TaxTMI 
TaxTMI 
2025 (3) TMI 795
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....is common order for the sake of brevity and convenience. First of all, we shall take appeal in BMA No.4/Kol/2022 A.Y. 2018-19. BMA No. 4/Kol/2022 A.Y.2018-19 2. Brief facts of the case are that the Assessee in the present case is an individual and a resident under the Act. A company by the name M/S. Anurag Intex (Chem) Pvt. Ltd. (AICPL), is engaged in the business of acting as commission agent/trading in iron ores of which the assessee is one of the director. The assessee derives income in the form of salary from the aforesaid company besides incomes under the head income from other sources like interest income etc. Proceedings under the BMA were commenced against the Assessee by issuing notice u/s. 10(1) of the Act dated 12.01.2018 in the light of the following information received by the Assessing Officer: (i) Information received on 8.5.2017 from Switzerland, Swiss Federal Tax Administration (FTA) under the "India- Switzerland Double Taxation Avoidance Agreement (DTAA) in the light of Exchange of Information clause of the DTAA. (ii) Information received on 7.6.2017 from Ministry of Finance, British Virgin Island, by virtue of the Agreement between the Gov....
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....ad raised invoices on another company MFT Services SA. MFT Services SA was acting as intermediary of the company KII and maintaining all its accounts. 3.5. The nature of information received from Competent Authority of Panama, was as follows: a) Prauk Foundation was a foundation. Foundation is a type of entity which the Swiss law allows for the purpose of allocating assets to a particular purpose. Unlike companies, foundations do not have any share capital or shareholders. b) Assessee and his wife are 24% and 76% beneficiaries, respectively of Prauk Foundation. c) KII is the foundation council of Prauk Foundation. 3.6. It is the case of the Assessing Officer that the Assessee was the beneficial owner of the Bank Accounts in the name of NGTL and NCL on the basis of the information obtained from Swiss Federal Tax Administration (Swiss FTA). 3.7. In so far as BEL is concerned, it was the case of the AO that as per information received from Swiss FTA the Assessee was the beneficial owner of the bank account in the name of BEL. Besides the above, according to the AO, International Tax Authority of BVI, the assessee was the beneficial owner of BEL. As ....
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....oss Account and return of income filed by AICPL for AY 2007-8 to 2013-14. Copies of thse documents are placed at pages 35 to 127 of the assessee's paper book. Thus when all details were already disclosed, there cannot be a charge of "undisclosed assets outside India" of which the assessee is a beneficial owner. b). The assessee was in Geneva from 15-5-2007 to 19.5.2007 where he met one Mr. Hui Li of China, who suggested to purchase the company NCL. Mr.Hui Li was known to the Assessee when he met him in china in 2006 when he had gone on a sales promotion tour to China. At his advise that Assessee's business prospects would improve, if he has a company in BVI and he can get exclusive agency for export of iron ore to china, the Assessee sent US $ 15000 on 8.7.2007 through remittances from HDFC Bank Account in the name of AICPL as share application money for purchse of shares in NCL in the name of the Assessee and his wife. Pge-34 of the paper book is a copy of the share application money ledger account in the books of AICPL which would show the share application money was paid for investment in shares of NCL in the name of the Assessee and his wife. There was a liberalized Sc....
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....iary owner of the bank account in the name of NCL. NCL is a corporate entity and it has personality different from the Assessee. The AO cannot therefore conclude that the Assessee is the beneficial owner of the said bank account. g). The AO in Paragraph 6.2.1 of his order did not dispute the fact that the Assessee invested US $ 15000 in NCL and that this transaction was recorded in the books of accounts of AICPL through disclosed bank accounts of the Assessee. The fact that the money was received back is also not disputed by the AO. He however concluded that Swiss FTA has mentioned Assessee as beneficiary of the Bank account and therefore the plea of the Assessee cannot be accepted. B.KRIMS INVESTMENTS INC:(KII). a). It is the case of the revenue based on minutes of the Board of Directors meeting held on 11.1.2010 (Page 274 of paper book) that the Assessee was a beneficial owner of the bank account of this company, apart from the information provided by the bank (Page 255 of the paper book) that the Assessee is the beneficial owner of the bank account in the name of KII. According to the assessee, the Board resolution cannot be true because on 11.1.2010, ....
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....eflected in the commission ledger of the assessee's company AICPL as placed at page No.27,28, and 29 of assessee's paper book. As per the information received by the AO, the assessee was director of this company. The basis of this assertion is that MFT Services was an intermediary of this company. A company by name Directorship Management Ltd. (DML) was the sole director of this company. The two directors of DML gave power of attorney to the Assessee to act as sole director of this company. This allegation of the AO is not acceptable because there is no evidence that the Assessee accepted to act as director of BEL on the strength of Power of Attorney allegedly given by directors of DML. Mr.Maurice Taylor is connected with DML. Therefore the Assessee's name has been used by the same group of people without the knowledge of the Assessee. b). At page 300 of the paper book is the information allegedly given by BNP Paribas Bank, that Assessee is beneficial owner of the bank account in the name of BEL. The date of this document is 3.3.2011 and the place is shown as Geneva. On this date the Assessee was not in Geneva and was in Singapore as would be evident from the endorsement i....
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....s doubtful for the reason that it has not been authenticated by the Government providing information and that the contents are contrary to the rules regarding opening of bank account. b). In Paragraph 6.2.4 of his order, the AO held as per information received from a soverign authority, the assessee was a beneficial owner of the bank account and hence the same has to be treated as Undisclosed asset located outside India of the assessee. c). In Paragraph 6.2.5 of his order, the AO accepts the plea of the Assessee that physical presence of beneficiary is a must for opening bank account in Switzerland of BNP Paribas Bank and that on the dates claimed to be the dates of opening of bank account, the assessee was not present in Switzerland. The AO however was of the view that it is possible that the account would have been opened in a branch of PNP Paribas in India. Over and above that the AO again reiterated the fact that information received from a soverign authority cannot be disregarded and have to be held to have evidentiary value. 4. In paragraph 7 of his order, the AO has culled out the details of the bank account and the balances and has arrived at the Assess....
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....ign companies also reveal that Mr. Anurag Kejriwal was offered Directorship of the Company Biscay Exports Ltd. and he was appointed as President of the Company Krims Investment Inc. However, Mr. Anurag Kejriwal in his submission refutes these evidences and submits that he never accepted the directorship or the presidentship in the two companies. The information sent by the Competent Authority of British Virgin Islands reveals that Shri Anurag Kejriwal along with his family members remained the beneficial owners and shareholder in the companies named Biscay Exports Ltd. and Krims Investment Inc. till their names were struck off from Register in 2013. There is no reason to doubt the information provided by the Competent Authority of British Virgin Islands. Appellant further submits that the documents/information has been received in the form of documents submitted by M/s. Mossack Fonseca & Company Associates, SA. Appellant says that this is a private party and hence questions the authenticity of these documents. However, appellant's objections are not justified because these documents have been received through the Competent Authority of British Virgin Islands Panama & Switzerlan....
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....t beneficial owners. Documents sent by the Competent Authority of Switzerland, reveals the signatures of Mr. Anurag Kejriwal his wife and mother on account opening forms, as beneficial owners. Copies of their passports are also attached to Account Opening forms, as proof of identity. In view of the above discussion, it is apparent that Shri Anurag Kejriwai along with his wife Mrs. Uttara Kejriwal and his mother Smt. Tara Kejriwal have been the beneficial owners of the foreign bank accounts. They have not been able to prove the contrary. Although, they have denied being beneficial owners of their foreign bank accounts but the documents sent by the Competent Authority of Switzerland contradicts their claim. As per the established norms regarding the exchange of information between two sovereign Governments, it is expected that the concerned Competent Authority would do necessary verification and satisfy itself about the authenticity of the documents and only then pass on those documents / information to the other Competent Authority. Under the circumstances, it is apparent that Shri Anurag Kejriwal and his family members were beneficial owners of the foreign bank accounts. Therefore,....
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....k accounts in HSBC Pvt. Ltd. (Suisse) SA, Geneva, Switzerland. The information said that assessee had a bank account in HSBC Bank, Geneva and the bank account was opened under the client name Dipak Varandmal Galani and/or Kamal Galani. During reassessment proceedings, assessee Shri Kamal Galani explained that bank account was opened by his brother Mr. Dipak Varandmal Galani with the British Bank of the Middle East in the year 1998 and this bank was subsequently taken over by HSBC Bank. Assessee submitted that bank account was opened by his brother and allrights, interest in the said bank account completely belonged to his brother. Assessee's name was included as a second account holder out of love and affection. Further, his brother Dipak Varandmal Galani owned up the account and stated that account is opened by him in the year 1998 and his brother's name was included as a mark of respect but his brother didn't have any right in bank account. However, AO insisted that the assessee should produce evidences to prove that he was not the onwer of the fund/assets held in bank account. AO ignored the letter filed by assessee's brother and held the assessee as beneficiary of that bank....
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....d. However, some discrepancy has been noticed in respect of your share of assets / income, as credited in the foreign bank accounts. There was some error in the assessment order regarding the total quantum of your share. Correct amount of your share is as per the table below: Bank Account No. Total Credit (USD) Assessed value (Rs.) after applying rate of conversion of 64,807 Share of Mr. Anurag Kejriwal Share of Mrs. Uttara Kejriwal Share of Mrs. Tara Kejriwal 88393/1C 293,489.40 1,90,20,167.55 95,10,083.78 95,10,083.78 - 88500/1A 439,523.78 2,84,84,217.62 1,42,42,108.81 1,42,42,108.81 - 87503/1Y 38,103.22 24,69,355.38 12,34,677.69 12,34,677.69 - 85877/1O 10,000.00 6,48,070.00 2,16,023.33 2,16,023.33 2,16,023.33 85877/5Y 274.72 17,803.78 5,934.59 5,934.59 5,934.59 Total 2,52,08,828.00 2,52,08,828 2,21,957.92 It appears that due to oversight, the AO has assessed Rs. 2,42,08,812.96 as undisclosed foreign assets whereas the correct amount should have been Rs. 2,52,08,828/-. Hence, I propose to enhance the assessment and this letter may be....
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....cer unsatisfactory. Section 4 deals with the scope of total undisclosed foreign income and assets and Section 5 deals with the computation of total undisclosed foreign income and asset. Thus on careful look at Section 3 of the Act it provides that irrespective of the year of investment, the undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the assessing officer. Therefore, the year of chargeability of such undisclosed assets located outside India shall be the previous year when it comes to the notice of the assessing officer. Provisions of Section 10 of the Act deals with the assessment of the undisclosed foreign income and assets and the sum payable by the assessee. There is no provision of charging of any interest over and above the tax at the rate of 30% provided u/s 3 of the Act. Provisions of Section 5 (1) (ii) provides for exclusion of the income already charged to tax under the Income Tax Act from the value of the undisclosed assets located outside India and furnishing of the evidence by the assessee to the satisfaction of the assessing officer. Provisions of Section 4 (3) provide that....
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...., British Virgin Island by virtue of the Agreement between the Government of the Republic of India and the Government of The British Virgin Islands (BVI), for exchange of Information relating to Taxes. Apart from the above, the ld. Assessing Officer also received information on 26.10.2017 under "Exchange of Information" Article of India-Panama Multilateral Convention of Mutual Administration Assistance in Tax Matters. As per the information in the possession of the AO, there were four bank accounts with BNP Paribas, Geneva. As per information received, the assessee and his wife Mr. Uttarra Kejriwal were the beneficiaries of the first three bank accounts and the assessee, his wife and his mother Smt. Tara Kejriwal, were the beneficiaries of the fourth bank account. We note that ld. Assessing Officer received KYC documents, statement of accounts from the Bank. We observe from the facts before us that BEL and KII were companies incorporated in BVI and both these companies were stuck off the register on 01.05.2013 and 01.112013 respectively. The assessee was stated to be beneficial owner of BEL and KII and entity Directorship Management Limited (DML) was the sole Director of BEL. 8.....
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....the assessee sent US $ 15,000 on 08.07.2007 through remittances from HDFC Bank Account in the name of AICPL as share application money for purchase of shares in NCL in the name of assessee and his wife. Copy of share application money ledger account available at page 34 of the paper book which indicates that share application money was paid for investment in shares of NCL in the name of assessee and his wife. Since the assessee was engaged in the business of export of iron ore to China, the assessee purchased shares in NCL in his name and his wife. It was also argued that there was a liberalized scheme of RBI which permitted remittances upto US $ 25,000, for business promotion purposes, without approval of RBI. It was argued that the assessee sent copies of his passport as well as that of his mother and wife and other KYC documents to enable complete the transactions. Mr. Hui Li promised to arrange for resolution of Board of Directors of NCL in due course, which was a requirement under the laws of BVI. Thereafter the assessee realized that he would not get exclusive agency for export of iron ore and, therefore, asked for refund of share application money, which was given on 21.04.2....
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....nd Assets) And Imposition Of Tax Act 2015. Section 2 (11) defines undisclosed assets located outside India as Under:- (11) "undisclosed asset located outside India" means 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 a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the assessing officer unsatisfactory. 23. On careful analysis of the above provision it clearly says that there has to be an 'asset located outside India'. It can also be any financial interest of an assessee in any entity. These assets must be held in the name of the assessee. It can also be held by assessee as its beneficial owner. These assets can be charged to tax if assessee has no explanation about the source of investment in such asset or if the assessee provides an explanation which is in the opinion of the assessing officer is unsatisfactory then such asset can be charged to tax in the hands of an assessee Under the provisions of Section 3 of this act. 24. Undoubtedly, in this case there is an ass....
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.... the account was as under: Date Credit (USD) Balance (USD) Particulars 21/12/2011 8,26,161.57 8,26,161.57 From "Rajvin Ltd." -Trust 30/03/2012 7,712.50 3,18,580.07 From Interest 25/10/2012 151.25 0 Deposited for closing account Total 8,34,025.32 Thus, it is seen that the credit to the said bank account and thus the source of the said account, was by way transfer made from the Trust Company "Rajvin Ltd.. Therefore now it is imperative to examine that where from Rajvin Limited has received the fund which are transferred on 21st of December 2011 into the account of Watergate advisors Ltd. Assessee has explained with the help of memorandum of family understanding placed at page number 125 - 129 of the paper book that "Rajvin Ltd. was a Trust formed by the son of the Assessee, Shri Rajneesh Mehra. The said Trust was conceived vide the "Memorandum of Family Arrangement" (MOA) dated 01/11/2003 entered into between the family members of the Assessee, being himself, his wife and his two sons. The said MOA, which was signed by the Assessee as one of the parties, was duly laid out before the ld. A.O. for his pe....
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....imilar objects. With respect to the credits in the account were also explained and stated that those were all on account of business transactions of the Rajvin Trust. This was also demonstrated by submitting Confirmation of GS Impex Pte Ltd, Singapore, which shows that confirming party had business relation with Mr. Rajneesh Mehra and it had invested a total of USD 2,00,000 in Rajvin Ltd and out of the said sum, a total of USD 1,50,000 was yet due from Rajvin Ltd. assessee also submitted a confirmation of Mathew G Stock, a UK Resident, which shows that for the past 20 years and that he had business relationship with Mr. Rajneesh Mehra and wherein he invested a total of about 9,50,000 USD in his Company "Rajvin Ltd." between the years 2005 to 2008. He also stated that out of the said investments so made, a total sum of USD 8,18,580 was received back on 30/03/2012 from Rajneesh Mehra, out of which USD 3,18,580 was received from the bank account No.806694 of Watergate Advisors Limited (WAL) and the balance USD 500,000 was received in the form of certain securities. Thus from the above statement it was demonstrated that there is no involvement of the assessee either in Rajvin Limited o....
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....e nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed: 29. "Beneficial interest" has been defined under section 89(10) of the Companies Act as follows (10) For the purposes of this section and section 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to- (i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share.] 30. Section 2 (27) of The Companies Act says that (27) "control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner 31. From the above the criteria to be considered for an ind....
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....s 34. Considering the definition of beneficial owner read with benami transaction, the primary conditions for a person to be considered as a beneficial owner under the Benami Act, may be summarized as under: (a) Could cover 'any person' (b) The consideration has been provided by such person other than the person holding/owning the property and such other person also hold the property. (c) Property of any kind 35. 'Beneficial owner' has been defined as "an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person". 36. Testing the above facts with respect to this law, here there is no evidence that the consideration has been provided by the assessee of the sum deposited in the bank account of Watergate advisors Limited. Contrary to that assessee has shown that above funds have been transferred from Rajvin Limited, which is owned and controlled by the son of the assessee. Similar to the provisions of the Companies act here also it is not demonstrated that assessee enjoys and exercises a....
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....f the bank account, the assessee cannot be held the beneficial owner of such sum. Therefore, such solitary fact cannot lead to addition in the hence of the assessee where there is no other evidence available with respect to the ownership or beneficial ownership over such bank account. In view of this it is apparent that the mere account opening form where the assessee is mentioned as the beneficial owner of the account mentioning is details of his passport as an identification document, does not necessarily, in absence of any other corroborative evidence of the beneficial ownership of the assessee over that for an asset cannot lead to taxability in the hands of the assessee Under the Black Money Act. 41. In view of above facts, we hold that assessee does not have beneficial ownership of the amount deposited in Watergate advisors Limited, assessee also do not held that asset. The learned CIT - A has also held so giving the detailed reasons as reproduced above. The learned departmental representative could not show us any evidence that assessee is the owner or beneficial owner of the sum lying in the bank account of Watergate advisors Limited. The assessee has given an overw....
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.... in HSBC Private Bank (Geneva). The Tribunal held that the AO cannot merely rely on base note received from French Government without conducting any independent inquiry and hence the addition was liable to be deleted. 12. The question therefore would be whether uncertified documents in the form of bank statements, would be admissible as evidence. It is no doubt true that in proceedings under the impugned Act, the provisions of the Indian Evidence Act, 1872 do not apply, but it does not mean that the revenue can rely on any piece of evidence without corroboration as proof of existence or non existence of a fact in the issue. The question therefore is as to the admissibility of uncertified foreign bank records, which might be submitted under DTAA. We have a legislation in India called the Banker's Book Evidence Act 1891. The said Act provides for conditions to be satisfied while submitting bank records as evidence in a court of law. Section 4 of Banker's Book Evidence Act 1891 provides that Bank records should be accompanied by a certificate in accordance with section 2(8) and 2A of the Act. A copy of the bank records duly certified as above constitutes a "certified copy".....
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....oubts on the correctness of the aforesaid view but nevertheless did not give a conclusive opinion on the correctness of the view expressed in Jatinder Mehra's case (supra). This would be clear from the observations of the Tribunal in Paragraph 105 of its' order wherein it observed that the arguments of the assessee which were on the short point of applicability of the definition of 'beneficial owner' under the Income-tax Act, a plea that has been rejected, there is no need to deal with the broad question as to what will constitute 'beneficial owner' under the BMA, or to deal with the question whether the coordinate bench decision, on this aspect, calls for reconsideration. In any event, as noted earlier, this issue is wholly academic in the present case because it has been categorically held that what is taxed, in the impugned assessments, is not the value of the undisclosed asset but undisclosed foreign income. Whatever be the connotations of 'beneficial owner' under the BMA, conclusions thus remain intact. Therefore the ratio laid down in the case of Jatinder Mehra (supra) remains intact. 17. In the case of Krishna Das Agarwal Vs. DDIT/ADIT(Inv) [2023] ....