RAVI PRAKASH KHEMKA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE above appeals are at the instance of three different assessees for the same assessment year, viz., 1997 -98. The facts are common in all cases. The questions of law raised are also same. They are as follows :

(2.) THE assessees are individuals assessed to tax. Since the facts are identical, for convenience, the facts in Tax Case No. 848 of 2005 are referred to here.

(3.) IN the course of the assessment proceedings for the asst. yr. 1997 -98, the assessee was called upon to explain and give the details as regards the firms and companies in which he had interest either as a partner or director or as a shareholder and to produce the books of account relating to the asst. yr. 1996 -97 to prove the copy of the accounts in 1996 -97 as appearing in the books of account of the firms and companies. The assessee was also called upon to furnish regarding fresh investments made during the financial year 1996 -97. Apart from this, the assessee was called upon to give the details regarding credit card operated by him. It is stated that the investigation was carried on under s. 144 of the Act to identify the various bank accounts maintained by the assessee. Since the assessee belonged to the NEPC Group, the details were gathered in respect of other group concerns with a specific reference to the assessee's case. It was found on information received from UTI Bank, Chennai -4, that one of the group companies, NEPC Agro Food Ltd. had loan account with UTI Bank Ltd. On an examination of the details furnished by the UTI Bank, it was noted that individuals including the assessees in the NEPC pledged the shares with the bank as a collateral security to enable NEPC Agro Food Ltd. to avail of loan facility. It is also seen that the assessee had pledged one lakh shares of M/s Sai Televisions Ltd. with the face value of Rs. 10 with UTI Bank Ltd. For further investigation summons were issued to the general manager of UTI Bank Ltd., Chennai, to produce the original share certificates pledged by the individuals. It must be noted herein that the individuals who had pledged their shares with the UTI Bank Ltd. are the appellants before this Court. On verification of the original share certificates produced by the bank, the Revenue noted that these shares were 1996 -97 relevant to the asst. yr. 1997 -98. The findings of the Revenue were communicated to the assessee along with a copy of the share certificates with a proposal to assess a sum of Rs. 10,00,000 as an unexplained investment under s. 69 of the IT Act. The assessee was called upon to offer his objections, if any, to show the genuine source of investment no fresh share capital was raised by Sai Televisions Ltd. during the relevant assessment year. As such, there was no possibility of the assessee being allotted any shares during the period under consideration. He further stated that the 1997. As such, this did not represent any additional investment. The assessing authority noted that the alleged balance sheet belonging to Sai Television Ltd. carried no authentication from a responsible officer. Further, the said company had was no material on record to prove that the said company had not issued any shares during the year 1996 -97. The assessing authority further noted that as per the share certificates pledged with UTI Bank, it was clearly mentioned that the acquisition of shares to the Department during the course of assessment proceedings for the asst. yr. 1996 -97, the assessing authority further pointed out that in none of these replies, the assessee cared to mention about the investment in shares. He also pointed out that the assessee was one of the directors in Sai Televisions Ltd. He also referred to the communication received from the Jt. CIT, Special Range -I, Guwahati, and came to the conclusion that the assessee tried to hide the facts of very important nature as regards his status in the company. Going by the facts and circumstances and considering the fact that there was no response from the assessee to produce the original certificate said to have been allotted as early as 1995 -96, the assessing authority came to the conclusion that the amount of Rs. 10 lakhs invested was liable to be assessed as per the provisions of s. 69 of the IT Act.