9911796707
TMI Blog1988 (7) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 3,50, 000 2. Smt. Anees Ali, EIN BISSCHEN. Road No. 9, Banjara Hills, Hyderabad. ₹ 1,97,000 ₹ 1,80,000 3. Smt. Rafat Zaheer, 12, Golden Beach, Juhu, Bombay. ₹ 1,90,000 ₹ 1,90,000 ₹ 7,56,600 ₹ 7,20,000 During the course of the search operation statements were recorded under s. 132(4) from the above ladies. Smt. Razia Begum stated that the sale consideration of the house sold by her to the assessee and his brothers was only ₹ 4,00,000. She could not explain the sources of cash of ₹ 3,69,600 which was found with her. A statement was recorded from her husband Dr. Zaheer Ahmed in the course of the search wherein he stated that his wife had sold the house property recently to the assessee and his brothers for a sum of ₹ 4,00,000. Smt. Anees Ali stated that the cash found with her represented sale proceeds of her jewellery, gold ornaments and silver articles. Smt. Rafat Zaheer stated that she received the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was not recorded, that the Superintending Engineer told him orally that the vendor Smt. Razia Begum. had given a sworn statement stating that the actual consideration received for the property was about ₹ 10 lakhs and thereupon he obtained a photostat copy of the affidavit given by Smt. Razia Begum and thus determined the value at ₹ 11,85,000. The Inspecting Assistant Commissioner (Acquisition) in his letter dated 20-5-1985 addressed to the Valuation Officer, requested him to submit a report after visiting the property and after collecting all the relevant materials necessary for proper valuation of the property and after visiting other properties quoted by him earlier as comparable cases. In this revised valuation report forwarded on 12-7-1985, the very same Valuation Officer, Sri B.R. Rao, reestimated the value of the property at ₹ 4.60 lakhs. The acquisition proceedings, which were initiated by the competent authority were held to be not valid by the Tribunal in its order dated 6-11-1986 in IT Acq. A. No. 12/Hyd./1986 on the ground that the provisions of s. 269D(2), which are mandatory, have not been complied with by the competent authority. 5. Be that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as holding jurisdiction over the case, moved a petition for enhancement or modification of the assessment order on the following grounds: (a)Dr. Zahir Ahmed, husband of Smt. Razia Begum, had owned the adjacent property. The property of Sri Zahir Ahmed was larger than the property sold by Smt. Razia Begum There was evidence to show that Sri Zahir Ahmed had sold his property on 17-6-1983 for ₹ 12 lakhs. Sri Zahir Ahmed had produced two pages of seribling notes which showed that the property had been sold for ₹ 12 lakhs. If this property had been sold for ₹ 12 lakhs, the property of Smt. Razia Begum which was slightly smaller in dimensions could have fetched ₹ 11.75 lakhs. The IAC enclosed photostat copies of the notes alleged to have been recorded on 2nd February 1983 and 6th April, 1983 and containing signatures of the buyer and seller. (b)The property belonging to Mr. J.P.L. Gwyn in the neighbour- hood on an area of 1,875 sq. metres with a built up area of 314.86 sq. metres had been sold for ₹ 10,80,000. The sale deed had been executed on 22-8-1984. (c)Another property belonging to Smt. Rafat Zahir on an area of 750 sq. yds. together with a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition in his case. He also felt that there was absolutely no need to discuss the various involved in the assessee s case in his assessment order. This was an unusual spectacle of the Income-tax Officer writing a long order merely to say that the assessee was right and the assessee in turn contending in the proceedings before the appellate authority that the Income-tax Officer was correct in the manner he investigated the matter and, of course, in his conclusions. Therefore, the CIT (Appeals) felt that the Income-tax Officer had put the cart before the horse by straight away putting the material filed by Smt. Razia Begum to the assessee and conducting further proceedings on that basis. He also noticed that there was a serious lacuna in that the department failed to confront Smt. Razia Begum and the assessee at any stage in the investigation or in the assessment proceedings. He also noticed that the Income-tax Officer had issued summons to Smt. Razia Begum on 27-2-1985 but she could not attend because she was ill. Thus, he set aside the order of the Income-tax Officer with a direction to the Inspecting Assistant Commissioner to redo the same afresh after completing the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects to the entertainment of fresh evidence, which was not before the Income-tax Officer, for consideration. Further the evidence sought to be used does not relate to the property purchased by the appellant and others. The appellant submits the Commissioner of Income-tax (Appeals) is precluded from entertaining a new plea, especially when such plea was based on information not relevant to the appellant. The Commissioner of Income-tax (Appeals) cannot go beyond the points raised by the appellant, except when it is a case of enhancement. The appellant submits that the order of the Commissioner of Income-tax (Appeals) is illegal, and having held, that a protective assessment cannot be made, the appellant prays that the appeal should be allowed by deleting the amount of ₹ 85,250. Finally it is submitted that on irrelevant and unconnected material which is found to be totally lacking in proof, the learned Commissioner of Income-tax (Appeals) ought not to have set aside the assessment. The Commissioner of Income-tax (Appeals) has no jurisdiction to set aside an assessment at the instance of the Income-tax Officer. He may by virtue of provisions of section 250(4), himself m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the assessing authority to traverse beyond the assessment records and ask for setting aside of the assessment order, on a representation made by the assessing authority. This would, in effect, confer on the assessing authority a right to make a piece-meal assessment which is illegal. 4. The appellant, therefore, submits that the order of the CIT (Appeals) should be cancelled. 9. K. Ranganathachari, learned counsel for the assessee, submitted that the order of the CIT (Appeals) is perverse. The only issue that was before him was whether it was proper for the Income- tax Officer, after an elaborate enquiry and discussion of all the matters and materials having a bearing on the assessment of the appellant, having held that the apparent consideration was the real consideration and that the assessee did not pay a paisa more than what was declared in the document of purchase of the house, to make a protective addition on the premise that if the appellate authorities took a different view, the interests of the revenue should not be jeopardised. The CIT (Appeals) erred in setting aside the order of the Income-tax Officer after having held that the protective addition is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self wanted in her assessment that the proceedings must be kept pending for the completion of the proceedings against her husband. The officer has to function on the basis of the records and other materials before him. Rightfully he considered the affidavit of Smt. Razia Begum, discussed it in depth in the context of other evidence available and rejected the same as an afterthought just to explain away the surplus monies in her possession and also in the possession of her daughters. Therefore, there is nothing topsy-turvy or hanky-panky in the manner in which the investigation has been conducted by the Income-tax Officer, and, at any rate, it was not the grievance of the assessee before the CIT (Appeals) that the Income-tax Officer had misdirected himself in the conduct of the investigation. Such being the case, the observations of the CIT (Appeals) are most unfortunate, unwarranted, unjustified and have slant in favour of Smt. Razia Begum. 10. Sri Ranganathachari submitted that the CIT (Appeals) erred in holding that the conclusion of the Income-tax Officer in the case of the appellant that there was no payment of money in excess of what had been declared in the registered docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or rectified by subsequent proceedings. This is the basic tenet of law which the CIT (Appeals) has ignored. In this connection, he relied on the decision of the Supreme Court in Baradakanta Mishra v. High Court of Orissa AIR, 1976 SC 1899. 12. Sri Ranganathachari vehemently argued that the enhancement sought by the Inspecting Assistant Commissioner on the basis of some scribblings in a note book which was not shown at the time of search in the residence of the husband of Smt. Razia Begum but was produced before the Income-tax authorities in support of their contention that the consideration was much more than what had been declared, was an extraneous material the very authenticity of which was called in question and the CIT (Appeals), having held that it was not permissible for him to take on record that particular document in the absence of it being established as a genuine document, erred in directing the Inspecting Assistant Commissioner to come to specific conclusions after establishing the genuineness of the document in the case of Dr. Zahir Ahmed and Sri Naresh Kumar who are persons totally strangers to the assessee. This document, though unrelated to the assessee, came u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at large and it is for the CIT (Appeals) to give appropriate directions or pass such orders as he may deem fit for the proper disposal of the appeal and, therefore, he was very much within his rights when he, set aside the assessment directing a fresh enquiry into the whole matter. In this case, there are certain intriguing features: for example, there are three valuation reports holding different valuations. The Income-tax Officer had not examined Smt. Razia Begum who is one of the kingpins in the transaction. He was in an unseemly haste to complete the assessment and the results of his investigations were not put to Smt. Razia Begum. In fact, in the case of Smt. Razia Begum, she had apprehended that no justice would be done to her in the hands of the Income-tax Officer. Subsequently, the Inspecting Assistant Commissioner had asked for an enhancement on the basis of certain records, chief among them being an agreement on the writing pad of Dr. Zahir Ahmed, husband of Smt. Razia Begum, containing certain agreements between him and one Sri Naresh Kumar and others who are related to the assesses. These special aspects of the matter require reconsideration before a proper assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another daughter of Smt. Razia Begum, recorded at Bombay, it was explained that her mother had given her a sum of ₹ 1,19,000 to her and she presumed it as a gift to her and she did not enquire further. Later on, Smt. Razia Begum filed an affidavit on 11-5-1984 to the effect that she had sold the property in question for a consideration of ₹ 11.75 lakhs, that in the sale deed the consideration was stated as ₹ 4,00,000 at the instance of the purchasers and that she had invested only ₹ 4,00,000 in National Rural Development Bonds for availing exemption under the Income- tax Act. She explained away her initial statement given to the Income-tax authorities in the course of the search at her premises wherein she had affirmed that she had sold the property for ₹ 4 lakhs, as being due to the fact that she was in total distress and afraid of the consequences which might follow on any statement given by her and that she was in a state of psychological shock and could not present the facts properly. The competent authority in the course of acquisition proceedings deputed the Inspector to visit the property and submit a preliminary valuation report on the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r he got the measurements and plinth area of the buildings in five sale instances on which he relied in his report, the Valuation Officer replied in the negative. Further cross-examination revealed that the second Valuation officer was only acting on the oral instructions of the Superintending Engineer as regards the land rates and the valuation. When asked why he adopted the land rate of ₹ 500 per sq. yd. in the case of property sold by Smt. Razia Begum to the assessee when he did not apply this rate in the case of similar properties, the Valuation Officer replied that he applied this rate mainly on account of the affidavit of Smt. Razia Begum and the directions of the Superintending Engineer. 17. The Income-tax Officer, in his detailed order dated 23-3-1985, discussed the ramifications of these two Valuation Reports, took into consideration the sale instances in the neighbourhood, discussed each one of them threadbare and supported his conclusion that the fair market value of the property sold by Smt. Razia Begum to Sri Ramesh Pershad and others did not exceed ₹ 4.56 lakhs as on 5-3-1984. 18. Subsequently, the competent authority, in his letter dated 20-5-1985, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings of Smt. Razia Begum and since these matters were conducted in the assessment proceedings of the appellant, the officer had put the cart before the horse. We are unable to subscribe to this view. Smt. Razia Begum is one person within the meaning of the Income-tax Act; Sri Ramesh Pershad, the appellant, is another person, also within the meaning of the Income-tax Act. Though this transaction might affect both these persons, it is immaterial whether a thorough enquiry is done in one case or the other case. What is significant and material is that there should be a threadbare investigation covering all the aspects of the transaction. The only point to be seen in this case is whether such an enquiry had been conducted by the Income-tax Officer observing the procedures laid down in the Income-tax Act. It may be mentioned that the Income-tax Officer was having jurisdiction over nor only the assessee but also Smt. Razia Begum, the seller in this case. While dealing with the assessment of the assessee, in fact he started with a notice issued on 11-3-1985 asking the assessee to explain why the sale consideration should not be taken at ₹ 11.75 lakhs and not at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribblings which showed that the property had been sold for ₹ 12 lakhs suggesting thereby that the property sold by Smt. Razia Begum could have fetched at least ₹ 11.75 lakhs ; (b)that properties in the neighbourhood had been sold for larger consideration (c)that the averments in the affidavit filed by Smt. Razia Begum were not effectively countered by the appellant; and (d)that Sri Kader Ali Khan had not been examined by the Income-tax Officer. The learned CIT (Appeals), while observing that unless the genuineness of the scribblings, produced by Dr. Zahir Ahmed, was established, it could not be considered in the assessment of the assessee and that all the matters raised by the Inspecting Assistant Commissioner in his enhancement petition could be gone through by him as the order was set aside. Sri Ranganathachari vehemently objects to this course of action. There is substance in his objection that the scribblings on which reliance was placed by the IAC (Asst.) for purposes of making an enhancement, were not at all relevant for the assessment of the assessee. For one thing, the scribblings relate to the property sold by Dr. Zahir Ahmed and not to the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the order of the Income-tax Officer did not suffer from any infirmity in not having examined Sri Kader Ali Khan. 25. Thus, all the points on the basis of which the IAC (Asst.) had Prayed for an enhancement before the CIT (Appeals) fell to the ground and, therefore, the CIT (Appeals) is not justified in directing the IAC (Asst.) to examine all these aspects in the fresh assessment proceedings. 26. Another reason for setting aside the assessment as given by the CIT (Appeals) is that Smt. Razia Begum had not been examined by the Income-tax Officer. From a scrutiny of the records, we feel that the Income-tax Officer was not averse to examining Smt. Razia Begum. In fact, he had proceeded to frame the assessment against the assessee on the basis of the averments made by Smt. Razia Begum. to the effect that she sold the property for ₹ 11.75 lakhs taking that to be gospel truth. It was only after he considered the evidence on record, the materials placed by the assessee, the examination and cross-examination of the Valuation Officer and the examination of Sri Laxminivas Ganeriwal, and on a scrutiny of the sale instances in the neighbourhood, that he came to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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