TaxTMI 
TaxTMI 
2021 (6) TMI 542
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....75/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 assessment and make the impugned addition under section 153A of the Act in the abs....
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....witzerland, 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 69 can only be made in respect of investment made during the f inancial year relevant to the assessment year." 4. In ITA No. 4576/Del/2016 for th....
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.... 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, 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 rejec....
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....e 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 basis of the alleged document and the figures appearing in the sheet, it cannot be said that such investment was made during the instant year. Contentions of the Assessing Officer: 12. The AO rejected the above explanation and the issues raised b....
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....ance 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 information exchange mechanism through DTAA/DTAC. The specific basis of the conclusion reached in assessment order for making addition. 20. In response thereto, the AO submitted remand reports dated 13th& 19th October, 2015, wherein it was submitted as under: i. It was stated that the inf....
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.... 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 the month wise balances in the alleged documents are balance in the bank account is factually incorrect as can be seen from documents which apparently are of investment and not the month wise balances in the bank account. viii. On the issue of statement of the assessee, the AO in the remand report has ignored the preliminary statement recorded at the beginni....
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....cial 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 competent authority of France. iii. The AO submitted the details of the chain of information received by CBDT and consequently by the AO. iv. In response to the question whether the 6 page document is an extract of bank account, the AO submitted that 6 page document was having the conclusive details of bank account. v. In response to the question that information was not in Swiss language, the AO stated that the language in which information was received is not material and the contents....
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....lso 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 extension in the present case will be available under clause (viii) of Explanation below Section 153B only from the date when reference was made when reply was received from the Swiss authorities and not one year as has been assumed by the AO. In this, the assessee also brought to the notice of ld. CIT (A) that the refusal to provide information to India is on the ground that the source is not authentic. 26. The assessee submitted another rejoinder dated 19.02.2016 pointing out that: i. Merely the information was received from French Government will not authenticate the inform....
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....s 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 the allegation is that this bank account is maintained with HSBC, Switzerland and how come the document is in French Language. The AO has not made any effort to find out whether HSBC is maintaining its accounts in French language. v. On the issue of order having been passed on the direction of CIT, it was contended that AO has admitted because of the seriousness of the case, the order has been passed on the direction of CIT and hence, the order stands vitiated placing reliance in the judgment of Hon'ble Supreme Court in the case of Greenworld Corporation 314 ITR 008. 27. Subsequent to the above, the AO filed another report dated 26.02.2016 where he stated that the 6 page document is an extract of the bank statement containing personal detail....
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....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 the enclosure i.e. on 21.02.2012. 30. In response thereto, the assessee filed another rejoinder dated 19.05.2016 pointing out that these letters submitted by the AO are internal correspondence and are not evidences of the letter written by the Indian Competent Authority to Swiss Tax Authority. The AO has not been able to point out any material which was found during the course of the search for the year under consideration. As regards the statement of the assessee, it was also submitted that in absence of any incriminating material, that cannot be basis for making addition in assessment u/s 153A in view of the judgment of Hon'ble Delhi High Court in the case of CIT VsHarjeev Aggarwal in ITA No. 8/2004 dated 10.03.2016. It was also pointed out that there was no material of any undisclosed income bein....
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....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 reliable was not acceptable. 37. On the issue of language of communication, the ld. CIT (A) was of the view that since this information was received from French Government and not from Switzerland, that is why it is in French. 38. The ld. CIT (A) was of the view that due process had been followed in the handing over of information. 39. The ld. CIT (A) further held that the contention that the said document do not contain complete information with regard to the deposit/withdrawal does not take away material significance revealed by these documents that assessee had substantial deposit indicated by monthly balances recorded in the said documents. 40. The ld. CIT (A) further held that there is detailed admission by the assessee and also the refusal to sign the consent form. Further, the contention of the assessee that imp....
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.... 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 absence of any explicit declaration that such amendment is retrospective in operation, such amendment has to be considered as prospective in nature and it is only the references made on or after 01.07.2012 which can be eligible for the extended period of one year. The ld. AR submitted that wherever legislation prescribes a date of applicability of a provision to be date other than 1st April off the year, it is with reference to transaction that takes place after such date. He argued that this is normal in the case of amendment to provision of TDS, etc. In the case in hand as well, the amendment has been made applicable w.e.f. 01.07.2012 and the benefit of extended period of one year vide the amendment made vide Finance Act 2012 will only be available qua references made on or after 01.07.2012. He accordingly argued that at best, 6 months ext....
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....rence 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 after filing of return of income in response to notice u/s 153A. The ld. AR submitted that the ld. CIT(A) erred in placing reliance on the judgment of the Hon'ble Delhi High Court in the case of Ashok Chadha Vs ITO 20 Taxmann.com 387 to hold that issuance off notice u/s 143(2) is not mandatory in respect of order passed u/s 153A. He submitted that though the issue is decided against the assessee in the said judgment, however, the said judgment is no longer a good law in view of the subsequent judgments of the Hon'ble Delhi High Court on the subject matter of issuance of notice u/s 143(2). 49. He submitted that in the judgment of Ashok Chadha (supra), the Hon'ble Delhi High Court has discussed at para 10 that in the case of CIT Vs Madhya Bharat Energy Corpn. in ITA No. 950/08 decided on 11.07.2011, the Hon'ble Court has held that there is no requirement....
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....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 was filed after issuance of notice u/s 148. To cure such time barred assessments, the law was amended retrospectively vide the Finance Act, 2006 and two provisos to Section 148 were inserted to cure the defect in relation to returns filed prior to Section 01.10.2005 in certain circumstances. However, an Explanation was inserted in the Act vide the Finance Act, 2006 w.e.f. 01.10.2005 in Section 148(1) so as to clarify that the provisions of the said provisos shall not apply in relation to any return which has been furnished on or after 01.10.2005 in response to a notice served u/s 148(1). The ld. AR submitted that this act of the legislation itself reflects that the legislation also considers that the issuance of notice u/s 143(2) is mandatory in view of the words "so far as may be" and the same interpretation should be given even to the provision of Section 153A. ....
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.... 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 that statement recorded during the course of search does not constitute incriminating material. In this regard, the ld. AR placed reliance on the following judgments: * Pr. CIT Vs Best Infrastructure ( India) Pvt. Ltd. (2017) 397 ITR 82 (Del.) * CIT VsHarjeev Aggarwal (2016) 290 CTR 263 (Del.) * Vascrof t Design Pvt. Ltd. Vs ACIT in IT(SS)A Nos. 129 & 130/Ahd./2015 * Shri Nirmal Kumar Kedia Vs DCIT in ITA Nos. 124 to 126/JP/2019 * Shri BrijBhushanSinghalVs ACIT in ITA No. 1412/Del/2018 * Krishan Kumar Modi Vs ACIT in ITA No. 2892/Del/2017 * AnuragDalmiaVs DCIT in ITA Nos. 5395 & 5396/Del/2017 * Shri BishwanathGarodiaVs DCIT in ITA Nos.853 to 856/Kol/2016 59. Further, in support of the above, the ld. AR also placed reliance on the recent judgment of the Hon'ble Delhi High Court in the case of PCIT Vs Anand Kumar Jain (HUF) in ITA No. 23/2021 dated 12.02.2021 to con....
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.... 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 year under consideration. Consequently, addition cannot be made during the year under consideration in view of the aforesaid position of law laid down by the Hon'ble Apex Court in the case of Singhad Technical Education Society (supra) and as has been echoed by the Hon'ble Delhi High Court in the case of SMC Power Generation Ltd. (supra). 65. On merits, ld. AR submitted that the entire basis of making the addition is revolving around the two allegation of the AO. One is the statement recorded during the search. The second is the 6 page document/ information. The ld. AR submitted that the addition cannot be made considering the same individually or collectively. 66. With regard to the 6 page document being the information received from French Competent Authority on the basis of which the AO has made the addition, he submitted that there is no authenticity to this information received by way of 6 page document which was received by way of pen drive. It is not that the case this ....
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....e 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. 71. He further submitted that the 6 page document is not a bank statement. He submitted that there is no basis for alleging that it is a HSBC bank account. Nowhere, HSBC has been stated in the 6 page document. There is no debit or credit as is normal in a bank statement. The ld. AR took us through the 6 pages document to demonstrate that the word "HSBC" is not appearing anywhere in this 6 page document. On this basis, he contended that it is not understood on what basis it is being assumed that this is HSBC bank account. He further pointed out that the revenue has been seeking information from Swiss authorities about HSBC Bank account, Geneva as is evident from page 5 to 7 of paper book filed by the ld. DR. he submitted that the fact that the revenue is seeking the bank statement confirms that the AO is not having bank statement and hence it is asking the bank statement from Swiss Authorities. 72. The ld. AR submitted that it is an admitted fact by the AO that he was not having the bank accou....
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....t 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 HSBC Bank, Geneva or HSBC Bank, Zurich itself is not clear. The ld. AR contended that in the case of ITO Vs PradipBurman, CC No. 5257922/16, the ACMM has expressed that such inconsistencies leads to grave doubt on the authenticity of the USB drive and its contents and the prosecution charges were dropped. 77. The ld. AR further submitted that since the 6 page document is unauthentic and unreliable, the said data cannot be relied upon. He submitted that it is a settled law that suspicion however strong, cannot take the place of evidence and that addition cannot be made on the basis of suspicion and in this regard, the ld. AR placed reliance on various judgments forming part of its case law compilation. 78. With regard to the statement, the ld. AR submitted that it is an undisputed fact that the said statement was subsequently retracted. Once that is the case, the said statement cannot be relied upon. He submitted that it is a typical case where the statement was obtained under coercion. The ld. AR submitted that ....
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....ue 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 the law. 83. In respect of the ground raised by the assessee that the assessment order is barred by limitation as the same has been passed beyond the time prescribed, the ld. DR submitted that the order has been passed within the extended time as per clause (viii) of the Explanation below Section 153B. She submitted that as per this clause, the limitation to pass assessment order gets extended by a period of one year or the period starting from the date on which the reference is made and ending with the date on which the information requested is last received, whichever is less. She submitted that in the case in hand, it is an admitted position of the AO that no reply has been received by him till date of passing the assessment order. Accordingly, the limitation period shall be extended by a period of one year. The ld. DR referred to her paper book page 8 which is letter dated 26.05.2015 from Under Secretary (FT&TR Division) to Pr. CIT (Central-II ) wherein a reference was made to a letter dated 22.04.2015 received from Swiss Gov....
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....rch u/s 132 or requisition u/s 132(A) was executed. As in this case, search was conducted on 28.07.2011 and all the warrants have been executed wi thin FY 2011-12 only, accordingly, in the normal circumstances the limitation date for competing assessment u/s 153A was 31.03.2014. 5.2 Further, as during the course of search and seizure operation, it was found out that the assessee was having foreign accounts/ foreign assets, accordingly, a reference was made by the Director of lnvestigation-2, New Delhi vide letter no. DIT Inv.-11/FB/11-12/72 (copy enclosed) dated 13.01.2012 to FT&TR Division to request for the information about the assessee from the Switzerland Tax Authority. Further, the competent authority of India for exchange of information i.e. Joint Secretary(FT&TR-I) has made the f irst reference to Swi tzerland Tax Authority vide letter F.No. 504/0070/2012-FTD-I dated 21.02.2012 [copy of letter of FT&TR vide F.No. 504/70/2012-FTD-I dated 21.02.2014 to "this effect is enclosed). In response to the reference made by the JS (FT&TR), no information has been received till the passing of the order i.e. 09.03.2015. 6. Before proceeding further, it would be very pertinent to f....
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....sessment year falling within 6 assessment years and the year in which search and seizure takes place has to be completed mandatorily. 7.1 Further, the sec. 153A also provides that the proceeding gets abated from the date of search in all the years in the case of a person where search is initiated u/s 132 or 132A of the IT Act. Thus, in the instant case, as the search was initiated on 28.07.2011, accordingly, from that date onwards, the AO was duty bound to complete the assessment and the re-assessment proceedings in the last 6 years as per the provisions of Section 153A and accordingly, during the pendency of the assessment proceedings, a reference was made by the Director of lnvestigation-2 to JS(FT&TR-II) for providing information so that the same can be used in the case of assessee for the assessment or reassessment proceedings. 8. Thus, the assessee's ground that a reference was made before the date of issuance of notice u/s 153A is totally devoid of merits because as per the sec 153A the period of assessment or re-assessment has to be started from the date of initiation of search and from that date onwards the assessment and the re-assessment proceedings are pending an....
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....ses. She also submitted that the judgments relied upon by the ld. AR are distinguishable since they are in the context of assessment proceedings under normal assessment proceedings or u/s 147. The procedure for Section 153A is different and in such cases, once return is filed, the AO is duty bound to complete the assessment. Thus, it is not an issue of jurisdiction which arises consequent to issue of notice u/s 143(2). She submitted that the AO assumes jurisdiction for reassessment consequent to the search and not consequent to the issue of notice u/s 143(2). C) No incriminating material seized during search: 86. In respect of ground raised by the assessee that in the absence of any incriminating material found during the course of search, no addition can be made. The ld. DR submitted that both the statements as well as the bank statement constitute incriminating material for the purpose of making the addition and accordingly, the ratio laid down by the Hon'ble Delhi High Court in the case of Kabul Chawla (supra) shall not apply. She submitted that the assessee has admitted in the statement recorded during the course of search that he is the owner of the bank account held with H....
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....ase such a notice may not only help the department but can also help the assessee. If the assessee is in a position to give more explanation so as to satisfy the authorised off icer that the documents seized by him do not reveal any undisclosed income, but the income or transactions referred to in the documents had been duly shown by him in his books of account or if the assessee gives any information to the effect that the f irst impression of the authorised off icer with regard to the nature of the documents was not correct, such a notice would help the assessee himself . If the assessee is called upon to give some information or to explain certain documents or writings seized during the process of search, no harm can be caused to the assessee and such particulars can be helpful not only to the department but to the assessee also. The Court, therefore, could not agree that such a notice could be issued only before the initiation of proceedings under section 132. Moreover, even under the provisions of section 133, the Assessing Off icer or the off icers referred to in the said section are having power to call for information. So issuance of such a notice during or after the sear....
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....his was on September 23, 1993, in the presence of two wi tnesses. The retraction of the statement came only on December 24, 1993, followed by a reiteration on the part of the appellant on February 20, 1995, in the course of the assessment proceeding. There is evidently a delay on the part of the appellant and its partners in retracting the statements re-corded. The attention of this Court has not been drawn to any material on record to establish that any attempt was made on behalf of the appellant to prove the allegation of inducement threat or coercion through the witnesses. We have examined the impugned orders rendered by the learned Tribunal with the reasonings in support of its finding against the complain of threat, inducement or coercion and we find no good and sufficient reason to differ from it. In our view, in the facts and circum-stances of the case, having regard to the materials on record, the appellant has failed to establish that the statements of its partner, Baban Singh, had been recorded in the course of the search by using coercion, threat or inducement. We, therefore, dismiss the contentions advanced by the learned senior Counsel for the appellant in this regard ....
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....s found as well as statements recorded by assessee's son in course of search operations and assessee had not been able to show as to how estimation made by Assessing Off icer was arbitrary or unreasonable, additions so made by Assessing Off icer by rejecting books of account was justified. l) Raj Hans Towers (P.) Ltd. Vs CIT (56 taxmann.com 67, 230 Taxman 567, 373 ITR 9) where Hon'ble Delhi High Court held that where assessee had not offered any satisfactory explanation regarding surrendered amount being not bona f ide and it was also not borne out in any contentions raised before lower authorities, additions so made after adjusting expenditure were justified (SURVEY CASE) m) PCIT Vs Avinash Kumar Setia [2017] 81 taxmann.com 476 (Delhi) where Hon'ble Delhi High Court held that Where assessee surrendered certain income by way of declaration and withdraw same after two years without any satisfactory explanation, it could not be treated as bona f ide and, hence, addition would sustain (SURVEY CASE) n) Decision of Hon'ble High Court of Chhattisgarh in the case of ACIT vs. Hukum Chand Jain - [2010] 191 Taxman 319 (Chhattisgarh) The search and seizure operations were conduc....
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....e could not explain the same. He could not explain the recovery of cash and jewellery and in his statement under section 132(4), he surrendered Rs. 30 lakhs as his undisclosed income for the block period and further expressed his willingness to pay the taxes worked out against the surrendered undisclosed income. He further stated that he was surrendering the income to avoid the dispute with the Income-tax department and for mental peace. The assessee had further stated that he was signing his statement after reading and understanding the same without any coercion and the same had been further countersigned by his 3 sons. The assessee did not retract his statement immediately after the search and seizure was over and in the return also, no explanation was offered for the surrender of the undisclosed income of Rs. 30 lakhs at the time of search and seizure operations under section 132(4). The allegation of duress and coercion was made for the first time in the year 2004, i.e., after almost 2 years when the Assessing Off icer confronted them with their statements under section 132(4) and they were asked to explain as to how the said undisclosed income did not find place in their retur....
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....e forums. [Para 30] Thus, the assessee had failed to discharge the onus of proving that confession made by him under section 132(4) was as a result of intimidation, duress and coercion or that the same was made as a result of mistaken belief of law or facts. The Assessing Off icer was justified in assessing the income of the assessee on the basis of surrender of undisclosed income made by the assessee under section 132(4). The orders passed by the Commissioner (Appeals) and the Tribunal were to be set aside and the order passed by the Assessing Off icer was to be restored. [Para 31] o) Decision of Hon'ble High Court of Bombay in the case of Paras Shantilal Shah vs. DCIT, Mumbai [2017] 81 taxmann.com 104 (Bombay) dated 21.08.2015 In this case the addition made on the basis of statement recorded during search, was upheld by Honb'le Bombay High. In this case during search, certain jewellery was found in possession of assessees. The assessees in a statement made on oath under section 132(4), admitted that jewellery recovered from them and in their locker was part of their undisclosed income and offered same to tax. Subsequently, the assessees f iled a letter before the revenue ....
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....mitted by, Sd/- (Sushma Singh) Commissioner of Income Tax (DR) F-Bench, ITAT, New Delhi 88. On merits of the case, the ld. DR argued that the categorical admission of the assessee in the statement recorded and the bank statement received from the French Government clearly reveal that the assessee is the owner of an undisclosed bank account. She placed reliance on the findings of the ld. CIT(A) in this regard. The ld. DR submitted that the ld. CIT(A) has called a number of remand reports and the AO has replied to each and every issue raised by the assessee before the ld. CIT(A). The ld. CIT(A) after thoroughly examining all the facts and the evidences on record has confirmed the addition. She submitted that the AO was justified in making the addition in the year under consideration as the 6 page document clearly demonstrated that the assessee was still holding such investment in the year under consideration. As regards the contention of the ld. AR. that the addition in the year under consideration on the basis of the statement of the assessee is unsustainable, she submitted that the AO has to make assessment on human probabilities. In support of her contention, she relied u....
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....ing the 6 page document on the basis of which the assessee was forced and his statement was extracted. This clearly demonstrates that the search party has gone to carry out the search with a preconceived notion and has obtained a statement on the information already in possession of the revenue department. Further, the assessee has filed the retraction on 30.08.2011. 91. It was also pointed out by the Id. AR that the search party has recorded preliminary statement on the date of the search where the assessee has categorically stated that he does not have any bank account outside India. 92. It was only after the assessee was coerced the statement was given as is evident from the facts and the same was retracted giving the entire details and sequence and a letter was filed before the DDIT, Unit-II . 93. It was argued that the contention of the ld. DR and the case laws cited in support thereof are not applicable. It was also submitted by the Id. AR that when there are two statements and the earlier one categorically stating that there is no bank account outside India, the later on statement cannot be given a priority over the earlier statement. Further, the earlier statement suppor....
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....not bound by the strict rule of evidence but that does not mean that addition can be made without evidence. In support thereof, the Id. AR placed reliance on the judgment of Supreme Court in the case of Dhakeshwari Cotton Mills vs CIT [1954] 26 ITR 775 (SC). 97. He submitted that the Id. DR could not justify how on the basis of statement, the addition can be made in the year under consideration. The Id. AR also referred to the judgment of PradipBurman reported in CC No.525792/16 whereby a similar issue has come up about the authenticity of the document and the court has held that there is grave doubt on the data received from French Competent Authority. 98. The ld. AR also filed written submission which reads as under: "Undisputed Facts:- 1. CBDT receives a pen drive from French Authority on 28.06.2011. 2. Print out taken of the pen drive. 3. A 6 page document is stated to be that pertaining to the assessee and on the basis of this document, it is stated that this is bank account of the assessee with HSBC, Geneva. 4. A search is carried out on the assessee on 28.07.2011 5. No incriminating document found during the course of search. 6. A statement of the assessee is....
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....of the assesseeo f such f inancial year. 4. As per above section, addition under section 69 section is to be made in the f inancial year in which assessee has made investment. 5. Now, the issue which needs consideration is that whether as per the statement, can it even be alleged that assessee has made investment in the f inancial year 2005-06 which is relevant to asstt. year 2006-07 under consideration. The complete statement is at PB Volume I page 29-42 and also extensively quoted in assessment order at page 17- 22 of the assessment order. In this statement, the answer to Question 7 and 18 are very clear. The investment has been made in 2002-04. Thus, the AO herself has not considered statement as the basis though she is referring to in the assessment order. Thus, addition on the basis of statement in the year under consideration is unsustainable. 6. Now coming to information received from French Authority. Firstly, there is no authenticity to this information which was received by way of pen drive. It is not that this information was obtained from Bank. The source of information with French Authority, its author, basis till today has not been revealed despite repeated requ....
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....ul Chawla [2016] 380 ITR 573. * Delhi High Court in the case of Pr. CIT v. Best Infrastructure ( India) Pvt. Ltd. [2017] 397 ITR 82 * Delhi High Court in the case of Pr. CIT v. MeetaGutgutia [2017] 395 ITR 526 * Hon'ble Supreme Court of India in the case of CIT v. Sinhgad Technical Education Society in Civil Appeal No. 11080 of 2017 dated 29th August, 2017 No incriminating material whatsoever found during the course of search 14. In the case in hand, it is an undisputed fact that no incriminating material whatsoever has been found during the course of search gua the addition made. Accordingly, in view of the aforesaid judgments, no addition can be made during the year under consideration. Reliance is placed on the following judgments wherein on similar facts, the addition has been deleted on, inter-alia, the ground that in absence of incriminating material, no addition can be made: * ITAT Delhi in the case of Anurag Dalmia 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 Bishwanath Garodia versus DCIT, I.T.A. Nos. 853 & 854 /KOL/ 2016, I.T.A. Nos. 855 &....
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....scrof t Design Pvt. Ltd., versus ACIT , I.T(SS).A. Nos. 129, 130, /Ahd/2015 * ITAT Jaipur in the case of Shri Nirmal Kumar Kediaversus DCIT (vice-versa), ITA 124 to 126/%JP/2019 * Hon'ble ITAT Delhi in the case of SH. BrijBhushanSingal versus ACIT, ITA No. 1412/Del/2018 19. Further, reliance is placed on the following judgments in this regard: * ITAT Delhi in the case of Krishan Kumar Modi versus ACIT, ITA No.2892/Del/2017 * ITAT Delhi in the case of AnuragDalmia versus DCIT, I.T.As. No.5395 And 5396/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 20. Further, reliance is placed on the recent judgment of the Hon'ble Delhi High Court in the case of PCIT (Central) - versus Anand Kumar Jain (Huf ) - ITA 23/2021 wherein it has been held that no addition can be made on the basis of statement alone without anu reference to material gathered during the course of search operations. 21. Further attention is invited to the CBDT's Circular F. No.286/2/2003/IT ( Inv) dated 10.03.2003 which was reiterated CBDT's circular No. 286/98/2013IT (Inv.), dated 18th December, 2014 wherein the Bo....
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....2002] 253 ITR 454 * ITAT Jaipur in the case of Om Prakash Agarwal v. ACIT in IT A Nos. 721 to 726/JP/2015 dated 23.011.2016 * ITAT Delhi in the case of Anant Raj Industries Limited vs. AO, TTJ 119, 865 27. Thus, going by the statement, the entire amount was invested prior to FY 2006. Accordingly, even if the statement could be considered as incriminating material, it does not constitute incriminating material qua the year under consideration. Consequently, addition cannot be made during the year under consideration in view of the aforesaid position of law laid down by the Apex Court in the case of Sing had and as has been echoed by the Hon'ble Delhi High Court in the case of Smc Power Generation Ltd. (supra). 28. In view of the above, in absence of any incriminating material found during the course of search, no addition can be made. 6 page document is unauthentic and unreliable 29. Additionally, it is submitted that the 6 page document loose documents, which were handed over in a USB drive, on the basis of which search is carried out is unauthentic and unreliable. Merely because information is received from France under the DTAC agreement does not make the information ....
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.... the said documents, what is the legal status of the entities, what is connection of the assessee wi th the bank account numbers mentioned against the said entities which are companies and not individuals and what is the role played by the assessee in the said entities. (x) The said document nowhere contains the name or whereabouts of the organization or person from whom the same has been received. Even name of any bank has not been mentioned in the same. 32. In CC No.525792/16, ACMM vide order dated 18.11.2020 in the case of ITO vsPradipBurman, the ACMM has considered the above said aspects and as specif ically observed that there are material inconsistencies in the content which leads to grave doubt on the authenticity of the USB drive and its contents. 33. Furthermore, in the assessment order, Id. AO has made the addition by stating that the alleged account is held in HSBC Zurich [Refer para 3 of assessment order]. However, as per the 6 page document, the alleged account of the assessee is at HSBC Geneva. In this regard, it may be relevant to mention that from the communication between the Director of Investigation Wing and the Pr. CIT placed at PB Volume I page 250, it is....
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....5 are not trustworthy, authentic and reliable." 34. Further, it is an admitted fact that upon reference being made to Swiss Authorities under the DTAA, no reply has been received by the Revenue. This implies that no adverse inference can be drawn in the case in hand based on the above said documents. 35. In view of the above, without prejudice to the fact that the loose papers are highly unreliable, they do not have any adverse bearing on the case of the assessee. Other arguments in brief:- 36. Onus is on the department for making any addition u/s 69, Section 69B or Section 69C of the Act and to prove that there is understatement of investment or unexplained expenditure /investment. That, such onus has not been discharged. 37. It is a settled law that no addition can be made in absence of enquiry merely on the basis of suspicion. There is no evidence in the case in hand to justify the addition. 38. 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.....
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....he case of amendment to provision of TDS, etc. Thus, the benefit of extended period of 1 year vide the amendment made vide Finance Act 2012 will only be made to references made on or after 01.07.2012. In view of the same, if 6 months extension is considered, the assessment order was required to be passed by 30.09.2014. However, the order was passed on 09.03.2015. Thus, the order is barred by limitation and liable to be quashed. 46. Without prejudice to the above, even if it is assumed that the extended period of 1 year is available, then the extended period is to be considered as the period of 1 year or the period between the date on which the first reference is made by the competent authority and the date on which information is last received, whichever is less. To compute such period, onus is on the Department to bring copies of the letter exchanged. In absence thereof , the benef it of extended period cannot be considered." 99. We have heard the rival submissions and perused the order passed by the authorities below and also the paper book, judgments and other material placed on record by both the parties. The assessee has raised various legal contentions besides challengin....
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....e extension of limitation for assessment proceedings will not be available. 104. The factual matrix of the case is as under: 1. Whether a search was conducted on 28.07.2011 ? Yes No 2. Whether the documents based on which addition has been made seized during the search ? Yes No 3. Whether the documents based on which addition has been made were available with the department before the search? Yes No 4. Whether details /document of any foreign bank account found and seized during the search ? Yes No 5. Whether a statement u/s 132(4) has been recorded on the date of search ? Yes No 6. Whether the assessee feigned ignorance of any foreign bank account in the preliminary statement ? Yes No 7. Whether the assessee agreed of having the bank account abroad in the statement recorded on 28.07.2011 ? Yes No 8. Whether as per the statement the account was opened in the year 2002 ? Yes No 9. Whether as per the statement, the deposits were made in the year 2002 or not ? Yes No 10. Whether the assessee 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 2....
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....der this section- (i) ........... (viii) the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information so requested is received by the Commissioner or a period of six months, whichever is less, shall be excluded." 106. The above clause was amended by the Finance Act, 2012 w.e.f. 01.07.2012 wherein the expression "six months" was substituted with the words "one year". The amended clause (viii) read as under: "Explanation:- In computing the period of limitation under this section- (i) ........... (viii) the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information 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 ....
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.... FT&TR to CCIT (Central). The AO has failed to produce the copy of the reference made and as such, this evidence is not sufficient to establish that a reference was made on 21.01.2012. The CIT(A) has accepted this as a credible evidence of in support of the fact that a reference was made by the Competent Authority. Considering the overall circumstances and this being a communication from one Department to another Department, we are of the view that the reference was made by Competent Authority on 21.01.2012 and hence we reject the contention of the ld. AR on this aspect. The third contention of the ld. AR is that as per the above clause (viii), the period commencing from the date on which the reference for exchange of information is made by a Competent Authority and ending with the date on which the information requested is last received by the Commissioner or period of one 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, th....
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....ention of the Id. AR is that for invoking extension of limitation, the onus was upon the AO to bring such material on record. 112. We are of the opinion that AO in the remand report has made a categorical statement that till the date of the order i.e. 09.03.2015, reply was not received. The AO has made a categorical statement in the remand report, we cannot ask the AO to establish a negative evidence that no reply was received from the Swiss Competent Authority. Accordingly, we reject this contention of the ld. AR. 113. The fourth contention of the ld. AR of the assessee is that the Competent Authority has made a reference as per the AO himself on 21.01.2012. On this basis, it is the contention of the ld. AR that the reference having been made even before the initiation of assessment proceedings u/s 153A, the extension will not be available. In the present 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 Secti....
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....r authorities. The contention was that in the present case, the assessment order has been passed under the directions and dictate of the higher officials and hence, the assessment is bad in law. It was further contended that the non-application of mind and interference of the higher authorities was of such nature that show-cause notice for 7 assessment years, all were issued as per verbal instructions of the Additional Commissioner as per noting in the proceeding sheet on 20.02.2015, which was received by the assessee on 23.02.2015 and in this notice the assessee was directed to file the reply to all assessment year(s) by 24.02.2015. Further, on 24.07.2015 the assesee sought adjournment on the ground of 24 hours-notice for 7 assessment years, the AO, on the direction of the CIT as noted in the proceeding sheets, allowed 72 hours to file reply 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. Si....
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....account, made the addition of the peak credit balance in the said account. The basis for reaching the above finding is the 6 page document received by the Competent Authority in India from the Competent Authority of France and statement of the assessee recorded during the search. The above findings have been confirmed by the ld. CIT(A). 120. On going through the assessment order and the order passed by the ld. CIT(A), we note that the addition has been made and sustained primarily on the basis of two materials. The first is the 6 page document/ information which was received by Competent Authority in India from the Competent Authority France on 14.07.2011 i.e. before the search. The second being the statement of the assessee recorded on the date of the search. 121. The contention of the ld. DR is that the 6 page document 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 w....
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.... ld. CIT(A). In one of the remand reports dated 28.12.2015, the AO has enclosed a letter dated 26.06.2015 giving clarification regarding the source of the 6 page document. As per this letter, the French Competent Authority has handed over a pen drive to the Indian Competent Authority in Paris on 28.06.2011. The print out from the contents of the pen drive pertaining to Delhi region were handed over to the DGIT (Investigation). These documents after print out from the said pen drive and on this basis, it has been contended in this remand report that 6 page document is authentic. As against this, the contention of the assessee has been that merely because a pen drive has been handed over by French Competent Authority to Indian Competent Authority, the information contained in the pen drive will not become authentic. 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....
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.... the assessee has raised this contention before the ld. CIT(A) as well. 131. We further find that the ld. DR has filed a paper book which has a letter dated 26.05.2015 from Under Secretary (FT&TR Division) to Pr. CIT (Central-II) (DR paper book page 8) which is a reference to a communication received from Swiss Tax Authorities asking to file a revised requisition.It is an undisputed fact that the above said 6 page document has been received by the Indian Competent Authority from the French Competent Authority. It is the contention off the ld. DR that such fact makes the document an authentic one. 132. The ld. CIT(A) having referred to the remand report submitted by the AO on this issue held that that in view of the chain of custody and integrity of information received 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 cont....
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....If the Revenue had any incriminating material antecedent to the search, that is, it was found during the course of search or as a result of search, then in that case Revenue had various other courses of action lef t under the provisions of Income Tax Act, but certainly not within the ambit and scope of Section 153A read with 2nd proviso thereto. ................... 16. Thus, following the aforesaid proposition of law and admitted fact of the case that there is no incriminating material found during the course of search qua the assessment year for which impugned addition has been made, we hold that such an addition cannot be roped in in the assessment order passed u/s 153A. Accordingly, same is directed to be deleted. ....................... 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 preem....
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....er is as under: "6. The ld. counsel for the assessee submitted that the returns of income filed by the assessee for both the years under consideration, i .e. A.Ys. 2006-07 and 2007-08 were processed by the Assessing Off icer under section 143(1) prior to the date of search and since no notices under section 143(2) were issued by him for the said two years and even the period available to issue such not ices had already lapsed even prior to the date of search, the assessments for the said two years were deemed to have been completed. He submitted that the information relating to the undisclosed Bank account maintained by the assessee with HSBC, Geneva, Switzerland was available with the Assessing 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 inc....
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.... incriminating material as well as without incriminating material. He also contended that the proceedings under section 143(1) are not assessment at all and since the assessment proceedings for both the years under consideration had not been completed prior to the date of search, the scope of proceedings under section 153A was wide to assess and reassess the total income of the assessee. In support of this contention, he relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia ( Income Tax Appeal No. 1626 of 2010 & Others dated 14.05.2012) as well as the decision of the Delhi Bench of this Tribunal in the case of ShivnathRaiHarnarain ( India) Limited 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 CB....
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....ed that the conclusion of such alone is suff icient to give jurisdiction to the Assessing Off icer to proceed against the assessee under section 153A of the Act. In support of this contention, he has relied on the unreported decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra). In the said case, a question was posed by the Hon'ble Delhi High Court in paragraph no. 12 of its order as to whether the Assessing Off icer was empowered to reopen the proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search where an assessment order had already been passed in respect of all or any 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 determi....
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..... Completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment" 139. The Hon'ble Delhi High Court in its recent decision in the case of Pr. CIT vs. MeetaGutgutia (2017) 395 ITR 526 in paras 69 to 72 has held as under: "69. What weighed with the Court in the above decision was the "habitual concealing of income 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 Chawl....
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....ments may be deemed to be the income of the assessee of such f inancial year." 144. As per the above cited provision of section 69 of the Act, where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to 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 state....
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....we also draw support from the decision of the Co-ordinate Bench of ITAT Delhi in the case of Km. Preeti Singh Vs ITO in ITA No. 6909/Del/2014, where speaking through one of us, the Co-ordinate Bench observed as under: "(4) We have heard both sides patiently and attentively. We have also considered all the materials on our record. At the time of hearing before us, the relevant facts are not in dispute. Firstly, it is not disputed that the total investment made by the assessee in this year was Rs. 12,58,100/- and the 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 severa....
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....r the relevant previous year are immaterial in assessing income of a particular year; unless in accordance with proviso to Section 4(1) of I.T. Act, there is statutory provision to the contrary, authorizing income of a period other than the previous year under consideration to be charged to income-tax (such as Section 7 IB of I.T. Act and Section 72 of I.T. Act which allow losses to be carried forward). Useful reference may also be made to in the RatanchandLallumal 4 ITR 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....
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....her date of creation is mentioned as 30.01.2001 and both the dates are much prior to assessment year 2006-07, the year under consideration. Moreover, it is noticed that the amounts ref lected balances carried forward from earlier period and there is no reference to any deposition being made in the said bank account which could be related to any of the assessment years 2006-07 or 2007-08. Of course, there is reference to certain 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....
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...., in view of our findings for the assessment year 2006-07, we direct the AO to delete the addition. In the result, the appeal of the assessee is allowed. ITA No. 5330/Del/2016: AY: 2007-08: 154. In the appeal filed by the revenue in ITA No. 5330/Del/2016, the only issue is the addition of interest assuming such interest would have been earned by the assessee from HSBC Bank account. Since, we have deleted 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 fact....
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....wedding programme 475603 475656 475662 494183 11-06-2008 17-09-2008 23-09-2008 21-11-2008 HDFC Bank HDFC Bank HDFC Bank HDFC Bank 750000 1000000 925000 4432.5 TK PSK PSK PSK Total 2679432.50 Less : received 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 weddi....
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....AO need to be upheld. 166. The ld. AR, in reply, submitted that during the year, assessee 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. ....
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....had borrowed amount on interest during the year under consideration and the 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 incom....
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....format containing opening balance, addition, sale, profit 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 unde....
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....Pvt. Ltd., [2017] 392 ITR 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 ca....
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.... 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 Business Balance sheet detailed as under: Liabilities Assets ....
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....troduced 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 has not been able to appreciate or understand the facts of the case in the right perspective. The assessee is an individual. He is not carrying on any business except the activity of giving loans on interest from the overdr....
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....g 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 further query. Thus the capital balance reconciled with each debit and credit entries in lending business activity which were through bank entries, and which stand explained and accepted by the Ld. AO. 10.4 The Assessing Off icer without appreciating the above facts has made an ....
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....ital 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 entries is cannot be treated as 'unexplained cash-credit' or unaccounted investment as contemplated under the Act. 10.6 From the assessment order is quite clear and evident that the Ld. AO has not rebutted the above explanation on merit or with some documentary evidence, and just arbitrarily and with pre set mind concluded that th....
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.... 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 account of interest on foreign deposits." Ground No. 1 Unexplained Cash Credit u/s 68: 184. The AO found that the closing balance as per the reconciled bank balance was Rs. 2,45,75,570/- whereas as per the audited balance sheet, the closing balance sheet was Rs. 2,14,05,994/-. The AO made addition of the difference amount of Rs. 31,70,476/- as credit unexplained. The ld. CIT (A) deleted ....
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....s. 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 (A) held that the assessee has borrowed amounts on interest during the assessment year under consideration and such loans have been advanced on interest to different parties. The copies of the bank statement and the details of the parties to whom the amounts have been advanced on interest have been examined. The ld. CIT (A) held that the assessee has advanced interest bearing amounts of Rs. 5.55 Cr. against the ....
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....ous. 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 on account of disallowance u/s 14A. 5. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 15,77,464/- made by AO on account of interest on foreign deposits. 6. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 15,99,503/- made by AO on account of disallowance of interest u/s 36(1)(iii). 7. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs....
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....ssee 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 appellant on the issue as detailed above. It is a peculiar feature of the assessee's financial affairs that no formal books of accounts had been maintained which could take into account all the financial transactions entered into by the assessee and whatever balance sheet has been prepared, its for purpose of recording transaction namely the bank statements pertaining to money lending business. This being so the exclusion of a particular transaction pertaining to advance given for margin money and its receipt back in particular ye....
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....3 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 rebut/disprove the contents of the said paper. 2. In the said paper, the same name of the assessee is clearly mentioned as the beneficiary of the amount of Rs. 1,21,31,973/- for the half year ended on 30.09.2010. 3. The assessee has also failed to substantiate during the search, post search and assessment proceedings to explain as to why his name is mentioned in the said paper. It is clear that assessee is the real beneficiary in the profits of the company to the extent of ¼ of the company's profit. The assessee's attempt to mislead the department by saying that this is the net worth or the book value....
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....ire 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 namely, Petal Infra Pvt. Ltd. and Stuti Agriculture Pvt. Ltd. on account of sale of shares of M/s Marvel Infracon Pvt. Ltd. The assessee has purchased of shares @ Rs. 120/- per share in the financial year 2007-08 and sold at the same rate of Rs. 120/- per share. The AO made addition of Rs. 49,35,250/- holding that the book value of the share was Rs. 78.44 only and the amount received by the assessee over and above of the book value has been paid back in cash to the investor. The relevant portion of the Assessment Order is as under: "It is pertinent to mention that company whose share have been bought and sold is a Private Limited Company (Closely held) whose shares are not listed/traded on the stock exchange. There....
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....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) Chirag Associates Pvt. Ltd. 210. The AO held that the total amount of the interest paid by the assessee was Rs. 80,49,478/- and disallowed the proportional amount of Rs. 15,99,503/- which was computed as under: Name of Person Amount of loan (INR) Period Period From To Interest Rate Amount of Interest deemed Gallery 200000 1 year 13.5% 27,000 GurdeepSin 10,80,000 1 year 13.5% 1,45,800 H.S. Kalra 23,90,000 62 30.10.20 03.01.20 13.5% 54,806 22,00,000 5 months 04.01.2010 22.06.2010 13.5% 1,35,074 27,00,000 6 months 23.06.2010 06.01.2011 13.5% 1,91,737 28,00,000 22 07.01.20 30.01.20 13.5% 22,784 31,00,000 1 day 30.01.20 31.01.20 13.5% 1,146 &....
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....he 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. 2012-13: 214. Following grounds have been raised by the revenue: "1. On the facts & circumstances of the case the CIT (A) has erred deleting the addition of Rs. 6,14,300/-made by AO on account of Unexplained cash credit u/s 68 of the I.T. Act. 2. On facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 1,44,00,000/- made by AO on account of unexplained investments. 3. On facts & circumstances of the case the CIT (A) has erred in deleting the addition of Rs. 22,31,727/- made by AO on account of unexplained investments. 4. On facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 12,85,898/- made by AO on account of disallowance u/s of interest u/s 36(1)(iii). 5. On facts & circumstances of the case the CIT (A) has erred in deleting the addition of Rs. 18,65,552/- made by AO on account of interest on foreign deposit. 6. On facts & circumstances of the case the CIT(A) has erred in deleting the addi....
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....intings. Submissions of the assessee have been considered which ref lects 13 paintings wi th tag price shown as Rs. 2.38 Crores. Five paintings have been shown as acquired in the year 1990. One painting has been shown as acquired in 2001, four paintings have been stated to be acquired in 2006 and three painting have been acquired in 2007 as per assessee. Details submitted by the assessee have been perused and found that assessee has not been able to produce any credible evidence. The only evidence which assessee has submitted is handmade vouchers f iled during the assessment proceedings. The same were neither found during the search nor submitted during the post search proceedings. Fact remains that assessee has not been able to reconcile the paintings of Rs. 2.38 crores and submit any credible evidence. Hence, the explanation of assessee is rejected and addition of Rs. 1,44,00,000/- (2.38 crores -39.5% on account of GP i.e. Rs. 94,00,000 =Rs. 1,44,00,000 - GP taken in the assessment of assessee's wife case) is made in the income of the assessee." The facts pertaining to this issue are as under: "The assessee has paid the amounts for purchase of paintings as below: (i) An amou....
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....ncern and the confirmations of the artists or the delivery of the paintings have not been disputed by the revenue. 222. The ld. CIT (A) has given the finding after detailed examination of the evidences filed. On going through the details containing name of the artist from whom the said paintings were acquired, mode of obtaining the same, i.e. by means of purchase or gift, along with price details viz., tag price and cost price and payment details, relevant extract of bank statement reflecting payment made to these artists, receipts issued by the artists in respect of paintings sold, acknowledgment of amount received from the assessee, copy of cheque issued towards such payment and confirmation of the artists in respect of gifted paintings and keeping in view the fact that out of the 13 paintings inventorized 5 paintings are acquired in 1990, one in 2001, 4 paintings acquired in 2006 and 3 in 2007, technically no addition is called for in the instant year. 223. Having regard to the considered decision of the ld. CIT (A), and after examination of the entire fact as mentioned above, we decline to interfere with the order of the ld. CIT (A) on this issue. Ground Nos. 3 Addition on ....
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....ery of 95.310 gram and of his individual jewellery of 247.522gram, aggregating to total 342.832 grams. 232. Hence, the value of this unexplained jewellery is added which comes to ( Rs. 11,39,656/- + Rs. 10,92,071/-) aggregating to Rs. 22,31,727/- as per valuation report dated 31.03.2008 given by the assesee. 233. Thus, the dispute narrows down to accountability of the jewellery pertaining to the assessee of 247.5 gms. and P.S. Kalra (HUF) of 95.3 gms. 234. From the records, we find that the seized document page no. 50/A-14 which is the trial balance of HUF has shown the value of jewellery at Rs. 17,42,755/-. Further, the page no. 32 of Annexure A-3 reflects purchase of jewellery on 13.02.2005 from Punjab Jewellers. The value as on 31.03.2001 was Rs. 1,05,000/-. Further, the seized material page no. 19 of Annexure -6 KR-1 also reflects the existence of jewellery in the hands of the HUF. Further, the bills of jewellery have been produced which are as under: 18.01.2005 Rs. 8,895.50/- 19.12.2005 Rs. 3,12,443/- 17.02.2006 Rs. 3,28,250/- 235. It is also a matter of record that from the entire jewellery found an amount of 2148 gms. has been considered as unexplained and discl....