By TIOL News Service

NEW DELHI, NOV 21, 2017: THE ISSUE BEFORE THE COURT IS - Whether when assessment order was based on FIR filed by CBI, which itself has aquitted Assessee from offence of benami property transactions in USA in the charge sheet, no further additions can be made u/s 69 in the hands of Assessee. YES is the verdict.

Facts of the case:

The Assessee is a former Chief Executive Officer in the Delhi Jal Board and was charged with having manipulated the award of contract. Accordingly, he was prosecuted. The contract was awarded to one M/s. Kaveri Infrastructure Pvt. Ltd. and M/s. Pipeway Ltd., a New Zealand based entity. The subject matter of the addition was a loan of US Dollar 6,59,000/- given to one Mr. Vijay Kumar Kataria, who had executed the power of attorney in favour of the assessee’s Son-in-law Sh. Mohit Mehra. These amounts were sought to be included in the hands of Assessee as Benami and brought to tax u/s 69. On appeal, the CIT(A) reversed the AO.

High Court held that,

++ the CIT(A) reversed the AO’s findings, holding that FIR mentions that the contractor Sh. Vijay Kumar Kataria had executed power of attorney in favour of Assessee's son-in-law Shri. Mohit Mehra and Sh. Mohit Mehra signed various documents to obtain bank loan of ,29,500. The only link between Assessee and the property is the power of attorney in favour of Assessee's son in law and the documents signed by the son in law to obtain the bank loan. This evidence mentioned in the FIR is not adequate to conclude that Assessee have property in USA valued at Rs.2,86,86,270/- as done in the assessment order by the AO. The assessment order also mentions that if the CBI files no charge sheet after the completion of the investigations, the Assessee can obtain suitable relief from appellate authorities. In the final charge sheet filed by CBI, there is no mention about the property transactions in USA. The CBI court stated that Assessee was not found guilty of even on this charge. Since, the assessment order was based on the FIR filed by the CBI and as the CBI itself had not found any material to pursue the matter regarding the property transaction in USA against Assessee in the charge sheet, the addition of Rs.2,86,86,270/- is not sustainable as the addition was not made on the basis of any evidence. It is mentioned clearly even in the FIR that the property was purchased by Sh. Vijay Kumar Kataria only and therefore it cannot become the income for Assessee on the premise that Assessee's son in law has power of attorney over such property for some period of time;

++ the ITAT affirmed the findings after noticing that the assessee had been acquitted by the competent court. Having regard to the circumstances, the findings and the facts, the Revenue has not been able to premise its claim upon its link through power of attorney under the provisions of the Act or any other related enactments. The Court is of the opinion that no substantial question of law arises.

(See 2017-TIOL-2437-HC-DEL-IT)