Addition for undisclosed foreign bank account deleted as info received wasn’t bank statement

Addition for undisclosed foreign bank account deleted as the information received in pen drive under DTAC lacked basic essentials of a bank statement.   

In the instant case, the assessee was aggrieved by the order of the CIT(A) confirming the addition u/s 69 of the Income Tax Act, 1961 (the Act) made by the Assessing Officer (AO) on account of undisclosed foreign bank account.

ABCAUS Case Law Citation
ABCAUS 3510 (2021) (06) ITAT

Important case law relied referred:
CIT Vs Anand Kumar Jain (HUF)
Pr. CIT vs Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.)
CIT vs Harjeev Aggarwal (2016) 290 CTR 263 (Del.)
Vascroft Design Pvt. Ltd. vs ACIT
Shri Nirmal Kumar Kedia vs DCIT
Brij Bhushan Singhal vs ACIT   
Krishan Kumar Modi vs ACIT   
Anurag Dalmia vs DCIT   
Bishwanath Garodia vs DCIT

The AO had received received an extract of the bank statement containing assessee personal details as the account holder.

This document was handed over under Article 28 of the DTAC between India and France.

Based on this information a search and seizure operation u/s 132 of the Act was carried out at the premises of the assessee on the premise that the assessee owned an account at HSBC Geneva Switzerland containing substantial credits which are not disclosed to the department.

A statement u/s 132(4) of the Act was recorded on the date of the search in which the assessee admitted having the said foreign bank account.

However, during the proceedings u/s 153A, the assessee retracted the statement and stated that he did not have any foreign bank account.  It was also stated by the assessee that no incriminating documents relating to any foreign bank account was found and seized during the course of search.

Before the Tribunal, the assessee submitted that the statement recorded during the course of search was obtained under coercion and as per settled law no cognizance of such statement can be taken.

He also contended that statement recorded u/s 132(4) does not constitute incriminating material and no addition can be made on the basis of statement alone without any reference to material gathered during the course of search operations.

With regard to the information received from French Competent Authority on the basis of which the AO has made the addition, it was submitted that there was no authenticity to the information received by way of pen drive. It was not that the information was obtained from Bank. Also, the source of information with French Authority, its author, basis has not been revealed despite repeated request. 

The Tribunal observed that as contended by the assessee, the said document lacked the basic essentials of a bank statement. Investigation Wing itself referred to the said document as ‘base sheet’.

Further the Tribunal noted that AO had made request to Swiss Competent Authority for bank statement of the assessee which indicated that the AO was otherwise not in possession of the bank statement.

The Tribunal expressed agreement with the argument of the assessee that the information contained in pen drive, the source thereof and author thereof and the authenticity of the information contained had not been established with any credible evidence or linkage with any of the document. The pen drive so received was just like an anonymous letter forwarded by French Competent Authority to the Indian Competent Authority.

The Tribunal held that any document  which  though is in the   nature of incriminating material but if it is not found in the   course  of  search, such  an  addition cannot  be  roped   in  the  assessment  u/s 153A

In view of the above, the Tribunal set aside the Orders of  the authorities below and deleted the entire additions.

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