AO can’t make additions related to deposit in Swiss Bank mere relying on info. received from Investigation wing: ITAT

Case details: Karamjit S. Jaiswal v. DCIT - [2021] 128 taxmann.com 225 (Delhi - Trib.)

Judiciary and Counsel Details

• • R.K. Panda | Accountant Member and Ms. Suchitra Kamble | Judicial Member
  • Ms. R.S. Singhavi, CA for the Appellant.
  • Dr. Prabha Kant, CIT-DR for the Respondent.

Facts of the Case

Assessee was not an ordinary resident. Assessing Officer (AO) received information from the investigation wing that the deceased father of assessee had a foreign bank account with a bank in Geneva. Assessee and his brother were his legal heirs. Deposits made in said bank account were not disclosed to the IT authorities by assessee, which needed to be taxed. Based on the same, Assessing Officer (AO) concluded that since assessee had not filed any return, income on account of said deposit had escaped assessment. Accordingly, AO issued a reopening notice under section 148 against assessee and further made an addition in respect of balance in said bank account.

ITAT Held

On appeal, Delhi ITAT held that the proceedings under Section 147 were extraordinary. The onus was on revenue to establish the existence of undisclosed income. Mere discovery of a foreign bank account in the name of assessee was not sufficient to thrust the tax liability without bringing on record the chargeability of the same under the provisions of the Act. It is the settled proposition of law that assessment cannot be carried out based on guesswork, and there must be more than mere suspicion.

In assessee’s case, there was no whisper of any inquiry or investigation carried out by AO to demonstrate the existence of an income source in India regarding deposits found in a foreign bank account. Moreover, AO had not brought anything on record to prove a money trail that flew from India to the foreign bank account maintained abroad. Further, the assessee also clarified that his father did not have any major stake or financial interest, or business connection in India during the relevant assessment years. Therefore, it was difficult to subscribe to the reasoning given by AO while assuming that deposit in the foreign bank account during said years was sourced from India.

Accordingly, ITAT held that the assessment order was not in accordance with law and was liable to be set aside. However, in the interest of justice, the matter was restored to the file of AO with a direction to arrive at specific findings based on the certified copy of the bank statement and the nature of credit entry in the said bank account.

Case Review

• • Prakash Wine Agencies v. ITO [1990] 38 TTJ 39 (All. – Trib.) (para 27)
  • Natwarlal Radheshyam Bagadiya v. Asstt. CIT [IT Appeal Nos. 715 to 719 (Pune) of 2007, dated 13-4-2011] (para 27) followed.

List of Cases Referred to

• • Pr. CIT v. RMG Polyvinyl (I) Ltd.[2017] 83 taxmann.com 348/249 Taxman 610/396 ITR 5 (Delhi) (para 13.1)
  • Gorika Investment and Exports (P.) Ltd. v. ITO [IT Appeal No. 3396 (Delhi) of 2018, dated 13-6-2018] (para 13.1)
  • Prakash Wine Agencies v. ITO [1990] 38 TTJ 39 (All.) (para 15)
  • Natwarlal Radheshyam Bagadiya v. ACIT [IT Appeal Nos. 715 to 719 (Pune) of 2007, dated 13-4-2011] (para 15)
  • Shyam Sunder Jindal v. Asstt. CIT[2017] 81 taxmann.com 123/164 ITD 470 (Delhi – Trib.) (para 20)
  • Dy. CIT (International Taxation) v. Rahul Rajnikant Parikh [IT Appeal No. 5889 (Mum.) of 2016, dated 1-6-2018] (para 20)
  • Dy. CIT v. Hemant Mansukhlal Pandya [2018] 100 taxmann.com 280/[2019] 174 ITD 101 (Mum. – Trib.) (para 20)
  • Dy. CIT v. Dipendu Bapalal Shah [2018] 95 taxmann.com 171/171 ITD 602 (Mum.) (para 20).