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TMI Blog2016 (9) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... pport and substantiate the said addition. The said additions made for both the years under consideration are, therefore, deleted allowing the relevant grounds of the assessee’s appeals. Channelizing undisclosed money through Bank account - source of monies deposited in HSBC Bank Account was his undisclosed money - Held that:- We find that this issue has become infructuous or academic as a result of the decision rendered by us on the preliminary issue raised in these appeals, holding that the additions made to the total income of the assessee on account of the income arising from the relevant transactions reflected in the HSBC Account are not sustainable in the absence of any incriminating material found during the course of search to support and substantiate the same. We, therefore, do not consider it necessary or expedient to adjudicate upon this issue on merit. Penalty imposed under section 271( 1)(c) also cancelled. - I.T.A. Nos. 853 & 854 /KOL/ 2016, I.T.A. Nos. 855 & 856 /KOL/ 2016 - - - Dated:- 21-9-2016 - Shri P.M. Jagtap, Accountant Member And Shri S.S. Vishwanethra Ravi, Judicial Member Shri D.S. Damle, FCA, for the assessee Shri Niraj Kumar. CIT, D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 23. 08. 2012 declaring total income of ₹ 5,18,435/- and ₹ 5,49,810/- for A.Y. 2006-07 and 2007- 08 respectively. In the said returns, the assessee had not offered to tax the amounts found deposited in his Bank account with HSBC, Geneva, Switzerland. In reply to the query raised by the Assessing Officer in this regard, the assessee denied of having any Bank account with HSBC, Geneva, Switzerland by stating that he had no knowledge about such Bank account. He also stated that he was under extreme pressure and duress as a result of search and seizure action and signed whatsoever was dictated by the DDIT ( Inv.)/ Additional DIT ( Inv.) in the statement recorded under section 131 on 30. 07. 2011. In his statement recorded under section 131 during the course of assessment proceedings on 17.06. 2014 and 12. 12.2014, the assessee again denied of having any Bank account in HSBC, Geneva, Switzerland. This denial of the assessee was found to be an after-thought by the Assessing Officer keeping in view the specific information received from foreign Government as well as the admission of the assessee in his statement recorded on 30. 07.2011 accepting the ownership of the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , facts in this case are different. In this case, apart from inventory of jewellery and other materials, cash of ₹ 5 ,00 ,000 /- was seized. Besides, at the time of search action, the Revenue was in possession of authenticated information that the assessee had an undisclosed bank account with the HSBC Bank, Geneva, Switzerland. In fact, one of the main reasons for initiation of search action was that undisclosed foreign bank account. Thus at the time of issuance of notice u/ s 153 A by the AO, there indeed some incriminating materials and documents were in the possession of the AO in the form of seized cash and undisclosed bank account and AO made an addition of ₹ 4 .61 crores on examination of undisclosed bank accounts as well. Moreover, the assessee never objected to the proceedings initiated u/ s. 153 A during the assessment proceedings. He filed a fresh return in response to notice u/ s 153 A and thereafter complied with the requirements of the assessment by attending the hearings from time to time and filing the requisite details and made several submissions. The materials on record suggest that before the AO, not even once the appellant had objected to the initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, Geneva, Switzerland opened in the name of the assessee and ultimately the entire balance lying in the said Bank account was remitted back to Singapore as per the directions given by Mr. Onn Sithawalla of MSM Enterprises PTE Limited in favour of Donald Mcarthy Trading PTE Limited, an associated concern of MSM Enterprises PTE Limited. The affidavit of Mr. Onn Sithawalla, owner of MSM Enterprises PTE Limited was also filed by the assessee before the ld. CIT(Appeals) affirming all these facts on oath and a request was made to admit the said affidavit as well as his own affidavit as additional evidence on the ground he could not place the same before the Assessing Officer in the course of assessment proceedings. This additional evidence filed by the assessee was admitted by the ld. CIT( Appeals) and after obtaining the comments of the Assessing Officer thereon in the form of remand report and also counter- comments of the assessee in the form of rejoinder to the remand report, the ld. CIT( Appeals) proceeded to decide this issue on merit. In this regard, he recorded his observations/findings in paragraphs no. 4.4. 1 to 4.4. 5 of his impugned order, which read as under:- 4:4.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). He also stated that no one approached me for opening of the account, I myself approached the bank to get an account opened.'(Answer to Q. 4). He further stated that 'except the deposits made at the time of-opening of account I do not remember the exact number of times deposits or Withdrawals in this account. However, I have operated this account 'only a few times.' (Answer to Q. 1O). On being asked about the source of deposits in the Swiss Bank account, assessee categorically stated that 'the money deposited in this account represents the proceeds of my export business as far as I remember.' (Answer to Q.12 ). Thus, in the first statement, which has got immense evidentiary value in the eyes of law, the assessee admitted the vital points that the, Swiss Bank account was opened by him and at his own behest; made few deposits and withdrawals (factually correct); and the deposits were made from his export proceeds. It is well settled law that an admission is the best evidence that an opposing party can rely upon and decisive of the matter, unless proved erroneous. Reliance is placed on the decision in the cases of Narayan Bhagwantrao Gosavi Batajiwale Vs. Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring between assessee and MSM was 30:70, assessee stated that there was no formal IV agreement (Answer to Q.26 ). In Q.28; it was asked i f the bank account with HSBC, Switzedrland was to open for the purpose of proposed Joint venture, why it was a condition that the bank account should be opened only in your name and that your wife Smt. Usha Garodia would be nominee, whereas 70% of the capital was to be contributed by MSM Enterprises PTE Limited? Assessee s reply was because the name of the joint venture was not decided and therefore, Onn Sithawalla asked me to open a bank account in HSBC...In Q. 29, assessee was asked in the proposed joint venture the share of MSM Enterprises PTE Ltd. was 70%. If the name of the Joint Venture was not decided, then why Mr. Sithawalla was not willing to have a joint account with you or at least the nominee in the said bank account?' Assessee's answer was - 'I do not know.' In Q. 33 , assessee was asked to reply - 'Whether Mr. Onn Sithatvalla or MSM Enterprises PTE Ltd were having any control over that bank account to issue any direction to the bank about utilization of balance or withdrawal of money?' Assesse's rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all deposits and withdrawals with supporting evidences, Mere saying or procuring some papers from a foreign concern would not come into rescue of explaining assessee' s undisclosed income stashed in a Swiss Bank. Moreover, MSM, Singapore or his owner Mr. Onn Sithawalla, with whom the assessee had no official business activity in this particular matter are non entities in the eyes of Indian Income Tax Law, especially when the assessee failed to file even the relevant bank statement of MSM, Singapore. The fact that all initial deposits in assessee's Swiss Bank account came from the bank account of MSM, is going to prove that the assessee had channelized his undisclosed money in Swiss Bank account through the bank account of MSM, Singapore, a company owned and managed by Mr. Onn Sithawalla, an old business associate of the assessee, who probably played the role of a conduit in the matter . On the basis of the above findings/observations recorded by him, the ld. CIT( Appeals) held that the relevant Bank account with HSBC, Geneva, Switzerland was the undisclosed Bank account of the assessee and the source of all deposits made in the said Bank account was assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the years under consideration, i.e. A.Ys. 2006- 07 and 2007-08 were processed by the Assessing Officer under section 143( 1) prior to the date of search and since no notices under section 143( 2) were issued by him for the said two years and even the period available to issue such notices had already lapsed even prior to the date of search, the assessments for the said two years were deemed to have been completed. He submitted that the information relating to the undisclosed Bank account maintained by the assessee with HSBC, Geneva, Switzerland was available with the Assessing Officer prior to the date of search and although the search was conducted on the basis of the said information, no incriminating material whatsoever was found during the course of search relating to the transactions reflected in the said Bank account or income arising to the assessee relating thereto. He contended that the scope of assessment made by the Assessing Officer under section 153A for both the years under consideration pursuant to the search, therefore, was limited to the income unearthed during the course of search on the basis of incriminating material found and in the absence of any such incrimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143( 1) are not assessment at all and since the assessment proceedings for both the years under consideration had not been completed prior to the date of search, the scope of proceedings under section 153A was wide to assess and reassess the total income of the assessee. In support of this contention, he relied on the decision of the Hon ble Delhi High Court in the case of CIT vs.- Anil Kumar Bhatia (Income Tax Appeal No. 1626 of 2010 Others dated 14. 05.2012) as well as the decision of the Delhi Bench of this Tribunal in the case of Shivnath Rai Harnarain (India) Limited-vs.- DCIT [117 TTJ (Del.) 480]. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, i f 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 specifically for the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Bank account of MSM Enterprises PTE Limited and that the source of monies deposited in HSBC Bank Account was his undisclosed money. 13. In support of the assessee s case on the issues raised in Grounds No. 5 to 8, the ld. counsel for the assessee has made a detailed submission, the gist of which is given below:- (i) Although the account with HSBC Bank, Geneva, Switzerland was opened on 07. 06. 1999, there was no money deposited in the said account initially for a period of about one year. (ii) The first deposit in the said account was made only on 22. 06.2000 and the same was originated from MSN International PTE Limited, a Company belonging to Mr. Onn Sithawalla as per the description given in the Bank statement itself. (iii) The entire deposits made in the said account amounting to US Dollars 8, 99,812 were in the name of MSM Enterprises PTE Limited as per the description given in the Bank statement itself. Mr. Onn Sithawalla and his family members were promoters/ shareholders of MSM Enterprises PTE Limited, Singapore and the assessee had regular business transactions for import of goods with MSM Enterprises PTE Limited from 1993. (iv) MSM Enterprises PTE Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assesese on this issue by recording various adverse observations/ findings, we find that this issue has become infructuous or academic as a result of the decision rendered by us on the preliminary issue raised in these appeals, holding that the additions made to the total income of the assessee on account of the income arising from the relevant transactions reflected in the HSBC Account are not sustainable in the absence of any incriminating material found during the course of search to support and substantiate the same. We, therefore, do not consider it necessary or expedient to adjudicate upon this issue on merit. 15. In his appeals for A.Y. 2007- 08 being ITA No. 856/KOL/ 2016, the assessee has raised two new grounds. However, no material or specific contentions are raised by the ld. counsel for the assessee at the time of hearing before us in support of the issues raised therein. We, therefore, treat both these grounds as not pressed and dismiss the same. 16. In the remaining two appeals being ITA Nos. 853 855/ KOL/ 2016, the assessee has challenged the levy of penalty imposed under section 271(1)( c) in respect of the additions finally sustained by the ld. CIT( A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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