TMI Blog2005 (8) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and consequent assessment framed thereunder. The common facts for all the assessment years are that the assessee was carrying on business of nickel polishing on a small scale. In fact, in the reasons recorded for issue of notices under s. 148, the AO has himself stated that his income from such source was Rs. 20,000 each. Since the income was below taxable limit, no returns for these assessment years had been filed. However, the, AO initiated proceedings under s. 147 on the ground that during the financial year ended on 31st March, 1991, the assessee had made investment of Rs. 2.94 lakhs in the asst. yr. 1991-92 and Rs. 1.47 lakhs for the asst. yr. 1992-93 in the purchase of land for which the source had not been explained. According to the AO, the income represented by unexplained investments and Rs. 20,000 each from nickel polishing business had escaped assessments for these two assessment years. As regards the remaining two assessment years, the AO observed that the land so purchased had been subsequently developed and flats were constructed which were sold and the resultant profit from the same had not been disclosed due to non-filing of returns for the asst. yrs. 1994-95 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not doing any business or had any independent source of income. The AO therefore, made additions on account of unexplained investments made by the assessee in the purchase of entire 42 marlas of property and also brought to tax resultant profit on the sale of property constructed thereon. 3. Being aggrieved, the assessee impugned the additions in appeals before the CIT(A) where action of the AO for reopening the assessments by issue of notices under s. 148 was also challenged. It was submitted before the CIT(A) that the action of the AO for initiating reassessment proceedings on the basis of allegation that the assessee had purchased land and constructed flats and thereafter sold the same was illegal and bad in law as the AO had not applied his mind while taking such action. It was submitted that the assessee was only a special power of attorney holder executed in his favour by owners to sell the land because the owners had shifted to Ghaziabad. It was also argued that the land in fact had been sold to Sh. Rajan Dhawan and Sh. Pardeep Kumar and full consideration was received on 31st July, 1992. These two persons who purchased the property, requested the assessee who was sem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was below the taxable limit, i.e., from Rs. 19,800 to Rs. 30,000 for all the assessment years, which was below the taxable limit for the respective years. He submitted that in the reasons recorded, the AO has referred to the fact that the assessee had made investments in the purchase of land amounting to Rs. 2,94,000 and Rs. 1,47,000 for the asst. yrs. 1991-92 and 1992-93 respectively. He submitted that once the income was below the taxable limit, it is not understood as to where the investment was required to be disclosed or how the returns were required to be filed. He submitted that if the return of the income is filed, there is no column in the return which requires the assessee to furnish the details of the investments made. He submitted that there is not even an iota of evidence on record that the assessee was ever owner of this property. He further drew my attention to p. 11 of the paper book which is English translation of special power of attorney in favour of the assessee in respect of 2/5th share on behalf of Smt. Namrata Sethi and Smt. Mamta Sharma, i.e., two sisters of Sh. Rajeev Kamal. He further referred to p. 15 of the paper book which is special power of attorney i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or subsequently and also with the parties to whom the flats were sold. He submitted that even as per, directions of the Bench given on 11th July, 2005 to produce the statements recorded and report of the Investigation Wing, which were relied upon by the assessee for reopening the assessments, the same have not been produced. This shows that there was absolutely no material or information on the basis of which ADIT (Investigation) formed a 'reason to believe' that income chargeable to tax had escaped assessment. He further relied on the decision of the Tribunal, Amritsar Bench, in the case of Kirpa Ram Ramji Dass vs. ITO (1983) 14 TLR 533 where it was held that it is elementary law of evidence that no admission or statement can be used against the persons unless that person is given a right to cross-examine the deponent whose admission or statement is intended to be used against him. Since, in the present case, the Revenue has even failed to produce report of the ADIT (Investigation) and the assessee has not been confronted with the statements and an opportunity to cross-examine the parties has not been allowed, it is clear that the assessment has been reopened without any valid m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of unexplained investment, the learned Departmental Representative was specifically directed to produce the report of the Investigation Wing along with statements recorded which indicated that assessee was the owner of the property and on the basis of which assessments were reopened. Accordingly, the learned Departmental Representative vide his letter dt. 12th July, 2005, directed the AO to send these records. However, the AO has only furnished copies of the reasons recorded and the statement of Sh. Rajesh Mehta, i.e., the assessee recorded on 26th Feb., 1998. Copies of none of other statements referred to in the assessment order have been furnished by the AO. Nowhere in his statement the assessee has stated that he had either purchased the property or he was the owner of the property. On the contrary, he had specifically stated that he was given power of attorney for the sale of 21 madas of land by Mr. Rajeev Kamal and his family members and he did not know who had made the construction of the property. A bare reading of the statement does not lend support to the conclusion that the assessee was owner of the said property or he had made investment in the same on the basis of pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of other family members, had even confessed or stated that he had sold the property to the assessee at the time of executing the power of attorney. He has also not even stated that the sale proceeds of the property had not been received from the assessee. No enquiry whatsoever has been made with the person who had given power of attorney and who was the owner of the property. 6.1 It is common knowledge that power of attorney in respect of a property is given to a person in whom the owner has complete faith and trust. The fact that Sh. Rajiv Kamal and his family shifted to Ghaziabad is not in dispute. Now since the assessee was residing in neighbourhood of the owner and Sh. Rajeev Kamal gave power of attorney in his favour does not in itself lead to the conclusion that he had purchased the property on power of attorney basis. Besides, the property was later developed and constructed. No enquiries have been made with the municipal corporation, Jalandhar as who had applied for and obtained the approval for construction plan. Merely because the assessee had signed the sale deeds as power of attorney holder does not itself establish that the assessee had himself constructed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucing such statements recorded yet these were not produced for reasons best known to them. In any case such statements recorded at the back of assessee without furnishing copies to him and without allowing an opportunity of cross-examination are not admissible evidence and the additions made by relying on such statements cannot be sustained. Thus, I am of the considered opinion that the additions sustained for the various assessment years are merely on the basis of surmises and conjectures and the Revenue has failed to place any material on record to show that the assessee was the owner of the property, constructed flats and sold the same. It is trite law that suspicion howsoever strong it may be, cannot be the basis of additions. Therefore, no addition made on the basis of surmises, conjectures and suspicion can be upheld. Thus, in the light of the facts and circumstances of the case, I hold that even on merits, the additions made by the AO are not called for in the hands of the assessee. Accordingly, the order of the CIT(A) is set aside and the respective grounds of appeal are allowed for all the assessment years. 6.3 As regards common ground relating to estimation of income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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