ANAND PERSHAD JAISWAL,NEW DELHI vs. DCIT (INTERNATIONAL TAXATION), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘D’: NEW DELHI (Through Video Conferencing)

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER

ITA Nos.3247 & 3248/Del/2016 Assessment Years : 2006-07 & 2007-08

Sh. Karamjit S. Jaiswal, Vs. The Deputy Commissioner of Legal Heir Late Sh. Ladli Income Tax, Pershad Jaiswal, Circle-2(2)(1), 6, The Green Rajokri, International Taxation, New Delhi-110038 Room No.411, Block-E-II, PAN-AAJPJ5836C Pratyaksh Kar Bhawan, Civic Centre, New Delhi-110002

(Appellant) (Respondent)

ITA Nos.3730 & 3731/Del/2016 Assessment Years : 2006-07 & 2007-08

Anand Pershad Jaiswal, Vs. The Deputy Commissioner of 54-Ring Road, Lajpat Nagar-III, Income Tax, New Delhi-110024 Circle-2(2)(1), PAN-ADRPJ2549M International Taxation, Room No.411, Block-E-II, Pratyaksh Kar Bhawan, Civic Centre, New Delhi-110002

(Appellant) (Respondent)

Appellant by : Ms. R.S. Singhavi, CA. Respondent by : Dr. Prabha Kant CIT-DR

Date of hearing : 02.02.2021 Date of pronouncement : 23.04.2021

ORDER PER R.K. PANDA, AM : ITA No.3247/Del/2016 & ITA No.3248/Del/2016 filed by the

assessee are directed against the common order dated 21.04.2016 of the

2 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

learned CIT(A)-43, New Delhi, relating to Assessment Years 2006-07 and

2007-08 respectively. ITA NO.3730/Del/2016 & ITA No.3731/Del/2016

filed by the assessee are directed against the order dated 21.04.2016 of the

learned CIT(A)-43, New Delhi, relating to Assessment Years2006-07 and

2007-08. Since, common issues are involved in all these appeals, therefore,

these were heard together and are being disposed of by this common order.

Facts of the case, in brief, are that the assessee is an individual and is not

ordinary resident as mentioned by the Assessing Officer in clause 5 of page1

of the assessment order. The Assessing Officer in the instant case, reopened

the assessment after recording the following reasons:-

“Reasons for reopening u/s. 147 of the Income Tax Act, 1961 in the case of Late Sh. LadliPershadJaiswal through all his legal heirs for the A.Y. 2006-07.

Information has been received in this case from the Investigation Wing, Delhi. As per information Late Sh. Ladli Pershad Jaiswal was having a bank account with HSBC Geneva with client profile names 4487AA, 22628AA and Searose foundation having client profile codes 5091264834, 5091262009 and 5091195751 respectively. BUP_SIFICJPER_ID of Late Sh. Ladli Pershad Jaiswal is 5090130944. Late Sh. Ladli Pershad Jaiswal has expired and Sh. Jagajit Jaiswal, Sh. Karamjeet Jaiswal and Sh. Anand Pershad Jaiswal are his sons and his legal heirs.

The maximum outstanding balance in client profile name 22628AA during the period F.Y. 2005-06 was USD 3048891.78 (Rs.13,70,47,686/-) in January 2006 and maximum outstanding balance during the period FY 2006-07 was USD 3510614.27 (Rs. 2,03,75,814/-) in February 2007. The whole amount deposited in HSBC Bank, Geneva is undisclosed to the IT authorities of India by Late Sh. LadliPershadJaiswal and his legal heirs which needs to be

3 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

taxed. It is noticed from the information that Sh. AnandPershadJaiswal is he joint account holder of the above state bank account in Geneva. The BUP_SIFIC_PER__ID allotted to Sh. Anand Pershad is 5090145761. The bank account was created on 02.02.1997 and modified on 29.07.2004. The legal address for Sh. Ladli Pershad Jaiswal is appeared as B-69, Greater Kailash, Part-I, New Delhi-10048 however, for Sh. Anand Pershad Jaiswal their legal address is 12, Eagle Place, Landon SW7-3RG, United Kingdom.

The assessee has not filed any return of income for the A.Y. 2006-07. As the assessee had not offered any income on this account, I have reason to believe that income amounting Rs. 13,70,47,686/- (USD1=INR 44.95) chargeable to tax has escaped assessment in A.Y. 2006-07. This may be issued to the assessee at his legal address.

This will be pertinent to mention that this case is related to assets located outside India therefore, section 149(1)(c) will be applicable for determining the time limit for reopening this case. Section 149(1)(c) is reproduced hereunder for ready reference:

(c) if your years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax has escaped assessment.

Since four years from the end of the relevant assessment year have been expired, an approval u/s. 151(2) of the I.T. Act, 1961 is solicited. Accordingly, put for perusal and approval please.

Date: 30/03/2014 NishthaTiwari Dy. Director of Income Tax, Circle 3(1), Intl. Taxation, New Delhi. Sd/-

4 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

Dy. Commissioner of Income Tax, Circle-2(2)(1), Delhi (Intl.Tax) Room No. 411, 4th Floor, E-2, Block, PratyakshKarBhawan, Civic Centre, J.L. Nehru Marg, New Delhi-110002.

1961 (in short ‘the Act’) to the assessee. During the course of assessment

proceedings, The Assessing Officer noted that the assessee has filed his

return of income on 28.07.2006 at income of Rs.6,92,310/-. This return

has been filed in the status of not ordinarily resident in the International

Taxation Circle-1(Del.). He noted that the assessee has been filing return of

income in the status of nonresident from the Assessment Years 1993-94 to

2004-05. Since, Shri Ladli Pershad Jaiswal has died on 11.08.2005, a

notice was sent to his legal heir. Subsequently, notice u/s 142(1) of the

Act was issued in which a consent & waiver form relating to the disclosure

of information and giving consent to the HSBC authorities to share

information with the Indian Revenue Authorities in respect of bank

accounts was sent to the assessee.

of the Act should be treated as return filed in respect of notice u/s 148 of

the Act. The assessee also requested to provide the reasons for reopening of

assessment u/s 147/148 of the Act. which were duly provided to the

assessee.

stating the following

5 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

i. Very basis of assumption of jurisdiction u/s 147 is false, baseless and illegal ii. Reasons of reopening are based on conjectures, surmises and are non-existent. iii. That assessee has filed returns for A.Y. 2006-07 & 2007-08 and the Assessing Officer has wrongly mentioned in the reasons that no return has been filed. iv. That there is no iota of evidence of any undisclosed income chargeable to tax as escaped assessment as per reasons recorded. v. That from A.Y. 2005-06 his status was “Not Ordinary Resident” and-that after his death on 11th Aug0st;2005, his son Sh. Karanhjit S. Jaiswal filed Income tax return of the estate of Late Ladli Pershad Jaiswal since A.Y. 2006-07 onwards. vi. That Lale Ladli Pershad Jaiswal was living independently in UK and looking after his personal affairs and in view of. sec 5(2) of the Income Tax Act he canpot be subject to tax for his income outside India. vii. That Sh. Karamjit S Jaiswal has no knowledge of bank account of Late Ladli Pershad Jaiswal and under the circumstances, the balance outstanding as shown in.the reasons connot be taxed in his hands. ” 6. However, the Assessing Officer rejected the objections filed by

the assessee by observing as under:-

The objection of the assessee are answered as under:-

6 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

outside India has escaped assessment for any assessment yean Therefore filing of return of Income In which there Is no disclosure of Income from asset located outside India does not give Immunity to the assessee from assessment or reassessment of such undisclosed income subsequently.

In this way the objection of the assessee were addressed to during the course of the assessment proceedings.

7 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

from 1993-94 till 2004-05 and thereafter not ordinary resident in AY 2005-

06 to AY 2007-08 and as per provisions of section 5(2) of the Act, he cannot

be subjected to tax in India as income regarding these deposits has not

been received or deemed to be received in India by him or accrues or arises

or deemed to accrue or arise in India is concerned, the Assessing Officer

observed as under:-

“In this regard, the claim of resident status of the assessee is not being challenged in this assessment. This issue in the case is that of source of investments in fiduciary deposits in Swiss bank. Despite opportunity, the assessee has denied knowledge of any such account and has therefore failed to provide any legitimate source outside India leading to the deposits of such sums in this account. In more specific terms, the assessee has failed to explain before the assessing officer as to whether the source of such deposits is from the income earned outside India or whether the source of such deposits is out of the income earned in India on which due taxes have been paid. In either case, the assessee has not provided complete trail of the funds leading to such deposits. In view of the discussion made in paras above on the nature & purpose/planning of making fiduciary deposits in Swiss banks and failure on the part of the assessee to explain the source of such deposits, it cannot be held that such deposits are out of the incomes earned from out of India by the non-resident assessee or not ordinary resident assessee.” 8. During the course of assessment proceedings, the Assessing

Officer noted that the assessee has filed return of income disclosing earning

of interest income on income tax refund for earlier years and interest from

saving bank account and the total returned income was Rs.6,92,310/-.

8 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

Vide letter dated 15.07.2014, the assessee filed a letter before the AO that

he has no knowledge of bank account at HSBC Private Bank (Swiss)S.A. It

was further stated that similar reply was filed before Dy. Director

(investigation) Unit-6, Delhi.

period of making the initial deposits in these accounts, source of deposits in

these accounts and to explain as to whether the source of such deposits is

out of the income earned in India and on which due taxes have been paid

and/or these investments are made from the income earned outside India.

Assessing Officer held that provision of Explanation 2(d) to section 147 of

the Act are applicable in this case, since, the assessee is found to have an

asset located outside India. He noted that an amount of investment of US $

3048891.78 of INR13,70,47,686/- being unexplained investment from

undisclosed and unexplained sources of income in India is chargeable to

tax for AY 2006-07. He further noted that from the said Client Profile Name

22628AA, a significant sum of USD $3055208.56 has been deposited as

fiduciary deposit as on January 2006. Therefore, he held that the

unexplained investment pertains to AY 2006-07 and the peak amount of

INR 13,70,47,686/- has to be added to the total income of the assessee

being unexplained investment in the assets held outside India from an

undisclosed and undeclared source of income from India. He made this

addition to the total income substantively in the hands of Sh. Karamjit S

Jaisawal as legal heir of late Ladli Pershad Jaiswal because Sh. Ladli

9 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

Pershad Jaiswal is the prime account holder i.e. account holder-1 and Sh.

Karamjit S Jaiswal has been filing return of income of estate of Late Ladli

Pershad Jaiswal as his legal heir.

arguments. However, the learned CIT(A) also did not find any merit in the

arguments and upheld the addition in principle but was of the view that

substantive addition is required to be made in the hands of Sh. Anand

Pershad Jaiswal as he was the joint account holder of the foreign bank

account. Accordingly, the substantial addition made in the hands of the

Sh. Karamjit S. Jaiswal was converted into protective addition and vice

versa was done in the case of Anand Pershad Jaiswal.

in appeal before the Tribunal by raising the following grounds of appeal:-

10 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

4i). That CIT(A) having confirmed the addition on substantive basis in the case of Anand Pershad Jaiswal, there is no justification for holding the same on protective basis in the case of appellant.

(ii) That the observation and conclusion of the CIT(A) are illegal, arbitrary and against the scheme of the act.

5(i). That on the facts and circumstances of the case, the CIT(A) has erred in confirming addition of Rs. 13,70,47,687/- on protective basis in the case of the appellant.

(ii). That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises.

(iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961.

6(i). That addition was made without going into the nature of deposit and in the absence of proper appreciation of facts, there could be no valid basis for any such addition.

(ii). That the finding of lower authorities are not based on proper appreciation of the entries in the bank account and addition was made on mechanical basis. 7. That the assesse is not liable to any tax liability as legal heir in the light of provisions of sec. 159(4) of the I.T. Act, 1961.

order of the learned CIT(A) in confirming the addition made by the

Assessing Officer as well as upholding the validity of reassessment

proceedings. The learned counsel for the assessee submitted that Sh. Ladli

Pershad Jaiswal was non-resident from AY 1993-94 to 2004-05 and was

not ordinarily resident in India during the AY 2005-06 and 2006-07. This

position has been accepted by the Assessing Officer at page 9, para-7 of the

assessment order. He submitted that foreign bank account with HSBC

11 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

Geneva (Client Profile 22628AA) is in the joint name of the assessee late Sh.

Ladli Pershad Jaiswal and Sh. Anand Pershad Jaiswal. Further, there is no

case of any deposits in the year under reference i.e. F.Y. 2005-06 and the

credit entry in the bank account is proceeds from maturity of bonds.

Further, the amount so credited into the account was post demise of Late

Sh. Ladli Pershad Jaiswal. He submitted that there is no nexus or

connection of amount lying in the said bank account with any income from

India and same is neither sourced nor earned from India in terms of section

5 of the I.T. Act. He submitted that in absence of any income chargeable to

tax in India have escaped assessment, the assumption of jurisdiction u/s

148 is illegal and bad in law.

13.1. Referring to the following decisions, he submitted that

reopening of the assessment u/s 148 of the Act is not in accordance with

law and has to be quashed.

i. PCIRT vs RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 (Delhi) ii. Gorika Investment and Exports Pvt. Ltd. vs ITO (ITA

No.3396/Del/2018)

He accordingly submitted that since the Assessing Officer has

reopened the assessment in a mechanical manner, therefore such

reopening of assessment has to be treated as null and void.

the provision of law and facts of the case made substantive addition of

Rs.13,70,47,686/- being the peak balance in the bank account in the

12 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

hands of Sh. Karamjit S. Jaiswal in the capacity of legal heir of the assessee

and protective basis in the hands of the Sh. Anand Pershad Jaiswal in AY

2006-07.

foreign bank account and despite repeatedly being asked no certified copy

of the same was made available to the assessee. He submitted that the

reassessment proceedings in the instant case are without jurisdiction and

bad in law as the reasons recorded failed to satisfy the jurisdictional

requirement of section 147 of the Act. He submitted that the Assessing

Officer in the instant case has assumed jurisdiction merely on the basis of

unsubstantiated information from the Investigation Wing and without

application of independent mind by him or carrying out any enquiry.

Further, Sh. Ladli Pershad Jaiswal was a nonresident for several years and

therefore, in absence of any evidence or material to establish the source of

such deposits being income earned or derived in India, there is no case of

any income chargeable to tax in India in terms of provisions of section 5 of

the Act, which could be considered as undisclosed income of the assessee

Late Sh. Ladli Pershad Jaiswal. He submitted that the learned CIT(A)

confirmed the addition on protective basis in the hands of the Sh. Karamjit

S. Jaiswal and substantive basis in the hands of Sh. Anand Pershad

Jaiswal. Relying on various decisions, the learned counsel for the assessee

submitted that the First Appellate Authority could not have made protective

addition in one hand and substantive addition in the other hand as it is not

open to him to make any inconclusive addition. Referring to the decision of

13 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

the Hon’ble Allahabad High Court in the case of Prakash Wine Agencies vs

ITO reported in 38 TTJ 39 (Allahabad), the decision of the Pune Bench of

the Tribunal in the case of Nartwarlal Radheshyam Bagadiya vs ACIT (ITA

No.715 to 719/Pune/2007), order dated 13.04.2011, he submitted that

right to make protective assessment has been given to ITO but appellate

authority cannot evade determination of issue as to who is the owner of real

income when it is brought before it by way of an appeal.

counsel for the assessee, referring to page 9, last para of the assessment

order submitted that the Assessing Officer in the instant case has made

observations that Late Sh. Ladli Pershad Jaiswal was having substantial

interest in Milkfood Ltd. and Jagatjit Industries Ltd. Further, the Assessing

Officer has observed that the assessee was chairman and managing

director till 31.11.1992 and thereafter he resigned and shifted to UK.

However, as per certificate placed on record, during the AY 2006-07 and

2007-08, the assessee was having following share holding in Milkfood Ltd.

and Jagatjit Industries Ltd.

i. Milkfood Ltd. 4 Shares

ii. Jagatjit Industries Ltd. 100 Shares

assessee was having substantial interest in these concerns relevant to AY

2006-07 and 2007-08 is factually incorrect and misconceived.

14 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

that as per the reasons in the assessment order, there is no reference to

fact, finding or evidence to the effect that there is any undisclosed income

in terms of section 5(1) of the Act and the same has any nexus with the

deposit in the said overseas bank account. He submitted that undisputedly,

the assessee expired on 11.08.2005, therefore, how could there be any

undisclosed income in relation to deposit in January 2006.

provided by learned CIT(DR) is concerned, he submitted that as per the

reasons, addition was in respect of credit in the said account in January

2006 which was in relation to maturity of old bonds and there is no case of

any fresh deposit or credit based on cash or cheque entry. He submitted

that despite specific request, the learned DR also could not provide certified

copy of the said account and any evidence in respect of substantial interest

of the assessee with Milkfood Ltd. and Jagatjit Industries Ltd. during the

relevant assessment years and the basis for presumption of undisclosed

income and nexus of same with deposit in overseas bank account.

learned counsel for the assessee referring to the following decisions

submitted that the addition to the assessee’s income in respect of

undisclosed amount kept in foreign bank account cannot be added to the

total income of the assessee when documents relied upon by the Revenue

15 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

authorities do not contain signature of bank official and requisite

information was not replied from foreign banking authority.

i. Shyam Sunder Jindal vs ACIT 188 TTJ 404 (Del. Trib.)

ii. DCIT vs Rahul Rajnikant Parikh (ITAT Mumbai Dated 01.06.2018)

iii. DCIT vs Hemant Mansukhlal Pandya (ITAT Mumbai Date

16.11.2018)

iv. DCIT vs Dipendu Bapalal Shah (ITAT Mumbai Dated 19.06.2018)

addition made by the Assessing Officer and sustained by the learned CIT(A)

is not accordance with law. The Assessing Officer has failed to take note of

section 159 of the Act which contains express provisions in respect of

liability of representative assessee in case of death of the assessee. He has

failed to establish any link between the so called deposit in the foreign bank

account and income earned/derived from India and therefore, there is no

case of income chargeable to tax u/s 5 of the Act.

of the lower authorities. He submitted that the assessee in the instant case

has not discharged the onus cast upon it by establishing that balance

appearing in the foreign bank account was earned outside India. He

submitted that the Assessing Officer in the instant case has rightly

presumed that the source of deposit in foreign bank account is from India

as the assessee late Sh. Ladli Pershad Jaiswal was a director and was

16 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

having substantial interest in Milkfood Ltd. and Jagatjit Industries Ltd. in

India before becoming nonresident. He accordingly submitted that grounds

raised by the assessee should be dismissed and the order of the learned

CIT(A) should be upheld.

sides, perused the orders of the Assessing Officer and learned CIT(A) and

the paper book filed on behalf of the assessee. We have also considered the

various decisions cited before us. We find that the Assessing Officer in the

instant case reopened the assessment on the ground that the assessee was

having a foreign bank account maintained with HSBC Bank Geneva, in the

joint name of Sh. Ladli Pershad Jaiswal (deceased) and Sh. Anand Pershad

Jaiswal with Client Profile 22628AA. The reason for such reopening has

already been reproduced in the preceding paragraphs. It is the submission

of the learned counsel for the assessee that such reassessment proceedings

u/s 147 of the Act is without jurisdiction and bad in law, since, the reasons

recorded are based on report of the Investigation Wing and not on due

application of independent mind by the Assessing Officer or carrying out

any enquiry. Further, according to the learned counsel for the assessee,

although the Assessing Officer can make protective addition however, the

learned CIT(A) has no authority to make addition on protective basis in one

hand and substantive basis in another hand. He cannot evade

determination of issue as to who is owner of real income when it was

brought before him by way of an appeal. It is also his argument that when

the assessee was nonresident upto AY 2004-05 and thereafter was not

17 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

ordinarily resident for AY 2006-07 and 2007-08 and when Sh. Ladli

Pershad Jaiswal expired on 11.08.2005 and when the amount credited in

the bank account in the month of January 2006 which were the maturity

proceed of sum invested earlier, the addition made by the Assessing Officer

and sustained by the learned CIT(A) is not justified.

counsel for the assessee. A perusal of the reason to believe which is

reproduced in the preceding paragraph reveals that the Assessing Officer

has assumed jurisdiction u/s 147 of the Act on the basis of information

received from the Investigation Wing about the foreign bank account in the

name of Late Sh. Ladli Pershad Jaiswal. The reasons also contain factual

information about the quantum of deposits in the foreign bank account and

the legal heir of Sh. Late Ladli Pershad Jaiswal namely Sh. Karanjit S.

Jaiswal and Sh. Anand Pershad Jaiswal. As held in various decisions, for

the purpose of assuming jurisdiction u/s 147 of the Act, the Assessing

Officer should form reason to believe based on tangible material that income

has escaped assessment. Further, such belief should not be on mere

suspicion but on the basis of some objective material that leads to prima

face case of escapement of income. Although in the present case Assessing

Officer was in possession of report of the Investigation Wing about the

existence of foreign bank account which has not been denied by the legal

heir, however, there is no details or evidence that money lying in the bank

account represent undisclosed income in terms of section 5(1) of the Income

Tax Act. We find the Assessing Officer in the instant case has failed even to

18 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

take note of the income tax return filed by the assessee while recording

reasons which in our opinion shows non application of mind. The reasons

recorded do not inspire confidence to make out a prima facie case for

escapement of income and the Assessing Officer in the instant case was

carried away by the mere fact of existence of foreign bank account. Despite

our direction to the learned CIT-DR to produce certified copy of the bank

statement and also to clarify the basis of treating deposit in the bank

account as undisclosed income in terms of section 5 of the Act, however,

the learned DR was unable to produce the same despite multiple

opportunities given. Therefore, argument of the learned counsel for the

assessee that reassessment proceeding are to be held as invalid find some

force. However, since, the assessee also could not produce the details and

the issue involved in the instant case are important being deposits in the

foreign bank account, we proceed to adjudicate the addition on merit.

Officer had made addition of Rs. 13,70,47,686/- on substantive basis in the

hands of the Sh. Karamjit S Jaiswal and on protective basis in the hands of

Sh. Anand Pershad Jaiswal. We find the learned CIT(A) converted the

substantive addition into protective addition on the ground that the co-

owner of the foreign bank account was Sh. Anand Pershad Jaiwsal and as

such Sh. Anand Pershad Jaiswal should be treated as legal heir and owner

of the bank account post demise of assessee late Sh. Ladli Pershad Jaiswal.

According to him merely because Sh. Karamjit S. Jaiswal filed the ITR as

legal heir of the assessee late Sh. Ladli Pershad Jaiswal, the same will not

19 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

absolve Sh. Anand Pershad Jaiswal of his liability as legal heir. According

to the learned CIT(A) , there is no estoppels against law.

address the issue raised by the learned counsel for the assessee regarding

the protective addition made by the learned CIT(A). There is no dispute or

controversy that the Assessing Officer, if the facts so warrant, can make

substantive addition in the hand of one person and protective addition in

the hands of another person where it is difficult to attribute the income in

the hands of the particular person. The purpose of making protective

addition is to safeguard the interest of the Revenue in the event where the

appellate authority reaches to a conclusion that income is taxable in the

hands of either of the two persons. However, the First Appellate Authority

being a quasi judicial authority created for independent adjudication of

appeal filed by the assessee cannot be expected to resort to making

protective addition for safeguarding the interest of the Revenue. It is

incomprehensible that an appellate authority of the rank of Commissioner

(Appeals) remains doubtful regarding rightful owner of any income and

making the protective addition in the hands of the assessee particularly

when the conclusion regarding substantive addition has already been

arrived at by the same authority. The decision of the Allahabad Bench of

the Tribunal in the case of Prakash Wine Agencies vs ITO (supra) and the

decision of the Pune Bench of the Tribunal in the case of Natwarlal

Radheshyam Bagadiya vs ACIT (supra) support the case of the assessee

wherein, it was held that it is not open to the appellate authority to make

20 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

the addition on protective basis. We, therefore, hold that once, the learned

CIT(A) has made substantive addition of Rs.13,70,47,686/- in the hands of

Sh. Anand Pershad Jaiswal, there was no valid justification or basis for

making protective addition in the hand of Sh. Karamjit S. Jaiswal. Further,

since the Revenue has not filed any appeal against the order of the learned

CIT(A), it is clear that the Revenue has accepted the substantive addition in

the hands of Sh Anand Pershad Jaiswal and as such protective addition

made in the hands of the Sh. Karamjit S. Jaiswal cannot survive as it has

no legs to stand.

Assessing Officer in the instant case has made addition of Rs.

13,70,47,686/- which is the peak deposit appearing in the foreign bank

account in the F.Y. 2005-06. We find despite filing a consent letter before

the Assessing Officer and RTI application, the Revenue authorities have not

provided certified copy or any authentic copy of bank account. Despite the

direction given by the Bench, the learned CIT-DR also could not produce

certified copy of bank statement and what is available in the paper book is

photocopy of sheet of paper which is not capable of being converted into

evidence. We find neither the Assessing Officer nor the learned CIT(A) could

provide the nature of entry in the said account or how the same are related

to undisclosed income under the provisions of Income Tax Act. We are

constrained to observe that even though the entire premises of reopening

and consequential of addition is the foreign bank account, none of the

parties was able to produce a copy of bank statement before us which is a

21 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

crucial piece of evidence. Under these facts and circumstances, we are not

in a position to verify the authenticity of the alleged bank statement or

quantum or nature of deposits therein and its relevance for the year under

consideration.

Assessing Officer himself has mentioned that the assessee late Sh. Ladli

Pershad Jaiswal was non-resident of India during AY 1993-94 to 2004-05

and not ordinarily resident for AY 2006-07 and 2007-08. The Assessing

Officer in the assessment order at clause 5 has also mentioned that

assessee is not ordinarily resident. Under these circumstances and in

absence of any factual finding, it is not open to dispute the claim of

residential status as declared in the return of income. Since, the

proceedings u/s 147 are extraordinary proceedings, the onus is on the

Revenue to establish the existence of undisclosed income. Mere discovery

of a foreign bank account in the name of the assessee is not sufficient to

thrust the tax liability without bringing on record the chargeability of the

same under the provisions of the Income Tax Act,1961. It is the settled

proposition of law that assessment cannot be carried out on the basis of

guess work and there must be more than mere suspicion. In the present

case, it is seen that there is no whisper of any enquiry or investigation

carried out by the Assessing Officer to demonstrate the existence of source

of income in India in respect of deposit found in foreign bank account.

Moreover, the Assessing Officer has not brought anything on record to prove

that there is money trail which actually flew from India to the foreign bank

22 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

account maintained abroad. Further, the learned counsel for the assessee

also clarified that Sh. Ladli Pershad Jaiswal was not having any major stake

or financial interest or business connection in India during the AY 2006-07

and 2007-08. Therefore, we find it difficult to subscribe to the reasoning

given by the Assessing Officer while assuming that deposit in the foreign

bank account in the year under consideration was sourced from India. In

any case, when the addition made by the Assessing Officer is on the basis of

peak credit in the month of January 2006 and when Sh. Ladli Pershad

Jaiswal expired on 11.08.2005, it is not understood as to how any credit in

January 2006 could be attributed to the deceased.

28.1. In the light of our discussion we are of the considered opinion

that the assessment order is not in accordance with law and is liable to be

set-aside. However, in the interest of justice and as requested by the

learned CIT-DR at the time of hearing before us, the matter is being

restored back to the file of the Assessing Officer with a direction to arrive at

specific finding based on certified copy of the bank statement and the

nature of credit entry in the said bank account. In case, there is no ground

or basis to establish any nexus between the alleged deposits in the bank

account and any undisclosed income under the provisions of Income Tax

Act or how such credit entries are attributable to the assessee who expired

on 11.08.2005 there will be no case for assuming jurisdiction u/s 148 or

consequential addition on merit. Needless to say the AO shall give due

opportunity of being heard to the assessee and decide the issue as per fact

and law after providing relevant documents or evidences that may be taken

23 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

into consideration while deciding the issue. It is further clarified that the

Assessing Officer shall restrict his verification only on the basis of

documents which are already available on record and shall not resort any

roving and fishing enquiry is permitted. The grounds raised by the assessee

are accordingly allowed for statistical purposes.

ITA No.3248/Del/2016

24 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

(ii). That the finding of lower authorities are not based on proper appreciation of the entries in the bank account and addition was made on mechanical basis. 7. That the assesse is not liable to any tax liability as legal heir in the light of provisions of sec. 159(4) of the I.T. Act, 1961. 8. That orders of the lower authorities are not justified on facts and same are bad in law. ITA No.3730/Del/2016

Without Prejudice 6. That the CIT(A) erred on facts and in law in not deleting the addition of Rs. 13,70,47,686 made by the assessing officer on protective basis; instead in directing the same to be made on substantive basis in the hands of the appellant, without any valid justification. 7. That the CIT(A) erred on facts and in law in holding that balance in the foreign bank account with HSBC Bank, Geneva, represented the appellant’s income from undisclosed sources. 8. That the CIT(A) failed to appreciate that - (a) the above alleged foreign bank account did not belong to the appellant; (b)

25 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

none of the deposits, as alleged, related to the appellant; and (c) no transaction was made by the appellant, and therefore, the question of making any addition in the hands of the appellant could not at all arise. 9. That the CIT(A) erred on facts and in law in not judiciously examining/ considering the detailed averments/ submissions made by the appellant during the course of appellate proceedings and concluding that the appellant allegedly maintained and operated a foreign bank account with HSBC Bank, Geneva. 10. That the CIT(A) erred on facts and in law in drawing adverse inference against the appellant on the basis of some general/ vague particulars appearing in some unsigned/ undated/ unauthenticated loose piece of papers, source whereof is also not known. 11. That the CIT(A) erred on facts and in law in confirming the addition made, without making available copies of bank statements and other ex-parte material(s) on the basis of which addition was made in the hands of the appellant, in gross violation of principles of natural justice. 12. Without prejudice, that the CIT(A) erred on facts and in law in not appreciating that the appellant was a Non-Resident Indian for past more than twenty five years and thus income on account of alleged deposit in foreign bank account, if any, was even otherwise not liable to be taxed in India. 13. That the CIT(A) failed to appreciate that there was no evidence on record to corroborate that deposit(s) in the alleged foreign bank account represented income earned/ received by the appellant in India. 14. That the CIT(A) erred on facts and in law in presuming that the alleged foreign bank account was operated by the appellant subsequent to his father’s death. 15. Further, without prejudice that the CIT(A) erred on facts and in law in holding that Rs. 13,70,47,686 represented the undisclosed income for the year under appeal.

26 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

illegal, bad in law and void-ab-initio. 2. That the CIT(A) erred on facts and in law in upholding validity of re-assessment proceedings without appreciating that the same was initiated without there being ‘reason to believe’ that income of the appellant had escaped assessment. 3. That the CIT(A) erred in not appreciating that the reassessment proceedings intended to bring to tax alleged escaped income on ‘protective basis’ was beyond jurisdiction and bad in law. 4. That the CIT(A) erred in not appreciating that reassessment proceedings under section 147 of the Act having been initiated merely on the basis of certain unreliable/ uncorroborated third party information, without independent application of mind by the assessing officer, was illegal and bad in law. 5. That the CIT(A) erred on facts and in law in not appreciating that the impugned proceedings having been initiated without obtaining requisite sanction in terms of section 151 of the Act was beyond jurisdiction and bad in law.

Without Prejudice 6. That the CIT(A) erred on facts and in law in not deleting the addition of Rs.2,03,75,814/- made by the assessing officer on protective basis; instead in directing the same to be made on substantive basis in the hands of the appellant, without any valid justification. 7. That the CIT(A) erred on facts and in law in holding that balance in the foreign bank account with HSBC Bank, Geneva, represented the appellant’s income from undisclosed sources. 8. That the CIT(A) failed to appreciate that - (a) the above alleged foreign bank account did not belong to the appellant; (b) none of the deposits, as alleged, related to the appellant; and (c) no transaction was made by the appellant, and therefore, the question of making any addition in the hands of the appellant could not at all arise. 9. That the CIT(A) erred on facts and in law in not judiciously examining/ considering the detailed averments/ submissions made by the appellant during the course of appellate proceedings and concluding that the appellant allegedly maintained and operated a foreign bank account with HSBC Bank, Geneva. 10. That the CIT(A) erred on facts and in law in drawing adverse inference against the appellant on the basis of some general/ vague particulars appearing in some unsigned/ undated/ unauthenticated loose piece of papers, source whereof is also not known.

27 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

appeals are identical to grounds raised in ITA No.3247/Del/2016. We have

already decided the issue and the grounds raised by the assessee have been

allowed for statistical purposes. Following similar reasoning, the grounds

raised in the above appeals are also allowed for statistical purposes.

allowed for statistical purpose.

Order was pronounced in the open court on 23.04.2021.

Sd/- Sd/-

(SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi/Dated- 23.04.2021

28 ITA Nos.3730, 3731, 3247 & 3248/Del/2016

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