Commissioner of Income Tax - I, Ludhiana vs Hakam Singh

Ajay Tewai, J.—The appeal proposes the following substantial questions of law:- i) Whether, on facts, as well as in law, the learned Income Tax Appellate Tribunal was right in holding that the proceedings u/s 158BD were invalid, ignoring the fact that the statement of Shri Bikar Singh, seller of the land, recorded on 28-8-1998, was the basis of satisfaction of the Assessing Officer ?

ii) Whether the learned Income Tax Appellate Tribunal was right in law in ignoring the fact that the undisclosed income was proposed to be worked out on the basis of agreement found during search in the case of M/S S.S Property Dealers ?

The revenue has filed the present appeal u/s 260A of the income tax Act, 1961 (for short "the Act") against the order dated 10-8-2007 passed by the Income Tax Appellate Tribunal, Chandigarh for the block period 1-4-1988 to 15-7-1998.

On a search operation conducted in the business premises of one M/s S.S. Property Dealer on 15-7-1988, an original agreement dated 5-12-1996 was seized from the proprietor which disclosed that the owners of the land Bihar Singh and others sold half of 8 acres of land to Sukhjinder Singh and Jarnail Singh. The statement of Bihar Singh dated 28-8-1998 revealed that half of the said land was sold to the respondent in benami names of Sukhjinder Singh and Jarnail Singh for a consideration of Rs. 72,82,500. On the basis thereof, the Assessing Officer served a notice u/s 158BD of the Act to the respondent and proceeded to frame the assessment by order dated 27-1-2004. The appeal preferred by the assessee was dismissed by the Commissioner of Income Tax (Appeal) by order dated 12-3-2004.

In second appeal, the Tribunal held that the solitary statement of Bihar Singh remained uncorroborated and unsubstantiated. It further held that the satisfaction recorded u/s 158BD of the Act can be arrived at on the basis of positive material.

In (2005) 92 ITD 148 the Delhi High Court held as follows:- The satisfaction is required to be preceded by the investigation and not that the investigation is required to be preceded by the satisfaction.....

We find no infirmity in the reasoning of the Tribunal and, being in respectful agreement with the above mentioned judgment of the Delhi High Court, we hold that the questions proposed cannot be held to be substantial questions of law. The appeal is dismissed.