M/s Kanti Prasad Kedia, Kolkata V. JCIT, SPL. RG-23, KOLKATA, Kolkata

ITSSA 104/KOL/2008

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3066 (ITAT-KOLKATA)
• Duration Of Justice: 8 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-11-2016
• Assessment Year: misc
• Appeal Filed On: 08-07-2008
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Search and seizure; Document seized; Question of law; Accommodation entries; Block assessment; Documents seized
• Section: 131; 144

Judgement Text

1 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, JM & SHRI WASEEM AHMED, AM] I.T(SS)A NO. 104/KOL/2008 ASSESSMENT YEAR: B.P. 01.04.1988 TO 12.03.1999 M/S. KANTI PRASAD KEDIA (PAN: AMVPK5039N) VS. JOINT COMMISSIONER OF INCOME-TAX, SPECIAL RANGE-23, KOLKATA APPELLANT RESPONDENT & I.T(SS)A NO. 113/KOL/2008 ASSESSMENT YEAR: B.P. 01.04.1988 TO 12.03.1999 INCOME-TAX OFFICER, WARD-9(4), KOL. VS. M/S. KANTI PRASAD KEDIA APPELLANT RESPONDENT DATE OF HEARING: 08.02.2017 DATE OF PRONOUNCEMENT: .03.2017 FOR THE ASSESSEE: SHRI MIRAJ D. SHAH, AR FOR THE REVENUE: SHRI JOHN VINCENT DONKUPAR LA NGSTICH, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THESE CROSS APPEALS PREFERRED BY ASSESSEE AND REVEN UE ARE AGAINST THE ORDER OF CIT(A)-VI, KOLKATA DATED 16.05.2008 FOR BLOCK PERIO D 01.04.1988 TO 12.03.1999. FIRST WE TAKE UP REVENUES APPEAL. 2. GROUND NO. 1 OF REVENUES APPEAL RELATES TO DEL ETION OF ADDITION OF RS.73,04,75,000/- WHICH WAS MADE BY THE AO UNDER THE HEAD PAID UP CAP ITAL OF 117 COMPANIES. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S. 132(1) OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDUCTED ON 12.03.1999 AT THE BUSIN ESS PREMISES AND PLACE OF RESIDENCE OF THE ASSESSEE RESULTING IN SEIZURE OF CERTAIN DOCUME NTS, BOOKS OF ACCOUNT ETC. THE AO NOTICED ON SCRUTINY OF THE DOCUMENTS SEIZED THAT TH ERE WERE UNDER THE ASSESSEES POSSESSION A LARGE NUMBER OF BLANK CHEQUES SIGNED BY THE VARIO US HOLDERS OF THE ACCOUNTS IN THE UBI, UNIQUE, PARK STREET BRANCH, NEW BANK OF INDIA, BURR ABAZAR BRANCH, ALLAHABAD BANK, CANARA BANK, PNB ETC. THE AO NOTED THAT ASSESSEE I N HIS DEPOSITION U/S. 131 OF THE ACT HAS 2 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ADMITTED THAT HE DID NOT KNOW THE DRAWERS OF THE CH EQUES AND WAS NOT ABLE TO IDENTIFY THEM. THE ASSESSEE FURTHER SUBMITTED THAT THE CHEQUES WER E WITH HIM SO AS TO ENABLE HIM TO PURCHASE SHARES OR MAKE INVESTMENTS. THE AO WONDER ED AS TO HOW PEOPLE WHO DO NOT KNOW THE ASSESSEE WILL LEAVE THEIR SIGNED BLANK CHE QUES IN HIS CUSTODY. THE AO AFTER ANALYSING THE DOCUMENTS SEIZED AND CHEQUES FOUND (B LANK SIGNED CHEQUES) HAS RECORDED THE FOLLOWING FINDINGS/OBSERVATIONS: (I) THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS NO T ABLE TO ENLIGHTEN HIM ON THIS UNUSUAL PRACTICE SAID TO BE CARRIED OUT BY THE ASSE SSEE WHICH LED HIM TO THE CONCLUSION THAT THE ACCOUNT HOLDERS (SIGNATORIES OF THE BLANK CHEQU ES) ARE EITHER NON-EXISTENT OR ARE HIS BENAMIDARS AND THE ACCOUNTS IN THEIR NAMES HAVE BEE N OPENED IN THE BANK BY THE ASSESSEE TO SUIT HIS OWN PURPOSE. (II) THE AO MAKES ANOTHER FINDING ON THE SAME SET O F FACTS THAT ON SCRUTINY AND EXAMINATION OF THE BOOKS OF ACCOUNT, LOOSE SHEETS, BLANK CHEQUES SIGNED BY THE ACCOUNT HOLDERS IT IS FOUND THAT MR. K. P. KEDIA (ASSESSEE) HAS BEEN INDULGING IN NAME LENDING BUSINESS I.E. HE HAS BEEN ASSISTING VARIOUS COMPANI ES IN INTRODUCING THEIR OWN MONEY ACCUMULATED OUT OF CONCEALED INCOME THROUGH HIS COM PANIES WHO MERELY LEND THEIR NAMES AS CREDITORS. WE TAKE NOTE THAT FOR COMING TO THIS CONCLUSION THE AO NOTES THAT THE ASSESSEE HAS SET UP A FEW PROPRIETARY CONCERNS WHER E CERTAIN PERSONS EXISTS AND EVEN NON- EXISTING WHO RECEIVES A SMALL AMOUNT OF SALARY FOR ACTING AS HIS BENAMIDARS AND ARE SHOWN AS APPARENT OWNERS AND OPERATED THE BANK ACCOUNT AS SUCH. THEREAFTER, THE AO SPELLS THE NAMES OF TEN PROPRIETARY CONCERNS AT PAGE 3 OF HIS ASSESSMENT ORDER. (III) THE AOS NEXT FINDING IS THAT HE FOUND THAT T HE ASSESSEE DEPOSITED CASH INTO THE BANK ACCOUNTS OF THE TEN PROPRIETARY CONCERNS AND OBTAIN ED BLANK CHEQUES SIGNED BY THE PERSONS AUTHORIZED TO OPERATE THEIR BANK ACCOUNTS AND RETAI NED SUCH CHEQUES IN HIS POSSESSION AND FOR COMING TO THE SAID CONCLUSION RELIED ON A STATE MENT MADE BY THE ASSESSEE WHEREIN HE HAS STATED THAT HE USED TO GIVE CASH TO HIS EMPLOYEES T O DEPOSIT INTO THE BANK ACCOUNTS OPENED IN THEIR NAMES OF THE PROPRIETARY CONCERNS. (IV) THE AO NOTES THAT THE ASSESSEE HAS GIVEN DIFFE RENT DEPOSITIONS IN RESPECT OF EARNING INCOME FOR THE PERIOD 1991-92. THE AO NOTES THAT O N 03.02.1999, THE ASSESSEE HAD STATED THAT HE EARNED PROFIT OF RS.15 TO 20 CRORES AND ON 28.06.1999 HE MADE STATEMENT THAT HE 3 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, RECEIVED RS. 10 CR. FROM THE SALE OF THE SHARES. T HE AO NOTES THAT WHEN ONE MR. SAMIR KEDIA, THE SHARE BROKER WHO USED TO DO THE SHARE TR ADING WITH THE ASSESSEE HAS DISCLOSED ON 23.02.1999 U/S. 131 OF THE ACT THAT IN THE YEAR 199 1-92 THE ASSESSEE MUST HAVE MADE AROUND RS. 1 CR. THE AO WAS OF THE VIEW THAT THE ASSESSEE COULD NOT RECONCILE THE EARNINGS FROM THE SHARE TRANSACTIONS DURING 1991-92 AND NOTED THE INCONSISTENCY. (V) ANOTHER FINDING OF THE AO IS THAT THE ASSESSEE HAS FLOATED 117 COMPANIES FROM THE ADDRESSES WHICH ARE GIVEN IN PAGE 4 OF THE ASSESSME NT ORDER. THE AO REPRODUCES THE ASSESSEES DEPOSITION U/S. 131 OF THE ACT RECORDED ON 03.02.1999 WHEREIN HE STATED THAT ALL THE 117 COMPANIES HAVE BEEN FLOATED BY HIM AND MANA GED AND CONTROLLED BY HIM ALONE AND THAT OTHER DIRECTORS OF THE COMPANIES DO NOT KNOW A NYTHING ABOUT THE ACTIVITIES OF THE COMPANIES AND THEY WERE ONLY HIS EMPLOYEES GETTING SALARY FROM HIM. THE AO AFTER TAKING NOTE OF THE FACT THAT DURING SEARCH AND SEIZURE SIG NED BLANK CHEQUES, VARIOUS COMPANYS SEAL WERE FOUND IN ASSESSEES PREMISES WHICH ACCORDING T O THE AO SUGGESTS THAT THE ASSESSEE USED THESE CHEQUES DRAWN BY THOSE COMPANIES IN FAVO UR OF COMPANIES WHO NEEDED CREDIT ENTRIES IN THEIR BOOKS OF ACCOUNT IN EXCHANGE FOR C ASH PAID BY THEM. THUS ACCORDING TO THE AO, THESE 117 COMPANIES WHICH HAVE BEEN FLOATED BY THE ASSESSEE ARE BEING USED BY HIM AS INTERMEDIARIES FOR ASSISTING ANY COMPANIES TO INTRO DUCE IN THEIR BOOKS OF ACCOUNTS THEIR OWN CONCEALED MONEY IN THE GUISE OF LOANS OR OF SUBSCRI BING TO THEIR SHARE CAPITAL. THEREAFTER, THE AO PREPARED THE NAMES OF THE 117 COMPANIES WHICH HA VE BEEN ANNEXED AS ANNEXURE 1 TO THE ASSESSMENT ORDER. (VI) WITH THE AFORESAID FINDINGS MADE, THE AO NOW E XPLAINS THE MODUS OPERANDI OF THE ASSESSEE. THE AO NOTES THAT THE 10 PROPRIETARY CON CERNS AND 117 COMPANIES (ANNEXURE 1 TO AOS ORDER) ALL OF THEM MAINTAINED THEIR ACCOUNTS IN THE SAME BANK VIZ., PUNJAB & SIND BANK, KALAKAR STREET BRANCH AND ACCORDING TO HIM, T HE MODUS OPERANDI OF THE ASSESSEE CAN BE CLEARLY UNDERSTOOD. THE ASSESSEE RECEIVED CASH FROM COMPANIES HEREINAFTER DESCRIBED AS BENEFICIARY COMPANIES WHO HAD THEIR OWN BLACK MON EY BUT CANNOT OBVIOUSLY INTRODUCE THE SAME IN THEIR BUSINESS IN THEIR OWN NAMES AND R EQUIRED A MEDIUM AND THE ASSESSEE PLAYS THAT VERY IMPORTANT ROLE AGAINST RECEIPT OF COMMISS ION AT CERTAIN PERCENTAGE OF THE AMOUNT OF CREDIT ENTRY PROVIDED BY HIM THROUGH ANY OF THE 117 COMPANIES A S PER ANNEXURE 1 FLOATED BY HIM. THEREAFTER WE NOTE THAT THE AO BRINGS OUT TWO ILLUSTRATIONS TO PROVE THE MODUS OPERANDI AS FOUND OUT BY HIM AT PAGES 4 AND 5 OF TH E ASSESSMENT ORDER. AFTER GIVING THE TWO 4 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ILLUSTRATIONS, THE AO MAKES A FINDING THAT THE CASH DEPOSITED BY THE ASSESSEE IN THE NAME OF THE PROPRIETARY CONCERNS WAS PROVIDED BY THE BENEFI CIARY COMPANY AND THE ASSESSEE HAS IN TURN ISSUED LOAN BY CHEQUE TO THE BENEFICIARY COMPA NY. (VII) THEREAFTER, THE AO NOTES THAT FOR THE BLOCK P ERIOD, THE PAID UP CAPITAL OF THE 117 COMPANIES WERE TO THE TUNE OF RS.73,04,75,450/-. T HE AO NOTES THAT WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF AFORESAID PAID UP CA PITAL, THE ASSESSEE TOOK THE PLEA THAT PAID UP CAPITAL WERE MUCH LESS AS THESE COMPANIES BETWEE N THEMSELVES SUBSCRIBED TO EACH OTHERS SHARE CAPITAL. HOWEVER, THE AO NOTES THAT THE ASSESSEE NEITHER STATED THE EXACT PAID UP CAPITAL NOR HE COULD EXPLAIN THE SOURCE OF CAPIT AL TO HIS SATISFACTION. THEREFORE, HE ADDED THE ENTIRE AMOUNT OF RS.73,04,75,000/- (ON PROTECTI VE BASIS). (VIII) THE REASONS FOR MAKING PROTECTIVE ASSESSMENT WAS THAT THE AO TOOK NOTE OF THE FACT THAT AFTER EXAMINATION OF THE SEIZED BOOKS OF ACCOU NT, DOCUMENTS AND AFTER RECORDING THE DEPOSITION ETC. HE HAD THE IMPRESSION THAT MR. KEDIA (ASSESSEE) IS NOT A MAN OF MEANS. NEITHER HE NOR HIS 117 COMPANIES WERE CAPABLE OF EA RNING AND OF POSSESSING CRORES OF RUPEES. IT APPEARS TO ME THAT HE HAD BEEN UTILIZING PROPR IETARY CONCERNS STATED ABOVE AND THE 117 INVESTMENT COMPANIES LISTED IN ANNEXURE 1 O F THIS ORDER OF ASSESSMENT AS THEIR OWN MONEY IN THEIR BUSINESS AND IN EXCHANGE OF THE SERV ICES RENDERED MR. KEDIA EARNS COMMISSION OF CERTAIN AMOUNT . THEREAFTER, THE AO HAS COMPUTED THE UNDISCLOSED IN COME OF THE ASSESSEE U/S. 158BC(C) OF THE ACT AS A PROTE CTIVE MEASURE WITHOUT PREJUDICE TO THE DEPARTMENT ASSESSING THE BENEFICIARY COMPANIES AS E NLISTED IN ANNEXURE 2. 3. AGGRIEVED BY THE AFORESAID ADDITION OF RS.73,04, 75,000/- THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DEL ETE THE ADDITION. AGGRIEVED, THE REVENUE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAS ADDED THE ENTIRE PAID UP CAPIT AL OF THE 117 COMPANIES HE HAS LISTED IN ANNEXURE 1 OF THE ASSESSMENT ORDER FOR THE BLOCK PE RIOD ON THE GROUND THAT THE ASSESSEE COULD NOT STATE THE EXACT PAID UP CAPITAL NOR COULD HE EXPLAIN THE SOURCE OF THE CAPITAL IN THE SAID COMPANIES TO HIS SATISFACTION. ON APPEAL, THE LD. CIT(A) NOTES THAT ALL THE COMPANIES REFERRED BY THE AO HAVE BEEN ASSESSED SEPARATELY A ND THE COMPANIES HAD IN FACT, DISCLOSED 5 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ITS PAID UP CAPITAL IN THEIR RESPECTIVE BALANCE SHE ETS ON THE CLOSING DATES OF EACH FINANCIAL YEAR. THEREFORE, ACCORDING TO LD. CIT(A), IT CANNO T BE SAID THAT SUCH AMOUNTS REMAINED UNDISCLOSED DURING THE BLOCK PERIOD INSOFAR AS PAID UP CAPITAL OF THE COMPANIES ARE CONCERNED. THE LD. CIT(A) TOOK NOTE OF THE FACT TH AT THE AO HAS NOT FOUND OUT ANY DOCUMENTS IN SUPPORT OF HIS FINDING THAT THE ASSESS EE HAS IN FACT, INVESTED THE AMOUNT OF RS.73,04,75,000/- IN THE SHARES OF 117 COMPANIES. THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT FROM THE STATEMENTS OF THE ASSESSEE WHICH CLEARLY INDICATE THAT THE CONTRIBUTION MADE INTO THE SHARE CAPITAL OF THE COMPANIES HAVE N OT ONLY BEEN MADE BY INDIVIDUAL SHAREHOLDERS BUT ALSO THE CONTRIBUTION MADE BY THE COMPANIES IN THE SHARE CAPITAL OF OTHER COMPANIES. SO, THE LD. CIT(A) HELD THAT THE AOS VI EW THAT THE ENTIRE AMOUNT WAS CONTRIBUTED BY THE ASSESSEE INTO THE SHARE CAPITAL OF THE COMPANIES WAS NOT CORRECT AND THE FINDING IS NOT BASED UPON COGENT MATERIALS ON RECOR D. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT NO ENQUIRIES AND VERIFICATIONS WERE MADE FROM THE CONCERNED SHARE HOLDING COMPANIES AND FROM THEIR RESPECTIVE INCOME TAX FILES WHICH WE RE WITH THE DEPARTMENT, AND THAT THE AO FAILED TO BRING OUT ANY EVIDENCE OR MATERIAL ON REC ORD THAT THE ASSESSEE WAS THE REAL BENEFICIARY IN THIS CASE AND, THEREFORE, HE DIRECTE D DELETION OF THE ADDITION OF RS.73,04,75,000/-. WE CONCUR WITH THE VIEW OF THE LD. CIT(A) FOR DELETING THE ADDITION MADE ON THIS ACCOUNT BECAUSE ALL THE COMPANIES ARE SEPARATE LEGAL ENTITIES AND HAVE BEEN ASSESSED SEPARATELY AND THAT THE ACCOUNTS OF THESE COMPANIES ARE STATUTORILY AUDITED AND MOREOVER THEY HAVE DISCLOSED THEIR PAID UP CAPITAL IN THEIR RESPECTIVE BALANCE SHEETS EVERY YEAR AND, THEREFORE, CANNOT BE TERMED AS UNDISCLOSE D INCOME. WITHOUT BRINGING ANY EVIDENCE TO SHOW THAT THE COMPANIES WHICH ARE LEGAL ENTITIE S AND ASSESSED TO TAX EVERY EAR, HAVE NOT DISCLOSED THE PAID UP CAPITAL OR LESS PAID UP CAPIT AL, THE AMOUNT OF PAID UP CAPITAL WHICH HAVE BEEN DISCLOSED IN ITS BALANCE SHEET EVERY YEAR , OUGHT NOT TO HAVE BEEN FASTENED IN THE HANDS OF THE ASSESSEE. THE AO FAILED TO BRING ON R ECORD THAT THE ENTIRE AMOUNT OF PAID UP CAPITAL AS SHOWN BY THE COMPANIES ORIGINATED FROM T HE ASSESSEES COFFERS AND WITHOUT MAKING ANY ENQUIRY FROM THE SAID COMPANIES AS TO TH EIR RESPECTIVE PAID UP CAPITALS AND WHO WERE THE SHARE HOLDERS AND WITHOUT BRINGING ANY EVI DENCE ON RECORD TO SUGGEST THAT THE PAID UP CAPITAL OF THOSE COMPANIES WERE FUNDED ONLY BY T HE ASSESSEE, THE AO OUGHT NOT TO HAVE MADE THE ADDITION WITHOUT ANY BASIS THE ADDITION MA DE CANNOT BE SUSTAINED. THEREFORE, WE 6 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY TH E LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF APPEAL OF REVENUE IS DISMIS SED. 5. GROUND NO.2 OF REVENUES APPEAL RELATES TO DELET ION OF ADDITION OF RS.3,25,000/- UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCE. BRIE F FACTS OF THE CASE IS THAT THE AO NOTES THAT FROM THE BOOKS OF ACCOUNT SEIZED IN COURSE OF SEARCH MARKED KD-I THAT THERE WERE CREDITS OF RS.50,000/- IN THE NAME OF SHRI G. K. VE RMA ON 01.01.1995 (AY 1995-96). FURTHER, IN AY 1996-97 AS ON 01.08.1995 AND ON 01.0 1.1996 CREDIT BALANCE OF RS.1,25,000/- FROM SHRI KALIDAS VERMA, RS. 1,00,000/- FROM SHRI M OTILAL DHANUKA AND RS.50,000/- FROM SHRI SASHI KANT RUIA RESPECTIVELY. ACCORDING TO THE AO, THE ASSESSEE COULD NOT OFFER ANY EXPLANATION AS TO THE IDENTITY OF PERSON, NATURE AN D SOURCE OF CASH CREDIT WHICH REMAINED UNEXPLAINED SO IT WAS ADDED BACK TO THE TOTAL INCOM E OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE AFORESAID CRE DIT ENTRIES AND TRANSACTIONS DESCRIBED BY THE AO WAS RELATED TO THE AY 1995-96 TO 1996-97 AND THE SAME APPEARED IN THE BOOKS OF ACCOUNT WHICH WAS TAKEN NOTE OF BY THE THEN AO DURI NG REGULAR ASSESSMENT PERTAINING TO THOSE ASSESSMENT YEARS AND SINCE THE INCOME WAS ASS ESSED AND TAXED UNDER THE REGULAR PROCEEDINGS, THE ASSESSEE CANNOT BE TAXED UNDER THE SPECIAL CHAPTER IN PURSUANCE OF THE NOTICE U/S. 158BC OF THE ACT AND THE ASSESSEE RELIE D ON THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CALTRADECO STEEL SALES (P) LTD. VS. DCIT 243 ITR 643 (CAL). THE LD. CIT(A) SOUGHT FROM THE AO THE R EMAND REPORT AND THEREAFTER, CAME TO THE CONCLUSION THAT THE ADDITION MADE BY THE AO ON THE BASIS OF THE CREDIT ENTRY IS NOT BASED ON ANY MATERIAL FACTS WHICH HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN THE REGULAR ASSESSMENT AND THEREAFTER, ORDERED DELETION OF THE ADDITION OF RS.3.25 LACS. AGGRIEVED, THE REVENUE IS NOW IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS STATED ABOVE PERTAINING TO THE ISS UE ARE NOT IN DISPUTE. THE FACT REMAINS THAT THE CREDIT ENTRIES IN THE BOOKS WERE RELATED TO AY 1995-96 TO 1996-97, WHICH HAVE BEEN ASSESSED IN THE REGULAR ASSESSMENT, SO ASSESSEE CAN NOT BE TAXED AGAIN DURING THE BLOCK ASSESSMENT AS HELD BY HONBLE JURISDICTIONAL HIGH C OURT IN CALTRADECO STEEL SALES (P) LTD. (SUPRA). THE LD. DR AT THE TIME OF HEARING BEFORE US COULD NOT POINT OUT ANY INFIRMITY IN THE 7 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ORDER PASSED BY THE LD. CIT(A) SO AS TO WARRANT OUR INTERFERENCE AND, THEREFORE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 7 NEXT, WE WILL TAKE UP THE ASSESSEES APPEAL WHERE IN GROUND NO. 4 THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITION OF RS.10,29 ,45,776/-. BRIEF FACTS ARE THAT THE AO AFTER SCRUTINY AND EXAMINATION OF THE BOOKS OF ACCO UNT OBSERVED AFTER LOOKING INTO THE LOOSE SHEETS THE BLANK CHEQUES SIGNED BY THE ACCOUNT HOLD ERS FOUND THAT THE ASSESSEE HAD BEEN INDULGING IN NAME LENDING BUSINESS I.E. HE HAS BEEN ASSISTING VARIOUS COMPANIES IN INTRODUCING THEIR OWN MONEY ACCUMULATED OUT OF CONC EALED INCOME THROUGH HIS COMPANIES AND WAS MERELY LENT THEIR NAMES AS CREDITORS. ACCO RDING TO THE AO, FOR THIS PURPOSE HE HAS SET UP FEW PROPRIETARY CONCERNS NOT HOWEVER DECLARI NG HIMSELF AS PROPRIETOR THEREOF BUT CERTAIN PERSONS EXISTING AND EVEN NON-EXISTING, REC EIVING A SMALL AMOUNT OF SALARY FROM HIM ACTING AS HIS BENAMDERS AND HAS SHOWN AS APPARENT O WNERS AND OPERATED THE BANK ACCOUNTS AS SUCH AND THEN THE AO GIVES TEN NAMES OF CONCERNS AND THEIR ACCOUNTS MAINTAINED IN THE PUNJAB & SIND BANK, KALAKAR ST. BRANCH, KOLKATA. T HEREAFTER, THE AO EXPLAINS THAT THE MODUS OPERANDI OF THE ASSESSEE WHEREIN HE OBSERVES THAT THE ASSESSEE USED TO DEPOSIT CASH INTO BANK ACCOUNT OF THE SAID TEN CONCERNS AND OBTA INED BLANK CHEQUES SIGNED BY THE PERSONS AUTHORIZED TO OPERATE THEIR BANK ACCOUNT AND RETAIN ED SUCH CHEQUES IN HIS POSSESSION. THE AO OBSERVES THAT THE ASSESSEE HAS GIVEN A STATEMENT THAT HE HAD GIVEN THE CASH TO HIS EMPLOYEES TO DEPOSIT IN THE BANK ACCOUNT OPENED IN THE NAME OF THE SAID CONCERNS. THE AO NOTES THAT THE CASH DEPOSITED INTO THE BANK ACCOUNT BY THESE CONCERNS TAKEN TOGETHER DURING THE BLOCK PERIOD IS AS FOLLOWS: ON 31.03.1995 RS. 85,85,476/- ON 31.03.1996 RS. 51,97,300/- ON 31.03.1997 RS.4,79,03,025/- ON 31.03.1998 RS.4,12,59,775/- THUS TOTAL AMOUNT OF RS.10,29,45,776/-. 8. THE AO NOTED AT PAGE 3 OF HIS ORDER THAT THE ASS ESSEE IN HIS DEPOSITION BEFORE THE INCOME-TAX AUTHORITIES REVEALED ON 03.02.1999 THAT HE EARNED PROFIT OF RS.15 TO 20 CRORES IN SHARE DEALING THROUGH SHARE BROKER SHRI SAMAR KEDIA DURING 1991-92. THE AO RECORDED 8 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, THAT MR. KEDIA HAS STATED IN HIS DEPOSITION ON 23.0 2.1999 THAT THE ASSESSEE MUST HAVE MADE AROUND RS. 1 CRORE DURING THE PERIODS 1990-91 AND 1 991-92. THE AO NOTED THAT FROM THE SEIZED PAPERS RELATING TO SHARE TRANSACTION WITH TH E SAID MR. KEDIA IT IS FOUND THAT THE AMOUNT WAS RS.2,55,09,375/- DURING THE YEAR 1990-91 AND 1991-92. ACCORDING TO THE AO, THE ASSESSEE COULD NOT RECONCILE THE CONTRADICTIONS IN HIS OWN DEPOSITION MADE ON 03.02.1999 WHEREIN HE STATED TO HAVE EARNED RS.15 T O 20 CRORES WHILE DEALING WITH THE SHARE DURING 1991-92 AND THAT MADE ON 28.06.1999 WHEREIN HE MADE A STATEMENT THAT HE RECEIVED RS.10 CRORE FROM THE SALE OF SHARES DURING THE SAID PERIOD. THEREAFTER, THE AO EXPLAINS THE MODUS OPERANDI BY AN ILLUSTRATION AT PAGE 4 OF HIS ORDER BASED ON THE FACTS EMERGING FROM THE SEIZED DOCUMENTS, WHICH ARE AS UNDER. A FEW INSTANCES AS FOUND OUT FROM THE SEIZED BOOK S AND REPRODUCED BELOW WILL TESTIFY TO THE MODUS OPERANDI ADOPTED BY THE ASSESSEE AS STATED AB OVE: ON 7.1.97 (I) TURNER & TOOLS A PROPRIETORY CONCERN SET UP BY THE ASSESSEE DEPOSITED CASH RS.1,50,000/- IN ITS CURRENT ACCOUNT NO. 1344 WITH PUNJAB & SIND BANK, KALAKAR STREET BRANCH, CALCUTTA. ON 7.1.97 (II) LALBAG INVESTMENT MAINTAINING ACCOUN T NO. C1343 IN THE SAME BANK DEPOSITED CASH RS.1,50,000/-. EACH OF THEM ISSUED CHEQUES OF RS.1,50,000/- IN FAV OUR OF SUKHI SUPPLIERS (PRIVATE) LTD., ONE OF THE 117 COMPANIES FLOATED BY THE ASSESSEE WHO IN ITS TURN ISSUED LOAN BY CHEQUE DRAWN ON THE SAME BANK FOR RS .3,00,000/- IN FAVOUR OF NAVELTEX MARKETING (P) LTD., A BENEFICIARY COMPANY. OBVIOUSLY THE CASH DEPOSITED BY THE ASSESSEE IN THE NAMES OF THE PROPR IETARY CONCERNS WAS PROVIDED BY THIS BENEFICIARY COMPANY. A LIST OF BENEFICIARY COMPANIES ARE ANNEXED AND MAR KED ANNEXURE II WHICH MAY BE TREATED AS PART AND PARCEL OF THIS ORDER OF ASSESSMENT. 9. THEREAFTER THE AO NOTES THAT CASH DEPOSITED IN T HE BANK ACCOUNTS OF THE PROPRIETARY CONCERNS OWNED BY THE ASSESSEE DURING THE YEAR ENDI NG 31.03.1998 WAS OF AN AMOUNT OF RS.10,29,45,794/- AND SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THESE CREDITS AND TAKING NOTE OF THE DEPOSITION MADE BY THE ASSESSEE, THE AO MADE THE ADDITION OF RS.10,29,45,776/-. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE SAME ON THE GROUND THAT THE ASSESSEE HAS ACCEPTED IN THE STATEMENT DURING SEARCH PROCEEDINGS THAT THE CASH G IVEN FOR DEPOSIT INTO THIS ACCOUNT WAS GIVEN BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS BEFORE US. 9 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, 10. WE NOTE FROM THE TOTAL FACTS AND CIRCUMSTANCES OF THE CASE THAT THE AOS DESCRIPTION ABOUT THE WORK OR MODUS OF THE ASSESSEE IS THAT THE ASSESSEE IS A NAME LENDER GIVING ACCOMMODATION ENTRIES TO THE VARIOUS BENEFICIARIES WHOSE NAMES HAVE BEEN GIVEN IN ANNEXURE II. FROM A PERUSAL OF THE ILLUSTRATION G IVEN BY THE AO AND FROM THE FACTS WHICH EMERGED FROM THE SEIZED BOOKS, THE AO HAS CLEARLY M ADE A FINDING BASED ON THE MATERIAL SEIZED IN THE SAID ILLUSTRATION WHICH HAS BEEN REPR ODUCED ABOVE THAT THE CASH DEPOSITED BY THE ASSESSEE IN THE NAMES OF THE PROPRIETARY CONCER NS WAS PROVIDED BY THE BENEFICIARY COMPANY WHICH FACT FINDING OF THE AO COULD NOT BE C ONTRADICTED BY THE LD. DR BEFORE US. THE AO HIMSELF HAS ACCEPTED IN THE CONCLUDING PARAG RAPH OF HIS ORDER THE FACT THAT THE ASSESSEE IS NOT A MAN OF MEANS. IN THE WORDS OF THE AO, NEITHER HE NOR HIS 107 COMPANIES WERE CAPABLE OF EARNING OF CRORES OF RUPEES . FURTHER, HE SAYS THAT IT APPEARS TO HIM THAT HE HAD BEEN UTILIZING THE PROPRIETARY CONCERNS STATED ABOVE AND THE 117 INVESTMENT COMPANIES LISTED IN ANNEXURE-1 OF THIS ORDER OF ASSESSMENT AS INTERMEDIARY THROUGH WHOM THE BENEFICIARY COMPANIES INTRODUCED THEIR OWN MONEY IN THEIR BUSINESS AND IN EXCHANGE OF THE SERVICES RENDERED MR. KEDIA EARNED COMMISSION OF C ERTAIN AMOUNTS. THIS FINDING OF FACT ALSO RECORDED BY THE AO FORTIFIES THE FACT THAT THE CASH DEPOSITED IN THE PROPRIETARY CONCERN DOES NOT BELONG TO THE ASSESSEE BUT BELONGS TO THE BENEFICIARIES LISTED AS ANNEXURE II TO THE ASSESSMENT ORDER. THEREFORE, THE ADDITION MADE BY THE AO IS NOT ON THE BASIS OF EVIDENCE OR MATERIAL TO EVEN REMOTELY SUGGEST THAT CASH DEPOSIT ED IN BANK ACCOUNT BELONGS TO ASSESSEE AND THE IMPUGNED ADDITION IS TOTALLY CONTRADICTORY TO THE FINDINGS RECORDED AT VARIOUS PLACES IN THE ASSESSMENT ORDER AND THE LD. CIT(A) ERRED IN NOT APPRECIATING THE AFORESAID FINDINGS OF THE AO AND HAS SIMPLY RELIED ON A PORTION OF THE STATEMENT RECORDED WHICH HAS BEEN SUBSEQUENTLY RETRACTED BY THE ASSESSEE, CANNOT BE T HE BASIS OF CONFIRMATION OF ADDITION WHICH HAS NO LEGS TO STAND AND, THEREFORE, WE ARE I NCLINED TO DELETE THE ADDITION OF RS.10,29,45,776/-. 11. GROUND NO. 5 OF THE ASSESSEES APPEAL IS AGAINS T THE ADDITION OF RS. 10 CRORE THE AO NOTES THAT MR. KEDIA IN THE COURSE OF STATEMENT MAD E ON VARIOUS DATES HELD THAT HE HAS EARNED NOT LESS THAN RS. 10 CRORE DURING THE PREVIO US YEAR RELEVANT TO THE ASSESSMENT YEAR 1992-93 (IN HIS LATEST DEPOSITION ON 28.06.1999, RS . 10 CRORE) WHICH HE UTILIZED IN ADVANCING LOANS TO THE BENEFICIARY COMPANIES BUT HE COULD NOT ADDUCE ANY EVIDENCE IN 10 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, SUPPORT OF HIS ASSERTION. ACCORDING TO THE AO, SIN CE THE ASSESSEE HIMSELF SUBMITS THAT HE EARNED RS. 10 CRORE THE SAME IS INCLUDED IN THE INC OME OF THE BLOCK PERIOD HITHER TO NOT DISCLOSED AND MADE ADDITION OF RS. 10 CRORE. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DISMISS TH E SAME ON THE GROUND THAT THE ASSESSEE HAS MADE A STATEMENT ON OATH, THEREFORE, HE CONFIRM ED IT. AGGRIEVED, THE ASSESSEE IS BEFORE US. 12. WE TAKE NOTE THAT RS. 10 CRORE HAS BEEN MADE ON LY ON THE BASIS THAT THE ASSESSEE HAD MADE A STATEMENT BEFORE THE AUTHORITIES BELOW DURIN G THE COURSE OF SEARCH WHICH HAS DEFINITELY GOT EVIDENTIARY VALUE. HOWEVER, IF THE ASSESSEE RETRACTS FROM THE STATEMENT THEN IT HAS TO BE SEEN WHETHER THE STATEMENT MADE BY THE AS SESSEE IT IS FACTUALLY CORRECT OR NOT. THE LD. AR STATED BEFORE US AND TOOK US TO PAPER BOOK P AGES 340, 339,337,338,335 AND 336 TO SHOW THAT THE ASSESSEE WAS UNDER TREATMENT FOR MENT AL DEPRESSION AND WAS MENTALLY DISTURBED AND WAS IN MENTAL SHOCK DURING THE SAID P ERIOD OF TIME. WE NOTE THAT THESE ARE THE MEDICAL CERTIFICATES AND HE TOOK US TO THE COMPLAIN T LODGED BY THE ASSESSEE BEFORE THE EXECUTIVE MAGISTRATE ASKING FOR PROTECTION U/S. 144 OF CR. P.C. THE LD. AR SUBMITS THAT THE ASSESSEE BEING DISTURBED MENTALLY NO WEIGHTAGE CAN BE GIVEN TO HIS STATEMENTS AND IT REVEALS THAT THE STATEMENTS ARE HOLLOW AND ASSESSEE BEING I NCESSANTLY QUESTIONED TO AVOID STRESS HAS MADE THE TALL CLAIMS TO HAVE EARNED HUGE INCOME AND IT CAN BE SEEN THAT STATEMENTS RECORDED ARE TOTALLY CONTRADICTING EACH OTHER. IN ONE PLACE HE SAYS HE MADE RS. 15 TO 20 CRORES AND THEN HE SAYS MORE THAN RS. 10 CRORE, THUS THE ASSES SEE DURING THE PERIOD OF RECORDING OF STATEMENT WAS NOT MENTALLY FIT AND, THEREFORE, THE STATEMENT RECORDED CANNOT BE THE ONLY GROUND ON WHICH HUGE ADDITION OF RS. 10 CRORES CAN BE MADE AGAINST THE ASSESSEE. WE NOTE THAT THE AO HIMSELF HAS CLEARLY MADE A FINDING THAT THE ASSESSEE IS NOT A MAN OF MEANS AND HE HAS ALSO ACCEPTED THE FACT THAT HE IS ONLY IN TH E NAME LENDING AND PROVIDING ACCOMMODATION ENTRY FOR A SMALL COMMISSION. THE ILL USTRATION GIVEN BY THE AO WHICH WE HAVE REPRODUCED IN PARA 8, SUPRA IS BASED ON THE MA TERIAL SEIZED FROM THE SEARCH AND THE MODUS OPERANDI HAS BEEN CLEARLY SPELLED OUT BY THE AO, THAT IS THE BASIS ON WHICH THE AO WENT AHEAD TO ADD THE INCOME ON PROTECTIVE BASIS AN D TOOK STEPS TO TAX THE BENEFICIARIES LISTED OUT AT ANNEXURE-II TO THE ASSESSMENT ORDER. IT HAS BEEN BROUGHT TO OUR NOTICE THAT IN THE CASE OF THE BENEFICIARY, THAT IS M/S TRINETRA C OMMERCE & TRADE PVT. LTD., THE ADDITION 11 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ON SUBSTANTIVE BASIS WAS UPHELD BY THE HONBLE CALC UTTA HIGH COURT IN ITA NO. 619 OF 2008 DATED 15.09.2016. SO, THEREFORE, THE ADDITION BASED ON STATEMENT ALONE WHICH HAS BEEN RECORDED WHEN HE WAS MENTALLY DISTURBED CANNOT BE S USTAINED. . IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AOS ORDER RELYING O NLY ON THE STATEMENT OF THE ASSESSEE TO FASTEN THE LIABILITY ON THE ASSESSEE IS UNSUSTAINAB LE AND, THEREFORE, WE ARE INCLINED TO DELETE THE ADDITION MADE ON THIS GROUND. 13. GROUND NO. 3 IS IN RESPECT OF ADDITION OF RS.7, 10,00,000/-. BRIEF FACTS OF THE CASE ARE THAT PURSUANT TO THE NOTICE U/S. 158BC(A)(II) OF TH E ACT SERVED ON ASSESSEE ON 21.07.1999 THE ASSESSEE HAD FILED RETURN ON 28.01.2000 DISCLOSING A TOTAL INCOME OF RS.7.10 CR. AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. AGGR IEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), HOWEVER, THE ASSESSEE HAD NO T ASSAILED THIS ISSUE BEFORE HIM. HOWEVER, THE ASSESSEE HAS MOVED THIS ISSUE AS GROUN D NO. 3 AS AN ADDITIONAL GROUND AND HAS FILED WRITTEN SUBMISSION ASSAILING THE SAME. THE L D. AR CONTENDED THAT AFTER THE SEARCH AND SEIZURE THE ASSESSEE WAS MENTALLY DEPRESSED AND WAS IN MENTAL SHOCK AND FOR PROVING THE SAID FACT HAS FILED MEDICAL CERTIFICATES WHICH WE H AVE REFERRED TO EARLIER. THE LD. AR SUBMITTED THAT THE AO HAS GONE THROUGH THE MATERIAL SEIZED AND HAS MADE A CATEGORICAL FINDING IN THE IMPUGNED ASSESSMENT ORDER AT PAGE 7 WHICH IS REPRODUCED AS BELOW: FROM THE EXAMINATION OF THE SEIZED BOOKS OF ACCOU NT AND DOCUMENTS AND ON DISCUSSION WITH THE ASSESSEE MR. KANTI PRASAD KEDIA WHO APPEARED PE RSONALLY IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 158BC, WHO HAD AN IMPRESSION THAT MR. KEDIA IS NOT A MAN OF MEANS. NETHER HE NOR HIS 117 COMPANIES WERE CAPABLE OF EAR NING AND OF PROCESSING CRORES OF RUPEES. IT APPEARED TO HIM THAT HE HAD BEEN UTILIZING THE P ROPRIETARY CONCERN STATED ABOVE AND 117 INVESTMENT COMPANIES LISTED IN ANNEXURE-1 OF THIS O RDER OF ASSESSMENT ARE INTERMEDIARY THROUGH WHOM THE BENEFICIARY COMPANIES INTRODUCED T HEIR OWN MONEY IN THEIR BUSINESS AND IN EXCHANGE OF THE SERVICES RENDERED MR. KEDIA EARNED COMMISSION OF CERTAIN AMOUNTS. 14. MOREOVER, IT WAS POINTED OUT BY THE LD. AR THAT THE AO HAS MADE THE ADDITION ON PROTECTIVE BASIS WITHOUT PREJUDICE TO THE RESPECTIV E OFFICERS FROM ASSESSING THE BENEFICIARY COMPANIES AND IT HAS BEEN BROUGHT TO OUR KNOWLEDGE THAT THE BENEFICIARY COMPANIES WERE IN FACT PROCEEDED AGAINST AND CONSEQUENTLY ADDITION ON SUBSTANTIVE BASIS WERE MADE AGAINST THEM AND ONE OF THE PARTIES WHO WAS AGGRIEVED BY TH E SUBSTANTIVE ADDITION, M/S. TRINETRA COMMERCE & TRADE PVT. LTD. APPROACHED THE HONBLE C ALCUTTA HIGH COURT WHEREIN THE HONBLE HIGH COURT IN ITA NO. 619 OF 2008 DATED 15. 09.2016 UPHELD THE ACTION OF THE AO IN MAKING SUBSTANTIVE ADDITION AGAINST THEM PURSUAN T TO THE SEARCH ACTION AND PROTECTIVE 12 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, ASSESSMENT AGAINST THE ASSESSEE. THE LD. AR DREW OU R ATTENTION TO ARTICLE 265 OF THE CONSTITUTION OF INDIA AND URGED THAT NO TAX CAN BE LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW AND MERELY BECAUSE THE ASSESSEE IN A DISTURBED MENTAL CONDITION HAS RETURNED HUGE AMOUNT TO THE TUNE OF RS.7.10 CR. AS HIS INCOME AND WHEN THE FACT REMAINS THAT DUE TO THE DISTRESSED MENTAL CONDITION HAS MADE SEVERAL INCONS ISTENT STATEMENTS DURING THE ASSESSMENT PROCEEDINGS U/S.158BC OF THE ACT WHEREIN HE HAS DEP OSED THAT HE HAS EARNED RS.15 TO 20 CR. ETC. SPEAKS VOLUME OF THE MENTAL CONDITIONS OF THE ASSESSEE, THEREFORE, THE AO AFTER INVESTIGATION AND GOING THOUGH THE SEIZED MATERIAL CAME TO THE RIGHT CONCLUSION THAT THE ASSESSEE IS A MAN OF NO MEANS AND CANNOT BE THE OWN ER OF CRORES OF RUPEES, BUT ADDED THE RETURNED INCOME AND MADE THE ADDITION OF RS.7.10 CR ORE SIMPLY BECAUSE THE ASSESSEE HAS RETURNED THE FIGURES, WHICH ACCORDING TO HIM IS NO T SUSTAINABLE AND ONLY THE CORRECT/REAL INCOME EARNED BY THE ASSESSEE, AS AN ACCOMMODATION ENTRY OPERATOR CAN AT BEST BE LEVIED AGAINST HIM AS PER THE CONSTITUTION OF INDIA. 15. ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOSE D THE PLEA OF THE LD. AR AND SUBMITTED THAT ONCE THE ASSESSEE HAS VOLUNTARILY RE TURNED THE INCOME PURSUANT TO NOTICE U/S. 158BC OF THE ACT, THERE IS NO QUESTION OF ASSESSING THE ASSESSEE AT A LOWER INCOME. THEREFORE, HE DOES NOT WANT US TO INTERFERE IN THE ORDER OF THE LOWER AUTHORITIES. 16. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE MATERIAL AVAILABLE ON RECORD. WE TAKE NOTE THAT PURSUANT TO THE NOTICE U/S. 158BC THE ASSESSEE HAS FILED RETURN OF INCOME AFTER APPROXIMATELY ONE YEAR AFTER GETTING THE NOTI CE. THE ASSESSEE HAS RETURNED TOTAL OF RS.7.10 CR. FOR THE BLOCK PERIOD. THIS ISSUE WAS NOT AGITATED BEFORE THE LD. CIT(A). HOWEVER, BEING A LEGAL ISSUE AS TO WHETHER THE ASSE SSEE CAN BE TAXED LOWER TO WHAT HE HAS RETURNED IN HIS INCOME IS BEING ADMITTED AS PER THE DECISION OF THE HONBLE SUPREME COURT IN NTPC WHEREIN THEIR LORDSHIPS HELD THAT QUESTION OF LAW CAN BE RAISED EVEN FOR THE FIRST TIME BEFORE THE TRIBUNAL. SO, WE ADMIT THE SAME AN D PROCEED TO ADJUDICATE THE ISSUE. 17. WE NOTE THAT THE AO HIMSELF HAS NOTED THAT THE ASSESSEE IS A MAN OF NO MEANS AND HAS OBSERVED THAT HE CANNOT OWN CRORES OF RUPEES. T HEREAFTER, HOWEVER, HE WENT AHEAD TO MAKE THE PROTECTIVE ASSESSMENT AND LATER PROCEEDED AGAINST BENEFICIARY COMPANIES; AND WE NOTE THAT THE AO HAS TAKEN ACTION AGAINST THE SAID BENEFICIARY COMPANIES AND ONE OF THE 13 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, PARTIES M/S. TRINETRA COMMERCE & TRADE PVT. LTD. CH ALLENGED THE SUBSTANTIVE ADDITION MADE AGAINST THEM. THE HONBLE CALCUTTA HIGH COURT HAS UPHELD THE ACTION OF THE AO IN MAKING SUBSTANTIVE ADDITION IN THEIR HANDS. 18. AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA , NO TAX SHALL BE LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW. MERELY BECAUS E THE ASSESSEE HAS RETURNED HUGE INCOME PURSUANT TO THE NOTICE U/S. 158BC OF THE ACT CANNOT BE THE SOLE REASON OF MAKING THE ADDITION. ACCORDING TO LD. AR, THE AO O UGHT TO HAVE TAXED THE ASSESSEE ONLY ON THE INCOME HE EARNED AND NOT ON PRESUMPTIVE BASIS. THE COORDINATE BENCH IN THE CASE OF SUSHIL KR. DAS VS. ITO REPORTED IN (201 1) 11 ITR 17 WAS CEASED OF THE QUESTION AS TO WHETHER THE INCOME DETERMINED BY THE AO ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE CAN BE A FIGURE LOWER THAN THE INCO ME RETURNED BY THE ASSESSEE. IT WAS HELD IN THE SAID CASE BY THE COORDINATE BENCH THAT IT IS A WELL SETTLED PRINCIPLE THAT FOR DETERMINING THE TAXABLE INCOME OF ASSESSEE UNDER TH E ACT SHOULD BE WITHIN THE PURVIEW OF LAW IN FORCE. IF THE TAXABLE INCOME DETERMINED BY THE AO IS NOT IN ACCORDANCE WITH SUCH PRINCIPLES, IT IS OPEN TO THE ASSESSEE TO CONT END THE SAME BEFORE THE HIGHER AUTHORITIES TO FOLLOW CORRECT APPLICATION OF LAW TO DETERMINE THE ACTUAL TAXABLE INCOME OF THE ASSESSEE . THE COORDINATE BENCH OBSERVED AS UNDER: IT IS A WELL SETTLED LAW THAT NO TAX CAN BE IMPOS ED WITHOUT THE AUTHORITY OF LAW AND THAT IF A TAX CANNOT BE IMPOSED THE SAME CANNOT BE COLLECTED MERE LY BECAUSE THE ASSESSEE HAS PAID THE SAME. IT IS UNCONSTITUTIONAL TO COLLECT TAX WITHOUT AUTHO RITY OF LAW. AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA STATES THAT NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAW. MERELY BECAUSE THE ASSESSEE UNDER WRONG UNDERSTANDI NG OF LAW OFFERS AMOUNT TO TAX THE SAME WILL NOT BE A REASON TO TAX THE SAID AMOUNT UNLESS IT IS LAWFUL TO TAX THE SAME. FOR THIS PROPOSITION, THE FOLLOWING CASE LAWS ARE RELIED ON: (I) CIT VS. (1994) 73 TAXMAN 437 (CAL); (II) MAINAC PODDAR (HUF) VS. WTO 262 ITR 633(CAL) (III) SAIL DSP VR EMPLOYEES ASSOCIATION 1998 VS. UOI 262 ITR 638 .IN OUR CONSIDERED VIEW, THE LOWER AUTHORITIE S ARE NOT ACCEPTED TO SAY THAT MERELY BECAUSE THE ASSESSEE HAS RETURNED INCOME WHICH IS H IGHER THAN THE INCOME DETERMINED IN ACCORDANCE WITH LEGAL PRINCIPLES SUCH RETURNED INCO ME CAN BE TREATED AS WRONGFULLY ASSESSED. THE ASSESSEE IS LIABLE TO PAY TAX ONLY UPON THE TAX ABLE INCOME. THE LAW EMPOWERED BY THE CONSTITUTION OF INDIA AND THE INCOME TAX ACT TO THE AO TO ASSESS THE INCOME IN ACCORDANCE WITH LAW AND DETERMINE THE TAX PAYABLE THEREON. IN DOIN G SO, THE AO CANNOT ASSESS THE INCOME OF THE ASSESSEE AN AMOUNT WHICH IS NOT TAXABLE AS PER LAW THOUGH SHOWN BY THE ASSESSEE IN THE RETURN. IT IS ALWAYS OPEN TO THE ASSESSEE TO TAKE A PLEA TH AT THE TAXABLE INCOME THOUGH SHOWN AS INCOME IS NOT TAXABLE UNDER THE LAW BEFORE THE HIGHER AUTH ORITIES. THE LD. CIT(A) WITHOUT GOING INTO THE MERITS OF THE CASE HELD THAT HE DOES NOT HAVE A NY POWER TO REDUCE THE TAXABLE INCOME OF THE ASSESSEE AT THE APPELLATE STAGE WHICH IS NOT CORREC T 14 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, 19. IT SHOULD BE NOTED THAT AO IS NO DOUBT AN AUTHO RITY APPOINTED BY THE UNION OF INDIA TO EXERCISE STATUTORY POWERS TO ASCERTAIN THE INCOM E OF A SUBJECT AND THE TAX PAYABLE TO HIM TO STATE. IT IS WELL SETTLED THAT AO IS DUTY BOUND TO TAX THE RIGHT INCOME IN THE HANDS OF THE RIGHT PERSON AND FOR THE RIGHT YEAR . AS PER THE CONSTITUTION OF INDIA, MANDATE (ARTIC LE 265) NO TAX SHALL BE LEVIED OR COLLECTED WITHOUT AUTHOR ITY OF LAW. SO, TAX BE LEVIED ONLY WITH AUTHORITY OF LAW AND IT CAN BE COLLECTED ONLY WITH AUTHORITY OF LAW, IN OTHER WORDS TAX CANNOT BE LEVIED OR COLLECTED IN THE ABSENCE OF THE AUTHOR ITY OF LAW. THE AUTHORITY OF LAW FLOWS FROM PARLIAMENT. EQUALLY IMPORTANT TO KEEP IN MIND THE PRINCIPLE OF RULE OF LAW WHICH IS ONE OF THE BASIC FEATURE OF THE CONSTITUTION. T HE HONBLE SUPREME COURT IN GLASSROCK ESTATE (P) LTD. VS. STATE OF TN 2010 (10) SCC 96 HA S EXPLAINED THE PRINCIPLE OF RULE OF LAW WHICH IS AS UNDER: THE EXPRESSION RULE OF LAW DESCRIBES A SOCIETY IN WHICH GOVERNMENT MUST ACT IN ACCORDANCE WITH LAW. A SOCIETY GOVERNED BY LAW IS THE FOUNDATION OF PERSONAL LIBERTY. IT IS ALSO THE FOUNDATION OF ECONOMIC DEVELOPMENT. SINCE INVESTMENT WILL NOT TAKE PLACE WHERE RIGHTS ARE NOT RESPECTED. IT IS IN THAT SENSE THAT THE EXPRESSION RULE OF LAW CONSTITUTES AN OVER ARCHING PRINCIPLE EMBODIED IN ARTICLE 21, ONE ASPECT OF WHICH IS EQUALITY. IT IS IN THAT CONTEXT THE HONBLE SUPREME COURT HAS USED THE PHRA SE ARTICLE 21 READ WITH ARTICLE 14 OF THE CONSTITUTION OF INDIA. 20. THEREFORE, THE PRINCIPLE OF RULE OF LAW MANDATE S THE GOVERNMENT TO ACT ONLY IN ACCORDANCE TO LAW . THE RULE OF LAW IS AN OVER-ARCHING PRINCIPLE O F LAW, WHICH IS A BASIC FEATURE OF THE CONSTITUTION. SO READ TOGETHER WITH ARTICLE 265 OF THE CONSTITUTION, THAT NO. TAX SHALL BE LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW, MEANS THAT AO SHOULD ASSESS THE INCOME OF THE ASSESSEE ONLY IN ACCORDANCE TO LAW. 21. IT SHOULD BE KEPT IN MIND THE DUTY OF AO AS PER THE ACT, THE AO IS NOT ONLY A QUASI JUDICIAL AUTHORITY, HE IS ALSO AN INVESTIGATOR. SO ACTUAL ROLE NEED TO BE DISCHARGED BY THE AO. THE AO SHOULD NOT SIT WITH FOLDED HANDS WHEN T HE RETURN IS FILED AND ACCEPT IT WITHOUT A MURMUR. A QUEST FOR FINDING THE TRUTH SHOULD BE T HE MOTTO OF EVERY QUASI/JUDICIAL BODY AND AO SHOULD MAKE ALL ENDEAVORS TO DO SO. AO IS EMPOW ERED TO FIND OUT THE VERACITY OF THE RETURNED INCOME AS PER LAW. THE AO SHOULD NOT TAKE ADVANTAGE OF THE IGNORANCE OF THE ASSESSEE, AND EVEN IF THE ASSESSEE HAS RETURNED MIS TAKENLY A HIGHER INCOME WHICH IS BASED ON MISCONCEPTION OF LAW, THE AO IS DUTY BOUND TO TA X ONLY THE RIGHT INCOME. 15 IT(SS)A NO. 104/KOL/2008 & 113/KOL/2008 M/S. KANTI PRASAD KEDIA, 22. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE NOTE THAT THE AO HIMSELF FINDS THAT THE ASSESSEE IS A MAN OF NO MEANS AND WA S OF THE CONSIDERED OPINION THAT CRORES OF RUPEES CANNOT BELONG TO THE ASSESSEE. THEREFORE, I N THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, MERELY BECAME THE ASSESSEE RETURNED RS.7. 10 CR. AS INCOME IN A DISTURBED MENTAL CONDITION CANNOT BE THE BED-ROCK ON WHICH THE ASSES SMENT OF INCOME OF THE ASSESSEE CAN BE MADE. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF T HE CASE, WE SET ASIDE THE ADDITION OF RS.7.10 CR. AND IN THE INTEREST OF JUSTICE, THIS IS SUE IS RESTORED BACK TO THE FILE OF THE AO TO EXAMINE THE SEIZED MATERIAL AND THEN RECOMPUTE THE INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. THE AO SHALL CORRELATE THE MATERIAL SEIZED BASED ON WHICH THE AO SHALL ARRIVE AT THE CORRECT TAXABLE INCOME OF THE ASSESSEE FOR THE BLOC K PERIOD. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31.03.201 7 SD/- SD/- (WASEEM AHMED) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :31ST MARCH, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. KANTI PRASAD KEDIA, 9, JAGMOHAN MU LLICK LANE, KOLKATA-700 007. 2 RESPONDENT JCIT, SPL. RANGE-23, KOLKATA/ ITO, WD-9 (4), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .