TaxTMI 
TaxTMI 
2016 (6) TMI 585
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....ct at the assessee's different, as it appears, 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 provide....
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....8 dated 20.5.2015 - reported at 2015-TIOL-1053-ITAT-Mum-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 compli....
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....aras 11.2, 12 and 128 of its' order in Hassan Ali Khan vs. Dy. 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....
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.....9.2013 (at APB 5, pgs. 853- 854), listing eight foreign bank accounts 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 o....
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.... such evidence to be adduced.' Relying on the decision by the Hon'ble 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....
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....rties to the appeal to produce additional evidence, oral or documentary, before 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 b....
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.... said statement is not suitable for tax purposes. Also, as argued by him, the 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 a....
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....s closure. We have already explained that the same cannot by itself be considered 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, a....
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....res toward unexplained deposit in the assessee's bank account no. 760001 with United 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 plea....
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....K, who, claimed to have access to huge funds, promised to invest in the assessee's projects. Whether that 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 c....
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....etan Karia, CA, argued and was at pains to bring home. In the present case, the account number specified 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 pursuan....
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....ears, as for A.Y. 2005-06. In explanation, the assessee vide letter dated 01.12.2008 stated that these were 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 assesse....
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....ection 292C). The assessee in fact admits before the A.O. (vide letter dated 01.12.2008) to have given the stated sum/s to Sushila Tapuriah, the widowed mother of his late half brother's grandson, further explaining 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/rece....
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....de before us by the assessee. We are, however, moved by the fact that the assessee has throughout maintained that the payments were made by cheque/s drawn on his regular bank account/s, duly reflected in his accounts, claiming no part of the same as deduction under the Act, being personal expenses. 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 whi....
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.... decide accordingly. 16. Vide Ground # 12, the assessee agitates the non-allowance of loss (of Rs. 4,86,147/-) claimed per his return of income for the year. The same stands disallowed in view of the said return having been furnished only on 26.3.2003, i.e., belatedly, precluding carry forward of determined 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 circumst....
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....or other assets u/s. 132A. As such, section 153A, enabling assessment in case of a search or requisition, making specific reference to the carrying out of search or exercise of power of requisition, the assessment u/s. 153A is only in furtherance to what is contemplated therein. Accordingly, for completed assessments, 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 summar....
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....li Khan (RHAK), is a letter of authorisation, signed by the assessee in favour of PA, authorising him to act as his (assessee's) agent as well as of Mr. HAK, i.e., to represent him internationally. Pages 7 and 8 is a copy of the bill dated 05.4.2001 for USD 5 lacs raised by PA on the assessee (KT). The assessee not 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 towa....
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....rial in the case of the assessee, who has admitted to holding and maintaining foreign bank accounts, suggesting that the payment may as well have been made. Under the circumstances, we consider it fit and proper to restore the matter back to the file of the A.O. The assessee shall, with reference to the account statements 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, wh....
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....is order, adjudicating Gd. 7 for A.Y. 2001-02; the respective cases of both the parties being the same. 23. Ground # 8 is toward an addition for Rs. 4,20,000/- on account of interest income and Rs. 12,000/- on account of interest. The same stands disposed vide at paras 10-11 of this order, deciding Gd. 8 for A.Y. 2001-02; the respective cases of both the parties being the 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....
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....stand duly accounted for in the regular books of account would not prove the same, particularly considering that the assessee did not file his return u/s. 139 for the year. Again, the explanation, even where disclosed, may have been claimed as a business expenditure, which aspect would in that case require being examined for deductibility on the anvil of section 37(1) (or other relevant provision). 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....
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....und 9 for A.Y. 2001-02; the respective cases of the parties being the same. 41. Ground # 9 is toward an addition for Rs. 74,614/- on account of amount of foreign currency purchased from Globe Forex, Kolkata, as unexplained expenditure. The same stands already decided vide paras 31-32 of this order, adjudicating Ground 8 for A.Ys. 2003-04; the respective cases of the parties being the same. 42. Ground # 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 vi....
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....th the bank statements, would support the assessee's claim/s. Two, as it appears, the figures stated are combined for both KT (assessee) and CT, so that only a single cash account, for both, has apparently been maintained by the assessee, deploying it for either deposit (in the bank accounts) or for user (for the purposes) of either. The matter is essentially factual; the assessee being called upon to explain the source of the cash 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 ....
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..... The matter is clearly unexamined, i.e., on merits, at any stage, so that the dictate of justice would be its restoration back to the file of the assessing authority, allowing the assessee a final opportunity to present his case, including furnishing of any material in support, and adjudication by the former in accordance with the law per a speaking order. We decide accordingly. We have, however, two observations to make in this regard. Firstly, 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 tim....
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....t in passing an assessment u/s. 153A r/w s. 143(3), the A.O. cannot disturb the finality of an (re)assessment order, unless of-course the relief granted under a finalised assessment is contrary to the facts unearthed during the course of section 153A proceedings. It further expresses itself unequivocally at para 29 (of its' later decision), at pg. 660 of the Reports, as under: 'If they were pending on the date of initiation of the search u/s. 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 p....
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....out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India [(1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision 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 bei....
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....O. and sans any assessment order, can only be said to be returned or processed income, and not assessed income. The assessee's argument, to our mind, constricts the scope of the proviso to section 153A beyond its mandate, which is limited to abatement of assessments pending on the date of initiation of search or, as the case may be, making the requisition. As afore-discussed, the limitation on the scope of inquiry or examination only to the findings of 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....
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....esumption of section 292-C being attracted. 59. We have heard the parties, and perused the material on record. The seized material, forming the basis of the addition, is placed at pgs. 1022 to 1038 of the assessee's paper-book (APB) [# 6]. At pgs. 1022 and 1038 is the communication in the nature of a Circular to all residents of 10A, Prithviraj Road, New Delhi - the assessee occupying Flats # 4 to 6, signed by one, Suresh Arora (on behalf of Rajan Kapoor, resident of Flat # 1), informing 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....
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....n. Then, the assessee states of the flats, purchased in 1983-84, being not owned by him, but by R. M. Investment and Trading Co. Pvt. Ltd. and Robert Mclean Consultants P. Ltd., whose names are conspicuous by their absence, i.e., except in the assessee's submission dated 01.2.2008. There is, firstly, no document to evidence the same. Two, it is clear that it is the assessee who was residing in these flats, located at first floor of the building, occupying the same as a bona fide resident, and it is he who, as a resident 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 a....
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....et. 25,000 USD i.e. 11 lacs received From Mr. Tapuriah Less: balance - 2.5 lacs - 11 = 8.5 lacs As on 16.4.2006' On the basis of the said documents, a total of Rs. 107 lacs (i.e., Rs. 56 lacs as per pg. 3A and Rs. 51 lacs as per pg.3), was paid by the assessee to SN, who vide a statement of oath u/s. 132(4) dated 05.1.2007 stated that the amount/s received were toward payments in respect of the transactions between the assessee and M/s. Soir Jewellers and, accordingly, the amounts were given to one, Mr. Imtiaz (of Soir Jewellers - SJ), on assessee's behalf. Copy of the assessee's accounts in the books of Soir Jewellers reflected payment/s received from KT (assessee) at Rs. 84 lacs (during f.y. 2005-06) and at Rs. 19 lacs (during 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....
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....eques (for Rs. 125 lacs) issued by CT, his wife, to SJ? The cheque (# 684614) dated 05.12.2005, signed by CT, is only drawn on the assessee's saving bank account (# 1051000011883) with the drawee bank (HDFC) (APB 14/pgs.2126, 2128). As regards the demand for cross examination of SN, it needs to be appreciated that the latter's statements is only in explanation of the documents found from his and the assessee's residence and, are in the facts of the case, only corroborative. The Revenue's case is not made on the basis of, or hinges on the said statement alone, which is rather in agreement with the facts as found from the various documents seized in search. It is the assessee who, therefore, would be required to produce SN - who has merely affirmed the truthfulness of the 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 m....
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....the parties, and perused the material on record. Evidence in respect of the assessee having been paid GPB 20,000 (equivalent to INR 18 lacs) was found in the material seized in search from the residence of SN. The transaction is explained as occasioned by the assessee's medical condition in late 2005, while at London, requiring funds on an emergent basis, for which he contacted SN, who in turn arranged the same through his London based friend, Shabeeh Abbas Sayed. Mr. Sayed confirms the transaction, further stating to have received back the money later. The statements of SN, the assessee's close friend and confidant, and Mr. Sayed, are confirmatory, and in agreement with the seized material, which is to be regarded as true by law (section 292-C). The assessee, while admitting 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 ....
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....a) and Kishinchand Chellaram (supra) - the matter being principally factual. In fact, the assessee stating in appellate proceedings, relying on the letter of Mr. Sayed, that the amount was 'returned' in London itself, is confirmatory and an admission of it being received/accepted in the first place. That it was returned in London further establishes of repayment being in the same financial year, the source of which though remains unexplained. We decide accordingly, confirming the addition. 64. Grounds # 8 to 11 are toward unexplained travel expenditure, found on the basis of the seized material, being Annexure A1 (pg. 109/Gd. # 8) and Ann. A2 (pgs. 40, 41 & 46 qua Gds. 9-11) to the Panchanama dated 06.1.2007. The same stand discussed at paras 8(iii), 9(i) to 9(iii) of the assessment 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 i....
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....se of telephone expenses, in cash and cheque/s in his account and of his wife. Also, the payment for the electrical bill, was made only in part (Rs.55,000/-), the balance being disputed. The same, however, came to be added and confirmed in the absence of substantiation of his claims by the assessee, so that, aggrieved, he is in second appeal. 66. We have heard the parties, and perused the material on record. In our considered view, the claim qua electrical expenses, represented by a bill dated 26.12.2005 (APB 6, pg. 1055) for electrical works (for Rs. 1.05 lacs), is a specific expense, occasioned by a requirement for the same. Payment of the same could not thus be explained out of regular withdrawals (which have not shown to be in excess over preceding year to that extent) and, in fact, 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 ....
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.... 71. Ground # 18 is in respect of an addition in the sum of Rs. 8,80,227/- toward unexplained expenditure on foreign travel, as found from the information gathered from the assessee's travel agent, M/s. Travel Hub Pvt. Ltd., Kolkata. The date of journey (specifying the place) as well as of booking, along with the amount billed, is tabulated at para 14 of the assessment order, discussing the said addition. The assessee's case of the expenditure being accounted, without exhibiting the same, led to its confirmation, so that he is in second appeal. The assessee's case before us remains the same, i.e., of the same being accounted, besides also resulting in double addition in-as-much as the part of the expenditure is also included while making the addition for travel expenditure (Grounds 8-11). We also 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 de....
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....8,780/-) claimed by the assessee per his return of income. The basis for the said denial is the absence of substantiation of his claim by the assessee (refer paras 17.2 and 27 of the assessment and the impugned order respectively). The subject matter as well as the case of the respective parties is the same as for Grounds 15 and 16 for A.Y. 2005-06. In view thereof, we decide likewise, allowing the assessee's claim. We decide accordingly. 77. Ground # 26 is merely a recount of the different Grounds in the form of a prayer, while Ground 27 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. 2007-08 78. Ground 1: The assessment for this year is distinguishable from that for the preceding years in-as-much as no return was 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 vie....
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.... expenses listed, aggregating to Rs. 17.29 lacs, is explicit, and in the nature of regular expenditure, viz. toward credit cards, electricity and telephone expenses, rent, staff salary and bonus, car instalments, etc. (with some also referring to the relevant month/s, being from June to November, 2006). There is no question of it being, as stated by the assessee, an estimate of certain liabilities to be met in future. Unless, therefore, the assessee explains the same with reference to its accounts (or otherwise) the source thereof, the same are liable to be added as unexplained expenditure u/s. 69C of the Act. Whether the same have been made, admitted to be in part, from the sale proceeds of the shares (in Redico and GHCL), also listed alongside (on the same page), valued at Rs. 11.50 lacs (out of a total four shares 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. Admitt....
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....ectively). Before us, the assessee reiterates the same being rough notings, further adding that the interest transactions are by cheque, so that the same could not be added. 83. We have heard the parties, and perused the material on record. Apart from being saved by the statutory presumption of section 292C (also refer: Surendra M. Khandhar v. CIT [2010] 321 ITR 254 (Bom), the assessee's explanation is selfcontradictory - stating the transactions as not representing actual transactions, but only rough notings, it questions the addition/s qua interest transactions (Rs.1.95 lacs) on the ground that these are by cheque, implying that these are actual transactions of (receipt of) interest. Could it be that a part of the transactions noted are actual, and the balance not? Further, the interest part, which is admitted, itself 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 the....
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....nd/or payment and/or statement of account (including the amount shown as balance outstanding or carry forward); which we consider to be a distinct possibility, particularly in the absence of any explanation/ correlation in the assessment proceedings. Needless to add, the assessee shall regard it as one, final opportunity in the matter, allowed in the interest of justice. We decide accordingly. Reference is also made to Ground 9 for A.Y. 2006-07 (decided along with Gds. 8, 10 and 11 for that year, vide para 64 of this order). Here it may be pertinent to mention that though the AO states of making the addition for Rs. 3,52,486/-, he actually includes only Rs. 1,73,950/- (a component of the former amount) in assessment (refer para 20(5) of the assessment order). In-as-much the addition is to be made at the correct amount only, the AO, subject to hearing the assessee, shall be at liberty to bring 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 ass....
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....nditure remains unexplained. The second argument, i.e., of double addition, is taken before us for the first time. Further, there are other aspects of the matter as well. The names of the five persons, to whom salary is paid (for the month of June, 2006) are clearly spelt out. Are they the assessee's personal staff, or of any of his companies? If they are of RMC or some other company, how, we wonder, could the same, i.e., the said expenditure, be added in the assessee's hands? Again, if the companies are defunct, with no business, what, and for whom, the services were being rendered by them. No such inquiry stands made, the question in which respect may arise only where not accounted for in the books of the company/s, in which case the same could be considered as paid by the assessee in his capacity as the principal person of the employer-company. The issue, we may clarify, is not with regard to the employer, 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 ....
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....y tabulating the relevant data, as under: Ground Amount (in Rs.) Annexure CIL (pg.) APB (pg.) 23 26,67,914 17-19 1212-1213 24 4,57,048 21 - The assessee explains the amount, which is a subject matter of Ground 23, as working of the gratuity of staff, for making payments on different dates, which does not, however, bear reference to any year. The second page (# 21) was explained to be, again, mere rough notings. The same did not find favour with the Revenue for being unsubstantiated. 94. We have heard the parties, and perused the material on record. The page corresponds to page 18 (toward an addition for Rs. 4,40,080/-). The handwriting on these pages is the same as that qua the preceding grounds. Ground 23 is toward various expenses listed at three pages (even as one page is missing in the assessee's paper-book). Page 1212 (of APB-6) is toward gratuity to staff and salary for April. True, the year is not mentioned, but the basic question 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 gra....
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....may undergo change, as for example, working qua page 17 is found in excess by Rs. 1,93,000/-. The matter, accordingly, shall warrant being restored to the file of the AO for fresh adjudication, who shall decide in accordance with law, issuing definite findings of fact upon hearing the assessee, who shall also be supplied page 21 (of Annexure CIL-1), for Rs. 4,57,048/-, stated by him as not available. We having - for like considerations, similarly restored the matter for other years also, guided by the interest of justice, do likewise for the current year as well. The AO in the set-aside proceedings, we may clarify, would be at liberty; rather obliged to bring the correct amount to tax in the assessee's hands, and for the right year. We decide accordingly. 95. Ground # 25 is toward a debit voucher dated 02.7.2006 for Rs. 8,50,000/- issued by the assessee in favour of HAK. The assessee explained the same as being a loan for Rs. 8.50 lacs given to HAK vide cheque no. 684624 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 ....
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.... based thereon - the assessee in fact not filing any return for the year. There is as such no material on record, except for the information received from the different credit card agencies - duly confronted to the assessee, with reference to which the addition could be examined for being consistent there-with. No doubt, it was incumbent on the assessee to specify the relevant bank accounts and lead evidence in the matter, yet, at the same time, in our view, the assessee's claim of having discharged the expenditure through banking channel, could be in the very least cross verified with his known bank accounts. The same could be easily accessed. Besides showing if the assessee was stating the truth (or not), this would eliminate scope for any unjustified addition. The assessee's balance-sheet as on 31.03.2007 (APB-6/pgs. 1239 - 1240) shows personal expenses (other than withdrawals, at Rs. 3 lacs) at Rs. 17.07 lacs. Though not clear as to how the loss for the year as reflected in the profit and loss account (Rs.9.06 lacs) 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 expenditur....
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....he parties, and perused the material on record. True, the assessee's balance-sheets as at 31.3.2001 to 31.3.2006 (except 31.3.2004, which is not on record), reflect cash balances in lakhs of rupees, the minimum being at Rs. 4.84 lacs as at 31.3.2005. The data is only indicative in-as-much as sufficient cash balance at an earlier point of time does not necessarily imply or translates into an adequate (cash) balance at a given, later point of time. That apart, the search yielded a host of incriminating materials in the form of renovation (of house property), travel, healthcare, mobile/telephone expenses, etc. which being apparently unexplained/unaccounted, have been either confirmed or restored back to the file of the AO to allow the assessee an opportunity to explain the source with reference to verifiable documents/sources. What, then, is the value or the credibility of the cash-inhand as per the accounts? Further, even if a part of the expenditure is explained with reference to the cash available at the relevant time, being anterior to 05.1.2007, the source would directly impact the cash available as on that date, i.e., 05.1.2007. The assessee, despite ample opportunities - the ca....
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.... being regular assessees to wealth-tax, and of it being reflected in their accounts, forming part of their income-tax returns, though in our view the same ought to have been reconciled in terms of both quantity as well as amount. The Revenue's stand does not appear tenable, being sans any definite findings with reference to the assessee's case, as made out. The matter being factually indeterminate, we set aside the assessment on this count to the file of the AO for fresh adjudication after hearing the assessee, in accordance with law and per a speaking order. We may also add that an addition of Rs. 53 lacs and Rs. 54 lacs stands made for A.Y. 2006-07 (Gd. 6) and 2007-08 (Gd.7) respectively toward payment/s to Soir Jewellers (SJ) against purchase of diamond jewellery, which has since been confirmed by us (refer paras 60-63 and 84 of this order). It is not clear as to what part of the valuables found consist of diamonds or diamond jewellery. Again, if (and to what extent) is the same old jewellery, which (jewellery) also cannot be put in locker prior to its purchase from SJ. However, where and to the extent the same matches with the jewellery purchased, the details of which can be so....