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TMI Blog2018 (6) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not challenged the same before the ITAT. Now coming to the merits of the addition, we find that account is in the name of three persons and the entire amount deposited has been added in the names of these two assessee’s twice. If the account is in the name of three persons, how can the full amount be added twice in the hands of both the assessee, has not been spelt out by the Assessing Officer. Secondly, the narrations in the bank accounts do not give any clue that these amounts originate from India. The assessee has responded that he is not able to obtain the necessary details from the bank. AO has also not made any effort to further identify the source of the deposits. It is also not the case that when the Assessing Officer’s inference is that the assessee’s are having partnership business of diamonds in India, the money belongs to the partnership firm. As held in the case of Kapoorchand Shrimal [1981 (8) TMI 2 - SUPREME COURT] it is the duty of the appellate authority to correct the error in the orders of the authorities below and remit the matter for further investigation with a necessary directions unless prohibited by law - remit the issue to the file of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 569/Mum/2016 Shri Rahul Rajnikant Parikh 2008-09 Quantum 1,50,139 5889/Mum/2016 Shri Rahul Rajnikant Parikh 2003-04 u/s. 271(1)(c) 17,54,370 5891/Mum/2016 Shri Rahul Rajnikant Parikh 2004-05 u/s. 271(1)(c) 26,90,844 5890/Mum/2016 Shri Rahul Rajnikant Parikh 2006-07 u/s. 271(1)(c) 81,882 5892/Mum/2016 Shri Rahul Rajnikant Parikh 2007-08 u/s. 271(1)(c) 91,147 5893/Mum/2016 Shri Rahul Rajnikant Parikh 2008-09 u/s. 271(1)(c) 1,37,825 5576//Mum/2016 Kalpesh R. Jhaveri 2003-04 Quantum 19,11,081 5575/Mum/2016 Kalpesh R. Jhaveri 2004-05 Quantum 29,31,204 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue even if the tax effect is below the limit specified. 8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts. From the reading of the above, it is clear that this appeal has been filed inasmuch as it falls under paragraph 8(d) wherein irrespective of the tax effect, appeals have to be contested where the addition relates to undisclosed foreign assets/bank accounts. In the present case, we have noted that assessee is having foreign bank account and information thereof has been received by Indian authorities inasmuch as the assessee has used Indian address. Stashing black money in foreign bank accounts is anathema to tax authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Geneva Account do not fall within the ambit of the provision of the above section ''Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year . 6. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in ignoring the provisions of Section 114 of the Indian Evidence Act, 1872 which reads as under and amply applies to the case of the assessee:- Section 114. Court may presume existence of certain facts - The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. The Court may presume - .... (g) That evidence which could be and is no! produced would, if produced be unfavorable to the person who withholds it...... Section 114(g) of The In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of deposit Amount (USD) Exchange rate (1 USD) Amount (1IMR) 8.1.2003 12000 ₹ 47.98 5,75,760 14.1.2003 7990 ₹ 47.90 3,82,721 5.3.2003 20000 ₹ 47.63 9,52,600 TOTAL 39990s 19,11,081 Date of deposit Amount (USD) 8.1.2003 12000 14.1.2003 7990 5.3.2003 20000 For AY 2004-05: Date of deposit Amount (USD) Exchange rate (1 USD) Amount (1NR) 24.04.2004 66376.90 ₹ 44.16 29,31,204 Date of deposit Amount (USD) 24.04.2004 66376.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter acquiring the American citizenship. From the documents pertaining to the opening of the account in HSBC, Geneva, it can be seen that this Indian passport was used to open the said account. 9. The Assessing Officer observed that the assessee is of Indian origin. He is using his Indian passport to open the HSBC Geneva account even after obtaining the US citizenship. During the assessment proceedings, notice u/s 133(6) of the Act was issued to CDSL and NSDL. In response, NSDL vide their letter dt. 18.3.15 has reported the following demat accounts in the name of the assessee : Sr.No. Client ID No Scripts held Total number shares held various 1 10246442 4 92 2 10246426 5 386 3 10246434 2 3400 4 10535620 3 116 10. This shows that the assessee has interests in India. Perusal of his return of income in India shows that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egs: rough diamonds are purchased in bulk by sightholders, and brought to markets in Antwerp, Dubai and London; rough diamonds are then sent for cutting and polishing; the CPDs or cut-andpolished diamonds are exported across the world. (g) In India, where there is no tax on import of rough diamonds, the precious stones are vulnerable to misuse - these are often used for illegal money transfer, money laundering and exploitation of credit facilities. The Income Tax (I-T), Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) have named diamond traders in at least 65 cases. It is alleged that they are key players in trade-based money laundering of an estimated ₹ 60,000 crore. A February 2014 internal I-T paper on the diamond traders of Surat and Mumbai outlines how traders facilitate bogus entries through which black money is converted to legitimate money for other sectors such as real estate. (h) A forensic report dated October 28, 2013, submitted by a consortium of banks to the Reserve Bank of India in connection with the credit facility used by a diamond trading company, underlines: It is very common for one family to have multiple companies under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income 648 Add Addition as above 89,197 Total income 89,845 The addition on this account is ₹ 89,197/- 2007-08 Particulars Amount(Rs.) Income as per return of income 411 Add Addition as above 99,289 Total income 99,700 The addition on this account is ₹ 99,289/- 2008-09 Particulars Amount(Rs.) Income as per return of income 2,879 Add Addition as above 1,50,139 Total income 1,53,018 The addition on this account is ₹ 1,50,139/- On this addition, penalty u/s. 271(1)(c) of the Act was also levied. 14. Against the above order, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with respect to this addition is that the same amount has been added in the hands of the other account holder, Kamlesh Jhaveri and surely the amount suffers from double taxation. I find that on merit in any case the said addition is not being upheld and therefore this ground is also treated as allowed. 16. Since the ld. Commissioner of Income Tax (Appeals) has deleted the quantum addition, she also deleted the penalty levied on the amount. 17. Against this order, the assessee is in appeal before us. 18. We have heard both the counsel and perused the records. We find that in this case, the assessee is a non resident staying in USA. The assessee has also submitted that in the year 2000 he surrendered his Indian nationality and accepted the citizenship of US. He was given the passport of USA and presently he was residing at California, USA. After obtaining US citizenship and passport, the assessee was not entitled to use Indian passport as per Indian Laws. The assessee had to surrender the said Indian passport. Indian laws do not permit dual citizenship. The assessee used his now invalid Indian passport to give Indian address for opening an account in HSBC bank, Switzerlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the US nationality by surrendering Indian citizenship. Here the assessee instead of surrendering his invalid Indian passport has used it to open a bank account in HSBC bank, Geneva. Further, the assessee is not responding that this bank account has been disclosed to the US tax authorities. In such circumstances, the suspicion that the deposits in this bank account have Indian origin is not unfounded. It is because of these circumstances, that when the ld. Commissioner of Income Tax (Appeals) has affirmed the reopening, the assessee has not challenged the same before the ITAT. 22. Now coming to the merits of the addition, we find that account is in the name of three persons and the entire amount deposited has been added in the names of these two assessee s twice. If the account is in the name of three persons, how can the full amount be added twice in the hands of both the assessee, has not been spelt out by the Assessing Officer. 23. Secondly, the narrations in the bank accounts do not give any clue that these amounts originate from India. The assessee has responded that he is not able to obtain the necessary details from the bank. The Assessing Officer has also not made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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