FAIZ MURTAZA ALI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Admit, on the following substantial questions of law:

(2.) While carrying out the assessment of the assessment year 2002-03, the Assessing Officer made additions aggregating to Rs. 55 lakhs deposited in the bank account of the Appellant/Assessee herein by invoking the provisions of Section 68 of the Income-tax Act. There were four additions in the sums of Rs. 20 lakhs, Rs. 20 lakhs, Rs. 5 lakhs and Rs. 10 lakhs respectively making a total of Rs. 55 lakhs. The Commissioner of Income-tax (Appeals), however, deleted these additions on the ground that the provisions of Section 68 of the Act were not applicable as well as on the merits. The Revenue went in appeal. The Income-tax Appellate Tribunal allowed the appeal of the Revenue by reversing the order of the Commissioner of Income-tax (Appeals). Though the Tribunal accepted that the provisions of Section 68 were not applicable, it sustained the additions invoking the provisions of Section 69A of the Act. Thereafter, each of the additions was discussed and the findings of the Commissioner of Income-tax (Appeals) were reversed sustaining the additions made by the Assessing Officer. Because in these circumstances, the present appeal is preferred by the Assessee challenging the order dated October 17, 2008, passed by the Tribunal, we may, however, point out that, at the outset before us only one addition to the tune of Rs. 20 lakhs sustained by the Income-tax Appellate Tribunal is challenged and, therefore, we would confine our discussions to that addition alone and the said addition came to be made by the Assessing Officer under the following circumstances.

(3.) As noted above, this amount of Rs. 20 lakhs also seemed to be deposited in the bank account of the Assessee herein. The explanation of the Assessee qua this amount was that he had entered into an agreement for development of property "Hasan Manzil" at Patna on December 2, 2000, which was registered with the Registrar vide serial No. 38096. It was submitted by the Appellant before the Assessing Officer that under the said agreement, the Assessee had received a sum of Rs. 25 lakhs from the said developer, namely, Ganpati Builder whose sole proprietor is Mr. Jagdeep Prasad Verma. It was also stated that Rs. 5 lakhs was received by the Assessee by means of cheque and balance of Rs. 20 lakhs in cash. However, the development agreement fell through and was cancelled subsequently, as a result, the Assessee was paid back the amount of Rs. 25 lakhs on September 26, 2001 by means of bank drafts of (Rs. 9 lakhs + 9 lakhs + 7 lakhs) respectively. The Assessee had also submitted the documents to support his plea in the form of development agreement, copies of the bank drafts and certain letters/correspondence written by Ganpati Builder.