9911796707
TMI Blog1988 (7) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,97,000 ₹ 1,80,000 3. Smt. Rafat Zaheer, 12, Golden Beach, Juhu, Bombay. ₹ 1,90,000 ₹ 1,90,000 ₹ 7,56,600 ₹ 7,20,000 During the course of the search operation statements were recorded under s. 132(4) from the above ladies. Smt. Razia Begum stated that the sale consideration of the house sold by her to the assessee and his brothers was only ₹ 4,00,000. She could not explain the sources of cash of ₹ 3,69,600 which was found with her. A statement was recorded from her husband Dr. Zaheer Ahmed in the course of the search wherein he stated that his wife had sold the house property recently to the assessee and his brothers for a sum of ₹ 4,00,000. Smt. Anees Ali stated that the cash found with her represented sale proceeds of her jewellery, gold ornaments and silver articles. Smt. Rafat Zaheer stated that she received the cash from her mother as a gift and that she was not absolutely sure of the nature of the receipt. 3. One and half months after the search, i.e., on 11-5-1984, Smt. Razia Begum filed an affidavit before the' Commissioner of Income- tax (Survey and Investigation), Hyderabad, stating that cash found with her and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s determined the value at ₹ 11,85,000. The Inspecting Assistant Commissioner (Acquisition) in his letter dated 20-5-1985 addressed to the Valuation Officer, requested him to submit a report after visiting the property and after collecting all the relevant materials necessary for proper valuation of the property and after visiting other properties quoted by him earlier as comparable cases. In this revised valuation report forwarded on 12-7-1985, the very same Valuation Officer, Sri B.R. Rao, reestimated the value of the property at ₹ 4.60 lakhs. The acquisition proceedings, which were initiated by the competent authority were held to be not valid by the Tribunal in its order dated 6-11-1986 in IT Acq. A. No. 12/Hyd./1986 on the ground that the provisions of s. 269D(2), which are mandatory, have not been complied with by the competent authority. 5. Be that as it may in the income-tax assessment of the assessee, the Income-tax Officer initially proposed to treat the undeclared consideration as the income of the assessee and his brothers. In the process, he examined the assessee, examined the Valuation Officer, issued summons to Smt. Razia Begum and others, took note of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There was evidence to show that Sri Zahir Ahmed had sold his property on 17-6-1983 for ₹ 12 lakhs. Sri Zahir Ahmed had produced two pages of seribling notes which showed that the property had been sold for ₹ 12 lakhs. If this property had been sold for ₹ 12 lakhs, the property of Smt. Razia Begum which was slightly smaller in dimensions could have fetched ₹ 11.75 lakhs. The IAC enclosed photostat copies of the notes alleged to have been recorded on 2nd February 1983 and 6th April, 1983 and containing signatures of the buyer and seller. (b)The property belonging to Mr. J.P.L. Gwyn in the neighbour- hood on an area of 1,875 sq. metres with a built up area of 314.86 sq. metres had been sold for ₹ 10,80,000. The sale deed had been executed on 22-8-1984. (c)Another property belonging to Smt. Rafat Zahir on an area of 750 sq. yds. together with a residential house had been sold under a deed dated July, 1985 for ₹ 9 lakhs. (d)The IAC pointed out that the averments in the affidavits filed by Smt. Razia Begum have not been effectively countered by the appellant. (e)The IAC also referred to the affidavits of Sri Laxminivas Ganariwal and Sri Kadar Ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings before the appellate authority that the Income-tax Officer was correct in the manner he investigated the matter and, of course, in his conclusions. Therefore, the CIT (Appeals) felt that the Income-tax Officer had put the cart before the horse by straight away putting the material filed by Smt. Razia Begum to the assessee and conducting further proceedings on that basis. He also noticed that there was a serious lacuna in that the department failed to confront Smt. Razia Begum and the assessee at any stage in the investigation or in the assessment proceedings. He also noticed that the Income-tax Officer had issued summons to Smt. Razia Begum on 27-2-1985 but she could not attend because she was ill. Thus, he set aside the order of the Income-tax Officer with a direction to the Inspecting Assistant Commissioner to redo the same afresh after completing the proceedings in the case of Smt. Razia Begum and after giving sufficient opportunity to the assessee in case the Inspecting Assistant Commissioner wanted to make an addition in the assessee's case. The assessee is on appeal before us. 8. The grounds of appeal taken before us are as under:- "The appellant has nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specially when such plea was based on information not relevant to the appellant. The Commissioner of Income-tax (Appeals) cannot go beyond the points raised by the appellant, except when it is a case of enhancement. The appellant submits that the order of the Commissioner of Income-tax (Appeals) is illegal, and having held, that a protective assessment cannot be made, the appellant prays that the appeal should be allowed by deleting the amount of ₹ 85,250. Finally it is submitted that on irrelevant and unconnected material which is found to be totally lacking in proof, the learned Commissioner of Income-tax (Appeals) ought not to have set aside the assessment. The Commissioner of Income-tax (Appeals) has no jurisdiction to set aside an assessment at the instance of the Income-tax Officer. He may by virtue of provisions of section 250(4), himself make enquiries as he thinks fit, or may direct the Income-tax Officer to make further enquiry and report the result of the same to the Commissioner of Income-tax (Appeals). Besides, section 251(1)(a) empowers the AAC/CIT (A) to set aside the order of assessment under appeal and direct the Income-tax Officer to make a. fresh assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the order of the CIT (Appeals) should be cancelled." 9. K. Ranganathachari, learned counsel for the assessee, submitted that the order of the CIT (Appeals) is perverse. The only issue that was before him was whether it was proper for the Income- tax Officer, after an elaborate enquiry and discussion of all the matters and materials having a bearing on the assessment of the appellant, having held that the apparent consideration was the real consideration and that the assessee did not pay a paisa more than what was declared in the document of purchase of the house, to make a protective addition on the premise that if the appellate authorities took a different view, the interests of the revenue should not be jeopardised. The CIT (Appeals) erred in setting aside the order of the Income-tax Officer after having held that the protective addition is not valid. Thus he has travelled beyond the issue before him. The CIT (Appeals) erred in observing that the detailed enquiry conducted by the Income-tax Officer was in a topsy-turvy fashion in that Smt. Razia Begum, the vendor, had not been examined by him. This observation of the CIT (Appeals) was uncalled for, for the disposal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e available and rejected the same as an afterthought just to explain away the surplus monies in her possession and also in the possession of her daughters. Therefore, there is nothing topsy-turvy or hanky-panky in the manner in which the investigation has been conducted by the Income-tax Officer, and, at any rate, it was not the grievance of the assessee before the CIT (Appeals) that the Income-tax Officer had misdirected himself in the conduct of the investigation. Such being the case, the observations of the CIT (Appeals) are most unfortunate, unwarranted, unjustified and have slant in favour of Smt. Razia Begum. 10. Sri Ranganathachari submitted that the CIT (Appeals) erred in holding that the conclusion of the Income-tax Officer in the case of the appellant that there was no payment of money in excess of what had been declared in the registered document was not put to Smt. Razia Begum before framing the assessment. The CIT (Appeals) himself was aware that his conclusions were unsustainable when he said that while framing the assessment of the appellant, the Income-tax Officer ought to have put the result of his investigations to Smt. Razia Begum and this will be evident from h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Commissioner on the basis of some scribblings in a note book which was not shown at the time of search in the residence of the husband of Smt. Razia Begum but was produced before the Income-tax authorities in support of their contention that the consideration was much more than what had been declared, was an extraneous material the very authenticity of which was called in question and the CIT (Appeals), having held that it was not permissible for him to take on record that particular document in the absence of it being established as a genuine document, erred in directing the Inspecting Assistant Commissioner to come to specific conclusions after establishing the genuineness of the document in the case of Dr. Zahir Ahmed and Sri Naresh Kumar who are persons totally strangers to the assessee. This document, though unrelated to the assessee, came up for consideration in the case of purchase of property from the husband of Smt. Razia Begum in the acquisition proceedings in IT Acq. Nos. 1, 2 and 3/Hyd/1986 and the Tribunal at para 25 of its order, dated 13-11-1986 held that there are strong indications to show that, this agreement must have been false, and the reasons are stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample, there are three valuation reports holding different valuations. The Income-tax Officer had not examined Smt. Razia Begum who is one of the kingpins in the transaction. He was in an unseemly haste to complete the assessment and the results of his investigations were not put to Smt. Razia Begum. In fact, in the case of Smt. Razia Begum, she had apprehended that no justice would be done to her in the hands of the Income-tax Officer. Subsequently, the Inspecting Assistant Commissioner had asked for an enhancement on the basis of certain records, chief among them being an agreement on the writing pad of Dr. Zahir Ahmed, husband of Smt. Razia Begum, containing certain agreements between him and one Sri Naresh Kumar and others who are related to the assesses. These special aspects of the matter require reconsideration before a proper assessment could be framed and, therefore, the CIT (Appeals) took note of all these circumstances while setting aside the order of assessment, ordering a fresh enquiry ; there was nothing wrong in his order. He referred in extenso to the order of the CIT (Appeals) and thus justified his action. 16. Having regard to rival submissions and the materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deed the consideration was stated as ₹ 4,00,000 at the instance of the purchasers and that she had invested only ₹ 4,00,000 in National Rural Development Bonds for availing exemption under the Income- tax Act. She explained away her initial statement given to the Income-tax authorities in the course of the search at her premises wherein she had affirmed that she had sold the property for ₹ 4 lakhs, as being due to the fact that she was in total distress and afraid of the consequences which might follow on any statement given by her and that she was in a state of psychological shock and could not present the facts properly. The competent authority in the course of acquisition proceedings deputed the Inspector to visit the property and submit a preliminary valuation report on the property and the Inspector submitted his estimate at ₹ 7,14,000 valuing the. land component at ₹ 300 per sq. yd. and the building at ₹ 1,20,000. There was one valuation by the Valuation Cell and Sri Ch. Veerabhadra Rao, Valuation Officer, in his report dated 26-5-1984, determined the value of the property at ₹ 4,52,925 rounded off to ₹ 4,53,000. This valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of ₹ 500 per sq. yd. in the case of property sold by Smt. Razia Begum to the assessee when he did not apply this rate in the case of similar properties, the Valuation Officer replied that he applied this rate mainly on account of the affidavit of Smt. Razia Begum and the directions of the Superintending Engineer. 17. The Income-tax Officer, in his detailed order dated 23-3-1985, discussed the ramifications of these two Valuation Reports, took into consideration the sale instances in the neighbourhood, discussed each one of them threadbare and supported his conclusion that the fair market value of the property sold by Smt. Razia Begum to Sri Ramesh Pershad and others did not exceed ₹ 4.56 lakhs as on 5-3-1984. 18. Subsequently, the competent authority, in his letter dated 20-5-1985, addressed to the Valuation Officer, requested him to submit a report after visiting the property and after collecting all relevant materials necessary for proper valuation of the property and after visiting other properties quoted by him earlier as comparable cases. In this revised valuation report, forwarded on 12-7-1985, the very same Valuation Officer, Sri B.R. Rao, re estimated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough this transaction might affect both these persons, it is immaterial whether a thorough enquiry is done in one case or the other case. What is significant and material is that there should be a threadbare investigation covering all the aspects of the transaction. The only point to be seen in this case is whether such an enquiry had been conducted by the Income-tax Officer observing the procedures laid down in the Income-tax Act. It may be mentioned that the Income-tax Officer was having jurisdiction over nor only the assessee but also Smt. Razia Begum, the seller in this case. While dealing with the assessment of the assessee, in fact he started with a notice issued on 11-3-1985 asking the assessee to explain why the sale consideration should not be taken at ₹ 11.75 lakhs and not at ₹ 4,00,000 shown in the sale deed, in the light of the affidavit and sworn statement given by Smt. Razia Begum and the second valuation report given by the Valuation Officer and also the affidavits of Sri Lakshminivas Ganeriwal and Sri Kader Ali Khan coupled with the fact that the cash of ₹ 7,56,600 had been found with Smt. Razia Begum and her daughters. This is a very material que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ali Khan had not been examined by the Income-tax Officer. The learned CIT (Appeals), while observing that unless the genuineness of the scribblings, produced by Dr. Zahir Ahmed, was established, it could not be considered in the assessment of the assessee and that all the matters raised by the Inspecting Assistant Commissioner in his enhancement petition could be gone through by him as the order was set aside. Sri Ranganathachari vehemently objects to this course of action. There is substance in his objection that the scribblings on which reliance was placed by the IAC (Asst.) for purposes of making an enhancement, were not at all relevant for the assessment of the assessee. For one thing, the scribblings relate to the property sold by Dr. Zahir Ahmed and not to the property sold by Smt. Razia Begum which is the subject-matter of appeal before us. Secondly, in I.T. Acq. Nos. 1, 2 and 3/Hyd/1986, the Tribunal has held that there are strong indications to show that the agreement found in the writing pad and produced by Dr. Zahir Ahmed must have been false (para 35 of the order). Sri Radhakrishna Murty submits that in disposing of this appeal, the Tribunal should not take note of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another reason for setting aside the assessment as given by the CIT (Appeals) is that Smt. Razia Begum had not been examined by the Income-tax Officer. From a scrutiny of the records, we feel that the Income-tax Officer was not averse to examining Smt. Razia Begum. In fact, he had proceeded to frame the assessment against the assessee on the basis of the averments made by Smt. Razia Begum. to the effect that she sold the property for ₹ 11.75 lakhs taking that to be gospel truth. It was only after he considered the evidence on record, the materials placed by the assessee, the examination and cross-examination of the Valuation Officer and the examination of Sri Laxminivas Ganeriwal, and on a scrutiny of the sale instances in the neighbourhood, that he came to the conclusion that what Smt. Razia Begum had stated in her affidavit was not supported by evidence on record. Even while admitting such a conclusion, the Income-tax officer had issued summons to Smt. Razia Begum but she had not availed of the opportunity. Even in her own assessment, she was pleading with the Income-tax Officer not to proceed with the assessment until the assessment proceedings in the case of her husband ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
