9911796707
TMI Blog2016 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... otice of hearing could be affected on the assessee. Under the circumstances, the matters being pending for long, the hearing was proceeded with ex parte qua the assessee, so as to dispose the appeals after hearing the party before us. However, as subsequently some clarifications were required, the appeals (along with the connected matters) were posted for 17.2.2016. A junior counsel, Shri Ramanath Prabhu, for HSA Advocates, appeared, and sought adjournment. No vakalatnama in his favour stands filed. It deserves to be noted that the hearing in these matters, along with the other connected matters, took place in parallel over a period of three months, wherein counsels from both the sides appeared and made representations. It was, accordingly, conveyed that it was not possible to grant adjournment at this stage, even as the court was prepared to hear the parties on a day to day basis. Time was sought for filing written submissions, which was granted. Written submissions were accordingly filed on 22.2.2016 (copy on record), with the copy to the other side. 3.1 Written submissions, separately for each year in appeal, filed along with the application for admission of additional ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laundering Act, 2005 ('PMLA' for short), registering an Enforcement Case Information Report (ECIR) (bearing no. ECIR/02/M2O/2007) against the appellant on 08.1.2007. The ECIR relied heavily on a letter dated 08.12.2006 and certain statement of account stated to be received by the ED from the Income-tax Department. In pursuance to ECIR, the ED approached the designated court u/s.57 of PMLA, seeking issuance of Letter Rogatory (LR) to various countries, being USA, UK, UAE, Singapore, Hongkong, Switzerland for gathering information regarding the alleged financial transactions by the applicant. The Hon'ble Court issued LRs addressed to the competent authorities of the said countries. The Embassy of India at Berne, Swizerland vide a 'Note Verbale' dated 12.1.2007 communicated the LR to the competent authority at Switzerland, giving specific reference to the letter dated 08.12.2006 (supra), further requesting it to block the amounts available in various accounts in Switzerland, as well as furnishing details of their transcripts. Vide fax dated 15.1.2007, the said competent authority, on the basis of a domestic enquiry of the said documents, informed the Embassy of India at Switzer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except one page incorporating transaction dated 08.12.2006 of deposit of 8 billion dollars, which was forged. The details of the documents prayed for admission by way of additional evidence, are as under: S. No. Particulars Page No. 1 Departmental Petition dated 01.6.2015 (*) 1 to 3 2 Copy of letter received from FT & TR, CBDT, dated 26.12.2013, along with its enclosures, by CIT(Central)-1, Mumbai 4 to 7 3 Copy of letter of Directorate of Enforcement dated 15.11.2010 along with enclosures, to CIT(Appeals). 8 to 19 4 Copy of letter dated 24.4.2008 of CIT, Central-1, Mumbai, to DCIT, Central Circle- 2, forwarding information in the case of Hassan Ali Khan along with its enclosures 20 to 30 (*) not an evidence, but an application in its respect. 3.3 In our view, we shall be required to, and would accordingly, discuss the admissibility, in seriatim, of each of the documents prayed to be admitted by way of additional evidence. So, however, before we proceed to do so, it may be relevant to discuss the general considerations that have a bearing in the matter as well as the Revenue's objections, which are again not document specific, but on a broad, general basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.' The rule places a total ban on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances: i. if the tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause; or ii. if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them. (emphasis, ours) On the existence of either of the circumstances mentioned above, the tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inherent lacuna which it has itself discovered (refer pgs. 713- 715 of the reports). In this context, it would be useful to refer to the constitutional bench decision in K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, wherein it was observed in the context of the provision of Order 41, Rule 27(1) of Code of Civil Procedure, 1908, to which r. 29 is similar in terms, that the appellate court has the power to allow additional evidence not only where it requires such evidence to enable it to pronounce the judgment but also for any other substantial cause. There may well be cases where even though the Court finds that it is able to pronounce the judgment on the state of record as it is, so that it cannot strictly be said that it requires additional evidence to enable it to pronounce the judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence for any other substantial cause under Rule 27(1)(b) of the Code. This aspect was again emphasized recently by the Hon'ble Court in Ibrahiam Udd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15.01.2007, purportedly by the Swiss Federal Government in the Department of Justice to the Indian Embassy, Berne. The same is admitted. Even though the designation of the person, whose name is specified at the place marked for signature, which is generally mandatory in official communication, is not stated. This may perhaps be due to the fact of the communication being by fax. c) This is the copy of the report dated 30.10.2007, marked 'confidential', by UBS AG to Swiss National Bank on the basis of an internal inquiry. The said letter is clearly in respect of the assessee and his alleged relationship with UBS, with which he is claimed to be holding huge amounts, or having banking relationship with. The same, as claimed by the assessee per his written submissions and as stated in the letter dated 28.12.2007 by UBS AG to the ED (which is a document listed at point (d) below), stands communicated to the ED vide the said letter. The same is admitted. As regards the report dated 29.10.2007 by Deloitte AG, which is in fact an accompaniment to the report dated 30.10.2007 by UBS AG, the same is an unsigned document. The same is not admitted. The gist of the same though gets inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted. In fact, these documents ought to have been confronted to the assessee, and relied upon by the ld. CIT(A) as well. 4. We, next, proceed to adjudicate the assessee's appeals. We shall be required to, however, consider the assessees' Grounds 1 and 2, common for all the years, before we may take up his other grounds, which are on the merits of the various additions made to the returned income. This is as the same raise fundamental issues. Vide Ground 1 (for all the years), the assessee impugns the assessment/s as void ab initio in-as-much as there was no service of notice under section 143 (2) within the stipulated period of 12 months from the end of the month in which the returns of income in response to notices under section 153 A were filed. In this regard, the ld. Departmental Representative (DR) would, at the outset, draw our attention to Annexures 1, 2 to the assessment order for all the years, even as one would suffice. Annexure 1 is an Acknowledgement of the notice under section 153A (for AYs. 2001-02 to 2006-07), which is at the assessee's Mumbai address, duly receipted. The service of the notice/s is in fact not disputed, with the assessee furnishing retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment, so that there had been violation of the principle of natural justice, vitiating the assessment/s, which aspect has not been appreciated by the ld. CIT(A). The ld. CIT(A), before whom, again, this aspect was raised, has discussed this at para 10 of the impugned order, observing the A.O. to have allowed sufficient opportunity to the assessee, concluding that the assessee's contention in this regard is general in nature. We, again, observe no specific contention in this regard in the assessee's written submissions before us. Per the same, it is claimed that the report of an internal enquiry by UBS AG, which was furnished to the ED, was not confronted to the assessee. The same having not been relied upon by the Revenue, the assessee's plea is not maintainable. On the contrary, we find abundant reference to the various opportunities afforded by the A.O. to the assessee, as well as of being provided with all the materials in his possession, including the incriminating material seized from the residence of Shri Kashinath Tapuriah (KT), a close associate of the assessee. The assessee has been at each stage duly confronted with the materials and/or evidences; the A.O. issuing a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed on the basis of suspicions, but only where it is proved beyond doubt that the same was generated by the assessee. The presumption of truth u/s.292C shall apply to documents found in search, and not to that provided by ED. The presumption is, in any case, rebuttable, which depends on the nature of evidence, so that in a given case mere denial may discharge the onus, i.e., depending on the facts of the case (refer para 12 of the impugned order - the assessee's submissions, which are common for Grounds 10 to 15 before the ld. CIT(A), with that under reference being Gd. 10). The addition stood considered vide para 13 (pgs. 24-31) of the impugned order. No evidence had been relied upon without the relevant document/s being given to the assessee, calling for his explanation. The addition had been made not because the ED had informed the Revenue about the evasion of tax, but on account of the inability of the assessee to explain the documents, which clearly indicate evasion of tax. It is the A.O. who is required to be satisfactorily explained, and had he been, there would have been no addition, i.e., irrespective of the status of the investigation by the ED. No evidence and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, Hassan Ali Khan and Kashinath Tapuria, acting together, as true and lawful attorneys of the company. DPB pg. 32 is a notarial certificate dated 14.03.2001 in its respect (DPB refers to the Department's paper-book for A.Y. 2000-01). Then, there is an Agreement dated 07.8.2001 between the assessee and KT, made at Dubai, also noted by the ld. CIT(A) (refer pg.26 of his order). The same was recovered from the residences of both, i.e., from the Pune residence of the assessee (pg. 18 to Ann.5 to Panchnama dated 5.1.2007) and the Kolkata residence of KT (pg. 22 of Ann.7 to Panchnama dated 6.1.2007), which clearly states of the said two companies being the assessee's companies. The said agreement, being of prime relevance, is enclosed as a part of this order (as Ann. A). The assessee has also not denied the statement of account as at 13.3.2001, or of its reflecting the profit for the year. The assessee seeks to impugn the inference of a close nexus between the said companies and himself, which is in fact self-evident from the facts eminent from the record; he having, rather, received substantial sums by way of income there-from in the past (1985-89), which were again not disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compiled on the basis of available documents and related statements provided by you.' [emphasis, ours] The same is in fact prepared by the Auditors only at the assessee's instance, and forwarded to one, Mr. Grossman - who (Markus Grossman, as the UBS report dated 30/10/2007 clarifies, is the assessee's relationship manager - para 3.2/pg. 2 of the report) vide fax dated 18.9.2001 (refer: DPB/pgs. 50-51 of DPB for A.Y. 2000- 01). On what basis, then, one wonders, the asseessee, assails the inference of either a nexus with these companies or having earned income there-from. Rather, the division of profits between him and KT, vide agreement dated 07.8.2001, is also that earned in and to be transmitted to, their companies. The assessee further states of having not received any commission, consultancy fee or any other income in the past (1985- 1989). The reference to the letter dated 17.9.2001, as would be apparent, is only toward establishing a close and clear nexus between the assessee - who in the Agreement declares these to be 'his' companies, i.e., 'owned' by him, and the said companies. The said period, it is to be noted, falls within the period 1983 to 1990, mentioned in the Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein? What is the nature of the services provided by the assessee in the past, for which consultancy fees and commission had been charged and paid? (refer para 8.1, Annexure B to this order). Are the invoices, as listed in the statement, raised or to be raised in respect of such like charges? If the amount is due from these companies, which are separate companies, why is a single statement drawn? Is the amount already billed accounted for in the books of the corresponding companies? Was the money received, toward which bank account particulars are also specified? The assessee has maintained complete passivity in the instant proceedings, refusing to divulge any information. The assessee's name is conspicuous by it's absence in the document, so that the only link with the assessee could be the bank account specified, as well as the consultancy fees received, similarly, in the past. Also relevant would be the place, circumstances, and the proceedings under which the document was recovered by ED. The information being received from ED, it would surely have probed the matter and, if so, the nature of its finding, if any, may be relevant. The matter is, clearly, factually indetermi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions. In fact, some such documents support and complement each other, providing corroboration, as well as establishing their truth. Reference toward the said discussion is drawn to paras 11.1 through 11.5 (pgs. 9-11) of the assessment order. The document clearly established funds to that extent with the assessee on that date (16.7.2000), the source of which had not been satisfactorily explained. The said amount was, accordingly, assessed as 'income' as unexplained money (deposit). The nature of the assessee's arguments in support and toward its case before the ld. CIT(A) stand already discussed at para 6 above. 10. Before us, the assessee per its written submissions for the relevant year (WS-1) (pgs.11-13) relies on the communication dated 30.10.2007 by UBS AG to the Head of the Department, Swiss National Bank. The same clearly states the assessee to have three accounts with it, opened only in the year 2001, bearing numbers 206-790786, 206-789758 and 206-794786, the third being in the name of his wife (RHAK), with the assessee holding a power of attorney (in his favour) in its respect. The assessee's accounts, opened on 30/7/2001, were never funded and there were no tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Kashinath Tapuriah - account No. 760001, with your Bank in Zurich. This may please be treated as my instructions, and I request you to take immediate action and confirm.' Thanking you, Yours Truly, HASSAN ALI KHAN' The Transfer Instruction is on the letter-head of 'Hotel Inter-Continental', Dubai, bearing its postal address, telephone and fax numbers. The assessee has not denied having signed the said document (i.e., the original copy, meant for being transmitted to the bank) or of being not in Dubai at the relevant time (July, 2000), or on 16/7/2000 specifically (which would also stand to be confirmed from his passport) and, thus, in fact tacitly admits to having instructed his bank in the manner stated. We are conscious that the document was not found during search (or survey) under the Act, for the presumption of section 292-C to apply thereto. The same has been provided to it by ED, and there is nothing on record to indicate that it has been requisitioned u/s.132A. In fact, the ED itself joined the search proceedings undertaken by the Revenue on 05.1.2007 (refer statement of facts by the assessee before the first appellate authority). The document, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, to deal with the property at 10A, Prithviraj Road, New Delhi (pg. 98 of Annexure A1) was found, which also shows the assessee to be well connected. Signed blank papers by the assessee were also found from the possession of KT (pages 68-70/Annexure A1). Again, a loan of Rs. 5 crores from assessee (lender) to RM Consulting Ltd., Kolkata (borrower), a company of KT, was found in search (pgs. 71-94 of Annexure A-1). Further, though the transfer instruction under reference predates the said Agreement dated 07.8.2001, is it that the monies were sought to be transferred to KT in satisfaction of the obligation recognized, in writing, subsequently, by the said Agreement? We say so as the agreement is only with a view to settle the accounts between the assessee and KT, so that pending final settlement, transfer could take place, i.e., is a distinct possibility. 11.2 The assessee claiming that no transfer of funds had, however, been effected, would be of little moment in-as-much as the addition is toward unexplained money or bank deposit. True, the same may be lying in his account, in whole or in part, from an anterior date, falling in a preceding year. However, it is for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er PMLA against the assessee, which are - as per the assessee, and which is not disputed by the Revenue - under-way. Cleary, the charges under PMLA shall only obtain where the assessee is found to have maintained bank account/s abroad, holding substantial sums therein. That is, the very basis on which the amount is sought to be assessed as income in his hands in-as-much as the same has not been disclosed or satisfactorily explained as to its nature and source of acquisition. The question that, therefore, arises is whether it would be proper to, pending the proceedings under PMLA, which in fact the Revenue is only aware of, conclude the proceedings under the Act. The assessee has also sought to raise this issue per his written submissions, stating that the ED concluded its initial investigation only in 2011, filing a complaint against him (with the Hon'ble Sessions Court, Greater Mumbai) on 1/5/2011, so that the assessments were liable to be set aside to this score alone. The proceedings under the Act are statutory and independent proceedings, to be decided on the basis of the materials and evidences brought on record as well as the explanations furnished, i.e., on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BS'. And is clearly in consequence to the details sought by the GOI (through proper channel), as a sovereign, with regard to the activities of one of its nationals in that country. Surely, GOI is concerned with the underlying activities resulting in the financial flows in-sofar as they relate to or have a bearing on the criminal and civil (including tax) liability of that person as per the laws of India. The same, along with the report dated 29.10.2007 by Deloitte AG to the Bank, has apparently been conveyed by it to ED vide its' communication dated 28.12.2007, as the enclosures to the said letter to ED indicate, and which is also one of the documents sought to be adduced by the assessee as additional evidence. The Deloitte report makes it abundantly clear that the information provided (by UBS) was not complete (refer paras 2.14, 3.3 and 3.5 thereof). Para 3 of the said report clearly brings out the scope of the work performed and its limitations. In respect of a fax dated 05.4.1997 by one, Hassan Ali Khan (from Account No. 710.085) to Account No. 760001 (of KT), it states that there is no evidence if the said person was the same Hassan Ali Khan who is the subject of the report (pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; his accounts. The Agreement dated 18.07.2001 with M/s. Clamai AG (refer paras 20- 22 of this order) was facilitated by the Bank, with meetings in its respect being also held at the Bank premises itself. Complete reliance therefore cannot be placed on the bank's said report. In fact, the transfer instructions or reference to accounts have been found during search where the reference to the account is not by name/s but in code/s. We may, if only to demonstrate this, refer to the three (3) transfer instructions, which are the subject matter of Gd. 6 for AY 2002-03 (at para 25 of this order), all the three mentioning only the (beneficiary) account number, with one being code named, or euphemistically named, as 'Black Prince'. The said name, which also appears in TI for USD 72 M (refer para 30.1), has been found by the ld. CIT(A) to be of 'Soir Contracting and General Trading Co., WLL Zurich, i.e., of an existing company, also confirming the account number, which is the same for both the TIs (refer page 37 of his order for A.Y. 2003-04). The Bank recognizes the account holder only by the code name, providing access upon successfully navigating through a filtering process, includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said report, for the reasons afore-discussed, cannot be considered as completely reliable. In fact, a notarized statement by the assessee (by and before Nicholas Ronald Rathbone Smith, Notary Public of London, England on 30/6/2003) at London (provided by ED), referred to in the Revenue's petition dated 01/6/2015 (refer para 3.2) - a part of the record, being in fact annexed to the assessment order for quite a few years (AYs 2005-06 to 2007-08/Ann. 13 for AY 2005-06), is most revealing in this regard, and annexed to this order as part thereof (Annexure C). The same charts or transverses the assessee's relationship with UBS, commencing with the opening of an account with UBS, Singapore (UBS-Sin) with an amount of USD 500,000 in 1982, up to the date of the statement. Further, that the account had a balance of USD 560 million in December, 1997. Dr. Peter Weilly (wrongly spelt as Dr. Walli in the TI dated 16/7/2000), who also visited India several times during the period the assessee could not travel outside India, is stated to be the assessee's portfolio manager, and Kashinath Tapuria as his advisor. The account was later moved to UBS AG, Zurich, Switzerland, as first suggest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged to an Indian national (though since closed) was issued without there being any account of the issuer of the instruction at the relevant time, is fatuous, if not also farcical. The assessee has, as it transpires, issued not one but several transfer instructions, from time to time, which have been found as a part of the seized material from his residences, or that of KT at Kolkata, searched simultaneously. The information/TIs provided by ED, who joined forces with the Department, besides being equally reliable, are corroborative. The same thus have strong evidentiary value, quite apart from s. 292C, which shall apply to all the documents found in search, so that their contents, unless shown otherwise, are to be regarded as true (ref: Surendra M. Khandhar v. CIT [2010] 321 ITR 254 (Bom)). The beneficiary is clearly specified, confirmed by the Revenue as an existing person, with complete bank particulars, again, found as correct. That, therefore, there is an account/s, even if unspecified, with reference to which the transfer instruction was issued by the assessee, is the only reasonable inference that emanates in the facts and circumstances of the case. The premise of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the funds in his account/s. The notarized statement dated 30/6/2003 (refer para 11.5), as apparent, does not throw any light on this aspect, except that HAK had access to huge funds and, besides investments, was also called upon to finance projects. The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law. The said findings shall, inter alia, address the issues raised and considered pertinent by us. Needless to add, the assessee shall be allowed a reasonable opportunity of hearing. We decide accordingly. 13. Ground 7 is again in respect of a transfer instruction by the assessee to UBS AG, forwarded to the Revenue by ED. The same, dated 09.03.2001, is for the issue of pay orders favouring Steelmet Pte Ltd., Singapore (for the USD 1,500,000) and one, Mr. S.C. Sharma (Singapore Passport No. S25804301) for USD 5,00,000, in the form of bank draft and traveller's cheque respectively. The same, annexed by way of Ann.13 to the assessment order, bears the full signature of Mr. S.C. Sharma and, as it appears, initials of the assessee, whose case remains the same as in respect of transfer instruction dated 16.07.2000 fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's own account with a different bank, and at a different place. The SWIFT codes are correct. The bank account numbers are also in line with the International Banking Account Numbering system, adopted by most countries. Though therefore the document is complete in all respects, with the assessee having not offered any explanation, we yet eschew determining the issue having regard to the UBS AG report dated 30.10.2007. The matter shall, for the same reasons, and with like incidents, stand set aside to the file of the assessing authority for fresh adjudication (also refer paras 9 to 12). 16. Ground 9 is in respect of confirmation of the addition for Rs. 7,00,000/- on account of a gift to son. The assessee per his statement on oath dated 05.01.2007 admitted to have gifted a car (Honda City) to his son (Syeed Mohamed Sameer Uddin Ali Khan) at Hyderabad, transferring funds by telex transfer in December, 2000. It was further stated that as the said gift had not been disclosed, the source of which is his business income, the same shall be disclosed to the Revenue. The same being not returned, was assessed as his undisclosed income. In appeal, it was found by the ld. CIT(A) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready disclosed by the assessee toward house-hold and/or maintenance expenditure for self and family (refer para 10 of the said order). The assessee, who had shifted from Hyderabad to Mumbai and Pune (having and maintaining residences at both these places), obtained residency permit for, shifting his base to, Dubai, UAE and is operating there-from, as noted by the AO in his orders, as e.g. para 2.1 of his order for AY 2001-02. The TIs dated 16/7/2000 and 23/7/2000 on UBS AG, Zurich have been issued from Dubai; from Hotel Intercontinental, Dubai, stated as his camp office. Then, the assessee has issued a notarized statement on 30.06.2003 at London, wherein he admits to have visited Switzerland in February, 2001. The same would entail, apart from travel expenditure, boarding and lodging costs, far in excess of that inures while staying at one's residence in India. The assessee is also suffering health problems and undergoing treatment from leading hospitals and clinics at Pune/ Mumbai, as evidenced by the medical reports filed by him and his wife, RHAK, in appellate proceedings, also entailing expenditure in tidy sums. We, accordingly, consider the assessment of living and life styl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition comprises two sums, as under: a) Transfer of USD 500,000 to the assessee by one, Philip Anandraj (PA) worked out at Rs. 243.80 lacs; b) Purchase of property in Switzerland for CHF (Swiss Franc) 27,999,000, i.e., INR 132,04,32,840/- (Rs.13204.33 lacs). The specific document in relation thereto is Bundle No. 7 of Annexure A dated 05.1.2007 to Panchanama dated 6.1.2007 (containing 29 pages), found and seized from the assessee's Pune residence. Page 1 contains the details of, among others, the transactions of loan/s of USD 500,000 by Philip Anandraj to the assessee. A note captioned "INDIA" mentions that the State Govt. of Kerala was willing to donate 2,50,000 sq. mtrs. of tea plantation to Philip Anandraj (PA) to set up an 'International Centre for Tourism Research Studies' (ICTRS) in Kerala, where he is planning to set up primary and secondary schools for street children and trust called "Dyveke". Page 2 is a signed document, in original, of the account details fax message dated 21.9.2006 addressed to the assessee, from PA (bearing Fax No. 00442074917476) for USD 1,600,000 to be transferred to his (PA's) account (complete details specified). Page 3 is the fax confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition being confirmed thus, aggrieved, the assessee is in second appeal. 21. The assessee's written submissions for the year (WS-2), apart from making reference to the response by various Swiss authorities/UBS, with (through) whom inquiries were initiated by GOI, already discussed in the earlier part of this order, refer to this aspect of the assessment at Part C thereof. Though PA had raised a bill (dated 05.4.2001) on the assessee, no payment was made by the assessee, as confirmed by PA vide his statement dated 10.3.2011 u/ss. 50(2) and 50(3) of PMLA, categorically stating that in October, 2006 he came to India to recover his money from HAK, who owed him to the extent of CHF 500,000. The amount due was in swiss franc and not USD, as assumed by the Revenue. No addition could under the circumstances be made, i.e., pending the completion of the investigation by ED. The ld. DR, on his part, relied on the orders by the authorities below, stating that no substantive explanation had been adduced by the assessee in reply at any stage. 22. We have heard the party before us, and perused the material on record. We may, firstly, clarify that we find no merit in the assessee's s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made. The invoice for USD 16 lacs includes remuneration up to August 2006, which remains, similarly, unpaid since April, 2001. No addition qua remuneration (at USD 2 lacs p.a.) paid to PA has been made by the Revenue for any year. This corroborates the statement of PA - who was found staying at his Pune residence at the time of search on 05.1.2007, to the Revenue that he came to India in October, 2006 only to pursue the assessee for the payment of his dues. By all counts, therefore, the payment of commission, to any extent, has not been made. It is only where the fact of payment is established that the Revenue can, in the absence of a satisfactory explanation as to its source by the assessee, assess it as income by way of unexplained expense and/or investment. As such, notwithstanding an evasive reply by the assessee in the proceedings before the Revenue, disclaiming the transaction, which it tacitly admits when he relies on the statement of PA before ED (per his written submissions), confirming non-payment of his dues by the assessee, no addition could be made on the basis of the material on record. We decide accordingly. (b) The Agreement dated 18.7.2001 is signed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances be issued at this stage, and the matter clearly requires being remanded back for the purpose. The matter shall, accordingly, stand to be set aside to the file of the A.O., who shall re-adjudicate afresh, allowing the assessee proper opportunity to present his case, confronting it all the materials it wishes to rely upon, particularly with regard to the payment aspect of the matter, and decide by issuing definite findings of fact. Reference in this context may be made to the decision by the Hon'ble Apex Court in the case of Kapurchand Shrimal vs. CIT [1981] 131 ITR 451 (SC), wherein it stands explained that unless forbidden from doing so by the statute, the tribunal, as an appellate authority, has the jurisdiction and is duty bound to direct the assessing authority to make fresh assessment in accordance with the law. That was a case where there was a clear violation of the procedure prescribed by law, so that the tribunal set aside the assessment, while in the present case all that we have found is that the necessary aspects of the matter have not been enquired into, so that the matter requires to be examined afresh. We decide accordingly. 23. Ground 5 is in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compilation, referred to earlier, which is an invoice by PA on HAK (in substitution of that dated 13.11.2005) for USD 16 lacs, does not bear reference to this expenditure at all, implying its payment. The only reference to expenditure in this, later invoice is for USD 4 lacs, which is in respect of an expense listed (of August, 2001). The document being found in the course of search would have to be regarded as true. The assessee, being in Dubai in July, 2000 (refer para 9 of the order), is found to be staying at Zurich, Switzerland during the relevant previous year, entered into agreements, as with PA (dated 05.4.2001) and Clamai AG (dated 18.7.2001), transacting businesses and entering into deals toward investment in real estate, companies, etc., even going to the extent of appointing a consultant (PA) at an exorbitant cost to represent him internationally. The bank accounts with UBS, Zurich, as per their report dated 30.10.2007, were opened on 30.7.2001. He has also been found to have executed an Agreement at Dubai (with KT, dated 07.8.2001/Annexure A). UBS AG, Zurich, per its said report, confirm him having visited it personally on 15.8.2001. Clearly, the assessee has int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was assessed as unexplained deposit, adopting the conversion rate, as it appears, as at the relevant date/s - the assessee raising no question in its respect. In appeal, the same stood confirmed for the same reason. The ld. CIT(A), in addition, on the basis of internet searches, confirmed Remo Maurer and Patric Wipfli as being existing persons, enclosing information in their respect by way of Annexure H and M respectively to his order. Remo Maurer was accordingly found by him to be a partner in Portelet Holdings Pte Ltd., Singapore, and managing director of Portelet AG, Zurich. The issue with regard to the additions, based on transfer instructions, particularly qua which information has been received from ED, stand discussed in detail at para 9 to 12, 15 of this order. For the same reasons and considerations as stated therein, the matter shall, with like directions, travel back to the file of the A.O. We decide accordingly. Before parting, we may highlight and deal with another aspect of the matter. It may be argued that in-as-much as the hard copy of certain documents are only printouts of different documents found from the laptop of PA, who happened to be staying at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, and in foreign exchange. We accordingly consider these incidences as material for assessment (of income) on account of (unexplained) living and lifestyle expenses, made at Rs. 30 lacs, which we accordingly confirm. Needless to add, the assessee shall be allowed due credit for the amount, if any, already disclosed towards the same. We decide accordingly, and the assessee gets part relief. 27. Grounds 8 and 9 stand already decided vide paras 19 and 20 of this order respectively, disposing grounds 11 and 12 respectively for A.Y. 2001-02, even as held in the said paras, to which reference is drawn. Grounds 10 and 11 are general in nature, warranting no adjudication. We decide accordingly. Asstt. Year 2003-04 28. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 impugns the confirmation of an addition in the sum of Rs. 24,43,14,85,000/- (USD 498.50 million) as undisclosed income by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the table (at Sr. Nos. 8-10), as it appears, pertain to a single document, being the Agreement dated 07.8.2001 between HAK and KT (annexed as Annexure A to this order). 30.2 We, next, consider different amounts comprising the impugned sum of USD 498.50 million. The first amount (USD 68.50 million), as claimed by the assessee, is not qua any transfer instruction, but based on a letter dated 16.9.2002 by PA to the assessee (page 11 of the compilation). We find this is as not correct. Page 13 of the said compilation is the transfer instruction for USD 68.50 million dated 7.11.2002 (also referred to at para 10(i) of the assessment order). On further enquiry, it was explained by the ld. DR, with reference to the order by the ld. CIT(A), that Loewengraben Management AG, i.e., the named beneficiary in the transfer instruction, is the proprietary concern of PA. The swift codes have been found as correct by the Revenue. This, then, is a TI, with complete details as well as the purpose for the transfer being also available. In fact, toward the same there are supporting documents as well, for example, one of the amounts comprising the sum of USD 68.50 million is USD 15 million for Villa 'ZR' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be said that the statement was indeed followed by a TI for the said amount. Then, is the question of date thereof. Though, again, the two sums for which the TI/s are issued, i.e., USD 68.50 million and USD 72 million, being dated 07.11.2002, the presumption qua the balance 'transfers' would be of the same being around the same time, particularly considering that all the payments stand tabulated and aggregated, so that they were being considered for being executed together, this cannot be said as a fact. We are conscious that the addition is toward the amount held in bank account against which the TI/s is issued, so that the very fact that the TI was proposed implies balance in the account (on which TI is issued), making the actual issue of TI as of little consequence. At the same time, it could also be said that the TI was not issued as the assessee could not arrange the requisite funds, so that the inference of a balance (to that extent) on the basis of a proposed TI would be presumptuous. The matter certainly calls for investigation before any definitive findings can be issued, even as there is strong circumstantial evidence against the assessee. The assessee can, and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest (refer para 8.1). Do the two identical figures refer to the same profit/s, stated to be earned in the same time frame, at one place, by the assessee abroad (no such income reported in India) and, at another, through their companies, from their business operations mainly in India. Both the assessee and KT being tax residents in India for those years, with their profit sharing ratio - from their joint venture, being clearly defined, the amount ought to have been, and would therefore have been, where so, returned for those years by the joint venture company/entity. As also the income, claimed as earned by the assessee from the said companies, which assumes the character of his personal income. Much less, the same finds no reference in the accounts of any of the companies. What are their businesses, stated to be carried on mainly in India, and how did it result in accumulation of funds abroad? Is there any link between the two identical profits? How is the share of KT, at 50%, worked to USD 200M? Is there any contemporaneous proof of earning of profits, or of their yielding further returns, either in India or abroad? How has the quantum been worked out, suggesting maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther year. The A.O., who has added the purchase amount as well as qua payment in its respect, shall have regard to this aspect. We decide accordingly, and the assessee's ground is partly allowed and partly allowed for statistical purposes. 31. Ground No. 5 is in respect of an addition for Rs. 1,98,000 toward gift/s to son, Syed Mohammad Sameer Uddin Ali Khan, Hyderabad. The same, being per telex transfer/s to his SB A/c No. 561 067 with ABN Amro Bank, were assessed in the assessee's hands on the basis of the donee-son's statement u/s. 131 dated 08.1.2007, stating the source of the said sums, comprised of three amounts credited to his bank account on 24.7.2002 and 26.3.2003, as being gifts from his father, the assessee, who though confirmed the same vide his statements on oath dated 26.4.2007 and 01.5.2007, did not return the same. The addition being confirmed, the assessee is in second appeal. 31A. We have heard the party before us, and perused the material on record. The assessee's written submissions are silent on this aspect of the matter. We find no reason, in view of the undisputed facts stated above, not to confirm the addition. We decide accordingly. 32. Grounds 6 and 7 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accordingly confirmed. 37. Ground No. 5 is in respect of investment in a Mercedes car, for Rs. 23 lacs. The assessee's marriage with RHAK was solemnised on 24.12.2000. The certificate of Nikah, duly notarised, found during search, revealed the Mehr amount to be at Rs. 21 lacs. The assessee, vide his statement u/s.131 dated 19.2.2007, explained to have gifted a Mercedez car (Registration No. MH 12BP 7860), purchased in 2003, at a cost of Rs. 23 lacs, to his wife, as part of the Mehr. Though no evidence in its respect was produced before the A.O., resulting in an addition for the said amount, the assessee furnished a copy of the invoice dated 12.2.2003 for Rs. 26,84,244/- toward purchase of the car. Copy of the vehicle registration, as well as of 'No Objection Certificate' (NOC) from GMac Financial Services India Ltd. dated 16.2.2006 cancelling the hypothecation of the vehicle, were also furnished. Cash statement (for F.Y. 2003-04) was also produced to exhibit payment by cash during the year. The same, however, did not find favour with the ld. CIT(A). The loan is to be repaid per 36 Equated Monthly Instalments (EMIs) of Rs. 22,631/- each. The 11 EMIs falling during the year, worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have definitely proposed, and where unexplained, made an enhancement toward unexplained payment of EMIs falling in other years, which surely cannot be considered for the current year, so that reference thereto is misplaced. Further, even assuming to be unexplained, how we wonder the addition for the current year could exceed the EMIs paid, of course, as increased by the registration and insurance cost, if any, paid during the year. Under the circumstances, we only consider it fit and proper to restore the matter back to the file of the assessing authority to adjudicate afresh, after examining and verifying the assessee's claims, in accordance with the law, allowing the assessee a reasonable opportunity of hearing. We decide accordingly. 39. Vide Ground 6, the assessee impugns the addition on account of living and life style expenses. This aspect of the assessment stands adjudicated vide paras 18 and 26 of this Order. For the reasons stated therein, we confirm the assessment as made for the year, allowing the assessee credit for the amount, if any, disclosed toward the household and/or maintenance expenditure for self and family. We decide accordingly. 40. Ground 7 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit, which included Rs. 3 lacs (out of Rs. 17.99 lacs) on 31.3.2004, i.e., falling in A.Y. 2004-05, pleaded for its exclusion. The source of deposit for the balance Rs. 14.99 lacs was also submitted. The addition, however, came to be confirmed in-as-much as the assessee failed to substantiate his claims. Aggrieved, the assessee is in second appeal. 44. We have heard the party before us, and perused the material on record. Apart from merely stating that the ld. CIT(A) had erred, no definite case has been made out before us. The same, even otherwise; the matter being factual, would be of little consequence in the absence of any material on record to establish the assessee's case, which has been held as an after-thought by the ld. CIT(A) before whom the books of account were not produced. We, accordingly, have no reason to interfere with his order, except for deleting Rs. 3 lacs, being in relation to the cash deposit on 31.3.2004, which is apparent from the date-wise statement of cash deposit, listed in the assessment and the impugned order itself. Further, the A.O. shall, while giving effect to her order, take into account the said cash deposits, including Rs. 3 lacs on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under, were found during search from the residence of KT loaded on a pen drive, hard copy of which was subsequently taken, forming part of the seized material (Annexure 7 to Panchanama dated 06.1.2007, containing 22 pages): S. No. Reference Annexure/ Page No. Remittance request via telegraphic transfer Value date Conversion rate of USD Amount in Rs. 1 A-7/9 TRIPLE 'A' UBS bonds of the value of US $ 1 billion 07.1.05 43.90 4390,00,00,000 2 A-7/10 TRIPLE 'A' UBS bonds of the value of US $ 0.4 billion 07.1.05 43.90 1756,00,00,000 3 A-7/18 TRIPLE 'A' UBS bonds of the value of US $ 1 billion 04.1.05 43.48 4348,00,00,000 Total USD 2.4 Billion Rs.10494,00,00,000 The same bears specific instructions, drawn on the assessee's account number (206-794.786). The valuation date is the material date, on which the instruction is executed and, accordingly, the conversion rate is adopted for that date. The same being found during search, from his control and possession, in the form of a pen drive at the residence of KT, is to be regarded as true as regards its contents in view of section 292C of the Act. In this regard, reference may also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during search. Reference may be drawn to the discussion at paras 11- 12, 15, 25 and 30 of this order. In the present case, the account on which the TIs are issued, is, rather, one of the accounts of the assessee confirmed by UBS AG. We have under the circumstances no reason to take a different view in the matter. We are acutely conscious that the amount under reference is astronomical. At the same time, however, we cannot disregard the clear evidences found in or as a result of search. The additions made, it may be appreciated, are only on the basis of objective materials - totally unexplained and, further, in agreement with the other materials found and in possession of the Revenue. Why, the notarized statement dated 30.06.2003 supra (Ann. C), itself contains details of the assessee's relationship with UBS, with account opened as far back as in 1982, with USD 5M, as also details of transfer of huge funds. The assessee's stand of complete denial is only toward stalling the process of law, which continues even before us. The same is clearly aimed at providing no clue whatsoever to the Revenue as to how he, at best only a horse trainer in India, had access to such sums, visit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business income on horse racing. The same stands disallowed in the absence of any substantiation of the loss, and confirmed for the same reason/s. The assessee, before us, has sought to plead its case with reference to section 74A. 55. We have heard the party before us, and perused the material on record. The Revenue has denied the claim of the impugned loss in view of it being unevidenced. The assessee's alluding to section 74A is thus of no moment. In fact, even section 74A refers to the activity of owning and maintaining race horses, while the loss under reference is on horse betting, which is a different activity altogether. The assessee's claim is thus not maintainable of all fours. We decide accordingly. 56. Grounds 12 and 13 correspond to grounds 11 and 12 for f.y. 2001-02 and, accordingly, stand decided vide paras 19 and 20 respectively of this order. 57. Grounds 14 and 15 are general in nature, warranting no adjudication. Asstt. Year 2006-07 58. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itely a source of cash, which could be deposited in bank, i.e., that made after the date/s of realisation of the sale proceeds. Our second observation in the matter is that out of the total deposit of Rs. 12,09,932 in Muslim Co-operative Bank, for which amount addition is made, Rs. 1.35 lacs stands deposited during the preceding year, so that the addition for the current year could not exceed the balance amount, determined at Rs. 10,75,038/- (para 19 of the impugned order). The matter accordingly stands restored to the file of the Assessing Officer (A.O.) to compute the quantum of the two additions on the basis of the short fall in the availability of cash, which accordingly has to be worked out with reference to different dates. The utilisation of cash for household/personal purposes is to be taken on a uniform basis over the year, while that toward income-tax paid, on the definite dates. Similarly, the business income (from horse racing), disclosed by the assessee at Rs. 15.69 lacs, would be taken proportionately during the year, at (say) each month-end. The assessee shall furnish the relevant data. Ground 6 of this appeal shall again stand to be addressed in the like manner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 crores, being the aggregate (at USD 11.999 billion) of 16 Transfer Instructions (TIs) or requests for various amounts, listed at para 13(ii)/pgs. 13-15 of the assessment order. The conversion rate, not specifically challenged, adopted, is that obtaining for each value date, separately, listed at para 13(x)/pgs. 22-23 of the assessment order. The same were found from the residence of KT in the course of search on 05.1.2007, in the form of data on a pen drive seized, hard copy of which was subsequently taken (Annexure A7 to Panchanama dated 06.1.2007, consisting of 22 pages). The same reveals them to be issued by the assessee, from London in December, 2005, on UBS AG, Zurich qua his account number 206-794-786 therewith, by direct transfer. These monies are transferred, by telex transfer, from Switzerland to various beneficiary accounts at New York, Dubai, Zurich, Singapore, London, etc. For each transfer, the beneficiary details are given. While some are toward transfer simpliciter, others are requests for AAA rated UBS bonds for a particular amount, specified with beneficiary details. The assessee, despite being questioned and show caused several times in the matter, denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Empire Builtech Pvt. Ltd. [2015] 228 Taxman 346 (Del)(Mag.); Umakant B. Agrawal vs. Dy. CIT [2014] 369 ITR 220 (Bom); CIT vs. Narinder Kumar Sekhri [2015] 228 Taxman 35 (P&H)(Mag); Edayanal Constructions vs. CIT [1990] 183 ITR 671 (Ker). In fact, that apart, the decision in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), rendered considering four precedents by the hon'ble Apex Court, is a locus classicus on the subject. In view of the foregoing, we see no reason to deviate from our decision as delineated at paras 11-12, 15, 25, 30 and 49 of this order, to which therefore reference is drawn. We decide accordingly. 66. Ground 10 is qua an addition, since confirmed, for Rs. 113.04 lacs, in respect of five TIs for a total of USD 152,200 issued by the assessee in favour of S.K. Financial Services from 16.11.2005 to 15.2.2006, valued at the obtaining conversion rate on the relevant value date. The inference, since validated on the basis of the enquiry by FTD division of CBDT, of the same representing income, was accordingly added in the absence of any explanation by the assessee, drawing support on the fact that TI dated 16.2.2007 to S.K. Financial Services, was also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity as well. The assessee's return is sans any supporting material, so that all he has done is to return an income from the said activity at Rs. 15.69 lacs - nothing less and nothing more. The Revenue's stand could only be sustained when there is clear evidence of the assessee having earned Rs. 24.11 lacs (i.e., 15.69 + 8.42), so that the loss is assailed for want of evidence. The Revenue's stand becomes all the more untenable considering that the entire returned income ( Rs. 15.69 lacs) is adjusted against living expenses. If the loss is disallowed, on which penalty is also initiated, it only implies that there is availability of cash at Rs. 24.11 lacs. This causes a double jeopardy for Rs. 8.42 lacs. We have further clarified that the deemed income on account of said expenses can be set off only against amount shown or taken as utilised, in accounts or otherwise, toward such expenses. The set off of loss is accordingly allowed. We may, before parting, clarify that the income from horse betting, assessable u/s. 56, is a separate and distinct activity, so that our decision shall not in any manner, impact our decision qua Ground 11 for A.Y. 2005-06. 70. Ground 15: The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee challenged the valuation, explaining the same as by way of a gift from his sister; belonging to his mother-inlaw; and purchased on 31/12/2006, besides a part of it comprising watches. The contention being unproved, besides bearing inconsistencies, was rejected by the ld. CIT(A), confirming the addition. 75. We have heard the party before us, and perused the material on record. The document is found during search, and clearly specifies the jewellery, item by item. Only the assessee, whose name is clearly spelt out and, in fact, admits the same, can tell when and how the same was acquired by him, lest the same be deemed as his unexplained income for the year in which it is found in his possession, the document being otherwise required to be regarded as true. The assessee renders no explanation before the assessing authority, whose satisfaction in the matter the law contemplates and, as it appears, prior thereto, even before the Authorized Officer. The explanation rendered in appeal, which would in any case have to cross the hurdle of rule 46A, is wholly unsubstantiated. We, however, observe two things. Firstly, that the jewellery stated as gifted to the assessee on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . An insurance policy for a car (Honda City), stating the premium at Rs. 41,005/-, in the name of Abbas A. Abbas, the assessee's fatherin- law, was found during the search from the assessee's Mumbai residence, which further stated the value of car at 10,30,750/-. Abbas A. Abbas being aged, a nonassessee, working as a horse trainer, so that he could not afford to purchase and maintain the vehicle, the same was considered as beneficially belonging to the assessee, from whose residence the insurance policy was found and, accordingly, assessed as his income, and confirmed for the same reason, so that the assessee is in second appeal. 79. We have heard the party before us, and perused the material on record. We do not find any infirmity in the Revenue's stand in the facts and circumstances of the case. The assessee has been found to own several cars; in fact gifting some, for which one may advert to paras 17 & 118 of this order. His stand that the car belongs to his father-in-law, unsupported by any evidence toward the latter's financial capacity for purchasing and maintaining the vehicle, cannot be countenanced. In income-tax law, primacy is accorded to beneficial ownership as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque. The matter needs proper verification of the assessee's claim of the entire sum being duly accounted for and, thus, explained, and, is accordingly restored to the file of the AO for fresh determination in accordance with law, issuing definite findings. We decide accordingly. 82. Ground # 8 is again in respect of investment in a motor car (Porscha Cayennes, 2005 Model/ Reg. No. KA 08M 969), purchased from one, Anil Shankar, for Rs. 61.50 lacs. The addition, based on the material found during search from the assessee's Pune residence in the form of a delivery note (dated 6/12/2006) issued by the assessee and receipt-cum-confirmation dated 8/12/2006 issued by the said Anil Shankar, is further supported by the assessee's deposition u/s. 131 dated 27/12/2007. In appeal, the assessee produced an account of payment, as: * Rs. 3,50,000/- (cash) on 4/12/2006 (self cheque No.41245 on ABN Amro Bank) * Rs. 46,50,000/- (cash) on 6/12/2006 * Rs. 11,00,000/- (cheque on Union Bank of India, dated 7/03/2007) The cash was sought to be explained as received from RWITC on 6/12/2006 on account of horse racing (Rs.45 lacs) and horse betting (Rs.15.70 lacs), which were dismissed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation by the assessee, and confirmed for the same reason. 85. We have heard the party before us, and perused the material on record. The Registration Certificate (RC) (found in search) shows the car model as '2002'. A car bearing registration number MH 12BP 7860 was found as purchased for like amount (Rs. 26,84,244) in Feb., 2003 (refer Gd. 5 for AY 2004-05/paras 37 & 38 of this Order). The car under reference, thus, also seems to be purchased in Feb., 2003, even as admitted by the assessee before ED - at a cost of Rs. 27.91 lacs (refer para H of WS-7). Two, the car is stated by the assessee to be financed through loan from GMac Financials. It is only the EMIs falling, or otherwise the loan repaid, during the year that can, in that case, where unexplained as to its source, deemed as income. Of course, no addition is called for to the extent the EMIs are explained on the basis of cash available, so that it essentially amounts to an addition qua cash where and to the extent unexplained. The matter is accordingly restored to the file of the AO for being decided afresh, in accordance with law, allowing the assessee opportunity of hearing. We decide accordingly. 86. Ground 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it results in a double addition, which aspect, where so claimed, the A.O. is obliged to verify, and satisfy himself that there is no double addition. We decide accordingly. 89. Ground 12 is qua an addition for Rs. 3.50 lacs toward payment of membership fee of 'Le Royale Residency Club'. The assessee confirmed the same, paid in cash, to be out of his race horse winnings, vide statement u/s. 131 dated 15.3.2007. The addition is confirmed subject to the A.O.'s verification of the same not resulting in a double addition in-as-much as the amount is stated to be paid through ABN Amro Bank. We decide accordingly. 90. Ground 13 is, at Rs. 25.50 lacs, toward investment in house property at Bangalore. On the basis of the material seized in search, the assessee was found to have paid Rs. 25 lacs as advance (in November, 2006) to M/s. H.M. Constructions for purchase of an apartment at Bangalore, and another Rs. 50,000/- to M/s. Khaitan & Co., Advocates, for title search of the said property. The advocates not giving a clear report, the advance was refunded to the assessee on 28.2.2007. The payments being not disclosed, were deemed as income by way of unexplained investment or, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the material on record. The assessee's case is that these are mere notings and do not constitute evidence. The Revenue's case, on the other hand, is that it is clear that the assessee was in the process of purchase of the subject property. There is nothing on record to show that the same was not purchased, or that the deal did not take place, as by furnishing a confirmation letter from the builder to that effect. The very fact that the assessee states that the purchase did not fructify itself confirms the document, to which section 292C applies, and is thus not a dumb document. The question, to our mind, is not whether the purchase fructified or not, but whether the assessee paid any amount/s as advance or for the booking the said flat to M/s. Prestige Estate Projects Pvt. Ltd., which appears to be through one, Rizwan Razad. The onus on the assessee would stand discharged only on satisfactorily explaining the document/s. The Revenue's case, on the other hand, can sustain only if the payment to the extent of Rs. 50 lacs can be inferred on the basis of the said document, which is ostensibly toward purchase of the flat. In whose hand the noting was made, which the law presumes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in search. The same being not disclosed, its' deeming as unexplained income cannot be faulted with. We decide accordingly. 98. Ground 19 is again qua unexplained payment of Rs. 20,87,500/-. Two pages, numbered 37 (of Bundle 6/Annexure A) and 21 (of Bundle 7/Annexure A), were found from the assessee's residence during search, containing similar entries, i.e., a balance of Rs. 4,52,696/- as on 23.12.2006, part payments on 23.12.2006 and 28.12.2006, with Rs. 20,87,500/- written on the reverse. The same came to be added and confirmed for want of any explanation. The paper is captioned 'Ritesh', a person the assessee states he does not know, besides denying any payment to him. The assessee's denial of the payment, or of knowing Ritesh, cannot be countenanced. The payments being noted on different dates, and the balance drawn, under a captioned name, cannot be considered as a dumb document, to which the presumption of section 292C shall also apply. At the same time, addition could only be for the amounts stated as paid as per the document. Accordingly, only payments up to 28.12.2006, as recorded, could be considered as paid during the relevant year. The impugned sum of Rs. 20.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility is incurred. The assessee can only be considered as having discharged the liability in the normal course of 'business', so that, being undisclosed, the deeming of income to that extent follows. Looked at from any angle, even as it is improbable that the assessee should prepare or retain a document concerning his liability, the amount is liable to be, in the absence of any explanation with reference thereto, which is only to be presumed as in his hand, construed as his deemed income on account of unexplained money or receipt or, as the case may be, payment. We, accordingly, confirm its assessment. We decide accordingly. 102. Ground 22 is, again, qua an unexplained expenditure for Rs. 74,500/- toward cost of one canon camera and speaker. The assessee's case is general, stating of the evidence with the Revenue as being not conclusive. We find the argument untenable. The document is speaking, in respect of purchase of electronic items of common day use. It is nobody's case that the camera cannot or had not been purchased. Further, what explains the document at the assessee's residence? The amount is nowhere even contended to be disclosed. The addition is, accordingly, conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de doubly to the extent of USD 5 lac. We decide accordingly. 105. Ground 24 is in respect of an addition on account of unexplained balance in bank account with UBS AG, Zurich, at Rs. 37,154.10 crores (USD 8 Billion). Search material (numbered as Bundle 1 of Annexure A dated 06/01/2007 to Panchnama dated 06/01/2007), is a set of 6 pages (annexed as Ann.11 to the assessment order). These are again print-outs of the scanned documents, found on the laptop of PA. Page 6 is a 'confirmation' dated 08/12/2006 (on a sheet of paper bearing the logo of UBS), signed by one, 'M.Rohnar' and another, 'M. Wilthrich' of UBS AG, Zurich (Wealth Management Department), which states that HAK, on the basis of telephonic discussion with the office of the Chairman (of UBS Ltd.), is permitted to withdraw a part of his assets (USD 6 Billion) deposited with UBS Ltd., i.e., out of the total deposit of USD 8,000,453,000 (8 Billion), and invest it in any manner he chooses to. The balance USD 2 Billion shall remain bound with UBS Ltd. till 15/01/2007, after which HAK can pursue any mode of investment or deposit, wherever and whenever he chooses to. Pages 1 and 5 of the said set are the statement of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any knowledge of the same, PA states that the original documents, which were scanned by him, were found from the assessee's Pune residence, where he was admittedly staying at the time of search. The scanned copies have not come out of nowhere. The PA's statement could thus as well be true. And how is it that the assessee is not aware of the said documents (stated to be found from his residence), whose statement thus lacks any credibility. Then, where did the original documents disappear? Further, PA would have scanned the documents only finding the same important and relevant. PA was representing the assessee to the outside world, engaged for promoting his business interests internationally. This could only be on the basis of investible resources with HAK, toward which are all the three documents (scanned copies) found from the PA's laptop. Reference here may be made to the assessee's notarized statement dated 30/06/2003, stating of visiting Zurich in Feb., 2001, after his acquittal in a case in India, and also in April, 2001, whereat he expressed his desire to invest in hotel projects in Switzerland, which PA promised to search; the two entering into a consulting agreement ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the criticality or the extreme significance of the said information, both in context of the assessment under the Act as well as the ongoing investigation by ED. From the tax point of view though, the balance in the assessee's account/s with UBS AG, even if its' number/s is not specified, is sufficient to attract the deeming fiction of assessment as income where not satisfactorily explained as to its nature and source. We have already found the assessee's case as sans any explanation, being confined to a total denial. The same is not only at cross with that of his close associate (PA), camping at his residence, but also completely out of sync with the obtaining facts and circumstances of the case, including his own statement dated 30/06/2003 supra; his conduct, including travel to and camping at, among others, London, Dubai, Zurich, etc.; opening of bank accounts with UBS AG, and locker with Barclays Bank PLC, dealing with Credit Lyonnais, Bank Sarasin. et. al. over the past few years (since 2001) - all of which is abundantly documented and evidenced on the basis of materials found in search. What for, for instance, PA was staying at his residence, and what was he doing there? A mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, places reliance on the results of the enquiry moved through its' FT Division, as afore-referred, documents in respect have since been admitted by us as additional evidence (AE). The letter dated 29.3.2010 is a response by the US Department of Justice in part execution of the request by Ministry of Home Affairs, GOI, made pursuant to Article 7 of the Treaty of Mutual Legal Assistance in criminal matters (pg. 10 of Additional Evidence). Then there is a response dated 22.3.2010 (by Barclays Bank) and letter dated 24.3.2008 by the Department of Treasury, Internal Revenue Service, Washington (pgs. 12 and 23 of Additional Evidence), each with accompanying documents. The information provided is definite, gathered in some cases by issuing subpoena on S. K. Financial Services. These would, however, require being correlated with the TIs found and/or information qua which is with the Revenue, and addition for which has been made. The ld. DR would concede during hearing that no such reconciliation has been made, being able to correlate only one transaction for USD 7 lac dated 22.11.2006 (pg. 15 of the AE, from among that validated). Our decision qua TIs continues to remain the same (r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 of this order, decide likewise for this Ground as well. 110. Ground # 28 refer para 107 of this order. 111. Ground # 29 is toward non-allowance of set off of loss of Rs. 2,77,960/-, claimed by the assessee per his return of income, on account of its non-substantiation. The position continues to be the same before us, with the assessee's written submissions being silent in the matter, even as the ld. CIT(A) confirmed the disallowance stating that the assessee himself claims to have not incurred any loss. Clearly, therefore, the assessee's claim is unsupported by any evidence, and is accordingly dismissed. We decide accordingly. 112. Ground # 30 is toward unexplained investment on horses, at Rs. 13 lacs, i.e., as found purchased by him during the year, valuing the same at Rs. 1 lac each, i.e., on the basis of field enquiries, as for the earlier years (para 18 of the assessment order). No affective rebuttal being furnished by the assessee, the same came to be confirmed by the ld. CIT(A), finding the price reasonable with reference to the entries made in the assessee's books (for the purchase of horses as reflected therein). The assessee has not denied the purchase of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the shortfall/s during the year, retaining the cash as admitted as on 31/3/2007, the year-end. We may here also add that cash to the extent of Rs. 5 lacs has been confirmed for addition for A.Y. 2000-01 vide our order for that year (in ITA No. 3726/Mum/2009 dtd. 09/12/2015). We decide accordingly. 115. Ground # 32 is toward unexplained investment in branded, luxury watches, at Rs. 19.97 lacs, being in fact admitted by the assessee per his statement u/s. 131 dated 27/02/2007 (refer para 20 of assessment order). The assessee before the ld. CIT(A) produced a reconciliation, re-produced at para 69 of the impugned order. Per the same, the assessee challenges the valuation of carterier watches, claiming a difference at Rs. 2.90 lacs between his valuation and that by the Revenue. The balance Rs. 17.07 lacs is stated to be in agreement with the balance in the relevant account (Watches) as on 31.03.2007 as per his books of account. The assessee's claim being found unsupported by evidence, the addition was confirmed, so that he is in second appeal. 116. We have heard the party before us, and perused the material on record. Firstly, it is the balance in account as on 05/01/2007, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 14 lacs, repurchasing it again Nov.-Dec., 2006 for Rs. 10 lacs, which claims were not accepted on account of being un-evidenced, resulting in an addition for Rs. 14 lacs being confirmed in first appeal. 120. We have heard the party before us, and perused the material on record. As we understand, the assessee has claimed credit (by way of cash credit) on account of sale of the subject car for Rs. 14 lacs, and which has been denied by the Revenue. When was the car sold; to whom; and for what amount? Then, on what basis the same is claimed to have been repurchased in Nov.-Dec., 2006? The assessee's claims are wholly unsubstantiated, if not also fanciful. How does it, however, result in an addition for Rs. 14 lacs is the question. If cash has been introduced in books, as it appears, during the current year (at Rs. 14 lacs) on account of the said sale, addition u/s. 68 would arise, which shall also fructify on working the cash flow by excluding the cash flows ascribed to the sale and repurchase of this car. This would in fact also cover the assessee's Ground # 35, which is for Rs. 4 lacs, being on account of purchase of an old Mercedez car, introducing another twist in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty before us, and perused the material on record. The total addition is for Rs. 17 lacs, the balance Rs. 5 lacs being toward the cost of the stay abroad. The travel itinerary has not been disputed, except for stating of a single visit to Canada, i.e., as against three journeys taken by the AO. The dates (24/9/2006, 03/10/2006 & 15/10/2006) are taken from the assessee's passport only. The same being proximate in time, the AO shall, nevertheless, visit this aspect of the addition again. We state so as if each date represents a one-way journey, an odd number (3) would imply that the assessee did not return back from Canada, and which is admittedly not the case. Again, we observe a different passport number (Z1069986) in the two different pages of Bundle 7/Ann. A (to Panchnama dated 06/1/2007), referred to, inter alia, at para 20, indicating either a dual citizenship or passport, or of one being issued on expiry or in lieu of the other. The assessee's claim of the travel expenditure being borne by KT, who accompanied him on every visit abroad (refer para I of WS-7), is, besides being without any material on record, of no consequence in the absence of any confirmation by KT. In fact, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns already made. We find no merit in the said contention, which in fact stands already dealt with at paras 11.2 and 12 of this order. The scope and ambit of the Act and the PML Act are completely different. Income, a word of wide import, is taxable under the Act irrespective of the manner of its earning, and the Act places no premium on the legality thereof, with which it is not concerned. The Hon'ble Courts have, rather, upheld bringing an amount to tax even on the basis of unjust enrichment (refer: Shree Digvijay Cement Co. Ltd. vs. Union of India [2003] 259 ITR 705 (SC); Sinclair Murray & Co. P. Ltd. vs. CIT [1974] 97 ITR 615 (SC)). Again, where the nature and source of any deposit in the assessee's bank account is not satisfactorily explained, the law deems it as his unexplained income. This is based on the principle of common law jurisprudence, embodied in s. 110 of the Evidence Act, as noted at para 11.5 of the order. The Revenue is not obliged to locate the source of the deposit before (or after) bringing the same to tax. The overriding effect of s. 71 PMLA is undisputed, but the same is with regard to any inconsistency between the provisions of the said Act and the other la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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