TaxTMI 
TaxTMI 
2021 (6) TMI 757
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.... of the order by the ld. Commissioner of Income Tax (Appeals)-50, Mumbai in appeal dated 22/09/2017 (ld. CIT(A) in short) against the order of assessment passed u/s. 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/03/2015 by the ld. Dy. Commissioner of Income Tax, Circle-8(3) (hereinafter referred to as ld. AO). Let us take up the appeals first in the case of Shri Sunil Chimanlal Gandhi. ITA No.7179/Mum/2017 (A.Y.2006-07)- Quantum Appeal in the case of Shri Sunil Chimanlal Gandhi 2. We find that assessee has contested the addition made u/s.69A of the Act in respect of monies lying in foreign bank account as undisclosed income of the assessee in the assessment framed u/s.153A r.w.s. 143(3) of the Act for the A.Y.2006-07. We also find that assessee has raised a preliminary ground that no addition could be made for the A.Y.2006-07 being a concluded assessment on the date of search in the absence of any incriminating material relatable to that assessment year. Hence, we would like to address this preliminary issue as to whether any addition could be made in a concluded assessment in the absence of incriminating material and whether there is a....
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....the assessee. In response to the said notice, the assessee filed the return of income on 23.07.2013 declaring the income of Rs. 58,889/-. Subsequently, the ld.AO issued a notice u/s 143(2) of the Act on 12.09.2013. Vide Notice u/s.142(1) of the Act issued on 28.10.2013, the assessee was asked to furnish the details about the foreign bank account in HSBC at Geneva. In full cooperation with the department and in good faith, the assessee through different submissions filed the details as required by the ld.AO. The assessee reiterated in all his statements that he was neither the owner of the said bank account, nor did he have any beneficial interest in the said account. He consistently held that the account belonged to, and was operated by his son, Shri, Nirav S. Gandhi. Hence, he was unable to furnish details of the said bank account to the authorities. 3.3. In all his replies to the income tax department, the assessee continued to deny any possession, ownership or beneficial interest in this bank account. Further, on 27.03.2014, the assessee had submitted a notarized copy of the official certificate confirming that his son, Shri Nirav Gandhi was the possessor, ultimate authority h....
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....ssment. Admittedly the residential status of assessee is resident and ordinarily resident wherein the global income of the assessee is taxable in India. We find that assessee had always stated that the HSBC Bank account in assessee's name was opened by his son Shri Nirav Gandhi for the purpose of securing his future (i.e. Shri Nirav Gandhi) and for sentimental reasons only. Hence, the assessee though gave a statement u/s.132(4) of the Act on the date of search and subsequently, had later retracted the same by not offering the disclosed sum in the return of income filed pursuant to notice issued u/s.153A of the Act. The very fact that income was not offered in the return u/s.153A of the Act despite giving a statement u/s.132(4) of the Act making same disclosures, tantamount to retraction made by the assessee. 3.7. During the course of assessment proceedings, the ld. AO issued notice u/s.142(1) of the Act dated 28/10/2013 asking the assessee to submit the complete copy of bank statement in HSBC, Geneva, right from inception till date. The said notice also gave an option to the assessee that if the assessee is not in possession of statement of his bank account, then he was requested ....
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....bank account maintained with HSBC Bank, Geneva. We find in response to Question Nos. 15 to 24 while recording a statement on oath by the ld. AO during the assessment proceedings on 29/07/2013, the assessee had categorically denied having any transactions in the said bank account with HSBC Bank, Geneva and submitted that the said account does not belong to him and it was all maintained and operated by only his son Shri Nirav Gandhi who is a resident of Belgium doing business there for the past 20 years. Again, the assessee filed yet another letter dated 19/09/2013 reiterating his earlier stand. We find that the ld. AO also records in para 8 of his assessment order that vide letter dated 27/03/2014, the assessee had stated that the said HSBC Bank was owned and operated by his son Shri Nirav Gandhi who is a non-resident since 1993 and presently is a resident of Belgium; that the assessee had submitted a translated statement of approval issued by the Belgium tax authorities stating that the full compliance of the same is done as per Belgium tax laws; and since the entire transactions in HSBC Bank account, Geneva has been disclosed to the Geneva tax authorities and the same should not b....
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....n (Nhava Sheva) reported in 374 ITR 645. The ld. AR also placed reliance on the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Best Infrastructure (India) Pvt. Ltd reported in 397 ITR 82 to drive home the point that statement recorded u/s.132(4) of the Act does not by themselves constitute incriminating material. Hence, the argument advanced by the ld. DR in this regard is dismissed. We find that the ld. DR vehemently relied on the decision of the Hon'ble Kerala High Court in the case of E N Gopakumar vs CIT reported in 390 ITR 131 wherein it was held that there is no requirement for recovery of any incriminating material during the course of search so as to make the assessment u/s.153A of the Act to make any addition thereon. We find that the Hon'ble Jurisdictional High Court in 374 ITR 645 stated above had decided the issue on this legal principle which would bind this Tribunal more than the decision of the Hon'ble Kerala High Court. Hence, respectfully following the decision of the Hon'ble Jurisdictional High Court stated supra and in view of the undisputed fact that there is no incriminating material found during the course of search and in view of the fact th....
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.... order of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal dated 22/09/2017 & 25/09/2017 respectively in the matter of imposition of penalty u/s.271 (1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act). 7.1. Since the quantum assessments have been cancelled for the A.Yrs. 2006-07 and 2007-08 in ITA Nos. 7179 & 7180/Mum/2017 respectively hereinabove, the concealment penalty u/s.271(1)(c) of the Act levied for both the years would have no legs to stand. Accordingly, the grounds raised by the assessee for these two years are allowed. 8. In the result, penalty appeals of the assessee for A.Yrs 2006-07 and 2007-08 in ITA Nos. 7181/Mum/2017 & 7182/Mum/2017 respectively are allowed. ITA Nos.7222/Mum/2017 to 7228/Mum/2017 (A.Y.2006-07 to 2012-13) - penalty appeals u/s.271(1)(b) of the Act 9. These appeals arise out of the independent orders of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal in the matter of imposition of penalty u/s. 271 (1)(b) of the Income Tax Act, 1961 (hereinafter referred to as Act) for the A.Ys. 2006-07 to 2012-13 in the case of Shri Sunil C Gandhi. 9.1. We find that al....
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....)(b) of the Act in ITA Nos.7222/Mum/2017 to 7228/Mum/2017 (A.Y.2006-07 to 2012-13)of the assessee i.e. Shri Sunil C Gandhi are allowed. ITA No.7183/Mum/2017 (A.Y.2012-13) - Shri Sunil C Gandhi - Penalty u/s.271AAA of the Act 11. This appeal arises out of order of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal dated 25/09/2017 in the matter of imposition of penalty u/s.271AAA of the Income Tax Act, 1961 (hereinafter referred to as Act) for the A.Y. 2012-13 in the case of Shri Sunil C Gandhi. 12. We have heard rival submissions and perused the materials available on record. We find that during the course of search on 16/09/2011, the assessee had admitted disclosure of Rs. 96,15,428/- in his statement recorded u/s.132(4) of the Act on account of unexplained cash and jewellery found during the course of search and the same was duly disclosed in the return of income filed by the assessee for A.Y.2012-13 on 30/09/2012 offering the said income. We find that assessment for the A.Y.2012-13 was completed by the ld. AO u/s.143(3) of the Act on 31/03/2015 accepting returned income of Rs. 1,01,81,170/- which admittedly included the amount disclosed by....
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....elonging to him as well as to various family members vide his letter dated 08/11/2011 before the Revenue. The said reconciliation statement further provides details of wealth tax returns that were filed and valuation reports that were obtained for the jewellery which was found in the course of search and seizure. The said details also provide that details about the jewellery that was purchased, details from whom it was purchased along with copies of relevant bills thereon. When the only source of income is from diamond business, it could be safely concluded and inferred that assessee could have earned undisclosed income only from such businesses, hence, the second condition prescribed in 271AAA(2) i.e. substantiating the manner in which undisclosed income has been derived has been duly complied with by the assessee in the instant case. Hence, we hold that assessee is duly entitled for immunity from levy of penalty in respect of undisclosed income disclosed during the course of search in terms of Section 271AAA(2) of the Act. Accordingly, the penalty levied for A.Y.2012-13 in the case of Shri Sunil C Gandhi is hereby directed to be deleted. 13. In the result, appeal of the assesse....
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....t maintained in the name of Shri Sunil C Gandhi with HSBC Bank, Geneva. As stated supra, Shri Sunil C Gandhi had always maintained and stated that the said bank account in his name was opened by his son Shri Nirav Gandhi for the purpose of business purposes of Shri Nirav Gandhi and for securing the future of Shri Nirav Gandhi; that the said bank account was opened in the year 2000 when Shri Sunil Gandhi visited Belgium to meet his son and that the said bank account transactions are fully owned up and belonging only to Shri Nirav Gandhi, who is a non-resident. Since, the ld. AO had made addition in respect of peak balance of the amounts lying in the said bank account as on November 2006 amounting to Rs. 1,26,18,254 (USD 2,82,857.07) on substantive basis in the hands of Shri Sunil C Gandhi, we find that the ld. AO had proceeded to make the very same addition in the hands of Shri Nirav S Gandhi on protective basis. The fact that the said transaction by at any stretch of imagination cannot be brought to tax in the hands of Shri Nirav Gandhi in view of the fact that he is a non-resident, has not been considered by the ld AO. We find that the ld. CIT(A) had observed that since the substa....
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....sessment year are identical with facts and circumstances of A.Y.2006-07 deliberated hereinabove, the decision rendered for A.Y.2006-07 in ITA No.7272/Mum/2017 shall apply with equal force for this assessment year also except with variance in figures. 20. In the result, both the quantum appeals of the Revenue in ITA No.7272/Mum/2017 & 7273/Mum/2017 for A.Y.2006-07 & 2007-08 respectively are dismissed. ITA No. 7236/Mum/2017 to 7242/Mum/2017 for A.Y.2006-07 to 2012-13 in the case of Shri Nirav Sunil Gandhi - Penalty appeals u/s.271(1)(b) of the Act 21. These appeals arise out of the independent orders of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal in the matter of imposition of penalty u/s. 271 (1)(b) of the Income Tax Act, 1961 (hereinafter referred to as Act) for the A.Ys. 2006-07 to 2012-13 in the case of Shri Nirav Sunil Gandhi. 21.1. We find that these penalties are levied for various assessment years by the ld. AO on the ground that assessee has not cooperated with the assessment proceedings. But while narrating the facts of the case in the case of the assessee (i.e. Shri Nirav Gandhi) in ITA No.7272/Mum/2017 supra, we find that th....
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.... the very basis of the protective addition in assessee's case is to protect the interest of Revenue in the event of the substantive demand being non-recoverable?" The appellant prays that the order of the CIT(A) on the above grounds be set aside and that the Assessing officer be restored. The appellant craves leave to amend or alter any ground and / or add new grounds which be necessary. 24. We have heard rival submissions and perused the materials available on record. We find that a search and seizure action was carried out u/s.132 of the Act at the residence and business premises of Shri Sunil C Gandhi and his group on 16/09/2011 by the Income Tax department. The present assessee i.e. Shri Pranav Sunil Gandhi is the son of Shri Sunil C Gandhi, who is also covered in the search action. The assessee Shri Pranav Sunil Gandhi is resident of India and is also partner in Nehal Diamonds, a partnership firm engaged in the diamond business. The original return of income for the A.Y.2006-07 was filed by Shri Pranav Sunil Gandhi on 12/07/2006 declared total income of Rs. 98,408/-. Pursuant to the search, the notice u/s.153A of the Act was issued on him and he filed the return in respo....
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....in respect of funds lying in the said bank account in HSBC, Geneva and hence, no addition could be made in his hands either on substantive basis or protective basis. Accordingly, the ground raised by the Revenue is dismissed. 28. In the result, appeal of Revenue in ITA No.7274/Mum/2017 for A.Y.2006-07 in the case of Shri Pranav Sunil Gandhi is dismissed. ITA No.7275/Mum/2017 (A.Y.2007-08) - Quantum Appeal filed by the revenue in the case of Shri Pranav Sunil Gandhi 29. As the facts and circumstances for this assessment year are identical with facts and circumstances of A.Y.2006-07 deliberated hereinabove, the decision rendered for A.Y.2006-07 in ITA No.7274/Mum/2017 shall apply with equal force for this assessment year also except with variance in figures. 30. In the result, the quantum appeals of the Revenue in ITA No.7274/Mum/2017 & 7275/Mum/2017 for A.Y.2006-07 & 2007-08 respectively in the case of Shri Pranav Sunil Gandhi are dismissed. ITA No.7229/Mum/2017 to 7235/Mum/2017 (A.Ys.2006-07 to 2012-13 respectively) - Shri Pranav S. Gandhi - Penalty Appeals u/s 271(1)(b) of the Act 31. These appeals arise out of the independent orders of the ld. Commissioner of Income Tax (Ap....