TMI Blog2021 (6) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... AO cannot make any assessment u/s.153A of the Act making addition to assessee s income in respect of amount deposited in foreign bank since assessment for relevant assessment year have already been completed u/s.143(3) Penalty u/s. 271 (1)(b) - HELD THAT:- This action of the assessee was found to be of non-cooperative attitude by the ld. AO for which penalty u/s.271(1)(b) of the Act was levied. In our considered opinion, the assessee has given a plausible explanation on the subject mentioned issue and the said explanation was not accepted by the ld. AO. However, we find that ultimately the assessments were framed by the ld. AO for all these assessment years only u/s.143(3) of the Act which goes to prove that assessee had indeed cooperated with the ld. AO for smooth completion of assessment proceedings by making some addition. Hence, we do not deem this as fit case for sustaining the levy of penalty u/s.271(1)(b) of the Act. Accordingly, the penalty levied u/s.271(1)(b) of the Act are hereby directed to deleted for A.Y.2006-07 to 2012-13. Penalty appeals u/s. 271(1)(b) of assessee allowed. Penalty u/s. 271AAA - HELD THAT:- When the only source of income is from diamond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri Rajesh Simhan Shri Ashish Sodhani For the Revenue : Shri Vijaykumar G. Subramanian ORDER PER M. BALAGANESH (A.M): ITA No.7180/Mum/2017 (A.Y.2007-08) and 7179/Mum/2017 (A.Y.2006-07) in the case of Shri Sunil Chimanlal Gandhi; 7272/Mum/2017 (A.Y.2006-07) and ITA No.7273/Mum/2017 (A.Y.2007-08) in the case of Shri Nirav Sunil Gandhi ; and ITA No. 7274/Mum/2017 (A.Y.2006-07) and 7275/Mum/2017 (A.Y.2007-08) in the case of Shri Pranav Sunil Gandhi These appeals arise out of the order by the ld. Commissioner of Income Tax (Appeals)-50, Mumbai in appeal dated 22/09/2017 (ld. CIT(A) in short) against the order of assessment passed u/s. 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/03/2015 by the ld. Dy. Commissioner of Income Tax, Circle-8(3) (hereinafter referred to as ld. AO). Let us take up the appeals first in the case of Shri Sunil Chimanlal Gandhi. ITA No.7179/Mum/2017 (A.Y.2006-07)- Quantum Appeal in the case of Shri Sunil Chimanlal Gandhi 2. We find that assessee has contested the addition made u/s.69A of the Act in respect of monies lying in foreign bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andhi who is a resident of Belgium and have accrued and received by him. Accordingly, the assessee herein chose not to offer the same in the return filed in response to notice u/s 153A of the Act, which tantamount to retraction made by him. 3.1. Pursuant to the above, the ld.AO referred the matter to the Foreign Tax and Tax Research ( FT TR ) division of CBDT on 04.01.2012 vide letter no. ADIT/Unit-IX(2)/Mumbai/HSBC_Sunil Gandhi/2011-12. 3.2. The case was selected for scrutiny and ld.AO issued a notice u/s 153A of the Act on 21.01.2013, which was served on the assessee. In response to the said notice, the assessee filed the return of income on 23.07.2013 declaring the income of ₹ 58,889/-. Subsequently, the ld.AO issued a notice u/s 143(2) of the Act on 12.09.2013. Vide Notice u/s.142(1) of the Act issued on 28.10.2013, the assessee was asked to furnish the details about the foreign bank account in HSBC at Geneva. In full cooperation with the department and in good faith, the assessee through different submissions filed the details as required by the ld.AO. The assessee reiterated in all his statements that he was neither the owner of the said bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts , or any other document relating to same, in any manner whatsoever, was found. Admittedly, the assessment for the A.Y.2006-07 was a concluded assessment as on 16/09/2011 (being the date of search) in as much as the original return of income was filed by the assessee on 12/07/2006 which was duly processed u/s.143(1) of the Act and that the time limit for issuance of notice u/s.143(2) of the Act had already expired as on the date of search. Hence, there is absolutely no quarrel that as on the date of search, the assessment for the A.Y.2006-07 had already been concluded and becomes unabated assessment. Admittedly the residential status of assessee is resident and ordinarily resident wherein the global income of the assessee is taxable in India. We find that assessee had always stated that the HSBC Bank account in assessee s name was opened by his son Shri Nirav Gandhi for the purpose of securing his future (i.e. Shri Nirav Gandhi) and for sentimental reasons only. Hence, the assessee though gave a statement u/s.132(4) of the Act on the date of search and subsequently, had later retracted the same by not offering the disclosed sum in the return of income filed pursuant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not visited Belgium after the year 2004, in support of which he has submitted the passport for verification of the ld. AO. It was categorically submitted by the assessee by way of statement on oath that the said bank in HSBC Bank, Geneva was opened only by Shri Nirav Gandhi (son of the assessee) in the name of the assessee for the business and personal purposes of Shri Nirav Gandhi. It was categorically stated that the said bank account was operated fully by Shri Nirav Gandhi. In other words, it could be safely inferred that assessee always maintained that he was never beneficial owner of the transactions in the bank account maintained with HSBC Bank, Geneva. We find in response to Question Nos. 15 to 24 while recording a statement on oath by the ld. AO during the assessment proceedings on 29/07/2013, the assessee had categorically denied having any transactions in the said bank account with HSBC Bank, Geneva and submitted that the said account does not belong to him and it was all maintained and operated by only his son Shri Nirav Gandhi who is a resident of Belgium doing business there for the past 20 years. Again, the assessee filed yet another letter dated 19/09/2013 reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the search proceedings u/s.132 of the Act and statement recorded u/s 132(4) of the Act at the time of search. The law is now very well settled that in respect of concluded assessment / unabated assessment, on the date of search, no addition could be made thereon unless there is any incriminating material relatable to that year during the course of search. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573 and the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Continental Wareshousing Corporation (Nhava Sheva) reported in 374 ITR 645. The ld. AR also placed reliance on the decision of the Hon ble Delhi High Court in the case of PCIT vs. Best Infrastructure (India) Pvt. Ltd reported in 397 ITR 82 to drive home the point that statement recorded u/s.132(4) of the Act does not by themselves constitute incriminating material. Hence, the argument advanced by the ld. DR in this regard is dismissed. We find that the ld. DR vehemently relied on the decision of the Hon ble Kerala High Court in the case of E N Gopakumar vs CIT reported in 390 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chimanlal Gandhi 5. As the facts and circumstances for this assessment year are identical with facts and circumstances of A.Y.2006-07 deliberated hereinabove, the decision rendered for A.Y.2006-07 in ITA No.7179/Mum/2017 shall apply with equal force for this assessment year also except with variance in figures. 6. In the result, appeal of the assessee for the A.Y.2007-08 in the case of Shri Sunil C Gandhi in ITA No.7180/Mum/2017 is allowed. ITA No.7181/Mum/2017 7182/Mum/2017 (A.Y.2006-07 A.Y. 2007-08) Penalty appeals u/s.271(1)(c) of the Act for A.Yrs. 2006-07 2007-08 respectively in the case of Shri Sunil C Gandhi 7. These appeals arise out of order of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal dated 22/09/2017 25/09/2017 respectively in the matter of imposition of penalty u/s.271 (1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act). 7.1. Since the quantum assessments have been cancelled for the A.Yrs. 2006-07 and 2007-08 in ITA Nos. 7179 7180/Mum/2017 respectively hereinabove, the concealment penalty u/s.271(1)(c) of the Act levied for both the years would have no legs to stand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me addition. Reliance in this regard is placed on the following decisions:- a) Decision of Co-ordinate Bench of Delhi Tribunal in the case of Shiv Kumar Nayyar vs ACIT in ITA Nos. 6203 6204/Del/2019 dated 31/03/2021 b) Decision of Delhi Tribunal in the case of Globus Infocom Ltd vs. DCIT in ITA No.738/Del/2014 c) Decision of Delhi Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Singh vs ADIT in ITA No.2900/Del/2005. 9.2. Hence, we do not deem this as fit case for sustaining the levy of penalty u/s.271(1)(b) of the Act. Accordingly, the penalty levied u/s.271(1)(b) of the Act are hereby directed to deleted for A.Y.2006-07 to 2012-13. 10. In the result, all these penalty appeals u/s.271(1)(b) of the Act in ITA Nos.7222/Mum/2017 to 7228/Mum/2017 (A.Y.2006-07 to 2012-13)of the assessee i.e. Shri Sunil C Gandhi are allowed. ITA No.7183/Mum/2017 (A.Y.2012-13) Shri Sunil C Gandhi - Penalty u/s.271AAA of the Act 11. This appeal arises out of order of the ld. Commissioner of Income Tax (Appeals)-50, Mumbai (ld. CIT(A) in short) in appeal dated 25/09/2017 in the matter of imposition of penalty u/s.271AAA of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de reply to question No.4 that he is a partner of Nehal Diamonds and had earned income thereon along with his family members. It was also specifically submitted that in the said statement that he is associated with M/s. Nehal Diamonds since 1979 and the modus operandi of business carried on by him was duly specified. Since the disclosure was made only in respect of jewellery predominantly and that unexplained cash of ₹ 3.5 lakhs, it could be safely concluded that the assessee had earned undisclosed income only from his diamond business which he has been carrying on from 1979 onwards and this is further strengthened by the stand that assessee does not have any other source of income other than this. We further find that assessee had duly filed the reconciliation of jewellery belonging to him as well as to various family members vide his letter dated 08/11/2011 before the Revenue. The said reconciliation statement further provides details of wealth tax returns that were filed and valuation reports that were obtained for the jewellery which was found in the course of search and seizure. The said details also provide that details about the jewellery that was purchased, detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered in the search action. There is absolutely no dispute that Shri Nirav S Gandhi is a non-resident as far as Indian Tax laws are concerned and he is a tax resident of Belgium. It is not in dispute that Shri Nirav S Gandhi is carrying on business in Belgium from 1993 onwards. As per Indian Tax laws, for a non-resident, only income earned in India would be liable to tax. The assessee (i.e. Shri Nirav Gandhi) had duly filed his original return of income for A.Y.2006-07 on 30/06/2006 declaring total income of ₹ 99,548/- comprising of interest income under the head income from other sources . As pointed out hereinabove in the quantum appeal for A.Y.2006-07 in the case of Shri Sunil C Gandhi in ITA No.7179/Mum/2017, the ld. AO obtained the Base note from the French Government which stated that there is a foreign bank account maintained in the name of Shri Sunil C Gandhi with HSBC Bank, Geneva. As stated supra, Shri Sunil C Gandhi had always maintained and stated that the said bank account in his name was opened by his son Shri Nirav Gandhi for the purpose of business purposes of Shri Nirav Gandhi and for securing the future of Shri Nirav Gandhi; that the said bank account was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve basis. On this preliminary ground, we are inclined to grant relief to the assessee (i.e. Shri Nirav Gandhi). We find that assessee has not preferred any appeal against the order passed by the ld. CIT(A). We find that Revenue has challenged the deletion of protective addition made by the ld. CIT(A). Since assessee is a non-resident, at the cost of repetition, there cannot be any addition in respect of a foreign bank account in HSBC Bank, Geneva in India either on substantive or on protective basis. Accordingly, the ground raised by the Revenue is dismissed. 18. In the result appeal of the Revenue in ITA No.7272/Mum/2017 for A.Y. 2006-07 in the case of Shri Nirav S Gandhi is dismissed. Quantum Appeal filed by the revenue in the case of Shri Nirav Sunil Gandhi - ITA No.7273/Mum/2018 (A.Y.2007-08) 19. As the facts and circumstances for this assessment year are identical with facts and circumstances of A.Y.2006-07 deliberated hereinabove, the decision rendered for A.Y.2006-07 in ITA No.7272/Mum/2017 shall apply with equal force for this assessment year also except with variance in figures. 20. In the result, both the quantum appeals of the Revenue in ITA No.72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. In the result, all the penalty appeals of the assessee (Shri Nirav Sunil Gandhi) u/s.271(1)(b) of the Act in ITA Nos. 7236 to 7242/Mum/2017 for A.Y.2006-07 to 2012-13 respectively are allowed. ITA No.7274/Mum/2015 (A.Y.2006-07)- Quantum Appeal filed by the revenue in the case of Shri Pranav Sunil Gandhi 23. The Revenue has raised the following ground:- On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 1,26,18,254/- u/s.69A of the I.T. Act made on protective basis in the case of the assessee, merely on the basis of confirming the same addition on substantive basis in the case of his father Shri Sunil C Gandhi without appreciating the fact that assessee s name had also appeared in the information received by the Government of India from the Government of France under the provisions of Double Taxation Avoidance Agreement (DTAA) and the very basis of the protective addition in assessee s case is to protect the interest of Revenue in the event of the substantive demand being non-recoverable? The appellant prays that the order of the CIT(A) on the above grounds be set aside and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 vide his order dated 22/09/2017, the protective addition made in the hands of Shri Pranav S Gandhi (assessee herein) was deleted. 25. Aggrieved by this, the Revenue is in appeal before us. 26. The assessee in response to queries of the ld. AO confirmed that his brother Shri Nirav Gandhi was the beneficial owner of the foreign bank account with HSBC at Geneva and that the said account was operated by his brother since 2000 and that all the funds in the said bank account are in relation to his brother s business (i.e. Shri Nirav S Gandhi) outside India and do not represent any income from sources in India. It was specifically confirmed that the said funds have been disclosed by his brother (Shri Nirav S Gandhi) while filing the tax returns in Belgium which fact is also confirmed by Belgium revenue authorities. 27. We find that the said bank account is not in the name of Shri Pranav Gandhi and hence, Shri Pranav Gandhi is not obliged to give any explanation in respect of funds lying in the said bank account in HSBC, Geneva and hence, no addition could be made in his hands either on substantive basis or protective basis. Accordingly, the ground raised by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Reliance in this regard is placed on the following decisions:- a) Decision of Co-ordinate Bench of Delhi Tribunal in the case of Shiv Kumar Nayyar vs ACIT in ITA Nos. 6203 6204/Del/2019 dated 31/03/2021 b) Decision of Delhi Tribunal in the case of Globus Infocom Ltd vs. DCIT in ITA No.738/Del/2014 c) Decision of Delhi Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Singh vs ADIT in ITA No.2900/Del/2005. 31.2. Hence, we do not deem this as fit case for sustaining the levy of penalty u/s.271(1)(b) of the Act. Accordingly, the penalty levied u/s.271(1)(b) of the Act are hereby directed to be deleted for A.Y.2006-07 to 2012-13 in the case of Shri Pranav Sunil Gandhi. 32. In the result, all these penalty appeals u/s.271(1)(b) of the Act of the assessee i.e. Shri Pranav S Gandhi in ITA Nos. 7229 to 7235/Mum/2017 for the A.Ys. 2006-07 to 2013-13 respectively, are allowed. 33. TO SUM UP: Sr. No. ITA No. A.Y. Name of the Assessee Result 1. 2. 3. 4. 5. 6. 7. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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