C I T JAIPUR vs. RAKESH R PUROHIT

Judgment 15/02/2017

judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee and dismissed the appeal of the Department modifying the order of CIT (A) which has partly allowed the appeal. All these appeals are preferred in respect of different assessment years.

on the facts

and circumstances of the case, the learned Tribunal was right and justified in not only upholding the relief given by CIT(A), but even deleting the addition of Rs.2,75,081/- made by the Assessing Officer and upheld by the CIT(A) on account of commission earned by the assessee by issuing bogus bills without actually delivering the goods, even without discussing and giving any finding on the same? (ii) Whether

on the facts

and circumstances of the case, the learned Tribunal was right and justified in holding that the assessee was not the real and beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash and thus, resulting into the deletion of addition of Rs. 43,48,538/-, ignoring the fact that the on record owner of these concerns admitted in their statements/affidavits that these concerns are owned, managed and controlled by the assessee alongwith Shri manmohan Krishna Bagla and Shri

Ramesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 41,36,256/- made on substantive basis and Rs. 4,87,383/- made on protective basis, totaling to Rs. 46,23,619/-, ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was (5 of 24) [ITA-50/2009]

not the real and beneficiary owner of the providing bogus bills and withdrawing cash?” (2) DB Income Tax Appeal No.77/2009 “(i) Whether

on the facts

and circumstances of the case, the learned Tribunal was right and justified in not only upholding the relief given by CIT(A), but even deleting the addition of Rs.2,75,081/- made by the Assessing Officer and upheld by the CIT(A) on account of commission earned by the assessee by issuing bogus bills without actually delivering the goods, even without discussing and giving any finding on the same? (ii) Whether

on the facts

and circumstances of the case, the learned Tribunal was right and justified in holding that the assessee was not the real and beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash and thus, resulting into the deletion of addition of Rs. 43,48,538/-, ignoring the fact that the on record owner of these concerns admitted in their statements/affidavits that these concerns are owned, managed and controlled by the assessee alongwith Shri manmohan Krishna Bagla and Shri

Ramesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 41,36,256/- made on substantive basis and Rs. 4,87,383/- made on protective basis, totaling to Rs. 46,23,619/-, ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash?” (3) DB Income Tax Appeal No.54/2009 “(i) Whether

on the facts

and circumstances of the case, the learned Tribunal was right and justified in not only in holding that the assessee was not the real and beneficiary owner of the primary and (6 of 24) [ITA-50/2009]

secondary concerns involved in providing bogus bills and withdrawing cash and thus, resulting into the deletion of addition of Rs. 29,64,113/- ignoring the fact that the on record owners of these concerns admitted in their statements/affidavits that these concerns are owned, managed and controlled by the assessee alongwith Shri Manmohan Krishan Bagla and Shri Rakesh Purohit@Lalluji?

of the case, the learned Tribunal was right addition of Rs. 5,41,152/- made by the same?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs.25,50,888/- made on substantive basis and Rs.9,54,377/- made on protective basis, totaling to Rs. 35,05,265/-, ignoring the detailed finding arrived by the Assessing Office and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash? (iv) Whether the learned Tribunal was justified in deleting the addition of Rs. 1,05,08,334/- made by the Assessing Officer on account of unexplained investment of assessee in shares on M/s. Gayatri Shakti Paper Boards Mill Limited and commission earned on sham share transactions, in the names of its Benamidars, even after holding that the said share transactions are merely accommodation entries? (v) Whether the learned Tribunal was justified in deleting the addition of Rs. 14,50,000/- made on account of unexplained investment in plot in the name of assessee’s wife even when the assessee’s wife stated that she has no independent source of income and the return of income

(7 of 24) [ITA-50/2009]

showing the said investment was filed by the assessee’s

wife

after

the search proceedings?” (4) DB Income Tax Appeal No.61/2009 of the case, the learned Tribunal was right addition of Rs.5,41,152/- made by the same?

of the case, the learned Tribunal was right assessee along with Shri Rakesh Purohit@ Lalluji and Shri Ramesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right and justifi9ed in deletion of addition of Rs. 25,50,888/- made on substantive basis and Rs. 9,54,377/- made on protective basis, totaling to Rs. 35,05,265/- ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash? (5) DB Income Tax Appeal No.72/2009 of the case, the learned Tribunal was right addition of Rs.5,41,152/- made by the (8 of 24) [ITA-50/2009]

same?

of the case, the learned Tribunal was right assessee along with Shri Manmohan Krishna Bagla and Shri Rakesh Purohit @ Lalluji?

of the case, the learned Tribunal was right and justifi9ed in deletion of addition of Rs. 25,50,888/- made on substantive basis and Rs. 9,54,377/- made on protective basis, totaling to Rs. 35,05,265/- ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash? (6) DB Income Tax Appeal No.57/2009 of the case, the learned Tribunal was right assessee along with Shri Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right (9 of 24) [ITA-50/2009]

addition of Rs.5,41,152/- made by the same?

of the case, the learned Tribunal was right and justified in deleting the addition of Rs. 9,54,377/- made on protective basis in respect of business of M/s. Vinayak Overseas, Prop. Shri Gauri Shankar Pareek, even without discussing and giving its finding and also ignoring the fact that the substantive addition of the said addition made in the hands of Shri Gauri Shankar Pareek was also deleted by the Tribunal? (iv) Whether the learned tribunal was justified in deleting the addition of Rs. 1,05,08,334/- made by the Assessing Officer on account of unexplained investment of assessee in shares of M/s. Gayatri Shakti Paper Boards Mill Limited and commission earned on sham share transactions, in the names of its Benamidars, even after holding that the said share transactions are marely accommodation entries? (7) DB Income Tax Appeal No.119/2009 of the case, the learned Tribunal was right assessee along with Shri Rakesh Purohit @ Lalluji and Shri Ramesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right (10 of 24) [ITA-50/2009]

addition of Rs.5,41,152/- made by the same?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 25,50,377/- made on substantive basis and Rs. 9,54,377/- made on protective basis, totaling to Rs. 35,05,265/-, ignoring the detailed findings arrived by the Assessing officer and holding that the assesses was not the real beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash ? (iv) Whether the learned Tribunal was justified in deleting the addition of Rs. 1,05,08,334/- made by the Assessing Officer on account of unexplained investment of assessee in shares of M/s. Gayatri Shakti Paper Boards Mill Limited and commission earned on sham share transactions, in the names of its Benamidars, even after holding that the said share transactions are merely accommodation entries? (8) DB Income Tax Appeal No. 94/2009 “(i) Whether on the facts and circumstances of the case, the learned Tribunal was right addition of Rs. 2,75,081/- made by the assesses by issuing bogus bills without actually delivering the without actually delivering the goods, even without discussing and giving any findings on the same?

of the case, the learned Tribunal was right and justified in holding that the asssessee the deletion of addition of Rs. 43, 48,538/-

(11 of 24) [ITA-50/2009]

statements/ affidavits that these concerns assessee alongwith Shri Manmohan Krishan Bagla and Shri Rakesh Purohit @ Lalluji? (iv) Whether on the facts and circumstances of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 41,36,256/- made on substantive basis and Rs. 4,87,383/- made on protective basis, totaling to Rs. 46,23,619/- ignoring the detailed findings arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash?” (9) DB Income Tax Appeal No. 120/2009 of the case, the learned Tribunal was right the deletion of addition of Rs. 11,68,179/- assessee alongwith Shri Manmohan Krishan Bagla and Shri Ramesh Chand Maheshwari (Manihar?

of the case, the learned Tribunal was right addition of Rs.2,15,807/- made by the same?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 11,02,636/- made on substantive basis and Rs. 2,81,350/- made on protective basis,

(12 of 24) [ITA-50/2009]

totaling to Rs. 13,83,986/-, ignoring the detailed findings arrived by the Assessing officer and holding that the assesses was not the real beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash? (10) DB Income Tax Appeal No. 110/2009 “(i) Whether on the facts and circumstances of the case, the learned Tribunal was right the deletion of addition of Rs. 43,48,538/-, assessee alongwith Shri Manmohan Krishan Bagla and Shri Ramesh Chnad Maheshwari (Manihar)?

of the case, the learned Tribunal was right addition of Rs. 2,75,081/- made by the Assessing Officer and upheld by the CIT(A)

same?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 41,36,256/- made on substantive basis and Rs. 4,87,383/- made on protective basis, totaling to Rs. 46,23,619/-, ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash? (iv) Whether on the facts and circumstances of the case, the learned Tribunal was right and justified in deleting the addition of Rs. 4,87,383/-, made on protective basis in respect of business of M/s. Vinayak

(13 of 24) [ITA-50/2009]

Overseas, Prop. Shri Gauri Shankar Pareek, even without discussing and giving its finding and also ignoring the fact that the substantive addition of the said addition made in the hands of Shri Gauri Shankar Pareek was also deleted by the Tribunal?” (11) D.B. Income Tax Appeal No. 93/09 of the case, the learned Tribunal was right given by CIT(A), but even deleting the addition of Rs. 5,41,152/- made by the Assessing Officer and upheld by the CIT(A)

same?

of the case, the learned Tribunal was right assessee along with Shri Manmohan Krishna Bagla and Shri Rakesh Chand Maheshwari (Manihar)?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 25,50,888/- made on substantive basis, totaling to Rs. 9,54,377/-, made on protective basis, totaling to Rs. 35,05,265/-, ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash? (12) DB Income Tax Appeal No.53/2009 “(i) Whether

on the facts

and circumstances of the case, the learned

(14 of 24) [ITA-50/2009]

Tribunal was right and justified in holding that the assessee was not the real and beneficiary owner of the primary and secondary concerns involved in providing bogus bills and withdrawing cash and thus, resulting into the deletion of addition of Rs. 43,48,538/-, ignoring the fact that the on record owners of these concerns admitted in their statements/affidavits that these concerns are owned, managed and controlled by the assessee alongwith Shri Rakesh Purohit @ Lalluji and Shri Ramesh Chand Maheshwari (Manihar)? (ii) Whether

on the facts

and circumstances of the case, the learned Tribunal was right and justified in not only upholding the relief given by CIT(A), but even deleting the addition of Rs. 2,75,081/- made by the Assessing Officer and upheld by the CIT(A) on account of commission earned by the assessee by issuing bogus bills without actually delivering the goods, even without discussing and giving any finding on the same?

of the case, the learned Tribunal was right and justified in deletion of addition of Rs. 41,36,256/- made on substantive basis and Rs. 4,87,383/- made on protective basis, totaling to Rs. 46,23,619/-, ignoring the detailed finding arrived by the Assessing Officer and holding that the assessee was not the real and beneficiary owner of the providing bogus bills and withdrawing cash?”

secondary concerns are reflected by the AO and after taking into consideration all evidence, the order passed by the AO is just and proper. The view taken by both the authorities is required to be reversed. He contended that if such a racket is allowed to be grown it is impossible to work distribution given to the Department, it is not possible to justify. It is also contended that opportunity was granted by the Department. However, in this regard, the Tribunal on Page 9, held as under: “Further, the AO has given opportunity to the assessee and his partners for cross examination, which was not availed by them. These statements are acceptable evidence under the Evidence Act and cannot be ignored specially when Sh. Umesh Kumar Saboo, Shri Mahesh Sharma, Sh. Raguhvar Dayal Pareek, Mohan Prakash Sharma, O.P. Ghiya who were different persons gave statements and affidavits disclosing the persons controlling

the business

activities

of the concerns/company which indicates that they were telling Durga Prasad More 82 ITR 540 (SC).”

(16 of 24) [ITA-50/2009]

“When the question referred to the High Court speaks of "on the facts and in the circumstances of the case", it means on the facts and circumstances found by the Tribunal and not about the facts and circumstances that may be found by the High Court. We have earlier referred to the facts found and the circumstances relied on by the Tribunal, the final fact finding authority. It is for the Tribunal to find facts and it is for the High Court and this Court to lay down the law applicable to the facts found. Neither the High Court nor this Court has jurisdiction to go behind or to question the statements of facts made by the Tribunal. The statement of the case is binding on the parties and they are not entitled to go behind the facts found by the Tribunal in the Statement-see: Kshetra Mohan Sannvasi Charan Sadhukhan v. Commissioner of Excess Profits Tax.”

it which says that the finding arrived at by the Tribunal on the facts is perverse, in the sense that no reasonable person could have taken such a view. In reference jurisdiction, the High Court can answer the question of law referred to it and it is only when a finding of fact recorded by the Tribunal is challenged on the ground of perversity, in the sense set out above, that a question of law can be said to arise. Since the frame of the question was not as to whether the findings recorded by the Tribunal on facts were perverse, the High Court was precluded from entering into any discussion regarding the perversity of the finding of fact recorded by the Tribunal.”

the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gives no support to the claim of the department.”

(19 of 24) [ITA-50/2009]

(20 of 24) [ITA-50/2009]

that securities are offered by other persons to guarantee the payment of the amount which may be found due from the principal debtor. The concepts of security and ownership are different and it would be a wholly erroneous approach to hold that a thing, offered in security by a third person to guarantee the payment of debt due from the principal debtor belongs not to the surety but to the principal debtor. (iv) That the fact that B received no consideration for offering the fixed deposit receipt as security for the overdraft facility would not result in any inference against the respondent. (v) That the onus of proving that the apparent was not the real was on the party who claimed it to be so. As it was the Department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of B, the burden lay on the Department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of B. (vi) That the fact that the branch of the bank in Calcutta was in the same building in which there were the business premises of the firm was a wholly extraneous and irrelevant circumstance for determining the ownership of the sum of Rs. 5 lakhs. (vii) That both as regards the source as well as the destination of the amount, the material on record gave no support to the claim of the Department, There should be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in arriving at the conclusion of fact.

(21 of 24) [ITA-50/2009]

[1996]222ITR391(SC) , the question before their Lordships was whether a particular sale is benami. In para- 5, their Lordships have observed as under (page 394) : "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."

Ltd.

MANU/SC/0057/1976 : [1977]1SCR967 , a reference was made to Gangadara Ayyar v. Subramania Sastrigal MANU/FE/0012/1948 and to Sree Meenakshi Mills Ltd.

v. CIT

MANU/SC/0121/1956 : [1957]31ITR28(SC) , and it was held that there are two tests which should be applied to ascertain whether " an assignment in the name of one person is in reality for the benefit of another ". The first test is the source from which the consideration for the transfer has come and the other test is who actually has enjoyed the benefits of the transfer. It was further observed (p. 413): " It is equally well settled that although the onus of establishing that a transaction is ' benami' is on the plaintiff, where it is not possible to obtain evidence which conclusively establishes or rebuts the allegations, the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted facts."

" that where evidence has been led by the contesting parties on the question in issue, abstract consideration of onus are out of place, and the truth or otherwise of the case must always be adjudged on the evidence led by the parties. This will be so if the court finds that there is no difficulty in arriving at a definite conclusion."

Poddar

v. Bibi

Hazra MANU/SC/0332/1973 : [1974]2SCR90 , it was laid down as under (p. 172): "It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rest on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down, yet inweighing the probabilities and for gathering the relevant indicia, the courts an usually guided by these circumstances : (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.

respect of their transactions have been assessed in their hands by the I.T.A.T.. Later statements/affidavits in assessment proceedings after thought, motivated, malafide, to avoid own taxation and rightly not believed by the appellate authorities and such retraction has been rightly ignored. In this regard, well settled proposition is – 'First statement to prevail – Later statement of no evidential value when belated. It was followed by both the appellate authorities. Statements in the course of search and before Customs authorities were on oath and voluntary – must prevail.

(24 of 24) [ITA-50/2009]

considering the case has considered in detail and after taking well established principles of law it has been affirmed by the Tribunal which further observing has partly allowed the appeal, in our view, in view of the concurrent finding of fact that the Department is required to follow the procedure prescribed which has not been done.

(VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. /bm gandhi 128-139