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--Assessee assessed on substantive basis in respect of cash seized from him and revenue precluded from initiating proceeding against employer firm.

Ratio:

Order of assessing officer was erroneous and prejudicial to the interest of revenue where assessee was assessed on substantive basis in respect of cash seized from him, precluding revenue to initiate proceedings against employer firm.
Facts:
The assessee was an employee of the firm M/s N. Angadia, Surat, drawing a salary of Rs. 500 per month. His main duty was to carry articles/packets/parcels, etc., containing goods including valuables from one place to another at the directions of the Angadia firm. It was during the course of such duties that he was carrying black plastic bag containing currency notes of Rs. 7,15,000 and that when he was intercepted by the Railway Police, Baroda, he gave a statement before the police inspector that the said bag was given to him by the firm M/s N. Angadia, Baroda Branch Office. He made similar admission before the ADI, on the same date. Later on, he retracted from his two statements made sponteneously before the two authorities stated supra and came forward with a concocted story that he was doing business in rough and polished diamonds and had earned the sums tabulated in chart during the assessment years 1981-82 to 1985-86.

3. In his statement dt. 29th Jan., 1985, recorded by the Railway Police, Baroda, the assessee stated that he was an employee of M/s. N. Rajaram Nagardas Angadia of Ahmedabad-Baroda (head office of which is at Surat) from the last eight years. He further stated that the plastic bag containing the currency notes of Rs. 7,15,000 was given to him by Shri N. C. Patel, the manager of Baroda branch of the Angadia firm on 29th Jan., 1985, with the directions to deliver the same to Shri Mangalbhai, an Accountant of the head office at Surat. According to the statement dt. 29th Jan., 1985, recorded by the ADI, Baroda, at the railway station, Baroda, the assessee stated that he had come to Baroda from Ahmedabad via Nadiad at about 7.30 p.m. on 28th Jan., 1985. He stayed overnight at the Baroda office of M/s. N. Rajaram Nagardas Angadia at Baroda. At that time he had a small rexin bag containing his cloths and that no cash or valuables were with him. At about 10.00 p.m. on 28th Jan., 1985, Shri N. C. Patel, the local manager, who also stayed on the first floor of the branch office, came to him and told that a parcel was to be delivered to head office of Angadia firm at Surat. For that purpose Shri P. R. Patel (the assessee) was asked to go to Surat office the next day morning. The next day in the morning at about 5.45 a.m., i.e., on 29th Jan., 1985 Shri N. C. Patel, local manager, of the Baroda branch of the firm handed over the black plastic bag to Shri P. R. Patel (the assessee). It was containing seven bundles of currency notes, out of which, six contained currency notes of Rs. 1,00,000 each. Remaining one bundle contained currency notes of Rs. 1,05,000 together with loose currency notes of value of Rs. 7,15,000. The assessee was asked to proceed to Surat and to deliver the bag to Shri Mangalbhai, accountant of head office, Surat.

9. The learned Departmental Representative heavily relied upon the order of the CIT and further submitted that the IAC(Asst.) had made the assessments for earlier years on productive basis and in all fairness he ought to have made the assessment for the assessment year under appeal also on productive basis so that substantive action could have been taken in the case of the firm M/s. N. Rajaram Nagardas Angadia, Surat, because the assessee was carrying money handed over to him by the Angadia firm. He further submitted that the statements made before the police inspector and the ADI on 29th Jan., 1985, were without any pressure and terror and coercion brought on the assessee and the assessee retracted from the same later on to help the firm of M/s. N. Rajaram Nagardas Angadia, Surat. In support of his contention the learned Departmental Representative relied upon the decision of the Honble Delhi High Court in the case of Sohan Singh vs. CIT (1986) 158 ITR 174 (Del).

10. We have considered the rival submissions and pursued the facts on record. From the facts stated above it is evident that the assessee was an employee of the firm M/s. N. Rajaram Nagardas Angadia, Surat drawing at a salary of Rs. 500 per month. His main duty was to carry articles/packets/parcels, etc., containing goods including valuables from one place to another at the directions of the Angadia firm. It was during the course of such duties that he was carrying black plastic bag containing currency notes of Rs. 7,15,000 and that when he was intercepted by the railway police, Baroda, he gave a statement before the police inspector that the said bag was given to him by the firm M/s. N. Rajaram Nagardas Angadia, Baroda branch office. He made a similar admission before the ADI, on the same date. Later on, he retracted from his two statements made spontaneously before the two authorities stated supra and came forward with a concocted story that he was doing business in rough and polished diamonds and had earned the sums tabulated in chart at page 5 of the paper book during the asst. yrs. 1981-82 to 1985-86. It cannot believed that a person who was working as an employee at a meagre salary of Rs. 500 per month and carrying packets/parcels from one place to another, would carry on business and that too of diamonds which requires not only great expertise but lot of investments. His story that he started the business with the amount of Rs. 8,000 which was received as Candla and Paithan amounts at the time of his marriage in 1981, is only to be stated to be disbelieved. In fact, the totality of the circumstance leads to the conclusion that the story was concocted to help the firm M/s. N. Rajaram Nagardas Angadia of which he was a faithful employee. We wish to say that on account of search operations which is an invasion on the Privacy of a citizen a searched person is put to suffer inconvenience and harassment and on account of that there can be mental turmoil, uneasiness and tension. This Tribunal has taken a similar view in the case of Asst. CIT vs. Mrs. Sushiladevi S. Agarwal to which one of us (Accountant Member) was a party and which has since been reported as (1994) 49 TTJ (Ahd) 663. But we do not find in the case of the assessee that any pressure or coercion was put on the assessee to get the two statements at the Baroda railway station before the police inspector and the ADI and by retracting from the statements given in spontaneity without any pressure or coercion the assessee has rendered himself untrustworthy and unreliable in the eyes of law. Under the circumstances it cannot be said that the amount of Rs. 6,05,000 belonged to the assessee and the learned IAC(Asst.) erred in assessing the same in the hands of the assessee on substantive basis. But since the assessee had offered this amount as his income, to help the firm M/s. N. Rajaram Nagardas Angadia, the IAC(Asst.) ought to have assessed the same on protective basis so that an appropriate action could have been taken in the hands of the firm M/s. N. Rajaram Nagardas Angadia. It was all the more necessary because in the earlier assessment years the IAC(Asst.) had assessed the income from the business on protective basis. The order passed by the IAC(Asst.) was thus erroneous because it was not in accordance with the provisions of law and the facts of the case and it was prejudicial because it had caused loss to the Revenue by pre-empting the Revenue from proceeding against M/s. N. Rajaram Nagardas & Co. the words "prejudicial to the interests Revenue" have not been defined but they just mean that the orders of assessment challenged are such as are not in accordance with law and facts in consequence whereof the lawful revenue due to the State has not been realised and/or cannot be realised. We, therefore, hold that the CIT is justified in invoking his jurisdiction under S. 263 and in modifying the assessment order of the IAC(Asst.) by making it protective assessment.