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TMI Blog2011 (2) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... o dispose off all the three appeals by a common order. For the sake of clarity, the appeal filed by Smt. Vijay Dutt Chaudhary is taken as a lead case. In view of the similarity in facts, issues and submissions made by the parties, the decision taken in the lead case shall mutatis mutandis apply to other two appeals also. Grounds of Appeal 2. Grounds of appeal, as amended, are identical in all the three appeals. They read as under: "1.That the order of the Assessing Officer bad in law and on facts and against the principle of natural justice. 2.That the initiation of proceedings under section 147/148 of the Act was unjust and "Reasons to believe" recorded for commencement of reopening proceedings were not factual and were totally unfounded, wrong, arbitrary and frivolous and on the wrong ground and therefore proceedings under section 147/148 are liable to be quashed. 3.That the Assessing Officer has not passed speaking order in response to assessee's submission for challenging "reasons to believe" before the commencement of assessment proceedings. 4.The Assessing Officer has wrongly made addition of Rs. 18,00,000 and wrongly relied only on the forged photocopy and not on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Investigation Wing of the Department, the assessees were confronted with the photocopy of a receipt duly dated and signed by Smt. Vijay Dutt Chaudhary and her sons, namely, S/Shri Prashant Dutt Chaudhary and Vikrant Dutt Choudnary as witnesses. A copy of the said receipt dated 15-9-2000 ("receipt" in short) has been placed by the assessees in their paper book filed before this Tribunal. It is recited in the said receipt that a sum of Rs. 55 lakhs was received by Smt Vijay Dutt Chaudhary from Shri Joginder Singh and Smt. Harjinder Kaur as part payment towards sale of House No. 146, Sector 8A, Chandigarh over and above Rs. 38 lakhs to be paid subsequently. The said receipt is dated 15-9-2000 and carries signatures of Smt. Vijay Dutt Chaudhary on the revenue stamp affixed on the receipt and the signatures of both of her sons as witnesses. A copy of the said receipt was given by the ADIT (Inv.) to the assessees for verification. After verification, Smt. Vijay Dutt Choudhary and Shri Prashant Chaudhary verified the authenticity of their signatures as appearing on the said receipt and confirmed on 4-11-2003 that the signatures on the receipt were their own signatures and that they had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reliable to him who was living in some house in Sector 9, Chandigarh. The buyers were some Sikh family including husband, wife and daughter. Now after you have told me, I can recall that the names of buyers were Shri Joginder Singh and Smt. Harjinder Kaur. Question No. 3 - What was the consideration received for sale of H. No. 146, Sector 8A, Chandigarh? Answer - I don't know anything about this matter. My father Shri Virat Dutt Chaudhary and my mother handle the consideration point. The deal was made in front of me and my bother Vikrant also but I can't recall the details as to how much money was received by us and what was the registration amount. My father collected the payment on our behalf. The deal was finalised with one property dealer Sardarji whose name I don't remember but used to come to our house when we were living in H. No. 146, Sector 8A, Chandigarh before October, 2000. Question No. 4 - Did you sign any document during the sale of H. No. 146, Sector 8A, Chandigarh? Answer - The deal was finalised after two three visits of Shri Joginder Singh and property dealer of this house. After that I don't remember whether any advance money was paid. I also don't rememb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, she stated that she is a postgraduate in physical education (MPEd.). Question No. 3 put to her and the answers given by her are relevant and read as under: Q. 4 - What was the consideration paid for H. No. 146, Sector 8A, Chd.? Ans. I do not remember the exact amount because all these matters are looked after by my husband Sh. Joginder Singh. He only handled the actual payment for this house. I will talk to him and give the details to you. I will also give the copy of registered sale deed for H. No. 146/8A, Chd. on 8-12-2003 at 11 AM. (xii)It is stated in the Report dated 11-3-2004 submitted by the ADIT(Inv.) to the DIT(Inv.) (placed in the paper-book filed by the Department a copy of which was also given to the ld. authorized representative for the assessees) that she did not furnish the details on 8-12-2003 as promised by her or even thereafter. (xiii) It is further stated in the Report dated 11-3-2004 submitted by the ADIT(Inv.) to the DIT(Inv.) that summons dated 13-11-2003 was also issued to Shri Joginder Singh calling upon him to furnish the details as specified in the summons on 28-11-2003 but he too did not furnish those details. (xiv)The Assessing Officer having ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the market value of land in the area, the Assessing Officer took the sale value of the property at Rs. 93 lakhs and accordingly assessed 1/3rd of the same under section 45 of Income-tax Act in the individual hands of all the three assessees before us. Decision of the First Appellate Authority, i.e., CIT(A) 4. Aggrieved by the order passed by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A). There were two main issues raised before the ld. CIT(A). While the first issue related to the validity of initiation of proceedings under section 147/148, the second issue related to the correctness of the addition made by the Assessing Officer on the basis of the receipt evidencing receipt of Rs. 55 lakhs by them. All the aforesaid aspects were duly considered by the ld. CIT(A). He however dismissed all of them. 5. The plea of the assessee with regard to the validity of initiation of proceedings under section 147/148 has been rejected by the CIT(A) with the following observations: "I have carefully considered arguments of the counsel for the appellant and the observations of the Assessing Officer in the assessment order. The Assessing Officer has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) with the following observations: "I have carefully considered arguments of the counsel for the appellant and the observations of the Assessing Officer in the assessment order. The Assessing Officer has made the addition of Rs. 18 lakhs on the ground that the property H. No. 146, Sector 8A, Chandigarh was sold for a consideration of Rs. 93 lakhs. The appellant was having 1/3rd share in the property and hence he received Rs. 31 lakhs on the sale of the house as his share whereas three sale deeds have been executed for Rs. 13 lakhs each showing the sale consideration of the whole house as Rs. 39 lakhs. The difference in the sale consideration shown and the actual sale consideration in the hands of the appellant is Rs. 18 lakhs which have been treated as unaccounted income of the appellant and the addition of the same has been made. The Assessing Officer has mentioned that the ADIT (Inv.) was in possession of a receipt dated 15-9-2000 which has been signed by the appellant's mother and witnessed by the appellant and his bother Shri Prashant Chaudhary. The receipt mentions the actual sale consideration of Rs. 93 lakhs Smt. Vijay Chaudhary and Shri Prashant Chaudhary admitted the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions on behalf of the appellants 8. Aggrieved by the order passed by the ld. CIT(A), all the three assessees are now in appeal before this Tribunal. In support of their appeals, the ld. authorized representative for them has filed identical written submissions before us in all the appeals in which the submissions earlier made before the CIT(A) have broadly been reiterated. His submissions, in brief, are as under: (i)The receipt on the basis of which the Assessing Officer issued notice under section 147/148 was forged and fake for several reasons. One, the receipt in the possession of the Department was a mere photocopy or scanned copy and, therefore, the Assessing Officer was not justified in acting upon the same without having original receipt thereof on record. Two, neither the complainant from whom the said receipt was obtained was identified nor his affidavit placed on record in confirmation of the correctness of the photocopy of the receipt. Three, the signatures of Smt. Vijay Dutt Chaudhary and Prashant Dutt Chaudhary as available on their statements recorded by the Assessing Officer on 4-11-2003 were different from their signatures as available on the said receipt. Four, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as mentioned in that receipt in cash from Mr. Joginder Singh & Mrs. Harjinder Kaur on 15-9-2000. I or my sons Parshant & Vikrant have never signed any such receipt/document. The said document is a forged and frivoulent document and signatures on such receipt are either forged or scanned from some other documents etc. and created just to harass me and my family members. As per that receipt the total consideration of sale of the H. No. 146, Sector 8, Chandigarh is Rs. 83,00,000. Rs. 55,00,000 were received on 15-9-2009 and Rs. 38,00,000 shall be paid at the time of registry. Whereas I would like to point out that Rs. 9,90,000 was received through Accounts payees cheques in June, 2000 as part payment and only Rs. 28,10,000 were pending to be received on 15-9-2000 and that was received in October, 2000. This shows that the said receipt is just a false document created without full knowledge of facts. Photocopy of such receipt does not define the status of Mrs. Vijay Chaudhary, Mr. Vikrant Chaudhary & Mr. Parshant Chaudhary. It shows that only Mrs. Vijay Chaudhary has taken the whole payment as seller and Mr. Parshant & Vikram Chaudhary are just witnesses. It nowhere shows th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to act upon retracted statements for forming the belief as contemplated by section 147 and for making the impugned additions; and (iii) the sale consideration taken by the Assessing Officer at Rs. 93 lakhs is incorrect as there is no evidence on record to substantiate that the assessees have actually received Rs. 93 lakhs as sale consideration. 11. Based on the aforesaid submissions, the ld. authorized representative contended that the proceedings initiated by the Assessing Officer under section 147/148 were bad in law and therefore all the proceedings taken in pursuance thereof including the assessment orders passed by the Assessing Officer should be quashed. He further contended that the sale consideration received was only Rs. 39 lakhs and nothing else and hence the Assessing Officer was not justified in taking the same at Rs. 93 lakhs. 12. In support of his submissions, the ld. authorized representative for the assessees has relied upon the following authorities: (i) Sheo Nath Singh v. AAC [1971] 82 ITR 147 (SC) for the proposition that the words "reason to believe" suggest that the belief must be of an honest and reasonable person based upon reasonable gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeded to record the reasons as required under section 148 and thereafter issued a notice under section 147/148 to all the assessees. He submitted that the report received by the Assessing Officer from the ADIT (Inv.) together with copies of the receipt dated 15-9-2000 and the statements of Smt. Vijay Chaudhary and Shri Prashant Chaudhary constituted relevant material in the possession of the Assessing Officer on the basis of which the Assessing Officer could form the requisite belief and, in fact, formed the belief that the income chargeable to tax has escaped the assessment and accordingly issued notices under section 147/148. He contended that the only question at the stage of issue of notice under section 147/148 was whether there was relevant material in the possession of the Assessing Officer on which a reasonable person could have formed the requisite belief. According to him, the aforesaid materials in the possession of the Assessing Officer were relevant and therefore the Assessing Officer was justified in forming the requisite belief contemplated by section 147 on that basis. He further contended that such materials as available with the Assessing Officer at the stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt out. According to him, materials available on record to not support the allegation of the assessees in this behalf. Three and without prejudice to the aforesaid two submissions, he submitted that mere perusal of the said letter dated 4-11-2003 would show that the assessees have not stated anywhere in the said letter that the signatures appearing on the receipt were not their own. According to him, the only submission made by the assessees in the said letter is that they have not signed on the said receipt. 17. As regards the correctness of the assessment made by the Assessing Officer, the ld. DR submitted that the assessment is based on the relevant materials which have never been rebutted with any reliable evidence by the assessees in spite of the opportunities given to them and therefore the same, in the absence of rebuttal, was rightly confirmed by the ld. CIT(A). Analysis of Facts and Decision 18. We have heard both the parties and carefully considered their submissions including the authorities referred to by them. The first issue that needs adjudication is whether the initiation of proceedings under section 147/148 by the Assessing Officer is valid in law. It is not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to tax if he has reason to believe that income chargeable to tax for the relevant assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" in section 147 would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income has escaped assessment, he can be said to have reason to believe that income chargeable to tax has escaped assessment. The expression "reason to believe" cannot be held to mean that the Assessing Officer should have finally ascertained the facts giving rise to his formation of belief by legal evidence. What is contemplated by section 147 is the prima facie belief by the Assessing Officer that income chargeable to tax has escaped assessment. In order to test the validity of initiation of proceedings under the main provisions of section 147, only one aspect has to be considered and that is whether there was relevant material or reasonable ground on the basis of which a reasonable person could have formed the requisite belief. Whether those materials and grounds would conclusively prove the escapement of income is not the concern at the initiation stage. This is so because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiation of proceedings under section 147/148, he, in that case, is expected to drop the proceedings. In the present case, the Assessing Officer has rejected the objections for the reasons given in the assessment orders. Be that as it may, we have already upheld the validity of the initiation of proceedings under section 147/148. Resultantly, the grounds of appeal taken by all the assessees in this behalf are dismissed. 21. We shall now consider various other submissions made by the ld. authorized representative for the assessees. According to the assessees, their statements were forcibly recorded by the ADIT (Inv.) at their residence. Two propositions of law in this behalf are firmly settled, i.e., one, that the statements which are voluntarily made can alone be acted upon; and two, while mere retraction of a statement may not be sufficient to make the statement irrelevant for the purpose of a proceeding in a case, there cannot be any doubt whatsoever that the court is obligated to take into consideration the pros and cons of both the statement and retraction made by a person. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yet the timing of retraction is a relevant factor to be taken into account to assess the motive behind retraction. The assessees could not explain before us as to what prevented them from retracting their statements at the earliest possible opportunity, which arose almost after the ADIT (Inv.) left the premises of the assessees after recording their statements. It is quite obvious that the assessees, after having given their statements on oath, must have had rethinking either on their own or on advice that their statements would go against them. It is this thought that compelled them to retract their statements. The ld. CIT(A) is quite right in his observation that their retractions are afterthought. Fourthly, the same ADIT (Inv.) has also recorded the statement of buyer, namely, Smt. Harjinder Kaur, but there is no allegation either by the buyers or by the assessees that statement of Harjinder Kaur was forcibly recorded by the ADIT (Inv.) or that she was even coerced to give a statement, much less against the assessees. In fact, the assessees strongly rely upon the statement of Smt. Harjinder Kaur (buyer) recorded by the same ADIT (Inv.). Thus these very assessees, on one hand, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r verification and satisfying themselves, to be their own. Thus the receipt and the statements given by the assessees corroborate each other. It is not that the Assessing Officer is acting upon the copy of the receipt alone or the statements given by the assessees alone. He is using both of them as corroborating each other. 24. Notwithstanding the fact that the genuineness of the signatures of the assessees on the receipt is corroborated by their statements and their statements are corroborated by their signatures on the receipt, the assessees want us to believe that signatures on the receipt are not their signatures. The relevant question therefore is not as to how evidence has been obtained or the statements have been recorded but as to whether the facts emerging from them have been rebutted by the assessees. It is well-settled by catena of authorities that the relevant issue in the admissibility of evidence is not as to how it has been obtained but as to whether it is relevant and if it is relevant as to whether it has been rebutted by the party against whom it is proposed to be used. A statement on oath is a strong piece of evidence qua the maker of the statement. It cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees and to help them in avoiding the tax liability. Besides, they are inconsistent with the statements given by the assessees themselves. We are therefore unable to lend credence to them in the face of other un-rebutted evidence available on record. 27. It was further contended by the ld. authorized representative that the sale value taken in the hands of the assessees ought to have been taken as the investment made by the buyers for purchasing the property and the buyers taxed accordingly. We are unable to comment upon this matter as the parties have not placed any material in this behalf before us. Be that as it may, there is no provision in the Income-tax Act which makes mere investment as taxable. What is taxable is the unexplained investment and not mere investment as such. There is nothing on record before us to show that the investment made by the buyers was unexplained. If it was at all so, it was for the Revenue to tax the same in conformity with law. 28. As regards the correctness of the impugned additions, the case of the assessees is that they are based on forged receipt and retracted statements and therefore not tenable in law. We have already rejected the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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