TaxTMI 
TaxTMI 
2026 (3) TMI 956
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....under consideration. The case of the assessee was reopened based on information received from the French Government regarding deposits made by the assessee in its account with HSBC Bank, Geneva. As the assessee had not filed return of income for the relevant year and apparently the Assessing Officer ('AO', for short) had reasons to believe that income had escaped assessment for the relevant year, the assessment proceedings were initiated. 3. In the absence of satisfactory/substantiated explanation regarding the source of deposits in account with HSBC Bank, Geneva, a sum of Rs. 6,13,09,845/- being rupee equivalent of peak credit of USD 13,62,441/- in the account during Assessment Year 2006-07, the aforesaid amount was added to the total income of the assessee and assessment order under Section 143(3) read with Section 147 was passed on 03/03/2015, wherein the income was asssessed at Rs. 6,13,09,845/-. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A), Mumbai. Thus, CIT(A) for the reasons recorded vide its order dated 28/03/2016 deleted the addition made by AO. The Revenue filed an appeal against the order of CIT(A) before ITAT, Mumbai. The ITAT vide....
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.... to contend that it is not necessary that whole of the amount should have a nexus with India for taxing the same in India. Section 5(2), according to him, applies in the case of a non-resident with regard to 'all income from whatever source derived'. The taxation of the beneficiaries is a separate aspect than the deposit of money in a foreign bank account in relation to a Trust the beneficiaries of which are Indian residents establishes the economic nexus of the account with India. Ms. Shilpa Goel relied upon the decision of the Hon'ble Supreme Court in the case of GVK Industries Ltd and anr. Vs. The Income Tax Officer and anr. in Civil Appeal No. 7796 of 1997 decided on 01/03/2011. 7. In the above said facts, Ms. Shilpa Goel submitted the following substantial questions of law arise in the present case. a) "Whether on the facts and in the circumstances and in law, the Hon'ble ITAT erred in deleting addition of Rs. 6,13,09,845/- without appreciating that section 5(2) of the Act provides for taxation of "all income from whatever source derived" in case of a non-resident"? b) "Whether on the facts and in the circumstances and in law, the Hon'ble ITAT erre....
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.... respondent-assessee. Mr. Shah invited our attention to the impugned order and also to the relevant provisions to contend that the present appeal does not raise any substantial question of law. 9. Heard learned counsel. Perused the memo of appeal and materials on record. There is no dispute that the assessee is a non-resident under Section 6 of the said Act. The source of information is a 'Base Note' which had various details of account holders along with the balance in certain years. The AO has made addition on the basis of Base Note of the foreign bank account of HSBC Bank, Geneva as income which has escaped assessment. The CIT(A) recorded a finding that Base Note indicates that the Bank account of HSBC Bank, Geneva was opened in the year 1997. The appellant was in fact a non-resident since 1979. Thus, during the year 1997, the year in which the account was opened and even before this year, and even thereafter the appellant continues to be a non-resident under the Act. The CIT(A) referred to the provisions of Section 5(2) read with Section 9 of the Act. It is a well settled position in law that a non-resident, having money in a foreign country cannot be taxed in India if such ....
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....try, cannot be called upon to pay income tax on that money in India unless it satisfies the test of taxability under the provisions of the Act, which in the instant case is not getting satisfied in the case of assessee. It is for these reasons, it was held that the bank account of HSBC Bank, Geneva is outside the purview of the Act. 11. A finding of fact recorded by CIT(A) that source of deposits are no where proved by the four instances which are relied upon by the AO as circumstantial evidence. In paragraph 30, it is observed thus : "30. I agree with the submissions of the Appellant, 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 Appellant 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 Appellant 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 & C....
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....te party contended before us that there was no bar to tax being charged on the income in the hands of the association after it had already been charged to tax in the hands of the individual members of that association relying on the fact that in the Income-tax Act there is no specific provision barring such action of charging of tax by the Income-tax Officer. We do not think that any specific provision in this behalf was required. Section 3 of the Act, which is the main charging section, only talks of charging the income of certain persons and does not talk of income-tax being charged on persons. This implies that the charge is to be levied on an income only once. Whether it is to be charged in the hands of one person or another can certainly be determined under section 3 and other relevant provisions of the Income-tax Act. Section 3 is clear enough to indicate that the same income cannot be charged repeatedly in the hands of different persons or in the hands of the same person." (Emphasis supplied) This view may be taken to be approved by their Lordships of the Supreme Court in Commissioner of Income-tax v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC). The view t....