TaxTMI 
TaxTMI 
2018 (2) TMI 1363
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....rts besides ignoring the submissions of the appellant before the said authorities. Thus, the impugned orders of the authorities below must be annulled. 2. The CIT(A) erred in law and on facts in confirming the assessment order passed on the basis of an illegal and invalid notice issued u/s 143(2) of the Act for the first time on 21/10/2013 though the same should have been issued statutorily by 30/09/2013 as the return of income was filed before 31/03/2013. The appellant never received any notice before the said date as has been alleged by the CIT(A) by referring to the assessing officer. Thus the assessment should be annulled. 3. That the impugned assessment order dated 23/03/2015 is barred by limitation as the time to pass the assessment order had already expired on 31/03/2014 but the proposal for reference to seek information from the foreign jurisdictions u/s 153B( 1) Explanation (viii) of the Act was made by the assessing officer first time vide his letters dated 27/02/2015, i.e. much after expiry of the time to pass the assessment order. Thus the assessment order should be annulled. 4. Without prejudice to the above ground, the appellant was not info....
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....153A/143(3) for the impugned Assessment Year, as on the date of search, i.e., 20.01.2012, the assessment for the Assessment Year 2006-07 was not pending and had attained finality. Accordingly, in view of the various judgments of the Hon'ble Jurisdictional High Court, especially in the case of CIT vs. Kabul Chawala (2016) 380 ITR 570; and Pr. CIT vs. Meeta Gutgutia, Prop. M/S. FERNS N' PETALS, in ITA No. 306 and 310/2010, the additions made for the assessment years which are unabated assessments are beyond the scope of assessment u/s 153A. Since the aforesaid issue raised by the learned counsel before us goes to the very root of the addition, therefore, we are taking up this issue first. 3. The brief facts and background of the case are that, the assessee is an individual deriving income from salary, short term capital gain and income from other sources. He has filed his return of income for the Assessment Year 2006-07 in the month of July, 2006, declaring total income of Rs. 27,86,027/-. The said return was duly accepted and processed u/s. 143(1) vide intimation dated 25.05.2007. Thereafter no notice u/s. 143(2) was issued and accordingly, such a return of income stood final....
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....tal in rupees Rs.27,91,72,017.47 1$ = Rs. 44.45 as on 31.03.2006 4. All these documents were in the possession of the Department as it was received from FT&TR Division of CBDT, much before the date of search and based on this information only search and seizure action was carried out at the various premises of the assessee. At the time of search, assessee was confronted with the said documents and his statement on oath u/s 132(4) was recorded on 20.01.2012, to verify the contents of the information contained in the said documents. The relevant question and answer have been reproduced by the Assessing Officer in his impugned assessment order. Apart from that, during the course of the assessment proceedings u/s 153A also, statement of the assessee was recorded on 03.12.2014 which too has been reproduced by the Assessing Officer in his assessment order. Since these question are quite pertinent, therefore, for the sake of ready reference, the relevant questions asked and answer given by the assessee are reproduced hereunder:- Q-8 Have you maintained any bank account abroad with the particulars as name "Anurag Dalmia, nationality Indian, Date of birth 11.05.1....
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....e any effort to verify from my records whether I was in Switzerland on that date as I don't have any account there. Q.6 Have you ever signed any document pertaining to opening of any account outside India especially HSBC bank Geneva? Ans. No I haven't. Q-7 Have you ever authorized any person/bank official/institution to sign any document on your behalf for the purpose of opening any account outside India? Ans. No. Q-8 Have you ever authorized any bank/institution/any other agency to open/operate any bank account outside India? Ans. No. Q-9 Did you ever authorize any person/institution/company to sign any document pertaining to formation of any company/trust/association of persons/societies outside India including British Virgin Islands? Ans. No, I haven't. Q.10 When did you come to know about existence of a bank account in your name in HSBC bank Geneva? Ans. I came to know at the time of search when the bank document was shown to me by the Income Tax Authorities. Q.11 After coming to know that you....
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....nt with HSBC bank so I didn't bother to go ahead for anything. Q21 On your statement recorded during the search on 21.01.2012 you were requested to furnish the details of your clients of Switzerland including the name of the clients who you could gather through your visit. In your reply you have stated that the details will be given to you in due course. However, no such details has been furnished by you as on date. What do you have to say? Ans. I will checkout how it has been left and I can furnish the details within a week. Q.22 On your statement recorded during the search on 21.01.2012 you were requested to furnish the details including the address, email id etc of Mr. Stapfer Walter. In your reply you have stated that whatever the details I have will be given later. However, no such details have filed till date. What do you have to say? Ans. I have checked and I don't have any details of the above person. Q.23 On your statement recorded during the search on 21.01.2012 you were requested to state whether you were present in Switzerland on 04.02.2005 and if yes, furnish the purpose....
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....shown as the beneficiary/having a right of inspection in this account. After coming to know of this have you made any communication with Mr. Chaddha to find out the veracity of the bank details shown to you ? Ans. I haven't been shoiun any account of Mr. Vivek Chaddhar Q.28 On your statement recorded during the search on 21.01.2012 you have stated that Mr. Bhavnesh Chaddha, is a school friend of yours. The name of Mr. Bhavnesh Chaddha is appearing as an attorney in Shagun 21, one of the accounts in which you are a beneficiary/ having a right of inspection. After coming to know of this have you made any communication with Mr. Bhavnesh Chaddha to find out the veracity of the bank details shown to you? Ans. I was not shown the account of Shagun 21. Q.29 On your statement recorded during the search on 21.01.2012 you have stated that Mrs. Poonam Chaddha, is wife of Mr. Bhavnesh Chaddha. Mr. Bhavnesh Chaddha is a school friend of yours. The name of Mrs. Poonam Chaddha is appearing as an attorney in Shagun 21, one of the accounts in which you are a beneficiary/ having a right of inspection. After coming to kno....
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....ormed above. Q.37 Do you want to say anything else? Ans. No. 5. From the perusal of the aforesaid question and answer, it is clearly evident that, firstly, no documents or any incriminating material relating to HSBC accounts in Switzerland was found from the possession and premises of the assessee; secondly, in the statement on oath recorded u/s.132(4) and also recorded during the course of assessment proceedings, nowhere the assessee has admitted of having such bank accounts or being any beneficial owner in the said bank accounts, albeit he has denied in all the questions put forth by the investigation authorities and the Assessing Officer; and lastly, the entire information and material was in possession of the Department prior to the date of search. A very important fact noted by the Assessing Officer that with a view to get further details relating to foreign bank account, reference has been sent to competent authorities in Switzerland and other authorities through FT & TR, Division of CBDT for getting the details of the account and other details which are yet to be received. This is evident from paragraph 9 of the assessment order. ....
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....tion contained in the corroborative bank statements. I hold that the statement u/s 132(4) of the Act recorded on 20.01.2012 do constitute incriminating material within the meaning or section 153A of the Act. It is settled law that the statement u/s 132(4) is deemed to be evidence under the Act. Since, the statement u/s 132(4) has been corroborated by other relevant and sufficient corroborative evidence, i.e, the documents related to foreign bank accounts received under exchange of information, it may be validly utilized as 'incriminating material'. Therefore, considering that the assessment has been made not merely on basis of the statement but based on the information and contents of the impugned foreign bank statement/documents. Therefore, I hold that the assessment made u/s 153A of the Act is not in conflict with the judgments of the Hon'ble Courts relied upon by the appellant including that of Kabul Chawla and others. So far as decision of ITAT relied upon by the appellant in the case of Shyam Sunder Jindal is concerned, the Hon'ble ITAT has set aside the issue to the file of the AO to be adjudicated afresh after providing a reasonable opportunity of being heard....
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....ccounts in HSBC Geneva. He also referred to the judgment of Hon'ble Delhi High Court in the case of Smt. Dayavanti vs. CIT. 8. Before us, ld. counsel for the assessee submitted that from the perusal of the entire material placed on record and the order of the Assessing Officer as well as ld. CIT (A), it can be seen that the information as received is under DTAA by the foreign authority was made available to the Department on 28.06.2011, i.e., prior to the date of search. This fact, he submitted is also borne out from the documents submitted by the learned Department Representative which is a letter given by the Assessing Officer. Based on this information, the investigation wing carried out the search operation on the premises of the assessee on 20.01.2012 and during the course of search no document or any single material was found either relating to opening of foreign bank account or to link assessee with any of the bank account or to infer that assessee was any kind of beneficial owner in the bank account of the various entities. Even during the course of statement on oath recorded u/s. 132(4), the assessee had denied having any such bank accounts and also any kind of a li....
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.... for further investigation in respect of bank account held in HSBC bank. This itself goes to show that assessee willfully tried not to co-operate with the Department and that is the reason why further information has been requested from the Swiss and French Authorities seeking specific information, some of which has already been received now. Assessee's profile has found to be linked with the four entities which fact is fully borne out from such information. In the wake of such definite information and looking to the fact that the search and seizure has been carried out in the case of the assessee, then Assessing Officer had no option but to utilize such vital piece of evidence while framing the assessment u/s.153A ensued after search. What is relevant to be seen is, whether at the time of search there was any information or evidence which per se is incriminating or not and not that such material has been found during the course of search. Here in this case, the material was available with the Department and to unearth other relevant information, a search and seizure action was carried out, therefore, such an information is a vital piece an evidence which can be used in a search pr....
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....2006-07 was not pending and accordingly, has to be reckoned as unabated assessment. Under the jurisdiction of Hon'ble Delhi High Court, the law is well settled that in case of unabated assessment, the additions which can be roped-in, in the assessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or found during the course of search. If no incriminating material has been found during the course of search, then no addition can be made in the assessment years where assessments had attained finality. The relevant observations and the ratio laid down would be discussed in the later part of this order. 13. Now keeping in view the binding judicial precedents of the Jurisdictional High Court, we shall proceed to examine the facts as are available on record. The Income Tax Department through its FT & TR Division of CBDT had received information pertaining to foreign bank accounts either held by certain Indians or were beneficiaries in these bank accounts under the exchange of information between India and France. The French Authorities on 28.06.2011 gave information in USB that certain persons in India held bank accounts in HSBC Pvt.....
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....he course of search, albeit he has given a finding that to the effect that it was on the basis of the information received which was precursor to carry out search and seizure action at the premises of the assessee and such an information/material even though not found in the course of search can be utilized for the purpose of assessment. For which reference was to made judgment of Hon'ble Supreme Court in the case of Pooranmal vs. DIT, (1974) 93 ITR 505 (SC). In the said judgment, Hon'ble Supreme Court held that if any evidence or material which has been found during the course of search can still be used/utilised, even if search has been held to be invalid. Nowhere has it been laid down by the Hon'ble Supreme Court that any material or information gathered prior to the search has to be reckoned or is deemed to be found during the course of search. It was never a case of the department either before us or before the first appellate stage that in the post search anything has been found, except that the information which though was incriminating against the assessee was already in the possession of the department. Ld. CIT (A) though has tried to rope in the element of incriminati....
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....d analysing the various judgments of different High Courts laid down the following legal proposition in terms of scope of addition which can be made u/s. 153A(1) which are as under:- "37. On a conspectus of Section 153A (1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be o....
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....issioner of Income Tax- 1 v. Devangi alias Rupa {supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. {supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. {supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in CIT-2 v. Salasar Stock Broking Ltd. {supra), too, followed the decision of this Court in Kabul Chawla (supra). In CIT v. Gurinder Singh Bawa {supra), the Bombay High Court held that: "6...once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the re....
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....uld be referred to a larger bench was turned down. Apart from these judgments, there are catena of other judgments of other High Courts laying down similar ratio and proposition. The main underlying principle permeating in all the judicial precedents is that, in the case of the unabated assessment which had attained finality on the date of search, which are reckoned as unabated assessments, no addition over and above the originally assessed income can be made sans any incriminating material found or unearthed during the course of search. The principle reiterated time and again is that something should be found as a result of search which is incriminating in nature so as to implicate the assessee and acquire jurisdiction to make the addition, because for the completed assessment, or in other words, assessment which are not abated, the Assessing Officer is required to make reassessment u/s.153A which is only possible when any incriminating material has been found during the course of search. If the Revenue has any information in its possession prior to the date of search and no corroborative evidence was found during the course of search so as to link the information already in hand ....