TaxTMI 
TaxTMI 
2021 (11) TMI 420
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....brought in by the present Government in 2015, as a part of a series of measures, to address the menace of undisclosed income and assets stashed abroad. Factual backdrop: 2. It is a case wherein based on the intelligence inputs with respect to offshore entities in the British Virgin Islands (BVI), that the income tax investigation wing claims to have learnt that Gold Jewel Corporation (GJC-BVI in short), a company formed in the BVI on 7th July 2008, had its beneficial owners in India and that GJC-BVI operated certain bank account in the UBS, AG, Singapore branch (UBS Bank, in short). It appears that this input was investigated further, information was successfully requisitioned from, amongst others, the Government of Singapore under the 'exchange of information' clause in the India Singapore Double Taxation Avoidance Agreement [(1994) 209 ITR (Stat) 1], and the inputs available to the investigation wing were analysed. The two undisclosed bank accounts reflect credit entries of US$ 122,011,244 and US$ 25,011,282 (equal to Rs. 999.74 crores, as computed by the Assessing Officer by adopting the rate of 1US$ as equal to INR 68), but then many of these entries were intra-bank and c....
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.... required the assessee to disclose information about offshore entities "in which you or your family members..... are promoter, partner, proprietor, trustee, settlor, beneficiary etc" and "state whether interest in such offshore entities were disclosed to the income tax authorities". Nothing further happened thereafter, except for taking the reply on record. A similar summons, with a requisition for the same information, was again issued on 24th November 2014, by the then Dy Director of Investigation. Copies of this summons and replies thereto are placed before us on pages 1-24 of the paper book filed by the assessee. The assessee was in denial mode and did not volunteer any information about the GJC-BVI or the bank accounts with the UBS Bank, Singapore. No such information was shared with the income tax authorities. It appears that the inputs available with the investigation wing were investigated further and relevant information was gathered from the agencies in different parts of the world. Armed with the information so collected, the investigation wing took steps to conduct search and seizure operations to take the matter to a logical conclusion. 3. It was in this backdrop th....
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.... put by the search team and the answers as given by the assessee, which reflect the above position, are reproduced below: Q 40. Are you aware about a concern M/s. Gold Jewel Corporation, BVI? Ans. To the best of my knowledge, answer is No. Q.41 Do you have any relation or connection in any manner whatsoever with the company M/s. Gold Jewel Corporation based in Portcullis, Trustnet Chambers, P.O. box 3444, Road Town, Tortola, British Virgin Islands (BVI)? Ans. To the best of my knowledge, answer is No. Q. 42 Do you have any business or personal transactions in any capacity in UBS AG Bank, Singapore or any other foreign bank in a foreign country? Ans. No transactions have taken place. Q.43 Did you sign any account agreement or any other document with UBS AG, Singapore or any other foreign bank in a foreign country in the last 10 years? If so, please state the detailed particulars of the same. Ans. To the best of my knowledge, answer is No. Q.44 Are you a beneficial owner or have any other interest in any foreign bank account? Ans. Personally No. However, Goldiam subsidiary in America and Honkong....
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....such document in the past. Q.53 I am showing you Account Opening Form for Corporation/ Trust/ Partnership/ Association of total 15 pages of Account No. 161753. On page No.3 of the Details and Mandate, the details of Corporation or Trust, Country and date of incorporation and registration number, registered office address, nature of business along with the names and specimen signatures of List of directors/partners/trustees/officers with Names of RasheshManharkumar Bhansali and Ami Rashesh Bhansali with designation as Directors along with your passport nos. F3687352 & Z1457657. Please go through the contents of page No.3 of the Account Mandate and offer your comments. Also please confirm as to whether the name and passport id number that appears on page No. 3 belong to you? Please explain these documents. Ans. I don't recall signing any such document. Regarding Passport it is a xerox copy of my old passport. I do not know how this has gone to UBS AG Bank, Singapore. Q.54 I am showing you the account Opening Form for Corporation/ Trust/ Partnership/ Association of total l5 pages of Account No.161753 whereas page No.5 reflects the name details of the Authori....
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.... to verify the whereabouts of myself and Ami Bansali on 26.08.2008 and get back. I will verify by 20.04.2016. Q.58 In the KYC Documents received there are copies of certified true copy of passports of Shri RasheshManharkumar Bhansali and Smt Ami Rashesh Bhansali. Please go through the contents of these documents and explain. Ans. These certified true copies specially of passports are used frequently by me for opening any D'mat account, bank account in India, visa purposes etc. etc. I am not sure how this has gone to Singapore. Q.59 I am now showing you a document titled "Corporate Certificate" in respect of foreign bank account No. 161753 [4 to 5 pages). On page 4 there are details of Name of Charger as Gold Jewel Corporation, Names of Authorised Representatives as RasheshManharkurnar Bhansali and Ami Rashesh Bhansali. Please go through the contents -of this document and explain. Ans. I have seen the pages that have shown to me. Again I am shocked to see our names on it. Q.60 I am showing you Incorporation details/certificates related to Gold Jewel Corporation at BVI which consists of Resolution of opening of bank account with UBS, AG, S....
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....161753 of Gold Jewel Corporation with UBS AG, Singapore branch, there is an outgoing payment of USD$ 3702810 on 26.9.2008 to Shri RasheshManharkumar Bhansali. What do you know about this outgoing payment. Please furnish details of account no, name of the bank, bank address to which this amount is going. Please also explain whether this receipt is reflected in your regular books of accounts or not? Ans. I do not know. Q.66 Perusal of the bank statement of foreign bank account No. 161753 of Gold Jewel Corporation with UBS AG, Singapore branch there are outgoing payment of USD 71303, 29308, 13000 respectively on 10.06.2009, 12.06.2009, 18.11.2009 being transfer of amount to the account of M/s Goldiam international Limited. Please explain the nature of these debit entries in the foreign bank account of Gold Jewel Corporation. Please explain whether these receipts are reflected in the regular books of accounts of M/s. Goldiam International Limited. Please provide ledger copies of these receipts in the books of accounts of M/s Goldiam International Limited. Also provide details of bank account to which these remittance are received by M/s Goldiam international Limited? ....
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....count and whether these credits are reflected in your income tax returns. F.Y. Amount (USD$) 2008-09 12018359 2009-10 109992885 Total 122011244 x 68 829,67,64,592 Ans. Some one a proper CA needs to study the credits and debits of these entries to ascertain the figures further statement I do not know and since I do not know they will not reflect in my tax returns. Q.71 The facts available indicate that you and your wife are a beneficial owner in the bank account No. 161753 of Gold Jewel Corporation with UBS AG, Singapore branch You have not explained the sources of credits received in the said bank account. Please state as to why the sum of Rs. 829,67,64,592/- should not be treated as your income for these years in view of the fact that you are the beneficial owner of the said foreign bank account. Ans. As stated earlier these do not belong to me hence I have no comments for the same. Q.72 Please explain as to why your contention that you are not the beneficial owner of the assets, including foreign bank account of M/s Gold Jewel Corporation should be accepted in view of the contrary facts present. Ans. I bel....
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....ese law few questions and reply as I am being framed on paper from UBS AG Bank, Singapore. The accuracy of data and beneficial has to be proved. ............. Q.78 I am showing you bank statement of Bank account no. 137274 in UBS AG Bank Singapore. This bank statement has been received from sovereign authority Singapore. You may go through the said bank statement. Does this bank account belongs to you. Please explain. Ans. This Bank account also does not belong to me. Q.79 Please explain the credit entries appearing in this bank account including the sources of the same. Ans. I do not know. Q. 80 The examination of the said bank account shows that there are credit entries of USD$ 2,50,11,282 during the FY 2008-09. Please explain the sources of these credit entries. Ans. I do not know and I do not remember. Date Name Credit in US$ Debit in US$ 04-08-2008 Asha Samir Bhansali [Sister of Rashesh M. Bhansali] 21,86,000 05-08-2008 Sahil Pravin Jain 21,86,000 25-09-2008 Gold Jewel Corporation 37,02,810 Q.81 Please explain these entries. Ans.....
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....n 17th August 2017, a notice under section 10(1) of the BMA was served on the assessee informing the assessee that there is certain specific information concerning the assets held abroad and requiring the assessee to produce or cause to be produced, the accounts and documents specified in the annexure, and furnish in writing, and verified in the prescribed manner, the information called for on the points and matters specified therein. The assessee was, inter alia, asked to furnish the list of all bank accounts held outside India and to furnish complete details of all such accounts right from the date of opening till date, a detailed note on the transactions carried out in these foreign bank accounts and their tax treatment. Instead of complying with this requisition, the assessee submitted that the BMA is not applicable in this case because it applies only from 1st April 2016 onwards, i.e. the assessment year 2016-17. It was also pointed out that somewhat similar requisitions were made by the income tax authorities on 19th July 2013 and 24th January 2014, which have been replied to, and a search operation was carried out on the assessee on 17th March 2016 for which post search asse....
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...., your family members and any concern of the Goldiam Group. In this regard, this office is in receipt of your reply dated 08-02-2019, submitted with this effect on 11-02-2019, wherein it is informed that neither you and/or any of your family members have any foreign Bank Account and/or asset. Further, it is also informed that no concern of Goldiam Group is having any foreign asset and/ or any overseas bank Account. Your attention is drawn to the details and photo copies of relevant documents in respect of Overseas Bank Account No.161753 and 137274, maintained with UBS AG, Singapore, provided to your Authorized Representatives, vide this office order sheet noting dated 09-02-2011, which is as under: 1. Notification of Account opening (A/c No.161753) in the name of M/s Gold Jewel Corporation which mentions that the Account Opening form is duly signed by you on 26-08-2008. 2. The part-1 of Account opening form containing details and mandate as under: Name of the Corporation Gold Jewel Corporation Address British Virgin Island Date of incorporation 07-07-2008 Registration No. 1491607 Nature of Business Investment Holding....
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....ashesh Address Nishika Terraces 55th Floor, A.G. Khan Road, Worli Sea face, Mumbai-400 030 6. Copy of Passport of Ami Rashesh Bhansali having the following details: Type of Passport P Country India Passport No. Z1457657 Name Ami Rashesh Bhansali Nationality Indian Sex Female Date of birth 23-05-1968 Place of birth Mumbai MS Place of Issue Mumbai Date of issue 19-03-2005 (the month appears to be 03) Date of expiry 18-03-2011 Address 1001, SrriRamikrishnaSadan, Sir Pochikhanwala Road, Worli, Mumbai-25 The documents are certified as True Copy by Arunabh Banerjee, WM India Intl. Asia, UBS AG, Singapore on 28-08-2008. 7. Memorandum of Charge, issued to the UBS AG bank wherein, the charger and borrowers are mentioned as Gold Jewel Corporation, Portcullis Trustnet Chambers, P.O. Box-3444, Road Town, Toriola, British Virgin Islands. 8. MOA and AOA of Gold Jewel Corporation, director's resolution adopted without a meeting on 12-08-2008 specifying Shri Rashes ManharkumarBhansaliaAmi Rashesh Bhansali as directors and details of their share holding in Gold Jewel Corporation. Th....
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....and also, beneficial ownership of the Account No. 161753 and 137274 is denied. The copies of the above mentioned documents have their own legal sanctity and validity. The documents and sequence of events, clearly and with forceful impact, indicate that you are one of the director in M/s Gold Jewel Corporation and the beneficial owner of the bank account in the UBS AG Bank, Singapore, as mentioned above. Investigation and enquiries further revealed that during the period of 2008 to 2010, the two offshore bank accounts as mentioned above were maintained and operated by Shri Rashesh M. Bhansali and Smt. Ami Rashesh Bhansali and large amount of credit entries were recorded which were not reported in their respective income-tax returns for the relevant Assessment years. Information were gathered from the Singapore Competent Authorities in this regard. The details of Bank Accounts are as under: Name of the Bank Account No. Total Credit in USD INR value of credits as on the Account the date of search (@Rs. 68) Name of the Account Holder Date of opening of Bank Account Date of Account closure UBS AG Singapore 161753 122011244 8296764592 ....
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....ons u/s 45 of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015. 5. On 19th February 2019, the assessee, in response to the summons, once again stated, as he had stated time and again, that he or his family had no connection whatsoever "with the alleged two bank accounts (in the UBS Bank, Singapore)". While the assessee was in complete denial about the facts, he did raise several legal arguments in support of the non-applicability of the BMA on the facts of this case, and also referred to the pending writ petition before Hon'ble Bombay High Court challenging the proceedings in question. It was also stated that so far as GJC-BVI is concerned, it is a separate legal entity and even a beneficial owner of the said company, which the assessee reiterated that he is not, can at best be taxed in respect of dividends. It was also pointed out that admittedly no dividends were paid by the said company. It was then pointed out that the expression Assessing Officer includes an Assistant Director or Deputy Director which includes an officer posted in the investigation wing, and since the existence of these bank accounts was in the knowledge of the officer....
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....as joint tenants with right of survivorship. v. The books of accounts, records, resolutions and minutes of the company are kept at c/o UBS AG, Singapore, one Raffles Quay. # 50-12, North Tower, Singapore 048583 and the original register of members and directors to be kept at c/o Portcullis Trustnet Chambers, P.O. Box No.-3444, Road Town Tortala, British Virgin Islands vi. A bank account in the name of the company be opened with UBS, AG, Singapore and the Account Opening Mandates and forms be signed and account be operated by RasheshManharkumar Bhansali and Ami Rashesh Bhansali. Please peruse the Board's resolution dated 12-08-2008 and confirm the content therein and also, please confirm that the resolution is signed by you and Smt. Ami Rashesh Bhansali as directors. Ans. I have reviewed the documents shown to me. I am seeing account number 161753 declaring the beneficial owner's identity. I would like to state that Ami Bhansali has not signed this document and her signatures are not there confirming she is not a beneficial owner of Account No.-161753 belonging to Gold Jewel Corporation, whereas the other signature looks like mine but, is ....
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....e company Gold Jewel Corporation, the documents that states that we are the first directors of the companies. To the best of my knowledge they are not signed by us. Q.14 From the documents i.e. MOA, AOA, appointment of directors, director's register and director's Resolution, Application for shares, Shares Certificate etc., shown to you and answers given by you in response to above questions, it is established that M/s Gold Jewel Corporation is an offshore entity incorporated and registered in British Virgin Island. Please confirm the same. Ans. As I have stated above, I and Ami Bhansali have not signed any such documents and we are not aware of M/s Gold Jewel Corporation. Q.15 From the documents shown to you especially the Board's resolution dated 12-08-2008, is evident that the company, by passing a board's resolution of the aforesaid date, decided to open Bank Account in UBS, AG, Singapore. The document is signed by you and Smt. Ami Rashesh Bhansali as directors. Please confirm the same and comment of the same. Ans. As I have already stated in reply to the foregoing questions, I and Ami Bhansali have not signed any documents, a....
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....20 From the various documents viz, MOA, AOA, appointment of directors, director's register and director's Resolution, Application for shares, Shares Certificate, bank account opening form etc., above questions and their respective replies given by you, it is established that you and Smt. Ami Rashesh Bhansali are the shareholders and director of M/s Gold Jewel Corporation and you and Ami Rashesh Bhansali had opened a bank account No.-161 753 in the UBS, AG Singapore, with a declaration that you and Smt. Ami Rashesh Bhansali are the beneficial owner of the Bank Account being the directors of M/s Gold Jewel Corporation, Please confirm and comment on the same. Ans. As per the documents shown to me, we have not opened any such bank account. Ami bhansali's signature is not there in the beneficial owner' statement in account No. 161753 and I also confirm that none of the document is signed by me and Ami Bhansali. Q.21 I am showing you copy of notification of account opening of account No.-161753 wherein UBS, AG, Singapore has notified M/s. Gold Jewel Corporation vide notification dated 04-09-2019 for opening of bark account No. 161753. Please go through t....
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....rom account No.-161753 (Gold Jewel Corporation, BVI) to HSBC India account No.- 000-64417-2 with instruction for onward credit to HSBC Lokhandwala Branch account 110-023587-001 (Goldiam Jewellery Ltd.) Please go through the remittance instruction, confirm that the instruction was issued by you under your signature and explain the transaction. Ans. I have not given any such instruction to the bank and the signature on the instruction is not mine. Q.27 I am showing you copy of document instructing Anurabh Banerjee of UBS, AG, Singapore, by you and under your signature for Gold Jewel Corporation. As per the "Remittance Instruction", you have instructed the bank to remit USD 18,000 as per instructions. Please go through the remittance instruction, confirm that the instruction was issued by you under your signature and explain the transaction. Ans. I have not given any such instruction to the bank and the signature on the instruction is rot mine. Q.28 I am showing you copy of document instructing Anurabh Banerjee of UBS, AG, Singapore, by you and under your signature for Gold Jewel Corporation. As per the "Remittance Instruction", you have instructed ....
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....S AG, Singapore at various occasions under your signature and accordingly transactions were made. All the aforementioned documents bear your signature which matches with your signature as seen from copy of your Indian Passport bearing No. - F3687352. Please comment. Ans. I have not signed any such documents Q.32 In your statement u/s 132(4) of the Income tax Act, dated 18-03-2016, in answer to Q.No.-43, you have stated that you have not signed any account opening documents and any other do with UBS AG, Singapore. However from the MOA, AOA, Share application, Share certificate and bank account opening form, instruction issued to the Bank UBS AG, Singapore at various occasions under your signature and accordingly transactions were made. Al the aforementioned documents bear your signature which matches with your signature as seen from copy of your Indian Passport bearing No.- F3687352. Please comment. Ans. I have not signed any such documents. Q.33 You have denied to have signed any of the following document as shown to you. i. Memorandum of Association of M/s Gold Jewel Corporation ii. Article of Association of M/s Gold Jewel Corp....
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....debited from the Account by Sahil Pravin Jain. What is your comment on the same and what was this transfer of huge amount for? Ans. I do not know anything about this transaction. Q.42 Do you know any concern in the name of M/s Hinkar Exports? Ans. I do not know any such concern. Q.43 I am showing you an entry in the bank statement for Account No.-161753 maintained in the name of Gold Jewel Corporation, BVI in UBS AG, Singapore. On 25-09-2008, an amount of USD 50,000 is credited in the Account by M/s Hinkar Exports. What is your comment on the same and what was this transfer of huge amount for? Ans. I do not know anything about this transaction. Q44 Who is Shri Karnawat Surya Prakash? Ans. I do not know any such person. Q.45 I am showing you an entry in the bank statement for Account No.-161753 maintained in the name of Gold Jewel Corporation, BVI in UBS AG, Singapore. On 26-09-2008, an amount of USD 49972 is credited in the Account by Shri Karnawat Surya Prakash. What is your comment about this entry and what was this transaction for? Ans. I do not know anything about this transaction. Q.46 Wh....
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....nternational Ltd. on various occasions. Being a director in M/s Goldiam International which has received the sun as instructed, please explain the transaction. Ans. I am seeing again photo copies of this communication where the signatures seem to be mine but are not signed by me. Q.53 Please state whether M/s Goldiam International Has received USD 71103.31, 36,800, 18,000 and 13,000 from M/s Gold Jewel Corporation, BVIP? Ans. I will check and get back to you on this. Q.54 Please furnish the bank statements of all bank accounts of M/s Goldiam International from the period from F.Y.-2007-08 to 2011-12. Ans. I do not have them readily available with me. I will furnish the same with you by as soon as possible. 6. The Assessing Officer noted the above and also reproduced the copies of documentary evidence such as bank's notification of account opening, account opening form, details and mandates to the bank, correspondence and instructions, investment services, agreements with the bank and signatures, declaration of beneficial ownership as declared, copies of passports, memorandum of charge, memorandum and articles of association of GJC-BVI....
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....erminology used in the process are illustrated as under: SWIFT Transfer- SWIFT is an abbreviated form of Society for Worldwide Interbank Financial Telecommunication'. The service of SWIFT is used by the Banks and other financial organization across the world to send and receive financial transaction information in a standardized, secured and reliable environment. ABA Route Number- ABA is an abbreviation for American Bankers Association'. ABA Route No. is a unique number assigned by the ABA that identifies a specific federal or state bank or saving institution. ABA transit number is used to identify the financial institution responsible for payment of a Cheques or other negotiable instrument. CHIPS- CHIPS is an abbreviation for "Clearing House Interbank Payments System, This is a Private Clearing House in the United States for large-value transactions. The entire route of transfer of money from the undisclosed Bank Account to destination Account is illustrated as under. To further illustrate the channels of transaction the following diagrams is exhibited for a better understanding. 7.7 The linear chain of transaction in the forego....
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....sible since every credit entry is not an income liable to tax. 5. Hence, on taking the Department's own evidence (which does not require further evidence to be produced by me), the tax liability, if any, under the Black Money Act, cannot be so high. 6. With great respect, I am entitled to raise/place/make my defense on the basis of Department's case only, without being required to produce any further evidence from my side. However, with a view to test the correct position, in law, merely owning the bank accounts will not automatically attract the provisions of the Black Money Act, since, as per the evidence produced by the department, the Bank accounts were operated only during the assessment years 2008-09 to 2010-11 and closed during year 2008 & 2011, which is well before the Bank Money Act came into force. Besides, information with respect to such bank accounts was available with the Department in 2013-14, which also is before the Black Money Act was enacted. As such, by owning the accounts also, I do not fall under the Black Money Act, more so for reasons, which are particularly set out in Writ petition No. 40 of 2019 filed by me before the Hon'ble ....
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....not supported by the withdrawals, in account nos. 161753 and 137274 were only US $ 7,15,538.58 and US $ 1,29,688.92 respectively, which, vide statement dated 28th March 2019, the assessee offered to tax. 9. It was explained that all the investments were made out of borrowings from the same bank and that "there was no collateral security given to the bank against the loan availed". It was also contended that "the loan was taken from the same bank which was invested with them in their own suggested schemes like various structural products, callable notes and bonds etc". It was explained that "on maturity or redemption, the bank would take the loan back along with their interest and credited the difference to the account which was the actual gain" In effect thus, here was a banker which gave assessee loans for the entire amount needed for purchasing their own products, and the only effective financial transaction was a net gain to the assessee on redemption. 10. In view of the submissions so made by the assessee on 28th March 2019, the summons under section 8(b) was issued for an appearance on that day itself, and a formal statement of the assessee was recorded. Some of the ques....
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.... It seems he did open the aforesaid Bank Accounts in our names and operated the same. As I have come to know about this yesterday and on taking legal opinion also, I now am able to own up these accounts opened and operated by my father in my name. Please also note that the beneficial owner in the account No 161753 was always Rasesh Bhansali only. Q.7 In your reply to Q. No 6 above, you have stated that your father did open Bank Account No 161753 and 137274 in the UBS, AG, Singapore, in your name and in the name of Ami Bhansali. If at all you did not recollect this at the time Search and subsequent proceedings, did you not speak to your father about the issues raised during the course of Search and/or afterwards? Ans. During the Search, the concerned officer took me to another room and she showed me the related documents. Post that, he took me to my factory and then next day to my other office. Post the Search was over, I did tell my father about the question asked. As I could see, the eminent stress on him due to his old age and various age related ailments, I did not press on this matter further with him. Q.8 Being the director in all of the group compan....
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.... to Newmont (Hong Kong) Ltd. please explain the treatment of these amounts in the respective companies. Ans. Amount of US$ 71103.31 and 13000 remitted to Goldiam International has been accounted for in the books of accounts of the company and offered for taxation. Similarly, the amount of US$ 36800 remitted to Goldiam Jewellery Ltd. has also been accounted for in the books of accounts of the company and offered for taxation. However, I do not know Newmont (Hong Kong) Ltd. and what the remittance was made for. Q.12 As can be seen from the records the Bank account No. 161753 was jointly held and operated by you and Smt. Ami Bhansali. In your statement, you are stating that you are the only beneficial owner of the Bank Account No. 161753 However, in the Bank Account Opening form the names mentioned as beneficial owner are Rashesh M. Bhansali and Ami R. Bhansali. Further, in another KYC document, it is clearly mentioned that Rashesh Bhansali and Ami Bhansali will operate the bank account for an unlimited amount. Please offer your comments on the same. Ans. The account number 161753 pertained to M/s Gold Jewel Corporation, BVI. As a legal requirement for all c....
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....account statement, the Callable Range Accrual Note was redeemed prematurely on 22-02-2010. Since the note was prematurely redeemed, as per the terms of the Note, the redemption value of US$ 3213307.63 was credited in the account No. 161753. Q.18 I am showing you the copy of Bank Account Statement in respect of Account No. 161753 and 137274. On occasions Loans are received from the Bank which were later on repaid. Please state what collateral security was given to the Bank to avail such loans. Ans. There was no collateral security given to the bank against the loan availed. The loans taken was never gone out of the account. The loan was taken from the same bank which was invested with them in their own suggested schemes like various structural products, callable notes and bonds etc. So in reality, the loan amount was held with the bank only for which there was no requirement of any collateral security. On maturity or redemption, the Bank would take the loan back along with their interest and credited the difference to the account which was the actual gain. Q.19 On 22-02-2010, an amount is seen to be credited in Bank account No. 161753. The transaction deta....
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....ions of finance, borrowing, investment expansion of business etc. were taken by him only. In these department; papers that were sent to me and Ami for signatures by my father were unquestionably signed by me and Ami. It thus appeared that those signed papers were pertaining to the very same two accounts which must have got opened by my father in our names, for reasons best known to him. I am not aware as to why these accounts were got opened by my father. I immediately took legal advice and accordingly in light of this, I do hereby categorically own up these accounts viz. account number - 137274 belonging to Rashesh Bhansali and account number - 161753 belonging to M/s. Gold Jewel Corporation, where beneficial owner is Rashesh Bhansali only though shareholders are Rashesh Bhansali & Ami Bhansali. My wife, Ami Bhansali was never a beneficial owner of M/s. Gold Jewel Corporation which is also clear from the fact that the beneficial owner form shown by you also does not bear her signature. 3. There has been no collateral given for availing the loans which are reflected in the statements of accounts shown by you to me. In fact these statements reflect that the loans taken from....
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....s clearly triggers a strong belief that the Assessee has no specific explanation to offer in this regard. 9.4 Further, it is noticed from the Bank Account Statement that an Jewel Corporation, BVI, by his father, and accordingly he was also made the joint holder in the Bank Account No. 161753 in the UBS, AG,Singapore along with Smt. Ami Rashesh Bhansali. The version of the Assessee is not acceptable in view of the facts on records. Since, the Assessee was a director in M/s Gold Jewel Corporation and was a joint holder of the Bank Account No. 161753; for whatever purpose, he accountable for the transaction made through the Bank Account. It is a fact on record that he issued instructions to the UBS, AG, Singapore, for remittance of amount from Account No. 161753 on various, occasions. The fact is established through various documentary evidences provided by the Competent Authorities of Singapore through the FT &TR, which has been discussed in length in the foregoing Paragraphs herein above, that the Assessee was a director in the offshore entity M/s Gold Jewel Corporation, BVI, and was a joint account holder in the Bank Account No. 161753 held in the name of M/s Gold Jewel Co....
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....hould not be considered as beneficial owner of M/s Gold Jewel Corporation, BVI and the Account no. 161753 and also, why the amount of US$ 3213307.60 should not be treated as a part of her income. However, the burden of proof was not discharged. Therefore, the assessee has failed to discharge the onus of proving and establishing as to why she should not be considered as beneficial owner of M/s. Gold jewel Corporation, BVI and the Account no. 161753 and the aforesaid amount should not be considered as a part of income 9.6 It is therefore, construed that, the assessee is a beneficial owner of offshore entity M/s Gold Jewel Corporation and Bank Account No. 161753 and 137274 maintained in the UBS, AG, Singapore. 13. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the CIT(A) on the following grounds: 1) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in passing the impugned order without affording adequate opportunity of being heard to the assessee. 2) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in invoking the ....
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....he conversion rate of USD to INR 66.4268) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in levying surcharge while calculating the total demand, as per the ground/s contained in the assessment order or otherwise. 7) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in levying cess while calculating the total demand, as per the ground/s contained in the assessment order or otherwise, 8) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in levying interest u/s 234A, B&C while calculating the total demand, as per the ground/s contained in the assessment order or otherwise. 14. In appeal before the CIT(A), there were two sets of arguments- first, against inapplicability of the BMA on the facts of the case; and, second, against the impugned additions made by the Assessing Officer. So far as the first set of arguments were concerned, these arguments were rejected in entirety, and, in broad terms, it was held that even if an asset has been acquired before commencement of the BMA, the same would be taxable in the year in which it comes to the n....
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.... any unaccounted asset abroad, which did not exist as at the point of time when the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 came into force, i.e. 1st July 2015, can be assessed under the said legislation? (b) Whether an undisclosed bank account abroad can be treated as an asset under section 2(12) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015? (c) Whether the provisions of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 can be pressed into service in respect of an undisclosed foreign asset or income which was already in the knowledge of the revenue authorities as at the point when the said legislation came into force? (d) Whether the assessee can be treated as a beneficial owner, under Explanation 4 to Section 139(1) of the Income Tax Act, 1961- which, according to the learned counsel, holds good in the present context as well, of the account in the name of the Gold Jewell Corporation BVI, and be thus assessed in respect of the same, and, whether, in this regard, the coordinate bench decision in the case of ACIT Vs Jitendra Mehra (BMA No....
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....ession "which is held by the assessee" or of which the assessee "is a beneficial owner", which indicates the continuing existence of the asset. When the asset does not exist, at the point of time when the law came into effect, there cannot be any occasion to invoke the provisions of the said Act. The basic contention of learned senior counsel, in this regard, is that while this Act came in force with effect from 1st April 2015, as is provided by Section 1(3) of the Act, and while the definition of undisclosed asset under section 2(11) refers to the undisclosed asset of which the assessee "is" beneficial owner, the relevant bank accounts did not exist at the point of time when the Act came into force, and, therefore, the provisions of this Act cannot be pressed into service vis-à-vis a bank account which did not exist on that date. He took us through Hon'ble Supreme Court's judgment in the case of FS Gandhi Vs CWT [(1990) 184 ITR 34 (SC)] in support of the connotations of expression "is" appearing in the statute, and submitted that the ratio of this case will squarely apply to the fact situation that we are dealing with. Learned counsel has also emphasized the fact that the a....
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.... by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory". It is thus submitted that an asset, as the language of section 2(11) suggests, has to be acquired for a cost, because it is only when there is no explanation, or unreasonable explanation, for investment in such asset that the asset can be treated as assessable under section 3. He gives the example of a house property held abroad and submits that it will have a value in much as it constitutes an investment. He, however, submits that under rule 3 (e) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Rules, 2015 (BMR, in short) a mechanism has indeed been provided for valuing a bank account, but then the provisions of the rule cannot override the provisions of the Act. He then takes us through the provisions of rule 3(e) which provide that "value of an account with a bank shall be, (i) the sum of all the deposits made in the account with the bank since the date of opening of the account; or (ii) where a declaration of s....
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....e BMA came into force, did not constitute an asset, and, accordingly, these bank accounts cannot be assessed in the hands of the assessee. Learned counsel submits that in any case the Assessing Officer could bring any income, even if not covered by the BMA, to tax in the post search assessments, and as such, there is no loss of revenue on account of a bank account being taken out of the ambit of Section 2(11) and (12). It is further urged that credit entries in these accounts cannot be treated as income because the expression 'income' inherently refers to the earnings from the receipts which can only be net of the expenses. 19. Learned senior counsel then submits that the bank accounts in question cannot be said to be undisclosed assets inasmuch these assets were in the knowledge of the income tax authorities much before the provisions of the BMA came into effect. Learned counsel then invites our attention to the CBDT circular no. 13 of 2015, dated 6th July 2015, which, in reply to question no. 12, admits that an assessee cannot make a declaration in respect of an undisclosed asset in respect of which the Government has received the information. He submits that it was in 2013 fo....
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....ffshore assets only, and, to highlight this aspect of the matter, he takes us to the fourth proviso to Section 139(1). We are thus urged to vacate the impugned additions for this reason as well and hold that the assessee was not a beneficial owner of the bank accounts in question. 21. Learned senior counsel then briefly addressed us on merits, He submitted that when each of the entries in the bank account is explained, there cannot be any question of any addition being made. Learned counsel submitted that what is being added in the hands of the assessee is value of an undisclosed asset and, therefore, all that is to be seen is whether the entry stands explained or not. When it was pointed out that the assessee has not even given the complete bank accounts and the assessee has not explained the source of investments, it was submitted that the additions have been made based on the documents on record, and, therefore, the documents not produced cease to be relevant and that his instructions are that the investments have been made out of borrowings. Learned counsel submits that, as per information available to him, whatever is invested is out of the funds provided by the bank on loa....
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....ttance received on 4th August 2008, from Asha Samir Bhansali, it has been explained as loan from sister and there is a corresponding entry the very next day i.e. 5th August 2008. It is thus nothing more than a contra entry and fully explained. It is once again emphasized that once a credit entry is reasonably explained and is not of the income nature, no additions can be made in respect of the same. Learned senior counsel for the assessee did not say much on the facts of the case, and when asked about the conduct of the assessee, he did not make any further submissions on the conduct on what the assessee has already explained at the assessment stage. He nevertheless pointed out that the requirement of disclosure of foreign bank accounts in the income tax returns did not exist at the relevant point of time and, therefore, the assessee could not be said to be at fault on this point. Learned senior counsel submits that once the affidavit of the assessee, owning up these bank accounts have been accepted by the Assessing Officer, it cannot be open to him to disregard the part of the affidavit which supports the case of the assessee. In this backdrop, it is urged that the assessee's wife....
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....t is submitted that the explanations of the assessee during the search proceedings, during the BMA proceedings as also the story cooked up for explaining the delay in owning up the bank accounts, lack any credibility. Learned Commissioner submits that the assessee has not come clean about these bank accounts and continued to be evasive even during the assessment and appellate proceedings. 24. As for the question that the BMA provisions cannot have any retrospective applications inasmuch as the assets did not exist at the point of time when the provisions of the BMA came into effect, learned Commissioner, relying upon the elaborate reasoning set out in the impugned order, stated that it is not a condition precedent for charging an asset under this Act that the assessee must continue to hold or be a beneficial owner of the asset in question. All that is necessary, according to Shri Mohan, is that the related assets must come to the notice of the Assessing Officer in the relevant previous year and that is what proviso to Section 3(1) specifically provides. Learned Commissioner then referred to the provision of Section 72(c) which provides that even in respect of the assets acquired....
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....ught to tax are only interest entries and unexplained credits which are of income nature anyway. As for the connotations of the expression 'beneficial owner' under the ITA, learned CIT(DR) submits that the assessee had much more than beneficial ownership of the bank accounts. The assessee directly owned, operated and maintained the bank accounts in question, and, therefore, it cannot be said that the accounts did not belong to the assessee. It was also submitted that as for the consideration for these assets, held as unaccounted assets abroad, flows through unofficial channels and in dark, and it can never be thus possible to prove the payment of such consideration. We are urged to hold that the definition set out in Explanation 4 to Section 139(1) of the ITA will not hold good in this regard. 26. Learned CIT(DR) explains that the inquiries conducted in 2013 were by the investigation wing, and, therefore, it could not be said that the Assessing Officer was aware of the existence of these bank accounts. What really matters is the previous year in which the Assessing Officer comes to know about these assets- as is the clear mandate of the proviso to Section 3(1). As for the clarif....
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....ese two accounts. Learned counsel once again explained the entries in the books of accounts and justified the same. When it was put to him that as to how could a bank advance loan, for investment in its own products, without any margin money or without any collateral security, learned counsel did not have much to say. While he painstakingly took us through the bank statements and attempted to explain every entry, he could not explain th commercial rationale for such a structure. He once again submitted that he has instructions to say that neither there was margin money nor collateral security for these borrowings. When we asked him as to how can the assessee be trusted for his explanation in the absence of any documentary evidence to substantiate the same and as to why has the assessee has not furnished the complete bank statements at least, learned counsel simply relied upon the stand of the assessee on the instructions as received from the assessee. Learned counsel nevertheless addressed us at length on legal principles and broadly reiterated the stand of the learned senior counsel. He submitted that it is not the asset held in past which is outside the ambit of BMA but his conte....
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....ssee is a beneficial owner of both of these accounts. 30. The matter was once again fixed for hearing on 27th October 2021, two days after the conclusion of hearing, for certain clarifications and for the perusal of assessment records, in the presence of the assessee, as we were not satisfied by the explanations of the assessee on the margin money and the collateral security. 31. During the course of perusal of assessment records, we noticed that, as evident from the supplementary appraisal report on 14th August 2017, that there was one more bank account, i.e. account no. 611254, maintained with UBS Bank Singapore, but somehow it has not been taken into account in any of the orders of the authorities below. However, we declined to take judicial note of the same as it was marked 'confidential' and a copy of this was not furnished to the assessee. Learned Commissioner (DR), however, prayed that a judicial note may be taken of the same and that he is willing to allow access to this report to the assessee. Learned counsel for the assessee also did not object to judicial note being taken in respect of the same. In these circumstances, we havetaken note of the following observation....
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....t, or to prevent Competent Authority from passing appropriate orders on pending proceedings. Interim reliefs prayed in the petition are, therefore, refused. Sd/xx [SARANG V KOTWAL, J] Sd/xx [AKIL KURESHI, J] 34. We have also perused a copy of the writ petition no. 10362/21 filed by the assessee before Hon'ble Bombay High Court, on 26th April 2021, a copy of which was available in the assessment records placed for our perusal, but we find it wholly unconnected with the controversy before us inasmuch as this writ petition deals with a challenge to the recovery proceedings in respect of the demands impugned in appeal before us, while we are not really concerned with that aspect of the matter as on now. That's not in challenge before us. 35. Learned senior counsel has submitted that as the very foundational legal provisions, under the BMA, are in challenge before the Hon'ble High Court, and as he undertakes to make a mention before Their Lordships- as soon as the Hon'ble High Court reconvenes, seeking an early hearing of the writ petition no. 40 of 2019, the hearing of these appeals may be kept in abeyance till the writ petition is disposed of. He submits ....
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....d in the present case. 37. We have also noted that Their Lordships have specifically declined a stay on the applicability of the provisions of the Act or a stay on proceedings by the authorities. We must humbly bow to the superior wisdom of Hon'ble Courts above. When Their Lordships considered opinion is that no such stay is warranted on the facts and in the circumstances of the case and even till the writ petition is disposed of, it cannot be open to us either to stay the proceedings till the writ petition is disposed of, or, in any manner, delay the disposal of these appeals till the writ petition is disposed of. In any event, having carefully perused the material on record and having considered the entirety of the case, we do not think it to be a fit case for holding these proceedings in abeyance till the disposal of the aforesaid writ petition. This prayer of the assessee is, thus, rejected. Our analysis: 38. While we will deal with the questions, as framed by the representatives, and then proceed to dispose of the specific grounds of appeal, in the light of, inter alia, our answers to these questions, we deem it appropriate to first deal with questions (e) and (f), wh....
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....ninvestigations done by the International Council of Investigative Journalists- see item 74 (http://archive.indianexpress.com/news/icij-probe-list-of-indians-in-tax-havens/1129752/3) but there was no action taken on the same. An enquiry was initiated by the investigation wing, as evident from the notice dated 19th July 2013 but the assessee did not even fully comply with the requisition for information, and till 24th November 2014 nobody even reminded the assessee about the remaining details which were said to be "under compilation and will take some more time" (see letter dated 1st October 2013- at page 5 of the paper-book, the last sentence). It was only on 24th November 2014 that the follow-up investigations were perhaps initiated and the process of collecting the requisite intelligence information, under the Exchange of Information clauses in respective treaties as also from other sources, started. Once the investigation wing had sufficient information, a search and seizure operation was carried out in early 2016 and the resultant proceedings are before us. 44. In the meantime, however, there was a very significant opportunity to those having unaccounted foreign assets, to c....
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....t to extent of saying that "I believe that there is some fraud and I am not the owner of this bank account". All this was being said on the face of the material officially received from the Government of Singapore, which included papers signed by him, incorporation details of the GJC-BVI, board resolutions of the GJC-BVI duly signed by him, clear handwritten instructions to the bankers, bank account opening forms duly signed by the assessee, statements of these accounts and evidence of transactions in these accounts directly with the companies owned and controlled by the assessee, and with close relatives of the assessee. All this is simply brushed aside and the assessee denies everything. That is not the end of the matter. The statement of the assessee is again recorded under section 8(b) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, and once again he denies anything to do with the GJC-BVI and accounts with the UBS Bank, Singapore. We have exhaustively reproduced the relevant questions and answers in paragraph 5, starting at page 19, earlier in this order. When asked about GJC-BVI and his being one of the directors thereof, the assesse....
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....nd in the light of the legal advice so obtained, "I do hereby categorically own up these accounts viz.: account number-1372 74 belonging to Rashesh Bhansali and account number 161753 belonging to Gold Jewel Corporation, where the beneficial owner is Rashesh Bhansali only though shareholders are Rashes Bhansali & Ami Bhansali" and that "I am (he is) giving explanation to the entries appearing in these two accounts to the best of my ability in the Annexure enclosed". The same is the story repeated in the affidavit dated 29th March 2019, as also in the statement recorded under section 8(b) on 28th March 2019. 48. Trigger by the sight of a bunch of papers, that the assessee had seen several times before as well, the assessee's amnesia suddenly vanished and he could recall even each entry is quite a bit of detail within a few hours, as also the point of time when he signed the papers and at whose instance he signed the papers. It is indeed amazing that within hours of seeing the same papers in his father's office, which were shown to him umpteen times- including by the Assessing Officer, by the search team during the search proceedings, and even copies of which were handed over on 7t....
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....proval, by the Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty v. CIT [(1994) 207 ITR 376 (Cal)]. In this case, Hon'ble Calcutta High Court has observed that, "Here, we go by the dictum 'falsus in uno, falsus in omnibus'. Though applicable in criminal law, it is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of witness and their judicial evaluation". The expression 'falsus in uno, falsus in omnibus' is a Latin phrase meaning "false in one thing, false in everything' and is well accepted legal doctrine in common law jurisdictions. In one of the coordinate bench decisions in the case of Friends Overseas Pvt Ltd Vs DCIT [(2001) 73 TTJ 367 (Del)], authored by one of us (i.e. the Vice President), this reasoning was adopted in rejecting the statement in a search case where contradictory stands were taken, and this line of reasoning was approved by Hon'ble Delhi High Court in the judgment reported as Friends Overseas Pvt Ltd Vs CIT [(2004) 269 ITR 268 (Del)].The explanation of the assessee does not, in view of the detailed discussions above, in the light of the human probabilities and on account of less tha....
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....r alleger to prove that the apparent and not real, and observed that, "This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities......In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim .......... is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". 51. The assessee has conveniently passed on the entire blame on his father, making the best out of the unfortunate fact that well his father is no more in the world and, therefore, this explanation cannot be proven wrong. Interestingly, however, his father was alive when search proceedings were conducted. In the statement recorded on 28th March 2019, when the assessee was specifically asked "if at all you did not recollect this (the details of bank accounts) at the time of search and subsequent proceedings, did you not speak to your father about the issues raised during the course of search and/ or afterwards", the assessee explained that "Post th....
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....y Goldiam International Ltd, through HSBC New York.As per noting by Anirudh Banerjee, he called back Mr R B (the assesseee) on 13 November 2009 at 12.35 pm, obviously to reconfirm the instructions, and then made the remittance of US $ 13,000. In the bank statement of GJC-BVI, this amount is shown as debited on 18th November 2009, and a copy of the relevant extracts of the bank statement is reproduced at page 145 of the assessment order. On the next page of the assessment order, a copy of the bank account of the Indian entity is reproduced which confirms that the credit of US $ 13,000 was duly given to the Indian bank account. The end to end transactions, in full knowledge of the assessee, is thus established. 52. To take another example, on 10th June 2009, the assessee sends instruction to Arunabh Banerjee to remit US $ 71,103.31 to his Indian company Goldiam International Ltd (HSBC India account no. 110-018397-001), giving reference of various invoices. As per bank notings, Banerjee called him back that very day at 2.40 pm. A copy of this document is placed at page 141 of the assessment order. The Bank account of GJC-BVI with UBS Singapore, a copy of which is placed at page 142....
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....il 2008, there is an entry of US $ 37,250 on account of interest on 7.45% ANZ Callable Daily Range Accrual Note 2006- 5.10.2016. Clearly, therefore, the assessee had some investments, which were not included in the opening balance of US $ 73.62 negative, and which earned sizable interest of US $ 37,250 which the assessee has offered to tax in these proceedings. In any case, US $ 73.62 is too odd a figure to be charged for something like account opening, and since the assessee has not shown any assets prior to the 31st March 2008, there is no question of any charges as well. The above statement also shows the net portfolio value of US $ 1,107,532.63 ( i.e. investments, net of borrowings) as on 31st December 2007 but neither the assessee has shown any papers for the same nor made any disclosure in respect of the same. The uncontroverted material on record clearly shows that the account existed from a date much prior to 1st April 2008, but there is no information available in respect of the same, and as such income discernible there from has not been brought to tax. What is the point of owning up these accounts, when the assessee does not give any further information about these accou....
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....eposits to make investments, we were told that the assessee had taken the loans from the bank itself to make investments in the bank itself. When we asked for the margin monies, the assessee claimed ignorance about the same. When we asked about the destination of closing amounts, we were told that the accounts were squared up after settling the losses on investments. It is difficult to believe that these explanations could be given with a straight face. Even if one believes that the assessee did not know till 27th March 2019 that he owned these bank accounts, though one will have to be either too naïve or too stupid to believe such implausible and outlandish stories, obviously nothing prevented the assessee, at least on 27th March 2019, to ask UBS Bank Singapore to share all the necessary details- such as complete statements of all bank accounts operated by the assessee, the statutory documents and the books of accounts of GJV-BVI which were stated to have been kept with UBS AG at Singapore, and the foundational details such as dates of opening and closing the bank accounts. 57. Yet, one purpose of the assessee was perhaps served by this admission, and that purpose of shari....
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....anation given by the assessee, in the remark column of his chart, is 'Maturity of Investments' but there is nothing to show that the said investment was ever accounted for. As noted by the Assessing Officer, 'the assessee has not been able to furnish any documentary evidence in support of the claim'. The Assessing Officer thus proceeded to treat this credit also as unexplained, and, accordingly, a part of the income offered by the assessee. However, when matter travelled in appeal before the learned CIT(A), he deleted the addition so made by the Assessing Officer, and observed that this amount stands explained inasmuch as it is on account of sale of 7% UBS Callable Range Accrual Notes which were purchased by the assessee to the debit of another account (i.e. RaseshManhan Bhansali's account no. 137274) on 15th May 2008. None of these submissions is based on copies of any sale or purchase documents produced by the assessee, but only simply based on the bland explanations given by the assessee. There is no evidence whatsoever to support the sale or purchase of a security, the nature of security or any other details. As for account no 13274, as we have already noted, this is an old acc....
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.... Government authorities, most likely on account of an oversight, did not send the bank statement for the period 12.6.2009 to 28.8.2009, and even though the assessee had already found another set of bank statements etc in his office as evident from his statement in the affidavit of 29th March 2019 to the effect " I found some papers pertaining to these bank accounts ...(which)....are photocopies of papers which are being relied upon against me and my wife by the department in respect of these two bank accounts", the papers missing in both the set of bank statements are for the same period. That is a very interesting coincidence, a coincidence if it is. 65. It is in this backdrop that, as against an unaccounted foreign income of US $ 7,15,538.58 disclosed by the assessee, the unaccounted foreign income, from this account, was assessed at the US $ 40,16,394.64. The correct figure, as per our calculations, seems to be the US $ 40,16,346.18, but then looking at the smallness of difference, we leave it at that. We confirm the action of the Assessing Officer in this regard and vacate the relief granted by the learned CIT(A). 66. So far as UBS account no. 137274 is concerned, the ass....
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....rst appeal, is with respect to credit of US $ 2,186,000 on 4th August 2008 with narration as "Incoming payment: Asha Sameer Bhansali". The assessee has explained this entry as "loan from sister" in the explanation dated 27th March 2019 filed before the Assessing Officer. There is, however, no supporting evidence of any kind. There are no details about when was the amount paid back, and what was the occasion for this loan. Interestingly, when the assessee was confronted with the details of this transaction during the search operations, the assessee had stated that "I do not have an explanation as they (these transactions) do not belong to me". When the assessee was asked about the business of his sister Asha, and her husband, the assessee had stated that "I am not aware of their business as I am not connected in business with them" and when asked whether he had any transactions with his sister, the assessee had categorically stated, even while acknowledging good relations with her and having spoken to her just six months back, "To the best of my knowledge neither I nor any of my concerns ever had any kind of transaction whether business or personal with her, her husband and children....
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....e learned senior counsel proceed on the assumption that what has been brought to tax in the impugned assessment is the value of the asset by way of undisclosed foreign bank accounts, and that this has been valued under rule 3(e) of the BMR. 72. This presumption, in our humble understanding, is incorrect. 73. We may, at the outset, make it clear that in the present case the Assessing Officer has simply accepted the approach adopted by the assessee and the said approach is that credits for interest income and the unexplained credits in the undisclosed bank accounts have been offered to tax as undisclosed foreign income. 74. So far as bank account no. 137274 is concerned, out of US $ 1,29,688.92 offered to tax by the assessee, US $ 1,24,750 pertained to the interest entries and minor entries which could not be explained by the assessee and accepted as income. Similarly, so far as bank account no. 161753 is concerned, out of US $ 7,15,538.58 offered to tax by the assessee, US $ 4,36,527.78 pertains to interest credits and the remaining amounts have been offered to tax as unexplained receipts. The presumption of an unexplained credit being in the nature of income is not at all ....
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....d the differentiation being sought to be canvassed by the learned senior counsel, therefore, is a distinction without any material difference. Under section 2(12), 'undisclosed foreign income and asset' means 'total amount of undisclosed income of an assessee from a source outside India, and value of disclosed asset located outside India, referred to in Section 4, and computed in the manner laid down in Section 5'. Section 4 (1), in turn provides, that "subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,- (a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the Income-tax Act; (b) the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the said Act; and (c) the value o....
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....ney (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 came in force, i.e. 1st July 2015, can be treated as an 'undisclosed asset' under section 2(11) of the Act and be brought to tax as such, under this legislation. 79. Given the facts of this case, and in the light of the preceding discussion, this question appears to be infructuous and wholly academic. Be that as it may, for the sake of completeness and now that we have had the benefit of listening to very erudite contentions, by learned senior counsel and by the learned Commissioner (DR) on this issue, let us deal with this contention on merit. 80. The basic thrust of learned counsel's submission is on the expression "is a beneficial owner" and reliance upon Hon'ble Supreme Court's judgment in FS Gandhi's case (supra). 81. Let us first deal with learned counsel's reliance on Hon'ble Supreme Court's judgment in the case of FS Gandhi (supra). This decision was in the context of Section 2(e) of the Wealth Tax Act 1957 and dealt with the connotations of expression "(e) 'assets' includes property of every description, movable or immovable, but does not include....(iii) any interest in property wher....
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....o Section 3(1) on the contrary, specifically mentions about the assets held in the past inasmuch as it provides that "Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer". So if the BMA comes in force from 1st April 2016, and an asset held prior to 1st April 2016 comes to the notice of the Assessing Officer, the Assessing Officer is clearly within his powers to bring it to tax. If at all, Hon'ble Supreme Court's FS Gandhi judgment (supra) has relevance in this context, the relevance is of the words "The word 'is', although normally referring to the present often has a future meaning,...may also have a past signification as in the sense of 'has been' (See Black's Law Dictionary, 5th edn. , p. 745) .That negates the interpretation sought to be canvassed before us. As regards learned counsel's submission that wherever lawmakers wanted to use the expression, they have done so- as in Section 5(1)(ii), and, therefore, we must not construe the word "is" in the sense of "has been" as well, such a contention does not appeal to us. The situations....
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....ts, is somewhat academic. As long as conclusions arrived at by the learned CIT(A) are correct, it does not really matter as to what was the reasoning adopted. 87. Be that as it may, we have noted that Hon'ble Supreme Court's judgment has observed that... a "bare reading of the provisions of section 3, read with section 2(9)(d), of the Black Money Act, would unambiguously show, that the legislative intent insofar as the charging tax on an undisclosed asset located outside India is concerned, is to charge the tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer" and that "(b)y virtue of these provisions, if such asset comes to the notice of Assessing Officer on 01.04.2016, he could charge such asset(s) on the basis of its value as would be ascertained in a previous year ending on 31.03.2016. A perusal of Section 3 of the Black Money Act, would further reveal, that what is relevant is the date on which the Assessing Officer notices the acquisition by an assessee of undisclosed asset located outside India". Once Their Lordships categorically appreciate that the relevant point of time for taxation, under the BMA, of an undisclosed for....
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....or receipts diverted to such an account by the account holder. If the owner of a bank account has say Rs. 10 crore in a bank account, he has to explain the source of investment in this bank account. If, for example, he can substantiate that, out of this Rs. 10 crores, he has transferred Rs. 5 crores from his other bank account, which is duly disclosed to the tax authorities, to that extent, the investment is explained. The requirements of section 2(11) can thus be clearly satisfied even in respect of a bank account. One has to understand that a bank account, in whatever way it is described, is an asset in the sense that it gives you ownership of the credit balance, in the books of the bank, in that account. Of course, when it is debit balance, reflecting borrowings, that reflects a liability, but we are not really concerned about that fact situation. 92. We, therefore, hold that an undisclosed foreign bank account per secan indeed be treated as an asset under section 2(11) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015. 93. Once we hold so, the plea of the learned senior counsel that rule 3(e) of BMR cannot go beyond the scope of secti....
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....red. So far as an undisclosed income from a source is concerned, it is a negative definition in the sense that under section 4(1)(a) and (b) provide that "subject to the provisions of this Act, the total undisclosed foreign income ...... any previous year of an assessee shall be,- (a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the Income-tax Act; (b) the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the said Act. Therefore, whether an undisclosed foreign income is in the knowledge of the Assessing Officer at any point of time or not is not the material factor; the material factor is that it should remain undisclosed in the income tax return or return of income in respect of the same is not filed. While the investigation wing was indeed....
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....ular, being in the nature of a concession- even if that be so, will bind all the field officers. It is thus submitted that dehors the wordings of Section 3 and 4, the provisions of circular should be given effect, and the cases in the knowledge of the Government of India, as at the point of time when the provisions of the BMA came into effect, be taken out of the ambit of the BMA. 99. We see no merits in this plea either. The opening words of this CBDT circular indicate that it is issued in the context of the compliance window offered by the BMA. These words are "The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as 'the Act') has introduced a tax compliance provision under Chapter VI of the Act. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (hereinafter referred to as 'the Rules') have been notified. In regard to the scheme queries have been received from the public about the scope of the scheme and the procedure to be followed. The Board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answ....
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.... pointed out by the learned senior counsel, Section 2(15) of the BMA provides that "all words and expressions used herein (i.e. Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015) but not defined, and defined under the Income Tax Act, 1961, shall meaning respectively assigned them in that Act" and that Explanation 4 to Section 139(1) of the Income Tax Act, 1961, states that "'beneficial owner' in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person". In the case of Jitendra Mehta, however, the coordinate bench has proceeded on the basis that "... it is not necessary that to examine the provisions of The Black Money Act only the definition provided under the Income Tax Act is required to be seen.......the beneficial ownership is required to be understood with respect to its dictionary meaning and also other provisions of other statute also keeping in mind the nature of the object and purposes of the Black Money Act". To the extent that these observations overlook the existence of Section 2(15) of BMA, the coord....
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....t is undisclosed foreign income and assets", and, as such, it deals with the underbelly of the world of offshore companies and tax havens. The present context of 'beneficial ownership' is thus diametrically different inasmuch as, unlike the Income Tax Act, it does not deal with transparent business transactions of the normal bonafide business world. Unlike in the situations dealt with in the Income Tax Act, which, more often than not and as a matter of course, deal with the genuine businesses which exist transparently and above board, the BMA deals with the hidden assets located outside India, and undisclosed incomes earned outside India. The monies and incomes stashed abroad in the undisclosed offshore entities in the tax havens and undisclosed foreign bank accounts are, as a rule, not out of the legitimate gains of businesses. Infact, when an assessee can demonstrate that the monies invested in the offshore companies and undisclosed accounts abroad are out of their legitimate earnings, for this reason alone, these investments get outside the ambit of the BMA. The provisions of this Act come into play only when the monies invested are not out of legitimate earnings of the assessee....
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....al requirements being otherwise, and (b) the adoption of this meaning rendering the provisions of BMA becoming unworkable, the definition under Explanation 4 to Section 139(1) cannot be adopted in the context of the BMA. We reject this plea of the learned counsel as well. 105. As arguments of the learned senior counsel were on the short point of applicability of the definition of 'beneficial owner' under the Income Tax Act, a plea that we have rejected, we see no need to deal with the broad question as to what will constitute 'beneficial owner' under the BMA, or to deal with the question whether the coordinate bench decision, on this aspect, calls for reconsideration. These issues must be left open as of now. In any event, as we have noted earlier, this issue is wholly academic in the present case because we have categorically held that what is taxed, in the impugned assessments, is not the value of the undisclosed asset but undisclosed foreign income. Whatever be the connotations of 'beneficial owner' under the BMA, our conclusions thus remain intact. 106. All the questions posed for our consideration are thus answered against the assessee and in favour of the Assessing Offi....
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....grounds urged on behalf of the Appellant with respect to the assailability of Order passed by Assessing Officer that too based on conjectures and surmises. The Learned CIT(A) has failed to even deal with various contentions raised on behalf of the Appellant including as contained in the Written Submissions filed on 14.06.2021 by the Appellant. No specific arguments raised; dismissed for want of prosecution. 4) In the facts and circumstances of the case and in law, Learned CIT(A) erred in the confirming the action of Assessing Officer in taxing the amounts of Rs. 31,33,50,656/- (being equivalent to $47,17,232.44). a) In the facts and circumstances of the case and in law, Learned CIT(A) erred in Confirming the action of Assessing Officer in taxing the amounts of Rs. 2,37,67,078.59/- (being equivalent to $ 3,57,793.52) being the amount reflected in bank account no. 161753 belonging to M/s. Gold Jewel Corporation, in the hands of the appellant. b) In the facts and circumstances of the case and in law, Learned CIT (A) erred in confirming the action of Assessing Officer in taxing an amount of Rs. 29,06,172/- (being equivalent to $43,750) alleged to be ....
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....arged by the assessee. Allowed 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was erred in not treating the credit of US$ 32,13,307.60 in bank account no. 161753 on 22.02.2010 as undisclosed asset, when as per section 2(11) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, unsatisfactory explanation regarding source of investment in a foreign asset renders such asset to be an undisclosed asset located outside India. Allowed 108. In view of the above discussions, and bearing in mind the entirety of the case, we uphold the action of the Assessing Officer in bringing to tax, in the hands of the assessee, the income reflected, to the extent information was available to him, in respect of undisclosed accounts with UBS AG, Singapore, under the Black Money (Undisclosed Income and Assets) & Imposition of Tax Act, 2015. The order of the Assessing Officer is thus restored and the relief granted by the learned CIT(A) is vacated. 109. Learned Commissioner (DR) has made an interesting prayer in the end. He submits that it was only 3 days prior to the time barring date of 31st March 2019, i.e....
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.... appellate authorities or Courts are not in the nature of "a provision enlarging the jurisdiction of the authority or court". So far as disposal of these appeals is concerned, we see no need to give any specific directions to the authorities. Whatever the Assessing Officer has done has been confirmed, and we cannot go beyond that. The question as to whether any of our observations given during the course of our adjudication can be construed as 'findings' for Section 11(3) is hypothetical as of now. If the law permits the tax authorities to take remedial measures based on these findings, they are surely at liberty to do so; they don't need our directions. However, when the law does not permit the tax authorities to take any such remedial measures based on these findings, we cannot direct them to take any remedial measures for doing that either. We leave it at that. 110. On the brighter side for the tax administration, however, all their concerted efforts to address the problem of undisclosed assets and incomes stashed abroad have started yielding tangible results. On the face of it, the manner in which the intelligence is developed, information is gathered and the official channe....
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.... SAG Singapore 2085 Document 3 Fo Arupash Banerjee bate - 10th June 2009 Dear Sir, Please proess the below mentioned Corporation, number 161753- Amount USD 71.631 from our bank account he name of Gold Jewel Please sent by swift transfer to HSBC Mumbai, swift adfiress HSBCINBB, through HSBC Bank New -York (Swift address MRMDUS33 ) on ABA Route No. 021-001-088 and HSBC New York Chips Code 302755 to HSBC jhdia's Ac number 000-044172 with instructions for orward credit to HSBC, Lokhandwala branch, Mumbai a/c "GOLDIAM International Ltd, a/c number-110-018397-001. Special Instructions - For invoice number 121-11-19 Please confirm to us via swift once the payment is processed. Thank you, 1-454. Kamemehanon For Jewel Corporation קדי הת TIR information is finished under the provisions of ar income rax treaty with a foreign government and its use and disclosure must be governed by tra Dragons of w 1321 56139 To 609 106 A 71,103 Go fut an - TAUTO EVT: 2085 3hrs NIL select br (a Cost Fe UBS GAMES 16 GOLD JEWEL COREQRATION RETAINED MAS ....