Sec.69/69A- Addition cannot be challenged on mere denial of transaction

Brief of the Case

Addition on account of unexplained money u/s 69/69A

ITAT Mumbai held in the case of Hassan Ali Khan vs. DCIT that the assessee claiming that he has no bank account or based on transfer instructions, no transfer of funds had, however, been effected, would be of little moment in-as-much as the addition is toward unexplained money or bank deposit. True, the same may be lying in his account, in whole or in part, falling in a preceding year. However, it is for the assessee to exhibit so – in explanation of the nature and source of acquisition of the money he is found to be in possession of, as statutory obliged to u/s. 69/69A. It is open for the assessee to show that the sum of money – to whatever extent, is brought forward from an earlier period, or otherwise does not represent his own capital – as where it is by way of a loan, or despite being his capital, represents a capital receipt, so that it cannot be brought to tax as his income. He, however, does not do so, and merely denies the existence of the bank account without adducing any evidence toward the same.

However, he is obliged to produce an authentic statement of account for the relevant period. The assessee could disprove the said document by a certificate from his Bank that no such transfer instruction i.e., the specified transfer instruction was in fact received or processed by it. In-as-much as the account number, which is unspecified, could be any of the account numbers which find reflection in the various documents found and seized by the Revenue in search or otherwise in its possession from reliable sources, the assessee, to decisively disprove the document, would require a statement of account for the relevant year in respect of such accounts. The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law.

Admission of Additional evidences

ITAT Mumbai held in the case of Hassan Ali Khan vs. DCIT that Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 places a total ban on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances – if the tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause or if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them. Thus, the admission of additional evidence by the tribunal is dependent on the tribunal requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered.

In the current case, surely, the result of the enquiries initiated by GOI in the matter or even that subsequently need to be taken on record in arriving at our conclusions thereon in-as much as they enable us to pass orders which are consistent with. A decision, after all, is only to be taken on the basis of the facts established or inferable from the material on record. We are, accordingly, prima facie, inclined to admit the material sought to be placed on record, both by the assessee and the Revenue.

Facts of the Case

Admission of Additional evidences

In the instant Appeals, the Assessee agitates separate orders by the CIT (A) for AYs 2001-02 to 2007-08. The appeals are with reference to the dismissal of the assessee’s appeals contesting his assessments under section 153A read with s. 143 (3) for the relevant years. Written submissions, separately for each year in appeal, filed along with the application for admission of additional evidence dated 10.12.2013, are not signed by the assessee or by his Advocate on his behalf. The same are stated to be presented by the assessee through his Advocates (HSA Advocates). There is also no forwarding letter communicating the assessee’s filing of the written submissions, also indicating his preference to rely thereon in prosecuting his appeals. The same, accordingly, cannot be taken as part of the tribunal’s record. The assessee, per his said application, prays for the admission of the various documents, as additional evidence, stating the same to have come in his possession in April, 2012, much after the conclusion of the proceedings before the first appellate authority.

Non service of notice u/s 143(2)

Vide this ground (for all the years); the assessee impugns the assessment/s as void ab initio in-as-much as there was no service of notice under section 143 (2) within the stipulated period of 12 months from the end of the month in which the returns of income in response to notices under section 153 A were filed.

Addition w.r.t. income from companies in tax havens

With reference to the information gathered from ED, the Revenue found the assessee to be operating two companies, Payson Company Ltd. and Autumn Holdings Ltd., registered in British Virgin Islands. Further, the business transacted during f.y. 2000-01 led to earnings of DHS 151,107.94 (DPB pgs. 34, 37 for A.Y. 2000-01). The assessee was, accordingly, show caused in the matter on 29.4.2008, enclosing along with the copy of account as on 13.03.2001. No explanation in its respect was, however, received. The assessee had, as per the letter dated 17.09.2001, earned commission and consulting fees from these companies (as their Chairman) during the period 01.1.1985 to 31.12.1989, proving his close nexus therewith. The amount was accordingly added.

Addition on account of unexplained money u/s 69/69A

The Revenue, on the basis of the information received from the ED, found the assessee to have issued a transfer instruction to UBS AG on 16.7.2000 to transfer funds in the sum of USD 1 million dollars (1000000) from his account number to another account with the said bank of KT, further requesting for an immediate action in the matter. The assessee was, accordingly, show caused (vide notice dated 19.12.2008), to which no effective reply was submitted; the assessee merely denying holding any foreign bank account. The same was, in the view of the A.O., clearly unacceptable in the face of such specific information, so that the assessee stating of being not aware of any such transaction or being ignorant of the said document would be of no consequence. Rather, several other documents were found during search, which independently established close relationship between the assessee and KT; their frequent travel abroad together, as well as cross border transactions. In fact, some such documents support and complement each other, providing corroboration, as well as establishing their truth. The document clearly established funds to that extent with the assessee on that date (16.7.2000), the source of which had not been satisfactorily explained. The said amount was, accordingly, assessed as ‘income’ as unexplained money (deposit).

Telescoping Benefits

Ground 11 impugns the non-grant of telescoping benefit.

Addition on account of undisclosed income

The addition comprises two sums, as under: a) Transfer of USD 500,000 to the assessee by one, Philip Anandraj (PA) worked out at Rs.243.80 lacs;  b) Purchase of property in Switzerland for CHF (Swiss Franc) 27,999,000, i.e., INR 132,04,32,840/- (Rs.13204.33 lacs).  

Addition on account of unexplained balance in bank account

Ground 4 impugns the confirmation of an addition in the sum of Rs.24,43,14,85,000/- (USD 498.50 million) as undisclosed income by way of alleged unexplained balance in account with UBS. The same is inferred on the basis of several transfer instructions (TIs) (tabulated at pages 8, 9 of the assessment order) aggregating to the said amount. These were found in the course of search and, thus, based on the material found during search. The addition, on the ground of the account/s having balance at least to the extent of the transfer instruction/s issued, came to be made and confirmed in the absence of any explanation whatsoever by the assessee, who denied having issued any transfer instruction, which were in fact unsigned documents. The case of the parties up to the first appellate stage, thus, remains the same, i.e., as for the earlier years. The ld. CIT (A), once again, confirmed the existence of the transferee entities, whose names are specified in the documents found.

Addition on account of unexplained cash credits u/s 68

This ground is toward unexplained cash credit for Rs. 1 crore. The assessee claims loans for Rs. 1.00 cr., raised by him and his wife, furnishing the list of lenders. The same came to be added and confirmed in view of the same being unproved on the anvil of sec. 68 of the Act, i.e., on the parameters of identity, capacity & genuineness, so that the assessee is in second appeal.

Contention of the Assessee

Admission of Additional evidences

The ld counsel of the assessee made an Application (dated 10.12.2013) for admission of additional evidence under Rule 29, which is a combined one for assessment years 2001-02 to 2007-08. The same is accompanied by an Affidavit dated 10.12.2013, avering that the accompanying documents, sought to be admitted, are true and correct to the best of his knowledge and belief. The assessee, per his said application, prays for the admission of the following documents, as additional evidence, stating the same to have come in his possession in April, 2012, much after the conclusion of the proceedings before the first appellate authority.

Addition w.r.t. income from companies in tax havens

The ld counsel of the assessee submitted that the addition in his case stands made presuming a close nexus between him and the stated companies. Again, there was no evidence that the amount had been transferred to or received by him. In fact, KT had during the course of his statement before the investigation authorities submitted that Payson Ltd. was never functional, and had no business dealings.

Contention of the Revenue

Admission of Additional evidences

The ld counsel of the revenue submitted that the additional evidences by assessee cannot be admitted in-as-much as the documents are not notarized or apostilled. Both India and Switzerland are signatories to the Hague Convention, placing on record the Apostille Convention. Banking industry in Switzerland, it needs to be appreciated, he continued, encourages opening of bank accounts, and information in their respect is protected by privacy laws of that country. With reference to a host of case law, it was pleaded that proceedings under the Act are to be decided on the basis of preponderance of probabilities in the facts and circumstances of the case, based on the material on record. There is no contention with regard to the lack of opportunity granted by the Revenue authorities.    

Held by ITAT

Admission of Additional evidences

ITAT held that as regards the objection of the documents being not subject to apostille, the same is essentially a question of authenticity of the document. This is as the apostille only certifies the signature; the capacity of the signer; and the seal or stamp it bears, and does not certify the content of the document for which it is issued. The documents being presented by the assessee would only have been sent directly by the Bank to ED in India, so that it would in any case stand to be verified there-from. The same, as well as the accompanying report by Deloitte AG, Zurich, are marked as ‘confidential’. The question as to how the assessee obtained the same does arise. It, in fact, clearly proves the assessee’s connections not only in India but even abroad; he being able to access confidential communication between UBS AG and the Swiss National Bank, as well as the accompanying report by an independent auditor, made available directly to the bank for its purposes. But, then, should we allow that consideration to weigh when an issue is to be decided on the basis of ‘facts’, so that any document that is relevant and purports to reveal the truth, should be, in principle, and subject to the provision/s of law in the matter, considered. In fact, the documents being presented by the Revenue are also, similarly, not apostilled. However, as afore-stated, the documents being presented are direct communications between the relevant (competent) authorities of the two countries, sent through the proper channel, so that authenticity thereof cannot be doubted, or the same insisted for being subject to the regular verification procedure and, in any case, could be got verified from the concerned Department, which (procedure) shall also establish the veracity (of the contents) of the document/s.

Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, places a total ban on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances – if the tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause; or if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them. On the existence of either of the circumstances mentioned above, the tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. The rule does not thus enable an assessee or the Department to tender fresh evidence to support a new point or to make out a new case.

Further additions in the present case are based on the information received from ED as well as that found and seized upon search dated 05.1.2007 at the residences of the assessee and others, on the ground of the same being not satisfactorily explained. The Revenue, acting through the proper channel, has sought further information and made inquiries into the affairs of the assessee. It is the result of such post search enquiries, received from time to time, which it claims as relevant and material, and seeks admission as additional evidence. How could then, we wonder, it validly object to the assessee’s prayer for, similarly, admission of the reports received as a result of such enquiries. If the Revenue’s plea is accepted, there is no reason not to accept that of the assessee, the two being of the same genre, supported by the same reasons. So, however, the terms of rule 29 would have to be regarded and satisfied, i.e., quite apart from the validity of the Revenue’s objection, and which (rule) itself obliges the tribunal to record reasons for such admission or, as the case may be, production or examination. The tribunal’s power to admit additional evidence is strictly limited.

The Hon’ble jurisdictional High Court in Velji Deoraj & Co. vs. CIT [1968] 68 ITR 708 (Bom) clarified that the admission of additional evidence is made to depend not on the relevancy or materiality but upon the fact whether or not the appellate court requires the evidence to enable it to pronounce the order or for any other substantial cause. Further, the mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at the appellate stage, especially when the evidence was available to the party at the initial stage and had not been produced by him. This, it was further explained, is as the rule is not to allow a litigant, who has been unsuccessful in the lower courts, to patch up the weak parts of his case and fill up the omissions in the court of law. The admission of additional evidence by the tribunal is thus dependent on the tribunal requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered (refer pgs. 713715 of the reports). In this context, it would be useful to refer to the constitutional bench decision in K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 SC 1526, 1530, wherein it was observed in the context of the provision of Order 41, Rule 27(1) of Code of Civil Procedure, 1908, to which r. 29 is similar in terms, that the appellate court has the power to allow additional evidence not only where it requires such evidence to enable it to pronounce the judgment but also for any other substantial cause. There may well be cases where even though the Court finds that it is able to pronounce the judgment on the state of record as it is, so that it cannot strictly be said that it requires additional evidence to enable it to pronounce the judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it can pronounce its judgment in a more satisfactory manner.

Surely, the result of the enquiries initiated by GOI in the matter or even that subsequently need to be taken on record in arriving at our conclusions thereon in-as much as they enable us to pass orders which are consistent with and, in any case; the same being not binding on this tribunal, take into account the results of such enquiries. This is more so as the decision/s by the Revenue in the matter are based primarily on the preponderance of probabilities. In fact, copy of the facsimile dated 15.1.2007 by the Swiss Federal Government, or the report dated 30.10.2007 by UBS AG to the Swiss National Bank, etc. are documents which were available at the time of assessment, so that they ought to have been considered or taken into account by the Revenue, providing, in all fairness, a copy thereof to the assessee. The assessee, whatever his conduct in the proceedings before the Revenue may have been, could not possibly have access thereto. A decision, after all, is only to be taken on the basis of the facts established or inferable from the material on record. We are, accordingly, prima facie, inclined to admit the material sought to be placed on record, both by the assessee and the Revenue.

Non service of notice u/s 143(2)

ITAT held that Annexure 1 is an Acknowledgement of the notice under section 153A (for AYs. 2001-02 to 2006-07), which is at the assessee’s Mumbai address, duly receipted. The service of the notice/s is in fact not disputed, with the assessee furnishing returns under section 153A in response to the said notices. Annexure 2 is, similarly, the acknowledgement of notices under section 143 (2) dated 04/10/2007 for A.Ys.2001-02 to 2007-08. The same, marked to his Pune address, bears the signature of Rheema Hassan Ali Khan (RHAK), the assessee’s wife, who accepts the same for on his behalf, even as clearly indicated therein. Though the date of receipt is not mentioned by the recipient, the same can only be presumed to be in the normal course of its business by the postal department when the registered post (the notices dated 04.10.2007 being conveyed through speed post), is not returned unserved, as in the instant case, which is also the presumption in law, with the returns for all the years being filed on 23.5.2007 (refer: Milan Poddar v. CIT [2013] 357 ITR 619 (Jh.)) The assessee’s claim is accordingly without merit; rather, stands disproved.

The assessee’s claim is even otherwise legally sustainable in-as-much as notice u/s.143(2) is not a prerequisite for framing an assessment u/s. 153A, which provision itself confers jurisdiction to frame the assessment of the total income for each of the relevant years. Notice u/s. 143(2), clearly procedural, was considered by the Hon’ble Apex Court as mandatory in CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC) only on account of it assuming a jurisdictional character. The view in this respect, expressed by the Hon’ble Delhi High Court in Ashok Chaddha vs. ITO [2011] 337 ITR 399 (Del), rendered considering the decision in Hotel Blue Moon (supra), has since been adopted by the tribunal in Sumanlata Bansal vs. Asst. CIT (in ITA Nos. 525-530/Mum/2008 dated 20.5.2015 – reported at 2015-TIOL-1053-ITAT-Mum-TM).

Addition w.r.t. income from companies in tax havens

ITAT held that the assessee has not denied the fact of the stated companies being registered in British Virgin Islands, a destination preferred, on account of its benevolent tax laws, for opening offshore accounts (called tax havens), and of which he is the Chairman. Such companies are usually paper companies, holding investments, and used to funnel income offshore, for tax considerations. The Director’s resolution/s dated 26.02.2001 of the said company constitute any two of the three, i.e., Bjorn Allan Andersson, Hassan Ali Khan and Kashinath Tapuria, acting together, as true and lawful attorneys of the company. DPB is a notarial certificate dated 14.03.2001 in its respect (DPB refers to the Department’s paper-book for A.Y. 2000-01). Then, there is an Agreement dated 07.8.2001 between the assessee and KT, made at Dubai, also noted by the ld. CIT (A). The same was recovered from the residences of both, i.e., from the Pune residence of the assessee and the Kolkata residence of KT, which clearly states of the said two companies being the assessee’s companies.

Further the assessee has also not denied the statement of account as at 13.3.2001, or of its reflecting the profit for the year. The assessee seeks to impugn the inference of a close nexus between the said companies and himself, which is in fact self-evident from the facts eminent from the record; he having, rather, received substantial sums by way of income there-from in the past (1985-89), which were again not disclosed to the tax authorities in India. All he was required to do, to exhibit otherwise, was to provide documents with regard to the share-holding or the stake in the said companies, which are formed to serve as mere vehicles for the benefit of the promoters. Then, how does he explain the documents and statements referred to in, and on the basis of which, the letter dated 17/9/2001 supra is issued by the assessee’s auditors? The non-receipt of money, in-as-much as income would stand to be taxed either on accrual or receipt basis, would also be therefore of no moment. The money may have been earned abroad, but being a resident of India for the relevant year, the same would stand to be taxed in his hands. Rather, it is for the assessee to explain the nature of the business activities undertaken by/in the said companies, which it seems have business/es also at Dubai, where the assessee was camping during the relevant year.

Further the assessee has maintained complete passivity in the instant proceedings, refusing to divulge any information. The assessee’s name is conspicuous by it’s absence in the document, so that the only link with the assessee could be the bank account specified, as well as the consultancy fees received, similarly, in the past. Also relevant would be the place, circumstances, and the proceedings under which the document was recovered by ED. The information being received from ED, it would surely have probed the matter and, if so, the nature of its finding, if any, may be relevant. The matter is, clearly, factually indeterminate, and requires further investigation before some definite findings are arrived at. Toward the tribunal’s competence to direct so, we may refer to s. 254(1) of the Act r/w r. 28 of the Rules (also refer: Hukumchand Mills Ltd. vs. CIT [1963] 63 ITR 232, 237 (SC); Bhor Industries Ltd. vs. CIT [1963] 48 ITR 376, 403 (Bom); Tarajan Tea Co. (P.) Ltd. vs. CIT [1994] 205 ITR 45 (Gau)), to cite few.  Under the circumstances, we only consider it proper to restore the matter back to the file of the assessing authority for adjudication afresh in accordance with the law.

Addition on account of unexplained money u/s 69/69A

ITAT held that the Transfer Instruction is on the letter-head of ‘Hotel Inter-Continental’, Dubai, bearing its postal address, telephone and fax numbers. The assessee has not denied having signed the said document (i.e., the original copy, meant for being transmitted to the bank) or of being not in Dubai at the relevant time (July, 2000), or on 16/7/2000 specifically (which would also stand to be confirmed from his passport) and, thus, in fact tacitly admits to having instructed his bank in the manner stated. We are conscious that the document was not found during search (or survey) under the Act, for the presumption of section 292-C to apply thereto. The same has been provided to it by ED, and there is nothing on record to indicate that it has been requisitioned u/s.132A. In fact, the ED itself joined the search proceedings undertaken by the Revenue on 05.1.2007. The document, however, has been officially transmitted by ED, the Government Agency investigating the foreign/cross border transactions of the assessee, including genesis of sums in these accounts (and now under the auspices of a Special Investigation Team (SIT) constituted by the Hon’ble Apex Court), to enable the Revenue to take appropriate proceedings under the Act. For all we know, it may well be one of the documents with the Revenue to form a reason to believe u/s. 132 of the Act. There can be in any case no presumption that the same has been obtained by ED illegally or without following the due process of law. The apex court in Pooran Mal vs. DIT (Inv.) [1974] 93 ITR 505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevancy, so that unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out. The reliability of the document cannot be doubted, and it has strong persuasive value. In fact, the assessee himself, at no stage, denies that the same was not recovered from him. Such like transfer instructions were also recovered from the assessee’s residence as well as of KT during search.

The assessee claiming that no transfer of funds had, however, been effected, would be of little moment in-as-much as the addition is toward unexplained money or bank deposit. True, the same may be lying in his account, in whole or in part, from an anterior date, falling in a preceding year. However, it is for the assessee to exhibit so – in explanation of the nature and source of acquisition of the money he is found to be in possession of, as statutory obliged to u/ss. 69/69A, lest the deposit be deemed as his unexplained income for the relevant year, i.e., the year for which he is so  found. It is open for the assessee to show that the sum of money – to whatever extent, is brought forward from an earlier period, or otherwise does not represent his own capital – as where it is by way of a loan, or despite being his capital, represents a capital receipt, so that it cannot be brought to tax as his income. He, however, does not do so, and merely denies the existence of the account without adducing any evidence toward the same.

Again, it is open to be argued that the transfer instruction would not by itself establish the balance in account to that extent. A transfer instruction (TI) is akin to a (non-negotiable) cheque drawn on his bank by the account holder, specifying also the account particulars of the transferee. Its’ preparation itself is an expert job, with the assessee being assisted in this regard by the bank officials. We have already clarified that the document is to be regarded as reliable, with persuasive evidentiary value. The same implies that such an instruction was in fact issued to his bank (UBS AG) by the assessee. If that be so, the said account, by necessary implication, had balance at least to that extent on the relevant date. True, the burden of proof that there is unexplained money, investment, etc. is on the Revenue. The same, however, can be discharged by it by establishing facts and circumstances from which a reasonable inference toward the same can be drawn (refer: Sudhakaran (C. K.) vs. ITO [2001] 279 ITR 533 (Ker)). The assessee is required to disprove the said document, and the logical inference/s that flows there-from.

We are conscious that no account number is mentioned in the transfer instruction. Could that, however, be interpreted as it bearing no account number, defeating the exercise or the very purpose of issuing the same? It is not unusual not to write information, deemed confidential, except in the original copy, i.e., on the basis of which the execution is to be made/is sought. Likewise for the non signing of the transfer instruction; it being usual not to ascribe the signature on the office copy. In fact, TIs have been found in search, which bears both the account number (written by hand in the place provided for it in the letter, as in the instant transfer instruction), as well as the assessee’s signature. The absence of these attributes would, thus, in our view, be of little moment. In-as-much as, however, the account number, which is not mentioned, could be any of the accounts which the assessee is found to be associated with, he shall be required to obtain the relevant record of his accounts (i.e., accounts of which he is either the holder or beneficiary or POA holder), and satisfy the Revenue with regard to the non-maintenance of any balance (or of a lower balance) therein at the relevant time. For the transfer instruction bearing an account number, as the one dated 23.7.2000, the validity or otherwise of the inference could be dislodged by producing the said information with regard to the account number specified therein.

Accordingly, the matter, in view of the foregoing, would stand to be restored back to the file of the assessing authority. The information/TIs provided by ED, who joined forces with the Department, besides being equally reliable, are corroborative. The same thus have strong evidentiary value, quite apart from s. 292C, which shall apply to all the documents found in search, so that their contents, unless shown otherwise, are to be regarded as true (ref: Surendra M. Khandhar v. CIT [2010] 321 ITR 254 (Bom)). The beneficiary is clearly specified, confirmed by the Revenue as an existing person, with complete bank particulars, again, found as correct. That, therefore, there is an account/s, even if unspecified, with reference to which the transfer instruction was issued by the assessee, is the only reasonable inference that emanates in the facts and circumstances of the case. The premise of the assessee’s – who has not explained as to why this, or any of the several transfer instructions were issued by him to different persons, for different amounts, and even from different places, from time to time – case is that the Revenue is obliged to prove beyond doubt that income was generated by him. Couple this with a complete denial of the transactions, his case cannot but be discountenanced. He cannot, after all, it must be appreciated, prove a negative, i.e., that he does not have any account with UBS AG (on which transfer instruction is drawn), other than he is found to be associated with in any capacity, either on the basis of the various documents in the possession of the Revenue or per the UBS AG report, since admitted in evidence. For these accounts, however, he is obliged to produce an authentic statement of account for the relevant period. The assessee could disprove the said document by a certificate from his Bank that no such transfer instruction dated 16.7.2000 (i.e., the specified transfer instruction) was in fact received or processed by it. In-as-much as the account number (on which the TI is drawn), which is unspecified, could be any of the account numbers which find reflection in the various documents found and seized by the Revenue in search or otherwise in its possession from reliable sources, the assessee, to decisively disprove the document, would require a statement of account for the relevant year in respect of such accounts. We may hasten to add that we are, when we state so, not foreclosing the assessee’s options in any manner. It is equally open to him to explain the document, as indeed the law obliges him to. That is, why and under what circumstances the TI was issued on his bank, for a specified amount, favoring a specified beneficiary (by name and/or account) and, as a concomitant, the nature and source of the funds in his account/s. The notarized statement dated 30/6/2003 , as apparent, does not throw any light on this aspect, except that HAK had access to huge funds and, besides investments, was also called upon to finance projects. The AO shall, accordingly, adjudicate afresh, based on his findings in the set aside proceedings, in accordance with law.

Telescoping Benefits

ITAT held that no such case was made out before the authorities below. How could then the assessee be aggrieved? Even the assessee’s written submissions are silent on this. The plea could in fact be available only where the assessee accepts the addition, claiming a double addition, leading to a double jeopardy. Be that as it may, we have already restored the assessment on some grounds, while confirming some additions. The principles of telescoping are well laid out by the Hon’ble Apex Court, as in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 (SC). The AO shall, in the set aside proceedings, consider the assessee’s case in this respect, where one is made out, in accordance with law. This disposes the assessee’s said ground, as well as similar ground/s for other years as well, where we observe the assessee contends of an addition as having been already returned, i.e., forming part of his returned income. The AO shall allow credit on the basis of verifiable cash flows, assuming annualized income/expenditure on a uniform basis, while taking others on the basis of actual date (of investment, expenditure, etc.), also accounting for the payment of tax, again, on defined dates.

Addition on account of undisclosed income

ITAT held that we find no merit in the assessee’s submission of the A.O. keeping the assessment proceedings in abeyance – which he is even otherwise incompetent to, till the investigation by the ED is concluded. The A.O. has no control over those proceedings, which are even otherwise inconclusive in-as-much as the complaint by the ED is to be adjudicated upon by a court of law. The scope of proceedings, being criminal in nature, is different, while tax proceedings result in a civil liability, and are independent, required to be completed in a time bound manner. The ED, by the assessee’s own admission, pressed laundering charges under PMLA for two transactions, being for USD 93 million (in 1997) and USD 700,000 (relating to year 2006). The contention is without any merit whatsoever.

We may now discuss the two additions, albeit separately. The raising of the bill dated 05.4.2001 by PA for commission (for having located, negotiated and brought the client (assessee-buyer) and M/s. Clamai AG (seller) together with the intent to transact the sale of Hotel Chateau Gutsah, Luzern, Switzerland, is established on the basis of pages 5 to 9 (of Bundle 7 of Annexure A to the Panchanama), noted above. The same gets, in fact, reflected in a number of documents; viz. consulting agreement dated 05.4.2001 read with addendum thereto; the invoice raised subsequently (replacing invoice dated 13.11.2005) for USD 1,600,000, comprising eight items, the first of which is the commission for the agreement for this Hotel, at USD 500,000. It is only where the fact of payment is established that the Revenue can, in the absence of a satisfactory explanation as to its source by the assessee, assess it as income by way of unexplained expense and/or investment. As such, notwithstanding an evasive reply by the assessee in the proceedings before the Revenue, disclaiming the transaction, which it tacitly admits when he relies on the statement of PA before ED (per his written submissions), confirming non-payment of his dues by the assessee, no addition could be made on the basis of the material on record.

The assessee, who has not denied signing the document (on behalf of self), or of being not in Switzerland where the document seems to have been executed (and which could be proved on the basis of entries in his passport), has not helped matters at all by not issuing any explanation what-so-ever in the matter. No definite findings – the issue being primarily factual – could under the circumstances be issued at this stage, and the matter clearly requires being remanded back for the purpose. The matter shall, accordingly, stand to be set aside to the file of the A.O., who shall re-adjudicate afresh, allowing the assessee proper opportunity to present his case, confronting it all the materials it wishes to rely upon, particularly with regard to the payment aspect of the matter, and decide by issuing definite findings of fact. Reference in this context may be made to the decision by the Hon’ble Apex Court in the case of Kapurchand Shrimal vs. CIT [1981] 131 ITR 451 (SC), wherein it stands explained that unless forbidden from doing so by the statute, the tribunal, as an appellate authority, has the jurisdiction and is duty bound to direct the assessing authority to make fresh assessment in accordance with the law. That was a case where there was a clear violation of the procedure prescribed by law, so that the tribunal set aside the assessment, while in the present case all that we have found is that the necessary aspects of the matter have not been enquired into, so that the matter requires to be examined afresh. We decide accordingly.

Addition on account of unexplained cash credits u/s 68

ITAT held that assessee’s claims are wholly unproved. Even as much as the confirmation from the so called creditors, which are without addresses; PAN, etc., as emphasized by the CIT (A), is not provided. The assessee per his written submissions states of the addition as having been made without any definitive, concrete evidence with the Revenue. The burden of proof; the credit being admitted in assessee’s accounts, reflected as sundry loans at Rs. 129 lacs , is on the assessee, which has not been at all met. Case law on s.68 is legion, even as some case law in this respect stands also cited, all of which would apply. We confirm the addition.

Accordingly appeals disposed of.