9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1077 - AT - Income TaxAdditions towards amount lying in bank account as unexplained money - additions towards amount lying in HSBC bank account, on the sole ground that the assessee is owner of the bank account and he is having beneficial interest in money lying in said bank account - HELD THAT - A close look at the provisions of section 69A it is abundantly clear that in order to bring any money or other valuable articles within the ambit of said section, the Ld. AO has to prove that the money is belong to the assessee. Initial burden is on the assessee to prove that the money or other valuable articles found in his position is not belongs to him. In the present case, one has to see, whether the money found in HSBC bank account is belongs to the assessee or his brother. In this case, the assessee right from beginning has made it very clear that the bank account belongs to his brother and he was named only as a second holder for the purpose of nomination and for the sake of convenience. To justify his claim, the assessee has filed a letter and affidavit from his brother stating that his brother Mr.Dipak V. Galani is the owner of the bank account and he was opened a bank account in his capacity as a non resident in the year 1998. Bank account was opened by his brother as a first account holder and the assessee was included in the bank account as a second account holder, which is very clear from the base documents relied upon by the Ld. AO, where the assessee name appears as a second account holder. Base documents itself clearly states the creation of identity of the assessee as date of 19/06/2003, and it is clearly stated therein that assessee account holder No.2. The passport detail of assessee as per base documents clearly shows him to be residing at Vienna (as place of having establishment) with place of birth as Baroda. The legal address in base documents is taken from the birth place mentioned in the passport as permanent address, otherwise the address of the assessee in Vienna is also mentioned in passport as taken is present address. Thus it is very clear that the bank account in the name of assessee and is brother and his brother as account holder No.1 is clearly established the fact that bank account is belongs to his brother, but not to the assessee and this fact has been further strengthened by the letter of the assessee s brother, dated 09/03/2015, where he has categorically accepted the ownership of bank account and money lying in said bank account. These facts have been disregarded by the Ld. AO without providing any basis for the same. Account was opened in 1998, when the assessee himself and Mr. Dipak Galani permanently resided in outside India for 30 years and had no intention to come to India at that time. Further, both of them have no source of income in India, during the course of their residence abroad. Therefore, we are of the view that entire motive as presented by the Ld. AO defines all logic of opening of a secret bank account in Geneva, by NRI to stash unaccounted income taxable in India fails. AO mechanically disregarding all explanations furnished by the assessee as to the ownership of the account along with the corroborative materials is contrary to the settled position of law, because, once assessee has provided a reasonable explanation about ownership, then the onus was on the Ld. AO to establish that account belongs to the assessee. Thus assessee right from day one has disowned the bank account. Further, the brother of the assesee has filed a letter to the Ld. AO along with affidavit and claimed that the bank account is opened by him in his capacity as NRI and whatever money lying in bank account is belongs to him. AO was erred in making additions towards amount lying in bank account as unexplained money of the assessee. Additions made towards return on investments @17% PA on year basis - HELD THAT - Once, it was established that bank account was not belongs to assessee and he was not a beneficial owner, then further additions towards estimated return of income on said unexplained money is arbitrary - account was opened by the Appellant's brother with the British Bank of Middle East. Therefore, the reliance placed by the AO on the account opening information appearing on the website of HSBC Bank cannot be relied upon. Further, the account was opened by the Appellant's brother in 1998, whereas the website information sought to be relied upon by the AO pertains to accounts sought to be opened at about the time of the assessment proceedings, i.e. around 2013. Such reliance on website information is impermissible as the same is merely based on fanciful presumptions. The AO has not brought any material on record to justify the use of account opening information as at time of assessments to presume and arrive at the conclusion that the same would be applicable to an account alleged to have been opened by the Appellant 15 years earlier. Owning the bank account and the investment by Non Resident out of sources of funds available abroad is still not taxable in India. AO has failed to point out any iota of evidence to prove that the funds of USD 3 million invested in opening bank account represent income from undisclosed sources earned/ accrued to appellant in 1998. The Appellant has no sources of income in India up to 2002 and the same has already been assessed on record in assessment proceedings earlier. The statement of Assets and liabilities and Income has been filed on record - having established that Appellant is NON-RESIDENT in AY 1999-2000 and complete absence of any source of taxable income in India, the addition u/s 69 made by AO in AY 1999-2000 on account of investment of USD 3 million in opening the bank account with HSBC and consequent estimation of return of investment @ 17% PA as Unexplained Investment is highly unjustified. Addition made towards bank account in the name of the assessee is incorrect. Accordingly, we direct the Ld. AO to delete additions made towards amount lying in bank account. Similarly addition made towards estimated return of investments @17% on said additions is also incorrect. Accordingly, we direct the Ld. AO to delete additions made towards estimated return of investments for all assessment years. - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order under section 147 read with section 144. 2. Adequacy of opportunity of being heard and invocation of section 144. 3. Ownership and taxability of the bank account and investments. 4. Reliance on the base notes and information from HSBC Private Bank. 5. Estimation of returns on investments and additions made on that basis. 6. Validity of reopening of assessment and jurisdictional issues. Detailed Analysis: 1. Validity of the Assessment Order under Section 147 Read with Section 144: The assessee challenged the validity of the assessment order dated 25/03/2015, arguing that the jurisdictional conditions required to assume jurisdiction under section 147 were not fulfilled by the Assessing Officer (AO). Specifically, the assessee contended that there was no "reason to believe," no sanction from the appropriate authority, and the notice was issued beyond the period of limitation. The Tribunal found that the AO had recorded reasons for reopening the assessment based on information received from the Government of France under the convention for the avoidance of double taxation. The Tribunal upheld the validity of the reopening of the assessment, stating that the AO had prima facie reasons to believe that income had escaped assessment. 2. Adequacy of Opportunity of Being Heard and Invocation of Section 144: The assessee argued that the assessment order was contrary to the principles of natural justice as adequate opportunity of being heard was not provided. The AO invoked the provisions of section 144 due to the assessee's failure to furnish complete details of the bank accounts despite multiple notices. The Tribunal upheld the AO's decision to invoke section 144, noting that the assessee had not cooperated fully during the assessment proceedings. 3. Ownership and Taxability of the Bank Account and Investments: The AO assumed that the assessee was the owner of the bank account and the investments therein, leading to additions based on incorrect factual assumptions. The Tribunal found that the bank account was opened by the assessee's brother, Mr. Dipak Galani, and the assessee was included as a second account holder out of respect. The Tribunal held that the AO had not provided sufficient evidence to prove that the assessee was the beneficial owner of the bank account. Consequently, the Tribunal directed the AO to delete the additions made on this basis. 4. Reliance on the Base Notes and Information from HSBC Private Bank: The AO relied on base notes received from the French Government and incomplete information from the HSBC Private Bank website to justify the authenticity of the base note. The Tribunal found that the AO had not brought any cogent material on record to establish the authenticity or veracity of the base notes. The Tribunal held that the AO's reliance on the base notes without corroborative evidence was incorrect. 5. Estimation of Returns on Investments and Additions Made on That Basis: The AO estimated the return on investments at 17% per annum and made additions based on this estimation. The Tribunal found that the AO had not provided any evidence to justify the use of a 17% return on investments. The Tribunal noted that the assessee had not earned a 17% return on investments and directed the AO to delete the additions made on this basis. 6. Validity of Reopening of Assessment and Jurisdictional Issues: The revenue argued that the CIT(A) erred in deleting the addition made by the AO on the ground that the assessee was a Non-Resident Indian (NRI) during the relevant previous year. The Tribunal upheld the CIT(A)'s decision, noting that the assessee was an NRI and the income accrued or arose outside India. The Tribunal also found that the AO had followed the correct procedure for reopening the assessment and that the notice under section 148 was issued within the extended time limit of 16 years for assets located outside India. Conclusion: The Tribunal allowed the appeals filed by the assessee for the assessment years 2003-04 to 2007-08 and dismissed the appeals filed by the revenue for the assessment years 2006-07, 2007-08, and 1999-2000 to 2002-03. The Tribunal also dismissed the cross objections filed by the assessee for the assessment years 1999-2000 to 2002-03. The Tribunal directed the AO to delete the additions made towards the amount lying in the bank account and the estimated return on investments.
|
