PCIT (CENTRAL) -3 Vs. KRISHAN KUMAR MODI

JUDGEMENT

(1.) The present appeals under Section 260A of the Income Tax Act, 1961 (hereafter "the Act") arise out of the common order of the Income Tax Appellate Tribunal ("ITAT") dated 5 th July, 2019 in ITA No. 3956/Del/2017, ITA No. 3955/Del/2017, ITA No. 3954/Del/2017, ITA No. ITA No. 3953/Del/2017, ITA No. 3952/Del/2017, ITA No. 3951/Del/2017 and ITA No. 2892/Del/2017 for assessment years 2012-13, 2011-12, 2010-11, 2009-10, 2008-09, 2007-08, and 2006-07 respectively. Since all the appeals raise identical questions of law, the same have been heard together and are being disposed of by way of a common order.

(2.) Briefly stated, on 9 th November, 2011, a search and seizure action under Section 132 of the Act was carried out at the premises of the Respondent-Assessee, on the basis of information and documents made available to the Government of India under a Double Taxation Avoidance Agreement, which revealed existence of an undisclosed Swiss bank account maintained by the Respondent-Assessee. During search, the statement of the Respondent-Assessee was recorded under Section 132(4), wherein the Respondent-Assessee denied maintaining any such foreign bank account. Nonetheless, the Respondent-Assessee agreed to offer to tax, income equivalent to US $11,46,368 to buy peace and avoid litigation. On the basis of the aforesaid statement, to cover the afore-noted amount of US$ 11,46,358/-, the Respondent-Assessee offered to tax, in his return of income filed on 28th July, 2012, under Section 139(1) of the Act an amount of Rs. 5,81,32,321/-, as income for AY 2012-13 under Section 69A of the Act. The said amount was computed by applying the conversion rate of Rs. 50.71 per dollar, as applicable in the relevant year 2012-13. Subsequently, pursuant to search under Section 132 of the Act, proceedings under Section 153A of the Act were initiated by the AO for AYs 2006-07 to 2011-12. In respect of AY 2012-13, the year of search, regular assessment was undertaken under Section 143(3) of the Act. The AO vide assessment order passed under Section 153A/143(3) for AY 2006-07 and AY 2007-2008, rejected Respondent-Assessee's submission that he did not own any such foreign bank account and added the undisclosed monies in Respondent-Assessee's bank account under Section 69 of the Act. For the AYs 2007-08 to 2012-13, AO also added interest income on the ground that the Respondent-Assessee would have earned interest on the balance available in the foreign bank account. In appeal, the CIT(A) held that deposits in the foreign bank account were rightly taxed by the AO under Section 69, however since no corroborative evidence was adduced to establish that interest was actually earned, the CIT(A) deleted the addition in that respect and the same was upheld by the learned ITAT vide the impugned order. The learned ITAT held that documents received by the Indian government are undated and unsigned and do not contain reference to any bank. Since no evidence emerged that the Respondent-Assessee had earned interest, the addition of interest could not be sustained. For AYs 2006-07 and 2007-08, the learned ITAT also came to the conclusion that there was no investment made by the Respondent-Assessee in the foreign bank account in these two assessment years and thus, the provisions of Section 69 could not have been invoked to make the additions of US$ 11,02,829 and US$ 43,359 respectively.

(3.) Mr. Ajit Sharma, learned Senior Standing Counsel for the Appellant-Revenue argues that the funds mentioned in the foreign bank account represent the investment or the deposits made by the RespondentAssessee in the said bank account. The foreign investment was not disclosed in his books of account and as such should be deemed to be the income in terms of Section 69 of the Act. The money discovered in the foreign bank account would be deemed to be income in that financial year in which the information of investment having been made in the foreign account is made available to the department. The statement recorded under Section 132(4), as extracted in the assessment order, itself lends credence to the information and documents made available to the Indian government as Respondent-Assessee's address on the documents matches with his present address, and he admits to knowing one Mr. Hinderling. Furthermore, the Respondent-Assessee conveniently refused to sign the consent waiver form, which would have enabled the government to unearth the truth behind the foreign account.