Mr. K.M.Mammen, CHENNAI V. DCIT, CHENNAI

ITA 870/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0722 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-01-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 10-05-2011

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO. 870/MDS/2011 ASSESSMENT YEAR : 2002-03 SHRI K.M. MAMMEN, 17, GILCHRIST AVENUE, HARRIGTON ROAD, CHETPET, CHENNAI-600 031. V. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-IV(1), CHENNAI. (PAN : AAEPM0314R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE RESPONDENT BY : SHRI GURU BASHYAM, JCIT DATE OF HEARING : 21.01 .2013 DATE OF PRONOUNCEMENT : 25.02.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-I, CHENNAI DATED 30-03-2011 FOR TH E ASSESSMENT YEAR 2002-03. ITA NO.870/MDS /2011 : 2 : 2. IN THIS APPEAL BEFORE US, THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE CIT(A) ERRED IN NOT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT IN SUBMITTING THE CASE AND DECIDING THE SAME EX PARTE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER IN ADDING THE UNEXPLAINED INVESTMENT U/S 69 OF ` 2,26,38,372/-. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE DOCUMENTS ON WHI CH THE ASSESSING OFFICER RELIED ON HAS NOT BEEN AUTHEN TICATED AND IS NOT CLEAR FROM WHOM THE DOCUMENTS WERE OBTAI NED. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THAT THE AUTHENTICITY OF DOCUMEN TS IS INADMISSIBLE IN EVIDENCE AND IT REQUIRES TO BE ATTE STED UNDER SECTION 3(2) OF THE DIPLOMATIC AND CONSULAR O FFICE (FEES) ACT 1948. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT EVEN BY THE DOCUMENT S GIVEN BY THE ASSESSING OFFICER, AMOUNT WAS AVAILABL E FROM MARCH 2000 AND HENCE CANNOT BE ADDED AS UNEXPLAINED INCOME FOR THE AY 2002-03. THE ASSESSMENT PROCEEDI NGS FOR ASSESSMENT IN AYT 2002-2003 IS THEREFORE, BARRE D BY LIMITATION. 7. THE APPELLANT FURTHER SUBMITS THAT ADDITION CANNOT BE SUSTAINED WITHOUT APPELLANT BEING GIVEN OPPORTUNITY TO EXAMINE THE VERACITY OF THE DOCUMENT S AND VERIFYING THE SAME WITH THE BANK. ITA NO.870/MDS /2011 : 3 : 8. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER WHO HAD FAILED TO APPRECIATE THAT IT CANNOT BE TAKEN TH AT THE APPELLANT HAS AGREED FOR ANY ADDITION, BUT ONLY THO SE ADDITIONS WHICH HAVE THE SANCTION OF LAW AND THAT T OO WHEN NO PENALTY WOULD BE ATTRACTED. 9. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUNDS AT THE TIME OF HEARING. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL. HIS SOURCES OF INCOME ARE FROM SALARY AND INTEREST. HE FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 ON 29-07- 2002 ADMITTING TOTAL INCOME OF ` 45,48,850/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED INITIALLY UNDER SECTION 143( 1) OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT) ON 24-01 -2003. SUBSEQUENTLY, A NOTICE UNDER SECTION 148 OF THE ACT DATED 25-03- 2009 WAS ISSUED AND DULY SERVED ON THE ASSESSEE ON 27-03-2009 REQUIRING HIM TO FILE A RETURN WITHIN THIRTY DAYS F ROM THE DATE OF SERVICE OF NOTICE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED A LETTER DATED 13-04-2009 ON 22-04-2009 STATING THAT THE RETURN ORIGINALLY FILED ON 29-07-2002 ADMITTING A TOTAL IN COME OF ` 45,48,850/- BE TREATED AS A RETURN FILED IN RESPONS E TO THE NOTICE UNDER SECTION 148 OF THE ACT. AS PER THE REQUEST O F THE ASSESSEE THE REASONS FOR INITIATING THE PROCEEDINGS U/S 148 OF THE ACT WERE ITA NO.870/MDS /2011 : 4 : DULY FURNISHED. NOTICE U/S 143(2) WAS DULY SERVED ON THE ASSESSEE WITHIN THE LIMITATION PERIOD AND THE CASE FOR HEARING WAS FIXED ON 14-09-2009. THE ASSESSEES CHARTERED A CCOUNTANT APPEARED AND FILED THE DETAILS CALLED FOR. 4. THE PRINCIPALITY OF LIECHTENSTEIN NESTLES IN THE PICTURESQUE RHINE VALLEY, BETWEEN SWITZERLAND AND AUSTRIA AND I S A TAX HAVEN. THERE IS A 35 KM BORDER WITH AUSTRIA AND A 41 KM BORDER WITH SWITZERLAND. IT IS EUROPES FOURTH SMALLEST S TATE WITH AN AREA OF ABOUT 159 SQ. KM. VADUZ IS BOTH THE CAPITAL AND THE SEAT OF GOVERNMENT. 5. INFORMATION ON RECORD SHOWED THAT ON 24-03-2000 THE ASSESSEE HAD MADE A DECLARATION OF ENDOWMENT IN FAV OUR OF M/S. WEBSTER FOUNDATION, 9490, VADUZ WHEREBY THE FOUNDATION WAS ENDOWED WITH A SUM OF EURO 123,000. THE SAID SUM O F 123,000 IN EURO CURRENCY WAS TRANSFERRED TO THE FOUNDATION S ACCOUNT NO. 0163517AAA EUR WITH LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT, VADUZ . IN THE SAID DECLARATION IT WAS CONFIRMED THAT THE ASSESSEE HAD LAWFULLY ACQUIRED A ND WAS ENTITLED TO DISPOSE FREELY OF THESE MONEYS AND IT W AS ALSO CONFIRMED THAT THE SAID DECLARATION OF ENDOWMENT WA S FREE FROM MISTAKES, THREAT OR COMPULSION. THE SAID DECLARAT ION WAS DULY ITA NO.870/MDS /2011 : 5 : SIGNED BY THE ASSESSEE. THE DECLARATION WAS ALSO ACCEPTED BY THE SAID M/S. WEBSTER FOUNDATION WITH DECLARATION O F ACCEPTANCE WITH THE CONFIRMATION OF THE TRANSFER OF THE ABOVE SUM TO THE FOUNDATIONS OWNERSHIP UNDER THE SIGNATURE OF THE P ERSONS MANAGING THE FOUNDATION. 6. INFORMATION IS ALSO ON RECORD TO SHOW WHO THE BE NEFICIARIES UNDER THE SAID FOUNDATION ARE. THE TRANSLATED PORT ION OF THE INFORMATION IN GERMAN LANGUAGE IS AS UNDER : TRANSLATED PORTION OF THE INFORMATION IN GERMAN LANGUAGE : {REFERENCE : IMTRANSALATOR.COM} LGT BANK IN LIECHTENSTEIN, A MEMBER OF LIECHTENSTEI N GLOBAL TRUST. STATEMENT OF BENEFICIAL OWNERSHIP REF: LTV/BAL/2664 ACCOUNT/SECURITIES ACCOUNT 0163517 CONTRACTING PARTNER, WEBSTER FOUNDATION, VADUZ THE UNDERSIGNED EXPLAINS HEREWITH THAT HE/SHE IS HIMSELF ENTITLED TO THE ULTIMATE ECONOMIC ASSETS. THE FACT THAT HE IS ENTITLED TO THE ECONOMIC ASSETS , IN THE END, ECONOMICALLY. 1. NAME MAMMEN MAPPILLAI SURNAME KANDATHIL MAMMEN DATE OF BIRTH 28-12-1922 ADDRESS NO. 28, G.N. CHETTY ROAD, T. NAGAR, CHENNA I-17. DOMICILE INDIA NATIONALITY INDIAN 2. NAME MAMMEN SURNAME ARUN DATE OF BIRTH 12.11.1964 ADDRESS NO.28,G.N.CHETTY ITA NO.870/MDS /2011 : 6 : ROAD, T. NAGAR, CHENNAI-17. DOMICILE INDIA NATIONALITY INDIAN 3. NAME MAMMEN SURNAME KANDATHIL MAMMEN DATE OF BIRTH 08.2.1949 ADDRESS NO.17,GILCHRIST AVENUE, HARRIGTON ROAD, CHENNAI-31. DOMICILE INDIA NATIONALITY INDIAN THE CONTRACTING PARTNER UNDERTAKES TO INFORM OF CHANGES OF THE BANK BY HIMSELF IMMEDIATELY IN WRITING. PLACE VADUZ, DATE : 12 TH JULY, 2001 (-SD-) WEBSTER FOUNDATION PROFILE MANAGEMENT TRUST 7. INFORMATION IS ALSO ON RECORD TO SHOW WHAT THE BALANCE WAS IN THE SAID ACCOUNT AS ON 31.12.2001. THE SAID INFORMATION IS IN GERMAN LANGUAGE AND THE TRAN SLATED VERSION IS REPRODUCED AS UNDER : WEBSTER FOUNDATION, 9490 VADUZ MAND NO.:TH 71049 FOUNDATION DATE: 27.3.2000 STATUS : ACTIVELY LAST CUSTOMER VISIT : 24.3.2000 TO ADMINISTRATIVE COUNCILS AND ENDOWMENT COUNCILS. PROFILE MANAGEMENT TRUSTREG., DRAWING RIGHT : INDIVIDUALLY TELSER MARCEL, TRIESEN ITA NO.870/MDS /2011 : 7 : BANKERS: LGT BANK IN LIECHTENSTEIN AG, VADUZ A/C. NO. 0163517AB SEVERAL INVESTMENT CONSULTANT - MEIER DIRK REPRESENTATIVE - LGT TREUHAND AG, VADUZ PRINCIPAL - PRIVATE PRINCIPAL FIXED FEES - 1000 27.3.2003 FLAT RATE FEES MINIMUM 5500 DUE ON 27.3.2003 ASSETS FOR 31.12.2001 770796.60 SWISS FRANC INVOICEABLE FLAT RATE FEE 5500 PURPOSEPOSSESSION,PROOFCONTRACTS AUTHORITIES INSTRUCTIONS FOR MANAGEMENT, ACCOUNTING ETC. HISTORY: ACCORDING TO OBV FROM 14.11.2000 ENCLOSURE 4/4 DOCUMENTS SHOULD STILL BE SIGNED BY THE FATHER AND THE SON. REMUNERATION IN CASH FOR THE SETTLEMENT O F THE FINAL ACCOUNT OF THE INSTITUTION ALLOWED TO DRA W. PROPERTY STATUS AND DECISION IN 2001 FROM CUSTOMER ALLOWED TO SIGN. PROPERTY STATUS AND DECISION IN 200 PROVIDE IN THE NEXT CUSTOMER CONTRACT MUST INTRODUCE SPR NE W KB 15.3.2002. THE ABOVE PIECES OF INFORMATION FORMED THE BASIS FO R INITIATING ASSESSMENT PROCEEDINGS U/S 148. ON RECEIPT OF THE REASON FOR ISSUE OF NOTICE U/S 14 8, THE ASSESSEE REPLIED AS UNDER : ON THE BASIS OF THE REASONS PROVIDED BY YOU BY YOU R LETTER DATED 24.4.2009. I HAVE WRITTEN TO LGT BANK, LICHT ENSTEIN ON 14/5/2009 REQUESTING THEM TO VERIFY THE DETAILS OF THE TRUST PURPORTED TO HAVE AN ACCOUNT WITH LGT BANK AN D THE BENEFICIARIES IN THE SAID TRUST. THE BANK HAS REPL IED BY THEIR LETTER DATED 08/7/2009 COPY OF WHICH IS ENCLOSED (O RIGINAL ITA NO.870/MDS /2011 : 8 : BANK LETTER IS PRODUCED FOR YOUR PERUSAL). THE BAN KS LETTER WILL SHOW THAT THEY HAVE NO INFORMATION OF ANY SUCH TRUST OR THE STATED BENEFICIARIES IN THE TRUST. IN VIEW OF THE BANKS CONFIRMATION, THE REASSESSME NT IS WITHOUT MERITS AND THEREFORE, THE PROCEEDINGS MA Y BE DROPPED. 10. THE REQUEST OF THE ASSESSEE WAS CONSIDERED. IT IS SEEN FROM THE COPY OF THE LETTER ANNEXED TO THE ABOVE TH AT IN REPLY TO THE COMMUNICATION CLAIMED TO HAVE BEEN ADDRESSED BY K.M.MAMMEN AS L/R OF LATE MR. K.M. MAMMEN MAPPILLAI , THE BANK HAS STATED AS UNDER : DUE TO THE LIECHTENSTEIN BANKING ACT, THE BANK CAN DISCLOSE INFORMATION ABOUT ANY POSSIBLE BUSINESS RELATION BE TWEEN A BANK CLIENT AND THE BANK ONLY TO AUTHORIZED PERSON( S) AND NONE ELSE. WE, THEREFORE, REGRET OUR INABILITY TO GIVE YOU THE INFORMATION CALLED FOR BY YOU. 11. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEES CLAIM THAT THERE IS NO INFORMATION OF ANY SUCH TRUS T OR THE STATED BENEFICIARIES IN THE TRUST IS NOT CORRECT FOR THE F OLLOWING REASONS : 1. THE ASSESSEE HAS CLAIMED TO HAVE ADDRESSED A LETTER TO THE LGT BANK IN LIECHTENSTEIN. IN FACT, THE ASSESSEE HAS NO PRIVITY OF CONTRACT WITH THE BANK A S THE BANK ACCOUNT STANDS IN THE NAME OF THE TRUST. IF AT ALL, TO PROVE HIS HONESTY, HE SHOULD HAVE ADDRES SED THE LETTER TO THE TRUST AND GOT THE CONFIRMATION FR OM THE TRUST. 2. MOREOVER, THE INFORMATION FURNISHED BY THE BANK ONLY SAYS THAT ACCORDING TO THEIR BANKING REGULATIONS, THE INFORMATION CAN BE DIVULGED ONLY T O A CLIENT WHICH IN THIS CASE IS THE TRUST VIZ. WEBSTER FOUNDATION. ITA NO.870/MDS /2011 : 9 : 12. THE INFORMATION RECEIVED IS IN GERMAN LANGUAGE WHICH WAS TRANSLATED. FROM THE TRANSLATION, THE FOLLOWING MO RE FACTS BECOME CLEAR. 1. THE ASSESSEE HAD VISITED VADUZ, LIECHTENSTEIN O N 24 TH MARCH, 2000. 2. THE ASSESSEE, THE ELDER SON KANDATHIL MAMMEN MAMMEN HAS CREATED THE ENDOWMENT ON 24 TH MARCH, 2000 BY TRANSFERRING 1,23,000 EURO DOLLARS. THE NAME OF THE TRUST CREATED IS WEBSTER FOUNDATION REPRESENTED B Y THE TRUSTEE PETER MEIER WHO IN TURN OPENED A BANK ACC OUNT WITH LGT BANK WITH A/C. NO. 0163517. THE BENEFICIA RIES NAMED ARE THE FATHER AND THE TWO SONS. THE SAID AC COUNT AS ON 31.12.2001 SHOWED A BALANCE OF 7,78,437.80 SW ISS FRANC KEPT IN SAFE CUSTODY ACCOUNT WHICH IS INCLUSI VE OF ACCRUED INTEREST. THERE WAS A DEBIT TO THIS ACCOUN T ON ACCOUNT OF FLAT RATE FEES AND THE NET BALANCE IS SH OWN AT 7,70,796 SWISS FRANC. THIS INFORMATION IS EVIDENT FROM THE ACCOUNT STATEMENT DATED JANUARY 1,2002 WHICH IS REPRODUCED AS UNDER: WEBSTER FOUNDATION 9490 VADUZ VADUZ, JANUARY 1ASSESSEE, 2002 DME/PK2/09:26:57 SUMMARY AS ON 31.12.2001 ACC. OVERVIEW: NO. ACCOUNTS/ CUR. AMT. CURR. AMT. IN CHF PORTFOLIOS RATE AB USD ACCOUNT USD 4,541.60 1.6825 764 1.2 (-) OO SAFE CUSTODY CHF 778,437.80 ACCOUNT INCL. ACCRUED INTEREST TOTAL 770,796.60 ITA NO.870/MDS /2011 : 10 : 13. IN VIEW OF THE ABOVE FACT, THE ASSESSING OFFICE R REJECTED THE REQUEST FOR DROPPING ALL THE PROCEEDINGS. THER EAFTER, THE ASSESSEE FILED A LETTER DATED 10-11-2009 IN WHICH H E HAS MADE THE FOLLOWING SUBMISSIONS : I HEREWITH ENCLOSE A COPY OF MY LETTER DATED 14.5.2009 ADDRESSED TO LGT BANK REQUESTING THEM TO FURNISH A COPY OF THE DOCUMENT CREATING THE TRUST UNDER THE NAME & STYLE OF WEBSTER TRUST FOUNDATION. HOWEVER, THE SAID BANK VIDE ITS LETTER DT. 8.7.2009 , A COPY OF WHICH HAS ALREADY BEEN FURNISHED TO THE DEPARTMENT, DECLINED TO FURNISH THE INFORMATION SOUGHT BY ME. I ALSO ENCLOSE A COPY OF MY LETTER DT. 29.10.2009 ADDRESSED TO LGT, TREUHAND, THE TRUSTEES OF THE ALLEGED WEBSTER TRUST FOUNDATION, REQUESTING THEM T O FURNISH A COPY OF THE DOCUMENT CREATING THE SAID TR UST FOR YOUR INFORMATION. I SHALL FURNISH THEIR REPLY, IF AND WHEN RECEIVED, UPON RECEIPT OF THE SAME. I SUBMIT THAT I AM NEITHER AWARE OF THE EXISTENCE OF THE AFORESAID TRUST NOR THE DECLARATIO N OF ENDOWMENT PURPORTED TO HAVE BEEN SIGNED BY ME ON 24.3.2000. I SUBMIT THAT I HAVE NOT SIGNED ANY SUC H DOCUMENT. BOTH THE DOCUMENTS, THE DECLARATION OF ENDOWMENT AND THE LETTER REFERRED HEREIN BELOW, SHOWN TO MY AUTHORISED REPRESENTATIVE DURING THE COURSE OF INCOME TAX PROCEEDINGS, ARE UNAUTHENTICATED AND UNATTESTED COPIES AND THEREFORE OUGHT NOT TO BE RELIED UPON UNLESS THEIR AUTHENTICI TY IS PROVED BEYOND DOUBT. WITHOUT PREJUDICE TO THE ABOVE, I SUBMIT THAT THE SUM OF EURO 123,000 ENDOWED UPON THE AFORESAID TRUST ON 24.3.2000 CANNOT BE THE SUBJECT MATTER OF ASSESSMENT IN ASST. YEAR 2002-03. I FURTHER SUBMIT THAT THE SUM OF CHF 770,796.70 OUTSTANDING AS AT 31.12.2001 AS PER THE LETTER CLAIMED BY THE DEPARTMENT TO HAVE BEEN ISSUE D BY THE SAID BANK AT THE END OF CALENDAR YEAR CANNOT ITA NO.870/MDS /2011 : 11 : BE CONSTRUED TO HAVE BEEN DEPOSITED ON 31.12.2001 AND THEREFORE CANNOT BE THE SUBJECT MATTER OF ASSESSMENT IN ASST. YEAR 2002-03. IN ANY CASE, THE SAID SUM OF CHF 770,796.70 WOULD INCLUDE EURO 123,000 REFERRED HEREINABOVE. IT IS REQUESTED THAT COPIES OF THE SAID DOCUMENTS AND ALL OTHER DOCUMENTS AND PAPERS THAT MAYBE RELIED UPON BY THE DEPARTMENT MAYBE GIVEN TO ME. 14. IN VIEW OF THE ABOVE SUBMISSIONS MADE ON 10-11- 2009 THE ASSESSING OFFICER ISSUED SUMMONS UNDER SEC. 131 OF THE ACT TO THE ASSESSEE TO ASCERTAIN ALL THE FACTS AND CIRCUMS TANCES RELATING TO THE TRANSACTION IN QUESTION. THE ASSESSEE PERSO NALLY ATTENDED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICE R ASKED VARIOUS QUESTIONS TO WHICH THE ASSESSEE ALSO GIVEN REPLY. THE ASSESSING OFFICER AFTER PUTTING VARIOUS QUESTIONS T O THE ASSESSEE AND AFTER RECEIVING REPLY, OBSERVED AS UNDER : BEFORE THE EXAMINATION IS CONCLUDED, I WOULD LIKE TO SUM UP THAT THE INFORMATION RECEIVED AND TAKEN ON RECORD SHOWS THAT THERE IS A PRIVATE FAMILY TRUST I N THE NAME OF M/S. WEBSTER FOUNDATION, VADUZ CREATED BY YOU ON 24.3.2000. YOURSELF, YOUR FATHER AND YOU R BROTHER ARE DIRECTLY ASSOCIATED WITH THE SAID TRUST . THE INITIAL ENDOWMENT WAS EURO 123000 AND THE FOUNDATION IN TURN OPENED A BANK ACCOUNT WITH LGT BANK IN LIECHTENSTEIN AND THE SAID TRUST SHOWS A BALANCE OF 77079A6 SWISS FRAN AS ON 31.3.01. IT IS PROPOSED TO TREAT THE SAID SUM OF 770796 SWISS FRAN C AS YOUR UNEXPLAINED INVESTMENT RELEVANT FOR THE A.Y . 2002-03 AS THE SAID FOUNDATION WAS CREATED BY YOU ITA NO.870/MDS /2011 : 12 : AND APPARENTLY AS THE FOUNDER OF THE TRUST YOU HAVE TO ACCOUNT FOR THE SOURCES FOR THE INITIAL ENDOWMEN T AS PER THE BALANCE AS ON 31.12.2001 FAILING WHICH I T WOULD BE TREATED THAT THE ENTIRE 770796 SWISS FRANC WILL BE TREATED, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, AS YOUR CONTRIBUTION TO THE SAID TRUST (FOUNDATION). WHAT WOULD YOU LIKE TO SAY? IT WAS REPLIED BY THE ASSESSEE AS UNDER : ANS. I AM NOT AWARE OF THE EXISTENCE OF WEBSTER FOUNDATION. I HAVE NEVER SIGNED ANY DOCUMENT IN CONNECTION WITH THE SAID TRUST. ON THE BASIS OF INFORMATION RECEIVED FROM THE DEPARTMENT, I HAVE TAKEN APPROPRIATE STEPS TO APPROACH LGT BANK AND LGT TREUHAND REQUESTING THEM TO FURNISH A COPY OF TRUST DEED OF WEBSTER FOUNDATION AND THE DETAILS OF ACCOUNT WITH LGT BANK. LGT BANK HAS REPLIED THAT I AM NOT AN AUTHORIZED PERSON AND THEREFORE INFORMATION CANNOT BE FURNISHED. LGT TREUHAND HAS SO FAR NOT REPLIED TO MY LETTER WHICH WOULD CLEARLY IMPLY THAT I AM NOT A BENEFICIARY OR AUTHOR OF THE SAID WEBSTER FOUNDATION. HOWEVER, I DO NOT INTEND TO ENTER INTO A LONG DRAWN PROTRACTED LITIGATION WITH THE DEPARTMENT ON THIS ISSUE AND THEREFORE I AM WILLING TO PAY THE TAXES TO PROTECT MY REPUTATION AND TO AVOID NEEDLESS PUBLICITY IN THE MATTER PROVIDED THAT NO PENAL ACTION BE INITIATED AGAINST ME. ITA NO.870/MDS /2011 : 13 : 15. SUBSEQUENTLY, THE ASSESSING OFFICER ASKED ANOTH ER QUESTION, DO YOU WANT TO SAY ANYTHING ELSE? THE ASSESSEE REPLIED THAT: ANS. ONCE AGAIN I REITERATE WHATEVER I HAVE STATED. TO MAINTAIN THE BLEMISH LESS TRACK RECORD OF THE MRF GROUP IN THE MATTER OF TAXATION ALL ALONG W ITH THE DEPARTMENT AND TO DISCHARGE ANY PIOUS OBLIGATIO N AS A SON TO MY DECEASED FATHER, I HAVE COME FORWARD TO PAY THE TAXES ON THE BASIS OF INFORMATION YOU RE PLY UPON WITHOUT PREJUDICE WITH THE STAND THAT I HAVE G OT NOTHING TO DO WITH THE SAID FOUNDATION. I EARNESTLY HOPE THAT THE DEPARTMENT WOULD RECIPROCATE ITS GESTURE BY NOT PENALIZING ME BY WAY OF PENALTY OR OTHER PUNITIVE MEASURES AS A GOOD GESTURE TO THE CO - OPERATION I HAVE EXTENDED TO THE DEPARTMENT. 16. THE ASSESSING OFFICER AFTER CONSIDERING THE AFO RESAID DEPOSITIONS OF THE ASSESSEE OBSERVED THAT : THE SIGNATURES FOUND IN THE DOCUMENTS ARE THAT OF THE ASSESSEE AND THE SAME EXACTLY TALLIES WITH T HE SIGNATURE FOUND ON THE RETURNS OF INCOME FILED AND THE SWORN STATEMENT. SINCE THE ASSESSEE IS THE FOUNDER OF THE TRUST, AND IN THE DECLARATION OF ENDOWMENT HE CONFIRMED THAT HE HAD LAWFULLY ACQUIRED THE MONEY AND THAT HE WAS COMPETENT TO DISPOSE OF THE MONEY, THE SOURCES FOR THE BALANCE I N THE SAID BANK ACCOUNT HAS TO BE TREATED TO BE HIS CONTRIBUTION AND THE SAME HAS TO BE BROUGHT TO TAX ITA NO.870/MDS /2011 : 14 : AS HIS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT, IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE SAME IS OUT OF ACCOUNTED FOR INCOME. THE CONTENTION THA T THE INITIAL CONTRIBUTION CANNOT FORM PART OF THE SUBJECT MATTER OF ASSESSMENT FOR THE CURRENT ASSESSMENT YEAR HAS TO BE IGNORED IN VIEW OF THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN THE COMPOSITION OF THE BALANCE OUTSTANDING AS ON 31.12.2001. IT IS FOR THE ASSESSEE TO EXPLAIN THE BREAK UP OF THE AMOUNT IN THE SAFE CUSTODY ACCOUNT AS ON 31.12.2001. THE POSSIBILITY OF WITHDRAWALS FROM THE SAID ACCOUNT AND SUBSEQUENT FRESH INVESTMENTS INTO THE ACCOUNT CANNOT BE RULED OUT. THE ONUS RESTS ON THE ASSESSEE TO PROVE THE SAME OTHERWISE. THE EXPENDITURE CLAIMED BY WAY OF FLAT RATE FEES CHARGED BY THE BANK IS ALSO NOT ALLOWABLE . THE BALANCE AS ON 31.12.2001 IN THE ACCOUNT IN QUESTION IS 778,437.80 (SWISS FRANK). THE CONVERSION RATE APPLICABLE AS ON THE RELEVANT DATE IS ONE SWISS FRANK IS EQUAL TO ` 29.0818 INR ( WWW.X.RATES.COM ). APPLYING THE SAME, THE VALUE OF UNEXPLAINED INVESTMENT OF THE ASSESSEE WORKS OUT TO ` 2,26,38,373 AND THE SAME IS BROUGHT TO TAX. 17. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT(APPEALS). AFTER FILING THE APPEAL, THE CIT(APP EALS) POSTED THE SAME FOR HEARING ON 23.11.2010. THE ASSESSEE F ILED A LETTER DATED 22.11.2010 IN WHICH HE REQUESTED TO ADJOURN T HE CASE TO AFTER APRIL, 2011 FOR THE REASON THAT HE HAS TO GET SOME ITA NO.870/MDS /2011 : 15 : CLARIFICATIONS FROM THE BANK AUTHORITIES BECAUSE TH E ENTIRE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER BAS ED ON THE INFORMATION GIVEN BY THE BANK. THE CIT(APPEALS) PO STED THE CASE ON 21.01.2011 GIVING THE ASSESSEE FURTHER TIME OF 10 DAYS BUT THERE WAS NO RESPONSE FROM THE ASSESSEE. THE C IT(APPEALS) PROCEEDED TO DISPOSE OF THE CASE BASED ON THE GROUN DS OF APPEAL AND STATEMENT OF FACTS FILED BY THE ASSESSEE. 18. THE MAIN ARGUMENT OF THE ASSESSEE BEFORE THE CIT(APPEALS) WAS THAT THE RE-OPENING WAS NOT VALID IN LAW, THE EVIDENCE ON RECORD WITH THE ASSESSING OFFICER IS NO T ACCEPTABLE EVIDENCE AND ADDITION IS BASED ON CONJUCTURES AND S URMISES, THE DOCUMENTS RELIED ON BY THE ASSESSING OFFICER ARE NO T AUTHENTICATED, DATE OF INVESTMENT BY ASSESSEE WAS N OT ESTABLISHED BY ASSESSING OFFICER, SECTION 69 CANNOT BE INVOKED AND THE INITIAL CONTRIBUTION BY ASSESSEE CANNOT BE ASSESSED IN THIS ASSESSMENT YEAR. . INSOFAR AS THE VALIDITY OF RE-OPENING IS CONCERNED, THE CIT(APPEALS) FOR THE DETAILED REA SONS GIVEN IN HIS ORDER, REJECTED THE GROUNDS RAISED BY THE ASSES SEE AND DISMISSED THE APPEAL. 19. INSOFAR AS THE SECOND GROUND RAISED BY THE ASSE SSEE BEFORE THE CIT(APPEALS) ABOUT THE UNACCEPTABLE EVI DENCE AND ITA NO.870/MDS /2011 : 16 : BASED ON CONJUCTURES AND SURMISES, THE CIT(APPEALS ) OBSERVED THAT THE INFORMATION ON RECORD SHOWED THAT ON 24.3. 2000 THE ASSESSEE MADE A DECLARATION OF ENDOWMENT IN FAVOUR OF M/S. WEBSTER FOUNDATION, 9490, VADUZ WHEREBY THE FOUNDAT ION WAS ENDOWED WITH THE SUM OF EURO 123,000. THE SAID SUM OF EURO 123,000 WAS TRANSFERRED TO THE FOUNDATIONS ACCOUNT NO. 0163517AAA EUR WITH LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT, VADUZ. IN THE SAID DECLARATION IT WAS CONFIRMED THAT THE ASSESSEE HAD LAWFULLY ACQUIRED A ND WAS ENTITLED TO DISPOSE FREELY OF THESE MONIES AND IT W AS ALSO CONFIRMED THAT THE SAID DECLARATION OF ENDOWMENT WA S FREE FROM MISTAKES, THREAT OR COMPULSION. THE SAID DECLARATI ON WAS DULY SIGNED BY THE ASSESSEE. THE DECLARATION WAS ALSO A CCEPTED BY THE SAID M/S. WEBSTER FOUNDATION WITH DECLARATION O F ACCEPTANCE WITH THE CONFIRMATION OF THE TRANSFER OF THE ABOVE SUM TO THE FOUNDATIONS OWNERSHIP UNDER THE SIGNATURE OF THE P ERSONS MANAGING THE FOUNDATION. 20. INFORMATION ON RECORD ALSO SHOWED THAT THE BENE FICIARIES UNDER THE SAID FOUNDATION ARE, MAMMEN MAPPILLAI KAN DATHIL MAMMEN, MAMMEN ARUN AND MAMMEN KANDATHIL MAMMEN. INFORMATION WAS ALSO ON RECORD TO SHOW WHAT THE BAL ANCE IN THE ITA NO.870/MDS /2011 : 17 : SAID ACCOUNT AS ON 31-12-2001 WAS AT 778,437.80 (SW ISS FRANC). THE ENTIRE INFORMATION WITH REGARD TO THE DECLARATI ON OF ENDOWMENT IN FAVOUR OF M/S. WEBSTER FOUNDATION, THE BENEFICIARIES AND BANK DETAILS WERE PROVIDED TO THE ASSESSING OFFICER BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT FOR SHORT), MINISTRY OF FINANCE, GOVERNMENT OF INDIA AND WAS IN THE POSSESSION OF THE ASSESSING OFFICER. THOSE PAPERS W ERE GIVEN TO THE ASSESSEE AND OPPORTUNITY WAS GIVEN TO REPLY TO THE SAME. THE CIT(APPEALS) FURTHER OBSERVED THAT, I HAVE PERUSED THE ITMR AND ALSO THE DETAILS RECEI VED BY DEPARTMENT. THESE PAPERS WERE RECEIVED BY CBDT, NEW DELHI, WHICH WORKS UNDER MINISTRY OF FINANCE, GOVERNMENT OF INDIA. ONCE THE PAPERS ARE RECEIVED BY GOVERNMENT OF INDIA FROM ANOTHER GOVERNMENTAL AUTHORITY, ON A GOVERNMENT-TO-GOVERNMENT BASIS, THE Y ARE DEEMED TO BE AUTHENTICATED AND THEIR AUTHENTICI TY CANNOT BE QUESTIONED IN THESE CROSS-COUNTRY TRANSACTIONS. 21. FOR THAT PROPOSITION THE CIT(APPEALS) FOLLOWED THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF H ERSH W. CHADDA, 43 SOT 544 (DEL). MOREOVER, THE PAPERS REC EIVED BY THE ASSESSING OFFICER ARE ON THE LETTERHEAD OF LGT BANK IN LIECHTENSTEIN (A MEMBER OF LIECHTENSTEIN GLOBAL TRU ST) AND THE ITA NO.870/MDS /2011 : 18 : PAPER WAS INITIALED AT THE CORNER OF THIS PAGE. (C OPY WAS ATTACHED TO THE CIT(A)S ORDER AS ANNEXURE-I). IN VIEW OF THE ABOVE, THE CIT(APPEALS) IN RESPECT OF THE CONTENTIO N OF THE ASSESSEE THAT THE PAPERS ARE NEITHER ATTESTED NOR A UTHENTICATED, HELD THE SAME TO BE DEVOID OF MERIT AND HENCE DISMI SSED IT. 22. THE NEXT CONTENTION RAISED BY THE ASSESSEE BEFO RE THE CIT(APPEALS) WAS THAT THE ENTIRE ADDITION CANNOT BE MADE IN THE YEAR UNDER CONSIDERATION. THE CIT(APPEALS) OBSERVE D THAT IT IS WITHIN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE AS T O WHEN HE DEPOSITED THE MONEY, WHEN HE WITHDREW ETC. HE FURT HER OBSERVED THAT INSTEAD OF GIVING THIS INFORMATION AN D CO-OPERATING WITH THE DEPARTMENT, THE ASSESSEE WAS ASKING THE DE PARTMENT TO PROVE HIS DEPOSITS INTO HIS BANK ACCOUNT. WHAT IS KNOWN AND IN THE POSSESSION OF THE DEPARTME NT IS THE SUMMARY OF BANK ACCOUNT AS ON 31.12.01 ON THE LETTE R HEAD OF LGT BANK IN LIECHTENSTIEN. THIS ACCOUNT SHOWS THAT THE ASSESSEE HAD 778,437.80 SWISS FRANCS AND THE CONVER SION RATE APPLICABLE AS ON THE RELEVANT DATE IS ONE SWISS FRA NC EQUAL TO RS29.0818 INR AND APPLYING THE SAME THE AMOUNT LYIN G IN HIS BANK ACCOUNT ON 31.12.01 WAS ` 2,26,38,3712/- WHICH PERTAINS ITA NO.870/MDS /2011 : 19 : TO THE ASSESSMENT YEAR 2002-03 RELEVANT TO THE PREV IOUS YEAR 2001-02. 23. IT IS A SETTLED LAW THAT IF AN AMOUNT IS CREDIT ED IN ASSESSEES ACCOUNT, THE ONUS OF PROOF LIES ON HIM T O EXPLAIN THE SOURCE OF THE SAME. TO COME TO THE ABOVE CONCLUSIO N, THE CIT(APPEALS) FOLLOWED THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF DEVI PRASAD (72 ITR 194) (SC) WHEREI N IT WAS HELD THAT THE BURDEN OF PROOF LIES ON THE PERSON WHOSE A CCOUNT IS CREDITED TO EXPLAIN THE SOURCE OF THE SAME. HE ALS O RELIED ON THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT (214 ITR 801), KALE KHAN MOHAMMED HAN IF V. CIT (50 ITR 1) (SC) AND SREELEKHA BENERJEE (49 ITR 112) (SC). HE FURTHER OBSERVED THAT IN FACT HONBLE KERALA HIGH C OURT IN THE CASE OF CIT V. C.P. ADAM (105 ITR 465) (KER) HAS HE LD THAT THE REVENUE IS ENTITLED TO COLLECT INFORMATION FROM ANY SOURCE AVAILABLE TO IT AND IS NOT OBLIGED TO REVEAL THE SO URCE. BUT STILL THE DEPARTMENT GAVE ALL PAPERS AVAILABLE WITH IT TO THE ASSESSEE BEFORE CONFRONTING HIM BASED ON THESE EVIDENCES. I N VIEW OF THE ABOVE, THE ASSESSEES CONTENTION THAT DEPARTMENT SH OULD PROVE CREDITED AMOUNTS OF ASSESSEE WAS HELD TO BE NOT VAL ID. IF THE ASSESSEE WANTED TO ESTABLISH THAT THE AMOUNTS MENTI ONED IN THE ITA NO.870/MDS /2011 : 20 : BANK PERTAINED TO EARLIER YEARS, THE BURDEN OF PROO F WOULD LIE ON HIM WHICH WAS NOT DISCHARGED IN THIS CASE. AS FAR AS THE REVENUE IS CONCERNED, THE CIT(APPEALS) OBSERVED, IT GATHERED EVIDENCE TO SHOW THAT THERE IS AN AMOUNT OF CHF OF 778,437.80 AS ON 31.12.01 IN THE GERMAN BANK ACCOUNT OF WEBSTE R FOUNDATION. THIS GROUND OF APPEAL RAISED BY THE AS SESSEE BEFORE THE CIT(APPEALS) WAS THEREFORE DISMISSED. 24. ANOTHER OBJECTION RAISED BY THE ASSESSEE BEFORE THE CIT(APPEALS) IS THAT HE DOES NOT KNOW ANYTHING ABOU T THIS BANK ACCOUNT IN LIECHTENSTEIN AND HENCE THE AMOUNT CANNO T BE ADDED AS UNEXPLAINED INVESTMENT IN HIS HANDS. THE CIT(AP PEALS) HELD THAT THE DECLARATION OF ENDOWMENT SIGNED BY THE ASS ESSEE SHOWS THAT HE HAS TRANSFERRED THE AMOUNTS TO WEBSTER FOUN DATION (VIDE ANNEXURE-2 OF THE APPELLATE ORDER). SO THE CONTENT ION OF THE ASSESSEE THAT HE DOES NOT KNOW ANYTHING ABOUT INVES TMENT IN THIS FOUNDATION WAS REJECTED. FROM THE DOCUMENTS W HICH WERE ENCLOSED TO THE APPELLATE ORDER IT COULD BE SEEN TH AT ALL OF THEM ARE SIGNED BY THE ASSESSEE ONLY AND HENCE HE COULD NOT FEIGN IGNORANCE NOR REJECT THOSE DOCUMENTS. THE CIT(APPE ALS) FURTHER HELD THAT THE SIGNATURE OF THE ASSESSEE ON THE SWOR N STATEMENT TAKEN BY THE ASSESSING OFFICER, RETURN OF INCOME FI LED BY THE ITA NO.870/MDS /2011 : 21 : ASSESSEE AND THE SIGNATURE IN ALL THESE DOCUMENTS WHICH SHOWS INVESTMENT IN WEBSTER FOUNDATION WAS THE SAME AND H ENCE THE ASSESSEE COULD NOT DENY THESE TRANSACTIONS. 25. THE NEXT OBJECTION RAISED BY THE ASSESSEE BEFOR E THE CIT(APPEALS) WAS THAT THE ADDITION CANNOT BE PUREL Y ON AGREED BASIS. HE FURTHER OBSERVED THAT THE ASSESSING OFFI CER DID NOT MAKE THE ADDITION SOLELY ON THE BASIS OF ADMISSION OF ASSESSEE. THE CIT(APPEALS) HELD THAT IT COULD BE SEEN THAT TH E DEPARTMENT GATHERED FULL EVIDENCE OF ASSESSEES UNACCOUNTED IN VESTMENT IN WEBSTER FOUNDATION, GAVE COPIES OF THE EVIDENCES WH ICH ARE GOING TO BE USED AGAINST HIM, FULL OPPORTUNITY TO R EBUT THE SAME WAS GIVEN TO HIM, A DETAILED SWORN STATEMENT WAS RE CORDED FROM HIM. TAKING INTO CONSIDERATION THE QUESTION NO. 22 AND THE REPLY GIVEN BY THE ASSESSEE AND THE ASSESSING OFFICERS C ONCLUSION THAT THE ASSESSEE HAS INVESTED UNACCOUNTED MONEY FROM TH E EVIDENCES COLLECTED BY THE DEPARTMENT AS DETAILED I N THE ASSESSMENT ORDER, IT IS WELL ESTABLISHED THAT THE A SSESSEE HAD MADE AN UNACCOUNTED INVESTMENT IN THE BANK ACCOUNT MENTIONED BY THE ASSESSING OFFICER. THE CIT(APPEAL S) FURTHER OBSERVED THAT ONCE THE ASSESSEE AGREED FOR THE ADDI TION NO APPEAL CAN BE FILED. IN FACT THE ASSESSEE HAS AGRE ED BEFORE THE ITA NO.870/MDS /2011 : 22 : ASSESSING OFFICER AND THE ASSESSING OFFICER THEREAF TER BY TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES, THE ADDITION WAS MADE. THE CIT(APPEALS) BY FOLLOWING THE DECISIO NS IN THE CASES OF CIT V. EAST COAST COMMERCIAL COMPANY LTD. (63 ITR 449) (SC), RAMANLAL KAMDAR V. CIT (108 ITR 73) (MA D) AND MALWA TEXTURISING P. LTD. & ORS. V. ACIT (77 TTJ 99 5) (INDORE) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 26. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DOCUMENTS, RELIED ON BY THE ASSESSING OFFICER, ARE NOT AUTHENT ICATED AND ON THE BASIS OF THAT NO ADDITION CAN BE MADE U/S 69 OF THE ACT. 27. EVEN AS PER THE DOCUMENTS RELIED ON BY THE ASS ESSING OFFICER THE AMOUNT WAS AVAILABLE FROM MARCH, 2000 A ND IT CANNOT BE ADDED AS UNEXPLAINED INVESTMENT FOR THE ASSESSME NT YEAR 2002-03 AND THEREFORE IT CANNOT BE ADDED AS UNEXPLA INED INCOME FOR THAT YEAR. THE LEARNED COUNSEL FOR THE ASSESSE E FURTHER ARGUED THAT BASED ON THE SINGLE ENTRY NO ADDITION C AN BE MADE. THE ASSESSING OFFICER HAS NOT EXPLAINED THE SOURCE OF THE ITA NO.870/MDS /2011 : 23 : ASSESSEE. ADDITION CANNOT BE MADE SOLELY ON THE BA SIS OF AGREEMENT. 28. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THA T THE ASSESSING OFFICER, BASING ON THE DOCUMENTS RECEIVED FROM CBDT AND AFTER EXAMINING THE ENTIRE CASE AND AFTER ISSUI NG NOTICE TO THE ASSESSEE, THE ADDITION WAS MADE. THE DOCUMENTS RECEIVED BY THE CENTRAL GOVERNMENT FROM ANOTHER GOVERNMENT, I.E., GOVERNMENT-TO-GOVERNMENT BASIS, IS AN AUTHENTICATED INFORMATION. BASED ON THAT, AFTER DETAILED ENQUIRY AND AFTER GIVING OPPORTUNITY TO THE ASSESSEE, THE ADDITION WA S MADE. THE ASSESSING OFFICER HAS TAKEN BANK ACCOUNT AS ON 31.1 2.2001 AND THE ADDITION WAS RIGHTLY MADE IN THE ASSESSMENT YEA R 2002-03. THE LEARNED DR SUBMITTED THAT WHEN THE ASSESSING OF FICER BROUGHT ALL THE MATERIAL FACTS TO THE NOTICE OF THE ASSESSEE AND AFTER DETAILED DISCUSSION AND CONFRONTATION, THE AS SESSEE AGREED TO PAY TAXES. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS ON THE BASIS OF VARIOUS DOCUMENTS AND AL SO BASED ON THE ASSESSEES AGREEMENT TO PAY TAXES. THE LEARNED DR FURTHER SUBMITTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE ONUS CAST UPON HIM. THEREFORE THE CIT(APPEALS) HAS RIGHTLY C ONFIRMED THE ORDER OF THE ASSESSING OFFICER. ITA NO.870/MDS /2011 : 24 : 29. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 29.7 .2002. THEREAFTER, THE ASSESSING OFFICER RECEIVED INFORMAT ION FROM CBDT, MINISTRY OF FINANCE, GOVERNMENT OF INDIA THAT ON 24.3.2000 THE ASSESSEE MADE A DECLARATION OF ENDOWM ENT IN FAVOUR OF M/S. WEBSTER FOUNDATION, 9490, VADUZ WHER EBY THE FOUNDATION WAS ENDOWED WITH THE SUM OF EURO 123,000 . THE SAID SUM OF EURO 123,000 WAS TRANSFERRED TO THE FOUNDATIONS ACCOUNT NO.0163517AAA EUR WITH LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT, VADUZ. T HE SAID FOUNDATION WAS CREATED BY THE ASSESSEE AND WAS DULY SIGNED BY THE ASSESSEE. THE DECLARATION OF THE ASSESSEE WAS ALSO ACCEPTED BY M/S. WEBSTER FOUNDATI ON AND THE SAME WAS CONFIRMED BY THE FOUNDATIONS OWNERSHIP UNDER THE SIGNATURE OF THE PERSONS MANAGI NG THE FOUNDATION. THE INFORMATION ON RECORD SHOWS THAT THE BENEFICIARIES OF THE FOUNDATION ARE MAMMEN MAPPILLA I KANDATHIL MAMMEN, MAMMEN ARUN AND MAMMEN KANDANTHIL MAMMEN. THE INFORMATION SHOWS THAT THE ASSESSEE HAD 7,78,43 7.80 SWISS FRANC AND BY APPLYING THE CONVERSION RATE THE AMOUN T LYING IN ITA NO.870/MDS /2011 : 25 : HIS BANK ACCOUNT AS ON 31.12.2001 WAS ` 2,26,38,378/- WHICH PERTAINS TO THE ASSESSMENT YEAR 2002-03 RELEVANT TO THE PREVIOUS YEAR 2001-02. ACCORDINGLY, THE ADDITION WAS MADE I N THE ASSESSMENT YEAR 2002-03. THE MAIN ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING SEC. 69 OF THE ACT WA S NOT RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION. WE ARE NOT AGREEING WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE SIMPLE REASON THAT ON THE FACTS OF THE CASE STATED ABOVE, THE SUMMARY BANK STATEMENT IN THE LET TERHEAD OF LGT BANK OF LIECHTENSTEIN AKTIENGESELLSCHAFT, VADUZ AS ON 31.12.2001 SHOWS THE BALANCE AMOUNT OF EURO 7,78,43 7.80 SWISS FRANC AMOUNTING TO ` 2,26,,38,372/-. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY ADD ED THE SAME FOR THE ASSESSMENT YEAR 2002-03 AND HAS RIGHTLY CON FIRMED THE SAME BY THE CIT(APPEALS). 30. ANOTHER SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT WITHOUT ANY AUTHENTICATED MATERIAL /DOCUMENTS SECTION 69 OF THE ACT CANNOT BE INVOKED BY THE ASSE SSING OFFICER. THE ASSESSING OFFICER RECEIVED INFORMATION FROM CBDT AND AFTER SCRUTINIZING ALL THOSE MATERIALS, THE ASSESSEE WAS ISSUED ITA NO.870/MDS /2011 : 26 : SUMMONS UNDER SECTION 131 OF THE ACT AND AFTER SHOW ING ALL THE MATERIALS TO THE ASSESSEE HE CALLED FOR THE EXPLANA TION FROM THE ASSESSEE. AFTER CONFRONTATION WITH THE ASSESSEE, T HE ASSESSING OFFICER HAS MADE THE ADDITION. THE MATERIAL INFORM ATION RECEIVED BY THE ASSESSING OFFICER IS FROM CBDT. THE CBDT UND ER THE MINISTRY OF FINANCE, GOVT. OF INDIA HAS RECEIVED TH REE MATERIAL PAPERS WHICH ARE ATTACHED TO THE APPELLATE ORDER PA SSED BY THE CIT(APPEALS) AS ANNEXURE-1 AND ANNEXURE-2 (3 PAGES) , I.E. ANNEXURE-I SHOWING SUMMARY FROM LGT BANK IN LIECHTEN STEIN (A MEMBER OF LIECHTENSTEIN GLOBAL TRUST) WITH SEAL AND ANNEXURE- II SHOWING DECLARATION OF ENDOWMENT BY THE ASSESSEE WITH SEAL. THESE PAGES ATTACHED TO THE CIT(A)S ORDER SHOW THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE CBDT, MIN ISTRY OF FINANCE, GOVERNMENT OF INDIA. THEREFORE, IT CANNO T BE SAID THAT THE INFORMATION IS NOT AUTHENTICATED. FURTHER THE INFORMATION GIVEN BY THE LGT BANK IN LIECHTENSTEIN SHOWS THAT EV EN AS PER THE LGT BANK, THE BENEFICIARIES ARE THE ASSESSEE, HI S BROTHER AND HIS FATHER. WHEN THIS INFORMATION WAS CONFRONTED WI TH THE ASSESSEE, THE ASSESSEE ADMITTED THAT THE DECLARATIO N OF ENDOWMENT SIGNED BY HIM IS SIMILAR TO HIS SIGNATURE AS IN ALL OTHER PAPERS SHOWN TO HIM AND THEREFORE IN OUR OPIN ION THE ITA NO.870/MDS /2011 : 27 : ASSESSING OFFICER HAS DISCHARGED HIS ONUS BY PRODUC ING ALL NECESSARY MATERIAL AND ALSO SHOWED THE SAME TO THE ASSESSEE AND AFTER CONFRONTATION WITH THE ASSESSEE THE ASSES SING OFFICER HAS MADE THE ADDITION. THEREFORE, THE ADDITION IS B ASED ON CERTAIN VERY IMPORTANT DOCUMENTS WHICH RELATED TO T HE ASSESSEES INVESTMENT. 31. FURTHER, THE ASSESSING OFFICER HAS CALLED FOR THE EXPLANATION FROM THE ASSESSEE AND THEREAFTER ISSUED SUMMONS U/S 131 OF THE ACT AND MADE DETAILED ENQUIRY WITH T HE ASSESSEE WITH REGARD TO THE INVESTMENT IN WEBSTER FOUNDATION . THE ASSESSEE IN RESPONSE TO QUESTION NO.22 HAS ADMITTED THE FOLLOWING : Q. NO. 22. DO YOU WANT TO SAY ANYTHING ELSE. ANS. ONCE AGAIN I REITERATE WHATEVER I HAVE STATED. TO MAINTAIN THE BLEMISHLESS TRACK RECORD OF THE MRF GROUP IN THE MATTER OF TAXATION ALL ALONG WITH THE DEPARTMENT AND TO DISCHARGE ANY PIOUS OBLIGATION AS A SON TO MY DECEASED FATHER, I HAVE COME FORWARD TO P AY THE TAXES ON THE BASIS OF INFORMATION YOU RELY UPON WITHOUT PREJUDICE WITH THE STAND THAT I HAVE GOT NOTHING TO DO WITH THE SAID FOUNDATION. I EARNESTL Y HOPE THAT THE DEPARTMENT WOULD RECIPROCATE ITS GEST URE BY NOT PENALISING ME BY WAY OF PENALTY OR OTHER ITA NO.870/MDS /2011 : 28 : PUNITIVE MEASURES AS A GOOD GESTURE TO THE CO- OPERATION I HAVE EXTENDED TO THE DEPARTMENT. 32. FROM THE ABOVE IT IS VERY CLEAR THAT THE ASSESS EE HAS ADMITTED BEFORE THE ASSESSING OFFICER TO PAY THE TA XES. THEREFORE, AFTER CONSIDERING THE ENTIRE MATERIAL ON RECORD, BRINGING ALL THE MATERIAL TO THE NOTICE OF THE ASSE SSEE AND AFTER DETAILED QUESTIONNAIRE AND DISCUSSION WITH THE ASSE SSEE, THE ASSESSING OFFICER HAS INVOKED SECTION 69 OF THE ACT . THEREAFTER, THE ASSESSEE AGREED TO PAY THE TAXES. THEREFORE IT CANNOT BE SAID THAT THE ADDITION MADE BY THE ASSESSING OFFICE R WAS PURELY ON THE BASIS OF AGREEMENT BY THE ASSESSEE. 33. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO A RGUED THAT AS PER THE EVIDENCE ACT, THE ADDITION MADE BY THE A SSESSING OFFICER IS BASED ON CERTAIN MATERIAL WITHOUT THERE BEING ANY EVIDENTIARY VALUE. WITH REGARD TO THIS ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT T HE INCOME TAX AUTHORITIES ARE NOT BOUND BY STRICT RULES OF EV IDENCE AS HELD BYTHE HON'BLE SUPREME COURT IN THE CASE OF CIT V. E AST COAST COMMERCIAL COMPANY LTD. (63 ITR 449) (SC). 34. THE ASSESSING OFFICER AFTER RECEIVING THE INFOR MATION FROM THE CBDT AND INTIMATING THE SAME TO THE ASSESSEE AND AFTER ITA NO.870/MDS /2011 : 29 : DETAILED ENQUIRY WITH QUESTIONNAIRE ISSUED TO THE A SSESSEE, PRIMA FACIE, CAME TO THE CONCLUSION THAT THE ASSESSEE HAD INVES TED UNACCOUNTED MONEY IN WEBSTER FOUNDATION AND ACCORDI NGLY HE INVOKED SECTION 69 OF THE ACT. THEREAFTER, THE ASS ESSING OFFICER HAS GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE AN D THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST UPON HIM. THEREF ORE, TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS RIGH TLY INVOKED SECTION 69 OF THE ACT AND THE SAME HAS RIGHTLY BEEN CONFIRMED BY THE CIT(APPEALS). IN VIEW OF THE ABOVE, WE DISMIS S THIS GROUND OF APPEAL RAISED BY THE ASSESSEE ALSO. 28. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 25 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 25 TH FEBRUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE