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TMI Blog2023 (4) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon'ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal and we take the appeal filed by the Revenue for adjudication. 3. The brief facts of the case is that a search action under section 132 of the Act was conducted at the residential and business premises of the assessee on 29-09-2011 both at Vadodara and Mumbai. Since the assessee was out of India, Prohibitory orders were placed at the residence of the assessee. When the Assessee had returned from abroad on 04-10-2011 in the morning, immediately search action re-commenced and no rest was permitted to the assessee and the search proceedings continued till very late in the night. Primary statement u/s.131 was recorded during the day time and then the statement u/s.132(4) was recorded till late in the night. 3.1. Thus the search proceedings, commenced on 29th September 2011 and were concluded on 15th November 2011. During the course of search, various places were searched including the Bank lockers of the assessee, his family members and all the business premises of the assessee. However NO incrimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was shared by the Ld CIT (A) to the Assessee, so as to enable him to rebut the same. Copy of the reference made by the Ld Commissioner of Income tax (Central)-II, Ahmedabad on 19th December 2012 to the Joint Secretary (Foreign Tax & Tax Research-1) Division of the CBDT under DTAA was also furnished. 3.4. The said Remand Report also contained a letter dated 31st December 2012 received from Under Secretary [Foreign Tax & Tax Research Division-III(2)] which states that a request for information under "Exchange of Information" made to Switzerland Tax Authorities. As and when any information is received, the same shall be forwarded to you [CIT, Central-II, Ahmedabad]. The ld AO has attached a Photo copy of "Base Document" with respect to issue of foreign bank account. However the Ld. AO in the show cause notice dated 02-02-2015 referred to the above and states that the information was received by Income Tax Department under Double Taxation Avoidance Conveyance (DTAC) between India and France to the effect that the assessee had a bank account in HSBC, Geneva with the aforesaid details. 3.5. The Ld AO has heavily relied on the so called "base document" and concluded that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious question turn by turn. The questioning continued till late night. Variou questions were out to me and since had returned after a long foreign travel and was exhausted, I answered the questions to the best of my ability but under duress I state that, at none of the factories did the officers find anything incriminating against the conduct of the Companies, so far as the provisions of Income Tax Act, 1961 are concerned. I explained to them that none of the factories generate unaccounted income. I also explained to them that RISHI FIBC Solutions Private Limited was entitled for deduction under section 30% of the Income Tax Act, 1961 and hence one can see no reason for the company to generate such unaccounted Income. I further explained to the officers that the companies other than RISHI FIBC Solutions Private Limited were subjected to scrutiny assessment for years together and that except for a few standard additions the company's books of accounts were accepted by all the assessing officers. Since was tired. I wanted to get over with the proceedings and answered the questions in the manner in which the ADIT's wanted them to be answered, it now occurs to me that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was received by Shri Shibu Varghese, Inspector on 25th February. 2013) is attached for your ready reference. This fact was also brought to the knowledge of JCIT, Central Circle, Baroda Shri Lala Philip by my AR Shri CA. Mayur Parmar during the recent conversation with him when a copy of the letter was given to him. In view of the above facts, regret, cannot furnish to you details sought by you in item (i), (ii). & (iii) of Part (o) of your questionnaire. 3.7. The Assessing Officer in the assessment order dated 27.02. 2015 made the impugned addition as follows: "So as per the information exchanged through Double Taxation Avoidance Conveyance(DTAC) between India and France, assessee is in possession of Foreign bank account vide account number stated above. The name, address, date of birth mentioned are of assessee only as can be found out from the return of income. And during the course of search when assessee was confronted with this fact, he had accepted the presence of foreign bank account in HSBC. So this is more than sufficient evidence to prove that assessee has HSBC foreign bank account. Assessee was specifically provided with this information during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved against the assessment order, the assessee filed an appeal before LdCIT[A] and during the course of appellate proceedings, the assessee raised the Additional Grounds of Appeal as follows: Additional Grounds of appeal No.1 a. On the facts and in the circumstances of the case and in law, the learned AO has erred in completing the assessment beyond the time limit for completion of assessment u/s 153A as stipulated by the provisions of section 153B(1)(viii) of the Income Tax Act, 1961. b. The learned AO on the facts and in the circumstances of the case and in law has erred in stating that the time limit for completion of assessment u/s 153 was extended by virtue of provision as per section 153B(1)(viii) of the Income Tax Act, 1961. c. The learned AO on the facts and in the circumstances of the case has erred in relying on the documents/evidences without granting adequate opportunity to your appellant to rebut the same. Additional Ground of appeal No.2 a. That on facts and in law, the learned AO has grievously erred in making addition of Rs.7.5 Crores in respect of alleged foreign bank account in the assessment u/s. 153A of the Act, as there is no incriminating mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. Now in the case six months period to be excluded begins on 31.12.2012 and ends on 30.06.2013.This period falls well before the period of limitation which ends on 31.03.2014. Therefore the Period of Limitation would be 31.03.2014. The last date for completion of the assessment as per the provisions of section 153B was 31.03.2O14. The period of six months for which the extension would have been available to the AO expired before this date and therefore there is no question of automatic extension of time. In view of the above the assessment completed by the AO on 27th February 2015 was way beyond due date i.e. 31.03.2014 for completion of assessment proceedings for AY 2007-08. 3.16 WITHOUT PREJUDICE TO THE ABOVE even assuming without granting that the period to be excluded while calculating the period of limitation available to the AO is a period of One Year (Not as per the amendment made by Finance ACT 2011 but held by AO), the following picture emerges: - Financial Year: 2006-07 - Assessment Year: 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left with him for completion of assessment. In both the situations, the limitation expired on 31st March 2014. Accordingly, the benefit of the said proviso was not available to the assessing officer and the assessment order passed after the statutory timeline i.e. 31.03.2014 is barred by limitation and thus making assessment void ab-initio. 4.2. The Ld. CIT[A] also dealt with the second limb of the argument namely the exclusion period would be computed "from the date of reference made" or 'time barring period of assessment" and the same was disposed by very detailed order as follows: "... 3.18 Now with regard to question no. 2, whether the exclusion time of six months (or one year as per AO) for completion of the assessment would start from the date of reference for exchange of information i.e. 31.12.2012 or from time barring date of assessment i.e. 31.03.2014. It may be pointed out that the interpretation of the AO regarding the extension of the period beyond the date of limitation i.e 31st March 2014 by adding a period of one more year and extending the limitation up to 31st March 2015 is not in line with the harmonious interpretation of the provisions of section 153B. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be completed within 105 days, i.e., by 4th May, 2007). (vi) On 29th June, 2007, the assessment order was passed. 17. From the aforesaid dates, it is clear that as per the proviso to Explanation to Section 153B, the assessment order could have been passed on or before 3rd July, 2007, i.e., period of 60 days after the special audit report was to be submitted to the Assessing Officer. 18. The proviso quoted above has an object and purpose. It stipulates that the Assessing Officer should have a minimum period of 60 days to complete the assessment, in case after exclusion of period under the Explanation, the period for completing the assessment is less than 60 days. Every time this situation occurs, the proviso comes into play and has to be applied. The proviso can come into operation on one, two or more occasions in the same assessment/reassessment proceedings. In the present case, the respondent assessee had filed a writ petition. Because of the stay order passed, the period during which the stay order was in operation in the High Court has to be excluded. Thereafter, the Assessing Officer passed an order under Section 142(2A) of the Act and the period for conducting special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al High Court as also other Courts. (I) Dr. CIT v. Devangi alias Rupa 394 ITR 184 (Guj.) (II PCIT vs Meeta Gutgutia 96 taxmann.com 468 (SC) (III) CIT (Cen)-III vs. Kabul Chawla[2015] 61 taxmann.com 412 Delhi (IV) CIT v. IBC Knowledge Park (P.) Ltd. 385 ITR 346 (Kar.) (V) Pr. CIT-2 v. Salasar Stock Broking Ltd. [ITA No. 264/2016 (VI) CIT v. Gurinder Singh Bawa [2017] 386 ITR 483 (Bom.), (VII) Pr. CIT v, Mahesh Kumar Gupta [ITANo. 810/2016 (VIII) Pr, CIT v. Ram Avtar Verrna [2017] 395 ITR 252 (IX) Pr.CIT v. Sunrise Fin lease (P.) Ltd. [2018] 89 taxmann.com 4.33 Now, coming to the facts and circumstances of the present case, the search revealed nothing incriminating. Further, the post search proceedings also revealed nothing incriminating. The AO failed to retrieve any authentic data from the custodians of the information / data. Thus, it can be inferred that, the assessment is finalized, and addition has been made on the presumption that the appellant is holding a foreign bank account. It is also seen that, even if the material in possession of Investigation Wing prior to search, is treated as incriminating, still there is substantial force in the argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has erred in holding that the provision of section 153B(1) of the Act as amended by the Finance Act, 2011 would be applicable and not the provision of section 153B(1) of the Act as amended by the Finance Act, 2012. (3) On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in quashing the assessment order u/s. 153A r.w.s. 143(3) of the Act dated 27.02.2015. (4) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that no incriminating evidence were found during the course of search action despite the fact that assessee has admitted in his statement recorded u/s. 132(4) of the Act that assessee is having foreign bank account and the same is not disclosed. (5) On the facts and in the circumstance of the case, the Ld. CIT(A) has grossly erred in ignoring the settled proposition of law that deposition made u/s. 132(4) of the Act is having evidentiary value which cannot be retracted by merely filing affidavit. (6) On the facts and in the circumstance of the case, the Ld. CIT(A) has erred in ignoring the fact that assessee has not brought on record any evidence to support his retraction though at the end of the statement rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on 27-02-2015 (clearly Time barred) 27-02-2015 (clearly Time barred) 6.2. It is an undisputed fact the normal period of limitation under section 153 of the Act for completion of assessment in this case is 31st March 2014. Since a reference was made to Competent Authority namely Joint Secretary (FT & TR-I) Division on 19-12- 2012 by Ld. CIT (Central)-II, Ahmedabad. As per the Pre Amended Proviso, six months namely (upto 30.06.2013) is available to the Assessing Officer. However as this period is less than 60 days of the actual time barring period of 31.03.2014, therefore the extended period is not applicable for completion of assessment. Even as per the Amended Provisions of Finance Act 2012, the period of limitation of one year namely 31.12.2013 is available. Even in that case regular time barring period is on 31.03.2014, which is less than 60 days for the purpose of limitation. There also this Amended Proviso is also not applicable for completion of assessment. 6.3. But without adhering to the above time limits prescribed both under the Pre Amended Proviso and Post Amended Proviso, the Ld. Assessing Officer completed the assessment order on 27.02.2015 which is clearly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under duress by the Investigation Team. It is for this reason, the assessee has not given any "Consent Form" vide letter dated 24-02-2013 for getting the bank account details from HSBC Foreign Bank Account. 7.1. Thus it is a fact that no incriminating document was found during the course of search proceedings. Further it appears that the Income Tax Department is also not sure of its own source of information and the veracity of the information, on which heavy reliance is placed. It is common knowledge, from the press reports, that the information received by the Department from France was based on stolen unverified/leaked documents. The search undertaken by the Department at various premises of assessee was a shot in the dark to try to recover something to give substance to the unverified data received by it from France. Thus the department was not able to find anything either at the residence or the various business premises of the assessee, relating to the offshore bank account. It is self-contradictory to note here that though the information was purportedly received from France, but the JS(FT&TR-1) Division of the CBDT had sought information from Switzerland, which is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made is liable to be deleted. Operative portion of the above judgement reads as follows: "...26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment orders passed on 2-3-2015 are barred by limitation because of search took place on 28-7-2011 as mentioned in the assessment orders and thus the limitation to pass assessment orders expire on 31-3-2014 as per Section 153B(1)(a) of the I.T. Act, 1961. But, the impugned orders have been passed on 2- 3-2015. The Ld. CIT(A) did not appreciate the above issue. He has submitted that reason of passing the assessment orders Dated 2-3-2015 advanced by the Ld. CIT- DR was that since a reference under section 90 of the I.T. Act, 1961 was made to Swiss Authority and no information was received till the time of passing of the assessment orders, hence, the time limit was extended by one year under Explanation-IX of Section 153B of the I.T. Act, 1961. He has submitted that the Ld. CIT-DR has furnished a letter Dated 26-6-2015 together with information asked for in relation to the assessee received from Swiss Authority. It may be seen that as per A.O's admitted case, reference was made under section 90 of the I.T. Act, 1961 under the provisions of "Exchange of Information", Article of Indo Switzerland Double Taxation Avoidance Agreement [DTAA] and such information was required for the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for assessment years under appeals i.e., 2006-2007 to 2011-2012. The Reference is, therefore, invalid and no limitation could have been extended to pass the assessment orders after 31-3-2014. He has, therefore, submitted that limitation extended on the basis of such Reference which could not have been made in Law in the instant case for the period prior to 1-4-2011 i.e., for A.Ys. 2006-2007 to 2011-2012 is bad and impugned assessment orders are barred by limitation. 6.1.12 Learned Counsel for the Assessee has also submitted that the assumption of jurisdiction under section 153A of the I.T Act, 1961 for assessment years under appeals is also bad in Law when there was no incriminating material found as a result of search relevant to assessment years under appeals. In support of his contention he has relied upon Judgments of Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/380 ITR 573 and Pr. CIT v. Meeta Gutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 (Delhi) in which the Departmental SLP have been dismissed by the Hon'ble Supreme Court Pr. CIT v. Meeta Gutgutia [2018] 96 taxmann.com 468/257 Taxman 441 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to by the Learned Counsel for the Assessee during the course of arguments. The Ld. D.R. further submitted that Son of the Assessee Mr. Praveen Sawhney admitted that assessee has maintained bank account with HSBC, Geneva, Switzerland in his statement recorded on 28-7-2011. Seized document Annexure-A1 of Party-SR-1 was found and seized during the course of search proceedings at the residence of the assessee which reflects details of Swiss Bank Account which document was confronted to the assessee, but, assessee did not reveal any information. The Ld. D.R, therefore, submitted that addition have been rightly made in the case of the assessee and decisions of the Hon'ble Delhi High Court in the cases of Kabul Chawla (supra) and Meeta Gutgutia (supra) are not applicable in this case. 8. We have considered the rival submissions and perused the material on record. It is not in dispute that search was conducted in the case of assessee on 28-7- 2011. Both the parties have placed on record copies of the panchanama drawn in the case of assessee at the time of search and thereafter, but, the same did not disclose if any, incriminating material much less than the material was found during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeals i.e., 2006-2007 to 2011-2012. Therefore, it is clear that no incriminating material was found against the assessee so as to make any addition against the assessee. The Hon'ble Delhi High Court in the case of, Kabul Chawla (supra) held as under: "vii. Completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment" 8.2 The Hon'ble Delhi High Court in its recent decision in the case Meeta Gutgutia (supra) in paras 69 to 72 has held as under : "69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer from CBDT relating to the undisclosed account maintained by the assesese with HSBC Bank, Geneva, Switzerland. During the course of search, no incriminating material, however, was found relating to the transactions reflected in the said Bank account of the assessee with HSBC Bank or any income relating thereto and this position was categorically admitted by the Assessing Officer during the course of appellate proceedings before the ld. CIT (Appeals) as is evident from the relevant order-sheet entry dated 21.12.2015 recorded by the ld. CIT (Appeals) (copy at page no. 22 of the paper book). The question that arises now is whether in the absence of such incriminating material, any addition to the total income of the assessee can be made on account of the transactions reflected in the Bank account of the assessee with HSBC Bank or any income relating thereto in assessments completed under section 153A of the Act for both the years under consideration. 9. As per the provisions contained in Section 153A, if the search or requisition is initiated after 31.03.2003, the Assessing Officer is under an obligation to initiate proceedings under section 153A for six years immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3) for determining the scope of the proceedings under section 153A. However, the said question arose specifically for the consideration of Mumbai Bench of this Tribunal in the case of Pratibha Industries Ltd. (supra) and after referring to the discussion made by the Hon'ble Delhi High Court in this context in the case of Anil Kumar Bhatia (supra), the Tribunal held that the only logical conclusion which could be traced out by harmonizing the legislative intendment and the judicial decision was that where the assessments had already become final prior to the date of search, the total income has to be determined under section 153A by clubbing together the income already determined in the original assessments and the income that is found to have escaped assessment on the basis of incriminating material found during the course of search. To arrive at this conclusion, reliance was placed by the Tribunal on the decision of Special Bench, Mumbai in the case of All Cargo Global Logistics Ltd. (supra), wherein it was held that even though all the six years shall become subject matter of assessment under section 153A as a result of search, the Assessing Officer shall get the fr ..... 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