Commissioner of Income Tax vs Jagjit Singh Gidda

Pasayat, C.J.—At the instance of the revenue, the following question has been referred for opinion of this Court by the Tribunal, New Delhi, u/s 256(1) of the income tax Act, 1961 (''the Act'') :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that Smt. Kamlesh Saini as a representative assessee had no obligation to explain the investment of Rs. 75,600 made by the assessee in the purchase of House No. S-305, Greater Kailash, New Delhi, prior to her appointment as an agent and as such the said amount was not liable to be assessed in her hands as representative assessee ?

Brief reference to the factual position, as indicated in the statement of case, would suffice.

Shri Jagjit Singh Gidda, a non-resident, is the assessee in respect of whom return was filed for the assessment year 1972-73 by Smt. Kamlesh Saini, who filed return as a representative of the assessee, declaring an income of Rs. 4,292. This income was declared in respect of property No. S-305, Greater Kailash, New Delhi. Along with return, copy of general power of attorney executed by Shri Jagjit Singh Gidda on 16-11-1971 was filed. The ITO issued notice u/s 143(2) of the Act to Smt. Kamlesh Saini asking her to explain the source of investment of Rs. 75,600 in the property, which was purchased by Shri Jagjit Singh Gidda as per registered sale deed dated 18-8-1971. Smt. Kamlesh Saini replied stating that, being a representative of the assessee, she cannot be asked to explain the source of investment, as she was merely an agent for collection of rent from the said property. The ITO asked her as to why she should not be treated to be liable to explain the source of investment in view of general power of attorney dated 16-11-1971. Reply was filed by her stating that she had no obligation to explain the source of investment of the assessee in the said property. Rejecting the contention, the ITO held that since Smt. Kamlesh Saini, acting in the capacity of an attorney or an agent, was liable to the same extent under the Act as the non-resident himself, she could not absolve herself of the responsibility of explaining the sources of investment. Accordingly, the investment was treated as income from other sources u/s 69 of the Act and was added to the income of the assessee. Matter was carried in appeal before the AAC. It was stand of the assessee that the ITO erred in calling upon Smt. Kamlesh Saini, the learned assessee, to explain the said investment. The AAC confirmed the action of the ITO and dismissed the appeal. Matter was carried in further appeal before the Tribunal. It was submitted that assessment in the case was made directly on the non-resident, Shri Jagjit Singh Gidda, but through his representative, Smt. Kamlesh Saini and it was, therefore, no part of the representative of the assessee''s liability to explain the source of income. The Tribunal accepted the stand and deleted the addition. At the instance of the revenue, the question as set out above, has been referred for opinion of this Court.

We have heard the learned counsel for the revenue. There is no appearance on behalf of assessee in spite of notice. The learned counsel for the revenue pointed out that the assessment was made on the non-resident and not on the representative of the assessee as was erroneously concluded by the Tribunal. Further, Shri Jagjit Singh Gidda had filed return and signed memorandum of appeal and form of verification. Moreover, he was present in person at the time of hearing. Therefore, the conclusions of the Tribunal are not in order.

We find, with reference to the assessment order, that while making the assessment, status of Shri Jagjit Singh Gidda was taken to be individual and so far as the residential status is concerned, it was taken to be non-resident. Though, there is mention that the assessment was made through the representative, Smt. Kamlesh Saini, the effect of such an indication has not been examined by the Tribunal. It has also not noticed the fact that the memorandum of appeal and form of verification have been signed by Shri Jagjit Singh Gidda and he himself was present in person along with his authorised representative at the time of hearing. The effect of this factual position has also not been considered by the Tribunal. These aspects were certainly needed to be considered by the Tribunal. That being the position, we think it appropriate to remit the matter back to the Tribunal to consider it afresh in the light of observations made by us and pass necessary orders, as provided in law.

It goes without saying that we have not expressed any opinion on the merits of the case.

This reference is disposed of.