SH. RAM PAL GILL,PATIALA vs. DEPUTY DIRECTOR OF INCOME TAX, CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER

ITA No.1116/Chd/2016 (Assessment Year : 2009-10)

Sh. Ram Pal Gill Vs. Dy. Director of Income Tax C/o Rakesh Cajla, Advocate (International Taxation) SCO-7, Opp. British Co-Ed Chandigarh School, Lower Mall Patiala

PAN: BCVPG8119A

(Appellant) (Respondent)

Appellant by : Shri Rakesh Cajla Respondent by : Shri Manjeet Singh Date of hearing : 23/04/2018 Date of Pronouncement : 19/07/2018

ORDER PER ANNAPURNA GUPTA, A.M. : The present appeal has been filed by the Assessee against the

order of the Ld. CIT(A)-43, New Delhi dt 31/08/2016.

found deposited in the bank account of the assessee, remaining

unexplained.

During the impugned year, cash amounting to Rs. 80 Lacs was

found deposited in his bank account ,on account of which his case was

reopened under section 147 of the Act. During assessment proceedings

the assessee explained that the cash deposited related to the money

received by his three brothers i.e. Sh. Bhagwan Das, Sh. Ram Tej and Sh.

Harbans lal, on account of sale of land by them in cash for Rs.

1,25,85,000/-during the year, out of which two brothers, Shri Bhagwan

Das and Shri Ram Tej, also being NRI, had deposited their share of money

to the extent of Rs. 80 Lacs in the assessee’s bank account, since bank

account in their name could not be opened as they had no ID proof with

them at the time whereas the assessee had Pass Port with him and

therefore account in the name of the assessee was opened and cash

deposited.

Harbans Lal, Sh Ram Tej and the assessee in this regard. The AO noted

that as per the affidavit of Mr. Harbans lal the amount was returned back

to him on 19/11/08. To verify the genuineness of the affidavit, summons

were issued and the statement of Shri. Harbans Lal was recorded, who

stated that he had received an advance of Rs. 30 Lacs in the month of

May 2008 out of which Rs. 29,80,000/- was deposited in his bank account,

statement of which was also filed. He further stated that the remaining Rs.

12 Lacs, out of his share from the land sold ,were utilized for personal

purposes including returning to people from whom loan had been taken.

However no details of such persons could be filed by him nor any

evidence in this regard. The AO therefore found affidavit of Shri Harbans

Lal and the statement given by him to be entirely contrary to each other.

The AO further conducted enquiry from PNB, Patiala in which amounts

were deposited after withdrawal from the bank account of the assessee

and received information that the amount were further invested in FDR’s

in the name of the assessee as under:

FDR No. Date of deposit Amount (in Rs.) 148200PR00033173 21.11.2008 20,00,000/- 148200PR00033155 21.11.2008 20,00,000/- 148200PR00033164 21.11.2008 20,00,000/-

Regarding the remaining Rs. 20 Lacs it was stated by the assessee

that the same had been given to one of the brother after withdrawal but

no details regarding the name of the brother were filed. On further

enquiry from the bank the AO found that all the FDR’s were redeemed

and transferred to the bank account of the assessee on 30/03/2011,

11/05/2009 and 15/05/2009 as under :

FDR No. Account No. to which Date of redemption transferred after redemption 148200PR00033173 7458 03.03.2011 148200PR00033164 68660 11.05.2009 148200PR00033155 68660 15.05.2009

called for from the bank, it was seen that Rs. 20 Lacs had been transferred

to Smt. Preeti Prohit and Sh. Naresh Prohit on 03/03/2011 and no

explanation was given regarding the same. Regarding the remaining

amount deposited in the account it was noted that there were cash

withdrawal of a total of Rs. 40,80,000/- on 11/05/2009, 12/05/2009 and

15/05/2009. However no details regarding the utilization or the details of

the person to whom it was handed over was filed. Further the two brothers

or their bank accounts were never produced by the assesee, expressing

his inability regarding the same. On the basis of the above information

the AO held that it was clear that the assessee had been unable to

explain the source of Rs. 80 Lacs deposited in his bank account even

though the FDR and the deposit made in the account of PNB were of Rs.

60 Lacs only. The AO held that the assessee had filed false reply and

incorrect affidavit. Show cause notice was further issued to the assessee

asking him to explain why the entire amount may not be treated as

unexplained cash credit. In response to the same no reply was filed.

Another opportunity was provided when the assessee alongwith his

counsel appeared and filed replies and the assessee also express his

inability to produce his brothers and also did not file any evidence

regarding the amount paid back to his brother. No confirmation could

also be filed from the brothers that they had received back the amounts.

The AO therefore held that the entire Rs. 80 Lacs deposited in the bank

account of the assessee remained unexplained and made addition to

the same in the income of the assessee.

explanation of the cash deposit in his bank account as belonging to his

two brothers and also reiterated the reason for depositing the same in his

bank account being the unavailability of ID proof of two brothers on

account of which their bank accounts could not be opened, while the

assessee possessing his Pass Port opened his bank account and money

therefore was deposited in his account. It was also contended that there

was no contradiction in the statement of the brother Sh. Harbans Lal and

the affidavit filed by him and the fact that the affidavit mentioned that he

had received his share of the amount on 19/11/2008 was a clerical

mistake which had been clarified in his statement recorded and in an

affidavit later on filed stating that Rs. 30 Lacs had been received in

advance in May 2008 and balance amount of Rs. 12 lacs was received

on 07/11/2008. The assessee further contended that as for the evidence

for Rs. 80 Lacs deposited in bank belonging to his brothers, affidavit of one

of the brother Shri Ram Tej had been filed mentioning the facts in the

same and further mentioning that amounts had been received back from

the assessee on 19/11/2008 after withdrawal from the bank account. Vis

a vis the contention of the AO that the amount deposited in the bank

account of the assessee had been utilized for making FDR in the name of

the assessee it was explained that the same was done since the two

brothers did not have any bank account and after maturity of the FDR the

amounts were withdrawn and transferred to the brothers amounting to Rs.

40,80,000/- while Rs. 20 Lacs was transferred to his sister on the direction of

one of the brother Bhagwan Das. Copy of the registration deed in the

name of the Preeti and Naresh Purohit was filed. It was pointed out that it

was a family arrangement carried out in a bonafide manner. It was

further contended that the two concerned brothers could not attend the

proceedings since they were in Germany. The assessee therefore

contended that having accepted the fact of sale of land belonging to

three brothers on account of which sale consideration of Rs. 1.25 Crores

was received in cash and there being no other source available with the

assessee to suggest that the amount deposited could be related to the

said source, the preponderance of probability was in favour of the

explanation of the assessee and amount of cash deposit stood explained.

to further clarity the issue asked the assessee to filed an affidavit of one of

the brother Shri Bhagwan Das affirming the relevant fact. In response to

the same assessee contended that he was not in good terms with Shri

Bhagwan Das who was not ready to accommodate / assist him in the

matter and had denied to file any affidavit to support him. He further

contended that all facts and evidence to explain the cash deposit had

already been filed by the assessee. The Ld. CIT(A) after taking note of this

fact that the affidavit of Shri. Bhagwan Das was not filed despite being

specifically asked for noted the factual matrix of the case that the

assessee who was an NRI and did not own the land yet had money

deposited in his bank account purportedly being cash proceeds from

agricultural land belonging to his three brothers, that the three brothers

out of whom two were NRI and who owned the land, of which one

brother did not confirm the transaction despite specifically being asked

to do so. As for the third brother who was the resident no money

belonging to him was deposited in the bank account of the assessee. The

factual matrix tabulated by the Ld. CIT(A) and reproduced in page 16 of

the order is as under:

Name of Residency Denoted as Remarks brother Ram Pal Gill NRI, living NRI Did not own the land. Yet money abroad for was deposited in his bank several years account in India, reportedly being cash proceeds of sale of agricultural land. Land belonged to the other three brothers. The AO has treated the amount to be his unexplained income. He is the appellant before me. Ram Tej -do- NR Owned the land. Cash proceeds of sale of land in India deposited in bank account of Ram Pal Gill. Bhagwan Das -do- NR3 Owned the land. Cash proceeds also known as of sale of land in India deposited Bhagwan Singh in bank account of Ram Pal Gill. However, his confirmation, though specifically required, was not filed, as noted in this order. Harbans Lal also Resident R No money belonging to the other known as brothers was deposited in his Harbans Singh account.

Based on the above the Ld. CIT(A) held that the preponderance of

evidence is against the assessee and therefore upheld the order of the

AO, confirming the addition made in the hands of the assessee on

account of cash found deposited in his bank account.

“2. That on facts & circumstances of the case the Ld. Commissioner of Income Tax (Appeals) New Delhi is not justified in upholding the addition of Rs.80,00,000/- in the hands of the appellant u/s 68 of the Income Tax Act, 1961. 3. That the Ld. Commissioner of Income Tax (A), New Delhi is erred in confirming the order of the assessing officer inspite of the fact that the source of deposit was fully explained, but the Ld. Assessing Officer stressed upon the destination of the amount. Addition has been made and confirmed inspite of the fact that the appellant's two brothers had specifically confirmed about the source of deposit. 4. That on the facts & circumstances of the case the Ld. Commissioner of Income Tax (A), New Delhi is not justified in confirming the order of the assessing officer, where no notice u/s 148 was served upon the appellant, which is a condition precedent for framing the assessment u/s 147 of Income Tax Act, 1961. 5. That on the facts & circumstances of the case the Ld. Commissioner of Income Tax (A), New Delhi is not justified in upholding the order of the asessing officer, where the notice u/s 148 was issued after recording the vague reasons.” 9. During the course of hearing before us Ld. Counsel for the assessee

first took up ground Nos.2 & 3 challenging the addition upheld on merits

and reiterated the contention made before the lower authority. Ld.

Counsel for the assessee also filed a fresh affidavit of one of the brother

Shri Ram Tej deposing on oath that he alongwith his two brothers had sold

land for a consideration of Rs. 1.25 Crores out of which Rs. 80 Lacs

belonged to himself and his brother Shri Bhagwan Das which was

deposited in the bank account of the assessee, Shri Ram Pal Gill for the

reasons that both of them were not carrying any ID proof and since Shri.

Ram Pal Gill had Passport with him account was opened in his name and

amount deposited and further that he had received back Rs. 20 Lacs

from his Bank on 19/11/2008 and the balance amount was received later

on. The said affidavit reads as under:

AFFIDAVIT

I, Ram Tej son of Sh. Deep Chand, resident of Dachauer, Strabe 24, 8035 Munchen, Germany, do hereby solemnly affirm and declare as under: - 1. That I am citizen of Germany, having passport noLF087wnpt2 and settled at Germany for the last 30 years. 2. That I along with my two brothers Sh. Harbans Singh and Sh. Bhagwan Dass had sold 123 Kanal 15 Maria of agricultural land at Village Mavi, Tehsil Samana, District Patiala on 07.11.2008 for a consideration of Rs. 12585000/-. 3. That out of sale proceeds an amount of Rs. 8000000/-belongs to myself and my brother Sh. Bhagwan Dass was deposited on 11.11.2008 in the saving bank account NRO no. 1087104016037 opened in Canara Bank, Patiala of my brother Sh. Ram Pal Gill, who is also a German national. 4. That the amount had to be deposited in his bank account, as at the time of the deposit.of amount myself and my brother Sh. Bhagwan Dass were not carrying any ID proof with us. My brother Ram Pal Gill had his passport with him, which was used as ID proof and account was opened his name and amount deposited. 5. That the deposited amount belonged to myself and my brother Sh. Bhagwan Dass. I had received Rs.20,00,000/- on 19.11.2008 from my brother Ram Pal Gill. The balance of the amount was received later on. 6. That I had also submitted a duly attested affidavit dated 24.04.2012 and a letter dt.07.02.2013 in this regard in the income tax matter of my brother Sh. Ram Pal Gill.

Sd/- Deponent

VERIFICATION* - Verified that the contents of my above affidavit are true to the best of my knowledge and belief and nothing has been concealed therein.

Dated: 08/08/2017 S d/- Deponent

orders of authorities below and gone through the documents, evidence

filed before us.

found deposited in the bank account of the assessee amounting to Rs. 80

Lacs. The explanation given by the assessee is that it belonged to his two

brothers Ram Tej and Bhagwan Das who had sold land belonging to them

and his third brother Shri. Harbans Singh, for a sum of Rs. 1.25 Crores and

the same was deposited in his bank account because the two brothers

were NRI’s and since they were not carrying any ID proof their bank

account could not be opened while the assessee was carrying his

Passport and therefore his bank account was opened and the cash

deposited therein.

assessee for the reason that on enquiry about the utilization of the amount

deposited in the bank account, it was found that they were utilized by the

assessee only, that there was no evidence to show that the amount was

returned back to the two brothers. It was found that after the cash of Rs.

80 lacs was deposited in the bank account of the assessee, Rs. 60 Lacs

was withdrawn and FDR made in the name of the assessee only. Later on

when these FDR’s were redeemed, the amount was again transferred to

bank account of the assessee and thereafter, Rs. 20 Lacs was transferred

to one Ms. Priti Prohit and Mr. Naresh Prohit and the balance withdrawn in

cash. No details of the cash withdrawal were given. No detail was given

also of Rs. 20 Lacs also withdrawn in cash, of which no FD was made. On

the basis of above the Revenue has contended that money always

remained at the assessees disposal and therefore even if land had been

sold by the three brothers the cash deposited in the assessees bank

account could not be attributed to the money received by the two

brothers on account of the said sale of land.

facts and evidences on record clearly lend credence to the assessees

explanation that the money belonged to his brothers. The admitted

chronology of events referred to in the present case is as under:

Date Event

7.11.2008 The land belonging to three brothers of the assessee, S/Shri Ram Tej, Bhagwan Dass and Harbans Singh sold for a consideration of Rs.1,25,85,000/- in cash. 11.11.2008 Rs.80 lacs deposited in cash in assessee’ bank account with Canara Bank, Patiala. 19.11.2008 Amount withdrawn from canara bank and Rs.60 lacs deposited in Punjab National Bank,Patiala 21.11.2008 Three FDRs of Rs. 20 lacs each made in the name of the assessee 11.5.2009 One FDR of Rs.20 lacs redeemed and transferred to the bank account of the assessee. 15.5.2009 One FDR of Rs.20 lacs redeemed and transferred to the bank account of the assessee. 11.5.2009 & 12.5.2009 & Rs.40,80,000/- withdrawn from bank account. 15.5.2009

3.3.2011 One FDR of Rs.20 lacs redeemed and transferred to the bank account of the assessee. 3.3.2011 Rs.20 lacs transferred to Smt.Preeti Purohit and Shri Naresh Purohit.

deposit of cash in the bank account of the assessee .That one of the said brothers, Shri Ram Tej has confirmed depositing his and his other brother Shri Bhagwan Dass’s share of cash received in the bank account by way of filing an affidavit is also a fact on record. The affidavit of the brother, we find, duly affirms receiving back his share of Rs. 20 lacs on 19/11/2008 and the balance 20 lacs later on. The said fact is correlated from the fact of withdrawal of money from canara bank on 19/11/2008, not redeposited in Punjab National Bank to the extent of Rs. 20 lacs, as per the chronology of events reproduced above, which can be attributed as returned to Shri.Ram Tej on the said date as stated in his affidavit. The return of the balance is attributable to the withdrawal of Rs. 40,80,000/- between 11/05/09 and 15/05/09. Further the utilization of Rs. 20 lacs by way of transfer to the sister of the assessee ,by way of family arrangement, for purchasing land is also confirmed by the registration deed of the said land which has not been disputed by the Revenue. Thus clearly the source of deposit of cash of Rs.80 lacs in the bank account of the assessee being attributable to the cash received from sale of land by brothers of the assessee, stands confirmed by the affidavit of one of the brother, the facts stated wherein being corroborated with the admitted chronology of events in the present case.

“5. During the course of appeal proceeding, the appellant raised, and. additional ground as follows:-

"The Id. AO is not justified in issuance of notice u/s 148 after recording the vague reasons" This is a case where the appellant had not filed his Return of Income. The appellant is a non-resident.

Yet, a sum of Rs. 80 lakhs was deposited in his bank account. The reasons recorded, by the AO before issue of notice u/s 148 are as follows:-

uAs per information received from Director of C1B Chandigarh, the assessee was found to be possession, of cash deposit of Rs. 80,00,000/- in the bank during the FY 2008-09 relevant to the AY 2009- 10. Accordingly, the information verified form the record/ system of this office by putting name and address received from the Director of Income Tax, CIB to find, out whether the assessee was filing his Income tax. Return or not since no even PAN is available with the department. The assessee was issued a letter no. 628.dated 14.02.2012 which was served upon through Inspector/ Notice Server, hut no compliance has been made to the letter issued. Again summons u/s 131 of the IT Act, 196! was issued fixing the date of hearing on 13.02.2012 on this date Sh. Harbans Singh, brother of the assessee attended and stated that Sh, .Ram Pal Gill is NR1 and. residing at Lindaver STR 21. 87453, Kempten-Germany. He was asked to furnish the detail of deposit of cash on behalf of the brother Sh. Ram. Pal Gill and case was adjourned, to 15,03,2012, On this date Sh. Harbans Singh attended but could, not furnish any information and case was adjourned, to 19,03.2012. On 19.03.2012, no body attended, nor any written reply received from the assessee side. In view of the non- compliance and. non-cooperative mood, of the assessee, I have reason to believe that: this income of the assessee chargeable to tax has escaped assessment for the FY 2008-09 A Y 2 009-10.

Issue notice u/s 148 of the IT Act, 1961 with the meaning of Section 147,"

the reasons recorded, the information which formed the basis for forming

belief of escapement of income was cash found deposited in the bank

account of the assessee of Rs.80 lacs. The Ld. counsel for assessee stated

that merely because the cash was found deposited in the bank account

of the assessee could not form the basis of formation of belief of

escapement of income unless the reasons made out a case that the

assessee was engaged in some business, the income from which had not

been returned. The Ld. counsel for assessee stated that re-assessment

proceedings in the present case have been resorted to examine the facts

of the case and are reasons to suspect that the income had escaped

assessment, which cannot form the basis for assuming jurisdiction to

reassess or reopen the case of the assessee u/s 147 of the Act. Reliance

was placed on the decision of the I.T.A.T. Delhi Bench in the case of Bir

Bahadur Singh Sijwali Vs. ITO, ITA No.384/Del/2011 dated 20.1.2015.

CIT(Appeals) in this regard and drew our attention to his findings at para

5.1 of the order as under.

5.1 What is required at the stage of issue of notice u/s 148 is recording of reasons based upon prima facie satisfaction of Assessing Officer, A perusal of reasons recorded show that the AC) had reasonable and sufficient grounds for proceeding to issue notice u/s 148. Support is found from Hon'ble Supreme Court in the case of Ganga Sarari & Sons Pvt. Ltd, vs. ITO (1981) 130 1TR 1 (SC). 1 am of the view that there was sufficient material with the AC), which is required at the stage of issue of taking action u/s 147/148. Support is found from Hon'ble Supreme Court in the case of M/'s Raymond Woollen Mills Ltd. vs. ITO (1999) 236 ITR 34 (SC), and Phool Chand Bajrang Lai vs. ITO (1993) 203 ITR 456 (SC). In this case, the assessee appellant had not filed Return of Income. Huge amount (Rs. 80 lakhs) was deposited in the assessee's bank account. The AC), therefore, was correct with regard to forming a prima facie belief for taking action u/s 147/148. It was held by the Hon'ble Chattisgarh High Court in ITO vs. Santosh Jain (2012) 247 CTR 488. "Where the assessee has not filed the return, of income for the relevant assessment years and. information, about huge turnover was received from the sales tax/Central Excise department. It was held such information constituted reason to believe that income has escaped assessment.”

reasons there was sufficient information to form the belief of escape of

income. Ld. DR pointed out that it was not merely on the basis of

information of cash having been found deposited in the bank account of

the assessee that the reopening was resorted to but as stated in the

reasons summons were also issued to the assessee asking him to explain

the said cash deposit and on getting no explanation, it was then believed

that since the assessee had no explanation to offer, it was his own income

which has escaped assessment. Thus, reopening was not based on

vague reasons, it was stated by the Ld. DR.

through the order of the CIT(Appeals). We find no infirmity in the order of

the CIT(Appeals) holding that the reasons showed reasonable and

sufficient grounds for proceeding to issue notice u/s 148 of the Act. As

rightly pointed out by the Ld.CIT(Appeals), the assessee had not filed

return of income, huge cash was deposited in his bank account. Further

summons were issued to enquire about the source of the cash deposited

but no information was furnished. These facts, we find, were sufficient to

form a prima facie belief that the income of the assessee had escaped

assessment and thus for taking action u/s 147 of the Act. The case law

relied upon by the Ld. counsel for assessee, we find, is of no assistance

since it is clearly distinguishable on facts as in the said case the only

information in the possession of the Assessing Officer was that of cash

deposited in the bank, which was held by the I.T.A.T. to be insufficient for

formation of belief of escapement of income and it was held that the re-

assessment proceedings were resorted to ascertain the facts whether the

cash deposits were actually the income of the assessee, which is not

permissible under law. In the present case, the formation of belief rests

not only on the information of the cash deposited in the bank account of

the assessee but also on the basis of further enquiry carried out by the AO

seeking information and explanation from the assessee regarding the

source of the same. It was only when no information was forthcoming

that the Assessing Officer formed belief of escapement of income and

rightly so since the assessee apparently had filed no return of income,

there was huge cash deposits in his bank account and the assessee was

not forthcoming with any information regarding the same. In view of the

above, we hold that the jurisdiction assumed u/s 148 of the Act was valid

and was not based on any vague reasons. Ground of appeal No.5 raised

by the assessee is, therefore, dismissed.

Order pronounced in the open court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 19th July, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh