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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee against the orders of ld. CIT(A)-23, New Delhi dated 29.08.2016.
2. Since, the issues involved in both the appeals are identical, they were heard together and being adjudicated by a common order.
3. In , following grounds have been raised by the assessee:
“1. The appellate order passed by the Ld. CIT(A) is illegal being against the principles of natural justice and provisions of the Income Tax Act, 1961. & 5295/Del/2016 2 Manish Periwal 2. The Ld. CIT(A) has grossly erred on facts as well as in law in upholding the assessment order which is barred by limitation (Sec. 153/153B).
3. Without prejudice to the above, the Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition made u/s 153A/143(3) inspite of the fact that on the date of search, neither any assessment proceeding was pending nor any incriminating document was found relating to the addition.
4. The Ld. CIT(A) has grossly erred on facts as well as in law in holding that statement u/s 132(4) recorded during search on 13/04/2012 constitutes incriminating material u/s 153A.
5. Without prejudice to the above, the Ld. CIT(A) has grossly erred in ignoring the fact that the necessary documents having an implication on the tax liability of the appellant & the legality of the assessment order have not been provided to the appellant.
6. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition of Rs. 3,99,72,014/- which is based on highly unreliable documents.
7. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition of Rs. 3,99,72,014/- by holding that there is no doubt about the integrity of the information used against the assessee.
8. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition on the basis of statement which could not be termed as the one u/s 132(4) and terming the arguments as an after thought.
9. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition on the basis & 5295/Del/2016 3 Manish Periwal of presumption of the probability of unaccounted income generated having been deposited abroad.
10. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition on various other grounds ignoring the vital facts.”
Brief facts relevant to the adjudication of the case are that the original return was filed on 22.07.2006 declaring a total income of Rs.9,58,620/-. A search & seizure action u/s 132 of the Income Tax Act, 1961 was conducted by the Investigation Wing of the Income Tax Department on 13.01.2012. Accordingly, notice u/s 153A has been issued to the assessee and the assessment has been completed on 24.02.2015. It is pertinent to mention that the Assessment Year in question before us is not an abated assessment by the virtue of filing of the return on 22.07.2006.
The assessment proceedings u/s 153A started with “As per information available with the Investigation Wing of the Department, the assessee was the sole beneficiaries of five bank account maintained with HSBC Bank, Geneva……….” The assessment completed is undisputedly not based on documents found and seized during the course of search but based on reference to the statement recorded during the search. Hence, by the virtue of settled position of law espoused by now, no addition is warranted in the case of unabated assessment in the absence of seizure of any incriminating materials.
Further, during the proceedings before the ld. CIT(A), the Assessing Officer vide letter F.No. ACIT/CC-02/2016-17/589 & 5295/Del/2016 4 Manish Periwal dated 02.06.2016 and 1021 dated 27.07.2016 while answering to the question [page no. 20 CIT(A)],
Whether any document etc. was found and seized during the search related to the additions u/s 153A of the I.T. Act.
AO’s Reply:
As per the Panchnamas of search conducted at various premises of the appellant group and inventories enclosed there with, no document related to the foreign bank account was found.
Copy of your letter through which reference was made to the appropriate authority for exchange of information.
AO’s Reply:
AO has provided copy of the request letter F.No.ACIT/CC- 2/14-15/254 dated 22.07.2015 of the AO addressed to the Pr. CIT(Central)-1, New Delhi for seeking information under the provisions of “exchange of information” article of DTAA who forwarded the same to the JS(FT & TR)-1, CBDT vide his letter F.No.Pr.CIT(Central)-1/2015- 16/1073 dated 12.08.2015.
However, this request letter having been sent after the assessment order dated 24.02.2015 is not relevance to the assessment order.
AO has also provided copy of the request letter F.No.ACIT/CC-2/14-15/977 dated 17.12.2014 of the AO addressed to the Pr. CIT(Central)-1, New Delhi for similar & 5295/Del/2016 5 Manish Periwal “exchange of information”, but whether this was forwarded to the JS(FT&TR)-1, CBDT is not informed by the AO.
However, whether the above requests were forwarded to the Swiss authorities is not known since the AO has not forwarded the copies of references made by the JS(FT & TR)-1, CBDT to the Swiss authorities thereafter.
In the Assessment Order, there is no reference to the above requests made by the AO.
8. The two tangible issues raised by the assessee are with regard to limitation and order being barred by limitation and the second issue being absence of incriminating document and assessment consequent.
From the above, an undisputed fact arises that during the search & seizure operation at the residential and business premises of the assessee on 13.01.2012. The ld. CIT(A) confirmed the addition holding that the statement recorded u/s 132(4) of the Act do constitute incriminating material within the meaning of Section 153A of the Act.
On these issues, we have been guided by the order of the Co-ordinate Bench of the Tribunal in the case of Late Shri Bhushan Lal Sawhney Vs DCIT, Central Circle-7, New Delhi in 428/Del/2017 for A.Y. 2006-07 and A.Y. 2007-08 wherein the similar issues have been dealt in detail. The relevant portion of the said order is as under: & 5295/Del/2016 6 Manish Periwal “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 vs., Kabul Chawla reported in 380 ITR 573 (Del.) and Pr. CIT vs., Meeta Gut Gutia reported in 395 ITR 526 (Del.) in which the Departmental SLP have been dismissed by the Hon’ble Supreme Court reported in 96 taxmann.com 468 (SC). He has also referred to panchnama executed in the case of assessee which did not find mention any incriminating material relevant to any assessment years under appeals which could be the basis for making any addition. He has, therefore, submitted that since no incriminating material was found in assessment year under appeals, therefore, no addition could be made against the assessee. Learned Counsel for the Assessee again by referring to the above evidences submitted that since no information could have been provided by the Swiss Authorities to the Revenue Authorities in India for assessment years under appeals, therefore, no incriminating evidence was found to show that additions are based on any incriminating material. Learned Counsel for the Assessee also submitted that assessee since the very beginning has denied to have maintained any bank accounts with HSBC, Geneva, Switzerland. Therefore, onus is upon the A.O. to prove by specific and reliable evidence that assessee maintained any such bank account. Therefore, in the absence of any evidence or material on record against the assessee, even the addition on merit are without any basis. The additions on account of notional interest are based on mere suspicion and as such no addition could be made. & 5295/Del/2016 7 Manish Periwal 7. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below. The Ld. D.R. submitted that assessee challenged that assessments in these cases were time barred. In this regard, it is relevant to note that time barring date as per provisions of Section 153B is 31.03.2015 as against 31.03.2014 because the exclusion of the time period as provided by Clause-ix of Explanation to Section 153B of the I.T. Act, 1961 as applicable in the case of the assessee. He has submitted that in this case information was called for from Foreign Competent Authority under Exchange of Information through Reference Dated 05.12.2012 and the information thereto was received back as on 10.07.2015. As per the Explanation, the time barring date would got extended by one year if response could not have been received within one year. The Ld. D.R. however, did not dispute that last panchanama was drawn on 26.09.2011 as is also confirmed by the A.O. vide his letter Dated 22.08.2019. The Ld. D.R. also filed copies of the panchanama in these cases on record. The Ld. D.R. also did not dispute the letter Dated 26.06.2015 referred 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 28.07.2011. 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 Gut Gutia (supra) are not applicable in this case.
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 28.07.2011. 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 the course of search to connect the assessee with maintenance of any bank account with HSBC, Geneva, Switzerland. The Ld. D.R. also placed on record letter of the A.O. Dated 22.08.2019 in which it is clearly mentioned by the A.O. that last panchanama was drawn on Dated 26.09.2011. Learned Counsel for the Assessee also placed on record letter Dated 26.06.2015 issued by Swiss Competent Authority addressed to the Government of India in which it is specifically mentioned that information as required could be provided from F.Y. 2011-2012 as the prior years are not covered by temporal scope of Article 26 of the Amended Double Taxation Avoidance Agreement between India and Switzerland. Therefore, such information could be provided from 01.04.2011. Learned Counsel for the Assessee also placed on record Notification Dated 27.12.2011 between India and Switzerland Confederation for avoidance of double taxation. These would clearly show that these are applicable after assessment years under appeals and as per information provided vide letter Dated 26.06.2015 no such information could be provided prior to 01.04.2011. Therefore, Swiss Authorities have not provided any information to Revenue Authorities in India about assessee’s bank account with HSBC, Geneva, Switzerland for assessment years under appeals i.e., A.Ys. 2006-2007 to 2011-2012. Thus, there is no incriminating material available on record to make any addition in any assessment years. It may also be noted here that assessee & 5295/Del/2016 9 Manish Periwal since the very beginning denied to have maintained any such bank accounts with HSBC, Geneva, Switzerland. There is no material available on record that assessee made deposits in HSBC Bank A/c in A.Y. 2006-2007 or thereafter earned any interest in remaining assessment years under appeals.
8.1. Considering the totality of the facts and circumstances of the case above, it is also clear that during the course of search no incriminating material was found against the assessee for maintaining any such bank accounts with HSBC, Geneva, Switzerland. Whatever information was supplied by the Swiss Authorities subsequently to the Revenue Authorities in India, no such information was provided for the period prior to 01.04.2011. Therefore, it is clear that no information have been provided by the Swiss Authorities that assessee maintained any bank account with HSBC, Geneva, Switzerland in assessment years under 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 CIT vs., 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 of Pr. CIT vs. Meeta Gutgutia (supra) in paras 69 to 72 has held as under: & 5295/Del/2016 10 Manish Periwal “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 any incriminating material qua the AY for which he sought to make additions of franchisee commission.
The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts.
For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs.
Conclusion
To conclude:
(i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenue was not justified in invoking Section 153 A of the Act against the Assessee in relation to AYs 2000-01 to AYs 2003-04.”
8.2.1. The above Judgment is confirmed by the Hon’ble Supreme Court by dismissing the SLP of the Department. Therefore, on this reason alone no addition could be made of & 5295/Del/2016 11 Manish Periwal any unexplained bank deposits or interest earned thereon in any of the assessment years. In view of the above, we set aside the Orders of the authorities below and delete the entire additions.”
Respectfully following the judgment of Co-ordinate Bench of ITAT, we hereby hold that no addition is called for in the absence of any incriminating material found and seized during the course of search & seizure action.
In the result, both the appeals of the assessee are allowed. Order Pronounced in the Open Court on 18/05/2022.