TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 668
X X X X Extracts X X X X
X X X X Extracts X X X X
.... holders had opened and maintained bank accounts with Hongkong & Shanghai Banking Corporation (HSBC) in Switzerland, etc. The information received was covered under the confidentiality clause of the DTAA, and its contents could not be disclosed or shared by the Income Tax Department (ITD) other than for tax purposes or without the consent of the country which had shared information. The source of the information was not disclosed by the sharing foreign government. Based on the information received, investigations were initiated by the ITD in July, 2011. When the investigations were on, many persons appeared suo motu before the ITD and admitted having opened the bank accounts and paid tax on the maximum amounts deposited/ outstanding. In several cases,' searches conducted led to admission by the persons searched that they had opened accounts overseas and not disclosed it for tax purposes in India. Some persons, when summoned by the ITD, admitted having opened the accounts and transacted therein while some persons denied having any transaction in the said accounts. Some persons outrightly denied having opened any such bank accounts overseas. Based on the investigations, further i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ismissed by the Hon'ble Delhi High Court." 4. The AO made additions of income being peak deposits held by the assessee in his different foreign bank accounts. Additions were also made on certain other issues which we would be specifically referring to later. 5. We have heard Ms Nirupama Kotru, the ld. CIT, DR on behalf of the Revenue and Shri Ajay Wadhwa, the ld. counsel for the assessee. Detailed submissions were made by both the parties. Paper books were filed along with written submissions. 6. On a careful consideration of the facts and circumstances of the case and on a perusal of the facts on record and the orders of the authorities below, we adjudicate the issues as follows. 7. The first common ground raised by the Revenue for AYs 2006-07 and 2007- 08 relates to the deletion of addition made by the AO on account of peak deposits in HSBC, Geneva account. 8. The ld. CIT(A) deleted the said addition as follows:- "Thus, on the issue whether amounts kept by the non-resident appellant in foreign bank account is exigible to tax in India, I have held that evidence is yet to be collected to establish that the amounts kept by the appellant in his foreign bank accounts, includ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income in India, foreign bank accounts of NRI cannot be subjected to tax in India. The relevant portions of the judgement of the Hon'ble High Court read as under:- "6. We are left to consider the addition of Rs. 10,51,20,000/- made u/s 68 of the Act. In so far as the addition is concerned, the decision with regard to it would depend on whether the assessee is regarded as a resident or non-resident. In case he is regarded as resident, then, obviously, this addition would have to be made. But if he is regarded as a non-resident, then, this addition will have to be deleted. This is exactly what the Tribunal has done. The Tribunal considered the case of the Revenue as well as that of the assessee and determined that the assessee was a non-resident and, therefore, the said addition was deleted." "13. In view of the fact that the Tribunal has correctly decided that the respondent/assessee was not a resident in India in the years in question, it is axiomatic that the addition of Rs. 10,51,20,000/- u/s 68 would have to be deleted because it was a transfer from the respondent/assessee's foreign account to the domestic account." 11. The ld. counsel for the assessee has also relied upon v....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... AY 2007-08, 2008- 09, 2009-10, 2010-11, 2011-12 and 2012-13 are dismissed. 16. Another common ground raised for the AYs 2006-07 & 2007-08 relate to the deletion of additions made by the AO on account of documents seized from Shri Suresh Gulati's residence. 17. The ld. CIT(A) vide the impugned order held as under:- "8.1 The fourth ground of appeal in AYs 2006-07 & 2007-08 are against additions of Rs. 4,82,543/- & Rs. 1 ,66,07,257/-, respectively, based on certain documents seized from the residence of Sh. Suresh Gulati. These payments were made by the appellant from his account with Deutsche Bank, Singapore for the purpose of renovations made in Sonali Farms. The matter was decided in favour of the appellant in the earlier appeals, wherein it was held that money kept in his account at Singapore is not taxable in India. It was also held that remittances made from the said account for expenses in India could not be held as unexplained expenditure/investments. Details are available in the submissions filed by Ld. AR reproduced in Para-4 above. Following the earlier appeal orders, these additions are deleted and these grounds of appeal are allowed." 18. It was submitted by the ld. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....judgements/orders, and consistent with our view on the issue of deposits in foreign bank accounts drawn from para 7 to para 13, we uphold the order of the CIT(A) on this issue also and dismiss the ground of revenue. 24. For AYs 2007-08 & 2008-09 the common ground raised by the Revenue is that the ld.CIT(A) has erred in deleting the additions of Rs. 1,15,40,179 (AY 2008- 09) and Rs. 3,61,47,562 (AY: 2007-08) made by the AO on account of unexplained deposits in ICICI, London. 25. The ld. CIT(A) held as under:- "8.3 The seventh ground of appeal in AY 2007-08 and the fourth ground of appeal in AY 2008-09 is against addition ofRs.3,61,47,562/- & Rs. 1,15,40,179/-, respectively, being deposits in the bank account of the appellant held with ICICI Bank, London. It has been held by Hon'ble ITAT in appellant's case in the earlier appeals that moneys kept in accounts held by him outside India could not be taxed as he is a non-resident. I have also held in the case of the appellant that unless it can be established that the money held by the appellant in his foreign bank accounts are proceeds of income accruing or arising in India or deemed to have accrued or arisen in India it cann....
X X X X Extracts X X X X
X X X X Extracts X X X X
....curity deposit against property let out. Such cases of amounts received for consideration and having commercial expediency are not covered in the purview of Section 2(22)(e). It is noted that the security deposit was also refunded by the appellant on termination/cancellation of lease agreement. The additions made are erroneous and are deleted. These grounds of appeal are allowed." 32. The ld. AR submitted that the deemed dividend applies to loans or advances in the nature of loans. It does not apply to business or commercial transaction. Hence, the security deposit is not in the nature of a loan, but, is a consideration for the benefit which the company has acquired by getting property on rent. He placed reliance on the following case laws:- (a) CIT v. Ambassador Travels (P) Ltd. (2008) 318 ITR 376 (Del); (b) CIT vs. Creative & Printing (P) Ltd. (2009) 318 ITR 416 (Del) (c) Sunil Sethi vs. DCIT (2008) 26 SOT 95 (Del). 33. Having heard the rival submissions and perused the relevant material on record, we are in agreement with the ld.CIT(A) that the consideration in question received by the assessee is not covered by section 2(22)(e) of the Act. This common ground raised by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd the tax paid is in excess of tax payable on income finally assessed in accordance with the appellate orders. Hence this view of the ld.CIT(A) is right. There is no estoppel against law. This ground of the assessee is, therefore, allowed. 40. The common grounds raised in the Cross Objections of the assessee for AYs 2007-08, 2008-09, 2009-10 & 2011-12 states that: (i) the ld.CIT(A) has erred in stating on presumptive basis that interest on amounts outstanding in ILORA (HSBC) account, if at all, can be charged at the prevalent actual rates or alternatively at the mean rate for the entire block period of assessment; and (ii) that the ld.CIT(A) has erred in stating the above despite the fact that he has himself deleted the addition relating to the amounts in HSBC account and has also stated that since the principal amounts cannot be brought to tax, the question of taxing interest on those amounts does not arise. 41. The ld. Counsel for the assessee submitted that the additions for these years were made on presumptive basis on account of deemed interest of 4% on the last known balance in the HSBC Geneva Bank Account. When the principle amount in the HSBC Geneva Bank account is itsel....