HITEN DALAL ,MUMBAI V. DCIT, CENTRAL CIRLE 4(4), MUMBAI

ITA 6267/MUM/2024

AI Insights

The case involves Hiten Dalal, the assessee, who appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs. 7,34,68,968 to his income for the Assessment Year 2011-12. This addition was initially made by the AO under the head 'income from other sources', based on the Income Tax Department's records showing interest income from various bank deposits. The assessee contended that he did not receive this income as his assets were under the control of a custodian appointed under the Special Court (TORTS) Act, 1992, and he had no access to these funds. The ITAT found that the lower authorities had not adequately verified the specifics of the bank accounts and deposits in question, leading to the decision to remand the case for further investigation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 27176 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: HITEN DALAL
• Section: 148; 143(3); 133(6)

Judgement Text

" N THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SMT. RENU JAUHRI, AM ITA No. 6267/Mum/2024 (Assessment Year: 2011-12) Hiten Dalal 26/30, Fort Foundation, 306, 3rd Floor, Bake House Lane, Fort, Mumbai – 400001. Vs. DCIT, Central Circle 4(4) Kautilya Bhavan, BKC, Mumbai - 400020 PAN/GIR No. ABTPD7909F (Assessee) : (Respondent) Assessee by : Shri. Hiten Dalal Respondent by : Shri. Hemanshu Joshi, Sr. DR Date of Hearing : 28.01.2025 Date of Pronouncement : 29.01.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals), 52, Mumbai (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2011-12. 2. The assessee has challenged the addition made by the ld. AO amounting to Rs. 7,34,68,968/- and upheld by the ld. CIT(A) on the ground that the assessee has failed to substantiate with relevant documentary evidence to substantiate his claim. 3. Briefly stated the assessee is an individual and has not filed his original return of income for the year under consideration. The learned Assessing Officer ('ld. A.O.' for short) reopened the assessee’s case, vide notice u/s. 148 dated 30.03.2018, pursuant to the ITS ITA No. 6267/Mum/2024 (A.Y. 2011-12) Hiten Dalal 2 details that an amount of Rs. 7,34,68,968/- has been credited to the various bank accounts of the assessee as interest income under the head ‘income from other sources’ arising out of the deposits made in various bank accounts of the assessee. The ld. AO passed the assessment order u/s. 143(3) r.w. 147 of the Act, determining total income at Rs. 7,34,68,970/-, after making an addition of the impugned amount to the total income of the assessee under the head ‘income from other sources’. 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 22.10.2024 upheld the addition made by the ld. AO. 5. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 6. During the appellate proceedings, the assessee appeared in person and contended that the assessee is a notified person as per the Special Court (TORTS) Act, 1992 u/s. 3 of the TORTS Act, 1992, vide order dated 08.06.1992, subsequent to which all the assets of the assessee were attached and vested with the Custodian appointed under the Act. The assessee further alleged that he has no credits of the impugned amount in his Andhra Bank, Fort Branch account 4819 as alleged by the revenue and further his entire assets are vested with the office of the Custodian out of which he has no control. The assessee also brought our attention to the letter dated 08.01.2019, issued by the office of the custodian, where it has stated that no part of the interest earned on the fixed deposit receipt was credited to the assessee’s account held with Andhra bank along with the details of the fixed deposit receipts which was pre-maturely closed on 14.09.2012. The assessee also brought our attention to the order of the Special Court in the case of ITA No. 6267/Mum/2024 (A.Y. 2011-12) Hiten Dalal 3 the assessee and reiterated that the assessee did not receive any interest income as alleged by the revenue during the year under consideration. 7. The learned Departmental Representative (‘ld. DR’ for short) on the other hand controverted the said fact and stated that the ld. AO has not specified that the interest amount has been credited in the Andhra Bank account held by the assessee and has made addition based on the ITS details in the case of the assessee which states that the assessee has made time deposits and had earned interest income during the year under consideration. The ld. DR further stated that the assessee has failed to submit the documentary evidence before the lower authorities and even the letter received from the office of the custodian was subsequent to the passing of the assessment order which implies that the assessee has not given complete details before the lower authorities. The ld. DR prayed that the addition made in the hands of the assessee be upheld. 8. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been declared as notified party under the Special Court (TORTS) Act, 1992 and the assessee has not filed his return of income for the year under consideration. The bank accounts of the assessee are also attached and vested with the office of the custodian, where the ld. AO has issued notice u/s. 133(6) of the Act to the custodian to provide the details of the deposits made by the assessee and the office of the custodian, vide letter dated 12.11.2018, has provide the following details of deposit which are reproduced hereinunder: - Sr. No. Name of the Bank Date of Deposit Amount Deposited Rate of Interest Tenure of Deposi t Maturity Value Maturity Date ITA No. 6267/Mum/2024 (A.Y. 2011-12) Hiten Dalal 4 1. State Bank of India 21.12.2009 54,41,000 6.50% 1 Year 58,03,379 Prematurely broken on 27.09.2011 2. Bank of Baroda 29.04.2010 1,14,56,50,498 6.76% 1 Year 1,22,50,81,940 29.04.2011 3. State Bank of Patiala 20.05.2010 96,77,000 6.75% 1 Year 1,03,46,918 Prematurely broken on 27.09.2010 4 Syndicate Bank 20.08.2010 6,72,000 7.25% 1 Year 7,22,060 20.08.2011 9. During the assessment proceedings, the assessee has denied having earned interest income of Rs. 7,34,68,968/- out of the time deposits in various banks and had further contended that the Andhra Bank, Fort Branch account 4819 statement does not reflect any such credit during the period from 1st April, 2010 to 31st March, 2011. The ld. AO failed to consider the assessee’s submission and stated that the custodian is appointed only to manage the funds of the notified parties and as to act in accordance with the direction of the Special Court and is in no obligation to file the return of income of the notified parties which lies only with the assessee. The ld. AO further stated that the other notified parties have been filing their return of income regularly and the assessee is not absolved from his obligation to file the return of income. The ld. AO added the impugned amount to the total income of the assessee under the head ‘income from other sources’ and also initiated penalty proceedings for concealment of particulars of income. 10. The ld. CIT(A) upheld the addition made by the ld. AO on the ground that the assessee has failed to substantiate his contention with supporting documentary evidence. 11. In the above factual matrix of the case, it is observed that the assessee is relying on the letter of the office of the custodian in which it is stated that the assessee has not received ITA No. 6267/Mum/2024 (A.Y. 2011-12) Hiten Dalal 5 any interest amount in the Andhra Bank account which is not the case of the revenue. The lower authorities have held that the assessee has received the interest amount in various bank accounts, where the assessee has made time deposits, in which the bank details of the Andhra Bank does not find place. It is also not disputed that the assessee has made deposits in various bank accounts such as State Bank of India, Bank of Baroda, State Bank of Patiala and Syndicate Bank on different dates, ranging from 2009-2010 and the same was also corroborated by the letter issued by the office of the custodian relied upon by the assessee, where the amount invested with Bank of Baroda was amounting to Rs. 132,35,58,784/- and the interest earned was Rs. 3,46,80,133/-. In the present case in hand, neither the ld. AO nor the ld. CIT(A) has specified in which bank account the interest income of Rs. 7,34,68,968/- was credited and neither the assessee has given any documentary evidence such as bank statements of the banks in which the assessee has made deposits, to show that the interest was not credited in these accounts. The assessee merely harps upon the bank statement of Andhra Bank, Fort branch account 4818 and has furnished the bank statement of the said account which is not included in the details of the deposits received from the office of the custodian. The assessee also contends that the deposits made in State Bank of India and State Bank of Patiala were pre maturely withdrawn on 27.09.2010 and the maturity proceeds along with the interest to the extent of Rs. 1.50 crore was paid to the income tax department subsequent to the order of the Hon'ble Special Court in report no. 2 of 2019, dated 9th July, 2010. This fact has not been verified by the lower authorities and it is also not evident whether the same pertains to the impugned year or for some other assessment ITA No. 6267/Mum/2024 (A.Y. 2011-12) Hiten Dalal 6 year. Along with this various other details have not been verified by the lower authorities and the assessee has also not furnished the complete details of the other bank statements held by the assessee. We therefore deem it fit to remand all these issues back to the file of ld. AO to consider the submission of the assessee and to conduct de novo assessment based on the same, as per the merits of the case and in accordance with law. The assessee is also directed to furnish all the documents along with the bank statements of all the accounts held by the assessee including the details of the deposits made in various banks. For the abovementioned reason, we remit these issues back to the file of the ld. AO. 12. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 29.01.2025 Sd/- Sd/- (RENU JAUHRI) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 29.01.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "