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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 ..... on 147 of the Act. As a result, the petition filed by the assessee under Rule 27 of ITAT Rules is allowed. Reopening of assessment u/s 147 - undisclosed income in bank in bank account - information received under the DTAA from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty held with the HSBC Bank, Geneva, Switzerland - HELD THAT:- As 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 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the CIT(A) in his decision has placed his reliance on the decision of the ITAT, Mumbai in the assessee's own case for A.YS. 2006-07 and 2007-08 ignoring that the HSBC bank accounts involved in AY 2006-07 and AY 2007-08 pertains to M/s. Sulay Trading Ltd. and M/s. Laptis Trading Ltd. whereas the bank accounts involved in the year under consideration pertains to M/s. Olga Ltd. and M/s. Blackberry International Ltd and that finding made by the Tribunal for those years with regards to the accounts of M/s. Sulay Trading Ltd. and M/s. Laptis Trading Ltd. is not applicable for the assessment under consideration. 4. On the facts and circumstances of the case and in law, the CIT(A) in his decision has placed his reliance on the decision of the ITAT, Mumbai in the assessee's own case for A.YS. 2006-07 and 2007-08 without appreciating that the ITAT has placed reliance on judicial pronouncement in the case of All Cargo Global Logistic Ltd. Department has not accepted this decision and further appeals have been filed in the cases." 4. The brief facts of the case as emanating from the record are: In these cases, information under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment were provided to all the assessees. During the course of search action as well as during the course of reassessment proceedings, all the assessees denied owning any such bank account in HSBC Bank, Geneva. All the assessees also did not furnish the consent waiver form waiving the protection of secrecy laws, so as to enable the government to get the requisite information and verify the details/letter furnished by the assessee. After verification of the information available in the seized material, appraisal report, and of the material available on records and in the light of the crucial evidential information held in possession of the Department received from the French authorities under the provisions of the DTAA and as per the enquiries conducted during the course of assessment proceedings in the cases of these 4 assessees, namely, Shri Milan Kavinchandra Parikh, Shri Raj Hiten Parikh, Shri Jay Ketan Parikh, and Shri Shaunak Jitendra Parikh, the Assessing Officer vide order passed under section 143(3) r/w section 147 of the Act held that these assessees are the beneficial owners of the aforesaid foreign bank accounts maintained with HSBC Bank, Geneva, Switzerland. 7. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before us. 10. During the hearing, the learned Departmental Representative ("learned DR") submitted that the addition in the present case has been made on the basis of base note information received from the French authority under the India-France DTAA. It was also submitted that all the information received by the assessee was confronted with all these assessees. However, these assessees only confirmed the personal information and denied any connection with these bank accounts. Further, the assessees have also not provided the consent waiver form to enable the department to obtain the information from the HSBC Bank, Geneva. 11. On the other hand, the learned Authorised Representative ("learned AR") relied upon the impugned order as well as the order passed by the coordinate bench of the Tribunal in assessee's own case and made other submissions on merits. Learned AR by referring to the petition dated 17/01/2023 filed under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 ("ITAT Rules") in all these appeals submitted that no addition has been made by the Assessing Officer in respect of the issue which is the subject matter of the reasons for reopening the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and therefore, the Assessing Officer has no jurisdiction under section 147 of the Act to make the impugned addition. 15. In the present case, it is undisputed that the assessee though had challenged the assumption of jurisdiction under section 147 of the Act before the learned CIT(A), however, the aforesaid plea now raised before us by way of the petition under Rule 27 was not raised and therefore was not dealt in the impugned order. Though the assessee is supporting the final decision of the learned CIT(A) of deletion of addition, however, by way of the petition under Rule 27 of the ITAT Rules has challenged the assumption of jurisdiction under section 147 of the Act. In order to support the admission of the petitions filed under Rule 27 of the ITAT Rules, the learned AR placed reliance upon the decision of the Hon'ble Jurisdictional High Court in Peter Vaz vs CIT, [2021] 436 ITR 616 (Bom.). From the perusal of the aforesaid decision, we find that the following additional substantial question of law was framed by the Hon'ble Court:- "Whether in the facts and circumstances of the present case, it was open to the appellant/assessee to have supported the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sees i.e. Peter Vaz and Edgar Afonso were found in the search proceedings under Section 132 in the premises of the said firm and the said company. Therefore, it was the case of the assessees that no proceedings under section 153C of the IT Act could ever have been initiated against these assessees. 29. Mr. Pardial stressed that the provisions of Section 153C as amended up to the year 2013 required the Assessing Officer to be satisfied that the books of the accounts belonging to the assessees who were proposed be proceeded with under section 153C ought to have been found, as a precondition for any action under section 153C of the IT Act. For this purpose, he compared the provisions of Section 153C as amended up to 2020, in which, there is a significant departure. Amended provisions, which did not apply to the present case, provided that the action under section 153C was competent even if the books of accounts "pertaining to" and belonging to the assessee were found during the search under section 132 upon a person not referred to in Section 153A of IT Act. He submitted that this was an issue of law and therefore, the ITAT should have permitted the assessees to raise this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court held that the ITAT apparently lost sight of the fact that the assessee had succeeded before the CIT (Appeals) that had allowed the assessee's appeal and even set aside the penalty in its entirety. Therefore, the assessee did not have to appeal. The position in law is well settled that the cross-objections, for all intents and purposes. would amount to an appeal and the cross objector would have the same rights which an appellant has before the Tribunal. Since the assessee did not have to appeal, the ITAT could not have insisted upon the filing of cross-objections as a precondition for permitting the assessee to assail the finding of concealment. 35. The Division Bench referred to the provisions of section 253 of the IT Act and after analyzing the scheme held that on a plain reading of the provision, it transpires that the party had been granted an option or a discretion to file cross-objections. In case a party having succeeded before the CIT (Appeals) opts not to file cross-objection even when an appeal is preferred by the other party, from that, it is not possible to infer that the said party had accepted the order or the part thereof which was against the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any relief which had been negatived to him by the trial Court and in addition to what he has already been given by the decree under challenge. The Hon'ble Supreme Court, therefore, held that the respondent in the appeal had every right to canvas the correctness of the finding on the bar of Order II Rule 2 rendered by the trial Court. 38. In the present case, it is not as if the issue of non-fulfillment of jurisdictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 us also the provisions of section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross-objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue." 17. From the perusal of the report furnished by the learned DR, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is individual capacities or in any other capacity with the said accounts. The fact that a large number of assessees have confirmed the existence of similar Bank Accounts in HSBC Bank, Geneva, Switzerland mentioned in the information received under DTAA is credible and the contention of the above-mentioned assessee is prima-facie not correct. 4. The individual has been declared as beneficiaries of the several accounts held in HSBC Bank, Geneva as mentioned above and for the purposes of identification, the detail of this specific beneficiary is available in the records of HSBC Bank, Geneva. From the records, it has been observed that the name of the assessee, his address and passport details were provided in respect of the individual who have been mentioned as beneficiary with their specific pieces of identities for the respective accounts. Subsequently, letters were written to the Passport Office to verify the authenticity of the information from the perspective of the records maintained by the Passport Office. The Passport Office has provided the details that the specific Passport Number belong to the individual and confirmed the name as well as address on the basis of their reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee from HSBC, Geneva, it can be seen that the Bank have never stated that the assessee is not the Beneficial Owner of the said Bank accounts. As the Beneficial Owner of the said Swiss Bank Accounts, the assessee is not required to go to the Bank. Further, the Beneficial Owner of any such Swiss Bank Accounts may not necessarily be the signatory. In addition, the transactions are not required to be initiated by the Beneficial Owner as it would be suffice if it was done by the signatory of the Account. Even the information that the said assessee is not the Director or Signatory of the Accounts is not very much pertinent since he is the Beneficial Owner of the said Accounts. In its concluding remarks, the HSBC Bank, Geneva has categorically stated and disclaimed that commentary and confirmation is in respect of the function of directors and/or authorized signatories with regard to these accounts i.e. Sulay Trading Limited, Laptis Trading Limited, Olga Limited and Blackberry International Limited. But this letter is absolutely mute on the beneficial ownership and real interest of the assessee in the funds lying in the said Accounts, which would only belong to the assessee as one of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed bank accounts maintained with HSBC Bank, Geneva is the income of the assessee, being the beneficial owner of the bank accounts, which has escaped assessment and therefore is taxable. 20. However, while passing the assessment order dated 27/03/2015 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:- "29. For the financial year 1996-97 relevant to assessment year 1997-98 the minimum balance required to open a account in HSBC, Geneva Bank, in which the assessee has opened an account and created his profile, it is learnt that minimum amount required to open an account in HSBC Geneva was 1,00,000/- CHF, in order to get the benefit of secrecy service provided. Since the assessee failed to disclose this amount in his return of income therefore an amount of CHF 100,000 which in terms of Indian Rupees comes to Rs. 25,24,000/- (as per RBI website, calculated at the exchange rate of INR of 25.24 to 1 CHF prevailing as at 03-02-1997) is assessed as unexplained money u/s. 69A of the Act and assessed accordingly. Penalty proceedings are initiated u/s 271(1)(c) of the I.T. Act for filing inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition made by the Assessing Officer is the same i.e. foreign bank accounts maintained with the HSBC bank, Geneva. Therefore, it was submitted that when the subject matter is the same the addition made by the AO cannot be said to be not based on the reasons recorded for reopening the assessment. We are of the considered view that even if it is accepted that the subject matter is the same, however, as is evident from the record the income which was alleged to have escaped assessment and the income that was ultimately added in the hands of the assessee are completely different, as the earlier one refers to the funds lying in the undisclosed bank accounts, while the latter refers to the minimum balance required to open such an account. 23. At the same time, we cannot be oblivious to the trite law that the reasons, as recorded for reopening the reassessment, are to be examined on a standalone basis to determine the validity of proceedings under section 147 of the Act. In this regard, it is relevant to note the following observation of Hon'ble Jurisdictional High Court in Hindustan Lever Ltd vs R.B.Wadkar: [2004] 268 ITR 332 (Bom.): "20. The reasons recorded by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er subsequently during the course of proceedings under section 147, even when the reason for the notice for "such income" which may have escaped assessment, may not survive. We are of the considered opinion that since the decision in Jet Airways India Ltd (supra) has been rendered by the Hon'ble jurisdictional High Court, therefore, the same is binding on us. 25. In view of our aforesaid findings and respectfully following the decisions of the Hon'ble jurisdictional High Court cited supra, we are of the considered opinion that in the present case, the Assessing Officer had no jurisdiction to make the addition under section 147 of the Act. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed. 26. In view of the above, the grounds raised by the Revenue on merits are rendered academic and therefore, are dismissed. 27. 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.2931/Mum./2022 Shri Milan Kevinchandra Parikh - A.Y. 1999-00 28. In the case of Shri Milan Kevinchandra Parikh, for the assessment year 1999-00, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, Shri Milan Kavinchandra 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." 29. 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." 30. 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, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997-98 are already completed wherein the Assessing Officer has established that the above mentioned assessees are having this undisclosed bank account and made certain additions. Further, on perusal of the information (in the form of Base Note), it is seen that the account is opened by the above mentioned 4 individuals (including the assessee, Shri Raj Hiten Parikh) in the name of Olga Limited and Blackberry International Limited on 25/05/1998, 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 further) 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 Raj Hiten 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." 34. However, while passing the assessment order dated 30/11/2016 under section 143(3) r/w section 147 of the Act, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 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. Jay Ketan Parikh 29/06/1998 BUP 5090144519 2. Milan Kavinchandra Parikh 02/02/1997 BUP 5090132872 3. Raj Hiten Parikh 29/06/1998 BUP 5090144520 4. Shaunak Jintendra Parikh 07/03/2001 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 undisclosed bank account and made certain additions. Further, on perusal of the information (in the form of Base Note), it is seen that the account is opened by the above mentioned 4 individuals (including the assessee, Shri Jay Ketan Parikh) in the name of Olga Limited and Blackberry International Limited on 25/06/1998, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 orothers 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. Shaunak Jintendra Parikh 07/03/2001 BUP 5090158784 2. Raj Hiten Parikh 29/06/1998 BUP 50901445 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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