TaxTMI 
TaxTMI 
2000 (8) TMI 249
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....rwal Rs. 9,50,200 and his family members 2. Shri Madhu Sudan Agarwal Rs. 10,12,200 3. Employees Rs. 300 4. Three companies Rs. 20,50,000 &n....
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....tion of the deal, partly at the time of sale and partly at the time of execution of the sale deed. He also deposed that he had half share in the ownership of land and the other half belonged to his brother and sons. The amount received from Haldi Ram Foods Ltd., was shared by them equally. It was also stated that the deal was finalized through a property dealer, namely, M/s. Krishna Properties. Commission of Rs. 72,000 worth @ 1 per cent of the consideration was paid to the property dealer by Shri Sachdeva. 8. The assessee-company was confronted with the statement of Shri Om Prakash Sachdeva. It was required to explain the source of investment of Rs. 22,00,000 over and above the disclosed purchase price of land. The assessee vide letter dated18-1-1996stated that seller had given wrong statement due to some vested interest. He asked for the copy of the statement of the seller and broker. He also asked for the cross examination of Mr. Sachdeva and broker Copy of the statements were made available to the assessee. Summon under section 131 of the Act was issued to Shri Om Prakash Sachdeva. He appeared and explained about the details and mode of payment in respect of property sold to....
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....nd does not establish that the declared value of the land was correct. It simply showed that the Department did not propose to acquire the said property. Given the industrialization ofDelhiand the prime location of the land the declared sale price of the land cannot be accepted as correct particularly when the sellers have admitted that they received more than what was declared in the sale deed. 11. In view of the above the Assessing Officer held that the assessee company purchased the land for a consideration of Rs. 72,00,000 out of which the recorded price in the books of account was Rs. 50,00,000 only and the balance amount of Rs. 22,00,000 was invested from undisclosed sources. Accordingly, the sum of Rs. 22,00,000 was treated as income of the company from undisclosed sources under section 69B of the Act. The CIT (Appeals) confirmed the order of the Assessing Officer, hence this appeal. 12. Shri Anand Prakash, learned counsel for the assessee appeared before us. It was vehemently argued that company did not make any extra payment for the purchase of land in question. The land was purchased during the pre-commissiong period. The assessee did not start business. It just obt....
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....soon after the company commenced its activities. Hon'ble Supreme Court has held that the inference drawn from the facts proved was a question of fact and the Tribunal's finding on that question was final. The construction company took time to earn profits and it could not have earned a huge profit within a few days after the commencement of its business. Hence, it was reasonable to assume that the cash credit entries represented capital receipts though for one reason or another the assessee had not come out with the true story as regards the sources of the receipts. On the basis of the aforesaid judgment the learned counsel argued that in the present case also earning of income on the part of the company was impossibility because it did not commence its business. Construction was going on. There is absolutely no evidence on record to indicate that the assessee company was in a position to earn the profits. It was further stated that the source of Rs. 22,00,000 was disclosed by Shri Manohar Lal Aggarwal, the Director of the company. He made a disclosure of this amount. As such, further addition of this amount in the hands of the company would amount to double taxation. I....
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.... jewellery or other valuable article, and the [Assessing] Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.' It was submitted that the decision of theApex Courtrendered in the case of Smt. PK. Noorjahan was not in the context of section 69B. 17. The learned Departmental Representative vehemently argued that the case of the assessee is not covered by the disclosure made by the Director of the company. It was argued that the disclosure cannot be used for the benefit of the third party. It is not possible for a Director to make disclosure for the benefit of the company. Reference was made to the decision of theApex Courtrendered in the case ofJamnaprasadKanhaiyalal. In this case theApex Courthas held that if a person made a false decl....
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.... have heard the rival submissions in the light of material placed before us and precedents relied upon. The provisions of section 69B can be invoked if it is found that the assessee has made investment or the assessee is found to be the owner of any bullion, jewellery or other valuable articles and it is found that the amount expended in making such investment or in acquiring such bullion, jewellery or other valuable articles exceeds the amount recorded on that behalf in the books of account maintained by the assessee, and either the assessee offers no explanation about such excess amount or the explanation offered by him is not satisfactory. In the present case we find that the assessee made investment for the purchase of land. The amount expended on making such investment exceeded the amount recorded in the books by Rs. 22,00,000. The assessee offered explanation that the extra amount of Rs. 22,00,000 was disclosed by the Director of the company, Shri Manohar Lal Aggarwal. 22. Now the question arise that whether Director can make disclosure for the benefit of the company. To examine this issue, we will make recourse to the provisions of Explanation (5) to section 271(1)(c) of ....
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....ry, but in the facts and circumstances of the case, it was not possible for the assessee to earn the amount invested in the properties and that by no stretch of imagination could the assessee be credited with having earned this income in the course of the assessment year or was even in a position to earn it for a decade or more. The Tribunal took the view that although the explanation of the assessee was liable to be rejected, section 69 of the Act conferred only a discretion on the Assessing Officer to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the investment as income of the assessee as soon as the seller's explanation happened to be rejected. On that view the Tribunal allowed the appeal and cancelled the assessment made by the Assessing Officer. High Court agreed with the view taken by the Tribunal. On appeal theApex Courtheld that the question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the Assessing Officer under section 69 to treat the source of invest....