ESTATE OF LATE SHRI VRAJLAL CHANDULAL MEHTA,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-3(2), MUMBAI

O R D E R Per B.R. Baskaran (AM) :-

The assessee has filed this appeal challenging the order dated 24.03.2017 passed by Ld CIT(A)-51, Mumbai and it relates to the assessment year 2007-08. The grounds of appeal of the assessee reads as under:- (a) The learned CIT(Appeals) has erred in confirming reassessment order passed in the name of Mr. Anoop Mehta (legal heir of Late Vrajlal Chandulal Mehta) instead of Estate of Late Vrajlal Chandulal Mehta. The Ld CIT(A) ought to have held that reassessment order passed by the Assessing officer is bad in law.

(b) The Ld CIT(A) has erred in enhancing the income assessed by the AO by Rs.14,49,34,704/- on account of the credits appearing in HSBC account of a company called Investment Lexcor S.A.

(c) The Ld CIT(A) has erred in confirming the action of the AO of not granting credit for taxes of Rs.52,44,128/- paid by the appellant on 31.3.2012 by way of self assessment tax for AY 2012-13. The Ld CIT(A) ought to have appreciated that the income in respect of which the self assessment tax paid has been assessed to tax by the AO for the impugned Assessment year.

(d) The Ld CIT(A) has erred in confirming the action of AO in not taking cognizance of revised Return of income filed by the appellant vide

2 Estate of Late Shri Vrajlal Chandulal Mehta letter dated 25.3.2015. The CIT(A) ought to have held that the revised return filed by the appellant was valid.

3. The revenue carried out search and seizure operations in the hands of Shri Anoop V Mehta on 13.09.2011. During the course of search, Shri Anoop V Mehta was shown following three accounts maintained in HSBC Bank, Geneva, Switzerland by Shri Vrajlal C Mehta. a. Yeel Investments Inc. b. Euros Invest Ltd. c. Investment Lexcor S.A.

Accordingly, in the statement taken u/s 132(4) of the Act, Shri Anoop V Mehta was questioned about the bank accounts three companies cited above. He replied that he was aware of company named M/s Yeel Investments Inc. He submitted that M/s Yeel Investments Inc was set up by his father and he is the beneficiary of that company. He expressed ignorance about other two companies stated above.

4. The AO noticed that the peak balance available in the account of M/s Yeel Investments Inc was USD 21,51,725/-, which was equivalent to 3 Estate of Late Shri Vrajlal Chandulal Mehta Rs.9,46,75,900/-. The peak balance was seen existing in the year 2007. Hence the assessing officer reopened the assessment of AY 2007-08 by issuing notice u/s 148 of the Act on 31.3.2014, i.e., long after expiry of Shri Vrajlal Mehta. It was stated that the above said notice was issued in the name of “Shri Anoop Vrajlal Mehta as Legal heir of Late Shri Vrajlal Chandulal Mehta”. In response to the notice, the representative of the assessee Shri Bimal Desai C.A from M/s Chhotalal H Shah & Co., Chartered Accountants filed a letter dated 08-04-2014 stating that the original return of income filed for AY 2007- 08 may be treated as return filed in response to the notice issued u/s 148 of the Act. The original return of income was filed for AY 2007-08 in the name of “Estate of Late Shri Vrajlal C Mehta” on 05-02-2008.

5. At this stage, it is pertinent to discuss about certain developments that happened at the assessee’s end. Shri Vrajlal C Mehta had written a Will on 14.12.2002, wherein he has appointed Shri Kerul Sashikant Shah and Shri Hitendra Kantilal Bhansali as “Executors” of the will. After the death of Shri Vrajlal C Mehta, the Will was probated in Hon’ble Bombay High Court on 28- 11-2007. Subsequent to search operations conducted in the hands of Shri Anoop V Mehta (son of Shri Vrajlal C Mehta) on 13.09.2011, the existence of bank account in the name of Yeel Investment Inc., came to light. Since the said account belonged to Shri Vrajlal C Mehta, the same was brought to the notice of Executors, so that they could take necessary steps to bring the monies lying in the above said bank account to India. Accordingly, the Executors sought professional help from Shri Bimal Desai, C.A and M/s Desai and Diwanji, Advocates and Solicitors for bringing money into India. As a result, the Executors got remittances from HSBC Bank, Geneva, Switzerland out of the account standing in the name of Yeel Investment Inc to the account of “Estate of Late V.C.Mehta”. The executors offered the same to tax for assessment year 2012-13, being the year in which the remittances were received in India. The return of income for assessment year 2012-13 declaring a sum of Rs.12,02,00,546/- as income of “Estate of Late Vrajlal C Mehta” was 4 Estate of Late Shri Vrajlal Chandulal Mehta filed in March, 2012. The self assessment tax of Rs.3,86,75,859/- was also paid on the above said income on 30-03-2012.

6. It is stated that when Shri Anoop Mehta received notice u/s 148 of the Act on 31.3.2014 for AY 2007-08, he informed the Executors about the same and requested them to take appropriate action as they were in charge of the Estate of Shri Vrajlal C Mehta. Since the Executors did not have information about the details of funds available in the HSBC bank account and also year wise movement of funds, they initially did not offer any additional income in the return filed on 09-04-2014 filed in response to the notice issued u/s 148 of the Act. During the course of reassessment proceedings, various details were called for by the AO. The reasons for reopening for AY 2007-08 was also provided to the Executors on 17-12-2014, where in the assessing officer has proposed to assess income relating to incremental deposits found in the bank account in AY 2007-08. It indicated that revenue has sought to assess income in the year in which deposits were made. The assessee had offered entire income in AY 2012-13. In view of the stand taken by the revenue, 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. 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 account 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 ============= ============

5 Estate of Late Shri Vrajlal Chandulal Mehta As stated above, in the revised return of income filed on 26-03-2015 for AY 2007-08, the assessee “Estate of lage Vrajlal C Mehta” offered a sum of Rs.1,57,86,368/- as additional income and claimed credit of tax of Rs.52,44,128/-, which was originally paid in AY 2012-13. The assessee also paid additional amount of self assessment tax of Rs.33,40,490/- in AY 2007- 08 while filing revised return of income for AY 2007-08.

6 Estate of Late Shri Vrajlal Chandulal Mehta amount of USD 3,56,298.67 was the difference between peak balance found in FY 2005-06 and 2006-07. Accordingly the AO also agreed that the income that is required to be assessed in AY 2007-08 is USD 3,56,298.67, which is equivalent to Rs.1,57,86,368/-. Accordingly he assessed the same as income of AY 2007-08 u/s 69A of the Act, even though the reopening was done to assess a sum of Rs.9.46 crores. The assessing officer passed the assessment order in the name of “Shri Anoop V Mehta in his capacity as Legal heir of late Shri Vrajlal C Mehta”.

7 Estate of Late Shri Vrajlal Chandulal Mehta 2007-08 in revised return of income. The said submission of Shri Anoop Mehta was rejected by both the tax authorities, as the AO had issued notice reopening the assessment for AY 2007-08 for assessing the above said income. The Ld CIT(A) also took note of the fact that Shri Anoop Mehta had agreed to offer relevant income in AY 2007-08 in his hands in the statement taken during the course of search u/s 132(4) of the Act. Accordingly the Ld CIT(A) upheld the assessment order passed by the AO.

8 Estate of Late Shri Vrajlal Chandulal Mehta

9 Estate of Late Shri Vrajlal Chandulal Mehta Vrajlal Chandulal Mehta, which is one and same thing. He further noticed that Shri Anoop Mehta agreed to offer income to the tune of USD 2151725 as his undisclosed income to the extent of beneficial ownership standing in his name, his wife, children or any business entity belonging to him. Accordingly the Ld CIT(A) took the view that Shri Anoop Mehta has agreed to offer USD 21,51,725 in his hands as undisclosed income. The Ld CIT(A) further noticed Mrs. & Mr Anoop Mehta are beneficial owners of all the three accounts found in HSBC, Geneva. However Mrs. & Mr. Rajesh mehta are noted as beneficial owners of accounts standing in the name of M/s Euros Invest Ltd and M/s Investment Lexor SA. [which is contradictory to what was stated by Ld CIT(A) in paragraph 30 extracted above]. The Ld CIT(A) also noticed that Shri Anoop Mehta is the sole beneficiary of residual estate as per Will executed by Shri Vrajlal C Mehta and hence is entitled to receive funds lying to the credit of undisclosed bank account in HSBC, Geneva. Accordingly the Ld CIT(A) took the view that the peak credits lying in the bank accounts are liable to taxed in the hands of Shri Anoop Mehta. With regard to the claim of the assessee that the above said two accounts (M/s Euros Invest Ltd and M/s Investment Lexor SA) belonged to Shri Rajesh Mehta, the Ld CIT(A) observed that the assessee failed to furnish any credible evidence to support the said claim. Accordingly, by placing reliance on the statement given by Shri Anoop Mehta during the course of search as well as on the fact that, as per the will of Shri Vrajlal C Mehta, Shri Anoop Mehta is the sole beneficiary of residual assets, the Ld CIT(A) held that the amount of Rs.14,40,34,704/- standing in the name of M/s Investment lexor SA is liable to assessed in the hands of Shri Anoop Mehta only. Accordingly he enhanced the income by Rs.14,40,34,704/-. The Ld CIT(A) also initiated penalty proceedings u/s 271(1)(c) of the Act in respect of the above said addition.

10 Estate of Late Shri Vrajlal Chandulal Mehta “The ld CIT(A) has erred in confirming reassessment order passed in the name of “Mr. Anoop Mehta (legal heir of Late Vrajlal Chandulal Mehta)” instead of “Estate of Late Virajlal Chandulal Mehta”. The Ld CIT(A) ought to have held that reassessment order passed by the Assessing Officer is bad in law.”

We have noticed earlier that the assessee Shri Vrajlal C Mehta has expired on 24.04.2005. We have also noticed that he has written a Will and has also appointed Executors. The Will was probated in Hon’ble High Court of Bombay on 28-11-2007. The Executors were filing return of income for the “Estate of late Shri Vrajlal C Mehta”. The details of HSBC Bank accounts maintained in Switzerland came to the notice of the Revenue only in 2011. One of the legal heirs of late Vrajlal C Mehta residing in India is Shri Anoop Mehta and he was subjected to search operations on 13.9.2011. In the statement taken from Shri Anoop Mehta u/s 132(4) of the Act, Shri Anoop Mehta admitted existence of a bank account in the name of Yeel Investment Inc., in HSBC, Switzerland and agreed to offer the peak amount of deposit in his hands to the extent he, his wife, his children and his business concerns are beneficiaries. However, subsequently he retracted from his statement through the letter dated 19-01- 2012 and submitted that the undisclosed income shall be offered by “Estate of late Vrajlal C Mehta”, as the Executors are incharge of the Estate of late Vrajlal C Mehta. There is no dispute that the bank account in the name of M/s Yeel Investments Inc., available in Switzerland belong to late Vrajlal C Mehta and what is assessed in AY 2007-08 is the incremental amount of peak balance over the immediately preceding year available in that account.

11 Estate of Late Shri Vrajlal Chandulal Mehta

“Sec.168 (1) Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor— (a) If there is only one executor, then, as if the executor were an individual; or (b) If there are more executors than one, then, as if the executors were an association of persons; and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took plce. (2).........

12 Estate of Late Shri Vrajlal Chandulal Mehta (3) Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests.”

The Ld A.R submitted that the above said provisions clearly demarcate the liability of legal representatives and executors. The Ld A.R submitted that as per provisions of sec. 159 of the Act, the legal representatives are liable to pay tax on the income accrued to the deceased till the date of death of the assessee, which the deceased person would have paid had he been alive. He further submitted that as per provisions of sec. 168 of the Act, the income accruing to the deceased for the period subsequent to his death has to be treated as the “income of Estate of deceased assessee” and shall be taxable in the hands of the Executors in his capacity of an executor. If the concerned asset has already devolved on the legal heir under inheritance, then the said asset shall become property of the legal heir in his own right and the income arising there from shall be assessed on the legal heir in his individual capacity.

13 Estate of Late Shri Vrajlal Chandulal Mehta (a) Arvind Bhogilal vs. CIT (105 ITR 764)(Bom) (b) K.Kunhi Mohammad Hajee vs. State of Kerala (93 ITR 193)(Ker) (c) Income tax Officer vs. Maramreddy Sulochanamma (79 ITR 1)(SC) (d) CIT vs. Mrs. Usha D Shah (127 ITR 850)(Bom)

Accordingly, the Ld A.R submitted that the assessing officer was not correct in law in assessing the income in the hands of Anoop Mehta as legal representative of late Vrajlal C Mehta. Accordingly he submitted that the assessment ought to have been passed in the name of “Estate of late Vrajlal C Mehta”.

23. Reiterating her stand, the Ld D.R submitted that the HSBC bank accounts do not find place in the Will of late Vrajlal C Mehta and hence what is not mentioned in the will cannot be considered as an asset forming part of the Estate. Further the Bombay High Court has probated the will with the condition that any further assets and liabilities over and above what is mentioned in the will shall be brought to the notice of the High Court. However the assessee has not clarified as to whether the HSBC bank accounts were brought to the notice of Hon’ble Bombay High Court or not. Accordingly the Ld CIT-DR contended that the HSBC bank accounts do not form part of Estate and hence the deposits made therein are taxable only in the hands of legal heirs on behalf of the assessee. In this regard, the Ld D.R also referred to sec. 248 of Indian Succession Act, 1925 , wherein it is stated that the probate is limited to purpose specified in the will. Further she submitted that sec.317 of Indian Succession Act prescribes the duties of an Executor or Administrator. It reads as under:- Inventory and account – (1) An executor or administrator shall, within six months from grant of probate or letters of administration, or within such further time as the Court which granted the probate or letters may appoint, exhibit in that Court an inventory containing a full and true estimate of all property in possession, and all the credits and also all the debts owing by any person to which the executor or administrator is entitled in that character; and shall in like manner, within one year from the grant or within such further time as the said Court may appoint, exhibit an account of the estate, showing the assets which have come to his hands and the manner in which they have been applied or disposed of.

The Ld CIT-DR submitted that the HSBC banks were not brought to the notice of Hon’ble High Court and on that count also these bank accounts cannot considered to be part of Estate. Accordingly she submitted that the assessing officer was right in passing the assessment order in the hands of legal heirs of 15 Estate of Late Shri Vrajlal Chandulal Mehta Late Shri Virajlal C Mehta. The Ld D.R submitted that the assessee cannot take support of various case laws relied upon by him, as they are distinguishable.

25. The Ld CIT-DR further submitted that the Tribunal has got a duty to correct the errors, if any, occurred in framing of assessment. Accordingly she submitted that tribunal should not annul the assessment and should restore it to the file of AO, if the assessment order is found to be not in accordance with the law. In support of above said contentions, she placed her reliance on the following case law:- (a) CIT vs. Jansampark Advertising & Marketing (375 ITR 373)(Delhi) (b) Kapurchand Shrimal vs. CIT (131 ITR 451)(SC) (c) CIT vs. Roshanlal and Smt. Chaturi Bai (134 ITR 145)(Delhi) (d) Kamalesh Kumar Mehta vs. CIT (106 ITR 855)(Cal) (e) CIT vs. Manohar Lal Nagpal (139 ITR 157)(P & H) (f) CIT vs. Chamdra Mohan Verma (244 ITR 430)(All) (g) CIT vs. Hukam Singh (276 ITR 347)(P & H) (h) Skylight Hospitality LLP (Delhi HC and SC)

16 Estate of Late Shri Vrajlal Chandulal Mehta

27. The Ld A.R submitted that the provisions of sec. 124(3) deals with territorial jurisdiction only and hence reliance placed by Ld CIT-DR in sec. 124 is misplaced. He further submitted that the provisions of Hindu Succession Act, relied upon by Ld CIT-DR, deals with the procedural aspects. He further submitted that the various case laws relied upon by the Ld DR are not applicable to the facts of the present case, as they have been rendered in different context. He submitted that in all those cases, right person was assessed and there were only procedural errors. In the instant case, there is no procedural irregularity, but it is a case of assessment on a wrong person. Hence the error is jurisdictional error, which goes to root of matter.

17 Estate of Late Shri Vrajlal Chandulal Mehta

(a) Kikabai Abdulali vs. ITAT (32 ITR 762)(Bom) (b) CIT vs. N.Ch.R Row & Co. (144 ITR 557)(Cal).

In both the cases, it has been held that the right of appeal to Tribunal is not confined technically to party who is party to appeal, but it is a much wider right which can be exercised by any person who becomes liable to pay tax by any order against which appeal is preferred. He submitted that, in the instant case, the Estate has received money from HSBC accounts and hence it is liable to pay tax. The Ld A.R further submitted that the Ld CIT(A) has also observed in page 39, paragraph (d) of his order that it is the primary responsibility of the executors of the Will to clear all the tax dues of Shri Vrajlal Mehta as applicable on all the incomes/properties standing in his name before they are distributed. Hence it has got locus standi to prefer appeal against the order passed by the tax authorities.

30 There is no dispute with regard to the fact that Shri Vrajlal C Mehta has expired on 24-04-2005. However, the year under consideration is AY 2007-08 and what is assessed is the amount of deposits found in HSBC account, Geneva, Switzerland during the financial year 1.4.2006 to 31.3.2007 maintained in the name of Yeel Investment Inc. Since Shri Vrajlal C Mehta was not alive during this period and hence he could not have made the deposits during the above said period. The Ld A.R, during the course of arguments, clarified that the amount of deposits found in the financial year under consideration may represent income accrued on the deposits made during his lifetime by Vrajlal C Mehta. The question that arises in this situation is - in whose hands, the income pertaining to AY 2007-08 could be assessed?

19 Estate of Late Shri Vrajlal Chandulal Mehta there is no material available on record to show exact nature of the same. The Ld A.R submitted that it could be accrual of income out of the deposits made earlier. Be that as it may, what is assessed as income in the year under consideration is the amount of deposit found in the bank account in the name of M/s Yeel Investment Inc. Hence, for all practical purpose, the nature of income may not be relevant here. Since the deposits were found during the financial year 1.4.2006 to 31.3.2007, i.e., subsequent to the date of death of the assessee, these deposits could not have been made by Shri Vrajlal C Mehta, as contended by Ld CIT-DR.

20 Estate of Late Shri Vrajlal Chandulal Mehta found in HSBC account was not forming part of assets of “Estate of late Vrajlal C Mehta”. The provisions of Indian Succession Act, which have been relied upon by Ld CIT-DR, deals with procedural aspects of dealing with the assets and liabilities of the Estate. As per the Will of Shri Vrajlal C Mehta, it is the duty of the Executors to distribute the assets in accordance with the directions given in the Will. Since the impugned income has accrued after the date of death of Shri Vrajlal C Mehta and since the Executors have taken responsibility to get the funds and distribute them, in our view, it may not be correct to contend that the same does not form part of the Estate.

Where a person dies Where a person dies His executor, administrator or 21 Estate of Late Shri Vrajlal Chandulal Mehta other legal representative His legal representative shall liable to pay Shall liable to pay Out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge The agricultural income-tax Any sum assessed as payable by such person or any agricultural income-tax Which would have been payable Which the deceased would by him under this Act have been liable to pay In the like manner and to the same extent as the deceased If he had not died” If he had not died”

Section 24B(1) is wrongly mentioned as sec. 24(1) in the above chart. A perusal of both provisions would show both are having same effect.

22 Estate of Late Shri Vrajlal Chandulal Mehta Officer included a sum of ` 2,49,459/- being proportionate part of share of profit of Mr. Arvind up to 22.8.1950 (profit pertaining to the period during which he was minor) in assessment of his father as per the relevant provisions of the Income tax Act. Hon'ble Bombay High Court has held that, as per clauses found in the partnership deed, profit accrued to the partnership firm only on the last date of the accounting year. The revenue took support of provisions of sec.24B to contend that the said income can be assessed on the legal heir, as per the provisions of sec. 24B. Hence the question of applicability of provisions of section 24B (which is akin to sec. 159 of Income tax Act, 1961) was examined by Hon'ble Bombay High Court and relevant observations are extracted below :- The second aspect of Mr. Mehta's contention relates to the proper construction of the provisions of section 24B of the Indian Income-tax Act, 1922. On the one hand it has been contended by Mr. Mehta that section 24B was inapplicable to the facts of the present case for the simple reason that no income or profits could be slid to have accrued to Arvind at all till he was alive, for accounts were made up as at the end of S.Y. 2006 on the Divali day and it was only then that any income or profits could, be said to have accrued to the firm or to the individual partners thereof, while, on the other hand, it has been the contention of the revenue that in view of the legal fiction, which has been enacted in section 24B(1) of the Act, the sum of Rs. 2,61,821 could be brought to tax under the said provisions of section 24B. It would, therefore, be necessary to set out the relevant provisions of section 24B. They are as follows; "24B. (I) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died. ………………….. Before going to the decided cases it would be necessary to consider the question on a proper reading of the aforesaid relevant provisions of the section. Sub-section (1) of section 24B provides that where a person dies, his heirs and legal representatives are liable to pay, out of the estate of the deceased, the tax assessed as payable by the deceased or any tax which would have been payable under the Act by the deceased if he had not died. In other words, a fiction is created whereby the personality of the deceased is extended for the duration of the entire previous year in which such person has died. According to Mr. Mehta, the legal fiction created by 23 Estate of Late Shri Vrajlal Chandulal Mehta the use of the words "if he had not died" is only limited for the purpose of providing a machinery which was absent for taxing the income of a dead person after his death and this legal fiction cannot be extended so as to render what is not an income of a deceased person to be his deemed income and in support of his contention he relied upon an old decision of this court in the case of Ellis C. Reid u. Commissioner of Income-tax AIR 1931 Bom 333 where a lacuna obtaining in the provisions of the Income- tax Act had been pointed out, to remove which the provisions of section 24B came to be enacted. He also relied upon the Statement of Objects and Reasons which has clearly set out the purpose for which section 24B came to be enacted. On the other hand, it was urged by Mr. Hajarnavis for the revenue that under sub-section (I) of section 24B the fictional extension of the legal personality of the deceased must be given full effect to and the legal fiction created by the words "if he had not died" cannot be regarded as merely providing a machinery dealing with assessment or recovery of payment of tax from the estate of the deceased. According to him, sub- section (1} of section 24B should be regarded as containing a charging provision, a provision which creates a liability, and as such it should be held that by the legal fiction created thereunder even the income that was received by the heirs of the deceased during the period after the death of the deceased till the end of the accounting year should be regarded as deemed, income of the deceased. In view of these rival submissions, which have been put forward before us, the narrow question, which this court is called upon to decide, is whether the fictional extension of the legal personality of the deceased as contemplated by sub-section (1) of section 24B could be regarded as having been enacted for the purpose of merely providing a machinery for dealing with assessment or recovery of payment of tax from the estate of the deceased or whether the same has been enacted with a view to create an additional liability to pay tax on that part of the income said to have been received by the heirs and legal representatives of the deceased after the death of the deceased till the end of the relevant accounting year.

In order to decide this question it will be necessary to consider the purpose for which the legal fiction came to be enacted, in sub-section (1) of section 24B and, on this aspect of the matter two things would be relevant, viz., the position which obtained in law prior to the enactment of section 24B and whether any lacuna was there in the Act—an indication of which has been given by this court in Ellis C. Reid's case (supra)—and the Statement of Objects and Reasons which may set out the purpose for which section 24B came to be enacted. …………………….. It is thus clear that the provisions of section 24B came to be enacted by the Indian Income-tax (Second Amendment) Act (18 of 1933) with the avowed object of filling in the lacuna that was pointed out by this court in Ellis C. Reid's case (supra), and the lacuna was that there was no 24 Estate of Late Shri Vrajlal Chandulal Mehta machinery in the Act till then which dealt with the assessment of or recovering payment from the assets of the deceased person. The above position also becomes clear if the Statement of Objects and Reasons appended to the Bill that was introduced in the Central Legislature is seen. The provisions of new section 24B were contained in clause 9 of the Bill and the note on clause 9 of the Bill runs as follows:

"The new section 24B supplies a lacuna in the Act which at present fails to provide either for assessment or the giving of refunds in respect of the income of persons deceased."

Having regard to these aspects there can be no doubt that the provisions of section 24B must be taken to have been enacted for the purpose of inserting a machinery provision for assessment or giving of refunds in respect of the income of deceased persons and if that be the object or purpose of the enactment, we feel Mr. Mehta would be right in contending that the legal fiction introduced in section 24B(1) should be restricted to the purpose for which it was meant and intended and could not be extended as has been suggested on behalf of the revenue, for the principle is well-settled that a legal fiction is to be limited for the purpose for which it has been created and cannot be extended beyond that legitimate field (vide Bengal Immunity Co. Lid's case AIR 1955 SC 66). ………………….. In view of this discussion we are clearly of the view that on a proper construction of section 24B(1) of the Act the said provision is clearly inapplicable in regard to the amount of Rs. 2,61,821 and Arvind's heirs or legal representatives cannot be called upon to pay tax thereon, as the same was never the income of Arvind prior to or on 31st August, 1950, nor could it be regarded as his income by reason of the legal fiction created there under.”

25 Estate of Late Shri Vrajlal Chandulal Mehta The relevant paragraph of the judgment is reproduced as under:

Section 24 of the Agricultural Income-tax Act, which corresponds to section 24B of the Indian Income-tax Act, 1922, since repealed, reads as follows: "24. (1)-Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge the agricultural income-tax assessed as payable by such person or any agricultural income-tax which would have been payable by him under this Act if he had not died. ………… Construing the corresponding section, section 24B of the Indian Income tax Act, 1922, the Supreme Court in Commissioner of Income-tax v. Amarchand N. Shroff, observed thus:

".....in all the cases enumerated above the language used in sub- sections (1), (2) and (3) of section 24B contemplates that the heirs and legal representatives of a deceased person are liable to pay income-tax out of his estate, (1) where assessment had already been made, and (2) where he dies before the assessment but the income was received before his death or by his heirs and legal representatives after his death which occurs during the previous year. If he dies before the publication of the notice under section 22(1) or before the service under section 22(2) or after the service but before he has furnished a return or filed an incorrect or incomplete return then the Income-tax Officer should make an assessment of the total income of such deceased person and determine the tax payable thereon. Section 24B does not authorize levy of tax on receipts by the legal representatives of a deceased person in the years of assessment succeeding the year of account being the previous year in which such person died".

In the same judgement their Lordships said thus:

"By section 24B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted. As was observed by this court in Bengal Immunity Co. Ltd. v. State of Bihar legal fictions are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond that legitimate field. In the present case the fiction is limited to the cases provided in the three sub-sections of section 24B and cannot be extended further than the liability for the income received in the previous year.

26 Estate of Late Shri Vrajlal Chandulal Mehta These decisions, no doubt, lay down the rule that the legal representatives are liable to be assessed as if the deceased was alive not only in respect of the income received by the deceased person upto the date of his death, but also the income received by the legal representatives during that year but not in any subsequent year. It is on this that reliance is placed by counsel for the revenue. According to him these decisions must be read as laying down the rule that if the legal representatives derived any income out of the property of the deceased during the previous year in which the death took place they are liable to be assessed on that income in addition to the income of the deceased upto the date of his death under section 24 of the Agricultural Income-tax Act, 1950. We do not think that this is the purport of the decisions of the Supreme Court. The language of section 24 of the Act appears to us to be clear. It indicates that what is permitted to be assessed under section 24 is the income of the deceased person and what is allowed to be recovered is the tax that would have been payable by the deceased. It is for that purpose and that alone that section 24 has provided for the fiction of continuance of the deceased person. Even if he is deemed to have not died, the income from his estates actually due to an received by his heirs could not have been his income unless it be there is a further fiction that he was to be deemed to have received such income. There is no scope for any such assumption. There is no compelling reason to assume so, keeping in view the limited objective of the fiction created in section 24 of the Agricultural Income-tax Act, 1950.

The cases before the Supreme Court to which we have adverted are all cases -where income that was sought to be assessed in the hands of the legal representatives represent the income of the deceased person, accrued due before his death, but received by the legal representatives after his death. That is not the case here. We cannot read the observations in the decisions to which our attention has been drawn by counsel for the revenue in such manner as to alter the apparently plain meaning of section 24 which we have already adverted to.

In these circumstances, the proper course would be to assess the petitioners as legal representatives of the deceased, KunhiBava, for the period upto July 18, 1968, and independently as tenants-in-common for the period subsequent to the death of KunhiBava. The assessment as made cannot, therefore, be sustained. Hence, exhibit P-3 orders (same in both the petitions) are quashed. This does not preclude the agricultural income-tax authorities from proceeding against the petitioners by way of assessment afresh in accordance with law. The original petitions are disposed of as above. We direct the parties to suffer costs.”

27 Estate of Late Shri Vrajlal Chandulal Mehta

The relevant extract of the headnote of the case is reproduced as under:

Section 168(1) of the IT. Act, 1961, which provides that the income of a deceased person shall be chargeable to tax in the hands of the executor does not leave any discretion to the I.T. authorities in respect of assessing the income of the estate of a deceased person to tax. Such income is to be taxed in the hands of the executor. The term "executor" is not to be understood in the restricted sense as the Expln. to the section gives an extended meaning to the word "executor" so as to include an administrator or other person administering the estate of the deceased person, that is, one who is in de facto management of the properly of the deceased person.”

The relevant paragraph of the judgment is reproduced as under:

One Narayana Reddy was an income tax assessee. He died on March 26, 1948, leaving behind him his widow, Ramanamma, and five daughters.

28 Estate of Late Shri Vrajlal Chandulal Mehta On his death his widow took possession of the estate and was managing it. ……………………. After the death of Narayana Reddy the income-tax authorities dealt with his widow as his sole legal representative. On that basis the authorities collected from her the tax due from the estate of the deceased Narayana Reddy. They also took reassessment proceedings under section 34 of the Act and collected some additional tax from her. On March 17, 1962, the respondent, who is one of the daughters of Narayana Reddy and who had obtained a share in the estate of Narayana Reddy under the compromise decree referred to earlier, was served with notices under section 34of the Act seeking to reopen the assessment of Narayana Reddy for the years, 1941-42 to 1949-50. She filed as many as nine writ petitions challenging the validity of the notices served on her. The main question for decision is, as mentioned earlier, whether the said notices are valid. …………….. It is clear that notices issued in respect of the assessment for the assessment year 1949-50 are clearly invalid as they relate to a period subsequent to the death of Narayana Reddy.”

29 Estate of Late Shri Vrajlal Chandulal Mehta This case law pertains to sec.24 of the Kerala Agriculture Income tax Act, 1950. The instant case refers to the applicability of sec.159, the legal representative is liable to pay any sum which the deceased would have been liable to pay if he had not died. This section has to be read in conjunction with sec. 168 wherein the Executors are liable only for the income of the Estate of the deceased person from the date of death to date of complete distribution to the beneficiaries of the Estate according to their several interest. In the instant case, Shri Anoop Mehta, the legal heir of Late Shri Vrajlal C Mehta is assessed in the capacity of legal representative of the deceased. The assessee expired on 24.4.2005 and therefore, assessment for AY 2006-07 is in the hands of the LR and assessment for AY 2007-08 is also in the hands of LR. The ratio of K.Kunhi Mohammed Hajee that proper course of assessing the petitioners as legal representatives of the deceased for the period upto the date of death and independently as tenants in common for the period subsequent to his death does not apply as Sec.159 does not state that the liability of LR stops with the previous year in which such person died. c. Supreme Court order in the case of Income tax Officer, Gudur and another vs. Mramreddy Sulochanamma:

The facts of this case are that the widow alone was assessed to tax as the sole legal representative of the deceased, though the property of the deceased was settled between the widow, the mother of deceased and his five daughters. Needless to say, the facts in our case are that the HSBC account is not part of the Estate, it devolves upon the son, Shri Anoop V Mehta and is assessed in the hands of the LR Shri Anoop V Mehta as it is the income of the deceased and would have been assessed in the hands of deceased but for his death. This does not apply to the instant case. d. Bombay High Court order in the case of CIT, Bombay City-II vs. Mrs. Usha D Shah:-

In this case, the Hon’ble Bombay High Court held that the mother of the deceased who was managing the estate of the deceased after his death intestate, even though she was not an executor would be covered by the definition in Sec.168(1) and in these circumstances, the income from the estate of the deceased could be charged to tax only in the hands of the mother of deceased and not the widow of the deceased. The instant case cannot place reliance on this decision as (a) the HSBC account was not part of Estate (b) the Executors of the Estate have not demonstrated that it is part of the Estate (c) the Executors of the Estate have only furnished a will probated by the Hon’ble Bombay High Court which does not 30 Estate of Late Shri Vrajlal Chandulal Mehta mention this HSBC account and the Executors have not furnished proof of having submitted inventory of assets and liabilities other than those in the will to the Hon’ble Bombay High Court (d) it is only the Executors who are asserting that they are the Executors of the Estate which includes the HSBC account and there is no direction from the Hon’ble Bombay High Court that they are the Executors/Administrator of all the assets and liabilities of the deceased even though not mentioned in the will.

(b) Sec. 159 of the Act does not state that the liability of the LR shall stop with the previous year in which the person died.

(c) The HSBC account is not part of the Estate (d) Only the Executors are claiming it to be part of Estate without disclosing those details to Hon’ble Bombay High Court, which has probated the Will of Shri Vrajlal C Mehta.

31 Estate of Late Shri Vrajlal Chandulal Mehta 1946-47 and 1947-48. Section 23A was applied and the amounts deemed to have been distributed as dividends in respect of these shares were Rs. 61,051 as on May 26, 1947, and Rs. 3,73,099 as on December 22, 1947. The Income-tax Officer served a notice under section 34(1)(b) of the Act read with section 24B on the respondent who was "a deemed assessee" in place of the "deceased person" and overruling his objection added the deemed dividends to the deemed assessee's income and the Supreme Court took the view that the assessment made on the assessee was not valid in law because the fictional extension of the legal personality of the deceased for the purpose of section 24B of the Act came to an end at the end of the accounting year in which G died and no tax could be levied on the assessee under section 24B in respect of the dividends deemed to have been disturbed on May 26 and December 22, 1947 after the end of the year. Similar was the position in the other case of Commissioner of Income-tax v. Hukumchand Mohanlal. the facts were that an allowance for sales tax paid by A was made in the assessment of A for the year 1950- 51. A died in February 1960, and the amount so paid was refunded by the Government and received back by A's widow in November 1961. The court held that this amount could not be included in profits of A's widow for the assessment year 1962-63 under section 41(1) as the amount was not received by the widow in the accounting year in which A died. This decision was later on confirmed by the Supreme Court in Commissioner of Income-tax v. Hukumchand Mohanlal. It would thus appear clear that in both these cases the question of applicability of section 24B was considered in this context of an income which had been admittedly received by the heirs and legal representatives of the deceased in years subsequent to the accounting year in which the deceased had died and the court took the view that the amount that was received by their and legal representatives could not be brought to tax under section 24B of the Act. In each, of these decisions the observations in Amarchand N. Shroff's case (quoted above) were relied upon and its ration was applied.”

The decision rendered by Hon’ble Supreme Court in the case of James Anderson (supra) makes it clear that the income accruing to a person after his death cannot be taxed as per the provisions of sec.159 of the Act on the legal heirs.

32 Estate of Late Shri Vrajlal Chandulal Mehta vs. Manohar Lal Nagpal (139 ITR 157). In the case of CIT vs. Roshanlal and Smt. Chaturi Bai (1`34 ITR 145) also, the issue related to the assessment of deceased in respect of income earned during his life time. (b) In the case of CIT vs. Chandra Mohan Verma (244 ITR 430), the issue was whether the assessment order passed on one legal heir without impleading others was valid or not. Similar is the position in the case of CIT vs. Humam singh (276 ITR 347)

In our view, the above said decisions are on different facts and hence they cannot be applied to the facts of the present case.

33 Estate of Late Shri Vrajlal Chandulal Mehta case are with regard to the jurisdiction, i.e., who has to be assessed for the impugned income and hence, in our view, the revenue cannot take support of the decision rendered in the case of Sky Light Hospitality LLP.

34 Estate of Late Shri Vrajlal Chandulal Mehta available in the account of M/s. Investment Lexcor SA is also assessable in the hands of Mr. Anoop Mehta as legal heir of Mr. Vrajlal Mehta. Accordingly, he enhanced the income by ` 14.49 crores.

35 Estate of Late Shri Vrajlal Chandulal Mehta

“The learned CIT(A) has erred in enhancing the income assessed by the AO by Rs. 14,49,34,704 on account of the credits appearing in HSBC bank account of a company called Investment Lexcor S,A”

1. Yeel Investment Inc- Offered to tax in the hands of Estate of Vrajlal C. Mehta based on the balances as appearing in the base note.

2. Euros Invest Limited - Rajesh Mehta, son of Vrajlal Mehta claimed that the said account belonged to him. Also, an affidavit was filed to that effect. Further, the account was closed in 2003.

3. Investment Lexcor S.A - Rajesh Mehta, son of Vrajlal Mehta claimed that the said account belonged to him. Also, an affidavit was filed to that effect.

24. Further, during the course of search proceedings, first statement of Mr. Anoop Mehta was recorded on 13.09.2011 (Page No. 1 to 6 of Paper book), wherein he was enquired of the bank accounts forming the part of base note. The relevant portion of the statement is reproduced as under:

Q. 8 Please state whether you know the following companies/ entities

2. Euros Invest Limited

3. Investment Lexcor S.A. Please also state whether you had any business dealing with any of these companies/entities. Please also state whether you are in anyway associated with these companies/ entities?

36 Estate of Late Shri Vrajlal Chandulal Mehta Ans. I am aware of the fact that there exists a company by the name M/s.Yeel Investments Inc. To the best of my knowledge, it was set up by my father Late Shri. VrajlalChandulal Mehta. I am the beneficiary of this company. The company was incorporated as an Investment company whose bank accounts have money whose beneficiary is myself. I do not have any idea about the other two companies you are mentioning about, i.e. Euros Invest Limited and Investment Lexcor S.A.

Q.9 I am showing you these documents (made part of this statement as Annexure-1, pages numbered 1-32) in which you name, date of birth, address, names of certain family members and other persons alongwith the name of some companies and other details as given below appear:

Name: Mehta AnoopVrajlal D.O.B.: 08.11.1956 Address: 52, Et-CID, 13A Ridge Road Ind - Bombay 400006.

Other Names: Mehta VrajlalChandulal, Mehta Suman Vrajlal, Mehta DevaunshiAnoop, Shah Asha Navin Chandra, Mehta Rajesh Vrajlal Mehta Asha Rajesh? Mehta Sachiv R and Mehta Siddhi.

Companies: Yeel Investments Inc, Euros Invest Limited, Investment Lexcor S.A, First Corporate Director Inc and Manacor S.A Trusts: The Parrots Trust, Fiduciare Equity Trust AG ID Numbers: BUP_SIFIC_PER_ID 5090140303, PERJD 34612, PER_NO 140303, etc.

Kindly confirm the same and state whether the data mentioned in these documents correspond to the data of you and your family members/ associates, State what these documents are about?

Ans. I have gone through the papers shown by you. I confirm that my name, my date of birth and my address, names of some of the members of my family/associates in my business i.e., Mehta Vrajlal Chandulal, Mehta Suman Vrajlal, Mehta DevaunshiAnoop, Shah Asha Navin Chandra, Mehta Rajesh Vrajlal, Mehta Asha Rajesh, Mehta Sachiv R and Mehta Siddhi Appear in the said document Further, I would also like to state that am aware of the company Yeel Investments Inc, in which I am a beneficiary.

I have some faint remembrance of the trust 'The Parrot Trust'. However, I have no idea about the concerns Euros Invest Limited, Investment Lexcor

37 Estate of Late Shri Vrajlal Chandulal Mehta S.A., First Corporate Director Inc and Manacor S.A and the Fiduciare Equity Trust A.O.

It appears from the documents shown by you that there are some balances in the bank accounts maintained by us with HSBC Geneva in the name of Yeel Investments Inc. As far as the rest of the data such as amounts reflected against the names of other concerns of which I have not knowledge about are concerned, I cannot comment upon them right now, I need to check up with the bank authorities and get back to you.

26.Further, vide letter dated 19.01.2012 (Page No.7 to 11 of Paper Book), a submission by Mr. Anoop Mehta was filed to Investigation wing wherein it was specifically written that Euros Invest Limited and Investment Lexcor S.A belonged to Shri Rajesh Mehta. A copy of the said letter and affidavit is already submitted before your Honour vide Paper Book. It is pertinent to note that investigation wing was satisfied with regards to the ownership of the said accounts.

Q9. There is a mention of an account in the base note, in the name of Yeel Investment Inc, are you aware about it? Ans. As on today, Yes.

Q.20 To whom this account belonqs? Ans. It belongs to my father late Shri V.C. Mehta.

Q.21 There is a mention of another account in the' base note, in the name of Euro Invest Ltd, are you aware about it? Ans. As on today I am aware of it. It belongs to my brother (Mr. Rajesh V Mehta).

Q.11 How do you know this it belongs to your brother (Mr.Rajesh V. Mehta)? Ans. He told me.

38 Estate of Late Shri Vrajlal Chandulal Mehta Q.12 Why do I accept your submission that this account belong to your brother? Ans. The following day after the search, I spoke to my brother and asked him about the three company shown to me. He immediately confirmed that Euros Invest Limited and Investment Lexcor S.A (Ex. Investment Funds S.A) belonged to him. About the third company (Yeel Investment Inc.) he said, he is not aware but would make some enquiries and get back to me. I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax Department, Scindhia House, by his chartered accountant Mr.Bimal Desai.

Q.13 Please produce the copy of the affidavit? Ans. If the affidavit is available with the CA and I will talk to him and furnish the same on 16.03.2015.

Q.14 Since base note is in your name then why Euro Invest P Ltd should not be considered as relating to you? Ans. As, I have already stated, the following day after the search, I spoke to my brother and asked him about the three company shown to me. He immediately confirmed that Euros Invest Limited and Investment Lexcor S.A (Ex. Investment Funds S.A) belonged to him. About the third company (Yeel Investment Inc), he said, he is not aware but would make some enquiries and get back to me. I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax Department, Scindhia House, by his chartered accountant Mr. Bimal Desai.

Q.15 There is one more accounting the name of Investment Lexcor S.A (Ex- investment funds S.A.), are you aware about it? Ans. As on today, yes, I am aware about it and this account belongs to my brother Q.16 How do you know this account belongs to your brother? Ans. As, I have already stated, the following day after the search, I spoke to my brother and asked him about the three company shown to me. He immediately confirmed that Euros Invest Limited and Investment Lexeor S.A (Ex. Investment Funds S.A) belonged to him. About the third company (Yeel Investment Inc), he said, he is not aware but would make some enquiries and get back to me.

I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax department, Scindhia House, by his chartered accountant Mr.Bimal Desai.

39 Estate of Late Shri Vrajlal Chandulal Mehta Q.16a How it is possible that out of three accounts mentioned in the Base Note, one account belongs to your father and remaining two account belongs to your brother? Ans. My brother informed me that the two companies belonged to him and the third company belong to my father. I have no reason to disbelieve him Q. 16b Why did not you transfer the money form account of late Mr. V C Mehta to you own account? Ans. I did not bring the money back, the executors of the Late Shri Vrajlal C. Mehta made all efforts to bring money back in the account of Late Shri Vrajlal C Mehta in Bank of Baroda. And the executors very clear that they would only distribute the residual money after all taxes were paid and all assessment done as per the Will.

28. It may further be noted that in the case of Shri Rajesh Mehta, search assessments were initiated u/s. 153C of the Act, wherein he was issued a show cause notice dated 13.03.2014 in which specific query was raised regarding Investment Lexcor S.A. The show cause notices have been reproduced as under:

"OFFICE OF THE ASST. COMMISSIONER TAX CENTRAL CIRCLE 20, ROOM NO.401, 4™FLOOR AAYAKAR BHAVAN M.K.ROAD, MUMBAI400020.

TEL: (O) 22039131 EXTN: 2401 Dated: 13.03.2014 Shri Rajesh V. Mehta 162, EL-CID, 13A Ridge Road, Mumbai 400 006.

PAN: AAIPM3017B

Sub : Search/block assessment proceedings for assessment year 2007-08 - Show cause regarding. **** * * * *** * * * ** ** ** * * * * * In connection with search assessment proceedings for AY 2007-08, the following points are noticed and in this regard, you are requested to furnish the submission of explanation within 3 days on receipt of this letter.

From the information available to this office it is seen that you are beneficial owner in the bank account in HSBC Bank, Switzerland with following code BUP

40 Estate of Late Shri Vrajlal Chandulal Mehta

Name Code BUP MEHTA RAJESH VRAJLAL 5090112178 Further you aforesaid identification is linked to following bank account

Investment 5091230085 CH13 0868 9050 9109 Lexcore SA 10013 CH36 0868 9050 910931625 CH73 0868 9050 910905150 CH82 0868 9050 910910129 CH85 0868 9050 9109 40415 Further, through affidavit submitted to this office, you have admitted that you are beneficiary in the above mentioned account. However, from the perusal of your return of income for the year under consideration it is seen that you have not disclosed the same bank account in the return of income. In this regard, you are hereby asked as to why the amount of peak credit of $ 38,76,949.00 during the year should not be considered as your income and be added back to your income? Seal (PRAVIN D. SALUNKHE) Asst. Commissioner of Income Tax, Central Circle-20, Mumbai"

29. The reply to the notice was filed by Shri Rajesh Mehta vide letter dated 24.03.2014. Thereafter, search assessment proceedings have been dropped. The relevant extract of the reply furnished by Shri Rajesh Mehta is reproduced as under:

2. "The assessee is a resident of United Arab Emirates (U.A.F) for the aforesaid year. The status of the assessee is Non Resident Indian" as per section 6 of the Income tax Act 1961 for the aforesaid year. It may be noted that the assessee is Non Resident since 1971, i.e more than past 30 years

41 Estate of Late Shri Vrajlal Chandulal Mehta

31. Further, in the CIT(A) order dated 24.03.2017, Hon'ble CIT(A) made an incorrect observation that the base note in the name of Late Shri Vrajlal C Mehta contains the name of all the three accounts and there is no specific reference for Rajesh V Mehta in the said base note being owner of accounts of either Investment Lexcor S.A. or Euros Invest Ltd. Further, same observation was made in Para 30 of Page 37 of the same CIT(A) order.

32. Considering all the above submission, observations of Investigation Wing, Assessment order of Vrajlal Mehta and dropping of assessment of Shri Rajesh Mehta, it is submitted that there was no new evidence based on which enhancement was made. Further, the already existing information was subject to inquiry and scrutiny at various levels of department. Hence, enhancement of income done by Hon'ble CIT(A) is bad in law.

33.It is hereby clarified that, the subject matter of current appeal is mainly enhancement of income of the assessee on account of the balances in HSBC bank account in name of Investment Lexcor S.A. It is hereby further clarified that the assessee has not challenged the declaration of income on account of balances lying in HSBC Bank account in the name of Yeel Investment Inc'.

34. Further, assessee has filed an undertaking dated 17.10.2016 before the Hon'ble CIT(A) during the course of the appellate proceedings that the assessee shall stand with their disclosure of income in respect of Yeel Investment Inc and will not be seeking any reduction in the income offered at any stage. Also, the assessee will not be claiming any refund of the amount of taxes already paid except for inter-se adjustment of taxes paid amongst various assessment years.

43 Estate of Late Shri Vrajlal Chandulal Mehta of Late Shri Vrajlal C Mehta to prove that the Lexcor Investment never belonged to late Shri Vrajlal C Mehta. Merely claiming that the beneficial owner of Lexcor SA is Rajesh Mehta does not discharge the burden of proof of establishing the ownership of lexcor SA. The filing of an affidavit by shri Rajesh Mehta (brother of Shri Anoop V Mehta), as alleged by the Executors, before the CIT(A) that this lexcor SA Investment belong to him does not establish how it belongs to him and not to late Shri Vrajlal C Mehta when the base note indicate a single HSBC account in the name of Shri Vrajlal C Mehta indicating various trust accounts. Thus, the logical conclusion is that all investments accounts indicated in the base note of Shri Vrajlal C Mehta pertain to his investments only and having not been included in the Will devolve upon his legal representatives. The legal representative of Late Shri Vrajlal C Mehta is shri Anoopo V Mehta and this fact has not been disputed by either Shri Anoop Mehta or Rajesh Mehta. The reference to show cause notice issued to Rajesh Mehta by Investigation wing does not indicate anything (Please see para 28 and 29 of the written submission). That search assessment proceedings have been dropped and that there is no adverse finding with respect to claim of Shri Rajesh Mehta regarding ownership of Investment lexcor SA does not lead to conclusion that these assertions have been accepted. No further enquiry was required to be caused by the CIT(A) to establish that Investment Lexcor SA belongs to Late Shri Vrajlal C Mehta as all the investments in that base note of Vrajlal C Mehta belonged to him.

Please see para 33 wherein it is stated that it is hereby clarified that, the subject matter of current appeal is mainly enhancement of income of the assessee on account of the balances in HSBC bank account in name of “Investment Lexcor SA”. It is hereby further clarified that the assessee has not challenged the declaration of income on account of balances lying in HSBC Bank account in the name of Yeel Investment Inc. The assessee here is Late Shri Vrajlal C Mehta represented by his legal representative Shri Anoop V Mehta; this assessee has not challenged the enhancement of income on account of balances in HSBC Bank account in the name of Investment Lexcor SA and has not challenged the assessment of balances lying in HSBC Bank account in the name of Yeel Invesment Inc. Thus, the order of the AO and the CIT(A) in the case of Late Shri Vrajlal C Mehta represented by his legal representative Shri Anoop V Mehta is not challenged. Therefore, the order of the CIT(A) must be upheld.”

45 Estate of Late Shri Vrajlal Chandulal Mehta Vrajlal C Mehta and also before his assessing officer also. All the authorities have accepted his claim. Hence in our view, the Ld CIT(A) is not justified in enhancing the income by holding that the bank account standing in the name of Investment Lexcor SA belong to the assessee, without finding fault with the decision taken by other authorities and also without bringing on record any material to contradict the claim so made. Accordingly we set aside his order on this issue. The Ld CIT-DR has also urged in her written submissions that Shri Anoop Mehta as legal heir has not filed appeal. The issue of locus standi has already been addressed by us in the earlier paragraphs and hence this contention of Ld CIT-DR is liable to be rejected.

46 Estate of Late Shri Vrajlal Chandulal Mehta

Order has been pronounced in the Court on 29.8.2018.