TaxTMI 
TaxTMI 
2018 (6) TMI 1174
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....out the source and nature thereof." 2. " Whether on the facts and in the circumstances of the case, the CIT(A) has erred in holding that AO has not proved that money deposited in HSBC a/c was sourced from India, without appreciating that assessee having admitted the ownership of HSBC A/c, stonewalled the further enquiry by not providing the bank statement or a consent waiver form, which could have enabled the AO to cross verify the claim made by assessee." 3. " Whether on the facts and in the circumstances of the case, the CJT(A) has erred in not appreciating that under similar circumstances, where petitioner had not provided the requisite details of the HSBC a/c, the Hon'ble Bombay High Court dismissed the W.P. No. 3172 of 2015 in the case of Soignee R. Kothari by observing that in the normal course of human conduct, if a person has nothing to hide and serious question are being raised about the funds, a person would put to rest all questions which seem to arise in the minds of the authority." 4. " Whether on the facts and in the circumstances of the case, the CIT(A) has erred in not appreciating that though assessee did not explain the source of amounts credited in H....
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....was made in the cases of Mr. Deepak Shah and Mr. Kunal Shah in their respective assessments by the Addnl. Commissioner of Income Tax-16(2), Mumbai. 6. By the impugned order CIT(A) deleted the addition after observing as under:- 13. I have given my careful consideration to the rival submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. 14. In view of the factual and legal analysis, it has been observed that the Appellant is indeed a non-resident under section 6 of the Act. This fact has not been disproved by the AO. The information relied by the learned AO is a Base Note which has various details of account holders along with the balance in certain years. As per the learned AO, these details clearly revealed that the account belonged to the Appellant. Even I have taken a note of the duly sworn in affidavit dated 13 October 2011 of the Appellant. 15. Thus, the fact that the information received in the form of Base Note regarding existence of an account with HSBC Bank, Geneva, Switzerland, a fact which has not been denied by the Appellant, is sufficient reason for the learned AO to initiate reasse....
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....o recover the revenue or tax. This was discussed elaborately by the co-ordinate bench in the case of DCIT vs. Finlay Corporation Ltd., [86 ITD 626], Delhi, wherein it was observed that "it is the settled legal position that burden is on the revenue to prove that income of an assessee falls within the net of taxation.Once it is so proved, then the burden is on the assessee to prove that such income is exempt from taxation. Section 5(2) being charging section, the burden is on the revenue to prove that the income of the non-resident falls within the ambit of such section. "(Emphasis supplied) 18. It is observed from the assessment order, that the AO has made addition based on the basis of Base Note of the foreign bank account of HSBC Bank, Geneva as income which has escaped assessment. In the reasons recorded, it is nowhere mentioned as to how such an amount constitutes income of the Appellant who is non-resident under the Act or even has a linkage with India or has escaped assessment. Thus, unless there are enough corroborative evidences to show that these amounts were actually sourced from India and taxable in the case of this nonresident, an addition cannot be sustained. ....
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....n, having money in a foreign country, could be called upon to pay income-tax on that money in India. The answer is 'NO', and the reason is obvious because in respect of that money it will not be possible for the Assessing Officer to say that it was either received by him in India, or it was deemed to be received by him in India, or it accrued to him in India, or it arose to him in India, or it was deemed to accrue to him in India, or it accrued to him in India, or it arose to him in India, or it was deemed to accrue to him in India, or it was deemed to arise to him in India." 23. Even the provisions of Section 5 do not permit taxation of amounts remitted to India from sources outside India which is not income under the provisions of the Act This issue was discussed elaborately by the co-ordinate bench in the case of DOT vs. Finlay Corporation Ltd., [supra], wherein it was held as under: "The issue whether the income of non-resident is taxable or not is still to be decided with reference to the provisions of section 5(2) and, the provisions of Section 68 or 69 cannot enlarge the scope of section 5(2), What is not taxable under section 5(2) cannot be taxed under the pro....
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.... the Appellant being a 'non-resident', having money in a foreign country, cannot be called upon to pay income tax on that money in India unless it satisfies the test of taxability of a non-resident under the provisions of the Act, which in the instant case is not getting satisfied in the case of Appellant. Thus, the bank account of HSBC Bank, Geneva is outside the purview of this Act. 27. It would, at this stage, be relevant to consider the admissibility and use of circumstantial evidence in income-tax proceedings. Circumstantial evidence is evidence of the circumstances, as opposed to direct evidence. It may consist of evidence afforded by the bearing on the fact to be proved, of other and subsidiary facts, which are relied on as inconsistent with any result other than the truth of principal fact. It is evidence on various facts, other than the fact in issue which are so associated with the facts in issue, that taken together they form a chain of circumstances leading to an inference or presumption of the existence of the principal fact. 28. The learned AO in his order has resorted to the circumstantial evidence since the assesses chose not to explain the source of d....
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.... Mr. Deepak Shah and Mr. Kunal Shah in their respective assessments for AY 2006-07 and AY 2007-08. Even both these assesses, have paid taxes on the amount of addition made to their respective computation of income. Thus, taxing the amounts from this foreign bank account would tantamount to double taxation of the same amount. 33. I do find substance in the argument advanced that the same income which has already been added in the hands of the appellant's relatives Mr. Deepak and Mr. Kunal Shah, who are beneficiaries of the trust, cannot be sustained as an income in the hands of the Appellant, who in facts is the settlor of the trust. Thus, it would be seen that to that extent, there is a case of double taxation of the same income in the hands of more one assessee. It is also evident from the base note that the balance of earlier year was being carried forward from March 2006 to April 2006. Thus it can also be seen that the same income has suffered tax in assessee's hand in two different years. 34. Regarding the issue of double taxation of income that has already suffered tax in the hands of the same assessee in different years or different assessee in same year, a numb....
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....he two alternatives open to an officer assumes knowledge on his part of the existence of two alternatives." And it was further observed that: "... the Act does not envisage taxation of the same income twice over 'on one passage of money in the form of one sort of income'." The same view is taken in Commissioner of Income-tax v. MJ. & P. Ginning & Pressing Factory [1966] 60 ITR 95 (SC). Thus, the position that section 4 of the Act (corresponding to section 3 of the 1922 Act) impliedly prohibits double taxation is accepted by the courts. If one of the entities has been taxed, it is not open to the taxation department to tax another entity for the same income. This maxim was confirmed by the Hon'ble Supreme Court in the case of Laxmipat Singhania 71 ITR 291(SC) by holding; "It is a fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. Again, it is not open to the ITO, if income has accrued to the assessee, and is liable to be include in the total income of the particular year, to ignore that accrual and thereafter to tax it as income of another year on the basis of receipt." 35. In view of the above,....
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....d to him in India. 10. The assessee also submitted that he was not having any of his business operations in India during AY 2006-07 hence, there is no income which has either deemed to accrue or arise in India under section 9 of the Act. Thus, the initial contribution or even other amounts in the foreign bank account does not fall under the purview - of section 9 of the Act. Thus, the peak balance appearing in the bank statement of the foreign bank account should not be added to the total income of the assessee. 11. Without prejudice to the above, he submitted that the peak balance appearing in the bank statement of this foreign bank account has already been added to the computation of income and subjected to tax in the hands of Deepak Shah and Kunal Shah in their respective assessments for AY 2006-07 and AY 2007-08. A copy of the order passed by Assistant Commissioner of Income-tax -16(2) and by Commissioner of Income-tax (Appeals)-27 ('CIT(A)-27') in their respective cases was submitted to the AO for his consideration. 12. Further, both these assessees - Deepak Shah and Kunal Shah have paid taxes on the amount of addition to their respective computation of income. A su....
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.... arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. We also found that the assessee in his affidavit dated 13 October 2011 has clearly stated that the he was a settlor of a trust outside India which he had created for the benefit of his family members with his initial contribution. Further, he has also stated that none of the discretionary beneficiaries have contributed any funds to the said trust. However, the content of this affidavit was nowhere declined by the AO nor was held to be not true. In view of the above, the assessee being a non-resident, having money in a foreign country cannot be called upon to pay income tax on that money in India unless it satisfies the tests of taxability of non-resident under the provisions of the Act, which in the instant case is not getting satisfied in the case of the assessee. Thus, the bank account of HSBC Bank, Geneva is outside the preview of this Act. 15. We found that CIT(A) as dealt with the issue threadbare and after applying judicial pronouncements laid....