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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI AMARJIT SINGH
Assessee by : Shri .Harsh Kapadia.AR Revenueby : Shri. Tejinder Pal Singh.DR Date of Hearing 06.09.2022 Date of Pronouncement 07.09.2022 आदेश / O R D E R PER BENCH:
CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 2 -
The appeal is filed by the revenue and cross objection(C.O.) is filed by the assessee against the common order of the Commissioner of Income Tax (Appeals) – 48, Mumbai passed u/s 143(3) r.w.s 147 of the Act. The revenue has raised the following grounds of appeal:
1.Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai had erred in deleting the addition of Rs.51,19,959/- on account of balance in the foreign bank account ignoring the fact that the information about the foreign bank account was received by the Government of India and the bank account was not disclosed by the assessee.
2 .Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), Mumbai had erred in allowing assessee's claim thereby causing the bank balance to be taxed in subsequent assessment years and not in the present assessment years.
The brief facts of case that the assessee is an individual and derives income from salary, house property, business and profession, capital gains and other sources. The assessee has filed the return of income for the A.Y 2006-07 on 31.10.2006 with a total
CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 3 - income of Rs.26,36,505/- and the assessment was completed on 15.10.2008 determining the total income of Rs.26,36,505/-.The Assessing Officer (AO) has received the information from Govt of India from the French Govt under DTAA in exercise of its sovereign powers that some Indian nationals and residents have foreign bank accounts in HSBC Bank, Geneva, Switzerland which were undisclosed to the Indian taxation and the information was received in the form of document (herein referred as Base Note) wherein various details of account holders such as name, date of birth, place of birth, sex, residential address, profession, nationality along with the date of opening the bank account in HSBC Bank, Geneva and balance in certain years etc are mentioned. Whereas the assessee is one of the bank account holder where the base note is received. Therefore the AO has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act.
In compliance to the notice, the assessee has filed the revised return of income on 15.05.2012 disclosing a total income of Rs.27,10,720/-. There was survey
CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 4 - u/sec133A of the Act was conducted and the revenue has received the information in respect of the assessee in relation to the foreign bank account in his name and also amount lying in the bank account and the statement was recorded in the case of the assessee. The AO has referred to the reasons for reopening at page 4 of the order as under:
"Consequent upon the survey action u/s 133A of the I.T. Act, 1961 carried out on 30.09.2011, it has been noticed that the assessee is having an undisclosed foreign bank account bearing account No. 5091189255 with HSBC Bank, Geneva. From the perusal of bank accounts available on record, it has been observed that the assesses is having peak balance of $1,13,776.87/ i.e. Rs. 51,19,959/- (considering 1$-45INR) in the F.Y. 2005-06 in his undisclosed account. The amount kept in undisclosed account is the undisclosed income which has not been accounted for and has escaped assessment.
In compliance to the notice, the Ld.AR of the assessee appeared from time to time and submitted the information. The A.O. found that the assessee has bank account in HSBC, Geneva right form inception till date and consent waiver form is given by assessee to the HSBC Bank, Geneva that the account details should be forwarded to himself only. The AO has dealt
CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 5 - on the facts with respect to the amount lying in the bank account and also statement recorded under section 131 of the Act on 18.10.2013 referred at page 5 to 7 of the assessment order and the AO has observed and made an addition at page 9 of the order as under:
During the course of enquiries conducted by the Investigation Wing, Mumbai, many assessees have accepted that they own the bank accounts as mentioned in the Base Notes related to them. Certain assessees have paid the taxes also on the amount mentioned in the Base Note against their undisclosed bank account in HSBC Bank, Geneva.
2. Various assessees have submitted the statements of their accounts in HSBC Bank, Geneva also. 3. In various other cases, where assessees were denying out rightly that they have such undisclosed bank account in HSBC Bank, Geneva were required to fill up the consent waiver form. In response to the consent waiver form sent to the HSBC Bank, Geneva, the bank has sent them their bank account statements and CD. The assessees submitted these bank statements and CDs to the Department. This confirms that even in those cases where assessees were denying the ownership of such undisclosed bank account, subsequently admitted their accounts and submitted their bank statements also. These statements' account numbers and other information tally with the information received by the Government of India from the French Authorities in the form of the base note.
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4. Therefore this is proved that the information received by Government of India from French Authorities under DTAA regarding undisclosed bank accounts held by these individuals in HSBC Bank, Geneva is true and correct.
Also Shri. Kumar Rasiklal Mehta (the assessee) has confirmed vide his letter dated 02.11.2011 the above disclosure and promised to pay taxes thereon. The assessee has paid Rs. 39,94,250/- as tax on this undisclosed income. The conduct of assessee establishes his acceptance of this undisclosed bank account. Paying taxes on an income which "does not belong" to him (as per the assessee) is highly improbable.
In the case of the assessee, the Base Note of the account held by him in HSBC Bank, Geneva was shown to him and it is found that the personal details in the document are of the assessee and which exactly match with the details (copies of passport and Driving Licence) provided by him during the statement recorded under oath and substantiated. His identity proofs are also attached with his statement. Like any other case, in assessee's case also the personal details of the assessee match exactly with the details found in the Base Note. However still the assessee is denying the ownership of his account.
It is pertinent to note that under section 106 of Indian Evidence Act which reads as:
"Burden of proving fact especially within knowledge.- When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Illustrations
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(a) When a person does an act with some intention other than that which the character and circumstances of the act suggest, the burden of proving that intention is upon him. (b) A is charged with travelling on a railway without a ticket. The burden of proving that he had a ticket is on him."
The burden of proving a fact which is especially within knowledge of the assessee is upon the assessee. The information received by the Government of India is found to be true and genuine; even then if the assessee, in particular, claims that this does not apply to him and he does not have any such account, then burden to prove this claim is upon him, which he could not discharge.
Accordingly, he was asked in statement recorded under oath to establish his denial of possession of account. However, in reply he has denied ownership of the said account. Simply saying this does not discharge the onus since no facts or evidences were produced to prove his claim. Where all the details in the Base Note match with assessee's personal details, the denial of possession of the account has to be substantiated by the assessee. But he could not do so.
The only argument given by the assessee is that the information with the Department is not authentic. Repeating the same argument again and again does not discharge his onus. Since the information is already found to be true and correct (as discussed above) the responsibility to discharge onus in his "especial case" lies on him which he could not discharge. All these clearly establish the fact that the assessee has bank account with BUP_SIFIC_PER_ID 5090129582 linked with Code profile
CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 8 - client 5091189255 in HSBC Bank, Geneva which is undisclosed to the Income Tax Department. All these above facts clearly establish that the account belongs to the assessee and the assessee has not disclosed this bank account to Income Tax Department. Assessee failed to explain the deposits shown in the Base Note in his bank account in this financial year. The balance reflected therein is his unexplained money. Therefore, an amount of Rs 51,19,959/-equivalent to USD 1,13,776/ (1 USD = 45INR) shown up as balance in F.Y. 2005-06 in the undisclosed bank account of the assessee in HSBC Bank, Geneva, Switzerland as per the information in document is treated as the undisclosed income which has not been accounted for and has escaped assessment. Accordingly an addition of Rs. 51,19,959/- is made to the total income of the assessee u/s 69A of the Income Tax Act, 1961 For A.Y. 2006-07. Penalty proceedings u/s 271(1)(c) is initiated for concealment of income.
5. Finally the AO has passed the assessment order u/s 143(3) r.w.s 147 of the Act determining the total income of Rs.78,30,680/- vide order dated 19.03.2014.
6. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the scrutiny assessment and has dealt elaborately on the provisions, facts and the concept of double taxation at page 38 to 49 of the order and CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 9 - granted partial relief and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the revenue has filed an appeal and the assessee has filed the CO on validity of reassessment before the Honble Tribunal.
7. At the time of hearing, the Ld. DR submitted that the CIT(A) has erred in granting the relief irrespective of the fact that the information was not disclosed by the assessee in respect of foreign bank account before the revenue authorities and relied on the order of the AO and prayed for allowing the revenue appeal. Contra, the Ld. AR supported the order of the CIT(A) on these disputed issues.
8. We heard the rival submissions and perused the material on record. The sole matrix of the disputed issue as envisaged by the Ld. DR that CIT(A) erred in deleting the addition of account balance in foreign bank account overlooking the various facts and findings of the AO and the provisions applied in respect of foreign bank account. Whereas the Ld. AR submitted that the CIT(A) has considered the relevant factors and the decision in the assessee’s own case for the A.Y 2007-08, where the addition has been made by CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 10 - the A.O. and the appeal was dismissed by the CIT(A), further the assessee has accepted the decision of the CIT(A) and has not preferred appeal. We find that the CIT(A) has passed the common order for A.Y 1997-98, 20006-07 & 2007-08 vide order dated 17.12.2021 and the CIT(A) has dealt on the grounds of appeal
, submissions, findings of the AO and has dismissed the appeal for A.Y 2007-08 referred at page 37 of the order. We consider in appropriate to refer to the findings of the CIT(A) at page
47. Para 17 to 17.3 read as under:
17. Ground number 5 and 6of the appellant deal with the addition made of Rs. 27,90,000/- u/s. 69A of the Act. While dealing with this issue, the AO vide para 7 of the assessment order has stated as under:
"Since, the assessee has not submitted the copy of said bank statement & failed to discharge his onus and no evidence was produced to prove his claim, in view of the above the assessee was show caused during the assessment proceedings vide notice u/s 142[1] dated 09.02.2015 as to why an amount of US$ 1,00,000 should notbe treated as undisclosed Income of the assessee being the minimum amount required to open/operate an account in HSBC, Geneva."
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17.1 In response to this notice, the assessee made a submission dated 25.02.2015 wherein the assessee has stated that highest maximum total balance of US$ 1,17,372 is inclusive of the initial deposit that might have being deposited being minimum amount required to open/maintain said (d) account hence, having included in the peak balance voluntarily offered for taxation no further separate taxability of same is acquired. The AO being not satisfied with the contention of the assessee as also the assessee failed to submit the complete bank statement in respect of the account with HSBC, Geneva, added back amount of Rs. 27,50,000/- being undisclosed income u/s. 69A of the Act, to the total income of the assessee.
17.2 In my considered view, the AO has simply applied the logic that the account in HSBC Geneva can be opened only on depositing minimum specific amount which he considered as income of the assessee u/s. 69A of the Act. After considering overall facts of the case, I feel that the AO's action in making addition of Rs. 27,50,000/- being initial deposit amount for opening the bank account with HSBC, Geneva is not correct. On this issue common logic has to be applied that, while considering an amount of Rs. 27,50,000/- being initial deposit amount on later in F.Y. 2006-07, it gets merged in the balances carried forward and cannot be considered in isolation without considering subsequent cumulative effect. Thus, estimating initial deposit amount of US$ 1,00,000 (Rs. 27,50,000/- to the income of the assessee is over and above maximum balance of US $ 1,17,372 (Rs. 53,00,000/-) which is already considered for A.Y. 2007-08. It will be not fair to held the assessee for the same addition made in A.Y. 2007-08 resulting in double taxation. Moreover, for any CO No. 87/Mum/2022 Shri Kumar Rasiklal Mehta, Mumbai. - 12 - additional addition over and above what is reflected in the piece of information received, it is the duty of the AO to bring on record additional information or document so as to attempt any further addition. Nothing has been brought on record.
17.3 Considering these facts, the AO is directed to delete the addition of Rs. 27,50,000/-.Thus, ground number 5 and 6 are Allowed.
9. We find that the CIT(A) has considered the facts, provisions and dealt on the financial aspects and observed that the income is already assessed in the A.Y 2007-08 and therefore granted the relief. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent evidence or information to take a different view. Accordingly, we do not find any infirmity in the order of the CIT(A) on the issues raised before the Honble Tribunal in the revenue appeal and uphold the same and dismiss the grounds of appeal filed by the revenue.
CO No.87/Mum/2022, A.Y 2006-07.
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The assessee has raised the cross objections in respect of validity of the reassessment proceedings and is not pressed. Since the revenue appeal is dismissed the CO raised by the assessee on validity of reassessment becomes academic and is left open.
11.In the result, the appeal filed by the revenue and CO filed by the assessee are dismissed.