In a recent decision, the Delhi High Court ruled that the completed assessment can be reopened only if incriminating material is found during search under Section 132 of the Income Tax Act, 1961.
The issue for consideration was whether the Income Tax Appellate Tribunal (ITAT) fell into error in setting aside the sums brought to tax by the AO under Section 153 A of the Income Tax Act in the circumstances of the case?
The counsel for the revenue submitted that the information based on which the impugned addition was made was available to the respondent/revenue “before the search action was carried out on 14.11.2011.Since the appellant/assessee had taken the position that he did not maintain the subject account with the Geneva branch of HSBC Bank, a communication was addressed to the concerned Swiss authorities on 10.05.2012, followed by reminders. However, to date, no information has been received. Significantly, the dates on which reminders were sent have not been set forth in the affidavit.
It was also noted that although, the appellant/assessee had been asked to execute consent waiver forms on multiple occasions so that the bank statement could be obtained from the concerned Swiss authorities, he refused to sign the consent form. Therefore, denial by the respondent/assessee as regards the ownership of the subject account demonstrates that there is wilful concealment of income by him.
A Division Bench comprising observed that “The absence of incriminating material has persuaded us to take this view. As indicated hereinabove, no incriminating material, even according to the respondent/revenue, was found during the search. Furthermore, the material on which the respondent/revenue relied on was not of a quality that would persuade us to hold that the stand taken by the appellant/assessee, which is, that he did not maintain an account with the Geneva branch of HSBC Bank, was incorrect.”
“Given the conclusion that we have arrived at and the position of law enunciated in the judgments referred to hereinabove, i.e., Kabul Chawla and Abhishar Buildwell P. Ltd., that a completed assessment can be reopened only if incriminating material is found during the course of search under Section 132 of the Income-tax Act, 1961, the question of law is answered in favour of the appellant/assessee and against the respondent/ revenue” the Bench concluded.
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