BIMAL KUMAR DROLIA,HOWRAH V. ITO, WARD-43(2), KOLKATA

ITA 347/KOL/2024

AI Insights

The case involves Bimal Kumar Drolia, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 58,14,000 to his income for the assessment year 2009-10. The addition was based on unexplained cash deposits in a bank account linked to Drolia. The Income Tax Officer (ITO) had initially assessed the income and made the addition, which was upheld by the CIT(A). Drolia's appeal to the Tribunal challenged the jurisdiction of the ITO and the validity of the notice under section 148 of the Income Tax Act, 1961, but these were dismissed. The Tribunal found that the notice was validly issued within the limitation period and that the ITO had jurisdiction over the case. The Tribunal also dismissed the assessee's arguments regarding the nature of the deposits, affirming that the assessee failed to substantiate the source of the deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708386 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2009-2010
• Other Referred Cases: NTPC vs CIT, R.K. Upadhyaya v. Shanabhai P. Patel, Calcutta Discount Co [41 ITR 191 (SC)], Principal Commissioner of Income-tax vs. Buniyad Chemicals Ltd. [2025] 172 taxmann.com 462 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Peak credit; Onus to prove; Period of limitation; Accommodation entries; Time period of passing order
• Section: 148; 142(1); 68; 131

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia Vs. ITO, Ward-43(2), Kolkata (Appellant) (Respondent) PAN: ADLPD7606B Appearances: Assessee represented by : B.K. Agrawal. Department represented by : Kapil Mandal, Addl. CIT (DR). Date of concluding the hearing : 23-April-2025 Date of pronouncing the order : 18-July-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2009-10 dated 22.12.2023, which has been passed against the assessment order u/s 147/143(3) of the Act, dated 10.11.2016. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: Page | 2 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 2 of 19 “1. Ld. CIT(A) [NFAC] has erred in confirming the addition on account of cash deposit in bank amounting to Rs.58,14,000.00 in his bank account. 2. The appellant craves leave to add, amend ground of appeal either during of before the hearing of the appeal.” 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 the earlier return filed as return filed in response to notice u/s 148 of the Act. Thereafter, notices u/s 143(2) and 142(1) of the Act dated 13.05.2016 and 06.09.2016, respectively along with several letters were also issued and served upon the assessee to prove with direct evidence the claim of cash deposits made out of sales. In response, the assessee filed only date-wise sales details in plain paper and did not substantiate it with documentary evidence, which was not accepted by the Assessing Officer (hereinafter referred to as Ld. Page | 3 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 3 of 19 'AO'). The Ld. AO stated that the assessee’s claims were all contradictory in nature and did not match with any circumstantial evidences. Subsequently, the Ld. AO passed the assessment order u/s 147/143(3) of the Act on 10.11.2016 and income was assessed at ₹59,69,530/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who, vide order dated 22.12.2023, dismissed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal. 4. Rival submissions were heard and the record and the submissions made have been examined. At the outset, the Ld. AR submitted that he was not pressing the additional ground regarding service of notice u/s 148 of the Act. This issue also arose before the Hon'ble Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Patel [1987] 33 Taxman 229 (SC) wherein the facts were that the period of limitation for reopening the assessment under section 147(b) was going to end on 31-3-1970. On that day, i.e., 31-3-1970, the ITO issued a notice to the assessee under section 147(6) by registered post which was received by the assessee on 4-3-1970. On writ, the High Court relied upon the decision of the Supreme Court in Banarsi Devi v. ITO. [1964] 53 ITR 100 wherein it was held that section 34 of the 1922 Act, conferred jurisdiction on the ITO to reopen an assessment subject to service of notice within the prescribed period. Therefore, service of notice within limitation was the foundations of jurisdiction. The High Court, accordingly, quashed the notice for reassessment issued under section 147(6). On appeal to the Hon'ble Supreme Court, it is held as under: “The scheme of the 1961 Act so far as notice for reassessment is concerned, is quite different. What used to be contained in section 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 Page | 4 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 4 of 19 '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 notice within limitations, the appeal was to be allowed and the order of the High Court was vacated.” 4.1 Since in the instant case, the notice u/s 148 of the Act was issued for AY 2009-10 on 29.03.2016, the same was issued within a period of six years from the end of the assessment year and therefore, the notice was validly issued. The same did not require to be served within the limitation period of six years and only the issuance of the notice during the limitation period was required. Hence, the additional ground is dismissed as ‘not pressed’. 5. Before us, the Ld. AR further submitted that the assessee’s case was earlier being assessed with the ACIT, Circle-43 and it was transferred to the ITO, Ward-43(2), Kolkata. The assessee relied upon the SO 275(E) dated 22.10.2014. No such ground relating to the jurisdiction of the Ld. AO has been raised before us in the Grounds of appeal. Regarding the question of jurisdiction with the ITO, Ward-43(2), Kolkata, the Ld. AR submitted that the jurisdiction was transferred on account of PAN as the income pertained to the jurisdiction of the ITO. The assessee claimed to be a name lender and an entry operator in whose account cash was deposited. The Ld. AR’s attention was drawn to paras 6.3 and 6.4 of the order of the Ld. CIT(A), which are extracted as under: Page | 5 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 5 of 19 “6.2 I have gone through the facts of the case, assessment order and the submissions and case laws relied upon by appellant. In the instant case, the appellant had deposited cash appearing in the bank accounts stated above of Rs.58,14,000/-, which are not recorded in the books of account of the appellant. The nature and source of such deposits made in the bank account were also not explained. The appellant is found to be the owner of the money as established from the statement obtained from the bank and the appellant didn't offer any acceptable and cogent explanation regarding the source of such money found in its bank account. Moreover, the appellant has given contradictory statements. As the true and correct return of income is not filed for the year under consideration, therefore, the income earned has not been offered and taxes due are not paid. 6.3 It is very pertinent to mention here that, appellant has changed his stance again and again before the authorities for explaining the cash deposits. The A.O noted that Sri Bimal Drolia in his 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. The Ld. DR, on the other hand, relied upon paras 6.5 and 6.7 of the order of the Ld. CIT(A) and stated that the assessee had no evidence for the cash deposited in the bank account in the assessee’s name and there was no justification/explanation for the source of the same. The relevant paras from the order of the Ld. CIT(A) are extracted as under: “6.5 During appellate proceedings, as per grounds of appeal and statement of facts so filed the appellant claimed that he is running a business of scrap Page | 6 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 6 of 19 cottons and maintains proper books of accounts. But in pursuance to the hearing notice u/s 250 in the submission uploaded on 12.12.2023 the appellant again changed his stance that that Shri Khandelwal asked the appellant to be a dummy proprietor in a company for which he was paid. The appellant has also provided a copy of cheating complaint against Shri Khandelwal before the Police authorities. The copy of complaint letter is reproduced as below: {The same is scanned and pasted in the order} 6.6 I have perused the complaint letter which is filed by the appellant. A plain reading of the letter itself establish that appellant himself is owning that the amount deposited in is his account pertains to him and the Mr. Prem Khandelwal has not refunded his money. Thus in a way it's a self confession of appellant where he himself admitting that amount in his bank account is his own money. Moreover in the complaint filed the appellant has nowhere denied that M/s Sumon enterprises is not his concern. 6.7 In this entire scenario, the appellant is changing his stance again and again as per his own convenience. But the moot point is about the cash deposits in the bank account which is in appellant's name and appellant failed to explain the sources of these cash deposits. It is, thus, evident that the appellant has no evidence to substantiate the grounds taken and it has not even once argued with any supporting. relevant and cogent arguments/averments. The appellant has shown dubious conduct The submission/contention made vide the statement of facts/grounds of appeal itself shows that appellant has tendency to change his stand as per his convenience to befool the authorities. The AO after considering the same has duly rejected or found without any merit leading him to add the same i.e., the additions made in the said assessment order. I am 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. Page | 7 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 7 of 19 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 to offer any explanation during assessment proceedings as well as appellate proceedings. The burden of proof lies on the appellant to explain the nature and source of bank deposits. Where the onus is upon the assessee to prove the fact, the assessee must place all relevant material to prove that fact whenever he is asked to furnish the same. The Hon'ble Supreme Court in the case of Calcutta Discount Co [41 ITR 191 (SC.)] has held that it is the duty of assessee to produce the books of account as well as all primary facts necessary for making the assessment at the earliest point of time. Hence, in the absence of any submission from the assessee and incomplete documents, the correct income of the assessee cannot be deduced. 7.1 Therefore, in the prevailing circumstances of the case, I find no infirmity in the action of the AO of addition of Rs.58,14,000/-. Consequently, the Ground Nos. 1 to 10 are dismissed. 8. In the result, the appeal of the appellant is dismissed.” 7. It was submitted by the Ld. AR that it is informed by the assessee that there has been no contact with Mr. Prem Narayan Khandelwal till date. The Ld. AR argued that the peak credit should be added instead of adding the entire cash deposits in the bank account and this was submitted as an alternative argument. However, it was conveyed to him that the theory of peak credit would be applicable where there is simultaneous deposit and withdrawal of money in cash in the same bank account and it was for the assessee to establish that the money withdrawn was the same which was subsequently deposited, which does not appear to be the case of the assessee as no such correlation has ever been filed before the lower authorities. In this respect, it is relevant to consider the decision of the Hon'ble Bombay High Court in the case of Principal Commissioner of Income-tax vs. Buniyad Page | 8 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 8 of 19 Chemicals Ltd. [2025] 172 taxmann.com 462 (Bombay)/[2025] 304 Taxman 560 (Bombay)[17-03-2025] wherein the facts were as under: “■ The assessee-company was engaged in providing accommodation entries. During the assessment proceedings, the assessee admitted that he was merely an accommodation entry provider, and the receipts and payments appearing in the bank accounts were of the customers from whom amounts were received for giving accommodation entries. However, no details of such customers 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 during the assessment proceedings. If the details of the credits appearing in the disclosed and undisclosed bank accounts of the respondent-assessee have not been explained, then there is no fault in the action of the Assessing Officer in making the addition. No submissions have been made that details of these credits are not available with the respondent-assessee. These credits have been extracted from the computer of the respondent-assessee and copied on CD as per the statement recorded. [Para 16] ■ Section 68 requires an assessee to explain the credits by providing the identity, creditworthiness and genuineness of the credits. It was incumbent upon the respondent-assessee to give the details of these credits because unless the details of these credits are provided, it Page | 9 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 9 of 19 cannot be ascertained as to whether the credits appearing belong to the customer of the respondent-assessee. Merely because the respondent-assessee states that he is only an accommodation entry provider and therefore the credits in the respondent-assessee's bank accounts belong to the customers to whom the accommodation entries were given cannot absolve the respondent-assessee from its obligation to provide the details. It is one thing to boldly and even proudly admit that a racket for providing accommodation entries was being operated but quite another to evade statutory liability or taxes based upon such assertion. [Para 17] ■ Even in the absence of provisions of section 68 (the said section being only enabling provision), credits appearing in the bank accounts of an assessee could be added as unexplained income of such an assessee if such assessee fails to explain the details of the source from where such deposits are made. The submission of the respondent-assessee that in case of many deposits, he does not know the customer who has deposited money in its bank account is a submission which has to be rejected at the outset. Any law does not support such a contention and cannot appeal to the conscience of the Court. [Para 18] ■ Before the Assessing Officer, the respondent-assessee has not made any submissions backed by any document to show that the credits appearing in the bank account for assessment year 2009-10 have been assessed in the hands of the beneficiaries and, therefore, no addition should be made. If that be the case, the submission 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 viewed that the Tribunal did not consider the issue from the proper perspective. The addition is made by the Assessing Officer and confirmed Page | 10 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 10 of 19 by Commissioner (Appeals) under section 68 as 'income from other sources' and under section 68 the unexplained credit in books is treated as income. [Para 20] ■ Although it was the case of the respondent-assessee that they are only accommodation entry providers and only certain percentage should be taxed as income, in the assessment order the addition is made since the respondent-assessee failed to explain the credits appearing in its bank account. The Assessing Officer never accepted in the assessment order that only certain percentage of such credit should be assessed as income. Even the Commissioner (Appeals) directed to adopt commission rate only qua identified beneficiaries and not all the beneficiaries. In any case, taxation of commission income and taxation of unexplained credits are two different things. Therefore, the same cannot be mixed to contend that only commission income should be taxed, not unexplained cash credits. [Para 21] ■ The Tribunal has not given any reasons as to if the respondent- assessee does not explain the beneficiary's identity, then why the whole amount should not be added under section 68, but only 0.15 per cent of the said deposit. It is viewed, therefore, the Tribunal has adopted a very casual approach to such a serious matter of rampant tax evasion by merely saying issue is covered. In such cases Tribunal should not go by the concession of the assessee but it was their duty to examine the issue in proper perspective since Tribunal is a final fact finding authority under the Act. It is said so because of the admission made by the respondent-assessee in the statement of its director recorded under section 131 on which heavy reliance is placed by the respondent-assessee was not even considered by the Tribunal. [Para 22] ■ In question No.2, the director of the respondent-assessee has admitted that he is the director of the respondent-assessee, and therefore, the statement is made in that capacity. In the said question, the respondent- assessee has admitted that they are engaged in the business of providing accommodation entries by charging a commission of 0.15 per cent. In answer to question No.7, the respondent-assessee admitted that in 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 Page | 11 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 11 of 19 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 is given. In the absence of any details of such beneficiaries, the submissions of the respondent-assessee that even if the credits are not explained or details are not given, still such credits cannot be added in the hands of the respondent-assessee cannot be accepted. [Para 24] ■ The respondent-assessee, during the hearing handed over an order giving effect to the Tribunal's order for the assessment year 2003-04. It cannot be understood how the said order giving effect for assessment year 2003-04 is of any assistance for considering the appeal for assessment year 2009-10 and more so when the same does not show that the sum added in the assessment has been assessed in the hands of the beneficiaries for assessment year 2009-10. [Para 28] ■ The respondent-assessee, thereafter relied upon the decision of the Co- ordinate Bench of this Court in the case of CIT v. Bhaichand N. Gandhi [1982] 11 Taxman 59/[1983] 141 ITR 67 (Bombay) in support of his submission that bank statement would not constitute 'books of an assessee' and therefore, the provisions of section 68 which requires the credits in the books of an assessee are not attracted in the present case and therefore, no addition is required to be made based on credits appearing in the bank statements. He submits that since the respondent-assessee is engaged in illegal business, he is not maintaining any books of account or any books for that matter and therefore, even if the provisions of some other Acts are violated, no addition could be made under section 68. [Para 29] ■ It is viewed that the above submissions made by the respondent-assessee are required to be rejected for more than one reason. In answer to question No.3 of the statement recorded of the director, respondent-assessee has admitted that books of account are maintained. The Assessing Officer in the assessment order has mentioned that the respondent-assessee has prepared the profit and loss account and has also obtained a tax audit report and shown a loss in the profit and loss account. Based on this profit and loss account and tax audit report, a return of income is filed. If the contention of the respondent-assessee is to be accepted that the respondent- assessee has not maintained any books of account or for that matter any books, then how the profit and loss account was prepared, and tax audit Page | 12 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 12 of 19 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 the director of the respondent- assessee, he has stated that the data appearing in 2 CDs are extracted by the investigating wing from books of account. Once more, it is reiterated that the data is extracted from the CDs. He has admitted that the contra entries appearing are entries in favour of beneficiaries. These contra entries are the entries which admittedly are prepared by director of the respondent- assessee. The director of the respondent-assessee has further admitted that whatever details he has, the same, are reflected in the CDs and to the same effect. [Para 31] ■ On a reading of various answers given by director of the respondent- assessee, it is admitted that books of account are maintained by the respondent-assessee and from those very books of account the revenue has extracted the data by copying the same on 2 CDs. This statement has been given on oath, and respondent-assessee has heavily relied on this very statement in his submissions before this Court. It is viewed that based on above, director of respondent-assessee has admitted that the respondent- assessee has maintained the books of account. Therefore, it is viewed that the contention of the respondent-assessee that an addition cannot be made under section 68 on the ground that the respondent-assessee has not maintained books and the bank statement cannot be treated as books is self-destructive in itself since, he has admitted that books of account are maintained and the data have been extracted from those very books of account and based on this data, addition has been made. [Para 32] ■ Even otherwise, the phrase 'books of an assessee' should be construed to mean data fed by the assessee in its computer from which the contents are copied on CDs, which is based on the entries recorded in the computer. The Page | 13 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 13 of 19 definition of 'books or books of account' in section 2(12A) as existed for assessment year 2009-10 includes ledgers, day-books, cash books, account books and other books, whether kept in the written form or as printouts of data stored in a floppy, disc, tape or any other form of electromagnetic data storage device. It is viewed that based on this definition read with the answers to various questions in the statement, in the facts of the present case submission of the respondent-assessee that provisions of section 68 are not attracted because no books 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 respondent-assessee cannot be heard to say that the provisions of section 68 cannot be made applicable to its case because the respondent- assessee does not maintain the books. The person who is required to maintain the books of account and does not maintain books of account cannot turn around and contend that because he has not maintained books or books of account, provisions of section 68 which requires credits in the books of an assessee cannot be made applicable. It is settled position that the person cannot take the benefit of its own wrong or violation. When it comes to provisions of section 68, such a contention which is self-defeating and which will make the provision of section 68 otiose cannot be accepted. If the contentions of the respondent-assessee are accepted, then it will amount to providing escape route to an assessee who is unable to explain the credits but still goes scot-free by arguing that since although he is required to maintain books, but because he has not maintained books, provisions of section 68 cannot be made applicable. Indeed, this Court cannot accept such a submission and provide an escape route by making the provisions of section 68 redundant. [Para 35] Page | 14 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 14 of 19 ■ It is not acceptable that because the respondent-assessee is engaged in the business of providing accommodation entry, revenue cannot assess the credits appearing in its bank account which are the money deposited by its customers. The respondent-assessee, to succeed in this submission, must give verifiable details of these customers; only then can the revenue verify whether the credits appearing belong to such customers. The Commissioner (Appeals), therefore, gave the relief by observing that an estimate of income will be made only in case of identified beneficiaries and balance credits would be assessed under section 68. [Para 37] ■ The respondent-assessee cannot contend that they will not give details of beneficiaries, but at the same time, credits cannot be assessed in its hands. It is wondered how the revenue can find out to whom the credits belong to unearth unaccounted income. The respondent-assessee cannot act as a shield for beneficiaries by making such a submission and at the same time refuse to pay taxes for the unexplained amounts in its bank accounts. [Para 38] ■ If the submissions made by the respondent-assessee that since 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 No.14 of the statement has admitted that he was a practicing Chartered Accountant but has surrendered the Certificate of Practice (COP) in 1993 and thereafter is only engaged in the business of providing accommodation entries. He has also stated that search action has been taken against him/his companies more than once.[Para 40] Page | 15 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 15 of 19 ■ A Chartered Accountant who may not be holding a COP but, if involved in illegal activities, as to whether any action is or can be taken by the Institute of the Chartered Accountants of India against such a person. Suppose no action is taken against such a person. In that case, the Institute of Chartered Accountants of India is directed to inquire whether such a person is liable for any professional misconduct as per the Chartered Accountant’s Act, 1949.[Para 41] ■ In answer to question no.15, the director through the respondent-assessee company has admitted that the bills/vouchers and other documents given for providing accommodation entries are not genuine. This would mean that he has admitted that he was engaged in the offence of commission of 'fraud'. If so, and based on such fraud, it is necessary to enquire whether he has committed an offence under the Indian Penal Code/BNS, 2023. therefore, it is directed that a necessary investigation be conducted by the concerned police station against the director to ascertain the offence, if any, committed under Indian Penal Code and the consequent action.[Para 42] ■ The director, in this statement, has also admitted that he has abetted in evasion of tax by various beneficiaries. He has also admitted that he cannot give details of the beneficiaries. The director has also admitted that by engaging in accommodation entry, he has engaged in the laundering of money. Therefore, the authorities under the Prevention of Money Laundering Act, 2002 should also investigate Shri Choksi on these activities.[Para 43] ■ This Court would also like to know from the Chief Commissioner of Income Tax in charge of Mumbai whether any prosecution is launched under the Income Tax Act and, if not, why it is not launched. If launched, what is the status of such prosecution and what steps the revenue has taken to expedite the prosecution hearings? ■ The respondent assessee informed that no order giving effect to CIT (A)'s directions 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 Page | 16 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 16 of 19 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 deterrent effect of the law has worked on a professional talent to become a habitual economic and financial offender, and this should be stopped in the larger interest of our country.[Para 47] ■ Insofar as question (b) is concerned, the Commissioner (Appeals) in its order directed the Assessing Officer to adopt the rate of commission at 0.37 per cent if the beneficiaries are identified by the respondent-assessee. The revenue has not challenged the said rate of 0.37 per cent by filing an appeal to the Tribunal. However, the respondent-assessee did challenge the adoption of this rate of 0.37 per cent. It was the contention of the respondent- assessee that the appropriate rate should be 0.15 per cent. The Tribunal followed its earlier order and opined 0.15 per cent to be applied as commission. [Para 48] ■ It is viewed that what rate should be adopted as commission would be a pure question of fact and therefore, insofar as the rate of commission with respect to those credits which are identified by the respondent-assessee is concerned same should be taken at 0.15 per cent. [Para 49] ■ To conclude, question (a) is answered in favour of the appellant-revenue and against the respondent-assessee. Insofar as question (b) is concerned, the same is answered against the appellant-revenue and in favour of the respondent-assessee. Consequently, the Tribunal's order is reversed and the Commissioner (Appeals) order is restored subject to retaining the rate of commission at 0.15 per cent as adopted by the Tribunal. [Para 50]” {emphasis supplied} 8. Similar facts as in the case of Buniyad Chemicals Ltd. (supra) are applicable in the case of the assessee. Therefore, since the assessee failed to explain the source of the cash deposits in his bank accounts amounting to ₹58.14 Lakh and as no justification for the nature and source of the cash deposits was made either before the Ld. AO or even before the Ld. CIT(A) and the money deposited has been transferred to Paramount Trader Pvt. Ltd., Sumita Exports Pvt. Ltd., Kaushal & Co. Bhilai Pvt. Ltd. and S.H. Investment Pvt. Ltd., the same remained Page | 17 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 17 of 19 unexplained. Further, the assessee was not able to substantiate the source of the deposits and the assessee was changing his stance while making deposition u/s 131 of the Act before the DDIT(Inv.) and subsequently at the time of scrutiny proceeding before the Ld. AO and both the submissions were contradictory as earlier he had stated that Mr. Prem Narayan Khandelwal, a practicing CA, had directed him to open this account in PNB and the transactions made in PNB was neither related to him nor to 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 and he used to sign on blank cheques as per direction of Mr. Khandelwal; but at the time of assessment proceedings he stated the same to be out of his sale proceeds of different items but he failed to furnish any supporting documents and books of account to prove that deposits in bank pertain to his business transactions. Further, the bank account was not disclosed to the Revenue, therefore, the source of the cash deposited in the undisclosed bank account was not satisfactorily explained nor this account was disclosed in the return of income for AY 2009-10, therefore, there is no justification to interfere with the findings of the Ld. CIT(A) whose findings confirming the order of the Ld. AO are hereby confirmed. Thus, the Ground No. 1 of the appeal relating to the addition made is hereby dismissed and the order of the Ld. CIT(A) is confirmed. 8. Ground No. 2 is general in nature and does not require any separate adjudication. Page | 18 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 18 of 19 9. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on 18th July, 2025. Sd/- Sd/- [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 18.07.2025 Bidhan (Sr. P.S.) Page | 19 I.T.A. No.: 347/KOL/2024 Assessment Year: 2009-10 Bimal Kumar Drolia. Page 19 of 19 Copy of the order forwarded to: 1. Bimal Kumar Drolia, 3, Tarachand Ganguli Street, Maa Sharda Apartment, Flat No. 202, Belur, Howrah, West Bengal, 711202. 2. ITO, Ward-43(2), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "