TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1363
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....ant 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 informed in any manner before the alleged extension of limitation period....
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....sment 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 finally assessed and had attained finality under the provisions of the Income Tax Act. A search and seizur....
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.... 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 11.05.1956, place of birth Delhi and profession as owner of Dalmia Bros.) Pvt. Ltd. If yes, furnish the details thereof? Ans. No I have not opened any account ....
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....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 your name is appearing in a bank account with HSBC what have you done to find out the veracity of the document/information? Ans. I have done nothing. Q.12 Have you made any communication with HSBC bank pertaining to this account after the ....
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.... 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 of the visit. In your reply you have stated that I don't remember but will try to find out will furnish if available. However, no such details have been furnished by you as on date. What do you have to say? Ans. I haven't been able to find out the details as it pertains to very long time. Q.24 On your statement recorded during the search on 21.01.201....
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.... 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 know of this have you made any communication with Mrs. Poonam Chaddha to find out the veracity of the bank details showy to you? Ans. I was not shown the account of Shagun 21. Q.30 All the details stated above were shown to you during the search and your statement has been recorded on these details on 21.01.2012. Now you are saying that no such document was shown to you. Are you trying to mislead the department? Ans. No I ....
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.... 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. All these information/documents received through FT&TR, Division of CBDT were confronted to the assessee firstly during the course of search and again during the course of assessment proceedings and on both the occasions assessee has denied the entire details or having any kind of link with HSBC account. After detailed discussion, AO held that the amount as reflected in these bank accounts aggregating to Rs. 27,91,72,017/- is to be taxed u/s.69. Apart from that he also held that amount of Rs. 4,88,816/- is the interest which has been calculated on s....
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....nsidering 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 and by confronting the assessee with the documents which relates to him. Further, whether an authentic document confronted to the assessee or not but in the present case even during the appellate proceedings remand reports were called for from the AO on various issues raised by the appellant and on the remand reports the appellant was given proper opportunity to file rejoinders. Further, the appellant was confronted with the authentic document, i.e. the information received from the French authorities with regard to the bank accounts of the appellant in HSBC Geneva und....
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.... 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 link with these entities. Once neither any material has been found during the course of search nor there is any admission by the assessee in the statement recorded on oath, then it cannot be held that any kind of incriminating material or evidence has been found during the course of search and if that is so, then no addition could have been made in the assessment passed u/s.153A in view of the settled judicial principle laid down by the Hon'ble Jurisdictional High Court in various other High Courts. In support, he has relied upon the judgment of Hon'ble Delhi High Court in the case of PCIT vs. Kurele Paper M....
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....ficer 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 proceedings even in an unabated evidence. She also relied upon the judgment of Anil Kumar Bhatia, that once the search has taken place, then AO has no option but to make assessment even though no material has been found during search. Thus, she strongly relied upon the order of the ld. CIT(A). 10. Alternatively, Ld. CIT DR submitted that, precisely similar issue had come up for consideration before this Tribunal in the case of Shyam Sunder Jindal Vs. ACIT (2017) 81 taxmann.com 123 (Del. Tribunal), wherein this Tribunal has set aside the matter to the file of the Assessing Officer to be adjudicated afresh, therefore f....
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....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. Bank (SUISSE), Switzerland. In the said information, the name of the assessee had also figured and 11 pages document pertaining to the assessee was also received. The contents of the documents have been reproduced in the assessment order. These documents revealed that in the bank accounts of certain entities, the assessee was either beneficial owner in the account or had been shown as the person having right of inspection or as account holder. The name of the entities which held the bank accounts have already been discussed above. The total sums standing in the bank accounts for the relevant financial year, aggregated to R....
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.... 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 incriminating material/evidence found during the course of search by holding that statement u/s. 132(4) it constitutes incriminating material within the meaning and scope of Section 153A. However, such an observation and the finding is de hors the fact as admittedly in the statement recorded on oath u/s 132(4) at the time of search, assessee has categorically denied having such transaction or any kind of link with the foreign bank accounts. Thus, the observation of the ld. CIT (A) to this extent is erroneous on facts and hence cannot be upheld. In the letter filed by the ld. CIT-DR written by the Assessing Officer before us, it is cle....
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....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 only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, t....
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....cision 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 regular assessment proceedings." 63. Even this Court has in CIT v Mahesh Kumar Gupta {supra) and The Pr. Commissioner of Income Tax-9 v. Ram Avtar Verma {supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. {supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015." 16. Thus, following the aforesaid proposition of law and admitted fact of the case that there is no incriminating material found during the course of search qua the assessment year for which impugned addition has been made, we hold that ....
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....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 with the material found during the course of search, then such an information for making any kind of addition ostensibly is outside the purview of Section 153A as per the binding judicial precedents of the Hon'ble Jurisdictional High Court. We again reiterate that if the Income Tax Department had any material information in its possession received from any external source and in wake of such an information search u/s 132 has been carried out and nothing incriminating has been found having live-link nexus with the said information already in hand, then the Revenue has other courses open to implicate the assessee or carry out further inquiry under the other provisions of the Act, but definitely not u/s.153....