TaxTMI 
TaxTMI 
2021 (6) TMI 815
X X X X Extracts X X X X
X X X X Extracts X X X X
.... issues raised in the said bunch of appeals are identical and connected to each other, arising out of the assessment relating to common search proceedings the matters are heard analogously and are being disposed of by a common order for the sake of convenience. Item No. 1 to 4 (Ravichandra V. Mehta vs. DCIT) A.Ys. 2006-07 to 2009-10):- 2. Item No. 1 is taken as the lead case. Appeal has been filed by the assessee with the following grounds:- "1. The Learned Commissioner of Income Tax (Appeals) - 13, Ahmedabad has erred in confirming the addition of Rs. 2,77,48,083/- by way of interest in the hands of the appellant on substantive basis. 2. The action of the learned assessing officer and the learned Commissioner (Appeals) - 13, Ahmedabad confirming the addition of Rs. 2,77,48,083/- on substantive basis in the case of the appellant and treating it as income on protective basis in the hands of the son of the appellant is bad in law, more so when credit of tax paid by son is not given to the appellant. 3. The Learned Commissioner of Income Tax (Appeals) -13, Ahmedabad and the assessing officer failed to appreciate that the appellant treated his funds as divided between two sons ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rence to the competent authority was made by the CIT (Central)-II, Ahmedabad under Section 90 of the Act by and under letter dated 01.01.2013 with a request to supply the details of foreign bank accounts with HSBC Geneva and ABN AMRO Bank, such details, however, were not received by the Department. 5. The assessment was finalized upon determination of the interest income of Rs. 1,32,94,549/- and Rs. 1,44,53,534/- as shown interest income by two sons of the assessee namely Shri Bal Krishna Mehta and Shri Jawahir Mehta respectively and addition was made on the total amount of Rs. 2,77,48,083/- in the hands of the assessee on substantive basis. (ii) Interest income of Rs. 27,85,904/- being the interest income from Account No. 208695A with ABM AMRO Bank has been added as income in the hands of the assessee, (iii) Interest @1% of USD 54,00,000 for the period commencing from 01.04.2005 to 31.03.2006 i.e. USD 54,000 equivalent to Rs. 23,76,000/- as interest on bank accounts No. G-208164 has been added to the total income of the assessee; all additions were, in turn, confirmed by the Ld. CIT(A). Hence, the instant appeal before us. 6. The brief facts leading to the case is this that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dealt with different correspondences made to different bank authorities by the assessee. Relevant to mention that the assessee, in most of the bank accounts was holding the Power of Attorney to act on behalf of his sons for giving instructions for transfer of funds on their behalf for better management of their investments. 8. It appears from the observation made by the Ld. AO that only on the basis of the fact of instructions made by the appellant to the Bank authorities to transfer the funds to other account or to other bank, the Revenue came to a conclusion that none but the assessee is the real owner of the fund and the interest income of Rs. 1,32,94,549/- earned on the fund lying in Account No. 4432533 held with the assessee and his son Balkrishna Mehta and Rs. 1,44,53,534/- as earned on the fund lying with Account No. 4432541 held with his son Jawahir Mehta with HSBC Bank, Geneva has been added in the hand of the assessee on substantive basis holding it as assessee's fund. 9. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee vehemently argued on the fact of the statement recorded under Section 132(4) of the Act during search wherein the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....some of which are at Page 7 dated 22.05.2007, Page 8 dated 05.12.2008, Page 12 dated 25.06.2004 of the Paper Book. Through these communications he wanted to justify the fact of controlling the funds by the assessee only. According to Ld. DR it shows that the assessee is the real owner of the funds and, therefore, the addition on substantive basis in the hand of the assessee is just and proper. The Ld. DR further submitted that it was an error and/or mistake on the part of the Ld. AO to make addition in the hands of the sons of the assessee on substantive basis in the year under consideration and later on such errors have rightly been cured by the Ld. Appellate Authority by reversing the same from substantive to protective in the hands of the sons. 12. We have heard both the parties, we have also perused the relevant materials available on record. 13. Question before us is as to whether the funds lying with the bank accounts as mentioned hereinabove belong to the assessee before us and finally the interest income arising out of those funds can be assessed in the hands of the assessee on substantive basis. 14. Without repeating the facts of the matter and the case made out by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,549/- and Rs. 1,44,53,534/- admittedly shown as interest income by Shri Balkrish Mehta and Shri Jawahir Mehta respectively made in the hands of the assessee on substantive basis holding him as the owner of the funds out of which the interest income has arisen is purely a guess work, based on surmise and conjecture and without any evidence. Moreso, in very many occasions the assessee acted as a constituted attorney of his sons to manage such investment on their behalf; such action does not establish his right on funds. Neither any document has been relied upon by the Revenue which shows that the assessee has utilized such funds for his own benefit or tried to be a beneficiary of the funds. Mere directions to the bank do not establish the beneficial ownership and enjoyments of funds lying in bank accounts. These directions/instructions, as it appears on record, is only for further transfer and bifurcate funds between separate accounts of two sons and not by way of withdrawals for father's/appellant's use. On the other hand such instructions given by the assessee to transfer funds to other accounts neither disentitle the sons from claiming ownership of the funds lying in those accou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which has been considered by us. The fact of the case on the basis of which the matter was decided in favour of the Revenue is completely different from that of the fact available before us in the case in hand. Hence, the judgment is not applicable. 19. Thus, upon considering the entire aspect of the matter, in view of the above we do not find any case in favour of the Revenue holding that the assessee is the owner of the funds who has acted on the basis of the power of attorney for giving instructions to transfer of funds from one account to another that too to the accounts belong to his two sons in the absence of any clinching evidence in support of the said observation and conclusion thereon. 20. Further fault in making addition of income of the son Balkrishna Mehta is glaring on the face of the records since Balkrishna Mehta has already shown the said income in his personal return and paid tax thereon. We would like to refer the assessment order of Shri Balkrishna Mehta all dated 27.02.2015 for A.Y. 2006-07, 2007-08, 2008-09 and 2009-10 respectively under Section 153A r.w.s. 143(3) of the Act. It is evident that addition were made in the hands of the said assessee as appearin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y as undisclosed cash receipt of the assessee. Subsequently, tax was paid on such income by the Directors of the company upon filing settlement application owning up such amount as his undisclosed income. The addition made on the company was then held to be bad and deleted since the same was suffering from the principle of double taxation. The income which was taxed in the case of the partnership farm cannot be taxed in the hands of the partner again as has been held by the Hon'ble Gujarat High Court in the case of Kanubhai Maganlal Patel reported in (2017) 79 taxman.com 257 as relied upon by the Ld. AR has also been considered by us. 22. Thus, considering the above facts and proposition of law we do not hesitate to hold that the addition made in the hands of the assessee suffers from the principle of double taxation. Needless to mention that our view has been strengthened by the principle laid down by the Hon'ble Jurisdictional High Court in the cases as discussed above. Hence, the addition is liable to be deleted. 23. We have further found that in the appellate proceeding the Ld. CIT (A) altered the nature of addition made by the Ld. AO in the case of the son Balakrishna on pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of interest on ABN Amro Bank Account bearing NO. 208695A jointly held with grandson of the appellant. The fact relating to the issue is this that the assessee opened an account in ABN Amro Bank jointly in his name and his grandson Shri Vicky Mehta. The fund was transferred from the Account No. G208164 to Account No. 208695A ABN Amro Bank and whatever amount lying in the Account No. G208164 the same was transferred in the newly opened account in the name of R. V. Mehta and Vicky Mehta. Such account is maintained by the assessee and transferred the fund to HSBC Bank Geneva. The entire fund was earned in Dubai and the assessee made internal transaction in various banks. It was placed on record by the assessee that the assessee tried to get the certificate from the bank confirming the balance but since the bank was totally closed and merged with RBS, the officials have refused to provide the bank statement. It is relevant to mention that the said Vicky Mehta was assessed by the same Ld. AO who has been assessed on substantive basis and paid tax thereupon. The Ld. AO in the assessment proceeding initiated against the assessee added the same income in the hands of the assessee on subst....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in confirming the addition of Rs. 18,96,146/- by way of interest on ABN AMRO Bank account no. 208695A jointly held with grandson of the appellant. (5) The Learned Commissioner of Income Tax (Appeals)-13, Ahmedabad erred in confirming the addition of Rs. 1,45,000/- by estimating 10% interest income on fixed deposit held with HDFC bank by the appellant." 28. Ground No. 1 to 3:- The identical issues involved in the case have already been dealt with by us in IT(SS)A No.10/Rjt/2018 for A.Y. 2006-07 and decided in favour of the assessee. In the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, these grounds preferred by the assessee are allowed. 29. Ground No. 4:- The identical issue involved in the case has already been dealt with by us in IT(SS)A No.10/Rjt/2018 for A.Y. 2006-07 and decided in favour of the assessee and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the ground preferred by the assessee is allowed. 30. Ground No. 5:- The assessee does not want to proceed with the ground as submitted by the Ld. AR at the time of hearing of the matter. Hence, this ground of appeal is dismissed as not pressed.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in favour of the assessee. In the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, these grounds preferred by the assessee are allowed. Balkrishna Ravichandra Mehta vs. DCIT (A.Y. 2006-07 & 2007-08):- 35. Both the appeals filed by the assessee are directed against the common order dated 14.02.2020 passed by the CIT(A)-13 arising out of the order dated 27.02.2015 under Section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as to 'the Act') for A.Y. 2006-07 and 2007-08 respectively. ITA No. 01/Rjt/2021:- Shri Balkrishna Ravichandra Mehta vs. DCIT (A.Y. 2006-07):- 36. The assessee has filed the appeal with the following grounds:- "1. The Learned Commissioner of Income-tax (Appeals)-13, Ahmedabad erred in treating a substantive income of Rs. 1,31,94,550/- returned b the appellant into a protective income in the hands of the appellant. 2. The Learned Commissioner of Income-tax (Appeals)-13, Ahmedabad erred in treating a substantive income returned by the appellant into a protective income in the hands of the appellant without issuing notice in this regard and hence the said part of the order being bad in law be quashed." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should be given an opportunity of being heard. Therefore, unless the person in whose hand the income is directed to be added on protective basis from substantive basis the direction issued by the appellate authority is an exercise in futility. The completed assessment cannot be disturbed in the manner as has been done by the Ld. CIT(A) in the case in hand. This direction is, thus, patently incorrect in the absence of providing an opportunity to the effected party while discharging judicial functions by the Ld. CIT(A). In that view of the matter relying upon the discussion on the identical issue as narrated hereinabove the assessment made by the Ld. CIT(A) in treating the substantive income of Rs. 1,31,550/- returned by the appellant into a protective income in his hands is not sustainable in the eye of law and thus the same is hereby expunged. ITA No. 02/Rjt/2021:- Balkrishna Ravichandra Mehta vs. DCIT(2007-08):- 38. The assessee has filed the appeal with the following grounds:- "1. The Learned Commissioner of Income-tax (Appeals)-13, Ahmedabad erred in treating a substantive income of Rs. 1,66,76,950/- returned by the appellant into a protective income in the hands of the ap....