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2018 (9) TMI 154 - HC - Income TaxRejection of applications before the Income Tax Settlement Commission (ITSC) u/s 245C - failure to make full and true disclosure of undisclosed income with reference to the London property and two foreign bank accounts of M/s Barro Holdings Limited and M/s Bulova Holding Limited in the BSI Bank Limited, Singapore - Beneficial ownership of Bank Account - Held that - Reasoning of the ITSC, to set at rest any argument of lack of application of mind on facts and documents. Indeed, there was a detailed and through examination of the factual aspects, including the contentions raised by the petitioner on the question of beneficial ownership. The petitioner had submitted that he was not a shareholder of the two companies and, therefore, he had no interest in the companies. The Singapore authorities had only made an observation that the petitioner was a beneficial owner, but this confirmation, the KYC documentations certifying that the petitioner was the beneficial owner, was imaginary or creation of the officers of the bank. The plea and contention that the petitioner s brother-in-law, Yusuf Mehboob Khan, citizen of Pakistan, was the beneficial owner of the property in London and also beneficial owner of M/s Bulova Holdings Limited and M/s Barro Holdings Limited was resoundingly rejected for cogent and good reasons. Reliance was placed on the power of attorney executed by Yusuf Mehboob Khan in favour of the petitioner, Moin Akhtar Qureshi, and discrepancies relied by the petitioner with regard to the accounts was duly considered. The contention of the petitioner that the acts attributable to him were on behalf of Yusuf Mehboob Khan, it was observed was unacceptable in view of the overwhelming evidence and material available and produced before the ITSC. The documents filed with the BSI Bank Limited, Singapore specifically and categorically mention that the petitioner was a beneficial owner. The veracity of these documents and the entire documentation regarding KYC cannot be ignored and treated as imaginary creation of the officers of the said bank and without knowledge and involvement of the petitioner. The ITSC has made reference to the banking procedures applicable, the strict KYC norms, the legal mandate and the requirement to identify and record details and particulars of the real or beneficial owner. It was noted that the petitioner had not disputed his signatures on the documents. The objection was with reference to date of signing. The identity of the petitioner was also established by verified copy of the passport. We have also examined the documents, copies of which have been placed on record, including the power of attorney executed by M/s Arcas Holding Limited, the director of M/s Barro Holdings Limited in favour of the petitioner. They had certified and identified the petitioner as the beneficial owner.Information with regard to M/s Bulova Holdings Limited was also received from the Government of Republic of Singapore under the Double Taxation Avoidance Agreement and the provisions relating to fiscal evasion in respect of taxes. M/s Bulova Holdings Limited had a bank account with BSI, AG in Switzerland. Letters received from the Singapore Authority had stated that payments were received by M/s Bulova Holdings Limited from M/s Barro Holdings Limited s Singapore and Hong Kong bank account with BSI Bank Limited. Lastly, and importantly, the petitioner i.e. Moin Akhtar Qureshi has declared himself as beneficial owner of the bank account of M/s Bulova Holdings Limited maintained with the BSI Bank, AG. Moin Akhtar Qureshi, had executed and signed indemnity bond, indemnifying the board of directors of M/s Bulova Holdings Limited. He had authorized the board of directors of M/s Bulova Holdings Limited to purchase the London property, i.e. 4, Chesterfield House, South Audley, Mayfair, London, and appoint a solicitor. M/s Bulova Holdings Limited was / is the registered owner of the London property which was acquired in May, 2012. Details of the income, payments from M/s Barro Holdings Limited to M/s Bulova Holdings Limited were available. The aforesaid evidence is compelling and conclusive. It cannot be ignored. It is in this context and in view of these documents specific factual findings have been recorded by the ITSC. It was also recorded that the petitioner had failed to adduce specific and clear evidence to show that he was not the beneficial owner of M/s Barro Holdings Limited etc. and the accounts and the London property were owned by his brother-in-law. On the question of full and true disclosure and the statutory mandate, reference can be made to decision of this Court in Ajmera Housing Corporation and Another versus CIT 2010 (8) TMI 35 - SUPREME COURT OF INDIA , Commission of Income Tax versus Income Tax Settlement Commission and Others 2013 (7) TMI 95 - DELHI HIGH COURT and and Vishwa Nath Gupta versus Principal Commissioner of Income Tax Central and Others, 2017 (5) TMI 848 - DELHI HIGH COURT Violation of principles of natural justice - Held that - We fail to fathom relevance of the said contention in the context in question. There is no violation of the principle of audi alteram partem in the said case as hearing was given as the impugned order refers to the various contentions and issues raised by the petitioner and answers the same.
Issues Involved:
1. Validity of the settlement application under Section 245D(2C) of the Income Tax Act, 1961. 2. Full and true disclosure of undisclosed income by the petitioner. 3. Adequate opportunity for the petitioner to respond to documents submitted by the respondents. 4. Compliance with High Court's remand orders and directions. 5. Beneficial ownership of foreign bank accounts and London property. Issue-wise Analysis: 1. Validity of the Settlement Application under Section 245D(2C): The petitioner challenged the order dated 12th May 2017, whereby the Income Tax Settlement Commission (ITSC) rejected the settlement application as invalid. This was the third round of litigation, with previous orders dated 24th February 2015, 4th June 2015, and 26th June 2015 being set aside by the High Court for fresh consideration. 2. Full and True Disclosure of Undisclosed Income: The primary contention was whether the petitioner made a full and true disclosure of undisclosed income, particularly concerning the London property and two foreign bank accounts. The ITSC concluded that the petitioner failed to disclose the beneficial ownership of these assets. The documents from Singapore and British Virgin Islands authorities, including KYC documents and indemnity bonds, indicated that the petitioner was the beneficial owner, which he did not disclose in his settlement application. 3. Adequate Opportunity for the Petitioner to Respond: The High Court had previously set aside the ITSC's orders on the grounds that the petitioner was not given adequate opportunity to respond to the additional documents submitted by the respondents. The ITSC was directed to reconsider the matter, ensuring that the petitioner had the opportunity to address these documents. The ITSC, in its fresh order, provided this opportunity and considered the petitioner's submissions dated 22nd May 2015 and 28th May 2015. 4. Compliance with High Court's Remand Orders and Directions: The High Court's remand orders required the ITSC to reconsider the matter, specifically focusing on the documents submitted by the respondents on 19th February 2015. The ITSC complied with these directions and concluded that the petitioner did not make a full and true disclosure. The ITSC's decision was based on a holistic appreciation of all evidence, including the documents received from foreign authorities. 5. Beneficial Ownership of Foreign Bank Accounts and London Property: The ITSC found that the petitioner was the beneficial owner of the foreign bank accounts and the London property. The documents from BSI Bank Limited, Singapore, and other foreign authorities confirmed the petitioner's beneficial ownership. The petitioner's contention that his brother-in-law was the beneficial owner was rejected due to the overwhelming evidence to the contrary. Conclusion: The High Court dismissed the writ petition, upholding the ITSC's decision that the petitioner failed to make a full and true disclosure of undisclosed income. The ITSC's findings were based on substantial evidence, including foreign bank documents and property records. The High Court found no merit in the petitioner's arguments, including alleged procedural violations, and concluded that the ITSC had complied with the remand orders and provided adequate opportunity for the petitioner to respond. The petition was dismissed with parties bearing their own costs.
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