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TMI Blog2021 (10) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional stage also succeeds on this count too. BM Act provides u/s. 4(2) an exclusion for the assets which have been created out of the income assessed in India - As the settlement commission had rejected the assessee s plea and these matters proceedings are already separately going on.Hence by no stretch of imagination can lead to a conclusion that incomes are not been assessed as the Revenue has not dropped its plea/withdrawn its plea, that these incomes are not exigible to income tax. Once it is so held, these assets cannot again be the subject matter of black money proceedings at this stage, as it will amount to double prejudice to the assessee which is not sustainable in law. Various materials which have been referred by learned CIT(A) in his order rejecting the jurisdictional challenge have not been confronted to the assessee at the time of learned CIT(A) s order dismissing the jurisdictional challenge. We note that this is a very germane point as the principle of natural justice in this regard have been ignored by learned CIT(A). It is evident that the catena of documents which learned CIT(A) has referred are in fact lifted by him from the final order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets created out of income assessed in income tax already shall be excluded. Hence, when the revenue has already assessed these assets under income tax proceedings upto previous Assessment Year and for current assessment year time for filing the return has not expired, assessee s plea that the issue of notice is premature is tenable and accordingly we accept the same. The bar in the ACT is inbuilt inasmuch as it has been provided that assets out of income assessed to income tax shall be excluded from the purview of undisclosed asset in Black Money Act. Hence, it is abundantly clear that as per the scheme of the act, there cannot be a simultaneously proceedings on the same asset/income under Income Tax Act, 1961 as well as Black Money Act. The doctorine of double prejudice does come into play here. Above discussion amply prove that the assessee s challenge before the ld CITA to denial of liability in the jurisdiction of the Assessing Officer to issue notice under black money act deserves to succeed. - SA No. 61/Mum/2021 And BMA No.01/Mum/2021 (Assessment Year 2016-17) - - - Dated:- 3-9-2021 - Justice Shri P.P. Bhatt (President) And Shri Shamim Yahya (AM) Assessee by: Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Tribunal exercises judicial functions, and it is well settled that it has all the powers of a Court. Hence, any proceeding before the Tribunal shall be deemed to be judicial proceedings. Thus, the facts as mentioned above, as accepted in the wealth tax proceedings, ought to be considered in the given case. Refusal to follow the binding order of the Tribunal in the wealth tax proceedings, would lead to serious prejudice to the Appellant and judicial impropriety. The law of judicial discipline ought to be followed in all circumstances. The Hon'ble Tribunal has in the Wealth tax proceedings referred above, already extensively deliberated upon and decided the core issues which have a direct bearing on the BMA proceedings. Thus, the impugned order is at best capable of being classified as a case of mere change of opinion; hence, the assessment is bad in law. Reliance is also placed on the legal principle of rule of consistency' and Article 141 of the Constitution of India. 2. That the order dated 17 January 2019 passed by the AO under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ( BMA ), which has me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above chart of beneficiaries, it is clear that the assessee is not the only beneficiary, it consists of other beneficiaries, who are direct lineal descendants of LMte Shri Pratap Malpani, Late Ashokvardhan Birla and spouses of their respective descendants. In any case, it could be seen that a charitable organisation is also one of the beneficiary together with assessee and aforesaid individuals. Hence, even if aforesaid individuals other than assessee do not survive, still assessee alone is not the sole beneficiary. It is the duty of the existing trustee to distribute the income and benefits among all the beneficiaries including charitable institution.. 39. Even though, in the KYC compliance, the assessee is mentioned as the beneficiary, it does not alter the fact that assessee is one of the beneficiary, and it is fact on record that assessee is not the only beneficiary. Therefore, we have to consider the actual legal ownership rather than deemed ownership which is without any evidence on record, to show that assessee has the legal ownership on bank account and other assets held by Trust. (as set forth in paragraphs 24 and 39 of the Tribunal order). That, in any event, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation made in the Appellant's return of income filed for assessment year 2015-16, wherein the Appellant's cessation as beneficiary of the Malpani Trust has been disclosed, which was bound to be construed with the duly apostilled Source of Wealth document executed by the current trustees of the Malpani Trust, which unequivocally confirms cessation of the Appellant as beneficiary of the Malpani Trust (since migrated to The Banyan Trust), which migration of trust has been affirmed by this Hon'ble Tribunal in paragraph 29 of its order dated 24 December 2020, in recording that The trust still will continue with the new trustees. The properties attached to the trust will continue to be the properties of the trust. It is wrong to presume that the properties governed by the trustee will be considered as the properties of the individual beneficiary who exercises the appointment of trustees. In the given case, no doubt the assessee is vested with the power to appoint or remove the trustees, does not change the status of the trust and its independent functioning 10. That, the Lower Authorities have erred in ignoring the fact that Schedule FA has undergone changes between 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the Appellant's own wealth tax proceedings that we notice that there was no obligation on the part of assesses to declare the wealth/assets in the ROI up to AY 2012- 13. The declaration of details of foreign bank account and trust were mandated only from AY 2013-14 . Further, the Appellant had duly disclosed in 'Schedule FA of the returns of income' filed on 13 January 2016 for AY 2014-15 and on 26 August 2016 for AY 2015-16, interest as beneficiary in the Banyan Trust with corollary offshore companies/trusts/entities there under. That the Lower Authorities has erred in ignoring the very crucial aspect that the Schedule FA has undergone changes between 2012 to 2016 with limitations of the 125 characters that can be written while uploading the details in Schedule FA of the ITR This limitation has been construed by the Lower Authorities as non-disclosure of the foreign assets. 15. That the Lower Authorities erred in applying the provisions of the BMA to the Appellant overlooking that Writ Petition No.862 of 2018 is pending adjudication in the Hon'ble Bombay High Court, which has a direct bearing on assessment qua the right of a beneficiary of an offshor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der BMA on the basis of such facts be considered bad in law, and accordingly the order of CIT(A) alongwith consequential implications of the application of such jurisdiction and its related assessments be quashed thereto. 3. Brief facts of the case are that the assessee-Shri Yashovardhan Birla is an Indian national and tax-resident of India. He was served a notice under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (in short BMIT Act ) dated 22.11.2017. The said notices read as under :- 4. The assessee made a jurisdictional challenge against the said notice issued by the Assessing Officer under section 10(1) of BMIT Act. The Assessing Officer vide order dated 17.01.2019 rejected the said objection. The order rejecting the jurisdictional challenge read as under :- Shri Yashovardhan Birla 1st Floor, Dalamal House, Nariman Point Mumbai-400 021 Sir, Sub: Assessment proceedings u/s 10(1) of the Black Money Act, 2015-rejection of jurisdictional challenge-Regarding. Ref: Your letters dated. 5.12.2017 18.12.2017 ***** Please refer to the above. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to institute proceedings under BMA, 2015, as he has a right to settle the matter with the ITSC and if such settlement is done, there is no scope for pursuit of proceedings under BMA, 2015. It is also averred that issue of notice u/s 10(1) of BMA, pending the settlement process would aggravate the disputes and tantamount to abuse of process. It is to be noted that the cause of action and basis on which notice issued u/s 10 (1) of the BMA is different from the issue before the Hon'ble ITSC. The claims of the assessee are unfounded and emanating from the ignorance of scope of undisclosed foreign asset and income under BMA, 2015, 4.3. In this context, the attention of the assessee is invited to the subsection 3 of section 4 (charging section under BMA, 2015) and clause (ii) to the section 5 (Computation of income under BMA, 2015). Section 4 (3) states that The income included in the total undisclosed foreign income and asset under this Act shall not form pan. of the total income under the Income-tax Act. It means that the undisclosed foreign income and asset which assessed under BMA, 2018 would not become income under Income-Tax Act, 1961, but not vice-a-versa. 4.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed foreign asset and income has been made under IT Act. Thus, in the assessee's case, notice u/s 10(1) of BMA has rightly been issued and undisclosed foreign income and asset has to be assessed under the BMA, 2015. It is to be noted that no facility of settling income with the ITSC is available under the BMA, 2015. 5. The assessee in his letter dated.18 December, 2017, has claimed that he neither holds beneficial ownership nor a beneficiary of foreign asset or income. It is interesting to note that, on one-hand, he is claiming that he is settling the undisclosed foreign income with ITSC and on the other hand claiming that he is not even beneficial owner. This is self-contradictory and self-serving. Even otherwise, if the facts are such that, according to him, he has not a beneficial owner of any undisclosed foreign asset and income, he has an opportunity to prove his case before the Addl. C1T, Central Range-4, being the AO under BMA, 2015. 6. The assessee is of the opinion that he has acquired the beneficial ownership by way of inheritance and therefore not liable to be taxed under BMA, 2015. No such exemption has been granted under the BMA, 2015. 7. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eks from today. The assessment proceedings to go on. The result therein would be subject to decision of Respondent No.2. 6. With the aforesaid observations, writ petition is disposed of. (ABHAY AHUJA, J) (SUNIL P. DESHMUKH, J) 6. In the meanwhile the Assessing Officer has passed an order under BM Act making assessment vide order dated 31.3.2021. Thereafter learned CIT(A) passed an order dated 26.4.2021 disposing of assessee s appeal regarding jurisdictional challenge to issue of notice under section 10(1) of BMIT Act. In the said order learned CIT(A) noticed the following grounds raised by the assessee :- 1. That, in the facts and circumstances of the case, and in law, the order dated 17 January 2019 (Impugned Order), passed by the Additional Commissioner of Income Tax, Central Range 4, Mumbai (Adjudicating Authority), under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA), is bad in law. 2. That, in the facts and circumstances of the case, and in law, the Impugned Order of the Adjudicating Authority is based on misappreciation of facts, incorrect findings, myriad conjectures, surmises, overlooks re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /or assets during the relevant assessment year, overlooking the Appellant's denial in this regard, and relying upon pending proceedings concerning Chapter XIX-A, which was neither contradictory nor self-serving. 8. That, in the facts and circumstances of the case, and in law, the Adjudicating Authority erred in concluding that notice under section 10(1) of BMA was properly issued to the Appellant in view of practically no assessment in relation to foreign income and/or assets under the Incometax Act, 1961, overlooking that the outcome of Chapter XIX-A proceedings will determine the scope for assessment of the Appellant in relation to beneficial interest held in foreign income and/or assets under the discretionary trust structure wherein the Appellant ceased to have interest with effect from 15 July 2014. 9. That, in the facts and circumstances of the case, and in law, the Adjudicating Authority erred in concluding that the Appellant is of the opinion that he has acquired beneficial ownership by way of inheritance which is not exempt under BMA, whereas it is the case of the Appellant that the source of the corpus of the foreign discretionary trust structure was not the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of assessee's liability, beyond the scope of section 15(l)(b) of the Act and are dismissed. 9. Thereafter learned CIT(A) held that ground Nos. 4 to 9 are on the issue of the liability of the assessee to be assessed under the BMIT Act, 2015. That these grounds of appeals are clubbed together and are taken up for adjudication together. Thereafter, he reproduced the assessee s submission in this regard. In the said submission of the assessee reproduced by learned CIT(A), it was inter alia noted that the Income Tax Appellate Tribunal in Wealth Tax Act, 1957 have conclusively adjudicated that the assessee have held limited interest in the offshore discretionary trusts, as only one of several beneficiaries of such trust structures with no distribution by the trustees ever made to the assessee, no scope lay for any declaration to have been made by the assessee within the ambit of Chapter VI of the BM Act. Assessee s quotation from the Wealth Tax order dated 24.12.2020 was reproduced as under :- 29. In our considered view, a private discretionary trust is created and few trustees were appointed to look after the trusts property. There is an enabling Clause for continui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fshore assets and/or income exist, viz. (a) undisclosed income of the Appellant chargeable to tax, or (b) partly out of disclosed income, or (c) exempt income. The foreign assets and/ or income constitute the corpus and/or income of an irrevocable discretionary offshore trust structure admittedly established in 1989 by the non-resident maternal uncle of the Appellant Late Shri Pratap Malpani, whereof the Appellant is neither settlor nor trustee, and has no absolute right, tide or interest either in the corpus or income of the Trust, but at best merely a hope that the trustee will exercise a discretion in favor of the Appellant, which too came to an end on 14 July 2014, when the Appellant ceased to be a beneficiary of the Trust, and as such and otherwise there is no foreign asset or income of the Appellant from unexplained sources amenable to BMA. The Appellant respectfully seeks a right of personal hearing. The above reply is filed in pursuance of a limited opportunity for presentation of its written submissions, within barely seventy-two hours from the time of the notice, and all rights are reserved, accordingly. 11. Learned CIT(A) thereafter noted alongwith submission date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no investments, which were made by the assessee or the investments were moved from India. Copy of Wealth Tax order for AY 2008-09 to AY 2013-14 is enclosed in Annexure 3. d) Assets and/or income which the AO purports to bring to tax under BMA already form part of income tax proceedings. The entities referred in the Notice u/s. 10(1) of the BMA is already a part of the erstwhile Income Tax Assessment Orders which was quashed by the Hon'ble Bombay High Courts. The said income tax orders were passed by the AO and hence the AO had complete knowledge of the foreign assets being purportedly assessed under the provisions of Income Tax. Copy of the Income Tax Assessment Order u/s 153A r.w.s. 143(3) for AY 2013-14 is enclosed in Annexure 4. e) Further, an apostilled certificate from M/s. Confiance Limited being the Trustee of the Banyan Trust was submitted to the Income Tax Authorities during the Income Tax Assessment Proceedings which states that the entities referred in the notice u/s 10(1) of the BMA are forming part of the trust structure where the Appellant being one of the beneficiaries. A Copy of Certificate dated 15.03.2016 is enclosed in Annexure 5. f) Appellant was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this connection, it is to be noted that Hon'ble Bombay High Court in the order in Writ Petition No.921 of 2021 dated 30.3.2021 had ordered learned CIT(A) to pass an order on the jurisdictional challenge to the notice and it has directed that the assessment proceedings was to go on. But the fact here is that assessment proceedings were duly completed before disposal of the appeal of Jurisdictional challenge by learned CIT(A) and learned CIT(A) has referred to the assessment orders which were directed by Hon'ble High Court to be carried on. Now learned CIT(A) held that information before the Assessing Officer at the time of issue of notice under section 10(1) of the Act has been elaborately reproduced by the Assessing Officer in his order dated 31.3.2021 and the same is summarised as below. 15. Thereafter learned CIT(A) quoted from the assessment order. 8. The information before the AO at the time of issue of notice u/s 10(1) of the BMIT Act has been elaborated by the assessing officer in his order dated 31.3.2021 and is summarized as below: 8.1 The AO has noted existence of a hank account with MSEC Geneva wherein the appellant was linked with another entity NEBDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Confiance Limited as Trustee of The Banyan Trust Barclays Bank PLC Singapore 91403600 Kinetic Holdings Ltd. TABLE -3 LIST OF BANK ACCOUNTS IN SWITZERLAND BANK BRANCH A/CNO NAME OF ACCOUNT CREDIT SUISSEAG SWITZERLAND 1367551 KINETIC HOLDINGS LIMITED CREDIT SUISSEAG SWITZERLAND 1494489 ANDRID LLC CREDIT SUISSEAG SWITZERLAND 722484 ALEA MANAGEMENT HSBC BANK/CREDIT SUISSE BANK SWITZERLAND 1541518 5 ALEA MANAGEMENT HSBC BANK/CREDIT SUISSE BANK SWITZERLAND 1689383 8 ALEA MANAGEMENT HSBC BANK/CREDIT SUISSE BANK SWITZERLAND 1403021 2 ALEA MANAGEMENT M5BC BANK/CREDIT SUISSE BANK SWIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd back end entities to mask the ownership of the front end entities. The front end companies listed by the AO are: S.N NAME OF THE OFFSHORE FRONT ENTITIES (i) Kinetic Holdings Limited (ii) Alea Management Ltd (iii) Herritor Investments limited (iv) Mokopane Limited (v) Sorwood Corporation SA (vi) Anrid LLC (vii) Magenta Property Investments Ltd (viii) Manwell Investment Properties Ltd (ix) Manwell Investments Ltd (x) The Banyan Trust (Panama) (xi) The Banyan Trust (Guernsey) (xii) Confiance Ltd as Trustee of The Banyan Trust (xiii) Nebola Trust (xiv) The Bird International Foundation (xv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td (xxiii) ETC Management Services Ltd (xxiv) Island Nominees Ltd (xxv) Continental Nominees Ltd (xxvi) Argonaut: (Guernsey) Ltd (xxvii) Pennymore Investment Corporation Int 8.4 The AO identified various private foundations and trusts under which offshore properties were being managed. Critical aspects of such Trusts have been elaborated by the AO as below: 1. THE BIRD INTERNATIONAL FOUNDATION, PANAMA It is formed as a Foundation of Private Interest under Law 25 of 1995 of Republic of Panama in which the assessee Shri Yashovardhan Birla is declared as the Beneficiary. Founder of The Bird International Foundation is named as Alcogal Corporate Services SA, represented by its directors Andres Maximino Sanchez and Nyrna De Navarreo. As per the First Schedule to the Regulations of the Foundation adopted on 15.10.2010, the Initial Foundation Fund (Patrimony) is declared as USD 10,000. The Second Schedule identifies the Beneficiaries as the son of Mr. and Mrs. Ashok V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la Trust Reg. is shown as the shareholder of one of the front companies, Kinetic Holdings Limited as on 01.01.2001 onwards and up to 21.11.2011 as per the Annual Returns filed with the Companies Registry of Jersey Financial Services Cornmission. The entire issued share capital comprising of 100 shares of USD 1 each of Kinetic Holdings Limited are held m the name of Nebola Trust during this period. As per the financial reports of Kinetic Holdings for the period ended 17.01.2012, sum of USD 9,306,269.54 has been shown as Loan brought forward as on 31.12.2010 from Nebola Trust. This loan is reported as unsecured, interest free and has unspecified repayment date. The entire loan of USD 9,106,169.54 given to Kinetic Holdings Limited by Nebola Trust has been assigned to The Bird International Foundation during 2011 and is then waived by the Bird international Foundation. ft is evident that before dosing the Nebola Trust on 20.03 2012, at least part of the funds held by it was transferred to Kinetic Moldings Limited through The Bird International Foundation as seen from the above entries. The liquidation fees for Nebola Trust Reg. have been paid from the account of another front com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yan Trust (Guernsey), These details are reaffirmed in the letter of Confiance Limited dated 24.02.2012 addressed to Credit Suisse Bank, Singapore, wherein The Bird International Foundation, Panama is reported as the Settlor of The Banyan Trust (Guernsey]. Confiance Limited is reported as the trustee and Consec Ltd, the secretary. David Bell and Andrew Hart are named as the Protectors of the Trust. Since The Bird International Foundation itself was formed 3.7.09.2010 only, the date of creation Of The Banyan Trust (Guernsy) could be sometime after that date only. After the creation of The Bird International Foundation, the Trust in Panama (though not identified but referred to as The Banyan Trust, (Panama) and The Banyan Trust (Guernsey) under its fold, the other front companies, namely, Alea Management Limited, Mokopane Limited, Manweel Investment Properties Limited, Kinetic Holdings Limited, Herritor Investments Ltd and Magenta Property investment Limited UAE were brought under the holding of the Foundation, This is confirmed by the declaration of beneficial holding available on the documents of account no.12504-2 duly attested by Ms.Shilpa Chowdhary, RM of the Bank. 6. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the demise of 3hrt. Pratap Malpani only. The actual descendants of Shri Malparo have alleged that they were made to sign some share transfer documents. As on 01.01.2000, entire shares comprising of 100 shares of USD 1 each were shown in the name of Nebola Trust Reg., Liechtenstein for the first time and continued to be in the Trust's name till 21.01.2011. The service providers were Credit Suisse Trust during this period. From the declarations filed to the banks during this period by Blue Sea Administration Ltd and Manex Ltd, the fiduciary companies of Credit Suisse Group, as the directors of Kinetic Holding Ltd, it is noted that the assessee, Shri Vashovardhan Birla is the beneficial owner of the shares held In the name of Nebola Trust Reg. On 21.01.2011, the shares were transferred to Corhold Limited, a fiduciary company of H5BC Group, as nominee of The Bird international Foundation, which had by then been created with the assessee as the sole Beneficial Owner. This is also corroborated by the Foundation documents and declarations filed before the bank. Thereafter, the service providers were changed to CCS Group / Confiance Group and Manwell Investment Properties Ltd, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited as nominee of The Bird International Foundation Panama, it is evident that this assignment of loan given by Nebola Trust to Kinetic Holdings Ltd in favour of The Bird International Trust was done with a view to consolidate the holding structure of which the assessee is the sole beneficiary/ beneficial owner. Subsequently, Nebola Trust Reg., Liechtenstein was liquidated on 20.03.2012. In addition to this assigned loan of USD 9,106,369,54 from Nebola Trust Reg,, Liechtenstein, further sums were given as loan by The Bird International Foundation, Panama also and was repaid in part by Kinetic Holdings on various dates after which, the balance loan amount of USD 7,170,002.61 was waived by The Bird International Foundation and has been taken to the accumulated profits of Kinetic Holdings Limited. The AO notes that in his statements, the assessee admitted that he had invested in a company Herritor Investment Ltd under LR5 scheme of RBI from 2007 to 2011. Details of remittances made through LRS furnished by the assessee showed that a sum of USD 400,000 and GBP 89,210 has been remitted from FY.2007-0 to FY 2010-11 through his CA No. 00960200001427 with UCO Bank, Church Gate Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing Flat C-3, Lees Palace, London as the address for delivery. In account no.125114 with Credit Suisse, Singapore in the name of Kinetic Holdings Limited, periodical payments have been found to have been made to Olander Property Service Ltd. towards property expenses for Fiat C-8. These evidences establish that the property at C-8, Lees Paiace, London was very much in the knowledge of the assessee and is reportedly being used by his son who is studying at UK. The fact that the assessee Shri Yashovardhan Birla is the ultimate beneficiary of Kinetic Holdings Limited is borne out by the documents exchanged between the service providers and the banks in connection with the opening of accounts as well. As proof of identity of the beneficial owner, copies of passport of the assessee, duly attested by the service providers and in some instances by Shri Bharat Ankaraju, the Advisor of the assessee were obtained by the banks and are part of the documents received by the Department from the off-shore tax authorities. Letter of HSBC to IFG Trust (Jersey) Ltd dated 07.03.2011, enclosing therewith the duly attested copy of passport of the assessee not oniy brings out the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count. Perusal of the credit / debit notes, copies of which were part of the information received shows that substantial payments have been received from / transferred to certain other entities of the assesses including Alea Management Ltd and Herrilor Investments Ltd, in the account of Kinetic Holdings Ltd, Some investments have been found made in another company AAL (S) Pte Ltd on various dates from out of funds received by Kinetic Holdings Ltd from an undisclosed account. Among the entities from which, money is received by Kinetic Holdings Ltd is A/c, No.41322005831 with standard Chartered Bank, Hongkong in the name of Int'l Commercial Agencies / Syed Abdul Kader Ahmed and the nature of payment is stated as B/O. SUNMOON. The total sum received in FY. 2007-08 is USD 499,913.38 on various dates. It is also seen that vide letter dated 19.06.2012 addressed to Credit Suisse, Singapore, the account was requested to be closed and after converting the balance into pound sterling, the balance was directed to be transferred to the account of UK based lawyers Brian Harris Co, a/c.no.32257120 with C Hoars Co, London, one of the leading private banker of UK. The account ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder are not yet known. 2. ALEA MANAGEMENT LTD Alea Management Ltd was incorporated under the laws of The Common wealth of The Bahamas on 14.09.2006 as an International Business Company. Ms. Sharon Sueess was identified by Shri. G. L. Lath as the person who is looking after the Accounts of the front entities in Singapore which are held by Mr, Yashovardhan Birla and the Telephone numbers +41442042809 arid +41442042828 mentioned by him, were found to match with the details given in the bank documents as well. The Service Providers were changed later on to HSBC Trust and Cordico Ltd became the authorized signatory on 20.01.2011. Documents forming part of the bank records such as declarations in Form A and the attendant details including copies of passport of the assesses and the holding structure as furnished by the authored signatories to the banks in respect of the accounts in the name of Alea Management Limited etc., clearly established the identity of the beneficial ownership of the assets/investments held therein beyond doubt. The following bank accounts were found to exist In the name of Alea Management Limited whtch have been discussed by the AO elaborate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequently onll.ll.Z012 and the balance / all assets were transferred to Alea Management Ltd - HSBC A/C13518394. The summarv of transactions during the relevant period indicates that there were numerous sub accounts and voluminous transactions were carried out over therein during the relevant period: There was a Safe Keeping Account also with the Credit Suisse Bank and among the securities which were thus held by the bank in Alea Management Ltd's safe keeping account included 250000 shares of 9% Kaupthing Bank 2007 Parp, which was renounced by the company on 03. 11.2011 in favour of the bank. Further contemporaneous record of Client note maintained by Credit Suisse Bank regarding Alea Management Ltds account, duly confirmed by the Relationship Manager (RW) of the Bank, gives a detailed account of the interactions that the bank officers / relationship managers had with the assessee, Shti Vashovardhan Birla in person at his office in Nariman Point, Mumbai and his intention to shift to HSBC. (iii) Account No. 1510428 with Credit Suisse, Geneva It is in the name of Alea Management Ltd was opened on 11.01.2011 in which, the Beneficial Owner as pet Form A is declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail and the findings are summarized as under. (i) MOKOPANE - ACCOUNT No.0835-1282411 WITH CREDIT SUISSE, ZURICH The information about this account is made available from 01.04.2011 only. This account has since been closed on 16.07.2013 and transferred to Account No. 9132000 with Barclays Bank, Singapore in the name of Mokopane Ltd. Documents filed in connection with this account shows that the beneficial owner is the assessee, Shri Yashovardhan Birla. Though the details of pre 2011 period is not known, the available information shows that substantial transactions have been carried out through this account with Credit Suisse, Zurich in the name of Mokopane Ltd, including dealing in securities. (ii) MOKOPANE-A/C No. 125042-01-780 WITH CREDIT SUISSE, SINGAPORE The account No. 125042-01-780 was opened on 16.08.2011. Regarding the Beneficial Ownership, there are five correspondences from the authorized signatories over a period. All of them invariably declare that the assessee Shri Vashovardhan Birla is the sole beneficial owner of the asset held under account No. 125042-01-780 with Credit Suisse in the name of Mokopane Ltd. The first letter dated 19.08.2011 mentions T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to this new account with RB5, Further details about this account not ascertained as on date. MOKOPANE -ACCOUNT WITH HSBC, LUXEMBOURG The correspondence dated 12.09.2011 from Credit Suisse; Singapore indicated that Mokopane Ltd also has an Account with HSBC Bank, Luxembourg. Further details of this account are not yet ascertained. The AO claims that the documents in the case of Mokopane Ltd are clinching on the issue of the identity of the person who has been contributing to the assets of the entity. Though the entity's ownership was structured in such a way to present it as a case of a private trust, in fact, the entire structure starting from The Bird International Foundation to The Banyan Trust and then to the layering entitles was only a camouflage to cover the trail of funds and the real owner of such assets. However, the letters of Confiance Ltd above establishes beyond doubt that the assessce. Shri Vaahovardhan Birla himself was the asset contributor through this carefully woven holding structure. 4. SORWOOD DEVELOPMENT SA Sorwood Development SA was incorporated on 25.05.1998 as an International Business Company In the British Virgin Islands. Sorw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is the beneficial owner. There are remittances made from the account of Sorwood Development to Herritor Investments Limited, with narration Dividend to the shareholder . This clearly established the fact that the shares of Sorwood Development were being held by Herritor Investments Limited, which in turn was beneficially owned by the assessee. The account was closed on 25.07.2012 and the balance was transferred to Herritor Investments Limited - account no.41171925 held with HSBC Private Bank (UK) Ltd, London. 5. ANRID LLC, DELAWARE, USA Anrid LLC is a limited liability company formed under the Delaware Limited Liability Company Act on 01.10.2007. Anrid LLC was having an account with Credit Suisse, Zurich bearing relationship number 0835-1494489-2. As per Form A filed under Article 3 of CBD by the company, Shri Yashovardhan Birla is the sole beneficial owner of the assets held under this account. As per the KYC document, the Origin of assets deposited is mentioned as from savings accumulated over the last couple of years and the expected movement in the account is stated to be part of export revenues. All assets in the account of Anrid were transferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, UK. Both companies are shown to be holding 1 share each in Lees Palace Properties Ltd This address of Lees Palace is also found mentioned m the letter addressed to Credit Suisse requesting to hand over the contents of the overseas safe deposit locker of the assesses in the year 2011. The documents received in connection with the other offshore entities of the assesses reveals that there is a very close nexus between Herritor Investments Ltd and other front entities like Alea Management Ltd, Kinetic Holdings Ltd, Sorwood Development SA and Mokopane Ltd, to list a few. Substantial sums have been transferred from one entity to the other, like in the case of Kinetic Holdings Ltd, loan has been given by Herritor investments Ltd which is much more than the investment admittedly made by the assessee. As per client notes in the case of Alea Management Ltd, it is clearly stated that Heiritor Investment Ltd has the same Beneficial Owner as the former and that sums have been transferred to the latter. As on date, no further information has been received in connection with this entity from the offshore banks. 8. MAGENTA PROPERTIES INVESTMENTS LTD Magenta Properties Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the stakes were sold in FV 2007-08 and the proceeds have been credited to offshore Trusts / accounts set up by the assessee. This was denied by the assessee and no further details have been submitted by the banks concerned. Subsequently, it has been claimed that the original trust which was claimed to have been setup by his Late father and Late Pratap Malpani, was holding the shares of Kinetic Holdings ltd and that Avit Investments Ltd was held by Kinetic Holdings Ltd. However, except this admission of investment in Avit Investments Ltd, no information or evidence has been furnished. The submission of undisclosed offshore investment in PT South Asia Viscose through Credit Suisse AG in the name of Avit Investments Ltd made by Shri G.L Lath is corroborated by assessee's own admission. However, the AO notes that the very existence of such a discretionary trust extent of corpus therein, identity of the settlor, terms and conditions therein nave not been substantiated tin date. The claim of flow of funds from such a trust is also not supported with any documents. 14. EPICORP SOFTWARE INC In the client notes, a draft email in connection with the buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assesses In the name of The Banyan Trust Capital Account, there is an account with Royal Bank of Scotland International bearing account number 56450634 having considerable 39. OTHER ENTITIES From the bank account statements of the assesses, transfer of substantial sums to a few hitherto unknown entities like B/O. SUNMOON, HOMES, Powerdesk International, etc. is also noticed for which no further details are available in this office. 8.6 While dealing with the above bank accounts, the AO has noted that a beneficial owner Is recognized as the ultimate owner of the deposited assets under Swiss Law and understanding of the Banks. The AO has noted that the menaing of Beneficial Owner is also explained in the declaration filed with the banks as the natural person who ultimately owns (directly /indirectly) and / or controls the account holder and or the person on whose behalf the transaction is being conducted. It also refers to those persons who exercise ultimate control over a legal person and / Of arrangement. It further clarifies that the beneficial owner does not necessarily have to be granted power of attorney or signatory authority for the bonking relationship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scose Ltd) held in the name of Credit Suisse AG (read, Avit Investments Ltd) which was sold in the FV .2007-08 and the proceeds from undisclosed stake sate was credited to Credit Suisse AG's account and was routed to some of these trusts. x. He confirmed and corroborated! the statement given by Ms Nita Shivdasani. In a subsequent statement, he submitted that he had been pressurized by the assesses to retract his earlier statement. He accepted that varacity of his earlier statement. xi. He accepted that he had met Mr Andrews, London [whose phone number was also available in the assessee's mobile) and that he assisted in closing assessee's bank accounts in HSBC and transfer of such funds to other accounts. 8.8 The other close aide who has, through documents seized from her computer, email correspondence and admission in the statements, provided irrefutable proof that it was the assessee who was in actual control of all the funds being managed in these accounts was Ms Nita Shivdasani. Ms Shivdasani was earlier an employee with Barclays Bank, Singapore and had assisted the assessee in opening some of the offshore accounts of the assesses while she was with the Sank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Assessing Officer. Thereafter he referred to the definition of undisclosed asset located outside India as per section 2(10) of the Act. He observed that the information available with the Assessing Officer has been elaborately discussed above and he noted that there were sufficient assets outside the country of which the assessee has been found to be a beneficial owner. Thereafter he referred to the scope of total undisclosed income and assets as per section 4 of the Act. Referring to the above he held that in the above definition of scope, only the determination of income element has been linked with the return of income filed by the assessee in proceedings going on under Income Tax Act. That it has no reference to the issue of notice u/s 10(1) of the Act for which mere presence of sufficient information with the AO under BMIT Act is sufficient. That further, as clause (c) above would indicate, the 'value of undisclosed assets' is not linked with the return of income, the implication being that if the such information about such assets comes to the knowledge of the AO, he is free to issue notice under the BMIT Act and such notice would not have a relation with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and his family were in the class of discretionary beneficiaries during their transteeship. He also referred to the assessee s reliance in the case of Malaysian International Trading Corporation vs. Mega Safe Deposit Vaults (P.) Ltd. [2006] 68 SCL 52 (Bom) to claim that where no evidence is adduced regarding foreign law, the presumption is that it is the same as Indian Law on the point in consideration. He noted that the assessee has now proceeded to argue his case as if the Trust was framed under the Indian Trust Laws. He observed that the assessee has elaborately submitted the rights and duties of the Settlor with reference to appointment of trustees and control over assets. That it is claimed that migration of trust assets does not alter the irrevocable nature of the trust settlement, rather the discretion merely becomes vested with new or additional trustees. That as per the assessee, the trust assets at AT 351 (above trust) are migrated by trustees to Nibola Trust (Liechtenstein) in 1998 with Credit Suise Limited as Trustee, in 2010 the trust assets are migrated to Bird International Foundation (Panama) with HSBC as trustee, in 2011, the trust assets are migrated to Banyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after, the ld. CIT(A) proceeded to elaborate upon the trusts created in tax heaven countries, etc. In this regard, he referred to the ITAT decision in the case of Renu Thadani [2020] 117 taxmann.com 804 (Mum-Trib.). He elaborately referred from the said decisions running into several pages. He noted that in the above order, the ITAT has given primacy to the documents with the bank which mention the assessee as beneficial owner rather than the contents of the various structures cited by the assessee. That in the above decision, the assessee s conduct in declining to sign a consent waiver was observed adversely by the ITAT. He referred extensively to the ITAT order. Thereafter, he held that in the present case, the assessee has tried to mislead the department in a planned way. That each and every bank having bank accounts identified by the A.O. has confirmed that the assessee is the beneficial owner/contributor of assets of these accounts. He further referred that sufficient evidence has been unearthed during search action indicating that while the assessee has given a consent waiver. The result has been lack of co-operation from HSBC, Geneva Bank. That evidence has also come in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and source of finance in acquisition of such assets, if beneficially owned. He observed that it is noted that the A.O. has enough direct evidences in form of bank documents and bank fillings indicating the assessee to be beneficial owner of such bank accounts and funds therein. He further held that without prejudice with this, the assessee has failed to produce any document to support the source of funds in the various bank accounts identified by the A.O. and reproduced in his order. That the assessee s claim was also not accepted because the assessee was a discretionary beneficiary in the Bird International Foundation and Banyan Trust, the schedule of Bird International Foundation reproduced by the A.O. at page 58 of his order shows only Yashovardhan Birla and his descendants as beneficiaries. These are contemporaneous documents shared by the Competent Authorities of these countries. Thereafter, the ld. CIT(A) held that the only evidence filed by the assessee in support of his contention of his being a discretionary benefit is an unauthenticated copy of a purported declaration of trust by one Albany Trustee Company Limited regarding the corpus fund of the impugned trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Hence, this must be excluded from the ambit of BMIT Act. He distinguished the decision referred by the assessee in this case and held that in absence of any specific bar on proceedings under BMIT Act in such circumstances, the action of the A.O. in issuig notice u/s.10(1) of the Act cannot be faulted. 24. Thereafter, he held that BMIT Act mandates assessment of undisclosed income/assets in the hands of beneficial owners/beneficiaries irrespective of ownership of paper. Referring to this, he held that in light of the discussion held earlier, the documents filed by the assessee at Annexure I, II, IV and V do not held the assessee. He again referred to the assessee s ground that the A.O. could not have issued a notice u/s.10(1) for the A.Y. 2016-17 as the assessee ceased to have an interest in the discretionary trust with effect from 15.07.2014. He held that similar issue has been raised by the assessee at ground no.6 as well. Referring to the earlier observation, he rejected this ground also. He held that while the issuing notice u/s.10(1), the A.O. has pointed out various entities and their bank account as well as documents evidencing that he was a beneficial owner of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble ITSC under section 2450(4) of the Income Tax Act 1961. That it is also claimed that the findings of the ITSC have been considered and rejected by the Hon'ble Tribunal in a later dated order (the copy of the order has been filed before me but has not been admitted as an evidence), it is claimed that the analysis and conclusion of the ITSC currently remain sub judice in a pending writ petition before Hon'ble Bombay High Court and that if the appellant were to succeed in the challenge, there is a clear prospect of a conclusive settlement being achieved in relation to the tax assessment and section 2451 will operate to bar reopening under any law including EMIT Act. 27. That the assessee has also contended that the Principal Commissioner of Income Tax (Central) - 2, Mumbai was aware of all the assets under discussion as clear from his letter dated 28.8.2017 addressed to the Secretary, Settlement Commission. Once he was aware of these assets under the Income Tax Proceedings; a separate notice u/s 10(1) of the EMIT Act could not have been issued. 28. That the submission made by the assessee has been examined. That there appears no provision in the BM Act which prohibits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and finally concluded as under: 10. In light of elaborate discussion with respect to the various grounds raised by the assessee, the claim of the assessee that he is not liable to be assessed under BMIT Act is not found acceptable. The grounds of appeal no. 4 to 9 raised by the assessee in his appeal in this regard are not found tenable and are dismissed. In light of the various facts which have already noted above, it is held under section 15(l)(b) rws 17 of the BMIT Act that the assessee is liable to be assessed under the Act and the notice under section 10(1) of the Act has been validly issued by the A.O. 32. Against the above order, the assessee is in appeal before us. 33. We have heard both the counsel and perused the records. Both the parties have been extensively heard. They made respective rejoinders as well. 34. Final summary of assessee s submissions are summarized as under: 1. The present appeal, instituted under section 18 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA), challenges the jurisdictional order dated 26 April 2021 passed by the Commissioner (Appeals)- Range 51, Mumbai under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and responsibilities. The duration of the-Trust Period set forth in clause 2(1)(b) of the Instrument of Trust stipulates the 'trust' must remain intact for: (i) eighty years from the date of the declaration of trust; (ii) death of the last survivor of the descendants of King George the Fifth of England; or, (iii) such earlier date as the trustees may in writing declare to be the date of expiration. The last of the three eventualities mandates a trigger either simultaneously with or following 'distribution', except where a migration of trust assets occurs in consonance with powers reserved to the trustees under clause 8(3) and 8(4) of the Instrument of Trust. 8. (Late) Shri Pratap Malpani died on 14 February 1990, simultaneously (in an airplane crash) with his wife Smt. Vibha Malpani, Shri Ashokvardhan Birla - father of the Appellant, Smt. Sunanda Birla- mother of the Appellant and Smt. Sujata Mehta- sister of the Appellant. COMPLIANCE WITH 2012 AMENDMENTS TO INCOME-TAX ACT RE: FOREIGN ASSETS LATER REVISIONS OF SCHEDULE FA 9. In AY 2012-13, a fifth proviso to s.139(1) of the Income-tax Act, 1961 (IT Act) was introduced, with corollary modificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Limited, Pollet House, St. Peter Port, Guernsey, United Kingdom, reflecting trust migration by the trustees (PB Vol.5@ Pages 2298-2299). CESSATION RE: MEMBER OF CLASS OF BENEFICIARIES OF TRUST 13. Upon the Appellant ceasing to be a member of the class of beneficiaries of the Trust in July 2014 (PB Vol.5 @ Page 2306), the obligation of the Appellant to declare status in relation to the Trust came to an end. In the return filed by the Appellant for AY 2015-16, it was specifically declared that Appellant was beneficiary of The Banyan Trust All Companies/ Trust/ Entities, thereunder (Discretionary Trust) Upto 14.07.2014. Extract of the Appellant's Schedule FA for AY 2015-16 is at PB Vol.5, Pages 2300-2302. 14. In AY 2016-17, the Appellant's Schedule FA continued to declare foreign bank accounts and an immovable property purchased through LRS in Oman. Extract of Appellant's Schedule FA for AY 2016-17 is at PB Vol.1 @ Pages 523-537. FOREIGN ASSETS ACQUIRED FROM INCOME CHARGEABLE TO TAX IN INDIA, WHICH HAS ESCAPED ASSESSMENT FOR REASONS ATTRIBUTABLE TO TAX EVASION, WITHIN THE FRAMEWORK OF BMA 15. On 26 May 2015, the BMA was enacted, rendering exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g made any contribution to the corpus or income of the Trust: 19.1.1 The fundamental jurisdictional pre-requisite for initiating proceedings under BMA is that the foreign asset or income shall have been acquired from income chargeable to tax under the Income-tax Act, 1961 which has escaped assessment for reasons attributable inter alia to tax evasion. Accordingly, it is imperative for the AO to establish prima facie, on the basis of cogent 'information', that such person against whom proceedings are initiated under BMA has contributed to that foreign asset from out of income that was chargeable to tax in India but which has escaped assessment for reasons of tax evasion, and accordingly that such person is either the 'beneficial owner' or 'beneficiary' of such asset or income on account of a clear nexus with such asset or income, in order to be rendered amenable to BMA. FAQ #31 in the binding CBDT Circular No.13 of 2015 dated 6 July 2015 stipulates, in express terms, that contribution/ consideration is key to establish 'beneficial ownership': THERE MAY BE A CASE WHERE A PERSON IS LISTED AS A BENEFICIARY IN A FOREIGN ASSET, HOWEVER, IF HE HAS P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n circumstances where the Appellant not being the recipient of income/distribution from the Trust, duly certified by the trustees inter alia in the 'source of trust wealth' certification issued by the trustees in June 2017, remined undisputed by the Revenue m the WT Act proceedings of the Appellant. The fact that there has been no distribution by the Trust(s) to the Appellant is independently supported by certificates of both the original and the existing trustees and remains uncontroverted by the Revenue. Albany's director- Michael Collins, on 7 March 2016 (refer PB Vol.1, Pg. 54), independently corroborated by certificate of Confiance Limited Guernsey dated 24 March 2016 (refer PB Vol.1, Pg: 72-74), conclusively establishes that no 'distribution' has been made directly to the Appellant. 19.3 Absence of 'jurisdictional fact' under BMA, in circumstances where it was not in dispute that the Appellant was neither shareholder nor director of any corporate vehicle(s) within the Trust structure. On the settled legal principle that a 'company is distinct from its shareholders', as held in Calcutta Tramways Co. Ltd. v. CWT [1972] 86 ITR 133 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When a trust is created, the ownership over the property is split into two: (i) the legal ownership which is acquired by and rests with the trustee; and (ii) the beneficial ownership which is; acquired by the beneficiary virtue of transfer under the trust and which is enjoyed by him. It is very important and curious instance of dual ownership which allows the separation of power of management and the rights of enjoyment. The former is owned by the trustee and is a matter of form and nominal and the latter is owned by the beneficiary and is a matter of substance and reality. It is by fiction of law that the trustee is treated as the full owner of the property against third person but as between the trustee and beneficiaries, the property belong to the latter and not to the former. The trust ownership and beneficial ownership are separate and independent of each other in their destination and disposition both. Either of the two may be transferred or encumbered without affecting the other in any way. 19.7 Limitations of corporate trustees, in matters of regulatory compliances, particular the fact that trustees/ fiduciaries are ineligible to declare themselves as 'beneficial o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Appellant. 19.12 Distinct recognition by the CBDT of a variance , between 'beneficial ownership' under BMA from that utid.er Prevention of Money Laundering (Maintenance of Records) Rules, 2005, clarified in FAQ #31 by CBDT Circular No.13 of 2015 dated 6 July 2015, in recognition of the fact that the remit of anti-money laundering compliances is the aim of verifying and validating no money laundering antecedents. 19.13 Principal Commissioner of income Tax (Central)- 2, after taking into consideration the certificate as to source of trust wealth' dated 27 June 2017 issued by Confiance Limited (PB Vol.5 @ Page 2303-2307), conceding in letter of 28 August 2017 that As to the submission of the assessee that formation of Avit Investment Ltd/ Kinetic Holdings Ltd. and related entities/ structures by Pratap Malpani, took place in the early and mid-1980's is concerned, the same is not disputed at present .. (PB Vol.1 @ Page 308-311); 19.14 Assertion of the Revenue in the IT Act and WT Act proceedings regarding exercise of power of appointment and removal of trustees rendering the Appellant is the brainchild of and in control of the Trust, tantamount to adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collapse the offshore trust structure i.e., corporate veil cannot be lifted, since offshore 1:ntities are independent .entities taxable in their respective jurisdictions (PB. Vol 5, pg. 2016, para 32). 23.5 the. Appellant was not the 'substantial owner' of assets settled upon Trust held through Kinetic Holdings Ltd'. (PB Vol.5, pg. 2011, para 25) 23.6 bank accounts in foreign jurisdictions pertaining to offshore entities could not be treated as bank accounts of Appellant even though for anti-money laundering purpose the Appellant had been declared beneficial owner (PB Vol.5, pg. 2019, para 37). 23.7 the case of the Revenue is no.t that the investments were moved from India by the settlor any beneficiaries ... It is a fact on record that there are investments, which were made by the assessee or the investments were moved from India (PB Vol5, pg. 2015, para 30). DELAY IN DISPOSAL OF APPEAL ON JURISDICTIONAL CHALLENGE 24. Arising from the Commissioner (Appeals) declining ability to schedule a hearing on the section 15(1)(6) BMA appeal citing lack of infrastructure and- faced with the AO simultaneously progressing the BMA assessment proceedings, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .16), 27.5 the Appellant had put into place and managed an intricate web of entities hidden behind the corporate veil i.e., a structure for his exclusive benefit, thereby being the ultimate sole beneficiary:- this was language lifted by the .Commissioner (Appeals) directly from the assessment order para 5.14.25 (para 9..2.6) , 27.6 the Appellant is the real owner of assets / investments / bank balances based on Form A declarations of Beneficial Owner under Swiss Penal Code- this was language lifted by the Commissioner (Appeals) directly from the assessment order para 5.16.8 (para 8.5 (2)(i) @ Pg.62, 8.5(3)(ii) @ Pg.65, 9.3.4(x)), 27.7 the Appellant had made efforts to conceal facts through instructing HSBC, Geneva not to part with details about his accounts to the Indian Authorities, revoking a Consent Waive letter issued by the Appellant to HSBC, Geneva (para 9.2.13), 27.8 the Appellant did not avail the benefit of one-time compliance 'Window by filing a declaration under section 59 of BMA, disclosing his undisclosed foreign income and/or assets (para 9.5.6), 27.9. the Appellant had not .submitted explanation with respect to the source of the credit entries i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MINATION 30. The present appeal No. 1/BMA/2021 was instituted on 17 May 2021. 31. Following the issuance of notice of hearing by the AO on 27 May 2021 in relation to the 'stay' application of the Appellant in relation to the assessment order, the Appellant instituted Stay Application No. 61/Mum/2021 on 28 May 2021, which came to be granted at a hearing held on 4 June 2021. GRANT OF STAY BY THIS HON'BLE TRIBUNAL 32. Despite grant of an order of 'stay' by this Hon'ble Tribunal on 4 June 2021, the AO declined to take cognisance of the order made on 4 June 2021. Heightened belligerence on the part of the Revenue was apparent from the Commissioner (Appeals) failing to take into consideration this Hon'ble Tribunal's order dated 24 December 2020 in the Appellant's WT proceedings despite its direct bearing on issues in contention in the BMA proceedings with identical facts having been adjudicated upon therein, and similarly the AO overlooked this Hon'ble Tribunal's order dated 24 December 2020. The AO also disregarded the order of 'stay' passed by this Hon'ble Tribunal. Following an unqualified apology proffered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which depends assumption or refusal to assume jurisdiction by a Court, tribunal or an authority. In Black's Legal Dictionary it is explained as a fact which must exist before a court can properly assume jurisdiction of a particular case. Mistake of fact in relation to jurisdiction is an error of jurisdictional fact. No statutory authority or tribunal can assume jurisdiction in respect of subject matter which the statute does not confer on it and if by deciding erroneously the fact on which jurisdiction depends the court or tribunal exercises the jurisdiction then the order is vitiated. Error of jurisdictional fact renders the order ultra vires and bad. [Wade Administrative Law] 33.5 Arun Kumar v Union of India [2007] 1 SCC 732 , wherein it was held ''A jurisdictional fact is a fact which must exist before a court, Tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on the existence or non-existence of which depends the jurisdiction of a court, a Tribunal or an authority. It is the fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, and none has been produced/confronted to the Appellant by the Revenue. In the circumstances, conclusive and binding findings of fact, rendered by the final fact-finding authority, i.e. this Hon'ble Tribunal, on the basis of distinct concessions made by the Revenue, in the course of WT Act proceedings, must preclude the Revenue from re-inventing or re-engineering matters or engaging in surmise or conjecture for purposes of BMA proceedings.. 36. Thus, whe.re the progenitor Instrument of Trust is an undisputed irrevocable discretionary trust, not disputed by the R venue in the WT Act proceedings, there is no scope to allege that its validity can be put into contention in BMA proceedings. APPLICATION OF PRINCIPLES OF APPROBATE AND REPROBATE 37. Principles of approbate and reprobate apply with full force and effect. The salutary observations of the Hon'ble Supreme Court in the case of Suzuki Parasrampuria Suitings Pvt. Ltd. v. Official Liquidator of Mahendra Petrochemicals Limited (In Liquidation) Ors. (2018) 10 SCC 707 on the doctrine of approbate and reprobate, to the effect that A litigant can take different stands at different times but cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3., it was held The basic concept is fair play in action administrative, judicial or quasi-judicial. The concept of fair play in action must depend upon the particular lis, if there be any, between the parties. Similarly, in State of Orissa v. Binapani Dei (1967) 2 SCR 625 it was held An order by the State to the Prejudice of a person in derogation of his vested rights may be made only in accordance with the basis rules of justice and fairplay. STATUTORY FRAMEWORK OF BMA 39. The framework .of s.2(11) BMA defines an undisclosed asset located outside India to be an asset located outside India held either directly in the assessee's own name, or in respect of which the assessee is a beneficial owner. 40. An assessee is, upon receipt of a s.10 BMA -notice, based on information available to the Assessing Officer (AO), bound to provide an explanation to the AO. 41. Where no explanation is available from the assessee, or the assessee's explanation is unsatisfactory in the opinion of the AO, s.2(11) read with s.10 BMA, stipulates that BMA must take its course, i.e., assessment will be followed by a notice of demand under s.13 BMA. 42. The charge of tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with effect from 1 April 2012, simultaneously with revising the form for 'return of income' under s.139 IT Act to include Schedule FA, imposes a statutory obligation to file a return of income by a person who holds any asset (including any financial interest in any entity) located outside India as a 'beneficiary owner and/or 'beneficiary. ' Introduction of Schedule FA was plainly the precursor to the introduction of BMA, including a declaratory regime in s.59 BMA. 51. Examining thus, the definition of a 'beneficial owner', within the meaning of s.139(1) Expln.4 IT Act: an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, directly or indirectly, of any other person , applied to the fact matrix, and examined particularly in light of the case of the Revenue in the WT Act proceedings, the Revenue is not entitled to assert that the Appellant is 'beneficial owner' or 'beneficiary' of the assets or income of the Trust. 52. As set forth in the foregoing, the Revenue has failed to establish the 'jurisdictional fact in the BMA proceedings, i.e. that the Appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no application to BMA is inconsistent with CBDT FAQ no. 31 in the binding CBDT Circular No.13 of 2015 dated 6 July 2015 which makes express reference to Explanation 4 and 5 of section 139 of the IT Act, in relation to matters of 'beneficial ownership and 'beneficiary' in relation to foreign asset and income, and reproduces verbatim those definitions stating these apply ''for the purpose of the Act , i.e. BMA, leaving no scope for Revenue to argue to the contrary. 58. Absent any statutorily drawn distinction or deeming fiction to demarcate the concept of 'beneficial ownership' and/or 'beneficiary' under these three statutes, i.e. IT Act, WT Act and BMA, it is reasonable for the definitions under the IT Act contained in Explanations 4 5 to s.139(1) to be treated as applicable equally to both the WT Act and BMA, and indeed, legislative intent is liable to be construed, absent statutory mandate to the contrary. 59. Thus, when this Hon'ble Tribunal concludes, in proceedings under the WT Act, that the Appellant is not a 'beneficial owner' of foreign assets or income of the Trust, there can be no scope to hold that the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timately premised on confiscation of benami property. Significantly, Revenue has not advocated, in the present case, that the definition of 'beneficial ownership' under the Prohibition of Benami Property Transactions Act, 1988 has any bearing on issues arising under BMA. 63. Under PMLA, a 'beneficial owner' is defined in s.2(1)(fa) to mean an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person'. While this statute ai1ns to provide legal redress in relation to money laundering, given the economic threat it imposes upon the financial systems of countries, and has been enacted in aid of international initiatives, including the United Nations Convention Against Illicit Traffic in Narcotic Drugs arid Psychotropic Substances, the Basle Statement of Principles 1989, the Financial Action Task Force established. in 1989, thereby ensuring power of confiscation in relation to money laundering, financing of terrorism, etc., ultimately, the emphasis of PMLA is on that person who exercises a right of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership' and 'beneficiary', the definitions in IT Act, s.139(1), Explanations 4 5, must determine scope for the Appellant to be treated as beneficial owner or beneficiary for purposes of BMA: AMBIT OF FORM A UNDER SWISS ANTI-MONEY LAUNDERING LAWS 66. The SCN disregards the binding CBDT circular No. 13 of 2015 dated 6 July 2015 (@ CBDT Circulars Tab 5), which in FAQ 31, clarifies that PMLA declarations - bound to be treated as analogous .to Swiss anti-money laundering declarations - cannot be reckoned for determining 'beneficial ownership' or 'beneficiary'. In effect, therefore, it was not available to the AO to premise the SCN in reliance upon Form A. In light of the well-settled position that CBDT Circulars are binding, Dattatraya Gopal Shette v. CIT [1984] 150 ITR460 (Bombay) - Para 9; UCO Bank v. CIT (1999) 4 SCC 599 / [1999] 237 ITR 889 (SC) - Para 12; R B Falcon (A) (P)Ltd. v. CIT [2008] 301 ITR 309 (SC) Para 33; CIT v. Madhukar B. Pawar [2009] 319 ITR 255 (Born) - Para 4; Catholic Syrian Bank Ltd. v. CIT, Thrissur (2012) 3 SCC 784- Para 23 24 upon the Revenue, the SCN is inconsistent with the binding CBDT Circular, which by itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as unassailable. As a corollary, it must follow that the Revenue concedes that AML compliance s are not determinative of matters of taxation. 73. The CBDT clarification, in this regard, vide Circular No.13 of 2015 dated 6 July 2015, in FAQ No. 31 specifically puts it beyond the realm of any doubt that the determination of beneficial owner would be at variance with the- defemination of beneficial ownership provided under Rule 9(3) of the PMLA (Maintenance of Records) Rules, 2005 . 74. Thus, it is apparent that 'beneficial owner' for purposes of PMLA and for BMA are at variance , and therefore, there is no scope to import the position of a beneficial owner under PMLA into BMA. The relevant FAQ is reproduced; Question No. 31: A person is a beneficiary in a foreign a set. Is he eligible for declaration under section 59 of the Act? Answer: As far as ownership is concerned, as per section 2(11) of the Act undisclosed asset located outside India means an asset held by the person in his name or in respect of which he is a beneficial owner. The definition of beneficial owner and beneficiary is provided in Explanation 4 and Explanation 5 to section 139( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due compliances in relation to trusts, through causing any one or more of several beneficiaries to make declaration(s) for anti-money laundering purposes, whether under PMLA or the analogous Swiss anti-money 1ai:indering framework, is incapable of causing vestiture upon such beneficiary(ies) of the t:mst assets within a discretionary trust structure. A regulatory declaration caused by trustees; who are ineligible to declare themselves as .. beneficiaries, cannot alter the entitlements of one or more beneficiaries under an instrument of trust, or have the legal effect of causing one or more beneficiaries to surrender or relin9uish or waive distribution by discretionary trustees. Indeed, that is not the aim of PMLA or AML compliances, and such declarations which are to operate in a different. statutory framework cannot simpliciter be imported. into determination of statutory ent:1tlements and obligations under BMA. Declarations made by both trustees and beneficiaries for fulfilling AML, in consonance with the requirements a regulatory regime, cannot impact or supersede or render redundant the governing Instrument of Trust, which must continue to determine rights, powers, obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BMA. 82. It was not available to the Commissioner (Appeals) to overcome. this Hon'ble Tribunal's order, through a fleeting observation that: In light of clear distinction between the two laws, it is held that the above decision cannot be treated as binding precedent, not even as a normal precedent. It is liable to be treated as a normal evidence produced by the assessce at the time of appellate proceedings. Since this evidence was not in existence at the time of decision taken any the AO to issue notice under section 10(1) of the BMIT Act, it cannot be admitted as fresh evidence now. (page 44, para 6.5), then import and combine en masse the AO's 'merits'. adjudication order within the jurisdictional adjudication. The course of action adopted by the Commissioner (Appeals) has betrayed an .attempt to reach a predetermined outcome. ONUS TO BE DISCHARGED BY NOTICEE UNDER BMA 83. A noticee may be called upon to provide an explanation in relation to allegedly undisclosed foreign asset(s) or income , where 'information' is available with the AO, through issuance of a notice under s.10 BMA by the designated officer. 84. The core question that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of trust wealth certificate issued in June 2017 (PB Vol.5 @page nos.2303 to 2307) by trustees Confiance Limited, as entitled to rely upon such uncontroverted document by way of explanation, to establish that the Appellant was not a contributor to the foreign assets or income of the Trust. 91. Such a certificate issued by the trustees was bound to constitute valid evidence, and a satisfactory explanation, more so in circumstances where the Revenue had conceded in WT Act proceedings that the Appellant had not made any contribution to the Trust (from out of income taxable in India). Para 30 of the order of this Hon'ble Tribunal in the WT Act proceedings records the case of the Revenue is not that the investments were moved from India by the settlor or any beneficiaries It is a fact on record that there are no investments, which. were made by the assessee or the investments were moved from India . 92. All the assets and/ or income and/ or bank accounts set forth in the SCN formed part of the Trust and were fully explained within the source of trust wealth certificate. Accordingly, due regard had also to the letter of the PCIT dated 28 August 2017 -wherein it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presume that the properties governed by the trustee will be considered as the properties of the individual beneficiary who exercises the appointment of trustees. In the given case, .no doubt the assessee is vested with the power to appoint or remove the trustees, does not change the status of the trust and its independent functioning . (Vol. 5, pg 2014, para 29). POWER OF APPOINTMENT AND REMOVAL OF TRUSTEES CANNOT LEAD TO CONCLUSION THAT APPELLANT IS SOLE BENEFICIARY OF TRUST 95. In any event, the contention of Revenue that the vestiture of power of appointment and removal of trustees in the Appellant renders the Appellant liable to be treated, for tax purposes, as the sole beneficiary and beneficial owner of assets and income of the Trust, defies logic. Fatal errors in this contention of Revenue, hitherto tested in the WT proceedings, are reiterated hereinbelow. 96. Firstly, the contention of Revenue overlooks-that the Instrument of Trust stipulates all lineal descendants of Pratap Malpani and Ashokvardhan Birla shall be beneficiaries, and also extends the list of beneficiaries to include bodies, organizations and/or associations in India and Guernsey, the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rla became the beneficial owner of assets and income settled upon trust. Thereafter, the beneficial ownership of assets and income vested upon Sunanda Birla, .and only finally in the Appellant, Such a theory of revolving 'beneficial ownership' depending on who is vested with power of appointment and removal, is completely inconsistent -with the provisions of the Instrument of Trust. 99. Fourthly, the Revenue has neither asserted nor laid evidence in support of any purported exercise by the Appellant of the power of appointment and removal of trustees, and has completely overlooked (A) clause 8(3) of the Instrument of Trust, which expressly confers absolute power and authority upon the trustees to appoint new trustees, and (B) Clause 8(4) of the Instrument of Trust wherein express powers for migration of trust assets to new trustees, that may in tum be appointed by existing trustees. Thus, in circumstances where trustee appointments and migrations have occurred, without exercise of the power of appointment or removal of trustees by the Appellant, in consonance with the framework of the Instrument of Trust, it cannot be reasonably contended by the Revenue that the vest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent proceedings, that the Swiss Federal Tax Administration is actively engaged with the Indian Competent Authority. The Appellant has reliably learnt that the Indian Competent Authority has actively engaged with the Guernsey Tax Office; however, no documentary evidence obtained by the Indian Competent Authority from the Guernsey Tax Office has been made available to the Appellant. The Appellant asserts that material exculpatory evidence is available to the Indian Revenue, which is not being shared with or delivered over to the Appellant , and in the circumstances, there is grave prejudice, jeopardy and detriment being caused to the Appellant as a direct consequence of these selective disclosures by the Indian Revenue. NO TERRITORIAL JURISDICTION OVER TRUST AND ENTITIES OF TRUST 101. The Trust and the corporate structures within the framework of the Trust are each independent taxable entities, in relation to which territorial jurisdiction is not available to the Indian Revenue under the BMA. Under s.1(2) BMA, it extends to the territory of India. The contention of the Appellant on matters of 'territoriality' has been upheld in WT Act proceedings and must equally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in view of: 104.1. by virtue of the Appellant having no 'beneficial ownership' in relation to foreign assets or income of the Trust, no corollary obligation arose to make a s.59 BMA declaration. In fact, express incorporation of Chapter A V of the IT Act (ss.159 to 181) into BMA, vide s.70 BMA, in turn preserved the statutory remit and entitlement of beneficiaries of discretionary trusts available under the IT Act, to not be treated as beneficial owners in relation to such assets or income until distribution, and to be exigible to income tax restricted to the remit of distribution; 104.2 the Appellant, by making full a d true disclosure in Schedule FA, for the duration when the Appellant was a member of a class of beneficiaries of the Trust (AY 2014-15) and until cessation (AY 2015-16) of the Appellant's membership of the class of beneficiaries, had duly complied with s.139(1) of the IT Act. The statutory framework of BMA lays emphasis on the term undisclosed , in the context of the disclosure framework provided under Chapter VI s.59, through a window until 30 September 2015 vide CBDT Notification No.SO 1791 (E) [No.57 /2015 (F.No.133/33/2015-TPL)] (CBDT Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke a declaration in respect of information that is not available to the Indian Revenue, whereas the present BMA proceedings are based on information that has been long available with the Revenue, hitherto deployed in both IT and WT proceedings against the Appellant. As such, there was no scope for any declaration to be filed by the Appellant under s.59 BMA. In fact, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015, specifically stipulate in Rule 9 that if such information has heady been obtained by FT TR by the Revenue, then any declaration encompassing information will be liable to rejection by the Principal- Commissioner; 104.7 in view of a s.59 BMA obligation requiring the declarant to confirm and validate that the 'source' of such foreign asset or income is India, inherent to the contention of the Revenue must be the Appellant must make declaration as to the 'source of the source', i.e:, the source of the Settlor's assets and income. It is the case of the Appellant that BMA does not and cannot impose obligation for disclosing source of source', in circumstances where the admitted case of the Revenue -is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrently pending adjudication in Writ Petition No.862 of 2018 in the Hon'ble Bombay High Court). SCHEME OF BMA- DUTY OF ONUS UPON REVENUE 105. The AO must initiate proceedings under BMA through the issuance of a show cause notice under s.10(1) BMA, based on 'information'. 106. Upon receipt of a show cause notice issued under s.10(1) BMA, the recipient thereof may elect to file a reply or decline to comply; as the case may be. 107. The AO is entitled, under s.10(2) BMA, to continue enquiries after delive1y of a notice under s.10(1) BMA, for the purpose of obtaining full information , ahead of carrying outan assessment under s.10(3) BMA. 108. Where a reply is not filed, the AO is empowered under s.10(4) BMA to proceed to a 'best judgment' assessment. 109. Where a reply is filed, be it a jurisdictional challenge, or a reply on merits, it is the bounden duty of the AO _to act judiciously, since the power granted under the BMA is coupled with a duty and must be exercised in manner that promotes the object of the Act. Such powers cannot 'be exercised arbitrarily or capriciously, as held in .State (Delhi Admn) v I K Nangia [1980] 1 SCC 258, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 December 2020 has concluded that the Appellant has.no beneficial interest or ownership whatsoever in the assets or 41come of the Trust, there can be no scope for the Revenue to continue to rely upon the ITSC order, which has been stayed.. NO SCOPE TO RELY UPON ITSC ORDER IN BMA PROCEEDINGS 115. In the case of ITO v. Dhrangadhra Chemical Works (P.) Ltd. [1989] 28 ITO 499, this Hon'ble Tribunal held that the Settlement Commission cannot exercise or supersede the powers of the ITAT. This has been well settled by a decision of the Supreme Court in the case of CIT v. B.N Bhattachargee [1979] 118 ITR 461 . Further, in Hooghly Mills Ltd. v. CIT (1990) SCC OnLine Cal 336; it has been held that the order passed by die settlement Commission cannot affect the determination. already made under the provisions of the Surtax Act. Similarly, under. the provisions of the Wealth-tax Act, 1957, There are provisions for settlement of cases in Chapter VA of the Wealth-tax Act, where similar provisions have also been made. This is so because the Income-tax Act; the Wealth tax Act and other Acts including the Surtax Act are independent statutes covering different fields and the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh requisite infrastructure for a s.15(1)(b) appeal, and finally the Article 226 Constitution of India remedy availed by the Appellant, culminating in the order dated 30 March 2021 of the Hon'ble Bombay High Court, are set forth in the Stay Application. The Hon'ble Bombay High Court order of 30 March 2021 is at Paper Book Vol.5, at pages 2029-2030. 119. In circumstances where the Revenue has conceded, during the WT Act proceedings before this Hon'ble Tribunal, that there was no contribution: by the Appellant to the Trust, the Revenue cannot be per1nitted to assert in BMA proceedings that there is contribution by the Appellant to the Trust. In the circumstances, there is no scope for the Revenue to discharge its onus in BMA proceedings against the Appellant. 120. In the case of CIT v. Datta Mahendra Shah (2015) 378 ITR 304 (Bom), the jurisdictional High Court has held that The Income Tax Department functions as one unit and its sta11d in identical matters cannot be different merely because the officers dealing with the two files are different. In any case, if there are substantive reasons in facts or in law take a different view the same should be set out in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Family Trust, of which Ms. Renu Tharani was a beneficiary, was upheld by this Hon'ble Tribunal. The case is distinguishable; since in that case, the assessee declined to. sign the consent waiver letter to enable the Revenue to obtain all necessary details from the foreign bank, and accordingly; an adverse inference was drawn by this Hon'ble Tribunal; and consequently the additions were upheld. In the present case, not only has the Appellant duly co-operated with all relevant authorities, but rather this. fact is also affirmed by the relevant competent authority; i.e. the Swiss Federal Tax Administration. Thus, the case of Renu Tharani (supra) is not applicable. 125. Similarly, an unsigned letter purportedly issued to Credit Suisse AG, Zurich by Sorwood Development SA is relied upon by the Commissioner (Appeals) to claim that certain payment authorizations were issued, but neither has the letter been shown to have been acted upon by any person or party, nor is the Letter signed, and furthermore, inspection has not been furnished. In_ any event the purported letter -does not bear the signature of the Appellant, and it must, therefore, constitute a 'dumb' docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were also available with the Revenue at the time of issuance of the PCIT letter cease to be.at relevance. The Revenue has also obtained the records of formation and shareholding patterns of Kinetic Holdings Limited and Avit Investments Limited, and therefore, no scope remains to assert that the Appellant is a contributor to the Trust. 128. The Revenue having also conceded the existence and validity of the Trust and the Instrument of Trust dated 7 September 1989 in the IT Act proceedings and the WT proceedings, through inter alia purporting to rely upon covenants concerning appointment and removal of trustees, etc., is precluded from challenging the validity of the Instrument of Trust in BMA proceedings. The Instrument of Trust has been certified by the original trustee, Mr. Michael Collins of Albany Trustee Company Limited, whose authoritative validation dated 7 March 2016 (Vol.1, page 54) in relation to the Instrument of Trust is further borne out by his signature on the Instrument of Trust (Vol.l, page 22) and further participation in June 2017, in the preparation of the source of trust wealth certification jointly with then current trustees, putting beyond the realm of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the wealth tax proceedings of the Appellant, aft r referring to the beneficiaries listed in Part II of First Schedule of Instrument of Trust, has categorically rejected this contention of the Revenue as to 'sole beneficiary', holding that- ''24. From the above chart of beneficiaries, it is clear that the assessee is not the only beneficiary, it consists of other beneficiaries, who are direct lineal descendants of Late Shri Pratap Malpani, Late Ashokvardhan Birla and spouses of their respective descendants. In airy case, it could be seen that a charitable organization ii also one of the beneficiary together with assessee and aforesaid individuals. Hence, even if aforesaid individuals other than assessee do not survive. still assessee alone is not the sole beneficiary. It is the duty of the existing trustee to distribute the income and benefits among all the beneficiaries including charitable institution. 131. The Revenue is bound to have considered all records available, gathered since the 2014 search proceedings, when it conceded in the WT Act proceedings that the Trust wealth did not emanate from India, arid is bound to. be held liable to that position in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of IT Act proceedings, asserted that the right, power and authority vested upon the Appellant, under the Instrument of Trust, for the appointment and removal of trustees, established that the Appellant was in control of the Trust, and further was the sole beneficiary and beneficially owned its assets/income, which was thus taxable in the hands of the Appellant. Revenue has, in particular, relied upon clause 8 of the Second Schedule to the instrument of Trust, to assert that the power of appointment of new trustees and removal of trustees conferred ultimate control to the Appellant. c) Having relied upon the Instrument of Trust, and in particular upon the power for the appointment and removal of trustees contained therein, it is not available to the Revenue to now claim in BMA proceedings that the Instrument of Trust does not exist. The Revenue is blowing hot and cold at the same time, which is against the doctrine of fair play and inconsistent with settled principles of approbate and reprobate. d). Insofar as concerns the connection of AT-351 (Guernsey trust, settled 1989) with Banyan Trust (Guernsey); the underlying assets are identical, i.e., the corporate structur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 2017, in consultation and coordination with former trustees, lawyers of the trustees and lawyers of the non-resident beneficiaries. of the Trust, which provides comprehensive details of creation and/or migration of trusts, and also the source of wealth and -investments from time to time which was taken into consideration by the PCIT, who in turn accepted in letter dated 28 August 2017 (Vol.1,@ pg. 311) that the assets of Kinetic Holdings Limited and Avit Investments Limited belonged to Late Mr. Pratap Malpani. Each of the trustees, some trusteeship arms of leading international banks, and also Confiance Limited, have at all material times lawfully carried on, at the material time, the business of trusteeship, with full accountability to the jurisdictional authorities in the country of incorporation. The Indian Revenue, through Tax Information Exchange Agreements, is bound to have secured material information concerning the existence of the Trust. In the course of IT Act proceedings it transpired that various documents, including the trust instrument pertaining to Bird International Foundation), were available with Revenue, through FT TR. h) No material has been brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cessation of the Appellant's status as beneficiary of the Trust, at paragraph 18(3) at Page 1976-1977. As such the position that was not contested by Revenue in the IT and/or WT proceedings cannot now be contested in the BMA proceedings, on the principle of approbate and reprobate. b) The source of wealth statement dated 27 June 2017, duly issued by existing Trustees of the Banyan Trust i.e., Confiance Limited (now succeeded by Praxis Trustees Limited) has certified that the existing class of beneficiaries was wholly replaced on 14 July. 2014 by a new class of beneficiaries, which does not include the Appellant or any other Indian residents. c) In order to counter the belated allegation of the Revenue that the Appellant has not produced authentic material in relation to cessation as beneficiary, a clarificatory validation of the June 2017 source of trust wealth certification has been obtained also from Praxis Trustees Limited on 4 August 2021, and duly filed under cover of application dated 5 August 2021 in order to establish the current position in the matter, i.e., that the Appellant is not a beneficiary of the Trust, having so ceased in July 2014. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyes of law. 5. COnfiance letter dated 20 and 24 April 2012 a) During the IT Act proceedings, the Appellant relied upon the source of trust wealth statement, issued in June 2017 by the trustee Confiance Limited (now succeeded by Praxis Trustees Limited), which had carried out a detailed analysis of the creation of the irrevocable offshore discretionary trust by the non-resident settlor/contributor of AT-351 Trust, migration of trusts and assets from time to time, and also certified that the existing class of beneficiaries was wholly replaced on 14 July 2014 by a new class of beneficiaries which did not include the Appellant or any other Indian residents. It is not open to Revenue to cherry pick documents issued by the trustees, disregarding that the assets of. Kinetic Holdings Limited and Avit Investments Limited are admitted by the PCIT to have been held at the material .time by Late Mr. Pratap Malpani. b) In any event, since the Revenue has unequivocally admitted, in the WT Act proceedings that the Appellant is not a contributor to the Trust, it is not available to the Revenue to adopt an inconsistent position for purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd CBDT Letter No. F.No.286/98/ 2013-IT (INV.II)], dated 18 December 2014 wherein it is made clear time and again that admissions retracted subsequently do not serve any useful purpose. Reliance is also placed on the ruling of D.S. Agencies Associates v. ACIT [(2017) 82 taxmann.com 252 (Mum. Trib.) - Para 24] wherein it was held that additions made on the basis of retracted statements are without a y basis and deserved to be deleted absent corroborative material on record. b) In any event, Mr. Lath has made statements inconsistent with documentary material available on record with the Revenue as to beneficial ownership of Kinetic Holdings Limited and/or Avit Investments Limited of Shri Pratap Malpani, which has also been conceded by PCIT letter dated 28 August 2017 (Vol.1, Page 311). c) In the course of cross-examination of Mr. Lath the Appellant established that the Appellant was not a contributor of any asset in any form, from India or any foreign asset, the Appellant was not a contributor to the corpus of Banyan Trust or any other entities therein, and further that the Appellant has not received any distribution as a beneficiary in his individual capacity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the .sons of Pratap Malpani allegedly confirmed that they did not execute any renunciations of their rights under the Trust have not been produced to the Appellant in order to enable the Appellant to cross-examine the sons who are claimed . to have issued statements. Copies of such statements were bound to have been furnished to the Appellant. instead, the Revenue claims that since.one of the sons was resident in the house of the Appellant, therefore, the Appellant was bound to be aware. of such statements. The law prescribes that a statement that is being relied upon by the Revenue must be produced to the party against whom such a statement is intended to be used, and an opportunity for cross-examination is liable to be afforded. Having failed to fulfil the minimum criterion prescribed in law for admissibility into evidence of such purported. statements, it was not available to the Commissioner (Appeals) to rely upon such contentions, all culled out of an impugned ITSC order, to the detriment of the Appellant 10. Appellant is sole beneficiary of the Trust a) The Revenue submission is significant, for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust with the Appellant. e) In any event, the Revenue submission is founded on the assumption that Form A only discloses the Appellant's name as the person having beneficial ownership, which is mere conjecture at best, since the framework of tax information exchange, encapsulated in TIEAs has the limitation of delivering documents strictly pertaining to the person in respect of whom an enquiry is initiated for information request, and no further. f) The Revenue submission also completely disregards order- of this Hon'ble Tribunal, which his already rejected this very contention in the WT proceedings, and concluded that the case of the Revenue as to the Appellant being the sole beneficiary is unsustainable (refer para 29- page 2014). g) No scope exists for treating the Appellant as sole beneficiary of the entire assets and income of the Trust exigible to BMA in the hands of the Appellant. Such an interpretation would result in denuding and eviscerating lawful rights and entitlements of other beneficiaries under the Instrument of Trust. h) The Appellant, by virtue of having ceased to remain a member of the class of beneficiaries of the Trust, in J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page no. 1 Whether the appellant has discharged the onus placed upon him to satisfactorily explain the source of the investment in the assets i.e. foreign bank accounts' where he is listed as the sole beneficial owner? / Ground Nos 3, 8, and 9] 1 2 Whether the Appellant has ceased to be beneficiary with effect from 14 July 2021 and does the Black Money Act apply retrospectively? 6 3 Does the FAQ 31 of the CBDT circular exclude the beneficial owners' definition under the PMLA Act, 2002 and restricts the definition of beneficial owner to that defined under section 139(1) of the Income Tax Act? [Ground Nos - 5, 8, 11 and 12] 11 4 Whether the Tribunal order dated 24 December 2020 in Wealth Tax proceedings can be relied upon by the appellant for the proceedings under BMA? [Ground Nos - 1 and 2] 22 5 Whether the assets have already been considered in the proceedings under the Income Tax Act, 1961? {Ground Nos-2 and 15} ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Renu T Tharani v DCIT, International Taxation [2020] 117 taxmann.com 804 (Mumbai - Trib.) has distinguished the judgement of the Supreme Court in HMM Vikramsinhji of Gondal (supra) on the ground of non availability of trust deeds. Relevant extract: 47. As regards the repeated references to Hon'ble Supreme Court's judgment in the case of Estate of HMM Vikramsinhji of Gonda (supra), These observations have no relevance in the present context. Firstly, neither there is any trust deed before us, nor the question before us pertains to taxability of income of the trust. Secondly, beyond a mention in the base note as a personneslegalesliees (i.e. related legal persons), there is no evidence even about existence, leave aside nature, of the trust. Thirdly, the point of taxability here is benefici.al ownership of GWU Investments Ltd., a Cayman Island based company, by the assessee. Finally, even if there is a dispute about the alleged trust, the dispute is with respect oftaxability of funds found with the trust and the source thereof. Clearly, therefore, the issue adjudicated upon in the said decision has no relevance in the present context. The very reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid AT-351 trust (with no settler) were resettled in Nebola Trust in 1999, then from Nebola Trust to Bird International foundation in 201O and therefrom in the Banyan Trust Limited in 2011. An important thing to note here is that no explanation/ document has been provided which would prove as to how the assets along with subsequent accretions have migrated from AT-351 trust to Nebola Trust and therefrom to the subsequent trusts. The appellant has failed to provide any explanation i.e. live link connecting the assets of AT-351 allegedly settled by Mr Malpani and the source of funds deposited in the bank accounts wherein the appellant is listed as beneficial owner. Only answer forthcoming from the appellant is reliance on a document issued by Confiance Limited who is expert in Somersault. Confiance Limited is paid service provider of the appellant and can be removed by the appellant at will (mentioned in Trust deed- Paperbook - Volume 1 - Page 19). On 20th April 2012, Confiance Limited submitted that the Mokopane Limited was asset contributor of the Banyan Trust and 4 days later in the same month of April 2012 it has issued a certificate that Yashovardhan Birla was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Hence, the reference to certain sections of the Indian Trusts Act is wholly incorrect because the trust is allegedly based in Guernsey and governed by the local laws. (See page 1 of the Paperbook - Volume 1 - for AT 351 Trust). However, as far as the alleged Banyan Trust is concerned since no trust deed is produced, it cannot be ascertained which country it is incorporated in. But the appellant contends that it is based in Guernsey albeit without any evidence. Thus, the Assessing Officer has rightly assumed the jurisdiction under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, because both the conditions are satisfied i.e. the appellant is a beneficial owner of the undisclosed foreign bank accounts and has not provided any explanation whatsoever about the source of the investment in such accounts. ISSUE-2 Whether the Appellant has ceased to be beneficiary with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emoval of doubts, it is hereby declared that- (c) where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly. Analysis Section 72(c) provides that, if the foreign asset has been acquired or made prior to commencement of this Act and no declaration in respect of such asset is made under section 59, such asset shall be deemed to have been acquired or made in the year in which notice for assessment issued by the assessing officer. Further, Rule of Valuation of undisclosed foreign assets contained in Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules , 2015 (hereinafter referred as the Valuation Rules ), too, gives indication of such retrospective applicability, in the following manner Rule 3 (1) (e) Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (e) value of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid on such fair market value and not on the balance as on date. Question No. 20: A person held a foreign bank account for a limited period between 1994-95 and 1997-98 which was unexplained. Since such account was closed in 1997-98 does he need to declare the same under Chapter VI of the Act? Answer: Section 59 of the Act provides that the declaration may be made of any undisclosed foreign asset which has been acquired from income which has not been charged to tax under the Income-tax Act. Since the investment in the bank account was unexplained and was from untaxed income the same may be declared under Chapter VI of the Act. The consequences of non-declaration may arise under the Act at any time in the future when the information of such account comes to the notice of the Assessing Officer. Question No.22: A person acquired a house property in a foreign country during the year 2000-01 from unexplained sources of income. The property was sold in 2007-08 and the proceeds were deposited in a foreign bank account. Does he need to declare both the assets under Chapter VI of the Act and pay tax on both the assets? Answer: The declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 lakh Question No. 29: Whether for the purpose of declaration, the undisclosed foreign asset should be held by the declarant on the date of declaration? Answer: No, there is no such requirement. The declaration may be made if the foreign asset was acquired out of undisclosed income even if the same has been disposed off and is not held by the declarant on the date of declaration. ISSUE 3 Does the FAQ 31 of the CBDT circular exclude the beneficial owner's definition under the PMLA Act, 2002 and restricts the definition of beneficial owner to that defined under section 139(1) of the Income Tax Act? (Ground Nos - 5, 8, 11 and 12) The appellant's counsel has relied on Swiss FTA's letter on Page 33 of the Paperbook - Volume I, to contend that the beneficial ownership information collected for anti-money laundering purposes cannot be used for tax purposes. Further, the appellant's counsel has repeatedly relied on FAQ 31 of the Circular no. 13 of 2015 dated 6 July 2015 to contend that the beneficial owner under the AML regulations cannot be considered as beneficial owner for the purpose of the BMA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) of sub-section (1) of section 90A, sections 119, 133, 134, 135, [138, 144A], Chapter XV and sections 237, 240, 245, 280, 280A, 280B, 280D, 281, 281B and 284 of the Income-tax Act shall apply with necessary modifications as if the said provisions refer to undisclosed foreign income and asset instead of to income-tax. If the intention of the legislature was to restrict the definition of the beneficial owner to that provided under the Income tax Act, it would have been so provided expressly in the BMA. In the absence of such express provision, to restrict the meaning of beneficial owner to that under 139(1) of Income tax act would be absurd. Hence, as correctly held in the case of ACIT v Jatinder Mehra (2021] 128 taxmann.com 152 (Delhi - Trib.) we may take cues to interpret the said term from the other Indian laws and reputed legal dictionaries. 25. However, as the entity involved where the money is found credited, it needs to be examined whether the assessee has 'beneficial ownership' on these companies/ entities. As stated earlier The Black Money Act 2015 does not define the term 'beneficial ownership' and The Income-tax Act 1961 explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;.. Section 2(fa) of the Prevention of Money Laundering Act, 2002 Beneficial owner means an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person;] Rule 9(3) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 The beneficial owner for the purpose of sub-rule (1) shall be determined as under - (a) where the client is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means. Explanation. - For the purpose of this sub-clause- 1. Controlling ownership interest means ownership of or entitlement to more than twenty-five per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonged to that person, even though legal title may belong to someone else, esp one for whom property is held in trust.' Law Lexicon One who, though not having apparent legal little, is in equity entitled to enjoy the advantage of ownership Klaus Vogel Beneficial owner is a person who is free to decide whether or not the capital or other assets should be used or made available for use by others (i.e., the right over capital), or how the yields from them should be used (i.e., the right over income), or both Webster's dictionary Beneficial owner is a person who is entitled to receive the income of an estate without its title, custody or control. Analysis On a holistic reading of the above definitions, it is clear that there exist two primary conditions for a person to be considered as the beneficial owner: A person who exercises effective control of the legal entity through ownership or otherwise; or Is entitled to the benefits of the asset/interest without having legal ownership. In the present case, there is no doubt that the appellant had effective control over the trust. He had right to appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions take place in. secret , and therefore, simply on the ground that such direct evidence is not brought on record by the revenue authorities, the assessee cannot go scot free. As observed by Hon`ble Supreme Court in the said case, it is upon the alleger to prove that it is so, ignores the reality . When we follow the path, as laid down by Hon'ble Supreme Court in the case of Sumati Dayal (supra), by considering surrounding circumstances and applying the test of human probabilities and do not take a superficial approach to the problem , the inescapable conclusion is that the explanation of the assessee is only fit to be rejected... 46. While we have noted the claim of the assessee that she is a discretionary beneficiary of Tharani Family Trust, that fact does not find mention in the base note. As we have clearly analyzed above, the base note shows that the assessee was beneficial owner or beneficiary of GWU Investments Ltd. We may add that in the rema the remand report filed by the Assessing Officer, there is a reference to some unsigned draft copy of the trust deed having been filed before him but neither this deed is authentic nor is it placed before us in the pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough a whistleblower. Support was also taken from the investigation done by the Permanent Sub Committee of the US senate. Thus, there is no reason as to why even better evidence of beneficial ownership i.e. Form A cannot be relied upon. Ambrish Manoj Dhupelia v DCIT, Mumbai [2017] 87 taxmann.com 195 (Mumbai - Trib.) Furthermore, I find that in the present case, from the employee of the said foreign bank, sovereign government of Germany comes into possession of documents relating to the deposit in the said bank. These deposit and detail give the name and address, date of birth, passport copy and all relevant particulars of the assessee. Then the sovereign government of Germany passes on this information to the sovereign government of India. Thereafter, the said document and information comes into the possession of Central Board of Direct Taxes and, thereafter, to the assessing officer. In this scenario, the assessee claim that the assessee has no information about the said bank deposit is totally unsustainable. That assessee's name and address, date of birth, passport copy and other particulars were planted in those documents to the prejudice of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be ignored and treated as imaginary creation of the officers of the said bank and without knowledge and involvement of the petitioner. The ITSC has made reference to the banking procedures applicable, the strict KYC norms, the legal mandate and the requirement to identify and record details and particulars of the real or beneficial owner. It was noted that the petitioner had not disputed his signatures on the documents. The objection was with reference to date of signing. The identity of the petitioner was also established by verified copy of the passport. 37 BSI Bank Limited, Singapore had also conducted due diligence vide Know Your Customer information. This information pertained and was relating to the petitioner, Main Akhtar Qureshi i.e. beneficial owner. The information states that Ajit Prasad, father -in-law of the daughter of the petitioner, was an existing client of the said bank and two employees of the bank had known Ajit Prasad for the last five years. Ajit Prasad had introduced the petitioner, Moin Aktar Qureshi. Further, the following facts demonstrate that the appellant was the beneficial owner as well as asset contributor of the alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso prohibits the Swiss banks from providing active assistance in tax evasion and similar acts. Thus, one of the purposes of the documentation under the AML regulations is also to prevent tax evasion. Hence, there is no reason why Form A - one of the important documents under the AML regulations recording ultimate beneficial ownership cannot be used as evidence under tax proceedings. ISSUE 4 Whether the Tribunal . order dated 24 December 2020 in Wealth Tax proceedings can be relied upon by the appellant for the proceedings under BMA? [Ground Nos-1 and2] Extract from the Tribunal Order in case of appellant in appeal no. W.T.A. No. 02 to 08/Mum/2020 - Assessment Year: 2007-08 to 2013-14 33. We are in agreement with the submission of the assessee that the narrow remit of 'assets' under section 2(ea) of the Wealth Tax Act, held to be an exhaustive definition, does not permit eligibility of offshore assets of an offshore trust to wealth tax in the hands of the Assessee. We hold that there is no room for intendment in a taxing statute. 38. Coming to the argument of the tax authorities that the undisclosed bank accounts in the foreign ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Wealth tax act cannot be relied as binding precedent in assessment under BMA due to different nature and wider scope of proceedings under BMA. ISSUE 5 Whether the assets have already been considered in the proceedings under the Income Tax Act, 1961? [Ground Nos - 2 and 15] Excerpts from The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. 2015 ( BMA ) 4. Scope of total undisclosed foreign income and asset (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,-... (3) The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act. 5. Computation of total undisclosed foreign income and asset (1) In computing the total undisclosed foreign income and asset of any previous year of an assessee, -... (ii) any income, - (a) which has been assessed to tax for any assessment year under the Income-tax Act prior to the assessment year to which this Act applies; or (b) which is assessable or has been assessed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issued by the Assessing Officer and the provisions of this Act shall apply accordingly. Hence, the Assessing Officer under the BMA has right to proceed against the appellant for his undisclosed assets outside which have not been considered under the Income tax Act. Further, Section 5(1)(ii)(b) of the BMA provides credit for income that has already been assessed under the Income tax Act. In the present case, BMA is invoked only for undisclosed foreign assets. Hence, section 5(1)(ii)(b) does not apply. Thus, in the absence of the express provisions under the Income Tax Act which bars the initiation of proceedings under the BMA, the tax authorities have correctly proceeded under the BMA. ISSUE 6 If the appellant was precluded from filling voluntary declaration under Section 59 of the BMA due to express bar under Section 71 of the BMA, can he be liable to tax under BMA? Excerpt from The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ( BMA ) Chapter not to apply to certain persons 71. The provisions of this Chapter shall not apply- (d) in relation to any undisclosed asset located outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Later, in 20 January 2015 for the first time (after search was conducted} the appellant sought to explain the said structure as a legacy from Late Mr Pratap Malpani albeit without any evidence. Hence, the Assessing Officer has correctly assumed jurisdiction under the BMA and must be allowed to proceed against the appellant to unearth the true extent of undisclosed assets located outside India. 36. We have carefully considered the submissions and perused the record. We note that we are sitting in appeal against the dismissal by the ld. CIT(A) to the assessee s challenge to judicial defect in issuing notice by the A.O. under BM Act to the assessee. We note that the assessee s challenge in this regard before the ld. CIT(A) was pending for quite some time. The assessee had to approach the Hon'ble Jurisdictional High Court in this regard. The Hon'ble Jurisdictional High Court has given certain direction. 37. The Hon'ble High Court had noted that the assessment proceedings in the meanwhile, were in progress against which the jurisdictional issue was raised. The Hon'ble High Court directed to the ld. CIT(A) that he shall dispose of the pending appeal before it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject matter of wealth tax proceedings before this ITAT. The assets and the bank accounts in question were already the subject matter to the Wealth Tax Assessment. The ITAT in Wealth Tax assessment has decided the issue in favour of the assessee. Some of the findings of the ITAT in the aforesaid Wealth Tax order has already been extensively dealt with in the aforesaid orders of the ld. CIT(A) but the same may be reiterated in the summary of the same here as well. 39. We note that the ITAT in wealth tax proceedings have already given a finding that the assessee was nominated as one of several beneficiaries of an offshore irrevocable discretionary trust, settled-in the year 1989 by the assessee s non-resident late maternal uncle Shri Pratap Malpani. That the assessee was not a contributor to the trust structure. That the assessee is not liable to be construed as sole beneficiary of the trust. That the Revenue cannot collapse the offshore trust structure. That the assessee was not a substantial owner of the assets settled upon trust held through Knitec Holdings Ltd. That the bank account in foreign jurisdictions pertaining to offshore entities could not be treated as bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld. CIT(A) is rejecting the same by holding that the same is not to be relied upon. In our considered opinion, on the touch stone of the Hon'ble Supreme Court decision referred above and the legal maxim of approbate and reprobate, the Revenue cannot be permitted to take a contrary stand in the proceedings before the ITAT that now they are doubting the veracity of the trust deed settled by Shri Pratap Malpani. Once it is held that the Revenue is not doubting the said trust deed, the entire edifice of Revenue s case in this case fails as it is clear that the said trust was settled by the assessee s maternal non residential uncle Shri Pratap Malpani. As held by the Hon'ble Bombay High Court in the case of Malaysian International Trading Corporation vs. Mega Safe Deposit Vaults (P.) Ltd. (supra) that where no evidence adduce regarding the foreign law, the presumption is that it is the same as Indian law on the point in consideration. The assessee s contention in this regard was that in such circumstances, the trust settled abroad has to be taken as under the Indian trust. In such circumstances, the rights and duties of the settler is governed with reference to appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income Tax Officer upto preceding assessment year. This submission was rejected on the ground that as the assessments were subject matter of settlement commission. We note that the settlement commission had rejected the assessee s plea and these matters proceedings are already separately going on.Hence by no stretch of imagination can lead to a conclusion that incomes are not been assessed as the Revenue has not dropped its plea/withdrawn its plea, that these incomes are not exigible to income tax. Once it is so held, these assets cannot again be the subject matter of black money proceedings at this stage, as it will amount to double prejudice to the assessee which is not sustainable in law. 45. We further note that another grievance of the assessee is that various materials which have been referred by learned CIT(A) in his order rejecting the jurisdictional challenge have not been confronted to the assessee at the time of learned CIT(A) s order dismissing the jurisdictional challenge. We note that this is a very germane point as the principle of natural justice in this regard have been ignored by learned CIT(A). It is evident that the catena of documents which learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding assessment year and that for present Assessment Year the assessee has still time to file income tax return. Hence, it is the claim of the assessee issue of notice is premature. This plea of the assessee has been rejected by the authorities below by holding that there is no such bar in the black money act. However, we note that definition of undisclosed asset in the back money act clearly provides that assets created out of income assessed in income tax already shall be excluded. Hence, when the revenue has already assessed these assets under income tax proceedings upto previous Assessment Year and for current assessment year time for filing the return has not expired, assessee s plea that the issue of notice is premature is tenable and accordingly we accept the same. The bar in the ACT is inbuilt inasmuch as it has been provided that assets out of income assessed to income tax shall be excluded from the purview of undisclosed asset in Black Money Act. Hence, it is abundantly clear that as per the scheme of the act, there cannot be a simultaneously proceedings on the same asset/income under Income Tax Act, 1961 as well as Black Money Act. The doctorine of double prejudice do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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