AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 944
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....Act, 2015 [ here in after referred as "BMA" for short]. 2. The issues involved in these appeals for all the years are almost identical, common and related one assessee. Therefore, all these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. First of all, we take up the appeal of the revenue in appeal number BMA No. 03, 04 & 05/JP/2022 related to Assessment Year 2016-17, 2017-18 and 2018-19 respectively. In this three-appeal revenue has taken all most similar grounds except the figures changed in the others years. Therefore, to avoid the repetition we reiterated the ground taken by revenue in appeal number BMA No. 03/JP/2022 here in below so as to decide these three appeals of the revenue. The grounds raised by the revenue in BMA No 03/JP/2022 are as under: "1. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer. 2. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer by deleting the addition amounting to Rs 69,78,53,383/- which was made by the AO on protective basis in A.Y. 2016-17 on account of credits in the bank ....
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.... 7. Apropos for these three appeal No. BMA No. 03, 04 & 05/JP/2022 filed by the revenue, the ld. AR of the assessee submitted that all these appeals filed by the revenue are infructuous and are required to be dismissed, if not withdraw the same at this stage. The reason placed by the ld. AR of the assessee that there is no concept of the protective addition and substantive addition qua assessee and assessment year. The revenue has to take a stand that in which year the income is chargeable to tax and accordingly the same can be charged to tax but the revenue cannot take a dual stand to charge income / assets in the different assessment year qua same assessee. Once the substantive addition is made in the case of the assessee same cannot be made in different year on protective basis. This is nothing but futile exercise. The ld. AR of the assessee submitted that the action of the ld. AO is under uncertainty and he cannot blow the hot and cold air on the same breath. The ld. AR of the assessee submitted that the provision of section 3 is very clear as regards the chargeability of the foreign assets. He has relied and read the provision of the Act and the same is haul out here in below....
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....ong to the company and the Appellant-assessee does not own any foreign asset in his individual capacity and has neither has any personal undisclosed foreign income and assets, in his individual capacity, nor is a beneficial owner of the assets of the company. Therefore, the taxability in the hands of the Appellant is wholly illegal and unjust. PROCEEDINGS BY THE INCOME TAX AUTHORITIES E. A Search action was conducted at the premises of Sh. K.D. Agrawal in July 2018 (F.Y. 2018 - 19) whereby certain documents concerning the transactions of a non-resident foreign company, viz. M/s Agrasen Polymers FZE were found. F. Based on the same, additions to the tune of Rs. Rs. 1,14,79,82,673/- pertaining to the transactions undertaken by the foreign company from A.Y. 2016 - 17 to 2018-19 were added in the hands of the Assessee for these years on PROTECTIVE BASIS, vide Assessment Orders dated 31.03.2021, passed u/s 10(3) of the Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 (hereinafter referred to as the "Black Money Act" or "The Act"). Sr. No. A.Y. Date of Order Amount of Tax Rs. Amount of Addition Rs. 1. 2016 - 1....
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....means the fair market value of an asset (including financial interest in any entity) determined in such manner as may be prescribed. 2. In the present case, the own assertion of the Ld. Assessing Officer is that the alleged information qua the foreign assets admittedly came to the notice of the Ld. Assessing Officer at the time of search which was conducted on 09.07.2018 i.e., AY 2019-20, which is evident from the following findings available at Page 2 of the respective Assessment Orders reproduced as under: "On 09.07.2018, a search & seizure action was conducted u/s 132(1) of the Income-Tax Act in the case of the assessee at his residence B-302, Aurum Trimurti, Tilak Marg, C-Scheme, Jaipur. During the course of search, evidences in the form of excel files were recovered from the e-mail account and personal Macbook of the assessee......." Therefore, as per Section 3, assessment was bound to be made only for the AY 2019-20 and could not have been made for any other year, viz. A.Y. 2016 - 17, 2017 - 18 and/or 2018 - 19. However, on perusal of the assessment order, it is clearly evident that the Ld. AO has made assessment not just in AY 2019-20 only but also....
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....ese years the amount in dispute is as under: Sr. No. Assessment year Amount of Addition made protectively Rs. 1. 2016 - 17 69,78,53,383/- 2. 2017 - 18 36,43,62,230/- 3. 2018 - 19 8,57,67,060/- 11. On examination of the order of the assessment year 2019-20 we find that the similar addition form part of the addition made by the AO in accordance with the provision of section 3 of BMA in this case on substantive basis and all the grounds raised in these appeals are equally challenged by the revenue on substantive basis and therefore, we feel that the same are not required to be adjudicated under these appeals on protective additions deleted by the ld. CIT(A). The appeal for the assessment year 2019-20 is under adjudication before us and therefore, we are of the considered view that the appeal of the revenue on the same very addition on protective addition cannot be litigated once the issue of substantive addition is not disputed by the assessee and its year of chargeability. 12. Based on this observation we are of the considered view that once the substantive addition has been made in the year in which such assets come to the notice of the Asse....
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....e Assessing Officer. In respect of the case on hand, it is an undisputed fact that the credit of Rs. 69,78,53,383/- appearing in foreign bank accounts located outside India during F.Y. 2015-16 relevant to A.Y. 2016-17 came to the notice of the AO during F.Y. 2018-19 relevant to A.Y. 2019-20 only and the substantive addition of the same has also been made by AO for A.Y. 2019-20. (xxvii) In view of the above facts of the case and Section 3 of the Black Money Act, the contentions of the appellant as presented in Ground of Appeal No. 13 that under the facts and the circumstances of the case and in law, protective assessment for the assessment year under consideration is not warranted as the same is entirely contrary to the provisions of Section 3 of the Black Money Act is found acceptable. (xxviii) Similarly, Ground of Appeal No. 14 wherein the appellant has contended that the concerned addition of Rs. 69,78,53,383/-in F.Y. 2015-16 relevant to A.Y. 2016-17 results in double taxation of the same amount also finds favour with this office. As the said addition of Rs. 69,78,53,383/- is contrary to the provisions of charging section of Black Money Act and as the said amoun....
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....s and circumstances of the case, the Appellant respectfully submits that the Ld. CIT(A), while passing the Appellate Order, has erred on the following grounds, each of which is independent and without prejudice to each other. 1. Under the facts and the circumstances of the case and in law, the order dated 31.08.2022 passed by the Ld. CIT(A) under the Black Money Act, by sustaining the addition in the hands of the Appellant on account of the value of the alleged undisclosed foreign assets amounting to Rs. 23,74,26,443/-, is perverse, incorrect, non-speaking, arbitrary and bad in law. 2. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining the addition of Rs. 19,68,01,923/- (18,56,28,608+ 1.11.73,315) on account of credits in the bank accounts of Agrasen Polymers FZE (Foreign Company") which do not belong to the Appellant. 3. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 2,34,26,056/- made by the Ld. AO, which pertains to the dividend earned by the Foreign Company on the investments made. Under the facts and circumstances of the case an....
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....ing that the Appellant admitted to have received commission income from companies/ persons of UAE and Turkey directly in his UAE-based bank accounts without appreciating the correct facts on record. 13. Under the facts and the circumstances of the case and in law, the Ld. CIT(A) and Ld. AO have failed to properly consider Rule 3(1)(e) of the Black Money Rules, as per which while computing the value of bank accounts, only 'deposits' have to be considered and not "loans". 14. Under the facts and the circumstances of the case and in law, the Ld. CIT(A) and the Ld. AO have failed to consider the original returns of income for AY 2018-19 and AY 2019-20 and the revised return of income for AY 2017-18, wherein due disclosures with respect to foreign assets were made by the Appellant. 15. Under the facts and circumstances of the case and in law, the Ld. AO has not given due consideration to the fact that the Appellant is above 84 years of age and has not been given due opportunity of being heard to present his case before launching the Prosecution proceedings, which is against the principles of natural justice. 16. The Appellant craves leave to a....
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.... appeal before us against the sustenance of the above-said amount of Rs. 23,74,26,443/-, which belonged to the company and the taxability thereof in the hands of the Appellant. For ready reference, the breakup of the additions so made, and the corresponding decision of the Ld. CIT(A) is tabulated as under: Sr. No. Particulars Addition made by AO Additions sustained by the CIT(A) Amount Deleted by the CIT(A) 1. Addition made on account of the credits in the following Bank Accounts of M/s Agrasen Polymers FZE and the accounts held by the Appellant in fiduciary capacity for the company during F.Y. 2015 - 16 and F.Y. 2018 - 19 INR 136,73,10,855 INR 23,74,26,443 INR 1,12,98,84,412 AE470271226001850542017 Appellant- Fiduciary Capacity AE410271226001850542028 Appellant - Fiduciary Capacity AE920271161201822102010 Company AE610271161371822102026 Company AE060276031498079255014 Appellant- Fiduciary Capacity AE550271031591850542039 Belongs neither to the company, nor to the Appellant in fiduciary/individual capacity 2. Income Allegedly earned on Investments in OMI INR 9,69,34,026 - INR 9,69,34,026 &....
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....the Auditors Ramesh Ramu & Audit Associates on 07.04.2016 whereby the Net Revenue, Expenses, Net Income/Loss is duly mentioned. PB 294 is the copy of notes to Financial Statements of M/s Agrasen Polymers FZE where at point 1 (b), the factum of the company being duly registered and undertaking activities of trading Plastic and Nylon raw materials and also the fact that the company has invested its own resources to earn dividend/interest/gains has duly been mentioned. PB 296 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 7,457,719 made by the Company are mentioned. PB 297 Copy of the Notes to Financial Statements for year ending 31st December 2015 whereby at point number 6, the bank accounts held by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks. PB 297 & 298 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 297) & point 12 (PB 298), the Financial Liabilities - in the form of Trade and Other Payables to the tune of 9,976,302/....
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....Khaimah PB 591 is the copy of the Director's Report prepared by the directors of the company. PB592-593 is the independent Auditor's Report prepared by M/s Ramesh Ramu & Audit Associates, UAE on 13.05.2018. PB 594 is the copy of Statement of Financial Position of M/s Agrasen Polymers FZE akin to a Balance Sheet. PB 595 is the Copy of the Statement of Comprehensive Income audited by the Auditors M/s Ramesh Ramu & Audit Associates on 13.05.2018 whereby the Net Revenue, Expenses, Net Income/Loss is duly mentioned. PB 598 is the copy of notes to Financial Statements of M/s Agrasen Polymers FZE where at point 1 (b), the factum of the company being duly registered and undertaking activities of trading Plastic and Nylon raw materials and also the fact that the company has invested its own resources to earn dividend/interest/gains has duly been mentioned. PB 600 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 5,530,785/- made by the Company are mentioned. PB 601 Copy of the Notes to Financial Statements for year ending 31st December 2017 whereby at point number 6, the bank accounts held by the....
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.... the Financial Liabilities - in the form of Trade and Other Payables to the tune of 3,358,200/- is duly mentioned to be belonging to the company. 4. That the concept of a separate legal entity has been a time old principle, which rather forms the backbone of legal jurisprudence. For ready reference reliance is placed on the following judicial precedents as under: MRS. BACHA F. GUZDAR vs. CIT SUPREME COURT OF INDIA (1955) 27 ITR 0001 Agricultural income-Dividend from tea companies-Assessee, a shareholder in a company engaged in manufacture of tea whose income was exempt to the extent of 60 per cent, receiving dividends from such company-Dividends arose to the shareholder due to investment in the company-Shareholder has no direct relationship with land as the same belongs only to the company, nor to its shareholders, nor directors BHARAT HARI SINGHANIA & ORS. ETC. vs. COMMISSIONER OF WEALTH TAX & ORSSUPREME COURT OF INDIA (1994) 207 ITR 0001 Held : Wealth being assessed is that of the shareholder and not of the company. The company may own agricultural assets and if company were to be liable to wealth tax, the said assets may be excludible....
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....itizens form a company, the rights guaranteed to them by article 19(1)c has been exercised and no restraint has been placed on the right and no infringement of that right is made. Once a company or corporation is formed, the business which is carried on by the such company or corporation is the business of that company or corporation and is not the business of the citizens who get the company or corporation incorporated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributed to the business of individual citizens. 5. Even as per the Income Tax Act, 1961 and for all purposes of the assessment, a company is treated to be a separate 'person' within the meaning of section 2(31) read with 2(17) of the Income Tax Act. In the present case, Company invested its own money and resources in the UAE to earn dividends, interest, gains, which cannot be taxed in the hands of the Appellant in any manner. The taxability thereof in the hands of the Appellant is not in consonance with the Black Money (Undisclosed Foreign Income and Asset) & Imposition of Tax Act, 2015. More so when, there is no iota of ....
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.... i.e., during F.Y. 2018 - 19 relevant to A.Y. 2019 - 20, therefore, taxability if any, can only be made for the year under consideration, viz. A.Y. 2019 - 20. 10. In this regard, it is pertinent to note that the Appellant made due disclosures in his Original Return filed u/s 139(1) of the Income Tax Act, 1961 for A.Y. 2018 - 19 & 2019 - 20 regarding having financial interest (in a fiduciary capacity) and a signing authority for and on behalf of the company. Therefore, even the case of non-disclosure cannot be made out against the Appellant. PB 542 - 543 is the copy of the return filed by A.Y. 2018 - 19 whereby due disclosures regarding the Financial Interest & Signing Authority had been made by the Appellant. PB 605 is the copy of the ITR Acknowledgement of the ITR filed u/s 139(1), viz. on or before due date. PB 606 - 640 is the copy of the ITR Form filed by the Appellant for A.Y. 2019 - 20, whereby in schedule FA (Pg. 628 & 629-630), due disclosure has been made by the Appellant in his return. Thus, no tax liability, let alone even penalty, can be imposed on the Appellant as the entire edifice of the case, built solely on suspicion and surmises....
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....ssue has been addressed by the Ld. Assessing Officer at Para 5.12 Page 56 of his order. 12. On Appeal, the Ld. CIT(A) has placed blind reliance on the version of the Ld. Assessing Officer the said issue has been dealt by the Ld. CIT(A) at Para 6.2 (xiii) Page 37 of his order, whereby, without considering the basic tenets / provisions of law, the Appellant has erroneously been held to be the 'beneficial owner' qua the assets of the non-resident foreign company. 13. It is submitted that the Appellant has been illegally deemed to be the beneficial owner of the assets of the company, viz. M/s Agrasen Polymers FZE, whereas as mentioned above, there is no income of the Appellant, which remained untaxed. Therefore, in the absence of any investment / withdrawal / benefit derived by the Appellant, there remains no taxability of any sum in the hands of the Appellant. 14. In this regard, reliance is placed on the judgment of ACIT vs. Jatinder Mehra, [2021] 190 ITD 611 (Delhi - Trib.) rendered in the context of 'beneficial ownership' under the Black Money Act, wherein it was held that: To identify a beneficial owner of an asset, said person should have nexus....
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.... Trib.) where the relevant finding of the coordinate bench reads as under: "5. 2. On consideration of the facts of the appellant's case it is noticed that the motor car was purchased, though in the name of the appellant's director, it was purchased out of the funds of the appellant-company and it is also not in dispute that the motor car was purchased for the purpose of business of the appellant. Thus the motor car being, business asset of the appellant and purchased for the purpose of business and used as such by the appellant, in view of the decision in the case of Mysore Minerals Ltd. [1999] 239 ITR 775 (SC) referred to above and other decisions cited by the learned authorised representative, I hold that the disallowance made by the Assessing Officer on this ground is not justified and hence the same is directed to be deleted. 18. We further state that there were three directors in the Foreign Company viz. M/s Agrasen Polymers FZE. The company is established in the Free Trade Zone in UAE and two directors, who are locals, stay in Dubai. The Appellant was one of the Directors and the signing authority on behalf of the Company, and cannot be termed as a b....
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....ed & approved by M/s Ramesh Ramu & Audit Associates, wherein the investments have been disclosed and dividends received thereon have also been disclosed. PB 885-888 is the copy of the Reply dated 08.08.2022 filed before the Ld. CIT(A) whereby the Appellant duly explained the transactions of credits in the bank accounts of the non-resident foreign company. 22. That from these investments, the company, viz. M/s Agrasen Polymers FZE earned dividend income of Rs. 2.34 Crores during F.Y. 2016 - 17 to 2018 - 19 which has incorrectly been added as the income of the Appellant, whereas, the investments and the benefits therefrom, solely pertain to the Company, in its individual capacity. It is pertinent to note that not even an iota of any amount from the above-said amount has ever been received by the Assessee, nor is there any such allegation made by the Ld. AO in the Assessment Order dated 31.03.2021 nor in the Remand Report dated 13.07.2022, nor the Ld. CIT(A) brought out any adverse evidence in this regard on record. Therefore, taxing the same, in the hands of the Appellant is wholly incorrect and illegal, as the same is not in the nature of income of the Assessee and is....
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....credits, hence has not been expressly discussed by the Ld. Assessing Officer either in his order, however, the said aspect was raised before the Ld. CIT(A) in reply to the remand report (PB 874) the Ld. CIT(A), while upholding the addition, has recorded his findings qua the issue at Para 6.2 (xxii) Page 41 of the Appellate Order. 27. That in order to meet day-to-day expenditures for the business of the Company, certain withdrawals were made by the Company, directly from the bank accounts and after utilsing the amounts, the remaining/balance amounts were deposited back in the respective bank accounts. 28. It is therefore stated that the addition of these amounts, tantamounts to double addition as cash in hand withdrawn from the bank has been deposited in bank which cannot be added as the amount has already been added at the time of withdrawal being the balance available in bank. PB 775 is the copy of Annexure 10 of Reply dated 12.07.2022 filed before the Ld. CIT(A) wherein the details of the cash deposits out of withdrawals after meeting expense of M/s AgrasenPolymers FZE was categorically provided. (See PB 755) Pg. ..... Synopsis is the Reconciliation ....
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.... of the total credits of Rs. 136,73,10,855/- hence has not been expressly discussed by the Ld. Assessing Officer, however, the Ld. CIT(A) has also not recorded his findings qua this issue in the Appellate Order, and after deleting the double additions so made, has merely sustained this amount (which remained a part of the credits). 34. It is stated that Rs. 19,68,01,923/- represents credits in bank accounts of the non-resident foreign company viz. M/s Agrasen Polymers FZE. 35. It is stated that at the time of opening the bank account of the non-resident foreign company viz. M/s Agrasen Polymers FZE, Rs. 18,56,28,608/- (AED 10487493 at PB 236 - 237) were credited in account no. ending with 2010 and Rs. 1,11,73,315/- (AED 4,99,460 + 77,123 PB 496) were transferred in the account no. ending with 2026 in the year 2017. The company had taken some loan from their own sources which was credited in the bank account of the company. The same was also informed to the CIT(A) during the proceedings, which is evident from the reply of the remand report (PB 882). However, the same was of no avail as the same was not taken into consideration which is evident as there has been no ....
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....oan was returned (AED 8,25,000/- PB 801, AED 6,50,000/-, AED 600,000/-, AED 500,000/-, AED 750,000/-, AED 1,550,000/- & AED 1,150,000/- (PB 802)) by the non-resident Foreign Company viz. M/s Agrasen Polymers FZE. For the sake of convenience to the bench a tabulated chart has been produced below of the repayment made: Sr. No. Date Cheque No. Amount Currency Reference of PB 1. 12.09.2018 175294 8,25,000 AED 801 2. 07.08.2018 175288 6,50,000 802 3. 07.08.2018 175287 6,00,000 802 4. 07.08.2018 175289 5,00,000 802 5. 08.08.2018 175290 750,000 802 6. 29.08.2018 175291 1,550,000 802 7. 05.09.2018 175292 1,150,000 802 TOTAL 6,025,000 39. Thus, this amount, firstly and undisputedly was a loan (liability), which was taken by the non-resident foreign company and has been repaid back by the company alone. This unequivocally proves that the same did not belong or even pertain to the Appellant. It clearly belonged to the company and that too as a liability, therefore, by no stretch of imagination can be taxed in the hands of the....
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....ut any reference to material found/discovered during the search would not empower the AO to make block assessment merely because of any admission made by Assessee during the search operation. CIT vs. Naresh Kumar Agarwal, I.T.T.A No.112 OF 2003 dated 09.09.2014 (Andhra Pradesh High Court) ........................The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under Section 94 of Cr.P.C by operation of sub-section (13) of Section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that tran....
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.... 4. Scope of total undisclosed foreign income and asset.- (1) 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 of an undisclosed asset located outside India. (2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C....
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.... Whereas, in the instant case, the assets belonged to the company, and the Appellant did not contribute, withdraw and/or benefit from any of the assets. Furthermore, there is no asset, held by the Appellant in his individual / personal capacity. Therefore, no addition can be made in such circumstances. Further that the Appellant cannot be made to prove the negative, as has been held in a number of judgments, some of which are as under: * K.P. Varghese Vs. ITO, [1981] 7 Taxman 13/131 ITR 587 (SC) * Interworld Shipping Agency LLP Vs. DCIT, [2021] 189 ITD 213 (Mumbai - Trib.) * Mayank Desai Vs. ACIT, (2006) 9 SOT 4 * Narendra Mafatlal Mehta Vs. Income-Tax Officer, (1997) 59 TTJ 175 50. Therefore, in such circumstances of the present case, none of the conditions are met, due to which there is no Scope of Undisclosed Foreign Income & Asset and therefore, no taxability can be levelled in the hands of the Appellant." 18. In addition to the above written submission the ld. AR of the assessee appraise that the assessee is an Individual having 84 years of his age. He is regular tax payer and for A. Y. 2016-17 & 2017-18 he was appreciated....
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.... incorporated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributed to the business of individual citizens. 20. The ld. AR of the assessee further submitted that for all the purposes of the assessment, a company is treated to be a separate `person' within the meaning of section 2(31) read with 2(17) of the Income Tax Act. In the present case, Company invested its own money and resources in UAE to earn dividends, interest, gains which cannot be taxed in the hands of the assessee in any manner and the liability casted upon the assessee is not in consonance with the BMA. Not only that in the search there is no evidence that any funds belonged to and / or pertained to the assessee in his individual capacity remained to taxed in India and therefore, any amount of liability on the assessee is unconstitutional and illegal. 21. The ld. AR of the assessee relying on the circular no. 08/2017 issued by the CBDT submitted that the place of effective Management(POEM) shall not apply to a company having turnover or gross receipts of Rs. 50 crore or less in a financial year and therefore, in no manne....
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....d on the decision of the coordinate bench of Delhi in the case of ACIT Vs. Jatinder Mehra 190 ITD 611(Delhi-Trib), wherein the bench has taken view which is relied upon is reiterated here in below; To identify a beneficial owner of an asset, said person should have nexus, direct or indirect to source of asset and he must have provided funds for said asset; mere account opening form of an overseas bank account where assessee was mentioned as beneficial owner of account, mentioning details of his passport as an identification document, did not necessarily, in absence of any other corroborative evidence of beneficial ownership of assessee over asset, lead to taxability in hands of assessee under Black Money Act. 24. The term beneficial owner is not defined in BMA but is defined in Explanation 4 to section 139(1) of the Income Tax Act. Explanation 4.-For the purposes of this section "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. He has submitted that based on that provision since the foreign....
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....8. A sum of Rs. 12,54,600/- added pertains to repayment of the loan given to staff by the company alone and is not in the nature of income and further this amount is in relation to a separate legal entity. This issue is addressed by the AO in his remand report (APB 875) and reply to the remand report (APB881). The ld. CIT(A) has confirmed the addition. If this is not allowed it will be double addition of the same amount. 29. As regards the liability appearing in the account of M/s. Agrasen Polymers FZE he submitted that the ld AO has added a sum of Rs. 136,73,10,855/-, a sum of Rs. 19,68,01,923/- consist of the liability to third party. While deleting the double addition the ld. CIT(A) has not given finding to this aspect. The relevant remark of the assessee already submitted to ld. CIT(A) (APB 882) but the same is not taken into consideration. The liability recoded in the books is neither income nor assets and therefore, sustaining addition is out of the purview of the BMA. The ld. AR of the assessee further relied upon the financial statement (APB 290 & 297). He further submitted that even the loans are repaid also and is appearing the balance sheet also. Based on this evidenc....
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....and answer to be filed in the ITR demonstrated that the declarations given by the assessee is completely wrong and misleading. In the proceeding initiated on 07.07.2018 the assessee has not given the pass word of his Mcbook and email account. Not only that in the search proceedings he has not voluntarily disclosed his financial interest in any concern and has not disclosed the fact of an entity having 100 % stake. Even he is regular tax payer his behavior was negative in the search and in the assessment proceedings. Being a regular tax payer, he must know the requirement of taxing statue and has not disclosed the financial interest in overseas entity. The source of this investment as clarified in a statement is the commission income that the assessee earned and parked in this entity. The assessee is a resident Indian for the purpose of taxation. The assessee had tried to submit the details as per his own will and did not provide the requisite details to explain the source of funds in these bank accounts maintained by the assessee. The assessee also failed to demonstrate as to which type of the business that M/s. Agrasen Polymers FZE is doing and in the absence of this information t....
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.... the sufficient opportunity were provided. The information which the assessee has to submit has been sourced with foreign jurisdiction through FTTR, CBDT. The ld. AO thus recorded his finding that the intention of the assessee, right from the initiation of search till the assessment proceeding ends, never provided the correct state of affairs in a transparent and fair manner. Based on these set of the arguments the ld. DR supported the order of the lower authorities. 34. We have carefully considered the rival contentions and perused the material placed on record and the orders of the lower authorities as well as the several judicial precedents relied upon before us. From the record, we noticed that the assessee is an Individual and is engaged in the business of manufacturing and trading of master batch, polymers etc. and for the assessment year under consideration, return of income under section 139(1) of the I.T. Act, 1961 was filed by the assessee for the assessment year 2019-20 on 23.08.2019 declaring total income of Rs. 1,20,17,790/-. As per the revenue, the credible intelligence was received in the month of May, 2018 that the assessee had interests in financial assets held ....
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....ee did not willfully disclose details of his foreign asset in his income-tax returns. Therefore, on the basis of these facts, the AO concluded the assessment proceedings in the case of the appellant by passing the assessment order dated 31.03.2021 under section 10(3) of the Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 by assessing the income at Rs. 146,42,44,881/- on account of alleged undisclosed credits in foreign bank accounts and investments outside India. 34.4 Aggrieved by the said order, assessee preferred an appeal before ld. CIT (A) and the ld. CIT (A) during the course of appeal proceedings considered the evidences submitted by the assessee. He also called for the remand report to have the comments on the submission of the assessee by AO. On the basis of remand report, the ld. CIT (A) deleted the substantial additions by holding that on verification of the bank accounts statements of the appellant it had categorically admitted that the amount of Rs. 103.64 crores were purely a double addition made in the hands of the appellant due to inter-bank transfers, redemptions of FDRs and investments, therefore, the addition of Rs. 103.64 crores....
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....ssessee fall in the category of "Non disclosure made by the assessee". In this regard our attention is drawn to paper book pages 542-543 which are copies of return filed by the assessee for the assessment year 2018-19 whereby due disclosure regarding financial interest and details of signature authority has categorically been made by the assessee. Apart from this, at paper book page 605 there is a copy of ITR acknowledgement filed under section 139(1) of the IT Act on or before the due date for A.Y. 2019-20. Proceeding further, our attention was also drawn to paper book pages 606-640 which are the copies of ITR Form filed by the appellant assessee for the assessment year 2019-20 whereby in schedule FA, more particularly at paper book pages 628 & 629-630, due disclosure has been made by the appellant assessee in his return. Thus, in this way according to ld. A/R, no tax liability or penalty can be imposed on the appellant as the entire edifice of the case, built solely on suspicion and surmises, deserves to be quashed and no amount can be taxed in the hands of the appellant assessee. 34.8. After having gone through the documents as pointed to us which are mentioned in detail abov....
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....y evidences. Thus in our view it is not a case of non-disclosure and even otherwise, as per the decision of Coordinate Bench of the Tribunal, Mumbai in the case of ACIT vs. Leena Gandhi Tiwari, (2022) 96 ITR (T) 384, it has been categorically held that Where assessee was a signatory in a foreign bank account owned by her mother and she failed to disclose same while filing her income-tax return, however disclosure was made while filing return under section 153A, therefore it was held that since such non-disclosure of a foreign asset was a bona fide mistake, penalty could not be imposed under section 43 of Black Money Act. 34.10. More particularly, in the present case, the additions of transactions in the hands of the appellant which solely belong to the non-resident foreign company i.e. M/s. Agrasen Polymers FZE, cannot be added in the hands of the appellant. Since as per the facts as discussed above, the assessee has disclosed his financial interest in the said company as signatory of the various bank accounts held by that entity, therefore, the burden of proof is on the department to bring the case within the ambit of Black Money (Undisclosed Foreign Income & Assets) & Impositi....
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....e law of the country where the same is incorporated. Therefore, taxing the assets of that company in his individual capacity is wholly illegal and unsustainable, by any stretch of imagination. The company has disclosed the transactions / bank accounts in its Audited Financial Statements, submitted to the Authorities of the Free Trade Zone of Ras Al Khaimah (APB289- 299 ), director report at APB 288, independent auditor report at page (APB 289) for 2015-16 and so on for the subsequent year. He has argued that the concept of a separate legal entity has been a time old principle, which rather forms the backbone of legal jurisprudence. For that he relied on following principles that has been established and are required to be followed for judicial consistency; a) Shareholder has no direct relationship with land as the same belongs only to the company, nor its shareholders, nor directors. [ Mrs. Bacha F. Guzdar Vs. CIT (SC) 27 ITR 001] b) The shareholder does not own and cannot claim any portion of the property held by the company of which he is a shareholder.[ Bacha F. Guzdar Vs. CIT 27 ITR 1 SC] c) Salmon Vs. Salmon & Co. Ltd.(1897), the company was a differ....
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....dated 13.07.2022. He has further submitted that the Place of Effective Management (POEM) of the said foreign company is also situated outside India because of which, the company is a nonresident in India within the meaning of section 6 of the income tax act and none of the assets were liable to be taxed in India [Reliance was made to the CBDT circular dated 23.02.2017 bearing Circular No. 08/2017]. Based on these clarifications by Board that in no view of the manner can taxability arise in the present case even on POEM and that the entire edifice of the case is wholly unjust and illegal. 38.2. It is pertinent to note that the company, viz. Agrasen Polymers FZE has also disclosed the transactions/bank accounts in its Audited Financial Statements, submitted to the Authorities of the Free Trade Zone of Ras Al Khaimah as under : AY 2015 - 16 (01.01.2015 - 31.12.2015) PB 286-299 Copy of Auditors Report, Director's Report & the Financial Statements of M/s Agrasen Polymers FZE audited & approved by M/s Ramesh Ramu & Audit Associates, UAE on 07.04.2016 which was even submitted to the authorities of the Free Trade Zone of Ras Al Khaimah. PB 288 is the copy of the Dir....
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....udit Associates on 10.04.2017 whereby the Net Revenue, Expenses, Net Income/Loss is duly mentioned. PB 433 is the copy of notes to Financial Statements of M/s Agrasen Polymers FZE where at point 1 (b), the factum of the company being duly registered and undertaking activities of trading Plastic and Nylon raw materials and also the fact that the company has invested its own resources to earn dividend/interest/gains has duly been mentioned. PB 435 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 8,233,239/- made by the Company are mentioned. PB 436 Copy of the Notes to Financial Statements for year ending 31st December 2016 whereby at point number 6, the bank accounts held by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks, in fiduciary capacity on behalf of the company. PB 436 & 437 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 436) & point 12 (PB 437), the Financial Liabilities - in the form of Trade and Other Payables to ....
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....ade Zone of Ras Al Khaimah PB 713 is the copy of the Director's Report prepared by the directors of the company. PB 714-715 is the independent Auditor's Report prepared by M/s Ramesh Ramu & Audit Associates, UAE on 22.01.2019. PB 716 is the copy of Statement of Financial Position of M/s Agrasen Polymers FZE akin to a Balance Sheet. PB 717 is the Copy of the Statement of Comprehensive Income audited by the Auditors M/s Ramesh Ramu & Audit Associates on 22.01.2019 whereby the Net Revenue, Expenses, Net Income/Loss is duly mentioned. PB 720 is the copy of notes to Financial Statements of M/s Agrasen Polymers FZE where at point 1 (b), the factum of the company being duly registered and undertaking activities of trading Plastic and Nylon raw materials and also the fact that the company has invested its own resources to earn dividend/interest/gains has duly been mentioned. PB 722 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 3,195,075/- made by the Company are mentioned. PB 723 Copy of the Notes to Financial Statements for year ending 31st December 2018 whereby at point number 6, the bank ....
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....ares, and his wife and five children owned one share each. Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be paid first as a secured debenture holder. The liquidator and the other creditors objected to this, claiming that it was unfair for the person who formed and ran the company to get paid first. However, the House of Lords held that the company was a different legal person from the shareholders, and thus Mr Salomon, as a shareholder and creditor, was totally separate in law from the company A Salomon & Co Ltd. The result was that Mr Salomon was entitled to be repaid the debt as the first secured creditor. In this case, Mr Salomon was the major shareholder, a director, an employee and a creditor of the company he created. It is quite common in Ireland for one person to have such a variety of roles and still be a different legal entity from the company. LEE V LEE`S AIR FARMING LTD (1961) In this case, Mr. Lee formed his crop spraying business into a limited company in which he was director, shareholder and employee. When he was killed in a flying accident, his widow sought social welfare compensation from the State, ....
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....reated as two separate legal entities and payment of interest to a firm cannot be treated in tax law as payment of interest to its partners - Held, yes - Whether, Therefore, payment of interest by assessee firm to another firm could not be treated as payment of interest to partners of that firm within meaning of section 40(b) even though partners in two firms were common - Held, yes 38.6. Without prejudice to the above, the comparison in the present case is that of a non-resident foreign company and not an Indian company. The said vital fact has been accepted and never been disputed by the Ld. AO in the Assessment Order dated 31.03.2021 and/or in the Remand Report dated 13.07.2022. 38.7. We further note that the place of Effective Management of the said foreign company M/s. Agrasen Polymers FZE is also situated outside India because of which, the company is a non-resident in India within the meaning of section 6 of the income tax act and none of the assets were liable to be taxed in India. Reference has been made to the CBDT circular dated 23.02.2017 bearing Circular No. 08/2017. Therefore, in no view of the manner taxability arise in the present case proving that the entire ....
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...., built solely on suspicion and surmises, deserves to be quashed and no amount can be taxed in the hands of the appellant, as the same in no manner, can be called as the income of the Appellant. 39.1. The ld. A/R further submitted that any incorrect allegation on the part of the Department with respect to Non-Disclosure in the return for the A.Y. 2017 - 18 to 2018 -19 is unjustifiable as the Appellant, after coming to be aware of the liability of legal compliances, i.e., requirement of disclosures, even amended / revised his previous returns for A.Y. 2017 - 18 and made due disclosures about the bank accounts which he held on behalf of the company and also the financial interest in the company. In support, assessee furnished the relevant documents as under : PB 303 is the copy of the ITR Acknowledgement of the ITR filed u/s 139(5) for AY 2017-18. PB 304-329 is the copy of the ITR Form filed by the Appellant for A.Y. 2017-18, whereby in schedule FA (Pg. 326, & 327), due disclosure has been made by the Appellant in his return. PB 376 - 377 is the copy of the revised return filed for A.Y. 2017 - 18 whereby due disclosures regarding the Financial Interest & Signing ....
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....nt to note that section 4 r.w.s. 2 (11) of the BMA, dealing with chargeability of undisclosed foreign asset, defines an undisclosed foreign asset as "an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is beneficial owner, and he has no explanation about the source of such investment in such asset or the explanation given by him is, in the opinion of the Assessing Office, not satisfactory" The definition of an undisclosed foreign asset, under the BMA, is thus not dependent on the disclosure made, or not made, in the income tax return. So far as disclosure of an undisclosed foreign asset in the income return is concerned, it is relevant only for the purpose of penalty under section 43 and for no other purpose in the BMA. The position so far as undisclosed foreign income is concerned, the position is quite different inasmuch the definition of undisclosed foreign income is concerned, it is materially different- as provided under section 4(1)(a) and (b) of the BMA, but then right now we are not concerned with that aspect of the matter. The observations that we make in this order here, therefore, may not....
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....e returns of income furnished under section 139. Once returns are furnished, income is to be assessed or re-assessed for the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, once section 153-A(1) is invoked, assessment for 6 assessment years immediately preceding the assessment year in which search is conducted or requisition is made becomes open to assessment or re-assessment. Two aspects are crucial here. One is use of the expression "notwithstanding" in subsection (1); and secondly that returns of income filed pursuant to notice under section 153-A (1)(a) would be construed to be returns under section 139. The use of non obstante clause in sub-section (1) of section 153-A i.e., use of the expression "notwithstanding" is indicative of the legislative intent that provisions of section 153-A(1) would have overriding effect over the provisions contained in sections 139, 147, 148, 149, 151 and 153". It was in this backdrop that Their Lordships of Hon'ble jurisdictional High Court held that "the original return which had been filed loses its originality and the subsequent re....
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.... stands substituted by the subsequent income tax return filed under section 153A for the same year. It cannot thus be said that even after making necessary disclosure in the income tax return filed under section 153A for the assessment year 2017-18, the assessee can be visited with penal consequences for not making that disclosure in the income tax return filed under section 139(1) because, in the considered view of the Hon'ble jurisdictional High Court, the return subsequently filed for the same assessment year under section 153A is to be "construed as one filed under section 139(1) of the Act and the provisions of the said Act (Income-tax Act, 1961) will apply to the same accordingly" On a conceptual note, there can be situations in which the opportunity to file the return under section 153A can indeed work to the advantage of the assessee, as apparently in this case, and even fresh claims may be made which have, as in the case of JSW Ltd (supra), meeting the judicial approval. Whatever be the consequence of this legal position, such conceptual notions, cannot negate the binding effect of the law laid down by the Hon'ble jurisdictional High Court. We may, however, add tha....
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.... the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The unambiguous intent of the legislature thus is to exclude trivial cases of lases which can be attributed to a reasonable cause. It is also to be noted that Section 43 provides that the Assessing Officer "may" impose the penalty, and the use of the expression "may" signifies that the penalty is not to be imposed in all cases of lapses and that there is no cause and effect relationship simpliciter between the lapse and the penalty. As to what should be the considerations for the exercise of this inherent discretion by the Assessing Officer, we find some guidance from Hon'ble Supreme Court's judgment in the case of Hindustan Steel (supra), which, inter alia, observes that "........penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. The penalty will not also be imposed merely because it is lawful to do so. Whether a penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority....
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.... donated money to a wellknown charity of global repute, as was the wish of the departed soul. All the thirty years that she was the technical owner of this legacy left behind by her father, which was for the benefit of her mother, she simply did not touch the money- did not take a penny or add a penny. It is a somewhat rare situation with touching reverence, almost to a fault, to the wish of the assessee's late father that the money was kept intact for the benefit of the assessee's mother, which mother never used, and then donated it, within weeks of her mother's death, to a charity of her late mothers choice, and a charity which has earned the prestigious Noble Peace Prize in 1999 for its humanitarian work. The degree of reverence for the feelings of the parents, as unambiguously shown by the mother, is undisputed. With this kind of detachment, and truly dealing with this as trust money in letter and in spirit, her belief that she was not required to disclose it as 'her' bank account, cannot be said to be lacking bona fides. While the amount held in the said account is donated to the charity, the entire tax liabilities in respect of the same have been paid by t....
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....te mother. Even before the bank account was detected by the revenue authorities, the entire balance in the said account, as per instruction of the assessee's late mother, has been donated to a bona fide charity of the global repute. In these circumstances, the plea that such a lapse of non-disclosure, even if that be so, is only an inadvertent mistake, and that conscious non-disclosure or any mens rea in the non-disclosure is completely contrary to human probabilities, does merit acceptance. No reasonable person would consciously or deliberately withhold disclosure about this foreign bank account, for an ulterior motive, from the tax authorities, and, in any case, admittedly the money does not belong to the assessee- as is the position accepted by the Assessing Officer himself. Viewed thus, on merits of assessee's conduct, it was not a fit case for the imposition of impugned penalty. It is also not a case of siphoning of unaccounted Indian wealth to the undisclosed foreign bank accounts, prevention of which was the noble cause for which the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was enacted immediately upon the present Government....
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....d under the BMA. To put a question to ourselves, can these provisions be invoked in the cases which more of bona fide mistakes, or, at worse, harmless carelessness. The answer is emphatically in the negative. The case before us is of, at best, inheritance of a bank account which the assessee's father opened forty years ago, and the assessee's father, as records indicate, was from a well-placed business family, with business interests abroad. The amount in the bank account, considering the status of the persons involved, is a very small amount of money. The person who inherited the said money or the persons who were signatories to the bank account, did not put that money to any use so much so that ultimately that money was donated to a charity of global repute. The assessee and her husband were signatories to the said bank account because, as is the uncontroverted stand of the assessee, the actual owner, late Dr Pramila Gandhi had health issues and she was not in a position to travel to Zurich when formalities in respect pf the account inherited by her were to be completed. The subsequent developments spanning over several decades unambiguously corroborate this stand of the ....
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....isclosure of the bank account in question will be justified under the stringent provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This is, of course, without any prejudice to whatever consequence may follow under the provisions of the Income-tax Act, 1961, the legislation under which the lapse of non-disclosure, even if that be so, occurred. 10. In view of the detailed reasons set out above, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. As we have reached the same conclusions on the basis of different reasons, we see no need to deal with the correctness of the path traversed by the learned CIT(A). As we part with the matter, we may take note of the useful flow of intelligence inputs, under the automatic exchange of information framework, about undisclosed assets abroad, and express satisfaction with the fact that the good work being done by the Government in this regard is yielding tangible results. Whereas the information obtained in this case clearly did not pertain to the kind of cases the tax administration is focussing to unearth, the fact remains that there is c....
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....ed to tax in respect of the bank account of the Foreign Company by treating him to be the 'beneficial owner'. He further submitted that the term "beneficial owner" is not defined in the Black Money Act but is defined in Explanation 4 to Section 139(1) of the IT Act, 1961. On perusal of the definition of the term "Beneficial owner", it is evident that a beneficial owner in respect of an asset would be a person who provides consideration for the asset for the immediate or future benefit of himself or any other person. Thus, it is relevant to understand the meaning of term 'beneficial owner' by making reference to Income Tax Act, 1961, wherein the said term has been defined in Explanation to Section 139(1) of the Income Tax Act, 1961. Explanation 4.-For the purposes of this section "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. That in the present case, the assets, i.e., the foreign bank accounts and foreign investments, were solely the assets of the foreign company and consideration for the sa....
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...., in the absence of which, the additions made in the hands of the appellant by holding him to be a beneficial owner, is just, illegal, notional and not grounded on actual facts and/or law. Thus the ld. A/R submitted that the assessee appellant has been wrongly held to be the 'Beneficial Owner' without there being any iota of evidence to justify any benefit or even any contribution made by the Appellant. We have on this issue elaborately heard both the parties and contentions so raised by them. As we have already held in Ground No. 9 that the company M/s. Agrasen Polymers FZE based at UAE is a separate legal entity and all the funds/investments etc. belong to the company and no tax liability can be fastened on the assessee, therefore, taking a consistent view of the matter, we are of the view that assessee appellant clearly does not fall in the ambit of the term 'beneficial owner' as he is not the provider of the consideration of the asset. Thus we allow this ground No. 10 of the assessee. GROUND NO. 3 - DIVIDEND OF RS. 2,34,26,056/- PERTAINS TO THE COMPANY AND DOES NOT BELONG OR BENEFIT THE APPELLANT THEREFORE CANNOT BE TAXED IN THE HANDS OF THE APPELLANT 41. As regards....
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....evidence in this regard on record. Therefore, taxing the same, in the hands of the appellant is wholly incorrect and illegal, as the same is not in the nature of income of the assessee and is not an asset belonging or pertaining to the assessee. 41.1. On this issue, as we have already decided ground nos. 9 & 10 that the non-resident company is a separate legal entity and the non-resident company owns these assets and investments beneficially, therefore, we are of the view that the dividend of Rs. 2,34,26,056/- pertained to the non-resident company, cannot be taxed in the hands of the assessee. This ground No. 3 of the assessee is allowed. GROUND NO. 4 - THE AMOUNT OF RS. 16,76,574/- PERTAINS TO THE INTEREST EARNED BY THE NON-RESIDENT COMPANY ALONE AND CANNOT BE TAXED IN THE HANDS OF THE APPELLANT 42. The ld. A/R of the assessee submitted that this amount formed part of total credits. The AO and the ld. CIT (A) has not given specific finding in this regard. The ld. A/R submitted that the interest earned from the bank has been credited in the bank account held by the non-resident company or on behalf of the company, can only be income of the company. The ld. A/R submit....
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....e chart extracted from the bank statement submitted in the remand proceedings. The relevant evidences in support of assessee's claim are placed on record as under : PB 775 is the copy of Annexure 10 of Reply dated 12.07.2022 filed before the Ld. CIT(A) wherein the details of the cash deposits out of withdrawals after meeting expense of M/s Agrasen Polymers FZE was categorically provided. (See PB 755) Pg. ..... Synopsis is the Reconciliation chart extracted from the bank statement is being provided here for the sake of convenience The ld. AR of the assessee also submitted that the deposits and withdrawals pertain and belong to the company, M/s Agrasen Polymers FZE and not to the assessee even on that count the addition is not sustainable. 43.1. The contention of the assessee on this issue is examined by us. In Annexure 10 at page 775 the assessee submitted summary of cash deposits out of cash withdrawal after meeting the expenses. The assessee tried to reconcile the same with the total withdrawal versus the cash deposit. In this regard, the assessee has also furnished Synopsis of Reconciliation Chart extracted from the bank statement in support of its claim. These ....
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....e ld. AR of the assessee in ground no. 2 & 13 submitted that the loans and liability cannot be taxed in the hands of the assessee, as the liability is already reflected in the accounts of the non-resident company M/s. Agrasen Polimers FZE and it amounts to Rs. 19,68,01,923/-. As this amount forms part of total credit of Rs. 136,73,10,855/- same is not expressly discussed by the ld. AO and even the ld. CIT(A) has also not recorded his findings qua this issue. The ld. AR of the assessee submitted that at the time of opening the bank account of the non-resident foreign company viz. M/s. Agrasen Polymers FZE Rs. 18,56,28,608/- [ AED 10487493 at APB 236-237] were credited to account no. ending with 2010 and Rs. 1,11,73,315/- [ AED 4,99,460/- + 77,123/- APB 496 ] were transferred in the account number ending with 2026 in the year 2017. The ld. AR of the assessee further submitted that the company has taken some loan from their own sources, which was credited in the bank account of the company. The same was informed to the ld. CIT(A) which is evident from the report at APB 882 and there is no finding of the ld. CIT(A) on this issue. He further submitted that liability is out of the purvie....
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....company and has been repaid back by the company alone. This unequivocally proves that the same did not belong or even pertain to the Appellant. It clearly belonged to the company and that too as a liability, therefore, by no stretch of imagination can be taxed in the hands of the Appellant. Secondly, even if it is presumed to be belonging to the Appellant, even then, it is a loan, viz. falling in the nature of a 'liability' and not 'income' or asset, in any manner. Therefore, the addition of Rs. 19,68,01,923/- is wholly illegal and liable to be quashed. 45.1. We have elaborately heard the parties on the issue and have persuaded the orders of the lower authorities and details filed in response to this by the assessee in his paper book. We note that the assessee submitted detailed evidences in support of his claim that credits of Rs. 19,68,01,923/- appearing in the accounts belong to non-resident company M/s. Agrasen Polymers FZE and not to the assessee and that too in the nature of a liability. This is a loan standing in the name of the nonresident company and a major portion of the loan has been repaid by the nonresident company M/s. Agrasen Polymers FZE. Thus it proves that the....
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....e of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under Section 94 of Cr.P.C by operation of sub-section (13) of Section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent.................. .......................This, in turn, is referable to a time-tested right of an individual which is recognised under Article 20(3)of the Constitution of India which mandates no person, accused of any offence, shall be compelled to be a witness against himself. The citing of a statement of an individual as the only evidence, in the penal proceedings initiated against him, is never treated as part of a developed and mature legal system. Section 31 of the Evidence Act, 1872 also assumes significance in this regard. It reads: Admissions not conclusive proof, but, may estop:Admissions are not conclusive proof of the matters admitted,....
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....sed off all the 16 grounds of the assessee and in terms of these observations the appeal of assessee in BMA 01/JP/2022 stands allowed. 49. Coming to the appeal of the revenue, in BMA No. 02/JP/2022, the revenue has taken following grounds of the appeal: 1. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer. 2. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer - (i) by scaling down the addition of Rupees 136.73 crores by Rupees 103.64 crores (ii) by deleting the addition of Rupees 9,01,93,937/- as double addition (iii) by deleting the addition of Rs 32,49,375/- holding the same to be contra entry (iv) by deleting the addition amounting to Rs 9,69,34,026/- as leverage facility. 3. The learned CIT Appeal has erred in granting relief to the taxpayer by admitting additional evidence, even though the additional evidence could not have been admitted as per stipulations laid down under Rule 46A of the Income Tax Rules 1962. Further, since the additional evidence itself was not to be admitted, and has been incorrectly admitted, relief (even otherwise c....
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....planation given by him is not satisfactory, in the opinion of the assessing officer, then such income is required to be taxed according to the provisions of the law. Therefore, the assessee is the beneficial owner of the firm M/s. Agrasen Polymers FZE where is he owns 100 % stake in the company the learned assessing officer has correctly charged the above sum to the tax in accordance with the provisions of the BMA. i) Since, the ld. CIT(A) has given the relief without obtaining the details of the credit entry in the bank account, the order of the assessing officer should be sustained and that of the order of the ld. CIT(A) be set aside. Based on the above observations, the ld. D/R fervidly claimed that the order of the assessing officer should sustain. 51. Against the grounds taken by the revenue, the ld. A/R of the assessee filed his written submission objecting to the appeal of the revenue and the grounds raised therein. The relevant written submission of the assessee is reiterated here in below: "A. Sh. K.D. Agrawal (hereinafter referred to as the "Appellant") is a senior citizen, aged 84 years and is presently enjoying a retired life. He is a regular tax....
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....ted by the CIT(A) 1. Addition made on account of the credits in the following Bank Accounts of M/s Agrasen Polymers FZE and the accounts held by the Appellant in fiduciary capacity for the company during F.Y. 2015 - 16 and F.Y. 2018 - 19 INR 136,73,10,8555 INR 23,74,26,4433 INR 1,12,98,84,4122 AE470271226001850542017 Appellant - Fiduciary Capacity AE410271226001850542028 Appellant - Fiduciary Capacity AE920271161201822102010 Company AE610271161371822102026 Company AE060276031498079255014 Appellant - Fiduciary Capacity AE550271031591850542039 Belongs neither to the company, nor to the Appellant in fiduciary/individual capacity 2. Income Allegedly earned on Investments in OMI INR 9,69,34,026 - INR 9,69,34,026 TOTAL INR 146,42,44,881 INR 23,74,26,443 INR 1,22,68,18,438 1. Aggrieved by the rightful deletion of Rs. 112,98,84,412/- & Rs, 9,69,34,026/-, the department has preferred this present appeal and has raised grounds which are not tenable under law, the rationale for which is elaborated as under: GROUND WISE SUBMISSIONS: GROUND NO.1 & 2 - THE LD. CIT(A) HAS E....
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....e, there remains no justifiable, legal basis to delete the rightful relief granted by the Ld. CIT(A). 1.2. Rs. 9,01,93,937/- IS A NOTIONAL ADDITION AS NO SUCH AMOUNT EXISTED. 1.2.1. That the said addition has not been discussed by the Ld. Assessing Officer in his order and has been made a part of the total credits in the bank account no. ending with 2039, whereas the said bank account no. ending with 2039 admittedly does not even belong either to the nonresident company, nor to the Respondent - assessee. which is an internal bank account of the FAB Bank. Secondly, it is an admitted fact (PB 873 - 874 - Remand Report) of the Ld. Assessing Officer that the total amount credited in the abovementioned bank account is NIL, therefore, there stands no basis to make any addition, whatsoever. PB 869 - 875 is the copy of the Remand Report dated 13.07.2022, wherein it is mentioned that the Ld. AO has verified the facts and that the FAB bank account no. ending with 2039 is an internal investment suspense account of the bank and which is used by the operations & credit teams of the bank. (PB 873 - 874). PB 876 - 884 is the copy of the reply dated 18.07.2022, filed ....
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....he cancellation of telex amount, resulting into refund of Rs. 32,49,375/- could not have been added again as the same would result in double addition, as has been rightly recognized by the Ld. CIT(A) in his findings (Para 6.2 (xx - xxi at Page 40 - 41 of the Appellate Order). Therefore, it is prayed that the deletion of such a contra entry (double addition of an amount already considered) be sustained. PB 869 - 875 is the copy of the Remand Report dated 13.07.2022, wherein it is mentioned that the Ld. AO has stated that on verification of bank account, it transpires that no new amount has been credited in the bank account. (PB 874). PB 876 - 884 is the copy of the reply dated 18.07.2022, filed by the assessee before the ld. CIT(A) wherein the assessee has prayed that since the Ld. AO has stated that on verification of bank account, it transpires that no new amount has been credited in the bank account, such addition may kindly be deleted. (PB 880). 1.4. Rs. 9,69,34,026/- CONSISTS OF NOTIONAL GAINS AND LEVERAGE FACILITY GRANTED BY THE BANK WHICH CANNOT BE CALLED INCOME; THEREFORE, THE DELETION DESERVES TO BE UPHELD 1.4.1. It is submitted that an amount ....
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....chart and reconciliation given it for verification in the proceeding before the ld. CIT(A) and he in turn send it to AO. The learned AO after verifying the contentions reported the facts only and thus, there is no additional evidence submitted by the assessee. He has further submitted that based on the evidence submitted the firm M/s. Agrasen Polymers FZE is not a paper company as alleged by the revenue. As regards the objections to the remand report by the ld. AO and thereby the ld. DR the ld. AR of the assessee relying on the finding of the ld. CIT(A) recorded at page 39 para 6.2 (xv) to (xvii) wherein the ld. CIT(A) considering the fact allowed the submission of the assessee along with the presentation based on chart and reconciliation. Therefore, now revenue cannot object the decision of the ld. CIT(A) which is rendered after giving an opportunity of hearing to the learned assessing officer and his comments were well taken while passing the order by the learned CIT(A). 53. We have heard both the parties and considered their rival contentions and perused the orders of the lower authorities. The ground no. 1 & 5 raised by the revenue are general in nature and does not require ....
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....17(1)(c) of BMA(UFIA) whereby the ld. CIT(A) was mandated to do inquiries herself or to get carried out further inquiries. Instead of doing the same the ld. CIT(A) choose to grant relief to the taxpayer. In this regard the bench has noted the ld. CIT(A) has granted the relief to the extent of Rs.103,64,41,100/- after considering the submission of the assessee and thereby seeking comments of the ld. AO and is supported by the remand report submitted by the ld. AO. The relief granted is after considering the fact that duplicate additions were made on account of interbank transfer, investment matured and maturity value of FDRs. The relevant finding of the ld. CIT(A) is reiterated here in below: (xiii) I have considered the facts of the case and it is observed that the appellant himself in his sworn statement recorded u/s 132(4) of the Act has neither disclosed voluntarily any of the foreign asset or income nor declared the same in his return of income for any of the year. It was only after the search team extracted the details of foreign assets and bank accounts from the e-mail and personal Macbook of the assessee, that he accepted to be in the possession of the same. Further....
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....mission /incentive as well as proceeds from foreign investment from sources located outside of India and he was the beneficial owner and sole signatory in the company M/s Agrasen Polymers FZE. (xiv) In view of the above facts, the contention of the appellant that the investments made belongs to the foreign company only and any income arising therefrom will be taxable in the hands of the said company is for from truth since as per the definition of undisclosed assets located outside India under the Black Money Act, 2015, it is observed that it is an undisputed fact that the assessee is the beneficial owner and the sole signatory in the company M/s Agrasen Polymers FZE and therefore the assessee is statutorily bound to not only disclose the complete details of the aforesaid company in his return of income but is also mandatorily bound to provide the source of investment made in the said company during the course of assessment proceedings to the full satisfaction of the Assessing Officer which the appellant has failed to do. (xv) However, as regards the contention of the appellant that out of total addition of Rs. 136.73 Crores, a sum of Rs. 103.64 Crores represents ....
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....ort has also confirmed that AE550271031591850542039 is an internal suspense account which is used by bank for their operation and internal investments and the said account does not belong to the appellant. In view of the above facts, the addition of Rs. 9,01,93,937/- made by the AO is not justified and I, therefore, delete the addition of Rs. 9,01,93,937/- so made by the AO. Contra entry of Rs. 32,49,375/- The ld. CIT(A) has also granted a relief of Rs. 32,49,375/- being the contra entry made at the instance of the bank and the same is deleted in the same bank statement. Based on the remand report submitted by the AO the ld. CIT(A) deleted that addition. The relevant findings of the ld. CIT(A) is reiterated here in below : "(xxi) In the remand proceedings, the AO has considered the argument of the Ld. AR of the appellant and on verification of bank account, it is noticed by him that this was only a contra entry and the amount of US$ 50000 is debited and USD 49975/- is credited in the Bank account No. 2028 on the same date, i.e. 18/5/2016 due to cancellation of telex and no new amount has been credited in the bank account. I have considered the submissions of the appe....