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TMI Blog2023 (3) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 2. At the outset, both parties agreed that though the individual tax effect in these appeals is below the prescribed limit of Rs.50 lakhs laid down by the CBDT Circular No.17/2019 dated 08/08/2019, however, all these appeals fall under the exception clause (d) of para-10, i.e. where addition related to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account, as prescribed in CBDT Circular dated 11/07/2018. 3. It is undisputed that similar issues arising out of similar and related facts are involved in these appeals. Therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. The Revenue has raised similar grounds in all 5 appeals, therefore, grounds of appeal raised in ITA no.2931/Mum./2022, for the assessment year 1999-00, in the case of Shri Milan Kevin Parikh, are reproduced hereunder for the sake of reference: "1. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 25,24,000/- made u/s 69A of the Act towards balance lying with the undisclosed foreign bank account maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as name, date of birth, place of birth, sex, residential address, profession, and nationality along with the date of opening of the bank account in HSBC Bank, Geneva, and balance in certain years was provided. In order to investigate these facts, a search and seizure action under section 132 of the Act was conducted on 08/08/2011 on Mahendra Brothers Export Private Limited, its directors including Shri Milan Kavinchandra Parikh, Shri Raj Hiten Parikh, Shri Jay Ketan Parikh, and Shri Shaunak Jitendra Parikh. Pursuant to the search action, the bank statement of these 4 individuals with HSBC Bank, Geneva, came into possession of the Investigation Wing, which showed that these 4 individuals are beneficiaries of the 4 bank accounts held by the following companies in HSBC Bank, Geneva:- Sr. no. Name of the Entity Account number Code Profile Client Date of Creation 1. Sulay Trading Limited 5091320491 20.04.2001 2. Laptis Trading Limited 5091316222 17.10.2001 3. Olga Limited 5091255754 25.06.1998 4. Blackberry International Limited 5091255711 25.06.1998 5. The BUP_code with respect to the above-mentioned bank accounts of the 4 individuals are as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, an amount of CHF 100,000, which in terms of Indian currency comes to Rs.24,24,000 (as per the exchange rate prevailing on 03/02/1997) was added to the total income of the assessee as unexplained money under section 69A of the Act. 8. Similarly, vide separate assessment orders of even date 30/11/2016, for the assessment year 1999-2000, in the cases of Shri Milan Kavinchandra Parikh, Shri Raj Hiten Parikh, Shri Jay Ketan Parikh, and Shri Shaunak Jitendra Parikh passed under section 143(3) r/w section 147 of the Act all the individuals were held to be owners of the undisclosed foreign bank accounts. Further, following the findings rendered in the case of Shri Milan Kavinchandra Parikh for the assessment year 1996-97, the Assessing Officer held that these individuals have failed to disclose an amount of CHF 100,000, which is the minimum balance required in order to get the benefit of secrecy services by the bank. Accordingly, the Assessing Officer made an addition of the aforesaid amount of CHF 100,000, which in terms of Indian currency comes to Rs.25,24,000 (as per the exchange rate prevailing on 29/06/1998) to the total income as unexplained money under section 69A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT Rules have been raised by the assessee in all these appeals, except with variance in dates, therefore, grounds raised in ITA no.2931/Mum./2022, for the assessment year 1999-00, in the case of Shri Milan Kevinchandra Parikh, are reproduced hereunder for the sake of reference: "1. The Ld. CIT(A) ought to have held that the Assessing Officer is not justified in making an addition of Rs. 25,24,000/- on account of the amount allegedly deposited while opening the bank account in the name of the assessee with HSBC bank on 02.02.1997, although the reopening of the assessment was based on the reason to believe that the bank account was opened with HSBC bank on 25.06.1998 in the name of Olga Limited and Blackberry International Limited and thus the funds/money lying in the account of companies remains untaxed. 2. The Ld. CIT(A) ought to have held that the addition made by the Assessing Officer while completing the assessment u/s. 147 of the Act was beyond his jurisdiction as he has not made any addition based on the reasons for reopening the assessment as held by the jurisdictional High Court in the case of Jet Airways (1) Ltd. [321 ITR 236 (Bom)]. 3. The appellant craves leave to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the root of the jurisdiction of the Assessing Officer to initiate the proceedings, can be raised by way of a petition under Rule 27 of the ITAT Rules and the Tribunal should allow the assessee to raise such an issue in the appeal instituted by the Revenue, even without the necessity of filing any cross objections. The relevant observations of the Hon'ble Court in the aforesaid decision are as under:- "26. To begin with therefore we propose to consider the issue as to whether there was any necessity for the Appellants/assessees to file cross-objections before the ITAT to raise the jurisdictional issue of compliance with jurisdictional parameters before any proceedings could be initiated under section 153C of the IT Act. 27. In this case, admittedly, the CIT (Appeals) had decided the matters in favor of the assessees and even set aside the orders made by the Assessing Officers. Therefore, the assessees did not have to institute any further appeals to the ITAT. The Revenue in this case had appealed to the ITAT against the orders made by the CIT (Appeals). Therefore, the issue is, whether the assessees could have raised the issue of non-compliance with jurisdictional paramete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided against him. 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him." 31. In this case, the assessees merely wanted to support the order made by the CIT (Appeals), which was entirely in their favor. The assessees wished to raise an issue, that was at least prima facie going to the root of jurisdictions initiate proceedings under section 153C of the IT Act. Having regard to the provisions of rule 27 referred to above, the ITAT in our opinion should have permitted the assessees who were Respondents before it, to support the orders of CIT (Appeals) on this ground, even without the necessity of filing any cross-objections. 32. In Dahod Sahakari Kharid Vechan Sangh Ltd. (supra), the Division Bench of Gujarat High Court was deciding whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee needed to file cross-objections despite fully succeeding in appeal and therefore, being unable to challenge the finding of the CIT (Appeals) that the assessee was guilty of concealment of income and/or furnishing inaccurate particulars. 33. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and interpretation which makes other connected provisions otiose has to be avoided. Rule 27 of the Appellate Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to the provisions of Section 253(4) of the IT Act. The ITAT was, therefore, in error in holding that the finding recorded by the CIT (Appeals) remained unchallenged since the assessee had not filed cross-objections. 37. The reference in this regard can also be made to the provisions of section 260A(7) of the IT Act which provides that save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may apply in the case of appeals under this Section. Now in the context of the provisions of Order XLI Rule 22 of the CPC dealing with the cross-objections, the Hon'ble Supreme Court in the case of S. Nazeer Ahmed (supra) has held that the High Court was clearly in error in holding that the appellant not having filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the decision of the Hon'ble jurisdictional High Court cited supra, the petitions filed by the assessee in these appeals under Rule 27 of the ITAT Rules are admitted for adjudication. ITA no.2933/Mum./2022 Shri Milan Kevinchandra Parikh - A.Y. 1997-98 18. In the case of Shri Milan Kevinchandra Parikh, for the assessment year 1997-98, the Assessing Officer recorded the following reasons for reopening the assessment under section 147 of the Act:- "The information was received under the Double Taxation Avoidance Agreement (DTAA) from the French Authorities regarding the foreign Bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty dated 29/11/1992. These accounts are held with the HSBC Bank, Geneva, Switzerland. There are four accounts in the name of four companies where the four individuals who are resident Indians and arecousin brothers belonging to M/s Mahendra Brothers Group are the Beneficial Owners. As per Base Note received, the details of these accounts are as under: Sr. no. Name Account Number / Code Profile Client 1. Sulay Trading Limited 5091320491 2. Laptis Trading Limited 5091316222 3. Olga Limited 5091255754 4. Blackb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Bank Accounts held in HSBC, Geneva and as per the details the beneficiary of the said accounts, the assessee is entitled to balances lying in the account of M/s Sulay Trading Limited, M/s Laptis Trading Limited, M/s Olga Limited and M/s Blackberry International Limited. As per the information available, the balances outstanding with M/s Sulay Trading Limited is $ 2,45,764, and with M/s Laptis Trading Limited is $ 2,98,91,844. Since the Individual assessee have been mentioned as Beneficial Owners' the same would be taxable in respect of his specific entitlements in these bank accounts. The assessee was called upon to seek more information on the balances lying in these Bank accounts as stated above and was requested to provide his consent for sharing of these account details of HSBC, Geneva with the Department. But the assessee have refused to sign any such Consent Waiver Form. Instead, the assessee have availed a letter from HSBC, Geneva providing certain facts as under: "1. The Assessee have never visited the Bank to open the Bank Accounts of the named companies and he has never signed any papers with the Bank. 2. The Assessee have not operated any of the Accounts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the said assessee as the Beneficial Owner of the funds lying in these Bank Accounts have been proven beyond doubt. It is also noted that the said Bank accounts have not been disclosed to the Department by the assessee. 7. In view of the above, I have reason to believe that the assessee Shri. Milan Kavinchandra Parikh holds the above Bank accounts in HSBC, Geneva, Switzerland and since the income as a Beneficial Owner of the fund lying in the various Bank accounts has escaped from assessment and taxation, the assessments for A.Y. 1997-98 is reopened u/s. 147 of the Act in respect of Assessment Year as mentioned above." 19. From the perusal of aforesaid reasons, it is evident that the same mentions the name of the Companies in whose names accounts have been maintained in HSBC Bank, Geneva. In para 5 of the aforesaid reason, the Assessing Officer alleged that the assessee is entitled to balances lying in the account of aforesaid 4 companies. Further, it has been alleged that since the assessee is the beneficial owner of these undisclosed bank accounts, therefore the balance outstanding is taxable in the hands of the assessee. In para 7 of the aforesaid reasons, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Jet Airways India Ltd (supra) become relevant: "16. ........Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and are cousin brothers belonging to M/s. Mahendra Brothers are the beneficial owners. As per Base Note received, the details of these accounts are as under :- Sr. no. Name of the Entity Account number Code Profile Client Date of Creation 1. Sulay Trading Limited 5091320491 20/04/2001 2. Laptis Trading Limited 5091316222 17/10/2001 3. Olga Limited 5091255754 25/06/1998 4. Blackberry International Limited 5091255711 25/06/1998 The BUP Code with respect to the above mentioned bank accounts for the four individuals are as follows:- Sr. no. Name of the Individual Date of Creation BUP_SIFIC_PER-ID 1. Milan Kavinchandra Parikh 02/02/1997 BUP 5090132872 2. Jay Ketan Parikh 29/06/1998 BUP 5090144519 3. Raj Hiten Parikh 29/06/1998 BUP 5090144520 4. Shaunak Jintendra Parikh 0703/2001 BUP 5090158784 In this regard, assessment proceedings in the case of the above mentioned 4 individuals for A.Y. 2006-07 and A.Y. 2007-08 as well as in the case of Shri Milan Kavinchandra Parikh for A.Y. 1997-98 are already completed wherein the Assessing Officer has established that the above mentioned assessees are having this undisclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 27 of ITAT Rules, as filed by the assessee, is allowed. ITA no.2932/Mum./2022 Shri Raj Hiten Parikh - A.Y. 1999-00 33. In the case of Shri Raj Hiten Parikh, for the assessment year 1999-00, the Assessing Officer recorded the following reasons for reopening the assessment under section 147 of the Act:- "REASONS FOR REOPENING U/S, 147 OF THE INCOME TAX ACT, 1961 The information was received under the Double Taxation Avoidance Agreement (DTAA) from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty dated 29/11/1992. These accounts are held with the HSBC Bank, Geneva, Switzerland. There are four accounts in the name of four companies where the four individuals who are resident Indians and are cousin brothers belonging to M/s. Mahendra Brothers are the beneficial owners. As per Base Note received, the details of these accounts are as under :- Sr. no. Name of the Entity Account number Code Profile Client Date of Creation 1. Sulay Trading Limited 5091320491 20.04.2001 2. Laptis Trading Limited 5091316222 17.10.2001 3. Olga Limited 5091255754 25.06.1998 4. Blackberry International L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in this case also, it is sufficiently evident that the reassessment proceeding under section 147 of the Act was initiated to bring to tax the funds lying in various bank accounts, however, while passing the assessment order the Assessing Officer made the addition of the minimum balance required to open an account in HSBC Bank, Geneva. Thus, our aforesaid findings rendered in ITA No. 2933/Mum/2022 shall apply mutatis mutandis. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed. 36. In view of the above, the grounds raised by the Revenue on merits are rendered academic and therefore, are dismissed. 37. In the result, the appeal by the Revenue is dismissed, while the petition under Rule 27 of ITAT Rules, as filed by the assessee, is allowed. ITA no.2934/Mum./2022 Shri Jay Ketan Parikh - A.Y. 1999-00 38. In the case of Shri Jay Ketan Parikh, for the assessment year 1999-00, the Assessing Officer recorded the following reasons for reopening the assessment under section 147 of the Act:- "REASONS FOR REOPENING U/S. 147 OF THE INCOME TAX ACT, 1961 The information was received under the Double Taxation Avoidance Agreement (DTAA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99-2000 is reopened u/s. 147 of the Income Tax Act, 1961." 39. However, while passing the assessment order dated 30/11/2016 under section 143(3) r/w section 147 of the Act, the Assessing Officer proceeded to make the addition of Rs. 25,24,000, by observing as under:- "14. Therefore, an amount of Rs. 25,24,000/- equivalent to CHF 1,00,000 (1 CHF = 25.24/- INR) being initial investment required to open/maintain an account in HSBC, Geneva, which is undisclosed Bank Account of the assessee is treated as the undisclosed income which has not been accounted for and has escaped assessment. Accordingly an addition of Rs. 25,24,000/- u/s. 69A of the Income Tax Act 1961, is made to the total income of the assessee for A.Y. 1999-00." 40. Therefore, in this case also, it is sufficiently evident that the reassessment proceeding under section 147 of the Act was initiated to bring to tax the funds lying in various bank accounts, however, while passing the assessment order the Assessing Officer made the addition of the minimum balance required to open an account in HSBC Bank, Geneva. Thus, our aforesaid findings rendered in ITA No. 2933/Mum/2022 shall apply mutatis mutandis. As a result, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the account is opened by the above mentioned 4 individuals (including the assessee, Shri Shaunak Jitendra Parikh) in the name of Olga Limited and Blackberry International Limited on 25/06/1998, i.e. Financial Year 1998-1999 (A.Y. 1999-2000). Therefore, the funds/money lying in the account of these two companies and such other names (if found fi ther) has not been disclosed by the assessee in his Return of Income and hence remains untaxed. In view of the above, I have reason to believe that the assessee, Shri Shaunak Jitendra Parikh holds the above Bank Accounts in HSBC, Geneva, Switzerland, and since the income as a Beneficial Owner or otherwise of the funds lying in these certain Bank Accounts has escaped assessment and taxation, the assessments for A.Y. 1999-2000 is reopened u/s. 147 of the Income Tax Act, 1961." 44. However, while passing the assessment order dated 30/11/2016 under section 143(3) r/w section 147 of the Act, the Assessing Officer proceeded to make the addition of Rs. 25,24,000, by observing as under:- "14. Therefore, an amount of Rs. 25,24,000/- equivalent to CHF 1,00,000 (1 CHF = 25.24/- INR) being initial investment required to open/maintain an account i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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