TMI Blog2022 (7) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... objection (to the issue of notice u/s. 148(1)) to the AO dated 29/11/2016, submitted on 30/11/2016, the same stands disposed of by the AO vide his communication dated 01/12/2016. Neither the said objection nor the disposal thereof is made part of the Tribunal s record, for us to be informed of the actual state of affairs or the legal consequences flowing therefrom. Besides, a non-satisfactory disposal of the objections by the AO ought to have prompted the assesse to challenge the same, which is the sole purpose of the prescription in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] to the AO to meet the tax payer s objection/s (to the issue 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. Cheque issue business - Unexplained bank deposits - HELD THAT:- In fact, the AO correctly observes that even in a no accounts case, the assessee is supposed to furnish evidences in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance/s. We are also, in view of the unsatisfactory factual determination (for which it is the assessee, being in the know of his financial affairs and obliged by law to explain the same, who, having failed to, is principally responsible), and the long period that has since lapsed, disinclined to restore the matter back, and consider it proper to, under the given facts and circumstances, adjudicate the matter on the basis of the material on record. 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. We have, on the contrary, in the conspectus of the case, accepted the financial accommodation entries as a business, stating our reasons for the same. And, further, allowed the assessee the benefit of doubt in not directing addition for the peak balance, i.e., in addition to the normative profit earned since, in computing his income, even as, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings 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 customers towards issue of cheque (or outstation cheque) and for which commission is charged @ Rs. 150 200 per lakh, i.e., at an average of Rs. 175 per lakh, and which also explained the admitted income of Rs. 1,51,000, i.e., after deducting expenditure on gross income of Rs. 2,51,662 (on a total cheque issue of Rs. 1438.067 lacs). This, however, was found not acceptable by the Assessing Officer (AO) in the absence of any substantiation of his claim/s by the assessee, who also failed to produce the books of account despite being called upon to by the AO, who, accordingly, made three additions, assessing the assessee s total income at Rs.2,62,08,584, as under: (a) for Rs. 1,52,19,400, toward unexplained cash deposits in the bank account # xxxx1088 (Bank A/c 1); (b) for Rs. 1,02,38,184, at 8% of the credit entries in bank account # xxxx1088 (at Rs. 1279.773 lakhs), being the estimated business income on these receipts; and (c) for Rs.6,00,000, toward unexplained cash d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 issue a finding thereon, so that the assessee s grievance in the matter is understandable. However, the fact of the matter is that there is nothing on record to exhibit that the assessee did indeed request the AO to provide a copy of the said approval. Then, again, what, one wonders, prevented the assessee to seek an inspection of his assessment record (either directly or even under the RTI Act) to ascertain if the same had indeed been obtained, or, as inferred, not. In its absence, this remains no more than a bald allegation, i.e., without any basis, even as the presumption in law (section 114(e) of the Indian Evidence Act) is that all judicial and official acts are regularly performed, so that the said presumption would have to be, for us to entertain the assessee s claim, rebutted. This is particularly so as the AO categorically states (at para 1 of his order) that notice u/s. 148 was issued on 30/03/2016 after taking approval from the appropriate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 provisions of the Act, as it is only the real income, subject to the provisions of the Act, that is liable to be assessed as income (Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521 (SC)). The first question that therefore emerges is if the assessee is indeed engaged in the said two business or, put differently, the two limbs of the same business, broadly described as and claimed to be cheque issue business , even if illegal or constituting an offence under law. No evidence stands brought on record by the assessee toward the same, either at the assessment or at the first appellate stage, even as confirmed by the parties during hearing. The ld. CIT(A) stating (at para 7.3.3 of his order) of his decision being based on the material evidences brought on record is, thus, a false statement. There is in fact no reference in his order to any material or even a mention of what those material evidences are, much less exhibit consideration thereof and, as the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 commission as well as prove the transaction to be a financial accommodation transaction. No such attempt has been made by the assessee at any stage, whose case remains, thus, wholly unsubstantiated, accepted by the ld. CIT(A) without any evidence whatsoever; rather, claiming that the AO had accepted the assessee s claim as to cheque issue business , as well as income therefrom. He has, in fact, clubbed two separate additions of Rs. 152.19 lacs and Rs. 6 lacs, qua cash deposits in bank account xxxx1088 (# 1) and bank account xxxx3970 (# 2) respectively, even as observed by the Bench during hearing, without appreciating that while there are debit and credit entries and, further, in nearly the same sum, in bank account # 1 (so that apparently the commission amount is received in cash and not in account), indicating payment in respect of all receipts, cash or cheque, therein, while no such payment is stated in respect of deposits in bank account # 2, nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, are inconsistent with each other, so that the latter, an inferential fact, which is under dispute, cannot hold. Even if therefore the assessee is unable to establish the source of the moneys deposited in his bank accounts, given the fact of such business being undertaken, only the peak balance in his bank accounts could be added as unexplained money u/s. 69/69A. The second aspect of the matter would be the income earned through such business, which the assessee admits at Rs. 1.51 lacs, albeit, sans any evidence. 3.5 The only material on record in this respect, i.e., income arising from business, is the stated consideration of 0.15% - 0.2% on turnover, also admitted by the assessee. It is inconceivable though that such a meagre commission is charged for assuming such a high risk; the illegality factor alone (i.e., even ignoring the service component of the activity undertaken, which involves transmission of liquid cash, which itself involves high risk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 same being not on record could not be relied upon and, consequently, responded to by the other side. We thoroughly discountenance, and express our extreme displeasure in the surreptitious manner in which material is sought to be placed on record by the assessee. The said Order was, nevertheless, read, to find it as wholly inapplicable. The same is a case of a NBFC, duly maintaining books of account disclosing commission income, charged separately on each cheque issued, and on which (commission) is charged, which is subject to service tax, duly deposited. In fact, the amount added as income in that case (Rs. 354.07 lacs) was that reflected in its balance-sheet as cheques pending clearance as at the year-end, which were confirmed by the AO (per his remand report called for by the first appellate authority) to have been cleared subsequently. A mere browse of paras 3 4 of the said Order would reveal the facts of the case to be materially, if not w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleteness 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, therefore, at liberty to adopt a different view even in an assessee s own case, stating though the reasons therefor. Judicial propriety would also demand of him to make a mention of the earlier assessment and state the reasons for taking a different view. One additional fact could make a world of difference, as explained in Padamasundra Rao v. State of Tamil Nadu [2002] 255 ITR 147 (SC). Then, there could be some development in law, or a decision may have come to his knowledge, and so on. That the Revenue is bound to adopt the view taken by the AO in a particular case, or on non-appeal by it against an appellate order, is a proposition not supported by law or any legal principle. On the contrary, that it is not so stands clarified by the Apex Court as and when this issue came up before it, as in CIT v. Goodwill Theatres [2017] 160 DTR 371 (SC) (reversing the decision by the Hon ble Bombay HC, reported at [2016] 386 ITR 294, relied upon by the ..... 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