VINAY PARMANAND HARIANI,MUMBAI vs. ITO (IT), WARD-2(2)(1), MUMBAI
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Income Tax Appellate Tribunal, MUMBAI BENCH “I” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against final assessment order dated 30.01.2023 passed by the Ld. Income-tax Officer, International Taxation Ward-2(2)(1), Mumbai (in short ‘the Ld. Assessing Officer’) for assessment year 2015-16, pursuant to the direction of the Ld. Dispute Resolution Panel (Ld. DRP) dated 29.12.2022. The grounds raised by the assessee are reproduced as under:
On the facts and circumstances of the case and in law: -
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The Ld. AO/DRP erred in adding Rs. 98,204/ 1. The Ld. AO/DRP erred in adding Rs. 98,204/- as interest from as interest from bank without appreciating that a sum of Rs. 1,04,468/ bank without appreciating that a sum of Rs. 1,04,468/- credited in credited in bank during the year relates to earlie bank during the year relates to earlier year i.e., A. Y 2014-15 interest 15 interest and Rs. 6,265/ and Rs. 6,265/- being credited in subsequent year but relates to the being credited in subsequent year but relates to the year under consideration. year under consideration. 2. The Ld. AO/DRP grossly erred in not appreciating the 26AS 2. The Ld. AO/DRP grossly erred in not appreciating the 26AS 2. The Ld. AO/DRP grossly erred in not appreciating the 26AS statements available before them which shows the date of credit a statements available before them which shows the date of credit a statements available before them which shows the date of credit and TDS deducted by the deductor. TDS deducted by the deductor. 3. The Ld. AO/DRP failed to appreciate the corrected computation 3. The Ld. AO/DRP failed to appreciate the corrected computation 3. The Ld. AO/DRP failed to appreciate the corrected computation submitted before them during the course of remand report submitted before them during the course of remand report submitted before them during the course of remand report proceedings and erred in adding Rs. 3,35,023/ proceedings and erred in adding Rs. 3,35,023/- as Short as Short-Term Capital Gain. 4. The Ld. AO erred in 4. The Ld. AO erred in adding Rs. 7,54,209/- as Long-Term Capital Term Capital Gain without providing the information collected directly by the AO to Gain without providing the information collected directly by the AO to Gain without providing the information collected directly by the AO to the assessee, when it is specifically requested by the assessee and the assessee, when it is specifically requested by the assessee and the assessee, when it is specifically requested by the assessee and instructed by the DRP also that all the information collected by the instructed by the DRP also that all the information collected by the instructed by the DRP also that all the information collected by the AO should be provided to the assessee. ould be provided to the assessee. 5. The Ld. AO erred in adding Rs. 61,58,276/ 5. The Ld. AO erred in adding Rs. 61,58,276/- u/s 69A: - i. Investment in Franklin Templeton MF for Rs. 30,00,000/ i. Investment in Franklin Templeton MF for Rs. 30,00,000/-il. il. ii. Investment in Birla Sunlife MF for Rs. 19,79,194/ Investment in Birla Sunlife MF for Rs. 19,79,194/- iii. In respect of Insurance premium paid for Rs In respect of Insurance premium paid for Rs. 7,20,965/- iv. In respect of Payment made for purchase of property for Rs. iv. In respect of Payment made for purchase of property for Rs. iv. In respect of Payment made for purchase of property for Rs. 4,58,117/-. 6. Without prejudice to the above grounds, the Ld. AO/DRP failed to 6. Without prejudice to the above grounds, the Ld. AO/DRP failed to 6. Without prejudice to the above grounds, the Ld. AO/DRP failed to appreciate that the assessee is a non appreciate that the assessee is a non-resident and when his income resident and when his income was subject to TDS, he was not r was subject to TDS, he was not required to file any return of income equired to file any return of income in India following the provisions of section 115G. in India following the provisions of section 115G. 7. The Ld. AO/DRP failed to appreciate that the assessee is a NRI 7. The Ld. AO/DRP failed to appreciate that the assessee is a NRI 7. The Ld. AO/DRP failed to appreciate that the assessee is a NRI and he is not getting any help from his investment bankers in and he is not getting any help from his investment bankers in and he is not getting any help from his investment bankers in providing information of investments, ea providing information of investments, earning, etc.So, the AO ought to rning, etc.So, the AO ought to have collected the information from MFs, Insurance Companies, etc have collected the information from MFs, Insurance Companies, etc have collected the information from MFs, Insurance Companies, etc and provided them to the assessee. To determine the correct income and provided them to the assessee. To determine the correct income and provided them to the assessee. To determine the correct income which could have been offered to tax in India. In spite of the fact, which could have been offered to tax in India. In spite of the fact, which could have been offered to tax in India. In spite of the fact, when these issues have when these issues have been elaborately submitted and discussed been elaborately submitted and discussed before the AO as well as the DRP. before the AO as well as the DRP.” 2. Briefly stated, facts of the case are that the assessee is a non Briefly stated, facts of the case are that the assessee is a non Briefly stated, facts of the case are that the assessee is a non- resident individual and resident individual and did not file his return of income for the year his return of income for the year under consideration. under consideration. In the case of the assessee information was In the case of the assessee information was
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received leading to escapement of the income and therefore after received leading to escapement of the income and therefore after received leading to escapement of the income and therefore after recording reasons to believe that income escaped assessment, case recording reasons to believe that income escaped assessment, recording reasons to believe that income escaped assessment, of the assessee was reopened invoking section 147 of the Income- of the assessee was reopened invoking section 147 of the Income of the assessee was reopened invoking section 147 of the Income tax Act, 1961 (in short ‘the Act’) and notices u/s 148 of the Act short ‘the Act’) and notices u/s 148 of the Act short ‘the Act’) and notices u/s 148 of the Act was issued. Subsequently ubsequently, the assessee filed return of income on the assessee filed return of income on 29.03.2022 and further responded to the various notices issued u/s 29.03.2022 and further responded to the various notices issued u/s 29.03.2022 and further responded to the various notices issued u/s 142(1) of the Act. The Assessing Officer passed draft assessment 142(1) of the Act. The Assessing Officer passed draft assessment 142(1) of the Act. The Assessing Officer passed draft assessment order on 30.03.2022 proposing various additions. On further 0.03.2022 proposing various additions. On further 0.03.2022 proposing various additions. On further objections by the assessee, the Ld. DRP issued direction to the objections by the assessee, the Ld. DRP issued direction to the objections by the assessee, the Ld. DRP issued direction to the Assessing Officer on 29.12.2022 Assessing Officer on 29.12.2022. In compliance to to the direction of the Ld. DRP, the Assessing Officer passed impugned final the Ld. DRP, the Assessing Officer passed impugned final the Ld. DRP, the Assessing Officer passed impugned final assessment order, wherein the Assessing Officer has made wherein the Assessing Officer has made additions, interalia,
(1) Addition of Rs.1,04,468/ of Rs.1,04,468/- for the interest income appearing in for the interest income appearing in the bank account but not included in the computation, the bank account but not included in the computation, the bank account but not included in the computation,
(2) Short term capital gain of Rs.2,35,023/ term capital gain of Rs.2,35,023/-,
(3) Long term capital gai term capital gain of Rs.7,54,209/-,
(4) Unexplained investment in mutual fund namely investment in mutual fund namely investment in mutual fund namely Franklin Tempton of Rs.14,00,000/ Tempton of Rs.14,00,000/-,
(5) Investment in Aditya Birla Sun Life of Rs.19,79,194/ in Aditya Birla Sun Life of Rs.19,79,194/ in Aditya Birla Sun Life of Rs.19,79,194/-,
(6) Insurance premium paid for Rs.7,20,965/ (6) Insurance premium paid for Rs.7,20,965/-,
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(7) Payment of purchase of properties amou of purchase of properties amounting to Rs.4,58,117/ nting to Rs.4,58,117/-.
Before us, the Ld. Counsel of the assessee filed Before us, the Ld. Counsel of the assessee filed Before us, the Ld. Counsel of the assessee filed a paper book containing pages 1 to 45 including documents at serial No. 6 to 9 containing pages 1 to 45 including documents at serial No. 6 to 9 containing pages 1 to 45 including documents at serial No. 6 to 9 (page No. 37 and 44) as additional evidence. (page No. 37 and 44) as additional evidence.
The ground No. 1 and 2 of the appeal of the assessee The ground No. 1 and 2 of the appeal of the assessee The ground No. 1 and 2 of the appeal of the assessee relate to interest of Rs.98,204/ of Rs.98,204/- which was credited in the bank account for which was credited in the bank account for the year under consideration. The brief facts qua the issue in the year under consideration. The brief facts qua the issue in the year under consideration. The brief facts qua the issue in dispute are that in the return of income filed in response to the dispute are that in the return of income filed in response to dispute are that in the return of income filed in response to notice u/s 148 of the Act, t notice u/s 148 of the Act, the assessee has shown he assessee has shown income from other sources at Rs.4,72,445/ other sources at Rs.4,72,445/- which included interest income from which included interest income from DBS Saving NRO account at Rs.70,200/ DBS Saving NRO account at Rs.70,200/-. However, during the . However, during the remand proceedings by the Ld. DRP, the Assessing Officer observed remand proceedings by the Ld. DRP, the Assessing Officer observed remand proceedings by the Ld. DRP, the Assessing Officer observed that interest amounting to Rs.1,68,404/ that interest amounting to Rs.1,68,404/- was credit was credited in said bank account and therefore, the Ld. DRP directed the Assessing Officer and therefore, the Ld. DRP directed the Assessing Officer and therefore, the Ld. DRP directed the Assessing Officer to tax the interest income from DBS Bank at Rs.1,68,404/- as to tax the interest income from DBS Bank at Rs.1,68,404/ to tax the interest income from DBS Bank at Rs.1,68,404/ against Rs.70,200/- declared by the assessee . Accordingly in the ccordingly in the final assessment order, the Assessing Officer final assessment order, the Assessing Officer made addition for the made addition for the difference amount of Rs.98,204/ difference amount of Rs.98,204/-.
4.1 Before us, the Ld. Counsel Before us, the Ld. Counsel for the assessee submitted that the assessee submitted that assessee is following mercantile system assessee is following mercantile system of accounting of accounting and declared interest income from DBS account as and when it was due to the interest income from DBS account as and when it interest income from DBS account as and when it assessee. He submitted that interest of Rs.1,04,468.13 was credited assessee. He submitted that interest of Rs.1,04,468.13 was credited assessee. He submitted that interest of Rs.1,04,468.13 was credited by the assessee in the assessment year 2014 by the assessee in the assessment year 2014-15 but said amount 15 but said amount
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was received in the year under consideration. Further, he submitted was received in the year under consideration. Further, he submitted was received in the year under consideration. Further, he submitted that similarly as per the statement of the 26 that similarly as per the statement of the 26AS statement the AS statement the interest which was due to the assessee of Rs.70,200/ due to the assessee of Rs.70,200/ due to the assessee of Rs.70,200/- for the year under consideration under consideration and accordingly, the assessee has shown the and accordingly, the assessee has shown the same as interest income for the year under consideration whereas same as interest income for the year under consideration whereas same as interest income for the year under consideration whereas same same same was was was received received received in in in subsequent subsequent subsequent assessment assessment assessment years. The submissions of the assessee in brief are reproduced as under: of the assessee in brief are reproduced as under: of the assessee in brief are reproduced as under:
“1. The Ld. AO in page no. 11 para 6 of his final order added Rs. 1. The Ld. AO in page no. 11 para 6 of his final order added Rs. 1. The Ld. AO in page no. 11 para 6 of his final order added Rs. 1,04,468/- as interest credited into Assessee's bank account on as interest credited into Assessee's bank account on as interest credited into Assessee's bank account on 01.04.2014 and DRP confirmed the same assuming that 01.04.2014 and DRP confirmed the same assuming that the assessee the assessee has failed to take into consideration this interest income in the has failed to take into consideration this interest income in the has failed to take into consideration this interest income in the computation of income. We would like to invite your kind attention on computation of income. We would like to invite your kind attention on computation of income. We would like to invite your kind attention on page no. 2 of the paper book, there is an interest Credit for Rs. page no. 2 of the paper book, there is an interest Credit for Rs. page no. 2 of the paper book, there is an interest Credit for Rs. 1,04,468.13, and below to that entry, it 1,04,468.13, and below to that entry, it has been mentioned by the has been mentioned by the bank that the value date is 31.03.2014. bank that the value date is 31.03.2014. 2. So, this interest relates to the last quarter of F.Y 2013 2. So, this interest relates to the last quarter of F.Y 2013-14 i.e., the 14 i.e., the A.Y 2014-15 and accordingly does not relate to the year under 15 and accordingly does not relate to the year under 15 and accordingly does not relate to the year under consideration i.e., A.Y 2015 consideration i.e., A.Y 2015-16. It is further evident from the 26AS from the 26AS statement of the A.Y 2015 statement of the A.Y 2015-16, (page no. 15 of the paper book), where 16, (page no. 15 of the paper book), where the interest from DBS bank appears for Rs. 70,200.58/ the interest from DBS bank appears for Rs. 70,200.58/-, this is the , this is the amount which assessee has offered in the computation of income ( amount which assessee has offered in the computation of income ( amount which assessee has offered in the computation of income ( page no. 19 of the paper book... page no. 19 of the paper book... 3. Kindly appreciate that at the time of hearing the undersigned AR dly appreciate that at the time of hearing the undersigned AR dly appreciate that at the time of hearing the undersigned AR has also submitted 26AS statement of A.Y 2014 has also submitted 26AS statement of A.Y 2014-15, where under the 15, where under the DBS bank head this interest amount of Rs.1,04,000/ DBS bank head this interest amount of Rs.1,04,000/- has been shown has been shown as credited on 31.03.2014. Kindly note that the assessee is f as credited on 31.03.2014. Kindly note that the assessee is f as credited on 31.03.2014. Kindly note that the assessee is following mercantile system of accounting so interest has to be assessed in the mercantile system of accounting so interest has to be assessed in the mercantile system of accounting so interest has to be assessed in the year in which it is due and not in the year of receipt. Kindly also year in which it is due and not in the year of receipt. Kindly also year in which it is due and not in the year of receipt. Kindly also appreciate that interest for the last quarter of this year i.e., 2015 appreciate that interest for the last quarter of this year i.e., 2015 appreciate that interest for the last quarter of this year i.e., 2015-16 has been credited by the banker on A has been credited by the banker on Assessee's account on 01.04.2015 ssessee's account on 01.04.2015 for Rs. 6,265.03 (page no. 12 of paper book). However, following the for Rs. 6,265.03 (page no. 12 of paper book). However, following the for Rs. 6,265.03 (page no. 12 of paper book). However, following the mercantile system of accounting the assessee has offered this income mercantile system of accounting the assessee has offered this income mercantile system of accounting the assessee has offered this income in A. Y 2015-16 itself, which proves the assessee is bona 16 itself, which proves the assessee is bona 16 itself, which proves the assessee is bona-fide. We pray accordingly. pray accordingly. 4. Kindly also appreciate as per provision of sec. 115G an nonresident . Kindly also appreciate as per provision of sec. 115G an nonresident . Kindly also appreciate as per provision of sec. 115G an nonresident Indian need not to file the return of income in India, if income consist Indian need not to file the return of income in India, if income consist Indian need not to file the return of income in India, if income consist of interest income and investment income and due tax has been of interest income and investment income and due tax has been of interest income and investment income and due tax has been deducted by the payer. Please note the bankers have deducted by the payer. Please note the bankers have deducted proper deducted proper tax under sect 195 on the income of the assessee. So, AO as well the tax under sect 195 on the income of the assessee. So, AO as well the tax under sect 195 on the income of the assessee. So, AO as well the DRP both were erred in adding interest income of Rs. 1,04,468/ in the DRP both were erred in adding interest income of Rs. 1,04,468/ in the DRP both were erred in adding interest income of Rs. 1,04,468/ in the
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year under consideration i.e. 2015 year under consideration i.e. 2015-16. which belongs to the earlier 16. which belongs to the earlier year i.e. A. Y 2014 year i.e. A. Y 2014-15 and on which due tax has been deduced by the ich due tax has been deduced by the banker in earlier year also. banker in earlier year also.” 4.2 The Ld. DR on the other hand relied on the order of the lower on the other hand relied on the order of the lower on the other hand relied on the order of the lower authorities.
4.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused d relevant material on record. The dispute is in relevant material on record. The dispute is in respect of interest amount which is appearing in the bank respect of interest amount which is appearing in the bank respect of interest amount which is appearing in the bank statement as credited on 01.04.2014 but not included by the statement as credited on 01.04.2014 but not included by the statement as credited on 01.04.2014 but not included by the assessee under the head ‘income from other sources’. The assessee under the head ‘income from other sources’. The assessee under the head ‘income from other sources’. The contention of the assessee contention of the assessee are that said interest amount was said interest amount was already included by the assessee in the return of income filed for already included by the assessee in the return of income filed for already included by the assessee in the return of income filed for immediately proceedings assessment year i.e. assessment year immediately proceedings assessment year i.e. assessment year immediately proceedings assessment year i.e. assessment year 2014-15 following the mercantile system of accounting as the said 15 following the mercantile system of accounting as the said 15 following the mercantile system of accounting as the said interest was credited by the bank interest was credited by the bank in relevant assessment year and in relevant assessment year and accordingly deducted the TDS and said amount was appearing in accordingly deducted the TDS and said amount was appearing in accordingly deducted the TDS and said amount was appearing in the 26AS statement for the assessment year 2014 the 26AS statement for the assessment year 2014-15. In view of the 15. In view of the above submission, we feel it appropriate to restore this matter back above submission, we feel it appropriate to restore this matter back above submission, we feel it appropriate to restore this matter back to the file for the Assess file for the Assessing Officer for verification of the claim of the ing Officer for verification of the claim of the assessee and if same is found to be correct assessee and if same is found to be correct, then no addition is then no addition is required to be made in the hands of the assessee for the required to be made in the hands of the assessee for the required to be made in the hands of the assessee for the assessment year under consideration. assessment year under consideration. The ground Nos. 1 & 2 of the The ground Nos. 1 & 2 of the appeal are accordingly allowed for statistical purpose. gly allowed for statistical purpose. gly allowed for statistical purpose.
In ground No. In ground No. 3, the assessee is aggrieved with considering the assessee is aggrieved with considering capital gain of redemption of mutual funds of BNP Paribas Mutual capital gain of redemption of mutual funds of BNP Paribas Mutual capital gain of redemption of mutual funds of BNP Paribas Mutual
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Fund Rs.56,586/-, Kotak Mahindra Mutual Fund Rs.1,73,662/ , Kotak Mahindra Mutual Fund Rs.1,73,662/ , Kotak Mahindra Mutual Fund Rs.1,73,662/- and Nippon India Mutual Fund of and Nippon India Mutual Fund of Rs.30,304.72 Rs.30,304.72/-, totaling to Rs.3,35,023/- as short term capital gain. as short term capital gain.
5.1 Before us, the Ld. Counsel of the assessee submitted that as Before us, the Ld. Counsel of the assessee submitted that as Before us, the Ld. Counsel of the assessee submitted that as per second proviso of sub per second proviso of sub-section 42(a) of section 2 of the Act section 42(a) of section 2 of the Act , the units of the mutual fund which units of the mutual fund which are sold between th between the period of 01.04.2014 to 10.07.2014, the 01.04.2014 to 10.07.2014, then, period of above 12 months shall period of above 12 months shall be considered for holding the assets as long term capital gain. be considered for holding the assets as long term capital gain. be considered for holding the assets as long term capital gain. Whereas the Assessing Officer and Ld. DRP both have treated the Whereas the Assessing Officer and Ld. DRP both have Whereas the Assessing Officer and Ld. DRP both have mutual fund units held for less than 36 months as liable to be mutual fund units held for less than 36 months as l mutual fund units held for less than 36 months as l taxed as short term capital gain. taxed as short term capital gain.
5.2 Per contra, the Ld. DR relied on the order of the lower Per contra, the Ld. DR relied on the order of the lower Per contra, the Ld. DR relied on the order of the lower authorities.
5.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute is whether the investment of Rs.3,35,023/ pute is whether the investment of Rs.3,35,023/- in mutual funds in mutual funds by the assessee should be subjected to short term capital gain or by the assessee should be subjected to short term capital gain or by the assessee should be subjected to short term capital gain or long term capital gain. The claim of the assessee that said mutual long term capital gain. The claim of the assessee that said mutual long term capital gain. The claim of the assessee that said mutual funds were sold by the assessee between the period of 01.04 sold by the assessee between the period of 01.04.2014 sold by the assessee between the period of 01.04 to 10.07.2014 and therefore, same should be subjected to long term to 10.07.2014 and therefore, same should be subjected to long term to 10.07.2014 and therefore, same should be subjected to long term capital gain being held for more than 12 months as provided u/s capital gain being held for more than 12 months as provided u/s capital gain being held for more than 12 months as provided u/s 2(42a) of the Act. For ready reference said section is reproduced as 2(42a) of the Act. For ready reference said section is reproduced as 2(42a) of the Act. For ready reference said section is reproduced as under:
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“(42A) ["short-term capital asset" means a term capital asset" means a capital asset held by an capital asset held by an asses-sees for not more than [thirty sees for not more than [thirty-six] months immediately six] months immediately preceding the date of its transfers :] preceding the date of its transfers :] [Provided that in the case of Ta security (other than a unit) listed in a [Provided that in the case of Ta security (other than a unit) listed in a [Provided that in the case of Ta security (other than a unit) listed in a recognized stock exchange in India] [or a unit of the Un recognized stock exchange in India] [or a unit of the Unit Trust of it Trust of India established under the Unit Trust of I India established under the Unit Trust of India Act, 1963 (52 of ndia Act, 1963 (52 of 1963) or [a unit of an equity oriented fund]] "[or a zero coupon bond], a unit of an equity oriented fund]] "[or a zero coupon bond], a unit of an equity oriented fund]] "[or a zero coupon bond], the provisions of this clause shall have effect as if for the words the provisions of this clause shall have effect as if for the words the provisions of this clause shall have effect as if for the words "thirty-six six months", months", the the words words "twelve "twelve months" months" had had been been substituted:] "[Provided further that in case of a share of a company (not "[Provided further that in case of a share of a company (not "[Provided further that in case of a share of a company (not being a share listed in a recognised stock exchange) or a unit being a share listed in a recognised stock exchange) or a unit being a share listed in a recognised stock exchange) or a unit of a Mutual Fund specified under clause (23D) of section 10, of a Mutual Fund specified under clause (23D) of section 10, of a Mutual Fund specified under clause (23D) of section 10, which is transferred during the period b which is transferred during the period beginning on the 1st eginning on the 1st day of April, 2014 and ending on the 10th day of July, 2014, day of April, 2014 and ending on the 10th day of July, 2014, day of April, 2014 and ending on the 10th day of July, 2014, the provisions of this clause shall have effect as if for the the provisions of this clause shall have effect as if for the the provisions of this clause shall have effect as if for the words "thirty- -six months", the words "twelve months" had been six months", the words "twelve months" had been substituted:] 6 Provided also that in the case of a 6 Provided also that in the case of a share of a company (not being a share of a company (not being a share listed in a recognised stock exchange in India), [or an share listed in a recognised stock exchange in India), [or an share listed in a recognised stock exchange in India), [or an immovable property, being land or building or both,] the provisions of immovable property, being land or building or both,] the provisions of immovable property, being land or building or both,] the provisions of this clause shall have effect as if for the words "thirty this clause shall have effect as if for the words "thirty-six months", six months", the words "twenty the words "twenty-four months" had been substituted.] "[Explanation I]. "[Explanation I].—(1) In determining the period for which any capital (1) In determining the period for which any capital asset is held by the assessee asset is held by the assessee- (a) in the case of a share held in a company in liquida tion, there (a) in the case of a share held in a company in liquida tion, there (a) in the case of a share held in a company in liquida tion, there shall be excluded the period subsequent to the date shall be excluded the period subsequent to the date on which the on which the company goes into liquidation; company goes into liquidation;” 5.4 In view of the In view of the highlighted portion of provision prescribing highlighted portion of provision prescribing holding period of 12 months for treating sale of sh holding period of 12 months for treating sale of shar res/mutual fund for Long Term Capital during the period of 1/04/2014 to Long Term Capital during the period of 1/04/2014 to Long Term Capital during the period of 1/04/2014 to 10/07/2014 , we feel it we feel it appropriate to restore this issue back to the appropriate to restore this issue back to the file of the Ld. Assessing Officer for verification of the date of the sale file of the Ld. Assessing Officer for verification of the date of the sale file of the Ld. Assessing Officer for verification of the date of the sale and then decide in accord and then decide in accordance with law. The ground No. 3 ance with law. The ground No. 3 of appeal of the assessee is accordingly allowed for statistical purposes. of the assessee is accordingly allowed for statistical purposes. of the assessee is accordingly allowed for statistical purposes.
Vinay Parmanand Hariani 9 ITA No. 985/Mum/2023
In ground No. 4 In ground No. 4 of the appeal , the assessee is aggrieved with the assessee is aggrieved with the long term capital gain amounting to Rs.7,54,209/-. The relevant the long term capital gain amounting to Rs.7,54,209/ the long term capital gain amounting to Rs.7,54,209/ part of the assessment order is reproduced as under: part of the assessment order is reproduced as under: part of the assessment order is reproduced as under:
“3.9. Long Term Capital Gain : “3.9. Long Term Capital Gain : As per reply received from Deutsche As per reply received from Deutsche Mutual Fund, it is found that Mutual Fund, it is found that the assessee has earned Long term capital gain from PGIM India the assessee has earned Long term capital gain from PGIM India the assessee has earned Long term capital gain from PGIM India Global Equity Opportunities fund and PGIM India Hybrid Fixed Global Equity Opportunities fund and PGIM India Hybrid Fixed Global Equity Opportunities fund and PGIM India Hybrid Fixed Term Term Term Fund. Fund. Fund. The The The assessee assessee assessee has has has earned earned earned Rs.3,22,299/-from Rs.3,22,299/ Rs.3,22,299/ redemption of PGIM India Global Equity Opportunit redemption of PGIM India Global Equity Opportunities fund and ies fund and Rs.4,31,910/-PGIM India Hybrid Fixed Term Fund. Hence, the total PGIM India Hybrid Fixed Term Fund. Hence, the total PGIM India Hybrid Fixed Term Fund. Hence, the total gain on redemption of aforesaid mutual funds is worked out at gain on redemption of aforesaid mutual funds is worked out at gain on redemption of aforesaid mutual funds is worked out at Rs.7,54,209/-. Hence, amount of Rs.7,54,209/ . Hence, amount of Rs.7,54,209/- is hereby added is hereby added the income of the assessee as Income from short term c the income of the assessee as Income from short term capital gain. apital gain. The gain on equity fund is being taxed @10% and gain on Hybrid The gain on equity fund is being taxed @10% and gain on Hybrid The gain on equity fund is being taxed @10% and gain on Hybrid Fixed Term Fund is taxed at 20% being debt fund. Penalty Fixed Term Fund is taxed at 20% being debt fund. Penalty Fixed Term Fund is taxed at 20% being debt fund. Penalty proceedings proceedings proceedings u/s u/s u/s 271(1)(c) 271(1)(c) 271(1)(c) is is is also also also initiated initiated initiated separately for separately for separately for concealment of income. concealment of income.” 6.1 Before us, the Ld. Counsel of the as Before us, the Ld. Counsel of the assessee has submitted that sessee has submitted that this addition was not part of the draft assessment order and no this addition was not part of the draft assessment order and no this addition was not part of the draft assessment order and no direction has been given by the Ld. DRP and therefore, while giving direction has been given by the Ld. DRP and therefore, while giving direction has been given by the Ld. DRP and therefore, while giving effect to the direction of the Ld. DRP the Assessing Officer is not effect to the direction of the Ld. DRP the Assessing Officer is effect to the direction of the Ld. DRP the Assessing Officer is justified in making addition making addition, which being ultra vires ultra vires , liable to be deleted.
6.2 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. On verification dispute and perused the relevant material on record. On verification dispute and perused the relevant material on record. On verification of the draft assessment order, we do not find any addition proposed of the draft assessment order, we do not find any addition proposed of the draft assessment order, we do not find any addition proposed on this account. Also, w . Also, we do not find any direction issued by the Ld. e do not find any direction issued by the Ld. DRP on this issue on this issue and therefore, at the stage of the final and therefore, at the stage of the final assessment order, the Assessing Officer is only required to comply assessment order, the Assessing Officer is only required to assessment order, the Assessing Officer is only required to with the direction of the Ld. DRP. The addition being without a the direction of the Ld. DRP. The addition being without a the direction of the Ld. DRP. The addition being without any
Vinay Parmanand Hariani 10 ITA No. 985/Mum/2023
direction of the Ld. DRP direction of the Ld. DRP, same is beyond scope of the final same is beyond scope of the final assessment order. The addition being not in accordance with law assessment order. The addition being not in accordance with law assessment order. The addition being not in accordance with law same is deleted. The ground No. 4 of the appeal of the assessee is same is deleted. The ground No. 4 of the appeal of the assessee is same is deleted. The ground No. 4 of the appeal of the assessee is allowed.
In ground No. 5, before us ground No. 5, before us, the assessee has sub has submitted that as under:
“a. The Ld. AO on page no. 9 of the final order added Rs. 30,00,000 The Ld. AO on page no. 9 of the final order added Rs. 30,00,000 The Ld. AO on page no. 9 of the final order added Rs. 30,00,000 as unexplained investment in Franklin Templeton MF. Kindly note as unexplained investment in Franklin Templeton MF. Kindly note as unexplained investment in Franklin Templeton MF. Kindly note there were two investments made of Rs. 30,00,000/ there were two investments made of Rs. 30,00,000/- cach in BNP cach in BNP Paribas MF on 30.04.2014 and Franklin T Paribas MF on 30.04.2014 and Franklin Templeton M.F on empleton M.F on 05.05.2014. At the time of making submission before the AO only 05.05.2014. At the time of making submission before the AO only 05.05.2014. At the time of making submission before the AO only one source of Rs. 30,00,000/ one source of Rs. 30,00,000/- could be found and it was unclear could be found and it was unclear whether it was for Franklin Templeton investment or BNP Paribas whether it was for Franklin Templeton investment or BNP Paribas whether it was for Franklin Templeton investment or BNP Paribas investment. So, the AO assume that the source wa investment. So, the AO assume that the source was explained for s explained for BP Paribas and not for the Franklin Templeton so he has added as BP Paribas and not for the Franklin Templeton so he has added as BP Paribas and not for the Franklin Templeton so he has added as unexplained investments for Franklin Templeton MF. unexplained investments for Franklin Templeton MF. b. Now the assessee could find MF statement of Franklin Templeton Now the assessee could find MF statement of Franklin Templeton Now the assessee could find MF statement of Franklin Templeton MF which is appearing on page 37 of paper book where you MF which is appearing on page 37 of paper book where you MF which is appearing on page 37 of paper book where you will find that investment was made on 05.05.2014 and on the detail find that investment was made on 05.05.2014 and on the detail find that investment was made on 05.05.2014 and on the detail appearing above statement the advisor code and name of appearing above statement the advisor code and name of appearing above statement the advisor code and name of DBS bank is appearing. bank is appearing. c. We invite your kind attention to page no. 39 of the paper book We invite your kind attention to page no. 39 of the paper book We invite your kind attention to page no. 39 of the paper book where on 29.04.2014 a DD was issued for Rs. 3 where on 29.04.2014 a DD was issued for Rs. 30,00,000/ 0,00,000/- that is the source of investment in Franklin Templeton MF. We have also the source of investment in Franklin Templeton MF. We have also the source of investment in Franklin Templeton MF. We have also attached on page no. 45 of the paper book the details of source of attached on page no. 45 of the paper book the details of source of attached on page no. 45 of the paper book the details of source of funds in DBS account which is transferred from the other bank funds in DBS account which is transferred from the other bank funds in DBS account which is transferred from the other bank account of the assessee. So, the AO was on e account of the assessee. So, the AO was on error that payment rror that payment made from DBS account of Rs. 30,00,000/ made from DBS account of Rs. 30,00,000/- was for investment in was for investment in BNP Paribas but it was actually for Franklin Templeton MF. BNP Paribas but it was actually for Franklin Templeton MF. d. For BNP Paribas we are submitting here with the statement of For BNP Paribas we are submitting here with the statement of For BNP Paribas we are submitting here with the statement of Standard Chartered Bank appearing on page 43 of the Standard Chartered Bank appearing on page 43 of the paper book paper book that on 13.04.2014 a sum of Rs. 30,00,000/ that on 13.04.2014 a sum of Rs. 30,00,000/-was debited for BNP was debited for BNP Paribas Money Plus Growth Fund which conclusively prove that the Paribas Money Plus Growth Fund which conclusively prove that the Paribas Money Plus Growth Fund which conclusively prove that the investment in BNP Paribas was made out of Standard Chartered investment in BNP Paribas was made out of Standard Chartered investment in BNP Paribas was made out of Standard Chartered Bank and not from Bank and not from DBS Bank as assumed by the AO.” 7.1 Before us, the assessee has filed additional evidence in fore us, the assessee has filed additional evidence in fore us, the assessee has filed additional evidence in support of investment in Franklin Templeton MF of Rs.30,00,000/- support of investment in Franklin Templeton MF of Rs.30,00,000/ support of investment in Franklin Templeton MF of Rs.30,00,000/
Vinay Parmanand Hariani 11 ITA No. 985/Mum/2023
as well as statement of investment in Aditya Birla Sun Life MF. In as well as statement of investment in Aditya Birla Sun Life MF. In as well as statement of investment in Aditya Birla Sun Life MF. In view of the additional evidence filed by the assessee, we restore the view of the additional evidence filed by the assessee, we restore the view of the additional evidence filed by the assessee, we restore the issue back to the file of the Assessing Officer for deciding afresh issue back to the file of the Assessing Officer for deciding afresh issue back to the file of the Assessing Officer for deciding afresh after verification of the source of investment in those mutual funds. after verification of the source of investment in those mutual funds. after verification of the source of investment in those mutual funds. Regarding the insurance premium paid for Rs.7,20,965/-, the Regarding the insurance premium paid for Rs.7,20,965/ Regarding the insurance premium paid for Rs.7,20,965/ assessee has expressed in assessee has expressed inability in getting copy the detail of the copy the detail of the insurance premium insurance premium allegedly paid by the assessee to ICICI paid by the assessee to ICICI Prudential Fund. In the facts and circumstances, we direct the n the facts and circumstances, we direct the n the facts and circumstances, we direct the Assessing Officer to gather the said details of the insurance Assessing Officer to gather the said details of the insurance Assessing Officer to gather the said details of the insurance premium paid by the assessee premium paid by the assessee from ICICI Prudentia ICICI Prudential Fund invoking authority u/s 133(6) or 131 of the Act and t authority u/s 133(6) or 131 of the Act and thereafter provide said hereafter provide said information to the assessee to explain the source of investment the assessee to explain the source of investment the assessee to explain the source of investment therein. Similarly, regarding the payment of purch therein. Similarly, regarding the payment of purchases of property ases of property Rs.4,58,117/-, we note that the assessee h , we note that the assessee has already explained as already explained amount of Rs.28,47,493/ amount of Rs.28,47,493/- out of Rs. 33,39,100/- - but could not explain source of Rs.4,58,117/ explain source of Rs.4,58,117/-. The Assessing Officer is directed to The Assessing Officer is directed to collect the detail of the payments made by the assessee from builder collect the detail of the payments made by the assessee collect the detail of the payments made by the assessee M/s PAX Homes LLP M/s PAX Homes LLP invoking authority u/s 133(6)or 131 of the Act ty u/s 133(6)or 131 of the Act and provide copy of the said payment details of Rs.33,39,100/- to and provide copy of the said payment details of Rs.33,39,100/ and provide copy of the said payment details of Rs.33,39,100/ the assessee. Accordingly, the Assessing Officer shall provide the Accordingly, the Assessing Officer shall provide the Accordingly, the Assessing Officer shall provide the details which will be collected from the builders and thereafter may details which will be collected from the builders and thereafter may details which will be collected from the builders and thereafter may examine the source of examine the source of investment and decide the issue in investment and decide the issue in accordance with law. The ground No. 5 of the appeal of the assessee accordance with law. The ground No. 5 of the appeal of the assessee accordance with law. The ground No. 5 of the appeal of the assessee is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.
Vinay Parmanand Hariani 12 ITA No. 985/Mum/2023
Since we have already allowed the grounds of appeal of the Since we have already allowed the grounds of appeal of the Since we have already allowed the grounds of appeal of the assessee from 1 to 5 for statistical purpo assessee from 1 to 5 for statistical purposes and ground ses and ground nos. 6 to 7 of the appeal of the assessee of the appeal of the assessee are rendered only academic and rendered only academic and therefore, not adjudicated upon and dismissed as infructuous. therefore, not adjudicated upon and dismissed as infructuous. therefore, not adjudicated upon and dismissed as infructuous.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in th Order pronounced in the open Court on 19/10/2023. /10/2023. Sd/ Sd/- Sd/- Sd/ (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 19/10/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai
