Rajasthan H.C : Notice be quashed and respondents be directed to return the FDRs to petitioner and in writ petition No. 2879 of 1997, the petitioner has prayed that the aforesaid assessment orders be set aside. Since the issue of ownership of FDRs is common in both the writ petitions

High Court Of Rajasthan : Jaipur Bench

Jayanti Lal Patel vs. Assistant Commissioner Of Income Tax & Ors.

Section 132(5)

Y.R. Meena, J.

SB Civil Writ Petition No. 3494 of 1994

1st October, 1997

Counsel Appeared

N.M. Ranka with R.K. Yadav, for the Petitioner in WP No. 3494/94 : Anant Kasliwal, for the Respondent No. 5 in WP No. 3494/94 : S.S. Hasan & Anant Kasliwal, for the Petititoner in WP No. 2897/97 : P.C. Jain, for the Respondents in both writs

Y.R. MEENA, J. ;

These two writ petitions are directed, one against the show-cause notice dt. 6th June, 1994, and another against the assessment orders dt. 22nd March, 1996 & 27th March,1996 Annexures-IX-A to IX-F. In writ petition No. 3494 of 1994, the petitioner has prayed that notice be quashed and respondents be directed to return the FDRs to petitioner and in writ petition No. 2879 of 1997, the petitioner has prayed that the aforesaid assessment orders be set aside. Since the issue of ownership of FDRs is common in both the writ petitions, therefore, both the writ petitions are being disposed of by this common order.

The search and seizure operation was carried out by the officials of the IT Department, on 17th and 18th Sept., 1992, at the residence of Dr. Tomar. The team of raid party was headed by DDI Shri Dilip Shivpuri. In that search operation, jewellery of 12 tola gold and Rs. 7,164 in cash were found. In addition to jewellery of ladies of family and cash amount Rs. 7,164, 3 FDRs in the name of one Shri Jayanti Lal Patel were also found during search. The petitioner explained that these FDRs are of Shri Jayanti Lal Patel, a friend of Dr. Tomar. When that search has resulted in failure, one FIR No. 124/92 has been lodged on 23rd Sept., 1992 against Dr. Tomar for the offences punishable under s. 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988. In FIR, the allegation against Dr. Tomar is that he possessed assets disproportionate to his income. The assets consist purchase of a plot and a house raised thereon. Dr. Tomar challenged that FIR and prayed that FIR No. 124/92 be quashed. The submission of Dr. Tomar before the High Court was that Shri Dilip Shivpuri, being cousin of Dr. Deepak Shivpuri, who happened to be colleague and rival in the profession. Shri Dilip Shivpuri has malafidely acted and arranged first income-tax raid. Then in connivance with his friend Shri Rohit Mahajan, who was the then Addl. S.P. (RSIB), Jaipur City, a FIR has been lodged against Dr. Tomar.

The High Court has allowed the petition of Dr. Tomar filed under s. 482 CrPC quashed the FIR and passed strictures against Shri Dilip Shivpuri, the then DDI in the IT Department. After search by the IT Department and material available on record, order under s. 132(5) of the IT Act, 1961 (hereinafter, referred as ‘the Act’) has been passed and therein the view has been taken that Shri Jayanti Lal Patel is owner of these 3 FDRs and not Dr. Tomar. Therefore, it was ordered that those FDRs be released. Thereafter, the CIT has issued show-cause notice to Dr. Tomar that why the amount of three FDRs Rs. 11,03,811 should not be added in the income of Dr. Tomar. In the notice, it is also stated that valuation report obtained by ACD, Rajasthan, from PWD valuing the investment of thhouse to the tune of Rs. 40,44,329 should not be taken for addition in the income of Dr. Tomar. Similarly, the valuation of plot has been enhanced. In the notice, some investments are also referred. According to CIT, they should also be scrutinised by the officer before passing the order under s. 132(5) of the Act and finally, it is stated that in view of these facts, why the appropriate direction should not be given for modification/ cancellation/amendment in the order passed under s. 132(5) of the Act.

The notice has been challenged on the ground that when the income-tax raid resulted in failure, as well as, the FIR which has been lodged at the instance of Addl. S.P. is quashed by this Court, Shri Dilip Shivpuri has managed to issue notice under s. 263 of the Act in spite of the fact that some strictures were passed while quashing the FIR and observing that no reliance can be placed on the valuation report of PWD as against the value estimated by the valuer of the IT Department and that order of the High Court has been upheld by the Apex Court. In spite of that, in the notice, under s. 263, the CIT has placed reliance on the valuation report which is found baseless by this Court in its order dt. 15th Oct., 1993. When the proceedings under s. 263 were stayed on 23rd June, 1994, in spite of that making base the facts given in notice under s. 263, six assessment orders are passed i.e. Annexure-IX-A to IX-F dt. 22nd March, 1996 and 27th March, 1996. A contempt petition has also been filed by Shri Jayanti Lal Patel that in spite of stay of proceedings under s. 263 of the Act, the aforesaid assessment orders have been passed.

Mr. Jain, learned counsel for the Department, has submitted that regular assessment orders under s. 143(3) have been passed after summary order under s. 132(5) of the Act and these assessment orders are not passed in pursuance of notice under s. 263 of the Act. At present I am not concerned with the fact whether the aforesaid six assessment orders are passed in pursuance of the order under s. 132(5) or in pursuance of the notice under s. 263 of the Act. In these petitions, I am basically concerned whether the additions made are baseless or there is any justification to assess the income as referred in these six assessment orders.

In these six assessment orders, the assessment order for the year 1984-85 which was assessed about 13 years back, has been reopened and the income assessed at Rs. 1,69,174. In asst. yr. 1990-91, the amount invested by B.S. Tomar HUF or Dr. Mrs. Tomar to the tune of Rs. 8,34,043 has been added in the income of Dr. B.S. Tomar. The investment and sources shown by Dr. B.S. Tomar out of Rs. 3,32,743. Rs. 1,60,753 are also treated income from unexplained source and added in the income of Dr. Tomar. The addition of Rs. 3,06,350 has also been made doubling the sale proceed of two plots. Rs. 22,12,500 are added in the income of Dr. Tomar on the basis of some figure on small piece of paper claimed to be found at the time of search. Rs. 3,16,000 investment by B.S. Tomar HUF are also treated the income of Dr. B.S. Tomar in the asst. yr. 1991-92.

In asst. yr. 1991-92, Rs. 99,680 which is the sale proceeds of gold ornaments, received from his mother Smt. Rajeshwari Devi, Smt. Rajeshwari Devi has shown this in her IT return. Dr. Tomar has also shown this in his WT returns, they are also treated unexplained income and added in the income of Dr. Tomar. Rs. 11,38,011, investment in FDRs, by Shri Jayanti Lal Patel, also added in the income of Dr. Tomar in the asst. yr. 1991-92. In the asst. yr. 1993-94, Rs. 14,57,611 has been added on the basis of valuation of house by PWD, ignoring the valuation report of the Department and valuation report of approved valuer of the Department, in spite of the fact that this house owned by three owners, namely, Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF.

In asst. yr. 1993-94, Rs. 1,00,000 has been added on the ground of investment in building material. In asst. yr. 1993-94, Rs. 1,31,800 added in the income of B.S. Tomar HUF, though Rs. 75,000 loan received by a bank draft from one Sarojani Devi. Similarly, Rs. 8,78,609 has also been added as income from unexplained sources in assessment order of B.S. Tomar HUF. Rs. 3,18,439, a carry forward balance of earlier year i.e. 1992-93 has been added in asst. yr. 1993-94. In case of Dr. Shobha Tomar, Rs. 42,263, a loan amount has been added as income from undisclosed sources. The entire amount shown as investment in the plot B-4, Govind Marg, Jaipur, by Dr. Mrs. Tomar and B.S. Tomar, HUF, has been treated as income of Dr. Tomar. Again out of total investment in plot, 1/3rd amount in the hands of Dr. Mrs. Tomar and 1/3rd amount in B.S. Tomar, HUF, has been added. Thus, this is second addition of the same amount. These are the main additions, in all the six assessment orders though the loans taken in the different years are also added as income from unexplained sources, in spite of the fact that assessees Dr. Tomar and Dr. Mrs. Tomar and B.S. Tomar, HUF, have filed the affidavits of the money lenders and even in some cases, the suit has been filed in civil Court for recovery of the amount and the Court has passed decrgainst Dr. Tomar for recovery of loan. Genuineness of loans are disbelieved and added that amount in the income of Dr. Tomar in different years.

The submission of learned counsel for Dr. Tomar is that the Departmental officers are biased while passing the aforesaid assessment orders. The AO had demanded money. Even some allegations are levelled against the then CIT Shri Kanwar Jeet Singh. The complaints have been made to the Chairman of CBDT on 7th Dec., 1993 and 20th March, 1995 regarding harassment and demand of money. In spite of that, these baseless additions are made in the income of Dr. Tomar and his wife Dr. Mrs. Shobha Tomar and B.S. Tomar, HUF.

Mr. Kasliwal brought to my notice that while making additions on the basis of valuation report of PWD, the AOs totally ignored the valuation report given by Departmental Valuer to whom the case of valuation of house has been referred, as well as, valuation given by approved valuer of the Department. The valuation report on which reliance has been placed has been considered by this Court while the FIR lodged against Dr. Tomar was challenged and that was found baseless. The FIR was quashed and that order of this Court has been upheld by the apex Court.

On such valuation report, again the additions to the tune of about Rs. 14 lacs have been made and the source of Rs.

26 lacs, shown as investment in house, has also been treated as income from unexplained sources. Similarly, after raid, enquiry has been made by the Asstt. CIT before order under s. 132(5), the statements of seller of plot and agent through whom the plot purchased have been recorded. They accepted that they have received only the money shown by petitioner Dr. Tomar and Dr. Mrs. Tomar and Tomar, HUF, but ignoring all this in these assessments, reliance has been placed on a small chit claimed to be found at the time of search. Even the figures shown in that chit are not tallied with the accounts maintained by the seller and agent, through whom the plot B-4, Govind Marg, Jaipur has been purchased. Neither that chit is in the hand writing of Dr. Tomar nor in the handwriting of any member of his family. In spite of that, the addition to the tune of Rs. 22 lacs has been made, only on the basis of that small piece of paper.

Learned counsel for the Department Mr. Jain has fairly admitted that on merits; he has no case for such additions. He only submitted that when alternate remedy is there, the petitioner should avail that and even he filed the appeal but it was later on withdrawn. Considering the submissions of the learned counsel for the parties and the aforesaid facts, the main grievance of the petitioner that whatever the investment has been shown in the plot, as well as, in the construction of the house is explained but due to mala fide attitude of the AOs, that has not been accepted. Not only that, the valuation of the plot, as well as, the house has been just made double. The entire investment shown has been treated as income of Dr. Tomar which has no justification. Even when petitioner sold two plots for Rs. 1,71,000, they have treated Rs. 1,71,000 value of one plot and just made it double i.e. Rs. 3,42,000 and no benefit of s. 54F of the Act has been given. When the appeals have been filed, they have taken one of the ground, in the appeals that the decision in the appeals will be subject to the decision of this Court in writ petition. That shows that the assessees had no faith in the officials after suffering lot in the hands of biased officials in the Department.

In reply filed by Dr. Tomar, in petition filed by Jayanti Lal Patel, he raised all these objections which the petitioner Dr. Tomar has raised in his writ petition No. 2879/97. It is also pertinent to note that reply filed by Dr. Tomar is prior to filing of appeals before CIT(A). The appeals filed before the CIT(A) are also withdrawn. When no effective, adequate and efficacious remedy is availed from the authority, there is no bar in entertaining the writ petition under Art. 226 of the Constitution of India and his petition should be decided on merits. Considering the submissions and instead of going into the assessment year-wise of Dr. Tomar. Dr. Mrs. Tomar and B.S. Tomar, HUF. I prefer to deal with the major items i.e. the investment made in the plot and construction of house and also the additions made on the basis of valuation report of PWD and additions made on the basis of a small chit claimed to have been found by the search party, for investment in the purchase of plot B-4, Govind Marg, Jaipur. Whether the amount of sale proceed of two plots shown by the assessee can be added twice treating that amount of one plot instead of two plots. Similarly, the assessment for the asst. yr. 1984-85 made about 13 years back, when the Amnesty Scheme was in force, can that assessment be reopened? and the additions can be made in the assessment year without any positive finding that income shown by Dr. Tomar is not correct? and income of Dr. Mrs. Tomar is income of Dr. Tomar. No additions can be made in respect of the assets which are declared and assessed under the Amnesty Scheme, in the asst. yr. 1984-85. First I will take the addition on the basis of valuation of house. Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF, they purchased plot No. B-4, Govind Marg, Jaipur, and raised onstruction. All the three assessees have equal share and investment in the plot, as well as, in construction of house. The total investment in the construction of the house roughly comes to about Rs. 25 lacs. After search at the residence of Dr. Tomar, the matter was referred to the Valuation Cell of the IT Department for estimation of the cost of the house raised by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. The Departmental Valuer, in his report, estimated the cost of the house to the tune of Rs. 26,29,000. These assessees have also obtained a report from the approved valuer of the Department and he valued the construction cost to the tune of Rs. 24 lacs. When valuer of PWD estimated the cost of the house to the tune of Rs. 32,35,465 and if the difference of period from the date of issuing the standing order of the Department and date of valuation according to him, 25 per cent can be added in the value already assessed and that total value comes to Rs. 40,44,329.

20. On the basis of this valuation report which is obtained by Addl. S.P. to fabricate a false case, from PWD, a FIR No. 124/92 has been lodged against Dr. Tomar for the offences under s. 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988. That FIR has been challenged in this Court and this Court has quashed the FIR which is mainly based on the valuation report of PWD which estimated the cost of the house more than Rs. 40 lacs. While quashing the FIR, this Court has passed strictures against the then DDI Shri Dilip Shivpuri and Shri Rohit Mahajan, the then Addl. S.P. (RSIB), Jaipur City. The relevant portion of the judgment reads as under:”From the material placed on record, it stands proved that Shri Dilip Shivpuri being cousin of Dr. Deepak Shivpuri (who, in the circumstances spelt out, from the petition, after his machination to get himself posted as Assistant Professor in Paediatrics for which, Dr. B.S. Tomar was to be posted after his return from London, having failed, had been nursing a rancour against Dr. Tomar, and being DDI, Income-Tax, had made firstly raid at the house of the petitioners, and when he failed in his machination in the raid which ended in a whimper after anatomising IT returns & assessment orders of the petitioners & family members, he approached his college-mate, Shri Rohit Mahajan who admittedly has been Addl. S.P. (RSIB), Jaipur City I, on or after 17th Sept., 1992 and informed Shri V.K. Thanvi, the then Director General of Police, RSIB, Jaipur, complaining of the property and assets of the petitioners, and in this manner. Shri Dilip Shivpuri was the complainant bearing rancour with the petitioners as a result of rivalry in between his cousin, Dr. Deepak Shivpuri, & Dr. Tomar. Thus, it cannot be denied that Shri Dilip Shivpuri, DDI, Income-tax is the first informant and complainant; that, he failed in his machination to get a case registered for an offence punishable under the provisions of the IT Act in the income-tax raid supervised, stage- managed by him, against the petitioners, which ended in a whimper obviously after having found no case made out, and that since he failed in his intrigue, so, in order to save their faces and conceal lapses, he informed other administrative authority, i.e., the present investigating authority which has been pursued for their own purpose and wreak rancour which arose also out of their failure in intrigue. The dominant purpose, as I wrung out from the aforesaid facts and circumstances pointed out in regard to the malafide exercise of power, supra, to register FIR and investigation thereon after being pursued by Shri Dilip Shivpuri is unlawful and to make the character assassination of the petitioners and family members. Thus viewed, registration of the impugned FIR and intended follow-up action is manifestly attended with malafide, with an ulterior motive for wreaking vengeance on the petitioners and with a view to spite them due to private and personal grudge.”

The order of this Court dt. 15th Oct., 1993 has been challenged in the apex Court. The apex Court has upheld the order of this Court dt. 15th Oct., 1993, meaning thereby that the mala fide found on the part of Departmental official, as well as, Addl. S.P. Shri Rohit Mahajan stands. Even the complaint has been made by Dr. Tomar to the Chairman, CBDT against Shri Dilip Shivpuri, the then DDI that he is being cousin of Dr. Deepak Shivpuri has managed this income-tax raid and also instigated Addl. S.P. Shri Rohit Mahajan to lodge FIR against Dr. Tomar and ultimately, this Court, in its order dt. 15th Oct., 1993, observed that source of income stands fully disclosed in the IT or WT returns spanning over last more than ten years and the FIR lodged was so absurd and inherently improbable, inasmuch, as the allegations made in the FIR even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence against Dr. Tomar and that FIR No. 124/92 registered at P.S. Rajasthan State Investigation Bureau, Jaipur has been quashed.

It is an admitted fact that while assessing the value of the house, the AO has totally ignored the valuation report of Departmental Valuer who valued the construction at Rs. 26,29,000 and also the report of approved valuer of the Department who valued the construction cost of the house to the tune of Rs. 24 lacs. About Rs. 25 lacs has been declared by the assessees themselves and the AO placed reliance only on the valuation report of PWD, which isobtained by the Addl. S.P. within two days after income-tax raid and lodged FIR on the basis of that valuation report against Dr. Tomar.

Learned counsel for the Department Mr. Jain failed to show me any justification to make addition on the basis of such valuation report of PWD, which is base of the FIR and FIR has been quashed by this Court and the decision of this Court has been upheld by the apex Court. No other justification has been shown for addition of Rs. 14,57,611 in the hands of Dr. B.S. Tomar for the asst. yr. 1993-94. On the facts stated above and Mr. Jain failed to show me any justification for this addition, the addition as discussed above, should be deleted which has been made on account of valuation of the house based on valuation report of PWD which is not even a final report but a provisional report, on the basis of this report, FIR has been lodged, which is quashed finally.

The next item is addition of Rs. 22,12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF. They equally shared the investment. This plot has been purchased through Sudershan Housing Corporation from Shri Bhagwan Sahai Ramjiwal. The case of the assessees is that they have purchased this plot for Rs. 15,75,000 and before purchase, NOC has been obtained from the IT Department. They have also paid some commission to Sudershan Housing Corporation, an agent through which this plot has been purchased. The amount of plot has been paid in different instalments, partly through Sudershan Housing Corporation and partly, by cheques issued directly in the name of Shri Bhagwan Sahai Ramjiwal, owner of plot. During search at the residence of Dr. Tomar, it is claimed that the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one column, the total of these figures comes to Rs. 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total of these figures comes to Rs. 22,12,500. This piece of paper admittedly neither in the handwriting of Dr. Tomar nor in the handwriting of any member of his family nor it is in the handwriting of an agent through whom the property has been purchased, nor it is in the handwriting of Shri Bhagwan Sahai Ramjiwal, owner of the plot. The exact place of piece of paper has not been shown from which place this paper has been recovered. The statements of Shri Bhagwan Sahai Ramjiwal, as well as, the proprietor of Sudershan Housing Corporation have been recorded. They denied that this piece of paper contains the payments made by Dr. Tomar to Shri Bhagwan Sahai Ramjiwal. Even their accounts were seized but the details given in this piece of paper does not tally with the accounts either of Sudershan Housing Corporation or the accounts of Shri Bhagwan Sahai Ramjiwal. In their statements, they have admitted that the plot was sold to Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF, jointly for the amount of Rs. 15,75,000 and about Rs. 1,50,000 has been paid as commission to Sudershan Housing Corporation through whom the plot has been purchased. If we compare the rate in that locality, Rs. 500 per sq. meter has been prescribed by the JDA for the year 1990 and the adjoining plots are sold at the rate of Rs. 1,205 per sq. meter. Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF, have purchased this plot at the rate of Rs. 1,458 per sq. meter. In the year 1990, sub-Registrar, Jaipur City, has also fixed the rate in this locality Rs. 1,200 per sq. meter.

Mr. Jain was asked to explain and show the justification that whether in these circumstances Rs. 22,12,500 can be added in income of the assessee on the basis of a small slip of paper claimed to have been found at the time of search though that is not in the handwriting of Dr. Tomar. Ignoring all the detailed facts, how the addition of Rs. 22,12,500 can be made in the income of Dr. Tomar for the asst. yr. 1991-92. Mr. Jain, learned counsel for respondents failed to give any justification for addition of Rs. 22,12,500. In view of these undisputed facts, this addition of Rs. 22,12,500 should be deleted. Now I come to the additions made on account of not believing and doubting the genuineness of the amount received from N.K. Enterprises and M/s Roopam Corporation. The case of petitioner that before construction of the house on plot No. B-4, Govind Marg, Jaipur, B.S. Tomar, HUF, has sold 3600 sq. feet underground portion of the house for Rs. 9 lacs to N.K. Enterprises. N.K. Enterprises has paid Rs. 35,000 as earnest money on signing of the agreement and the balance amount has been paid in instalments. Similarly, B.S. Tomar, HUF, again entered into agreement with M/s Roopam Corporation, Naroda, Ahmedabad, and B.S. Tomar, HUF, has sold part of underground measuring about 3,600 sq. ft. to M/s Roopam Corporation for Rs. 9,50,000 and Rs. 50,000 received as earnest money from M/s Roopam Corporation and balance amount has been paid in instalments.

Under the agreement, B.S. Tomar, HUF, has received the sale proceed from N.K. Enterprises as under : . . Rs.28-03-1990 To Debit 35,000 10-04-1990 To Debit 80,000 20-04-1990 To Debit 60,000 04-05-1990 To Debit 60,000 20-05-1990 To Debit 90,000 16-07-1990 To Debit 30,000 25-08-1990 To Debit 1,55,000 12-11-1990 To Debit 50,000 08-01-1991 To Debit 40,000 25-01-1991 To Debit 75,000 10-03-1991 To Debit 66,000 . . 7,41,000 And from M/s Roopam Corporation. Dr. B.S. Tomar HUF has received the sale proceed as under : . . Rs. 13-05-1991 To Debit 50,000 26-05-1991 To Debit 60,000 23-06-1991 To Debit 1,50,000 03-07-1991 To Debit 1,40,000 15-09-1991 To Debit 1,00,000 24-09-1991 To Debit 1,25,000 09-10-1991 To Debit 1,00,000 16-10-1991 To Debit 1,00,000 . . 8,25,000 To this effect, the agreement to sell has been reduced in writing with N.K. Enterprises, as well as, M/s. Roopam Corporation. That was placed before the AO when the order under s. 132(5) has been passed. Similarly, these agreements were made available to the AO. Ignoring these agreements and without enquiry, he added whatever amount has been received from N.K. Enterprises and M/s Roopam Corporation treating as income of Dr. Tomar undisclosed sources.

In subsequent assessment year, in case of B.S. Tomar HUF, enquiries have been made through Departmental officials in Ahmedabad. They enquired about the genuineness of transactions between N.K. Enterprises and B.S. Tomar HUF and transactions between M/s Roopam Corporation and B.S. Tomar HUF and after enquiry, they found that N.K. Enterprises and M/s Roopam Corporation both have capacity to pay the cash to B.S. Tomar HUF, and on enquiry, the officer of IT Department at Ahmedabad found that the amount has been paid by them, as per agreement of sale of part of the property from the share of B.S. Tomar HUF in a house constructed at plot No. B4, Govind Marg, Jaipur. The ADI (Investigation) Unit 4 Ahmedabad has also sent the letter dt. 25th March, 1997 confirming the genuineness of the transaction between M/s Roopam Corporation and B.S. Tomar HUF and the transaction between N.K. Enterprises and B.S. Tomar HUF. Considering this letter from ADI (Investigation) written to the AO, Jaipur further strengthen the case of petitioner that whatever the amount B.S. Tomar HUF has received on a sale of part of its property in the house situated at plot No. B-4, Govind Marg, Jaipur is genuine and no addition can be made either in the hand of Dr. Tomar individual, Dr. Mrs. Tomar individual or in the hand of B.S. Tomar HUF. That is fully explained. The AO has no material. Only on his conjectures and surmises and due to mala fide, he added this entire amount in the income of Dr. Tomar in different years. Not only that, addition of Rs. 22,12,500 has been made on the ground that the plot has been purchased for about Rs. 40 lacs and only Rs. 18 lacs have been shown as cost of the plot. In all, Rs. 22,12,500 has been added in the income of Dr. Tomar for the asst. yr. 1990-91. Again 1/3rd of that amount has again been added in the income of Dr. Mrs. Tomar, in 1990-91 and 1/3rd of that amount in the income of B.S. Tomar HUF in asst. yr. 1990-91. For that Mr. Jain has no explanation how the same amount can be assessed in three hands.

Dr. B.S. Tomar has also received the loans in different years. In 1991, B.S. Tomar HUF received Rs. 45,000 from Ramesh Chandra Sharma; Rs. 90,000 from Smt. Sarojani Devi in the asst. yr. 1993-94; Rs. 17,500 from Shri Prashant Kumar; Rs. 19,500 from Sanjiv Kumar; Rs. 18,000 from Sanjiv Kumar and Prashant Kumar; Rs. 19,500 from M/s Ram Chandra Shri Bhagwan by Dr. Tomar. Mr. Kasliwal submitted that the creditors are assessees in the Department and they have shown their transactions in their IT returns. Dr. Tomar has also taken loans in the asst. yr. 1993-94 Rs. 60,000 from Ashok Kumar Bansal.

All these creditors are assessees in the Department. Even Ashok Kumar Bansal has filed a civil suit against Dr. Tomar and the civil Court has decreed the suit for recovery of Rs. 81,600 from Dr. Tomar. All these creditors have filed the affidavits. In spite of that, the AO has disbelieved the genuineness of the loans and added those amounts in the income of these assessees as income from undisclosed sources. This attitude of the AO further shows prejudice in the mind of AO against these assessees. Without sufficient material, no such additions should be made, but if he has any doubt, he should make enquiry specially when the affidavits are filed and the creditors are assessees of the Department, he can write and enquire from the Departmental officials who have assessed these creditors and if the loan is found genuine, how that can be taken as income of Dr. Tomar. Not only that, in some cases where the jewellery of the family has been sold, that has been disbelieved without taking into consideration the status and financial position of the petitioner and his wife, both are Doctors by profession, they also have the ancestral property in the form of jewellery which was declared much before the search in their regular WT returns. Thus the sale proceeds of this ancestral jewellery of Rs. 99,680 which has already been declared and assessed in the WT assessment much before the search, how the sale proceeds of that jewellery can be added in the income of Dr. Tomar. Further this investment was made in the construction of house, in spire of this, the benefit of provisionder s. 54-F of IT Act, has not been given. In view of all these aforesaid facts, I find no justification in addition on account of loan amount and sale proceeds of jewellery in income of the petitioner and his family member.

Now it brings me to three FDRs of Shri Jayanti Lal Patel, whether it can be treated as the property of petitioner Dr. Tomar? During the search at the residence of petitioner Dr. Tomar, three FDRs No. 0659536/443/90 of Rs. 10,31,158, date of maturity is 16th Nov., 1993; second FDR No. 1350197/426/90 of Rs. 41,000, date of maturity is 4th Oct., 1995; third FDR No. 0659512/441/90 of Rs. 31,653.40, date of maturity is 9th Oct., 1992. After search, the summary order under s. 132 (5) has been passed on 15th Jan., 1993. The petitioner was asked to explain. The petitioner has explained before the Asstt. CIT (Investigation), Circle-I (3), Jaipur. While passing the order under s. 132(5), the Asstt. CIT (Investigation), Circle-1(3) has categorically mentioned that: “these term deposit receipts belong to Shri Jayanti Lal Patel S/o. Shri Maganbhai Patel who is a non-resident Indian residing at 115, Grove Lane, Camberwell, London. Shri Patel is stated to be a very close friend of the assessee and whenever he comes here, he stays with the assessee. Therefore, instead of carrying them to UK he kept the same with the assessee. All the three term deposit receipts are made out of foreign exchange earnings of NRI. Shri Jayanti Lal Patel.

Necessary enquiries in this regard have been conducted from the various banks. The confirmation of Shri Jayanti Lal Patel to this effect has also been filed in which it has been stated that these deposits were made out of his foreign currency brought in India and converted in Indian rupees. In view of the enquiries and evidence, the TDRs are held to be the property of Shri Jayanti Lal Patel and as such these are to be released”.

In a notice to Dr. Tomar under s. 263, inter alia, the CIT required from Dr. Tomar to explain why the order under s.

132(5) of the Act should not be modified wherein the term deposit receipts valuing Rs. 11,03,811 were treated the property of Shri Jayanti Lal Patel. The reason given by the CIT for the notice is that on perusal of record, it shows that proper scrutiny has not been done while treating these FDRs of Shri Jayanti Lal Patel, specially the CIT has emphasised that the Asstt. CIT has not enquired whether the foreign currency brought by Shri Jayanti Lal Patel, whether the money has been converted into Indian currency for the purpose of taking the term deposits. There is no application of Shri Jayanti Lal Patel for taking the aforesaid term deposits.

It appears that the CIT has not applied his mind while issuing notice under s. 263 nor has properly seen the record, in a proceeding under s. 132(5) of the Act. The facts have brought on record that at the time of search, it was explained that these FDRs are of Shri Jayanti Lal Patel NRI (Non-resident Indian). He has his account in the State Bank of Indore. Account bearing No. NRI-7, Station Road, Jaipur. For opening NRI account, passport and states of NRI is sufficient. Mr. Patel came from London in India and while staying in India, he himself opened this account in the year 1990 and those FDRs were made from this NRI account in 1990. This amount in State Bank of Indore has been transferred from the account No. 65002 of Shri Jayanti Lal Patel, in the Branch of Bank of Baroda, Belgium, which has been operated since 1984. While the money flew from branch of Bank of Baroda, Belgium, that has come through RBI. That enquiry has also been conducted and found true.

In the proceedings for order under s. 132(5), Shri Jayanti Lal Patel himself has submitted the affidavit. He came personally from London to India three times and met income-tax authority including the Chairman, CBDT claimed the ownership of these FDRs which were seized by the Department.

It is also pertinent to note that for construction of the house by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF, they have sold part of their building to M/s Roopam Corporation and N.K. Enterprises and after receiving the sale price of the building and utilised that sale proceed about Rs. 15 lacs in the house construction. They have not utilised these FDRs. If they were the owners of the FDRs, why the amount of these FDRs was not used in the construction of house. On the contrary, they have taken loan from different parties and paid heavy interest on that loan amount. Mr. Jain, learned counsel for the Department has not explained and there is no material on record, no reason has been given by the CIT while issuing the notice under s. 263 that if they were the owners of the FDRs, why the amount of FDRs has not been utilised instead of selling the part of the house by B.S. Tomar HUF to M/s Roopam Corporation and N.K. Enterprises.

Mr. Ranka, learned counsel for the petitioner Shri Jayanti Lal Patel submitted that whether it is a benami transaction, the burden lay on the person/authority who says so. Admittedly, the facts on record are that the FDRs were in the name of Shri Jayanti Lal Patel. At the time of search on the spot, it was pointed out to the Departmentofficials that Shri Jayanti Lal Patel is the owner of these FDRs. Shri Jayanti Lal Patel has confirmed this fact. He came to India thrice. It has been explained that how the money has come to State Bank of Indore, Jaipur from Belgium. It has come from the account of Shri Jayanti Lal Patel in the branch of Bank of Baroda, Belgium which account has been operated by Shri Jayanti Lal Patel since 1984. Shri Jayanti Lal Patel categorically stated that he is friend of Dr. Tomar, no purpose would be served to take these FDRs to London, therefore, he left those FDRs with Dr. Tomar. There is no material with the CIT to justify that the money invested in the FDRs is of Dr. Tomar. Apart from that, the Benami Transactions (Prohibition) Act, 1988, has further prohibits the benami transactions and now nobody can claim the ownership of the property against the person, in whose name the property stands. These FDRs are taken subsequently, that is in 1990. Their Lordships have considered what are the factual aspects, which should be considered, while deciding the issue of benami transactions.

In case of Jaydayal Poddar (Deceased) Through L.Rs. & Anr. vs. Mst. Bibi Hazara & Ors. (1974) 1 SCC 3, their Lordships have observed that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on persons asserting it to be so. Their Lordships further observed in para 6 that, though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, yet in weighing the probabilities and for gathering the relevant indicia, the Courts are usually guided by these circumstances: (1) the source from which the purchase money came: (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship; if any, between the claimant and the alleged benamidar; (5) the custody of the title-deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale.

In case of Laljibhai K. Soni vs. Asstt. CIT (1994) 122 CTR (Guj) 169 : (1995) 213 ITR 114 (Guj), the assessee had purchased silver from customs department from 2nd Dec., 1993 to March, 1994. In search, this fact came to the knowledge of search party. The silver was seized. They give explanation that the money for purchase of silver has been received from different parties by account payee cheques. The explanation was not accepted. The issue was considered by the Gujarat High Court in the aforesaid case and held that from the record of case, it was apparent that the petitioner had purchased the silver from customs department during the period from 2nd Dec., 1993 to March, 1994. He had produced the extracts of his account with the bank which showed how he got the money by account payee cheques from different parties, accepting the explanation, the order of Asstt. CIT was quashed.

In case of CIT vs. Daulat Ram Rawatmull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC) : TC 54R.301, the question before their Lordships that firm had opened an overdraft account with a limit of Rs. 10 lakhs against the collateral security of two fixed deposit receipts of Rs. 5 lakhs each, one of which was in the name of B, son of a partner of the firm, and the other in the name of A, son of another partner. The AO has treated the investment in the fixed deposit as investment of the firm. Their Lordships held : (i) that a person could still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money was found to be not correct. From the simple fact that the explanation regarding the source of money furnished by X, in whose name the money was lying in deposit, had been found to be false, it would be a remote and far-fetched conclusion to hold that the money belonged to Y. There would be in such a case no direct nexus between the facts found and the conclusions drawn therefrom. (ii) That the circumstances of the transfer of the amount of Rs. 5 lakhs from Calcutta to Jamnagar for fixed deposit in the name of B and the use soon thereafter of the said fixed deposit receipt as security for the overdraft facility to the respondent firm did not justify the inference that the amount belonged to the respondent. (iii) That the approach of the Tribunal that the firm could not have obtained an overdraft against the security of B’s fixed deposit was erroneous. It is a common feature of commercial and other transactions that securities are offered by other persons to guarantee the payment of the amount which may be found due from the principal debtor. The concepts of security and ownership are different and it would be a wholly erroneous approach to hold that a thing offered in security by a third person to guarantee the payment of debt due from the principal debtor belongs not to the surety but to the principal debtor. (iv) That the fact that B received no consideration for offering the fixed deposit receipt as security for the overdraft facility would not result in any inference against the respondent. (v) That the onus of proving that the apparent was not the real was on the party who claimed it to be so. As it was the Department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of B, the burden lay on the Department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of B. (vi) That the fact that the branch of the bank in Calcutta was in the same building in which there were the busine premises of the firm was a wholly extraneous and irrelevant circumstance for determining the ownership of the sum of Rs. 5 lakhs. (vii) That both as regards the source as well as the destination of the amount, the material on record gave no support to the claim of the Department. There should be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in arriving at the conclusion of fact.

In case of Prahlad Maliram vs. CIT (1987) 63 CTR (Raj) 271 : (1987) 166 ITR 149 (Raj) : TC 51R.1137, the issue before the Court was, can the income of the firm be assessed as income of HUF. There is no evidence that funds invested by coparceners in firm came from the HUF. This Court held that the finding that the assessee of HUF constituted the source of investments in the firm was patently based on conjectures as there was no evidence to support it. Therefore, the income of the firm could not be assessed in the hands of the assessee HUF.

In case of Heirs of Vrajlal J. Ganatra vs. Heirs of Parshottam S. Shah (1996) (5) SCC 4, the question before their Lordships was whether a particular sale is benami? In para 5, their Lordships have observed as under : “The question whether a particular sale is benami or not is largely one of fact. Though there is no formula or acid test uniformly applicable it is well neigh settled that the question depends predominantly upon the intention of the person who paid the purchase money. For this, the burden of proof is on the person who asserts that it is a benami transaction. However, if it is proved that the purchase money came from a person other than the recorded owner (ostensible owner) there can be a factual presumption at least in certain cases, depending on facts, that the purchase was for the benefit of the person who supplied purchase money”.

The above referred decisions of their Lordships clearly shows that burden lay on the authority/person who claims that the particular transaction is Benami.

In notice under s. 263, the CIT simply said that the proper enquiry has not been conducted. He has pointed out only that Asstt. CIT has not enquired whether an application has been given by Shri Jayanti Lal Patel for obtaining FDRs. The material on record brought before the Asstt. CIT in the proceedings under s. 132(5) that at the time of search, it was pointed out on the spot by Dr. Tomar that these FDRs are of Shri Jayanti Lal Patel. Shri Jayanti Lal Patel has come to India and claimed that he has purchased these FDRs out of the amount in his account in State Bank of Indore, Station Road, Jaipur and in this account, the money has been transferred from his account, in the Bank of Baroda, Branch at Belgium. The account has been operated by him since 1984. It is also enquired from Bank of Indore, Station Road, Jaipur, whether application has been given by Shri Jayanti Lal Patel for taking these FDRs. In reply, the Bank authorities of State Bank of Indore have clarified vide letter dt. 6th Jan., 1993 that they have verified from their own record and found that all these three FDRs have been prepared on oral instruction and this is the common practice in case of NRI account to prepare FDR on oral instruction. Shri Jayanti Lal Patel has his NRI account in their Bank. No written application is required in case of NRI for obtaining FDR but while making payment they obtain written instructions from the depositor. In view of the clarification given by the Bank authorities, there is no substance in the objection of CIT in the notice that the Asstt. CIT has not enquired about the application. Not only that, order under s. 132(5) is just a provisional order, final order yet to be passed under s. 143(3) of the Act, but in spite of that, he issued the notice for direction under s. 263 of the Act and ordered that the FDRs should not be released.

The AO has passed a regular assessment order under s. 143(3) also after order under s. 132 (5) of the Act. There also the same amount has been added in the income of Dr. Tomar treating the investment in these FDRs of Dr. Tomar.

In the asst. yr. 1991-92, investment in the FDRs has been assessed in the name of Dr. Tomar. The reason given by the AO that when any property found in possession of any person, the burden lay on the person in whose possession, the property is found. Whether mere possession is enough to hold the ownership of the assets? In case of Benami transaction, the consistent view of their Lordships that burden lay on a person to prove, who asserts that it is a benami transaction.

In the case in hand, the undisputed facts are, the FDRs are in the name of Shri Jayanti Lal Patel. He claimed the ownership of those FDRs. Dr. Tomar has clarified on the spot when search taken place that these FDRs are of Shri Jayanti Lal Patel. It is only the Department who is claiming that Shri Jayanti Lal Patel is not the owner of these FDRs. They belonged to Dr. Tomar, only on the basis that they were found at the residence of Dr. Tomar. It is also admitted fact that after search, the detailed enquiry has been made by the Asstt. CIT before order under s. 132(5) of the IT Act and on the basis of that enquiry, he found that owner of the FDRs is Shri Jayanti Lal Patel. He enquired from various banks how the money flow and who invested in the FDRs. Money flow was from the account of Shri Jayanti Lal Patel. The AO has treated these FDRs of Dr. Tomar only on the basis that once the FDRs are found at the residence of Dr. Tomar, he is the owner of these FDRs and burden lay on him to prove that he is not the owner. It is just a contrary view from the view taken by the apex Court in catena of their decisions.

The FDRs are purchased in 1990. Prior to that, the Benami Transactions (Prohibition) Act, 1988, has come into force. That not only prohibits the benami transaction, but also provide punishment. Sub-s. (3) of s. 3 of the Benami Transactions (Prohibitions) Act, 1988, provides that whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.

In view of these facts and the decisions taken by their Lordships in various cases, I am of the considered view that there is no justification in adding the amount of investment in FDRs in the income of Dr. Tomar. That should be deleted. The FDRs be released forthwith and handed over to Dr. Tomar, who was custodian of the FDRs at the time of search. Dr. Tomar shall give undertaking that if the investment is found of Dr. Tomar, he shall pay the Tax in accordance with the provisions of the IT Act.

51. Now it brings me to the issue whether alternate efficacious remedy is available to the petitioner in the circumstances. In case of Ram & Shyam Co. vs. State of Haryana & Ors. AIR 1985 SC 1147, in para 9, their Lordships have observed as under: “We remain unimpressed. Ordinarily it is true that the Court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Art. 226 where the party invoking the jurisdiction has an effective, adequate alternative remedy. More often, it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law. At any rate it does not oust the jurisdiction of the Court”.

In case of Dhari Gram Panchayat vs. Saurashtra Mazdoor Mahajan Sangh & Anr. (1987) 4 SCC 213, their Lordships have observed as under : “We do not propose to express any opinion on this question since we are of the view that, on the finding that the action of the Panchayat was mala fide, the High Court could have directly interfered with the retrenchment of the workmen under Art. 226 of the Constitution if the workmen had straightway approached the Court without raising an industrial dispute”.

In case of Dr. Bal Krishna Agarwal vs. State of Uttar Pradesh & Ors. (1995) Lab. I.C. (SC) 1396, in para 9, their Lordships have observed as under: “The Writ Petition had been filed in 1988 and it had been admitted and was pending in the High Court for the past more than five years. The learned counsel has also urged that the High Court was not right in saying that there was dispute on questions of fact. According to the learned counsel there is no dispute that the appellant had been selected by the Selection Committee”. Their Lordships have further observed in para 10 as under: “We are of the view that the High Court was not right in dismissing the Writ Petition of the appellant on the ground of availability of an alternative remedy under s. 68 of the Act especially when the Writ Petition that was filed in 1988 had already been admitted and was pending in the High Court for the past more than five years. Since the question that is raised involves a pure question of law and even if the matter is referred to the Chancellor under s. 68 of the Act it is bound to be agitated in the Court by the party aggrieved by the order of the Chancellor.

52. Therefore, when there is no dispute on question of fact and petition is pending for a long time, the High Court should normally dispose of it on merits instead of dismissing it on the ground of alternate remedy.

In Syed Viquar Mohd. vs. Jawaharlal Nehru Technological University, Hyderabad 1984(2) SLR 294, the view has been taken even an alternate remedy has been availed but if it is not efficacious, jurisdiction under Art. 226 of the Constitution can be exercised.

53. Now I come to the question whether the assessment orders passed are mala fide. As discussed above, at the time of search by the Department, the search party has found only jewellery of 12 tola gold and cash of Rs. 7,164 and the FDRs of Shri Jayanti Lal Patel. When nothing was found at the time of search by the IT Department, Shri Dilip Shivpuri, the then DDI who happened to be the cousin of Dr. Deepak Shivpuri, who is a rival in the profession of Dr. Tomar, approached his college-mate Shri Rohit Mahajan, the then Addl. S.P. (RSIB), Jaipur City-I and Shri Rohit Mahajan has obtained valuation report of the house. The house B-4, Govind Marg, Jaipur has been valued for more than Rs. 40 lacs as against Rs. 25 lacs investment shown by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. The FIR has been lodged within five days from the date of search mainly on the basis of valuation report obtained from PWD. Ultimately, that FIR has been quashed and strictures have been passed against Shri Dilip Shivpuri and Shri Rohit Mahajan. The complaints are also filed by Dr. Tomar against Shri Dilip Shivpuri and the then CIT Shri Kanwar Jeet Singh that they have demanded money and are harassing him. After investigation, order under s. 132(5) has been passed and the investment in the plot was found explained. The Asstt. CIT also found that Shri Jayanti Lal Patel is the owner of FDRs. The normal course after order under s. 132(5) is order under s. 143(3), but without waiting for that regular order, a notice under s. 263 of the Act has been issued by the CIT to the effect that why the order under s. 132(5) should not be modified/cancelled, though no proper justification has been given by the CIT for issuing such notice. In regular assessment under s. 143(3) additions of huge amount have been made in the income of Dr. Tomar. Mr. Jain, learned counsel for the Department failed to show any justification for such additions, such as on account of valuation of the house, on the basis of valuation report of PWD ignoring the valuation report of Departmental Valuer, as well as, the approved valuer of the Department. Mr. Jain has also failed to show any justification how the FDRs in question can be treated as the FDRs of Dr. Tomar. The additions of huge amount has been made on account of some figures on a piece of paper which is admittedly neither in the handwriting of Dr. Tomar nor in the hand-writing of any member of his family nor it has been found in any hidden place. A small piece of plain paper wherein some figures are given, which are not tallied even with the account of seller of the plot nor these figures are tallied with the figures in the account of agent through whom the plot B-4, Govind Marg, Jaipur, has been purchased. In their statements, the seller of plot B-4, Govind Marg, Jaipur, as well as, agent through whom the plot has been purchased admitted that the plot has been sold for about Rs. 15 lacs and payment has been received in instalments. The possibility cannot be ruled out that the piece of paper may be planted to create evidence and harass Dr. Tomar, who is rival of cousin of Shri Dilip Shivpuri, the then DDI. When these huge amounts are baseless and without any justification, the conduct of the Departmental officials and their attitude left no doubt that the assessment orders which are passed are mala fide. Once the orders are mala fide, this High Court has jurisdiction to interfere in the orders in exercise of its powers under Art. 226 of the Constitution of India.

The notice under s. 263 of the Act has been issued by the CIT in 1993 whereby Dr. Tomar was required to explain why the FDRs should not be treated the property of Dr. Tomar. That has been challenged by Shri Jayanti Lal Patel and has also made Dr. Tomar as respondent No. 5. In reply, Dr. Tomar has raised all these grievances. Thereafter, he filed the appeals also against the assessment orders. One of the ground in each appeal that the decision of appeal shall be subject to decision of writ petition pending in the High Court.

Mr. Kasliwal also brought to my notice the following strictures passed by this Court against Shri Dilip Shivpuri and Shri Rohit Mahajan: “From the material placed on record, it stands proved that Shri Dilip Shivpuri being cousin of Dr. Deepak Shivpuri (who, in the circumstances spelt out, from the petition, after his machination to get himself posted as Assistant Professor in Paediatrics for which, Dr. B.S. Tomar was to be posted after his return from London, having failed, had been nursing a rancour against Dr. Tomar), and being DDI, Income Tax, had made firstly raid at the house of the petitioners, and when he failed in his machination in the raid which ended in a whimper after anatomising IT returns & assessment orders of the petitioners & family members, he approached his college-mate, Shri Rohit Mahajan who admittedly has been Addl. S.P. (RSIB), Jaipur City I, on or after 17th Sept., 1992 and informed Shri V.K. Thanvi, the then Director General of Police, RSIB, Jaipur, complaining of the property & assets of the petitioners, and in this manner, Shri Dilip Shirpuri was the complainant bearing rancour with the petitioners as a result of rivalry in between his cousin, Dr. Deepak Shivpuri, & Dr. Tomar. Thus, it cannot be denied that Shri Dilip Shivpuri, DDI, Income Tax is the first informant and complainant; that, he failed in his machination to get a case registered for an offence punishable under the provisions of the IT Act in the income-tax raid supervised, stage-managed by him, against the petitioners, which ended in a whimper obviously after having found no case made out, and that since he failed in his intrigue, so, in order to save their faces and conceal lapses,he informed other administrative authority, i.e. the present investigating authority which has been pursued for their own purpose and wreak rancour which arose also out of their failure in intrigue. The dominant purpose, as I wrung out from the aforesaid facts and circumstances pointed out in regard to the mala fide exercise of power, supra, to register FIR and investigation thereon after being pursued by Shri Dilip Shivpuri is unlawful and to make the character assassination of the petitioners and family members. Thus viewed, registration of the impugned FIR and intended follow-up action is manifestly attended with mala fide, with an ulterior motive for wreaking vengeance on the petitioners and with a view to spite them due to private and personal grudge.” That shows Dr. Tomar has no faith in Departmental officials. Just for formality, he has filed appeals and later-on withdrawn the same. Here is a case where it has been clearly proved that entire frame of assessments smacks of mala fides and the assessment orders have originated from malice harboured by the officers of the IT Department personally against the petitioner Dr. Tomar. In doing so they have ignored the clear provisions of law and certain aspects: assessment history of the petitioner, several pieces of evidence, adduced by the petitioner.

It is proved beyond doubt that taxation authority has framed assessment orders purely out of malice both in fact and in law. The petitioner’s case is a proved case of malice in fact and malice in law. The alternate remedy prescribed in Statute by way of an appeal to the CIT(A), who is an officer subordinate to the CIT, Chief CIT and CBDT (respondents Nos. 2 to 4). The appeal before the CIT(A) in the peculiar facts and circumstances of the present case is neither efficacious nor effective remedy. In these circumstances, it can be said that this Court has jurisdiction to interfere in the mala fide orders passed by the AO. When the issue regarding ownership of FDRs has been decided in the writ petition of Dr. Tomar, now that need not require to be decided once again in the petition of Shri Jayanti Lal Patel. Thus, the petition of Shri Jayanti Lal Patel shall stand disposed of in the light of views taken in the petition of Dr. Tomar in respect of ownership of FDRs.

Further, notice under s. 263 of the Act has been issued to show cause why the order under s. 132 (5) of the Act should not be modified, now after summary order under s. 132(5), regular final order under s. 143(3) has been passed, in respect of item considered in order under s. 132(5) of the Act, therefore, order under s. 132(5) no more remains in existence.

61. To sum-up:— (i) The income/assets declared under Amnesty Scheme for the asst. yr. 1984-85 cannot be reopened unless there is positive finding of AO that the income shown by the assessee is not correct or the asset has not properly been valued. (ii) Three FDRs, referred above, is the property of Shri Jayanti Lal Patel. They should be released forthwith and be handed over to Dr. Tomar, who is custodian of these FDRs at the time of search, on an undertaking from him that if the investment in FDRs is found of Dr. Tomar, he will pay the tax in accordance with the provisions of the IT Act. (iii) The value of the house B-4, Govind Marg, Jaipur cannot be taken more than which has been shown by three assessees i.e. Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. (iv) No addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur in the hands of Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. (v) Dr. Tomar and Dr. Mrs. Tomar sold two plots for Rs. 1,71,000. That should be accepted and no double additions should be made presuming that one plot is sold for Rs. 1,71,000. The benefit as required under s. 54-F should also be given. (vi) The loan which has been taken from Ashok Kumar Bansal, and on his suit, the suit has been decreed, that should be accepted as such. The sale proceed of the jewellery should be accepted as genuine and benefit of s. 54-F, if conditions are satisfied, should be given to assessee. Any addition on account of any loan should not be made, if the loan has been taken from the income-tax assessees and they have given affidavits, the AO should verify the genuineness of loan from the concerned official in the Department. If he certifies the loan by creditor who is assessee of the Department, no addition is warranted. Similarly the amount of various gifts be verified, before any addition is made.

In the result, the writ petition of Dr. Tomar is allowed. All the six assessment orders Annexures-IXA to IX-F dt. 22nd March, 1996 and 27th March, 1996 are set aside and also drop the penalty proceedings, if any initiated on the basis of these assessment orders, with a direction to pass fresh assessment orders within three months, in the light of aforesaid discussions. The issue regarding ownership of FDRs of Shri Jayanti Lal Patel has been considered in writ petition filed by Dr. Tomar, there is no need to go into the merits once again in the case of the petition filed by Shri Jayanti Lal Patel as the ownership of Shri Jayanti Lal Patel has been considered in the writ petition filed by Dr. Tomar. That writ petition shall stand disposed of accordingly.

[Citation : 233 ITR 588]

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