HARSHAD R. MEHTA, MUMBAI V. DCIT CEN CIR 1, MUMBAI

ITA 2744/MUM/2011

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1261 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 14-02-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P P BHANDARI
• Keywords: Reopening of assessment; Income from undisclosed sources; Residential status; Search and seizure; Opportunity of being heard; Principle of natural justice; Source of fund; Corroborative evidences; Assessment record; Notional interest; Onus to prove; Reason to believe; Set aside; Capital Gains
• Section: 143(3); 142(1); 234B; 143(1); 201; 143(2); 69A; 139(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, JM ITA NO. 7307/MUM/ 201 1 & 2744/MUM/2011 ( ASSESSMENT YEAR : 2003 - 04 ) SHRI HARSHAD R AMANIKLAL MEHTA 7 TH FLOOR, MEHTA MAHAL 15 TH MATHEW ROAD OPERA HOUSE, MUMBAI 400 004 VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 9 TH FLOOR, OLD CGO BUILDING M.K.ROAD, NEW MARINE LINES MUMBAI 400 020 PAN/GIR NO. AAJPM7052R (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI ROHAN SHAH & SHRI P.P. B HANDARI REVENUE BY SHRI GIRISH DAVE DATE OF HEARING 17 / 07 /2019 DATE OF PRONOUNCEMENT 04 /09 /2019 / O R D E R PER M. BALAGANESH (A.M) : ITA NO.2744/MUM/2011 THIS APPEAL IN ITA NO. 2744/MUM/2011 FOR A.Y. 2003 - 04 ARISE S OUT OF TH E ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 36, MUMBAI IN APPEAL NO. CIT(A) - 36/AP.221/09 - 10 DATED 25/02/2011 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/12/2009 BY THE LD. DY. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 1, MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 2 ITA NO.7307/MUM/2011 TH IS APPEAL IN ITA NO. 7307/MUM/2011 FOR A.Y. 2003 - 04 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 36, MUMBAI IN APPEAL NO. CIT(A) - 36/AP.7/11 - 12 DATED 30/08/2011 (LD. CIT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) 1.1. BOTH THESE APPEALS ARE DISPOSED OFF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIND THAT THE ASSESSEE HAD FILED AN ADDITIONAL GROUND CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT MADE IN THIS CASE. AT THE TIME OF HEARING BEFORE US, THE LD AR STATED THAT ON INSTRUCTIONS FROM THE AS SESSEE, THE SAME IS NOT PRESSED BY HIM. INFACT THE LD AR ALSO HAD FILED A WRITTEN SUBMISSION DATED 26.7.2019 , WHEREIN HE HAD DULY CONFIRMED THAT THE ADDITIONAL GROUND RAISED CHALLENGING THE VALIDITY OF REOPENING IS NOT PRESSED. ACCORDINGLY, THE SAME IS D ISMISSED AS NOT PRESSED. 3. THE ONLY ISSUE INVOLVED IN QUANTUM APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION IN THE SUM OF RS 5,35,23,181/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THIS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAD FILED HIS ORIGINAL RETURN OF INCOME FOR THE ASST YEAR 2003 - 04 ON 30.9.2003 DECLARING TOTAL INCOME OF RS 1,53,160/ - COMPRISING OF INCOME FROM HOUSE PROPERTY, OTHER SOURCES AND CAPITAL GAINS. THE RETURN WAS DULY PR OCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, INFORMATION WAS RECEIVED THAT THE ASSESSEE WAS BENEFICIARY IN DRYADE STIFTUNG, AN ENTITY WITH LGT TREUHAND AG, WHICH BELONGS TO THE LGT GROUP BASED IN ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 3 LIECHTENSTEIN. THE INFORMATION RECEIVED SHOWED TRANSACTION IN THE ACCOUNT OF THE SAID ENTITY DURING APRIL 2002 RELEVANT TO THE ASST YEAR 2003 - 04 TO THE TUNE OF USD 4387146. THE LD AO OBSERVED THAT INFORMATION RECEIVED ALSO SHOWED THAT CERTAIN ASSETS WERE BEING HELD IN THE ACCOUNT OF THE SAID ENTITY AS IN DECEMBE R 2001. SINCE ALL THESE ASSETS AND BANK ACCOUNTS WERE NOT REFLECTED IN THE STATEMENTS FILED ALONG WITH THE RETURN OF INCOME U/S 139(1) OF THE ACT, THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT ON 30.3.2009 AFTER RECORDING REASONS . IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A RETURN ON 27.4.2009 DECLARING THE SAME INCOME AS DECLARED IN THE RETURN U/S 139(1) OF THE ACT I.E RS 1,53,160/ - . NOTICES U/S 143(2) AND 142(1) WERE ISSUED ON 9.12.2009 WITH A SHOW CAUSE NOTICE AS TO WHY T HE AMOUNT DEPOSITED OF USD 4387146 SHOULD NOT BE TREATED AS HIS INCOME AND TAXED IN HIS HANDS FOR THE ASST YEAR UNDER CONSIDERATION. THE SHOW CAUSE NOTICE ISSUED BY THE LD AO IS AS UNDER: - THE INCOME TAX DEPARTMENT HAD RECEIVED INFORMATION THAT YOU ARE A BENEFICIARY OF THE BANK ACCOUNT OPENED IN THE NAME OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ IN LTG BANK, LIECHTENSTEIN. THE AMOUNT DEPOSITED IN THE BANK OR THE BENEFITS DERIVED OUT OF THE INTEREST ACCRUED OR OTHERWISE ON SUCH DEPOSIT WAS NO WHERE R EFLECTED IN YOUR RETURNS OF INCOME .ACCORDINGLY, THIS CASE WAS REOPENED U/S,148 OF THE I.T. ACT, 1961. THIS CASE WAS CENTRALIZED IN THIS CIRCLE VIDE ORDER DATED 3.9.2009 ISSUED BY CI T,16, MUMBAI, IN RESPONSE TO THIS OFFICE NOTICE DT.30 - 03 - 2009, YOU HAD ST RONGLY DENIED ANY KNOWLEDGE OF ANY SUCH TRUST AND HAD CATEGORICALLY DENIED OF RECEIVING ANY BENEFIT FROM SUCH TRUST. THE UNDERSIGNED HAS INFORMATION IN MY POSSESSION THAT YOU ALONG WITH THREE OTHERS HAD DEPOSITED $ 43,87,146.00 IN THE NAME OF DRYADE STIFTU NG AND DIANESE STIFTUNG VADUZ IN LTG BANK, LIECHTENSTEIN DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2002 - 03, 2003 - 04, 1 HAVE FURTHER REASON TO BELIEVE THAT THIS AMOUNT IS TAXABLE IN INDIA DUE TO THE FOLLOWING REASONS : (A) THE ADDRESS GIVEN TO THE LTG BANK, LIECHTENSTEIN IS BOMBAY - INDIA. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 4 NO PROOF OF THIS AMOUNT HAVING BEEN DECLARED TO ANY OF THE REVENUE AUTHORITIES ABROAD HAS BEEN FURNISHED. (B) ORIGIN OF THE DEPOSIT HAS BEEN STATED AS ' FAMILY MONEY' THE ABOVE FACTS MAKE IT CLEAR THAT YOU HAVE NO EXPLANATION TO OFFER REGARDING THE AMOUNT OF $ 43,87,146.00 DEPOSITED IN THE NAME OF DRYADE STIFFTUNG AND DIANESE STIFTUNG VADUZ , IN LTG BANK LIECHTENSTEIN FOR WHICH YOU ALONG WITH YOUR OTHER THREE MEMBERS WERE THE SOLE BENEFICIARIES. THE LTG BANK, LIE CHTENSTEIN IS A BANK WHICH HAS BEEN PUT UNDER 'GREY LIST' BY PA RI S BASED ORGANIZATION FOR ECONOMIC COOPERATION AND SINCE 2007. THE ACTIVITIES OF LTG BANK, LIECHTENSTEIN ARE UNDER THE SCANNER OF ALMOST ALL THE COUNTRIES AS THIS IS CONSIDERED AS ONE OF TH E SAFE UNCOOPERATIVE TAX HEAVENS ALONG WITH ANDORRA AND MONACO. THE ACTIVITIES OF LTG BANK, LIECHTENSTEIN WHICH ARE DOWNLOADED FROM THE WEBSITE, ARE SUMMARIZED AS UNDER: - BACKGROUND MILLIONS OF EUROS BELONGING TO HUNDREDS OF CITIZENS LIVING IN GERMANY WE RE CHANNELED INTO THE LGT BANK AND OTHER BANKS IN LIECH TENSTTEN, TAKING ADVANTAGE OF LIECHTENSTEI N - BASED TRUSTS TO EVADE PAYING TAXES IN GERMANY. ACCORDING TO THE PROSECUTOR'S OFFICE THESE TRUSTS HAVE BEEN CREATED APPARENTLY ONLY TO EVADE PAYING TAXES. ACC ORDING TO THE LAW IN LIECHTENSTEIN, SUCH TRUSTS ALLOW THE SEPARATION OF MONETARY ASSETS FROM THEIR OWNERS AND ARE KEPT ANONYMOUSLY. IN CONTRAST TO TRUSTS OF MOST OTHER COUNTRIES, LIECHTENSTEIN TRUSTS CAN BE REVOKED AT ANY TIME AND THE ASSETS WILL BE RETURN ED TO THE OWNER. FURTHERMORE, SUCH TRUSTS AS WELL AS THEIR MAINTAINING SHELL ENTITIES ARE ONLY CHARGED 0.1% (MINIMUM 1,000 SWISS FRANCS) ANNUALLY. LIECHTENSTEIN THUS IS KNOWN TO BE A TAX HAVEN. INVESTIGATIONS GERMANY ACCORDING TO THE LEAD PROSECUTING OFFI CE RESPONSIBLE FOR ECONOMIC CRIME IN BOCHUM, WHICH IS SUPPORTED BY PROSECUTING OFFICES IN OTHER TOWNS AS WELL AS THE CRIMINAL POLICE, CURRENTLY ABOUT 600 TO 700 INDIVIDUAL ARE SUSPECTED IN THE INVESTIGATIONS. IN ADDITION, SEARCH WARRANTS HAVE BEEN ISSUED. AN OFFICIAL CONFIRMATION ABOUT THE TOTAL NUMBER OF SUSPECTS AND AMOUNT OF MONEY INVOLVED HAS NOT YET BEEN ISSUED. ACCORDING TO THE PROSECUTORS, CURRENT INVESTIGATIONS PROVIDE A 'VERY HIGH LEVEL OF EVIDENCE.' ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 5 THE AFFAIR BECAME KNOWN ON FEBRUARY 14, 2008, W HEN A RAID WAS CONDUCTED AGAINST KLAUS ZUMWINKEL, THE CHIEF EXECUTIVE OF DEUTSCHE POST AG, UNDER THE SUSPICION THAT HE EVADED ABOUT 1 MILLION ($1.46 MILLION) IN TAXES. PRESSURED BY THE GOVERNMENT, ZUMWINKEL RESIGNED FROM HIS POSITION. SIMILARLY A NUMBER OF OTHER INDIVIDUALS HAVE BEEN UNDER INVESTIGATION FOR MONTHS, AND THE APPEARANCE THAT THE WELL TO DO HAVE WAYS AND MEANS TO EVADE THE GERMAN TAX LAWS HAS CAUSED COMPLAINTS ABOUT INEQUALITY. ACCORDING TO. A REPORT BY THE SUDDEUTSCHE ZEITUNG, HEINRICH KIEBER, A BANK COMPUTER TECHNICIAN, SOLD A CD WITH INCRIMINATING BANK INFORMATION TO THE BUNDESNACHRICHTENDIENS (BND, ENGLISH; FEDERAL INTELLIGENCE SERVICE), WHICH HANDED THE MATERIAL OVER TO THE TAX INVESTIGATION OFFICE IN WUPPERTAL. KIEBER WAS PAID $4.2 MILLION BY THE FEDERAL MINISTRY OF FINANCE FOR THE DATA ON WHICH THE INVESTIGATION IS BASED. FACING DEATH THREATS, THE INFORMANT IS CURRENTLY IN HIDING AND HAS ASKED FOR POLICE PROTECTION. KIEBER IS WANTED BY INTERPOL. THE WALL STREET JOURNAL INDICATED ON FEBRUAR Y 19, 2008, THE NAME OF THE INFORMANT WHO APPARENTLY LIVES NOW IN AUSTRALIA AND HAD SOLD THE DATA TO TAX MINISTRIES OF A NUMBER OF COUNTRIES, INCLUDING THE USA. SINCE FEBRUARY 18 A NUMBER OF RAIDS HAVE BEEN CONDUCTED IN HAMBUR G, MUNICH, FRANKFURT AND OTHE R CI TIES. SEVERAL BANKS WERE SEARCHED INCLUDING BANKHAUS METZLER, THE HAUCK & AUFHAUSER BANK, DRESDNER BANK, UBS IN MUNICH AND THE BERENBERG BANK IN HAMBURG. IN THE MEANTIME REVENUE OFFICES ALSO NOTED A HIGHER NUMBER OF VOLUNTARY SELF INCRIMINATIONS THIS W ILL AVOID OR REDUCE PUNITIVE DAMAGES - FOR POSSIBLE TAX EVASIONS BY PEOPLE WITH FINANCIAL ASSETS IN LIECHTENSTEIN. . WHILE THE BND RECEIVED THE DATA IN 2006, T H E LGT GROUP INDICATED 'THA T IN 2002 SECRET INFORMATION HAD ; BEEN STOLEN BUT THE INFORMANT HAD BE EN CAUGHT AND TRIED IN 2003, AND ALL MATERIAL HAD BEEN RETURNED. UNITED STATES OF AMERICA THE INFORMANT ALSO HAD SOLD DATA TO THE GOVERNMENT OF THE UNITED STATES. AFTER THE AFFAIR BROKE OPEN, SENATOR CARL LEVIN, CHAIRMAN OF A SENATE INVESTIGATIONS COMMITT ED, INDICATED HIS INTENTION TO PROBE TO WHAT DEGREE AMERICAN CITIZENS HAVE USED THE LGT BANK TO EVADE HIS INTENTION TO PROBE TO WHAT DEGREE AMERICAN CITIZENS HAVE USED THE LGT BANK TO EVADE TAXES. IN JULY 2008 THE U.S. SUBCOMMITTEE DETERMINED THAT OFFSHORE TAX HAVEN SUPPORTED TAX CHEATS TO THE COST OF ABOUT $100 BILLION PER YEAR FOR THE U,S. TAXPAYER. SPECIFICALLY MENTIONED WERE SWITZERLAND UBS AG AND LIECHTENSTEIN LGT GROUP. THE REPORT INDICATES THAT THE LGT GROUP CONTRIBUTED TO A 'CULTURE OF SECRECY AND D ECEPTION' ACCORDING TO THE REPORT UBS HOLDS 1,000 DECLARED ACCOUNTS VERSUS 19,000 THAT ARE NOT DECLARED TO THE IRS. THE REPORT ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 6 RECOMMENDED A NUMBER OF STEPS INCLUDING TIGHTER REGULATIONS FOR FINANCIAL INSTITUTIONS. OTHER COUNTRIES ON FEBRUARY 24, 2008, IT BECAME APPARENT THAT SECRET BANK INFORMATION HAD ALSO BEEN SOLD TO THE BRITISH TAX AUTHORITIES AND THAT ABOUT 100 INDIVIDUALS IN THE UK ARE AT RISK FOR INVESTIGATIONS FOR TAX EVASION. THE INFORMATION ALSO PROVIDED THE GOVERNMENTS OF AUSTRALIA, CANADA AND FRANCE WITH DATA. ON FEBRUARY 26 IT BECAME KNOWN THAT THE GERMAN GOVERNMENT WAS WILLING TO SHARE RELEVANT DATA OF THE ABOUT 4,500 ACCOUNTS WITH OTHER GOVERNMENTS; TWO THIRD OF THESE ACCOUNTS BELONG TO ACCOUNTS OF NON - GERMAN INDIVIDUALS OR ENTITIES, FISCAL AUTHORITIES IN IRELAND, FINLAND/ ITALY, THE NETHERLANDS, NORWAY, GREECE AND SWEDEN INDICATED INTEREST, AND WHILE THE DANISH GOVERNMENT INITIALLY DECLINED - IT CONSIDERED THE MATERIAL TO HAVE BEEN STOLEN - IT APPEARS TO HAVE REVERSED ITS POSITION. THE GOVER NMENTS OF THE CZECH REPUBLIC AND SPAIN HAVE ALSO ANNOUNCED INVESTIGATIONS DERIVED FROM GERMANY'S LIST. INDIA, HOWEVER, HAS THUS FAR NOT CONSIDERED GERMANY'S OFFER DESPITE REPORTS THAT MANY WEALTHY INDIAN CITIZENS MIGHT HAVE ACCOUNTS IN THE BANK. THE ABOVE ACTIVITIES OF T HE LTG BANK, YOUR HEAVY DEPOSIT IN THAT BANK WITH THREE OTHERS TO PROVE IT BEYOND DOUBT THAT THE TRUST UNDER THE NAME AND STYLE OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ HAS BEEN INCORPORATED IN LIECHTENSTEIN ONLY TO STASH YOUR AND OT HER THREE FAMILY MEMBERS INCOME FROM UNDISCLOSED SOURCES IN A SAFE UNCOOPERATIVE TAX HEAVEN OUTSIDE INDIA. YOU ARE, THEREFORE, REQUESTED TO PLEASE EXPLAIN AS TO WHY YOUR SHARE IN THE AMOUNT OF $.43,87,146.00 DEPOSITED IN LTG BANK, LIECHTENSTEIN, IN THE NA ME DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ A TRUST OF VADUZ DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2002 - 03, AND 2003 - 04 MAY NOT BE TREATED AS INVESTMENT OUT OF UNDISCLOSED SOURCES AND ADDED BACK TO YOUR INCOME. YOU ARE REQUESTED TO PERSONA LLY APPEAR ON THE NEXT DATE OF HEARING AS YOUR STATEMENT IS REQUIRED TO BE RECORDED. NOTICE U/S. 142(1) DND SUMMONS U/S.131 OF THE I.T. ACT, 1961 ARE ENCLOSED FOR COMPLIANCE. COPIES OF RELEVANT DOCUMENTS ARE ENCLOSED FOR YOUR PERUSAL. YOUR CASE STANDS FIXE D FOR HEARING ON 18/12/2009 AT 11:30 AM IN MY OFFICE AT THE ADDRESS GIVEN ON THE LETTERHEAD ABOVE. SINCE THE MATTER IS GETTING BARRED BY 31 - 12 - 2009, YOUR COOPERATION IN NOT SEEKING ANY ADJOURNMENT WILL BE HIGHLY APPRECIATED. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 7 4.1. THE ASSESSEE IN RESPONSE TO THE SAID SHOW CAUSE NOTICE REPLIED VIDE LETTER DATED 18.12.2009 AS UNDER: - THIS HAS REFERENCE TO THE NOTICES UNDER SECTION 142(1) AND 143(2) OF THE INCOME TAX ACT 1961 DATED 9 TH DECEMBER 2009 RECEIVED ALONG WITH THE LETTER DATED 8 TH DECEMBER 2009, IN RESPECT OF THE RE - ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04. IN THIS CONNECTION, I WISH TO MAKE THE FOLLOWING SUBMISSIONS FOR YOUR PERUSAL AND RECORD: 1. I UNDERSTAND THAT MY ELDER BROTH ER SHRI ARUN R MEHTA HAS ALSO BEEN ISSUED SIMILAR NOTICES REFERRED TO ABOVE UNDER THE RELEVANT PROVISIONS OF THE INCOME TAX ACT FOR WHICH HE HAS ALREADY MADE HIS SUBMISSIONS. THESE SUBMISSIONS ALSO HOLD GOOD FOR ME. HOWEVER, FOR THE SAKE OF GOOD RECORD I W ISH TO MAKE THE FOLLOWING SUBMISSIONS FOR YOUR PERUSAL AND RECORD. 1.1 I AM A CITIZEN OF INDIA AND HAVE BEEN BORN AND BROUGHT UP IN INDIA. I WAS BORN IN AUGUST 1947. MY PRESENT AGE IS 62 YEARS. 1.2 I JOINED MY BROTHER SHRI ARUN MEHTA IN OUR DIAMOND BUSINESS IN THE YEAR 1969.. I HAVE SHIFTED TO DUBAI IN 2004 FOR MY OWN BUSINESS. 2. I HAVE PERUSED THE NOTICES AND THE LETTER REFERRED TO ABOVE WHICH ALLEGES THAT; 2.1 I AM A BENEFICIARY OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ IN L GT BANK, LIECHTENSTEIN. 2 - 2 I ALONG WITH OTHER THREE MEMBERS HAVE DEPOSITED $ 4,387,146 IN THE NAME OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04. 2.3 THAT THE ABOVE SAI D AMOUNT IS TAXABLE IN INDIA ON ACCOUNT OF THE FOLLOWING REASONS. (A) THE ADDRESS GIVEN TO LGT BANK, LIECHTENSTEIN IS BOMBAY - INDIA. (B) NO PROOF THAT THIS AMOUNT IS DECLARED TO ANY OF THE REVENUE AUTHORITIES ABROAD HAS BEEN FURNISHED. (C) ORIGIN OF TH E DEPOSIT HAS BEEN STATED AS 'FAMILY MONEY' ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 8 (D) I HAVE NO EXPLANATION TO OFFER REGARDING THE AMOUNT DEPOSITED IN THE NAME OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ FOR WHICH I ALONG WITH OTHER THREE MEMBERS WERE THE SOLE BENEFICIARIES. (E) THAT THE L GT BANK, LIECHTENSTEIN IS A BANK WHICH HAS BEEN PUT UNDER GREY LIST OF PARIS BASED ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT SINCE 200 7. ACCORDINGLY, I AM CALLED UPON TO EXPLAIN AS TO WHY MY ALLEGED SHARE IN THE AMOUNT OF $ 4,387,146.00 ALLEGE D TO BE DEPOSITED IN LGT BANK, LIECHTENSTEIN IN THE NAME OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ, A TRUST OF VADUZ, DURING THE PERIOD RELEVANT TO ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 MAY NOT BE TREATED AS INVESTMENT OUT OF UNDISCLOSED SOURCES AND ADD ED TO MY INCOME. IN RESPECT OF THE ABOVE ALLEGATION, I PLACE ON RECORD MY SUBMISSIONS HEREUNDER: I) IN THIS CONTEXT, KINDLY REFER TO MY LETTER DATED 31' JULY 2009 IN WHICH I HAD ASSERTED THAT I HAVE NOT RECEIVED ANY AMOUNT OR INCOME FROM THE SAID TRUST S AND I REITERATE THE SAME. II) I HAVE NOTED FROM THE ANNEXURE TO YOUR LETTER THAT 1 AM A BENEFICIARY OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ. ACTUALLY, I AM ONE OF THE PERSONS NAMED IN WHOSE FAVOUR THE FOUNDATION BOARD MAY EXERCISE DISCRETION. I FU RTHER REITERATE THAT I HAVE NOT SIGNED ANY DOCUMENT IN THIS REGARD AND ALTHOUGH I MAY HAVE BEEN NAMED AS A BENEFICIARY 1 HAVE NEVER RECEIVED ANY BENEFIT FROM THE SAID STIFTUNG AND HAVE HAD NO ROLE WHATSOEVER TO PLAY, IN THE SAID STIFTUNG DURING THE ASSESSM ENT YEARS UNDER REFERENCE. III) I STRONGLY DENY THE ALLEGATION THAT I, ALONG WITH OTHERS HAVE DEPOSITED THE SAID SUM OF $4,387,146.00 IN LGT BANK, LIECHTENSTEIN. IV ) MY BROTHER ARUN MEHTA HAS ALREADY ENQUIRED WITH O UR NON - RESIDENT YOUNGER BROTHER DILIP MEHTA ABOUT THE AFORESAID ALLEGATIONS. A COMMUNICATION RECEIVED FROM LGT BANK (NOW KNOWN AS FIDUCO TREUHAND AG) THROUGH HIS LAWYER IS ENCLOSED MARKED ANNEXURE 'A' V) I HAVE BEEN ADVISED THAT A STIFTUNG IS AKIN TO A DISCRETIONARY TRUST WITH ABSOLUTE AN D EXCLUSIVE POWERS VESTED IN THE FOUNDATION BOARD OF THE TRUST TO APPOINT AND/OR REPLACE THE BENEFICIARIES AND TO AMEND THE STATUTES AND/OR BYE LAWS AND TO MANAGE THE ASSETS OF THE STIFTUNG. AS MENTIONED EARLIER, I HAD NO ROLE TO PLAY EITHER WITH THE CREAT ION OR THE MANAGEMENT OF THE STIFTUNG AND THIS IS BORNE OUT BY THE CONFIRMATION FURNISHED BY FIDUCO TREUHAND AG. I MAY REITERATE THAT THE FOUNDATION BOARD HAS NEVER EXERCISED DISCRETION IN MY FAVOUR AND ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 9 HENCE I HAVE NEVER BEEN A MEMBER OF THE FOUNDATION BO ARD AND NO INCOME HAS ACCRUED TO ME OR HAS BEEN RECEIVED BY ME FROM THE SAID STIFTUNG WHICH CAN BE BROUGHT TO TAX FOR THE ASSESSMENT YEARS UNDER REFERENCE. IT IS WELL SETTLED THAT A BENEFICIARY OF A DISCRETIONARY TRUST CAN ONLY BE ASSESSED IN RESPECT OF AN AMOUNT WHICH IS RECEIVED BY HIM FROM THE TRUST OR IN RESPECT OF AN AMOUNT WHICH ACCRUES TO HIM AS A CONSEQUENCE OF A DISCRETION BEING EXERCISED IN HIS FAVOUR ALTHOUGH THE ACTUAL AMOUNT MAY NOT BE PAID OVER TO THE CONCERNED BENEFICIARY. IN THE PRESENT C ASE, NO SUCH AMOUNT HAS EVER BEEN RECEIVED BY ME AND SIMILARLY NO SUCH BENEFIT HAS BEEN GRANTED TO ME WHICH WOULD RESULT IN ANY PART OF THE SAID SUM OF $ 4,387,146.00 BEING TREATED AS PART OF MY INCOME CHARGEABLE TO TAX IN INDIA. VI) YOU PROPOSE TO DRAW AN INFERENCE THAT THE AMOUNT IS TAXABLE IN INDIA ON ACCOUNT OF THE FACT THAT THE ADDRESS GIVEN TO LGT BANK IS MY ADDRESS IN INDIA. MERELY BECAUSE 1 AM NAMED AS A BENEFICIARY IN A DOCUMENT AND MY ADDRESS IN SUCH DOCUMENT IS OF A PLACE IN INDIA DOES NOT LEAD TO AN INFERENCE THAT ANY INCOME HAS ACCRUED OR IS RECEIVED BY ME AND, HENCE, WOULD BECOME CHARGEABLE TO TAX IN INDIA DURING THE RELEVANT YEARS UNDER REFERENCE. VII ) YOU HAVE ALSO ALLEGED THAT NO PROOF HAS BEEN FURNISHED AS TO WHETHER THIS AMOUNT HAS BEEN DECLARED TO ANY OF THE REVENUE AUTHORITIES ABROAD. IN THIS REGARD, I MAY POINT OUT THAT 1 WAS LIABLE TO TAX ONLY IN INDIA AS I WAS A RESIDENT OF INDIA. I HAD NOT RECEIVED ANY INCOME NOR HAS ANY INCOME OF ANY NATURE OF WHATSOEVER ACCRUED TO ME IN ANY COUNT RY OTHER THAN INDIA DURING THE RELEVANT YEARS UNDER REFERENCE. VIII) YOU HAVE ALSO INFERRED THAT THE ORIGIN OF THE DEPOSIT HAS BEEN STATED AS 'FAMILY MONEY'. THIS INFERENCE IS ERRONEOUS BECAUSE A PERUSAL OF THE DOCUMENT WOULD REVEAL THAT WHAT HAS BEEN STATED AS 'FAMILY MONEY 7 IS THE ORIGIN OF THE AMOUNTS DEPOSITED WITH STIFTUNG INITIALLY WHEN IT WAS CRESTED. THESE, AS YOU ARE AWARE WERE CREATED IN 1986 AND HENCE IS IRRELEVANT TO THE CIRCUMSTANCES FOR THE PURPOSE OF THE PRESENT ASSESSMENT. IX ) YOU HAVE ALSO REFERRED TO THE ACTIVITIES OF THE LGT BANK AND THE INVESTI GATIONS MADE B Y VARIOUS COUNTRIES IN CONNECTION WITH THEIR OPERATIONS. HOWEVER, THE SAME HAS NO RELEVANCE TO THE ASSESSMENT THAT YOU PROPOSE TO MAKE OF AN AMOUNT WHICH HAS NEVER BEEN RECEIVED B Y ME OR ACCRUED TO ME. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 10 X) YOU PROPOSE TO MAKE THE ADDITION ON THE FOOTING THAT THE AMOUNT REPRESENTS AN INVESTMENT OUT OF AN UNDISCLOSED SOURCE. HOWEVER, FOR AN INVESTMENT TO BE ASSESSED AS INCOME, IT MUST BE ESTABLISHED THAT THE PERSON WHO IS SOUGHT TO BE ASSESSED HAS MADE SUCH AN INVESTMENT. IN THE PRESENT CASE, THERE IS NO MATERIAL WHATSOEVER THAT I AS AN ALLEGED BENEFICIARY OF A STIFTUNG HAVE MADE AN INVESTMENT IN SUCH A STIFTUNG AND ACCORDINGLY, THE QUESTION OF ASSESSING ANY AMOUNT IN MY HANDS DOES NOT ARISE. IN VIEW OF THE ABOVE, I HUMBLY STATE THAT; I) L HAVE NOT DEPOSITED $ 4,387,146.00 IN THE ACCOUNT OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ. II) I HAVE NOT RECEIVED ANY INCOME FROM THESE TRUSTS UNDER THE CIRCUMSTANCES, I REQU EST YOU TO DROP THE PROCEEDING S INITIATED UNDER SECTION 148 OF THE ACT AGAINST ME. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 11 4.2. THE LD AO OBSERVED THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS TO BE REJECTED IN THE LIGHT OF FOLLOWING EVIDENCES AVAILABLE ON RECORD : - 1 ) VERIFICATION OF T HE BENEFICIAL OWNER'S IDENTITY SIGNED BY PROXY HOLDER ABN AMRO TRUST COMPANY (SUISSE) SA, WHICH STATED THAT THE BENEFICIAL OWNER OF THE ASSETS DEPOSITED WITH THE BANK ARE DILIP RAMNIKLAL MEHTA ANTWERP, BELGIUM ARUN RAMNIKLAL MEH TA BOMBAY, INDIA HARSHAD RAMNIKLAL MEHTA BOMBAY, INDIA AMIT BHANSALI ANTWERP, BELGIUM ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 12 2) BACKGROUND INFORMATION / PROFILE - FORM FOR EXISTING BUSINESS RELATIONSHIP WITH INSTI TUTIONAL CLIENTS PRIOR TO JANUARY 1, 2001, WHICH SHOWS THE ORIGIN OF THE ASSETS DEPOSITED IN DRYADE STIFSTUNG AS 'FAMILY MONEY'. THIS ALSO SHOWS THE ASSETS HELD BY THE ABOVE MENTIONED ENTITY AS FOLLOWS : I) SNOW DROP COMPANY LTD. - ONE BEARER SHARE (100%) II) SUNDEW COMPANY LTD. - ONE BEARER SHARE (100%) III) RUBY ENTERPRISES INC - 300 BEARER SHARES THIS FORM ALSO GIVES PROFESSION AND BUSINESS OF BENEFICIAL OWNERS AS 'EXECUTIVE OFFICERS - OWN DIAMOND TRADE' 3) ANOTHER BANK SUMMARY FOR THE ABOVE MENTIONED ACCOUNT SHOWING CREDIT OF US $ 4386,034.37 ON 17.04,2002. 4) A BANK SUMMARY OF ABN AMRO BANK IN RESPECT OF DRYADE STIFSTUNG HAVING ACCOUNT NO. IBAN CH70 0864 5000 OG20 4109 C WHICH SHOWS DEBIT OF U S $ 4,387,146 ON 19.04.2002. 4.3. THE LD AO F URTHER OBSERVED THAT THE COPIES OF ALL THESE DOCUMENTS WERE DULY PROVIDED TO THE ASSESSEE. THE ASSESSEE HAD MERELY SUBMITTED THAT HE WAS NEVER ON THE BOARD OF THE TRUST OR FOUNDER MEMBER AND HAD NO ROLE TO PLAY OF WHATSOEVER NATURE IN THE ABOVEMENTIONED E NTITY. THE LD AO CONSIDERED THE REPLY SUBMITTED BY THE ASSESSEE AS DETAILED HEREINABOVE. THE LD AO OBSERVED THAT THE ASSESSEE SUBMITTED THAT HE HAD NOT RECEIVED ANY BENEFIT FROM THE SAID TRUST BUT HAD NOT STATED A SINGLE WORD REGARDING THE DEBIT / CREDIT ENTRIES APPEARING IN THE ABOVE MENTIONED BANK ACCOUNT. SINCE THE BUSINESS IN WHICH THE ASSESSEE AND HIS FAMILY MEMBERS WERE MATCHING I.E OWN DIAMOND TRADE, COUNTRY IN WHICH THE RESPECTIVE BROTHERS WERE STATIONED WAS MATCHING AND IN VIEW OF THE FACT THAT LGT BANK IN LIECHTENSTEIN IS A TAX HAVEN AND IN THE ABSENCE OF ANY CONTRADICTORY EVIDENCE PRODUCED BY THE ASSESSEE, THE LD AO HELD THAT THE DEPOSIT MADE IN THE BANK ACCOUNT OF THE TRUST ON 17.4.2002 REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE FROM HIS BUSINESS ACTIVITY . THERE ARE FOUR BENEFICIARIES OF THE TRUST AND AS SUCH IN ABSENCE OF EXACT ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 13 ALLOCATION OF SHARES AMONGST THE BENEFICIARIES, THE ASSESSEES SHARE WAS TAKEN AT 25%. CONSIDERING THE EXCHANGE RATE FOR USD TO INR AT RS 48.80 AS PREVAILING I N APRIL 2002 , THE DEPOSIT IN EQUIVALENT INR WAS WORKED OUT AT RS 21,40,92,725/ - AND 25% THEREON WORKED OUT TO RS 5,35,23,181/ - , BEING THE ASSESSEES SHARE THEREON, WAS BROUGHT TO TAX AS HIS UNDISCLOSED INCOME FOR THE ASST YEAR 2003 - 04. PENALTY PROCEEDIN GS U/S 271(1)(C ) OF THE ACT FOR DELIBERATE CONCEALMENT OF SUCH INCOME WERE ALSO INITIATED IN THE ASSESSMENT ORDER. 5. THE ASSESSEE REITERATED HIS SUBMISSIONS BEFORE THE LD CITA. AMONG OTHER SUBMISSIONS, IT WAS SPECIFICALLY PLEADED THAT THE LD AO HAD MA DE THE ADDITION ON THE FOOTING THAT NO CONTRADICTORY EVIDENCE WAS PRODUCED BY THE ASSESSEE AND THEREFORE THE DEPOSIT MADE IN THE BANK ACCOUNT OF DRYAGE STIFTUNG AMONG REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE FROM HIS BUSINESS ACTIVITIES. IN THIS REG ARD, THE ASSESSEE SUBMITTED THAT IT IS AN ESTABLISHED FACT THAT THE ASSESSEE ALONG WITH HIS BROTHER HAD VENTURED INTO MANUFACTURE AND EXPORT OF DIAMOND TRADE IN THE YEAR 1969; THAT THE FAMILY BUSINESS WAS CONDUCTED THROUGH ROSY BLUE (INDIA) PRIVATE LIMITE D, ENGAGED IN THE MANUFACTURE AND EXPORT OF DIAMONDS FROM INDIA; THAT HIS ASSESSMENT RECORDS WOULD ESTABLISH BEYOND DOUBT THAT HE HAD NEVER CARRIED ANY BUSINESS ACTIVITIES IN HIS PERSONAL CAPACITY ; THAT IT WOULD APPRECIATED THAT TO CARRY ON A BUSINESS OF SUCH MAGNITUDE, ONE NEEDS AN ESTABLISHMENT AND THAT THERE WAS NO EVIDENCE OF WHATSOEVER THAT THE ASSESSEE EVER CARRIED ANY DIAMOND BUSINESS IN HIS INDIVIDUAL NAME. 6. THE LD CITA CONFIRMED THE ACTION OF THE LD AO BY OBSERVING AS UNDER: - 16. I HAVE PERUS ED THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE AO. THE BANK DOCUMENTS BEAR THE SIGNATURE OF THE TRUSTEES AND HENCE THE SAME ARE GENUINE. THESE DOCUMENTS BEAR THE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 14 CORRECT NAME, ADDRESS AND DATE OF BIRTH OF THE APPELLANT. THE DOCUMENT SHOWS T HAT THE TRUST WAS CREATED ON JULY 02, 1986. THE ACCOUNT HAS BEEN MENTIONED AS ACTIVE. THERE IS A MENTION OF TRANSACTION ON APRIL 17, 2002 VALUED AT 4,386,034.37 WHICH CREATED THE BALANCE OF 4,387,146.86. THE TRANSACTION IS RELATED TO ROSY BLUE FIN SA. IT I S PERTINENT TO NOTE THAT THE APPELLANT IS A DIRECTOR OF ROSY BLUE (INDIA) PRIVATE LIMITED. THE COMPANY IS ENGAGED IN MANUFACTURE AND EXPORT OF DIAMOND, WHICH IS INCIDENTALLY ALSO MENTIONED IN THE BANK DOCUMENTS AND THE TRUST. THE DATE OF BIRTH AND THE ADDR ESS OF THE APPELLANT ARE CORRECTLY MENTIONED ON THE BANK DOCUMENT. ALL THIS CLEARLY PROVES THAT THE APPELLANT IS CLOSELY CONNECTED TO THE SAID BANK ACCOUNT AND THE TRUST. EVEN IF THE APPELLANT HAS DENIED ANY KNOWLEDGE OF THE TRUST OR HAS NOT TRAVELLED TO T HAT AREA, THE APPELLANT CANNOT EXPLAIN HOW A TRUST WAS CREATED WHEREIN HE AND HIS FAMILY MEMBERS WERE MADE THE BENEFICIARIES. SINCE, THE TRANSACTION HAS TAKEN PLACE IN FINANCIAL YEAR 2002 - 03, THE INCOME HAS BEEN CORRECTLY ASSESSED IN AY 2003 - 04. AS THERE A RE FOUR BENEFICIARIES MENTIONED, THE AO HAS CORRECTLY TAKEN THE INCOME OF THE APPELLANT AT THE 25% VALUE OF THE AMOUNT MENTIONED THEREIN. 17. THE ARGUMENT THAT THE BENEFICIARIES CANNOT BE ASSESSED DIRECTLY IS INCORRECT AND IT IS NECESSARY TO QUOTE S ECTION 166 HERE WHICH READS AS UNDER: - 'DIRECT ASSESSMENT OR RECOVERY NOT BARRED NOTHING IN THE FOREGOING SECTIONS IN THIS CHAPTER SHALL PREVENT EITHER THE DIRECT ASSESSMENT OF THE PERSON ON WHOSE BEHALF OR FOR WHOSE BENEFIT INCOME THEREIN REFERRE D TO IS RECEIVABLE, OR THE RECOVERY FROM SUCH PERSON TAX PAYABLE IN RESPECT OF SUCH INCOME.' 18. THE SECTION DOES NOT DEBAR THE DEPARTMENT FROM MAKING DIRECT ASSESSMENT OF THE APPELLANT AND HENCE EVEN ON THIS ACCOUNT THE ARGUMENT OF THE APPELLANT FAILS . 19. IN VIEW OF THE ABOVE, THE STAND OF THE AO IS UPHELD AND THE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD AR BEFORE US VEHEMENTLY ARGUED THAT THE ASSESSEE DURING THE RE ASSESSMENT PROCEEDINGS HAD PLACED ON RECORD A WRITTEN CONFIRMATION FURNISHED BY LGT TREUHAND AG (NOW KNOWN AS FIDUCO TREUHAND AG) ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 15 CONFIRMING THAT THE ASSESSEE HAD NO ROLE TO PLAY EITHER IN THE CREATION OR THE MANAGEMENT OF DRYADE FOUNDATION AND HAD ALSO RE CEIVED NO BENEFIT FROM THE SAME. HE ARGUED THAT THOUGH THIS CONFIRMATION WAS PLACED ON RECORD, THE SAME WAS NOT DEALT WITH BY THE LOWER AUTHORITIES. THE MAIN CRUX OF THE VARIOUS ARGUMENTS MADE BY THE LD AR COULD BE SUMMARIZED AS UNDER: - A) THE ASSESSEE H AD NEITHER CONTRIBUTED ANY MONEY TO THE SAID TRUST NOR RECEIVBED ANY DISTRIBUTION OF INCOME OR CAPITAL FROM IT. THIS HAS BEEN STATED BEFORE THE LD AO VIDE LETTERS DATED 31.7.2009 AND 18.12.2009. B) THE AFORESAID ASSERTIONS HAVE BEEN BACKED BY LEADING EV IDENCE BY WAY OF WRITTEN CONFIRMATION FURNISHED BY FIDUCO TREUHAND AG DATED 5.11.2009 THAT : ( I ) NO CONTRIBUTION HAS BEEN MADE BY THE ASSESSEE TO THE FOUNDATIONS. ( II ) THE ASSESSEE HAD NO ROLE TO PLAY EITHER WITH THE CREATION OR THE MANAGEMENT OF THE STIFTUNG. ( III ) NO DISTRIBUTION OF INCOME OR CAPITAL HAVE BEEN MADE TO THE ASSESSEE DURING THE ASST YEAR 2003 - 04. C) THERE IS NO CONCRETE EVIDENCE THAT HAS BEEN PRODUCED BY THE REVENUE TO ESTABLISH THAT : (I) THE ASSESSEE HAS MADE ANY CONTRIBUTION TO THE TRUST. (II) ANY DIS TRIBUTION OF INCOME OR CAPITAL HAS BEEN MADE TO THE ASSESSEE FROM THE TRUST. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 16 D) ALL THE ALLEGATIONS ARE LEVELED ON THE ASSESSEE ONLY ON CONJECTURES AND SURMISES. THE EVIDENCE LED BY THE ASSESSEE ON THIS ISSUE HAD NEITHER BEEN REBUTTED NOR DEALT WITH BY T HE LOWER AUTHORITIES. E) THE NAME OF THE FOREIGN TRUST IS DRYADE STIFTUNG WHICH WAS STARTED ON 2.7.1986 WITH THE SOURCE OF FUNDS BEING MENTIONED AS FAMILY MONEY. THE BYE - LAWS OF THE SAID TRUST INDICATE THAT TURST BEING A DISCRETIONARY TRUST, THE FOUND ATION BOARD IS VESTED WITH ABSOLUTE AND EXCLUSIVE POWERS TO MODIFY THE BENEFICIARIES AND AMEND THE STATUTES AND / OR BYE - LAWS TO MANAGE THE ASSETS OF THE STIFTUNG. FURTHER, THE ONLY REMITTANCE OF FUNDS HAS BEEN TO AN ENTITY OTHER THAN THE ASSESSEE. F) T HE ASSESSEE IS NEITHER A MEMBER OF THE ADVISORY BOARD NOR A FOUNDER AND HAS NO ROLE TO PLAY IN THE FOUNDATION. G) THE CONFIRMATION GIVEN BY FIDUCO TREUJHAND AG HAD BEEN NOTED IN BOTH ASSESSMENT AS WELL AS THE ORDER OF THE LD CITA, BUT NO FINDING HAS BEEN GIVEN BY BOTH THE AUTHORITIES WITH REGARD TO THE SAID DOCUMENT. NO DOUBTS HAD BEEN RAISED BY THEM WITH REGARD TO THE AUTHENTICITY OR GENUINENESS OF THE SAID CONFIRMATION PLACED ON RECORD. HENCE THE ASSESSEE HAD PRODUCED THE NECESSARY EVIDENCE TO PROVE HI S STAND AND THE REVENUE CANNOT SHIFT THE ONUS OF PROOF AND REQUIRE THE ASSESSEE TO PROVE THE NEGATIVE. H) THE LD SPECIAL COUNSEL FOR THE REVENUE HAD SUBMITTED THAT THE PROVISIONS OF SECTION 106 (BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE) , SECTI ON 111 (PROOF OF GOOD FAITH IN TRANSACTIONS WHERE PARTY IS IN RELATION OF ACTIVE CONFIDENCE) AND SECTION 114 (PRESUMPTION OF EXISTENCE OF CERTAIN FACTS) OF THE INDIAN EVIDENCE ACT, 1872, IN A BID TO ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 17 DRAW A PRESUMPTION THAT THE INCOME IS THAT OF THE ASSESS EE. IN THIS REGARD, THE LD AR SUBMITTED THAT EVEN IF ANY SUCH PRESUMPTIONS ARISE, THEY WOULD CLEARLY STAND REBUTTED BY THE CONFIRMATION FROM FIDUCO TREUHAND AG, WHICH STATES THAT THE ASSESSEE HAD MADE NO CONTRIBUTION NOR RECEIVED ANY DISTRIBUTION QUA THE DRYADE FOUNDATION ACCOUNT. THE LD AR STATED THAT INFACT IT IS THE DEPARTMENT WHICH HAS FAILED TO DISPROVE THE SAID CONFIRMATION AND IT HAS ALSO NOT BEEN CONSIDERED BY THE LOWER AUTHORITIES. I) DURING THE COURSE OF HEARING, LD SPECIAL COUNSEL FOR THE REV ENUE SOUGHT TO TRANSLATE AND EXPLAIN THE VARIOUS DOCUMENTS WHICH ARE AT PAGES 21,22 TO 25 AND 31 OF THE PAPER BOOK BY REFERRING TO THE GERMAN TRANSLATION. A PRELIMINARY POINT WAS MADE THAT THE DOCUMENT AT PAGE 24 WAS NOT IN GERMAN BUT IN FRENCH. THEREFOR E, REFEREN C E TO THE GERMAN TRANSLATION IS WHOLLY INAPPROPRIATE. IT IS FURTHER SUBMITTED THAT, SEEKING TO GIVE AN ADDITIONAL THRUST TO THE DEPARTMENTS CASE, BY REFERRING TO A TRANSLATION AT THE FIRST STAGE BEFORE THIS TRIBUNAL, HAD DENIED THE ASSESSEE A F ULL AND EFFECTIVE OPPORTUNITY OF DEFENSE. IT WAS SUBMITTED THAT IF IN FACT, THE DEPARTMENT WANTED THE BENCH TO CONSIDER THE DOCUMENTS IN LIGHT OF TRANSLATION CLAIMED BY LD SPECIAL COUNSEL FOR THE REVENUE , CONSISTENT WITH THE PRINCIPLES OF NATURAL JUSTICE , THE ASSESSEE MUST BE MADE AWARE AND GIVEN AN OPPORTUNITY TO RESPOND THERETO, AS EVEN ON A PRIMA FACIE BASIS, THERE WERE SOME ERRORS IN THE TRANSLATIONS REFERRED TO. J) THE MATTER IN THE PRESENT CASE HAS SERIOUS MONETARY AND REPUTATIONAL CONSEQUENCES. THERE ARE ALSO RELATED CRIMINAL PROSECUTIONS INITIATED. IN THIS BACKGROUND, AS PER LAW SETTLED BY THE HONBLE APEX COURT IN THE CASE OF HADIBANDHU DAS VS DISTRICT MAGISTRATE , CUTTACK (1969 AIR 43 SC) , THE AFFECTED PARTY MUST RECEIVE TRANSLATIONS OF THE DOCUMENT IN A LANGUAGE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 18 HE IS FAMILIAR WITH SO AS TO ENABLE HIM TO FULLY AND ADEQUATELY DEFEND HIS CASE. RELIANCE WAS ALSO PLACED ON THE DECISION OF NANDKUMAR ALIAS NANDU VS S.RAMAMURTHI, COMMISSIONER (1992 CRI LJ 1078). IN VIEW OF THE AFORESAID POSITIO N IN LAW, THE ASSESSEE MUST BE EXTENDED A FULL AND EFFECTIVE OPPORTUNITY OF DEFENDING HIS CASE IN RELATION TO THE TRANSLATIONS SOUGHT TO BE RELIED UPON BY THE LD SPECIAL COUNSEL FOR THE REVENUE. IN SUPPORT OF THIS, THE LD AR RELIED ON SECTION 45 OF THE I NDIAN EVIDENCE ACT, 1872, WHICH INTER ALIA PROVIDES THAT : WHEN THE COURT HAS TO FORM AN OPINION UPON A POINT OF FOREIGN LAW OR OF SCIENCE OR ART, OR AS TO IDENTITY OF HANDWRITING OR FINGER IMPRESSIONS, THE OPINIONS UPON THAT POINT OF PERSONS SPECIALLY S KILLED IN SUCH FOREIGN LAW, SCIENCE OR ART, IN QUESTIONS AS TO IDENTITY OF HANDWRITING OR FINGER IMPRESSIONS ARE RELEVANT FACTS. MOREOVER, SECTION 57 OF INDIAN EVIDENCE ACT, 1872 SPECIFICALLY PROVIDES THAT INDIAN COURTS CAN TAKE JUDICIAL NOTICE OF INDIAN LAW. NO SUCH MENTION IS MADE OF FOREIGN LAW. SECTION 57 OF THE INDIAN EVIDENCE ACT, 1872 INTER ALIA PROVIDES THAT: THE COURT SHALL TAKE JUDICIAL NOTICE OF THE FOLLOWING FACTS : - (1) ALL LAWS IN FORCE IN THE TERRITORY OF INDIA; (2) ALL PUBLIC ACTS PASS ED OR HEREAFTER TO BE PASSED BY PARLIAMENT OF THE UNITED KINGDOM, AND ALL LOCAL AND PERSONAL ACTS DIRECTED BY PARLIAMENT OF THE UNITED KINGDOM TO BE JUDICIALLY NOTICED ; . (13) THE RULE OF THE ROAD, ON LAND OR AT SEA. IN ALL THESE CASES, AND ALSO ON ALL MATTERS OF PUBLIC HISTORY, LITERATURE, SCIENCE OR ART, THE COURT MAY RESORT FOR ITS AID TO APPROPRIATE BOOKS OR DOCUMENTS OF REFERENCE. IF THE COURT IS CALLED UPON BY ANY PERSON TO TAKE JUDICIAL NOTICE OF ANY FACT, IT MAY REFUSE TO DO SO, UNLESS AND U NTIL SUCH PERSON PRODUCES ANY SUCH BOOK OR DOCUMENT AS IT MAY CONSIDER NECESSARY TO ENABLE IT TO DO SO. ON A CONJOINT READING OF THE ABOVE PROVISIONS, IF ANY FOREIGN LAW (OTHER THAN MENTIONED UNDER THE ABOVE PROVISION) IS TO BE RELIED ON OR APPLIED BY AN INDIAN COURT / TRIBUNAL, THEN EXPERT OPINION(S) ON THE SAME SHOULD BE OBTAINED AND PLACED ON RECORD. IF NECESSARY, CROSS - EXAMINATION OF THE EXPERTS MAY ALSO REQUIRE TO BE CARRIED OUT. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 19 K) THE REVENUE CANNOT MAKE AN ALTOGETHER A NEW CASE BEFORE THE TRIBU NAL FOR THE FIRST TIME WHICH WAS NOT THE SUBJECT MATTER OF THE CONSIDERATION BY THE LD AO. RELIANCE IN THIS REGARD WAS PLACED ON THE SPECIAL BENCH DECISION OF MUMBAI TRIBUNAL IN THE CAES OF MAHINDRA AND MAHINDRA LTD VS DCIT REPORTED IN 2009 - TIOL - 255 - ITAT - MUM - SB . IN THE INSTANT CASE, THE LD SPECIAL COUNSEL FOR THE REVNEUE IS MAKING AN ALTOGETHER NEW CASE BEFORE THIS TRIBUNAL IN RELATION TO THE FOLLOWING: - A) UNSUPPORTED TRANSLATIONS OF THE FOREIGN LANGUAGE DOCUMENTS PROVIDED BY THE DEPARTMENT; B) WHETHE R THE LD AO WAS INCORRECT IN GIVING A FINDING THAT THE DRYADE FOUNDATION IS IN THE NATURE OF A DISCRETIONARY TRUST C) RELIANCE ON THE LAWS OF LIECHTENSTEIN, ON THE BASIS THAT AS THE TRUSTS ARE OF LIECHTENSTEIN, THE TAX LAWS OF GOVERNMENT OF INDIA DO NOT APPLY. L) IT IS WELL SETTLED THAT UNDER THE INCOME TAX ACT, A DISCRETIONARY BENEFICIARY WHO HAS NOT RECEIVED ANY DISTRIBUTION CANNOT BE TAXED UNTIL THERE IS AN ACTUAL DISTRIBUTION IN HIS FAVOUR. RELIANCE IN THIS REGARD WAS PLACED ON THE FOLLOWING JUDGE MENTS : - (I) CWT, RAJKOT VS ESTATE OF HMM VIKRAMSINHJI OF GONDAL REPORTED IN [(2015) 5 SCC 666] (II) MAHARAJA JYOTINDRASINHJI VS ACIT REPORTED IN (2008) 174 TAXMAN 605 (GUJ) (III) CIT VS KAMALINI KHATAU REPORTED IN [(1994) SCC (4) 308] IT WAS SUBMITTED TH AT IN THE CASE OF CWT RAJKOT VS ESTATE OF HMM VIKRAMSINHJI OF GONDAL SUPRA, ALTHOUGH THE TRUSTS WERE BASED IN US AND UK, THE HONBLE SUPREME COURT DID NOT IN ANY MANNER SUGGEST THAT EXAMINATION OF THE LOCAL LAWS OF THOSE JURISDICTIONS WAS NECESSITATED OR A PPROPRIATE. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 20 M) FURTHERMORE, CONTRARY TO THE FINDING IN THE ORDER OF THE LD CITA, THERE IS NO QUESTION OF TAXING A DISCRETIONARY BENEFICIARY IN TERMS OF SECTION 166 OF THE INCOME TAX ACT, AS HAS BEEN HELD IN BOTH KAMALINI KHATAU SUPRA AND MAHARAJA JYOTIND RASINHJI SUPRA. N) IN THE PRESENT FACTS, IT IS UNDISPUTED EVEN IN THE ASSESSMENT ORDER THAT BOTH THE FOUNDATIONS (I.E DRYADE AND DIANESE STIFTUNG) ARE DISCRETIONARY FOUNDATIONS. ACCORDINGLY, HAVING REGARD TO THE WELL ESTABLISHED POSITION IN LAW, SINCE NO DISTRIBUTION HAS BEEN MADE IN FAVOUR OF THE ASSESSEE WHICH WAS ALSO CONFIRMED IN WRITING BY FIDUCO TREUHAND AG, NO INCOME OUGHT TO BE TAXED IN THE HANDS OF THE ASSESSEE. O) IT IS SETTLED LAW THAT NO SUCH BURDEN OF PROOF CAN BE PLACED ON THE ASSESSEE UNDE R A TAXING STATUTE, AND IT REMAINS THE ONUS OF THE DEPARTMENT TO PROVE TAXABILITY ON A STRICT CONSTRUCTION. HOWEVER, CONTRARY TO THIS WELL ESTABLISHED POSITION, THE DEPARTMENT IN THE PRESENT CASE IS PLACING AN IMPOSSIBLE BURDEN ON THE ASSESSEE TO PROVE TH E NEGATIVE VIZ THAT HE HAS NOT RECEIVED ANY INCOME FROM THE TRUST. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS TO DRIVE HOME THE POINT THAT ENTITY MUST STRICTLY FALL WITHIN THE CHARGING PROVISIONS OF THE LAW: - (I) AV.FERNANDEZ VS STATE OF KERALA REPOR TED IN AIR 1957 SC 657 (II) CWT , GUJARAT VS ELLIS BRIDGE GYMKHANA REPORTED IN (1998) 1 SCC 384 RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS TO DRIVE HOME THE POINT THAT ONUS OF ESTABLISHING THE CONDITION OF TA XABILITY IS ON THE DEPARTMENT: - (I) K.P.VAR GHESE VS ITO ERNAKULAM REPORTED IN 131 ITR 597 (SC) (II) CIT VS SHIVAKAMI CO. PVT LTD REPORTED IN (1986) 2 SCC 418 ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 21 P) IT IS CLEAR THAT THE DEFAULT POSITION IS THAT THE ONUS OF PROOF TO DEMONSTRATE TAXABILITY IS ON THE DEPARTMENT AND CANNOT BE REVERSED OR SHIFTED TO THE ASSESSEE. INFACT, WHERE THE LEGISLATURE INTENDED TO SHIFT THE BURDEN OF PROOF UNDER THE INCOME TAX ACT TO THE ASSESSEE, SPECIFIC PROVISIONS HAVE BEEN ENACTED FOR THIS PURPOSE AS UNDER: - (I) SECTION 278D PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNT , ETC IN CERTAIN CASES (II) SECTION 278E PRESUMPTION AS TO CULPABLE MENTAL STATE (III) SECTION 292C PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNT, ETC ACCORDINGLY, SHIFTING OF ONUS OF PROOF UNDER THE INCOME TAX ACT IS ONLY ENVISAGED IN THE AFORES AID SITUATIONS AND CANNOT BE PRESSED INTO PLAY IN ANY OTHER SITUATION. Q) ASSESSEE CANNOT BE ASKED TO PROVE THE NEGATIVE. RELIANCE IN THIS REGARD WAS PLACED ON THE FOLLOWING DECISIONS: - (I) K.P.VARGHESE VS ITO ERNAKULAM REPORTED IN 131 ITR 597 (SC) (II) ADVANI OERLIKON LTD AND ANR VS UOI AND ORS REPORTED IN 1981 ELT 432 HENCE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS RECEIVED A DISTRIBUTION FROM THE FOUNDATION, WHICH CONSTITUTES INCOME IN RESPECT OF WHICH HE WAS LIABLE TO DISCHARGE TAX IN IND IA. FURTHER, THE DEPARTMENT CANNOT PALCE A NEGATIVE BURDEN OF PROOF ON THE ASSESSEE TO SHOW THAT HE HAS NOT RECEIVED A DISTRIBUTION AS A DISCRETIONARY BENEFICIARY. R) IN THE INSTANT CASE, THE LD AO IN PAGE 7 OF HIS ASSESSMENT ORDER HAD OBSERVED THAT DRY AGE IS IN THE NATURE OF A DISCRETIONARY TRUST . IT IS SUBMITTED THAT AT THE PRESENT STAGE BEFORE THE TRIBUNAL, THE DEPARTMENT ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 22 IS NOW SEEKING TO NEGATE A FINDING OF THE SUBORDINATE OFFICER IN THE ASSESSEES APPEAL. IT IS SETTLED LAW THAT IF THE DEPARTM ENT IS AGGRIEVED BY THE DECISION OF THE LOWER AUTHORITIES, CROSS APPEAL SHOULD BE FILED CHALLENGING THE ORDER. NO SUCH CROSS APPEAL HAS BEEN FILED IN THE PRESENT CASE BEFORE THIS TRIBUNAL. HENCE THE REVENUE IS NOT ENTITLED AT THIS STAGE OF THE PROCEEDINGS TO IMPUGN A FINDING IN THE ASSESSMENT ORDER AND RAISE A GROUND SO AS TO WORK ADVERSELY TO THE ASSESSEE WITHOUT FILING AN APPEAL ITSELF CHALLENGING THE SAID FINDING. RELIANCE IN THIS REGARD WAS PLACED ON THE FOLLOWING DECISIONS : - (I) STATE OF KERALA VS V IJAYA STORES REPORTED IN (1979) 116 ITR 15 (SC) (II) THE MOTOR UNION INSURANCE VS CIT REPORTED IN (1945) 13 ITR 272 (BOM) S) IT WAS FURTHER SUBMITTED THAT SECTION 5 OF THE INCOME TAX ACT IMPOSES A GENERAL LIABILITY TO TAX ALL INCOME. HOWEVER, THE BURDEN OF PROOF LIES ON THE DEPARTMENT TO PROVE THAT THERE EXISTS AN AMOUNT WHICH FALLS WITHIN THE TAXING PROVISION AS INCOME OF THE ASSESSEE. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PARIMISETTI SEETHARANAMA VS CIT REPORTED IN (1966) 1 SCR 8 , WHEREIN IT WAS HELD THAT THE ACT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TAX. IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES UPON THE D EPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. IN THE PRESENT CASE, NEITHER THE ASSESSMENT ORDER NOR THE LD CITA ORDER MAKE MENTION OR INVOKE ANY PROVISION OF THE INCOME TAX ACT UNDER WHICH THE AMOUNT IS LIABLE FOR TAXAGTION (I.E NO MENTION IS MADE OF ANY OF THE TYPICAL PROVISIONS SUCH AS SECTION 5, SECTION 68, SECTION 69A ETC). ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 23 T) WITH REGARD TO JUDGEMENTS CITED BY THE LD SPECIAL COUNSEL FOR THE DEPARTMENT IN THE CASE OF MOHAN MANOJ DHUPELIA VS DCIT IN ITA NO. 3544/MUM/2011 DATED 31.10.201 4 REPORTED IN 67 SOT 12 (MUMBAI TRIB) AND HASMUKH GANDHI VS DCIT IN ITA NOS. 2795 & 2796/MUM/2011 DATED 15.11.2017, THE RELEVANT PARAGRAPHS OF THE DECISION IN THE CASE OF HASMUKH GANDHI WHICH FOLLOWED MOHAN MANOJ DHUPELIA ARE REPRODUCED : - 18. IN OUR CONS IDERED OPINION THE ABOVE EVIDENCE IS COGENT AND SUFFICEITN. FURTHERMORE, WE NOTE THAT IN TERMS OF THE EXTANT SECRECY PROVISIONS OF LIECHESTEIN, NO FURTHER INFORMATION FROM THE SAID BANK CAN BE OBTAINED BY THE AO. THE ASSESSEE IS CLEARLY TRYING TO GET BENE FIT UNDER THIS PROVISION AND DENYING THE EXISTENCE OF THE SAID BANK ACCOUNT. THIS AS PER THE FACTS DISCUSSED HEREINABOVE IS A SELF SERVING STATEMENT NOT AT ALL SUSTAINABLE. IN THE BACKGROUND OF THE ABOVE DISCUSSION, THE ONUS NOW IS CLEARLY ON THE ASSESSE E TO PROVE THAT THE ASSESSEE HAS NO BENEFICIAL INTEREST IN THE SAID BANK ACCOUNT OR THAT THE SAID BANK ACCOUNT IS A FICTITIOUS STORY, WHICH THE ASSESSEE HAS FAILED TO DISCHARGE. HENCE, THE IMPUGNED ADDITIONS IN THE HANDS OF THE ASSESSEE ARE JUSTIFIED AND I UPHOLD THE SAME. CONTRARY TO THE AFORESAID JUDGEMENTS RELIED UPON BY THE DEPARTMENT, IN THE INSTANT CASE, THE ASSESSEE HAD NOT BLANKETLY DENIED THE EXISTENCE OF THE BANK ACCOUNT IN QUESTION. RATHER, THE ASSESSEE HAS PRODUCED ON RECORD THE CONFIRMATION DATED 5.11.2009 FROM FIDUCO TREUHAND AG. NO PROOF HAS BEEN SUBMITTED BY THE DEPARTMENT TO DEMONSTRATE THAT THE ASSESSEE HAS A BENEFICIAL INTEREST IN THE BANK ACCOUNTS IN THE NAME OF DRYADE STIFTUNG AND DIANESE STIFTUNG VADUZ IN LGT BANK, LIECHTENSTEIN. W ITHOUT PREJUDICE, EVEN IF THERE IS ANY ONUS ON THE ASSESSEE, THE SAME STANDS DISCHARGED BY THE CONFIRMATION OBTAINED FROM FIDUCO TREUHAND AG, WHICH AFFIRMS THAT THE ASSESSEE MADE NO CONTRIBUTION TO, AND RECEIVED NO CONTRIBUTION FROM, THE FOUNDATIONS IN QUE STION. THERE IS NO CORROBORATIVE EVIDENCE , OR ANY MATERIAL WHATSOEVER, BROUGHT ON RECORD BY THE DEPARTMENT TO JUSTIFY THE ADDITION IN THIS BACKDROP. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 24 U) IT WAS FURTHER SUBMITTED THAT IN THE CASE OF HASMUKH GANDHI VS DCIT SUPRA, IT HAS ALSO BEEN HELD TH AT : - 19. AS REGARDS REFERENCE OF THE LEARNED COUNSEL OF THE ASSESSEE FOR THE TAX TREATMENT OF THE DISCRETIONARY TRUST IS CONCERNED, IT IS NOTED THAT THE SAID TRUST IS IN LIECESTEIN, THE TAX LAWS OF GOVERNMENT OF INDIA DO NOT APPLY. HENCE, REFERENCE TO C ASES WHICH ARE IN THE INDIAN CONTEXT ARE NOT AT ALL APPLICABLE. SOME OF THE SALIENT FEATURES OF TRUST IN LIECHESTEIN ARE ALREADY MENTIONED IN THE ABOVE SAID TRIBUNAL ORDER. HENCE, REFERENCE BY THE LD. COUNSEL OF THE ASSESSEE TO APPLY INDIAN CASE LAWS TO TRUST THAT ARE GOVERNED BY LAW OF LIECHESTEIN IS BEREFT OF COGENCY. IT WAS SUBMITTED THAT IF THE DEPARTMENT IS OF THE OPINION THAT SINCE THE DISCRETIONARY FOUNDATION IS IN LIECHTENSTEIN, THE TAX LAWS OF THE GOVERNMETN OF INDIA DO NOT APPLY, AND THE TAX L AWS OF LIECHTENSTEIN WOULD INSTEAD APPLY, THEN THE FOLLOWING MUST NECESSARILY OCCUR: (I) THE DEPARTMENT CANNOT URGE THIS GROUND FOR THE FIRST TIME AT THE TRIBUNAL STAGE, IN A BID TO SIDESTEP THE BINDING RULINGS OF THE INDIAN SUPREME COURT IN THE CASES OF (I) CWT, RAJKOT VS ESTATE OF HMM VIKRAMSINHJI OF GONDAL REPORTED IN [(2015) 5 SCC 666] (II) CIT VS KAMALINI KHATAU REPORTED IN [(1994) SCC (4) 308] (II) THE DEPARTMENT MUST LEAD EVIDENCE AS TO THE APPLICABLE LAW IN LIECHTENSTEIN; AND (III) THE ASSESSEE MUST BE GIVEN AN OPPORTUNITY TO LEAD ALL EVIDENCE IN ITS DEFENSE , IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. V) FURTHERMORE, WITHOUT PREJUDICE TO THE FOREGOING, EVEN IF THE LIECHTENSTEIN LAW IS TO BE CONSIDERED, EVEN THE EXTRACTS OF THE LAW IN HASMUKH GANDHI SUPRA WHICH WERE RELIED UPON BY THE LD SPECIAL COUNSEL FOR THE DEPARTMENT, SHOW THAT THE LAW SUPPORTS THE FOLLOWING: ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 25 (I) A FOUNDATION MAY BE CONSTITUTED FOR PRIVATE USE (PAGE 31 OF PAPER BOOK) (II) IT IS THE FOUNDER WHO ENDOWS ASSETS FOR A SPECIFIC PURPOSE AND REGULATES THE BENEFICIAL INTEREST (PAGE 31 OF PAPER BOOK) (III) THE FOUNDATION IS A SEPARATE LEGAL ENTITY. A FOUNDATION AND TRUST ARE DISTINCT ENTITIES (PAGES 26 AND 30 OF PAPER BOOK) IN VIEW OF THE FOREGOING, THE EXISTENCE OF A FOU NDATION PER SE HAS NO IMPLICATION FOR THE TAXABILITY OF THE ASSE S SEE. INFACT, THE CONFIRMATION OF FIDUCO TREUHAND AG THAT THE ASSESSEE IS NOT THE FOUNDER IS CRITICAL IN AS MUCH AS IT AFFIRMS THAT THE ASSETS OF THE FOUNDATION HAVE NOT BEEN ENDOWED BY THE AS SESSEE. W) IN ANY EVENT, IF LIECHTENSTEIN LAW IS TO BE RELIED UPON, THE MATTER PERFORCE REQUIRES TO BE REMANDED TO THE FILE OF LD AO FOR THIS PURPOSE. 9. THE LD SPECIAL COUNSEL FOR THE REVENUE FILED A DETAILED WRITTEN SUBMISSION ON 29.7.2019 WHICH IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE : - SYNOPSIS OF SUBMISSIONS MADE FOR & ON BEHALF OF REVENUE IN THE COURSE OF HEARING BEFORE HON'BLE BENCH IN ORDER TO EXPLAIN THE DOCUMENTS SUBMITTED BY AND ON BEHALF OF THE APPELLANT - ASSESSEE IN ITS COM PILATION FILED ON 10.02.2017, A BRIEF PAGE - WISE BREAK UP WAS FILED TO SEGREGATE AND IDENTIFY THESE DOCUMENTS ACCORDING TO THE TWO FOUNDATIONS, NAMELY, DRYADE FOUNDATION & DIANESE FOUNDATION, OF WHICH THE APPELLANT - ASSESSEE WAS BENEFICIAL OWNER WITH HIS TWO BROTHERS, NAMELY, S/SHRI ARUN RAMNIKLAL MEHTA AND DILIP RAMNIKLAL MEHTA AND ANOTHER CLOSE RELATIVE, SHRI AMIT BHANSALI. THIS HAS ALREADY BEEN FILED IN THE COURSE OF HEARING OF THE APPEAL. OF THESE, S/SHRI DILIP RAMNIKLAL MEHTA & AMIT BHANSALI WERE STATED TO BE NON - RESIDENTS AND, IN WHOSE CASE, THE PROCEEDINGS WERE DROPPED, WHEREAS IN RESPECT OF OTHER TWO ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 26 WHICH INCLUDED THE APPELLANT - ASSESSEE, ASSESSMENT PROCEEDINGS WERE INITIATED IN THE FORM OF RE - ASSESSMENT. 2. EFFORT ON OUR PART IS TO EXPLAIN MAINLY THE DOCUMENTS AT PAGES (21) TO (24) AND PAGE (31) WHICH RELATES TO DRYADE FOUNDATION AND IN ORDER TO UNDERSTAND THE TRANSLATED VERSION OF THE GERMAN TERMS AND WORDS, SENTENCES USED IN THESE PAGES. 3. BUT, BEFORE PROCEEDING TO EXPLAIN THE AFORESAID DOCUMENTS, IT IS CONSIDERED NECESSARY TO PLACE FOR CONSIDERATION OF HON'BLE BENCH SOME FACTS WHICH WOULD CAUSE ANGUISH AND PAIN BECAUSE SUCH SITUATIONS ARE UNEXPECTED AND UNUSUAL. VERY RECENTLY IN THE CASE OF LAL BAHADUR GAUTAM V. STATE OF U.P., (2019) 6 SCC 441, HO N'BLE JUSTICE SHRI NAVIN SINHA OBSERVED AS UNDER: 'AS A RESPONSIBLE OFFICER OF THE COURT AND AN IMPORTANT ADJUNCT OF THE ADMINISTRATION OF JUSTICE, THE LAWYER UNDOUBTEDLY OWES A DUTY TO THE COURT AS WELL AS TO THE OPPOSITE SIDE. HE HAS TO BE FAIR TO ENSUR E THAT JUSTICE IS DONE.' NECESSITY OF EXTRACTING THE QUOTE FROM THE ABOVE JUDGMENT IS FELT FOR THE REASON THAT IN THE COURSE OF HEARING OF THE APPEAL, HON'BLE BENCH WAS AT PAINS AND ANXIOUS, TO KNOW THE STATUS OF ASSESSMENT IN THE CASE OF THE BROTHER OF THE APPELLANT - ASSESSEE, SHRI ARUN RAMNIKLAL MEHTA AND THERE WAS COMPLETE SILENCE ON THE PART OF THE APPELLANT - ASSESSEE NOR ANY INSTRUCTION WAS GIVEN IN THIS REGARD TO THE LEARNED COUNSEL APPEARING IN THE CASE ON THE PART OF THE APPELLANT - ASSESSEE. IT W AS RATHER ON THE PART OF THE REVENUE THAT EFFORTS TAKEN TO FIND OUT THE STATUS OF THAT ASSESSMENT WAS STATED AND IT WAS INFORMED THAT AFTER MUCH EFFORTS, THE COUNSEL FO R REVENUE COULD FIND THAT HON'BLE CO - ORDINATE BENCH FOR THE ASSESSMENT YEAR 2005 - 06 QUAS HED THE RE - ASSESSMENT PROCEEDING WHERE RE - ASSESSMENT PROCEEDING WAS INITIATED TO INCLUDE NOTIONAL INTEREST IN THE HANDS OF THE BROTHER, SHRI ARUN RAMNIKLAL MEHTA. IT WAS HOWEVER ASSURED TO HON'BLE BENCH ON THE PART OF THE SPECIAL COUNSEL APPEARING FOR & ON BEHALF OF THE REVENUE THAT EFFORTS ARE CONTINUING TO ASCERTAIN THE STATUS THEREOF. IT IS NOW BROUGHT TO THE NOTICE OF HON'BLE BENCH THAT LEARNED ASSESSING OFFICER HAS ON 18/07/2019 FORWARDED THROUGH WHATSAPP MESSAGE A COPY OF THE ASSESSMENT ORDER DATED 30 .12.2009 IN THE CASE OF THE BROTHER, SHRI ARUN RAMNIKLAL MEHTA TO THE SPECIAL COUNSEL APPEARING FOR AND ON BEHALF OF THE REVENUE AND UNDER ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 27 INSTRUCTIONS A COPY OF THE SAID ASSESSMENT ORDER IS ENCLOSED AS 'ANNEXURE A' TO THIS SUBMISSION. A READING OF THIS AS SESSMENT ORDER WOULD SHOW THAT AN ADDITION OF RS. 5,35,23,181/ - HAS BEEN MADE IN THE CASE OF SHRI ARUN RAMNIKLAL MEHTA BEING 25% SHARE OF THE DEPOSIT MADE IN THE BANK ACCOUNT OF DRYADE FOUNDATION ON IDENTICAL FACTS AND CIRCUMSTANCES AS IN THE CASE OF THE A PPELLANT - ASSESSEE. FURTHER, IT WOULD BE SEEN THAT THE EXPLANATION OFFERED ON THE PART OF SHRI ARUN RAMNIKLAL MEHTA IS ALMOST SIMILAR AS GIVEN IN THE CASE OF THE APPELLANT - ASSESSEE. PURSUANT TO ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 148 DAT ED 30.12.2009, DEMAND OF RS. 3,08,08,337/ - INCLUDING INTEREST AMOUNTING TO RS. 1,39,36,328/ - UNDER SECTION 234B OF THE ACT WAS RAISED. IN ADDITION, PENALTY OF RS. 3 , 37,19,602/ - WAS IMPOSED UNDER SECTION 271(1) (C) AT 200% OF DEMAND RAISED THEREBY RAISING A N AGGREGATE DEMAND OF RS. 6,45,27,939/ - FOR THE ASSESSMENT YEAR 2003 - 04. IT IS, UNDER INSTRUCTIONS, INFORMED TO HON'BLE BENCH THAT SHRI ARUN RAMNIKLAL MEHTA HAS PAID ENTIRE TAX DEMAND AMOUNTING TO RS. 6,45,27,939/ - BY WAY OF INSTALMENTS AND HAS APPLIED FOR WAIVER OF INTEREST CHARGED IN TERMS OF SECTION 220 (2A) OF THE ACT. IT HAS FURTHER BEEN FOUND FROM THE OFFICIAL WEBSITE OF THE ITAT THAT SHRI ARUN RAMNIKLAL MEHTA HAD FILED AN APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE ITAT BEING ITA NO. 2743/MUM//201 1. THE STATUS OF THIS APPEAL IS SHOWN AS PENDING. A COPY OF THE SNAPSHOT TAKEN FROM THE WEBSITE IS ALSO ENCLOSED AS 'ANNEXURE - B' HEREWITH. 3, DOCUMENTS RELATING TO DRYADE FOUNDATION ARE AT PAGES (17) TO (20), (22) TO (24), PAGE (31), PAGES (36) TO (39) O F THE COMPILATION. PAGES (17) TO (20) ARE IN ENGLISH AND ARE SELF - EXPLANATORY. PAGE (21) IS COMPTE COURANT WHICH MEANS TRANSACTION ACCOUNT WITH ABN AMRO BANK, GENEVA. THE CURRENCY IN WHICH THE TRANSACTION IS MAINTAINED IS US DOLLARS OF ACCOUNT NUMBER G 20 4109. EXTRAIT JOURNALIER MEANS ACCOUNT STATEMENT. THE CREDIT ENTRY OF USD 43,86,034.37 WITH BALANCE AT THE END OF THE DAY AT USD 43,87,146.86 IN THE ACCOUNT IS OF 17.04.2002 WITH NARRATION 'BONIFICATION AA1452197 ROSY BLUE FIN SA'. THE TERM 'BONIFICATION', AS DEFINED IN BLACK'S LAW DICTIONARY MEANS THE REMISSION OF TAX, PARTICULARLY ON GOODS INTENDED FOR EXPORT, BEING A SPECIAL ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 28 ADVANTAGE EXTENDED BY GOVERNMENT IN AID OF TRADE AND MANUFACTURES, AND HAVING THE SAME EFFECT AS A BONUS OR DRAWBACK. IT IS A DEVIC E RESORTED TO FOR ENABLING A COMMODITY AFFECTED BY TAXES TO BE EXPORTED AND SOLD IN THE FOREIGN MARKET ON THE SAME TERMS AS IF IT HAD NOT BEEN TAXED.' COPY OF THE DEFINITION IS ALREADY FILED WITH HON'BLE BENCH IN THE COURSE OF HEARING OF THE APPEAL. AT PAG E (23) THE SAME ACCOUNT IS DEBITED WITH USD 43,87146/ - AS PAYMENT TO AA 1454221 WITH CLOSING BALANCE AT USD 0.86. THESE ENTRIES WOULD SHOW THAT OPENING BALANCE AS ON 17.04.2002 WAS USD 1112.49 IN THIS ACCOUNT WITH A FRESH CREDIT OF USD 43, 86,034.37 ON 17. 04.2002. PAGE (24) IS A REVIEW OF THE DEBIT ENTRIES WHICH WERE INSTANT AND WITH NARRATION' WE DEBIT TO ACCOUNT' AND THE NAME OF THE BENEFICIARY OF THIS DEBIT IS SHOWN TO BE SUNDEW COMPANY LIMITED. PAGE (31) INDICATES THE DETAILS OF THE DRYADE FOUNDATION AS TO (1) WHO ARE THE FOUNDATION BOARD; (2) SINCE WHEN IT IS ACTIVE; (3) WHO ARE THE BANKERS; (4) VARIOUS DETAILS AS TO INSTITUTIONAL CLIENTS, REPRESENTATIVES, CUSTOMERS; (5) PURPOSE; (6) INVESTMENT PARTICIPATION ETC. THERE CAN BE SEEN VARIOUS INSTRUCTIONS R ELATING TO THE TRANSACTIONS OF THE FAMILY CONCERNS INVOLVING LOANS OF USD 4 MILLION AND USD 2 MILLION TO ROSY BLUE FINANCE AND OF DEBIT NOTES TO ABN AMRO BANK FOR THE PERIOD 06.09,2000 TO 14.09.2000 AND TO KEEP UPDATED THE ROSY BLUE FINANCES AND WITH DELIV ERY INSTRUCTIONS TO LUXEMBOURG. AS EXPLAINED IN THE COURSE OF HEARING IT WAS AN ATTEMPT TO UNDERSTAND THE NATURE OF THESE TRANSACTIONS BY USING THE TRANSLATION PLATFORM AVAILABLE ON THE GOOGLE PUBLIC DOMAIN. 4. AS FAR AS EXPLANATION DATED 18 TH DECEMBER, 2 009 OF THE APPELLANT - ASSESSEE IS CONCERNED, IT WAS SUBMITTED THAT THE EXPLANATION OFFERED DOES NOT SOUND CREDENCE AS THE REFERENCE MADE TO THE BROTHER ARUN MEHTA'S ENQUIRIES WITH ANOTHER BROTHER DILIP MEHTA HAS MISSING LINKS. NO SUPPORTING EVIDENCE HAS BEE N FILED AS TO WHEN THE APPELLANT - ASSESSEE MADE ENQUIRY WITH ARUN MEHTA AND WHEN ARUN MEHTA MADE ENQUIRY WITH DILIP MEHTA. NEITHER THE LETTER OF THE COUNSEL, WHICH IS ENCLOSED AS ANNEXURE WITH THIS EXPLANATION INDICATED ON WHOSE BEHALF THE LETTER DATED 13 TH NOVEMBER 2009 IS GIVEN. THE LETTER DATED 13 TH NOVEMBER 2009 IS FROM FIDUCIO TREUHAND AG AND INFORMATION GIVEN IS FOR DISSOLVED DRYADE FOUNDATION. FURTHER, THE APPELLANT - ASSESSEE STATES THAT HE IS ADVISED THAT STIFTUNG IS ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 29 AKIN TO A DISCRETIONARY TRUST. THI S ASSERTION IS ALSO WITHOUT ANY SUPPORTING EVIDENCE. 5. THE EXPLANATION ASKED FOR BY LEARNED ASSESSING OFFICER WAS THE DEPOSIT MADE ON 17.04.2002 IN THIS ACCOUNT. THE APPELLANT - ASSESSEE INSTEAD ASSERTS THAT NEITHER HE WAS CONTRIBUTORY TO THE FOUNDATION AN D NOR HE RECEIVED ANY BENEFIT BY WAY OF DISTRIBUTION. LEARNED ASSESSING OFFICER HAS HELD THAT THE APPELLANT DID NOT STATE A SINGLE WORD REGARDING THE DEBIT/ CREDIT ENTRIES APPEARING IN THE ACCOUNT OF THE FOUNDATION. SINCE THE CREDIT PRECEDED THE DEBIT, IT WAS INCUMBENT ON THE PART OF THE APPELLANT - ASSESSEE TO EXPLAIN AS TO THE SOURCE OF THE CREDIT WHICH HE FAILED TO EXPLAIN WITH THE OTHER BROTHER, SHRI ARUN RAMNIKLAL MEHTA. NEITHER THE NON - RESIDENT BENEFICIAL OWNERS CAME FORWARD TO EXPLAIN THE CREDIT ENTRIE S. IN ABSENCE OF ANY EXPLANATION, THE LEARNED ASSESSING OFFICER WAS JUSTIFIED IN INCLUDING 25% SHARE OF THE AMOUNT OF CREDIT FOUND IN THE BANK ACCOUNT OF THE FOUNDATION. 6. IT MUST BE APPRECIATED THAT THE PRINCIPALITY OF LIECHTENSTEIN OPERATES IN COMPLETE SECRECY AND THROUGH MANAGEMENT COMPANIES WHO MAINTAINS CLIENTS' ACCOUNTS IN COMPLETE SECRECY. PART OF THESE DETAILS FROM PAGES (17) TO (31) WERE COMMUNICATED TO, AND RECEIVED BY THE GOVERNMENT OF INDIA FROM THE GOVERNMENT OF FEDERAL REPUBLIC OF GERMANY. T HE OTHER PART OF THE DETAILS FROM PAGES (36) TO (43) WERE FILED BY THE APPELLANT - ASSESSEE. IT IS ALSO A FACT THAT AN INTEGRAL PART FORMING THE DRYADE FOUNDATION AND THE DIANESE FOUNDATION HAVE BEEN WITHHELD BY THE APPELLANT - ASSESSEE. IT IS A FACT THAT THE DOCUMENTS SUBMITTED BY THE APPELLANT - ASSESSEE ARE INCOMPLETE AND THUS CAN BE SAID TO HAVE BEEN WITHHELD FOR REASONS BEST KNOWN TO THE APPELLANT - ASSESSEE. FROM THE CONDUCT OF THE APPELLANT - ASSESSEE AS CAN BE WITNESSED FROM THE FOLLOWING FACT THAT THE APPELL ANT - ASSESSEE HAS NOT COME CLEAN AND DELIBERATELY WITHHELD VITAL INFORMATION: 1. COMPLETE CORRESPONDENCE BETWEEN THE APPELLANT - ASSESSEE, HIS BROTHER SHRI ARUN RAMNIKLAL MEHTA, THE NON - RESIDENT BROTHER, SHRI DILIP RAMNIKLAL MEHTA AND FIDUCIO TREUHAND AG AS STATED IN ITEM (IV) AT PAGE (33) OF THE COMPILATION FILED BY THE APPELLANT HAS NOT BEEN FURNISHED WHICH IS EVIDENT FROM THE FACT THAT LETTERS OF DATED 13/11/2009 AT PAGES (36) AND (40) ARE REFERRED TO IN RELATION TO THE APPELLANT - ASSESSEE; ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 30 2. THE ADVICE R ECEIVED & STATED IN ITEM (V) AT PAGE (33) OF THE COMPILATION FILED BY THE APPELLANT - ASSESSEE HAS NOT BEEN FURNISHED; 3. COMPLETE INFORMATION ON THE MEMORANDUM OF FORMATION OF DRYADE FOUNDATION HAS NOT BEEN GIVEN; AND 4. FACT OF ASSESSMENT MADE IN THE CAS E OF BROTHER, SHRI ARUN RAMNIKLAL MEHTA FOR THE A. YR. UNDER CONSIDERATION AND PAYMENT BY HIM OF THE ENTIRE DEMAND RAISED ON THE INCLUSION OF L/4 TH SHARE OF THE ENTIRE AMOUNT OF RS. 21, 40, 92,725/ - BEING RS. 5, 35, 23,181/ - HAS BEEN WITHHELD THOUGH IT IS THROUGH HIM THAT ADMITTEDLY ENQUIRY WAS MADE WITH THEIR NON - RESIDENT BROTHER, SHRI DILIP RAMNIKLAL MEHTA ABOUT THE TRANSACTIONS APPEARING IN THE BANK IN RELATION TO DRYADE FOUNDATION. 5. BOTH FOUNDATIONS ARE SHOWN AS DISSOLVED [KINDLY REFER PAGE (36) AND PAGE (40)]. THE EXPLANATIONS GIVEN BY FIDUCIO TREUHAND AG IS COMPLETELY VAGUE. IT WOULD BE APPROPRIATE TO CONSIDER THESE FACTS AND CIRCUMSTANCES IN THE CONTEXT OF SECTION 106, 111 AND 114 OF THE INDIAN EVIDENCE ACT AND ADVERSE INFERENCE MUST BE DRAWN AGAI NST THE APPELLANT - ASSESSEE TO HOLD THAT THE ADDITION MADE BY LEARNED ASSESSING OFFICER WAS CORRECTLY INCLUDED IN HIS HANDS. IT HAS BEEN ARGUED FOR AND ON BEHALF OF THE APPELLANT - ASSESSEE THAT THE INFORMATION CULLED OUT FROM THE DOCUMENTS WHICH ARE IN GERM AN LANGUAGE AND IN ORDER TO UNDERSTAND THE LIECHTENSTEIN LAW, EXPERT EVIDENCE MUST BE BROUGHT ON RECORD AS TO LAW RELATING TO FOUNDATIONS SET UP IN LIECHTENSTEIN. IN THIS CONNECTION, IT IS SUBMITTED THAT AT FIRST INSTANCE, THE DOCUMENTS FORMING THE TWO FOU NDATIONS, NAMELY, DRYADE AND DIANESE FOUNDATIONS MUST BE FURNISHED BY THE APPELLANT - ASSESSEE ALONG WITH COMPLETE CHANGES EFFECTED SINCE 02/07/1986 BEING THE DATE OF FORMATION TILL THE DISSOLUTION AS SEEN FROM LETTER OF 13/11/2009. IT MAY BE SEEN AT PAGE (3 6) OF THE COMPILATION THAT DRYADE FOUNDATION IS SHOWN AS DISSOLVED BUT NO DATE IS GIVEN. WHEREAS AT PAGE (40) OF THE COMPILATION THE DATE OF DISSOLUTION OF DIANESE FOUNDATION IS GIVEN AS 21 ST AUGUST, 2003. IF THESE TWO FOUNDATIONS ARE DISSOLVED THEN WHAT W AS DONE AT THE TIME OF DISSOLUTION. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 31 7. THE ASSESSING OFFICER HAS MADE ADDITION WITHOUT THE MENTION OF SECTION OF THE ACT IN THE ASSESSMENT ORDER UNDER WHICH THE ADDITION IS MADE. IT WAS SUBMITTED IN THE COURSE OF HEARING OF THE APPEAL THAT BEING UNEXPLAIN ED MONEY, ADDITION IS MADE UNDER SECTION 69A OF THE ACT. IT IS A FACT THAT NO EXPLANATION HAS BEEN OFFERED OF THIS DEPOSIT OF USD 43, 86034.37 WITH ABN AMRO BANK, GENEVA BY ANY OF THE BENEFICIAL OWNERS NOR BY MANACOR MANAGEMENT SERVICES WHO WERE ACTING AS MANAGER/ADMINISTRATOR FOR AND ON BEHALF OF DRYADE FOUNDATION AND NOT BY ANY OTHER PERSON ON BEHALF OF THE FOUR BENEFICIAL OWNERS. THE DEPOSIT HAVING REMAINED UNEXPLAINED, LEARNED ASSESSING OFFICER HAS CORRECTLY MADE AN ADDITION OF RS. 5, 35, 23,181/ - BEING L/4 TH SHARE OF THE APPELLANT - ASSESSEE. THE JUSTIFICATION OF THIS ADDITION IS FOUND BY ADMISSION ON THE PART OF THE RESIDENT BROTHER, SHRI ARUN RAMNIKLAL MEHTA OF THE APPELLANT - ASSESSEE WHO HAS PAID TAX NOT ONLY ON THE ADDITION MADE BUT ALSO BY PAYMENT OF T HE AMOUNT OF PENALTY IMPOSED UNDER SECTION 271(1) (C) OF THE ACT. 10. THE LD AR FILED A REJOINDER ON 1.8.2019 IN RESPONSE TO THE WRITTEN SUBMISSIONS FILED BY THE LD SPECIAL COUNSEL FOR THE REVENUE. THE SAID REJOINDER IS REPRODUCED HEREIN FOR THE SAKE OF CONVENIENCE : - 1. THIS SUBMISSION - LN - REJOINDER IS FILED IN RESPONSE TO THE WRITTEN SUBMISSIONS ('WS') DATED 29 07.2019 MADE IN THE ABOVE MATTER BY THE SPECIAL COUNSEL FOR THE REVENUE ('SCR'). THIS SUBMISSION - IN - REJOINDER IS NECESSITATED AS SEVERAL ASSER TIONS, FACTUAL AND LEGAL, HAVE BEEN MADE IN THE WS OF THE SCR WHICH ARE BEYOND THE SCOPE OF THE PROCEEDING TO DATE, AND WHICH ARE RAISED FOR THE VERY FIRST TIME AT THE LEVEL OF THE APPEAL BEFORE THIS HON'BLE TRIBUNAL. WHILE NORMALLY THE MATTER WOULD HAVE R ESTED WITH THE APPELLANT'S WS (FILED ON 26.07.2019) AND THE SCR'S WS, IN THE PECULIAR FACTS OF THE PRESENT CASE AND GIVEN THE NATURE OF ISSUES AGITATED IN THE WS BY THE SCR, IT IS PRAYED THAT THIS SUBMISSION - LN - REJOINDER BE TAKEN ON RECORD OY THIS HON'BLE TRIBUNAL. 2. AT PARA 2 OF THE WS OF THE SCR : IT IS SUBMITTED THAT THE LEARNED SCR HAS ATTEMPTED BEFORE THIS HON'BLE TRIBUNAL TO EXPLAIN THE DOCUMENTS BASED ON A TRANSLATED VERSION OF THE GERMAN TERMS AND WORDS USED IN THE DOCUMENTS. LATER IN THE WS IT IS STATED THAT THESE TRANSLATIONS ARE REFERENCE FROM AN INTERNET SERVICE PROVIDER, VIZ. GOOGLE. IT IS SUBMITTED ON BEHALF OF THE APPELLANT THAT, THROUGH THE TRANSLATIONS, THE DEPARTMENT IS AT THE STAGE OF APPEAL BEFORE THIS HON'BLE TRIBUNAL, SEEKING TO URGE A ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 32 DIFFERENT OR ADDITIONAL CONNOTATION AND CONTEXT TO THE DOCUMENTS IN QUESTION. THE IMMEDIATE LEGAL CONSEQUENCE WHICH FOLLOWS FROM THE ATTEMPT TO LEAD THE TRANSLATIONS AT THIS STAGE IS THAT: I. THE CASE OF THE DEPARTMENT HAS BEEN ARTICULATED AT THE LE VEL OF THE TRIBUNAL DIFFERENTLY FROM THE CASE OF THE DEPARTMENT AT ALL EARLIER STAGES (WHEN THE VERY DOCUMENTS WERE SOUGHT TO BE REIIED UPON WITHOUT REFERENCE TO ANY TRANSLATIONS). THIS WOULD APPEAR TO INDICATE THAT: (A) THE DEPARTMENT IS SEEKING TO MAKE OUT A FRESH AND ADDITIONAL CASE AT THE LEVEL OF THE TRIBUNAL, WHICH IS IMPERMISSIBLE IN LAW; (B) THE DEPARTMENT ACCEPTS THAT THE CASE AS EARLIER MADE OUT FELL SHORT OF THE REQUIRED STANDARDS THAT THE DEPARTMENT SHOULD HAVE MET TO SUSTAIN ITS CASE. II. IT IS WORTH NOTING THAT AT THE STAGE OF THE HEARING BEFORE THIS HON'BLE TRIBUNAL, FROM THE SAME INTERNET SOURCES AS RELIED ON BY THE SCR, THE APPELLANT WAS ABLE TO ESTABLISH THAT SOME OF THE TRANSLATIONS AS CLAIMED WERE INACCURATE AND THEREFORE - REQUIRE D TO BE FULLY AUTHENTICATED AND ANSWERED TO. III. IN VIEW OF THE ABOVE, FOR THE REASONS STATED IN THE APPELLANT'S SUBMISSIONS DATED 26.07.2019 AT PARA 19, IF THE TRANSLATIONS IN QUESTION ARE TO BE RELIED ON, IT IS NECESSARY TO COMPLY WITH THE PRINCIPLES O F NATURAL JUSTICE AND REQUIREMENTS OF DUE PROCESS THAT THE APPELLANTS BE GIVEN AN OPPORTUNITY TO RESPOND TO THE AUTHENTICITY OF THE TRANSLATIONS AND THE CONSEQUENTIAL FACTUAL OR LEGAL ISSUES WHICH ARE SOUGHT TO BE ARTICULATED FOR THE FIRST TIME BY THE DEPA RTMENT BEFORE THIS HON'BLE TRIBUNAL.' 3. IN RESPONSE TO PARA 3 OF THE WS OF THE SCR ; RELIANCE IS PLACED ON A JUDGMENT OF THE HON'BLE SUPREME COURT WHICH DEALS WITH AN ISSUE WHICH IS CLEARLY EXTRANEOUS TO THE PRESENT PROCEEDINGS AS, AT THE TOP OF PAGE 2 OF THE WS OF THE DEPARTMENT IT IS CLEARLY STATED THAT 'NOR ANY INSTRUCTION WAS GIVEN IN THIS REGARD TO THE LEARNED COUNSEL APPEARING IN THE CASE ON THE PART OF THE APPELLANT - ASSESSEE'. REFERENCE TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IS THEREFORE CLEAR LY MISGUIDED IN TERMS OF THE VERY PLEADINGS IN THE WS BY THE SCR. IT IS SUBMITTED THAT IF THIS ISSUE IS INTENDED TO BE RAISED ANY FURTHER BY THE TAX DEPARTMENT OR THE SCR. A FULL AND PROPER OPPORTUNITY SHOULD BE AFFORDED TO THE APPELLANT IN THIS REGARD.( R EFER HADIBANDHU DAS V. DISTRICT MAGISTRATE, CUTTACK(1969 AIR 43 SC), NANDKUMAR ALIAS NANDU V. S. RAMAMURTHI COMMISSIONER (1992 CRI LJ 1078) ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 33 THE SCR CLAIMS THAT THE APPELLANT HAS NOT MADE A FULL DISCLOSURE TO ASSIST THE HON'BLE TRIBUNAL. THE ASSERTIONS IN THIS REGARD ARE WHOLLY MISGUIDED AND UNSUSTAINABLE FOR THE REASONS THAT: I. THE HON'BLE TRIBUNAL WAS AWARE THAT THE APPEAL WAS PENDING IN THE CASE OF MR. ARUN RAMNIKLAL MEHTA, REFERENCE WAS MADE BY THE SCR, AS ALSO A MEMBER OF BENCH. WHEN THIS SPECIF IC ISSUE CAME UP AS TO WHETHER THE DEPARTMENT IS SUGGESTING THAT BOTH THE APPEALS BE HEARD TOGETHER, THE SCR HIMSELF RESPONDED TO SAY THAT HE WAS NOT SUGGESTING THAT THE PRESENT APPEAL BE DELAYED AND BOTH THE MATTERS BE HEARD TOGETHER . II. THE PROCE EDINGS OF MR. ARUN RAMNIKLAL MEHTA REFERRED TO ARE THE PROCEEDINGS AT THE LEVEL OF THE ASSESSING OFFICER. THE AMOUNTS MENTIONED THEREIN THE APPROACH ADOPTED BY THE ASSESSING OFFICER AND THE PAYMENTS MADE UNDER PROTEST, ARE ALL MATTERS OF RECORD, DETAILS OF WHICH WERE ALWAYS FULLY AVAILABLE BEFORE THE TAX DEPARTMENT. THERE IS THEREFORE NO QUESTION WHATSOEVER OF THIS INFORMATION NOT BEING AVAILABLE OR SHARED, AS RESPONDENT TAX DEPARTMENT WAS ALWAYS FULLY AWARE OF ALL OF THE RELEVANT FACTS RELATING TO THE PROC EEDINGS IN RELATION TO ARM, INCLUDING DETAILS AS TO THE PENDENCY OF THE APPEAL IN THAT MATTER. III . IT IS NOTEWORTHY THAT EVEN IN THE MATTER OF THE PRESENT APPELLANT, PAYMENTS HAVE IN FACT BEEN MADE UNDER PROTEST AND CLEAR DETAILS IN RELATION TO SUC H PAYMENTS ARE AVAILABLE WITH THE TAX DEPARTMENT WHICH HAVE COLLECTED PAYMENTS OF THE AMOUNT IN QUESTION. THE RELEVANT PAYMENT CHALLANS AND CORRESPONDENCE IN THIS REGARD ARE ANNEXED HERETO AS ANNEXURE A. IV. SEEKING TO REFER TO THESE FACTS WHICH ARE ALREADY IN THE KNOW OF THE DEPARTMENT AND GIVING IT A COLOUR OF NON - DISCLOSURE IS UNFORTUNATE, GIVEN THE STATUS OF THE FACTS AVAILABLE TO THE DEPARTMENT AS TO BOTH THE PRESENT APPEAL PROCEEDINGS AND THE PROCEEDINGS IN RELATION TO ARM. V. IT ALSO IS REQUIRED TO BE EMPHASIZED THAT THE AO AND CIT(A) IN RELATION TO BOTH, THE PRESENT APPELLANT AND MR. ARUN RAMMKLAL MEHTA, ARE THE SAME. VI. AS THE PAYMENTS HAVE BEEN MADE UNDER PROTEST AND WITHOUT PREJUDICE, IN LIGHT OF THE APPEALS WHICH HAVE BEEN LOD GED BY BOTH ASSESSEES, THERE IS CLEARLY NO QUESTION OF TREATING SUCH PAYMENT AS AN ADMISSION OR ACCEPTANCE OF THE ADDITION. ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 34 4. IN RESPONSE TO PARA 3 (APPARENTLY ERRONEOUSLY NUMBERED AT PAGE 2), THE APPELLANT SEEKS TO RELY ON PARA 19 OF THE APPELLANT'S WS DATED 26.07.2019 AND PARA 2 HEREINABOVE OF THIS SUBMISSION - !N - REJOINDER. WHILE THE DEPARTMENT MAY FEEL ENTITLED TO RELY ON THE TRANSLATIONS FOR THE FIRST TIME AT THE STAGE OF APPEAL, THE APPELLANT SUBMITS THAT IF ANY SUCH TRANSLATIONS ARE NOW TO BE MADE P ART OF THE DEPARTMENT'S CASE, IT IS ESSENTIAL THAT THE APPELLANT IS AFFORDED FULL OPPORTUNITY TO DEAL WITH THE AUTHENTICITY OF THE TRANSLATION, AND THE CONNOTATION SOUGHT TO BE DRAWN FROM THE TRANSLATION. THE APPELLANTS RESERVE THE RIGHT TO RESPOND TO THE SAID TRANSLATIONS, AND WOULD ALSO BELIEVE THAT THEY SHOULD BE GIVEN AN OPPORTUNITY TO LEAD A DULY AUTHENTICATED TRANSLATION BY WAY OF EVIDENCE IN RESPONSE TO THE TRANSLATION MADE AVAILABLE BY THE SCR. 5. IN RESPECT OF PARA 4 AT PAGE 3, SUBMISSIONS HAVE BE EN MADE FOR THE FIRST TIME THAT THERE ARE CERTAIN ISSUES IN RELATION TO THE APPELLANT'S REPLY DATED 18.12.2009 AND THE LETTER DATED 5.11,2009 FROM FIDUCO TREUHAND AG. IT IS SUBMITTED THAT THE REPLY DATED 18.12.2009 AND THE FIDUCO TREUHAND AG LETTER DATED 0 5.11.2009 WERE FIRST PLACED ON RECORD BEFORE THE TAX AUTHORITIES ON 18,12.2009. IT IS SIGNIFICANT THAT THE SUBMISSIONS NOW MADE VIS - A - VIS THERE BEING SOME MISSING LINK OR MISSING DOCUMENTS HAVE NEVER BEEN RAISED AS AN ISSUE EITHER AT THE LEVEL OF ASSESSING OFFICER OR THE CIT(A). THESE SUBMISSIONS ARE AN AFTERTHOUGHT TO TRY AND DISCREDIT DOCUMENTS WHICH HAVE BEEN ON RECORD AND REMAINED UNCONTESTED FOR ALMOST 10 YEARS. IT IS SUBMITTED THAT IF THE FACTUAL VERACITY OF DOCUMENTS IS SOUGHT TO BE CHALLENGED AFTER A PERIOD 10 YEARS IT WOULD HAVE A DISASTROUS EFFECT ACROSS THE TENS OF THOUSANDS OF PROCEEDINGS PENDING BEFORE THIS HON'BLE TRIBUNAL IF SUCH ISSUES COULD BE RAISED FOR THE FIRST TIME BEFORE THIS HON'BLE TRIBUNAL, AS IT WOULD LEAD ALL SIMILAR MATTERS IN A S TATE OF UNCERTAINTY IF IT WERE PERMISSIBLE TO TRY AND REINVENT THE FACTUAL MATRIX AND THE BASIS OF THE DEPARTMENT'S CASE 10 YEARS INTO THE LIFE OF SUCH A PROCEEDING. (REFER ACIT V. AISHWARYA K RAI [2009 - TIOL - 11 - ITAT - MUM] MAHINDRA AND MAHINDRA LIMITED V. DC IT [2009 - TIOL - 255 - ITAT - MUM - SB] THE WS SEEKS TO RAISE AN ISSUE AS TO WHETHER THE DRYADE FOUNDATION IS A DISCRETIONARY TRUST THE WS IS EFFECTIVELY SEEKING TO CHALLENGE THE FINDING OF THE ASSESSING OFFICER IN THIS REGARD IN HIS ORDER DATED 30.12.2009. WHERE HE HAS CLEARLY OBSERVED THAT THE DRYADE FOUNDATION IS A DISCRETIONARY TRUST THIS FINDING HAS NEVER BEEN CHALLENGED BEFORE NOW, BY THE DEPARTMENT, BY INITIATING APPROPRIATE PROCEEDINGS IN THIS REGARD. THE ATTEMPT TO ASSAIL AN UNCHALLENGED FACTUAL FINDING OF ITS ASSESSING OFFICER IS IMPERMISSIBLE AND UNSUSTAINABLE IN LAW. 6. IN RESPONSE TO PARA 5 AT PAGE 3, IT SETTLED LAW THAT IN RELATION TO AN INDIAN RESIDENT NAMED IN TO FOREIGN BANK DEPOSIT, A LIABILITY TO TAX ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 35 WOULD ARISE ONLY IF (REFER 'CWT RAJKOT VS ES TATE OF HMM VIKRAMSINHJI OF GONDAL. [20155 SCC 666], CIT V. KARNALINI KHATAU [(1994) SCC (4) 308] (I) THE RESIDENT WAS PROVEN TO HAVE CONTRIBUTED TO A DEPOSIT OUTSIDE INDIA FROM ANY SOURCE WHICH HAS NOT BEEN TAXED IN INDIA, OR (II) THE ASSESSEE HAS RECE IVED A DISTRIBUTION FROM A TRUST OR FOUNDATION OUTSIDE INDIA WHICH THE ASSESSEE HAS NOT OFFERED TO TAX IN INDIA. THE POSITION IN THIS REGARD IS THAT, THE APPELLANT HAS LED CLEAR EVIDENCE BY WAY OF THE FIDUCO TREUHAND AG LETTER 05.11.2009 THAT: (I) HE IS NOT THE FOUNDER (NOT A CONTRIBUTOR) TO THE DRYADE FOUNDATION; (II) HE HAS RECEIVED NO DISTRIBUTION IN THE RELEVANT PERIOD FROM THE DRYADE FOUNDATION. IN ADDITION, THE DOCUMENTS RELIED ON BY THE SDR HIMSELF AT PAGES 22 AND 24 ESTABLI SH THAT THE CONTRIBUTION WAS MADE BY ROSY BLUE FIN SA AND THE REMITTANCE OF THE AMOUNT OF $4,387,146 WAS MADE TO SUNDEW COMPANY LIMITED. IN VIEW OF THESE UNCHALLENGED FACTS AND DOCUMENTS, THE INEVITABLE CONCLUSION WOULD BE THAT THE APPELLANT IS NOT LIABLE TO BE CHARGED TO INCOME TAX IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 7. IN THE BACKGROUND OF THE FACTUAL AND LEGAL POSITION AS SET OUT IN THE PRECEDING PARAGRAPH, A NEW ARGUMENT WAS SOUGHT TO BE EVOLVED THAT, IF THERE IS A DEPOSIT IN A FOREIGN ACCOUNT, THAT IN ITSELF IS SUFFICIENT TO CREATE A LIABILITY OF TAX FOR AN INDIAN RESIDENT NAMED AS A BENEFICIARY, EVEN IF SUCH BENEFICIARY HAS NEITHER CONTRIBUTED TO THE DEPOSIT NOR RECEIVED A DISTRIBUTION FROM THE RELEVANT ENTITY. THIS ARGUMENT IS WHOLLY NEW AND IS DISTINCT FROM THE DEPARTMENT'S CASE AS MADE OUT AT EARLIER STAGES OF THE PROCEEDING. THE PROPOSITION THAT A DEPOSIT ALONE IS ENOUGH RUNS CONTRARY TO THE PROVISIONS OF SECTION 5 AND SECTION 9 OF THE INCOME TAX ACT (ACT'). TO SUPPORT A CHARGE OF TAX BASED MERELY ON A DEPOSIT WOULD REQUIRE A SPECIFIC PROVISION OF LAW EMPOWERING SUCH A CHARGE ON PRESUMPTIVE BASIS. IN THE ACT AS IT CURRENTLY IS, THERE IS CLEARLY NO PROVISION TO THIS EFFECT, VIZ. THAT A DEPOSIT IN A FOREIGN ACCOUNT IN RESPECT OF WHICH A RESIDENT IS SHOWN AS A BENEFICIARY IS ITSELF SINGULARLY SUFFICIENT TO SUPPORT A CHARGE OF INCOME TAX ON SUCH RESIDENT. IT IS SUBMITTED BY THE SCR THAT RELEVANT TO THE FOREIGN ACCOUNT, SINCE THE CREDIT PRECEDED THE DEBIT, IT WAS INCUMBENT ON THE PART OF THE APPELLANT - ASSESSEE TO EXPLAIN THE SOURCE OF THE CREDIT WHICH HE FAILED TO EXPLAIN. IT ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 36 IS WELL SETTLED THAT A PERSON CANNOT BE ASKED TO SPEAK TO OR EXPLAIN EVENTS WHOLLY BEYOND THE REMIT OF HIS KNOWLEDGE. THERE IS CLEAR EVIDENCE ON RECORD THAT THE PRES ENT APPELLANT HAS NEITHER OPENED THE ACCOUNT OF THE FOUNDATION NOR OPERATED IT IN VIEW OF THE EVIDENCE, IT WOULD BE AN WHOLLY ONEROUS AND ERRONEOUS OBLIGATION TO PLACE ON THE PRESENT APPELLANT THAT HE SHOULD EXPLAIN THE SOURCE OF THE CREDIT. IT IS ERRONEOU SLY SUGGESTED THAT THERE HAS BEEN NO EXPLANATION. THE FIDUCO TREUHAND LETTER DATED 05.11.2009 CLEARLY ANSWERS ALL THE RELEVANT QUESTIONS AS TO TAXABILITY, VIZ. THE CURRENT APPELLANT IS NOT A CONTRIBUTOR AND HAS NOT RECEIVED A DISTRIBUTION FROM, THE DRYADE FOUNDATION IN THE RELEVANT PERIOD. AN EXPLANATION HAS CLEARLY BEEN GIVEN WHICH IS REQUIRED UNDER LAW TO BE FOLLOWED, THE DEPARTMENT HAS HOWEVER CONTINUOUSLY CHOSEN TO IGNORE SUCH EXPLANATION. 8. IN RESPONSE TO PARA 6 AT PAGE 4 OF THE WS, ASSERTIONS HAVE BEEN MADE THAT DOCUMENTS SUBMITTED BY THE PRESENT APPELLANT ARE INCOMPLETE OR SOME DOCUMENTS HAVE BEEN WITHHELD BY TH E APPELLANT. AS POINTED OUT HEREINABOVE, TO PERMIT SUCH ASSERTIONS 10 YEARS AFTER THE DOCUMENTS HAVE BEEN FIRST PRODUCED AND TO PERMIT SUCH SUBMISSIONS AT THE STAGE OF SECOND APPEAL IS WHOLLY IMPERMISSIBLE IN LAW AND HAS THE POTENTIAL TO ADD IMMEASURABLY TO THE ALREADY LONG PERIOD OF PENDENCY OF LITIGATION IN TAX PROCEEDINGS ANY REQUEST TO REDEFINE THE SCOPE OF PROCEEDINGS AT THIS STAGE WOULD BE IMPROPER AND CONTRARY TO THE LEGAL DIKTAT THAT REMANDS, EVEN IF NECESSARY, SHOULD NOT BE MADE TO RECONSTRUCT A CASE, BUT ONLY TO PREVENT A FAILURE OF JUSTICE.' (REFER ENUMALAI VS. KANTHAMANI AMMAL [(2017) 1 M LJ 379] THE DEPARTMENT, SEEKING TO RELY ON THE GERMAN TRANSLATION AT THIS STAGE HAS CREATED A SITUATION THAT A FRESH OPPORTUNITY OF RESPONSE MUST BE SECURED TO THE APPELLANT. IT IS HOWEVER URGED THAT THE PROCEEDINGS OUGHT NOT TO BE ENTIRELY REINVENTED IN THE INTERESTS OF CERTAINTY AND EXPEDIENCY. T HE SUGGESTION THAT THE APPELLANT HAS NOT COME CLEAN AND DELIBERATELY WITHHELD INFORMATION IS ENTIRELY UNSUSTAINABLE AS THE APPELLANT HAS ALREADY LED HIS EVIDENCE IN THE YEAR 2009 AND IT IS FOR THE FIRST TIME THAT THAT EVIDENCE IS SOUGHT TO BE CRITIQUED AS BEING INADEQUATE. THE APPROACH OF THE DEPARTMENT IN TAKING UP THESE ISSUES FOR THE FIRST TIME IN SECOND APPEAL BY THE APPELLANT IS IMPROPER AND IMPERMISSIBLE AND CERTAINLY CANNOT SUSTAIN THE ALLEGATIONS THAT THE APPELLANT HAS WITHHELD VITAL INFORMATION. (R EFER SUPRA) 9 IN RESPONSE TO PARA 6 AT PAGE 5 OF THE WS, IN THE CASE OF HASMUKH GANDHI REPORTED AT [ORDER DATED 15.11.2017 IN ITA NO. 2795 AND 2796 MUMBAI 2011] (RELIED ON BY THE SCR) AT PARA 19, IT IS SAID THAT THE ISSUE OF THE CHARACTER OF THE TRUST NEEDED TO BE DETERMINED NOT IN TERMS OF THE INDIAN LAW (WHICH IT IS SUBMITTED IS CONTRARY TO THE LAW LAID DOWN BY THE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 37 SUPREME COURT IN CWT, RAJKOT VS. ESTATE OF HMM VIKRAMSINHJI OF GONDAL. {(2015) 5 SC C 666]}, BUT SHOULD INSTEAD BE DETERMINED AS PER THE LO CAL LAW OF THE JURISDICTION WHERE THE TRUST/FOUNDATION IS FORMED IF THIS IS IN FACT THE RELEVANT TEST, IT WAS SUBMITTED BY THE APPELLANT THAT IN TERMS OF SECTION 45 OF THE INDIAN EVIDENCE ACT, 1872, THE POSITION IN RELATION TO FOREIGN LAW MUST BE PROVED AS A RELEVANT FACT BASED ON EXPERT EVIDENCE FROM THE RELEVANT JURISDICTION. THE SUBMISSION IN THIS REGARD IS THEREFORE CONSEQUENT ONLY TO PARA 19 OF THE SAID JUDGEMENT. IT IS ALSO REQUIRED TO BE NOTED THAT THE APPELLANT HAS STRONGLY URGED THAT, GIVEN THE EVI DENCE PRODUCED BY WAY OF LETTER DATED 05.11 2009 BY FIDUCO TREUHAND AG , NO ADDITION CAN BE MADE IN THE PRESENT APPELLANT'S HANDS AS PER THE TEST LAID DOWN IN PARA 18 OF THE CASE OF HASMUKH GANDHI (SUPRA). IN VIEW OF WHAT IS SET OUT HEREINABOVE AND WHAT IS SET OUT IN THE APPELLANT'S WS DATED 26.07.2019, IT IS SUBMITTED THAT THE ADDITION SOUGHT TO BE MADE IN THE HANDS OF THE APPELLANT IS WITHOUT THE AUTHORITY OF LAW AND IF THE DEPARTMENT IS SEEKING TO SUPPORT ITS CASE BASED ON THE TRANSLATIONS, A FULL OPPORTU NITY MUST BE GRANTED TO THE APPELLANT CONSISTENT WITH THE PRINCIPLES OF NATURAL JUSTICE FOR THE REASONS SET OUT HEREINABOVE ON BEHALF OF THE APPELLANT. 10. AS REGARDS PARA 7 OF THE WS, THE CANDID ADMISSION THAT THE ADDITION IN THE PRESENT CASE IS MADE WIT HOUT SPECIFICALLY INVOKING A SPECIFIC PROVISION OF THE LAW GOES TO THE VERY ROOT OF THE MATTER TO ESTABLISH THAT THE ENTIRETY OF THE PROCEEDING IS WITHOUT AUTHORITY OF LAW, AS TILL DATE THERE IS AN OMISSION OF THE LAW UNDER WHICH THE DEPARTMENT SEEKS TO MA KE AN ADDITION IT IS AT THIS STAGE THAT AN ATTEMPT IS MADE TO SUGGEST THAT THE ADDITION IS SUSTAINABLE U/S 69A OF THE ACT. THE ARTICULATION FOR THE FIRST TIME, BEFORE THE TRIBUNAL, OF THE PROVISION OF LAW UNDER WHICH THE DEPARTMENT IS ACTING, IS UNSUSTAINA BLE AND BAD IN LAW. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE HAD VEHEMENTLY TRIED TO EXPLAIN THE VARIOUS CONTENTS OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE . WE FIND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE SUBMITTED THAT THE CONTENTS IN PAGES 13 TO 16 OF THE PAPER BOOK WERE COLLECTED BY THE GOVERNMENT OF INDIA FROM THE GOVERNMENT OF FEDERAL REPUBLIC OF GERMANY. THE CONTENT IN PAGE 17 OF T HE PAPER BOOK CLEARLY STATES THAT THE BENEFICIAL OWNER HAD DEPOSITED THE MONIES INTO THE FOREIGN BANK ACCOUNT WHEREIN THE ASSESSEES NAME , ALONG WITH OTHER BROTHERS, IS ALSO INCLUDED AS ONE OF THE BENEFICIARIES IN THE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 38 SAID LIST. WE FIND THAT THE LD SPECIA L COUNSEL FOR THE REVENUE STATED THAT THE CONTENTS IN PAGES 18 TO 20 OF THE PAPER BOOK CONTAINS THE BACKGROUND INFORMATION OF DRYADE STIFTUNG MENTIONING THE PURPOSE OF STARTING THE SAID FOUNDATION AS ESTATE PLANNING AND SOURCE OF THE DEPOSITED ASSETS AS FAMILY MONEY. WE FIND THAT PAGE 22 OF THE PAPER BOOK CONTAINS THE BANK STATEMENT OF ABN AMRO BANK MAINTAINED BY DRYADE STIFTUNG WHICH ADMITTEDLY CONTAINED THE DEPOSIT ENTRY ON 17.4.2002 AND THE CLOSING BALANCE AS ON SUCH DATE WAS USD 4387146.86, WHICH I S THE SUBJECT MATTER OF ADDITION IN THE IMPUGNED ASSESSMENT TO THE EXT ENT OF ASSESSEES SHARE. WE FIND THAT THE ENTIRE CONTENTS FROM PAGES 21 TO 25 OF THE PAPER BOOK ARE PURPORTED TO BE IN GERMAN LANGUAGE AS ADMITTED BY THE LD SPECIAL COUNSEL FOR THE REVEN UE AND HE TRIED TO TRANSLATE THE CONTENTS REFLECTED THEREIN THROUGH HIS INDEPENDENT RESEARCH MADE WITH THE ASSISTANCE OF GOOGLE. IT IS NOT IN DISPUTE THAT THE TRANSLATED VERSION OF THOSE CONTENTS WERE NOT MADE AVAILABLE EITHER TO THE ASSESSEE OR TO THE BENCH AT OR BEFORE THE TIME OF HEARING. WE FIND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE VEHEMENTLY ARGUED THAT THE ASSESSEE HAD FURNISHED THE MEMORANDUM OF FORMATION OF DRYADE STIFTUNG DATED 2.7.1986 BEFORE THE LD AO IN PAGE 38 OF THE PAPER BOOK, WHE REIN IT HAD BEEN SPECIFICALLY MENTIONED THAT THERE WERE SOME ATTACHMENTS FORMING AN INTEGRAL PART OF THAT MEMORANDUM AND THAT NO SUCH ATTACHMENT WAS EVER FILED BY THE ASSESSEE EITHER BEFORE THE LOWER AUTHORITIES OR IN THE PAPER BOOK FILED BEFORE US . WE FI ND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE SUBMITTED THAT THIS ATTACHMENT PROBABLY WOULD PROVE THE FACT AS TO WHO IS THE FOUNDER OF DRYA D E STIFTUNG AND WHO HAD DEPOSITED THE INITIAL CONTRIBUTION IN THE SAID F OUNDATION ETC, WHICH WOULD BE CRUCIAL FOR AD JUDICATION OF THE ISSUE IN DISPUTE BEFORE US. WE FIND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE FURTHER ARGUED THAT AS PER THE MEMORANDUM OF FORMATION DATED 2.7.1986 SUPRA, THE FOUNDER ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 39 OF DRYADE STIFTUNG APPEARS TO BE BIL TRUST CORPORATION AND HENCE ASS ESSEE CANNOT BE THE FOUNDER. THE LD SPECIAL COUNSEL FOR THE REVENUE FURTHER STATED THAT THE BY LAWS OF ANOTHER FOUNDATION VIZ DIANESE STIFTUNG ARE AVAILABLE IN THE PAPER BOOK ON WHICH NO ADDITION HAS BEEN MADE BY THE LD AO, WHEREAS THE BY LAWS OF DRYADE S TIFTUNG WERE NOT PLACED ON RECORD BY THE ASSESSEE EITHER BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE US . WE FIND THAT THE LD AR HAD TRIED TO TAKE SHELTER FROM THE OBSERVATION OF THE LD AO THAT DRYADE STIFTUNG IS A DISCRETIONARY TRUST AND THAT ANY MONIES CO ULD BE SOUGHT TO BE TAXED IN THE HANDS OF THE ASSESSEE, PURPORTED TO BE BENEFICIARY, ONLY IN THE EVENT OF ANY ACTUAL RECEIPT OF MONEY FROM THE SAID DISCRETIONARY TRUST. WE FIND THAT THE LD SPECIAL COUNSEL FOR THE REVENUE ON THE CONTRARY HAD ARGUED THAT A TRUST IS DIFFERENT FROM FOUNDATION AND HENCE THE ARGUMENT OF THE LD AR THAT DRYADE STIFTUNG IS A DISCRETIONARY TRUST CANNOT BE APPRECIATED. IN THIS REGARD, WE FIND THAT IT IS THE LD AO IN PAGE 7 OF HIS ORDER HAD CONCEDED THIS FACT BY STATING AS UNDER : - IT IS A COMMON KNOWLEDGE THAT DISCRETIONARY TRUST ARE CREATED FOR BENEFIT OF PARTICULAR PERSONS AND THOSE PERSONS NEED NOT NECESSARILY CONTROLLING THE AFFAIRS OF THE TRUST. STILL THE FACT REMAINS THAT THEY ARE THE SOLE BENEFICIARIES OF THE TRUST. HE NCE WE ARE INCLINED TO APPRECIATE THE ARGUMENT OF THE LD AR THAT THE LD SPECIAL COUNSEL FOR THE R EVENUE CANNOT TRY TO IMPROVE THE CASE OF THE LD AO DURING THE APPELLATE PROCEEDINGS BEFORE THIS TRIBUNAL. 11.1. ADMITTEDLY, THE CONTENTS OF VARIOUS PAPERS AS DETAILED ABOVE IN GERMAN LANGUAGE WERE PRODUCED BY THE LD AO TO THE ASSESSEE AND HENCE IT IS THE DUTY OF THE REVENUE TO FURNISH THE TRANSLATED VERSION OF THE SAID DOCUMENTS TO THE ASSESSEE FOR HIS EFFECTIVE REBUTTAL. IT IS AN UNDISPUTED FACT THAT THE A SSESSEE HAD LED CRUCIAL EVIDENCE IN THE FORM OF CONFIRMATION FROM FIDUCO TREUHAND AG (FORMERLY LGT BANK) DATED 5.11.2009 , THE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 40 CONTENTS OF WHICH ARE ENCLOSED IN PAGES 36 AND 37 OF THE PAPER BOOK AND FULLY REPRODUCED ELSEWHERE IN THIS ORDER ABOVE. ADMITTED LY, NO EFFORTS HAD BEEN TAKEN TO VERIFY THE VERACITY OF THIS CONFIRMATION BY THE LOWER AUTHORITIES AND WE FIND THAT THIS CONFIRMATION HAS NOT BEEN DEALT WITH AT ALL BY THE LOWER AUTHORITIES IN THEIR ORDER. WITH REGARD TO THE AVERMENT OF THE LD SPECIAL COU NSEL FOR THE REVENUE THAT THE ATTACHMENT TO MEMORANDUM OF FORMATION DATED 2.7.1986 OF DRYADE STIFTUNG NOT ENCLOSED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, WE FIND THAT THE LOWER AUTHORITIES HAD NOT DISPUTED THE SAME OR EVEN REMOTELY SUGGESTED IN THE IR ORDERS THAT ABSENCE OF THE SAID ATTACHMENT HAD LED THEM TO EVENTUALLY DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. 11.2. WE HOLD THAT ALL THE RELEVANT FACTS WERE NOT BROUGHT ON RECORD BY BOTH THE PARTIES IN THE INSTANT CASE. IT IS JUST AND FAIR TH AT THE ENGLISH TRANSLATED VERSION OF ALL THE DOCUMENTS RELIED UPON BY THE REVENUE NEED TO BE GIVEN TO THE ASSESSEE BY THE REVENUE IN ORDER TO ENABLE THE ASSESSEE TO UNDERSTAND THE CONTENTS OF THE DOCUMENTS FURNISHED BY THE REVENUE FOR HIS EFFECTIVE REBUTTA L. WITHOUT ADJUDICATING THE RELEVANT FACTS ON RECORD, IT WOULD BE PRE - MATURED TO DIRECTLY ADDRESS THE VARIOUS CASE LAWS RELIED UPON BY BOTH THE SIDES AND HENCE THE SAME ARE NOT ADDRESSED HERE AT THIS STAGE. EACH DECISION IS RENDERED IN THE CONTEXT OF FAC TS AND CIRCUMSTANCES OF THAT CASE AND ONE DECISION RENDERED IN A CASE CANNOT BE UNIFORMLY APPLIED IN ALL OTHER SET OF CASES. HENCE THE ENTIRE FACTS OF THE CASE SHOULD BE FIRST BROUGHT ON RECORD, WHICH IN THE INSTANT, CASE IS NOT DONE BY BOTH THE PARTIES . CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE VARIOUS ELABORATE AVERMENTS MADE BY THE LEARNED COUNSELS FROM BOTH THE SIDES, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO REMAND THIS APPEAL IN ITA NO. 2744/MUM/2 011 FOR THE ASST YEAR 2003 - 04 TO THE FILE OF THE LD AO FOR DE ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 41 NOVO ADJUDICATION , WITH ALL THE ISSUES AND A VERMENTS CONTAINED IN THEIR WRITTEN SUBMISSIONS , REPRODUCED SUPRA , OF BOTH THE SIDES , LEFT OPEN. THE ASSESSEE IS GIVEN LIBERTY TO FURNISH FURTHER EVI DENCES , IF ANY, TO SUPPORT HIS CONTENTIONS BEFORE THE LD AO. SIMILARLY THE REVENUE IS ALSO AT LIBERTY TO MAKE NECESSARY ENQUIRIES AND VERIFICATION FROM THE COMPETENT AUTHORITIES AND FURNISH THE RELEVANT INFORMATION DULY TRANSLATED IN ENGLISH TO THE ASSES SEE AND PASS AN ORDER AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND MEETING HIS REBUTTAL, IF ANY. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 2744/MUM/2011 ON MERITS OF THE ADDITION ARE ALLOWED FOR STATISTICAL PURPOSES. 12. SINCE THE QUANTUM APPEAL IS SET ASIDE TO THE FILE OF LD AO FOR DENOVO ADJUDICATION, THE PENALTY APPEAL IN ITA NO. 7307/MUM/2011 FOR THE ASST YEAR 2003 - 04 WOULD BE PRE - MATURED TO BE ADJUDICATED AND WOULD NOT SURVIVE A T THIS STAGE. HENCE THE SAME IS SET ASIDE TO THE FILE OF LD AO. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 / 09 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 04 / 09 / 2019 KARUNA , SR.PS ITA NOS.7307/MUM/2011 & 2744/MUM/2011 SHRI HARSHAD R MEHTA 42 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI . 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//