TMI Blog2023 (3) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... nt - information received under the DTAA from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty held with the HSBC Bank, Geneva, Switzerland - HELD THAT:- As reassessment proceeding under section 147 of the Act was initiated to bring to tax the funds lying in various bank accounts, however, while passing the assessment order the Assessing Officer made the addition of the minimum balance required to open an account in HSBC Bank, Geneva. Thus, our aforesaid findings rendered shall apply mutatis mutandis. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed. - ITA no.2931/Mum./2022 And ITA no.2932/Mum./2022 And ITA no.2934/Mum./2022 And ITA no.2935/Mum./2022 And ITA no.2933/Mum./2022 - - - Dated:- 21-3-2023 - Shri M. Balaganesh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Vijay Mehta a/w Ms. Priya Kumar For the Revenue : Smt. Jayashree Thakur ORDER PER SANDEEP SINGH KARHAIL, J.M. The present batch of 5 appeals has been filed by the Revenue in the matter of different respondent assessees, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the CIT(A) in his decision has placed his reliance on the decision of the ITAT, Mumbai in the assessee's own case for A.YS. 2006-07 and 2007-08 ignoring that the HSBC bank accounts involved in AY 2006-07 and AY 2007-08 pertains to M/s. Sulay Trading Ltd. and M/s. Laptis Trading Ltd. whereas the bank accounts involved in the year under consideration pertains to M/s. Olga Ltd. and M/s. Blackberry International Ltd and that finding made by the Tribunal for those years with regards to the accounts of M/s. Sulay Trading Ltd. and M/s. Laptis Trading Ltd. is not applicable for the assessment under consideration. 4. On the facts and circumstances of the case and in law, the CIT(A) in his decision has placed his reliance on the decision of the ITAT, Mumbai in the assessee's own case for A.YS. 2006-07 and 2007-08 without appreciating that the ITAT has placed reliance on judicial pronouncement in the case of All Cargo Global Logistic Ltd. Department has not accepted this decision and further appeals have been filed in the cases. 4. The brief facts of the case as emanating from the record are: In these cases, information under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5090144519 3. Raj Hiten Parikh 29.06.1998 BUP 5090144520 4. Shaunak Jintendra Parikh 07.03.2001 BUP 5090158784 6. On the basis of the above information, reassessment proceedings under section 147 of the Act were initiated in the case of all 4 individuals, and notice under section 148 of the Act was issued. In response to the aforesaid notice, these individuals filed a letter that the return filed under section 139(1) of the Act be treated as a return filed in compliance with the notice issued under section 148 of the Act. The reasons recorded for reopening the assessment were provided to all the assessees. During the course of search action as well as during the course of reassessment proceedings, all the assessees denied owning any such bank account in HSBC Bank, Geneva. All the assessees also did not furnish the consent waiver form waiving the protection of secrecy laws, so as to enable the government to get the requisite information and verify the details/letter furnished by the assessee. After verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal before the learned CIT(A), all the assessees challenged the assessment orders both on the assumption of jurisdiction under section 147 of the Act as well as additions made by the Assessing Officer. Vide separate impugned orders, the learned CIT(A) upheld the assumption of jurisdiction by the Assessing Officer under section 147 of the Act and held that the Assessing Officer had valid reasons to initiate the reassessment proceedings, which were duly recorded and communicated to the assessee. On merits, the learned CIT(A) following the decision of the coordinate bench of the Tribunal in assessee's own case for the assessment years 2006-07 and 2007-08 deleted the addition made by the Assessing Officer. Being aggrieved, the Revenue is in appeal before us. 10. During the hearing, the learned Departmental Representative ( learned DR ) submitted that the addition in the present case has been made on the basis of base note information received from the French authority under the India-France DTAA. It was also submitted that all the information received by the assessee was confronted with all these assessees. However, these assessees only confirmed the personal information a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to add to, amend or alter, the foregoing grounds of appeal. 13. It is pertinent to note that in response to the petitions filed under Rule 27 of the ITAT Rules, the learned DR furnish a copy of the report dated 27/01/2023, received from the office of Additional CIT, Central Range-1, Mumbai. 14. We have considered the rival submissions and perused the material available on record including the petition filed by the assessee under Rule 27 as well as Revenue s response thereto. By way of the petition under Rule 27, it is the plea of the assessee that the assessment in these cases has been completed under section 147 and no addition has been made by the Assessing Officer in respect of the issue which is the subject matter of reasons for reopening the assessment and therefore, the Assessing Officer has no jurisdiction under section 147 of the Act to make the impugned addition. 15. In the present case, it is undisputed that the assessee though had challenged the assumption of jurisdiction under section 147 of the Act before the learned CIT(A), however, the aforesaid plea now raised before us by way of the petition under Rule 27 was not raised and therefore was not dealt in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional parameters set out under section 153C of the IT Act, before the ITAT, even without filing any cross-objections before the ITAT. 28. At least, prima facie, non-compliance with jurisdictional parameters set out under section 153C of the IT Act, if established, will go to the root of the matter and even nullify the very action initiated under section 153C of the IT Act. Based on the material furnished to the assessees, it was the case of the assessees that what was found in the course of search proceedings under section 132 of the IT Act in the premises of the said firm and the said company, were the books of accounts belonging to the said firm and the said company. It is the case of the assessees that no books of accounts belonging to the assessees i.e. Peter Vaz and Edgar Afonso were found in the search proceedings under Section 132 in the premises of the said firm and the said company. Therefore, it was the case of the assessees that no proceedings under section 153C of the IT Act could ever have been initiated against these assessees. 29. Mr. Pardial stressed that the provisions of Section 153C as amended up to the year 2013 required the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing inaccurate particulars. 33. In the above case, the CIT (Appeals) recorded a finding that the assessee had concealed particulars of his income or furnished inaccurate particulars of his income but for detailed reasons set out, the CIT (Appeals) quashed the penalty imposed upon the assessee under section 271 of the IT Act. In the appeal filed by the Revenue before the ITAT, the assessee sought to assail the finding of concealment but the ITAT did not permit the assessee to do so, on the ground that the assessee had failed to file any cross-objections. 34. The Division Bench of Gujarat High Court however held that the ITAT committed an error in law in not permitting the assessee to assail the finding of the concealment without filing cross-objections. The Court held that the ITAT apparently lost sight of the fact that the assessee had succeeded before the CIT (Appeals) that had allowed the assessee's appeal and even set aside the penalty in its entirety. Therefore, the assessee did not have to appeal. The position in law is well settled that the cross-objections, for all intents and purposes. would amount to an appeal and the cross objector would have the same rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial Court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial Court even by challenging any of the findings that might have been rendered by the trial Court against himself. For supporting the decree passed by the trial Court, it is not necessary for the respondent in the appeal, to file a memorandum of cross-objections challenging a particular finding that is rendered by the trial Court against him when the ultimate decree itself is in his favor. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial Court and in addition to what he has already been given by the decree under challenge. The Hon'ble Supreme Court, therefore, held that the respondent in the appeal had every right to canvas the correctness of the finding on the bar of Order II Rule 2 rendered by the trial Court. 38. In the present case, it is not as if the issue of non-fulfillment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Sulay Trading Limited 5091320491 2. Laptis Trading Limited 5091316222 3. Olga Limited 5091255754 4. Blackberry International Limited 5091255711 The BUP Code with respect to the above mentioned Bank accounts for the-four individuals are as follows: Sr. no. Name of the Individual Date of Creation BUP_SIFIC _PER ID 1. Jay Ketan Parikh 29/06/1998 5090144519 2. Raj Hiten Parikh 29/06/1998 5090144520 3. Milan Kavinchandra Parikh 02/02/1997 5090132872 4. Shaunak Jintendra Parikh 07/03/2001 5090158784 3. From the date of cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assessee have been mentioned as Beneficial Owners' the same would be taxable in respect of his specific entitlements in these bank accounts. The assessee was called upon to seek more information on the balances lying in these Bank accounts as stated above and was requested to provide his consent for sharing of these account details of HSBC, Geneva with the Department. But the assessee have refused to sign any such Consent Waiver Form. Instead, the assessee have availed a letter from HSBC, Geneva providing certain facts as under: 1. The Assessee have never visited the Bank to open the Bank Accounts of the named companies and he has never signed any papers with the Bank. 2. The Assessee have not operated any of the Accounts of the above named companies with the Bank. 3. The Assessee have not themselves initiated any transactions with the Bank 4. The Bank is not aware of any receipts or distributions made personally from or to the assessee from the accounts held with the Bank in the name of the said companies. 5. The Bank has not found any record that the said assessee were either directors or authorized signatories on the said accounts of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Owner of the fund lying in the various Bank accounts has escaped from assessment and taxation, the assessments for A.Y. 1997-98 is reopened u/s. 147 of the Act in respect of Assessment Year as mentioned above. 19. From the perusal of aforesaid reasons, it is evident that the same mentions the name of the Companies in whose names accounts have been maintained in HSBC Bank, Geneva. In para 5 of the aforesaid reason, the Assessing Officer alleged that the assessee is entitled to balances lying in the account of aforesaid 4 companies. Further, it has been alleged that since the assessee is the beneficial owner of these undisclosed bank accounts, therefore the balance outstanding is taxable in the hands of the assessee. In para 7 of the aforesaid reasons, the Assessing Officer ultimately concluded that the assessee holds the bank accounts in HSBC Bank, Geneva, Switzerland and the funds lying in the various bank accounts are its income as the beneficial owner, which has escaped assessment and taxation. Thus, the assessment for the assessment year 1997-98 was reopened under section 147 of the Act. Therefore, no doubt true that on the basis of information received from the French ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income and also any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words and also are used in a cumulative and conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. (emphasis supplied) 24. Further, by relying upon the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5091320491 20/04/2001 2. Laptis Trading Limited 5091316222 17/10/2001 3. Olga Limited 5091255754 25/06/1998 4. Blackberry International Limited 5091255711 25/06/1998 The BUP Code with respect to the above mentioned bank accounts for the four individuals are as follows: Sr. no. Name of the Individual Date of Creation BUP_SIFIC_PER ID 1. Milan Kavinchandra Parikh 02/02/1997 BUP 5090132872 2. Jay Ketan Parikh 29/06/1998 BUP 5090144519 3. Raj Hiten Parikh 29/06/1998 BUP 5090144520 4. Shaunak Jintendra Parikh 0703/2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in ITA No. 2933/Mum./2022 shall apply mutatis mutandis. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed. 31. In view of the above, the grounds raised by the Revenue on merits are rendered academic and therefore, are dismissed. 32. In the result, the appeal by the Revenue is dismissed, while the petition under Rule 27 of ITAT Rules, as filed by the assessee, is allowed. ITA no.2932/Mum./2022 Shri Raj Hiten Parikh - A.Y. 1999-00 33. In the case of Shri Raj Hiten Parikh, for the assessment year 1999-00, the Assessing Officer recorded the following reasons for reopening the assessment under section 147 of the Act:- REASONS FOR REOPENING U/S, 147 OF THE INCOME TAX ACT, 1961 The information was received under the Double Taxation Avoidance Agreement (DTAA) from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty dated 29/11/1992. These accounts are held with the HSBC Bank, Geneva, Switzerland. There are four accounts in the name of four companies where the four individuals who are resident Indians and are cousin brothers belonging to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed by the assessee in his Return of Income and hence remains untaxed. In view of the above, I have reason to believe that the assessee, Shri Raj Hiten Parikh holds the above Bank Accounts in HSBC, Geneva, Switzerland, and since the income as a Beneficial Owner or otherwise of the funds lying in these certain Bank Accounts has escaped assessment and taxation, the assessments for A.Y. 1999-2000 is reopened u/s. 147 of the Income Tax Act, 1961. 34. However, while passing the assessment order dated 30/11/2016 under section 143(3) r/w section 147 of the Act, the Assessing Officer proceeded to make the addition of Rs. 25,24,000, by observing as under:- 14. Therefore, an amount of Rs. 25,24,000/- equivalent to CHF 1,00,000 (1 CHF = 25.24/- INR) being initial investment required to open/maintain an account in HSBC, Geneva, which is undisclosed Bank Account of the assessee is treated as the undisclosed income which has not been accounted for and has escaped assessment. Accordingly an addition of Rs. 25,24,000/- u/s. 69A of the Income Tax Act 1961, is made to the total income of the assessee for A.Y. 1999-00. 35. Therefore, in this case also, it is sufficiently evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he-four individuals are as follows: Sr. no. Name of the Individual Date of Creation BUP_SIFIC _PER ID 1. Jay Ketan Parikh 29/06/1998 BUP 5090144519 2. Milan Kavinchandra Parikh 02/02/1997 BUP 5090132872 3. Raj Hiten Parikh 29/06/1998 BUP 5090144520 4. Shaunak Jintendra Parikh 07/03/2001 BUP 5090158784 In this regard, assessment proceedings in the case of the above mentioned 4 individuals for A.Y. 2006-07 and A.Y. 2007-08 as well as in the case of Shri Milan Kavinchandra Parikh for A.Y. 1997-98 are already completed wherein the Assessing Officer has established that the above mentioned assessees are having this undisclosed bank account and made certain additions. Further, on perusal of the information (in the form of Base Note), it is seen that the account is opened by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ak Jitendra Parikh, for the assessment year 1999-00, the Assessing Officer recorded the following reasons for reopening the assessment under section 147 of the Act:- REASONS FOR REOPENING U/S. 147 OF THE INCOME TAX ACT, 1961 The information was received under the Double Taxation Avoidance Agreement (DTAA) from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty dated 29/11/1992. These accounts are held with the HSBC Bank, Geneva, Switzerland. There are four accounts in the name of four companies where the four individuals who are resident Indians and are cousin orothers belonging to M/s. Mahendra Brothers are the beneficial owners. As per Base Note received, the details of these accounts are as under :- Sr. no. Name of the Entity Account number Code Profile Client Date of Creation 1. Sulay Trading Limited 5091320491 20.04/2001 2. Laptis Trading Limited 5091316222 17/10/2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/11/2016 under section 143(3) r/w section 147 of the Act, the Assessing Officer proceeded to make the addition of Rs. 25,24,000, by observing as under:- 14. Therefore, an amount of Rs. 25,24,000/- equivalent to CHF 1,00,000 (1 CHF = 25.24/- INR) being initial investment required to open/maintain an account in HSBC, Geneva, which is undisclosed Bank Account of the assessee is treated as the undisclosed income which has not been accounted for and has escaped assessment. Accordingly, an addition of Rs.25,24,000/ u/s 69A of the Income Tax Act, 1961, is made to the total income of the assessee for A.Y. 1999 00. 45. Therefore, in this case also, it is sufficiently evident that the reassessment proceeding under section 147 of the Act was initiated to bring to tax the funds lying in various bank accounts, however, while passing the assessment order the Assessing Officer made the addition of the minimum balance required to open an account in HSBC Bank, Geneva. Thus, our aforesaid findings rendered in ITA No. 2933/Mum/2022 shall apply mutatis mutandis. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed. 46. In view of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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