TaxTMI 
TaxTMI 
2016 (6) TMI 585
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....s, Short Street and Camac Street premises, at Kolkata on 05.1.2007. The same formed part of a concerted action by the Revenue on Hassan Ali Khan and other related parties at different place across India. The first four grounds of appeal, common for all the years, as under, raise legal/jurisdictional issues, and are accordingly taken up first, i.e., prior to the other grounds agitating to the various additions/disallowances on merits: '1. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the assessment order u/s. 143(3) r. w. s. 153A is without jurisdiction and bad in law. 2. The learned Commissioner of Income Tax (Appeals) erred in not granting a reasonable and sufficient opportunity of being heard to the appellant. 3. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the learned Assessing Officer had relied on incomplete investigation and had also failed to bring all evidences and findings of investigation on record and erred in not directing the learned Assessing Officer to obtain findings of investigations made by Enforcement Directorate having relied on the information provided by the said department. 4. The learned Commissi....
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....TM), following the same. The factual position is that the assessee did not file any return in response to the notice u/s. 153A. How could then, it is wondered, he claim non-assumption of proper jurisdiction by the Assessing Officer (A.O.) for want of notice u/s. 143(2)? True, the assessee claims to have communicated to the A.O., vide letter dated 31.3.2008, to treat the return/s originally filed u/s. 139 as in response to notice u/s. 153A. So, however, we do not find any merit therein as the non-furnishing of a return in response to notice u/s. 153A stands confirmed in view of the levy of penalty u/s. 271F of the Act (for A.Ys. 2001-02 to 2006-07), since confirmed by the Tribunal (in ITA Nos. 2919- 2929/Mum/2009 dated 16.4.2010/APB-9, pgs. 1771-1773), and which order stands admittedly accepted by the assessee. For A.Y. 2007-08, admittedly no original return u/s. 139 was filed (APB 10, pg. 1781). The question of the assessee requesting the A.O. for treating the same as in compliance to notice u/s. 153A, therefore, does not arise for that year. The assessment for A.Y. 2007-08 is in fact made u/s. 144; there being no compliance of notice u/s. 142(1). The impugned assessment, and....
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....y. CIT (in ITA Nos. 4156-4162/Mum/2010 dated 29.2.2016). 5.2 As regards the plea as to non-allowance of proper opportunity by the A.O., the same we find stands raised before the first appellate authority, and duly dealt with him in his order (as vide Ground 7 and at para 18 for A.Y. 2001-02), stating that no submission in this regard was made before him even as the A.O. had allowed sufficient opportunity to the assessee. The ld. Authorized Representative (AR) would toward this state that the first effective notice seeking details and clarifications on the seized materials was issued to the appellant only on 07.11.2008, while the information received from the ED communicated, also show causing the assessee in its respect, only on 19.12.2008. Both these were, thus, toward the fag end of the assessment, leaving insufficient time to respond to the detailed questionnaire/requisition. This is supported by a plea for admission of additional evidences. The Revenue responds by listing the several notices - eleven in number, issued u/s. 142(1), mentioning the dates of their issue and service (including one u/s. 143(2) dated 02.12.2008). The matter, though pertinent, is purely factual in-as....
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....counts in their names. The second letter, issued in response to a requisition u/s. 142(1) to furnish copies of such accounts (APB pg. 877), is accompanied by eight separate instructions dated 12.9.2013 (one dated 20.9.2013) (APB 5, pgs. 855 - 870) by the assessee, in the format suggested by the Department, to the respective banks for furnishing all the accounts recorded. Both the letters are much after the completion of the assessment proceedings, nay, even after the conclusion of the proceedings at the first appellate stage. How, then, can they be of any consequence in-so-far as the assessee's charge of non-grant of proper opportunity by the A.O. is concerned? How, rather, could the Revenue modify the impugned assessments in any manner. In fact, these are mere requisitions (on the respective banks), not accompanied by the bank account statements, so that by itself this is of little moment as far as the assessments are concerned. On the contrary, it establishes non-co-operation as well as a deliberate design to mislead the Revenue. All that the said letters may therefore exhibit, taking a magnanimous and liberal view of the matter, is of a change of heart at the end of the assessee....
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....e Apex Court in the case of K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, it was submitted that the scope of the words 'substantial cause' occurring in rule 29 stands explained therein to mean that where evidence on record is sufficient to enable the court to pass an order, it may yet admit additional evidence for any other substantial cause. The ld. special counsel for the Revenue would rely on the decision in the case of in Ibrahiam Uddin and Anr. [2012] 8 SCC 148, specifically referring to para 41 (at page 168 thereof), to say that the power to admit additional evidence u/r. 29 'for any other substantial cause' is to be read in context of the earlier words 'requires... to enable it to pass orders', and cannot be admitted where evidence on record enables the tribunal to pass an order. The argument raised by the ld. AR is even prima facie not valid. If the words 'substantial cause' in rule 29 are not to be read in the context of the words 'requires... to enable it to pass an order', which is imminent from a plain reading of the rule, how, it may be asked, is the same to be read and understood as? That is, what then would inform or guide the understanding or the ....
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....fore the tribunal, which though is vested with judicial discretion to allow production of the same under specified circumstances, i.e., either to enable it to pass an order or for any other substantial cause, or where the Revenue authorities had decided the case without affording sufficient opportunity to the assessee to adduce the same. The latter aspect is not in dispute in the present case, which, it would be appreciated, could not, where so, strictly qualify to be additional evidence - the assessee being prevented to produce it in the first place. The words 'substantial cause', as a holistic reading of the several decisions cited as well as the analysis in the case of HAK (supra) referred to would suggest, cannot be read removed from or de hors the purpose for which and toward which the adjudication under reference is being made. As explained by the Hon'ble jurisdictional High Court in Ahmedabad Electricity Co. Limited vs. CIT [1993] 199 ITR 351 (Bom) (FB), the jurisdiction of the tribunal is not restricted to the subject matter of the appeal, i.e., the points challenged in the memorandum of appeal before it, but ranges over the whole assessment. If the evidence is not to e....
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.... same originating in a foreign territory, is not apostilled and, accordingly, cannot be accepted in evidence. This, then, makes a short shrift of the fore-going discussion on the law in the matter, which was yet preferred by us in view of the lengthy arguments in the matter canvassed before us. No wonder, the ld. AR has chosen not to make a separate and specific prayer for admission of additional evidence u/r. 29, as ought to be and is generally the case, but seeks to make out a case in its respect, and argues the same with reference to grounds of appeal, contesting the non-allowance of proper opportunity by the assessing and the first appellate authority. The two aspects, save to the extent that are clearly interrelated, are separate and distinct. If there has been non-allowance of proper opportunity by the Revenue authorities, an aspect considered by us earlier, that by itself is a ground sufficient for seeking a set aside qua the relevant issue/s. The same, depending on the facts and circumstances of the case, could be an open set aside or for furnishing some specific evidences, either way serving the appellants' cause. Rather, the admission of additional evidence at first appel....
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....ed as an evidence but only an expression of earnestness on the part of the assessee to come clean. There is also no way to hold the said list of bank accounts as exhaustive. We have, however, admitted the report by UBS AG, Zurich, dated 30.10.2007 to ED in the case of HAK (supra) (refer para 3.3 of the said order), to which reference stands also made by the assessee in support of his case, noting that the same as well as the facsimile dated 15.1.2007 by the Swiss Federal Government to the Embassy of India, both available at the time of assessment, ought to have been taken into account, providing, in all fairness, a copy thereof to the assessee. The same, to whatever extent, may have a bearing on the present assessments as well. This is as the Transfer Instructions (TIs), which form the bulk of the additions toward unexplained balances in foreign bank accounts, are for most part from the accounts of or controlled by HAK. The basis of the TI based additions is that the same would only be given effect to, and even if some reason not, the very fact of drawing the TI implies balance in the relevant account, at least to the extent. The rationale has been found by us as valid. The matter,....
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.... Bank of Switzerland (name since changed to UBS AG, Zurich) during the year. The Revenue, on the basis of the information received from ED, found the assessee to be in receipt of the said sum (USD 100 Million) from HAK, on the basis of transfer instruction by HAK, i.e., vide his letter dated 16.7.2000 to the said bank, even as the assessee denied any knowledge of the same or even of the existence of the said account. 7. We have heard the parties, and perused the material on record. 7.1 The addition, thus, is based on a transfer instruction (TI), which though in the instant case is in the form of a letter, reproduced at para 11 of the assessment order as well as, prior thereto, in the show cause notice dated 19.12.2008, reading 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.' Than....
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....hat by itself was sufficient for the assessee to have, on the contrary, as claimed, incur heavy expenditure or, rather, transfer no insubstantial sums to HAK, i.e., to have continued to be deluded by the said promise for several years, is another matter. There is, however, sufficient evidence on record to show the two sharing a close relationship for several years - the assessee claiming to know HAK since 1994, of which mutual trust is an essential ingredient, as well as, by implication, common business intent and interest. There is an Agreement dated 07.8.2001 between them, at Dubai, recovered from the premises of both in search, envisaging transfer of huge funds to the assessee (which stands discussed extensively in the order dated 29.2.2016 (supra) in the case of HAK), who though now debunks the same. Further, HAK vide his notarized statement dated 30.6.2003 at London (forming Annexure-C to the order afore-mentioned), whereat the assessee was also present, states of him as being his advisor. In fact, HAK was found to have lent Rs. 5 crs. to R. M. Consultants P. Ltd., Kolkata a company of KT (assessee) (refer paras 11-12, 18, 30.2 of the order afore-stated). The Revenue in fact i....
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....d in the document is admitted and confirmed to be that of the assessee's bank account with UBS AG, Zurich. The decision of the tribunal in HAK (supra) shall, accordingly, apply on all fours, with we finding no reason to take any different view in the matter. As such, for the same reasons as stated in the said order, and for which reasons reference is drawn to the six (6) paras thereof adverted to above, we decide likewise, i.e., restore the matter back to the file of the A.O. to adjudicate afresh, allowing the assessee an opportunity to establish his case. He shall be required to produce the relevant bank account/s to exhibit the non receipt of the relevant amount/s - in the whole or in part - during the relevant year, or at any time later. We state so as it could well be that the TI gets delayed in execution for some reason, and is given effect to at a later point in time. The addition though, we may clarify, even if this amount stands received - in whole or in part, during a subsequent year, shall be for the current year as, as presently discussed, the same is only in pursuance to the rights already inured, i.e., in discharge of the liability already accrued/arisen. Where, howeve....
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....mere rough calculations and notings with regard to interest calculation, and no transaction had taken place. The same did not find acceptance by the A.O., who added the amount of interest and brokerage, working to the impugned sum of Rs. 1,07,700/-. The assessee could not improve his case before the ld. CIT(A) in any manner, resulting in confirmation of the impugned addition, so that, aggrieved, he is in second appeal. 9. We have heard the parties, and perused the material on record. The assessee in relation to the additions made with respect to pages 48 (and 103) and 49 (and 102), has vide his said letter dated 01.12.2008 admitted the same to be the loans from Harsh Enterprises and Ramlal Jain, in the stated sum of Rs. 2 lacs and Rs. 1.25 lacs respectively, claiming the same to be duly reflected in his books of account. Even as the same came to be added for A.Y. 2005-06 in the absence of the assessee producing the said books of account and, thus, substantiating his claim, the same abundantly clarifies the said notings to be not mere rough notings, as stated by the assessee, but reflect definite transactions. This presumption would, in fact, also flow in view of the statutory pres....
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....xplaining the interest calculation to have been made so that if at a future date some joint property is sold, the amount could be recovered, though no amount was recovered. How could, then, we wonder, the assessee explain the same as mere rough notings before the first appellate authority. At the same time, the assessee's explanation appears plausible. The same is though incomplete in-as-much as no details of the joint property have been furnished. What would therefore be required to be seen is if any property, held jointly, or even individually, stands sold by Sushila Tapuriah, or even by the assessee in which she has or could stake a claim, as that only would enable her to pay the assessee either the principal or interest. This aspect would require being examined. If, on the other hand, there is no such property, the assessee's plea is palpably false, ostensible with an intent to mislead. The assessee we observe has stopped paying sums from January, 1997, indicating income/receipt in her hands since 1997, which aspect also would require being examined as the same is indicative of funds in her hands, which could have been utilized to pay the assessee. De hors any materials or evid....
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....The transaction is thus admitted as toward personal expenses, while the explanation required is with regard to establishing the source of the payment thereof. The contention of the payment by cheque, which though is not proved, is not disproved as well, raises the presumption as to the payment being, as claimed, accounted for in the assessee's books of account or otherwise discharged from an accounted/disclosed source, so that the source becomes explained. The assessee is a reputed businessman at an advanced stage of his life. We cannot but have regard to the trying circumstances in which he was placed during the relevant period as well as the complete disarray in which his office set-up went into on account of the search by the Revenue as well as ED and the subsequent proceedings. In fact, the tribunal has, taking cognizance of the similar circumstances and considering the injustice which a non-allowance of opportunity may entail, restored the matter for fresh adjudication back to the file of the A.O. in the case of HAK (supra). The matter is essentially factual, and the onus to establish his claims, i.e., as to the source of the expenditure incurred by him through credit cards, i....
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....mined loss in view of section 139(3). The facts are admitted, and the assessee's return stands filed beyond the time allowed for furnishing the return of income u/s. 139(1). The provisions of sections 139(3) and 80 are explicit in the matter. The said provisions, however, would came into effect only when the question of carry forward of the loss is to be determined, i.e., to the following years, to be set off against the income in terms of the relevant provisions of Chapter VI of the Act. The loss under reference is for the current year, which would surely stand to be set off against income from the same source or assessable under any other head of income for the same year, in terms of sections 70 and 71 of the Act. We further notice that no ground qua this aspect has been raised by the assessee before the ld. CIT(A). So, however, the issue is legal, and there is under the circumstances, no question of application of sections 139(3) and 80, which would come into play only when a loss, determined under a particular head of income, is to be carry forward for set off against specific income/s for a subsequent year. The Ground, notwithstanding its being not raised before the first appe....
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....ssments, which do not abate, assessment shall be made on the basis of books of account not produced in the course of original assessment but found in the course of search, and undisclosed income discovered in the course of search (refer paras 18, 23, 28-31 of the Judgment as well as paras 48-54 of the order of the tribunal in All Cargo Global Logistics Ltd. vs. Dy. CIT [2012] 23 taxmann.com 103(Mum)(SB), reproduced at para 31). The Hon'ble Apex Court in P. R. Metrani vs. CIT [2006] 287 ITR 209 (SC) had an occasion to consider the scope of the search and seizure proceedings under the Act. Approving the decisions in Pushkar Narain Sarraf vs. CIT [1990] 183 ITR 388 (All) and Daya Chand vs. CIT [2001] 250 ITR 327 (Del), and the reversing the decision in CIT vs. P. R. Metrani (HUF) [2001] 251 ITR 244 (Kar), it clarified this scope to be very limited, i.e., restricted to a summary assessment toward retaining sufficient assets to meet the demand of tax and/or penalty that may arise in assessment. Section 132, it explains, is a complete code in itself, which cannot intrude into any other provision of the Act and, similarly, the other provisions of the Act cannot interfere with the scheme ....
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....t furnishing any satisfactory explanation, submitted vide reply dated 01.12.2008 (refer page 14 of the assessment order), the A.O. made the addition toward the same. No improvement in his case whatsoever being made, the same came to be confirmed in first appeal, with the ld. CIT(A) finding, on the basis of internet searches, the various persons/entities mentioned in the letter/communication found - to which the presumption of section 292C, i.e., as to truthfulness to their contents, shall apply, as being real, existing persons/entities. Aggrieved, the assessee is in second appeal. 20. We have heard the parties, and perused the material on record. PA, an Indian national, is a resident of Switzerland, and a close associate of HAK/KT, having been engaged by them to represent their interests internationally. There is sufficient evidence on record to establish this, and toward which we may refer to paras 11.5, 20A to 25, 103-106 of the tribunal's order dated 29/2/2016 in case of HAK (in ITA Nos. 4156 and 4162/Mum/2010). He was in fact found residing at the HAK's Pune residence at the time of search, as stated, since his arrival in India in October, 2006, with a view to pursue his outst....
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....ements of the bank accounts, since admitted, as well as the bank accounts in the knowledge of the Revenue, exhibit that no such payment, which could well be in the installments, has been made. True, there is no direct proof of payment, yet, by all indica the payments has been made; the assessee himself admitting to being in negotiation for purchase of real estate properties in Western Europe (albeit on behalf of unknown, unspecified friends), and having hired the services of PA for the purpose, so that the non-payment, as claimed, shall have to be reasonably proved. PA, after all, was pursuing HAK, and not the assessee, who has himself been found to have financed and/or incurred expenditure for and on behalf of HAK. Needless to add - each year being an independent unit of assessment, it is only the payment found made during the current year that could, to that extent, where unexplained, be confirmed for assessment for the current year. We decide accordingly. 21. Ground # 6: This Ground is toward an addition with reference to page 17 of Bundle 7 of Annexure-A (dated 05.1.2007) to Panchanama dated 06.1.2007 (containing 29 pages), found and seized in search from the Pune residence of....
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....he same. 24. Grounds # 9, 10 and 11 being not in respect of any materials found during search, are without jurisdiction in the instant proceedings and, accordingly, are directed for deletion respectfully following the decision by the Hon'ble Jurisdictional High Court in Continental Warehousing Corporation (supra). 25. Ground # 12 impugns the non-allowance of the set off of loss of Rs. 7,60,020/- per the return of income filed on 31.3.2004 and, thus, being not in terms of section 139(3) in-as-much as it is filed in breach of the time allowed for furnishing the return allowed u/s. 139(1) (refer para 14 of the assessment order). The assessee, however, claims it to be a loss for the current year. Be that as it may, it is only the loss as determined in assessment that could be set off, which is stated as made u/s. 143(3) on 31.3.2005 (APB 10, pg. 1785). We, accordingly, modify the impugned order to hold in favour of the loss, as determined, to the extent it relates to the current year, against income assessable for the current year. In other words, it is the income as already assessed u/s. 143(3), as against that returned, that shall be the starting point of the computation of income,....
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....ovision). Consistent with our decision qua other such disputed claims, which are ostensibly accounted for, we restore the matter back to the file of the A.O. to allow the assessee an opportunity to substantiate his claim/s, discharging the onus that lies on him in law. The A.O. shall adjudicate afresh, in accordance with the law, issuing definite findings of fact. We decide accordingly. This also decides Gd. 9 and Gd. 19 for AY 2004-05 and AY 2006-07. 33. Gd. # 9 is toward an addition for Rs. 11,57,251/- on account of unexplained expenses. The same stands already decided vide paras 14-15 of this order, adjudicating Ground 10 for A.Y. 2001-02; the respective cases of the parties being the same. 34. Gd. # 10 is toward an addition for Rs. 6,00,000/- on account of unexplained loans and creditors. The same stands already decided vide paras 14-15 of this order, adjudicating Ground 11 for A.Y. 2001-02; the respective cases of the parties being the same. 35. Ground # 11 is toward an addition for Rs. 7,04,266/- on account of returned loss. The same stands already decided vide paras 16 and 25 of this order, adjudicating Ground 12 for A.Ys. 2001-02 and 2002-03; the respective cases of the ....
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.... 10 is toward an addition for Rs. 5,16,727/- on account of unexplained expenses. The same stands already decided vide paras 14-15 of this order, adjudicating Ground 10 for A.Y. 2001-02; the respective cases of the parties being the same. 43. Ground # 11 is toward an addition for Rs. 20,78,661/- on account of unexplained loans and credits. The same stands already decided vide paras 14-15 of this order, adjudicating Ground 11 for A.Y. 2001-02; the respective cases of the parties being the same. 44. Ground # 12 is merely a recount of the different grounds in the form of a prayer, while Ground 13 is towards a leave to add or alter any ground of appeal. The same, therefore, do not arise for adjudication. We decide accordingly. A.Y. 2005-06 45. Grounds 1 to 4 stand decided vide paras 2 to 5 of this order. 46. Ground # 5 is toward an addition for Rs. 74,100/- on account interest and brokerage. The same stands already decided vide paras 8-9 of this order, adjudicating Ground 7 for A.Y. 2001-02; the respective cases of both the parties being the same. 47. Grounds # 6 and 7 agitates the addition (Rs.4,42,000/-) in respect of interest and brokerage. This is a subsisting issue, being the....
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....ash available with him, and which he states as sourced from different bank accounts. The deposit of cash in bank is toward utilisation of the said cash; apart from explaining the source of the relevant bank deposit/s. The matter, in our view, therefore, merits being examined, allowing the assessee an opportunity to prove his claim/s. The cash-in-hand, to the extent unproved, and confirmed for addition, would form part of the cash-in-hand, as much as that which stands explained as to its source, so as to be available for subsequent utilisation. Two, the A.O. shall be at liberty, nay, obliged to also examine the balance/deposit in the bank, and the mere fact of the cash being withdrawn from bank account may by itself not be conclusive of the explanation as to the source of cash, which only translates into the source of the corresponding bank deposit/s /balance. We decide accordingly. This also decides Grounds 16 and 18 for A.Ys. 2006-07 and 2007-08 respectively; the facts and circumstances of the case as well as the respective cases of the parties being the same. 50. Ground # 9 is toward an addition for Rs. 2,50,604/- on account of unexplained expenditure on credit card payments. Th....
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....irstly, if and where a loss under the head 'capital gains' obtains consequent to the A.O.'s findings, issued having regard to the provision of section 71 of the Act, i.e., which allows the set off of loss from one head of income against income from another for the same year; the return having been filed only on 29.7.2006, i.e., much after the time allowed for furnishing the return u/s. 139(1), the same shall not be, in terms of sections 80 and 139(3), stand to be carry forward. Two, there is no indication if the assessment for the current year (A.Y. 2005-06) was framed at any time, i.e., prior to the impugned assessment. True, one could argue, as indeed it was before us, that where no assessment for the year is pending, in-as-much as the time provided for the service of notice u/s. 143(2) under the Act had expired, it did not abate, and it was by implication a concluded assessment, which cannot be interfered with in section 153A proceedings. Both the parties before us relied, in support of their cases, on the decision in the case of Continental Warehousing Corporation (supra). There is, firstly, admittedly no intimation u/s. 143(1) or order u/s. 143(3), so that the stated issue do....
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....132 or making of requisition u/s. 132A, as the case may be, they abate. It is only the pending proceedings that would abate and not where there are orders made of assessment or reassessment are in force on the date of initiation of the search or making of a requisition.' What, one may ask, could be more explicit than this? A finalised assessment, it continues to explain (at pg. 661), cannot be touched by resorting to the provision (section 153A). Whether the processing of the return u/s. 143(1) could be said to be an assessment is a matter dealt with, and can be said to be concluded by the decision by the Hon'ble Apex Court in CIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC). Tracing the legislative history of the provision, for which it makes reference to its earlier decision in Apogee International Ltd. vs. Union of India [1996] 220 ITR 248 (SC), it explained that the legislative intent is very clear from the use of the word 'intimation' as substituted for 'assessment', which denote different concepts. While in assessment, the A.O. is free to make any addition after grant of opportunity to the assessee, no such addition/adjustment is permissible u/s. 143(1)....
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....itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any 'assessment' is done by them? The reply is an emphatic 'no'. The intimation undersection 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.' Finally, we may, for the sake of completeness of the discussion in the matter, which we have though found as completely covered by the decisions by the Hon'ble jurisdictional and the Hon'ble Apex court cited supra, consider the argument of the processing of a return u/s. 143(1) as leading to an assessment, i.e., after the expiry of the time pr....
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....f search or requisition while making a s. 153A assessment would extend only to concluded assessments, signified by orders of assessment or reassessment. This, we find to be the unequivocal view expressed by the Hon'ble Court in Continental Warehousing Corporation (supra) and Murli Agro Products Ltd. (supra), judicially binding on us, and which we further find as consistent with the decisions in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) and Kelvinator of India Ltd. (supra), as also the scope and purport of a s. 153A assessment as explained by the Hon'ble Courts of law. 55. Grounds 15 & 16 are in respect of disallowance of deduction for Rs. 1 lac and Rs. 1,18,406/- claimed u/s. 80G and 80D of the Act, made and sustained in the absence of its substantiation by the assessee (refer paras 12.3 and 15 of the assessment and impugned order respectively). Clearly, in the absence of any evidence, the assessee has failed to support its claim, much less prove it. No such proof/material has also been led, exhibiting the genuineness of the claim or toward making out a case for admission of additional evidence in this regard. We, accordingly, find no reason for interference, and decline the ....
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....g the cost of upkeep and maintenance, estimated at Rs. 6.25 lacs, to be distributed in 8 shares, of which two (2) fall to the share of the assessee. No addition in it's respect appears to have been made. Pages 1023 to 1037 are detail estimates by 'Symphony Interiors', signed by one, Sanjiv Talwar, toward different works planned to be carried out, summarised at pg. 1037 (APB 6), as under: Summary Amount (Rs.) Dismantling work 3,04,050 Civil & electrical work 23,87,085 Plumbing work 2,50,000 Window & door chaukhat 7,96,995 total 37,38,120 We find no separate estimation for miscellaneous work (taken at Rs. 15,87,085/- by the A.O.) or description thereof, or even reference thereto, in the said papers. This figure is in fact of the cost of the civil work (as per the revised estimate at pg. 1035), with electrical work being estimated thereat at Rs. 8,80,000/- (i.e., both aggregating to Rs. 23,87,085/-). This, in fact, summarises the revised cost estimate (dated 07.2.2006), appearing at pgs. 1029 to 1036, being thus in supercession of the provisional estimate (dated 24.8.2005), appearing at pgs. 1023 to 1028, estimating the civil and electrical cost at Rs. 14,66,005/- and the....
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....ident and ostensible owner of the flats, would be interested in the renovation, and was interacting with the contractor, specifying and discussing the works to be carried out, and would be called upon to pay, and whose names appears on the records of the resident's association/society inso- far as the communication there from is concerned - in other words, has, in any case, the beneficial interest in the flats, which he holds out to the world as belonging to him. Income-tax law recognises beneficial ownership as against legal or titular ownership (CIT vs. Podar Cement (Pvt.) Ltd. [1997] 226 ITR 625 (SC)), even as the issue before is qua the payment for the renovation of assessee's residence. No case of he being required to reside in these flats for the purpose of the business of the stated companies, even assuming them to be the owner, has been made out, or of the negotiations with the contractor being carried out by the assessee (and his wife) for and on behalf of these companies. Under the circumstances, we have no hesitation in confirming the addition in principle. However, as observed earlier, there is clearly a double addition of Rs. 15.07 lacs, even as pointed out by the ld. ....
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....ng f.y. 2006-07, in April, 2006), i.e., at a total of Rs. 103 lacs. Accordingly, it was inferred that out of Rs. 107 lacs received by SN from the assessee, Rs. 103 lacs were given to SJ. The same, to the extent pertaining to the current year (Rs.53 lacs), was proposed to be added for A.Y. 2006-07, and the balance Rs. 54 lacs for the following year (A.Y. 2007-08). The assessee denied the transactions, stating that all that SN had requested of him was assistance by way of finance, and though the possibility of diamond exports was discussed with him, the same did not materialise, also disclaiming the transactions listed in the seized papers (vide statement u/s. 132(4) dated 11.1.2007). SN, on being confronted with the assessee's statement, would, in rebuttal, allude to the dishonour of cheque/s issued by CT in favour of SJ (pgs. 27, 28 of Annexure A2, seized from the assessee's residence) vide his statement dated 21.3.2007. The A.O. found the assessee's denial unacceptable, and made the addition for the proposed amounts, which are the subject matter of Grounds 6 and 7 of the appeals for A.Ys. 2006-07 and 2007-08 respectively. In appeal, the assessee reiterated his claim of no diamonds....
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....he documents found in search, even otherwise mandated by law (section 292-C of the Act). In our view, it is, on the contrary, the assessee who needs to explain the documents found from his residence in relation to this addition, as well as to how was SN in the know of the same, i.e., the dishonoured cheque and the lawyer's notice. We are conscious that the date/s of the payment as recorded in the books of SJ do no match with that in the seized material. It is the letter, which though forms the principal document and the basis of the addition. Two, it is clear that the assessee, HAK and SN maintain open accounts with each other, giving payments to one another, or one another's behalf, from time to time, to be adjusted/settled subsequently. This also explains the different between Rs. 107 lacs paid to SN (as per pgs. 3, 3A) and the amount reflected as received from the assessee (Rs.103 lacs) in the accounts of SJ. The matter is purely factual, decided by us on the basis of the various materials found in search, to which the presumption of section 292C shall also apply, as well as that led in support, viz. the copy of the assessee's account in the books of SJ (f.ys. 2005-06 and 2006-0....
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....ng to the circumstance of his, on account of his medical problems, having sought funds at London, contacting SN for the purpose, states that money was 'returned' then and there. Now, it is nobody's case that the assessee owes either SN or Mr. Sayed any sum - on that account. The question, therefore, is whether it was accepted in the first place or not. The obligation to explain the source (of repayment) shall arise only in case of the former, resulting in an addition (to the returned income) where not satisfactorily explained. The assessee's explanation obviates that need by stating that the money, though offered, was in fact not accepted in-as-much as he was not required to be hospitalised. The 'explanation' is contrary to the clear evidence of the assessee being given UK Pounds 20,000 at London in late 2005. Why, one may ask, would it be recorded if no money had in fact exchanged hands? That is, the assessee's 'explanation' challenges the very basis of recording the transaction, by 'denying' it, while at the same time not denying the circumstances and the background facts leading to it. On what basis? The assessee's stating of being not hospitalised as the reason, is neither her....
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....ent order. In each case, the payments stand admitted, the evidence being in the form of passenger tickets in the assessee's name and/or payments made to the travel agents and, thus, irrebutable. The assessee's plea of the payment/s being made only for self, and not for HAK - in case of common tickets, is understandable and merits acceptance - unless of-course the payment/s qua the same is also recorded in the accounts of the travel agent in the assessee's name. The payments are for most part admitted, stated to be recorded in the books of the assessee's (HUF) or his wife, Chandrika Tapuriah (CT) or R. M. Investment & Trading Co. P. Ltd. (RMI), either directly or through personal expenses/withdrawals. The same stood not accepted by the Revenue in the absence of the assessee leading evidence toward the same. Surely, personal withdrawals cannot be on an omnibus account to explain any expenditure. These are specific payments, occasioned by specific evidence/s. No case for sufficiency of withdrawals, which are primarily for regular and household expenditure, is also made out. The ld. Authorized Representative (AR) would before us make reference to several pages of PB 6, viz. from 1039 t....
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....ct, to the extent of Rs. 55,000/- are detailed in the bill itself. Also, there is nothing to exhibit of the balance being in dispute or not paid, the repair work in fact continuing upto 30.11.2005, over 2 month after the last payment of Rs. 10,000/- was made on 28.9.2000. As regards the telephone expenses, the same are in the nature of regular expenses. However, the bills found are for a part of the year (commencing from 15.1.2006 up to 01.2.2008), working to an average of Rs. 26,000/- p.m. The expenditure for f.y. 2006-07, corresponding to A.Y. 2007-08, is at Rs. 3.41 lacs, which yields an average of Rs. 28,000/- pm. To state therefore that Rs. 50,000/- (out of the withdrawal of Rs. 3 lacs for the year) and Rs. 2,80,000/- (without specifying the total withdrawal for the year) from HUF account, be appropriated toward telephone expenses, is obfuscating, rather than addressing the issue, by issuing a gross statement. We could understand where the assessee says of having made a regular, monthly withdrawal of Rs. xxx (signifying the same), of which Rs.xxxx (stating the amount) is toward monthly telephone expenses, which would only but be a small part of the total expenditure that the p....
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.... observe that the booking dates of same journeys do not fall during the relevant previous year. We, accordingly, only consider it proper to restore this matter back to the file of the A.O. to allow the assessee one final opportunity to satisfactory explain the source of the expenditure, as well as to remove the apparent anomalies. The A.O. shall decide in accordance with the law, issuing defining findings of fact. We decide accordingly. 72. Ground # 19 is in respect of an addition for Rs. 6,48,665/- toward purchase of foreign exchange. The case of the parties is the same as qua Ground 18, so that we have no reason to take a different view, and decide likewise (also refer paras 31-32). 73. Ground 20 relates to an addition qua unexplained expenditure incurred during the relevant previous year in foreign exchange (GBP 2488), i.e., at Rs. 25,765/-, being toward booking of two rooms in a hotel, paid for in cash. The addition stood made based on the information received from FBT division of CBDT. The same stands discussed at paras 16 and 24 of the assessment and the impugned order respectively. The assessee has before both the authorities failed to make out any case, relying on vague a....
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....admittedly filed u/s. 139 of the Act and, two, is framed u/s. 144 of the Act. The search conducted, being prior to the close of the relevant previous year, the search year, there is no question of the assessee having filed the return by that date or of the assessment proceedings having commenced. The A.O. accordingly retains original jurisdiction, and the assessment, in our view, is u/s. 153A r/w s. 144 of the Act. The same would thus not stand restricted to the material found in search. Abundant opportunities to represent his case were provided to the assessee, which commenced with the issue of a questionnaire on 29.01.2008, continuing with the issue of questionnaires and notices up to 19.12.2008. Copies of the documents seized from the residence of the assessee, as well as of HAK and SN, were supplied to his representative, Shri Pradeep Shah, CA, on 05.9.2008, 17.11.2008 and 21.11.2008. No return, despite notice u/s. 142(1), being filed, with the assessee also failing to make compliance, not responding even to summons u/s. 131 dated 16.12.2008, the assessment was finally framed u/s. 144 after duly show causing the assessee qua the same (vide letter dated 01.12.2008), also informi....
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....es valued at Rs. 20.50 lacs), is a question of fact, not proved; the assessee as much as not producing his books of account, stated to bear the said shares, some of which are further stated to be sold, and which (sale) also stands reflected therein. That is, the said sale is the assessee's explanation toward the source - to whatever extent, of the said expenditure. Admittedly, only some of the shares have been sold later, so that the listing of the shares on the said page can at best be stated as of the holding, stated toward the intent of being sold. It could well be that the other shares were not sold (or required to be), or even that the same, though belonging to the assessee, are not disclosed. There is no indication of the expenditure being kept in abeyance and not made on a regular basis, being even otherwise of a recurring nature, and not discharging which could lead to disruption in the relevant service or even penal consequences, viz. electricity, telephone, rent, car instalments, credit card, etc. The matter is primarily factual and the relevant facts would need to be established. When were (and how many) the shares were sold; at what price; when were the sale proceeds re....
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....self confirms the transactions to be financial transactions, pursuant to loan transactions. Again, where by cheque, as the interest amounts are indicated to be in the document recovered - the narration to the interest amounts reading: Int. Chq', it is only ostensibly so, and would require being shown as accounted and, further, disclosed as income. The matter would therefore merit being adjudicated afresh. We understand that assessment is a best judgment assessment, so that the AO is bound to act only on the materials, as well as explanation furnished, before him, and that the assessee had failed to discharge the burden of proof on him, only denying the transaction/s. The interest of justice, however, dictates our decision as to restoration; the interest amount indicated to be by cheque/s. Again, if the interest is accounted, could it be that the principal amount is not by cheque, though the question of it being accounted/disclosed is, again, wide open. The assessee, who is accorded one final opportunity to substantiate his claims, shall, needless to add, provide full co-operation/details, even as assured by the ld. AR during hearing time and again. The entire issue is open, and the....
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....the correct amount to tax. This decides the Grounds tabulated above, save Gd. # 10. 85.2 Ground 10 is in respect of unexplained expenses on viz. travel, mobile, AMC, personal expenditure (as on medicine), etc. (APB-6, pg. 1140). The statement is in the handwriting of, as it appears, the assessee. No explanation stood furnished, except for stating it to be through personal withdrawals, without of course showing it to be so. So, however, we observe that the expenditure includes payment for credit cards (American Express - Rs. 25,395/-), as well as on telephone, paid per cheque/s. Subject to the assessee so exhibiting, i.e., of the payment/s being accounted for, we confirm the addition. We decide accordingly. 86. Gd. # 15 is qua an addition for Rs. 30,000/-, based on seized material (APB- 6/pgs. 1151 - 1153) on account of payments to one, Babu Chakravarty, on 2.05.2006 (Rs.10,000/-) and on 05.7.2006 (Rs.10,000), duly receipted. Page 1153 is a statement dated 21.06.2006 by him, again duly signed, of only Rs. 10,000/- being outstanding. The assessee's claim of the amount being accounted (through personal withdrawals) stands rightly rejected by the Revenue, being unsubstantiated. The c....
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....yer, de facto or de jure, on whose behalf the payment/s may have been made, but the source of payment - the provider of funds therefor. The matter accordingly is restored back to the file of the AO for addressing this aspect, allowing the assessee a reasonable opportunity of being heard, and deciding on the basis of explanation furnished, issuing definite findings of fact. We decide accordingly. 91. Gds. # 20 to 22 are in respect of three separate additions, based on seized material (APB 6/pg. 1208-1211), as under, which the assessee claims to be dumb documents: Ground Amount (in Rs.) Annexure CIL-1 (pgs.) APB-6 (pgs.) 20 10,07,426 11-12 1208 21 61,99,965 14 1210 22 1,99,94,946 16 1211 The assessee's only case qua the said documents, found from the premises of Chandrika Investments Private Limited, 27B, Camac Street, Kolkata during search on 05.1.2007, is that these are rough notings, which did not find favour with the Revenue in the absence of any explanation or evidence being led by the assessee. 92. We have examined the relevant documents. The handwriting is the same as that appears at page 1207 (Ground # 19), i.e., toward withdrawal of cash (Rs.50,000), and t....
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....uestion is: With which company or concern - the assessee having proprietary business/es as well, were the said persons, i.e., G. S. Gupta, R. K. Lohia and B. K. Lohia, employed? The expenses on their salary and gratuity would stand to be paid by that firm. The assessee has not stated the name of the company/concern. It is only in the event of the same being not reflected as paid in the books of the said company, that the question of who, in that case, paid the same and, thus, of it being ascribed to the assessee, may arise. Why, it may also be that the person/s, though on the rolls of these companies, without business, are working for the assessee or his some other company. The assessee's contention that the 'year' (period) is not mentioned is factually correct. That, however, should not pose any problem as the month of April would correspond to the time period when the gratuity was given to these persons. Being written on the same page (# 17 of Annexure CIL-1), immediately below the working of the gratuity to the very same persons, the salary (for the month of April) should be that following the financial year ending March, which appears to be March, 2005 (the period for gratuity ....
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.... dated 02.1.2006 and, accordingly, reflected in his personal balance-sheet as on 31.3.2006. We observe that though the AO states of adding back the said amount in the absence of a satisfactory explanation by the assessee, the same does not appear in the computation of assessable income at para 20 of his order. The same is, thus, a mistake apparent from record. The assessee, accordingly, did not appeal this 'addition' before the first appellate authority, whose order thus does not bear any reference thereto. The said Ground is accordingly not maintainable before us. We decide accordingly. 96. Ground 26 is qua credit card expenses, at Rs. 20,23,701/-. The brief facts are that the assessee, on the basis of information accumulated from various credit card agencies, was found to have incurred expenditure qua different credit cards for different years, and was accordingly questioned in its respect by the AO; that for the current year being as under: Sr. No. Name of the Bank Assessment Year Amount (Rs.) 1 American express 2007-08 8,06,065/- 2 City Bank 2007-08 8,62,463/- 3 ICIC Bank 2007-08 1,38,428/- 4 ABN Amro Bank 2007-08 2,16,745/- The assessee states of being un....
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....) has been adjusted in the balance-sheet, we, admitting the same as an additional evidence, restore the matter toward explaining the source of the impugned expenditure as to its source. We may further add that where the said source is attributable to some credit/s in the assessee's accounts, the AO shall be fully competent to examine the said source, being part of the assessee's explanation, as well. We decide accordingly. 98. Ground # 27 is toward an addition for Rs. 3,19,520/- in respect of unexplained travel expenditure, based on booking of journey tickets on different dates (including open tickets), as found from the information gathered from M/s. Travel Hub Pvt. Ltd., the assessee's travel agent, as under: (Amount in Rs.) Date of Journey Date of Booking Sector Bill Amount 4.4.2006 1.4.2006 Bom/JRH/Bom 129106 13.6.2006 13.6.2006 CCU/Bom 72854 26.6.2006 24.6.2006 CCU/Del/CCU 29368 Open 6.11.2006 Open 63199 Voide Charge 200 24.5.2005 Swis Visa 18850 5.10.2005 Medical INS 2900 29.4.2006 Medical INS 1983 18.5.2006 UK Visa 15400 28.7.2006 Medical INS 2300 24.11.2006 Swis Visa &....
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....e., 05.1.2007. The assessee, despite ample opportunities - the cash being found as on 05.1.2007 itself, failed to adduce any evidence toward the same being accounted for. So, however, considering that we have, as afore-stated, restored the addition/s toward different expenses, which would have a direct bearing on the availability of cash as on 05.1.2007, we consider it only proper that this matter is also restored to the file of the AO to enable proper adjudication, i.e., considering all the relevant aspects. The burden of proof to establish his claims would though be on the assessee. We decide accordingly. 101. Ground # 29 is toward an addition for Rs. 86,68,693/- on account of unexplained jewellery found from the assessee's Short Street, Kolkata residence during search on 05.1.2007, as well as from his locker (with Standard Chartered Bank, Kolkata). The assessee explained the gold and diamond jewellery, as well as gold and silver utensils found in search, as being disclosed to the Revenue per wealth-tax returns of self, his wife (CT) and his HUF (as karta), also enclosing the wealth-tax returns for A.Y. 1999-2000. The assessee reiterated his stand in first appeal, emphasizing th....
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.... with the jewellery purchased, the details of which can be sought from SJ, credit in its respect could be allowed, which aspect the A.O. shall consider rather, is obliged to. We decide accordingly. 103. Gd. # 30 is toward expenditure on foreign exchange (GPB 445.26/INR 39406), stating to be incurred from the credit card of CT. However, we observe that before the Revenue authorities, the assessee stated the expenditure (incurred in October, 2006) to be booked as personal expenses of the assessee. We remit the matter to the file of the AO for allowing the assessee opportunity to state and present his case, considering that the expenditure is incurred through credit card/s, payment/s qua which have been also separately added. We decide accordingly. 104. Ground # 31 is merely a recount of the different Grounds in the form of a prayer, while Ground 32 is towards a leave to add or alter any ground of appeal. The same, therefore, do not arise for adjudication. We decide accordingly. 105. In the result, all the quantum appeals are partly allowed. Penalty Appeals 106. We next consider the penalty appeals, i.e., the levy of penalty for all the years under reference u/s. 271(1)(c) of th....