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TMI Blog2016 (12) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... olicitor General was an alternative submission made even though the Executor of the Estate of late Ramniklal N. Mehta, one Mr. Dilip Mehta – uncle of the Petitioner clearly admits in his statement made to the Income Tax Authority on 10th January, 2012 that he has limited authority to operate the A/c. No. 5091404580 in the name of M/s. White Cedar. The Revenue ought to have in fact proceeded further and held the uncle of the Petitioner – Mr. Dilip Mehta who is Executor of the Estate of late Ramniklal N. Mehta bound by his admission that he has limited authority to operate the Account No. 5091404580 in HSBC Geneva of M/s. White Cedar. As we understood the Revenue to contend that the Estate of late Ramniklal Mehta is not the correct person to be taxed there was no occasion to to examine the statement of Dilip Mehta dated 10th January, 2012 as extracted in the order dated 30 May 2014 passed in the case of the Estate before our attention was invited by the petitioner to the order dated 30 May 2014 in support of its case during its rejoinder. We would expect the Revenue in matters such as these to take decisions with due consideration and some thought before taking a stand as taken in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was adjourned to be disposed of finally at the stage of admission and it has now been taken up for hearing. 3. Brief facts : (a) The petitioner though born in India has migrated to United States of America on her marriage in 1996 (and since then has her permanent place of residence therein). From the assessment year 2000-01 onwards, the petitioner has been for the purposes of the Act a Non Resident. It has been so declared in her Return of Income and her status as NonResident is also accepted by the Revenue. (b) For the Assessment Year 2006-07, the petitioner filed her Return of Income on 29th March, 2007 declaring a total income of ₹ 37.96lakhs. This income was the aggregate of interest received by her on her bank balance in accounts in India, on delay in income tax refund being issued and on loans advanced by her in India. The Return was processed under Section 143(1) of the Act. (c) On 25th June, 2011 the Assessing Officer received information from the Central Board of Direct Taxes in the form of a copy of a "Base Note" received by it from the French Government. This Base Note was received under the Double Taxation Avoidance Agreements (DTAA) between France and Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons recorded in support of the impugned notice dated 31st March, 2015 was also issued to the petitioner. (h) The petitioner by her letter dated 1st September, 2015 filed her objections to the reasons as recorded by the Assessing Officer in support of the impugned notice. By an order dated 18th September, 2015, the Assessing Officer rejected the petitioner's objections leading to filing of this petition. 4. Mr. Pardiwalla, learned Senior Counsel in support of the petition submits as under : (I) The impugned notice dated 31st March, 2015 seeking to reopen the assessment for A.Y. 2006-07 under Section 148 of the Act is barred by limitation in view of Section 149(1)(b) of the Act. (II) In any case, the sine qua non to issue a notice under Section 147 / 148 of the Act is that the income chargeable to tax should have escaped assessment. In this case, the same Assessing Officer has brought to tax the entire amount of deposit i.e. US$ 44,861,171 to tax in the hands of Estate of Ramniklal Mehta by order dated 30th May, 2014. Further, by order dated 31st March, 2015 all other six individual beneficiaries have been brought to tax to the extent of 1/7th of the amount in their hands an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere fact that the petitioner is a nonresident, does not absolve her from paying taxes on the amount in the Account in view of Section 9(1) of the Act especially in view of the Indian connection. (g) De hors the fact that the Assessing Officer records reason to believe that income chargeable to tax has escaped assessment without application of Explanation 2 to Section 147 of the Act, would not by itself exclude the Explanation 2 to Section 147 of the Act where a person is found to have an asset outside India, the reopening of reason to believe that income chargeable to tax has escaped assessment is deemed to be satisfied. (h) There is no reason in a fiscal statute to interpret the Act by examining the possible consequences resulting in absurdity. A fiscal statute is to be literally interpreted. It is not for the Courts to rewrite a fiscal legislation. 6. We invested considerable time on this Petition. During the course of the hearing of the Reply of the Revenue it was pointed out to us that despite the Revenue's request, the Petitioner had failed to sign a Consent Waiver Form ("the Waiver") which would have enabled HSBC to provide information about the Account. According to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the office as he is nonresident and not present in India. We, therefore, asked Mr. Pardiwalla whether the petitioner could obtain the Consent Waiver Form from her uncle Mr. Dilip Mehta in respect of A/c. No. 5091404580 in HSBC Bank, Geneva. 9. At this Mr. Pardiwalla, learned Sr. Counsel appearing for the Petitioner drew our attention to the letter dated 6th January, 2012 i.e. letter by which the Executor of the Estate of late Ramniklal N.Mehta i.e. Mr. Dilip Mehta states that the authority to operate the A/c. No.5091494580 is with the Directors of M/s. White Cedar. However, in the letter, there is no denial to his limited authority to operate account of M/s. White Cedar, being A/c. No. 5091404580 in HSBC, Geneva. Mr. Pardiwalla, learned Sr. Counsel seeks to rely upon para 11. C thereof to contend that the account is operated by the Directors of M/s. White Cedar and his role is limited to advise M/s. White Cedar on behalf of the Estate as an investor. On instructions of the Petitioner, the Learned Senior Counsel Mr. Pardiwalla informed us that her Uncle Mr. Dilip Mehta i.e the Executor of the Estate of late Mr. Ramniklal N Mehta was also willing to sign a modified consent waiver fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by HSBC Bank, Geneva to M/s. Red Oak Operation Ltd. which has been taken on record and marked X for identification. This bank statement if obtained from HSBC, Geneva, would reveal and/or possibly give clues as to the source of amounts deposited in the Account No. 5091404580 of HSBC Bank, Geneva . Neither the Petitioner nor her uncle i.e. Executor of the Estate of late Ramniklal N. Mehta is ready to obtain the necessary statement either directly or through M/s. White Cedar from HSBC, Geneva in respect of A/c. No. 5091404580 by exercising or causing to be exercised the limited authority to instruct White Cedar to apply for and obtain the requisite information. In the normal course of human conduct if a person has nothing to hide and serious allegations /questions are being raised about the funds a person would make available the documents which would put to rest all questions which seem to arise in the mind of the Authorities. The conduct on the part of the Petitioner and her uncle, in not being forthcoming, to our mind leads us to the conclusion that this is not a fit case where we should exercise our extra ordinary writ jurisdiction and/or interfere with the orders passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and income should be brought to tax in the hands of correct persons. As discussed above, income of six beneficial owners is already brought to tax in their respective hands and income of the assessee is required to be brought to tax in her hand." 13. From the above, it is clear that the stand of the Revenue is that the names of the late Ramniklal N. Mehta or his executor - does not appear in the Base Note received from the French Government. Further, the bank account in the name of M/s. White Cedar was opened only on 23rd March, 2004 i.e. almost two years after the death of Shri Ramniklal N. Mehta. During the course of arguments, we understood the learned Additional Solicitor General to contend that the tax in the hands of the Estate of late Ramniklal N. Mehta is not correct and the Revenue is obliged to tax the income in the hands of the correct person i.e. Petitioner herein. By virtue of the aforesaid affidavit read in the context of the submission made on behalf of the Revenue it is likely that the the Executor of the Estate may contend that the order dated 30th May, 2014 passed on the Estate of late Ramniklal N.Mehta which is in appeal before the CIT(A), is not sustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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