9911796707
TMI Blog2019 (9) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Continental Warehousing Corporation and Murli Agro Products which have been relied upon by the Ld.CIT(A). 2. The brief facts of the case are that the assesee is an individual, derives income from salary and income from other sources, filed his return of income for AY 2007-08 on 27/08/2007, declaring total income of Rs. 18,37,040/-. A search and seizure action was carried out u/s 132 of the I.T.Act, 1961, at the resident and business premises of entities of the Rosy Blue (India) Group. The assesee, Mr.Arun Kumar R. Mehta was also covered in the search action. Consequent to search, the case was selected for scrutiny and the assessment has been completed u/s 143(3) r.w.s. 153A of the I.T.Act, 1961 and determined total income at Rs. 1,94,14,740/- by making additions towards undisclosed cash balance in HSBC bank account, in the name of Ruby Enterprises Inc. and also White Cedar Investments Ltd. 3. Aggrieved by the assessment order, the assesee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A), for detailed reasons recorded in his appellate order dated 14/02/2018, deleted additions made by the AO towards cash balance lying in HSBC account, Geneva, in the name of Ruby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the orders of authorities below. The facts born out from the record clearly established that assessment for the impugned assessment year is unabated as on the date of search i.e. 25/08/2011, because the assessment for the impugned assessment year was completed u/s 143(1) of the Act, and the time limit for issue of notice u/s 143(2) of the Act, had been expired on 30/09/2007. It is an admitted fact that during the course of search in the case of the assessee, no incriminating material was found in respect of undisclosed bank account maintained at HSBC Bank, at Geneva in the name of Ruby Enterprises Inc. and White Cedar Investment Ltd. Although, certain incriminating material and undisclosed asset was found during the course of search in respect of silver articles and gold jewellery received from various people on the occasion of engagement of grandson of the assessee and the assessee has accepted undisclosed income in respect of silver articles and gold jewellery for AY 2012-13 but it is true that nothing was found in respect of HSBC Bank account. From this, it is abundantly clear that nothing was found and seized during the course of search in respect of HSBC Bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear falling within the period of six Assessment Years referring to in this subsection pending on the date of initiation of search u/s 132 or making of the requisition u/s 132A as the case may be shall abate. From the reading of above provision, it is very clear that although the legislature specifically not mentioned about unabated assessment, the legislature consciously provided for abetment of assessment as per which any proceedings is pending in respect of any of six assessment years, then the same shall be abate and the AO shall have power to assess or reassess the total income of those years. As regards to other years which assessment have already been completed and the assessment orders determining the total income are subsisting at the time of search or requisition are made the scope of assessment u/s 153 A is limited to reassess the income of the assessee on the basis of incriminating material found as a result of search. 18. In the above legal background, if you examine the facts of the present case, we found that the assessment for the impugned assessment year is unabated as on the date of search, which is because the assessment for the impugned year has been completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there are incriminating material and undisclosed assets found in respect of silver articles and gold jewellery and the same has been admitted by the assessee in its statement u/s 132(4) and also filed return, accordingly the AO has assessed undisclosed income for AY 2012-13, therefore there is no logic in the arguments of the assessee that there is no incriminating material found at all during the course of search. He further, submitted that when the legislature has specifically provided for separate assessment in case of search, then it is incorrect to say that only those issues which are supported by material found during the course of search can only to be considered in the assessment u/s 153A, because once the assessment get reopened consequent to search and seizure, then AO is bound to assess or re-assess total income including undisclosed income found as a result of search. We find that the Hon'ble Supreme Court in the case of CIT vs Singhad Technical Education Society (397 ITR 344) has considering similar arguments of Revenue, where it was held that where incriminating material is found in the course of search, but was not related to the concerned year and hence, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation received by the Assessing Officer from CBDT relating to the undisclosed account maintained by the assessee with HSBC Bank, Geneva, Switzerland. During the course of search, no incriminating material, however, was found relating to the transactions reflected in the said Bank account of the assessee with HSBC Bank or any income relating thereto and this position was categorically admitted by the Assessing Officer during the course of appellate proceedings before the Commissioner (Appeals). ■ The question that arises now is whether in the absence of such incriminating material, any addition to the total income of the assessee can be made on account of the transactions reflected in the Bank account of the assessee with HSBC Bank or any income relating thereto in assessments completed under section 153A for both the years under consideration. [Para 8] ■ As per the provisions contained in section 153A, if the search or requisition is initiated after 31-03-2003, the Assessing Officer is under an obligation to initiate proceedings under section 153A for six years immediately preceding the year of search. The Assessing Officer is then required to assess or reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. ■ To arrive at this conclusion, reliance was placed by the Tribunal on the decision of Special Bench, Mumbai in the case of All Cargo Global Logistics Ltd. v. Dy. CIT [2012] 137 ITD 287/23 taxmann.com 103, wherein it was held that even though all the six years shall become subject matter of assessment under section 153A as a result of search, the Assessing Officer shall get the free hand through abatement only on the proceedings that are pending. But in a case or in a circumstances where the proceedings have reached finality, assessment under section 143(3) read with section 153A(3) has to be made as was originally made and in a case certain incriminating documents were found indicating undisclosed income, then addition shall only be restricted to those documents/incriminating material. [Para 10] ■ Keeping in view the discussion made above, the additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the relevant years had become f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch) and the word 'reassess' to complete assessment proceedings. 33 ITA Nos.3712 & 4721/Mum/2017 (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 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. [Para 37] ■ The present appeals concern assessment years 2002-03, 2005-06 and 2006- 07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. [Para 38] ■ The reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and, hence, the loss so claimed for carry forward and set off should be allowed against the income for the assessment year 2006-07. [Para 6] ■ It has been noticed above that search in this case was conducted on 20-11- 2009. The assessment years under consideration are 2004-05, 2005-06 and 2006-07. The assessee filed returns for these years originally under section 139 at the material time. Whereas the return for the assessment year 2004-05 was processed under section 143(1) of the Act, assessments were completed under section 143(3) in respect of the assessment years 2005-06 and 2006-07. The assessee's profit & loss account for the assessment year 2004-05 shows incurring of expenses at Rs. 95.21 lacs against which loss of Rs. 24.30 lac was computed and claimed in the return of income. The return of the assessee was processed under section 143(1) determining loss at the declared figure. Profit & Loss Account of the assessee for the assessment year 2005-06 shows incurring of expenses at Rs. 1.31 crores and the assessee filed return at a loss of Rs. 23,59,200/-. After making some disallowance, the Assessing Officer completed assessment under section 143(3) at a loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum time, the issuance of intimation on processing the return under section 143(1), is construed as completion of assessment. However, where such notice is issued, the intimation issued under section 143(1)(a) loses the character of an assessment order, which in that case, is passed under section 143(3) after thorough scrutiny. To sum up, an assessment is termed as completed on the passing of an order under section 143(3) of the Act, but, in a case, where a return has been filed by the assessee, which is processed under section 143(1), but no further notice under section 143(2) is issued and the same cannot be issued because of the time limit setting in, the intimation sent to the assessee under section 143(1) is also treated as a completed assessment for this purpose. [Para 9] ■ Au contraire, the assessment years having non-completed or pending assessments mean the years for which the assessments were pending on the date of search which are abated in terms of the express provisions of the second proviso to section 153A. This will also embrace the years in respect of which the time limit for issuing notice under section 143(2) is still available with the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowing any particular amount of expense for whatever reason. Thus, it is manifest that only a part of the expenses, representing loss of Rs. 23.05 lacs, were disallowed and that too, on the ground that complete details in respect of the expenses incurred were not furnished by the assessee during the course of proceedings under section 153A of the Act. Similar is the position for the assessment year 2005-06 in which the assessee incurred expenses of Rs. 1.31 crores and claimed loss of Rs. 23.59 lacs. The Assessing Officer, in the proceedings under section 153A, reduced such loss to Rs. Nil, thereby implying that only a part of the expenses to the extent of the amount of loss, was disallowed for non-furnishing of necessary details in support of expenses. The crux of the matter is that only a part of the expenses representing loss for the assessment years 2004-05 and 2005-06 was disallowed and not allowed to be carried forward for set off against the income for assessment year 2006-07 simply on the ground that expenses were not fully verifiable since complete details were not furnished during the course of assessment proceedings. [Para 15] ■ Admittedly, assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus expenses in its books of account for the succeeding years, so as to extrapolate the same to the years under consideration. The trump card of the department's case is the ratio of Smt. Dayawanti (supra), which could have been applied only if the revenue had established the recording of some bogus expenses by the assessee in later years, so as to enable it to draw an adverse inference for the current years. This is absent in the facts and circumstances of the case. Thus, it is vivid that the ratio decidendi in the case of Smt. Dayawanti (supra) does not apply to the facts of the case. In the absence of any material, the genuineness of expenses incurred by the assessee, and that too partly to the extent of losses claimed, could not have been disturbed by the Assessing Officer in the assessment under section 153A. [Para 17] ■ Thus, it is apparent that between the two judgments of Kabul Chawla (supra) and Smt. Dayawanti (supra), the facts and circumstances of the instant case are fully covered by the ratio in the case of Kabul Chawla (supra), which view has been reiterated by the Delhi High Court in a more recent decision in Principal CIT v. Meeta Gutgutia [2017] 82 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9632; The Statute nowhere makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under section 153A(1)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to law, including under section 143(3) or even section 144 of the Act, if need be. Therefore, the assessment proceedings generated by the issuance of a notice under section 153A(1)(a) can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search under section 132 on the basis of which the notice was issued under section 153A(1)(a) of the Act. [Para 8] ■ In the case in hand, the assessing authority had, upon receipt of the returns in answer to the notice under section 153A(1)(a) of the Act, given an opportunity to the assessee to interact with the officer and thereafter he was required to place a cash flow statement. All that followed thereafter is the assessing authority carrying out an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, we reverse the findings of the Ld. CIT(A) and deleted additions made by the AO towards peak balance lying in HSBC Bank, Geneva as unexplained money u/s 69A of the Act, in the hands of the assessee. 25. The next issue that came up for our consideration, from the assessee as well as Revenue's appeal is addition made towards balance in HSBC Bank account, Geneva in the name of Ruby Enterprises Inc. and White Cedar Investment Ltd. amounting to Rs. 1,79,333/- and Rs. 200,12,56,838/- as unexplained money u/s 69A of the Act. The AO has made towards peak balance lying in the HSBC Bank account, Geneva in the name of Ruby Enterprises Inc. for Rs. 1,79,333/- and a sum of Rs. 200,12,56,838/- in the name of White Cedar Investments Ltd. on the ground that although the assessee denied having operated any bank account in HSBC Bank Geneva and also he is not beneficiary of those two bank accounts, but the contents of Base Note clearly contains the name of the assessee as one of the beneficiary and also the assessee has failed to sign consent waiver form which enable the AO to gather information from the HSBC Bank, Geneva. The AO further observed that the contents of base note are exactly match ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has been confirmed by the Ld. CIT(A), The Ld. AO has made addition in the hands of the assessee substantively for 1/7th of total amount of Rs. 200,12,56,838/- and balance amount being 6/7th total amount is assessed protectively with a condition that the same is being added substantively in the name of remaining six beneficiaries separately. 26. We have heard both parties, perused the material available on record and gone through orders of the authorities below. The facts borne out from the record clearly indicate that the assessee has denied having any bank account at HSBC Bank, Geneva either in his individual capacity or as a beneficiary of accounts in the name of Ruby Enterprises Inc. and White Cedar Investment Ltd. The assessee right from the beginning expresses his unawareness about contents of the Base Note received from French Government. The assessee, during the course of search while recording the statement u/s 132(4), stated that he is not aware of any bank account in HSBC Bank, Geneva and further stated that Mr. Dilip Ramniklal Mehta would be able to explain the nature and source of the investment in the bank account with HSBC Bank, Geneva of White Cedar Investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned and operated any bank account and that no payments have been received or made in relation to the said account. The said undisputed fact that the account is of M/s Ruby Enterprises Inc. with HSBC bank, Geneva, leads to the positive inference that the assessee is not owner of the bank account and therefore addition made u/s 69A is not sustainable. In order to bring any money, bullion jewellery or any other asset, within the ambit of section 69A of the Act, ownership is a sine-qua-non that the assessee must be found to be the owner of any money, bullion, jewellery or other valuable articles and the onus of proving this lies on the Department. This legal proposition has been laid down by Hon'ble Supreme Court in the case of CIT vs K. Chinnathamban (2007) 162 taxman 459(SC), where it was held that where a deposit stands in the name of a third person and where that person is related to the assessee, then in such a case the proper course would be to call upon the person in whose books the deposit appears or the person in whose name the deposit stands should be called upon to explain such deposit. This legal proposition is further supported by the decision of Hon'ble Calcutta High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets or valuable articles. This legal proposition is further supported by the decision of the Hon'ble Supreme Court in the case of Commissioner of Wealth Tax vs Ellis Bridge Gymkhana [(1998) 1 SCC 384]. Further the onus to prove is fully lies on the Department. The department cannot be asked the assessee to prove negative. The department cannot force impossible burden of proving negative on the assessee. This legal proposition is reiterated by Hon'ble Supreme Court in the case of K.P. Varghese vs ITO [(1981) 4 SCC 137] where it was held that moreover to throw the burden of showing that there is no understatement of the consideration, on the respondent would be attached and almost impossible burden upon him to establish the negative, namely, that he did not receive any consideration beyond that declared by him. 29. Therefore, considering the facts and circumstances of the case and also by following judicial precedence discussed hereinabove, we are of the considered view that the AO has made additions toward peak balance lying in HSBC Bank account, Geneva mentioned in the name of Ruby Enterprises Inc. and White Cedar Investment Ltd. in the hands of the assessee as unexplained income ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
