TaxTMI 
TaxTMI 
2018 (2) TMI 1731
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....e assessee on 18.07.2013 requiring him to file certain information in respect of HSBC Bank Switzerland. Since there was no compliance to this notice, the Assessing Officer levied penalty of Rs. 10,000/- u/s 271(1)(b) which was subsequently confirmed by the ld. CIT(A). Subsequently, the assessee, in response to notice u/s 143(2) and the questionnaire issued, appeared before the Assessing Officer through his Authorized Representative and filed details as called for from time to time. The Assessing Officer observed that as per the information received under DTAA/DTAC between India and other countries, certain persons in India (including the assessee) held bank accounts in HSBC Private bank (Suisse), SA, Switzerland (hereinafter referred to as the HSBC Bank). He observed that in respect of the assessee, information was received in the form of a 7 page document which was provided to the assessee. The Assessing Officer observed that during the course of search u/s 132, statement of the assessee was recorded u/s 132(4) wherein he was specifically asked to give details of his foreign bank accounts. The assessee denied to have any such foreign bank account. The Assessing Officer reproduced ....
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.... the assessee filed a letter dated 09.02.2012 before the DDIT (Inv.), New Delhi wherein he clarified that during the search operation certain documents related to an Overseas Bank account were shown to him according to which the accounts belonged to some trust/companies. The name of the assessee appeared in that statement as a beneficiary/attorney holder together with some of his family members. It was clarified by the assessee that neither he created such an entity nor is he aware of one existing as on date. The assessee submitted that not a single document related to the above account was found from the residential premises of the assessee during the course of search operation. It was stated that even if the bank statement in respect of the said bank account are old and may fall outside the block period, however, as assessee's name accidently happens to appear in the statement as a beneficiary/attorney holder, in order to buy peace and avoid litigation with the revenue authorities, the assessee is willing to pay income tax and interest due thereon for the relevant assessment year, provided no penal action and/or prosecution action is undertaken. The assessee also requested to kee....
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.... balance of USD 2,52,246 in December, 2005. This client profile was closed on 25.01.2006. Shri Parag Dalmia is shown as 'ATTORNEY A' IN CLIENT PROFILE RONDEBERG LIMITED. (3) Client profile TAIRA FOUNDATION (Code-9072037726) was created on 28.01.1998. It was having account balance of USD 7,658 in November, 2005. This client profile was closed on 03.01.2006. (4) Client profile 12717 RSK (Code-9072013290) was created on 11.06.1992. This client profile was closed on 28.06.2000. Shri Parag Dalmia is shown as 'Account Holder' in client profile of 12717 RSK. Since in the column maximum balance amount during the period is written as [non reference], no amount is being taxed qua this account. (5) Client profile MENKO FOUNDATION, VADUZ (Code- 9072011212) was created on 27.08.1991 and closed on 07.08.1992. Shri Parag Dalmia is shown as 'Beneficial Owner' in client profile of Menko Foundation, Vaduz. Since in the column maximum balance amount during the period is written as [non reference], no amount is being taxed qua this account. 6. The Assessing Officer observed that the information in the form of the document has been collected by the Government of India from credible sources ....
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.... he has been telling that the account is not his. Rather he would have helped the Government of India in its efforts to bring back the money lying in foreign bank accounts about which the Government has not been informed of. The submission of the assessee that his name is accidently appearing in the document was rejected by the Assessing Officer since the nature of details available in the document are personal and the same are corroborated with the appearance of the details of his father, mother and wife. Moreover, the assessee has not taken any action against any entity/agency for using his particulars without his permission. Even he has not bothered to contact the bank to know under what circumstances his details are appearing in the accounts. The Assessing Officer observed that the three accounts to which he has been related as attorney and beneficial owner has the following maximum amounts appearing therein which is as under :- TAIRA FOUNDATION USD 7,658.49 RONDEBERG LIMITED USD 2,52,246.78 ASPREY WORLDWIDE S.A. USD 10,912.80 Total USD 2,70,818.07 Total in Rupees Rs.1,20,37,863/- 1$=Rs.44.45 as on 31.3.2006 SBI TT Buying rates  ....
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.......... it is not improbable that the personal information of any person and his family members could be retrieved..... In this respect your attention is invited to the statement recorded during the assessment proceedings in which you have given a very evasive reply on being asked - do you think that your personal details have been misused. Hence your submission lacks credibility. 6. Numerous opportunities were given to you during the search, post search and assessment proceedings requiring you to sign the consent waiver from which would have enable the department to get the bank account details (not appearing in the Document) and other particulars relating to the details mentioned in the Document. Your non-cooperation to get the full particulars about the account is incomprehensible, belies human logic and makes all your defenses self-serving. The only unassailable conclusion from all this is that the details in the Document pertain to you and your family members. These details have not been disclosed to the Income Tax Department." 9. The Assessing Officer accordingly made an addition of Rs. 1,20,37,863/- to the total income of the assessee which appears in the bank account/l....
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....n view of the foregoing. So far as the addition of the amount is concerned, the ld. CIT(A) upheld the addition made by the Assessing Officer by observing as under :- "Findings:- The AO discussed the issues related in details in the assessment order. I have considered the submission made by Ld AR in this regard and also the fact that the assessee has later denied owning up the accounts. The document providing information in respect of the undisclosed foreign bank account has been received under mutual agreement between India and other countries. The details appearing in the Document pertain to information relating to accounts of the persons, the personal details of which are also appearing in the Document. The assessee name and other relevant details are there including personal details. The assessee apart from merely denying has not rebutted the presence of clear personal details in the account papers. The assessee had himself admitted to the account and also accepted the deposits as his during the course of search, The retraction subsequently is cryptic and without any cogent basis. There is ample jurisprudence available to reject the assessee contention in absence of ....
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....mstances of the case and in law the CIT(A) has grossly erred in upholding the addition of Rs. 1,20,37,863/- in respect of the purported peak balance of the bank accounts alleged to be held by the Appellant, based on information, the authenticity of which the tax department has failed to corroborate and substantiate. 2.1 That without prejudice to the above ground on the facts and circumstances of the case and in law the CIT(A) has grossly erred in upholding the addition of Rs. 1,20,37,863/- in respect of the purported peak balance of the bank accounts alleged to be held by the Appellant, whereas the alleged bank accounts as admitted in the assessment order are in the name of certain foreign entities and not in the name of the Appellant. 2.2 That without prejudice to the above ground(s) on the facts and circumstances of the case and in law the CIT(A) has grossly erred in upholding the addition of Rs. 1,20,37,863/- in respect of the purported peak balance of the bank accounts whereas in para 11 (page 23) of the assessment order it has been admitted that - "Till date verificatory report in respect of the above foreign bank accounts) has not been received. In view of these facts a....
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....xmann.com 412 (Delhi) - Para 37 16. In his alternate contention, the ld. counsel for the assessee submitted 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 the signature of any official of any bank. Therefore, it is not clear as to 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 which the alleged bank statement related. He submitted that although the Assessing Officer in the present case stated that the documents had been obtained under DTAA but nowhere it was mentioned that under which DTAA those documents had been obtained. If the aforesaid documents had been received under DTAA' nothing is brought on record to substantiate that any letter was issued by the competent authority of the relevant country from which the aforesaid documents were obtained. The assessee had also asked for the same but nothing was provided to the assessee. Therefore, in the absenc....
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....o explanation 5 to section 139 (1), as per which "beneficiary" (inserted w.e.f. 1.4.2016 by Finance Act 2015) in respect of an asset means an individual who derives benefit from the asset during previous year and the consideration for such asset has been provided by any person other than such beneficiary. He submitted that Sh. Parag Dalmia has not derived any benefit from the bank account of the aforesaid entities during A.Y. 2006-07. There is no evidence on record to this effect. Additionally, there is no document/ evidence on record for alleging that Mr. Parag Dalmia was beneficiary in the assets (i.e. HSBC Account) of the aforesaid entities. 21. In his further alternate contention, ld. counsel for the assessee submitted that the surrendered income must be correlated with some incriminating material found during the search so as to justify the addition. As admittedly no incriminating material was found during the course of search showing the involvement of the assessee in the HSBC account for which the concession was made or obtained vide letter dated 09.02.2012, the addition cannot be sustained. For the above proposition, he relied on the following decisions :- Ajay Gupta ....
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....dition arises out of enquiry related to source of investment in disclosed investment, if details of such disclosed investment were found during search, addition has to be sustained. He submitted that at that time simultaneous proceedings u/s 148/regular assessment and Block Assessment proceedings were not possible. 26. The ld. DR submitted that limitation to issue notice u/s 148 was available in this case till 31.03.2013. However, proceedings u/s 153A were pending on that date. Referring to the decision of the Co-ordinate Bench of the Tribunal in ITA No.2675 & 2676/Del/2010, order dated 8-8-2013, he submitted that the Tribunal at para 9 has held that during the pendency of proceedings u/s 153A of the Act, the Assessing Officer is not empowered to issue notice u/s 147/148 of the Act". Therefore, the Tribunal answered the following question of law in the negative and held that addition for such escapement of income is to be made in order u/s 153A/153C proceeding only. "Whether, during the pendency of proceedings u/s 153A/153C, the AO can issue a notice u/s 148, in respect of escapement of income, which comes to his knowledge from a source other than the evidence found during th....
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....at para 11 of assessment order refers to certain closed accounts for which reference was made to Swiss Authorities. The corresponding additions have not been made in the assessment order. Therefore, the said communication to Swiss Authorities is not relevant in this appeal. As regards additions made, the basis is the principle of "Preponderance of Probabilities". He submitted that exchange of information between Sovereign Nations is governed by treaty provisions and not as per the standards and procedure laid down by domestic law. For the above proposition, he relied on the decision of Ahmedabad Bench of the Tribunal in ITA No 3451/Ahd/2014 order dated 30.11.2017 in the case of Mayurbhai Mangaldas Patel. For information received from Foreign Governments, the corresponding standard operating procedures apply and not the standard operating procedures applicable to receipt and verification of documents/ information from domestic sources. He submitted that the decision in the cases of Bishwanath Garodia (supra) and Shyam Sunder Jindal (supra) relied upon by the assessee cannot be followed. He also relied on the decision of the Hon'ble Apex Court in the case of Mumbai Kamgar Sabha vs....
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.... consent waiver form, the assessee did not sign the same, the Assessing Officer rejected the explanation given by the assessee and made addition of Rs. 1,20,37,863/- to the total income of the assessee being the deposit in TAIRA FOUNDATION, RONDEBERG LIMITED and ASPREY WORLWIDE SA, the details of which are given at para 6 of this order. The Assessing Officer further made addition of Rs. 1,23,130/- being income on account of undisclosed income earned for such undisclosed foreign bank account deposits u/s 69 of the I.T. Act. 31. We find the ld. CIT(A) deleted the addition of Rs. 1,23,130/- being the interest on account of undisclosed interest earned on such deposits for which the revenue is not in appeal and therefore we are not concerned with the same. He, however, dismissed the ground raised by the assessee challenging the validity of the assessment proceedings u/s 153A and sustained the addition made by the Assessing Officer amounting to Rs. 1,20,37,863/-. 32. It is the submission of the ld. counsel for the assessee that in absence of any incriminating material found during the course of search, no addition can be made. It is also the submission of the ld. counsel for the as....
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....in our opinion are not applicable to the facts of the present case and are distinguishable. Since in the instant case the documents in the shape of 7 pages received by the Government of India from a sovereign country containing information regarding the undisclosed foreign accounts were received prior to the search and was confronted to the assessee during the course of search, therefore, the same, in our opinion, constitutes incriminating material which has rightly been used by the Assessing Officer in the proceedings u/s 153A/143(3) of the I.T. Act. Further, since the proceedings u/s 153A was pending, the Assessing Officer is not empowered to issue notice u/s 148 of the I.T. Act in respect of income which comes to his knowledge from a source other than the evidence found during the course of search and continued the said proceedings simultaneously with proceedings u/s 153A/153C as held by the Tribunal in the case of ACIT vs. Vipul Motors Pvt. Ltd. vide ITA No.2675 & 2676/Del/2010 order dated 08.08.2013 and in the case of Rajat Subham Chatterjee vs. ACIT vide ITA No.2430/Del/2015, order dated 20.05.2016. Such type of argument was never taken in the case of Bishwanath Garodia (supr....