2008 (3) TMI 37

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..... al question of law: - "a)Whether on the facts and in the circumstances of the case , the ITAT has erred in law to not hold the assessee as an agent to the non-resident under Section 163 of the Income Tax Act ?" A search operation was carried out in the case of M/s Hotel Park Avenue, Phillaur on 20.5.1997 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 assesse .....

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..... fore 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 non-resident Indian so as to attract the provisions of Section 163(1)(d) of the Act. We have heard learned counsel for the Revenue.  It has been vehemently argued before us that the assessee was not able to explain as to why the deposits were held by him jointly with Raj Kumar Goyal as Non Resident Indian brother an .....

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..... ny business connection of the assessee, with the non-resident. Apropos the issue as to whether the non-resident was in receipt of any income, direct or indirect, through the assessee, in reply to show cause notice, the assessee has categorically said that the relevant KDR was held only in the name of Shri Rakesh Goyal and that the entire proceeds were credited to his bank account, on 16.3.1993. This itself shows that there was no accrual of income to the non-resident, and once there was no accrual of income proved in the name of non-resident, section 163(1)(c) also could not be applied on the assessee. Apropos the property held jointly by the assessee and the NRI, as noted by the learned CIT(A), there is no evidence of any income from such .....

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