Vinod Kumar Bansal, Pune V. ACIT, Circle-5, Pune

ITA 1615/PUN/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6980 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-09-2017
• Assessment Year: misc
• Appeal Filed On: 23-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Principle of natural justice; Block assessment; Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1615 /P U N/20 1 3 BLOCK A SSESSMENT YEAR : 1997 - 98 TO 2003 - 04 VINOD KUMAR BANSAL, M/S. MZSK & ASSOCIATES, CHARTERED ACCOUNTANT S LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 . / APPELLANT PAN:A CSPB8345D VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 5, PUNE . / RESPONDENT / APPELLANT BY : SHRI NILESH KHANDELWAL / RESPONDENT BY : S HRI VIVEK AGGARWAL / DATE OF HEARING : 18 . 09 .2017 / DATE OF PRONOUNCEMENT: 11 . 1 2 .2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - III , PUNE, DATED 3 1.0 7 .201 3 RELATING TO BLOCK ASSESSMENT YEAR 1997 - 98 TO 2003 - 04 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 158BC OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 2 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, THE ORDER COMMUNICATED TO AND RECEIVED BY THE APPELLANT AFTER 31 ST DEC, 2011 BE HELD AS NON EFFECTIVE IN LAW AND BEYOND THE TIME LIMITATION AND IS NOT TENA BLE IN LAW. THE ORDER FINALIZED BY THE AO AND CONFIRMED BY THE 1 ST APPELLATE AUTHORITY BE CANCELLED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. WITHOUT PREJUDICE TO GROUND NO:1 AND IN THE ALTERNATIVE, IF THE ORDER PASSED BY THE AO IS HELD AS ENFORCEABLE AND TENABLE IN LAW. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT ADDITION OF RS.2,00,000/ - FOR INVESTMENT MADE BY THE AO AND CONFIRMED BY THE 1 ST APPELLATE AUTHORITY PERTAINING TO THE ALLEGED INVESTMENT IN UNEXPLAINED FDS AND THAT OF RS.29,760/ - PERTAINING TO THE INTEREST ALLEGED TO HAVE BEEN RECEIVED ON THE SAID FDS AND THAT OF RS.17,40,197/ - PERTAINING TO THE ALLEGED INVESTMENT IN FICTITIOUS FDS IS IMPROPER, UNWAR RANTED, UNJUSTIFIED, CONTRARY TO THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE ADDITION MADE BY THE AO AND CONFIRMED BY THE 1 ST APPELLATE AUTHORITY ON THESE ISSUES BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 3. THE ASSESSMENT ORDER PASSED BY THE AO AND CONFIRMED BY THE 1 ST APPELLATE AUTHORITY IN VIOLATION OF RULES OF NATURAL JUSTICE STANDS VITIATED AND NOT TENABLE IN LAW. THE ORDER SO PASSED BE CANCELLED BEING IN VIOLATION OF RULES OF NATURAL JUSTICE. 3. T HE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND OF APPEAL NO.2 WITHOUT PREJUDICE BASIS TO GROUND OF APPEAL NO.1 IS AGAINST MERITS OF ADDITION MADE BY THE ASSESSING OFFI CER AND UPHELD BY THE CIT(A). 5. BRIEFLY, IN THE FACTS OF THE CASE, THIS IS SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUNAL. THE ASSESSMENT COMPLETED FOR BLOCK PERIOD 1997 - 98 TO 2003 - 04 (PART) WAS SET ASIDE BY THE TRIBUNAL VIDE ITS ORDER DATED 28.02.2011 . THE ISSUES WHICH WERE SET ASIDE BY THE TRIBUNAL WERE AGAINST ADDITION OF RS.2 LAKHS ON ACCOUNT OF FDRS DISCOVERED DURING SEARCH ACTION FROM THE PREMISES OF M/S. AGRASEN URBAN CO - OP. BANK LTD. AND RELATABLE INTEREST OF RS.29,760/ - ON THE SAID FDRS . ANOTHER ADDITION OF RS.17,40,197/ - WAS MADE ON ACCOUNT OF INVESTMENT IN FDRS WHICH WERE FOUND IN FICTITIOUS NAMES AND WERE ALLEGED TO BE OWNED BY THE 3 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL ASSESSEE. THE ASSESSING OFFICER HAD MADE THE SAID ADDITIONS ON THE BASIS OF FACTS AND EVIDENCES RECORDED DURING SEARCH OPERATION AND THE SAID ADDITIONS WERE CONFIRMED BY THE CIT(A). HOWEVER, THE TRIBUNAL HELD THAT SINCE THE DOCUMENTS, BASED ON WHICH ADDITION WAS MADE IN THE HANDS OF ASSESSEE WERE DIFFERENT FROM THE POSSESSION OF BANK RUN BY THE DIRECTOR I.E. ASSESSEE, THE RESPONSIBILITY LIES ON THE ASSESSEE OR THE BANK TO DEMONSTRATE THAT THE OWNERSHIP OF IMPUGNED FDRS WAS NOT WITH THEM. THE ONUS WAS ON THE BANK OR THE ASSESSEE TO DEMONSTRATE TOWARDS ACTUAL OWNERS OF FDRS . THE ASSESSEE THUS, WAS DIRECTED TO FURNISH THE REQUISITE FACTS RELATING TO OWNERSHIP OF FDRS BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS. THE ASSESSING OFFICER THUS, ASKED THE ASSESSEE TO EXPLAIN ABOUT THE OWNERSHIP OF FDRS OF RS.2 LAKHS AND RS.17,40,197/ - , RESPECTIVELY. THE A SSESSEE WAS ALSO ASKED TO PRODUCE CONCERNED PERSONS FOR CONFIRMATION. IN RESPONSE THERETO, THE ASSESSEE EXPLAINED THAT FDRS WERE RECOVERED FROM THE POSSESSION OF BANK, HENCE, ONUS OF PROVIDING THE SOURCE WAS WITH THEM. FURTHER, THE ASSESSEE CLAIMED THAT HE WAS NOT THE DIRECTOR INCHARGE OF YERWADA BRANCH OF THE BANK FOR THE PERIOD TO WHICH FDRS RELATED. THE ASSESSEE ALSO REQUESTED FOR CROSS - EXAMINATION OF EVIDENCES. THE CASE OF ASSESSEE WAS THAT HE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS - EXAMINE THE BANK EMPLOYEES , WHO HAD GIVEN THE STATEMENT DURING SEARCH ACTION. THE SAID CONTENTION OF ASSESSEE WAS FOUND TO BE BASELESS BY THE ASSESSING OFFICER, SINCE IN ORDER DATED 29.11.2004, THE ASSESSING OFFICER HAD CLEARLY MENTIONED OF PROVIDING COPIES OF RELEVANT DO CUMENTS AND STATEMENTS OF BANK EMPLOYEES RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS AND ALSO POST - SEARCH ENQUIRIES. THE ASSESSEE WAS ALSO ALLOWED TO CROSS - EXAMINE THE BANK EMPLOYEES. VIS - - VIS SHOW CAUSE NOTICE WAS ISSUED AS TO WHY THE SAID AMOUNT SHOULD NOT BE ADDED IN THE HANDS OF ASSESSEE, ANOTHER NOTICE WAS GIVEN 4 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL TO THE ASSESSEE AND AS THE ASSESSEE HAD NOT BROUGHT ON FRESH FACTS ON RECORD, THE ASSESSING OFFICER BASED ON THE OLD FACTS, UPHELD THE ADDITION IN THE HANDS OF ASSESSEE. 6. THE CIT(A ) ALSO NOTED THAT ONUS WAS UPON THE ASSESSEE AND / OR THE BANK TO DEMONSTRATE THAT THEY WERE NOT THE OWNERS OF IMPUGNED FDRS AND SOMEBODY ELSE WERE THE OWNERS. THE ASSESSEE WAS THE DIRECTOR OF THE BANK AND HENCE, HE COULD NOT DISCONNECT ITSELF FROM THE BA NKING ACTIVITIES. THUS, IN THE SET ASIDE PROCEEDINGS, ONUS WAS CAST ON THE ASSESSEE TO DEMONSTRATE AND BRING ON RECORD THE ACTUAL OWNER OF IMPUGNED FDRS I.E. NAMES AND ADDRESSES OF THE PERSONS AND SOURCES THEREOF. AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE WHICH ARE REPRODUCED UNDER PARA 4.5, THE CIT(A) OBSERVED THAT THE MAIN SUBMISSIONS OF THE ASSESSEE WAS FDRS WERE NOT FOUND IN POSSESSION OF THE ASSESSEE AND HENCE, THE ONUS DID NOT LIE ON HIM. HE STRESSED THAT NO INCRIMINATING DOCUMENTS WERE FOUND D URING THE COURSE OF SEARCH AND SURVEY PROCEEDINGS AT HIS PREMISES ON 05.09.2002. FURTHER, THE ASSESSEE WAS THE DIRECTOR INCHARGE OF RAVI W AR PET H BRANCH DURING THE RELEVANT PERIOD, WHEREAS FDRS IN QUESTION WERE FOUND IN YERWADA BRANCH. THE CIT(A) HELD THAT THE FDRS WERE NOT FOUND IN THE POSSESSION OF ASSESSEE, WAS NOT RELEVANT WHERE THE ASSESSEE WAS RESPONSIBLE DIRECTOR OF THE BANK AND IMPUGNED FDRS I.E. BUNDLE OF 14 FDRS AMOUNTING TO RS.2 LAKH S WERE FOUND AT THE MAIN BRANCH OF AGRASEN URBAN CO - OP. BANK LTD. AT YERWADA. THE ASSESSEES NAME WAS MENTIONED IN A SLIP ATTACHED TO THE BUNDLE OF 14 FDRS. THE STATEMENT OF MANAGER OF THE BRANCH CLEARLY INDICATED THE ASSESSEE WAS OWNER OF THE FDRS. THU S, FDR OF RS.2 LAKHS IS TO BE ADDED IN THE HANDS OF ASSESSEE ALONG WITH INTEREST. THE CIT(A) ALSO CONSIDERED THAT THOUGH THE ASSESSEE DENIED HAVING FDRS IN FICTITIOUS NAMES IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT ON 05.09.2002 I.E. DURIN G THE COURSE OF SEARCH ON 5 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL HIS PREMISES BUT HE SUBSEQUENTLY ACCEPTED THE OWNERSHIP OF FDRS VIDE LETTER DATED 30.10.2002. IN THE SUBSEQUENT STATEMENT RECORDED UNDER SECTION 131(1) OF THE ACT ON 02.01.2003, THE ASSESSEE RETRACTED FROM THE ADMISSION OF UNDISC LOSED INCOME. THE PLEA OF ASSESSEE WAS THAT EARLIER OFFER WAS MADE UNDER CONFUSION AND WITHOUT UNDERSTANDING LEGAL IMPLICATIONS. HENCE, IT WAS RETRACTED BY THE SECOND STATEMENT. 7. IN RESPECT OF ADDITION OF RS.17 ,40,197/ - , THE CIT(A) OBSERVED THAT REAL OWNERS OF FICTITIOUS ENTRIES AS FOUND IN THE COURSE OF SEARCH PROCEEDINGS ON THE BANK WERE PLACED AS PER THE MARKING S ON THE FDR REGISTER. IT WAS FURTHER SEEN THAT DURING THE COURSE OF CROSS - EXAMINATION, SMT. NEHA BHAVE AND SMT. SHOBHA WAGHCHOURE, BOT H BANK EMPLOYEES CONFIRMED THEIR OWN STATEMENTS MADE UNDER SECTION 132(4) OF THE ACT ON 27.09.2002 ALLEGING THAT THE ASSESSEE WAS REAL OWNER OF IMPUGNED FDRS. THE MODUS OPERANDI OF IDENTIFYING THE REAL OWNER WAS TO PUT HIS/HER NAME ON THE RIGHT HAND CORNE R OF THE FD LEDGER WITH A * (STAR) MARK, WHERE SERIES OF FICTITIOUS FDRS BEGIN AND TO PUT THE REAL OWNERS NAME AGAIN FOLLOWED BY A * (STAR) MARKET WHERE THE SERIES OF FICTITIOUS FDRS END. THE MODUS OPERANDI AS PER THE CIT(A) STOOD CORROBORATED NOT ONLY BY THE BANK MANAGER OF THE MAIN BRANCH BUT ALSO BY SEVERAL BANK EMPLOYEES AND HENCE, THE FACTS RELATING TO OWNERSHIP OF HAND WRITING ON FD REGISTER BECOMES UNIMPORTANT. THE CIT(A) FURTHER OBSERVED THAT THE AS SESSEE WAS PROVIDED WITH STATEMENTS OF BANK EMPLOYEES AND WAS ALSO ALLOWED CROSS - EXAMINATION. THE CIT(A) VIDE TOP PARA AT PAGE 15 FURTHER HELD THAT IN RESPECT OF SOME OF FDRS WHEN CONFRONTED WITH THE REAL OWNERS I.E. SHRI NANDLAL JETHANI, SHRI L.K. AGARWA L AND OTHERS, THEY ADMITTED THE SAME AS BELONGING TO THEM AS UNACCOUNTED INCOME. THEREFORE, SINCE THE BANK HAD IDENTIFIED THE IMPUGNED FDRS AS BELONGING TO THE APPELLANT, 6 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL SUBSTANTIVE ADDITION WAS CORRECTLY MADE IN THE HANDS OF ASSESSEE. HE ALSO REFERRED TO THE PROTECTIVE ADDITION MADE IN THE HANDS OF BANK. 8. THE SECOND CONTENTION OF ASSESSEE THAT HE WAS THE DIRECTOR INCHARGE OF RAVI W AR PET H BRANCH AT THE RELEVANT TIME WAS FOUND TO BE NOT CORRECT SINCE THE HEAD OFFICE OF THE CO - OPERATIVE BANK WAS SITUA TED AT YERWADA, PUNE. THE PLEA OF CROSS - EXAMINATION WAS THUS, HELD TO HAVE BEEN ALLOWED. THE NEXT PLEA OF ASSESSEE OF DOUBLE TAXATION BOTH IN THE HANDS OF ASSESSEE AND BANK WAS HELD TO BE NOT CORRECT SINCE PROTECTIVE ADDITIONS WERE ONLY MADE IN THE HANDS OF BANK. IN VIEW THEREOF, THE CIT(A) UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. 9. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SEARCH ON AGRASEN URBAN CO - OPERATIVE BAN K LTD. ALONG WITH 5 - 6 OTHER PERSONS WERE CARRIED OUT BY THE INVESTIGATION TEAM. HE FURTHER STATED THAT THERE WAS AN ALLEGATION OF INVESTMENT IN FDRS BY THE DIRECTORS OF THE SAID BANK. HOWEVER, THE FINDING WAS THAT SEVERAL PERSONS WERE INVESTING IN FDRS A ND LOANS WERE TAKEN AGAINST SUCH FDRS . THE NAMES DID NOT TALLY BETWEEN THE PERSONS INVESTING AND THE LOANS TAKEN. HE FURTHER POINTED OUT THAT THE BANK HAD TWO BRANCHES I.E. ONE AT YERWADA AND SECOND ONE AT RAVIWAR PETH AND BOTH THE BANKS HAVE DIFFERENT D IRECTORS. REFERRING TO THE TWO SETS OF FDRS FOUND DURING THE SEARCH, HE POINTED OUT THAT FIRST FD WAS OF RS.2 LAKHS ALONG WITH INTEREST AND THE SECOND WAS OF RS.17,40,197/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HERE STRESSED THAT FDRS F OUND FROM THE PREMISES OF PERSON SEARCH ED BELONGED TO YERWADA BRANCH AND THE ASSESSEE WAS NOT THE DIRECTOR IN THE SAID BRANCH AND HE WAS THE DIRECTOR IN RAVIWAR PET H . OUR ATTENTION WAS DRAWN TO CROSS - 7 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL EXAMINATION OF THE PARTY AT PAGES 67 TO 69 OF THE PAPER BOOK. OUR ATTENTION WAS FURTHER DRAWN TO COMMUNICATION PLACED AT PAGES 70 AND 71 OF THE PAPER BOOK . OUR ATTENTION WAS DRAWN TO PAGE 119 OF THE PAPER BOOK, WHEREIN PROTECTIVE ADDITIONS WERE MADE IN THE HANDS OF AGRASEN URBAN CO - OPERATIVE BANK LTD. AND HO WEVER, THE BANK SAYS ONLY RS.2,12,444/ - WAS CONFIRMED ON PROTECTIVE BASIS. OUR ATTENTION WAS FURTHER DRAWN TO PAGE 151 OF THE PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEREAFTER, POINTED OUT THAT SIMILAR FDRS WERE FOUND FROM BRI J MOHAN AGRASEN AND THE TRIBUNAL VIDE PARAS AT PAGES 186 AND 194 OF THE PAPER BOOK, DELETED THE ADDITIONS MADE ON THE BASIS OF PAPERS FOUND DURING THE COURSE OF SEARCH / SURVEY ON HIS RESIDENCE. HE FURTHER POINTED OUT THAT PERUSAL OF DOCUMENTS SHOWS THAT MARKINGS IN THE REGISTERS FOUND FROM THE BANK PREMISES. HE FURTHER STRESSED THAT SINCE NO CORROBORATIVE EVIDENCE WAS FOUND FROM ASSESSEES PREMISES EXCEPT ONE REGISTER, WHICH WAS NOT OWNED UP, THEN PRESUMABLY IF REGISTERS WERE THERE, MARKINGS WOULD ALSO B E THERE AT BEST OF RS.2,12,444/ - . REFERRING TO THE CASE OF REVENUE, WHEREIN THE ASSESSING OFFICER AND CIT(A) CLAIMS THAT THE ASSESSEE IN HIS STATEMENT STATED THAT RS.2 LAKHS BELONGED TO THE ASSESSEE AND THEREAFTER, THE ASSESSEE RETRACTS THE SAID STATEMENT . HOWEVER, NO SUCH STATEMENT WAS AVAILABLE ON RECORD. OUR ATTENTION WAS DRAWN TO RTI APPLICATION MADE IN THIS REGARD, WHICH IS PLACED AT PAGE 73 OF THE PAPER BOOK. HE POINTED OUT THAT THAT THE ASSESSING OFFICER SAYS THAT SAME BELONGS TO THE ASSESSEE. H OWEVER, IN RESPONSE TO RTI APPLICATION, NO DOCUMENT WAS GIVEN TO THE ASSESSEE. IN RESPECT OF SUM OF RS.17,40,197/ - , THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT NOTHING COULD BE ADDED IN HIS HANDS AS NO DIRECT EVIDENCE WAS FOUND AN D ON WITHOUT PREJUDICE BASIS, AT BEST, SUM OF RS.2,12,444/ - COULD BE ADDED IN THE HANDS OF ASSESSEE. 8 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT SURVEY WAS CONDUCTED AT AGRASEN BANK ON 13.08.2002 AND TWO KINDS OF REGISTERS WERE FOUND. THE TOTAL ENTRIES OF FDRS FOUND WERE RS.2.30 CRORES. HE POINTED OUT THAT THE STATEMENT OF BRANCH MANAGER MR. KOLE WAS RECORDED. THE ASSESSING OFFICER IN THE FIRST ROUND AT PAGE 6 HAD TALKED ABOUT THE MARKINGS TO IDENTIFY, WHICH IN TURN, REL ATED TO THE ASSESSEE. HOWEVER, THE ASSESSEES SUBMISSIONS TALKS OF ADMISSION AND RETRACTION. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH IS ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF ALLEGED FD BELONGING TO THE ASSESSEE. BRIEFLY, IN THE FACTS OF THE CASE, BLOCK ASSESSMENT ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER UNDER SECTION 158BC OF THE ACT FOR THE BLOCK PERIOD 1997 - 98 TO 2003 - 04 (PART UPTO 05.09.2002). THE ORIGINAL ASSESSMENT WAS COMPLETED BY T HE ASSESSING OFFICER VIDE ORDER DATED 29.11.2004. SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF AGRASEN URBAN CO - OPERATIVE BANK LTD., YERWADA BRANCH ON 13.08.2002 TO VERIFY THE INFORMATION OF FDRS BEING MADE IN FICTITIOUS NA MES. CERTAIN FDRS WERE SEIZED DURING SURVEY ACTION. CONSEQUENT THERETO, SEARCH ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON THE RESIDENTIAL AND BUSINESS PREMISES OF THE PERSONS TO WHOM THE SAID FDRS WERE LINKED I.E. SHRI NANDLAL JETHANI, SHRI L.K. AGARWAL AND OTHERS . FURTHER, ENQUIRIES CONDUCTED BY INVESTIGATION WING, PUNE REVEALED THAT THE CO - OPERATIVE BANK IN ITS YERWADA BRANCH AND MARKET YARD BRANCH USED TO KEEP DEPOSITS FROM THE DIRECTORS AS WELL AS DEPOSITORS FROM THEIR UNACCOUNTED INCOME , WHICH IN TURN, WAS DEPOSITED IN VARIOUS FICTITIOUS NAMES, IN CONNIVANCE WITH THE BANK EMPLOYEES TO INCREASE THE BANK DEPOSIT LIMITS. IT WAS FOUND BY THE INVESTIGATION WING THAT SHRI VINOD KUMAR 9 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL BANSAR I.E. ASSESSEE BEFORE US USED TO MAKE FDRS WITH BANK IN FICTITIOUS NAMES BY HANDING OVER MONEY TO THE BANK MANAGER WITHOUT FILLING ANY ACCOUNT OPENING FORM AS IN THE CASE OF OTHER DEPOSITORS. CONSEQUENT TO THE SAID INFORMATION, SEARCH AND SEIZURE ACTION WAS INITIATED AT THE RESIDENTIAL AND BUSINE SS PREMISES OF ASSESSEE AND HIS RELATIVES. SIMULTANEOUSLY, SEARCH AND SEIZURE ACTION WAS ALSO CONDUCTED IN THE PREMISES OF AGRASEN URBAN CO - OPERATIVE BANK LTD. THE SAID SEARCH WAS CONCLUDED ON 15.11.2002 . DURING THE COURSE OF SEARCH, FDRS AT THE BANK PR EMISES WERE FOUND TO THE EXTENT OF RS.2 LAKHS BESIDE CASH, JEWELLERY, SILVER AT THE RESIDENCE OF ASSESSEE. 13. THE FIRST ISSUE WHICH ARISES BEFORE US IS IN RELATION TO THE SAID FD OF RS.2 LAKHS SEIZED FROM BANK PREMISES. THE SAID FDRS WERE SEIZED AND T OTAL OF 14 CERTIFICATES IN THE NAMES OF DIFFERENT PERSONS WERE FOUND IN A BUNDLE ON WHICH A SLIP IN THE NAME OF ASSESSEE WAS WRITTEN. IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT ON 05.09.2002, THE ASSESSEE DENIED HAVING PLACED THE SAID AMOUN T IN DIFFERENT NAMES OUT OF HIS OWN FUNDS. HOWEVER, POST SURVEY INVESTIGATION , THE ASSESSEE FILED A LETTER DATED 30.10.2002, IN WHICH HE CONFIRMED THAT THE FD OF RS.2 LAKHS I.E. FDR NOS.020922 TO 020935 BELONGED TO HIM AND HE SHALL PAY TAXES THEREON ON TH E UNDISCLOSED FDRS. CONSEQUENT THERETO, THE SAID FDRS WERE ENCASHED FROM THE BANK AND PAY ORDER WAS OBTAINED FOR RS.2 LAKHS AND INTEREST THEREON OF RS.29,760/ - AND THE SAME WAS DEPOSITED IN THE PERSONAL DEPOSIT ACCOUNT OF THE COMMISSIONER OF INCOME TAX, P UNE ON 05.11.2002. THE ASSESSING OFFICER AND CIT(A) IN THE FIRST ROUND AND THEREAFTER, EVEN AFTER THE ORDER OF TRIBUNAL REMANDING BACK TO THE FILE OF ASSESSING OFFICER, INCLUDED THE SAID SUM OF RS.2 LAKHS AND INTEREST OF RS.29,760/ - AS UNDISCLOSED INCOME OF THE ASSESSEE. THE FIRST ISSUE WHICH HAS BEEN RAISED IS AGAINST THE 10 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL SAID ADDITION IN THE HANDS OF ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE MADE ELABORATE SUBMISSIONS BEFORE US IN THIS REGARD. HOWEVER, IN VIEW OF THE FACTUM OF F DRS BEING ENCASHED AND THE AMOUNT BEING DEPOSITED ON ASSESSEES BEHALF IN THE PERSONAL DEPOSIT ACCOUNT OF THE COMMISSIONER OF INCOME TAX ON 05.11.2002, WE FIND NO MERIT IN THE STAND OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. THE ASSESSEE HAD A DMITTED THAT THE SAID FDRS BELONGED TO HIM AND THEREAFTER ON MATURITY, THE SAME WERE ENCASHED AND WERE DEPOSITED IN PERSONAL DEPOSIT (PD) ACCOUNT ON THE REQUEST OF ASSESSEE. IN VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND UPHO LD THE ADDITION OF RS.2 LAKHS BEING THE AMOUNT OF FDRS HELD IN DIFFERENT NAMES AND THE ADDITION OF INTEREST THEREON OF RS.29,760/ - . 14. NOW, COMING TO THE SECOND ISSUE I.E. ADDITION MADE ON ACCOUNT OF FDRS IN FICTITIOUS NAMES IN THE BANK REGISTER WHICH WA S EARMARKED ALLEGEDLY IN THE NAME OF ASSESSEE. DURING THE COURSE OF SEARCH AND EVEN DURING THE COURSE OF SURVEY ON THE PREMISES OF AGRASEN URBAN CO - OPERATIVE BANK LTD. AND EVEN IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE NO FDRS WERE FOUND. HOWEVER, FDRS REGISTER WAS MAINTAINED BY THE CO - OPERATIVE BANK AND FROM THE SAME, CERTAIN DETAILS WERE UNEARTHED ON THE PREMISE THAT THE SAID FDRS WERE EARMARKED FOR SHRI VINOD KUMAR BANSAL. THE CASE OF REVENUE WAS THAT IN THE FDRS REGISTER MAINTAINED IN THE BANK IN RESPECT OF SOME FDRS, MADE BY VARIOUS PERSONS WHEN CONFRONTED WITH THE REAL OWNERS, THEY VOLUNTARILY ADMITTED THE INCOME AND PAID THE TAXES THEREON. THE STATEMENTS OF NUMBER OF PERSONS IN THIS REGARD WERE RECORDED. THE DETAILS OF FDRS FOUND F ROM THE FDRS RE GISTER WHICH WAS MAINTAINED BY THE BANK EARMARKED FOR SHRI VINOD KUMAR BANSAL, AS PER THE ASSESSING OFFICER TOTALED RS.32,20,222/ - AND THE ASSESSEE WAS SHOW CAUSED IN 11 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL THIS REGARD. THE BASIS FOR SHOW CAUSING THE ASSESSEE WAS STATEMENTS RECOR DED OF THE BANK EMPLOYEES DURING THE COURSE OF SURVEY / SEARCH PROCEEDINGS AND POST SEARCH ENQUIRIES. THE ASSESSEE IN REPLY POINTED OUT THAT DURING THE COURSE OF SEARCH ONLY FDRS TOTALING RS.2 LAKHS WERE FOUND. HOWEVER, NO OTHER FDRS WERE FOUND FROM THE BANK OR FROM THE PREMISES OF ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH WHICH WOULD INDICATE THAT THE ASSESSEE HAD INVESTED UNACCOUNTED INCOME IN THE SAID FDRS, NO ADDITION MERITS TO BE MADE. THE ASSESSEE ALSO ALLEGED TH AT THE PERSONS WHO HAS MADE ENTRIES IN THE FDRS REGISTER ALLEGING THAT THE SAME BELONGS TO HIM HAS NOT BEEN PRODUCED NOR HIS STATEMENT RECORDED. ANOTHER ASPECT WHICH WAS POINTED OUT BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT EVEN DURING THE COURSE OF SEARCH ON THE PREMISES OF CO - OPERATIVE BANK, NO SUCH FDRS WERE FOUND. HE FURTHER STRESSED THAT IN THE ABSENCE OF ANY OF THE EMPLOYEES HAVING GIVEN ANY STATEMENT OR EVIDENCE IN CONNECTION WITH FDRS SOUGHT TO BE TAXED IN HIS HANDS, THEN NO ADDITION MERITS TO BE MADE. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF ASSESSEE SI NCE THE ASSESSEE IN THE POST SEARCH PROCEEDINGS HAD ACCEPTED THAT FIRST FDRS TOTALED RS.2 LAKHS FOUND IN DIFFERENT NAMES AND EARMARKED TO THE ASSESSEE, WERE OWNED UP BY THE ASSESSEE AS HIS INCOME. REJECTING THE PLEA OF ASSESSEE, THE ASSESSING OFFICER HELD THAT THE FACTS OF CASE WERE SIMILAR TO THE FDRS OF RS.2 LAKHS AND HENCE, NON ACTIVE FDRS AS PER FDRS REGISTER EARMARKED FOR THE ASSESSEE COULD NOT BE DISOWNED BY HIM. CONSEQUENTLY, THE ASSESSING OFFICER FURTHER ACCEPTED THE PLEA OF ASSESSEE OF RANGE OF C ERTAIN FDRS ON MATURITY RESTRICTED THE ADDITION TO RS.17,40,197/ - BEING UNEXPLAINED INVESTMENT FROM UNDISCLOSED INCOME DURING THE BLOCK PERIOD. THE TRIBUNAL WHILE DECIDING THE APPEAL OF ASSESSEE REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WIT H DIRECTIONS TO DEMONSTRATE THE OWNERSHIP OF FDRS 12 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL PROCEEDS. THE ASSESSING OFFICER AND CIT(A) IN THE SECOND ROUND HAS UPHELD THE ADDITION IN THE HANDS OF ASSESSEE. 15. IN VIEW OF THE FACTS AND CIRCUMSTANCES DISCUSSED IN THE ORIGINAL ASSESSMENT ORDER, WE FIND THAT IT IS A CASE OF BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT, UNDER WHICH ASSESSMENT CAN BE MADE ON THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF SEARCH, WHICH IN TURN, BELONGS TO THE ASSESSEE. IN THE FIRST INSTANCE, NO PHYSICAL FDR HAS B EEN FOUND, THE ADDITION IS BASED ON NARRATIONS IN THE FDRS REGISTER, WHICH WAS FOUND FROM THE PREMISES OF CO - OPERATIVE BANK. IN VIEW OF THE LAW BEING DEVELOPED AFTER THE ORDER OF TRIBUNAL, WE HOLD THAT ONUS WAS UPON THE BANK TO EXPLAIN THE SOURCE OF FDRS FOUND FROM ITS POSSESSION. THE SAID FDRS WERE NOT IN THE NAME OF ASSESSEE BUT WERE ENTERED IN THE NAMES OF DIFFERENT PERSONS. DURING THE COURSE OF SURVEY AND/OR SEARCH, NONE OF FDRS WERE FOUND FROM THE PO SSESSION OF ASSESSEE OR THE CO - OPERATIVE BANK AND IN THE ABSENCE OF THE SAME, THE QUESTION WHICH ARISES IS WHETHER THE ENTRIES FOUND IN THE DOCUMENTS CAN RESULT IN MAKING THE ADDITION IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER HAS RELIED ON THE STATEMENTS OF BANK EMPLOYEES WHO HAVE ALLEGED THAT IN T HE BANK FDRS REGISTER, THE NAMES OF PERSONS TO WHOM THE SAME BELONGS TO WERE MENTION ED I.E. ASSESSEE BEFORE US. HOWEVER, THE SAID STATEMENT RECORDED BY THE INVESTIGATION TEAM COULD NOT BE CROSS - EXAMINED BY THE ASSESSEE AS THE SAID BANK EMPLOYEE WHO W AS THE WITNESS OF THE ASSESSING OFFICER, WAS NOT PRODUCED FOR CROSS - EXAMINATION. IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN RELYING ON THE AFORESAID STATEMENT RECORDED. FURTHER, THE ASSESSEE HAS ALSO REFERRED TO CERTAIN CROSS - EXAMINATIONS OF DIFFEREN T PERSONS WHICH WERE ALLOWED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ONE SUCH STATEMENT IS OF SMT. NEHA BHAVE, 13 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL WHICH IS PLACED AT PAGES 67 TO 69 OF THE PAPER BOOK, IN WHICH SHE CONFIRMED THAT HER STATEMENT WAS RECORDED. HOWE VER, WHEN QUESTIONED AS TO A METHOD OF MARKING OF FICTITIOUS FDRS, SHE STATED THAT THE SAID PRACTICE WAS ALREADY PREVALENT AND IT WAS COMMUNICATED TO HER BY THE BANK MANAGER BUT SHE DO NOT REC OLLECT THE SAME. SHE WAS POINT BLOCK ASKED WHETHER SHE HAD PREP ARED ANY STATEMENT IN RESPECT OF FICTITIOUS FDRS IN THE NAME OF VINOD KUMAR BANSAL ; SHE REPLIED THAT SHE NEVER PREPARED SUCH STATEMENT FOR THE ASSESSEE. SHE WAS SHOWN THE PAGES ON WHICH STAR MARK AS WELL AS THE NAME OF VINOD KUMAR BANSAL WAS WRITTEN AND W HETHER THE SAME WAS IN HER HANDWRITING, THEN SHE SAID THAT THE MARKING AND NAME WERE NOT IN HER HANDWRITING , SHE COULD NOT SAY WHOSE HANDWRITING IT WAS. 16. ANOTHER CROSS - EXAMINATION WAS OF MRS. SHOBHA SURESH WAGHCHAURE, WHICH IS PLACED AT PAGES 70 TO 7 2 OF THE PAPER BOOK, IN WHICH SHE CONFIRMED HER EARLIER STATEMENT. SHE WAS ASKED WHETHER SHE KN E W THE ASSESSEE AND SHE REPLIED THAT THE PERSON WAS NOT DIRECTOR INCHARGE OF RAVIWAR PET H BRANCH. SHE WAS THE BRANCH MANAGER AND SHE WAS ASKED WHETHER FDRS IN FICTITIOUS NAMES WERE MADE WITHOUT FOLLOWING FORMALITIES AND HAD SHE RECEIVED ANY INSTRUCTIONS OF SUCH TYPE TO OBLIGE A PARTICULAR CUSTOMER TO OPEN OR TO ENCASH FDR S IN FICTITIOUS NAME OF THE DIRECTOR INCHARGE OF RAVIWAR PET H BRANCH. SHE STATED THAT NO SUCH INSTRUCTIONS OR DIRECTIONS WERE RECEIVED FROM THE DIRECTOR INCHARGE VINOD KUMAR BANSAL IN HER TENURE AS BRANCH MANAGER. THE ASSESSEE SOUGHT CERTAIN INFORMATION UNDER THE RTI ACT AND THE ORDER UNDER SECTION 19(6) OF THE RTI ACT IS PLACED AT PAGES 73 AND 74 OF THE PAPER BOOK. IN THIS, THE ASSESSEE HAD ASKED FOR THE COPY OF LETTERS FILED AND THE SUBMISSIONS OF APPLICANT RECORDED ON 22.01.2003. THE ADDL. CIT WAS OF THE VIEW THAT THE CP O W O ULD GIVE THE SAID 14 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL INFORMATION. HOWEVER, THE CPO VIDE ORDER DATED 26.11.2007 DENIED THE INFORMATION, AGAINST WHICH THE ASSESSEE FILED AN APPEAL. THE APPELLATE AUTHORITY VIS - - VIS STATEMENT RECORDED OBSERVED THAT THE STATEMENT OF SHRI RAMESH KOLE, BRAN CH MANAGER OF THE CO - OPERATIVE BANK HAD NOT BEEN RECEIVED BY HIM AND HE WAS NOT SURE THAT THE STATEMENT EXISTED OR NOT. THE SAID STAND WAS TAKEN BY THE ITO, WARD - 1, PUNE AND THE ADDL.CIT, PUNE. WITH REGARD TO OTHER STATEMENTS, IT WAS HELD THAT THEY WERE EXEMPT UNDER SECTION 8 OF THE RTI ACT. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE EVEN THE BASIC STATEMENT WHICH HAD BEEN RELIED UPON HA D NOT BEEN PROVIDED TO THE ASSESSEE AND ALSO NO PHYSICAL FDRS WERE FOUND EITHER FROM THE PREMISES OF CO - O PERATIVE BANK OR THE ASSESSEE, WHERE BOTH THE PREMISES WERE SEARCHED UNDER SECTION 132(1) OF THE ACT AND ALSO SURVEY PROCEEDINGS WERE CONDUCTED AGAINST THE BANK ; IN THE ABSENCE OF THE SAME, MERELY BECAUSE CERTAIN NOTINGS WERE MADE IN THE FDR REGISTER, THE ADDITION CANNOT BE UPHELD IN THE HANDS OF ASSESSEE. THE ALLEGED FDRS WERE IN THE NAME OF DIFFERENT PERSONS AND MERELY BECAUSE SOME STAR MARKS WE RE WRITTEN ON THE LETTERS CANNOT RESULT IN HOLDING THEM TO BE UNACCOUNTED AND ADDITION BEING MADE IN THE HANDS OF ASSESSEE. IN ANY CASE, THIS IS A CASE OF BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT, WHEREIN THE SAID LETTER WAS FOUND IN THE POSSESSION OF THE CO - OPERATIVE BANK, IN WHICH, UNDOUBTEDLY, THE ASSESSEE WAS DIRECTOR ; BUT THE DOCUMENTS CANNOT BE PASSED ON AND THE ENTRIES IN THE SAID DOCUMENTS BE THE BASIS FOR MAKING ADDITION IN THE HANDS OF ASSESSEE FROM WHOSE POSSESSION, NO SUCH DOCUMENT WAS FOUND. ACCORDINGLY, WE HOLD SO. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD REPEATEDLY STATED T HAT HE WAS LOOKING AFTER RAVIWAR PETH BRANCH AND HE WAS THE DIRECTOR OF SAID BRANCH AND NOT OF YERWADA BRANCH, CANNOT BE ACCEPTED AS BASIS FOR DELETING ADDITION IN THE HANDS OF ASSESSEE, SINCE THE 15 ITA NO. 1615 /PUN/20 13 VINOD KUMAR BANSAL ASSESSEE IS DIRECTOR OF CO - OPERATIVE BANK. HOWEVER, IN THE ABSENCE OF ANY PHYSICAL FDRS BEING FOUND FROM THE POSSESSION OF ASSESSEE OR EVEN FROM THE BANK WHICH INDICATES THAT THE SAME RELATE TO THE ASSESSEE, THERE IS NO MERIT IN MAKING THE AFORESAID ADDITION IN THE HANDS OF ASSESSEE AND THE SAME IS DIRECTED TO BE DELETED. EVEN IN RESPECT OF THE NOTINGS IN FDR REGISTER, THE STATEMENT RECORDED HAS NOT BEEN PROVIDED TO ASSESSEE NOR CROSS - EXAMINATION ALLOWED. THE ASSESSING OFFICER SHALL ACCORDINGLY DELETE THE ADDITION OF RS.17,40,197/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 1 7 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF DECEM BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 11 TH DECEM BER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - III , PUNE ; 4. THE C IT - III , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE