TaxTMI 
TaxTMI 
2016 (9) TMI 1365
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....ion Clauses of the Bilateral Double Taxation Agreement with that country, the assessee had a Bank Account in HSBC, Geneva, Switzerland showing a sum of US Dollars 10, 23, 210 in December, 2005 relating to A.Y. 2006- 07 and two other sums of US Dollars 10, 74,837 in May, 2006 and US Dollars 10, 64, 993 in December, 2006 relating to A.Y. 2007- 08. On the basis of this information, a search and seizure action under section 132 of the Income Tax Act, 1961 was conducted in the case of the assessee as well as in other cases belonging to Mangal Steel Group on 28.07. 2011 as well as subsequent dates. During the course of search, books of account, jewellery, etc. were found besides some cash. The statement of the assessee was recorded under section 131 of the Act, wherein he admitted of having maintained a Bank Account in HSBC, Geneva, Switzerland. He also admitted that the said Bank Account was opened on 07.06. 1999 and his wife Smt. Usha Garodia was an authorized person to operate the said account maintained in his name. He further accepted that the money deposited in the said account represented the proceeds of his export business and agreed to pay income- tax, if any, due thereon. He al....
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....3) for both the years under consideration, appeals were preferred by the assessee before the ld. CIT( Appeals) challenging therein the validity of the said assessments as well as disputing the additions made therein on account of the transactions reflected in the Bank account with HSBC Bank, Geneva, Switzerland. As regards the preliminary issue relating to the validity of the assessments made by the Assessing Officer, the main contention raised by the assessee before the ld. CIT( Appeals) was that in the absence of any incriminating material or document found in the course of search, the Assessing Officer had no jurisdiction to initiate and frame the assessments under section 153A of the Act. This stand of the assessee was not found acceptable by the ld. CIT( Appeals) and he proceeded to uphold the validity of assessments made by the Assessing Officer under section 153A/ 143(3) of the Act for both the years under consideration for the following reasons given in paragraph no. 3. 2 of his impugned orders:- "3.2. The contention of the assessee that in absence of any incriminating material or document found in the course of search action, assessment could not be framed u/ s. 153 A of....
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.... this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act --- ' In this case, as stated hereinabove, that the assessee had accepted the notice issued U/ s. 153 A of the Act and filed a fresh return without any objection. No objection was raised also during the assessment proceedings, rather assessee co-operated with the AO. An addition of Rs. 4 .61 crores were also made on account of undisclosed Swiss Bank account, which was a subject matter of search action. Therefore, I do not find any merit on facts and under the law, in the objection raised by the assessee during this appeal proceeding. This grounds of appeal are therefore, dismissed". 4. As regards the issue relating to additions made by the Assessing Officer on account of the relevant transactions reflected in the Bank account with HSBC Bank, Geneva, Switzerland, an affidavit was filed by the assessee before the ld. CIT( Appeals) stating that the said Bank account with HSBC, Geneva, Switzerland was opened in his name by one Mr. Onn Sithawalla, owner of MSN International PTE Limited, Singapore in connection with a proposed joint venture. It was also stated in th....
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....ed 1511212014 recorded by the AO during the assessment proceeding, and (iv) Statement dated 05105/2015 , recorded by my predecessor CIT(A)'in office after receipt of Form No. 35. Iri the first statement recorded by the DDIT(Inv,), assessee owned up the Swiss Bank account. In the next two statements recorded by the AO during the assessment proceedings, assessee flatly denied to have had any Swiss Bank account. In the Forth statement recorded by the CIT(A), he though accepted that he opened that Swiss Bank account but contended that the bank account had been handled by one Onn Sithawalla, a citizen of Singapore and owner of MSM Enterprises P . in connection with a proposed Joint Venture. He stated that all the deposits in the Swiss B~ account were made by MSM Enterprises PTE Ltd. and all actions were handled by Onn Sithawalla. In this regard, assessee filed a copy of his own affidavit dated 03/ 02/2015 and a copy of an Affidavit of Onn Sithawala alongwith Form No. 35. 4.2. A cursory look in the contain of the statements given by the assessee would reveal that he had at times made vague, roundabout, self- contradictory as well as false statements under 'oath', to suppres....
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....stated about the purported JV with MSM in his first statement; In his first statement, assessee unequivocally admitted that not only the Swiss Bank account was opened by him but de posits were made by him and the source of such deposits was proceeds from his export business. It is not that the first statement was recorded under threat or coercion. No such allegation has ever been made by the 'assessee during or after the search action. When statement was made voluntary and was not alleged to have been obtained under threat or coercion,* onus was on assessee to prove that said declaration was made under any misconception of facts. Since assessee had not taken any steps to rectify his declaration before authorities before whom such declaration was made, there could not be any valid reason for retraction of same after a gap of three' and half years. Reliance is placed in the case of Carpenters Classics (Exim) Pvt. Ltd. Vs- DCIT, ITAT, Bang) 108 ITD 142, Further, Ld, AR could not explain but the assessee had given false statements before the AO during the assessment proceedings by denying to have had any Swiss Bank account. 4.4.4. Ld. Ld. AR has also given some emphasis on th....
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....ation or withdrawl of money but still withdrew the money in the account of M/s. Donald Mcarthy Trading PTE Limited of Singapore, as associate concern of MSM. Thus this statement of the assessee was far from truth. Ld. AR could not explain these self- contradictions in assessee' s statement. 4.4.5. In a landmark judgment of CIT Vs. Durga Prasad More (SC) 82 ITR 540, the Hon'ble Apex Court held that in a case where party relied on self- servicing recitals in documents, it was-for the party to establish the truth of these recitals: The taxing authorities were entitled to look *into the surrounding' circumstances' and find . out the reality of such recitals. In this case, the assessee 'produced some self- servicing documents after three and half years from the date of search, in the form of an Affidavit and some purported correspondence from MSM, Singapore and its owner Mr. Onn Sithawala, for shifting ownership of his own black money which was parked in a Swiss Bank account, which cannot be considered as genuine. In the case of Sri Krishna -vs.- CIT (All.) 142 ITR 618, it is held that affidavit need not always be accepted as genuine. Going by the facts of the case con....
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.... Dollars 4,246. 42 and US Dollars 55, 414 in the Bank account of the assessee with HSBC, Geneva, Switzerland in the previous year relevant to A.Ys. 2006- 07 and 2007- 08 respectively and the same represented earnings of the assessee on investment made out of initial deposits in the Bank account in various forms like Fixed Deposits, Bonds, etc. Accordingly, he directed the Assessing Officer to add equal Indian rupee of US Dollars 4, 246. 42 and US Dollars 55, 414 to the total income of the assessee for assessment years 2006- 07 and 2007-08 respectively. Still aggrieved by the orders of the ld. CIT( Appeals) for both the years under consideration, i.e. A.Ys. 2006- 07 and 2007- 08, the assessee has preferred these appeals before the Tribunal. 5. The preliminary issue involved in this case as raised in Ground Nos. 1 to 4 of the assessee's appeal for A.Ys. 2006- 07 and 2007-08 and further argued by the ld. counsel for the assessee at the time of hearing before us is that there was no incriminating material found during the course of search in relation to the transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and since the assessments for both the ....
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.... the Act. The ld. counsel for the assesese reiterated that in the absence of such incriminating material, the additions as made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC Bank, Geneva, Switzerland as well as income relating thereto in the assessments completed under section 153A for both the years under consideration are not maintainable. In support of this contention, he relied on the decision of the Mumbai Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited -vs.- DCIT reported in 137 ITD 287 as well as the decision of the Division Bench of this Tribunal in the case of ACIT - vs.-Pratibha Industries reported in 141 ITD 151. 7. The ld. D.R., on the other hand, strongly relied on the impugned orders of the ld. CIT( Appeals) in support of the Revenue' s case on this issue. He contended that there is no such requirement of any incriminating material having been found during search to initiate proceedings under section 153A and the fact that the search is conducted and concluded in the case of the assessee alone is sufficient to give jurisdiction to the Assessing Officer to initiate....
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....ontained in Section 153A, if the search or requisition is initiated after 31. 03.2003, the Assessing Officer is under an obligation to initiate proceedings under section 153A for six years immediately preceding the year of search. The Assessing Officer is then required to assess or reassess the total income of the said six years and i f any assessment or reassessment out of the said six years is pending on the date of initiation of the search, the same would abate, i.e. pending proceeding qua the said assessment year would not proceed thereafter and the assessment has to be made under section 153A( 1)(b) of the Act read with the 1st Proviso thereunder. As regards the other years for which assessments have already been completed and the assessment orders determining the assessee's total income are subsisting at the time when the search or requisition is made, the scope of assessment under section 153A is limited to reassess the income of the assessee on the basis of incriminating material found during the course of search. 10. At the time of hearing before us, the ld. D.R. has contended that the processing of returns of income filed by the assessee as made by the Assessing Officer ....
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....l Logistic Limited (supra), wherein it was held that even though all the six years shall become subject matter of assessment under section 153A as a result of search, the Assessing Officer shall get the free hand through abatement only on the proceedings that are pending. But in a case or in a circumstances where the proceedings have reached finality, assessment under section 143( 3) read with section 153( 3) has to be made as was originally made and in a case certain incriminating documents were found indicating undisclosed income, then addition shall only be restricted to those documents/incriminating material. 11. Keeping in view the discussion made above, we hold that the additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. The said additions made for both the yea....
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....2011 and the total deposits made therein along with the income accrued over the years were remitted to the account of M/s. Doland Mearthy Trading PTE Limited at the instance of Mr. Onn Sithawalla. Not even a part of the monies withdrawn from the said Bank account thus ever reached the assessee or used for the benefit of the assessee. (ix) All the above facts were sufficient to support and substantiate the explanation of the assessee that the entire money found deposited in the relevant Bank account of the assessee belonged to MSM Enterprises PTE Limited, which was deposited in connection with the setting of a joint venture between the said company and the assessee' s company and although there was no actual joint venture agreement entered into, the relevant correspondence setting out the terms and conditions of the joint venture was brought on record. Even the affidavits of the assessee and Mr. Onn Sithawalla affirming the relevant facts on oath were filed in support and there was nothing brought on record either by the Assessing Officer or by the ld. CIT(Appeals) to prove any factual infirmity or falsity therein. They also failed to dislodge or disprove the ownership of funds cl....