Sri Bishwanath Garodia, Kolkata V. DCIT, CC-3(3), kOLKATA, Kolkata

ITA 853/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4492 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2016
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR; PINAKI MUKH
• Assessee Lawyers: D S DAMLE
• Keywords: Search and seizure; Additional evidence; Corroborative evidences; Retraction
• Section: 143(3); 153A; 131; 132; 15

Judgement Text

I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 20 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISHWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NOS. 853 & 854 /KOL/ 2016 ASSESSMENT YEAR: 2006-2007 & I.T.A. NOS. 855 & 856 /KOL/2016 ASSESSMENT YEAR: 2007-2008 SHRI BISHWANATH GARODIA,........................... ................................APPELLANT 9, DOVER PARK, 2 ND FLOOR, KOLKATA-700 019 [PAN: ADGPG 4384 E] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ......................RESPONDENT CENTRAL CIRCLE-3(3), KOLKATA, AAYAKAR BHAWAN, POORVA, 110, SHANTIPALLY, KOLKATA-700 017 APPEARANCES BY: SHRI D.S. DAMLE, FCA, FOR THE ASSESSEE SHRI NIRAJ KUMAR. CIT, D.R. & SHRI PINAKI MUKHERJEE , JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 20, 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 21, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M .: THESE TWO APPEALS BEING ITA NOS. 854 & 856/KOL/2016 FILED BY THE ASSESSEE AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLKATA BOTH DATED 11.03.2 016 INVOLVE COMMON ISSUES AND THE SAME, THEREFORE, ARE BEING DISPOSED OF BY A SINGLE COMPOSITE ORDER ALONG WITH THE CORRESPONDING PENALT Y APPEALS BEING ITA NOS. 853 & 855/KOL/2016 FOR THE SAKE OF CONVENIENCE . I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 20 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE AS FOLLOW:- THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL, WHO BELONGS TO MANGAL STEEL GROUP. AS PER THE INFORMATION RECEIVED BY THE GOVERNMENT OF INDIA FROM A FOREIGN GOVERNMENT UNDER THE PROVIS ION OF EXCHANGE OF INFORMATION CLAUSES OF THE BILATERAL DOUBLE TAXATIO N AGREEMENT WITH THAT COUNTRY, THE ASSESSEE HAD A BANK ACCOUNT IN HSBC, G ENEVA, SWITZERLAND SHOWING A SUM OF US DOLLARS 10,23,210 IN DECEMBER, 2005 RELATING TO A.Y. 2006-07 AND TWO OTHER SUMS OF US DOLLARS 10,74,837 IN MAY, 2006 AND US DOLLARS 10,64,993 IN DECEMBER, 2006 RELATING TO A.Y . 2007-08. ON THE BASIS OF THIS INFORMATION, A SEARCH AND SEIZURE ACT ION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE CASE OF THE ASSESSEE AS WELL AS IN OTHER CASES BELONGING TO MANGAL STEEL GR OUP ON 28.07.2011 AS WELL AS SUBSEQUENT DATES. DURING THE COURSE OF SEAR CH, BOOKS OF ACCOUNT, JEWELLERY, ETC. WERE FOUND BESIDES SOME CASH. THE S TATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 131 OF THE ACT, WHEREIN HE ADMITTED OF HAVING MAINTAINED A BANK ACCOUNT IN HSBC, GENEVA , SWITZERLAND. HE ALSO ADMITTED THAT THE SAID BANK ACCOUNT WAS OPENED ON 07.06.1999 AND HIS WIFE SMT. USHA GARODIA WAS AN AUTHORIZED PERSON TO OPERATE THE SAID ACCOUNT MAINTAINED IN HIS NAME. HE FURTHER ACCEPTED THAT THE MONEY DEPOSITED IN THE SAID ACCOUNT REPRESENTED THE PROCE EDS OF HIS EXPORT BUSINESS AND AGREED TO PAY INCOME-TAX, IF ANY, DUE THEREON. HE ALSO POINTED OUT THAT THE SAID BANK ACCOUNT WAS CLOSED S OMETIME AGO AND THERE WAS NO BALANCE IN THE SAID ACCOUNT ON THE DAT E OF RECORDING OF HIS STATEMENT. PURSUANT TO THE SEARCH, NOTICES UNDER SE CTION 153A OF THE ACT WERE ISSUED BY THE ASSESSING OFFICER FOR BOTH THE Y EARS UNDER CONSIDERATION, IN RESPONSE TO WHICH HIS RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION WERE FILED BY THE ASSESSEE ON 2 3.08.2012 DECLARING TOTAL INCOME OF RS.5,18,435/- AND RS.5,49,810/- FOR A.Y. 2006-07 AND 2007-08 RESPECTIVELY. IN THE SAID RETURNS, THE ASSE SSEE HAD NOT OFFERED TO TAX THE AMOUNTS FOUND DEPOSITED IN HIS BANK ACCOUNT WITH HSBC, GENEVA, I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 20 SWITZERLAND. IN REPLY TO THE QUERY RAISED BY THE AS SESSING OFFICER IN THIS REGARD, THE ASSESSEE DENIED OF HAVING ANY BANK ACCO UNT WITH HSBC, GENEVA, SWITZERLAND BY STATING THAT HE HAD NO KNOWL EDGE ABOUT SUCH BANK ACCOUNT. HE ALSO STATED THAT HE WAS UNDER EXTREME P RESSURE AND DURESS AS A RESULT OF SEARCH AND SEIZURE ACTION AND SIGNED WH ATSOEVER WAS DICTATED BY THE DDIT (INV.)/ADDITIONAL DIT (INV.) IN THE STA TEMENT RECORDED UNDER SECTION 131 ON 30.07.2011. IN HIS STATEMENT RECORDE D UNDER SECTION 131 DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 17.0 6.2014 AND 12.12.2014, THE ASSESSEE AGAIN DENIED OF HAVING ANY BANK ACCOUNT IN HSBC, GENEVA, SWITZERLAND. THIS DENIAL OF THE ASSES SEE WAS FOUND TO BE AN AFTER-THOUGHT BY THE ASSESSING OFFICER KEEPING IN V IEW THE SPECIFIC INFORMATION RECEIVED FROM FOREIGN GOVERNMENT AS WEL L AS THE ADMISSION OF THE ASSESSEE IN HIS STATEMENT RECORDED ON 30.07. 2011 ACCEPTING THE OWNERSHIP OF THE RELEVANT BANK ACCOUNT. HE ALSO NOT ED THAT THE ALLEGATION OF PRESSURE AND COERCION DURING THE COURSE OF SEARC H AND SEIZURE ACTION AS MADE BY THE ASSESSEE WAS NOT BACKED BY ANY EVIDE NCE OF ANY SORT. ACCORDINGLY, RELYING ON THE ADMISSION OF THE ASSESS EE AS MADE IN HIS STATEMENT RECORDED ON 30.07.2011, WHICH WAS DULY SU PPORTED BY THE INFORMATION RECEIVED BY THE GOVERNMENT OF INDIA FRO M THE FOREIGN GOVERNMENT, THE SUMS OF RS.4,61,16,074/- (EQUIVALEN T TO US DOLLARS 10,23,210) AND RS.9,70,73,651/- (EQUIVALENT TO US D OLLARS 10,64,993 AND 10,74,837) WERE ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE FOR A.YS. 2006-07 AND 2007-08 IN THE ASSESSMENTS COMPLE TED UNDER SECTION 153A/143(3) OF THE ACT VIDE ORDERS DATED 31.12.2014 . 3. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 153A/143(3) FOR BOTH THE YEARS UNDER CONSIDERATION, APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEAL S) CHALLENGING THEREIN THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS DIS PUTING THE ADDITIONS MADE THEREIN ON ACCOUNT OF THE TRANSACTIONS REFLECT ED IN THE BANK ACCOUNT WITH HSBC BANK, GENEVA, SWITZERLAND. AS REGARDS THE PRELIMINARY ISSUE I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 20 RELATING TO THE VALIDITY OF THE ASSESSMENTS MADE BY THE ASSESSING OFFICER, THE MAIN CONTENTION RAISED BY THE ASSESSEE BEFORE T HE LD. CIT(APPEALS) WAS THAT IN THE ABSENCE OF ANY INCRIMINATING MATERI AL OR DOCUMENT FOUND IN THE COURSE OF SEARCH, THE ASSESSING OFFICER HAD NO JURISDICTION TO INITIATE AND FRAME THE ASSESSMENTS UNDER SECTION 15 3A OF THE ACT. THIS STAND OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY T HE LD. CIT(APPEALS) AND HE PROCEEDED TO UPHOLD THE VALIDITY OF ASSESSME NTS MADE BY THE ASSESSING OFFICER UNDER SECTION 153A/143(3) OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3.2 OF HIS IMPUGNED ORDERS:- 3.2. THE CONTENTION OF THE ASSESSEE THAT IN ABSENC E OF ANY INCRIMINATING MATERIAL OR DOCUMENT FOUND IN THE COU RSE OF SEARCH ACTION, ASSESSMENT COULD NOT BE FRAMED U/S. 153A OF THE ACT. LD. AR REFERRED SOME CASE LAWS IN. SUPPORT OF HIS ARGUMENT S. THERE ARE DECISIONS STATING ASSESSMENTS CAN BE MADE U/S. 153A EVEN IF NO MATERIAL FOUND DURING SEARCH. RELIANCE IS PLACED UP ON JUDGMENTS IN THE CASE OF SHIVNATH RAI HARNARAIN (INDIA) LTD. VS. DCIT (ITAT, DELHI), 304 LTR (AT) 271 AND SHYAM LATA KAUSHIK VS. ACIT (ITAT, DELHI), 114 ITD 305. HOWEVER, FACTS IN THIS CASE AR E DIFFERENT. IN THIS CASE, APART FROM INVENTORY OF JEWELLERY AND OTHER M ATERIALS, CASH OF RS.5,00,000/- WAS SEIZED. BESIDES, AT THE TIME OF S EARCH ACTION, THE REVENUE WAS IN POSSESSION OF AUTHENTICATED INFORMAT ION THAT THE ASSESSEE HAD AN UNDISCLOSED BANK ACCOUNT WITH THE H SBC BANK, GENEVA, SWITZERLAND. IN FACT, ONE OF THE MAIN REASO NS FOR INITIATION OF SEARCH ACTION WAS THAT UNDISCLOSED FOREIGN BANK ACCOUNT. THUS AT THE TIME OF ISSUANCE OF NOTICE U/S 153A BY THE AO, THERE INDEED SOME INCRIMINATING MATERIALS AND DOCUMENTS WERE IN THE P OSSESSION OF THE AO IN THE FORM OF SEIZED CASH AND UNDISCLOSED BANK ACCOUNT AND AO MADE AN ADDITION OF RS.4.61 CRORES ON EXAMINATION O F UNDISCLOSED BANK ACCOUNTS AS WELL. MOREOVER, THE ASSESSEE NEVER OBJECTED TO THE PROCEEDINGS INITIATED U/S. 153A DURING THE ASSESSME NT PROCEEDINGS. HE FILED A FRESH RETURN IN RESPONSE TO NOTICE U/S 1 53A AND THEREAFTER COMPLIED WITH THE REQUIREMENTS OF THE ASSESSMENT BY ATTENDING THE HEARINGS FROM TIME TO TIME AND FILING THE REQUISITE DETAILS AND MADE SEVERAL SUBMISSIONS. THE MATERIALS ON RECORD SUGGES T THAT BEFORE THE AO, NOT EVEN ONCE THE APPELLANT HAD OBJECTED TO THE INITIATION OR CONTINUANCE OF THE ASSESSMENT PROCEEDING VIS. 153A OF THE ACT. THEREFORE, THE CASE IS DISTINGUISHABLE ON FACTS FRO M THE JUDICIAL PRONOUNCEMENTS REFERRED TO. IT IS A WELL SETTLED LE GAL POSITION THAT EVERY CASE DEPENDS ON ITS OWN FACTS. EVEN A SLIGHTE ST CHANGE IN THE FACTUAL SCENARIO ALTERS THE ENTIRE CONSPECTUS OF TH E MATTER AND MAKES ONE CASE DISTINGUISHABLE FROM ANOTHER. THE CR UX OF THE MATTER I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 20 IS THAT THE RATIO OF ANY JUDGMENT CANNOT BE SEEN DI VORCED FROM ITS FACTS. FURTHER SECTION 92BB OF THE ACT PROVIDES THA T- WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY INQUIRY RELATING TO ASSESSMENT O R REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UN DER ANY PROVISIONS OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN T IME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND S UCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTI ON IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT --- ' IN THIS CASE, AS STATED HEREINABOVE, THAT THE ASSES SEE HAD ACCEPTED THE NOTICE ISSUED U/S. 153A OF THE ACT AND FILED A FRESH RETURN WITHOUT ANY OBJECTION. NO OBJECTION WAS RAISED ALSO DURING THE ASSESSMENT PROCEEDINGS, RATHER ASSESSEE CO-OPERATED WITH THE AO. AN ADDITION OF RS.4.61 CRORES WERE ALSO MADE ON ACCOUN T OF UNDISCLOSED SWISS BANK ACCOUNT, WHICH WAS A SUBJECT MATTER OF S EARCH ACTION. THEREFORE, I DO NOT FIND ANY MERIT ON FACTS AND UND ER THE LAW, IN THE OBJECTION RAISED BY THE ASSESSEE DURING THIS APPEAL PROCEEDING. THIS GROUNDS OF APPEAL ARE THEREFORE, DISMISSED. 4. AS REGARDS THE ISSUE RELATING TO ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE RELEVANT TRANSACTIONS REF LECTED IN THE BANK ACCOUNT WITH HSBC BANK, GENEVA, SWITZERLAND, AN AFF IDAVIT WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) STATING TH AT THE SAID BANK ACCOUNT WITH HSBC, GENEVA, SWITZERLAND WAS OPENED I N HIS NAME BY ONE MR. ONN SITHAWALLA, OWNER OF MSN INTERNATIONAL PTE LIMITED, SINGAPORE IN CONNECTION WITH A PROPOSED JOINT VENTURE. IT WAS ALSO STATED IN THE SAID AFFIDAVIT THAT THE PROPOSED JOINT VENTURE WAS BETWE EN MSM ENTERPRISES PTE LIMITED OWNED AND CONTROLLED BY THE FAMILY MEMB ERS OF MR. ON SITHAWALLA, A PERMANENT RESIDENT OF SINGAPORE AND T HE MANGAL GROUP OWNED BY THE ASSESSEE. IT WAS FURTHER STATED THAT T HE SAID MSN INTERNATIONAL PTE LIMITED HAD MADE CERTAIN DEPOSITS IN THE BANK ACCOUNT WITH HSBC BANK, GENEVA, SWITZERLAND OPENED IN THE N AME OF THE ASSESSEE AND ULTIMATELY THE ENTIRE BALANCE LYING IN THE SAID BANK ACCOUNT WAS REMITTED BACK TO SINGAPORE AS PER THE DIRECTIONS GI VEN BY MR. ONN SITHAWALLA OF MSM ENTERPRISES PTE LIMITED IN FAVOUR OF DONALD MCARTHY I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 20 TRADING PTE LIMITED, AN ASSOCIATED CONCERN OF MSM E NTERPRISES PTE LIMITED. THE AFFIDAVIT OF MR. ONN SITHAWALLA, OWNER OF MSM ENTERPRISES PTE LIMITED WAS ALSO FILED BY THE ASSESSEE BEFORE T HE LD. CIT(APPEALS) AFFIRMING ALL THESE FACTS ON OATH AND A REQUEST WAS MADE TO ADMIT THE SAID AFFIDAVIT AS WELL AS HIS OWN AFFIDAVIT AS ADDITIONA L EVIDENCE ON THE GROUND HE COULD NOT PLACE THE SAME BEFORE THE ASSESSING OF FICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. THIS ADDITIONAL EVIDENCE FI LED BY THE ASSESSEE WAS ADMITTED BY THE LD. CIT(APPEALS) AND AFTER OBTA INING THE COMMENTS OF THE ASSESSING OFFICER THEREON IN THE FORM OF REMAND REPORT AND ALSO COUNTER-COMMENTS OF THE ASSESSEE IN THE FORM OF REJ OINDER TO THE REMAND REPORT, THE LD. CIT(APPEALS) PROCEEDED TO DECIDE TH IS ISSUE ON MERIT. IN THIS REGARD, HE RECORDED HIS OBSERVATIONS/FINDINGS IN PARAGRAPHS NO. 4.4.1 TO 4.4.5 OF HIS IMPUGNED ORDER, WHICH READ AS UNDER :- 4:4.1, I HAVE READ THE SUBMISSION OF LD. AR AND SE EN THE PAPERS FILED. I HAVE ALSO GONE THROUGH THE DEPARTME NTAL RECORDS. THE ISSUE RELATES TO OWNERSHIP OF A BANK A CCOUNT [CODE PROFILE NO. 5091276522 AND IDENTIFICANTS INTE RNES NO. BUP_SIFIC_PER_ID 5090147737] WITH HSBC, GENEVA, SWITZERLAND' [HENCEFORTH. REFERRED TO AS SWISS BANK ACCOUNT] AND DEPOSITS AND TRANSACTIONS THEREIN. THE ACCOUNT WAS OPENED 'IN THE YEAR 1999, IN THE .NAME OF THE ASSESSEE AND HIS WIFE SMT. USHA GARODIA WAS MADE 'NOMINEE'. IN THIS RESPECT, FOUR SWORN STATEMENTS O F THE ASSESSEE WERE RECORDED U/S. 131 OF BY THE REVENUE A T THREE DIFFERENT STAGES -' (I) STATEMENT DATED 3010712011 RECORDED BY THE DDIT(INV.) IN THE COURSE OF A SEARC H ACTION, (II) STATEMENT DATED 25106/2014 RECORDED BY THE AO DURING THE ASSESSMENT PROCEEDING, (III) ANOTHER STA TEMENT DATED 1511212014 RECORDED BY THE AO DURING THE ASSESSMENT PROCEEDING, AND (IV) STATEMENT DATED 05105/2015, RECORDED BY MY PREDECESSOR CIT(A)'IN OF FICE AFTER RECEIPT OF FORM NO. 35. IRI THE FIRST STATEME NT RECORDED BY THE DDIT(INV,), ASSESSEE OWNED UP THE S WISS BANK ACCOUNT. IN THE NEXT TWO STATEMENTS RECORDED B Y THE AO DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE FLAT LY DENIED TO HAVE HAD ANY SWISS BANK ACCOUNT. IN THE F ORTH STATEMENT RECORDED BY THE CIT(A), HE THOUGH ACCEPTE D THAT HE OPENED THAT SWISS BANK ACCOUNT BUT CONTENDED THA T THE BANK ACCOUNT HAD BEEN HANDLED BY ONE ONN SITHAWALLA , A CITIZEN OF SINGAPORE AND OWNER OF MSM ENTERPRISES P . IN I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 7 OF 20 CONNECTION WITH A PROPOSED JOINT VENTURE. HE STATED THAT ALL THE DEPOSITS IN THE SWISS B~ ACCOUNT WERE MADE BY MSM ENTERPRISES PTE LTD. AND ALL ACTIONS WERE HANDLED B Y ONN SITHAWALLA. IN THIS REGARD, ASSESSEE FILED A COPY O F HIS OWN AFFIDAVIT DATED 03/02/2015 AND A COPY OF AN AFFIDAV IT OF ONN SITHAWALA ALONGWITH FORM NO. 35. 4.2. A CURSORY LOOK IN THE CONTAIN OF THE STATEMENT S GIVEN BY THE ASSESSEE WOULD REVEAL THAT HE HAD AT TIMES M ADE VAGUE, ROUNDABOUT, SELF-CONTRADICTORY AS WELL AS FA LSE STATEMENTS UNDER 'OATH', TO SUPPRESS THE FACTS. IN HIS 2ND AND 3RD STATEMENTS RECORDED BY THE AO, ASSESSEE MAD E FALSE STATEMENTS BY DENYING TO' HAVE HAD ANY SWISS BANK ACCOUNT. HOWEVER, HIS FIRST STATEMENT CAN BE CONSID ERED AS CLOSE TO TRUTH. HERE HE ADMITTED THAT ONE. BANK A/C WAS OPENED IN SWISS BANK IN HIS NAME AND HIS WIFE WAS AUTHORIZED TO OPERATE THE ACCOUNT(ANSWER TO Q.3). H E ALSO STATED THAT NO ONE APPROACHED ME FOR OPENING OF THE ACCOUNT, I MYSELF APPROACHED THE BANK TO GET AN ACC OUNT OPENED.'(ANSWER TO Q. 4). HE FURTHER STATED THAT 'E XCEPT THE DEPOSITS MADE AT THE TIME OF-OPENING OF ACCOUNT I D O NOT REMEMBER THE EXACT NUMBER OF TIMES DEPOSITS OR WITHDRAWALS IN THIS ACCOUNT. HOWEVER, I HAVE OPERAT ED THIS ACCOUNT 'ONLY A FEW TIMES.' (ANSWER TO Q. 1O). ON B EING ASKED ABOUT THE SOURCE OF DEPOSITS IN THE SWISS BAN K ACCOUNT, ASSESSEE CATEGORICALLY STATED THAT 'THE M ONEY DEPOSITED IN THIS ACCOUNT REPRESENTS THE PROCEEDS O F MY EXPORT BUSINESS AS FAR AS I REMEMBER.' (ANSWER TO Q .12). THUS, IN THE FIRST STATEMENT, WHICH HAS GOT IMMENSE EVIDENTIARY VALUE IN THE EYES OF LAW, THE ASSESSEE ADMITTED THE VITAL POINTS THAT THE, SWISS BANK ACCOUNT WAS O PENED BY HIM AND AT HIS OWN BEHEST; MADE FEW DEPOSITS AND WITHDRAWALS (FACTUALLY CORRECT); AND THE DEPOSITS W ERE MADE FROM HIS EXPORT PROCEEDS. IT IS WELL SETTLED L AW THAT AN ADMISSION IS THE BEST EVIDENCE THAT AN OPPOSING PARTY CAN RELY UPON AND DECISIVE OF THE MATTER, UNLESS PR OVED ERRONEOUS. RELIANCE IS PLACED ON THE DECISION IN TH E CASES OF NARAYAN BHAGWANTRAO GOSAVI BATAJIWALE VS. GOPAL, AIT 1960 100 (SC) AND PRANAV CONSTRUCTION. CO. -VS. ACI T (ITAT, MUMBAI) 61 ITJ 145. 4.4.3. THE NAME OF MS M ENTERPRISES PTE LTD. (MSM), A COMPANY OWNED BY ONE ONN SITHAWALLA, A SINGAPORE CI TIZEN AND A PROPOSED JOINT VENTURE BETWEEN ASSESSEE AND M SM SURFACED FOR THE FIRST TIME IN A FORM OF AN AFFIDAV IT, DATED 03/02/2015~JILED IN THIS OFFICE ALONGWITH FORM NO. 35., I.E. I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 8 OF 20 AFTER 3 YEARS AND 6 MONTHS FROM THE DATE OF RECORDI NG THE FIRST STATEMENT ON 30/07/2011. IN THIS AFFIDAVIT, I T IS STATED THAT ASSESSEE THOUGH OPENED THE SWISS BANK A CCOUNT BUT NEITHER REMITTED ANY MONEY IN THAT ACCOUNT NOR OPERATED THE SAME. ALL DEPOSITS WERE MADE BY MSM AN D NEITHER THE ASSESSEE NOR HIS WIFE HAD ANY BENEFICIA L INTEREST THEREIN. LD. AR IN HIS SUBMISSION HAS GIVE N HIGH EMPHASIS ON THIS AFFIDAVIT. HOWEVER, HE FAILED TO E XPLAIN WHY THE ASSESSEE BAD NOT STATED ABOUT THE PURPORTED JV WITH MSM IN HIS FIRST STATEMENT; IN HIS FIRST STATE MENT, ASSESSEE UNEQUIVOCALLY ADMITTED THAT NOT ONLY THE SWISS BANK ACCOUNT WAS OPENED BY HIM BUT DE POSITS WERE MADE BY HIM AND THE SOURCE OF SUCH DEPOSITS WAS PROCEEDS FROM HIS EXPORT BUSINESS. IT IS NOT THAT THE FIRST STATE MENT WAS RECORDED UNDER THREAT OR COERCION. NO SUCH ALLEGATI ON HAS EVER BEEN MADE BY THE 'ASSESSEE DURING OR AFTER THE SEARCH ACTION. WHEN STATEMENT WAS MADE VOLUNTARY AND WAS N OT ALLEGED TO HAVE BEEN OBTAINED UNDER THREAT OR COERC ION, ONUS WAS ON ASSESSEE TO PROVE THAT SAID DECLARATION WAS MADE UNDER ANY MISCONCEPTION OF FACTS. SINCE ASSESS EE HAD NOT TAKEN ANY STEPS TO RECTIFY HIS DECLARATION BEFO RE AUTHORITIES BEFORE WHOM SUCH DECLARATION WAS MADE, THERE COULD NOT BE ANY VALID REASON FOR RETRACTION OF SAM E AFTER A GAP OF THREE' AND HALF YEARS. RELIANCE IS PLACED IN THE CASE OF CARPENTERS CLASSICS (EXIM) PVT. LTD. VS- DCIT, I TAT, BANG) 108 ITD 142, FURTHER, LD, AR COULD NOT EXPLAI N BUT THE ASSESSEE HAD GIVEN FALSE STATEMENTS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS BY DENYING TO HAV E HAD ANY SWISS BANK ACCOUNT. 4.4.4. LD. LD. AR HAS ALSO GIVEN SOME EMPHASIS ON T HE STATEMENT GIVEN BY THE ASSESSEE ON 05/05/2015 BEFOR E MY PREDECESSOR CIT(A) IN OFFICE. HOWEVER, I FIND THAT THE CONTENTS OF THE STATEMENT DO NOT SUPPORT THE CAUSE OF THE ASSESSEE, RATHER IT GOES AGAINST ASSESSEE. HERE ASS ESSEE FUMBLED TO ANSWER SOME OF THE QUERIES RAISED. ON BE ING ASKED TO PRODUCE THE COPY OF JV WHERE CAPITAL AND P ROFIT SHARING BETWEEN ASSESSEE AND MSM WAS 30:70, ASSESSE E STATED THAT THERE WAS NO FORMAL IV AGREEMENT (ANSWE R TO Q.26). INQ.28; IT WAS ASKED IF THE BANK ACCOUNT WIT H HSBC, SWITZEDRLAND WAS TO OPEN FOR THE PURPOSE OF PROPOSE D JOINT VENTURE, WHY IT WAS A CONDITION THAT THE BANK ACCOU NT SHOULD BE OPENED ONLY IN YOUR NAME AND THAT YOUR WI FE SMT. USHA GARODIA WOULD BE NOMINEE, WHEREAS 70% OF THE CAPITAL WAS TO BE CONTRIBUTED BY MSM ENTERPRISES PT E LIMITED? ASSESSEES REPLY WAS BECAUSE THE NAME OF THE I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 9 OF 20 JOINT VENTURE WAS NOT DECIDED AND THEREFORE, ONN SITHAWALLA ASKED ME TO OPEN A BANK ACCOUNT IN HSBC. ..IN Q. 29, ASSESSEE WAS ASKED IN THE PROPOSED JOINT VENT URE THE SHARE OF MSM ENTERPRISES PTE LTD. WAS 70%. IF THE N AME OF THE JOINT VENTURE WAS NOT DECIDED, THEN WHY MR. SIT HAWALLA WAS NOT WILLING TO HAVE A JOINT ACCOUNT WITH YOU OR AT LEAST THE NOMINEE IN THE SAIDBANK ACCOUNT?' ASSESSEE'S A NSWER WAS - 'I DO NOT KNOW.' IN Q. 33, ASSESSEE WAS ASKED TO REPLY - 'WHETHER MR. ONN SITHATVALLA OR MSM ENTERPRISES P TE LTD WERE HAVING ANY CONTROL OVER THAT BANK ACCOUNT TO I SSUE ANY DIRECTION TO THE BANK ABOUT UTILIZATION OF BALA NCE OR WITHDRAWAL OF MONEY?' ASSESSE'S REPLY WAS THAT THEY WERE NOT HAVING ANY CONTROL OVER IT [EMPHASIS GIVEN]. IN Q. 42, ASSESSEE WAS ASKED TO PRODUCE THE COPY OF BANK STAT EMENT OF MSM AND ASSESSEES REPLY WAS M/S. MSM ENTERPRI SES IS NOT ABLE TO PROVIDE ITS BANK STATEMENT OF THE RELEV ANT PERIOD AS THE ABN AMRO BANK WAS MERGED WITHY RBS BA NK IN 2006 AND THEREAFTER THE RBS BANK WAS TAKEN OVER BY ANZ BANK. THUS IT EMERGES FROM ASSESSEE'S STATEMENT ' DATED. 05/05/2015, THAT THERE WAS NO ACTUAL-JOINT V ENTURE BETWEEN ASSESSEE AND MSM. THOUGH MSM AND THE ASSESS EE HAD CAPITAL AND PROFIT SHARE RATIO OF 70: 30, THE S WISS BANK ACCOUNT WAS OPENED ONLY IN THE NAME OF THE ASSESSEE AND HIS WIFE WAS MADE NOMINEE, WHO ALONE COULD OPERATE THE BANK ACCOUNT IN CASE OF EVENTUALITY, MSM AND ITS OW NER MR. ONN SITHAWALA THOUGH HAD NO CONTROL OVER THE BANK ACCOUNT TO ISSUE ANY DIFRECTION FOR UTILIZATION OR WITHDRAWL OF MONEY BUT STILL WITHDREW THE MONEY IN THE ACCOUN T OF M/S. DONALD MCARTHY TRADING PTE LIMITED OF SINGAPOR E, AS ASSOCIATE CONCERN OF MSM. THUS THIS STATEMENT OF TH E ASSESSEE WAS FAR FROM TRUTH. LD. AR COULD NOT EXPLA IN THESE SELF-CONTRADICTIONS IN ASSESSEES STATEMENT. 4.4.5. IN A LANDMARK JUDGMENT OF CIT VS. DURGA PRAS AD MORE (SC) 82 ITR 540, THE HON'BLE APEX COURT HELD THAT I N A CASE WHERE PARTY RELIED ON SELF-SERVICING RECITALS IN DO CUMENTS, IT WAS-FOR THE PARTY TO ESTABLISH THE TRUTH OF THESE R ECITALS: THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING' CIRCUMSTANCES' AND FIND . OUT THE REALITY OF SUCH R ECITALS. IN THIS CASE, THE ASSESSEE 'PRODUCED SOME SELF-SERVICI NG DOCUMENTS AFTER THREE AND HALF YEARS FROM THE DATE OF SEARCH, IN THE FORM OF AN AFFIDAVIT AND SOME PURPORTED CORR ESPONDENCE FROM MSM, SINGAPORE AND ITS OWNER MR. ONN SITHAWALA , FOR SHIFTING OWNERSHIP OF HIS OWN BLACK MONEY WHICH WAS PARKED IN A SWISS BANK ACCOUNT, WHICH CANNOT BE CONSIDERED AS GENUINE. IN THE CASE OF SRI KRISHNA VS.- CIT (ALL. ) 142 ITR 618, I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 10 OF 20 IT IS HELD THAT AFFIDAVIT NEED NOT ALWAYS BE ACCEPT ED AS GENUINE. GOING BY THE FACTS OF THE CASE CONSIDERING THE SELF- CONTRADICTORY, EVASIVE AND FALSE STATEMENTS OF THE ASSESSEE AND CIRCUMSTANTIAL EVIDENCES AS DISCUSSED HEREINABOVE, THE AFFIDAVIT FILED BY THE ASSESSEE CANNOT BE ACCEPTED AS GENUINE. IT IS WELL SETTLED LAW THAT THE PERSON IN WHOSE NAM E THE BANK ACCOUNT IS OPENED, IS THE OWNER, AND HE IS RESPONSI BLE TO EXPLAIN THE .SOURCE OF ALL DEPOSITS AND WITHDRAWALS WITH SUPPORTING EVIDENCES, MERE SAYING OR PROCURING SOME PAPERS FROM A FOREIGN CONCERN WOULD NOT COME INTO RESCUE O F EXPLAINING ASSESSEE'S UNDISCLOSED INCOME STASHED IN A SWISS BANK. MOREOVER, MSM, SINGAPORE OR HIS OWNER MR. ONN SITHAWALLA, WITH WHOM THE ASSESSEE HAD NO OFFICIAL BUSINESS ACTIVITY IN THIS PARTICULAR MATTER ARE NON ENTITIES IN THE EYES OF INDIAN INCOME TAX LAW, ESPECIALLY WHEN THE ASSES SEE FAILED TO FILE EVEN THE RELEVANT BANK STATEMENT OF MSM, SI NGAPORE. THE FACT THAT ALL INITIAL DEPOSITS IN ASSESSEE'S SW ISS BANK ACCOUNT CAME FROM THE BANK ACCOUNT OF MSM, IS GOING TO PROVE THAT THE ASSESSEE HAD CHANNELIZED HIS UNDISCLOSED M ONEY IN SWISS BANK ACCOUNT THROUGH THE BANK ACCOUNT OF MSM, SINGAPORE, A COMPANY OWNED AND MANAGED BY MR. ONN SITHAWALLA, AN OLD BUSINESS ASSOCIATE OF THE ASSESS EE, WHO PROBABLY PLAYED THE ROLE OF A CONDUIT IN THE MATTER . ON THE BASIS OF THE ABOVE FINDINGS/OBSERVATIONS REC ORDED BY HIM, THE LD. CIT(APPEALS) HELD THAT THE RELEVANT BANK ACCOUNT WI TH HSBC, GENEVA, SWITZERLAND WAS THE UNDISCLOSED BANK ACCOUNT OF THE ASSESSEE AND THE SOURCE OF ALL DEPOSITS MADE IN THE SAID BANK ACCOUN T WAS ASSESSEES OWN UNDISCLOSED FUNDS, WHICH WERE CHANNELIZED THROUGH M SM ENTERPRISES PTE LIMITED, SINGAPORE. HE ALSO HELD THAT THE ENTIRE IN COME GENERATED, ACCRUED AND ACCRETED IN THAT BANK ACCOUNT WAS UNACC OUNTED INCOME OF THE ASSESSEE. HAVING ARRIVED AT THIS CONCLUSION, THE LD . CIT(APPEALS), HOWEVER, FOUND THAT THERE WERE NO DEPOSITS MADE IN THE SAID BANK ACCOUNT OF THE ASSESSEE DURING THE YEARS UNDER CONS IDERATION AND SUCH DEPOSITS WERE ACTUALLY MADE IN THE SAID BANK ACCOUN T IN THE EARLIER YEARS. HE, THEREFORE, HELD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IN BOTH THE YEARS UNDER CONSIDERATION ON ACCOUNT OF SU CH DEPOSITS WERE NOT SUSTAINABLE AS THE SAME COULD BE MADE ONLY IN THE R ELEVANT YEARS WHEN THE DEPOSITS WERE ACTUALLY MADE FOR WHICH THE ASSES SMENTS HAD ALREADY I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 11 OF 20 BEEN REOPENED BY THE ASSESSING OFFICER. HE, HOWEVER , FOUND THAT THERE WAS AN ACCRETION OF US DOLLARS 4,246.42 AND US DOLL ARS 55,414 IN THE BANK ACCOUNT OF THE ASSESSEE WITH HSBC, GENEVA, SWI TZERLAND IN THE PREVIOUS YEAR RELEVANT TO A.YS. 2006-07 AND 2007-08 RESPECTIVELY AND THE SAME REPRESENTED EARNINGS OF THE ASSESSEE ON INVEST MENT MADE OUT OF INITIAL DEPOSITS IN THE BANK ACCOUNT IN VARIOUS FOR MS LIKE FIXED DEPOSITS, BONDS, ETC. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ADD EQUAL INDIAN RUPEE OF US DOLLARS 4,246.42 AND US DOLLARS 55,414 TO THE TOTAL INCOME OF THE ASSESSEE FOR ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY. STILL AGGRIEVED BY THE ORDERS OF THE LD. CIT(APPEALS) FOR BOTH THE YEARS UNDER CONSIDERATION, I.E. A.YS. 2006-07 A ND 2007-08, THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRI BUNAL. 5. THE PRELIMINARY ISSUE INVOLVED IN THIS CASE AS R AISED IN GROUND NOS. 1 TO 4 OF THE ASSESSEES APPEAL FOR A.YS. 2006-07 A ND 2007-08 AND FURTHER ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE T IME OF HEARING BEFORE US IS THAT THERE WAS NO INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH IN RELATION TO THE TRANSACTIONS REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE WITH HSBC, GENEVA, SWITZERLAND AND SINCE T HE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION HAD BECOME FINAL BEFORE THE INITIATION OF SEARCH, NO ADDITIONS ON ACCOUNT OF THE SAID TRAN SACTIONS OR INCOME ARISING THEREFROM WERE PERMISSIBLE IN THE ASSESSMEN TS COMPLETED UNDER SECTION 153 OF THE ACT. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RETURNS OF INCOME FILED BY THE ASSESSEE FOR BOTH THE YEARS UND ER CONSIDERATION, I.E. A.YS. 2006-07 AND 2007-08 WERE PROCESSED BY THE ASS ESSING OFFICER UNDER SECTION 143(1) PRIOR TO THE DATE OF SEARCH AND SINC E NO NOTICES UNDER SECTION 143(2) WERE ISSUED BY HIM FOR THE SAID TWO YEARS AND EVEN THE PERIOD AVAILABLE TO ISSUE SUCH NOTICES HAD ALREADY LAPSED EVEN PRIOR TO THE DATE OF SEARCH, THE ASSESSMENTS FOR THE SAID TW O YEARS WERE DEEMED TO I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 12 OF 20 HAVE BEEN COMPLETED. HE SUBMITTED THAT THE INFORMAT ION RELATING TO THE UNDISCLOSED BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH HSBC, GENEVA, SWITZERLAND WAS AVAILABLE WITH THE ASSESSING OFFICE R PRIOR TO THE DATE OF SEARCH AND ALTHOUGH THE SEARCH WAS CONDUCTED ON THE BASIS OF THE SAID INFORMATION, NO INCRIMINATING MATERIAL WHATSOEVER W AS FOUND DURING THE COURSE OF SEARCH RELATING TO THE TRANSACTIONS REFLE CTED IN THE SAID BANK ACCOUNT OR INCOME ARISING TO THE ASSESSEE RELATING THERETO. HE CONTENDED THAT THE SCOPE OF ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 153A FOR BOTH THE YEARS UNDER CONSIDERATION PURSUAN T TO THE SEARCH, THEREFORE, WAS LIMITED TO THE INCOME UNEARTHED DURI NG THE COURSE OF SEARCH ON THE BASIS OF INCRIMINATING MATERIAL FOUND AND IN THE ABSENCE OF ANY SUCH INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH, ADDITION ON ACCOUNT OF HSBC BANK TRANSACTIONS OR IN COME RELATING THERETO WAS BEYOND THE SCOPE OF ASSESSMENT MADE UNDER SECTI ON 153A. HE CONTENDED THAT WHEN THIS ISSUE WAS SPECIFICALLY RAI SED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE T HE LD. CIT(APPEALS), THE CONCERNED ASSESSING OFFICER HAD APPEARED BEFORE THE LD. CIT(APPEALS) ON 21.12.2015 AND AGREED VIDE ORDER-SHEET ENTRY DAT ED 21.12.2015 RECORDED BY THE LD. CIT(APPEALS) (COPY AT PAGE NO. 22 OF THE PAPER BOOK) THAT THE INFORMATION REGARDING THE UNDISCLOSED HSBC BANK ACCOUNT MAINTAINED BY THE ASSESSEE WAS DULY RECEIVED FROM T HE CBDT AND THERE WAS NO INCRIMINATING DOCUMENTS/ BOOKS OF ACCOUNT TH AT WERE FOUND DURING THE COURSE OF SEARCH, WHICH HAD BEEN USED IN MAKING THE ADDITIONS TO THE INCOME OF THE ASSESSEE UNDER SECTION 153A OF THE ACT. THE LD. COUNSEL FOR THE ASSESESE REITERATED THAT IN THE ABS ENCE OF SUCH INCRIMINATING MATERIAL, THE ADDITIONS AS MADE TO TH E TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF TRANSACTIONS REFLECTED IN TH E BANK ACCOUNT OF THE ASSESSEE WITH HSBC BANK, GENEVA, SWITZERLAND AS WEL L AS INCOME RELATING THERETO IN THE ASSESSMENTS COMPLETED UNDER SECTION 153A FOR BOTH THE YEARS UNDER CONSIDERATION ARE NOT MAINTAINABLE. IN SUPPORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF THE MUMBAI SPECIAL BENCH OF THE I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 13 OF 20 TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED VS.- DCIT REPORTED IN 137 ITD 287 AS WELL AS THE DECISION OF THE DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS.-PRATIBHA IND USTRIES REPORTED IN 141 ITD 151. 7. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDERS OF THE LD. CIT(APPEALS) IN SUPPORT OF THE RE VENUES CASE ON THIS ISSUE. HE CONTENDED THAT THERE IS NO SUCH REQUIREME NT OF ANY INCRIMINATING MATERIAL HAVING BEEN FOUND DURING SEA RCH TO INITIATE PROCEEDINGS UNDER SECTION 153A AND THE FACT THAT TH E SEARCH IS CONDUCTED AND CONCLUDED IN THE CASE OF THE ASSESSEE ALONE IS SUFFICIENT TO GIVE JURISDICTION TO THE ASSESSING OFFICER TO INITIATE T HE PROCEEDINGS UNDER SECTION 153A AGAINST THE ASSESSEE FOR THE PRECEDING SIX YEARS. HE CONTENDED THAT THE SCOPE OF SECTION 153A IS VERY WI DE AND IT TALKS ABOUT TOTAL INCOME, WHICH INCLUDES INCOME ON THE BASIS OF INCRIMINATING MATERIAL AS WELL AS WITHOUT INCRIMINATING MATERIAL. HE ALSO CONTENDED THAT THE PROCEEDINGS UNDER SECTION 143(1) ARE NOT A SSESSMENT AT ALL AND SINCE THE ASSESSMENT PROCEEDINGS FOR BOTH THE YEARS UNDER CONSIDERATION HAD NOT BEEN COMPLETED PRIOR TO THE DATE OF SEARCH, THE SCOPE OF PROCEEDINGS UNDER SECTION 153A WAS WIDE TO ASSESS A ND REASSESS THE TOTAL INCOME OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTI ON, HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS.- ANIL KUMAR BHATIA (INCOME TAX APPEAL NO. 1626 OF 2010 & OTHERS DATED 14.05.2012) AS WELL AS THE DECISION OF THE DELHI BE NCH OF THIS TRIBUNAL IN THE CASE OF SHIVNATH RAI HARNARAIN (INDIA) LIMITED- VS.- DCIT [117 TTJ (DEL.) 480]. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE RETURNS OF INCOME ORIGINALLY FILED BY THE ASSESSEE FOR BOTH TH E YEARS UNDER CONSIDERATION WERE DULY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 14 OF 20 143(1) WELL BEFORE THE DATE OF SEARCH CONDUCTED ON 28.07.2011. THE SAID SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON THE BASIS OF INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM CBDT RELATING TO THE UNDISCLOSED ACCOUNT MAINTAINED BY THE ASSESESE WITH HSBC BANK, GENEVA, SWITZERLAND. DURING THE COURSE OF SEARCH, NO INCRIM INATING MATERIAL, HOWEVER, WAS FOUND RELATING TO THE TRANSACTIONS REF LECTED IN THE SAID BANK ACCOUNT OF THE ASSESSEE WITH HSBC BANK OR ANY INCOM E RELATING THERETO AND THIS POSITION WAS CATEGORICALLY ADMITTED BY THE ASSESSING OFFICER DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE T HE LD. CIT(APPEALS) AS IS EVIDENT FROM THE RELEVANT ORDER-SHEET ENTRY DATE D 21.12.2015 RECORDED BY THE LD. CIT(APPEALS) (COPY AT PAGE NO. 22 OF THE PAPER BOOK). THE QUESTION THAT ARISES NOW IS WHETHER IN THE ABSENCE OF SUCH INCRIMINATING MATERIAL, ANY ADDITION TO THE TOTAL INCOME OF THE A SSESSEE CAN BE MADE ON ACCOUNT OF THE TRANSACTIONS REFLECTED IN THE BANK A CCOUNT OF THE ASSESSEE WITH HSBC BANK OR ANY INCOME RELATING THERETO IN AS SESSMENTS COMPLETED UNDER SECTION 153A OF THE ACT FOR BOTH THE YEARS UN DER CONSIDERATION. 9. AS PER THE PROVISIONS CONTAINED IN SECTION 153A, IF THE SEARCH OR REQUISITION IS INITIATED AFTER 31.03.2003, THE ASSE SSING OFFICER IS UNDER AN OBLIGATION TO INITIATE PROCEEDINGS UNDER SECTION 15 3A FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE ASSES SING OFFICER IS THEN REQUIRED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SAID SIX YEARS AND IF ANY ASSESSMENT OR REASSESSMENT OUT OF THE SAID SIX YEARS IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, THE SAME WOUL D ABATE, I.E. PENDING PROCEEDING QUA THE SAID ASSESSMENT YEAR WOULD NOT P ROCEED THEREAFTER AND THE ASSESSMENT HAS TO BE MADE UNDER SECTION 153 A(1)(B) OF THE ACT READ WITH THE 1 ST PROVISO THEREUNDER. AS REGARDS THE OTHER YEARS FOR WHICH ASSESSMENTS HAVE ALREADY BEEN COMPLETED AND T HE ASSESSMENT ORDERS DETERMINING THE ASSESSEES TOTAL INCOME ARE SUBSISTING AT THE TIME WHEN THE SEARCH OR REQUISITION IS MADE, THE SCOPE O F ASSESSMENT UNDER I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 15 OF 20 SECTION 153A IS LIMITED TO REASSESS THE INCOME OF T HE ASSESSEE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. 10. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS CONTENDED THAT THE PROCESSING OF RETURNS OF INCOME FILED BY THE ASSESS EE AS MADE BY THE ASSESSING OFFICER UNDER SECTION 143(1) COULD NOT BE REGARDED AS ASSESSMENT AND IT IS, THEREFORE, NOT A CASE WHERE T HE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION COULD BE SAID TO HAVE BEEN COMPLETED. HE HAS ALSO CONTENDED THAT THE CONCLUSION OF SUCH ALON E IS SUFFICIENT TO GIVE JURISDICTION TO THE ASSESSING OFFICER TO PROCEED AG AINST THE ASSESSEE UNDER SECTION 153A OF THE ACT. IN SUPPORT OF THIS C ONTENTION, HE HAS RELIED ON THE UNREPORTED DECISION OF THE HONBLE DELHI HIG H COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA). IN THE SAID CASE, A QUES TION WAS POSED BY THE HONBLE DELHI HIGH COURT IN PARAGRAPH NO. 12 OF ITS ORDER AS TO WHETHER THE ASSESSING OFFICER WAS EMPOWERED TO REOPEN THE P ROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDISC LOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH WHERE AN ASSESSMENT ORD ER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESS MENT YEARS EITHER UNDER SECTION 143(1) OR SECTION 143(3) OF THE ACT AND SUC H ORDER WAS ALREADY IN EXISTENCE HAVING BEEN PASSED PRIOR TO THE INITIATIO N OF SEARCH/ REQUISITION. ALTHOUGH THIS QUESTION WAS NOT FINALLY ANSWERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA), IT IS QUITE CLEAR FROM THE SAID QUESTION RAISED BY THE HO NBLE DELHI HIGH COURT THAT THERE WAS NO DISTINCTION MADE BY THEIR LORDSHI PS IN THE ASSESSMENTS COMPLETED UNDER SECTION 143(1) AND SECTION 143(3) F OR DETERMINING THE SCOPE OF THE PROCEEDINGS UNDER SECTION 153A. HOWEVE R, THE SAID QUESTION AROSE SPECIFICALLY FOR THE CONSIDERATION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS.- PRATIBHA INDUSTRIES REPOR TED IN 141 ITD 151 AND AFTER REFERRING TO THE DISCUSSION MADE BY THE HONB LE DELHI HIGH COURT IN THIS CONTEXT IN THE CASE OF ANIL KUMAR BHATIA (SUPR A), THE TRIBUNAL HELD THAT THE ONLY LOGICAL CONCLUSION WHICH COULD BE TRA CED OUT BY HARMONIZING I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 16 OF 20 THE LEGISLATIVE INTENDMENT AND THE JUDICIAL DECISIO N WAS THAT WHERE THE ASSESSMENTS HAD ALREADY BECOME FINAL PRIOR TO THE D ATE OF SEARCH, THE TOTAL INCOME HAS TO BE DETERMINED UNDER SECTION 153 A BY CLUBBING TOGETHER THE INCOME ALREADY DETERMINED IN THE ORIGI NAL ASSESSMENTS AND THE INCOME THAT IS FOUND TO HAVE ESCAPED ASSESSMENT ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. TO ARRIVE AT THIS CONCLUSION, RELIANCE WAS PLACED BY THE TRIBUNA L ON THE DECISION OF SPECIAL BENCH, MUMBAI IN THE CASE OF ALL CARGO GLOB AL LOGISTIC LIMITED (SUPRA), WHEREIN IT WAS HELD THAT EVEN THOUGH ALL T HE SIX YEARS SHALL BECOME SUBJECT MATTER OF ASSESSMENT UNDER SECTION 1 53A AS A RESULT OF SEARCH, THE ASSESSING OFFICER SHALL GET THE FREE HA ND THROUGH ABATEMENT ONLY ON THE PROCEEDINGS THAT ARE PENDING. BUT IN A CASE OR IN A CIRCUMSTANCES WHERE THE PROCEEDINGS HAVE REACHED FI NALITY, ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153(3) HAS T O BE MADE AS WAS ORIGINALLY MADE AND IN A CASE CERTAIN INCRIMINATING DOCUMENTS WERE FOUND INDICATING UNDISCLOSED INCOME, THEN ADDITION SHALL ONLY BE RESTRICTED TO THOSE DOCUMENTS/INCRIMINATING MATERIA L. 11. KEEPING IN VIEW THE DISCUSSION MADE ABOVE, WE H OLD THAT THE ADDITIONS AS FINALLY MADE TO THE TOTAL INCOME OF TH E ASSESSEE ON ACCOUNT OF TRANSACTIONS REFLECTED IN THE BANK ACCOUNT OF THE A SSESSEE WITH HSBC, GENEVA, SWITZERLAND AND INCOME RELATING THERETO FOR BOTH THE YEARS UNDER CONSIDERATION ARE BEYOND THE SCOPE OF SECTION 153A AS THE ASSESSMENTS FOR THE SAID YEARS HAD BECOME FINAL PRIOR TO THE DA TE OF SEARCH AND THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH TO SUPPORT AND SUBSTANTIATE THE SAID ADDITION. THE SAI D ADDITIONS MADE FOR BOTH THE YEARS UNDER CONSIDERATION ARE, THEREFORE, DELETED ALLOWING THE RELEVANT GROUNDS OF THE ASSESSEES APPEALS. 12. IN GROUNDS NO. 5 TO 8 OF HIS APPEALS FOR BOTH T HE YEARS UNDER CONSIDERATION, THE ASSESSEE HAS MAINLY OBJECTED TO THE FINDINGS RECORDED I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 17 OF 20 BY THE LD. CIT(APPEALS) THAT HE HAD CHANNELIZED HIS UNDISCLOSED MONEY THROUGH BANK ACCOUNT OF MSM ENTERPRISES PTE LIMITED AND THAT THE SOURCE OF MONIES DEPOSITED IN HSBC BANK ACCOUNT WAS HIS UNDISCLOSED MONEY. 13. IN SUPPORT OF THE ASSESSEES CASE ON THE ISSUES RAISED IN GROUNDS NO. 5 TO 8, THE LD. COUNSEL FOR THE ASSESSEE HAS MA DE A DETAILED SUBMISSION, THE GIST OF WHICH IS GIVEN BELOW:- (I) ALTHOUGH THE ACCOUNT WITH HSBC BANK, GENEVA, S WITZERLAND WAS OPENED ON 07.06.1999, THERE WAS NO MONEY DEPOSITED IN THE SAID ACCOUNT INITIALLY FOR A PERIOD OF ABOUT ONE YEAR. (II) THE FIRST DEPOSIT IN THE SAID ACCOUNT WAS MAD E ONLY ON 22.06.2000 AND THE SAME WAS ORIGINATED FROM MSN INT ERNATIONAL PTE LIMITED, A COMPANY BELONGING TO MR. ONN SITHAWALLA AS PER THE DESCRIPTION GIVEN IN THE BANK STATEMENT ITSELF. (III) THE ENTIRE DEPOSITS MADE IN THE SAID ACCOUNT AMOUNTING TO US DOLLARS 8,99,812 WERE IN THE NAME OF MSM ENTERPRISE S PTE LIMITED AS PER THE DESCRIPTION GIVEN IN THE BANK STATEMENT ITSELF. MR. ONN SITHAWALLA AND HIS FAMILY MEMBERS WERE PROMOTERS/SHAREHOLDERS OF M SM ENTERPRISES PTE LIMITED, SINGAPORE AND THE ASSESSEE HAD REGULAR BUSINESS TRANSACTIONS FOR IMPORT OF GOODS WITH MSM ENTERPRIS ES PTE LIMITED FROM 1993. (IV) MSM ENTERPRISES PTE LIMITED WAS AN INDEPENDEN T COMPANY HAVING SUBSTANTIAL BUSINESS AND IT WAS IN EXISTENCE FOR SEVERAL YEARS HAVING SUBSTANTIAL FUNDS OF ITS OWN. (V) THERE WAS NO MATERIAL BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO SHOW THAT MR. ONN SITHAWALA OR MSM E NTERPRISES PTE LIMITED ACTED IN CONCERN WITH THE APPELLANT-ASSESSE E OR UNDER THE DICTATES OF THE ASSESSEE. I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 18 OF 20 (VI) THE ENTRIES IN THE RELEVANT BANK STATEMENT AL SO PROVED THAT SAVE AND EXCEPT THE DEPOSITS FROM MSM ENTERPRISES P TE LIMITED, THERE WAS NO OTHER DEPOSIT MADE IN THE HSBC ACCOUNT, WHIC H WAS IN ASSESSEES NAME. (VII) THE ENTRIES IN THE BANK STATEMENT MADE DURIN G 2000 TO 2004 ESTABLISH THAT THE MONIES DEPOSITED ORIGINATED FROM MSM ENTERPRISES PTE LIMITED AND EVEN MR. ONN SITHAWALLA OF MSM ENTERPRI SES PTE LIMITED ADMITTED THE OWNERSHIP OF ALL THE FUNDS SO DEPOSITE D. (VIII) THE RELEVANT BANK ACCOUNT WAS CLOSED IN THE YEAR 2011 AND THE TOTAL DEPOSITS MADE THEREIN ALONG WITH THE INCO ME ACCRUED OVER THE YEARS WERE REMITTED TO THE ACCOUNT OF M/S. DOLAND M EARTHY TRADING PTE LIMITED AT THE INSTANCE OF MR. ONN SITHAWALLA. NOT EVEN A PART OF THE MONIES WITHDRAWN FROM THE SAID BANK ACCOUNT THUS EV ER REACHED THE ASSESSEE OR USED FOR THE BENEFIT OF THE ASSESSEE. (IX) ALL THE ABOVE FACTS WERE SUFFICIENT TO SUPPOR T AND SUBSTANTIATE THE EXPLANATION OF THE ASSESSEE THAT THE ENTIRE MON EY FOUND DEPOSITED IN THE RELEVANT BANK ACCOUNT OF THE ASSESSEE BELONGED TO MSM ENTERPRISES PTE LIMITED, WHICH WAS DEPOSITED IN CONNECTION WITH THE SETTING OF A JOINT VENTURE BETWEEN THE SAID COMPANY AND THE ASSE SSEES COMPANY AND ALTHOUGH THERE WAS NO ACTUAL JOINT VENTURE AGREEMEN T ENTERED INTO, THE RELEVANT CORRESPONDENCE SETTING OUT THE TERMS AND C ONDITIONS OF THE JOINT VENTURE WAS BROUGHT ON RECORD. EVEN THE AFFIDAVITS OF THE ASSESSEE AND MR. ONN SITHAWALLA AFFIRMING THE RELEVANT FACTS ON OATH WERE FILED IN SUPPORT AND THERE WAS NOTHING BROUGHT ON RECORD EIT HER BY THE ASSESSING OFFICER OR BY THE LD. CIT(APPEALS) TO PROVE ANY FAC TUAL INFIRMITY OR FALSITY THEREIN. THEY ALSO FAILED TO DISLODGE OR DISPROVE T HE OWNERSHIP OF FUNDS CLAIMED BY MR. ONN SITHAWALLA. I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 19 OF 20 14. ALTHOUGH IN REPLY TO THE ARGUMENTS RAISED BY TH E LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF THE ASSESSEES CASE ON THIS ISSUE, THE LD. D.R. HAS ALSO RAISED VARIOUS CONTENTIONS BESIDES RELYING ON THE IMPUGNED ORDERS OF THE LD. CIT(APPEALS), WHEREIN HE HAS REJECTED THE C ASE OF THE ASSESESE ON THIS ISSUE BY RECORDING VARIOUS ADVERSE OBSERVATION S/FINDINGS, WE FIND THAT THIS ISSUE HAS BECOME INFRUCTUOUS OR ACADEMIC AS A RESULT OF THE DECISION RENDERED BY US ON THE PRELIMINARY ISSUE RA ISED IN THESE APPEALS, HOLDING THAT THE ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF THE INCOME ARISING FROM THE RELEVANT TRA NSACTIONS REFLECTED IN THE HSBC ACCOUNT ARE NOT SUSTAINABLE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH TO SUPPO RT AND SUBSTANTIATE THE SAME. WE, THEREFORE, DO NOT CONSIDER IT NECESSA RY OR EXPEDIENT TO ADJUDICATE UPON THIS ISSUE ON MERIT. 15. IN HIS APPEALS FOR A.Y. 2007-08 BEING ITA NO. 8 56/KOL/2016, THE ASSESSEE HAS RAISED TWO NEW GROUNDS. HOWEVER, NO MA TERIAL OR SPECIFIC CONTENTIONS ARE RAISED BY THE LD. COUNSEL FOR THE A SSESSEE AT THE TIME OF HEARING BEFORE US IN SUPPORT OF THE ISSUES RAISED T HEREIN. WE, THEREFORE, TREAT BOTH THESE GROUNDS AS NOT PRESSED AND DISMISS THE SAME. 16. IN THE REMAINING TWO APPEALS BEING ITA NOS. 853 & 855/KOL/2016, THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY IMP OSED UNDER SECTION 271(1)(C) IN RESPECT OF THE ADDITIONS FINALLY SUSTA INED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ACCRETION OF INCOME ON T HE BASIS OF TRANSACTIONS REFLECTED IN THE BANK ACCOUNT OF THE A SSESSEE WITH HSBC, GENEVA, SWITZERLAND FOR BOTH THE YEARS UNDER CONSID ERATION ON VARIOUS GROUNDS. HOWEVER, KEEPING IN VIEW THE DECISION REND ERED BY US HEREINABOVE WHILE DISPOSING OF THE CORRESPONDING QU ANTUM APPEALS OF THE ASSESSEE WHEREBY WE HAVE DELETED THE SAID ADDITIONS , THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271( 1)(C) IN RESPECT OF I.T.A. NOS. 853 & 854/KOL./2016 ASSESSMENT YEARS: 2006-2007 & I.T.A. NOS. 855 & 856/KOL/2016 ASSESSMENT YEAR: 2007-2008 PAGE 20 OF 20 THE SAID ADDITIONS FOR BOTH THE YEARS UNDER CONSIDE RATION IS LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. WE, THEREFORE, C ANCEL THE PENALTY IMPOSED UNDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION AND ALLOW THE APPEALS OF THE ASSESSEE. 17. IN THE RESULT, THE APPEALS OF THE ASSESSEE BEIN G ITA NOS. 853, 854 AND 855/KOL/2016 ARE ALLOWED, WHILE THE ASSESSE ES APPEAL BEING ITA NO. 856/KOL/2016 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 21, 2016. SD/- SD/- (S.S. VISHWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 21 ST DAY OF SEPTEMBER, 2016 COPIES TO : (1) SHRI BISHWANATH GARODIA, 9, DOVER PARK, 2 ND FLOOR, KOLKATA-700 019 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(3), KOLKATA, AAYAKAR BHAWAN, POORVA, 110, SHANTIPALLY, KOLKATA-700 017 (3) COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLK ATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.