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TMI Blog2021 (11) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... elf will become unworkable. Therefore, for both of these reasons- i.e. (a) the contextual requirements being otherwise, and (b) the adoption of this meaning rendering the provisions of BMA becoming unworkable, the definition under Explanation 4 to Section 139(1) cannot be adopted in the context of the BMA. We reject this plea of the learned counsel as well. Levy of interest under sections 40(1) and (2) of the BMA, which, in turn, refers to interest under sections 234A, 234B and 234C - As submitted that the question of levy of interest under sections 40(1) and 40(2) is only with respect to tax on an undisclosed foreign income and not in respect of tax on an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the impugned assessments is undisclosed foreign income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the investigation wing were analysed. The two undisclosed bank accounts reflect credit entries of US$ 122,011,244 and US$ 25,011,282 (equal to ₹ 999.74 crores, as computed by the Assessing Officer by adopting the rate of 1US$ as equal to INR 68), but then many of these entries were intra-bank and contra entries. The incorporation documents of the GJC-BVI, the documents regarding the opening of and operation of the bank accounts with UBS, AG- including beneficial owner declaration, correspondence, account holder s instructions and bank statements, the KYC documents- including passport copies of the beneficial owners, and several other critical documents were obtained by the investigation wing. It was also found that Portcullis Trust Net BVI Ltd, (described as its incorporator and its first registered agent) assisted the assessee, or rather its master client (a term used for the persons who coordinate the incorporation of an offshore entity, such as a banker), i.e. UBS AG s Singapore branch, in the incorporation of GJC-BVI, and the said entity was incorporated as a company under the BVI Business Companies Act, 2004. It was also found that during the period 2008 to 2011, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing were investigated further and relevant information was gathered from the agencies in different parts of the world. Armed with the information so collected, the investigation wing took steps to conduct search and seizure operations to take the matter to a logical conclusion. 3. It was in this backdrop that a search and seizure operation was carried out, on 17th March 2016, on the residential and commercial premises of the assessee before us. During these search operations, some of the material so collected by the investigation wing was confronted to the assessee, but assessee feigned completed ignorance about the GJC-BVI and about the offshore bank accounts, as described above, with the UBG AG s Singapore branch. During these search operations, a statement of the assessee was recorded under section 132(4) and the assessee was specifically asked about the particulars such as name and address of offshore entities like companies, firm, proprietary concerns or trusts etc. in which, either you or any of your family members are the director(s), authorized representative(s) or beneficial owner(s) or trustee(s), manager(s) or master client(s) or settler(s) or are present in any offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. Ans. To the best of my knowledge, answer is No. Q.44 Are you a beneficial owner or have any other interest in any foreign bank account? Ans. Personally No. However, Goldiam subsidiary in America and Honkong has foreign bank accounts. Q45. Did you have any business relations in any of your concerns with an entity M/s Hinkar Exports? Ans. I do not remember at this moment However, I can check and confirm the same. Q.46 Do you have any business connection or relation or any financial transactions of yours in your individual capacity or any of your family member or any of your entities in which you are having financial Interest in any manner whatsoever, with Hinkar Exports? Ans. No Q.47 Whether you had entered into any financial transactions with the Hinkar exports? Ans. To the best of my knowledge, answer is No. Q.48 Have you ever received any payments in India or out of India from Hinkar Export since the year 2008 in your personal capacity or in any of the entities to which you are associated in any manner whatsoever or having any financial interest? Ans. In the personal capacity the answer is No . For the business to the best of my knowledge, answer is No. Q.49 What do you k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflects the name details of the Authorised E-mail like name: Bhansali Rashesh, ID/Passport No: F3687352 E-mail address: [redacted by us] Please go through the contents of page 5 of these total 15 pages of Mandate and confirm as to whose name, Passport and E-mail details appears. Please explain these documents. Ans. I am not aware and do not recall and I am surprised to see these pages. I think there is some huge mistake or conspiracy in this matter. Q.55 I am showing you Account Opening Form for Corporation/ Trust/ Partnership/ Association of total 15 pages of Account No.161753 whereat page No. 11 reflects Authorized Representatives, passport nos, and signature of Director. These details include Authorized Representatives as RasheshManharkumar Bhansali (Passport ID: F 3687352) and Ami Rashesh Bhansali (Passport ID: Z 1457657) with signatures in the presence of a witness named Arunabh Banerjee and the place is mentioned as Singapore and date mentioned is 26.08.2008 . Please go through the contents of this document and explain. Ans. I have seen the contents of the document. I do not recall signing this document. The place mentioned is Singapore I will check and get back whether on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication for shares, Share Certificate which are duly signed by Sh. RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali. Please to through the contents of this document and explain? Ans: I have seen the pages that have shown to me and again state I don t have any comments to offer on the same. Q.60 Perusal of the bank statement of foreign bank account No.161753 with UBS AG, Singapore branch, standing in the name of Gold Jewel Corporation reveals the some of the credit amount as under: Date Name of Creditor Amount in US$ 08/06/2009 Gold Jewel Corporation 125,954 16/11/2009 Gold Jewel Corporation 20,645 22/02/2010 Gold Jewel Corporation 3,213,307 25/09/2008 Hinkar Exports 50,000 26/09/2008 Karnawat Surya Prakash 49,972 04/12/2008 Munish Anand/Sunish Anand 32,301 TOTAL 34,92,179 Please explain the nature of these credit entries. Also please state as to whether these amounts have been reflected in your returns of Income for the F.Y. 2008-09 2009-10 relevant to AY 2009-10 2010-11 as you being the beneficial owner of the said foreign entity's bank account. Also please explain and provide details of other offshore bank accounts held in the name Gold Jewel Corporation as 3 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -06-2009, 28-08-2009 being transfer of amount to the account of M/s. Goldiam international Limited. Please explain the nature of these debit entries in the foreign bank account of Gold Jewel Corporation. Please explain how these receipts are reflected in the regular books of accounts of M/s. Goldiam Jewellery Limited. Please provide ledger copies of these receipts in the books of accounts of M/s Goldiam International Limited. Also provide details of bank account to which these remittance are received by M/s Goldiam international Limited? Ans. I am not aware of these entries and will verify. I will verify by 20.04.2016. Q.68 Perusal of the bank statement of foreign bank account No.161753 of Gold Jewel Corporation with UBS AG, Singapore branch, shows debit entry of US$ 19743 as an outgoing payment as on 08.02.2010 to another bank account of Gold Jewel Corporation. Please explain the nature of this transaction and also please state as to which other account belongs to Gold Jewel Corporation this debit is going? Ans. I do not know. Q.69 Perusal of the bank statement of account No. 161753 of Gold Jewel Corporation with UBS AG, Singapore branch, shows debit entry of US$ 18000 as an outgo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieve there is some fraud and I am not the owner of this bank account. Q.74 You have denied that neither you nor your family members are beneficial owners or authorized representative in any offshore entity or any of their foreign bank accounts. However, the documents gathered from Intelligence reveal that you are the beneficial owner of the foreign bank account No. 161753 of an entity known as Gold Jewel Corporation. Please state as to why suitable action should not be taken in your case for giving false statement on oath. Ans. This is not my bank account I do not know anything about this. Q.75 You have stated that you have no relationship with Gold Jewel Corporation in the capacity of the beneficial owner. However, the documents received from Singapore Tax Authorities indicate that you are the beneficial owner and authorized signatory of the offshore bank account No. 161753 with UBS AG Bank, Singapore branch and offshore entity M/s Gold Jewel Corporation. Please explain as to why suitable action should not be taken in your case for giving false statement on oath? Ans. This is not my bank account. I do not know anything about this. Q.76 The evidence available with this Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rces. Ans. As stated earlier these do not belong to me hence I have no comments for the same. Q.84 In replies to earlier questions, you have mentioned that you do not have any foreign bank account. However, it has come to notice that you have bank account no. 137274 in UBS AG Bank Singapore in your name. This means that you have given a wrong statement on oath. Please explain why action may not be taken for giving false statement on oath. Ans. This is not my bank account. I do not know anything about this. 4. The assessee was thus in complete denial about the existence of GJC-BVI and the bank accounts with UBS Bank, even though there was overwhelming evidence not only to show that the assessee owned the GJC-BVI but also to establish that the assessee was operating the bank accounts in question. On the basis of inputs from the investigation wing, these accounts had credits aggregating to ₹ 999.75 crores. It was also noted that there were transactions, in the UBS Bank accounts, with the companies controlled by the assessee. While the search operations covered the assessee, his wife, and three other entities substantially owned or controlled by the assessee, a survey under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer and it was, inter alia, explained that what is material is that when a foreign asset or a foreign income is known to the Assessing Officer after the commencement of the BMA, as precisely is the case, and it is wholly immaterial as to the year in which the asset came into existence or existed. A fresh notice under section 10(1) was issued on 28th January 2019 seeking details of, amongst other things, the bank accounts abroad, assets held abroad, and the family members. On 7th February 2019, in response to a request of the assessee, the assessee was also provided copies of bank statements, KYC details held by UBS Bank abroad and other related documents. On 8th February 2019, once again the assessee made his submissions but was in complete denial of the offshore entity and the UBS Bank accounts in Singapore. On 11th February 2019, finally, the assessee was issued summons under section 8(b) of BMA and the contents of this summon were as follows: ........In this connection, your attention is invited to the notice u/s 10(1) of The Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015, dated 28-01-2019, wherein the following details were called f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Passport No.-F3687352 Residential Address Nishika Terraces, 55A, 5th Floor, Worli Sea Face, Ag. Khan Road, Mumbai- 30 Occupation Business Country India e-mail address [redacted] Mobile No. [redacted] Further, details of the other beneficial owner is mentioned as Client M/s Gold Jewel Corporation First name Ami Rashesh Bhansali Date of birth 23-05-1968 Nationality Indian Identity type Passport No.- Z1457657 Residential Address 1001, Sri RamikrishnaSadan, Pochikhanwala Road, Worli, Mumbai-25 Occupation Business Country India e-mail address [redacted] Mobile No. [redacted] The place on the documents is mentioned as Singapore and date of document is shown at 26-08-2018. The document is duly signed by Shri Rashesh M. Bhansali and Smt. Ami Rashesh Bhansali. 5. Copy of Passport of RasheshManharkumar Bhansali having the following details: Type of Passport P Country India Passport No. F3687352 Name RasheshManharkumar Bhansali Nationality Indian Sex M Date of birth 06-07-1968 Place of birth Mumbai MS Place of Issue Mumbai Date of issue 03-05-2005 Date of expiry 15-02-2020 Father's name Bhansali Manharkumar Mother's name Bhansali Shobhana Spouse name Bhansali Ami Rashesh Address Nishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Account Statement for A/c No.-137274 reflecting all credit, debit and balance entries. 16. Letter duly signed by Shri Rashesh M. Bhansali, requesting remittance of USD 71103.31 from Account No. 161753 to HSBC Mumbai account of Goldian International Ltd., USD 36,800 to HSBC Mumbai account owned by Goldian Jewellery Ltd., During the statement rendered u/s.132(4) of the Income-tax Act, 1961, dated 18-03-2016 the documents viz. account opening forms, copies of details and documents provided to the bank and correspondence between the UBS AG, Singapore with M/s Gold Jewel Corporation, BVI, Application form for issue of shares, Share Certificate, instructions issued to USB, AG Bank Singapore for various remittances etc. were shown to you and was confronted to you. However, you have denied to have any connection with M/s Gold Jewel Corporation, BVI. Further, you have also denied to have operated foreign accounts as mentioned above in UBS AG Bank, Singapore, in any capacity and also, beneficial ownership of the Account No. 161753 and 137274 is denied. The copies of the above mentioned documents have their own legal sanctity and validity. The documents and sequence of events, clearly an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 2015. It is further seen from the records of this office that no proper compliance to the earlier notices have been made. In this connection, since, sufficient opportunities have already been provided to you earlier, you are informed that this is the last and final opportunity of being heard which is being given to you. In the instance of noncompliance to this summon/ notice, an ex parte order u/s 10(4) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, will be passed on the basis of materials/information available on records, without any further notice and/ or opportunity. Failure to comply shall also entail invocation of Penalty provisions u/s 45 of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015. 5. On 19th February 2019, the assessee, in response to the summons, once again stated, as he had stated time and again, that he or his family had no connection whatsoever with the alleged two bank accounts (in the UBS Bank, Singapore) . While the assessee was in complete denial about the facts, he did raise several legal arguments in support of the non-applicability of the BMA on the facts of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rashesh Bhansali. Q.9 I am showing you the director's resolution of M/s Gold Jewellery Corporation, dated 12-08-2008, whereby the following resolutions were adopted. i Certificate of incorporation number of Gold Jewel Corporation (BVI) is 1491607. ii. Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali are appointed as first directors. iii. The Company can issue maximum number of 50,000 shares of a single class. iv. The company has received application of shares and the shares were approved and the company has issued 1 share of USD 1 to RasheshManharkumar Bhansali and Ami Rashesh Bhansali as joint tenants with right of survivorship. v. The books of accounts, records, resolutions and minutes of the company are kept at c/o UBS AG, Singapore, one Raffles Quay. # 50-12, North Tower, Singapore 048583 and the original register of members and directors to be kept at c/o Portcullis Trustnet Chambers, P.O. Box No.-3444, Road Town Tortala, British Virgin Islands vi. A bank account in the name of the company be opened with UBS, AG, Singapore and the Account Opening Mandates and forms be signed and account be operated by RasheshManharkumar Bhansali and Ami Rashesh Bhansali. Plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot aware of the company Gold Jewel Corporation, the documents that states that we are the first directors of the companies. To the best of my knowledge they are not signed by us. Q.13 Please peruse the copy of Share Certificate being shown to you bearing Certificate No.-001, issued by M/s Gold Jewel Corporation, certifying to have issued you and Smt. Ami Rashesh Bhansali one number of share. The document is issued on 12-08-2008 under your signature as a director. Please Ans. I am not aware of the company Gold Jewel Corporation, the documents that states that we are the first directors of the companies. To the best of my knowledge they are not signed by us. Q.14 From the documents i.e. MOA, AOA, appointment of directors, director's register and director's Resolution, Application for shares, Shares Certificate etc., shown to you and answers given by you in response to above questions, it is established that M/s Gold Jewel Corporation is an offshore entity incorporated and registered in British Virgin Island. Please confirm the same. Ans. As I have stated above, I and Ami Bhansali have not signed any such documents and we are not aware of M/s Gold Jewel Corporation. Q.15 From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorized e-mail of communication will be [email protected] of RasheshBhansai. Please confirm that this information/ mandate was given to the bank in the account opening form duly signed by you and Smt. Ami Rashesh Bhansali. Ans. To the best of my knowledge, these documents are not signed by me and Ami Bhansali and we are not aware of the e-mail id mentioned in the question. Q.20 From the various documents viz, MOA, AOA, appointment of directors, director's register and director's Resolution, Application for shares, Shares Certificate, bank account opening form etc., above questions and their respective replies given by you, it is established that you and Smt. Ami Rashesh Bhansali are the shareholders and director of M/s Gold Jewel Corporation and you and Ami Rashesh Bhansali had opened a bank account No.-161 753 in the UBS, AG Singapore, with a declaration that you and Smt. Ami Rashesh Bhansali are the beneficial owner of the Bank Account being the directors of M/s Gold Jewel Corporation, Please confirm and comment on the same. Ans. As per the documents shown to me, we have not opened any such bank account. Ami bhansali's signature is not there in the beneficial own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not mine. Q.26 I am showing you copy of document Remittance Instruction given to Anurabh Banerjee of UBS, AG, Singapore, by you and under your signature for Gold Jewel Corporation. As per the Remittance Instruction , you have instructed the bank to remit USD 36,800 from account No.-161753 (Gold Jewel Corporation, BVI) to HSBC India account No.- 000-64417-2 with instruction for onward credit to HSBC Lokhandwala Branch account 110-023587-001 (Goldiam Jewellery Ltd.) Please go through the remittance instruction, confirm that the instruction was issued by you under your signature and explain the transaction. Ans. I have not given any such instruction to the bank and the signature on the instruction is not mine. Q.27 I am showing you copy of document instructing Anurabh Banerjee of UBS, AG, Singapore, by you and under your signature for Gold Jewel Corporation. As per the Remittance Instruction , you have instructed the bank to remit USD 18,000 as per instructions. Please go through the remittance instruction, confirm that the instruction was issued by you under your signature and explain the transaction. Ans. I have not given any such instruction to the bank and the signature on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , instruction issued to the UBS, AG, Singapore and copy of account statement etc. shows that you are the beneficial owner of M/s Gold Jewel Corporation and instructed the Bank UBS AG, Singapore at various occasions under your signature and accordingly transactions were made. All the aforementioned documents bear your signature which matches with your signature as seen from copy of your Indian Passport bearing No. - F3687352. Please comment. Ans. I have not signed any such documents Q.32 In your statement u/s 132(4) of the Income tax Act, dated 18-03-2016, in answer to Q.No.-43, you have stated that you have not signed any account opening documents and any other do with UBS AG, Singapore. However from the MOA, AOA, Share application, Share certificate and bank account opening form, instruction issued to the Bank UBS AG, Singapore at various occasions under your signature and accordingly transactions were made. Al the aforementioned documents bear your signature which matches with your signature as seen from copy of your Indian Passport bearing No.- F3687352. Please comment. Ans. I have not signed any such documents. Q.33 You have denied to have signed any of the following document a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and what was this transfer of huge amount for? Ans. I do not know anything about this transaction. Q.42 Do you know any concern in the name of M/s Hinkar Exports? Ans. I do not know any such concern. Q.43 I am showing you an entry in the bank statement for Account No.-161753 maintained in the name of Gold Jewel Corporation, BVI in UBS AG, Singapore. On 25-09-2008, an amount of USD 50,000 is credited in the Account by M/s Hinkar Exports. What is your comment on the same and what was this transfer of huge amount for? Ans. I do not know anything about this transaction. Q44 Who is Shri Karnawat Surya Prakash? Ans. I do not know any such person. Q.45 I am showing you an entry in the bank statement for Account No.-161753 maintained in the name of Gold Jewel Corporation, BVI in UBS AG, Singapore. On 26-09-2008, an amount of USD 49972 is credited in the Account by Shri Karnawat Surya Prakash. What is your comment about this entry and what was this transaction for? Ans. I do not know anything about this transaction. Q.46 Who is Munish Anand and Sunish Anand? Ans. I do not know any of them. Q.47 I am showing you an entry in the bank statement for Account No.-161753 maintained in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by me. Q.53 Please state whether M/s Goldiam International Has received USD 71103.31, 36,800, 18,000 and 13,000 from M/s Gold Jewel Corporation, BVIP? Ans. I will check and get back to you on this. Q.54 Please furnish the bank statements of all bank accounts of M/s Goldiam International from the period from F.Y.-2007-08 to 2011-12. Ans. I do not have them readily available with me. I will furnish the same with you by as soon as possible. 6. The Assessing Officer noted the above and also reproduced the copies of documentary evidence such as bank s notification of account opening, account opening form, details and mandates to the bank, correspondence and instructions, investment services, agreements with the bank and signatures, declaration of beneficial ownership as declared, copies of passports, memorandum of charge, memorandum and articles of association of GJC-BVI, directors resolutions, register of directors, consent to act as directors, share certificates, account closing reference, application for shares etc. It was noted that the GJC-BVI was incorporated, through Portcullis TrustNet (BVI) Ltd and that vide directors resolution dated 12th August 2008, duly signed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable environment. ABA Route Number- ABA is an abbreviation for American Bankers Association'. ABA Route No. is a unique number assigned by the ABA that identifies a specific federal or state bank or saving institution. ABA transit number is used to identify the financial institution responsible for payment of a Cheques or other negotiable instrument. CHIPS- CHIPS is an abbreviation for Clearing House Interbank Payments System, This is a Private Clearing House in the United States for large-value transactions. The entire route of transfer of money from the undisclosed Bank Account to destination Account is illustrated as under. To further illustrate the channels of transaction the following diagrams is exhibited for a better understanding. 7.7 The linear chain of transaction in the foregoing discussions established the very fact that Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali incorporated offshore entity in the name of M/s Gold Jewel Corporation in the British Virgin Islands and they are the directors, equal share holders and beneficial owners of the aforesaid Company. Further Bank Account No.-161753 and 137274 were opened in the UBS, AG, Singapore and the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide. However, with a view to test the correct position, in law, merely owning the bank accounts will not automatically attract the provisions of the Black Money Act, since, as per the evidence produced by the department, the Bank accounts were operated only during the assessment years 2008-09 to 2010-11 and closed during year 2008 2011, which is well before the Bank Money Act came into force. Besides, information with respect to such bank accounts was available with the Department in 2013-14, which also is before the Black Money Act was enacted. As such, by owning the accounts also, I do not fall under the Black Money Act, more so for reasons, which are particularly set out in Writ petition No. 40 of 2019 filed by me before the Hon'ble Bombay High Court, and which is pending. 7. I may add that there are good reasons why I did not own up the bank accounts in my statements under section 132 of the Income tax, 1961. One of the primary reasons is that the alleged accounts opening form shows that the bank account was opened in Singapore and the Bank opening form purportedly bears my signature having been made at Singapore, whereas my passport is proof of the fact that I was not in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem in their own suggested schemes like various structural products, callable notes and bonds etc . It was explained that on maturity or redemption, the bank would take the loan back along with their interest and credited the difference to the account which was the actual gain In effect thus, here was a banker which gave assessee loans for the entire amount needed for purchasing their own products, and the only effective financial transaction was a net gain to the assessee on redemption. 10. In view of the submissions so made by the assessee on 28th March 2019, the summons under section 8(b) was issued for an appearance on that day itself, and a formal statement of the assessee was recorded. Some of the questions and answers so recorded are as follows: Q.5 In continuation to your earlier submissions furnished with this office in connection with Assessment proceedings in your case u/s 10(3) of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, you have made further submission dated 28-03-2019. Please go through the same and confirm that the submission is made by you. Ans. I have gone through the submission dated 28-03-2019 furnished in your office by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ami Bhansali. If at all you did not recollect this at the time Search and subsequent proceedings, did you not speak to your father about the issues raised during the course of Search and/or afterwards? Ans. During the Search, the concerned officer took me to another room and she showed me the related documents. Post that, he took me to my factory and then next day to my other office. Post the Search was over, I did tell my father about the question asked. As I could see, the eminent stress on him due to his old age and various age related ailments, I did not press on this matter further with him. Q.8 Being the director in all of the group companies, you the person looking after the business affairs of the group. Why and with what motive would your father open offshore Bank Accounts and incorporate offshore entity in the name of Gold Jewel Corporation, BVI ? Ans. I was the director in all our Group Companies. My expertise/role was only limited towards production, marketing and purchase of Raw Materials. My father who was Chairman and Managing Director, was always in control of finance and investments. All the policy decisions of finance, borrowing, investment expansion of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operated by you and Smt. Ami Bhansali. In your statement, you are stating that you are the only beneficial owner of the Bank Account No. 161753 However, in the Bank Account Opening form the names mentioned as beneficial owner are Rashesh M. Bhansali and Ami R. Bhansali. Further, in another KYC document, it is clearly mentioned that Rashesh Bhansali and Ami Bhansali will operate the bank account for an unlimited amount. Please offer your comments on the same. Ans. The account number 161753 pertained to M/s Gold Jewel Corporation, BVI. As a legal requirement for all companies, there needs to be at least two directors and therefore, I think, Ami being a housewife was also made director for the namesake purpose and for compliance only. She had no active role in operations of that company. Similarly, her name was added in the bank Account opening form for namesake purpose only. I think, her name was also included by my father in the Bank account to safeguard the interest in case of any eventuality. As you can see, her signatures are not there in the beneficial owner form, which is a part of the KYC documents. There is no records of her operating the bank account no. 161753 and she neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested with them in their own suggested schemes like various structural products, callable notes and bonds etc. So in reality, the loan amount was held with the bank only for which there was no requirement of any collateral security. On maturity or redemption, the Bank would take the loan back along with their interest and credited the difference to the account which was the actual gain. Q.19 On 22-02-2010, an amount is seen to be credited in Bank account No. 161753. The transaction details as mentioned in the account statement is incoming payment: Gold Jewel Corporation'. Please explain what is this credit amount and where has this come from and how can Gold Jewel Corporation pay to Gold Jewel Corporation? Ans. Sir, In the Bank Account No. 161753. I will take you to Bank Account Statement on 18-02-2010, when a UBS-Callable Range Accrual Note of US$ 5000000 was taken from the Bank by M/s Gold Jewel Corporation. The Accrual; note was to be redeemed on 15-05-2018. However, it was prematurely redeemed and the redemption proceeds were again credited to the same account of M/s Gold Jewel Corporation. Q.20 Do you wish to say anything else? Ans. Yes sir. The above statement is given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders are Rashesh Bhansali Ami Bhansali. My wife, Ami Bhansali was never a beneficial owner of M/s. Gold Jewel Corporation which is also clear from the fact that the beneficial owner form shown by you also does not bear her signature. 3. There has been no collateral given for availing the loans which are reflected in the statements of accounts shown by you to me. In fact these statements reflect that the loans taken from the same bank were invested with them in their own structural products, Callable notes, bonds etc.; that the same never went out of the account; that in reality the loan amount was held with the bank only and that on maturity or redemption, the Bank would take the loan back alongwith their interest and credit the difference to the account, which was the only actual gain. These statements reflect that there is no credit balance on closure of both the accounts. 4. I have now verified from the records in India that the remittances from the aforesaid accounts to the recipient Indian concerns were duly disclosed in the books of accounts of the recipients and offered to taxation. 5. I say that whatever I have stated above is true to the best of my knowledge. Solemnly aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documentary evidences provided by the Competent Authorities of Singapore through the FT TR, which has been discussed in length in the foregoing Paragraphs herein above, that the Assessee was a director in the offshore entity M/s Gold Jewel Corporation, BVI, and was a joint account holder in the Bank Account No. 161753 held in the name of M/s Gold Jewel Corporation, BVI, andmaintained in the UBS, AG, Singapore. The Assessee was also holding Bank account No. 137274 in the same Bank. The Assessee has signed various documents with regards to incorporation of the offshore entity and opening of bank Account. Further, the Assessee has not denied that the documents were signed by him. Therefore, the very fact is established amount of US$ 87500 being quarterly interest at 7% on Callable Range Accrual Note is credited periodically in the Bank Account No.161753. One of such credit was due between the periods from 12-06-2008 to 28-08-2008. However, entries are missing in the bank account for this period. Which is also required to be added in the total undisclosed income out of the Bank Account No. 161753. 9.5. It is pertinent to mention here that it was the onus of the assessee to bring materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing grounds: 1) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in passing the impugned order without affording adequate opportunity of being heard to the assessee. 2) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in invoking the provisions of Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015 since the same are neither attracted nor applicable to the assessee. 3) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in passing the impugned assessment order u/s 10(3) of Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015 which is bad in law and without jurisdiction. 4) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in taxing the amounts of ₹ 42,00,75,526/-(being equivalent to $.6323886.24). a) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in taxing the amounts of ₹ 2,37,67,078.59 / - (being equivalent to $357793.52) being the amount reflected in bank account no. 161753 belonging to M/s. Gold Jewel Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arguments were concerned, these arguments were rejected in entirety, and, in broad terms, it was held that even if an asset has been acquired before commencement of the BMA, the same would be taxable in the year in which it comes to the notice of the Assessing Officer. It was held that it is not a condition precedent for taxation under the BMA that the asset must continue to be held at the point of time when it is being brought to tax. A reference was made to the clarifications issued by the CBDT, to the provisions of the BMA, and to the Hon ble Supreme Court s judgment in the case of Gautam Khaitan Vs Union of India [(2019) 110 taxmann.com 272 (SC)]. It was also held that while an officer working in the investigation, whether a DDIT or ADIT, is an income tax authority under section 116, it is the matter coming to the notice of the Assessing Officer which is relevant for the application of BMA. So far as the factual part is concerned, the learned CIT(A) accepted explanation of the assessee so far as credit of US$ 3,213,307.60, as amount received on redemption of investment was concerned. Learned CIT(A) was of the view that once it is not in dispute that the amount is received on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of the Gold Jewell Corporation BVI, and be thus assessed in respect of the same, and, whether, in this regard, the coordinate bench decision in the case of ACIT Vs Jitendra Mehra (BMA No. 1/Del/20; order dated 7th July 2021) does not constitute a binding precedent inasmuch as it does not take into account Section 2(15) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015? (e) Whether the authorities below were justified in assessing the amounts, represented by certain entries in the bank account, under the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015, even though the assessee had furnished due and reasonable explanations in respect of the same? (f) Whether the learned CIT(A) was justified in deleting the amount of US $ 32,13,307.60 in UBS Bank Singapore account no. 161753 on the ground that the related bank credit on 22.2.2010 stands reasonably explained by the assessee, whereas under section 2(11) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015, what needs to explained is the source of investment and not merely the accounting entry? Rival contentions: 16. Shri Pardiwalla, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio of this case will squarely apply to the fact situation that we are dealing with. Learned counsel has also emphasized the fact that the assessee has been taxed on assets, and, not on income from these assets is evident from the fact that if the assessee was to be assessed on income, only the net receipts (i.e. net of expenses) could have been taken into account while the Assessing Officer has simply taken into account the gross receipts. Learned counsel further submits that wherever lawmakers wanted to use the expression has been , as would probably cover the assets not existing at the point of time when BMA came into force, the legislature has specifically done so, for example in section 5(1)(ii) where the expression is as also has been used alongside. 17. It is pointed out that as on the point of time when the provisions of the BMA came in force, i.e. on 1st April 2015, the related bank accounts were already closed. The bank account no 134274 was closed on 8th October 2008, and bank account no. 161753 was closed on 16th May 2011. It is thus contended that under section 3 the charge of taxis in respect of his total undisclosed foreign income and asset of the previous year and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the deposits made in the account with the bank since the date of opening of the account; or (ii) where a declaration of such account has been made under Chapter VI and the value of the account as computed under sub-clause (i) has been charged to tax and penalty under that Chapter, the sum of all the deposits made in the account with the bank since the date of such declaration subject to the proviso that where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account . It is his submission that the said rule undoubtedly covers the valuation of an undisclosed foreign bank account as well, but, in doing so, the rule goes well beyond the scope of the related provisions of the BMA. If Section 2(11) does not cover a bank account, this rule is irrelevant and we must read down the same. On the question whether we have the powers to read down the provisions of the rules, learned counsel relies upon Hon ble jurisdictional High Court s judgment in the case of CIT Vs Bombay State Corporation [(1979) 118 ITR 399 (Bom)]. It is submitted that a bank account is not an asset even though i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n undisclosed asset in respect of which the Government has received the information. He submits that it was in 2013 for the first time that the assessee received a notice in respect of these bank accounts, and the Government as such aware and had received the information about these bank accounts much before the BMA came into force. It is thus submitted that the bank accounts in question, even if treated as foreign assets, cannot be treated as unaccounted foreign assets. 20. Learned senior counsel s next point is that the assessee cannot be said to be the beneficial owner of the bank accounts in question. Learned counsel submits that the expression beneficial owner is a well-defined expression under the BMA, inasmuch as Section 2(15) of the BMA provides that all words and expressions used herein (i.e. Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015) but not defined, and defined under the Income Tax Act, 1961, shall have the meaning respectively assigned them in that Act and inasmuch as Explanation 4 to Section 139(1) of the Income Tax Act, 1961, states that beneficial owner in respect of an asset means an individual who has provided, directly or indir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er information available to him, whatever is invested is out of the funds provided by the bank on loan, and that no collateral security or margin money has been provided by the assessee. When it was pointed out that while the bank account shows interest income of US $ 4,36,527.78 but what is the position concerningthe taxability of the asset on which this interest income is earned, learned counsel submitted that the investments, on which this interest income is earned, was made out of the borrowed funds. He also points out that the asset in question, i.e. 7% UBS Callable Accrual Note 2008, for the US $ 5 million was acquired out of borrowed funds on 15th May 2008. It is pointed out that the early redemption of these securities, for the US $ 3,212,766, on 18th February 2010, was treated as unexplained by the Assessing Officer, but satisfied with the fact that these securities were purchased out of borrowed funds, and to that extent, this credit stands unexplained, this addition has been deleted by the learned CIT(A). Learned senior counsel thus justified the action of the CIT(A) on this point, which is a subject matter of revenue s appeal and is referred to in question (f) framed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit which supports the case of the assessee. In this backdrop, it is urged that the assessee s wife did not have anything to do with the bank accounts and she was not the beneficial owner of these bank accounts. In case anything is to be taxed in respect of these bank accounts, the same should only be made in the hands of this assessee. It is also pointed out that, according to this affidavit, no collateral security was given for the loans availed by the assessee. In particular, our attention is invited to the statement made in the affidavit to the effect that loans taken from the bank were invested with them in their own structured products, callable notes, bonds etc; that, in reality, the loan amount was held in the bank only and that on maturity or redemption, the bank would take the loan back along with the interest, and credit the difference to the account which was the actual gain . It was explained that for this reason there was no credit balance on the closure of accounts. It is submitted that it is not open to us to disregard the affidavit on these issues when the same has been accepted for bringing the accounts in question to tax. 22. When we asked the learned counsel w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provision of Section 72(c) which provides that even in respect of the assets acquired prior to the commencement of BMA, as long as the declaration has not been made in respect of the same, such assets can also be subjected to assessment under the BMA. 25. Learned CIT(DR) then submits that no word in a statute can be interpreted in such a manner so as to make the entire scheme of the Act redundant. It is submitted that the scheme of the Act, duly supported by interpretations by Hon ble Courts above as also by CBDT in the circulars issued on the subject, clearly provides that the assets held in past can also be subjected to assessment under the BMA when these assets are undeclared ones, and that is how the provisions of the Act must be construed. He then submits that there is no question of rule 3 (e) being contrary to the BMA provisions, and quite to the contrary, the provisions of the Act and the Rules must be read in a holistic manner so as to bring out the true scope of the provisions of the Act. When we do so, according to the learned counsel, the inevitable corollary is that a bank account is also required to be treated as an asset, as it existed as an asset in past- whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets- as is the clear mandate of the proviso to Section 3(1). As for the clarification, that is not in the nature if a concession and it only explains the scope of declarations to be made under the BMA. It is thus submitted that the circular is being quoted out of context. 27. As regards the explanation for the credit entry of US $ 3,212,766, on 18th February 2010, in the bank account, it is submitted that the entry may be explained inasmuch as it is a transparent manner, and, therefore, the investment does not remain unexplained. It is pointed out that the assessee has not given bank statements for the earlier period, and even this is not clear as to how margin monies are maintained for loans on these investments. Keeping all these factors in mind, according to the learned CIT(DR), learned CIT(A) has wrongly deleted this addition, and we are urged to restore the same. As regards other additions on the basis of credits, learned CIT(DR) relied upon the findings of the Assessing Officer. In particular, it was pointed out that the addition of US $ 2,186,000 is justified since the explanation of the assessee is not supported by any document, material or confirmation. Similarly, so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the asset held in past which is outside the ambit of BMA but his contention is that a bank account that is closed now cannot be taxed in respect of its balance earlier. It was then pointed out that what can be taxed in BMA is either an asset or an income, but credit entries cannot be equated with income and the bank account is not an asset anyway. The concept of beneficial ownership under the ITA was reiterated again, and it was submitted that the case of the Assessing Officer is that the assessee was the beneficial owner of the bank accounts but then the conditions precedent for establishing beneficial ownership are not satisfied. It was once again pointed out that not only the bank accounts were known to the assessee, these bank accounts were duly investigated upon as far back as in 2013 and, therefore, it could not be said that these are undisclosed foreign assets. In response to our specific question about funding of the investments, learned counsel filed a written statement which, inter alia, states that: On perusal of the entries in the bank accounts, it can be observed that the bank account reflect various entries in the nature of loans, investments, call deposits, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, we havetaken note of the following observation made in the said appraisal report only with a view to point out our doubt that the assessee has not shared full facts even now: An indicative annexure based on the brief analysis of the contents of the statement of the account for the Account No. 611254 held by the GJC with the UBS AG, Singapore from the period December 2008 (account opening) to May 2011 (account closing) is enclosed. As per the information received, the account number 611254 is the margin account to the GJC s account number 161753 and no separate account opening form is required [Emphasis, by underlining, supplied by us] 32. Learned counsel submits that he has no idea about this account and that he will take instructions. He submits that he will need time to obtain a copy of the account and analyze the same. We do not think it is necessary to deal with this account on merits as we cannot enhance the scope of the proceedings. The additions in respect of the said account is not an issue before us as on now. We are not inclined to deal with those aspects of the matter or to broaden the scope of controversy before us. Suffice to note that this input suggests that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iplicity of proceedings in the sense that in the event of Hon ble Bombay High Court upholding the challenge to the constitutional validity of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, the present proceedings will be rendered infructuous. Learned Commissioner (DR), on the other hand, prays that once the matter has come up for hearing, it is only appropriate that the matter be disposed ofat the earliest convenience. However, the learned Commissioner leaves the matter to the bench. 36. We are unable to accede to the request made by the learned senior counsel. There is no question of any parallel proceedings. As a final fact-finding authority, it is our bounden duty to place on record our understanding of the law and our understanding of the correct facts, and our reasons for having formed that opinion, so that Their Lordships can take appropriate judicial call thereon whenever the occasion arises. Our work is, in a way, is to put the things in proper perspective, whether legal or factual- and more so factual, and to facilitate superior judicial calls by Hon ble Courts above. Whatever we hold is, and shall always remain, subject to whatever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd legal propositions. 39. The enactment of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 did not only reflect the beginning of the relentless efforts of the present Government to check the menace of undisclosed assets and income stashed abroad but it also provided a window to all the wrongdoers to come clean, to pay their taxes honestly and to enjoy being on the right side of the law. 40. Unfortunately, however, many in our citizenry did not take this opportunity seriously and with the respect it deserved. They were blinded by the perception that our preceding establishments and the foreign Governments as also the multilateral forums, while giving this cause a somewhat superficial support, have all along been seen as turning a Nelson s eye to such things, and by the hope that this approach will continue to hold good until the proverbial Nelson, as the phrase goes, got his eye back . [Incidentally, Horatio Nelson, the character behind these famous expressions, i.e. turning Nelson s eye (signifying turning a blind eye) and not until Nelson gets his eye back (signifying something to last forever) was a British naval commander (1758-1805) who w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of commencement of this Act but on or before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any undisclosed asset located outside Indiaand acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on 1st day of April 2016- (a) for which he has failed to furnish a return under section 139 of the Income-tax Act; (b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Act; and (c) which has escaped assessment because of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise . In between the point of time when the inquiry concerning assessee s unaccounted foreign bank and the offshore company started and till the point of time when search and seizure operation was carried out, the assessee had an opportunity to come clean- the opportunity which the assessee never availed. 45. As early as 2013, the assessee was asked by the Dy Director of Investigation ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first directors of the company. To the best of my knowledge, these documents are not signed by us . When asked about the bank account, he declined having signed the related documents and claims that he is not aware of any such bank account in UBS AG, Singapore . However, when asked about entries in the bank accounts, he states that the entries appearing in the bank account statements of both the accounts are self-explanatory in the wording as loans and time deposits given by the bank . It is not his account but he is wise enough to explain the entries as loans and time deposits given by the bank ; that is somewhat unusual. The assessee is then shown specific written directions to the bank, in his own handwriting, but once again, he denies everything. The assessee was completely in denial mode all along the assessment proceedings, but just three days before the time limit for framing the BMA assessment order is to come to an end, the assessee owns up the offshore company as also the UBS AG s bank accounts in Singapore. 46. Let us take a pause here and consider how bonafide is this act of owning up the bank account, including the bank account in the name of GJC-BVI, and whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter owning up the bank accounts was handed over on 28th March 2019, the heading of attachment as Annexure to letter dated 27th March 2019- Total transactions in account reflecting as per bank account , with six-page explanations for each entry in these bank accounts, shows that this elaborate statement was also drawn up on 27th March 2019 itself. The assessee accepts that these papers are nothing more than copies of the very same papers that were shown to him by set of copies. 49. That certainly is an outlandish explanation, and, if anything, it shows the contempt that the assessee has for the wisdom of those who are to examine such explanations. The assessee also appears to be inconsistent in his approach. It is interesting to note that while, even according to the assessee s admission, he realized on 27th March 2019 that these bank accounts are his own accounts but then, on 28th March 2019 he was in Hon ble Bombay High Court, to plead for interim relief his writ petition no. 40 of 2019 [which inter alia stated that at all times, the petitioners have denied and holding such accounts (i.e. bank accounts with UBS Singapore) and still continue to deny the same - internal page 334 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneous evidence, received through the Government of Singapore, to establish that the assessee did actually operate these accounts and that the assessee made clearly discernible efforts to withhold the truth. 50. That is, of course, besides the point that, as we will see a little later, the assessee did not enlighten the Assessing Officer anything that the Assessing Officer did not already know. The moment the assessee is asked about anything else, that is not known to the Assessing Officer, he once again feigns his ignorance, and amnesia hits him again. Coming back to the explanation given by the assessee, it is only elementary that when an asessee is required to give an explanation, it is not that his onus is discharged the minute he gives any explanation, howsoever improbable it is. Hon ble Supreme Court has, in the case of CIT v. Mussadilal Ram Bharose [(1987) 165 ITR 14 (SC)], although in the context of penalty, has observed, approving a ful bench decision of Hon ble Patna High Court , that it was plain on principle that it was not the law that the moment any fantastic or unacceptable explanation was given, the burden placed upon him would be discharged and the presumption rebu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further with him . Clearly, therefore, the father was told about all these papers, and yet he did not have anything to enlighten the assessee on. He had the papers and father together, yet he did not recall anything. Now you have the papers and memories of father, and everything is recalled to the extent planned. This admission is also incorrect and misleading when he says that It seems he (late father of the assessee) open the aforesaid bank account in our names and operated the same. As I have come to know about this yesterday and on taking legal opinion also, I now am able to own up these accounts opened and operated by my father in my name . This statement appears to beex facie incorrect in the light of the following instructions, including handwritten instructions, given by the assessee to the UBS Bank, Singapore (marked for the attention of Arunabh Banerjee, who is described as an employee of UBS AG, as evident from the rubber stamp marking in the account opening contract and at most of the documents reproduced in the assessment order- Arunabh Banerjee, Wealth Management India Int l Asia, UBS AG Singapore, Extn 2085 ), and bank s internal marking shows not only the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01) at page 143 of the assessment order shows the credit to the Indian company controlled by the assessee. A copy of each of these bank instructions, debit to the GJC-BVI s account and credit to assessee s Indian company s account are placed below, exactly in that sequence: 53. It is also important to bear in mind the fact that these documents are received from official Government sources and these documents form part of contemporaneous records maintained by a bank. In view of our discussions above, the assessee has been untruthful all along and the explanation of the assessee does not inspire any confidence. 54. We may at this stage also take note of the fact that one more account of the assessee, i.e. margin money account no. 611254, has been mentioned in the supplementary appraisal report dated 14th August 2012- which was duly confronted to the assessee, but the assessee could not make any statement about the existence or otherwise of this bank account. The assessee was not truthful at any stage, nor is the assessee truthful even now. When we look at the bank statement for account no 137274 in the name of the assessee, this begins from 31st March 2008 and shows an opening negati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as evident from the material in the possession of the Assessing Officer, the books of accounts of GJC-BVI were kept at USB, AG, and the assessee could have therefore shared the same. However, there is not even a whisper about the financial statements of the GJC-BVI and other assets of, or transactions by, the GJC-BVI. The conduct of the assessee is thus indeed wanting, and non-cooperative. 56. This account also shows several entries with respect to the call deposits, such as on 8th April 2008, a debit of US $ 2,037,250 as transfer to call deposit and on 10th April and 11th April credits of US $ 397,619.24 and the US $ 382,188.19 as decrease of call deposits . Obviously, there has to be a call deposit account of the assessee but, despite our specific questions, no details are pointed out in respect thereof. All that is explained is that the credit from call deposit is explained by the call deposit being placed, but that does not answer the question as to what is the balance of the call deposit and what are the transactions there. Wherever the amounts are not matching or cannot be explained by any of the contra entries, the same has been offered to tax. There is certainly no objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld possibly be to create confusion in the process of assessment. If that was the object, the assessee does indeed appear to be successful. On the last few days available to the Assessing Officer, he was busy examining the explanations for the entries and rejecting the same wherever found to be incorrect. Rather than doing an assessment of unaccounted foreign income and assets, the Assessing Officer ended up doing an assessment on the basis of unexplained credits in bank accounts. As a matter of fact, when during the course of hearing before us, we asked learned Senior Advocate ShriPardiwalla whether he was explaining the credit entries in the bank accounts or he was explaining the unaccounted assets and income, learned senior counsel candidly pointed out that all that the Assessing Officer has done is to make an assessment on the basis of unexplained credits and it cannot be open to us to take any other approach at this stage. 58. Let us, in this light, address ourselves to the undisclosed assets and income offered to tax by the assessee, and the additions made thereto by the Assessing Officer. 59. The starting point of assessment of the bank accounts was the statement, explaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is neither any explanation for credits to this bank account nor copies of the statement of account for the earlier period. One cannot, therefore, proceed on the basis, even if the purchase of the redeemed security from that account is established, logically come to the conclusion that the investment in the said property is out of accounted funds. As for learned CIT(A) s observations that a mere credit to the bank account cannot be treated as income, he ought to have appreciated the approach adopted by the assessee who has, on his own, proceeded on the basis that the unexplained entries in the bank accounts are required to be treated as income of the assessee, and the Assessing Officer has simply accepted that approach. It cannot, therefore, be open to the assessee to contend that even though the receipt is unexplained, it cannot be treated as income. Learned CIT(A), therefore, erred in deleting the impugned addition of US $ 32,13,307.60 and we reverse his action on this point. 63. The second adjustment is of US $ 87,500 on account of missing interest credit of US $ 87,500 on account of quarterly interest on 7% UBS Callable Range Accrual note of US $ 5 million. It is an agreed pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustments which have been confirmed by the learned CIT(A) as well. 67. The first adjustment made by the Assessing Officer is the US $ 2,000,000 which is a credit in the bank account on 7th April 2008 and bank account narration is given as Early Redemption of US$ 2,000,000 ANZ Callable Daily Range Note 2006- 5.10.2016@ 100.0 . Interestingly that is a bank account in respect of which the assessee has given bank statement only from 31st March 2008, starting with a negative balance of US $ 73.62, and it has just three entries prior to this investment redemption entry- two contra entries, cancelling each other, for a time loan, and time loan repayment, for the US $ 397,275.51 and one entry signifying receipt of US $ 87,250 on account of Interest received 7.45%ANZ Callable Daily Range Note 2006- 5.10.2016 . There are two things clearly discernible from this bank statement- first, that the investments were not made out of accounted funds, as there is no explanation whatsoever for the bank transactions prior to 31st March 2008; and second, that the interest was definitely held for a period well before 31st March 2008, as the interest of US $ 87,250 could not have been earned on the securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en indicate the nature of the transaction and that it is out of accounted assets abroad. There is nothing on record to show that it was a loan, that it was a genuine transaction and that the person giving US $ 2,186,000 as the loan had the means to give the same out of accounted funds. Even going by the methodology that the assessee has adopted, this amount of US $ 2,186,000 is required to be treated as income reflected in the UBS bank account in question. The authorities below were thus quite justified in including this amount in unaccounted income reflected in the said bank account. We approve the action of the authorities below on this point and decline to interfere on this count as well. 69. It is in this backdrop that, as against an unaccounted foreign income of US $ 1,29,688.92 disclosed by the assessee, the unaccounted foreign income, from this account, was assessed at the US $ 43,15,688.92. We confirm the action of the Assessing Officer in this regard and vacate the relief granted by the learned CIT(A). The correct undisclosed foreign income from these two accounts with UBS AG Singapore was thus US $ 83,32,083.56, or say US $ 8,332,083.56. No interference is called for in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax law is only with respect to deduction for expenditure to earn the said income, whether allowable under the Income Tax Act or not, being declined. We may, in this regard, refer to the provisions of Section 5(1)(i) provides that In computing the total undisclosed foreign income and asset of any previous year of an assessee no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee, whether or not it is allowable in accordance with the provisions of the Income-tax Act . 75. A reference to the provisions of Section 5(1)(i) of the BMA also takes care of the point frequently raised by the learned senior counsel that if the impugned assessment was to be in respect of an income, the Assessing Officer should also have taken the debit entries reflecting expenditure, thus, in effect, taking into account the receipts net of expenses incurred. That s not permissible under the BMA. To that extent, there is variation in the approach in computing under the ITA and the BMA, and such a variation has the sanction of law. When an undisclosed foreign income is to be computed under the BMA, no deduction in respect of any expenditure or allowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed; and, finally; third- the value of an undisclosed asset outside India. All the three segments are required to be taken together for the same treatment, taxable at the flat rate of 30% and subject to penalty at the flat rate of 90%, without any differentiation. As a matter of fact, when we see the wordings of Section 4(3), that aspects become more clear as this sub section provides that (t)he 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 . In effect thus, whether it is an undisclosed asset or an undisclosed income, it is treated as income included in the total undisclosed income and assets. Whatever is taxed under the BMA, thus has to get out of the taxation under the Income Tax Act. As regards the analysis of Section 5(1)(i) for the present purposes, as we have noted earlier, provides that, inter alia, no deductions for earning an income are to be allowed in the computation of income, and that also shows that it is, what learned counsel terms as, the undisclosed receipts simpliciter which are subjected to tax under the Act. Section 5(1)(ii) provides that where an undisclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is followed by the words 'for a period not exceeding six years'. The word 'is', although normally referring to the present often has a future meaning. It may also have a past signification as in the sense of 'has been' (See Black's Law Dictionary, 5th edn. , p. 745). We are of the view that in view of the words 'for a period not exceeding six years' which follow the word 'available' the word 'is' must be construed as referring to the present and the future. In that sense it would mean that the interest is presently available and is to be available in future for a period not exceeding six years. [Emphasis, by underlining, supplied by us] 82. While learned counsel refers to Their Lordship s observation to the effect that (t)he word 'is', although normally referring to the present often has a future meaning , we must point out the underlined portion above which (a) acknowledges that the word is may have past significance in the sense of has been ; and (b) emphasizes that the critical factor leading to the present and future meaning being assigned by Their Lordships is the word available immediately following the word is . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the assets existing at present as also existing in past, and, therefore, the expression is here is in the sense of is and has been as well- a situation where the extended definition of is , as theorised by the Black s Law Dictionary and as implicitly approved by Hon ble Supreme Court in F S Gandhi s case (supra), will come into play. 84. It is anyway elementary, and has been reiterated time and again by Hon ble Supreme Court- including in the landmark judgment in the case of CIT Vs Sun Engineering Works Pvt Ltd [(1992) 198 ITR 287 (SC)], that a decision of Hon ble Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings . As noted by Their Lordships, in H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur v. Union of India [1971] 3 SCR 9, Hon ble Supreme Court cautioned: It is not proper to regard a word, a clause or a sentence occur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, therefore, as to whether a bank account abroad or any unaccounted asset abroad, which did not exist as at the point of time when the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015 came in force, i.e. 1st July 2015, can be assessed under the said legislation, is thus answered in positive and in favour of the revenue. 90. The next question posed for our consideration is whether an undisclosed foreign bank account per se, whether it existed at the point of time of the provisions of the BMA came into force or not, can be treated as an asset under section 2(11) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015?As we have mentioned earlier as well, this question is wholly academic inasmuch as whether a bank account per se, whether it existed at the point of time of the provisions of the BMA came into force or not, it is immaterial for the present purposes because, in our considered view,what has been brought to tax is the only the income clearly discernible from the bank account in question and not the value of the asset itself. 91. Learned senior counsel s suggestion that section 2(11) refers to only such assets whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed Foreign Income and Assets) and Imposition of Tax Rules 2015,provides that for the purposes of chargeability of tax under section 3(2) , the fair market valueof an account with a bank shall be, (i) the sum of all the deposits made in the account with the bank since the date of opening of the account; or(ii) where a declaration of such account has been made under Chapter VI and thevalue of the account as computed under sub-clause (i) has been charged to tax and penalty under that Chapter, the sum of all the deposits made in the account with the bank since the date of such declaration subject to the proviso that where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account . Whether rule 3(1)(e) is on the statute or not, this is the right way, even from a common-sense perspective discussed earlier. It is not the case that it is because of rule 3(1)(e) that a bank account is being treated as an asset under section 2(11). Rule or no rule, the position would be the same. 95. The next question that the learned senior counsel wants us to adjudicate upon is whether the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r given therein is as follows: Question No.13: How would the person know that the Government has received information of an undisclosed foreign asset held by him which will make the declaration ineligible? Answer: The person may not know that the Government has information about undisclosed foreign asset held by him if the same has not been communicated to him in any enquiry/proceeding under the Income-tax Act. After the person has filed a declaration, which is to be filed latest by 30th September, 2015, he will be issued intimation by the Principal Commissioner/Commissioner by 31th October, 2015, whether any information has been received by the Government and consequently whether he is eligible to make the payment on the declaration made. If no information has been received up to 30th June, 2015 by the Government in respect of such asset the person will be allowed a time upto 31st December, 2015 for payment of tax and penalty in respect of the declared asset. There may be a case where person makes declaration in respect of 5 assets whereas the Government has information about only 1 asset. In such situation the person will be eligible to declare the balance 4 assets under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in the knowledge of the other functionaries of the Government of India. That circular goes beyond the scope of the statutory provision, and, even going by the argument of the learned counsel, imposes conditions tougher than the law envisaged. As is the well-settled legal position, such circulars do not bind the assessee. Nothing, therefore, turns on the circular. Yes, if the same logic is employed in the assessment proceedings, this could have been of some help, if at all, to the assessee, but neither this circular is issued for the purposes of assessment, nor it can have application for anything other than availing the compliance window. 100. We, therefore, hold that the provisions of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015 can indeed be pressed into service in respect of an undisclosed foreign asset or income even if it was already in the knowledge of any Governmental authorities, other than the jurisdictional Assessing Officer, as at the point when the said legislation came into force. This question is thus decided against the assessee. 101. The last question that learned counsel has framed for our consideration is whether the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions under section 2 of the ITA stand incorporated in the BMA, the rider of this definition that is In this Act, unless the context otherwise requires must stand incorporated. The context of the definition under the ITA and the BMA must therefore meet to invoke the definition, under the ITA, for the purposes of the BMA. In other words, the definition provided is subject to unless the context requires otherwise condition, and, therefore, merely because the expression beneficial ownership is defined under Explanation 4 to Section 139 (1), that definition would not automatically apply to the BMA context as well. 103. When we put this proposition to the learned senior counsel, he hastened to add that the context for our purposes as also for Section 139(1) is the same. He took us through the provisions of Section 139 to emphasize this point- particularly the fourth proviso to Section 139(1) and Explanation 4 to Section 139(1). It is then pointed out that under Explanation 4 to Section 139(1) beneficial owner in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to prove that the assessee has paid, directly or indirectly, for that asset, before the provisions of BMA can be invoked is contrary to common sense. It will make the provisions of the BMA unworkable inasmuch as the Assessing Officer can never prove, let us say, hawala transactions, or account receivables being diverted to the offshore accounts, which are inherently outside the books of accounts of legitimate businesses. The Assessing Officer thus has to first find out the undisclosed assets, and then he has to prove that the assessee paid, directly or indirectly, for these assets. If the routing of consideration was so transparent that the Assessing Officer could identify the same, it would not normally be for an undisclosed asset. The provisions of BMA can never be put into effect, but then, as is the well-settled position of law, the law can only so be interpreted so as to make it workable rather than redundant, as is the prescription of the Latin maxim ut res magis valeat quampereat . A statute is supposed to be an authentic repository of the legislative will and the function of a judicial forum is to interpret it according to the intent of them that made it. From that fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax on an undisclosed foreign income and not in respect of tax on an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the impugned assessments is undisclosed foreign income. On account of this factual aspect, even though learned senior counsel is correct in his legal plea, the assessee gets no relief in respect of levy of interest under sections 40(1) and 40(2), referable to Section 234A, 234B and 234 C. To sum up, the grounds of appeal raised in these appeals are disposed of as shown below: BMA 03/M/2021;Y 2017-18 Rashesh M. Bhansali Vs Addl Commissioner of Income Tax 1) In the facts and circumstances of the case and in law, learned CIT(A) erred in confirming the action of Assessing Officer in invoking the provisions of Black Money (Undisclosed Foreign Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected in the bank account no.137274, in the hands of the appellant. e) In the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Officer in taxing the amounts of ₹ 86,14,820/-(being equivalent to $ 1,29,688.92) being the amount reflected in bank account no. 137274, in the hands of the appellant. Dismissed. 5) In the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Officer in adopting the conversion rate of USD to [email protected] . No specific arguments raised; dismissed for want of prosecution. 6) In the facts and circumstances of the case and in law, Learned CIT (A) erred in confirming the action of Assessing Officer in levying interest u/s 234A, B C while calculating the total demand, as per the ground/s contained in the assessment order or otherwise. Dismissed. 7) Even otherwise, the Impugned Order is bad under the law and is required to be set aside. No adjudication required 8) The Appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing. No adjudication required B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act. Learned counsel for the assessee, on the other hand, submits that no such directions are warranted, and that will be beyond the scope of powers of the Tribunal. If any proceedings can be taken under the Income Tax Act, it is for the Assessing Officer to do so. We are thus urged to refrain from going beyond the scope of the issues raised in the appeal before us. However, we are of the considered view that it is indeed going much beyond the call of our duty to give a specific direction calling upon the Assessing Officer to examine this matter any further. No findings or directions can be given unless such a finding or direction is required for disposal of appeals before us. The statutory provisions in Section 11(3) with respect to findings or directions by the Tribunal, and the impact thereof on the time limit of completion of assessment or reassessment, are somewhat akin to the provisions of Section 153(3) of the Income Tax Act. In the case of Rajinder Nath Vs CIT [(1999) 120 ITR 14 (SC)], and dealing the scope of the provisions of Section 153(3), Hon ble Supreme Court has held that The expressions finding and direction are limited in their meaning. A finding give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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