JT.COMM OF INCOME TAX (OSD) (INTL TAX) -2(3) (1) , MUMBAI vs. BHARATI JAIPRAKASH GAJARIA, MUMBAI

Since, the grounds of appeal and the facts germane to the issue in both appeals are identical, these appeals are taken up together for adjudication and are decided by this common order.

Shri Soumendu Kumar Dash representing the Department submits that information was received by the Government of India from French Government under Double Taxation Avoidance Agreement (DTAA) that some Indian nationals have foreign bank account in HSBC Private Bank (Suisse) SA Geneva. This information was received in the form of “base note” , wherein various details of the account holders including the date of opening of the bank account and balance in certain years in HSBC Private Bank were shared On the basis of information received from the DIT(Inv)-II, Mumbainotice u/s. 148 of the Income Tax Act, 1961 [in short ‘the Act’] dated 08/12/2014 was issued and served on the assessee. During the course of assessment proceedings the assessee tried to explain the deposits in HSBC Bank Account but failed to furnish documents to substantiate her contentions. The assessee failed to reconcile the information available in ‘base note’ with the bank statement. The assessee failed to explain the source of investment in HSBC account. In the absence of any documentary evidence to explain deposits in HSBC Account Dubai, the assessee did not execute “Consent Waiver Form”. Thus, the assessee failed to discharge her onus in explaining the amount deposited with HSBC account. Further, no information was provided by the assessee regarding payment of tax on the said amount in the country of residence.

3.1 In First Appellate proceedings, the assessee filed additional evidences before the CIT(A). The CIT(A) sought remand report from the Assessing Officer on the documents furnished. The Assessing Officer objected to admission of additional evidences. The CIT(A) despite objection from the Assessing Officer, admitted additional evidences and on the basis of said evidences deleted the addition. The ld. Departmental Representative contended that the CIT(A) has failed to take into consideration the fact that the assessee has not approached First Appellate Authority with clean hands. The assessee did not execute ‘Consent Waiver Form’ thereby not allowing the Assessing Officer to have access to information in the bank account of assessee. The ld. Departmental Representative further submitted that CIT(A) has granted relief to the assessee without considering the fact that the assessee has failed to furnish information with respect to source of investment in HSBC Private Bank account. The ld. Departmental Representative in support of his submissions placed reliance on the decision of Hon'ble Bombay High Court in the case Soignee R. Kothari Vs. DCIT in W.P(L) 3172 of 2015 decided on 05/04/2016 to contend that the assessee should have filed ‘consent waiver form’. The ld. Departmental Representative prayed for reversing the findings of CIT(A) and upholding addition made in the assessment order.

Shri Madhur Agrawal appearing on behalf of the assessee vehemently defended the impugned order. The ld.Counsel for the assessee narrating facts of the case submitted, that the assessee is a Non-Resident since 1992. The father-in-law of the assessee, Shri Vallabhai Kesavdas had opened bank account with British Bank of Middle East in 1987. Later on British Bank of Middle East was taken over by HSBC Bank. The father-in-law of the assessee died in 1992. After his demise the bank account was transferred in the name of her mother-in-law and her husband.. Subsequently, the name of assessee was also included. The father-in-law of assessee was doing business on trade licence in Dubai and had made investments from his said business income. After the demise of her father-in-law in September,1992, no further deposits were made in the said bank account. The only credit entries in the account are interest, dividend, coupons, etc. Whenever fixed deposits / bonds had matured the amount was credited to the said bank account for which corresponding debit entries are reflected in the statement. The bank account was closed in December 2006.

We have heard the submissions made by rival sides and have examined orders of authorities below. It is an undisputed fact that the assessee is a non- resident and is based in Dubai. On the basis of information received in the ‘base note’ notice u/s. 148 of the Act was served on the assessee. The details of the bank account with HSBC Bank Geneva as per the information received from French Authorities in base note are as under:

The assessee had filed additional evidences before the CIT(A). It is an unrebutted fact that documents filed by the assessee as additional evidences were not available with the assessee at the time of assessment proceedings. Though, the CIT(A) had sought remand report from the Assessing Officer on the additional evidences filed, the Assessing Officer only opposed the admission of additional evidences, however, no comments on the veracity / relevance of the documents filed as additional evidences were offered by the AO. The Assessing Officer was given opportunity to examine the documents on which heavy reliance was placed by the assessee to substantiate her contentions. The documents filed as additional evidences remained unrebutted by the AO. The CIT(A) after examining the documents took cognizance of the same and came to the conclusion that amount of $4,77,872 is not a fresh investment but is a renewed investment in HSBC Bank Geneva bank account. The CIT(A) further observed that in assessment year 1996-97 the assessment was reopened on the basis of information about the deposits in HSBC Bank Geneva for identical reasons. However, while passing the assessment order date 24.03.2014 no addition was made in A.Y. 1996-97.

In so far as Department’s reliance on the case of Soignee R. Kothari (supra), we find that in the said case the petitioner invoking writ jurisdiction of Hon’ble High Court assailed notice issued u/s. 148 of the Act. The Hon’ble High Court after examining the issue dismissed the Writ Petition without expressing any opinion on merit. In the said case the Revenue had asked the petitioner to sign a Consent Waiver Form. Though, the said request was made by the Department after filing of the writ petition, the petitioner agreed to sign the form. Thus, there was no question/dispute regarding signing of Consent Waiver Form in the said writ petition. The ‘consent waiver form’ is executed to enable the Department to seek information about the account from the bank. In the instant case, the assessee had voluntarily furnished HSBC bank account statements, name of account holders, etc. This fact has not been disputed by the Department. Further, we observe that at no point of time during assessment proceedings or thereafter, the Revenue had ever asked the assessee to furnish ‘consent waiver form’. Hence, the decision rendered in the case of Soignee R. Kothari (supra) would not apply to the facts of the present case.

In so far as the contentions of the Revenue that the assessee has not been able to reconcile the amounts mentioned in base note with the bank statement, in base note it appears to be the position of liquid asset held by assessee on a particular date of a month, whereas, the bank statement gives the details of all debits and credits and the total bank balance on the date of these transactions. Thus, the two documents reflect different information. Be that as it may, the assessee has given plausible source of deposits in HSBC Bank account. The Revenue has not been able to rebut the same on one hand and on other hand failed to substantiate that the credits in the account are from fresh infusion of funds by assessee.

We do not find infirmity in the impugned order, hence, the same is upheld and the appeal of Revenue is dismissed.

Both sides are unanimous in stating that the facts in this appeal are identical to the facts(except for the amount) in assessment year 2006-07. We find that the grounds raised by the Revenue in assessment year 2007-08 are identical to the grounds raised in 2006-07. Therefore, the findings given by us while adjudicating appeal of Revenue for assessment year 2006-07 would mutatis mutandis apply to the appeal for assessment year 2007-08. For parity of reasons appeal of the Revenue is dismissed.

To sum up, appeal by the Revenue for assessment year 2006-07 and 2007-08 are dismissed being devoid of any merit.