AI Drafter 
TaxTMI 
TaxTMI 
2017 (10) TMI 1088
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....except for the change in amounts involved. For the sake reference, the grounds of appeal from ITA No. 5720/Mum/2016 are being referred as under: A) Reopening of assessment 1) On the facts and circumstances of the case and in Law the learned Commissioner of Income Tax (Appeals) - 47, Mumbai [CIT(A)] erred in holding that the reopening of assessment made by the Deputy Commissioner of Income Tax, Central Circle-1, Mumbai (AO) was in accordance with law. 2) That, the Learned CIT(A) erred in agreeing with the AO that on the facts and in the circumstances of the case, the latter had reasons to believe that the appellant was one of the beneficiaries of Ambrunova Trust, Vaduz, which had a bank account with LGT Bank, Liechestein, and that from the said bank account the appellant had interest income of Rs. 8,04,855/- which had escaped original assessment u/s. 143(3) of the Income Tax Act, 1961. 3) That, while agreeing with the AO as stated in the preceding Ground No. 2, the Learned CIT(A) failed to consider as to whether before assumption of jurisdiction u/s.147, the AO had applied mind to the alleged information said to have been received from the C.B.D.T....
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....leged interest/benefit derived on deposit with LGT Bank, Liechtenstein in the name of Ambrunova Trust. 2) The Learned CIT(A) failed to appreciate that the appellant had not received any income from Ambrunova Trust and that no addition could be made on account of alleged unaccounted interest/benefit received on deposit in LGT Bank, Liechestein in the name of Ambrunova Trust on the basis of surmises and conjectures. 3) The appellant prays that the addition made by the AO of Rs. 3,03,259/- on account of alleged interest on deposit with LGT Bank, Liechtenstein in the name of Ambrunova Trust and as upheld by the CIT(A) may be deleted. 4. These appeals relate to foreign bank accounts found in LGT Bank, Liechtenstein in the name of Ambrunova Trust. The cases pertaining to the same bank account of the same assessees' relating to A.Y. 2002-03 which had come up before this Tribunal in ITA Nos.3544, 3545 & 3546/Mum/2011. In the said case, the reopening as well as the merits of addition was confirmed by the ITAT. The appeals against the above order of ITAT are pending before the Hon'ble High Court. The reopening of the case as well as the addition of the undisclosed income....
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....ing Officer also referred to the assessment order in A.Y. 2002-03. The Assessing Officer after noting the submissions of the assessee recorded his findings in assessment order as under: 4.2 The submission of the assessee has been carefully perused and considered and are not found tenable as per following discussion. 4.2.1 Information was received by CBDT from German Authorities about bank account held by a trust Ambrunova Trust where economically beneficial ownership of the assets is of the assessee and his family members. Specific details such as date of birth, residential address, nationality, domicile, nature of business activity of the assessee in India, copy of the passport of some of the family members etc. were available with the bank authorities. It is also seen from the information in possession of the department that origin of deposits the said trust in the LGT bank has been indicated to be 'Income from business activities as securities dealer in India. The other necessary details such as date of creation etc. with regard to the trust and its beneficiaries are also provided in the information received by the department. The summary of account as on 31.12....
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....ledge of any such trust or bank account, he has no explanation as to how his correct name, address, date of birth, nationality or copy of passport could be available to a person creating trust in a far off place like Vaduz. It is the trust created for the sole benefit of the assessee and his family members. The knowledge of the trust and its other related details sought by the assessee are information which are in the exclusive knowledge of the assessee and the assessee has no option to remain selective, elusive, evasive or restrained in disclosure. It has been held in the above cited judgment of Hersh Win Chadha that "The assessee has to give proper explanation and disclose facts which are in his exclusive knowledge. The assessee has no option to remain selective, elusive, evasive or restrained in disclosure. Further, it has been held that "It h the duty of the revenue authorities to be mindfui of clues and coincidences and bring them to the logical conclusion, otherwise clandestine tax evasion through shady economic deals will go undetected, as appears to be the order of day. India is neither a tax heaven nor a banana republic." 4.2.4 Hence, in view of the above discussi....
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...., I have no hesitation in holding that interest income/benefits derived by the assessee out of the deposits made in the said bank account have to be brought to tax. However, in the absence of any specific details being provided by the assessee of such benefits, the following method of calculation of interest is adopted as reasonable method. Therefore, an average rate of interest (0)3.8225% on US $ (U.S. Department of the Treasury interest rates as on 31.03.2005 on deposits for 1 year: 3.35%, 2 years: 3.8%, 3 years: 3.96% and for 5 years: 4.18%), the interest accrued during the F.Y. 2004-05 on the deposited amount of 1)5524,06,604.9 is worked out to US $92,004.50. Considering the conversion rate of US $ to INR as on 31.03.2005 at Rs. 43-74/-, the total accrued interest / benefit derived out of deposit / asset in LOT Bank in the name of Ambrunova Trust, Vaduz, Liechtenstein is worked out in INR at Rs. 40,24,277/-. The assessee's share @ 20% amounts to Rs. 8,04,855/- (Rs.40,24,277/- * 20%) which is taxed as his concealed income for the assessment year under consideration. 8. Against the above order, the assessee appealed before the ld. CIT(A) challenging both the reopening as w....
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....k account is proven as is that of the balance standing in deposit 'therein as well the accrual of interest. As such there was enough 'reason to believe' for the AO to initiate the proceedings u/s 147 as courts have repeatedly clarified that it is the existence of reasons and not the sufficiency of reasons that is to be examined at the stage of initiation,; It is also clear that the appellant, in the return originally filed for the year, under consideration did not reflect the interest income accrued on the balance in the said account. So this was not a case where the AO did not have information or where there was no failure of the appellant to disclose the material facts. In the decision rendered by the Bombay High Court in the case of Bright Start Syntex P. Ltd. vs ITO (71 taxmann.com 64), the Hon'ble Court has elaborated as follows: "6. It is settled position in law that while considering a challenge to a reopening notice on the ground that it is without jurisdiction, the Court has to keep in mind that a settled position in law is not being disturbed as evident from the orders passed earlier, without any justification. However, the Court will certainly in....
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....f assessment is not without basis. Further, it has not been shown that such interest was offered to tax subsequently, if accounted for on receipt basis. Neither has it been demonstrated that the Trust in question has offered the interest income to tax. As noted earlier, the interest income had not been offered to tax in the return originally filed u/s 139. In view of these facts it cannot be said that there was change of opinion in this case or that the A.O. had no material before him that indicated escapement of income. Thus, in the face of these facts, I find that I must differ from the decision of my Ld. Predecessor in the appellate order for A.Y.2004-05. Accordingly the reopening of assessment for A.Y.2005-06 is upheld and the Grounds 4, 5 and 6 raised by the appellant are dismissed. Further as regards Grounds 7 and 8, the facts enumerated above show that the AO in the order rejecting the objections to reopening, clearly mentioned that specific information with sufficient details was received, from credible sources, by the Department through government channels and that apart from denying knowledge or connection to the bank account in question, the appellant did not produce any....
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....ositions and case laws: 1) There is no evidence that appellant had received any benefit/income from trust. Hence, there could be no reason to believe that income of appellant had escaped assessment. 2) Appellant was not aware that he was beneficiary of any trust outside India. In any case, at the relevant point of time, Return Form did not require assessee to furnish assets held abroad. Hence, no failure to disclose any material facts. 3) Reopening of assessment is after 4 years from the end of the assessment year. No failure on part of appellant. Hence, reopening bad in law: a) ICICI Securities Ltd. v. ACIT (2016) 231 Taxman 460 (Bom) b) Alliance Space P. Ltd. v. ITO (2016) 375 ITR 473 (Bom) c) Tao Publishing (P.) Ltd. v. DCIT (2015) 370 135 (Bom) d) Business India v. DCIT (2015) 370 ITR 154 (Bom) 4) There was no tangible material with Department to reopen assessment. Hence, reopening of assessment is bad in law : a) Nivi Trading Ltd. v. UOI (2015) 375 ITR 308 (Bom) - Notice issued to verify certain details was bad in law. b) Hemant Traders v. ITO (2015) 375 ITR 167 (Bom) - Survey report and ....
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.... not own (Refer para 44 and 45 on pages 100 and 101 of paper book). e) Appellant has not received a single penny from the trust (Refer para 43 on page 101 of paper book). f) Without prejudice, appellant is following cash method of accounting. Hence, income can be taxed only on receipt basis (Refer para 46 and 48 on pages 101 and 102 of paper book). 4) In rejoinder to Remand Report, appellant drew the CIT(A's) attention to the fact that for a receipt to be taxable, Department has to prove that it is income. Reliance in this regard was placed on the following decisions: a) Parimisetti Seethramamma v. CIT (1965) 57ITR 532 (SC) b) Dr. K. George Thomas v. CIT (1985) 156 ITR 412 (SC) 5) In present case, there is no income or receipt in the first place. How can appellant be taxed? 6) CIT(A) summarily dismissed submissions of appellant. 7) Aggrieved by said order, appellant is in appeal before your honour. Proposition and case laws :. 1) Appellant is not a beneficiary of Ambrunova Trust. Hence, no amount can be added to income of appellant. 2) Control and management of trust is in the han....
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....r distributed and received by the beneficiary, which would be subject to tax - CIT v. Kamalini Khatau (1994) 209 ITR 101 (SC). As no income received, no amount liable to tax. ... 13) The burden of proving that the assesse received any income, gain or profit, within taxable territories is on the revenue -S. Zoraster & Co. v. CIT (1968) 68 ITR 770 (Del). 14) Where a receipt is sought to be assessed as income received in the taxable territories, the burden is on the revenue to prove that the income was received in the taxable territories - Dalmia Dadri Cement Ltd. v. CIT (1974) 94 ITR 303 15) Without prejudice, AO has to determine the year of receipt of amounts and if relating to different years, has to spread over in different year - Fifth Avenue v. CIT319ITR132(SC) 16) Where income can be said not to have resulted at all, there is neither accrual nor receipt of income - CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC). 17) Hence, addition made by AO needs to be deleted. 12. At the outset, the ld. Departmental Representative pointed out that since the tribunal in assessee's own case on the same issue has confirmed the reopening as....
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....come u/s 139(1) of the Act on 1st August 2002 showing total income of Rs. 1,97,650/-. Subsequently, information was received that the assessee is a beneficiary of Ambrunova Trust, having an account in Liechtenstein Bank. The said information contained summary of bank statement as on 31/12/2001 of the said trust in which there was a balance of US $ 24,06,604.90/-. This information was not disclosed by the assessee in the original return thus notice u/s 148 of the Act was issued on 26/03/2009. The assessee requested the revenue to treat the return already filed as having being filed in response to the notice issued and served u/s 148 of the Act. The assessee was also supplied with a copy of reasons recorded for reopening of assessment including English translation of the documents. The assessee also denied of any knowledge of trust by further claiming that he/she has not received any money. The AO found that the address/nationality, country of domicile was the same as of the assessee as mentioned in India in the return. However, the assessee did not provide any document in support of his statement that he is not connected with this trust. The AO added Rs. 2,34,64,398 being 25% if his....
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....n as Henrich Kieber. b. Liechtenstein warrant for the arrest of Henrich Richer. • DOCUMENT RELATING TO MARSH ACCOUNTS: 6. Letter of wishes, Lincol Foundation, October 15, 1985. 7. LGT receipt for US $3,310,700 cash from Lincol Fondation, dated October 15, 1985. 8. Handwritten letter signed by Shannon N. Marsh to Mr. Alvate, to give Kerry M. Marsh permission to review all documents and receipts pertaining to Lincol Foundation and Chateau Foundation, dated May 23, 1992. 9. Instructions signed by Shannon Neal Marsh, empowering Marsh family members to act as principals for Lineal Foundation, dated November 17, 1993. 10. Correspondence from James A. Marsh, Jr. to Peter Meier, LGT, dated October 4, 1994, re: Lincol and Chateau. 11. Letter of wishes, Lincol Foundation and Foundation Chateau, October11, 2000 12. LGT Memorandum to File about Lincol and Chateau Foundations, dated February 7,2002. 13. Deed of Signature accepting appointment as Protector of the Chateau Foundation, signed by Kerry Michael Marsh, Shannon Neal Marsh, and James Aibright Marsh, Jr. and Deed of Appointment of Successors. ....
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.... 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 September 3,1997. 32. Handwritten organizational chart showing Veline Foundation ownership of corporations and property, undated DOCUMENTS RELATED TO LOWY ACCOUNTS: 33. LGT Memorandum for the Record, dated November26, 1996, memorializing a November21, 1996, Meeting in Sydney regarding Westflelds, Adelphi, Crofton between LGT and Frank Lowy, David Lowy, David Gronski and Joshua Gelbard. 34. LGT Memorandum for the Record, dated November 27, 1996, regarding New Establishment Westfield/Lowy. 35. LGI Note for File, dated December 17, 1996, regarding telephone conversation with Frank Lowy and Joshua Gelbard regarding Westfields, Adelphi, Crofton. 36. LGT Memorandum for the Record, dated January 23, 1997, regarding January 20, 1997 meeting in Los Angeles between LGT and Frank Lowy, David Lowy, and Peer Lowy regarding Westfield/Lowy Family. 37. LGT Memorandum for the....
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....n 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 GONZALEZ ACCOUNTS: 61. Foundation Tragique flow chart, undated. 62. LGT report for Tragunda Foundation, dated December 3,2001. 63. LGT Background Information/Profile for Auto and Moteren [Motors] Corp. dated October 3, 2001. 64. LGT report on Asmeral Investment Anstalt. 65. LGT Memorandum for the File, dated September 11,2001, regarding Foundation Tragique. 66. Stiftung flow chart, undated. 67. LGT Background Information/Profile for Foundation Tragique, Vaduz, dated December 18, 2001. 68. LGT Background Information/Profile for FIWA AG, Vaduz, dated December 10, 2001. DOCUMENTS RELATING TO CHONG ACCOUNTS: 69. LGT Background Information/Profile on ....
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....rth 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: Guardian Guarantee Co. Ltd. 99. Email between Staggl/Olenicoff, dated January2002, re: Structure. 100. UBS documents related to opening of account for Guardian Guarantee Company, Ltd. 101. Emails related to Liechtenstein trust and a Danish Corporation. 102. Fax from Olenicoff to Birkenfeld, dated December 2001, re: Structure. 103. Emails dated April 2002, re: transferring U.S. securities to a Liechtenstein account. OTHER DOCUMENTS: ....
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.... 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 concern his or her qualification for the employment or are indispensable for the performance of the employment contract. In addition, the provisions of the Data Protection Act shall apply." Article 8-Transhorder Data Flows: "No personal data may be ....
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....s 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 Liechtenstein entity and subsidiary entitles In other tax haven jurisdictions. In the Australian examples, the parent entity Is usually a foundation or trust. In some instances, LGT appears ....
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....y 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 beneficial owner. LGT also arranges for shell entities Incorporated hi other tax haven juri....
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.... 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 Establishing a Company Liechtenstein Fees and costs in assigned to persons other than the settler -The administrat....
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.... on dividends distributed from income accrued after January 1, 2011. - The profits earned are not subject 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 beneficia....
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....the members of board who also take care of the administration. - The founder may designate other bodies as e.g. protectors, collators and auditors. - An individual as founder may by creating retained founder's rights preserve for himself 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 settlemen....
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....es as second beneficiary once the first has died. As no formal change of ownership takes place in case of succession, no inheritance tax becomes payable. - Asset protection by means of a holding company If assets - earmarked for the personal benefit only - are held by a holding company (normally a foundation) not all assets are endangered in case of losses or liabilities incurred 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 dir....
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....epted by almost all economic superpowers and formulated by the Paris-based Organisation for Economic Cooperation and Development (OECD), an international policy-advisory body that formulates global tax standards to fight tax evasion and concealment of illicit funds. Switzerland, in October, had joined the same convention. "Liechtenstein and San Marino became the 62nd and 63rd signatories 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 se....
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....of the trust, (c) purpose of creating trust, (d) copy of trust deed, (e) asset and bank accounts held by the trust in India and abroad and (f) benefit received by the appellant during the financial years relevant to Assessment Year 2002-03 to 2007-08 (page 21 ). The assessee vide letter dated 14/10/2009 denied the allegation of the Assessing Officer (page-22). The assessee also informed that she/they had not received any benefit 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....
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.... neither the amount was accrued/credited nor the name of the assessee appeared as beneficiary of Ambrunova Trust. On the other hand, the ld. Special Counsel brought to our notice certain documents evidencing that the names of all the assessees were appearing, who are beneficiaries of the said trust. 3.1 We note that (Pg-14 of the document filed by the ld. Spl. Counsel) the trust was established on 21/3/1997 and the status of the 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 world- wide 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 pres....
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....here is no surrender of judgment by the Board to the recommending Regional Inspector, there is no contravention of the cannons of natural justice. (5) Natural justice is no unruly horse, no lurking landmine, nor a judicial cureall. If fairness is shown by the decision-maker to the man proceeded against, the form features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation. 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 ....
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....ready been reproduced by us in earlier part of this order. As we have reproduced in earlier part of this order (host trust reg.), the distribution to the beneficiaries as well as profits earned are not subject to any further tax and, further, the supreme authority is vested in the settler and is transferable. It can be concluded that the Liechtenstein jurisdiction qualifies as an off shore financial centre due to a very modest tax regime, high standard of secrecy laws and further foreign investors had the opportunity to establish companies or trust with "HOST trust reg." in the principality of Liechtenstein to enjoy the advantages of off-shore financial centre. As per the report Indian Investigating Agencies came across a number of cases where individual or entities from India were detected using banking channels of Liechtenstein to hide their illegal income or stash funds and it was only possible when India became signatory to a world-wide convention formulated by OECD an international policy advisory body which formulated global tax standards to fight tax evasion and concealment of illicit funds. It also provided option to undertake automatic exchange of information. It is a comm....
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....by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court)." 17. The above Hon'ble Apex Court decision duly complements the validity of reopening in this case. The assessee's cla....