DCIT Vs. Rahul Rajnikant Parikh (ITAT Mumbai)
We note that at the time of opening of the bank account in Geneva, the assessee was a US citizen and resident and he was holding a US passport. Still the assessee chose to open the account in HSBC bank account in Geneva by using the address and proof thereof by way of his Indian passport which was no longer valid when he has accepted the US nationality by surrendering Indian citizenship. Here the assessee instead of surrendering his invalid Indian passport has used it to open a bank account in HSBC bank, Geneva. Further, the assessee is not responding that this bank account has been disclosed to the US tax authorities. In such circumstances, the suspicion that the deposits in this bank account have Indian origin is not unfounded. It is because of these circumstances, that when the ld. Commissioner of Income Tax (Appeals) has affirmed the reopening, the assessee has not challenged the same before the ITAT.
Now coming to the merits of the addition, we find that account is in the name of three persons and the entire amount deposited has been added in the names of these two assessee’s twice. If the account is in the name of three persons, how can the full amount be added twice in the hands of both the assessee, has not been spelt out by the Assessing
Secondly, the narrations in the bank accounts do not give any clue that these amounts originate from India. The assessee has responded that he is not able to obtain the necessary details from the bank. The Assessing Officer has also not made any effort to further identify the source of the deposits. It is also not the case that when the Assessing Officer’s inference is that the assessee’s are having partnership business of diamonds in India, the money belongs to the partnership firm.
In our considered opinion, the issue involves further investigation. The ld. Commissioner of Income Tax (Appeals) has deleted the addition by holding that the amount relates to nonresident foreign national in foreign bank account. Here the ld. Commissioner of Income Tax (Appeals) has totally ignored the crucial fact that the assessee has used his invalid Indian passport which he should have surrendered to the Indian authorities in opening a bank account in Geneva. Hence, the intent of the assessee is not above board. Further it is settled law from the Hon’ble Apex Court that the revenue authorities are entitled to look into the surrounding circumstances and economic reliability.
As held by the Hon’ble Apex Court in the case of Kapoorchand Shrimal [1981] 131 ITR 451 (SC) it is the duty of the appellate authority to correct the error in the orders of the authorities below and remit the matter for further investigation with a necessary directions unless prohibited by law. In the background of the aforesaid discussion and precedent, we remit the issue to the file of the Assessing Officer. The Assessing Officer is directed to make further investigation into the source of the deposits in the bank The Assessing Officer is also directed to apportion the amounts in the name of the account holders unless proved otherwise by means of cogent evidence. The assessee is also directed to cooperate and he cannot plead ignorance of the source of his own bank deposits. Needless to add, the assessee should be granted adequate opportunity of being heard. Both the counsels agreed to the proposition of the issue being remitted to the file of Assessing Officer for necessary adjudication.
FULL TEXT OF THE ITAT JUDGMENT
These are appeals by the Revenue against two assessee’s against the respective common order of the ld. Commissioner of Income Tax (Appeals) for the concerned assessment years, by way of which quantum addition and penalty u/s. 271(1)(c) of the Income Tax Act, 1961 have been deleted as under:
