Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: due date for vat payment :: VAT Audit :: empanelment :: Central Excise rule to resale the machines to a new company :: cpt :: TDS :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ACCOUNTING STANDARD
From the Courts »
 Group M. Media India Pvt. Ltd vs. UOI (Bombay High Court)
 Shreemati Devi vs. CIT (Allahabad High Court)
 Vatsala Shenoy vs. JCIT (Supreme Court)
  Dr. Gautam Sen vs. CCIT (Bombay High Court)
 Dr. Gautam Sen vs. CCIT (Bombay High Court)
 DCIT vs. Shivshankar R. Sharma (ITAT Mumbai)
 ACIT vs. Jawaharlal Agicha (ITAT Mumbai)
 CIT vs. M/s. D. Chetan & Co (Bombay High Court)
 Makes further amendments to Notification no. 157/90-Customs dated 28th March, 1990 regarding temporary admission under the ATA Carnet
 Appointment of Common Adjudicating Authority by DGRI - 2/2016-Customs

Hassan Ali Khan Valentine Society, 1 Tulip, Main Road, Koregaon Park, Pune-411 001 Vs. Dy. CIT, Central Circle-2, North / Mumbai
December, 10th 2015

      .  ,      ,                                  

                     ./I.T.A. No. 3726/Mum/2009
                   (   / Assessment Year: 2000-01)

Hassan Ali Khan                       Dy. CIT, Central Circle-2,
Valentine Society, 1 Tulip, North / Mumbai
Main Road, Koregaon Park,         Vs.
Pune-411 001
     . /  . /PAN/GIR No. AOMPK 8155 J
        ( /Appellant)                       :           (    / Respondent)

      / Appellant by                        :    None
         /Respondent by                     :    Shri Girish Dave &
                                                 Ms.Kadambari Dave

                        /                   :    15.09.2015
                 Date of Hearing
                                            :    09.12.2015
          Date of Pronouncement

                                   / O R D E R
Per Sanjay Arora, A. M.:

      Vide this Appeal the Assessee agitates the Order by the Commissioner of
Income Tax (Appeal) Central-I, Mumbai (`CIT(A)' for short) dated 17.11.2008,
dismissing the Assessee's appeal contesting its assessment u/s.143(3) r/w s. 147 of the
Income Tax Act, 1961 (`the Act' hereinafter) for the assessment year (A.Y.) 2000-01
dated 19.3.2008.
                                                          ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                   Hassan Ali Khan vs. Dy. CIT

2.     None appeared for and on behalf of the assessee when the appeal was called out
for hearing, even as the assessee has caused to place on record a General Power of
Attorney dated 02.2.2010, duly accepted, in favour of one Shri Sunil Shinde, CA on
record (zerox copy), authorizing him to represent the assessee before the Tribunal in,
among others, Income-tax matters. Despite several attempts, no service of the notice
of hearing could be affected on the assessee. The last such attempt, vide notice dated
10.4.2015 for 09.6.2015, sent through RPAD, came back unserved with the postal
remarks `Not claimed, return to the sender' on 15.4.2015. The hearing of this group of
appeals, outstanding for long, was accordingly proceeded with, so as to adjudicate
these appeals after hearing the party before us and considering the material placed on
record by the parties, including the assessee, who has filed a paper-book containing 31
pages, and which includes written submissions before the Assessing Officer (A.O.).
In addition, the assessee has also made an Application vide letter dated 01.10.2013 for
admission of additional evidence under Rule 29 of the Income-tax (Appellate
Tribunal) Rules, 1963 (containing 79 pages), which is a combined one for assessment
years 2001-02 to 2007-08, through one, Shri Nand Kishore of HSA Advocates. The
said application contains a letter dated 29.2.2008 by UBS AG, Zurich (a bank in
Switzerland) to the Enforcement Directorate (ED) in respect of its letter dated
11.2.2008 (at PB pgs.64-65, reproduced again at pgs.66-69 of the application). Para 2
of the said letter reads as under:

       `2.    We have reviewed the copy of the facsimile dated 12.4.1999
       purported to be from Dr. P Waely, for the attention of H.A. Khan. You
       have asked whether this is a genuine document and whether the
       veracity of the contents can be confirmed.

       We do NOT believe that this document is genuine. HAK, as we have
       previously reported, did not maintain accounts with us at this time. We
       explained in our previous letters the limited nature of the HAK
       relationship, which came later than the date of this facsimile. As we
       have previously confirmed, we did employ a Dr. P. Waely, who has
       since retired from UBS. However, the fact that Dr. Waely's name is
                                                           ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                    Hassan Ali Khan vs. Dy. CIT

      misspelt in the letter and that the facsimile bears the heading and marks
      of one of our predecessor banks "Union Bank of Switzerland", which
      was no longer in existence at the date of this letter (the merger of Swiss
      Bank Corporation and Union Bank of Switzerland took place in 1998
      and resulted in the firm's name changing to "ÜBS"), leads us to
      conclude that this letter is a forgery.'

      The assessee has, per his application afore-referred, prayed for the admission of
the said letter, among others, as additional evidence, stating the same to have come
into his possession in April, 2012, much after the conclusion of the proceedings
before the first appellate authority. The ld. DR would, on this being put across to him
(i.e., while hearing the appeals for AYs. 2001-02 to 2007-08), object, stating that the
same cannot be admitted in-as-much as the document is not notarized or apostiled.
Both India and Switzerland are signatories to the Hague Convention. Banking
industry in Switzerland, it needs to be appreciated, encourages opening of bank
accounts, and information in their respect is protected by privacy laws of that country.
      In our view, in-as-much as the document under reference clearly relates to an
addition for the current year, which stands disputed by the assessee per the instant
appeal, it would firstly be of little consequence that the assessee's application is for
A.Ys. 2001-02 to 2007-08, i.e., the years to which the evidence in the main relates,
and not the current year. Before we may discuss the merits of the objections raised by
the ld. Departmental Representative (DR), we observe that the letter under reference
is unsigned. Its contents, therefore, carry little weight, i.e., as evidence. The same
accordingly cannot be admitted in evidence.

3.    The assessment in this case was made u/s. 143(3) r/w s. 147 of the Act, with the
proceedings initiated on the basis of information found by the Revenue during
searches u/s.132 of the Act carried at the residences of the assessee as well as that of
Shri Kashinath Tapuriah and others on 05.01.2007, continuing up to 06.1.2007. The
assessee, in response to notice u/s.148 dated 23.5.2007, furnished a return declaring
                                                            ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                     Hassan Ali Khan vs. Dy. CIT

an income of Rs.1,50,000/-, as income from horse betting (Rs.9,950/-) and from
business (Rs.1,40,050/-). The said incomes, in the absence of any material found in
relation thereto in search as well as the non-furnishing of any books of account in
respect thereof by the assessee, were retained by the A.O. as such, making the
following additions:                                                     (Amt. in Rs.)

     a)      Income from undisclosed sources by way of pay orders         17,14,00,000
             from Union Bank of Switzerland (UBS) ­ AG for US $
             4 million
     b)      Income from undisclosed sources                                  28,50,000
     c)      Income from undisclosed sources by way of unexplained            17,29,051

          The assessee failing to make any improvement in his case; rather, exhibiting
un-cooperative behavior in the appellate proceedings, the addition was confirmed
(refer para 2.2 of the impugned order), so that the assessee is in second appeal,
challenging each of the three additions, which we shall take up in seriatim.

Ground 1: Addition on account of Pay Orders ­ Rs.1714 lacs

4.        A letter dated 12.04.1999 (April 12, 1999), bearing the seal of UBS (Union
Bank of Switzerland), was found during search from the residence of Kashinath
Tapuriah (KT) at Kolkata (assessee's paper-book ­ APB pg. 3), also reproduced at
para 7 (pages 5-6) of the assessment order, which reads as under:

          `Kind Attn: Mr. H. A. Khan

          This is to inform you that the understated Pay Orders have expired its
          encashment period.
          Pay Order No.            Favouring              Amount             Payable in
          004 07192013276543       Pan            Asian   USD 2000000        Singapore
                                   Distribution Ltd.
          00406298027432895        Hassan Ali Khan        USD 2000000        India
          004080460182248547       Roberts & Mclean       USD 2000000        India
                                   Cos. Ltd.
                                                         ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                  Hassan Ali Khan vs. Dy. CIT

      Fresh Pay Orders are in the process of being issued along with the amended
      name of Robert & Mclean Companies Limited to Robert Mclean and
      Companies Limited. I shall courier these pay orders to you at the earliest. And
      shall be informing the courier details to you telephonically.
      The validity for encashment of pay orders carry a thirty calendar days. Please
      ensure that the fresh pay orders are encashed within the stipulated period in
      order to avoid the repetition of this exercise.
      I sincerely regret the inconvenience caused.

      Thanking you,
      Yours truly,
      Dr. P. Wiely
      Chief Manager
      UBS AG'

      The assessee, on being questioned in the matter, denied any knowledge of the
said document. No revised pay orders have been received, i.e., after 12.04.1999, or at
any time later, and toward which he furnished (uncertified) copy of his bank account
with Bombay Mercantile Bank at Hyderabad, which was stated to be the only bank
account maintained by him. An Affidavit was also furnished averring to have no
foreign bank accounts. Summons u/s.131 of the Act were issued to the assessee,
specifically enquiring about foreign bank accounts, which remained un-complied. In
fact, the assessee could not be traced despite best efforts, and even the summons were
served through affixture at his Mumbai address (also refer para 6.1 of the assessment
order). The assessee was merely in denial mode, alleging the letter, specifically
addressed to him, bearing his name as the beneficiary of one of the pay orders, to be
forged. Various documents seized during search also reveal close association between
him and KT, Chairman (of the Board of directors) of Robert Mclean & Co. Ltd., as
well as of them indulging in cross border transactions. The document was duly signed
by the Chief Manager, also giving his name, and the assessee did not lead any
                                                          ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                   Hassan Ali Khan vs. Dy. CIT

evidence to rebut the presumption u/s.292C of the Act (refer para 7.7 of the
assessment order). The pay orders received (or receivable) by the assessee in lieu of
pay orders bearing Nos. 004 07192013276543 and 004 06298027432895, i.e., the first
two pay orders mentioned in the letter, were, accordingly, brought to tax as his
income and, in appeal, confirmed for assessment.

5.    Before us, the assessee was unrepresented in person or through an Authorized
Representative (AR), relying on the contents of the paper-book referred to earlier,
which also contains the written submissions before the Revenue authorities. The ld.
DR vehemently argued the Revenue's case, relying on the orders by the authorities

6.    We have heard the parties, and perused the material on record.
      Our first observation is that the conversion rate of US Dollar into Indian
Rupees (Rs.42.85) has not been disputed at any stage. The second observation in the
matter is that of the two pay orders under reference, one is in the name of a company
by the name Pan Asian Distribution Ltd. The presumption u/s.292C would, therefore,
suggest that there is a company by that name, and the money represented by the said
pay order is to be conveyed to it, as its' beneficiary. How could, then, one may ask,
the same be considered as the payment to or on behalf of the assessee, for it to
represent or be considered as his income? True, we observe no contention ­ which in
the normal course would be the first argument by the assessee in the matter. So,
however, we find nothing on record to suggest any link between the assessee and the
said company, which appears to be an Indian company and is only to be regarded as a
distinct legal entity. And income due to or receivable by it could be regarded as the
assessee's income only on the strength of evidence which leads to the inference of it
being the assessee's money, being transferred to it, or the like. There is, in fact, no
mention or even a whisper in this regard, or of any association or link between the
                                                             ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                      Hassan Ali Khan vs. Dy. CIT

two. Clearly, no case for including the amount received or receivable by the said
company (US $ 2 million) in the assessee's hands is made out.
      Coming, next, to the amount paid to the assessee. Again, in view of the clear
prescription of section 292C, it is the assessee who is to disprove the said document as
not representing the truth. Merely denying the knowledge of the said transaction/s or
stating of not having any foreign bank account, etc. would be of little assistance to the
assessee. Monies are payable in India, so that the non maintenance of any bank
account abroad would even otherwise be of little consequence. In fact, as clarified by
the A.O., the seized material itself reveals several accounts with UBS AG, Zurich
(refer para 7.7 of the assessment order). The existence or the making of the pay order
(No.004 06298 027 43 2895) by UBS AG - as stated by it, in assessee's favour, is
neither disputed nor could be without any controverting material. The same, in the
absence of anything to the contrary, establishes the assessee's right to the said
amount. As such, the amount receivable by the assessee would not cease to be so
merely because the pay order, per which it was conveyed to the assessee, gets lapsed
by time (stipulated for its encashment) or due to the validity of the relevant instrument
having expired. The assessee's right would subsist, resulting in the relevant amount
being remitted to him vide a fresh instrument, which is precisely what the letter states.
      Then, it is said that the amount has in fact not been received by the assessee at
any time subsequent to 12.4.1999. Why, he does not answer, and which is the next
logical question that arises. The fresh pay order/s is, and as per the letter itself, which
would be governed by the presumption of section 292C, i.e., with regard to the truth
of its' contents, to follow. Why, rather, should it not be so, allowing for the things to
take their normal, regular course? There is no explanation in this regard. The
assessee's case rests on a bald statement as to the ignorance of the transaction/s, and
who does not even explain as to why, or on what account, or under what
circumstances, was the amount due to or receivable by him in the first place? The
charge of forgery is, again, without any basis. Rather, the letter itself may have been
                                                             ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                      Hassan Ali Khan vs. Dy. CIT

written by the bank to officially confirm the remittance by it, i.e., at the insistence of
the beneficiaries themselves. On the other hand, the Pay Orders may have been
deliberately not encashed, allowing them to expire, as the assessee (payee) did not
wish monies to be brought into India. For all we know, the assessee may have issued
fresh instructions to the bank, which is, as apparent from the letter, in clear
communication with the assessee, to whom the letter is addressed, having the details,
including telephone numbers, of all the beneficiaries. The change in the name of one
of the companies to its' correct name also bears out the said communication in-as-
much as the bank stands conveyed the correct name, as against the original, incorrect
name, to which the original pay order (number specified), issued in the first place, was
made payable, also indicating its receipt. The non-receipt of money in India, not
proved conclusively, would thus not be of much help to the assessee.
      Continuing further, how, one wonders, the non-receipt of the sum extinguishes
the assessee's right thereto. To, again, no answer by the assessee. The assessee has in
fact not divulged either its banking relationship with UBS AG, or even the activity/s
resulting in or leading to the impugned amount being due to him, and which prompted
us to suggest that the monies may have been diverted to a different destination. There
is, in any case, nothing on record to rebut the statutory presumption of section 292C,
so that it cannot be said that the earlier pay order/s was not followed, as the letter
states, by fresh pay order/s. The existence of cross border transactions, or foreign bank
accounts, as the seized material bears out, only strengths this presumption. Income, it
is well-settled, could be brought to tax either on accrual or receipt basis. In the present
case, the underlying transactions having not been divulged, much less explained, it is
difficult to issue any definite finding with regard to accrual, except to state that the
normal presumption is of payment following accrual. The payment is, as afore-
discussed, only in the current year and, further, in one's own capacity.
      Finally, would be the issue with regard to the nature of the receipt. The
assessee, as would be abundantly clear by now, has not clarified the same; denying the
                                                            ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                     Hassan Ali Khan vs. Dy. CIT

receipt itself, which we have found as of no consequence in-as-much as the pay order
stands already issued in assessee's favour, with the letter dated 12.04.1999, to which
the presumption of section 292C shall apply, being issued only in view of the same
having lapsed, i.e., in consequence, so that the payment shall have to be effected by
issuance of a fresh pay order. It is only on its receipt that the payment could be said to
have been received by the assessee. The concept of income under the Act is vast, so
that anything corresponding with the notion of income or gain qualifies to be
`income'. The exception would be where the amount is received on capital account,
where, again, that received/receivable on transfer of a capital asset would stand to be
assessed, to the extent of the gain embedded therein, as capital gains. There is nothing
to suggest that the amount is on capital account, or in lieu of a capital asset. Why, any
unexplained deposit or money, etc., is, by virtue of the provisions of the Act, and for
the same reason, also deemed as income. That is, the onus to establish the nature (as
well as the source) of the money, i.e., as being not in the nature of income, is on the
assessee, and which he has clearly not.
      There is, under the circumstances, no case for or no basis to consider the
impugned sum as not received (during the relevant year) and, two, of it being not in
the nature of income. The assessment of the amount, sought to be paid to the assessee
initially vide Pay Order (No. 004 06298 027 43 2895), as income, is, accordingly
upheld. We decide accordingly, and the assessee gets part relief.

Ground 2: Addition on account of `opening capital' ­ Rs.17.29 lacs

7.    The assessee's next ground is in respect of the `opening capital', i.e., as on
31.03.1999, as reflected in the assessee's balance-sheet as on 31.3.2000, the relevant
year-end, accompanying his return furnished in response to the notice u/s.148. The
detail of the said capital is as under (APB pg. 9/DPB pg. 28):
                                                            ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                     Hassan Ali Khan vs. Dy. CIT

                  Credit         Amount          Debit                  Amount
      i)     To      balance    Rs.17,29,032 Ornament                   Rs.1,29,032
             carry forward
      ii)                                       Watches               Rs.11,00,000
      iii)                                      Cash on hand           Rs.5,00,000
                                Rs.17,29,032                          Rs.17,29,032

      The same did not find favour with the Revenue authorities. The assessee had
admittedly not filed any returns since A.Y. 2000-01, i.e., prior to the initiation of the
assessment proceedings for these years. The returns for A.Ys. 1990-91 to 1999-2000
(filed at Hyderabad) were for meager sums, ranging from Rs.41,000/- to Rs.65,000/-.
Further, the same were not accompanied by any balance-sheet, capital account, etc.
No books of account were produced for the current year. The assessee's claim for
opening capital was under the circumstances found not acceptable.

8.    We have heard the parties, and perused the material on record, including the
assessee's paper-book.
      The assessee's case is sans any explanation. In fact, the assessee was
recalcitrant, not appearing before the assessing as well as the first appellate authority,
both of whom allowed extensive opportunity to him to state his case. We observe a
statement by the assessee to the effect that the jewellery and watches were ancestral,
family property, the details of which are in the possession of the Department, being
explained to the competent authority, who had accepted the same (refer para 26 of the
letter dated 24.2.2010 to the AO/APB pgs.5-10). It is the assessing authority to whom
the nature and the source of the investment has, in any case, to be satisfactorily
explained. The same being submitted during penalty proceedings, much after the
conclusion of the quantum proceedings before the ld. CIT(A), could not form part of
the record. The least that the assessee was, even so, required to do was to advert to the
relevant statement/s, or even to the relevant part of the said deposition/s, including the
same in his compilation. There is no reference to the date/s thereof, or even the
                                                           ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                    Hassan Ali Khan vs. Dy. CIT

authority before whom the same had been made, stating to be explaining the source.
We have, on our part, perused the assessee's statements recorded on oath u/s. 131 of
the Act on 27.4.2007 (continued from 26.4.2004) and 01.5.2007 (APB pgs. 11-27),
forming part of the paper-book. Both the statements are before the investigating
authority, being ADIT (Inv.), Unit-VIII(2), Mumbai, duly signed by him as well as the
assessee. There is no reference therein to the said jewellery or watches. The assessee
speaks of a rich ancestry (refer answers to Q. Nos. 16-20 of his deposition u/s.131
dated 26.4.2007). That may rather be responsible for his venturing into antique
business (refer answer to Q. No.15 of the said statement), also returning income there-
from. The jewellery and watches would in fact have to be identified, being ascribed to
ancestry, so that they would bear mark thereof. This becomes all the more relevant as
jewellery was also found from his Pune and Mumbai residences, which were subject
to search, and the assessee, as it appears, is a keen watch collector as well, having
been found in search to be the owner of branded watches.
      The assessee's claim of having produced computerized books of account before
the A.O., so that the latter's stating of him as not maintaining any books of account is
incorrect, is neither here nor there. The `opening capital' has nothing to do with the
books of account for the current year. Rather, the books of account could only be of a
business, while the bulk of the `opening capital' is claimed to be in the form of assets
carried over from generations, as part of the family heirloom. The books of account
for the earlier years have admittedly been not produced. How and why have the same,
having been acquired without incurring any cost, been valued? The income as
returned for the nine years preceding the current year is meager, being not sufficient
for the family even to meet two ends. Then, again, is the question of valuation. The
claim of the opening capital, to the extent it relates to cash-in-hand of Rs.5 lacs, is
thus, again, without any explanation, none being even otherwise furnished. The
addition is, accordingly, confirmed. We decide accordingly.
                                                               ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                        Hassan Ali Khan vs. Dy. CIT

Ground 3: Addition on account of life style other expenditure ­ Rs.28.50 lacs

9.     We may next consider the assessee's third and final ground, which concerns an
addition of Rs.28.50 lacs. The assessee, in response to Q. Nos. 7-10 of his statement
u/s.132(4) dated 05.1.2007, stated his annual earnings to be around Rs.30 lacs, while
that of his wife at around Rs.3 lacs. He had in fact disclosed income (including the
additional income) for A.Y. 2003-04 onwards exceeding Rs.30 lacs. The average
income for A.Ys. 2000-01 to 2007-08 works to around Rs.28 lacs p.a., corroborating
the figure stated per the statement u/s.132(4). The assessee had in fact staggered his
income toward the later years, with that for A.Y. 2007-08 being at Rs.139.04 lacs (out
of an aggregate income of Rs.226.07 lacs for the said years), only to avoid interest
u/ss. 234A, 234B and 234C. The assessee was even otherwise found to be leading a
lavish lifestyle, travelling abroad, gifting luxury cars to his relatives, etc. All this lends
credence to the statement u/s. 132(4)(supra), stating his annual earning to be to the
tune of Rs.30 lacs. The assessee having, however, returned his income at Rs.1.50 lacs
only, the balance Rs.28.50 lacs was assessed as his income for the year (refer para 8
of the assessment order). The same came to be confirmed in first appeal on the same
basis; the assessee having not improved his case before the ld. CIT(A) in any manner;
rather, exhibiting un-cooperative behavior, not responding to the notices of hearing
issued to him time and again (refer para 3.2 of the impugned order).

10.    We have heard the parties, and perused the material on record.
       It is nobody's case that the assessee had been disclosing his correct or true
income from year to year; rather, he had not disclosed any income from A.Y. 2000-01
onwards, i.e., prior to the initiation of the assessment proceedings for these years by
issue of notices u/s.148 or, as the case may be, section 153A, with that returned for the
years preceding thereto being also for paltry sums, not sufficient to make two ends
meet. He, in fact, is candid about it, explaining the various assets found during search
                                                           ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                    Hassan Ali Khan vs. Dy. CIT

as sourced from income from his business of horse betting/racing, and for which one
only needs to visit his various statements. Why, income of Rs.226.07 lacs, as returned
for A.Ys. 2000-01 to 2007-08, which works to an average annual income of Rs.28.25
lacs, and which the Revenue therefore considers as corroborative of the assessee's
own estimation of his annual income of Rs.30 lacs, is comprised of such assets, i.e., as
found with him or his near relatives, stated to be gifted thereto by him. The assessee's
stating of his admission being confined only to A.Y. 2007-08, i.e., the year during the
previous year relevant to which the statement u/s.132(4) was made, is thus without
any merit in the given facts and circumstances of the case. At the same time, the
Revenue, having already made separate additions qua the assets found, is not justified
in adding, once again, based on the assessee's statement of his annual earnings.
Rather, if the assessee's disclosed income agrees, on an average, with his admitted
income, no case for any further addition to the income would be made out, apart from
the redistribution of the said income across different years! The income in respect of
an asset could only be where the assessee is found to be in its' possession ­ physical
or constructive, or otherwise found to be its owner, i.e., based on definite evidences
and materials. The same, where contested, would require being decided on the basis of
an appraisal of the said materials, and the explanation/s furnished in support.
Reference thereto, which, as afore-stated, comprises the assessee's returned income in
the main, would thus be of no assistance to the Revenue. The income toward which an
estimate could be made, i.e., which could be justified on the basis of an informed
estimate, is therefore only which does not result in any tangible (or intangible) asset,
viz. expenditure. The assessee surely maintains a lavish lifestyle, frequently travelling
abroad, staying at prime hotels there, gifting luxury cars to relatives, etc. A person so
gifting would only be maintaining some for himself, of which he is in fact found to be
the owner, entailing cost. By own admission, his monthly expenditure is to the tune of
Rs.60,000/- to Rs.70,000/- p.m. (refer answer to Q. No.12 of statement u/s. 132(4)
dated 05.01.2007). The same, also noted by the ld. CIT(A), translates into a sum of
                                                            ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                                                     Hassan Ali Khan vs. Dy. CIT

Rs.7.20 lacs to Rs.8.40 lacs p.a. The Revenue, on its part, has not impugned the same;
rather, relies on the said statement. Though the assessee subsequently, vide his
statement u/s.131 dated 01.5.2007, does state that the said estimate by him was only
for the current year f.y. 2006-07, and that the household expenditure earlier was much
lower at Rs.20,000/- p.m., there is nothing to indicate that his lifestyle of few years
earlier was any different, or any less ostentatious. Why, the letter under reference by
UBS AG is itself of April, 1999, suggesting links abroad even at that time. Rather, he
shifted to Mumbai and Pune from Hyderabad, whereat he filed his returns up to A.Y.
1999-2000, so that his reference to an earlier living could, then, only be to that at
Hyderabad. The said estimate, to be valid in law, has to be an informed one, taking
into account the different variables or attributes on which it depends, viz. the number
of family members, their living style, including expenditure on food, clothing,
domestic helps, etc.; the expenditure on their education, medical bills; the number of
residences being maintained; social or health clubs joined, etc. No such exercise has
been attempted by the Revenue. Under the circumstances, it is only considered proper
to determine the addition on account of lifestyle, including by way of maintenance,
expenditure on the basis of the assessee's own estimate, and which we do at Rs.7.50
lacs. The assessee shall be allowed credit for any sum reflected in his books of
account toward the same. We decide accordingly, and the assessee gets part relief.

11.   In the result, the assessee's appeal is partly allowed.
             Order pronounced in the open court on December 09, 2015

             Sd/-                                        Sd/-
        (D. Manmohan)                               (Sanjay Arora)
         / Vice President                            / Accountant Member
  Mumbai;  Dated : 09.12.2015

. ../Roshani, Sr. PS
                                     ITA Nos. 3726/M/2009 (A.Y. 2000-01)
                                              Hassan Ali Khan vs. Dy. CIT

        /Copy of the Order forwarded to :
1.  / The Appellant
2.     / The Respondent
3.     () / The CIT(A)
4.      / CIT - concerned
5.            ,     ,   / DR, ITAT, Mumbai
6.     / Guard File
                                  / BY ORDER,

                            /  (Dy./Asstt. Registrar)
                          ,   / ITAT, Mumbai
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions