TaxTMI 
TaxTMI 
2021 (4) TMI 1025
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....f the case, in brief, are that the assessee is an individual and is not ordinary resident as mentioned by the Assessing Officer in clause 5 of page1 of the assessment order. The Assessing Officer in the instant case, reopened the assessment after recording the following reasons:- "Reasons for reopening u/s. 147 of the Income Tax Act, 1961 in the case of Late Sh. LadliPershadJaiswal through all his legal heirs for the A.Y. 2006-07. Information has been received in this case from the Investigation Wing, Delhi. As per information Late Sh. Ladli Pershad Jaiswal was having a bank account with HSBC Geneva with client profile names 4487AA, 22628AA and Searose foundation having client profile codes 5091264834, 5091262009 and 5091195751 respectively. BUP_SIFICJPER_ID of Late Sh. Ladli Pershad Jaiswal is 5090130944. Late Sh. Ladli Pershad Jaiswal has expired and Sh. Jagajit Jaiswal, Sh. Karamjeet Jaiswal and Sh. Anand Pershad Jaiswal are his sons and his legal heirs. The maximum outstanding balance in client profile name 22628AA during the period F.Y. 2005-06 was USD 3048891.78 (Rs. 13,70,47,686/-) in January 2006 and maximum outstanding balance during the period FY 2006-07 was USD 3....
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....come of Rs. 6,92,310/-. This return has been filed in the status of not ordinarily resident in the International Taxation Circle-1(Del.). He noted that the assessee has been filing return of income in the status of nonresident from the Assessment Years 1993-94 to 2004-05. Since, Shri Ladli Pershad Jaiswal has died on 11.08.2005, a notice was sent to his legal heir. Subsequently, notice u/s 142(1) of the Act was issued in which a consent & waiver form relating to the disclosure of information and giving consent to the HSBC authorities to share information with the Indian Revenue Authorities in respect of bank accounts was sent to the assessee. 4. The assessee explained that the return already filed u/s 139(1) of the Act should be treated as return filed in respect of notice u/s 148 of the Act. The assessee also requested to provide the reasons for reopening of assessment u/s 147/148 of the Act. which were duly provided to the assessee. 5. The assessee filed his objections for reopening of assessment stating the following i. Very basis of assumption of jurisdiction u/s 147 is false, baseless and illegal ii. Reasons of reopening are based on conjectures, surmises and are non-exi....
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..... As regards claims of the assessee being Non-Resident since A.Y. 1993- 94 to 2004-05 and being Not Ordinary Resident in A.Y. 2006-07 & 2007- 08, firstly the onus to prove residential status for all these years is on the assessee [in this case Legal Heir). Apart from written submission, no supporting documents/evidence etc have been filed from where the status could be ascertained. The assessee is requested to provide the details in order to substantiate its claim that he was non-resident and/or not ordinary resident during above period and that the income In relation to the assets located outside India accrues & arises to him outside India. In the absence of any such evidence and explanation, the assessee's income in relation to asset located outside India cannot be held to be the income accruing/arising outside India and in such a situation, the argument of the assessee that it cannot be subject to tax in India holds no ground. 5. Sh. Karamjit S Jaiswal has been filing return of income as Legal Heir of Late Ladli Pershad Jaiswal and accordingly for above discussed income, reassessment proceeding have been correctly initiated in his hands as Legal Heir of Late Sh. Ladli Pershad ....
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....he part of the assessee to explain the source of such deposits, it cannot be held that such deposits are out of the incomes earned from out of India by the non-resident assessee or not ordinary resident assessee." 8. During the course of assessment proceedings, the Assessing Officer noted that the assessee has filed return of income disclosing earning of interest income on income tax refund for earlier years and interest from saving bank account and the total returned income was Rs. 6,92,310/-. Vide letter dated 15.07.2014, the assessee filed a letter before the AO that he has no knowledge of bank account at HSBC Private Bank (Swiss)S.A. It was further stated that similar reply was filed before Dy. Director (investigation) Unit-6, Delhi. 9. The Assessing Officer asked the assessee to inform the date and period of making the initial deposits in these accounts, source of deposits in these accounts and to explain as to whether the source of such deposits is out of the income earned in India and on which due taxes have been paid and/or these investments are made from the income earned outside India. 10. Rejecting the various explanation given by the assessee, the Assessing Officer ....
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....of jurisdiction u/s. 148 of the I.T. Act, 1961. 3. That even otherwise, reassessment proceedings are not sustainable as same were without requisite approval in terms of provisions of sec. 251 of the I.T. Act, 1961. 4i). That CIT(A) having confirmed the addition on substantive basis in the case of Anand Pershad Jaiswal, there is no justification for holding the same on protective basis in the case of appellant. (ii) That the observation and conclusion of the CIT(A) are illegal, arbitrary and against the scheme of the act. 5(i). That on the facts and circumstances of the case, the CIT(A) has erred in confirming addition of Rs. 13,70,47,687/- on protective basis in the case of the appellant. (ii). That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises. (iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961. 6(i). That addition was made without going into the nature of deposit and in the absence of proper appreciation of facts, there could be no valid basis for any such addition. (ii). That the finding o....
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....ands of the Sh. Anand Pershad Jaiswal in AY 2006-07. 15. He submitted that the dispute in the instant case relates to the foreign bank account and despite repeatedly being asked no certified copy of the same was made available to the assessee. He submitted that the reassessment proceedings in the instant case are without jurisdiction and bad in law as the reasons recorded failed to satisfy the jurisdictional requirement of section 147 of the Act. He submitted that the Assessing Officer in the instant case has assumed jurisdiction merely on the basis of unsubstantiated information from the Investigation Wing and without application of independent mind by him or carrying out any enquiry. Further, Sh. Ladli Pershad Jaiswal was a nonresident for several years and therefore, in absence of any evidence or material to establish the source of such deposits being income earned or derived in India, there is no case of any income chargeable to tax in India in terms of provisions of section 5 of the Act, which could be considered as undisclosed income of the assessee Late Sh. Ladli Pershad Jaiswal. He submitted that the learned CIT(A) confirmed the addition on protective basis in the hands o....
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....ned CIT(DR) is concerned, he submitted that as per the reasons, addition was in respect of credit in the said account in January 2006 which was in relation to maturity of old bonds and there is no case of any fresh deposit or credit based on cash or cheque entry. He submitted that despite specific request, the learned DR also could not provide certified copy of the said account and any evidence in respect of substantial interest of the assessee with Milkfood Ltd. and Jagatjit Industries Ltd. during the relevant assessment years and the basis for presumption of undisclosed income and nexus of same with deposit in overseas bank account. 20. As regards the issue of foreign bank account is concerned, the learned counsel for the assessee referring to the following decisions submitted that the addition to the assessee's income in respect of undisclosed amount kept in foreign bank account cannot be added to the total income of the assessee when documents relied upon by the Revenue authorities do not contain signature of bank official and requisite information was not replied from foreign banking authority. i. Shyam Sunder Jindal vs ACIT 188 TTJ 404 (Del. Trib.) ii. DCIT vs Rahul Rajn....
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.... the Assessing Officer or carrying out any enquiry. Further, according to the learned counsel for the assessee, although the Assessing Officer can make protective addition however, the learned CIT(A) has no authority to make addition on protective basis in one hand and substantive basis in another hand. He cannot evade determination of issue as to who is owner of real income when it was brought before him by way of an appeal. It is also his argument that when the assessee was nonresident upto AY 2004-05 and thereafter was not ordinarily resident for AY 2006-07 and 2007-08 and when Sh. Ladli Pershad Jaiswal expired on 11.08.2005 and when the amount credited in the bank account in the month of January 2006 which were the maturity proceed of sum invested earlier, the addition made by the Assessing Officer and sustained by the learned CIT(A) is not justified. 24. We find some force in the above arguments of the learned counsel for the assessee. A perusal of the reason to believe which is reproduced in the preceding paragraph reveals that the Assessing Officer has assumed jurisdiction u/s 147 of the Act on the basis of information received from the Investigation Wing about the foreign ....
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.... that the coowner of the foreign bank account was Sh. Anand Pershad Jaiwsal and as such Sh. Anand Pershad Jaiswal should be treated as legal heir and owner of the bank account post demise of assessee late Sh. Ladli Pershad Jaiswal. According to him merely because Sh. Karamjit S. Jaiswal filed the ITR as legal heir of the assessee late Sh. Ladli Pershad Jaiswal, the same will not absolve Sh. Anand Pershad Jaiswal of his liability as legal heir. According to the learned CIT(A) , there is no estoppels against law. 26. Before proceeding into legality of addition we deem it proper to address the issue raised by the learned counsel for the assessee regarding the protective addition made by the learned CIT(A). There is no dispute or controversy that the Assessing Officer, if the facts so warrant, can make substantive addition in the hand of one person and protective addition in the hands of another person where it is difficult to attribute the income in the hands of the particular person. The purpose of making protective addition is to safeguard the interest of the Revenue in the event where the appellate authority reaches to a conclusion that income is taxable in the hands of either of....
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....nstrained to observe that even though the entire premises of reopening and consequential of addition is the foreign bank account, none of the parties was able to produce a copy of bank statement before us which is a crucial piece of evidence. Under these facts and circumstances, we are not in a position to verify the authenticity of the alleged bank statement or quantum or nature of deposits therein and its relevance for the year under consideration. 28. We find from a perusal of the assessment order, that the 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 asses....
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....ocuments or evidences that may be taken into consideration while deciding the 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. 29. Grounds raised in other appeals are as under:- ITA No.3248/Del/2016 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 authentic copy of any such account or proper appreciation of nature of entries in the bank account, there could be no justification for recording of satisfaction and assumption of jurisdiction u/s. 148 of the I.T. Act, 1961. 3. That even otherwise, reassessment proceedings are not sustainable as same were without requisite approval in terms of provisions of sec. 251....
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....illegal and bad in law. 5. That the CIT(A) erred on facts and in law in not appreciating that the impugned proceedings having been initiated without obtaining requisite sanction in terms of section 151 of the Act was beyond jurisdiction and bad in law. Without Prejudice 6. That the CIT(A) erred on facts and in law in not deleting the addition of Rs. 13,70,47,686 made by the assessing officer on protective basis; instead in directing the same to be made on substantive basis in the hands of the appellant, without any valid justification. 7. That the CIT(A) erred on facts and in law in holding that balance in the foreign bank account with HSBC Bank, Geneva, represented the appellant's income from undisclosed sources. 8. That the CIT(A) failed to appreciate that - (a) the above alleged foreign bank account did not belong to the appellant; (b) none of the deposits, as alleged, related to the appellant; and (c) no transaction was made by the appellant, and therefore, the question of making any addition in the hands of the appellant could not at all arise. 9. That the CIT(A) erred on facts and in law in not judiciously examining/ considering the detailed averments/ submissions....
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....s' was beyond jurisdiction and bad in law. 4. That the CIT(A) erred in not appreciating that reassessment proceedings under section 147 of the Act having been initiated merely on the basis of certain unreliable/ uncorroborated third party information, without independent application of mind by the assessing officer, was illegal and bad in law. 5. That the CIT(A) erred on facts and in law in not appreciating that the impugned proceedings having been initiated without obtaining requisite sanction in terms of section 151 of the Act was beyond jurisdiction and bad in law. Without Prejudice 6. That the CIT(A) erred on facts and in law in not deleting the addition of Rs. 2,03,75,814/- made by the assessing officer on protective basis; instead in directing the same to be made on substantive basis in the hands of the appellant, without any valid justification. 7. That the CIT(A) erred on facts and in law in holding that balance in the foreign bank account with HSBC Bank, Geneva, represented the appellant's income from undisclosed sources. 8. That the CIT(A) failed to appreciate that - (a) the above alleged foreign bank account did not belong to the appellant; (b) none of the de....