TaxTMI 
TaxTMI 
2023 (5) TMI 1046
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....ince F.Y.1999-2000 to till date and had status of non-resident or not ordinarily resident of India. Even prior to that, from F.Y. 1989-90 to 1998-99, she was a non-resident or not ordinarily resident. As a non-resident, the assessee has been maintaining NRE account & NRO account in India. However, the assessee was filing the return of income in India in the status of non-resident in respect of income chargeable to tax in India in accordance with the provisions of Income Tax Act, which generally comprises of capital gains and income from other sources like dividend, interest, etc. For the A.Y.2006-07 assessee had filed return of income in India declaring income of Rs.15,86,134/- in the return of income filed on 30/03/2007 in the status of non-resident. And in the A.Y.2007-08, return of income was filed on 31/03/2008 in the same status of non-resident declaring total income of Rs. 4,61,12,141/-. 4. Prior to the issuance of notice u/s.148 and recording of the "reasons", ADIT (Investigation), Mumbai had issued summons u/s.131 to the assessee on the basis of certain information received from Government of India in the form of "Base Note" from French Government from which it was gathe....
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....P). Copies of these accounts are attached herewith. These accounts were closed in August 2005. 6. Sources of Funds in the Account- How the funds are generated in these accounts. She is a person of Indian origin. She holds Indian Passport. She was employed in Britain, married to a British Citizen and has settled in London. For the past several years she has been engaged in buying and selling of Art Works. She has also been advising on Art Works and earning income by way of consultancy and Commission. Various deposits in the account are from her own funds generated or earned abroad. Most of the amounts deposited in the account are from selling of Art works The credits in the account relate to transactions of sale of paintings or Art Work abroad or in respect of income earned by way of Commission for procuring Sale of art work abroad or by way of commission for sales or purchase of paintings effected outside India. Transactions originating in India are shown in her Bank Accounts in India. They do not appear in the Accounts held with HSBC Bank Geneva. No transactions which appear in the HSBC (Geneva) accounts have any nexus or relation or origination to a source in India....
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....ancy receipts and commission for facilitating sale of paintings overseas. With reference to deposits in HSBC (Geneva) Accounts the paintings are bought in foreign countries and sales also are effected in those countries i. e. London, Paris, New York etc. The deposits / credits in these accounts, apart from her savings from salary earned abroad, transfers for investment in fiduciary/term deposits, entirely relate to these transactions of buying and selling of paintings / art work and income received by way of commissions for facilitating sale of paintings/art work. These receipts or deposits did not originate or arise whether directly or indirectly through or from any business connection in India or through or from any property in India or through or from any asset or source of income in India or through the transfer of a capital asset situate in India. We wish to mention that Ms. Jhaveri has bought some of the paintings from Indian parties and has imported the same to territories outside India, for which she has made payments from these accounts. Income arising from such transactions do not come within the meaning of income deemed to accrue or arise in India and income arisin....
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....unt all the above submissions. Thanking you Yours faithfully, R. K. KOTIAN CHARTERED ACCOUNTANT Encl 1. Copies of Bank Statements for Account with HSBC, Geneva Account No. 11790208 in USD Currency Account No. 11790216 in EURO Currency Account No. 11790224 in GBP Currency 2. Copies of Bank Statements for Account with HSBC, Geneva in the names of Ms. Amrita Jhaveri and her husband Mr. CHRISTOPHER MICHAEL DAVIDGE Account No: 10906776 (USD). Account No. 11448879 (EUR) Account No. 10906601 (GBP). 5. Thereafter, assessee had also submitted her affidavit before the ADIT, reiterating the same things which are borne out from the records and giving the details of the accounts and the source of deposits made therein. After all these information been filed, ACIT (2) further issued notice u/s.131 on 19/07/2013 in the following manner:- "1. On the basis of information received, it is seen that you hold account No. 5090149151 with HSBC, Geneva. 2. The ownership of the aforesaid account was confirmed by you during the course of inquiries by the Investigation Wing, Mumbai....
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.... AO and in his record all the bank statements, all the details as and when required by the ld. AO were filed. The copies of which have been placed in the paper book also before us alongwith copy of returns, statements of income etc., 8. After having called for all the informations from the assessee, the ld.AO issued notice u/s.148 on 12/03/2014 on the following reasons recorded:- REASONS FOR RE OPENING U/S 147 OF THE IT.Act 1961 Information was received by the Government of India under Article 28 of Double Taxation Avoidance Agreement from the French authorities in exercise of its sovereign powers that certain persons in India held bank accounts in HSBC Bank, Geneva. The information is received in the form of a document wherein various details of account holders such as Name, Date of Birth, Place of Birth, Residential Address, Sex Nationality etc are mentioned in the case of the assessee also such information is received. The details of the assessee's bank account in HSBC, Geneva are as under:- Name Amrita Jhaveri BUP_SIFIC_PER_ID: 5090149151 Date of opening of account 25.11.1999 Balance shown for AY 2006-07 USD 505262 The Investi....
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....denied having such account in HSBC Bank. Geneva later on submitted their bank account statements which were forwarded to them by the HSBC bank, Geneva in response to Consent Waiver Form submitted by them. The fact that a large number of assesses have confirmed the existence of the bank accounts in HSBC Bank, Geneva mentioned in the information received under DTAA, shows that the information received is credible The information regarding the assessee with the department shows a balance of In FY 2006-07 relevant to the AY 2007-08 The balance shown of USD 607950 in Assessment Year 2007-08 is not disclosed to Income-tax Department. In view of the above. I have reason to believe that the assessee holds the above mentioned bank account in HSBC, Geneva which is an asset located outside India and that the income in relation to such asset has escaped assessment for the assessment year 2007-08, for which as per Section 149(c), sixteen years time limit is available (KISHAN VYAS) Commissioner of income tax (OSD), I/C Range 16(2), Mumbai 9. After receiving the notice u/s 148, assessee raised detailed objections before the ld. AO, which ha....
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....s concerns the assessee has furnished before the HSBC authorities the required information as AMAYA Ltd. (Ex AM ART INDIA Pvt. Ltd. Until 18.01.2006). In the light of the silence maintained by the assessee despite being asked and the disclosure/information appearing in the base note issued by the French Authority it is undoubtedly concluded that this deposits has been made out of Indian income as per the IT. Act. The submission of the AR are mere time consuming tactics and to pose a stonewall before the eyes of the tax authority 8.3 Firstly, it must be understood that the assessee has her interests in India. As per the Base Note, the assessee is having an address in 80, Napean Sea Road, Mumbai - 400 008 which is her legal address. The assessee has not offered any explanation with regard to this address even after a specific question was raised. As per the Base Note 8.4 Secondly, the assessee chose not to produce the bank statements and the source of deposits made in the account even after various opportunities were given during the assessment proceedings. It is in the public domain that HSBC. Geneva has been inquired regarding its role in facilit....
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....olders, and brought to markets in Antwerp, Dubai and London, rough diamonds are then sent for cutting and polishing the CPDs or cut-and-polished diamonds are exported across the world. (g) In India, where there is no tax on import of rough diamonds, the precious stones are vulnerable to misuse - these are often used for illegal money transfer, money laundering and exploitation of credit facilities. The Income Tax (1-T), Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) have named diamond traders in at least 65 cases. It is alleged that they are key players in trade-based money laundering of an estimated Rs 60,000 crore. A February 2014 internal I-T paper on the diamond traders of Surat and Mumbai outlines how traders facilitate bogus entries through which black money is converted to legitimate money for other sectors such as real estate. h) A forensic report dated October 28, 2013, submitted by a consortium of banks to the Reserve Bank of India in connection with the credit facility used by a diamond trading company, underlines: "It is very common for one family to have multiple companies under multiple names across geographies that receiv....
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....usiness activities in India and abroad and hence provisions of section 149(1)(c) of I.T.Act, 1961 were correctly applied. Moreover, assessee's case squarely falls within provisions of section 139(1) itself and that is why she had filed her return of income for A.Y 2006-07 on 30/3/2007 and she had not offered her income accruing and arising from India and Income deemed to accrue and arise in India under section 9 of 1.T.Act, 1961, her case was reopened under section 147/148/149 of 1.T.Act, 1961 which is fully justified in facts and law. Hence the objections raised by the assessee are baseless and are rejected." 12. In so far as merit is concerned, ld. CIT(A) has confirmed the reasoning of the ld. AO which reads as under:- 5.4 Assessee is a citizen of India was a resident of India till F.Y.1998-99 and became not ordinarily resident from FY 1999-2000 relevant to AY 2000-01 and yet assessee regularly visited for periods ranging between 81 days in A.Y.2000-01 to 111 days in A.Y 2006-07 and 123 days in A.Y.2001-02, 136 days in A.Y 2002-03, 158 days in A.Y 2003-04 and 147 days in A.Y.2004-05 and 104 days in A.Y.2005-06 and the total number of days stayed always below 180 d....
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...., Walkeshwar Road, Mumbai owned by her and also appears to have vast collections of paintings by Indian painters as per the details of assets s on 31/3/2006 submitted by the assessee and the return of income for A.Y 2006-07. She is rated as one of the topmost authority on Indian painters and has also authored a monogram of 101 Indian Contemporary Painters for an Indian Art auction house Saffron Art, Mumbai and has also organised several exhibitions and auctions under the name Amaya Collections during 2013 with Southbeys and Dubai fest in 2016 as per the information available from the internet. She has in her affidavit admitted she derives income by way of consultations and commissions from the sale of works of art and paintings. Entries in the bank account in the name of Amaya Limited with HSBC Pvt.Bank Geneva also point to the fact of payments and receipts for sale of paintings. Assessee is also a director of AM Art India Pvt.Ltd. which is registered in Mumbai, India with her relatives as directors. This fact and assessee's frequent visits for 111 days during previous year relevant to A.Y.2006-07 to India in connection with identification of Indian paintings and its selection ....
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....company whether it was named as AM Art India Pvt.Ltd. and/or Amaya Limited are her property only. There is something called concept of corporate veil and as soon as it is lifted in the case of Amaya Limited, we have assessee, that is, Amrita Jhaveri. Till date, except for the email by HSBC Pvt.Ltd., assessee and its CAS have not indicated what was the source of the debits and credits in the three bank accounts of Amaya Limited with HSBC Bank Pvt.Ltd. and why was a company floated in tax haven Seychelles and a bank account opened in the name of Amaya Limited when she was living in London UK? 5.8: All these facts clearly and unequivocally indicate that Amaya Limited was nothing but a company solely and wholly owned by Amrita Jhaveri and all the assets owned by Amaya Limited were the assets of the assessee who wanted to avoid and evade Indian and/or UK/France income tax accruing and arising from her business activity of purchase and sale of paintings imported from India. All these facts clearly point to one single fact that assessee was engaged in the import of paintings from India over which she exercised direct and indirect control because of business operations conducted b....
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....om the bare perusal of the "reasons" recorded, it is seen that nowhere these documents have been mentioned nor the bank statements as was supplied by the assessee to the Income Tax department. These bank accounts have been provided to the ADIT way back in the year 2011, then again to ACIT in the year 2013 and at no point of time they asked any clarification with regard to various entries appearing in the said bank statement. The reasons recorded are so general in nature which only mentioned about information received by the Government of India and how Investigation wing of the Income Tax department after conducting enquiries, found large number of assessee have admitted of holding accounts in HSBC bank and certain assessees have denied. Whether the balance shown in the bank account of the assessee with HSBC Geneva, leads to reason to believe that income is chargeable to tax in India and how it is income taxable in India or not has not even mentioned. 14. One very important fact which is relevant here in this case is that, assessee is a non-resident and from last several years she has been staying in London and earning income from various activities carried outside India. Whateve....
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....column in the return of income as noted above in the foregoing para. It is reiterated that, even the ld. CIT (A) has not disputed that assessee was non-resident and more so the assessment passed by the ld. AO is in the status of non-resident. The ld. CIT(A) had also not denied this fact that assessee in terms of Section 6 of the Income Tax Act was never a resident of India. Thus, extended time limit provided u/s. 149(1)(c) will not be applicable in the case of the present assessee. 16. The ld. AO while recording the reasons has not disputed that assessee is a non-resident and even her return of income filed for the A.Y. 2006-07 and 2007-08 showed the status of non-resident and nowhere the ld. AO has held that assessee has no longer the status of non-resident. Once the Assessing Officer while recording the reasons has accepted that assessee is a non-resident, then how balance in the bank account with HSBC bank, Geneva represents income which is accrued or arising or is deemed to accrue or arise in India so as to come within the scope of total income in terms of Section 5 of the Act. At least, the ld. AO should have mentioned it in the reasons recorded before acquiring jurisdictio....
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....from sources earned outside India from various activities carried outside India. 20. At the time of hearing, we had also called for the entire statement of bank accounts from the period 17/08/2005 to 31/03/2006 for all the three bank accounts which was in US currency, Euro currency and GBP currency and all of the entries are by way of clearance and nowhere it can be inferred that any amount has been deposited from Income earned from India. The entries of these bank statements have already been incorporated in the ld. CIT (A)"s order also and nowhere any finding has been given that any credit in the said bank account pertains to any income earned from India even in terms of Section 9. While confirming the order of the ld. AO, ld. CIT (A) has narrated various facts from Google search in order to draw presumption that; there might have some income earned from import of paintings, which might have deposited in these accounts and therefore, income might have deemed to accrue and arise in India. All these findings are based on certain hypothesis on which he has come to a conclusion. Even certain observations that Amaya Ltd was in fact belong to the assessee and assets owned by said en....