Shri Manoj Kumar Dhupelia, Kolkata V. DCIT, Central Circle - III, Kolkata, Kolkata

ITA 674/KOL/2011

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0613 (ITAT-KOLKATA)
• Duration Of Justice: 9 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI ROY J
• Assessee Lawyers: S K TULSIYAN; BHOOMIJA VEREMA
• Keywords: Charitable institution; Principle of natural justice; Question of law; Tangible material; Assessment record; Onus to prove; Reason to believe
• Section: 143(3); 191; 254(2); 22; 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI P.M.JAGTAP, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.674 & 675/KOL/2011 ASSESSMENT YEAR:2002-03 SHRI MANOJ KUMAR DHUPELIA NILHAT HOUSE, 6 TH FLOOR, 11 R.N. MUKHERJEE ROAD, KOLKATA-700 001 [ PAN NO.ADSPD 4099 F ] SMT. RUPAL DHUPELIA C/O MANOJ DHUPELIA & CO. NILHAT HOUSE, 6 TH FLOOR, 11 R.N. MUKHERJEE ROAD, KOLKATA-700 001 [ PAN NO.ADSPD 3509 N ] / V/S . DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, 18, RABINDRA SARANI, PODDAR COURT, 5 TH FLOOR, KOLKATA-01 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.K. TULSIYAN. ADVOCATE & SHRI. BHOOMIJA VEREMA, ADVOCATE /BY RESPONDENT SHRI DHRUBAJYOTI ROY, JCIT-DR /DATE OF HEARING 06-01-2020 /DATE OF PRONOUNCEMENT 15-06-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEAR 2 002-03 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-II, KO LKATAS ORDER(S); BOTH DATED 04.03.2011, PASSED IN CASE NOS. 154 & 153/CC-III/ C IT(A)C-II/10-11;RESPECTIVELY ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 2 INVOLVING PROCEEDINGS U/S 147 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT HEARD SHRI S.K.TULSIYAN AND SHRI BHOOMIJA VERMA ADV OCATE(S) / LEARNED AUTHORIZED REPRESENTATIVES APPEARING FOR ASSESSEES AND SHRI DHRUBAJYOTI ROY, JCIT REPRESENTING THE REVENUE. CASE FILE(S), VOLUMI NOUS PAPER BOOKS COUPLED WITH ADDITIONAL SUBMISSIONS AND JUDICIAL PRECEDENTS , STAND DULY PERUSED. 2. WE FIND AT THE OUTSET THAT BOTH ASSESSEES HAVE R AISED THEIR IDENTICAL TWIN SUBSTANTIVE GROUNDS INTER ALIA CHALLENGING CORRECTN ESS OF BOTH THE LOWER AUTHORITIES ACTION INITIATING SEC. 148 R.W.S. 147 PROCEEDINGS C ULMINATING IN UNDISCLOSED INCOME FROM BANK ACCOUNTS ADDITION(S) OF 2,30,71,880/- EACH, ON VARIOUS LEGAL AND FACTUAL ASPECTS, RESPECTIVELY. 3. MR. TULSIYAN SUBMITS THAT THESE TWO ASSESSEES HA VE ALSO RAISED THEIR TWO ADDITIONAL SUBSTANTIVE GROUNDS AS FOLLOWS:- 1. THAT ON THE FACE OF THE ASSESSEES DENIAL, SINC E THE REVENUE FAILED TO DISCHARGE ITS ONUS TO PROVE THAT HE WAS ONE OF THE BENEFICIARIES OF M/S AMBRUNOVA TRUST OR THAT HE MADE ANY INVESTMENT IN L GT BANK, THE LD. AO /CIT(A) ERRED IN ADDING HIS ALLEGED PROPORTIONATE SHARE OF BENEFIT IN THE BANK BALANCE AS ON 31.12.2001 AS HIS INCOME FROM OT HER SOURCE APPARENTLY U/S 69 OF THE I.T. ACT. 2. THAT WITHOUT PREJUDICE TO THE ASSESSEES DENIAL OF ANY CONNECTION WITH AMBRUNOVA TRUST OR LGT BANK SINCE THE DEPARTMENT HA S NOT PROVED THAT THE SUM OF USD 24.06.604 WAS INVESTED IN LGT BANK DURIN G THE FY 2001-02, THE LD. AO/ CIT(A) ERRED IN HOLDING THAT A SUM OF RS.2, 30,71,881 IS ASSESSABLE IN THE HAND OF THE ASSESSEE IN ASST. YEAR 2002-03 APP ARENTLY U/S 69 OF THE IT ACT. 4. LEARNED DEPARTMENTAL REPRESENTATIVE HAS STRONGLY OPPOSED ADMISSION OF ASSESSEES FOREGOING ADDITIONAL SUBSTANTIVE GROUNDS AT THIS BELATED STAGE. HIS CASE IS THAT THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE A FFORDED ADEQUATE OPPORTUNITIES OF HEARING DURING RE-ASSESSMENT AND LOWER APPELLATE PR OCEEDINGS; RESPECTIVELY. MR. ROY FAILS TO DISPUTE THAT HON'BLE APEX COURTS DECISION IN NATIONAL THERMAL POWER CORPORATION. LTD. VS. COMMISSIONER OF INCOME-TAX (1998) 229 ITR 383 (SC) AND ALL ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 3 CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 26 (MUM) (SB) HOLD THAT THIS TRIBUNAL CAN VERY WELL ENTERTAIN AN ADDITIONAL GROU ND GOING TO ROOT OF THE MATTER PROVIDED ALL THE RELEVANT FACTS FORM PART OF RECORD S. WE ADOPT THE VERY REASONING HEREIN AS WELL TO DECLINE REVENUES FOREGOING TECHN ICAL OBJECTION. THE ASSESSEES TWIN ADDITIONAL SUBSTANTIVE GROUND(S) STAND ADMITTED THE REFORE. 5. LEARNED COUNSEL NEXT TOOK US TO ASSESSING OFFICE RS RE-OPENING REASONS RECORDED IN WHILST INITIATING U/S 148 / 147 PROCEED INGS IN FORMER ASSESSEES CASE AS FOLLOWS:- SUB: REASONS FOR RE-OPENING U/S 148 OF THE I.T. AC T FOR A.Y. 2002-03 REF: YOUR LETTER DATED 19/06/2009 PLEASE REFER TO THE ABOVE, THE REASONS FOR RE-OPENING OF YOUR CASE FOR A.Y. 2 002-03 IS AS UNDER:- I HAVE THE INFORMATION IN MY POSSESSION THAT MANOJ DHUPELIA OF 19A, SARAT BOSE ROAD, KOLKATA-20 AND HAVING OFFICE ADDRESS AT 6 TH FLOOR, NILHAT HOUSE, R.N. MUKHERJEE ROAD, DALHOUSIE , KOLKATA-700001, IS ONE OF THE BENEFICIARIES IN AMBRUNOVA TRUST. THE AMBRUNOVA TRUST MAINTAINED AN ACCOUNT WITH THE LGT BANK IN LIECHTENSTEIN AND THE BALANCE THEREON AS ON 31/1 2/2001 WAS US $ 24,06,604.90. I HAVE ALSO INFORMATION IN MY POSSESSION THAT MANOJ DHUPELIA OF 19A, SARAT BOSE RAOD, KOLKATA-700020 AND HAVING OFF ICE ADDRESS AT 6 TH FLOR, NILHAT HOUSE, R.N. MUKHERJEE ROAD, DALHOUSSIE , KOLKATA-700001 IS ALSO ONE OF THE BENEFICIARIES IN MARLINE MANAGEM ENT S.A., ANOTHER TRUST. IN VIEW OF THE ABOVE, I HAVE THE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE TO THE EXTENT OF HIS SHARE AS PER THE RELE VANT TRUST DEEDS IN THE ABOVE TWO TRUSTS HAVING AFOREMENTIONED BALANCES AS ON 31/12/2001 ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULL AND TRUE INCOME FOR A.Y 202-03 WITHIN THE MEAN ING OF SECTION 147 OF INCOME TAX ACT. 1961. ISSUE NOTICE U/S. 148 OF THE I.T. ACT. PRIOR SANCTI ON OF CIT KOL-XII, KOLKATA HAS ALREADY BEEN OBTAINED VIDE NO.CIT-XII/K OL/TECH./147/08- 09/1490 DATED 30/03/2009. THE FACTUAL POSITION IS VERY MUCH IDENTICAL IN LAT TER APPEAL AS WELL. ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 4 6. MR. ROY ONCE AGAIN SOUGHT OUR PERMISSION TO HIGH LIGHT A VERY SIGNIFICANT ASPECT THAT THIS TRIBUNALS CO-ORDINATE BENCHS ORDER(S) I N ASSESSEES OTHER THREE FAMILY MEMBERS CASE NAMELY SHRI MOHAN, AMBRUSH, & MS. BHAV YA MANOJ DHUPELIA VS. DCIT, MUMBAI (2014) 54 TAXMANN.COM 146 (MUM-TRIB) H AVE ALREADY UPHELD DEPARTMENTAL ACTION INITIATING RE-OPENING PROCEEDIN GS QUA THE VERY TWIN TRUSTS SET UP IN LIECHTENSTFIN THE DEPARTMENTS CASE THEREFORE IS THAT THE INSTANT APPEAL(S) MUST ALSO FOLLOW THE SUIT SINCE INVOLVING IDENTICAL QUESTIONS OF LAW AND FACTS. 7. LEARNED AUTHORIZED REPRESENTATIVE CLARIFIED AT T HIS STAGE THAT ALTHOUGH IT IS CORRECT THAT ALL THESE FIVE FAMILY MEMBERS HAVE BEE N HELD AS THE ALLEGED BENEFICIARIES OF THE TWIN TRUSTS I.E. M/S AMBRUNOVA TRUST HAVING MAINTAINED AN ACCOUNT WITH THE LGT BANK IN LIECHTENSTEIN AND ANOTHER TRUST NAMELY MARLINE MANAGEMENT S.A.WITH FORMER HAVING ACCOUNT BALANCE OF US $ 2406604.90 ON 31.12.2001; THE FACT ALSO REMAINS THAT THE RE-OPENING REASONS RECORDED BY THE ASSESSING OFFICER WHILE FORMING BELIEF OF THE TAXABLE INCOME HAVING ESCAPED ASSESSM ENT ARE ON ALTOGETHER DIFFERENT FOOTING THAN OTHER THREE CASES AS FOLLOWS:- REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT: IN THIS CASE, A TAX EVASION PETITION HAS BEEN RECEI VED FROM THE CBDT. AS PER THE INFORMATION CONTAINED IN THE SAID DTEP, THE ASS ESSEE IS A BENEFICIARY OF AMBBRUNOVA TRUST. THE RETURN OF INCOME OF THE ASSES SEE FOR THE AY 2002-03 WAS PERUSED AND IT IS FOUND THAT THE ASSESSEE HAS N EITHER OFFERED ANY INCOME WITH REFERENCE TO THE AMBRUNOVA TRUST NOR ANY DETA ILS WERE DISCLOSED TO THE EFFECT THAT THE ASSESSEE IS A BENEFICIARY. THE ASSE SSEE IS ALSO A BENEFICIARY IN ANOTHER TRUST NAME MARLINE MANAGEMENT S.A. HAVING A CCOUNT IN ACCOUNT IN LTG BANK. LIECHTENSTEIN 2. ON GOING THROUGH THE COPY OF BANK SUMMARY IN RESPEC T OF AMBRUNOVA TRUSTS ACCOUNT IN LTG BANK. LIECHTENSTEIN, IT IS O BSERVED THAT THERE IS A CREDIT BALANCE IN THE SAID ACCOUNT OF USD 24,06,604 AS ON 31.12.2001, EQUIVALENT TO INDIAN RUPEES 11,60,99,390/- @ RS.48. 242 PER USD. 3. AS PER THE INFORMATION RECEIVED ON THE AMOUNTS TO T HE CREDIT OF THE TRUST, THE INTEREST ACCRUED IS USD 13,500 EQUIVALENT TO RS .6,51,267/-. AS MENTIONED ABOVE, THE ASSESSEE IS ONE OF THE BENEFIC IARIES OF THE TRUST ALONG WITH FOUR OTHERS. BY TAKING THE ASSESSEES SHARE AS 1/5 TH OF THE SAME, THE INTEREST ACCRUED TO ASSESSEES SHARE WORKS OUT TO R S.1,30,253/-. THE SAME IS NOT REFLECTED IN THE RETURN OF INCOME OF THE ASSESS EE. 4. IN VIEW OF THE AFORESAID FACTS, I HAVE REASON TO BE LIEVE THAT RECEIPTS ON ACCOUNT OF INTEREST AT RS.1,30,253/- HAS ESCAPED AS SESSMENT WITHIN THE ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 5 MEANING OF SECTION 147 OF THE IT ACT, 1961. SINCE N O ASSESSMENT UNDER SUB- SECTION (3) OF THE SECTION 143 OR 147 HAS BEEN MADE IN THIS CASE, NECESSARY, PERMISSION MAY KINDLY BE ACCORDED AS PER THE PROVIS ION OF SECTION 151(2) OF THE IT ACT, 1961 IN ORDER TO ISSUE NOTICE U/S. 147/ 148 OF THE IT ACT. A COPY OF THE RELEVANT PORTION OF THE TEP IS ENCLOSED HERE WITH. DATED: 26.3.2009. MR. TULSIYANS CASE NEXT INVITED OUR ATTENTION TO T HE ASSESSEES RE-OPENING REASONS (SUPRA) THAT THE CONCERNED ASSESSING OFFICER(S) IN THE INSTANT ASSESSEES CASES HAVE SET SEC. 148 / 147 PROCESS IN MOTION ON DIFFERENT SET(S ) OF REASONS. AND THAT THE OTHER THREE ASSESSEES / FAMILY MEMBERS HAD ALSO FILED SEC. 254( 2) RECTIFICATION BEFORE THE TRIBUNALS CO-ORDINATE BENCH WHICH STOOD REJECTED O N 22.06.2015. THEY THEN FILED CIVIL WRIT PETITION NOS. 2601 TO 2603 OF 2015 BEFORE THE HON'BLE BOMBAY HIGH COURT WHICH STOOD ACCEPTED VIDE ORDER DATED 03.03.2016 AS UNDER :- 1. THESE PETITIONS CHALLENGE A COMMON ORDER DATED 22 ND JUNE 2015 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (TRIBUNAL) UNDER SECTION 254(2) OF THE INCOME TAX ACT 1961 (THE ACT).BY THE IMPUGNED ORDER DATED 22 ND JUNE 2015, THE PETITIONERS RECTIFICATION APPLICATIONS, SEEKIN G TO RECTIFY THE ORDER DATED 31 ST OCTOBER 2014 PASSED UNDER SECTION 254(1) OF THE IN COME TAX ACT 1961 (THE ACT) WAS REJECTED. 2. WE HEARD THE PETITIONS FOR SOME TIME AND WE FIND THAT THE PETITIONERS HAVE MADE OUT AN ARGUABLE CASE THAT THE IMPUGNED ORDER HAS FAILED TO DEAL WITH TH E PETITIONERS SUBMISSIONS WITH REGARD TO THE RECTIFI CATION OF THE ORDER DATED 31 ST OCTOBER 2014. TO ILLUSTRATE THE ORDER DATE 31 ST OCTOBER 2014 PASSED BY THE TRIBUNAL WHILE REJECTING THE PETITIONERS GRIEVANCE OF BREACH OF NATURAL JUSTICE INTER ALIA REFERS TO A LETTER DATED 23 RD SEPTEMBER 2009 AND MAKES THE FOLLOWING OBSERVATIONS : EVEN VIDE LETTER DATED 23/9/2009 THE ASSESSING OFFI CER SHOWED DETAILS (A) INFORMATION OF TRUST, (B) DETAILS OF SETTLER OF THE TRUST, (C) PURPOSE OF CREATING TRUST, (D) COPY OF TRUST DEED, (E) ASSE T AND BANK ACCOUNTS HELD BY THE TRUST IN INDIA AND ABROAD AND A(F) BENE FIT RECEIVED BY THE APPELLANT DURING THE FINANCIAL YEARS RELEVANT T O ASSESSMENT YEAR 2002-03 TO 2007-08 (PAGE 21) . 1. HOWEVER, ON PERUSAL OF THE LETTER DATED 23 RD SEPTEMBER 2009 IT IS CLEAR THAT THE ASSESSING OFFICER DID NOT FURNISH ANY DETAILS A S INDICATED IN THE ORDER OF THE TRIBUNAL, RATHER IT CALLED FOR DETAILS FROM THE PETITIONERS, AND IN TURN, BY LETTER DATED 14 TH OCTOBER 2009 THE PETITIONERS PLEADED IGNORANCE OF THE TRUST. THE RECTIFICATION APPLICATION FILED BY THE PETITIO NERS SOUGHT TO ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 6 RECTIFY THE AFORESAID ERROR APPARENT ON THE FACE OF THE ORDER. HOWEVER, THE IMPUGNED ORDER DOES NOT DEAL WITH THE AFORESAID OBJ ECTION OF THE PETITIONERS AND THE ORDER DATED 31 ST OCTOBER 2014 OF THE TRIBUNAL PASSED UNDER SECTION 254(1) OF THE ACT ON THE ABOVE ISSUE. IT IS THE PETITIONERS CASE THAT THERE ARE SUCH OTHER GLARING ERRORS IN THE IMP UGNED ORDER. HOWEVER, LOOKING AT THE ENTIRE CONTROVERSY IN THE PETITIONS, IT WOULD BE APPROPRIATE THAT THE PETITIONS BE DISPOSED OF FINALLY AT THE ST AGE OF ADMISSION. THIS IS PARTICULARLY BECAUSE THE PETITIONS ARISE FROM AN OR DER REJECTING THE RECTIFICATION APPLICATION AND ADMITTING THE PETITIO N WOULD UNDULY DELAY THE PROCEEDINGS. 2. IN THE ABOVE VIEW, THE PARTIES ARE PUT TO NOTICE T HAT THE PETITIONS ARE FIXED PEREMPTORILY ON 12 TH APRIL 2016 AT 3.00 P.M. AT WHICH STAGE IT MAY BE DISPOSED OF FINALLY. IN THE MEANTIME, THREE SHALL B E AD-INTERIM RELIEF IN TERMS OF PRAYER CLAUSE (D). IT IS FURTHER STATED THAT THE VERY HON'BLE HIGH COU RT HAS ALSO ADMITTED THE SAID THREE ASSESSEES APPEAL(S) NO. 754 TO 756 OF 2015 AGAINST THE TRIBUNALS ORDER AFTER FRAMING SUBSTANTIAL QUESTION OF LAW. ALL THESE CLINCHING FACTUAL DEVELOPMENTS HAVE GONE UNREBUTTED FROM THE DEPARTMENT SIDE 8. WE NOW ADVERT TO THE ASSESSEES FORMER SUBSTANTI VE GROUND CHALLENGING VALIDITY OF RE-OPENING. WE START WITH THE SETTLE LEGAL PROPO SITION, FIRST OF ALL. CASE LAW CALCUTTA DISCOUNT CO. LTD. VS. INCOME TAX OFFICER (1961) 41 ITR 191 (SC) HELD LONG BACK THAT A BELIEF OF ANY TAXABLE INCOME HAVING REMAINED UNASSESSABLE BY REASONS OF AN ASSESSEES FAILURE IN DISCLOSING ALL MATERIAL FACTS FULLY AND TRULY MUST NOT BE BASED ON MERE SUSPICIOUS BUT ON RELEVANT INFORMATION / MATER IAL ONLY. THEIR LORDSHIPS NEXT JUDGMENT INCOME TAX OFFICER VS. LAKMANI MEWAL DAS, (1976) 103 ITR 437 (SC) ALSO CONCLUDED THAT THEIR MUST BE SOME DIRECT NEXUS OR LIVE LINK BETWEEN THE RELEVANT MATERIAL COMING TO AN ASSESSING OFFICERS NOTICE WH ILST FORMING BELIEF OF ESCAPEMENT OF TAXABLE INCOME FROM BEING ASSESSED. THEIR LORDSH IPS WERE FURTHER OF THE VIEW THAT ALTHOUGH IT IS CORRECT THAT A COURT COULD NOT GO IN TO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ASSESSING OFFICER ON THE POINT AS TO WHETHER RE-OPENING ACTION OUGHT TO BE INITIAT ED OR NOT, IT HAS TO BE KEPT IN MIND THAT IT IS NOT ANY OR EVERY MATERIAL; HOWEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 7 AND FORFETCHED, WHICH WOULD WARRANT THE FORMATION O F BELIEF RELATING TO TAXABLE INCOME HAVING GONE UNASSESSED. 9. THEIR LORDSHIP IN SHEO NATH SINGH VS. ACIT 972 S CR (1) 175 (SC) AND S. NAARAYANAPPA AND OTHERS VS. COMMISSIONER OF INCOME TAX, BANGALORE, (1967) 63 ITR 219 (SC) ALSO HOLD THAT AN ASSESSING OFFICERS ACTION FORMING TO BELIEF OF ANY TAXABLE INCOME HAVING ESCAPED ASSESSMENT IS TO BE B ASED ON SUPPORTIVE MATERIAL ONLY THAN ON A MERE SUSPICIOUS. THE VERY PROPOSITION ALS O STAND REITERATED IN COMMISSIONER OF INCOME TAX-II VS. MULTIPLEX TRADING AND INDUSTRI AL CO. LTD. (2015) 63 TAXMANN.COM 170 (DEL) AS WELL. 10. WE KEEP IN MIND THE FOREGOING LEGAL POSITION AN D DECLINE THE REVENUES PRAYER TO TREAT THE INSTANT APPEAL AS SQUARELY COVERED. WE WISH TO MAKE IT CLEAR THAT WE ARE DEALING WITH VALIDITY OF RE-OPENING REASONS AT THIS STAGE KEEPING IN MIND THE MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER WHICH IS FOU ND TO BE TOTALLY DIFFERENT THAN THAT IN CASE OF OTHER THREE CONNECTED FAMILY-MEMBERS / A SSESSEES. CASE LAW HINDUSTAN LEAVER LTD. VS. R.B. WADKAR (2004) 268 ITR 339 (BOM ) AND (2010) 189 TAXMAN 1 PRASHANT S. JOSHI VS. INCOME TAX OFFICER, WARD-19(2 )(4) MUMBAI HAD THAT IT IS ONLY THE RE-OPENING REASONS RECORDED BY THE ASSESSING O FFICER WHICH COULD BE CONSIDERED WHEN FORMATION OF BELIEF OF A TAXABLE INCOME HAVING ESCAPED ASSESSMENT IS CHALLENGED AND THE SAME COULD NOT BE ALLOWED TO GROW WITH AGE AND INGENUITY BY DEVISING NEW GROUNDS IN REPLIES AND AFFIDAVITS NOT FORMING PART OF RECORDS WHILST THE REASONS WAS ORIGINALLY RECORDED AT THE FIRST STAGE. WE THUS REJ ECT THE REVENUES ENDEAVOUR TO IMPORT RE-OPENING REASONS INCOME OTHER THREE FAMILY MEMBERS TO BE READ IN THESE TWO APPEALS. MORE SO, WHEN THE SAID THREE FAMILY MEMBER S ASSESSING AUTHORITY HAD RELIED AS TAX EVASION PETITION(S) (SUPRA) AS WELL. 11. MR. ROY AT THIS STAGE VEHEMENTLY SUBMITTED THAT BOTH ASSESSING OFFICERS IN KOLKATA & MUMBAI HAVE RIGHTLY GONE BY THE RELEVANT MATERIAL ON RECORD INDICATING ALL THESE FIVE ASSESSEES AS BENEFICIARIES OF THE TWIN T RUSTS SET UP IN LIECHIENSTFIN. HE ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 8 EMPHASISES THAT THE ASSESSING OFFICER(S) HAVE ASSES SED THESE FIVE ASSESSEES TO THE EXTENT OF 1/5 TH SHARE EACH IN AS BENEFICIARIES GOING BY THE TRUST DEED(S). 12. WE FIND NO MERIT IN REVENUES FOREGOING INSTANT ARGUMENT SUPPORTING THE ASSESSING OFFICERS RE-OPENING REASONS. THERE IS HA RDLY ANY DISPUTE THAT THESE ASSESSEES STOOD ASSESSED U/S 143(3) OF THE ACT AT T HE FIRST INSTANCE. IT WAS ONLY IN THE YEAR 2009 I.E. ON 30.03.2009 TO BE PRCISED THAT TH E ASSESSING OFFICER ISSUED HIS SEC. 148 NOTICE(S) AFTER FORMING REASONS TO BELIEVE BASE D ON THE ALLEGED TANGIBLE MATERIAL THAT THEIR TAXABLE INCOME IN THE NATURE OF BALANCE AMOUNT OF US $ 246604.09 AS ON 31.12.2001 HAD REMAINED UNASSESSED TO THE EXTENT OF 1/5 TH SHARE EACH. THE REVENUES VEHEMENT STAND THROUGHOUT IS THAT THE ASSESSING OFF ICER HAD PROCEEDED ON THE BASIS OF THE CORRESPONDING TRUST DEED(S) PERTAINING TO THE F OREGOING TWO TRUSTS AS WELL AS OTHER RELEVANT DOCUMENTS WHILST SETTING INTO MOTION U/S. 148 / 147 MECHANISM. THESE TWO ASSESSEES HAD FILED A COMMON REPRESENTATION BEFORE THE ASSESSING OFFICER ON 23.07.2009 DENYING NOT ONLY ANY SUCH UNDECLARED BAN K ACCOUNT(S) BUT ALSO CATEGORICALLY STATED THAT THEY ARE NOT BENEFICIARIE S OF ANY SUCH FAMILY OR CHARITABLE TRUST. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT IN SPITE OF THE ASSESSING OFFICER HAVING RECORDED HIS RE-OPENING RE ASONS BASED ON ASSESSEES ALLEGED SHARES IN TRUSTS ASSETS GOING BY THE TRUST DEEDS CL AIMS, THE DEPARTMENT ITSELF SOUGHT FOR THE VERY TRUSTS DEEDS FROM THESE ASSESSEES / BENEFI CIARIES ONLY. COPY OF THE RELEVANT CLINCHING CORRESPONDING COMING FROM THE DEPARTMENT TO THIS EFFECT IS DATED 23.09.2009. 13. COUPLED WITH THIS, THE CASE FILE(S) SUGGESTS TH AT THIS TRIBUNAL HAD ALSO DIRECTED THE DEPARTMENT TO PRODUCE THE ASSESSMENT RECORDS AS WELL AS THE RELEVANT EVIDENCE / MATERIALS ON THE BASIS OF WHICH THE ASSESSING OFFIC ER FORMED HIS REASONS TO BELIEVE THAT THE ASSESSEES TAXABLE INCOME HAD ESCAPED ASSE SSMENT. WE MAKE IT CLEAR THAT NO SUCH EVIDENCE OR MATERIAL IN THE NATURE OF TRUST DE EDS HAS SEEN LIGHT OF THE DAY EVEN AFTER A TIME GAP OF FIVE YEARS SINCE THIS TRIBUNAL S DIRECTION TO THIS EFFECT HAD BEEN ISSUED ON 25.05.2015. WE OBSERVE IN THIS BACKDROP T HAT THE ASSESSING OFFICERS RE- OPENING REASONS RECORDED ON THE BASIS OF ALLEGED T RUST DEEDS OF THE TWIN TRUSTS IS NOT ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 9 BASED ON THIS RELEVANT MATERIAL / EVIDENCE SINCE TH E SAID TRUST DEEDS NOWHERE FORMED PART OF RECORDS AT THE THRESHOLD STAGE. THAT BEING THE CASE, WE QUOTE THE SETTLED LEGAL PROPOSITION HEREINABOVE (SUPRA) TO CONCLUDE THAT TH E ASSESSING AUTHORITY HEREIN HAD NOT PROCEEDED AS PER LAW WHILST INITIATING SEC. 148 / 1 47 PROCEEDINGS AGAINST THESE TWO ASSESSEES. THE IMPUGNED RE-OPENING IS HELD NOT UNSU STAINABLE IN LAW THEREFORE. 14. LEARNED DEPARTMENTAL REPRESENTATIVE HAS TAKEN U S THE CIT(A)S LOWER APPELLATE DISCUSSION THAT THE REVENUE HAS VERY WELL PROVED TH AT ONE SHRI SANDRO PRETE HAD REPRESENTED THE FORMER TRUST AND HE SIGNED A DECLAR ATION ON 30.05.2001 AND 05.03.2002 THAT THE SAID TRUST HAD ITS AN LGT BANK ACCOUNT HA VING THESE FIVE FAMILY-MEMBERS AS BENEFICIAL OWNERS OF THE ASSET THEREOF. HE FAILED T O PIN-POINT ANY SUCH MATERIAL ON RECORD WHICH COULD PROVE THE CLINCHING FACT INDICAT ING THESE ASSESSEES TO HAVE EVER NOMINATED MR. PRETE AS THEIR REPRESENTATIVE FOR THE PURPOSE OF MANAGING THE AFFAIRS OF THE ABOVE STATED TRUST. MR. ROY TOOK US TO PAGE 46 PARE 4.2 OF THE LOWER APPELLATE DISCUSSION THAT A MEETING HAD TO TAKE PLACE IN JULY , 2002 BETWEEN ASSESSEE(S) AND MR. PRETE WHICH STOOD CANCELLED ON ACCOUNT OF LATTERS EYE SURGERY. HE SEEKS TO BUTTRESS THE POINT THAT ALL THIS SUFFICIENTLY INDICATED THE RELATION BETWEEN THE ASSESSEES AND THEIR ALLEGED AUTHORIZED REPRESENTATIVE, MR. PRETE. WE AR E OF THE OPINION THAT EVEN IF THERE IS SOME E-MAIL CORRESPONDENCE INDICATING THIS ASSESSEE TO HAVE UNDERGONE EYE TREATMENT, IT NOWHERE EMANATES THAT EITHER MR PRETE WAS ASSESS EES NOMINEE FOR MANAGING THE TRUST(S) OR MR. DHUPELIA ACTED AS MR. RALPS QUA AFFAIRS OF THE FORMER TRUST. 15. THERE IS FURTHER NO DISPUTE THAT THE ASSESSING OFFICERS RE-OPENING REASONS HAVE ALSO NOWHERE SPECIFIED AS TO HOW MUCH OF THE ASSESS EES TAXABLE INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF THEIR FAILURE IN DISCLOSI NG THE MATERIAL FACTS FULLY & TRULY AS STIPULATED IN SEC. 147 1 ST PROVISO OF THE ACT. THE REVENUE HAS STRONGLY CONTE NDED THAT THESE ASSESSEES ARE BENEFICIAL OWNERS OF THE T RUSTS ASSETS TO THE EXTENT OF 1/5 TH SHARE EACH WHICH REPRESENTED THEIR TAXABLE INCOME R EMAINING UNASSESSED. SECTION 147 2 ND PROVISO R.W.S U/S 149(1) (C) IS ALSO QUOTED THAT SINCE THE INSTANT APPEALS PERTAIN TO UNDISCLOSED OVERSEAS ASSETS, THE ASSESSEES ARE NOT ENTITLED TO DRAW ANY BENEFIT U/S 147 1 ST PROVISO. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT BOTH THE ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 1 0 FOREGOING STATUTORY PROVISIONS STOOD INSERTED BY TH E FINANCE ACT 2012 W.E.F. 01.07.2012 HAVING PROSPECTIVE EFFECT WHEREAS WE ARE DEALING WITH SEC. 148 PROCEEDINGS INVOLVING RE-OPENING REASONS RECORDED I N THE YEAR 2009 PERTAINING TO ASSESSMENT YEAR 2002-03 I.E. MUCH EARLIER THAN INSE RTION OF THE AMENDED PROVISION. WE ALSO MAKE IT CLEAR IN VIEW OF OUR OBSERVATION IN PRECEDING PARAGRAPHS THAT THERE IS NO MATERIAL EVIDENCE COMING FROM THE DEPARTMENTAL S IDE THAT THE CORRESPONDING TWIN TRUSTS DEEDS HAVE FORMED PART OF RECORDS WHICH COUL D EVEN REMOTELY INDICATE THAT THESE ASSESSEES ARE BENEFICIAL OWNERS OF THE TRUSTS ASSE TS TO THE EXTENT OF 1/5 TH SHARE EACH AS ON 31.12.2001 WE QUOTE (2014) 363 ITR 300 (ALL) MUKESH KUMAR GUPTA VS. COMMISSIONER OF INCOME TAX THAT SUCH A RE-OPENING INITIATED BEYOND A PERIOD O F FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS NOT SUSTAINABLE IN ABSENCE OF THE SPECIFIED AMOUNT OF TAXABLE INCOME HAVING ESCAPED A SSESSMENT BEING RECORDED IN RE- OPENING REASONS 16. THERE IS FURTHER NO QUARREL THAT SEC. 5(1)(A-C) DEFINES TOTAL TAXABLE INCOME IN CASE OF A RESIDENT THAT THE INCOME WHICH IS RECEIVE D OR DEEM TO BE RECEIVED IN INDIA, ACCRUED OR ARISE OR IS DEEM TO ACCRUE OR ARISE IN I NDIA AND ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING SUCH YEAR. WE REITERATE THAT L EARNED LOWER AUTHORITIES HAVE ASSESSED THESE TWO ASSESSEES QUA THE OVERSEAS TRUSTS BALANCE AMOUNT TO THE EXTENT OF 1/5 TH SHARE EACH U/S 5(1)(C) ONLY. WE TAKE INTO ACCOUNT THE VERY FACT AND CIRCUMSTANCES; AND PARTICULARLY, THE CLINCHING ASPE CT OF THE TRUST DEEDS NOWHERE FORMING PART OF RECORDS THAT THERE IS NO COGENT MAT ERIAL INDICATING THE ASSESSEES AS HAVING 1/5 TH SHARE EACH IN THE TRUSTSASSETS. AND ALSO AS TO W HETHER THE TRUST DEEDS HEREIN PIN-POINT THE TRUSTS AS DISCRETIONARY OR SPE CIFIC ONES AND WHETHER THE BALANCE AMOUNT THEREIN WAS TO DEVOLVE UPON THEM IN A VESTED OR CONTINGENT MANNER. WE NOTE THAT ONCE THE ASSESSING OFFICER HAS HIMSELF NOT SUG GESTED THAT THE IMPUGNED SUMS HAVE BEEN IN FACT ACCRUED OR ARISEN TO THEM, CASE L AW (2008) 174 TAXMANN 605 (GUJARAT) MAHARAJA SHRI JYOTINDRESINJI VS. ACIT AS UPHELD IN HON'BLE APEX COURT (2014) 45 TAXMANN.COM 552 (S.C) HOLDS THAT THE DEPA RTMENTS IMPUGNED ACTION ADDING THE TRUSTS BALANCE IN THESE TWO TAXPAYERS HANDS DOES NOT DESERVE TO BE CONCURRED WITH. THE ASSESSING OFFICERS RE-OPENING REASONS NOWHERE ALLEGE THAT THESE ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 1 1 ASSESSEES HAD ANY RIGHT TO RECEIVE THE ALLEGED 1/5 TH SHARES AS WELL. WE ALSO QUOTE (2014) STPL (WEB) 335 (SC) COMMISSIONER OF WEALTH TAX VS. ESTATE OF LATE HMM VIKRAMSINHJI THAT IN A CASE OF DISCRETIONARY TRUST, THE BENEFIC IARY HAS NO MORE THAN A HOPE THAT THE DISCRETION WOULD BE EXERCISED IN HIS FAVOUR. HON'BLE APEX COURT IN COMMISSIONER OF INCOME TAX VS. KAMALINI KHATAU (1994) 209 ITR 101 (SC) ALSO HOLDS THAT IT COULD NOT BE SAID THAT THE INCOME; WH ICH IS LEFT TO THE DISCRETION, IS RECEIVABLE SO AS TO BE ASSESSED IN A TAXPAYERS HAN DS. WE APPLY THE VERY REASONING MUTATIS MUTANDIS AND HOLD THAT THE AMOUNT IN QUESTION IN THE NATURE OF ASSESSEES ALLEGED 1/5 TH SHARE IN THE TRUST BALANCE HAD NEITHER ACCRUED NOR ARISEN SO AS TO BE TAXED IN THESE TWO TAXPAYERS HANDS. WE ALSO QUOTE HON'BL E APEX COURTS DECISION IN PUSHALAL MANSINGHKA (P) LTD. VS. COMMISSIONER OF I NCOME TAX (1964) 66 ITR 159 (SC) THAT THE CLINCHING EXPRESSION ACCRUES OR ARISES DOES NOT CONSTRUE ACTUAL RECEIPT BUT ONLY A RIGHT TO RECEIVE. WE WISH TO MAKE IT CLE AR THAT OUR FOREGOING DETAILED DISCUSSION SUFFICIENTLY PROVES IN ABSENCE ANY MATER IAL ON RECORD, THESE TWO ASSESSEES DID NOT HAVE RIGHT TO RECEIVE THE ALLEGED 1/5 TH SHARE EACH IN THE TRUSTS BALANCE. 17. WE OBSERVE IN VIEW OF THE FOREGOING DETAILED DI SCUSSION THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN INITI ATING SEC. 148 /147 PROCEEDINGS AGAINST THESE TWO ASSESSEES CULMINATING IN THE IMPU GNED ADDITION(S) OF 230,71,880/- EACH. THE IMPUGNED PROCEEDINGS STAND QUASHED THEREF ORE. THE ASSESSEES IDENTICAL FORMER SUBSTANTIVE GROUNDS ALONGWITH THEIR ADDITION AL LEGAL GROUNDS (SUPRA) ARE ACCEPTED. ALL OTHER PLEADINGS ON MERITS ARE RENDERED INFRUCT UOUS. [A COPY OF THIS COMMON ORDER BE PLACED IN RESPECTIV E CASE FILES . ] 18. BEFORE PARTING, IT IS NOTED THAT THE ORDER IS B EING PRONOUNCED AFTER THE NINETY (90) DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAORDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD O F LOCKDOWN DAY NEED TO BE EXCLUDED. FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE DECISION OF THE CO- ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF DC IT VS. JSW LTD. IN ITA ITA NO.674-675/KOL/2011 A.Y.2002-03 SH MANOJ KR. & SMT. RUPAL DHUPELIA VS. DCIT, CC-I II, KOL PAGE 1 2 NO.6264/MUM/2018 & 6103/MUM/2018 DECIDED ON 14.05.2 020 ASSESSMENT YEAR 2013-14. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15/06/2020 SD/- SD/ - ( '#) (%& () (P.M.JAGTAP) (S.S.GODARA) VICE PRESIDENT JUDICIAL MEMBER *DKP-SR.PS ) - 15/06/2020 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI MANOJ KR. DHUPELIA NILHAT HOUSE, 6 TH FLOOR, 11, R.N. MUKHERJEE ROAD, KOLKAKTA-700 001 / SMT. RUPAL DHUPELIA, C/O. MANOJ DHUPELIA & CO. NILHAT HOUSE, 6 TH FLOOR, 11,R.N. MUKHERJEE ROAD, KOLKATA-700 001 2. /RESPONDENT-DCIT, CENTRAL CIRCLE-III, 18, RABINDRA SARANI, PODDAR COURT 5 TH FLOOR, KOLKTA-700 001 3. , . / CONCERNED CIT 4. . - / CIT (A) 5. / &&, , , / DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , ,,