TMI Blog2005 (7) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... held the contention of the appellant that it is the assessee who has to furnish an explanation and not the legal heirs of the assessee. ( iv )The CIT(A) has erred in confirming the additions made on account of the alleged bank deposits in the facts and circumstances of the case. ( v )The CIT(A) ought to have sustained the addition in the absence of a direct link between the assessee and the deposits in the banks. The CIT(A) ought to have given due consideration to the fact that the maturity proceeds of the bank deposits have not come back to the assessee and it has been encashed by somebody else. ( vi )The CIT(A) has erred in holding that the objections of the appellant that the statement of the ex-employee should not be believed is unsustainable. If the ex-employee, Sri N. Ramachandran Nair, has admitted that he had made the deposits and has signed in various names, he cannot escape from the responsibility of proving the source of the deposits merely by making a statement that the deposits belong to the late N. Chellappan Chettiar. 3. The brief facts of the case which have witnessed multiple litigations are that original assessee, late Shri Chellappan Chettiar was the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any unaccounted money or investment by the original assessee. The assessee has also raised the following contentions before Assessing Officer : ( a )Information regarding deposits with the bank might have been available even at the time of original assessment and thereby rendering the re-opening of the assessment illegal. ( b )It is illegal to make re-assessment since addition under section 69 can be made only after obtaining explanation from the assessee which in this case is impossible as the assessee is no more. ( c )The statement recorded from the Managers of the banks was without notice to the assessee and it is, therefore, illegal. The above contentions of the assessee were negatived by Assessing Officer. The Assessing Officer was of the opinion that merely because there is death of a person, it does not bring to an end the assessment proceedings. In the opinion of Assessing Officer, the legal heirs of the deceased assessee are also liable to given information end explanation. It appears from the order of Assessing Officer that an opportunity to cross-examine Shri Ramachandran Nair, ex-manager of the deceased assessee, was offered to the legal heirs of the deceased a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation done by the I.T. Department and on the basis of the said detailed investigation, Assessing Officer came to the find that all the said deposits were benami and that the deceased assessee was the real owner of those deposits. Assessing Officer has come to the above conclusion by recording the following reasons in the assessment order : "(1) None of the depositors were traceable at the address given in the deposit register when registered letters were sent to them. (2) The deposits were made by Shri D. Ramachandran Nair, the then manager of the assessee, on assessee s behalf and most of the deposit receipts and pay-in-slips have been prepared by Shri Ramachandran Nair in his own hand-writing and most of them bear his signature. (3) Sri Ramachandran Nair has, in a sworn statement given, admitted that he himself had made various deposits in question in fictitious names on behalf of the assessee and that the amounts deposited represents the unaccounted money of late Sri Chellappan Chettiar. On the facts and circumstances of the case and especially in view of the past conduct of the assessee and the nefarious ways he has been resorting to in the past years, there is no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication form for FDR No. 154/74 dated 9-7-1974 for Rs. 1 lakh has no similarity at all with the signature in the endorsement on the same FDR. This signature is in Malayalam. However, the signature of the same person in the application for FDR 279/74 dated 5-9-1976 for Rs. 26,000 is in English. The address is not traceable. All the pay-in-slips (17 in number) for the deposits made with the Federal Bank Ltd., Quilon (including the deposit of Rs. 2 lakhs in the name of the assessees) have been signed by Shri Ramachandran Nair, Manager of the assessee. The slips were also seen prepared by him in his own hand-writing. The following FDRs seen encashed on the same date, i.e., 2-4-1975 : 1. R. Santhakumari Quilon. FDR A85317/537/74 Dt. 30-9-94 48,470 2. Ananthavally R. Chavara -do- /538/74 30-9-74 54,590 3. Suneethy T. Chavara -do- /539/74 1-10-74 43,260 4. Sarojini B., -do- /540/74 1-10-74 59,740 Chathannoor 2,06,000 This to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced above) regarding the legality and validity of the re-opening of the assessment under section 147( a ) of the Income-tax Act. This ground is, therefore, dismissed, as not pressed. 8. We have heard both the Ld. counsel Shri Kochunni Nair for the assessee and ld. DR, Shri K.K. John. The Ld. counsel for the assessee submitted that as per the facts on record, (deceased assessee) the original assessment of the assessee was completed on 25-11-1976 and he died on 22-9-1977 within a span of one year. He further submitted that in the original assessment, Assessing Officer had determined the total income of the deceased assessee at Rs. 2,19,090 and agricultural income at Rs. 20,040 which was subsequently reduced in appeal to Rs. 2,09,410 and Rs. 6000 respectively. He further submitted that though the first notice under section 148 was issued on 31-3-1977 the reassessment was completed on 26-3-1981 determining the total income at Rs. 24,41,652 by making a huge addition on account of alleged investments made by the deceased assessee in different banks in the names of fictitious persons. The ld. counsel submitted that the entire addition was made on the basis of the statement recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any explanation given by the assessee, the CIT(A) was not at all justified in sustaining the additions made by Assessing Officer under section 69, or 69A of the Income-tax Act. He, therefore, submitted that the entire additions made by the Assessing Officer under section 69 or section 69A sustained by CIT(A) may be deleted. 10. The ld. DR, on the other hand, submitted that merely because there was death of the deceased assessee that does not absolve the legal heirs from the liability under the Act. He submitted that the definition of assessee given under the Act includes every person who is deemed to be an assessee under this Act and it cannot be contended that for invoking the provisions of section 69 or 69A, it is the deceased assessee and not the representative assessee or the legal heirs. The ld. DR relying upon the order of the CIT(A), submitted that whatever additions are made under section 69/69A, they are made after detailed investigations made by the revenue. He has also taken us through the assessment order and submitted that the details given by the Assessing Officer are sufficient to conclude that there was substantial material gathered by Assessing Officer af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the value of the investments may be deemed to be the income of the assessees of such financial year." It is a well-settled proposition of law that the provisions of sections 68, 69, 69A etc., are in the nature of deeming provisions. In the case of Smt. Rajabai B. Kadam ( supra ) cited above, the Tribunal (Pune Bench) had an occasion to examine the provisions of section 69. In the above case the assessment was framed against the legal heirs of the deceased assessee by making additions under section 69 or section 69A of the Act. In the above case, the assessee who was a minor was found carrying cash of Rs. 1,18,500 by police department of Ullal, Mangalore on 9-8-1994. Subsequently, by the direction of the Court, the money was transferred to IT Department, Mangalore who in turn transferred the same to the IT authorities of Pune. An enquiry was star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellappan Chettiar is not at all sustainable and liable to be deleted. 12. In the case of Vijay Sarin ( supra ), the issue before the Hon. Delhi High Court was totally different. In that case ITO issued notice to one Mr. Basheshar Nath, the assessee, under section 39(2) for the assessment year 1963-64. In response to the said notice, the assessee submitted his return of income. While the proceedings were still pending, the assessee, Shri Basheshar Nath died and the proceedings were continued against the legal representatives. In the said case, ITO did not issue notice to the legal representative regarding further proceeding to be continued and that was challenged by the legal representative. After following the observations made by the Supreme Court in the case of Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 , the Delhi High Court held that "a reading of the aforesaid quotation clearly shows that lack of notice to the legal representatives does not amount to the revenue authority having no jurisdiction, but the assessment was defective by reason of want of notice. It was also observed that when assessment proceeding does not cease to be proceeding under the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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