TaxTMI 
TaxTMI 
2021 (6) TMI 542
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....tions for AY 2009-10 to AY 2012-13. ITA No. 4575/Del/2016: Assessement Year 2006-07 ITA No. 4576/Del/2016: Assessement Year 2007-08 2. Since, the issues involved in both the years are common and related, there being adjudicated together. 3. In ITA No. 4575/Del/2016 for the assessment year 2006-07, following grounds have been raised by the assessee: "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) {CIT(A)} is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A against the appellant and the assessment framed under Section 153A/143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the learned AO has no jurisdiction to frame assess....
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....n conf irming the addition of an amount of Rs. 8,51,10,905/- on account of alleged deposits in bank account with HSBC Bank, Switzerland, despite nothing adverse having come on record in the investigation or enquiry initiated by the Ld. AO. 10. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the addition was made in the hand of the assessee wi thout bringing any cogent material or evidences that the alleged investment has been made by the assessee. 11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that in the al ternative and without prejudice to above, the learned AO has erred in taking the peak credit balance of US$ 19,03,332.38 as unexplained investment of the year under consideration despite there being an opening balance of US$ 17,31,710.93 stated by A.O. herself in the assessment order. 12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the settled position of the law that additions under Section ....
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.... without establishing the authenticity of the document relied upon and without providing a copy of the same and an opportunity to rebut the same and without taking the investigation and the enquiry to the logical end. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the assessment order passed by the learned AO is bad in law and liable to be quashed as the same has been passed in gross violation of the principles of natural justice and without providing the opportunity to the appellant for cross examination. 8. On the facts and in the circumstances of the case, the Ld. CIT(Appeal) erred in law in rejecting the assessee's contention that statement made by the appellant u/s 132(4) of the Act, had no evidentiary value as it was made under coercion and that it was retracted when the coercion was lif ted by the ADI ( Inv.). 9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in conf irming the addition of an amount of Rs. 61,22,916/- on account of alleged deposits in bank account with HSBC Bank, Switzerlan....
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....ee that the allegation levied in the show-cause notice that the foreign bank account belongs to him was without any basis and credible evidence. The assessee also submitted to the Assessing Officer that he had not provided any evidence to the assessee to show that he ever had any foreign bank account. It was also stated by the assessee that as per the enclosure with the said notice, the same were not bank statement as is being alleged. On the contrary, it appears to be an extract/information that depicts month wise balances. 10. The assessee also challenged the authenticity and credibility of the document which is being relied upon and on the basis of which, the allegation was made. It was also pointed out that the alleged document does not carry any indication that it relates to any bank account held by the assessee in his name in HSBC, Zurich. It was also pointed out that the said document does not carry any signature or stamp of any authority. Moreover, the said document apparently is a photocopy not legible without any reference to the original of such document and the person who was in possession of such original document. 11. It was also pointed out that even on the bas....
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....s. 61,22,916/- was also made u/s 69 in AY 2007-08 as unexplained investment. 17. The AO also made an addition of Rs. 1,12,880/- in AY 2007-08 on the assumption that the assessee would have earned interest at the rate of 4% in respect of the last credit balance in the account. 18. Aggrieved by the order of the AO, the assessee filed appeal before the ld. CIT (A) and raised various grounds both legal and factual. Proceedings before the ld. CIT (A): 19. On the various contentions raised by the assessee, the ld. CIT (A) called for remand reports from the AO from time to time which dealt with the following issues: i. That no incriminating document has been found during the course of search and hence, no addition could be made in the year under consideration in view of the judgment of the Hon'ble Delhi High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573. ii. The assessment was time barred as no notice has been issued u/s 143(2) after filing of the return by the assessee. iii. The time limit for completion of assessment has been taken as 31.03.2015 on the basis of the Explanation 8 below Section 153B iv. Information received under inform....
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....edings on 21.11.2012 and hence, no extension will be available for this reference. The assessee also raised the issue that the AO has not submitted any evidence of such reference being made on 21.02.2012. It was raised that the contention of the AO that no reply has been received for over 3 years till the passing of the assessment order on 09.03.2015 from a sovereign Government is unbelievable. The AO has not brought any correspondence or evidence so as to substantiate its contention off extended period. The assessee also raised the issue that extension in this case, if any, will be available for 6 months not 12 months as was the law at the time reference was made. iv. The AO in the remand report has admitted that it was the information received not the bank statement. v. The observation by the AO that information provided that the assessee has opened HSBC account in the name of various foundations is incorrect as there is no mention of HSBC in the 6 page document referred to by the AO. vi. Such information nowhere states that the assessee has opened HSBC account at Zurich in the name of various foundations. vii. The observation by the AO that th....
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.... vii. AO to clarify whether the information meansphotocopy of original or extracted from another document. viii. AO to clarify whether the amount shown is in US Dollar. ix. AO to clarify whether the amount shown has to be taxed in this year, not in any earlier year. x. AO to clarify how the entities Bunfield Invests/Nine on Ten Foundation are linked/operated by the assessee. xi. AO to clarify how assessee could be treated as beneficial owner. xii. AO to respond on the issue that assessment order has been passed on direction of higher authorities with reference to the order sheet of the AO dated 20th February, 2015 and 24th February, 2015. 23. The AO submitted its second remand report dated 28.12.2015. In this remand report, the AO stated as under: i. That the 6 page document containing the extract of bank account maintained by the assessee in HSBC, Zurich was very well with the search party and the same was confronted to the assessee. ii. On the issue of no reply having been received from the competent authority, the AO admitted that the assessment has been framed on the basis of the information received from the ....
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....ocopy of original or something written from another document. vii. The assessee also pointed out that the AO has not clarified whether the amount stated in the alleged document is in US dollars and whether the amount shown has to be taxed in this year. The information apparently being incomplete, it cannot be said that the amount is to be taxed in the year under consideration and for this purpose, it becomes important to find out the author of the person who jotted down this information and the source from which he jotted down this information. viii. It was also pointed out that the extension of one year completing assessment u/s 153B on the basis of reference being made will not be available in this case as per the facts emerging from remand report. 25. The assessee further filed its submissions on 09.02.2016 raising the issue of authenticity of 6 page document and cross examination of the person who provided such information. The assessee also submitted evidences in the form of press reports whereby the Switzerland Government has replied to the references made by the Competent Authority immediately after the reference was made to support its contention that e....
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.... f. The date and reply received by the AO from the Indian competent authority. g. The basis on which the AO in the remand report has stated that no reply has been received from the Swiss authorities. h. Copy of any other evidence/letter received by the AO from the Indian competent authority. iii. On the issue that the 6 page document is not a bank account, the assessee raised following specific issues: a. Whether this 6 page document is a bank statement or not? b. If not, what this document is? c. How this document came into the possession off the French authorities which has been stated in the assessment order/remand report? d. Identity of the person who has authored this document and cross examination of the person who has authored such document? e. If this is not bank statement how additions have been made assuming the figures stated therein as the balances in the bank account? f. If this is not bank statement, then what is the basis for making additions have been made in the year under consideration? iv. On the issue of language of this 6 page document, it was again pointed out that t....
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.... AO stated that the information was provided by the Competent Authority of France. He has not answered the specific question who has authored this document. Identity of this person has not been found out. The AO is also silent on the cross examination of such person. iv. On the issue that the 6 page document is not a bank statement, then how the addition has been made, by assuming the figures stated therein as balance in the bank account, the AO has simply stated "not applicable". This is again admission that this being not a bank statement, then the addition made assuming the figures stated therein as balance in the bank account is incorrect. v. In this remand report, the assessee also pointed out that other specific issues raised in its rejoinder dated 19.02.2016 have not been answered by the AO. 29. Thereafter, the AO submitted another report dated 04.05.2016 wherein he enclosed letter dated 13.01.2012 written by Director of investigation to JS, FT &TR-I , CBDT, requesting him to seek information from Switzerland Tax Authority and letter dated 21.02.2014 written by Under Secretary to CCIT, Central - Delhi, informing that the first reference was made as per t....
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....od of limitation. 34. On the issue of no notice having been issued u/s 143(2), the ld. CIT (A) relying upon the judgment of Hon'ble Delhi High Court in the case of Ashok Chadha Vs ITO 20 Taxmann.com 387 held that issue of notice u/s 143(2) is not mandatory and accordingly, this contention off the assessee was also rejected. The judgment relied upon by the assessee of Hon'ble Delhi High court in the case of Nikki Drugs in ITA No. 442/2015, dated 03.12.2015 was distinguished by the ld. CIT (A). 35. The contention of the assessee that assessment order stands vitiated having been passed on the specific direction of the CIT was also rejected by the ld. CIT (A) on the ground that approval is required to be obtained by the AO from the Addl. CIT/JCIT as per provision of Section 153D. The ld. CIT (A) further held that administrative control of CIT has not been exceeded and the CIT in his administrative capacity was sell within his right. 36. On the merit off the addition, the ld. CIT (A) held that the information relied upon by the AO has been handed over by competent authority of French Government and hence, the contention of the assessee that information is not authentic or re....
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....t order passed by the AO is time barred as the same has been passed beyond the statutory limit prescribed under the provision of the Act. The ld. AR submitted that the search has been carried out on the assessee on 28.07.2011. As per the provisions of Section 153B of the Act, the assessment u/s 153A ought to have been culminated by 31st March, 2014 in view of the provision of Section 153B(1)(a) of the Act. In the present case, assessment case to an end as per the assessment order on 09.03.2015. The Department is relying on clause (viii) of Explanation to Section 153B of the Act to claim extension of the period of limitation by one year without producing evidence of any reference having been made. 44. The ld. AR submitted that the AO's contention is that the alleged reference was made on 21.01.2012. At that point in time, clause (viii) of Explanation to Section 153B, as it then stood, provided for extension of time period to complete the assessment by 6 months as against by one year. He submitted that is vide the Finance Act, 2012 that the period of extension of 6 months was increased to one year. This amendment was made effective from 01.07.2012. The ld. AR submitted that in ....
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....g on relying upon a simple assertion made by the AO without there being any evidence to support such assertion. It was submitted that limitation is an important issue and it is AO who is seeking extended period and as such, onus is upon him to produce evidence. Having failed to do so, despite repeated remand reports being called upon by the ld. CIT(A), the assessment order needs to be quashed as being barred by limitation. 47. The ld. AR further submitted in an alternate that the reference having been made even before the initiation of assessment proceedings u/s 153A, the extension will not be available. In this regard, the ld. AR pointed out that the reference in the present case has been made as per the AO on 21.01.2012 whereas the assessment proceedings were initiated by the AO by issuance of notice u/s 153A on 21.11.2012. Accordingly, the reference having been made even before the initiation of assessment proceedings, the extended period of limitation cannot be available. B) Non-issue of notice u/s 143(2): 48. The ld. AR on the next legal ground submitted that the assessment is bad in law as undisputedly, no notice u/s 143(2) has been issued and served on the assessee ....
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.... by the AO requiring assessee to furnish the return and once the same is so furnished, both the provision provide that "the provisions of the Act, shall, so far as may be, apply accordingly as if such return were a return required to be furnished u/s 139 off the Act". He submitted that the interpretation of the expression "so far as may be" has to be same for both the provision of Section 147 and Section 153A. The ld. AR submitted that once it has been held in the subsequent judgments by the Hon'ble Delhi High Court that it is mandatory to issue notice u/s 143(2) in respect of proceedings u/s 147, the words "so far as may be" should be given same interpretation under both the provision of Section 148 and 153A and accordingly, the requirement to issue notice u/s 143(2) should be seen as mandatory for assessment u/s 153A as well. 52. The ld. AR further submitted that the words "so far as may be" appearing in Section 148 were interpreted by the ITAT Delhi Special bench in the case of Raj Kumar Chawla Vs ITO (2005) 94 ITD 1 wherein it was held that assessment u/s 147 is invalid if the notice u/s 143(2) is not issued within 12 months from the end of the month in which return u/s 147 ....
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....itself. This is an undisputed fact. The same is evident from the communication between the Director of Investigation Wing and the Pr. CIT placed in the paper book. The said document accordingly cannot constitute incriminating material found during the course of the search. 56. In support thereof, the ld. AR placed reliance on the judgment of ITAT Delhi in the case of AnuragDalmiaVs DCIT in ITA Nos. 5395 & 5396/Del/2017 and in the case of Krishan Kumar Modi Vs ACIT in ITA No. 2892/Del/2017 and ITAT Benches of Kolkata in the case of Shri BishwanathGarodiaVs DCIT in ITA Nos. 853, 854, 855 & 856/Kol/2016 and Yamini Agarwal Vs DCIT 83 Taxmann 209 (Kol. Trib.). D) Statement u/s 132(4): 57. As regards, the statement recorded during the course of search, the ld. AR submitted that firstly, the same was obtained under coercion on 28.07.2011 which stands subsequently retracted by the assessee on 30.08.2011 and as such no cognizance of such statement can be taken. It is a settled law that a statement obtained under coercion and a statement which was tutored cannot be used against the assessee. 58. The ld. AR further submitted that without prejudice to the above, it is settled law t....
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....placed reliance on the judgment of Hon'ble Supreme Court in the case of CIT Vs Singhad Technical Education Society (2017) 397 ITR 344 and the judgment of Hon'ble Delhi High Court in the case of PCIT Vs M/s SMC Power Generation Ltd. in ITA No. 406/2019. 63. The ld. AR submitted that in the case in hand, in the statement recorded, it is nowhere stated that the amount has been deposited by the assessee in the bank during the year under consideration. On the contrary, in the statement, it has been stated that the account was opened in 2002 and the amount was invested on various dates in 2002. In this regard, the ld. AR placed reliance on question no. 7 and 18 of the statement recorded. The ld. AR submitted that it is a settled law that if the revenue has to rely on the statement, the statement must be read in entirety. In this regard, the ld. AR placed reliance on a number of judgments which is a part of its case law compilation. 64. The ld. AR submitted that on going through the statement, the entire amount was invested prior to FY 2006 and accordingly, even if, the statement could be considered as incriminating material, it does not constitute incriminating material qua the yea....
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....he said pen drive being established. There is no answer to this issue by the AO despite repeated remand report being called by the ld. CIT(A). The ld. AR invited attention to the correspondence shared by the AO during the hearing before the ld. CIT(A) to demonstrate that what is being tried to establish is the pen drive having been received from the French Authority. There is no link brought on record about this pen drive with any bank account with HSBC, Switzerland. 69. The ld. AR further argued that unless the author of the information is established and it is not brought on record as to how French Government got in possession of the information, the information cannot be considered to be authentic. 70. The ld. AR further also submitted that the case of the revenue is that this pen drive contains a bank statement of the assessee with HSBC Bank, Switzerland whereas a cursory look at the print out of this pen drive clearly shows that it is not a bank statement but merely a memoranda, the authenticity of which cannot be claimed merely on the basis that it has been received from French Competent Authority. It was further submitted that this is neither original nor Photostat.....
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....s Authorities. 76. He further pointed out that as per the document submitted by the AO in the remand proceedings before the ld. CIT(A) regarding the authenticity of the pen drive, there is a letter dated 26.06.2015 placed at PB page 250 from DIT(Inv.)-2, to Pr. CIT (Central-II) wherein it has been stated that print out from the content of the pen drive pertaining to Delhi Region were handed over to DGIT(Inv.) on 14.07.2011. The print out so received contained base sheets of account of the assessee of HSBC Bank, Geneva, Switzerland. The ld. AR invited attention to the paper book filed by the ld. DR where in the proforma regarding request for information, the information has been sought from HSBC Bank, Geneva at page 6 of the first paper book filed by the ld. DR. Thus, allegation as per the pen drive is of bank account of HSBC bank at Geneva, Switzerland falls flat. However, he pointed out that in the assessment order, addition has been made by the AO of HSBC Bank at Zurich. Geneva and Zurich are two different cities and hence, the very basis of making the addition by the AO itself is contradictory. The ld. AR contended that addition is being made on the basis of account with H....
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.... is referring to in the assessment order. Thus, addition on the basis of statement in the year under consideration is unsustainable. 80. The ld. AR further submitted that for making any addition u/s 69 of the Act onus is on the department to prove that there is unexplained investment. The ld. AR pointed out that such onus has not been discharged. The ld. AR further submitted that it is an admitted fact by the AO himself that upon reference being made to Swiss Authorities under the DTAA, no reply has been received by the revenue till date. Further, no incriminating material whatsoever has been found during the course of the search. In view of such facts, no adverse inference can be drawn in the case in hand and the addition ought to be deleted. Submissions of the Ld. DR: 81. In reply, the ld. DR supported the order passed by the AO as confirmed by the ld. CIT(A). She submitted that the addition made by the AO deserves to be upheld. In support of her contentions, the ld. DR filed her arguments in writing. A) On the issue of limitation-Section 153B: 82. It was contended by the ld. DR that the order passed by the AO is legally valid and within the time prescribed under t....
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....en up by the assessee both during the assessment stage as well as at the first appellate stage before the Ld. C1T(A). The AO has also deal twith this issue in the assessment order and the Ld. CIT(A) has given a very detailed and comprehensive finding that the order which is passed on 09,03.2015 was well within the time and the assessee's contention have been dismissed by the Ld. CIT(A) by giving a very reasoned finding in the appeal order. 5. Even-though this issue has been deal t comprehensively in the appellate stage, the comments on this issue are once again being provided to further elaborate the f inding of Ld. CIT(A). 5.1 A search and seizure operation was carried out in the case of Mr. Parminder Singh Kalra and Consortium Security Pvt. Ltd. and other associated concerns on 28.07.2011. In the normal circumstances as per the provisions of Sec. 153B(1) the assessment in the search and seizure operation cases was required to be completed within the period of 2 years from the end of the financial year in which the last of the authorization for search u/s 132 or requisition u/s 132(A) was executed. As in this case, search was conducted on 28.07.2011 and all t....
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....tant case as mi information is received. 6.2 Thus, in the instant case, as the reference was made by the JS(FT&TR-2) on 21.02.2012 and no information has been received for a one year period, accordingly, period of maximum of one year is excluded from the lime barring date or in other words, the time barring date of 31.03.2014 in the instant case gets extended by 12 months i.e. 31.03.2015. 7. Now, coming to the assessee's ground that as the notice u/s 153A was issued on 21.12.2012, accordingly, the extension of time can be allowed only when a reference has been made af ter the issuance of notice. This issue has already been deal t by CIT(A) but it is once again mentioned that it has no basis because the explanation (ix) of Sec. 153B sub section 3 clearly and categorically mentions that the extension of time is available from the date JS(FT&TR) makes a reference to the foreign authority. Now, time limits for assessment in the search and seizure case is governed by sec. 153A of the IT Act which provides that the assessment and the re-assessment of the assessee's total income in respect of each assessment year falling within 6 assessment years and the year in ....
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.... date is governed by the provision of the IT Act and discussion between the AO and the assessee has no meaning within the provisions of the IT Act. As it has been conclusively established in the above referred paras that limitation date in the case is 31.03.2015, accordingly, the assessee's contentions are totally devoid of merits and are baseless. Accordingly, the same may be rejected." B) Non-issue of notice u/s 143(2): 85. In respect of the ground raised by the assessee that the assessment framed is without jurisdiction as no notice u/s 143(2) was issued post filing of the return of income by the assessee in response to notice u/s 153A. She submitted that the ld. CIT(A) rightly rejected such contention. It was contended that in an assessment framed u/s 153A, there is no requirement to issue notice u/s 143(2) after the assessee has filed the return in response to notice u/s 153A. She submitted that this issue is squarely covered against the assessee by the judgment of the Hon'ble Jurisdictional Delhi High Court in the case of Ashok Chadha (supra). In this judgment, it has been held that there is no requirement to issue notice u/s 143(2) in search cases. She also submitted t....
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....d that the following submission may kindly be considered in this case 1. Submission regarding the statement recorded of assessee on 28.07.2011, and his subsequent retraction on 30.08.2011 i.e. after 32 days, 2. it is respectfully submitted that the following case laws which are in favour of Revenue may kindly be considered: a) Decision of Hon'ble Gujarat High Court in the case of Arti Gases vs. DIT ( Inv.) 248 ITR 55 has held that notice u/s 131(1A) can be issued after completion of search u/s 132 of the IT Act. It observed With regard to the petitioner's contention that the summon issued under section 131(1A) was bad in law and beyond jurisdiction of the issuing authority, notices under section 131(1A) can also be issued af ter completion of the search undertaken under the provisions of section 132; it would be absolutely logical to call for information so as to have better particulars or to have complete idea about the material seized during the search. If some material is seized at the time of the search and the authorised off icer wants to have some details so as to understand the nature of the documents, he may issue notice under se....
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....ax was to be levied on basis of admission without scrutinizing documents. B Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court confirmed. e) Decision of Hon'ble Supreme Court of India in the case of M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIOL-238-SC-IT)has held that where Hon'ble Supreme Court dismissed SLP challenging the judgment, whereby the High Court had held that statement made u/s 133A could be relied upon for purposes of assessment, in absence of any contrary evidence or explanation as to why such statement made was not credible. M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIOL-188-HC-MUM-IT) Bombay High Court confirmed. f) Decision of Hon'bleGauhati High Court in the case of Greenview Restaurant vs. ACIT [2003] 263 ITR 169 (Gauhati) thatupheld validity of statement on oath despite retraction since the assessee failed to prove that there was any threat, inducement or coercion. "9. The primary facts pertaining to the search of the premises of the appellant-firm and its other groups on September 22, 1993, and the recording of statements of Baban Singh, its partner, are admitted. The appellant's objection....
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.... h) Video Master Vs JCIT 66 taxmann.com 361 (SC)/[2015] 378 ITR 374 (SC)/[2016] 282 CTR 221 where Hon'ble Supreme Court held that where addition on account of undisclosed income was based on statement of partner of assessee-firm, it could not be said that addition was based on no evidence i) Bhagirath Aggarwal Vs CIT (31 taxmann.com 274, 215 Taxman 229, 351 ITR 143) where Hon'ble Delhi High Court held that an addition in assessee's income relying on statements recorded during search operations cannot be deleted without proving statements to be incorrect. j) CIT Vs M. S. Aggarwal [2018] 93 taxmann.com 247 (Delhi) where Hon'ble Delhi High Court held that where in course of block assessment proceedings, AO made addition to assessee's undisclosed income in respect of gif t, in view of fact that assessee did not even know donor personally and, moreover, he himself in presence of his Chartered Accountant had made a statement under sec. 132(4) admitting that said gif t was bogus, impugned addition was to be confirmed. k) Smt.Dayawanti Vs CIT [2016] 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/[2017] 390 ITR 496 (Delhi)/[2016] 29....
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.... he does not have relevant details, documents and books of account and in the absence of the same, precise computation relating to mode of utilization of such income and year of investment cannot be clearly furnished. On the revenue's appeal to the High Court: HELD From the principles of law laid down in various judgments, it may be deduced that admission is one important piece of evidence, but it cannot be said that it is conclusive. It is rebuttable. It is open to the assessee, who made admission, to establish that confession was involuntary and the same was extracted under duress and coercion. The burden of proving that the statement was obtained by coercion or intimidation lies upon the assessee. Where the assessee claims that he made the statement under the mistaken belief of fact or law, he should apply for rectif ication to the authority who passed the order based upon his statement. The retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evidence, oral or documentary, to substantiate the allegation that he was forced to make the statement in question invol....
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....cer. From perusal of the order of the Commissioner (Appeals) as also of the Tribunal, it was found that none of the forums had recorded a finding that the statement under section 132(4) was obtained under duress. The assessee had totally failed to discharge the burden of proving that the statement was obtained under coercion or intimidation. He did not make any complaint to the higher authorities alleging intimidation or coercion for retracting the statement under section 132(4). The Tribunal had confirmed the order of the Commissioner (Appeals) by observing that surrender was made under bona f ide mistake, though it was never the case of the assessee before any of the forums that the surrender was on account ofbona f ide mistake. The appellate forums, while reversing the orders of the Assessing Off icer, are legally bound to dwell upon specific reasons assigned by the Assessing Off icer for not accepting the explanation of the assessee. In the instant case, the Assessing Off icer had assigned cogent reasons for not accepting the retraction of the statement under section 132(4) by the assessee. From perusal of the orders of the appellate forums, it was found that without meeting th....
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....'ble Supreme Court of India in the case of BannalalJat Constructions (P) Ltd. [2019] 106 taxmann.com 128 (SC) dated 08.04.2019 In this case where the Tribunal as well as Rajasthan High Court had upheld the additions made on the basis of statement recorded under Section 132(4) during search but subsequently retracted, Apex Court dismissed the SLP f iled by the assessee . In the case, a search was carried out at business premises of assessee-company. In course of search proceedings, statement of director of assessee-company was recorded under section 132(4) admitting certain undisclosed income. In course of assessment, Assessing Off icer made addition to assessee's income on basis of statement given by its director although subsequently, director of assesseecompany retracted said statement .Tribunal, however, f inding that statement had been recorded in presence of independent witness, conf irmed addition made by Assessing Off icer .High Court also opined that mere fact that director of assessee-company retracted statement at later point of time, could not make said statement unacceptable . It was further opined that burden lay on assessee to show that admission made by ....
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....ument is a bank statement or not but what is important, prime and relevant is the "information" contained therein. She submitted that though apparently there is no debit or credit as is usual in a bank statement, but the fact remains that this information pertains to the assessee. On the issue of language in which this 6 page document has been written, she submitted that this document is in French language since the documents are received from French Competent Authority. She submitted that it is a common knowledge many Indians have parked their funds outside India and assessee is one of them. She submitted that it is a clear case where the assessee himself has admitted in the statement recorded during search that it has opened a bank account outside India. The statement recorded during the course of search clearly establishes the fact that the assessee was having a bank account outside India. She submitted that the retraction made by the assessee later on was an afterthought. She reiterated that the AO has made the addition by taking into consideration both the statement and the 6 page document. She submitted that the assessee has also refused to sign the consent waiver form and....
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....t letter dated 26.05.2015, page no. 8 of the paper book filed by ld. DR, supports the case of the assessee. It proves that the basis of which information was sought do not sufficiently demonstrate that the sources/evidences are independent from the HSBC List. This letter instead of supporting the case of the AO in fact supports the case of the assessee that the so called 6 page document on the basis of which addition has been made has been found not credible by the Swiss Government itself. 96. The ld. AR further submitted that it is an admitted fact by the AO that in the remand report dated 13.10.2015 filed before ld. CIT(A) at paper book page 226 relevant page 231, that information was not received by the time assessment order was passed. Thus, the very basis of making the addition does not stand. On the reliance by the Id. DR on the judgment of SumatiDayal (supra), the Id. AR submitted that the said judgment is not applicable. In that judgment, the issue was of human probabilities. In case, the argument of the Id. DR is taken to the logical conclusion, this would mean that human probability is that every taxpayer has a bank account outside India. As such, on the contrary, t....
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....f Rs. 8,51,10,905/- as unexplained investment under section 69 taking peak of the amount stated in 6 pg document in AY 2006-07 and Rs. 61,22,916 in AY 2007-08. AO has further assumed that assessee would have earned interest on such investment and made addition of interest in AY 2007-08 onwards assuming 4% as interest rate. 14. The additions as can be seen from assessment order are based on two premises. One premise is the statement of assessee recorded during the search. The second is the 6 page document. 15. In para 5.1 on page 17, AO has stated that the 6 page document is a credible information. The AO further in para 5.3 has stated that statement recorded is credible. In para 5.5 on page 25 of the assessment order, AO in response to assessee contention of proving evidence that assessee has a foreign bank account, has stated that the assessee's own statement of having bank account is evidence. Issues:- In view of above facts, the following issues arise:- 1. Addition is under section 69 as unexplained investment. 2. Basis for this addition is information received from French Authority and assessee's own statement. 3. S....
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....horities about HSBC Bank Account, Geneva as is evident from page 5 to 7 of paper book filed by the learned DR. The tax period is stated froml.4.2000 to 31.12.2011. Item nos. 2 and 3 on pg 6 of this paper book confirm that AO is not having bank statement. That is why it is asking information from Swiss Authorities. Further, it has been confirmed by the AO in the remand report dated 13.10.2015 at pg 226 relevant pg 231 that information was not received till the date of assessment order. Thus, AO has made addition prematurely. In case information with AO was sufficient and authentic as is being alleged, what for this information was sought for? This, supports the contention that information with AO was not authentic. It was not a bank statement. It was not any original document. It was not sent by HSBC; it was not sent by Swiss Authorities. 9. In view of the above facts, there are glaring inconsistencies in the allegations levied by the AO. 10. Statement doesn' t support the addition during the year under consideration. 11. The 6 pg document is not a bank statement. 12. That there is no explanation about contradiction HSBC Geneva vs HSBC Zu....
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.... * Statement: The second basis for mocking the addition is statement of the assessee obtained under coercion which was subsequently retracted. 6 page document available prior to search - thus not incriminating material 16. With regard to 6 page document (so-called bank statement), without prejudice to the fact that the said document is not reliable (submitted below in detail) it is submitted that the said document was available prior to the date of search itself . This is an undisputed fact. The same is evident from, inter-alia, the communication between the Director of Investigation Wing and the Pr. CIT placed at PB Volume I page 250. Accordingly, the said document cannot constitute incriminating material for the purpose of making the addition. In this regard, reliance is placed on the following judgments: * ITAT Delhi in the case of AnuragDalmia versus DCIT, I.T.As. No.5395 And 5396/DEL/2017 * ITAT Delhi in the case of Krishan Kumar Modi versus ACIT, ITA No.2892/Del/2017 * ITAT Kolkata in the case of Shri BishwanathGarodia versus DCIT, I.T.A. Nos. 853 & 854 /KOL/ 2016, I.T.A. Nos. 855 & 856 /KOL/ 2016 Statement does not const....
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....e statement constitutes incriminating material; it does not constitute incriminating material qua the near under consideration 23. Without prejudice to the above, even if it assumed that the statement constitutes incriminating material, addition can be made only in the year to which the incriminating material pertains. In this regard, reliance is placed on the judgment of Apex Court in CIT v. Singhad Technical Education Society (2017) 397 ITR 344 (SC) [Para 18]. 24. Delhi High Court in Pr. CIT (Central) versus M/S. Smc Power Generation Ltd., ITA 406/2019 has followed the said judgment of the Apex Court in Singhad (supra) and held that the same logic will apply to proceedings under section 153A as well. 25. In the case in hand, in the statement recorded, it is nowhere stated that the amount has been deposited by the assessee in the bank during the year under consideration. On the contrary, the assessee has categorically stated that the account was opened in 2002 and the amount was invested on various dates in 2002. In this regard, it is pertinent to note the question no 7 and 18 [PB Volume I page 31 and 33] in respect thereof which reads as under:....
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....hich, is a matter of doubt. The media reports reveals that the data is contains errors as reported by HSBC and is therefore inadmissible as also held bu Supreme Court of Switzerland (refer news reports). 30. In the above circumstances, said data cannot be relied upon. It is a settled law that addition cannot be made on the basis of suspicion. Reliance is placed on the recent judgment of Hon'ble Delhi High Court in the case of Pr. CIT vs. Smt. Krishna Devi, ITA 125/2020, dated 15.01.2021 wherein i t has been held that no addition can be made merely on the basis of suspicion in absence of any evidence on record of in absence of adequate inquiry. 31. Without prejudice to the above, it is pertinent to mention that in any case, the loose papers do not have any adverse bearing on the case of the assessee. It is pertinent to note the following in this regard: (i) Nowhere the name of the bank i.e. 'HSBC' is mentioned in the impugned document. (ii) The so called bank statement does not look like bank account at all. In the communication between the Director of Investigation Wing and the Pr. CIT, it has been stated that the document is in the nature of 'ba....
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....t details in HSBC Bank, Geneva. These inconsistencies show that the Id. AO is not sure or clear as to where the alleged bank account of the assessee was opened i.e. in which branch. In CC No.525792/16, ACMM vide order dated 18.11.2020 in the case of ITO vsPradipBurman, the ACMM has taken note of such fact as well and observed as under: "32. It is clear from the complaint and assessment order that the alleged account is stated to be opened in HSBC Zurich but as per the testimony of CW-6 and documents Ex. CW-6/2 annexure Ex. CW-6/2 Page 1A to 14 of additional documents f iled on 08.09.2016, the alleged account of the accused is at HSBC Geneva.These inconsistencies show that the complainant himself is not sure or clear as to where the alleged bank account of the accused was opened i.e. in which branch. No effort was made to enquire from Swiss Authorities or French authorities to clarify the aforesaid inconsistencies. 33. No explanation for this material inconsistency has been given by the complainant department despite leading ample evidence. This inconsistency hits at the roots of the entire prosecution version as the identity of the bank account qua which the prose....
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....section 143(2) 39. In the reference letter, as has been brought on record by the Id. DR, it has been stated that the account was created in 2001. It is a settled law that addition under section 69 cannot be made in respect of opening balance or amount deposited in bank account in earlier years. 40. In the case in hand, no notice under section 143(2) has been issued. Ld. CIT(A) placing reliance on the judgment of Ashok Chadha vs ITO, 20 Tax.mann.com 387 (Delhi) held that issuance of notice under section 143(2) is not mandatory in respect of order passed under section 153A. 41. In this regard, it is submitted that the said judgment doesn' t hold good in view of the subsequent judgments of the Hon'ble Delhi High Court on the subject matter of issuance of notice. 42. Further, reliance is also placed on the judgment of the Hon'ble Delhi High Court in the case of PR. CIT-06 versus Nikki Drugs & Chemicals PVT. LTD., [2016] 386 ITR 680, where the Hon'ble High Court has held that notice under section 143(2) is required to be issued when the return is to be subject to scrutiny under section 153A of the Act. Assessment order is time barred ....
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....ous legal contentions besides challenging the addition on merit. The only issue here in this appeal is the addition of Rs. 8,51,10,905/- made by the AO as unexplained investment made by the assessee during the year u/s 69 of the Act. 100. The assessee has raised 13 grounds of appeal. 101. Ground Nos. 1 & 2 are general in nature and need no adjudication. Ground No. 3 is regarding no incriminating material being found during the course of search which we shall deal with while adjudicating ground Nos. 7 to 12. 102. Ground No.4 raised by the assessee is that the assessment is barred by limitation having been framed beyond the time limit prescribed u/s 153B of the Act. As per the provision of Section 153B of the Act, as applicable in the case of the assessee, the assessment has to be framed within the period of two years from the end of the financial year in which search is carried out. In the case of the assessee, the search was carried out on 28.07.2011. Accordingly, the period of two years end on 31.03.2014. The assessment in this case however has been made on 09.03.2015. The AO has relied upon the clause (viii) of Explanation below Section 153B which gives an extensio....
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.... accepted of making deposits to the tune of Rs. 2 to 5 crores ? Yes No 11. Whether the balance amount in the month of May 2006 pertains to deposit during the year ? Yes No 12. Whether the assessee filed letter of retraction of the statement on 30.08.2011 before the DDIT, Unit-II(1) ? Yes No 13. Whether the amounts shown in the document deposited in financial years 2005-06 and 2006-07 ? Yes No 14. Whether the documents bear the stamp of any bank/logo ? Yes No 15. Whether as per the document, the date of creation of the account and the trust was 29.01.2001/06.02.2001/16.01.2002/15.01.2002 ? Yes No 16. Whether the information has been provided by the Competent Authorities of France ? Yes No 17. Whether the HSBC Bank confirmed the information ? Yes No 18. Whether the AO held that the documents are the account of HSBC Zurich ? Yes No 19. Whether the Director(Inv.) held that the documents are the account of HSBC Geneva ? Yes No 20. Whether it has been clarified the bank statement belongs to HSBC Geneva or HSBC Zurich ? Yes No 21. Whether the CBDT handed over....
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....which the information so requested is received by the Commissioner or a period of One year, whichever is less, shall be excluded." 107. In this case, the reference as per AO's contention has been made on 21.01.2012 when the extended period was 6 months only. This period of 6 months was extended to one year w.e.f. 01.07.2012. Assessment in this case was initiated by the AO on 21.11.2012 when notice under section 153A was issued for filing return of income. Since notice under section 153A was issued on 21.11.2012 and the reference at that time was pending, we are of the view that the period as prescribed under this clause (viii), when assessment proceedings were initiated will be available. 108. The Id. AR has referred to section 153B(1) to contend that AO is bound by this time limit with reference to the date of search i.e. two years from the end of the year in which search was carried out. This period gets extended by this clause in case a reference has been made. We are not in agreement with the contention of the ld. AR that the extension has to be counted from the date of the search as provided under section 153A and thus, only period of only 6 months will be available ....
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....ne year, whichever is less, gets extended. It is the case of the AO that a reference was made by the Competent Authority and the information as requested was not received till the time of passing the assessment order and hence, the extension in passing the assessment order will be of one year. As against this, the contention of the ld. AR is that it is not possible that a reply would not have been received from the Competent Authority of Sovereign Government. The ld. AR has invited attention to the repeated remand reports before CIT(A) whereby the AO has not placed any correspondence or reply which has been received in response to the alleged reference made on 21.01.2012. 110. Thus, the issue is whether in these circumstances, the extended period available to the AO will be that of one year or less. The Id. AR's contention is that the Swiss Competent Authority having refused to share the information in response to the request dated 21.01.2012, the period, if any, available will be from 21.01.2012 to the date when reply to such requisition has been received. Since AO is seeking extension on the basis of this clause, it was for the AO to place evidence in support thereof. H....
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....case, the assessment proceedings have been initiated on 21.11.2012 when notice u/s 153A was issued. The assessment consequent to this notice could have been completed by 31.03.2014. Since a reference was made on 21.01.2012 as per the AO, the extended period available will be as per clause (viii) of the Explanation below Section 153B. The contention of the ld. AR that the benefit of this clause will not be available in case such reference has been made before the initiation of assessment proceedings is not correct. Section 153B provides time limit for completion of assessment. This clause (viii) of Explanation below this Section 153B is part of this Section 153B itself. Section 153B cannot be read dehors the clause (viii) of the Explanation. We are of the view that it does not matter when the reference was made whether before the assessment proceedings having been initiated or later on. The time period for completion of assessment will include the extended period in case a reference has been made. Accordingly, we reject this contention of the ld. AR. 114. In view of the above, we hold that the assessment passed by the AO is not barred by limitation. Accordingly, we dismi....
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....y for all 7 notices. 117. It was contended that these facts clearly reveal the compelling circumstances and preset mind of the then Addl. CIT / CIT and that the assessment orders and impugned additions are made on the directions of the higher authorities only, and therefore, there is no application of mind by the Ld. AO under such dictate. Similar contention was raised by the assessee before the ld. CIT(A). The ld. CIT(A) has called for a remand report on this issue and the AO in the remand report dated 28.12.2015 has clarified that CIT and Addl. CIT are supervisory authorities and they monitor the progress of sensitive cases. Thus, in the instant matter, directions were given by the Addl./Joint CIT and CIT in view of the seriousness of the matter including the unaccounted transaction of HSBC, Zurich. The ld. CIT(A) after taking into consideration the above reply from the AO has held that these directions do not in any way convey that the AO has been influenced to decide the case before her in any particular manner. CIT in has administrative powers and the Addl.CIT has statutory powers under the act. 118. As per provision of section 119(1), the CBDT has been empowered to i....
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....t received from French Competent Authority is an authentic document and hence, the AO is justified in making the addition on the basis of this document. The contention of the ld. DR further is the fact of the bank account being held by the assessee as per this 6 page document gets corroborated from the statement of the assessee recorded on the date of the search where he has admitted of having a bank account with HSBC, Switzerland. 122. As against this, the contention of the ld. AR is that the 6 page document is not an authentic document and nor it is a bank statement considering which the AO has made the addition. As regards the statement of the assessee recorded during the course of the search, the contention of the ld. AR is that the same was obtained under coercion and stands already retracted and as such, said statement cannot be used against the assessee. The search party has gone to carry out the search with a preconceived notion and has obtained a statement as suits. 123. Without prejudice to above, the contention of ld. AR is that the addition on the basis of the alleged statement even otherwise cannot be sustained in the year under consideration as unexplained inves....
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..... The allegation is that the assessee is having a bank account with HSBC, Geneva, Switzerland as per this document. This information has not come from HSBC. This information has also not come from Switzerland Competent Authority where it is being alleged that the assessee is having the bank account. How this pen drive came in possession of French Competent Authority, there is no answer from any source. 127. There are various aspects that require our consideration. 1. Whether the 6 page document is a bank statement or not. 2. Whether the said document is authentic or not and 3. Whether the amounts were deposited during the year and whether they are liable to tax u/s 69 during the year. 4. Whether any incriminating material has been found during the course of search addition can be made on the basis of said document or not. 128. As regards the issue whether the 6 page document is a bank statement or not as the basic features of a bank statement are missing, specific question raised to the ld. DR on the issue whether such 6 page document is a bank statement or not, we find that she did not controvert the fact that such document does indeed ....
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....ved from the time it has been handed over to the Competent Authority of India, till has reached the AO, there remains no doubt. There is no quarrel with the proposition that the French Competent Authority has handed over the pen drive to the Indian Competent Authority and the 6 page document is a print out of the said pen drive. But the ld. CIT(A) failed to address the argument of the assessee that the information contained in pen drive, the source thereof and author thereof and the authenticity of the information contained in the pen drive has not been established with any credible evidence or linkage with any of the document. The pen drive so received was just like an anonymous letter forwarded by French Competent Authority to the Indian Competent Authority. The issue which the ld. CIT(A) has failed to appreciate is the origin of the source of information only and certainly not the passing of the information from French Competent Authority to Indian Competent Authority, till such time the origin of source of information is authenticated. 133. Further, we hold that similar issue of authenticity of the documents has been examined and adjudicated in the case of AnuragDalmiaVs ....
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....................... 20. Here in this case as per the Assessing Off icer still certain information are yet to be received and the material and information available with the department needs to be corroborated and needs to be further inquired into. Under these circumstances also in our opinion same cannot be done within the scope of Section 153A as we have already held that nothing has been found from the assessee during the course of search, which can preempt any post search inquiry. Albeit in abated assessments AO may have power to conduct further inquiry but not in case of unabated assessments. 135. With regard to the issue of abatement of assessment, we hold that the assessment years under consideration i.e. AY 2006-07 and AY 2007-08 were completed assessments and not abated assessments and hence, no addition can be made in absence of incriminating material found during the course of search in view of the judgment of the Hon'ble Delhi High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573 and other such judgments on the issue. The ld. AR all through argued that there is no incriminating material seized during the search and the addition made during the year....
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....ssing Off icer prior to the date of search and al though the search was conducted on the basis of the said information, no incriminating material whatsoever was found during the course of search relating to the transactions reflected in the said Bank account or income arising to the assessee relating thereto. He contended that the scope of assessment made by the Assessing Off icer under section 153A for both the years under consideration pursuant to the search, therefore, was limited to the income unearthed during the course of search on the basis of incriminating material found and in the absence of any such incriminating material found during the course of search, addition on account of HSBC Bank transactions or income relating thereto was beyond the scope of assessment made under section 153A. He contended that when this issue was specifically raised by the assessee during the course of appellate proceedings before the ld. CIT(Appeals), the concerned Assessing Off icer had appeared before the ld. CIT(Appeals) on 21.12.2015 and agreed vide order-sheet entry dated 21.12.2015 recorded by the ld. CIT(Appeals) (copy at page no. 22 of the paper book) that the information regarding the....
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....ted vs. DCIT [117 TTJ (Del.) 480]. 8. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the returns of income originally f iled by the assessee for both the years under consideration were duly processed by the Assessing Officer under section 143(1) well before the date of search conducted on 28.07.2011. The said search was conducted in the case of the assessee on the basis of information received by the Assessing Off icer from CBDT relating to the undisclosed account maintained by the assesese with HSBC Bank, Geneva, Switzerland. During the course of search, no incriminating material, however, was found relating to the transactions ref lected in the said Bank account of the assessee with HSBC Bank or any income relating thereto and this position was categorically admitted by the Assessing Off icer during the course of appellate proceedings before the ld. CIT(Appeals) as is evident from the relevant order-sheet entry dated 21.12.2015 recorded by the ld. CIT(Appeals) (copy at page no. 22 of the paper book). The question that arises now is whether in the absence of such incriminating material, any....
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....ny of those six assessment years either under section 143(1) or section 143(3) of the Act and such order was already in existence having been passed prior to the initiation of search/requisition. Although this question was not f inally answered by the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra), it is quite clear from the said question raised by the Hon'ble Delhi High Court that there was no distinct ion made by Their Lordships in the assessments completed under section 143(1) and section 143(3) for determining the scope of the proceedings under section 153A. However, the said question arose specif ically for the consideration of Mumbai Bench of this Tribunal in the case of ACIT vs. Pratibha Industries reported in 141 ITD 151 and af ter referring to the discussion made by the Hon'ble Delhi High Court in this context in the case of Anil Kumar Bhatia (supra), the Tribunal held that the only logical conclusion which could be traced out by harmonizing the legislative intendment and the judicial decision was that where the assessments had already become f inal prior to the date of search, the total income has to be determined under section 153A by clubbing together....
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....come and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justif ication at all for the AO to proceed on surmises and estimates wi thout there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justif ied in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was wi thout any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude: (i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Reven....
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.... be the income of the assessee of such financial year. 145. Now, in the light of the above provision, we may go through the statement of the assessee to find out whether the assessee has admitted to have made investment during the year under consideration. The AO has quoted the statement in the assessment order. We have gone through the entire statement. There is no admission that any investment has been made during the year under consideration. On the contrary, we find that in this statement, it is coming out that investment has been made in the year 2002. It may be relevant to quote the relevant para of the statement as referred by the AO in the assessment order: "Q. 7. Can you recollect as to when was it opened? Ans. Sometime in 2002. Q. 18 What amount was given at the instruction Charlie and what amount was deposited by him in your account? Ans. Various amount were given on various dates in 2002 in Delhi ranging from Rs. 2 crore to Rs. 5 crore." 146. With the assistance of both the ld. AR and ld. DR, we have again gone through the statement of the assessee recorded during the search which has been used by the AO for making the addition.....
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.... remaining investment was made in earlier years. It is also not disputed that out of the aforesaid investment of Rs. 12,58,100/-, the total payment amounting to Rs. 6,05,100/- was made by cheque and the remaining balance of Rs. 6,53,100/ - was made by cash. It is also not disputed that the assessee had suff icient deposits in her bank account due to brought forward deposits of earlier year at the beginning of the year under consideration to explain the source of aforesaid transactions by cheque totaling Rs. 6,05,000/-. It is further not disputed that the deposits in the bank accounts of the assessee at the beginning of the year had accumulated in the past, across several years. It is also not disputed that the assessee had made signif icant amounts of withdrawals in cash, out of her bank account in an earlier year. (4.1) It will be useful to refer to Section 4 of I.T. Act, which is the charging section. For ease of reference, Section 4 is reproduced as under:- "Charge of income-tax. 4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for ....
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....TR 189 (All.), Jagannath Ram Dayal CIT 18 ITR 375 (All); M.K Muhammad Ibrahim vs. CIT 10 ITR 64 (Mad.), CIT vs. Jug Sah Muni Lai Sah 7 ITR 522 (Patna), CIT vs. Planters Co. Ltd. 123 ITR 648 (Mad.), CIT vs. Spunpipe 141 ITR 246 (Guj.), DebaprasannaMulcharjee vs. CIT 20 ITR 293 (Cal.), CIT vs. Bijli Cotton Mills Pvt. Ltd. (All.) and CIT VsPartabmullRameshwar 107 ITR 526 (Cal.) for proposition that; even if certain income has escaped tax in the relevant assessment year, because of f a device adopted by the assessee or otherwise, it does not entitle revenue to assess the same as the income of any subsequent year when the mistake becomes apparent." 148. Now, in the case in hand, as noted above, as per the statement of the assessee, the entire amount has been invested in the years prior to the assessment year under consideration i.e. prior to AY 2006-07. There was no evidence to prove either by the way of statement or by the way of documents available with the department that the amounts have been deposited during the instant assessment year. It is a settled law that a statement has to be read in entirety. The AO in case wants to rely upon the statement, he has to read the statement a....
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....n balances for the period November, 2005 to February, 2007, which has been relied upon by the assessing off icer, but it is noticed that the said balances are merely balances and not any deposits. In this context, the Ld. Senior Counsel vehemently contended that if one were to strictly construe the document as it is, then, no addition could have been made in any of the assessment years under consideration since as per the document the account was created much earlier and there is no evidence of deposition of any amount in any of the assessment yeas beginning with assessment year 2006-07. It was contended that the assessee merely offered the amount to tax in assessment year 2012-13 to avoid litigation and if at all the said amount could only been taxed in the said year, being the year of search, as per the provisions of section 69A of the Act. 5.7 On thorough and serious consideration, we f ind substantial merit in the aforesaid contention of the Ld. Sr. Counsel that if at all the amount on the basis of the papers relied upon could only be taxed in year of search, when the said papers were, for the f irst time, confronted to the assessee. This is for the reason that the pap....
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....leted the addition made by the AO as unexplained investment with the HSBC Bank A/c, as a consequence thereto, the addition of interest assuming such interest would have been earned on the deposit cannot be sustained. Even otherwise, this addition of interest by the AO is merely by indulging into surmises that such interest would have been earned despite there being any evidence thereof. Accordingly, we uphold the order of the ld. CIT(A) on this issue and the appeal of the revenue is dismissed. 155. In the result, the appeal of the assessee for the assessment year 2007-08 in ITA No. 4576/Del/2016 is allowed and the appeal of the revenue in ITA No. 5330/Del/2016 is dismissed. ITA No. 5332/Del/2016 A.Y. 2009-10: 156. Following grounds have been raised by the revenue: "1. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 40,00,000/-made by AO on account of Unexplained expenditure. 2. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 12,23,083/- made by AO on account of disallowance u/s 14A. 3. On the facts and circumstances of the case, the CIT(A) has err....
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....ceived from R. S. Anand Net Amount 103845 06-11-08 HSBC 650000 2029432.5 RSA 2. Payments made Air tickets for guests Particulars Cheque Date Bank Amount Sourc Amount paid to Global E-travel Solutions Pvt. Ltd. towards cost of Air tickets for guests 475604 11-06-2008 HDFC Bank 500000 TK 3. Cash withdrawn from bank A/c for expenses Particulars Cheque Date Bank Amount Sourc Cash drawn for meeting marriage expenses 475622 495403 475653 451250 06-08-2008 09-09-2008 08-09-2008 08-08-2008 HDFC Bank HDFC Bank HDFC Bank HDFC Bank 100000 500000 500000 100000 TK TK PSK PSK Total 1200000 4. Other Expenses Particulars Cheque Date Bank Amount Sourc Amount paid to 'Wedding Gurus' xxx show at marriage programme 494178 13-09-2008 HDFC Bank 75000 PSK Amount paid to Jerry Pinto for decoration of venue of wedding function 494177 13.09.2008 HDFC Bank 40000 PSK Amount paid to Saroja Communications for invitation cards Amount paid to Spice J....
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....sessee had borrowed interest bearing funds to the tune of Rs. 3,03,50,275 [PB page no 53 and 54]. The assessee had utilized such funds towards advancing interest bearing loan to the tune of Rs. 3,41,00,000/- [PB page no 53 and 54]. Additionally, there were certain interest free advances made to Mr. Gurdeep Singh, RK Gupta during earlier years by the assessee from his own capital and to another party Omega Finhold Private Limited during the year from owned funds. He submitted that during the course of proceedings, AO vide letter dated 20.02.2015 (PB page no. 114), required the assessee to show cause as to why disallowance of interest @ 13.5% on interest free loan to the aforesaid three parties should not be made. In response thereto, the assessee filed a reply dated 26.02.2015 (PB page no. 115-118) wherein it was explained that all the interest bearing funds were utilized for making interest bearing advances. It was pointed out that the assessee was sanctioned overdraft facility of Rs. 400 Lacs. from State Bank of Patiala (SBOP) in October 2017. The interest free loan of Rs. 15 Lacs was given to Mr. Gurdeep Singh in FY 2006-07 and Rs. 37 Lacs was given to Mr. RK Gupta in FY 2005-06 ....
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....he loans had been advanced on interest two different parties also during the year under consideration only. The assessee had filed copy of the bank statement before the AO as well copy of each of the parties to whom the amount has been advanced on interest. The facts also highlight that the assessee had advanced interest bearing amounts totaling Rs. 3,41,00,000 as on 31.3.2009 as against interest bearing loans raised amounting to Rs. 3,03,50,275/- on the said date. This fact clearly shows that the amount borrowed on interest has been used specifically and exclusively for advancing amounts of interest for the purposes of earning income. The facts that an amount of Rs. 46.80 lakh has been given as loans free of interest in earlier years cannot effect the arguments taken by the assessee on the issue. The assessee had sufficient capital of loan owned as evident from the capital account and any amounts out of the same advanced in the earlier years for whatever personal circumstances, cannot be the basis to disallow the interest on amounts borrowed as the said amount has been duly used for the interest earning income. The appellant had also submitted before the AO at para 4 on his reply ....
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....fit or loss, closing balance and dividend received. In response thereof, the assessee vide para 8 to reply dated 30.12.2014 (PB page no. 49-113), furnished the details of investments in the desired format. From the submitted details of investments, the AO observed that during the year under consideration, the assessee had earned a dividend of Rs. 35,854/- . Further, on perusal of the computation of income (PB page no. 2), the AO vide para 7 of the assessment order observed that the assessee had claimed dividend income of Rs. 35,854/- as exempt and interest expenditure of Rs. 24,00,153/- towards interest in money lending business. The AO then proceeded to straightaway compute the disallowance under section 14A r.w.r 8D of the Act, without discussing the issue further, or providing any basis for establishing nexus between the borrowed funds and amount invested in equity shares. It was submitted that out of the total interest of Rs. 24,00,153/- claimed by the assessee, the AO computed disallowance under Rule 8D at Rs. 21,39,724/-. However, owing to the fact that interest to the extent of Rs. 11,77,070/- was already disallowed under section 36(1)(iii) of the Act, therefore the AO re....
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....R 552 172. It was further contended that in the present case, while the amount of dividend income earned by the assessee is Rs. 35,854/-, the disallowance of interest computed by the AO under section 14A r.w.r 8D is Rs. 21,39,724/-. The disallowance under no circumstances can exceed the exempt income earned by the assessee. In support thereof, the ld. AR placed reliance on the decision of the jurisdictional High court in the case of Joint Investments Pvt. Ltd Versus Commissioner of Income Tax, [2015] 372 ITR 694 (Del). Reliance in this regard was also placed on the decision of Hon'ble Delhi Court (SLP against which has been dismissed by the apex court) in the case of PCIT vs. DLF Home developers Ltd. ITA 65/2019, CM APPL. 3709/2019. 173. We have considered the rival submissions. In the present case, assessee has incurred total expenditure of Rs. 24,00,153 on account of interest, a part of which the AO has disallowed under section 36(1)(iii) and the balance he has disallowed under section 14A. While deciding the disallowance under section 36(1)(iii), we have held that the entire interest expenditure was for business purposes and hence, no disallowance is called for. The CIT(A)....
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....of the revenue. The same ratio applies this year. Accordingly, this ground is dismissed. Ground No. 5 Capital Introduced: 176. After examination of balance sheet and the statement of affairs, the AO made addition of Rs. 24,77,843/- on account of capital introduced. The details are as under: "In response to questionnaire dated 27.01.2014, Assessee vide annexure -D of letter dated 11.02.2014 submitted business Balance Sheet as on 31.03.2009 detailed as under: Liabilities & Capital Assets & Property Capital Current Assets & Loans Advances Add: Profit for the year Rs. 12,71,883 Loans & advances(sch.A) Amount Introduced Rs. 24,77,843 Rs. 37,49,725 Rs. 3,41,00,000 Current Liabilities & Provisions Borrowings from Overdraft A/c (Bal.Fig.) Rs. 36,00,275 Advanced from Rs. 2,67,50,000 Customers (Sch-B) Rs. 3,03,50,275 Rs. 341,00,000 Rs. 3,41,00,000 Vide questionnaire Dated 17.12.2014-Assessee was further asked to explain the source of capital introduced of Rs. 24,77,843/- during the year. Vide annexure A of submission dated 30.12.2014, assesee has furnished lending Bu....
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....85/- appears on both sides signifying that on 01.04.2008 there was Nil Balance. From the above facts it is crystal clear that assesee has not been able to prove the amount of Capital introduced of Rs. 24,77,843/- and therefore addition of Rs. 24,77,843/- made." Net Addition: Rs. 24,77,843/- 177. The ld. CIT (A) deleted the addition after examination of the transfer of amounts in the various bank accounts which have been declared by the assessee. 178. Before us, the Counsels relied on the respective orders of the revenue. 179. The submissions of the assessee before the revenue authorities are as under: "12.1 The Assessing Off icer has stated that since the assessee has not submitted any evidence regarding the balance brought forward, details of the amount lend and borrowed and the interest receivable, the capital introduced of Rs. 24,77,843/- as shown by the assessee in his balance sheet of lending business activity is considered to be unexplained. 10.2 In this regard it is submitted that the f indings recorded by the Assessing Off icer are factually incorrect and contrary to the material and documents on record. The Assessing Off icer ha....
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....,000 - 96,27,765) relates to net difference of the funds transfer to and from non interest bearing accounts i.e. Rs. 1,02,50,000/- received in the bank account of SBOP and Rs. 96,27,765 being amount received in HDFC Bank account relating to interest bearing accounts, etc. iii. Further a sum of Rs. 5,85,585/- was the interest accrued but not received (receivable) from the previous year which was inadvertently not shown in the previous balance sheet/statement of affairs of lending business activity, and as such had not been added to opening capital balance carried forward. This interest receivable was duly offered for tax in the previous assessment year. iv. Thus the aggregate of these was obviously assessee's own capital, as shown as balancing f igure in the balance sheet of lending business activity. 10.3 During the course of proceedings, the assessee, in support of the Capital in the statement of affairs of lending business activity, provided bank statement of all banks, wi th description of each deposit and withdrawal. The Ld. AO being satisf ied wi th each debit and credit entry in the bank account / statement of the assessee did not raise any furt....
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....dvertently was not shown as 'interest accrued but not received' on the asset side, and its corresponding credit in Capital Account in the lending business balance sheet, as this amount was not received in F.Y. 2007-08. This amount of Rs. 5,85,585/- which was received on 01.04.2008 is therefore added to the Capital in the year under consideration. (d) The above three f igures, i.e. (i) Rs. 12,70,023/- is the opening capital of assessee in lending business activity in the year under consideration, (ii) Rs. 6,22,235/- is contribution of difference between funds transferred from and to as per bank statement and (iii) Rs. 5,85,585/- is interest receivable, and total of the all these entries which in aggregate makes a sum of Rs. 24,77,843/- [12,70,023 + 6,22,235 +5,85,585). Thus, the assessee provided a detailed and substantiated explanation, vide letter, dated 30.12.2014 and 26.02.2015. 10.5 That the addition to the capital in statement of affairs of lending business activity is not a result of any credit entry in books or bank account that remained unexplained or unsubstantiated by the assessee. Thus, this kind of addition which related to reconciliation entri....
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....on in making the impugned addition, same is directed to be deleted." 181. On going through the order, we find that the ld. CIT (A) has judiciously examined the bank account of HDFC, State Bank of Patiala and the interest earned and the capital transferred. In the absence of any factual incongruency brought to our notice by the revenue, we hereby decline to interfere with the order of the ld. CIT (A) on this issue. 182. In the result, appeal of the Revenue is dismissed. Since, the matters have been adjudicated on merits, the CO of the assessee is treated as infructuous. ITA No. 5333/Del/2016 A.Y. 2010-11: 183. Following grounds have been raised by the revenue: "1. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 31,70,746/-made by AO on account of Unexplained cash credit u/s 68 of the I.T. Act. 2. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 34,73,669/-made by AO on account of disallowance of interest u/s 36(1)(iii). 3. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 15,21,850/-made by AO on accoun....
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....closing balance has been taken after taking into consideration the business transaction of the assessee. The borrowings from the overdraft account shown in the balance sheet as on 31.03.2010 prepared on 18.09.2010 shown a balancing figure of Rs. 2,14,05,994/- which cannot be taken as the bank balance of the assessee when a single account is used for the purposes of the business and for personal transactions. The AO made addition on account of in appropriate reconciliation in the bank overdraft account and the bank statement. Hence, we decline to interfere with the order of the ld. CIT (A) on this ground. Ground No. 2 Disallowance of Interest u/s 36(1)(iii): 186. As per the Assessing Officer, the assessee has given interest free loans of Rs. 5,45,40,000/- during the year and the opening balance of the same was Rs. 20,80,000/-, totaling the amount of interest free loans to Rs. 5,66,20,000/-. Further, during the year under consideration, the assessee has borrowed funds from banks and others at the rate of 13.5% and has paid interest of Rs. 34,73,669/-. During the year, the assessee has received loans of Rs. 5,23,40,000/- and loans given of Rs. 5,45,40,000/-. 187. The ld. CIT ....
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....A/c. Ground No. 3 Interest on Foreign Deposits: 191. This issue stands adjudicated in the appeal of the revenue for the assessment year 2007-08 in ITA No. 5330/Del/2016 and the same ratio with regard to notional earning of interest on the presumed credit balance applies for this year too. This ground of appeal is accordingly dismissed. 192. Since, the matters have been adjudicated on merits, the CO of the assessee is treated as infructuous. ITA No. 5334/Del/2016 A.Y. 2011-12: 193. Following grounds have been raised by the revenue: "1. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 1,43,29,815/-made by AO on account of Unexplained cash credit u/s 68 of the I.T. Act. 2. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,24,00,000/- on account of prof it share. 3. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 49,35,250/- made by AO on account of sale of unlisted shares. 4. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 42,08,366/- made by AO o....
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....ddition made by the AO and the arguments of the AR during assessment as well as appellate proceedings. It is seen that the AO has made an addition of Rs. 1 crore on the ground that such receivable had not been recorded in the balance sheet prepared by the assessee. The explanation of the assessee clearly shows that the amounts in question had been given as margin money for transaction of shares through its broker viz. M/s Consortium Securities Private Limited and had been received in the current year. The balance sheet prepared by the assessee was with respect to the money lending business and impugned share transactions and the related deposits of margin money was not part of the said record and accordingly had not been made part of the said balance sheet which was exclusively for the money lending business. The source of payment of said amount of Rs. 1,00,00,000/- to M/s Consortium Securities Private Limited in the earlier years and its receipt during the year under consideration has been as per the bank statement f iled before the AO and as per the copy of account with the with the said entity. The AO has not brought on record anything to contradict the factual submission of the....
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.... regard to the amount of the transaction with HDFC Bank and State Bank of Patiala, since the amount represents transfer of funds from disclosed accounts and since reconcile, we decline to interfere with the order of the ld. CIT (A). Ground No. 2 of Revenue's appeal and Ground no.8 of Cross Objection No. 344/Del/2016 of the assessee Addition on account of Profit Share: 197. Page No. 76 of Annexure A-2 seized from the residence of the assessee represents as under: Particular P.S. Kalra Manish Mehta BadalMidha Samir Kalia Share 12,131,973 12,131,973 12,131,973 12,131,973 Less: 6,053,855 6,677,851 4,422,213 5,173,444 Balance with them Net Balance Payable 6,078,118 5,454,122 7,709,760 6,958,529 198. The AO held that the above seized material represents the half yearly profit to be earned by the assessee through the company Global E-Solutions Ltd. and thus determined the annual profit of Rs. 2,42,63,946/-. The AO made addition holding that, 1. The paper has been found during the course of search on the residence of the assessee and the onus is on the assessee to reb....
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....ta, BadalMidha along with ArtiMidha and Samir Kalia. 203. In view of the above facts, we are of the opinion that AO was not justified in drawing adverse inference against the assessee. The figures stated in the seized document pertains to the said company i.e. Global e-Travel Solutions Pvt. Ltd. We are also in agreement with the contention of the ld. AR that CIT(A) was not justified in giving partial relief once the figures stated in the seized document pertains to an independent entity i.e. Global e-Travel Solutions Pvt. Ltd. Assessment of the said company has also been made post search and no adverse inference has been drawn in respect of the seized document. Accordingly, we direct to delete the entire addition of Rs. 2,42,63,946/-. In the result, the ground no. 2 of the Revenue's appeal is dismissed and ground no. 8 of assesse's Cross Objections is allowed. Ground No. 3 Addition on account of Sale of unlisted Shares: 204. The assessee has received an amount of Rs. 52.5 lacs in the HDFC Bank on 02.06.2010 and Rs. 90 lacs on 15.05.2010 in the State Bank of Patiala. On enquiry, it was submitted before the AO that the amounts have been received from two entities namel....
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....its utilization towards interest bearing advances, there is no justification for allocating any interest expenditure towards earning dividend income. It is also surprising that AO has made a disallowance of Rs. 3,01,150 as administrative expenses despite no such expenses having been incurred by the assessee. In view of these facts, we are of the view that no disallowance under section 14A is required in the present case and accordingly, we uphold the order of the CIT(A) deleting this addition and this ground of the Revenue is dismissed. Ground No. 5 Interest on Foreign Deposits: 208. This issue stands adjudicated in the appeal of the revenue for the assessment year 2007-08 in ITA No. 5330/Del/2016 and the same ratio with regard to notional earning of interest on the presumed credit balance applies for this year too. Accordingly, this ground is dismissed. Ground No. 6 Disallowance of Interest u/s 36(1)(iii): 209. The AO held that the assessee has given interest free loans to the following related parties: i) Gallery Navya ii) Gurdeep Singh iii) H.S. Kalra iv) Omega Finhold Pvt. Ltd. v) Acron Inf. Pvt. Ltd. vi....
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....Ground No. 7 Capital introduced: 212. The capital account as per the audited balance sheet filed by the assessee was Rs. 1,30,27,866/-. Before the AO, the assessee submitted un-audited balance sheet wherein the capital introduced was shown to be Rs. 1,49,44,281/-. The AO treated the difference of Rs. 19,16,415/- as undisclosed income. We find that the ld. CIT (A) has deleted the addition holding that the balance in the capital account pertaining to the individual and the entity of lending business are different. On going through the record, we hold that the difference between capital account of the individual and the capital account of the business entity do not call for any determination of undisclosed income. Hence, we decline to interfere with the order of the ld. CIT (A) wherein the addition has been deleted after examining the due reconciliation of the amounts involved in the capital account. 213. Since, the matters have been adjudicated on merits, the other legal grounds raised in the CO of the assessee are treated as infructuous. In the result, the appeal of the Revenue is dismissed and the CO of the assessee is partly allowed. ITA No. 5335/Del/2016 A.Y. 2012-....
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.... Rs. 4,700/- Consortium Securities Rs. 1,16,500/- AlokGoel Rs. 15,000/- B.S. Kalra Rs. 61,000/- Rajendra Place Office (Petty cash) Rs. 800/- MeharAnand Locker Rs. 50,000/- Global E-Solutions Rs. 1,04,300/- 218. Availability of the cash which has been a part of the cash found on the date of search has not been disputed by either parties. Hence, we decline to interfere with the order of the ld. CIT (A) in deleting the addition on account of the cash, the existence and accountability of which has been duly proved. Ground Nos. 2 Addition on account of Unexplained Investments: Paintings (Rs. 1,44,00,00/-) 219. The relevant part of the Assessing Order on this issue is as under: "4. Assessee was asked to explain the source of paintings of Rs. 2.38 crores belonging to assessee as stated in the of assessment proceedings of Mrs. Tripat Kaur. Vide Submission dated 06.01.2015 assessee has submitted that the value of Rs. 2.38 crores is tag price and not the purchase price. The assessee has submitted that this consists of 13 paintings. Submissions of the assessee have been considered which ref lects 13 paintings wi th tag pric....
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....g available as per the records that could be made the basis of doubting the assessee's version with regard to the purchase either in terms of prices or in terms of source of payment. It is further seen that the painting at Sr. No. 12-13 have been claimed to be received as gift from the artists and relevant evidence in the form of confirmation by the assessee thereof by the said artists had also been produced before the AO. It is further seen that the assessee had made substantial purchases from the said artist Sh. K.S. Radhakrishnan and Sh. Gurdeep Singh. It is also seen that both paintings have been gifted on important social occasions and had been marked as 'not for sale' (NFS) in the inventory as per Annexure A-1, A-2 in the case of Smt. Tripat Kaur. It clearly lends credibility to the impugned claim of the appellant that the paintings at Sr. No. 12-13 being receipts as gift were not meant for sale (NFS). 221. The fact that the paintings have been sourced in a particular year is clearly recorded and the seized document as per Annexure-A1 and Annexure-A2. All the purchases have been confirmed by the artists concern and the confirmations of the artists or the delivery o....
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.... Rs. 228. The total weights of the Jewellery of family members as mentioned above are summarized as under: H.S. Kalra : 946.45 Gram Tripat Kaur : 1584.09 Gram Bikramjit Singh Kalra : 796.45 Gram P.S. Kalra(HUF) : 95.310 Gram P.S. Kalra(Ind.) : 247.522 Gram Total Weight : 3668.922 Gram 229. The difference between the jewellery found at the time of search (5906.35 gram) and as explained above (3668.922 gram) comes to 2237.428 Grams. The assesee has also explained that the following jewellery was purchased after 31.03.2009 and upto the date of search i.e. 28.07.2011. Tripat Kaur : 70.46 Gram P.S. Kalra (Ind.) : 10.17 Gram P.S. Kalra(HUF) : 8.31 Gram Total : 88.94 Gram 230. Thus, difference (2237.428 - 88.94) = 2148.488 Gram which has explained having been surrendered by Smt. Tripat Kaur in her assessment. The assessee was finally show caused for addition of Rs. 22,31,727/- on 20.02.2015. Vide reply dated 26.02.2015, the assessee reiterated his earlier stand. 231. The submission of the assesee has not been considered by the revenue authorities on the grounds that the assesee has not ....
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....eal of the revenue for the assessment year 2007-08 in ITA No. 5330/Del/2016 and the same ratio with regard to notional earning of interest on the presumed credit balance applies for this year too. Accordingly, this ground is dismissed. Ground No. 6 Disallowance u/s 14A: 238. The Assessing Officer held that the assessee has claimed Rs. 76,26,407/- towards interest in money lending business and worked out disallowance of Rs. 38,36,009/- u/s 14A. 239. We have perused the order passed by the Authorities below. On going through the same, we note that the assessee has taken loan on interest and the same amount has been advanced on giving advances on interest. Thus, there is a direct nexus in respect of the amount of interest incurred and the interest earned. On going through the profit and loss account, we note that the total interest earned Rs. 127,85,451/- and the interest paid for earning such interest is Rs. 76,26,407/-. Further expenditure of Rs. 120 has been incurred as fees and taxes and the balance amount of Rs. 51,58,924/- is the income declared by the assessee. There being a direct nexus of the borrowing of the fund and its utilization towards interest bearing ad....