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TMI Blog2015 (5) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... availed the opportunity of cross examination - Held that:- 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 appellant with the underlying object of sale of property held by the said company. When the 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 shifts to the appellant. The appellant failed to rebut the same. Therefore, that it stands corroborated. It 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 in the case of Dhakeswari Cotton Mills Ltd. Vs. CIT, (1954 (10) TMI 12 - SUPREME Court); Vasantlal & Co. (C) Vs. CIT (1962 (2) TMI 7 - SUPREME Court) and CIT Vs. East Coast Commercial Co Ltd., (1966 (10) TMI 37 - SUPREME Court). Addition made purely based on the photocopy of the agreement to sell - Held that:- This sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the hands of the appellant. Mrs. Ritu Parwal was holding 58,000/- shares. The share of on money comes to ₹ 1,71,10,000/-. Therefore, the total addition in the hands of the appellant comes to ₹ 3,48,10,000/-. Hence, we confirm the addition in the hands of the appellant only to the extent of ₹ 3,48,10,000/-. Decided partly in favour of assesse. - ITA No. 892/Del/2015 - - - Dated:- 15-5-2015 - SHRI G.C. GUPTA AND SHRI INTURI RAMA RAO, JJ. For the Appellant : Sh. Ashwani Kumar, CA For the Respondent : Sh. Vikram Sahay, Sr. DR 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 (Appeals) 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 Incometax, Sonepat Circle to the extent of ₹ 8,33,59,871/-, after allowing a partial relief of ₹ 36,40,129/-, on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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. 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 justified 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 have 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 the 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 19th August, 2008, declaring income of ₹ 22,13,680/-. The said return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal through transfer of shares of M/s Smriti Buildcon Pvt Ltd for a total consideration of ₹ 12.95 Crores, and an amount of ₹ 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 ₹ 8.70crores was made to Sh. Sanjay Parwal and Smt. Ritu 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 hereunder. Relevant portion of statement of Sit. Anil Mahajan, Chief Real Estate of HBN Group recorded on 21.11.2009 by tlte Investigation Wing: : 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 (recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. Please also state 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 ₹ 8.70 crores was made in cash. The purchase of property was effected through the books of M/s Smriti Buildcon Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Payment made till date: 80,00,000/- Payment made 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 figures 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 ₹ 80,00,000/-, the amount of ₹ 31 lakhs was paid in cash. As regards, the further payment of ₹ 25 lakhs, as I recall the same were paid through cheque only. The source of the cash payments of ₹ 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 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 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 Nagar, 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 , second 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, 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 ₹ 12.95 crores and as per terms and condition a sum of ₹ 25 lakhs was to be paid to the first party as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sh. Virendra Nehra recorded on 02.02.2010 by the Investigation Wine. 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 Parwal 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 Delhi 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 was acting on behalf of M/s Smriti Buildcon Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Pankaj Tetarway (witness no. 3) and Sh. G.S. Chauhan (witness no. 4) are the employees 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 on 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 recorded 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 Delhi? 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 na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes, I know him in relation 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, BBlock, community Centre, Janakpuri, New Delhi. Ans: The property in question was registered in the name of M/s Smiriti Buildcon Pvt. Ltd.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 entered 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 14.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orandum 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 Assessment 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 case 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; 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 sale deed for a sum of ₹ 35,00,000/-; Copy of Lease Deed dated 12.07.2006. 4. The appellant submitted befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information. In this regard, he relied upon the following decisions: 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 Singh, 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 xiii. Mohinder Singh Malik Vs. CCIT, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 12.95 crores. In respect of shares held by the appellant he confirmed the addition @ ₹ 439.43 per share held by the appellant and thereby confirmed the addition to ₹ 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 provisions of Section 151 of the Act and he further raised objection that the reassessment proceedings were merely initiated on the directions of Investigation Wing of the Department, New Delhi, without the Assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 for 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 Assistant Commissioner of Income Tax, who is competent to 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 original assessment was made under Section 143(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 learned Authorized Representation, the permission was obtained from the Commissioner instead of Joint Commissioner, therefore, the Courts have held that the jurisdiction exercised by the Commissioner is invalid, inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme 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 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. Moreover, 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. Chandravilas, [1987] 164 ITR 102 (Guj.). In In Roger Enterprises P. Ltd. v. DCIT [2004] 88 ITD 95 (Delhi), 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 witnesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a company the entire property held in the name of Company 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. DCIT, 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 learned 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 photocopy of the agreement to sell entered into among three parties, namely, Mr. Virdnera Nehra and Mr. Harmander Singh Sran and Mr. Sanjay Parwal i.e. appellant. From the perusal of the assessment order, it is clear that the photocopy of this agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 money of ₹ 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 Buildcon 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 cannot 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 used against him. Agitating on this issue, at later stage is not acceptable, since the appellant had chosen not to advance this argument before the lower authorities, when he was confronted with the information. Had the appellant chosen to advance this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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