TMI Blog2005 (3) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... es, viz. , Smt. A.V. Shanthi, the Director of the assessee-company and the authorized representative of the assessee, the Assessing Officer passed the block assessment order on 28-6-2001, determining the income at Rs. 59,40,762 as against the declared income of Rs. 3,56,363 and made impugned addition on Rs. 50 lakhs on the reason that the balance sheet filed by the assessee along with the return of income reflects an amount of Rs. 50 lakhs outstanding with Bank of India. But, actually as per information with him no liability was existing as on 31-3-1995. Instead, the loan was with Catholic Syrian Bank and the assessee has repaid the loan with Catholic Syrian Bank and the source of the third party deposit through which the loan was repaid was not explained to the Assessing Officer. The assessee being aggrieved against the addition of Rs. 50 lakhs carried the matter in appeal before the CIT(Appeals), who has confirmed the addition. Further aggrieved, the assessee is in appeal before us on this issue. 3. At the outset, the learned counsel for the assessee challenged the legality of the action of the Assessing Officer in passing the assessment order without invoking the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving intimation to the assessee which is required under section 127 of the Act. For this purpose, he relied on the decision of the Tribunal in the case of All India Children Care Educational Development Society v. Jt. CIT [2003] 87 ITD 209 (All.). Further, he submitted that the order does not conform to the requirement of section 158BD which requires that satisfaction of any undisclosed income belonging to any person other than the person with respect to whom the search was made was to be recorded. For this purpose he relied on the judgment of Bangalore Bench of the Tribunal in the case of Y. Subbaraju Co. v. Asstt. CIT [2004] 270 ITR 174 (AT). The learned counsel for the assessee vehemently argued that the Assessing Officer has not recorded the satisfaction as warranted under section 158BD. 5. The learned counsel for the assessee also submitted that the order passed by the CIT(Appeals) is in violation of principles of natural justice as adequate opportunity of hearing was not given to the assessee. The CIT(Appeals) gave only one opportunity on 4-3-2003 to appear before him for which the assessee filed an adjournment letter on 4-3-2002 which was not consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of Smt. A.V. Shanti. Subsequent to the search, the Investigation Officers found that the assessee is having Current Account bearing No. 747 with Bank of India, Usman Road Branch, Chennai, and the same was recorded in Inventory statement of Bank accounts found at 184, Rangarajapuram, Main Road, Kodambakkam, Chennai which was named as document No. MAK/Bank a/cs/NS. In this Bank a/c the assessee has deposited a sum of Rs. 46 lakhs on 28-1-1995 and sum of Rs. 4 lakhs on 11-3-1995 and these funds have came from outward clearing i.e. from Pondicherry. Further enquiry it was observed that the assessee had a loan account with Catholic Syrian Bank, Pondicherry. After going through the file, the assessee observed that there was prima facie case and on that reason the file was transferred from Company Circle IV(3) to Central Circle I(5) under section 127(3) of the Act. The Revenue after recording the reason for issuing the notice under section 158BD, the Notice under section 158BD was issued on 22-6-1999. Section 127(3) does not provide for giving any opportunity to the assessee while effecting such transfer, especially when both the Assessing Officers are located in the same cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outward clearing i.e. from Pondicherry. Further enquiry it was revealed that the assessee had a loan account with Catholic Syrian Bank, Pondicherry which was closed by assessee and the source from which it was repaid has not explained to the satisfaction of Assessing Officer. The plea of the assessee that the entire loan was settled through one SM Pandian who was the former Director of the assessee-company and the company does not have any deposit with the bank. The company s turnover for the assessment years 1993-94 to 1996-97 is as follows : Asstt. year Amount (Rs. in lakhs) 1993-94 23.48 1994-95 18.92 1995-96 47.08 1996-97 0.51 As such, the assessee Counsel argued that the company could not have earned an amount of Rs. 50 lakhs from the business in view of meagre turnover in the above years. This plea of the assessee cannot be accepted on the reason that the assessee-company has been carrying the business and sources from which the bank loan has been repaid is not disclosed even before us. On the other hand, only raised the arguments on technicalities. Further, the assessee has not denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTC 621. Where there is an unexplained credit, the assessee could hold that it would be income of the assessee and it is for the assessee to prove that even if the cash credit represents income, it is the income from a source which has already been taxed or exempted from taxation as held in the case of Addl. CIT v. Mohan Engg. Co. [1985] 151 ITR 571 (Pat.), V. Datachinamurthy v. Asstt. DIT [1984] 149 ITR 341 (Mad.), A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and Samati Dayal v. CIT [1995] 214 ITR 801 (SC). The Assessing Officer is free to add those credits to the income of the assessee where the explanation furnished by the assessee regarding genuineness of the credits is not satisfactory as held by Hon ble Supreme Court in the case of Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244, ITO v. Rattan Lal [1984] 145 ITR 183 (SC), CIT v. S. Kamaraja Pandian [1984] 150 ITR 703 (Mad.), CIT v. United Trading Construction Co. [2001] 247 ITR 819 (SC) and CIT v. K. Palaniappan [2000] 242 ITR 719 (Mad.). 12. Regarding the plea of the assessee that the block assessment for which block assessment income has to be determined in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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