SHRI HARPHOOL BHARDWAJ,JALANDHAR vs. INCOME TAX OFICER, NAKODAR, NAKODAR

ORDER PerLaliet Kumar, JM:

The present appeal filed by the assessee feeling aggrieved by the order of Ld. CIT(A)-2, Jalandhar dated 21.08.2018 for A.Y. 2009-10.

2. The assessee has raised the following grounds of appeal:

“1. The assessment framed by the Ld. AO was illegal and void ab-initio. The notices initiating the Assessment were not served on the Assessee, the subsequent notices and the final Assessing Order was not served on the Assessee.

2. The Assessee deposited Rs. 51,17,437/- in his saving account. The Assessee submitted that he sold his agriculture land and furnished the documentary evidences with regard to the sale of the agriculture land. The Assessee received sale consideration from the sale of agriculture land of his brother. His brother submitted the title deeds of land sale, confirmation in the shape of oath and personally deposed before the ITO. The Ld. AO is still not satisfied on the pretext of credit worthiness. So, resultant appeal is filed.”

“Kindly refer to your office letter No. 772 dated 15.05.2018, on the subject citedabove.

2. In this regard and with respect to filing of additional evidence by the assesseeduring the appellate proceedings in the form of affidavit of Shri Pran Nath, the assessee's brother, and copy of his bank account, it is submitted that the AO had provided sufficient opportunities to the assessee during the course of assessment proceeding itself but the assessee did not turn up at all before the AO, as such, it is requested that the additional evidence submitted by the assessee may not be entertained as condition under rule 46A is not satisfied in this case

However, as directed, in order to examine the affidavit of assessee's brother ShriPranNath, a letter was issued to him on 06.06.2018 requesting him to attend the office on 15.06.2018. ShriPranNath attended the office on 27.06.2018 and his statement was recorded (copy enclosed).

Taking into consideration the facts stated by ShriPranNath, the assessee's brother, and after examining the material on record, the following submissions are made:- i. The creditworthiness of Shri Pran Nath remains unproved as he had no source income during the year under consideration i.e. F.Y. 2008- 09 (Ans. to p. No.4). So, it is unbelievable that Shri Pran Nath, having six family members, and with no source of income, gave Rs. 25.20 lakh to his brother. ii. Shri Pran Nath could not prove the genuineness of transaction as he could not file any evidence to prove that he paid Rs. 25.20 lakh to his brother, the assessee. iii. Shri Pran Nath stated that he paid Rs. 25.20 lakh in cash to Shri Harphool Chand, the assessee, on 06.05.2008. However, it is noted from Shri Pran Nath's bank Account No.2001000100069005, maintained with Punjab National Bank, Heran Branch that a sum of Rs.3,00,000/- on 07.05.2008 and Rs. 6.0 lakh on 23.10.2008 was deposited in cash in this account. When asked to explain the source of these deposits (Q.No.13 of statement), Shri Pran Nath stated that he had given Rs. 12.0 lakh to some travel agent after selling his land for consideration of Rs. 12.0 lakh on 11.04.2017(copy of sale deed filed) to send his son abroad. However, the sum was returned back by the travel agent in installments and he deposited the same in his bank account. Shri Pran Nath, however, could not file any evidence to prove that he had given Rs. 12.0 lakh to travel agent and that he deposited the installments in his bank account.

From the above mentioned facts, it is inferred that the assessee's contention that he had received Rs. 25.20 lakh from his brother ShriPranNath is not acceptable.”

“The Assessee is a Non Resident Indian having passport of Netherlands. During the year 2009-10, the assessee deposited Rs. 51.17 lacs in his saving account maintained with Centurian Bank of Punjab Limited (Now HDFC Bank) with Jalandhar Road, Nakodar Branch. Upon the receipt of AIR information, the Ld. AO proceeded with Assessment Proceedings. The Assessment was completed under section 144 of the Income Tax Act. This has resulted in appeals:

First Ground of Appeal:

The appeal was preferred in the court of Commissioner of Income Tax (Appeals).The first Ground of appeal taken was that the Assessment was arbitrary, illogical, illegal, bad in law and need to be set aside.

Submissions Before the Honorable CIT (A):

1. The Assessment Proceedings on the Assessee are illegal, bad in law and void abinitio: a. In this regard, it is submitted that the Assessee is foreign citizen. During the Assessment Proceedings, the notices issued under section 148 were never served on the Assessee. Service of notice is the pre-requisite for initiating the Assessment Proceedings. Even the final opportunity and the Assessment Order were passed without the bothering the basic principle that the notices are not being served on the Assessee. The copy of the Passport is attached for your kind perusal. b. The Ld. AO failed to appreciate the fact that all the notices are being received back. All the notices sent through Registered Post were returned with a remark that Assessee refused to accept the notice. The Ld. AO never bothered to obtain the factual position by sending any field officer at the known address that why or who is refusing the Income Tax Notices. So, in this case, the Ld. AO, failed to discharge his duty vigilantly. The Assessee was not in India and also he never authorized any body to receive any notice on his behalf. If the notices were served on any unauthorized person even then it would not have been proper service under the Income Tax Act. The reliance is placed on the ratio of judgement of passed by ITAT, Chandigarh Bench in a recent case of Sh. Om Parkash Kukreja Vs Department of Income Tax on April 08, 2016. The copy of judgement is attached for your kind perusal. c. Any Registered Post sent through post needs to be served on the Person himself or on any authorized person in this regard. The Postman has also given the remark that the Assessee refused to accept the notice. Then itbecomes the necessity that the postman should be summoned in Your Court in the presence of the Assessee so that the facts should be brought to file in the interest of justice. d. Your Honor, on perusal of the Assessment Order, will notice that Assessment Proceedings were started on 03/03/2016 through affixture of notice. The subsequent notices were issued on 20/06/2016 and 12/08/2016 that were not served on the Assessee. Thereafter the final opportunity notice was issued on 20/08/2016 that was after a gap of two months only. Eventually, the Assessment was completed on 30/09/2016 under section 148 of the Income Tax Act. Your Honor, what was the haste of finalizing the Assessment. If the Assessment Order is to be framed under section 144 of the Act and all the information in possession is to be taxed then why to make such haste. This type of order could have been passed at the eleventh hour. The Ld AO could have gone further in to his enquiries by obtaining field inquiry. The report from the Post Man who returned the Dak with remarks Refused must have been obtained on the file. Your Honor, will appreciate that the total proceedings took only three months to complete starting from June and then concluded in September.

In view of the above, it is prayed that the Assessment framed under section 144 needs to be quashed.

Observations of Honorable CIT(A):

The Honorable Commissioner (Appeals) has not made any comment on the 1st Ground of appeal. The issue was pressed upon as per the submissions, logics and facts but the CIT-(A) did not bother to give his judgement on the this Ground taken by the Assessee.

Submissions before the Honorable ITAT, Amritsar Bench:

In view of the above, it is prayed that the file should be restored to Honorable CIT-(A) with a direction to pass speaking order on this Ground of appeal.

Second Ground of Appeal:

The Assessee had deposited Rs.51.17 lacs in his saving account. Since the Assessee could not avail the opportunity to explain the source of funds deposited in the bank, the application was made to the Honorable CIT-(A) to allow the submission of proofs at the Appellate Stage. The Honorable CIT-(A) was kind enough to allow the Assessee to submit the additional evidences.

Submissions before the Honorable CIT-(A):

1. The Assessee had deposited Rs. 51.17 lacs in his saving account. The Assessee had sold his ancestral agriculture land during the year under consideration and submitted the documents in this regard. The details of sale of agriculture land was as under:

i) Sale of land by Harphool Chand on 28.05.2008 for Rs. 29,85,000 ii) Sale of land by Pran Nath on 06.05.2008 for Rs. 25,20,000 iii) Sale of ‘and by Harphool Chand on 19.05.2008 for Rs. 6,75,000 Total Amount Rs.61,80,000

2. The Assessee submitted that Sh. Pran Nath son of Sh. Jagdish Ram is the real brother. The Id and Address proof like PAN and Adhar along with confirmation that he paid the amount to the Assessee out of the sale proceeds of his agriculture land. The Assessee also produced Sh. Pran Nath before the Ld. Assessing Officer and his statement was recorded on oath before the AO. Sh.Pran Nath again confirmed that he paid the amount to his brother (Assessee) for further purchase of agriculture land.

Observations of Honorable CIT(A):

The Honorable CIT-(A) on the basis of the remand report of the Ld AO held that Sh. Pran Nath did not have the creditworthiness to pay the amount to the Assessee.

Submissions before the Honorable ITAT, Amritsar Bench:

ii) Secondly, he had the conviction to pay the amount to theAssessee. ii) Thirdly he had the genuine reason for making the payment.The Cash creditor had received funds against the sale of land.

He paid the amount to the Assessee, submitted confirmations and provided the reasons for making the payments.

In view of the above, it is prayed that the Assessment order may be set aside and/or deletions may be deleted.”

Undoubtedly, the identity of Sh. Pran Nath, from whom the assessee had allegedly received the amount, cannot be doubted as the assessee had produced his brother before the assessing officer, whose statement was recorded by the assessing officer on oath. However, the Assessing Officer in his report had doubted the genuineness of the transaction and had also doubted the creditworthiness of Sh. Pran Nath. It was mentioned in the report that Sh. Pran Nath had a bank account with Punjab National Bank and had a sum of Rs.3 lac as of 07.05.2008 and sum of Rs. 6 lac was deposited in cash on 23.08.2010. The explanation given by Sh. Pran Nath was duly mentioned by the Assessing Officer in the remand report (supra), whereby he stated that this said amount was received back by him from the travel agent to whom the money was given on earlier occasion for sending his son abroad. We have gone through the remand report as well as the submission of the assessee. In our view, the case of the assessee was that the sum of Rs.25,20,000/- were given by the brother of Sh. Pran Nath to the assessee which was received by Pran Nath on account of sale of land. It was also the case of assessee that Sh. Pran Nath had given the amount of Rs. 12 lac to the Travel Agent on 11.04.2017 after selling the land. The question arises, is it probable for a person of limited means, like, in the present case Sh. Pran Nath, who had sold the agricultural land and initially allegedly utilized the amount for sending his son abroad, in our opinion such a person would not give the amount to his brother , rather he would deposit the same in his bank account or utilise it for sending his son abroad, therefore his statement of Sh. Pran Nath, does not give confidence being incongruent and against the preponderance of probability and normal human conduct, as it is not expected from a person of limited means to provide the entire amount of sale proceeds of agriculture land to to his brother rather he should have utilized the amount for his purposes either for sending the son abroad or for reinvesting the amount in purchasing the agricultural land. Further, we believe that once the cash was received by the brother from the travel agent, there was no occasion for him to give the cash amount to the assessee when both have bank accounts. In a result the assessee failed to establish not only the genuineness of the transaction but also the credit worthiness of Sh. Pran Nath. The assessee produced no evidence except sole statement of the brother either before the assessing officer or before the Commissioner appeal, therefore in the absence of any evidence, it cannot be presumed that the amount was issued by the assessee from his brother.In the light of the above we do not find that the assessee was able to prove his case within the four corners of law and failed to establish the source of investment made by the assessee in his bank account were from his brother.. No other issue has been pressed before us, though some are arguments were mentioned in respect of Ground one before us however the same was found to be unsustainable in the facts of the present case; therefore, the Ground No. one raised by the assessee is also dismissed.

Order pronounced in the open court on 16/09/2021.