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2014 (12) TMI 335
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....tion of mind, objection of the reopening was not deal with, the purported reasons recorede3d were served beyond limitation period, hence the notice is bad etc. 2. Addition on account of alleged undisclosed income- Rs. 2,34,64,398/- (original Ground no.4) The ld. Commissioner of Income Tax (Appeals), erred in confirming the order of the Assessing Officer making an addition of Rs. 2,34,64,398/- on account of alleged undisclosed income, without appreciating the fact that the alleged trust was discretionary trust as neither the amount was accrued nor credited to Appellant's name, hence addition cannot be made in the hands of the Appellant. 3. Not adjudicating the alternative ground regarding taxability of income only (Original Ground no.4). Without prejudice to the above, the learned CIT(A) erred on facts and in law in not adjudicating the alternative grounds regarding the taxability of income only of US $ 13,500/- earned by the alleged trust and not the amount outstanding of US $24,06,604.90/- as at 31st December, 2001. 4. Original Ground no.5 The above grounds of appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete ....
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....sessee was made aware about the names of the beneficiaries, bank account. Our attention was invited to section 106 of the Evidence Act (burden of proving fact) by contending that the department got these authenticated documents which were provided to the assessee also, therefore, reopening is valid. It was pointed out that the assessee was summoned by the Revenue authorities but she/they did not appear before the AO and even sought adjournment during remand proceedings which was granted, convenient date was fixed and even on that date the assessees did not appear. It was submitted that money was arranged by the beneficiaries to the local jurisdiction because distribution of assets was not liable for further taxation at that place (where account of the trust was opened ) but liable for taxation in India. 2.2. We have considered the rival submissions and perused the material available on record. Since identical facts/issues are involved and all the assessees are relatives, therefore, these appeals are being disposed of by this common and consolidated order. In the case of Shri Mohan Manoj Dhupelia the facts in brief are that the assessee filed return of income u/s 139(1) of the Ac....
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....clients. The obligation to maintain secrecy shall not be limited in time. These documents are available at pages from 1 to 15 of the paper book filed by the ld. Special Counsel. We are reproducing hereunder the exhibit list (Hearing) on Taxhaven Bank and US tax Compliance (July 17 and 25, 2008) for ready reference and proper conclusion. United States Senate PERMANENT SUB COMMITTEE ON INVESTIGA TIONS Committee on Homeland Security and Governmental Affairs Carl Levin, Chairman Norm Coleman, Ranking Minority Member EXHIBIT LIST Hearing On TAX HAVEN BANKS AND U. S. TAX COMPLIANCE July 17 and 25, 2008 1. Marsh Foundations, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. 2. Wu Foundation, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. 3. Greenfield Foundation, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. 4. Laity Foundation, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. 5. a. Statement of former LGT Treuhand employee, formerly known as Henrich Kieber. b. Liechtenstein warrant for the arrest of Henrich Richer. DO....
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..../william Wu from LGT through HSBC Hong Kong and Shanghai Banking Corp. Hong Kong, June 2002. 24. Excerpt from Resolution, The Foundation Board of JCMA Foundation, indicating statement of assets asper3l December2001 in the total amount of USD 4.283,4 73 .49. dated February 7, 2002. 25. Excerpt from Resolution, The Foundation Board of JCMA Foundation, indicating inventory of assets and liabilities at 31 December 2003 showing a total of USD 2.1 7Z145.9 7, dated March 10, 2004. 26. Excerpt from Resolution of the Foundation Board of JCMA Foundation, showing assets as per 31 December2004 amount to USD 1,202,636.25, dated February 13, 2006. 27. Excerpt from Resolution of the Foundation Board of JCMA Foundation, showing assets as per 31 December2005 amount to USD 1,188,957.64, dated March 30, 2006. 28. Excerpt from Resolution of the Foundation Board of JCMA Foundation, showing assets as per 31 December2006 amount to USD 422,249.10, dated April 18,2007. 29. WI report on Veline Foundation after a March 27, 2000, client visit. 30. Statement of asset as per 31.12.2000, Veline Foundation, dated February 5, 2001. 31. Bearer Share Certificate, Manta Company Limited, dated ....
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....Luperla Foundation, Valuz. 49. Memorandum for the File, dated December 18, 2001, regarding Luperla Foundation, Valuz. 50. Memorandum for the File, dated December 20,2001, regarding Luperla Foundation, Valuz. 51. Documents regarding Beverly Park Corporation. 52. IRS Information Document Requests (IDR) regarding Beverly Park Corporation. 53. State of Delaware, Division of Corporations, Entity Details for Beverly Park Corp., listing Incorporation Dates of December 17, 1991, and January 3, 1997. DOCUMENTS RELATING TO GREENFIELD ACCOUNTS: 54. LGT Memorandum for the Record, dated March 27, 2001, memorializing a March 23, 2001 meeting regarding Maverick Foundation between LGT and Harvey and Steven David Greenfield. 55. WI Summary of Maverick Foundation as of December 31, 2001, dated January 1, 2002., 56. LGT report on Maverick Foundation, undated. 57. LGT report on TSF Company Limited, undated. 58. LGT report on Chiu Fu (Far East) Limited, undated. 59. LGT Background Information/Profile for Maverick Foundation, dated October 12,2001. 60. LGT Background Information/Profile for TSF Company Ltd., BVI, dated December 20, 2001. DOCUMENTS RELATING TO GO....
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....4,2002, We are writing to reassure you that your fear is unjustified and wish to outline only some of the reason why the protect ion of client data cannot possibly be compromised .... UBS's entire compliance with its QI obligations does not create the risk that his/her identity be shared with U.S. authorities. 89. Martin Liechti (Head of UBS Wealth Management Americas) email, January2007, regarding net new money goal and Year of the Pig. 90. Referral Campaign BU Americas, June 2002 (Swiss watch await!). 91. Overview Figures North America, prepared by UBS. 92. Case Studies Cross-Border Workshop NAM. 93. UBS Memorandum, dated November 15, 2007, re: Changes in business model for U.S. private clients. 94. Talking Points for Informing U.S. Private Clients With Securities Holdings About The Realignment Of Our Business Model Plus Q&.A. DOCUMENTS RELATED TO OLENICOFF: 95. Statement of Facts, United States of America vs. Bradley Birkenfelc4 dated 2008. 96. Plea Agreement For Defendant Igor hi Olenicoff, dated 2007. 97. Emails between Birkenfeld/Olenicoff, dated July2001, re: Meeting in California. 98. Correspondence of Igor Olenicoff, dated October2001, re: ....
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.... on behalf of such banks shall be obliged to maintain the secrecy of facts that they have been entrusted to or have been made available to them pursuant to their business relationships with clients. The obligation to maintain secrecy shall not be limited in time." Article 11 of the Trustee Act "Trustees are obliged to secrecy on the matters entrusted to them and on the facts which they have learned in the course of their professional capacity and whose confidentiality Is in the best interest of their client. They shall have the right to such secrecy subject to the applicable rules of procedure in court proceedings and other proceedings before Government authorities." Article 10- Data Confidentiality: 'Whoever processes data or has data processed must keep data from applications entrusted to him or made accessible to him based on his professional activities secret, notwithstanding other legal confidentiality obligations, unless lawful grounds exist for the transmission of the data entrusted or made accessible to him, Processing of Personal Data - § 1173., Art. The AB~ (General CMI Code): "The employer may not process data relating to the employee unless such data conce....
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....alia, we are conducting 20 tax audits which are likely to raise tax liabilities In excess of $100 million. Anecdotal information suggests that relatively few Australians are involved in Liechtenstein arrangements relative to citizens from other countries. Liechtenstein -The ATO is currently reviewing the taxation affairs of Australian taxpayers who appear to have concealed income in offshore entities located hi banking secrecy jurisdictions and tax havens. ~M have a particular focus on taxpayers who have used the services of the LGT Group and Its trustee entity, LGT Treuhand Aktiengesellschaft in Vaduz. Liechtenstein (LGT.) * LGT Treuhand A.O. operates a fiduciary or trustee service and establishes and administers legal entitles such as anstalts, stiftungs (foundations) and trusts for its clients. - * LGT Bank in Liechtenstein A.G. Is the banking division of the LGT Group. It has responsibility for banking services related to the investment functions of the LGT Group. The services provided by LGT include administration and Investment of offshore assets which appear to be beneficially owned by the client LGT acts on Instructions from a client to establish or create a Lie....
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....rtfolio Management (Cayman) Limited. At the clients direction, funds may be invested with a third party bank, usually operated In a banking secrecy jurisdiction. The ATO understands that for a trust or foundation to be established by LGT, substantial funds must be settled In the trust or foundation for it to be economically viable for LGT. LGT clients are wealthy investors who typically Invest a small portion of their total wealth in a LGT structure and who do not need access to these funds to supped their domestic lifestyle. LGT plays an active role in servicing and administering the clients Liechtenstein entity. For example the bawd members of a foundation will be LGT employees. They are responsible for administration of the entity and are the approved signatories. The use of LGT employees as board members or trustees and in-house or 'omnibus' entities as nominee directors of Interposed entities is considered to be another means by which the beneficial owner is distanced from being connected to their Liechtenstein entity. This may facilitate the avoidance or evasion of tax on any offshore Income derived by the Liechtenstein entity by an Australian taxpayer, who is the....
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..... However, we are concerned to see the detailed law and Its proposed implementation in 2009 to determine whether there are practical changes to trustee/banking practices. Lessons learned * Project management strategies are essential to successful audit outcomes. * Sharing of information with other revenue agencies expedites the progress of cases. * Our compliance activities have resulted in disclosures or settlements. 2.3. We are reproducing hereunder the salient features of the Host Trust reg. Home -The trust Reg. can be structured like a company limited by shares or foundations as an instrument for commercial activities or for the administration of assets. Company overview -The trust reg. qualifying as private asset structure pays an annual tax of CHF 1,200 only Executive Sum Company norms many Liechtenstein -Distribution to the beneficiaries as well as profits earned are not subject to any further tax Trust. Reg. -The Supreme Authority is vested in the settlor and is transferable. Foundation Trust -The beneficial interests may be assigned to persons other than the settler Establishing a Company in Liechtenstein Fees and costs -T....
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....ect to any further tax. - Bearer or registered shares are admissible. The minimum nominal value is not regulated. It is also possible to issue voting shares. The Liechtenstein law does not ask for any qualifying shares to be held by the directors. - The general meeting of the shareholders is the supreme authority. - The board of directors conducts and manages the company business. - The auditor has to examine the annual accounts and reports to the general meeting. - The annual accounts approved have to be submitted to the Liechtenstein tax administration. - The minimum capital to constitute a company limited by shares is CHF 50'000. The organization of an individual establishment may be adopted to its specific needs: like a company limited by shares or a foundation, as an instrument for commercial objectives or for the administration of assets. Establishment - The establishment qualifying as private asset structure pays an annual tax of CHF 1 '200 only. - Distributions to the beneficiaries as well as profits earned are not subject to any further tax. - The supreme authority is vested in the founder (holder of the founder's rights) and is tr....
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....self the authority to revoke the foundation and to amend the foundation documents. - Only if the foundation pursues commercial activities the annual accounts approved by the auditor must be submitted to the Liechtenstein tax administration. - The minimum capital to constitute a foundation is CHF 30'000. The Liechtenstein trust settlement is shaped according to the English law trust. Trust (Trust Settlement) - Trusts are used in a similar manner as the foundation. - However, the trust is not a legal entity itself, but a kind of contractual relationship. - The settlor transfers movable or immovable assets or rights to the trustee with the obligation to hold and make use of this trust property against third parties in his own name as independent legal owner for the benefit of one or more beneficiaries. - The trust comes into existence with the stipulation of the trust settlement (trust deed) between the settlor and the trustee or by means of a trust letter accepted. - The trustee must keep his personal assets strictly separate from the trust property. - To ensure the observance of the provisions in the trust deed an auditor, a protector, a curator or ....
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....ncurred during the course of business activities pursued by the beneficiary. Fees and Costs in General The fees and costs involved with the constitution and administration of a Liechtenstein company or trust are approximately the following: - For the constitution of a company/trust between CHF 5'000 and 6'000; - The court fees (costs) coming along with the constitution depend on the kind of company, normally approx. CHF 600 - I '300; - For the local director/trustee of the company/trust an annual lump sum between CHF 5'000 and 6'000; - For the legal representative in charge to accept services on behalf of the company an annual lump sum between CHF 500 and 600; - Petty expenses. - While the fees for the director and legal representative are payable in advance and cover the acceptance of the respective position by the person or company retained, further services provided by the local director and his staff are charged by the time spent according to an hourly fee rate. The fee rate normally varies between CHF 100 for administrative work to CHF 500 for management and legal work and depends on the level of sophistication involved, the assets c....
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....ignatories of the multilateral convention on mutual administrative assistance in tax matters at a ceremony marking the first day of the November 21-22 meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes," the OECD said in a statement. A senior Finance Ministry official in Delhi said the step, announced by Liechtenstein last week, is a "boost to India's efforts to combat black money instances overseas." Indian investigating agencies have come across a number of cases where individuals or entities from India have been detected using banking channels of Liechtenstein to hide their illegal incomes or stash funds. By joining the comity of nations, the Central European nation, Liechtenstein has virtually pulled down the wall of secrecy and will allow partner nations like India to seek information about suspect individuals and entities and provide for obtaining banking information about such people. The multilateral convention of the 0 ECD provides for all forms of mutual assistance like exchange on request, spontaneous exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection while protecting tax....
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....efit from the trust or for that matter in any other Assessment Years. Vide letter dated 26/10/2009 the Assessing Officer furnished the copies of documents (pages 24 to 28) which formed the basis for initiating proceedings u/s. 148/147 of the Act. The Assessing Officer vide letter dated 8/12/2009 informed that he has information that the assessee deposited USD 24,06 604.90 in the name of Ambrusova trust in LTG Bank (pg-31). The assessee was asked to explain as to why it may not be treated as investment out of undisclosed sources and added to the income (pg-34). The assessee vide letter date 18/12/2009 informed the Assessing Officer that the evidences furnished by him in no way showed that the assessee deposited the said amount in the name of the said trust during the year (pg-35 para-1). The Assessing Officer was again requested to furnish the evidence of such deposit by the assessee and the person who deposited the amount (pg-36). Vide para-13 of the said letter it was claimed that she had not received any benefit from the said trust (pg-39). Identical plea was raised before the ld. CIT(A) also regarding non-supply of material or opportunity to the assessee which has been dealt wit....
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....e account is "active". On 21st Nov. 2013, Liechtenstein joined India as important partner in fighting overseas tax abuse and black money and shed its secrecy cloak and joined the league of a host of other countries for automatic exchange of information and mutual assistance in tax matters. Thus, became 62nd signatory to a worldwide convention, accepted by almost by all economic super powers and formulated by Paris based Organization for Economic Co-operation and Development (OECD), an international policy advisory body which formulates global tax standard to fight tax evasion and concealment of illicit funds. Switzerland joined the same convention in October, 2013. The ld. Spl. Counsel showed the bench a confidential list containing the names of the present assessee as trustee/beneficiaries of the trust. It was requested that since the investigation is in progress, therefore, at this stage it will hamper the investigation if the document is made public as the same list is containing the names of other beneficiaries also. On going through the bank summary in respect of Ambrunova's trust account in LTG Bank Liechtenstein, we find that there is a credit balance of USD 24,06,605 (equiv....
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....on. no breach of natural justice can be complained of. Unnatural expansion of natural justice. without reference to the administrative realities and other factors of a given case, can be exasperating. Courts cannot look at law in the abstract or natural justice as a mere artifact. Nor can the), fit into a rigid mould the concept of reasonable opportunity. If the totality of circumstances satisfies the Court that the party visited with gelverse order has not suffered from denial of reasonable opportunity the Court will decline to be punctilious or fanatical as if the rules of natural justice were sacred scriptures. In the instant case, the Board cannot be anath-ematised as condemning the man without being heard. The respondent has, in the form of an appeal against the report of the Regional Inspector, sent his explanation to the Chairman of the Board. He has thus been heard dad compliance with Regulation 26 in the circumstances is complete. [909G-H, 910A-G] Tereaesai's case [1970] 1 S.C.R 251; Management of DTU[1973] 2 S.C.R. 114: Tandon's case [1974] 4 SCC 374 referred to. Observations: Sensitive occupations demand stern juristic principles to reach at scapegraces,....