCIPLE THAT PHOTOSTAT COPY CAN BE TAKEN AS AN EVIDENCE , IF THE CIRCUMSTANTIAL EVIDENCE JUSTIFIES, PLEASE REFER TO MOOSA S MADHA & AZAM S MADHA VS. CIT, (1973) 89 ITR 65 (SC). IN THE PRESENT CASE, AS HELD BY US IN SUP RA, THE PRESUMPTION DRAWN BY THE ASSESSING OFFICER THAT THE ON MONEY WAS PAID TO THE APPELLANT REMAINS UNREBUTTED, THEREFORE, THE PHOTOSTAT COPY OF AGREEMENT TO SELL CAN VERY WELL FORM THE BASIS FOR THE ADDITION. THEREFORE, THE RELIANCE PLACED BY THE LEARN ED AUTHORIZED REPRESENTATIVE ON THE DECISION OF 27 HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SIDHU RICE & GEN. MILLS, (2005), 142 TAXMAN 335 (P&H) IS MISPLACED. 21. MOREOVER, KNOWING FULLY WELL ABOUT THE INCRIMINATING INFORMATION AGAINST HIM, THE APPELLANT HA D NOT CHOSE N TO REBUT THE SAME EITHER BEFORE THE ASSESSING OFFICER OR INVESTIGATION WING OF THE DEPARTMENT AND HE HAD NOT EVEN AVAILED THE OPPORTUNITY OF CROSS EXAMINATION, THEREFORE, THE INFORMATION THAT THE APPELLANT HAD BEEN PAID ON MONE Y OF RS. 8.7 CRORES IN CONNECTION WITH THE TRANSFER OF SHARES HELD BY HIM IN THE M/S SMRITI BUILDCON PVT. LTD. REMAINS UNCONTROVERTED. MOREOVER, IT IS UNDISPUTED FACTS THAT THE APPELLANT HAS TRANSFERRED HIS SHARES AND CONTROLLING INTEREST IN M/S SMRITI BUI LDCON PVT. LTD. TO HBN GROUP OF COMPANIES WITH THE SOLE OBJECT OF TRANSFERRING THE PROPERTY HELD BY THE M/S SMRITI BUILDCON PVT. LTD. THIS CONCLUSIVELY PROVES THAT THE AGREEMENT TO SELL ENTERED AMONG THE PARTIES IS GENUINE. THE ARGUMENT ADVANCED BEFORE US THAT THE APPELLANT HAD NEVER SIGNED SUCH AN AGREEMENT C ANNOT BE ACCEPTED AT THIS STAGE OF PROCEEDINGS SINCE HE HAD NOT AVAILED TO REBUT THE SAME BEFORE THE LOWER AUTHORITIES KNOWING FULLY WELL THAT THIS WAS GOING TO BE USE D AGAINST HIM. AGITATIN G ON THIS ISSUE, AT LATER STAGE IS NOT ACCEPTABLE, SINCE THE APPELLANT HAD CHOSEN NOT TO ADVANCE THIS ARGUMENT BEFORE THE LOWER AUTHORITIES , W HEN HE WAS CONFRONTED WITH THE INFORMATION . HAD THE APPELLANT CHOSEN TO ADVANCE THIS ARGUMENT BEFORE THE ASSESSING OFFICER, T HE ASSESSING OFFICER SHOULD HAVE SENT THIS DOCUMENT FOR EXAMINATION BY THE FORENSIC A UTHORITIES TO EXAMINE THE VERACITY OF THIS DOCUMENT AND CONVENIENTLY THE APPELLANT HAS CHOSEN TO AVOID THIS OFFER AND 28 AGITATING ON THIS GROUND BEFORE US DOES NOT HELP THE CASE OF THE APPELLANT. HENCE, THIS GROUND OF APPEAL FILED BY THE APPELLANT IS DISMISSED. 22. HOWEVER, IN OUR CONSIDERED OPINION, THE ON MONEY OF RS. 8.7 CRORES WAS PAID IN CONNECTION WITH THE TRANSFER OF ENTIRE SHAREHOLDING IN THE M/S SMRITI BUILDCON PVT. LT D. THEREFORE, THE ON MONEY SHOULD BE APPORTIONED IN THE RATIO OF THE SHAREHOLDING HELD. INDISPUTABLY, THE TOTAL SHAREHOLDING IN THE SAID COMPANY WAS 2,94,700 SHARES. THE ON MONEY PAID PER SHARE COMES TO RS. 295 PER SHARE. THE NUMBER OF SHARES HELD BY THE A PPELLANT WERE ONLY 60,000 SHARE THEREFORE THE ON MONEY PAID TO THE APPELLANT COMES TO RS. 1,77,00,000/ - . APART FROM THIS THE SHARE OF THE ON MONEY PAID ON ACCOUNT OF THE SHAREHOLDING HELD BY THE SPOUSE OF THE APPELLANT I.E. MRS. RITU PARWAL IS TO BE ADDED IN THE HANDS OF THE APPELLANT SINCE SHE MADE CATEGORICAL STATEMENT BEFORE THE INVESTIGATION WING THAT IT WAS ONLY HER HUSBAND MR. SANJAY PARWAL WHO LOOK ED AFTER ALL HER FINANCIAL AFFAIRS AND THE FULL CONTROL VEST ED WITH HI M AND THE APPELLANT HAD CHOSEN NOT TO REBUT THE SAME. HENCE, THE ON MONEY ATTRIBUTABLE TO SHAREHOLDING OF MRS. RITU PARWAL IS TAXABLE IN THE HANDS OF THE APPELLANT. MRS. RITU PARWAL WAS HOLDING 58,000/ - SHARE S. THE SHARE OF ON MONEY COMES TO RS. 1,71,10,00 0/ - . THEREFORE, THE TOTAL ADDITION IN THE HANDS OF THE APPELLANT COMES TO RS. 3,48,10,000/ - . HENCE, WE CONFIRM THE ADDITION IN THE HANDS OF THE APPELLANT ONLY TO THE EXTENT OF RS. 3,48,10,000/ - . HOWEVER, THE ASSESSING OFFICER SHALL HAVE THE LIBERTY TO PROC EED AGAINST THE OTHER CO - SHAREHOLDERS TO ASSESS THE ON MONEY BY DULY FOLLOWING THE PROCESS KNOWN TO THE LAW. 29 23. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED . THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 5 T H MAY , 2015. S D / - S D / - ( G.C. GUPTA ) (INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 1 5 T H MAY , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI