TaxTMI 
TaxTMI 
2017 (11) TMI 1850
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.... ITA Nos. 2795 to 2798/Mum/2011 (Assessment Year 2002-03) 2. These appeals by the four assessee's are against the respective orders of the ld. CIT(A), pertaining to assessment year 2002-03, wherein reopening as well as merits of the addition regarding deposits in the foreign bank account have been challenged. The grounds are common except for the change in amounts involved. For the sake of reference, the grounds of appeal from ITA No. 2795/Mum/2011 are being referred as under: 1. The learned CIT (Appeal) has erred in law and on sustaining the order of the A. O. reopening the assessment u/s. 147 of the Income Tax Act. 2. The learned CIT (Appeal) has erred in law and on the facts or sustaining the addition of Rs. 37,67,807/- without appreciating the fact that the A. O. had no authentic material before him relating to the trust, trustee, settlor, beneficiaries, whether the trust is specific or discretionary and dates of deposit in the bank account. 3. Without prejudice to Ground No. 2, (a) The learned CIT (Appeal) has erred in law and on the facts of the case in sustainin....
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....rred in law and on the facts of the case in sustaining the order of the Assessing Officer in making an addition of Rs. 48,552/- on account of unaccounted interest income. ITA Nos. 2795 to 2798/Mum/2011 (Assessment Year 2002-03) 5. These appeals relate to foreign bank account found in LGT Bank, Liechtenstein in the name of Manichi Trust. Brief facts of the case are that the Assessing Officer received information that the assessee was beneficiary of Marnichi Trust, having account in LGT Bank, Liechestien. The information received also gave summary of the Bank statement of the said Trust as on 31.12.2001 in which the opening balance was US $ 309,154.74 and the accrued interest thereon was US $ 83.82. Since this information was not disclosed by the assessee in his Income-tax Return, the assessment was re-opened by issue of notice u/s. 148 on 30.03.2009 and was served on the assessee on 31.03.2009. 6. The assessee in response denied knowledge of any such trust. Subsequently, the Assessing Officer issued following show cause notice: "The Income Tax Department had received information that you are a beneficiary of the bank account opened in the ....
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....n created apparently only to evade paying taxes. According to the law in Liechtenstein, such trusts allow the separation of monetary assets from their owners and are kept anonymously. In contrast to trusts of most other countries, Liechtenstein trusts can be revoked at any time and the assets will be returned to the owner. Furthermore, such trusts as well as their maintaining shell entities are only charged 0.1% (minimum 1,000 Swiss francs) annually. Liechtenstein thus is known to be a tax haven. Investigations Germany According to the lead prosecuting office responsible for economic crime in Bochum, which is supported by prosecuting offices in other towns as well as the criminal police, currently about 600 to 700 individual are suspected in the investigations. In addition, search warrants have been issued. An official confirmation about the total number of suspects and amount of money involved has not yet been issued. According to the prosecutors, current investigations provide a "very high level of evidence." The affair became known on February 14, 2008, when a raid was conducted against Klaus Zumwinkel, the chief executive ....
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....ffshore tax haven supported tax cheats to the cost of about $100 billion per year for the U.S. taxpayer. Specifically mentioned were Switzerland UBS AG and Liechtenstein LGT Group. The report indicates that the LGT group contributed to a "culture of secrecy and deception" According to the report DBS holds 1,000 declared accounts versus 19,000 that are not declared to the IRS, The report recommended a number of steps including tighter regulations for financial institutions. Other Countries On February 24, 2008, it became apparent that secret bank information had also been sold to the British tax authorities and that about 100 individuals in the UK are at risk for investigations for tax evasion. The information also provided the governments of Australia, Canada and France with data. On February 26 it became known that the German Government was willing to share relevant data of the about 4,500 accounts with other governments; two third of these accounts belong to accounts of non-German individuals or entities, Fiscal authorities in Ireland, Finland, Italy, the Netherlands, Norway, Greece and Sweden indicated interest, and while the Danish government initially ....
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....54.74 converted at Rs. 48.75) was deposited by the assessee and his family members out of their Undisclosed Income. The assessee's share is at 25% (in absence of any share allocation of the Trust available in this office) work out to Rs. 37,67,807/- which is added to his total income. 8. Against the above order, the assessee is an appeal before the ld. CIT(A) challenging both the reopening as well as the merits of the case. As regards the reopening, the ld. CIT(A) confirmed the reopening by holding as under: The first ground of appeal is against the reopening of the assessment by invoking the provisions of section 147 of the Income Tax Act, 1961. The appellant had not made any specific submissions on this issue except of relying on the decision of the Hon'ble Supreme Court of India in the case of Coca-Cola Export Corporation vs. ITO reported in 231 ITR 200 wherein it has been held that letters issued by Government of India limiting dollars remittances under provisions of Foreign Exchange Regulation Act, Income Tax Act and Foreign Exchange Regulation Act operates in different fields. And letters are not information in possession of ITO" for purposes of reopening ....
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....e AO was not correct in assuming jurisdiction on the basis of the said letter to reopen the assessment of the assessee. The present case is having altogether different facts. The department has received information which was specific to the appellant and related to the income that may not have been disclosed. Further, the original order was u/s 143(1) and the information pertaining to the appellant were specific and therefore, the AO was correct in reopening the assessment u/s 147. 9. As regards the merits of the addition, the ld. CIT(A) confirmed the same also. The ld. CIT(A) wherein observed as under: 9. The AO had received specific information regarding the undisclosed income of the appellant in the form of the summary of the bank statement of the Trust in which the appellant is the beneficiary. The bank summary stated that the name of the trust is Manichi Trust. The beneficiaries are four individuals viz., * Hasmukh Gandhi * Madhu Gandhi * Nirav Gandhi * Chintan Gandhi All the above four individuals are residing at 802, Citadel, 18-B, L D Ruparel Marg, Malabar Hill, Mumbai - 400 006. This informat....
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....sessment of the appellant and hence even on this account the argument of the appellant fails. In view of the above, the stand of the AO is upheld and the grounds of appeal of the appellant are dismissed. 10. Against the above order, assessee's are in appeal before us. 11. We have heard both the ld. Counsel and perused the material on record. The ld. Counsel of the assessee submitted that the information received in this case is as on 31.12.2001 which falls prior to the previous year involved. The only information Assessing Officer has is that the assessee is a beneficiary of a Trust which has a bank account in LGT Bank, Liechtenstein. Merely on this information, the Assessing Officer has jumped and concluded that the beneficiary has contributed in the said bank account. The ld. Counsel of the assessee submitted that the time limit of section 149(1)(b) for reopening where only addition for interest is involved, is violated. The ld. Counsel referred to the case laws for the proposition that the reopening should be based upon the reason to believe and not reason to suspect. The ld. Counsel of the assessee further submitted that it is the discretionary tr....
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....osits in foreign bank account, the ITAT Delhi Bench and ITAT Kolkata Bench had remitted the matter back to the file of the Assessing Officer with certain directions. Hence, the ld. Counsel of the assessee submitted that the addition in this case be either deleted or set aside to the file of the Assessing Officer for further investigation. 13. The ld. Counsel for the Department, on the other hand, submitted that at the stage of reopening, the Assessing Officer need not conclusively prove that there has been concealment on the part of the assessee. He submitted that the Assessing Officer only needs to have a reason to believe. In this case, data were obtained from the sovereign government of Germany from the employee of the LGT Bank, Leichtenstein. This information was passed on to the sovereign government of India. Thereafter, the said information comes into the possession of Central Board of Direct Taxes and, thereafter, to the assessing officer. In this regard, the ld. Counsel of the department submitted that the confidential report containing confidential documents are available. He produced the same for the verification of the Bench. We have gone through these....
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....The Hon'ble Jurisdictional High Court has not yet reversed the said decision. 15. In light of the above, in our considered opinion, the doctrine of stare decisis mandates us to follow ITAT Mumbai Bench decision in the case of Shri Ambrish Manoj Dhupelia and others (supra). We find that the facts and circumstances as mentioned in the case of Shri Ambrish Manoj Dhupelia and others (supra) are identical to the present case. The confidential folder provided to us by the ld. Counsel for the Department also contained in the documents assessee's names as well assessee's in the case of Shri Ambrish Manoj Dhupelia and (supra). The distinction sought by ld. Counsel of the assessee being in the present case and the case of Dhupelia group is not sustainable as documents are similar. In the said decision of the tribunal in ITA Nos.3544, 3545 & 3546/Mum/2011 for assessment year 2002-03 vide order dated 31.10.2014, the tribunal had upheld the reopening as well as the addition of the amount of deposit in the bank account in the hands of the assessee's. The relevant portion of the order may be gainfully referred as under: 2.2. We have considered the rival submissions and peru....
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....; As per Article 14 of the Banking Act (Liechtenstein Secrecy laws) the members of the organ of the Bank and their employees as well as other persons, acting on behalf of such banks, shall be obliged to maintain secrecy of facts that they have been interested too or have been made available to them pursuant to their business relations with 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. Sen....
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....he Internal Revenue Service, dated May 12,2008, forwarding amended returns for foreign income and foreign bank and financial accounts for calendar years 2002-2006. DOCUMENTS RELATING TO WU ACCOUNTS: 19. WT report on JCMA Foundation, dated June 27, 2002. 20. Declaration of Trust between Cobyrne Limited and JCMA Foundation, dated October 1,1996. 21. New York City property records, recording sale of Forest Hills, NY home of William S. Wu to TM Lung Worldwide, Ltd, dated January 21, 1997. 22. LGT Memorandum by Kim Choy regarding JCMA Foundation, dated June 26, 2002. 23. Documents regarding withdrawal of$1 00,000 by JCMA Foundation/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.....
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....rding Luperla Foundation, 41. Regulations, Luperla Foundation, Vaduz, dated April 30, 1997. 42. LGT Memorandum for the Record, dated May 2, 1997, regarding April 30, 1997, meeting in the Hotel Savoy, Zurich between LGT and Frank Lowy and J.H. Gelbard. 43. LGT Memorandum for the File, dated May14, 1997, regarding Luperla Foundation, Valuz. 44. LGT Memorandum for the File, dated October 23,1997, regarding Luperla Foundation/Swell Service Ltd. B.V.I. 45. LGT Memorandum for the file, dated January 29, 1998, regarding January 28,1998, meeting in Bendern with Peter Widmer regarding Luperla Foundation, Vaduz ("Luperla"). 46. Memorandum for the File, dated June 26, 2001, regarding Luperla Foundation. 47. Memorandum for the File, dated July 16, 2001, regarding Luperla Foundation, Valuz. 48. Memorandum for the File, dated December 17, 2001, regarding 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.....
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....ael Misken Letter of Wishes with respect to the assets of Micronesia Foundation, dated July 28, 2000. 76. LGT report on Micronesia Foundation. 77. LGT/Michael Misken receipt for wire transfer of GBP 3,650,314.00, dated October 21,1998. 78. Fax from Thoams Lungkofler/LGT to Michael Misken, dated February 27,2002, regarding tax situation in the US-area. ADDITIONAL DOCUMENTS RELATING TO LGT: 79. Documents related to Sera Financial Corporation. 80. Documents related to Jaffra Development Inc. 81. Documents related to Sewell. 82. Excerpt from presentation related to LGT and the Qualified Intermediary (QI) Program. 83. Documents related to LRAB Foundation. DOCUMENTS RELATED TO UBS: 84. Wealth Management and Business Banking, Client Advisor's Guidelines For Implementation and Management Of Discretionary Asset Management Relationship With U.S. Clients (2002). 85. Cross-Border Ban king Activities into the United States (version November2004) 86. Restrictions on Cross-Border Banking and Financial Services Activities. Country Paper USA (Effective Date June 1, 2007), prepared by....
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....OUNTS: 108. LGT report on Luperla Foundation. 109. LGT Background Information/Profile for Luperla Foundation, dated December 7, 2002. 110. LGT Statement of Account for Luperla Foundation, dated December 29, 2001. 111. LGT Memorandum for the Record, dated April 10, 2002, regarding retroactive dissolution of Luperla Foundation. 112. Letter to Peter Lowy from Leon C. Janks, dated December 13, 2001, enclosing four original documents related to Beverly Park Corporation. 113. a. Contract For The Purchase And Sale of Real Estate, sale by West Park Avenue Corporation to Beverly Park Corporation, March 1997. b. Beverly Park Corporation Guest Log, Beverly Hills House and New York Condo, July 1999-May 2000. 114. Hidden Money Trail, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. Tax Haven Bank Secrecy Tricks * Code Names for Clients * Pay Phones, not Business Phones * . Foreign Area Codes * Undeclared Accounts * Encrypted Computers * Transfer Companies to Cover Tracks * Foreign Shell Companies * Fake Charitable Trusts * Stra....
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....ve no knowledge of the transmission." Prohibited Acts of a Foreign State -Art. 2 of the Liechtenstein State Security Law: "prohibited Acts for a Foreign State: Whoever, without being authorized, performs acts for a foreign state on Liechtenstein territory that are reserved to an authority or -an official, whoever aids and abets such acts, shall be punished by the Liechtenstein court (Landgericht) with imprisonment up to three years." Prohibited Acts for a Foreign State - Art. 271 of the Swiss Penal Code: "Whoever, without being authorized, performs acts for a foreign state on Swiss territory that are reserved to an authority or an official, whoever performs such acts for a foreign party or another foreign organization, whoever aids and abets such acts, shall be punished with Imprisonment up to three years or a fine, in serious cases with imprisonment of no less than one year." Economic Intelligence Service (Art. 273 SPC): 'Whoever seeks out a manufacturing or business secret in order to make it accessible to a foreign official agency, a foreign organization, a private enterprise, or their agents, whoever makes a manu....
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.... board comprising LGT officials, who exercise control of that entity on behalf of the beneficial owners. -Documents relating to a private family foundation are not recorded on the Liechtenstein pubic registry. Th. foundation Is a separate legal entity and the board members have discretion to nominate beneficiaries, so that secrecy is maintained. The ATO-understands that In practice the foundation board members act on the wishes or instructions of the settlor or beneficial owners of the entity. In other cases the client has used a foreign attorney to give instructions to the foundation board members or has replaced the by-laws or regulations of the foundation to appoint new beneficiaries. LGT allegedly designs client structures so that the client or beneficial owner, is unable to be connected to the Liechtenstein entity, whether that entity te a foundation, trust or anstalt. The services provided by LGT - on the banking and secrecy laws operating hi Liechtenstein to prevent disclosure of the client's identity or information. LGT will also arrange to open and operate a bank account for the foundation or trust It has established fo....
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....eter mining the underlying ownership and control of the entity established by LGT and Its assets and Income. LGT allegedly recommends to clients that fund transfers be conducted through interposed entities In countries outside the client's domestic jurisdiction. The Australian experience Is-that clients have adopted this recommendation and that few International fund transfers are remitted directly between Australian residents and Liechtenstein or Switzerland as detected by our FIU. Communication, between the ultimate beneficial owner of the foundation and LGT appears to be limited to either face to face or telephone contact LGT Instructs the ultimate beneficial owner of the foundation to avoid written correspondence with It and clients are provided with codes and passwords to maintain confidentiality and secrecy. Intelligence held by the ATO Indicates that at July 2006 there were 14 banks operating hi Liechtenstein with funds under control-of approximately 255 billion Swiss francs. Also operating in Liechtenstein was numerous Treuhand (Trust Service Companies). Further intelligence indicates that as at November 2006 approximate....
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....; In this case the annual accounts approved by the auditor must be submitted to the Liechtenstein tax administration. Contact Details -In case of losses or liabilities only the asset of the trust reg. have to be used to cover them Disclaimer -The minimum capital to constitute a trust reg. is CHF 30,000 HOST Trust reg.'s mission is to advise foreign investors and to establish It 11* them - based on legal expertise - companies or trusts in Liechtenstein to enhance profits. The Liechtenstein jurisdiction qualifies as an offshore financial centre. Foreign investors have the opportunity to establish companies or trusts ill the Principality of Liechtenstein to enjoy the advantages of our offshore financial centre due to: A very modest tax regime with special advantages for private asset structures i.e. legal entities and trusts which do not pursue any economic activity; A company law which offers next to the ordinary kind of companies like the company limited by shares ( Aktiengesellschaf/AG) those specifically designed to serve the needs coming along with holding of assets, namely the foundation (Stiftu....
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....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 transferable. - The beneficial interests may be assigned to persons other than the holder (s) of the founder's rights - The administration is taken care by the board of directors. - If commercial activities are pursued or the articles make provision for such activities an auditor must be appointed. In this case the annual accounts approved by the auditor must be submitted to the Liechtenstein tax administration. - In case of losses or liabilities only the assets of the establishment have to be used to cover them. - The minimum capital to constitute an establishment is CHF 30'000. Trust Reg (Trust Enterprise) The trust-reg. can be structured like a company limited by shares or foundation as an instrument for commercial activities or for the administration of assets. - The trust reg. qualifying as pr....
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.... 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 a collator can be appointed. - The keeping of annual accounts is not obligatory. - Trusts according to foreign law can be formed in Liechtenstein. - The assets held by the trust qualifying as private asset structure are subject to an annual tax of CHF 1 '200 only. - The distributions to the beneficiaries as well as the profits earned are not subje....
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....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 concerned as well as on what the parties have agreed. - All fees are subject to 8 % V A T and are charged against t....
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....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 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 ....
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.... 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 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 tr....
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.... 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 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....
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....rials for consideration. Where there 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 ....
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....e is also incorrect as we have discussed in earlier paras of this order that not only the documents rather the English translated copy of such documents was also provided. Therefore, this assertion of the assessee is also without any basis. Another assertion made by the assessee was that the information was unvouched and not corroborated with any evidence. We note that the said documents were received officially by the Government pursuant to an investigation made by permanent sub-committee on investigation of United States Senate. The copy of exhibit list regarding tax haven banks has already 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 Liech....
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....served 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. Moreover, in view of the above, the case laws referred by the ld. Counsel of the assessee are not applicable on the facts....
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....are justified and I uphold the same. 19. As regards reference of the learned counsel of the assessee for the tax treatment of the discretionary trust is concerned, it is noted that the said trust is in Liechestein, the tax laws of government of India do not apply. Hence, reference to cases which are in the Indian context are not at all applicable. Some of the salient features of trust in liechestein are already mentioned in the above said tribunal order. Hence, reference by the ld. Counsel of the assessee to apply Indian case laws to trust that are governed by law of Liechestein is bereft of cogency. 20. The ld. Counsel of the assessee's reference that data regarding bank balance is as on 31.12.2001 does not oxygenate the case of the assessee. The A.Y. 2002-03 very much encompasses the same. The reference by ld. Counsel of the assessee for A.O. mentioning sometimes US Dollars and sometimes Euro as currency is also not relevant as some error in mentioning the name of the currency in transcontinental, transfer of information regarding surreptitious bank holdings is not fatal. Apropos all other appeal 21. In the present case before us....
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....ducing any iota of evidence in support of its claim, which therefore remained only as a self serving statement. There was credible and reliable lation available that the appellant is beneficiary of above trust along with his, which had been set up by or on behalf of the family and for the family members. The detail such as name, address, date of birth mentioned in the trust documents are those of the appellant and his family members. In these circumstances/ the outright denial by the appellant of existence of the said trust or the bank account or other information with which he v/as confronted amounted to an explanation which is false, fraudulent, malafide and with intention to commit tax fraud. 6.4 The source of information is reliable and the validity of information cannot be in doubt. The onus is on the appellant to prove that the information obtained by the Indian Government is wrong. The ITAT Delhi Bench had occasion to consider a similar issue in the case of Shri Hersh Wing Chedha. In this judgement, it was held that "if the statement of a sovereign Govt, is not acceptable as reliable evidence in Indian tax proceedings, no case of crossborder transaction can e....
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....e here that the information received by the department also contained a summary of bank account as on particular date which showed that interest has been paid by the bank on the deposits made in the said bank account held by the trust of which the appellant and his family members are the beneficiaries. The appellant has not disclosed any such bank account or the benefits derived out of it in the income tax returns filed by it. Hence, there was tangible material on record to believe that income chargeable to tax had escaped assessment arid it is for the appellant to prove with supporting evidence mat no such benefit has been derived by the appellant out of the deposits made in the bank account held by the trust It has also been held by the Hon'ble ITAT Delhi in the above cited judgment of Hersh Win Chadha that "there is no presumption in law that tJte A.G. is supposed to discharge an impossible burden to assesss the tax liabilit; by direct evidence only and to establish the evasion beyond doubt as in criminal proceeding:., He can assess on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incrimi....