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TMI Blog2017 (4) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... ut it is not clear for which purpose the said reference was made. So in the absence of clear facts on record, this issue is also set aside to the file of the AO to be adjudicated afresh, in accordance with law after providing a due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. - ITA No. 5448/Del/2016 - - - Dated:- 10-4-2017 - Sh. N. K. Saini, AM and Smt. Beena Pillai, JM For The Assessee : Sh. Ajay Vohra, Sr. Adv. and Sh. Rohit Garg, Adv. For The Revenue : Sh. S. S. Rana, CIT DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 24.08.2016 of ld. CIT(A)-30, New Delhi 2. Following grounds have been raised in this appeal: 1.That the CIT(Appeals) erred on the facts and in law, in not holding that the assessment order dated 27.02.2015 passed by the assessing officer under section 153A of the Income-tax Act, 1961 ('the Act ) was bad in law and void-ab-intio. 1.1 That the CIT(Appeals) erred on the facts and in law in not appreciating that the above assessment order passed under section 153A is barred by limitation as prescribed in section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise as the appellant denied having any foreign bank account in the first place. The appellant craves leave to add to, alter, amend or vary the aforesaid grounds of appeal at or before the time of hearing. 3. From the aforesaid grounds, it would be clear that the assessee had challenged the jurisdiction of the AO in passing the assessment order u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act) and sustenance of the addition of ₹ 69,07,414/- made by the AO. 4. Facts of the case in brief are that the assessee filed the original return of income on 29.07.2006 declaring an income of ₹ 7,05,730/- which was processed as such on 20.11.2006. Later on, the case was selected for scrutiny and the assessment was framed u/s 143(3) of the Act on 08.10.2008. Subsequently, a search and seizure operation u/s 132 of the Act was conducted on various business premises of Sh. V. C. Jindal Group of cases as well as the residential premises including the residence of the assessee at 12A, Vasant Kunj, Pocket-D, New Delhi on 14.11.2011. The AO issued the notice u/s 153A of the Act on 19.10.2012. In response to the said notice, the assessee filed the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of the assessee Name mentioned - Shyam Sunder Jindal Name of assessee. Each alphabet of the name surname are that of assessee as mentioned in return as well as passport. Date of Birth - 26.08.1955 26.08.1955 is the correct date of birth of the assessee as mentioned in the return filed passport. Profession - Chairman The assessee is chairman of Jindal Group of companies. Postal - 56, Hanuman Road, New Delhi/India (Legal Address) This was the Registered Office of M/s Jindal Rubber Pvt. Ltd as proved by a screenshot downloaded from website. Place of birth 356, Bhiwani, Haryana. This is birth place of assessee as mentioned in his passport. The telephone no. - +11 3345463. This telephone no. 23345463 is a MTNL telephone issued in the name of M/s Jindal Rubber Pvt. Ltd. A screen shot obtained from MTNL directory through website establishes this fact Screen shot is place in file. The earlier seven digit number was 3345463 and 2 was prefixed to all MTNL nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btain the account statement from HSBC, Geneva, Switzerland through FT TR by not furnishing the consent waiver form. He, therefore, considered the maximum credit balance of US$155923.57 on conversion of Indian Rupees @ ₹ 44.30 per $ (rate of $ taken at average rate for the relevant year as per Reserve Bank of India rates) to ₹ 69,07,414/- as undisclosed deposit/credits of the assessee for the year under consideration. The AO also observed that the assessee had been Resident in India during the period of existence of the above said account, the source of deposit/credit in the said account had not been disclosed by the assessee in his returns of income filed for the relevant assessment years, therefore, the addition on account of deposit/credit in the said bank account was being made in the hands of the assessee. Accordingly, addition of ₹ 69,07,414/- was made. 7. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the order u/s 153A of the Act passed by the AO, as without jurisdiction, bad in law and void ab initio. The ld. CIT(A) dismissed the said ground of the assessee by observing that the objection raised by the assessee were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be excluded from the computation of limitation period for completing assessment under Section 153A of the Act. Relevant text of the aforesaid provision is reproduced hereunder, for your honour's ready reference: Section 153B.......................................................................... Explanation - In computing the period of limitation for the purposes of this section- ................................................................................(viii) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in Section 90 or Section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less ... shall be excluded (Emphasis supplied by us) 2.5 The issue of limitation was raised by the Appellant before the Ld. AO, during the course of assessment proceedings vide his letter dated November 25, 2014. (Pages 22 to 25 of the paper book) 2.6 The Ld. AO replied vide a letter dated December 24, 2014 (Page 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fate of queries raised by FT TR division on November, 27, 2012 and if as a result of such enquiries it transpires that these queries were summarily rejected by the concerned foreign authorities and consequently the time limit of completion of assessment does not get extended till February, 27, 2015 (the date on which the Ld. AO completed the assessment), Your Honour may declare the assessment void, being barred by limitation. 9. The ld. CIT(A) after considering the submissions of the assessee held that the assessment u/s 153A of the Act was completed within the statutory time limit by observing in para 5.3 of the impugned order as under: (i) In this regard, the appellant has submitted that the search and seizure action u/s 132 was initiated on 14.11.2011 and therefore, as per appellant the limitation expires u/s 153B for completing the assessment u/s 153A on 31.3.2014. In the assessment order, in para 6 at page no. 10, A.O, has made a reference vide letter dated 30.01.2015 to the concerned authorities, for obtaining the information relating to the appellant under DTAA. (ii) However, on the perusal of the assessment record presented by the A.O. in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain that the loose sheet of paper, supposedly a foreign bank account, which allegedly, was held by the Appellant, was received under the 'DTAA'. In this regard, one may mention that based on contemporaneous media reports, such information has been made available to the Indian Income tax authorities through means, the legitimacy of which, is a matter of doubt. 2.13 Given that the authenticity of the aforesaid papers, based on which the assessment was proposed to be framed, was questionable, the Appellant did request the Ld. AO to make available the source of the aforesaid alleged bank account. However, the Ld. AO failed to provide any such document to the Appellant and also failed to provide an opportunity for cross examination of the person whose statement or information was relied upon by the Ld. A. O. against the appellant, therefore, denied him an opportunity to assail the aforesaid information/ based on which, adverse inference were drawn against him. Such failure is a blatant breach of natural justice and renders the impugned order void. 2.14 It may also be noted that the Ld. AO never took into consideration any of the submissions made by the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me' as defined in section 158B(d) is only relatable to material found as a result of search. Unless the materials are unearthed as a result of search, there is no question of assessment of undisclosed income in terms of Section 1S8BA in Chapter XIV-B Further, in a recent judgement in the case of CIT Central-III vs Kabul Chawla (DB) [2015] 234 Taxman 300 (Delhi) dated August 28, 2015 the Jurisdictional High Court has discussed the provisions of section 153A of the Income Tax Act in detail, and held: 37. On a conspectus of section 153A(1) of the Act, read with the proviso thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: vii. Completed assessments can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeal concerned AYs 2002-03, 2005-06 and 2006-07. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PORTMAN INVESTMENTS HOLDING LIMITED MOSSACK FONSECA CO. (B. V.I) LTD. SKELTON BLDG. MAIN STREET P.O. BOX 3136 ROAD TOWN, TORTOLA [SITZADRESSE] PORTMAN INSVESTMENT HOLDING LIMITED C/o POSTFACH 365 POSTSTRASEES 403 FL-9491 RUGGELL [ADDMIN ADRESSE] Code BUP: 9070145843 / Code profile: 9072021170 Monthly balances in the account of profile: PORTMAN INSVESTMENTS HOLDING LIMITED It cannot be disputed that the above referred alleged bank account, if at all it exists, it pertains to some PORTMAN INVESTMENTS HOLDING, and not to the Appellant. The place of domicile as well as the address of PORTMAN INVESTMENTS HOLDING are clearly mentioned in the photostat copy and the same has no connection whatsoever with the Appellant. PORTMAN INVESTMENTS HOLDING is a separate legal entity and the Ld. AO has not even attempted to establish any link between the said entity and the Appellant; he has not even pointed out whether the Appellant is a shareholder or a director or is having any connection with the said entity. Without establishing any nexus or connection of the Appellant with the said entity, the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie case arises to suggest that the Appellant was the owner of the alleged foreign bank account. 2.26 At this point, it is worthwhile to invite Your Honour s kind attention to page 6, PARA 10 of the assessment order wherein the Ld. AO has himself admitted the requisite information from Swiss Banking Authorities has not been received so far . This admission on the part of Ld. AO leaves no doubt in mind that, what to speak of discharge of burden of proof cast on the Ld. AO (by bringing conclusive evidence on record to substantiate his allegations), the Ld. AO has not even brought the enquiry to a logical conclusion, before completing the assessment, as a result of which the entire assessment proceedings are vitiated. 2.27 Without prejudice it is reiterated that in statement recorded on oath during the course of search, the Appellant had categorically mentioned that he had never owned/maintained any such foreign bank account, Furthermore, the Ld. AO has not been able to bring any material on record to disprove the statement of the Appellant. Here, it would not be out of place to highlight the decision of the Hon'ble Supreme Court in the case of Sreelekha Banerjee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO has not even stated the specific tax treaty under which, such information has been received and the manner thereof. This conduct only indicates non application of mind and the prejudicial and presumptuous nature of the proceedings conducted by the Ld. AO. Needless to reiterate, the addition was made on the basis of surmises and conjectures, without bringing any cogent evidence on record. 2.31 One must be mindful that in the instant circumstances, it was incumbent upon the Ld. AO to prove his allegation. The Ld. AO has all along remarked that the Appellant has failed to furnish the requisite information pertaining to the alleged bank account and even levied penalty twice under Section 271(1)(b) of the Act on the inevitable failure of the Appellant to do so. It is quite unfathomable as to how the Ld. AO can expect the Appellant to furnish information which is not in his possession and to penalise for his inevitable failure to produce the same. The Ld. AO has totally failed to consider the well accepted legal maxim of Lex non cogitadimpossibilia which implies that an impossible act cannot be enforced or compelled to be done. Here, one may usefully rely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the Assessing Officer may require; 2.36 The language of the above-mentioned provisions would reveal that an Assessing Officer is empowered to seek accounts, documents or information as the Assessing Officer may require. Whilst is as abundantly clear that a 'consent form' cannot be included in the ambit of 'accounts' or 'documents' as envisaged by Section 142(1), one may nevertheless, examine whether execution of such consent form may be enforceable under the umbrella of 'information' as envisaged by Section 142(1) of the Act. 2.37 It is respectfully submitted that by no stretch of imagination, can the expression 'information as the Assessing Officer may require', be suggestive of the proposition that an Assessing Officer is authorised to seek the signature of an assessee on any form, much less, a consent form. Such authority to enforce signature on any consent form may only be exercised under any explicit provision of the law, which is absent, insofar as provisions of Section 142(1) of the Act are concerned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged HSBC Bank account no. BUP no. 9070145843, at Geneva, Switzerland (herein with referred as the bank account ) was available with the A.O. and copy was given to the AR of assessee. From the assessment order, the A.O. has given sufficient opportunity to the assessee to represent the case and therefore, the A.O, has allowed sufficient opportunity of being heard. Accordingly, the claim of the appellant that there is a violation of principle of natural justice is not substantiated and therefore, hereby rejected. (ii) From the information available with the A.O., which has been discussed in the assessment order, there is no doubt about the alleged Bank account, maintained by the assessee, which is not disclosed to the department. However, the assessee has not accepted and disclosed the alleged Bank account: During the search and seizure action u/s 132 on 14.11.2011, In the return of income filed on 29.7.2006 u/s 139(1), In the return of income filed on 20.12.2012, in response to notice u/s 153Aon 19.10.2012, and Also during assessment proceedings. (iii) During the appellate proceedings, in the statement of fact, the appellant has objected that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own by Hon'ble Supreme Court in the case of M/s. Phool Chand Bajrang Lal v. ITO [1993] 69 taxman 627(SC). In view of the above, I am of the considered opinion that the HSBC bank account, belongs to the appellant, which is not disclosed to the department. Therefore, the credit entries in the bank account represent the undisclosed income of the appellant. In these facts and circumstances, the arguments of the appellant are not acceptable and hereby rejected. Accordingly, I do not find any infirmity in the findings of the A.O. Accordingly, ground no. 1.2, 1.3 and 1.4, are hereby dismissed. .. .. . 7.4 (i) In the assessment order, A.O. has stated that the Income Tax Department had certain documents in its possession, evidencing the fact that the appellant was operating an undisclosed bank account with HSBC, Geneva. The Department also possesses details in relation to the Monthly balance in the bank account from Nov., 2005 to Feb., 2007. As per the information, the peak balance in the bank account in February, 2006 amounting to US$1,55,923.57, on conversion in INR comes out to ₹ 69,07,4147- @ ₹ 44.30 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any infirmity in the findings of the A.O. and addition of Rs, 69,07,414/-, on account of peak balance in the bank account with HSBC, Geneva, is confirmed. Accordingly, ground no.2, including sub-grounds 2.1 to 2.5, are hereby dismissed. 13. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that search in this case took place on 14.11.2011 and no incriminating material was found during the course of search. A reference was made to page nos. 72 to 75 of the assessee s paper book which is the copy of panchnama. It was further submitted that the AO passed the assessment order on 27.02.2015 while the time limit to pass the assessment order expired on 31.03.2014. Therefore, the assessment order passed by the AO was beyond limitation period. It was emphasized that in view of the provisions of Section 153B of the Act, the order u/s 153A of the Act ought to have been passed within the period of two years from the end of the financial year, during which the last of authorization for search was executed and in this case the last panchnama was drawn on 15.11.2011. A reference was made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14.11.2011, the assessee categorically stated that he did not have any bank account outside India. A reference was made to page no. 84 of the assessee s paper book wherein in response to query no. 5, the assessee clearly stated that neither he nor any of his family member had bank account outside India. It was submitted that the AO although stated that certain documents had been obtained under DTAA but the said documents did not demonstrate in any manner because the same is the photocopy of the bank statement, not on the letter head of any bank, did not bear signature of any official of any bank and did not carry seal of any bank. Therefore, the documents relied upon by the AO could not be said to be photocopy of a bank statement, leave alone bank statement of loan account in HSBC Bank. Therefore, those documents did not have any evidentiary value. The reliance was placed on the following case laws: Collector of Customs Vs East Punjab Traders and Ors (1998) 9 SCC 115 (SC) Srichand P. Hinduja Vs State trough CBI CRLMA 169 of 2005 (Del.) Commissioner of Customs Vs Rajesh Polyfilm (2006) 202 ELT 416 (Cal.) Truwoods Pvt. Ltd. and Shri Sanjiv Agarwal Vs Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search on 14.11.2011 u/s 132(4) of the Act. It was also submitted that the assessee did not inform about his bank account for the period November 2005 to February 2007, copy of which was provided to the Authorized Representative of the assessee on 21.11.2014, in the said details, name, date of birth, address, telephone number, residential address, passport number etc. pertaining to the assessee were mentioned. Therefore, the addition was rightly made by the AO and the ld. CIT(A) was fully justified in confirming the same. It was stated that the ld. CIT(A) asked the assessee to furnish consent form and the AO asked the assessee to submit the complete bank statement but no such statement was filed nor consent waiver form was furnished by the assessee in order to obtain the bank statement from HSBC Bank, Geneva. It was also stated that all the details/particular pertained to the assessee only and the credit entries appearing in the alleged bank account were on account of undisclosed income of the assessee and the ld. CIT(A) was fully justified in sustaining the addition on account of peak balance amounting to ₹ 69,07,414/- found in the month of February 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Bank, as referred to in the above notice, in which deposits have been alleged to have been made by me in the financial years 2005-06 and 2006-07. I have been required to explain the source of credits in the above bank account, failing which the deposits in the above bank account, it is stated, would be added to my income of the relevant assessment years. In this regard, it is respectfully submitted, as under: I have, in response to queries raised by the Department from, time to time requiring me to provide information /details in relation to the aforesaid bank account, like account opening form, bank .statement,, etc., categorically stated that I have not maintained any such bank account. In fact, in the statement dated 14.11.2011, recorded during the search carried out by the Department, I had stated that I did not have any bank account outside India. In fact, I had been asking the Department to provide the document/evidence on the basis of which it has been alleged that the aforesaid bank account belongs to me. The principles of natural justice require that the 'document/evidence (duly signed and stamped), the source from which such evidence has been obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The aforesaid documents are photo copies of certain sheets of paper. You have stated that the document being provided is bank statement of HSBC Bank. The said documents do not demonstrate in any manner that the same is a photo copy of a bank statement leave alone bank statement of HSBC Bank, considering that it is not on the letter head of any bank, it is not stamped by any bank, it does not bear signatures of any official of any bank and it does not carry seal of any bank. If, indeed it is a bank statement of HSBC Bank, there is no indication as to the branch and country to which the same relates. The aforesaid documents, therefore, cannot be said to be photo copies of any bank statement, leave alone account in HSBC Bank. ii) The aforesaid document does not carry the stamp or signature of your office and cannot, therefore, be said to be official document provided by your office. iii) The source of the aforesaid documents is not known and has not been provided. iv) The aforesaid document, which is a foreign document, is not consularized by the Indian Embassy of the country from which such document has originated. In view of the aforesaid, the aforesaid unauthent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 800 F.Y. 2006- 07 at $ 1702241. Since the deposits during this period are in form of Fiduciary Deposits, Liquid Assets Stocks therefore it is not possible to establish any connection of a deposit entry with any withdrawal of earlier month/period. In that circumstances the entire deposits will have to be added in the Income of the relevant year has absolutely no basis. No adverse inference on facts and in law can, therefore, be drawn based on the aforesaid document for the reasons mentioned hereinabove. That apart, and without prejudice, it may be pointed out that the aforesaid notice is time-barred having regard to the provisions of section 153B of the Act, since in terms of section 153B(1)(a), the assessment under section 153 A of the Act, for assessment years 2006-07 and 2007-08 was required to be completed by 31.3.2014 as the search was carried out on 14.11.2011. In view of the aforesaid, the aforesaid notice may kindly be withdrawn/dropped. Thanking you, Yours faithfully Sd/- (Shyam Sunder Jindal) 20. The aforesaid contention of the assessee has not rebutted by bringing any cogent material on record. In the present case, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same but nothing was provided to the assessee. Therefore, in the absence of all the relevant documents/evidences on record, it is not possible to come to a just conclusion relating to the authenticity of the document relied by the AO or to the facts as to whether these documents pertained to the assessee. Now question arises as to whether the document relied by the AO are admissible in evidence as the documents were photocopies which were not duly authenticated. 21. On a similar issue in the case of Collector of Customs Vs East Punjab Traders and Ors. before the Hon ble Supreme Court (1998) 9 SCC 155 (supra) their lordships in para 5 observed as under: 5. The single Technical Member, who wrote the minority judgment, however, held the view that it was not essential on the part of the Customs Officer to strictly prove the documents as required by the Evidence Act and that the authenticity of the documents, though copies, could not be doubted as they had been collected by the Collector from foreign sources and could be admitted in evidence by virtue of Section 139(ii) of the Customs Act, 1962 which permits the raising of a presumption in respect of documents received from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancy in regard to copies bearing the seal of Customs at Kobe also raises a serious doubt whether the copies relate to any of the consignments in question. In these circumstances, if the majority was disinclined to place reliance on these documents we find it difficult to hold that it was in error in doing so. 22. In the present case also the documents relied by the AO are the copies of the copies which did not have any signature of bank official or name of the bank or the place or the country were the branch was situated. The AO himself admitted in para 6 of the assessment order that the requisite information from the Swiss Banking Authority had not been received. It is also relevant to point out that the AO vide letter dated 12.11.2014 (copy of which is placed at page nos. 44 45 of the assessee s paper book) stated to the assessee as under: Sir, Please refer to this office letter no. ACIT/CC-14/2014-15/132 dated 12-08-2014 your reply dated 05/09/2014 on the above subject. In your reply you have submitted as under: In this regard, it is submitted that the undersigned is not, aware as to how and wherefrom, the above information has been extracted by your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for this purpose. After having receipt of the same you are required to explain the source of the credits in the bank account. In aggregate the deposits during F.Y. 2005-06 stands at $ 776800 F.Y. 2006-07 at $ 1702241. Since the deposits during this period are in form of Fiduciary Deposits, Liquid Assets Stocks therefore it is not possible to establish any connection of a deposit entry with any withdrawal of earlier month / period. In that circumstances the entire deposits will have to be added in the Income of the relevant year. If you have any explanation for the nexus of entries during this period please provide the same. From the above it is established beyond doubt that you had an account with the HSBC Bank for which you are still denying. The other persons associated with the account are M/s Portman Investments Holding Ltd., Darshna Saraf, Raghu, Bhavesh, Roland Oehri, Gerhard Aric Hoop, Vartika Saraf AG Hab Consult, Please intimate your relations with the above persons and their nature-of activities connected to the account. Another opportunity is granted to you to explain as to why the amounts appearing in the Bank account under consideration may not be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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