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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the Revenue is directed against the order of the ld.
CIT (Appeals)-29, New Delhi pertaining to Assessment Year 2016-17.
The grounds of appeal taken by the Revenue read as under :- “On the facts and in the circumstances of the case the Ld. CIT (A) has erred in law and on facts in deleting the protective addition of Rs.99,07,290/- made by the AO on account of undisclosed interest income without appreciating the fact that the assessee had not submitted any details regarding the same during the assessment proceedings of appellate proceedings.”
3. In this case, Assessing Officer made addition for interest in foreign bank account in the hands of the assessee on protective basis as under:-
“3. The assessee is an individual and during the year under consideration, has derived income from salary, capital gain, business or profession and income from other sources.
It is noted that as per the calculation made in assessment year 2012-13, the closing balance of the foreign bank account including interest was USD 3323601.75 as on 31.03.2012 which became the opening balance for the assessment year 2013-14 and the assessee also earned interest income on this sum from 01.04.2012 to 31.03.2013 i.e. for twelve month which @ 4% works out to Rs.7233486.85 (USD 132944.07 X 54.41), the closing balance of the foreign bank account for A.Y. 2013-14 including interest was USD 3456545.82 as on 31.03.2013 and the assessee also earned interest income on this sum from 01.0-4.2013 to 31.03.2014 i.e. for twelve month which @ 4% works out to Rs.8428441.15 (138261.83 X 60.96), the closing balance of the foreign bank account for A.Y. 2014-15, the closing balance of the foreign bank account including interest was USD 3594807.65 as on 31.03.2014 which became the opening balance for the assessment year 2015-16 and the assessee also earned interest income on this sum from 01.04.2014 to 31.03.2015 i.e. for twelve month which @ 4% works out to Rs.897695.91 (USD 143792.31 X 62.43), the closing balance of the foreign bank account for the A.Y. 2015-16 including interest was USD 3738599.96 as on 31.03.2015 which became the opening balance for the assessment year 2016-17 and the assessee also earned interest income on this sum from 01.04.2015 to 31.03.2016 i.e. for twelve month which @ 4% works out to Rs.9907290.00 (USD 149544.00 X 66.25) as per the calculation in the chart given below :
Interest Calculation
Name of Financial Balance as Interest Total Total Value Intt. In on 31st Profile Client Year rate Interest Balance at of US Rupees March of US $ the end of $ in (Col.5 X earlier year year in US the Col.7) in US $ $ (Col.3 + end Col. 5) of the F.Y. 1 2 3 4 5 6 7 8 CHOTUMAN 2011-12 3195770.92 4% 127830.83 3323601.75 54.41 6955275.46 21 (EX CHOTUMAN) UNTIL 25.11.2005) CHOTUMAN 2012-13 3323601.75 4% 132944.07 3456545.82 54.41 7233486.85 21 (EX CHOTUMAN) UNTIL 25.11.2005)
CHOTUMAN 2013-14 3456545.82 4% 138261.83 3594807.65 60.96 8428441.15 21 (EX CHOTUMAN) UNTIL 25.11.2005) CHOTUMAN 2014-15 3594807.65 4% 143792.31 3738599.96 62.43 8976953.91 21 (EX CHOTUMAN) UNTIL 25.11.2005) CHOTUMAN 2015-16 3738599.96 4% 149544.00 3888143.96 66.25 9907290.00 21 (EX CHOTUMAN) UNTIL 25.11.2005) 4.1 Accordingly, the amount of Rs.99,07,290/- being the interest as calculated above shall be added to the income of the assessee u/s 69 of the Income-tax Act, 1961 as undisclosed interest income of the assessee for the A Y 2016-17 on protective basis as the substantive addition of this amount has been made in the hands of Shri Anurag Dalmia. Since the assessee has concealed the particulars of his income and/or filed inaccurate particulars of such income, I am satisfied that the provisions of section 271(1)(c) of the Act are attracted in this case and therefore, penalty proceedings U/S 271(1)(c) of the Act is being initiated separately on this count.”
4. Upon assessee’s appeal, ld. CIT (A) noted that same ground was adjudicated upon in assessee’s own case by him for AY 2012-13 in which appeal was allowed. He further referred that this ground has been discussed in detail in case of Anurag Dalmia for AY 2006-07.
Accordingly, he deleted the disallowance. The order of ld. CIT (A) reads as under :-
“4. There is only one issue involved in all the grounds of appeal which relates to addition made by the AO under section 69 of the IT Act as notional interest on the balance amount of alleged offshore bank accounts with HSBC Bank, Geneva. This ground has been adjudicated by me in the appellant's own case for the AY 2012-13 in which the appeal has been allowed. This ground has been discussed in detail in the case of Sh. Anurag Dalmia for the AY 2006-07 which is reproduced as under:-
" ..... 11. Ground no.5 relates to addition of Rs.4,88,816/- made by the AO under section 69 of the IT Act as notional interest on the amount of alleged offshore bank accounts with HSBC Bank, ./2019 Geneva. I find that the AO had calculated 4% interest on the amount /balance related to the year under consideration and accordingly addition was made. The interest was calculated on notional/adhoc rate. There was no material available on record to establish the fact that the interest was earned on this rate or actually on some other rate, it was earned. Even otherwise it is settled law that no notional interest can be taxed as income. Further, the AO has not brought any corroborative evidence on record in this regard, hence, addition made on this account is directed to be deleted ..// Being identical facts, the appeal for the year under consideration is also allowed.”
5. In the result, the appeal is allowed.
Against the above order, Revenue is in appeal before the ITAT, We have heard both the parties and perused the record.
Ld. DR relied upon the order of the AO. Per contra, ld. counsel of the assessee claimed that the issue is covered in favour of the assessee.
For this proposition, he referred to ITAT’s order in AY 2014-15 in case of Anurag Dalmia where the appeal by the Revenue was dismissed. Ld. counsel further referred to for AY 2007-08 in the case of Jayanti Dalmia (assessee herein) where ITAT has dismissed the Revenue’s appeal on a finding that substantive assessment in the hands of Anurag Dalmia had been deleted.
Upon careful consideration, we find that no case has been made out before us that ITAT has confirmed the deletion of substantive assessment in the hands of Anurag Dalmia for the present assessment year. In this view of the matter, the submission of the ld. counsel of the assessee is erroneous. Hence since there is no finding that ITAT has upheld the present appeal of Revenue is liable to be dismissed on that count. Furthermore, ld. counsel of the assessee was not in a position to assist the court that what is the present position of appeal for the substantive addition in the hands of Anurag Dalmia. Hence we deem it appropriate to remit the issue to the file of AO. AO should consider the issue afresh upon receipt of the order of the ITAT in the case of substantive assessment in the hands of Anurag Dalmia for the present assessment year.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on this 24th day of June, 2022.