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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-47, Mumbai [in short CIT(A)], in appeal No. CIT(A)-47/11654/2016-17 vide dated 24.04.2019. The Assessment was framed by the Dy. Commissioner of Income Tax, Central Circle 1(1) Mumbai (in short DCIT/ AO) for the A.Y. 2014-15 vide order dated 27.10.2016 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
At the outset, the learned Counsel for the assessee stated that the only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the Assessing 2 Mr. Mohan Manoj Dhupelia; AY 14-15 Officer making addition of consequential interest of ₹2,30,102/- on alleged deposit of ₹2,34,64,398/- with LGT Bank Liechtenstein in the name of Ambrunova Trust. For this, assessee has raised the following four grounds: - “1. On the facts and circumstances of the case and in law, the Learned CIT(A)-47, Mumbai erred in confirming the addition of notional interest income Rs. 2,30,102/- on alleged deposit of Rs. 2,34,64,398/- with LGT Bank Liechtenstein in the name of Atubrunova Trust, without appreciating that (i) The revenue did not supply any evidence to show that the entire balance in Ambrunova Trust was deposited in A. Y. 2002-2003 itself
(ii) The A.O. has not given any evidence to show that said interest income is received by the appellant.
(iii) AO not supplying basic details to make addition such as details of deposit made by the appellant source / origin and nature of said deposits, name of the settlor etc.
(iv) The source of information was not authentic and the documents supplied were not authenticated, and (v) No notional interest income has been added for the period 1.1.2002 to 31.3.2002 and also for A. Y. 2003-2004, 2004-2005, 2006-2007, 2007-2008, 2008-2009, 2009-2010 and 2013-2014 and thus the entire addition was made on surmises and conjecture, presumptions and the onus cast on the Revenue was not discharged.
3 Mr. Mohan Manoj Dhupelia; AY 14-15 2. On the facts and circumstances of the case and in law, income of discretionary trust can be taxed in the hands of the beneficiary only when the income of the trust is distributed and received by the beneficiary in the light of the law laid down by the Hon'ble Supreme Court in CWT vs. Estate of Late HMM Vikramsinhji of Gondal (2014) 363 ITR 679 (SC).
3. On the facts and circumstances of the case and in law, as the alleged trust and trustees are non-resident and the income of the trust if any at all, is received outside India the same cannot be taxed in India as per section 5(2) r.w,s. section 6(4) of the Income Tax Act, 1961.
4. On the facts and circumstances of the case and in law, no addition of interest income of Rs. 2,30,102/- can be made as Appellant is following cash system of accounting interest income.”
The learned Counsel for the assessee stated that this interest is consequence of deposit of earlier year and Hon’ble Bombay High Court in assessee’s own case for Assessment Year 2005-06 has admitted the appeal and framed question of law. The learned Counsel for the assessee field copy of order of Hon’ble Bombay High Court, wherein substantial question of law admitted in Income Tax Appeal No. 1651/2018 vide order dated 24.02.2021 and the relevant order of Hon’ble High Court reads as under: - “I. Whether in law and on facts and circumstances of the case, reopening is bad in law as the recorded reasons do not manifest that A.O. had reason to believe that the appellant’s income had 4 Mr. Mohan Manoj Dhupelia; AY 14-15 escaped assessment and thereby reopening was resorted for fishing and roving enquiry without there being any tangible material with AO (i) as at the time of recording reasons for reopening information was sought from the German Authorities through FIU, CBDT i.e. details of deposit made by the appellant, source/origin and nature of said deposits, name of the settlor etc. basic details for reopening assessment were not available with the Assessing officer (ii) as the trust is held to be a discretionary trust by the department in AY 02-03, income can be assessed in the hands of the trust and not the beneficiary. (iii) as there is no evidence to show that appellant as an alleged beneficiary of Ambrunova trust has received any benefit from the trust and (iv) there is no evidence showing any investment or deposit in Ambrunova Trust where allegedly Appellants name appears as beneficiary and (v) no notional interest income has been added for the period 1/1/2002 to 31/3/2002 ?
II. Whether in law and on facts and circumstances of the case, reopening is bad in law in view of first proviso to section 147 as at the relevant time, return from did not require assessee to furnish assets held abroad and thus there was no failure on part of the appellant to make true and fair disclosure ?
III. Whether in law and on facts and circumstances of the case, reopening is bad in law as the recorded reasons that recorded reason has not mentioned that the escaped income is likely to be more than Rs.1 Lakh ?
IV. Whether in law and on facts and circumstances of the case, reopening is bad in law as the Assessing Officer did not wait for 5 Mr. Mohan Manoj Dhupelia; AY 14-15 a period of 4 weeks to start assessment after disposing objections to reopening ?
V. Whether in law and on facts and circumstances of the case, the Hon’ble ITAT erred in confirming the addition of notional interest income of Rs.8,04,855/- on alleged deposit of Rs.2,34,64,398/- without appreciating that (i) the revenue did not supply any evidence to show that the entire balance in Ambrunova Trust was deposited in A. Y. 2002-03 itself (ii) the AO has not given any evidence to show that said interest income is received by the appellant (iii) AO not supplying basic details to make addition such as details of deposit made by the appellant, source/origin and nature of said deposits, name of the settlor etc. (iv) the source of information was not authentic and the documents supplied were not authenticated and (v) no notional interest income has been added for the period 1/1/2002 to 31/3/2002 and thus the entire addition was made on surmises and conjecture, presumptions and the onus cast on the Revenue was not discharged ?
VI. Whether in law and on facts and circumstances of the case, income of discretionary trust can be taxed in the hands of the beneficiary only when the income of the trust is distributed and received by the beneficiary in the light of the law laid down by the Hon’ble Supreme Court in CWT vs. Estate of Late HMM Vikramsinhji of Gondal (2014) 363 ITR 679 (SC) ?
VII. Whether in law and on facts and circumstances of the case, as the alleged trust and trustees are non resident and the income of the trust if any at all, is received outside India the 6 Mr. Mohan Manoj Dhupelia; AY 14-15 same cannot be taxed in India as per section 5(2) r.w.s. section 6(4) of the Income tax Act, 1961 ?
VIII. Whether in law and on facts and circumstances of the case, no addition of interest income of Rs.8,04,855/- can be made as Appellant is following cash system of accounting interest income ?
IX. Whether in law and on facts and circumstances of the case, the Hon’ble ITAT erred in passing the corrigendum which has the effect of enhancing the assessment without giving notice to the Appellant of its intention to do so and without allowing the assessee a reasonable opportunity of being heard ?
X. Whether in law and on facts and circumstances of the case, the impugned order of ITAT is bad in law being perverse ?”
The learned Counsel for the assessee filed form No.8 i.e. declaration under section 158 A(1) of the Act by assessee claiming that identical question of law is pending before Hon’ble High Court. This, the learned counsel stated that the said question of law at (v) to (x) are identical with the question of law arising in assessee’s case for Assessment Year 2014-15 i.e. year under consideration. The learned counsel stated that the Tribunal in term of section 158 A(1) of the Act has now to sent back the matter to the file of the Assessing Officer and Assessing Officer be directed to keep it pending till the decision of Hon’ble Bombay High Court and whatever be the decision of Hon’ble High Court, will be applied to these proceedings also.