DCIT (IT) 3(3)(2), MUMBAI V. BHATIA PUSHPA KHIMJI, MUMBAI

ITA 7405/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7122 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P
• Assessee Lawyers: BIREN GABNAWALA
• Keywords: Capital asset; Double taxation relief; Peak credit; Deemed to accrue or arise in india; Set aside
• Section: 271(1)(c); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.7405/M/2016 ASSESSMENT YEAR: 2007-08 ITA NO.1323/M/2017 ASSESSMENT YEAR: 2006-07 ITA NO.5947/M/2016 ASSESSMENT YEAR: 2006-07 ITA NO.1324/M/2016 ASSESSMENT YEAR: 2007-08 DCIT 3(3)(2), R NO.1603, 16 TH FLOOR, AIR INDIA BLDG., NARIMAN POINT, MUMBAI 400021 VS. SMT. BHATIA PUSHPA KHIMJI, DEV DARSHAN, 50, RIDGE ROAD, MUMBAI 400 006 PAN: ASRPK 6503B (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI BIREN GABNAWALA, A.R. REVENUE BY : SHRI ASGHAR ZAIN V.P., D.R. DATE OF HEARING : 09.04.2019 DATE OF PRONOUNCEMENT : 30.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED FOUR APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE ORDERS DATED 15.06.2016, 28.10. 2016 08.08.2016 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2006-07 & 2007-08. ITA NO.5947/M/2016 (A.Y. 2006-07) 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS CORRECT IN DELETING THE ADDITION OF RS. 2 ,33,92,362/- BEING THE PEAK BALANCE LYING IN THE APPLICANT'S HSBC PRIVATE BANK (SUISSE) SA, GENEVA MADE BY THE AO. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS AGREEING TO THE CONTENTION OF THE ASSESSE E THAT IT IS FABRICATED/MANUFACTURED DATA WITH SOME MALAFIDE INT ENTION, AND HAS IGNORED THE FACT THAT THE ASSESSEE DID NOT GIVE ANY EVIDENCE/PR OOF IN THIS REGARD. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)HAS ERRED BY IGNORING THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN WRIT PETITION (L) NO. 3172 OF 2015 IN THE CASE OF SOIGNE E R. KOTHARI VS. DCIT, CENTRAL CIRCLE-8(3), MUMBAI WHEREIN IT WAS HELD THAT 'IN TH E NORMAL COURSE OF HUMAN CONDUCT IF A PERSON HAS NOTHING TO HIDE AND SERIOUS ALLEGATIONS/QUESTIONS ARE BEING RAISED ABOUT THE FUNDS A PERSON WOULD MAKE AVAILABL E THE DOCUMENTS WHICH WOULD PUT TO REST ALL QUESTIONS WHICH SEEM TO ARISE IN TH E MIND OF THE AUTHORITIES. THE CONDUCT ON THE PART OF THE PETITIONER AND HER UNCLE , IN NOT BEING FORTHCOMING, TO OUR MIND LEADS US TO THE CONCLUSION THAT THIS IS NO T A FIT CASE WHERE WE SHOULD EXERCISE OUR EXTRA ORDINARY WRIT JURISDICTION AND/O R INTERFERE WITH THE ORDER PASSED BY THE AUTHORITIES UNDER THE ACT. IF A PERSON HAS N OTHING TO HIDE, WE BELIEVE THE PERSON WOULD HAVE CO-OPERATED IN OBTAINING THE BANK STATEMENTS. ' WHICH SQUARELY APPLIES TO THE PRESENT CASE OF THE ASSESSEE. 4. THE LD. CIT(A) HAS ALSO IGNORED THE PROVISIONS OF SECTION 114 OF THE INDIAN EVIDENCE ACT, 1872 WHICH READS AS UNDER AND AMPLY A PPLIES TO THE CASE OF THE ASSESSEE:- 'SECTION 114. COURT MAY PRESUME EXISTENCE OF CERTAI N FACTS THE COURT MAY PRESUME THE EXISTENCE OF ANY FACT WHI CH IT THINKS LIKELY TO HAVE HAPPENED, REGARD BEING HAD TO THE COMMON COURS E OF NATURAL EVENTS, HUMAN CONDUCT AND PUBLIC AND PRIVATE BUSINESS, IN T HEIR RELATION TO THE FACTS OF THE PARTICULAR CASE. THE COURT MAY PRESUME .... (G) THAT EVIDENCE WHICH COULD BE AND IS NOT PR ODUCED WOULD, IF PRODUCED BE UNFAVORABLE TO THE PERSON WHO WITHHOLDS IT...... ' SECTION 114(G) OF THE INDIAN EVIDENCE ACT, 1872, TH US CLEARLY SAYS THAT THE COURTS CAN PRESUME EXISTENCE OF CERTAIN FACTS IF TH E PERSON LIABLE TO PRODUCE EVIDENCE WHICH COULD BE AND IS NOT PRODUCED, WHICH IF PRODUCED WOULD HAVE BEEN UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 3 7. THE APPELLANT PRAYS THAT THE ORDER OF THE ID. CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 8. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER A NY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE ONLY EFFECTIVE ISSUE RAISED BY THE REVENUE I N THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE DELETION O F ADDITION OF RS.2,33,92,362/- BY LD. CIT(A) AS MADE BY THE AO ON THE BASIS OF PEAK BALANCE LYING IN ASSESSEES HSBC PRIVATE BA NK, (SUISSE) SA, GENEVA. 4. THE FACTS IN BRIEF ARE THAT THE GOVERNMENT OF IN DIA RECEIVED INFORMATION FROM FRENCH GOVERNMENT UNDER DTAA IN EX ERCISE OF ITS SOVEREIGN POWERS THAT SOME INDIAN NATIONALS AND RESIDENTS HAVE FOREIGN BANK ACCOUNTS IN HSBC PRIVATE BANK, (S UISSE) SA, GENEVA WHICH WERE UNDISCLOSED TO THE INDIAN TAXATIO N DEPARTMENT. THE SAID INFORMATION WAS RECEIVED IN T HE FORM OF BASE NOTE WHEREIN THE VARIOUS DETAILS OF ACCOUNT HO LDERS SUCH AS NAME, DATE OF BIRTH, PLACE OF BIRTH, RESIDENTIAL AD DRESS, NATIONALITY, ALONG WITH DATE OF OPENING OF BANK ACC OUNT AND BALANCE LYING THEREIN WERE MENTIONED. IN THE CASE OF THE ASSESSEE ALSO A BASE NOTE WAS RECEIVED. THEREAFTER , THESE INFORMATION/DETAILS WERE PASSED ON TO THE AO. THE AO AFTER RECEIVING THE INFORMATIONS FROM DIT(INV.) 2, MUMBAI ISSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 12.03.201 5 AFTER OBTAINING THE APPROVAL FROM THE JOINT CIT, MUMBAI AFTER RECORDING REASONS TO BELIEVE THAT INCOME OF THE AS SESSEE TO THE TUNE OF AMOUNT APPEARING IN THE SAID BANK ACCOUNT H AS ESCAPED ASSESSMENT. ACCORDINGLY, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSEE IS A NON RESIDENT IN INDIA. THE ASSESSEE DURING THE ASSESSMENT PROCEEDI NGS ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 4 SUBMITTED THAT ASSESSMENT FOR THE INSTANT YEAR HAS BECOME BARRED BY LIMITATION UNDER SECTION 149(1) OF THE AC T AND PROVISIONS OF SECTION 149(1)(C) DO NOT APPLY TO THE ASSESSEE AS HE IS A NON RESIDENT FOR THE LAST 40 YEARS AND SUBMITT ED THE VARIOUS DOCUMENTS AS DESIRED BY THE AO SUCH AS COPY OF THE PASSPORT, COPY OF BANK ACCOUNT OF HSBC, GENEVA, PROOF OF NOT HAVING ANY TAXABLE INCOME IN INDIA, ADDRESS OF THE ASSESSEE IN INDIA ETC. HOWEVER, THE AO DID NOT FIND THE REPLY OF THE ASSES SEE AS ACCEPTABLE AND CAME TO THE CONCLUSION THAT ASSESSEE HAS NOT FILED ANY PROOFS OF MONEY DEPOSITS IN HER FOREIGN A CCOUNT WITH HSBC PRIVATE BANK, (SUISSE) SA, GENEVA AND THE ASSE SSEE HAS FAILED TO OFFER ANY EXPLANATION OF THE SOURCES OF D EPOSIT MADE IN HER BANK ACCOUNT ABROAD. FINALLY, THE AO TREATED T HE PEAK AMOUNT APPEARING IN HSBC BANK ACCOUNT IN A.Y. 2006 -07 RS.2,33,92,362/- BY CONVERTING THE SAME AT $44.23 U SD. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALL OWED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERAT ION THE SUBMISSIONS OF THE ASSESSEE. THE SUBMISSIONS OF TH E ASSESSEE ARE REPRODUCED BELOW: 2.2: DURING THE APPELLATE PROCEEDINGS, ASSESS EE'S CAS IN THEIR SUBMISSIONS HAVE SUBMITTED AS FOLLOWS: '5.1 THE APPELLANT IS ABOUT 72 YEARS OLD NON-RESIDE NT INDIA STAYING MUSCAT, SULTANATE OF OMAN. SHE WAS MARRIED TO LATE MR.NAREN DRAKHIMJI ON 12.2.1966. HE WAS CARRYING ON BUSINESS OF CONSTRUCT ION AND HAD MADE VARIOUS INVESTMENTS AND HELD VARIOUS BANK ACCOUNTS IN MUSCAT AND OTHER COUNTRIES. MR.NARENDRAKHIMJI EXPIRED ON 15.7.1988 A T HOUSTON. USA AND ALL THE PROPERTIES HELD BY HIM WERE INHERITED BY THE AP PELLANT AS PER WILL EXECUTED ON 5.7.1988. 5.2 THE TIME ALLOWED BY THE LEARNED ASSESSING OF/LE ER WAS VERY SHORT. THE FIRST NOTICE U/S. 142(1) OF THE ACT CALLING FOR INF ORMATION WAS ISSUED ON 12.3.2015 AND THE SECOND NOTICE ON 27.3.2035. THE A PPELLANT BEING NON- RESIDENT WAS NOT IN A POSITION TO COLLECT AND FURNI SH BEFORE THE LEARNED ASSESSING OFFICER WITHIN THE STIPULATED TIME. ULTIM ATELY HE COMPLETED THE ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 5 ASSESSMENT ON 31.3.2015 TREATING THE PEAK AMOUNT AP PEARING IN THE HSBC BANK ACCOUNT AS INCOME OF THE APPELLANT PURELY ON T HE BASIS OF PRESUMPTION AND CONJECTURE. 5.3 THE APPELLANT OPENED THE BANK ACCOUNT NO. 10388 171 IN ZURICH BRANCH OF HSBC ON 13.8.2004 AND TRANSFERRED USD 704220.28 TO THIS ACCOUNT ON REDEMPTION OF FIXED DEPOSITS WITH ANZ GRIND LAYS BA NK. JERSEY, WHICH ARE AS UNDER: IT MAY KINDLY BE NOTED THAT THE' AFORESAID FIXED DE POSITS WERE MADE OUT OF FUNDS AVAILABLE FROM THE HUSBAND OF THE APPELLANT, LATE SHRI NARENDRA J. KHIMJI. IN THIS REGARD, COPIES OF STATEMENTS SHOWIN G THE DETAILS OF DATE OF INITIAL DEPOSIT, DATE OF PERIODICAL MATURITY, INTER EST CREDITED ON THE DATE OF MATURITY, AND ANY WITHDRAWALS, IN RESPECT OF THE AF ORESAID THREE FD ACCOUNT ARE ENCLOSED AX ANNEXURE A. FURTHER, COPIES OF CONF IRMATION OF FIXED DEPOSITS ISSUED BY ANZ GRINDLAYS BANK, JERSEY ARE A LSO ENCLOSED AS ANNEXURE B. 5.4 THE APPELLANT, AS STATED ABOVE, IS NON-RESIDENT AND IT IS ONLY HER INCOME WHICH IS RECEIVED OR ACCRUED OR ARISING IN INDIA WH ICH CAN BE BROUGHT TO TAX UNDER THE I. T. ACT. IT IS SUBMITTED THAT THE APPEL LANT HAS NEITHER EARNED NOR HAS ANY INCOME OR INCOME ARISEN OR ACCRUED TO HER I N INDIA. THE SOURCE OF DEPOSITS MADE IN THE HSBC ACCOUNT CONSTITUTES ON MA TURITY OF REDEMPTION OF VARIOUS FDS NARRATED ABOVE, FURTHER, THE APPELLA NT WAS NOT ALLOWED TO CARRY ON ANY BUSINESS IN MUSCAT AS PER LAW PREVAILI NG THERE. ON THE OTHER HAND, IT IS FOR THE LEARNED ASSESSING OFFICER TO ES TABLISH THAT ANY INCOME HAD. IN FUEL. ACCRUED OR ARISEN TO THE APPELLANT IN INDI A. THE APPELLANT SUBMITS THAT SHE HAS NO SOURCE OF INCOME, DIRECTLY OR INDIR ECTLY, THROUGH OR FROM (A) BUSINESS CONNECTION IN INDIA, (B) PROPERTY, ASSET, OR SOURCE OF INCOME IN INDIA, (C) TRANSFER OF CAPITAL ASSET SITUATED IN IN DIA. THEREFORE, THE QUESTION OF ANY INCOME DEEMED TO ACCRUE OR ARISE IN INDIA TO THE APPELLANT IN TERMS OF THE PROVISIONS OF SECTION 9 OF THE I. T. ACT DOE S NOT ARISE AT ALL. 5.5 THE LEARNED ASSESSING OFFICER, MERELY ON THE BA SIS OF INFORMATION THAT THE APPELLANT HAD ACCOUNT IN HSBC BANK, HAS COME TO THE CONCLUSION THAT TOO WITHIN 18 DAYS, THAT THE PEAK AMOUNT OF USD 528 880 IS SOURCED FROM INDIA AND HENCE THE INCOME OF THE APPELLANT. THE LE ARNED ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT INVESTIGATION ON HIS O WN NOR FOUND ANY FIXED DEPOSIT NO. DATE OF DEPOSIT LAST DALE OF MATURITY MATURITY AMOUNT 1229187-102 18.1.1990 15.9.2004 USD87,094.50 122918-101 3.1.1990 30.9.2004 USD 1,68,224. 23 122918-103 29.12.1989 29 11.2004 USD 4,48,901. 55 ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 6 AMOUNT BEING SOURCED FROM INDIA. IN THE ABSENCE OF ANY SUCH FINDING, THERE IS NO JUSTIFICATION FOR THE LEARNED ASSESSING OFFIC ER THAT THE PEAK AMOUNT IN THE HANK ACCOUNT REPRESENTS THE INCOME OF THE APPEL LANT. THE APPELLANT HAVING STAYED ONLY 55 DAYS IN INDIA DURING THE F.Y. 2005-06 RELEVANT TO THE ASSTT. YEAR 2006-07 OR STAYED 365 DAYS OR MORE DURI NG THE FOUR PRECEDING PREVIOUS YEARS. ON THIS COUNT ALSO, SHE CANNOT BE H ELD TO BE A RESIDENT IN INDIA. ON THE OTHER HAND, THE APPELLANT HAS ESTABLI SHED THAT SHE IS A NON- RESIDENT AND THAT THE DEPOSITS IN THE BANK ACCOUNT WITH HSBC IS FROM REDEMPTION OF VARIOUS F.DS IN ANZ GRINDLAYS BANK, T HE INVESTMENT OF WHICH WERE MADE BY HER FROM THE MONEY INHERITED BY HER FR OM HER HUSBAND ON HIS DEATH. ' 6. THEREAFTER, THE LD. CIT(A), AFTER TAKING INTO AC COUNT THE ABOVE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE, ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: AS REGARDS GROUND NOS. 4 &5, THE CRUX OF THE MATTE R EMERGING FROM THE ABOVE DETAILS IS THAT THE AO RELIED ON THE INFORMATION IN THE BASE NOTE AND REOPENED THE ASSESSMENT ON THE BELIEF THAT THE ASSESSEE DID NOT SHOW THE BALANCE OF USD 528880 WHICH WAS IN THE BANK ACCOUNT OF HSBC AND DID NOT F ILE THE RETURN OF INCOME FOR THE A.Y.2006-07. THE ASSESSING OFFICER FURTHER BELI EVED THAT THE ACCUMULATED BALANCES WERE EARNED FROM INDIA AS THE ASSESSEE WAS NOT PERMITTED TO UNDERTAKE ANY EMPLOYMENT ABROAD AND THIS FACT GOT STRENGTH FR OM THE PERUSAL OF PASSPORT WHICH REVEALED THAT DURING THE F.Y.2005-06 RELEVANT TO A.Y.2006-07 THE ASSESSEE HAD MADE FREQUENT VISITS TO INDIA AND COMPLETED THE RE-ASSESSMENT BY HOLDING THAT THE SOURCE OF THE FUNDS FOR THE DEPOSIT OF US DOLLA RS 704220.28 ON 30/11/2004 WERE RELATABLE TO A SOURCE IN INDIA AND A DISCRETIO NARY TRUST WAS MADE BY THE ASSESSEE FROM SOURCES IN INDIA AND ALSO HAD A SOURC E IN INDIA AND ASSESSED THE TOTAL INCOME AT RS.2,33,92,362/-ONLY ON THE BASIS OF A CO PY OF BASE-NOTE RECEIVED FROM THE GOVERNMENT SOURCES. FIRST NOTICE UNDER SECTION 148 OF L.T.ACT, 1961 WAS ISSUED ON 18/3/2015 AND 142(1) NOTICE REQUISITIONING DETAI LS AND DOCUMENTS ON 27/3/2015(FRIDAY) CALLING FOR DETAILS ON 30/3/2015 [MONDAY) AND ASSESSEE AND ITS CAS TRIED TO COMPLY WITH THE NOTICES DESPITE THE AS SESSEE BEING A NON-RESIDENT AND YET COMPLIANCE WAS MADE BY THE CA TO THE BEST LEVEL . AND THE ASSESSMENT ORDER WAS FINALISED ON 31/3/2015 ON TOTAL INCOME OF RS.2( 33,92,362/-. THUS ASSESSEE DID NOT HAVE SUFFICIENT OPPORTUNITIES TO EXPLAIN HER CA SE TO THE AO. THEREFORE, SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE ASSESSEE'S CA TO SU BMIT DETAILS AND DOCUMENTS AND EXPLAIN THE CASE AND THEREFORE FACTS OF THE CASE WE RE EXAMINED VIS-A-VIS THESE DETAILS AND DOCUMENTS. 2.5: PRIMA FACIE IT EMERGES FROM THE DETAILS AVAILA BLE ON RECORD THAT THE ASSESSEE WAS A NON-RESIDENT AND WAS LIVING IN MUSCAT DURING PREVIOUS YEAR RELEVANT TO A.Y. 2006-07, AND THE SOURCE OF THE DEPOSITS OF US DOLLA RS 528880 IN THE HSBC PRIVATE BANK DURING PREVIOUS YEAR RELEVANT TO A.Y.2006-07 W AS THE INHERITANCE OF THE MOVEABLE AND IMMOVEABLE ASSETS OF MR.NARENDRA KHIMJ I BHATIA WHO EXPIRED ON 15/7/1988 AT HOUSTON, USA AND HE WAS CARRYING ON TH E CONSTRUCTION BUSINESS AND HELD ASSETS IN MUSCAT AND OTHER COUNTRIES. AND THE FUNDS OF US DOLLARS ARE THE RESULT OF MULTIPLYING OF VARIOUS DEPOSITS WITH INTE REST EARNED FROM TIME TO TIME ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 7 FROM 1988 ONWARDS IN GRINDLAYS BANK AND ANZ BANK MU SCAT WHICH WAS QUANTIFIED TO US DOLLLARS 704220 STANDING IN BANK ACCOUNT NUMB ER 10388171 AND THIS AMOUNT WAS DEPOSITED WITH IISHC PRIVATE BANK SUISSE GENEVA WHICH IS THE BONE OF CONTENTION. 2.6: THERE ARE TWO PERTINENT ISSUES OF THE CASE, WH ETHER THE ASSESSEE IS A NON RESIDENT OR NOT FOR THE RELEVANT ASSESSMENT YEAR AN D SECOND IS WHETHER FUNDS DEPOSITED IN THE HSBC SWITZERLAND OF US DOLLARS 528 880 OR US DOLLARS 704220 (87167 PLUS 168297 PLUS 448974) WERE ATTRIBUTABLE T O A SOURCE OF INCOME AND/OR ASSETS IN INDIA OR NOT FIRST OF ALL IT APPEARS FROM RECORDS THAT THE AO WAS IN A HURRY TO PASS ASSESSMENT ORDER SINCE TIME BARRING DATE OF 31.03.2015 WAS COMING NEAR AND DID NOT HAVE THE TIME TO PERUSE THE CD FURNISHE D BY THE ASSESSEE AND/OR ACCESS RECORDS FROM THE INVESTIGATION WING AND/OR ACIT 26( 1), MUMBAI, WHERE THE CASE RECORDS WERE THERE EARLIER BEFORE THE TRANSFER OF C ASE RECORDS. THIS IS FURTHER EVIDENT FROM THE OBSERVATIONS OF THE AO WHO RE-OPEN ED THE ASSESSMENT AND RECORDED REASONS AND THE AO WHO PASSED THE ASSESSME NT ORDER AS FOLLOWS: THE ACCUMULATED BALANCES IN THE HSBC ACCOUNT APPEA R TO BE FROM INCOME SOURCED IN INDIA AS SHE IS NOT PERMITTED TO UNDERTA KE EMPLOYMENT ABROAD. THIS FACT GETS STRENGTH FROM THE PERUSAL OF PASSPOR T WHICH REVEALS THAT DURING THE F.Y.2005-06 RELEVANT TO A.Y.2006-07, THE ASSESSEE HAS MADE FREQUENT VISITS INDIA AND ABROAD. THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WHEN READ WITH THE JURISPRUDENCE AS MENTIONED ABOVE POINTS ONLY TO ONE THING WITH REGARD TO THE SOURCE OF DEPOSITS IN THE HSBC, GENEVA ACCOUNTS , THAT THE INITIAL CONTRIBUTION TO THE HSBC, GENEVA ACCOUNT WHILE SETT LING THE DISCRETIONARY TRUST WAS MADE BY THE ASSESSEE FROM SOURCES IN INDI A WHICH HAS NOT BEEN DISCLOSED IN HER RETURN OF INCOME. FURTHER, BY APPL YING THE SAME PRINCIPLE, IT CAN BE CONCLUDED THAT THE SUBSEQUENT DEPOSITS IN TH E ACCOUNT WERE ALSO FROM SOURCES IN INDIA WHICH HAS NOT BEEN DISCLOSED IN THE ASSESSEE'S RETURN OF INCOME.' 2.7 PRIMA FACIE IT APPEARS THAT THE FOLLOWING INITI AL DEPOSITS MADE BY THE ASSESSEE IN DECEMBER 1989 AND JANUARY 1990 MULTIPLIED OVER A PE RIOD OF TIME EVERY MONTH WITH THE CREDIT OF INTEREST TO IT AS PER BANK RULES WHICH ULTIMATELY RESULTED IN THE DEPOSITS OF US DOLLARS 704220 WITH HSBC BANK SWITZE RLAND IN 2004. A. 15TH SEPTEMBER 2004 USD 87,167.50 TRANSFERRED TO HSBC PRIVATE BANK (SUISSE) SA B. 30TH SEPTEMBER 2004 USD 168,297.23 TRANSFERRED T O HSBC PRIVATE BANK (SUISSE) SA C. 29TH NOVEMBER 2004 USD 448,974.55 TRANSFERRED TO HSBC PRIVATE BANK (SUISSE) SA PRIMA FACIE THE DEPOSIT OF FUNDS OF US DOLLARS 5288 80 AND/OR EVEN US DOLLARS 704220 AS PER THE AFFIDAVIT AND RECORDS IS NOT AT A LL RELATABLE TO ANY SOURCE OF ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 8 BUSINESS AND/OR ASSETS IN INDIA AND HENCE THESE DEP OSITS AND ANY INCOME THEREON DID NOT ACCRUE AND/OR ARISE IN INDIA. AS SUCH THESE DEPOSITS WERE RELATABLE TO A SOURCE OF DEPOSITS IN MUSCAT AND ELSEWHERE. THE DET AILS OF THE BANK DEPOSITS ARE AS UNDER: FIXED DEPOSIT NO. DATE OF DEPOSIT LAST DATE OF MATURITY MATURITY AMOUNT 1229187-102 18.1.1990 15.9.2004 USD87.094.50 1229187-101 3.1.1990 30.9,2004 USD 1.68,224.23 1229187-103 29.12.1989 29.11.2004 USD 4,48,901.55 TOTAL USD 7,04,220.28 2.8 THERE IS ANOTHER ASPECT OF THE MATTER FROM WHIC H THE AO HAS DRAWN ADVERSE CONCLUSIONS. ASSESSEE IS AN INDIAN PASSPORT HOLDER AND HAS GIVEN HER ADDRESS ON THE PASSPORT AS 16 DEV DARSHAN, 50, RIDGE ROAD, WALKESH WAR, MUMBAI, M.S. HERE ALSO THE AO HAS DRAWN ADVERSE CONCLUSIONS BECAUSE HE WAS IN A HURRY TO PASS ASSESSMENT ORDER. JUST BECAUSE THE ASSESSEE OWNS OR HAS GIVEN A MUMBAI ADDRESS ON PASSPORT DOES NOT AUTOMATICALLY PROVE THAT THE S OURCE OF THESE DEPOSITS AND INCOME ACCRUING AND/OR ARISING THEREON ON DEPOSITS WITH A BANK EITHER IN MUSCAT AND/OR GENEVA ARE ASSESSABLE TO TAX IN INDIA UNDER SECTION 9 OF THE I.T.ACT,1961 SINCE THE ASSESSEE IS A NON-RESIDENT IN NUTSHELL, T HE DEPOSITS OF US DOLLARS OF 528880 AND/OR US DOLLARS 704220 WITH GRINDLAYS BANK /ANZ GRINDLAYS BANK AND LATER ON WITH HSBC PRIVATE BANK SUISSE GENEVA AND I NTEREST EARNED THEREON DURING PREVIOUS YEAR RELEVANT TO A.Y.2006-07 DID NOT ACCRU E AND ARISE IN INDIA AND HENCE NOT TAXABLE UNDER THE INCOME-TAX ACT,1961. HENCE IT IS HELD THAT THE AMOUNT OF RS.2,33,92,362/- EQUIVALENT TO US DOLLARS 528880 AN D EVEN US DOLLARS 704220 AND INTEREST EARNED THEREON IS NOT TAXABLE AND HENCE TH E ADDITION OF RS.2,33,92,362/- MADE BY THE AO IS HEREBY DELETED. IT IS ALSO SUBMIT TED BY THE ASSESSEE'S CA THAT MOST OF THE INFORMATION/DETAILS REQUIRED FOR MAKING A FAIR AND JUST ASSESSMENT VIZ., THE ORIGINAL CD OF THE HSBC BANK ACCOUNT STATEMENT RIGHT FROM THE DATE OF CREATION TILL DATE OR DATE OF CLOSURE, WHICHEVER WAS LATER A ND THE ASSESSEE REPLIED DURING THE ASSESSMENT PROCEEDINGS STATING THAT THE ASSESSEE HA S SUBMITTED THE ORIGINAL CD OF THE ACCOUNT FROM HSBC BANK, GENEVA TO THE ACIT-26(1 ). SIMILARLY, THE ASSESSEE'S CA HAS ALSO SUBMITTED THAT COPY OF THE PASSPORT/DETAIL S OF FOREIGN TRAVEL WAS ALSO MADE AVAILABLE TO ACIT-26(1) VIDE LETTER DATED 16.02.201 5 AND WAS VERIFIED BY THE AO, ACIT.26(1], MUMBAI. HOWEVER, IT IS SEEN FROM THE AS SESSMENT ORDER THAT THE ASSESSING OFFICER MENTIONED THAT THE ASSESSEE DID N OT PROVIDE ANY INFORMATION. THE ASSESSEE'S CA, HOWEVER, DURING THE APPELLATE PROCEE DINGS FILED THE DETAILS AGAIN. THE UNDERSIGNED VERIFIED THESE DETAILS AND BASED ON WHICH THE DECISIONS HAVE BEEN TAKEN. NEVERTHELESS, THE ASSESSEE'S CA IS REQUESTED TO PROVIDE THE ENTIRE SET OF 13 PAGE AFFIDAVIT, 265 PAGE DOCUMENTS AND LETTER DATED 27.05.2016 ALONG WITH THREE ANNEXURES TO THE AO AND AO WILL VERIFY THE AUTHENTI CITY OF THESE DOCUMENTS, CORRELATE FIGURES OF DEPOSITS MADE FROM DECEMBER 19 89/ JANUARY 1990 LEADING TO THE DEPOSIT/TRANSFER OF US DOLLARS 704220 (87167 PL US 168297 PLUS 448974) WITH ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 9 HSBC BANK SWITZERLAND IN 2004 AND GIVE EFFECT TO TH IS ORDER AFTER VERIFYING THE DETAILS. IT MAY BE MENTIONED HERE THAT THE NAME OF ANZ GRINDLAYS BANK WAS CHANGED TO STANDARD CHARTERED BANK FROM 000 ONWARD S AS PER THE INFORMATION AVAILABLE ON INTERNET. 2.9 IN NUTSHELL, ASSESSEE'S GROUND OF APPEALS NOS,4 & 5 ARE ALLOWED AND THE ENTIRE ADDITION OF RS.2,33,92,363/- IS DELETED SUBJECT TO VERIFICATION OF DETAILS AS MENTIONED ABOVE 7. THE LD. D.R. VEHEMENTLY SUBMITTED BEFORE US THAT ASSESSEE HAS DEPOSITED MONEY INTO FOREIGN BANK ACCOUNT IN A. Y. 2006-07 SOURCE OF WHICH WAS NOT EXPLAINED BY THE ASSESSEE, NEITHER ANY DISCLOSURE WAS MADE TO THE INDIAN INCOME TAX AUTHOR ITIES. IT CAME TO BE KNOWN ONLY WHEN THE GOVERNMENT OF INDIA RECEIVED INFORMATION FROM FRENCH GOVERNMENT UNDER DTAA IN EX ERCISE OF ITS SOVEREIGN POWERS THAT ASSESSEE WAS HAVING ACCOU NT WITH FOREIGN BANK WITH HSBC PRIVATE BANK, (SUISSE) SA, GENEVA WHICH WAS NOT DISCLOSED TO THE INCOME TAX DEPARTMEN T, GOVT. OF INDIA. THUS, THE LD. D.R. RELIED HEAVILY ON THE OR DER OF AO BY SUBMITTING THAT THE ASSESSEE WAS HAVING DEPOSITS IN THE HSBC PRIVATE BANK, (SUISSE) SA, GENEVA WHICH WOULD NOT H AVE BEEN REVEALED IF THE GOVERNMENT OF INDIA HAVE NOT RECEIV ED INFORMATION UNDER DTAA FROM THE FRENCH GOVERNMENT A ND THEREFORE THE SAME WAS RIGHTLY TREATED AS UNDISCLOS ED INCOME BY THE AO AS THE SOURCE WAS NOT EXPLAINED AT ALL. TH EREFORE, THE ORDER OF LD. CIT(A) MAY KINDLY BE REVERSED AND THAT OF THE AO BE RESTORED. 8. THE LD. A.R., ON THE OTHER HAND, SUBMITTED BEFOR E THE BENCH THE DETAILS OF HOW THE ASSESSEE HAS RECEIVED THE MONEY BY HERITANCE WERE FILED BEFORE THE AUTHORITIES BELOW. THE LD. A.R. SUBMITTED THAT ASSESSEE WAS A NON RESIDENT AND WAS LIVING IN MUSCAT IN PREVIOUS YEAR RELEVANT TO AY. 2006-07. TH E LD AR ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 10 STATED THAT SOURCE OF DEPOSIT OF USD 52880 IN HSBC PRIVATE BANK, (SUISSE) SA, GENEVA DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2006-07 WAS BY WAY OF INHERITANCE OF MOVABLE A ND IMMOVABLE ASSETS OF MR. NARENDRA KHIMJI BHATIA HUSB AND OF THE ASSESSEE WHO EXPIRED ON 15.07.1988 AT HOUSTON, USA . THE LD. A.R. SUBMITTED THAT ASSESSEE WAS CARRYING ON THE CO NSTRUCTION BUSINESS AND HAS HELD ASSETS IN MUSCAT AND OTHER CO UNTRIES. THE LD. A.R. SUBMITTED THAT THE SOURCE OF THESE DEP OSITS WERE THE DEPOSITS OF THE HUSBAND ALONG WITH INTEREST EAR NED FROM TIME TO TIME RIGHT FROM 1988 ONWARDS IN GRINDLAYS BANK A ND ANZ BANK, MUSCAT WHICH WERE QUANTIFIED AT USD 704220 STANDING IN THE BANK ACCOUNT NO.10388171 AND THIS IS THE AMOUNT WHICH WAS DEPOSITED WITH THE HSBC PRIVATE BANK, (SUISSE) SA, GENEVA WHICH IS THE BONE OF CONTENTION IN THE PRESENT CASE . THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT THE ASSESSEE I S UNDISPUTEDLY A NON RESIDENT INDIAN AND EVEN THE LD. CIT(A) HAS OBSERVED THAT AO WAS IN A HURRY TO PASS THE ASSESSM ENT ORDER SINCE THE TIME BARRING DATE WAS 31.03.2015 AND PROB ABLY DID NOT HAVE THE TIME TO EXAMINE THE CD FURNISHED BY TH E ASSESSEE AND THE RECORDS FROM INVESTIGATION WING, MUMBAI. THE LD. A.R. SUBMITTED THAT THE LD. CIT(A) HAS GIVEN A FINDING O F FACTS THAT THE SOURCE OF DEPOSITS AS APPEARING IN THE HSBC PRI VATE BANK, (SUISSE) SA, GENEVA WERE OUT OF THE CREDIT BALANCE WITH THE BANKS AS STATED ABOVE AS INCREASED BY INTEREST FROM TIME TO TIME WHICH WERE DEPOSITED IN HSBC PRIVATE BANK, (SUISSE) SA, GENEVA IN 2004 AS PER DETAIL GIVEN HEREINABOVE. TH E LD. A.R. SUBMITTED THAT LD. CIT(A) HAS EVEN NOTED THAT ASSES SEE IS A NON RESIDENT AND IS NOT HAVING ANY ASSETS IN INDIA AND THE SAID INCOME/DEPOSITS ABROAD IS NOT RELATABLE TO ANY ASSE T IN INDIA ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 11 AND HENCE THE SAID INCOME DID NOT ACCRUE OR ARISE IN INDIA. THE LD. CIT(A) ALSO OBSERVED THAT THESE DEPOSITS WERE R ELATABLE TO SOURCE OF DEPOSIT IN MUSCAT AND ELSEWHERE AS GIVEN HEREINABOVE AND FINALLY LD. CIT(A) ALLOWED THE APPEAL OF THE AS SESSEE SUBJECT TO VERIFICATION OF THESE DOCUMENTS BY THE AO. THE LD. A.R. THEREFORE SUBMITTED THAT SINCE THE AO HAS BEEN PROV IDED OPPORTUNITY TO VERIFY THESE DOCUMENTS AND IF ANYTHI NG WRONG IS FOUND AO WOULD HAVE TAKEN DECISION ACCORDINGLY BUT IN THE PRESENT CASE NOTHING OF THE SORT HAS HAPPENED. THE LD. A.R. THEREFORE SUBMITTED THAT THE ORDER OF LD. CIT(A) MA Y KINDLY BE AFFIRMED AS BEING REASONED AND AS PER LAW. 9. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE BONE OF C ONTENTION WAS THE SOURCE OF DEPOSITS IN HSBC PRIVATE BANK, (SUISS E) SA, GENEVA TO THE TUNE OF 2,33,92,363/- THE PEAK BALANC E IN FINANCIAL YEAR RELEVANT TO A.Y. 2006-07. WE FIND M ERIT IN THE CONTENTIONS OF THE LD. A.R. THAT THE SOURCE OF DEPO SIT WAS OUT OF THE FUNDS HELD BY THE ASSESSEES HUSBAND IN MUSCAT AND OTHER COUNTRIES AS ASSESSEES HUSBAND WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND BUILDERS ABROAD. THE ASSESSEE REC EIVED THIS MONEY BY WAY OF INHERITANCE ON THE DEATH OF HER HUS BAND IN 1988 WHO EXPIRED ON 15.07.1988. WE FURTHER FIND TH AT THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING ALL THESE FACTS AND INFORMATION RECORD SUBJECT TO V ERIFICATION OF THESE INFORMATIONS BY THE AO AS AO HAS PASSED THE A SSESSMENT ORDER IN A HURRIED MANNER WITHOUT EXAMINING ALL THE SE FACTS. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF LD. CIT(A) AND ACCORDINGL Y WE UPHOLD THE SAME BY DISMISSING THE APPEAL OF THE REVENUE. ITA NO.7405/M/2016 & ORS. SMT. BHATIA PUSHPA KHIMJI 12 ITA NO.7405 (A.Y.2007-08) 10. SINCE WE HAVE DECIDED AN IDENTICAL ISSUE IN IT A NO.5947 A.Y. 2006-07 DISMISSING THE APPEAL OF THE REVENUE, OUR DECISION IN ITA NO.5947 A.Y. 2006-07 WOULD, MUTATIS MUTANDIS , APPLY TO THIS APPEAL AS WELL. ACCORDINGLY, THE APPEAL OF TH E REVENUE IS DISMISSED. ITA NO.1323/M/2017 & ITA NO.1324/M/2016 11. THE REVENUE HAS CHALLENGED THE DELETION OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT IN BOTH THESE CASES. SINCE WE HAVE DISMISSED THE APPEALS OF THE REVENUE CHALLENGING TH E QUANTUM BY UPHOLDING THE ORDER OF LD. CIT(A), THE ABOVE TWO APPEALS BECOME INFRUCTUOUS AND ARE DISMISSED. 12. IN THE RESULT, ALL THE FOUR APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.