2024 (5) TMI 320 - AT - Income Tax

Assessment completed u/s 153A - addition on account of peak balance maintained by the assessee with HSBC Bank, Geneva - validity of second round of the quantum proceedings - HELD THAT - As the original assessment order made in the first round stands quashed by the Hon ble Delhi High Court 2024 (2) TMI 401 - DELHI HIGH COURT wherein as held no incriminating material was found during the course of search carried out on the assessee and further that the Revenue was unable to place on record any reliable material to establish that the assessee was indeed the owner of alleged foreign bank account in HSBC Bank, Geneva. Therefore, the orders of Ld. AO/CIT(A) do not have any legs to stand. Accordingly, the orders of Ld. AO/CIT(A) made by them in the second round of proceedings are hereby quashed as a consequence. Appeal of the assessee is allowed.

Summary

Issues involved: The jurisdiction of the assessment order u/s 254 r.w.s. 153A/143(3) of the Income-tax Act, 1961, authenticity of information/documents received from Swiss Authorities, Double Taxation Avoidance Convention (DTAC) with French Authorities, addition made by the assessing officer based on unverified documents, limitation period u/s 153B(1)(viii) of the Act, and summary dismissal of the appeal without considering detailed submissions.

Jurisdiction of Assessment Order: The CIT(A) erred in not holding that the assessment order passed u/s 254 r.w.s. 153A/143(3) of the Act was beyond jurisdiction, bad in law, and void-ab-initio. The assessing officer exceeded his jurisdiction by not bringing authentic information/documents from Swiss Authorities, as directed by the Tribunal, to corroborate the existence of the alleged foreign bank account in HSBC, Geneva. The CIT(A) failed to appreciate that the addition made was solely based on unauthentic/undated/unsigned loose papers, which was contrary to the Tribunal's specific mandate.

Authenticity of Information/Documents: The CIT(A) erred in confirming the addition despite the absence of "authentic" information from Swiss Authorities, as only photocopies of certain unverified documents were relied upon. The assessing officer failed to provide any authentic document/information to prove the existence of a foreign bank account with HSBC, Geneva, resulting in the addition of Rs. 69,07,414 being made on suspicion and surmises without any incriminating material found/seized.

DTAC and Addition Based on Unverified Documents: The CIT(A) erred in confirming the addition of Rs. 69,07,414 based on loose unauthentic sheets as bank statements and general/vague particulars from French Authorities, which did not constitute evidence in the eyes of the law. The alleged foreign bank account did not belong to the appellant, and no transactions were made by the appellant, rendering the addition without any evidence or basis.

Limitation Period and Summary Dismissal: The initial assessment order passed u/s 153A was held to be barred by limitation as prescribed in section 153B(1)(viii) of the Act. The CIT(A) summarily dismissed the appeal without considering the detailed submissions and arguments made during the appellate proceedings, leading to the quashing of the orders made in the second round of proceedings.

Conclusion: The original assessment order from the first round was quashed by the Hon'ble Delhi High Court due to the absence of incriminating material and the failure to establish the ownership of the alleged foreign bank account in HSBC Bank, Geneva. Consequently, the orders of the Ld. AO/CIT(A) in the second round were quashed, and the appeal of the assessee was allowed on 3rd May, 2024.