TaxTMI 
TaxTMI 
2019 (4) TMI 1425
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.... the Revenue's identical substantive ground in all four cases is to revive the Assessing Officer's action making the impugned addition(s) after treating assessee's alleged undisclosed sum(s) deposited in swiss bank accounts. The latter's plea in this as many cross objections that all four re-assessments are not liable to be sustained since barred by limitation prescribed in sec. 153 of the Act. Both the learned representatives are ad idem during the course of hearing that the assessee's Cross Objections raising the said legal issue go to root of the matter in all four assessment years. I therefore proceed to adjudicate the same first for the sake of convenience and brevity. 3. Case file(s) suggests that instant batch of eight cases has emanated from swiss bank authorities information to the Government of India under exchange of information clauses framed in corresponding double taxation avoidance agreement (DTAA) between the two countries. The same alleged to have contained the taxpayer's name alongwith date of birth on the contract details. It was further mentioned therein that the assessee had opened his bank account in Switzerland way back on 08.06.1999. He is also stated to h....
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....thoughtful consideration to the facts, I do not find force in the arguments put forth by the Ld. AR. In the present case it is undisputed that the bank Account with HSBC Bank, Geneva was standing in assessee's name. In the appellate proceedings for AYs 2006-07 & 2007-08, the appellant had suo moto furnished copies of the said bank statements before the Ld. CIT(A) who in turn had forwarded the same to the Ld. AO. The Ld. AO had got these statements authenticated from the Swiss tax authorities through CBDT(FT & TR) Division. It may be true that this document was not unearthed by the Ld. AO or received from any external source or agency but this does not take away the fact that this foreign bank account standing in assessee's -name was not disclosed in the tax returns filed by the appellant earlier. It is true that the appellant had at all time disputed that the monies in the foreign bar-e account did not belong to him. However whether the monies deposited in the bank account and the accretions thereto belonged to the appellant or some other person as claimed by him required investigation of facts and examination by the Ld. AO. At the stage of recording of his reasons for reop....
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.... not bear or reveal any date and in that view of the matter the benefit of clause (x) of the Explanation was not available to the Ld. AO. The appellant further contended that in the communication sent by FT & TR Division, the said Indian Tax Authority had informed the Singapore Tax Authority that assessment proceedings were getting time barred in December 2016, which further supported the appellant's case that the last date of passing of order was 31.12.2016 and not the extended time limit of 31.12.2017 in terms of Explanation to Section 153 of the Act. 5. On giving due consideration to the submissions of the Ld. AR and the facts available on record, I find that the limited point of dispute regarding the issue of limitation concerns the date on which the information was received from the competent foreign tax authority by the Ld. AO. In my considered view the date of receipt of information from the foreign tax authority is irrelevant. In the impugned order the Ld. AO has clearly stated that reference was duly made by the competent authority in November 2016 which was well within the normal period of limitation i.e. 31.12.2016 and therefore the benefit of extended time limit ....
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....00 to 2004 from the bank account of M/s MSM Enterprises Pte Ltd CMSM') a company managed by him. The said remittance was made as part of his contribution to the proposed joint venture with the appellant. He further admitted that the sums deposited in the said bank account and accretions thereto beneficially belonged to him and since the joint venture did not materialize, the entire amount transacted through the said bank account was remitted at his instruction to another Singapore company, M/s Donald Mcarthy Pte Ltd (,DMT'), which was his associate. In support of the averments made in the affidavit, copies of the bank statements issued by HSBC Bank as initiated by Mr. Onn Sithawalla were also submitted before the Ld. CIT(Appeals). Since these documents were never furnished before the Ld. AO in the course of assessment and these documents were found to be relevant for deciding the appeal, the remand report was sought from the Assessing Officer. In the remand proceedings, the Ld. AO referred the matter to the FT&TR Division of CBDT for authentication of the bank statements by the Swiss tax authorities. The Swiss tax authorities after obtaining the no-objection of the appellan....
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....ly belonged to the appellant and consequently therefore the accretions thereto are rightfully chargeable to tax in the hands of the appellant. 9. On careful scrutiny of the impugned order it is observed that even though the Ld. AO has passed a very lengthy order, major part of this order is the repetition of the events which had occurred at the time of search and subsequent thereto till the passing of the order of assessment u/s 153A for the AYs 2006-07 & 2007-08. Much emphasis has been put by the Ld. AO with regard to contradictory statements given by the appellant at the time of search and at the time of framing of the assessment u/s 153A of the Act. There is no dispute that the assessee had indeed given contradictory statements concerning the said HSBC A/c at the time when the assessments u/s 153A were completed for the AYs 2006-07 to 2011-12. However it is significant to note that at the relevant time when these statements were recorded neither the appellant nor even the AO had in their possession the relevant bank statements of HSBC A/c. The assessment proceedings for these two years had been completed on the basis of some information for which official confirmation from Sw....
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....r dispute the explanation put forth by Mr. Sithawalla nor the Ld. AO considered Mr. Sithawalla to be a nonexisting entity. The Ld. Aa himself chose to issue notice u/s 131 to Mr. Sithawalla for verifying the facts as affirmed in his affidavit made in February 2015. The Ld. AO in his submissions pointed out various legal and factual infirmities in notice u/s 131 issued to Mr. Sithawalla who was permanent resident of Singapore. According to Ld AR in terms of the provisions of the Civil Procedure Code, 1908; the Ld. AO had not statutory power to issue summons to the witness staying beyond 500 kms. Be the same as it may, despite various infirmities, I find that the Ld. AO opted to treat Mr. Sithawalla to be the pertinent witness believing the averments made in the affidavit to be true. Although the Ld. AO has made much ado about alleged discrepancy in the weight of the postal consignment through which the summons was sent by speed post by the appellant, I find that the assessee had furnished before the Ld. AO evidence, which proved that the notice issued u/s 131 was actually served on Mr. Sithawalla at his Singapore address. The assessee also furnished before the Ld. AO, the requisite ....
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....e I find that the notice u/s 131 was issued by the Ld. AO in contravention of provisions of Code for Civil Procedure, 1908. Rule 19 of Order XVI of CPC provides that no summons to a witness can be issued where the person ordinarily resides beyond 500 kms from the Court. In the circumstances the notice u/s 131 requiring appearance of Mr. Sithawalla before the Ld. AO at Kolkata was legally untenable. If the Ld. AO having statutory powers could not have enforced the attendance of Mr. Sithawalla at Kolkata, he could not expect the appellant, an ordinary citizen of India, to ensure his attendance for examination by the Ld. AO. I however find that having received the summons from the Ld. AO the assessee made every effort to serve the said summon u/s 131 and ultimately succeeded in serving the same at his Singapore address through speed post. Requisite evidence in support of the service of summons was furnished. I therefore find that the charge of noncompliance cannot be attributed to the appellant. I also find that Mr. Sithawalla acknowledged the receipt of summons and in confirmation of his transactions in relation to HSBC A/c, directly furnished copy of his affidavit to the Ld. AO vide....
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....upported by the relevant documents which showed that no enquiry was sought to be conducted from Mr. Sithawalla. 13. In light of the foregoing facts the question which begs answer is whether on the facts of the present case it could be held that only because the account with HSBC was opened in the name of the appellant, the monies transacted really belonged to the appellant and therefore accretions during the relevant year represented the appellant's undisclosed income chargeable to tax in India. If one examines the facts concerning the said HSBC A/c, then one finds that this account was opened in the .appellant's name in June 1999 with NIL balance. Till June 2000, no transaction took place in the said account. The first deposit in the account was reflected on 22.06.2000 when HSBC Republic Bank (Sussie) S.A.; as the bank was then known, gave credit for net sum of $149987.50. The entry in the statement of accounts stated that the amount was received from MSM Enterprises Ltd, Singapore. The further deposits were made in the years 2001 & 2004. From the statement of accounts, it is apparent that each of such deposit originated from the account of MSM Enterprises Pte Ltd. This....
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.... and the destination of monies in the said account ended with companies managed & controlled by Mr. Sithawalla. In the circumstances, I find that Mr. Sithawalla was directly involved and connected with the account with HSBC although the same appeared in the name of the appellant. I note that in his affidavit Mr. Sithawalla had explained the factual background leading to opening of the bank account in the assessee's name. Merely because the joint venture contemplated by the parties did not materialize, did not and cannot lead to conclusion that the account opened in the assessee's name and the monies transacted through the said account beneficially belonged to the appellant. From Page 24 of the impugned order, the Ld. AO has categorically admitted that both MSM & DMT were managed by Mr. Sithawalla. As such both the payer & payee companies were not under the control, supervision or superintendence of the appellant. Merely because M/s Mangal Steel Enterprises Ltd, a company managed by the appellant, had transactions with MSM in the past cannot ipso facto lead one to believe that in 2015, Mr. Sithawalla would have affirmed certain facts on oath in the Ld. AO's opinion did n....
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....bank account was made by the appellant or for the benefit of the appellant. Had the amounts transacted through the said account beneficially belonged to the appellant, then there would have been at least one instance where the Ld. AO could have found since evidence to show that deposit or withdrawal beneficially connected to the appellant. However no such case has been made out by the Ld. AO nor entries in the bank statement support the theory put forth by the Ld. AO that the monies transacted in the said account belonged to the appellant. On the contrary if the documents and evidences brought on record are read harmoniously and in totality and also considering the surrounding circumstances, then the conclusion which a prudent person can draw is that the monies transacted through the HSBC A/c did not belong to the appellant but to Mr. Sithawallaand his companies, who were named payer & payees in the bank statements. Since the Ld. AO has not been able to bring on record any cogent & tangible material which could link either the deposits or withdrawals made in the names of MSM & DMT with the appellant, and he has also not been able to disprove the affidavit of Mr. Sithawalla, the con....
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.... limitation - (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever less, It is submitted that in terms of Clause (x) of the Explanation-1 to Sec. 153 the AO was given additional 1 year period for completing the assessment. In the present case, admittedly the reference by a competent authority u/s 90 of the I.T. Act read with Article 28 of the DTAA with Singapore was made on 25.11.2016. As on that date, 36 days were available to the AO for passing of the assessment order u/s 153(2) of the Act. However, once the reference under Article 28 of the DTAA with Singapore was made, the period of one year commencing from 25.11.2016 was required to be excluded in working out the period of limitation. In the resent case, the period which was required to be excluded in working out period of limitation commenced on 5.11.2016 and ended on 24.11.2017. Additionally, the AO had 36 mor....
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.... months from the end of the financial year in which sec. 148 notice stood served. There can hardly be any dispute about nine months from the end of the financial year of such section 148 notice service dated 19.02.2016; last upto 31.12.2016. The Revenue's submission extracted hereinabove are fair enough to this effect. I therefore observe that last date of framing of reassessments in all these assessment years was 31.12.2016. 8. I further notice that Explanation-1 to sec. 153 prescribes certain specified circumstances in clauses (i) to (xi) as exception to statutory running of limitation period in framing of assessment, re-assessment & re-computation. Clause(X) deals with an instance of exchange of information between competent authority of the two countries u/s 90 and 90A with Government of India being one of them. I notice that the CBDT (FT and TR (Foreign Tax and Tax Research division) made necessary reference on 25.11.2016 on which stood replied 08.08.2017 as per the Revenue's stand. The said period of almost nine months deserves to be excluded since coming under clause (x) of Explanation-1 to sec. 153 of the Act. The Assessing Officer was very well aware of all clinching dev....