TaxTMI 
TaxTMI 
2023 (4) TMI 1380
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....on'ble Supreme Court judgment dated 23.3.2020 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon'ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal and we take the appeal filed by the Revenue for adjudication. 3. The brief facts of the case is that a search action under section 132 of the Act was conducted at the residential and business premises of the assessee on 29-09-2011 both at Vadodara and Mumbai. Since the assessee was out of India, Prohibitory orders were placed at the residence of the assessee. When the Assessee had returned from abroad on 04-10-2011 in the morning, immediately search action re-commenced and no rest was permitted to the assessee and the search proceedings continued till very late in the night. Primary statement u/s.131 was recorded during the day time and then the statement u/s.132(4) was recorded till late in the night. 3.1. Thus the search proceedings, commenced on 29th September 2011 and were concluded on 15th November 2011. During the course of search, various places were searched including the Bank lockers of the assessee, his family members and all the busines....
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.... 2015, a Confidential Report was furnished by the Ld AO, out of which certain portion of the same was shared by the Ld CIT (A) to the Assessee, so as to enable him to rebut the same. Copy of the reference made by the Ld Commissioner of Income tax (Central)-II, Ahmedabad on 19th December 2012 to the Joint Secretary (Foreign Tax & Tax Research-1) Division of the CBDT under DTAA was also furnished. 3.4. The said Remand Report also contained a letter dated 31st December 2012 received from Under Secretary [Foreign Tax & Tax Research Division-III(2)] which states that a request for information under "Exchange of Information" made to Switzerland Tax Authorities. As and when any information is received, the same shall be forwarded to you [CIT, Central-II, Ahmedabad]. The ld AO has attached a Photo copy of "Base Document" with respect to issue of foreign bank account. However the Ld. AO in the show cause notice dated 02-02-2015 referred to the above and states that the information was received by Income Tax Department under Double Taxation Avoidance Conveyance (DTAC) between India and France to the effect that the assessee had a bank account in HSBC, Geneva with the aforesaid details. ....
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....he course of recording of my statement at my residence, the ADIT Shri Mahit Mrinal and Shri Ashish Kumar were asking various question turn by turn. The questioning continued till late night. Variou questions were out to me and since had returned after a long foreign travel and was exhausted, I answered the questions to the best of my ability but under duress I state that, at none of the factories did the officers find anything incriminating against the conduct of the Companies, so far as the provisions of Income Tax Act, 1961 are concerned. I explained to them that none of the factories generate unaccounted income. I also explained to them that RISHI FIBC Solutions Private Limited was entitled for deduction under section 30% of the Income Tax Act, 1961 and hence one can see no reason for the company to generate such unaccounted Income. I further explained to the officers that the companies other than RISHI FIBC Solutions Private Limited were subjected to scrutiny assessment for years together and that except for a few standard additions the company's books of accounts were accepted by all the assessing officers. Since was tired. I wanted to get over w....
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....d in the said consent from I, therefore, express my inability to give any consent in regard to obtaining Information from HSBC. Thanking you, Yours faithfully, Sd/- (Arvind Nopany) A copy of the letter (which was received by Shri Shibu Varghese, Inspector on 25th February. 2013) is attached for your ready reference. This fact was also brought to the knowledge of JCIT, Central Circle, Baroda Shri Lala Philip by my AR Shri CA. Mayur Parmar during the recent conversation with him when a copy of the letter was given to him. In view of the above facts, regret, cannot furnish to you details sought by you in item (i), (ii). & (iii) of Part (o) of your questionnaire. 3.7. The Assessing Officer in the assessment order dated 27.02. 2015 made the impugned addition as follows: "So as per the information exchanged through Double Taxation Avoidance Conveyance(DTAC) between India and France, assessee is in possession of Foreign bank account vide account number stated above. The name, address, date of birth mentioned are of assessee only as can be found out from the return of income. And during the course of search when assessee was confront....
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.... 8.8 Thus, the amount of Rs 7.5 crore is added to the total income of the assessee as his unexplained investment/deposit for the year under consideration. Penalty proceedings u/s 271(1)(c) of the Act are being initiated separately for concealment of income. " 4. Aggrieved against the assessment order, the assessee filed an appeal before LdCIT[A] and during the course of appellate proceedings, the assessee raised the Additional Grounds of Appeal as follows: Additional Grounds of appeal No.1 a. On the facts and in the circumstances of the case and in law, the learned AO has erred in completing the assessment beyond the time limit for completion of assessment u/s 153A as stipulated by the provisions of section 153B(1)(viii) of the Income Tax Act, 1961. b. The learned AO on the facts and in the circumstances of the case and in law has erred in stating that the time limit for completion of assessment u/s 153 was extended by virtue of provision as per section 153B(1)(viii) of the Income Tax Act, 1961. c. The learned AO on the facts and in the circumstances of the case has erred in relying on the documents/evidences without granting adequate opp....
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....essment "was completed on 27 February, 2015 which was beyond the statuary time limit as noted above. 3.15 Further Provided in Section 153B that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (a) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. Now in the case six months period to be excluded begins on 31.12.2012 and ends on 30.06.2013.This period falls well before the period of limitation which ends on 31.03.2014. Therefore the Period of Limitation would be 31.03.2014. The last date for completion of the assessment as per the provisions of section 153B was 31.03.2O14. The period of six months for which the extension would have been available to the AO expired before this date and therefore there is no question of automatic extension of time. In view of the above the assessment completed by the AO on 27th February 2015 was way beyond due date i.e....
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....t December 2013. Thus period of 90 days were available (from 31.12.2013 to 31.03.2014). As per the proviso to the explanation (viii) which states that if the period available to the AO is less than 60 days for the purpose of limitation then the period available would get extended to 60 days or deemed to be extended accordingly. Thus, no benefit of 60 days period as per the said proviso would be available to the AO for completion of the assessment as it was already having' 90 days left with him for completion of assessment. In both the situations, the limitation expired on 31st March 2014. Accordingly, the benefit of the said proviso was not available to the assessing officer and the assessment order passed after the statutory timeline i.e. 31.03.2014 is barred by limitation and thus making assessment void ab-initio. 4.2. The Ld. CIT[A] also dealt with the second limb of the argument namely the exclusion period would be computed "from the date of reference made" or 'time barring period of assessment" and the same was disposed by very detailed order as follows: "... 3.18 Now with regard to question no. 2, whether the exclusion time of six months (or one year ....
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....ting assessment under Section 153A in normal course was 31st March, 2006. (ii) On 22nd March, 2006 an order under Section 142(2A) was passed. (iii) On 31st March, 2006, the assessment proceedings were stayed by an interim order in W.P. (C) No. 4954/2006. (iv) On 18th December, 2006, the stay order was vacated with liberty to the Revenue to issue a fresh notice and after considering the reply, pass an order under Section 142(2A). (v) On 19th January, 2007, an order under Section 142(2A) was passed (the special audit was to be completed within 105 days, i.e., by 4th May, 2007). (vi) On 29th June, 2007, the assessment order was passed. 17. From the aforesaid dates, it is clear that as per the proviso to Explanation to Section 153B, the assessment order could have been passed on or before 3rd July, 2007, i.e., period of 60 days after the special audit report was to be submitted to the Assessing Officer. 18. The proviso quoted above has an object and purpose. It stipulates that the Assessing Officer should have a minimum period of 60 days to complete the assessment, in case after exclusion of period under the Explanation, th....
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....all be determined on the basis of the material found in search. In any case, the income to be determined u/s. 153A has to be on the basis of material found in the course of search. If no incriminating material is found in the course of search, then no adverse inference can be drawn. Thus, incriminating material is sine qua non for making assessment U/S.153A. It cannot be on the basis of any material or information which is dehors the search. This established matrix has been held by various decisions/judgments discussed in preceding paras besides in the following judicial precedents of jurisdictional High Court as also other Courts. (I) Dr. CIT v. Devangi alias Rupa 394 ITR 184 (Guj.) (II PCIT vs Meeta Gutgutia 96 taxmann.com 468 (SC) (III) CIT (Cen)-III vs. Kabul Chawla[2015] 61 taxmann.com 412 Delhi (IV) CIT v. IBC Knowledge Park (P.) Ltd. 385 ITR 346 (Kar.) (V) Pr. CIT-2 v. Salasar Stock Broking Ltd. [ITA No. 264/2016 (VI) CIT v. Gurinder Singh Bawa [2017] 386 ITR 483 (Bom.), (VII) Pr. CIT v, Mahesh Kumar Gupta [ITANo. 810/2016 (VIII) Pr, CIT v. Ram Avtar Verrna [2017] 395 ITR 252 (IX) Pr.CIT v. Sunr....
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....e by the AO cannot survive. Thus, this additional ground of appeal is allowed. 5.1. Aggrieved against the appellate order the Revenue is in appeal before us raising the following Grounds of Appeal: (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the exclusion period of six months or even twelve months as per the Explanation (viii) of Section 153B{1) of the Act in the instant case has expired before the before the limitation period date of 31-03-2014 and the assessment order u/s. 153A r.w.s. 143(3) dated 27.02.2015 is barred by limitation. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the provision of section 153B(1) of the Act as amended by the Finance Act, 2011 would be applicable and not the provision of section 153B(1) of the Act as amended by the Finance Act, 2012. (3) On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in quashing the assessment order u/s. 153A r.w.s. 143(3) of the Act dated 27.02.2015. (4) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that ....
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....leted by the Ld. CIT(A). 6.1. To deal with Ground Nos. 1 to 3, after going through the submissions of the parties, the issue and the relevant dates are tabulated as follows: Particulars Pre Amended Provision of Six Months (applicable upto 30-06-2012] Post Amended Provision by Fina nce Act, 2012, 12 Months period [wef 01-07-2012] Asst. to be completed (2 years from the end of relevant F Yr 31-03-2012) 31-03-2014 31-03-2014 Period to be excluded 31-12-12 to 30-06-13 31-12-12 to 31-12-13 No of Days available 274 days (30-06-2013 to 31-03-2014) 90 days (31-12-2013 to 31-03-2014) As per Explanation (viii) of sec. 153B namely less than 60 days available Not Applicable since 274 days available Not Applicable since 90 days available Asst. Order passed on 27-02-2015 (clearly Time barred) 27-02-2015 (clearly Time barred) 6.2. It is an undisputed fact the normal period of limitation under section 153 of the Act for completion of assessment in this case is 31st March 2014. Since a reference was made to Competent Authority namely Joint Secretary (FT & TR-I) Division on 19-12- 2012 by Ld. CIT (Central)-II, Ahmedabad. As per the Pre Amen....
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....d income in the business premises of the assessee. Since the assessee was physically and mentally tired due to his foreign travel and got exhausted, therefore the assessee answered the questions in the manner in which the Investigation Team wanted them to be answered. Further there was no incriminating documents were found during the continuation of the search in the residential premises of the assessee. Therefore Investigation Team pressurized the assessee to make substantial disclosure of unaccounted income, both in the hand of the assessee as well as the Group of companies equivalent to USD 15 million. However the assessee filed Notarized Affidavit on 01.02.2012 retracting that the disclosure and statements made by the assessee regarding the bank account was not voluntary statement and was made under duress by the Investigation Team. It is for this reason, the assessee has not given any "Consent Form" vide letter dated 24-02-2013 for getting the bank account details from HSBC Foreign Bank Account. 7.1. Thus it is a fact that no incriminating document was found during the course of search proceedings. Further it appears that the Income Tax Department is also not sure of its ow....
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....counts Manager, HSBC Bank, Geneva, Switzerland asking about the details of the account, however there is no response from the said Bank. Therefore, in the absence of any incriminating materials and based only on the statements recorded during the course of search u/s. 132(4), which was also later retracted by the assessee, therefore the statement cannot be the basis for additions. 7.3. In this connection, Jurisdictional High Court of Gujarat in the case of Kailashben Manharlal Chokshi Vs. CIT reported in [2008] 174 taxmann.com 466 (Guj.) held that merely on the basis of admission of the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such addition. When the statement recorded at such odd hours cannot be considered to be a voluntary statement, when the same is retracted by the assessee. Therefore the addition made is liable to be deleted. Operative portion of the above judgement reads as follows: "...26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or....
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....land. There is no material available on record that assessee made deposits in HSBC Bank A/c in A.Y. 2006-2007 or thereafter earned any interest in remaining assessment years under appeals. Operative portion of the decision reads as follows: "... 5.1 We have heard both the parties who have also filed written submissions which are also taken into consideration. 6. Learned Counsel for the Assessee submitted that it is an undisputed fact that search was conducted on 28-7-2011 on the assessee. Learned Counsel for the Assessee referred to paper book filed by the Ld. D.R. containing letter Dated 22-8- 2019 of ACIT, Central Circle-7 [ A.O.] to the CIT-DR in which it was categorically stated that last panchanama was drawn on 26-9-2011. He has, therefore, submitted that in F.Y. 2011-2012 search is executed and last panchanama drawn. Learned Counsel for the Assessee, therefore, submitted that impugned assessment orders passed on 2-3-2015 are barred by limitation because of search took place on 28-7-2011 as mentioned in the assessment orders and thus the limitation to pass assessment orders expire on 31-3-2014 as per Section 153B(1)(a) of the I.T. Act, 1961. But, the impugned....
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....December 2013 of the Swiss Federal Administrative Court)". 6.1.1.2 The Learned Counsel for the Assessee submitted that the Agreement between The Republic of India and The Swiss Confederation for avoidance of double taxation with respect to taxes on income as modified by Notification No. S.O.2903(E) Dated 27-12-2011. Copy of Notification No. S.O.2903(E) Dated 27-12- 2011together with amended protocol filed to show it apply to later period. Therefore, reliance is placed on the following judicial decisions which hold that if the Reference based upon which the limitation is sought to be extended is held bad, limitation so extended would also be bad in law. 6.1.11 Learned Counsel for the Assessee, therefore, submitted that since no information could have been provided for assessment years under appeals i.e., 2006-2007 to 2011-2012 and the protocol also started from 1-4-2011, therefore, no reference could be made by the Revenue Authorities for assessment years under appeals i.e., 2006-2007 to 2011-2012. The Reference is, therefore, invalid and no limitation could have been extended to pass the assessment orders after 31-3-2014. He has, therefore, submitted that limitati....
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....ts in these cases were time barred. In this regard, it is relevant to note that time barring date as per provisions of Section 153B is 31-3-2015 as against 31-3-2014 because the exclusion of the time period as provided by Clause-ix of Explanation to Section 153B of the I.T. Act, 1961 as applicable in the case of the assessee. He has submitted that in this case information was called for from Foreign Competent Authority under Exchange of Information through Reference Dated 5-12-2012 and the information thereto was received back as on 10-7-2015. As per the Explanation, the time barring date would got extended by one year if response could not have been received within one year. The Ld. D.R. however, did not dispute that last panchanama was drawn on 26-9-2011 as is also confirmed by the A.O. vide his letter Dated 22-8-2019. The Ld. D.R. also filed copies of the panchanama in these cases on record. The Ld. D.R. also did not dispute the letter Dated 26-6-2015 referred to by the Learned Counsel for the Assessee during the course of arguments. The Ld. D.R. further submitted that Son of the Assessee Mr. Praveen Sawhney admitted that assessee has maintained bank account with HSBC, Geneva, S....
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....ny addition in any assessment years. It may also be noted here that assessee since the very beginning denied to have maintained any such bank accounts with HSBC, Geneva, Switzerland. There is no material available on record that assessee made deposits in HSBC Bank A/c in A.Y. 2006-2007 or thereafter earned any interest in remaining assessment years under appeals. 8.1 Considering the totality of the facts and circumstances of the case above, it is also clear that during the course of search no incriminating material was found against the assessee for maintaining any such bank accounts with HSBC, Geneva, Switzerland. Whatever information was supplied by the Swiss Authorities subsequently to the Revenue Authorities in India, no such information was provided for the period prior to 1-4-2011. Therefore, it is clear that no information have been provided by the Swiss Authorities that assessee maintained any bank account with HSBC, Geneva, Switzerland in assessment years under appeals i.e., 2006-2007 to 2011-2012. Therefore, it is clear that no incriminating material was found against the assessee so as to make any addition against the assessee. The Hon'ble Delhi High Court i....
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....ove, there is no need to decide the remaining grounds of appeals which are left with academic discussion only. Accordingly, all the appeals of the Assessee are allowed. 9. In the result, all the appeals of the Assessee are allowed." 7.5. Another Co-ordinate Bench of Kolkata Tribunal in the case of Bishwanath Garodia Vs. DCIT, Central Circle-3(3), Kolkata reported in [2016] 76 taxmann.com 81 has considered similar HSBC Bank foreign account and deleted the additions made by the AO as no seized materials was found during the search operation. Operative portion of the decision reads as follows: "....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 filed 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 Officer from CBDT relating to the undisclosed account maintained by the assesese with HSBC Bank, Geneva, Switzerland. During....
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....ceed 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 Officer 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 finally 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 distinction made by Their Lordships in the assessments completed under section 143(1) and section 143(3) for determining the scope of the proceedings under section 153A. However, the said question arose speci....