1999 PLP 3206 (PTD)

V.V. KAMAT, J.

With regard to the assessment year 1989-90.. in regard to the allegation that the assessee received and one Shri Sundaresa Pai paid an amount of Rs.10 lakhs in addition to Rs.2 lakhs as security deposit, the Income-tax Officer acted on the basis of the sworn affidavit of Shri Sundaresa Pai with regard to the payment made by him and acceptance thereof by the assessee in question in the matter of a lease,, dated February 10, 1989, of the premises covered thereby. It is a lease for a period of 20 years. With regard to the amount in question, as stated, the material was the sworn testimony in the nature of affidavit of the. person who paid. The decision was affirmed by the first appellate authority observing that Rs.2 lakhs being the amount of deposit, refundable as security deposit could not be understood as the capital gains. The Tribunal firstly observed that the transaction could not be understood as a transfer in law. The Tribunal further observed that the affidavit of Shri Sundaresa Pai could not be legally acted upon because he was not put to cross-examination by the assessee. The evidence of affidavit becomes acceptable unless a right of cross-examination is demanded in regard thereto. In our judgment, the approach of the Tribunal requires reference because with regard to both the aspects, the situation on the facts and circumstances of the case raise questions of law. Accordingly, the Income-tax Appellate Tribunal, Cochin Bench, is directed to prepare the statement of case and refer the following three, questions to this Court and remit the matter to this Court within a period of three months from today: "(1) Whether, on the facts and in the circumstances of the case and in view of the statement by Shri Sundaresa Pai in his 'sworn statement' that 'he had also paid a sum of Rs.10 lakhs to the assessee and his brother on various dates in February, 1989, out of his unaccounted income and offered the same for assessment (and also in the absence of any finding even doubting the veracity of the statement), the Tribunal is right in law and fact in holding that 'there is no material on record to show that the assessee had received Rs.10 lakhs., ' 'there is no basis for including the impugned amount in the hands of the assessee' and are not the above findings wrong, unreasonable and- based on wrong approach? (2) Whether, on the facts and in the circumstances of the case and in the light of the sworn statement by Shri Sundaresa Pai,

(i) the, Tribunal is right in interfering with the inclusion of the impugned amount in the hands of the assessee on the ground that Shri Sundaresa Pai was not put to cross-examination by the assessee? (ii) should not the Tribunal have/is not the Tribunal legally and by all canons of law bound to remit the case to the assessing authority and to complete the assessment afresh after giving the assessee an opportunity to cross-examine Shri Sundaresa Pai and in accordance with law? (3) Whether, on the facts and in the circumstances of the case (admittedly, possession has been handed over) and also in view of section 2(47)(v) of the Income Tax Act, 1961, the Tribunal is right in law in holding that ' in law there is no transfer under the impugned agreement and, therefore, the levy of capital gains on the same cannot be sustained'?" The original petition stands disposed as above. M.B.A./3072/FC Petition disposed.