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TMI Blog2022 (6) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction becomes even more intriguing and inexplicable. There is no explanation at any stage, including before us, for this, and which we regard as incongruent and, rather, anomalous. What purpose, one may ask, does the same, i.e., name lending, serve? Could a transaction, much less the one at hand, being in respect of acquisition of IP, be entered into without any reason or purpose? The assessment order abysmally fails on the ground of lack of enquiry which, inasmuch as it reflects non-application of mind, is one of the infirmities that renders an order as erroneous and prejudicial to the interest of the Revenue and, thus, liable for revision u/s. 263, even as explained in Malabar Industries Co. Ltd. v. CIT [ 2000 (2) TMI 10 - SUPREME COURT] the other three being: wrong assumption of facts; incorrect application of law; and omission to observe the principles of natural justice. The case law in the matter is legion, with a series of decisions by the Apex Court, both before and after Malabar Industries Co. Ltd. (supra). The same has been (by Finance Act, 2015, w.e.f. 01/6/2015) incorporated as one of the ingredients leading to the invocation of sec. 263, in the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision u/s. 263. True, an explanation could provoke another, and so on. Application of mind contemplates proper enquiry, which, by definition, would be one as warranted in the facts and circumstances of the case, so as to arrive at a reasonable satisfaction with regard thereto. The whole purpose of inquiry, it may be appreciated, is to ascertain the truth of the matter. Any inconsistency or incoherence in the explanation or the evidence adduced should therefore prompt further inquiry, which thus becomes prima facie warranted. The language employed by the statute (i.e., w.e.f. 01/6/2015) in this regard, i.e., 'an order passed without making further inquiries or verification which should have been made.' is apposite. It is the inquiry/verification by the AO that is relevant for the purpose, and not the explanation/s, if any, furnished before the appellate authority, much less that de hors the record. We do not consider it necessary to dilate further in the matter; the case law in the matter, rendered in different fact settings, being legion. The argument advanced is completely inapplicable in the facts of the instant case, which we have found to be of one of lack of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 10/07/2011, whereby the assessee received consideration of Rs. 10,000/- from RS in lieu of lending his name in the purchase transaction; and (d) the confirmation by the seller, Smt. Sudha Singh, by way of an affidavit dated 11/09/2017, to have received the outstanding consideration (as on 10/08/2009), i.e., Rs. 6 lacs, in cash from RS in instalments as the cheque dated 12/08/2009 (for Rs. 6 lacs) could not be presented in bank as it was not presentable (PB pgs. 11-12). 2.2. The Pr. CIT, on an examination of the assessment record, found the enquiry by the AO as deficient for failure to examine the following issues, which he regarded vital: (para 5 of the impugned order) (i) Who had paid Rs. 6,00,000/- in cash to the seller/s of the property? (ii) In whose possession the property is at present? (iii) Whether the assessee has disowned the ownership over the property and the name of the assessee has been removed from the records maintained, by the State Revenue Authority. If not, how can it be relied upon that a person (who is by profession an advocate) will allow to use his name for such a big deal and that too for a small fee of Rs. 10,000/-. (iv) Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Sudha Singh, confirms having received the entire payment, i.e., Rs. 11 lacs, at one go. 3.2. Shri Agrawal would, in rejoinder, state that RS, the owner, intended to sell the land after plotting, and which was in fact done soon after purchase, and that explains the POA term of one year as well as clarifies on the possession of the plot. A POA beyond one year would attract stamp duty at a higher rate. The mention of 'entire consideration at one go' in the sale deed is a typing mistake, i.e., when juxtaposed with the statement of consideration in the earlier part of the sale deed, which bears a clear mention of two cheques dated 10/8/2009 12/8/2009 for Rs. 5 lacs and Rs. 6 lacs respectively. He expressed his ignorance on the Bench asking him about the education profile of RS. 4. We have heard the parties, and perused the material on record. 4.1. The first thing that strikes one on a mere browse of the facts of the case is as to why would one, much less a practising lawyer, who is well aware of the intricacies of law, as well as the practical problems one could face on not stating the truth in the registered documents, which have evidentiary value in law, agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings to enquire into the source of investment as well as about the huge difference between the fair market value and the stated consideration, the AO did not even venture on this, extremely relevant, aspect of the matter. 4.2. We may at this stage, and only for the sake of completeness of our order, also consider the different aspects of the matter, i.e., as argued before us. It is said that RS intending to sell the property soon after its' purchase, the assessee issued a POA for one year, with that over that period attracting stamp duty. Why, to begin with, did the assessee lend his name in the first place? Further, the POA only authorizes RS to sell the property, but does not relinquish the assessee's right over the sale proceeds thereof. What value, then, the same? It is then said that the seller confirmed the receipt of Rs. 6 lacs in cash from RS, who gave her the cheque in the first place, so that there was nothing to doubt the same. Apart from the fact that the same is contradicted by the sale deed itself wherein the seller confirms receipt of the entire sale consideration at the time of the sale deed itself, the argument does not stand the test of scrutiny. How, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper enquiry, which, by definition, would be one as warranted in the facts and circumstances of the case, so as to arrive at a reasonable satisfaction with regard thereto. The whole purpose of inquiry, it may be appreciated, is to ascertain the truth of the matter. Any inconsistency or incoherence in the explanation or the evidence adduced should therefore prompt further inquiry, which thus becomes prima facie warranted. The language employed by the statute (i.e., w.e.f. 01/6/2015) in this regard, i.e., 'an order passed without making further inquiries or verification which should have been made.' is apposite. It is the inquiry/verification by the AO that is relevant for the purpose, and not the explanation/s, if any, furnished before the appellate authority, much less that de hors the record. We do not consider it necessary to dilate further in the matter; the case law in the matter, rendered in different fact settings, being legion. The argument advanced is completely inapplicable in the facts of the instant case, which we have found to be of one of lack of inquiry on the most fundamental aspects of the transaction under examination and, thus, observed an absence of any b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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