RAJAT BANSAL vs. COMMISSIONER OF INCOME TAX, LUDHIANA AND ANR.

ITA/213/2010HC Punjab & HaryanaPHHC01093124201021 July 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the reassessment was justified and no substantial questions of law arose. Regarding the first two issues, the Court found no perversity. It reasoned that the addition was not solely based on the third party's statement but also on cogent material, including the surrender of Rs. 10,64,000 by the assessee's father's HUF allegedly received from M/s Usha Garg and Company, and cash deposits in the firm's account. The Court stated that the burden was on the assessee to examine the party with whom he transacted to prove genuineness, and the assessee had not been cooperative. For the third issue, the Court agreed with the Tribunal that additional evidence was rightly rejected because the assessee was not vigilant during assessment proceedings and the evidence was not essential for a just decision. The Tribunal's observation that the evidence was available during assessment and the assessee failed to establish why it wasn't produced was cited. Consequently, the appeal was dismissed.

What were the facts?

The assessee, Rajat Bansal, an individual, did not file a return for assessment year 2003-04. Following a survey at M/s Usha Garg and Company, the Assessing Officer (AO) noted that the assessee received cheques totaling Rs. 11,27,000 from this firm, with corresponding cash deposits in the firm's account. The firm's representative stated they provided accommodation entries for commission. The AO also observed cash deposits of Rs. 10,39,500 in the assessee's bank account. A notice under Section 148 was issued. The AO, relying on the statement of the firm and the Supreme Court case of M.C. Dowell & Co. Ltd., made additions of Rs. 11,27,000 and Rs. 10,39,500, framing reassessment on a total taxable income of Rs. 22,17,700. The CIT(A) deleted the addition of Rs. 10,39,500 but upheld the addition of Rs. 11,27,000, rejecting additional evidence due to the assessee's conduct. The Tribunal affirmed the CIT(A)'s order.

What were the issues?

1. Whether the authorities' action to make an addition based solely on a third party's statement, without providing an opportunity for cross-examination, is legally sustainable under the Act? (Question of law and fact, concerning principles of natural justice and evidence). The assessee argued that the addition was unsustainable as the statement of a third person could not be used against him without an opportunity to cross-examine. The revenue did not record specific arguments on this point, but the High Court addressed it. 2. Whether the authorities' refusal to grant an opportunity to cross-examine the person whose statement was used and to provide a copy of that statement is legally sustainable under the Act? (Question of law and fact). The assessee contended that the denial of cross-examination and the statement copy was illegal. 3. Whether the authorities' refusal to consider additional evidence under Rule 46A of the Income Tax Rules, 1962, is legally sustainable? (Question of law and fact). The assessee argued that the denial of additional evidence was illegal. 4. Whether the impugned orders are legally sustainable? (A general question encompassing the previous points).

Which sections of the Income-tax Act were involved?

Section 260A,Section 148

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-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 21.7.2010 Rajat Bansal ....Appellant. Versus Commissioner of Income Tax and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Akshay Bhan, Advocate for the appellant. ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 11.9.2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 297/ASR/2009 for the assessment year 2003-04 proposing to raise the following substantial questions of law:- “i) Whether in the facts and circumstances of the present case the action of the authorities below to make addition mere relying upon the statement of third person at the back of the -2- assessee/appellant is legally sustainable in the eyes of law? ii) Whether in the facts and circumstances of the present case the action of the authorities below not to grant an opportunity to assessee/ appellant to cross exami

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