CHANDRIKA TAPURIAH, MUMBAI vs. DCIT CEN CIR 2, MUMBAI

आयकर अपील�य अ�धकरण “डी” �यायपीठ मुंबई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI �ी डी. म�मोहन, उपा�य� एवं �ी संजय अरोड़ा, लेखा सद�य के सम� । BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM Sr.No. ITA Nos. Appellant Respondent A.Ys. Chandrika Tapuriah Dy. CIT, 9, Rowdan Street, Central Circle-2, 3822/M/10 to 2001-02 to 1. Udayachal Building, Flat No. Mumbai 3828/M/10 2007-08 20, 5th Floor, Kolkata-700 017 PAN : ABPPT 9474 K 8298 to Chandrika Tapuriah Dy. CIT 2001-02 to 2. 8304/M/11 2007-08 अपीलाथ� क� ओर से / Appellant by : Shri Chetan Karia & Shri Haresh P. Kenia ��यथ� क� ओर से/Respondent by : Shri Girish Dave & Ms. Kadambari Dave सुनवाई क� तार�ख / : 17.02.2016 Date of Hearing घोषणा क� तार�ख / : 25.04.2016 Date of Pronouncement आदेश / O R D E R Per Sanjay Arora, A. M.: The instant Appeals agitate separate orders by the Commissioner of Income Tax (Appeals)-36, Mumbai ('CIT(A)') of even date (26.2.2010) dismissing the assessees' appeals contesting his assessments under section 153A r/w s. 143 (3) of the Income Tax Act, 1961 ("the Act") for assessment years (A.Ys.) 2001-02 to 2006-07 and u/s. 144 for 2007-08. The other set of seven appeals is in relation to the penalty u/s. 271(1)(c) for these years. The appeals raising common issues, were taken up for hearing, and were accordingly heard together.

2 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Quantum Assessments 2. The assessments presently under appeal before us (as well as the corresponding penalty appeals) are consequent to a search action u/s. 132(1) of the Act at the assessee’s different, as it appears, Short Street and Camac Street, premises, at Kolkata on 05.1.2007. The same formed part of a concerted action by the Revenue on Hassan Ali Khan and other related parties at different places across India.

4.1 The pleadings with regard to the assessment being without jurisdiction revolve around canvassing the scope of the assessment, claimed, relying on the decision in the case of CIT vs. Continental Warehousing Corporation [2015] 374 ITR 645 (Bom), to be restricted where the assessment is not pending (as on the date of search u/s.132(1) or requisition u/s. 132A), so that it does not abate, to the books of account, documents

3 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) and materials, etc. not produced, but found during the course of search or requisition, or to the undisclosed income discovered as a result of search or requisition. The Revenue’s response is that there has been no assessment either u/s. 143(3) or 144 or even processing of the return u/s. 143(1) at any time prior to the date of search (05.1.2007). This in fact is the admitted position, reflected in the tabular chart prepared and furnished by the assessee (APB 10/pg. 1823). The limitation on the scope of the assessment could only be for a year for which assessment stands made, as vide order u/s. 143(3) or s.144. The instant assessments are the first (original) assessments, and there is therefore no question of any restriction on their scope to the findings of search or requisition. The assessee’s argument and, consequently, objection is thus largely to no avail. We may though clarify that her challenge is thus not to the jurisdiction to assess per se, toward which the provision of section 153A is plainly clear, nor adversely commented upon in Continental Warehousing Corporation (supra), but to the scope of the assessment u/s. 153A where it follows an unabated assessment, i.e., which has attained finality.

4.2 The assessee in this regard also assumed another argument before the first appellate authority, i.e., as to non-issue of notice u/s. 143(2), to which passing reference was also made before us and, accordingly, responded to by the ld. special counsel, Sh. Girish Dave, by placing reliance on the decision in the case of Ashok Chaddha vs. ITO [2011] 337 ITR 399 (Del), holding the issue of notice u/s. 143(2) as not mandatory in the case of an assessment u/s. 153A and, besides, on a third member decision in Sumanlata Bansal vs. Asst. CIT (in ITA Nos. 525 to 530/Mum/2008 dated 20.5.2015 - reported at 2015-TIOL-1053-ITAT-Mum-TM), passed following the same. The factual position is that the assessee did not file any return in response to the notice u/s. 153A. How could then, it is wondered, she claim non-assumption of proper jurisdiction by the Assessing Officer (A.O.) for want of notice u/s. 143(2)? True, the assessee claims to have communicated to the A.O., vide letter dated 31.3.2008, to

4 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) treat the return/s originally filed u/s. 139 as in response to notice u/s. 153A. So, however, we do not find any merit therein as the non-furnishing of the return in response to notice u/s. 153A stands confirmed in view of the levy of penalty u/s. 271F of the Act (for A.Ys. 2001-02 to 2006-07). Though there is no order by the tribunal confirming the levy of penalty u/s. 271F for non-filing of returns u/s. 153A on record, as in the case of the assessee’s husband, Kashinath Tapuriah (KT), the same stands levied, for all the relevant years, vide order/s dated 05/3/2008, which appears to have not been contested, attaining finality. In fact, admittedly no return was filed for A.Y. 2004-05 (APB 10, page 1823), while for A.Y. 2006-07 the original return was furnished only on 26/5/2008, i.e., after the time prescribed under section 139(1) or for a belated return u/s. 139(4), so that the same is a non-est return in law. The assessee therefore could not (for these years) take the plea that original return be considered as in response to a notice u/s.153A, issued in all cases on 21/9/2007 consequent to the transfer of the assessee’s case with the central charge, Kolkata on 07/8/2007 (refer para 3 of the assessment order). It is notable that, despite being called for by the AO, the assessee did not adduce copy of the return, stated to be originally filed, for any of the years, i.e., while stating that the return/s filed originally may be treated as the return/s in response to the notice/s u/s.153A. For A.Y. 2007-08, the search year, the return could not have been filed as on the date of search in-as-much as the previous year had not ended by then. In fact, the assessee did not admittedly file any return of income u/s. 139, also not complying with notices u/s. 142(1). The impugned assessments, i.e., for all the years under reference, is accordingly neither without jurisdiction nor bad in law. Gd. 1 for all the years is, therefore, dismissed.

5 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) non-allowance of proper opportunity by the first appellate authority, who in fact also sought a remand report from the A.O., placed at APB-2 (pgs. 294-295). The decision to admit, or not to, the said additional evidence is a subject matter of his appellate order, which could be impugned on merits on any score, including on that aspect. The assessee in fact made a similar prayer before us as well, per her submissions in pursuance to Grounds 2 to 4, and which we shall consider separately.

6.1 Grounds 3 and 4 overlap, and were accordingly argued together. The same assail the impugned order, again, for want of proper opportunity to the assessee to explain and present her case before the assessing authority in-as-much as the ld. CIT(A) failed to appreciate this aspect, as well for having completed the assessment without awaiting the completion of the investigation in the matter by the Directorate of Enforcement, the agency of the Government of India (GOI) investigating economic offences. With regard to the latter aspect, the same only needs to be stated to be rejected, the proceedings under the Act being independent, statutory proceedings, which are to be completed in a time bound manner, on the basis of and upon considering the material (brought) on record and the explanation/s furnished in the matter, and which, needless to add, is an aspect that concerns the merits of the assessment/s. Its completion, impending the investigation by Enforcement Directorate (ED), which also does not form part of the Revenue, cannot be faulted with. Reference in this context may also be made to the detailed observations by the tribunal in the matter vide paras 11.2, 12 and 128 of its’ order in Hassan Ali Khan vs. Dy. CIT (in ITA Nos. 4156-4162/Mum/2010 dated 29.2.2016).

6.2 As regards the plea as to non-allowance of proper opportunity by the A.O., the same we find stands raised before the first appellate authority, and duly dealt with him in his order (as vide Ground 3 at para 7 for A.Y. 2001-02, reproduced as under),

6 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) stating that no submission in this regard was made before him even as the A.O. had allowed sufficient opportunity to the assessee: ‘7. The appellant neither filed any reply nor any detailed submissions nor appeared. Despite giving many opportunities, the appellant did not produce any books of accounts. In response to notice u/s. 153A, the appellant did not even file the copies of return claimed to have been originally filed by her u/s. 139. The appellant did not submit to the AO the requisite details supported by evidences and books of account to substantiate the queries raised. The appellant adopted delaying techniques and dragged the case till the time barring date on 31.12.2008. The AO therefore applied the provisions of section 132(4A) and 292C of the Act in the case of the appellant and the assessment made on the various issues.’ The ld. counsel for the assessee, Sh. Chetan Karia, CA would toward this state that the first effective notice seeking details and clarifications on the seized materials was issued to the appellant only on 07.11.2008, while the information received from the ED communicated, also show causing the assessee in its respect, only on 19.12.2008. Both these were, thus, toward the fag end of the assessment, leaving insufficient time to respond to the detailed questionnaire/requisition. This is supported by a plea for admission of additional evidences. The Revenue responds by listing the several notices – ten in number, issued u/s. 142(1), which remained uncomplied with. The matter, though pertinent, is purely factual in-as-much as, if adequate opportunity stands not allowed by the assessing authority, it may vitiate the proceedings. The charge, however, as we find, is misplaced. The assessment order (vide paras 3 to 7.4/pgs. 2-6 for A.Y. 2001-02) deals extensively with the proceedings as transpired before the assessing authority, with the assessee being conveyed, vide letter dated 24.4.2008, that she may collect the copies of the seized documents as may be deemed relevant, and the copies being furnished to the assessee’s representative Shri Pradip Shah (power of attorney in whose favour was submitted on 17.9.2008), even as his authorization only extended to representation and not to collect/make copies, also adverting to the order sheet entries dated 05.9.2008, 25.9.2008,

7 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 17.11.2008, 21.11.2008, and 02.12.2008. True, a detailed questionnaire stands issued late into the assessment proceedings, which were on in parallel for all the years under reference, sifting through the plethora of materials gathered. The assessee – whose case is one of denial, either before or subsequent to the said notices, was, however, recalcitrant. How, then, is the said date relevant – the assessee only denying any knowledge of any account, throughout denying his association with Hassan Ali Khan (HAK) or of maintaining any foreign bank account? The information with regard thereto comprises the bulk of questionnaire by the Revenue. The queries in respect of domestic transactions, we observe have in fact been responded to, as vide letters dated 01.12.2008 (submitted on 05.12.2008), 05.12.2008, 23.12.2008 & 25.12.2008 (submitted on 26.12.2008) by the assessee. This is also what the A.O. states in substance vide his remand report dated 04.2.2010 to the ld. CIT(A) (APB 2, pgs. 294- 295). The additional evidence is also qua transactions in or through such foreign bank accounts. Then, again, the assessee could have furnished her explanation/s before the first appellate authority, meeting any deficiency in presenting her case earlier. Ground after ground, we find the ld. CIT(A) to state of either the assessee reiterating her explanation before the A.O. or not making any substantive reply. No wonder, heavy emphasis is laid down before us on admission of additional evidences, placing reliance on the two letters by the assessee to the A.O. (i.e., dated 13.12.2011 at APB- 5, pgs. 871-873), followed by letter dated 12.9.2013 (at APB 5, pgs. 853-854), listing eight foreign bank accounts in the names of herself and her husband. The second letter, issued in response to a requisition u/s. 142(1) to furnish copies of such accounts (APB-5, pg. 877), is accompanied by eight separate instructions dated 12.9.2013 (one dated 20.9.2013) (APB 5, pgs. 855 – 870) by KT, in the format suggested by the Department, to the respective banks for furnishing all the accounts recorded. Both the letters are much after the completion of the assessment proceedings, nay, even after the conclusion of the proceedings at the first appellate stage. How, then, can they be of any consequence in-so-far as the assessee’s charge of non-grant of proper

8 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) opportunity by the A.O. is concerned? How, rather, could the Revenue modify the impugned assessments in any manner. In fact, this information is also furnished only in response to notice u/s. 142(1) dated 12.12.2011 (APB-5, pgs. 874-876) issued in pursuance to s. 148 proceedings initiated on 31.3.2011 in the assessee’s case for A.Y. 2004-05, which enlists all these eight (8) foreign bank accounts, information on which, thus, was with the Revenue. Further, these are mere requisitions (on the respective banks), not accompanied by the bank account statements, so that by itself this is of little moment as far as the assessments are concerned. On the contrary, it establishes non-co-operation as well as a deliberate design to mislead the Revenue. All that the said letters may therefore exhibit is of a change of heart at the end of the assessee, even if belatedly, and correspondingly an attempt to co-operate with the Revenue, even if on being cornered. In this regard, given the secrecy/privacy laws of the relevant countries, even perhaps the letter of December, 2011, not accompanied by a similar requisition on the respective banks, do not amount to much, except perhaps signify a willingness to co-operate and mislead no longer, i.e., assuming, again, the list furnished to be complete. The second letter, after nearly two years of the first one, and only at the instance of the Revenue, is only a follow up of the first letter. We in fact observe a lack of earnestness on the part of the Department as well, which should have acted with a much more alacrity; it requisitioning the said information only vide its letter dated 11.7.2013. True, the assessments had already been framed, yet, the same were pending in appeals, so that the information is relevant, besides the accounts, particularly where not disclosed, being in violation of other laws as well. So, however, the burden of proof, in view of the materials in the possession of the Revenue, duly confronted to the assessee, clearly is on the assessee, and which remains completely un-discharged. The assessee’s case, with regard to the relevant Grounds, in view of the foregoing, rather than being proved, gets disproved, so that the same is without merit.

9 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 6.3 Next, we may examine plea for admission of additional evidence. The issue was argued at length before us. Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, which is a provision regarding production of additional evidence before the Tribunal, and reads as under: ‘29. Production of additional evidence before the Tribunal. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.’

Relying on the decision by the Hon’ble Apex Court in the case of K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, it was submitted that the scope of the words ‘substantial cause’ occurring in rule 29 stands explained therein to mean that where evidence on record is sufficient to enable the court to pass an order, it may yet admit additional evidence for any other substantial cause. The ld. special counsel for the Revenue would rely on the decision in the case of in Ibrahiam Uddin and Anr. [2012] 8 SCC 148, specifically referring to para 41 (at page 168 thereof), to say that the power to admit additional evidence u/r. 29 ‘for any other substantial cause’ is to be read in context of the earlier words ‘requires… to enable it to pass orders’, and cannot be admitted where evidence on record enables the tribunal to pass an order. The argument raised by Sh. Karia is, in our view, even prima facie not valid. If the words ‘substantial cause’ in rule 29 are not to be read in the context of the words ‘requires… to enable it to pass an order’, which is imminent from a plain reading of the rule, how, it may be asked, is the same to be read and understood as? That is, what then would inform or guide the understanding or the meaning of the said words? Surely, if the said words had received a different or expanded meaning, the Apex

10 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Court would have explained the same, dilating on the exact scope of the said words, and how the same are to be understood and applied, so that the same could only mean to be able to do justice as between the parties, in the context of the matter before it. The scope of the words ‘substantial cause’ occurring in rule 29, which is similar in terms to Order 41, Rule 27(1) of the Code of Civil Procedure, 1908, was, with reference to the decision in the case of K. Venkataramiah (supra), understood to mean that though the court may not strictly be said to require additional evidence to pronounce a judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it could pronounce the judgment in a more satisfactory manner, which would in that case be a case covered under Rule 27(1)(b) of the said Code. In short, the power for admission of additional evidence is to be exercised for a just and fair disposal of the appeal. We do not find any dichotomy between the two decisions by the Hon’ble Apex Court cited supra. There is accordingly no question of the decision by it’s division bench in Ibrahiam Uddin and Anr. (supra) overriding or prevailing over the larger (five member) bench decision in the case of K. Venkataramiah (supra); it only explaining the latter. The former decision, including para 41 thereof, is thus judicially binding on us, and accordingly is to be considered as conclusive, settling the law in the matter. We may in this regard also profitably refer to the discussion at para 3.3 (pgs. 6- 9) of the order by the tribunal in the case of HAK (supra). This order has in fact, due to the commonality and over-lap of the issues; rather, even to a large extent the evidences as well as the arguments advanced, to be read in conjunction with the said order, to which therefore frequent (and specific) references stand made; the reasons and principles guiding the said decision, being equally applicable, informing the present decision as well. The power of the tribunal to admit additional evidence, it notes with reference to the settled law in the matter, is strictly limited. Rule 29 places a total ban on the parties to the appeal to produce additional evidence, oral or documentary, before the tribunal, which though is vested with judicial discretion to

11 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) allow production of the same under specified circumstances, i.e., either to enable it to pass an order or for any other substantial cause, or where the Revenue authorities had decided the case without affording sufficient opportunity to the assessee to adduce the same. The latter aspect is not in dispute in the present case, which, it would be appreciated, could not, where so, strictly qualify to be additional evidence – the assessee being prevented to produce it in the first place. The words ‘substantial cause’, as a holistic reading of the several decisions cited as well as the analysis in the case of HAK (supra) referred to would suggest, cannot be read removed from or de hors the purpose for and toward which the adjudication under reference is being made. As explained by the Hon'ble jurisdictional High Court in Ahmedabad Electricity Co. Limited vs. CIT [1993] 199 ITR 351 (Bom) (FB), the jurisdiction of the tribunal is not restricted to the subject matter of the appeal, i.e., the points challenged in the memorandum of appeal before it, but ranges over the whole assessment. If the evidence is not to enable it to pass an order in a more satisfactory manner, with reference to the issue/s arising, which require its deliberation and adjudication, what purpose, one may ask, would it serve? The same has to necessarily relate to the adjudication process and, consequently, to proper adjudication, i.e., the end to which the entire exercise is geared toward and attempts to seek.

6.4 This brings us to our first observation (factual) in the matter. We find no evidence which would enable us to arrive at a decision, much less in a satisfactory manner. As explained by the Hon’ble Courts time and again, the admission of additional evidence under rule 29 (which is pari materia to the provision of Order 41, Rule 27(1) of the CPC) is to be considered at the stage of considering the issue on merits. The reason is, again, simple. It is only upon examining the issue arising before it for adjudication, that the tribunal could appreciate the import or the purport of the evidence or the material being now sought to be produced and relied upon, i.e., by way of additional evidence. In other words, the process necessarily involves a

12 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) correlation between the evidence and the issue/aspect of assessment under examination, i.e., is to be evidence–issue specific; a particular evidence may pass muster while another not. Apart from, however, broadly mentioning the contents of various paper-books stated as containing additional evidences, no specific pleadings were made qua any evidence, save one, and which, it would be appreciated, has to be while pleading a specific issue/ground of appeal. The matter, given the law in the matter, is clearly factual, requiring the consideration by the appellate authority if particular evidence shall better serve the cause of justice in-so-far as it relates to adjudication of issue/s under reference. There is accordingly no scope for generalized pleadings, as made. The only evidence to which our specific attention was drawn with reference to an issue is the account statements (of bank account no. 835-357-902-3 with Credit Suisse Private Banking, Zurich) for the period 01.7.2001 to 28.12.2006 (APB-5, pgs. 883-913). The same would, however, be of no avail as, as pointed out during hearing by Shri Dave, with reference to the disclaimer qualifying the said statement (at pg. 890), that the said statement is not suitable for tax purposes. Also, as argued by him, the same originating in a foreign territory, is not apostilled and, accordingly, cannot be accepted in evidence. This, then, makes a short shrift of the fore-going discussion on the law in the matter, which was yet preferred by us in view of the lengthy arguments in the matter canvassed before us. No wonder, the ld. AR has chosen not to make a separate and specific prayer for admission of additional evidence u/r. 29, as ought to be and is generally the case, but seeks to make out a case in its respect, and argues the same with reference to grounds of appeal, contesting the non-allowance of proper opportunity by the assessing and the first appellate authority. The two aspects, save to the extent are clearly interrelated, are separate and distinct. If there has been non-allowance of proper opportunity by the Revenue authorities, an aspect considered by us earlier, that by itself is a ground sufficient for seeking a set aside qua the relevant issue/s. The same, depending on the facts and circumstances of the case, could be an open set aside or for furnishing some specific evidences, either

13 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) way serving the appellants’ cause. Rather, the admission of additional evidence at first appellate stage itself includes, as a consideration, the refusal to or non-grant of sufficient opportunity by the assessing authority to produce the same, besides being prevented by sufficient cause to be able to do so, both generally as well as which the assessee was specifically called upon to (rule 46A(1) of the Income Tax Rules, 1962). That apart, that does not restrain the first appellate authority to, to enable him to dispose an appeal or for any substantial cause, including the enhancement of assessment, admit the evidence for the first time. The denial of opportunity to furnish evidence by either the assessing or the first appellate authority, in exercise of their power to adjudicate, is thus a separate ground - not under challenge before us, from that of non-allowance of opportunity, except where the lack of opportunity itself relates to or is toward non-production of the evidence, so as to form a sub-set thereof. That there has been no failure to provide proper opportunity to the assessee to present her case before them by the authorities below, i.e., at the assessment and the first appellate stage, has been found by us as a fact. The whole purport of the foregoing is to explain that, save and to the extent factually interrelated – for which the law itself provides, non-grant of opportunity to present its case by the Revenue and the admission of additional evidence before the tribunal, are separate and distinct aspects of the appellate proceedings before it. This constitute our second observation in repelling the case for the latter before us, the first being toward the matter being, in substance, factual. We have, it may be added, already found no merit in the assessee’s argument of the Revenue to have awaited the conclusion of the proceedings before the ED prior to the completion of the assessment under the Act and, consequently, keeping even the assessment proceedings – which are only an extension of the appellate proceedings, in abeyance, on that score. This, then, brings us to the third limb of the discussion in the matter. The assessee, as discussed above, in response to a requisition u/s. 142(1), placed request on different foreign banks in which she and her husband, KT, have since admitted to

14 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) have accounts, for furnishing copies of account since inception of the account to its’ closure. We have already explained that the same cannot by itself be considered as an evidence, but only an expression of earnestness on the part of the assessee to come clean. There is also no way to hold the said list of bank accounts as exhaustive. We have, however, admitted the report by UBS AG, Zurich, dated 30.10.2007 to ED in the case of HAK (supra) (refer para 3.3 of the said order), to which reference stands also made by the assessee in support of her case, noting that the same as well as the facsimile dated 15.1.2007 by the Swiss Federal Government to the Embassy of India, both available at the time of assessment, ought to have been taken into account, providing, in all fairness, a copy thereof to the assessee. The same, to whatever extent, may have a bearing on the present assessments as well. This is as the Transfer Instructions (TIs), which form the bulk of the additions toward unexplained balances in foreign bank accounts, are for most part from the accounts of or controlled by HAK. The basis of the TI based additions is that the same would only be given effect to, and even if some reason not, the very fact of drawing the TI implies balance in the relevant account, at least to the extent. The rationale has been found by us as valid. The matter, however, has been, considering the entirety of the facts and circumstances of the case and for the reasons stated therein (refer paras 11-12, 15, 25, 30, 49, 65A & 106 of the order supra in case of HAK), remanded back to the file of the A.O. to allow the assessee an opportunity to produce the copy of the relevant accounts, establishing his case, which would, it opined, prove or disprove the assessee’s, on whom the burden of proof lies in view of the material in the possession of the Revenue, case. This, it considered as toward a just and fair disposal of the appeals in the given facts and circumstances, as analyzed by it in the various paragraphs to which reference has been made, applying the law in the matter of admission of additional evidence by the tribunal in conformity with its’ understanding thereof. Now, if, the said account statement/s for the relevant period reveals no balance, or a balance which does not match at all with the transfer instruction, clearly drawing of the transfer instruction

15 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) shall be of little consequence. The further question of it being given effect to, and the inference flowing there-from, would also not arise. In other words, as a corollary and a necessary adjunct to having decided in favour of the restoration of the assessment qua the additions made on account of transfer instructions from HAK/HAK controlled bank accounts, the corresponding additions with reference to the balances in the transferee accounts would require a like remission. Accordingly, all our observations as stated in the foregoing paragraphs in the order of HAK (supra), to the extent relevant and not inconsistent with the facts as may be found in the present case, would equally apply and hold for the instant appeals as well. This, it may be stated, decides the relevant grounds. True, however, in-as-much as the considerations for the same flow from the principle informing the admission of additional evidence/s by us as well as, similarly, in the case of HAK, the same represents our view point in the matter, so that it was considered only proper to state the same while discussing the said aspect of the assessee’s appeals.

6.5 The foregoing discussion decides Grounds 3 and 4 of the instant appeals for all the years.

Asst. Year 2001-02 7. Ground 5: Annexure 12 to the assessment order is a detail of transfers, mentioning the name/s; the account number/s; and amount/s, to be transferred to the listed accounts (which Standard Chartered bank, Dubai), from UBS AG, Zurich. The same is dated 12/3/2001, bearing the assessee’s name and account number (18 - 220 3316 - 01) for USD 7 Million (INR 32,60,60,000) (APB-2, pg. 381). The assessee, on being show caused in the matter, denied the transaction/s. There was sufficient evidence on record of the assessee and her husband, KT, having links with HAK and, further, holding bank accounts and investments outside India, particularly at Dubai and Switzerland. No improvement in her case having been made by the assessee, the

16 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) amount of the transfer instruction, assessed as income by way of unexplained deposit, was confirmed by the ld. CIT(A), so that, aggrieved, the assessee is in further appeal.

17 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) establishing facts. Reference in this regard is also made to paras 9-12 and 6-7 in the case of HAK (supra) and KT (in ITA Nos.3815-3821/Mum/2010) respectively (annexed as Annexure A to this order). We may though clarify that where the amount is not received (or to the extent it is not), the TI itself cannot be the sole basis of the addition, i.e., unless the Revenue has material to exhibit the assessee’s right to the amount/s stated therein. Reference is also drawn to paras 15, 25, 30, 49, 65A and 106 of the order in the case of HAK (supra) –in public domain. The matter, as in the case of other assessees, is accordingly set aside to the file of the AO for fresh determination. All the facets of the issue, including the explanation of the transactions by the assessee, are kept open. This decides all TI-based additions in these appeals, viz. Gd. 5 for AYs 2002-03 and 2006-07. We may, however, before concluding this aspect, add that qua some accounts, the assessee has stated that the bank account/s under reference does not belong to her but to her husband, KT and, therefore, no addition could be made in its respect in her hands. This contention shall be considered on merits qua each account, i.e., where made. In respect of the instant Ground, this plea cannot be accepted; the assessee herself admitting her account vide her letter dated 13/12/2011 (APB 6/pages 936 – 938).

18 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) to allow the assessee an opportunity to consider the merits of the assessee’s claim per its’ original return, filed u/s.139(4), bringing the correct income to tax. We decide accordingly.

Asst. Year 2002-03 10. Ground 5 is qua a TI-based addition in the sum of USD 100 Million (INR 471.60 crores). The same is in pursuance to a Minutes and Agreement dated 07/8/ 2001 entered into between HAK and KT, whereby USD 200 Million were to be transferred to KT nominated accounts towards KT’s share of profits earned on account of diverse business operations, mainly in India, conducted in joint-venture between HAK and KT companies (specified therein) during the years 1983 to 1990, which is to be effected latest by December, 2001. The Agreement, found in search from the residences of both, HAK and KT, is annexed by way of Annexure-C to this order. The transfer under reference, a part of the total transfer of USD 200 Million, is to Roberts, McLean & Co. (P.) Ltd. The assessee’s case is that, quite clearly, the amount belongs to KT, and so is the position with regard to the bank account (# 0835 - 357902 – 3) with Credit Suisse, Zurich, i.e., the account to which the amount stands (or is to be) transferred. In short, the assessee is nowhere involved, and cannot therefore be implicated.

19 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 8. Roberts, Mclean & 100.00 CREDIT SUISSE FIRST BOSTON ZURICH, Co. Ltd. SWITZERLAND FOR FURTHER CREDIT TO CREDIT SUISSE PRIVATE BANKING ZURICH, PARADEPLATZ 8, CH 8070 ZURICH SWIFE COUE: CRESCHZZ 80A BENEFICIARY ACCOUNT # 0835-357902-3 (CHANDRIKA) ATTN: MR. REMO MAURER 9. Roberts Mclean 35.00 TO UNION BANCAIRE PRIVATE ZURICH Services Pvt. Ltd. ATTN. Mr. W. Mueller In favour of account # 713.169 AC Correspondent Bank - JP MORGAN CHASE BANK NEW YORK (SWIFT ADDRESS CHASUS 33) FOR FURTHER CREDIT UBP GENEVA (UBPGCHGG) FOR FURTHER CREDIT UBP ZURICH (UBPGCHZZ) 10. R M. Investment 65.00 CREDIT L YONNAIS, Bahnhofstrasse 3, and Trading Co. ZURICH Pvt. Ltd. SWIFT: CRL YCHGG ACCOUNT # 08-06702.7 498.50

Note: Particulars at Sr. No. 1 to 7, being not relevant, have not been reproduced.

The 3 transfers, with one of which we are presently concerned (at serial number 8), stands discussed at paras 30.4 and 30.5 of the order dated 29/2/2016 in the case of HAK (supra), reproduced here-in-below: ‘30.4 At this stage, it may also be relevant to dwell on the three (3) transfers, for USD 200M, listed at serial numbers 8 to 10 of the Table. The same are apparently in pursuance to the Agreement dated 07/8/2001 (refer Ann. A). Though not so contended, it may be argued, and is indeed open to be so, that the same are in pursuance to the said

20 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Agreement and, therefore, being only toward transfer of the share of the profits (of KT) earned in the past, no taxable event arises for the current year. The argument, appealing at first sight, is not tenable. Firstly, in- as-much as the payment under the Agreement dated 07/8/2001 is to be made latest by end December, 2001, the onus is on the assessee to show that no payment/s there-under was made, and it is this payment/s, sought to made/made in November, 2002 (or around about). That is, the onus to prove the nexus, by exhibiting that no payment had been made prior thereto, is squarely on the assessee. Continuing further, the Agreement, found in search from the residences of both – the assessee and KT, is, on close examination, found to be a make-believe, entered perhaps with a view to transfer funds without attracting corresponding tax liability by ascribing their origin or source to past profits. The total amount of profit, worked meticulously (at USD 280.54 M), matches the amount stated to have been earned by the assessee (from 1985-1989) from his two companies, stated to be not functional, in which he has sole invested interest (refer para 8.1). Do the two identical figures refer to the same profit/s, stated to be earned in the same time frame, at one place, by the assessee abroad (no such income reported in India) and, at another, through their companies, from their business operations mainly in India. Both the assessee and KT being tax residents in India for those years, with their profit sharing ratio - from their joint venture, being clearly defined, the amount ought to have been, and would therefore have been, where so, returned for those years by the joint venture company/entity. As also the income, claimed as earned by the assessee from the said companies, which assumes the character of his personal income. Much less, the same finds no reference in the accounts of any of the companies. What are their businesses, stated to be carried on mainly in India, and how did it result in accumulation of funds abroad? Is there any link between the two identical profits? How is the share of KT, at 50%, worked to USD 200M? Is there any contemporaneous proof of earning of profits, or of their yielding further returns, either in India or abroad? How has the quantum been worked out, suggesting maintenance of elaborate accounts. That, despite so, the two did not settle accounts, or even appropriate their respective share in accounts, or even otherwise signify the same, much less return or report the same to the competent authorities in the relevant jurisdictions, for over two decades. It calls for a complete and willing suspension of the sense of reality to accept the statement at face value. In fact, KT, per his written notes (APB-5, pgs. 918-919) himself states that the said document is fabricated, and that he came to know HAK only in 1994. There is no

21 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) gainsaying that the entire endeavour, which should under normal circumstances yield a host of evidences or trail, is sans any in the present case, viz. as to the joint venture or any business operations undertaken, the nature of which is itself unspecified, yet, profits were earned there-from, transmitted and invested - as it appears, abroad, all without any evidence. And all that has been retained – by both the parties, or survives, is the Agreement dated 07/8/2001! Even if therefore it is shown by the assessee that the TIs for USD 200M are in pursuance of the Agreement dated 07/8/2001, the source thereof as being profits earned – to that or whatever extent, in the past, shall require being shown or reasonably proved, for it to be accepted. Then, again, is the question of avenues where the profits were invested, in India or abroad, or partly in one and partly in another, and also the returns fetched during the intervening years. 30.5 The matter, accordingly, for both the sums, i.e., USD 140.5 million (for which the two TI/s dated 07.11.2002 have been found), as well as for the balance, is restored to the file of the assessing authority for adjudication afresh, with observations and directions as contained at para 12 and, as the case may be, para 8 of this order. We may further add that there is nothing to show that any TI was proposed for an amount of USD 50 million, which is stated to be for personal requirements (appearing at Sr. No. 7 of the table). The addition toward the same is deleted. Two, the payment as listed at Sr. No. 6 of the table, being in relation to an Agreement dated 18.7.2001, due to be paid, has been also noted by us for A.Y. 2002-03 (vide para 22(b) of this order). Without doubt, the same being in respect of a single payment, could, even assuming so, be brought to tax for either year. The A.O., who has added the purchase amount as well as qua payment in its respect, shall have regard to this aspect. We decide accordingly, and the assessee’s ground is partly allowed and partly allowed for statistical purposes.’

The Tribunal did not, for the reasons stated therein, accept the truth of the Agreement dated 07/8/2001, stated as a fabricated and planted document by KT himself, and that the real facts of this document be ascertained (APB-5, pg. 922). It though admitted the transfer instruction/s, covered u/s. 292-C. That is, saw the two as separate and distinct, decoupling them, so that the appellant was required to explain the TI, including the basis thereof. The same shall hold equally for the transferee as well, as discussed in the case of KT (supra) (para 7). This leaves us with the

22 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) assessee’s contention that, even so, the bank account belongs to KT and, therefore, the amount could not be assessed as income in her hands. ‘Chandrika’, as stated, is just a nickname or the title of the account, which in any case does not bear any deposit/s. Surely, income can be taxed only on the right person, and even its being taxed in the hands of another is no bar for it being brought to tax in hands of the right person. The facts of the case shall accordingly will have to be examined with a view ascertain the applicability of this principle. There is, to begin with, no evidence to suggest it to be the bank account of KT, in which case it would certainly be a case of the Revenue pursuing the wrong person. The TI clearly states the beneficiary’s account number and name. There is nothing to indicate of it being a nickname or title. Even where so, the nickname is only presumably of the beneficiary. The ‘safe-keeping’ account statement (for the period 1/7/2001 28/12/2006/APB 5, pgs. 883-913), also referred to in the remand report dated 4/2/2010 (APB 2, pgs. 294-295), mentions the name of the account holder as well as of the customer, as “Chandrika”, the assessee’s initial name. How would, then, one may ask, the Revenue come to the conclusion that it is the KT’s account? Unless, that is, he or his wife, who denied any knowledge of the transaction/s or of having any foreign bank account, had spoken the truth, explaining the transaction. Then, by letter dated 16/1/2009, the assessee seeks statement of the said account, since inception, from the Bank (APB 5, pgs. 880-881), posting another reminder thereto on 15/2/2009 (these letters are a part of the Revenue’s record). How, then, can the assessee claim of being not aware of or not holding any foreign bank account? How, again, her claim of the said account being of KT be accepted? True, there are similar letters (to the Bank) by KT as well (APB-5, pgs. 878-879), but what does that prove? Only that the two were in knowledge of the said account, since its inception, as well as of being associated therewith, with the assessee having proprietary interest therein. Surely, it is not the KT’s benami account. The provision of sec. 106 of the Evidence Act, 1872 shall apply in the facts and circumstances of the case. Further, why, we wonder, did

23 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) not be assessee state so upon being confronted there-with in the assessment proceedings? Section 114, Ill.(g) of the Evidence Act, would entitle the Revenue to presume that the information withheld would be adverse to the assessee. Apparent is to be regarded as real unless shown otherwise, and the onus for the same is on the person claiming otherwise. Why, even if KT were to be the account holder, men handling the finances of their women folk is not uncommon in Indian society, and is rather a common feature of the business (in the unorganized sector). The assessee as the beneficiary of the account has proprietary interest therein. In fact, both assessee and KT denied having any foreign bank account, even deposing to that effect on oath before the investigating authorities (of the Revenue), even as noted in the remand report supra. They now turn-around to furnish a list of eight foreign bank accounts, claimed as belonging to them, establishing perjury. The Hon’ble Apex Court in Chuharmal vs. CIT [1988] 172 ITR 250 (SC) clarified that when it is said that the rigour of the rules of evidence as contained in the Evidence Act are not applicable to tax proceedings, it does not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so. The assessee, in our view, thus cannot be now (i.e., before us) be allowed to take a stand that it is not she, but her husband, KT, to whom the account belongs to, with she being only the title-holder. The principle of tax being imposed on the right person is true enough, but the dispute here is of who, in the facts and circumstances the case, is to be regarded as the ‘right person’, the named beneficiary (and account holder) or another. The assessee can definitely be regarded as the right person. Here it is also be clarified that the assessee’s claim of being an outsider, and nowhere involved in either the Agreement dated 07/8/2001 between HAK and KT (or was not aware of it), or their business relationship or ventures, becomes an irrelevant consideration considering that we have already in the case of HAK (supra) held the said Agreement to be a ruse; KT himself denouncing it. The much touted business

24 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) relationship/interest is shrouded in complete mystery/secrecy, for us to give any credence thereto. What only survives is a transaction of transfer of funds by HAK to the assessee’s account, and which is to be considered on the anvil of section 69A. We have already found the provision to be applicable even in the case of the transferee in- as-much as the presumption would be of the funds having been received (or entitled to be received) on own account. The decision in the case of Tolaram Daga vs. CIT [1966] 59 ITR 632 (Assam), relied upon by the assessee, has no application in the facts and circumstances of the case. In the facts of that case, the credit brought to tax u/s.68 was to the account of the assessee’s wife, in the books of a firm in which the assessee was a partner. It was under these circumstances; the wife admitting to the deposit, that it was held that there could be no inference of the same representing the assessee’s money merely because the creditor was his wife. The facts of the instant case, as a reading of the foregoing paragraphs shall show, are completely different. The monies stand transferred, or are being sought to be transferred, to the assessee’s account, who is unable to satisfactorily explain the nature and the source of the deposit or of her entitlement thereto. The assessee’s said plea would thus be to no avail. All other contentions are kept open. The matter, as in the case of other TI-based additions, is set aside to the file of the AO for fresh determination in accordance with law with like directions. We decide accordingly.

25 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Asst. Year 2003-04 13. Gd. # 5 is qua a disallowance of expenditure claimed per the Profit & Loss Account, at Rs.30,836/-, and stands decided vide para 9 of this order, adjudicating Gd. # 6 for A.Y. 2001-02; the facts and circumstances as well as the respective cases of the parties being the same.

Asst. Year 2004-05 14. Gd. # 5 is toward purchase of foreign exchange (at Rs.74,614/-) from Globe Forex, Kolkata on 15.1.2004 on the basis of information received there-from. The assessee having not filed any return for this year either u/s. 139 or section 153A, the impugned assessment, which is thus u/s. 153A r/w s. 144 (and not u/s. 143(3)), is the original assessment, with this being the only addition, being on account of unexplained expenditure u/s. 69C. The assessee’s explanation, not accepted, is of the same having been purchased out of her withdrawals for the year, dismissed for being unsubstantiated (refer paras 8 and 10 of the assessment and the impugned order respectively).

26 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) though not be construed as having expressed any view in the matter. This also decides Gd. # 8 for A.Y. 2006-07. We decide accordingly.

Asst. Year 2005-06 16. Gd. # 5 is qua an addition for Rs.1,90,874/- on the basis of the working of cash- in-hand with KT and the assessee for three years, as under, based on seized material (pgs. 3 and 4 of Annexure CIL-1A dated 05.1.2007), revealing as under: F. Y. 2004-05 Rs.1,90,874/- F.Y. 2005-06 Rs.9,85,874/- F.Y. 2006-07 Rs.15,87,874/-

27 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Asst. Year 2006-07

28 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Maurer Phone-44 33 29 041) Account with: Credit Suisse Private banking Zurich, Parade Platz 8, CH 8070 Zurich, Swift Code: CRESCHZZ80A 5 A-7/20 19.12.05 TRIPLE ‘A’ UBS 04.01.06 Beneficiary: Bonds of the value of Account No. 0835-899786-7 US $ 1.695 billion (Black Prince) Atten: Mr. Remo Maurer (Phone-44 33 29 041) Account with: Credit Suisse Private banking Zurich, Parade Platz 8, CH 8070 Zurich, Swift Code: CRESCHZZ80A

As evident, these instructions are: a) addressed to UBS AG, Post Fach 8098 Zurich; b) issued by Hassan Ali Khan (HAK), in December, 2005; and c) refer to his account no. 206-794.786 with UBS AG, Zurich. The identity of Mr. Remo Maurer is not in doubt. He was in fact the same bank official of whom KT complained of creating hurdles in the progress of the work of HAK in his e-mail (letter) dated 25.10.2006 to one, Ravinderji (downloaded on 08.1.2007 during the course of search). In view of the Revenue, KT and HAK were engaged in money laundering, transferring funds to, among others, the assessee’s account. Both the accounts, titled ‘Black Prince’ and ‘Chandrika’ were considered by the Revenue as belonging to the assessee, i.e., of her being the beneficiary. KT, vide his letter dated 05.12.2008, submitted in the assessment proceedings, replied denying any knowledge, further stating that he was not involved in any such (money laundering) activities and, further, that ‘Chandrika’ does not refer to or mean ‘Chandrika Tapuriah’. The assessee, vide her reply to the A.O. of even date, adverted to the reply of her husband (KT), which replies were considered as self-serving by the Revenue. In appeal, though the assessee furnished a copy of the safe-keeping account

29 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) (# 0835-357902-3) for the relevant years (01.7.2001 to 28.12.2006/APB-5, pgs. 883- 913), the same was not found convincing by the ld. CIT(A); the same bearing no debits or credits and, again, carrying a disclaimer of being not suitable for tax purposes. The addition, since confirmed, the assessee is in further appeal.

30 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) viewed/considered, and has been by us. The Revenue is not, where it seeks to invoke the provision of, or finds section 69A (or other provision of the relevant Chapter) as applicable, obliged to locate the exact source of the credit; the manner of its’ earning, etc. The charge of money laundering or reference to an email by one, Ralph Gantenbein, Director of Credit Suisse, Zurich to KT, transmitting the TIs, which are stated to be in terms of a discussion between them, is secondary. The same would be relevant and may assume significance had the assessee or KT (who denied any knowledge thereof) explained the transaction/s resulting in the impugned transfers. The matter, both in the case of HAK and KT, stands set aside for fresh determination with a view to allow an opportunity to explain the transactions. We have explained, with reference to the decision by the Hon'ble jurisdictional High Court in Ahmedabad Electricity Co. Ltd. (supra), rendered relying on several decisions by the Hon’ble Apex Court, held that the appellate jurisdiction of the Tribunal ranges over the whole assessment, and is not necessarily confined to the matters raised by the assessee or to the points decided by the first appellate authority, which may be challenged in appeal before it (refer pg. 368 C & D of the Reports). The Revenue is at liberty to adopt any course as deemed proper in law, where and to the extent it finds the assessee’s explanation, which may now be furnished in the set aside proceedings, as acceptable or, as the case may be, unexplained, i.e., consistent with its findings. We may further add that we are conscious that of the two accounts, one is titled ‘Chandrika’ and the other ‘Black Prince’. Even though there is no mention of the assessee’s name in the second case, the very fact of the transfer being by HAK/from HAK controlled account, found from the assessee’s residence, would only imply of it pertaining (belonging) to the assessee or, at best, her husband, KT (refer s. 292C). The said inference, therefore, cannot in law be faulted with. We, accordingly, as for the other TI based additions in the case of assessee (refer paras 8 and 11), as well as other assessees, restore the matter back to the file of the A.O. with like directions for fresh determination in accordance with law. The

31 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) assessee, needless to add, and even as assured by the ld. counsel, extend full co- operation to the Revenue, whose endeavor must be to enforce the law, bringing full facts on record. It is this, it may be appreciated, that guides and informs our decision for the set aside. We decide accordingly.

32 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) the renovation project of their said house property, does not necessarily imply of the payment being made by her, or even of any payment having been made. Though normally such payment would be made by the husband or by his HUF, there can be no hard and fast rule in the matter. Further, the retention of the document only confirms an agreement over the rate quoted, stated to be the final rate. There is no indication of payment, which even where so, would imply a payment of Rs.1 lac, i.e., as an advance. The interior work would commence only later, i.e., after 31.3.2006, and the payments would stand to be made subsequently, with the progression of the work. In fact, the payment for civil and electrical work is also stated for being undertaken during February and March, 2006, only upon completion of which this work would commence. Accordingly, we find no basis to hold of any payment being made during the current year, save Rs.1 lac on the acceptance of the rate, by way of an advance and, accordingly, direct for deletion of the balance. We decide accordingly, and the assessee gets part relief for Rs.7.25 lacs.

33 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) same came to be added and confirmed in the absence of any satisfactory explanation as to the source of the said, admitted expenditure by the assessee. The assessee before us states of the expenditure being duly reflected in the regular accounts of KT and KT (HUF), also adverting to similar additions in case of her husband, KT. The matter, very clearly, requires being restored to the file of the A.O. to allow the assessee an opportunity to establish her claims of the expenditure claimed to be incurred through cheques, as having been duly discharged from the regular/accounted/disclosed sources. This also decides Gd. # 6 for A.Y. 2007-08. We decide accordingly.

34 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 29. We have heard the parties, and perused the material on record. Admittedly, no evidences, which stand adduced before us (at APB-7/pg. 1287-1326), were produced before the Revenue authorities. How, we wonder, is then the action of the Revenue authorities infirm in law, liable to be modified? It is not the case of the assessee’s return and accompanying documents being not properly considered or of lack of proper opportunity to the assessee to present her case. The assessee’s balance-sheet as at 31.3.2005 and 31.3.2006, filed along with the returns for the respective years, reflect an investment in shares at Rs.19.98 lacs and Rs.13.91 lacs, indicating churning of shares, including as its appears, fresh investments therein. We, accordingly, only consider it proper in the interest of justice to allow the assessee a final opportunity to prove her claims before the A.O. We decide accordingly.

A.Y. 2007-08 31. Gd. # 5 is qua an addition for Rs.15,87,874/-, based on seized material, toward unexplained cash-in-hand. The same stands decided vide paras 16-17 of this order, adjudicating Gd. # 5 for A.Y. 2005-06; the facts and circumstances as well as the respective cases of the parties being the same. We decide accordingly.

35 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 2006-07, shall be only applicable for the instant ground as well. We decide accordingly.

Penalty Appeals 34. We next consider the penalty appeals, i.e., the levy of penalty for all the years under reference u/s. 271(1)(c) of the Act. The assessee’s case in the quantum proceedings, as shall be apparent from a reading of the tribunal’s order on quantum, has been largely one of denial. The tribunal, however, considering the totality of the facts and circumstances of the case, considered it proper to – in the main, restore the matter back to the file of the assessing authority, either by way of an open set aside or for a limited purpose, for fresh determination after examining the assessee’s case, per a speaking order. The additions/disallowances made in the first round may thus not survive or stand modified – in whole or in part, in the set aside proceedings. It would, in our view, be therefore improper to proceed to examine the correctness of the levy of penalty at this stage. The explanation/s that may now stand to be offered by the assessee, i.e., even qua the additions/disallowances that stand confirmed by us or may obtain in the second round, which are supposed to reflect the facts, i.e., the truth of the matter, may be substantially different from that obtaining in the first round - the assessee herself admitting to several relevant facts. Accordingly, we set aside the levy of penalty for all the years under reference. The AO, after passing fresh order/s of assessment in pursuance to our order in quantum proceedings, shall qua each addition/disallowance made/sustained, consider the issue of levy of penalty afresh as per law, show causing the assessee in the matter. Needless to add, the assessee shall be allowed proper opportunity to present her case before him. We decide accordingly.

36 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Order pronounced in the open court on April 25, 2016 Sd/- Sd/- (D. Manmohan) (Sanjay Arora) उपा�य� / Vice President लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 25.04.2016 व.�न.स./Roshani, Sr. PS Encl.: Annexures A (A1 & A2), B & C, forming an integral part of this order. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT - concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai

37 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08)

This page is left intentionally blank as it contains details not forming part of the order but internal to the Tribunal.

38 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Annexure A-1

Extract from the order of Hassan Ali Khan (in ITA Nos. 4156-4162/M/10/M/10)

‘9. The next and the sixth ground is in respect of unexplained money with UBS AG, Zurich, at Rs.447 crores. The Revenue, on the basis of the information received from the ED, found the assessee to have issued a transfer instruction to UBS AG on 16.7.2000 to transfer funds in the sum of USD 1 million dollars (1000000) from his account number (space left blank) to another account with the said bank (account number specified) of KT (name of the person), further requesting for an immediate action in the matter (annexed by way of Annexure 11 to the assessment order). The assessee was, accordingly, show caused (vide notice dated 19.12.2008), to which no effective reply was submitted; the assessee merely denying holding any foreign bank account. The same was, in the view of the A.O., clearly unacceptable in the face of such specific information, so that the assessee stating of being not aware of any such transaction or being ignorant of the said document would be of no consequence. Rather, several other documents were found during search, which independently established close relationship between the assessee and KT; their frequent travel abroad together, as well as cross border transactions. In fact, some such documents support and complement each other, providing corroboration, as well as establishing their truth. Reference toward the said discussion is drawn to paras 11.1 through 11.5 (pgs. 9-11) of the assessment order. The document clearly established funds to that extent with the assessee on that date (16.7.2000), the source of which had not been satisfactorily explained. The said amount was, accordingly, assessed as ‘income’ as unexplained money (deposit). The nature of the assessee’s arguments in support and toward its case before the ld. CIT(A) stand already discussed at para 6 above.

39 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) the Department, Swiss National Bank. The same clearly states the assessee to have three accounts with it, opened only in the year 2001, bearing numbers 206-790786, 206-789758 and 206-794786, the third being in the name of his wife (RHAK), with the assessee holding a power of attorney (in his favour) in its respect. The assessee’s accounts, opened on 30/7/2001, were never funded and there were no transactions of any kind (including bond and other security transactions). The said accounts were never made operational, and closed on 17.10.2001. The third account, also opened on 30/7/2001, contains only one transaction by way of deposit of USD 61,031.30 in cash on 15.8.2001, of which USD 60,700 was transferred by way of a wire transfer to a third party individual (i.e., not Mr. Khan or his family members) to a account at a bank in United Emirates (UAE) on the same day. There were no other transactions on this account (including no book or remitted bond or other security transaction). This account was also closed on 17.10.2001. The fourth account disclosed in the report is (#760001), which is stated to be in the name of an Indian National (with POA in favour of the account holder’s wife), opened in December, 1994, and closed in January, 1998, i.e., over 3 years before the assessee opened an account with UBS. The reason for opening this account was because the account holder was, as stated by him, expecting a transfer from a HAK account with UBS, Zurich (refer para 3.4 of the report). The several Transfer Instructions (TIs) found in search reflect this account as of KT. On the basis of this communication, the assessee claims that it stands established that he did not have any account (No. 6667663) with UBS Zurich, as alleged by the A.O., or any other account for that matter. No tax liability would, therefore, stand attracted on the basis of alleged transfer of funds to another account with the said bank (#760001) in the name of KT. The ld. DR, on the other hand, would submit that no explanation, apart from denying the said transfer, pleading ignorance, stands advanced by the assessee at any stage. His stating of having no foreign bank account stands also conclusively

40 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) disproved. In this view of the matter, the same has to be concluded against the assessee.

‘The Union Bank of Switzerland July 16, 2000 Zurich

Attn. Dr. Walli (Through UBS Dubai) Dear Sir,

Please transfer a sum of US Dollars One Hundred Million (US $ 100,000,000) from my account no………………………………… , to the account of Mr. Kashinath Tapuriah – account No. 760001, with your Bank in Zurich. This may please be treated as my instructions, and I request you to take immediate action and confirm.’

Thanking you,

Yours Truly,

HASSAN ALI KHAN’

The Transfer Instruction is on the letter-head of ‘Hotel Inter-Continental’, Dubai, bearing its postal address, telephone and fax numbers. The assessee has not denied having signed the said document (i.e., the original copy, meant for being transmitted to the bank) or of being not in Dubai at the relevant time (July, 2000), or on 16/7/2000 specifically (which would also stand to be confirmed from his passport) and, thus, in fact tacitly admits to having instructed his bank in the manner stated. We are conscious that the document was not found during search (or survey) under the Act, for the presumption of section 292-C to apply thereto. The same has been provided to

41 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) it by ED, and there is nothing on record to indicate that it has been requisitioned u/s.132A. In fact, the ED itself joined the search proceedings undertaken by the Revenue on 05.1.2007 (refer statement of facts by the assessee before the first appellate authority). The document, however, has been officially transmitted by ED, the Government Agency investigating the foreign/cross border transactions of the assessee, including genesis of sums in these accounts (and now under the auspices of a Special Investigation Team (SIT) constituted by the Hon’ble Apex Court), to enable the Revenue to take appropriate proceedings under the Act. For all we know, it may well be one of the documents with the Revenue to form a reason to believe u/s. 132 of the Act. There can be in any case no presumption that the same has been obtained by ED illegally or without following the due process of law. The apex court in Pooran Mal vs. DIT (Inv.) [1974] 93 ITR 505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevancy, so that unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out. The reliability of the document cannot be doubted, and it has strong persuasive value. In fact, the assessee himself, at no stage, denies that the same was not recovered from him. Such like transfer instructions were also recovered from the assessee’s residence as well as of KT during search. Why, one may ask, should the assessee (or KT) retain them for years, which itself is a strong indicator of the truth of the document, i.e., of the transfer instruction having been in fact issued. It is notable that the assessee does not, at any stage, including before us, explain the reason for, and/or the circumstances under which the transfer instruction was issued. Or, for that matter, any of the transfer instructions, some of which bear his (transferor) account number as well as his signature. That is, on what account was he required to transfer funds to KT. The Agreement dated 07.8.2001 between them (referred to earlier at para 8.1/enclosed as Ann. A) apart, the search revealed several documents and materials evidencing a close relationship between the assessee and KT. The assessee per his notarized statement

42 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) dated 30/6/2003 infra admits to him being his advisor. They travelled abroad together frequently (pgs. 35, 40, 43-45 of Annexure A-2, seized from KT’s residence). A signed power of attorney by KT, jointly with another, as representative of Roberts, Mclean and Company Ltd., Kolkata, in favour of the assessee, to deal with the property at 10A, Prithviraj Road, New Delhi (pg. 98 of Annexure A1) was found, which also shows the assessee to be well connected. Signed blank papers by the assessee were also found from the possession of KT (pages 68-70/Annexure A1). Again, a loan of Rs. 5 crores from assessee (lender) to RM Consulting Ltd., Kolkata (borrower), a company of KT, was found in search (pgs. 71-94 of Annexure A-1). Further, though the transfer instruction under reference predates the said Agreement dated 07.8.2001, is it that the monies were sought to be transferred to KT in satisfaction of the obligation recognized, in writing, subsequently, by the said Agreement? We say so as the agreement is only with a view to settle the accounts between the assessee and KT, so that pending final settlement, transfer could take place, i.e., is a distinct possibility.

11.2 The assessee claiming that no transfer of funds had, however, been effected, would be of little moment in-as-much as the addition is toward unexplained money or bank deposit. True, the same may be lying in his account, in whole or in part, from an anterior date, falling in a preceding year. However, it is for the assessee to exhibit so - in explanation of the nature and source of acquisition of the money he is found to be in possession of, as statutory obliged to u/ss. 69/69A, lest the deposit be deemed as his unexplained income for the relevant year, i.e., the year for which he is so found. It is open for the assessee to show that the sum of money – to whatever extent, is brought forward from an earlier period, or otherwise does not represent his own capital – as where it is by way of a loan, or despite being his capital, represents a capital receipt, so that it cannot be brought to tax as his income. He, however, does not do so, and merely denies the existence of the account without adducing any evidence toward the

43 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) same. Again, it is open to be argued that the transfer instruction would not by itself establish the balance in account to that extent. A transfer instruction (TI) is akin to a (non-negotiable) cheque drawn on his bank by the account holder, specifying also the account particulars of the transferee. Its’ preparation itself is an expert job, with the assessee being assisted in this regard by the bank officials (also refer para 11.4). We have already clarified that the document is to be regarded as reliable, with persuasive evidentiary value. The same implies that such an instruction was in fact issued to his bank (UBS AG) by the assessee. If that be so, the said account, by necessary implication, had balance at least to that extent on the relevant date. True, the burden of proof that there is unexplained money, investment, etc. is on the Revenue. The same, however, can be discharged by it by establishing facts and circumstances from which a reasonable inference toward the same can be drawn (refer: Sudhakaran (C. K.) vs. ITO [2001] 279 ITR 533 (Ker)). The assessee is required to disprove the said document, and the logical inference/s that flows there-from. The assessee has, however, produced before us the copy of the report (dated 30.10.2007) submitted by UBS AG, Zurich to Switzerland National Bank, claiming it to have been since forwarded to ED, as also patent from the UB’s letter dated 28.12.2007 to ED (refer para 3.1 - which though being unsigned has not been admitted in evidence). The said letter/report (dated 30.10.2007) has been admitted in evidence. It is therefore clear that the matter is under investigation by ED, which has initiated proceedings under PMLA against the assessee, which are - as per the assessee, and which is not disputed by the Revenue - under-way. Cleary, the charges under PMLA shall only obtain where the assessee is found to have maintained bank account/s abroad, holding substantial sums therein. That is, the very basis on which the amount is sought to be assessed as income in his hands in-as-much as the same has not been disclosed or satisfactorily explained as to its nature and source of acquisition. The question that, therefore, arises is whether it would be proper to, pending the

44 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) proceedings under PMLA, which in fact the Revenue is only aware of, conclude the proceedings under the Act. The assessee has also sought to raise this issue per his written submissions, stating that the ED concluded its initial investigation only in 2011, filing a complaint against him (with the Hon’ble Sessions Court, Greater Mumbai) on 1/5/2011, so that the assessments were liable to be set aside to this score alone. The proceedings under the Act are statutory and independent proceedings, to be decided on the basis of the materials and evidences brought on record as well as the explanations furnished, i.e., on the basis of the facts as established therein. They are, further, to be concluded in a time bound manner, which, being a statutory prescription, cannot be breached. It is the asssessee who, on the contrary, has been recalcitrant, disregarding the said proceedings, even choosing to be not represented before us, relying ostensibly on written submissions instead. The said non-representation is only deliberate, denying valuable assistance to the court/adjudicating authority, a negation of the due process of law, besides causing loss of valuable court time, a national asset, which needs to be conserved and put to optimum use. Be that as it may, the plea of set aside of assessment by the assessee on that ground, which is de hors any ground of appeal, is without merit.

11.3 The transfer instruction under reference does not bear the account number of the assessee-transferor, and the A.O. wrongly mentions the same as ‘6667663’ (refer para 11 of the assessment order). We are conscious of this fact, and without which the document is incomplete. It also does not bear the assessee’s signature. At the same time, it needs to be borne in mind that the office copy of a document generated is usually retained as such, i.e., without signing, or ascribing thereon information deemed confidential. It is this that prevailed with us, so as to examine the case further despite the document being not complete. Why, Annexure 12 to the assessment order, again a transfer instruction (dated 23.7.2000) by the assessee on UBS AG, Zurich,

45 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) duly signed by him, bears the said account number (6667663). It the proximity of the dates of the two transfer instructions that perhaps led the A.O. to assume this account number for transfer instruction dated 16.7.2000 as well.

11.4 We, next, consider the UBS report dated 30.10.2007, on which the assessee relies. We appreciate that this is a communication by the bank, located in another sovereign jurisdiction, to another, exercising regulatory power thereon (as per the laws of that country), so that it could be argued that it cannot therefore be relied upon; it being even not clear if the same stands communicated to the Indian investigation authorities. At the same time, however, it needs to be appreciated that the same pertains to the assessee. Why, the same is itself titled: ‘Results of investigation into Hassan Ali Khan and his alleged relationship with UBS’. And is clearly in consequence to the details sought by the GOI (through proper channel), as a sovereign, with regard to the activities of one of its nationals in that country. Surely, GOI is concerned with the underlying activities resulting in the financial flows in-so- far as they relate to or have a bearing on the criminal and civil (including tax) liability of that person as per the laws of India. The same, along with the report dated 29.10.2007 by Deloitte AG to the Bank, has apparently been conveyed by it to ED vide its’ communication dated 28.12.2007, as the enclosures to the said letter to ED indicate, and which is also one of the documents sought to be adduced by the assessee as additional evidence. The Deloitte report makes it abundantly clear that the information provided (by UBS) was not complete (refer paras 2.14, 3.3 and 3.5 thereof). Para 3 of the said report clearly brings out the scope of the work performed and its limitations. In respect of a fax dated 05.4.1997 by one, Hassan Ali Khan (from Account No. 710.085) to Account No. 760001 (of KT), it states that there is no evidence if the said person was the same Hassan Ali Khan who is the subject of the report (para 2.13). Then, again, the UBS report (dated 30.10.2007) states that A/c No. 760001 (the beneficiary account in the impugned TI) was closed in January, 1998,

46 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) while at the same time stating that the said account was opened as a transfer from HAK account was expected (refer para 9 above). That the said account belongs to KT is admitted, stated to be opened in 1986 and closed in the year 2000 (refer communication by Chandrika Tapuriah (CT) to the A.O. dated 13.12.2011 (at APB-5 – in the case of KT/CT, pgs. 871-873)). The UBS report, however, states of the said account having been closed in January, 1998, pointing to yet another inconsistency with reference to the said report. However, the moot question is: If there was no HAK account at the relevant time, how could this constitute a basis for opening the said account? There should thus be a HAK account/s with UBS AG at the relevant time, or, in the very least, one (or more) account, opening of which was certain, for the bank to have opened the said account in December, 1994. Though the letter dated 28.12.2007, being unsigned, has not been admitted by us, it is clear that the report dated 30.10.2007, stated to be on the basis of an internal investigation by the bank, is based on the Deloitte AG report dated 29.10.2007, as admitted by the assessee himself (refer his written submissions, viz. para 10 of WS-1). The ED, by the assessee’s own admission per its written submissions, has pressed charges against the assessee u/ss.3 and 4 of PMLA in respect of two transactions (pg. 27 of WS-1): a) Laundering of 93 million US Dollars to have been acquired by the applicant in the year 1997; b) USD 700,000 to have been acquired by the assessee in the year 2006. As afore-referred, the assessee has himself, vide transfer instruction dated 23.7.2000, duly signed by him, instructed UBS AG, Zurich to transfer USD 500,000 from his account number ‘6667663’, disproving the UBS’s said report. The complaint under PMLA by ED, in-as-much as it pertains to the year 1997, also suggests that the A/c No. 710.085 (as per the Deloitte Report, relied by the assessee) is of the assessee. UBS officials, such as Markus Grossman, Dr.Peter Weilly, Reto Hartmann, have been found associated with, and been specifically assigned as relationship manager, portfolio manager, etc., to the assessee, to look after his business interests and manage

47 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) his accounts. The Agreement dated 18.07.2001 with M/s. Clamai AG (refer paras 20- 22 of this order) was facilitated by the Bank, with meetings in its respect being also held at the Bank premises itself. Complete reliance therefore cannot be placed on the bank’s said report. In fact, the transfer instructions or reference to accounts have been found during search where the reference to the account is not by name/s but in code/s. We may, if only to demonstrate this, refer to the three (3) transfer instructions, which are the subject matter of Gd. 6 for AY 2002-03 (at para 25 of this order), all the three mentioning only the (beneficiary) account number, with one being code named, or euphemistically named, as ‘Black Prince’. The said name, which also appears in TI for USD 72 M (refer para 30.1), has been found by the ld. CIT(A) to be of ‘Soir Contracting and General Trading Co., WLL Zurich, i.e., of an existing company, also confirming the account number, which is the same for both the TIs (refer page 37 of his order for A.Y. 2003-04). The Bank recognizes the account holder only by the code name, providing access upon successfully navigating through a filtering process, including passwords, etc. The UBS report also clarifies (per para 3.5 thereof) on the coding configuration adopted by the Bank qua account numbers. We may at this stage also note, as also sought to be emphasized by the ld. DR during hearing, that privacy and banking laws in Switzerland enable opening of bank accounts in such a manner, as well as placing stringent conditions on the exchange of information in respect thereof. The facsimile date 15.1.2007 supra, in response to the request for mutual legal assistance by the GOI, which is the other document admitted by us, very clearly states that the Swiss Federal Office of Justice shall require, besides others, a confirmation that the investigation (in India) is in respect of criminal proceedings and there is a relation between the predicate offences and the accounts of Hassan Ali Khan in Switzerland, before it would be able to proceed with the said request. The same only endorses the concern expressed by the ld. DR, i.e., as far as tax proceedings in India are concerned. We may further add that it is only after September, 2001 attack in New York, USA,

48 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) that the banking industry across the globe woke up to the threat of financial flows arising from or in respect of such terrorist and illegal activities, devising KYC (know your customer) norms. And which have since been gradually updated and adopted across nations, including India.

11.5 The Revenue, to proceed against the assessee, must have definite information with regard to the assessee being in possession of monies or holding investment. This is in view of the salutary principle of common law jurisprudence, embodied u/s.110 of the Evidence Act, i.e., that possession implies ownership, so that the onus of proving that the possessor is not the owner is on the person so alleging. This principle is also applicable to tax proceedings, incorporated in the Act (under Chapter VI), so that the principle would be attracted to a set of circumstances that satisfies its conditions. The expression ‘income’ under the Act, a term of wide import, is applicable to section 69A, among others, of the Act (refer: Chuharmal vs. CIT [1988] 172 ITR 250 (SC)). The assessee, claiming to have no foreign bank accounts, concedes subsequently (on the basis of a report by UBS AG, Zurich - which has been taken as part of the record) to have a limited banking relationship with UBS AG, Zurich. The said report, for the reasons afore-discussed, cannot be considered as completely reliable. In fact, a notarized statement by the assessee (by and before Nicholas Ronald Rathbone Smith, Notary Public of London, England on 30/6/2003) at London (provided by ED), referred to in the Revenue’s petition dated 01/6/2015 (refer para 3.2) - a part of the record, being in fact annexed to the assessment order for quite a few years (AYs 2005-06 to 2007-08/Ann. 13 for AY 2005-06), is most revealing in this regard, and annexed to this order as part thereof (Annexure C). The same charts or transverses the assessee’s relationship with UBS, commencing with the opening of an account with UBS, Singapore (UBS-Sin) with an amount of USD 500,000 in 1982, up to the date of the statement. Further, that the account had a balance of USD 560 million in December, 1997. Dr. Peter Weilly (wrongly spelt as Dr. Walli

49 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) in the TI dated 16/7/2000), who also visited India several times during the period the assessee could not travel outside India, is stated to be the assessee’s portfolio manager, and Kashinath Tapuria as his advisor. The account was later moved to UBS AG, Zurich, Switzerland, as first suggested by Dr. Weilly in 1986. In December, 2002, the assessee authorized one, Philip Anandraj (who was found staying at his Pune residence at the time of search), duly accepted, to operate his Locker with Barclays Bank, Plc, issuing a letter (duly signed) dated 23.12.2002 to the said Bank, at London. In fact, PA’s – with whom the assessee entered into a consulting agreement to represent him internationally in April, 2001, extended stay at the assessee’s residence itself confirms the assessee’s overseas financial and business interests. We are conscious that no account number is mentioned in the transfer instruction. Could that, however, be interpreted as it bearing no account number, defeating the exercise or the very purpose of issuing the same? It is not unusual not to write information, deemed confidential, except in the original copy, i.e., on the basis of which the execution is to be made/is sought. Likewise for the non signing of the transfer instruction; it being usual not to ascribe the signature on the office copy. In fact, TIs have been found in search, as Annexure 12 to the assessment order for the current year, which bears both the account number (written by hand in the place provided for it in the letter, as in the instant transfer instruction), as well as the assessee’s signature. The absence of these attributes would, thus, in our view, be of little moment. In-as-much as, however, the account number, which is not mentioned, could be any of the accounts which the assessee is found to be associated with, he shall be required to obtain the relevant record of his accounts (i.e., accounts of which he is either the holder or beneficiary or POA holder), and satisfy the Revenue with regard to the non-maintenance of any balance (or of a lower balance) therein at the relevant time. For the transfer instruction bearing an account number, as the one dated

50 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) 23.7.2000 supra, the validity or otherwise of the inference could be dislodged by producing the said information with regard to the account number specified therein.

Conclusion

51 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Mumbai in 2005, claiming to be a new assessee notwithstanding he being an existing assessee - filing returns (up to A.Y. 1999-2000) at Hyderabad, shall, therefore, be required to obtain a clear certificate of not maintaining any account, either as an account holder or its beneficiary or as its POA, i.e., of which he is the owner of or could operate, as specified in the various documents found in search or otherwise transmitted to the Revenue. He cannot, after all, it must be appreciated, prove a negative, i.e., that he does not have any account with UBS AG (on which transfer instruction is drawn), other than he is found to be associated with in any capacity, either on the basis of the various documents in the possession of the Revenue or per the UBS AG report, since admitted in evidence. For these accounts, however, he is obliged to produce an authentic statement of account for the relevant period. The assessee could disprove the said document by a certificate from his Bank that no such transfer instruction dated 16.7.2000 (i.e., the specified transfer instruction) was in fact received or processed by it. In-as-much as the account number (on which the TI is drawn), which is unspecified, could be any of the account numbers which find reflection in the various documents found and seized by the Revenue in search or otherwise in its possession from reliable sources, the assessee, to decisively disprove the document, would require a statement of account for the relevant year in respect of such accounts. We may hasten to add that we are, when we state so, not foreclosing the assessee’s options in any manner. It is equally open to him to explain the document, as indeed the law obliges him to. That is, why and under what circumstances the TI was issued on his bank, for a specified amount, favoring a specified beneficiary (by name and/or account) and, as a concomitant, the nature and source of the funds in his account/s. The notarized statement dated 30/6/2003 (refer para 11.5), as apparent, does not throw any light on this aspect, except that HAK had access to huge funds and, besides investments, was also called upon to finance projects.

52 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law. The said findings shall, inter alia, address the issues raised and considered pertinent by us. Needless to add, the assessee shall be allowed a reasonable opportunity of hearing. We decide accordingly.’

53 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Annexure A-2 Extract from the order of Kashinath Tapuriah (in ITA Nos. 3815 to 3821//M/2010)

‘6. Ground # 5 is in respect of addition for Rs.447 crores toward unexplained deposit in the assessee’s bank account no. 760001 with United Bank of Switzerland (name since changed to UBS AG, Zurich) during the year. The Revenue, on the basis of the information received from ED, found the assessee to be in receipt of the said sum (USD 100 Million) from HAK, on the basis of transfer instruction by HAK, i.e., vide his letter dated 16.7.2000 to the said bank, even as the assessee denied any knowledge of the same or even of the existence of the said account.

HASSAN ALI KHAN’

The assessee’s case, as in the case of HAK (in whose hands also addition stands made on the basis of the said letter), is one of complete denial, which in view of the

54 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Revenue cannot hold in view of the specific information contained therein, reliability of which, being received from an official source, cannot be doubted. The respective cases of the parties are thus the same, as in the case of HAK, which stands discussed at length by the tribunal at paras 9-12 of its order (in ITA Nos.4156-4162/Mum/2010 dated 29.2.2016), with paras 11 and 12 bearing its’ findings. The said addition, in fact, happens to be the first such addition, i.e., based on a transfer instruction (TI), in the case of HAK (supra), several of which follow, as a reading of the said order would show, discussed in its various aspects therein, even as the approach and the rationale underlying the same and, consequently, the result, remains the same. Reference toward this may also be made to paras 15, 25, 30, 49, 65A and 109 of the said order. The tribunal found the TIs, despite being transmitted to the Revenue by ED, which joined the Revenue in the search operations, and not found by the latter itself in search u/s. 132(1), so that section 132(4) as well as the statutory presumption of section 292C of the Act would, strictly speaking, not apply in relation thereto, to yet have a strong and persuasive evidentiary value. The non-mention of the transferors’ bank account number or its’ non-signing by him – though obtaining in some cases, stands discussed, as were the other aspects in relation thereto, viz. the background and the surrounding facts and circumstances; the bank particulars, including the names of the bank officials, the abiding and apparent relationship between the assessee and KT, in the said paras. The same would apply in the equal measure in the present case, with rather the existence of the account number 76001 (in the name of the assessee (KT)) being admitted, both by him as well as in the bank report. As regards the reason for the HAK to transfer funds in such huge sums to him, the assessee himself now (vide letter dated 01.7.2009, pgs.914-917/APB-5) explains that to be the sole purpose and the raison de’tre of his relationship with HAK, who, claimed to have access to huge funds, promised to invest in the assessee’s projects. Whether that by itself was sufficient for the assessee to have, on the contrary, as claimed, incur heavy expenditure or, rather, transfer no insubstantial sums to HAK, i.e., to have continued

55 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) to be deluded by the said promise for several years, is another matter. There is, however, sufficient evidence on record to show the two sharing a close relationship for several years – the assessee claiming to know HAK since 1994, of which mutual trust is an essential ingredient, as well as, by implication, common business intent and interest. There is an Agreement dated 07.8.2001 between them, at Dubai, recovered from the premises of both in search, envisaging transfer of huge funds to the assessee (which stands discussed extensively in the order dated 29.2.2016 (supra) in the case of HAK), who though now debunks the same. Further, HAK vide his notarized statement dated 30.6.2003 at London (forming Annexure-C to the order afore-mentioned), whereat the assessee was also present, states of him as being his advisor. In fact, HAK was found to have lent Rs.5 crs. to R. M. Consultants P. Ltd., Kolkata a company of KT (assessee) (refer paras 11-12, 18, 30.2 of the order afore-stated). The Revenue in fact is not obliged to prove the nature of the receipt or to locate its source, so that, where not satisfactorily explained as to its nature and/or source, it could be deemed as income (refer: CIT vs. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC); Sreelekha Banerjee vs. CIT [1963] 49 ITR 112 (SC)). In the view of the tribunal, this was a matter of fact, which had to be established by definite material/evidence, viz. the copy of the bank accounts, in view of the definite material with the Revenue (in the form of TIs), and which therefore would presumably be considered as having been given effect to. Then, again, even so, the addition is toward unexplained deposit (balance) in account, signified by the drawing of the TI itself. As such, even if not given effect to, the necessary implication and the inference of the balance in account shall follow and hold, justifying invocation of section 69A. There is implication for the transferee’s case as well. This is as the TI implies a right in the amount sought to be transferred thereby, and presumably only on own account. This could though be disproved, adducing, again, satisfactory explanation as to the nature of the funds sought to be transferred. Accordingly, a concomitant of the assessee being entitled to funds in the sum stated in the transfer instruction, in the absence of explanation as to

56 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) its nature, would, even where not received, admit an inference as to accrual of income, as also of the application of the deeming fiction of section 69A; the assessee being found to be a creditor qua a debt to that extent. That is, the nature of the debt, unexplained, is sufficient to attract the rigor of the provision.

7.2 No improvement in his case stands made by the assessee, i.e., vis-a-vis that before the Revenue, even as indicated above with reference to the arguments in respect of admission of additional evidence by the tribunal. So, however, and even as we say so, we cannot help but observing and, accordingly, state that the tribunal in the case of HAK (supra), decision in which case shall for apparent reasons stand to be adopted in the present case, i.e., a set aside to the file of the assessing authority to enable the assessee to conclusively prove the facts, besides being precisely what the ld. counsel, Shri Chetan Karia, CA, argued and was at pains to bring home. In the present case, the account number specified in the document is admitted and confirmed to be that of the assessee’s bank account with UBS AG, Zurich. The decision of the tribunal in HAK (supra) shall, accordingly, apply on all fours, with we finding no reason to take any different view in the matter. As such, for the same reasons as stated in the said order, and for which reasons reference is drawn to the six (6) paras thereof adverted to above, we decide likewise, i.e., restore the matter back to the file of the A.O. to adjudicate afresh, allowing the assessee an opportunity to establish his case. He shall be required to produce the relevant bank account/s to exhibit the non receipt of the relevant amount/s – in the whole or in part – during the relevant year, or at any time later. We state so as it could well be that the TI gets delayed in execution for some reason, and is given effect to at a later point in time. The addition though, we may clarify, even if this amount stands received – in whole or in part, during a subsequent year, shall be for the current year as, as presently discussed, the same is only in pursuance to the rights already inured, i.e., in discharge of the liability already accrued/arisen. Where, however, no amount is received, the

57 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) addition, solely on the basis of a TI, though could be made, would only be where the Revenue has any material to justify the accrual of income and, accordingly, would require being adjudicated on the basis of the entirety and facts and circumstances of the case. Qua TIs where no bank account is specified therein, in-as-much as the assessee cannot prove a negative, it shall, as also clarified in HAK (supra), suffice, i.e., the burden of proof on the assessee shall stand discharged, where he produces the bank statement of all such bank accounts, either admitted by the assessee or his wife or in the knowledge of the Revenue on the basis of the material found in search or otherwise transmitted to it. We may also, before concluding, clarify that it shall be open for the assessee to, i.e., apart from the course suggested above, explain the transaction. That is, the basis or the reason for the drawing of the TI and the consequent events leading to the receipt – in whole or in part, or the non-receipt of the stated sum/s, explaining as to why the receipt should not be deemed as income or, as the case may be, the reason for its non-receipt, and where so, the assessing authority shall decide, giving reasons in support of his decision. We decide accordingly. This also decides other TI based additions in these appeals by the assessee, facts of which are pari materia, being in fact also argued together, viz. Ground # 6 (for the current year).’

58 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Annexure B Extract from the order of Kashinath Tapuriah (in ITA Nos. 3815 to 3821//M/2010)

‘18.2 We may, however, before we begin to address and adjudicate the other grounds raised by the assessee, clarify that for this year only the additions and/or disallowance made or effected on the basis of the material or evidences found during search, or that found in pursuance thereof, i.e., as a direct result of search, only would, in view of the decision in Continental Warehousing Corporation (supra/also at APB-11, pgs. 1888- 1948), stand to be adjudicated on merits, the balance being, as held therein, incompetent in the present proceedings which arise only on account of a search u/s. 132 or requisition u/s. 132A of the Act. The said decision, being by the Hon’ble jurisdictional High Court, is judicially binding. Per the same, the Hon’ble Court has held that though a non obstante provision, so as not to restrict the power of assessment of the A.O. u/s. 153A, yet the foundation of action u/s. 153A is a search u/s. 132 or requisition of books of account or other assets u/s. 132A. As such, section 153A, enabling assessment in case of a search or requisition, making specific reference to the carrying out of search or exercise of power of requisition, the assessment u/s. 153A is only in furtherance to what is contemplated therein. Accordingly, for completed assessments, which do not abate, assessment shall be made on the basis of books of account not produced in the course of original assessment but found in the course of search, and undisclosed income discovered in the course of search (refer paras 18, 23, 28-31 of the Judgment as well as paras 48-54 of the order of the tribunal in All Cargo Global Logistics Ltd. vs. Dy. CIT [2012] 23 taxmann.com 103(Mum)(SB), reproduced at para 31). The Hon’ble Apex Court in P. R. Metrani vs. CIT [2006] 287 ITR 209 (SC) had an occasion to consider the scope of the search and seizure proceedings under the Act. Approving the decisions in Pushkar Narain Sarraf vs. CIT [1990] 183 ITR 388 (All) and Daya Chand vs. CIT [2001] 250 ITR 327 (Del), and the reversing the decision in

59 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) CIT vs. P. R. Metrani (HUF) [2001] 251 ITR 244 (Kar), it clarified this scope to be very limited, i.e., restricted to a summary assessment toward retaining sufficient assets to meet the demand of tax and/or penalty that may arise in assessment. Section 132, it explains, is a complete code in itself, which cannot intrude into any other provision of the Act and, similarly, the other provisions of the Act cannot interfere with the scheme of the working of section 132 or its provisions. The presumption of section 132(4A) is only for the limited purpose of passing an order u/s. 132(5), and was not available for framing a regular assessment. The Hon’ble Apex Court found the provisions (forming part of Chapter XIII-C) to have all the trappings of a small code in itself, embodying an integrated scheme (sections 132 to 132B) for a specific purpose, i.e., laying down a complete procedure for search and seizure; the power of the relevant authorities, and confiscation of the assets seized. The material seized though could be used as a piece of evidence in any proceedings under the Act, with section 132(4) itself so providing. That is, the provisions of sections 132 and 132A, save to the extent specifically provided, would not impact or regulate the process of assessment in any manner. An assessment under the Act, i.e., where the A.O. has the power to assess income after making enquiries, by effecting adjustment/s to the returned income, can even otherwise be made only on the basis of material on record, applying the extant law (of-course duly confronting the assessee therewith) and, besides, is impermissible to be reviewed (CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC)). Be that as it may, in all cases of completed assessment, as held by the Hon’ble Court in Continental Warehousing Corporation (supra), binding on us, the scope of section 153A assessment shall be confined to the findings of the search or, as the case may be, requisition.’

‘54. We have heard the parties, and perused the material on record. Admittedly, …….. We decide accordingly.

60 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) We have, however, two observations to make in this regard. Firstly, ….. Two, there is no indication if the assessment for the current year (A.Y. 2005-06) was framed at any time, i.e., prior to the impugned assessment. True, one could argue, as indeed it was before us, that where no assessment for the year is pending, in-as-much as the time provided for the service of notice u/s. 143(2) under the Act had expired, it did not abate, and it was by implication a concluded assessment, which cannot be interfered with in section 153A proceedings. Both the parties before us relied, in support of their cases, on the decision in the case of Continental Warehousing Corporation (supra). There is, firstly, admittedly no intimation u/s. 143(1) or order u/s. 143(3), so that the stated issue does not arise for consideration, save for A.Y. 2002-03, for which, as afore-discussed, concluded assessment u/s. 143(3) stands made. Further, this issue will also not arise for A.Y. 2007-08 for which no return has admittedly been filed u/s. 139 and the impugned assessment (u/s. 144) for which year is the original assessment. As, however, processing of each return, validly furnished, is an established procedure, we consider this issue, without prejudice, moving on the premise that the same may have been subject to processing u/s. 143(1), and which issue would therefore survive for A.Ys. 2001-02, 2003-04 to 2005-06. This is as for A.Y. 2006-07, the return filed prior to the date of search is on 28.5.2008, i.e., beyond the time prescribed therefor u/s. 139(1) or for a belated return u/s. 139(4). On merits, the gist of the afore-said decision, even otherwise binding on us, stands stated at para 18.2 of this order, making reference to different paragraphs thereof. The same, carefully perused, in our view, makes it abundantly clear that when the Hon’ble Court speaks of a completed assessment, it adverts and refers to just that, i.e., an assessment completed observing the due process of law, for which there is an order of assessment (or reassessment) in force as on the date of search or requisition. It, in so doing, reiterates its earlier decision in CIT vs. Murli Agro Products Ltd. (in ITA No. 36 of 2009 dated 29.10.2010), which it in fact follows, reproducing the relevant part (paras 8-13) at para 28 of its Judgment (reported

61 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) at pgs. 658 – 660 of the Reports). Vide para 10 (reproduced) the Hon’ble Court speaks of assessment/reassessment which stands finalized as not abating, so that the appeal or revision proceedings pending against such finalized assessment would not abate. This is also what stands clarified by the Board per its Circulars. Then, at para 12 (reproduced), it clarifies that in passing an assessment u/s. 153A r/w s. 143(3), the A.O. cannot disturb the finality of an (re)assessment order, unless of-course the relief granted under a finalised assessment is contrary to the facts unearthed during the course of section 153A proceedings. It further expresses itself unequivocally at para 29 (of its later decision), at pg. 660 of the Reports, as under: ‘If they were pending on the date of initiation of the search u/s. 132 or making of requisition u/s. 132A, as the case may be, they abate. It is only the pending proceedings that would abate and not where there are orders made of assessment or reassessment are in force on the date of initiation of the search or making of a requisition.’

What, one may ask, could be more explicit than this? A finalised assessment, it continues to explain (at pg. 661), cannot be touched by resorting to the provision (section 153A). Whether the processing of the return u/s. 143(1) could be said to be an assessment is a matter dealt with, and can be said to be concluded by the decision by the Hon’ble Apex Court in CIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC). Tracing the legislative history of the provision, for which it makes reference to its earlier decision in Apogee International Ltd. vs. Union of India [1996] 220 ITR 248 (SC), it explained that the legislative intent is very clear from the use of the word ‘intimation’ as substituted for ‘assessment’, which denote different concepts. While in assessment, the A.O. is free to make any addition after grant of opportunity to the assessee, no such addition/adjustment is permissible u/s. 143(1), where-under he cannot go beyond the return, accounts or documents accompanying the return, and for the reason that no opportunity is granted to the assessee. Substantial changes, it notes, have been further made w.e.f. 01.6.1999, restricting the power to

62 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) make adjustment to removal of arithmetic errors or that otherwise apparent on the basis of the return itself or the documents accompanying the same. The processing of the return, leading to an Intimation u/s. 143(1), may not be done by the AO himself and, further, is without prejudice to the provision of section 143(2) (refer pgs. 507 to 510 of the reports). The intimation u/s. 143(1), it further explains, is not an assessment and cannot be treated as an assessment order, also explaining the purpose for which it is deemed as a notice of demand u/s. 156, i.e., to enable recovery thereof, where it reflects ‘tax payable’. Continuing further, it explains that the word ‘assessment’ is used in the Act for conveying different meanings. It may be used to mean ‘the computation of income’, sometimes ‘the determination of the amount of tax payable’ and sometimes ‘the whole procedure laid down in the Act for imposing liability upon the tax payer’ (pgs. 507-510). We having set out the decision in brief, may as well reproduce a part thereof (pgs. 509-510), as under: ‘In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(l)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India [(1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any ‘assessment’ is done by them? The reply is an emphatic ‘no’. The

63 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) intimation undersection 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.’

Finally, we may, for the sake of completeness of the discussion in the matter, which we have though found as completely covered by the decisions by the Hon’ble jurisdictional and the Hon’ble Apex court cited supra, consider the argument of the processing of a return u/s. 143(1) as leading to an assessment, i.e., after the expiry of the time prescribed for the service of notice u/s. 143(2), in the context of section 153A proceedings or a s. 153A assessment. There is no concept of deemed assessment, i.e., by lapse of time, under the Act, which is a positive act of determination of income. The law does not contemplate two assessments, i.e., one by issue of notice u/s. 143(2) and the other, otherwise, i.e., without the issue of the said notice. As explained by the Hon’ble Court per its afore-referred decisions, what section 153A contemplates, quite simply, is that the return (for a year) that has undergone the process of verification, resulting in an order of assessment (or reassessment), becomes finalized and cannot be visited again.That is, what s. 153A contemplates is an assessment of total income upon a scrutiny of the assessee’s claims, i.e., following the verification procedure under the Act, and due application of mind by the A.O. And, it is precisely for this reason that where assessment stands so framed, passing an assessment order, the same is held as not liable to be visited again except where adverse material is found in search or requisition. This is subject to the caveat that no adverse material, incriminating the return, is found in search or requisition (of books of account or other assets). It is notable that even income recorded in the books of account would stand to be included in a section 153A assessment, where not produced but found during search or requisition. There is no question of calling for the books of account, much

64 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) less examining them, under the processing of the return. As explained by the Apex Court in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra), the question of the A.O. expressing his opinion u/s. 143(1) does not arise. There is no determination of income in such a case by the A.O., who is precluded for making enquiries, nay, even affecting prima facie adjustments to the return (w.e.f. 01.6.1999). The income so accepted, being not determined by the A.O. and sans any assessment order, can only be said to be returned or processed income, and not assessed income. The assessee’s argument, to our mind, constricts the scope of the proviso to section 153A beyond its mandate, which is limited to abatement of assessments pending on the date of initiation of search or, as the case may be, making the requisition. As afore-discussed, the limitation on the scope of inquiry or examination only to the findings of search or requisition while making a s. 153A assessment would extend only to concluded assessments, signified by orders of assessment or reassessment. This, we find to be the unequivocal view expressed by the Hon’ble Court in Continental Warehousing Corporation (supra) and Murli Agro Products Ltd. (supra), judicially binding on us, and which we further find as consistent with the decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) and Kelvinator of India Ltd. (supra), as also the scope and purport of a s. 153A assessment as explained by the Hon’ble Courts of law.’

65 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) Annexure C

‘MINUTES AND AGREEMENT This Agreement has been entered into on this 7th day of August 2001. between Mr. Hasan Ali Khan (HAK) presently staying at Ema House, Zurich And Mr. K Tapuriah (KT) of 27-B, Camac Street, Kolkata, India in connection with the following

Preamble Mr. Hasan Ali Khan who owns the two companies namely, Autumn Holdings ltd. and Payson ltd. through them had a business relationship with the Indian companies named below which were and continue to be owned by Mr. K. Tapuriah, in India. The Indian companies referred to are:

Roberts, McLean and Co. Ltd., R. M. Investment and Trading Company Private Ltd. and Roberts, McLean Services Private Ltd. On the basis of agreements entered into between the companies named above, HAK’s companies and KT’s companies were involved in diverse business operations (on a 50:50 basis) mainly in India and had earned substantial profits through this joint venture. The total amount of profits earned by the joint venture during the years 1983 to 1990 amounted to USD 280.54 million. As per the understanding between HAK and KT all the earnings were held in the accounts managed by HAK. Now it has been agreed that HAK shall transfer the amount relating to KT’s share of profit of such offshore accounts as may be nominated by KT. The fact that the funds did not remain idle and did earn some returns was discussed. After due deliberations it was mutually agreed that a lump-sum of USD 200 million shall be paid to KT by HAK and the same shall be considered as the final settlement. It was agreed that no further claims in respect of interest or otherwise by KT shall be raised or considered.

66 ITA Nos. 3822/M/10 to 3828/M/10 & 8298 to 8304/M/11 Chandrika Tapuriah vs. Dy. CIT (A.Ys. 2001-02 to 2007-08) The said amount of USD 200 million shall be split into 3 parts as follows: 1. USD 100 million relating to Roberts, Mclean and Co. Ltd. 2. USD 65 million relating to R. M. Investment and Trading Company Pvt. Ltd. and 3. USD 35 million relating to Roberts, McLean Services Pvt. Ltd.

HAK assured that payment in respect of this account shall be effected latest by the end of December 2001. Signed and executed on this 7th day of August 2001, at Dubai

HASAN ALI KHAN K TAPURIAH’