Ita/43/2012 Of Ravinder Pal Singh v. Commissioner Of Income Tax-Ii, Aayakar Bhawan, Ludhiana

ITA No. 43 of 2012 =|. IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 43 of 2012 (O&M). Date of Decision: 18.72.2014 | shri Ravinder Pal Singh ...Appellant 0!*$1$ Commissioner of Income lax-ll, Ludhiana ... Respondent CORAM:-HON BLE MR. JUSTICE AJAY KUMAR MITTAL.HON BLE MRS. JUSTICE ANITA CHAUDRRY. PRESENT: Mr. S.K. Mukhi, Advocate andMr. Rajiv Sharma, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the assessee under section 260A of the Income Tax Act, 1961 (in short “the Act’) against theorder dated 21.6.2011 (Annexure A-3) passed by the Income TaxAppellate Tribunal, Chandigarh Bench ‘'B’, Chandigarh (hereinafterreferred to as ‘the Tribunal’) passed in ITA No. 1150/CHD/2009 for theassessment year 2005-06 claiming the following substantial questions of law:- A.Whether the ITAT has misdirected itself in being influenced by irrelevant factors and _ applyingerroneous criteria while deciding the issue of ITA No. 43 of 2012 =2= genuineness of the Impugnea donations therebyIgnoring sufficient evidences to prove the factum ofreceipt of donations by tne UK sangat for applicationof the funds for the benefit of Gurudwara Sahib bytreating the explanation and affidavit of Sewadar ofGurudwara Baba Balwinder Singh as not sufficientevidence and thereby making aadaition u/s 68 of thincome lax Act, 1961 In the nands of appellant wnohaving simply collecteaq the said amount in theabsence of Baba Ji from India which findings of theTribunal being perverse? B. Whether, the ITAT was justified in reversing the orderof CIT(A) and upholding the order of A.O., under the peculiar facts and circumstances of the case whereno evidence Is on record to prove income butpayment 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 theevidences on record thus unsustainable in law so tnatso the impugned addition of Rs.11,26,000/- onaccount of donations by Sangat and interest ofRs.39,411/- is bad in law and needs deletion? D 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 9.3.2006declaring the income at 497,500/-. The said return was processedunder Section 143(1) of the Act. The case of the assessee was selected for scrutiny and was asked to explain casn deposits ofL16,92,300/-.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 ofdonation from the Sangat of UK. [he assessee also Tiled an affidavitdated 21.6.2007 (Annexure A-4) of Balwinder Singh. Ine appellant wasasked to produce Balwinder Singh on 2.11.200/7 to verity the authenticitand genuineness of the affidavit but he could not be produced.Accordingly, the Assessing Officer vide order dated 27.12.2007 made anadaition of =11,26,000/- along with interest of |439,410/-. Feelingaggrieved, the assessee filed an appeal before the Commissioner ofIncome Tax (Appeals) who vide order dated 10.9.2009 (Annexure A-2)deleted the aforesaid adaitions made by the Assessing Officer. Againstthe order of tne CIT(A), the Revenue Tiled an appeal before the Iribunal,Tne Tribunal vide order dated 21.6.2011 (Annexure A-3) while allowingthe appeal of the revenue, sustained the order of the Assessing Officer,Hence, the present appeal by the assessee, 3 We have heard learned counsel for the parties. 3 We have heard learned counsel for the parties. 4 The issue that arises for consideration in this case iswhether the addition otL11,26,000/- on account of donations collectedby way of Sangat of U.K. and interest of=39,410/- as made by theAssessing Officer and upheld by the Tribunal was justified. It was urgedon behalf of learned counsel for the assessee-appellant that Baba Jicould not be produced earlier for cross-examination as he was out ofIndia but could be produced now and the inference drawn on that basiswas unjustified. 5 The Assessing Officer and the Tribunal on appreciation ofevidence nad concluded tnat 411,26,000/- collected on behalf of Baba ITA No. 43 of 2012=4. Balwinder Singh from the sangat of UK by way of donation was notgenuine. [ne assessee could not produce Baba Balwinder singh toestablisn the genuineness of the alleged donation and, therefore, theinference drawn by the Assessing Officer and the Tribunal was justified.The Tribunal while upholding the addition made by the Assessing Officernag recorded as under': On careful consideration of rival Submissionswe are inclined to endorse the findings of the AO.The impugned sum has been deposited In casn In thebank account of the assessee. There Is no evidenceon record to snow tnat the assessee was autnorisedto collect the money/donations on_ behalf of(Suruawara. {Tnere Is no evidence on record toestablish that even Balwinder singh was authorized tocollect the money on behalf of Gurdwara. There isalso no evidence on record that Balwinder Singh wasempowered to authorize anyone to collect the money/donation on behalf of Gurdwara. Though theassessee claimed tnat to have collected the moneyaggregating to Rs.11,26,000/- on behalf of Gurdwaraand handed over the same to Balwinder Singh by twocheques, the observations made by the AO that thedeposits so made in the account of Balwinder Singhwere subsequently withdrawn from his bank account,cannot be lightly brusned aside. It Is a case wherethe assessee claims to nand over the amount toBalwinder Singh through cheques but the money is ITA No. 43 of 2012=5- tound to nave been withdrawn in casn from the bankaccount of Balwinder singh. [Ine whole story ringsTalse right from tne beginning to end. As regards theaffidavit filed by Balwinder Singh, the law is fairly wellsettled. Affidavits are not Included in the definition of“avidence’ in the Evidence Act but are admissible ifthe conaitions of Order XIX, CPC are satistied. Rule2 of Order XIX, CPC empowers the Court to order forcross examination of the deponent. Ine AO orderedthe assessee to produce tne deponent, namely,Balwinder Singh for cross-examination but Balwindersingh was not produced before him. It is well settledthat if the party fails to produce the deponent forcross-examination despite the order of tne Court,affidavit of the deponent Tiled In the Court nas to beignored. Without prejudice to the aforesaid, the AOhas rightly not attached any credibility to the affidavitfor the reasons that the circumstances surroundingthe case are completely inconsistent witn what Isstated in the affidavit. There is no evidence on recordto establish that Balwinder Singh was at all appointedsewadar of Gurdwara by an authority competent toappoint Sewadar in a Gurdwara. 10.Under the provisions of the Income-tax Act, theonus is upon the assessee to establish the nature ofentries in his books of account including the bankaccount, expenditure and sources of the same with -6- 10.Under the provisions of the Income-tax Act, theonus is upon the assessee to establish the nature ofentries in his books of account including the bankaccount, expenditure and sources of the same with -6- evidence. Ine onus cast upon the assessee Is not anempty formality but Is to be discharged with evidencewnich can stand the test of judicial security. [neexplanation envisaged by section 68 is not a fantasticor fanciful explanation but a genuine explanation dulysubstantiated by reliable evidence. In the facts of thecase before us tne assessee claims that it nadreceived certain amount on behalf of anotner personwno in turn Is In charge of a Gurdwara and he was outof country, the said amount remitted by the Sangatbeing in the form of foreign exchange, afterencashment was deposited In his bank account,wnich latter was returned to the sala person bycheque. Ine assessee nas tried to explain the sourceof money deposited In his bank account, witnoutevidence. Mere explanation is not sufficient todischarge the onus cast upon him under the Act,Repeated opportunities were allowed to the assesseeto prove its stand but except for filing an affidavit ofBaba Balwinder Singh and producing some allegedencashment certificate, the assessee has _ notestablished the veracity of his explanation. Theaffidavit of a third person is mere self servingevidence unless the same is backed by some otherevidence justifying the nature of the transaction or theconcerned party appears in person to verity itscontents. We find that though several opportunities) ITA No. 43 of 2012 were allowed by the AO but the assessee falled toavail of the same.| 6.The aforesaid findings of fact recorded by the AssessingOfficer and the Tribunal are not shown to be erroneous or perverse inany manner. Accordingly, no question of law much less a substantialquestion of law arises in this appeal. Finding no merit in the appeal, thesame Is hereby dismissed. (AJAY KUMAR MITTAL) JUDGEJUDGE February 18, 2014.:$ (ANITA CHAUDHRY)