The Commissioner Of Income Tax-Ii, Ludhiana v. Shri Palwinder Pal Singh

Income-tax Appeal No.76 of 2011 **** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.76Date of decision: 14.11.2011 of 2011 The Commissioner of Income Tax-II, Ludhiana ...Appellant Versus Shri Palwinder Pal Singh ...Respondent CORAM: HON'BLE MR.JUSTICE HEMANT GUPTA HON'BLE MR.JUSTICE G.S.SANDHAWALIA Present: Ms. Savita Saxena, Sr. Standing Counsel for the appellant.**** G.S.SANDHAWALIA, J. Affidavit of compliance regarding payment of costs as imposed videorder dated 28.7.2011 has been filed. The present appeal is filed by the revenue under Section 260Aof the Income Tax Act, 1961 (hereinafter referred to as “the Act”) againstorder dated 30.6.2010 passed in ITA No.165/Chd/2010 for the assessmentyear 2006-07 whereby the appeal filed by the revenue against the order ofthe Commissioner of Income Tax (Appeals)-II, Ludhiana (for short “the CIT(A)” has been dismissed. The revenue has contended that the followingsubstantial questions of law arise in the facts of the case:- “1.Whether on the facts and in law, the Hon'ble ITAT waslegally justified in dismissing the appeal of the department andupholding the order of CIT(Appeals) in deleting the additionmade under Section 69A of the Act ignoring that there waslegally justified in dismissing the appeal of the department andupholding the order of CIT(Appeals) in deleting the additionmade under Section 69A of the Act ignoring that there was nexus established between the withdrawals made by thefather/mother of the assessee from their bank account and thedate of deposit of the same by the assessee into his bankaccount? 2.Whether on the facts and in law, the Hon'ble ITAT waslegally justified in dismissing the appeal of the department andupholding the order of CIT(Appeals) in deleting the additionmade under section 69A of the Act ignoring that there wassubstantial time gap between the withdrawals made by thefather/mother of the assessee from their bank account and thedate of deposit of the same by the assessee into his bankaccount?” The Assessing Officer while processing the return of theassessee of Rs.1,24,220/- issued statutory notice under Section 143(2) ofthe Act on 28.7.2007 and notice under Section 142(1) of the Act on5.12.2008 which was responded to by the father of the assessee. TheAssessing Officer examined the assessee's income from FDR and from thesaving bank account with Centurion Bank of Punjab and saving bankaccount with Punjab National Bank came to the conclusion that theassessee deposited Rs.41,14,146/- in the Centurion Bank andRs.4,86,700/- in the Punjab National Bank between the period from21.4.2005 to 14.2.2006. The reply of the assessee was that he had sold ahouse on behalf of Baljit Singh Sidhu, Barjinder Singh Sidhu and RavinderSingh Sidhu as a power of attorney holder on 20.12.2005 and received asum of Rs.22,50,000/-. It was further explained that deposit had beentransferred in the Punjab National bank account from Saving Bank AccountNo.61524, which was in the name of Smt. Surjit Kaur. The Assessing Officer, accordingly, came to the conclusion that a sum of Rs.35,61,066/-were deposited from undisclosed sources under Section 69A of the Act andtreated the same as income of the assessee from undisclosed sources andaccordingly held that notice under Section 271(1) (c ) of the Act be issuedseparately. Officer, accordingly, came to the conclusion that a sum of Rs.35,61,066/-were deposited from undisclosed sources under Section 69A of the Act andtreated the same as income of the assessee from undisclosed sources andaccordingly held that notice under Section 271(1) (c ) of the Act be issuedseparately. That in appeal, the CIT(A) while examining various entrieswhich were made in the two bank accounts came to the conclusion thatamount had been withdrawn from the account of the father of the appellantAjit Singh Mangat who had a joint bank account with the assessee'smother Smt. Surjit Kaur. That after comparing the accounts entries itfurther came to the conclusion that account with the Centurion Bank ofPunjab was in the joint name of the appellant, his wife Smt. Mandeep Kaurand his grand mother Smt. Daljit Kaur. It was also noticed by the CIT(A)that the notice was issued on 5.12.2008, which was served upon theassessee on 11.12.2008 fixing the case for 15.12.2008 and only threedays' time was allowed to furnish the details called for. The fact that theassessee has immigrated to Canada on 7.11.2008 and copy of theconfirmation of permanent residence was also taken into considerationwhile noting that assessee's father could not reasonably explain thedeposits with the two banks due to shortage of time. A sum ofRs.17,00,000/- was transferred from the bank account No.85 OD141978 ofthe assessee's father and mother of the Centurion Bank of Punjab. Thecertificate issued by the HDFC bank was also taken into consideration asadditional evidence. Accordingly, the appeal was allowed and addition tothe extent of Rs.34,36,846/- was deleted. The assessee's father alsoclarified that the said amount was deposited in these bank accounts heldby him jointly with his Sh. Palwinder Pal Singh to show sufficient cash in his bank account for going abroad to Canada which he ultimately did inNovember, 2008. That dissatisfied with the appeal being dismissed by the CIT(A), the appeal was filed before the Income Tax Appellate Tribunal,Chandigah Bench 'A', Chandigarh (for short “the Tribunal') which came tothe conclusion that the entire deposits in the bank accounts were explainedas out of the money withdrawn from the joint saving account of assessee'sfather and mother of the Centurion Bank of Punjab and that transfer offunds by Sh. Ajit Singh Mangat from one joint account to another jointaccount cannot be treated as unexplained and the source of deposits havebeen duly explained. The revenue had failed to bring on record anyevidence to show that the explanation of the assessee was incorrect. Theexplanation of the father that the amount was withdrawn for the purchaseof some agricultural land and when the purchase did not materialise, theamount was deposited in the aforesaid bank accounts of his son wasaccepted for showing certain amount in the bank account of the assesseewho had plans to go abroad and had actually left the country in November,2008. From the above facts and circumstances, it would be clear thatthe question of law as framed above by the revenue could not arise in thepresent case as admittedly the amount transferred is within the family andfrom joint accounts of the father, mother, grand mother, son and daughter-in-law and it is question of fact which has been determined by the CIT(A)by taking additional evidence on record as it came to the conclusion thatthe Assessing Officer had never given sufficient time to the assessee toexplain the said deposits which would be clear from the dates mentionedabove.The authorities below have also came to the categorical finding From the above facts and circumstances, it would be clear thatthe question of law as framed above by the revenue could not arise in thepresent case as admittedly the amount transferred is within the family andfrom joint accounts of the father, mother, grand mother, son and daughter-in-law and it is question of fact which has been determined by the CIT(A)by taking additional evidence on record as it came to the conclusion thatthe Assessing Officer had never given sufficient time to the assessee toexplain the said deposits which would be clear from the dates mentionedabove.The authorities below have also came to the categorical finding that the amount was withdrawn from one account and deposited in theaccount of the assessee solely to facilitate his immigration to Canada andalso took into consideration the fact that the assessee did migrate toCanada as the confirmation of the permanent resident was also placedbefore the CIT(A). Accoordingly, no question of law arises for determinationin the background of the case due to transfer of funds interse between thefamily members. Accordingly, the appeal is dismissed. (G.S.SANDHAWALIA) Judge November 14, 2011Pka (HEMANT GUPTA) Judge