TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 154
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.... the High Court vide the orders dated 18th May,2015 and 13th April,2017, respectively, with remand to the ITSC for a fresh decision. 3. To curtail prolixity, we would refer to only relevant and material facts. The petitioner, it is claimed and stated, was/is engaged in business of manufacture and export of omasum and cattle casing, by-products of animal husbandry, as a sole proprietor of M/s Abdul Majeed Qureshi. Petitioner is also a director in AMQ Agro India Private Limited (AMQ Agro, for short), in which he and his wife Nasreen Moin Qureshi, hold majority (85%) shares. AMQ was/is entirely engaged in exports and its registered office was/is the residence of the petitioner located at C-134, Defence Colony, New Delhi. 4. On 15th February, 2014, search and seizure operations under Section 132 of the Act were conducted at various business and residential premises of the petitioner. The search had concluded on 19th April, 2014. Survey under Section 133A of the Act was also carried out at different premises. 5. During the course of search, various documents, cash and jewellery were seized. Statements of the petitioner, his family members, employees and directors of associate compani....
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....oin Qureshi were heard on 20th February, 2015. 13. The ITSC vide common order dated 24th February, 2015 admitted applications for settlement filed by AMQ Agro, Mohd. Shahnawaz and Aditya Sharma for further consideration, but applications filed by the petitioner and Nasreen Moin Qureshi were rejected on the ground of failure to make full and true disclosure of undisclosed income and the manner in which the undisclosed income was earned. This order in the case of the petitioner had primarily referred to the documents relied upon by the Respondents relating to property located at 4, Chesterfield House, South Audley, Mayfair, London (London property, for short) and the records and documents received from Singapore Tax Authorities and UK Tax Authorities under the Double Taxation Avoidance Agreement. We shall subsequently refer to these documents. 14. Aggrieved, the petitioner had filed Writ Petition (C) No. 4900/2015 before this High Court, which was allowed vide short order dated 18th May, 2015 on the ground that the Respondents had submitted additional set of documents running into 260 pages during the course of hearing before the ITSC on 19th February, 2015. The ITSC, it was observ....
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.... June, 2015. 16. Orders dated 4th June, 2015 and 26th June, 2015 became subject matter of challenge in Writ Petition (C) No. 8101/2015, which petition was allowed vide order dated 13th April, 2017 with an order of remand to the ITSC for a fresh decision. We shall be subsequently referring to this order in some detail as the assertion of the petitioner is that the ITSC has not complied with the directions in this order and has misconstrued the same. 17. Pursuant to the second order of the remand, the ITSC has now passed the order dated 12th May, 2017, which order holds that the petitioner had failed to make full and true disclosure and, therefore, the settlement application was rejected as invalid under Section 245D(2C) of the Act. The case of the petitioner for the AYs 2009-10 to 2013-14 have been sent to the Assessing Officer for adjudication and passing assessment orders. 18. We would first refer and examine the primary argument of the petitioner, that the impugned order completely disregards and is contrary to the earlier order of the High Court dated 13th April, 2017 passed in Writ Petition (C) No. 8101/2015 by which orders of the ITSC dated 4th June, 2015 and 26th June, 201....
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.... two informations are very vital to determine the truth in the matter and it will be fatal on the part of the Commission to ignore the same. It is also the submission of the Department that these two letters relate only to the issue of the bank account and the flat at London which are in consideration and remitted by the Hon'ble High Court to the Commission. (b) We agree with the submissions made by the Department that these two informations submitted by the Department dated 25.05.2015 with the Commission and received by the Department subsequent dated 19.02.2015 helps the Commission to determine whether the disclosure made by the applicant is full and true or not. Hence these documents require to be considered and the applicant can very well give his comments on these documents...." 6. Then from para 15.1 onwards, both the pieces of information are discussed in extenso by the ITSC. In para 15.17 the conclusion drawn by it, as regards the opening of an account, reads as under: "15.17. If there was a POA (Power of Attorney) arrangement between Mr. Yusuf Mehboob Khan and MR. Qureshi, it was a legal obligation of Mr. Qureshi to provide the alleged POA to the bank, as the Bank was....
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....ms were signed by Shri Moin Qureshi and his address mentioned is C 134 Defence Colony, New Delhi - 110024, India as seen from page 18 and 19 of pages marked as 7 to 49 received from Singapore authorities. The copies of the passport of Shri Qureshi were enclosed by Singapore authorities. The CIT(DR) argued that Shri Moin Akhtar Qureshi is the beneficial owner of account No. 6CO3122 held by Barro Holdings Ltd. (Barro) with BSI Bank Ltd. Singapore in Form A and that this account was opened on 22.07.2011 and closed on 19.04.2013..." 9. The correction now sought was that the acknowledgement of the fact that the bank account opening forms for both Barro Holdings Ltd. and Bulova Holdings Ltd. were not signed by Sh. Moin Akhtar Qureshi but by Arcas Holdings Ltd. 'the authorized signatory and a director of Barro and Bulova'. The important change which was sought by the Pr. CIT himself was for the ITSC to now acknowledge that there did exist a Power of Attorney (POA) on record which is now enclosed by the Pr. CIT with its application seeking the correction. 10. This application by the Pr. CIT was heard by the ITSC in the absence of any notice to the Petitioner. The ITSC accepted the appl....
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....hing to state that the said 'correction' was in fact beneficial to the Petitioner since the allowing of the application meant that the Petitioner's case that there was no failure by him to make a full and true disclosure of facts pertaining to the bank account was in fact accepted by the ITSC. But there is also merit in the contention of the learned counsel for the Petitioner that had the Petitioner known of the application, the Petitioner may have been able to persuade the ITSC even as regards the other 'errors' which according to the Petitioner vitiate the impugned order dated 4th June 2015. Whether in fact the ITSC may have been persuaded or not is not the point. The fact remains that an order passed by the ITSC cannot be sought to be 'corrected' by it without putting both parties to the order to notice. The procedure adopted by the ITSC of passing an order ex parte, correcting an earlier order, is not acceptable to the Court. 15. The Court is of the considered view that the ITSC should again undertake the exercise that it was expected to undertake pursuant to the order passed by this Court on 18th May, 2015 in WP(C) No. 4900/2015. Accordingly, the impugned order dated 4th ....
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....order dated 13th April, 2017 refers to the fact that the rectification application filed by the Revenue was allowed ex parte vide order dated 26th June, 2015. The Division Bench felt that question would arise whether the above change or rectification would impact the main conclusion drawn by the ITSC in its order dated 4th June, 2015 that there was failure to make true and full disclosure of all facts. It was observed that ITSC on two grounds had held that there was failure to make full and true disclosure, namely, the bank accounts in Singapore and the property at London. With regard to the property at London, paragraph 12 observes that the petitioner had made written submissions dated 15th May, 2015 enclosing certain documents, which were not considered. Paragraph 13 states that the order dated 4th June, 2015 had also not considered written submissions dated 22th May, 2015. Paragraph 14 thereupon states and records that the ITSC ought to have, at the first instance, put the petitioner on notice if it was going to entertain an application for correction filed by the Respondents. It did not matter whether the corrections would have been beneficial to the petitioner for it was obser....
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....ed by the ITSC, which had in paragraph 4.3 referred to the contention of the Revenue that M/s Bulova Holdings Limited, a company incorporated in British Virgin Island, had purchased the London property. However, the petitioner was a beneficial owner of M/s Bulova Holdings Limited and he had given instructions for furnishing of London property in his capacity as a beneficial owner. Similarly, order dated 4th June, 2015 records that the petitioner was beneficial owner of M/s Barro Holdings Limited and M/s Bulova Holdings Limited as well as the owner of the flat at London. ITSC had relied upon Know Your Customer (KYC) details in the account opening form. The petitioner had questioned the said details with reference to the two accounts alleging discrepancies, which contention was rejected in view of the fact that the details recorded in the KYC included personal details, etc. The ITSC had also recorded that M/s. Barro Holdings Limited had executed a power of attorney in favour of the petitioner, which was signed by the petitioner and his signatures on the documents with the BSI Bank Limited, Singapore were not disputed. 25. Therefore, it is clear that the stand of the Revenue, i.e. th....
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....d. the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur. The bench held that, 'precedents sub-silentio and without arguments are of no moment'. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi. In B. Shama Rao v. Union Territory of Pondicherry it was observed, 'it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general natu....
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.... It is also well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.' (emphasis in original) 17. As held in Bharat Petroleum Corpn. Ltd. v. N.R. Vairamani [(2004) 8 SCC 579 : AIR 2004 SC 4778] a decision cannot be relied on without disclosing the factual situation. In the same judgment this Court also observed: (SCC pp. 584-85, paras 9-12) '9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are neither to be read as Euclid's theorems nor as provisions of a statute and that too taken out of their context. (emphasis in original) These observations must be read in the context in which they appear to have been stated. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their....
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....ed 24th February, 2015, though this order had been set aside by the Court in Writ Petition (C) No. 4900/2015 vide order dated 18th May, 2015. It is also submitted that the ITSC had tried to justify its order dated 26th June, 2015 in spite of the observations of the order dated 13th April, 2017 passed by the High Court in Writ Petition (C) No. 8101/2015. 30. In order to decide this controversy and contention, we would like to reproduce relevant portion of the impugned order dated 12th May, 2017 passed by the ITSC, which reads:- "8. The Hon'ble High Court has now disposed of the above writ petition (WP (C) 8101/2015 and CM No. 16773/2015) by an order dated 13.4.2017 in which both the orders dated 4.6.2015 and 26.6.2015 passed by the Commission have been set aside. The Hon'ble High Court has observed in para 13 that submission dated 22.5.2015 filed by the applicant have not been discussed by the Commission in the order u/s 245D(2C) dated 4.6.2015 and that the said order could not be corrected without putting both the sides to notice. The Hon'ble High Court has accordingly directed as under:" "15. The Court is of the considered view that the ITSC should again undertake the exercise....
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....tion order, it might have been able to persuade the Commission to the other 'errors which according to the applicant vitiate the order dated 4.6.2015. On the basis of these observations, the A.R contented that the Commission needs to examine all the issues that formed a subject of its order u/s 245D(2C) dated 24.2.2015. 10.2 Ms. Bhanumati who represented the Department (referred to hereafter as D.R) strongly objected to the above proposition made by the A.R. She stated that the Hon'ble had only set aside the order accepting with the applicant's plea that full opportunity was not given to him in as much as the submissions dated 22.5.2015 were not considered. She stated that the Hon'ble High Court did not go into the merits of the case as it was not the issue before it in the Writ Proceedings. She stated that the para 11 of the order cannot be taken to mean that the Hon'ble High Court had given a clear finding that in view of the rectification made in the order dated 4.6.2015 the discourse made by the applicant can be taken to be full and true. According to the D.R this should be read only as a reproduction of the contention made to that effect by the applicant during the Writ proce....
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....ion order dated 26.6.2015, it is an admitted position that the relevant facts had been placed before the Commission by the Pr. CIT before the order dated 4.6.2015 and it was not as if in the rectification application the Pr. CIT had placed some fresh facts before the Commission. The error in the order had occurred due to inadvertence at the end of the Commission but that error had no bearing on the conclusion arrived at by the Commission as that decision was not solely or primarily dependent on it. The conclusion was based on a holistic appreciation of all the evidence contained in the documents running into 260 pages. 10.4 When apprised of our view on the above proposition, the learned AR prayed for an adjournment on the ground that the applicant would like to seek a clarification on this issue from the Hon'ble High Court. Considering that the order giving effect to the directions of the Hon'ble High Court is to be passed within the limited time period prescribed under the law an adjournment up to 9.5.2017 was granted to the applicant. On 9.5.2017, the A.R. informed that on the advice of their legal counsel they have not approached the Hon'ble High Court for a clarification and i....
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....d and paragraph 11 of the order passed by the High Court had not given a clear finding on the question of full and true disclosure with regard to the bank accounts. The sentence in the order of remand dated 13th April, 2017 passed by the High Court in Writ Petition(C) No. 8101/2015, relied upon by the petitioner was merely a reproduction of the contention raised by the petitioner, and not a conclusive opinion expressed by the High Court. If the High Court had reached and concluded that there was full and true disclosure, there was no reason to set aside the order with remand to the ITSC for a fresh hearing and decision. Paragraphs 10.3 and 10.4 refer to the order dated 18th May, 2015 passed in Writ Petition (C) No. 4900/2015 and that the remand was restricted to cognizance and examination of the documents running into 260 pages, which were filed by the respondents during the course of hearing on 19th February, 2015 and for which the petitioner was granted and given adequate opportunity to respond. The observation in paragraph 10.3 of the order were clearly with reference to the order dated 18th May, 2015 passed in Writ Petition (C) No. 4900/2015, which had circumscribed and confine....
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....ere was failure and lapse on the part of the petitioner to make full and true disclosure of undisclosed income. Till we set aside this finding, the argument raised is irrelevant and of no consequence. 34. On the question of the two bank accounts and the London property, the finding of the ITSC are to be found in paragraph 12, which are material and relevant and are reproduced below:- "12. Decision: we have once again considered the submissions dated 22.5.2015 and 28.5.2015 filed by the applicant in pursuance of the directions of the Hon'ble High Court, even though these were duly taken into account by our predecessor Bench earlier while passing the order dated 4.6.2015. It is seen that in these submissions the applicant has raised various objections that are of technical or peripheral nature: i. It is stated that on 23.6.2011 i.e. the date on which the Bank representative of BSI Bank is stated to have met Sh. Moin Queresh at his residence at New Delhi, Sh. Quereshi was not present there. We are not getting into the question whether this was on account of any mistake in mentioning the date by the bank employee or otherwise. What cannot be denied is that this kind of a discrepanc....
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....ore government. We are unable to agree with the applicant that the veracity of these documents is doubtful and that the entire documentation regarding KYC is an imaginary creation of the officers of the Bank without any involvement of Moin Akhtar Quereshi. v. The applicant has stated that the Department has not been able to provide the details of payment towards the purchase or furnishing of the flat at London. While there may be some substance that the Department has not produced specific details it cannot be denied that the information provided by the Competent Authorities of British Virgin Island and Singapore and by BSI Bank contain enough information to show that the applicant was the beneficial owner of a bank account in which there were substantial transactions of funds. Further the information received from the Competent Authority of British Virgin Island corroborates the assertion of the Department about the nexus of the property at London with the applicant. 12.1 As pointed out earlier, the documents running into 260 pages on 19.2.2015 pertained to the ownership of a bank account and a property at London. These documents have been considered by us afresh during these p....
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.... us the D.R. took us through the detailed facts and evidences to establish the beneficial ownership of the account in question by Sh Moin Qureshi. After the presentation of the D.R., keeping in view the directions of the Hon'ble High Court that no further document etc is to be filed by the either side, the A.R. was specifically asked to point out to us if the D.R. had brought any new fact on record. The A.R. in all due fairness admitted that it was not so and that these facts were already on record viz. in the submissions dated 25.5.2015 filed by the Department. As the submissions dated 25.5.2015 were filed by the Department in response to applicant's submissions dated 19.5.2015, they need to be considered even otherwise keeping in view the principle of natural justice. The relevant portion of these submissions, which are of importance to decide the issue at hand is therefore reproduced below for the sake of convenience: "12.5. The Material evidence establishing Mr. Qureshi's involvement with Barro Holdings Ltd are in the form of Power of Attorney executed in favour of BSI Bank Ltd which was signed by Mr. Qureshi himself under his signature. And Mr. Qureshi has not disputed his si....
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....re tax authorities. He has stated that the information has been provided by Orbis Advisory Pvt. Ltd, Singapore - a private company. This is a misleading statement by Mr. Qureshi. This confirms that Mr. Qureshi is not intending to come clean before ITSC. He is indulging in giving half-truths and misleading the ITSC into admitting his application. This is exposed by the fresh information received from Singapore and BVI authorities. By the above averment, Mr. Qureshi has implied ignorance about Orbis Advisory Pvt. Ltd and implied that Orbis has nothing to do with Bulova and Barro. A reference was made on 14/01/2015 to the Singapore authorities asking clarification about, inter-alia, who had engaged Orbis and under whose instructions payments were made to Orbis, on what basis payment etc. 12.9 The Singapore authorities have categorically stated through their letter dated 12/03/2015 addressed to J.S. (FT&TR), CBDT, Ministry of Finance, Delhi that Orbis was engaged by Mr. Qureshi only. The letter is enclosed as Annexure- B and most importantly, Singapore authority have also supplied a copy of the indemnity signed by Mr. Moin Akhtar Qureshi to the board of directors, Bulova Holdings Ltd.....
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....in. 12.12 It has been established that Bulova holds bank account with BSI Ltd. Singapore. The documents obtained through BVI authorities also prove that Mr. Qureshi is the beneficial owner of account of Bulova with BSI ltd. Singapore. The account opening application was made by Arcas Holdings Ltd, BVI - the director of Bulova. Declaration of the identity of the beneficial owner in Form A has been provided by Arcas Holding Ltd. on 16/-7/2014 under its signature and seal indentifying the beneficial owner as Mr. Quershi. This declaration was the same as provided by the Singapore authorities earlier. This corroborates the declaration of identity of the beneficial owner as provided by the Singapore authorities earlier with regard to the bank account opened by Bulova. with BSI bank Ltd, Singapore. It can be seen that the cancelled Form-A provided by the Singapore authorities as dated 08/03/2012. In this form, Mr. Qureshi's India address C-134, Defence Colony, Delhi-110024 was given. A change in address was effected on 16/09/2014 wherein Mr. Qureshi was changed to 9202, Princess Dubai Marina, Dubai UAE-225831. It has already been brought to the notice of ITSC in the Commissioner's report....
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....urther established that the applicant did not make a full and complete disclosure of all the material facts when it filed its application u/s 245C(1) before us. The applicant had denied owning any property or bank account outside India during the search and even later. Now that it is established that he is the beneficial owner of a bank account in Singapore through which substantial amount of funds had been transferred in and out of the above denial is disproved. It is thus clear that the applicant has not come out clean before us while making the application for settlement u/s 245C(1). It may be mentioned that the provisions of Settlement under the Income Tax Act, 1961 were introduced to allow an errant taxpayer who desires to follow the path of rectitude to make a clean breast of his affairs and file an application u/s 245C(1) for the settlement of its tax disputes before the Settlement Commission. However this once in a life time opportunity is available to an errant taxpayer only if he comes out clean. It cannot be allowed to a taxpayer who fails to disclose such a material fact as ownership of a foreign bank account. As Sh. Moin Qureshi is a 'resident' u/s 6, his worldwide inc....
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.... contention that the petitioner's brother-in-law, Yusuf Mehboob Khan, citizen of Pakistan, was the beneficial owner of the property in London and also beneficial owner of M/s Bulova Holdings Limited and M/s Barro Holdings Limited was resoundingly rejected for cogent and good reasons. Reliance was placed on the power of attorney executed by Yusuf Mehboob Khan in favour of the petitioner, Moin Akhtar Qureshi, and discrepancies relied by the petitioner with regard to the accounts was duly considered. The contention of the petitioner that the acts attributable to him were on behalf of Yusuf Mehboob Khan, it was observed was unacceptable in view of the overwhelming evidence and material available and produced before the ITSC. 36. The documents filed with the BSI Bank Limited, Singapore specifically and categorically mention that the petitioner was a beneficial owner. The veracity of these documents and the entire documentation regarding KYC cannot be ignored and treated as imaginary creation of the officers of the said bank and without knowledge and involvement of the petitioner. The ITSC has made reference to the banking procedures applicable, the strict KYC norms, the legal manda....
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....hi i.e. beneficial owner. The information states that Ajit Prasad, father -in-law of the daughter of the petitioner, was an existing client of the said bank and two employees of the bank had known Ajit Prasad for the last five years. Ajit Prasad had introduced the petitioner, Moin Aktar Qureshi. Importantly, in the Know Your Customer Report, on the question of expected volume and type of transactions/products, it was recorded as under:- "The account will be used to capture money that he receives from off shore which will then be invested. The client is also keen to buy London property and may even invest on our third party fund structure at a later stage. It is an investment holding company and will have inwards and then smaller amounts in investments. 2-3 inward transactions and 2-3 inward payments in a month. All the transactions are for investments largely and not commercial." 38. Information with regard to M/s Bulova Holdings Limited was also received from the Government of Republic of Singapore under the Double Taxation Avoidance Agreement and the provisions relating to fiscal evasion in respect of taxes. M/s Bulova Holdings Limited had a bank account with BSI, AG in Switzer....