TaxTMI 
TaxTMI 
2002 (5) TMI 199
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.... through cheques only. (3) The order of the Assessing Officer is against law and facts of the case." 3. There was search and seizure operation on 13-12-1995 at the residence of the assessee and her husband Shri J.K Beri and thereafter in response to this a show-cause notice was issued under section 158BC(c) on 28-2-1996. The assessee filed her return for the block period from 1st April, 1985 to 13 December, 1995 in Form 2B on 2nd May, 1996 declaring therein the undisclosed income at 'Nil'. As per the return filed in Form 2B, the details of income comprised in the block period is as under: --------------------------------------------------------------------------------- Assessment year Details of total income Details of total of the previous year income of the previous  ....
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.... Rs. 74,480 Rs. 1,30,300 1993-94 Rs. 99,810 Rs. 99,810 1994-95 Rs. 96,500 Rs. 96,500 1995-96 Rs. 61,400 Rs. 61,400 1996-97 Rs. 1,02,500 &....
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....f Rs.1,01,04,000 mentioned in the agreement dated 29-4-1995 was to compensate Shri Vijay Sehgal for transferring the shares to the assessee to enable the Beri Group to have effective control over the affairs of the company M/s. Leader Valves Ltd. whereas in the subsequent agreement dated 1-5-1995 the price paid was mentioned at Rs.200 per share as against Rs.2,000 per share mentioned in the agreement dated 29-4-1995 and the price of Rs.200 per share was approximately the book value of the share against the face value of Rs.100 per share. 5. The Assessing Officer has given in para 5 of the assessment order the brief history relating to the company M/s. Leader Valves Ltd. and its promoters as under: "M/s Leader Engineering Works, prior to its being converted into a private Ltd. Co. M/s Leader Valves Ltd. was a partnership firm in which Shri P.N. Beri, Sh. D.D. Sehgal, Sh. K.K. Sehgal, and Sh. Gambhir were partners. On conversion of the partnership firm M/s Leader Engineering Works into M/s Leader Valves Ltd.; the original partners became shareholders of the company. Subsequently disputes had arisen among the promoters/shareholders and the pattern of shareholding was such that n....
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....ation which was paid by the assessee to Shri Vijay Sehgal for assuming the effective control by the Beri Group over the affairs of the company M/s Leader Valves Pvt. Ltd. Both S/Sh. Vijay Sehgal and Purnima Beri, the assessee agreed that the total sale consideration was Rs.1,01,04,000 but only an amount of Rs.10,10,400 was paid and the balance was to be paid at the time of search. The Assessing Officer also recorded the statement of Sh. Yesh Pal Mittal as well as Sh. Shital Vij, during the course of assessment proceedings on 14-10-1996, and they resiled from their earlier statements given at the time of search on 13-12-1995 with regard to the payment by the assessee in cash to Sh. Vijay Sehgal aggregating to Rs.42 lakhs. The Assessing Officer on the basis of these facts arrived at the following conclusion:-- "(i) The Beri Group which is running the company Leader Valves Ltd., desperately needed to raise its shareholding to acquire majority share so as to effectively control the operations of the company. There was always a feeling of bitterness among the shareholders of different groups. (ii) The genuineness of the agreement entered into by the assessee with Sh. Vijay Sehgal ....
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....rsay. It is important to note that the statement was made at the time of search spontaneously and without any pressure or influence. There appears no reason to doubt the credibility of that statement. After consideration of all the relevant facts the only conclusion we arrive at is that the assessee has made full payment of sale consideration of Rs.1,01,04,000 for purchase of 5052 shares belonging to Sh. Vijay Sehgal. The sale consideration comprises payments by cheques amounting to Rs.10,10,400. The sources thereof stands explained while balance amount of Rs.90,93,600 has been paid in cash, the sources thereof remains unproved and undisclosed. Therefore, a sum of Rs.90,93,600 is added as income of the assessee from undisclosed sources." 7. Aggrieved with the order of the Assessing Officer the assessee has filed this appeal to the Tribunal. It was submitted by Shri N.K. Sud, Learned representative of the assessee that from the facts brought on record during the course of assessment proceedings, the conclusion of the Assessing Officer that the assessee has made cash payment amounting to Rs.90,93,600 to Shri Vijay Sehgal between the period 1-4-1995 to 31-12-1995 which is the da....
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....nheritance of those shares was pending adjudication before the Hon'ble Punjab and Haryana High Court at Chandigarh on account of dispute between the legal heirs of Shri D.D. Sehgal (Deceased). It was submitted that under these circumstances, it was difficult to understand as to how the assessee could pay for those shares whose very existence was in doubt at the time of search as the matter with regard to the distribution of the Estate of late Shri D.D. Sehgal which included 29860 Equity Shares held by Shri D.D. Sehgal (Deceased) was in dispute and was pending adjudication with the Punjab and Haryana High Court at Chandigarh. It was pleaded that the assessee had by the time of search paid only a sum of Rs.10,10,400 by cheques to Shri Vijay Sehgal for which regular receipts were issued by Shri Vijay Sehgal which were also found at the time of search from the custody of Shri Y.P. Mittal. It was submitted that the only basis of the Assessing Officer for making this huge addition of Rs.90,93,600 to the income of the assessee was the statement of Shri Y.P. Mittal recorded by the search party on 13-12-1995. The relevant portion which was relied upon by the Assessing Officer is as under --....
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....have given a clarification to the Assessing Officer that the fact of passing of cash amounting to Rs.42 lacs between the parties mentioned by them at the time of recording their statement on 13-12-1995 was not based on their personal knowledge but was on the basis of hearsay and as such they have no knowledge about the passing of any cash between the parties and they were witness only to the cheque payments aggregating to Rs.10,10,400 which was paid by the assessee Smt. Purnima Beri to Shri Vijay Sehgal in the form of three cheques of valuing Rs.1,98,000, Rs.66,000 and Rs.7,46,000. The receipt in relation to which was also seized by the search party from the residence of Shri Yash Pal Mittal. It was submitted that the assessee Smt. Purnima Beri could not pay the entire sales consideration of Rs.1,01,04,000 to Shri Vijay Sehgal by 31-12-1995 as stipulated in the agreement dated 29-4-1995 which date was extended by mutual consent and subsequently the assessee did make payment of the balance amount of Rs.90,93,600 by cheques extending over a period of more than a year. in fact the entire payment of Rs.90,93,600 has been made by Smt. Purnima Beri, the assessee, by cheques to Shri Vijay....
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....also leads credence to the theory of Shri Vijay Sehgal having been in receipt of unaccounted cash from Smt. Purnima Beri and that unaccounted cash was paid by the assessee to Shri Vijay Sehgal. It was submitted that the subsequent payments by cheques by the assessee to Sh. Vijay Sehgal were made and might be equivalent cash taken by the assessee from Shri Vijay Sehgal. Shri Mohinder Singh, learned D.R. accordingly supported the order of the Assessing Officer and submitted that the addition of Rs.90,93,400 was rightly made by the Assessing Officer and should be confirmed. 9. We have considered the rival submissions and have also gone through the order passed by the Assessing Officer as well as the paper book running into 56 pages filed by the assessee which contained the statements of Sh. Vijay Sehgal, statement of the assessee Smt. Purnima Beri, statement of witnesses S/Sh. Yash Pal Mittal and Shital Vij, recorded at the time of search on 13-12-1995 as well as the subsequent statements of all these persons recorded by the Assessing Officer during the course of assessment proceedings. The factual details relating to the dispute have been summarised by us in para 3 above. The only....
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....ole, of the payment is to be paid through cheque only. As per my knowledge the payment of Rs.10 lacs has been paid through cheque till 13-12-1995, date of search and certain cheque payments have been made after 13-12-1995 of which I am aware of. No cash payment were made in my presence. I have no knowledge about the same. Q. 2. I am showing you your statement recorded on 13-12-1995 wherein you have confirmed the statement of Sh. Yash Pal Mittal dated 13-12-1995 in which he has stated after consulting you that Mrs. Purnima Beri has paid Rs. 60 lacs till 31-12-1995 which included payments approximately Rs.10 lacs made through cheque which means the balance was paid in cash. But now you are giving a contradictory statement. What you have to say about that? Ans. Whatever I had stated on 13-12-1995 to Sh. Yash Pal Mittal was just an hearsay. That was not a fact. No cash payment has been made to Sh. Vijay Sehgal by Mrs. Purnima Beri in my presence and I have no knowledge as to whether any cash transaction has been made between them. I stand by the statement recorded today i.e., 14-10-1996. From the above, it is clear that the basis of addition made by the Assessing Officer were ....
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....he learned brother. Accordingly, I proceed to pass the following order. 12. Before taking up the arguments of respective parties, a belief of the facts involved in the case though the same have been narrated by learned brother in detail. Initially, it was Leader Engg. Works, a partnership firm in existence located at Jalandhar in which S/Shri P.N. Beri, D.D. Sehgal, K.K. Sehgal and Gambhir were partners. It was shown to be a successful venture. Later on, it was converted into a limited company in the name of "Leader Valves Ltd." The original partners became shareholders of the company. However, some years back certain disputes had arisen among the shareholders. The pattern of shareholding was such that no single group held majority shares. After the death of Shri P.N. Beri, his son Shri J.K. Beri and his wife Smt. Purnima Beri inherited his shares. Shri K.K. Sehgal joined hands with this Beri group but still their combined shareholding was less than 50 per cent. The dispute relating to the control and management was taken to the Company Law Board, New Delhi. When this legal disputes were going on, Smt. Purnima Beri reportedly had a deal with Shri Vijay Sehgal s/o Shri D.D. Sehga....
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....d that the same was signed by her in office in routine manner alongwith other documents and did not confirm the statement given by Shri Yash Pal Mittal to whom she admitted to have met 2-3 times in her life. She could not give out anything about the payment made in respect of those agreement deeds or about the person who actually paid that amount. However, during the assessment proceedings, story took different turn as Shri Yash Pal Mittal resiled from his earlier stand during the statement recorded by the Assessing Officer (hereinafter referred as the Assessing Officer) and mentioned that whatever he stated was hearsay and he had no personal knowledge about any payment made by Smt. Purnima Beri to Shri Vijay Sehgal. Shri Shital Vij also denied his personal knowledge and stated that his corroboration of the statement of Shri Yash Pal Mittal was based on hearsay. Still, Smt. Purnima Beri also took different stand as she admitted signing of both the agreements and further accepted the fact that amount of Rs.1,01,04,000 was to be paid by her upto 30-12-1995 to Shri Vijay Sehgal on the basis of agreement dated 29-4-1995 and that date stood extended by mutual understanding. These are th....
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....er that both the parties viz. Smt. Purnima Beri and Shri Vijay Sehgal admitted to the correctness of the agreements and have given reasons for the difference in value of one share in Leader Valves Ltd. in both two agreements. According to him, the price of Rs.2,000 in the agreement dated 24-9-1997 was tentative price, which includes the amount being paid by the assessee to Shri Vijay Sehgal to compensate him for surrendering his ownership of shares. The other agreement dated 1-5-1995 representing the price, which was to be paid for the transfer of shares of Shri Vijay Sehgal including those inherited by said Shri Vijay Sehgal from the estate of his father Shri D.D. Sehgal (deceased). It was further contended that an amount of Rs.10,10,400 alone was paid at the time of search and that too through cheques by Smt. Purnima Beri to Shri Vijay Sehgal for which Shri Vijay Sehgal issued receipts. Everything apart from the above facts was against truth. First of all, he took the statement of Shri Yash Pal Mittal and recorded at the time of search in which he stated about the transfer of Rs.60 lacs to Shri Vijay Sehgal by Smt. Purnima Beri but pointed out that in the statement recorded at th....
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....in his own name and 3732 equity shares inherited by Shri Vijay Sehgal being 1/8th of 29860 equity shares owned by his father, Shri D.D. Sehgal. It is also undisputed fact that there were two agreements recovered from the house of one Shri Yash Pal Mittal out of which the first agreement dated 29-4-1995 reveals that Shri Vijay Sehgal agreed to sell the above referred to equity shares to assessee @ Rs.2,000 per share and the consideration of Rs.1,01,04,000 was to be paid by 30-12-1995. The other agreement dated 1-5-1995 is in respect of transfer of 3732 shares allegedly inherited by Shri Vijay Sehgal from his father in which value of all shares is Rs.7,46,400 meaning thereby @ Rs.200 per equity share. Now the case of the Revenue is that rest of the amount of value of equity shares i.e., Rs.1,01,04,000 was transferred by Smt. Purnima Beri to Shri Vijay Sehgal before the date of search out of which Rs.10,10,000 was paid through cheques and rest in cash while the assessee denied payment of any amount except paid through cheques. 17. It will be in the fitness of things to consider the facts and the circumstances as well as conduct of the assessee and other concerned persons to arrive ....
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....he assessment proceedings goes to show that the conduct of Smt. Purnima Beri was not above board. 18. There is another peculiar feature of the transaction that there were two agreements executed in between the transferor and transferee and the first was executed on 29-4-1995 and second after the two days. The price of equity share to be paid by Smt. Purnima Beri was Rs.2,000 per share in agreement dated 29-4-1995 but this price was reduced to Rs.200 per share in the second agreement dated 1-5-1995. The explanation of the assessee that value of Rs.2,000 per share given in the first agreement was mentioned as tentative price is not believable nor it was fact that Shri Vijay Sehgal was being compensated but the only inference out of execution of two agreements is that in case transaction was over, the agreement dated 1-5-1995 alone would have seen the light of the day and both the parties would have destroyed the very existence of earlier agreement otherwise what was the necessity for the parties to execute the second agreement in a period of 2 days and reducing the price of share from Rs.2,000 to Rs.200. Initially, as stated above the case of the assessce was that the price of eac....
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....h payment. In my earlier statement I had deposed that on the date of we enter of document only five to six lacs were passed, but now I remember that it was Rs. seven lacs as stated above. So far as remaining payments are concerned, I can tell after consulting other witness to the document i.e., Mr. Shital Vij. Now, I have made a contract with the other witness to the document Mr. Shital Vij and the total payment including the payment made by cheques as described above is Rs. sixty lacs as on 13-12-1995." Statement of Shri Shital Vij, another witness of these two agreement deeds, were also recorded on that very day and he gave the following answers to the questions regarding execution of agreement deeds and about passing of the amount as told by Shri Yash Pal Mittal:-- "Ans. I admit the contents of the statement regarding agreement between Shri Vijay Sehgal and Purnima Beri and also admit his statement on the issue of payment made by Smt. Purnima Beri to Sh. Vijay Sehgal." From the above admission of alleged independent witnesses of agreement deeds the passing of Rs.60 lacs including the amount paid by cheques out of the transactions of transfer of shares is very much ev....
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....en the parties as they were said to be the man of confidence and even documents were with them. The parties must be apprising about each and every fact to both of them and whatever version given by Shri Yash Pal Mittal and corroborated by Shri Shital Vij at the time of search should be taken as true. Not only this, Shri Yash Paul Mittal in his statement reproduced above have given out the details how the payments have been made and even specifically dates and months of payment of cash made by Smt. Purnima Beri to Shri Vijay Sehgal were mentioned. Unless and until these witnesses were not knowing full facts question of giving minute details about the payments were not expected from him. 20. Further, another aspect of the matter is that during the assessment proceedings when the statement of Shri Yash Pal Mittal was recorded, he has not denied the earlier version about the payment of Rs. 60 lacs including the payment through cheques but he simply added that his statement recorded on 13-12-1995 was hearsay and stated further that no cash had been paid in his presence at any point of time. This is not to be treated that witness resiled from the earlier statement nor his statement is....
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....0 lacs. We have the copy of assessment order in the case of Shri Vijay Sehgal on record and most of these amounts were treated as unexplained amounts of investment made by Shri Vijay Sehgal during the period after the date of agreement and before search. The Assessing Officer rightly observed that there is nexus in between the payment of Rs. 50 lacs approximately by Smt. Purnima Beri in cash to Shri Vijay Sehgal and recovery of cash as well as unexplained investment by Shri Vijay Sehgal as noted above. We confirm that finding of Assessing Officer, which is apparent on record. Apparently it is clear that whatever amount was received by Shri Vijay Sehgal was invested in FDRs and other transactions noted above and some of the cash was found but fact remains that it is in consonance with the theory of Revenue that the amount more than 50 lacs was paid bv Smt. Purnima Beri to Shri Vijay Sehgal on the basis of agreement dated 29-4-1995. 22. The other relevant point is that in view of the rivalry going on in between different group of shareholders and competition to take over the effective control and management of the Company, none of the shareholder must be having confidence on the o....
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....their chest for the reasons best known to them and the Revenue is not expected to unfold the industries. This ground will not help the assessee. 25. On the basis of the aforesaid discussion and if summarised, then the factum of execution of two agreements, conduct of Smt. Purnima Beri at the time of search evading the questions relating to the transactions and later on admitting that Rs.2,000 were fixed as the price of each equity share and statements of Shri Yash Pal Mittal as well as Shri Vijay Sehgal at the time of search coupled with the recovery of approximately 50 lacs cash and unexplained investments in search on 13-12-1995 itself from Shri Vijay Schgal who allegedly received the cash and other circumstances, conclusion is that Rs. 60 lacs including amount of pavment made through cheques were actually transferred from Smt. Purnima Beri to Shri Vijay Sehgal based on agreement dated 29-4-1995 and addition is to be made to the extent of Rs.60 lacs - Rs.10,10,000 = Rs.49,90,000 in the hands of Smt. Purnima Beri and not Rs.90,93,600 made by the Assessing Officer and the Assessing Officer is directed accordingly. 26. The appeal of the assessee is partly allowed as addition w....
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....sideration of Rs.1,01,04,000 and full consideration was to be paid by 31-12 1995; (iii) Blank Share Transfer Deeds signed by Shri Vijay Sehgal and witnesses were also found and seized; (iv) Three receipts signed by Shri Vijay Sehgal testifying to the receipt of sums aggregating Rs.10,10,400 by cheques being the sale consideration of shares were also found and seized; and (v) Another agreement dated 1-5-1995 between the assessee and Shri Vijay Sehgal for sale of the ownership rights of shares inherited by the latter from his deceased father Shri D.D. Sehgal for a sum of Rs.7,46,400 was also found and this stated that the consideration of the said amount i.e., Rs.7,46,400 had been paid by cheque by the assessee to Shri Vijay Sehgal. 3. On being confronted with the aforesaid documents during the course of search, the assessee admitted the signatures on both the documents but explained that the sum of Rs.1,01,04,000 mentioned in the agreement dated 29-4-1995 took into account the compensation to Shri Vijay Sehgal for transferring the shares to the assessee to enable the "Beri Group" to have effective control over the affairs of the company M/s. Leader Valves Limited whereas....
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....ed. 8. At the assessment stage, the assessee explained that the price of Rs.2,000 per share was a tentative one while the price of Rs.200 was the correct price and the difference between the two represented the compensation which was to be paid by the assessee to Shri Vijay Sehgal for assuming effective control by the "Beri Group" over the company M/s. Leader Valves Limited. Both the assessee and Shri Vijay Sehgal agreed and stated that the total sale consideration was Rs.1,01,04,000 but only a sum of Rs.10,10,400 was paid and the balance was still to be paid. 9. At the assessment stage, the statements of Shri Yash Paul Mittal and Shri Shital Vij were once again recorded on 14-10-1996 and they resiled from their earlier statements given at the time of search with regard to the payment of a sum of Rs.42 lakhs in cash to Shri Vijay Sehgal. 10. On the aforesaid facts the Assessing Officer arrived at the following conclusions:-- (i) The "Beri Group" desperately needed to raise its shareholding to acquire majority stake in the company; (ii) The genuineness of the agreement entered into between the parties had never been in doubt as the parties as also the witnesses had te....
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....ing the date of search was not justified being based on mere suspicion and conjectures. (ii) That search and seizure operations were carried out at the premises of the assessee and her husband as also Shri Vijay Sehgal along with two witnesses on the basis of a complaint/information with the Department that Shri Vijay Sehgal had sold his entire holding of shares of M/s. Leader Valves Limited to the "Beri Group" so as to enable them to assume effective control over the management of the company and that unrecorded cash amount over and above the sale price mentioned in the agreement had changed hands. (iii) The search party no doubt found two agreements of sale one dated 29-4-1995 and the other dated 1-5-1995 but parties to the agreement that is the assessee and Shri Vijay Sehgal both had admitted to the correctness of the agreements and had given reasons for the difference in the value of one share of the company mentioned in the agreement. (iv) That the price of Rs.2,000 per share in the agreement dated 29-4-1995 was tentative price and it included the amount which was agreed to be paid by the assessee to Shri Vijay Sehgal to compensate him for surrendering his ownership o....
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....Sehgal by 31-12-1995 as stipulated in the agreement dated 29-4-1995, which date was extended by mutual consent and subsequently the assessee did make payment of the balance amount of Rs.90,93,600 by cheques extending over a period of more than a year. (xiii) That the entire payment of Rs.90,93,600 had been made by the assessee by cheques to Shri Vijay Sehgal by the end of September 1997 only. (xiv) There was no evidence available with the Department to indicate that the assessee had in fact paid cash to Shri Vijay Sehgal during the period 1-4-1995 to 13-12-1995 and the addition was based on mere suspicion and vague allegations that at the time of search at the residence of Shri Vijay Sehgal huge unaccounted cash, FDRs etc. were found. (xv) In case the source of cash and FDRs from the residence of Shri Vijay Sehgal was the money given by the assessee then Shri Vijay Sehgal could have explained it to be so and under these circumstances there could have been no addition on account of undisclosed income in the hands of Shri Vijay Sehgal. (xvi) That both the assessee and Shri Vijay Sehgal had stated that the price of Rs.1,01,04,000 represented the price for the transfer of t....
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.....60 lakhs and the other witness Shri Shital Vij corroborated the statement of Shri Yashpal Mittal when his own statement was recorded at his business premises on 13-12-1995. 17. The learned AM then noticed the statements of both the aforesaid witnesses, which were recorded by the Assessing Officer during the course of assessment proceedings on 14-10-1996 when they resiled from their statements recorded on 13-12-1995. It was highlighted by the learned AM that in response to a particular question put by the Assessing Officer, these witnesses categorically stated that the information with regard to the passing of cash by the assessee to Shri Vijay Sehgal was based on hearsay and that cash was not paid in their presence. The relevant question and answer from the statement of Shri Y.P. Mittal recorded by the Assessing Officer on 14-10-1996 was thereafter reproduced in the order of the learned AM. The learned AM also proceeded to reproduce relevant extracts from the statement of Shri Shital Vij recorded by the Assessing Officer on 14-10-1996 vis-a-vis the retraction from the earlier statement and also confirming that no cash had been paid to Shri Vijay Sehgal by the assessee in his pr....
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....r shareholding to more than 50 per cent. A reference was made to the two agreements recovered from the house of Shri Y.P. Mittal out of which the first agreement dated 29-4-1995 mentioned the sale consideration at Rs.2,000 per Equity Share i.e., Rs.1,01,04,000, which was to be paid by 30-12-1995 and the second agreement dated 1-5-1995 which mentioned a figure of Rs.200 per Equity Share. As noted in the order of the learned AM, the learned JM also took note of the revenue's stand that the difference between the two figures was paid in cash by the assessee to Shri Vijay Sehgal before the date of search and their being no dispute between the parties about the payment of Rs.10,10,400 by means of cheques prior to the date of search. 22. The learned JM referred to the conduct of the assessee vis-a-vis the preliminary statement recorded at the time of search i.e., on 13-12-1995 when she has purported to have evaded answers about the payment of consideration money of the Equity Shares and stated that her husband alone knew about this. She further denied knowledge about the extent of payment having been made whether in full or still outstanding but she categorically admitted that an agre....
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....man of confidence of both the parties and that was any the valuable documents were given to him by the parties and he must therefore be taken as a privy to the transaction and developments thereafter. The learned JM at page 28 of the order reproduced the relevant extracts of the statements of Shri Y.P. Mittal and Shri Shital Vij to conclude that passing of Rs.60 lakhs including the amount paid by cheques between the parties was very much evident. He rejected the contention of the assessee's counsel about the recording of the statements behind the back or the assessee observing that even during the assessment proceedings these two witnesses were examined by the Assessing Officer in the presence of the assessee, who was thereafter given an opportunity to cross-examine them. 26. The learned JM thereafter came to the subsequent statements recorded whereby the witnesses resiled from the earlier statement and relevant extracts from the statement of Shri Y.P. Mittal are reproduced at pages 29 and 30 of the order of the learned JM. 27. At page 30 of his order, the learned JM discussed at some length the effect of the initial statement recorded at the time of search and the subsequent....
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.... the statements of the two witnesses recorded at the time of search and treating the changed version as a result of manoeuvering on the part of the assessee and Shri Vijay Sehgal. 30. It was also noted by the learned JM during the simultaneous raid conducted at the house of Shri Vijay Sehgal that substantial cash and investments were found and these approximately exceeded Rs. 50 lakhs. According to him, the assessment order of Shri Vijay Sehgal showed that most of these were treated as unexplained investments made by Shri Vijay Sehgal during the period beginning with the date of agreement and ending with the search. The view of the learned. JM was that the Assessing Officer had rightly observed that there was a nexus between the payment of the substantial amount by the assessee in cash to Shri Vijay Sehgal and the recovery of more or less the same amount in the form of cash and unexplained investments from Shri Vijay Sehgal. 31. The learned JM further observed that Shri Vijay Sehgal had executed Power of Attorney and also signed blank share transfer deeds, which were recovered at the time of search and he could not be such a novice that without recovering the entire payment h....
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....ubsequent arguments advanced by him were a reiteration of those tendered before the Division Bench. The following were highlighted:-- (1) Out of the total number of shares i.e., 5032, 1800 shares which belonged to Shri Vijay Sehgal had been transferred to the assessee prior to the date of raid whereas the remaining 3232 shares, which were the subject matter of succession proceedings before the Hon'ble High Court came to be transferred only in 1996. (2) The price of each equity share if worked out on the basis of the balance sheet of the Company was Rs.200 and this was not in dispute between the parties. (3) Simultaneous raids had taken place at eight locations and vis-a vis the assessee no incriminating documents were found and nor was the seizure of any asset made. (4) All documents which were the subject matter of the addition were found at the residence of Shri Y.P. Mittal. (5) No receipts/documents were found at any place, which would show that anything over and above Rs.200 per share had been paid. (6) There was cogent evidence on record to show that payment at the rate of Rs.2,000 had been made after the date of raid. (7) Vis-a-vis the transfer deeds foun....
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....hich would show that huge payments of the magni tude alleged had been made by the assessee to Shri Vijay Sehgal. This was also not possible because the assessee considering her past assessments showing nominal income could not be expected to be in possession of funds to the tune of Rs.90 lakhs and odd. (18) When it was the case of the Department itself that there was no trust between any of the parties to the transaction, then how could it be said or held, with certainty that assessee would make payment of Rs.90 lakhs and odd without any receipt or without the transfer to her name of 3732 shares, which were the subject matter of succession proceedings. (19) The action of the Assessing Officer in making the huge addition was entirely on probability, surmises, conjectures and suspicion when there was clear evidence available on record. (20) The Department had not brought anything on record which would show that the sum of Rs.90 lakhs and odd paid to Shri Vijay Sehgal after the raid and that also by cheque had come back to the assessee by any manner or mode. (21) That suspicion however strong could not replace evidence and in proceedings under section 158BD, there could be....
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....assed by the learned AM be approved. 38. The learned DR on behalf of the Department vehemently supported the order passed by the learned JM and subsequent arguments advanced by him were a reiteration of the reasons recorded by the learned JM in confirming the addition to the tune of Rs.49,90,000. The following were highlighted:-- (a) The conduct of the assessee was not bona fide since she did not give direct reply to any of the questions asked at the time of search. (b) There were two agreements one mentioning a figure of Rs.200 per share and the other mentioning a figure of Rs.2,000 per share and these agreements were signed by the two witnesses who were the close confidants of the assessee. (c) The two witnesses in having their statements recorded mentioned specific dates and amounts in respect of the money paid in cash by the assessee to Shri Vijay Sehgal and subsequent statements resiling from the said stand were not valid in the eyes of law. (d) The two witnesses were responsible persons and it had to be seen in this respect as to why they should make initial statements about a particular state of affairs and which were subsequently resiled. That resiling was do....
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....2 ITR 766 (All.) (xi) Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) (xii) Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC). 42. I have considered the rival submissions and also perused the separate orders passed by the learned Members constituting the Division Bench. The decisions cited at the par have also been considered. 43. As rightly observed by the learned AM, the main basis for the addition on the part of the Assessing Officer were the statements of Shri Y.P. Mittal and Shri Shital Vij recorded on 13-12-1995 i.e., the date of search. Subsequently, however, they were resiled from at the assessment stage. The position of law is absolutely clear on the resiling by a witness from an earlier statement i.e., it has to be for good reason. In the second statement, both the witnesses categorically stated that they were not witness to any money being paid in cash over and above the cheque payment aggregating Rs.10 lakhs and odd. Both of them accepted that what they had stated at the time of search was based on hearsay. There is also the mention of consultations between the two witnesses on 13-12-1995 probably on phone before making a statement before the Assessing Off....