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TMI Blog2011 (1) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... on oath of Smt. Asha Bhatnagar has been repelled cursorily although she had in detail explained the circumstances under which she had made her savings; her earning earned by tuition; amounts received by her in terms of the Will of her father in law enabling her to purchase the aforenoted properties as noted in Group II in her own name - The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so - Appeals are allowed - ITA No.1604/2006, ITA No.1691/2006 - - - Dated:- 31-1-2011 - MR. JUSTICE A.K.SIKRI, MS. JUSTICE INDERMEET KAUR, JJ. For Respondent : Mr.Sanjeev Sabharwal, Advocate (Per se) INDERMEET KAUR, J. 1. These appeals filed by the appellant Mr.S.K. Bahadur have impugned the orders of the ITAT dated 28.07.2006 and thereafter the subsequent order dated 27.02.2009. ITA Nos. 363/2009, 532/2009, 533/2009 534/2009 have impugned the later order i.e. order dated 27.02.2009. The other appeals have impugned the order dated 28.07.2006. 2. On 04.12.1984 the Anti-Corru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led which have now been heard on merits. 6. The substantial question of law was formulated in ITA Nos.532/2009, 533/2009, 534/2009 363/2009 which inter-alia reads as under:- Whether it is within the jurisdiction of Income Tax Department to frame assessment under the Income Tax Act, 1961, during the pendency of trial under the Prevention of Corruption Act? 7. On 14.01.2011 it was noted that proper question of law has not been framed. The following substantial question of law was accordingly formulated:- Whether the order of the learned ITAT is perverse in so far as it takes into consideration irrelevant facts in determining undisclosed income in the hands of the assessee? 8. Appellant S.K. Bahadur was a Member of the Indian Legal Services and was working as Joint Secretary and Legal Advisor in the Department of Legal Affairs, Ministry of Law, New Delhi. On 04.12.1984, the CBI made a search in his house i.e. house No. D1/153, Satya Marg, Chanakyapuri, New Delhi. His office was also searched on 05.12.1986. In the course of search, CBI recovered incriminating documents relating to immoveable and moveable properties; unaccounted sets were found and seized. Lockers in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.6,14,847 (3) House at KD-63, Kavi Nagar, Ghaziabad in the name of Smt. Asha Bhatnagar, wife of the assessee (4) Flat No. 402, DDA (Multi-storeyed), East of Kailash, New Delhi in the name of Sh. S.K. Bahadur. (5) Valuables s per items No. 3 of search list dated 04.12.1984, found at the assessees residence. GROUP-III (i) FDRs in various banks of total face value of Rs.1,94,000/- in the name of the assessee, his wife and three daughters. (ii) Deposits of Rs.15,000/- each in the names of the assessees daughters, Km. Taral Bahadur and Viral Bahadur in June, 82 for booking of DDA flats. (iii) Deposits of Rs.10,000/- made in the names of Km. Taral Bahadur and Km. Viral Bahadur for the booking of two Maruti Cars in May, 1983. (iv) Flat No. 93, Block B, Sector 27, Noida, purchased in the name of Smt. Asha Bhatnagar on 27.04.1983. 10. The Assessing Officer on the basis of the oral and documentary evidence led before it vide its order dated 30.03.1988 repelled the contentions raised by the assessee that the items in Group II Group III belonged to his wife and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984. The wealth tax returns in these circumstances, cannot be a suspect document; these returns cannot now be reopened which had been affirmed thereafter in appeal on 30.03.1989 by the Commissioner of Income Tax (Appeals) and thereafter reaffirmed by the ITAT. The same property which had been the subject matter of the wealth tax returns filed by Smt. Asha Bhatnagar cannot become the subject matter of the additions made by the ITAT in the impugned order. The same property cannot be assessed twice for tax. It is also not the case of the Revenue that the assets which were the subject matter of the wealth tax returns had earned any income for which it was incumbent upon Smt. Asha Bhatnagar to file income tax returns. 17. In (1992) 4 SCC 45 titled M. Krishna Reddy Vs. State Deputy Superintendent of Police, Hyderabad on the question of benami transaction alleged by the CBI and where there was evidence of income tax and wealth tax returns submitted by the accused prior in time to the search conducted by the Anti-Corruption Branch in his house, it was held that the burden of proof in disproving the claim of the accused had to be discharged by the prosecution. The Apex Court had returned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Smt. Suraj Bhatnagar dated 22.11.1985 (sister of her husband), affidavit of Smt. Rani Bhatnagar dated 03.06.1985 (another sister of her husband) as also the details annexed along with the Will of her father-in-law i.e. Annexure A‟ which had bequeathed the aforenoted properties to her. It is also not in dispute that in the wealth tax returns filed by Asha Bhatnagar for the assessment year 1984-85, the same aforenoted assets have been detailed on which she has paid wealth tax; net taxable wealth was Rs. 7,11,000/- It is also relevant to point out that the details as aforenoted and given by Asha Bhatnagar before the Income Tax authorities on 25.02.1988 were the same details which had been given by her on 07.01.1985 when her statement was recorded by the Enforcement Directorate and thereafter in her statement before the CBI on 07.05.1985; in her affidavit dated 09.05.1985 and her subsequent statement dated 04.11.1985. If the story was concocted and sham as has been concluded by the Assessing Officer, the same narration would not have been found in her statement which was recorded on 07.05.1985 which was less than six months after the search conducted in the house of her husba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Will did not bequeath anything to the second son Mr. Inderjeet Bahadur or his wife Smt. Suraj Bhatnagar or to Kumari Rani Bhatnagar was the other another reason to reaffirm this conclusion that this document was fabricated. This was a perversity. The Assessing Officer could not have ignored the affidavits of facts which had been filed by Rani Bhatnagar Suraj Bhatnagar who were admittedly closely related to the deceased being his daughters; yet they had chosen to support the stand of Asha Bhatnagar. The Will had stipulated that the marriage expenses of Rs. 50,000/- for his unmarried daughter Kumari Renu Bhatnagar would be borne by Asha Bhatnagar and she would also give her a part of the jewellery. The interest of his only unwed child had been taken care of. Yet this document was rejected. The lengthy discussion on the Will is clearly based on surmises and conjectures. 23. The further conclusion drawn was that the income received by Asha Bhatnagar from tuitions must have been consumed as it was only a pocket money. This source of income of Asha Bhatnagar had been rejected for the reason that there was no documentary evidence. Smt. Bharti Bhatnagar wife of Sq. Leader R.K. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that this money had in fact belonged to the wife, it has to be treated as money in the hands of the wife especially keeping in view the fact that this money had been reflected by her in her income tax returns. This was not withstanding of the fact that husband and wife were admittedly living together in the same house. 26. In Vol. XXVI ITR 74 Dhirajlal Girdharilal Vs. Commissioner of Income Tax, the Supreme Court has held that a finding by the ITAT which is based on mere surmises and conjectures is perverse and is liable to be set aside. In the said case, it had been conceded by the Attorney General that the Tribunal had drawn upon its own imagination and had made use of a number of surmises and conjectures. 27. In Vol. XXXVII ITR 288 Lalchand Bhagat Ambica Ram Vs. Commissioner of Income Tax, Bihar and Orissa, the Supreme Court in this context had held as under:- When a court of fact arrives of its decision by considering material which is irrelevant to the enquiry or acts on material, partly relevant and partly irrelevant, and it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its decision, a que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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