CHAND PARKASH vs. C.I.T., JALANDHAR

The assessee has preferred this appeal under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 25.5.2007 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 I and VI in para 13 of the appeal, which are as under:- “i) Whether on the facts and circumstances of the case, the ITAT was justified in dismissing the various important legal issues raised before it by the assessee, touching upon the very validity of initiation of proceedings under section 147, non service of notice under section 148, non-disposal of legal objections raised before the AO against proceedings under Section 147/148 by passing a speaking order before pursuing the assessment, non summoning the prime witnesses to deal and the purchasers by the AO thereby denying fair opportunity of cross examination to assessee, on the simple plea that no specific grounds of appeal apropos such issues were raised before the ITAT?” “VI. That whether on the facts and circumstances of the case, was the ITAT 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 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 AO for initiating action under section 143(2) or 148 as the case may be, which was well over five years before the issue of impugned notice u/s. 148 on 24.03.2004?”

The assessee was assessed for the assessment year 1998-

After assessment, the Assessing Officer received information from the Assistant Director of Income Tax (Investigation) vide letter dated 11.2.2004 that the assessee deposited a sum of Rs.11,33,800/- on 24.9.1997 in cash in his saving bank account. On receiving the said information, notice for reassessment under Section 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 CIT(A) as well as by the Tribunal. The Tribunal, inter- alia, recorded the following findings:- “19. Apropos the first issue i.e. that the taxing authorities erred in partly rejecting/disallowing the agreement dated 10.03.97 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 under section 147 of the Act were initiated against the assessee for the reasons of failure of the assessee to explain the source of the case deposits of Rs.11,33,800/- in his saving 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 A.O. 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 A.R. of the Assessee. Shri Gurdial Singh the third purchaser, could nto be traced. So far as regards the assessee, he did not provide to the A.O. the address of Shri Gurdial Singh, not did he produce to the A.O. Apropos the marginal witnesses of the agreement, the marginal witnesses. However, the assessee himself objected to these witnesses being examined by the A.O. on the ground that no proceedings were pending before the A.O. and that so the A.O. could not, in law, examine the marginal witnesses. The observations of the learned CIT(A), in this regard, are pertinent:- “The AO attended the appellate proceedings and as per order sheet entry the AO mentioned that the report will be sent by him after recording the statement of independent witness. But it was reported by AO vide letter dated 21.02.2006 that the assessee filed letter dated 21.02.2006 before him and mentioned therein that since no proceedings are pending before the AO the Summons u/s 131 of the I.T. Act to the witnesses are without jurisdiction. It was mentioned by the AO that since the assessee has challenged the issuance of summons to the witnesses for recording their statements as desired by ld. CIT(A) 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 21.02.2006.”

Thus, it is evident that two of the three purchasers were examined by the A.O. 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 produced him before the A.O. Therefore, it cannot at all be said that the purchasers were illegally not examined by the A.O. So far as regards the marginal witnesses, as seen above, the assessee himself objected to their examination by the AO. 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 saving bank accound 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 A.O. 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. ( ADARSH KUMAR GOEL ) JUDGE December 12, 2008 ( L. N. MITTAL ) ashwani JUDGE 6