TaxTMI 
TaxTMI 
2017 (4) TMI 517
X X X X Extracts X X X X
X X X X Extracts X X X X
....order in undue haste and in gross violation of principles of natural justice. Without prejudice: 2. That the CIT(A) erred on facts and in law in confirming addition of Rs. 69,07,414 (US$ 155923.57 @ Rs. 44.30), being the peak balance lying in some account of HSBC Bank, Geneva made by the assessing officer alleging that: a) the above bank account though belongs to the appellant was not disclosed either in the return of income or during the course of assessment proceedings; and b)the appellant failed to furnish explanations/documents, etc. in respect of the deposits lying in the above bank account. 2.1 That the CIT(A) erred on facts and in law in not appreciating that the aforesaid addition has been made by the assessing officer de-hors any material found/ seized during the course of search in the premises of the appellant and is not sustainable in law. 2.2 That the CIT(A) / assessing officer erred on facts and in law in drawing adverse inference on the basis of some general/ vague particulars appearing in some unsigned/ undated/ unauthenticated loose photocopied sheets of papers, whose source is also not known/ reliable/ credible, not appreciating that the same doe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nor son Sh. Bhavesh Jindal in the form of interest income and dividend income. 5. During the course of assessment proceedings, the AO observed that as per the information available with his office, the assessee maintained an account with HSBC Bank, Geneva, Switzerland. A reference was made to the appropriate authority for exchange of information. The AO reproduced translation in English of the said information which was available in French in para 4.1 of the assessment order dated 27.02.2015, for the cost of repetition, the same is not reproduced herein. The AO mentioned that the assessee was maintaining a bank account with HSBC Bank, Geneva, Switzerland with BUP No. 9070145843 and this account remained undisclosed to the Income Tax Department and that the assessee had not furnished a copy of complete statement of this bank account. The AO also mentioned that the requisite information from Swiss Banking Authorities had not been received. At the same time, he stated that as per the bank statement with his office, the credit balance in this account was US$155507.80 at the end of March 2006 and US$152027.93 at the end of February, 2007. The peak balance was US$156740.81 in the mont....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Account No. B0129826 This is the number of passport issued in the name of assessee. A certificate confirming this fact obtained from passport authority vide F.No. 25/Misc./15/Pol.GR.II/24-S dated 20/02/2015 establishes the fact. Place of office - New Delhi New Delhi, Head Office of the business of assessee as well as his residence is in Delhi. Date -23/08/1999- This is the date of issue of passport No. B0129826 in the name of assessee. Copy obtained u/s 133(6) of I.T. Act from passport authority Delhi vide letter No. 25/Misc./15/Pol.GR.II/24-S dated 20/02/2015 established the fact. Although the assessee was asked to furnish copy of passport issued on 23/08/1999 but instead assessee filed copy of passport issued dated 23/08/2011. Date of modification 11/03/2005 From the details of arrival & departure it has been found that the assessee departed on 05/03/2005 through flight Q407 with passport no Z052887 issued on 06/12/2000 from Delhi & arrived on 22/03/2005 through flight AF148 at Delhi Airport. During the intermediate time the assessee is likely to have done the modification on 11/03/2005 in the bank. 6. The AO provided copy of account statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be made within a period of two years from the end of the financial year in which the search was executed. Relevant text of Section 153A is reproduced hereunder, for your Honour's ready reference: ''Section 153B (1) Notwithstanding anything contained in Section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of sub section (1) of Section 153A, within a period of two years from the end of the financial year in which the last of the authorizations for search under Section 132 or for requisition under Section 132 was executed; (b)....................................." 2.3 As mentioned in the preceding paragraphs, the search operation was carried out on November 11, 2011. In view of the provisions of Section 153B of the Act, the order under Section 153A of the Act ought to have been passed within a period of two years from the end of the financial year 2011- 12 (during which the last of authorizations for search was executed) punchnamas dated 15.11.2011 are enclosed (Pages 13 to 21 of the paper book). Accordingly, the limitation pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be informed as to what additional information has been sought through FT& TR division and how the said information is relevant in Appellant's case, for the purpose of examining the limitation of assessment proceedings. The Appellant also invited the Ld. AO's attention to the media's reports that the Indian authorities have been denied providing of information with reference to the foreign bank accounts and as such the Appellant assumes that the reference stated to have been made by FT & TR division on 27.11.2012, which the Ld. AO has stated to be still pending, might have been declined by the concerned foreign authorities long back. The Ld. AO was requested to clarify the above point so as to enable the Appellant to understand as to how his assessment proceedings are yet not barred by limitation. 2.8 The Ld. AO neither gave any clarification to the Appellant on the issues raised by him, nor did he mention anything about the query raised by the FT & TR division on November, 27, 2012 (which alone could have saved the assessment from limitation) in his assessment order. Instead, the Ld. AO relied upon a much later reference made by the FT & TR division on January, 30, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jurisdiction of the assessment on legal issue challenged the addition made by the AO and submitted as under: "2.10 At the outset, it is submitted that it is incomprehensible as to the basis on which the assessment was concluded. It seems that the assessment has been concluded merely with a preconceived notion, influenced by certain media reports highlighting the ownership of the bank accounts with HSBC Bank, Geneva on the basis of some information supposedly received by Indian Government, through means, the veracity of which is highly doubtful. 2.11 It may also be submitted that the Ld. AO has grossly breached the principles of natural justice by not affording any opportunity to examine the so called correspondence (exchange of information) made available to Indian Government purportedly under the 'DTAA'. The same was never furnished thereby denying any opportunity to assail the same. The significance of the opportunity to examine has been well established in law. Here, one may usefully cite the decision of the Hon'ble Apex Court in Dhakeshwari Cotton Mills v. C1T [1954] 26 ITR 775 (SC), wherein, the right of examination has been considered as an essential ingr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich were purported to be copy of some foreign bank account. The same is enclosed at page no. 22 to 25of paper book. 2.16 Furthermore, the perusal of the order also indicated that the Ld. AO has not applied his mind at all in concluding the impugned assessment under Section 153A of the Act, but only relied on some stray sheet of papers whose authenticity/credibility was neither established neither was made available to the Appellant despite the repeated requests made by him. 2.17 In this backdrop, wherein, the appellant has always co-operated with the tax department and has consistently maintained that he never owned any foreign bank account, coupled with the fact that the Ld. AO does not have anything on record to substantiate the veracity of the purported bank account, it is most humbly submitted before your honour that the order is made in violation of the principles of natural justice has no value and is thus void-ab-initio. Thus, it is humbly prayed that since the impugned order violates the principles of natural justice and has been made with a preconceived notion and bias against the appellant, the same should be quashed. 2.18 Vide the above ground, the appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aforementioned cases, no addition could be made in the hands of the Appellant in consequent assessment made u/s 153A. Needless to mention that the fact that the search team had confronted the Appellant with unauthentic document, allegedly a statement of foreign bank account, is not enough to warrant any such addition." 11. It was further submitted as under: "2.21 It is further submitted that it is a settled Law that addition made by Income Tax authorities can be founded only on credible and cogent evidence. Where revenue authorities failed to demonstrate the same, the addition made is liable to be deleted. It bears repetition that in the instant case, the impugned addition was made solely on the basis of photostat copies of some loose sheet of papers purported to be Appellant's bank statement in a foreign bank (herein after referred to as photostat copy), but which actually appears to be a mere printout of spreadsheet rather than a valid or authenticated bank statement, whose source was never disclosed to the Appellant. The purported bank account whose peak credit has been added in the assessment is incorporated on page 4, 5 &6 of the assessment order and reads as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of the Hon'ble High Court of Bombay in the case of Sukhdayal Rambilas v. CIT [1982]10 Taxman 151 (Bom), wherein the aforesaid principle has been upheld. The Hon'ble Court held as under: "Where it is contended that what is apparent Is not real, the burden to establish that is on the person who alleges this. Thus, when the revenue contended that impugned amount in the fixed deposit really belonged not to S but to the assessee- firm, the burden was on the revenue to establish that the moneys belonged to the assessee-firm". (Emphasis supplied by us) 2.23 Also, one may also refer to the recent decision of the Hon'ble High Court of Rajasthan in the case of CIT v. Vinayak Plasto Chem (P) Ltd. [2014] 42 taxmann.com 43 (Rajasthan), wherein, the Hon'ble Court held that in terms of Section 69 of the Act, the onus is on the assessing officer to prima facie prove that investment was made by the assessee. 2.24 Furthermore, it is apt to bring to your kind attention that the Hon'ble High Court of Andhra Pradesh has held in the case of CIT Vs Shri Ramdas Motor Transport Ltd. [2015] 230 Taxman 187, that the department must press in to service any other credible sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rebutting the explanation consistently made by the appellant from time to time. 2.28 Further, one may note that the Ld. AO in the impugned order highlighted that the stray sheet of papers purported to be a statement of a foreign bank account was available with the department and supposedly received under the 'DTAA'. 2.29 The impugned assessment order does not even hint from where the said documents were received. It is incumbent upon the Ld. AO to explain the source of the said information as well as make available the said information to the Appellant for examination, which, in the instant case, the Ld. AO has blatantly failed to do so. 2.30 At the cost of repetition, it is submitted that the media reports do suggest that the aforesaid information in possession of the revenue authorities, has been received otherwise than by due process and procedure laid down under law, and more particularly the mechanism prescribed under the tax treaty entered into by India with other sovereign countries." It is therefore inconceivable as to how, an entire assessment can be framed on the basis of information which apart from being unreliable and unverified, has not even been o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and, therefore, no inference could be drawn, solely on the basis of such papers. 2.33 In view of what has been stated above, the impugned addition made is unwarranted, unjustified and fit to be deleted. 2.34 In this regard, it is respectfully submitted at the cost of repetition, that the Appellant never owned/maintained the alleged foreign bank account which stance has been maintained by the Appellant since the statement recorded during the course of search proceedings. In view thereof, it is inconceivable that the necessary information as sought in the above-referred notice is available with the Appellant. 2.35 The Ld. AO has stated that the Appellant has not furnished consent waiver formas requisitioned. In this regard, we wish to draw your attention to the relevant provisions of Section 142(1) of the Act, which reads as under: "(I) For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 115WD or section 139 or in whose case the time allowed under sub-section (I) of section 139] for furnishing the return has expired a notice requiring him, on a date to be therein specified,- where.......
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion under the aforesaid laws, an effective machinery to obtain such consent has been built in the statute books. Whilst Section 94A affords legal benediction to a similar consent form for its limited purpose, the absence of any such mechanism for obtaining information related to foreign bank account of any assessee, execution of the subject consent form is not enforceable in law. 2.41 Furthermore, even for argument sake, if it is conceded that the provisions of Section 142(1) are wide enough to enable Assessing Officers to enforce execution of a consent form, the need for the mechanism provided in Section 94A would not arise and therefore, the said provision may be regarded as otiose. However, it is a well settled canon of construction that a provision cannot be interpreted in such a manner to render the other provision as otiose or redundant. 2.42 In view thereof, it is respectfully submitted that the provisions of the Act, in their present form, do not enforce execution of the subject consent form and therefore, no adverse inference need be drawn against the Appellant for non-execution of the consent form." 12. The ld. CIT(A) after considering the above submissions of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ank statement is proving beyond doubt that the alleged bank account belongs to the appellant. Therefore, information available in the form of bank statement is an incriminating document and the transactions in the bank statement, show undisclosed income. In the result, the undisclosed income as per bank statement is not disclosed to the department till date. Therefore, the submissions of the appellant that alleged piece of paper, was not found in the search and seizure action u/s 132 of the Act, is not acceptable. (iv) In the appellate proceedings, the appellant has submitted that during action u/s 132, no incriminating material was found and therefore, the A.O. has no authority to make addition, which is not based on seized material. But that does not mean that the credit entries representing taxable income in this bank account to be excluded. Thus, there is a failure on part of the appellant to disclose the correct income in the original return, as well as in the subsequent return filed in response to notice u/s 153A and has willfully made the false / untrue statement at the time of filing original return, as well in the return filed in response to notice u/s 153A. Therefore, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c. and even postal address was belonging to the appellant. In these facts and circumstances, the claim of the appellant that the alleged bank account belongs to M/s Portman Investments Holding Limited, is nothing but an intermediator for facilitating to the appellant and the HSBC Bank only, since all the details/ particulars pertain to the appellant only. Therefore, above submission of the appellant, are not acceptable. From the above, following facts emerged: • The appellant Shri Shyam Sunder Jindal, maintained a bank account with HSBC Bank Geneva, Switzerland with BUP no. 9070145843 and this account remained undisclosed to the Income Tax Department. Therefore, the credit entries, are also not disclosed as income in the returns of income filed, and • The A.O. has determined the peak balance of USD 1,55,923.57, on conversion in INR conies to Rs. 69,07,414/- @ Rs. 44.30 per USD. From the above, it is clear that the HSBC bank account belongs to the appellant, as has been held (supra), while deciding the grounds no. 1.2 to 1.4. Therefore, the credit entries made in this alleged bank account is undisclosed income of the appellant. The A.O. has added the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....scribed u/s 153B of the Act was void ab initio. It was pointed out that the AO himself admitted in letter dated 24.12.2014 (copy of which is placed at page no. 56 of the assessee's paper book) that the information sought vide letter dated 27.11.2012 from the concerned authorities were not yet received. Therefore, nothing was available with the AO while framing the assessment. As such in the absence of incriminating material the addition made by the AO was not justified particular when the original assessment was framed u/s 143(3) of the Act on 08.10.2008. The reliance was placed on the following case laws: • CIT Vs Chetan Das Lachman Das 211 Taxman 61 (Del.) • CIT Vs Anil Bhatia 352 ITR 493 (Del.) • CIT Vs Kabul Chawla 380 ITR 573 (Del.) • CIT Vs Continental Warehousing Corporation 374 ITR 645 (Bom.) 14. It was contended that the onus was on the department to establish that the bank account was of the assessee but nothing was brought on record to substantiate that the assessee was having any bank account with HSBC Bank, Geneva, Switzerland. It was further contended that the assessee in response to the queries raised by the depa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that onus was not discharged. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. The reliance was placed on the following case laws: • CIT Vs Ved Prakash Choudhary 305 ITR 245 (Del.) • CIT Vs Anil Bhalla 322 ITR 191 (Del.) • CIT Vs Lubtec India Ltd. 311 ITR 175 (Del.) • CIT Vs Atam Valves (P.) Ltd. 332 ITR 468 (P&H) • CIT Vs Dolphin Builders (P.) Ltd. 356 ITR 420 (MP) • ACIT Vs Sharad Chaudhary 165 TTJ 145 (Del. Trib.) • CIT Vs Ravi Kumar 294 ITR 78 (P&H) • ITO Vs Twinkle Papers (P.) Ltd. 95 TTJ 987 (Chd. Trib.) (TM) 17. In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the AO made a reference to the concerned authority vide letter dated 27.11.2012 for obtaining the information under DTAA. Therefore, the limitation as per the proviso to Section 153B of the Act for completing the assessment u/s 153A of the Act will expire on 31.03.2015. As such the assessment order passed u/s 153A of the Act on 27.02.2015 was within the prescribed time limit and the assessment made by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee's paper book). In the said statement the assessee replied to the various questions asked by the ADIT(Inv.), Unit-VI, Central Circle-30, Jhandewalan Exten. New Delhi. In the said statement vide question no. 5, it was asked that as to whether the assessee or his family member, had account outside India in the name of any trust, entities, firm etc. The assessee replied that to his knowledge, there was no bank account in his or his family member's names, however, some companies like M/s Rexor (subsidiary of Jindal Ply Films) Mining Company had bank account. A specific question no. 8 was asked relating to bank account with HSBC Bank, Geneva/London, in response, the assessee stated that neither he nor his family member had any bank account with HSBC Bank at Geneva/London. During the course of assessment proceedings also the assessee denied of having any bank account with HSBC Bank, Geneva. However, the AO pointed out that the assessee was having account with HSBC Bank, Geneva. He reproduced the translated information in English at para 4 of the assessment order and also stated in para 6 of the said order that a reference was made to the concerned authorities through the FT&TR Division....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9;s office to collect the alleged bank statement but the same was not handed over on the ground that the same had to be collected either by the assessee in person or by my representative duly authorized for this purpose. In the circumstances, adjournment was sought in the matter and the case was adjourned to 25.11.2014. Thereafter, authorization letter dated 20.11.2014 was filed with your honour on 21.11.2014 and pursuant thereto four photo copied pages were provided by your honour to my representative on 21.11.2014. In the meantime, I have been provided through my representative an unsigned copy of your letter dated 20.11.2014 on 24.11.2014, (original thereof stated to be sent by post from your office is yet to be received by me) stating that opportunity granted to me to obtain the bank account statement provided vide letter dated 12.11.2014 was not availed on due date i.e., on 19.11.2014, and that in case such bank statement is not collected by 11 AM on.24.11.-2014, it would be presumed that I am not willing to obtain the same and intentionally evading the opportunity. It has been further stated that any further requisition of any material will not be entertained and assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under section 153B of the Act, as explained subsequently. It may not be out of place to mention that as per the media reports, I understand that Government of India is making enquiries from alleged bank account holders based on certain stolen data. Therefore, the aforesaid information/details/documents to demonstrate the authenticity of the documents provided to me is absolutely essential in order for the same to constitute evidence which is recognized in law. 3) I may also point out that the aforesaid document is in a foreign language which I do not understand and, therefore, I am not able to understand the contents of the said document. The official translation of the aforesaid document needs to be provided. In view of the aforesaid, you may kindly appreciate that I am handicapped in responding to your letter dated 12.11.2014, which is based on unauthenticated, unsubstantiated foreign documents and whose contents are not known. Further, I cannot be said to have been provided opportunity of hearing as required in law in this regard and principle of natural justice cannot be said to have been observed in the present case. Without prejudice to the aforesaid, it is obse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained with HSBC Bank, Geneva, even when the assessee was denying from the very beginning that he was having any bank account with HSBC Bank, Geneva. In the present case, no original document was brought on record and also not confronted to the assessee. The AO also admitted in para 11 of the assessment order that a copy of bank statement for a period from November 2005 to February 2007 was provided to the Authorized Representative of the assessee on 21.11.2014 but nowhere he stated that the original document/evidence was confronted to the assessee. It is also noticed from the translation version of the said information reproduced by the AO at pages no. 3 to 10 of the assessment order dated 27.02.2015 that the said document/evidence was not signed by any authority and did not demonstrate in any manner that the same was a photocopy of bank statement, it was also not on the letter head of any bank, neither it was stamped by any bank nor it bore signature of any official of any bank. Therefore, it is not clear how and in what manner the said document was considered as the bank statement of HSBC Bank, Geneva, particularly when there was no indication as to the branch and country to whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted to have exported the material in question. It is also found that one of these copies of the alleged declarations bears the seal of the Customs at Kobe and the name of the vessel is shown to be "Raya Fortune" but the itinerary of that vessel collected at the instance of the Indian Customs shows that the said vessel had never touched Kobe which raises a serious doubt as to how far this document is authentic. The majority raises the question as to how the declaration at Kobe and shipment from Osaka are reconcilable noting that there is no explanation coming forth. The majority feels that the authenticity of the documents itself is suspect. In these circumstances, the presumption to be raised under Section 139(ii) of the Customs Act could not be raised because the document did not bear any signature, did not come from proper custody and it is difficult to understand why the Indian Customs did not interact with the Japan Customs and obtain authentic copies of the document from the latter. Merely because the Department offered cross-examination of the steamer agent from whom the export declaration had been obtained and the respondents chose not to avail of that opportunity is no grou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 27. Tel. No. : + 11 334 54 63 28. Fax No. : + 113732126 29. Residence Address : 56, Hanuman Road, New Delhi- 110001 30. Date of creation : 16-02-1999 31. Date of Modification : 11-03-2005 32. BUP-SIFIC-PER-ID : 9070145843 All the above said particulars pertain to the bank account are same as that of yours. It is pertinent to mention that the telephone no. mentioned in the bank account stands in the name of M/s Jindal Rubber (Priv) Ltd., 56, Hanuman Road, Connaught Place, Delhi - 110001. To establish this fact a screen shot obtained from internet from the site of MTNL Delhi is enclosed. This office is ready to provide you the copy of Bank account statement for the period Nov. 2005 to Feb. 2007 received obtained under DTAA in your case. Since the information is to be used only for income tax purposes so you are requested to collect it either in person or through any authorized person for this purpose. After having receipt of the same you are required to explain the source of the credits in the bank account. In aggregate the deposits during F.Y. 2005-06 stands at $ 776800 & F.Y. 2006-07 at $ 17....