DCIT CENTRAL CIRCLE-1(2) , MUMBAI vs. JAY KETAN PARIKH, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL, HON'BLE JUDICIAL MEMBER ITA NO.1225/MUM/2022 (A.Y: 2006-07) DCIT – Central Circle – 1(2) v. Jay Ketan Parikh Room No. 906, 9th Floor 94-D, Thanee Heights Pratishtha Bhavan, Old CGO Annexe 66, Nepean Sea Road Maharishi Karve Road Mumbai - 400006 Mumbai - 400020 PAN: AAIPP6681J (Appellant) (Respondent) Assessee by : Shri Anuj Kisnadwala Department by : Shri Achal Sharma

Date of Hearing : 08.08.2022 Date of Pronouncement : 22.08.2022

O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) – 47, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 09.11.2021 for the Assessment Year 2006-07.

2 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh quantum additions/disallowance were deleted by the Hon'ble ITAT vide order dated 07.04.2021 for the Assessment Year under consideration.

3 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh “5 APPELLATE DECISION: I have carefully considered the facts of the case, submissions made by the assessee as also the penalty order of the Assessing Officer. The only issue involved in the present appeal is levy of penalty at Rs. 9,42,29,730/-, in respect of addition of Rs.27,99,45,729/- on account of undisclosed HSBC accounts. 5.1 It is observed that while passing the order u/s 143(3) rws 153A of the Act dated 27.03.2015, the AO has added the peak balance of USD 2,43,132.65 as appearing in the month of January 2006 in the bank account of Sulay Trading Ltd. and USD 60,35,211.5 being 25% of peak balance of USD 62,41,40,846/- as appearing in the month of March 2006 in the bank account of Laptis Trading Company Ltd. with HSBC Bank (Suisse) SA Geneva. Thus, an aggregate addition of Rs.27,99,45,729/- was made as unexplained money under section 69 of the Act based on the information contained in the base note. 5.2 The assessee had challenged the said order passed by the AO, before the Ld. CIT(A). The primary argument of the assessee before the Ld. CIT(A) was that the said addition could not have been made as no incriminating material was found during the course of search. The Ld. CIT(A) did not find any merit in the contentions of the assessee and dismissed the appeal. 5.3 Aggrieved by the said order of the Ld. CIT(A) in quantum addition, the assessee preferred further appeal before the Hon'ble ITAT, Mumbai. 5.4. The Hon'ble ITAT, Mumbai vide combined order dated 07.04.2021 in ITA no. 1955 & 1956/M/2020 has allowed the appeal of the assessee in the following words ITAT ORDER NO.1955 & 1956/M/2020 EXTRACTS: “14. We have heard the rival submissions of both the parties and perused the material on record including the orders of authorities below and various decisions cited by both the sides. We note that the department has received information in the form of base note from French government under DTAA containing information that assessee is beneficiary of foreign bank accounts in HSBC Bank (Suisse) SA Geneva, Switzerland. It is undisputed that during the course of search proceedings on the assessee no incriminating materials in respect of assessee being a beneficial owner of bank accounts in HSBC Bank (Suisse) SA Geneva, Switzerland were found. The assessee also denied in the statement recorded under section 132(4) of the Act that he was beneficial owner of the foreign bank

4 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh accounts held in HSBC Bank by 4 companies as mentioned elsewhere in this order. In the instant case, the assessee filed the return of income under section 139(1) of the Act on 16.10.2006 whereas the search was conducted under section 132(1) of the Act on 08.08.2011. Thus the time limit for issue of notice under section 143(2) of the Act expired on 31.10.2007 meaning thereby that no assessment was pending for the instant year on the date of search and therefore the present assessment year has not abated. It is also a settled position of law that any addition in a non abated assessment year can only be made on the basis of incriminating material found during the course of search and not otherwise. We find that during the course of search no such incriminating material was found by the search team. We have also perused the order of Ld. CIT(A) wherein Ld. CIT(A) has noted that the addition made by the AO was based upon incriminating documents in the form of base note as received from French authorities under DTAA, statement of assessee recorded under section 132(4) of the Act during search and material gathered in post search proceedings like HSBC Bank (Suisse) SA Geneva letter and Additional DIT(Inv.) Mumbai’s letter to HSBC Bank (Suisse) SA Geneva etc. Now the issue before us whether the base note or statement recorded during search u/s 132(4) of the Act or material gathered during post search proceedings constitute incriminating materials found during search or not. We have perused the facts on records and after analyzing them in the light of various decisions of tribunal and Hon’ble High Courts we opine that such materials/evidences cannot be said to found during the course of search. We further find merits in the contentions of the assessee that materials has to be found during search and it has to be incriminating which was not the case before us. Therefore, we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. We note that base note was available with the revenue authorities before the date of search and search was, in fact, carried out on the basis of said base note and therefore same can not be construed or considered as incriminating evidence found during the course of search in order to make the addition in an unabated assessment year. The case of the assessee is supported by the following three decisions of the coordinate benches of the tribunal: • In the case of DCIT vs. Arunkumar Mehta (supra) wherein the co-ordinate bench of the Tribunal has held as under: “6. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We have also carefully considered case laws relied upon by both the parties. We find that

5 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh an identical issue had been considered by the co- ordinate bench of ITAT, Mumbai ‘A’ Bench in assessee own case for AY 2006-07 in ITA No. 3712/Mum/2017, where the Co-ordinate Bench, after considering relevant facts and also by following the decision of Hon’ble Bombay High Court, in the case of CIT vs Murali Agro Product. Ltd, deleted additions made by the AO. The relevant findings of the Tribunal are as under: “16. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The facts born out from the record clearly established that assessment for the impugned assessment year is unabated as on the date of search i.e. 25/08/2011, because the assessment for the impugned assessment year was completed u/s 143(1) of the Act, and the time limit for issue of notice u/s 143(2) of the Act, had been expired on 30/09/2007. It is an admitted fact that during the course of search in the case of the assessee, no incriminating material was found in respect of undisclosed bank account maintained at HSBC Bank, at Geneva in the name of Ruby Enterprises Inc. and White Cedar Investment Ltd. Although, certain incriminating material and undisclosed asset was found during the course of search in respect of silver articles and gold jewellery received from various people on the occasion of engagement of grandson of the assessee and the assessee has accepted undisclosed income in respect of silver articles and gold jewellery for AY 2012- 13 but it is true that nothing was found in respect of HSBC Bank account. From this, it is abundantly clear that nothing was found and seized during the course of search in respect of HSBC Bank account under the name of Ruby Enterprises Inc and White Cedar Investment Ltd. This fact has been admitted by the AO in assessment order at para 7.1 on pages 12 and 13. Further, the assessee has denied having any bank account with HSBC Bank (Suisse) SA Geneva. In fact, the assessee claims to have not aware of facts and contents in Base Note received from the French Government under DTAA between two countries……. …………………………… 18. In the above legal background, if you examine the facts of the present case, we found that the assessment for the impugned assessment year is unabated as on the

6 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh date of search, which is because the assessment for the impugned year has been completed u/s 143 (1)of the Act, and the time limit for issue of notice u/s 143(2) was expired much before the date of search i.e. 25/08/2011. It is also an admitted fact that the addition made by the AO is not supported by any incriminating material found as a result of search. In fact, the AO made additions on the basis of ‘Base Note’ received by the government of India under exchange of information between French Government and Indian Government under the provisions of DTAA, and said Base Note was received prior to search. The sole reason for conducting search in the case of the assessee is information received from French Government in the form of Base Note with regard to undisclosed bank account in HSBC Bank Geneva. Therefore, we are of the considered view that the additions made by the AO is merely based on Base Note which is not found as a result of search or requisition and consequently the additions made by the AO in assessment order passed u/s 153A of the Act, consequent to search, in absence of any incriminating material found as a result of search is bad in law and liable to be deleted. This legal proposition is supported by the decision of the jurisdictional High Court of Bombay in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd vs CIT (supra), where the court held that no additions can be made in respect of assessments which have become final if no incriminating material is found during the course of search. This legal proposition is further supported by the decision of division bench of the Hon’ble Bombay High Court in the case of Murali Agro Products Ltd vs CIT (2014) 49 taxman.com 72, wherein it was held that no additions can be made in respect of unabated assessment which have become final, if no incriminating material is found during the course of search. This legal proposition is further reiterated by various High Courts, including the jurisdictional High Court in the case of CIT vs Gurinder Singh Bawa 386 ITR 483(Bom), where it was held that once an assessment has attained finality for a particular year i.e. it is not pending, then the same cannot be subject to tax in proceedings under section 153A of the Act.” Similar ratio has been laid down in the case of Shri Biswanath Garodia vs. DCIT (supra). The operative part whereof is reproduced as under:

7 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh “2……….. During the course of search, books of account, jewellery, etc. were found besides some cash. The statement of the assessee was recorded under section 131 of the Act, wherein he admitted of having maintained a Bank Account in HSBC Bank (Suisse) SA Geneva, Switzerland. He also admitted that the said Bank Account was opened on 07.06.1999 and his wife Smt. Usha Garodia was an authorized person to operate the said account maintained in his name. He further accepted that the money deposited in the said account represented the proceeds of his export business and agreed to pay income-tax, if any, due thereon. He also pointed out that the said Bank Account was closed sometime ago and there was no balance in the said account on the date of recording of his statement……….. 8 We have considered the rival submissions and also perused the relevant material available on record…………………….. 11. Keeping in view the discussion made above, we hold that the additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC Bank (Suisse) SA Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. The said additions made for both the years under consideration are, therefore, deleted allowing the relevant grounds of the assessee’s appeals” In the case of Yamini Agarwal vs. DCIT (supra) the coordinate bench of the Tribunal has also held that specific information received from HSBC from French Government with regard to HSBC account at Geneva, Switzerland can not be considered incriminating material found at the time of search. The operative part is as under: “23. It is not in dispute before us that with respect to the additions made during the course of assessment proceedings u/s.153A of the Act, there was no incriminating material found at the time of search and that the AO while concluding the assessment u/s.153A of the Act dealt with the HSBC Bank Account at Geneva, Switzerland on receipt of specific information from sources, which are not disclosed but

8 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh admittedly not found or discovered as a result of search conducted u/s.132 of the Act on the Assessee……………… 24. We are of the view that the proposition canvassed by the learned counsel for the Assessee finds support from the various decisions cited by him………………………….…….We are of the view that the view expressed by the Hon’ble Bombay High Court and the Hon’ble Delhi High Court has to be followed being views in favour of the Assessee, in the facts and circumstances of the present case. 25. We therefore hold that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search………….” After taking into account the facts of the instant case and the decisions of the coordinate benches as discussed above, we are inclined to set aside the findings of the Ld. CIT(A) on this issue and hold that base note as received from the French authorities is not an incriminating material and therefore addition made on the basis of base note can not be sustained. 15. We also note that Ld. CIT(A) has held that the statement recorded of the assessee under section 132(4) of the Act during the search on 08.08.2011 constituted the incriminating material. In our considered opinion, the findings of the ld CIT(A) that statement recorded during search constitutes incriminating material is also not correct as the same can not be said to be found during the course of search but is recorded to elicit more information/explanation of the searched person on the incriminating documents/gold/jewellery found during search. Therefore after perusing the material on record and considering rival contentions and also the decisions cited before us, we are of the considered view that a statement recorded during the course of search can not be considered an incriminating material in order to make addition in an unabated assessment year. The case of the assessee is supported by the decision of the co-ordinate bench of the Tribunal in the case of DCIT vs. Shivali Mahajan & others (supra). The relevant paras are reproduced below: “3……. During the course of search, statement of Shri Lalit Mahajan i.e., the assessee in appeal

9 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh No.5590/Del/2015 was recorded, in which, he admitted of cash investment by him and other family members in respect of booking of space in Indirapuram Habitat Centre…… 4. …….. 7. Learned DR, on the other hand, stated that during the course of search of Aerens Group who is the builder and developer of Indirapuram Habitat Centre……………….. That the statement under Section 132(4) has a legal sanctity and that by itself constitutes an evidenceand addition can be made on the basis of assessee’s statement………… 8. …….. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, following two questions arise for our consideration: i) Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under Section 153A of the assessee. (ii) Whether the addition can be made only on the basis of statement given by the assessee during the course of search. ……………. 16. Now, coming to question No.2, we find that this issue is also covered by the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference: - ……….. 17. Thus, Hon'ble Jurisdictional High Court has held “The words “evidence found as a result of search” would not take within its sweep statements recorded during

10 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh search and seizure operations”. Their Lordships further observed “However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation”. In paragraph 24, their Lordships have mentioned about the prevailing practice of extracting statement by exerting undue influence or coercion by the search party. Though the above decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, however, in our opinion, the above observation of Hon'ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the assessment u/s 153A 18. In the case of Best Infrastructure (India) (P.) Ltd. (supra), Hon'ble Jurisdictional High Court reiterated in paragraph 38 “Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal”. 16. Therefore, on this count also, we are not in agreement with the conclusion drawn by the Ld. CIT(A). In our considered view the statement recorded under section 132(4) of the Act can not be considered as incriminating material found in the course of search. 17. We also note that Ld. CIT(A) has also held that material gathered in post search proceedings such as HSBC Bank (Suisse) SA Geneva letter and Additional DIT(Inv.) Mumbai’s letter to HSBC Bank (Suisse) SA Geneva also constitute incriminating material. In this case, we note that the assessee has suo-motto furnished before the revenue authorities in post search proceedings the HSBC Bank (Suisse) SA Geneva letter. Besides, the Additional DIT (Inv.) Mumbai wrote a letter to HSBC Bank (Suisse) SA Geneva seeking clarification during post such investigation whether such letter as furnished by the assessee was issued by HSBC Bank Geneva or not. This view of the Ld. CIT(A) also appears to be totally contrary to law and can not be accepted. The case of the assessee finds support from the decision of Hon’ble Madras High Court in the case of CIT vs. PK Ganeswar (supra) wherein the Hon’ble High Court has

11 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh held that no addition can be made on the basis of material gathered during post search investigation in an unabated assessment year. In this case, the assessee has furnished a letter from HSBC Bank (Suisse) SA Geneva on his own before the tax authorities which certainly, in our view, does not constitute an incriminating material on the basis of which addition could be made in the hands of the assessee. Therefore, this is an undisputed position of law that in case of unabated assessment year, no addition can be made in absence of any incriminating material found during the course of search. The view is supported by the decision of Hon’ble Jurisdictional High Court in the case of CIT v. All Cargo Global Logistics Ltd (supra) wherein it has been held that no addition can be made if no incriminating material was found during the course of search in an unabated assessment year which has attained finality on the date of search. The decisions cited by the ld DR were also perused carefully and find them not applicable to the facts before us. In view of the above facts and circumstances of the case and various decisions as discussed above , we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. The ground No.1 is allowed. 5.5 Apart from that inpar 31-33 of the order. Hon'ble ITAT has given findings with respect to addition Rs.27,99,45,729/- in respect of deposit in HSBC bank Accounts of Laptis Trading Ltd., and Sulay Tradign Ltd., Under section 69A of the Act. These are reproduced as below:- 31. We have heard the rival submissions of both the parties and perused the material on record including the impugned orders of the lower authorities and decisions cited by both sides. We note that during the appellate proceedings before the Ld. CIT(A), numerous documents were received from foreign government which were also made available to the assessee by Ld. CIT(A) vide letter dated 08.09.2020. All these documents have been referred by the Ld. A.R. in his submissions and arguments as discussed supra. For the sake of ready reference these are listed along with the contents therein as under:

12 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh a) Letter of Government of Virgin Islands dated 19-05- 2017 (page 18 of paper book) - Laptis Trading is owned by The Beal Trust. The said Trust has been formed by Mr. Raju Navinchandra Shah. - The beneficiaries of The Beal Trust are (i) Milan Parikh (ii) Shaunak Parikh (iii) Jay Parikh (iv) Raj Parikh (v) Mahendra Parikh (vi) Care Britain and (vii) Feed the Children (Europe). - Out of the above, first four are appellants before Your Honours, fifth is uncle of the appellants and rest two are charitable organisations. b) Instrument of Trust dated 26-03-1997 (page 23 of paper book) - The Beal Trust has been formed on 26-03-1997 with ABN Amro as Trustee. - The beneficiaries were (i) Care Britain and (ii) Feed the Children (Europe). c) Deed of Appointment, Retirement and Indemnity dated 14-09-2006 (page 36 of paper book) - The full document is not available but based on the subsequent documents it is evident that on this day ABN Amro retired as a Trustee and Equity Trust has been appointed as Trustee. d) Deed of addition of beneficiaries dated 07-09-2007 (page 37 of paper book) - As per the recital, on 14-09-2006, Equity Trust had been appointed as a Trustee in place of ABN Amro. – (i) Milan Parikh (ii) Shaunak Parikh (iii) Jay Parikh and (iv) Raj Parikh have been appointed as beneficiaries. - It may be noted that the appellant has been appointed as beneficiary for the first time on 07-09-2007, which date falls beyond the end of the previous year. - . e) Deed of Appointment and Indemnity dated 05-12- 2007 (page 41 of paper book)

13 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh - An amount of USD 2.30 million was appointed to the beneficiary, HSBC Trustee, Singapore. - This also happened much after the end of the relevant previous year. f) Deed of Addition of beneficiary dated 28-08-2009 (page 45 of paper book) - Mahendra Parikh has been appointed as beneficiary of the Trust. g) Letter of TMF group dated 16-10-2020 (page 72 of paper book) - Equity Trust has been merged with TMF group - The Beal Trust has been formed on 26.03.1997 by one Mr Raju Navinchandra Shah of Israel and the trustee was ABN Amro. - 100% share capital of four companies including Sulay Trading Ltd and Laptis Trading Ltd is held by The Beal Trust. - On 14th September,2006, Equity Trust has been appointed as trustee - On 07-09-2007 Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have been appointed as beneficiary. - On 28-08-2009, Mahendra Parikh has been appointed as beneficiary – In October 2009, Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have been removed from the list of beneficiaries. - Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have not received any distribution from the trust. 32. Upon perusal of all the above documents, we note that each of the Trust documents, received from Government of virgin Islands & Jersey, contains reference to all earlier chain of the documents. We also note that the assessee has filed some documents before the revenue authorities which were counter verified by the revenue independently and found them correct. We have perused all these documents supplied by the foreign government to the Indian counter

14 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh part and letter from government of Virgin Island dated 19.05.2017 and we find that Laptis Trading Co. Ltd is owned by Beal Trust and the trust has been formed by Mr. Raju Navinchandra Shah with beneficiary namely Milan Parikh, Shaunak Parikh, Jay Parikh, Raj Parikh, Mahendra Parikh, Care Britain and Feed the Children (Europe). Of the above beneficiaries, the first 4 are appellants before us and 5th is uncle of the various appellants and the remaining two are charitable organizations. Similarly, the instrument of trust dated 26.03.1997 with ABN Amro as trustee with two beneficiaries namely Care Britain and Feed the Children (Europe) and deed of appointment, retirement and indemnity dated 14.09.2006 which is filed at page No.36 of the paper book were perused and we find that that ABN Amro retired as trustee and equity trust has been appointed as trustee. We further note from deed of addition of beneficiaries dated 07.09.2007, a copy of which is filed at page No.37 of the paper book that ABN Amro was replaced by equity trust as trustee and the 4 appellants including the assessee before us namely Mr. Milan Kavinchandra Parikh, Mr. Shaunak Jitendra Parikh, Mr. Raj Hiten Parikh & Mr. Jay Ketan Parikh have been appointed as beneficiaries. It is important to note at this stage that the assessee is appointed as beneficiary for the first time on 07.09.2007 which apparently and undoubted after the end of the previous year under consideration. We also note that this chain or chronology of events as unfolded by the various documents sent by the Sovereign Government of Virgin Island & Jersey to the Indian counter part that assessee was never a beneficiary prior to the 07.09.2007. Further, vide deed of appointment and indemnity dated 05.12.2007, a copy of which is filed at page No.41 of the paper book, an amount of USD 20.3 million was appointed/earmarked to the beneficiary HSBC trustee, Singapore. We note that this earmarking of funds also happened after the close of the financial year in question. We further note that vide deed of addition of beneficiary dated 28.08.2009 Mahendra Parikh the uncle of four appellants before us was appointed as beneficiary of the trust. Finally, comes the letter of TMF group dated 16.10.2020, a copy of which is filed at page No.72 of the paper book, which evidenced all the correspondences/documents as discussed above and some additional facts/documents as under: - Equity Trust has been merged with TMF group - The Beal Trust has been formed on 26.03.1997 by one Mr Raju Navinchandra Shah of Israel and the trustee was ABN Amro. - 100% share capital of four companies including Sulay Trading Ltd and Laptis Trading Ltd is held by The Beal Trust.

15 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh - On 14th September, 2006, Equity Trust has been appointed as trustee - On 07-09-2007 Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have been appointed as beneficiary. - On 28-08-2009, Mahendra Parikh has been appointed as beneficiary - In October 2009, Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have been removed from the list of beneficiaries. - Milan Parikh, Shaunak Parikh, Jay Parikh and Raj Parikh have not received any distribution from the trust. 33. Thus, on the basis of above set of documents as supplied by Ld. CIT(A) to the assessee vide its letter dated 08.09.2020, we observe that assessee was added as a beneficiary to Beal Trust vide deed of addition of beneficiary dated 07.09.2007 and prior to this date the assessee had nothing to do with the trust. We also note that on the basis of letter of TMF group that the assessee has been removed as beneficiary w.e.f. October 2009. After taking into the account these undisputed facts in entirety and considering the various documents as placed by the assessee before us as have been discussed hereinabove, we find that the assessee was never a beneficiary prior to 07.09.2007 and also post October 2009. Based on the said information and facts, we are quite convinced with the contentions of the Ld. A.R. that no addition can be made in the year under consideration as the assessee was not a beneficiary during the year under consideration. We observe that the assessee was not the owner of the foreign bank account. He was added as beneficiary on 07.09.2007 and ceased to be beneficiary w.e.f. October 2009. We have also perused the decision relied upon by the Ld. D.R in the case of Renu Tharani vs. DCIT (supra) and find that the facts of the said case are distinguishable than that of the assessee’s case. We note that in that case the trust deed was not on record whereas in the instant case all the documents were before the Revenue Authorities. We also note that in the case of Renu Tharani vs. DCIT (supra) the Tribunal has made an observation that it can not be a general proposition that wherever name of the assessee figures in base note from HSBC Bank (Suisse) SA Geneva, an addition will be justified in each case. The coordinate bench of the Tribunal noted that an account in HSBC Bank by itself can not be taken to mean that money in the account is unaccounted, illegitimate and illegal. The co- ordinate bench of the Tribunal noted that in each case, the facts and the surrounding circumstances are to be examined on merit and then a call has to be taken about as to whether the explanation of the assessee merits acceptance or not and there can not be a short cut or one size fits of approach to this exercise. Besides, the revenue

16 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh could not prove that any distribution was done. In view of the above facts and circumstances, we are inclined to set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition made under section 69A of the Act of Rs.27,99,45,729/-. Consequently ground no. 2 is allowed. 6. Conclusion 6.1 From the above, it is clear that Hon'ble ITAT, Mumbai has deleted the entire addition of Rs.27,99,45,729/- made by the AO under section 69 of the Act in the quantum appeal. 6.2 Under these circumstances, as held by the Hon'ble Supreme Court and Hon'ble High Courts in various decisions that where additions made in the assessment order, on the basis of which penalty u/s 271(1)(c) was levied are deleted, there remains no basis for levying the penalty for concealment or furnishing of inaccurate particulars. Therefore in such a case, no such penalty can survive and the same is liable to be cancelled. Some of the often quoted decisions are Com (i) KC Builders v. ACIT, 265 ITR 562 (SC) (ii) ITO V. Nandlal & Co., 341 ITR 646 (Bom) (iii) CIT v. Brahmaputra Consortium Ltd., 348 ITR 339 (Del) (iv) CIT v. P. Balasubramanian, 354 ITR 116 (Mad) 7. Consequently, penalty levied u/s 271(1)(c) of Rs.9,42,29,730/- is deleted. Hence, ground of appeal no.2 is allowed in favour of the assessee. As a result, grounds of appeal no. 1, 3 & 4 become infructuous. 8. Hence, appeal of the assessee is allowed.”

17 ITA NO.1225/MUM/2022 (A.Y: 2006-07) Jay Ketan Parikh penalty since the very basis for levy of penalty i.e. addition made in the assessment proceedings was deleted by the Tribunal and in which case penalty will not survive. Thus, we confirm the order of the Ld.CIT(A) in deleting the penalty. Ground raised by the Revenue is dismissed.

Order pronounced in the open court on 22nd August, 2022.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 22/08/2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mum