The Income Tax Appellate Tribunal, (Delhi Bench), has recently, in an appeal filed before it, held that no income addition can be made in respect of addition under the Black Money Act.
The aforesaid observation was made by the Delhi ITAT, when appeals were preferred before it by the Revenue, against a consolidated order of the CIT(A) 24, New Delhi, dated 23.08.2021, pertaining to A.Y.2013-14 and 2014-15.
The common grievance in both the appeals is that the CIT(A), has erred in deleting the addition made on a protective basis, without appreciating that the assessment under Section 10(3) of the Black Money Act, has not yet attained finality and is under sub-judice, the briefly stated the facts of the case are that a search and seizure operation under Section 132 of the Income Act was carried out on 07.04.2016. Accordingly, statutory notices were issued and served upon the assessee.
During the course of the assessment proceedings, certain information was available on the website of the International Consortium of Investigative Journalists (ICIJ), regarding Indians having undisclosed foreign companies and assets offshore.
The investigation was carried out by the Investigation Wing, Delhi, which revealed that the assessee was the Director and Shareholder of a BVI Company namely M/s. Everbez Business Inc.
Subsequently, the assessee was asked to explain his relationship with the said company who submitted that he is neither been a beneficial owner/ trustee/ settler in any foreign entity nor he has a foreign bank account after 01.04.1997.
Information was received from BVI under the tax information exchange agreement, and thereafter, information was also received from the competent authority of Singapore who informed that company M/s. Everbez business NIC had one bank account, with UBS AG Singapore dealing in three foreign currencies.
The AO further noted that there are huge credits in these bank accounts, and asked the assessee to furnish his explanation, thereby recording the assessee’s statement under Section 131 of the Income Tax Act. And thereafter, invoking the provisions of Black money (undisclosed foreign income and assets) and imposition of tax Act, 2015, the AO made his observations, thus initiating penalty proceedings under section 271 (1) (c) of the Income Tax Act, 1961.
The assessee challenged the matter before the CIT(A) and convinced the CIT(A) that the addition so made by the AO amounts to double addition and, therefore, the same should be deleted. The CIT(A) after considering the facts and submissions held that the additions in question be deleted. And, it is being aggrieved by the same, that the Revenue has preferred the instant appeal before the Tribunal.
Hearing the opposing contentions of either side, as submitted by Sh. Gautam Jain, the Advocate on behalf of the assessee, and Sh. B. S. Anand, the Sr DR, on behalf of the Revenue, and thereby perusing the materials available on record, the ITAT coram of C.V Prasad, the Judicial Member, and N.K Billaiya, the Accountant Member, observed:
“We have carefully perused the orders of the authorities below. Without going into the merits of the case, we are of the considered view that once additions have been made under the Black Money Act the same addition cannot be made under the IT Act on the same set of facts, therefore, the deletion of the addition by the CIT(A) does not call for any interference.”
Thus, the ITAT finally held:
“Hence, both the appeal by the revenue is dismissed.”
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