TaxTMI 
TaxTMI 
2026 (7) TMI 1384
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....de India" occurring in section 2(11) of the BMA Act and the nature of burden cast upon an assessee who seeks to explain the source of acquisition of a foreign asset. The existence of the foreign assets in question is not disputed. The real dispute is whether such assets can be brought within the mischief of the BMA Act despite the assessee's explanation that they originated from gifts received during a period when he was residing abroad and long before he became a tax resident of India. 2. The assessee, Shri Youri Hermans, is a citizen of Belgium by birth. The record reveals that he migrated to India in the year 2002 and thereafter became a tax resident in India. Prior to such migration, he was permanently residing in Belgium and maintained various banking and investment relationships in that country. According to the assessee, while residing in Belgium he had received substantial financial assistance and gifts from close family members and family associates, which were invested in securities and financial instruments maintained through Belgian financial institutions. The assessee's consistent case throughout the proceedings has been that the assets which subsequently became the....
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....ovisions of the BMA Act were initiated. An order conferring concurrent jurisdiction was passed authorising the competent authority to exercise powers under the BMA Act and thereafter proceedings under section 10(1) of the Act were commenced. During the course of such proceedings, a detailed show cause notice was issued requiring the assessee to explain the source of the foreign assets reflected in the information received by the Department. Ultimately, the Assessing Officer proposed to treat an aggregate amount of Rs. 2,77,87,881 as an undisclosed foreign asset liable to tax under section 10(3) of the Act. 6. The aforesaid amount of Rs. 2,77,87,881 broadly consisted of four components. The first and principal component related to investments reflected in the Goldwasser Exchange account amounting to Rs. 1,78,77,450. The second component consisted of the opening balance together with accretions in BNP Paribas Fortis Account No.035-7182976-70 aggregating to Rs. 55,94,806. The third component comprised certain credits reflected in Account No.220-0436551-87 amounting to Rs. 43,15,547. The fourth component represented a nominal balance in another BNP Paribas account. According to the ....
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.... opportunities granted during the course of proceedings, the assessee had failed to produce legally admissible and contemporaneous evidence demonstrating the origin of the investments. The Goldwasser portfolio statements were treated as inadequate. The explanation regarding gifts was rejected on the ground that no satisfactory confirmation from the donors had been furnished. The Assessing Officer further observed that there was no sufficient material establishing the financial capacity of the donors or proving the actual transfer of assets from the donors to the assessee. Similar objections were raised in respect of the balances appearing in the BNP Paribas accounts. 10. The Assessing Officer also rejected the assessee's explanation that difficulties were faced in procuring documents from Belgium. According to him, sufficient time had been available to the assessee and therefore the inability to furnish supporting documents could not be accepted as a valid justification. Proceeding on this reasoning, he concluded that the assessee had failed to discharge the burden cast upon him under section 2(11) of the BMA Act and accordingly treated the investments reflected in the Goldwasse....
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.... sustain the addition by observing that the documents and declarations were insufficient to conclusively establish the source of the foreign assets and that the assessee had failed to satisfactorily discharge the burden contemplated under the provisions of the BMA Act. It is against these findings of the authorities below that the assessee is now in further appeal before us. 13. Before us, the learned counsel appearing on behalf of the assessee assailed the orders of the authorities below both on facts and in law and submitted that the entire assessment proceeds upon a fundamental misconception regarding the scope and operation of the Black Money Act. At the very outset, it was contended that the Act does not authorise taxation of every foreign asset merely because such asset exists outside India or because it was not disclosed in a particular schedule of the return of income. Drawing our attention to the language employed in section 2(11), the learned counsel submitted that the legislature has consciously used the expression "undisclosed asset located outside India" and not merely "foreign asset". According to him, the statutory requirement is not merely existence of an asset o....
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....ented a gift of Euro 62,000 received from Mr. Philippe Aisinber, a close family associate residing in Belgium, together with savings already accumulated by the assessee during his Belgian residency. The learned counsel submitted that these explanations were not invented during the appellate proceedings but had consistently been advanced before every authority from the very beginning. The explanation has remained unchanged throughout the proceedings and there has never been any deviation or improvement in the factual stand of the assessee. According to him, this circumstance by itself lends considerable credibility to the assessee's explanation because a fabricated explanation ordinarily undergoes alterations as proceedings progress, whereas in the present case the factual narrative has remained constant from the investigation stage till the hearing before the Tribunal. 16. Inviting our attention to the additional evidences placed before the learned CIT(A), the learned counsel submitted that the very deficiencies noted by the Assessing Officer stood fully cured during the appellate proceedings. Our attention was drawn to the notarised gift declaration executed by Mrs. Suzon Ingbe....
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.... after the matter reached the Tribunal. He pointed out that during the course of hearing, this Bench, considering the nature of the dispute and the evidences already available on record, deemed it appropriate to direct an independent verification of the assessee's claim through recording of statements of the donors themselves. Pursuant to such directions, the donors appeared through virtual mode, their statements were recorded on oath and they categorically affirmed the gifts made by them. It was submitted that once the donors themselves had appeared before the authorities, identified themselves, confirmed the contents of the affidavits and declarations and affirmed the gifts on oath, the controversy ceased to remain a matter of inference or presumption. The learned counsel submitted that the verification report submitted thereafter by the Assessing Officer did not bring on record any material to discredit either the donors or the transactions. Therefore, according to him, the very factual basis on which the addition had originally been made stood completely extinguished. 19. Per contra, the learned Senior Departmental Representative strongly relied upon the assessment order and....
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....ontroversy before us was not whether the assets existed, for their existence was never in dispute, but whether the explanation regarding their source could be accepted as genuine and credible. 21. It is for this reason that during the course of hearing we consciously refrained from deciding the matter merely on the basis of affidavits, declarations and rival submissions advanced across the Bar. The Tribunal, being the final fact-finding authority under the Act, carries an obligation not merely to adjudicate but also, where circumstances so warrant, to ascertain the truth through appropriate verification. Since the entire addition rested upon the Revenue's doubt regarding the gifts claimed by the assessee, we considered it appropriate, in the interest of substantial justice and to put the controversy beyond the pale of speculation, to direct the Assessing Officer to undertake an independent verification exercise by facilitating the recording of statements of the donors themselves through virtual mode and thereafter place a factual report before the Tribunal. This direction, as reflected in the order-sheet proceedings, was issued precisely because we were of the view that if the d....
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....mentally alters the complexion of the entire dispute. The assessment order proceeds substantially on the premise that the assessee had failed to satisfactorily substantiate the source of acquisition of the foreign assets. Even the learned CIT(A), though admitting the additional evidence, entertained reservations regarding the sufficiency of the explanation. However, once the donors themselves appeared pursuant to the judicial directions issued by this Tribunal, subjected themselves to examination, affirmed the gifts on oath and thereafter the Assessing Officer, after carrying out verification, failed to bring any adverse material on record, the very deficiency which weighed with the authorities below stood completely removed. The controversy thereafter ceased to be one resting upon unverified assertions and became one resting upon independently tested evidence. 25. We are unable to overlook the fact that the Revenue was afforded the fullest possible opportunity to verify the assessee's explanation. This is not a case where the Tribunal is accepting the assessee's claim merely because affidavits have been filed. Nor is it a case where relief is being granted solely on technical c....