Income Tax Appellate Tribunal - Jaipur
Dr. Dalbir Singh Tomar, Jaipur vs Assistant Commissioner Of Income Tax , ... on 27 April, 2018
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
Jh fot; ikWy jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 837/JP/2017
fu/kZkj.k o"kZ@Assessment Years : 2015-16
Dr. Balbir Singh Tomar, cuke ACIT, Central Circle-1,
Jaipur Vs. Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAMPT7282M
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri G. M. Mehta (CA)
jktLo dh vksj ls@ Revenue by : Shri Varindar Mehta (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 17/04/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 27/04/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-4, Jaipur dated 03.10.2017 for Assessment Year 2015-16 wherein the following grounds of appeal have been taken:
"(1) Ld. CIT(A) has erred in law and on facts in sustaining addition of Rs. 12,27,109/- in the hands of the assessee alone on account of excess jewellery, when total jewellery of all the family members living jointly was measured/weighted at one place, ignoring the fact that jewellery so found is fully explainable in the hands of all the family members.2 ITA No. 837 /JP/2017
Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur
2. Ignoring and by misinterpreting the final finding of the Hon'ble Settlement Commission, Addl. Bench-2, New Delhi in its order dated 30th June 2017 in case of Indian Medical Trust in respect of remittance of US $3,00,000/- (Rs. 1,84,35,000/-) that the assessee has not remitted the said sum, ld. CIT(A) was not justified in sustaining addition of Rs. 1,84,35,000/- in the hands of the assessee.
3. Ld. CIT(A) has acted against the facts of the case in sustaining estimated addition of Rs. 2,03,405/- for foreign tour expenses, though during course of search, no incriminating material was found for incurring such expenses as the same were incurred by the assessee out of his substantial amount of drawings."
2. Regarding Ground No. 1, the facts of case are that a search & seizure operation under section 132(1) of the Act was carried out at the various premises of NIMS Group as well as residential premises of its trustees. During the course of search, at the residential premises of the assessee, being one of the trustees, situated at B-4, Govind Marg, Adarsh Nagar, Jaipur, from the Bedroom of Smt. Shobha Tomar, wife of the assessee, Dr. BS Tomar, Bedroom of Dr. Anurag Tomar and Dr. Swati Tomar, the son and daughter-in-law of the assessee, gold weighing 2595.72 grams, diamond weighing 19.3 cts and 714 grams of silver was found which was valued at Rs. 55,80,042/-.
3. In his statement recorded during the course of search u/s 132(4) of the Act, the assessee was asked a specific question i.e. question No. 3 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur 39 to explain the source of the jewellery so found and valued at Rs. 55,80,042/-. In response, the assessee submitted that the jewellery and the silver so found belong to him, his wife, son, daughter in law and his HUF namely, B.S Tomar (HUF). It was further submitted that the jewellery and silver so found has been reflected in the Wealth tax returns and the wealth tax has been duly paid on such jewellery and the silver items.
4. During the course of assessment proceedings, the assessee was again asked to provide the necessary explanation in respect of the jewellery so found at his residential premises during the course of search. In response, the assessee vide his letter dated 17.10.2016 submitted that the total jewellery found at his residence, weighted and valued by the valuer jointly for all the family members and it was further submitted that the jewellery disclosed by him and his other family members are as per their respective wealth tax returns and in case of non-wealth tax family members, the jewellery weighing the prescribed grams be treated as disclosed as per the judgment of Hon'ble Jurisdiction High Court reported in 366 ITR 325. It was accordingly submitted that in respect of all the family members, the total explainable jewellery is weighing 2,212.04 grams whose value comes to more than Rs. 60,00,000 as against Rs. 55,80,042/- determined by the search team and it was accordingly submitted that no part of the jewellery could be treated as unexplained.
5. The Assessing Officer found the explanation of the assessee acceptable to the extent of 2,210.04 grams of gold jewellery. However, 4 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur in respect of the balance gold jewellery weighing 383.68 grams, diamond 19.3 cts and silver worth Rs. 14,280/- was found unexplained and a specific show cause was issued to the assessee to which the assessee responded. In its response, the assessee had further included the quantity of jewellery as per the wealth tax returns of Dr. Eshan Sharma, Dr. Surabhi Tomar and Ms. Pallavi Tomar which was not found acceptable to the Assessing Officer. It was held by the Assessing Officer that these people have separate residential premises and where their respective jewellery was also found. Further, the AO referred to the statement of the assessee recorded during the course of search and it was held that in the said statement, the assessee did not mention that the jewellery belonging to Dr. Eshan Sharma, Dr. Surabhi Tomar and Ms Pallavi Tomar was lying at his premises. Accordingly, the reply so filed by the assessee was not found acceptable and 383.68 grams of Gold jewellery and 19.3 cts diamonds were found unexplained and it was held by the Assessing Officer that since Dr. B.S.Tomar is the head of family, the addition on this account shall be made in his hand for the impugned assessment order. Accordingly, an addition of Rs. 10,43,609/- on account of unexplained investment in gold jewellery weighing 383.68 grams and Rs. 183,500/- on account of unexplained investment in 19.3 cts of diamond totaling to Rs. 12,27,108/- was made and brought to tax in the hands of the assessee.
6. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and reiterated the submissions made before the Assessing Officer. It was further contended before the ld CIT(A) that when the jewellery which was found during the course of search was 5 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur owned by all the family members, then why the addition is made in the hands of the assessee alone and not in the hands of the other family members. It was further contended that there was no loose diamonds which were found during the course of search and these were studded diamond and gold jewellery which was belonging to female members of his family. It was further submitted that the assesse's own jewellery as per his wealth tax return was just 99.14 grams(net) which is gold chain, rings and other minor items used by male members in the society.
7. The ld. CIT(A) however confirmed the action of the AO and while doing so, observed that the assessee has given inconsistent explanation before the Assessing Officer and further such explanation is at variance with the initial statement recorded u/s 132(4) of the Act. It was held by the ld. CIT(A) that the AO has rightly given credit of jewellery to the assessee and his family members and has treated the remaining gold jewellery weighing 383.68 grams and 19.3 cts diamonds as unexplained. Accordingly, he confirmed the addition of Rs. 12,27,109/- in the hands of the assessee.
8. Now, the assessee is in appeal against the said findings of the ld. CIT(A). The ld AR reiterated the submissions made before the lower authorities. It was further submitted by him that the approved valuer has already included Rs. 1,83,500/-which is the value of diamonds studded in jewellery in his overall valuation of Rs. 55,65,762/- against which the explainable value of jewellery found with assessee and his family is Rs. 60,16,749/- therefore no addition is called for. It was further submitted that for jewellery owned by assessee and family 6 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur members, straightway 15% reduction was made for impurity whereas the approved valuer has allowed reduction which was lower than 15% in majority of items of jewellery. It resulted in calculation of higher weight of jewellery. Without prejudice, it was further submitted that the addition cannot be made in the hands of the assessee alone for the reason that total jewellery of all the family members was valued by approved valuer at one place.
9. The DR is heard who has vehemently argued the matter and took us through the findings of the lower authorities and submitted that the addition has been rightly confirmed by the ld. CIT(A) as the source of investment in the gold and diamond studded jewellery remained unexplained by the assessee.
10. We have heard the rival contentions and perused the material available on record. Firstly, it is noted that the jewellery which has been found from the bedroom of Dr. Shobha Tomar, Dr. Anurag Tomar and Dr. Swati Tomar belongs to all the family members who were staying jointly with the assessee at the relevant point in time. The same is confirmed by the assessee in his statement recorded u/s 132(4) of the Act where the assessee has categorically stated that the jewellery so found belong to him, his wife, son, daughter in law and B.S.Tomar (HUF). Therefore, we find that the jewellery so found where remained unexplained, the addition has to be made equally in the hands of the each of the family members to whom the said jewellery belongs. Therefore, we found that the observation of the Assessing Officer that since the assessee is the head of family, the whole of the addition shall 7 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur be made in his hand is not emerging from the facts on record and therefore, the same cannot be accepted. In absence of any specific identification of the jewellery belonging to the assessee and to the other family members, it would be reasonable that if the addition has to be made, it should be made equally in hands of all the family members staying with him at the relevant point in time and the assessee's HUF.
11. Now, coming to the explanation and the contentions so raised by the ld. AR. Firstly, the contention regarding the overall valuation of the explainable jewellery amounting to Rs 60,16,749/- being higher than the value of Rs 55,65,762 as determined by the approved valuer is not found acceptable as there is a clear cut finding by the AO that jewellery weighing 2595.72 grams was found as against explainable jewellery of 2212.04 grams. Similarly, the other contention raised by the ld. AR regarding 15% reduction done by the asseessee for impurity whereas the approved valuer has allowed reduction which was lower than 15% in majority of items of jewellery and which has resulted in calculation of higher weight of jewellery. We find that the said contention was not raised before the lower authorities and it has been raised for the first time before us and in absence of any findings of the lower authorities, we don't deem it appropriate to consider the same.
12. We therefore confirm the findings of the AO to the extent that the jewellery worth Rs 55,65,762 remains unexplained. At the same time, as we have noted above, the addition, towards the unexplained investment in the jewellery so found during the course of search, should be made equally in hands of all the family members staying with him at 8 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur the relevant point in time. The proportionate addition in the hands of the assessee comes to Rs 245,422 (1/5 of Rs. 12,27,109/-). The balance addition of Rs 981,687 is therefore directed to be deleted. In the result, the ground of appeal is partly allowed.
13. Regarding ground No. 2, the facts of the case are that the Assessing Officer observed that certain discreet enquiries during pre- search investigation had revealed that the Tomar family is making a lot of investment in countries outside India, particularly in Madagascar and Mozambique. During the course of search proceedings at his residence, the assessee's statement was recorded u/s 132(4) and certain specific questions were raised regarding foreign investment and which have been reproduced in the assessment order at Pages 10, 11 and 12. As per the Assessing Officer, responses so given by the assessee to the various questions so put to him shows that the assessee was constantly trying to avoid the questions regarding foreign investment and he was constantly denying that no investment has been made. Thereafter, the Assessing Officer referred to the seized material which revealed that Shri Tomar has made investments of USD 3,00,000 during the FY 2014- 15 for setting up of business of gold mines, infrastructure, medical hospital and college etc. in the above stated African countries. As per the page No. 129-130 and 151-155 of annexure A-27 seized from residence of the assessee, it is evident that Mr. Bitthal Maheshwari has made a payment of USD 1,00,000 from HSBC bank account in Hong Kong on 09.05.2014. Thereafter, the AO observed that Mr. Bitthal Maheshwari after sending the payment has e-mailed the receipt to Shri B.S. Tomar for sending the payment receipt of USD 1,00,000 on 9 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur 09.05.2014. The AO further observed that Mr Bitthal Maheshwari is not an Indian citizen and is believed to live in Germany since many years. The AO further observed that the Statement of Mr. Bitthal Maheshwari's real brother Mr. Goverdhan Maheshwari, who lives in Jaipur and who also escorted Mr. B. S. Tomar and his wife to Africa was recorded u/s 131 of the Income Tax Act. Mr. Goverdhan Maheshwari submitted that he will ask about the above transactions from his brother, however, till date, no details have been furnished by him. The AO accordingly comes to a conclusion that it is clear that the HSBC bank account in Hong Kong from which the transfer of USD 1,00,000/- took place, and the receipt of which was sent by Mr. Bitthal Maheshwari, was made on behalf of Dr. B.S.Tomar as all the emails have been addressed to Dr. B. S. Tomar and not Mr. Bitthal Maheshwari. It was accordingly held by the AO that it was on behalf of Dr. B. S. Tomar that money was transferred from the HSBC bank account to the Dubai bank account by Mr. Bitthal Maheshwari or his relative/associate who had a bank account in HSBC Hong Kong.
14. Further, AO referred to page No. 180-182 of the same annexure i.e. Annexure 27 which shows transfer of USD 1,00,000/- on or after 26.09.2014 to M/s Gedena- Gesta de Desenvolvimento de Nampula, SA having address- Rua Beato Joao De Brito, N 37 1 Maputo Mocambique. The AO further referred to Page No. 182 which shows that another transfer of USD 1,00,000/- in a bank account on or after 16.07.2014.
15. In light of above seized material, the AO observed that USD 3,00,000/- have been transferred by Dr. B.S.Tomar to foreign bank 10 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur accounts and no evidence was found during the course of search that this amount was transferred from disclosed bank accounts of Dr. B. S. Tomar or IMT. The AO further observed that no evidence regarding the genuineness of the above transactions was submitted during the course of post-search proceedings. Thus, Rs. 1,84,35,000/- equivalent to USD 3,00,000/- converted at the exchange rate of Rs. 61.45 per US Dollar was determined undisclosed income of Dr. B. S. Tomar or M/s IMT, from undisclosed sources.
16. Thereafter, a detailed show cause notice mentioning the above facts was issued to the assessee on 01.12.2016. In reply to the show cause notice, the assessee vide its letter dated 08.12.2016 submitted as under:-
"Remittance of foreign currency: This issue has already been discussed in details in Applicant's comments on Commissioner's Report under rule 9 of Settlement Commission Procedural Rules, in case of M/s. Indian Medical Trust where ld. Pr. CIT (C), Jaipur had raised the same issue in report under Rule 9 to Settlement Commission Procedural Rules, 1997. The same is repeated hereunder:
"6.12.4 Foreign Investment:......... One Bithal Maheshwari, a Jeweller and a non-resident (foreign citizen) is close friend of Dr. B.S. Tomar, who accompanied Dr. Tomar to Mozambique and other countries. Mr. Maheshwari, being a jeweller, was interested in purchasing or investing in Gold or other mines in those countries and therefore, he had given reference of Dr. B.S.Tomar for those dealings. By taking advantage of acquaintance of Dr. Tomar's with heads of Mozambique and other countries, he had remitted 11 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur US$1,00,000/- in those countries. For remittance, since reference of Dr. Tomar was with those parties, copy of the mail was also sent to Dr. Tomar. Otherwise, Dr. Tomar has nothing to do with gold and other mines in foreign countries as he is fully devoted to the cause of education and medical relief. Had the payment of US$ 1,00,000/- or more been paid by Mr. Maheshari from his bank account with HSBC Bank on behalf of Dr. Tomar, evidence for repayment in India or foreign currency to Mr. Maheshwari of his relatives in India would have been found during the course of search whereas not a iota of any such evidence or entry in diary or other document was found. The allegation of the ld. Pr.CIT(C) appears to be on the basis of her own presumptions, conjectures and guess work. Since conjectures, guess work and possible stories have no place in search cases, the request of the ld. Pr.CIT(C) to this Hon'ble ITSC to allow the Department to make necessary reference to FT and TR divisions of CBDT will be meaningless. When no remittance was made by Dr. B.S. Tomar or by IMT, one cannot understand, how the sources of such transaction could be explained? Had there been any merit in such query, the Investigation Wing of the Department was competent enough in making investigation during more than a year after the search".
In response to query raised in respect of exhibit AS-27, in comments of IMT under Rule 9A of 1TSC Procedure Rules, it was submitted as under:
"Neither any remittance was made by Trustees of IMT or their relatives nor does any one have bank account in foreign countries.12 ITA No. 837 /JP/2017
Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur This payment was made by one Shri Bithal Maheshwari (foreign citizen) from his own bank account who is close friend of Dr. Tomar and visited gulf countries with Dr. B.S.Tomar. By taking advantage of acquaintance of Dr. Tomar, he started some business links. The payment of $1,00,000/- must be Mr. Maheshwari's remittance in connection with his foreign trade, in some cases, copy of mail was also sent to Dr. Tomar"
In response to query for pages 151 to 155 of exhibit AS-27, in comments of IMT under Rule 9A of ITSC Procedure Rules, it was submitted as under:
"No payment was made by IMT or Tomars but by Mr. Bitthal Maheswari who must have invested in gold mines, taking advantage of Dr. Tomar's relations with foreign personal and therefore, the same was sent to Dr. Tomar for information to persuade Mr. Maheshwari.
It is also requested that before drawing any adverse inference or before making unjustified additions in the hands of the assessee in respect of remittance of US$ 3,00,000/- by and from the bank account of Shri Bitthal Maheshwari who had also issue receipt for the remittance from his own bank account, you are requested to get the charges verified from the local branch of HDFC Bank, SP Marg, Jaipur. From the bank account, full facts and figures will be known to the Department. Even the recipient or the bank where the money was transferred as per account number given in notice could be enquired by the department but in no case unjustified addition on basis of mere guess work could be made.13 ITA No. 837 /JP/2017
Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur Otherwise, on the basis of copy of mail message giving transaction reference number or bank account number and other details of Dubai bank or date of transaction without proving proof and source of remittance or finding any incriminating material for such remittance by the assessee himself will be against the principles of natural justice for making unjustified addition of such huge sums. In assessee's case, neither any undisclosed bank account proving remittance in US$ was found during course of search nor any document, purchase deed of the property purchased or proposed or agreement in form of any asset in foreign country was found that the assessee had made investment in gold mines or in others for which remittance was made in foreign currency by himself. Without finding any incriminating material justifying any investment by the assessee himself, no addition could be made. There must be some material substance either in form of documents or the like to arrive at a ground for addition of income.
The assessee has been requesting time and again to Department to make necessary enquiry from bank for the ownership of the money sent in terms of US$ to Gulf countries. Even the recipient or the bank where the money was transferred as per account number given in notice could be enquired. Moreover had the Assessee remitted the money, why and how Bitthal Maheshwari could be said to have issued receipt as against the assessee himself as given in your said notice dated 1St December 2016 u/s 142(1) of IT Act.
On the facts, neither any incriminating document nor any evidence was found during course of search for the ownership of US 14 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur $, remitted to gulf countries from the HSBC bank account of one Shri Bitthal Maheshwari as being sent by assessee, the amount in no case could be considered as assessee's undisclosed income nor any evidence was found during course of search or thereafter that assessee had made payment of equal sum either to Shri Bitthal Maheshwari or to his relative equivalent to Indian Currency."
17. Thereafter, the AO refers to the counter comments of the department in the case of M/s Indian Medical Trust before the Hon'ble ITSC, where on a substantive basis the department has claimed that the foreign investment of Rs. 1,84,35,000/- is made out of the undisclosed income of M/s Indian Medical Trust. The AO accordingly held that to safeguard the interest of Revenue, a protective addition of Rs. 1,84,35,000/- is being done to the total income of Dr. B. S. Tomar as his undisclosed foreign investment for AY 2015-16.
18. Being aggrieved, the assessee carried the matter in appeal before ld. CIT(A) and submitted as under:-
"10. During the course of appellate proceedings written submissions were made, the main portion of which is reproduced below:-
Shri Bitthal Maheshwari, a Jeweler and NRI who is a close friend of appellant who accompanied him (appellant) to Gulf countries for his own business work (may be for obtaining gold mines in gulf countries). From his NRE bank account Mr. Maheshwari had remitted US $ 2,00,000 or so to one of those countries for his business work. Since Mr. Maheshwari had the reference to the appellant, copy of email for remittance by Mr. Maheshwari was also sent to the 15 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur appellant. On the basis of copy of email, Ld. AO presumed that it was payment made by the appellant himself though no other proof of payment was found during the course of search.
The finding of the Hon'ble Income tax Settlement Commission on foreign remittance said to have been made by the appellant is appearing at page 123 (para 13.7.4) which is repeated hereunder:
"During the hearing the A.R. requested us to allow the Department to make a reference to FT & TR Division of CBDT to make enquiries through the Competent Authority. However, as the payments in question have been made by Sh. Bitthal Maheshwari and not by IMT or Dr. Tomar no such permission needs to be given by us. The Department is free to take any action in case of Sh. Bitthal Maheshwari. However, from the clarifications given and the facts places before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third party outside India and there is no material on record to show that any such funds were provided by Dr. B.S.Tomar. Therefore merely on the basis of the fact that Sh. Maheshwari sent an endorsement of payment by email to Dr. B. S. Tomar, it is not possible to derive any adverse inference in the case of the applicant trust".
The issue of foreign remittance was already examined by the Hon'ble Income tax Settlement Commission (ITSC) from the material places before it by the Ld. Pr.CIT (C) and also by Indian Medical Trust. After considering material placed by both the parties, the Hon'ble ITSC has arrived at the following finding (Repeated from above findings of Hon'ble ITSC):
16 ITA No. 837 /JP/2017Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur "However, from the clarifications given and the facts places before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third party outside India and there is no material on record to show that any such funds were provided by Dr. B.S. Tomar".
Therefore when the remittances were found to have been made by third party (Sh. Bitthal Maheshwari - who is NRI) outside India and there is no material on record to suggest that Appellant had provided such fund, the addition of Rs. 1,84,35,000/- is totally unjustified."
19. The ld. CIT(A) however didn't agree with the assessee's contentions and confirmed the addition made by the AO. His findings are as under:-
"11. I have seen the order of AO and submissions made in this regard. I have also gone through the order of Settlement Commission and I find that issue of foreign investment of Rs. 3 lakhs USD is not considered and taxed in the hands of IMT. In fact all the discussion of this amount revolves around not being pertaining to IMT. The Settlement Commission in no way has exonerated the appellant. In my view, in light of detailed discussion in the assessment order, the protective addition made by the AO is correct. Appellant's Ground No. 3 is dismissed."17 ITA No. 837 /JP/2017
Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur
20. During the course of hearing, the ld. AR reiterated the submissions made before the lower authorities and submitted as under:-
"During the course of search, copy of e-mail message was found acknowledging receipt of payment of US $1,00,000/-on 8th May 2014 and repetition of same amount on very next date on 9th May 2014 and again in July 2014. The e-mail so found were misinterpreted by both the lower Authorities as remittance of US$3,00,000/- (equal to Rs.1,84,35,000/-) by the assessee himself though at page No. 129 of seized document, in bold letters - Payment receipt Bitthal is appearing. Facts are that on invitation of head of different countries, the assessee visited those countries in connection with establishing Hospitals and Medical Colleges there. Ultimately following MOUs were signed by assessee on behalf of NIMS University and different countries:
S.No. Name of country MOU dated Paper book page 1. Kazakhstan 20.05.2015 15 to 17 1. DEL Sacro Cuore 30.03.2015 18 & 19 2. Slovenia 10.11.2014 20 to 22 3. Kampala (Uganda) 22.01.2015 23 to 25 4. Italy 16.11.2014 27 & 28
When assessee visited Mozambique on invitation of Head of State for same reason of establishing Medical College and Hospital, he was accompanied by his NRI Jeweler friend Mr. Bithal Maheshwari. Mozambique being unknown and new place for Shri Maheshwari, at the assurance/verbal guarantee of the assessee (being guest of head of Mozambique), Shri Maheshwari had entered into some jewellery business dealings there. Copy of 18 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur above message to assessee meant only the information (who stood Guarantor) for the remittance made by Shri Maheshwari from his own foreign bank account for his own business dealings. No incriminating material or other evidence whatsoever was found during course of search evidencing any payment by the assessee either to Mozambique or to Mr. Maheshwari or his relations in India even in post search proceedings but both the lower authorities preferred to make/sustain the unjustified addition of Rs.1,84,35,000/- in hands of assessee. All these facts and documents relating to remittance of US$3,00,000/- were also examined by the Hon'ble Settlement Commission, Addl. Bench, New Delhi in case of M/s. Indian Medical Trust. The finding of the Hon'ble Income Tax Settlement Commission on this issue is appearing at page 123 order dated 30.06.2017 u/s. 245D(4)of IT Act in case of India Medical Trust which is repeated hereunder.
"During the hearing the A.R. requested us to allow the Department to make a reference to FT & TR Division of CBDT to make enquiries through the Competent Authority. However, as the payments in question have been made by Sh. Bitthal Maheshwari and not by IMT or Dr. Tomar no such permission needs to be given by us. The Department is free to take any action in case of Sh. Bitthal Maheshwari. However, from the clarifications given and the facts places before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third party outside India and there is no material on record to show that any such funds were provided by Dr. B.S. Tomar. Therefore merely on the basis of the fact that Sh. Maheshwari sent an endorsement of payment by 19 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur email to Dr. B.S. Tomar, it is not possible to derive any adverse inference in the case of the applicant trust".
It was submitted by the ld AR that though the above findings are in case of M/s. Indian Medical trust but the findings in case of assessee also figures in it. Avoiding the above finding of the Hon'ble ITSC, without any change in facts and circumstances of the case, without providing any opportunity to assessee, ld. AO, in a very arbitrary way, converted the protective additions originally made vide order dated 26.12.2016 under section 143(3) r.w.s 153B(1)(b) of IT Act (appealed against) into substantive additions vide order dated 15.09.2017 marked as "order giving effect to the order u/s.245D(4) of the Act passed by the Income tax Settlement Commission, New Delhi" though no such order was passed by Hon'ble ITSC in assessee's case."
21. The ld DR vehemently argued the matter and took us through the findings of the lower authorities. It was submitted that the findings of the settlement commission are in the context of IMT and the same has rightly not been followed in case of the assessee.
22. We have heard the rival contentions and purused the material available on record. The case of the Revenue is that an amount of Rs. USD 3,00,000 equivalent to Indian Rupees 1,84,35,000/- has been transacted and transferred on behalf of Dr. B. S. Tomar to various foreign bank accounts. The basis of such findings by the Revenue is on account of certain enquiries conducted during pre-search investigation, statement of Dr. B. S. Tomar recorded during the course of search and 20 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur the document seized during the course of search. It would therefore be relevant to examine the basis of such finding which has been arrived at by the Revenue.
23. Firstly, the AO has referred to certain discreet enquiries during pre-search investigation that Tomar family is making a lot of investment in countries outside India, particularly in Madagascar and Mozambique. However, we find that there is nothing available on record in terms of such inquiries which have been conducted by the Revenue and as to how the Revenue has come to such a finding. Therefore, in absence of any material on record in terms of the nature of such enquiries, the person from whom such inquiries have been made, any documentation which has been found and what is the exact findings arising out of such inquiries, we do not find there is any basic to hold that the so called discreet inquiries anyway establishes the fact that Dr. B.S.Tomar has made any investments in countries outside India and the impunged remittances are in connection thereto.
24. Now coming to the statement of Dr. B. S. Tomar recorded during the course of search u/s 132(4). In response to Question No. 28 wherein the assessee was specifically asked to state whether he or any member of his family or his institute has any foreign bank account, the assessee had submitted that neither he nor any members of his family has any foreign bank account. In Question No. 29, the assessee was specifically asked whether he or any members of his family or the institute has made any foreign investment and the sources of such foreign investment. In response, the assessee submitted that neither he 21 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur nor his family or his institute has made any foreign investment. In Question No. 42, where the assessee's reference was drawn to annexure-ASExb 33 page 177 wherein remittance of USD 1 lac to Mr. N- REDO was made in his UAE bank account. In response, the assessee submitted that he has no knowledge about such remittance and there is no foreign exchange transactions which has happened through his bank account. In question No. 44, the assessee was asked whether IMT is carrying out any activities outside India. In response, the assessee submitted that IMT has not carried out any business outside India. In question No. 46, the assessee was asked whether they have any share holding in any business outside the country and whether there is any proposal in this regard. In response, the assessee submitted that he has visited those countries on the invitation of head of states. However, there are no business activities which have been started in those countries. On perusal of the above statement so recorded u/s 132(4), it is clear that the assessee has confirmed that he does not have any foreign bank account, no foreign exchange dealings have been made by him and he does not have any business activities outside the country. If Revenue were to disbelieve such statement which has been recorded on oath, the onus is on the Revenue to demonstrate through verifiable evidence that what the assessee has stated in his statement on oath is incorrect or there is falisity in such statement. Merely disbelieving such statement without bringing anything contrary on record cannot advance the cause of the Revenue.
25. Now coming to the seized documents which have been found during the course of search. Pages 129 to 130 and 151 to 155 of 22 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur Annexure A-27 relates to remittance of USD 1 lac from HSBC bank account in Hong Kong on 09.05.2014 by Shri Bitthal Maheshwari to Oceanix International FZE in Dubai UAE. There is an email communication from Christine of Axius Gold on 8th May, 2014 addressed to Dr. B. S. Tomar on his gmail account as well as his official NIMS University email ID wherein there is reference of some telecom that Dr. B. S. Tomar had with Mr. Nyrado and bank details were provided in that email communication for transfer of USD 1 lac. Thereafter, on 9th May, 2014, the transfer has happened by Shri Bitthal Maheshwari from HSBC bank account in Hong Kong of USD 1,00,000 and there is a forward email communication confirming the remittance having been and the said communication is by Shri Bitthal Maheshwari addressed to Shri B.S.Tomar. Based on the seized documents, it is an admitted position of the Revenue as emerging from the assessment order that the payment has been made by Shri Bitthal Maheshwari. However, given the fact that all the email communications have been addressed to Dr. B.S.Tomar and not to Mr Bitthal Maheshwari, the AO has come to a conclusion that the payment has been made on behalf of Dr. B.S.Tomar from the HSBC bank account to the Dubai bank account by Shri Bitthal Maheshwari or his relative/associate who had a bank account in HSBC Hong Kong. In our view, these documents on first blush might create some suspicion or apprehension in mind of the Assessing officer that there is some involvement of Dr B.S Tomar in these transactions. However, relying merely on these email communications and without bringing any further evidence on record as to the nature and extent of involvement of Dr B.S Tomar, it is too premature to hold that the remittance of USD 1 lac has been made by Shri Bitthal Maheshwari on 23 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur behalf of Dr. Tomar. There is nothing on record which prove that the HSBC bank account in Hong Kong is operated on behalf of Dr. B.S.Tomar, there is also nothing on record which anyway suggest that funds belonging to Dr. B.S.Tomar have been routed either directly/indirectly through the HSBC bank account in Hong Kong and which has been used for making the remittance to Oceanix International FZE, Dubai. There is no enquiry or investigation which has been carried out by the Revenue which demonstrate that the funds from Hong Kong are undisclosed income of Dr. B.S.Tomar. There has been no enquiry which has been carried out with either the HSBC bank in Hong Kong or the Mashreq Bank PSC in Dubai to determine the particulars of the account holders who have made the remittance and who has received the remittance. There is no enquiry or investigation done with Oceanix International FZE, which has received the remittance which demonstrate that the funds have been remitted in relation to certain business transactions undertaken or proposed to be undertaken by Dr. B.S.Tomar. Now coming to Page No. 180 of Annexure 27, it is again an email communication from Alberto Vaguina from Mozambique dated 26th Sep, 2014 which provides the bank details for making the remittance of US$ 100,000 to Gedena-Gestao de Desenvolvimento de Nampula, SA. It is not clear whether the said remittance has actually happened or not. There is no subsequent confirmation or any bank advice which has been found unlike the initial remittance of US$ 100,000. Similarly, according to Page No. 182 of the seized document, there is another email communication from Christine Ramos of Axius Gold of 17th July, 2014 giving the bank details for transfer of US $ 100,000 to the Oceanix International FZE. It is again not clear and there 24 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur is nothing on record which suggest that there is any remittance which has actually happened in this regard. In light of the same, the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, to our mind, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from the undisclosed sources of income.
26. A related question that arises for consideration is as to why the email communication were addressed to Dr. B.S.Tomar. In this regard, the ld AR has submitted that Shri Bitthal Maheshwari who is a non resident and a close friend of Dr. B.S.Tomar had accompanied him to Mozambique and he was trying to take advantage of acquaintance of Dr. B.S.Tomar to further his own business interest. It was submitted that Dr. B.S Tomar has nothing to do with the remittance so made by Shri Bitthal Maheswari and the remittance were made by Shri Bitthal Maheswari from his own bank account for his own business dealings. It was further submitted that no incriminating material or other evidence whatsoever was found during the course of search evidencing any payment by the assessee either to Shri Bitthal Maheswari or his relatives in India/outside India even in post search proceedings. We find that the said contentions and explanation so furnished were raised/made before the lower authorities as well and the same remain uncontroverted before us. As we have noted above, the Revenue has admitted the fact that the remittance has been made by Shri Bitthal Maheswari and the assessee having denied making such remittances or any direct/indirect involvement in such remittances, what is apparent 25 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur has to be treated as real unless the Revenue brings on record any evidence which establishes his linkages with remittance having being made on his behalf from his undisclosed sources.
27. It was further submitted by the ld AR that all these seized documents relating to remittance of USD 3 lacs were also examined by the Settlement Commission and the findings of the Settlement Commission are very clear that there is no material on record to show that any such funds were provided by Dr. B.S.Tomar. It was submitted by the ld AR that though the above findings were rendered in the context of Indian Medical Trust where substantive additions were made, given that the basis of addition in the hands of the assessee on protective basis is also the same seized material and the said findings of the Settlement Commission are equal applicable in the instant case.
28. The findings of the Settlement Commission in context of subject matter are contained at para 13.7.4 of its order passed u/s 245D(4) of the Act dated 30.06.2017 which reads as under:-
"13.7.4 Foreign investments:
In para 9.4 of the Rule 9 report the CIT has raised the issue of a foreign investment made by Dr. B. S Tomar. It has been stated that Dr. Tornar made investment of U.S $ 3,00,000 during the financial year 2014-15 in setting up a business of gold mines, infrastructure and medical college etc in Mozambique. It is stated that one. Sh. Bitthal Maheshwari made a payment of US $ 1,00,000 from HSBC bank account in Hong Kong on 26 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur 9.5.2014 to a bank in Dubai. It is stated that Sh. Maheshwari sent a copy of the receipt of this payment to Dr. B. S Tomar on the same date. Two further payments of US $ one million each were made on or after 26.9.14 to the beneficiaries in Mozambique. According to the CIT these investments were made on behalf of Dr. Tornar who could have paid the money in cash to the intermediaries in India or by sending money through hawala from India. The applicant denies having made any such investment out of India. It was argued that there is no references to the applicant trust in any of the papers referred to by CIT therefore these transactions are not relevant in the present proceedings. It was however clarified that Sh Bitthal Maheswari is a non-resident and a close friend of Dr. B. S Tomar and he had accompanied him to Mozambique. He was trying to take advantage of the acquaintance of Dr. Tomar with the heads of Mozambique and other countries in furthering his own interest but Dr. Tomar has nothing to do with the gold or other mine in Africa. According to the applicant the allegation made by CIT are therefore based merely on guesswork and surmises.
During the hearing the A.R requested us to allow the Department to make a reference to FT & TR Division of CBDT to make enquiries through the Competent Authority. However as the payments in question have been made by Sh. Bitthal Maheswari and not by IMT or Dr. Tomar no such permission needs to be given by us. The Department is free to take any action in the case of Sh. Bitthal Maheswari. However, from the clarifications given and the facts placed before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third 27 ITA No. 837 /JP/2017 Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur party outside India and there is no material on record to show that any such funds were provided by Dr. B. S Tomar. Therefore - merely on the basis of the fact that Sh Maheswari sent an endorsement of payment by email to Dr. B. S Tomar it is not possible to derive any adverse inference in the case of the applicant trust."
29. We find that the Settlement Commission has also reached at the same conclusion as we have arrived above that the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from his undisclosed sources of income.
30. In light of above discussions and in the entirety of facts and circumstances of the case, we donot find any basis for making the addition of Rs 1,84,35,000 in the hands of the assessee. The said addition is hereby directed to be deleted. The ground of appeal taken by the assessee is thus allowed.
31. Regarding Ground No. 3, briefly stated, the facts of case are that the AO observed that based on various seized documents and details collected during the course of post search investigation, the assessee and his wife have frequently travelled to foreign countries. The AO determined an amount of Rs. 2,70,050/- towards foreign tour expenses of Dr. Sobha Tomar and Rs. 3,33,750/- towards foreign tour expenses of the assessee and thereafter taking into consideration visa charges Rs. 1,14,000/-, determined total foreign tour expenses Rs. 7,71,800/-. It was further observed by the AO that the NIMS University has paid Rs.
28 ITA No. 837 /JP/2017Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur 4,54,900/- towards such foreign tour expenses and the balance amount of Rs. 2,62,900/- was determined as undisclosed expenses incurred in cash by the assessee and his wife as no proof with regard to the source was found during the search as well as post-search proceedings. A show cause was issued to the assessee and the response so submitted by the assessee was however, not found acceptable to the Assessing Officer. The AO brought to tax half of the total unexplained expenditure of Rs. 2,62,900/- to tax in the hands of the assessee. Further he has estimated expenses of Rs. 50,000/- on return trip to Milan and Rs. 22,000/- as return trip to Sharjah. The AO accordingly made an addition to Rs. 2,03,450/- in the hands of assessee.
32. Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) and submitted that during the course of search proceedings, no incriminating material or other evidence was found that the appellant has incurred foreign tour expenses, visa expenses and other expenses out of his undisclosed sources. It was further submitted that the assessee has incurred the foreign tour expenses out of his personal drawings of Rs. 10,17,138/- during the year. The ld. CIT(A) however confirmed the addition relying on the finding of the AO that the expenses of foreign tour on foreign travel is not relatable to drawings and no cash flow or evidence is submitted to show that such cash payment has been made out of the cumulative drawings made during the year. Further, ld. CIT(A) referred to the decision of the Settlement Commission which has also refused to recognize that expenses on such trips have been made from the accounts of IMT.
29 ITA No. 837 /JP/2017Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur
33. Now, the assessee is in appeal against the said findings of the ld CIT(A). During the course of hearing, the ld. AR reiterated the submissions made before the lower authorities and submitted that additions have been made on mere estimation and guess work without any incriminating material found during the course of search. It was further submitted that the assessee lives in a joint family in a house jointly owned by him and his wife, therefore, no rent is payable for residence. Besides, the assessee and the family members have drawn substantial amount of drawings in FY 2014-15 duly disclosed in their respective income tax returns. It was further submitted that the individual drawings of the assessee during the year comes to Rs. 10,17,138/- which is sufficient enough to take care of foreign tour expenses which have been brought to tax in the hands of the assessee.
34. We have heard the rival contentions and perused the material available on record. The AO has made an addition of Rs. 2,03,450/- on account of unexplained foreign tour expenses. The ld AR has reiterated the contentions raised before the ld CIT(A) and submitted that the assessee's drawings during the year are sufficient enough to explain the source of such expenditure. In support, our reference was drawn to the assessee's capital account for the financial year ended 31st March, 2015 which shows total drawings of Rs. 10,17,138/-. In absence of anything contrary on record, it would be reasonable to hold that the foreign tour expenses of Rs 203,450 are met out of such drawings. In the result, the addition made by the AO is hereby deleted and ground of the assessee's appeal is allowed.
30 ITA No. 837 /JP/2017Dr. Balbir Singh Tomar, Jaipur vs. ACIT, Jaipur In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court on 27/04/2018.
Sd/- Sd/-
¼fot; iky jko½ ¼foØe flag ;kno½
(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 27/04/2018.
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Dr. Balbir Singh Tomar, Jaipur
2. izR;FkhZ@ The Respondent- ACIT, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 837/JP/2017} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar