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TMI Blog2017 (10) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... For the sake reference, the grounds of appeal from ITA No. 5720/Mum/2016 are being referred as under: A) Reopening of assessment 1) On the facts and circumstances of the case and in Law the learned Commissioner of Income Tax (Appeals) - 47, Mumbai [CIT(A)] erred in holding that the reopening of assessment made by the Deputy Commissioner of Income Tax, Central Circle-1, Mumbai (AO) was in accordance with law. 2) That, the Learned CIT(A) erred in agreeing with the AO that on the facts and in the circumstances of the case, the latter had reasons to believe that the appellant was one of the beneficiaries of Ambrunova Trust, Vaduz, which had a bank account with LGT Bank, Liechestein, and that from the said bank account the appellant had interest income of Rs. 8,04,855/- which had escaped original assessment u/s. 143(3) of the Income Tax Act, 1961. 3) That, while agreeing with the AO as stated in the preceding Ground No. 2, the Learned CIT(A) failed to consider as to whether before assumption of jurisdiction u/s.147, the AO had applied mind to the alleged information said to have been received from the C.B.D.T., and as to how before receipt of credible information sought by C.B.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) failed to appreciate that the appellant had not received any income from Ambrunova Trust and that no addition could be made on account of alleged unaccounted interest/benefit received on deposit in LGT Bank, Liechestein in the name of Ambrunova Trust on the basis of surmises and conjectures. 3) The appellant prays that the addition made by the AO of Rs. 3,03,259/- on account of alleged interest on deposit with LGT Bank, Liechtenstein in the name of Ambrunova Trust and as upheld by the CIT(A) may be deleted. 4. These appeals relate to foreign bank accounts found in LGT Bank, Liechtenstein in the name of Ambrunova Trust. The cases pertaining to the same bank account of the same assessees' relating to A.Y. 2002-03 which had come up before this Tribunal in ITA Nos.3544, 3545 & 3546/Mum/2011. In the said case, the reopening as well as the merits of addition was confirmed by the ITAT. The appeals against the above order of ITAT are pending before the Hon'ble High Court. The reopening of the case as well as the addition of the undisclosed income in the shape of deposit in the bank account was confirmed by the ITAT vide order dated 31.10.2014: 5. In the present case before us, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings in assessment order as under: 4.2 The submission of the assessee has been carefully perused and considered and are not found tenable as per following discussion. 4.2.1 Information was received by CBDT from German Authorities about bank account held by a trust Ambrunova Trust where economically beneficial ownership of the assets is of the assessee and his family members. Specific details such as date of birth, residential address, nationality, domicile, nature of business activity of the assessee in India, copy of the passport of some of the family members etc. were available with the bank authorities. It is also seen from the information in possession of the department that origin of deposits the said trust in the LGT bank has been indicated to be 'Income from business activities as securities dealer in India. The other necessary details such as date of creation etc. with regard to the trust and its beneficiaries are also provided in the information received by the department. The summary of account as on 31.12.2001 also shows that the Interest income has accrued on the deposits made in the said bank account. All these information was duly provided to the assessee dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son creating trust in a far off place like Vaduz. It is the trust created for the sole benefit of the assessee and his family members. The knowledge of the trust and its other related details sought by the assessee are information which are in the exclusive knowledge of the assessee and the assessee has no option to remain selective, elusive, evasive or restrained in disclosure. It has been held in the above cited judgment of Hersh Win Chadha that "The assessee has to give proper explanation and disclose facts which are in his exclusive knowledge. The assessee has no option to remain selective, elusive, evasive or restrained in disclosure. Further, it has been held that "It h the duty of the revenue authorities to be mindfui of clues and coincidences and bring them to the logical conclusion, otherwise clandestine tax evasion through shady economic deals will go undetected, as appears to be the order of day. India is neither a tax heaven nor a banana republic." 4.2.4 Hence, in view of the above discussion, it is held that all the contention of the assessee that existence of the trust cannot be believed is not acceptable unless the assessee brings on record any such evidence to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails being provided by the assessee of such benefits, the following method of calculation of interest is adopted as reasonable method. Therefore, an average rate of interest (0)3.8225% on US $ (U.S. Department of the Treasury interest rates as on 31.03.2005 on deposits for 1 year: 3.35%, 2 years: 3.8%, 3 years: 3.96% and for 5 years: 4.18%), the interest accrued during the F.Y. 2004-05 on the deposited amount of 1)5524,06,604.9 is worked out to US $92,004.50. Considering the conversion rate of US $ to INR as on 31.03.2005 at Rs. 43-74/-, the total accrued interest / benefit derived out of deposit / asset in LOT Bank in the name of Ambrunova Trust, Vaduz, Liechtenstein is worked out in INR at Rs. 40,24,277/-. The assessee's share @ 20% amounts to Rs. 8,04,855/- (Rs.40,24,277/- * 20%) which is taxed as his concealed income for the assessment year under consideration. 8. Against the above order, the assessee appealed before the ld. CIT(A) challenging both the reopening as well as merits of the addition. The ld. CIT(A) confirmed the reopening, while confirming the reopening the ld. CIT(A) held as under: 5.2.1 On consideration of the facts of the present case, it is e. cent that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts have repeatedly clarified that it is the existence of reasons and not the sufficiency of reasons that is to be examined at the stage of initiation,; It is also clear that the appellant, in the return originally filed for the year, under consideration did not reflect the interest income accrued on the balance in the said account. So this was not a case where the AO did not have information or where there was no failure of the appellant to disclose the material facts. In the decision rendered by the Bombay High Court in the case of Bright Start Syntex P. Ltd. vs ITO (71 taxmann.com 64), the Hon'ble Court has elaborated as follows: "6. It is settled position in law that while considering a challenge to a reopening notice on the ground that it is without jurisdiction, the Court has to keep in mind that a settled position in law is not being disturbed as evident from the orders passed earlier, without any justification. However, the Court will certainly interfere where the reason to believe that income has escaped assessment, is a clear case of change of opinion i.e. the same material was subject to consideration in regular assessment proceedings or where the reopening is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income to tax. As noted earlier, the interest income had not been offered to tax in the return originally filed u/s 139. In view of these facts it cannot be said that there was change of opinion in this case or that the A.O. had no material before him that indicated escapement of income. Thus, in the face of these facts, I find that I must differ from the decision of my Ld. Predecessor in the appellate order for A.Y.2004-05. Accordingly the reopening of assessment for A.Y.2005-06 is upheld and the Grounds 4, 5 and 6 raised by the appellant are dismissed. Further as regards Grounds 7 and 8, the facts enumerated above show that the AO in the order rejecting the objections to reopening, clearly mentioned that specific information with sufficient details was received, from credible sources, by the Department through government channels and that apart from denying knowledge or connection to the bank account in question, the appellant did not produce any documentary evidence to disprove the information available. Accordingly, in the backdrop of these facts Grounds 7 and 8 raised by the appellant are also dismissed. 9. On merits of the addition also the ld. CIT(A) affirmed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciary of any trust outside India. In any case, at the relevant point of time, Return Form did not require assessee to furnish assets held abroad. Hence, no failure to disclose any material facts. 3) Reopening of assessment is after 4 years from the end of the assessment year. No failure on part of appellant. Hence, reopening bad in law: a) ICICI Securities Ltd. v. ACIT (2016) 231 Taxman 460 (Bom) b) Alliance Space P. Ltd. v. ITO (2016) 375 ITR 473 (Bom) c) Tao Publishing (P.) Ltd. v. DCIT (2015) 370 135 (Bom) d) Business India v. DCIT (2015) 370 ITR 154 (Bom) 4) There was no tangible material with Department to reopen assessment. Hence, reopening of assessment is bad in law : a) Nivi Trading Ltd. v. UOI (2015) 375 ITR 308 (Bom) - Notice issued to verify certain details was bad in law. b) Hemant Traders v. ITO (2015) 375 ITR 167 (Bom) - Survey report and other material not indicating any income chargeable to tax - Notice not valid. c) Known Agro Foods P. Ltd. v. ACIT (2015) 375 ITR 460 (Del) - Notice issued on suspicion and surmises - not valid. 5) Appellant has specifically asked AO to furnish evidence, if any, which shows that appellant has earned income during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that for a receipt to be taxable, Department has to prove that it is income. Reliance in this regard was placed on the following decisions: a) Parimisetti Seethramamma v. CIT (1965) 57ITR 532 (SC) b) Dr. K. George Thomas v. CIT (1985) 156 ITR 412 (SC) 5) In present case, there is no income or receipt in the first place. How can appellant be taxed? 6) CIT(A) summarily dismissed submissions of appellant. 7) Aggrieved by said order, appellant is in appeal before your honour. Proposition and case laws :. 1) Appellant is not a beneficiary of Ambrunova Trust. Hence, no amount can be added to income of appellant. 2) Control and management of trust is in the hands of Trustees who are nonresident Indians and income of trust is also received outside India. Hence, as per section 5(2) read with section 6(4), income of the trust cannot be taxed in India. 3) As shares of beneficiaries are indeterminate, trust is discretionary and income can only be taxed in hands of trust - CWT v. Estate of Late HMM Vikramsinhji of Gondal (2014) 363 ITR 679 (SC). 4) Department has not brought any evidence that appellant had any income from trust. Addition made merely on the basis of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to determine the year of receipt of amounts and if relating to different years, has to spread over in different year - Fifth Avenue v. CIT319ITR132(SC) 16) Where income can be said not to have resulted at all, there is neither accrual nor receipt of income - CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC). 17) Hence, addition made by AO needs to be deleted. 12. At the outset, the ld. Departmental Representative pointed out that since the tribunal in assessee's own case on the same issue has confirmed the reopening as well as merits of the addition, these appeals by the assessee should be dismissed. The ld. Departmental Representative further submitted that the issue is now pending before the Hon'ble High Court. Till date, the Hon'ble High Court has not reversed the order of ITAT. The ld. Departmental Representative further submitted that the assessee has filed a miscellaneous application against the above order of the ITAT, which has been dismissed by the ITAT. It was further pointed out that against the dismissal of the miscellaneous application, the assessee has further filed an appeal before the Hon'ble High Court. 13. The ld. Counsel of the assessee pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied with a copy of reasons recorded for reopening of assessment including English translation of the documents. The assessee also denied of any knowledge of trust by further claiming that he/she has not received any money. The AO found that the address/nationality, country of domicile was the same as of the assessee as mentioned in India in the return. However, the assessee did not provide any document in support of his statement that he is not connected with this trust. The AO added Rs. 2,34,64,398 being 25% if his share out of Rs. 11,73,31,988/-(i.e. US $ 24,06,604.90/- converted at 48.75%). We note that the assessment was reopened by the AO on the information received from LGT Bank regarding Ambrunova Trust in which the name of the assessee was appearing as a beneficiary. Before the ld. AO, it was contended by the assessee that the documents so received by the Department regarding the Trust (LGT Bank) are unauthenticated and unverified and thus reopening is incorrect. We have perused the documents. A permanent sub-committee on investigation (committee on homeland security and government affairs) was constituted by the United States Senate of which Mr. Caral Levin was the Chai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Letter of wishes, Lincol Foundation and Foundation Chateau, October11, 2000 12. LGT Memorandum to File about Lincol and Chateau Foundations, dated February 7,2002. 13. Deed of Signature accepting appointment as Protector of the Chateau Foundation, signed by Kerry Michael Marsh, Shannon Neal Marsh, and James Aibright Marsh, Jr. and Deed of Appointment of Successors. 14. Resolution, The Foundation Board of Foundation CHATEAU, indicating the inventory of assets and liabilities at 31. December 2000 showing a total of USD 10'O15'623,50, dated September 12, 2001 15. Letter from James A. Marsh to LGT, dated November 10, 2004, granting LGT all administrational and management activities for Foundation Chateau. 16. Correspondence from Shannon Neal Marsh to Members of the Foundation Council of Chateau Foundation, dated November 4, 2004, re: appointment of members of the Foundation Council of Chateau Foundation. 17. Excerpt from 2006 Income Tax Returns, Estate of James A. Marsh. 18. Three letters from Baker & McKenzie LLP (Marsh Family attorney) to the Internal Revenue Service, dated May 12,2008, forwarding amended returns for foreign income and foreign bank and fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36. LGT Memorandum for the Record, dated January 23, 1997, regarding January 20, 1997 meeting in Los Angeles between LGT and Frank Lowy, David Lowy, and Peer Lowy regarding Westfield/Lowy Family. 37. LGT Memorandum for the Record, dated March 4, 1997, regarding March 3, 1997, phone call with Peter Widmer regarding March 12, 1997 meeting in London with F.L. and J. Gelbert, the definitive structure as well as the asset transfer is to be discussed. 38. Correspondence from J.H. Gelbard to WI, dated March 12, 1997, regarding formation of a Foundation by the name of Luperla Foundation. 39. WI Memorandum for the file, dated March 13, 1997, regarding March 12,1997, meeting in London between LGT and Frank Lowy and Josua Gelbard. 40. LGT Memorandum for the Record, dated March 16, 1997, regarding March 12, 1997 meeting in London with F.L. regarding Luperla Foundation, 41. Regulations, Luperla Foundation, Vaduz, dated April 30, 1997. 42. LGT Memorandum for the Record, dated May 2, 1997, regarding April 30, 1997, meeting in the Hotel Savoy, Zurich between LGT and Frank Lowy and J.H. Gelbard. 43. LGT Memorandum for the File, dated May14, 1997, regarding Luperla Foundation, V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion/Profile on Yue Shing Tong Foundation. 70. Documents related to Apex. 71. Communication between Chong and Chalet [Silvan Golanti at LGT], February - March 2008, regarding disclosure of LGT accounts. DOCUMENTS RELATING TO MISKIN ACCOUNTS: 72. Declarations of Michael Miskin, dated 2003. 73. Declarations and court pledings of Stephanie Miskin, dated 2003. 74. LGT Memorandum for the Record, dated, June 30,1 998~ regarding New Establishment Michel Misken. 75. Michael Misken Letter of Wishes with respect to the assets of Micronesia Foundation, dated July 28, 2000. 76. LGT report on Micronesia Foundation. 77. LGT/Michael Misken receipt for wire transfer of GBP 3,650,314.00, dated October 21,1998. 78. Fax from Thoams Lungkofler/LGT to Michael Misken, dated February 27,2002, regarding tax situation in the US-area. ADDITIONAL DOCUMENTS RELATING TO LGT: 79. Documents related to Sera Financial Corporation. 80. Documents related to Jaffra Development Inc. 81. Documents related to Sewell. 82. Excerpt from presentation related to LGT and the Qualified Intermediary (QI) Program. 83. Documents related to LRAB Foundation. DOCUMENTS RELATED TO UBS: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigations. 106. Letter from Baker & McKenzie LLP (Marsh Family attorney) to the Permanent Subcommittee on Investigations, dated July 15,2 008, with clarification. 107. Statement for the Record of the Australian Taxation Office. ADDITIONAL DOCUMENTS RELATED TO LOWY ACCOUNTS: 108. LGT report on Luperla Foundation. 109. LGT Background Information/Profile for Luperla Foundation, dated December 7, 2002. 110. LGT Statement of Account for Luperla Foundation, dated December 29, 2001. 111. LGT Memorandum for the Record, dated April 10, 2002, regarding retroactive dissolution of Luperla Foundation. 112. Letter to Peter Lowy from Leon C. Janks, dated December 13, 2001, enclosing four original documents related to Beverly Park Corporation. 113. a. Contract For The Purchase And Sale of Real Estate, sale by West Park Avenue Corporation to Beverly Park Corporation, March 1997. b. Beverly Park Corporation Guest Log, Beverly Hills House and New York Condo, July 1999-May 2000. 114. Hidden Money Trail, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations. Tax Haven Bank Secrecy Tricks * Code Names for Clients * Pay Phones, not Business Ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclose the data and b) the persons affected have no knowledge of the transmission." Prohibited Acts of a Foreign State -Art. 2 of the Liechtenstein State Security Law: "prohibited Acts for a Foreign State: Whoever, without being authorized, performs acts for a foreign state on Liechtenstein territory that are reserved to an authority or -an official, whoever aids and abets such acts, shall be punished by the Liechtenstein court (Landgericht) with imprisonment up to three years." Prohibited Acts for a Foreign State - Art. 271 of the Swiss Penal Code: "Whoever, without being authorized, performs acts for a foreign state on Swiss territory that are reserved to an authority or an official, whoever performs such acts for a foreign party or another foreign organization, whoever aids and abets such acts, shall be punished with Imprisonment up to three years or a fine, in serious cases with imprisonment of no less than one year." Economic Intelligence Service (Art. 273 SPC): 'Whoever seeks out a manufacturing or business secret in order to make it accessible to a foreign official agency, a foreign organization, a private enterprise, or their agents, whoever makes a manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to a private family foundation are not recorded on the Liechtenstein pubic registry. Th. foundation Is a separate legal entity and the board members have discretion to nominate beneficiaries, so that secrecy is maintained. The ATO-understands that In practice the foundation board members act on the wishes or instructions of the settlor or beneficial owners of the entity. In other cases the client has used a foreign attorney to give instructions to the foundation board members or has replaced the by-laws or regulations of the foundation to appoint new beneficiaries. LGT allegedly designs client structures so that the client or beneficial owner, is unable to be connected to the Liechtenstein entity, whether that entity te a foundation, trust or anstalt. The services provided by LGT - on the banking and secrecy laws operating hi Liechtenstein to prevent disclosure of the client's identity or information. LGT will also arrange to open and operate a bank account for the foundation or trust It has established for its client The bank accounts are typically held hi the name of the entity, to avoid any connection with the instructing chant, and to meet the bank's anti-money laun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian experience Is-that clients have adopted this recommendation and that few International fund transfers are remitted directly between Australian residents and Liechtenstein or Switzerland as detected by our FIU. Communication, between the ultimate beneficial owner of the foundation and LGT appears to be limited to either face to face or telephone contact LGT Instructs the ultimate beneficial owner of the foundation to avoid written correspondence with It and clients are provided with codes and passwords to maintain confidentiality and secrecy. Intelligence held by the ATO Indicates that at July 2006 there were 14 banks operating hi Liechtenstein with funds under control-of approximately 255 billion Swiss francs. Also operating in Liechtenstein was numerous Treuhand (Trust Service Companies). Further intelligence indicates that as at November 2006 approximately 127,000 entities were registered with the public company registry (the population of Liechtenstein Is approximately 35,000). The ATO has employed several compliance strategies - audits, Issuing Information production notices (both domestically and off-shore), conducting formal and informal interviews, accessing pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enstein jurisdiction qualifies as an offshore financial centre. Foreign investors have the opportunity to establish companies or trusts ill the Principality of Liechtenstein to enjoy the advantages of our offshore financial centre due to: A very modest tax regime with special advantages for private asset structures i.e. legal entities and trusts which do not pursue any economic activity; A company law which offers next to the ordinary kind of companies like I he company limited by shares ( Aktiengesellschaf/AG) those specifically designed to serve the needs coming along with holding of assets, namely the foundation (Stiftung) and the establishment (Anstalt); The institute of trusts shaped according to the English law trust; A high standard of secrecy laws. Key Figures - Foundation: 1719 AD - Government: constitutional hereditary monarchy - Economy (GNP): CHF 5.2 Billion (2009) - Currency: Swiss Franc (CHF) (Possible to invest in any currency) - Size: 160 sq meters (62 sq miles) - Population: 36' 150 (2010) - Member of UNO, EFTA, EEA and WTO The Principality of Liechtenstein is a politically, economically and socially very stable country for inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for commercial activities or for the administration of assets. - The trust reg. qualifying as private asset structure pays an annual tax of CHF 1 '200 only. - Distribution to the beneficiaries as well as profits earned are not subject to any further tax. - The supreme authority is vested in the settlor and is transferable. - The beneficial interests may be assigned to persons other than the settlor. - The administration is taken care by the board of trustees. - If commercial activities are pursued or the articles make provision for such activities an auditor must be appointed. In this case the annual accounts approved by the auditor must be submitted to the Liechtenstein tax administration. - In case of losses or liabilities only the assets of the trust reg. have to be used to cover them. - The minimum capital to constitute a trust reg. is CHF 30'000. Foundation The foundation may be constituted as: . one for private use, especially as family foundation; . charitable foundation. - The founder endows assets for a specific purpose and regulates the beneficial interest. - The foundation qualifying as private asset structure pays an annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on bank accounts, dividend payments from shares, earnings from participations in other companies, proceeds of sales or royalties qualify as income of the holding company which are in case of a private asset structure subject to an annual tax of CHF 1 '200 only. - The pursuit of business Profits stemming from business transactions of companies constituted after January 1, 2011, are subject to ordinary corporate tax with a tax rate of 12.5% on the taxable net income. Companies pursuing business transactions and having been constituted prior to January 1, 2011, are until December 31, 2013 subject to a specific annual capital tax of 0.1 % of the assets held only, at least CHF 1 '200 per year. It is not necessary that such an offshore company sets up an office in Liechtenstein or employs people. The management of such an offshore company can be provided on a contractual basis by the Liechtenstein trustee. - Regulation of succession/avoidance of inheritance tax Especially foundations are qualified for all purposes of estate planning as well as to avoid inheritance tax. The succession in the assets is regulated by the so-called by-laws. These are regulations set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reg. in the Principality of Liechtenstein to enjoy the advantages of our offshore financial centre. Contact Details Gerhard R. Holzhacker Dr.iur. M.B.L.-HSG Attorney at Law Law firm Holzhacker Josef Rheinberger Strasse 11 P.O.Box 656 FL-9490 Vaduz Principality of Liechtenstein 1m Duxer 4 P.O.Box 240 FL-9494 Schaan Principality of Liechtenstein Tel.: +423 239 66 33 Fax: +423 239 66 44 [email protected] www.holzhacker-lawfirm.com Tel.: +423 392 42 45 Fax: +423 3924246 host -trust [email protected] www.host-trust.com Black money: Liechtenstein joins India in stash funds fight Press Trust Of India: JakartalNew Delhi, Thu Nov 21 2013, 19:53 hrs. Liechtenstein, one of India's important partner nations in fighting overseas tax abuse and black money, on Thursday shed its secrecy cloak and joined the league of a host of other countries for automatic exchange of information and mutual assistance in tax matters. TThe country, a landlocked jurisdiction in Central Europe, became the 62nd signatory to a worldwide convention, accepted by almost all economic superpowers and formulated by the Paris-based Organisation for Economic Cooperation and Developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. The Assessing Officer vide letter dated 13/5/2009 provided the reasons for reopening of the assessment wherein it was specified that a tax-evasion petition (TEP) has been received from CBDT. As per the information contained in the said TEP the assessee is a beneficiary of Ambrunova Trust and Merlyn Management SA. In the return of income the assessee neither offered any income with reference to the trust nor disclosed any details to the effect that the appellant was a beneficiary of the said trust. The Assessing Officer, from the, summary of the trust account in LTG Bank, found credit balance of US $ 24,06,604 as on 31/12/2001 (Rs.11,60,99,390/- @ 48.242 per USD) interest accrued of USD 13500 (equivalent to Rs. 6,51,267/-) was credited to the said account. As the same was not reflected in the return of income thus, the Assessing Officer correctly presumed that income has escaped assessment. Even vide letter dated 23/9/2009 the Assessing Officer showed details (a) information of trust, (b) details of settler of the trust, (c) purpose of creating trust, (d) copy of trust deed, (e) asset and bank accounts held by the trust in India and abroad and (f) benefit received by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived as a part of the tax information exchange treaty and therefore, there could not have been any cross examination." 2.4.2 So far as the contention of the assessee that enough opportunity was not provided to the assessee is concerned we find no merit in this assertion as is evident from para-28 (pg-14) of the order of the ld. CIT(A) (ITA No.3546/M/11) wherein un-controverted finding is that the assessee chose not to use the same when it was provided . Therefore, from this angle also the assessee is having no case. The totality of the facts clearly indicates that the Assessing Officer rightly assumed jurisdiction to reopen the assessment. Thus, this ground of the assessee in the respective appeal is dismissed. 3. The next ground pertains to confirming the addition of Rs. 2,34,64,398/- on account of alleged undisclosed income. The crux of argument advanced on behalf of the assessee is that the addition was made by the AO without appreciating the fact that the alleged trust was discretionary trust and neither the amount was accrued/credited nor the name of the assessee appeared as beneficiary of Ambrunova Trust. On the other hand, the ld. Special Counsel brought to our notice c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lisation can be subversive of the justice of the law. To invalidate the Board's order because the Regional Inspector did not suspend the certificate is fallacy. The Board's power is independent and is ignited by 905 the report, which exists in this case, of the Regional Inspector. There is an overall duty of oversight vested in the board to enforce observance of rules of safety. [909 D] (4)To set aside the order on the ground that the Regional Inspector had no power to recommend but only to suspend and report that his recommendation influenced the Board's order is to enthrone a processual nicety do dethrone plain justice. Suspension, on an enquiry, predicates a prior prima-facie finding of guilt and to make that known to the Board implicitly conveys a recommendation. The difference between suspension plus report and recommendatory report is little more than between Tweedledum and Tweedledee Recommendations are not binding but are merely raw materials for consideration. Where there is no surrender of judgment by the Board to the recommending Regional Inspector, there is no contravention of the cannons of natural justice. (5) Natural justice is no unruly horse, no lurking lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for evolving a code of strict liability calling to utmost care not only the crowd of workers and others but the few shall care or quit so that subterranean occupations necessary for the nation are made as riskproof as technology and human vigilance permit). 3.2 So far as the contention of the ld. Counsel for the assessee that such documents were not provided to the assessee is also incorrect as we have discussed in earlier paras of this order that not only the documents rather the English translated copy of such documents was also provided. Therefore, this assertion of the assessee is also without any basis. Another assertion made by the assessee was that the information was unvouched and not corroborated with any evidence. We note that the said documents were received officially by the Government pursuant to an investigation made by permanent sub-committee on investigation of United States Senate. The copy of exhibit list regarding tax haven banks has already been reproduced by us in earlier part of this order. As we have reproduced in earlier part of this order (host trust reg.), the distribution to the beneficiaries as well as profits earned are not subject to any further t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been disclosed in the return of income, the reopening of the case is duly justified. The ld. CIT(A) has very elaborately dealt with the issue. His order is well reasoned and the case laws referred by him are quite germane here. Hence, I uphold the same. Further in this regard, I may refer to the decision of Hon'ble Apex Court in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500 as under:- "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to lax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation from the said bank can be obtained by the assessing officer. The assessee is clearly trying to get benefit under this provision and denying the existence of the said bank account. This as per the facts discussed hereinabove is a self serving statement not at all sustainable. In the background of the above discussion, the onus now is clearly on the assessee to prove that the assessee has no beneficial interest in the said bank account or that the said bank account is a fictitious story, which the assessee has failed to discharge. Hence, the impugned addition in the hands of the assessee are justified and I uphold the same. 19. As regards reference of the learned counsel of the assessee for the tax treatment of the discretionary trust is concerned, it is noted that the said trust is in Liechestein. The tax laws of government of India do not apply. Hence, reference to cases which are in the Indian context are not at all applicable. Some of the salient features of trust in liechestein are already mentioned in the above said tribunal order. Hence, reference by the ld. Counsel of the assessee to apply Indian case laws to that governed by law of Liechestein is bereft of cogency. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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