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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. A. L. Saini: The captioned two appeals filed by the Assessee, pertaining to assessment years2006-07 & 2007-08, are directed against the separate orders passed by the learned Commissioner of Income Tax (Appeals)-21, Kolkata,[(in short the ld. CIT(A)], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 153A / 143(3) of the Income Tax Act, 1961 ( in short the Act), dated 31.12.2014.
At the outset itself, the ld. Counsel for the assessee submitted before the Bench that at assessment stage, the assessee has not been provided the certified copy of the bank account in HSBC, Geneva, Switzerland. The assessing officer used the information sheets for making the impugned additions in both the years, that is A.Y. 2006-07 and 2007-08. The Assessing Officer claimed that these information
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 sheets were received by the Government of India from a foreign government under the provision of exchange of information clauses of the Bilateral Double Taxation Agreement with that country. These information sheets relate to assessee, daughter of assessee, Ms.Yamini Agarwal and granddaughter Ms.Dipiksha Murarka and contain the information like name, residential address, date of birth, account No. with HSBC bank and money deposited in these accounts in dollar currency. The main grievance of the assessee is that these information sheets can not be a base to make huge addition therefore, he challenged these information sheets on the following counts: a) According to the assessee who is an individual cannot be termed to own the undisclosed income since the Assessing Officer did not bring on record any material on the basis of which he came to a definite finding that amount which was held in account having client profile code no. 5091157752 which was in the name of Bilipack Ltd. and wondered as to how the Assessing Officer determined the amount in the name of assessee as his own money. So according to the assessee it was incumbent upon Assessing Officer to first establish the identity of the Bilipack Ltd. and thereafter it was obligatory on his part to bring on record relevant and tangible material to hold that the money in the name of Bilipack Ltd. actually belonged to assessee. b) The assessee challenges the assertion of the Assessing Officer that the information has been received from the Swiss Government as per the Double Taxation Avoidance Agreement. So, therefore the authencity of the information and the material on which the Assessing Officer has started the investigation itself according to the assessee is legally invalid.
(c). These information sheets do not contain the name and signature of bank manager/authorized person of HSBC Bank, therefore these are fabricated information sheets to harass the assessee.
(d). These information sheets do not contain the seal of the HSBC Bank.
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 (e).These information sheets were provided to the assessee during the assessment proceedings but the assessing officer did not certify them that these sheets were received by him from HSBC Bank Switzerland through Government of India.
(f).These information sheets handed over to the assessee by the AO were not in English but another foreign language, therefore, assessee could not understand the true and correct meaning of various terms, wordsetc, hence could not defend his case properly at the assessment stage. The assessee also could not understand from the foreign language whether he is owner of account or just attorney.
(g). During the assessment proceedings a reference was made by the AO to the Swiss Authorities through the foreign tax and Tax research division of the CBDT requesting for information from HSBC, Geneva Switzerland. The response of the Swiss Authorities is awaited. Therefore, ld Counsel submitted before the Bench that assessment of income, if any, in the assessee`s case should be done based on the authentic and certified bank statement of HSBC Bank, which is awaited from Swiss authorities, hence matter should be remitted back to the file of the assessing officer for making fresh assessment (h).It will be evident that nowhere, on any of the six pages, name of HSBC Private Bank, Geneva, appears nor seal of the bank appears thereon. There is absolutely no material or information discernible from the said information sheets, which may enable any man of prudence to conclude and hold that these pages in any manner establish and prove that information contained therein represents details of bank account with any particular bank. Nowhere in any of the six pages reference is made to any particular bank or financial institution and therefore based on these information sheets which did not bear signature or seal of Bank the high pitched assessment should not be made. Moreover, these information sheets do not contain signature of any governmental authority either Indian or foreign. No statutory authority certified the authenticity of these documents nor source of the information was disclosed to the assessee.
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 (i) The ld. counsel pointed out that pages 3 to 6 of the information sheets contained month wise value of assets held in three client profile, pertaining to November, 2005 to February, 2007. Out of month wise or rolling balances, the ld. Assessing Officer selected the value of assets for the month of December, 2005 totaling USD 21,14,501/- and made addition in assessment year 2006-07. The Assessing Officer took up the value of rolling balances for the month of May, 2006 and December, 2006 aggregating to USD 35,85,086/- and made addition in A.Y. 2007-08 as well. The ld. Counsel therefore submitted that then values of same set of investment for the month of November, 2005 to February, 2007 were stated in the information sheets, then the Assessing Officer could not selectively pick up balances for three months and make the addition as undisclosed income. The ld. Counsel claimed that the addition amounted to double taxation of the same assets, which was not permissible and addition if any, should have been restricted in the right hands only to the peak investments.
On the other hand, ld DR for the Revenue has fairly agreed with the submissions of the ld. Counsel and stated before the Bench that there is a double addition in the hands of the assessee which needs to be verified by Assessing Officer afresh.
We have heard both the parties and perused the material available on record, we note that there is gross negligence of the part of the of assessing officer which is getting reflected in the conclusion para of the assessment order, which is being reproduced below for ready reference: “It is worthwhile to mention that Dipiksha Murarka is Granddaughter, Smt. Yamini Agarwal is daughter and in respect of Bilipack Ltd., the seized document vide page no.- 48 of SPM/8 was found from his residence which speaks about the certificate of Foreign Inward Remittance issued on 09.01.2004. Thus, it is crystal clear from the said records/ documents that the undisclosed amount was deposited in to undisclosed Bank account vide code Profile client no. 5091437453 & Nom (code BUP) Murarka Dipiksha(5090183141) in respect of entry of name of Dipiksha Murarka, vide Code Profile Client No. 5091438123 & Nom (code BUP) AGARWAL YAMINI (5090183310) in respect of entry of name of Smt. Yamini Agarwal and vide Code Profile Client No. 5091157752 & Nom structure juris.(code BUP) BILIPACK LTD (5090224794) in respect of entry of name of Bilipack Ltd with HSBC, Geneva, Switzerland. In view of the facts, Substantive addition is being made in the hands of Shyama Prasad Murarka. Hence, sum of Rs. 1,84,52,164/- (equivalent to $ 3,97,419.00 @ Rs. 46.4300 per USD in May 2006) Page | 4
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 &Rs. 1,68,01,915/- ( equivalent to $ 3,79,876.00 @Rs. 44.2300 per USD in Dec 2006), Rs. 1,36,34,587/- ( equivalent to $ 2,93,659.00 @ Rs. 46.1300 per USD in May 2006)& Rs. 1,24,20,580/- ( equivalent to $ 2,80,818.00 @ Rs.44.2300 per USD in Dec 2006) and Rs. 8,69,83,726/- ( equivalent to $ 18,73,438.00 @ Rs. 46.4300 per USD in May 2006) &Rs. 7,39,46,854/- ( equivalent to $3,79,876.00 @ Rs. 44.230 per USD in Dec 2006), totaling to Rs. 22,22,39,826/-( Rs. 18452164 + Rs.16801915 + Rs. 13634587 + Rs. 12420580 + Rs. 86983726 + Rs.73946854) is treated as undisclosed income deposited into undisclosed Bank account with HSBC, Geneva, Switzerland and added to the total income of assessee for A.Y- 2007-08. Penalty proceeding U/s 271(1)(c) is initiated separately.”
From the perusal of the addition made by Assessing Officer, we note that USD $3,79,876/- @ Rs.44.230 which comes to INR at Rs.1,68,01,915/- has been added twice ( see highlighted figures noted above). Not only that while computing the conversion itself mistake has crept it which tantamount to double addition which can be clearly observed from the above noted italics para. At one place conversion rate is mentioned at Rs.1,68,01,915/- whereas while calculating the same figure for coversion USD and same conversion rate, the addition was worked out at Rs.7,39,46,854/-($3,79,876/- @ Rs.44.230) which is wrong. Apart from this, there is over assessment in respect of the following addition: “Rs. 1,36,34,587/- ( equivalent to $ 2,93,659.00 @ Rs. 46.1300 per USD in May 2006)” The conversion amount ought to be at Rs.1,35,46,489/-, instead of Rs. 1,36,34,587/-. Therefore, prima facie itself we note that it is not only a case of double addition but high- pitched assessment also.
We note that another grievance of the assessee is that Assessing Officer has taxed ‘maximum holdings noted for the period (in USD)’ as well as individual month wise entries. Apart from this, the ‘maximum holdings noted for the period (in USD) 18,73,438, which belongs to Bilipak Ltd. has also been added in the hands of assessee as a part of substantive addition without spelling out the reason how the amount reflected in Bilipack Ltd. has been taxed in the hands of assessee. .
Now, we take conclusion para of the assessing officer for the assessment year 2006-07, which reads as under: “It is worthwhile to mention that Dipiksha Murarka is Granddaughter, Smt Yamini Agarwal is daughter and in respect of Bilipack Ltd. the seized document Page | 5
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 vide page no-48 of SPM/8 was found from his residence which speaks about the Certificate of Foreign Inward Remittance issued on 09.01.2004. Thus, it is crystal clear from the said records/documents that the undisclosed amount was deposited into undisclosed Bank account vide Code Profile Client No. 5091437453 & Nom (code BUP) MURARKA DIPIKSHA (5090183141) in respect of entry of name of Dipiksha Murarka, vide Code Profile Client No. 5091438123 & Nom (code BUP) AGARWAL YAMINI (5090183310) in respect of entry of name of Smt. Yamini Agarwal and vide Code Profile Client No. 5091157752 & Nom structure juris.(code BUP) BILlPACK LTD (5090224794) in respect of entry of name of Bilipack Ltd with HSBC, Geneva, Switzerland. In view of the facts, Substantive addition is being made in the hands of Sri Shyama Prasad Murarka. Hence, a sum of Rs. 1,65,44,160/- (equivalent to $ 3,67,077.00 @ Rs. 45.0700 per USD in Dec 2005), a sum of Rs.1,22,48,403/- (equivalent to $ 2,71,764.00 @ Rs. 45.0700 per USD in Dec 2005) and a sum of Rs.6,65,07,951/- (equivalent to $ 14,75,659.00 @ Rs. 45.0700 per USD in Dec 2005) totaling to Rs. 9,53,00,514/-is treated as undisclosed income deposited into undisclosed Bank account with HSBC, Geneva, Switzerland and added to the total income of assessee for AY- 2006-07. Penalty proceeding U/s 271(1)(c) is initiated separately.”
We note that in respect of Bilipack Ltd, client profile No.5091157752, the substantive addition made by assessing officer in respect of USD $ 14,75,659 in assessment year 2006-07, the relevant detail is given below:
Rs.6,65,07,951/- (equivalent to $ 14,75,659.00 @ Rs. 45.0700 per USD in Dec 2005)
In assessment Year 2007-08, the assessing officer made addition in respect of Bilipack Ltd, client profile No.5091157752, taking into account USD $ 18,73,438 which includes previous years` USD $ 14,75,659 for which addition had already been made by AO in assessment year 2006-07. The addition made by AO for A.Y. 2007-08 in respect of Bilipack Ltd is given below for ready reference:
Rs. 8,69,83,726/- ( equivalent to $ 18,73,438.00 @ Rs. 46.4300 per USD in May 2006)
From the perusal of the addition made by Assessing Officer, we note that USD $14,75,659 belongs to Bilipak Ltd. has been added in the assessee’s hand, as a part of substantive addition but we note that the USD $ 18,73,438 includes USD $ 14,75,659, hence it is a double addition in the hands of the assessee.
6.Another grievance of the assessee is that the assessing officer has not brought out as to the nexus of Bilipak Ltd, with that of assessee and what is the material on which the AO inferred that the money held in the account of Bilipak Ltd, actually Page | 6
Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 belongs to the assesssee. The ld Counsel submitted before us that complete address of Bilipak Ltd, with client profile code of 509115772 was available in the documents and is in the assessment records of the AO, however AO had not summoned directors of this company or enforced the attendance of the directors of the said company during the assessment proceedings and did not provide opportunity to assessee to cross examine them. According to assessee had the AO enforced the attendance of director’s of Bilipak Ltd, the substantive addition would not have been made in the hands of the assessee, in respect of amount reflected in the name of ‘Bilipak Ltd’. This clearly shows that the AO has failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion.
We note from page 26 to 29 of paper book which contains the month-wise balances of account profile of Bilipak Ltd, 31792YA and 31791DP for the period between November 2005 to February, 2007. We note that these pages contained the same investments in Bonds and liquid assets held in each of the three accounts for the aforesaid period. For example, a perusal of page No.26 shows that account profile, Bilipak Ltd- UDS $ 14,75,659.25, account profile No.31792YA- USD $2,71,764.26 and account profile No.31791DP- USD $3,67,077.76, all aggregating to USD $21,14,501. The investments in bonds and liquid assets continued in subsequent months also. Out of continuing investments, the assessing officer again selected balances in the month of May 2006 and December 2006 in all the three accounts and assess the value of investments for these two months as income of the assesee for assessment year 2007-08. We note that the investments which were continuing from month to month (that is, carry forwarding from previous month to next month), there was no reason for the Assessing Officer to assess the value of same investments two times/three times which needed to be examined, as it will tantamount to double taxation which is not permissible in law. Thus, it is abundantly clear that the assessing officer has not properly discharged his statutory duty to the assessee, the right income, in the hands of the right person and in right assessment year. Right means legally correct as per law and not the wrong hands etc. We are of the opinion that assessment should not result in Shyama Prasad Murarka Assessment Years:2006-07 & 2007-08 double taxation of the same investment, if any, and it need to be verified by the Assessing Officer from the correct source and ascertain the true and correct facts keeping in mind that only in the right year the right income in the right hands only should be taxed. we rely on the judgment of the Hon’ble Supreme Court in ITO Vs. CH. Atchaiah (1996) 218 ITR 239 (SC). In these circumstances, we are of the view that right person has not been identified by the assessing officer.
Based on the above discussion, we are constrained to observe that the AO has failed to discharge his obligation to conduct a proper inquiry to ascertain the income of the assessee and the tax payable by him to the UOI.
Therefore, taking into account the dictum of the Hon`ble Supreme Court in the case of CH. Atchaiah (supra), proper inquiry needed to be conducted by Assessing Officer to ascertain the income of the assessee. Therefore, we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment in accordance to law after giving opportunity of being heard to the assessee.
In the result, the both appeals of assessee are allowed for statistical purposes.
Order is pronounced in the open court on 15.02.2019.