9911796707
TMI Blog2018 (11) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and Rs. 2,74,007/- in AY 2007-08 u/s. 69A of Income tax Act each on account of deposit in HSBC Bank, Geneva. 3. At the time of hearing the assessee did not press for the ground on reopening of assessment u/s 147 of the Act. Thus this ground is dismissed as not pressed. 4. With regard to second issue challenging the order of ld. CIT(A) confirming the addition to the tune of Rs. 3,06,54,922/- and Rs. 2,74,007/- in AY 2006-07 and 2007-08 u/s. 69A of the Act in both the cases of these appellants, the brief facts are that both assessees have filed their respective income tax returns for both the assessment years i.e. 2006-07 and 2007-08 which were processed under section 143(1) of the Act. Subsequently notices u/s 148 was issued for reopening the assessment stating that income had escaped assessments. The assessees in response to the said notice filed letters requesting to treat the returns filed originally treated as returns filed in response to notices u/s. 148 of the Act. The case of both the assessees were re-opened when information was received by Govt. of India from French Government under DTAA in exercise of its sovereign powers that some Indian nationals and residents have F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to opening or operating of the said bank account. In addition the assessees submitted a clarificatory letter from HSBC Bank, Geneva stating that both the assessees have neither visited nor opened or operated the said bank account and that no payments have been received or made in relation to the said account. However not convinced with the submissions of the assessee, the Assessing Officer after initiating the proceedings u/s. 147 of the Act and added peak balance i.e. in the hands of both the appellants at Rs. 6,13,09,845/- and Rs. 5,99,75,370/- for assessment year 2006-07 and 2007-08 respectively by framing assessments u/s 143(3) r.w.s. 147 of the Act. Thus the same additions were made in the hands of two assessees. It is also pertinent to note that same additions were also made in the hands of Shri Dipendu Bapalal Shah who created the private discretionary Trust known as Balsun Trust. So the same additions were made in the hands of three assessee. 5. In the appellate proceedings the ld. Commissioner of Income tax(Appeals) [CIT(A)] affirmed the addition to the tune of half of the peak balance in the hands of both the assessees/appellants to avoid double taxation and now the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the CIT(A) is factually incorrect and against the settled position of law in as much as in sustaining part of the peak balance in the account of Balsun Trust, an overseas Discretionary Trust, with HSBC, Geneva, which was created by Shri Dipendu Bapalal Shah, who is an NRI since 1979, and a non-resident under section 6 of the Income tax Act, 1961. The learned counsel argued that Shri Deepak B Shah and Shri Kunal N Shah are Indian residents and have been named as discretionary beneficiaries of the said Trust. This fact has been corroborated by sworn in affidavit dated 13.10.2011 before the UAE authority of Shri Dipendu Bapalal Shah, asserting that (i) he had settled an offshore discretionary trust with his initial contribution; (ii) none of the discretionary beneficiaries have contributed any funds to the trust and (iii) none of the beneficiaries have received any distribution from the trust. The learned counsel further submitted that peak balances in two years in the HSBC account of Balsun Trust, created by Shri Dipendu Bapalal Shah of Rs. 6,13,09,8745/- and Rs. 5,99,75,370/- were added in the assessment years 2006-07 and 2007-08 of the said NRI but were deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is nothing of the sort. The learned AR further relied on the following decisions in defence of his arguments : CIT vs. K Chinnathamban [2007] 162 Taxman 459 (SC) Durga Kamal Rice Mills v. CIT [2003] 130 Taxman 553 (Cal) CIT vs. KTMS Mohamood [1997] 92 Taxman 169 (Madras) It is undisputed that the money lying in the foreign bank account with HSBC, Geneva, belongs to Shri Dipendu Bapalal Shah, who has agreed that the appellants are discretionary beneficiaries and it was he who created the Trust with his initial contribution. He also confirmed that the two beneficiaries viz. the appellants before us, have not contributed anything to the said trust nor did they receive any money by way of distribution during the year. The said undisputed fact that Shri Dipendu Bapalal Shah is owner of money lying in the HSBC Account, Geneva, leads to the positive inference that the appellants are not owners of the bank account and, therefore, addition made u/s. 69A is not sustainable. The learned counsel submitted that even the ITAT vide order dated 19.06.2018 held that the money lying in the HSBC account, Geneva, is outside the purview of the I.T Act, and, therefore, the said money held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that it is well settled proposition of law that the onus to prove the taxability of particular income is heavily on the department. The ld Counsel contended that the Revenue ought to have discharged its burden of proof to prove the ownership qua the appellants and could not have shifted the onus of proof on the assessees under the I T Act. He further stated where the legislature specifically intended to shift the burden of proof under the IT Act to the assessee, specific provisions u/s 278D, 278E and 292C of the Act have been enacted. In view of the said provisions, the learned counsel submitted that shifting of the onus of proof under the IT Act is only envisaged only in respect of specific provisions and cannot be pressed into play in any other situation. In the present case, the Revenue is placing an impossible burden on the appellants to prove a negative that the account has not been opened by the appellants and that they have not received any distribution from the said account, which is contrary to various precedents which have clearly held that no such burden of proof can be placed on an assessee under a taxing statute. The assessee relied heavily on two decisions viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed that the said transactions are proved beyond doubt that these two assesses have connection with the said bank account. Further, both the assessee's did not cooperate at any stage of the proceedings. He further submitted that the first appellate authority has very clearly held that in such clandestine operations and transactions, it is impossible to have direct evidences or demonstrative proofs of every move of the assessee. The income tax liability is to be assessed on the basis of parameters, which are gathered from the inquiries during the course of assessment. Therefore, he confirmed that the AO has no choice but to take recourse on the material available on record. Finally, the ld DR prayed before the bench that the order of CIT(A) should be upheld. 12. We have heard rival submissions and carefully considered the relevant records as placed before us including various decisions cited by the Ld. AR during the course of hearing. The undisputed facts are that the after receiving "Base Note" in 2011 as apart of "Swiss leaks", the investigation wing of the Income-tax Department conducted a survey u/s 133A of the IT Act the premises of Kanubhai B. Shah & Co. on 30/09/2011. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The peaks during two years in the said account with HSBC, Geneva were added in the hands of all three persons the Mr. Dipendu Bapalal Shah and two appellants presently before us in AY 2006-07 and 2007-08. In the case of Mr. Dipendu Bapalal Shah, the Ld. CIT(A) vide order dated 28/03/2016 deleted the addition by holding that Mr. Dipendu Bapalal Shah is an NRI, and none of his monies outside India could be brought to tax in India unless they would shown to have arisen or accrued in India. The said order of the Ld. CIT(A) was also upheld by the coordinate bench of the Tribunal vide order dated 19/06/2018 by holding that contents of the affidavit dated 13/10/2011 of the Mr. Dipendu Bapalal Shah were not declined or held to be not true by the AO. The relevant operative extracts are as under:- 14. Under section 5(2) the income accruing or arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. We also found that the assessee in his affidavit dated 13 October 2011 has clearly stated that the he was a settlor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sine qua non for invoking section 69A of the IT Act., the assessee must be found to be the owner of money, bullion, jewellery or other valuable articles and whereas in the present case the money is owned and held by Mr. Dipendu Bapalal Shah a foreign resident in an account HSBC, Geneva and also admitted that he is the owner of the money in the HSBC Account Geneva. 15. In the case of CIT Vs K. Chinnathamban (supra) the Hon'ble Apex Court has held that when a deposit stands in the name of third person and that person is related to the assessee in a such case the proper course would be to call upon the person in whose books the deposit appears or the person in whose name the deposit stands to explain such deposit. In the present case the money is held in the name of Mr. Dipendu Bapalal Shah who vehemently claimed to be owner of the said deposits from his own fund /sources and the revenue has failed to bring any cogent and convincing materials on record which proved that the two appellants are owners of the money in HSBC Account. 16. In the case of Durga Kamal Rice Mills vs. CIT (supra) it was observed by the Hon'ble Kolkata High Court that ownership is one of the considerations whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x payable thereof, provided that is permissible under any other provisions of the Act. Even so, since the word used in section 166 is 'receivable' it cannot apply to a discretionary trust for it cannot be said that the income thereon is 'receivable' for one or more beneficiaries, it being left to the discretion of the trustees whether or not the income should be distributed to one or more of the beneficiaries or not at all. But that is not to say that the beneficiary of a discretionary trust, because he does not fall within the ambit of section 166, may not be assessed upon income received by him and tax recovered from him thereon if that is permissible under any other provisions of the Act. Section 5 defines the total income of any person to include income received by him or received on his behalf or which accrues or arises to him. A person may be directly assessed in respect of such income. The income of a discretionary trust which is within the accounting year distributed to and received by the beneficiary would, therefore, be subject to assessment in his hands and tax thereon would be recoverable from him. Such income would squarely fall within the broad sweep of total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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