9911796707
TMI Blog2000 (12) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... of such notice along with the copy of the acknowledgement which has not been furnished and, therefore, the proceedings are without jurisdiction. This Hon'ble Tribunal may, therefore, be pleased to hold the order passed by the AO under s. 158BD r/w s. 158BB(1) of the IT Act is without jurisdiction and bad in law and the same be annulled. 2. In law and in the facts as well as the circumstances of the appellant's case, the Dy. CIT (Asst.), S.R.-11, Ahmedabad, grossly erred in making the addition of Rs. 3.61 lacs as income from undisclosed sources in the form of investment in Flat No. 201, Moin Apartment, Ahmedabad, when no such addition is called for. In doing so he has failed to appreciate the following: (a) The AO has grossly failed to appreciate the cogent evidence produced by the appellant in the form of certificate from the employers, transfer of amounts from Dubai through banking channels, etc. which has been ignored and addition made. This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification for making the addition of Rs. 3.61 lacs and direct the deletion thereof. 3. In law and in the facts as well as the circumstances of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employers, transfer of amounts from Dubai through banking channels, the bank certificates, etc. in support of the sources of these deposits. (b) He has further grossly erred in ignoring the evidence in the form of statement of the appellant recorded by the Asstt. Director of Income-tax regarding the source of investment in FDR. (c) He has further failed to appreciate that the appellant came to India permanently and the savings in Dubai were transferred to India in NR NR a/c through banking channels. This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification for making the addition of Rs. 72,21,040 and direct the deletion thereof. 5. In law and in the facts as well as the circumstances of the appellant's case, the Dy. CIT (Asst.), SR-11, Ahmedabad, has grossly erred in making the addition of Rs. 19,55,335 for the alleged estimated income on FDR at 15 per cent p.m. without bringing any evidence to that effect when no such addition is called for. This Hon'ble Tribunal may, therefore, be pleased to hold that there was no justification for making the addition of Rs. 19,55,335 as the interest on FDRs in NR NR account is exempt under s. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., on 31st Oct., 1996, and also furnished a copy of the acknowledgement at p. 8 of the paper book. The learned counsel appearing on behalf of the assessee did not dispute the correctness of this fact. The notice under s. 158BD was thus issued and served on 31st Oct., 1996. 4. Shri K.R. Dixit, the learned counsel, submitted that the assessment in question relates to 4 items of investments mentioned in para 3.1 of the assessment order which can be briefly described as under: Rs. (1) Investment in house property at 201, Moin Apartment standing in the name of the assessee-Smt. Farooq F. Desai 3,61,000 (2) Investment in various shares-certificates found and seized during the search operation 1,00,05,687 (3) Sources of deposits in various NR NR accounts 72,21,040 (4) Source of investment in Maruti Esteem Car 3,00,000 5. Shri Dixit, the learned counsel, submitted that the additions in respect of investments mentioned at Sl. Nos. 1, 2 and 4 above have been made in the hands of the appellant on protective basis. The addition in respect of investment mentioned at Sl. No. 3 namely—deposit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs could be made only by non-residents and the amount had to be deposited in foreign currency in an approved manner. The amount so deposited in NR NR a/cs have their origin out of income of the assessee derived during her stay in Dubai. Shri Dixit submitted that he has submitted various documentary evidence in the paper book to establish a nexus between the funds accumulated by her from her foreign income with the deposits made in the NR NR a/cs. He also submitted an application dt. 10th Nov., 2000, requesting for admission of additional evidence in relation to the sources of making deposits in NR NR a/cs and also sources of other investments made in her name. 8. Shri Dixit then drew our attention to the application dt. 10th Nov., 2000, for admission of additional evidence. In this application it has been submitted that the assessee has informed the learned counsel that original documents were filed before the SAFEMA authorities and their copies were filed before the AO during the proceedings. However, the appellant has no proof of filing, since no receipts were given. The documents appearing at Sl. Nos. 8 and 15 submitted in the paper book have been referred to in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are reproduced hereunder: "Submission of behalf of the Department: I. Assessment without jurisdiction The assessee has challenged that she did not receive any notice under s. 158BD and therefore, the proceedings were bad in law and without jurisdiction. In this regard, kind attention in drawn to the proof of issue and service of notice as per the copy of notice issued on 31st Oct., 1996, in the name of the assessee and served upon her on the same date which is enclosed at p. 8 of the Dept.'s paper book submitted before the Hon'ble Tribunal on 5th Oct., 2000. II. Investment in house property at 201, Moin Apartment for Rs. 3,61,000 The addition was made in the hands of the assessee on protective basis and in the hands of Shri Farooq Ibrahim Desai, husband of the assessee on substantive basis. Hon'ble Tribunal in the case of husband has dismissed the appeal and therefore said issue has reached a finality in the case of Shri Farooq Ibrahim Desai. III. Addition of Rs. 1,00,05,687 on account of investment of shares In respect of this item also, substantive assessment was made in the hands of Shri Farooq Ibrahim Desai husband of the assessee and protective asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales for a particular year and commission earned by the assessee @ 1 per cent on such sales. (iv) The certificate dt. 24th Feb., 1997 which indicates the payment of US $ 1,90,000 does not bear signature of any responsible person of the said concern, TANB Trading Est. (v) On the one hand, the assessee states that she got US $ 1.9 lakhs (Rs. 38,21,000) on her retirement from the said concern which were put in Citi Bank from time to time, the concern TANB Trading Est. in their certificate certifies that on her retirement in the year 1990 she was paid US $ 1,90,000 in lieu of her share in the profits of the firm. (vi) Citi Bank Dubai confirms in their letter dt. 8th Dec., 1995 that they had FD NR deposit in her name for the period from 29th Dec., 1990 to 21st Jan., 1993. She retired from the firm on 31st Jan., 1990. There is a huge time gap of almost 10 months and assuming for a moment that TANB Trading Est. paid her this sum, the question which arise are: 1. When did the TANB Trading Est. made the payment? 2. In what mode the said payment was made? 3. Where was the same deposited? 4. Copy of bank a/c if any, if the money was lying in a bank. 5. In her bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on protective basis, it in fact amounts to addition made on substantive basis and the assessee is entitled to explain on merits that such additions are patently wrong and that the assets really belong to her and those were acquired our of her explained sources. Such assets belonging to the assessee which were acquired by her out of her hard earned income cannot be considered as assets acquired out of undisclosed income/undisclosed sources. 14. Sec. 158BD is reproduced hereunder: "158BD. Undisclosed income of any other person.—Where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against such other person and the provisions of this Chapter shall apply accordingly." A plain reading of this section clearly shows that the said provision can be invoked only if the AO is satisfied that any undisclosed income belongs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the undisclosed income belongs to someone else, which may happen at any point of time after the material is seized pursuant to the authorisation either when the statement is recorded under sub-s. (4) of s. 132 or even thereafter when the raided person is required to file the return in Form No. 2B in cases which fall in Chapter XIV-B and the AO may be satisfied that some part of the undisclosed income really does not belong to the raided person who is being proceeded against and that it belongs to some other person that the occasion arises for the first time to proceed against such other person. Thus, the satisfaction which the AO is required to reach for proceeding against such other person as contemplated by s. 158BD of the Act is entirely a different matter from the reason to believe that the designated authority is required to have on the basis of the information in his possession for the purpose of issuing an authorisation for search and seizure under s. 132(1) of the Act." At page 96, the Hon'ble Gujarat High Court has observed: "Once the satisfaction under s. 158BD is reached by the AO, there would be no valid reason for him to delay the issuance of the notice which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to her by her father-in-law, Shri Ibrahim Desai. These facts have been mentioned in para 3.4 of the assessment order. The assessee explained that one Honda Car was brought by her from Dubai in August, 1989. A copy of bill of entry dt. 1st Aug., 1989, is sought to be adduced as additional evidence to support this fact. This car was sold and the sale proceeds were claimed to have been deposited in her bank a/c with Dena Bank. To corroborate this contention copy of bank statement with Dena Bank has been produced which inter alia shows that a deposit of Rs. 6 lacs was made in August, 1989, in assessee's aforesaid bank a/c. On the basis of this circumstantial evidence the assessee desires to prove that part amount for purchase of flat was paid out of her own funds accumulated in the said bank account. The balance amount was claimed to have been given by way of loan by assessee's father-in-law Shri Ibrahim Desai for purchase of the said flat. In order to support this contention the learned counsel referred to the copy of affidavit of Shri Ibrahim Desai dt. 17th April, 1997, which according to the assessee was furnished before the AO but no proof or acknowledgement is available with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that he received cheque No. 633128 of Vijaya Bank for Rs. 2,43,433 on 3rd October. This amount has been debited in the overdraft bank a/c No. 2080 by Vijaya Bank on 1st Oct., 1994 with the same cheque No. 633128. Like this, the learned counsel explained a direct nexus between the cheques drawn on overdraft a/c on Vijaya Bank and the cheques acknowledged by the share-broker. The assessee has also submitted a certificate dt. 19th Sept., 1996 issued by the Chief Manager, Vijaya Bank, certifying that the appellant is having overdraft a/c No. 2080 with them against the security of NR NR RD (VCC) deposit No. 20/1993 dt. 10th Nov., 1993, which is one of the accounts mentioned in para 3.6 of the order containing details of deposits in NR NR a/c aggregating to Rs. 72,21,840. The deposit in NR NR (VCC) a/c No. 20/93 made on 10th Nov., 1993 was Rs. 38,20,040. Shri Dixit submitted that investment in shares standing in the name of the appellant were acquired out of funds drawn from the aforesaid overdraft a/c. 20. As regards the source of Maruti Esteem car, the learned counsel drew our attention to the documents submitted at p. 37 of the paper book. This document is a copy of purchase or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, transfer of foreign currency through approved banking channels, etc. The genuineness of such documents can be verified from the records of the concerning banks or by requiring the assessee to produce further corroborative evidence. The evidence as sought to be submitted by way of additional evidence goes to the root of the matter and is considered necessary for determining the question as to whether the assessee is the real owner of all the assets in question and whether such assets were acquired out of her own funds and income and whether such sources are adequately explained by necessary and reliable evidence and material or not. During the course of hearing Shri Dixit had also stated that final order of SOFEMA authorities is also still awaited. The assessee also stated in the application dt. 10th Nov., 2000, that copies of these documents were filed before the AO, but the appellant has no proof of filing since no receipts were given. The learned Departmental Representative has not submitted any comments on this factual statement given in assessee's application dt. 10th Nov., 2000. Let us now examine the ratio of the decision cited by the learned counsel. The Tribunal, Patna B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents would enable the Tribunal to pass orders effectively and their absence might not unfold the actual controversy and lead to a miscarriage of justice. This additional evidence had to be admitted in evidence." 24. On a careful consideration of entire relevant facts and the decisions relied upon by the learned counsel, we are of the view that it would be necessary in the interest of justice and fairness that the additional evidence sought to be adduced by the assessee should be entertained. After entertaining the application for admission of additional evidence, it would be necessary on the facts and circumstances of the present case to set aside the order of the AO and restore the matter back to his file for making a fresh assessment de novo after allowing the assessee to furnish necessary evidence before him. The AO will also be entitled to conduct further investigation, as he may consider proper. The AO will also ascertain from the SAFEMA authorities about the final decision that might have been taken by them under the relevant provisions of law. The learned counsel had also relied upon circular issued by the R.B.I. recording N.R. N.R. Rupee Deposit Scheme and Notificat ..... 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