Income Tax Appellate Tribunal - Ahmedabad
Smt. Farzana Farooq Desai vs Dy. Cit on 20 December, 2000
Equivalent citations: (2002)74TTJ(AHD)507
ORDER
B.M. Kothari, A.M. This appeal is directed against the assessment order by the Deputy Commissioner Ahmedabad under section 158BD read with section 158BB(1) of the Income Tax Act, 1961, on 29-12-1997.
2. The assessee has raised the following grounds in this appeal :
1. In law and in the facts as well as the circumstances of the appellant's case, the order passed by the Deputy Commissioner (Assessment), Senior Representative 11, Ahmedabad, under section 158BD read with section 158BB(1) of the Income Tax Act is bad in law and without jurisdiction. In passing this order the assessing officer has failed to appreciate the following amongst others :
(a) He ought to have appreciated that the appellant very specifically informed the assessing officer vide her letter dated 14-10-1997, that she did not receive any notice under section 158BC, of the Income Tax Act and, therefore, the proceedings were ab initio void and without jurisdiction.
(b) He has further failed to appreciate that the appellant had requested in her letter dated 14-10-1997, that in case such notice was served, she may be furnished a copy of such notice along with the copy of the acknowledgement which has not been furnished and, therefore, the proceedings are without jurisdiction.
This Hon'ble Tribunal may, therefore, be pleased to hold the order passed by the assessing officer under section 158BD read with section 158BB(1) of the Income Tax Act is without jurisdiction and bad in law and the same be annulled.
2. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), S.R.-11, Ahmedabad, grossly erred in making the addition of Rs. 3.61 lacs as income from undisclosed sources in the form of investment in Flat No. 201, Moin Apartment, Ahmedabad, when no such addition is called for. In doing so he has failed to appreciate the following :
(a) The assessing officer has grossly failed to appreciate the cogent evidence produced by the appellant in the form of certificate from the employers, transfer of amounts, from Dubai through banking channels, etc.,S which has been ignored and addition made.
This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification for making the addition of Rs. 3.61 lacs and direct the deletion thereof.
3. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), SR-11, Ahmedabad, has grossly erred in making addition of Rs, 1,00,05,687 for the alleged unexplained investment in shares vide para 3.13 in various names when no such addition is called for. In doing so, he has failed to appreciate the following amongst others :
(a) As for the investment in shares by the appellant, viz., Smt. Farzana amounting to Rs. 61,00,302 he has failed to appreciate that these are fully explained by way of withdrawals from her bank accounts for which complete details were furnished which has been ignored without assigning any cogent reasons.
(b) He has failed to appreciate that the presumption arising out of the provisions of section 132(4A) are only restricted to the provisions of section 132 and do not extend to the assessment proceedings and, therefore, the burden was on the assessing officer to establish that the investment made in the shares which are not in the name of the appellant was actually made by the appellant. This burden has been discharged and the addition has been made on presumptions and assumptions and nothing more as is done.
(c) He has further failed to establish that the alleged market value of the shares at the time of purchase as adopted by him for making the addition was ten times the face value. Not even one instance of such market value is brought on record.
(d) He has further failed to appreciate that quite a large number of shares were purchased in public issue and not from the market as presumed.
(e) Without prejudice, the assessing officer has made double addition-Firstly as unexplained investment in shares and secondly as unexplained investment in FDR. He ought to have appreciated the investment in shares has been made out of overdraft taken on FDRs and ought not to have made addition under this head also.
This Hon'ble Tribunal may, therefore, be pleased to hold that there was no jurisdiction for making the addition of Rs. 1,00,05,687 and direct the deletion thereof.
4. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), SR-11, Ahmedabad, has grossly erred in making the addition of Rs. 72,21,040 for the alleged unexplained investment for FDR while no such addition is called for. In doing so he has failed to appreciate the following amongst others:
(a) He has failed to consider and appreciate the correct evidence in the form of certificate from the employers, transfer of amounts from Dubai through banking channels, the bank certificates, etc., in support of the sources of these deposits.
(b) He has further grossly erred in ignoring the evidence in the form of statement of the appellant recorded by the Asstt. Director of Income Tax Regarding the source of investment in FDR.
(c) He has further failed to appreciate that the appellant came to India permanently and the savings in Dubai were transferred to India in Non-resident Non-repartiable account through banking channels.
This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification for making the addition of Rs. 72,21,040 and direct the deletion thereof.
5. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), SR-11, Ahmedabad, has grossly erred in making the addition of Rs. 19,55,335 for the alleged estimated income on FDR at 15 per cent p.m. without bringing any evidence to that effect when no such addition is called for.
This Hon'ble Tribunal may, therefore, be pleased to hold that there was not justification for making the addition of Rs. 19,55,335 as the interest on FDRs in NR NR account is exempt under section 10 of the Act and further that the appellant has paid interest on overdraft taken against such FDRs and direct the deletion thereof.
6. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), SR-11, Ahmedabad has grossly erred in making the addition of Rs. 3,00,000 as undisclosed income for the assessment year 1994-95 allegedly as discussed in para 3.13 when no such addition is made in that para. This Hon'ble Tribunal may be pleased to direct the deletion of the same.
7. In law and in the facts as well as the circumstances of the appellant's case, the Deputy Commissioner (Assessment), SR-11, Ahmedabad, has grossly erred in making the addition of Rs. 3,00,000 for the alleged unexplained investment in F.Y. 1994-95 in the purchase of Maruti System Vehicle, when no such addition is called for more particularly when all relevant documents for such investment from finance obtained from GLFL has been filed.
This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification for making the addition of Rs. 3,00,000 and direct the deletion thereof.
3. Shri K.R. Dixit, the learned Advocate, appeared on behalf of the assessee. He briefly explained the facts of the case and stated that Shri Farooq Desai, husband of the appellant, was arrested while he was coming from Mumbai to Ahmedabad. The Officers of Marine and Customs (Preventive), Mumbai, on ll-10-1995, intercepted Shri Farooq Desai, when he was about to board the Jet Airways flight from Mumbai to Ahmedabad and foreign currency equivalent to Rs. 1.61 crores was found in his possession and the amount was seized. In the follow up action, the officers of customs (preventive) also searched the residence of Shri Farooq I Desai at Ahmedabad on l-10-1995, where share certificates, FDRs and other assets were found. They informed the Income Tax Department who also then conducted a search at the assessee's residence. Proceedings under section 158BC were initiated against Shri Farooq Desai under section 158BC and the assessment for the block period in his case was made on 30-12-1986. A notice under section 158BD was issued to the appellant on 31-10-1996. The assessee, in the grounds of appeal has challenged the service of the said notice. But the learned Departmental Representative in the written submission pointed out that the said notice was serviced on the assessee on the same day, i.e., on 31-10-1996, and also furnished a copy of the acknowledgement at page 8 of the paper book. The learned counsel appearing on behalf of the assessee did not dispute the correctness of this fact. The notice under section 158BD was thus issued and served on 31-10-1996.
4. Shri K.R. Dixit, the learned counsel, submitted that the assessment in question relates to 4 items of investments mentioned in para 3.1 of the assessment order which can be briefly described as under :
Rs.(1)
Investment in house property at 201, Moin Apartment standing in the name of the assessee-Smt. Farooq F. Desai 3,61,000 (2) Investment in various shares-certificates found and seized during the search operation 1,00,05,687 (3) Sources of deposits in various NR NR accounts 72,21,040 (4) Source of investment in Maruti Esteem Car 3,00,000
5. Shri Dixit, the learned counsel, submitted that the additions in respect of investments mentioned at serial Nos. 1, 2 and 4 above have been made in the hands of the appellant on protective basis. The addition in respect of investment mentioned at serial No. 3 namely-deposit in NR NR accounts has been made in the hands of the assessee on substantive basis.
6. Shri Dixit, the learned counsel contended that there cannot be a protective assessment under section 158BD. A plain reading of the language of section 158BD indicates that jurisdiction under section 158BD can be assumed by the assessing officer only in a case, where he is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132. Such a notice under section 158BD can be issued only after the assessing officer records his satisfaction that the assets in question belongs to such other person and were acquired out of his/her undisclosed income. It is, therefore, erroneous to say that additions in respect of above referred three investments were made in the hands of assessee on protective basis. Shri Dixit submitted that the learned senior Departmental Representative in his written submissions has inter alia, pointed out that the protective additions made in the case of the appellant were also made in the case of her husband and in the appeal in the case of her husband has been dismissed by the Tribunal. The issue relating to those three items of unexplained investments have reached the finality in the case of Shri Farooq I. Desai. Shri Dixit pointed out that the order passed by the Tribunal in the case of Shri Farooq I. Desai is an ex parte order and the memorandum of appeal submitted by Shri Farooq I. Desai was invalid and contrary to law. Shri Dixit pointed out that the Tribunal has not rendered any decision on the merits of the various additions in question. The husband of the assessee has jumped bail and is absconding. In any case, since the additions in the hands of the appellant have been made after recording the satisfaction as contemplated under section 158BD, the appellant is entitled to prove that all these assets mentioned at serial Nos. 1 to 4 belonged to her and those were acquired out of her explained sources. She can validly support all the grounds of appeal raised in the appeal submitted before the Tribunal.
7. Shri Dixit submitted that as regards the addition of Rs. 72,21,840 being assets mentioned at serial No. 3 is concerned, these deposits were made by the appellant in her Non-resident (Non-repatriable) Rupee Deposit Scheme (NR NR). These deposits in NR NR accounts cannot constitute income liable to tax in India as the deposits in such NR NR accounts could be made only by non-residents and the amount had to be deposited in foreign currency in an approved manner. The amount so deposited in NR NR accounts have their origin out of income of the assessee derived during her stay in Dubai. Shri Dixit submitted that he has submitted various documentary evidence in the paper book to establish a nexus between the funds accumulated by her from her foreign income with the deposits made in the NR NR accounts. He also submitted an application dated 10-11-2000, requesting for admission of additional evidence in relation to the sources of making deposits in NR NR accounts and also sources of other investments made in her name.
8. Shri Dixit then drew our attention to the application dated 10-11-2000, for admission of additional evidence. In this application it has been submitted that the assessee has informed the learned counsel that original documents were filed before the SAFEMA authorities and their copies were filed before the assessing officer during the proceedings. However, the appellant has no proof of filing, since no receipts were given. The documents appearing at serial Nos. 8 and 15 submitted in the paper book have been referred to in the assessment order by the assessing officer and the remaining documents in the paper book may be admitted as additional evidence. These documents are essential for supporting the assessee's case and they are required to be considered in the interest of justice. The assets found were in the name of present assessee but it is the department's case that they were actually purchased by assessee' husband in her name. These documents would show that they were in fact purchased out of her own hard earned resources. This is a substantial cause under section 29 of the ITAT Rules. The assessee has relied on the decisions of the Tribunal reported at Dwarika Prasad v. ITO (1999) 237 ITR 64 (AT) and Abhay Kumar Shroff & Anr. v. ITO (1999) 237 ITR 75 (AT).
9. Shri Dixit then drew our attention to the various documents submitted in the compilation which relate to the sources of purchase of flat, source ot investments in shares, source for purchase of Maruti Esteem car, source of deposits in NR NR accounts. After elaborately explaining the nature of evidence, Shri Dixit pointed out that these documentary evidence in the form of payments by cheques, copies of bank's statement, etc., are genuine documents and go to the root of the matter. For the sake of substantial justice, it is necessary to entertain the entire relevant evidence, so that the real ownership of the assessee over these assets and the source thereof can be fully examined by the assessing authority. Shri Dixit submitted that in case the additional evidence is entertained, it would be appropriate and proper to set aside the order passed by the assessing officer and restore the matter back to him for examination of the entire evidence and making a fresh assessment in accordance with the provisions of law. He, therefore, strongly urged that the assessment order should be set aside and the matter should be sent back to the assessing officer with the direction that he should examine the entire relevant evidence, which according to the assessee fully explain the sources of acquiring all those assets, out of appellant's own hard earned income.
10. The learned Departmental Representative relied upon the reasons mentioned in the assessment order and also drew our attention to the written submissions dated 11-10-2000, submitted by Shri Girish Dave, learned Senior Departmental Representative. The said written submissions are reproduced hereunder :
"Submission on behalf of the department :
I. Assessment without jurisdiction The assessee has challenged that she did not receive any notice under section 158BD and, therefore, the proceedings were bad in law and without jurisdiction.
In this regard, kind attention is drawn to the proof of issue and service of notice as per the copy of notice issued on 31-10-1996, in the name of the assessee and served upon her on the same date which is enclosed at page 8 of the Departments paper book submitted before the Hon'ble Tribunal on 5-10-2000 II. Investment in house property at 201, Moin Apartment for Rs. 3,61,000 The addition was made in the hands of the assessee on protective basis and in the hands of Shri Farooq Ibrahim Desai, husband of the assessee on substantive basis. Hon'ble Tribunal in the case of husband has dismissed the appeal and, therefore, said issue has reached a finality in the case of Shri Farooq Ibrahim Desai.
III. Addition of Rs. 1,00,05,687 on account of investment of shares In respect of this item also, substantive assessment was made in the hands of Shri Farooq Ibrahim Desai husband of the assessee and protective assessment was made in the hands of the assessee. Hon'ble Tribunal has dismissed appeal in the case of Shri Desai and, therefore, the said issue also has reached a finality.
IV. Addition of Rs. 72,21,040 in respect of unexplained investment in FDRs
(i) The details of investment in FDRs are as under :
A/c No. Bank Date of Deposit Amount Rs.(1)
NR NR VCC Vijaya Bank 10-11-1993 38,21,000 (2) FDR No. 1839 NR NR BOB 17-5-1993 6,00,000 22-5-1993 4,00,000 (3) FDR No. 18328 SBI NR NR No. 703664 9-7-1993 24,00,000 Total :
72,21,000
(ii) The assessee has sought to explain the investment by claiming that she was paid U.S. $ 1,90,000 Rs. 38,21,000 from M/s. TANB Trading Est. wherein she was working. She has filed certificate from the said concern, which is available at page 20 of the assessee's paper book (hereinafter referred to as the AFB). In this regard, kind attention of Hon'ble Members is drawn to another certificate dated 5-12-1995 of the said concern which has been filed in the department's paper book(hereinafter referred to as the DPB) at page 9. The certificate which has been filed by the assessee in her paper book is dated 24-2-1997 whereas the certificate filed by the department is dated 5-2-1995. If we compare the two certificates, certain discrepancies are clearly noticeable, which are summarised as under :
Sl. No. Certificate dated 5-12-1995 Certificate dated 24-2-1997 (1) The assessee was in employment as a sales-executive.
She is stated to the working partner having share in the profit of firm.(2)
Period from 1-10-1984 to 31-1-1990 shown Period given is 1984 to 1990 (3) There is no mention of any sum having been paid on her retirement on 31-1-1990 There is mention of payment of U.S. $1,90,000 in lieu of her share in the profits of firm.(4)
The certificate is said to have been issued at the request of the assessee.
There is no such indication.
(iii) The only similarity in both the certificates is for payment of monthly salary of 3,800. Dirhams Per month + 1 per cent commission on sales. The certificates of both the dates do not mention any details of sales for a particular year and commission earned by the assessee @ 1 per cent on such sales.
(iv) The certificate dated 24-2-1997 which indicates the payment of US $ 1,90,000 does not bear signature of any responsible person of the said concern, TANB Trading Est.
(v) On the one hand, the assessee states that she got US $ 1.9 lakhs (Rs. 38,21,000) on her retirement from the said concern which were put in Citi Bank from time to time (ref. page 5 of APB-last line), the concern TANB Trading Est. in their certificate (p 20 of APB) certifies that on her retirement in the year 1990, she was paid US $ 1,90,000 in lieu of her share in the profits of the firm.
(vi) Citi Bank Dubai (page 21 of APB) confirms in their letter dated 8-12-1995 that they had FD NR deposit in her name for the period from 29-12-1990 to 21-1-1993. She retired from the firm on 31-1-1990. There is a huge time gap of almost 10 months and assuming for a moment that TANB Trading Est. paid her this sum, the question which arise are :
1. When did the TANB Trading Est. made the payment?
2. In what mode, the said payment was made?
3. Where was the same deposited?
4. Copy of bank account if any, if the money was lying in a bank.
5. In her bank account with Bank Sederate Iran, she had credit balance only of 5142.99 as on 16-10-1989, as per the copy filed in the course of assessment proceedings.
6. In para 6.2 pp 5 and 6 of APB, it is seen that US $ 1,22,000 was transferred to Vijaya Bank by Citi Bank, Dubai.
7. There is no evidence in respect of corresponding source for the remaining FDRs of Rs. 6 lakhs, Rs. 4 lakhs and Rs. 24 lakhs.
(vii) In the circumstances, that even the source for the FDR of Rs. 38,21,000 is not sufficiently proved, it is submitted that the addition made on this account needs to be sustained.
(viii) Kind attention is also invited to para 3.18 at page 8 of the assessment order estimating interest income by the assessing officer. The assessing officer has calculated interest @ 15 per cent p.a. on all 3 FDRs. It is noticed that an amount of Rs. 11,17,335 being interest calculated by the assessing officer has not been included in the final computation in para 4 at page 9 of the order. It is, therefore, submitted that this being mistake apparent on record may kindly be considered for inclusion in the income for block assessment.
(ix) Addition of Rs. 3 lakhs in respect of purchase of Maruti Esteem car The addition was made in the hands of the assessee on protective basis and in the hands of Shri Farooq Ibrahim Desai, husband of the assessee on substantive basis. Hon'ble Tribunal in the case of husband has dismissed the appeal of Shri Farooq Ibrahim Desai. and, therefore, said issue has reached a finality in the hands of the husband Shri Farooq Ibrahim Desai."
11. We have carefully considered the rival submissions and have perused the order of the assessing officer as well as all other documents to which our attention was drawn during the course of hearing.
12. The Tribunal vide its order dated 20-12-1999 in IT (SS) No. 4837/Ahd/1996 in the case of Shri Farooq Ibrahim Desai, against the assessment order for the block period made by the assessing officer under section 158BC has dismissed the appeal as no one attended on behalf of Shri Farooq I. Desai and also because the memorandum of appeal was invalid and contrary to law, The Tribunal in the case of the husband has not given any finding on merits of various additions made in his assessments for the block period.
13. We will first consider the assessee's submissions that there cannot be a protective assessment under section 158BD and even if certain additions are described as additions made on protective basis, it in fact amounts to addition made on substantive basis and the assessee is entitled to explain on merits that such additions are patently wrong and that the assets really belong to her and those were acquired out of her explained sources. Such assets belonging to the assessee which were acquired by her out of her hard earned income cannot be considered as assets, acquired out of undisclosed income/undisclosed sources.
14. Section 158BD is reproduced hereunder :
"158BD. Undisclosed income of any other person.Where the assessing officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the assessing officer having jurisdiction over such other person and that assessing officer shall proceed against such other person and the provisions of this chapter shall apply accordingly."
A plain reading of this section clearly shows that the said provision can be invoked only if the assessing officer is satisfied that any undisclosed income belongs to some person other than the one with respect to whom search was made under section 132.
15. In order to understand the true meaning and scope of the expression "satisfied", we can make a useful reference to the Commentary of Income Tax Laws Chaturvedi & Pithisaria's Edn. Vol. 5 at page 8635. The relevant extract is reproduced hereunder :
"Satisfactionimport of,To be satisfied with a state of things means to be satisfied in one's own mind. Satisfaction is essentially a condition of the mind. The phrase 'is satisfied' means 'makes up its mind'; per Lord Pearson in Blyth v. Blyth (1966) 1 All ER 524, 541). Dixon, J., defined it as 'actual persuasion'. That means a mind not troubled by doubt, or to adopt the language of Smith, J, 'a mind which has reached a clear conclusion' (Angland v. Payee, (1944) NZUR 610, 626). Thus, the assessing officer, in the course of proceedings for the assessment, or the first appellate authority in the course of the appeal hearing, has to form a prima facie view that it is a case, where, subject to what the assessee may have to say, he should initiate penalty proceedings so that the majesty of the law is upheld. He must reach a clear conclusion that a good ground exists, for launching penalty proceedings. It is this satisfaction which is the foundation of action for imposition of penalty (Jiten & Co. v. STO (1977) 39 STC 388, 312 (Del))."
Satisfaction required under section 158BD should precede the issue of a notice under section 158BD to such other person. In other words, assessing officer should reach a clear conclusion that the assets and income in question really belong to such other person, other than the person with respect to whom the search was made. Such satisfaction should not be embedded with an element of doubt or uncertainty or any kind of confusion about the ownership of such other person over the assets and income in question.
16. It may also be relevant here to refer to the judgment of Hon'ble Gujarat High Court in the case of Khandubhai Vasanji Desai & Ors. v. Dy. CIT & Anr. (1999) 236 ITR 73 (Guj) in which the constitutional validity of the provisions of section 158BD of the Act were challenged. The Hon'ble Gujarat High Court, inter alia made the following observations while upholding the constitutional validity of the said provision. At page 93, the Hon'ble High Court observed as under :
"However, if it is found that any of the undisclosed income belongs to someone else, which may happen at any point of time after the material is seized pursuant to the authorisation either when the statement is recorded under sub section (4) of section 132 or even thereafter when the raided person is required to file the return in Form No. 2B in cases which fall in Chapter XIV-B and the assessing officer may be satisfied that some part of the undisclosed income really does not belong to the raided person who is being proceeded against and that it belongs to some other person that the occasion arises for the first time to proceed against such other person. Thus, the satisfaction which the assessing officer is required to reach for proceeding against such other person as contemplated by section 158BD of the Act is entirely a different matter from the reason to believe that the designated authority is required to have on the basis of the information in his possession for the purpose of issuing an authorisation for search and seizure under section 132(1) of the Act."
At page 96, the Hon'ble Gujarat High Court has observed :
"Once the satisfaction under section 158BD is reached by the assessing officer, there would be no valid reason for him to delay the issuance of the notice which ought to be issued soon after the satisfaction is reached and if the assessing officer is different, he ought to immediately transmit the relevant material in the assessing officer, having jurisdiction to enable him to proceed against such other person by issuing notice under section 158BC requiring him to file the return. Since the satisfaction that any undisclosed income belongs to any person other than the one with respect to whom search was made or books of account, documents or assets requisitioned, may, in many cases be reached after the assessing officer starts the proceedings under section 158BC against the person with respect to whom the search was made, the shift of the commencement point of the limitation to the date of the notice, which could be issued to such other person only after it comes to light leading to the satisfaction of the assessing officer that any undisclosed income belongs to him, was fully justified and it was germane to the object of making block assessment of the undisclosed income of such other person, who is now known as a person to whom that undisclosed income belongs."
It is amply clear from the aforesaid observations made by the Hon'ble High Court and a plain reading of the section 158BD, that before assuming jurisdiction under section 158BD, the assessing officer should be satisfied that some of the undisclosed assets/income found during the course of search or discovered as a result of post-search/investigation does not belong to the raided person but it belongs to some other person, then the occasion arises to proceed against such other person. It is, therefore, clear that the assessing officer in the present case, arrived at a satisfaction that the assets and income in question really belonged to the assessee and, therefore, the appellant has a right to explain the source of acquisition of all the assets belonging to her; and the order passed by the Tribunal in the case of husband of the assessee cannot disentitle the assessee to explain the source of the assets belong to her and also to produce necessary evidence to establish that such assets were acquired out of her own income and funds.
17. We may now consider the question relating to nature of evidence, sought to be adduced as additional evidence in relation to explaining the source of various assets.
18. The assessee explained before the assessing officer that the flat at 201, Moin Apartment, Ahmedabad was purchased by her partly from her own funds and partly from the money loaned to her by her father-in-law, Shri Ibrahim Desai. These facts have been mentioned in para 3.4 of the assessment order. The assessee explained that one Honda Car was brought by her from Dubai in August, 1989. A copy of bill of entry dated 1-8-1989, is sought to be adduced as additional evidence to support this fact. This car was sold and the sale proceeds were claimed to have been deposited in her bank account with Dena Bank. To corroborate this contention copy of bank statement with Dena Bank has been produced which inter alia shows that a deposit of Rs. 6 lakhs was made in August, 1989, in assessee's aforesaid bank account. On the basis of this circumstantial evidence, the assessee desires to prove that part amount for purchase of flat was paid out of her own funds accumulated in the said bank account. The balance amount was claimed to have been given by way of loan by assessee's father-in-law Shri Ibrahim Desai for purchase of the said flat. In order to support this contention, the learned counsel referred to the copy of affidavit of Shri Ibrahim Desai dated 17-4-1997, which according to the assessee was furnished before the assessing officer but no proof or acknowledgement is available with them. In this affidavit Shri Ibrahim Desai has affirmed that he was Superintendent in the Excise & Prohibition Department prior to his retirement on 1-4-1971. He has confirmed that he paid Rs. 1,70,000 to Moin Association on behalf of his daughter-in-law Mrs. Farzana Farooq Desai for purchase of the residential flat. The details of cheque numbers and amount, etc., have also been given. Photocopy of bank account of Shri Ibrahim I. Desai has also been furnished in the paper book. The learned counsel submitted that Moin Association in their receipts have given the cheque numbers which will establish that cheques were given by the assessee's father-in-law directly to the said society for purchase of flat by the appellant. He drew our attention to receipt No. 133, dated 13-11-1988 (page 19 of paper book) in which a cheque of Rs. 29,500 on Dena Bank dated 13-11-1988, and cheque for Rs. 41,000 have been mentioned. A copy of bank account of Shri Ibrahim, submitted at page 11 shows that cheque No. 254 for Rs. 29,500 was debited by Dena Bank in bank account No. 425 in the name of Shri Ibrahim I. Desai. The narration in the pass book also shows that the cheque was given to Moin Association. Likewise a certificate of State Bank of Saurashtra has been placed at page 12 of the paper book which shows that a cheque for Rs. 41,000 dated 18-11-1988, was given in favour of Moin Association which was drawn on Bank Account No. 4909 of Shri Ibrahim Ismailbhai Desai. Shri Dixit submitted that like this, the assessee can prove that the entire amount of Rs. 1,70,000 given by way of loan by her father-in-law stands fully corroborated by such payments made through cheques to Moin Association.
19. As regards the investment in shares aggregating to Rs. 1,00,05,687, the learned counsel submitted that a major part of the investment in shares were, made out of overdraft taken by the assessee from Vijaya Bank on the security of deposit in her NR NR account. In order to establish a nexus between the funds drawn from overdraft taken from Vijaya Bank with the investment in shares, the learned counsel drew our attention to the details given by the share-broker for receiving the payment by cheques with the copy of overdraft bank account with Vijaya Bank given in the compilation at per page 23 to 26. The copy of statement from share broker Shrinath Investment appears at per page 31 to 26 of the paper book. At page 35, the broker has inter alia indicated that he received cheque No. 633128 of Vijaya Bank for Rs. 2,43,433 on 3rd October. This amount has been debited in the overdraft bank Account No, 2080 by Vijaya Bank on 1-10-1994 with the same cheque No. 633128. Like this, the learned counsel explained a direct nexus between the cheques drawn on overdraft account on Vijaya Bank and the cheques acknowledged by the share-broker. The assessee has also submitted a certificate dated 19-9-1996 issued by the Chief Manager, Vijaya Bank, certifying that the appellant is having overdraft Account No. 2080 with them against the security of NR NR RD (VCC) deposit No. 20/1993 dated 10-11-1993, which is one of the accounts mentioned in para 3.6 of the order containing details of deposits in NR NR account aggregating to Rs. 72,21,840. The deposit in NR NR (VCC) account No. 20/93 made on 10-11-1993 was Rs. 38,20,040. Shri Dixit submitted that investment in shares standing in the name of the appellant were acquired out of funds drawn from the aforesaid overdraft account.
20. As regards the source of Maruti Esteem car, the learned counsel drew our attention to the documents submitted at page 37 of the paper book. This document is a copy of purchase order dated 28-3-1995, which shows that the appellant acquired this car on lease basis from Gujarat Lease Finance Ltd, The assessee also drew our attention to a copy of letter dated 18-11-1996, from G.L.F. Ltd. to the assessee giving an intimation of dishonour of one of the cheques of Rs. 24,816. He submitted that instalment of Rs. 24,816 was payable by the assessee for payment of purchase price of the aforesaid car. The instalment of Rs, 24,816 has been paid out of the same overdraft account with Vijaya Bank from time-to-time. A perusal of the copy of the said bank account at page 25 of the compilation shows that on various dates, there is a debit of Rs. 24,816 in the said bank account with Vijaya Bank.
21. As regards sources of deposit in NR NR account aggregating to Rs. 72,21,040 Shri Dixit drew our attention to the copy of letter dated 24-2-1997 given by TANB Trading Est. (p. 20 of P.B.) in which they have certified that Mrs. Farzana F. Desai (appellant) was a working partner having a share in the profits of the firm during the period from 1984-1990 at Dubai. She was drawing monthly salary of 3,800 Dhs. plus a commission of one per cent on sales. On her retirement in the year 1990, they paid her $ 1,90,000 (U.S.) dollars in lieu of her shares in profits of the firm. Then he drew our attention to a certificate dated 9-12-1995 from Citi Bank, Dubai (page 21) confirming that they had a FCNR deposit in the name of Farzana Farooq Desai for US $ 1,90,000 for the period from 29-11-1990, to 29-11-1993. The deposit in NR NR (VCC account) was made on 10-11-1993. Shri Dixit submitted that the said fixed deposit with Citi Bank, Dubai might have been encashed on a premature date and those funds have been transferred through the approved channel for depositing in NR NR (VCC) account.
22. It may be relevant here to refer to the written submissions submitted by the learned Senior Departmental Representative. In para 4(vi) while referring to this document, he has pointed out certain facts which require further investigation. This indicates that the learned Senior Departmental Representative was also of the view that before accepting the contents of such documentary evidence, further investigation will be necessary.
23. The aforesaid facts and discussion reveal that the documents which are sought to be adduced as additional evidence mostly consist of bank documents, payments by cheques, transfer of foreign currency through approved banking channels, etc. The genuineness of such documents can be verified from the records of the concerning banks or by requiring the assessee to produce further corroborative evidence. The evidence as sought to be submitted by way of additional evidence goes to the root of the matter and is considered necessary for determining the question as to whether the assessee is the real owner of all the assets in question and whether such assets were acquired out of her own funds and income and whether such sources are adequately explained by necessary and reliable evidence and material or not. During the course of hearing Shri Dixit had also stated that final order of SAFEMA authorities is also still awaited. The assessee also stated in the application dated 10-11-2000, that copies of these documents were filed before the assessing officer, but the appellant has no proof of filing since no receipts were given. The learned Departmental Representative has not submitted any comments on this factual statement given in assessee's application dated 10-11-2000. Let us now examine the ratio of the decision cited by the learned counsel. The Tribunal, Patna Bench in the case of Dwarka Prasad v. ITO (supra) considered the question relating to powers of the Tribunal to admit additional evidence under rule 29 of Income Tax Appellate Tribunal Rules, 1963, and also the powers of Commissioner (Appeals) under rule 46A. The Tribunal inter alia held as under :
"Under rule 29 of the ITAT Rules, 1963, the powers of the Tribunal to receive additional evidence, in the appeal before it are just like the powers of a civil court under 0.41, rule 27. If the Tribunal comes across a crucial document like a bank document to prove all the three ingredients essential to establish the truth of the cash credit, it will not be in the interests of justice to deny admission of such crucial evidence into the records by simply stating that it was not produced before the assessing officer but it was produced at a later stage. The bank account cannot be manufactured or connected to suit the convenience of any party. An extract of the books of account maintained by the bank is very much relevant under the Bankers Books Evidence Act, 1891. The Accountant Member was, therefore, not justified in rejecting the additional evidence or in concurring with the decision of the Commissioner (Appeals) in rejecting the additional evidence produced before him."
The Tribunal in the case of Abhey Kumar Shroff & Anr. v. ITO (supra) has held as under :
"Held, per R.D. Agrawala and Abdul Razack (JM) : V.K. Sinha (AM) (dissenting), (i) that the documents sought to be admitted as evidence, were the correspondence between the assessee and the HUF landlord during the relevant period and letters of almost the same period which emanated from the Assistant General Manager, Union Bank of India, Bombay 2, containing terms of lease and the advancement of loan of Rs. 11.40 lakhs. The first ground of appeal challenging the disallowance of interest amounting to Rs. 1,16,250 paid to the bank. The other substantial dispute in these appeals was in respect of the treatment of the amount of deposit in a sum of Rs. 7,75,000 given by the bank to the HUF, the transaction claimed in consideration of commercial expediency to enable the bank to get the premises in question at a much lower rent than the market rent. The plea further taken by the assessee was that the rental income earned by them out of the renting of the premises was quite high even after deducting the interest paid in the bank and as such there was no justification for the Department to negate their claim. Patently those documents would enable the Tribunal to pass orders effectively and their absence might not unfold the actual controversy and lead to a miscarriage of justice. This additional evidence had to be admitted in evidence."
24. On a careful consideration of entire relevant facts and the decisions relied upon by the learned counsel, we are of the view that it would be necessary in the interest of justice and fairness that the additional evidence sought to be adduced by the assessee should be entertained. After entertaining the application for admission of additional evidence, it would be necessary on the facts and circumstances of the present case to set aside the order of the assessing officer and restore the matter back to his file for making a fresh assessment de novo after allowing the assessee to furnish necessary evidence before him. The assessing officer will also be entitled to conduct further investigation, as he may consider proper. The assessing officer will also ascertain from the SAFEMA authorities about the final decision, that might have been taken by them under the relevant provisions of law. The learned counsel had also relied upon circular issued by the R.B.I. recording N.R. N.R. Rupee Deposit Scheme and Notification No S.O. 653(E), dated 31-3-1992 (1992) 198 ITR 174 (St.) clarifying that interest on deposit in NR NR account is exempt under section 10(15)(i). The assessing officer should consider this submission also while making fresh assessment in accordance with the provisions of law. The assessing officer, will make the fresh assessment after providing adequate and reasonable opportunity to the appellant.
25. In the result, the appeal is allowed for statistical purposes.