9911796707
TMI Blog2003 (12) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,741 as profit from Iron & Steel Company. 6. That the Learned Commissioner of Income Tax (A) was not justified in confirming the interest charged under sections 139(8) and 217(1)(a), as the assessment was not regular assessment." 2. The relevant facts giving rise to this appeal are that the assessee filed the return on 18th August, 1987 showed total income of Rs. 28,730. The assessment was completed under section 143(1) on 8th February, 1988. 3. The Assessing Officer issued notice under section 148 of the Act on 13th February, 1996 based on certain information in his possession and stated that the Assessing Officer had reason to believe that there was escapement of income within the meaning of section 147 of the Act. The case was re-opened on the basis of a cash book ledger and loose sheets containing the details of transactions pertaining to the assessee. The said material was shown to the assessee's representative and he was asked to show cause why the material should not be used against the assessee. Since the assessee could not give satisfactory explanation, the Assessing Officer completed the assessment under section 143(3)/147 of the Act on 31st March, 1998 adding the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that some entries in the books tallied with the regular books of account of the assessee. The Assessing Officer has stated that the assessee had not denied that the account books had been written by the ex-accountant. The Assessing Officer has further stated that the assessee had not been able to corroborate her contention that the ex-accountant fabricated the accounts of the firm M/s. Jay Bharat Corporation. The Assessing Officer stated that the assessee was maintaining duplicate set of books of account and as a result of some quarrel with the concerned accountant, he had given the same to the department. In view of the above, the Assessing Officer completed the assessment at Rs. 74,76,280 by making the following additions: (a) Capital as per,loose sheet Rs.51,61,420 (b) Profit derived from Drug account Rs.21,11,392 (c) Profit derived from Iron & Steel account Rs. 1,74,741 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accountant was given by the department and the Assessing Officer made the additions merely on presumptions that the books of account belonged to the assessee. He submitted that no documents were furnished by the Assessing Officer to establish that the assessee had the transactions in respect of those entered in the books of account. He submitted that the additions confirmed by the Ld. CIT(A) should be deleted. On the other hand, the Ld. Departmental Representative relied on the orders of the authorities below. 10. We have carefully considered the submissions of the Ld. Representatives of the parties and have perused the orders of the authorities below. We have also gone through the relevant pages of the paper book filed before us. 11. In regard to the validity of initiation of proceeding under section 147 of the Act on the basis of the books of account and the other information received by department from an ex-accountant of the assessee, we are of the considered view that the action of the Assessing Officer to re-open the assessment and to initiate the proceedings under section 147/148 of the Act is in accordance with law as the Assessing Officer had prima facie reason to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal are rejected. 13. In regard to ground No.6 of the appeal the assessee has not made any submissions. Therefore, the said ground is rejected as not pressed for. 14. In the result, the appeal filed by the assessee is dismissed. Per Sri K.K. Gupta, A.M. - I have gone through the order of my learned Judicial Member. I am unable to convince myself that the assessment framed under section 143(3)/147/251 at Rs. 74,76,280 as against the original return filed by the assessee at Rs. 28,730 has been confirmed by the lower authorities on the basis of certain facts and figures not confirmed from any source whatsoever becoming one-sided at the cost of pranks played by the ex-accountant of the assessee leading to absurdity and no justification. 2. A brief history of the case would lead to understand the issue in hand as follows. The return of income declaring total income of Rs. 28,730 was filed on 18-8-1987. An order under section 143(1) was passed on 8-2-1988. However, the assessment was re-opened under section 147 and notice under section 148 was issued on 13-2-1996 which was received on 15-2-1996. This case was re-opened on the basis of a cash book-ledger and one loose sheet contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintains duplicate set of books of account which is generally maintained by the accountant of the assessee or some other close relations or persons, which even if as a result of some quarrel, the concerned accountant gives it to the department for necessary action, that will not diminish the correctness of the accounting entries recorded therein. In view of these facts Assessing Officer proposed to make the following additions to the income of the assessee. Since capital as per loose sheet is Rs. 51,61,420 and the same as per the original return of income was Rs. 28,730, The balance amount is unaccounted capital and the same is added to the total income of the assessee. 6. On similar ground the Assessing Officer also brought to tax a sum of Rs. 21,11,392 from drug account and Rs. 1,74,741 from Iron & Steel a/c and added it to the total income of the assessee. 7. The learned CIT(A) proceeded to confirm the said assessment by observing the following: "The Assessing Officer has been directed to prepare a Trial Balance based on the Cash Book and the Ledger available in his possession. The following is the Trial Balance prepared by the Assessing Officer: Trial Balance Dr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 914.00 7. S.T. (Sales Tax) 30,47,223.00 8. Sangita 7,65,000.00 (Collected but not paid) 9. Jyoti 7.31,662.48 (Heroin Smack &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1,33,45,108.00 1,33,45,108.68 --------------- --------------- The Assessing Officer has recorded the statement of the appellant on 24-12-2001 on this Trial Balance. The appellant has merely denied the entries. The Trial Balance clearly shows the Capital of the appellant, the income earned by her during the year and the application of such income. This kind of evidence cannot be thrown out of the window merely based on the denial of the appellant. To sum up the appellant has not succeeded in challenging the assessment order. She has failed to address the issues involved and to produce the accountant. The innocence of the appellant can be established by positive act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion by the accountant led to such absurd figures in the trial balance so much so that sales-tax has been collected but not paid amounting to Rs. 30,47,223 on account of heroine and smack which sales had not been shown in the alleged trial balance. The officers of the investigation wing and the Assessing Officer relied on the materials supplied during the course of their purposes of their duties. Nothing of this sort had been brought on record by the authorities below, instead the paper book as supplied by the learned counsel for the assessee from pages 39 to 49 indicate depositions made by the various persons before the ITO, Ward 46(3), Kolkata. The very perusal of the depositions would lead much to be desired for satisfaction as to the high-pitched assessment framed by the Assessing Officer without any corresponding corroborative evidence, justification leading to a business transaction into holding income as assessed. Not having been able to cross-examine the ex-accountant who left after having done is worse than letting the taxing authorities to grope in the dark for finding a black cat which is not there. It is apparent that the accountant had fabricated the books of account f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g evidences in the form of confirmations of debtors against the capital held by the assessee sought to be taxed by the Assessing Officer and in similar situation should be able to bring out the interpolation made by the accountant inasmuch as the regular books of account and the fabricated ones have been made by an accountant who has simply turned thousands into lakhs and lakhs into crores. Therefore, 1 set aside the order of the CIT(A) and restore the matter to the file of the Assessing Officer. 9. In the result, the appeal filed by the assessee shall be treated as allowed for statistical purposes as indicated above, REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since there is a difference of opinion between the Members of the Bench, we state following point of difference and refer the same to the Hon'ble president of the Income-tax Appellate Tribunal in accordance, with the provisions of sub-section (4) of section 255, of the Income-tax Act. The point of difference is as under: "Whether on the facts and circumstances of the case the Ld. Judicial Member is justified to confirm the order of the Ld. CIT(A) in confirming the additions made by the Assessing Officer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said papers. As such question of capital of Rs. 51,61,420 shown in M/s. S.D. Enterprises is not correct and cannot be added with my income. I had no business income as shown in the said papers. As such profit of Rs. 21,11,392 and Rs. 1,74,741 also as shown in the said paper does not belong to me. I totally deny the said books and papers belong to me. If your honour wants to act on the said papers, I, humbly request you to call the said person for cross-examination. The said papers had no basis as it were written by him and imaginary figures were shown in the said paper." The Assessing Officer held that the assessee had failed to prove that anybody has fabricated books of her accounts and that such claim was not corroborated. He further observed that for tax evasion, assessee maintained duplicate set of accounts. Accordingly a sum of Rs. 74,47,553 was added in the hands of the assessee as income from undisclosed sources in the assessment order dated 31.3-1998 with the following details: (a) Capital as per,loose sheet Rs.51,61,420 (b) Profit derived from Drug account Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is thereof and apparently from the notings in the loose sheets is objected to the next two grounds. I find some merit in the contention of the counsel. Neither was proper opportunity nor basis of estimate given by the DCIT in the assessment order. In the interest of justice and fair play, the order is set aside with the direction to do it afresh in the light of the foregoing and in accordance with law." 4. The aforesaid directions of the learned CIT(Appeals) attained finality as neither party challenged them before the Appellate Tribunal. In uncertain terms, the learned CIT(Appeals) had recorded that assessment order was based on presumptions and assumptions instead of verifiable and established facts. Further investigations were called for and basis of estimate was required to be given. Most importantly the learned CIT(Appeals) had directed that opportunity of cross-examination or rebuttal be allowed to the assessee. S. The Assessing Officer again took up the assessment in compliance to above direction of the CIT(Appeals) but instead of appreciating and applying or following the directions given by the learned CIT(Appeals), asked the assessee to furnish names and address of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 6,73,727.94 1. Capital 51,61,470.97 (Jai Bharati Corpn.) (S.C. Enter- prises) 2. B.S. 19,75,372.97 2. B.I. (Cash) 4,34,731.69 (Biseswarlal Ajoy (Biseswarlal) Kumar) 3. Piyush Kumar 5,58,304.00 3. P.D. (Cash) 23,63,628.48 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Corpn.) 10. T.M.B. 2,439.01 8. Dividend 9,345.55 11. U.Co. 43.95 12. Union Bank 1,872.55 (Loose Sheet) 13. Share 7,871.00 14. Salaries 10,800.00 15. T.D.S. 17,738.00 16. N.S.C. 12,000.00 17. Pahari Khata 1,000.00 18. Dalali &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can either confirm, reduce, enhance or annul the assessment. In the instant case the appellant has not prayed for reduction of the assessment. The appellant's challenge of the assessment order is merely based on a denial and not on any evidence. Based on such assertions the assessment cannot be killed for all times to come. Under such circumstances, hardly any interference is possible by this intermediate appellate forum." 9. The assessee then brought the issue in appeal before the Appellate Tribunal. The learned Members hearing the appeal differed in their approach. The learned Judicial Member was of the view that addition of Rs. 74,47,553 is required to be confirmed as the same was based on books of account and loose sheets submitted by the ex-accountant of the assessee. Merely because the ex-accountant was not cross-examined by the assessee, the addition could not be deleted. The learned Judicial Member further observed that no action was taken by the assessee against the said accountant by filing any complaint against her if it was a fact that books of account were fabricated to harass the assessee. The learned Judicial Member further held that "the bona fide of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard both the parties in this matter. It is painful to record that the matter for the period ending 31-3-1987 has dragged on for 16 years and yet remains undecided and inconclusive at first stage of assessment. Even after my order, the proceedings would be carried at the first stage of proceedings i.e., at assessment stage. Having regard to the proposed orders, I cannot alter this most unfortunate situation. The facts involved are not that complicated, yet on account of their in- appreciation, the matter has been dragged on and would remain so, I do not know for how many years to come. 13. The assessment of the assessee on total income of Rs. 28,730 was made on 8-2-1988 under section 143(1) of Income-tax Act. Later on Assistant Director of Income-tax (ADI) (Inv.) handed over cash book, ledger and loose paper allegedly belonging to the assessee. It is not brought on record as to where from the above referred to books and documents came into possession of the ADI. The name of the informant is not mentioned nor it is stated by the revenue authorities that the ex-accountant handed over the books to the authority and thus these came from a proper custody. No attempt was made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used by the Revenue against the assessee. It was revenue's evidence who wrote the books of account was well within knowledge of the revenue. If cross examination of the author or writer of the books was to be carried, it was to be done by the assessee and so called witness was to be produced by the revenue. Above facts which are basic were rightly appreciated by the learned CIT(A) and appropriate directions issued. Inspite of finality of above directions, these were not properly appreciated nor complied with. Having regard to above facts, appellate authorities should have passed appropriate orders advancing cause of justice. Several opportunities having already been granted to the revenue to prove the case, further opportunity was quite unnecessary. Yet granted again and again. 16. As a Third Member, my jurisdiction in the case is very limited. I have to agree with one of the proposed order of the Members so that there is a majority to dispose of the case in accordance with law in terms of section 255(4) of the Income-tax Act. In the circumstances narrated above, I agree with the course adopted by the learned Accountant Member. There is absolutely no question of holding that addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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