Chand Parkash Vij vs Commissioner of Income Tax

The assessee has preferred this appeal u/s 260A of the Income Tax Act, 1961 (for short, "the Act"), against the order dated May 25, 2007, passed by the Income Tax Appellate Tribunal, Amritsar Bench, in I.T.A. No. 418/ASR/2006 for the assessment year 1998-99. The assessee has proposed several substantial questions of law, but at the time of arguments, Mr. Mukhi, learned Counsel for the assessee, pressed questions Nos. I and VI in paragraph 13 of the appeal, which are as under:

(I) Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in dismissing the various important legal issues raised before it by the assessee, touching upon the very validity of initiation of proceedings u/s 147, non-service of notice u/s 148, non-disposal of legal objections raised before the Assessing Officer against proceedings u/s 147/148 by passing a speaking order before pursuing the assessment, non-summoning the prime witnesses to deal and with purchasers by the Assessing Officer thereby denying fair opportunity of cross-examination to the assessee, on the simple plea that no specific grounds of appeal apropos such issues were raised before the Income Tax Appellate Tribunal?

VI. That whether, on the facts and circumstances of the case, was the Income Tax Appellate Tribunal justified in confirming the orders of the authorities below upholding the addition of Rs. 11,33,800 as unexplained credit in the bank account of the assessee, even when the Investigation Wing of the Department had first time investigated the matter in October, 1998, and based on sworn affidavits of the purchasers, chosen not to refer it to the Assessing Officer for initiating action u/s 143(2) or 148, as the case may be, which was well over five years before the issue of the impugned notice u/s 148 on March 24, 2004?"

The assessee was assessed for the assessment year 1998-99. After assessment, the Assessing Officer received information from the Assistant Director of Income Tax (Investigation), vide letter dated February 11, 2004, that the assessee deposited a sum of Rs. 11,33,800 on September 24,1997, in cash in his savings bank account. On receiving the said information, notice for reassessment u/s 148 of the Act was given to the assessee, proposing to treat the amount of the said cash deposit in the bank as undisclosed income. Finally, the Assessing Officer made reassessment, treating the said amount as undisclosed income. The order of the Assessing Officer has been affirmed in appeal by the Commissioner of Income Tax (Appeals) as well as by the Tribunal. The Tribunal, inter alia, recorded the following findings:

Apropos the first issue, i.e., that the taxing authorities erred in partly rejecting/disallowing the agreement dated March 10, 1997, while partly accepting the same, contention of the assessee is that the earnest money of Rs. 2,50,000, received by the assessee with regard to the proposed sale of his residential house to S/Shri Gurdial Singh, Sukhdev Singh and Baljit Singh, was accepted by the Department, the receipt of part payment of sale consideration of Rs. 11,35,000 has wrongly been not believed. In this regard, undisputedly, the proceedings u/s 147 of the Act were initiated against the assessee for the reasons of failure of the assessee to explain the source of the cash deposits of Rs. 11,33,800 in his savings bank account of the remaining unsuccessful in explaining the source of such deposit. Therefore, the grievance of the assessee in this regard is meritless and is rejected as such.

The last issue is that the Assessing Officer had erred in not summoning the purchasers as well as the marginal witnesses of the agreement. In this regard, undisputedly, the alleged purchasers were examined. S/Shri Sukhdev Singh and Baljit Singh denied having purchased the property in question from the assessee so much so, they denied even having known the assessee or having known the other purchaser. This stand taken by them was unshaken and maintained even in the cross-examination of these purchasers by the authorised representative of the assessee. Shri Gurdial Singh the third purchaser, could not be traced. So far as regards the assessee, he did not provide to the Assessing Officer the address of Shri Gurdial Singh, nor did he produce to the Assessing Officer. Apropos the marginal witnesses of the agreement, the marginal witnesses (sic). However, the assessee himself objected to these witnesses being examined by the Assessing Officer on the ground that no proceedings were pending before the Assessing Officer and that so the Assessing Officer could not, in law, examine the marginal witnesses. The observations of the learned Commissioner of Income Tax (Appeals), in this regard/are pertinent:

The Assessing Officer attended the appellate proceedings and as per order-sheet entry the Assessing Officer mentioned that the report will be sent by him after recording the statement of independent witness. But it was reported by the Assessing Officer, vide letter dated February 21, 2006, that the assessee filed letter dated February 21, 2006, before him and mentioned therein that since no proceedings are pending before the Assessing Officer the summons u/s 131 of the Income Tax Act to the witnesses are without jurisdiction. It was mentioned by the Assessing Officer that since the assessee has challenged the issuance of summons to the witnesses for recording their statements as desired by the learned Commissioner of Income Tax (Appeals) during the appellate proceedings, no further action of recording of statement of marginal witnesses is called for at his end. It was endorsed to Addl. CIT, Range-III, Jalandhar, vide his letter dated February 21, 2006.

Thus, it is evident that two of the three purchasers were examined by the Assessing Officer and they deposed against the assessee, whereas the third purchaser could not be traced and the assessee did not either provide his address or himself produce him before the Assessing Officer. Therefore, it cannot at all be said that the purchasers were illegally not examined by the Assessing Officer. So far as regards the marginal witnesses, as seen above, the assessee himself objected to their examination by the Assessing Officer. Hence, this issue raised by the assessee is also devoid of force and is decided against the assessee.

In view of the above, ground No. 2 and 5 are rejected. The taxing authorities have concurrently found on facts that the assessee has not been able to explain the source of cash deposit of Rs. 11,33,800 in his savings bank account with Dena Bank. The assessee had put up the story that he had entered into the agreement to sell with S/Shri Gurdial Singh, Sukhdev Singh and Baljit Singh and sold his residential house to them and that the amount was received towards this consideration; that since the deal could not get finalized, the amount was returned by the assessee towards the said transaction. The third, i.e., Shri Gurdial Singh could not be traced. The assessee did not provide his address to the Assessing Officer nor was this person produced before the authorities. That being so, the story put forth by the assessee remained unproved. The explanation of the source of this sum of Rs. 11,33,800 was, therefore, rightly rejected by the authorities below.

We have heard learned Counsel for the assessee.

We are of the view that questions sought to be raised by the assessee, in appeal, are pure questions of fact and relate to appreciation of evidence.

No substantial question of law arises.

The appeal is dismissed.