A notice is received u/s 148 for purchase of immovable property and not filing a Return. During hearings, it is shown that property was purchased by loan from a relative. The identity of lender is clearly established, (He is a tax payer) his PAN and address provided. There was no written agreement, but loan is acknowledged by both the lender and borrower and was given by means of crossed bank draft in name of the vendor of property. The bank draft was obtained by the lender from his bank by debit to his bank account. Documentary proof of the transaction has been provided, including copy of crossed bank draft, registered sale deed of property, bank account extract of the lender showing debit to his account for the issue of bank draft etc.
Now the ITO is asking the borrower to organise for personal presence of the lender, who is in different city and under different tax jurisdiction, to get his statement and enquire into his source of funds credited in his bank account from where bank draft was issued.
Is ITO within his rights to enforce personal appearance of lender, where there is no doubt about his identity, he is tax payer business man, is regularly assessed, his accounts are audited by a CA,and enquire about his source of funds out of which he provided finance to buy the property? Is the lender bound to appear before ITO? Is ITO not trying to extend his enquiry to another person with out issuing separate notice to the lender? Please give your views on the legality of ITO's action.
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