TMI Blog2004 (4) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ,13,53,285 (stock Rs. 90 lakhs plus Rs. 23,53,825 of Shri D. Sengupta considered to be that of the present assessee), was set aside by the CIT(A) vide order dt. 16th March, 1990, with the following direction: "Before making any inclusion in the total income of the assessee as income from undisclosed sources on account of the materials found on the date of search, i.e., 16th May, 1985 mentioned in the impugned assessment order, the AO must prove by cogent piece of material or evidence on record that the assessee Shri Chandrakant N. Seth was actually the owner of the materials in question at the relevant time. In case Sri D. Sengupta is considered to be a benamidar of Shri Chandrakant N. Seth in the instant case, then such benami transaction shall be established by bringing materials and/or evidences on record by the AO to the effect that Shri D. Sengupta imported such materials out of funds provided by Shri Chandrakant N. Seth, the appellant in the instant case. The AO shall determine afresh the value of the materials in question with reference to the actual cost incurred by Sri D. Sengupta for importing such materials. The assessee shall be given opportunity to produce all neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials/goods, by reiterating the same reasons as were given in the first two assessment orders. This assessment was given set aside by the CIT(A) vide his order dt. 17th Nov., 2000, by making the observations as under: "I am satisfied that the directives of CIT(SA)-Central-II, in order dt. 14th Feb., 1997, in establishing benami had not been observed by the AO and obviously further investigation was called for in this regard. In view of the foregoing, the order is set aside on this point with a direction to do it afresh in accordance with law." 3.5 A fresh assessment order for the fourth time was, therefore, made on 27th March, 2002 making an addition of Rs. 1,11,46,448. The AO addressed the issue in the following words: "The major issue involved in this proceedings is whether Sri D. Sengupta is a benamidar of the assessee, Shri Chandrakant Seth. Perusal of the assessment orders as well as details filed by the assessee reveal the following: (1) Statements, of Shri D. Sengupta were recorded under s. 132(4) on 24th April, 1985 by the Rev. Int. Authority, and again under s. 132(4) by the Addl. Director of IT (Inv.), Callcutta. On 16th May, 1985, and again by the AO of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Sengupta could be called a benamidar of Shri Seth as per s. 2(a) of the Benami Transactions (Prohibition) Act. Shri Sengupta had nowhere and never again or before retracted his statement that he does not know abc of the business; he used to sign blank cheques and hand them over to Shri C.K. Seth; Shri C.K. Seth obtained letter of authority in his name; the control of the business was with Shri C.K. Seth. Moreover, Shri Sengupta was confronted with Benami Transactions (Prohibition) Act, 1988, whereas the period under consideration relates to asst. yr. 1985-86, hence the provisions of the said Act of 1988 do not lie (apply) in the instant case. Further, statement given by a person before any civil authority on oath bears a strong evidentiary value as laid down under s. 164 of the Cr.PC and simply retracting it does not reduce the worth of the statement made on oath as a piece of evidence. Hence, Shri D. Sengupta is considered benamidar of the assessee, Shri Chandrakant Seth. On the date of search, i.e., on 16th May, 1985, the following stocks were found in the godown mentioned below in the name of Shri D. Sengupta and Shri C.K. Seth as under: In the name of Shri D. Sengupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted on 16th May, 1985. He further submitted that the statement of Shri D. Sengupta to the effect that he was a benamidar of Shri C.K. Seth, he did not know about the business, he used to sign blank cheques and hand them over to Shri C.K. Seth, Shri C.K. Seth obtained letter of authority in his name, the control of the business was with Shri C.K. Seth and Shri D. Sengupta used to get only 1 per cent of CIF value of imports for lending his name were sufficient enough to hold that Shri C.K. Seth was a benamidar of Shri D. Sengupta and as such the AO was justified in including the income relating to the business standing in the name of Shri D. Sengupta in the hands of the present assessee and the CIT(A) has wrongly deleted the addition. The learned Departmental Representative has, in fact, virtually supported the reasons given by the AO in his orders made from time to time. 5. The learned authorised representative has submitted that the AO has not been able to discharge the burden that lay upon him to establish that the assessee was the real owner of the business standing in the name of Shri D. Sengupta by bringing cogent and sufficient evidences in support thereof. He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In support of the contention that there was no material to hold the assessee as benamidar of Shri D. Sengupta, the learned counsel for the assessee has referred various decisions of the apex Court of the land and other High Courts wherein it has been held that the onus to establish the benami transaction is on the person who asserts so. In short, the learned counsel for the assessee has reiterated all those submissions and contentions that were made before the CIT(A) and are elaborately discussed in the order of the CIT(A) to which he has drawn our attention. 6. We have heard both the parties and have gone through the orders of the authorities below. We have carefully perused the voluminous papers filed by the assessee. We have deliberated upon the judicial decisions cited at the Bar. 7. The whole controversy in the present case rests upon the issue as to whether the present assessee can be held as the real owner of the business carried on in the name of Shri D. Sengupta. In other words, the question arises for our consideration is as to whether Shri D. Sengupta can be held as benamidar of the present assessee and all benefits or interest arising from the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as or is a benami one, the following guidelines may be followed: (1) The source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale; and (6) the conduct of the parties concerned in dealing with the property after the sale. 3.1 We may cite Jayadayal Poddar vs. Mst. Bibi Hazra AIR 1974 SC 171, Amit Mukherjee vs. Smt. Bibhabati Dasi AIR 1979 Cal 344 and Krishnanand Agnihotri vs. State of Madhya Pradesh AIR 1977 SC 796 for the above proposition." 8. On perusal of the said proposition laid down, it is clear that, to hold Sri D. Sengupta as benamidar of the assessee, there must be cogent and sufficient evidence to conclude that the apparent state of affairs being the business carried on in the name of Sri D. Sengupta is not real. The AO has treated Sri D. Sengupta as benamidar of the present assessee on the basis of his deposition recorded on 24th April, 1985, 16th May, 1985, 18th March, 1988 and 4th March, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt raises doubt as to the ownership of the business being carried on by him but coupled with documentary evidence produced by the assessee it has not been conclusively established and proved by cogent and legal material that Sri D. Sengupta is the benamidar of the assessee. Various documents such as confirmation given by the licence holders, bank account maintained by Shri D. Sengupta, release of the goods by the authority in favour of actual owners goes to destroy the Departmental case that the assessee is a benamidar of Sri D. Sengupta. The AO has not been able to discharge the burden that lay upon him through legal evidence of definite character. The only evidence relied on by the AO is the initial statement of Sri D. Sengupta. The statement of Sri D. Sengupta given initially that he was benamidar of the present assessee is not backed by or supported by documentary evidences or the surrounding circumstances. There is no evidence available on record which can directly prove the fact of benamidar as alleged by the AO. The evidences available on record do not also establish the circumstances which can unerringly and reasonably raise an inference that Shri D. Sengupta is benam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee unless fully supported and established by cogent, adequate and legal evidences. (iii) The fact of receiving retainership fees by the assessee from Shri D. Sengupta has been admitted by Sri D. Sengupta in his deposition and the AO has also admitted the same by including the retainership fees as income of the assessee while completing the impugned assessment order. (iv) The goods imported and found at the time of search were ultimately released to the real owners and not to the present assessee or to Sri D. Sengupta implying thereby that the Department has accepted the position that the imported goods were owned by the import licence holders. (v) As directed by the CIT(A) in his order dt. 16th March, 1990, the AO has not established the question of benamidar by bringing cogent material or evidences on record to show that the present assessee was the actual owner of the goods in question at the relevant time and the goods were imported out of the funds provided by the present assessee. Though directed by the CIT(A) from time to time, the AO has not been able to discharge his burden that lay upon him by bringing sufficient materials and/or evidences on record in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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