Brief of the Case
Calcutta High Court held In the case of Late Sushil Modi vs.CIT that the contention of the assessee that he need not prove his case and the assessing officer is bound to find corroboration by making independent enquiry is neither based on law nor is supported by reason. The case is clearly covered by Clause – (g) of Section 114 of the Evidence Act which provides that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it.
Facts of the Case
During the search of the assessee, a Savings Bank Account maintained with Canara Bank was detected. It was also found that a sum of Rs.2, 01,000/- had been deposited in the aforesaid bank account. The defence as regards the aforesaid sum of rs.2,01,000/- was that the deposit was made from out of the cash balance available with the assessee. It was submitted that AO. erred in having treated the cash deposit in Canara Bank as unexplained cash credit u/s 69 while the source of such deposit was duly considered in the final accounts of the appellant.
Contention of the Assessee
The learned counsel for the assessee submitted that the block assessment order shows lack of required enquiry as to the sources of deposits even when most of the deposits of salary are in the bank accounts like in the case of account with PNB, New Delhi and Dena Bank, New Delhi, represented by clearing cheques deposited for which necessary enquiry was possible with the Bank where deposits were found and the Banks from which the amount were debited for credit to the assessee’s account. Such enquiry was not even attempted.
He further submitted that the conclusions are mostly on the basis of A.O.’s statement that assessee was not able to explain. Such conclusion can indicate either absence of explanation or explanation given verified to be not tenable. However, such conclusion has to be based on result of specific post such enquiry and assessee’s explanation with regard to result of such enquiry. Therefore the block assessment order failed to rise to the requirement of a speaking order based on result of post of such enquiry and assessee’s statement on results of enquiry put across to the assessee.
An Assessing Officer is different from a Civil Court as held in the decision of Re: Gee Vce Enterprises Vs-Addl. CIT (New Dehli) reported in (1975) 99 ITR 375. Lack of necessary enquiry makes an assessment order erroneous as held by the Hon’ble Supreme Court of India in Malabar Industrial Corporation (2000) 243 ITK 83 (SC).
Held by ITAT
In order to consider as to whether the addition of Rs.2,01,000/- is in accordance with the provisions relating to the block assessment, it would be necessary to consider as to which addition is based on the material found during the course of search. If the addition is based on some material found in the course of search, then the second question that arises for consideration is as to whether the provisions of Sec.69 are attracted in the case of block assessments and finally it is to be considered as to whether the assessee had satisfactorily explained the source of the deposits in the bank account and not whether the addition was justified in block assessment.
In this case, the existence of Savings Bank Account No. 4790 with Canara Bank was detected as a result of search and the assessee had owned the said account. Therefore, the foundation for assessment of Rs.2,01,000/- is the material found in the course of the search.
Held by High Court
During the search and seizure it was found that the Savings Bank Account No. 4790 maintained with Canara Bank. It was also found that a sum of Rs.2,01,000/- had been deposited in the aforesaid bank account. It is not disputed that a sum of Rs.2,00,000/- was deposited on 7.4.1986 and the balance sum of Rs.1000/- was deposited on 21.1.1987.. The deposit was admittedly made during the financial year 1986-87 corresponding to assessment year 1987-88.
From the written submission filed by the ld counsel of the assessee it does not appear that even before us there is any attempt to offer any explanation with regard to the two deposits made with Canara Bank. We have not been impressed by the submissions by ld counsel of the assessee for more than one reason. In the first place, no such case was made out before the learned Tribunal. Even assuming that investment of a sum of Rs.2,01,000/- has been reflected in the final accounts of the assessment year 1987-88 and has duly been offered for taxation, nothing was easier for the assessee than to produce a copy thereof before us which may have tilted the balance in his favour. The fact that the assessee did not take any such step leaves no doubt in our mind that the submissions are not true. The investment discovered during the search and seizure has not been disputed on facts. Therefore, it was a clear case where Section 69 of the Income Tax Act would be applicable.
Also, the ld counsel of the assessee submitted that the deposit had been reflected in the final accounts of he assessment year 1987-88. The explanation offered before us could have been proved by the assessee by producing his final accounts of the assessment year 1987-88 but he omitted to do so. So, it is presumption that no proof submitted even if it is there will be treated unfavorable against the party.
Accordingly appeal of the assessee dismissed.