TMI Blog1997 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery of 12 tola gold and Rs. 7,164 in cash were found. In addition to jewellery of ladies of family and cash amount of Rs. 7,164, 3 FDRS in the name of one Shri Jayanti Lal Patel were also found during the search. The petitioner explained that these FDRs are of Shri Jayanti Lal Patel, a friend of Dr. Tomar. When that search resulted in failure, one FIR No. 124 of 1992 has been lodged on September 23, 1992, against Dr. Tomar for the offences punishable under sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988. In the FIR, the allegation against Dr. Tomar was that he possessed assets disproportionate to his income. The assets consist of a plot and a house raised thereon. Dr. Tomar challenged that FIR and prayed that FIR No. 124 of 1992 be quashed. The submission of Dr. Tomar before the High Court was that Shri Dilip Shivpuri, being a cousin of Dr. Deepak Shivpuri, who happened to be a colleague and rival in the profession, Shri Dilip Shivpuri has malafidely acted and arranged the first income-tax raid. Then in connivance with his friend, Shri Rohit Mahajan, who was the then Additional S. P. (RSIB), Jaipur City, a FIR has been lodged against Dr. Tomar. The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch 22, 1996, and March 27, 1996. A contempt petition has also been filed by Shri Jayanti Lal Patel that in spite of stay of proceedings under section 263 of the Act, the aforesaid assessment orders have been passed. Mr. Jain, learned counsel for the Department, has submitted that regular assessment orders under section 143(3) have been passed after summary order under section 132(5) of the Act and these assessment orders are not passed in pursuance of a notice under section 263 of the Act. At present I am not concerned with the fact whether the aforesaid six assessment orders are passed in pursuance of the order under section 132(5) or in pursuance of the notice under section 263 of the Act. In these petitions, I am basically concerned whether the additions made are baseless or there is any justification to assess the income as referred to in these six assessment orders. In these six assessment orders, the assessment order for the year 1984-85 which was assessed about 13 years back, has been reopened and the income assessed at Rs. 1,69,174. In the assessment year 1990-91, the amount invested by B. S. Tomar HUF and Dr. Mrs. Tomar to the tune of Rs. 8,34,043 has been added in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added. Thus, this is second addition of the same amount. These are the main additions, in all the six assessment orders though the loans taken in the different years are also added as income from unexplained sources, in spite of the fact that the assessees, Dr. Tomar and Dr. Mrs. Tomar and B. S. Tomar Hindu undivided family, have filed the affidavits of the money-lenders and even in some cases, the suit has been filed in the civil court for recovery of the amount and the court has passed a decree against Dr. Tomar for recovery of a loan. The genuineness of the loans are disbelieved and that amount added in the income of Dr. Tomar in different years. The submission of learned counsel for Dr. Tomar is that the departmental officers are biased while passing the aforesaid assessment orders. The Assessing Officer had demanded money. Even some allegations are levelled against the then Commissioner, Shri Kanwar Jeet Singh. Complaints have been made to the Chairman of Central Board of Direct Taxes on December 7, 1993, and March 20, 1995, regarding harassment and demand of money. In spite of that, these baseless additions are made in the income of Dr. Tomar and his wife, Dr. Mrs. Shobha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the plot, as well as the house has been just made double. The entire investment shown has been treated as income of Dr. Tomar which has no justification. Even when the petitioner sold two plots for Rs. 1,71,000, they have treated Rs. 1,71,000 as the value of one plot and just made it double, i.e., Rs. 3,42,000 and no benefit of section 54F of the Act has been given. When the appeals have been filed, they have taken one of the grounds in the appeals that the decision in the appeals will be subject to the decision of this court in the writ petition. That shows that the assessees had no faith in the officials after suffering lot in the hands of biased officials in the Department. In reply filed by Dr. Tomar, in the petition filed by Jayanti Lal Patel, he raised all these objections which the petitioner Dr. Tomar has raised in his Writ Petition No. 2879 of 1997. It is also pertinent to note that reply filed by Dr. Tomar is prior to the filing of appeals before the Commissioner of Income-tax (Appeals). The appeals filed before the Commissioner of Income-tax (Appeals) are also withdrawn. When no effective, adequate and efficacious remedy is availed from the authority, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent can be added in the value already assessed and that total value comes to Rs. 40,44,329. On the basis of this valuation report which is obtained by the Additional S. P. to fabricate a false case, from the PWD a FIR No. 124 of 1992 has been lodged against Dr. Tomar for the offences under section 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988. That FIR has been challenged in this court and this court has quashed the FIR which is mainly based on the valuation report of the PWD which estimated the cost of the house at more than Rs. 40 lakhs. While quashing the FIR, this court has passed strictures against the then DDI, Shri Dilip Shivpuri, and Shri Rohit Mahajan, the then Additional S. P. (RSIB), Jaipur City. The relevant portion of the judgment reads as under : "From the material placed on record, it stands proved that Shri Dilip Shivpuri being cousin of Dr. Deepak Shivpuri (who, in the circumstances spelt out, from the petition, after his machination to get himself posted as Assistant Professor in Paediatrics for which Dr. B. S. Tomar was to be posted after his return from London, having failed, had been nursing rancour against Dr. Tomar), and being Dy. Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect Taxes against Shri Dilip Shivpuri, the then DDI that he being cousin of Dr. Deepak Shivpuri has managed this income-tax raid and also instigated Additional S. P., Shri Rohit Mahajan, to lodge FIR against Dr. Tomar and ultimately, this court in its order dated October 15, 1993, observed that the source of income stands fully disclosed in the income-tax or wealth-tax returns spanning over last more than ten years and the FIR lodged was so absurd and inherently improbable, inasmuch as the allegations made in the FIR even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence against Dr. Tomar and that FIR No. 124 of 1992 registered at P. S. Rajasthan State Investigation Bureau, Jaipur, has been quashed. It is an admitted fact that while assessing the value of the house, the Assessing Officer has totally ignored the valuation report of the departmental valuer who valued the construction at Rs. 26,29,000 and also the report of the approved valuer of the Department who valued the construction cost of the house to the tune of Rs. 24 lakhs. About Rs. 25 lakhs has been declared by the assessees themselves and the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the handwriting of Dr. Tomar nor in the handwriting of any member of his family nor is it in the handwriting of an agent through whom the property has been purchased, nor is it in the handwriting of Shri Bhagwan Sahai Ramjiwal, owner of the plot. The exact place of piece of paper has not been shown from which place this paper has been recovered. The statements of Shri Bhagwan Sahai Ramjiwal, as well as the proprietor of Sudershan Housing Corporation have been recorded. They denied that this piece of paper contains the payments made by Dr. Tomar to Shri Bhagwan Sahai Ramjiwal. Even their accounts were seized, but the details given in this piece of paper do not tally with the accounts either of Sudershan Housing Corporation or the accounts of Shri Bhagwan Sahai Ramjiwal. In their statements, they have admitted that the plot was sold to Dr. Tomar, Dr. Mrs. Tomar and B. S. Tomar HUF jointly for the amount of Rs. 15,75,000 and about Rs. 1,50,000 has been paid as commission to Sudershan Housing Corporation through whom the plot has been purchased. If we compare the rate in that locality, Rs. 500 per sq. meter has been prescribed by the JDA for the year 1990 and the adjoining plots ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebit 60,000 23-6-1991 " Debit 1,50,000 3-7-1991 " Debit 1,40,000 15-9-1991 " Debit 1,00,000 24-9-1991 " Debit 1,25,000 9-10-1991 " Debit 1,00,000 16-10-1991 " Debit 1,00,000 --------------------- 8,25,000 --------------------- To this effect, the agreement to sell has been reduced in writing with N. K. Enterprises, as well as Roopam Corporation. That was placed before the Assessing Officer when the order under section 132(5) has been passed. Similarly, these agreements were made available to the Assessing Officer. Ignoring these agreements and without enquiry, he added whatever amount has been received from N. K. Enterprises and Roopam Corporation treating as income of Dr. Tomar from undisclosed sources. In the subsequent assessment year, in case of B. S. Tomar Hindu undivided family, enquiries have been made through departmental officials in Ahmedabad. They enquired about the genuineness of transactions between N. K. Enterprises and B. S. Tomar Hindu undivided family and the transactions between Roopam Corporation and B. S. Tomar Hindu undivided family and after enquiry, they found that N. K. Enterprises and Roopam Corporation both have capacity to pay the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their income-tax returns. Dr. Tomar has also taken loans in the assessment year 1993-94, Rs. 60,000 from Ashok Kumar Bansal. All these creditors are assessees in the Department. Even Ashok Kumar Bansal has filed a civil suit against Dr. Tomar and the civil court has decreed the suit for recovery of Rs. 81,600 from Dr. Tomar. All these creditors have filed the affidavits. In spite of that, the Assessing Officer has disbelieved the genuineness of the loans and added those amounts in the income of these assessees as income from undisclosed sources. This attitude of the Assessing Officer further shows prejudice in the mind of the Assessing Officer against these assessees. Without sufficient material, no such additions should be made, but if he has any doubt, he should make enquiry specially when the affidavits are filed and the creditors are assessees of the Department. He can write and enquire from the departmental officials who have assessed these creditors, and if the loan is found genuine, how that can be taken as income of Dr. Tomar. Not only that, in some cases where the jewellery of the family has been sold, that has been disbelieved without taking into consideration the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made out of his foreign currency brought in India and converted in Indian rupees. In view of the enquiries and evidence, the TDRs are held to be the property of Shri Jayanti Lal Patel and as such these are to be released." In a notice to Dr. Tomar under section 263, inter alia, the Commissioner required from Dr. Tomar to explain why the order under section 132(5) of the Act should not be modified wherein the term deposit receipts valuing Rs. 11,03,811 were treated the property of Shri Jayanti Lal Patel. The reason given by the Commissioner for the notice is that on perusal of record, it shows that proper scrutiny has not been done while treating these FDRs of Shri Jayanti Lal Patel, specially the Commissioner has emphasised that the Assistant Commissioner has not enquired whether the foreign currency was brought by Shri Jayanti Lal Patel, whether the money has been converted into Indian currency for the purpose of taking the term deposits. There is no application of Shri Jayanti Lal Patel for taking the aforesaid term deposits. It appears that the Commissioner has not applied his mind while issuing notice under section 263 nor has he properly seen the record. In the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttedly, the facts on record are that the FDRs were in the name of Shri Jayanti Lal Patel. At the time of search on the spot, it was pointed out to the departmental officials that Shri Jayanti Lal Patel is the owner of these FDRs. Shri Jayanti Lal Patel has confirmed this fact. He came to India thrice. It has been explained how the money has come to the State Bank of Indore, Jaipur, from Belgium. It has come from the account of Shri Jayanti Lal Patel in the branch of Bank of Baroda, Belgium, which account has been operated by Shri Jayanti Lal Patel since 1984. Shri Jayanti Lal Patel categorically stated that he is a friend of Dr. Tomar, that as no purpose would be served to take these FDRs to London, therefore, he left those FDRs with Dr. Tomar. There is no material with the Commissioner to justify that the money invested in the FDRs is of Dr. Tomar. Apart from that, the Benami Transactions (Prohibition) Act, 1988, further prohibits the benami transactions and now nobody can claim the ownership of the property against the person, in whose name the property stands. These FDRs are taken subsequently, that is in 1990. Their Lordships have considered what are the factual aspects, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner of the firm, and the other in the name of A, son of another partner. The Assessing Officer has treated the investment in the fixed deposit as investment of the firm. Their Lordships held : (i) that a person could still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money was found to be not correct. From the simple fact that the explanation regarding the source of money furnished by X, in whose name the money was lying in deposit, had been found to be false, it would be a remote and far-fetched conclusion to hold that the money belonged to Y. There would be in such a case no direct nexus between the facts found and the conclusions drawn therefrom. (ii) That the circumstance of the transfer of the amount of Rs. 5 lakhs from Calcutta to Jamnagar for fixed deposit in the name of B and the use soon thereafter of the said fixed deposit receipts as security for the overdraft facility to the respondent firm did not justify the inference that the amount belonged to the respondent. (iii) That the approach of the Tribunal that the firm could not have obtained an overdraft against the security of B's fixed dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidence to support it. Therefore, the income of the firm could not be assessed in the hands of the assessee-Hindu undivided family. In case of Heirs of Vrajlal J. Ganatra v. Heirs of Parshottam S. Shah [1996] 222 ITR 391 (SC), the question before their Lordships was whether a particular sale is benami. In para. 5 their Lordships have observed as under : "The question whether a particular sale is benami or not is largely one of fact. Though there is no formula or acid test uniformly applicable it is well nigh settled that the question depends predominantly upon the intention of the person who paid the purchase money. For this, the burden of proof is on the person who asserts that it is a benami transaction. However, if it is proved that the purchase money came from a person other than the recorded owner (ostensible owner) there can be a factual presumption at least in certain cases, depending on the facts, that the purchase was for the benefit of the person who supplied the purchase money." The above referred decisions of their Lordships clearly show that the burden lay on the authority/person who claims that the particular transaction is benami. In the notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any property is found in the possession of any person, the burden lay on the person in whose possession the property is found. Whether mere possession is enough to hold the ownership of the assets? In the case of benami transaction, the consistent view of their Lordships is that the burden lay on a person to prove, who asserts that it is a benami transaction. In the case in hand, the undisputed facts are, the FDRs are in the name of Shri Jayanti Lal Patel. He claimed the ownership of those FDRs. Dr. Tomar has clarified on the spot when the search had taken place that these FDRs are of Shri Jayanti Lal Patel. It is only the Department who is claiming that Shri Jayanti Lal Patel is not the owner of these FDRs, they belonged to Dr. Tomar, only on the basis that they were found at the residence of Dr. Tomar. It is also admitted fact that after the search, the detailed enquiry has been made by the Assistant Commissioner before the order under section 132(5) of the Income-tax Act and on the basis of that enquiry, he found that the owner of the FDRs is Shri Jayanti Lal Patel. He enquired from various banks how the money flowed and who invested in the FDRs. Money flowed from the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterfered with the retrenchment of the workmen under article 226 of the Constitution if the workmen had straightaway approached the court without raising an industrial dispute." In the case of Dr. Bal Krishna Agarwal v. State of Uttar Pradesh [1995] Lab IC 1396 (SC), in para. 9, their Lordships have observed as under : "The writ petition had been filed in 1988 and it had been admitted and was pending in the High Court for the past more than five years. The learned counsel has also urged that the High Court was not right in saying that there was dispute on questions of fact. According to the learned counsel there is no dispute that the appellant had been selected by the Selection Committee." Their Lordships have further observed in para. 10 as under : "We are of the view that the High Court was not right in dismissing the writ petition of the appellant on the ground of availability of an alternative remedy under section 68 of the Act especially when the writ petition that was filed in 1988 had already been admitted and was pending in the High Court for the past more than five years. Since the question that is raised involves a pure question of law and even if the matter is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /cancelled, though no proper justification has been given by the Commissioner for issuing such notice. In the regular assessment under section 143(3) additions of huge amounts have been made in the income of Dr. Tomar. Mr. Jain, learned counsel for the Department, failed to show any justification for such additions, such as on account of valuation of the house, on the basis of the valuation report of the PWD ignoring the valuation report of the departmental valuer, as well as, the approved valuer of the Department. Mr. Jain has also failed to show any justification how the FDRs in question can be treated as the FDRs of Dr. Tomar. The additions of huge amounts have been made on account of some figures on a piece of paper which is admittedly neither in the handwriting of Dr. Tomar nor in the handwriting of any member of his family nor has it been found in any hidden place. A small piece of plain paper wherein some figures are given, which are not tallied even with the account of the seller of the plot nor these figures are tallied with the figures in the account of the agent through whom the plot B-4, Govind Marg, Jaipur, has been purchased. In their statements, the seller of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioners, and in this manner, Shri Dilip Shivpuri was the complainant bearing rancour with the petitioners as a result of rivalry in between his cousin, Dr. Deepak Shivpuri, and Dr. Tomar. Thus, it cannot be denied that Shri Dilip Shivpuri, Dy. Director (Investigation), Income-tax, is the first informant and complainant; that, he failed in his machination to get a case registered for an offence punishable under the provisions of the Income-tax Act in the income-tax raid supervised, stage-managed by him, against the petitioners, which ended in a whimper obviously after having found no case made out, and that since he failed in his intrigue, so, in order to save their faces and conceal lapses, he informed the other administrative authority, i.e., the present investigating authority which has been pursued for their own purpose and wreak rancour which arose also out of their failure in intrigue. The dominant purpose, as I wrung out from the aforesaid facts and circumstances pointed out in regard to the mala fide exercise of power, supra, to register FIR and investigation thereon after being pursued by Shri Dilip Shivpuri is unlawful and to make the character assassination of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence. To sum up : (i) The income/assets declared under the Amnesty Scheme for the assessment year 1984-85 cannot be reopened unless there is positive finding of the Assessing Officer that the income shown by the assessee is not correct or the asset has not properly been valued. (ii) The three FDRs, referred to above, are the property of Shri Jayanti Lal Patel. They should be released forthwith and be handed over to Dr. Tomar, who is the custodian of these FDRs at the time of the search, on an undertaking from him that if the investment in FDRs is found to be of Dr. Tomar, he will pay the tax in accordance with the provisions of the Income-tax Act. (iii) The value of the house B-4, Govind Marg, Jaipur, cannot be taken at more than what has been shown by the three assessees, i.e., Dr. Tomar, Dr. Mrs. Tomar and B. S. Tomar Hindu undivided family. (iv) No addition on account of entries on a piece of paper which is claimed to have been found at the time of the search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur, in the hands of Dr. Tomar, Dr. Mrs. Tomar and B. S. Tomar Hindu undivided family. (v) Dr. Tomar and Dr. Mrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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