TaxTMI 
TaxTMI 
2016 (4) TMI 243
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.... despite several attempts, no service of notice of hearing could be affected on the assessee. Under the circumstances, the matters being pending for long, the hearing was proceeded with ex parte qua the assessee, so as to dispose the appeals after hearing the party before us. However, as subsequently some clarifications were required, the appeals (along with the connected matters) were posted for 17.2.2016. A junior counsel, Shri Ramanath Prabhu, for HSA Advocates, appeared, and sought adjournment. No vakalatnama in his favour stands filed. It deserves to be noted that the hearing in these matters, along with the other connected matters, took place in parallel over a period of three months, wherein counsels from both the sides appeared and made representations. It was, accordingly, conveyed that it was not possible to grant adjournment at this stage, even as the court was prepared to hear the parties on a day to day basis. Time was sought for filing written submissions, which was granted. Written submissions were accordingly filed on 22.2.2016 (copy on record), with the copy to the other side. 3.1 Written submissions, separately for each year in appeal, filed along with th....
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....ic offences in India) also commenced an investigation under the provisions of Prevention of Money Laundering Act, 2005 ('PMLA' for short), registering an Enforcement Case Information Report (ECIR) (bearing no. ECIR/02/M2O/2007) against the appellant on 08.1.2007. The ECIR relied heavily on a letter dated 08.12.2006 and certain statement of account stated to be received by the ED from the Income-tax Department. In pursuance to ECIR, the ED approached the designated court u/s.57 of PMLA, seeking issuance of Letter Rogatory (LR) to various countries, being USA, UK, UAE, Singapore, Hongkong, Switzerland for gathering information regarding the alleged financial transactions by the applicant. The Hon'ble Court issued LRs addressed to the competent authorities of the said countries. The Embassy of India at Berne, Swizerland vide a 'Note Verbale' dated 12.1.2007 communicated the LR to the competent authority at Switzerland, giving specific reference to the letter dated 08.12.2006 (supra), further requesting it to block the amounts available in various accounts in Switzerland, as well as furnishing details of their transcripts. Vide fax dated 15.1.2007, the said competent authority, o....
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....ity has certified that out of 404 pages, 403 pages (containing bank account statement of HAK) are true, except one page incorporating transaction dated 08.12.2006 of deposit of 8 billion dollars, which was forged. The details of the documents prayed for admission by way of additional evidence, are as under: S. No. Particulars Page No. 1 Departmental Petition dated 01.6.2015 (*) 1 to 3 2 Copy of letter received from FT & TR, CBDT, dated 26.12.2013, along with its enclosures, by CIT(Central)-1, Mumbai 4 to 7 3 Copy of letter of Directorate of Enforcement dated 15.11.2010 along with enclosures, to CIT(Appeals). 8 to 19 4 Copy of letter dated 24.4.2008 of CIT, Central-1, Mumbai, to DCIT, Central Circle- 2, forwarding information in the case of Hassan Ali Khan along with its enclosures 20 to 30 (*) not an evidence, but an application in its respect. 3.3 In our view, we shall be required to, and would accordingly, discuss the admissibility, in seriatim, of each of the documents prayed to be admitted by way of additional evidence. So, however, before we proceed to do so, it may be relevant to discuss the general consideration....
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....ined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.' The rule places a total ban on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances: i. if the tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause; or ii. if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them. (emphasis, ours) On the existence of either of the cir....
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.... The admission of additional evidence by the tribunal is thus dependent on the tribunal requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered (refer pgs. 713- 715 of the reports). In this context, it would be useful to refer to the constitutional bench decision in K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, wherein it was observed in the context of the provision of Order 41, Rule 27(1) of Code of Civil Procedure, 1908, to which r. 29 is similar in terms, that the appellate court has the power to allow additional evidence not only where it requires such evidence to enable it to pronounce the judgment but also for any other substantial cause. There may well be cases where even though the Court finds that it is able to pronounce the judgment on the state of record as it is, so that it cannot strictly be said that it requires additional evidence to enable it to pronounce the judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it can pronounce its judgment in a more satisfactory manner. Such a case will be on....
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....The same is unsigned and, accordingly, has no evidentiary value. The same, therefore, is not admitted. The same is, in any case, only a request for assistance. b) The copy of the fascimile dated 15.01.2007, purportedly by the Swiss Federal Government in the Department of Justice to the Indian Embassy, Berne. The same is admitted. Even though the designation of the person, whose name is specified at the place marked for signature, which is generally mandatory in official communication, is not stated. This may perhaps be due to the fact of the communication being by fax. c) This is the copy of the report dated 30.10.2007, marked 'confidential', by UBS AG to Swiss National Bank on the basis of an internal inquiry. The said letter is clearly in respect of the assessee and his alleged relationship with UBS, with which he is claimed to be holding huge amounts, or having banking relationship with. The same, as claimed by the assessee per his written submissions and as stated in the letter dated 28.12.2007 by UBS AG to the ED (which is a document listed at point (d) below), stands communicated to the ED vide the said letter. The same is admitted. As regards the report dat....
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....ated 15.11.2010 along with its enclosures. The same is admitted. c) Copy of letter dated 24.4.2008 of CIT, Central-1, Mumbai, to DCIT, Central Circle-2, forwarding information in the case of Hassan Ali Khan along with its enclosures. The same is admitted. In fact, these documents ought to have been confronted to the assessee, and relied upon by the ld. CIT(A) as well. 4. We, next, proceed to adjudicate the assessee's appeals. We shall be required to, however, consider the assessees' Grounds 1 and 2, common for all the years, before we may take up his other grounds, which are on the merits of the various additions made to the returned income. This is as the same raise fundamental issues. Vide Ground 1 (for all the years), the assessee impugns the assessment/s as void ab initio in-as-much as there was no service of notice under section 143 (2) within the stipulated period of 12 months from the end of the month in which the returns of income in response to notices under section 153 A were filed. In this regard, the ld. Departmental Representative (DR) would, at the outset, draw our attention to Annexures 1, 2 to the assessment order for all the years, even as one ....
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....d at 2015-TIOL-1053-ITAT-Mum-TM). 5. Ground No.2, which, along with that following it are 'non prejudice' grounds, would accordingly stand to be taken up. Ground No.2 alleges non-grant of reasonable opportunity by the Assessing Officer (A.O.) while framing the assessment, so that there had been violation of the principle of natural justice, vitiating the assessment/s, which aspect has not been appreciated by the ld. CIT(A). The ld. CIT(A), before whom, again, this aspect was raised, has discussed this at para 10 of the impugned order, observing the A.O. to have allowed sufficient opportunity to the assessee, concluding that the assessee's contention in this regard is general in nature. We, again, observe no specific contention in this regard in the assessee's written submissions before us. Per the same, it is claimed that the report of an internal enquiry by UBS AG, which was furnished to the ED, was not confronted to the assessee. The same having not been relied upon by the Revenue, the assessee's plea is not maintainable. On the contrary, we find abundant reference to the various opportunities afforded by the A.O. to the assessee, as well as of being provided with all the mate....
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.... that the A.O. had jumped to the conclusion without waiting for the enquiry by the ED to get over. A document of a third party could not be relied upon unless the assessee is allowed to cross examine him, or otherwise meet the same. In any case, income could not be assessed on the basis of suspicions, but only where it is proved beyond doubt that the same was generated by the assessee. The presumption of truth u/s.292C shall apply to documents found in search, and not to that provided by ED. The presumption is, in any case, rebuttable, which depends on the nature of evidence, so that in a given case mere denial may discharge the onus, i.e., depending on the facts of the case (refer para 12 of the impugned order - the assessee's submissions, which are common for Grounds 10 to 15 before the ld. CIT(A), with that under reference being Gd. 10). The addition stood considered vide para 13 (pgs. 24-31) of the impugned order. No evidence had been relied upon without the relevant document/s being given to the assessee, calling for his explanation. The addition had been made not because the ED had informed the Revenue about the evasion of tax, but on account of the inability of the ....
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....ificate of incorporation of Autumn Holdings Ltd. form part of the Departments' paper-book (DPB) (DPB pages 46-49, 38/AY 2000-01). The Director's resolution/s dated 26.02.2001 (of the said company) (at DPB pgs. 30-31) constitute any two of the three, i.e., Bjorn Allan Andersson, Hassan Ali Khan and Kashinath Tapuria, acting together, as true and lawful attorneys of the company. DPB pg. 32 is a notarial certificate dated 14.03.2001 in its respect (DPB refers to the Department's paper-book for A.Y. 2000-01). Then, there is an Agreement dated 07.8.2001 between the assessee and KT, made at Dubai, also noted by the ld. CIT(A) (refer pg.26 of his order). The same was recovered from the residences of both, i.e., from the Pune residence of the assessee (pg. 18 to Ann.5 to Panchnama dated 5.1.2007) and the Kolkata residence of KT (pg. 22 of Ann.7 to Panchnama dated 6.1.2007), which clearly states of the said two companies being the assessee's companies. The said agreement, being of prime relevance, is enclosed as a part of this order (as Ann. A). The assessee has also not denied the statement of account as at 13.3.2001, or of its reflecting the profit for the year. The assessee seek....
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.... [At this place of the letter is the statement of income (in USD) for each of the years, from 1985 to 1989, under the heads, commission, consultancy fees and interest income, aggregating (for these years) to USD 280,540,000. The letter further reads as follows:] 'Please be noted that the above summary has been compiled on the basis of available documents and related statements provided by you.' [emphasis, ours] The same is in fact prepared by the Auditors only at the assessee's instance, and forwarded to one, Mr. Grossman - who (Markus Grossman, as the UBS report dated 30/10/2007 clarifies, is the assessee's relationship manager - para 3.2/pg. 2 of the report) vide fax dated 18.9.2001 (refer: DPB/pgs. 50-51 of DPB for A.Y. 2000- 01). On what basis, then, one wonders, the asseessee, assails the inference of either a nexus with these companies or having earned income there-from. Rather, the division of profits between him and KT, vide agreement dated 07.8.2001, is also that earned in and to be transmitted to, their companies. The assessee further states of having not received any commission, consultancy fee or any other income in the past (1985- 1989). The reference ....
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....dverse inference (Section 114, Illustration (g), of the Evidence Act, 1872), even as clarified in, inter alia, CIT v. Sanjay Jain [2015] 230 Taxman 550 (Cal). At the same time, however, the inference could only be as arising from the material in the possession of the Revenue. Who has drawn this statement or the invoices noted therein? What is the nature of the services provided by the assessee in the past, for which consultancy fees and commission had been charged and paid? (refer para 8.1, Annexure B to this order). Are the invoices, as listed in the statement, raised or to be raised in respect of such like charges? If the amount is due from these companies, which are separate companies, why is a single statement drawn? Is the amount already billed accounted for in the books of the corresponding companies? Was the money received, toward which bank account particulars are also specified? The assessee has maintained complete passivity in the instant proceedings, refusing to divulge any information. The assessee's name is conspicuous by it's absence in the document, so that the only link with the assessee could be the bank account specified, as well as the consultancy fees rece....
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....the assessee stating of being not aware of any such transaction or being ignorant of the said document would be of no consequence. Rather, several other documents were found during search, which independently established close relationship between the assessee and KT; their frequent travel abroad together, as well as cross border transactions. In fact, some such documents support and complement each other, providing corroboration, as well as establishing their truth. Reference toward the said discussion is drawn to paras 11.1 through 11.5 (pgs. 9-11) of the assessment order. The document clearly established funds to that extent with the assessee on that date (16.7.2000), the source of which had not been satisfactorily explained. The said amount was, accordingly, assessed as 'income' as unexplained money (deposit). The nature of the assessee's arguments in support and toward its case before the ld. CIT(A) stand already discussed at para 6 above. 10. Before us, the assessee per its written submissions for the relevant year (WS-1) (pgs.11-13) relies on the communication dated 30.10.2007 by UBS AG to the Head of the Department, Swiss National Bank. The same clearly states the ....
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.... as, prior thereto, in the show cause notice dated 19.12.2008, reads as under: 'The Union Bank of Switzerland Zurich July 16, 2000 Attn. Dr. Walli (Through UBS Dubai) Dear Sir, Please transfer a sum of US Dollars One Hundred Million (US $ 100,000,000) from my account no....................................... , to the account of Mr. Kashinath Tapuriah - account No. 760001, with your Bank in Zurich. This may please be treated as my instructions, and I request you to take immediate action and confirm.' Thanking you, Yours Truly, HASSAN ALI KHAN' The Transfer Instruction is on the letter-head of 'Hotel Inter-Continental', Dubai, bearing its postal address, telephone and fax numbers. The assessee has not denied having signed the said document (i.e., the original copy, meant for being transmitted to the bank) or of being not in Dubai at the relevant time (July, 2000), or on 16/7/2000 specifically (which would also stand to be confirmed from his passport) and, thus, in fact tacitly admits to having instructed his bank in the manner stated. We are conscious that the document was not found during search (or survey) u....
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....relationship between the assessee and KT. The assessee per his notarized statement dated 30/6/2003 infra admits to him being his advisor. They travelled abroad together frequently (pgs. 35, 40, 43-45 of Annexure A-2, seized from KT's residence). A signed power of attorney by KT, jointly with another, as representative of Roberts, Mclean and Company Ltd., Kolkata, in favour of the assessee, to deal with the property at 10A, Prithviraj Road, New Delhi (pg. 98 of Annexure A1) was found, which also shows the assessee to be well connected. Signed blank papers by the assessee were also found from the possession of KT (pages 68-70/Annexure A1). Again, a loan of Rs. 5 crores from assessee (lender) to RM Consulting Ltd., Kolkata (borrower), a company of KT, was found in search (pgs. 71-94 of Annexure A-1). Further, though the transfer instruction under reference predates the said Agreement dated 07.8.2001, is it that the monies were sought to be transferred to KT in satisfaction of the obligation recognized, in writing, subsequently, by the said Agreement? We say so as the agreement is only with a view to settle the accounts between the assessee and KT, so that pending final settlemen....
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....h to Switzerland National Bank, claiming it to have been since forwarded to ED, as also patent from the UB's letter dated 28.12.2007 to ED (refer para 3.1 - which though being unsigned has not been admitted in evidence). The said letter/report (dated 30.10.2007) has been admitted in evidence. It is therefore clear that the matter is under investigation by ED, which has initiated proceedings under PMLA against the assessee, which are - as per the assessee, and which is not disputed by the Revenue - under-way. Cleary, the charges under PMLA shall only obtain where the assessee is found to have maintained bank account/s abroad, holding substantial sums therein. That is, the very basis on which the amount is sought to be assessed as income in his hands in-as-much as the same has not been disclosed or satisfactorily explained as to its nature and source of acquisition. The question that, therefore, arises is whether it would be proper to, pending the proceedings under PMLA, which in fact the Revenue is only aware of, conclude the proceedings under the Act. The assessee has also sought to raise this issue per his written submissions, stating that the ED concluded its initial inv....
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....er the laws of that country), so that it could be argued that it cannot therefore be relied upon; it being even not clear if the same stands communicated to the Indian investigation authorities. At the same time, however, it needs to be appreciated that the same pertains to the assessee. Why, the same is itself titled: 'Results of investigation into Hassan Ali Khan and his alleged relationship with UBS'. And is clearly in consequence to the details sought by the GOI (through proper channel), as a sovereign, with regard to the activities of one of its nationals in that country. Surely, GOI is concerned with the underlying activities resulting in the financial flows in-sofar as they relate to or have a bearing on the criminal and civil (including tax) liability of that person as per the laws of India. The same, along with the report dated 29.10.2007 by Deloitte AG to the Bank, has apparently been conveyed by it to ED vide its' communication dated 28.12.2007, as the enclosures to the said letter to ED indicate, and which is also one of the documents sought to be adduced by the assessee as additional evidence. The Deloitte report makes it abundantly clear that the information provided ....
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.... in-as-much as it pertains to the year 1997, also suggests that the A/c No. 710.085 (as per the Deloitte Report, relied by the assessee) is of the assessee. UBS officials, such as Markus Grossman, Dr.Peter Weilly, Reto Hartmann, have been found associated with, and been specifically assigned as relationship manager, portfolio manager, etc., to the assessee, to look after his business interests and manage his accounts. The Agreement dated 18.07.2001 with M/s. Clamai AG (refer paras 20- 22 of this order) was facilitated by the Bank, with meetings in its respect being also held at the Bank premises itself. Complete reliance therefore cannot be placed on the bank's said report. In fact, the transfer instructions or reference to accounts have been found during search where the reference to the account is not by name/s but in code/s. We may, if only to demonstrate this, refer to the three (3) transfer instructions, which are the subject matter of Gd. 6 for AY 2002-03 (at para 25 of this order), all the three mentioning only the (beneficiary) account number, with one being code named, or euphemistically named, as 'Black Prince'. The said name, which also appears in TI for USD 72 M (....
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....ts conditions. The expression 'income' under the Act, a term of wide import, is applicable to section 69A, among others, of the Act (refer: Chuharmal vs. CIT [1988] 172 ITR 250 (SC)). The assessee, claiming to have no foreign bank accounts, concedes subsequently (on the basis of a report by UBS AG, Zurich - which has been taken as part of the record) to have a limited banking relationship with UBS AG, Zurich. The said report, for the reasons afore-discussed, cannot be considered as completely reliable. In fact, a notarized statement by the assessee (by and before Nicholas Ronald Rathbone Smith, Notary Public of London, England on 30/6/2003) at London (provided by ED), referred to in the Revenue's petition dated 01/6/2015 (refer para 3.2) - a part of the record, being in fact annexed to the assessment order for quite a few years (AYs 2005-06 to 2007-08/Ann. 13 for AY 2005-06), is most revealing in this regard, and annexed to this order as part thereof (Annexure C). The same charts or transverses the assessee's relationship with UBS, commencing with the opening of an account with UBS, Singapore (UBS-Sin) with an amount of USD 500,000 in 1982, up to the date of the statement. Further,....
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.... the said information with regard to the account number specified therein. Conclusion 12. The matter, in view of the foregoing, would accordingly stand to be restored back to the file of the assessing authority. We are conscious that the transfer instruction bears no account number. To accept, as contended, that the transfer instruction of a sum to an account which, as confirmed by the said report itself, belonged to an Indian national (though since closed) was issued without there being any account of the issuer of the instruction at the relevant time, is fatuous, if not also farcical. The assessee has, as it transpires, issued not one but several transfer instructions, from time to time, which have been found as a part of the seized material from his residences, or that of KT at Kolkata, searched simultaneously. The information/TIs provided by ED, who joined forces with the Department, besides being equally reliable, are corroborative. The same thus have strong evidentiary value, quite apart from s. 292C, which shall apply to all the documents found in search, so that their contents, unless shown otherwise, are to be regarded as true (ref: Surendra M. Khandhar v. CIT [2010]....
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....respect of such accounts. We may hasten to add that we are, when we state so, not foreclosing the assessee's options in any manner. It is equally open to him to explain the document, as indeed the law obliges him to. That is, why and under what circumstances the TI was issued on his bank, for a specified amount, favoring a specified beneficiary (by name and/or account) and, as a concomitant, the nature and source of the funds in his account/s. The notarized statement dated 30/6/2003 (refer para 11.5), as apparent, does not throw any light on this aspect, except that HAK had access to huge funds and, besides investments, was also called upon to finance projects. The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law. The said findings shall, inter alia, address the issues raised and considered pertinent by us. Needless to add, the assessee shall be allowed a reasonable opportunity of hearing. We decide accordingly. 13. Ground 7 is again in respect of a transfer instruction by the assessee to UBS AG, forwarded to the Revenue by ED. The same, dated 09.03.2001, is for the issue of pay orders favouring Steelme....
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.... of the transfer are as: - CHIP UID : 095179 - Swift Code AAB, New York : ABNAUS33 - Swift Code AAB, Dubai : ABNAAEAD The transfer instruction, again received by the Revenue from ED, is signed by the assessee. The second additional feature (of this transfer instruction - placed as Annexure 12 to the assessment order) is that both the transferor and transferee account numbers are mentioned, with the transfer being to the assessee's own account with a different bank, and at a different place. The SWIFT codes are correct. The bank account numbers are also in line with the International Banking Account Numbering system, adopted by most countries. Though therefore the document is complete in all respects, with the assessee having not offered any explanation, we yet eschew determining the issue having regard to the UBS AG report dated 30.10.2007. The matter shall, for the same reasons, and with like incidents, stand set aside to the file of the assessing authority for fresh adjudication (also refer paras 9 to 12). 16. Ground 9 is in respect of confirmation of the addition for Rs. 7,00,000/- on account of a gift to son. The assessee per his statement on oath dated 05.....
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....se-hold expenses at Rs. 60,000 to Rs. 70,000 per month. Two, the credit to be allowed is for the amount reflected toward the same by the assessee. Surely, if the income is appropriated for any other purpose; the addition being in respect of personal expenditure, the same could not be allowed set off of. Accordingly, the Tribunal after discussing the matter at some length, upheld the addition at Rs. 7.50 lacs, allowing credit for the amount already disclosed by the assessee toward house-hold and/or maintenance expenditure for self and family (refer para 10 of the said order). The assessee, who had shifted from Hyderabad to Mumbai and Pune (having and maintaining residences at both these places), obtained residency permit for, shifting his base to, Dubai, UAE and is operating there-from, as noted by the AO in his orders, as e.g. para 2.1 of his order for AY 2001-02. The TIs dated 16/7/2000 and 23/7/2000 on UBS AG, Zurich have been issued from Dubai; from Hotel Intercontinental, Dubai, stated as his camp office. Then, the assessee has issued a notarized statement on 30.06.2003 at London, wherein he admits to have visited Switzerland in February, 2001. The same would entail, apart from....
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.... 20A. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 impugns the confirmation of an addition for Rs. 1,34,48,12,840/- as undisclosed income. The addition comprises two sums, as under: a) Transfer of USD 500,000 to the assessee by one, Philip Anandraj (PA) worked out at Rs. 243.80 lacs; b) Purchase of property in Switzerland for CHF (Swiss Franc) 27,999,000, i.e., INR 132,04,32,840/- (Rs.13204.33 lacs). The specific document in relation thereto is Bundle No. 7 of Annexure A dated 05.1.2007 to Panchanama dated 6.1.2007 (containing 29 pages), found and seized from the assessee's Pune residence. Page 1 contains the details of, among others, the transactions of loan/s of USD 500,000 by Philip Anandraj to the assessee. A note captioned "INDIA" mentions that the State Govt. of Kerala was willing to donate 2,50,000 sq. mtrs. of tea plantation to Philip Anandraj (PA) to ....
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.... since, are also listed (annexing the detail by way of Annexure C to his order). The search in respect of property 'Chateau Gutsah' was also made, which revealed it to be an old hotel built in 1818 in the style of a fairy tale castle at Lucerne, Switzerland. It belongs to M/s. CM Clamai AG, who had purchased it in order to adjust loans advanced to the promoters (Annexure B to his order). The Hotel had been repeatedly offered for sale in the past, to no success. The addition being confirmed thus, aggrieved, the assessee is in second appeal. 21. The assessee's written submissions for the year (WS-2), apart from making reference to the response by various Swiss authorities/UBS, with (through) whom inquiries were initiated by GOI, already discussed in the earlier part of this order, refer to this aspect of the assessment at Part C thereof. Though PA had raised a bill (dated 05.4.2001) on the assessee, no payment was made by the assessee, as confirmed by PA vide his statement dated 10.3.2011 u/ss. 50(2) and 50(3) of PMLA, categorically stating that in October, 2006 he came to India to recover his money from HAK, who owed him to the extent of CHF 500,000. The amount due was in s....
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....he assessee (HAK), faxed on 21.9.2006 (at No. 0044 207 4917 476), stating his account details where the bill amount of USD 16 lacs is to be transmitted. These set of documents, being found during search, form part of the assessment record. The amount, on its basis, has been correctly considered as in USD. There is, however, nothing to indicate it's payment. Rather, the subsequent invoices raised, being inclusive of the impugned sum, confirm that no payment toward commission was made. The invoice for USD 16 lacs includes remuneration up to August 2006, which remains, similarly, unpaid since April, 2001. No addition qua remuneration (at USD 2 lacs p.a.) paid to PA has been made by the Revenue for any year. This corroborates the statement of PA - who was found staying at his Pune residence at the time of search on 05.1.2007, to the Revenue that he came to India in October, 2006 only to pursue the assessee for the payment of his dues. By all counts, therefore, the payment of commission, to any extent, has not been made. It is only where the fact of payment is established that the Revenue can, in the absence of a satisfactory explanation as to its source by the assessee, assess it as in....
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.... being exchanged, i.e., even as clearly it was not carried out fully and fell through. The assessee, who has not denied signing the document (on behalf of self), or of being not in Switzerland where the document seems to have been executed (and which could be proved on the basis of entries in his passport), has not helped matters at all by not issuing any explanation what-so-ever in the matter. No definite findings - the issue being primarily factual - could under the circumstances be issued at this stage, and the matter clearly requires being remanded back for the purpose. The matter shall, accordingly, stand to be set aside to the file of the A.O., who shall re-adjudicate afresh, allowing the assessee proper opportunity to present his case, confronting it all the materials it wishes to rely upon, particularly with regard to the payment aspect of the matter, and decide by issuing definite findings of fact. Reference in this context may be made to the decision by the Hon'ble Apex Court in the case of Kapurchand Shrimal vs. CIT [1981] 131 ITR 451 (SC), wherein it stands explained that unless forbidden from doing so by the statute, the tribunal, as an appellate authority, has t....
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....from the amount borrowed from PA in the first place. Likewise is the entry (No. 1.13) in the invoice, which is in respect of cash loan to Mr. Khan (for CHF 1000). Apart there-from, all the amounts listed, which would thus work to the balance amount of CHF 216,164 (394,164 - 178,000) are in respect of different expenses incurred by PA on HAK and his associates, for and on his behalf. There is no reason to presume that the amount has not been paid in the normal course. Page 4 of the compilation, referred to earlier, which is an invoice by PA on HAK (in substitution of that dated 13.11.2005) for USD 16 lacs, does not bear reference to this expenditure at all, implying its payment. The only reference to expenditure in this, later invoice is for USD 4 lacs, which is in respect of an expense listed (of August, 2001). The document being found in the course of search would have to be regarded as true. The assessee, being in Dubai in July, 2000 (refer para 9 of the order), is found to be staying at Zurich, Switzerland during the relevant previous year, entered into agreements, as with PA (dated 05.4.2001) and Clamai AG (dated 18.7.2001), transacting businesses and entering into deals ....
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.... Prince, Credit Suisse First Boston, Zuirch, Switzerland Att: REMO MAURER/SOBE 21.2.2002 USD 390,000,000 (three hundred & ninety million) A/c 08-065-45.0 Credit Lyonnais Bahanhofstrasse 3, Zurich, Switzerland Att: PATRIC WIPFLI 21.02.2002 USD 200,000,000 (two hundred million) a/c 08-068-86.8 Credit Lyonnais Bahanhofstrasse 3 Zurich, Switzerland Att: PATRIC WIPFLI [emphasis, by underlining, ours] The assessee furnishing no explanation despite being show caused in the matter, the same was assessed as unexplained deposit, adopting the conversion rate, as it appears, as at the relevant date/s - the assessee raising no question in its respect. In appeal, the same stood confirmed for the same reason. The ld. CIT(A), in addition, on the basis of internet searches, confirmed Remo Maurer and Patric Wipfli as being existing persons, enclosing information in their respect by way of Annexure H and M respectively to his order. Remo Maurer was accordingly found by him to be a partner in Portelet Holdings Pte Ltd., Singapore, and managing director of Portelet AG, Zurich. The issue with regard to the additions, based on transfer instructions, particularly qua whic....
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....t to PA, which may well be true, would thus be of no moment, both in law as well as in the facts and circumstances of the case. 26. Ground 7 is pari materia to the Ground 10 of the assessess's appeal for A.Y. 2001-02, which stands decided vide para 18 of this order. The assessee, for this year, has been found to be staying at Ema House, Zuirch, Switzerland, for an extended period. He has also travelled to Dubai and back, at least once, staying there, even if for a few days. The same definitely entails expenditure, and in foreign exchange. We accordingly consider these incidences as material for assessment (of income) on account of (unexplained) living and lifestyle expenses, made at Rs. 30 lacs, which we accordingly confirm. Needless to add, the assessee shall be allowed due credit for the amount, if any, already disclosed towards the same. We decide accordingly, and the assessee gets part relief. 27. Grounds 8 and 9 stand already decided vide paras 19 and 20 of this order respectively, disposing grounds 11 and 12 respectively for A.Y. 2001-02, even as held in the said paras, to which reference is drawn. Grounds 10 and 11 are general in nature, warranting no adjudicatio....
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..... 2001-02 to 2007-08). The same is with reference to pages 18 and 19 of Bundle 7 of Annexure A dated 05.1.2007 to Panchanama dated 06.1.2007, qua which addition for USD 498.50 million was proposed and stands made vide para 10 of the assessment order. We find the explanation as correct, which has also not been objected to by the assessee per his written submissions. The particulars of the instructions are accordingly tabulated at below: (Amount in USD M) [emphasis, by underlining, ours] In fact, the last three entries in the table (at Sr. Nos. 8-10), as it appears, pertain to a single document, being the Agreement dated 07.8.2001 between HAK and KT (annexed as Annexure A to this order). 30.2 We, next, consider different amounts comprising the impugned sum of USD 498.50 million. The first amount (USD 68.50 million), as claimed by the assessee, is not qua any transfer instruction, but based on a letter dated 16.9.2002 by PA to the assessee (page 11 of the compilation). We find this is as not correct. Page 13 of the said compilation is the transfer instruction for USD 68.50 million dated 7.11.2002 (also referred to at para 10(i) of the assessment order). On further en....
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.... not. The onus in such a case is on the assessee to show that, despite the same, no addition to his returned income is called for on that account. For the balance, the onus is clearly on the Revenue. A probability in favour of the TI being issued, being firstly proposed and, further, only for the purpose of being issued, is certainly higher by far than it being not issued, which would only be where there is a hiccup or change in plan or circumstances, warranting non-issue or deferring the issue of the TI/s. However, by itself, it cannot be said that the statement was indeed followed by a TI for the said amount. Then, is the question of date thereof. Though, again, the two sums for which the TI/s are issued, i.e., USD 68.50 million and USD 72 million, being dated 07.11.2002, the presumption qua the balance 'transfers' would be of the same being around the same time, particularly considering that all the payments stand tabulated and aggregated, so that they were being considered for being executed together, this cannot be said as a fact. We are conscious that the addition is toward the amount held in bank account against which the TI/s is issued, so that the very fact that t....
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....y on the assessee. Continuing further, the Agreement, found in search from the residences of both - the assessee and KT, is, on close examination, found to be a make-believe, entered perhaps with a view to transfer funds without attracting corresponding tax liability by ascribing their origin or source to past profits. The total amount of profit, worked meticulously (at USD 280.54 M), matches the amount stated to have been earned by the assessee (from 1985-1989) from his two companies, stated to be not functional, in which he has sole invested interest (refer para 8.1). Do the two identical figures refer to the same profit/s, stated to be earned in the same time frame, at one place, by the assessee abroad (no such income reported in India) and, at another, through their companies, from their business operations mainly in India. Both the assessee and KT being tax residents in India for those years, with their profit sharing ratio - from their joint venture, being clearly defined, the amount ought to have been, and would therefore have been, where so, returned for those years by the joint venture company/entity. As also the income, claimed as earned by the assessee from the said comp....
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..... We may further add that there is nothing to show that any TI was proposed for an amount of USD 50 million, which is stated to be for personal requirements (appearing at Sr. No. 7 of the table). The addition toward the same is deleted. Two, the payment as listed at Sr. No. 6 of the table, being in relation to an Agreement dated 18.7.2001, due to be paid, has been also noted by us for A.Y. 2002-03 (vide para 22(b) of this order). Without doubt, the same being in respect of a single payment, could, even assuming so, be brought to tax for either year. The A.O., who has added the purchase amount as well as qua payment in its respect, shall have regard to this aspect. We decide accordingly, and the assessee's ground is partly allowed and partly allowed for statistical purposes. 31. Ground No. 5 is in respect of an addition for Rs. 1,98,000 toward gift/s to son, Syed Mohammad Sameer Uddin Ali Khan, Hyderabad. The same, being per telex transfer/s to his SB A/c No. 561 067 with ABN Amro Bank, were assessed in the assessee's hands on the basis of the donee-son's statement u/s. 131 dated 08.1.2007, stating the source of the said sums, comprised of three amounts credited to his bank....
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.... in the absence of any substantiation. The assessee, in view of his revised plea before us, effectively confirms the impugned sum to be a gift/s, as in the preceding year, to his son at Hyderabad. No evidence, however, of the same being out of the income returned, has been led before us. It needs to be appreciated that the assessee's contention would be valid only where the amount is debited to his capital account, and a mere disclosure of income to an extent equal to or exceeding the gift amount would be by itself of little consequence. The addition is accordingly confirmed. 37. Ground No. 5 is in respect of investment in a Mercedes car, for Rs. 23 lacs. The assessee's marriage with RHAK was solemnised on 24.12.2000. The certificate of Nikah, duly notarised, found during search, revealed the Mehr amount to be at Rs. 21 lacs. The assessee, vide his statement u/s.131 dated 19.2.2007, explained to have gifted a Mercedez car (Registration No. MH 12BP 7860), purchased in 2003, at a cost of Rs. 23 lacs, to his wife, as part of the Mehr. Though no evidence in its respect was produced before the A.O., resulting in an addition for the said amount, the assessee furnished a copy ....
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..... The matter definitely requires verification to arrive at definite findings. As regards the payment per EMIs, registration and insurance charges, falling during the year, the assessee has produced a cash statement, which has been disregarded for want of both, authenticity and adequacy. When separate addition is being made by the Revenue for household expenses, being part of the living expenses, which should also include that toward running of vehicle, denial of credit for the income applied toward the payment of EMIs for the year cannot be appreciated. The ld. CIT(A) could have definitely proposed, and where unexplained, made an enhancement toward unexplained payment of EMIs falling in other years, which surely cannot be considered for the current year, so that reference thereto is misplaced. Further, even assuming to be unexplained, how we wonder the addition for the current year could exceed the EMIs paid, of course, as increased by the registration and insurance cost, if any, paid during the year. Under the circumstances, we only consider it fit and proper to restore the matter back to the file of the assessing authority to adjudicate afresh, after examining and ver....
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...., being account no. 949548 (HAK) and 498572 (RHAK). The cash deposited for different years, as revealed by the statements of account, are as under: Financial Year Amount 2004-05 17,99,000 2005-06 24,69,900 2006-07 10,05,500 Total 52,74,400 The assessee, on being confronted, admitted the cash deposits in the bank account to be out of his income by way of horse racing, and which had not been disclosed to the Department (vide statement u/s. 131 dated 19.2.2007). In appeal, the assessee contesting the addition made in the assessment, with reference to the datewise cash deposit, which included Rs. 3 lacs (out of Rs. 17.99 lacs) on 31.3.2004, i.e., falling in A.Y. 2004-05, pleaded for its exclusion. The source of deposit for the balance Rs. 14.99 lacs was also submitted. The addition, however, came to be confirmed in-as-much as the assessee failed to substantiate his claims. Aggrieved, the assessee is in second appeal. 44. We have heard the party before us, and perused the material on record. Apart from merely stating that the ld. CIT(A) had erred, no definite case has been made out before us. The same, even otherwise; the matter being ....
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.... toward the stated acquisition cost of Rs. 25 lacs, the same came to be added for the current year. 48. We have heard the party before us, and perused the material on record. The ld. CIT(A), on the basis that the investment toward purchase cost of the Bangalore flat, though undisclosed, was made during f.y. 2002-03, so that the addition in its respect could only be for A.Y. 2003-04, has deleted the addition (refer para 19 of the impugned order). The assessee's ground is accordingly not maintainable. 49. Ground No. 7 is in respect of an addition for Rs. 10,494 crores (USD 2.4 billion) toward transfer instructions. The same, tabulated as under, were found during search from the residence of KT loaded on a pen drive, hard copy of which was subsequently taken, forming part of the seized material (Annexure 7 to Panchanama dated 06.1.2007, containing 22 pages): S. No. Reference Annexure/ Page No. Remittance request via telegraphic transfer Value date Conversion rate of USD Amount in Rs. 1 A-7/9 TRIPLE 'A' UBS bonds of the value of US $ 1 billion 07.1.05 43.90 4390,00,00,000 2 A-7/10 TRIPLE 'A' UBS bonds of the value of US $ 0.4 billion ....
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.... that the assessee has or had millions in USD in accounts with UBS, at Switzerland or Singapore or elsewhere or in AAA or any other type of securities. The report, being unsigned, has not been admitted. Yet, it is clear that the same is based on the UBS report dated 30.10.2007. We have upon considering the said report clarified that nevertheless the onus to explain the transaction in all the cases where a TI is issued, or apparently so, effectively rebutting the logical inference of the balance in the account at the relevant time, is on the assessee. This is so even where the TI is not found in search, but transmitted to the Revenue by ED, while being more so, as in the instant case, where the TI is found during search. Reference may be drawn to the discussion at paras 11- 12, 15, 25 and 30 of this order. In the present case, the account on which the TIs are issued, is, rather, one of the accounts of the assessee confirmed by UBS AG. We have under the circumstances no reason to take a different view in the matter. We are acutely conscious that the amount under reference is astronomical. At the same time, however, we cannot disregard the clear evidences found in or as a result of....
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....rses purchased, listed at paras 14 and 22 of the assessment and the impugned order respectively, reveals one horse 'Bu Attifel' to be purchased on 19.8.2005. The said date falls outside the relevant previous year. Accordingly, the addition is confirmed at Rs. 8 lacs. We decide accordingly. 53. Ground No. 10 concerns the addition on account of additional income disclosed before the Hon'ble Settlement Commission. The same we find stands not challenged before the first appellate authority. For the same reasons as stated at para 40 of this order, we confirm the addition, with like directions. We decide accordingly. 54. Ground 11 is the disallowance of loss on horse betting, claimed by the assessee against its business income on horse racing. The same stands disallowed in the absence of any substantiation of the loss, and confirmed for the same reason/s. The assessee, before us, has sought to plead its case with reference to section 74A. 55. We have heard the party before us, and perused the material on record. The Revenue has denied the claim of the impugned loss in view of it being unevidenced. The assessee's alluding to section 74A is thus of no moment. In fact, even s....
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.... deposit in account with Muslim Co-operative Bank, Yerwada, Pune, made at Rs. 1.35 lacs for A.Y. 2005-06, and subject matter of Ground 5 for that year (para 45). The assessee's declared income has been found by the Revenue as not sufficient to meet household and personal expenses. If, as claimed before the ld. CIT(A), bank withdrawals is a source of cash deposit, the source of bank deposit/s itself needs to be explained. The assessee before us, in addition, states that the sale proceeds of the Bangalore property (at Rs. 35 lacs) has been utilized. The capital gain on the said sale (Rs.10 lacs) has been offered to tax for the current year, discussed with reference to Ground 6 for A.Y. 2005-06 (refer para 47). The same is definitely a source of cash, which could be deposited in bank, i.e., that made after the date/s of realisation of the sale proceeds. Our second observation in the matter is that out of the total deposit of Rs. 12,09,932 in Muslim Co-operative Bank, for which amount addition is made, Rs. 1.35 lacs stands deposited during the preceding year, so that the addition for the current year could not exceed the balance amount, determined at Rs. 10,75,038/- (para 19 o....
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....et, found and seized during search. Similarly, Grounds 11, 12 and 16, for Rs. 92,699/-, Rs. 1,25,180/- and Rs. 1,25,000/- respectively, are all toward journeys undertaken by the assessee, either domestic or foreign. These facts, stated at paras 12, 14, 15 and 19 of the assessment order, are not denied, much less rebutted. The facts are borne out by the record. The case of the opposing parties is the same, as for Ground no. 4 (refer para 60 of this order and para D of WS-6). The additions are, under the circumstances, confirmed, dismissing the relevant grounds. We decide accordingly. 65. Ground 9 is toward unexplained monies with Bank. The amount for which the addition has been made and confirmed and, thus, under challenge, is Rs. 54,266.41 crores, being the aggregate (at USD 11.999 billion) of 16 Transfer Instructions (TIs) or requests for various amounts, listed at para 13(ii)/pgs. 13-15 of the assessment order. The conversion rate, not specifically challenged, adopted, is that obtaining for each value date, separately, listed at para 13(x)/pgs. 22-23 of the assessment order. The same were found from the residence of KT in the course of search on 05.1.2007, in the form of....
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....on the UBS report stands discussed at paras 11 and 12 of this order. The contention qua ED is not supported by any material on record. We have further explained that the proceedings under PMLA stand on a different footing, and that the request for mutual legal assistance by the Indian authorities would stand to be considered and responded to by the Swiss authorities on a clear nexus between the predicate offences and the funds, i.e., for/qua which information/assistance is sought. The investigation by ED, which is thus at a trial stage, would be of little consequence in the proceedings under the Act, which are or can be decided upon on the basis of preponderance of probabilities, and toward which the ld. DR has cited abundant case law, viz. CIT vs. Empire Builtech Pvt. Ltd. [2015] 228 Taxman 346 (Del)(Mag.); Umakant B. Agrawal vs. Dy. CIT [2014] 369 ITR 220 (Bom); CIT vs. Narinder Kumar Sekhri [2015] 228 Taxman 35 (P&H)(Mag); Edayanal Constructions vs. CIT [1990] 183 ITR 671 (Ker). In fact, that apart, the decision in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), rendered considering four precedents by the hon'ble Apex Court, is a locus classicus on the subject. In vi....
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....Rs. 82,500/-). The assessee before us, as per his written submissions (para I of WS-6), contended that he is a member of RWITC, which provides facilities for maintaining & training of, as well as stable for, horses, and from which he receives stake monies in respect of horses that win (races). Reference is made to sections 2(24)(xii), 56(2) and 74A. The activity of owning and maintaining race horses, which is clearly in the nature of a business, is regarded by the Act as a separate and distinct activity, loss incurred in which stands to be set off only against income from the said activity, which is precisely what the assessee has claimed. True, there may be no evidence, but then there is equally no evidence toward earning of income from the said activity as well. The assessee's return is sans any supporting material, so that all he has done is to return an income from the said activity at Rs. 15.69 lacs - nothing less and nothing more. The Revenue's stand could only be sustained when there is clear evidence of the assessee having earned Rs. 24.11 lacs (i.e., 15.69 + 8.42), so that the loss is assailed for want of evidence. The Revenue's stand becomes all the more untenable c....
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.... 74. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 is in respect of undisclosed jewellery, at Rs. 44,80,000/-, deemed as income by way of unexplained investment. This is on the basis of a statement drawn on a loose sheet of paper, containing details of 12 items of jewellery, captioned 'Mr. Khan', found & seized from his Mumbai residence during search. No explanation was furnished before the Assessing Officer, who accordingly assessed it as income. In appeal, the assessee challenged the valuation, explaining the same as by way of a gift from his sister; belonging to his mother-inlaw; and purchased on 31/12/2006, besides a part of it comprising watches. The contention being unproved, besides bearing inconsistencies, was rejected by the ld. CIT(A), confirming the addition. 75. We have heard the party before us, and perused the material on record. The document is found duri....
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....epaid per EMIs, payable on 5th of every month, at Rs. 14,625/-, to ICICI Lombard, through one, Nilesh V. Padhye. The difference of Rs. 38,000/-, as it appears, is the excess repayment in-as-much as the loan would also carry interest, which gets included in the EMIs. Further, the same is clearly unaccounted. The addition under the circumstances could be for the cash component of Rs. 6.07 lacs, plus the EMIs falling due for payment and/or paid during the year. The assessee furnishing no details, it is reasonable to presume 12 EMIs during the year, i.e., Rs. 1,75,500/-. The addition is accordingly restricted to Rs. 7,82,500 (i.e., 6,07,000 + 1,75,500), and the assessee gets part relief. 78. Ground 6 is in respect of an addition for Rs. 10,30,750/- for unexplained investment in Honda City Car. An insurance policy for a car (Honda City), stating the premium at Rs. 41,005/-, in the name of Abbas A. Abbas, the assessee's fatherin- law, was found during the search from the assessee's Mumbai residence, which further stated the value of car at 10,30,750/-. Abbas A. Abbas being aged, a nonassessee, working as a horse trainer, so that he could not afford to purchase and maintain the v....
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.... and perused the material on record. We observe that the assessee's consistent stand is that of the sum of Rs. 5.0 lacs, Rs. 2.50 lacs is paid by cheque, and the balance Rs. 2.50 lacs by cash, out of his horse racing income, not disclosed to the Revenue (refer statement u/s. 131 dated 26/04/2007). Surely, if cash payment has also been accounted for in books, as claimed, even this sum may not stand to be included in the assessment. The stand of the ld. CIT(A) that the cash payment is reflected in the books on 10/05/2006, while cash receipt is dated 9/05/2006, may not be material where cash is also available in books on 9/05/2006. The basic issue is of the source of cash in the books as well as the balance in the ABN Amro Bank, which cannot be considered as explained merely because the payment is by cheque. The matter needs proper verification of the assessee's claim of the entire sum being duly accounted for and, thus, explained, and, is accordingly restored to the file of the AO for fresh determination in accordance with law, issuing definite findings. We decide accordingly. 82. Ground # 8 is again in respect of investment in a motor car (Porscha Cayennes, 2005 Model/ Reg.....
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....vidence toward horse racing/betting income is produced, apart, the moot question is whether any, and to what extent, addition is called for considering the purported inclusion of the impugned sum in the income returned, i.e., of having returned the same as income. It is also not clear if the assessee's balance-sheet as on 31/03/2007 reflects the investment in the said car. Under the circumstances, we only consider it proper to set aside the matter to the file of AO for necessary verification and determination in accordance with law, issuing definite findings of fact, after allowing the assessee opportunity to state his case. We decide accordingly. 84. Ground # 9 is qua unexplained investment in a Mercedez car (Reg. No. MH 12BP 7861) for Rs. 26,84,244, being it's cost, added as the assessee's income in the absence of any explanation by the assessee, and confirmed for the same reason. 85. We have heard the party before us, and perused the material on record. The Registration Certificate (RC) (found in search) shows the car model as '2002'. A car bearing registration number MH 12BP 7860 was found as purchased for like amount (Rs. 26,84,244) in Feb., 2003 (refer Gd. 5 for AY 2004....
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....dition toward unexplained cash deposits with ABN Amro Bank, at Rs. 10,05,500/-. Cash deposits for a total of Rs. 52.74 lacs in the assessee's savings bank account (# 949548) therewith, which had a balance of Rs. 52 lacs as on 05.1.2007, were found (from f.y. 2004-05 to 2006-07) and, accordingly, addition made for each of these three years. The facts and circumstances, as well as the case of both the parties, being the same, we confirm the addition, as for the preceding two years, for which reference may be made to paras 44 and 61of this order. We may, however, add that there can be no double addition for the same amount, as where the cash deposited is utilised, as by issue of bearer cheque for Rs. 3.50 lacs for payment of car (refer paras 82,83). In other words, the addition is confirmed in principle, though the assessee can show that it results in a double addition, which aspect, where so claimed, the A.O. is obliged to verify, and satisfy himself that there is no double addition. We decide accordingly. 89. Ground 12 is qua an addition for Rs. 3.50 lacs toward payment of membership fee of 'Le Royale Residency Club'. The assessee confirmed the same, paid in cash, to be out of hi....
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.... or living expenses for this year, nor is the amount toward such expenses for the year stated. The addition is accordingly confirmed. We decide accordingly. 93. Ground 15 is qua an addition for Rs. 50 lacs in respect of investment in a property on account of it being unexplained. Pages 30 and 43 of Bundle No. 6 of Annexure A dated 05.1.2007 (to Panchnama dated 06.1.2007) show the assessee to be in deal for purchase of a Flat (admeasuring 4000 sq. ft.) in a housing project by the name 'Indulgence' from M/s. Prestige Estate Projects Pvt. Ltd. Further, notings for Rs. 50 lacs were found below the name 'Rizwan Razad', also mentioned of these pages. The investment being not disclosed, the amount of Rs. 50 lacs was added and confirmed in assessment, so that, aggrieved, the assessee is in appeal. 94. We have heard the party before us and perused the material on record. The assessee's case is that these are mere notings and do not constitute evidence. The Revenue's case, on the other hand, is that it is clear that the assessee was in the process of purchase of the subject property. There is nothing on record to show that the same was not purchased, or that the deal did not take....
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....e ticket does not necessarily imply travel. The argument is misconceived. The question is of the source of money expended on the purchase or booking of the ticket for foreign travel by the assessee. If the assessee did not undertake travel, it may result in a refund as per the rules governing the same, where cancelled within the prescribed time. We, accordingly, confirm the addition. 97. Ground 18 is toward cash payment of Rs. 32,500/- on the basis of a receipt dated 30.12.2006, issued by one, Sameer Zamiar (page 36 of Annexure A). The same came to be added and confirmed in the absence of any explanation by the assessee. The assessee's case before us remains the same, i.e., that the evidence with the Revenue is no sufficient to impugn him. The fact of the payment by the assessee is clearly established by the receipt, found from the assessee's residence in search. The same being not disclosed, its' deeming as unexplained income cannot be faulted with. We decide accordingly. 98. Ground 19 is again qua unexplained payment of Rs. 20,87,500/-. Two pages, numbered 37 (of Bundle 6/Annexure A) and 21 (of Bundle 7/Annexure A), were found from the assessee's residence during sear....
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....ess shown to be not so. Only the assessee could explain the document, or the working made therein/thereby, which he chooses not to. Again, we are conscious that the same could either be a payment or a receipt. In either case, the same being undisclosed, is liable to be regarded as undisclosed and, thus, as unexplained income. Further still, no date is mentioned. The presumption, consistent with the document being valid, is of it being current, or even of the amount due for receipt as on 05.1.2007, the date of search. Per contra, the inference of income is valid. This leaves us with the amount as representing a payment due as on 05.1.2007, i.e., a liability to the named person. The inference of 'income' even in such a case cannot be faulted. This is as the liability incurred would only be against value - to that extent, received, and in respect of which the liability is incurred. The assessee can only be considered as having discharged the liability in the normal course of 'business', so that, being undisclosed, the deeming of income to that extent follows. Looked at from any angle, even as it is improbable that the assessee should prepare or retain a document concerning his l....
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....ifies the balance in account at least to that extent. Reference in this context may also be made inter alia to paras 11-12 of this order, delineating our reasons for considering the issue of TI as a valid ground for confirming the addition. At the same time, however, no TI has been issued for USD 16 lac. We have, vide para 22(b) of this order, found that no payment for USD 16 lac can be said to have been made; rather, the facts borne out by the record indicating to the contrary. The mention of the beneficiary account details and the reason/s for the expenditure/investment/s notwithstanding, we find nothing on record to justify either the inference of TI being issued or payment for USD 16 lac, or of balance to that extent; the same representing only a claim on the assessee. The addition, consistent with our findings at para to 22(b) supra, is deleted, being in fact made doubly to the extent of USD 5 lac. We decide accordingly. 105. Ground 24 is in respect of an addition on account of unexplained balance in bank account with UBS AG, Zurich, at Rs. 37,154.10 crores (USD 8 Billion). Search material (numbered as Bundle 1 of Annexure A dated 06/01/2007 to Panchnama dated 06/01/2007), ....
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....li Khan, clearly states that of the 404 pages provided (by GOI), 403 are true, i.e., except the letter dated 08/12/2006, enclosing a copy thereof as Annexure 'F' thereto, and which is the very same letter as page 6 (of Bundle 1/Annexure A), i.e., the Confirmation dated 8/12/2006 supra. It states, on the basis of precisions issued by UBS AG, that there was, at no time, a phone conversation between HAK and its' Chairman's office; that the said letter was never written or signed by any employee of UBS AG; that at no time the amount of USD 6 billion transferred to any account in the name of HAK. Our first observation in the matter is that both the assessee and PA have issued evasive replies, which are mutually inconsistent, if not contradictory, so that either of them, or perhaps even both of them, are not speaking the truth, or wholly or the whole truth. While the assessee denies any knowledge of the same, PA states that the original documents, which were scanned by him, were found from the assessee's Pune residence, where he was admittedly staying at the time of search. The scanned copies have not come out of nowhere. The PA's statement could thus as well be true. And how is it th....
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....assessee's dues to PA, but further plans as well. The two dates are for the same period, and perilously close to the date of the confirmation (08/12/2006). Then, again, are these two statements among the 403 documents given by CBDT to its Swiss counterpart under DTAA for verification, all of which have been found true (& genuine). It is not clear. Assuming that these were not so given, the million dollar question is: Why not? Two, the account particulars being withheld, by UBS Ltd. in each of these three documents, it is not clear if the two pertain, as it appears to be, the same account. Only the assessee (or UBS AG) could tell as to which account/s the same pertain to. Why, where not so, was the identification of the account/s not sought, as appears to be the case, as the Revenue would have most certainly highlighted this aspect otherwise. This is very surprising, considering the criticality or the extreme significance of the said information, both in context of the assessment under the Act as well as the ongoing investigation by ED. From the tax point of view though, the balance in the assessee's account/s with UBS AG, even if its' number/s is not specified, is sufficient ....
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...., again, may relate to one or even two separate account/s with UBS AG/UBS Ltd. We decide accordingly. 107. Ground 25: Transfer Instruction (TI) dated 22.11.2006 favouring S.K. Financial Services, i.e., as the beneficiary, in its' account with Barclays Bank, PLC, New York, for USD 700,000 was found. Inquiries in its respect were made through the FT Division of CBDT, and the assessee show caused in the matter, as also qua another TI dated 18.4.2006 for USD 99,965 in favour of the said concern. The two amounts, converted at the relevant rates, were added at the impugned sum of Rs. 3,59,47,418/-, which is contested before us; the ld. CIT(A) confirming the assessment in the absence of any improvement in his case - which is in effect blank, by the assessee before him. The assessee's written submissions for the year (WS-7) also do not throw any light in the matter. The Revenue, on the other hand, places reliance on the results of the enquiry moved through its' FT Division, as afore-referred, documents in respect have since been admitted by us as additional evidence (AE). The letter dated 29.3.2010 is a response by the US Department of Justice in part execution of the request by M....
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....), converted at the relevant date. The same came to be added in the absence of any specific comment by the assessee. We have also perused the assessee's written submissions in the matter. The same (para K of WS-7), which are common for Grounds 26 to 28, are general, stating that no addition could be made only on the basis of a TI. Remo Maurer, also referred to at para 25 of this order, is confirmed to be, and admittedly, an officer of Bank Credit Suisse, Switzerland. He, as confirmed by the ld. CIT(A) on the basis of internet search, had worked as a Director with Credit Suisse Private Banking (Zurich), and his responsibilities included handling the Indian subcontinent, having in fact lived and worked at Mumbai from 1996 to 1999 (refer page 39 of his order for AY 2003-04). We, therefore, for the reasons stated qua different grounds toward additions in respect of TIs at paras 11-12, 15, 25, 49 & 65 of this order, decide likewise for this Ground as well. 110. Ground # 28 refer para 107 of this order. 111. Ground # 29 is toward non-allowance of set off of loss of Rs. 2,77,960/-, claimed by the assessee per his return of income, on account of its non-substantiation. The position c....
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....t for the admitted income/s and avail credit for the corresponding cash. The Revenue having seized cash at Rs. 90.29 lacs (of the total Rs. 91.30 lacs found), what, we wonder, is the source of advance-tax deposited on the very same day. There is no reference to the cash-book, considered doubtful by the ld. CIT(A), by the AO, before whom, it appears, the same had not been produced. Our only concern is that the addition for the admitted cash is made, and that there is no double addition, thereby addressing the concerns of both the sides. The AO shall verify the assessee's claims in the matter, on the basis of verifiable cash flows. As aforestated, the inflows and outflows for the income/s & expenditure, stated on an annualized basis (viz. horse racing income, household expenditure, etc.), be reckoned uniformly (proportionately) over the year, at each month-end, and confirm the addition on that basis, i.e., for the shortfall/s during the year, retaining the cash as admitted as on 31/3/2007, the year-end. We may here also add that cash to the extent of Rs. 5 lacs has been confirmed for addition for A.Y. 2000-01 vide our order for that year (in ITA No. 3726/Mum/2009 dtd. 09/12/2015). We....
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....his son in Dec., 2006 is admitted. The only question is if the same is already accounted for by the assessee from his returned income for the year, as claimed, or not. We have already restored the matter in respect of such claim qua admitted incomes to the file of the AO, before whom the cash-book was not produced, for verification of the assessee's claims and a decision consistent with his findings (refer para 114 of this order). We decide accordingly. 119. Ground # 34 is in respect of a Mercedez Car (Regd. No. MH 12BP 7860). The same was purchased by the assessee in Feb., 2003 for Rs. 26.84 lacs, and stated to have been given to his wife, RHAK, in mehr; the nikah-nama of their marriage in Dec, 2000 stating the mehr amount at Rs. 21 lacs. The addition qua purchase of this car stands discussed and decided vide paras 37-38 of this order. The assessee claims to have sold this car after a couple of years for Rs. 14 lacs, repurchasing it again Nov.-Dec., 2006 for Rs. 10 lacs, which claims were not accepted on account of being un-evidenced, resulting in an addition for Rs. 14 lacs being confirmed in first appeal. 120. We have heard the party before us, and perused the materi....
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....redit being admitted in assessee's accounts, reflected as sundry loans at Rs. 129 lacs (ref. para 78 of the impugned order), is on the assessee, which has not been at all met. Case law on s.68 is legion, even as some case law in this respect stands also cited (refer para 65), all of which would apply. We confirm the addition. 124. Ground # 37 relates to an addition for Rs. 12 lacs toward the cost of air travel by the assessee during the year to different foreign locations, information on which was found from his Passport (No. 9884318 dtd. 10/7/2003, valid up to 23/11/2010) (refer para 25 of the assessment order). In appeal, the assessee submitted that the cost of travel to Canada was at one-half of that taken by the AO (at Rs. 1,65,000). The ld. CIT(A) observed the assessee's claim before him, confined to travel to Canada only, as un-evidenced. Aggrieved, the assessee is in second appeal. 125. We have heard the party before us, and perused the material on record. The total addition is for Rs. 17 lacs, the balance Rs. 5 lacs being toward the cost of the stay abroad. The travel itinerary has not been disputed, except for stating of a single visit to Canada, i.e., as again....
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....ra), if only to demonstrate our consideration thereof. Per the same, the assessee's counsel has, in the main, reiterated his submissions of instant proceedings being bad in law in-as-much as they stand proceeded with and concluded pending the proceedings under PMLA Act, which are under trial before the sessions court. Reproducing section 71 of the said Act, as under, it is said that the same would have an overriding effect, so that the assessments made would be to no consequence in law, further relying on the decisions in the case of Gautam Kundu vs. Manoj Kumar, Asst. Director (AIR 2016 SC 106) and Janta Jha vs. Asst. Director (in CRLMC No. 114 of 2011): '71. Act to have overriding effect The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.' The Revenue's counsel, on being confronted therewith, chose to rely on his submissions already made. We find no merit in the said contention, which in fact stands already dealt with at paras 11.2 and 12 of this order. The scope and ambit of the Act and the PML Act are completely different. Income, a word of wide import, is....
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....T's companies were involved in diverse business operations (on a 50:50 basis) mainly in India and had earned substantial profits through this joint venture. The total amount of profits earned by the joint venture during the years 1983 to 1990 amounted to USD 280.54 million. As per the understanding between HAK and KT all the earnings were held in the account managed by HAK. Now it has been agreed that HAK shall transfer the amount relating to KT's share of profit of such offshore accounts as may be nominated by KT. The fact that the funds did not remain idle and did earn some returns was discussed. After due deliberations it was mutually agreed that a lump-sum of USD 200 million shall be paid to KT by HAK and the same shall be considered as the final settlement. It was agreed that no further claims in respect of interest or otherwise by KT shall be raised or considered. The said amount of USD 200 million shall be split into 3 parts as follows: 1. USD 100 million relating to Roberts, Mclean and Co. Ltd. 2. USD 65 million relating to R. M. Investment and Trading Company Pvt. Ltd. and 3. USD 35 million relating to Roberts, McLean Services Pvt. Ltd. ....
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.... 503.33 Total 9,076.33 503.33 0003690 Nominee Arrangements Reorganization 6004845 09/10/00 4,344.00 6005188 21/11/00 30,025.90 0004433 Al Haseena 6005189 21/11/00 37,548.10 36,993.00 4,344.00 30,025.90 128.40 74,541.00 LLC 0005184 Autumn 6005455 21/01/01 5,320.00 9,486.00 68.00 14,874.00 Holdings 0005188 Appoint 6005454 21/01/01 3,346.38 207.00 3,553.38 Director 0005195 Scandinavian 6005456 21/01/01 9,746.00 4,420.00 24.00 14,190.00 Tech Document 4 ANNEXURE-C1 ssan Ali Khan Akbar Manzil 7-152, Musheerabad Hyderabad Camp: London 29 June 2003 Personal & Confidential Mr. Prabhu Guptara Director, Organisational Development Wolfsberg Executive Development Centre 8272 Ermatingen Switzerland Our Telephone Conversation Dear Mr. Guptara With respect to the matter discussed. I would appreciate it very much if you could kindly assist me in clearing up the situation. I would very much like to give you and your organisation this opportunity before I decide to take any drastic steps that could be counter-productive to both of us. With warm r....
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....ds having not been delivered on time and USD 140'000'000.-of the transaction had to be reversed. On trying to reverse the transaction the recipient of the USD 140'000'000.-expired without leaving any instructions of transaction details or heirs that would contact HAK. Until 1992 no problems were raised by UBS and HAK had an internal problem in India where he was unnecessarily implicated in a case by the DRI under and FERA laws which thereby prevented HAK from traveling outside India. The Indian authorities also asked him to deposit his passport. This case was finally disposed of in favour of HAK and be was permitted to travel abroad after his acquital in 2000. In 1993-1994 Dr. Weilly asked HAK OF JUDO CERTIFIED TRUE COPY face a project of Mr. Khashoggi. This was to the tune of USD 300'000'000.--. It is not know if this was a legitimate transaction and that it would be tako mal GREATER BOMBAY 1. VIKRAMAN Assistant Director Directorate of Enforcement Government of India Mumbai Document 6 eturned under the normal UBS investment conditions or if this was a private loan brokered by Dr. Weilly. HAK was informed about thi....
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.... operate his account in April 2001. Before this some time in the middle of 2000 Dr. Weilly had asked HAK to finance a sum of USD 20M to one of his friends Mrs. Santosh Golecha of 1 Green Close, London. He even sent this lady to Calcutta to meet HAK, who happened to be there at the time. Dr. Weilly had even taken the trouble of preparing the transfer instructions in respect of the same but HAK was not interested. Dr. Weilly was very upset with HAK for this. This was another matter which made Dr. Weilly vindictive towards HAK. HAK meets Mr. Philip Anandraj and expressed his desire to invest in hotel properties in Switzerland, PA promises to search and let him know. In April 2001 HAK again arrives in Zurich and finds out that. Orly! UBS and that his portfolio manager is Mr. Markus Grossman. Songeris employed by JUDGE On demanding to operate his account HAK is informice by Mr. Grossmann that there things to clear up and that this will taken care of very soon. SINDC Su GREATER BOMBAY GEO THUL GOPY are still some 1. VIKRAMAN Assistant Director ☠rectorate of Enforcement Government of India Mumbai Document 7 Conta....