Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the impugned diary of the property dealer recording actual transactions in the properties located in that very area had no evidentiary value ?

Counsel Appeared

R.P. Sawhney with Rajesh Bindal, for the Appellant

JUDGMENT

G.S. SINGHVI, J. :

In this appeal filed under s. 260A of the IT Act, 1961, the appellant has sought determination of the following question of law :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the impugned diary of the property dealer recording actual transactions in the properties located in that very area had no evidentiary value ?”

2. The facts necessary for deciding this appeal are that by an order, the AO finalised the assessment of the respondent under s. 143(1) on a total income of Rs. 15,320 but in pursuance of a search and seizure operation conducted at the business premises of the firm, Mohar Singh Ishwar Dayal, Ballabgarh, and the residential premises of Shri Vidya Rattan, he made an addition of Rs. 1,45,000 by treating the purchase of the plot in the name of the assessee’s minor son as unexplained investment. The appeal filed by the assessee was allowed by the CIT(A) vide his order dt. 31st July, 1991, and that order was upheld by the Tribunal while dismissing the appeal filed by the Revenue. The reasons recorded by the CIT(A) for deleting the addition made by the AO read as under : “(i) The return showing an income of Rs. 9,350 was filed on 30th July, 1987. The AO has observed that search and seizure operations were conducted on the business premises of Mohar Singh Ishwar Dayal, Ballabgarh, and at the residential premises of the assessee’s father, Shri Vidya Rattan on 29th Oct., 1987. The documents seized during the search revealed that Plot No. 583 in Sector 15, Faridabad, had been purchased in the name of the assessee, minor, on 12th May, 1986, for a total consideration of Rs. 45,000. Subsequently, notice under s. 148 was issued to bring to tax the unexplained investment in the acquisition of the plot. The assessee filed the return in response to a notice under s. 148 declaring an income of Rs. 9,346. (ii) It has been observed in para 6 of the assessment order, ‘since the plot has been purchased in the name of the minor, the investment in the purchase of plot and construction thereof, is being considered in the case of the assessee also on protective basis. This finding is, however, without prejudice to any action to be taken in the case of the firm as well as Shri Vidya Rattan, father of the assessee’. The AO held that the cost of the plot shown was very low as compared to the existing market price. Accordingly, the AO estimated the market value of the plot at Rs. 1,90,000 and after deducting the investment of Rs. 45,000 shown by the assessee, added the difference of Rs. 1,45,000 as unexplained investment in the plot. (iii) An identical addition was made in the hands of Shri Vidya Rattan, father of the assessee, in the asst. yr. 1987-88. In fact, the aforesaid addition in the hands of the assessee has been made on a protective basis as the substantive addition was made in the hands of Shri Vidya Rattan. In my appellate order dt. 26th June, 1991, in Appeal No. 103 of 1991-92 for the asst. yrs. 1987-88 in the case of Shri Vidya Rattan, father of the assessee, the issue of unexplained investment in the aforesaid plot was dealt with and examined by me in detail. Following my appellate order, supra, and for the reasons stated therein, as the addition in the hands of Shri Vidya Rattan has been deleted, the addition of Rs. 1,45,000 made in the hands of the assessee on a protective basis is, accordingly, deleted. The assessee would get relief of Rs. 1,45,000 as a result of this order.”

3. The Tribunal upheld the deletion by making the following observations : “12. We have carefully considered the facts, the material available on record and the rival submissions. We find that the addition on account of unexplained investment could only be made under s. 69 of the Act. Sec. 69 of the IT Act provides that where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investment or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. The simple reading of the section would show that the following are the prerequisites for invoking of the provisions of s. 69 of the IT Act : (a) That the assessee has made investment ; (b) Such investment is unexplained. In the present case, the assessee involved, have purchased the plots for a consideration of Rs. 35,000/Rs. 45,000 as recorded in the sale deeds. The Revenue claims that the total investment made is at Rs.3,66,400 and there is unexplained investment of Rs. 2,86,400 but as would be seen from the facts given, there is no material evidence to establish that the assessee made investment of Rs. 2,86,400 over and above that record in the sale deeds at Rs. 80,000. In the absence of any such evidence, and the investment having been proved, no addition could be made under s. 69 of the IT Act. This view is fully supported by the aforecited decisions of the Tribunal. Moreover, the assessees have laid cogent evidence by way of receipts and copies of sale deed to show that the assessees acquired the said plots for a consideration of Rs. 35,000/Rs. 45,000 and the diaries of property dealer relied upon by the Revenue do not prove that the assessee paid a consideration of Rs. 3,66,400 to the vendors against the apparent consideration shown at Rs. 30,000. Further, according to learned counsel, the vendors sold the said plots before leaving India for abroad and this could also be a distress sale. Such facts have not been controverted by the Revenue. The Revenue has also not made any enquiries from the property dealers, vendors, etc. to establish that the assessee paid any amount, over and above the apparent consideration in purchase of the said plots. We also find that for similar reasons, the Tribunal in the aforesaid cases, deleted the addition made vide order, dt. 27th March, 1996, in ITA Nos. 3863 and 3053/Delhi of 1990 for the asst. yr. 1984-85 in the case of Mrs. Shakuntala Bhatia and order dt. 21st Jan., 1992, in ITA No. 2701/Delhi of 1990, for the asst. yr. 1980-81 in the case of Smt. Santosh Gupta. Having regard to the facts and material, we see no infirmity in the orders of the CIT(A) and the same are upheld.”

4. A perusal of the reasons assigned by the CIT(A) and the Tribunal shows that similar additions made by the AO in other cases were deleted by the CIT(A) and his orders were upheld by the Tribunal. It has not been shown to us that the orders passed by the Tribunal in similar cases are the subject-matter of any reference pending before this Court or any appeal pending in the Supreme Court. Therefore, we do not find any valid ground to interfere with the concurrent findings recorded by the CIT(A) and the Tribunal. For the reasons mentioned above the appeal is dismissed.

[Citation : 248 ITR 478]