JUGAL CHANDRA SAIKIA,GUWAHATI V. INCOME TAX OFFICER, WARD-1(3), GUWAHATI

ITA 258/GTY/2018

AI Insights

The case involves appeals by Jugal Chandra Saikia against the orders of the Commissioner of Income Tax (Appeals), Guwahati, which confirmed the assessments made by the Income Tax Officer. The assessments were based on allegations of involvement in the LOC Scam, a fraud involving the misuse of government funds for personal gain. The Tribunal noted that the criminal cases against Saikia were still pending and no final judgments had been made regarding his involvement or the exact amount of any alleged gains. Consequently, the Tribunal set aside the CIT(A)'s orders and remanded the case for re-evaluation post the conclusion of the criminal proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46714 (ITAT-GUWAHATI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 1992-1993
• Other Referred Cases: Shri Janardan Mishra V ITO, State (CBI) v Dr. Absaduz Zaman and Others, State (CBI) Vs. Sh. J. Ahmed & Ors
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FINDING HIM GUILTY
• Keywords: Set aside; Unexplained investment; Reopening of assessment; Reason to believe; Tangible material
• Section: 147; 148; 143(3); 250; 154; 251; 153; 22; 13; 2(A); 13(2); 20

Judgement Text

"आयकर अपीलीय अधिकरण गुवाहाटी पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH AT KOLKATA [वर्ुुअल कोटु] [Virtual Court] श्री मनमोहन दास, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI MANOMOHAN DAS, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia Vs. ITO, Ward-1(3), Guwahati (Appellant) (Respondent) PAN: AUBPS5282M Appearances: Assessee represented by : Uttam Kumar Borthakur, Adv. Department represented by : Kausik Ray, JCIT. Date of concluding the hearing : January 2nd, 2024 Date of pronouncing the order : January 27th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: Both these appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals), Guwahati [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 1992-93 & 1993- 94 dated 29.06.2018, which have been passed against the assessment Page | 2 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. order u/s 254 of the Act, dated 20.12.2016. Since the issues in both the appeals are common, they were heard together and are being decided by this common order for the sake of convenience and brevity. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: I. I.T.A. No. 258/GTY/2018; AY 1992-93: “1 For that, on the facts and in the circumstances, the learned Commissioner of Income Tax (Appeals), Guwahati-1, Guwahati [\"CIT(A)\" for short hereafter] has erred in law and in fact in dismissing the appeal and thereby confirming the assessment order, as held by him to be passed under section 143 (3) read with Sections 147 and 254, by the learned Assessing Officer (\"AO\" for short hereafter) on the pleas that: (A) the Appellant could not submit the judgements of the sub-judge within the time limit; (B) the learned CIT(A) had no other option but to sustain the assessment order in view of the fact that the Honourable Court had not passed any orders in the said cases; and (C) the request of the appellant to keep the appeal pending in the interest of justice could not be entertained by the learned CIT(A) in view of governmental policies and norms to be followed in respect of disposal of appeals. 2. For that, on the facts and in the circumstances, the learned Commissioner of Income Tax (Appeals), Guwahati-1, Guwahati [\"CIT(A)\" for short hereafter] has erred in law and in fact in confirming the assessment order dated 20/12/2016 that was liable to be set aside and quashed. 3. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law and in fact in confirming the assessment of the revised income at Rs.340270/- against the returned income of Rs.47150/-. The addition to income of Rs.293117/- is liable to be deleted in full. As otherwise, the addition made to income is excessive. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.176177/- was added back to the income of the appellant in spite of the fact that such addition had been made relying solely on the Page | 3 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. allegations contained in a charge sheet before a court under Criminal Law and not on the basis of any relevant materials pertaining to the income of the appellant. 5. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order, whereby an amount of Rs.176177/- was added back to the income of the appellant, by prejudging a matter pending before appropriate court of law for adjudication, without any relevant materials to show that the appellant was involved in a crime, as alleged, and/ or that the appellant had derived any income, assessable under the Act for the relevant year, from his involvement in such crime. 6. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.176177/- was added back to the income of the appellant, on the plea that the appellant could not produce any documentary evidence that he was not involved in the LOC Scam, as alleged in the CBI charge sheet, and thereby has caused grave miscarriage of justice by not adhering to the due process of law and by requiring the appellant to perform the impossible. 7. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order, whereby an amount of Rs.176177/- was added back to the income of the appellant, as income from LOC Scam, estimated at 1/16th of 60 percent of Rs.4698049/- , which is patently without basis and mere surmises and conjectures. 8. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.115500/- was added back to the income of the appellant representing the purchase consideration of a land standing in the name of Smt Giribala Saikia, wife of the appellant. 9. For that, the appellant begs leave of putting forward additional ground/ grounds in addition to, modification/substitution of the above ground of appeal before or at the time of hearing.” II. I.T.A. No. 259/GTY/2018; AY 1993-94: “1. For that, on the facts and in the circumstances, the learned Commissioner of Income Tax (Appeals), Guwahati-1, Guwahati [\"CIT(A)\" for short hereafter] has erred in law and in fact in dismissing the appeal, save and except his direction that the assessed income was to be taken at Rs.1822610/-, and not Rs.2583060/-, as wrongly taken by the learned Assessing Officer (\"AO\" for short hereafter), and thereby in confirming the assessment order, which was Page | 4 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. held by him to be passed under section 143 (3) read with Sections 147 and 254, on the pleas that: (A) the Appellant could not submit the judgements of the sub-judge within the time limit; (B) the learned CIT(A) had no other option but to sustain the assessment order in view of the fact that the Honourable Court had not passed any orders in the said cases; and (C) the request of the appellant to keep the appeal pending in the interest of justice could not be entertained by the learned CIT(A) in view of governmental policies and norms to be followed in respect of disposal of appeals. 2. For that, on the facts and in the circumstances, the learned Commissioner of Income Tax (Appeals), Guwahati-1, Guwahati [\"CIT(A)\" for short hereafter] has erred in law and in fact in otherwise confirming the assessment order dated 20/12/2016 that was liable to be set aside and quashed. 3. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law and in fact in confirming the assessment of the revised income at Rs.1822610/- against the returned income of Rs.74701/-. The addition to income of Rs.1747899/- is liable to be deleted in full. 4. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.1747899/- has been added back to the income of the appellant in spite of the fact that such addition has been made relying solely on the allegations contained in charge - sheets filed before a court under Criminal Law and not on the basis of any relevant materials pertaining to the income of the appellant. 5. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.1747899/- was added back to the income of the appellant, by prejudging a matter pending before appropriate court of law for adjudication, without any relevant materials to show that the appellant was involved in a crime, as alleged, and/ or that the appellant had derived any income, assessable under the Act for the relevant year, from his involvement in such crime. 6. For that, on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in fact in confirming the assessment order whereby an amount of Rs.1747899/- was added back to the income of the appellant, on the plea that the appellant could not produce any documentary evidence that he was not involved in the LOC Scam, as alleged in the CBI charge sheet, Page | 5 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. and thereby has caused grave miscarriage of justice by not adhering to the due process of law and by requiring the appellant to perform the impossible. 7. erred For that, on the facts and in the circumstances of the case, the learned CIT(A) has in law in fact in confirming the assessment order whereby an amount of Rs.1747899/- was added back to the income of the appellant, as income from LOC Scam, computed by estimating Rs.9,35,761/- at 1/16th part of 60 percent of Rs.2,49,53,627/- of Barpeta DVO, as 16 officials were named therein, another amount of Rs.5, 60, 117/- at 1/13th part of 60 percent of Rs.1, 21, 35, 879/ of Howli ICDP Scam, as 13 officials were named therein and another Rs.2,52,021/- at 1/5th part of 60 percent of Rs.21,00,177/- from Nagaon Treasury, as 5 officials were named therein 1/16th of 60 percent of Rs.4698049/-, which is patently without basis and mere surmises and conjectures. 8. For that, the appellant begs leave of putting forward additional ground/ grounds in addition to, modification/ substitution of the above ground of appeal before or at the time of hearing.” 3. Rival contentions were heard and the records and the submissions made have been examined. Brief facts of the case as submitted before the Ld. CIT(A) in ITA No. 259/GTY/2018 summarise the contentions of the assessee and are as under: 1.0 The impugned order is the upshot of the original order u/s 143(3)/147 dated 31/03/2003 (Order u/s 143(3)/147 dated 31/03/2003, ANNEXURE-1). The assessment order is incomplete in the sense that the details of computation of income are not available and tax is directly computed in page 4 after an incomplete page 3, as available with us. Your honour may be pleased to call for the records if deemed fit and proper. However, I have reconstructed the disputed amounts, as added back, on the basis of the narratives in the assessment order and the findings of the learned CIT(Appeals) in the first round in the additions made are enumerated below: Income from \"LOC SCAM\" (As discussed in the order) Barpeta DVO (1/15th of 60% of 2, 49, 53, 627/-) 935761 Howly ICDP (1/13th of 60% of 1, 21, 35, 879/-) 560117 Nagaon Treasury (1/5th of 60% of 21, 00, 177/-) 252021 1747899 Unexplained investment in residential building 760455 Total disputed additions to income: 2508354 Page | 6 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. 1.1 In appeal bearing number Guwa-109/2003-04/TR, the learned CIT (A)-II, by an order dated 30/11/2006 partly allowed the appeal by holding that the addition was based on too many assumptions. The said appellate authority further held that as otherwise no separate addition of Rs.7,60,455/- for investment in residential building was necessary, as there was 'undisclosed income' of Rs.17,47,899/-. (Appeal order at Page number 5 to 9 of the paper-book, at ANNEXURE- 2). Accordingly, relief was granted of Rs.7,60,455/-. The effect was given to the aforesaid order by an order purportedly made under section 251 dated 21/03/2007 passed by the learned AO where the Revised Total Income after appeal effect was considered at Rs.:18,22,610/-. (Appeal effect at Page number 10 to 11 of the paper-book, at ANNEXURE-3) 1.2 By way of a common order in my case, the Hon'ble ITAT, in I. T. A. No. 60 & 61/ GAU/2010 for the assessment years 1992-93 and 1993-94 allowed the appeals of the appellant with direction to the learned AO to reframe the reassessment order afresh in the light of findings of the Special Judge on the charge sheet filed against the appellant. (Tribunal's order at Page number 12 to 16 of the paper-book, at ANNEXURE-4) {emphasis supplied} 1.3 The learned AO has given effect to the Hon'ble Tribunal's order by the purported order u/s 254 (which should have been u/s 143(3)/147/254 or 143(3)/ 147/254, as the case may be) on 20/12/2016 by assessing the income, as per the original assessment order dated 31/03/2003, at Rs.25,83,060/-. Prima-facie, this is a wrong order, as the income after appeal effect was Rs.18,22,610/-. 1.4 The present appeal is against the said order. REGRADING GROUND No. 1 READ WITH GROUNDS 2 TO 7 2.0 An assessment cannot be passed under section 254. The original assessment was made u/s 143(3) read with section 147. The present order has been passed to give effect to an order u/s 254. I complied with the notice fixing hearing. The order should be under section 143(3)/147/254. 2.1 Apart from the wrong nomenclature, the original assessment was re-opened admittedly on the 'accusations' contained in 2 (two) CBI charge-sheet without any tangible material that income had escaped assessment. It makes the entire proceeding void ab initio, as the condition precedent i.e. reason to believe was absent, as recorded u/s 148(2) on 30/05/2001. 2.2 The assessment also suffers from perversity of facts and law and therefore without jurisdiction. The assessment of income from LOC SCAM at Rs. 17,47,899/- is not based on any material about receipt of such income, but is an estimate made on pure surmise and conjecture. Page | 7 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. That apart, the addition on account of investment in residential building of Rs.7,60,455/- was deleted by the said Learned First Appellate Authority in appeal bearing number Guwa-109/2003-04/TR on 30/11/2006 (ANNEXURE-2). The appeal effect was given on 21/03/2007 u/s 251 revising the income to Rs.18, 22, 610/-. The Department did not file any appeal against such deletion before the Hon'ble ITAT. Therefore, the Revised Total Income became final at Rs.18,22,610/-. The learned AO in defiance of the provision of the Act, established law and order of his superiors have ignored the Revised Total Income at Rs.18,22,610/- without jurisdiction and determined a non-existent income of Rs.25,83,060/-. 2.3 In addition to the above preliminary submissions, the detail submissions are being made here after in respect of other specific grounds. REGRADING GROUNDS 3 TO 6 READ WITH GROUND No. 2 3.0 In the 1st paragraph of 1st page of the order u/s 143(3)/147(ANNEXURE-1, Page1, P.B.), the learned AO had disclosed that he received 'information' that I was an accused in a scandal called LOC SCAM related to Animal Husbandry and Veterinary Department of the Government of Assam and that I had been named as an accused by the CBI in that scam in two charge-sheets' namely, RC - 2(A) / 94 of ACU-I and RC - 5(A) / 94 of ACU-II. The learned AO had not mentioned that such information contained any tangible material to show that I had earned income from such scam that had escaped assessment. Without such tangible material, the learned AO was not authorized in law to clothe himself with the jurisdiction to re-open the assessment proceeding. Therefore, my preliminary submission is that your honour may kindly call for the records and examine the reason, as recorded on 30/05/2001 u/s 148(2), to see whether the learned AO had any 'tangible material' (CIT v Kelvinator India Limited ([2010] 320 ITR 561 (SC): At Page No. 564 to 565, paragraph 6 & 7) to have a 'cause' or 'justification' to form a 'belief' as a prudent man that I had earned any income from such scam. I submit that there could be no tangible material on the basis of unproved allegation. No other corroborative material of evidentiary value had been indicated. Therefore, the impugned assessment order purportedly passed u/s 254 as a sequel to the void order u/s 143(3) / 147 dated 31/03/2003 is liable to be quashed. 3.1 As stated above, in view of the relief granted in the appeal order dated 30/11/2016 in Guwa-109/2003-04/TR on 30/11/2006 (ANNEXURE-2) the revised total income was scaled down to Rs.18,22,610/- in appeal effect u/s 251 dated 21/03/2007 (ANNEXURE-3) that was not challenged in appeal by the Page | 8 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. Department before the Hon'ble ITAT. Therefore, the assessment of Income at Rs.25,83,060/- in the purported order u/s 254 is evidently bad in law and in fact. 3.2 The learned AO has referred to the CBI allegations contained in the cases registered by it as RC-2(A)/ 94 of ACU-I and RC-5(A)/94-ACU-I. The learned AO has found that in respect of RC-2(A)/ 94 of ACU-I related to Nagaon Treasury, I, along with 4 (four) other persons, allegedly drew Rs.21,00,177/- from the government fund. He also has found that in respect of RC-5(A)/ 94-ACU-I of Barpeta Treasury the total alleged scam was of Rs.3,70,89,506/-. Out of this, an amount of Rs.2,49,53,627/- related to Barpeta DVO and the number of accused including me was 16 (sixteen). The remaining amount of Rs.1,21,35,879/- related to Howly ICDP and the number of accused including me was 13 (thirteen). The allegation was that false sanction orders issued without having any proposal regarding the purchase of medicine/materials and without any allocation of funds from the Secretariat by violating norms and procedures. My submission before him was that the matter was sub-judice (Line no. 1 from top, Page 3 of P.B., Annexure-1). But, the learned AO, determined an income of Rs.17,47,899/- in my hand from the said SCAM, on the plea that 'no documentary evidence about the non- involvement in the scam was produced by the assessee'. 3.3 That the learned AO has no jurisdiction to decide whether I was involved in the so called LOC SCAM. The jurisdiction lies with the Court of Special Judge, Assam, CBI Court, Panbazar, Guwahati. So the aforesaid reason (no documentary evidence about the non-involvement in the scam was produced by the assessee) adduced for addition of Rs.17,47,899/- is not tenable in law. Since he asserts that I am involved in a crime, the burden is on him to prove that. He acted on the irrelevant material in so far as he is concerned. The allegation about my complicity in a crime has no implication in framing the assessment. He has failed to point out any material to show that I had 'earned' income from the crime, that such Income had escaped assessment and finally that the quantum had been Rs.17,47,899/-. There has to be independent finding of materials to corroborate the assessment. The entire addition is therefore without jurisdiction, without basis and liable to be quashed. In the purported order u/s 254, the learned AO has made an identical assessment, which is required to be quashed and deleted. 3.4 The learned AO has added back Rs.17,47,899/-, as my income from LOC SCAM. He has done so on the basis of two cases. Page | 9 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. (A) The first is related to Barpeta Treasury that was registered by the CBI as RC- 5(A)/94-ACU-I. The said case has two parts: Barpeta DVO and Howly ICDP, as found by the learned AO in the original order. These are still being prosecuted in The Court of Special Judge, CBI, Guwahati, Assam as Special Case no. 56 and 57/2004. My advocate Sri Kapil Jain on my request has issued a certificate dated 05/05/2017 about the present status of the cases. It clearly says that the cases are now pending for trial and the next dates for examination of prosecution witness are fixed on 31/05/2017, 01/06/2017 and 02/06/2017. (ANNEXURE- 5, 5A at Page No. 17, 18 of the Paper-book). By adding back Rs.14, 95, 878/- (935761+560117) [Kindly refer to 1st paragraph of page 3 of P.B, ANNEXURE-1] as my income, the learned AO has without jurisdiction pre-judged the case before the Hon'ble Special Judge by finding me guilty of the crime. He did not stop at that; he went ahead to hold without any relevant finding that I had earned income from the said crime and that the quantum of such income was Rs.14,95,878/-. The action of the learned AO Is against the due process of law, it is an abuse of the process of law, findings are perverse that render the assessment order without jurisdiction and the usurpation of jurisdiction of the Hon'ble Judge has rendered the assessment order a nullity in the eyes of law. (B) The learned AO added back another Rs.2,52,021/- on account of Nagaon Treasury, in another case registered as RC-2(A)/ 94 of ACU-I. [Kindly refer to 1st paragraph of page 3 of P.B, ANNEXURE-1]. By doing so, the learned AO has without jurisdiction pre-judged the case before the Hon'ble Special Judge by finding me guilty of the crime. He did not stop at that; he went ahead to hold without any relevant finding that I had earned Income from the said crime and that the quantum of such income was Rs.2,52,021/-. The present AO in the impugned order merely repeated his predecessor. I must, however, update your honour on the subsequent events. On 09/05/2014, the Court of the Special Judge, CBI, Assam, Guwahati had passed an order in Special Case no.67/2004 (new)/ 18(c) /1997 (old) related to Nagaon Treasury that was registered by the CBI as RC-2(A)/ 94 of ACU-I. In that order, I have been found guilty with 6(six) others u/s 120B/420IPC and 471 IPC/ 13(2) r.w. 13 (1) (d) of the PC Act. However, there is no finding about any Income earned by me and/or any amount. I submit herewith a photocopy thereof for your kind perusal (ANNEXURE- 6, Pages 19 to 84) Be that as it may, even the conviction in this particular case has not reached any finality, as on 27/06/2014, the appeal against the order in Crl Appeal 217/2014 has been admitted for hearing and the bail has been continued in Crl. M.C. Page | 10 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. 585/2014 in Crl.A 217/2014. I submit herewith two photocopies thereof for your kind perusal (ANINEXURE-7, 7A, Pages 85 to 88). The matter remains sub-judice. There is no finding about my earning of any income and/or the quantum thereof. Therefore, my submissions remain as above. In addition, it is evident that there is no finding about me earning any income and/ or amount of such Income. In the absence of such finding of the Court, the learned AO is precluded from drawing any conclusion about my income unless he gives any independent finding to corroborate it with materials of probative value. It is submitted that the present learned AO therefore, without application of mind, passed an identical assessment order, as was done by his predecessor and the same is liable to be quashed and the amounts deleted for the aforesaid reason as well. 3.5 In the original assessment order, which has been repeated in the present impugned assessment order purportedly passed u/s 254, the plea taken by the learned AO, in order to add back Rs.17,47,899/-, has been that I had failed to prove my non-involvement in LOC SCAM. The plea is absurd in as much as till now my involvement in the crime alleged in CBI case RC-5(A)/94-ACU-I that is being prosecuted as Special Cases no. 56 & 57/2004 has not been proved. The Judgment of the Special Judge in Special Case 67/2004 related to Nagaon Treasury does not give any finding about my income from the crime or about any quantum. Even that case is in appeal before the Hon'ble High Court. It would be repetitive to say the well established principle that a person is considered as innocent of an alleged crime until proved guilty as charged. Therefore, the aforesaid plea in adding back Rs.17,47,899/- is a pretence, being abuse of the process of law and liable to be quashed and deleted in full. It is the assertion on the part of the learned AO that I was involved in a crime. From a plain reading of the relevant provision of law relating to evidence that it is the burden of the person to prove the truth of the assertion. I cannot be called upon to prove the nugatory. The learned AO has not only caused miscarriage of justice, as stated earlier above, he has also asked me to do what is called performance of the impossible in law. In that view of the matter also, the assessment of Rs.17,47,899/- is liable to be quashed and deleted in full. 3.6 The learned AO has repeated the addition of Rs.17,47,899/- made by his predecessor in office, as income from LOC Scam. It has been estimated as the sum of 1/16th of 60% of Rs.2,49,53,627/-, 1/13th of 60% of Rs.1,21,35,879/- and 1/5th of 60% of Rs.21,00,177/-. The amounts of Rs.2,49,53,627/-, Rs.1,21,35,879/- and Rs.21,00,177/- are stated to be the alleged fraudulent bills under the scanner (ANNEXURE-1, page 3 of Paper book). The AO has assumed without stating any basis that 60% (sixty percent) thereof has been the illicit gratification, which was received by the 16, 13 and 5 accused respectively. Then, Page | 11 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. by assuming again, without basis that each of the accused has taken equally, he determined my alleged income from the booty at Rs.17,47,899/-. An assessment u/s 143(3)/ 147 during the course of which the above determination was made must be based after collecting all 'materials' and after hearing all 'evidence'. The learned AO did not carry out this mandate of law. Instead, the learned AO estimated the income to make addition on pure whimsy. Neither my receipt of any income been corroborated at any stage nor the justification of the material basis of the estimate has been indicated. Being contrary to the express mandate of law, the assessment and estimate are liable to be quashed and deleted. 4. We have heard the rival contentions and also gone through the facts of the case. This is a matter where addition has been made on account of alleged frauds committed by the assessee along with other officials for which the criminal proceedings are still pending before the competent Court and have not been concluded. The Ld. CIT(A) dismissed the appeal of the assessee by his decision as under: “I have gone through the above submissions of the Appellant and have considered the facts and evidences on record. I find that the Honourable Tribunal remitted the matter to the file of Assessing Officer in view of a large number of decisions of the Co-ordinate benches where similarly placed matters have been remitted to the file of Assessing Officer for fresh adjudication after validity of charge sheet is judicially examined by the Sub-judge. The Honourable Tribunal had further directed that the Assessing Officer should not keep the fresh assessment pending forever to await the decision of the Sub Judge, and that he must pass the fresh assessment order, well within the time limit, to protect the legitimate interest of revenue. In view of the fact that appellant could not submit the judgments within the time limit, the AO had no option but to pass the fresh assessment by determining the total income as earlier passed in his case u/s 143(3)/147 on 31/03/2003. In ground no. 1, the appellant raised a point that an assessment order cannot be passed under section 254. He submitted that in the instant case the original assessment was passed consequent to re-opening of assessment under section 147 after hearing the appellant under section 143(3). The present assessment was to give effect to order under section 254. So, it ought Page | 12 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. to be an assessment order u/s 143(3) read with Sections 147 and 254. I find that the present appeal has been made under section 143(3) as per direction of the Hon'ble Tribunal. Therefore, it should be read as an order u/s 143(3) read with section 254. As contended by the appellant in ground no. 2, I have found that Honourable Commissioner of Income Tax (Appeals)-II, Guwahati while disposing of the Appeal Number Guwa-109/2003-04/TR on 30/11/2016 in the case of the appellant for the assessment year in consideration allowed relief of Rs. 7,60,455/-, on account of investment in residential building against assessed income of Rs. 25,83,060/-, of which appeal effect was given on 21/03/2007 by assessing the Total Income at Rs.18,22,610/- by way of an order u/s 251 read with section 143(3)/147. In the Hon'ble Tribunal's order, I find no mention of any cross-objection by the Department on this point. Therefore, I hold that the learned AO, in his impugned order has wrongly taken the assessed income at Rs.25,83,060/-. It should have been Rs.18,22,610/- as per the subsequent order dated 21/03/2007 and the Ld AO is directed to correct this apparent mistake from record u/s 154 of the Act. I have gone through the order of the Special Judge, CBI, Assam, Guwahati passed on 09/05/2014 in Special Case no.67/2004 (new)/18(c)/1997 (old) related to Nagaon Treasury that was registered by the CBI as RC-2(A)/ 94 of ACU-I. In that order, the appellant have been found guilty with 6(six) others u/s 120B/420IPC and 471 IPC/ 13(2) r.w. 13 (1) (d) of the PC Act. The points decided by the Hon'ble Court were, \"Whether the appellant, along with others, (1) conspired to cheat the government of Assam, (2) whether through such conspiracy obtained forged LOC andfalse sanction orders, (3) obtained false medicine bills and fictitious bills in the names of fictitious firms, (4) Falsified records of ICDP, (5) wrote false letter to the Director for obtaining re-sanction of the amount and submitted false bills without supplying medicines, (6) illegally passed those bills and dishonestly and fraudulently induced the Government of Assam to deliver Rs. 21,00,177/- and thereby cheated the said government, (7) fraudulently and dishonestly used forged documents as genuine and (8) as public servants committed criminal misconduct by abusing their position and power and obtained for themselves and for others pecuniary advantage to the tune of Rs.21,00,177/-, as evident from the Paragraphs 5 to 5.1 of the said judgment. Page | 13 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. At paragraph 50 of the aforesaid Judgment the Hon'ble Special Court had found as follows in respect of the appellant: \"........... From our earlier discussions of the evidence it has revealed that Ext. 5/4 is the draft of sanction order for an amount of Rs. 5,80,711.47 for ICDP, Nagaon in respect of payment to firm M/S Prabhat Surgicals and it bears the signature of J. C. Saikia, Director. It reveals from the materials on record that Prabhat Surgicals is not an approved firm of the Vety. department. It cannot be believed that it was not within the knowledge of the signatories of Ext. 5/4 and also of the sanction orders. During the course of argument it has been submitted that accused J. C. Saikia only revalidated the sanction order. But in our earlier discussions we have found sufficient materials against him and also against accused T. Chakravarty who gave notes and prepared draft sanction order.\" At paragraph 51, the Honourable Special Court had pronounced the following sentence upon the appellant him: 6 (six) months rigorous imprisonment each U/S 120B I.P.C. and they are again sentenced with 2(two) years rigorous imprisonment and with fine of Rs.5, 000/- (five thousand) in default three months rigorous imprisonment each U/S 420 I.P.C Accused Tileswar Dutta, Jiten Hazarika, Jugal Ch. Saikia and T. Chakravarty are again sentenced with 6 (six) months Rigorous imprisonment each U/S 471 IPC. They are also sentenced with one year rigorous imprisonment and with fine of Rs. 1,000/- (one thousand) i/d fifteen days R.I. each U/S 13(2) r/w 13(1)(d) of the P.C. Act. Period in jail shall be set off. The sentence of imprisonment shall run concurrently.\" I have found no quantification of the pecuniary gains by the appellant in the entire judgment, save and except the fact that he was found to be involved in sanction of a for an amount of Rs.5,80,711.47 for ICDP, Nagaon in respect of payment to firm M/S Prabhat Surgicals, which was not an approved firm. So, in the light of the said judgment, without any corroborating evidence and materials brought on record, the pecuniary gains, if any, cannot be quantified. However, the aforesaid case has not reached finality in view of the fact that a Criminal Appeal bearing no. 217/2014 has been preferred by the appellant before the Honourable Gauhati High Court and by way of an order dated 27/06/2014 the said Court has allowed him remain on bail as evident from the copy of the order in Crl. Misc Case no. 585/2014 furnished before me. In view of the aforesaid facts related to Special Case no. 67/2004 related to Nagaon Treasury, and in view of the certificates issued by the appellant's counsel Sri Kapil Jain, Advocate and appellant's own submissions that the Honourable Special Judge's Court has not yet passed any orders in the other Page | 14 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. two cases related to Barpeta DVO and Howly ICDP i.e. Special Cases nos. 56/04 and 57/04 and the hearings are still continuing, I too have no other option but to sustain the impugned assessment order to the extent of addition of Rs.17,47,899/-, which was estimated in respect of the 'LOC scam'. Ground nos. 3, 4, 5 and 6 are disposed of accordingly. Ground no. 7 is dismissed as redundant as no additional ground was pressed before me. 9. In the result, the appeal is partly allowed. In the result the appeal is decided as above.” 5. At the conclusion of the hearing, the Ld. AR was also required to furnish a synopsis of his arguments which were filed and have been perused and the extract from the same is as under: 3.0 As regards the matter related to ITA No. 259/GTY/2018 for the A.Y. 1993-94 the appellant seeks to put forward the submissions and notes, as directed by the Honourable Tribunal, to the best of his ability, as hereafter appearing 4.0 The appellant was an officer of the Government of Assam. He was one of the three Individuals, who held the post of the Director of the Animal Husbandry and Veterinary Department of the Government of Assam during the period 1990-92 obviously consisting of financial years 1989-90 (part), 1990-91, 1991-92 and 1992-93 (part). To his knowledge, he joined as the Director on 30.11.1991 and went into suspension on 08.08.1993 and retired on 11.04.1994. 5.0 The Central Bureau of Investigation (CBI) submitted two charge-sheets RC- 2(A)/94 of ACU-I and RC-5(A)/94 of ACU-II in respect of Nagaon Treasury and Barpeta Treasury respectively concerning a part of a larger scandal known as LOC scam. The appellant was an accused in those charge-sheets. No return was filed by the appellant for the assessment year 1993-94, as no tax was due on his income. By dint of the aforesaid charge-sheets his case was re-opened vide notice under section 148 dated 30.05.2001 and the return in response was filed on 27.02.2003. 6.0 In the original assessment order dated 31.03.2003 under section 143(3)/147 (kindly refer to Enclosure-82 page 11-14 of the paper-book dated 19.10.2020), the learned Assessing Office (AO for short hereafter) found from the charge-sheet Page | 15 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. RC-2(A)/94-ACU-I in respect of Nagaon Treasury that the appellant with others had dishonestly and fraudulently drawn Rs.2100177 against forged LOC (Letter of Credit) of Rs.2230000 on the basis of false/ forged or fictitious sanction letters, bills etc., by falsifying and forging various official records without purchase receipt of medicines /materials. 7.0 In addition, the learned Assessing Officer (AO for short hereafter) found from the charge-sheet RC-5(A)/94 of ACU-II in respect of Barpeta Treasury that the appellant with others had issued 12 false sanction orders without any proposal from the (a) DVO's Office of Barpeta and (b) the ICDP, Howly regarding purchase of medicines/materials and without any allocation of funds from the Secretariat by violating Treasury rules and norms. He thereafter reproduced a list of fraudulent bills related to false sanction orders pertaining to financial year 1992- 93 aggregating to Rs.37089506. 8.0 During the course of assessment proceedings, certain documents, which were called for were filed. It was inter-alia submitted that the matter was sub-judice. But the learned AO went on to estimate the income of the appellant from the scam. 9.0 The learned AO estimated the appellant's share of pecuniary benefit from Nagaon Treasury Scam at Rs. 252021 by dividing equally among 5 co-accused 60% of Rs. 2100177. This was related to charge-sheet RC-2(A)/94 of ACU-1. Similarly, for charge-sheet RC-5(A)/94 of ACU-II related to Barpeta Treasury, the said authority computed such pecuniary benefit from two sources: (1) Barpeta, DVO and (2) ICDP, Howly. In respect of Barpeta DVO, he estimated the appellant's share of pecuniary benefit at Rs. 935761 by dividing equally among 16 co- accused 60% of Rs. 24953627. On the other hand, in respect of ICDP, Howly he estimated the appellant's share of pecuniary benefit at Rs. 560117 by dividing equally among 13 co-accused 60% of Rs. 12135879. 10.0 The total estimated income from LOC Scam in the hands of the appellant was assessed at Rs. 1747899 (Page 13 of Enclosure 82 of Paper-book dated 19.11.2020 at 1\" paragraph of the original assessment order dated 31.03.2003). Besides, he added back Rs. 760455 on account of house construction. As the assessment order given to the appellant is incomplete, the addition of Rs. 760455 Page | 16 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. is evident from the learned CIT (A)'s order at Enclosure B3, ibid., at Page 18 thereof. Accordingly, the income was assessed at Rs. 2583060. 11.0 On appeal, the learned CIT(A) vide his order dated 30.11.2006 in Appeal no. Guwa-109/2003-04 confirmed the addition of Rs. 1747899 on the ground of surrounding circumstances and human probability while he deleted the addition of Rs. 760455 on account of house construction by setting off the amount of Rs. 760455 against Rs. 1747899. (These facts are evident from Enclosure 83, page 15 to 19 of the Paper-book dated 19.10.2020) 12.0 That the appeal effect to learned CIT(A)'s order dated 30.11.2006 in Appeal no. Guwa-109/2003-04 was given on 21.03.2007 vide order under section 251 (Page 20 of the Paper-book dated 19.10.2020, Enclosure B4). Accordingly, revised assessed Total Income was computed at Rs. 1822610. 13.0 On further appeal, the Honourable ITAT vide common order dated 15.05.2015 in ITA no. 60 & 61/Gau/2010 for the Assessment Years: 1992-93 and 1993-94 following its own order in Shri Janardan Mishra V ITO (ITA nos. 29 & 30/Gau/2011 for Assessment Years 1992-93 and 1993-94) set aside the matter to frame the Assessment Order afresh in light of the findings of Sub-Judge with the rider to complete the assessment within the time limit under section 153 (2A) to protect the legitimate interest of the Revenue (These facts are evident from Enclosure 85, page 22 to 26 of the Paper-book dated 19.10.2020). 14.0 To give effect, the learned AO passed an Assessment Order on 20.12.2016 purportedly under section 254. The said authority recorded a finding that till such date he had not received the decision of the Sub-Judge on the subject matter and that the appellant too had not been able to produce such decision. Citing the need to protect the legitimate interest of the Revenue he passed the Assessment Order by adopting the assessed income same as in the original Assessment Order under section 143 (3)/147 at Rs. 2583060. The said authority adopted the figure of Rs. 2583060 wrongly in view of the fact that such figure was revised to Rs. 1822610 vide order under section 251 dated 21.03.2007 passed by him to give effect to the order dated 30.11.2006 passed by the learned CIT(A) in Appeal no.: Guwa-109/03-04 for A.Y. 1993-94. While doing so, the learned AO did not make Page | 17 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. independent application of mind and did not consider the materials, as those stood uncorroborated before him. (These facts are evident from the certified copy of the Assessment Order dated 20.12.2016 enclosed with the Memorandum of Appeal in Form no. 36). 9.0 On appeal, the learned CIT(A) in the impugned order dated 29.06.2018, received on 24.07.2018, in Appeal no. 596417691190117/10, held that the Assessment Order should be read as passed 'u/s 143 (3) read with S. 254' and not as passed 'u/s 254'. (Kindly refer to the internal page 10 to 11 of the impugned order). 10.0 The learned CIT(A) after considering the order under section 251 dated 21.03.2007 passed by the learned AO to give effect to the order dated 30.11.2006 passed by the learned CIT(A) in Appeal no.: Guwa-109/03-04 for A.Y. 1993-94 held that the learned AO adopted the assessed Total Income wrongly at Rs.2583060 and accordingly directed the assessing authority to correct the mistake apparent from the records by taking the figure of Rs. 1822610. 11.0 In view of the fact that the Special Judge, CBI, Assam, Guwahati in the mean time had passed his verdict in Special Case no. 67/2004 (New)/18(c)/1997 (old) related to Nagaon Treasury arising out of CBI Charge-sheet bearing no. RC- 2(A)/94 of ACU-I [The verdict is available at ENCLOSURE 88, page 29 to 94 of the paper book dated 19.10.20201, in respect of which an amount of Rs. 252021 was added back on estimate to the appellant's income, that learned CIT(A) recorded his detailed finding in Page no. 11 to 13 of the impugned order regarding the verdict of the said Honourable Court. He referred to the issues decided in the said verdict wherein the appellant with 6 (Six) others were found guilty under section 1208/420 IPC/13(2) r. w. 13(1)(d) of the Prevention of Corruption Act. He quoted from paragraph 50 of the judgment to record that the said court found sufficient materials against the appellant along with another in respect of draft sanction order for an amount of Rs. 580711.47 paid to an unapproved firm called M/s Prabhat Surgicals. From paragraph 51 the learned CIT(A) also found that the Honourable Court pronounced sentence upon the appellant by finding him guilty under section 1208 IPC, Section 420 IPC, Section 471 IPC and Section 13(2) r. w. 13(1)(d) of the Prevention of Corruption Act. Page | 18 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. 12.0 However, the learned CIT(A) did not find any quantification of the pecuniary gains made by the appellant in the entire judgement save and except the fact that he had been found to be involved in sanction of Rs. 580711.47 for ICDP Nagaon in respect of payment to the firm M/s Prabhat Surgicals, which was not an approved firm. Accordingly, he held that in the light of the said judgment, without any corroborative evidence and materials brought on records, the pecuniary gains, if any, could not be quantified. He further found that the case did not attain finality in view of a pending criminal appeal bearing no. 217/2014 before the Honourable Gauhati High Court [ENCLOSURE-89, page 95 to 96 of the paper- book dated 19.10.2020) 13.0 The learned CIT(A) further observed that the other two cases arising out of the charge-sheet bearing no. RC-5(A)/94 of ACU-II, being Special Cases nos. 56/04 and 57/04 related to ICDP Howly and Barpeta DVO of Barpeta Treasury had been still continuing. 14.0 By referring to his findings and observations, he too held that he had no option but to sustain the impugned assessment order to the extent of addition of Rs.1747899, which was estimated in respect of the LOC scam. (These facts are evident from the certified copy of the learned CIT(A)'s Order enclosed with the Memorandum of Appeal in Form no. 36). . . . 13.0 The appellant further states, without prejudice to any of his other contentions taken in the appeal, that the entire assessment proceeding had been commenced on the presumption based on assumptions that illegal pecuniary advantage, if any, gained by a public servant from the state exchequer was 'Income' assessable under the Income Tax Act, 1961. This is patently untenable, because, such amount is diverted at source to the Government by overriding title. Among others, the relevant Rule 466 and 467 of the Assam Financial Rules, as available in the public domain, clearly show that such amount is to be recovered from the person and departmental inquiries are to be undertaken for that purpose before the criminal investigation and prosecution commence. The Court of the Special Judge is trying the matters under Indian Penal Code and Prevention of Page | 19 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. Corruption Act to punish the errant persons, if any, for indulging in crimes. But the proceeds of such crime, if any, cannot be the income of a public servant for the reason that the ownership of the money or asset, misappropriated or defalcated, vests in the Government and it is diverted by overriding title before it reaches the errant public servant. The relevant part of the Assam Financial Rules containing Rule 466 and 467 has been enclosed as Annexure-2 (page 3 to 11) hereof. 14.0 (a) From the above, it is clear that the judgment and order dated 09.05.2014 in Special Case no.67/2004 (new)[18 (c)/1997 (old)] in \"State (CBI) v Dr. Absaduz Zaman and Others\" related to Charge-sheet no RC-2(A)/94 of ACU- I for Nagaon Treasury [ENCLOSURE B8, page 29-94 of the page-book dated 19.10.2020] is now in Criminal Appeal no.217/2014 [ENCLOSURE B9, page 95- 96 of the page-book dated 19.10.2020] before the Gauhati High Court. As the appeal is an extension of the trial, the matter has yet to reach conclusion. (b) Similarly, the judgment and order dated 16.12.2019 in Special Case no. 56/2004 in State (CBI) Vs. Sh. J. Ahmed & Ors' related to Charge-sheet no RC-5(A)/94 of ACU-II of Barpeta Treasury regarding ICDP, Howly [ANNEXURE-4, Page 6 to 198 of the Additional Paper-Book dated 19.09.2020) is now a subject matter of the Criminal Appeal 96/2020 (Copy of the order in the Linked Case: I.A.(Crl.) 219/2020 suspending operation of the sentence during pendency of the said Criminal Appeal is at ANNEXURE-3, Page 3 to 5 of the Additional Paper- Book dated 19.09.2020]. As the appeal is an extension of the trial, the matter has yet to reach conclusion. (These paragraph numbers are as appearing in the note of the assessee) 6. Since the criminal proceedings relating to the frauds have not been finally concluded as no orders have been passed in the two charge sheets filed and it is by estimate that the assessee has been saddled with 1/16th, 1/13th and 1/5th of 60% of the amount mentioned; unless and until a clear finding of the competent court is delivered relating to who the accused are and it is ascertained what is the benefit which has Page | 20 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. accrued to each of them, neither any income can be said to have accrued nor the addition will be justified, which has been upheld by the Ld. CIT(A) despite mentioning the facts of the proceedings not being finalised and the hearing still continuing, when last informed. Therefore, in the interest of justice and fair play, we deem it proper to set aside the order of the Ld. CIT(A) and restore the appeal to him with a direction that he shall await the orders of the competent court in all the pending criminal proceedings and only thereafter decide the appeal. The assessee shall be at liberty to file a copy of the order of the competent court and also make submissions in this regard for claiming the required relief. While deciding the appeal, all the grounds of appeal should be decided by the Ld. CIT(A) whether they pertain to the fraudulent gains or even otherwise. 7. Since the issues in I.T.A. No: 258/GTY/2018 are similar, the finding as in A.Y. 1993-94 shall mutatis mutandis also apply to the appeal for the A.Y. 1992-93 and the order of the Ld. CIT(A) is set aside to be done de novo as per the directions issued in A.Y. 1993-94. 8. In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced on 27th January, 2025 under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- [Manomohan Das] [Rakesh Mishra] Judicial Member Accountant Member Dated: 27.01.2025 Bidhan (P.S.) Page | 21 I.T.A. Nos.: 258 & 259/GTY/2018 Assessment Years: 1992-93 & 1993-94 Jugal Chandra Saikia. Copy of the order forwarded to: 1. Jugal Chandra Saikia, House No.186, Chachal Path, Opp. Nagaland House, Six Mile, Khanapara, Guwahati, Assam, 781022. 2. ITO, Ward-1(3), Guwahati. 3. CIT(A)-Guwahati. 4. CIT- 5. CIT(DR), Guwahati Benches, Guwahati. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "