Rule 10 says any fact should be supported by affidavit and Rule 29 says additional evidence can be submitted only when Tribunal consider fit

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘F’ DELHI

BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL

ITA No. 2348(Del)/2011

Assessment year: 2007-08

Pradeep Khanduja

C/o O.P. Sapra &Associates, Vs. Ward 3(4),

C-783, New Friends Colony

New Delhi.

PAN: AADPK4359F

(Appellant)

Vs

Income-tax Officer,

Ward 3(4),

                                                       New Delhi

Appellant by : Shri O.P. Sapra, Advocate

Respondent by : Ms. Y. Kakkar, Sr. D.R

Date of hearing: 13.12.2011

Date of pronouncement: 13.12.2011.

ORDER

PER K.G. BANSAL : AM

The assessee has taken up five grounds in this appeal. In the course of hearing, the ld. counsel for the assessee explained that only ground no. 1 is material ground for the purpose of the disposal of the appeal. The other grounds are in relation to facts and findings of the lower authorities, as well as general and residual in nature.

2. The facts are that the assessee filed his return on 30.07.2007 declaring total income of Rs. 3,81,368/-. The return was processed u/s 143(1) at the returned income. Thereafter, the case was taken up for scrutiny. The assessee has derived salary income, income from house property and income from other sources in this year. The case was taken up for assessment by issuing notice u/s 143(2) on 15.09.2008. This was followed by a questionnaire issued to the assessee on 17.07.2009. In the course of the proceedings, it was found that the assessee showed loan of Rs. 5.00 lakh from Shri Lalit Khanduja. The assessee was required to produce evidence to establish the genuineness of the loan. It was submitted that the loan has been taken from twin-brother, who is living in Canada. A copy of his passport was filed. A copy of bank statement of the lender, maintained with HSBC, was also filed to evidence the source of the loan. However, the AO did not consider these evidences to be sufficient for establishing the loan to be genuine. Therefore, the amount was added to the income of the assessee and the total income was computed at Rs. 8,81,370/-.

2.1 In the course of proceedings before the first appellate authority, it was submitted that the lender is a non-resident Indian settled in Canada for more than a decade. He is a Canadian citizen. He has maintained a NRE savings bank account with HSBC, New Delhi. The loan has been advanced from this account. The money was accumulated in this account on account of savings. It was further submitted that photocopies of passport and bank account in respect of the lender, and bank account in the case of the assessee were filed. Thereafter, the AO did not make any further enquiry. No notice was issued intimating the intention to invoke the provision contained in section 68. Therefore, it was argued that the addition may be set aside. However, the ld. CIT(Appeals) did not agree with the aforesaid submissions. It is mentioned that the AO had specifically asked the assessee to file confirmation of loan. The same had not been filed. The documents submitted do not show the extent of their relevance for substantiating the loan transaction. The burden to prove identity and capacity of the lender and genuineness of the transaction is on the assessee. The same does not stand discharged in this case. Thus, the addition has been upheld.

3. Before us, the ld. counsel for the assessee referred to the findings of the lower authorities. Further, he referred to the documents filed in support of the genuineness of the loan. These are copies of passport and bank account of the lender. The bank account, placed on page no. 36, contain only two entries, showing balance as on 13.05.2006 at Rs. 5,78,871/-, debit of Rs. 5.00 lakh on 06.06.2006, leaving balance of Rs. 78,871/-. The ld. counsel also filed a copy of the order-sheet maintained by the Assessing Officer ostensibly to show that after filing the evidences, no further question was asked. The paper book filed by the assessee contains additional evidence on six maters running into 21 pages, placed in the paper book from page nos. 3 to 23. These evidences contain assessment orders in case of the lender passed by Canada Revenue Agency, copy of his bank account from 13.10.2005 to 02.04.2007, certificate from  the employer of the lender about emoluments earned by him per annum, immigration letter dated 20.02.1995 issued by Canada Government and confirmation letter in respect of the loan. It was prayed that the additional evidence may be admitted under Rule 10/29 of the Appellate Tribunal

Rules. His case is that bank account of the brother proves the loan. In any case, sufficient evidence has now been filed to prove the genuineness of  the loan. In the alternative, it is submitted that if matter requires further examination, it may be restored to the file of the AO or the ld. CIT(Appeals).

3.1 In reply, the ld. senior D.R. submitted that even after passing of the assessment order, evidence to discharge the burden u/s 68 was not filed  before the ld. CIT(Appeals). Therefore, the evidence sought to be filed before the Tribunal may not be admitted. The facts on the record of the lower authorities do not prove the capacity of the lender and genuineness of the transaction. Accordingly, it is urged that the action of the lower authorities may be confirmed.

4. We have considered the facts of the case and submissions made before us. It is admittedly true that even after passing of the assessment order, the assessee did not move any application before the ld. CIT(Appeals) for admission of additional evidence, which has now been filed before us, and which is sought to be admitted. Rule 10 deals with filing of affidavit and states that where a fact, which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit. In this connection, the assessee has filed an affidavit dated 12.09.2011 to the effect that he received an amount of Rs. 5.00 lakh as interest-free loan from his twinbrother Shri Lalit Khanduja, resident of Canada vide cheque no. 358105 on 06.06.2006, which was debited to his NRE savings bank account no. 051-6010003-006 with HSBC bank, New Delhi and credited to the savings bank account with ABN-AMRO bank on the said date. Rule 29 deals with production of additional evidence before the Tribunal. It starts with a prohibition that the parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal. Then, exceptions are provided that if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the  Income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be produced. In so far as grant or otherwise of sufficient opportunity is concerned, the assessee has no case because even after passing the assessment order, no further evidence was sought to be adduced before the ld. CIT(Appeals). At the same time, the Tribunal has not required the assessee to produce any document or witness. Therefore, the only exception which is applicable in the case of the assessee is regarding any other substantial cause. On looking at the evidence filed before the lower authorities, it is clear that the loan has been taken from the brother, who is a Canadian citizen. The amount has been debited in his bank account. These evidences show that there is some grain of truth in the claim that the amount was loan taken from the twin-brother. However, the evidence is not sufficient to discharge the burden u/s 68, as discussed earlier, under which prima facie evidence about three things has to be produced by the assessee. In these circumstances, we are of the view that substantial cause exists to permit the assessee to file additional evidence, placed in the paper book from page nos. 3 to 23. Therefore, the additional evidence is admitted.

4.1 The additional evidence has not been examined by any of the lower authorities. Therefore, it will be in the fitness of the situation that the matter is restored to the file of the AO for examination of the evidence and thereafter to pass an order as per law. It is ordered accordingly.

5. In the result, the appeal is treated as allowed for statistical purposes.

                             Sd/-                                                              Sd/-

                     (R.P. Tolani)                                                (K.G. Bansal)

                   Judicial Member                                        Accountant Member

                  SP Satia

Copy of the order forwarded to:-

Pradeep Khanduja, New Delhi.

ITO, Ward 3(4), New Delhi.

CIT(A)

CIT

The DR, ITAT, New Delhi.                                           Assistant Registrar.