Sh. Suresh Nanda, New Delhi V. ACIT, New Delhi

ITA 4873/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8895 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 01-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Unexplained investment; Income from undisclosed sources; Residential status; Document seized; Rule of consistency; Onus to prove; Documents seized
• Section: 260A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 4873/DEL/2013 ASSESSMENT YEAR: 2009 - 10 SH. SURESH NANDA, VS. ASSTT. COMMISSIONER OF 4, CASUA RINE AVENUE, INCOME TAX, CENTRAL CIRCLE - 13, WESTEND GREENS, RAJOKRI, NEW DELHI. NEW DELHI. (PAN:AAPPN9895H) (APPELLANT) (RESPONDENT) WITH ITA NO. 5258/DEL /2013 ASSESSMENT YEAR: 2009 - 10 ASSTT. COMMISSIONER OF VS. SH. SURESH NANDA, INCOME TAX, CENTRAL CIRCLE - 13, 4, PRITHVI RAJ ROAD, NEW DELHI NEW DELHI. ASSESSEE BY : SH. AJAY WADHWA, ADV. RESPONDENT BY: SH. RAMESH CHANDRA, CIT DR DATE OF HEARING: 01.01.201 5 DATE OF PRONOUNCEMENT: .02.2015 ORDER PER I.C. SUDHIR, JM : ITA NO. 4873/DEL /2013 IN THIS APPEAL, THE ASSESSEE HAS IMPUGNED THE FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 2 1) THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEAL). NEW DELHI DATED 04.07.2013 IS BAD IN LAW AND IN FACTS. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ID. CIT(APPEALS) HAS ERRED IN UPHOLDING THE ACTION THE AO IN TAKING THE STATUS OF THE APPELLANT AS 'RESI DENT' DURING THE YEAR AS AGAINST THE STATUS OF NON - RESIDENT CLAIMED IN THE RETURN AND ACCEPTED BY THE DEPARTMENT CONSISTENTLY YEAR AFTER YEAR SINCE 1985. 2.1 THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT'S STAY IN INDIA EXCEEDED 182 DAYS AS HIS PASSPORT WAS ILLEGALLY SEIZED BY THE CBI AND HE WAS COMPELLED TO STAY IN INDIA FOR REASONS BEYOND HIS CONTROL AND ACCORDINGLY THE DOCTRINE OF IMPOSSIBILITY OF PERFORMANCE IS APPLICABLE. 3) WHETHER WHILE DELETING THE ADDITION OF RS. 9,08,26,525/ - BEING SHARE CAPITAL OF UNIVERSAL BUSINESS SOLUTIONS MAURITIUS IN CLARIDGES HOTELS PVT. LTD., THE LD. CIT(APPEALS) CAN DIRECT THE AO TO PURSUE THE REFERENCE MADE TO THE GOVERNMENT OF MAURITIUS AND TO MAKE FRESH REFERENCE TO THE GOVERNMENTS OF JERSEY AND BRITISH VIRGIN ISLAND TO ARRIVE AT REAL FACTS REGARDING FLOW OF FUNDS AMONG VARIOUS ENTITIES ABROAD AND HOLDING THAT THE ADDITION IS PRESENTLY DELETED. 4) WHETHER THE LD. AO IS JUSTIFIED IN SUSTAINING ON PROTECTIVE BASIS THE ADDITION OF RS. 2,34,96,795/ - BEING SHARE CAPI TAL SUBSCRIBED BY PALM TECHNOLOGIES LTD., MAURITIUS IN CLARIDGES SEZ (P) LTD. BY OBSERVING/DIRECTING THE AO TO ASCERTAIN THE REAL FACTS BY PURSUING THE REFERENCE MADE TO THE GOVT./ADMINISTRATIONS OF JERSEY AND BRITISH 3 VIRGIN ISLAND AND TO MAKE FRESH REFERE NCE IN THE MATTER TO THE GOVERNMENTS/ADMINISTRATIONS OF JERSEY AND BRITISH VIRGIN ISLANDS AND TO EXAMINE INTERCONNECTED TRANSACTIONS AND FLOW OF MONEY TO VARIOUS ENTITIES INVOLVED. 4.1 THAT THE ABOVE ADDITION SUSTAINED ON PROTECTIVE BASIS IS AGAINST TH E BASIC PRINCIPLES OF LAW AND THE LD. CIT (APPEALS) OUGHT TO HAVE DELETED THE ENTIRE ADDITION AFTER HAVING ARRIVED AT THE FINDINGS THAT KEEPING IN VIEW OF THE PRESENT FACTS OF THE MATTER SHARE CAPITAL CANNOT BE TREATED AS UNEXPLAINED MONEY/INVESTMENT OF TH E APPELLANT VIDE PARA 6.3 PAGE 21 OF THE APPELLATE ORDER. 4.2 THAT HAVING HELD THAT THE MONEY DOES NOT BELONG TO THE APPELLANT BUT TO M/S UBS, SHARJAH, THE ADDITION SUSTAINED ON PROTECTIVE BASIS IS BAD IN LAW AND OUGHT TO HAVE BEEN DELETED ON SUBSTANTI VE BASIS. 5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION OF INTEREST INCOME OF RS. 18,493/ - ACCRUED IN ASSESSEE'S NRE ACCOUNT CLAIMED TO BE EXEMPT U/S 10(4)(II) OF THE INCOME - TAX ACT, 1961. 6) THAT THE APPELLANT PRAYS THE HON'BLE TRIBUNAL TO AWARD SUITABLE COST OF APPEAL UNDER SUB - SECTION (2B) OF SECTION 254 OF THE INCOME - TAX ACT, 1961. 4 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORI TIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. GROUND NO. 1 IS GENERAL IN NATURE. GROUND NO. 2 4. IN THIS GROUND, THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE A.O. IN TAKING THE STATUS OF THE ASSESSEE AS RESI DENT DURING THE YEAR AS AGAINST THE STATUS OF NON - RESIDENT CLAIMED IN THE RETURN AND ACCEPTED BY THE DEPARTMENT CONSISTENTLY YEAR AFTER YEAR SINCE 1985. 4.1 AT THE OUTSET OF HEARING, THE LEARNED AR POINTED OUT THAT THE ISSUE RAISED IN THIS GROUND IS SQUA RELY COVERED BY THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09, VIDE ORDER DATED 11.04.2014 IN ITA NO. 2237 & 3718/DEL/2013. HE REFERRED PARA NOS. 66 AND 67 OF THE SAID ORDER MADE AVAILABLE AT PAGE NOS. 421 AND 422 OF THE PAPER BOOK. 4.2 THE LEARNED CIT DR, ON THE OTHER HAND, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE. HE SUBMITTED THAT THE ORDER OF THE TRIBUNAL CITED BY THE LEARNED AR DOES NOT COVER UP ALL THE ASPECTS OF THE CASE WHICH GO TO THE ROOT OF THE MATTER. THE DECISION OF THE TRIBUNAL HAS BEEN GIVEN ON IGNORANCE OF LEGAL POSITION THAT SECTION 6 IS A DEEMING 5 PROVISION AND HENCE IT NEEDS TO BE STRICTLY INTERPRETED WITHOUT IMPLYING ANY INTENDMENTS . A DEEMING PROVISION OF SECTION 6 CANNOT BE INTERPRETED ON THE BASIS OF UNFORESEEN CIRCUMSTANCES WHEREBY WHEN A PERSON CANNOT BE TREATED AS NON INDIA TAX RESIDENT EVEN IF THE PERSON STAYS FOR 182 DAYS OR MORE. HE SUBMITTED THAT THE TRIBUNAL HAS FAILED TO APPRECIATE THAT THE LAW DOES NOT PROVIDE FOR EXCLUSION ON ANY POINT. WHEREVER THE LEGISLATURE INTENDED EXCLUSION IT HAS DONE SO - LIKE CLAUSE (A) AND (B) OF THE EXPLANATION TO SECTION 6 WHEREBY WHEN A PERSON GOES ABROAD OR VISITS INDIA BECAUSE OF EMPLOYMENT ETC. IS DEEMED TO BE NON - RESIDENT IN INDIA IRRESPECTIVE OF VERY LITTLE PERIOD OF STAY IN INDIA. HE SUBMITTED FURTHER THAT VIPIN KHANNA S CASE RELIED BY THE TRIBUNAL HAD NO APPLICATION BECAUSE IN THAT CASE NO DECISION BY THE GOVERNMENT WAS YET TAKEN QUA TH E TAX STATUS AND MAY BE BECAUSE OF PECULIAR FACTS, ASG MIGHT HAVE OBSERVED THAT WAY WHICH WAS BANKED UPON HEAVILY BY THE COURT TO GIVE DECISION IN A PARTICULAR WAY. 4.3 LEARNED CIT DR SUBMITTED FURTHER THAT THE TRIBUNAL S ORDER BEING RELIED UPON DOES NO T DEAL WITH VERY IMPORTANT ASPECT THAT IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID AS HAS BEEN HELD BY THE HON BLE SUPREME COURT IN THE CASE OF SALES TAX COMMISSIONER VS. MODI SUGAR MILLS, AIR 1961 1047, PAGE 1051 . HE ALSO CITED THE DECI SION IN THE CASE OF CUSTOMS VS. TOP TEN PROMOTIONS, (1969) 3 ALL ER 39 (HL), PAGE 90. HE SUBMITTED 6 THAT PRINCIPLES OF EQUITY HAVE NO ROLE TO PLAY IN A TAXING STATUTE. HE SUBMITTED THAT THE ARGUMENTS OF THE ASSESSEE THAT BECAUSE OF IMPOUNDING OF THE PASSPOR T HE COULD NOT GO ABROAD IS HYPOTHETICAL AND PRESUMPTION BASED AND HAS TO BE REJECTED WHEN SUCH AN ASPECT IS NOT EXCEPTED/EXCLUDED UNDER THE BARE PROVISIONS OF SECTION 6(1)(A) OF THE ACT. QUA THE RELIANCE OF THE ASSESSEE ON THE PRINCIPLE OF PERFORMANCE OF IMPOSSIBILITY , THE LEARNED CIT DR SUBMITTED THAT IT IS NOT APPLICABLE BECAUSE LAW DOES NOT FORCE THAT ONE MUST IN EVERY CASE RESIDE AT A PARTICULAR PLACE. THE ASSESSEE CANNOT SAY THAT HAD THE PASSPORT BEEN THERE WITH HIM HE WOULD HAVE NECESSARILY GONE AB ROAD. HE SUBMITTED THAT PRINCIPLE OF PERFORMANCE OF IMPOSSIBILITY AS WELL AS OTHER CONCEPT OF FORCE MAJEURE WHICH OTHERWISE ARE APPLICABLE TO CONTRACTUAL OBLIGATIONS/LAW OF EQUITY IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS ESPECIALLY WHEN FOR SUBSTAN TIAL PERIOD EVERY YEAR THE ASSESSEE WAS STAYING IN INDIA AND OPERATING FROM HERE. 4.4 QUA THE HON BLE SUPREME COURT JUDGMENT DATED 24.01.2008 IN ASSESSEE S OWN CASE IT IS SUBMITTED THAT THIS JUDGMENT WAS GIVEN UNDER THE CRIMINAL PROCEDURE CODE/INDIAN PE NAL CODE AND THE PASS PORT ACT AND HENCE IT CANNOT AT ALL HAVE ANY IMPLICATION UNDER THE I.T. ACT. THE HON BLE SUPREME COURT DID NOT HOLD ALL ACTIONS TAKEN IN PURSUANCE OF THE SEIZURE OF THE DOCUMENTS TO HAVE BECOME NULLITY AND REFERRING PARA 17 OF THE JUD GMENT 7 IT WAS EXPLAINED THAT THE COURT REFRAINED FROM EXPRESSING OPINION ON THE MERITS OF THE CASE. THOUGH VERY CLEARLY BUT OBLIQUELY THE TRIBUNAL HAS DRAWN SUBSTANTIAL SUPPORT FROM THE CLOSURE REPORT FILED BY THE CBI ON 11.12.2013 IN THE HIGH COURT IN BA RAK MISSILE CASE, WHICH WAS NOT RELEVANT AT ALL, SUBMITTED THE LEARNED CIT DR. 4.5 CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THE LEARNED CIT DR HAS NOT BEEN ABLE TO REBUT THE SUBMISSION OF THE LEARNED AR THAT UNDER SIMILAR SET OF FACTS IDENTICAL I SSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 (SUPRA). INSTEAD THE LEARNED CIT DR HAS TRIED TO ARGUE THAT IN THE SAID DECISION OF THE TRIBUNAL FOR THE ASSESSM ENT YEARS 2007 - 08 AND 2008 - 09, THE TRIBUNAL HAS FAILED TO APPRECIATE SEVERAL ASPECTS OF THE CASE AND RELATED PROVISIONS OF THE LAW, HENCE THAT CANNOT BE RELIED UPON. WE DO NOT CONCUR WITH THIS ARGUMENT OF THE LEARNED CIT DR AS WE ARE BOUND BY THE DECISION OF A COORDINATE BENCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE TO MAINTAIN THE PRINCIPLE OF CONSISTENCY UNLESS THE AFFECTED PARTY IS ABLE TO EXPLAIN THAT FACTS OF THE CITED CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE BEFORE US. IN SUCH A SITUATION, WHEN THE AFFECTED PARTY IS NOT AGREEABLE TO THE DECISION OF THE TRIBUNAL THE REMEDY IS AVAILABLE BEFORE THE HON BLE HIGH COURT UNDER SECTION 260A OF I.T. ACT. SINCE THE DECISION OF THE 8 TRIBUNAL RELIED UPON BY THE LEARNED AR IS IN OPERATION, WE ARE BOUND TO FOLLOW THE SAME. IN THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09, THE TRIBUNAL HAS DEALT WITH THE ISSUE IN DETAIL AND HAS COME TO THE FOLLOWING CONCLUSION IN PARA NOS. 66 AND 67 OF THE SAID ORDER, WHICH ARE BEING REPRODUCED HEREUNDER: 66. WHEN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES ARE EXAMINED WITH RESPECT TO JUDICIAL PRONOUNCEMENT AS RELIED UPON BY THE LEARNED AR, WE FIND THAT ASSESSEE WAS FORCED TO STAY IN INDIA FOR A PERIOD OF MORE THAN 182 DAYS BY WHICH HE LOST HIS NRI STATUS AND BECAME LIABLE TO ENHANCED INCOME TAX ON HIS GLOBAL. THE LEGISLATURE IN ITS WISDOM MIGHT NOT HAVE ENVISAGED SUCH A SITUATION WHEREIN A PERSON IS FORCED TO BECOME A RESIDENT DUE TO WRONGFUL RESTRAINT OF SUBJECT IN ABSENCE OF ELIGIBILITY TO TRAVEL OUTSIDE INDIA. THEREFORE , ASSESSEE S CASE BECOME FIT WHERE DOCTRINE OF FORCED MEAJURE MAY BE APPLICABLE AS IT WAS IMPOSSIBLE FOR THE ASSESSEE TO MOVE OUT OF CONTRARY AND THEREFORE DOCTRINE OF IMPOSSIBILITY OF PERFORMANCE IS ALSO APPLICABLE. THIS IS A FIT CASE WHERE STRICT LEGAL R EADING OF THE PROVISIONS REGARDING RESIDENCE IN INDIA SHOULD NOT BE APPLIED. AN INTERPRETATION OR CONSTRUCTION SHOULD BE APPLIED WHICH RESULTS IN HARMONIOUS MEANING, EQUITY RATHER THAN INJUSTICE. 67. IN OUR CONSIDERED VIEW APPLICATION OF RULE OF INTERPR ETATION OF READING DOWN AND HARMONIOUS CONSTRUCTION AUTOMATICALLY TAKE CARE OF ASSESSEE S ARGUMENTS ON DOCTRINES OF IMPOSSIBILITY OF PERFORMANCE AND FORCE MAJEURE . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE HOLD THAT FOR CALCULATION OF STAY IN I NDIA FOR THESE YEARS THE SAME SHOULD BE CALCULATED AFTER EXCLUSION OF DAYS OF WRONGFUL IMPOUNDING 9 OF PASSPORT WHICH CONSTITUTES FORCED STAY IN INDIA. THUS PERIOD FOR WHICH ASSESSEE COULD NOT TRAVEL OUTSIDE INDIA IN ABOVE FACTS AND CIRCUMSTANCES I.E. FROM 1 0.10.2006 TO 21.09.2011 I.E. TILL THE PASSPORT WAS FINALLY HANDED OVER TO ASSESSEE AND ALLOWED TO TRAVEL OUTSIDE INDIA SHOULD BE EXCLUDED. CONSEQUENTLY ASSESSEE S RESIDENTIAL STATUS IS HELD TO BE AS NON - RESIDENT FOR THE YEARS BEFORE US. THEREFORE, GROUND NO. 2 IN BOTH THE YEARS IS ALLOWED. 4.6 RESPECTFULLY FOLLOWING THE ABOVE DECISION ON THE ISSUE, WE HOLD THAT THE PERIOD FOR WHICH THE ASSESSEE COULD NOT TRAVEL OUTSIDE INDIA IN THE ABOVE STATED FACTS AND CIRCUMSTANCES BEYOND HIS POWER AND CONTROL TILL THE PASSPORT WAS FINALLY HANDED OVER TO THE ASSESSEE AND ALLOWED TO TRAVEL OUTSIDE INDIA, SHOULD BE EXCLUDED. CONSEQUENTLY, THE ASSESSEE S RESIDENTIAL STATUS IS HELD TO BE AS NON - RESIDENT FOR THE YEAR BEFORE US. GROUND NO. 2 IS THUS ALLOWED. GROUN D NO.3 : 5. IN THIS GROUND, THE ASSESSEE HAS QUESTIONED THE VERY DIRECTION GIVEN BY THE LEARNED CIT(APPEALS) TO THE ASSESSING OFFICER TO PURSUE THE REFERENCE MADE TO THE GOVERNMENT OF MAURITIUS AND TO MAKE FRESH REFERENCE TO THE GOVERNMENT OF JERSEY AND BR ITISH, VIRGIN AND ICELAND TO ARRIVE AT REAL FACTS REGARDING FLOW OF FUNDS AMONG VARIOUS ENTITIES ABROAD AND HOLDING THAT THE ADDITION IS PRESENTLY DELETED. 10 5.1 WE FIND THAT THE ISSUE RAISED IS SQUARELY COVERED BY THE DECISION OF THE DELHI BENCH OF THE I TAT IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 (SUPRA). THE RELEVANT PARA NO. 69 THEREOF IS BEING REPRODUCED HEREUNDER: 69. VIDE GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THAT LEARNED CIT(APPEALS) WAS NOT JUSTIFIED TO DIRE CT THE ASSESSING OFFICER TO PURSUE THE REFERENCE MADE TO GOVT. OF MAURITIUS, GOVT. OF JERSEY AND BRITISH ISLANDS TO ARRIVE AT REAL FACTS REGARDING FUNDS INVOLVED IN VARIOUS ENTITIES ABROAD. WE FIND THAT THIS DIRECTION GIVEN TO ASSESSING OFFICER DOES NOT AM OUNT TO SET ASIDE OF THE A.O S ORDER. CIT(A) HAS TRIED TO CAUTION THE A.O. TO KEEP THE INTEREST OF REVENUE IN MIND. GENERALLY THE APPELLATE AUTHORITIES SHOULD RESTRICT THEIR CONCLUSIONS TO THE SUBJECT MATTER AND SHOULD AVOID GENERALIZED DIRECTIONS. SUCH DI RECTIONS ARE SUSCEPTIBLE TO BE TAKEN TO BE ORDERS OF A HIGHER AUTHORITIES. LEARNED CIT(APPEALS) HAS DELETED THE ENTIRE ADDITION WITHOUT ANY PRE CONDITION, THEREFORE, GENERAL INSTRUCTIONS GIVEN TO ASSESSING OFFICER DO NOT AMOUNT TO BINDING ORDER AND AT BEST AMOUNT TO OBITER DICTA. TO PROTECT THE INTEREST OF REVENUE IS THE DUTY OF INVESTIGATION OR ASSESSING OFFICER EVEN WITHOUT ANY DIRECTION. CONSEQUENTLY WE ARE OF THE VIEW THAT OBSERVATIONS OF LEARNED CIT(APPEALS) ARE GENERAL AND INCONSEQUENTIAL OBSERVATIONS REQUIRING NO INTERFERENCE . 5.2 FOLLOWING THE ABOVE POSITION ON AN IDENTICAL ISSUE UNDER THE SIMILAR SET OF FACTS, WE HOLD THAT THE OBSERVATIONS OF THE LEARNED CIT(APPEALS) ARE 11 GENERAL AND INCONSEQUENTIAL OBSERVATION REQUIRING NO INTERFERENCE. THE GROUND NO.3 IS ACCORDINGLY REJECTED. GROUND NOS. 4, 4.1 & 4.2 : 6. THE ASSESSING OFFICER MADE ADDITION OF RS.2,34,96,759 BEING SHARE CAPITAL INVESTED BY PALM TECHNOLOGIES LTD. (PTL.), MAURITIUS, CLARDGES SEZ (P) LTD. AS UNACCOUNTED MONEY OF THE ASSESSEE. THE A SSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD BEEN BRINGING IN UNACCOUNTED MONEY AFTER CREATING L AYERS OF INTERMEDIARIES INCLUDING PALM TECHNOLOGIES, MAURITIUS AND HELD THAT THE AMOUNT WAS NOTHING BUT ASSESSEE S UNEXPLAINED MONEY ASSESSABLE IN ITS HANDS IN ASSESSMENT YEAR 2008 - 09. THE LEARNED CIT(APPEALS) HAS SUSTAINED THE ADDITION BUT ON PROTECTIVE BASIS AS UNEXPLAINED INVESTMENT UNDER SEC. 69 IN THE HANDS OF THE ASSESSEE. IT IS THE MAIN GRIEVANCE OF THE ASSESSEE. 6.1 IN SUPPORT OF THE GROUND, THE LEARNE D AR REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE IMMEDIATE SOURCE OF MONEY INTO CLARIDGES IS CLEAR WHICH IS UNIVERSAL BUSINESS SOLUTION LTD., MAURITIUS; RESULT OF THE INQUIRY FROM GOVERNMENT OF MAURITIUS, NO WHERE ST ATES THAT ASSESSEE IS THE SHAREHOLDER OF UNIVERSAL BUSINESS SOLUTION, MAURITIUS; SOURCE OF THE SOURCE I.E. SHAREHOLDING PATTERN OF UNIVERSAL 12 SOLUTION BUSINESS, MAURITIUS IS PART OF DEPARTMENT SEIZED MATERIAL; INDEPENDENT CONFIRMATION IN RESPECT OF 80% OF T HE SHAREHOLDING OF UNIVERSAL BUSINESS SOLUTION, MAURITIUS IS ON RECORD; IN RESPECT OF BALANCE SHAREHOLDING IN UNIVERSAL BUSINESS SOLUTION, MAURITIUS, THE ASSESSEE HAS MADE A STATEMENT UNDER SEC. 132(4A) OF THE ACT BEFORE THE DEPARTMENT AS WELL AS BY WAY OF A SUBMISSIONS BEFORE THE ASSESSING OFFICER WHICH IS THE PART OF ASSESSMENT ORDER AT PAGES 21 AND 22 THAT IT HAS BEEN INVESTED BY INFOTECH SERVICES L T D., JERSEY; CLARIDGES HOTEL PVT. LTD. HAS NOT BEEN HELD AS BENAMI OF THE ASSESSEE; AND THERE IS NO EVIDE NCE IN ANY FIRM WHATSOEVER TO SHOW THAT MONEY RECEIVED IN CLARIDGES HOTEL PVT. LTD. DURING THE YEAR BELONGS TO THE ASSESSEE. THE GRIEVANCE OF THE ASSESSEE IS THAT WHEN THE LEARNED CIT(APPEALS) HAS HELD BY CLEAR FINDING THAT THE CAPITAL DID NOT BELONG TO T HE ASSESSEE BUT TO A DISTINCT ENTITY WHOSE EXISTENCE IS NOT DENIED THEN THERE WAS NO NEED FOR GIVING A FINDING ABOUT ADDITION ON PROTECTIVE BASIS. IT WAS SUBMITTED THAT PALM TECHNOLOGIES LTD. AND ASSESSEE ARE TWO DIFFERENT PERSONS. THE LEARNED AR SUBMITTED THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISION OF THE ITAT IN THE CASE OF ITSELF FOR THE ASSESSMENT YEAR 2004 - 05 IN ITA NO. 2605DEL/13 VIDE ORDER DATED 21.2.2014 AND IN ASSESSMENT YEAR 2007 - 08 IN ITA NOS. 2237/DEL/13 AND 3431/DEL/13 VIDE ORDER DATED 11.4.2014 AND IN ASSESSMENT YEAR 2008 - 09 IN ITA NOS. 13 3718 & 4641/DEL/13 VIDE ORDER DATED 11.4.2014. THE LEARNED AR IN SUPPORT REFERRED PAGE NOS. 326 TO 354, 423 AND 428 AND 422 OF THE PAPER BOOK. 6.2 THE LEARNED CIT( DR ) ON THE OTHER HAND PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THERE IS NOTHING WRONG IN THE DIRECTION GIVEN BY THE LEARNED CIT(APPEALS) IN WHOSE HANDS ADDITION ON PROTECTIVE BASIS IS TO BE ASSESSED . THE ASSESSEE FAILED TO APPRECIATE THAT THE LEARNED CIT(APPE ALS) HAS ALREADY POWERS OF THE ASSESSING OFFICER AS WELL AS APPELLATE AUTHORITY TO GIVE SUCH DIRECTION. ADDITION ON PROTECTIVE BASIS IS MADE IN DISCHARGE OF HIS FUNCTION AS ASSESSING OFFICER HENCE THERE WAS NOTHING WRONG IN THIS ACTION OF THE LEARNED CIT(A PPEALS). THE LEARNED CIT( DR ) SUBMITTED FURTHER THAT THE ISSUE IN HANDS IS NOT COVERED BY THE ORDER OF THE ITAT IN ANY OF THE YEARS IN ANY WAY AS IN NONE OF ITS ORDER, THE ITAT HAS ALLOWED APPEAL OF THE ASSESSEE WHEREBY HIS AGITATION ABOUT THE PROTECTIVE AD DITION HAS BEEN SUSTAINED. 6.3 HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT LEARNED CIT(APPEALS) AFTER DISCUSSING THE ISSUE IN DETAIL HAS HELD THAT ALTHOUGH IT CANNOT BE HELD THAT THE AMOUNT IS UN EXPLAINED MONEY/INVESTMENT OF THE ASSESSEE, THE SOURCE OF MONEY EMANATING FROM ENTITIES UNDER THE CONTROL OF THE ASSESSEE, THE ADDITION OUGHT TO BE SUSTAINED O N A PROTECTIVE 14 BASIS TILL THE REAL FACTS ARE ASCERTAINED FOR WHICH NECESSARY REFERENCE ARE TO BE MADE TO THE GOVERNMENT OF MAURITIU S AND ALSO TO MAKE F RES H REFERENCE IN THE MATTER TO THE GOVERNMENT/ADMINISTRATION OF JERSEY AND BRITISH, VIRGINIA, ISLAND WITH EXCHANGE AGREEMENT TO ARRIVE AT THE REAL FACT BY EXAMINING INTER - CONNECTED TRANSACTIONS AND THE FLOW OF FUNDS AMONG VARIOUS ENTIT IES INVOLVED. THE LEARNED CIT(APPEALS) HAS ACCORDINGLY SUSTAINED THE ADDITION ON PROTECTIVE BASIS AS EXPLAINED INVESTMENT UNDER SEC. 69 IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE ITAT HAS DEALT WITH AN IDENTICAL ISSUE IN THE CASE OF ASSESSEE ITSELF FO R THE ASSESSMENT YEAR 2008 - 09 IN ITA NO. 3718 & 4641/DEL/13 VIDE ORDER DATED 11.4.2014. RELEVANT PARA NO. 70 THEREOF IS BEING REPRODUCED HEREUNDER: 70. GROUND NO.4 RELATES TO ADDITION MADE ON PROTECTIVE BASIS. WE FIND THAT LEARNED CIT(APPEALS) HAS CLEARLY HELD THAT SHARE CAPITAL WAS SUBSCRIBED BY PALM TECHNOLOGIES LTD. WHICH IS A SEPARATE ENTITY. LEARNED CIT(APPEALS) HELD BY A CLEAR FINDING THAT THE CAPITAL DID NOT BELONG TO ASSESSEE BUT TO A DISTINCT ENTITY WHOSE EXISTENCE IS NOT DENIED. AFTER GIVING SUCH CLEAR FINDING, HE SHOULD NOT HAVE GIVEN FINDING ABOUT ADDITION ON PROTECTIVE BASIS. PALM TECHNOLOGIES LTD. AND ASSESSEE ARE HELD TO BE TWO DIFFERENT PERSONS. THE LEARNED CIT(APPEALS) HAS HELD THAT OWNERSHIP OF PALM TECHNOLOGIES LTD. IS KNOWN AND APPELLANT WAS NOT A SHAREHOLDER OF PALM TECHNOLOGIES LTD. IS KNOWN AND APPELLANT WAS NOT A SHAREHOLDER IN PALM TECHNOLOGIES WHICH WAS OWNED BY ONE MRS. EA HALFLAND. IT IS UNDISPUTED THAT BOTH 15 UBBS AND PTL ARE DULY INCORPORATED COMPANIES UNDER THE LAWS OF SHARJAH AN D MAURITIUS RESPECTIVELY. THE LEARNED CIT(APPEALS) HAS HIMSELF OBSERVED THAT THIS AMOUNT CANNOT BE HELD AS UN - EXPLAINED MONEY/INVESTMENT OF APPELLANT THEREAFTER THERE IS NO JUSTIFICATION IN KEEPING A PROTECTIVE ADDITION IN THIS BEHALF. WE ALSO FIND THAT SI MILAR ADDITION ON SUBSTANTIVE BASIS WAS MADE IN ASSESSMENT YEAR 2004 - 05 AND TRIBUNAL ON REVENUE APPEAL IN ITA NO. 2605/DEL/2013 HAS DEALT WITH THIS ISSUE AT PAGE 60 ONWARDS VIDE ORDER DATED 21.2.2014 AND VIDE PARA 7.5 AT PAGE 68 HAS DISMISSED THE APPEAL OF REVENUE ON THIS ISSUE. DURING THESE YEARS THE LEARNED CIT(APPEALS) HAS HOWEVER MADE THE ADDITION ON PROTECTIVE BASIS WITHOUT JUSTIFICATION. IN VIEW OF THE ABOVE AND FOLLOWING THE ITAT ORDER FOR 2004 - 05 IN ASSESSEE S OWN CASE WE DELETE THE ALTERNATE RETENT ION OF ADDITION ON PROTECTIVE BASIS. THEREFORE, GROUND NO. 4 IN BOTH THE YEARS IS ALLOWED. 6.4 SINCE THERE IS NO REBUTTAL THAT THE FACTS RELATING TO THE ISSUE ARE SIMILAR DURING THE ASSESSME NT YEAR UNDER CONSIDERATION TO THOSE REMAINED IN ASSES SMENT YEAR 2008 - 09 , WE FIND NO REASON TO DEVIATE FROM THE DECISION OF THE ITAT ON AN IDENTICAL ISSUE IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2008 - 09, REPRODUCED HEREINABOVE. RESPECTFULLY FOLLOWING THE SAME , WE DELETE THE ALTERNATE RETENTION OF ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE . THE GROUND NO.4, 4.1 AND 4.2 ARE THUS ALLOWED. GROUND NO.5 : 7. THE ASSESSING OFFICER MADE ADDITION OF INTEREST INCOME OF RS.18,493 ACCRUED IN THE NRI ACCOUNT OF THE ASSESSEE. IT CLAIMED EXE MPTION UNDER SEC. 16 10(4)(II) OF THE INCOME - TAX ACT, 1961. THE LEARNED CIT(APPEALS) HAS UPHELD THIS ADDITION ON THE BASIS OF HIS FINDING HOLDING THE STATUS OF THE ASSESSEE AS RESIDENT DURING THE PREVIOUS YEAR. SINCE WE IN THE ADJUDICATION OF THE ISSUE RAISED IN GROUND NOS. 2 AND 2.1 HEREINABOVE HAS DECIDED THE STATUS OF THE ASSESSEE DURING THE PREVIOUS YEAR AS NON - RESIDENT, THE ADDITION QUESTIONED IN GROUND NO.5 BEING CONSEQUENTIAL IN NATURE IS DELETED. GROUND NO.5 IS ACCORDINGLY ALLOWED. 8. IN RESULT, THE A PPEAL IS PARTLY ALLOWED. ITA NO.5258/DEL/2013 : 9. THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. THE ORDER OF LEARNED CIT(APPEALS) IS NOT CORRECT IN LAW AND FACTS: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.9,08,26,525 MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE BY ASSESSEE IN M/S. CLARIDGES HOTELS PVT. LTD. THROUGH UNIVERSAL BUSINESS SOLUTION (USB) MAURITIUS. 3. ON THE FACTS AND CIRCUMST ANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE A.O. OF RS.2,34,96,795 ON PROTECTIVE BASIS INSTEAD OF 17 SUBSTANTIVE BASIS ON ACCOUNT OF INVESTMENT MADE BY ASSESSEE IN M/S. CLARIDGES SEZ PVT. LTD. (NOW KNOWN AS M/S . RIVER VALLEY MEADOWNS AND TOWNSHIPS PVT. LTD.). 9.1 GROUND NO.1 IS GENERAL IN NATURE, HENCE, DOES NOT NEED INDEPENDENT ADJUDICATION. GROUND NO.2 : 10. THE ASSESSING OFFICER MADE ADDITION OF RS.9,08,26,525 AS UNEXPLAINED INVESTMENT IN THE HANDS OF TH E ASSESSEE WITH THIS OBSERVATION THAT THE ASSESSEE HAS BEEN BRINGING UNACCOUNTED MONEY AFTER CREATING LA YERS OF INTERMEDIARY INCLUDING ONE M/S. UNIVERSAL BUSINESS SOLUTION, MAURITIUS (UBSM). HE ACCORDINGLY HELD THAT SHARE CAPITAL OF RS.9,08,26,525 SUBSCRIB ED BY UBSM IN CLARIDGES HOTEL (P) LTD. IS NOTHING BUT ASSESSEE S OWN UNEXPLAINED MONEY ASSESSABLE IN HIS HANDS. THE LEARNED CIT(APPEALS) AFTER DISCUSSING THE ISSUE IN DETAIL HAS DELETED THE ADDITION WHICH HAS BEEN QUESTIONED BY THE REVENUE. 10.1 IN SUPPO RT OF THE GROUND, LEARNED CIT(DR) SUBMITTED THAT THE ASSESSING OFFICER HAS DEALT WITH THE ISSUE VIDE PARA NO. 8 OF THE ASSESSMENT ORDER WHERE HE HAS HELD THAT THE CONTROL OF SHRI SURESH NANDA I.E. ASSESSEE 18 ON CLARIDGES HOTEL IS EVIDENT FROM THE FACT THAT H E WAS THE CHAIRMAN AND HIS SON WAS THE M.D. OF THE COMPANY AND HIS CLOSE CONFIDEN T LIKE VIPIN SHAH AND HARVAS CHAWLA BEING ITS OTHER DIRECTOR S . CONSIDERING THE ADMISSION OF MR. NANDA THAT TRANSACTION MENTIONED IN THE SEIZED DOCUMENTS ARE CORRECT AND TAKING NOTE OF THE FACT THAT MR. NANDA S MONEY THAT HAS BEEN ROUTED AFTER CRE A TING LA YE RS OF INTERMEDIAR IES INCLUDING THROUGH UBS, MAURITIUS DUE TO LESS STRINGENT EXCHANGE CONTROL NORMS THERE, THE ASSESSING OFFICER MADE THE ADDITION LIKE IN EARLIER YEARS. 10. 2 THE LEARNED CIT(DR) SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THE COMBINED EFFECT OF THE DOCUMENTS SEIZED IN SEARCH AS RELIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WHICH CLEARLY SHOWED THE ASSESSEE TO BE INTRODUCING HIS O WN UNACCOUNTED INCOME THROUGH VARIOUS INTERMEDIAR IES . THE LEARNED CIT(APPEALS) HAS ALSO FAILED TO APPRECIATE THE DOCUMENTS REFERRED BY THE ASSESSING OFFICER SEIZED DURING THE COURSE OF THE SEARCH TO SUPPORT HIS FINDINGS THAT THE MONEY WAS ACTIALLY UNACCOUN TED INCOME OF THE ASSESSEE. HE SUBMITTED THAT ON THE BASIS OF DOCUMENTS SEIZED AND PROFIT AND LOSS ACCOUNT AS WELL AS BALANCE SHEET THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT UBS DOES NOT HAVE ANY SIGNIFICANT INCOME OF ITS OWN AND THAT IT IS BASICAL LY USED AS A CONDUIT TO 19 CHANNELIZE UNACCOUNTED INCOME OF THE ASSESSEE BECAUSE OF THE LESS STRINGENT EXCHANGE CONTROL NORMS IN MAURITIUS. IT ALSO APPEARS THAT EVEN THE LEARNED CIT(APPEALS) WAS IMPLIEDLY CONVINCED WITH THE ASSESSING OFFICER THAT THE ASSESSEE WAS INTRODUCING HIS OWN UNACCOUNTED MONEY I.E. WHY HE DIRECTED THE ASSESSING OFFICER TO MAKE FURTHER INVEST IGATION BY MAKING REFERENCE TO JERSEY AND BRITISH, VIRGINIA & ISLAND ETC. THE LEARNED CIT(DR) SUBMITTED FURTHER THAT THE ORDER OF THE ITAT FOR THE E ARLIER ASSESSMENT YEAR ON THE ISSUE ARE NOT RELEVANT AS THE ITAT HAS SIMPLY UPHELD THE FIRST APPELLATE ORDER ON THE BASIS THAT THE LEARNED CIT(APPEALS) HAS DEALT WITH THE ISSUE IN DETAIL. 10. 3 THE LEARNED AR ON THE OTHER HAND POINTED OUT THAT THE ISSUE I S FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER DATED 21.2.2014 OF THE ITAT FOR THE ASSESSMENT YEAR 2004 - 05 IN ITA NO.2605/DEL/2013, FOR ASSESSMENT YEAR 2007 - 08 IN ITA NOS. 2237 & 3431/DEL/13 AND FOR ASSESSMENT YEAR 2008 - 09 IN ITA NOS. 3718 & 4641/D EL/13, BOTH VIDE ORDER DATED 11.4.2014. IN SUPPORT, HE REFERRED PAGE NOS. 326 TO 344 OF THE PAPER BOOK I.E. COPY OF THE ABOVE REFERRED ORDERS OF THE ITAT ON THE ISSUE. 10.4 WE FIND THAT THE ITAT HAS DEALT WITH AN IDENTICAL ISSUE UNDER SIMILAR SET OF F ACTS IN THE CASE OF ASSESSEE ITSELF LASTLY FOR THE ASSESSMENT YEARS 2007 - 20 08 AND 2008 - 09 (SUPRA), VIDE PARA NOS. 7.4.4, 7.4.5 AND 7.5 OF THE ORDER DATED 11.4.2014. FOR A READY REFERENCE, THE SAME IS BEING REPRODUCED HEREUNDER: 7.4.4 IN THIS CASE M/S. CLA RIDGES HOTELS P. LTD. RECEIVED MONEY FROM ITS HOLDING CO. M/S. UBS OF MAURITIUS. THIS IS NOT A CASE WHERE THE ASSESSEE RECEIVED ANY MONEY. M/S. UBS, MAURITIUS IS NOT A COMPANY CONTROLLED BY THE ASSESSEE AND THERE IS NO MATERIAL WITH THE REVENUE TO PROVE TH AT M/S. UBS, MAURITIUS IS A BENAMI COMPANY OF THE ASSESSEE. THE RECEIPT CERTIFICATE AND SHARE HOLDING PATTERN OF UBS, MAURITIUS LTD. WERE FILED BY THE ASSESSEE. THE SHAREHOLDERS OF UBS, MAURITIUS HAVE FILED LETTERS OF CONFIRMATION AS REGARDS THE OWNERSHIP. THERE IS NO DOCUMENT OR EVIDENCE WHATSOEVER WITH THE ASSESSING OFFICER, WHICH WOULD CONTRADICT THE EVIDENCE FURNISHED BY THE ASSESSEE. THE CORRESPONDENCE RECEIVED BY THE ASSESSING OFFICER DIRECTLY CONSEQUENT TO ENQUIRIES, ARE SUPPORTING THE TAX OF THE ANY . UNDER THE CIRCUMSTANCES, IT IS WRONG ON THE PART OF THE ASSESSING OFFICER TO IGNORE THE EVIDENCES AND MAKE A HUGE ADDITION BASED ON SURMISES AND CONJECTURES. WE ARE ALSO INFORMED THAT THE SAME AMOUNT WAS ADDED U/S. 68 IN THE HANDS OF CLARIDGES HOTEL PVT. LTD. AND THE SAME WAS DELETED IN APPEAL. BE IT AS IT MAY WE DO NOT FIND ANY LOGIC IN THE ASSESSING OFFICER MAKING AN ADDITION OF THIS AMOUNT IN THE NAME OF THE COMPANY. 7.4.5 COMING TO DOCUMENTS FOUND DURING THE COURSE OF SEARCH WE EXAMINE THE SAME AS H OLD AS FOLLOWS: 21 (I) ANNEXURE A 26 SUPPORTS THE CLAIM OF THE ASSESSEE ON THE ISSUE OF SHARE HOLDING AND FURTHER THAT THE ASSESSEE DOES NOT CONTROL UBS LTD., MAURITIUS. (II) ANNEXURE A - 8 AT PAGES 17 TO 34 DOES NOT SUPPORT THE CONCLUSIONS OF THE ASSESSING OF FICER THAT UBS LTD., MAURITIUS IS CONTROLLED BY THE ASSESSEE. ON THE OTHER HAND IT DEMONSTRATES THAT THE ASSESSEE IS A MAJOR SHAREHOLDER OF INFOTECH SERVICES, WHICH IN TURN HOLDS ONLY 20% OF SHAREHOLDING OF UBS LTD., MAURITIUS. THE BALANCE 80% OF THE SHARE HOLDING OF UBS LTD. IS HOLD BY THE PARTIES WHO ARE NOT RELATED, MUCH LESS CONTROLLED BY THE ASSESSEE. (III) ANNEXURE A 8 ALSO SUPPORTS THE CLAIM OF THE ASSESSEE THAT INFOTECH SERVICES LTD. HOLDS 20% OF UBS LTD. MAURITIUS. THE CLAIM OF THE ASSESSEE THAT TH E LETTER IN QUESTION REFERS TO SECOND ROUND OF FINANCIAL REQUIREMENTS OF UBS LTD., MAURITIUS AND THAT INFO SERVICES LTD. WAS REQUIRED TO CONTRIBUTE 20% OF SHARE OF FINANCE OF UBS LTD. MAURITIUS AND THAT THIS WAS MET THROUGH INTERIM DIVIDEND DECLATED BY M/S . UBS TRADING FZC, WHERE THE ASSESSEE IS A MAJORITY SHAREHOLDER IS PROVED BY THIS DOCUMENT. (IV) ANNEXURE A 8 AT PAGE 36 IS A LETTER WRITTEN BY M/S. UBS TRADING FZC DECLARE INTERIM DIVIDEND REFERRED TO ABOVE. THIS LETTER DOES NOT DEMONSTRATE THAT THE ASSE SSEE HAS ANY RELATIONSHIP WITH M/S. MID EAST, S.A. (V) ANNEXURE A 8 PAGE 38, 39 TO 71 SUPPORT THE CONTENTIONS OF THE ASSESSEE THAT INFO SERVICES LTD. PROVIDE FUNDS TO UBS LTD., MAURITIUS. (VI) ANNEXURE A 8 PAGE 13 ALSO CORROBORATES THE CLAIM OF THE ASSESSE E REGARDING FUNDING OF M/S. UBS, MAURITIUS. THERE IS NO CONTROVERSY ON THE INTERPRETATION OF THIS DOCUMENT BETWEEN HE 22 ASSESSING OFFICER AND THE ASSESSEE. SIMILAR IS THE INTERPRETATION OF ANNEXURE A 8 PAGE 70 TO 75. (VII) ANNEXURE A 22 PAGES 67 TO 70 DOES N OT DEMONSTRATE THAT THE ASSESSEE HAS ACQUIRED OR THAT THE ASSESSEE HAD INVESTED FURTHER IN M/S. PARAMEL FINANCE. MERELY BECAUSE THE FINANCIAL STATEMENTS INCLUDING BALANCE SHEET OF PARAMEL FINANCE IS SENT TO THE ASSESSEE, IT DOES NOT FOLLOW THAT THE ASSESSE E HAD PURCHASED THOSE COMPANY THAT TOO WITHOUT ANY FURTHER EVIDENCE. (VIII) SIMILARLY ANNEXURE A 26 PAGES 11 TO 13 ONLY CORROBORATE THE VERSION OF THE ASSESSEE THAT HE INVESTED IN UBS, MAURITIUS THROUGH INFORTECH SERVICES LTD. AND THAT THE STALE IS ONLY 2 0% AND THAT 80% SHARES OF UBS, MAURITIUS IS OWNED BY MR. HAMITTON AND RUSE THROUGH M/S. PARAMAL FINACNE AND MITES COMPANY. IN OUR VIEW THE STATEMENT GIVEN BY THE ASSESSEE TO THE DIT INVESTIGATION, NEW DELHI ON 8.3.2007 ( A COPY OF WHICH HAS LATTER BEEN F URNISHED TO THE ASSESSEE), DOES NOT BETTER THE CASE OF THE REVENUE, AS THE ASSESSEE HAS CLAIMED THAT HIS INTEREST IN M/S. CLARIDGES HOTELS PVT. LTD. IS ONLY BY WAY OF INVESTMENTS MADE THROUGH M/S. UBS, MAURITIUS, IN WHICH COMPANY HE HAS ONLY 20% STAKE. SIM PLY BECAUSE THE ASSESSEE IS THE CHAIRMAN OF M/S. CLARIDGES HOTELS P. LTD. AND BECAUSE HIS SON WAS MD OF THE COMPANY, IT DOES NOT SUPPORT THE ADDITION IN QUESTION, AS ADMITTEDLY THE INVESTMENT IN THE HOTEL IS MADE BY M/S. UBS LTD., MAURITIUS IN WHILE THE CO MPANY WHICH THE ASSESSEE CONTROLS IT IS A MINORITY SHARE HOLDER. THE ASSESSEE HAS DEMONSTRATED THAT HE CONTROLS ONLY 20% STAKE HOLDER IN M/S. UBS LTD., MAURITIUS. THE A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO 23 DEMONSTRATE THAT THE FUNDS INVESTED IN M/S . CLARIDGES HOTELS P. LTD. BY M/S. UBS LTD., MAURITIUS, HAS ACTUALLY BEEN INVESTED FROM UNACCOUNTED INCOME OF THE ASSESSEE. THE DIVIDEND EARNED BY THE ASSESSEE FROM A COMPANY CONTROLLED BY HIM I.E. M/S. UBS TRADING FZC WAS INVESTED IN M/S. UBS LTD. MAURITI US, THROUGH INFOTECH SERVICES LTD.. IN VIEW OF THIS FACTUAL MATRIX, WE UPHOLD THE ORDER OF THE LEARNED CIT(APPEALS). HENCE WE DO NOT GO INTO THE LEGAL SUBMISSIONS MADE BY THE ASSESSEE THAT WHOEVER ALLEGES FRAUD, HAS TO PROVE IT; (B) THE BURDEN OF PROOF LI ES ON THE PERSON ALLEGING BENAMI TRANSACTIONS; (C) THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT LIE ON IT; (D) THAT SOURCES OF SOURCE NEED NOT BE ESTABLISHED. 7.5. IN THE RESULT, GROUND NOS. 3 AND 4 OF THE REVENUE ARE DISMISSED. 10.4 RESPE CTFULLY FOLLOWING THE ABOVE DECISIONS ON THE ISSUE, UNDER THE SIMILAR SET OF FACTS, WE FIND NO REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUND NO.2 IS ACCORDINGLY REJECTED. GROUND NO. 3 : 11. THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.2,34,96,795 ON PROTECTIVE BASIS INSTEAD OF SUBSTANTIVE BASIS ON ACCOUNT OF 24 INVESTMENT MADE BY THE ASSESSEE IN CLARIDGES SEZ PVT. LTD. (NOW KNOWN AS RIVER VALLEY MEADOWNS & TOWNSHIP PVT. LTD.). 11.2 IN SUPPORT OF THIS GROUND, THE LEARNED CIT( DR ) SUBMITTED THAT THE ASSESSING OFFICER HAS DEALT WITH THE ISSUE IN PARA 9 OF THE ASSESSMENT ORDER POINTING OUT THAT INVESTMENT IN CLARIDGES SEZ PV T. LTD. IS FINANCED THROUGH THE BORROWINGS FROM UBS FZC DUBAI AND MR. NANDA S CLOSE ASSOCIATION WITH THE AFFAIRS OF CLARIDGES SEZ IN INDIA GO TO SHOW THAT IT IS MR. NANDA S MONEY THAT HAS BEEN ROUTED AFTER CREATING LAYE R S OF INTERMEDIARIES INCLUDING THROUG H M/S. PALM TECHNOLOGIES, MAURITIUS DUE TO LESS STRINGENT EXCHANGE CONTROL NORMS THERE. THE INTERMEDIARIES HAVE MERELY PROVIDED THEIR NAMES. THE LEARNED CIT(APPEALS) HAS SUSTAINED THE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE WHICH IS INDIC ATIVE OF THE FACT THAT THERE WERE MERITS IN THE ADDITION MADE BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE ITAT IN ITS ORDER FOR THE EARLIER ASSESSMENT YEARS ON THE ISSUE HAS INADVERTENTLY NOT TAKEN NOTE ON THE CRUCIAL FACTS THAT THERE WAS DIRECT LINK T HOUGH BACKWARD, WHICH THE LEARNED CIT(APPEALS) HAS APPRECIATED AND WHEN IT WAS SO HOW ONE CAN SAY THAT THERE IS NO EVIDENCE YET TO ESTABLISH THAT MONEY BROUGHT INTO CLARIDGES SEZ AS FDI BY UBS WAS ATTRIBUTABLE TO 25 PERSONAL INCOME /ASSETS OF THE ASSESSEE. HE SUBMITTED THAT THE FACT WAS SUCH THAT THE ADDITION OUGHT TO HAVE BEEN UPHELD ON SUBSTANTIVE BASIS. 11.3 THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE WITH THIS FURTHER SUBMISSION THAT AN IDENTICAL ISSUE HAS AL READY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 2004 - 05, 2007 - 08 AND 2008 - 09 VIDE ITA NOS.2605/DEL/2013, 2237/DEL/2013 AND 3431/DEL/13 AS WELL AS ITA NOS. 3718 & 4641/DEL/13 VIDE ORDERS DATED 21.2.2014 AND 11.4.2014 RESPECTIVELY. HE REFERRED PAGE NOS. 326 TO 354 AND 423 TO 428 OF THE PAPER BOOK WHEREIN COPIES OF THE SAID ORDERS OF THE ITAT HAVE BEEN MADE AVAILABLE. 11.4 WE HAVE DEALT WITH A RELATED ISSUE IN THE APPEAL PREFERRED BY THE ASSESSE E HEREINABOVE WHILE ADJUDICATING GROUND NOS. 4, 4.1 AND 4.2 OF THE APPEAL. THE GRIEVANCE OF THE ASSESSEE IN THOSE GROUNDS REMAINED THAT THE LEARNED CIT(APPEALS) WHILE HAVING HELD THAT THE MONEY DOES NOT BELONG TO THE ASSESSEE BUT TO UBS, THE ADDITION SUST AINED ON PROTECTIVE BASIS WAS BAD IN LAW. LEARNED CIT(APPEALS) OUGHT TO HAVE DELETED THE SAME ON PROTEC TIVE BASIS AS WELL . WE WHILE DEAL ING WITH THIS ISSUE HAS FOLLOWED THE ORDER OF THE ITAT FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 (SUPRA), REFERRING P ARA NO. 7 0 THEREOF. IN THIS DECISION, THE ITAT HAS DELETED THE ALTERNATIVE 26 RETENTION OF THE ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS WITH THIS FINDING THAT THE LEARNED CIT(APPEALS) HAS CLEARLY HELD THAT THE SHARE CAPITAL WAS SUBSCRIBED BY PALM TECHNOLOGIES LTD. WHICH IS A SEPARATE ENTITY AND THAT THE CAPITAL DID NOT BELONG TO THE ASSESSEE BUT TO A DISTINCT ENTITIES WHOSE EXISTENCE IS NOT DENIED. THE ITAT HELD THAT AFTER GIVING SUCH CLEAR FINDING, THE LEARNED CIT(APPEALS) SHOULD NOT HAVE GIV EN FINDING ABOUT ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AS PALM TECHNOLOGIES LTD. AND ASSESSEES ARE HELD TO BE TWO DIFFERENT PERSONS. FOLLOWING THE SAID DECISION OF THE ITAT ON A CONNECTED ISSUE RAISED IN GROUND NOS. 4, 4.1 AND 4.2 HEREI NABOVE, WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THERE WAS NO REASON TO MAKE THE ADDITION ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE. THE FINDING OF THE LEARNED CIT(APPEALS) IN THIS REGARD IS THUS UPHELD. THE GROUND NO. 3 IS ACCORDINGLY REJECTED. 11.5 IN RESULT, APPEAL IS DISMISSED. 12. IN SUMMARY, APPEAL PREFERRED BY THE ASSESSEE IS PARTLY ALLOWED AND THAT PREFERRED BY THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.02.2015. S D/ - SD/ - (B.C. MEENA) ( I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27TH FEBRUARY, 2015. *RK & MOHAN LAL* 27 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE 1. DRAFT DICTATED ON 19.02.2015, 20.2.2015 - RK - & 23.02.2015 - ML 2. DRAFT PLACED BEFORE AUTHOR 2 3 .02.2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/ PS 27.02.2015 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 27.02.2015 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.