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High Court Of Delhi
MADAN B. LOKUR,V. B. GUPTA
MALIK BROS. PVT. LTD. - Appellant
Versus
COMMISSIONER OF INCOME TAX - Respondents
ITA 915 Of 2006
Decided On : 04/19/2007
Income Tax - Assessment of additional sale consideration - Section 260A of the Income Tax Act, 1961 - [Section 143, Section 69] - The court discussed the assessment of additional sale consideration in the hands of the assessee-company, the opportunity granted to the assessee to cross-examine the vendor, and the applicability of legal precedents in similar cases.
Fact of the Case:
The assessee filed a return of income at 'nil income' but was found to have purchased a property for a higher amount. The assessing officer made an addition of the additional sale consideration, which was confirmed by the Commissioner of Income Tax (Appeals) and the Tribunal. The assessee sought to delay the assessment proceedings and did not avail the opportunity to cross-examine the vendor.
Finding of the Court:
The court found that the assessee did not avail of the opportunities granted to it and was indulging in delaying tactics. The court also noted that the assessee tried to avoid the vendor when confronted with the full facts, and the concealment of income was detected. The court dismissed the appeal filed by the assessee.
Issues: Assessment of additional sale consideration, opportunity granted to the assessee, delay in assessment proceedings, and applicability of legal precedents.
Ratio Decidendi: The court held that the assessee did not avail of the opportunities granted and was indulging in delaying tactics, leading to the dismissal of the appeal.
Final Decision: The appeal filed by the assessee was dismissed.
V. B. GUPTA, J.
( 1 ) APPELLANT has filed this appeal under Section 260a of the Income Tax Act, 1961 (hereinafter referred to as Act) challenging the order dated 23rd september, 2005 passed by Income Tax Appellate Tribunal (hereinafter referred to as Tribunal), New Delhi in ITA No. 981/del/2001 for the assessment year 1991-92 vide which the appeal filed by the Appellant against the order of Commissioner of Income Tax (Appeals) was dismissed.
( 2 ) THE facts of this case are that the Assessee filed return of income on 30th December, 1991 at "nil income". Later on, information was received that the Assessee had purchased property No. 4b/16, Tilak Nagar, New Delhi for Rs. 6 lacs plus registration charges on 5th October, 1990. A search was conducted in the business and residential premises of sister concern M/s B. K. Jewellery House and its partners. After that a survey was also conducted at the business premises of Sh. Gajender Seth, husband of Smt. Pushpa Seth who had sold the above stated property to the Assessee-company. Smt. Pushpa Seth in her statement confirmed that the total sale consideration for the sale of the said property was Rs. 45 lacs. In fact this amount was disclosed by her in her return of income tax. Another statement of Smt. Pushpa Seth was recorded on 29th July, 1996 in which the sale consideration was admitted at Rs. 45 lacs and the copy of the statement was sent to the Assessee by the Assessing Officer on 9th January, 1997. The Assessee responded that the property was purchased only for Rs. 6 lacs. However, the Assessing Officer made addition of Rs. 39 lacs.
( 3 ) AGGRIEVED by this order, the Assessee filed an appeal before the commissioner of Income Tax (Appeals) and the matter was set aside by the commissioner of Income Tax (Appeals) for fresh examination.
( 4 ) ACCORDINGLY the fresh notice under Section 143 (2) of the Act was issued on 4th August, 1999. None attended in response of this notice and the case was later on fixed for various other dates but no compliance was made. However, on few dates adjournments were sought on behalf of the Assessee on one pretext or the other. Finally, the Assessee responded on 23rd March, 2000 asking the assessing Officer to give documents submitted by Smt. Pushpa Seth and asking to fix the time for cross-examination.
( 5 ) IT was also pointed out by the Assessee that the company was incorporated only on 29th September, 1990 that means the Assessee-company had no source of income till the date of purchase of property and, therefore, the additional alleged consideration could not be assessed in the hands of assessing-company. Further, it was stated by the Assessee that the group of assessee has already approached the Settlement Commission and the issues regarding investment in the said property was also pending and, therefore, the request was made to keep the assessment proceedings pending till the proceedings before the Settlement Commission become final.
( 6 ) THE Assessing Officer observed that the assessment was getting time barred on 31st March, 2000 and, therefore, the same had to be completed and it was further observed by the Assessing Officer that the Assessee has not been able to furnish any evidence that amount of Rs. 39 lacs being the additional sale consideration was not assessable in the hands of the company. The Assessing officer, thus, made the addition of Rs. 39 lacs. This action of Assessing officer was confirmed by the Commissioner of Income Tax (Appeals ).
( 7 ) BEING aggrieved with the order of Commissioner of Income Tax (Appeals), the Assessee preferred an appeal before the Tribunal, who also confirmed the finding of the Commissioner of Income Tax (Appeals ).
( 8 ) IT has been argued by learned counsel for the Assessee that the sale consideration at the higher amount has been fixed solely relying upon the statement of this seller and without conducting any independent enquiry relating to the value of the property. In support of this contentio
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