B.H.Kothari, Rep by L/H Nina B.Kothari, CHENNAI V. ACIT, CHENNAI

ITA 411/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3957 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Peak credit; Competent authority

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.410 & 411/MDS/2017 ' (' / ASSESSMENT YEARS : 2006-07 & 2007-08 SHRI B.H. KOTHARI, REP. BY L/H NINA B. KOTHARI, NO.18, NUNGAMBAKKAM HIGH ROAD, CHENNAI - 600 034. PAN : AGJPK 7393 K V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NOS.564 & 565/MDS/2017 ' (' / ASSESSMENT YEARS : 2006-07 & 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI - 600 034. V. SHRI BHADRASHYAM HARSAD KOTHARI (DECEASED), REP. BY L/HS SMT. NINA B. KOTHARI (WIFE), MS. NAYANTARA (DAUGHTER), SH. ARJUN B. KOTHARI (SON), NO.18, NUNGAMBAKKAM HIGH RD., CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) './ 0 1 /ASSESSEE BY : SH. R. VIJAYARAGHAVAN, ADVOCATE 2 0 1 /REVENUE BY : SMT. VIJAYALAKSHMI, CIT 3 0 /$ / DATE OF HEARING : 09.05.2017 4!( 0 /$ / DATE OF PRONOUNCEMENT : 27.07.2017 2 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE AND REVENUE HAVE FILED APPEALS AGAI NST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS)-8, CHENNAI, DATED 30.12.2016 AND PERTAIN TO ASSESSMENT YEARS 2006-07 AND 2007-08. SINCE COMMON ISSUE ARIS ES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSING OFFICER, ON THE BASIS OF THE INFORMATION SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT, FOUND THAT THERE WERE DEPOSITS IN THE NAME OF M/S S ISAL HOLDINGS LIMITED AND NICOLA FALLAHA AND/OR ALEX FALLAHA IN H SBC BANK, GENEVA, SWITZERLAND. ACCORDING TO THE LD. COUNSEL, THE SO-CALLED INFORMATION SAID TO BE RECEIVED FROM THE ASSESSING OFFICER IS NOT AN AUTHENTICATED ONE. THE ASSESSEE RELIABLY UNDERSTAN DS THAT SOME OF THE DATA HAD BEEN STOLEN FROM HSBC BANK, GENEVA AND THE SAME WAS HANDED OVER TO GOVERNMENT OF INDIA. THE ACCOUN T IN THE NAME OF M/S SISAL HOLDINGS LIMITED, ACCORDING TO THE LD. COUNSEL, MIGHT HAVE BEEN OPENED BY THE COMPANY. IT IS NOT KNOWN H OW THE 3 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 ASSESSEE WAS SHOWN AS BENEFICIARY IN THE SAID ACCOU NT. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS NOT OPENED THE ACCOUNT IN HSBC BANK, GENEVA NOR DEPOSITED ANY MONEY IN THE AC COUNT. HOWEVER, IN ORDER TO AVOID TENSION AND PURCHASE PEA CE, THE ASSESSEE DURING THE COURSE OF INVESTIGATION, AGREED TO OFFER THE PEAK CREDIT FOUND IN THE ACCOUNT OF M/S SISAL HOLDI NGS LIMITED. 3. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT WITH RESPECT TO DEPOSITS IN THE ACCOUNT OF NICOLA FALLAH A AND/OR ALEX FALLAHA IN HSBC BANK, THE BANK ITSELF CLARIFIED THA T THE ACCOUNT DOES NOT BELONG TO THE ASSESSEE. THE ASSESSEE ALSO CLARIFIED THAT THE ACCOUNT IN THE NAME OF NICOLA FALLAHA AND/OR AL EX FALLAHA IS NOT CONNECTED TO THE ASSESSEE, HENCE, NO TAX WAS PAID. IN THE ABSENCE OF ANY AUTHENTICATED INFORMATION, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER CANNOT MAKE ANY ASSESSMENT IN THE HANDS OF THE ASSESSEE. EVEN IN RESPECT OF THE ACCOUNT STANDING IN THE NAME OF SISAL HOLDINGS LIMITED, NO AUTHENTICATED INFORMATIO N WAS AVAILABLE WITH THE DEPARTMENT. THE ASSESSING OFFICER HURRIED LY COMPLETED THE ASSESSMENT BEFORE THE COMPLETION OF INVESTIGATI ON. ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) ALSO FAILED TO EXAMINE THE FACTUAL ASPECT AND CONFIRMED THE ADDITION MADE BY T HE ASSESSING OFFICER. WHEN THE INVESTIGATION IS STILL GOING ON, ACCORDING TO THE LD. 4 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 COUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE. 4. ON THE CONTRARY, SMT. VIJAYALAKSHMI, THE LD. DEP ARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE INVESTIGATION WI NG OF THE DEPARTMENT HAD RECEIVED INFORMATION IN RESPECT OF A CCOUNT MAINTAINED BY THE ASSESSEE WITH HSBC BANK, GENEVA A T SWITZERLAND. THE LD. D.R. FURTHER SUBMITTED THAT T HE ASSESSEE OPERATED THE HSBC ACCOUNT AT SWITZERLAND UNDER CODE NO. BUP 5090151543 AND CARRIED OUT UNACCOUNTED TRANSACTIONS AND MADE DEPOSITS DURING THE PERIOD 01.04.2005 TO 31.03.2006 . IN FACT, ACCORDING TO THE LD. D.R., THE ASSESSEE DEPOSITED U SD 3,15,55,874.03 WHICH IS EQUIVALENT TO ` 1,40,73,91,847/- IN HSBC BANK IN THE NAME OF SISAL HOLDINGS LIMITED. THE AC COUNT NUMBER IN HSBC BANK IS 5091364910. REFERRING TO THE REPLY GI VEN BY THE ASSESSEE TO THE ASSESSING OFFICER REGARDING ADMISSI ON THAT THE ASSESSEE AND HIS WIFES NAME WERE FOUND AS BENEFICI ARIES, THE LD. D.R. SUBMITTED THAT THE ASSESSEE AGREED TO PAY TAXE S IN RESPECT OF THE AMOUNT OUTSTANDING IN HSBC ACCOUNT NO.509136491 0. HENCE, NOW, ACCORDING TO THE LD. D.R., THE ASSESSEE CANNOT DISPUTE THAT THE ACCOUNT DOES NOT BELONG TO HIM. 5 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 5. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE ASSESSEE HAS ALSO PRODUCED A LETTER FROM HSBC B ANK SAYING THAT HE IS NOT CONNECTED WITH THE ACCOUNT IN THE NA ME OF NICOLA FALLAHA AND/OR ALEX FALLAHA. IN VIEW OF THE ABOVE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER REQUESTED THE CBDT TO COUNTER CHECK THE MATTER BY MAKING PROPER INVESTIGATION. A CCORDING TO THE LD. D.R., SINCE INVESTIGATION WAS IN PROGRESS AND T HE TIME LIMIT FOR COMPLETING THE ASSESSMENT IS GOING TO EXPIRE, THE A SSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING ADDITION. EVEN IN RESPECT OF NICOLA FALLAHA AND/OR ALEX FALLAHA, THE ASSESSEES NAME WAS SHOWN AS BENEFICIARY AS IN THE CASE OF SISAL HOLDIN GS LIMITED. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEE CANNOT DENY AT THIS STAGE THAT THE ACCOUNT DOES NOT BELONG TO HIM. THE VERY FACT THAT THE ASSESSEE ACCEPTED THE DEPOSIT MADE IN THE CASE OF SISAL HOLDINGS LIMITED IN HSBC BANK, GENEVA, THE SAME ALS O CANNOT BE DENIED IN RESPECT OF NICOLA FALLAHA AND/OR ALEX FAL LAHA. ACCORDING TO THE LD. D.R., WHATEVER INFORMATION RECEIVED BY T HE DEPARTMENT WAS THOROUGHLY INVESTIGATED. THE ASSESSEE ALSO CON FIRMED THE DEPOSIT IN SISAL HOLDINGS LIMITED AND ALSO AGREED T O PAY THE TAXES, THEREFORE, ACCORDING TO THE LD. D.R., IT IS NOT COR RECT TO SAY THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER IS UN AUTHENTICATED 6 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 ONE. THE NAMES OF THE ASSESSEE AND HIS WIFE WERE C ORRECTLY REFERRED AS BENEFICIARIES FOR THE ACCOUNT. THEREFO RE, ACCORDING TO THE LD. D.R., THERE IS NO GAIN FOR THE ASSESSEE IN DENYING THE ACCOUNT OF HSBC BANK. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT ABOUT THE DEPOSITS IN HSBC BANK, GENEVA, SWITZERLAND. THE INFORMATION RECEIVED BY THE ASSES SING OFFICER FROM THE INVESTIGATION WING DISCLOSES THE BANK DEPO SITS IN THE NAME OF SISAL HOLDINGS LIMITED WITH A/C NO.5091364910 AN D IN THE NAME OF NICOLA FALLAHA AND/OR ALEX FALLAHA WITH A/C NO.5 094062371. THE ASSESSEE AND HIS WIFE WERE NOMINATED AS BENEFICIARI ES IN THE ACCOUNT. NOW THE ASSESSEE CLAIMS BEFORE THIS TRIBU NAL THAT HE IS NOT IN ANY WAY CONNECTED WITH THE BANK ACCOUNT. TH E ASSESSEE ALSO CLAIMS THAT THE ACCOUNT IS NEITHER OPENED BY H IM NOR OPERATED BY HIM. THE DEPARTMENT CLAIMS THAT THE ASSESSEE OP ERATED THE ACCOUNT AND CARRIED ON UNACCOUNTED TRANSACTIONS UND ER CODE BUP 5090151543. WHEN THE INVESTIGATION WING OF CHENNAI CARRIED OUT THE INVESTIGATION, THE ASSESSEE AGREED TO PAY THE T AXES ON THE DEPOSITS MADE IN ACCOUNT NO.5091364910 STANDS IN TH E NAME OF 7 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 SISAL HOLDINGS LIMITED TOGETHER WITH ACCRUED INTERE ST. MOREOVER, THE NAMES OF THE ASSESSEE AND HIS WIFE WE RE REFERRED AS BENEFICIARIES IN THE ACCOUNT. THEREFORE, THERE IS NO GAIN SAYING AT THIS STAGE BY THE ASSESSEE THAT THE ACCOUNT WAS NOT OPENED BY HIM. NO ONE ELSE OTHER THAN THE ASSESSEE WOULD REFER THE ASSESSEES NAME AND HIS WIFES NAME AS BENEFICIARY IN HIS ACCO UNT STANDS IN THE BANK. FURTHERMORE, BY AGREEING TO PAY THE TAX ON THE DEPOSIT STANDING IN THE NAME OF SISAL HOLDINGS LIMITED, THE ASSESSEE PREVENTED THE TEAM FROM MAKING FURTHER INVESTIGATIO N. THE MATTER WOULD STAND DIFFERENTLY, IN CASE THE ASSESSEE WAS A BLE TO PRODUCE ANY MATERIAL CONTRARY TO THE ADMISSION MADE BEFORE THE AUTHORITIES. IN THIS CASE, THERE IS NO MATERIAL AVAILABLE ON REC ORD TO DISPROVE/CONTRADICT THE ADMISSION MADE BY THE ASSES SEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT AT THIS STAGE THE ASSESSEE CANNOT DISPUTE / CHALLENGE THE A UTHENTICITY OF INFORMATION SAID TO BE RECEIVED BY THE INCOME-TAX D EPARTMENT. 7. IN VIEW OF THE ABOVE FACTUAL SITUATION, THE ADDI TION MADE IN THE HANDS OF THE ASSESSEE IN RESPECT OF DEPOSIT IN HSBC BANK, GENEVA, SWITZERLAND IN THE NAME OF SISAL HOLDINGS L IMITED IN A/C NO.5091364910 IS CONFIRMED. 8 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 8. NOW COMING TO THE DEPOSITS IN THE NAME OF NICOLA FALLAHA AND/OR ALEX FALLAHA, THE ASSESSEE HAS PRODUCED A LE TTER SAID TO BE RECEIVED FROM HSBC BANK, GENEVA, SWITZERLAND CLAIMI NG THAT THERE ARE SOME ERRORS IN THE INFORMATION TRANSMITTED TO T HE INDIAN AUTHORITIES BY A FRENCH NATIONAL. THE HSBC BANK AL SO APPEARS TO HAVE CLARIFIED THAT THE ASSESSEE IS NOT CONNECTED W ITH ACCOUNT NO. 5094062371 OF NICOLA FALLAHA AND/OR ALEX FALLAHA. ON THE BASIS OF THE ABOVE SAID SO-CALLED LETTER SAID TO HAVE BEEN R ECEIVED FROM HSBC BANK BY THE ASSESSEE, THE ASSESSING OFFICER RE QUESTED THE CBDT TO MAKE FURTHER ENQUIRY. THE MATTER IS PENDIN G INVESTIGATION. SINCE THERE WAS LIMITATION PROVIDED IN THE INCOME-T AX ACT TO COMPLETE THE ASSESSMENT BY THE ASSESSING OFFICER, T HE ASSESSING OFFICER MADE ADDITION WHICH WAS ALSO CONFIRMED BY T HE CIT(APPEALS). FROM THE ASSESSMENT ORDER, IT APPEAR S THAT THE ASSESSEE HAD NO OBJECTION TO REOPEN THE ASSESSMENT AND LEVY TAX AS PER THE PROVISIONS OF LAW, IN CASE THE DEPARTMEN T PRODUCES ANY MATERIAL TO PROVE THE LINK OF NICOLA FALLAHA AND/OR ALEX FALLAHA WITH THE ASSESSEE. 9. SINCE THE INVESTIGATION IS PENDING, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER IS EX PECTED TO CONSIDER THE MATERIAL COLLECTED BY THE COMPETENT AU THORITY IN THE 9 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 COURSE OF INVESTIGATION. IN OTHER WORDS, THE INVES TIGATION SHALL GO TO ITS LOGICAL END. THEREFORE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT IN RESPECT OF DEPOSIT IN THE NAME OF NICOLA FA LLAHA AND/OR ALEX FALLAHA WITH ACCOUNT NO.5094062371, THE MATTER NEED S TO BE RECONSIDERED BY THE ASSESSING OFFICER AFTER RECEIVI NG REPORT FROM THE COMPETENT INVESTIGATING AUTHORITY OF THE DEPART MENT. THE ASSESSEE ALSO HAS TO EXPLAIN HOW HIS NAME AND HIS W IFES NAME WERE REFERRED AS BENEFICIARIES IN THE ACCOUNT. THE COMPETENT AUTHORITY NOMINATED BY THE CBDT FOR INVESTIGATING T HE MATTER HAS TO EXPEDITE THE MATTER AND FILE A REPORT BEFORE THE AS SESSING OFFICER SO THAT THE MATTER CAN BE FINALIZED AT AN EARLY STAGE. ACCORDINGLY, WHILE CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER IN RESPECT OF THE DEPOSIT IN SISAL HOLDING LTD. IN ACCOUNT NO.509 1364910, THE ORDERS OF BOTH THE AUTHORITIES BELOW IN RESPECT OF DEPOSIT IN THE NAME OF NICOLA FALLAHA AND/OR ALEX FALLAHA IN ACCOU NT NO.5094062371, ARE SET ASIDE AND THE ISSUE IS REMIT TED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE- EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE INVES TIGATION REPORT THAT MAY BE FILED BY THE COMPETENT AUTHORITY AND THEREAF TER DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 10 I.T.A. NOS.410 & 411/MDS/17 I.T.A. NOS.564 & 565/MDS/17 10. WE MAKE IT CLEAR THAT THE INVESTIGATING AUTHORI TY NOMINATED BY THE CBDT IN THIS MATTER HAS TO EXPEDITE THE INVE STIGATION AND FILE ITS REPORT AS EARLY AS POSSIBLE SO THAT THE ASSESSI NG OFFICER CAN COMPLETE THE ASSESSMENT AT THE EARLIEST POSSIBLE TI ME. 11. WITH THE ABOVE OBSERVATION, ALL THE APPEALS FIL ED BY BOTH REVENUE AND THE ASSESSEE ARE PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 27 TH JULY, 2017. KRI. 0 ,/78 98(/ /COPY TO: 1. './ /ASSESSEE 2. ,-*+ /RESPONDENT 3. 3 :/ () /CIT(A)-8, CHENNAI 4. PRINCIPAL CIT, CHENNAI-4, CHENNAI 5. 8; ,/ /DR 6. <' = /GF.