Mohan Thakur Vs ACIT (ITAT Mumbai)
Facts- As per the report, information was received from the Australian taxation office that the Assessee under consideration has transferred funds amounting to 12,97,122 AU (Australian Dollars) to many of his relatives through hawala system for the period of F.Y. 2007-08 to 2012-13. Shri. Shagun Thakur (son) has claimed before the Australian Taxation office, that the said amount was received by him from his father as gift to buy a property situated in Australia. In his statement recorded before the Australian Taxation Office, Shri. Shagun Thakur has submitted that his father has instructed to his friends and business associated overseas to send the funds to him through hawala system i.e. Informal Money Transfer System (I.M.T.S). As per the statement on oath of Shri. Shagun Thakur before the Australian Taxation Office, it is recorded that the said method is adopted by the assessee, Shri, Mohan Thakur due to the current restrictions in foreign exchange transfers in India.
Conclusion- We find that the addition is solely made on the basis of statement of the assessee’s son before Australian Tax Authorities and affidavit by the assessee before them that fund found in possession of the son were arranged by assessee by hawala transaction.
There is absolutely no other material in the hand of the A.O. of proving the addition in the hands of the assessee. Despite the assessee’s request, the copy of information received from Australian tax Authority has not been given to the assessee. In these circumstances, the addition made, which is based upon the information from a foreign source, without confronting the same to the assessee and without any corroborative material is not at all sustainable. The case laws referred by the ld. Counsel of the assessee as above are germane and support the case of the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These are appeals by the assessee against the respective orders of learned CIT(A) for the concerned assessment years. Since the issues are common and connected these appeals are consolidated and disposed of together for the sake of convenience
ITA 1434/Mum/2018 for assessment year 2009-10
2. The grounds of appeal raised read as under :-
“I. Addition of Rs. 25,97,980/- u/s. 69 based on information received from Australian Tax authorities:
1. No addition can be made based on mere information received from foreign authorities without any evidence on record, hence the entire addition is bad and may be deleted.
2. No addition can be made u/s 69 of the Income-tax Act, since no investment has been made by the Assessee, and it does not act as any source of income, for which, the assessee is also offering an explanation about its nature and source, thus not fulfilling the requirements of S.69.
3. The CIT(A) erred in confirming the addition of Rs. 25,97,980/- based on information received from DDIT(I&CI) via Australian Tax Office that there was receipt of money through alleged hawala system by the Appellant’s Son from various parties, all of whom were living outside India, which was assumed to be transferred from the Appellant to his son without any evidence on record and a statement given by the appellant’s son before the Australian tax authorities, the copy of which had not been provided to the Assessee and on mere suspicion and conjectures no addition can be made and hence the addition made may be deleted.
4. The CIT(A) erred in not appreciating that no transaction has taken place between appellant and his son and also that the transactions, which would be repaid by the Appellant’s son and not the appellant himself, as confirmed by the parties providing loans, were outside the Jurisdiction of the Income Tax Act, where no provision has been provided under which such foreign transactions could be taxed, and hence the said addition may be deleted.
II. Addition of Rs.30.00.000/- on account of Loan written off through P&L a/c.
5. The Learned CIT(A) erred in confirming the order of the AO making an addition on account amount of Loan written off through P&L a/c, hence the addition may be deleted.
6. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.”
Apropos issue of addition u/s. 69:
3. The brief facts of the case are as under :-
In this case, certain information with respect of assessee Shri Mohan Thakur was received from the office of the Director of Income Tax (I&CI), Mumbai alongwith the report of the Deputy Director of Income Tax (I&CI), under ‘spontaneous exchanges of information from the Australian Tax authorities’. As per the report, information was received from the Australian taxation office that the Assessee under consideration has transferred funds amounting to Rs. 12,97,122 AU (Australian Dollars) To Shri. Shagun Thakur (Son) and the other family members i.e. Shri. Shikhar Thakur (Son) Smt. Desiree Ann Thakur (Wife) through hawala system (IMTSTnformal Money Transfer System) for the period of F.Y. 2007-08 to 2012-13. Shri. Shagun Thakur has claimed before the Australian Taxation office, that the said amount was received by him from his father as gift to buy a property situated in Australia. In his statement recorded before the Australian Taxation Office, Shri. Shagun Thakur has submitted that his father has instructed to his friends and business associated overseas to send the funds to him through hawala system i.e. Informal Money Transfer System (I.M.T.S). As per the statement on oath of Shri. Shagun Thakur before the Australian Taxation Office, it is recorded that the said method is adopted by the assessee, Shri, Mohan Thakur due to the current restrictions in foreign exchange transfers in India. The A.O. noted that as per the documentary evidences, the information of the funds transferred have been received by the department and it pertains to F.Y. 2007-08 to F.Y. 2012-13. He noted that the Assessee has submitted an affidavit before the Australian taxation office on 27/07/2012 which is reproduced as follows:-
“TO WHOMSOEVER IT MAY CONCERN”
“I, Mohan Thakur, confirm that any and all amounts utilized by my son, Shagun Thakur, in 2007 to purchase the property located at 13, Bayliss Road, Kardinya were arranged by me, to him, for use at my direction i.e. to purchase a family home for my wife, Shagun and my other son Shikhar to reside in. I confirm that the amounts do not constitute consideration of income for other son Shikhar to reside in. I confirm that the amounts do not constitute consideration or income for the Shagun in return for any goods or services or otherwise. Rather, simply money arranged by me to my son so that my family could purchase and live in their own home in Australia. I conduct my business on my own and give help to my family as I may deem fit. I categorically deny any implication or my instruction that I am carrying on my business pursuant to a bare trust arrangement with my son. I confirm that there is no trust that has been set up, bare or otherwise, in India or overseas under which Shagun is entitled to disbursement or any benefit.
I further confirm that the amount transferred to Shagun in 2010 related to a payment made in the Australian Department of Immigration for the finalization of my wife and my permanent residency application to Australia. Any inference that amount was earned by Shagun is incorrect.
I trust this information, combined with documents establishing my financial capacity are now sufficient to establish that my 24 years old son did not have the financial capacity to purchase a house a worth $9,12,000 in 2007. Rather, the amounts were arranged by me to my son for the benefit of wife and the children in Australia to have their own house.
Sd/-
Mohan Thakur
Place: – Mumbai
Date :- 30.07.2012″
4. The A.O. further referred that the statements of the Assessee under section 131(A) of the I .T. Act were recorded before the department Authorities, Deputy Director of Income Tax (I & CI), Unit 1(1), Mumbai. He observed that the perusal of the statement of the Assessee in consideration to the above affidavit submitted by the Assessee before the Australian taxation Office reveals gross inconsistencies in the replies of the Assessee vis-a-vis affidavit submitted to the Australian Taxation Office (ATO). The A.O. observed that on perusal of the evidences in the form of Affidavit and the other documents received from the Australian Taxation Office, he was satisfied and have a reason to believe that Shri. Mohan Thakur, the assessee in consideration has transferred funds to his son during the Assessment year under consideration through Hawala system. He noted that the details of the entire funds transferred are as follows;.
