COMMISSIONER OF INCOME TAX Vs. RAKESH CHANDER GOYAL

JUDGEMENT

(1.) THE Revenue has filed the present appeal under Section 260A of the IT Act, 1961 (for short 'the Act') against the order dt. 11th May, 2007 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short the Tribunal'), in IT(SS)A No. 9/Asr/2006 for the block period from 1st April, 1987 to 20th May, 1997 raising the following proposed substantial question of law:

(2.) A search operation was carried out in the case of M/s Hotel Park Avenue, Phillaur on 20th May, 1997 under Section 132 of the Act. The residential premises of the assessee was also searched. It came to the notice of the Revenue that one Shri Raj Kumar Goyal, brother of the assessee was maintaining some bank accounts. Source of deposits in these bank accounts were required to be explained. Therefore, proceedings under Section 158BD of the Act to bring to tax unexplained income of Raj Kumar (non -resident Indian brother of the assessee) were initiated. Since Raj Kumar Goyal, brother of the assessee was a nonresident Indian therefore, proceedings under Section 163 of the Act were taken up against the assessee. A show -cause notice was given to the assessee on 25th Nov., 2003, to provide an opportunity to explain as to why he should not be treated as an agent of Raj Kumar Goyal for the purpose of framing assessment under Section 158BD of the Act. In response to the show -cause notice, the assessee furnished written explanation dt. 30th Jan., 2004 explaining therein that none of the provisions of Section 163 of the Act is applicable in his case. The Dy. CIT, Phagwara Circle, Phagwara vide his order dt. 10th March, 2005 passed under Section 163 of the Act treated the assessee as an agent of his non -resident Indian brother.

(3.) NOT satisfied with the order of the CIT(A), the Revenue filed the appeal before the Tribunal challenging the said order. The Tribunal while dismissing the appeal filed by the Revenue held that neither there was any business connection of the assessee with the non -resident Indian, nor did any income come into existence as having been received by the nonresident Indian so as to attract the provisions of Section 163(1)(c) of the Act. Further the assessee had also not been proved to be trustee of the nonresident Indian so as to attract the provisions of Section 163(1)(d) of the Act.