TaxTMI 
TaxTMI 
2005 (7) TMI 570
X X X X Extracts X X X X
X X X X Extracts X X X X
....nation from the assessee. The CIT(A) should have upheld 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 ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the IT Act in April 1995 did not reveal 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 offe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 reason to disbelieve the statement of Sri D. Ramachandran Nair that the mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re 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 total is written on the back of the FDR No. 537. It is evident that all the four FD's have been encashed by single person. This is possible only if the depositor is the same and encashed by the same depositor. This is despite the fact that the made-to-look depositors are from different p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. 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 from Shri D. Ramachandran Nair, ex-manager of the deceased assessee. He further contended that the ground in respect of the invoking of provisions of section 69 of the Act by Assessing Officer for making additions after the death of the deceased assessee was not at all seriously consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 after taking a lot of pains and on the basis of the said detailed investigation and on the basis of this evidence, the additions under section 69/69A were made by Assessing Officer. DR also submitted that opportunity to the present assessee given for cross-examining Shri Ramachandran Nair, e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 started by the Assessing Officer on 22-11-1996 and subsequently notice under section 148 was issued on 18-12-1996 which was served on Smt. Rajabai B. Kadam, mother of the assessee as legal heir, since in the meantime, the assessee had died on 16-4-1995. On the facts of the said case, the Tribunal held tha....