ORDER SHEET IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE ITA No. 52 of 2003 LATE SUSHIL MODI Versus C. I. T., CENTRAL -II BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 1st April, 2015. Mr. Ananda Sen, Adv. Mr.Biswajit Mal, Adv. for Appellant Mr. Arkadeb Biswas, Adv. for Respondent Court: subject matter of challenge in this appeal, of year 2003, which is yet to be admitted, is judgment and order dated 28.6.2002 by which learned Tribunal dismissed appeal preferred by assessee challenging order dated 30.10.1998 of Deputy Commissioner of Income Tax passed in block assessment for period between 1.4.1986 to 20.9.1996. question, which learned Advocate for appellant has pressed before us, is Question No.(iii) which reads as follows:- (iii) Whether, on facts and in circumstances of case, Tribunal was justified in having upheld treatment of cash deposits of Rs.2,01,000/- in Canara Bank during assessment year 1987-88 as unexplained cash credit by invoking provisions of section 69 of I.T. Act, 1961, inasmuch as source of such deposits were duly considered in final account of assessee? Learned Advocate for appellant has filed written notes of submission. He relied on paragraphs 2, 3 and 4 at page-2 of his written notes, which read as follows: In this case block assessment order shows lack of required enquiry as to sources of deposits even when most of deposits of salary are in bank accounts like in case of account with PNB, New Delhi and Dena Bank, New Delhi, represented by clearing cheques deposited for which necessary enquiry was possible with Bank where deposits were found and Banks from which amount were debited for credit to assessee s account. Such enquiry was not even attempted. conclusions are mostly on basis of A.O. s statement that assessee was not able to explain. Such conclusion can indicate either absence of explanation or explanation given verified to be not tenable. However, such conclusion has to be based on result of specific post such enquiry and assessee s explanation with regard to result of such enquiry. Therefore, here also, block assessment order failed to rise to requirement of speaking order based on result of post of such enquiry and assessee s statement on results of enquiry put across to assessee. grounds of appeal before Tribunal clearly shows assessee s grievance on lack of specific post such enquiry to verify assessee s explanation. Assessing Officer is not supposed to sit idle even in face of return which is apparently in order but calls for further enquiry as he is not only adjudicating authority but investigating authority as well. In this respect, Assessing Officer is different from Civil Court as held in decision of Re: Gee Vce Enterprises Vs- Addl. CIT (New Dehli) reported in (1975) 99 ITR 375. Lack of necessary enquiry makes assessment order erroneous as held by Hon'ble Supreme Court of India in Re: Malabar Industrial Corporation (2000) 243 ITK 83 (SC) . learned Tribunal in paragraph-16 of impugned judgment, held as follows:- 16. question before us is, as to whether action of A.O. to treat deposits aggregating to sum of Rs.2,01,000/- as income of assessee from undisclosed sources is justified. In order to consider as to whether addition of Rs.2,01,000/- is in accordance with provisions relating to block assessment, it would be necessary to consider as to which addition is based on material found during course of search. If addition is based on some material found in course of search, then second question that arises for consideration is as to whether provisions of Sec.69 are attracted in case of block assessments and finally it is to be considered as to whether assessee had satisfactorily explained source of deposits in bank account and not whether addition was justified in block assessment. In this case, existence of Savings Bank Account No. 4790 with Canara Bank was detected as result of search and assessee had owned said account. Therefore, foundation for assessment of Rs.2,01,000/- is material found in course of search. During search and seizure, it is thus evident that Savings Bank Account No. 4790 maintained with Canara Bank was detected. It was also found that sum of Rs.2,01,000/- had been deposited in aforesaid bank account. It was not disputed by Mr. Sen that sum of Rs.2,00,000/- was deposited on 7.4.1986 and balance sum of Rs.1000/- was deposited on 21.1.1987. This is also reflected in paragraph-15 of impugned judgment. deposit was admittedly made during financial year 1986-87 corresponding to assessment year 1987-88. Before learned Tribunal, defence as regards aforesaid sum of Rs.2,01,000/- was that deposit was made from out of cash balance available with assessee as would appear from paragraph-15 of impugned judgment. From written submission filed by learned Advocate for assessee before us, which we have quoted above, it does not appear that even before us there is any attempt to offer any explanation with regard to two deposits made with Canara Bank. When this was pointed to learned Advocate for assessee, he drew our attention to grounds of appeal filed before learned Tribunal. He relied upon Ground No.1, which reads as follows: That Ld.A.O. erred in having treated cash deposit in Canara Bank amounting to Rs.2,00,000/- and Rs.1000/- on 7.4.86 and 21.187 respectively as unexplained cash credit while source of such deposit was duly considered in final accounts of appellant. Mr. Sen, learned Advocate for appellant repeated that aforesaid sum of Rs.2,01,000/- was duly accounted for in final accounts of financial year 1986-87 corresponding to assessment year 1987-88, but Assessing Officer did not take trouble of making necessary investigation. Had such investigation been made, fact would have been discovered. We have not been impressed by submissions advanced before us by Mr. Sen, learned Advocate for assessee for more than one reason. In first place, no such case was made out before learned Tribunal. Even assuming that investment of sum of Rs.2,01,000/- has been reflected in final accounts of assessment year 1987-88 and has duly been offered for taxation, nothing was easier for assessee than to produce copy thereof before us which may have tilted balance in his favour. fact that assessee- appellant did not take any such step leaves no doubt in our mind that submissions are not true. investment discovered during search and seizure has not been disputed on facts. Therefore, it was clear case where Section 69 of Income Tax Act would be applicable and this is what was done. In written notes quoted above emphasis was laid on independent investigation by Assessing Officer. In support of his submission, learned advocate has also relied upon judgement in case of Malabar Industrial Corporation. Independent investigation on part of assessing officer was stressed in case of Malabar Industrial Corporation in proceeding under Section 263 of I. T. Act. For exercise of power under Section 263 two jurisdictional facts are required to be shown:- (a) That order is erroneous. (b) That order is prejudicial to interest of Revenue. answer to question whether order is prejudicial to interest of Revenue is dependent upon proper and requisite investigation by assessing officer. assessing officer cannot accept claim made by assessee without satisfying himself about correctness thereof. For arriving at such satisfaction, he is empowered to make necessary investigation. In case before us, assessee admittedly made investment of sum of Rs.2,01,000/- which was not disclosed by him in returns filed under Section 139. During search his explanation was that said deposits were made out of cash balance available. In absence of any proof with regard to such availability of funds, assessing officer treated aforesaid deposits as income of assessee from undisclosed sources. Mr. Sen contended before us that deposit had been reflected in final accounts of he assessment year 1987-88. Therefore, explanation offered at relevant time and explanation offered now before us materially differ. explanation offered before us could have been proved by assessee by producing his final accounts of assessment year 1987-88 but he omitted to do so. Therefore, case is clearly covered by Clause (g) of Section 114 of Evidence Act which provides as follows:- ( g) that evidence which could be and is not produced would, if produced, be unfavourable to person who withholds it; Court is therefore entitled to apply aforesaid presumption. contention that assessee need not prove his case and assessing officer is bound to find corroboration by making independent enquiry is neither based on law nor is supported by reason. We do not find any error in order under appeal. There is, as such, no reason why appeal should be admitted. We were inclined to saddle appellant with costs, but considering that no notice has been issued, we refrain from imposing costs. appeal is dismissed. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) km Sushil Modi v. C. I. T., Central -II