TMI Blog2005 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) of the Income-tax Act, 1961 ("the Act"), at the instance of the assessee: "1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that reopening of the assessment under section 147(a) of the Income-tax Act, 1961, could not be reagitated after the said point was consciously waived by the assessee vide letter dated August 10,1990, submitted to the Commissioner of Income-tax (Appeals)? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the assessing authority had jurisdiction to initiate proceedings for reassessment under section 147(a) of the Act? 3. Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming the addition of Rs. 1,85,900 representing the difference between purchase price of the first floor of the house property at Athugar Street, Nanpura, Surat, as recorded in the seized diary and the purchase price shown in the agreement for purchase of the said property?" The assessment year is 1984-85 and the relevant accounting period is S.Y. 2039. The assessee filed return of income on June 30, 1984, declaring total income of Rs. 37,510. The said ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration and apparent consideration. It was held by the Assessing Officer that this sum represented the component of "on money" which the assessee had paid for purchasing the property. The addition was made under section 69 of the Act vide order dated February 28, 1990. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals), who confirmed the assessment order, vide his order dated August 10, 1990. The assessee had raised twofold challenges before the Commissioner (Appeals): the first one was relatable to the validity of proceedings initiated under section 147(a) of the Act, and the second one was in relation to merits of the addition of Rs. 1,85,900. The Commissioner (Appeals) recorded that the first challenge as to initiation under section 147(a) of the Act was not pressed. The assessee carried the matter in appeal before the Tribunal. The issue regarding challenge to initiation of proceedings under section 147(a) of the Act was specifically raised and urged before the Tribunal. However, the Tribunal rejected the said contention holding that the assessee, having waived the contention before the first appellate authority, could not be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one diary had no evidentiary value and it could not override the evidentiary value of the agreement for sale, the sale document and the books of account maintained by the assessee. That whosoever was the author of the noting made in the diary had committed an error in writing Rs. 3,76,321 instead of Rs. 1,76,121. Therefore, in the face of this evidence, even if the burden was on the assessee, the same stood discharged and the Department was required to file cogent evidence in rebuttal and conclusively establish by bringing positive material on record to prove existence of any unaccounted investment. That the authorities had failed to appreciate that in relation to the transaction in question the assessee had submitted Form No. 37G as prescribed under the Income-tax Rules, 1962, but no acquisition proceedings had been commenced by the Department. On the basis of this, it was contended that the respondent ought to have undertaken an exercise to correctly evaluate the market value of the property before treating the amount mentioned in the noting on the last page of the diary as being the sale consideration. She placed reliance on the decision of the apex court in the case of Dhakeswa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 21, 1987. It was on the basis of this communication that the representative of the assessee had not pressed the aforesaid point before the Commissioner of Income-tax (Appeals). The Tribunal has wrongly treated this as a conscious waiver on the part of the assessee. In fact, the Tribunal failed to appreciate that the challenge to reassessment proceedings before the Tribunal was on entirely different grounds and had nothing to do with pendency of the original return, once the assessee having come to know that the original assessment had been framed before issuance of notice under section 148 of the Act. In these circumstances, question No. 1 is answered in the negative, i.e., in favour of the assessee and against the Revenue. In so far as question No. 2 is concerned, the facts on record go to show that the assessee cannot succeed. The original assessment had been completed under section 143(1) of the Act accepting the returned income. Though this order was made on January 21, 1987, and the search proceedings took place on November 6, 1985, there is nothing on record to show that while framing the original assessment the assessing authority had any material before it which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session. The ownership of the diary has not been denied by either of them. Therefore, under section 132(4A) of the Act a statutory presumption arises and it is for the person from whose possession the seizure has been effected to explain the document and its contents. Neither the assessee nor her husband have produced the person who is supposed to have made the noting. Section 69 of the Act provides that in the case of investments which are not recorded in the books of account, if any, maintained by the assessee, and the assessee offers no explanation, or explanation offered by the assessee is not satisfactory in the opinion of the Assessing Officer, the value of the investments may be deemed to be income of the assessee for such financial year. In the present case the value of the property reflected in the noting in the seized diary is in excess of the value reflected in the books of account and the explanation offered by the assessee has not been found to be satisfactory by the authorities below and the Tribunal. In these circumstances, the authority is statutorily empowered to deem the difference as income of the assessee for the year under consideration by exercise of the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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