ACIT, CENTRAL CIRCLE- 26, NEW DELHI V. PARAG DALMIA, NEW DELHI

ITA 6607/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3599 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARAMITA M BISWAS
• Keywords: Search and seizure; Opportunity of being heard; Documents seized; Set aside
• Section: 143(3); 153A; 13; 131; 132; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.6607/DEL./2017 (ASSESSMENT YEAR : 2010-11) ACIT, CENTRAL CIRCLE 26, VS. SHRI PARAG DALMIA, A-238, GROUND FLOOR, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI - 110 020. (PAN : AAAPD3725B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIREN MEHTA, CA SHRI NIRBHEY MEHTA, CA REVENUE BY : MS. PARAMITA M. BISWAS, CIT DR DATE OF HEARING : 23.09.2021 DATE OF ORDER : 13.10.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CENTRAL CIRCLE 26, NEW DELHI (HERE INAFTER REFERRED TO AS 'THE REVENUE') BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 11.08.2017 PASSE D BY THE COMMISSIONER OF INCOME - TAX (APPEALS) XXVI, NEW D ELHI QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER AL IA THAT :- ITA NO.6607/DEL./2017 2 '1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.5,83,739/- WHICH WAS IMPOSED BY THE AO ON ACCOUNT OF UNDISCLOSED INTEREST INCOME ON AMOUNT DE POSITED WITH HSBC, GENEVA. THE ISSUE IS COVERED BY CBDT'S C IRCULAR NO.21/2015 DATED 10.12.2015 IN THE EXCEPTIONS PROVI DED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION, DISREGA4RDING THE FACTS THAT THE ASSESSEE HAS DELIBERATELY CONCEALED HIS INTEREST INCOME OF RS.5, 83,739/- IN HSBC, GENEVA. 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC E TO EACH OTHER.'' 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE BY FILING RETURN OF INCOME DECLARED TOTAL INCOME OF RS.21,79,201/- WHICH WAS P ROCESSED UNDER SECTION 143 (1) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT 'THE ACT'). ON THE BASIS OF SEARCH AND SEIZURE OPERATION CARRIE D OUT U/S 132 OF THE ACT IN CASE OF ASSESSEE, CERTAIN ASSETS VIZ. CA SH, JEWELLERY CERTAIN DOCUMENTS, ETC. WERE FOUND AND SEIZED. NOTI CE U/S 153A WAS ISSUED. IN RESPONSE TO WHICH, ASSESSEE FILED RE TURN OF INCOME DECLARING TOTAL INCOME OF RS.21,79,201/- ON 22.11.2 012. 3. ASSESSING OFFICER (AO) ON THE BASIS OF INFORMAT ION CONCERNING ASSESSEE HAVING ACCOUNTS IN HSBC BANK, G ENEVA, WHICH IS A 7 PAGES DOCUMENT WHICH ARE PART OF THE A SSESSMENT ORDER, CONTAINING THE NAME OF THE ASSESSEE AS PARAG DALMIA. AO ANALYZED THAT THE DETAILS MENTIONED IN THE DOCUM ENTS INDICATE THAT ASSESSEE HAS BEEN SHOWN AS ATTORNEY A IN THE ACCOUNT ITA NO.6607/DEL./2017 3 AND THE MAXIMUM CONSTANT AMOUNT IN THE ACCOUNT DURI NG DECEMBER 2005 WAS US $ 255,246. AO ALSO ANALYZED T HAT ASSESSEE IS ALSO BENEFICIAL OWNER OF ACCOUNT IN THE NAME OF TAIRA FOUNDATION AND THE MAXIMUM CONSTANT AMOUNT DURING T HE PERIOD HAS BEEN SHOWN AS NON REFERENCE. 4. DURING THE COURSE OF SEARCH U/S 132 OF THE ACT, STATEMENT OF ASSESSEE WAS RECORDED U/S 132 (4) OF THE ACT. ASSES SEE ALSO FILED A LETTER DATED 09.02.2012 BEFORE THE DDIT (LNV.), UNI T VI (1), NEW DELHI GIVING INFORMATION QUA FOREIGN BANK ACCOUNT A S UNDER :- '1. DURING THE COURSE OF SEARCH OPERATION ON 20.1. 2012, THE ASSESSEE WAS ASKED A QUESTION REGARDING EXISTENCE O F AN OVERSEAS BANK ACCOUNT. THE ASSESSEE IN HIS REPLY ST ATED THAT HE DOES NOT OWN ANY OVERSEAS ACCOUNT, IN HIS NAME . IT IS IN THIS REGARD THAT THE UNDERSIGNED WOULD LIKE TO CLAR IFY CERTAIN ISSUES. 2. DURING THE SEARCH OPERATION, JUST TO CROSS- EXAMINE THE ASSESSEE, CERTAIN DOCUMENTS RELATED TO AN OVERS EAS BANK WERE SHOWN TO THE ASSESSEE, WHERE THE ACCOUNTS BELO NGED TO SOME TRUST/COMPANIES. THE ASSESSEE'S NAME HAPPEN S TO APPEAR IN THAT STATEMENT AS A BENEFICIARY/ATTORNEY HOLDER, TOGETHER WITH SOME OF HIS FAMILY MEMBERS. IT IS STATED THAT THE ASSESSEE NEITHER CREATED SUCH AN ENTITY NOR IS AWARE OF ONE EXISTING AS ON DATE. 3. IT IS NOTEWORTHY TO POINT OUT THAT THE ASSESS EE HAS NEVER OPERATED THE SAID BANK ACCOUNT(S) OF THESE TRUST(S)/COMPANIES, AND THEREFORE IS NOT PRIVY TO T HE TRANSACTIONS THEREIN. FURTHER NEITHER THE UNDERSIGN ED IS IN POSSESSION OF ANY BANK STATEMENT OF THESE TRUST/ COMPANIES NOR IS HE IN POSSESSION OF ANY DOCUMENT SHOWING HIM AS THE BENEFICIARY/ATTORNEY HOLDER OF THESE TRUSTS/COMPANI ES. IT IS ALSO PERTINENT TO NOTE THAT NOT A SINGLE DOCUMENT RELATED TO THE ABOVE ACCOUNT(S) HAS BEEN FOUND, DURING THE COU RSE OF SEARCH AND SEIZURE OPERATION CONDUCTED AT HIS RESID ENCE AND OFFICE PREMISES. ITA NO.6607/DEL./2017 4 4. IN VIEW OF THE ABOVE STATED POSITION, IT IS ES TABLISHED THAT NEITHER THE ASSESSEE, NOR ANY OF HIS FAMILY ME MBERS, ARE OWNERS OF THESE BANK ACCOUNTS, NOR ARE THEY AWAR E OF SUCH AN ARRANGEMENT, AND THEREFORE, THE BALANCE SHOWN IN THE BANK STATEMENT IS IN NO WAY HIS OR HIS FAMILY MEMBE RS UNDISCLOSED INCOME. EVEN THOUGH THE BANK STATEMENTS IN RESPECT OF THE SAID BANK ACCOUNTS ARE OLD AND M AY FALL OUTSIDE THE BLOCK PERIOD, HOWEVER, AS ASSESSEE'S NA ME ACCIDENTLY HAPPENS TO APPEAR IN THE STATEMENT AS A BENEFICIARY/ATTORNEY HOLDER, IN ORDER TO BUY PEACE AND AVOID LITIGATION WITH THE REVENUE AUTHORITIES, THE ASSE SSEE IS WILLING TO PAY INCOME TAX AND INTEREST DUE THEREON FOR THE RELEVANT ASSESSMENT YEAR, PROVIDED NO PENAL ACTION AND/OR PR OSECUTION ACTION IS UNDERTAKEN. 5. IT IS SUBMITTED THAT THE ABOVE DISCLOSURE/SURRE NDER IS BEING MADE BY THE ASSESSEE VOLUNTARILY IN ORDER TO BUY PEACE ALTHOUGH THERE IS NO EARNING OF ANY UNDISCLOSED INC OME. IT IS THEREFORE, A PRE CONDITION THAT IF THE ASSESSMEN T OF UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE IS BASED UPON PRESENT LETTER, NO PENAL ACTION FOR CONCEALM ENT OF INCOME BE INITIATED / UNDERTAKEN. 6. IT IS REQUESTED THAT THE ABOVE STATEMENT MA Y KINDLY BE KEPT CONFIDENTIAL AND NOT SHARED WITH ANY AGENCY/INDIVIDUAL AS THE ABOVE STATED OFFER HAS BEE N MADE TO PROTECT MYSELF FROM UNDUE HARASSMENT.' 5. DURING ASSESSMENT PROCEEDINGS U/S 153A, STATEME NT OF THE ASSESSEE WAS RECORDED ON 02.12.2014 BY THE AO AND R EACHED THE CONCLUSION THAT THE ASSESSEE HAS OPENED/OPERATED TH E ACCOUNT IN HSBC BANK, GENEVA AND HE WAS GIVEN UNIQUE CODE WHIC H IS BUP SIFIC PER ID 9070142903. HIS PROFILE WAS LINKED TO CLIENTS, NAMELY, ASPREY WORLDWIDE S.A.; RONDEBERG LIMITED; TAIRA FOUNDATION, 12717, RSK AND MENKO FOUNDATION, VADUZ. IN ORDER TO VERIFY THE AFORESAID FOREIGN BANK ACCOUNTS, REFERENCES WERE SENT TO THE COMPETEN T AUTHORITIES AT ITA NO.6607/DEL./2017 5 SWITZERLAND AND OTHER COUNTRIES BUT VERIFICATORY RE PORT QUA THE REPORTS OF BANK HAVE NOT YET BEEN RECEIVED. 6. WHILE RECORDING OF THE STATEMENT OF THE ASSESSE E U/S 131 OF THE ACT, ASSESSEE HAS FILED REPLY DATED 12.01.2014 WHICH IS AS UNDER :- 'I WISH TO SUBMIT AS UNDER: '1. DURING THE COURSE OF ABOVE SAID ASSESSMENT PROCEEDINGS UNDER SECTION 131 OF THE INCOME TAX ACT , 1961 I HAVE RECEIVED A COPY OF THE ALLEGED OVERSEAS BANK ACCOUNT FOR MY COMMENTS. I HAVE TO STATE THAT I DO NOT OWN ANY SUCH ACCOUNT. I HAVE NEITHER CREATED SUCH AN ENTITY NOR AM AWARE OF ONE EXISTING AS ON DATE. I FURTHER STATE THAT I NEVER O PERATED THE SAID BANK ACCOUNTS OF THE MENTIONED TRUST(S)/COMPANIES AND THEREFORE AM NOT AWARE OF AN Y SUCH TRANSACTIONS.' 7. FROM THE DETAILED INVESTIGATION, AO REACHED THE CONCLUSION THAT THE ASSESSEE IS HAVING AN ACCOUNT IN HSBC BANK , GENEVA WITH THE DETAILS APPEARING IN THE DOCUMENTS SEIZED. THE ASSESSEE HAS FAILED TO COMPLY WITH THE NOTICES ISSUED U/S 142 (1 ) OF THE ACT DESPITE AVAILING NUMEROUS OPPORTUNITIES BY NOT SIGN ING THE CONSENT WAIVER FORM, FOR WHICH PENALTY PROCEEDINGS ARE INIT IATED SEPARATELY. CONSEQUENTLY, AO MADE ADDITION ON ACCOU NT OF INTEREST INCOME OF RS.5,83,739/- U/S 69 OF THE ACT AND THERE BY ASSESSED THE TOTA1 INCOME AT RS.27,62,940/- U/S 153(A)/143(3) OF THE ACT. ITA NO.6607/DEL./2017 6 8. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY OF FILING APPEAL WHO HAS ALLOWED THE APPEAL. FEELING A GGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF F ILING THE PRESENT APPEAL. 9. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. UNDISPUTEDLY, IN AY 2006-07, ADDITION OF RS.1, 20,37,863/- AND RS.1,23,130/- WAS MADE BY THE AO TO THE TOTAL I NCOME OF THE ASSESSEE ON THE BASIS OF AMOUNT FIGURED IN THE FORE IGN BANK ACCOUNT/LINKED PROFILE OF THE ASSESSEE AND ON ACCOU NT OF UNDISCLOSED INTEREST U/S 69 OF THE ACT RESPECTIVELY . IT IS ALSO NOT IN DISPUTE THAT AY 2006-07 IS THE BASE YEAR FOR MAKING ASSESSMENT ON THE BASIS OF FOREIGN BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH HSBC BANK, GENEVA U/S 153A/143(3) OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT ADDITION MADE BY THE AO IN THIS CASE A MOUNTING TO RS.5,83,739/- IS ON ACCOUNT OF UNDISCLOSED INTEREST EARNED BY THE ASSESSEE FOR THE PERIOD 01.04.2009 TO 31.03.2010 @ 4% ON THE CLOSING BALANCE OF US $307749.42 AS ON 31.03.2009, AS PER WORKING GIVEN BELOW :- ITA NO.6607/DEL./2017 7 NAME OF PROFILE CLIENT FINANCIAL YEAR BALANCE AS ON 31 ST MARCH OF EARLIER YEAR IN US $ INTEREST RATE TOTAL INTEREST USD TOTAL BALANCE AT THE END OF YEAR (COL.3 + COL.5) AVERAG E VALUE OF $ AT END OF THE YEAR INT.. IN RUPEES (COL.5 X COL.7) ASPREY WORLDWIDE S.A. 2009-10 12439.07 4% 497.56 12936.63 47.42 23594.29 RONDEBERG LTD. 2009-10 286580.76 4% 11463.23 298043.99 47.42 543586.37 TAIRA FOUNDATION 2009-10 8729.61 4% 349.19 9078.79 47.42 16558.59 TOTAL 30779.43 4% 12309.98 320059.41 47.42 583739.25 IT IS ALSO NOT IN DISPUTE THAT ASSESSMENT FRAMED AG AINST THE ASSESSEE ON THE BASIS OF AMOUNT LYING DEPOSITED IN THE FOREI GN BANK ACCOUNT MAINTAINED WITH HSBC BANK, GENEVA FOR AY 2006-07 WA S CHALLENGED BY THE ASSESSEE BEFORE THE TRIBUNAL VIDE ITA NO.5499/DE1/2017 FOR AY 2006-07 WHICH WAS DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 2 6.02.2018 . 11. IN THE BACKDROP OF THE AFORESAID UNDISPUTED F ACTS, WE ARE OF THE CONSIDERED VIEW THAT ADDITION MADE BY THE AO AN D DELETED BY THE LD. CIT (A) ON ACCOUNT OF UNDISCLOSED INTEREST OF RS.5,83,739/- IS TO BE DECIDED AS PER ORDER PASSED QUA PRINCIPAL AMOUNT DEPOSITED IN ASSESSEE'S FOREIGN BANK MAINTAINED WITH HSBC BAN K, GENEVA, WHICH HAS BEEN REMITTED BACK TO AO FOR DECIDING AFR ESH. 12. COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2006-07 (SUPRA) QUA THIS FOREIGN BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH HSBC BANK, GENEVA HAS PARTLY A LLOWED THE APPEAL FOR STATISTICAL PURPOSES BY REMITTING THE CA SE BACK TO THE AO WITH DIRECTION TO ADJUDICATE AFRESH IN ACCORDANCE W ITH LAW AFTER ITA NO.6607/DEL./2017 8 OBTAINING THE VERIFICATORY REPORT FROM THE BANK BY RETURNING FOLLOWING FINDINGS :- '35. NOW, COMING TO THE MERITS OF THE CASE IS CONCE RNED, WE FIND THE ASSESSING OFFICER AT PARA 11 OF THE ORDER AS OBSERVED AS UNDER :- '11. FROM THE ABOVE FACTS IT IS CLEAR THAT THE ASS ESSEE HAS OPENED AND/OR OPERATED ACCOUNT(S) IN HSBC BANK. HE HAS BEEN GIVEN A UNIQUE CODE WHICH IS BUP SIFIC PER ID 9070142903. HIS PROFILE WAS FOUND LINKED TO FIVE CLIENT PROFILES NAMELY, ASPREY WORLDWIDE S.A.; RONDEBERG LIMITED; TAIRA FOUNDATION, 12717 RSK AND MENKO FOUNDATION, VADUZ. WITH A VIEW TO VERIFYING THE ABOVE FOREIGN BANK ACCOUNT(S) A REFERENCES HAS/HAVE BEEN SENT TO COMPE TENT AUTHORITIES IN SWITZERLAND AND OTHER COUNTRIES. TIL L DATE THE VERIFICATORY REPORT IN RESPECT OF ABOVE FOREIGN BANK ACCOUNTS) HAS NOT BEEN RECEIVED. IN VIEW THESE FACT S AND SINCE THE ASSESSMENT IS GETTING BARRED BY LIMITATIO N ON 31.03.2015, THE ASSESSMENT OF THE ASSESSEE IS BEING COMPLETED IN THE ABSENCE OF VERIFICATORY REPORT AND APPROPRIATE ACTION AS PROVIDED IN THE ACT, WILL BE TAKEN AS AND WHEN THE VERIFICATORY REPORT IS RECEIVED.' 36. THIS SHOWS THAT THE VERIFICATORY LETTERS FROM THE COMPETENT AUTHORITIES IN SWITZERLAND WAS YET TO BE RECEIVED B EFORE COMPLETION OF THE ASSESSMENT. BEFORE ID. CIT(A) WAS ALSO, THE SAME WAS NOT AVAILABLE. EVEN BEFORE US NOTHING WAS BROUGHT TO OUR NOTICE REGARDING THE VERIFICATORY LETTERS RECEI VED FROM SWITZERLAND. SINCE ASSESSEE IN THE INSTANT CASE WAS DENYING FROM THE BEGINNING THAT THE ACCOUNTS DOES NOT BELONG TO HIM AND SINCE VERIFICATORY REPORT IN RESPECT OF ABOVE IS YET TO B E RECEIVED, AND SINCE IN ABSENCE OF SUCH VERIFICATORY LETTER, IT CA NNOT BE CONCLUSIVELY PROVED THAT THE ACCOUNTS IN FACT DO BE LONG TO THE ASSESSEE, THEREFORE, CONSIDERING THE TOTALITY OF TH E FACTS AND IN THE INTEREST OF JUSTICE, WE RESTORE THIS ISSUE TO THE F ILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ADJUDICATE THE ISSUE AF RESH AND IN ACCORDANCE WITH LAW AFTER OBTAINING THE LAW AFTER G IVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 37. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES.' ITA NO.6607/DEL./2017 9 13. SINCE THE PRESENT ASSESSMENT FRAMED U/S 153A R EAD WITH SECTION 143(3) OF THE ACT IS AN OFFSHOOT OF INITIAL ASSESSMENT FRAMED IN AY 2006-07 QUA THE FOREIGN BANK ACCOUNT M AINTAINED WITH HSBC BANK, GENEVA ON ACCOUNT OF INTEREST INCOM E IN THE SUBSEQUENT YEARS, WE ARE OF THE CONSIDERED VIEW THA T THIS CASE IS ALSO REQUIRED TO BE REMITTED BACK TO THE AO TO DECI DE ACCORDINGLY AS PER ORDER PASSED IN AY 2006-07. SO, WE REFRAIN F ROM ENTERING INTO MERITS OF THIS CASE IN ORDER TO GIVE FREE HAND TO THE PARTIES TO THE APPEAL TO ARGUE THEIR CASE BEFORE THE AO AFRESH . CONSEQUENTLY, THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) IS SET ASIDE AND REMITTED BACK TO THE AO TO DECIDE AFRESH AFTER PROV IDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. RESULTA NTLY, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 13 TH DAY OF OCTOBER , 2021. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 13 TH DAY OF OCTOBER, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.