RAVINDER PAL SINGH vs. COMMISSIONER OF INCOME TAX-II, AAYAKAR BHAWAN, LUDHIANA

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 21.6.2011 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as “the Tribunal”) passed in ITA No. 1150/CHD/2009 for the assessment year 2005-06 claiming the following substantial questions of law:- A. Whether the ITAT has mi irected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue of Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -2- genuineness of the impugned donations thereby ignoring sufficient evidences to prove the factum of receipt of donations by the UK Sangat for application of the funds for the benefit of Gurudwara Sahib by treating the explanation and affidavit of Sewadar of Gurudwara Baba Balwinder Singh as not sufficient evidence and thereby making addition u/s 68 of the Income Tax Act, 1961 in the hands of appellant who having simply collected the said amount in the absence of Baba Ji from India which findings of the Tribunal being perverse? B. Whether, the ITAT was justified in reversing the order of CIT(A) and upholding the order of A.O., under the peculiar facts and circumstances of the case where no evidence is on record to prove income but payment to aforesaid third party is an admitted fact? C. Whether, on the facts and circumstances of the case, the findings of the ITAT are perverse and against the evidences on record thus unsustainable in law so that so the impugned addition of Rs.11,26,000/- on account of donations by Sangat and interest of Rs.39,411/- is bad in law and needs deletion?

The facts necessary for adjudication as narrated in the present appeal may be noticed. The assessee who is engaged in Glass business filed his return for the assessment year 2005-06 on 9.3.2006 declaring the income at ` 97,500/-. The said return was processed under Section 143(1) of the Act. The case of the assessee was selected Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -3- for scrutiny and was asked to explain cash deposits of ` 16,92,300/-. The appellant explained that out of the said amount, a sum of ` 11,26,000/- was collected on behalf of Baba Balwinder Singh by way of donation from the Sangat of UK. The assessee also filed an affidavit dated 21.6.2007 (Annexure A-4) of Balwinder Singh. The appellant was asked to produce Balwinder Singh on 2.11.2007 to verify the authenticity and genuineness of the affidavit but he could not be produced. Accordingly, the Assessing Officer vide order dated 27.12.2007 made an addition of ` 11,26,000/- along with interest of ` 39,410/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) who vide order dated 10.9.2009 (Annexure A-2) deleted the aforesaid additions made by the Assessing Officer. Against the order of the CIT(A), the Revenue filed an appeal before the Tribunal. The Tribunal vide order dated 21.6.2011 (Annexure A-3) while allowing

We have heard learned counsel for the parties.

The issue that arises for consideration in this case is whether the addition of ` 11,26,000/- on account of donations collected by way of Sangat of U.K. and interest of ` 39,410/- as made by the Assessing Officer and upheld by the Tribunal was justified. It was urged on behalf of learned counsel for the assessee-appellant that Baba Ji could not be produced earlier for cross-examination as he was out of India but could be produced now and the inference drawn on that basis was unjustified.

The Assessing Officer and the Tribunal on appreciation of evidence had concluded that ` 11,26,000/- collected on behalf of Baba Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -4- Balwinder Singh from the sangat of UK by way of donation was not genuine. The assessee could not produce Baba Balwinder Singh to establish the genuineness of the alleged donation and, therefore, the inference drawn by the Assessing Officer and the Tribunal was justified. The Tribunal while upholding the addition made by the Assessing Officer had recorded as under:- “9. On careful consideration of rival submissions we are inclined to endorse the findings of the AO. The impugned sum has been deposited in cash in the bank account of the assessee. There is no evidence on record to show that the assessee was authorised to collect the money/donations on behalf of Gurudwara. There is no evidence on record to establish that even Balwinder Singh was authorized to collect the money on behalf of Gurdwara. There is also no evidence on record that Balwinder Singh was empowered to authorize anyone to collect the money/ donation on behalf of Gurdwara. Though the assessee claimed that to have collected the money aggregating to Rs.11,26,000/- on behalf of Gurdwara and handed over the same to Balwinder Singh by two cheques, the observations made by the AO that the deposits so made in the account of Balwinder Singh were subsequently withdrawn from his bank account, cannot be lightly brushed aside. It is a case where the assessee claims to hand over the amount to Balwinder Singh through cheques but the money is Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -5- found to have been withdrawn in cash from the bank account of Balwinder Singh. The whole story rings false right from the beginning to end. As regards the affidavit filed by Balwinder Singh, the law is fairly well settled. Affidavits are not included in the definition of “evidence” in the Evidence Act but are admissible if the conditions of Order XIX, CPC are satisfied. Rule 2 of Order XIX, CPC empowers the Court to order for cross examination of the deponent. The AO ordered the assessee to produce the deponent, namely, Balwinder Singh for cross-examination but Balwinder Singh was not produced before him. It is well settled that if the party fails to produce the deponent for cross-examination despite the order of the Court, affidavit of the deponent filed in the Court has to be ignored. Without prejudice to the aforesaid, the AO has rightly not attached any credibility to the affidavit

Under the provisions of the Income-tax Act, the onus is upon the assessee to establish the nature of entries in his books of account including the bank account, expenditure and sources of the same with Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -6- evidence. The onus cast upon the assessee is not an empty formality but is to be discharged with evidence which can stand the test of judicial security. The explanation envisaged by section 68 is not a fantastic or fanciful explanation but a genuine explanation duly substantiated by reliable evidence. In the facts of the case before us the assessee claims that it had received certain amount on behalf of another person who in turn is in charge of a Gurdwara and he was out of country, the said amount remitted by the Sangat being in the form of foreign exchange, after encashment was deposited in his bank account, which latter was returned to the said person by cheque. The assessee has tried to explain the source of money deposited in his bank account, without evidence. Mere explanation is not sufficient to discharge the onus cast upon him under the Act. Repeated opportunities were allowed to the assessee to prove its stand but except for filing an affidavit of Baba Balwinder Singh and producing some alleged encashment certificate, the assessee has not established the veracity of his explanation. The affidavit of a third person is mere self serving evidence unless the same is backed by some other evidence justifying the nature of the transaction or the concerned party appears in person to verify its contents. We find that though several opportunities Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh -7- were allowed by the AO but the assessee failed to avail of the same.”

The aforesaid findings of fact recorded by the Assessing Officer and the Tribunal are not shown to be erroneous or perverse in any manner. Accordingly, no question of law much less a substantial question of law arises in this appeal. Finding no merit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE February 18, 2014 (ANITA CHAUDHRY) gbs JUDGE Singh Gurbachan 2014.03.25 14:21 integrity of this document High Court Chandigarh