2025 (3) TMI 795 - AT - Income Tax

Proceedings under the Black Money Act - allegation of beneficial owner of undisclosed foreign assets - as per revenue Since the Assessee has been shown as beneficiary in the bank accounts the monies lying in the said accounts are to be regarded as Foreign Assets i.e. in respect of which the Assessee is a beneficial owner - whether uncertified documents in the form of bank statements would be admissible as evidence? HELD THAT - AO has simply relied on the documents received from the foreign Government under DTAA and exchange of information without verifying the authenticity and veracity of these documents. We note that during the course of assessment proceedings AO examined the assessee on oath when he appeared in compliance to summons issued on 05.06.2018 where Mr. Anurag Kejriwal the assessee has totally denied to have any connection with the Bank and AO has extracted relevant questions and answers as recorded in the said statement in the assessment order. We note that Mr. Anurag Kejriwal has totally denied to have any interest whatsoever in the said entities qua which information was passed on by DDIT (Inv.) Ward-3(3) Kolkata. We are inclined to hold that the assessee is not a beneficiary of the assets abroad as has been noted by the ld. Assessing Officer. The case of the assessee finds support from the decision of the Addl. CIT -vs.- Jatinder Mehra We have a legislation in India called the Banker s Book Evidence Act 1891. The said Act provides for conditions to be satisfied while submitting bank records as evidence in a court of law. Section 4 of Banker s Book Evidence Act 1891 provides that Bank records should be accompanied by a certificate in accordance with section 2(8) and 2A of the Act. A copy of the bank records duly certified as above constitutes a certified copy . A certified copy as defined under Section 2(8) of the Act of any entry of banker s book shall be admissible prima facie as Evidence. The foreign banks would under ordinary circumstances not part with certified copies of bank statements as that would violate the contract of secrecy with their customers of details of bank accounts which they have to maintain. In the absence of authenticated copies of original records it is for revenue to corroborate with other evidences whatever information in the form of unauthenticated copies of original records to establish facts with regard to whether or not the assessee held as a beneficiary assets outside India. We are inclined to hold that the assessee does not have any beneficial interest in the above four bank accounts nor did have any undisclosed foreign asset. Consequently the appellate order is set aside and the AO is directed accordingly.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

• Whether the assessee was the beneficial owner of undisclosed foreign assets and income, as alleged by the Assessing Officer (AO) under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (BMA).
• Whether the evidence provided by foreign authorities was sufficient and reliable to establish the assessee's beneficial ownership of the foreign bank accounts.
• Whether the procedural requirements for opening foreign bank accounts were adhered to, and if not, how that impacts the assessment of the assessee's liability under the BMA.
• Whether the assessee's denial of ownership and the explanations provided were satisfactory to rebut the claims made by the Revenue.

2. ISSUE-WISE DETAILED ANALYSIS

Beneficial Ownership of Foreign Assets

• Relevant Legal Framework and Precedents: The BMA defines "undisclosed asset located outside India" as an asset held by the assessee in his name or as a beneficial owner without satisfactory explanation for the source of investment. The Tribunal considered precedents such as the cases of Jatinder Mehra and Kamal Galani, which emphasized the need for corroborative evidence beyond mere mention of names in bank documents to establish beneficial ownership.
• Court's Interpretation and Reasoning: The Tribunal found that the AO relied heavily on unauthenticated documents provided by foreign authorities without conducting independent verification. The court emphasized that mere mention of the assessee's name as a beneficiary in bank documents, without corroborative evidence, is insufficient under the BMA.
• Key Evidence and Findings: The evidence included unauthenticated bank statements and KYC documents from foreign authorities. The Tribunal noted the absence of certified copies and the lack of corroboration with other evidence to establish the assessee's beneficial ownership of the foreign bank accounts.
• Application of Law to Facts: The Tribunal applied the legal definitions and requirements of the BMA to the facts, determining that the evidence was insufficient to prove the assessee's beneficial ownership. The Tribunal emphasized that the physical presence requirement for opening accounts was not met, as the assessee's passport did not show travel to the relevant locations when the accounts were allegedly opened.
• Treatment of Competing Arguments: The Tribunal considered the assessee's arguments regarding procedural lapses in opening the accounts and the lack of direct involvement in the foreign entities. The Tribunal found these arguments persuasive, particularly given the lack of authenticated evidence from the Revenue.
• Conclusions: The Tribunal concluded that the assessee was not the beneficial owner of the foreign assets as alleged by the AO. The reliance on unauthenticated documents and the lack of corroborative evidence failed to satisfy the requirements under the BMA.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The Tribunal found that the AO relied heavily on unauthenticated documents provided by foreign authorities without conducting independent verification. The court emphasized that mere mention of the assessee's name as a beneficiary in bank documents, without corroborative evidence, is insufficient under the BMA."
• Core Principles Established: The Tribunal established that for an assessee to be deemed a beneficial owner under the BMA, there must be clear, authenticated evidence linking the assessee to the foreign assets. Mere mention in documents is not sufficient without corroborative evidence.
• Final Determinations on Each Issue: The Tribunal determined that the assessee was not liable under the BMA for the alleged undisclosed foreign assets due to the lack of sufficient evidence. The appeals were allowed, setting aside the previous orders of the AO and the CIT(A).