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CASE LAW

2016-TII-69-HC-DEL-INTL

CIT Vs LATE SHRI K M BIJLI: DELHI HIGH COURT (Dated: December 15, 2016)

Income Tax Act - Sections 147, 148 - India-UK DTAA.

Keywords - completed assessment - delay - probe - reassessment - reopening of assessment

The assessee, Late Sh. K.M. Bijli ["Sh. Bijli"] was a tax payer. On the basis of an information received from the UK tax authority in terms of the Indo-UK DTAA, the Revenue reopened the completed assessment for AY 1982-83. The assessee died in the year 1992. The basis for the reopening of the completed assessment was a statement made by Bijli on 06.06.1983 to the UK revenue officials, who had suspected evasion of income on the part of one Sh. K.L. Kumar ["Sh. Kumar"] – Sh. Bijli's brother-in-law. It was revealed that during his numerous visits spanning several years, the assessee consistently made deposits in his brother in law's account which aggregated to UK £2 million (the exchange value of which in 1992 was about Rs.2.4 crores). The assessment order was confirmed by the CIT(A). The Tribunal carried out an analysis of the queries put to Sh. Kumar and the materials considered, including the bank account statements in relation to Sh. Kumar as well as Sh. Chhabra. It was of the opinion that since UK revenue authorities did not accept the assessee's explanation, particularly, that the amounts deposited belonged to him, there could be no question of assessing him since such amounts have been brought to tax in the UK.

Having heard the parties, the High Court held that,

Whether a completed assessment can be reopened a decade later when the assessee has deceased, merely based on information received from UK authorities under India UK DTAA in absence of any further probe by Indian revenue authorities - NO: HC

++ no doubt, the letters received from the UK authorities were sufficient to trigger a reassessment proceedings but exactly that is where the Revenue, in our opinion, faltered. Having received information, it could well have proceeded through a reassessment proceeding at the earliest opportunity, i.e. in October 1989 or latest by December of that year, the revenue chose to wait for three years and sought to reopen at least a decade-late completed assessment. By then the assessee had died. There are certainly pointers to interesting omissions and in any event, leads that could have been developed by the AO, such as queries to the Bank of India, for foreign inward remittances and their source. If the assessee were alive, upon receipt of such information, he might well have been confronted with them. The lack of any probe in this regard and almost exclusive reliance upon the UK revenue information, was not sufficient to conclude that the amount which was attributed to the deceased assessee, i.e. UK £2 million in fact belonged to him. In fact, the materials show that these amounts were brought to tax in the hands of Sh. Kumar. Rather than accepting what ought to be the correct standard, this Court is of the opinion that the tax authorities did not do what they could have and had not done what they should have when they did get information in September 1989 and woke-up far too late.

Revenue's appeal dismissed