Rajat Bansal V. Commissioner of Income Tax and another

ITA/213/2010

AI Insights

The case involves Rajat Bansal, the appellant, who contested the additions made to his income by the Income Tax Department for the assessment year 2003-04. The additions were based on transactions with M/s Usha Garg and Company, which were found to involve accommodation entries and undisclosed income. The Assessing Officer, after a survey and examination of bank transactions, concluded that Rajat Bansal had concealed income. The CIT (Appeals) and the Tribunal upheld this conclusion, leading to the appeal in the High Court. The main legal issues revolved around the admissibility of third-party statements without cross-examination, the rejection of additional evidence, and the sustainability of the additions made to the assessee's income.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 680097 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-07-2010
• Assessment Year: misc
• Other Referred Cases: MC Dowell and Co. Ltd., 154 ITR 148 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Accommodation entries; Additional evidence; Cross Examination; Cross-examination; Income Tax; Reassessment; Undisclosed income
• Section: 148; 260A; 46A

Judgement Text

"ITA No. 213 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 213 of 2010 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 ITA No. 213 of 2010 -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 examine the person on whose statement the addition was made and not to hand over the copy of the statement, is legally sustainable in the eyes of law? iii) Whether in the facts and circumstances of the present case the action of the authorities not to consider the additional evidence under Rule 46-A of the Act is legally sustainable in the eyes of law? iv) Whether in the facts and circumstances of the present case the impugned orders A-1 to A-3 are legally sustainable in the eyes of law?” 2. Facts necessary for deciding the present appeal may be noticed. The assessee is an individual and had not filed any return for the relevant assessment year. A survey was conducted by the Income Tax Department on M/s Usha Garg and Company. The Assessing Officer on receiving information from the Assistant Commissioner of Income Tax, Moga vide his office letter dated 20.2.2006, examined in detail, the current account No. 31001 of M/s Usha Garg and Company with Union Bank of India, Moga which revealed that Shri Rajat Bansal had received the following entries from this account:- ITA No. 213 of 2010 -3- Cheque No. Date of clearing of cheques Amount in Sh. Rajat Bansal Account 152385 7.5.2002 Rs.5,00,000/- 152387 17.9.2002 Rs.5,61,625/- 349445 17.9.2002 Rs.65,375/- ___________ Total Rs.11,27,000/- It was also noticed that the said current account of M/s Usha Garg and Company had entries of cash deposits of equal amounts in that account before the issuance of cheque to Rajat Bansal, the present assessee. The authorized representative of M/s Usha Garg and Company stated that he had no business other than providing accommodation entries by receiving specific amount of commission. The Assessing officer also noticed that a sum of Rs.10,39,500/- was deposited in cash in Centurion Bank of Punjab Ltd., Moga, on 19.2.2003, 21.2.2003 and 3.3.2003 in the account of the assessee. Accordingly, notice under Section 148 of the Act was issued. The Assessing Officer also relied upon the observations of the Hon'ble Supreme Court in the case of MC Dowell and Co. Ltd., 154 ITR 148 (SC) and finding that the assessee had concealed the income, re-assessment was framed on total taxable income of Rs.22,17,700/- after making the aforesaid additions. Against these additions, an appeal was filed by the assessee before the Commissioner of Income Tax (Appeals) [in short “CIT (A)”]. During the pendency of appeal, the assessee made an application to file certain additional evidence in the form of undated certificate which was not allowed having regard to the conduct of the assessee not being cooperative during the assessment proceedings. The CIT (A) observed that in several other cases of Ludhiana, M/s Usha Garg and Company ITA No. 213 of 2010 -4- had been found to be an agent for laundering the unaccounted money in similar manner. He, therefore, treated Rs.11,27,000/- as concealed income of the assessee and added the same to the return of his income being income from undisclosed sources. The addition of Rs.10,39,500/-, however, was deleted. On further appeal, the Tribunal affirmed the findings of the CIT (A). It was held that the addition in dispute had rightly been upheld by the CIT (A) and additional evidence was not permissible in view of the conduct of the assessee during assessment proceedings as well as on the ground that the said evidence was not essential for just and proper decision of the case. 3. We have heard the learned counsel for the appellant. 4. The question for consideration is whether there is any perversity in the view taken by the authorities in making the addition. 5. Learned counsel for the appellant submitted that the statement of third person recorded, could not be used against him unless an opportunity to cross-examine that person was given as required under the law. Learned counsel further submitted that additional evidence under Rule 46A of the Income Tax Rules, 1962 had been illegally declined. 6. Both the contentions of learned counsel for the assessee has no substance in it. We do not find any ground to hold that the reassessment was not justified. The Assessing Officer had not made the addition solely on the statement of third person Shri Shagun Garg but there was cogent material on record on the basis of which the reassessment was done. The HUF of father of the assessee, namely, Dwarka Dass (HUF) had surrendered a sum of Rs.10,64,000/- which ITA No. 213 of 2010 -5- was allegedly received from M/s Usha Garg and Company as undisclosed income by filing the revised return. There were cash deposits of almost equal amounts in the current account of M/s Usha Garg and Company before issuance of the cheques to the assessee. The grievance of the assessee that opportunity to cross examine Shri Shagun Garg had not been provided does not stand judicial scrutiny as the burden was on the assessee to examine the said party with whom he had made transactions to prove the genuineness thereof. It is not the case of the assessee that during reassessment proceedings no opportunity was given to the assessee to show that it was not his income whereas the Assessing Officer has recorded that the assessee had not been cooperative during the proceedings and had been deliberately and knowingly evading the reassessment proceedings. Once there was material to justify the addition made on merits, no error could be noticed in the re-assessment proceedings. 7. The second contention is equally devoid of merit inasmuch as the additional evidence had been declined as the assessee was not vigilant in pursuing the proceedings before the Assessing Officer and it was not established that the material was essential to adjudicate the controversy effectively. Moreover, the Tribunal observed as under:- “.... In our view, the assessee does not deserve any lenient view from the court of law on the issue of additional evidence produced by the assessee before the Ld. first appellate authority. This evidence was very much available with the assessee during the course of assessment but the assessee could not ITA No. 213 of 2010 -6- establish the circumstances and the reasons as to why he has not produced the same before the A.O. Therefore, the ld. first appellate authority has rightly rejected the same. Secondly, the assessee could not establish that the additional evidence produced by the assessee before the ld. CIT (A) is very much essential for just and proper decision in the case of the assessee.” 8. In view of the above, we are unable to hold that any substantial questions of law arise in this appeal. 9. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 21, 2010 (AJAY KUMAR MITTAL) gbs JUDGE "