ITAT quashes second round quantum proceedings under section 153A for HSBC Geneva account additions lacking reliable ownership evidence

ITAT Delhi quashed the second round of quantum proceedings under section 153A relating to additions based on peak balance in HSBC Bank, Geneva account. The original assessment order was previously quashed by Delhi HC, which held no incriminating material was found during search and Revenue failed to establish assessee's ownership of the alleged foreign bank account with reliable evidence. Consequently, AO/CIT(A) orders in second round proceedings lacked foundation and were quashed. Assessee's appeal was allowed.

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Issues involved: The jurisdiction of the assessment order u/s 254 r.w.s. 153A/143(3) of the Income-tax Act, 1961, authenticity of information/documents received from Swiss Authorities, Double Taxation Avoidance Convention (DTAC) with French Authorities, addition made by the assessing officer based on unverified documents, limitation period u/s 153B(1)(viii) of the Act, and summary dismissal of the appeal without considering detailed submissions.

Jurisdiction of Assessment Order: The CIT(A) erred in not holding that the assessment order passed u/s 254 r.w.s. 153A/143(3) of the Act was beyond jurisdiction, bad in law, and void-ab-initio. The assessing officer exceeded his jurisdiction by not bringing authentic information/documents from Swiss Authorities, as directed by the Tribunal, to corroborate the existence of the alleged foreign bank account in HSBC, Geneva. The CIT(A) failed to appreciate that the addition made was solely based on unauthentic/undated/unsigned loose papers, which was contrary to the Tribunal's specific mandate.

Authenticity of Information/Documents: The CIT(A) erred in confirming the addition despite the absence of "authentic" information from Swiss Authorities, as only photocopies of certain unverified documents were relied upon. The assessing officer failed to provide any authentic document/information to prove the existence of a foreign bank account with HSBC, Geneva, resulting in the addition of Rs. 69,07,414 being made on suspicion and surmises without any incriminating material found/seized.

DTAC and Addition Based on Unverified Documents: The CIT(A) erred in confirming the addition of Rs. 69,07,414 based on loose unauthentic sheets as bank statements and general/vague particulars from French Authorities, which did not constitute evidence in the eyes of the law. The alleged foreign bank account did not belong to the appellant, and no transactions were made by the appellant, rendering the addition without any evidence or basis.

Limitation Period and Summary Dismissal: The initial assessment order passed u/s 153A was held to be barred by limitation as prescribed in section 153B(1)(viii) of the Act. The CIT(A) summarily dismissed the appeal without considering the detailed submissions and arguments made during the appellate proceedings, leading to the quashing of the orders made in the second round of proceedings.

Conclusion: The original assessment order from the first round was quashed by the Hon'ble Delhi High Court due to the absence of incriminating material and the failure to establish the ownership of the alleged foreign bank account in HSBC Bank, Geneva. Consequently, the orders of the Ld. AO/CIT(A) in the second round were quashed, and the appeal of the assessee was allowed on 3rd May, 2024.

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