9911796707
TMI Blog2000 (8) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Madhu Sudan Agarwal Rs. 10,12,200 3. Employees Rs. 300 4. Three companies Rs. 20,50,000 ------------- Rs. 40,12,700 ------------- 4. The assessee-company purchased a plot of land measuring 32 canals 18 marlas situated at Village K her Ki Daula, Teh. Sohna, Distt. Gurgaon, Haryana. This land was purchased from S/shri Om Prakash Sachdeva, Ashwani Kumar Sachdeva and Dharmender Kumar Sachdeva, all residents of Gurgaon. The consideration said to have been paid for the purchase of the said land was stated to be Rs. 50,00,000. A certificate under section 269UL(3) of the Act was also obtained from the appropriate authority. 5. A search under section 132(1) was carried out on9-8-1994at the business premises of companies belonging to Haldi Ram Group as well as at the residential premises of their Directors, S/shri Manohar Lal Agarwal and Shri Madhu Sudan Agarwal. During the course of search at the residence of these Directors, lot of papers were found reflecting the acquisition of various properties by this group. This included land purchased in the name of assessee-company also as discussed hereinbefore. 6. On getting this information, a consequential search was conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. 9. Shri Manohar Lal Agarwal, Director of the company was called by the Addl. Director of Income-tax, investigation Unit-IV,New Delhi, on24-8-1994to explain further about the acquisition of land in question. Shri Manohar Lal Agarwal had admitted that he had purchased the property measuring about 4.5 acres on behalf of Haldi Ram Foods Ltd. from Shri Ashwani Kumar Sachdeva and Shri Om Prakash Sachdeva for a total consideration of Rs. 50,00,000 as evidenced from the sale deed. However, when the provisions of section 132(4) read with explanation (5) to section 271(1)(c) of the Act were explained to Shri Manohar Lal Aggarwal, he voluntarily surrendered Rs. 25,00,000. It was contended that extra consideration of Rs. 22,00,000 may be considered as investment in the land by Shri Manohar Lal Aggarwal out of surrender of Rs. 25,00,000 made on24-8-1994. 10. The Assessing Officer did not accept the surrender of Rs. 22,00,000 of Shri Manohar Lal Aggarwal as investment for the purchase of the land by the company for the following reasons : (i) The ownership of the land in question vested with the appellant company and not with Shri Manohar Lal Aggarwal in his individual capacity. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is not explained the income is treated as assessee's own for the financial year concerned. He placed reliance on the decision of theApex Courtrendered in the case of CIT v. Smt P.K. Noorjahan [1999] 237 ITR 570 (SC)'. In this case theApex Courthas held that the phraseology of section 69, in creating the legal fiction, employstheword "may" and not "shall". Thus, the unsatisfactoriness of the explanation does not, and need not, automatically result in deeming the value of the investment to be the income of the assessee. That is still a matter within the discretion of the officer and, therefore, of the Tribunal. In other words, a discretion has been conferred on the Income-tax Officer under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. The Income-tax Officer is not obliged to treat the value of investment as income in every case where the explanation offered by the assessee is found to be unsatisfactory. 14. Shri Anand Prakash further relied on the decision of the Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and treat it to be the complete 'law' declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, courts must carefully try to ascertain the true principle laid down by the decision." 15. Shri Rajnish Kumar, learned Departmental Representative, who appeared before us invited our attention on clause (A) - 3 of the Memorandum of Association dealing with the main objects of the company. This reads as under: 'To carry out on the business of commission agents, brokers, consultants, representatives and middlemen of all types of food products and food grains as mentioned in sub-clauses (1) and (2) above.' It was submitted that the assessee admitted that consideration paid for the purchase of land was Rs. 72,00,000 and not Rs. 50,00,000 as disclosed in the books. The amount of Rs. 22,00,000 was said to be paid by the Director of the company in his personal capacity. This is not believable. Why should Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payment of the Stamp Duty on the registration of the documents, It is not open for the Director to make disclosure on behalf of the company to cover up the deficiencies. 18. Coming to the aspect of double taxation our attention was invited in the case of Jamnaprasad Kanhaiyalal wherein theApex Courthas held as under: "The last question that remains is whether the same income cannot be taxed twice, once in the hands of the creditors and again in the hands of the assessee. in a case of this description, there is no question of double taxation. The situation is of the assessee's own making in getting false declaration filed in the names of the creditors with a view to avoid a higher slab of taxation. Once it was found that the income declared by the creditors did not belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it actually belonged.' 19. Commenting on the decision of the Apex Court rendered in the case of Bharat Engineering Construction Co., the learned Departmental Representative submitted that in view of clause (A) - 3 of the Memorandum of Association reproduced at para 15, it was possible on the part of the company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of his shareholding. He can be construed to be the proportionate owner of the company, but he does not own the company's assets which belong to the company as a separate and independent entity. As such, the Director cannot be construed to be the legal owner of the company. It follows that he cannot make disclosure for the benefit of the company. Therefore, the Assessing Officer was correct in holding that the investment made for acquiring the asset of the company was to be examined in the hands of company and not in the hands of the Director of the company, who was simply an agent and not the owner of the asset. We have also noted that Shri M.L. Aggarwal, did not make investment towards the purchase of the said property. The investment as disclosed by Shri M.L. Aggarwal to the tune of Rs. 22,00,000 was not reflected in the balance sheet of the company. What prompted Shri M.L. Aggarwal for making this investment when the company was not solely owned by his group is a riddle, wrapped in a mystery inside an enigma. 25. Coming now to the decision in the case of Smt. P.K. Noorjahan we find that Smt. Noorjahan was a Muslim lady aged about 20 years during the relevant year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arning made by the company cannot be rooted out altogether. In view of clause (A) - 3 of the memorandum of Association, it was possible for the assessee to carry on business of commission agents, brokers, consultants, representatives and middlemen of all types of food products and food-grains...... Besides, the decision in the case of Smt. P.K. Noorjahan was rendered in the context of section 69 whereas in the present case the addition was made under section 69B. In our opinion, the decision in the case of Smt. P.K. Noorjahan is not applicable in the facts and circumstances of the present case. Similarly, the ratio laid down in the case of Bharat Engineering & Construction Co. is not applicable as because possibility of earning profit was found to be there in the facts of the present case. 27. The correctness of the declared value of the property cannot be ascertained merely on the basis of certificate issued by the appropriate authority. It simply indicates that the Department is not interested in acquiring the property. The fact of "on money" payment was admitted by the Director. It was cross verified with the vendors. Now it does not he in the mouth of the assessee to change t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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