TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1174
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.... 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 facts and in law in making an addition of Rs. 11,28,15,433/- of peak amount....
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....st 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 bank statements provided by HSBC Switzerland inspite of Fresh Consent Waiver Forms submitted in the desired format and his failure to obtain the inf....
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....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 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 ....
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....ies 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 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 b....
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....essment. 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 5. The Action of the A.O. in charging interest under Section 234A and 234B of the I. T. Act 1961 of Rs. 1,92,01,470/-and Rs. 1,95,68,962/- respectively is unjust, illegal, arbitrary and against the facts and circumstance of the case. 10. With the consent of both the parties, the case of the assessee, Partab Gulabrai Tulsiani, in ITA No. 448/Mum/2025 pertai....
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....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 him on 22-05-2023, which were thereafter sent by AO to CBDT for onward transmission / forwarding to HSBC Geneva for furnishing the necessary documents. The HSBC Geneva however expressed its inability to furnish the bank statements citing Swiss laws, at the same time, it suggested the AO to consider proceeding through DTT channels. There is nothing further on record as to whether t....
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.... 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 even from this detail, the source of this sum of GBP 6,68,624.73 is not established. 9. During the course of reassessment as well as before the appellate proceedings, the assessee has relied on an original deposit, stated to be made in Feb 1994, as part of distribution of assets of his late father, as source of deposits made during the year. Even if this credit advice is accepted as genui....
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....hed 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 needs to furnish details of the source of funds appearing in the specified bank accounts, in his hands which have not been done in this case. All the bank accounts need to be seen cumulatively, and the assessee has to explain the source of inward transfers in his bank accounts as a whole and not explain inward transfer in one account through a transfer in from another account which only gives a vague, disconnected picture and does not e....
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.... 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 public and private business, in their relation to the facts of the particular case. The Court may presume- ......(g) That evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it...... Section 114(g) of The Indian Evidence Act, 1872, thus clearly says that the Courts can presume existence of certain facts if the person liable to produce evidence which could be and is not produced, which if produced would have been unfavourable to the person who withholds it....
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....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 need any evidence on such an issue. In case of Smt. Vasantibai Shah 213 ITR 805 (Bom) the court observed that The Income tax Officer is entitled to take into consideration the totality of the facts and circumstances of the case Mumbai and to draw his own inference on the basis thereof. Circumstantial evidence in such cases 1s not impermissible. In cases like this it is only the circumstantial evidence which will be available. No direct evidence can be expected... In case of JS Parker 94 ITR 616 (Bom) it was held that "the tax liability under th....
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.... 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 simplistic explanation is not acceptable, particularly in light of evidence received through the Geneva HSBC leak, which indicated significant unreported investments by the Applicant in an HSBC account outside India and the self-tendered address of the applicant being India. Despite the Applicant's assertions, several factors undermine the credibility of this claim, including absence of documented information from HSBC records and the presence of an Indian address on HSBC Account. Assertions of the Ld. A.O.: The Assessing Officer has held the following in respect of taxability of the applicant assessee: (i....
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.... 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. Indian Address as Essential Evidence of Connection to India: The Applicant's principal 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 However, Assessee had given Indian address to HSBC and that address of India was found in the base note of the HSBC bank record associated with the Applicant, which the Applicant has not been able to justify satisfactorily. Mere denial and claim of absence of awareness is not proof. This Indian address, even in the absence of direct evidence of business activity, is an essential proof that potentially ties the Applicant to India and negates the Applicant's claim of no connection. The Panel notes that,....
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....ver. 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's reservations and assessment actions. Applicant's Minimal Physical Presence in India Does Not Negate Business Connection: The Applicant has stressed their limited stay in India and claims they have no family or business connection in the country. As a British citizen with only 22 cumulative days in India in FY 2005-06 and no prolonged presence, the Applicant maintains that no business activities could feasibly be conducted within India. However, business connections are not necessarily dependent on physical presence or residency duration, especially in financial matters where indirect links, such as documented Indian addresses in overseas banking records, suggest potential connections. Additionally, the Applicant's background indicates involvement in the audio products busine....
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.... 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 Indian address documented in HSBC's records is substantial evidence of a business connection, which the Applicant has failed to satisfactorily explain. (iii) Furthermore, the non-cooperation from HSBC and reliance on unverified Applicant-furnished data weaken the Applicant's claims. The address on the Account is the material evidence that income has accrued in India. (iv) In absence of cooperation by HSBC, the credits are not verifiable by the Assessing Officer. (v) As per sub-section 5(2), the sums are liable to be treated as having accrued/arisen in India. (vi) The onus on the applicant lied in terms of explanation of the income being offered to tax in U.K., if not in India. The applicant has shifted the onus to the Assessing Officer, without discharging the primary burden of explanation of accounted nature of the income that lied on him. The burden for establish of accounted nature of the i....
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....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 opening form was 217-218, Tottenham Court Road, United Kingdom WIP 9AF. (Page No. 239 of PB). The Swiss Bank account opening form is part of the assessment records and clearly mentions that the assessee is UK citizen, has a UK passport and a UK address. 19. It was submitted that the assessee has already placed on record the relevant documents to show that the Swiss Bank Account have been declared before the HMRC (Her Majesty's Revenue and Customs) (Revenue authorities in UK) and have paid the relevant tax due as applicable and demanded in the UK. It was submitted that these documents were placed before the A.O. and before the CIT (Appeals)-58, Mumbai, in the first proceedings which have been duly noted in Para 18 of the order dated 13-03-2019, a copy of which has been placed on record. It was submitted that these documents show that whatever the taxes were due, in accordance with U.K. Tax Laws were paid and a certificate of full disclosure was issued by HMRC as above. In any case it w....
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....and. 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 address of the domicile country for their internal compliance. For UK resident, domicile country means country of origin of their forefathers and for the assessee, his forefathers were residing in India. Hence, domicile country is India. It was submitted that the assessee's passport copy states his date of Birth as 15 July 1945 and Place of Birth as Karachi. Thus, it may be concluded on the basis of the above that domicile status of the assessee communicated to the bank is of no relevance and is merely for administrative and convenience purposes of the bank. Domicile is different from nationality, citizenship and residency status. In India, tax is levied on the basis of residential status of a person as to whether he is resident, non resident and resident but not ordinarily resident. 24. It was submitted that the appellant's parents were born in Undivided India. His mother had a Flat at 20 Worli, Mumbai, Maharashtra, which was transferred to assessee's name after the demise of his mother on 13- 11-19....
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....1-2007 Departure from India 30 31-03-2007 76 Total 30 335 29-08-2005 Departure from India 14 31-03-2006 214 Total 22 343 2006-07 01-04-2006 15-12-2006 Arrival in India 259 14-01-2007 Departure from India 30 31-03-2007 76 Total 30 335 29-08-2005 Departure from India 14 31-03-2006 214 Total 22 343 2006-07 01-04-2006 15-12-2006 Arrival in India 259 14-01-2007 Departure from India 30 31-03-2007 76 Total 30 335 29-08-2005 Departure from India 14 31-03-2006 214 Total 22 343 2006-07 01-04-2006 15-12-2006 Arrival in India 259 14-01-2007 Departure from India 30 31-03-2007 76 Total 30 335 29-08-2005 Departure from India 14 31-03-2006 214 Total 22 343 2006-07 01-04-2006 &nb....
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....ds as under "6. For the purposes of this Act, - (I) An individual is said to be resident in India in any previous year, if he (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (b) [***] (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year." 27. Further, reference was drawn to section 2(7), which defines "assessee" for the purpose of the Act as under: "2. In this Act, unless the context otherwise requires: (7) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes- (a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or assessment of fringe benefits or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee under any pr....
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....t, a non- resident is liable and obligated towards the Income Tax Authorities only in respect of income which is "assessable in India" and not otherwise. 32. It was submitted that the assessee's stay in India in each year was significantly less than 182 days and it was in fact even less than 60 days and as such the assessee is a non resident and has been assessed as such. There is nothing on record to show that the deposit in HSBC Account in 1994 was from Indian source. Further there is nothing on record to suggest that there was any source of income in India or any property was sold in India and the funds were remitted from India. But in the case of a non-resident, assets/funds held outside India, no income could be said to have accrued or received in India. 33. It was submitted that the assessee's stay in India was less than 182 days in each year from 1984 (Year from which passport details are available, and in fact they left India much before that in 1947). The assessee has no source of income assessable to tax. Assessee's foreign income is not taxable in India being a non resident. In this case all income which accrues or arises outside India would not be taxable ....
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....TA No.6096/Mum/2016) and relevant findings therein read as under: "13. We have heard both the parties at length, carefully considered the findings given in the impugned orders as incorporated above and also various materials referred to before us at the time of hearing. The entire edifice for reopening is based on some "Base Note" received by Government of India under Article 28 of DTAA from the French authorities, on the basis of which, belief has been entertained that assessee holds a bank account with HSBC Bank, Geneva and thus, the balance lying in the said bank accounts is taxable in India and therefore, income chargeable to tax has escaped assessment. As noted above, prior to the recording of the reasons, the investigation wing had issued notices u/s. 131 and asked for all the requisite details of the bank statements, accounts and the relevant information which was placed before the Investigation wing, as well as before the Assessing Officer also prior to the issuance of notice u/s.148. From 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 departm....
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....urn of income to be filed in India. This basic tenet has been missed by the Assessing Officer while recording the reasons as well as in the assessment order. 15. The department before us seeks to rely upon Section 149(1)(c) to justify the availability of extended time period of 16 years within which the notice can be issued would be available, provided the income in relation to any asset is located outside India which is chargeable to tax has escaped assessment. However, section 149(1)(c) and the period of 16 years is only applicable for reopening the assessment of the persons who are residents and are required to disclose the assets outside India. The asset can be said to be "found" when an assessee who is resident is required to disclose the said asset in the return of income within the provisions of the Income Tax Act. For a nonresident there is no obligation to disclose any foreign asset / account in its return of income in India as per section 139 itself, nor there is any 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. ....
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....and arisen in India u/s.9 which has not been done by her. First of all, there has to be some material on record that any amount deposited in HSBC bank account, Geneva is the income which has accrued and arisen in India and has been routed back in the said bank account. Nothing can be presumed on some hypothesis or surmise that assessee might have earned income from India which has been transferred or deposited in HSBC Bank, Geneva. On the contrary right from beginning assessee has been stating and claiming that she has opened three bank accounts in HSBC Geneva and all the deposits are from her income earned outside India in the form of her salary or sale of panting etc. Not a single entry in the said bank statement refers to any remittance from India or through some indirect channel where money can be said to have been transferred from India and found its final destination in the said bank accounts. Assessee all throughout has been claiming that money deposited in these are 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 31/03/200....
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....nce was placed on the decision of the Coordinate Bench in case of Manish Vijay Mehta (ITA No. 493 & 494/Mum/2021) and relevant findings therein read as under: "015. We have carefully considered the rival contentions and perused the orders of the lower authorities. Undisputedly, in this case, the assessee is a nonresident from A.Y. 2001- 02 and has been working as an employee in Belgium. He is having the income of interest on fixed deposits in India and is filing the return of income since A.Y. 2003-04 showing residential status as non-resident. Assessee has also submitted the proof of his non-residential status by submitting the copy of the passport showing Belgium citizenship. Thus the assessee is a non-resident and it is accepted by both the parties. 016. A Non resident is chargeable to tax in India only income falls under Section 5(2) of the Act. Accordingly, he is chargeable to tax only if the income is received or accrues or arises in India or deemed to be received or deemed to accrue or arise to him in India. Therefore, the assessee can be asked to file the details only with respect to the income falling under Section 5(2) of the Act. Therefore, it is an undisputed fact t....
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....ome of a non-resident under Section 5(2) of the Act. Assessee is assessed to tax year to year basis as non-resident on his Indian income. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the addition of Rs. 30,33,945/- in the hands of the assessee for A.Y. 2006-07. Accordingly, the order of the learned CIT (A) is confirmed." 39. Further, reliance was placed on the decision of the Coordinate Bench in case of DCIT (IT)-3(3)(2), Mumbai vs Shri Hemant Mansukhlal Pandya (I.T.A No.4679&4680/Mum/2016) and relevant findings therein read as under: "15. We have heard both the parties, considered the material available on record and gone through the orders of authorities below. We have also considered the case laws cited by either parties. The AO made addition towards amount found credited in HSBC Bank account, Geneva on the ground that the assessee has failed to explain and prove that deposit is not having any connection to income derived in India and not sourced from India. The AO has made additions on the basis of a document called 'base note' received from French Government, as per which the assessee is maintaining a bank account in HSBC Ban....
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....a is accrued / arisen in India or is deemed to accrue or arisen in India and is taxable in India in the hands of non residents has to be examined. Insofar as the residential status of the assessee, there is no dispute. The AO has accepted the fact that the assessee is a non resident. In fact, the assessee has filed his passport details right from AYs 1995-96 to 2011-12 as per which, the assessee was in India for less than 60 days in all these years. The assessee also filed an affidavit stating that he does not have any business connection in India either through a proprietory / partnership concern or holding directorship in any of Indian companies. The assessee further stated that he is neither in employment in India nor in business activity in India. The assessee also filed details to prove that he is regularly filing his income-tax return in India in the status of non resident disclosing income accrued or arose in India during the relevant financial years. The return filed by the assessee has been accepted by the department for all these years. All these facts have not been disputed by the lower authorities. 17. Having said, let us examine, non residents are required to furnish....
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....reign accounts of non residents. The Minister of State for Finance has clarified on the floor of the Loksabha on 02-12-2011 that mere holding of an account outside India does not have led to the conclusion that the amount is tax evaded. Further, the white paper on black money introduced by the Government states that if information is received about 100 Indians having bank accounts abroad, it does not automatically prove that all those 100 accounts represent black money of Indian citizens stashed abroad. There may be cases where the account holder may be an NRI who is not assessed to tax in India or the sum deposited may already have been disclosed to the Income-tax department. It is only after enquiry and completion of assessment one can know whether the amount deposited in the foreign account represents black money of an Indian citizen. Similarly, in the statement dated 04-04-2016 issued by the Minister of Finance published by Press Information Bureau, it was clarified that non residents found having foreign bank accounts were non actionable. Thus, it is very clear from the clarifications issued by the Government itself that the legislature does not wish to take any action in resp....
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....t the assessee was a non resident Indian and he has earned any income outside India which is not taxable in India. Further, the AO has taken the information of foreign bank accounts of Indians to come to the conclusion that the said information is even applicable to non residents without appreciating the fact that even the government's intention is not to tax NRIs in respect of foreign bank account and assets. No material was brought on record to show that the funds were diverted by the assessee from India to source the deposits found in foreign bank account. The suspicion, howsoever strong, cannot take place of proof and no addition could be made on presumption and assumption. The AO has not proved that impugned addition could be made within the ambit of section 5(2) r.w.s. 68 / 69 of the Income-tax Act, 1961. 19. Coming to the case laws relied upon by the assessee. The assessee has relied upon the decision of ITAT, Mumbai Bench in the case of DCIT vs Dipendu Bapalal Shah in ITA No.4751-4752/Mum/2016. We find that the co- ordinate bench of ITAT has decided an identical issue in respect of foreign bank accounts of non residents and held that when the AO failed to prove nexus betw....
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.... is a 'non-resident' has to pay tax only on that income which is either received or is deemed to be received by him in India, or accrues or arises or deemed to accrue or arise to him in India, during the year. Thus, he will be liable to tax only in respect of income received or accrued to him in India. 10. The assessee also submitted that he was not having any of his business operations in India during AY 2006-07 hence, there is no income which has either deemed to accrue or arise in India under section 9 of the Act. Thus, the initial contribution or even other amounts in the foreign bank account does not fall under the purview - of section 9 of the Act. Thus, the peak balance appearing in the bank statement of the foreign bank account should not be added to the total income of the 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) an....
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....dent is determined with reference to the provisions of section 5(2) read with section 9 of the Act. In the instant case undisputedly the assessee is a non-resident since 1979, as per the provisions of Section 6 of the IT Act. The scope of income in case of a non-resident is defined under the provisions of subsection (2) of section 5 of the Act. As per this section, a person who is a 'non-resident' has to pay tax only on that income which is either received or is deemed to be received by him in India, or accrues or arises or deemed to accrue or arise to him in India, during the year, therefore assessee will be liable to tax only in respect of income received or accrued to him in India. Further, section 9 of the Act, lays down the provisions relating to income which is deemed to accrue or arise in India. As the assessee Mr. Dipendu Shah was not having any of his business operations in India during AY 2006- 07 and AY 2007-08, there is no income which has either deemed to accrue or arise in India under section 9 of the Act, Thus, the initial contribution or even other amounts in the foreign bank account mentioned by AO in the notice does not fall under the purview of section 5(....
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....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 the learned AO nowhere conclusively establishes that the source of the deposits, since the inception, in the bank account was from India. In view of the above discussion, we do not find any infirmity in the order of CIT(A) for deleting the....
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.... 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 the learned AO nowhere conclusively establishes that the source of the deposits, since the inception, in the bank account was from India. In view of the above discussion, we do not find any infirmity in the order of CIT(A) for deleting the addition made in respect of deposits in HSBC Account, Geneva in the hands of non- resident assessee. Facts and circumstances in both the years are same." 20. Coming to the case laws relied upon by the revenue. The Ld.DR has relied upon the decision of IT....
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.... total income of any previous year of a person who is a resident includes all income from whatever source derived, which is received or deemed to be received in India in such year by or behalf of such person; or accrues or arises or deemed to accrue or arise to him during such year; or accrues or arises to him outside India during such year. It has been further provided that in case of a person not ordinarily resident in India within meaning of sub- section (6) to section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled or a profession set up in India. 44. Sub-section (2) to section 5 further provides that subject to the provision of the Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which is received or is deemed to be received in India in such year by or on behalf of such person; or accrues or arises or deemed to accrue or arise to him in India during such year. 45. We therefore, find that the statue has made a distinction while defining the scope of total income in the hands of a person depending on his residential st....
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....see's passport has been submitted before the AO and is part of the assessment records. It has been submitted that on perusal of the assessee's passport, it can be noted that the assessee's date of birth is 15th July 1945 and place of birth is Karachi. It has been further submitted that the statement of the assessee was recorded by ADIT (Inv.)-Unit 4, Mumbai on 29-12-2011 wherein he has stated that he is a citizen of United Kingdom and has been staying in the UK since last 45 years and a copy of his British passport No. 304741902 was also submitted. Further, our reference was drawn to the affidavit submitted by the assessee which is available at assessee's Paper Book page 62 where the assessee has again reiterated the fact that he is a British citizen holding passport no. 304741902 issued on 18-06-2005 by the United Kingdom of Great Britain and Northern Island and he is a resident of UK since 1967. We also note from the records that the base note which has been received from the French Government talks about the fact that the assessee is a British national and his date of birth is 15-07- 1945. Further, we refer to the finding of the AO in para 11 of the assessment order wherein he s....
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....me for the relevant assessment year, the peak balance standing credit in the bank account represents income which has escaped assessment. Thereafter, while passing the assessment order, the AO has held that the assessee has not been able to substantiate the source of funds appearing in the bank account with HSBC Bank Geneva and the onus is on the assessee to establish that such deposits were not out of funds sourced from India and it was inferred that the amount deposited are unaccounted deposits sourced from India and therefore taxable in India. 51. We therefore have a situation where right from initiation of the reassessment proceedings in the first round and conclusion of the reassessment proceedings in the present round, pursuant to remand by the Co-ordinate Bench, there is no material on record with the Assessing officer which can reasonably establishes that amount standing credit in the bank accounts with HSBC Geneva represent income which has accrued or arisen in India or deemed to accrue or arise in India. The onus to prove that such deposits were not out of funds sourced from India has been entirely shifted on the assessee. In our considered opinion, the onus to prove tha....
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....e are unable to comprehend what prevented the AO in examining the same and arriving at an appropriate finding in terms of determining the charge of tax on such deposits in India as per the provisions of section 5 r/w section 9 of the Act. However, there is no finding recorded by the AO as to how the charge of tax has been satisfied in the instant case and the tax liability can be fastened on the assessee, being a non-resident in respect of deposits placed outside of India with HSBC Bank Geneva. 53. Even the Ld.DRP has not recorded any specific finding as to how the charge of tax has been satisfied in the instant case except for the fact that it has laid great emphasis on the Indian address in the HSBC bank records as mentioned in the "base note" to hold that the same represent substantial evidence of business connection which the assessee has satisfactorily failed to explain and a material evidence that income has accrued in India and then, it goes on to hold that as per sub-section 5(2), the sums so found credited in the bank account are liable to be treated as having accrued/arisen in India. It has been held by the ld DRP that the Indian address, even in the absence of direct ev....
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....ame after the demise of her mother and all these submissions and affidavit are part of assessment records which the AO and Ld. DRP has failed to appreciate and take into consideration. 55. Having said that, merely having a property in India or for that matter, an address in India is too simplistic a basis to hold that deposits placed outside of India can be brought to tax in India as a connection with India has been established by way of the said property or the residential address. What is essential to determine is the nature and extent of activities that have been carried out in India through such presence which has contributed in earning of income and which has been remitted overseas and deposited in HSBC Bank. In this regard, useful reference can be drawn to the decision of the Hon'ble Supreme Court in case of Commissioner of Income-Tax, Punjab vs R. D. Aggarwal & Company (1965) AIR 1526 wherein the Hon'ble Supreme Court has held that "a business connection involves a relation between a business carried on by a non- resident which yields profits or gains and some activity in the taxable territories which contributes directly or indirectly to the earning of those profits or gai....