TMI Blog2003 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... e paper the land was agreed to be sold @ Rs. 77 lakhs per acre and the total consideration agreed to be paid was Rs. 7.07 crores. 3. At the time of recording the statement of Shri N.S. Atwal, a special query was put up by the concerned Officer in regard to the paper marked Annexure A-3 and it was replied by Shri N.S. Atwal that he and his family members owned 16 plus acres of agricultural land at village Kishan Garh. Out of this land, some portion was sold earlier and the remaining portion of 9.16 acres known as Sunrise Farm, was agreed to be sold to Shri A.S. Bakshi and his family members @ Rs. 77 lakhs per acre. In reply to further question it was answered by Shri N.S. Atwal that the paper annexed as Annexure A-3, is an agreement for sale of agricultural land and on the date of signing of this agreement, a sum of Rs. 5.51 lakhs was paid by Shri A.S. Bakshi. It was further stated that at the moment of signing, only a sum of Rs. 51,000 was paid and Rs. 5 lakh was arranged by Shri Bakshi in the evening and the same was delivered to Shri N.S. Atwal. In response to Q. No. 24 it was replied by Shri N.S. Atwal that a total sum of Rs. 368 lakhs had been received from Shri A.S. Bakshi a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 158BD the Assessing Officer noticed that assessment under section 143(3) has already been completed and an addition of Rs. 6,83,50,000 have been made under section 69B of the Income-tax Act. It was further noticed by the Assessing Officer that this addition was made on protective basis keeping in view the decision of the Hon'ble Punjab Haryana High Court in the case of Raja Ram Kulwant Rai v. Asstt. CIT [1997] 227 ITR 187. It is further noticed by the Assessing Officer that in regular assessment the addition was made because of insertion of Explanation to section 158BA by Finance (No. 2) Bill, 1998 with retrospective effect i.e., from 1-7-1995 and from this insertion of Explanation, the controversy was set at rest, that the regular assessment will be separate and apart from the block assessment under Chapter XIV-B. The assessee was required to explain the sources of payment of Rs. 6,83,50,000. It was stated that no such amount has been paid by the assessee. It was further clarified that the land was purchased only for Rs. 23.5 lakhs and that is in the names of assessee and his family members through separate 16 sale deeds. Copies thereof were also filed. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or legally argued that the value declared for lending purposes is irrelevant and has no sanctity. The courts have not accepted such double standards and have attached due importance to the declaration and submitted before the banks. Assessee's argument that the Valuation Report for 8th July, 1995 has no relevance for the value as on 29-11-1994 has no force because one valuation intimated to him on the basis of information received from Punjab Sind Bank is for 3rd April, 1990 i.e., much prior to 29-11-1994 and value mentioned therein is Rs. 2.10 crores for 3.812 acres. On the basis of the same the value of 9.16 acres even on 3-4-1990 would come to Rs. 5,08,88,888, the reference to valuation as on 8-7-1995 is indicator of the fact that value declared by the assessee of the land] in registered sale deed(s) is much less than the real value and the consideration actually paid. Assessee is well aware of the fact that Shri Atwal is being assessed atCalcuttaand original seized papers are in possession of the concerned Assessing Officer atCalcuttaand, therefore, insistence of the original papers at this stage was to circumvent true facts. Assessee's repeated reliance on the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e more papers were also enclosed with this report which were sent to the forensic department for verifying the signature, those were copy of Annexure A-3, copy of return filed for assessment year 1996-97 along with computation of taxable income, which were duly signed by Shri A.S. Bakshi. This application also accompanied by copy of statement of Shri N.S. Atwal recorded under section 132(4) on6-11-1996, the date on which the search was made on Shri N.S. Atwal. The learned DR requested to admit these additional evidences as they goes to the root of the matter. 11. The learned Counsel of the assessee filed copy of summarised submissions signed by assessee on the basis of oral submissions made on various dates on earlier hearings started from 5-10-2000 onwards. These submissions also include summarised synopsis to synopsis filed on 5-102000. These synopsis filed on31-5-2001starts from page 17. At page 23, a copy of letter dated28-3-2001is placed. This letter was written by Shri N.S. Atwal to the Additional CIT, Special Range-3,Calcuttain regard to assessment year 1996-97. This was also an additional evidence and the learned Counsel of the assessee requested the Bench to admit this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease the title of the property on the payment of Rs. 2.50 crores. This is evident from page 165 Part 'A' of the paper book. (e) Fourthly, the vendor himself in a suit filed before the Sub-Judge I, Dhanbad in Title Suit No. 124 of 1997, page 87 Part-B of the paper book at page 93, has duly admitted that an estimate of the measurement of land with price and mode of payment were estimated on paper with the total price of Rs. 7.07 crores, payable in instalments upto 19th May, 1995 and both Mr. A.S. Bakshi and Shri N.S. Atwal, signed the said paper as Memorandum of Agreements. All these Agreements were made in the presence of higher officials who technically did not want to be named for the transaction. It is further stated in Clause 15 that as per the Agreement, Mr. A.S. Bakshi did not paid the entire consideration amount to set off the loan account of the Bank and got the land of the Plaintiff as aft the three Plaintiffs executed number of sale deeds with eager desire to remove the burden of bank dues and over business dues. In clause 17, it is stated that the dues against the company were of approximately Rs. 6,47,77,643. It is, thus, apparent that there is no basis for the allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. To be consistent with the claim, obviously, each of the three co-owners would have then either shown or would have been assessed to tax in respect of the sale consideration (had the property been sold as alleged for Rs. 7.07 crores). (h) Seventhly, it is submitted that unless evidence is brought on record establishing that the assessee had made an investment in the year 1995-96 only, for which there is not an iota of evidence, it cannot be held that the assessee had made investment which could be subjected to tax by invoking the provisions of section 69B of the Income-tax Act. It cannot be disputed that the burden to establish that the assessee has made investment of a sum in excess to the declared consideration, rests on the revenue. The mere execution of sale deeds by itself cannot be any evidence to establish that the alleged consideration, as agreed between the parties for which there is no evidence again, was paid before the sale deed was executed when the sale deed does not mention any such figure. In this connection the judgment of Supreme Court in the case of K.P. Verghese, 131 ITR 597 and that of Tribunal in the case of Bigjo's is referred. (i) From the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had invested the said alleged amount and, therefore, the amount cannot be the subject matter of assessment under Chapter XIV-B of the Income-tax Act. (1) It is needless to repeat that the assessment for the assessment year 1995-96 was completed which was set aside on appeal and again, the same has been repeated, pending the disposal of appeal by the Tribunal, even disregarding the contention of the assessee stated in its submissions dated 17th March, 2001, a copy of which has been placed at page 27/31 of the Synopsis." 14A. On the other hand the learned DR firstly made arguments on legal issue. Then he made arguments on merit. In regard to grounds on merit, it was submitted that main thrust of argument of the counsel of assessee is in regard to opportunity, that no proper opportunity was given to the assessee to cross examine two witnesses i.e., Mr. N.S. Atwal and Shri R. Ganeshan. It was submitted by the learned DR that the matter can be restored to the file of the Assessing Officer to allow an opportunity to the assessee for cross examining the two witnesses. 14B. In regard to other grounds it was submitted that there was sufficient material before the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the parties. 16. In regard to letter dated28-3-01filed by Shri N.S. Atwal before the Addl. Commissioner, it was submitted that this letter has no evidentiary value, because of Shri N.S. Atwal has himself disclosed the amount of consideration while filing the return of income earlier. Therefore, this letter has no value now. This is just retraction from its earlier stand, which should not be taken into consideration because this letter has no evidentiary value now. It was further submitted that the assessment order passed in the case of Shri N.S. Atwal has been set aside for consideration and if the department accepts the letter dated 28-3-2001 and delete the addition in the hands of Shri N.S. Atwal, then of course department has no case. Therefore, it was submitted, lastly, that the matter can be restored to the Assessing Officer for fresh consideration in view of the setting aside of the issue in regard to Shri N.S. Atwal. 17. In reply, the counsel of the assessee firstly gave reply in regard to legal objection raised by the learned DR. Further he strongly objected in regard to restoring the matter for granting an opportunity. Again the reliance was placed on the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department while making the addition under section 69B of the Act. The reliance was placed on various case laws. The list of case laws has already been furnished by the counsel on earlier hearings. Accordingly the attention of the Bench was drawn on those case laws. In last, the learned counsel has stated that synopsis filed on5-10-2000and case laws relied upon by him from time to time during the course of hearing should be taken into consideration. 19. It was further submitted that the addition in the case of Shri A.S. Bakshi (HUF) was made on protective basis; whereas the addition of the entire amount had already been made in the case of Shri A.S. Bakshi, Individual. Therefore, it was submitted that the addition made in the hands of HUF was illegal and unwarranted. However, lastly it was submitted that the arguments taken in the case of individual, may be considered in the case of HUF also, as the additions were made in similar circumstances and on the basis of paper seized during the course of search on Shri N.S. Atwal. 20. In reply, the learned DR also submitted that the arguments taken in the case of individual may be considered in the case of HUF also, as the additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s family members and Shri N.S. Atwal and his family members and they were duly registered on29-11-1994. Copies of these sale deeds are enclosed in the paper book in A--section from pages 30 to 159. The details of the payments made by Shri A.S. Bakshi and his family members are placed at pages 1 to 5 of the compilation. 23. A search was conducted at the premises of Shri N.S. Atwal on6-11-1996and some documents and loose papers were found and were seized by the department. Statement of Shri N.S. Atwal was recorded. As per version of the learned counsel these statements were recorded on 7-2-1997 and 31-3-1997, but copy filed by the learned DR shows that the statement of Shri N.S. Atwal was recorded on the date of search i.e., on 6-11-1996 A copy of the same is enclosed along with the application filed by the learned DR on 31-5-2001. Copies of the statements recorded on 72-1997 and31-3-1997are placed in B-section of the paper book at pages 38 to 44. Contents of all these statements are different, which establishes that the statements of Shri N.S. Atwal were recorded on the date of search i.e., on6-11-1996and on7-2-1997and then on31-3-1997. A statement of Shri R. Ganeshan, Personal Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further admitted by Shri N.S. Atwal that he has received a total amount of Rs. 3.68 crores from the assessee on account of sale of the aforesaid agricultural land. The statement of Shri R. Ganeshan was also recorded on31-3-1997, who also confirmed the version of the statement of Shri N.S. Atwal. Accordingly it was confirmed by him also that the document, i.e., page No. 8 of Annexure-3, was signed in his presence, and a sum of Rs. 5.51 lakhs was paid on the day of signing of this document. 27. The proceedings under section 158BC were initiated against Shri N.S. Atwal. On receiving the material from the department, the Assessing Officer issued notice under section 158BD on assessee, Shri A.S. Bakshi in capacity of individual and in capacity of HUF. The proceedings under section 158BD were initiated on the basis of document page No. 8 of Annexure A-3, seized during the course of search on Shri N.S. Atwal and on the basis of statement of Shri N.S. Atwal recorded on6-11-1996and again on7-2-1997and31-3-1997. The notices under section 158BD were issued on23-7-1997; again on 28-8-1997and lastly on23-9-1997. In response to notice under section 158BD issued on23-9-1997, the assessee filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was completed on31-3-1998. 29. As we have already stated that notice under section 158BD was issued lastly on23-9-1997. Similar observations have been made by the Assessing Officer in order under section 158BD, as were made by the Assessing Officer while making assessment under section 143(3). The reason on which the addition was made by the Assessing Officer while completing the assessment under section 158BD, have been recorded in paragraph 4 and the same has already been reproduced somewhere above in the order. 30. After reading deeply these two assessment orders, we nowhere find that reply filed by the assessee has been discussed by either of the Assessing Officers. The assessee repeatedly made requests to summon two witnesses for cross examination. It was further mentioned by him that total land was not purchased by Shri A.S. Bakshi alone, as the same was purchased by three persons i.e., the assessee Shri A.S. Bakshi in his individual capacity, in HUF capacity and by his wife, Smt. Amrita Bakshi and the same has been purchased from three different persons i.e., Shri N.S. Atwal, Shri F.S. Atwal and Shri B.S. Atwal. The consideration was also paid to these three perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y merely took into consideration the page No. 8 of Annexure-3, found during the course of search on Shri N.S. Atwal. Both of the Assessing Officers have not allowed cross examination of the two witnesses, i.e., Shri N.S. Atwal and Shri R. Ganeshan, whose statements were recorded and were relied upon heavily by the Assessing Officer. It is further noted that the Assessing Officer was clarified through the letter that how a prudent person will purchase land for a consideration of Rs. 7.07 crores, especially when he knew that there is a heavy charge on the land to Punjab Sind Bank, from whom the loan was obtained by Mr. N.S. Atwal, which was more than Rs. 4 Crores and the loan was obtained after mortgaging the properties belonging to Shri N.S. Atwal, which includes the agricultural land of 9.16 acres known as Sunrise Farm. It is further noted that it is clarified by the assessee that of course, some deals were agreed upon, but on a later stage, when the assessee came to know that there is a heavy lien on the land, he refused to purchase the land from him. However, after making negotiations with the bank and Shri N.S. Atwal, the assessee agreed to purchase this agricultural land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had received only Rs. 23.5 lakhs against the sale of Farm House known as Sunrise Farm. It was further stated through this letter that Shri A.S. Bakshi fraudulently transferred the land in his name and in the name of his family members and no amount had been paid by him, though it was agreed by Shri A.S. Bakshi that he will clear the loan of Punjab Sind Bank, but he failed to do so. Copy of this letter is placed at page 23 of the Synopsis filed on31-5-2000. After taking all these contentions of Shri N.S. Atwal into consideration, the only inference which can be drawn, that can be drawn that no such valid agreement was entered into between Shri A.S. Bakshi and Shri N.S. Atwal, and no such payment was made by Shri A.S. Bakshi to Shri N.S. Atwal. 34. If we go by the page No. 8 of Annexure A-3, which is enclosed at page 37 of 'B' section of the paper book, from this paper also only inference can be drawn that this paper cannot be equated with a valid agreement. Two parties are entering into an agreement for a consideration of Rs. 7.07 crores, no signature of any witnesses is there; no receipt of any amount is there; even there is no receipt of Rs. 5.51 lakhs, as stated by Shri N.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al v. Asstt. CIT [1999] 70 ITD 62 (Chd.), the additions made under section 69 read with section 158BA were deleted by the Bench. The facts in this case were similar to the facts of the present case here before us. The facts of that case were that as a consequence of search, block assessment was made under section 158BA for the block period 1985-86 to7-9-1995. An addition of Rs. 4.83 lakhs was made on account of premium paid over and above the cost of land purchased mentioned in registered deed. In this regard the Assessing Officer noticed that out of various its seized at residence of a relative, some related to purchase of land. He further noted that in case of assessee the transaction related to 12 bighas of land, the registration of which was made at Rs. 3 lakhs but the consideration paid for the same was at Rs. 7.83 lakhs. It was further noticed by the Assessing Officer that seizure from the house of one "V" confirmed the premium of Rs. 4.83 lakhs, paid over and above the cost mentioned in the registered deed, and hence added back Rs. 4.83 lakhs as income of the assessee from undisclosed sources being unexplained investment in purchase of land. It was contended before the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law and that these provisions have to be construed strictly. Thus, in a situation where the Assessing Officer had failed to comply with the basic provisions of section 69/69B, whereunder the impugned addition had overtly been made it was difficult to accept the plea that the matter may be restored to the file of the Assessing Officer, so that the requisite material can be confronted to the assessee and then the addition made. It is not the function of the Tribunal to further allow opportunity to the Assessing Officer so as to cover up legal lapses made by him while making addition by restoring the matter back to his file. Further, the power of remand under section 254 is required to be exercised in a disciplined and responsible manner and that the same cannot be invoked in a case where the Assessing Officer has not cared to follow the provisions of section 69/69B, inasmuch as no explanation had been called for by the Assessing Officer in relation to the documents relied upon by him for making the impugned addition and further the said documents which were found with other persons, had not been specifically confronted to the assessee. Hence, the plea of revenue to restore the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a difference of opinion in regarding to sending the matter back to the file of the Assessing Officer. The matter was referred to Third Member as per rule of the Income-tax Appellate Tribunal and the Third Member has held that "The powers of the Tribunal in the matter of setting aside an assessment are large and wide, but these cannot be exercised to allow the Assessing Officer an opportunity to patch up the weak part of his case and to fill up the omission. A party guilty of remissness and gross negligence is not entitled to indulgence being shown. Therefore, remand/setting aside order could not be made in this case to enable the Assessing Officer to make up his earlier deficient work by initiating assessment proceedings for the third time after a lapse of considerable time." Therefore, in view of the decision of the Tribunal and in view of the discussion of ours above, we reject the plea of the learned DR in regard to sending the matter back to the file of the Assessing Officer. 40. The Hon'ble Supreme Court in the case of Kishinchand Chellaram has categorically held that without affording opportunity, addition cannot be made in the hands of assessee. In this case before the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the Income tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter datedMarch 9, 1957, and what statements he had made." 41. After observing these observations theApex Courtfurther observed that the burden was on the department to show that the money belonged to assessee by bringing proper evidence on record and the assessee could not be expected to call T and N in evidence to help the department to discharge the burden that lay upon it. Accordingly the additions sustained by Tribunal and High Court were deleted by theApex Court. 42. Here before us the facts are on stronger footing. Only a document w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act was conducted at the premises of Shri N.S. Atwal on6-11-1996. During the search certain papers were seized including the document marked as Annexure A-3. This seized paper revealed an agreement between Shri N.S. Atwal and Shri A.S. Bakshi entered into on19-8-1994. As per this agreement Shri Bakshi agreed to purchase from Shri Atwal 9.16 acres of land known as Sunrise Farms at Kishangarh, Mehrauli,Delhi, at the rate of Rs. 77 lakhs per acre and for total consideration of Rs. 7.07 crores. Shri Bakshi, however, declared the purchase price of 9.16 acres of land at Rs. 23.50 lakhs as per sale deeds executed on29-11-1994. 3. The above information was passed on by the Assessing officer assessing Shri Atwal to the Assessing Officer assessing Shri Bakshi. The Assessing Officer initiated proceeding under section 158BD of Income-tax Act against Shri Bakshi and completed block assessment for the assessment years 1987-88 to 1997-98 (upto 6-11-1996) adding Rs. 6,83,50,000 (Rs. 7.07 crores-Rs. 23,50,000) as unexplained investment under section 69B of the Income-tax Act, 1961. Addition of the same amount was also made in the case of Shri A.S. Bakshi, HUF on protective basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd analysed the contents of the seized document marked as annexure A-3. A copy of the same is placed at page 23 of the proposed order of Ld. JM. This paper contains all the relevant details like 9.16 acres of land, sale consideration of Rs. 7.07 crores at the rate of Rs. 77 lakhs per acre, the date of agreement as on 19-8-1994, payment of Rs. 2 crores on 19-8-1994, balance in two instalments of Rs. 1 crore each in third and fourth month and balance in five instalments of Rs. 60 lakhs each in 5th, 6th, 7th, 8th 9th months i.e., by 19-5-1995. Further this seized document contains signature of Shri N.S. Atwal on right-hand side and signature of Shri A.S. Bakshi on left-hand side. This seized document is in original having its contents, signature etc. in original. In the course of hearing of the appeal before us, the Ld. Sr. D.R. produced the original document which was perused by both of us and was also shown to the learned counsel of the assessee. 8. It is found that as many as three statements of Shri Atwal were recorded in the case. The first was under section 132(4) of the Act on the date of search i.e.,6-11-1996. The second was under section 131(1) on7-2-1997and the third was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been allowed to my authorised representative and we are in the process of finalising out reply to your Department. Q. 4. Have you gone through Question Nos. 10, 18 Question No. 25 of the questionnaire dated17-1-1997which deal with your sale of land to Mr. A.S. Bakshi. Ans. Yes, I have gone through question Nos. 10, 18 25 of the above questionnaire dated17-1-1997. Q .5. How much land you and members of your family owned at Summarise Farms, Kishangarh, Mehrauli,Delhiand how much of it was sold to Shri A.S. Bakshi. About 1982-83 I and my family members owned 16 plus acres of, agricultural land at village Kishangarh which was named by me asSunrise, Farms. Even though it was agricultural land so many brick kilns were coming around and some of them already existed around that land. A part of land was sold by me in 1991 to 1993. About 9.16 acres of the land was sold by me in 1994 to Shri A.S. Bakshi and his family. That was the last piece of land, I and my family members disposed off. Nothing was left thereafter with me atSunrise, Farm. Q. 9. What price you demanded and what offer of rate of land did he make? Ans. He offered a rate of Rs. 77 lakhs per acre to buy entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s agreement shows that you Will get only 700 lakhs (seven hundred lakhs) (two crores now) 1-3 months, 1-4 months, 60-5, 60-6, 60-7, 60-8, 60-9, totalling (not done on the document) to 700 lakhs Can you explain the difference? Ans. It was really a schedule of payment mentioned on right side of the big arrow on this document and was approximately agreed upon to be executed and there could be slight variation in the amount to be paid by Mr. Bakshi from 5th month to 9th month as suitable to him. This means that it could be more in any of the month from 5th to 9th month, it could also be less than 60 lakhs during those months. This is indicated by an curely bracket and a three sided box indicating the scheduled from 5th to 9th month permitting suitability of Mr. A.S. Bakshi by mentioning therein "As suitable to Mr. A.S. Bakshi" Q. 20. Now kindly see signatures on this agreement Do you recognise who has signed over Mr. A.S. Bakshi and do you recognise the signature of Shri A.S. Bakshi? Ans. Signatures over Shri A.S. Bakshi are those of Amarjeet Singh Bakshi and I do recognise them same as his signature. Q. 21. Who has signed over "Mr. N.S. Atwal" on this agreement referred above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed May, 1995/in as per page 8 of annexure document No. 3. Ans. Upto29-11-1994I had received little above Rs. 3 crores. Mr. A.S. Bakshi induced me that Punjab Sind Bank has pot recorded their lien in respect of the land with Registrar, however, by executing the sale deed we can pressurise the Punjab Sind Bank to settle the loan accounts at the principal amount. Under this inducement I executed the sale deed on 29- 11- 1994 in favour of Mr. A.S. Bakshi and his family members without receiving full and final payment as per agreement dated 19-8-1994 which was seized by you." 10. The statement of his close employee Shri R.Ganeshan copies of which are placed in the paper book also gives graphical picture and all details of the background of the agreement as per seized document and subsequent development which confirmed the contents of the seized document and the statement, of Shri Atwal. The seized document was prepared in the presence of Shri Ganeshan besides others. The answer to question No. 8 of Shri Ganeshan gives intimate knowledge of important things of Shri Atwal. 11. The above statements give graphical picture and detailed picture about the background in which the seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Ganeshan as mentioned above. The retraction by Shri Atwal in his letter dated28-3-2001addressed to his Assessing Officer cannot impair and alter the earlier three statements on different dates as mentioned above. The retraction letter to the Assessing Officer was long after the three statements by him referred to above and also, long after impugned assts. In the proposed order, the Ld. JM has admitted the said retraction letter of, Shri Atwal but still that cannot alter the admitted position much earlier and before the impugned asst. The statements were given by Shri Atwal voluntarily and without any coercion or un-due influence. Perusal of the statements would show that Shri Atwal was in free and frank state of mind at the time of statement and he was voluntarily giving all the details and the background of the matter as mentioned in the seized document. In view of this and in the fight of the relevant observation of Supreme Court in decision of Gura Singh v. State ofRajasthan[2001] 2 SCC 205, ITO v. Sadhu Ram Gupta [1998] 66 ITD 441 (Chd.) and Smt Vasanti Sethi v. Asstt. CIT [1992] 43 ITD 447 (Delhi), the statement of Shri Atwal has to be accepted as the correct statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned assessment order that "the information received from Punjab Sind Bank brought to the notice of the assessee also shows that Value of land measuring 3.812 acres as declared i.e., the part of the entire land of 9.16 acres as declared and accepted by the bank was more than the value shown in the registered sale deed(s) and even more than the value at Rs. 7.07 crores. It cannot be logically or legally argued that the value declared for lending purposes is irrelevant and has no sanctity. The Courts have not accepted such double standards and have attached due importance to the declaration submitted before the banks. Assessee's argument that the valuation report for 8th July, 1995 has no relevance for the value as on 29-11-1994 has no force because one valuation intimated to him on the basis of information received from Punjab , Sind Bank is for 3rd April, 1990 i.e., much prior to 29-11-1994 and value mentioned therein is Rs. 2.10 crores for 3.812 acres. On the basis of the same the value of 9.16 acres even on 3 -4-1990 would come to Rs. 5,08,88,888. The reference to valuation as on8-7-1995is indicator of the fact that value declared by the assessee of the land in registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in his submission and the Ld. JM in his observations thereon has relied on certain decisions in support of the view that on the ground of lack of opportunity the addition was liable to be deleted. The facts of the cases referred to in this regard, were not same as the facts of the present case. The Ld. JM is of the view that on the ground of lack of opportunity the addition must be deleted and the Ld. Sr. D.R.'s alternative prayer for restoring the case to the Assessing Officer for passing afresh order after giving reasonable opportunity to the assessee for cross examination, etc. cannot be exceeded to. In support he has referred certain decisions. I respectfully disagree with the Ld. JM on this point. The Assessing Officer had fully and convincingly proved and established that the seized document was genuine and the sale consideration was Rs. 7.07 crores as agreed in the seized document and the sale consideration of Rs. 23.50 lakhs mentioned in the sale deed executed was not real and correct. In fact the setting aside was not going to provide an opportunity to the Assessing Officer to investigate the matter further and bring fresh materials on record but it was going to remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that he had not received the entire amount of Rs. 7.07 Crores as per the seized document. Shri Atwal in his statement stated that he had received over Rs. 3 crores upto29-11-1994vide his statement on31-3-1997. In his earlier statement he had more specifically mentioned that he had received Rs. 3.68 crores upto15-10-1994. In view of this, we can consider only Rs. 3.68 crores as the total payment by Shri Bakshi to Shri Atwal under the agreement as per the seized document. Since the Assessing Officer had accepted the declared sale consideration of Rs. 23.50 lakhs as explained, the unexplained investment would work out to Rs. 3,44,50,000 (Rs. 3.68 crores - Rs. 23.50 lakhs). Addition under section 69B for un-unexplained investment in the hands of Shri A.S. Bakshi individual cannot be made more than Rs. 3,44,50,000. Accordingly, the addition is reduced from Rs. 6,83,50,000 to Rs. 3,44,50,000. 22. I am of the view that in view of the preponderance of evidence as mentioned above and as the assessee was given reasonable opportunity in the course of assessment proceedings under section 143(3) and again in the course of proceeding under section 158BD of the Act, it will not serve any pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the Assessing Officer while framing the Block assessment on the basis of proceeding initiated under section 158BD of the Income-tax Act." THIRD MEMBER ORDER Per Shri R.M. Mehta, Vice-President.-- On a difference arising between the learned Members constituting the Division Bench, the matter has been referred to me under section 255(4) of the income-tax Act to resolve the following: "Whether on the facts and on the basis of material on record the learned Accountant member was correct in sustaining an addition of Rs. 3,44,50,000 or whether the Judicial Member was justified in deleting the entire addition made by the Assessing Officer while framing the block assessment on the basis of proceeding initiated under section 158BD of the Income-tax Act." 2. There is no dispute between the learned Members as regards the facts of the case, but for purposes of disposing of the present reference, I summarize these as under:-- There was a search conducted at the premises of Shri M.S. Atwal on6-11-1996and during the course of which certain papers were found and seized. One of the documents found [marked as Annexure A-3] revealed "an agreement" between the assessee and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts placed on record in respect of a part of property in question. It was specifically confronted to the assessee that in one of the valuation reports viz. the one dated 8-7-1995 an area of land measuring 3.08 acres had been valued at Rs. 3.67 crores and on the basis of this figure, the value of land purchased by the assessee i.e. 9.16 acres was bound to be much higher than the figure shown in the sale deeds. The Assessing Officer in fact by means of the notice sent to the assessee proposed to treat the purchase consideration of the land in question at Rs. 7.07 crores and which would mean an addition of Rs. 6.83 crores. 6. In response to the communication of the Assessing Officer the assessee submitted that the sale consideration be taken as shown in the registered sale deeds and he also asked the Assessing Officer to show him the original documents relied upon by the Department. The further submission was to the effect that information received by the Assessing Officer from the Punjab Sind Bank had been shown to him for the first time and such documents were not part of the record of assessment and, therefore, confronting the assessee with the same in a block assessment was ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 indicator of the fact that value declared by the assessee of the land in registered sale deed(s) is much less than the real value and the consideration actually paid. Assessee is well aware of the fact that Shri Atwal is being assessed atCalcuttaand original seized papers are in possession of the concerned Assessing Officer atCalcuttaand, therefore, insistence of original papers at this stage was to circumvent true facts. Assessee's repeated reliance on the registered sale deed(s) is not acceptable because the value shown therein is self-serving specially in view of the statement of the seller and Ns employee to the contrary. The assessee was made aware by my predecessor of the documents to be used in the course of the regular assessment under section 143(3) but assessee did not choose to co-operate with the Department. The facts fully indicate that assessee has suppressed the investment in Sunrise Farms measuring 9.16 acres and is now trying to get out of predicament one way or the other. Though registered sale deed(s) the name of the buyers have been shown as Shri A.S. Bakshi, Shri A.S. Bakshi (HUF) and Smt. Amrita Bakshi. Yet the seized papers and evidence as well statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the bank had agreed to release the title of the property on the payment of Rs. 2,50 crores; (v) The vendor in a suit filed before Sub-Judge-I, Dhanbad, had duly admitted that an estimate of the property had been made on paper mentioning a total price of Rs. 7.07 crores payable in instalments upto 19th May, 1995 and both the assessee and Shri N.S. Atwal had signed the said paper as a memorandum of agreement. Further a11 agreements were made in the presence of higher officials, who did not want to be named and further it was stated that even as per the agreement the assessee did not pay the entire consideration amount to set off the loan due to the bank and remove thereby the burden of bank dues. Further the dues against the company of Mr. N.S. Atwal were approximately Rs. 6.47 crores and vis-a-vis the aforesaid facts there could be no basis for the allegation that the assessee had paid Rs. 7.07 crores to the vendors; (vi) A suit had also been filed by Shri N.S. Atwal before the Senior Sub Judge, Delhi, and a perusal thereof would show that it had been stated therein that the defendant (the assessee) did not pay the amount either to the plaintiff (Mr. N.S. Atwal) and nor deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 2001filed before the Addl. CIT atCalcutta. Further the circumstances had also been narrated in the two suits filed by Shri N.S. Atwal; (xiv) The revenue could not be allowed to blow hot and cold and there was to be some consistency in the stand of the revenue, which was seeking to rely on the statement of Shri N.S. Atwal, but ignoring in the process the communication dated28th March, 2001. The plea, in other words, was that the statements as also the said letter should be read as a whole before coming to a conclusion; and (xv) There was no justification "to tax the huge amount more particularly in the assessment framed under Chapter XIV-B, which provided that undisclosed income could be taxed only as a result of material/evidence found as a result of a search. 10. As against the aforesaid submissions made on behalf of the assessee, the learned Departmental Representative, at the outset, contended that since the main thrust of the argument of the assessee's counsel was with regard to non-granting of an opportunity to cross examine two witnesses i.e. Shri N.S. Atwal and Shri R. Ganeshan, then the matter could be restored back to the file of the Assessing Officer to allow s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d28-3-2001filed by Shri N.S. Atwal before the Addl. CIT, the submission was that this had no evidentiary value because Shri N.S. Atwal had himself disclosed the sum of Rs. 7.07 crores while filing his return of income earlier and this letter only amounted to a retraction from his earlier stand. It was also submitted by the learned Departmental Representative that the assessment order passed in the case of Shri N.S. Atwal had been set aside for re-consideration and in case the Department accepted the letter dated28-3-2001and deleted the addition in the hands of Shri N.S. Atwal, then the Department had no case. The learned Departmental Representative urged before the Division Bench that the matter could be restored to the Assessing Officer for fresh consideration in view of the setting aside of the issue in regard to Shri N.S. Atwal. In reply, the learned counsel for the assessee objected to the stand taken by the learned departmental representative for having the matter restored back for granting an opportunity. 14. On the merits of the case the learned counsel reiterated that Shri N.S. Atwal had changed his statement a number of times initially accepting that he had received the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Member noted as a fact that the assessee and his family members purchased agricultural land known as Sunrise Farms measuring 9.16 acres from Shri N.S. Atwal and his family members and this was purchased by the assessee in his individual capacity, in the capacity of the HUF and lastly, in the name of his wife, Smt. Amrita Bakshi. The consideration for the land was noted at Rs. 23.5 lakhs and to which was added a further payment of Rs. 45 lakhs on account of the superstructure the total thereby coming to Rs. 68.75 lakhs. At page 20 of the order the learned Judicial Member noted the quantum paid by each of the purchasers as also the land area thereof. The sum of Rs. 45 lakhs for the superstructure was noted as having been expended from three firms/companies. The learned Judicial Member noted as a fact that all the aforesaid payments aggregating Rs. 68.75 lakhs were recorded in the regular books of account maintained by the assessee as also his family members plus the firms/companies. The period of payment was also noted as the month of September, 1994 and onwards. It was also noted as a fact that 16 sale deeds were executed between the parties and registered on29-11-1994. 18. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had informed through written communications to the Assessing Officer theft Shri N.S. Atwal had filed a suit against the assessee, his family members as also against Punjab Sind Bank and further Punjab Sind Bank had filed a case against Shri N.S. Atwal before the Debt Recovery Tribunal, for an outstanding amount exceeding Rs. 10 crores; (vi) The assessee had denied from day one that he had not purchased any land for a consideration of Rs. 7.07 crores and it had all along been admitted that the land in question was purchased for a consideration of Rs. 23.5 lakhs and further building and superstructure was purchased for a consideration of Rs. 45 lakhs and all the aforesaid amounts coming from the books of account of the individuals and the firms/companies; (vii) That the Department had got the property in question valued by the DVO, who had worked out the value of land at Rs. 2.66 crores and the building thereon at Rs. 29.58 lakhs. Further, the DVO valued the cost of additions/alterations as also modifications; and the new construction between the period 29-11-19 94 and upto 31-7-1997 at Rs. 45,23,000; (viii) That the aforesaid valuation report had not been taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28th March, 2001 before the Addl. CIT at Calcutta where it was stated that he had not received any sum from the assessee or from his family members and it was in fact clearly admitted that only a sum of Rs. 23.5 lakhs had been received against the sale of the property in question; (xv) By the same very letter i.e., the one dated 28-3-2001, it was stated that the assessee had fraudulently transferred the land in his name and in the name of his family members and no amount had been paid by him though it was agreed that he [the assessee] would clear the loan of the Punjab Sind Bank, but which he failed to do; (xvi) Taking all the facts and circumstances into consideration, the only inference which could be drawn was that no valid agreement existed between the assessee and Shri N.S. Atwal and no such payment was made by the assessee to the said Shri N.S. Atwal; (xvii) That the document seized viz., Annexure A-3 could not be equated with a valid agreement since it did not bear the signature of any witness, no receipt of any amount had been mentioned although a sum of Rs. 5.51 lakhs had been paid as stated by Shri N.S. Atwal and Shri R. Ganeshan during the course of recordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same very decision of the Chandigarh Bench was also found to be applicable on the merits of the addition itself. Another decision which was relied upon by the learned Judicial Member was that of the Delhi Benches of the Tribunal in the case of Anima Investment Ltd. Third decision which was relied upon was that of the Hon'ble Supreme Court in the case of Kishin Chand Chella Ram and this was for the proposition that an addition could not be made in the hands of an assessee without affording due opportunity to the said assessee. Another decision which was relied upon was that of the Hon'ble Supreme Court in the case of R.B. Shreeram Durga Prasad and Fateh Chand Narsing Das. 22. According to the learned Judicial Member the facts in the case of the assessee were stronger than those considered in the judgments cited since only a document had been found at the premises of Shri N.S. Atwal and there was no evidence about any amount having been paid by the assessee or for that matter received by Shri N.S. Atwal and there was no material which could establish the investment of such a huge amount by Shri N.S. Atwal in case it was so received from the assessee. Further the statement of Shri N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion report pertaining to the mortgage of 3.812 acres of land to Punjab Sind Bank for obtaining a bank loan of Rs. 2.50 crores; (vii) In view of the preponderance of evidence in support of the sale consideration of Rs. 77,00,000 per acre the valuation of land made by the DVO at Rs. 2.96 crores on 29-11-1994 was rightly rejected by the Assessing Officer; (viii) That Shri Atwal filed a suit in the Court of Sub-Judge Dhanbad on 11-12-1997 where he confirmed the sale consideration mentioned in the seized document, but stated that the entire consideration had not been paid to him by the assessee, who also did not clear the bank loan of Shri Atwal, as promised; (ix) That the submissions of the assessee's counsel as also the observations of the learned Judicial Member in his order did not make any dent in the strong clinching evidence contained in the seized document and which was supported by the statements of Shri Atwal and Shri Ganeshan; (x) The retraction by Shri Atwal in his letter dated28-3-2001addressed to the Addl. CIT could not impair and alter the three earlier statements given on different dates and further the retraction letter to the Assessing Officer was much after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench, the counsel and the learned Departmental Representative. In such a situation there are bound to be some repetitions, but my task has been made somewhat easier by the learned counsel for the appellant, who has summarized his arguments in the form of a written note and which is appended at pages 1 to 16 of the paper book which runs into 130 pages. The main submissions of the learned counsel, who has vehemently supported the view expressed by the learned Judicial Member, are as under:-- "(a) That the document seized from Shri N.S. Atwal on the basis of which the impugned addition has been made is mere 'dumb document' and at the best, is in the nature of a mere proposal, which noted in principal, basic detail pertaining to agricultural land, the demand made and the manner of making payment, obviously if agreed on the basis of the proposal. In fact close scrutiny of the paper would show that the figures noted in the said paper is in different ink, pencil and handwriting; (b) That the assessee was unaware, when he had been negotiating, on the basis whereof, the aforesaid proposal was made that the subject property was an encumbered property i.e., it was mortgaged with the bank; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, which appears at page 165 of Part 'A' of the paper book, was furnished; (g) It was further contended that the vendor himself in a Suit filed before Sub-Judge I, Dhanbad, in Title Suit No. 124 of 1997 had duly admitted that, an estimate of the measurement of the land with price and mode of payment were estimated on paper with a estimated price of Rs. 7.07 crores, which sum was payable in instalments upto 19-5-1995. This evidence was furnished to substantiate that no amount was paid as alleged upto 31-3-1995 as is duly admitted by the vendor himself with suit filed in 1997 and further the slip on the basis of which alone addition has been made has been itself discredited as an agreement; (h) In the same Suit it was averred by, Shri N.S. Atwal that Shri A.S. Bakshi had not paid the entire consideration, to set off the loan amount of the bank, and got the land of Shri N.S. Atwal and all the three other plaintiffs executed by number of Sale Deeds, with a desire to remove the burden of bank dues and other business dues; (i) Another Suit had been filed by Shri N.S. Atwal before the Sr. Sub Judge, Delhi, wherein it was averred by the plaintiff i.e., Shri N.S. Atwal, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns but had not disclosed any such extra consideration even in their returns of income filed for the assessment year 1996-97; This itself shows that the assessee had not paid any extra alleged consideration at least in the assessment year 1995-96: (m) That no reliance can be placed on the statement of Shri N.S. Atwal since he was having his share of land only 18 Bighas and 6 biswas whereas, the aggregate land transferred was 43 Bighas and 17 biswas for which, it was alleged by him that he had received Rs. 7.07 crores, which too was later denied by him in writing in a letter filed in the course of his assessment proceedings before the learned Assessing Officer and had been received by his learned Assessing Officer also. This document has duly been admitted by both the Hon'ble Members as reflecting the statement of Shri N.S. Atwal. The aforesaid letter addressed and is dated28-3-2001, reads as under:-- "I wish to make the following submission for the assessment year 1996-97: 1. Due to sudden changes in the Government policy in 1991, our major works for removal of overburden and coal mining with Coal India Ltd. and Its subsidiaries came to a stand still. This had put lot of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p me in my business by aligning with me/my company in new business ventures etc. Under these circumstances, we executed the sale deeds dated29-11-1994. Keeping in view the overall settlement it was found desirable by both of us not to mention anything about the encumbrance of Punjab Sind Bank in the Sale Deeds; 4. After Mr. A.S. Bakshi and his family members took possession of the land/property pursuant to the conveyances, he stopped taking any interest in respect of my problems with Punjab Sind Bank. I made a number of visits to Mr. A.S. Bakshi and requested him either to resolve the Punjab Sind Bank problem or to pay me some amount immediately so that I could negotiate with Punjab Sind Bank on my own. He however did not pay me anything further after execution of sale deeds. In the meantime, Punjab Sind Bank started demanding huge amount towards their dues. They even started recovery proceedings against me probably at the instance of Mr. A.S. Bakshi; 5. Thereafter I filed Court cases against Mr. A.S. Bakshi to rescind and/or cancel the sale deeds. I felt that I had been taken for a ride and has been severely deprived of my legitimate and agreed rights. In order to st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1996-97, which was based on rough paper prepared regarding 3 farm houses as mentioned in Para 5 above, with a view to force Mr. A.S. Bakshi to come to some settlement. My accountant Mr. R. Ganeshan also made statement accordingly with an intention to create a prejudice in the minds of Income Tax Authorities against Mr. A.S. Bakshi. You are requested to kindly make the assessment on the basis of above facts." 27. According to the learned counsel the learned Judicial Member had rightly observed that there was not an iota of evidence to establish that the assessee had made the payment of the amount in question to the seller and, on the other hand, there was only the statement of the seller wherein he had stated receiving a sum of Rs. 3.68 crores from the assessee, but failing to establish or prove where the sum so allegedly received had been invested by him. A reference was also made by the learned counsel to the statements recorded of the seller and his Secretary Shri R. Ganeshan behind the back of the assessee without allowing opportunity of cross examination and there was also a factual observation of the learned Judicial Member to the effect that even after an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the nature of the addition involved as also appreciating that lot of facts have been adverted to, there are once again bound to be repetitions, but I proceed to extract some of the relevant arguments advanced by the learned counsel as follows:-- Hearing on 8-2-2002.:-- "(i) In fact, the aforesaid land had been purchased by the assessee, his wife and the HUF of which he was the Karta along with the superstructure for a total consideration of Rs. 68,50,000 (towards the value of land Rs. 23.50 lakhs and Rs. 45 lakhs towards the value of superstructure) amounts having been paid by the various companies of which the assessee was the shareholder. In other words, an aggregate amount of Rs. 68,50,000 had been paid in respect of the property acquired. The property acquired was wholly an encumbered property and had been mortgaged with Punjab Sind Bank. In fact the aforesaid fact that the property is mortgaged with Punjab Sind Bank and was an encumbered property was not known to the assessee, at the time when the seller had offered the property to be sold. It was thus submitted that in the absence of any positive evidence that the assessee had made any such investment, as allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid statement from the assessee in the course of assessment proceedings., Let alone a copy was not supplied but also the fact any statement was made also not intimated or informed; (v) Further, it will be seen that in the said statement, it has been stated that he had received Rs. 3.80 crores, whereas in the statement dated 7-2-1997, the amounts stated to have been received is Rs. 368 lakhs and in the statement which is of 31-3 1997, it has been stated that he had received a little over Rs. 3.00 crores; while in his written submissions dated 28th March, 2001, in the course of assessment proceedings, for the assessment year 1996-97, he has denied to have received any such said sum; (vi) The learned Accountant Member also has relied heavily on the statement of Shri R. Ganeshan, stated to have given a graphic picture of entire transaction. It will be seen from the statement of Shri R. Ganeshan dated 31-3-1997 (the only statement confronted to the assessee) without producing the witness though requested, that he had stated in answer to Question No. 18 that, cash of Rs. 1,61,76,000 was received from Shri A.S. Bakshi and not any other amount. It is thus submitted that here t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 7-2-1997 it was stated the amount received is Rs. 3,68,000; (3) In the statement recorded on 31-3-1997 it was stated, the amount received is about Rs. 3,00,00,000 (which statement was last made); (4) In the statement recorded of Shri R. Ganeshan on31-3-1997it was stated the amount received by Shri Atwal was Rs. 1,61,76,000; (5) In the documents said to have been seized (which have never seen the light of the day) it was stated to Rs. 7.07 crores; (6) Further in the suits filed before the sub-Judge, Dhanbad and before Senior Civil Judge he has denied to have received any such alleged amount; (7) It is further important to be noted in the verified return of income no such receipt has been shown for the assessment year 1995-96. (iii) Further, it will b e seen that the learned Accountant Member at Page 15 of the Order noted that, "in fact, the setting aside was not going to provide an opportunity to the learned Assessing Officer, to investigate the matter further and being, therefore, the material on record but it was going to remove the assessee's technical grievance of not being allowed an opportunity to cross examination; but it will be seen instead of having so done ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in order to enable the assessee to grant any opportunity and to make his comments with reference to those papers. In these circumstances the appellant believes that those documents had not been referred as the same might not have been in the interest of revenue to do so; (v) In view of the aforesaid, it is submitted that the addition made cannot be sustained on the mere testimony of Shri N.S. Atwal, which alone cannot be regarded as sufficient to sustain the addition, as the witness has never been allowed to be cross examined. The assessee has already furnished in the paper book the letters of the request filed before the learned Assessing Officer seeking examination of the aforesaid witness i.e., Shri N.S. Atwal and Shri R. Ganeshan. The assessee had duly furnished the copies of the orders of assessment and appellate orders, to establish that the orders in the case of Shri N.S. Atwal for the assessment years 1995-96 and 1996-97 have been set aside and also the apparent purpose of offering the income, in the assessment year 1996-97 by Shri N.S. Atwal as also not offering the alleged sums of capital gains in the hands of other owners i.e., Shri F.S. Atwal and Shri B.S. Atwal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the order of the Hon'ble Judicial Member and stressed on the observations made in the aforesaid order on Para 12 and further submitted that from the perusal of the order of the Hon'ble Judicial Member, it would be seen that it was the only basic admitted contention of the Revenue, that the assessee has not been given an opportunity to cross examine Shri N.S. Atwal as the statements, on the basis of which, he had to be cross examined, had not been furnished and, therefore, the learned D.R. only had made a prayer to set aside the assessment and it did not support the order to sustain the addition, since he himself found that there is substantial contradiction in the statement of Shri N.S. Atwal and further there is no evidence that the assessee has been found to have paid the alleged consideration. It was at this stage reiterated the present proceedings are proceedings under Chapter XIV-B, where an addition of undisclosed income can alone be made on the basis of material found or detected as a result of search and in the instant case it was the submission that no such material or evidence has been found." 31. The learned counsel for the assessee relied on the following decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the numerous sale-deeds pertaining to the transfer of the property in question had not been registered and the observations of the learned Judicial Member to this effect were improper; (vi) The signatures on the document, which was the basis for making the addition impugned had been signed by the assessee and this was substantiated by the report of the forensic expert; (vii) All relevant facts of the case were confronted to Shri N.S. Atwal in the statements recorded subsequent to6-11-1996and this was also the position in respect of the statement of Shri Ganeshan, the Secretary to Shri N.S. Atwal. In other words, the assessee could not say that relevant facts of the case were not confronted to him; (viii) In the proceedings under section 143(3) the assessee had not sought cross-examination of the persons in question; (ix) That even in the proceedings pertaining to the block assessment the assessee had initially not asked for cross-examination, but made such a request only at the fag-end when the proceedings were getting barred by limitation and in the latter communications addressed to the Assessing Officer the request for cross-examination did not survive although raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement of law that cross-examination should be allowed in respect of all the material found/collected. It was sufficient in case the primary document had been confronted and under these circumstances non-granting of opportunity to cross examine would not be fatal; (xix) The judgment of the Hon'ble Supreme Court in the case of R.B. Shreeram Durga Prasad and Fatehchand Narsing Das applied by the learned Judicial Member was not relevant since in that case the Settlement Commission did not allow opportunity of being heard whereas the facts were quite different in the assessee's case where material had been confronted to the assessee and due opportunity given to explain his stand; (xx) That a formal cross-examination was not a part of 'natural justice' and in case there had been a violation of the principles of natural justice, then it could not lead to an annulment of assessment, but a set aside for purposes of de novo examination; (xxi) That the basic document for making the addition impugned was the one marked Annexure A-3 and those referred to in the assessment order were over and above/additional items of evidence; (xxii) That the learned Accountant Member had rightly note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to account the point of time at which it was made the ground for retraction and the basis on which the earlier statement had been made and considering the facts of the present case it was apparent that the retraction was without any valid basis or justification; (xxxiv) No useful purpose would have been served by restoring the matter back to the file of the Assessing Officer asking him to allow opportunity to the assessee to cross-examine Shri N.S. Atwal on his first statement since the retraction had taken place at a later stage of the proceedings before the Assessing Officer in the case of said Shri N.S. Atwal; (xxxv) That the document signed by both the parties had been acted upon since the land had been sold to the assessee and part consideration had been received; (xxxvi) That it was not the case of a wholly encumbered property since the area mortgaged to the bank was only around 3 acres and the loan amount was Rs. 2.5 crores and if the total area sold to the assessee was taken into account, then the valuation would double up to more or less the same figure as mentioned in the seized document; (xxxvii) That the statements of Shri N.S. Atwal at different points of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Kar.); (xxi) Dinesh Kumar Mittalv. ITO [1992] 193 ITR 770 (All.); (xxii) CIT v. Khem Chand Bahadur Chand [1981] 131 ITR 336 (Punj. Har.) (FB); (xxiii) Mahmudabad Properties (P.) Ltd. v. CIT [1972] 85 ITR 500 (Cal.); and (xxiv) Sumati Dayal v. CIT [1995] 214 ITR 801 (SC); 34. During the course of the hearing the learned Departmental Representative also placed reliance on certain decisions reported in ELT, AIR and SCC, but wherever copies have been filed, as directed during the course of the hearing, these are being taken into account. 35. The learned Departmental Representative also sought to distinguish the judgments relied upon by the assessee's counsel and to mention some of these specifically they are as under: (i) R.B. Shreeram Durga Prasad Fatehchand Narsingh Das' case; (ii) Ashwani Kumar's case; (iii) Apsara Talkies' case; (iv) Unique Associates Co-operative Housing Society Ltd.'s case; (v) An unreported decision of the Tribunal in the case of Pushp Lata Gupta. 36. In reply the learned counsel for the appellant contended that the sale deeds pertaining to the property in question were registered and further the statement of Shri N.S. Atwal recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only other submission was that an investigator need not confront a document to the other side, but once he became an adjudicator, then he could not kept back anything. This argument was once again with reference to the statement of Shri N.S. Atwal recorded on6-11-1996. I must, however, mention at this stage that on a query, the learned counsel stated that the said first statement of Shri N.S. Atwal had not been used against the assessee, but he hastened to submit that all statements recorded on different occasions has to be read and considered together and, therefore, the first statement itself was required to be confronted to the assessee for purposes of allowing an opportunity to cross-examine. 39. In support of the aforesaid argument, the learned counsel placed reliance on the following decisions: (i) C Vasantlal Co.'s case; (ii) Popatlal Devaram v. CIT[1970] 77 ITR 1013 (Ori.); (iii) Nathu Ram Premchand v. CIT [1963] 49 ITR 561 (All.); and (iv) Rambhai Mania Nayak v.UnionofIndia[1983] 142 ITR 211 (Guj.). 40. I have examined the rival submissions and have also perused the material or record to which my attention was invited during the course of the hearing. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint by the first appellate authority at Calcutta and during the entire hearing of this reference there was nothing said by any party and which would lead me to conclude that his assessment had attained finality. There was in fact a retraction on the part of Shri N.S. Atwal before the Assessing Officer vis-a-vis the extra consideration itself over and above the figure booked in the accounts and which was filed as additional evidence during the course of the hearing before the Division Bench. To this must be linked the changing stand taken by Shri N.S. Atwal at various stages of the proceedings i.e., during the course of the recording of his statements, the averments in the suit filed at Delhi as also at Dhanbad and considering these in totality could his testimony be treated as reliable and that also in a case of a block assessment where the addition has to be made on evidence found during the course of the search and one cannot go on assumptions and presumptions. The learned Departmental Representative in fact argued before me during the present reference that it is a well-known fact that whatever is the amount mentioned in the registered sale deed is not the one which changes han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative for set aside since the learned Judicial Member took the view that non-granting of opportunity for cross-examination was fatal to the addition whereas the learned Accountant Member very oddly took the view that this would serve no useful purpose and it would at the most serve the assessee's purpose and not that of the Assessing Officer. These observations, in my opinion, are rather odd since a Court is not expected to watch the interests of any party, but only those of justice. I am not in agreement with the learned Departmental Representative when she contends that cross-examination is not part of the principles of natural justice. In my opinion, if this argument is accepted, then the statement recorded on which cross-examination is not allowed is also to be ignored. Anything used against an assessee has to be confronted. I may only mention at this stage that the learned Departmental Representative's submission to the effect that the initial statement of 6-11-1996 had not been used against the assessee remains unchallenged on behalf of the learned counsel and I, therefore, do not propose to detain myself any further with this statement. 45. A set aside could have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parent from the originals produced during the course of the hearing and I must say that the learned Departmental Representative argued to the contrary. Another submission by her was that there were some factual inaccuracies in the order of the learned Judicial Member, but none have been pin-pointed during the course of the present hearing. Another submission was that the report of the DVO in respect of the property was not binding on the Assessing Officer. Without entering into the legal aspect of this submission, all that I would like to observe is that the report of the DVO is at a figure much lower than the sum of Rs. 7 crores and odd which is attributed to the property vis-a-vis the seized document. 49. Much was argued by the parties about the mortgage of the property with the Punjab Sind Bank as also the meaning and impact of the term 'encumbered' but in my opinion these arguments are to be considered not in isolation, but as a part of the numerous facts, which have emerged during the course of the hearing before the Division Bench and now before me and as I have already stated the principle of "preponderance of probabilities" has also to be kept in mind and one must appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant Member ultimately confirmed an addition of Rs. 3.68 crores and not Rs. 7.07 crores. He has also referred to capital gains being declared in the case of Shri Atwal taking into account the amount mentioned in the seized document, but the subsequent events pertaining to the assessments of Shri Atwal have been overlooked. He also upheld the action of the Assessing Officer in not accepting the report of the DVO, but as already observed by me, this aspect of the matter has to be considered only for a limited purpose and that is to determine the prima facie value of the property in question. The learned Accountant Member has also referred to the retraction of Shri N.S. Atwal, but as already observed by me this was relevant to the assessment of Shri Atwal and it was best that his Assessing Officer should have considered whether the retraction was in order or not, but in so far as the present proceedings were concerned, this was only one factor, which showed that the assessment in the case of Shri Atwal was not final and his Assessing Officer had to determine as to what was the amount which changed hands i.e. whether Rs. 7.07 crores, the figure as stated by the assessee in his records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viduals and other entities; (iii) The figure of Rs. 7.07 crores mentioned in the document could not be the one at which a prudent person would purchase land especially when he knew that there was a heavy charge on the said land with Punjab Sind Bank from whom a loan of a few crores had been obtained by Shri N.S. Atwal; (iv) There were conflicting statements by Shri N.S. Atwal at various stages of the proceedings, before the courts at Dhanbad andDelhiand lastly, in his own assessment when he completely retracted from the stand taken in earlier proceedings; (v) That even if a valid 'agreement' had been entered into between the parties and by this the reference is to the seized document, the Department still had to prove that the amount stated in the said seized document changed hands between the parties when the registered documents and the books of account revealed a completely different position; (vi) That although Shri N.S. Atwal at one stage mentioned a sum of Rs. 3.68 crores as receipt from the assessee, but no material was found in his case and which would show as to where such a huge amount had been kept/invested by him. 53. The Third Member decision of the Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a third person. In case the statement of the third person is recorded with reference to the notings, then such a statement undoubtedly has to be confronted to the assessee and he is to be allowed an opportunity of cross-examination. In the present reference the document in question has not been found from the assessee's possession, but from the possession of Shri Atwal and undoubtedly no opportunity of cross examination has been allowed to the assessee and it has clearly emerged from the record and as amply discussed in the present order itself the testimony of Shri Atwal is not credible at all since in three separate statements he has indicated different figures, his Secretary Shri Ganeshan has given yet another figure and in proceedings before the two different courts at Delhi and as far away at Dhanbad, he has given a different picture altogether and lastly, in his Income-tax assessment he has retracted from all his earlier statements and has categorically stated that the document which has been signed both by him and by the assessee contains only projections and purported figures in respect of the property in question. In other words, the entire addition in the hands of the ass ..... 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