9911796707
TMI Blog2018 (8) TMI 2069X X X X Extracts X X X X X X X X Extracts X X X X ..... l C Mehta is valid. The legal heirs have not disputed the right of the Executors to get the money transferred from Switzerland to India. In fact, Shri Anoop Mehta has given in writing to the revenue that he has informed the Executors about the HSBC bank accounts and also requested them to make arrangements for transfer of money to India. CIT(A) has also observed that it is the primary responsibility of the executors of the Will to clear all the tax dues of Shri Vrajlal Mehta as applicable on all the incomes/properties standing in his name before they are distributed. Hence, it is nobody s case that the deposit found in HSBC account was not forming part of assets of Estate of late Vrajlal C Mehta . The provisions of Indian Succession Act, which have been relied upon by Ld CIT-DR, deals with procedural aspects of dealing with the assets and liabilities of the Estate. As per the Will of Shri Vrajlal C Mehta, it is the duty of the Executors to distribute the assets in accordance with the directions given in the Will. Since the impugned income has accrued after the date of death of Shri Vrajlal C Mehta and since the Executors have taken responsibility to get the funds and distribute the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was closed in 2003 itself and hence the dispute arose in respect of M/s Investment Lexcor SA. Besides the above, the assessing officer has initiated proceedings u/s 153C of the Act in respect of the above said account in the hands of Shri Rajesh Mehta and a specific query was also raised in this regard. The query raised by the AO and the reply given by shri Rajesh Mehta is extracted in the preceding paragraphs. After considering the reply, it is stated that the proceedings u/s 153C of the Act were dropped. CIT(A) has not duly considered above facts and he has been mainly influenced by the fact that Shri Anoop Mehta is also shown as one of the beneficiaries in the above said account. Further the Ld CIT(A) has also stated that Shri Anoop Mehta is entitled to residual assets of Late Vrajlal Mehta as per the Will. In our view, the reasoning given by Ld CIT(A) is not sustainable. Under the Income-tax Act, the income tax is levied on the person who earned the income. The fact that Shri Anoop Mehta may be entitled to the residual assets may not be relevant to determine the person on whom the income is required to be assessed. For the same reasoning, the details of beneficiaries are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Ld CIT(A) ought to have appreciated that the income in respect of which the self assessment tax paid has been assessed to tax by the AO for the impugned Assessment year. (d) The Ld CIT(A) has erred in confirming the action of AO in not taking cognizance of revised Return of income filed by the appellant vide letter dated 25.3.2015. The CIT(A) ought to have held that the revised return filed by the appellant was valid. 2. The facts relating to the case are discussed in brief. The assessee before us is Shri Vrajlal C Mehta, who expired on 24-04-2005. The assessment year under consideration is assessment year 2007-08. The Government of India received information from the French Government under DTAA in exercise of its Soverign Powers that late Shri Vrajlal C Mehta has held an account with HSBC Bank, Geneva. It was received in the form of Base Note, which contained various details relating to the account holder. The assessee held an account with number BUP_SIFIC_PER_ID 5090140302 PER ID - 34610 PER No.140302. The above said account was linked with Code Profile Client 5090140302. The related concerns, in whose accounts the moneys were held, were also mentioned in the Base Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account in the name of Yeel Investment Inc., came to light. Since the said account belonged to Shri Vrajlal C Mehta, the same was brought to the notice of Executors, so that they could take necessary steps to bring the monies lying in the above said bank account to India. Accordingly, the Executors sought professional help from Shri Bimal Desai, C.A and M/s Desai and Diwanji, Advocates and Solicitors for bringing money into India. As a result, the Executors got remittances from HSBC Bank, Geneva, Switzerland out of the account standing in the name of Yeel Investment Inc to the account of "Estate of Late V.C.Mehta". The executors offered the same to tax for assessment year 2012-13, being the year in which the remittances were received in India. The return of income for assessment year 2012-13 declaring a sum of ₹ 12,02,00,546/- as income of "Estate of Late Vrajlal C Mehta" was filed in March, 2012. The self assessment tax of ₹ 3,86,75,859/- was also paid on the above said income on 30-03-2012. 6. It is stated that when Shri Anoop Mehta received notice u/s 148 of the Act on 31.3.2014 for AY 2007-08, he informed the Executors about the same and requested them to take appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying in bank accounts to the extent of beneficial ownership standing in his name and in the name of his wife, children or any of his business entities. However, Shri Anoop Mehta retracted from his statement by filing a letter dated 19-01-2012, wherein he stated that the funds belong to Shri Vrajlal C Mehta. It was further stated that an amount of USD 24,68,070 (equivalent to ₹ 10.85 crores) shall be declared in the hands of "Estate of Late Shri Vrajlal C Mehta". We noticed earlier that the assessee initially filed return of income declaring an income of ₹ 12.02 crores in AY 2012-13 in respect of moneys received from HSBC Account, Geneva, Switzerland. We also noticed that the assessee, then filed revised return of income for AY 2006-07 and 2007-08 thereby shifting part of income declared in AY 2012-13 to the above said two years. In the revised return of income filed for AY 2007-08 on 26-03-2015, the assessee declared an income of ₹ 1,57,86,368/-. However, the assessing officer rejected the revised return of income filed for AY 2007-08 by holding that the same has been filed beyond the stipulated time. 8. The AO noticed that, in the revised return of income, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Shri Anoop Mehta was rejected by both the tax authorities, as the AO had issued notice reopening the assessment for AY 2007-08 for assessing the above said income. The Ld CIT(A) also took note of the fact that Shri Anoop Mehta had agreed to offer relevant income in AY 2007-08 in his hands in the statement taken during the course of search u/s 132(4) of the Act. Accordingly the Ld CIT(A) upheld the assessment order passed by the AO. 11. The Ld CIT(A) further went on to enhance the income assessed by the AO. The facts that led the Ld CIT(A) to enhance the income are stated in brief. We have noticed earlier, the bank accounts of Vrajlal C Mehta were linked to three companies. Shri Anoop Mehta was questioned about these three accounts during the course of search. In the statement taken u/s 132(4) of the Act, Shri Anoop Mehta accepted only one account, viz., the account standing in the name of Yeel Investments Inc. With regard to other two accounts, he expressed that he does not have any idea about the same. This is evident from the question no.8 & 9 and answer given to it in the statement recorded on 13.09.2011, during the course of search. Subsequently, Shri Anoop Mehta filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem that assessment was made in the name of Shri Anoop Mehta as Legal Heir of Late Shri Vrajlal Chandulal for AY 2006-07 & 2007-08 against which appeals were filed vide ITA No. 51/2015-16 and 125/15-16 respectively and subsequently notice of enhancement vide letter dated 04- 07-2016 was issued in the name of Anoop Mehta being Legal Heir to explain as to why the income should not be enhanced by ₹ 27,92,21,467/- (sic.₹ 2,79,21,467/-) and ₹ 14,40,34,704/- respectively. It was further clarified to the assessee that there was no mention of name of Shri Rajesh Mehta in the base note as beneficial owner, contrary to the claim of the assessee and therefore claim that these accounts are owned by Shri Rajesh Mehta appears to be incorrect...." 13. The ld CIT(A) took the view that the income of ₹ 1,57,86,300/- was accepted by the present assessee (Shri Anoop Mehta, legal heir of Late Vrajlal C Mehta) in respect of present assessment year as is evident from the undertaking dated 17.10.2016 though given in the hands of Estate of Late Shri Vrajlal Chandulal Mehta, which is one and same thing. He further noticed that Shri Anoop Mehta agreed to offer income to the tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajlal C Mehta has expired on 24.04.2005. We have also noticed that he has written a Will and has also appointed Executors. The Will was probated in Hon'ble High Court of Bombay on 28-11-2007. The Executors were filing return of income for the "Estate of late Shri Vrajlal C Mehta". The details of HSBC Bank accounts maintained in Switzerland came to the notice of the Revenue only in 2011. One of the legal heirs of late Vrajlal C Mehta residing in India is Shri Anoop Mehta and he was subjected to search operations on 13.9.2011. In the statement taken from Shri Anoop Mehta u/s 132(4) of the Act, Shri Anoop Mehta admitted existence of a bank account in the name of Yeel Investment Inc., in HSBC, Switzerland and agreed to offer the peak amount of deposit in his hands to the extent he, his wife, his children and his business concerns are beneficiaries. However, subsequently he retracted from his statement through the letter dated 19-01- 2012 and submitted that the undisclosed income shall be offered by "Estate of late Vrajlal C Mehta", as the Executors are incharge of the Estate of late Vrajlal C Mehta. There is no dispute that the bank account in the name of M/s Yeel Investments Inc., ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding as the deceased person was a resident or non-resident during the previous year in which his death took plce. (2)......... (3) Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests." The Ld A.R submitted that the above said provisions clearly demarcate the liability of legal representatives and executors. The Ld A.R submitted that as per provisions of sec. 159 of the Act, the legal representatives are liable to pay tax on the income accrued to the deceased till the date of death of the assessee, which the deceased person would have paid had he been alive. He further submitted that as per provisions of sec. 168 of the Act, the income accruing to the deceased for the period subsequent to his death has to be treated as the "income of Estate of deceased assessee" and shall be taxable in the hands of the Executors in his capacity of an executor. If the concerned asset has already devolved on the legal heir under inheritance, then the said asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account is not part of the Estate mentioned in the Will, against which probate was obtained from Hon'ble Bombay High Court. Accordingly the Ld CIT-DR submitted that these HSBC bank accounts cannot be considered to be part of Estate of Late Shri Vrajlal C Mehta. 22. Further clause 6 of the Will specifically provides that the rest and residue of the estate which will consist of cash on hand and items of daily personal wear is bequeathed to his son Anoop Vrajlal Mehta and daughter-in-law Devaushi Anoop Mehta in equal shares. Since these HSBC bank accounts have not been mentioned in the will, even though they were deposited before the death of Vrajlal C Mehta, yet they will devolve upon the legal representatives only. Therefore the assessment of the same would fall within the purview of sec.159 of the Act, as the deceased would have been liable to pay tax on that income, had he been alive. Accordingly she submitted that the AO has rightly assessed the income in the hands of Anoop Mehta as legal representative of late Vrajlal C Mehta. 23. Reiterating her stand, the Ld D.R submitted that the HSBC bank accounts do not find place in the Will of late Vrajlal C Mehta and hence what is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso saves the assessment. The Ld CIT-DR further submitted that it is Anoop Mehta as legal heir is the person, who can be considered as aggrieved by the orders of tax authorities and hence he alone could have filed appeal before the Tribunal. However, the appeal has been filed by "Executor of late Vrajlal C Mehta", who does not have locus standi to file the appeal. Accordingly the Ld CIT-DR submitted that the present appeal is liable to be dismissed on this ground alone. 25. The Ld CIT-DR further submitted that the Tribunal has got a duty to correct the errors, if any, occurred in framing of assessment. Accordingly she submitted that tribunal should not annul the assessment and should restore it to the file of AO, if the assessment order is found to be not in accordance with the law. In support of above said contentions, she placed her reliance on the following case law:- (a) CIT vs. Jansampark Advertising & Marketing (375 ITR 373) (Delhi) (b) Kapurchand Shrimal vs. CIT (131 ITR 451) (SC) (c) CIT vs. Roshanlal and Smt. Chaturi Bai (134 ITR 145) (Delhi) (d) Kamalesh Kumar Mehta vs. CIT (106 ITR 855) (Cal) (e) CIT vs. Manohar Lal Nagpal (139 ITR 157) (P & H) (f) CIT vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state of late Vrajlal C Mehta does not have locus standi to contest this appeal, the Ld A.R submitted, by placing reliance on the following case law, that any person aggrieved by the order passed by the tax authorities is entitled to file appeal:- (a) Kikabai Abdulali vs. ITAT (32 ITR 762)(Bom) (b) CIT vs. N.Ch.R Row & Co. (144 ITR 557)(Cal). In both the cases, it has been held that the right of appeal to Tribunal is not confined technically to party who is party to appeal, but it is a much wider right which can be exercised by any person who becomes liable to pay tax by any order against which appeal is preferred. He submitted that, in the instant case, the Estate has received money from HSBC accounts and hence it is liable to pay tax. The Ld A.R further submitted that the Ld CIT(A) has also observed in page 39, paragraph (d) of his order that it is the primary responsibility of the executors of the Will to clear all the tax dues of Shri Vrajlal Mehta as applicable on all the incomes/properties standing in his name before they are distributed. Hence it has got locus standi to prefer appeal against the order passed by the tax authorities. 29. We have heard rival contentions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The Ld CIT-DR has contended that the amount of deposit assessed in this year was made by Shri Late Vrajlal C Mehta and hence it was rightly assessed in the hands of the legal heir. In our view, there is a flaw in this argument of Ld CIT-DR. We have earlier noted that Shri Vrajlal C Mehta has expired on 24.4.2005. As contended by Ld A.R, Shri Virajlal C Mehta can be considered to have made deposits only upto the date of his death only. Any deposits found in the bank accounts after the date of death could not have been made by him. With regard to the nature of deposit, there is no material available on record to show exact nature of the same. The Ld A.R submitted that it could be accrual of income out of the deposits made earlier. Be that as it may, what is assessed as income in the year under consideration is the amount of deposit found in the bank account in the name of M/s Yeel Investment Inc. Hence, for all practical purpose, the nature of income may not be relevant here. Since the deposits were found during the financial year 1.4.2006 to 31.3.2007, i.e., subsequent to the date of death of the assessee, these deposits could not have been made by Shri Vrajlal C Mehta, as conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm part of assets of Estate as correct for a moment, then those assets shall devolve upon the legal heirs as per the law. Since the year under consideration falls after the death of Shri Vrajlal C Mehta, the income relating to the impugned deposits has to be assessed only in the hands of legal heirs in their individual capacity, since they have inherited the assets of the deceased in their own right. In that kind of situation also, the assessment in the hands of Late Vrajlal Mehta through his legal heir Shri Anoop Mehta could not be possible. 35. Now we shall deal with some of the relevant case laws on this legal issue. The decisions relied upon by the assessee deals with sec.24B of the Income tax Act, 1922. We are concerned with sec. 159 of the Income tax Act, 1961. The Ld A.R submitted that the provisions of sec. 24B of the Act is akin to sec. 159 of the Act and in this regard he has furnished a comparative chart, which is extracted below:- Section 24 of the Indian Income Tax Act, 1922 "S. 24(1) "S. 159(1) Where a person dies Where a person dies His executor, administrator or other legal representative shall liable to pay His legal representative Out of the estate of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the one hand it has been contended by Mr. Mehta that section 24B was inapplicable to the facts of the present case for the simple reason that no income or profits could be slid to have accrued to Arvind at all till he was alive, for accounts were made up as at the end of S.Y. 2006 on the Divali day and it was only then that any income or profits could, be said to have accrued to the firm or to the individual partners thereof, while, on the other hand, it has been the contention of the revenue that in view of the legal fiction, which has been enacted in section 24B(1) of the Act, the sum of ₹ 2,61,821 could be brought to tax under the said provisions of section 24B. It would, therefore, be necessary to set out the relevant provisions of section 24B. They are as follows; "24B. (I) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died. ………………&he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the fictional extension of the legal personality of the deceased as contemplated by sub-section (1) of section 24B could be regarded as having been enacted for the purpose of merely providing a machinery for dealing with assessment or recovery of payment of tax from the estate of the deceased or whether the same has been enacted with a view to create an additional liability to pay tax on that part of the income said to have been received by the heirs and legal representatives of the deceased after the death of the deceased till the end of the relevant accounting year. In order to decide this question it will be necessary to consider the purpose for which the legal fiction came to be enacted, in sub-section (1) of section 24B and, on this aspect of the matter two things would be relevant, viz., the position which obtained in law prior to the enactment of section 24B and whether any lacuna was there in the Act-an indication of which has been given by this court in Ellis C. Reid's case (supra)-and the Statement of Objects and Reasons which may set out the purpose for which section 24B came to be enacted. …………………… ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this decision:- "Further, Kerela High Court in case of K Kunhi Mohommad Hajee vs State of Kerela and Another' held that Section 24 of Kerela Agricultural Income Tax Act permits assessment of income of the deceased person and recovery of tax that would have been payable by the assessee. It is only for this purpose that Section 24 has provided for the fiction of continuance of the deceased person. Further, it was held that the proper course would be to assess the legal representative sup to the period of his death and individually in the hands of legal representatives for the period subsequent to death. The relevant paragraph of the judgment is reproduced as under: Section 24 of the Agricultural Income-tax Act, which corresponds to section 24B of the Indian Income-tax Act, 1922, since repealed, reads as follows: "24. (1)-Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge the agricultural income-tax assessed as payable by such person or any agricultural income-tax which would have been payable by him under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions must be read as laying down the rule that if the legal representatives derived any income out of the property of the deceased during the previous year in which the death took place they are liable to be assessed on that income in addition to the income of the deceased upto the date of his death under section 24 of the Agricultural Income-tax Act, 1950. We do not think that this is the purport of the decisions of the Supreme Court. The language of section 24 of the Act appears to us to be clear. It indicates that what is permitted to be assessed under section 24 is the income of the deceased person and what is allowed to be recovered is the tax that would have been payable by the deceased. It is for that purpose and that alone that section 24 has provided for the fiction of continuance of the deceased person. Even if he is deemed to have not died, the income from his estates actually due to an received by his heirs could not have been his income unless it be there is a further fiction that he was to be deemed to have received such income. There is no scope for any such assumption. There is no compelling reason to assume so, keeping in view the limited objective of the fiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood in the restricted sense as the Expln. to the section gives an extended meaning to the word "executor" so as to include an administrator or other person administering the estate of the deceased person, that is, one who is in de facto management of the properly of the deceased person." 39. The submissions made by the assessee on the decision rendered by Hon'ble Supreme Court in the case of Mramreddy Sulochanamma (supra) are extracted below:- "Further, Supreme Court in case of Income Tax Officer, Gudur and Another vs Maramreddy Sulochanamma' held that re-opening for assessment year is bad in law when the notice is issued in the name of legal heir representative post death of the assessee. The same in invalid even in absence of a will appointing executors. Relying on various judgments, it was held that Income Tax officer has to proceed to assess the total income of the deceased against all the executors or all the legal representatives, as the case may be. If there are more than one executor of the deceased person, all of them will be his representatives and for the purpose of Section 24B(2) all of them jointly represent the estate of the deceased. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of our case. In the instant case, the assessee, Shri Vrajlal C Mehta had opened a HSBC bank account before his death and the peak credit balances in the bank account after his death were assessed as undisclosed income in the hands of the LR, Shri Anoop V Mehta, legal heir of Shri Vrajlal C Mehta. b. Kerala High Court in the case of K. Kunhi Mohammed Hajee vs. State of Kerala and Another: This case law pertains to sec.24 of the Kerala Agriculture Income tax Act, 1950. The instant case refers to the applicability of sec.159, the legal representative is liable to pay any sum which the deceased would have been liable to pay if he had not died. This section has to be read in conjunction with sec. 168 wherein the Executors are liable only for the income of the Estate of the deceased person from the date of death to date of complete distribution to the beneficiaries of the Estate according to their several interest. In the instant case, Shri Anoop Mehta, the legal heir of Late Shri Vrajlal C Mehta is assessed in the capacity of legal representative of the deceased. The assessee expired on 24.4.2005 and therefore, assessment for AY 2006-07 is in the hands of the LR and assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice that the Ld CIT-DR has sought to distinguish the case laws mainly on the reasoning that (a) Shri Vrajlal C Mehta has opened the HSBC account before his death. (b) Sec. 159 of the Act does not state that the liability of the LR shall stop with the previous year in which the person died. (c) The HSBC account is not part of the Estate (d) Only the Executors are claiming it to be part of Estate without disclosing those details to Hon'ble Bombay High Court, which has probated the Will of Shri Vrajlal C Mehta. 42. We are unable to agree with any of the reasoning given by the Ld CIT-DR to distinguish the case laws relied upon by Ld A.R. There is no dispute with regard to the fact that the impugned income has arisen after the death of Shri Vrajlal C Mehta, even though the initial deposits might have been made by him during his life time. The Hon'ble jurisdictional Bombay High Court has held in the case of Arvind Bhogilal (supra) that the provisions of sec. 24B(1) is not applicable to the income that arose after the death of Mr. Arvind Bhogilal and hence his legal heirs or legal representatives cannot be called upon to pay tax thereon on his behalf. This legal position is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the deceased had died and the court took the view that the amount that was received by their and legal representatives could not be brought to tax under section 24B of the Act. In each, of these decisions the observations in Amarchand N. Shroff's case (quoted above) were relied upon and its ration was applied." The decision rendered by Hon'ble Supreme Court in the case of James Anderson (supra) makes it clear that the income accruing to a person after his death cannot be taxed as per the provisions of sec.159 of the Act on the legal heirs. 43. Now we will advert to the decisions relied upon by Ld CIT-DR. (a) In the case of Kamalesh Kumar Mehta (106 ITR 855), the issue was about continuation of assessment of deceased assessee in respect of income earned during his life time. So is the case in the case of CIT vs. Manohar Lal Nagpal (139 ITR 157). In the case of CIT vs. Roshanlal and Smt. Chaturi Bai (134 ITR 145) also, the issue related to the assessment of deceased in respect of income earned during his life time. (b) In the case of CIT vs. Chandra Mohan Verma (244 ITR 430), the issue was whether the assessment order passed on one legal heir without impleading others w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Vrajlal C Mehta", which is liable to pay tax in terms of sec. 168 of the Act in respect of impugned income. Since the assessing officer has assessed wrong person for the above said income and since the Ld CIT(A) has also confirmed the same, in our view, orders passed by them are not sustainable in law for the reasons discussed above. Accordingly we quash the orders passed by the tax authorities. 47. The second ground urged by the assessee relates to enhancement of income by the learned CIT(A) by an amount of ₹ 14.49 crores relating to HSBC Bank account standing in the name of a company called Investment Lexcor SA. 48. We have noticed earlier that Mr. Anoop Mehta had accepted the bank account standing in the name of Yeel Investment Inc. In respect of bank accounts standing in the names of M/s. Euros Invest Ltd. and M/s. Investment Lexcor SA, he has submitted that the same belongs to his brother Mr. Rajesh Mehta. Before Investigation authorities, an affidavit of Mr. Rajesh Mehta was also filed. During the assessment proceedings also, Shri Anoop Mehta reiterated the above said submissions and hence the Assessing Officer did not make any addition in respect of deposits fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled Investment Lexcor S,A" 23. It is reiterated that during the course of search, Mr. Anoop Mehta was shown certain documents by which he was informed for the first time of the existence of a bank account with HSBC Bank in Geneva. The said base note gives details of the three accounts, i.e Yeel Investments Inc, Euros Invest Limited, Investment Lexcor S,A and the balances lying in these accounts as on December 2005 and December 2006 .The tax treatment of balances of the said accounts is as under: 1. Yeel Investment Inc- Offered to tax in the hands of Estate of Vrajlal C. Mehta based on the balances as appearing in the base note. 2. Euros Invest Limited - Rajesh Mehta, son of Vrajlal Mehta claimed that the said account belonged to him. Also, an affidavit was filed to that effect. Further, the account was closed in 2003. 3. Investment Lexcor S.A - Rajesh Mehta, son of Vrajlal Mehta claimed that the said account belonged to him. Also, an affidavit was filed to that effect. 24. Further, during the course of search proceedings, first statement of Mr. Anoop Mehta was recorded on 13.09.2011 (Page No. 1 to 6 of Paper book), wherein he was enquired of the bank accounts formi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciary. I have some faint remembrance of the trust 'The Parrot Trust'. However, I have no idea about the concerns Euros Invest Limited, Investment Lexcor S.A., First Corporate Director Inc and Manacor S.A and the Fiduciare Equity Trust A.O. It appears from the documents shown by you that there are some balances in the bank accounts maintained by us with HSBC Geneva in the name of Yeel Investments Inc. As far as the rest of the data such as amounts reflected against the names of other concerns of which I have not knowledge about are concerned, I cannot comment upon them right now, I need to check up with the bank authorities and get back to you. 25. On perusal of the same, it is important to note that Mr. Anoop Mehta in the first spontaneous statement, accepted to have some idea about the account, 'Yeel Investment Inc' which he claimed to have been belonged to his father, Late Vrajlal C. Mehta. He clearly denied to have known anything about 'Euros Invest Limited' and Investment Lexcor S.A'. 26.Further, vide letter dated 19.01.2012 (Page No.7 to 11 of Paper Book), a submission by Mr. Anoop Mehta was filed to Investigation wing wherein it was specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inc), he said, he is not aware but would make some enquiries and get back to me. I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax Department, Scindhia House, by his chartered accountant Mr. Bimal Desai. Q.15 There is one more accounting the name of Investment Lexcor S.A (Ex- investment funds S.A.), are you aware about it? Ans. As on today, yes, I am aware about it and this account belongs to my brother Q.16 How do you know this account belongs to your brother? Ans. As, I have already stated, the following day after the search, I spoke to my brother and asked him about the three company shown to me. He immediately confirmed that Euros Invest Limited and Investment Lexeor S.A (Ex. Investment Funds S.A) belonged to him. About the third company (Yeel Investment Inc), he said, he is not aware but would make some enquiries and get back to me. I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax department, Scindhia House, by his chartered accountant Mr. Bimal Desai. Q.16a How it is possible that out of three accounts mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard, you are hereby asked as to why the amount of peak credit of $ 38,76,949.00 during the year should not be considered as your income and be added back to your income? Seal (PRAVIN D. SALUNKHE) Asst. Commissioner of Income Tax, Central Circle-20, Mumbai" 29. The reply to the notice was filed by Shri Rajesh Mehta vide letter dated 24.03.2014. Thereafter, search assessment proceedings have been dropped. The relevant extract of the reply furnished by Shri Rajesh Mehta is reproduced as under: 2. "The assessee is a resident of United Arab Emirates (U.A.F) for the aforesaid year. The status of the assessee is Non Resident Indian" as per section 6 of the Income tax Act 1961 for the aforesaid year. It may be noted that the assessee is Non Resident since 1971, i.e more than past 30 years 3. The assessee fails to understand the legality and jurisdiction under the provision of Income Tax Act 1961 for issuing show cause to consider the peak credit balance of the HSBC Bank, Switzerland as indicated in the show cause notice, as income of the assessee for the A.Y 2007-08. All the transactions in HSBC Bank, Switzerland account pertain to businesses and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble CIT(A) did not consider the submission of assessee. Further, he did not conduct any other independent inquiry on the basis of assessee's contention and enhanced the income of the assessee without bringing any further evidence on record. The enhancement was made purely on the assumption that Investment Lexcor S.A belongs to Late Shri Vrajlal C. Mehta. 31. Further, in the CIT(A) order dated 24.03.2017, Hon'ble CIT(A) made an incorrect observation that the base note in the name of Late Shri Vrajlal C Mehta contains the name of all the three accounts and there is no specific reference for Rajesh V Mehta in the said base note being owner of accounts of either Investment Lexcor S.A. or Euros Invest Ltd. Further, same observation was made in Para 30 of Page 37 of the same CIT(A) order. 32. Considering all the above submission, observations of Investigation Wing, Assessment order of Vrajlal Mehta and dropping of assessment of Shri Rajesh Mehta, it is submitted that there was no new evidence based on which enhancement was made. Further, the already existing information was subject to inquiry and scrutiny at various levels of department. Hence, enhancement of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal representatives. The legal representative of Late Shri Vrajlal C Mehta is shri Anoopo V Mehta and this fact has not been disputed by either Shri Anoop Mehta or Rajesh Mehta. The reference to show cause notice issued to Rajesh Mehta by Investigation wing does not indicate anything (Please see para 28 and 29 of the written submission). That search assessment proceedings have been dropped and that there is no adverse finding with respect to claim of Shri Rajesh Mehta regarding ownership of Investment lexcor SA does not lead to conclusion that these assertions have been accepted. No further enquiry was required to be caused by the CIT(A) to establish that Investment Lexcor SA belongs to Late Shri Vrajlal C Mehta as all the investments in that base note of Vrajlal C Mehta belonged to him. Please see para 33 wherein it is stated that it is hereby clarified that, the subject matter of current appeal is mainly enhancement of income of the assessee on account of the balances in HSBC bank account in name of "Investment Lexcor SA". It is hereby further clarified that the assessee has not challenged the declaration of income on account of balances lying in HSBC Bank account in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op Mehta may be entitled to the residual assets may not be relevant to determine the person on whom the income is required to be assessed. For the same reasoning, the details of beneficiaries are also not relevant for that purpose. 55. The Ld CIT-DR also contended that the account standing in the name of M/s Investment Lexcor SA is tagged to late Shri Vrajlal C Mehta. There should not be any dispute that only right person can be assessed in respect of any income. Mere tagging of group accounts together will not automatically lead to the conclusion that all the accounts belong to a single person. In the instant case, it is noticed that Shri Rajesh Mehta has claimed ownership of the account before the investigation wing, before the assessing officer of Late Vrajlal C Mehta and also before his assessing officer also. All the authorities have accepted his claim. Hence in our view, the Ld CIT(A) is not justified in enhancing the income by holding that the bank account standing in the name of Investment Lexcor SA belong to the assessee, without finding fault with the decision taken by other authorities and also without bringing on record any material to contradict the claim so made. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court in the case of Naresh Bhavani Shah (HUF) vs. CIT (396 ITR 589), wherein it is held that there was no dearth of power with the department to grant credit of tax deducted at source in a genuine case. 60. The Ld D.R, on the contrary, submitted that there is no provision under the Act to give credit for the tax paid in AY 2012-13 in AY 2007-08. 61. This ground of the assessee pertains to the returns of income filed by "Estate of late Vrajlal C Mehta". We notice that the assessee has placed reliance on the Circular issued by CBDT and the decision rendered by Hon'ble Gujarat High Court in the case of Naresh Bhavani Shah (HUF) (supra). Considering the peculiar circumstances of the case, we are of the view that there is merit in the claim of the assessee. As per the provisions of sec. 5 of the Act, income received in India is taxable in the year of receipt. Hence the assessee appears to have offered the income in AY 2012-13. However, when the revenue chose to assess the income on accrual basis, the assessee has accepted the same and has accordingly filed revised returns of income, though they were beyond the prescribed time. No information was placed before us about th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
