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IN THE HIGH COURT OF DELHI AT NEW DELHI

Decided on: 15.12.2016

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ITA 613/2004

COMMISSIONER OF INCOME TAX DELHI

..... Appellant

Through: Sh. Ashok. K. Manchanda, Sr. Standing

Counsel with Ms. Sherry Goyal, Advocates.

Versus

LATE SH. K.M. BIJLI THRU LR’S

..... Respondent

Through: Sh. Salil Kapoor, Ms. Ananya Kapoor, Sh.

Sanat Kapoor and Sh. Sumit Lal Chandani, Advocates.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT

HON'BLE MR. JUSTICE NAJMI WAZIRI

MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)

%

1. The question of law framed in this case is as follows:

upon surmises and conjectures?”

2. The original assessee died even before the proceedings commenced.

3. The brief facts are that the assessee, Late Sh. K.M. Bijli [hereafter

“Sh. Bijli”] was a tax payer. On the basis of an information received from

the UK tax authority through letter dated 12.05.1989, in terms of the Indo-

UK Double Taxation Avoidance Agreement [hereafter “DTAA”], the

appellant/Revenue reopened the completed assessment for AY 1982-83 by

reassessment notice dated 08.12.1992. Sh. Bijli died on 11.01.1992. 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 [hereafter “Sh.

Kumar”] –Sh. Bijli’s brother-in-law. The communication received from the

UK revenue authorities was that in the interview conducted in Sh. Kumar’s

counsel’s office (since Sh. Kumar was facing investigation for concealment

of income), Sh. Bijli made some statements that the amounts received by Sh.

Kumar was in reality his. In the course of the interview, Sh. Bijli appears to

have indicated that during his numerous visits (numbering 25) spanning

several years, he consistently made deposits in Kumar’s account which

aggregated to UK £2 million (the exchange value of which in 1992 was

about `2.4 crores).

4. The reassessment notice was opposed by the legal representatives of

Sh. Bijli but without success. In these circumstances, the assessment was

completed and the Assessing Officer (AO) brought to tax the sum of `2.4

crores. In doing so, the relevant discussion in the AO’s order is as follows:

business in United Kingdom.”

proceedings u/s 271(1)(c) are also initiated on this point.”

5. The matter appears to have been appealed against and after successive

remands, both at the original assessment and the appellate stage, the CIT(A),

after analysing the nature of the correspondence between the Indian tax

authorities and UK revenue authorities concluded that the evidence pointed

to interest income to the tune of UK £64,500/- and further amount of UK

£55,000/- in the account of one Sh. Chhabra and brought it to tax. The

assessee felt aggrieved and approached the Income Tax Appellate Tribunal

(ITAT). As to the correctness of the addition, based on the assumption that

the UK £2 million in fact and in reality belonged to the assessee, it was

urged that in the absence of any objective or cogent material, or even bank

statements, the statement attributed to Sh. Bijli and his brother-in-law Sh.

Kumar were ipso facto insufficient.

6. The Revenue, on the other hand, contended that these statements were

made in the course of proceedings that should be treated as regular having

regard to the nature of revenue loss in UK. The ITAT considered the letters

written by the UK authorities dated 10.07.1989 and 11.09.1989, shared under

the Indo-UK DTAA. It also took note of the letter written by the UK revenue

department in reply to the letter of Joint Secretary of the Govt. of India on

24.11.1988. The relevant extract of the letter written by the UK tax

authorities have been reproduced in the ITAT as follows:

Conventions.”

7. The ITAT carried out an analysis of the queries put to Sh. Kumar and

the materials considered, including the bank account statements in relation to

Sh. Ku