TMI Blog2021 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... This observation made by the Ld. CIT(A) thus may to be expunged. From all corners the Revenue has failed to satisfy us to how the addition in the hands of the assessee at all be sustainable. By no stretch of imagination the addition made by Revenue on the interests income on substantive basis in the hands of the assessee holding assessee as the owner of the funds of the account only on relying upon the instructions to transfer the fund solely on the basis of surmise and conjecture cannot be said to be justified in the absence of corroborative evidence and/or clinching evidence in support of the same and also on the ground of assessment already made on substantive basis in the hands of the sons of the assessee on the same amount of interest income as narrated hereinbefore. In that view of the matter, the addition under challenge is hereby deleted. Addition on substantive basis in the hands of the assessee by way of interest on ABN Amro Bank Account bearing NO. 208695A jointly held with grandson of the appellant - HELD THAT:- AO in the assessment proceeding initiated against the assessee added the same income in the hands of the assessee on substantive basis in the similar ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome as admitted by the Ld. AO by applying the exchange rate as on 31st March of that year has been rightly rejected by the Ld. CIT(A) and consequently deletion of addition of the difference amount is in our considered opinion just and proper and without any ambiguity so as to warrant interference. Hence, the ground of appeal preferred by Revenue is found to be devoid of any merit and, thus, dismissed. - IT(SS)A No. 10 to 13/Rjt/2018, ITA No. 01 to 02/Rjt/2021, ITA No. 120/Rjt/2020, ITA No. 121/Rjt/2020 - - - Dated:- 22-6-2021 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri D. M. Rindani, AR For the Respondent : Shri Om Prakash , CIT DR ORDER PER MADHUMITA ROY, JM: The bunch of appeals filed by both the assessee and Revenue are directed against the order passed by the Ld. CIT(A)-13, Ahmedabad. Item No. 1, 2, 3 4 filed by the assessee are against the orders dated 13.10.2017 passed by the appellate authority for A.Y. 2006-07, 2007-08, 2008-09 and 2009-10. Item No. 5 6 filed by same assessee are against the order dated 14.02.2020 passed by the appellate authority for A.Y. 2006-07 2007-08. Item N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to as the Act ) was carried out in the case of the assessee whereupon a notice under Section 153A of the Act was issued upon the assessee on 16.11.2012 with a direction upon him to file the return of income within 30 days from the date of service of the notice. Pursuant to the same the assessee, an individual filed its return of income on 21.03.2013 showing therein income of ₹ 21,170/-. Relevant to mention that the notice under Section 143(2) dated 08.03.2013 was also then served upon the assessee. 4. During the course of search it was found that the assessee and other family members were holding foreign bank accounts with HSBC Bank Geneva and other banks which were not disclosed to the Income Tax Department. It was further found that during the year under consideration the assessee had Accounts bearing No. 4432541 and 4432533 with the HSBC Bank Geneva in the joint name of Shri Jawahir Mehta (son of the assessee) and Shri Balkrishna Mehta (son of the assessee) respectively. These two accounts were opened on 25.03.1998 and the funds in these accounts were transferred from the A/c. No. 130756 and 4431675 with HSBC Geneva respectively. The A/c No. 130756 was opened by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome earned from the funds transferred from abroad. Both the sons of the assessee since were engaged in business activities at Dubai and could not been able to take care of investments received on distribution in the family due to such engagement in business abroad, the appellant, father took the initiative and responsibility, (who practically left all business investments due to age and returned to India.) in order to manage investments of his sons in a better way kept started managing the funds in his managerial/guardian capacity. It is the sons of the appellant who had utilized their funds by making different investments in future. 7. During the course of search and seizure, numbers of documents including family arrangements were found wherein the direction to transfer the funds from one bank to the other was given to the appellant. Few correspondence shows that the assessee instructed the concerned bank to transfer fund from one account to other or one bank to another and therefore, the Revenue was of the opinion that the assessee is having absolute control over the funds in all the accounts particularly even after the demise of assessee s wife on 1997 when the assessee s inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying with the different bank accounts in dispute never belonged to the appellant as submitted by the Ld. AR. These amounts have been taxed on substantive basis in the hands of the two sons namely Balkrishna Mehta and Jawahir Mehta by the Ld. AO during their assessment proceedings in the year under consideration. Hence, the addition of the said interest income in the hands of the assessee on substantive basis suffers from the principle of double taxation and thus, bad and liable to be deleted as argued by the Ld. AR. 10. The Ld. AR on this issue relied upon the order passed by the Allahabad Tribunal in the case of Prakash Wine Agencies vs. Income Tax Officer reported in 09 CCH 0116 38 TTJ 0039 (Allahabad Trib.) and the order passed by the Pune Tribunal in the case of Natwarlal Radheshyam Bagadiya vs. ACIT (Pune Trib.) where it was held that the right to make protective assessment is given to ITO and not to the appellate authority. Relying on this particular judgment the Ld. AR vehemently argued that altering the nature of addition already made in the hands of Balkrishna by the Ld. AO from substantive basis to protective by the Ld. CIT(A) is without jurisdiction and, therefore, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the order passed by the Revenue on the premise that the funds in question belongs to the assessee since all the instructions to the HSBC Bank for transfer of funds in favour of his sons in the accounts of his two sons namely Jawahir Mehta and Balkrishna Mehta was made by the assessee only. The summarized chart showing that transfer of funds from HSBC Geneva to the concerned accounts of two sons in HSBC Bank at Dubai and India gives no indication that the fund transferred from HSBC Geneva to HSBC Dubai and HSBC India belongs to the assessee. Apart from that, perusal of the communications issued by the HSBC Bank Geneva dated 23.03.2012 merely shows the status of the account being No. 4432541 and 4432533 were closed on 27.09.2007 and 27.05.2008 respectively. 17. The details of fixed deposits of the appellant and his family as assessed by Revenue as made available at Page 47 to 50 in Paper Book No. III have been considered by us. In our humble understanding nowhere of the entire set of above documents gives any indication that the funds transferred from HSBC, Geneva to the son s accounts lying with HSBC Dubai and India belongs to the assessee. These documents do not speak that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new accounts in the name of two sons opened in 2007 and 2008 as appearing from Page 43 to 46 of the Paper Book No. III confirms the initial statement made by the assessee that he made internal division between the two sons and, therefore, in effect he acted in a fiduciary capacity all throughout. As long as the assessee acted as a constituted attorney of his sons, he cannot set to be the owner and/or principal but an agent. Therefore, the fund lying in those accounts belonged to the principal i.e. his sons and not the assessee who has acted merely as an agent. In fact, this particular fact is strengthen by the action made subsequently by his two sons who have owned up and declared the interest incomes in their respective returns of income filed under Section 153A of the Act. It further reveals that the fixed deposit with the bank including in India as found at the time of search and seized thereon stood mainly in the name of son s families and only two of them were kept in the name of the appellant which further goes to show that hardly any investment was left for himself. However, the Revenue failed to submit any such evidence which clearly shows that it is the appellant who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflecting that the said assessments were made on protective basis on him. Be that as it may, if the assessment in the case of the father Ravichandra Mehta is made to be substantive in respect of the said sons namely Jawahir Mehta and Balkrishna the original assessment orders all dated 27.02.2015 in respect of both the sons do not alter its nature from substantive to protective. Ld. AO knowing fully well the fact again made addition on the same alleged income on substantive basis in the hands of the assessee. This is nothing but a case on double taxation. In this respect the Ld. AR relied upon the judgment passed by the Hon ble Jurisdictional High Court in the case of M. R. Shah Logistics Pvt. Ltd. vs. DCIT reported in (2019) 308 CTR 0493. The same has been carefully considered by us. In this particular case by taking the shelter of reopening the AO sought to tax in the hands of the petitioner company of that particular income which was declared by another particularly when such declaration was accepted by the competent authority and by three installments of the entire amount of tax with surcharge and penalty was deposited thereon. The same has been deleted on the ground of double t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of assessment cannot be altered from substantive to protective by indicating the substantive assessment as an error on the part of the Ld. AO merely on the ground that the said income was added on substantive basis in the hands of the assessee. This proposition and conclusion made thereupon by the Ld. CIT(A) at the appellate proceeding is nothing but an afterthought, without any basis arbitrary, whimsical, erroneous and not sustainable in the eyes of law. This observation made by the Ld. CIT(A) thus may to be expunged. Thus, from all corners the Revenue has failed to satisfy us to how the addition in the hands of the assessee at all be sustainable. Therefore, by no stretch of imagination the addition made by Revenue on the interests income of ₹ 1,32,94,549/- ₹ 1,44,53,534/- on substantive basis in the hands of the assessee holding assessee as the owner of the funds of the account only on relying upon the instructions to transfer the fund solely on the basis of surmise and conjecture cannot be said to be justified in the absence of corroborative evidence and/or clinching evidence in support of the same and also on the ground of assessment already made on substantiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the observation made by us hereinabove on this issue in case of the assessment made in the hands of the sons, we find that the addition of ₹ 27,85,904/- by way of interest on ABN Amro Bank Account No. 208695A again in the hands of the assessee is not sustainable in the eye of law and, thus, deleted. 26. Ground No. 5:- The assessee does not want to proceed with the ground as submitted by the Ld. AR at the time of hearing of the matter. Hence, this ground of appeal is dismissed as not pressed. (IT(SS)A No. 11/Rjt/2018):- Ravichandra V. Mehta vs. DCIT (A.Y. 2007-08):- 27. The assessee has filed the appeal with the following grounds:- (1) The Learned Commissioner of Income Tax (Appeals) - 13, Ahmedabad has erred in confirming the addition of ₹ 3,58,05,279/- by way of interest in the hands of the appellant on substantive basis. (2) The action of the learned assessing officer and the learned Commissioner (Appeals) - 13, Ahmedabad confirming the addition of ₹ 3,58,05,279/- on substantive basis in the case of the appellant and treating it as income on protective basis in the hands of the son of the appellant is bad in law, more so when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) - 13, Ahmedabad and the assessing officer failed to appreciate that the appellant treated his funds as divided between two sons and hence income thereon did not belong to the appellant. 32. Ground No. 1 to 3:- The identical issues involved in the case have already been dealt with by us in IT(SS)A No.10/Rjt/2018 for A.Y. 2006-07 and decided in favour of the assessee. In the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, these grounds preferred by the assessee are allowed. IT(SS)A No. 13/Rjt/2018:- Ravichandra V. Mehta vs. DCIT (A.Y. 2009-10):- 33. The assessee has filed the appeal with the following grounds:- (1) The Learned Commissioner of Income Tax (Appeals) - 13, Ahmedabad has erred in confirming the addition of ₹ 1,56,54,476/- by way of interest in the hands of the appellant on substantive basis. (2) The action of the learned assessing officer and the learned Commissioner (Appeals) - 13, Ahmedabad confirming the addition of ₹ 1,56,54,476/- on substantive basis in the case of the appellant and treating it as income on protective basis in the hands of the son of the appellant is bad in law, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rakash Wine Agencies vs. Income Tax Officer, reported in 09 CCH 0116 38 TTJ 0039 (Allahabad Trib.) and the order in the matter of Netwarlal Radheshyam Bagadiya vs. ACIT by the Pune Bench wherein it has been held that if the error is fatal it is not a curable error especially by the appellate authority. The right to make protective assessment is the right to be exercised by the ITO and not the appellate authority. Once addition made on substantive basis in the hands of the sons of the assessee and tax and/or penalty paid thereon the said category of assessment cannot be altered from substantive to protective by indicating the substantive assessment as an error on the part of the Ld. AO merely on the ground that the said income was added on substantive basis in the hands of the assessee. This proposition and conclusion made thereupon by the Ld. CIT(A) at the appellate proceeding is nothing but an afterthought, without any basis arbitrary, whimsical, erroneous and not sustainable in the eyes of law. This observation made by the Ld. CIT(A) thus may to be expunged. 37. It is an admitted position that no opportunity of hearing has been afforded to the assessee before treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground preferred by the assessee is allowed. ITA No. 120/Rjt/2020:- ACIT vs. Balkrishna Ravichandra Mehta (2006-07):- 40. Deleting of addition of ₹ 43,99,544/- by way of interest income from HSBC Account No. 4432533 has been challenged before us by the Revenue. While deleting the addition the Ld. CIT(A) has been pleased to pass orders in the following manner:- 5.12 In this submissions the Ld. AR has alleged that the AO has wrongly arrived that the interest income during A.Y. 2006-07 of ₹ 1m76,94,093/- as against interest income shown of ₹ 1,32,94,549/- in the P L account and the computation of income. Along with the submission dated 20.01.2016, the Ld. A.R. has filed the print out of the computerized books of account of the appellant as paper book which has been claimed to have been produced before the AO also during the assessment proceedings. At page 25 of the paper book, the FD HSBC SA interest has been shown at ₹ 1,32,94,549/- and same has been offered to tax. In the balance sheet at page 24 of the paper book the investments in HSBC 4432533/10998565 and 4432533/10998573 are ₹ 1,36,55,531/- and ₹ 74,06,740/- respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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