TMI Blog2021 (4) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5(1) of the Income Tax Act. Assessing Officer in the instant case has failed even to take note of the income tax return filed by the assessee while recording reasons which in our opinion shows non application of mind. The reasons recorded do not inspire confidence to make out a prima facie case for escapement of income and the Assessing Officer in the instant case was carried away by the mere fact of existence of foreign bank account. Assessing Officer himself has mentioned that the assessee late Sh. Ladli Pershad Jaiswal was non-resident of India during AY 1993-94 to 2004-05 and not ordinarily resident for AY 2006-07 and 2007-08. The Assessing Officer in the assessment order at clause 5 has also mentioned that assessee is not ordinarily resident. Under these circumstances and in absence of any factual finding, it is not open to dispute the claim of residential status as declared in the return of income. Since, the proceedings u/s 147 are extraordinary proceedings, the onus is on the Revenue to establish the existence of undisclosed income. Mere discovery of a foreign bank account in the name of the assessee is not sufficient to thrust the tax liability without bringing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue. It is further clarified that the Assessing Officer shall restrict his verification only on the basis of documents which are already available on record and shall not resort any roving and fishing enquiry is permitted. The grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA Nos.3247 & 3248/Del/2016, ITA Nos.3730 & 3731/Del/2016 - - - Dated:- 23-4-2021 - Shri R.K. Panda, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Appellant : Ms. R.S. Singhavi, CA. For the Respondent : Dr. Prabha Kant CIT-DR ORDER PER R.K. PANDA, AM : ITA No.3247/Del/2016 ITA No.3248/Del/2016 filed by the assessee are directed against the common order dated 21.04.2016 of the learned CIT(A)-43, New Delhi, relating to Assessment Years 2006-07 and 2007-08 respectively. ITA NO.3730/Del/2016 ITA No.3731/Del/2016 filed by the assessee are directed against the order dated 21.04.2016 of the learned CIT(A)-43, New Delhi, relating to Assessment Years2006-07 and 2007-08. Since, common issues are involved in all these appeals, therefore, these were heard together and are being disposed of by this common order. 2. First, we ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India therefore, section 149(1)(c) will be applicable for determining the time limit for reopening this case. Section 149(1)(c) is reproduced hereunder for ready reference: 149. (1) No notice under section 148 shall be issued for the relevant assessment year (c) if your years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax has escaped assessment. Since four years from the end of the relevant assessment year have been expired, an approval u/s. 151(2) of the I.T. Act, 1961 is solicited. Accordingly, put for perusal and approval please. Date: 30/03/2014 NishthaTiwari Dy. Director of Income Tax, Circle 3(1), Intl. Taxation, New Delhi. Sd/- Dy. Commissioner of Income Tax, Circle-2(2)(1), Delhi (Intl.Tax) Room No. 411, 4th Floor, E-2, Block, PratyakshKarBhawan, Civic Centre, J.L. Nehru Marg, New Delhi-110002. 3. He, therefore, issued notice u/s 148 of the Income Tax Act, 1961 (in short the Act ) to the assessee. During the course of assessment proceedings, T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee are answered as under:- 1. In this case it is very important to Understand that this is a case where provisions of explanation 2(d) to section 147 are applicable as in this case the assessee is found to have an asset located outside India and this is deemed to be a case where income chargeable to tax has escaped assessment. Accordingly, provision of section .149(1) (c) will be applicable for determining the time limit for re-opening this case. Therefore, the proceedings u/s 147/148 are not barred by time limitations in this case. 2. As regards the contention of the assessee that the AO in the reasons has wrongly mentioned that no return was filed for these assessment years and hence the re-opening is bad in law, this issue has been examined and it is found that the provisions of first proviso to section 147 are not applicable in the case of assesses where any income in relation to any asset located, outside India has escaped assessment for any assessment yean Therefore filing of return of Income In which there Is no disclosure of Income from asset located outside India does not give Immunity to the assessee from assessment or reassessment of such undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was non-resident from 1993-94 till 2004-05 and thereafter not ordinary resident in AY 2005- 06 to AY 2007-08 and as per provisions of section 5(2) of the Act, he cannot be subjected to tax in India as income regarding these deposits has not been received or deemed to be received in India by him or accrues or arises or deemed to accrue or arise in India is concerned, the Assessing Officer observed as under:- In this regard, the claim of resident status of the assessee is not being challenged in this assessment. This issue in the case is that of source of investments in fiduciary deposits in Swiss bank. Despite opportunity, the assessee has denied knowledge of any such account and has therefore failed to provide any legitimate source outside India leading to the deposits of such sums in this account. In more specific terms, the assessee has failed to explain before the assessing officer as to whether the source of such deposits is from the income earned outside India or whether the source of such deposits is out of the income earned in India on which due taxes have been paid. In either case, the assessee has not provided complete trail of the funds leading to such dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt holder-1 and Sh. Karamjit S Jaiswal has been filing return of income of estate of Late Ladli Pershad Jaiswal as his legal heir. 11. Before the learned CIT(A), the assessee made elaborate arguments. However, the learned CIT(A) also did not find any merit in the arguments and upheld the addition in principle but was of the view that substantive addition is required to be made in the hands of Sh. Anand Pershad Jaiswal as he was the joint account holder of the foreign bank account. Accordingly, the substantial addition made in the hands of the Sh. Karamjit S. Jaiswal was converted into protective addition and vice versa was done in the case of Anand Pershad Jaiswal. 12. Aggrieved with such order of the learned CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal:- 1. That on the facts and circumstances of the case, the CIT(A) was not justified in confirming initiation of reassessment proceedings u/s. 148 even though initiation of proceedings u/s. 148 are illegal, arbitrary and without jurisdiction in the absence of tangible material and recording of proper satisfaction. 2. That in the absence of Assessing Officer having auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny deposits in the year under reference i.e. F.Y. 2005-06 and the credit entry in the bank account is proceeds from maturity of bonds. Further, the amount so credited into the account was post demise of Late Sh. Ladli Pershad Jaiswal. He submitted that there is no nexus or connection of amount lying in the said bank account with any income from India and same is neither sourced nor earned from India in terms of section 5 of the I.T. Act. He submitted that in absence of any income chargeable to tax in India have escaped assessment, the assumption of jurisdiction u/s 148 is illegal and bad in law. 13.1. Referring to the following decisions, he submitted that reopening of the assessment u/s 148 of the Act is not in accordance with law and has to be quashed. i. PCIRT vs RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 (Delhi) ii. Gorika Investment and Exports Pvt. Ltd. vs ITO (ITA No.3396/Del/2018) He accordingly submitted that since the Assessing Officer has reopened the assessment in a mechanical manner, therefore such reopening of assessment has to be treated as null and void. 14. He submitted that the Assessing Officer in utter disregard of the provision of law and facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to page 9, last para of the assessment order submitted that the Assessing Officer in the instant case has made observations that Late Sh. Ladli Pershad Jaiswal was having substantial interest in Milkfood Ltd. and Jagatjit Industries Ltd. Further, the Assessing Officer has observed that the assessee was chairman and managing director till 31.11.1992 and thereafter he resigned and shifted to UK. However, as per certificate placed on record, during the AY 2006-07 and 2007-08, the assessee was having following share holding in Milkfood Ltd. and Jagatjit Industries Ltd. i. Milkfood Ltd. 4 Shares ii. Jagatjit Industries Ltd. 100 Shares 17. Therefore, the observation of the Assessing Officer that the assessee was having substantial interest in these concerns relevant to AY 2006-07 and 2007-08 is factually incorrect and misconceived. 18. Referring to provision of section 5(1) of the Act, he submitted that as per the reasons in the assessment order, there is no reference to fact, finding or evidence to the effect that there is any undisclosed income in terms of section 5(1) of the Act and the same has any nexus with the deposit in the said overseas bank account. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that balance appearing in the foreign bank account was earned outside India. He submitted that the Assessing Officer in the instant case has rightly presumed that the source of deposit in foreign bank account is from India as the assessee late Sh. Ladli Pershad Jaiswal was a director and was having substantial interest in Milkfood Ltd. and Jagatjit Industries Ltd. in India before becoming nonresident. He accordingly submitted that grounds raised by the assessee should be dismissed and the order of the learned CIT(A) should be upheld. 23. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and learned CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find that the Assessing Officer in the instant case reopened the assessment on the ground that the assessee was having a foreign bank account maintained with HSBC Bank Geneva, in the joint name of Sh. Ladli Pershad Jaiswal (deceased) and Sh. Anand Pershad Jaiswal with Client Profile 22628AA. The reason for such reopening has already been reproduced in the preceding paragraphs. It is the submission of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5(1) of the Income Tax Act. We find the Assessing Officer in the instant case has failed even to take note of the income tax return filed by the assessee while recording reasons which in our opinion shows non application of mind. The reasons recorded do not inspire confidence to make out a prima facie case for escapement of income and the Assessing Officer in the instant case was carried away by the mere fact of existence of foreign bank account. Despite our direction to the learned CIT-DR to produce certified copy of the bank statement and also to clarify the basis of treating deposit in the bank account as undisclosed income in terms of section 5 of the Act, however, the learned DR was unable to produce the same despite multiple opportunities given. Therefore, argument of the learned counsel for the assessee that reassessment proceeding are to be held as invalid find some force. However, since, the assessee also could not produce the details and the issue involved in the instant case are important being deposits in the foreign bank account, we proceed to adjudicate the addition on merit. 25. As mentioned in the preceding paragraphs, the Assessing Officer had made addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. We, therefore, hold that once, the learned CIT(A) has made substantive addition of ₹ 13,70,47,686/- in the hands of Sh. Anand Pershad Jaiswal, there was no valid justification or basis for making protective addition in the hand of Sh. Karamjit S. Jaiswal. Further, since the Revenue has not filed any appeal against the order of the learned CIT(A), it is clear that the Revenue has accepted the substantive addition in the hands of Sh Anand Pershad Jaiswal and as such protective addition made in the hands of the Sh. Karamjit S. Jaiswal cannot survive as it has no legs to stand. 27. From the various details fled by the assessee, we find the Assessing Officer in the instant case has made addition of ₹ 13,70,47,686/- which is the peak deposit appearing in the foreign bank account in the F.Y. 2005-06. We find despite filing a consent letter before the Assessing Officer and RTI application, the Revenue authorities have not provided certified copy or any authentic copy of bank account. Despite the direction given by the Bench, the learned CIT-DR also could not produce certified copy of bank statement and what is available in the paper book is photocopy of sheet of pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08. Therefore, we find it difficult to subscribe to the reasoning given by the Assessing Officer while assuming that deposit in the foreign bank account in the year under consideration was sourced from India. In any case, when the addition made by the Assessing Officer is on the basis of peak credit in the month of January 2006 and when Sh. Ladli Pershad Jaiswal expired on 11.08.2005, it is not understood as to how any credit in January 2006 could be attributed to the deceased. 28.1. In the light of our discussion we are of the considered opinion that the assessment order is not in accordance with law and is liable to be set-aside. However, in the interest of justice and as requested by the learned CIT-DR at the time of hearing before us, the matter is being restored back to the file of the Assessing Officer with a direction to arrive at specific finding based on certified copy of the bank statement and the nature of credit entry in the said bank account. In case, there is no ground or basis to establish any nexus between the alleged deposits in the bank account and any undisclosed income under the provisions of Income Tax Act or how such credit entries are attributable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of proper appreciation of facts, there could be no valid basis for any such addition. (ii). That the finding of lower authorities are not based on proper appreciation of the entries in the bank account and addition was made on mechanical basis. 7. That the assesse is not liable to any tax liability as legal heir in the light of provisions of sec. 159(4) of the I.T. Act, 1961. 8. That orders of the lower authorities are not justified on facts and same are bad in law. ITA No.3730/Del/2016 1. That the Commissioner of Income Tax (Appeals) [ CIT(A) ] erred on facts and in law in not holding that the assessment order passed by the assessing officer under section 147/143(3) of the Income Tax Act, 1961 ( the Act ) is beyond jurisdiction, illegal, bad in law and void-ab-initio. 2. That the CIT(A) erred on facts and in law in upholding validity of re-assessment proceedings without appreciating that the same was initiated without there being reason to believe that income of the appellant had escaped assessment. 3. That the CIT(A) erred in not appreciating that the reassessment proceedings intended to bring to tax alleged escaped income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant was a Non-Resident Indian for past more than twenty five years and thus income on account of alleged deposit in foreign bank account, if any, was even otherwise not liable to be taxed in India. 13. That the CIT(A) failed to appreciate that there was no evidence on record to corroborate that deposit(s) in the alleged foreign bank account represented income earned/ received by the appellant in India. 14. That the CIT(A) erred on facts and in law in presuming that the alleged foreign bank account was operated by the appellant subsequent to his father s death. 15. Further, without prejudice that the CIT(A) erred on facts and in law in holding that ₹ 13,70,47,686 represented the undisclosed income for the year under appeal. 16. That the CIT(A) erred on facts and in law in directing the assessing officer to levy interest under section 234B of the Act. ITA No.3731/Del/2016 1. That the Commissioner of Income Tax (Appeals) [ CIT(A) ] erred on facts and in law in not holding that the assessment order passed by the assessing officer under section 147/143(3) of the Income Tax Act, 1961 ( the Act ) is beyond jurisdiction, illegal, bad in law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown. 11. That the CIT(A) erred on facts and in law in confirming the addition made, without making available copies of bank statements and other ex-parte material(s) on the basis of which addition was made in the hands of the appellant, in gross violation of principles of natural justice. 12. Without prejudice, that the CIT(A) erred on facts and in law in not appreciating that the appellant was a Non-Resident Indian for past more than twenty five years and thus income on account of alleged deposit in foreign bank account, if any, was even otherwise not liable to be taxed in India. 13. That the CIT(A) failed to appreciate that there was no evidence on record to corroborate that deposit(s) in the alleged foreign bank account represented income earned/ received by the appellant in India. 14. That the CIT(A) erred on facts and in law in presuming that the alleged foreign bank account was operated by the appellant subsequent to his father s death. 15. Further, without prejudice that the CIT(A) erred on facts and in law in holding that ₹ 13,70,47,686 represented the undisclosed income for the year under appeal. 16. That the CIT(A) erred on facts and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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