THE DY.CIT. CENTRAL CIRCLE-1, BARODA vs. SMT. MANJULABEN BIPINCHANDRA PATEL, BARODA

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA Nos: 1894 to 1903/Ahd/2019 & 1904/Ahd/2019 Asst. Years: 2000-01 to 2009-10 & 2016-17 & IT(SS)A Nos: 569 to 574/Ahd/2019 Asst. Years: 2010-11 to 2015-16 बनाम बनाम/ बनाम बनाम Manjulaben Bipinbhai Deputy Commissioner of Patel Legal Heir of Late Vs. Income Tax Bipinbhai P. Patel Central Circle-1, Vadodara C/o. Apex Extrusions - 390007 Pvt. Ltd., 220-221, GIDC Estate, Makarpura, Vadodara, Gujarat, 390010 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACQPP7757H (Appellant) .. (Respondent) & ITA Nos: 1905 to 1914/Ahd/2019 & 1915/Ahd/2019 Asst. Years: 2000-01 to 2009-10 & 2016-17 & IT(SS)A Nos: 575 to 580/Ahd/2019 Asst. Years: 2010-11 to 2015-16 बनाम/ बनाम बनाम बनाम Smt. Manjulaben B. Deputy Commissioner of Patel Income Tax Vs. C/o. Apex Extrusions Central Circle-1, Vadodara Pvt. Ltd., 220-221, GIDC - 390007 Estate, Makarpura, Vadodara, Gujarat, 390010 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACQPP7419J (Appellant) .. (Respondent)

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& ITA Nos: 31 to 39/Ahd/2020 & 40/Ahd/2020 & C.O. Nos: 54 to 61 & 63/Ahd/2020 & 62/Ahd/2020 Asst. Years: 2000-01 to 2009-10 & 2016-17 & IT(SS)A Nos: 01 to 06/Ahd/2020 & C.O. Nos: 47, 49, 50, 52, 51 & 53/Ahd/2020 Asst. Years: 2010-11 to 2015-16 बनाम/ बनाम बनाम बनाम Deputy Commissioner of Smt. Manjulaben B Patel, Income Tax Legal Heir of Late Shri Vs. Central Circle-1, Bipinchandra Prabhudas Vadodara – 390007 Patel 2, Shantivan Society, Sussen Tarsali Society, & Makarpura, Vadodara, Manjulaben Bipinbhai Gujarat – 390014 Patel Legal Heir of Late Bipinbhai Prabhudas Deputy Commissioner of Patel Income Tax 2, Shantivan Society, Central Circle-1, Vadodara Tarsali Society, - 390007 Makarpura, Vadodara, Gujarat – 390014 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACQPP7757H (Appellant/Cross Objector) .. (Respondent) & ITA Nos: 41 to 49/Ahd/2020 & 50/Ahd/2020 Asst. Years: 2000-01 to 2009-10 & 2016-17 & IT(SS)A Nos: 07 to 12/Ahd/2020 Asst. Years: 2010-11 to 2015-16 बनाम/ बनाम बनाम बनाम Deputy Commissioner of Smt. Manjulaben Income Tax Bipinchandra Patel Vs. Central Circle-1, 2, Shantivan Society, Vadodara – 390007 Sussen Tarsali Society,

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Makarpura, Vadodara, Gujarat – 390014 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACQPP7419J (Appellant) .. (Respondent)

Assessee by : Shri Tushar Hemani Sr. Advocate & Shri Parimalsinh B. Parmar, AR. Revenue by : Dr. Darsi Suman Ratnam, CIT. DR & Shri Ashish Revar, Sr. DR Date of Hearing 07/08/2024 Date of Pronouncement 10/09/2024 आदेश/ORDER PER BENCH: The above 82 appeals pertain to Late Shri Bipinchandra Prabhudas Patel (hereinafter referred to as “the assessee”) and his wife Smt. Manjulaben Bipinbhai Patel in respect of assessments completed for 17 assessment years (A.Y.) from A.Y. 2000-01 to A.Y. 2016-17. All the 82 appeals filed by these two assessees and by the Revenue as well as the cross- objections were heard together. During the pendency of these group of appeals before the ITAT, Shri Bipinchandra Prabhudas Patel expired on 18.01.2021. Smt. Manjulaben Bipinbhai Patel has impleaded herself as his legal-heir and an affidavit to this effect has been filed. Further, the revised Form No.36 and 36A has also been filed in respect of appeals and cross- objections pertaining to late Shri Bipinchandra P. Patel.

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Facts of the case 3. Succinctly, the facts of the case are that a search action u/s 132 of the Act was carried out in the case of the assessee and his family members on 02.12.2015. During the search at the residence of the assessee, it was gathered that bank accounts with “MLB”, as referred earlier, were held in the name of a company ‘M/s. NAD Investments Ltd.”, registered in Cayman Islands, through a trust and the settlors of the said trust were Shri Bipinchandra P. Patel and Smt. Manjulaben B. Patel (husband and wife). The ultimate beneficiaries of the trust/accounts were their own family members namely Shri Minesh Patel, (Son – 50%); Smt. Jigishaben Patel (Daughter-in-law, 25%); Ms. Natasha Patel (Grand-daughter – 12.5% and Ms. Amisha Patel (Grand-daughter – 12.5%). These foreign bank accounts were not disclosed in the income-tax returns of either of the persons. During the course of search, a statement of Shri Bipinchandra P. Patel was recorded

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u/s 132(4) of the Act, wherein he initially denied having possessed any foreign bank account or being a beneficiary of any foreign trust. However, when he was confronted with “Confidential Client Profile Sheet”, “Settlor Profile Form”, deed of trust between Shri Bipinchandra P. Patel & Smt Manjulaben B. Patel and Merrill Lynch Bank and Trust Company (Cayman) Ltd. dated 07.01.2000, the supplementary deed of trust dated 07.01.2000, the company formation letter, deed of amendment dated 30.03.2021, Revocation of Trust Deed dated 19.11.2012; Shri Bipinchandra P. Patel accepted that he had signed on the deed of trust as well as the other documents related to establishment of a trust with Merrill Lynch Bank and Trust Company (Cayman) Ltd. However, he stated that he had signed on these forms as settlor in order to help his blood-sister late Smt. Prabhavatiben Amin and brother-in-law late Shri Jashbhai Amin who were settled in London, in order to help them to bring their money from Africa to London. The Assessing Officer found this explanation to be a concocted story; and on the basis of material available on record and the statement of Shri Bipinchandra P. Patel, initiated action against the assessee and Smt. Manjulaben B. Patel for 17 assessment years under different provisions of Act as follows: - i) U/s 147 of the Act : for AYs 2000-01 to 2009-10 ii) U/s 153A of the Act : for AYs 2010-11 to 2015-16 iii) U/s 143(3) of the Act : for AY 2016-17

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FT&TR Division of the CBDT. These accounts were having deposits during the period of financial years 2013-14 to 2016-17. The assessments were completed in the case of Shri Bipinchandra P. Patel and Smt. Manjulaben B. Patel after making additions in respect of credits reflected in the foreign bank accounts. Further, addition in respect of jewellery found during the search was also made.

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Rs.24,18,78,960/-. As the foreign bank accounts were held by the assessee and Smt. Manjulaben B. Patel jointly, the Assessing Officer had made the addition of Rs.24,18,78,960/- in the hands of both the persons in the following manner: - (i) 50% of the amount was added on substantive basis; (ii) 50% of the amount was added on protective basis.

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Grounds taken in the appeal

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- No documents were found during search or thereafter to prove that the funds in the alleged foreign bank accounts are transferred or sourced by the appellant and likewise the ld. AO also not proved that the appellant has received or has been enriched in any manner whatsoever by any funds from the alleged foreign bank accounts, - Ld. AO has grievously erred in passing the order on "False Statement / Grounds/basis that incriminating documents were found or gathered from searched premises whereas the addition was made based on the documents gathered from unknown sources. - Ld. AO has passed the impugned order with the predetermined mind set to make high pitched assessment which can be proved from the fact that details and statements related to offshore trust accounts were provided almost after 22 months post search conducted and that too after number of requests made by your appellant. Such details and statements were running into around 2,500 pages. Accordingly, the order passed was without providing sufficient opportunity to your appellant to represent his case and as such violates principles of natural justice. 1.02 On the facts and in circumstances of your appellant's case and in law, the reasons recorded before issue of notice u/s 148 of the Act does not spell out clearly any income that has escaped assessment, in as much as, it only states that "amounts credited into these bank statements (relating to foreign bank accounts) need to be taxed as per the prevailing provisions of the Income Tax Act, 1961". 1.03 On the facts and in circumstances of your appellant’s case and in law, ld. CIT(A) erred in upholding the order passed us 147 r.w.s. 143(3) of the Act an erroneous plea that information along with the statement recorded during the search became the basis of issue of notice u/s 148 of the Act for proceedings u/s. 147 r.w. Explanation 2(d) of the Act. 1.04 On the facts and in circumstances of your appellant's case and in law, ld. CIT(A) erred in upholding that credit entries in alleged foreign bank statements is liable to be treated as deemed income as per section 68 of 69A of the Act though your appellant has not maintained any books of accounts. Accordingly, confirmed addition of Rs.38,58,950/- to the returned income as against additions of Rs.54,43,228/- made by ld. AO. 2.00 WITHOUT PREJUDICE TO ABOVE, on the facts and circumstances of your appellant's case and in law, ld. CIT(A) grossly erred in not allowing set off of resultant loss of the year, relating to transactions in foreign bank accounts, against declared income of the same year and carry forward of such unadjusted loss, if any, for being its set off of with the income of following year(s), on wrong plea that such set off and carry forward could have been possible only if the

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returns were filed within the due date as per the provisions of the Act which is not the case in the case of your appellant. 2.01 It is brought to notice that the return was filed in time for the year under review. Since the loss is first computed, relating to transactions in alleged foreign bank accounts, during appellate proceedings, the same should be allowed to be set off against returned income of the same year and carry forward of the same to subsequent year(s) for being its set off as per sections 70, 71, 72, 74 of the Act.”

Grounds of appeal in ITA Nos. 1895/Ahd/2019 to 1903/Ahd/2019 & in ITA Nos. 1905 to 1914/Ahd/2019 are same as in ITA No. 1894/Ahd/2019 (except the amounts mentioned in Ground 1.01 and in Ground 1.04 of each appeal and a ground regarding substantive & protective addition taken in ITA No. 1914/Ahd/2019).

“1.00 Order passed u/s 153A r.w.s. 143(3) of the Act is void and deserved to be quashed: 1.01 On the facts and in circumstances of your appellant's case and in law, Id. CIT(A) failed to appreciate that - - Your appellant was simply settlor and Merrill Lynch was the director of the Company, therefore the ld. AO ought to have called on relevant information from the directors rather than calling the information from settlor and as such the act of Ld. AO is arbitrary to make impugned addition of Rs. 61,02,094/- to the returned income. - No documents were found during search or thereafter to prove that the funds in the alleged foreign bank accounts are transferred or sourced by the appellant and likewise the Id. AO also not proved that the appellant has received or has been enriched in any manner whatsoever by any funds from the alleged foreign bank accounts.

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- Ld. AO has grievously erred in passing the order on "False Statement / Grounds/basis that incriminating documents were found or gathered from searched premises whereas the addition was made based on the documents gathered from unknown sources. - Ld. AO has passed the impugned order with the predetermined mind set to make high pitched assessment which can be proved from the fact that details and statements related to offshore trust accounts were provided almost after 22 months post search conducted and that too after number of requests made by your appellant. Such details and statements were running into around 2,500 pages. Accordingly, the order passed was without providing sufficient opportunity to your appellant to represent his case and as such violates principles of natural justice. 1.02 On the facts and in circumstances of your appellant's case and in law, Id. CIT(A) erred in upholding the order passed u/s 153A r.w.s. 143(3) of the Act on erroneous plea that information along with the statement recorded during the search became the basis for proceedings u/s 153A r.w.s. 143(3) of the Act. 1.03 On the facts and in circumstances of your appellant's case and in law, Id. CIT(A) erred in upholding that credit entries in alleged foreign bank statements is liable to be treated as deemed income as per section 68 or 69A of the Act though your appellant has not maintained any books of accounts. Accordingly, confirmed additions of Rs. 4,99,483/- to the returned income as against additions of Rs. 61,02,094/-made by Id. AO. 2.00 WITHOUT PREJUDICE TO ABOVE, on the facts and circumstances of your appellant's case and in law, ld. CIT(A) grossly erred in not allowing set off of resultant loss of the year, relating to transactions in foreign bank accounts, against declared income of the same year and carry forward of such unadjusted loss, if any, for being its set off of with the income of following year(s), on wrong plea that such set off and carry forward could have been possible only if the returns were filed within the due date as per the provisions of the Act which is not the case in the case of your appellant. 2.01 It is brought to notice that the return was filed in time for the year under review. Since the loss is first computed, relating to transactions in alleged foreign bank accounts, during appellate proceedings, the same should be allowed to be set off against returned income of the same year and carry forward of the same to subsequent year(s) for being its set off as per sections 70, 71, 72, 74 of the Act.”

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Grounds of appeal in IT(SS)A Nos. 570/Ahd/2019 to 574/Ahd/2019 & 575 to 580/Ahd/2019 are identical as in IT(SS)A No.569/Ahd/2019 (except the amounts mentioned in Ground 1.01 and in Ground 1.03 of each appeal).

“1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition of Rs.54,43,228/- to Rs.38,58,950/- on account of undisclosed income from foreign bank account, by not appreciating the facts involved in this case. . 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the income on account of STCG/LTCG which relate to transactions in shares and find place in bank statement showing realized gain/loss. 3. The issue involved is related to undisclosed foreign bank accounts which falls within the ambit of exception under para 10(d) of the C.B.D.T. instruction no. 17/2019 dated 08.08.2019. 4. It is, therefore, prayed that the order the Ld. CIT(A) 12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.”

Grounds of appeal in ITA Nos. 32/Ahd/2020 to 39/Ahd/2020, in ITA Nos. 41/Ahd/2020 to 49/Ahd/2020, IT (SS)A Nos. 1 to 6/Ahd/2020 & IT (SS)A Nos. 7 to 12/Ahd/2020 are same as in ITA No. 31/Ahd/2020 (except the quantum of amounts as mentioned in the Grounds of each appeal).

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“1. The ld. CIT(A) erred in law and on facts in upholding the addition made in assessment u/s. 153A r.w.s. 143(3) for unabated AY 2000-01 in the absence of incriminating material found during the course of search. 2. The ld. CIT(A) erred in law and on facts in holding that confrontation of available documentary evidences to the appellant and recording of statement u/s.132(4) of the Act constitutes incriminating material on the basis of which addition can be made for an unabated assessment year. 3. The ld. CIT(A) erred in law and on facts in confirming the addition made by the AO to the extent of Rs.38,58,950.27/- (USD 89,054). 4. The ld. CIT(A) erred in law and on facts in holding that 100% of the addition is taxable on a substantive basis in the hands of the appellant as against the AO adding 50% on a substantive basis and 50% on a protective basis. This amounts to enhancement and is not permissible without notice. 5. The ld. CIT(A) erred in law and on facts in holding that in case of loss/negative income, it will not be allowed to be carried forward as return was not filed within due date. 6. The ld. CIT(A) erred in law and on facts in advising AO to examine applicability of and initiate proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.”

Grounds of appeal in CO Nos. 47/Ahd/2020, in 49 to 53/Ahd/2020, in 55/Ahd/2020 to 61/Ahd/2020 & in CO No. 63-64/Ahd/2020 are same as in CO no. 54/Ahd/2020 (except the quantum of amounts as mentioned in the Grounds of each CO).

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A.Y. 2010-11 are IT(SS)A No.569/Ahd/2019 filed by the assessee and IT(SS)A No.01/Ahd/2020 filed by the Revenue with CO No.47/Ahd/2020.

We will take up the legal grounds raised by the assessee for the different years first before deciding the grounds as taken on the merits of the addition.

Principle of natural justice

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He further submitted that these details and statements were running into around 2500 pages, but no proper opportunities were allowed to the assessee to represent his case, which was in violation to principle of natural justice. The Ld. AR submitted that the time allowed to the assessee to explain the documents were not sufficient and that the AO passed the order in a hurry. He further submitted that the Ld. CIT(A) also did not allow sufficient opportunity to respond to the remand report of the AO. According to the Ld. Counsel the Ld. CIT(A) had passed the order within less than one month time after providing a copy of the remand report. He relied upon the following decisions in respect of his contention that sufficient opportunity of being heard has to be granted before the AO and that the factum of opportunity of being granted before the appellate forum is of no consequence: i. Tin Box Co. vs. CIT, [2001] 249 ITR 216 (SC) ii. TIBCO Software India P. Ltd. Vs. DCIT [2015] 170 TTJ 432 (Pune)

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in the course of remand proceedings. The assessee had made further submissions in respect of year wise net income calculated as per bank statements, post remand report. Thus, sufficient opportunities were allowed to the assessee before the Ld. CIT(A) as well. The Ld. CIT.DR relied upon the decision of Hon’ble Calcutta High Court in case of Hydro Carbon Services (P.) Ltd. vs. Union of India, [2021] 131 taxmann.com 175 (Calcutta) in support of his contention that there was no violation of natural justice.

Assessment Proceedings Sr. Date Event Reference Remarks no. 1. 02.12.2015 Search & Statement u/s 132 Para 2.1-2.2 Pg 1-2 of AO 2. 03.12.2015 Statement recorded where asked to Para 5.9 Pg 31 of AO explain contents of letter in Qs no 30.

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These documents were basically the statement of foreign bank account which should have been available with the assessee himself. Still, when he demanded the copy of the same from the AO, it was provided to him. However, no compliance was made before the AO in spite of repeated opportunities as provided to explain these documents. In fact, the AO had suo motto provided the soft copy of bank statement and other documents to the assessee on 04.10.2017, still no compliance was made. The assessee had asked time for 3 weeks vide letter dated 06.11.2017 which was granted till 17.11.2017 by the AO. In fact, the AO waited till 01.12.2017 for issue of final show cause notice. Finally, the assessee had made his submission on 05.12.2017 by denying and disowning the foreign bank account and filing an affidavit dated 04.12.2015 disowning the foreign bank accounts. When the foreign bank accounts were disowned on 05.12.2017 and no further time was sought by the assessee, we don’t find any violation of principle of natural justice. The AO had finally passed the assessment order on 29.12.2017 but no further communication was made by the assessee till the date of passing of the order.

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assessee cannot take a plea that no sufficient opportunity was allowed by the AO to explain the credit entries in the foreign bank account. Further, it is found that the Ld. CIT(A) had also allowed sufficient opportunities to the assessee to explain the transactions in the foreign bank accounts by admitting the additional evidences filed before him. The assessee had made submissions before the AO in the course of remand proceeding as well as before the Ld. CIT(A) after receipt of the remand report. Even if the Ld. CIT(A) passed his order within a month of the remand report, it is not the case that the he didn’t consider the submissions of the assessee on the rejoinder of the remand report. Rather, the ld. CIT(A) has passed a detailed order considering and taking into account the submissions of the assessee and has substantially reduced the additions as made by the AO. We, therefore, do not find any instance of violation of natural justice in this case. The assessee was allowed sufficient opportunities to explain the transactions in the foreign bank accounts. The case laws relied upon the assessee are not found applicable to the peculiar facts of this case as discussed above. Therefore, the grounds taken by the assessee in respect of providing insufficient opportunities and violation of principle of natural justice are dismissed.

Reopening u/s. 147 of the Act

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Ld. Sr. Counsel explained that the reopening was done merely on the basis of details of foreign bank accounts received from FT&TR division of CBDT. The deposits appearing in the foreign bank account were apparently on account of interest, dividend, person cheque deposits, wire transfers, call loan/ fixed loan/ loan etc. According to the AO, the amounts deposited in the bank accounts were required to be taxed as per the provisions of the Act and, therefore, the cases were reopened. The Ld. Sr. Counsel has raised the following specific objections in respect of reopening of the cases:

(A) Mere deposits in the bank account cannot lead to the conclusion or even inference that the income chargeable to tax has escaped assessment. The Ld. Sr. Counsel submitted that the assessee had filed return of income for all the assessment years and, therefore, the mere fact that there were certain deposits in the bank accounts cannot lead to the conclusion or inference that income chargeable to tax has escaped assessment and can’t be a ground for resorting to reopening. In this regard, reliance was placed on the following decisions: 1. Mariyam Ismail Rajwani in ITA No. 676/Ahd/2016 2. Bir Bahadur Singh vs. ITO, [2015] 53 taxmann.com 366 (Del.) 3. Gurpal Singh vs. ITO, 159 ITD 797 (Amritsar) 4. Amrik Singh vs. ITO, 159 ITD 329 (Amritsar)

(B) Reopening was based on borrowed satisfaction: – The Ld. Sr. Counsel submitted that the cases were reopened merely on the basis of the details received from the FT&TR Division of CBDT and there was no independent application of mind by the AO. He submitted that the reopening

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in the case of the assessee was merely based on borrowed satisfaction. In this regard he placed reliance on the following decisions: 1. Harikishan S. Virmani vs. DCIT, [2017] 394 ITR 146 (Guj.) 2. Varshaben S. Patel vs. ITO, [2015] 64 taxmann.com 179 (guj) 3. Signature Hotels P. Ltd. Vs. ITO, [2012] 338 ITR 51 (Delhi) 4. Paresh Babubhai Bhalani vs. ITO, [2023] 156 taxmann.com 517 (Guj.)

(C) Reason for reopening was absolutely vague, scanty and non- specific: According to the Ld. Senior Counsel, the nature of underlying transaction was not specified in the reason. In this regard, he placed reliance on the following decisions: 1. Paresh Babubhai Bhalani vs. ITO, [2023] 156 taxmann.com 517 (Guj.) 2. Surani Steel Tubes Ltd. vs. ITO, [2022] 136 taxmann.com 139 (Guj.) (D) AO had not quantified amount of escapement of income chargeable to tax – The Ld. Sr. Counsel submitted that no notice u/s. 148 of the Act can be issued beyond four years unless the income chargeable to tax that has escaped assessment is Rs. One Lakh or more. He submitted that this condition was not fulfilled as the AO had not quantified the amount of escapement for the different years in the reason as recorded by him. He further relied on the followings decisions: 1. Mahesh Kumar Gupta vs. CIT, 363 ITR 300 (Allahabad) 2. Novo Nordisk India P. Ltd., [2018] 95 taxmann.com 225 (Kar.)

(E) Reopening was barred by limitation – The Ld. Senior Counsel explained that the AO had resorted to Clause (c) of Section 149(1) of the Act

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which was inserted w.e.f. 01.07.2012 for issuing notice u/s. 148 of the Act. Prior to 01.07.2012, the reopening was permissible only up to a period of 6 years from the end of relevant assessment year. Thus, the limitation for reopening for A.Y. 2005-06 and earlier years had expired on or before 31.03.2012. According to the Ld. Sr. Counsel, A.Ys. 2000-01 to 2005-06 had attained finality on 31.03.2012 and it was not permissible to reopen cases for these years beyond 6 years period, as a vested right was created in favour of the assessee for these years. Ld. Senior Counsel emphasized that it is well settled that subsequent amendment (w.e.f. 01.07.2012 in this case) cannot empower the AO to reopen the assessments which had already become time barred under the earlier provision, prior to such amendment coming into force. He placed reliance on following decisions in support of this legal proposition:

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obtaining the prior approval of the Pr. CIT as stipulated under the provisions of the Act. He explained that the cases were reopened on the basis of specific information received from FT&TR Division of CBDT regarding foreign bank account of the assessee. On the basis of this information, the AO had recorded his reason to believe that income has escaped assessment. The Ld. CIT.DR relied upon the decision of Hon’ble Gujarat High Court in the case of Kantibhai Dharamshibhai Narola v. ACIT, [2021] 125 Taxmann.com 348 (Gujarat) and submitted that the validity of the reopening of the assessment has to be determined with reference to the reasons as recorded by the AO. He asserted that sufficiency or correctness of any material cannot be considered at the stage of the notice. In this regard, he relied upon the decision of Hon’ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das, [1976] 103 ITR 437 (SC). As regarding amendment made in Section 149 of the Act vide Finance Act, 2012 w.e.f. 01.07.2012, the Ld. CIT.DR submitted that the said amendment was retrospective in nature. In this regard, he has placed reliance on the Explanation to Section 149 of the Act as well as Memorandum of the Finance Bill, 2012. He further submitted that the decision of Hon’ble Delhi High Court in the case of Brahm Dutt vs. ACIT (supra) relied upon by the assessee was without considering the retrospective application of Section 149(1)(c) of the Act. In this regard, he has placed reliance on the decision of ITAT, Mumbai Bench in the case of DCIT vs. Dilip J. Thakkar, 135 taxmann.com 208 (ITAT Mumbai).

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147 of the Act, it will be relevant to reproduce the reason as recorded by the AO. The assessee has filed a copy of the reason in the paper book which is reproduced below:

“The assessee has furnished the return of income. It was gathered that there are bank account having account number ICA03B39 and 16503B39 held in Merrill Lynch Bank in the name of a company, M/s Nad Investment Ltd. This company is registered in Cayman Islands. The foreign bank accounts were held in the name of the company "M/s NAD Investments Ltd" through a trust, whose settler were Shri Bipinchandra Patel and Mrs. Manjula Patel and ultimate beneficiaries were his own family members. 2. In the meantime, a search u/s 132 of the I T Act was carried out at the residence of Shri Bipinchadra Patel and Mrs. Manjulaben Patel at 2, Shantivan Society, Sussen-Tarsali Road, Vadodara on 02.12.2015, During the course of the search, a statement on oath u/s 132(4) of the Income Tax Act, 1961 was recorded on 02/12/2015 of Shri Bipinchandra Patel. In the statement, in the initial questions, he was specifically asked to state whether he or his family members were holding any foreign bank accounts / were beneficiaries of any amount received from a trust located outside India. In his reply, he categorically denied having any foreign bank account or being a beneficiary of any foreign trust. 3. In the later questions, he was confronted with the "Confidential Client Profile Sheet", "Settler Profile Form", the deed of trust between Shri Bipinchandra Patel & Mrs. Manjulaben Patel and Merrill Lynch Bank and Trust Company (Cayman) Ltd dated 07/01/2000, the supplementary deed of trust dated 07/01/2000, the company formation letter, deed of amendment dated 30/03/2001, Revocation of Trust Deed dated 19/11/2012 and was asked to explain them. Sh. Bipinchandra has accepted that he signed on the deed of trust as well as other documents related to the establishment of a trust with Merrill Lynch Bank and Trust Company (Cayman) Ltd. In none of his reply, he stated that he has not signed on the document. In all his reply, he put forward a concocted story stating that he had signed on the form as a settler in order to help his blood sister Late Smt. Prabhavatiben Amin and brother-in-law Late Shri jashbhai Amin, who were settled in London to help them bring their money from Africa to London. In view of these facts, these bank accounts with Merrill Lynch Bank and Trust Company (Cayman) Ltd are undisclosed and the deposits made in these Foreign Bank Accounts are unexplained. .'

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Department. In view of the specific provision of deemed escapement of income in respect of foreign assets (bank account of the assessee), the case laws as relied upon by the Ld. Sr. Counsel in this respect are not found applicable to the facts of the present case.

Whether reopening was based on borrowed satisfaction?

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respective income tax returns. Further, this decision was in the context of reopening beyond 4 years and in consideration of Proviso to section 147 of the Act. In fact, the Proviso to section 147 of the Act is not at all applicable in the case of reopening on account of undisclosed foreign assets and, therefore, the assessee can’t derive any benefit from this decision.

Whether reason for reopening was vague, scanty and non-specific?

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foreign bank accounts of the assessee. The background of the case, the information available with the AO, the explanation of the assessee has been discussed in detail and taken into account, while the AO formed his opinion that the foreign bank accounts of the assessee were undisclosed and that the income had escaped assessment. Therefore, the ground taken by the assessee in this regard is found to be baseless, and is dismissed. The facts of the case laws as relied upon by the assessee in this respect are found to be totally different and not directly applicable to the facts of the present case, as the nature of underlying transaction was specified in the reasons recorded in this case.

Whether quantification of escaped income is necessary?

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cases are not related to foreign account cases. Therefore, the objection of the assessee regarding non-quantification of escapement of income is without any merits, and is dismissed.

Whether reopening was barred by limitation?

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(including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. ……… Explanation.—For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. (Emphasis supplied)

REASSESSMENT OF INCOME IN RELATION TO ANY ASSET LOCATED OUTSIDE INDIA Under the provisions of section 149 of the Income-tax Act, the time limit for issue of notice for reopening an assessment on account of income escaping assessment is 6 years. The time limit of 6 years is not sufficient in cases where assets are located outside India because gathering information regarding such assets takes much more time on account of additional procedures and laws of foreign jurisdictions. It is proposed to amend the provisions of section 149 so as to increase the time limit for issue of notice for reopening an assessment to 16 years, where the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Amendments are also proposed to be made in section 147 of the Income-tax Act to provide that income shall be deemed to have escaped assessment where a person is found to have any asset (including financial interest in any entity) located outside India.

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The provisions of sections 147 and 149 are procedural in nature and will take effect from 1st July, 2012 for enabling reopening of proceedings for and assessment year commencing prior to this date. This is proposed to be clarified through an Explanation stating that the provisions of these sections, as amended, by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. (Emphasis supplied)

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for the period already expired. The observation of the Hon’ble Apex Court is reproduced below: As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income-tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by section 18 of the Finance Act, 1956, authority was conferred upon the Income-tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of the year of assessment. But authority of the Income-tax Officer under the Act before it was amended by the Finance Act of 1956, having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act. The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings which before the new Act came into force had by the expiry, of the period provided become barred. (Emphasis supplied)

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amended provision vide Explanation to section 147 of the Act, the judgement of the Supreme Court in the case of SS Gadgil (supra) rather supports the case of the Revenue.

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to reopen an assessment which was already barred under the old Act. As already discussed earlier the retrospective application of the amended provision of section 147 w.e.f. 1st April, 2012 was expressed unequivocally by insertion of Explanation to section 147 of the Act. Therefore, the amended provisions had revived the rights of the AO to reopen the assessments which had become barred under the old provisions.

Thus, the Apex Court has approved the proposition that the proceedings which have attained finality due to bar of limitation can be revived and allowed to be unsettled by the amended provision, if the amended provision is given retrospective operation.

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When the new Act came into force, there was no cause of action of issuing a further notice to revive old matters which have attained finality under the then existing law due to limitation and, therefore, the new Act cannot be applied. Provision for limitation is not a mere procedure and unless it is made retrospectively, it cannot be acted upon retrospectively for reviving any barred and extinguished assessments on the date when the Act came into force. (Emphasis supplied).

The Hon’ble Court had acknowledged that the provision of limitation can’t be acted upon retrospectively unless the new provision was given retrospective application by the Statute.

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6 years vide this amendment. Commenting on the law of limitation the Hon’ble Delhi Court had held as under:

"93. ....If the 1948 Amendment could be treated as enabling the Income Tax Officer to take action at any point of time in respect of back assessment years within eight years of March 30, 1948 then such cases were within his power to tax. We have such a case here in CA No. 509 of 1958 where the notice was issued in 1949 to the lady whose husband had remitted Rs 9180 to her from Bangkok in the year relative to Assessment Year 1942-43. That lady was assessable in respect of this sum under Section 4(2) of the Income Tax Act. She did not file a return. If the case stood governed by the 1939 Amendment the period applicable would have been four years if she had not concealed the particulars of the income. She had of course not deliberately furnished inaccurate particulars thereof. If the case was governed by the 1948 Amendment she would come within the eight-year rule because she had failed to furnish a return. Now, we do not think that we can treat the different periods indicated under Section 34 as periods of limitation, the expiry of which grant prescriptive title to defaulting tax-payers It may be said that an assessment once made is final and conclusive except for the provisions of Sections 34 and 35 but it is quite a different matter to say that a "vested right" arises in the assessee. On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income Tax Act a liability to pay tax is incurred when according to the Finance Act in force the amount of income,

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profits or gains is above the exempted. That liability to the State is independent of any consideration of time and, in the absence of any provision restricting action by a time limit, it can be enforced at any time. What the law does is to prevent harassment of assessees to the end of time by prescribing a limit of time for its own officers to take action. This limit of time is binding upon the officers, but the liability under the charging section can only be said to be unenforceable after the expiry of the period under the law as it stands. In other words, though the liability to pay tax remains it cannot be enforced by the officers administering the tax laws. If the disability is removed or according to a new law a new time limit is created retrospectively, there is no reason why the liability should not be treated as still enforceable. The law does not deal with concluded claims or their revival but with the enforcement of a liability to the State which though existing remained to be enforced… ** ** ** 95. .....It says that the limit of time mentioned in Section 34 is removed in certain cases that is to say, action can be taken at any time in these cases. In our judgment, each case of a notice must be judged according to the law existing on the date the notice was issued or served, as the law may require. So long as the notice where the notice is in question, and the assessment, where the assessment is in question, are within the time limited by the law, as it exists when the respective actions are taken, the actions cannot be questioned provided the law is clearly retrospective. The only case in which no further action can be taken is one in which action was not taken under the old law within the period prescribed by that law and which is not also within the period mentioned in the new law if its operation is retrospective. All other cases are covered by the law in force at the time action is taken. It is from these viewpoints that these appeals, in our opinion, should be judged." (Emphasis supplied) 45. The Hon’ble Supreme Court in the case of S.C. Prashar (supra) had unambiguously held that the notice for reassessment should be judged by the law as existing on the date of issue of notice and that if the notice and the assessment year is within the time period in compliance to the retrospective law, such notice can’t be questioned. The principle that the liability to the State is independent of any consideration of time and the legislature is

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capable of enacting retrospective law was endorsed by the Hon’ble Supreme Court in that case.

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of legal position earlier in this order, in any event, do not constitute unquestionably binding judicial precedents, which cannot be deviated from, for us. While the views expressed by even non-jurisdictional High Court does deserve utmost respect and reverence, that position is still a step below the unquestionable binding force of law. On the peculiar facts of this case, it is not open to us to disregard the Explanation above below section 149(3) based on a judicial precedent that had no occasion to even deal with the same. Regarding the Hon'ble Supreme Court's summary dismissal of SLP against the Brahm Datt case (supra), as relied upon by the assessee, it is only elementary that mere dismissal of an SLP does not amount to a decision on the law. Such a summary dismissal of SLP cannot be treated as a binding precedent under article 141 of the Constitution of India- as has been held by several judgments of Hon'ble Supreme Court time and again, and reiterated by Hon'ble Bombay High Court in the case of CIT v. Pamwi Tissues Ltd. [2009] 313 ITR 137. Nothing, therefore, turns on the dismissal of the SLP either.

We are in complete agreement with the decision of the ld. ITAT Bombay in that case. The other decisions of Mumbai Tribunal relied upon by the assessee were delivered following the non-binding ratio in the case of Brahm Dutt (supra) and can’t be given any weightage.

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38/2021 cannot extend the time limit and that CBDT's Instructions No. 1 of 2022 dated 11-5-2022 which, if permits Jurisdictional Assessing Officer to act beyond jurisdiction prescribed under statute, was ultra vires to the provision of Finance Act, 2021. It was also held that Notification Nos. 20/2021 and 38/2021 would not extend time period provided under proviso to section 149(1). The Court further held that the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TLA Act) was a subsidiary legislation, whereas unamended sections 147 to 151 was principal legislation. The substitution of sections 147 to 151 by Finance Act with entire new set of provision having different conditions and procedures on which existence of subsidiary legislation TLA Act depends itself and ceased to exist, provision contained in TLA cannot have any effect after enactment of Finance Act, 2021. This decision was given after considering the specific mention of Proviso to section 149 which read as under: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if [a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021.

The Hon’ble Court held that in view of express language of 1st proviso to Section 149(1), legislative mandate required that no notice could be issued under the new provision, if such notice could not be issued at that time on account of being beyond the time specified under the said section as it stood before the commencement of the Finance Act 2021, i.e. a period of six years. Further, in view of decision of Hon'ble Supreme Court in case of Ashish

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Agarwal (supra), the notices issued to the respective assessees under section 148 shall be deemed to be notices under section 148A(b) of the Act as substituted by Finance Act 2021. Accordingly, it was held that the notices under section 148A (by deeming fiction) was issued, between the period 1- 4-2021 to 30-6-2021 (i.e after 31-3-2021), wherein six years had elapsed from end of the relevant assessment year and therefore they were time barred. Thus, the issue involved in that case is found to be totally different and not applicable to the facts of the present case.

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‘relevant assessment year’ passed u/s 153C r.w.s. 144 of the Act was held as bad in law and quashed. The Hon’ble High Court held that the Tribunal had faulted on the ground that the search being conducted on 07 April 2016, the extended period of ten years was not applicable. According to the Hon’ble Court, the commencement point would have to be construed as the date when the satisfaction is formed by the common AO with respect to such other person. It was held that it would be the date when the Assessing Officer records his satisfaction with respect to the non-searched entity which would be of seminal importance and constitute the bedrock for commencement of action under section 153C. The Hon’ble Court held that even though the search was conducted on 7-4-2016, since satisfaction in case of assessee was recorded on 15-5-2019, i.e., after amendment to section 153C by Finance Act, 2017 came into effect, block period of six assessment years would get extended to ten assessment years.

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existing on the date of issue of notice has to be applied and in the present case it is clear that the cases can be reopened up to 16 years. Therefore, the notice under section 148 of the Act issued by the AO for the assessment years 2000-01 to 2009-10 are held as valid, correct and in accordance with the provisions of law.

Completion of unabated assessment without incriminating material 52. This ground is involved in the A.Ys. 2010-11 to 2014-15, for which assessment were completed u/s.153A of the Act. According to the Ld. Sr. Counsel, A.Ys. 2010-11 to 2014-15 are unabated assessment years, whereas, A.Y. 2015-16 is the case of abated assessment. The Ld. Sr. Counsel submitted that no incriminating material was found in the course of search at the premise of the assessee. The assesse was only confronted with certain documents in relation to foreign bank accounts held with MLB. He had drawn our attention to the various questions put to the assessee in the

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statement recorded under Section 132(4) of the Act and explained that the documents were merely confronted to the assessee during the search and those documents were not found from the premises of the assessee during the search. He had also drawn our attention to the assessment order wherein the AO had categorically mentioned that “Confidential Client Profile Sheet” and “Settler Profile Form”, were received from tax authorities of Cayman Islands. Further, that the AO had acknowledged in the assessment order that the assessee was only confronted with these documents. Ld. Sr. Counsel has also drawn our attention to the order of the Ld. CIT(A) wherein only the confrontation of the available documentary evidence to the assessee and the statement u/s.132(4) of the Act, was construed as incriminating material. Ld. Sr. Counsel submitted that the details regarding other four foreign bank accounts held by the assessee with HBS were received through FT&TR Division of CBDT during the assessment proceeding, which was acknowledged by the AO. According to the Ld. Sr. Counsel, the additions made by the AO in respect of foreign bank accounts were not based on any incriminating material found from the premises of the assessee during the search. He submitted that in the case of unabated assessment no addition can be made in the absence of any incriminating material found during the search. In this regard, he has placed reliance mainly on the following decisions: i. CIT v. Abhishar Buildwell (P.) Ltd., [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212 (SC) ii. Pr.CIT-4 v. Saumya Construction (P) Ltd., (2016) 387 ITR 529 (Guj- HC) iii. CIT vs. Kabul Chawla, [2016] 380 ITR 573 (Del HC)

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assessee in the statement under Section 132(4) of the Act that he was settlor of the trust and that the beneficiaries of the trust were all his family members constituted incriminating material. The Ld. CIT.DR submitted that in spite of being confronted with all the documentary evidences which clearly established that the foreign bank accounts belonged to the assessee, the assessee was in denial mode and didn’t answer the specific questions about the foreign account transactions as evident from the seized documents. According to the Ld. CIT. DR, the statement recorded during the search also constituted incriminating material and the AO had rightly based his additions on this statement. Further, no evidence was brought on record by the assessee in support of his contention that the foreign bank accounts belonged to his sister. Therefore, the AO had rightly made the addition after confronting the evidences available with the Department in the course of statement recorded during the search, which constituted incriminating material.

Our finding on incriminating material

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that of the Hon’ble Delhi High Court in the case of Kabul Chawla (61 taxmann.com 412) (Del) and by the Hon’ble Gujarat High Court in the case of Saumya Constructions (81 taxmann.com 291) (Guj). The Hon’ble Allahabad High Court, however, in the case of CIT v. Mehndipur Balaji [2023] (147 taxmann.com 201) (All) had taken a contrary view. After the declaration of law on the issue by the Hon’ble Apex Court, reference and reliance on various other decisions of different High Courts and Tribunals, will be otiose. The doctrine of precedence is absolute for the lower courts and therefore, we don’t find it necessary to refer to other decisions relied upon by the assessee in this regard.

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difference of opinion in the judicial pronouncements of different High Courts. The conclusion as recorded by the Apex Court in Para 14 of the order in the case of Abhisar Buildwell (supra) is found to be as under:

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not confined only to the incriminating material found during search. The Hon’ble Apex Court has categorically held that the AO would assume the jurisdiction to assess or re-assessee the “total income” by taking into consideration the incriminating material unearthed during the search and the ‘other material’ available with the AO, including the income declared in the returns. The essence of the judgement is that the incriminating material found during the search gives the AO the jurisdiction to assess or reassess the ‘total income’ u/s 153A of the Act of the unabated/completed assessment. In the absence of any incriminating material unearthed during the search the AO would not have the jurisdiction to proceed in the unabated/completed year(s) only on the basis of other material. However, once the jurisdiction is assumed by the AO on the strength of incriminating material found during the search, the AO has to assess or reassess the ‘total income’ of the unabated year not only on the basis of incriminating material found during the search but also taking into account the ‘other material’ as available with him as well as the return of income. We have to, therefore, examine as to what were the “incriminating materials” found during the search and what were the “other materials” available with the AO, to assess/reasess the total income of the assessee.

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the basis of which the reason to believe is formed that any person is in possession of money, bullion, jewellery or other valuable articles or things which represent his income and which has not been or would not be disclosed for the purpose of Income Tax Act. The precise purpose of conducting search operation is to get hold of evidences having a bearing on the tax liability of a person, which the said person is seeking to withhold from the assessing authority. From the facts as narrated in the assessment order as well as from the statement recorded u/s 132(4) of the Act, it prima facie appears that the department was already in possession of certain specific information in respect of foreign bank accounts of the assessees, which were not disclosed in their income tax returns. For this reason, search operation u/s.132 of the Act was conducted to unravel further evidences, and in the course of search the assessee was confronted with the information/documents already available with the department. The statement of the assessee recorded u/s. 132(4) of the Act is reproduced in the assessment order and it is found therefrom that the trust deed dated 07.01.2000, supplementary deed dated 07.01.2000, company formation letter addressed to MLB and Trust Company (Cayman) Ltd., Confidential Client Profile Sheet dated 06.12.1999, Settlor Profile Form, deed of amendment dated 30.03.2004, Revocation of Trust Deed dated 19.11.2012; were all shown to the assessee and merely confronted for explanation in the course of statement. It is apparent from the statement that these documents were not found from the premises of the assessee in the course of search, as no such reference is appearing in the statement. However, there is no dispute to the fact that the documents as confronted to the assessee in the course of statement recorded during search were in respect of foreign bank accounts of

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the assessee. These documents can’t be considered as ‘incriminating material’ found during the search but are in the nature of ‘other material’ and the very basis upon which the search was conducted at the premises of the assessee.

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the assessee in the course of the statement recorded during the search. The correctness or authenticity of these “other incriminating materials” has not been questioned. Therefore, any evidence found in the course of search that corroborates the “other materials” as already available with the department, partakes the character of incriminating material found during the search. Such corroborating evidences found during the search may be documentary or oral and the same has to be considered by the AO during the search assessment as per section 153A of the Act. Therefore, we have to examine whether any documentary or oral evidence was found in this case during the search, which corroborates the incriminating material already available with the department regarding existence of foreign bank accounts of the assessee.

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available with the Revenue. Further, the documents in respect of re- payment mortgage scheme of Barclays Bank and a letter from Barclays Bank, England, which contained the confidential Pin of a credit card issued by Barclays Bank were also seized. In the course of statement recorded u/s. 132(4) of the Act on 03.12.2015, the assessee was enquired about these documents and in reply to question no.30, he had stated as under:

Q 30: During the course of search u/s 132 at your residential premises on 2/12/2015 certain loose papers were found and inventorized in a loose paper file as per Ax. A-1 containing pages 1 to 54. Kindly confirm whether the same have been found from your premises and give page wise description for the same. Ans.: I confirm that the loose paper, cards etc. were found during the course of search from my residential premises and the page wise description is as under: Page Nos. - 1 to 6 are xerox copy of visiting cards. …….. Page 26 - Credit Card related correspondence resident from Barclays Bank for Add on card of my sister Prabhavatiben Amin Page 27 – Visiting card Page 37 to 42 – Brochure of Barclays Bank Page 43 to 54 – Actual visiting cards, copies of which were already explained while explaining page no. 1 to 6. Q.31 During the course of search at your residence two mobiles were found and backup of the same are taken, and one sealed copy and one working copy are taken in pendrives inventorized as per Ax-A/2. Kindly confirm the same. Ans: Yes, I confirm the same

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evidence in the course of statement u/s.132(4) of the Act and he had stated that this correspondence was related to his late sister Smt. Prabhavatiben Amin. However, no evidence in this regard was brought on record by the assessee. On the other hand, in the Confidential Client Profile Sheet of NAD Investment Ltd. which was signed by the assessee and which is reproduced at Page Nos.12 to 14 of the assessment order, the assessee had disclosed his present banking relationship with Barclays Bank. Therefore, the correspondence with Barclays Bank found during the search was not in respect of assessee’s sister as contended in his statement, but it pertained to the assessee himself. Thus, corroborating evidence in the form of correspondence with Barclays Bank was found during the search which confirmed the disclosure as made by the assessee in the other material i.e. Confidential Client Profile Sheet of the bank account with MLB.

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i.e. FC who was representing MLB and whose connection was found at the residence of the assessee in the course of search.

“Q 4. You are shown the extract of bank statement of bank a/c. no. I6503B39 and ICA03B39 in Meryll lynch bank in the name of the company M/s. NAD Investment Ltd. There are total 31 transactions of deposits from the period 12/01/2000 to 16/09/2010 totalling to $6,84,468/- by way of fund transfer wire transfers, cheque deposits and money transfer. The company NAD Investment Ltd. was a property of a trust, whose settler as well as beneficiary were you and your wife Smt. Manjulaben Patel. Therefore you are requested to kindly explain the source of this $6,84,468/-. Ans 4:- First of all we were only Settler working under instruction of my sister. Any of these above amount had not been withdrawn or deposited by me from Indian funds. My sister’s name is Prabhavatiben Amin (British Citizen) who was formerly a Kenyan resident. Q 5:- Please confirm the 31 pages described in Q.4 of this statement pertaining to A/c. no. I6503B39 and ICA03B39 in Meryll Lynch bank in the name of NAD Invst. Co. as Annexure-1 Ans 5:- Yes, I am confirm that the particular page is marked as Annexure-1 to the statement. Q 6 You are shown the extract of bank statement of bank a/c. no. ICA03B39 in Meryll lynch bank in the name of the company M/s. NAD Investment Ltd. There are total 6 transactions of withdrawals which is attached with statement as Annexure-2 for the period 10/06/2011 to 04/12/2012 totalling to $2,71,669/- by

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way of wire transfer to different accounts. The Company NAD Investment Ltd. was a property of a trust, whose settler as well as beneficiary were you and your wife Smt. Manjulaben Patel. Therefore you are request to explain these withdrawals of $2,71,669/-. Ans 6:- All transactions are done under the instruction of account holder (Smt. Prabhavatiben). Q 7 Do you know any person Shri Jignesh Patel to whom amount of $50,000/- has been transferred on 10/06/2011 from bank a/c no. ICA03B39 in Meryl lynch bank of the company NAD Investment Ltd. Ans 7:- At present I am unable to recollect….. I am unaware of the said person. Q 8 Do you know any person Shri Hitesh Patel to whom amount of $30,000/-, $40,000/- and $30,000/- has been transferred on 16/06/2011 from banc a/c. no. ICA03B39 in Meryll lynch bank of the Company NAD Investment Ltd. Ans 8:- I am unable to recollect and also I am unaware of the said person. Q 9 Do you know any entity Anjaneya Hospitality Ltd. to whom amount of $50,000/- has been transferred on 23/06/2011 from bank a/c no. ICA03B39 in Meryll lynch bank of the company NAD Investment Ltd. Ans 9:- I am unaware of the said entity and also I am unable to recollect. Q 10 At the time of closure of A/c. no. ICA03B39 in Meryll lynch bank of the Company NAD Investment Ltd. an amount of #71,669/- was transferred to an account in Bank of America of NAD Investment Ltd. on 04/12/2012. Does NAD Investment ltd. has another account in Bank of America also? Ans 10:- I am not aware of another account and also I am unable to recollect. Q11 Do you know a person Shri Anil Chaturvedi and are you in touch with him? Ans 11 Shri Anil Chaturvedi was Branch Manager of State Bank of India, Markarpura Indl. Est. Branch, Vadodara, where my account is there for last

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more than 45 years. I am not regularly in touch with him except talk phone.”

Whether statement u/s 132(4) is incriminating material? 67. In the course of search the assessee was confronted with the ‘other materials’ as available with the Department as well as the evidences recovered during the search and the assessee, though denying that he was owner of the foreign bank accounts, had admitted that he had signed all those documents. Thus, there is oral evidence recorded during the search

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which corroborates the ‘other incriminating material’ available with the Department. Further, the circumstantial evidences recovered during the search in the form of visiting cards of Sh Anil Chaturvedi representing the foreign banks and communication of Barclays Bank as referred above, also corroborate the other incriminating materials. The Ld. Sr. Counsel has contended that the statements recorded by the Revenue doesn’t constitute incriminating material for which he has placed reliance on certain judicial pronouncements. We have carefully gone through the referred decisions and it is found that they rather support the case of the Revenue in the given facts and circumstances.

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assessment years. As regarding statement of T, a copy of the said statement was not provided to the assessee and he was also not offered for cross-examination. Further 'T' had retracted from his statement and, therefore, his statement was discarded. Thus, the facts of that case are found to be totally different. In that case reliance was placed on statement of third party whereas in the present case the reliance is on the statement of the assessee himself and, therefore, the ratio of that decision can’t be imported here. Rather, the statement u/s 132(4) of the Director of the company was considered as incriminating material by the Hon’ble Delhi High Court for the year to which the surrender pertained.

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details and evidences, the correctness or authenticity of which is not in question and which clearly establish the existence of undisclosed foreign bank accounts. Further, the evidences and details found during the search, which corroborates the other materials available with the Department, were also confronted in the statements recorded under section 132(4) of the Act. The reliance here is not on mere statements u/s 132(4) but also on the other materials that were duly confronted to the assessee.

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discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. …(Emphasis supplied). 71. It is relevant to consider here that the decision of Hon’ble Delhi High Court in that case was given in the context of section 158BC of the Act, which required computation of undisclosed income only for the block period. On the other hand, the provision of section 153A of the Act, requires the AO to compute the ‘total income’ of the assessee considering the evidences found during the search as well as the other evidences as available with him. Therefore, the statement recorded during the search u/s 132(4) is not confined only to materials found during the search. As held by the Hon’ble Delhi High Court, the statement can be recorded in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. Therefore, the other materials as well as the materials which were the base of the search, were rightly confronted to the assessee in the statements recoded during the search and which can be

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utilized in its entirety as incriminating material to compute the total income of the assessee, as held in the case of Abhisar Buildwell (supra).

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statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. To reproduce from the order of the Hon’ble High Court: 6. …. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue.

The Special Leave Petition filed against this order was dismissed by the Hon’ble Apex Court in B. Kishore Kumar v. Dy. CIT [2005] 62 taxmann.com 215. The fact that a mere statement U/s 132(4) is evidence for making an assessment was upheld in this judgement. Thus, even a statement u/s 132(4) shall constitute incriminating material for the purpose of making an assessment U/s 153A of the Act.

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recorded with specific reference to the circumstantial evidences found during the search as well as the ‘other materials’ available with the Department and such statement is “incriminating evidence” collected during the search which certainly can be used as evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. Therefore, the grounds taken by the assessee in respect of completion of unabated assessment without incriminating material and against considering the statement u/s 132(4) as incriminating evidence, are dismissed.

Grounds on the merits of the addition.

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sister. Shri Bipinbhai Patel and his family members had not transferred any amount from India to the foreign bank accounts nor had they transferred any funds from the foreign bank accounts into India for their personal benefit. The bank accounts with MLB was closed in December 2012 and the proceeds were transferred back to assessee’s sister or her nominees. An affidavit to the above extent was also filed before the AO in the course of assessment proceeding, which was ignored. The Ld. Sr. Counsel submitted that the contents of the affidavit cannot be ignored unless proved to be contrary by the Revenue and in this regard reliance was placed on the decision of Hon’ble Jurisdictional High Court in the case of Glass Lines Equipments Company Ltd. Vs. CIT, reported in 253 ITR 454 (Gujarat).

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(AP). The Ld. Sr. Counsel further submitted that the assessee had filed return of income in response to notices u/s.148/153A of the Act within the prescribed time limit. As the bank statements were made available to the assessee towards the fag end of assessment proceeding, the losses could be quantified only at the appellate stage and, therefore, the assessee could not have claimed such losses in the return of income. He further submitted that the provision of Section 79A of the Act which prohibits set off of losses subsequent to search was inserted by Finance Act, 2022 w.e.f. 01.04.2022 and the amendment was prospective in nature. Therefore, the assessee was eligible for set off of losses subsequent to search. The Ld. AR contended that the losses in question were worked out on the basis of same material based on which income was worked out and additions were made. According to the Ld. Sr. Counsel, any document has to be read in its entirety and it was not permissible for the Revenue to adopt pick and choose method. He further submitted that the losses falling within the block period must be allowed, reliance for which was placed on the following decisions: i. E.K. Lingamurthy(2009) 314 ITR 305 (SC): ii. H.E. Distilleries (P.) Ltd. (2010) 229 CTR 457 (Karnataka) iii. Fenoplast Ltd.(2014) 367 ITR 761 (AP & Telangana): iv. Ch. Mohan v ACIT-(2014) 369 ITR 189 (Andhra Pradesh); v. P Mohammed alias Manu- (2014) 41 taxmann.com 6 (Kerala); vi. P.D. Abrahm - (2012) 349 ITR 442 (Kerala): vii. Mahalaxmi Motors Ltd.-(2014) 368 ITR 724 (AP): 79. The Ld. Sr. Counsel further submitted that the additional claim in respect of set off of losses can be raised before the appellate authorities, for which, reliance has been placed on the following decisions:

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i. Jute Corporation of India vs. CIT-187 ITR 688 (SC) ✓ National Thermal Power Corporation vs CIT-229 ITR 383 (SC); ii. CIT v. Mitesh Impex-(2014) 367 ITR 85 (Guj): iii. PCIT vs. UTI Bank-(2017) 398 ITR 514 (Guj): iv. CIT vs. Jai Parabolic Springs Ltd.-306 ITR 42 (Delhi): v. CIT vs. Pruthvi Brokers & Shareholders-349 ITR 336 (Bom): vi. CIT vs. Abhinitha Foundation P. Ltd.-396 ITR 251 (Madras 80. The Ld. Sr. Counsel submitted that the genuineness and quantification of the losses was not in dispute and it was well settled that only real income has to be taxed in the hands of the assessee, for which, reliance was placed on the decision of Godhara Electricity Co. Ltd. vs. CIT, (1997) 225 ITR 746 (SC). He submitted that AO was duty bound to give relief to the assessee wherever due even if it was not claimed by the assessee, for which, he relied on the decision of Hon’ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in (2205) 276 ITR 165 (Guj.). The Ld. SR. Counsel vehemently contended that the Ld. CIT(A) was not justified in adopting Nil amount in place of losses, which has resulted in denial of benefit of carry forward and set off of such losses in the succeeding years.

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assessee didn’t bring any evidence on record to establish that the amounts in the foreign bank accounts were transferred from the accounts of his sister or that the bank accounts belonged to his sister. He has drawn our attention to the fact that in the documents related to formation of NAD Investment Ltd. and the operation of the bank accounts with MLB, no mention of assessee’s sister or even her husband was mentioned anywhere. The Ld. CIT-DR vehemently submitted that the assessee had not explained, that if the accounts were opened to help his sister, why the ultimate beneficiary of the trust that was holding the foreign bank accounts were his own son, daughter- in-law and granddaughters and why his sister or his descendants were not nominated as beneficiary of the foreign accounts. The Ld. CIT-DR further submitted that the affidavit dated 04.12.2015 filed by the assessee on 04.12.2017 was only a self-serving document and no evidence was brought on record to establish the contentions as made in the said affidavit. He submitted that the primary onus was only on the assessee to establish that he was not the owner of the foreign bank accounts or that the funds in those accounts did not belong to him. Apart from making a bland denial the assessee has not brought any evidence to establish that the funds in the foreign bank accounts did not belong to him. As the assessee was a resident and his global income was taxable, the onus was squarely on him to establish that certain amount/credit were not his income and it was not for the AO to prove otherwise. The Ld. CIT-DR submitted that the initial burden lying on the assesse to rebut the primary presumption made by the AO on the documents found during the search and as available with the department was not discharged.

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Our findings on ownership of the bank accounts

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Manjulaben Patel. The Confidential Client Profile Sheet (CCPS) and Settlor Profile Form, which were received from tax authorities of Cayman Islands and which has been reproduced in the assessment order, contained identity details and profile of owners of NAD Investment Ltd. and settlor of the trust and the name of the assessee and his wife and their Baroda address was appearing in these forms. It is explicit from these evidences that the assessee and his wife were the actual owners of the company NAD Investment Ltd., which was holding the foreign bank accounts and the onus was squarely on the assessee and his wife, who were the settlors, to explain the source of the funds in the foreign bank accounts.

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husband or her family member. Why the ultimate beneficiaries of the trust were his own son, daughter-in-law and granddaughter of the assessee and why his sister or his family members were not named as ultimate beneficiary of the trust in the documents? No explanation was given in this regard as any stage in spite of specific queries. In fact, the deed of trust was amended on 30.03.2024 to include the name of second granddaughter of the assessee in the list of ultimate beneficiaries. The assessee has also not brought on record any evidence to establish the fact that the funds in the foreign bank account were transferred from the account of her sister. The contention of the assessee that the funds, on closure of the foreign bank accounts with MLB, were transferred to her sister is also not found correct. In the statement u/s 132(4) Dated 27th January 2016 (already reproduced earlier) it was categorically mentioned that at the time of closure of account number 1CA03B39 with Meryll Lynch Bank on 04/12/2012 the company NAD Investment Limited had transferred $71669/- to another account of NAD Investment Limited with Bank of America and when enquired about this another bank account the assessee had pleaded his ignorance. Thus, the fund on closure of the account was not transferred to his sister but to another account of NAD Investment Limited, which was owned by the assessee and his wife, as already discussed earlier.

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assessee the dispel those evidences by producing evidences in support of the averments as made in the affidavit. Rather the averment made in the affidavit regarding transfer of closure proceeds of the account was found to be incorrect. In the absence of any contrary evidence the AO had rightly not taken into account the affidavit of the assessee, which was a mere self- serving document and furnished without establishing its correctness through other supportive documents. The assessee had relied upon the decision of jurisdictional High Court in the case Glass Lines Equipments Company Ltd. Vs. CIT (supra). In that case the assessee had on its own described that six items of expenditure totalling to Rs. 38,349 were not relevant to the setting up of the plant, and this part of the affidavit was accepted by the Commissioner (Appeals), and the balance portion of the affidavit was ignored. The Hon’ble Gujarat Court had held that the Commissioner (Appeals) was not correct in accepting only part of the affidavit. The facts of that case being totally different, the assessee can’t derive any benefit from the said decision. In the present case neither the assessee has supported his affidavit with any shred of evidence not any part of the affidavit was accepted by the Revenue.

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to be taxed in India. Under the circumstances, the onus was squarely on the assessee to explain and bring on record the evidences for source of credits as appearing in the foreign bank accounts. Apart from making a bald statement that foreign bank accounts were opened on behalf of his sister, no evidence has been brought on record to substantiate this fact. Under the circumstances, the affidavit filed by the assessee, which was a mere self- serving document, was rightly rejected by the AO.

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account with MLB. This CCPS was to be completed by FC/GPB when submitting new trust or standalone company business. Shri Anil Chaturvedi had submitted the CCPS of the assessee and his wife as FC. Regarding his acquaintance with the client, Mr. Chaturvedi had declared in the CCPS that he knew the client since 1977 when he was client of his previous employer and his present banking relationship was stated to be with Barclays Bank. In the case of Hinduja’s Bank account also, the relationship of Mr Chaturvedi with the assessee is evident from his association as declared while Manager with SBI Vadodara, though his name is redacted in the document. Thus, the acquaintance of Mr. Anil Chaturvedi was only with the assessee and his family members. There was no trace of evidence that Mr Chaturvedi had any acquaintance with the sister of the assessee or that the foreign bank accounts were opened on her behalf by him or that he was managing the funds of her sister. Neither any such evidence was brought on record by the assessee. In the absence of any contrary evidence to his declarations as made while opening the foreign bank accounts of the assessee, there was no occasion for the Revenue to conduct any enquiry with Shri Anil Chaturvedi. The contention of the assessee that no specific material was found to demonstrate that the transactions were carried out by the assessee is found to be baseless. All the evidences were confronted to the assessee and have also been discussed in detail in the assessment order, which leave no doubt about the ownership of the bank accounts. It will be apposite here to refer to some of the evidences.

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“Q. No.10 In the said cheque signed by Shri Vijay M Patel for $ 6200 dated 24/05/2000, the payments is stated to be made to B.P. Patel and has been deposited in the bank account no.16503B39 in Merrill Lynch in the name "NAD Investment Ltd." Considering the fact that the cheque has been issued in your name and deposited in the account of Nad Investment Ltd, why this bank account no. 16503B39 in Merrill Lynch Bank should not be considered as belonging to you? Ans : I have explained at the time of raid also that I helped my sister to take out whatever possible from East Africa and these may be the transactions she may have made in my name as per the bankers advice. Sitting in India, I cannot handle all these things. Q.No. 14 You are shown a cheque signed by Shri Prakash M Amin for $ 57,000 dated 25/08/2000, in which the payments is stated to be made to Bipin Patel and has been deposited in the bank account no. 16503B39 in Merrill Lynch in the name "NAD Investment Lid." Considering the fact that the cheque has been issued in your name and deposited in the account of Nad Investment Ltd, you are again asked why this bank account no. 16503B39 in Merrill Lynch Bank should not be considered as belonging to you? Ans I am not aware of the foreign countries law. Q. No. 15 Does this bank account number 16503B39 and 1CA03B39 in Merrill Lynch Bank belong to you and your wife?: Ans I was merely a settlor for this account and to my knowledge, no money has been deposited or withdrawn from India by me. Qs. No. 24 In reply to all questions related to bank account number 16503B39 & 1CA03B39 of NAD Investments Ltd in Merrill Lynch Bank, you have repeatedly

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stated that these bank accounts, the funds in it and all the transactions in these bank accounts belong to your sister Late Smt. Prabhavati Amin. Do you have any documentary evidence to prove this? Ans: This must be with the bankers, Mr. Chaturvedi Qs. No.25 You are again asked to submit any documentary evidence you have with you to prove that these foreign bank accounts 16503B39 & 1CA03B39 of NAD Investments Ltd in Merrill Lynch Bank belongs to your sister and not to you/your wife. Ans : I will have to check with Mr. Chaturvedi Qs. No. 26 Your reply to Qs. No. 25 means that at present, you don't have any evidence to prove that these undisclosed foreign bank accounts doesn't belong to you. Therefore, please state why these bank account number 16503B39 & 1CA03B39 of NAD Investments Ltd in Merrill Lynch Bank be considered as belonging to you / your wife? Ans: All formalities of bank is done by my sister and Mr. Chaturvedi, as my domicile is India and not other country. Qs No. 28 Does mobile number 09898453287 belongs to you and used by you only? Ans : Yes. But when I give it in repairs, I don't know who uses it. Qs, No. 29 Have you made any telephonic conversation from 09898453287 with Merrill Lynch bank authorities on 12/03/2012 requesting for transfer of funds? Ans : As advised by our lawyer, I have telephoned to Merrill Lynch time and again. Qs. No. 30 Have you ever signed any account opening forms/documents for any other foreign bank accounts? Ans : As directed by my sister and Mr. Chaturvedi, I may have signed many papers.

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Qs. No.34 You are shown a notarized letter dated 16/08/2012 signed by you and your wife Smt. Manjulaben Patel, whereby it is stated that all balance trust funds, after revocation of trust with Merrill Lynch Bank, shall be transferred to bank account number 11370 in Hinduja Bank (Switzerland) Ltd. in the name of Nad Investment Lid having IBAN No CH12 0882 7001 1370 0184 0. Kindly state whether this foreign bank account number 11370 in Hinduja Bank (Switzerland) Ltd. belongs to you/your wife or not? Ans: The account belongs to NAD Investment Ltd.” 91. It is evident from the above statement that the cheques in the name of the assessee were deposited in the foreign bank account with Merill Lynch Bank, which is a conclusive proof that those bank accounts belonged to the assessee. The assessee couldn’t explain how the cheque drawn in his name was deposited in the bank account, if the account belonged to her sister, as contented. When the assessee was specifically asked to produce documentary evidence that the accounts belonged to his sister, no documentary evidence could be provided and an evasive reply was given by the assessee that the documents will be available with the banker or Mr. Chaturvedi. If so, why the documents couldn’t be obtained and furnished by the assessee. Not only the assessee had signed the account opening forms for all the foreign bank accounts, but he was also in constant touch with Merrill Lynch through his telephone number 09898453287 as acknowledged in the statement. The evidences as available with the Revenue leave no doubt that the assessee and the assessee only, along with his wife, were the actual owner of all the foreign bank accounts. Therefore, the action of the AO to treat all the foreign bank accounts as belonging to the assessee is upheld. The grounds taken by the assessee and his wife that they being settlors, no addition could have been made in their hands are rejected.

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Our findings on merit of the addition

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in the foreign bank accounts and allowed relief to the assessee in respect of the expenses as evident from the bank accounts. The contention of the Revenue that all the additions were in the nature as mentioned in section 68 or section 69 of the Act is also not found correct. The AO had reproduced the description of the credit entries appearing in the bank accounts in the assessment order from which it is found that large number of credit entries were in respect of dividend, interest, STCG, LTCG etc. and the assessee was entitled to claim deduction for the expenses incurred in earning the income of these nature. Therefore, the Ld. CIT(A) had rightly allowed the deduction for expenses as evident from the bank account itself. As a result, the ground taken by the Revenue against the deduction for expenses, as allowed by the ld. CIT(A), is dismissed.

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any specific submission as to how the finding as given by the Ld. CIT(A) was not correct. Under the circumstances we do not find any reason to interfere with the order of the Ld. CIT(A) in this respect. The ground taken by the Revenue in this regard is, therefore, dismissed.

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for which reliance has been placed on various judicial decisions. It is found that all the decisions as relied upon by the assessee were rendered in the context of block proceeding u/s. 158BC of the Act, where a single assessment order for the entire block period was required to be passed. In the scheme of assessment u/s.153A of the Act, there is no concept of block period and the assessment for each year is required to be completed separately. Further, in the block period only unaccounted income for the entire block period was required to be computed whereas in the proceeding u/s.153A of the Act, the total income of the assessee (including unaccounted income) is to be computed for each year separately. Therefore, the reliance upon decisions that were delivered in the context of the block proceeding u/s.158BC of the Act cannot be applied to the assessments being completed u/s.153A of the Act. In the scheme of assessment u/s.153A of the Act, the carry forward of loss has to be decided in accordance with the specific provision as stipulated under the Act.

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in order to carry forward the loss. In the present cases, no return of income was filed claiming any loss within the time limit as prescribed u/s.139(1) of the Act. Therefore, the direction of the ld. CIT(A) that the assessee was not eligible for carry forward of loss, is found to be in accordance with the provisions of the Act and correct. The ground taken by the assessee in respect of allowing carry forward of losses is, therefore, rejected.

Correctness of losses?

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of mutual funds as worked out by the assessee and reproduced in the order of Ld. CIT(A) cannot be held as correct.

AY Diff. between sale & purchase of MF

2000-01 0 2001-02 -604923 2002-03 -101711 2003-04 197840 2004-05 2050 2005-06 1065 2006-07 61695 2007-08 -89631 2008-09 -12923 2009-10 -83820 2010-11 8307 2011-12 -30093 2012-13 772561 2013-14 197840

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2013-14 -271094.25 2014-15 -236.78 2015-16 6922.75 2016-17 -1000 Net Total 52848.72

(i) The AO should work out year-wise profit/loss of mutual fund transactions after taking into account the closing stock and opening stock of shares/mutual funds for each year after allowing an opportunity of being heard to the assessee. For this purpose, he may call for the details from the assessee in respect of the opening stock/closing stock for the different years or from any other source as deemed fit. If details are obtained from a third party, that should be confronted to the assessee before taking a final call.

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(ii) We are conscious of the fact that the above exercise will not be easy on the part of the AO since the assessee is no longer alive and the other family members may not be privy to the information. Further, the details from third party also, mayn’t be forthcoming due to long passage of time. In such an eventuality and in the absence of any quantitative details of the mutual funds / share transactions, the net positive income of US $52,858.72 as per the working as detailed above, may be apportioned to different years proportionately on the basis of sale proceeds of the respective years. 102. Since the quantification of actual profit/loss in mutual funds / share transactions as appearing in foreign bank accounts is set aside to the file of the AO, the appeals of the assessee (except for A.Y. 2000-01 wherein no such transaction was involved) are deemed to be partly allowed for statistical purposes.

Unexplained jewellery found during search 103. The Ld. Sr. Counsel explained that in the case of Smt. Manjulaben Patel this issue is involved in ITA No.1915/Ahd/2019 filed by the assessee and ITA No.50/Ahd/2020 filed by the department for the A.Y. 2016-17. In the course of assessment, the AO had made addition of Rs.1,03,86,888/- in respect of unexplained jewellery found during the course of search in the hands of Manjulaben Patel and Jigishaben Patel (Daughter-in-law of Manjulaben Patel) in the following manner:

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(a) Substantive addition @50% Rs.51,93,444/- (b) Protective addition @ 50% 51,93,444/-

The Ld. Sr. Counsel submitted that the entire addition of jewellery was confirmed in the hands of Jigishaben Patel with an enhancement. As against original addition of Rs.1,03,86,888/-, the addition confirmed in the hands of Jigishaben Patel on account of unexplained jewellery was Rs.1,04,83,953/-. He explained that in the case of Jigishaben Patel that a Declaration was filed under Vivad Se Vishwas Act, 2020 for A.Y. 2016-17 and tax was paid on the entire addition of jewellery as confirmed by the Ld. CIT(A) and, thereafter, the appeal in her case before the ITAT was withdrawn. According to the Ld. Sr. Counsel, the entire addition on account of unexplained jewellery, thus stands confirmed in the hands of Jigishaben Patel on substantive basis. Therefore, the protective addition of Rs.52,91,977/- as upheld by the Ld. CIT(A) in the hands of Smt. Manjulaben B Patel deserves to be deleted.

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unexplained jewellery of Rs.1,03,86,888/- was made in the hands of Jigishaben Patel, 50% on protective basis and 50% on substantive basis. The Ld. CIT(A)-12 vide order dated 07.01.2019 had directed that the entire addition should be made in the hands of Smt. Jigishaben Patel on substantive basis. As per order giving effect to CIT(A)’s order, the AO vide order dated 11.03.2019 had made addition of Rs.1,04,83,953/- on account of unexplained jewellery in the hands of Jigishaben Patel. As appeal was filed in the case of Jigishaben Patel before the ITAT vide ITA No.497/Ahd/2019 for the A.Y. 2016-17. The assessee has filed Form No.3, Form No.4 and Form No.5 in respect of application of Jigishaben Patel under Vivad Se Vishwas Act, 2020 and it transpires therefrom that the declaration made by the assessee was accepted on payment of the disputed tax. In the Form-5, a reference of appeal pending before the ITAT i.e. ITA No.497/Ahd/2019 is also appearing. It thus transpires that the entire substantive addition of the unexplained jewellery of Rs.1,04,83,953/- as made in the hands of Smt. Jigishaben Patel stands finalized and accepted in her hands. In view of these facts, we direct that the protective addition of Rs.51,93,444/-in respect of unexplained jewellery as made in the hands of Smt. Manjulaben Patel should be deleted. The ground taken by the assessee in the regard is allowed and the ground of the Revenue is dismised.

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the addition made on account of unexplained jewellery found from the locker was not justified as locker did not belong to the assessee. He submitted that the assessee had given a detailed explanation regarding the jewellery but the AO did not make any effort to verify the same. Further, that the Ld. CIT(A) had dismissed the ground taken by the assessee in a very cryptic manner. Per contra, the ld. CIT-DR supported the orders of the lower authorities.

“13.4 It is worth mentioning here that the assessee, Shn Bipinchandra Patel has admitted in his statement recorded u/s 132(4) of the Income Tax Act, 1961 on 11.01.2015 in reply to question No. 4 to 6 that all the Jewellery items found from this locker belongs to Sml Kusumben V. Patel and Late Shri Vinodbhai R. Patel However, no documentary evidence to support his daim was submitted by him at that time. Whereas, during the assessment proceedings, Smt Kusumben Patel has stated in her submission filed in this office on 18.09.2017 that the jewellery belong to Shri Bipin Patel and his family. However, Shri Bipinchandra Patel vide his submission filed in this office on 05.10.2017 has stated that the jewellery belongs to Smt. Kusumben Patel and her late husband Shri Vinod Patel and his name was kept as third holder for convenience. Surprisingly Shn Bipin Patel in his submission filed in this office on 10.10.2017 and 13.11.2017 has confirmed that the jewellery does not belong to Smt. Kusumben Patel and hesusband but it belongs to his late brother Shri Vinayak Patel. The submission of Shri Bipin Patel is summarized as under- "The jewellery belong to the legal heirs of his late brother, Mr. Vinayak Patel, who passed away in 1995 and left behind a will wherein he was a executor. He filed for the probate before the city civil judge in Bangalore in 1996. In the meantime he had distributed all his jewellery among women of the family and jewellery of some of some of the women members of the family are lying with him which was kept in the said locker No.17

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somewhere in 1995-96. The said locker has not been operated since 1995- 96. A certificate to this effect issued by the concerned bank i..e Makarpura Industrial Estate Co-Op. Bank Ltd. has been furnished wherein it stated that as per the records available with the bank for the last 10 years, the locker has not been operated within that period. It must have been operated before 10 years, the exact date of operation could not be provided in absence of the records beyond 10 years. Shri Bipin patel has kept the jewellery in the lockers of Smt Kusumben Patel because it was vacant at that time." 13.5 Due to frequent change in the explanations furnished by the assessee, Shri Bipinchandra Patel which is also not corroborative with his statement recorded during the search proceedings, the different versions of explanations submitted by Shri Bipin Patel is not reliable and thus rejected.”

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Sl. ITA No. A.Y. Appeal filed Outcome No. by 1-2 ITA Nos. 1894 Both for 2000- Assessee Dismissed /Ahd/2019 & 01 1905/Ahd/ 2019 3-12 ITA Nos. 1895 to 2001-02 to Assessee Partly allowed for 1903/Ahd/2019 & 2009-10 & statistical purposes 1904/Ahd/2019 2016-17 13- IT(SS)A Nos. 569 to 2010-11 to Assessee Partly allowed for 18 574/Ahd/2019 2015-16 statistical purposes 19- ITA Nos. 1906 to 2001-02 to Assessee Partly allowed for 28 1914/Ahd/2019 2009-10 statistical purposes 29 ITA No.1915/Ahd/2019 2016-17 Assessee Partly allowed 29- IT(SS)A Nos. 575 to 2010-11 to Assessee Partly allowed for 34 580/ Ahd/2019 2015-16 statistical purposes 35- ITA Nos. 31 to 39 & 2000-01 to Appeal by Dismissed 54 40/Ahd/2020 2009-10 & Revenue & A/w. CO Nos. 54 to 61, 2016-17 CO by 63 & 62/Ahd/2020 assessee 55- IT(SS)A Nos. 01 to 2010-11 to Appeal by Dismissed 66 06/Ahd/2020 2015-16 Revenue & A/w. CO Nos. 47, 49, CO by 50, 52, 51 & assessee 53/Ahd/2020 67- ITA Nos. 41 to 49/ 2000-01 to Revenue Dismissed 76 Ahd/2020 & 2009-10 & 50/Ahd/ 2020 2016-17 77- IT(SS)A Nos. 07 to 2010-11 to Revenue Dismissed 82 12/Ahd/2020 2015-16

This Order is pronounced in the open court on 10/09/2024

Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 10/09/2024 S. K. SINHA True Copy आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत

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उप/सहायक पंजीकार उप सहायक पंजीकार (Dy./Asstt. Registrar) उप उप सहायक पंजीकार सहायक पंजीकार आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद