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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI RAM LAL NEGI
Per Rajesh Kumar, Accountant Member:
The above cross appeals one by the Revenue and the other by the assessee have been preferred against the order dated 13.10.2017 of the Commissioner of Income Tax (Appeals)
ITA No.7404/M/2017 (Assessee’s appeal)
2. In the assessee’s appeal, the confirmation of re-opening of assessment has been challenged whereas, the revenue in its appeal assailed the order of CIT(A) deleting the addition on merits. First, we shall take up the appeal of the assessee in ITA No. 7407. The grounds raised
by the assessee are as under:-
1. The learned C1T(A) erred in confirming reopening of assessment proceedings u/s 147 of the Act, without appreciating the fact that Assessing Officer (AO) has not complied with the jurisdictional conditions which are required to be fulfilled before the jurisdiction can be validly assumed. The learned CIT(A) failed to appreciate that AO did not provide any authenticated information alleged to be in his possession which had led to his belief that there is escapement of income as the very same income is taxed in the hands of the husband of Appellant.
2. It is therefore prayed that the order of the Commissioner of Income-tax (Appeals) be cancelled and direction be issued to allow the appeal on the grounds raised before him.
3. Each one of the above grounds of appeal is without prejudice to the other.
4. The appellant reserves the rights to amend alter or add to any of the above grounds of appeal.”
The facts in brief are that the assessee is deriving income from Salaries, capital gain and other sources and filed her return of income on 31.7.2006 declaring an income of Rs.1,26,25,760/- which was processed u/s 143(1) of the Act. The case was selected for scrutiny proceedings and assessment u/s 143(3) was framed vide order dated 17.4.2008. Thereafter information was received from the Government of France under double taxation avoidance agreement (DTAA) regarding bank account with HSBC, Geneva in the name of Smt Dipti Salgaocar
3 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar jointly with her husband and children which was passed on to the AO. The case of the assessee was re-opened u/s 147 of the Act by DCIT Mumbai by issuing notice u/s 148 on 3.6.2014. The reasons recorded are extracted below:- “...Information under the Double Taxation Avoidance Agreement (hereinafter referred as DTAA) from the French Authorities regarding existence of certain bank accounts with HSBC Bank, Geneva in the name of Smt. Dipti Dattaraj Salgaocar has been received from the joint Commissioner of Income Tax, Margao Range, Margao.
As per the information, Smt Dipti Dattaraj Salgaocar has bank accounts with HSBC Bank, Geneva, with following internal identifier (identifiants internes) details
S.NO. BUP_SIFIC_PER_ID PER ID PER_NO.
5090184332 144366 184332
3. Further, Smt. Dipti Dattaraj Salgaocar with the aforesaid identification details is linked with the following bank account: S.NO. Nom du Profit client Code Profit Client I BAN NO.
GALLIARD CAPITAL 5091457543 CH 05 0868 9050 9120 3244 7 (i) LIMITED CH 48 0868 9050 9120 4408 9
The assessee is the holder of the aforesaid bank account which has a peak credit/ deposit of USS 51,78,668.83, equivalent to approximate of Rs.23,09,68,630/- i.e Rs.44.60/- per US$) during the year under consideration. Thus the assessee in the FY 2005-06 relevant to AY 2006-07, has peak credit / deposit of USS 51,78,668.83 (equivalent to Rs.23,09;68,630/-) in the foreign bank account.
5. From the records, it is seen that Smt. Dipti Dattaraj Salgaocar, has filed the return of income for A.Y. 2006-07 on 31.07.2006 declaring the total income of Rs.1,26,25,760/-. The assessment in this case has been completed u/s 143(3) of the Act on 17.04.2008 determining the total income at Rs.1,26,25,760/-. On further examination of records, it came to light that the said foreign bank account, source of investment in the said foreign Bank account and income from the same has not been disclosed in the original return of income.
6. Based on the above, I have reason to believe that the income of US$ 51,78,668.83 translating into at least Rs. 23,09,68,630/ [51,78,668.83 x Rs. 44.60) i.e. SBI TT Buying Rate per US$ as on 31.03.2006] has escaped assessment in the hands of Smt. Dipti Dattaraj Salgaocar, for AY 2006-07 within the meaning of Section 147 of the IT Act. Further, the assessee's case falls under clause (c) of sub- section (1) of Section 149 of the IT Act..."
4 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar 4. Thus it is clear from the reasons recorded that the investments in foreign bank account and interest accruing thereon have not been disclosed by the assessee in the return of income and therefore the AO has reasons to believe that US$ 51,78,668 equivalent to Rs.23,09,68,630/- by applying exchange rate of Rs.44.60 on 31.3.2006 has escaped assessment in the hands of the assessee in AY 2006-07.
In response to notice issued under section 148 of the Act, the assessee filed the return of income on 1.7.2014 declaring same income as in the original return of Rs. 1,26,25,760/- and requested for supplying the reasons recorded for re-opening the assessment vide letter dated 27.6.2014 filed on 1.7.2014 which were supplied by the DCIT on 2.9.2014.The AO issued notice u/s 143(2) of the Act on 2.9.2014 which was duly served upon the assessee.
The assessee objected to the reasons recorded for re- opening vide letter dated 2.1.2015 filed 5.1.2015 in which assessee stated as under:- a. No income has escaped assessment: Assessee submitted that "...the assessee has neither understated her income nor has claimed excessive deduction. The assessee has all along maintained that she does not hold any such accounts abroad,- nor is she aware about the existence of any such account. Earlier, while examining him on oath, the assessee's husband, Shri. Dattaraj Salgaocar was given to understand by the Dy Director of Income tax (Inv), Bangalore, that an amount of USD 51,78,668/- has been deposited in HSBC Bank, Geneva account held by him along with his wife and children. Although the allegation was not accepted by him, he paid the tax in order to buy peace and to avoid protracted litigation, filed the return and same was also accepted by the DCIT in his order u/s 143(3) r.w.s 147 dated on March 14, 2012. Thus it is not very clear on what basis your goodself is seeking to reopen the assessee's assessment on the very same amount on which taxes have been duly paid by the assessee's husband and assessed as such...
It is further submitted that the information provided by your good self in your reason for reopening, nowhere shows that (i) The assesses opened an account in the HSBC bank in Geneva; or (ii) The assessee is the account holder or the beneficial owner or the authorized signatory of any account in that bank; or (iii) The assessee has authorized any transaction through any account in that bank; or The assessee has received any benefit out of any account in that bank.” (iv)
The said objections were rejected by the AO by order dated 10.2.2015 as under: “(a) Income has indeed escaped assessment: Information was received from the under the Double Taxation Avoidance Agreement (DTAA) regarding existence of certain bank accounts with HSBC Bank, Geneva in the name of Smt. Dipti Dattaraj Salgaocar and was passed from the Joint Commissioner of Income Tax, Margao Range, Margao to the Assessing Officer. As per the information, Smt. Dipti Dattaraj Salgaocar has a bank account with HSBC Bank, Geneva which has amounts undisclosed in her original return of income filed on 31.07.2006. The same return was taken up for scrutiny and the returned income was accepted. But neither in the original return of income nor during scrutiny proceedings, had the assessee, Smt. Dipti Dattaraj Salgaocar, disclosed the said foreign bank if the details of the bank account. On perusal of the details of the bank account and return of income of the assessee for A.Y. 2006-07, it was evidently clear that the assessee has not disclosed the above said deposit in the bank account in her return of income. Hence assessee’s claim that no income has escaped assessment was rejected.”
The assessee again objected to the reasons recorded for re- opening the assessment vide letter dated 12.3.2015 filed on 18.3.215 for the second time which were disposed of by the AO vide order dated 23.32015. In the second objections it was stated that the amount of US$51,78,668/-(Rs.23,09,68,630/-) has already been assessed to tax on substantive basis in the hand of Shri Dattaraj Salgaocar husband of the assessee. But the AO observed that the re-opening was based upon specific information received from Govt. of France under DTAA that Smt Dipti Dattaraj Salgocar jointly with her husband and children has a bank account in HSBC Bank, Geneva. The AO noted that since the assessee and her husband are two distinct and separate, thus assessee’s case was re-opened.
The assessee also claimed vide letter dated 24.3.2015 filed on 27.3.2015 as follows:
..The assessee has all along maintained that she does not hold any such account abroad, nor is she aware about the existence of any such account. Earlier while examining him on oath, the assessee's husband, Shri, Dattaraj V Salgaocar was given to understand by the Dy. Director of Income Tax (Inv.), Bangalore, that an amount of USD 51,78,668 has been deposited in HSBC Bank, Geneva account held by him along with his wife and children. Although the allegation was not accepted by him, he paid the tax in order to buy peace and to avoid protracted litigations, filed the return and same was also accepted by the DCIT in his order under section 243(3) r.w.s. .247 dated March 14, 2022. Thus it is not clear on what basis your good self wants to assess the same amount on which taxes have been duly paid by the assessee's husband assessed as such...
The assessee’s husband vide letter dated 23.3.2015 filed before the AO on 27.3.2015 stated that the said alleged income denied by me has already been assessed to tax in my hands and therefore it can not be taxed again in the hands of his wife the present assessee before us as it is well settled principle of law that same income can not be taxed twice.
The ld AO rejected the various contentions raised against the re-opening of the assessment by observing that the deptt. has specific information from Govt of France qua the assessee having a bank account in HSBC Bank, Geneva and thus justified the re-opening while observing that the assessment of income in the hands of assessee’s husband was done on the basis of his voluntary admission to pay taxes on the said amount of income at the time of confrontation of facts during recording of his sworn in statement u/s 131 of the Income tax Act before the investigation Wing. Thereafter the AO went ahead with the re-assessment proceedings which culminated into
In the appellate proceedings, the ld CIT(A) upheld the order of AO on the issue of re-opening after considering the submissions and contentions of the assessee by observing and holding as under:- “5.1.2 I have given due consideration to the arguments and contentions of the appellant as reproduced above, in the instant case, the assessing officer had authentic information from a foreign government under DTAA treaties relating to the existence of the above-mentioned accounts, which had not been disclosed by the appellant according to the assessing officer. This reason is enough to form objective satisfaction by any honest and reasonable person and such formation reason cannot be challenged. At the time of recording of reasons, the assessing officer is only required to have sufficient reliable and new tangible material to lead him to a prima facie belief that income has escaped assessment. In the instant case, the assessing officer had no reason to doubt the validity of a foreign authority received under international treaties with Indian Government. Hence, this objection of the appellant is also not sustainable. The assessing officer has followed due procedure by meeting the objection raised for reopening and I do not find any procedural defect in the action of the assessing officer. This conclusion draws strength from the following decision of Hon'ble Delhi High Court. The relevant extract is reproduced below:
Mitsui & Company India (P.) Ltd. Versus Income-tax Officer WP(C) s/ . NO. 1121 OF 2012 AND CM NO. 2447 OF 2012 dt. September 26, 2012. This information is stated to have been received under the exchange of information contemplated by Article 26 of the Indo-Japanese Agreement for the Avoidance of Double Taxation. There is nothing on record to doubt the fact that the information was so received. At the stage when reasons are recorded under Section 148(2), the Assessing Officer is not expected to hold an enquiry, with the participation of the assesses, and come to a final determination that the amount in question represented the income of the assessee: CIT v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC) and Narayanappa v. CIT [1967] 63 ITR 219. He is required only to reach prima facie or tentative belief. The formation of the belief must be based on some valid material It cannot be disputed that the information received from a governmental agency constitutes valid material on the basis of which the Assessing Officer could form a tentative or prima facie belief regarding escapement of income.”
The ld AR vehemently argued that the re-opening of assessment in the case of the assessee is not valid at all by the 8 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar DCIT for the reason that no income has escaped. The ld AR submitted that the amount deposited in the HSBC Bank account, Geneva stood assessed to tax in the hands of the assessee Mr Dattaraj Salgaocar which was also sought to be assessed as escaped income in the hands of the assessee. The ld AR argued that the fact the said amount of deposits in HSBC Bank, Geneva has been assessed to tax in the hands of the husband of the assessee when he was confronted by Dy. Director of Income tax(Inv) Bangalore that there was a bank account in the name Mr Dattaraj Salgocar, his wife Mrs. Dipti Dattaraj Salgaocar and their children who, without owning the said bank account ,offered to pay tax on the said deposits . The ld AR stated that ld DR. failed to bring any evidence on records that the revenue has same information about the husband of the assessee. The ld AR submitted that it not permissible under the Income Tax Act to assess the same amount of income twice. The ld AR contended that the said deposit was assessed in the hands Shri Dattaraj Salgocar the husband of the assessee on substantive basis and therefore the assessment in the case of assessee can not be re-opened to assess the same income when AO was very much in the knowledge that said amount stood assessed in the hand s of the Mr Dattaraj Slgaocar as stated above. The ld AR referred to the assessment order passed u/s 143(3) r.w.s.147 dated 14.3.2012 filed at page no. 7-12 of the PB. The ld counsel while arguing at length the provisions of section 147 of the Act and circumstances under which the re- opening can be resorted to by the AO to assess the escaped income. The ld AR contended that the re-opening can not be made where there is nexus between the reasons recorded and 9 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar belief of the AO that income has escaped income but these provisions could not be taken assistance of where AO is in the knowledge that income has been assessed in some other hands which has been accepted by the revenue but it should have been assessed in the hands of the assessee. In defense of his arguments the ld AR relied on a series of decisions namely:- a)DCIT Vs. Bullion Investments & Financial Services (P) Ltd (2010) 123 ITD 568(Bang)
b)M.P.Ramachandran Vs. DCIT(2010) 129 TTJ (Mumbai) 190 c) KIIC Investment Company Vs DCIT (2019) 101 taxmann.com 19 (Mumbai-Tri)
The D.R. on the other hand relied heavily on the orders of authorities below. The ld DR submitted that the re-opening was done on the basis of specific information from Govt. of Frace under DTAA that assessee is holding bank account in HSBC Bank Geneva jointly with her husband, and children in which the US$ 51,78,668/- (Rs.23,09,68,630/-) were deposited during FY 2005-06 and the peak credit was US$ 51,78,668/-. The ld DR submitted that though income was assessed in the hand of the husband of the same and equal amount when he was encountered with the information of having a bank account in HSBC Bank Geneva with his wife and children by Dy Director Income Tax (Inv) Bangalore. Though he did not own up the account but in to buy peace mind and avoid litigation he offered the said deposit in the return filed in response to notice issued u/s 148 of the Act and department accepted the return. The ld DR argued that it is also possible that the husband has separate foreign account. The DR prayed before the bench that assessee
We have heard the rival contentions and perused the materials on records carefully including the decisions cited by the ld AR during the course of hearing. The undisputed facts are that the Govt of France passed on some information under DTAA that the assessee Sm Dipti Dattaraj Salgocar has a foreign bank account with HSBC Bank Geneva jointly with her husband and children in which the peak deposits were to the tune of US$ 51,78,668/-(Rs. 23,09,68,630/-) in FY 2005-06 relevant to AY 2006-07. The husband of the assessee was confronted the said information by the Dy Director Income Tax (Inv) Bangalore that he along with his wife (the present assessee) and children have a bank account in HSBC Bank Geneva and his statement was recorded u/s 131 of the Act on 19.8.2011. Though he did not own the bank account but offered the balance in the said account to tax in order to buy peace of mind and avoid litigation. The reasons u/s 148 of the Act recorded in husband case are extracted below:- "As per the information received by the Directorate of Income Tax, Bangalore, Shri Dattaraj Vassudev Salgaocar, his wife Smt Dipti Salgaocar, his son Mr. Vasudev Vikram and his daughter Isheta having bank accounts in their names in HSBC Bank, Geneva. As per the information, a sum of USD $ 51,78,668 has been deposited during the period from July'2005 onwards to 2007 to the said account. In this regard the Deputy Director of Income Tax (Investigation), Unit-11(3), Bangalore has recorded sworn statement from Mr.Dattaraj V. Salgaocar u/s 131 of the Income Tax Act in the chamber of Additional Director of Income Tax (Investigation), Unit-11, Bangalore oh 19.08.2011. During the course of sworn statement recorded, Mr.Dattaraj V. Salgaocar has disclosed an amount of Rs.23,01,91,793/- as his additional income In his individual capacity being the value of the deposit made in USD$ to the said account for the assessment year 2006-07 and paid Rs.13,07,13,077/- as taxes and interest thereon.
Since, the assessee deposited the money during the period from July'2005 to 2007, and the assessee has disclosed an amount of Rs.23,01,91,793/- for the assessment
11 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar year 2006-07 on account of the deposit made in USD to the said account, he should have field the revised return of income declaring above undisclosed income. Further, the details of deposits made to the said account also have to be examined with reference to the particular bank account. During the course of scrutiny assessment proceedings also, the assessee failed to disclose the said bank account maintained in abroad along with the sources of depositing the money. Therefore, the assessee failed to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. Therefore, I have reason to believe that income chargeable to tax has escaped assessment within the meaning ofSec.147 of the IT Act."
Thus, it is clear from the above the bank account with HSBC Geneva belonging to the family of Mr Dattaraj Salgaocar was assessed to tax in his hand and he paid due taxes thereon. Now the case of the assessee was re-opened by the AO on the basis of specific information from Govt. of France that a bank account in HSBC Bank Geneva is owned by the assessee, her husband and her children with same facts. The assessee objected to the re-opening proceedings by submitting before the AO that the income which is sought to be assessed as escaped income in her hands has been assessed to tax in the hand of Mr. Dattaraj Salgocar her husband and he has paid the income tax thereon. The husband of the assessee also by way of letter dated 23.3.2015 informed the AO that the said deposit in HSBC Bank Geneva has already been assessed in his hands vide order dated 14.3.2012 passed u/s 143(3) r.w.s. 147 of the Act. The revenue has not brought any evidence on records to controvert facts on records and submissions of the assessee and that of her husband on the issue. Under the presents facts before us we have all the reasons to believe and conclude that the family has only bank account with HSBC Bank Genva. After taking into account facts and circumstances in totality, we are of the view that AO can only take help of the provisions of 147 of the Act to 12 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar assess the income which he has reasons to believe that it has escaped assessment but not a scenario where the income is already assessed in the hand of another person. The revenue has accepted the same amount in the assessment of that other person which was very much in the knowledge of the AO at the time of recording the reasons for re-opening u/s 147 of the Act in the case of the assessee. The case of the assessee is supported by a series of decisions where the re-opening was held to be invalid and bad in law where AO has no reasons to believe that income has escaped assessment. In the case of DCIT Vs. Bullion Investments & Financial Services (P) Ltd. (supra) under similar facts the issue was decided in favour of the assessee.. The operative part is reproduced below: “2.5 We have heard both the parties. The fact of undisclosed investment in the share capital of the assessee-company was found during the course of search and material was collected during the course of search that such investment belonged to D Shri G.P. Goyal. If such income was to be assessed in the hands of a person other than Shri G.P. Goyal, then revenue should have taken recourse under section 158BD. If the revenue was not sure as on which hands the assessment is to be made, then the revenue could have initiated proceedings against both the assessees. In the instant case, assessment in the case of Shri G.P. Goyal was completed on 31-7-1997. Notice under section 148 had been issued to the assessee-company on 27-7-1998. Once the revenue d taken its stand that such investment in the share capital belong to Shri G.P. Goyal and the assessment order was passed, en it cannot be said that the Assessing Officer was having reason to believe that income has, escaped in the hands of the assessee-company. Reassessment cannot be made on mere suspicion. The Assessing Officer has to form a belief that income has escaped assessment in the hands of the assessee. Once it has been held that such investment belonged to Shri G.P. Goyal, then there was no further material to come to the conclusion that such Escaped income belonged to the assessee. 2.6 The Apex Court in the case of Lalji Haridas v. ITO [1961] 43 ITR 387 observed at page 392 as under:-
"In case where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie, it appears that the income may have been received either by 'A' or 'B' or by both together. It would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against 'A' and 'B'."
But in the instant case, the revenue held that such undisclosed income belonged to Shri G.P. Goyal and assessment was made in the hands of Shri G.P. Goyal on substantive basis. The case of the assessee-company was not reopened during the pendency of proceedings in the case of Shri Goyal. Had the revenue made protective assessment in the case of Shri G.P. Goyal, then it could have taken action against the assessee-company. Thus, the basic requirement for reopening the assessment is that the Assessing Officer should have reason to believe that income has escaped assessment, is not satisfied in this case. Hence, we are satisfied that the learned CIT(A) was justified in holding that assessment cannot be reopened for making protective addition.”
In the case of M.P. Ramachandran Vs. DCIT (supra) a similar issue was decided in favour of the assessee as under:- “The AO, during the block assessment proceedings, formed his opinion that addition of Rs.527.85 lakhs was warranted as undisclosed income in the block assessment and he actually made such addition. When the matter was pending before the CIT(A), the AO changed his opinion and came to the conclusion, on the strength of the assessee's view that the disallowance of advertisement expenditure was not called for in the block assessment proceedings. The Departmental Representative has fairly conceded that the Tribunal deleted the said addition from the block assessment and the Department has carried the matter before the High Court by assailing that the addition was to be made in the block assessment. An item of income is said to have escaped assessment if it is not charged to tax. If on the other hand an income has already been charged to tax in the hands of the same assessee and for the same period, albeit in the proceedings under some different section, it cannot be said that an income chargeable to tax has escaped assessment. It cannot be so more particularly when no decision has been given by any appellate authority reversing the addition made by the AO. How the disallowance of Rs. 527.85 lakhs out of the advertisement expenses can be a reason to believe for the AO that the income has escaped assessment, when he had himself taxed the same in the block assessment of this very assessee for the period which also covers the year in question. Further, the taking up the appeal before the High Court against the order of the Tribunal deleting the addition in the block assessment clearly indicates that the Department is still of the opinion that the income has been rightly put to tax in the block assessment. Once this is the view of the Department, then how can It entertain a diagonally opposite view that this income has escaped assessment. There cannot be any initiation of reassessment proceedings on the basis of an item of income or disallowance which has been made in another proceedings of the same assessee for the same year.—Smt. Mira Ananta Naik & Ors: vs Dy. CIT(lnv.)(2008) 15 DTR (Bom) 8 relied on.”
In the case of KIIC Investment Company Vs DCIT (supra) with similar facts the issue was decided in favour of the assessee. The operative para is as under:
14 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar “14. In this background, now we have to consider the formation of belief about escapement of income qua the aforesaid amount in the hands of the assessee- company on the date of recording reasons, i.e. 18.07.2014. Quite clearly, on the date of recording reasons, assessment of Rs. 13 crores as 'deemed dividend' in terms of Sec. 2(22 )(e) of the Act stood finalised on substantive basis in the hands of Videojet and, of course, on protective basis too, in the hands of Portescap. The reasons recorded also bring out that they were based on the information provided by the DClT-8(2), Mumbai vide communication dated 03.07.2013, who was the assessing authority for Portescap. The moot question is when the same income purported to be taxable u/s 2(22)(e) of the Act is already lying taxed, can it be said that it constituted an escapement of income so as to be the basis for Assessing Officer in the instant case to initiate proceedings under Sections 147/148 of the Act. Ostensibly, the reasons for reassessment should not only have a rational nexus but also an intelligible nexus to form a belief that certain income had escaped assessment. In the factual matrix which is prevalent in the instant case, it could not be said that the said income had escaped assessment inasmuch the same was already subjected to assessment on a substantive as well as on protective basis in the hands of other two entities. We may again hasten to add here that we are not on the correctness of assessing the impugned 'amount in the hands of assessee u/s 2(22)(e) of the Act, but merely examining the validity of the assumption of jurisdiction u/s 147 of the Act, which has to be adjudicated having regard to the prescription of the said section. At the time of hearing, the learned representative also made a reference to the decision of the Bangalore Bench of the Tribunal in the case of Dy. CITv. Bullion Investment & Financial Services (P.) Ltd [2010] 123 ITD 568 wherein also a somewhat similar situation has been dealt with. In the case before the Bangalore Bench proceeding under Sections 147/148 of the Act was initiated in the case of a company in order to tax an income which had already been subjected to assessment in the hands of another company. As per our co-ordinate Bench, such initiation was impermissible as once the Revenue takes a stand that an income is assessable in the hands of an assessee and passes an assessment order, then it could not be said that same income had escaped assessment in the hands of another assessee. In our considered opinion, the meaning of expression "escaped assessment" appearing in Sec. 147 of the Act is quite clear and does not entail any ambiguity inasmuch as it cannot cover within its fold an income which has already been taxed. Quite clearly, in the instant case, not only the income taxed in other hand is same, but it has also been assessed in the other hand by invoking the very same section which is sought to be invoked in the present case, namely, Sec. 2(22)(e) of (he Act. Therefore, considering the entirety of facts and circumstances, we are unable to uphold that there was any rational or intelligible nexus between the reasons and formation of belief by the Assessing Officer about the impugned escapement of income. Thus, on this aspect, we uphold the plea of the assessee that the initiation of proceedings under Sections 147/148 of the Act is untenable in the eyes of law and, consequently the assessment is liable to be quashed. We hold so.”
In the present case also the AO was having the knowledge that the balance in HSBC bank ,Geneva has already been taxed
15 ITA No.7404/M/2017 Smt. Dipti Dattaraj Salgaokar in the hands of assessee’s husband and therefore reasons recorded by the AO for re-opening the assessment of the assessee are not valid as there was no income which has escaped the assessment. Consequently the re-opening u/s 147 of the Act and the consequent assessment order have to go. We, therefore, respectfully following the orders of the coordinate benches, quash the proceedings u/s 147 r.w.s. 148 and also the consequent order.
ITA No.7403/M/2017 (Revenue’s appeal)
This is the cross appeal of the revenue on merits against the order of CIT(A). Since we have held in the assessee’s appeal that re-assessment proceedings are invalid and bad in law, the appeal of the revenue becomes infructuous and is dismissed.
In result the appeal of the assessee is allowed and appeal of the Revenue is dismissed.
Order pronounced in the open court on 20.03.2019.