HASSAN ALI KHAN,MUMBAI vs. DCIT CEN CIR 2, MUMBAI

O R D E R Per Sanjay Arora, A. M.: Vide his instant Appeals, the Assessee agitates separate orders by the Commissioner of Income Tax (Appeals)-36, Mumbai ('CIT(A)') for assessment years (A.Ys.) 2001-02 to 2007-08. The appeals are with reference to the dismissal of the assessee’s appeals contesting his assessments under section 153A read with s. 143 (3) of the Income Tax Act, 1961 (‘the Act’) for the relevant years. The appeals raising common issues, were posted for hearing along with other connected appeals.

2 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT being pending for long, the hearing was proceeded with ex parte qua the assessee, so as to dispose the appeals after hearing the party before us. However, as subsequently some clarifications were required, the appeals (along with the connected matters) were posted for 17.2.2016. A junior counsel, Shri Ramanath Prabhu, for HSA Advocates, appeared, and sought adjournment. No vakalatnama in his favour stands filed. It deserves to be noted that the hearing in these matters, along with the other connected matters, took place in parallel over a period of three months, wherein counsels from both the sides appeared and made representations. It was, accordingly, conveyed that it was not possible to grant adjournment at this stage, even as the court was prepared to hear the parties on a day to day basis. Time was sought for filing written submissions, which was granted. Written submissions were accordingly filed on 22.2.2016 (copy on record), with the copy to the other side.

3.1 Written submissions, separately for each year in appeal, filed along with the application for admission of additional evidence dated 10.12.2013, are not signed by the assessee or by his Advocate on his behalf. The same are stated to be presented by the assessee through his Advocates (HSA Advocates). There is also no forwarding letter communicating the assessee’s filing of the written submissions, also indicating his preference to rely thereon in prosecuting his appeals. The same, accordingly, cannot be taken as part of the tribunal’s record. We shall, however, in arriving at our decision, take note thereof, if only to understand the assessee’s case, eschewing reference to or reliance on facts not borne out by the record. Next, we examine the assessee’s Application (dated 10.12.2013) for admission of additional evidence under Rule 29 of the Rules (containing 79 pages), which is a combined one for assessment years 2001-02 to 2007-08. The same is accompanied by an Affidavit dated 10.12.2013, avering that the accompanying documents, sought to be admitted, are true and correct to the best of his knowledge and belief. The assessee, per his said application, prays for the admission of the following documents, as 3 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT additional evidence, stating the same to have come in his possession in April, 2012, much after the conclusion of the proceedings before the first appellate authority: a) Copy of ‘Note Verbale’ dated 12.01.2007 issued by the Embassy of India, Berne to the Federal Department of Justice and Police, Federal Government of Swiss Confederation; b) Copy of fax response dated 15.01.2007 issued by the Federal, Department of Justice and Police, Federal Government of Swiss Confederation to the Embassy of India, Berne; c) Copy of letter dated 30.10.2007 from UBS AG to Swiss National Bank along with the Deloitte Report (dated 29/10/2007); d) Copy of letter dated 28.12.2007 and letter dated 29.02.2008 from UBS AG to ED No.1; e) Letter by UBS AG dated 8.12.2006 purportedly confirming that the Applicant has balance of USD 8 billion in his account; f) RBI notification notifying UBS AG as a scheduled bank; g) Extracts of the White Paper on Black Money published in May 2012; and h) Newspaper reports on RBI allowing UBS to operate in India.

As a prelude, it is submitted that the Directorate of Enforcement (the agency of the Government of India (GOI) that investigates the economic offences in India) also commenced an investigation under the provisions of Prevention of Money Laundering Act, 2005 (‘PMLA’ for short), registering an Enforcement Case Information Report (ECIR) (bearing no. ECIR/02/M2O/2007) against the appellant on 08.1.2007. The ECIR relied heavily on a letter dated 08.12.2006 and certain statement of account stated to be received by the ED from the Income-tax Department. In pursuance to ECIR, the ED approached the designated court u/s.57 of PMLA, seeking issuance of Letter Rogatory (LR) to various countries, being USA, UK, UAE, Singapore, Hongkong, Switzerland for gathering information regarding the alleged financial transactions by the applicant. The Hon’ble Court issued LRs addressed to the competent authorities of the said countries. The Embassy of India at Berne,

4 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Swizerland vide a ‘Note Verbale’ dated 12.1.2007 communicated the LR to the competent authority at Switzerland, giving specific reference to the letter dated 08.12.2006 (supra), further requesting it to block the amounts available in various accounts in Switzerland, as well as furnishing details of their transcripts. Vide fax dated 15.1.2007, the said competent authority, on the basis of a domestic enquiry of the said documents, informed the Embassy of India at Switzerland that the letter dated 08.12.2006 (supra) and the accompanying documents are forged documents. In justification, it is explained that the UBS AG, Zurich confirms the assessee to have a limited banking relationship with HAK (assessee). The ld. Departmental Representative (DR) would, on this being put across to him, object, stating that the same cannot be admitted in-as-much as the documents are not notarized or apostilled. Both India and Switzerland are signatories to the Hague Convention, placing on record the Apostille Convention. Banking industry in Switzerland, it needs to be appreciated, he continued, encourages opening of bank accounts, and information in their respect is protected by privacy laws of that country. With reference to a host of case law, it was pleaded that proceedings under the Act are to be decided on the basis of preponderance of probabilities in the facts and circumstances of the case, based on the material on record. There is no contention with regard to the lack of opportunity granted by the Revenue authorities.

3.2 We may now detail the Revenue’s application for admission of additional evidence dated 01.6.2015, which is the combined one for all the appeals of the group, i.e., the assessee, his wife (Rheema Hassan Ali Khan), Syed Ahmed Abbas Naqvi, Kashinath Tapuriah, Chandrika Tapuriah and R.M. Investment & Trading Co. P. Ltd. It is stated therein that in the course of post search enquiry, Enforcement Directorate (ED) provided a copy of a notarized statement dated 30.6.2003 of HAK confirming that he had an account in UBS, Singapore opened in 1982 with a deposit of 1.5 Million USD. All the deposits, as per the statement, pertained to the period 1982 to 5 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 1997. The Notary Public of London, who verified the genuineness of the signatures of HAK, has accepted the genuineness of the said notarized statement. Further, to ascertain the genuineness of the various documents, including the bank accounts, obtained from UBS AG, Mumbai by the Assessing Officer (A.O.), a request was made to the Swiss Competent Authority through FT & TR Division of CBDT. In response, Swiss Authority vide letter dated 18.12.2013 confirmed the veracity of the documents gathered during the post assessment proceedings from the UBS AG. The Switzerland Authority has certified that out of 404 pages, 403 pages (containing bank account statement of HAK) are true, except one page incorporating transaction dated 08.12.2006 of deposit of 8 billion dollars, which was forged. The details of the documents prayed for admission by way of additional evidence, are as under: S. No. Particulars Page No. 1 Departmental Petition dated 01.6.2015 (*) 1 to 3 2 Copy of letter received from FT & TR, CBDT, dated 26.12.2013, along with its 4 to 7 enclosures, by CIT(Central)-1, Mumbai 3 Copy of letter of Directorate of Enforcement dated 15.11.2010 along with enclosures, to 8 to 19 CIT(Appeals). 4 Copy of letter dated 24.4.2008 of CIT, Central-1, Mumbai, to DCIT, Central Circle- 20 to 30 2, forwarding information in the case of Hassan Ali Khan along with its enclosures (*) not an evidence, but an application in its respect.

3.3 In our view, we shall be required to, and would accordingly, discuss the admissibility, in seriatim, of each of the documents prayed to be admitted by way of additional evidence. So, however, before we proceed to do so, it may be relevant to discuss the general considerations that have a bearing in the matter as well as the Revenue’s objections, which are again not document specific, but on a broad, general basis. As regards the objection of the documents being not subject to apostille, the 6 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT same is essentially a question of authenticity of the document. This is as the apostille only certifies the signature; the capacity of the signer; and the seal or stamp it bears, and does not certify the content of the document for which it is issued. The documents being presented by the assessee would only have been sent directly by the Bank to ED in India, so that it would in any case stand to be verified there-from. The same, as well as the accompanying report by Deloitte AG, Zurich, are marked as ‘confidential’. The question as to how the assessee obtained the same does arise. It, in fact, clearly proves the assessee’s connections not only in India but even abroad; he being able to access confidential communication between UBS AG and the Swiss National Bank, as well as the accompanying report by an independent auditor, made available directly to the bank for its purposes. But, then, should we allow that consideration to weigh when an issue is to be decided on the basis of ‘facts’, so that any document that is relevant and purports to reveal the truth, should be, in principle, and subject to the provision/s of law in the matter, considered. In fact, the documents being presented by the Revenue are also, similarly, not apostilled. However, as afore-stated, the documents being presented are direct communications between the relevant (competent) authorities of the two countries, sent through the proper channel, so that authenticity thereof cannot be doubted, or the same insisted for being subject to the regular verification procedure and, in any case, could be got verified from the concerned Department, which (procedure) shall also establish the veracity (of the contents) of the document/s. Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, which reads as under, is a provision regarding production of additional evidence before the Tribunal: ‘29. Production of additional evidence before the Tribunal. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the 7 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.’ The rule places a total ban on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances: i. if the tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause; or ii. if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them. (emphasis, ours)

On the existence of either of the circumstances mentioned above, the tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. The rule does not thus enable an assessee or the Department to tender fresh evidence to support a new point or to make out a new case. Additions in the present case are based on the information received from ED as well as that found and seized upon search dated 05.1.2007 at the residences of the assessee and others, including Kashinath Tapuriah, on the ground of the same being not satisfactorily explained. The Revenue, acting through the proper channel, has sought further information and made inquiries into the affairs of the assessee. It is the result of such post search enquiries, received from time to time, which it claims as relevant and material, and seeks admission as additional evidence. How could then, we wonder, it validly object to the assessee’s prayer for, similarly, admission of the reports received as a result of such enquiries. If the Revenue’s plea is accepted, there is no reason not to accept that of the assessee, the two being of the same genre,

8 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT supported by the same reasons. So, however, the terms of rule 29 would have to be regarded and satisfied, i.e., quite apart from the validity of the Revenue’s objection, and which (rule) itself obliges the tribunal to record reasons for such admission or, as the case may be, production or examination. The tribunal’s power to admit additional evidence is strictly limited. The Hon'ble jurisdictional High Court in Velji Deoraj & Co. vs. CIT [1968] 68 ITR 708 (Bom) clarified that the admission of additional evidence is made to depend not on the relevancy or materiality but upon the fact whether or not the appellate court requires the evidence to enable it to pronounce the order or for any other substantial cause. Further, the mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at the appellate stage, especially when the evidence was available to the party at the initial stage and had not been produced by him. This, it was further explained, is as the rule is not to allow a litigant, who has been unsuccessful in the lower courts, to patch up the weak parts of his case and fill up the omissions in the court of law. The admission of additional evidence by the tribunal is thus dependent on the tribunal requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered (refer pgs. 713- 715 of the reports). In this context, it would be useful to refer to the constitutional bench decision in K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, wherein it was observed in the context of the provision of Order 41, Rule 27(1) of Code of Civil Procedure, 1908, to which r. 29 is similar in terms, that the appellate court has the power to allow additional evidence not only where it requires such evidence to enable it to pronounce the judgment but also for any other substantial cause. There may well be cases where even though the Court finds that it is able to pronounce the judgment on the state of record as it is, so that it cannot strictly be said that it requires additional evidence to enable it to pronounce the judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it can pronounce its judgment in a more satisfactory manner. Such a 9 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT case will be one for allowing additional evidence for any other substantial cause under Rule 27(1)(b) of the Code. This aspect was again emphasized recently by the Hon’ble Court in Ibrahiam Uddin and Anr. [2012] 8 SCC 148, wherein it was explained that the words ‘for any other substantial cause’ must be read with the word ‘requires’ in the beginning of the sentence, so that it is only where, for any other substantial cause, the appellate court requires additional evidence, that this rule shall apply, for example, when evidence had been taken by the lower courts so imperfectly that the appellate court cannot pass a satisfactory judgment (refer pg. 168 of the reports). This view stands also expressed by the Hon’ble jurisdictional HC in Suhasinibai Goenka vs. CIT [1995] 216 ITR 518, 521-22 (Bom), stating that r. 29 allows the exercise of the power for production of additional evidence for a fair and just disposal of the appeal. Surely, the result of the enquiries initiated by GOI in the matter or even that subsequently need to be taken on record in arriving at our conclusions thereon in-as- much as they enable us to pass orders which are consistent with and, in any case; the same being not binding on this tribunal, take into account the results of such enquiries. This is more so as the decision/s by the Revenue in the matter are based primarily on the preponderance of probabilities. In fact, copy of the facsimile dated 15.1.2007 by the Swiss Federal Government, or the report dated 30.10.2007 by UBS AG to the Swiss National Bank, etc. are documents which were available at the time of assessment, so that they ought to have been considered or taken into account by the Revenue, providing, in all fairness, a copy thereof to the assessee. The assessee, whatever his conduct in the proceedings before the Revenue may have been, could not possibly have access thereto. A decision, after all, is only to be taken on the basis of the facts established or inferable from the material on record. We are, accordingly, prima facie, inclined to admit the material sought to be placed on record, both by the assessee and the Revenue. We consider the admissibility of the documents prayed for admission on the parameters and anvil of r. 29, as under:

By the Assessee a) The first document is the copy of ‘Note Verbale’ dated 12.1.2007, purportedly issued by Embassy of India, Berne. The same is unsigned and, accordingly, has no evidentiary value. The same, therefore, is not admitted. The same is, in any case, only a request for assistance. b) The copy of the fascimile dated 15.01.2007, purportedly by the Swiss Federal Government in the Department of Justice to the Indian Embassy, Berne. The same is admitted. Even though the designation of the person, whose name is specified at the place marked for signature, which is generally mandatory in official communication, is not stated. This may perhaps be due to the fact of the communication being by fax. c) This is the copy of the report dated 30.10.2007, marked ‘confidential’, by UBS AG to Swiss National Bank on the basis of an internal inquiry. The said letter is clearly in respect of the assessee and his alleged relationship with UBS, with which he is claimed to be holding huge amounts, or having banking relationship with. The same, as claimed by the assessee per his written submissions and as stated in the letter dated 28.12.2007 by UBS AG to the ED (which is a document listed at point (d) below), stands communicated to the ED vide the said letter. The same is admitted. As regards the report dated 29.10.2007 by Deloitte AG, which is in fact an accompaniment to the report dated 30.10.2007 by UBS AG, the same is an unsigned document. The same is not admitted. The gist of the same though gets included in the UBS AG report dated 30.10.2007, a fact admitted to by the assessee as well (per his written submissions). d) Copy of letter dated 28.12.2007 and letter dated 29.02.2008 from UBS AG to ED No.1. The said letters are unsigned documents and, accordingly, have little evidentiary value. e) Letter by UBS AG dated 8.12.2006- held to be forged by purportedly confirming that the Applicant has balance of USD 8 billion in his account, along with confirmation of balances as on 31.8.2006 and 02.11.2006.

The said document is purportedly communicated by the bank, UBS Ltd., to the assessee (even as the account number stands withheld). The said information, being relevant, apparently sought by the assessee himself, though he claims as not, is admitted in evidence. These documents are in fact part of the record in-as-much as they form the basis of the corresponding addition for A.Y. 2007-08.

11 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT f to h) These documents, in the public domain, have no direct bearing on the assessment of the relevant incomes. Accordingly, the same are not liable for admission, so that admission thereof is rejected.

A document, even if not apostilled, could be, for the reasons stated, admitted. However, an unsigned document has no claim to legitimacy or to being genuine. The documents under reference, it is to be appreciated, are not system generated reports, or otherwise emails, etc., which may not require signatures for validation, but official communications between the competent authorities, so that signature/s, by the concerned official/s only would lend credibility to the document.

By the Revenue: The ld. DR, on being inquired as to the 403 documents which had been found true, would submit that apart from the confirmation dated 08/12/2006, which has been found as not true, all the other documents which have been found true, as are relevant, form part of the assessee’s application. Our decision and/or specific comment/s, if any, qua each document, is as under: a) Copy of letter received from FT & TR, CBDT, dated 26.12.2013, along with its enclosures. The same is admitted. b) Copy of letter of Directorate of Enforcement dated 15.11.2010 along with its enclosures. The same is admitted. c) Copy of letter dated 24.4.2008 of CIT, Central-1, Mumbai, to DCIT, Central Circle-2, forwarding information in the case of Hassan Ali Khan along with its enclosures. The same is admitted. In fact, these documents ought to have been confronted to the assessee, and relied upon by the ld. CIT(A) as well.

12 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT in-as-much as there was no service of notice under section 143 (2) within the stipulated period of 12 months from the end of the month in which the returns of income in response to notices under section 153 A were filed. In this regard, the ld. Departmental Representative (DR) would, at the outset, draw our attention to Annexures 1, 2 to the assessment order for all the years, even as one would suffice. Annexure 1 is an Acknowledgement of the notice under section 153A (for AYs. 2001-02 to 2006-07), which is at the assessee's Mumbai address, duly receipted. The service of the notice/s is in fact not disputed, with the assessee furnishing returns under section 153A in response to the said notices. Annexure 2 is, similarly, the acknowledgement of notices under section 143 (2) dated 04/10/2007 for A.Ys.2001-02 to 2007-08. The same, marked to his Pune address, bears the signature of Rheema Hassan Ali Khan (RHAK), the assessee’s wife, who accepts the same for on his behalf, even as clearly indicated therein. Though the date of receipt is not mentioned by the recipient, the same can only be presumed to be in the normal course of its business by the postal department when the registered post (the notices dated 04.10.2007 being conveyed through speed post), is not returned unserved, as in the instant case, which is also the presumption in law, with the returns for all the years being filed on 23.5.2007 (refer: Milan Poddar v. CIT [2013] 357 ITR 619 (Jh.)) . So, however, to amply clarify matters, the ld. DR was called upon to produce the record, and which he did. The same notes of the notices u/s. 143(2) dated 04.10.2007, placed on record, duly served on the assessee on 09.10.2007, with proof placed in the file cover for A.Y. 2007-08, which was confirmed. Copies of the notices for the first and the last year, i.e., A.Ys. 2001-02 and 2007-08, bearing the noting, were obtained and placed on record. The assessee’s claim is accordingly without merit; rather, stands disproved. The assessee’s claim is even otherwise legally sustainable in-as-much as notice u/s.143(2) is not a prerequisite for framing an assessment u/s. 153A, which provision itself confers jurisdiction to frame the assessment of the total income for each of the 13 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT relevant years. Notice u/s. 143(2), clearly procedural, was considered by the Hon’ble Apex Court as mandatory in CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC) only on account of it assuming a jurisdictional character. The view in this respect, expressed by the Hon’ble Delhi High Court in Ashok Chaddha vs. ITO [2011] 337 ITR 399 (Del), rendered considering the decision in Hotel Blue Moon (supra), has since been adopted by the tribunal in Sumanlata Bansal vs. Asst. CIT (in ITA Nos. 525-530/Mum/2008 dated 20.5.2015 - reported at 2015-TIOL-1053-ITAT-Mum-TM).

14 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT counsel (duly authorized to receive the same), and also sent through speed-post at both his known addresses (i.e., Mumbai and Pune residences). The notices, questionnaires and show causes were also served through affixture at the assessee’s Peddar Road, Mumbai address. Reference in this context may be made to paras 5 thro’ 9 of the assessment order. In fact, the assessee himself furnished replies vide his letters dated 19.11.2008, 01.12.2008, 10.12.2008 and 26.12.2008, the last being, as also noted by the ld. CIT(A), while being in jail. In fact, prior thereto, he had attended personally along with his counsel, Shri Sunil Shinde, on 12.11.2008, and was served all notices issued up to then. Rather, if time was an issue, the assessee, whose case remains essentially one of denial, could have furnished substantive replies even before the first appellate authority. The assessee’s case on this ground is without merit, which is accordingly dismissed.

16 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 7. Before us, the assessee per his written submissions claims that the addition in his case stands made presuming a close nexus between him and the stated companies. Again, there was no evidence that the amount had been transferred to or received by him. In fact, KT had during the course of his statement before the investigation authorities submitted that Payson Ltd. was never functional, and had no business dealings. The ld. DR relied on the orders by the Revenue authorities.

17 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The assessee has also not denied the statement of account as at 13.3.2001, or of its reflecting the profit for the year. The assessee seeks to impugn the inference of a close nexus between the said companies and himself, which is in fact self-evident from the facts eminent from the record; he having, rather, received substantial sums by way of income there-from in the past (1985-89), which were again not disclosed to the tax authorities in India. All he was required to do, to exhibit otherwise, was to provide documents with regard to the share-holding or the stake in the said companies, which are formed to serve as mere vehicles for the benefit of the promoters. Then, how does he explain the documents and statements referred to in, and on the basis of which, the letter dated 17/9/2001 supra is issued by the assessee’s auditors? The non-receipt of money, in-as-much as income would stand to be taxed either on accrual or receipt basis, would also be therefore of no moment. The money may have been earned abroad, but being a resident of India for the relevant year, the same would stand to be taxed in his hands. Rather, it is for the assessee to explain the nature of the business activities undertaken by/in the said companies, which it seems have business/es also at Dubai, where the assessee was camping during the relevant year, as his letter dated 16.7.2000 to UBS AG, Zurich (refer para 9) indicates. The assessee has also not denied or explained the letter dated 17.9.2001 supra, which is the format letter by his auditors containing information - verified and certified by them, on commission, consultancy and interest income earned by him from these companies from January, 1985 to December, 1989. The same, in the relevant part, reads as follows (DPB pg. 51): ‘Date: 17th September, 2001

Mr. Hassan Ali Khan Zurich, Switzerland

As requested by you, we have reviewed the available documents and other relevant statements in connection with the commission income and consultancy fees earned by you being the chairman of M/s. Payson

18 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Co. Ltd., Dubai and Autumn Holdings Ltd. Dubai during the period from 1st January, 1985 to 31st December, 1989, in which you have sole invested interest.

On the basis of the said documents, the information and explanation furnished and relying on the representations made, we have summarized the statement of your commission income and consultancy fees earned for the period from 1st January, 1985 to 31st December, 1989 as under:’ [At this place of the letter is the statement of income (in USD) for each of the years, from 1985 to 1989, under the heads, commission, consultancy fees and interest income, aggregating (for these years) to USD 280,540,000. The letter further reads as follows:]

‘Please be noted that the above summary has been compiled on the basis of available documents and related statements provided by you.’ [emphasis, ours]

The same is in fact prepared by the Auditors only at the assessee’s instance, and forwarded to one, Mr. Grossman – who (Markus Grossman, as the UBS report dated 30/10/2007 clarifies, is the assessee’s relationship manager – para 3.2/pg. 2 of the report) vide fax dated 18.9.2001 (refer: DPB/pgs. 50-51 of DPB for A.Y. 2000- 01). On what basis, then, one wonders, the asseessee, assails the inference of either a nexus with these companies or having earned income there-from. Rather, the division of profits between him and KT, vide agreement dated 07.8.2001, is also that earned in and to be transmitted to, their companies. The assessee further states of having not received any commission, consultancy fee or any other income in the past (1985- 1989). The reference to the letter dated 17.9.2001, as would be apparent, is only toward establishing a close and clear nexus between the assessee – who in the Agreement declares these to be ‘his’ companies, i.e., ‘owned’ by him, and the said companies. The said period, it is to be noted, falls within the period 1983 to 1990, mentioned in the Agreement dated 07.8.2001 (Annexure A) found during search, separately from the residences of the assessee and KT. The UBS AG report dated

19 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 30.10.2007, since admitted, also states that UBS was targeted by Mr. Khan from (year) 1987 to 2001 (refer para 1 of the report), indicating his activities abroad dating back to the 1980s, and the corresponding need to establish banking relationship, which could also include for investments purposes, as well as through companies. As regards the statement supra of KT, a person he states to, in the same breath, to have no business links with, the same would be of no consequence as, as afore- stated, the truth of the statement of account is neither denied nor controverted.

8.2 We are, however, unable to read the statement of account as at 13.3.2001 (annexed as Annexure B to this order) as being the statement of profit of the said two companies or the earnings of the assessee there-from, at least in its entirety, as inferred by the Revenue. The bank particulars, i.e., to which the amount (DHS 151, 197.94) is to be transferred, is also mentioned therein. To whom does this bank account belong? The amounts are in respect of different matters, identified by number and brief description, for which invoices (number and date specified) have been raised. The statement also includes fees as well as costs which are yet to be billed, i.e., as on 13.3.2001. The same, even if not in its entirety, pertains to these companies. The assessee has not explained the document in any manner, giving an evasive reply, nor has it been enquired into the Revenue. One thing, however, is clear, i.e., the two companies – Payson Company Ltd. and Autumn Holdings Ltd., were existing during the relevant year, and had transactions therein. This is also the unmistakable inference; rather, the admitted position that also flows from the Agreement dated 07.8.2001 supra. True, where the assessee does not lead the best evidence in his possession, which could throw light on the issue in controversy, and withholds it, the court may draw an adverse inference (Section 114, Illustration (g), of the Evidence Act, 1872), even as clarified in, inter alia, CIT v. Sanjay Jain [2015] 230 Taxman 550 (Cal). At the same time, however, the inference could only be as arising from the material in the possession of the Revenue. Who has drawn this statement or the 20 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT invoices noted therein? What is the nature of the services provided by the assessee in the past, for which consultancy fees and commission had been charged and paid? (refer para 8.1, Annexure B to this order). Are the invoices, as listed in the statement, raised or to be raised in respect of such like charges? If the amount is due from these companies, which are separate companies, why is a single statement drawn? Is the amount already billed accounted for in the books of the corresponding companies? Was the money received, toward which bank account particulars are also specified? The assessee has maintained complete passivity in the instant proceedings, refusing to divulge any information. The assessee’s name is conspicuous by it’s absence in the document, so that the only link with the assessee could be the bank account specified, as well as the consultancy fees received, similarly, in the past. Also relevant would be the place, circumstances, and the proceedings under which the document was recovered by ED. The information being received from ED, it would surely have probed the matter and, if so, the nature of its finding, if any, may be relevant. The matter is, clearly, factually indeterminate, and requires further investigation before some definite findings are arrived at. Toward the tribunal’s competence to direct so, we may refer to s. 254(1) of the Act r/w r. 28 of the Rules (also refer: Hukumchand Mills Ltd. vs. CIT [1963] 63 ITR 232, 237 (SC); Bhor Industries Ltd. vs. CIT [1963] 48 ITR 376, 403 (Bom); Tarajan Tea Co. (P.) Ltd. vs. CIT [1994] 205 ITR 45 (Gau)), to cite few. Under the circumstances, we only consider it proper to restore the matter back to the file of the assessing authority for adjudication afresh in accordance with the law. Needless to add, the assessee shall be provided due and reasonable opportunity to state his case in the matter. As regards the rate (of conversion into Indian rupees), the assessee has, while challenging the same, not brought the ‘correct’ rate on record; his written submissions being also silent on this aspect. The A.O. is, nevertheless, directed to apply the correct conversion rate, adopting the same as on 13.3.2001, or for a date as close to that date as possible. Even otherwise, there appears to be some

21 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT mistake in-as-much as even the applied rate of Rs.46 per DHS yields a sum of Rs. 69.55 lacs. We decide accordingly.

‘The Union Bank of Switzerland July 16, 2000 Zurich

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

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

Thanking you,

Yours Truly,

HASSAN ALI KHAN’ The Transfer Instruction is on the letter-head of ‘Hotel Inter-Continental’, Dubai, bearing its postal address, telephone and fax numbers. The assessee has not denied having signed the said document (i.e., the original copy, meant for being transmitted to the bank) or of being not in Dubai at the relevant time (July, 2000), or on 16/7/2000 specifically (which would also stand to be confirmed from his passport) and, thus, in fact tacitly admits to having instructed his bank in the manner stated. We are conscious that the document was not found during search (or survey) under the Act, for the presumption of section 292-C to apply thereto. The same has been provided to 24 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT it by ED, and there is nothing on record to indicate that it has been requisitioned u/s.132A. In fact, the ED itself joined the search proceedings undertaken by the Revenue on 05.1.2007 (refer statement of facts by the assessee before the first appellate authority). The document, however, has been officially transmitted by ED, the Government Agency investigating the foreign/cross border transactions of the assessee, including genesis of sums in these accounts (and now under the auspices of a Special Investigation Team (SIT) constituted by the Hon’ble Apex Court), to enable the Revenue to take appropriate proceedings under the Act. For all we know, it may well be one of the documents with the Revenue to form a reason to believe u/s. 132 of the Act. There can be in any case no presumption that the same has been obtained by ED illegally or without following the due process of law. The apex court in Pooran Mal vs. DIT (Inv.) [1974] 93 ITR 505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevancy, so that unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out. The reliability of the document cannot be doubted, and it has strong persuasive value. In fact, the assessee himself, at no stage, denies that the same was not recovered from him. Such like transfer instructions were also recovered from the assessee’s residence as well as of KT during search. Why, one may ask, should the assessee (or KT) retain them for years, which itself is a strong indicator of the truth of the document, i.e., of the transfer instruction having been in fact issued. It is notable that the assessee does not, at any stage, including before us, explain the reason for, and/or the circumstances under which the transfer instruction was issued. Or, for that matter, any of the transfer instructions, some of which bear his (transferor) account number as well as his signature. That is, on what account was he required to transfer funds to KT. The Agreement dated 07.8.2001 between them (referred to earlier at para 8.1/enclosed as Ann. A) apart, the search revealed several documents and materials evidencing a close relationship between the assessee and KT. The assessee per his notarized statement

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

11.2 The assessee claiming that no transfer of funds had, however, been effected, would be of little moment in-as-much as the addition is toward unexplained money or bank deposit. True, the same may be lying in his account, in whole or in part, from an anterior date, falling in a preceding year. However, it is for the assessee to exhibit so - in explanation of the nature and source of acquisition of the money he is found to be in possession of, as statutory obliged to u/ss. 69/69A, lest the deposit be deemed as his unexplained income for the relevant year, i.e., the year for which he is so found. It is open for the assessee to show that the sum of money – to whatever extent, is brought forward from an earlier period, or otherwise does not represent his own capital – as where it is by way of a loan, or despite being his capital, represents a capital receipt, so that it cannot be brought to tax as his income. He, however, does not do so, and merely denies the existence of the account without adducing any evidence toward the 26 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT same. Again, it is open to be argued that the transfer instruction would not by itself establish the balance in account to that extent. A transfer instruction (TI) is akin to a (non-negotiable) cheque drawn on his bank by the account holder, specifying also the account particulars of the transferee. Its’ preparation itself is an expert job, with the assessee being assisted in this regard by the bank officials (also refer para 11.4). We have already clarified that the document is to be regarded as reliable, with persuasive evidentiary value. The same implies that such an instruction was in fact issued to his bank (UBS AG) by the assessee. If that be so, the said account, by necessary implication, had balance at least to that extent on the relevant date. True, the burden of proof that there is unexplained money, investment, etc. is on the Revenue. The same, however, can be discharged by it by establishing facts and circumstances from which a reasonable inference toward the same can be drawn (refer: Sudhakaran (C. K.) vs. ITO [2001] 279 ITR 533 (Ker)). The assessee is required to disprove the said document, and the logical inference/s that flows there-from. The assessee has, however, produced before us the copy of the report (dated 30.10.2007) submitted by UBS AG, Zurich to Switzerland National Bank, claiming it to have been since forwarded to ED, as also patent from the UB’s letter dated 28.12.2007 to ED (refer para 3.1 - which though being unsigned has not been admitted in evidence). The said letter/report (dated 30.10.2007) has been admitted in evidence. It is therefore clear that the matter is under investigation by ED, which has initiated proceedings under PMLA against the assessee, which are - as per the assessee, and which is not disputed by the Revenue - under-way. Cleary, the charges under PMLA shall only obtain where the assessee is found to have maintained bank account/s abroad, holding substantial sums therein. That is, the very basis on which the amount is sought to be assessed as income in his hands in-as-much as the same has not been disclosed or satisfactorily explained as to its nature and source of acquisition. The question that, therefore, arises is whether it would be proper to, pending the 27 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT proceedings under PMLA, which in fact the Revenue is only aware of, conclude the proceedings under the Act. The assessee has also sought to raise this issue per his written submissions, stating that the ED concluded its initial investigation only in 2011, filing a complaint against him (with the Hon’ble Sessions Court, Greater Mumbai) on 1/5/2011, so that the assessments were liable to be set aside to this score alone. The proceedings under the Act are statutory and independent proceedings, to be decided on the basis of the materials and evidences brought on record as well as the explanations furnished, i.e., on the basis of the facts as established therein. They are, further, to be concluded in a time bound manner, which, being a statutory prescription, cannot be breached. It is the asssessee who, on the contrary, has been recalcitrant, disregarding the said proceedings, even choosing to be not represented before us, relying ostensibly on written submissions instead. The said non-representation is only deliberate, denying valuable assistance to the court/adjudicating authority, a negation of the due process of law, besides causing loss of valuable court time, a national asset, which needs to be conserved and put to optimum use. Be that as it may, the plea of set aside of assessment by the assessee on that ground, which is de hors any ground of appeal, is without merit.

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

28 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT duly signed by him, bears the said account number (6667663). It the proximity of the dates of the two transfer instructions that perhaps led the A.O. to assume this account number for transfer instruction dated 16.7.2000 as well.

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

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

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

31 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT that the banking industry across the globe woke up to the threat of financial flows arising from or in respect of such terrorist and illegal activities, devising KYC (know your customer) norms. And which have since been gradually updated and adopted across nations, including India.

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

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

33 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 23.7.2000 supra, the validity or otherwise of the inference could be dislodged by producing the said information with regard to the account number specified therein.

Conclusion

35 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law. The said findings shall, inter alia, address the issues raised and considered pertinent by us. Needless to add, the assessee shall be allowed a reasonable opportunity of hearing. We decide accordingly.

36 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The case of the parties, accordingly, remains the same, in view whereof, as well as the similarity of the nature of evidence, we have no reason to take any other view than that in respect of Ground 6 (refer paras 9 to 12 of this order). The assessment of the impugned sum is accordingly restored to the file of the Assessing Officer for fresh adjudication, with the same observations and directions as for that Ground. We decided accordingly.

39 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The assessee is, without doubt, entitled to credit for the withdrawal for such expenditure booked in accounts. We decide accordingly.

Asstt. Year 2002-03

40 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 20A. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 impugns the confirmation of an addition for Rs.1,34,48,12,840/- as undisclosed income. The addition comprises two sums, as under: a) Transfer of USD 500,000 to the assessee by one, Philip Anandraj (PA) worked out at Rs.243.80 lacs; b) Purchase of property in Switzerland for CHF (Swiss Franc) 27,999,000, i.e., INR 132,04,32,840/- (Rs.13204.33 lacs).

The specific document in relation thereto is Bundle No. 7 of Annexure A dated 05.1.2007 to Panchanama dated 6.1.2007 (containing 29 pages), found and seized from the assessee’s Pune residence. Page 1 contains the details of, among others, the transactions of loan/s of USD 500,000 by Philip Anandraj to the assessee. A note captioned “INDIA” mentions that the State Govt. of Kerala was willing to donate 2,50,000 sq. mtrs. of tea plantation to Philip Anandraj (PA) to set up an ‘International Centre for Tourism Research Studies’ (ICTRS) in Kerala, where he is planning to set up primary and secondary schools for street children and trust called “Dyveke”. Page 2 is a signed document, in original, of the account details fax message dated 21.9.2006 addressed to the assessee, from PA (bearing Fax No. 00442074917476) for USD 1,600,000 to be transferred to his (PA’s) account (complete details specified). Page 3 is the fax confirmation report dt. 21.9.2006 (15:30 hrs.) mentioned at page No. 2 above. Page 4 is the bill raised by PA on HAK for USD 1,600,000, mentioned at page No.

41 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT the seller, together to transact the sale of “Hotel Chateau Gutsah, Luzern, Switzerland”. Pages 8 & 9 contain hard copy of an unsigned agreement dated 05.4.2001 between PA, Switzerland and HAK, Pune made at Zurich towards retaining the services of PA. Further, as per information received from the Enforcement Directorate, there is a signed Agreement dated 18.7.2001 for purchase of the said Hotel by the assessee from M/s. Clamai AG for CHF 2,79,99,999. This document and pages 6 and 7 (listed above) complement and support each other (pgs. 80-81 of the Annexure to the assessment order). No substantive reply was received from the assessee despite being questioned in respect of these materials (vide letter that dated 05.3.2008, 13.5.2008 and 17.5.2008) and show cause notices in November, 2008 (on 12/11, 24/11, 26/11 and 28/11) and December, 2008 (19.12.2008) (refer para 10 of the assessment order, as well as para 15 of the assessment order for A.Y. 2007-08). The same stood, accordingly, brought to tax as unexplained income by way of unexplained payments and/or investment. In appeal, the same stood confirmed for the same reasons as prevailing with the A.O., and which are essentially the same as for the preceding year. Further, the internet search of PA, made by the ld. CIT(A), revealed him to be settled in Maur, Switzerland, running an Indian restaurant ‘Kormasutra’ in Zurich, which though had since ceased operations. His activities since, are also listed (annexing the detail by way of Annexure C to his order). The search in respect of property ‘Chateau Gutsah’ was also made, which revealed it to be an old hotel built in 1818 in the style of a fairy tale castle at Lucerne, Switzerland. It belongs to M/s. CM Clamai AG, who had purchased it in order to adjust loans advanced to the promoters (Annexure B to his order). The Hotel had been repeatedly offered for sale in the past, to no success. The addition being confirmed thus, aggrieved, the assessee is in second appeal.

42 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT inquiries were initiated by GOI, already discussed in the earlier part of this order, refer to this aspect of the assessment at Part C thereof. Though PA had raised a bill (dated 05.4.2001) on the assessee, no payment was made by the assessee, as confirmed by PA vide his statement dated 10.3.2011 u/ss. 50(2) and 50(3) of PMLA, categorically stating that in October, 2006 he came to India to recover his money from HAK, who owed him to the extent of CHF 500,000. The amount due was in swiss franc and not USD, as assumed by the Revenue. No addition could under the circumstances be made, i.e., pending the completion of the investigation by ED. The ld. DR, on his part, relied on the orders by the authorities below, stating that no substantive explanation had been adduced by the assessee in reply at any stage.

(b) The Agreement dated 18.7.2001 is signed by both the assessee (buyer) and one, Mr. Franz Glanzmann, as President of the Board of CM Clamai AG (seller). The impression ‘AAKRONR management…...’ (being not clear)’ is inscribed at the top of two page Agreement, suggesting it to be on the letter head of some company. The reliability of the document, which has not been challenged by the assessee, is not in doubt. The total purchase price as per the Agreement is CHF 320 lacs, and not CHF 279.99 lacs, as adopted by the A.O., which represents that of the real estate property, including cost of furniture and fixture, cable car, etc. (refer para 10 of the Agreement). The internet search, the results of which form part of the impugned order, itself shows the property being unsold. It was in fact leased by the Italian THI Group in 2002, as noted at the listing at Sr. No. 2 (pg. 35) as well as Annexure B to the impugned order. The addition, though, could yet become exigible where some sum is paid toward purchase price. Page 19 of the 29 page compilation supra is the statement of transfer. The same states of transfer of USD 20 million to account # 08-06868.6 on account of Chateau Gutsah, Luzern, Switzerland. The information, found in search, is specific, even as we find no reference thereto in the orders by the Revenue for the year. This could perhaps be for the reason that the Revenue had, presuming the purchase, added the entire purchase cost, which amount though incorrectly stated, is of no consequence in-as-much as the purchase did not admittedly mature. If such a payment (USD 20 million) (200 lacs) was made, which would require being verified, it implies that the down payment of CHF 2.5 lacs (refer para 4 of the Agreement), to be made by 03.8.2001, stood also made, at least in all probability. It is in fact difficult to believe that such a deal/agreement was finalised and, further, in subsistence, at least for some time, without any money being exchanged, i.e., even as clearly it was not carried out fully and fell through. The assessee, who has not denied signing the document (on behalf of self), or of being not in Switzerland where the document seems to have been executed (and which could be proved on the basis of entries in his passport), has not 45 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT helped matters at all by not issuing any explanation what-so-ever in the matter. No definite findings – the issue being primarily factual – could under the circumstances be issued at this stage, and the matter clearly requires being remanded back for the purpose. The matter shall, accordingly, stand to be set aside to the file of the A.O., who shall re-adjudicate afresh, allowing the assessee proper opportunity to present his case, confronting it all the materials it wishes to rely upon, particularly with regard to the payment aspect of the matter, and decide by issuing definite findings of fact. Reference in this context may be made to the decision by the Hon’ble Apex Court in the case of Kapurchand Shrimal vs. CIT [1981] 131 ITR 451 (SC), wherein it stands explained that unless forbidden from doing so by the statute, the tribunal, as an appellate authority, has the jurisdiction and is duty bound to direct the assessing authority to make fresh assessment in accordance with the law. That was a case where there was a clear violation of the procedure prescribed by law, so that the tribunal set aside the assessment, while in the present case all that we have found is that the necessary aspects of the matter have not been enquired into, so that the matter requires to be examined afresh. We decide accordingly.

47 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 18.7.2001), transacting businesses and entering into deals toward investment in real estate, companies, etc., even going to the extent of appointing a consultant (PA) at an exorbitant cost to represent him internationally. The bank accounts with UBS, Zurich, as per their report dated 30.10.2007, were opened on 30.7.2001. He has also been found to have executed an Agreement at Dubai (with KT, dated 07.8.2001/Annexure A). UBS AG, Zurich, per its said report, confirm him having visited it personally on 15.8.2001. Clearly, the assessee has interests internationally, also apparent from the issue of LRs to various countries (refer para 3.1 of this order). Incurring expenditure of the like stated in the invoice, viz. hotel, telephone, travel, etc., besides being only understandable, is thus corroborative. That the amounts should be accumulated for so long; the period of expenditure covered by the bill extending beyond six months, is itself surprising. Why the payments would not be made, being for expenditure which ought to be financed by the assessee in the first place, belies comprehension. The assessee’s case is sans any explanation. Under the circumstances, we find no reason to not to confirm the assessment to the extent noted above. The assessee’s reliance on the decisions in L.K. Advani (supra) and V. C. Shukla (supra) is misplaced. The statements as well as invoices relied upon are not loose sheets, the forwarding letter itself clarifying that the invoice for USD 16 lacs was in fact transmitted to the assessee on 21.9.2006, clearly mentioning the account details of the beneficiary (PA). In fact, each of the expenses are in respect of specific transactions (with mention of, in some cases, their dates), viz. hotel bills of Ms. Fatima Said and Tapuria; train tickets to Geneva for Khan family; Nelson office telephone bills (from September, 2001 to March, 2002); Flight ticket for PA to Dubai (in March, 2002), etc., all, or almost all, of which are in fact verifiable. We, accordingly, confirm the addition to the extent of CHF 216,169, applying the same conversion rate, which is not in dispute.

48 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 25. Ground 6 is in respect of an addition for Rs.5267.98 crores qua three transfer instructions (TIs) by the assessee on UBS AG, Zurich, information on which stands received by the Revenue from ED, as under:

Date Amount Beneficiary 21.1.2002 USD A/c 0835-899786-7 500,000,000 (five hundred Black Prince, Credit Suisse First million) Boston, Zuirch, Switzerland Att: REMO MAURER/SOBE 21.2.2002 USD A/c 08-065-45.0 390,000,000 (three Credit Lyonnais hundred & ninety million) Bahanhofstrasse 3, Zurich, Switzerland Att: PATRIC WIPFLI 21.02.2002 USD a/c 08-068-86.8 200,000,000 (two hundred Credit Lyonnais million) Bahanhofstrasse 3 Zurich, Switzerland Att: PATRIC WIPFLI [emphasis, by underlining, ours] The assessee furnishing no explanation despite being show caused in the matter, the same was assessed as unexplained deposit, adopting the conversion rate, as it appears, as at the relevant date/s – the assessee raising no question in its respect. In appeal, the same stood confirmed for the same reason. The ld. CIT(A), in addition, on the basis of internet searches, confirmed Remo Maurer and Patric Wipfli as being existing persons, enclosing information in their respect by way of Annexure H and M respectively to his order. Remo Maurer was accordingly found by him to be a partner in Portelet Holdings Pte Ltd., Singapore, and managing director of Portelet AG, Zurich. The issue with regard to the additions, based on transfer instructions, particularly qua which information has been received from ED, stand discussed in detail at para 9 to 12, 15 of this order. For the same reasons and considerations as 49 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT stated therein, the matter shall, with like directions, travel back to the file of the A.O. We decide accordingly. Before parting, we may highlight and deal with another aspect of the matter. It may be argued that in-as-much as the hard copy of certain documents are only print- outs of different documents found from the laptop of PA, who happened to be staying at the residence of the assessee at the time of search on 05.1.2007, the same cannot be regarded as documents to which the statutory presumption of section 292-C of the Act shall apply. In this regard, in our view, the argument is both legally and factually untenable. The words used in the provision are ‘any person’, so that it may not necessarily be the assessee himself. On facts, the man (PA), in whose laptop the documents were stored, as also noted by both the AO & the ld. CIT(A), has not owned these documents, clearly stating them to belong to the assessee. He himself, closely associated with the assessee, was engaged for representing the assessee internationally, having several transactions with him (refer para 24). His residing at the assessee’s residence, having, by own admission, come to India in October, 2006, only to pursue the assessee for his outstanding payments, was thus only in relation to his work/assignment. The same clearly proves that the two were well known to each other and, further, as between the two, they did indeed enter into transactions, or transacted business/es, entailing financial obligations and commitments on the part of the assessee, which he did not, however, meet in whole or in part. In fact, materials, apart from that found from the seized laptop, were also seized, which are corroborative, independently establishing their veracity. That is, the truth of the documents gets established even independent of the provision of s. 292-C of the Act. The statement/s by PA, made on oath, would be admissible in evidence u/s.132(4) or, as the case may be, s. 131 of the Act. The assessee in fact has not denied or rebutted the statement/s; rather, further presses on PA’s statement/s before the ED in proceedings under PMLA, without of course making them a part of the record. The plea that the laptop did not belong to the assessee, but to PA, which may well be true,

Asstt. Year 2003-04

51 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT to the said amount. These were found in the course of search and, thus, based on the material found during search (being pages 10-13, 18-19 of Bundle No. 7 of Annexure A dated 05.1.2007 to Panchanama dated 06.1.2007, containing 29 pages). The addition, on the ground of the account/s having balance at least to the extent of the transfer instruction/s issued, came to be made and confirmed in the absence of any explanation whatsoever by the assessee, who denied having issued any transfer instruction, which were in fact unsigned documents. The case of the parties up to the first appellate stage, thus, remains the same, i.e., as for the earlier years. The ld. CIT(A), once again, confirmed the existence of the transferee entities, whose names are specified in the documents found.

52 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT written submissions. The particulars of the instructions are accordingly tabulated at below: (Amount in USD M) S.No. Favouring Amount Account Particulars 1. Loewengraben 68.50 UBS AG IN FAVOUR OF LOEWENGRABEN Management AG MANAGEMENT AG ACCOUNT # 820052.01 P CLEARING NO.251 2. Soir Contracting & 72.00 CREDIT SUISSE FIRST BOSTON ZURICH, General Trading SWITZERLAND Co. W.L.L. FOR FURTHER CREDIT TO CREDIT SUISSE PRIVATE BANKING ZURICH, PARADEPLATZ 8, CH 8070 ZURICH SWIFE CODE: CRESCHZZ 80A BENEFICIARY ACCOUNT # 0835-899786-7 (BLACK PRINCE) ATTN: MR. REMO MAURER 3. Dianoor Jewellers 22.00 CREDIT LYONNAIS, Bahnhofstrasse 3, ZURICH SWIFT: CRLYCHGG ACCOUNT # 08-06545.0 4. Gulf Stream 46.00 CREDIT LYONNAIS, Bahnhofstrasse 3, ZURICH 5. Geneva House 20.00 SWIFT: CRL YCHGG 6. Chateau Gutsch 20.00 ACCOUNT # 08-06868.6 7. Personal 50.00 requirements 8. Roberts, Mclean & 100.00 CREDIT SUISSE FIRST BOSTON ZURICH, Co. Ltd. SWITZERLAND FOR FURTHER CREDIT TO CREDIT SUISSE PRIVATE BANKING ZURICH, PARADEPLATZ 8, CH 8070 ZURICH SWIFE COUE: CRESCHZZ 80A BENEFICIARY ACCOt1NT # 0835-357902-3 (CHANDRIKA) ATTN: MR. REMO MAURER 9. Roberts Mclean 35.00 TO UNION BANCAIRE PRIVATE ZURICH Services Pvt. Ltd. ATTN. Mr. W. Mueller

53 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT In favour of account # 713.169 AC Correspondent Bank - JP MORGAN CHASE BANK NEW YORK (SWIFT ADDRESS CHASUS 33) FOR FURTHER CREDIT UBP GENEVA (UBPGCHGG) FOR FURTHER CREDIT UBP ZURICH (UBPGCHZZ) 10. R M. Investment 65.00 CREDIT L YONNAIS, Bahnhofstrasse 3, and Trading Co. ZURICH Pvt. Ltd. SWIFT: CRL YCHGG ACCOUNT # 08-06702.7 498.50 [emphasis, by underlining, ours] In fact, the last three entries in the table (at Sr. Nos. 8-10), as it appears, pertain to a single document, being the Agreement dated 07.8.2001 between HAK and KT (annexed as Annexure A to this order).

30.2 We, next, consider different amounts comprising the impugned sum of USD 498.50 million. The first amount (USD 68.50 million), as claimed by the assessee, is not qua any transfer instruction, but based on a letter dated 16.9.2002 by PA to the assessee (page 11 of the compilation). We find this is as not correct. Page 13 of the said compilation is the transfer instruction for USD 68.50 million dated 7.11.2002 (also referred to at para 10(i) of the assessment order). On further enquiry, it was explained by the ld. DR, with reference to the order by the ld. CIT(A), that Loewengraben Management AG, i.e., the named beneficiary in the transfer instruction, is the proprietary concern of PA. The swift codes have been found as correct by the Revenue. This, then, is a TI, with complete details as well as the purpose for the transfer being also available. In fact, toward the same there are supporting documents as well, for example, one of the amounts comprising the sum of USD 68.50 million is USD 15 million for Villa ‘ZR’ (mentioned at item no. 5 of letter

54 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT dated 16.9.2002/pg. 11 of the compilation). The letter dated 19.6.2002 by PA to the assessee (placed at pg. 14 of the compilation) is qua purchase of the said Villa, the initial ‘ZR’ being the abbreviated form of ‘Zum Rebgarten’, in Uerikon, Stafa. Surely, these are not loose sheets or random notings, but payments made or to be made in pursuance to definite arrangements, for which the assessee had entered into agreements, camping in Switzerland, appointing a person (PA) to represent him and advance his interests. The assessee, vide his notarized statement dated 30.06.2003 at London (forming part of the assessment orders for A.Ys. 2005-06 to 2007-08) stated that upon arriving at Zurich again in 2001, i.e., after his acquittal in a complaint case in India in 2000, he met PA and expressed his desire to invest in hotel projects in Switzerland, which the latter promised to search. The reliance by the assessee on the decisions in the case of L K Advani vs. CBI 1997 Cri LJ 2559 and CBI vs. V. C. Shukla, AIR 1998 SC 1406 is misconceived.

30.3 A scrutiny of the compilation (i.e., Bundle 7 of Annexure A dated 05.1.2007, comprising of 29 pages) shows the TIs have been issued only for USD 68.50 million and USD 72 million, i.e., as listed at item nos. 1 and 2 of the Table. For the balance, it appears to be a table of the various payments, either made or proposed to be made by the assessee. The payments are for the purchase of real estate or towards investments (for which evidence in the normal course events should be available). In our view, for the amounts for which TI/s have been found, which are dated, the presumption would be that the same have been issued, irrespective of whether the same bear the assessee’s signature or his account particulars (from which the transfer is to take place) or not. The onus in such a case is on the assessee to show that, despite the same, no addition to his returned income is called for on that account. For the balance, the onus is clearly on the Revenue. A probability in favour of the TI being issued, being firstly proposed and, further, only for the purpose of being issued, is certainly higher by far than it being not issued, which would only be where

55 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT there is a hiccup or change in plan or circumstances, warranting non-issue or deferring the issue of the TI/s. However, by itself, it cannot be said that the statement was indeed followed by a TI for the said amount. Then, is the question of date thereof. Though, again, the two sums for which the TI/s are issued, i.e., USD 68.50 million and USD 72 million, being dated 07.11.2002, the presumption qua the balance ‘transfers’ would be of the same being around the same time, particularly considering that all the payments stand tabulated and aggregated, so that they were being considered for being executed together, this cannot be said as a fact. We are conscious that the addition is toward the amount held in bank account against which the TI/s is issued, so that the very fact that the TI was proposed implies balance in the account (on which TI is issued), making the actual issue of TI as of little consequence. At the same time, it could also be said that the TI was not issued as the assessee could not arrange the requisite funds, so that the inference of a balance (to that extent) on the basis of a proposed TI would be presumptuous. The matter certainly calls for investigation before any definitive findings can be issued, even as there is strong circumstantial evidence against the assessee. The assessee can, and it is open for him to, as also clarified earlier, explain the circumstances under which the TI was not issued or otherwise explain the nature and source of the relevant funds as not being his income. The Revenue, on its part, can also enquire into the transactions, which are apparently in relation to acquisition of the property or rights therein or other investments in listed/public companies. The matter, though may appear so, is not vexed. This is, as clarified by us at para 12 of this order, the assessee shall, qua each of the TIs issued, be required to produce the transcript of his account/s (the account statement) for the relevant year, which would at once exhibit whether any of the ten (10) contemplated transfers comprising the impugned sum, including the two dated 07/11/2002, were in fact executed or not, as also the balance, if any, in the account/s, toward which in fact the addition/s is made.

56 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 30.4 At this stage, it may also be relevant to dwell on the three (3) transfers, for USD 200M, listed at serial numbers 8 to 10 of the Table. The same are apparently in pursuance to the Agreement dated 07/8/2001 (refer Ann. A). Though not so contended, it may be argued, and is indeed open to be so, that the same are in pursuance to the said Agreement and, therefore, being only toward transfer of the share of the profits (of KT) earned in the past, no taxable event arises for the current year. The argument, appealing at first sight, is not tenable. Firstly, in-as-much as the payment under the Agreement dated 07/8/2001 is to be made latest by end December, 2001, the onus is on the assessee to show that no payment/s there-under was made, and it is this payment/s, sought to made/made in November, 2002 (or around about). That is, the onus to prove the nexus, by exhibiting that no payment had been made prior thereto, is squarely on the assessee. Continuing further, the Agreement, found in search from the residences of both – the assessee and KT, is, on close examination, found to be a make-believe, entered perhaps with a view to transfer funds without attracting corresponding tax liability by ascribing their origin or source to past profits. The total amount of profit, worked meticulously (at USD 280.54 M), matches the amount stated to have been earned by the assessee (from 1985-1989) from his two companies, stated to be not functional, in which he has sole invested interest (refer para 8.1). Do the two identical figures refer to the same profit/s, stated to be earned in the same time frame, at one place, by the assessee abroad (no such income reported in India) and, at another, through their companies, from their business operations mainly in India. Both the assessee and KT being tax residents in India for those years, with their profit sharing ratio - from their joint venture, being clearly defined, the amount ought to have been, and would therefore have been, where so, returned for those years by the joint venture company/entity. As also the income, claimed as earned by the assessee from the said companies, which assumes the character of his personal income. Much less, the same finds no reference in the accounts of any of the companies. What are their businesses, stated to be carried on mainly in India, and 57 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT how did it result in accumulation of funds abroad? Is there any link between the two identical profits? How is the share of KT, at 50%, worked to USD 200M? Is there any contemporaneous proof of earning of profits, or of their yielding further returns, either in India or abroad? How has the quantum been worked out, suggesting maintenance of elaborate accounts. That, despite so, the two did not settle accounts, or even appropriate their respective share in accounts, or even otherwise signify the same, much less return or report the same to the competent authorities in the relevant jurisdictions, for over two decades. It calls for a complete and willing suspension of the sense of reality to accept the statement at face value. In fact, KT, per his written notes (APB-5, pgs. 918-919) himself states that the said document is fabricated, and that he came to know HAK only in 1994. There is no gainsaying that the entire endeavour, which should under normal circumstances yield a host of evidences or trail, is sans any in the present case, viz. as to the joint venture or any business operations undertaken, the nature of which is itself unspecified, yet, profits were earned there-from, transmitted and invested - as it appears, abroad, all without any evidence. And all that has been retained – by both the parties, or survives, is the Agreement dated 07/8/2001! Even if therefore it is shown by the assessee that the TIs for USD 200M are in pursuance of the Agreement dated 07/8/2001, the source thereof as being profits earned – to that or whatever extent, in the past, shall require being shown or reasonably proved, for it to be accepted. Then, again, is the question of avenues where the profits were invested, in India or abroad, or partly in one and partly in another, and also the returns fetched during the intervening years.

30.5 The matter, accordingly, for both the sums, i.e., USD 140.5 million (for which the two TI/s dated 07.11.2002 have been found), as well as for the balance, is restored to the file of the assessing authority for adjudication afresh, with observations and directions as contained at para 12 and, as the case may be, para 8 of this order. We may further add that there is nothing to show that any TI was proposed for an amount

58 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT of USD 50 million, which is stated to be for personal requirements (appearing at Sr. No. 7 of the table). The addition toward the same is deleted. Two, the payment as listed at Sr. No. 6 of the table, being in relation to an Agreement dated 18.7.2001, due to be paid, has been also noted by us for A.Y. 2002-03 (vide para 22(b) of this order). Without doubt, the same being in respect of a single payment, could, even assuming so, be brought to tax for either year. The A.O., who has added the purchase amount as well as qua payment in its respect, shall have regard to this aspect. We decide accordingly, and the assessee’s ground is partly allowed and partly allowed for statistical purposes.

31A. We have heard the party before us, and perused the material on record. The assessee’s written submissions are silent on this aspect of the matter. We find no reason, in view of the undisputed facts stated above, not to confirm the addition. We decide accordingly.

Asstt. Year 2004-05

61 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Our first observation in the matter is that there is nothing to show that the car, purchased by the assessee and registered in his name, was gifted by him to his wife, so as to be considered as in discharge of the Mehr for his marriage, solemnised in December, 2000. The addition, however, is toward unexplained investment in car. The same was purchased in February, 2003 for Rs.26.84 lacs. The down payment, to which reference is made by the ld. CIT(A), would therefore only be in February, 2003, i.e., assessable for A.Y. 2003-04. Our second observation is that the 36 EMIs (for Rs.22,631/- each) work to a total of Rs.8.15 lacs. The loan amount, on the other hand, which the assessee states (refer para B of Written Submissions – WS-4), in part explanation as to the source of investment, is Rs.18 lacs. Two, the same is from ICICI Bank Ltd. As it appears, therefore, the EMIs to GMac Financial Services India Ltd. are toward a loan for a different purpose/investment. Again, how could that be in-as-much as it is the latter institution to which the vehicle is hypothecated and has issued the NOC. Surely, only either of the loans from ICICI Bank and GMac Financial Services is toward the car under reference, while EMIs, as it appears, have been paid to both during the year. The matter definitely requires verification to arrive at definite findings. As regards the payment per EMIs, registration and insurance charges, falling during the year, the assessee has produced a cash statement, which has been disregarded for want of both, authenticity and adequacy. When separate addition is being made by the Revenue for household expenses, being part of the living expenses, which should also include that toward running of vehicle, denial of credit for the income applied toward the payment of EMIs for the year cannot be appreciated. The ld. CIT(A) could have definitely proposed, and where unexplained, made an enhancement toward unexplained payment of EMIs falling in other years, which surely cannot be considered for the current year, so that reference thereto is misplaced. Further, even assuming to be unexplained, how we wonder the addition for 62 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT the current year could exceed the EMIs paid, of course, as increased by the registration and insurance cost, if any, paid during the year. Under the circumstances, we only consider it fit and proper to restore the matter back to the file of the assessing authority to adjudicate afresh, after examining and verifying the assessee’s claims, in accordance with the law, allowing the assessee a reasonable opportunity of hearing. We decide accordingly.

63 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 41. Grounds 8 and 9 correspond to Grounds 11 and 12 respectively for A.Y. 2001-02 and, accordingly, stand decided vide paras 19 and 20 respectively of this order.

Asstt. Year 2005-06 43. Grounds 1 and 2 are common to that for A.Y. 2001-02 and, accordingly, stand disposed of vide paras 4 and 5 of this order respectively. Paras 5 through 9 of the assessment order, we may add, contain detailed discussion on the provision of due and adequate opportunity to the assessee. Ground 3 is general in nature, warranting no adjudication. Ground 4 relates to an addition for Rs.17.99 lacs. The assessee (HAK) and his wife (RHAK) were found to maintain huge balances in their savings bank accounts with ABN Amro Bank, M.G. Road Branch, Pune, being account no. 949548 (HAK) and 498572 (RHAK). The cash deposited for different years, as revealed by the statements of account, are as under: Financial Year Amount 2004-05 17,99,000 2005-06 24,69,900 2006-07 10,05,500 Total 52,74,400

The assessee, on being confronted, admitted the cash deposits in the bank account to be out of his income by way of horse racing, and which had not been disclosed to the Department (vide statement u/s. 131 dated 19.2.2007). In appeal, the assessee contesting the addition made in the assessment, with reference to the date- wise cash deposit, which included Rs.3 lacs (out of Rs.17.99 lacs) on 31.3.2004, i.e., falling in A.Y. 2004-05, pleaded for its exclusion. The source of deposit for the balance Rs.14.99 lacs was also submitted. The addition, however, came to be 64 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT confirmed in-as-much as the assessee failed to substantiate his claims. Aggrieved, the assessee is in second appeal.

The assessee, on being confronted, admitted the repayment of Rs.12,09,932/- made for both the years in his account as from his horse racing income, not disclosed to the Revenue, agreeing to pay tax thereon, vide statement dated 26.4.2007. The same, however, having been not so included, came to be added to the returned income, and confirmed in appeal in view of the undisputed facts.

65 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 46. We have heard the party before us, and perused the material on record. The loan under reference is a housing loan in the name of RHAK, advanced on 13.3.2004. The repayment during the year has been confirmed by the ld. CIT(A) at Rs.1.35 lacs, as against Rs.1.20 lacs, as contended by the assessee before him. We, accordingly, find no ground for interference.

The same bears specific instructions, drawn on the assessee’s account number (206-794.786). The valuation date is the material date, on which the instruction is executed and, accordingly, the conversion rate is adopted for that date. The same being found during search, from his control and possession, in the form of a pen drive at the residence of KT, is to be regarded as true as regards its contents in view of section 292C of the Act. In this regard, reference may also be made to para 25 of this order. The assessee denying any knowledge thereof, despite several reminders, the same came to be added as income by way of unexplained investment. The assessee being unable to improve his case in any manner in appeal, the same stood confirmed; the assessee continuing to deny the existence of the accounts, and his arguments being general as in nature, as adopted for the earlier years as well, duly met by the ld. CIT(A) (refer para 6 of this order). Further, there is reference by him to Annexure 13 of the assessment order (pages 94-97), which is a notarized statement dated 30.6.2003 (wrongly noted as 20.6.2005) by the assessee at London (pg. 29 of the impugned order), also referred to earlier (paras 11.1, 11.5, 12 & 18). The first general comment in the statement is that all the investments made by Dr. Peter Weilly were safe investments, with guarantee of no loss on account of price, as assured by him. This is, in fact, otherwise patent from the investment option chosen; being AAA rated bonds (of UBS). The said statement dated 30.6.2003 clearly states of the assessee’s (HAK) intention to invest in hotel properties in Switzerland, and for which he seeks assistance of PA. The assessee could have surely expanded the horizon of his

67 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT investment options to include securities as well. In any case, it only implies that he has investible monies or access to resources for investment purposes, and which could, pending investment in profitable ventures, be parked or invested in safe investment avenues. The assessee per his written submissions refers to the letter dated 28.12.2007 by UBS AG, Zurich, ED, New Delhi, rejecting the allegation that the assessee has or had millions in USD in accounts with UBS, at Switzerland or Singapore or elsewhere or in AAA or any other type of securities. The report, being unsigned, has not been admitted. Yet, it is clear that the same is based on the UBS report dated 30.10.2007. We have upon considering the said report clarified that nevertheless the onus to explain the transaction in all the cases where a TI is issued, or apparently so, effectively rebutting the logical inference of the balance in the account at the relevant time, is on the assessee. This is so even where the TI is not found in search, but transmitted to the Revenue by ED, while being more so, as in the instant case, where the TI is found during search. Reference may be drawn to the discussion at paras 11- 12, 15, 25 and 30 of this order. In the present case, the account on which the TIs are issued, is, rather, one of the accounts of the assessee confirmed by UBS AG. We have under the circumstances no reason to take a different view in the matter. We are acutely conscious that the amount under reference is astronomical. At the same time, however, we cannot disregard the clear evidences found in or as a result of search. The additions made, it may be appreciated, are only on the basis of objective materials – totally unexplained and, further, in agreement with the other materials found and in possession of the Revenue. Why, the notarized statement dated 30.06.2003 supra (Ann. C), itself contains details of the assessee’s relationship with UBS, with account opened as far back as in 1982, with USD 5M, as also details of transfer of huge funds. The assessee’s stand of complete denial is only toward stalling the process of law, which continues even before us. The same is clearly aimed at providing no clue whatsoever to the Revenue as to how he, at best only a horse trainer

68 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT in India, had access to such sums, visiting and staying at Switzerland, Dubai, London, Hongkong, etc. on a regular basis, in fact since 1980s. The matter is accordingly restored to the file of the A.O. for adjudication afresh in accordance with the law by issuing definite findings of fact, and after allowing the assessee reasonable opportunity to present his case. We decide accordingly.

Asstt. Year 2006-07

70 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT toward unexplained expenditure on air ticket. An air ticket, issued in the assessee’s name, for travel from London to Bombay on 28.11.2005, was found during search (refer para 10(i) of the assessment order). Cost thereof came to be added as unexplained income in its respect. Though the assessee in appeal claimed the same to be a part of his drawings, no detail thereof was produced and, hence, confirmed.

71 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT (Rs.10 lacs) has been offered to tax for the current year, discussed with reference to Ground 6 for A.Y. 2005-06 (refer para 47). The same is definitely a source of cash, which could be deposited in bank, i.e., that made after the date/s of realisation of the sale proceeds. Our second observation in the matter is that out of the total deposit of Rs.12,09,932 in Muslim Co-operative Bank, for which amount addition is made, Rs.1.35 lacs stands deposited during the preceding year, so that the addition for the current year could not exceed the balance amount, determined at Rs.10,75,038/- (para 19 of the impugned order). The matter accordingly stands restored to the file of the Assessing Officer (A.O.) to compute the quantum of the two additions on the basis of the short fall in the availability of cash, which accordingly has to be worked out with reference to different dates. The utilisation of cash for household/personal purposes is to be taken on a uniform basis over the year, while that toward income-tax paid, on the definite dates. Similarly, the business income (from horse racing), disclosed by the assessee at Rs.15.69 lacs, would be taken proportionately during the year, at (say) each month-end. The assessee shall furnish the relevant data. Ground 6 of this appeal shall again stand to be addressed in the like manner and, thus, is disposed of accordingly.

72 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 63. We have heard the party before us, and perused the material on record. The cancellation deed is in respect of lease deed dated 11.4.2005. The assessee’s case (refer para G of WS 6) is that the amount (Rs.5.50 lacs) refunded by him to the lessee on cancellation is only that deposited by him upon entering the lease agreement. How can that be faulted with? The cancellation deed itself would bear this out. Surely, it implies that the assessee expended a similar, or perhaps a larger, sum on furniture and fixture. However, the question is of time. It cannot, on the basis of the material on record, be said that it was during the current year. The Revenue has also not questioned the assessee on this aspect, for us to draw any adverse inference on non- furnishing of proper explanation by the assessee. The only impact that we discern is that the assessee’s cash flow would witness an inflow and outflow for that sum on 11.4.2005 and 29.4.2005 respectively. The addition is deleted. We decide accordingly.

73 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The same were found from the residence of KT in the course of search on 05.1.2007, in the form of data on a pen drive seized, hard copy of which was subsequently taken (Annexure A7 to Panchanama dated 06.1.2007, consisting of 22 pages). The same reveals them to be issued by the assessee, from London in December, 2005, on UBS AG, Zurich qua his account number 206-794-786 therewith, by direct transfer. These monies are transferred, by telex transfer, from Switzerland to various beneficiary accounts at New York, Dubai, Zurich, Singapore, London, etc. For each transfer, the beneficiary details are given. While some are toward transfer simpliciter, others are requests for AAA rated UBS bonds for a particular amount, specified with beneficiary details. The assessee, despite being questioned and show caused several times in the matter, denied any knowledge thereof, further emphasising that he had not comments to offer (refer para 13(iv) of the assessment order).

65A. We have heard the party before us, and perused the material on record. The TIs are on an account confirmed by UBS AG report to be of HAK in the name of RHAK, qua which the assessee holds power of attorney (POA). We have already noted that the names of the persons mentioned in the TIs, different banks and their addresses, particulars, etc. of the beneficiary accounts, are existing persons, as confirmed by the ld. CIT(A), in fact, for each year under reference, under the section ‘Supporting Evidences’ of his order. We have already explained that the fact of the document, a word of wide amplitude, being found on electronic/magnetic media (viz. pen drive, CD, etc.), and not on paper, would not in any manner impact its evidentiary value or the statutory presumption of section 292C in its respect (refer para 25 of this order). Strict rules of evidences are even otherwise not applicable to the proceedings under the Act, so that any material, otherwise reliable, where found relevant and material, can be considered. A decision, further, is to be taken considering the entirety of the facts and circumstances of the case, of course upon duly confronting the assessee therewith, providing adequate opportunity to explain the same.

74 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The assessee’s case, across all the years, is the same, i.e., of denial, alluding to the UBS AG report dated 30.10.2007 and the result of the investigations by ED, stating of complaints by it being ultimately filed only in May, 2011, and only on two counts. The reliance on the UBS report stands discussed at paras 11 and 12 of this order. The contention qua ED is not supported by any material on record. We have further explained that the proceedings under PMLA stand on a different footing, and that the request for mutual legal assistance by the Indian authorities would stand to be considered and responded to by the Swiss authorities on a clear nexus between the predicate offences and the funds, i.e., for/qua which information/assistance is sought. The investigation by ED, which is thus at a trial stage, would be of little consequence in the proceedings under the Act, which are or can be decided upon on the basis of preponderance of probabilities, and toward which the ld. DR has cited abundant case law, viz. CIT vs. Empire Builtech Pvt. Ltd. [2015] 228 Taxman 346 (Del)(Mag.); Umakant B. Agrawal vs. Dy. CIT [2014] 369 ITR 220 (Bom); CIT vs. Narinder Kumar Sekhri [2015] 228 Taxman 35 (P&H)(Mag); Edayanal Constructions vs. CIT [1990] 183 ITR 671 (Ker). In fact, that apart, the decision in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), rendered considering four precedents by the hon’ble Apex Court, is a locus classicus on the subject. In view of the foregoing, we see no reason to deviate from our decision as delineated at paras 11-12, 15, 25, 30 and 49 of this order, to which therefore reference is drawn. We decide accordingly.

75 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 16.2.2007 to S.K. Financial Services, was also found during search from the assessee’s Pune residence (refer para 107 of this order). The matter, in view of the discussion at para 107, is restored to the file of the AO with like directions. We decide accordingly.

Asstt. Year 2007-08

78 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT explaining the same as by way of a gift from his sister; belonging to his mother-in- law; and purchased on 31/12/2006, besides a part of it comprising watches. The contention being unproved, besides bearing inconsistencies, was rejected by the ld. CIT(A), confirming the addition.

79 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 76. Ground 5 concerns an addition for Rs. 12,07,000/- towards unexplained payment. A ICICI Lombard envelope, addressed to one, Nilesh V. Padhye, was found and seized in search from the assessee’s residence. The page containing the following details, had ‘5’ of every month, Jan., 2007 (EMI Rs. 14,625), inscribed thereon: ‘12,07,000 (-) 6,38,000 Loan 5,69,000 (-) 6,07,000 Cash 38,000 Diff.’ Addition for Rs. 12.07 lacs was proposed and made in the absence of any explanation and, further, confirmed on the same basis.

80 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT the premium at Rs 41,005/-, in the name of Abbas A. Abbas, the assessee’s father- in-law, was found during the search from the assessee’s Mumbai residence, which further stated the value of car at 10,30,750/-. Abbas A. Abbas being aged, a non- assessee, working as a horse trainer, so that he could not afford to purchase and maintain the vehicle, the same was considered as beneficially belonging to the assessee, from whose residence the insurance policy was found and, accordingly, assessed as his income, and confirmed for the same reason, so that the assessee is in second appeal.

81 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT the premium of Rs.41,005/- as an outflow on account of car insurance while preparing the cash flow statement for the year. We decide accordingly.

82 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 82. Ground # 8 is again in respect of investment in a motor car (Porscha Cayennes, 2005 Model/ Reg. No. KA 08M 969), purchased from one, Anil Shankar, for Rs. 61.50 lacs. The addition, based on the material found during search from the assessee’s Pune residence in the form of a delivery note (dated 6/12/2006) issued by the assessee and receipt-cum-confirmation dated 8/12/2006 issued by the said Anil Shankar, is further supported by the assessee’s deposition u/s. 131 dated 27/12/2007. In appeal, the assessee produced an account of payment, as:  Rs. 3,50,000/- (cash) on 4/12/2006 (self cheque No.41245 on ABN Amro Bank)  Rs. 46,50,000/- (cash) on 6/12/2006  Rs. 11,00,000/- (cheque on Union Bank of India, dated 7/03/2007) The cash was sought to be explained as received from RWITC on 6/12/2006 on account of horse racing (Rs.45 lacs) and horse betting (Rs.15.70 lacs), which were dismissed by the ld. CIT (A) as not credible as never in the past had receipts for such amounts been issued on a single day. Aggrieved, the assessee is in appeal.

89 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT in search. The same being not disclosed, its’ deeming as unexplained income cannot be faulted with. We decide accordingly.

93 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT of UBS AG, Zurich (Wealth Management Department), which states that HAK, on the basis of telephonic discussion with the office of the Chairman (of UBS Ltd.), is permitted to withdraw a part of his assets (USD 6 Billion) deposited with UBS Ltd., i.e., out of the total deposit of USD 8,000,453,000 (8 Billion), and invest it in any manner he chooses to. The balance USD 2 Billion shall remain bound with UBS Ltd. till 15/01/2007, after which HAK can pursue any mode of investment or deposit, wherever and whenever he chooses to. Pages 1 and 5 of the said set are the statement of accounts, again, on the letter head of the UBS, in the name of Hassan Ali Khan, issued under the signature of M. Wilthrich, for and on behalf of UBS Ltd., stating the balance on two value dates, as under: Date: 31.08.2006 Amount: USD 6,620,575,431.00 Date: 02.11.2006 Amount: USD 7,780,330,548.00 The amount of USD 8 Billion came to be added in, and confirmed for, assessment - the assessee denying any knowledge of the same, or of any bank account with UBS AG, much less, balance therein; rather, suggesting of documents being planted at his residence, with some malicious intent.

94 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 02/11/1994 (at pages 5,6). It, stated to be in response to a request by the Ministry of Finance, GOI dated 19/12/2011 regarding Hassan Ali Khan, clearly states that of the 404 pages provided (by GOI), 403 are true, i.e., except the letter dated 08/12/2006, enclosing a copy thereof as Annexure ‘F’ thereto, and which is the very same letter as page 6 (of Bundle 1/Annexure A), i.e., the Confirmation dated 8/12/2006 supra. It states, on the basis of precisions issued by UBS AG, that there was, at no time, a phone conversation between HAK and its’ Chairman’s office; that the said letter was never written or signed by any employee of UBS AG; that at no time the amount of USD 6 billion transferred to any account in the name of HAK. Our first observation in the matter is that both the assessee and PA have issued evasive replies, which are mutually inconsistent, if not contradictory, so that either of them, or perhaps even both of them, are not speaking the truth, or wholly or the whole truth. While the assessee denies any knowledge of the same, PA states that the original documents, which were scanned by him, were found from the assessee’s Pune residence, where he was admittedly staying at the time of search. The scanned copies have not come out of nowhere. The PA’s statement could thus as well be true. And how is it that the assessee is not aware of the said documents (stated to be found from his residence), whose statement thus lacks any credibility. Then, where did the original documents disappear? Further, PA would have scanned the documents only finding the same important and relevant. PA was representing the assessee to the outside world, engaged for promoting his business interests internationally. This could only be on the basis of investible resources with HAK, toward which are all the three documents (scanned copies) found from the PA’s laptop. Reference here may be made to the assessee’s notarized statement dated 30/06/2003, stating of visiting Zurich in Feb., 2001, after his acquittal in a case in India, and also in April, 2001, whereat he expressed his desire to invest in 95 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT hotel projects in Switzerland, which PA promised to search; the two entering into a consulting agreement (dated April 5, 2001). Reference is also made to bill dated 08/2006 for USD 16 lac, by PA on HAK, as well as letter dated 16/9/2002 issued toward commission for USD 68.5 M, for which amount TI was also found, which find discussion at paras 22, 30 and 104 of this order. Now, coming to the communication dated 18/12/2013 by Swiss authorities to CBDT, stating that the letter dated 08/12/2006 was not written by any of the employees of UBS AG. We find it odd that UBS AG issues such a disclaimer without, at the same time, stating that the signatures of ‘Marcel Rohnar/M.Rohnar’ and ‘M. Wilthrich’, both of whom ostensibly signed the confirmation dated 08/12/2006, are not their signatures, or that their signatures are forged. Or that these two persons were not in employment of UBS Ltd. at the relevant time, or even that they were not competent, or authorized, to issue such a confirmation. It does not even state that the assessee had no account with UBS AG/UBS Ltd., i.e., as on 08/12/2006 (or 02/11/2006 or 31.8.2006). The disclaimer is clearly not complete, but open ended. We leave it at that. Two documents, purportedly signed by ‘M. Wilthrich’, for and on behalf of UBS Ltd., being statements of account (of HAK) as on 31/8/2006 and 2/11/2006, also form part of the scanned documents, three in number. It is notable that PA came to India in October, 2006, and was admittedly residing at the assessee’s Pune residence since. Surely, and in any case presumably, they were discussing not just the assessee’s dues to PA, but further plans as well. The two dates are for the same period, and perilously close to the date of the confirmation (08/12/2006). Then, again, are these two statements among the 403 documents given by CBDT to its Swiss counterpart under DTAA for verification, all of which have been found true (& genuine). It is not clear. Assuming that these were not so given, the million dollar question is: Why not? Two, the account particulars being withheld, by UBS

96 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Ltd. in each of these three documents, it is not clear if the two pertain, as it appears to be, the same account. Only the assessee (or UBS AG) could tell as to which account/s the same pertain to. Why, where not so, was the identification of the account/s not sought, as appears to be the case, as the Revenue would have most certainly highlighted this aspect otherwise. This is very surprising, considering the criticality or the extreme significance of the said information, both in context of the assessment under the Act as well as the ongoing investigation by ED. From the tax point of view though, the balance in the assessee’s account/s with UBS AG, even if its’ number/s is not specified, is sufficient to attract the deeming fiction of assessment as income where not satisfactorily explained as to its nature and source. We have already found the assessee’s case as sans any explanation, being confined to a total denial. The same is not only at cross with that of his close associate (PA), camping at his residence, but also completely out of sync with the obtaining facts and circumstances of the case, including his own statement dated 30/06/2003 supra; his conduct, including travel to and camping at, among others, London, Dubai, Zurich, etc.; opening of bank accounts with UBS AG, and locker with Barclays Bank PLC, dealing with Credit Lyonnais, Bank Sarasin. et. al. over the past few years (since 2001) – all of which is abundantly documented and evidenced on the basis of materials found in search. What for, for instance, PA was staying at his residence, and what was he doing there? A multitude of such questions arise, all of which get stonewalled by his being in denial mode - clearly a deliberate strategy. We, under the circumstances, only consider it fit and appropriate to restore the matter back to the file of the AO, to allow the assessee another opportunity to satisfactorily explain the said documents, lest the inference, as admissible in law, shall follow. Even ignoring the confirmation dated 8/12/2006 in view of the disclaimer by UBS AG - which though does not fully address the issues arising, the 97 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT statements of account/s need to be explained, lest the adverse inference in law follows. As indicated earlier, the assessee, either by himself or through the agency of UBS AG, can surely lead and furnish the necessary evidence and the required information. The Revenue has also much to explain, i.e., given the incriminating material found in search, and to which the statutory presumption of s. 292C therefore, applies. It shall be at liberty to seek verification or adduce any material in support or in furtherance of its’ case; rather, of the truth of the matter, even as we may clarify that the onus, in view of the documents found, coupled with the provisions of sections 132(4), 132(4A) & 292-C of the Act, is squarely on the assessee. Further, the addition, we may add, is not on account of any transfer - to a HAK account - which is categorically denied (by UBS AG), or to any other, but on account of unexplained balance in the bank account/s, which, again, may relate to one or even two separate account/s with UBS AG/UBS Ltd. We decide accordingly.

98 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT evidence (AE). The letter dated 29.3.2010 is a response by the US Department of Justice in part execution of the request by Ministry of Home Affairs, GOI, made pursuant to Article 7 of the Treaty of Mutual Legal Assistance in criminal matters (pg. 10 of Additional Evidence). Then there is a response dated 22.3.2010 (by Barclays Bank) and letter dated 24.3.2008 by the Department of Treasury, Internal Revenue Service, Washington (pgs. 12 and 23 of Additional Evidence), each with accompanying documents. The information provided is definite, gathered in some cases by issuing subpoena on S. K. Financial Services. These would, however, require being correlated with the TIs found and/or information qua which is with the Revenue, and addition for which has been made. The ld. DR would concede during hearing that no such reconciliation has been made, being able to correlate only one transaction for USD 7 lac dated 22.11.2006 (pg. 15 of the AE, from among that validated). Our decision qua TIs continues to remain the same (refer, inter alia, paras 11-12, 15, 25, 30, 49 & 65 of his order). The assessee shall, in addition, be required to meet the Revenue’s case, further fortified, on the basis of the input received, since admitted in evidence by us. We, accordingly, with like directions as for the preceding years, restore the matter back to the file of the A.O. to decide afresh in accordance with the law, issuing definite findings of fact after allowing the assessee an opportunity of being heard. This also decides Ground 26 of this appeal, being qua TI dated 21.11.2006 in favour of Ms. Cayennes. As also Ground # 28 as, as conceded to by the ld. DR during hearing, the same is in respect of the same TI, even as there can be no double addition. We note that the ld. CIT(A) himself observes the same (refer paras 58 to 60 of his order), but ascribes it to a mistake by the assessee in filing two grounds of appeal (i.e., for the same addition). The mistake in fact has occurred at the end of the AO, making two additions, the relevant part/s of whose order we have read – the addition being referable only to para 16(ix) of his order and not para 16(vii), so that addition

99 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT toward the latter (at sr. no. 25/pg. 33 of the assessment order) is superfluous. The same is accordingly directed for deletion. We decide accordingly.

101 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT any books of account, i.e., regular, nor were any, for any year, found during search. The same also explains the assessee’s admission on oath on 27/02/2007 (supra). The books of account have been prepared only subsequently, to account for the admitted income/s and avail credit for the corresponding cash. The Revenue having seized cash at Rs. 90.29 lacs (of the total Rs. 91.30 lacs found), what, we wonder, is the source of advance-tax deposited on the very same day. There is no reference to the cash-book, considered doubtful by the ld. CIT(A), by the AO, before whom, it appears, the same had not been produced. Our only concern is that the addition for the admitted cash is made, and that there is no double addition, thereby addressing the concerns of both the sides. The AO shall verify the assessee’s claims in the matter, on the basis of verifiable cash flows. As afore- stated, the inflows and outflows for the income/s & expenditure, stated on an annualized basis (viz. horse racing income, household expenditure, etc.), be reckoned uniformly (proportionately) over the year, at each month-end, and confirm the addition on that basis, i.e., for the shortfall/s during the year, retaining the cash as admitted as on 31/3/2007, the year-end. We may here also add that cash to the extent of Rs. 5 lacs has been confirmed for addition for A.Y. 2000-01 vide our order for that year (in ITA No. 3726/Mum/2009 dtd. 09/12/2015). We decide accordingly.

102 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT account (Watches) as on 31.03.2007 as per his books of account. The assessee’s claim being found unsupported by evidence, the addition was confirmed, so that he is in second appeal.

103 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT The only question is if the same is already accounted for by the assessee from his returned income for the year, as claimed, or not. We have already restored the matter in respect of such claim qua admitted incomes to the file of the AO, before whom the cash-book was not produced, for verification of the assessee’s claims and a decision consistent with his findings (refer para 114 of this order). We decide accordingly.

106 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT that was required in that case was for the assessee to exhibit this on the basis of the accounts of M/s. Travel Hub, which would bear the payments in respect of the assessee’s travel by KT or his companies. The cost of travel, being based on information from his regular travel agent, has not been contested for most part, with that qua travel to Canada being, again, unsubstantiated. Subject to the AO’s verification supra, we confirm the addition u/s. 69C. Further, we also agree that the addition on account of stay abroad is, on the basis of the travel dates and visa period, listed in the assessment order, is reasonable. We decide accordingly.

107 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Manoj Kumar, Asst. Director (AIR 2016 SC 106) and Janta Jha vs. Asst. Director (in CRLMC No. 114 of 2011): ‘71. Act to have overriding effect The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.’ The Revenue’s counsel, on being confronted therewith, chose to rely on his submissions already made. We find no merit in the said contention, which in fact stands already dealt with at paras 11.2 and 12 of this order. The scope and ambit of the Act and the PML Act are completely different. Income, a word of wide import, is taxable under the Act irrespective of the manner of its earning, and the Act places no premium on the legality thereof, with which it is not concerned. The Hon’ble Courts have, rather, upheld bringing an amount to tax even on the basis of unjust enrichment (refer: Shree Digvijay Cement Co. Ltd. vs. Union of India [2003] 259 ITR 705 (SC); Sinclair Murray & Co. P. Ltd. vs. CIT [1974] 97 ITR 615 (SC)). Again, where the nature and source of any deposit in the assessee’s bank account is not satisfactorily explained, the law deems it as his unexplained income. This is based on the principle of common law jurisprudence, embodied in s. 110 of the Evidence Act, as noted at para 11.5 of the order. The Revenue is not obliged to locate the source of the deposit before (or after) bringing the same to tax. The overriding effect of s. 71 PMLA is undisputed, but the same is with regard to any inconsistency between the provisions of the said Act and the other law. We have already stated of the provisions of the Act and PML Act as operating in different fields. We are also completely unable to understand the relevance of the two cited decisions; the same relating to violations under Companies Act and SEBI Act (in the former case) and Indian Penal Code and Arms Act (in the latter), which are scheduled offences under PMLA. The assessee’s written submissions would therefore be to no moment.

108 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT 129. In the result, the assessee’s appeals for all the years are partly allowed and partly allowed for statistical purposes. Order pronounced in the open court on February 29, 2016 Sd/- Sd/- (D. Manmohan) (Sanjay Arora) उपा�य� / Vice President लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 29.02.2016 व.�न.स./Roshani, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT - concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai

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

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

The Indian companies referred to are: Roberts, McLean and Co. Ltd., R. M. Investment and Trading Company Private Ltd. and Roberts, McLean Services Private Ltd.

On the basis of agreements entered into between the companies named above, HAK’s companies and KT’s companies were involved in diverse business operations (on a 50:50 basis) mainly in India and had earned substantial profits through this joint venture. The total amount of profits earned by the joint venture during the years 1983 to 1990 amounted to USD 280.54 million. As per the understanding between HAK and KT all the earnings were held in the account managed by HAK.

Now it has been agreed that HAK shall transfer the amount relating to KT’s share of profit of such offshore accounts as may be nominated by KT.

The fact that the funds did not remain idle and did earn some returns was discussed. After due deliberations it was mutually agreed that a lump-sum of USD 200 million shall be paid to KT by HAK and the same shall be considered as the final settlement. It was agreed that no further claims in respect of interest or otherwise by KT shall be raised or considered.

The said amount of USD 200 million shall be split into 3 parts as follows:

1. 1. USD 100 million relating to Roberts, Mclean and Co. Ltd.

2. USD 65 million relating to R. M. Investment and Trading Company Pvt. Ltd. and 3. USD 35 million relating to Roberts, McLean Services Pvt. Ltd.

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

HASAN ALI KHAN K TAPURIAH’

111 (A.Ys. 2001-02 to 2007-08) Hassan Ali Khan vs. Dy. CIT Annexure B ‘Statement of Account as at 13 March, 2001 Matter Matter Name Invoice Invoice Amount Unbilled Unbille Total No. Number Date Fees d costs 0001860 Payson 6004846 09/10/00 9,076.33 9,076.33 Company Ltd. 6005359 17/12/00 503.33 503.33 Reorganization 6004845 09/10/00 4,344.00 4,344.00 0003690 Nominee 6005188 21/11/00 30,025.90 30,025.90 Arrangements 0004433 Al Haseena 6005189 21/11/00 37,548.10 36,993.00 128.40 74,541.00 LLC 0005184 Autumn 6005455 21/01/01 5,320.00 9,486.00 68.00 14,874.00 Holdings 0005188 Appoint 6005454 21/01/01 3,346.38 207.00 3,553.38 Director 0005195 Scandinavian 6005456 21/01/01 9,746.00 4,420.00 24.00 14,190.00 Tech Total to be transferred DHS 151,107.94 Bank Details Standard Chartered Bank P.O. Box 999 Dubai UAE Account Number 02-2246910-02’