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TMI Blog2011 (11) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement to sell dated 3.2.2000 erred in making an addition of ₹ 2,00,000/- as unexplained investment u/s 169 of the Income-tax Act,1961. The addition be deleted. 3. In the course of appellate proceedings before us, ld. 'AR' contended that the AO failed to apply his mind to the reasons recorded for the purpose of initiating re-assessment proceedings u/s 147 read with Section 148 of the Act. He was of the opinion that the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P.Ltd. (2007) 291 ITR 500 (S.C) is not applicable to the facts of the present case. Accordingly, he prayed that the re-opening of the case be declared as bad in law. 3(i). In Ground No.2, ld. 'AR' argued the case on merits. He argued that agreement dated 14.10.1999 is the original agreement and the same has not been acted upon by the assessee appellant. Ld. 'AR' was of the opinion that the agreement dated 03.02.2000 is the agreement which has been acted upon, therefore the addition made u/s 69 is uncalled for. He referred to the statement of Mr.Kulbhushan and J.D.Gupta to support his contentions. The ld. 'AR' also contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sell dt.14.10.99. Further, as per the statement of the complainant recorded by the ADI (Inv.) on 09.02.2004 Shri J.D.Gupta was instrumental in negotiating the deal and had signed the agreement as witness No.1. Shri Arun Goyal though he admits that there was an agreement to sell dated 14.10.99 but this agreement was never acted upon, as the complainant had misquoted the sale consideration at ₹ 85 lacs. The complainant had a vested interest and therefore the agreement was negotiated afresh for 5/6th share at a consideration of ₹ 1600000/- vide agreement to sell dated 3rd Feb.2000 (03.02.2000). Latter, the sale deed was executed on 13th Sept.,2002 for 2/3rd share for consideration of ₹ 12,80,000/- through local commission appointed by Civil Judge (Junior Division) Chandigarh. The drop in the sale consideration was attributed to the following facts; i) Because of violation of the Building Law the Estate Office UT had resumed the property. ii) Appeals before the Advisor to the administrator were also unsuccessful. iii) The matter was subjudice as appeal was pending before the Hon'ble Punjab Haryana High Court. The appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and Dr.Muklndak M.Sharma JJ dsmissed the department s special leave petition against the judgment dated Feb 19,2008 of the Delhi High Court ITA No.903 of 2007 reported in 305 ITR 245 whereby the High Court dismissed the department s appeal on the ground that the respondent having denied the transfer of money between him and the respective vendor and the vendors having denied the receipt of money from the respondent there ought to have been corroborative evidence to show that there was infact such a transfer of money : CIT V Ved Parkash choudhary SLP (C) No.17329 of 2008 reported in vol. 309 ITR (Statutes) 19. On merits 1. Apparent is real : The onus is on the department to prove that the sale deed dt.13.9.2002 through Court is a shown document. This has not been done. No mention of this document in the entire assessment order. Onus not discharged. 2. Total reliance has been placed upon the statement of the complainant Shri J.D.Gupta also himself could not prove the transfer of the sale consideration of ₹ 85 lacs. 3. The statement of Shri Kulbhushan Garg the seller has been totally ignored. Statement of seller 1. The seller straight away state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yers i.e. Shri Arun and Smt.Parveen Goyal accompanied him to Rampuraphool, where the seller and buyers together signed the statement. Q.No. 4 of Examination in chief and cross examination, where as per: a) The Sellter : i) Mr.JD Gupta, alone come to Rampuraphool ii) There were no signatures of buyers iii) They had never met the buyers iv) Mp copy of the agreement was given to the seller, therefore he denied knowledge of the attestation by the notary, signatures of the buyers etc. v) The amount mentioned for consideration was ₹ 1920000/-. b) The purchaser : He signed on performa agreement to sell, which was signed by him and his wife at Chandigarh Statements of the other purchaser viz Sanjeev Chadha and Smt.Vinod Kumari, Prop. Shivalik Book Depot, not examined. 6. The brief facts necessary for the disposal of the present appeal are that the assessee filed his return of income declaring estimated business income at ₹ 69500/- and income from house property at ₹ 35,000/-. The return was filed by the assessee on 31.3.2004 which was processed on 15.6.2004 at the returned income u/s 143(1) of the Act. Subsequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P.Ltd. 291 ITR 500 (S.C) that sufficiency of the reasons is not justifiable. The relevant part of the decision is as under : Section 147 authorizes and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. The function of the AO is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v ITO (1991) 191 ITR 662 for initiation of action u/s 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P.Ltd. (supra) squarely covers the issue raised by the assessee as is clear from the ensuing discussion of the relevant and operative part of the said decision : Re-assessment-Intimation-Provision for initiating re assessment applied-only one of two conditions to be complied with-Only reason to believe that income chargeable to tax has escaped assessment- Reason to believe -Formation of belief within subjective satisfaction of Assessing Officer-Principle relating to change of opinion Not applicable-Income-tax Act,1961 ss. 143(1)(a),147. Income escaping assessment-Intimation-Claim of assessee for bad debts-Notice for re-assessment on the basis that conditions for allowance were not fulfilled-Valid-Within jurisdiction of AO-Income-tax Act,1961, ss. 36(1)(vii), (2) 132(1)(a), 147,148. Words and phrases _ Reason to believe , Assessment , Intimation meanings of. Under the scheme of Section 143(1) of the Income-tax Act,1961, as substituted w.e.f. April,1989 and prior to its substitution w.e.f. June 1,1999, what were permissible to be adjusted under the first proviso to Section 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eming provisions. Therefore, there being no assessment u/s 143(1)(a), the question of change of opinion does not arise. The expression reason to believe in Section 147 would mean cause or justification. If the AO has cause or jurisdiction to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. What is required is reason to believe but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the AO. ITO v Selected Dalurband Coal Co. P.Ltd. (1996) 217 ITR 597 (S.C) and Raymond Woollen Mills Ltd. v ITO (1999) 236 ITR 34 (S.C) followed. Taking income escaping assessment in the case of an intimation u/s 143(1)(a) is covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns u/s 143(1) of the Act. It is further added that in such type of processing of returns, there is no formation of opinion by the AO. Therefore, the question of change of opinion does not arise. Similarly, no opinion was ever expressed or formed by the AO, while processing the return under the said scheme. The change of opinion presupposes the existence of any opinion formed by the AO, in the earlier proceedings. The formation of opinion is positive act on the part of the AO. Thus, an opinion can be said to have been formed where there is application of mind, with reference to the material on record and the relevant provisions of the statute. Hence, under such proceedings, no such opinion is formed by the AO and if there is an escapement of income, then it cannot be contended that the re-assessment proceedings are initiated on mere change of opinion. 11. The case laws cited by the assessee, in the synopsis, reproduced above, on the issue of re-opening the case are not applicable to the facts of the present case, being factually different and distinguishable. The facts narrated in the present case by the AO while recording reasons u/s 148 of the Act, are definite, rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the facts of the present case are squarely covered by the decision of the Hon'ble Supreme Court, in the case of Rajesh Jhaveri Brokers P.Ltd.(supra). Therefore, having regard to the fact situation of the present case, clear findings of the CIT(A) and true ratio of the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri (supra), we uphold the findings of the CIT(A) and consequently, the Ground of Appeal of the assessee is dismissed. 13. Now, we turn to consider the issue of addition made by the AO and challenged by the assessee in Ground No.2 on merit. The AO made an addition of ₹ 2 lacs as unexplained investment/ u/s 69 of the Act. The ld. CIT(A), upheld the said addition by passing a detailed and speaking order. We consider it essential to reproduce the findings of the ld. CIT(A) on the issue in question for the purpose of proper appreciation of the same : I have carefully considered the entire material on record. The main contention of the assessee is that agreement dated 14.10.1999 is not genuine. The sequence of events and surrounding circumstances would reveal that the information/documents in possession of the department can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. Remarks by the CIT(A) 1 Property is a resumed property This fact has been mentioned on P-1 of the agreement. It is despite that total consideration is ₹ 85 lacs. 2 Buyers Sellers had great faith in Shri J.D.Gupta and signed on dotted lines The buyers would not sign blindly. The price of the property is the first thing which is asked and noted. Atleast, price mentioned in the agreement is checked. Even otherwise, the department has to take decision as per evidence on record. 3 The agreement showing consideration of ₹ 85 lacs never existed. The complainant created agreement The assessee has been showing a true copy of agreement. The assessee himself accepted that agreement was torn. That means the agreement existed. 4 The signatures on the agreement has same spacing chronology This fact will not affect the validity of agreement. 5 Shri Arun Goyal put signature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sell, dated 14.10.1999, wherein demand drafts are also recorded as payment made in pursuance of the said agreement. The important and significant factor to be noted is that the same demand drafts are appearing in the subsequent Agreement to Sell dated 03.02.2000, which came into existence after four months of the original Agreement to Sell dated 14.10.1999. It is unbelievable to accept that such demand drafts were purchased in pursuance of the Agreement to Sell dated 03.02.2000 even prior to its existence These demand drafts are dated 12.10.1999 and it is beyond comprehension that any rational human being would prepare such drafts and record the same in the original Agreement to Sell dated 14.10.1999 and then claim that such drafts were purchased in pursuance to the Agreement to Sell dated 03.02.2000, which was executed subsequent to the original Agreement. As indicated earlier, the Agreement to Sell dated 03.02.2000, existed in the womb of futurity, and, hence, said drafts dated 12.10.1999 cannot be purchased in pursuance of such Agreement to Sell. The time latches between the original Agreement dated 14.10.1999 and the purchase of said drafts is just two days. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssertions purely founded on surmises and conjectures, cannot rebut the documentary corroborative and credible material evidences against the assessee. Incidentally, it is pointed out that copies which are made from original by mechanical process, which in themselves assure the accuracy of the copy and copies compared with such copies as also the copies made from or compared with the original are evidence within the meaning of Section 63 of the Indian Evidence Act, 1872. In the original Agreement to Sell dated 14.10.1992, the consideration of the impugned property is clearly recorded as ₹ 85 lacs whereas the consideration of the same property has been recorded as ₹ 16 lacs in the subsequent agreement dated 03.02.2000. The subsequent agreement dated 03.02.2000 was executed after four months of the original Agreement to Sell, dated, 14.10.1999. Such a drastic decline in the sale consideration viz-a-viz these two agreements remains inexplicable and unrebuttable by the assessee appellant. In this context, it is pertinent to mention here that the assessee appellant admits the existence of the original agreement dated 14.10.1999 and also admits that the said original agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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