HEMESH FAMILY TRUST Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) MR . S.N. Soparkar, learned Counsel assisted by Ms. Vaibhavi Parikh, learned Counsel for the assessee. Mr. Tanvish U. Bhatt, learned Counsel for the Revenue. Parties are heard.

(2.) AT the instance of the assessee, the Tribunal, Ahmedabad Bench 'B' has made this reference for opinion of this Court in relation to ITA Nos. 2682, 2683 and 2684/Ahd/1990 on the following question:

(3.) THE facts, in nutshell, for disposal of the present reference, are that one Ishwardas Gordhandas Patel, resident of 4/A, Shivalaya, Chembur, Bombay, executed a deed of settlement on 20th April, 1982 on two non -judicial stamp papers of Rs. 60 bearing No. 467 and another of value of Rs. 40 bearing No. 466 purchased by Shivalaya Construction Co., on 5th July, 1982. A submission was made by the assessee placing reliance upon the trust deed that by the deed of settlement a sum of Rs. 1,000 was transferred to 3 persons, namely (1) Bhagwandas Gordhandas Gujarati, resident of Pune, (2) Purshottamdas Bhikhabhai Patel of Dholka, and (3) Smt. Kalindi Jayantilal Patel of Dholka as trustees to hold the said sum for the benefit of three beneficiaries who were mentioned in Clause (2) of the said deed of settlement, namely (1) Hemesh, son of Navnit Kanaiyalal Patel, (2) Pinakin, son of Bhagwandas Gordhandas Gujarati, and (3) Amrish, son of Bhagwandas Gordhandas Gujarati. Various arguments were raised before the AO that as the trust had come into existence, the trust was required to be assessed. The AO, recording salient features in the matter, observed that the trust deed in fact was sham and bogus and was concocted. He decided the matter against the interests of the assessee and opened the penalty proceedings. The order, not being palatable to the assessee, was challenged at his instance before the CIT(A). The CIT(A) called for remand report from the AO as per his order dt. 6th Oct., 1986. The remand report was received by the CIT(A) vide AO's letter dt. 20th Jan., 1990, the report was against the interests of the assessee. The CIT(A), after hearing the parties and not agreeing with the remand report, observed that there was an arithmetical/clerical mistake in mentioning the date of execution of the document as '20 April, 1982' because in fact the document was executed on '20th Sept., 1982'. He also observed that the attending circumstances like minutes book recorded and cash book opened by the assessee, the opening of the bank account and registration under the Sales -tax Act which were after 20th Sept., 1982 would show that the trust deed was executed and signed on 20th Sept., 1982. He accordingly allowed the appeals. The Revenue, being dissatisfied with the order, preferred appeal to the Tribunal. The Tribunal, after hearing the parties and after recording the arguments which were raised by the parties, observed that the CIT(A) was unnecessarily influenced by the submissions made by the assessee. It observed that the trust deed was sham and bogus, it could not be executed on 20th April, 1982 on a stamp purchased on 5th July, 1982, that too especially when the stamp was purchased in the name of M/s Shivalaya Construction Co., there was difference in the signatures, and there was a serious dispute about the place of execution of the document. It accordingly allowed the appeals and held that the AO was justified in disowning and disregarding the trust deed. The assessee, thereafter, made various applications for reference. Referring to question No. 1 in Ref. Appln. No. 1465/Ahd/1994, Mr. Soparkar submitted that number of questions, which were considered by the Tribunal, were not raised by the parties and no opportunity was afforded to the assessee to meet with the submissions. It is also the case of the assessee that the legal effect of purchase of the stamp in name of someone else and difference in place of execution/attestation, or difference in the signatures and execution of the document on a date prior to the date of the purchase of the stamps were in fact not argued. He submits that the Tribunal was absolutely unjustified and from the frame of the question proposed by the assessee it would clearly appear that the assessee all throughout had been contending that he was condemned unheard. On the other hand, learned Counsel for the Revenue submits that from a perusal of the order passed by the Tribunal and para 7 of the statement of the case made by the Tribunal it would clearly appear that not only the questions were raised and argued by the Revenue but those were properly replied by the learned Counsel for the assessee. He submits that the Tribunal was justified in restoring the order passed by the AO. We have heard the parties at length and have perused the reference.