9911796707
TMI Blog2014 (4) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... ee not to leave India even if he has found not to have violated the alleged law - assessee was forced to stay in India for a period of more than 182 days by which he lost his NRI status and became liable to enhanced income tax on his global - assessee's case becomes fit where doctrine of forced meajure may be applicable as it was impossible for the assessee to move out of country and therefore doctrine of impossibility of performance is also applicable - This is a fit case where strict legal reading of the provisions regarding residence in India should not be applied - An interpretation or construction should be applied which results in harmonious meaning, equity rather than injustice. For calculation of stay in India for these years the same should be calculated after exclusion of days of wrongful impounding of passport which constitutes forced stay in India - Thus period for which assessee could not travel outside India in above facts and circumstances i.e. from 10.10.2006 to 21-9-2011 i.e. till the passport was finally handed over to assessee and allowed to travel outside India should be excluded - the assessee's residential status is held to be as 'non-resident&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 against separate orders of Ld CIT(A) dated 18.3.2013 and 22.5.2013 respectively. These appeals were heard together, therefore, for the sake of convenience these appeals are being disposed off by this common order. The grounds of appeals filed by assessee as well as revenue for these two years are detailed as under:- Assessment year : 2007-08: (Assessee's appeal): 1. That the order of the Ld CIT(A), New Delhi dated 18.3.2013 is bad in law and in facts. 2. That on the facts and in the circumstances of the case the Ld CIT(A) has erred in upholding the action the Assessing Officer in taking the status of the appellant as Resident during the year as against the status of non resident claimed in the return accepted by the Department consistently year after year since 1985. That during the year under consideration the appellant's stay in India exceeded 182 days as his passport was illegally seized by the CBI and he was compelled to stay in India for reasons beyond his control and accordingly the doctrine of impossibility of performance is application. 3. Whether while deleting the addition of Rs.17,94,15,000/- being share capital of Universal Business Sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of the appellant's status as resident and accordingly his global income is taxable in India. 8. That on the facts and in the circumstances of the case, the CIT(A) has erred in upholding the action of Assessing Officer i.e. the sum of Rs.23,66,190/- as unexplained cash out of total cash found of Rs..44,57,800/- during the course of search u/s 132(1) on 28.2.2007. 9. That the appellant prays the Hon'ble Tribunal to award suitable cost of appeal under sub sec. 2B of sec. 254 of the Income Tax Act, 1961 . 10. The appellant craves leave to add, alter, remove and modify any grounds of appeal before or at the time of hearing of the appeal. Assessment year: 2008-09: (Assessee's appeal): 1. That the order of the Ld CIT(A), New Delhi dated 22.5.2013 is bad in law and in facts. 2. That on the facts and in the circumstances of the case the Ld CIT(A) has erred in upholding the action the Assessing Officer in taking the status of the appellant as Resident during the year as against the status of non resident claimed in the return accepted by the Department consistently year after year since 1985. 2.1. That during the year under consideration the appellant& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case the Ld CIT(A) has erred in deleting the addition of Rs.17,94,15,000/- made by the Assessing Officer on account of unexplained income made by the assessee in M/s Claridges Hotel Pvt. Ltd. through M/s Universal Business Solution Ltd. Mauritius and the various intermediately companies. 3. On the facts and circumstances of the case, the Ld CIT(A) has erred in upholding the addition of Rs.16,98,38,020/- on protective basis as against substantive basis in the hands of assessee on account of unexplained investment made by assessee in M/s Claridges SEZ Pvt. Ltd. through M/s Palm Technologies Ltd. Mauritius and the various intermediately companies created for this. 4. On the facts and circumstances of the case the Ld CIT(A) has erred in law in adjudicating the issues involved with certain directions and upheld the addition made by Assessing Officer on protective basis which is beyond the powers of CIT(A) as section 251(1)(a) of the IT Act empowers CIT(A) only to confirm reduce enhance or annul the issues involved in appeal. 5. On the facts and circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs.1,20,73,114/- made by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of information and documents made the following additions to the income of assessee in these two years and further denied the claim of the assessee to be treated as NRI:- 3. Aggrieved against the assessment order, assessee filed appeals before Ld CIT(A) and made various submissions. One of the grounds raised by the assessee was to the effect that he was assessed as non resident from the year 1985 to 2006. For impugned years he has filed income tax returns as non resident. His stay in India during the years under consideration had exceeded 182 days because of reasons beyond his control as his Passport was illegally impounded by govt. agencies and he was unable to travel from India. Assessee submitted that he remained as non resident as he was forced to become resident because of illegal impounding of his Passport. The Ld CIT(A) after going through the submissions of assessee confirmed the order of AO on this issue and held him to be a resident as per literal meaning of the provisions of the Act. He, however, partly deleted the additions made by the Assessing Officer on merits and further upheld certain additions to be added on protective basis. Various grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'resident' for every A.Y. wherein he has stayed in India for 182 days or more, including the current A Y. b) Regarding additions in the hands of assessee on account of Invetment made by Universal Business Solutions Mauritius in the Claridges Hotelks (P) Ltd. 6.5 I have considered the assessment order, submissions made and the records relevant to the matter in issue here. In fact there are several aspects of the matter - (a) whether income accrued or arose to the appellant in India which was not disclosed by him for tax purposes, (b) whether such income was received by him abroad and routed as investments into India, and (c) whether such investments can be taxed in the hands of the appellant or the entities wherein the investments have been brought in. The undisputed facts are that UBS (Universal Business Solutions) is an entity duly incorporated under the law in Mauritius. The said UBS has invested in Claridges Hotels P Ltd. as foreign direct investment (FDI) under the automatic route permissible by the Government of India for the hospitality industry. It has taken all necessary approvals and complied with all new rules and regulations prescribed by the Government in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholder in PTL, which is owned by one Mr. E.A. Half11and. The appellant is, however, 99% shareholder / owner of Universal Business Solutions FZC (UBSS), an entity duly incorporated under the law in Sharjah. Dividend declared by UBSS, and payable to the appellant, was invested in Infotech Services Ltd. (ISL), Channel Islands, and Mideast Consortium, SA (MCSA), British Virgin Islands, at the instruction of appellant. Appellant has controlling interest in ISL. The equity base of PTL is USD 1,001 only. The investment of PTL in Claridge's SEZ is seen to be emanating from loan / borrowings from UBSS of USD 3,000,000 and from Y2K SIL (another company in which the appellant holds interest) of USD 431,197. Thus, unlike in the case of UBSM (in Para-6 above), in the present instance there is a backward link between funds transferred from PTL to Claridges SEZ, which have been sourced from entities under the control of the appellant (UBSS 1SL). However, the moot question is whether money sourced from UBSS and lSL even though the appellant has interest / controlling interest in those companies, can be treated as income of the appellant? I find that, on present facts, it cannot be so held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,64,000/-. The AO found that out of bank withdrawals of Rs..22,35,000/- made by the appellant, Rs..14,20,0001- was made up to 30.06.2006, i.e. 4 months before the search by CBI. The AO estimated the monthly expenses of the appellant at Rs.1 ,50,0001-and observing that withdrawals accounted for only about Rs...13,35,OOO/- held the remaining cash of Rs..20,64,000/- minus Rs..13,35,000/- Rs..729,000/- as unexplained in the / hands of the appellant. I do not find any infirmity with conclusions reached by the AO. The need for keeping large quantities of cash is inexplicable, particularly in view of substantial business of the appellant abroad and in India and the availability of anytime anywhere banking 1 ATM facilities. The AO has been fair in treating Rs..13,35,000/- as explained. The addition is sustained u/s 69 A. There is no merit in this ground of appeal and is, accordingly, dismissed. e) Regarding Investment made on account of renovation of Sonali Farms from assessee's Overseas Bank Accounts. 4. The submissions filed on behalf of the appellant in this regard are as under:- ''The Assessing Officer made an addition of Rs.28,47,533/- being investment made in So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een discharged by the appellant. The presumptions u/s 132( 4A) and u/s 292C thus become binding. The claim of the appellant that the deposits represent maturity proceed of old/earlier deposits in Citibank UK remains unsubstantiated. The appellant has been held to be 'resident' for tax purposes during this A Y. Therefore, the earlier decision holding the appellant as 'non-resident' is not applicable. Also, even if the amounts represent appellant's foreign income, his global income is taxable and he shall be only entitled to credit for taxes paid abroad under the relevant DTAA. This ground of appeal is devoid of any merit and is, therefore, dismissed. The addition is sustained as unexplained credits I deposits / expenditure in the bank account of the appellant and also his income not disclosed in his tax returns chargeable to tax u/ss 68 or 69 or 69A or 69C, as may be applicable. g) Regarding unexplained cash found during search on 28.2.2007. 11. The ninth ground of appeal (renumbered) is against addition of Rs..23,66, 190/- as unexplained cash found during the course of income-tax search u/s 132 on 28.02.2007. The submission of appellant is reproduced in Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble if the appellant remained in India by operation of the law and procedure established, even though for no fault on his part. Certainly, it was not the case that he was compelled to any disadvantaged position. Thirdly, the incidence of taxation due to his' residential status is only an uninterrupted consequence of certain proceedings, which had no connection whatsoever with proceedings under the tax laws. Fourthly, no legal injury has been caused to the appellant. Residential status is determined by number of days in India, plainly, and if a resident is taxable on his global income, he will be given credit for taxes paid on income accruing or arising outside India in terms of the Double Taxation Avoidance Agreement / Treaty with the respective countries. In these circumstance and legal position of the matter, the status of the appellant is held as 'resident for every A Y wherein he has stayed in India for 182 day or more, including the current A.Y. (as 1 have already held in appellant's own case for A.Y. 2007-08 in Appeal NO.82/11-12 vide order dated 18.3.2013). i) Regarding addition in the hands of assessee on account of investment made by Universal Business Solut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posal to get at the truth of the matter. Accordingly, I direct the AO to I pursue the reference made to the Govt. of Mauritius, and also to make fresh I references in the matter to the Governments / Administrations of Jersey and British Virgin Islands, with which India now has Tax Information Exchange Agreements, to arrive at the real facts by examining interconnected transactions and the flow of funds among various entities involved. The addition made is presently deleted. Appellant gets relief of Rs.3,96,87,500/-. j) Regarding addition made in the hands of assessee on account of investment made by Palm Technologies into Claridges SEZ. 7.5 I have considered the assessment order and reports of the Revenue, various documents and the submissions made on behalf of the appellant. The undisputed facts arc that investment as share capital has been brought into Claridges SEZ by Palm Technologies Limited (PTL), a company duly registered in Mauritius. The ownership of PTL is known, from the response received from the Govt. of Mauritius, from the evidence filed by the appellant, and from the seized documents itself. The appellant is not a shareholder in PTL, which is owned by one Mr. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant the addition ought to he sustained on a protective basis till the real facts are ascertained for which necessary references are to be made or pursued as already directed. I hold accordingly and direct the AO to pursue the reference made to the Govt. of Mauritius, and also to make fresh references in the matter to the Governments/Administrations of Jersey and British Virgin Islands, with which India now has Tax Information Exchange Agreements, to arrive at the real facts by examining interconnected transactions and the flow of funds among various entities involved. In Para-6.3 and 6.4 above. I have considered the matter in detail. This decision is in consonance with the decision of Hon'bIe ITAT as above. The addition is sustained on protective basis as unexplained investments u/s 69 in the hands of the appellant. k) Regarding foreign remittance. 8. The sixth ground of appeal is against addition of Rs..8,45,288/- being unexplained receipt of GRP 10,000 in appellant's bank account. I am unable to find any explanation / justification with regard to this ground of appeal in the submissions made before me. Accordingly, this addition made by the revenue is confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore he was compelled to stay in India by government and thereby his stay exceeded 182 days in these years. The Assessing Officer ignoring these crucial facts held the status of assessee as a 'resident' and computed his worldwide income as taxable in India. Continuing his arguments the Ld AR submitted that the passport was impounded allegedly for offences committed under IPC but till the date of release of Passport by CBI i.e. 21.9.2011 no charge sheet was filed against the assessee. Besides, it is submitted that none of the alleged offences related to Income tax Act. The passport was impounded on account of unfounded and wild suspicion of receiving commission to assessee in Barak missiles case. These unfounded allegations no longer exist because the CBI has already filed a closure report stating lack of evidence to press any alleged charges in FIR. It is submitted that entire basis for impounding of passport was illegal from beginning to end and assessee was thus forced to stay in India against his will for more than 182 days in these years due to illegal action of CBI. It was argued that in these circumstances the period of forced stay cannot be used for determinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of foreign business partners, balance sheets of the companies in which he is a Director etc. which are creating complication of foreign business related problems. 9. Arguing further the Ld AR submitted that the CBI has accepted that there was no sufficient evidence and dropped the FIR lodged on alleged Barak Missiles issue and accepted that he has not received any commission in alleged defence deals. Thus no evidence exist which in any way indicates this offence and the passport was illegally impounded on suspicion. The Ld AR submitted that Tribunal vide order dated 24.7.2012 for assessment year 2001-02, 2002-03 2004-05 has held the status of assessee as non resident on the basis of number of days stay in India on a totally different issue and facts. In this respect our attention was invited to paper book pages 857 to 905. 10. The Ld DR interrupted at this juncture and invited our attention to the Tribunal order cited by Ld AR and submitted that the Tribunal has held the assessee as non resident on the basis of number of days of his stay in India. Therefore this Tribunal judgment is against the assessee by drawing our attention to relevant paper book pages where the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d violations of Foreign Exchange Management Act for short (FEMA) in nearly simillar circumstances. Though Hon'ble Supreme Court permitted the retention of passport but it was on the explicit undertaking given by Additional Solicitor General to the effect that if there was any problem about the NRI status of the petitioner as apprehended, the Govt. of India would extend full cooperation to help the petitioner in that respect. Thus even Govt. has not taken the days of stay in India as an absolute rule. Had it been so ld ASG would not have given a concession for estoppels against law and Hon'ble Supreme Court may not have accepted such concession unless it was within the four corners of law. Thus the stay as envisaged in the Income Tax Act by a harmonious interpretation and applying the concept of reading down of legal provisions, means stay without force. 3. CIT v. J.H. Gotla 156 ITR 323 (SC) for the proposition that if result of plain reading of a section of an Act is absurd and not be intended then construction that results in equity rather than injustice is to be preferred. In assessee's case this interpretation is leading to a totally absurd and unintended result. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amsher Singh (1985) AIR 1082. 6. Smt. Tejasvani Panigrahi v. State of Orissa in W.P. No.571 of 2011 dated 13.9.2013 7. Krishnaswamy S. Pd. V. UOI (2006) 281 ITR 305. 8. ACIT v. Ramachandra Educational Health Trust (2010) 128 TTJ (Chennai) 408. 9. National Aviation Co. of India v. DCIT (2011) 137 TTJ (Mum.) 662. 10. ACIT v. Jindal Irrigation Systems Ltd. (1996) 56 ITD (Hyd.) 164. 11. Canara Bank v. ITO 125 TTJ 819. 12. South Eastern Coalfields Ltd. v. JCIT (2003) 85 ITD 608 (Nag.). 13. Standard Chartered Bank v. Directorate of Enforcement (2005) 275 ITR 81 (SC). 13. Further reliance is placed on the doctrine of Force Majeure which refers to events beyond the control of parties inhabiting them to fulfill their duties and obligations under the agreement. In this respect counsel relied upon the case law of Global Steel Philippines v. STC of India decided by the Hon'ble High Court in I.T.A. No.4615 5316/2009 and the decision of Hon'ble Apex Court in the case of State of Tamilnadu v. NK Kandaswamy 26 SCC 191 with the proposition that in interpreting the provision where a construction which would defeat its purpose and obliterate it from the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remand report from AO and then deciding by himself. Thus ld. CIT(A) though has given relief on one hand but unjustifiably contradicted his findings. An appellate authority is under obligation to decide the issue of taxability in correct assessee, which is already held to be belonging to Palm Technologies and not the assessee. 18. With regard to grounds No.5 to 8 for assessment year 2007-08 and ground in assessment year 2008-09 the Ld AR submitted that if assessee fails on the main ground of appeal regarding 'residential status' then these issues can be set aside by ITAT to the Assessing Officer for further verification and in case the ground of residential status is decided in favour than all other grounds of appeal become in fructuous as the additions were made holding the assessee to be a resident in India. Without prejudice to other arguments it was argued that Ld CIT(A) even otherwise deleted the additions by holding that the moneys did not belong to assessee. 19. The Ld AR also argued that as a legal course of appeal proceedings, once ld CIT(A) held that incomes did not belong to assessee there is no justification to retain additions on protective basis as it amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal submitted that Ld CIT(A) has wrongly deleted the additions and further relied upon the assessment order. The Ld AR on the other hand with regard to revenue's appeal relied upon the Ld CIT(A)'s order. 23. The request of Ld DR for filing of written submissions was acceded by Bench which are filed on 5.3.2014. After reiterating facts discussion regarding search by CBI, impounding of Passport etc. ld DR's submissions are mainly as under:- (i) That the Assessing Officer has gone strictly by the meaning of bare provisions of law as per which the assessee had to be treated as a resident in India. It is submitted that having stayed for more than 180 days in these years, the Ld AR fails to appreciate the fundamental principle of interpretation whereby a taxing statue is to be strictly construed and is very clear that rely upon the case law of Commissioner Customs v. Top Ten Promotions (1969) 3 All ER 39HL page 90. It is argued that deducing meaning of a taxing act one has to look merely at what is clearly said. Further reliance is placed upon the case law of CWT v. Modi Sugar Mills AIR 1961 (SC) 1047 wherein it was held that while interpreting a taxing statute e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken it will only be possible when there would be tangible material and the limitation would still be available with Assessing Officer. Therefore, it was argued that assessee's grievance against the above directions is unfounded and needs to be dismissed. 28. Arguing upon the revenue's appeal in respect of deletion of addition on jewellery amounting to Rs. 1.20 crores, Ld DR submitted that Ld CIT(A) has committed a serious error in not appreciating that Mrs. Renu Nanda ex wife of assessee did not have any independent source and the only logical inference cqan be to the effect of holding that the investment made was from assessee's sources only. It was submitted that Ld CIT(A) failed to appreciate that even otherwise also the addition was required to be deleted from Mrs. Renu Nanda hands as the jewellery found was held to have been acquired out of income of assessee only. Therefore, deletion in the hands of assessee's wife was inconsequential because the Ld CIT(A) was required to decide the issue on stand on alone basis. In view of the above, it was prayed that Assessing Officer's order in this respect be restored more so when the assessee has specially not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation and then decided the issues. In these circumstances the additions ought to have been confirmed. 31. Assailing the deletion of addition of Rs. 7.28 lakhs, the Ld DR submitted that Assessing Officer gave appropriate relief for withdrawals made by the assessee from bank. After deduction of household expenses he has given credit against cash found by the CBI on 10.10.2006 recovered at various premises. The Ld CIT(A) has justified the need for keeping huge quantity of cash by the assessee looking at his business. The relief is not warranted when majorl business of the assessee is located abroad and ATM facilities are available at all places. Therefore, the ld CIT(A) has wrongly deleted the addition. 32. As regards the deletion of addition of Rs. 28.47 lakhs qua investment in Sonali Farms, the Ld DR submitted that despite various queries, the Assessing Officer was not supplied the information on the bank account from which the payment as reflected in the seized documents were made. Therefore, Ld CIT(A) ignored that assessee failed to explain the source of expenditure on Sonali Farms and even if the amount originated from Singapore/foreign bank account no evidence was add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady dealt by ITAT in earlier years. Ld. DR is also heard thereon. 38. Ground No. 1 10 in A.Y. 2007-08 and ground No.5 7 in A.Y. 2008-09 are general in nature and do not require any adjudication. 39. We advert to the common legal ground taken by the assessee as ground No.2 in both appeals regarding determination of residential status. The dispute of residential status in these years has arisen because the Assessing Officer rejected the assesses claim of being 'non resident' and determined the status of the assessee as 'resident in India' finding the number of days of stay in India being more than 180 days as per the provisions of section 6. Per contra the claim of the assessee is that he was illegally forced to stay in India because his Passport was illegally impounded and he was compelled to stay in India against his wishes or free will. The Ld AR has forcefully argued that assessee has been a non resident since a long time and was earning only passive income in India for which he was filling regular income tax returns in India and was assessed accordingly. The ITAT order dated 24.7.2012 holding the assessee as non resident for assessment year 2001-02, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld Special Judge, CBI Court by order dtd. 15.1.2007, directed for release of his passport on the fulfillment of certain conditions. Before assessee could comply with those stringent conditions, the CBI challenged CBI judge's order before Hon'ble Delhi High Court. By order order dated 5.2.2007 Hon'ble Delhi High Court reversed this order of ld Special Judge, CBI. Against the order of Hon'ble Delhi High Court the assessee approached Hon'ble Supreme Court and Hon'ble Supreme Court vide order dated 24.1.2008 ordered for release of passport. Ironically before the passport could be physically released consequent to Supreme Court order, the Passport Authorities again impounded the passport on 25.3.2008 under some other provisions. Against the later order of Pass Port Authorities the assessee again approached Hon'ble Delhi High Court against impounding of passport vide order dated 5th October, 2010 was pleased to order for release of Passport with a condition that assessee will take permission of the Trial Court before seeking to travel abroad. 44. The assessee then filed application for permission to travel abroad for two months which was dismissed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdized his NRI status and resulted in irreparable loss. He also alleged that for more than three months since 10.10.2006 he had to postpone visits abroad and reschedule business meetings but such indefinite postponement could not be continued for ever. 47. Therefore, the intention and anxiety of the assessee to maintain his NRI status demonstratively emerges from the proceedings. In these facts and circumstances it is very clear that assessee made every legal effort to maintain his past status as non resident and endeavored to defend his legal rights before various legal forums. Had the Passport been released after first order of spl. Judge CBI court, the assessee would have travelled abroad thus maintaining his NRI status, it is only the wrongful impounding of passport which is the cause of preventing the assessee from excercising his lawful right of travelling abroad. In the light of above legal hurdles, facts and circumstances, the Ld AR argued that for the purpose of determination of residential status of assessee the period of impounding of passport which resulted in forced/compelled stay in India should be excluded while counting the days of stay in India. 48. The appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. Furthermore, in the instant case, we are dealing with an artificial liability created for counteracting the effect only of attempts by the assessee to reduce tax liability by transfer. 49. The assessee's case gets further strength from the case law of CWS India Ltd. v. CIT (1994) 208 ITR 649 (SC) wherein the Hon'ble Supreme Court has observed as under:- Where the language of the statute in the ordinary meaning and grammatical construction, leads to manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdly which can hardly have been intended a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence, this may be done by departing from the rules of grammer, by giving an unsual meaning to particular words, or by rejecting them altogether on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T order has been rendered altogether on a different issue i.e. the non resident assessee though not remained in India for more than 182 days was willy nilly held as resident because it was alleged to have been doing global business from India. An allegation which has been factually and legally refuted by ITAT and confirmed by Hon'ble High Court. The issue in question of illegal impounding of passport, illegal restrain in India and consequent litigation was neither in question nor an issue at all in earlier years. Therefore, the earlier ITAT order is on totally different set of facts and legal propositions, which cannot be held to be covering the issues in question. The issue of literal or strict interpretation and these peculiar facts about untenable impounding of passport and restrain on travel out of India was not at all present in earlier years. Thus a judgment which has no parity of facts or issues cannot be applied to present case. These issues cannot be summarily held to be covered against assessee on assumptions and presumptions as is being canvassed by the revenue. 55. After careful consideration of the facts we are inclined to agree with ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged charges and no FIR is applied to be closed. 57. These proceedings clearly reveal that the repeated impounding of assessee's passport and lodging of criminal case was found to be untenable by courts. This entangled the assessee into spat of litigation, forcing him to stay in India and unwillingly loose his NRI status on strict and literal interpretation of relevant provision. The plea of imminent loss of NRI status consequent to illegal restraint on assessee from traveling outside India is pleaded before Hon'ble High Court as mentioned above. Thus looking at the matter from all possible angles the assessee was restrained by govt. from traveling abroad, compelled to stay in India for more than 180 days. The circumstances were beyond assessee's control and no fault can be attributed to assessee in this behalf. 58. In our considered view these facts and circumstances create a peculiar situation. Due to initiative on the part of govt. agency which is held to be untenable, it became impossible for the assessee to go out of India. If only a strict and legal meaning is assigned to relevant provision it leads to a manifest absurdity thereby denying a lawful entitlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vipin Kumar's case throws a light on possibility of applying rules of interpretation to be adopted in case of aberrations in NRI status caused by untenable impounding of passport. 60. In view of the foregoing and taking guidance from Hon'ble Supreme court order in the case of Vipin Kumar(supra) we are inclined to hold that the strict and literal interpretation put by lower authorities is not an absolute rule. Looking at facts and unintended hardship caused to the assessee by illegal impounding of passport and the fact that assessee is not found to be on the wrong side of law on these issues and whose passport was untenably impounded and released after a long winding and apparently tiring spat of legal proceedings. In our considered view the literal meaning and strict interpretation cannot be applied to decide the NRI status in the peculiar facts of this case. The literal meaning manifestly leads to unintended absurdities and undue hardship on an assessee who is not found to have violated the law. Untenable impounding of passport and restriction on freedom of movement to travel abroad and thereafter adverse tax consequences cannot be the intention of legislature. In thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disability to perform the mandatory part of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like an act of God, the circumstances will be taken as a valid excuse. 63. Similarly the Apex Court in the case of State of Rajasthan v. Shamsher Singh (1985) AIR 1082 applied the doctrine of impossibility of performance by observing as under:- Mr. Jethmalani placed before us a passage from Broom's Legal Maxims (p. 162) 10th Edn. Where the doctrine of impossibility of performance (lex non cogit ad imporsibilia) has been discussed, it has been indicated therein that however mandatory the provisions may be, where it is impossible of compliance that would be a sufficient excuse for non compliance, particularly when it is a question of the time factor. Keeping the attendant circumstances of this case in view, we find it difficult to hold that the time taken by the State Govt. can amount to withholding of the representation which resulted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f forced meajure may be applicable as it was impossible for the assessee to move out of country and therefore doctrine of impossibility of performance is also applicable. This is a fit case where strict legal reading of the provisions regarding residence in India should not be applied. An interpretation or construction should be applied which results in harmonious meaning, equity rather than injustice. 67. In our considered view application of rule of interpretation of 'reading down' and 'harmonious construction' automatically take care of assessee's arguments on doctrines of impossibility of performance and 'force majeure' . In view of the above facts and circumstances we hold that for calculation of stay in India for these years the same should be calculated after exclusion of days of wrongful impounding of passport which constitutes forced stay in India. Thus period for which assessee could not travel outside India in above facts and circumstances i.e. from 10.10.2006 to 21-9-2011 i.e. till the passport was finally handed over to assessee and allowed to travel outside India should be excluded. Consequently assessee's residential status is held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We also find that similar addition on substantive basis was made in assessment year 2004-05 and Tribunal on revenue appeal in I.T.A. No.2605/Del/2013 has dealt with this issue at page 60 onwards vide order dated 21.2.2014 and vide para 7.5. at page 68 has dismissed the appeal of revenue on this issue. During these years the Ld CIT(A) has however made the addition on protective basis without justification. In view of the above and following the ITAT order for 2004-05 in assesses own case we delete the alternate retention of addition on protective basis. Therefore, ground No.4 in both the years is allowed. 71. Ground No.5 in A.Y. 2007-08 relates to addition of Rs. 7,29,0000/- confirmed by ld CIT(A) on account of excess cash found at the time of search. The assessee had submitted his explanation vide letter dated 14.1.2009 along with cash flow statement placed at paper book page 261. The Assessing Officer has made the addition by rejecting the opening balance of cash in the cash flow statement and also estimated Rs. 1,50,000/- per month as household expenses against Rs. 75,000/- per month claimed by the assessee. The Ld AR has argued that without considering opening balance and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... senting deposits in Deutsche Bank were deleted allowing the ground taken by assessee. The relevant findings of the ITAT are reproduced below:- This issue has been covered by the decision of the Hon'ble High Court in the case of the appellant where the deposits in the same bank account for the assessment year 2001-02, 2003-04 were deleted with the following observations:- We are left to consider the addition of Rs.10,51,20,000/- made u/s 68 of the said Act. Insofar as this addition is concerned, the decision with regard to it would depend on whether the respondent/assessee is regarded as a resident or a non resident. In case he is regarded as a resident then obviously this addition would have to be made. But, if he is regarded as a non resident then this addition will have to be deleted. This is exactly what the Tribunal has done. The Tribunal considered the case of the revenue as well as that of the respondent/assessee and determined that the respondent/assessee was a non resident and therefore the said addition has --------. In view of the fact that the Tribunal has correctly decided that the respondent/assessee was not a resident in India in the years in question, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable opportunity of being heard. Therefore, ground No.5 for AY 2008-09 is allowed for statistical purposes. 79. Adverting to the appeals filed by revenue in these years, ground No.1 in both the years and ground No.6 in A.Y. 2007-08 ground No.5 in A.Y. 2008-09 are general in nature and do not require any adjudication. Ground No.2 in both years is regarding grievance of the assessee wherein Ld CIT(A) deleted the addition on account of investment made by Universal Business Solutions in the Claridges Hotels Ltd. We find that Ld CIT(A) has dealt with this issue very elaborately and after recording proper reasons has rightly deleted the addition. Therefore, we do not find any infirmity in the same. In view of the above, revenue's ground No.2 in both years is dismissed. 80. Ground No.3 relates to the grievance of revenue regarding addition made on protective basis only instead of on substantive basis. We have already dealt with this issue and decided in favor of assessee. Therefore, this ground in both years is dismissed. 81. Ground No.4 relates to the grievance of revenue whereby Ld CIT(A) had made the addition on protective basis and at the same time issued certain direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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