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Income Tax Appellate Tribunal, “I” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Pawan Singh (JM)
O R D E R Per B.R. Baskaran (AM) :-
2 Shri Anoop Vrajlal Mehta & Others All these four appeals have been filed at the instance of revenue and they relate to the years mentioned in the caption against the name of each of the assessees. In all these cases, the AO made addition on protective basis and the Ld CIT(A) deleted the same on noticing that the addition on substantive basis has been made in the hands of Late V.C. Mehta. The revenue is challenging the orders so passed by Ld CIT(A). As the issue contested in these appeals arises on common set of facts, they are being disposed of by this common order.
The facts relating to these cases are stated in brief. The Government of India received information that Shri Vrajlal C. Mehta is having undisclosed bank account with HSBC Bank, Geneva, Switzerland. Consequent thereto, the revenue carried out search and seizure operations in the case of Mohit Diamond P. Ltd. on 13.09.2011. In Mohit Diamonds P. Ltd., Smt. Suman V. Mehta, wife of Late Vrajlal C. Mehta was main director. Shri Anoop V. Mehta was son of Shri Vrajlal C. Mehta and Smt. Devaushi A. Mehta is the wife of Shri Anoop V. Mehta and daughter in law of Vrajal C Mehta. Shri Vrajlal C. Mehta had expired on 24.4.2005. Consequent to the search operations and also on the basis of information about HSBC bank accounts, these cases were reopened u/s 147 of the Act.
Late Shri Vrajlal C. Mehta had executed a Will and had also appointed Executors in the Will. After receipt of knowledge of HSBC bank accounts, the Executors took steps to bring the money into India. They received an amount of Rs.12.02 crores. The money so received was offered to Income tax in AY 2012-13 in the name of “Estate of late Vrajlal C. Mehta”. The revenue, however, took the view that the income should have been offered in the year in which the deposits were found to have been made in the HSBC bank account. In view of the same, the assessee also felt that the deposits found in the financial years relevant to AY 2006-07, 2007-08 and 2012-13 should have been offered as income of the respective years. Subsequently, on 16-03-2015, Shri Anoop Mehta was given copy of Base Note relating to the bank account.
3 Shri Anoop Vrajlal Mehta & Others On the basis of information available in Base Note, the Executors filed revised returns of income for AY 2006-07, 2007-08 and 2012-13 in the name of “Estate of late Vrajlal C. Mehta”, thereby allocating the amount received from the HSBC bank account standing in the name of Yeel Investment Inc in the three years as detailed below:- Assessment year Income Tax Credit 2006-07 8,00,94,000 2,68,90,153 2007-08 1,57,86,300 52,44,128 2008-09 2,43,20,246 65,41,578 -------------------- ------------------- 12,02,00,546 3,86,75,859 ============= ============ 4. The AO, however, completed the assessments in the name of “Shri Anoop Mehta, Legal heir of Shri late Vrajlal C. Mehta” assessing the deposits found in the bank account of M/s. Yeel Investment Inc., in AY 2006-07 and 2007-08. Simultaneously, he made addition on protective basis in the basis of the present assessees as detailed below:- Name of Assessee Asst. Year Protective Addition Late Suman V. Mehta through L/H Anoop V. Mehta 2006-07 8,07,95,907
- Do - 2007-08 1,57,87,865 Anoop V. Mehta 2007-08 9,46,75,900 Devaushi Anoop Mehta 2007-08 9,46,75,900
All the above said additions pertain to amount of USD 21,75,725 found in the bank account of M/s. Yeel Investment Inc. The rupee equivalent of the above said amount was Rs.9.46 crores referred above and the AO assessed the very same amount on protective basis in each of the above said assessees’ hand. In the hands of Late Suman V. Mehta (through L/H Anoop V. Mehta), it has been assessed in AY 2006-07 and 2007-08. For other two assessees, entire amount was assessed in AY 2007-08.
4 Shri Anoop Vrajlal Mehta & Others 6. The Ld CIT(A) noticed that the above said amount has been assessed on substantive basis in the hands of Late Vrajlal C. Mehta, which he had upheld in principle.
It is pertinent to note another fact here. The Ld Pr. CIT noticed that part of deposits has found in the financial year relevant to AY 2006-07. Hence the Ld Pr. CIT took the view that the AO should have assessed part of the amount in AY 2006-07. Accordingly he passed revision order in AY 2006-07 in the hands of Shri Anoop V. Mehta and Smt. Devaunshi A. Mehta. Both the assessees challenged the same by filing appeals before the ITAT. The Tribunal set aside the revision order on noticing that the relevant income has been offered in the hands of late Shri Vrajlal C. Mehta.
The Ld CIT(A), in the present proceedings, noticed that the revision orders passed Ld Pr. CIT for AY 2006-07 in the hands of Shri Anoop V. Mehta and Smt. Devaushi A. Mehta were set aside by the Tribunal on noticing that the relevant income was offered by Late Shri Vrajlal C. Mehta. He also noticed that the assessees have given an undertaking that they will stand by its disclosures made in the hands of Late V.C. Mehta and will not be claiming any refund of the taxes paid. Since substantive addition made in the hands of Late Vrajlal C. Mehta has already been confirmed in principle in AY 2007-08 by Ld CIT(A), the first appellate authority took the view there is no necessity to sustain the protective additions. Accordingly he deleted the protective additions made in the hands of the above said assessees as detailed above.
Before adjudicating the present appeals, it is necessary to discuss about the action taken by the AO in the case of late Vrajlal C. Mehta. The assessing officer had passed the order for AY 2007-08 in the name of “Shri Anoop V. Mehta, Legal heir of late Vrajlal C. Mehta”. However, the assessee had filed the return of income in the name of “Estate of late Vrajlal C. Mehta” in response to the notice issued by the AO u/s. 148 of the Act. The Ld CIT(A) also confirmed the assessment made by the AO and also enhanced the assessment. Before
5 Shri Anoop Vrajlal Mehta & Others the Tribunal, the assessee submitted that the status of “Shri Anoop V. Mehta, Legal heir of late Vrajal C. Mehta” is different from “Estate of late Vrajlal C. Mehta”. It was submitted that the legal heir of Vrajlal C. Mehta can be assessed only in respect of income earned by Vrajlal C. Mehta during his life time as per the provisions of sec.159 of the Act. Since the impugned income has accrued after the death of Vrajal C. Mehta, it was contended that the assessment should have been made in the hands of “Estate of late Vrajlal C. Mehta” as per the provisions of sec. 168 of the Act. The Tribunal, vide its order dated 29-08-2018 passed in accepted the contentions of the assessee and held that the assessment order passed in the name of Shri Anoop V. Mehta, Legal heir of late Vrajlal C. Mehta is not in accordance with the law and accordingly quashed the orders of the tax authorities.
We have deal with the present appeals on the back ground of the above said of facts. It is an admitted fact that “Estate of late Vrajlal C. Mehta” has filed its original return of income for AY 2012-13 and filed revised returns of income for AY 2006-07, 2007-08 and 2012-13. In the original returns of income, entire income of Rs.12.02 crores (which included the impugned addition of Rs.9.46 crores) was offered. In the revised returns of income, the above said amount has been spread between three years. Thus, it is a fact that the protective addition of Rs.9.46 crores made in the hands of present assessees, have been offered on substantive basis by “Estate of late Vrajlal C. Mehta”. It is also a fact that the assessees have given an undertaking to the effect that they will stand by the disclosures made and will not claim refund of tax already paid by them on the above said income.
We have also noticed that the Ld Pr. CIT passed revision order u/s 263 of the Act in AY 2006-07 in the hands of Shri Anoop V. Mehta and Smt. Devaushi A Mehta. The view of Pr. CIT was that a part of protective addition should have been assessed protectively in AY 2006-07. The co-ordinate bench of Tribunal has passed its orders against the appeals filed by Shri Anoop V.
6 Shri Anoop Vrajlal Mehta & Others Mehta and Smt. Devaushi A. Mehta on 14.12.2016 in and 3672/M/72 respectively, wherein taking note of fact of returns filed by late Shri Vrajalal C. Mehta and the undertaking given by the assessees, the Tribunal has quashed the revision orders passed by Ld Pr. CIT with the following observations:- “7. Since the executors of estate of late Shri V. C. Mehta have owned up the amount lying in the HSBC Bank and have paid the taxes thereupon and they have also given an undertaking to the Commissioner of Income tax (Appeals) that they owned up the bank balances lying in the bank account of late Shri V. C. Mehta, hence, under such circumstances, the addition, if any, made on protective basis in the hands of assessee will not have any tax effect. The Ld A.R has stated that by setting aside the assessment proceedings relating to the decisions made on protective basis in the hands of assessee, the assessee has been subjected to face multiple proceedings and will have to suffer harassment of attending the proceedings before the AO which ultimately will not have any bearing in relation to the tax effect as the amount lying in the HSBC Bank account has already been owned up by the estate of late Shri V. C. Mehta. Substantive additions have been made in the case of late Shri V. C. Mehta and under such circumstances the assessment order passed in the case of assessee on protective basis cannot be said to be prejudicial to the interest of the Revenue at all. Considering the above submissions, we are of the view that when the estate of late Shri V. C. Mehta, in whose case the additions have been made on protective basis, have owned up the amount lying in the bank account and have also given an undertaking to the Commissioner of Income Tax (Appeals) that they stand by the disclosure made by them in relation to the above said bank account and will not be claiming any refund of the taxes already paid except inter-se adjustment of taxes paid amongst various assessment years, no useful purpose will be served in making a fresh assessment on protective basis in the hands of the assessee merely because that some of the income was to be added in assessment year 2006-07 instead of the entire addition made in assessment year 2007-08 on protective basis.....”
Even though the above said decision was rendered against the revision order passed u/s. 263 of the Act, the observations made by the Tribunal are relevant in the present appeals also. Since the entire income has already been offered by “Estate of late Vrajal C. Mehta” and since the assessees have given undertaking that they will stand by the returns of income filed and will not claim refund of tax except for inter-se adjustment between assessment years, we are of the view that the orders passed by Ld CIT(A) in these appeals do not 7 Shri Anoop Vrajlal Mehta & Others call for any interference. Our view also gets support from the orders passed by the co-ordinate bench in the case of Shri Anoop V. Mehta and Smt. Devaunshi A Mehta in and 3672/M/72 respectively, referred supra.
In the result, all the appeals of the revenue are dismissed. Order has been pronounced in the Court on 31.8.2018.