TaxTMI 
TaxTMI 
2024 (6) TMI 734
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....el/2016 25.04.2016 27.02.2015 2011-12 3627/Del/2016 25.04.2016 27.02.2015 2012-13 PENALTY APPEALS 6767/Del/2017 17.10.2017 30.04.2015 2006-07 6769/Del/2017 17.10.2017 30.04.2015 2007-08 7756/Del/2017 20.10.2017 30.04.2015 2008-09 7757/Del/2017 20.10.2017 30.04.2015 2009-10 7758/Del/2017 20.10.2017 30.04.2015 2010-11 7759/Del/2017 20.10.2017 30.04.2015 2011-12 7760/Del/2017 20.10.2017 30.04.2015 2012-13 2. The revenue has also filed appeal in ITA 3368/Del/2016 for AY 2010-11 against the order of the Ld. CIT(A)-30, dated 11.03.2016 for AY 2010-11. 3. Since the identical issues are involved in all the above appeals, therefore, all these appeals are taken up together and disposed off by this consolidated order for the sake of convenience and brevity. We take ITA No. 6743/Del/2017 for AY 2006-07 as lead case. 4. Brief facts of the case are, assessee filed its return of income on 31.10.2006, declaring an income of Rs.6,47,19,409/-. Subsequently, a search and seizure operation u/s 132 of the Income Tax Act, 1961, (for short "the Act) was conducted at various busin....
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....bsequent post search proceedings as there was no options available with the assessee. Further, he observed that till the date of completion of assessment, none of the account holders have furnished the complete statements of this bank account. The AO discussed the statement recorded u/s 132(4) of the Act with the assessee on 23.08.2011, which was discussed elaborately and reproduced the same in his order at page 8 to 11. The AO observed from the statement of Smt. Shobha Kumar(wife), Shri Rahul Kumar (son) that initially they denied the opening of any bank account abroad and later accepted that they have foreign bank account. The AO also discussed in his order about the reference made to the concerned authorities through FT&TR Division of the CBDT, New Delhi, calling for certain information relating to HSBC Account, London operated by the assessee. Due to non-receipt of requisite information from the concerned authorities, the time limitation of completion of assessment in this case was extended in accordance with the provision of section 153B(1)(viii) of the Act. 6. The AO observed at para 10 of the order that the assessee during search u/s 132 of the Act voluntarily stated on 2....
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....nk account however, the other details which was with the department made the assessee to accept existence of the bank account opened by the assessee and accepted the same by filing revised return of income. Further he observed that the conduct of the assessee in not providing the concerned waiver form is amounts to non-cooperation on the part of the assessee. Only after search and subsequent proceedings, assessee accepted the same and disclosed the above said bank deposits as income. With the above observations, the ld. CIT(A) has dismissed the appeal filed by the assessee for the current assessment year. 9. Aggrieved with the above order, the assessee is in appeal before us, raising following grounds of appeal:- "1. That the Commissioner of Income Tax (Appeals) erred on facts and in law in not holding that the assessment order dated 27.02.2015, passed under section 143(3) r.w.s. 153A of the Income-tax Act, 1961 ('the Act') is beyond jurisdiction, bad in law and void-ab-initio. 1.1. That Commissioner of Income Tax (Appeals) erred in not appreciating that the impugned assessment under section 153A having been completed de-hors any incriminating material/....
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.... not appreciating that the exchange rate adopted by the assessing officer was without any basis. 3. That the Commissioner of Income Tax (Appeals) erred in not directing deletion of interest charged under section 234B of the Act." 10. Subsequently, the assessee has filed additional grounds of appeal in accordance with Rule 11 of the ITAT Rules with the prayer and the same is reproduced below:- "4. "That on the facts and circumstances of the case, the Ld. CIT(A) erred on facts and in law in holding that the assessment under section 153A of the Act has been completed within the statutory time limit as mentioned in section 153B of the Act. 5. "That on true construction of Article 23(3) of the India-UK Double Taxation Avoidance Agreement, the credits in alleged bank account in London can't be taxed in the hands of the Appellant." 6. "That in view of Article 23(3) of the India-UK Double Taxation Avoidance Agreement, the Notification No. 91 dated 28.08.2008 issued under section 90(3) of the Act is inapplicable." 7. "Without prejudice to above, Notification No. 91 dated 28.08.2008 issued under section 90(3) of the Act will not be applicab....
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....nfer jurisdiction to tax the said amount. 2.5. That the Commissioner of Income Tax (Appeals) erred in alleging that the Appellant had intentionally concealed vital information by not signing the consent/declaration form, without appreciating that the Appellant was not at all competent to sign such form. 2.6. That the Commissioner of Income Tax (Appeals) failed to appreciate that there was no evidence on record to corroborate that deposit(s) in the alleged foreign bank account represented income earned/received by the Appellant in India. 2.7. Further, without prejudice, that the Commissioner of Income Tax (Appeals) erred in not appreciating that the exchange rate adopted by the assessing officer was without any basis. 3. That the Commissioner of Income Tax (Appeals) erred in not directing deletion of interest charged under section 234B of the Act. Additional Grounds of Appeal 4. That on the facts and circumstances of the case, the Ld. CIT(A) erred on facts and in law in holding that the assessment under section 153A of the Act has been completed within the statutory time limit as mentioned in section 153B of the Act. 5. ....
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....ernment of France in 2011 under the Double Tax Avoidance Convention/ Agreement ("DTAC/DTAA") entered between India and France, which revealed that the Appellant- Assessee was beneficial owner of a bank account with HSBC Bank, London. 1.3. Further, in "Annexure E" to the said complaint, the Respondent has enclosed a letter dated 26.10.2015 issued by JCIT, Central Range-8, New Delhi to the Respondent, which provided clarification regarding source of information relating to the alleged undisclosed foreign bank account. [Kindly refer page 10 of the Paper Book, Volume 2]. 1.4. The said letter dated 26.10.2015 also contains a certified copy of the letter dated 28.06.2011 through which the said information was handed over by the Government of France to the Government of India in a pen drive. 1.5. Data provided in a pen drive to the Government of India by the authorities of French Government is based the documents stolen in 2006 by a person working for HSBC in Geneva. The documents purportedly contained details of more than 1,00,000 clients of HSBC from around the world. 1.6. The document alleged to be statement of a bank account with HSBC London does no....
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....f search and seizure. ii. the entire information and material was in possession of the Department prior to the date of search. The Hon'ble ITAT, Delhi has held that once any document which though is in the nature of incriminating material but if it has not been found in the course of search, then such an addition cannot be roped in the assessment u/s. 153A. The Hon'ble ITAT further held that if the Revenue has any information in its possession prior to the date of search i.e., the USB received from a foreign government and no corroborative evidence was found during the course of search so as to link the information already in hand with the material found during the course of search, then such an information for making any kind of addition ostensibly is outside the purview of Section 153A of the Act. Accordingly, the reliance place by the Revenue solely on the USB was held to be invalid and additions made by the revenue was deleted. c) ACIT v. Shri Rajeshkumar Govindlal Patel, ITA Nos. 25 & 26/ITAT Rajkot/2021, 12.04.2023, ITAT Rajkot (Relevant para 8.2, 8.3, 9.1 & 9.4, Page 36-80 of case law compendium, Volume 3.1): In this case, the AO attempted ....
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.... of the assessee, Upon appeal, the ITAT held that an information, regardless of its validity and accuracy from a reliable source, must still be converted into evidence in order to draw an inference and establish the proven fact. The court observed that the French authorities had provided the information stored on a USB drive but the Act does not include any provision that assumes the truth of the information received from the Competent Authority under the DTAA between India and France. Therefore, the court held that it is the responsibility of the AO to prove that the material obtained or printed from the Pen Drive contains exactly the contents of the 'Bank Account' as recorded by the bank and only then can it be deemed to possess evidentiary significance of categorical value. Since, there was no incriminating material found during the course of search to support and substantiate the said addition hence the court held that the income relating for relevant AY under consideration was beyond the scope of section 153A of the Act. 1.10. Per contra, in Renu Tharani v. DCIT, ITA No.2333/Mum/2018, 16.07.2020 (Relevant paras 45, 46 & 50, Page 203-255 of case law compendium,....
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....the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities; c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities. 1.16. Accordingly, as per section 65B of the Indian Evidence Act, 1872, the Revenue Authorities have to mandatorily and scrupulously follow the conditions laid down under section 65B(2) and (4) of the Ind....
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....nk statement can't be relied on to complete the assessment. 1.22. Reliance in this regard is placed on the following judgements: a) Hon'ble Supreme Court in the case of Anvar P.V. v. P.K. Basheer, [2014] 10 SCC 473(SC) dated 18.09.2014 (Relevant para: 22, Page 301314 of case law compendium, Volume 3.1) has stated that that noncompliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law. b) Further, the Hon'ble Supreme Court in the case of Arju Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal, Civil Appeal Nos. 2082520826 of 2017 dated 14.07.2020 (Relevant para: 22, Page 301-314 of case law compendium, Volume 3.1) held that the non obstante clause in section 65B(1) makes it clear that when it comes to information contained in an electronic record, admissibility and proof thereof must follow the drill of section 65B. The Hon'ble Court further observes that the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced i.e., the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the....
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....cate u/s. 65B of the Indian Evidence Act 1872 in the case of the assessee which are to be followed mandatorily. Therefore, we have no hesitation to hold that this Certificate is not a valid Certificate as prescribed under the Indian Evidence Act 1872 and hence cannot be enforced. Therefore, the Certificate obtained in the case of the assessee cannot be regarded as a legally valid certificate u/s. 65B of the Indian Evidence Act and the same has no recognition in the eyes of law. The information contained in the seized pen drive is could not be considered as admissible evidence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31-3-2022 is not a valid assessment order in the eyes of law and it deserves to be set aside. 47. So far as Grounds No. 2 and 3 (AY 2012-13) are concerned, since we have set- aside the assessment order by allowing the Grounds No. 4 & 5 raised by the assessee, the Ground Nos 2 and 3 needs no separate adjudication. It is ordered accordingly. 48. In the r....
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....gement of Hon'ble ITAT, Rajkot in ACIT v. Shri Rajeshkumar Govindlal Patel, ITA Nos. 25 & 26/ITAT Rajkot/2021, 12.04.2023 (Relevant para: 9.3, Page 36-80 of case law compendium, Volume 3.1): held that a statement recorded under section 132(4) of the Act is not a document seized during the continuation of a search. 2.7. The Ld. AO has also made additions amounting to Rs. 2,28,00,000/- alleging the sum as fictitious expenditure for AY 2010-11. The Ld. AO has based his conclusion on an accountant' note which was found during search. The addition in relation to the alleged fictious expenditure has been deleted by Ld. CIT(A) holding that the Appellant Assessee has explained the contents of the note. Thus, the accountant' note cannot be an incriminating material for the purpose of section 153A of the Act 2.8. The revenue has preferred an appeal against the aforesaid order of Ld. CIT(A). Even if that appeal of revenue is allowed by this Hon'ble Bench, the incriminating material bears nexus to AY 2010-11. It will not confer jurisdiction to the department in relating to other completed assessments (vide para 11 of Abhisar Buildwell (P.) Ltd (supra), Page 41....
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....owned by a resident of a Contracting State, wherever arising, other than income paid out of trusts or the estates of deceased persons in the course of administration, which are not dealt with in the foregoing Articles of this Convention, shall be taxable only in that State. 2. The provisions of paragraph (1) shall not apply to income, other than income from immovable property as defined in paragraph (2) of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15 of this Convention, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraphs (1) and (2) of this Article, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention, and arising in the other Contracting State may ....
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....e 3.2): dismissed the appeal of the revenue against the above decisions of Madras High Court & Karnataka high Court. 3.11. In Union of India v. Azadi Bachao Andolan, [2003] 263 ITR 706 (SC), [2003] 263 ITR 706 (SC), 07.10.2003, Supreme Court of India (Relevant para: Para 23-26, Page 482-531 of case law compendium, Volume 3.2 after inter alia, referring to CIT v. R.M. Muthaiah (supra) the Hon'ble Supreme Court observed that: "... We approve of the reasoning of the decisions which we have noticed. If it was not an intention of the Legislature to make a departure from the general principles of chargeability under section 4, and the general principles of ascertainment of total income under section 5 of the Income-tax Act, then there was no purpose of making those sections 'subject to the provisions of the Act'. The very object of grafting the said two sections with the said clause is to enable the Central Government to issue a notification under section 90 towards implementation of the terms of the DTAA which would automatically override the provisions of the Income-tax Act in the matter of ascertainment of chargeability to income tax and ascertainment of ....
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....an DTAA which employed the expression "may be taxed" and in the light of the judgment of the apex court in the case CIT v. P. V. A. L. Kulandagan (supra), the ITAT excluded the profit earned from the permanent establishment at Oman. Upon appeal by revenue, the Hon'ble High Court upheld the order of the Tribunal and dismissed the appeal of Revenue. Effect of Section 90(3) and notification 91/2008 dated 28.8.2008 on the meaning of term "may be taxed" particularly for AY 2006-07 and AY 2007-08 in question. 3.16. Sub-section (3) to section 90 was inserted vide Finance Act 2003 with effect from 01st April 2004 and provides as under: "(3) Any term used but not defined in this Act or in the agreement referred to in sub- section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf." 3.17. Pursuant to 90(3) of the Act, notification number 91/2008 dated 28.08.2008 was issued by CBDT, which stated as follows: "In exercise of the powers conferred....
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....the principles flowing from the judgement of Hon'ble Bombay High Court in Godrej & Boyce Mfg. Co. Ltd. v. DCIT, [2010] 328 ITR 81, dated 12.08.2010 (Relevant para 65, 66 & 67, Page 638-676 of case law compendium, Volume 3.2) and the ruling of Hon'ble Supreme Court in CIT v. Essar Teleholdings Ltd., [2018] 300 CTR 561 dated 31.01.2018 (Relevant para: 23 & 48, Page 677-692 of case law compendium, Volume 3.2. These judgements were no doubt in the context of Rule 8D and Section 14A of the Act and not in the context of Notification 91/2008 dated 28.8.2008. However, these judgements have held that the Rules/notifications issued under the fiscal statutes will be, unless otherwise expressly provided, prospective in nature. 3.21. Notification dated 28.8.2008 cannot be retrospective and applicable to AY 2006-07 & 2007- 08, particularly where civil and penal consequence are attracted. Income in the form of alleged credits in a bank account in London would fall Article 23 of Indo-UK DTAA. Also, it would be income arising in UK and hence governed by Article 23(3). 3.22. The income in question has been assessed by the Ld. AO as "income from the sources". ....
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.... had invoked Section 163 of the Act. It is implicit that both the Nepali citizens were not residents for the purpose of Indian Income Tax Act, 1961. 3.30. The sums deposited by non-residents in the bank account located in India were held taxable under Section 69 of the Act. Non-residents are liable to tax under the Act only on income which has arisen in India. It is also implicit that clear basis of the aforesaid decision is that income being sums deposited in bank account arise in the country in which the bank account is located, 3.31. ITAT has clearly in view that Section 69 is otherwise attracted. It is therefore self-evident that ITAT has effectively concluded that income accrues or units in India as otherwise non- resident will not be taxable in India. 3.32. Therefore, it is clear ratio of the above decision type of income being sums deposited in bank account is not an item of income dealt with by specific articles of the DTAA and consequently fall only within the ambit of Article 21 - Other Income of the DTAA. Article 21 of the Indo-Nepal DTAA granted taxing right only to the country of residence, thus such sums were held as not taxable in India. ....
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.... ITAT in ITO v. Branch Manager, sums in question are not taxable in India, in view of Article 23(3)/ 4. The impugned assessment order passed under section 153A of the Act for all the AYs is barred by limitation prescribed under section 153B of the Act. Reasoning of the Ld. AO to extend it, based on reference made to Swiss tax authority is invalid. [AY 2006-07 and AY 2007-08: Ground Number 4 (Additional Ground) AY 2008-09, AY 2009-10: Ground Number 2 AY 2010-11: Ground Number 1 AY 2011-12 and AY 2012-13: Ground Number 2] 4.1. In the impugned assessment order, it has been averred that a reference has been made to the concerned Swiss tax authorities through the FT & TR Division of CBDT calling for certain information vide letter dated 16.11.2012 and 11.02.2015. Accordingly, it is the contention of the Ld. Assessing Officer that because of the said reference the time period for concluding the assessment u/s 153A of the Act is extended. 4.2. The Notification No. S.O. 2903(E) dated 27.12.2011 amending the DTAA between India and Switzerland clearly states that that Exchange of Information provided for in the said Protocol will....
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....ormation for the period prior to 01.04. 2011. Therefore, the information for period prior to 01.04.2011 can't be received and it would be futile to wait for such information by making an invalid reference. Thus, the period of limitation could not be extended by the Revenue and the impugned assessments are clearly barred by limitation and deserve to be quashed. 15. On the other hand, the Ld. DR submitted that the assessee has agreed to disclose the above said undisclosed credit in the bank account in the revised return of income and he submitted that can the assessee raise the issues in the appellate proceedings on which no addition was made in the assessment order by the AO. The AO has accepted the revised return of income and proceeded to complete the assessment based on the revised return of income. Therefore, he submitted that all the issues raised by the assessee on such already declared income are not to be entertained by the Hon'ble Bench. Accordingly, he prayed that several issues raised by the Ld. AR on the issue of additional income declared by the assessee is only afterthought. Further, he brought to our notice Question No. 45 from the statement recorded u/s 131 in....
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....ot authenticated by any authorities and also this is not coming directly from the HSBC bank, has no evidentiary value. In this regard, he relied on following cases: a. Bishwanath Garodia (supra), in this case, the assessment was completed by the AO on the basis of information of assessee having bank account with the HSBC bank and having conducted the search and seizure operation, the department could not find any incriminating material. The case of the assessee was decided on the basis of jurisdictional issue and not on the basis of merits. Therefore, this case is distinguishable to the present case. b. Anurag Dalmia (supra), In this case, the search was conducted on the basis of alleged information contained in the USB that Indian persons maintaining bank account with HSBC Switzerland. In search, no documents or any incriminating material was found from the possession of the assessee, the coordinate bench held that no incriminating material found during the search and the information of having bank account was already with the department therefore, it was held that though there is material in the nature of incriminating but it has not been found in the possession....
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....ly available from known sources and therefore such details do not validate the case of the AO in any manner and it is upon the AO to prove the truthfulness of the same. In our view, this case also distinguishable to the facts in the present case, as discussed in the case of Anurag Dalmia (supra) case. d. Similarly in the cases of Parminder Singh Karla, Late Shri Bhushan Lal Sawhney, Vikram Dhirani (supra), in the above cases, it was held that an information, regardless of its validity and accuracy from a reliable source, must still be converted into evidence in order to draw an inference and establish the proven fact. It was held that the French authorities had provided the information stored on a USB drive but the Act does not include any provision that assumes the truth of the information received from the Competent Authority under the DTAA between India and France. Therefore, it was held that it is the responsibility of the AO to prove that the material obtained or printed from the Pen Drive contains exactly the contents of the 'Bank Account' as recorded by the bank and only then it can be deemed to possess evidentiary significance of categorical value. Since, t....
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....ted since the mandatory requirements of section 65B of the Evidence Act are not satisfied. In the given case, the facts are different considering the fact that the information are received thru the FT&TR Division and these evidences are forwarded to the respective officers to make the investigations, normally the information's may not contain basic information's or may contain certain information relating to the alleged assessees, upon investigations, the information's used to corroborate with the information collected from the respective assessees. In the given case, the contents of the information are complete and the assessee has accepted the same upon investigation and not preferred to retract the same before any authorities. At this stage, contesting the same is not appropriate. In our view, the Evidence Act is applicable based on the evidential value of the same and it is known fact that it is not applicable in the income tax proceedings. Therefore, in our view the facts in the above case are distinguishable to the facts in the present case. b. Arjun Pandit Rao Khotkar Vs. Kailash Kushanrao Gorantyal (supra), in this case also, the findings in the Anvar P.V supra was....
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.... incriminating material per se, however, after accepting the existence of the bank account and owning up the above transaction, the assessee cannot rake up the issue of incriminating material not found in the search proceedings, in our view, after thought and irrelevant at this stage. Further even the assessee has not retracted the statement till now, proceeded to revise the return of income and paid the relevant tax. Therefore, the search was initiated to verify the information available with the revenue thru the FT&TR division of the CBDT and the same was found to be proper when confronted with the assessee. Therefore, the information collected was confirmed in the search assessment proceedings is nothing but acceptance and confirmation of the existence of such bank account. The important thing is that the assessee not only revised the return of income and chose not to retract the statement. Therefore, now invoking the jurisdictional issue relying on the several case law is not acceptable at this stage. The findings in the Abhishar Buildwell is as under: "It held that in a case of search under section 132 or requisition under section 132A, the Assessing Officer assumes j....
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....nformation which was confirmed by the assessee in the search assessment proceedings, further, the assessee has not retracted means he has accepted, it goes to prove that the information with the revenue is substantially correct. Hence the material with the revenue has to be considered proper and the action of the AO to accept the revised return of income and proceeded to complete the assessment goes to prove that the material with the revenue can be assessable u/s 153A of the Act. Therefore, we have no choice but to reject the contentions of the assessee. 21. The next contention of the assessee is, the sum in question is not taxable in view of Article 23(3) of Indo-UK DTAA on the expression "may be" taxed employed therein. We perused the detailed submissions made by the Ld AR that in case of income declared under the head Income from other sources, the relevant article 23(3) of Indo-Uk is applicable and as per the concept of "may be taxed", the various courts have held that it should be taxed only in the other country of source. We are not in dispute with the above submissions and he has relied on several case law. By acknowledging the various case law on this subject, the facts....
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....is chargeable to tax in India and any tax suffered by the assessee can be claimed as tax credit. The important issue is, whether the assessee has declared the income in source country ie., UK and whether the assessee has declared the relevant income in the source country. There is nothing coming out of the submissions made by the assessee. Merely because the income was declared by the assessee as income from other sources and the same was accepted by the AO, the article 23 will not be invoked automatically. The assessee first has to establish the source of income declared in the UK relevant to the bank deposits or establish that the bank deposits are not generated in India and earned outside India, further the income is falling under the category of other income without considering the fact that global income is chargeable to tax in the case of Indian resident. Therefore, the case of SBI, Patna branch is not applicable in the present case and distinguishable. 23. As discussed above, the assessee itself declared the income under the head income from other sources without clearly disclosing the nature of income earned by the assessee in the source country in this case, UK. Merely ....
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....generated and description in the body of the statement clearly shows that the assessee has closed the account. Therefore, the AO cannot apply the presumption to tax the income, he can only tax on the actual income accrued to the assessee. On the other hand, Ld DR objected to the above submissions and the assessee has not submitted any bank statement and also failed to sign the waiver form to obtain the above said bank statement through the FT& TR division. 28. In this regard, Ld AR has filed the below detailed submissions: 5. Notional interest could not have been added to income of AY 2008-09 to AY 2012-13 [AY 2008-09 to AY 2012-13: Ground Number 4] 5.1. The Ld. AO added notional interest to the incomes for AY 2008-09 to AY 2012-13 alleging that the Appellant-Assessee ought to have earned interest at the rate of 4% from the alleged bank account. This is incorrect. 5.2. Even as per the bank statement relied upon by the department, the bank account is indicated to be closed in October 2006. Further, the Assessee in his statement dated 23.08.2011 (Page 7 to 39 of Paper Book Volume 1) had also stated that the bank account stood closed in 2006. The relevant....
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....nalty appeals filed by the assessee, the Ld. AR submitted that the penalty was levied based on the bank account maintained by the assessee in HSBC bank account, London. He submitted that the assessee has accepted the maintenance of bank account during the assessment proceedings and filed the revised return of income voluntarily to buy peace of mind and to avoid protracted litigation. Therefore, the Ld. AO has completed the assessment based on the revised return of income. AO again proceeded to levy the penalty and further he submitted that there is no material with the department about the maintenance of bank account by the assessee only because of old age and to buy peace of mind the assessee has proceeded to disclose the undisclosed bank account in its return of income. In this regard, he has submitted a detailed submissions as under: "6. For AY 2006-07 and 2007-08 penalty under section 271(1)(c) of the Act is not leviable since the assessment under Section 153A is based income disclosed in the return of income filed pursuant to notice under section 153A of the Act. [AY 2006-07 to AY 2012-13: Ground Number 1 and 2] 6.1. The Appellant-Assessee had filed ....
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....ors of the company. A notice under section 153A of the Act was issued. In response to it the assessee filed his return of income declaring additional income. The AO completed the assessment under section 153A of the Act, read with section 143(3) of the Act after accepting the declared income. He also imposed penalty proceedings under section 271(1)(c) of the Act. Aggrieved, the assessee made an appeal before the CIT(A) where it was held that for the purpose of imposition of penalty, the original return of income filed under section 139 of the Act could not be considered and penalty under section 271(1)(c) of the Act was imposable only when there was a variation in assessed and returned income. If there was no variation, there will be no concealment and thus the question of levy of penalty would not arise. Upon appeal by the revenue against the CIT(A) order, the ITAT held that the concealment of income is to be determined with reference to the return of income to be filed in response to notice u/s 153A of the Act. Once returned income filed u/s 153A of the Act is accepted by the assessing officer it can neither be a case of concealment of income nor furnishing of inaccurate of parti....
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....osed. Noting the fact that may be the assessee would have not disclosed the income but for the said survey, the Hon'ble High Court held that in the facts of the said case, no such concealment or non-disclosure of income was made as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. 6.9. Further, in CIT vs. Suresh Chandra Mittal [(2001) 251 ITR 9] (Page 772-773 of case law compendium, Volume 3.2) the Hon'ble Supreme Court upheld the view taken by the Hon'ble Madhya Pradesh High Court. The Hon'ble High Court of Madhya Pradesh in Commissioner of Income Tax v. Suresh Chandra Mittal [(2000) 241 ITR 124] (Page 774- 776 of case law compendium, Volume 3.2) has held that once the revised assessment was filed by the Assessee and regularised by the Revenue and once the Assessing Authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Accordi....
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.... In DCIT v. Shri Shah Rukh Khan, [2018] 93 taxmann.com 320 (ITAT Mumbai) dated 21.05.2018 and DCIT v. Shahrukh Khan [(2019) 103 taxmann.com 252] dated 08.03.2019 the issue before the Tribunal was with regards to taxability of income of assessee from immovable property as per Article 6 of DTAA between India and UAE read along with the Notification No 91, dated 28.08.2008 issued by the CBDT. The court observed that the issue in this case is whether Notification No 91, dated 28.08.2008 will have a superseding effect over the DTAA entered between Government of India along with the Government of any other country. The court observed that the above issue was debatable and had come before this tribunal in the case of Essar Oil Ltd. v. Addl. CIT (supra) from where it has been appealed and pending before the Hon'ble Bombay High Court. There was another ruling of Bank of India v. DCIT (supra) where in a similar issue emerging in context of India-Kenya DTAA. It held by the co-ordinate bench that any notification or circular cannot alter the nature of income that had been specifically included in the DTAA's. Therefore, on the basis of conflicting views of two benches of the Tribunal on....
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....te of the month. For the AY 2007-08, assessee adopted exchange rate of 1USD = Rs . 46.41 and offered USD 33, 189 = Rs * 0.15 ,40,318 as income for A Y 2007-08. 8.5. Exchange rate adopted by assessee for A Y2007-08 was acceptable by assessing officer for this year A Y2007-08 . 8.6. However, the Ld. AO in his assessment order for A Y 2006-07 stated that the Assessee ought to have adopted the exchange rate based on the average rate for the month and made addition amounting to Rs. 2,28,854/- by adopting the rate as 1USD= INR 44.398/- 8.7. The conversion of income from USD to INR was based on the bona fide belief that the rate of exchange for the last day of the month should be adopted. Further, the Assessee had made complete disclosures regarding exchange rate adopted in the revised ITR. 8.8. Consequently, penalty under section 271(1)(c) in relation to exchange difference is not sustainable. 9. Ld. CIT(A) should not have arbitrarily increased quantum of penalty from 100% to 200%. [AY 2006-07, AY 2007-08: Ground number 3] 9.1. At the time of passing the assessment orders, the Ld. AO had levied penalty under section 271(1)(c)....
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....Y 2005-06 and 2006-07 in the search proceedings initiated on 23/08/2011. The above said bank account information was obtained from the French Authorities and in order to confirm the same, the assessee was searched and post search proceedings, the assessee had accepted the same as his account and could not confirm the sources for the same. The assessee had accepted the same in order to buy peace with the department and revised the return of income. The AO has accepted the revised return of income and proceeded to complete the assessment. 34. The AO initiated the penalty proceedings considering the fact that the assessee has not declared the same in the original return of income filed u/s 139(1) of the Act. Strictly speaking, we have already held in the quantum proceeding that the information collected by the revenue from foreign authorities and based on the above information, the search was initiated and during the search no incriminating material was found and only because the assessee had accepted the existence of bank account in the search assessment proceedings, we held that the income accepted by the assessee is chargeable to tax and assessable u/s 153A of the Act. We came t....
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....articulars of such income." 36. From the above, it is clear that any material found during the search which consist of money, bullion, jewellery or other valuable article/thing and the assessee discloses the same in the return of income filed subsequent to the search is considered deemed to have concealed the particulars of income for the purpose of section 271(1)( c) of the Act. In the given case, we already discussed this issue while dealing with the issue of incriminating material, the revenue has not found any material during the search which was the main reason for the additional income declared by the assessee rather, the assessee had accepted the contents of the bank account only in the post search assessment. Therefore, the explanation 5A cannot be invoked in the present case due to the fact that there was no incriminating material found during the search and such material was not applied to revise the return of income. The explanation 5A of section 271(1)(c) can be invoked only in the situation wherein the department finds incriminating material found during the search and in the given case, the department had the material prior to initiation of search. We have to inter....
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....0. The Ld. CIT(A) has rightly deleted addition relating to alleged fictitious expenditure in relation to AY 2010-11. [Department Appeal ITA No. 3368/DEL/2016, AY 2010-11] 10.1. The Ld. AO had made additions amounting to Rs. 2,28,00,000/- citing an accountant' note as the basis of concluding that the Appellant-Assessee had booked fictitious expenditure. 10.2. In doing so, the Ld. AO erred on law and in facts considering the following position: a. That the note was merely a lose sheet and did not have evidentiary value in isolation. b. Without prejudice, on perusal of the note it is evident that the note was prepared on 16.02.2010 i.e., before the closure of financial year 2009-10 relevant to AY 2010-11 and that the alleged amount represented the amount that the Appellant-Assessee was expecting to incur before the closure of financial year. c. That the Appellant-Assessee follows cash system of accounting, and that the Appellant has actually paid for the expenses claimed by him before the closure of financial year and deducted taxes in accordance with the provisions of IT Act. Therefore, the accountant note could not have been ....