9911796707
TMI Blog2023 (4) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... hus the Ground Nos. 1 to 3 raised by the Revenue are devoid of merits and against the provisions of law, therefore the same are liable to be dismissed. Addition of Off Shore Bank Account - As no incriminating document was found during the course of search proceedings. Further it appears that the Income Tax Department is also not sure of its own source of information and the veracity of the information, on which heavy reliance is placed. It is common knowledge, from the press reports, that the information received by the Department from France was based on stolen unverified/leaked documents. The search undertaken by the Department at various premises of assessee was a shot in the dark to try to recover something to give substance to the unverified data received by it from France. Thus the department was not able to find anything either at the residence or the various business premises of the assessee, relating to the offshore bank account. Decided against revenue. - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER For the Assessee Represented: Shri M.K. Patel, Adv For the Revenue Represented: Shri A.P. Singh, CIT DR ORDER PER : T.R. SENTHIL KUMAR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as follows: . In connection with search assessment proceedings for A.Y. 2006-07 to 2012-13, you were earlier issued show cause notice dated 21.01.2015. You have filed reply to the show cause vide letter dated 23.01.2015. As per your above mentioned reply you have stated that you are not in possession any HSBC bank account in Geneva in contrast to what has been stated by you in a statement u/s 132(4) of the Income Tax Act dated 04.10.2011. But as per the information received by Income Tax Department under Double Taxation Avoidance Conveyance (DTAC) between India and France, you have a bank account in HSBC, Geneva with following details mentioned: Name Nopany Arvind Narayanprasad Date of Birth 29.03.1965 Address 11-A, Nilambar Bunglows, Vasna Road, Vadodara, 390015, Gujarat, India (legal address) Date of creation 26.09.2006 BUP_ SIFIC_PER_ID 5090189906 PER_ID 151190 PER_NO 189906 As per the above information indicated herein above, you are in possession of bank account in HSBC, Geneva, with the above mentioned details. In this connection you are requested to furnish details of above mentioned account which will include amount of deposit, withdrawals made from this accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Geneva, which mentions the name and certain personal details of the assessee. The piece of paper relied by the Ld. AO does not contain any reference to the source from which it is found/received, it is unauthenticated and unverifiable and it does not even mention that it pertains to which Bank it relates to. 3.6. In the above circumstances the assessee vide its letter dated 22.10.2013 replied to the Assessing Officer as follows: Purported Disclosure of Rs. 7.5 Crores As regards the purported disclosure of Rs.7.5 crore, I have to bring to your kind knowledge that a search was conducted at my residence on 29.09.2011. On 29 September 2011 Officers of the Income Tax Department, Vadodara, conducted search/survey at my residence and business premises of Rishi FIBC Solutions P Limited, Garrison Polysacks Private Limited and Dan Cement Trading Private Limited. The Officers arrived at the residence at about 8 am and around the same time at the business premises of the various factories and offices and sought to examine various records. There were various teams deputed at the same time at difference premises, assisted by subordinate staff members. The various officers of the department wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect that the said disclosure made by me as regards the said bank was not an voluntary statement and was made under duress and that by the Affidavit have retracted the same. The same Affidavit, copy of which is enclosed, was made an enclosure to various returns of income filed by me under section 153A on 27th July 2012 and the note attached to the computation of total income very clearly discloses this fact. I state that I have no income from undisclosed sources amounting to Rs.7.5 crore. As regards the second part of your question, you have asked me to furnish the details of my account with HSBC Bank Switzerland to you. In this regard, I have to state that the DDIT(Inv.)-II, Vadodara who had given to mix a consent waiver letter which was requested to sign and hand it back to them to enable them to forward the same to the concerned authority for obtaining the information from the foreign bank through diplomatic channels. After this letter was received by me on 21st February 2013, and since do not have a bank account as stated, replied to the DDIT(Inv.)-II, Vadodara, on 24th February, 2013 where, I have stated as under: To The Deputy Director of Income Tax (Inv.)-II Room No. 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral justice has been followed by furnishing assessee the details with respect to his HSBC bank account in GENEVA. But even after receipt of this evidence, assessee has been repeating the stand that he does not have any account in HSBC, Geneva. 8.7. Thus on the basis of above discussion, it is concluded that as per the information available with this office, assessee is in possession of HSBC, bank account in GENEVA with the account details as mentioned in para 8.6. Further this fact has been admitted by assessee in his statement recorded on oath u/s 132(4) of the 1 T Act dated 04.10.2011. In this statement assessee has given various details with respect to this account including the amount of deposit as on Sept 2006 at US $1.5 million. Further retraction made by assessee is an afterthought act which is made after the long gap of almost 4 months hence loses its validity. Further it is not corroborated by any strong evidence to prove that the statement recorded on oath as erroneous Assessee has not discharged the onus cast upon him to prove the validity of retracted statement. So considering the factual and legal position, it is held that assessee has a HSBC bank account in Geneva wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for completion of the assessment shall be deemed to be excluded for a period of Six Months i.e. Period commencing from the date on which a reference for exchange of information is made ending with the date on which the information so requested is received by the Commissioner or a period of six months, whichever is less, shall be excluded. Since no information in this case has been received by the Pr. CIT, the upper limit of six months exclusion would be available to the AO for completion of assessment. 3.14 The above situation is once again reiterated as under: - Financial Year: 2006-07 - Assessment Year: 2007-08 - Return of income under section 153 A: 27.07.2012 - Date of Reference to Competent Authority: 31.12.2012 - Period of extension from the date of reference (Six Months) to end on 30.06.2013 - Due Date of completion of assessment: 31 March 2014. - Time available after the date of extension from 30.06.2013 to 31.03.2014 =274 days In such a case the assessment order was to be passed by 31 March 2014 as the period available after the period of extension from the date of reference to competent authority is 274 days in view of proviso to Explanation of Section of 153 B of IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he receipt of the information whichever is earlier. Since, in the instant case on reference no information has been received from foreign authorities, therefore the maximum available time would be six months (or one year as per AO). Accordingly if the above period of reference is excluded, then the following picture emerges: 1. If period of six months is considered then the period to be excluded would be from 31st December 2012 till 30th June 2013. Thus period of 274 days were available (from 30.06.2013 to 31.03.2014). As per the proviso to the explanation (viii) to section 153 B which states that if the period available to the AO is less than 60 days for the purpose of limitation then the period available would get extended to 60 days or deemed to be extended accordingly. Thus no benefit of 60 days period as per the said proviso would be available to the AO for completion of the assessment as it was already having 274 days left with him for completion of assessment. OR 2. If period of One Year is considered then the period to be excluded would be from 31st December 2012 till 31st December 2013. Thus period of 90 days were available (from 31.12.2013 to 31.03.2014). As per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and redundant as under no circumstances the period of sixty days mentioned in the said proviso would become applicable due to availability of extended period of six months from the normal time barring date as per Section 153 B(a) or (b) of IT Act. Thus, the working/counting of the limitation date for exclusion period (six months or one year) in view of Explanation (viii) of Section 153 B from the time barring date i.e. 31.03.2014 is not in consonance with the provisions of law as in that case the proviso to Explanation would become redundant/non workable and thus the same would not be in accordance with the provisions of law as intended by the legislature. The relevancy/applicability of the said proviso to explanation has been emphasized by the Hon'ble Delhi High Court in the case of CIT Vs. U Like Promoters Pvt. Ltd. in ITA No. 1528/2010, 1529/2010, 1530/2010 and 1532/2010 dated 24.01.2005. For ready reference the observations of the Hon'ble Court are reproduced as under: (i) Date of limitation for completing assessment under Section 153A in normal course was 31st March, 2006. (ii) On 22nd March, 2006 an order under Section 142(2A) was passed. (iii) On 31st March, 2006, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search and disposed of the same by a very detailed order as follows: 4.32. I have considered the material on record and various case Laws relied upon by the appellant and legal precedents laid down by the jurisdictional High Court and other High Courts as also by several Benches of the Hon'ble ITAT. The crux of the finding is that, Clause (a) of sub-section (1) of section 153A mandates the AO to issue notice in respect of the preceding six assessment years. Clause (b) mandates the AO to assess or reassess the income in respect of these years. A combined reading of both the provisions indicates that where a pending assessment has abated, the total income will comprise of the normal income on the basis of returned income plus the income escaping assessment on the basis of seized material found in the course of search. Where the assessment has reached finality and hence not abated, the income under section 153A shall be determined on the basis of the material found in search. In any case, the income to be determined u/s. 153A has to be on the basis of material found in the course of search. If no incriminating material is found in the course of search, then no adverse inferen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other decisions/judgments cited above, addition cannot be roped in the assessment u/s 153A particularly when it has not abated. This decision of jurisdictional High Court is binding and one acting under the same jurisdiction as a subordinate authority, is bound to follow the decision rendered by highest Court of the state. 4.35 Further my above view on legal aspect is also in consonance with the principle laid down by Hon'ble Gujarat High Court and various courts. Under the circumstances, the addition not based on the incriminating document, be sustained in the assessment order passed u/s 153A if such document was not found in the possession of the assessee during the course of search operation. In view of the above discussion, as also after considering the relevant judicial pronouncements, the addition made by the AO cannot survive. Thus, this additional ground of appeal is allowed. 5.1. Aggrieved against the appellate order the Revenue is in appeal before us raising the following Grounds of Appeal: (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the exclusion period of six months or even twelve months as per the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided the said ground on merits, instead of treating it as academic and infructuous. 6. Heard both parties extensively and have carefully perused the records, Paper Books, case laws filed by the assessee. As it can be seen from the grounds of appeal raised by the Revenue, Ground Nos. 1 to 3 are interconnected with each other questioning the time barring period for completion of assessment order by the A.O. Ground Nos. 4 to 6 are also interconnected to each other namely can the Ld. CIT(A) delete the additions, in the absence of any incriminating material/evidence, statements recorded under 132(4) during the course of search and retraction of the same at a later period. Ground no. 7 is on the quantum of the addition deleted by the Ld. CIT(A). 6.1. To deal with Ground Nos. 1 to 3, after going through the submissions of the parties, the issue and the relevant dates are tabulated as follows: Particulars Pre Amended Provision of Six Months (applicable upto 30-06-2012] Post Amended Provision by Fina nce Act, 2012, 12 Months period [wef 01-07-2012] Asst. to be completed (2 years from the end of relevant F Yr 31-03-2012) 31-03-2014 31-03-2014 Period to be excluded 31-12-12 to 30-06-13 31-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... va during the course of search on 29.09.2011 both at Vadodara and Mumbai and various business premises of the assessee and his relatives. Since the assessee was out of India prohibitory order of Search was placed at the residence of the assessee. When the assessee returned back to India on 04.10.2011 in the morning, search action was recommenced immediately and the assessee was not allowed to take rest and the search proceedings continued till very late night and statements u/s. 132(4) were recorded till mid night. The Investigation Officers were asking various questions turn by turn to the assessee. However the Revenue could not found any unaccounted income in the business premises of the assessee. Since the assessee was physically and mentally tired due to his foreign travel and got exhausted, therefore the assessee answered the questions in the manner in which the Investigation Team wanted them to be answered. Further there was no incriminating documents were found during the continuation of the search in the residential premises of the assessee. Therefore Investigation Team pressurized the assessee to make substantial disclosure of unaccounted income, both in the hand of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of this appeal, the JS (FT TR-l) Division of the CBDT has not been in a position to supply any positive information to the CIT(Central) in regard to the purported HSBC Bank account at Geneva held by the assessee, that is after the passage of almost ten years, since the date of reference made by the Ld CIT (Central)-II, Ahmedabad on 19-12-2012 to the JS (FT TR-1) Division of the CBDT under DTAA. It is further seen from page 22 of the assessment order the assessee was requested to send a letter dated 10-12-2011 to the Accounts Manager, HSBC Bank, Geneva, Switzerland asking about the details of the account, however there is no response from the said Bank. Therefore, in the absence of any incriminating materials and based only on the statements recorded during the course of search u/s. 132(4), which was also later retracted by the assessee, therefore the statement cannot be the basis for additions. 7.3. In this connection, Jurisdictional High Court of Gujarat in the case of Kailashben Manharlal Chokshi Vs. CIT reported in [2008] 174 taxmann.com 466 (Guj.) held that merely on the basis of admission of the assessee could not have been subjected to such additions unless and until, some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 1-4-2011. Therefore, Swiss Authorities have not provided any information to Revenue Authorities in India about assessee's bank account with HSBC, Geneva, Switzerland for assessment years under appeals i.e., A.Ys. 2006-2007 to 2011-2012. Thus, there is no incriminating material available on record to make any addition in any assessment years. It may also be noted here that assessee since the very beginning denied to have maintained any such bank accounts with HSBC, Geneva, Switzerland. There is no material available on record that assessee made deposits in HSBC Bank A/c in A.Y. 2006-2007 or thereafter earned any interest in remaining assessment years under appeals. Operative portion of the decision reads as follows: 5.1 We have heard both the parties who have also filed written submissions which are also taken into consideration. 6. Learned Counsel for the Assessee submitted that it is an undisputed fact that search was conducted on 28-7-2011 on the assessee. Learned Counsel for the Assessee referred to paper book filed by the Ld. D.R. containing letter Dated 22-8- 2019 of ACIT, Central Circle-7 [ A.O.] to the CIT-DR in which it was categorically stated that last panch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: In accordance with Article 26 DTA CH-IN, administrative assistance for questions concerning the application of domestic law can only be provided for information starting from the financial years 2011/2012 as the prior years are not covered by temporal scope of Article 26 of the amended Double Tax Agreement between India Swtizerland. Therefore we can only provide you with information from 1 April 2011 (see decision A-4232/2013 of 12 December 2013 of the Swiss Federal Administrative Court) . 6.1.1.2 The Learned Counsel for the Assessee submitted that the Agreement between The Republic of India and The Swiss Confederation for avoidance of double taxation with respect to taxes on income as modified by Notification No. S.O.2903(E) Dated 27-12-2011. Copy of Notification No. S.O.2903(E) Dated 27-12- 2011together with amended protocol filed to show it apply to later period. Therefore, reliance is placed on the following judicial decisions which hold that if the Reference based upon which the limitation is sought to be extended is held bad, limitation so extended would also be bad in law. 6.1.11 Learned Counsel for the Assessee, therefore, submitted that since no information could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. Therefore, in the absence of any evidence or material on record against the assessee, even the addition on merit are without any basis. The additions on account of notional interest are based on mere suspicion and as such no addition could be made. 7. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below. The Ld. D.R. submitted that assessee challenged that assessments in these cases were time barred. In this regard, it is relevant to note that time barring date as per provisions of Section 153B is 31-3-2015 as against 31-3-2014 because the exclusion of the time period as provided by Clause-ix of Explanation to Section 153B of the I.T. Act, 1961 as applicable in the case of the assessee. He has submitted that in this case information was called for from Foreign Competent Authority under Exchange of Information through Reference Dated 5-12-2012 and the information thereto was received back as on 10-7-2015. As per the Explanation, the time barring date would got extended by one year if response could not have been received within one year. The Ld. D.R. however, did not dispute that last panchanama was drawn on 26-9-2011 as is also confirmed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided vide letter Dated 26-6-2015 no such information could be provided prior to 1-4-2011. Therefore, Swiss Authorities have not provided any information to Revenue Authorities in India about assessee's bank account with HSBC, Geneva, Switzerland for assessment years under appeals i.e., A.Ys. 2006-2007 to 2011-2012. Thus, there is no incriminating material available on record to make any addition in any assessment years. It may also be noted here that assessee since the very beginning denied to have maintained any such bank accounts with HSBC, Geneva, Switzerland. There is no material available on record that assessee made deposits in HSBC Bank A/c in A.Y. 2006-2007 or thereafter earned any interest in remaining assessment years under appeals. 8.1 Considering the totality of the facts and circumstances of the case above, it is also clear that during the course of search no incriminating material was found against the assessee for maintaining any such bank accounts with HSBC, Geneva, Switzerland. Whatever information was supplied by the Swiss Authorities subsequently to the Revenue Authorities in India, no such information was provided for the period prior to 1-4-2011. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SLP of the Department. Therefore, on this reason alone no addition could be made of any unexplained bank deposits or interest earned thereon in any of the assessment years. In view of the above, we set aside the Orders of the authorities below and delete the entire additions. In view of the above, there is no need to decide the remaining grounds of appeals which are left with academic discussion only. Accordingly, all the appeals of the Assessee are allowed. 9. In the result, all the appeals of the Assessee are allowed. 7.5. Another Co-ordinate Bench of Kolkata Tribunal in the case of Bishwanath Garodia Vs. DCIT, Central Circle-3(3), Kolkata reported in [2016] 76 taxmann.com 81 has considered similar HSBC Bank foreign account and deleted the additions made by the AO as no seized materials was found during the search operation. Operative portion of the decision reads as follows: .8. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the returns of income originally filed by the assessee for both the years under consideration were duly processed by the Assessing Officer under section 143(1) well before the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is, therefore, not a case where the assessments for both the years under consideration could be said to have been completed. He has also contended that the conclusion of such alone is sufficient to give jurisdiction to the Assessing Officer to proceed against the assessee under section 153A of the Act. In support of this contention, he has relied on the unreported decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra). In the said case, a question was posed by the Hon'ble Delhi High Court in paragraph no. 12 of its order as to whether the Assessing Officer was empowered to reopen the proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search where an assessment order had already been passed in respect of all or any of those six assessment years either under section 143(1) or section 143(3) of the Act and such order was already in existence having been passed prior to the initiation of search/requisition. Although this question was not finally answered by the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra), it is quite clear from the said question raised by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds of the assessee's appeals. 7.6. In fact the ld. CIT(A) in Para 4.32 and 4.33 as has discussed in detail [which is reproduced in Para 4.3 of this order) that No incriminating materials was found and following Jurisdictional High Court judgement in the case of Saumya Construction held that the addition made by the Assessing Officer cannot be survive. Thus the Ld CIT[A] upheld that the assessment order is against the provision of section 153A of the Act and deleted all the additions made by the Assessing Officer. 7.7. We are in full agreement with the findings of the Ld. CIT(A) on this count. Therefore Ground Nos. 4 to 6 raised by the Revenue are found to be devoid of merits and the same are hereby dismissed. 8. Ground no. 7 is on the quantum of addition made by the Assessing Officer, as we have already held that the assessment order itself is time barred and quashed the assessment order, the additions made thereon is consequential in nature. Therefore this ground does not require any separate adjudication, hence the same is also dismissed. 9. Ground no. 8 is general in nature. Hence no adjudication required, hence the same is also dismissed. 10. In the result, the appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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