TaxTMI 
TaxTMI 
2025 (8) TMI 1174
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....rounds of appeal: 1. The learned Assessing Officer erred on facts and in law in reopening the assessment u/s 147 of I. T. Act 1961 inspite of his satisfaction that the proceedings are liable to be dropped and the communication thereof made vide Email dated 25.11.2014 2. The assessment is barred by limitation as the provisions of Section 149(1)(c) of the I. T. Act 1961 would be applicable for reopening of the assessment of resident Indians as per the CBDT Circular No. 3 of 2012 dated 12.06.2012 and the base note having mentioned that the appellant was a British National and the HSBC account was opened on 16.02.1994, there could be no reason to believe that the income of the appellant had escaped assessment. 3. The action of the A.O. in rejecting the genuineness of bank statements provided by HSBC Switzerland inspite of Fresh Consent Waiver Forms submitted in the desired format and his 3 failure to obtain the information from Swiss or UK tax authorities directly through proper channel and inspite full cooperation extended by the assessee, is illegal, arbitrary and against the facts and circumstances of the case. 4. The learned A.O. erred on the fac....
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.... India nor accrued or arise in India and much less received in India. 5. The Action of the A.O. in charging interest under Section 234A and 2348 of the L. T. Act 1961 of Rs. 1,14,73,533/- and Rs. 1,16,93,122/- respectively is unjust, illegal, arbitrary and against the facts and circumstance of the case. 4. In ITA No. 464/Mum/2025 (AY. 2006-07), the assessee has taken the following grounds of appeal: 1. The learned Assessing Officer erred on facts and in law in reopening the assessment u/s 147 of I.T. Act 1961 inspite of his satisfaction that the proceedings are liable to be dropped and the communication thereof made vide Email dated 25.11.2014. 2. The assessment is barred by limitation as the provisions of Section 149(1)(c) of the L. T. Act 1961 would he applicable for reopening of the assessment of resident Indians as per the CBDT Circular No. 3 of 2012 dated 12.06.2012 and the base note having mentioned that the appellant was a British National and the HSBC account was opened on 16.02.1994, there could be no reason to believe that the income of the appellant had escaped assessment. 3. The action of the A.O. in rejecting the genuineness of ba....
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....he facts and circumstances of the case. 4. The learned A.O. erred on the facts and in law in making an addition of Rs. 1,62,57,665/- on account of difference between the peak bank balance as on December 2006 and the opening bank balance in the base note as on March 2006 of the appellant's HSBC account, being a non-resident British National non-citizen of India was neither earned in India nor accrued or arise in India and much less received in India. 5. The Action of the A,O. in charging interest under Section 234A and 234B of the I. T. Act 1961 of Rs. 1,13,19,920/ and Rs. 1,15,36,570/- respectively is unjust, illegal, arbitrary and against the facts and circumstance of the case. 6. In ITA No. 482/Mum/2025 (AY. 2006-07), the assessee has taken the following grounds of appeal: 1. The learned Assessing Officer erred on facts and in law in reopening the assessment u/s 147 of I. T. Act 1961 inspite of his satisfaction that the proceedings are liable to be dropped and the communication thereof made vide Email dated 25.11.2014. 2. The assessment is barred by limitation as the provisions of Section 149(1)(c) of the I. T. Act 1961 would be applicab....
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....caped assessment. 3. The action of the A.O. in rejecting the genuineness of bank statements provided by HSBC Switzerland inspite of Fresh Consent Waiver Forms submitted in the desired format and his failure to obtain the information from Swiss or UK tax authorities directly through proper channel and inspite full cooperation extended by the assessee, is illegal, arbitrary and against the facts and circumstances of the case. 4. The learned A.O. erred on the facts and in law in making an addition of Rs. 1,67,57,465/- on account of difference between the peak bank balance as on December 2006 and the opening bank balance in the base note as on March 2006 of the appellant's HSBC account, being a non-resident British National non-citizen of India was neither earned in India nor accrued or arise in India and much less received in India. 5. The Action of the A.O. in charging interest under Section 234A and 2348 of the I. T. Act 1961 of Rs. 1,16,71,523/- and Rs. 1,18,94,901/- respectively is unjust, illegal, arbitrary and against the facts and circumstances of the case. 8. In ITA No. 537/Mum/2025 (AY. 2006-07), the assessee has taken the following grounds o....
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....Act 1961 would be applicable for reopening of the assessment of resident Indians as per the CBDT Circular No. 3 of 2012 dated 12.06.2012 and the base note having mentioned that the appellant was a British National and the HSBC account was opened on 16.02.1994, there could be no reason to believe that the income of the appellant had escaped assessment. 3. The action of the A.O. in rejecting the genuineness of bank statements provided by HSBC Switzerland inspite of Fresh Consent Waiver Forms submitted in the desired format and his failure to obtain the information from Swiss or UK tax authorities directly through proper channel and inspite fall cooperation extended by the assessee, is illegal, arbitrary and against the facts and circumstances of the case. 4. The learned A.O. erred on the facts and in law in making an addition of Rs. 2,74,61,100/-on account of difference between the peak bank balance as on December 2006 and the opening bank balance in the base note as on March 2006 of the appellant's HSBC account, being a non-resident British National non-citizen of India was neither earned in India nor accrued or arise in India and much less received in India ....
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....r challenged the said order and filed appeal before the Tribunal. The Co-ordinate Bench vide its order (in ITA no.3778/Mum/2019) dated 30-09-2022 has set aside the assessment for de novo adjudication by the AO and findings of the Co-ordinate Bench read as under: "In view of the above position, and in view of the fact that the Assessing Officer is still in the process of requisitioning information, from the bank, we deem it fit and proper to remit the matter to the file of the Assessing officer for adjudication de novo after obtaining necessary information from the banks concerned, subject to the condition that the assessee will furnish fresh consent waiver form in such format as the Assessing Officer may specify, and fully co-operate with the Assessing Officer by furnishing such permissions, declarations and authorizations etc. to collect the information, as the Assessing officer may requisition. The assessee will fully co-operate with the Assessing Officer in the remanded proceeding" 13. During the course of fresh round of assessment proceedings, the assessee was asked to furnish the consent waiver forms, which were submitted before the A.O. in the format desired by hi....
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....pporting documentary evidence. There is no clarity on what are the assets of the father so distributed; the assessee along with his brothers has connection with India. They have their ancestral property in Mumbai which is the property in Seaface House. Worli. It is likely that his father may have properties and assets in India. Without documents pertaining to the distribution of estates, the assessee has not shown that the money received by him from his father is not from any source in India. Further assessee had submitted credit advice dated 17.2.1994 during appellate proceeding stage before CIT(A) to support his claim that initial deposit of GBP 6,68.624.73 was w.r.t. inheritance received from his father. The advice was neither signed/ digitally signed nor stamped and the authenticity of the document remains to be established. Without prejudice to the same, the credit advice was examined. It is seen that the advice same is for Republic National Bank of New York, Suisse, SA (this company was subsequently acquired by HSBC Bank, USA in 1999). This credit advice is for an account number 1035769 which is a current account of the assessee in HSBC Bank, Geneva. Thus, It is seen that eve....
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....he ones claimed to have been received from the estates of their father. In view of the same, the reliance of the assessee on the above portfolio statements in support of his claim is incorrect. 13. Assessee during the course of assessment proceeding has submitted bank statement of HSBC Geneva, but neither the same is authenticated from the bank authorities nor any explanation/detail/narration of entries have been furnished which could explain the source of fund lying in the said bank account. There is no narration for any account. It is the onus of the assessee to establish that such deposits are not out of funds sourced in India. However, none of the submissions made during either assessment proceedings or appellate proceedings, give any clarity regarding the same. The assessee from the start has insisted that the deposits in these accounts are not taxable in India, however, the assessee at no point has given details regarding the source of such deposits during the year. 14. It is important to note that the assessee cannot state that the funds transferred from one account to another bank account is the source of deposits in the second bank account. The assessee n....
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....ntention. Thus, it is clear that no tax has ever been paid on the amounts in the HSBC, Geneva account held by the assessee. 6. Assessee's explanation that source is out of inheritance from father suffers from very serious inconsistencies like lack of will, explanation of intervening years where the money was kept confirmation from relatives, non-furnishing the bank statement of relatives, lack of evidence to show that the proceeds was not out of sale of assets located in India etc 16. In this case, the source of money deposited in the HSBC, Geneva Account has not been explained with material evidences, then in absence of anything contrary shown by assessee the only logical conclusion that can be inferred is that that the amounts deposited are unaccounted deposits sourced from India and therefore taxable in India. This presumption is as per the provisions of Section 114 of The Indian Evidence Act. 1872 which reads as follows "Section 114 Court may presume existence of certain facts- The Court may presume the existence of any fact which it thinks likely to have happened regard being had to the common course of natural events, human conduct and publ....
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.... to find out the reality of the recitals made in those documents.... The apparent must be considered as real only it is shown that there are reasons to believe that the apparent is not the real and that too taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probability.... Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and tribunals have to judge the evidence before them by applying the test of human probabilities. The Hon'ble Punjab and Haryana High Court, in the case of Som Nath Maini v CIT [2008] 306 ITR 414 (Punj. & Har.), has held that "the assessing officer is to apply the test of human probabilities for deciding genuineness or otherwise of a Mere particular transaction leading of the evidence that the transaction was genuine, cannot be conclusive. Any such evidence is required to be assessed by the assessing officer in a reasonable way genuineness of the transaction can be rejected in case the assessee not needs evidence, which is trustworthy. And the Department does not....
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....on that the assessee will furnish fresh consent wavier form in such format as the Assessing Officer may specify, and fully co- operate with the Assessing Officer by furnishing such permissions, declarations and authorizations etc to collect the information, as the Assessing Officer may requisition. The assessee will fully co-operate with the Assessing Officer in the remanded proceedings." Facts: The Ld. A.O. has re-examined the case. Despite consent waiver from the applicant, HSBC Bank has declined to share information with the Department, for reasons best known to the Bank. In absence of verified information regarding the account being not sources from India, the Assessing Officer has proceeded with assessment of income in hands of the applicant assessee. The applicant assessee has argued that he is a UK citizen, a non-resident of India, and the income has no business connection to India. Hence, the sums are not assessable in India as per section 5 of the Income Tax Act, 1961. Panel has examined the Applicant's assertion that there is no business connection to India, and the income in HSBC Geneva does not have any link to India. This simplis....
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....s remains that of a non-domiciled resident, which may impact tax liabilities and reporting obligations in the UK. This status complicates the clarity of tax obligations regarding global income, including any income potentially linked to Indian sources. (vi) Indian Address on Base Note Indicates Direct Tax Liability: The bank's "Base Note" shows the Assessee's address in India, suggesting a direct nexus between the account and the Indian tax jurisdiction. This connection indicates that transactions in this account could be directly taxable in India, necessitating reporting and tax obligations in India. (vii) Investment in HSBC Geneva in FY 2005-06 Not Linked to Opening Balance. The Assessee has not proven that funds used for investments in FY 2005-06 in HSBC Geneva accounts stem from an existing opening balance rather than new deposits. Furthermore, the Assessee has not clarified whether income derived from these investments was reported in any tax jurisdiction, further raising concerns about unreported income and compliance. The Assessing Officer has carved out a case that the income of the applicant is taxable in India. ....
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....C provided this information solely to them and not to the Assessing Officer. This lack of direct information has impacted the AO's ability to verify the Applicant's submissions fully, as the evidence furnished by the Applicant alone lacks third-party confirmation Thus, the incomplete cooperation from HSBC further complicates the Applicant's denial of a business connection. Discrepancies in Documentation and Reliability of Applicant's Claims: The Applicant asserts that the investments indicated in the HSBC Geneva leak records are correct, yet denies any business connection to India. The Applicant claims that the HSBC information was provided directly to them rather than to the Revenue, with HSBC withholding original statements and records despite the consent waiver. The AO has reasonably questioned the accuracy and completeness of the information submitted by the Applicant, given that the primary records from HSBC have not been furnished directly to the Revenue. Such reliance on Applicant-submitted information, without validation by HSBC, casts doubt on the reliability and completeness of the data presented, further justifying the Assessing Officer&....
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....ity of asset or income). It cannot be that in none of the three tax jurisdictions the asset and income is not reported. Since French Government has provided information to Indian Tax Authorities, it is the duty of Indian Tax Authorities to decide the matter. iv. It is not proven that the investments in FY 05-06 in HSBC Geneva are out of opening balance and not proven where the income is reported. C. The rational that a deposit made over a decade ago is the source of present transactions is far-fetched as there are constant deposits and withdrawals in the bank account. Assessee has not furnished statement of intervening years to establish that no deposits were made in the intervening years in these accounts Hence reliance of the assessee on above portfolio statements is incorrect. The findings of the Ld. CIT(A) in Round 1 buttresses the assessment of the Ld. Α.Ο. Findings of the Panel: (i) Applicant's argument based on denial of business connection, minimal physical presence in India, and absence of direct business activities-is insufficient to dismiss the HSBC evidence indicating a link to India. (ii) The India....
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....d that the date of birth and place of birth of Tulsiani Brothers are as under: Name PAN Place of Birth Date of Birth Partab Gulabrai Tulsiani AURPT4816C Karachi Sindh Pakistan 15" July" 1945 Jawaharlal Gulabrai Tulsiani AFKPT5682G Aden, Yemen 03"" Feb' 1949 Sham Gulabrai Tulsyani ARYPT4091R Karachi, Sindh Pakistan 19" May' 1941 Naraindas Tulsiani ANQPT0488C Aden, Yemen 13" June' 1957 17. It was submitted that Sham Tulsyani and Partab Tulsiani were born in Sindh, Pakistan (Undivided India) and Jawaharlal Tulsiani and Naraindas Tulsiani were born in Aden. Since they were Hindus living in Sindh Pakistan, due to partition they left for Aden, Yemen (a British colony) in 1947. After Aden (now in Yemen) was granted independence from British Rule, the Tulsiani family went and settled in United Kingdom in 1967. It has been accepted that the Tulsyani Brothers are U.K. Citizens and Non Residents. 18. It was submitted that the Swiss bank accounts in HSBC Private Bank Geneva were opened on 16-02-1994 when the appellant was a British Citizen, resident in the UK and the primary address as mentioned in the account openin....
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....ned as UK citizens with UK address. Further as per letter dated 17-09-2015 from HSBC (Page No. 63 of PB) the position has been clarified and from the same, it is clear that the account was opened with the HSBC bank, mentioning the address at 217-2L8 Tottenham Court Road London WIP 9AF England. Thereafter on 2nd March 2005, other address added to the account was Sea face House Flat 20 Worli, Mumbai, India as per HSBC Bank's regulatory requirements. It was submitted that the address in the bank account would not entitle the AO to assess the deposits held in a Foreign bank account of a foreign citizen and bring the same to tax in India. 23. It was further submitted that the assessee made an application to open an individual account with the Republic National Bank of New York (Suisse) S.A on 18-02-1994 (Page No. 239 of PB) which was subsequently acquired by HSBC Bank, USA in 1999. While opening such account, the Appellant provided his residence Address as "217-2L8 Tottenham Court Road London WIP 9AF England. The same specifies that the assessee is a UK Passport Holder and country of Residence is mentioned as UK. Subsequently, in year 2005 the bank requested to provide the addres....
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.... Remark In India Out of India 2005-06 01-04-2005 31-07-2005 Arrival in India 122 08-08-2005 Departure from India 8 15-08-2005 Arrival in India 7 Date of Travel Remark In India Out of India 2005-06 01-04-2005 31-07-2005 Arrival in India 122 08-08-2005 Departure from India 8 15-08-2005 Arrival in India 7 Date of Travel Remark In India Out of India 2005-06 01-04-2005 31-07-2005 Arrival in India 122 08-08-2005 Departure from India 8 15-08-2005 Arrival in India 7 Date of Travel Remark In India Out of India 2005-06 01-04-2005 31-07-2005 Arrival in India 122 08-08-2005 Departure from India 8 15-08-2005 Arrival in India 7 29-08-2005 Departure from In....
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.... banker has refused to supply the same to the AO with the recommendation that the AO, should "consider proceeding through DTT channels. Should you choose to submit such a request, we and our PBRS colleagues will do what we can to try and expedite that process". The AO did not further proceed to approach the HSBC Bank through DTT channels. The appellant was however asked to submit the authenticated bank statements. The HSBC provided these statements to the appellant in a Pen Drive and these were all forwarded to the AO which are included in the two paper books from Pages 239 to 896 in all containing 658 pages. These were not considered by the AO in the present proceedings, which would show that there were no credits/deposits made during the year in foreign bank accounts. These statements are from opening of bank account on 15-02-1994 (Page No. 440 of PB) till 11-04-2014. It is clear from the bank statements that the source of funds belongs to only credit entries in the year 1994 and 1995 from overseas bank account held in Switzerland. The amounts initially credited are a result of a transfer from another account of the same branch. None of entry in the bank account is assessable to ....
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....ovisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year." 29. A bare reading of sub-section (2) to section 5 would show that in the case of a 'Non-Resident. any income which is received or is deemed to be received in India or accrues or arises or deemed to accrue or arises in India is eligible to tax in India. The reasons for reopening nowhere alleges that any income from the Bank account in HSBC Bank in Geneva is received or is deemed to be received in India or accrues or arises or is deemed to accrue or arise in India. Thus, the basic conditions set out in Section 5 for charging tax on balance in HSBC Bank Account in Geneva are not satisfied. The entire emphasis of the Revenue is on the information extracted from "Base Notes". Unless it is shown that the income from HSBC Bank Geneva satisfies the condition set out in Section-5(2) of the Act, the income of a 'Non-resident ass....
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....est accrued is taxable in India. It is submitted that the AO has misread the provisions of Section 9(1) of the Act. The assessee was not carrying on any business, there was no income from any property in India. There was no income from any asset held in India. There was no source of income in India. The funds were held abroad and as such the interest/investment income was not in India. There was no transfer of asset or funds in India. 35. It was submitted that interest earned by a non-resident on deposits in a foreign bank account by no stretch of the imagination could be said to have accrued or been received in India. Section 9(1)(i) provides that all income accruing or arising directly or indirectly through or from any property in India shall be deemed to accrue or arise in India. Again it is provided that income through or from any asset or source in India shall be deemed to accrue or arise in India. Clearly the asset i.e. bank account was located abroad. The source of income i.e. interest income was not in India and as such shall not be deemed to accrue or arise in India. 36. It was submitted that in the case of a non resident, foreign income accruing or arising or deemed....
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.... 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. Whatever income, which has been accrued in India in the form of capital gain or interest or dividend has always been disclosed in the return of income filed in India. Fourth proviso to Section 139(1) of the Act requires that a person who is resident of India to disclose the details of foreign assets in the return of income and is not applicable to the assessees who are not ordinarily resident or non-resident. Before us, ld. Counsel has filed a copy of return and had drew our attention to Schedule FA forming part of the return of income which requires assessee to give information with respect to assets held outside India, but the same is applicable for residents and not for ....
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....he 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 jurisdiction to reopen an assessment for an extended period of 16 years that, firstly, assessee is a resident in terms of Section 6; and if not then secondly, the balance lying in the foreign bank account represents income which has accrued or arisen or deemed to accrue or arise in India u/s. 5. Once that fact has not been brought on record, ostensibly there cannot be any reason to believe that the income in relation to such an asset has escaped assessment for the A.Y.s 2006-07 and 2007-08 and extended time limit of 16 years is available. 17. The reasons recorded by the AO are not only vague and general but without any application of mind on the records....
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.... 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 entity is an asset of the assessee, but that does not lead to inference that assessee has evaded tax from India, because the said entity has neither been incorporated nor has any connection in India nor has any business connection or any place of effective management is situated in India. Further, nothing has been brought on record in 'reasons recorded' or there is any material on record that assessee has any business connection in India and therefore amount deposited in said foreign bank account is income arisen or accrued or deemed to have arisen or deemed to have accrued in India. If at all there is some doubt about the said e....
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....in any firm in India. This data and statement of facts was not rebutted by the learned Assessing Officer. Further, these facts are also not doubted that assessee is employed in Belgium after he became a non-resident. Assessee also denied that he was ever a beneficiary of any discretionary trust. Therefore, it is apparent that all the allegation made in the assessment order are without any basis or evidence available with the learned Assessing Officer. If an income is to be taxed in the hands of non- resident assessee under Section 5(2) of the Act, then the burden is on the ld. AO to show that income of the non-resident assessee is falling within the definition of income chargeable to tax in his hands. No doubt, 'base note' before us shows the name of the assessee, however, such 'base note' could have been used for income tax in the hands of this assessee only if he would have been resident in India. That is not the case, because assessee is a non- resident accepted by the learned Assessing Officer for last several years i.e. almost 2 decades. The assessee has also produced his Passport which also do not show that he was resident in India in any of these years. It is also clear that....
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....pplied his mind before coming to the conclusion that whether the information contained in base note is verified or authenticated. The AO never disputed the fact that the assessee is a non resident. The lower authorities have accepted the fact that the assessee is a non resident since 2001. The AO also accepted the fact that the non residents are not required to disclose their foreign bank accounts and assets to the Indian Income-tax authorities. But, the AO has made addition on the ground that before 2001 it was not clear as to whether the assessee, is a resident or non resident and the assessee also not filed any documentary evidence to prove that he is having business visa in Japan and earned income therefrom. The AO has shifted the burden on the assessee to prove negative. According to the AO, it is for the assessee to prove that the credits found in HSBC Bank is not sourced out of income derived from India. 16. The provisions of section 5 of the Act has defined the scope of 'total income' in the Indian Income-tax Act. As per provisions of section 5(2), the total income of any previous year of the person, who is a non resident includes all income from whatever source de....
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....t in India from the financial years 1998 to 2008. On perusal of the bank account filed by the assessee, it was noticed that there are no debits in the bank account which could have gone to the foreign bank account. Thus, it can be seen that no amounts have been transferred from his Dena Bank account in India to any of the bank accounts maintained including HSBC, Geneva. In fact, the balance in the account maintained in Dena Bank is so less that it cannot fund an amount of Rs.4.28 crores which has been added by the AO as assessee's income. Despite this, the AO sought to put the onus of proving a negative that the deposits in foreign bank account are not sourced from India, on the assessee. In our considered view, the AO is not justified in placing the onus of proving a negative on the assessee. In fact, only a positive assertion can be proved, but not a negative. Furthermore, the onus of proving that an amount falls within the taxing ambit is on the department and it is incorrect to place the onus of proving negative on the assessee. This legal proposition is supported by the decision of Hon'ble Supreme Court in the case of Parimisetty Seetharaman vs CIT (1965) 57 ITR 532 (SC) where....
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....n bank may not be illegal as they may belong to NRI. Thus, even the government has acknowledged the fact that an NRI foreign bank account is not illegal. We further notice that provisions of black money (undisclosed foreign income and assets) and imposition of tax Act, 2015 is applicable only to residence. As per section 2((2) of the said Act, an assessee means a person being a resident other than not ordinarily resident in India within the meaning of sub section (6) of section 6 of the Income-tax Act,by whom tax in respect of undisclosed foreign income and assets or any other sum of money is payable under this Act and includes, every person who is deemed to be an assessee in default under this Act. Even, the FAQs to the black money (undisclosed foreign income and assets) and imposition of tax Act, 2015 reiterates the above position in questions No.24 & 32 where it was clarified that if a person, while he was a non-resident acquired or made a foreign asset out of income which is not chargeable to tax in India, such asset shall not be an undisclosed asset under the Act. The AO, without understanding these facts and also without answering the jurisdictional issue of whether the non r....
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.... absence of any nexus between deposits found in foreign bank account and source of income derived in India, no addition could be made towards cash deposits u/s 68 / 69 of the I.T. Act, 1961. The relevant portion of the order is extracted below:- "8. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. From the record we found that assessee is a non-resident since 1979, as per Section 6 of the IT Act. Assessment of the assessee was reopened on the basis of information (called as 'Base Note') which was received in respect of the assessee from the office of DIT(Inv.)-II, Mumbai pertaining to a bank account with HSBC Bank, Geneva, Switzerland. It was submitted by assessee before AO that he is a Non-resident as per section 6 of the Act since 1979. Copies of his passport were also submitted to the AO in order to substantiate his claim of being a non-resident under the Act. Since, he is a nonre....
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....income. A summary of the taxes paid by them was also submitted to the AO for his consideration. However, AO did not agree with the assessee's contention and added peak credit in the account of HSBC Geneva in assessee's income. The AO has made additions in the case of assessee. 11. Without prejudice to the above, he submitted that the peak balance appearing in the bank statement of this foreign bank account has already been added to the computation of income and subjected to tax in the hands of Deepak Shah and Kunal Shah in their respective assessments for AY 2006-07 and AY 2007-08. A copy of the order passed by Assistant Commissioner of Income-tax -16(2) and by Commissioner of Income-tax (Appeals)-27 ('CIT(A)-27') in their respective cases was submitted to the AO for his consideration. 12. Further, both these assessees - Deepak Shah and Kunal Shah have paid taxes on the amount of addition to their respective computation of income. A summary of the taxes paid by them was also submitted to the AO for his consideration. However, AO did not agree with the assessee's contention and added peak credit in the account of HSBC Geneva in assessee's income. The AO has made add....
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.... India if such money has neither been received or deemed to be received, nor has it accrued or arisen to him or deemed to accrue or arise to him in India. 14. Under section 5(2) the income accruing or arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. We also found that the assessee in his affidavit dated 13 October 2011 has clearly stated that the he was a settlor of a trust outside India which he had created for the benefit of his family members with his initial contribution. Further, he has also stated that none of the discretionary beneficiaries have contributed any funds to the said trust. However, the content of this affidavit was nowhere declined by the AO nor was held to be not true. In view of the above, the assessee being a non-resident, having money in a foreign country cannot be called upon to pay income tax on that money in India unless it satisfies the tests of taxability of non-resident under the provisions of the Act, which in the instant case is not getting satisfied in the c....
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....ever used has to be conclusive in nature. Thus, the circumstantial evidences relied on by the learned AO nowhere lead to the conclusion that the amounts in the alleged foreign bank account are sourced from India. The CIT(A) also recorded a finding to the effect that the source of deposits is no where proved by the four instances relied on by the AO being termed as circumstantial evidence. The learned AO has himself observed based on the survey report dated 18 November 2011 that the assessee had retired from partnership of M/s Kanubhai B. Shah & Co. since October 1978. Also, the learned AO observed in the next para that the assessee became a non-resident as per section 6 of the Act since 1979 which is the year after which he retired from being the partner in the firm. Thus, the addition of undisclosed income of the firm M/s Kanubhai B. Shah &: Co. during the FY 2011-12 has no connection with the assessee, as he was not a partner during this period. In the instant case, even it is seen that the bank account with HSBC Bank, Geneva was opened during the year 1997. Hence, the circumstantial evidences discussed above including the report of Indian express of 10 February 2015, relied by t....
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....laid down any ratio. The matter was set aside to the file of the AO by consent of both the parties. It is a settled law that a judgement / order delivered by consent has no precedential value. Even otherwise, the taxpayer in the said case had business connections in India by way of being a partner in partnership firms. Under those facts, the Tribunal has set aside the issue to the file of the AO for further examinations on the request of both the parties. Admittedly, in this case, the assessee is a non resident and he does not have any business connection / interest in India. Therefore, the case law relied upon by the Ld.DR cannot be applied to the facts of the present case. 21. In this view of the matter and considering the ratios of the case laws discussed above, we are of the considered view that the AO was erred in making addition towards deposits found in HSBC Bank account, Geneva u/s 69 of the Act. The Ld.CIT(A), after considering relevant facts, has rightly deleted addition made by the AO. We do not find any error or infirmity in the order of Ld.CIT(A). Hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the revenue." 40. It....
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.... the person qualifies as a non-resident, the scope of total income is guided by the provisions of sub-section (2) to section 5 of the Act. 46. It is therefore essential to determine the resident status of the assessee for the year under consideration before one can determine the scope of total income which can be brought to tax in the hands of the assessee and in particular, the amount standing credit in the bank accounts maintained with HSBC Bank Geneva. 47. As per sub-section (1) of section 6 of the Act, for the purposes of the Act, an individual is said to be resident in India in any previous year if he is in India in that year for a period or periods amounting in all for 182 days or more; or having within the four year preceding that year being in India for a period or periods amounting in all to 365 days or more, is in India for a period or periods amounting in all to 60 days or more in that year. As per clause (b) to the explanation 1 to sub-section (1) to section 6, in case of an individual being a citizen of Indian or a person of Indian origin within the meaning of explanation to clause (E) of section 115C, who being outside India, comes on a visit to India in any pre....
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....m an Indian source and not his residential status, even when an assessee is an NRI income sourced from India needs to be offered for taxation. Therefore, this document filed by the assessee has no merit w.r.t. the issue under consideration." We therefore find that the assessee being a non-resident and a copy of his passport which corroborates his stay in India for 22 days during the financial year 2005-06 relevant to assessment year 2006-07 and 30 days during the financial year 2006-07 relevant to assessment year 2007-08 is not being disputed by the AO. The assessment order has also been passed in the case of the assessee in the status of a non-resident. In fact, the DRP also acknowledges the fact that the applicant principle argument hinges on his status as a non-resident with minimal time spent in India - a total of only 22 days during the 2005-06 fiscal year. There is however no specific finding recorded by the DRP disputing the residential status of the assessee being a non-resident for the impugned assessment year 2006-07 as well as for assessment year 2007-08. Therefore, it is an established and an undisputed fact that the assessee having not spent minimum prescribed days in ....
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....s in the instant case, as he has to have reasons to believe that income has escaped assessment and for the purposes, there has to be tangible material in possession of the Assessing officer to arrive at a reasonable belief even though prima facie that income has escaped assessment. We can gainfully refer to the decision of the Coordinate Bench in case of Hemant Mansukhalal Pandya (supra) wherein it was held that "the AO is not justified in placing the onus of proving a negative on the assessee. In fact, only a positive assertion can be proved, but not a negative. Furthermore, the onus of proving that an amount falls within the taxing ambit is on the department and it is incorrect to place the onus of proving negative on the assessee. This legal proposition is supported by the decision of Hon'ble Supreme Court in the case of Parimisetty Seetharaman vs CIT (1965) 57 ITR 532 (SC) where it was categorically held that the burden lies upon the department to prove that a particular asset is within the taxing provisions." 52. Having said that, we find that the assessee on his part has furnished copies of his bank statements as evident from paragraph 13 of the assessment order. The AO ac....
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....re primary evidence may be lacking, circumstantial indicators, such as documented address in India, assume critical importance and the applicant's inability to explain the address raises suspicion regarding his claim of no business affiliation in India and it was accordingly held that the Indian address serves as a material factor in substantiating AO's stance that the applicant has a business connection within India. 54. In this regard, it was submitted by the Ld.AR that it is not a case where the assessee has failed to offer an explanation regarding his Indian address before the AO or for that matter before DRP, rather, it is a case where the authorities have failed to take in consideration the explanation so offered. It was submitted that the assessee had explained before the authorities that the assessee's mother had a flat at Worli, Mumbai which was transferred in assessee's name after her demise on 13-11-1994. It has been further submitted that in year 2005, the HSBC Bank has requested to provide an address of the domicile country for certain regulatory and internal compliances and as part of the said compliance, the assessee has provided the aforesaid Indian address and a....
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....s a business connection. Business connection may take several forms it may include carrying on a part of the main business or activity incidental to the main business of the non-resident through an agent or it may merely be a relation between the business of the non-resident and the activity in the taxable territories, which facilitates or assists the carrying on of that business. In each case the question whether there is a business connection from or through which income, profits or gains arise or accrue to a nonresident must be determined upon the facts and circumstances of the case. A relation to be a "business connection" must be real and intimate, and through or from which income must accrue or arise whether directly or indirectly to the non-resident." However, in the instant case, as we have noted supra, the Ld.DRP acknowledges the fact that there is no direct evidence of any business activity in India. Merely having an Indian address is not sufficient to demonstrate a business connection through which the activities have been carried on in India and which has led to earning of income. We therefore find that in absence of any business activity carried out in India which has ....