TMI Blog2016 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee accepts the addition, claiming a double addition, leading to a double jeopardy. Be that as it may, we have already restored the assessment on some grounds, while confirming some additions. The principles of telescoping are well laid out by the Hon’ble Apex Court, as in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980 (4) TMI 2 - SUPREME Court ]. The AO shall, in the set aside proceedings, consider the assessee’s case in this respect, where one is made out, in accordance with law. This disposes the assessee’s said ground, as well as similar ground/s for other years as well, where we observe the assessee contends of an addition as having been already returned, i.e., forming part of his returned income. The AO shall allow credit on the basis of verifiable cash flows, assuming annualized income/expenditure on a uniform basis, while taking others on the basis of actual date (of investment, expenditure, etc.), also accounting for the payment of tax, again, on defined dates Addition as undisclosed income - Held that:- As payment (USD 20 million) (200 lacs) was made, which would require being verified, it implies that the down payment of CHF 2.5 lacs to be made by 03.8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. Undisclosed income by way of alleged unexplained balance in account with UBS - Held that:- All that has been retained – by both the parties, or survives, is the Agreement dated 07/8/2001! Even if therefore it is shown by the assessee that the TIs for USD 200M are in pursuance of the Agreement dated 07/8/2001, the source thereof as being profits earned – to that or whatever extent, in the past, shall require being shown or reasonably proved, for it to be accepted. The payment as listed at Sr. No. 6 of the table, being in relation to an Agreement dated 18.7.2001, due to be paid, has been also noted by us for A.Y. 2002-03 (vide para 22(b) of this order). Without doubt, the same being in respect of a single payment, could, even assuming so, be brought to tax for either 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 Addition toward gift/s to son, Syed Mohammad Sameer Uddin Ali Khan, Hyderabad - Held that:- The assessee’s written submissions are silent on this aspect of the matter. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. CIT(A) at ₹ 1.35 lacs, as against ₹ 1.20 lacs, as contended by the assessee before him. We, accordingly, find no ground for interference. Addition toward transfer instructions - Held that:- 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, visiting and staying at Switzerland, Dubai, London, Hongkong, etc. on a regular basis, in fact since 1980s. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. Undisclosed jewellery - Held that:- Firstly, that the jewellery stated as gifted to the assessee on the occasion of his marriage by his sister, Amia Khan (at ₹ 2.22 lacs) can only be regarded as reasonable, and is thus accepted. Secondly, even if the jewellery stated to be purchased in December, 2006 (at ₹ 13.16 lacs) cannot be accepted in absence of any bill or other evidence, its’ being accounted, assuming so, implies absorption of cash to that extent, so that non-acceptance of the explanation would release cash to that extent, for being considered toward other applications. This is further subject to the cash availability being properly explained. The AO shall verify the same, clearly recording his findings, upon allowing the assessee an opportunity to state his case in the matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two years, for which reference may be made to paras 44 and 61of this order. We may, however, add that there can be no double addition for the same amount, as where the cash deposited is utilised, as by issue of bearer cheque for ₹ 3.50 lacs for payment of car (refer paras 82,83). In other words, the addition is confirmed in principle, though the assessee can show that 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. Payment of membership fee of ‘Le Royale Residency Club’ - Held that:- We find little merit in the assessee’s case. The explanation, now furnished, firstly confirms the transaction. Two, there is nothing on record to establish the stated source (loans), in terms of identity, capacity or genuineness. We are aware that the payment of ₹ 25 lacs is from ABN Ambro Bank, cash deposits in which have been separately brought to tax (Gd. # 11). However, the cash deposits, assessed as income, total to ₹ 52.74 lacs, as against a balance of ₹ 52 lacs in the said account on 05.1.2007, the date of search. The impugned amount of ₹ 25 lacs, though routed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion toward the cost of air travel by the assessee during the year to different foreign locations - Held that:- All that was required in that case was for the assessee to exhibit this on the basis of the accounts of M/s. Travel Hub, which would bear the payments in respect of the assessee’s travel by KT or his companies. The cost of travel, being based on information from his regular travel agent, has not been contested for most part, with that qua travel to Canada being, again, unsubstantiated. Subject to the AO’s verification supra, we confirm the addition u/s. 69C. Further, we also agree that the addition on account of stay abroad is, on the basis of the travel dates and visa period, listed in the assessment order, is reasonable. We decide accordingly. - ITA No. 4156 to 4162/M/2010 - - - Dated:- 29-2-2016 - SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM For The Appellant : None (written submissions) For The Respondent : Shri Girish Dave and Ms.Kadambari Dave ORDER Per Sanjay Arora, A. M.: Vide his instant Appeals, the Assessee agitates separate orders by the Commissioner of Income Tax (Appeals)-36, Mumbai ('CIT(A)') for assessment years (A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reliance on facts not borne out by the record. Next, we examine the assessee s Application (dated 10.12.2013) for admission of additional evidence under Rule 29 of the Rules (containing 79 pages), which is a combined one for assessment years 2001-02 to 2007-08. The same is accompanied by an Affidavit dated 10.12.2013, avering that the accompanying documents, sought to be admitted, are true and correct to the best of his knowledge and belief. The assessee, per his said application, prays for the admission of the following documents, as additional evidence, stating the same to have come in his possession in April, 2012, much after the conclusion of the proceedings before the first appellate authority: a) Copy of Note Verbale dated 12.01.2007 issued by the Embassy of India, Berne to the Federal Department of Justice and Police, Federal Government of Swiss Confederation; b) Copy of fax response dated 15.01.2007 issued by the Federal, Department of Justice and Police, Federal Government of Swiss Confederation to the Embassy of India, Berne; c) Copy of letter dated 30.10.2007 from UBS AG to Swiss National Bank along with the Deloitte Report (dated 29/10/2007); d) Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in Switzerland, it needs to be appreciated, he continued, encourages opening of bank accounts, and information in their respect is protected by privacy laws of that country. With reference to a host of case law, it was pleaded that proceedings under the Act are to be decided on the basis of preponderance of probabilities in the facts and circumstances of the case, based on the material on record. There is no contention with regard to the lack of opportunity granted by the Revenue authorities. 3.2 We may now detail the Revenue s application for admission of additional evidence dated 01.6.2015, which is the combined one for all the appeals of the group, i.e., the assessee, his wife (Rheema Hassan Ali Khan), Syed Ahmed Abbas Naqvi, Kashinath Tapuriah, Chandrika Tapuriah and R.M. Investment Trading Co. P. Ltd. It is stated therein that in the course of post search enquiry, Enforcement Directorate (ED) provided a copy of a notarized statement dated 30.6.2003 of HAK confirming that he had an account in UBS, Singapore opened in 1982 with a deposit of 1.5 Million USD. All the deposits, as per the statement, pertained to the period 1982 to 1997. The Notary Public of London, who ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the document for which it is issued. The documents being presented by the assessee would only have been sent directly by the Bank to ED in India, so that it would in any case stand to be verified there-from. The same, as well as the accompanying report by Deloitte AG, Zurich, are marked as confidential . The question as to how the assessee obtained the same does arise. It, in fact, clearly proves the assessee s connections not only in India but even abroad; he being able to access confidential communication between UBS AG and the Swiss National Bank, as well as the accompanying report by an independent auditor, made available directly to the bank for its purposes. But, then, should we allow that consideration to weigh when an issue is to be decided on the basis of facts , so that any document that is relevant and purports to reveal the truth, should be, in principle, and subject to the provision/s of law in the matter, considered. In fact, the documents being presented by the Revenue are also, similarly, not apostilled. However, as afore-stated, the documents being presented are direct communications between the relevant (competent) authorities of the two countries, sent throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.1.2007 at the residences of the assessee and others, including Kashinath Tapuriah, on the ground of the same being not satisfactorily explained. The Revenue, acting through the proper channel, has sought further information and made inquiries into the affairs of the assessee. It is the result of such post search enquiries, received from time to time, which it claims as relevant and material, and seeks admission as additional evidence. How could then, we wonder, it validly object to the assessee s prayer for, similarly, admission of the reports received as a result of such enquiries. If the Revenue s plea is accepted, there is no reason not to accept that of the assessee, the two being of the same genre, supported by the same reasons. So, however, the terms of rule 29 would have to be regarded and satisfied, i.e., quite apart from the validity of the Revenue s objection, and which (rule) itself obliges the tribunal to record reasons for such admission or, as the case may be, production or examination. The tribunal s power to admit additional evidence is strictly limited. The Hon'ble jurisdictional High Court in Velji Deoraj Co. vs. CIT [1968] 68 ITR 708 (Bom) clarified th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall apply, for example, when evidence had been taken by the lower courts so imperfectly that the appellate court cannot pass a satisfactory judgment (refer pg. 168 of the reports). This view stands also expressed by the Hon ble jurisdictional HC in Suhasinibai Goenka vs. CIT [1995] 216 ITR 518, 521-22 (Bom), stating that r. 29 allows the exercise of the power for production of additional evidence for a fair and just disposal of the appeal. Surely, the result of the enquiries initiated by GOI in the matter or even that subsequently need to be taken on record in arriving at our conclusions thereon in-asmuch as they enable us to pass orders which are consistent with and, in any case; the same being not binding on this tribunal, take into account the results of such enquiries. This is more so as the decision/s by the Revenue in the matter are based primarily on the preponderance of probabilities. In fact, copy of the facsimile dated 15.1.2007 by the Swiss Federal Government, or the report dated 30.10.2007 by UBS AG to the Swiss National Bank, etc. are documents which were available at the time of assessment, so that they ought to have been considered or taken into account by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. e) Letter by UBS AG dated 8.12.2006- held to be forged by purportedly confirming that the Applicant has balance of USD 8 billion in his account, along with confirmation of balances as on 31.8.2006 and 02.11.2006. The said document is purportedly communicated by the bank, UBS Ltd., to the assessee (even as the account number stands withheld). The said information, being relevant, apparently sought by the assessee himself, though he claims as not, is admitted in evidence. These documents are in fact part of the record in-as-much as they form the basis of the corresponding addition for A.Y. 2007-08. f to h) These documents, in the public domain, have no direct bearing on the assessment of the relevant incomes. Accordingly, the same are not liable for admission, so that admission thereof is rejected. A document, even if not apostilled, could be, for the reasons stated, admitted. However, an unsigned document has no claim to legitimacy or to being genuine. The documents under reference, it is to be appreciated, are not system generated reports, or otherwise emails, etc., which may not require signatures for validation, but official communications between the competent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife, who accepts the same for on his behalf, even as clearly indicated therein. Though the date of receipt is not mentioned by the recipient, the same can only be presumed to be in the normal course of its business by the postal department when the registered post (the notices dated 04.10.2007 being conveyed through speed post), is not returned unserved, as in the instant case, which is also the presumption in law, with the returns for all the years being filed on 23.5.2007 (refer: Milan Poddar v. CIT [2013] 357 ITR 619 (Jh.)) . So, however, to amply clarify matters, the ld. DR was called upon to produce the record, and which he did. The same notes of the notices u/s. 143(2) dated 04.10.2007, placed on record, duly served on the assessee on 09.10.2007, with proof placed in the file cover for A.Y. 2007-08, which was confirmed. Copies of the notices for the first and the last year, i.e., A.Ys. 2001-02 and 2007-08, bearing the noting, were obtained and placed on record. The assessee s claim is accordingly without merit; rather, stands disproved. The assessee s claim is even otherwise legally sustainable in-as-much as notice u/s.143(2) is not a prerequisite for framing an assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same), and also sent through speed-post at both his known addresses (i.e., Mumbai and Pune residences). The notices, questionnaires and show causes were also served through affixture at the assessee s Peddar Road, Mumbai address. Reference in this context may be made to paras 5 thro 9 of the assessment order. In fact, the assessee himself furnished replies vide his letters dated 19.11.2008, 01.12.2008, 10.12.2008 and 26.12.2008, the last being, as also noted by the ld. CIT(A), while being in jail. In fact, prior thereto, he had attended personally along with his counsel, Shri Sunil Shinde, on 12.11.2008, and was served all notices issued up to then. Rather, if time was an issue, the assessee, whose case remains essentially one of denial, could have furnished substantive replies even before the first appellate authority. The assessee s case on this ground is without merit, which is accordingly dismissed. 6. Ground 3 is general in nature, warranting no adjudication, while Grounds 4 and 5 relates to an addition in the sum of ₹ 6950.97 lacs. With reference to the information gathered from ED, the Revenue found the assessee to be operating two companies, Payson Company Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd genuine. Proper opportunity was in fact provided to the assessee, duly confronting him with all the materials being relied upon by the A.O. The case law relied upon by the assessee was distinguished on facts by the ld. CIT(A), also stating that section 292C stands since brought on the statute book. True, the presumption of section 292C shall not apply to the documents provided by the ED. The assessee is, nevertheless, required to explain, if not disprove the said information. The said documents in fact correlate with, and are in addition to, the material seized in search from the assessee s residence as well as that of KT, all of which duly were confronted to the assessee. He, accordingly, confirmed the addition. 7. Before us, the assessee per his written submissions claims that the addition in his case stands made presuming a close nexus between him and the stated companies. Again, there was no evidence that the amount had been transferred to or received by him. In fact, KT had during the course of his statement before the investigation authorities submitted that Payson Ltd. was never functional, and had no business dealings. The ld. DR relied on the orders by the Revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and statements referred to in, and on the basis of which, the letter dated 17/9/2001 supra is issued by the assessee s auditors? The non-receipt of money, in-as-much as income would stand to be taxed either on accrual or receipt basis, would also be therefore of no moment. The money may have been earned abroad, but being a resident of India for the relevant year, the same would stand to be taxed in his hands. Rather, it is for the assessee to explain the nature of the business activities undertaken by/in the said companies, which it seems have business/es also at Dubai, where the assessee was camping during the relevant year, as his letter dated 16.7.2000 to UBS AG, Zurich (refer para 9) indicates. The assessee has also not denied or explained the letter dated 17.9.2001 supra, which is the format letter by his auditors containing information - verified and certified by them, on commission, consultancy and interest income earned by him from these companies from January, 1985 to December, 1989. The same, in the relevant part, reads as follows (DPB pg. 51): Date: 17th September, 2001 Mr. Hassan Ali Khan Zurich, Switzerland As requested by you, we have reviewed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities abroad dating back to the 1980s, and the corresponding need to establish banking relationship, which could also include for investments purposes, as well as through companies. As regards the statement supra of KT, a person he states to, in the same breath, to have no business links with, the same would be of no consequence as, as aforestated, the truth of the statement of account is neither denied nor controverted. 8.2 We are, however, unable to read the statement of account as at 13.3.2001 (annexed as Annexure B to this order) as being the statement of profit of the said two companies or the earnings of the assessee there-from, at least in its entirety, as inferred by the Revenue. The bank particulars, i.e., to which the amount (DHS 151, 197.94) is to be transferred, is also mentioned therein. To whom does this bank account belong? The amounts are in respect of different matters, identified by number and brief description, for which invoices (number and date specified) have been raised. The statement also includes fees as well as costs which are yet to be billed, i.e., as on 13.3.2001. The same, even if not in its entirety, pertains to these companies. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT [1963] 48 ITR 376, 403 (Bom); Tarajan Tea Co. (P.) Ltd. vs. CIT [1994] 205 ITR 45 (Gau)), to cite few. Under the circumstances, we only consider it proper to restore the matter back to the file of the assessing authority for adjudication afresh in accordance with the law. Needless to add, the assessee shall be provided due and reasonable opportunity to state his case in the matter. As regards the rate (of conversion into Indian rupees), the assessee has, while challenging the same, not brought the correct rate on record; his written submissions being also silent on this aspect. The A.O. is, nevertheless, directed to apply the correct conversion rate, adopting the same as on 13.3.2001, or for a date as close to that date as possible. Even otherwise, there appears to be some mistake in-as-much as even the applied rate of ₹ 46 per DHS yields a sum of ₹ 69.55 lacs. We decide accordingly. 9. The next and the sixth ground is in respect of unexplained money with UBS AG, Zurich, at ₹ 447 crores. The Revenue, on the basis of the information received from the ED, found the assessee to have issued a transfer instruction to UBS AG on 16.7.2000 to transfer funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich USD 60,700 was transferred by way of a wire transfer to a third party individual (i.e., not Mr. Khan or his family members) to a account at a bank in United Emirates (UAE) on the same day. There were no other transactions on this account (including no book or remitted bond or other security transaction). This account was also closed on 17.10.2001. The fourth account disclosed in the report is (#760001), which is stated to be in the name of an Indian National (with POA in favour of the account holder s wife), opened in December, 1994, and closed in January, 1998, i.e., over 3 years before the assessee opened an account with UBS. The reason for opening this account was because the account holder was, as stated by him, expecting a transfer from a HAK account with UBS, Zurich (refer para 3.4 of the report). The several Transfer Instructions (TIs) found in search reflect this account as of KT. On the basis of this communication, the assessee claims that it stands established that he did not have any account (No. 6667663) with UBS Zurich, as alleged by the A.O., or any other account for that matter. No tax liability would, therefore, stand attracted on the basis of alleged transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt), to enable the Revenue to take appropriate proceedings under the Act. For all we know, it may well be one of the documents with the Revenue to form a reason to believe u/s. 132 of the Act. There can be in any case no presumption that the same has been obtained by ED illegally or without following the due process of law. The apex court in Pooran Mal vs. DIT (Inv.) [1974] 93 ITR 505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevancy, so that unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out. The reliability of the document cannot be doubted, and it has strong persuasive value. In fact, the assessee himself, at no stage, denies that the same was not recovered from him. Such like transfer instructions were also recovered from the assessee s residence as well as of KT during search. Why, one may ask, should the assessee (or KT) retain them for years, which itself is a strong indicator of the truth of the document, i.e., of the transfer instruction having been in fact issued. It is notable th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is open for the assessee to show that the sum of money to whatever extent, is brought forward from an earlier period, or otherwise does not represent his own capital as where it is by way of a loan, or despite being his capital, represents a capital receipt, so that it cannot be brought to tax as his income. He, however, does not do so, and merely denies the existence of the account without adducing any evidence toward the same. Again, it is open to be argued that the transfer instruction would not by itself establish the balance in account to that extent. A transfer instruction (TI) is akin to a (non-negotiable) cheque drawn on his bank by the account holder, specifying also the account particulars of the transferee. Its preparation itself is an expert job, with the assessee being assisted in this regard by the bank officials (also refer para 11.4). We have already clarified that the document is to be regarded as reliable, with persuasive evidentiary value. The same implies that such an instruction was in fact issued to his bank (UBS AG) by the assessee. If that be so, the said account, by necessary implication, had balance at least to that extent on the relevant date. Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presented before us, relying ostensibly on written submissions instead. The said non-representation is only deliberate, denying valuable assistance to the court/adjudicating authority, a negation of the due process of law, besides causing loss of valuable court time, a national asset, which needs to be conserved and put to optimum use. Be that as it may, the plea of set aside of assessment by the assessee on that ground, which is de hors any ground of appeal, is without merit. 11.3 The transfer instruction under reference does not bear the account number of the assessee-transferor, and the A.O. wrongly mentions the same as 6667663 (refer para 11 of the assessment order). We are conscious of this fact, and without which the document is incomplete. It also does not bear the assessee s signature. At the same time, it needs to be borne in mind that the office copy of a document generated is usually retained as such, i.e., without signing, or ascribing thereon information deemed confidential. It is this that prevailed with us, so as to examine the case further despite the document being not complete. Why, Annexure 12 to the assessment order, again a transfer instruction (dated 23.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove). That the said account belongs to KT is admitted, stated to be opened in 1986 and closed in the year 2000 (refer communication by Chandrika Tapuriah (CT) to the A.O. dated 13.12.2011 (at APB-5 in the case of KT/CT, pgs. 871-873)). The UBS report, however, states of the said account having been closed in January, 1998, pointing to yet another inconsistency with reference to the said report. However, the moot question is: If there was no HAK account at the relevant time, how could this constitute a basis for opening the said account? There should thus be a HAK account/s with UBS AG at the relevant time, or, in the very least, one (or more) account, opening of which was certain, for the bank to have opened the said account in December, 1994. Though the letter dated 28.12.2007, being unsigned, has not been admitted by us, it is clear that the report dated 30.10.2007, stated to be on the basis of an internal investigation by the bank, is based on the Deloitte AG report dated 29.10.2007, as admitted by the assessee himself (refer his written submissions, viz. para 10 of WS-1). The ED, by the assessee s own admission per its written submissions, has pressed charges against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opening of bank accounts in such a manner, as well as placing stringent conditions on the exchange of information in respect thereof. The facsimile date 15.1.2007 supra, in response to the request for mutual legal assistance by the GOI, which is the other document admitted by us, very clearly states that the Swiss Federal Office of Justice shall require, besides others, a confirmation that the investigation (in India) is in respect of criminal proceedings and there is a relation between the predicate offences and the accounts of Hassan Ali Khan in Switzerland, before it would be able to proceed with the said request. The same only endorses the concern expressed by the ld. DR, i.e., as far as tax proceedings in India are concerned. We may further add that it is only after September, 2001 attack in New York, USA, that the banking industry across the globe woke up to the threat of financial flows arising from or in respect of such terrorist and illegal activities, devising KYC (know your customer) norms. And which have since been gradually updated and adopted across nations, including India. 11.5 The Revenue, to proceed against the assessee, must have definite information with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndon. In fact, PA s with whom the assessee entered into a consulting agreement to represent him internationally in April, 2001, extended stay at the assessee s residence itself confirms the assessee s overseas financial and business interests. We are conscious that no account number is mentioned in the transfer instruction. Could that, however, be interpreted as it bearing no account number, defeating the exercise or the very purpose of issuing the same? It is not unusual not to write information, deemed confidential, except in the original copy, i.e., on the basis of which the execution is to be made/is sought. Likewise for the non signing of the transfer instruction; it being usual not to ascribe the signature on the office copy. In fact, TIs have been found in search, as Annexure 12 to the assessment order for the current year, which bears both the account number (written by hand in the place provided for it in the letter, as in the instant transfer instruction), as well as the assessee s signature. The absence of these attributes would, thus, in our view, be of little moment. In-as-much as, however, the account number, which is not mentioned, could be any of the accounts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. Couple this with a complete denial of the transactions, his case cannot but be discountenanced. The assessee, who is in fact applied for obtained a new PAN from the Department at Mumbai in 2005, claiming to be a new assessee notwithstanding he being an existing assessee - filing returns (up to A.Y. 1999-2000) at Hyderabad, shall, therefore, be required to obtain a clear certificate of not maintaining any account, either as an account holder or its beneficiary or as its POA, i.e., of which he is the owner of or could operate, as specified in the various documents found in search or otherwise transmitted to the Revenue. He cannot, after all, it must be appreciated, prove a negative, i.e., that he does not have any account with UBS AG (on which transfer instruction is drawn), other than he is found to be associated with in any capacity, either on the basis of the various documents in the possession of the Revenue or per the UBS AG report, since admitted in evidence. For these accounts, however, he is obliged to produce an authentic statement of account for the relevant period. The assessee could disprove the said document by a certificate from his Bank that no such transfer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bear no specific explanation or submission qua this ground, presumably as he has regarded the additions on account of transfer instructions as one block (refer para C of WS-1). The ld. CIT(A), on the basis of the internet searches, has confirmed the stated company and the associate person (whose passport number stands specified) to be existing persons. Annexure L to the impugned order is the download from the internet of what appears to be the home page/profile of the said company. It states of Steelmet Pte Ltd. to be a Singapore based company led by Shri S. C. Sharma, who has over 27 years of experience, specializing in trading of various metals, non-ferrous and ferrous alloys, besides also providing logistic and trading support services. The case of the parties, accordingly, remains the same, in view whereof, as well as the similarity of the nature of evidence, we have no reason to take any other view than that in respect of Ground 6 (refer paras 9 to 12 of this order). The assessment of the impugned sum is accordingly restored to the file of the Assessing Officer for fresh adjudication, with the same observations and directions as for that Ground. We decided accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been allowed to examine his son in the matter (refer para 14 and paras 14, 15 of the assessment and the impugned order respectively). Aggrieved, the assessee is in second appeal. 17. We have heard the party before us, and perused the material on record. We observe the assessee s sworn statement to be prior to and in agreement with that of his son, again on oath, dated 08.1.2007. Where, then, is the question of the Revenue not providing him opportunity to rebut the latter s statement? Neither has the assessee retracted his statement dated 05.1.2007 nor sought opportunity to cross examine his son in the matter, which is in fact not warranted under the circumstances. Rather, the assessee, on being confronted with his son s statement dated 08.1.2007, confirmed his gifting a Honda city car costing ₹ 7 lacs to his son in December, 2000 vide statement u/s. 131 dated 01.5.2007. We, accordingly, find no merit in the assessee s case, and confirm the assessment of the impugned sum as income. 18. Vide Ground 10, the assessee agitates an addition on account of living and life style expenses, which, by all available accounts, can only be considered as lavish and ostentatious. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made out before the authorities below. How could then the assessee be aggrieved? Even the assessee s written submissions are silent on this. The plea could in fact be available only where the assessee accepts the addition, claiming a double addition, leading to a double jeopardy. Be that as it may, we have already restored the assessment on some grounds, while confirming some additions. The principles of telescoping are well laid out by the Hon ble Apex Court, as in the case of Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 (SC). The AO shall, in the set aside proceedings, consider the assessee s case in this respect, where one is made out, in accordance with law. This disposes the assessee s said ground, as well as similar ground/s for other years as well, where we observe the assessee contends of an addition as having been already returned, i.e., forming part of his returned income. The AO shall allow credit on the basis of verifiable cash flows, assuming annualized income/expenditure on a uniform basis, while taking others on the basis of actual date (of investment, expenditure, etc.), also accounting for the payment of tax, again, on defined dates. We decide accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o act as Mr. Khan s consultant in his interests internationally. Pages 6 7 contain hard copy of a bill addressed to HAK, Pune towards the former s commission for having located, negotiated and brought HAK and M/s. Clamai AG, the seller, together to transact the sale of Hotel Chateau Gutsah, Luzern, Switzerland . Pages 8 9 contain hard copy of an unsigned agreement dated 05.4.2001 between PA, Switzerland and HAK, Pune made at Zurich towards retaining the services of PA. Further, as per information received from the Enforcement Directorate, there is a signed Agreement dated 18.7.2001 for purchase of the said Hotel by the assessee from M/s. Clamai AG for CHF 2,79,99,999. This document and pages 6 and 7 (listed above) complement and support each other (pgs. 80-81 of the Annexure to the assessment order). No substantive reply was received from the assessee despite being questioned in respect of these materials (vide letter that dated 05.3.2008, 13.5.2008 and 17.5.2008) and show cause notices in November, 2008 (on 12/11, 24/11, 26/11 and 28/11) and December, 2008 (19.12.2008) (refer para 10 of the assessment order, as well as para 15 of the assessment order for A.Y. 2007-08). The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as the complaint by the ED is to be adjudicated upon by a court of law. The scope of proceedings, being criminal in nature, is different, while tax proceedings result in a civil liability, and are independent, required to be completed in a time bound manner. The ED, by the assessee s own admission, pressed laundering charges under PMLA for two transactions, being for USD 93 million (in 1997) and USD 700,000 (relating to year 2006) (pgs. 27 28 of WS-1). The contention is without any merit whatsoever. This aspect, already discussed earlier (vide para 11 of this order), is again emphasized in view of the specific contention raised by the assessee per his written submissions for this year (WS-2). We may now discuss the two additions, albeit separately. The raising of the bill dated 05.4.2001 by PA for commission (for having located, negotiated and brought the client (assessee-buyer) and M/s. Clamai AG (seller) together with the intent to transact the sale of Hotel Chateau Gutsah, Luzern, Switzerland, is established on the basis of pages 5 to 9 (of Bundle 7 of Annexure A to the Panchanama), noted above. The same gets, in fact, reflected in a number of documents; viz. consultin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me company. The reliability of the document, which has not been challenged by the assessee, is not in doubt. The total purchase price as per the Agreement is CHF 320 lacs, and not CHF 279.99 lacs, as adopted by the A.O., which represents that of the real estate property, including cost of furniture and fixture, cable car, etc. (refer para 10 of the Agreement). The internet search, the results of which form part of the impugned order, itself shows the property being unsold. It was in fact leased by the Italian THI Group in 2002, as noted at the listing at Sr. No. 2 (pg. 35) as well as Annexure B to the impugned order. The addition, though, could yet become exigible where some sum is paid toward purchase price. Page 19 of the 29 page compilation supra is the statement of transfer. The same states of transfer of USD 20 million to account # 08-06868.6 on account of Chateau Gutsah, Luzern, Switzerland. The information, found in search, is specific, even as we find no reference thereto in the orders by the Revenue for the year. This could perhaps be for the reason that the Revenue had, presuming the purchase, added the entire purchase cost, which amount though incorrectly stated, is of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2002 for USD 391,164. The same is the detail of expenditure incurred and advances given to the assessee. The same came to be added and, further, confirmed in the absence of any explanation by the assessee, who denied the same, so that, aggrieved, he is in second appeal. Per its written submission, the assessee, changing tack, claims that no addition could be made on the basis of the unproved payments. The evidences are mere notings, loose sheets, which are neither audited or authenticated, so that the same cannot be considered as legal evidence. Reliance is placed on L K Advani vs. CBI 1997 Cri LJ 2559 and CBI vs. V. C. Shukla, AIR 1998 SC 1406. The ld. DR relied on the orders by the Revenue. 24. We have heard the party before us, and perused the material on record. Page 17 of the compilation is the relevant statement, i.e., of Expenses incurred for and advances given to HAK . Our first observation in the matter is that the invoice date is 09.3.2002 (and not 09.1.2002 ) and, two, the total amount for which the statement is drawn is CHF 394,164 (and not USD 391,164), i.e., as stated at para 11 of the assessment order. These, which appear to be mistakes, would have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the amounts should be accumulated for so long; the period of expenditure covered by the bill extending beyond six months, is itself surprising. Why the payments would not be made, being for expenditure which ought to be financed by the assessee in the first place, belies comprehension. The assessee s case is sans any explanation. Under the circumstances, we find no reason to not to confirm the assessment to the extent noted above. The assessee s reliance on the decisions in L.K. Advani (supra) and V. C. Shukla (supra) is misplaced. The statements as well as invoices relied upon are not loose sheets, the forwarding letter itself clarifying that the invoice for USD 16 lacs was in fact transmitted to the assessee on 21.9.2006, clearly mentioning the account details of the beneficiary (PA). In fact, each of the expenses are in respect of specific transactions (with mention of, in some cases, their dates), viz. hotel bills of Ms. Fatima Said and Tapuria; train tickets to Geneva for Khan family; Nelson office telephone bills (from September, 2001 to March, 2002); Flight ticket for PA to Dubai (in March, 2002), etc., all, or almost all, of which are in fact verifiable. We, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.2007, the same cannot be regarded as documents to which the statutory presumption of section 292-C of the Act shall apply. In this regard, in our view, the argument is both legally and factually untenable. The words used in the provision are any person , so that it may not necessarily be the assessee himself. On facts, the man (PA), in whose laptop the documents were stored, as also noted by both the AO the ld. CIT(A), has not owned these documents, clearly stating them to belong to the assessee. He himself, closely associated with the assessee, was engaged for representing the assessee internationally, having several transactions with him (refer para 24). His residing at the assessee s residence, having, by own admission, come to India in October, 2006, only to pursue the assessee for his outstanding payments, was thus only in relation to his work/assignment. The same clearly proves that the two were well known to each other and, further, as between the two, they did indeed enter into transactions, or transacted business/es, entailing financial obligations and commitments on the part of the assessee, which he did not, however, meet in whole or in part. In fact, materials, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount with UBS. The same is inferred on the basis of several transfer instructions (TIs) (tabulated at pages 8, 9 of the assessment order) aggregating to the said amount. These were found in the course of search and, thus, based on the material found during search (being pages 10-13, 18-19 of Bundle No. 7 of Annexure A dated 05.1.2007 to Panchanama dated 06.1.2007, containing 29 pages). The addition, on the ground of the account/s having balance at least to the extent of the transfer instruction/s issued, came to be made and confirmed in the absence of any explanation whatsoever by the assessee, who denied having issued any transfer instruction, which were in fact unsigned documents. The case of the parties up to the first appellate stage, thus, remains the same, i.e., as for the earlier years. The ld. CIT(A), once again, confirmed the existence of the transferee entities, whose names are specified in the documents found. 29. Before us, while the assessee relies on its written submissions (WS-3), the ld. Departmental Representative (DR) does on the orders by the Revenue authorities. 30. We have heard the party before us, and perused the material on record. 30.1 Our first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of letter dated 16.9.2002/pg. 11 of the compilation). The letter dated 19.6.2002 by PA to the assessee (placed at pg. 14 of the compilation) is qua purchase of the said Villa, the initial ZR being the abbreviated form of Zum Rebgarten , in Uerikon, Stafa. Surely, these are not loose sheets or random notings, but payments made or to be made in pursuance to definite arrangements, for which the assessee had entered into agreements, camping in Switzerland, appointing a person (PA) to represent him and advance his interests. The assessee, vide his notarized statement dated 30.06.2003 at London (forming part of the assessment orders for A.Ys. 2005-06 to 2007-08) stated that upon arriving at Zurich again in 2001, i.e., after his acquittal in a complaint case in India in 2000, he met PA and expressed his desire to invest in hotel projects in Switzerland, which the latter promised to search. The reliance by the assessee on the decisions in the case of L K Advani vs. CBI 1997 Cri LJ 2559 and CBI vs. V. C. Shukla, AIR 1998 SC 1406 is misconceived. 30.3 A scrutiny of the compilation (i.e., Bundle 7 of Annexure A dated 05.1.2007, comprising of 29 pages) shows the TIs have been issued onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed earlier, explain the circumstances under which the TI was not issued or otherwise explain the nature and source of the relevant funds as not being his income. The Revenue, on its part, can also enquire into the transactions, which are apparently in relation to acquisition of the property or rights therein or other investments in listed/public companies. The matter, though may appear so, is not vexed. This is, as clarified by us at para 12 of this order, the assessee shall, qua each of the TIs issued, be required to produce the transcript of his account/s (the account statement) for the relevant year, which would at once exhibit whether any of the ten (10) contemplated transfers comprising the impugned sum, including the two dated 07/11/2002, were in fact executed or not, as also the balance, if any, in the account/s, toward which in fact the addition/s is made. 30.4 At this stage, it may also be relevant to dwell on the three (3) transfers, for USD 200M, listed at serial numbers 8 to 10 of the Table. The same are apparently in pursuance to the Agreement dated 07/8/2001 (refer Ann. A). Though not so contended, it may be argued, and is indeed open to be so, that the same are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite so, the two did not settle accounts, or even appropriate their respective share in accounts, or even otherwise signify the same, much less return or report the same to the competent authorities in the relevant jurisdictions, for over two decades. It calls for a complete and willing suspension of the sense of reality to accept the statement at face value. In fact, KT, per his written notes (APB-5, pgs. 918-919) himself states that the said document is fabricated, and that he came to know HAK only in 1994. There is no gainsaying that the entire endeavour, which should under normal circumstances yield a host of evidences or trail, is sans any in the present case, viz. as to the joint venture or any business operations undertaken, the nature of which is itself unspecified, yet, profits were earned there-from, transmitted and invested - as it appears, abroad, all without any evidence. And all that has been retained by both the parties, or survives, is the Agreement dated 07/8/2001! Even if therefore it is shown by the assessee that the TIs for USD 200M are in pursuance of the Agreement dated 07/8/2001, the source thereof as being profits earned to that or whatever extent, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively for A.Y. 2001-02 and, accordingly, stand decided vide paras 19 and 20 respectively of this order. 33. Grounds 8 and 9 are general in nature, warranting no adjudication. Asstt. Year 2004-05 34. 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 addition for ₹ 5.48 lacs on account of gift to son, Syed Mohammad Sameer Uddin Ali Khan. The basis of the orders by the Revenue authorities is the sworn statement dated 08.1.2007 of the donee-son, followed by admission by the assessee per his sworn statements on 26.4.2007 and 01.5.2007 in respect of the gift, which amount had though been not returned u/s.153A (refer paras 10 and 13-14 of the assessment and the impugned order respectively). Aggrieved, the assessee is in second appeal. 35. Before us, the assessee states of having honored his statements, and that the income disclosed for the year (Rs.11.09 lacs) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut to ₹ 2,48,941/- only. The books of account were not audited or otherwise authenticated, to be able to place any credence thereon or on the cash statement. Then, again, the assessee would have, besides repayment of loan, also incurred expenditure toward household expenditure, maintenance of car, etc. The cash statement, thus, could not relied upon. The addition for ₹ 23 lacs was accordingly confirmed. Aggrieved, the assessee is in second appeal. 38. We have heard the party before us, and perused the material on record. Our first observation in the matter is that there is nothing to show that the car, purchased by the assessee and registered in his name, was gifted by him to his wife, so as to be considered as in discharge of the Mehr for his marriage, solemnised in December, 2000. The addition, however, is toward unexplained investment in car. The same was purchased in February, 2003 for ₹ 26.84 lacs. The down payment, to which reference is made by the ld. CIT(A), would therefore only be in February, 2003, i.e., assessable for A.Y. 2003-04. Our second observation is that the 36 EMIs (for ₹ 22,631/- each) work to a total of ₹ 8.15 lacs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly. 40. Ground 7 is in respect of an addition for ₹ 2 lacs on the ground that the assessee declared the said amount as his additional income for the year before the Hon ble Settlement Commission. The assessee did not raise any ground in respect of the said addition before the first appellate authority and, resultantly, the same is not subject to his findings/adjudication. That is, does not arise out of the impugned order. No application for the admission for additional ground has also been made. The same is accordingly not maintainable. The declaration before the Settlement Commission is accompanied by verification by the Applicant, affirming it to be a true and correct disclosure. We, accordingly, confirm the assessment. However, in-as-much as and to the extent the declaration is not toward any specific expenditure/investment, etc., the A.O. shall consider the said income as available toward application for living expenses, as explained while disposing Ground no. 6 above. We decide accordingly. 41. Grounds 8 and 9 correspond to Grounds 11 and 12 respectively for A.Y. 2001-02 and, accordingly, stand decided vide paras 19 and 20 respectively of this order. 42. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 3 lacs on 31.3.2004, while reckoning the availability of finance for other purposes with the assessee. We decide accordingly. 45. Ground No. 5 is in respect of unexplained deposit/investment by way of repayment of bank loan. The assessee and his wife were found to have availed loans from Muslim Co-operative Bank, Yerawada Branch, Pune. Copies of accounts revealed repayment in the said account, as under: Name/AY A.Y. 2005-06 A.Y. 2006-07 Shri Hassan Ali Khan 135000 1075038 (cash) Smt. Rheema Khan 135000 1075038 (cash) The assessee, on being confronted, admitted the repayment of ₹ 12,09,932/- made for both the years in his account as from his horse racing income, not disclosed to the Revenue, agreeing to pay tax thereon, vide statement dated 26.4.2007. The same, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be made to para 25 of this order. The assessee denying any knowledge thereof, despite several reminders, the same came to be added as income by way of unexplained investment. The assessee being unable to improve his case in any manner in appeal, the same stood confirmed; the assessee cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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, visiting and staying at Switzerland, Dubai, London, Hongkong, etc. on a regular basis, in fact since 1980s. The matter is accordingly restored to the file of the A.O. for adjudication afresh in accordance with the law by issuing definite findings of fact, and after allowing the assessee reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 is in respect of an addition, since confirmed, of ₹ 1,22,297/- toward unexplained expenditure on air ticket. An air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative Bank, for which amount addition is made, ₹ 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 ₹ 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 ₹ 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, thus, is disposed of accordingly. 62. The facts in relation to Ground 7 are that a cancellation deed dated 29.4.2005 was found during search. The same, being in respect of the lease of the assessee s Bangalore pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 any knowledge thereof, further emphasising that he had not comments to offer (refer para 13(iv) of the assessment order). 65A. We have heard the party before us, and perused the material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructions 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 ₹ 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 found during search from the assessee s Pune residence (refer para 107 of this order). The matter, in view of the discussion at para 107, is restored to the file of the AO with like directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and nothing more. The Revenue s stand could only be sustained when there is clear evidence of the assessee having earned ₹ 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 ( ₹ 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 ₹ 24.11 lacs. This causes a double jeopardy for ₹ 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 during the relevant year found to have purchased 10 horses on different dates, viz. 23.4.2005, 19.8.2005, and then intermittently from 23.12.2005 to 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 occasion of his marriage by his sister, Amia Khan (at ₹ 2.22 lacs) can only be regarded as reasonable, and is thus accepted. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained investment in Honda City Car. An insurance policy for a car (Honda City), stating the premium at ₹ 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered as explained merely because the payment is by 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 ₹ 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: ₹ 3,50,000/- (cash) on 4/12/2006 (self cheque No.41245 on ABN Amro Bank) ₹ 46,50,000/- (cash) on 6/12/2006 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H 12BP 7861) for ₹ 26,84,244, being it s cost, added as the assessee s income in the absence of any explanation 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 ₹ 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 afres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs for payment of car (refer paras 82,83). In other words, the addition is confirmed in principle, though the assessee can show that 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 ₹ 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 ₹ 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 ₹ 25 lacs as advance (in November, 2006) to M/s. H.M. Constructions for purchase of an apartment at Bangalore, and another ₹ 50,000/- to M/s. Khaitan Co., Advocates, for title search of the said property. The advocates not giving a clear report, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being not disclosed, the amount of ₹ 50 lacs was added and confirmed in assessment, so that, aggrieved, the assessee is in appeal. 94. We have heard the party before us and perused 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains the same, i.e., that the evidence with the Revenue is no sufficient to impugn him. The fact of the payment by the assessee is clearly established by the receipt, found from the assessee s residence 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 ₹ 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 ₹ 4,52,696/- as on 23.12.2006, part payments on 23.12.2006 and 28.12.2006, with ₹ 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, add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, i.e., a liability to the named person. The inference of income even in such a case cannot be faulted. This is as the liability incurred would only be against value to that extent, received, and in respect of which the liability 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 ₹ 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inference of TI being issued or payment for USD 16 lac, or of balance to that extent; the same representing only a claim on the assessee. The addition, consistent with our findings at para to 22(b) supra, is deleted, being in fact made 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and PA have issued evasive replies, which are mutually inconsistent, if not contradictory, so that either of them, or perhaps even both of them, are not speaking the truth, or wholly or the whole truth. While the assessee denies 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 Zur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s the same pertain to. Why, where not so, was the identification of the account/s not sought, as appears to be the case, as the Revenue would have most certainly highlighted this aspect otherwise. This is very surprising, considering 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 Sara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment in the absence of any improvement in his case which is in effect blank, by the assessee before him. The assessee s written submissions for the year (WS-7) also do not throw any light in the matter. The Revenue, on the other hand, 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 dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having in fact lived and worked at Mumbai from 1996 to 1999 (refer page 39 of his order for AY 2003-04). We, therefore, for the reasons stated qua different grounds toward additions in respect of TIs at paras 11-12, 15, 25, 49 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 ₹ 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 ₹ 13 lacs, i.e., as found purchased by him during the year, valuing the same at ₹ 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flows and outflows for the income/s expenditure, stated on an annualized basis (viz. horse racing income, household expenditure, etc.), be reckoned uniformly (proportionately) over the year, at each month-end, and confirm the addition on that basis, i.e., 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 ₹ 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 ₹ 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 ₹ 2.90 lacs between his valuation and that by the Revenue. The balance ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to his wife, RHAK, in mehr; the nikah-nama of their marriage in Dec, 2000 stating the mehr amount at ₹ 21 lacs. The addition qua purchase of this car stands discussed and decided vide paras 37-38 of this order. The assessee claims to have sold this car after a couple of years for ₹ 14 lacs, repurchasing it again Nov.-Dec., 2006 for ₹ 10 lacs, which claims were not accepted on account of being un-evidenced, resulting in an addition for ₹ 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 ₹ 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 ₹ 14 lacs is the question. If cash has been introduced in books, as it appears, during the current year (at ₹ 14 lacs) on account of the said sale, addition u/s. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 25 of the assessment order). In appeal, the assessee submitted that the cost of travel to Canada was at one-half of that taken by the AO (at ₹ 1,65,000). The ld. CIT(A) observed the assessee s claim before him, confined to travel to Canada only, as un-evidenced. Aggrieved, the assessee is in second appeal. 125. We have heard the party before us, and perused the material on record. The total addition is for ₹ 17 lacs, the balance ₹ 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, indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AIR 2016 SC 106) and Janta Jha vs. Asst. Director (in CRLMC No. 114 of 2011): 71. Act to have overriding effect The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The Revenue s counsel, on being confronted therewith, chose to rely on his submissions 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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