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TMI Blog2011 (11) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... d 14.10.1999 and also in ignoring the agreement to sell dated 3.2.2000 erred in making an addition of ₹ 2,00,000/- as unexplained investment u/s 169 of the Income-tax Act,1961. The addition be deleted." 3. In the course of appellate proceedings before us, ld. 'AR' contended that the AO failed to apply his mind to the reasons recorded for the purpose of initiating re-assessment proceedings u/s 147 read with Section 148 of the Act. He was of the opinion that the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P.Ltd. (2007) 291 ITR 500 (S.C) is not applicable to the facts of the present case. Accordingly, he prayed that the re-opening of the case be declared as bad in law. 3(i). In Ground No.2, ld. 'AR' argued the case on merits. He argued that agreement dated 14.10.1999 is the original agreement and the same has not been acted upon by the assessee appellant. Ld. 'AR' was of the opinion that the agreement dated 03.02.2000 is the agreement which has been acted upon, therefore the addition made u/s 69 is uncalled for. He referred to the statement of Mr.Kulbhushan and J.D.Gupta to support his contentions. The ld. ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal in negotiating the deal and had signed the agreement as witness No.1. Shri Arun Goyal though he admits that there was an agreement to sell dated 14.10.99 but this agreement was never acted upon, as the complainant had misquoted the sale consideration at ₹ 85 lacs. The complainant had a vested interest and therefore the agreement was negotiated afresh for 5/6th share at a consideration of ₹ 1600000/- vide agreement to sell dated 3rd Feb.2000 (03.02.2000). Latter, the sale deed was executed on 13th Sept.,2002 for 2/3rd share for consideration of ₹ 12,80,000/- through local commission appointed by Civil Judge (Junior Division) Chandigarh. The drop in the sale consideration was attributed to the following facts; i) Because of violation of the Building Law the Estate Office UT had resumed the property. ii) Appeals before the Advisor to the administrator were also unsuccessful. iii) The matter was subjudice as appeal was pending before the Hon'ble Punjab & Haryana High Court. The appellant has taken up Ground of Appeal first challenging the action of the ITO u/s 47 r.w.s. 148 of the Income-tax Act,1961 and second in sustaining the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the respondent having denied the transfer of money between him and the respective vendor and the vendors having denied the receipt of money from the respondent there ought to have been corroborative evidence to show that there was infact such a transfer of money : CIT V Ved Parkash choudhary SLP (C) No.17329 of 2008 reported in vol. 309 ITR (Statutes) 19. On merits 1. Apparent is real : The onus is on the department to prove that the sale deed dt.13.9.2002 through Court is a shown document. This has not been done. No mention of this document in the entire assessment order. Onus not discharged. 2. Total reliance has been placed upon the statement of the complainant Shri J.D.Gupta also himself could not prove the transfer of the sale consideration of ₹ 85 lacs. 3. The statement of Shri Kulbhushan Garg the seller has been totally ignored. Statement of seller 1. The seller straight away states that the sale consideration is ₹ 1920000/-. There were two registers i) For ₹ 12,80,000/- for 2/3rd share in favour of the appellant. ii) No question of ₹ 85 lacs has been posed to him iii) Denies the authenticity of the agreement to sell dated 14.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p copy of the agreement was given to the seller, therefore he denied knowledge of the attestation by the notary, signatures of the buyers etc. v) The amount mentioned for consideration was ₹ 1920000/-. b) The purchaser : He signed on performa agreement to sell, which was signed by him and his wife at Chandigarh Statements of the other purchaser viz Sanjeev Chadha and Smt.Vinod Kumari, Prop. Shivalik Book Depot, not examined." 6. The brief facts necessary for the disposal of the present appeal are that the assessee filed his return of income declaring estimated business income at ₹ 69500/- and income from house property at ₹ 35,000/-. The return was filed by the assessee on 31.3.2004 which was processed on 15.6.2004 at the returned income u/s 143(1) of the Act. Subsequently, it was noticed by the AO that certain income escaped assessment and consequently a notice u/s 148 was issued on 9.3.2005. The reasons recorded u/s 148 of the Act by the AO are reproduced hereunder : "As per information received from DDIT (Inv)-I Chandigarh vide his letter No. DDIT-I/Inv /2004-05/2342 dated 11.02.2005 received through Addl.CIT, Range-III Chandigarh vide letter No.7695 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. The function of the AO is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v ITO (1991) 191 ITR 662 for initiation of action u/s 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words at the initiation stage, what is required is "reason to believe" but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to believe"-Formation of belief within subjective satisfaction of Assessing Officer-Principle relating to 'change of opinion' Not applicable-Income-tax Act,1961 ss. 143(1)(a),147. Income escaping assessment-Intimation-Claim of assessee for bad debts-Notice for re-assessment on the basis that conditions for allowance were not fulfilled-Valid-Within jurisdiction of AO-Income-tax Act,1961, ss. 36(1)(vii), (2) 132(1)(a), 147,148. Words and phrases _"Reason to believe", "Assessment', "Intimation" meanings of. Under the scheme of Section 143(1) of the Income-tax Act,1961, as substituted w.e.f. April,1989 and prior to its substitution w.e.f. June 1,1999, what were permissible to be adjusted under the first proviso to Section 143(1)(a) were: (1) only apparent arithmetical errors in the return, accounts or documents accompanying the return (ii) loss carried forward, deduction, allowance or relief, which was prima facie admissible on the basis of information available in the return but not claimed in the return, and similarly (iii) those claims which were, on the basis of the information available in the return, prima facie inadmissible and were to be rectified/allowed/disallowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al evidence or conclusion. What is required is "reason to believe" but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the AO. ITO v Selected Dalurband Coal Co. P.Ltd. (1996) 217 ITR 597 (S.C) and Raymond Woollen Mills Ltd. v ITO (1999) 236 ITR 34 (S.C) followed. Taking income escaping assessment in the case of an intimation u/s 143(1)(a) is covered by the main provision of Section 147 as substituted w.e.f. April 1,1989 and initiating re-assessment proceedings in the case of intimation would be covered by the main provision of Section 147 and not the proviso thereto. Only one condition has to be satisfied. Failure to take steps u/s 143(3) will not render the AO powerless to initiate re-assessment proceedings when intimation u/s 143(1) has been issued. Adani Exports v Deputy CIT (Assessment) (1999) 240 ITR 224 (Guj) distingu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on can be said to have been formed where there is application of mind, with reference to the material on record and the relevant provisions of the statute. Hence, under such proceedings, no such opinion is formed by the AO and if there is an escapement of income, then it cannot be contended that the re-assessment proceedings are initiated on mere change of opinion. 11. The case laws cited by the assessee, in the synopsis, reproduced above, on the issue of re-opening the case are not applicable to the facts of the present case, being factually different and distinguishable. The facts narrated in the present case by the AO while recording reasons u/s 148 of the Act, are definite, relevant, credible and have direct nexus to the factum of escapement of income. These reasons are not based on surmises as contended by the ld. 'AR', while placing reliance on the decisions indicated in the synopsis, in the matter. Thus, we are of the considered opinion that none of the case law is applicable to the facts of the present case. The facts of the case are squarely covered by the decision of the Hon'ble Supreme Court, in the case of Rajesh Jhaveri Stock Brokers P.Ltd. (supra). 12 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by the AO and challenged by the assessee in Ground No.2 on merit. The AO made an addition of ₹ 2 lacs as unexplained investment/ u/s 69 of the Act. The ld. CIT(A), upheld the said addition by passing a detailed and speaking order. We consider it essential to reproduce the findings of the ld. CIT(A) on the issue in question for the purpose of proper appreciation of the same : "I have carefully considered the entire material on record. The main contention of the assessee is that agreement dated 14.10.1999 is not genuine. The sequence of events and surrounding circumstances would reveal that the information/documents in possession of the department can be relied upon. The following factors are relevant: i) "Original" attested true copy by Notary, Chandigarh was confronted to the assessee. ii) The assessee has not denied that there was no agreement prior to another agreement dated 3.2.2000. iii) The assessee in his statement and also in written submissions accepted that the assessee had great faith in Mr.J.D.Gupta and signed on the dotted lines. iv) The assessee has admitted that it was in the knowledge of the assessee that the sale consideration was ₹ 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant created agreement The assessee has been showing a true copy of agreement. The assessee himself accepted that agreement was torn. That means the agreement existed. 4 The signatures on the agreement has same spacing & chronology This fact will not affect the validity of agreement. 5 Shri Arun Goyal put signature on stamp. It is not possible. The stamp is generally put on the paper without at times, looking on the signature. This fact will not invalidate the agreement. 6 The agreement to sell is not ₹ 3 stamp paper As far as Income Tax is concerned, this fact is not material 7 Record of Notary Public not examined No need of seeing the record of Notary Public. Statement of Notary Public recorded. 8 Receipt appearing as annexure. Signatures appearing on stamp of Notary The stamp is generally put on the paper without, at times, looking on the signature. This fact will not invalidate the agreement. 9 Agreement requires to be examined by Forensic Expert No need. The assessee himself agrees that there was agreement which was torn. There is no denial of signatures on the agreement. 10 The agreement was without mentioning the amount The agreement mentions the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is almost four months in respect of subsequent Agreement dated 03.02.2000. The sequence of events in the case runs contrary to the probability of human conduct and surrounding circumstances of this case. The assessee failed to explain and rebut such documentary evidence to prove the genuineness of Agreement to Sell dated 03.02.2000 and to prove the non-genuineness of agreement dated 14.10.1999. 14. The AO, as also the CIT(A), appreciated the existence of documentary material to support their findings. It is undisputed fact that original attested true copy by Notary Chandigarh was confronted to the assessee. The Notary also accepted in his statement the contents of the certified Agreement to Sell dated 14.10.1999, in the lieu of such certification by him. In this connection it is pertinent to highlight that the AO is not fettered by technical rules of evidence and pleadings, and he is entitled to act on material which may not be accepted as evidence in a Court of law as held by the Hon'ble Apex Court in the case of Dhakeshwari Cotton Mills Ltd. (1954) 26 ITR 775/Dhakeshwari Cotton Mills V CIT (1955) 27 ITR 126 (S.C). Further, such judicial precedent of the Hon'ble Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. Bare assertions on the part of the assessee that he has not seen the contents of the original agreement dated 14.10.1999 and signed the same accordingly is a specious and self-serving explanation, unsupported by any evidence brought on record by the assessee. No rational person would appreciate that the impugned Agreement to Sell dated 14.10.1999 has been signed without even knowing contents of the same. However, such assertions cannot substitute the cardinal material on the basis of which the CIT(A) has upheld the findings of the AO. The ld. CIT(A), has passed a detailed and speaking order after appreciation of the relevant material and submissions filed by the assessee, as reproduced above. 15. In view of the above legal and factual discussions, we do not find any infirmity in the findings of the ld. CIT(A), and, hence the order of the ld CIT(A) is upheld. Consequently, this ground of appeal raised by the assessee are dismissed. 16. Resultantly, the appeal filed by Shri Arun Kumar Goyal, the assessee appellant is dismissed. Similar findings would hold good in respect of appeal by the assessee appellant vide ITA No. 206/Chd/2009, as similar issues are involved. ITA Nos. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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