TaxTMI 
TaxTMI 
2025 (7) TMI 1379
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.... 2.1. The assessee has also raised additional ground of appeal which is as under: "The appellant prey honours to kindly allow admission of following ground as additional ground. The ground was raised before Ld. CIT(A), NFAC also and otherwise in view of the Honourable Supreme Court order in the matter of NTPC vs CIT (1998) 229 ITR 383(SC) legal ground can be raised before appellate authority. "Notice under section 148 was served to the appellant on 02.04.2016, and since the notice is time barred the assessment proceedings carried out are without jurisdiction, bad in law and are liable to be quashed." 3. Brief facts of the case are that the assessee is an individual. Information regarding huge cash deposit in saving bank account No. 3185002100021034 of Punjab National Bank, Lenin Sarani Branch, Kolkata on different dates from 03.03.2009 to 13.03.2009, was received from D.D.I.T(Inv) Unit-2(3), Kolkata. The account is in the name of Sumon Enterprise, Prop. Bimal Kumar Drolia. Therefore, a notice u/s 148 of the Act was issued on 29.03.2016, requiring the assessee to submit a true and correct return of income. In response to this, the assessee requested to treat ....
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....ection 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149 in the 1961 Act. A clear distinction has been made out between 'issue of notice' and 'service of notice' under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitations, jurisdiction becomes vested in the ITO to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In the present case, admittedly, the notice was issued within the prescribed period of limitation as 31-3-1970 was the last day of that period. Service under the 1961 Act is not a condition precedent to conferment of jurisdiction in the ITO to deal with the matter but it is a condition precedent to making of the order of assessment. As the ITO in the instant case had issued notic....
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....s statement dt. 09.03.2016 against notice u/s 131 issued by DDIT(Inv) Unit 2(3) Kolkata stated that Mr. Prem Narayan Khandelwal a practicing CA had directed him to open this account in PNB. The transaction made in PNB was neither related to him nor his business. The account was fully operated by Mr. Khandelwal and the appellant only used to get some commission from Mr. Khandelwal in cash which is very negligible of total transaction. The assessee used to sign on blank cheques as per direction of Mr. Khandelwal. The A.O also noted that from the perusal of bank account it appears that appellant's cash deposit started from 03.03.2009 to 13.03.2009 when on every alternate day cash was transferred to 4 companies namely Paramount Trader Pvt. Ltd., Sumita Exports Pvt Ltd, Kaushal & Co., Bhilai Pvt. Ltd., and S.H. Investment Pvt. Ltd. 6.4 However, during the course of assessment proceedings assessee took complete u turn and vide his letter dated 13.10.2016 stated that the cash deposit is out his sale proceeds of different items. But he failed to furnish any supporting documents and books of account to prove that deposits in bank pertains to his business transactions." 6. Th....
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....m constrained to concur with the AO's findings of fact and decisions thereof, more particularly in the absence of any meaningful and worthwhile submissions/documentations even during the instant appellate proceedings in this case to counter effectively the position adopted by the AO on the concerned issues and reduced in writing in the assessment order. 6.8 To sum up the above, the analysis of the cash deposited and other credit added in the appellant income is as under: The appellant deposited cash of Rs. 58,14,000/- in the bank accounts maintained by the appellant. The appellant found to be the owner of the money as established through statement received from banks. The nature and source of the cash deposited or other credit entries found in the bank statement were not explained by the appellant. The income earned by the appellant is not offered for taxation purposes and taxes due thereon are not paid. The appellant failed to offer any explanation during assessment proceedings as well as appellate proceedings, therefore, the cash deposit appearing in the bank statement remained unexplained. 7. The appellant failed....
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....mers were ever provided to the Assessing Officer. ■ The Assessing Officer made an addition under section 68 to the income of the assessee on ground that the credits appearing in the disclosed and undisclosed bank accounts of the assessee were unexplained, and since no details or explanation regarding the identity, source and genuineness of such deposits were submitted, the same were treated as unexplained cash credits. ■ On appeal, the Commissioner (Appeals) held that in case the assessee failed to identify the beneficiaries in that case the amounts credited in the bank account of the assessee would stand confirmed as unexplained cash credit under section.68. ■ On appeal, the Tribunal reduced the rate of 0.37 per cent as adopted by the Commissioner (Appeals) to 0.15 per cent by merely following its own order for earlier assessment years. ■ On revenue's appeal: 7.1. The Hon'ble High Court has held as under: "■ At the outset, the details of the credits in the disclosed and undisclosed bank accounts of the respondent-assessee amounting to Rs. 10.74 crores were not furnished by the respondent-assessee....
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....on of the respondent-assessee that the amount added is included in the assessment of the beneficiaries and, therefore, same cannot be added once again in the hands of the respondent-assessee cannot be accepted. There is no basis for such a submission made by the respondent-assessee, nor is it stated so before the Assessing Officer or the Appellate Authorities. Such a factual submission for the first time before this Court in a third appeal by oral argument across the bar cannot be permitted. [Para 19] ■ The Commissioner (Appeals) has adopted a fair approach by stating that if the respondent-assessee identifies the beneficiaries, then the rate of commission adopted should 0.37 per cent of such identified beneficiaries and if the respondent-assessee fails to identify the beneficiaries, then in that case, the sum credited in the bank accounts would stand confirmed under section 68. It is viewed that the Tribunal was not justified in directing 0.15 per cent of the total deposits (explained and unexplained) appearing in the bank accounts as income. The Tribunal has not given any reason as to why the directions of the Commissioner (Appeals) are wrong or erroneous. It is vi....
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....n so far as 3321 cases are concerned, they do not have the details of the customers. Thereby, the respondent-assessee has admitted that they are not able to explain the source of credits appearing in its bank statements. It is important to note that the respondent-assessee has executed transactions of crores of rupees to accommodate various parties. Still, many of these beneficiaries' details are unknown to the respondent-assessee. This is something which this Court cannot accept. [Para 23] ■ Such an explanation cannot be accepted more so from the respondent-assessee company who is claiming to have been engaged in the business of providing accommodation entries where crores of rupees are deposited and withdrawn. If the respondent-assessee does not have the details of the beneficiaries, then it cannot be understood how the money were deposited in the bank accounts of the respondent-assessee and withdrawn from such bank accounts without respondent-assessee knowing the details of these beneficiaries. The only person who can operate these bank account would be the respondent-assessee, who, at least at the time of withdrawing, would know to whom the amount withdrawn i....
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....udit report and return of income based on such documents was filed is not understandable. The profit and loss account and tax audit report can only be prepared and filed if the respondent-assessee has maintained books of account or for that matter any books. In none of the pleadings before the assessing authority and appellant authorities, the respondent-assessee pleaded that no books of account are maintained for the assessment year under consideration i.e. assessment year 2009-10. Therefore, the submissions made by the respondent-assessee have to be rejected that no books or books of account are maintained. [Para 30] ■ Section 68 was inserted in the 1961 Act and there was no corresponding provision in 1922 Act. The phrase 'books of an assessee' appearing in section 68 has to be interpreted by adopting updated construction in accordance with the changes in technology. Legislature is presumed to anticipate the developments and to intend the Act to be applied to such future developments. After the advent of computers, the businessmen records its transaction in computers and not in the 'books' as traditionally understood. In the statement recorded of th....
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....ks are maintained is required to be rejected. The data extracted from the computer of the respondent-assessee in which these transactions are recorded would constitute 'books of an assessee' for the purpose of section 68. Section 68 should be interpreted to mean books of an assessee to include the computer in which the business transactions are recorded and from which data was extracted on CD's. [Para 33] ■ The submissions of the respondent-assessee are tested on the premise that assuming the respondent-assessee maintains no books, whether addition can be made under section 68. The respondent-assessee is a company formed under the Companies Act, 1956. As per section 209 of the Companies Act 1956, books of account are required to be kept by the company. Corresponding section of 2013 Act is section 128. Section 44AA also requires a person carrying on business to maintain books of account and if the gross receipt or turnover exceeds prescribed limit, then the same are required to be audited under section 44AB. In the present case in the assessment order it is stated that tax audit report is filed by the respondent-assessee. [Para 34] ■ The res....
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....ce they are engaged in providing accommodation entry and therefore, the credits appearing in the bank cannot be assessed in its hands has to be accepted without the respondent-assessee giving details of the beneficiaries which they have flatly refused as recorded in the statement referred to hereinabove then the consequence would be that such unaccounted sum can never be brought to tax under the Act by the revenue authorities in the hands of none of the assessee/persons to whom such unaccounted sum belongs to. In the absence of any details provided by the respondent-assessee of the beneficiaries, the revenue will not be able to verify whether such credits really belong to those beneficiaries, in which case provisions of section 68 get attracted in the hands of the respondent-assessee. Any interpretation which would make admitted unaccounted income tax free based on the denial by the assessee/persons to give details has to be rejected. [Para 39] ■ The director of assessee operated through his web of shell companies and various admissions made by the respondent-assessee. It is also important to note that the director of the respondent-assessee in his answer to question....
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....ions for AY 2009-10 has been passed. If that is correct, then the CCIT should conduct an enquiry and fix the responsibility against the officer responsible for the same.[Para 44] ■ The assessee boldly submitted that the activities may amount to violations or crimes, but still under the tax regime applicable, no tax was payable. The argument on tax regime is found untenable. Still since the record and submissions indicate prima facie commission of serious economic crimes, investigations must be undertaken by the law enforcement agencies.[Para 45] ■ By ignoring the material on record, the Court would be failing in its duty and its oath if the activities of such persons are not directed to be investigated into and taken to their logical conclusion. Inaction only encourage more persons to engage in illegal activities as admitted by the respondent-assessee during hearing. As a Court of law, such a thing to happen in the future can not be permitted or at least this Court should ensure that action against persons involved in such activities should be a deterrent for other persons to think on such line.[Para 46] ■ This is a case where the low de....