Vijay Alimchandani, New Delhi V. ITO, New Delhi

ITA 1953/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3950 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 05-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 142(1); 234B; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI C.L.SETHI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI C.L.SETHI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI C.L.SETHI, JM AND SHRI B.C.MEENA, AM ITA NO.1953/DEL/2010 ITA NO.1953/DEL/2010 ITA NO.1953/DEL/2010 ITA NO.1953/DEL/2010 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005- -- -06 0606 06 SHRI VIJAY ALIMCHANDANI, SHRI VIJAY ALIMCHANDANI, SHRI VIJAY ALIMCHANDANI, SHRI VIJAY ALIMCHANDANI, 204 204 204 204- -- -206, SIDDHARTH 206, SIDDHARTH 206, SIDDHARTH 206, SIDDHARTH CHAMBERS, CHAMBERS, CHAMBERS, CHAMBERS, HAUZ KHAS, HAUZ KHAS, HAUZ KHAS, HAUZ KHAS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 016. 110 016. 110 016. 110 016. P PP PAN NO.AJCPA0612R. AN NO.AJCPA0612R. AN NO.AJCPA0612R. AN NO.AJCPA0612R. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -22(4) & DAO 22(4) & DAO 22(4) & DAO 22(4) & DAO- -- -42, 42, 42, 42, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL AGGARWAL, ADVOCATE. RESPONDENT BY : SHRI K.RAVI RAM CHANDRAN, SR.DR ORDER ORDER ORDER ORDER PER C.L.SETHI, JM : PER C.L.SETHI, JM : PER C.L.SETHI, JM : PER C.L.SETHI, JM : THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 4.3.2010 PASSED BY LEARNED CIT(A) IN THE MATTER OF AN ASSESS MENT MADE BY THE AO U/S 144 OF THE INCOME-TAX ACT, 1961 (THE ACT) FO R THE AY 2005-06. 2. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSE SSEE REVOLVE AROUND THE FOLLOWING ISSUES:- (I) WHETHER THE ASSESSMENT MADE AGAINST THE ASSESSE E U/S 144 OF THE ACT IS VALID IN VIEW OF THE FACT THAT AS SESSEE IS A NON-RESIDENT AND NO NOTICE HAS BEEN SERVED UPON HIM AT THE CORRECT ADDRESS. (II) WHETHER THE ADDITION OF `28,03,625/- BEING ALL EGED UNEXPLAINED INVESTMENT IN MUTUAL FUND AS THE ASSESS EES ITA-1953/DEL/2010 2 INCOME FROM UNDISCLOSED SOURCES U/S 69 OF THE ACT I S JUSTIFIED. (III) WHETHER INTEREST U/S 234A AND 234B HAS BEEN C ORRECTLY CHARGED. 3. IN THIS CASE, THE AO RECEIVED AN INFORMATION FRO M ITS SYSTEM THAT ASSESSEE MADE AN INVESTMENT IN MUTUAL FUNDS AMOUNTI NG TO `28,03,625/- INVESTED IN HSBC, HDFC AND RELIANCE MU TUAL FUNDS DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION. THE AO, THEREFORE, ISSUED A NOTICE U/S 142(1) DATED 20.9.2007 THROUGH SPEED POST AT THE ASSESSEES ADDRESS GATHERED FROM THE SYSTEM, AS ASSESSEE DID NOT FILE ANY RETURN U/S 139(1) OF THE ACT. THIS NOTICE ISSUED BY THE AO REMAINED UNCOMPLIED WITH. THE AO, THEREFORE, ISSUED ANOTHER NOTICE U/S 142(1) ALONGWITH LETTER DATED 22 .10.2007 ASKING THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT MADE I N THE MUTUAL FUNDS AMOUNTING TO `28,03,625/- INVESTED DURING THE RELEV ANT YEAR. THIS NOTICE ALSO REMAINED UNCOMPLIED WITH. THE AO, THER EFORE, TREATED THE INVESTMENT TO BE UNDISCLOSED INCOME OF THE ASSESSEE WITHIN THE MEANING OF SECTION 69 OF THE ACT. THE AO THEN COMP LETED THE ASSESSMENT U/S 144 ON 19.12.2007 DETERMINING THE AS SESSEES TOTAL INCOME AT `28,03,625/-. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A) WHO, AFTER CONSIDERING THE ASSESSEE S EXPLANATION, DISMISSED THE ASSESSEES APPEAL AND CONFIRMED THE A OS ORDER. 5. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO GONE THR OUGH THE VARIOUS DOCUMENTS PLACED IN THE PAPER BOOK FILED BY THE ASS ESSEE BEFORE US. ITA-1953/DEL/2010 3 7. WE SHALL FIRST DECIDE AS TO WHETHER ASSESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF INVESTMENT IN MUTUAL FUNDS AM OUNTING TO `28,03,625/-. IN SUPPORT OF THE SOURCE OF INVESTME NT, THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF ABN AMRO NRE B ANK ACCOUNT FROM WHICH THE AMOUNT WAS WITHDRAWN BY CHEQUE AND PAID T OWARDS INVESTMENT IN MUTUAL FUNDS. THESE DETAILS WERE NOT FILED BEFORE THE AO. HOWEVER, THIS BANK ACCOUNT WAS FILED BEFORE TH E LEARNED CIT(A). IN THE ORDER OF LEARNED CIT(A), THE LEARNED CIT(A) HAS ADMITTED THE FACT THAT ASSESSEE IS A CITIZEN OF UNITED STATES OF AMER ICA. THIS WAS EVIDENT FROM THE COPY OF THE PASSPORT FILED ON REQUISITION BY THE LEARNED CIT(A). THE LEARNED CIT(A) HAS ALSO ADMITTED THE FACT THAT THE INVESTMENT OF `28,03,625/- IN UNITS OF MUTUAL FUNDS WERE MADE THR OUGH NRE BANK ACCOUNT NO.908924 STANDING IN THE NAME OF THE ASSES SEE. THOUGH LEARNED CIT(A) ADMITTED THE FACT THAT THE SAID INVE STMENTS WERE MADE THROUGH NRE BANK ACCOUNT NO.908924, IT WAS NOT CLEA R ABOUT THE TRANSFER OF MONEY FROM USA TO NRE BANK ACCOUNT NO.9 08924 MAINTAINED IN INDIA. HE, THEREFORE, UPHELD THE AO S ORDER BY OBSERVING THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF MONEY DEPOSITED IN NRE BANK ACCOUNT. IN THE COURSE OF HE ARING OF THIS APPEAL, WE INVITED THE LEARNED COUNSEL FOR THE ASSE SSEE TO SHOW A LINK OR NEXUS BETWEEN AMOUNT DEPOSITED IN NRE BANK ACCOU NT AND THE AMOUNT TRANSFERRED FROM BANK ACCOUNT MAINTAINED IN USA. IN REPLY THERETO, THE ASSESSEE HAS FILED DETAILS OF TRANSFER OF MONEY FROM USA TO NRE ACCOUNT AND THEN THE AMOUNT DEPOSITED IN THE NR E ACCOUNT WAS UTILIZED TOWARDS INVESTMENT IN MUTUAL FUND. ON PER USAL OF DETAILS OF INVESTMENT IN MUTUAL FUNDS, WE FIND THAT THE INVEST MENT TO THE EXTENT OF `28,03,625/- HAS BEEN MADE FROM TIME TO TIME DUR ING THE PERIOD FROM DECEMBER 2004 TO MARCH 2005 AS DETAILED BELOW: - ITA-1953/DEL/2010 4 DATE DESCRIPTION/NAME OF FUND (SCHEME) AMOUNT (RS.) 7-FEB-05 HDFC-CAPITAL BUILDER (D)(Z) 402,727.00 13-DEC-04 HDFC-FR INCOME FUND-STP- (W)(D) 400,000.00 7-FEB-05 HSBC-EQUITY FUND (D) 400,898.00 16-MAR-05 HSBC-EQUITY FUND (D) 200,000.00 17-MAR-05 HSBC-EQUITY FUND (D) 200,000.00 13-DEC-04 HSBC-FRF-LTP REG M(D) 400,000.00 16-MAR-05 RELIANCE GROWTH FUND (D) 200,000.00 17-MAR-05 RELIANCE GROWTH FUND (D) 200,000.00 10-DEC-04 RELIANCE-FRF (D) 400,000.00 TOTAL 2,803,625.00 8. WE HAVE ALSO GONE THROUGH THE TRANSACTION STATEM ENT FROM 1.4.2004 TO 31.3.2005 GIVEN BY PRIME CAPITAL SERVIC ES (P) LTD. WHEREIN THE AMOUNT INVESTED BY THE ASSESSEE HAS BEEN REFLEC TED. FROM THE STATEMENT, IT WAS FOUND THAT SOME INVESTMENTS WERE MADE AFTER SWITCH OVER FROM ONE SCHEME TO ANOTHER. WE HAVE ALSO GONE THROUGH THE ACCOUNT STATEMENT FURNISHED BY VARIOUS MUTUAL FUNDS TO THE ASSESSEE. FROM THESE DETAILS, IT IS NOT IN DISPUTE THAT THE A SSESSEE HAS PURCHASED UNITS OF MUTUAL FUNDS TO THE EXTENT OF `28,03,625/- . 9. NOW, WE COME TO THE SOURCE OF MONEY UTILIZED TOW ARDS INVESTMENT IN MUTUAL FUNDS. WE HAVE CAREFULLY PERU SED THE NRE ACCOUNT NO.908924 OF THE ASSESSEE MAINTAINED WITH A BN AMRO BANK. VARIOUS AMOUNTS BY CHEQUES WERE DEPOSITED IN THIS B ANK ACCOUNT FROM TIME TO TIME. THESE CHEQUES HAVE BEEN DEPOSITED UN DER THE DESCRIPTION HIGH VALUE INWARD CLG AS WELL AS UN DER THE HEAD INWARD CLEARING. THE AMOUNT OF `28,03,625/- HAS BEEN INVESTED IN MUTUAL FUNDS BY WITHDRAWING THE AMOUNT BY CHEQUES. THE VARIOUS ITA-1953/DEL/2010 5 DEPOSITS IN THE NRE ACCOUNT ARE FOUND TO HAVE BEEN TRANSFERRED FROM BANK OF AMERICA, ACCOUNT NO.06685-03122. ON PERUSA L OF CHART SHOWING MOVEMENT OF FUNDS FROM AMERICAN BANK OF AME RICA TO INDIAN ABN AMRO BANK NRE ACCOUNT, WE FIND THAT TOTAL AMOUN T OF `50,34,460/- HAS BEEN TRANSFERRED FROM AMERICAN BANK OF AMERICA TO INDIAN ABN AMRO BANK NRE ACCOUNT DURING THE PERIOD FROM 7.12.2 004 TO 30.3.2005. OUT OF THIS AMOUNT OF `50,34,460/- DEPO SITED IN ABN AMRO BANK ACCOUNT BY TRANSFER FROM AMERICAN BANK OF AMER ICA, THE ASSESSEE INVESTED THE SUM OF `28,03,625/- IN MUTUAL FUNDS DURING THE PERIOD FROM 10.12.2004 TO 17.3.2005. THE COPY OF A MERICAN BANK OF AMERICA ACCOUNT IS PLACED AT PAGE 2 TO 9 OF THE PAP ER BOOK-2 FILED BY THE ASSESSEE. THE COPY OF INDIAN ABN AMRO BANK NRE BANK ACCOUNT IS PLACED AT PAGE 12 TO 14 OF THE PAPER BOOK-1 FILED B Y THE ASSESSEE. THE ASSESSEE HAS ALSO PRODUCED BEFORE US AMERICAN RETUR N OF INCOME FOR THE CALENDAR YEAR 2004 & 2005. ON GOING THROUGH T HE CORRESPONDING ENTRIES IN THE BANK OF AMERICA VIS-A-VIS COPY IN NR E BANK ACCOUNT WITH ABN AMRO BANK, IT IS CLEAR THAT THE ASSESSEE HAD DE POSITED THE MONEY IN ABN AMRO BANK NRE BANK ACCOUNT BY TRANSFER FROM BANK OF AMERICA AND THEN RELEVANT INVESTMENT WAS MADE IN THE MUTUAL FUNDS. NO CASH MONEY HAS BEEN INTRODUCED BY THE ASSESSEE IN NRE BA NK ACCOUNT MAINTAINED WITH ABN AMRO BANK. IT IS NOT THE AOS CASE THAT THE ASSESSEE WAS HAVING ANY SOURCE OF INCOME IN INDIA W HICH HAS NOT BEEN DISCLOSED FOR THE PURPOSE OF TAXATION. IN THE LIG HT OF THESE DETAILS, WE, THEREFORE, FIND THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF THE INVESTMENT MADE IN THE MUTUAL FUNDS. WE, THERE FORE, DELETE THE ADDITION OF `28,03,625/- MADE BY THE AO ON ACCOUNT OF INVESTMENT MADE IN MUTUAL FUNDS. 10. SINCE THE VERY ADDITION MADE IN THE ASSESSMENT HAS BEEN DELETED BY US AFTER HOLDING THAT THE ASSESSEE HAS B EEN ABLE TO EXPLAIN THE SOURCE OF INVESTMENT, THE VARIOUS OTHER ISSUES RAISED BY THE ITA-1953/DEL/2010 6 ASSESSEE REGARDING THE AOS ACTION IN COMPLETING TH E ASSESSMENT U/S 144 OF THE ACT AGAINST THE ASSESSEE NEED NO ADJUDIC ATION AT THIS STAGE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AS INDICATED ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2011. SD/- SD/- (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (C.L.SETHI) (C.L.SETHI) (C.L.SETHI) (C.L.SETHI) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 13.05.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR