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TMI Blog2022 (7) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... e issuing cheques to persons located in different parts of the country against deposit of cash in their accounts as well as acceptance of local cheques, and for which they were charging commission @ Rs. 150 - 200 per lakh. Investigation of accounts found and seized during the said search resulted in discovery of transactions by the assessee with the persons searched through his two bank accounts (with Axis Bank), one each in his two propriety concerns which, similarly, bore high value transactions, including cash deposits, details of which for the relevant year (f.y. 2008-09) are as follows: (page 3 of the assessment order) a) cash deposit of Rs. 1,52,19,400/- in bank A/c No. xxxx1088. b) cash deposit of Rs. 600,000/- in bank A/c No. xxxx3970. c) regular credits & debits in A/c No. xxxx1088. d) total credits in the Bank A/c No. xxxx1088 at Rs. 14,31,96,700/-. e) total debits in the Bank A/c No. xxxx1088 at Rs. 14,31,51,500/-. 2.2 The assessee, in assessment proceedings initiated by the issue of notice u/s. 148(1) on 30/03/2016, followed by notice u/s. 142(1) on 15/06/2016, explained the credits in his two bank accounts aforesaid as received cash (or cheque) from his cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the assessee's CO which, though principally supportive (of the impugned order) in nature, raises a legal issue per its ambiguously worded Ground No.1, as under: "1. On the facts and in the circumstances of the case the ld. CIT(A) should have held that the initiation of reassessment proceeding in the case of the assessee does not meet the requirement of law and accordingly the initiation of reassessment proceeding as well as reassessment order dated 22/12/2016 is bad in law." The same was argued before us in terms of non-obtaining of approval by the AO from the Pr. CIT-1, Jabalpur, or of it being not in accordance with law, which was so inferred in view of non-supply thereof despite the AO being requested for a copy thereof vide the assessee's letter dated 11/01/2016. The ld. CIT(A), rather than calling for the said Approval, i.e., as requested, chose to ignore the said plea in his order. We were accordingly urged by Shri Ghai, the ld. counsel for the assessee, to call for the assessment record, or otherwise direct the AO to produce the approval u/s. 151. 3.2 We are unable to appreciate the assessee's case. True, the ld. CIT(A) has failed to consider the assessee's plea and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice u/s. 148(1)) per a speaking order, and only whereupon he could proceed to make the assessment. Why, the assessee's Ground, even before us, continues to be vague and non-specific. We are, in view of the aforesaid reasons, not persuaded to call for the assessment record, or otherwise direct the AO to produce the approval u/s. 151. 3.3 We may next take up the two additions being agitated by the Revenue, both of which have their genesis in the transactions reflected in the assessee's two bank accounts aforesaid (not on record). The additions by the AO are on the premise that the assessee has abysmally failed to substantiate his claim of being engaged in the cheque issuing business, i.e., on receipt of cash or local cheque, issuing outstation cheque in the case of the latter. The first is clearly laundering of money, a criminal offence under law. The second would also require a licence from the Reserve Bank of India (RBI), or at least being registered with it as a non-banking financial institution, so that the same is, again, illegal. Our purview in the instant proceedings, however, is to determine factually the income arising from these transactions, i.e., as per the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record (refer, inter alia, CIT v. Radha Kishan Nandlal [1975] 99 ITR 143 (SC)). Further, as observed by the Bench during hearing, all that the assessee was required to do, in substantiating his claim/s, was to produce some customers to whom the cheques had been issued, borne out by the bank statements inasmuch as, as per the assessee, it is they who had deposited cash (or cheque) in his bank account in lieu of a cheque (or, as the case may be, an outstation cheque). Even if the party depositing the cheque, and the outstation party to whom the corresponding cheque is issued, are, as would appear, different, as it is only that which would provide a basis or a rationale to the transaction, both the parties are known and, thus, available for confirmation. A one-to-one correlation between the debits and credits, with the two parties having trade relations, would at once establish that the assessee is not the beneficiary of the sums deposited in his bank accounts. The same would also exhibit if the commission stands paid in his bank accounts, or outside it. For example, a cash deposit of Rs. 1,00,200, as against a remittance of Rs. 1,00,000, would clearly exhibit both, the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiaries of the amounts received in the assessee's bank accounts, explaining thus the nature and source of the credits (receipts or deposits) in his bank accounts, as he is obliged to under law (s. 69A). Further, why should, in that case, the assessee have transactions with the persons searched, as the investigation of these accounts disclosed, and which in fact led to the issue of notice u/s. 148(1) in his case? Surely, there are gaps in the factual framework, as suggested by the explanation furnished and the material found and analysed by the Revenue (through the Investigation Wing), and which remain unaddressed. Neither the assessee has stated the truth nor has the Revenue made any further investigation in the matter. Following the money trail would have surely led to a better clarity on facts. However, the very fact of it being a part of such racket implies it to be an organized business. As such, it caters to some persons, even if unidentified, outside the assessee. A business implies an exchange. The two facts, i.e., the money laundering and financial accommodation business, on one hand, and the money in his bank account/s belonging entirely to the assessee, on the other, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the year in bank account # 1, i.e., Rs. 45,200; and b) the unexplained cash deposit of Rs. 6 lacs in bank account # 2. The assessee shall thus stand to be assessed for a total income of Rs. 6,45,200, as business income, as against the returned income of Rs.1,51,000. This is as there is nothing on record to suggest the assessee, who did not file any return u/s. 139, but only (on 18/11/2016) after being served the notice u/s. 148(1) on 02/04/2016, carrying on any other business or vocation during the year. 3.6 The decision by the Tribunal in Raaga Finvest Ltd. (for AYs. 2007-08 to 2011-12) stands relied upon by the ld. CIT(A) (at para 7.2.3 of his order) without as much as mentioning, leave alone discussing, its' facts, or showing as to how the same are applicable in the facts and circumstances of the instant case, so that the said reliance is to no moment. An unverified copy of the said order (in ITA Nos. 256-259/Jab/2013 & 218/Jab/2015, dated 31/8/2016) stands submitted after hearing - without being asked to by the Bench, with the Registry of the Tribunal. This is wholly unwarranted, in complete disregard of the process of hearing, and the rights of the opposing side. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v despite the facts being the same, so that no addition could be made in the instant case as well. The said order is not on record. The said argument, also referred to in the impugned order, is without as much as mention of the facts of the said case, much less discussing the same as well as the decision arrived at therein, including its basis and its consideration by the first appellate authority, followed by the issue of a finding/s as to the facts being the same. The argument is thus de hors anything on record. How can, one wonders, the same be relied upon, as we are urged to. How, again, one wonders, the AO's order (in case of Rakesh Yadav) be binding on the ld. CIT(A) in his case, much less in the assessee's case. We are, therefore, constrained to regard the argument as without basis, and is in fact referred to only due to the specific insistence of Shri Ghai during hearing to take the same on record. We may though, for the sake of completeness of our order, clarify that the principle of res judicata is not applicable to the proceedings under the Act (viz. New Jehangir Vakil Mills Co. Ltd. v. CIT [1963] 49 ITR 137 (SC); M.M. Ipoh v. CIT [1968] 67 ITR 106 (SC)). The AO is, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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