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TMI Blog2023 (5) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... oped by Argent Constructions for a consideration of Rs.1 crore. A search action was carried out on the premises of Vipul Mangal, Partner in M/s. Argent Constructions. During the course of search, certain documents were found and seized from his premises indicating that Vipul Mangal had accepted on-money aggregating to Rs.9,75,50,000/- from the purchasers of the flat in the project Silver Arch. In post search proceedings, Vipul Mangal furnished a list of flat purchasers and on-money received in cash from each one of them. On the basis of the statement of Vipul Mangal and the documents found in the course of search action, assessment for AY 2013-14 and 2014-15 in the case of assessee was reopened. Notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was issued on 12.09.2016 to the assessee. In response to the said notice, the assessee filed return of income on 30.07.2017 declaring total income of Rs.41,760/- for AY 2013-14. During the course of reassessment proceedings, summons u/s 131 of the Act were issued to Vipul Mangal. He appeared before the AO and recorded his statement on 12.12.2017 in the presence of Shri Umang Dedhia, CA, Authorised Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the consideration was paid by the assessee through banking channel. The market value of flat as per registered agreement for sale is Rs.86,04,500/-. The agreed consideration for purchase of flat is already more than the market value, hence, there was no question of payment of on-money over and above the agreed price. The ld. Counsel further pointed that Vipul Mangal in his statement recorded on 12.12.2017 has stated that the on-money of Rs.47 lakhs was received from family members of the assessee. However, the names of the family members from whom alleged on-money was received, has not been disclosed. One thing is evident from the said statement that on-money has not been paid by the assessee, someone else paid the alleged on-money in the name of assessee. Addition on the basis of vague statement cannot be made in the hands of assessee. The Ld. Counsel further submitted that proper/effective opportunity of cross-examination was not provided to the Authorised Representative of the assessee when statement of Shri Vipul Mangal was recorded on 12.12.2017. 5.2 The ld. Counsel for the assessee stated that not admitting but assuming that even if on-money was paid by assessee, the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. From the perusal of same, we find that the roots of reassessment proceedings in the case of assessee are in the information received from Joint DIT (Investigation), Mumbai. As per the information received, the assessee has paid on money amounting to Rs.47 lakhs in cash to Vipul Mangal, Partner of M/s Argent Constructions for purchase of flat in Silver Arch project developed by M/s Argent Constructions. The details of alleged on-money paid by the assessee to Vipul Mangal is as under: F.Y. Date of Payment Amount (Rs. in lakhs) 2012-13 05.12.2012 10.00 2012-13 16.12.2012 15.00 2013-14 05.05.2013 02.00 2013-14 05.06.2013 08.00 2013-14 21.12.2013 12.00 Total 47.00 It is not simpliciter on the information received from Investigation Wing that the AO re-opened assessment. Though, the belief of the AO stemmed from information from Investigation Wing, the AO further gathered information through AIR on another issue. After receipt of information, the same was examined by the AO and thereafter he proceeded on to reopen the assessment. We find no infirmity in reopening of the assessment, hence, ground no. 1 of appeal is dismissed, being devoid of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined investment at that. Bearing this in mind, let us now see the treaty provisions under which this income can be brought to tax in the hands of the assessee- in terms of the provisions of the Indo UAE tax treaty, as there is no dispute that the assessee is, being resident in and fiscally domiciled in the UAE, entitled to the benefits of the Indo UAE tax treaty. We are right now dealing with an assessment year in which tax residency certificate was not even mandatory, but quite fairly, that aspect has not even been raised before us. Coming to the taxability under the Indo UAE tax treaty, such an income is not specifically taxed under any of the heads in the tax treaty in question. That brings us to the residuary head of income, dealing with 'other income', which is covered by article 22. Under Article 22 (1) of the Indo UAE tax treaty, "Subject to the provisions of paragraph (2), items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this Agreement, shall be taxable only in that Contracting State". It is not even anyone's case that income has arisen here; the case is that the income has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither residence nor source jurisdiction; it is at best investment jurisdiction. However, the scheme of tax treaties limits the rights of taxation either to residence or to source jurisdiction. 12. What essentially follows is that if, under the domestic tax laws of the UAE, the amounts in question can be treated as of income nature, the tax implications of these amounts, under the scheme of the Indo UAE tax treaty, can at best follow in the UAE, but that is not relevant in the present context of holding these amounts to be, even if so permissible in our domestic tax laws, taxable in India. The revenue thus derives no support from the Indo UAE tax treaty, which, under the scheme of Section 90(2), must make way to the domestic law provisions except to the extent the applicable treaty provisions are 'more' favourable to the assessee." (Emphasized by us) 10. In the instant case, Article 24 of India-Oman DTAA would come to the rescue of assessee. For the sake of completeness Article 24 of the DTAA is reproduced herein below: ARTICLE 24 OTHER INCOME 1. Subject to the provisions of paragraph 2 of this Article, items of income of a resident of a Contracting State, wherev ..... 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