9911796707
TMI Blog2023 (5) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... these appeals for all the years are almost identical, common and related one assessee. Therefore, all these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. First of all, we take up the appeal of the revenue in appeal number BMA No. 03, 04 & 05/JP/2022 related to Assessment Year 2016-17, 2017-18 and 2018-19 respectively. In this three-appeal revenue has taken all most similar grounds except the figures changed in the others years. Therefore, to avoid the repetition we reiterated the ground taken by revenue in appeal number BMA No. 03/JP/2022 here in below so as to decide these three appeals of the revenue. The grounds raised by the revenue in BMA No 03/JP/2022 are as under: "1. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer. 2. The learned CIT Appeal has erred in law and on facts in granting relief to the taxpayer by deleting the addition amounting to Rs 69,78,53,383/- which was made by the AO on protective basis in A.Y. 2016-17 on account of credits in the bank accounts of the assessee and foreign company M/s Agrasen Polymers FZE. The assessment for the A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are infructuous and are required to be dismissed, if not withdraw the same at this stage. The reason placed by the ld. AR of the assessee that there is no concept of the protective addition and substantive addition qua assessee and assessment year. The revenue has to take a stand that in which year the income is chargeable to tax and accordingly the same can be charged to tax but the revenue cannot take a dual stand to charge income / assets in the different assessment year qua same assessee. Once the substantive addition is made in the case of the assessee same cannot be made in different year on protective basis. This is nothing but futile exercise. The ld. AR of the assessee submitted that the action of the ld. AO is under uncertainty and he cannot blow the hot and cold air on the same breath. The ld. AR of the assessee submitted that the provision of section 3 is very clear as regards the chargeability of the foreign assets. He has relied and read the provision of the Act and the same is haul out here in below: Charge of tax 3. (1) There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assets of the company. Therefore, the taxability in the hands of the Appellant is wholly illegal and unjust. PROCEEDINGS BY THE INCOME TAX AUTHORITIES E. A Search action was conducted at the premises of Sh. K.D. Agrawal in July 2018 (F.Y. 2018 - 19) whereby certain documents concerning the transactions of a non-resident foreign company, viz. M/s Agrasen Polymers FZE were found. F. Based on the same, additions to the tune of Rs. Rs. 1,14,79,82,673/- pertaining to the transactions undertaken by the foreign company from A.Y. 2016 - 17 to 2018-19 were added in the hands of the Assessee for these years on PROTECTIVE BASIS, vide Assessment Orders dated 31.03.2021, passed u/s 10(3) of the Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 (hereinafter referred to as the "Black Money Act" or "The Act"). Sr. No. A.Y. Date of Order Amount of Tax Rs. Amount of Addition Rs. 1. 2016 - 17 31.03.2021 20,93,56,020/- 69,78,53,383/- 2. 2017 - 18 10,93,08,670/- 36,43,62,230/- 3. 2018 - 19 2,57,30,120/- 8,57,67,060/- TOTAL 1,14,79,82,673/- G. With regard to the above additions, it is also submitted that the same additions aggregating to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2018 i.e., AY 2019-20, which is evident from the following findings available at Page 2 of the respective Assessment Orders reproduced as under: "On 09.07.2018, a search & seizure action was conducted u/s 132(1) of the Income-Tax Act in the case of the assessee at his residence B-302, Aurum Trimurti, Tilak Marg, C-Scheme, Jaipur. During the course of search, evidences in the form of excel files were recovered from the e-mail account and personal Macbook of the assessee......." Therefore, as per Section 3, assessment was bound to be made only for the AY 2019-20 and could not have been made for any other year, viz. A.Y. 2016 - 17, 2017 - 18 and/or 2018 - 19. However, on perusal of the assessment order, it is clearly evident that the Ld. AO has made assessment not just in AY 2019-20 only but also made assessment for AY 2016-17, 2017-18 and 2018- 19 on PROTECTIVE BASIS which came to be deleted by the Ld. CIT(A). Therefore, the department appeals filed qua A.Y. 2016 - 17 to A.Y. 2018 - 19 are liable to be quashed outrightly. 3. Without prejudice, it is to be noted that the department has filed appeal regarding the same issues for A.Y. 2016 - 17 to 2018 - 19 & also independently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on substantive basis and all the grounds raised in these appeals are equally challenged by the revenue on substantive basis and therefore, we feel that the same are not required to be adjudicated under these appeals on protective additions deleted by the ld. CIT(A). The appeal for the assessment year 2019-20 is under adjudication before us and therefore, we are of the considered view that the appeal of the revenue on the same very addition on protective addition cannot be litigated once the issue of substantive addition is not disputed by the assessee and its year of chargeability. 12. Based on this observation we are of the considered view that once the substantive addition has been made in the year in which such assets come to the notice of the Assessing Officer that can be charged to tax in the year as per clear mandate of provision of law and since the matter is already under consideration for assessment year 2019-20. The separate addition made in the respective years on protective basis and the appeal filed by the department against the finding of the ld. CIT(A) for these years is not maintainable and has rightly held by the ld. CIT(A) that the protective addition for the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the appellant as presented in Ground of Appeal No. 13 that under the facts and the circumstances of the case and in law, protective assessment for the assessment year under consideration is not warranted as the same is entirely contrary to the provisions of Section 3 of the Black Money Act is found acceptable. (xxviii) Similarly, Ground of Appeal No. 14 wherein the appellant has contended that the concerned addition of Rs. 69,78,53,383/-in F.Y. 2015-16 relevant to A.Y. 2016-17 results in double taxation of the same amount also finds favour with this office. As the said addition of Rs. 69,78,53,383/- is contrary to the provisions of charging section of Black Money Act and as the said amount has already been added to the Total Income of appellant for A.Y. 2019-20, being the year in which the undisclosed asset came to the notice of the AO, the addition Rs. 69,78,53,383/- is not sustainable in the year under consideration, being made on protective basis, and is deleted in the A.Y.2016- 17. (xxix) In view of the aforesaid discussion, the grounds of appeal no. 1,5 to 14 raised by the Ld.A.R. of the appellant for the A.Y. 2016-17 are treated as allowed. 6. Based on the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,26,443/-, is perverse, incorrect, non-speaking, arbitrary and bad in law. 2. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining the addition of Rs. 19,68,01,923/- (18,56,28,608+ 1.11.73,315) on account of credits in the bank accounts of Agrasen Polymers FZE (Foreign Company") which do not belong to the Appellant. 3. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 2,34,26,056/- made by the Ld. AO, which pertains to the dividend earned by the Foreign Company on the investments made. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 16,76,574/- made by the Ld. AO that pertains to the interest earned by the Foreign Company. 5. Under the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 1,42,67,290/- on account of cash deposits in the foreign bank accounts without considering that the cash deposits were made out of the withdrawals made from the said accounts. 6. Under the facts and circumstances of the case and in law, the Ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider the original returns of income for AY 2018-19 and AY 2019-20 and the revised return of income for AY 2017-18, wherein due disclosures with respect to foreign assets were made by the Appellant. 15. Under the facts and circumstances of the case and in law, the Ld. AO has not given due consideration to the fact that the Appellant is above 84 years of age and has not been given due opportunity of being heard to present his case before launching the Prosecution proceedings, which is against the principles of natural justice. 16. The Appellant craves leave to add, amend, and modify all or any grounds of appeal on or before the hearing date." 15. The brief facts of the case are that Shri K.D. Agrawal (hereinafter referred to as the "Appellant") is a senior citizen, aged 84 years and is presently enjoying a retired life. He is a regular taxpayer and has been awarded Certificates of Appreciation from the Income Tax Department. PB 216 - 217 are the copies of Certificate of Appreciation issued by the Income Tax Department for A.Y. 2016 - 17 & 2017 - 18. 15.1. In the earlier years, the appellant along with a group of persons came together and incorporated a company in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 - 19 INR 136,73,10,855 INR 23,74,26,443 INR 1,12,98,84,412 AE470271226001850542017 Appellant- Fiduciary Capacity AE410271226001850542028 Appellant - Fiduciary Capacity AE920271161201822102010 Company AE610271161371822102026 Company AE060276031498079255014 Appellant- Fiduciary Capacity AE550271031591850542039 Belongs neither to the company, nor to the Appellant in fiduciary/individual capacity 2. Income Allegedly earned on Investments in OMI INR 9,69,34,026 - INR 9,69,34,026 TOTAL INR 146,42,44,881 INR 23,74,26,443 INR 1,22,68,18,438 17. Before us, the ld. A/R of the assessee has submitted his ground-wise written submissions as under :- "GROUND NOS. 1, 8, 11, 15 & 16 ARE GENERAL AND INCIDENTAL TO THE OTHER GROUNDS OF APPEAL AND THEREFORE, BE READ IN CONJUNCTION. GROUND NO. 9 - THAT THE LD. CIT(A) ERRED IN NOT RECOGNIZING THAT THE COMPANY VIZ. AGRASEN POLYMERS FZE HAS SEPARATE LEGAL ENTITY AND THAT ALL THE FUNDS / INVESTMENTS ETC. BELONGED TO THE COMPANY ALONE. THEREFORE, THE TAXABILITY LEVIED IN THE HANDS OF THE APPELANTS IS WHOLLY UNJUST, ILLEGAL AND LIABLE TO BE QUASHED OUTRIGHTLY 1. The said issue has not been addressed by the Ld. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks. PB 297 & 298 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 297) & point 12 (PB 298), the Financial Liabilities - in the form of Trade and Other Payables to the tune of 9,976,302/- (18.6 Cr INR) is duly mentioned to be belonging to the company. AY 2016 - 17 (01.01.2016 -31.12.2016) PB 422-438 Copy of Auditors Report, Director's Report & the Financial Statements of M/s Agrasen Polymers FZE audited & approved by M/s Ramesh Ramu & Audit Associates, UAE on 10.04.2017 which was even submitted to the authorities of the Free Trade Zone of Ras Al Khaimah PB 425 is the copy of the Director's Report prepared by the directors of the company. PB 426-428 is the independent Auditor's Report prepared by M/s Ramesh Ramu & Audit Associates, UAE on 10.04.2017. PB 429 is the copy of Statement of Financial Position of M/s Agrasen Polymers FZE akin to a Balance Sheet. PB 430 is the Copy of the Statement of Comprehensive Income audited by the Auditors M/s Rames ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/interest/gains has duly been mentioned. PB 600 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 5,530,785/- made by the Company are mentioned. PB 601 Copy of the Notes to Financial Statements for year ending 31st December 2017 whereby at point number 6, the bank accounts held by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks, in fiduciary capacity on behalf of the company. PB 601 & 602 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 601) & point 12 (PB 602), the Financial Liabilities - in the form of Trade and Other Payables to the tune of 9,840,450/- is duly mentioned to be belonging to the company. AY 2018 - 19 (01.01.2018 -31.12.2018) PB 710-725 Copy of Auditors Report, Director's Report & the Financial Statements of M/s Agrasen Polymers FZE audited & approved by M/s Ramesh Ramu & Audit Associates, UAE on 22.01.2019 which was even submitted to the authorities of the Free Trade Zone of Ras Al Khaimah PB 713 is the copy of the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WEALTH TAX & ORSSUPREME COURT OF INDIA (1994) 207 ITR 0001 Held : Wealth being assessed is that of the shareholder and not of the company. The company may own agricultural assets and if company were to be liable to wealth tax, the said assets may be excludible in its hands. But that has no relevance to the case of a shareholder. The shareholder does not own and cannot claim any portion of the property held by the company of which he is a shareholder. The company is an independent juristic entity. An assessee holding shares in a company whose assets comprise wholly or partly of agricultural land, is not entitled to exclude such shares from his wealth.-Bacha F. Guzdar vs. CIT (1955) 27 ITR 1 (SC) : 1955 (1) SCR 876 SALOMON V SALOMON & CO LTD (1897) Mr. Salomon had a boot manufacturing business which he decided to incorporate into a private limited company. He sold his business to the newly formed company, A Salomon & Co Ltd, and took his payment by shares and a debenture or debt of GBP10,000. Mr Salomon owned 20,000 GBP1 shares, and his wife and five children owned one share each. Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner. The taxability thereof in the hands of the Appellant is not in consonance with the Black Money (Undisclosed Foreign Income and Asset) & Imposition of Tax Act, 2015. More so when, there is no iota of evidence that any funds belonged to and/or pertained to the Appellant in his individual capacity. Nor is there any evidence to show that any income of the Appellant was taken abroad and was omitted to be taxed in India. Therefore, the taxability of any amount in the hands of the Appellant will be unconstitutional and hence illegal. 6. That not just a company, even a partnership firm has a separate legal entity. In light of the same, reliance is placed on the judgment of the Hon'ble Delhi High Court in CIT vs. Nagpur Golden Transport Co., [1998] 233 ITR 389 (Delhi) has held as under: Whether while framing an order of assessment under provisions of Act, firm and its partners are to be treated as two separate legal entities and payment of interest to a firm cannot be treated in tax law as payment of interest to its partners - Held, yes - Whether, Therefore, payment of interest by assessee firm to another firm could not be treated as payment of interest to partners of that firm w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability, let alone even penalty, can be imposed on the Appellant as the entire edifice of the case, built solely on suspicion and surmises, deserves to be quashed and no amount can be taxed in the hands of the Appellant, as the same in no manner, can be called as the income of the Appellant. Further, any incorrect allegation on the part of the Department with respect to Non-Disclosure in the return for the A.Y. 2017 - 18 to 2018 -19 is unjustifiable as the Appellant, after coming to be aware of the legal compliances, i.e., requirement of disclosures, even amended / revised his previous returns for A.Y. 2017 - 18 and made due disclosures about the bank accounts which he held on behalf of the company and also the financial interest in the company. PB 303 is the copy of the ITR Acknowledgement of the ITR filed u/s 139(5) for AY 2017-18. PB 304-329 is the copy of the ITR Form filed by the Appellant for A.Y. 2017-18, whereby in schedule FA (Pg. 326, & 327), due disclosure has been made by the Appellant in his return. PB 376 - 377 is the copy of the revised return filed for A.Y. 2017 - 18 whereby due disclosures regarding the Financial Interest & Signing Authority had been made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of an asset, said person should have nexus, direct or indirect to source of asset and he must have provided funds for said asset; mere account opening form of an overseas bank account where assessee was mentioned as beneficial owner of account, mentioning details of his passport as an identification document, did not necessarily, in absence of any other corroborative evidence of beneficial ownership of assessee over asset, lead to taxability in hands of assessee under Black Money Act. 15. It is submitted that the Appellant has been subjected to tax in respect of the bank account of the Foreign Company by treating him to be the 'beneficial owner'. The term "beneficial owner" is not defined in the Black Money Act but is defined in Explanation 4 to Section 139(1) of the IT Act, 1961. 16. On perusal of the definition of the term "Beneficial owner", it is evident that a beneficial owner in respect of an asset would be a person who provides consideration for the asset for the immediate or future benefit of himself or any other person. Thus, it is relevant to understand the meaning of term 'beneficial owner' by making reference to Income Tax Act, 1961, wherein the said term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no amount has been received by the Appellant from the company in the form of remuneration or commission or profit or in any manner and neither is there any evidence suggesting the same, in the absence of which, the additions made in the hands of the Appellant by holding him to be a beneficial owner, is unjust, illegal, notional and not grounded on actual facts and/or law. PB 889 - 894 is the copy of the submissions dated 18.07.2022 filed before the Commissioner of Income Tax (Appeals)-3, Jaipur regarding the issue of no 'beneficial ownership' of the Appellant. 19. In light of the above, it is most respectfully submitted that the Ld. Assessing Officer as well the Ld. CIT(A) erred in holding the Appellant to be the 'Beneficial Owner' without there being any iota of evidence to justify any benefit or even any contribution made by the Appellant. GROUND NO. 3 - DIVIDEND OF RS. 2,34,26,056/- PERTAINS TO THE COMPANY AND DOES NOT BELONG OR BENEFIT THE APPELLANT THEREFORE CANNOT BE TAXED IN THE HANDS OF THE APPELLANT 20. The said amount formed a part of the total credits, hence has not been expressly discussed by the Ld. Assessing Officer. Even, the Ld. CIT(A) has also not record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - THE AMOUNT OF RS. 16,76,574/- PERTAINS TO THE INTEREST EARNED BY THE NON-RESIDENT COMPANY ALONE AND CANNOT BE TAXED IN THE HANDS OF THE APPELLANT 23. The said amount formed a part of the total credits, hence has not been expressly discussed by the Ld. Assessing Officer, however, the Ld. CIT(A) has also not recorded his findings qua this issue in the Appellate Order. 24. That as mentioned above, the bank account pertained to the non-resident company, the interest earned from the bank has been credited in the bank account held by the company, or on behalf of the company, can only be income of the company. Therefore, taxing the same in the hands of the Appellant is wholly illegal and liable to be quashed. PB 436 is the copy of the Financial Statement of M/s Agrasen Polymers FZE for the period ending on 31st December 2016 audited & approved by M/s Ramesh Ramu & Audit Associates, wherein the interest income has been disclosed. PB 601 is the copy of the Financial Statement of M/s Agrasen Polymers FZE for the period ending on 31st December 2017 audited & approved by M/s Ramesh Ramu & Audit Associates, wherein the interest income has been disclosed. PB 723 is the copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong to the company, M/s Agrasen Polymers FZE and not to the Appellant. Therefore, in any view of the manner, taxing the said amount in the hands of the Appellant is wholly illegal and unjust. GROUND NO. 6 - RS. 12,54,600/- PERTAINS TO REPAYMENT OF LOAN BY STAFF TO THE COMPANY ALONE AND IS NOT IN THE NATURE OF INCOME AND IN ANY MANNER, THE SAID AMOUNT HAS BEEN CONSIDERED AS ALL CREDITS HAVE BEEN CONSDIERED. THEREFORE, THE ADDITION OF THE SAID AMOUNT IS ILLEGAL AS THE SAME IS NOT IN THE NATURE OF INCOME AND ALSO AMOUNTS TO DOUBLE ADDITION, THEREFORE, ILLEGAL. 30. The said amount formed a part of the total credits, hence has not been expressly discussed by the Ld. Assessing Officer, however, the said issue was addressed by the Ld. Assessing Officer in his remand report (PB 875) and a reply thereto was offered in the reply to the remand report (PB 881). Thereafter, the Ld. CIT(A) has recorded his findings qua the issue at Para 6.2 (xxiii) Page 42 of the Appellate Order and confirmed the addition. PB 776 is the copy of Annexure 11 of Reply dated 12.07.2022 filed before the Ld. CIT(A) wherein the details of the staff loan repaid to the non-resident company viz. M/s Agrasen Polymers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y viz. M/s Agrasen Polymers FZE which is not an income or an asset, rather a liability and, therefore, they are out of the purview of Black Money Act. An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent. We, therefore, state that loan cannot, under any circumstances, be classified ~ as an asset and that the Ld. Assessing Officer has wrongly made the additions. 37. Furthermore, it can be seen from the audited Balance Sheets of the non-resident foreign company viz. M/s Agrasen Polymers FZE, that the liability in the nature of loan is duly reflected in the payables side of the Balance Sheet and, therefore, cannot be added as an asset of the assessee. PB 236-237 & 496 are the copies of the respective Bank Statement reflecting the amount of fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HAS GROSSLY ERRED IN ALLEGING THAT THE APPELLANT ADMITTED HAVING RECEIVED COMMISSION INCOME FROM COMPANIES/ PERSONS OF UAE AND TURKEY DIRECTLY IN HIS UAE-BASED BANK ACCOUNTS WITHOUT APPRECIATING THE CORRECT FACTS ON RECORD. 40. It is most respectfully submitted that the facts of case have been incorrectly interpreted and wrongly portrayed. It has been alleged that the Appellant admitted that certain commission received by him was taken aboard directly to UAE in M/s Agrasen Polymers FZE, which is wholly incorrect and unjust. PB 200 - 201 is the copy of the statement of the Appellant recorded u/s 132(4) of the Income Tax Act, 1961 whereby the Appellant mentioned that commission / incentive was paid by the Turkish companies to maintain continuity. 41. The statement has been misinterpreted as the transactions were between foreign companies and the companies in which the Appellant was acting in Fiduciary Capacity. No such amount was received by the Appellant on his personal account. Neither was the same the income of the Appellant. 42. Furthermore, there is no whisper as to any amount / transaction which could've been this alleged commission amount, if any. Therefore, taxing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated against him, is never treated as part of a developed and mature legal system. Section 31 of the Evidence Act, 1872 also assumes significance in this regard. It reads: Admissions not conclusive proof, but, may estop: Admissions are not conclusive proof of the matters admitted, but they may operate as estoppels under the provisions hereinafter contained............" B.R. Associates Pvt. Ltd. Vs ACIT (ITAT Delhi) In absence of adverse material found during search, no addition could be made merely on the basis of statement recorded under section 132(4) of Income Tax Act, 1961 which did not constitute conclusive evidence and having been given under pressure was immediately retracted. Additions made u/s 153A of the Act, in the absence of incriminating material found as a result of search is outside the scope of section 153A of the Act. 44. It is therefore submitted that no reliance can be placed on such a statement without there being any corroborative material found the course of search or otherwise, to justify the allegation. ADDITIONAL SUBMISSION ON GROUND NO.1 & 13: - THE LD. ASSESSING OFFICER AS WELL AS THE LD. CIT(A) ERRED IN TAXING THE APPELLANT WITHOUT CONSIDERIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) where there is income as mentioned in point a) above but no return has been furnished and c) Value of undisclosed asset located outside India. 47. That the first condition, viz. income from a source located outside India not disclosed in return, is not met in the case as there is no income of the Appellant which has not been disclosed to tax in India and nor is there any allegation to that effect. Without prejudice, there must be cogent, tangible material showing the income earned abroad and not disclosed to tax in India. Unless, shown to exist, there can be no liability which can be imposed on the Appellant. 48. Coming to the second condition, it stipulates where no return is furnished, which is not the case, the Appellant is a regular tax filer and has also disclosed the bank account held by him in fiduciary capacity and other details of the foreign asset of the company, in his return. Thus, making the second condition also inapplicable. 49. The third condition is the value of 'undisclosed asset located outside India'. In order to examine this issue, it is crucial to ascertain whether the conditions of section 2(11) of the Act - undisclosed asset located outside India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the proceeding under the Act. This issue has not been addressed by the ld. AO and ld. CIT(A) and as already evidence from the evidence adduced before the assessing officer, he failed to appreciate the legal entity concept and illegally taxed the assets of that separate legal entity. The ld. AR of the assessee to support his view on facts relied upon the audit reports and thereby demonstrated that the assets and liability are separately recorded by the that legal entity and since the same is already disclosed in that entity the same cannot be added in the case of the assessee. To substantiate this view, he has relied upon the decision in the case various case law where in the view is taken that; a) Shareholder has no direct relationship with land as the same belongs only to the company, nor its shareholders, nor directors. [ Mrs. Bacha F. Guzdar Vs. CIT (SC) 27 ITR 001] b) The shareholder does not own and cannot claim any portion of the property held by the company of which he is a shareholder.[ Bacha F. Guzdar Vs. CIT 27 ITR 1 SC] c) Salmon Vs. Salmon & Co. Ltd.(1897), the company was a different legal person from the shareholders, and thus Mr. Salomon, as shareholder an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e about the financial interest in overseas company. Relying on the judgement of the coordinate bench of ITAT Mumbai bench in the case of ACIT Vs. Leena Gandhi Tiwari 96 ITR 384 the bench has taken a view that Where assessee was a signatory in a foreign bank account owned by her mother and she failed to disclose same while filing her income-tax return, however disclosure was made while filing return under section 153A, since such non-disclosure of a foreign asset was a bona fide mistake, penalty could not be imposed under section 43 of Black Money Act. Based on that set of facts he has submitted that since, the disclosure already made no addition can be made in the hands of the assessee in respect of the assets of the separate legal entity M/s. Agrasen Polymers FZE. Since the assessee has already adopted and considered the disclosure of his financial assets in return of income, therefore, revenue can very well charge the income when the assessee liquidate these investments and tax the assessee. Therefore, in the light of these facts and considering the fact that the assessee has made disclosure so as to comply the provision of Black Money Act. 23. The ld. AR of the assessee also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir findings qua this issue. The ld. AR of the assessee submitted that all the investment made by that M/s. Agrasen Polymers FZE are duly disclosed in the financial statement and relevant records placed on record (APB 296, 435-436, 600- 601, 722-723, 885-888) and does not belong or benefit the assessee and therefore, that income is not in the nature of income of the assessee and is not an asset belonging to or pertaining to the assessee. 26. The ld. AR of the assessee further submitted that the ld. AO erred in adding a sum of Rs. 16,76,574/- being the amount of interest earned by the non resident company and that interest earned by that company cannot be taxed in the hands of the assessee. He further submitted that the ld. CIT(A) has not recorded his findings qua this issue in her order. To drive this contention the ld. AR of the assessee relied upon the financial statement as at 2017 & 2018 ( APB 601 & 723). Based on this evidence the ld. AR of the assessee submitted that addition to that extent required to quashed. 27. As regards the deposit of cash of Rs. 1,42,67,290/- the ld. AR of the assessee submitted the amount of credit which has already been considered and from that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention the ld. AR of the assessee relied upon the judgment in the case of CIT Vs. Harjeev Aggarwal 29 DLT 33, CIT Vs. Naresh Kumar Agarwal ITTA No. 112 of 2003 and B. R. Associates Private Limited (ITAT - Delhi). Based on these he submitted that no reliance can be placed on such statement without any corroborative evidence. 31. To support the ground no. 1 & 13 the ld. AR of the assessee submitted that there is no income earned by the assessee which has been omitted to be disclosed in the return, nor is there any 'undisclosed asset located outside India' which can be taxed in the hands of the assessee, therefore, the liability ascribed is wholly without jurisdiction as there exists no 'Scope of total undisclosed foreign income and asset' in the hands of the assessee as per section 4 of the Act. He has further discussed the condition mentioned in that section so as make charge on the assessee. 32. Finally, the ld. AR of the assessee submitted that the asset in question belonged to the company and the assessee did not contribute, withdraw and / or benefit from any of the assets and in such circumstances no addition can be made in the case of the assessee. 33. On the other hand, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in UAE/Turkey and in order to maintain good relationship and in order to maintain continuity of goods to these clients and credited money/commission in his UAE based bank account. Thus, it is clear that the assessee has received the commission income from the foreign source and parked that income in the company named M/s. Agrasen Polymers FZE. The stake in this company is 100 % as it is evident from the audit report, bank account opening form and he being the signatory to the account. This evidence clearly establish that the assessee is the beneficial owner of the income and asset of that company. In the course of the search the assessee has not co-operated to the revenue. As the revenue has credible information based on that the search was conducted and various incriminating material found suggesting the foreign asset and income. When these details found from the Mcbook and email account of the assessee has confirmed that he has income which is parked outside India and is very well invested outside and based on this fact he is very well covered under the provision of BMA. The fact that in that company the assessee is holding 100 % stake and it proves beyond doubt that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of excel files were recovered from the e-mail account and personal Macbook of the assessee. The print out of these excel sheets were seized as Exhibit Nos. 13 & 14. These excel files had details of UAE based bank accounts held in the name of M/s. Agrasen Polymers FZE. In addition, the excel files also contains details of foreign based investment products such as mutual funds, bonds etc. held by the said firm. 34.2 The excel files reproduced by the AO in the body of the assessment order contain the details of UAE based bank accounts and investment products located in various countries around the world such as Sri Lanka, Peru, Germany, Isle of Man etc. In these excel files, the assessee had maintained a meticulous and detailed account of all the transactions entered into by that firm in his foreign based bank accounts and investment products. The AO observed that these excel files clearly prove that the assessee making all the decisions relating to this firm's foreign bank accounts and investment products and therefore, the assessee was fully aware that he was holding foreign based financial assets and that he is also the signing authority in such accounts. The AO noted that in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 32,49,375/-. 34.6. Apart from this, an addition of Rs. 9,69,34,026/- made by the AO on account of income earned on investment in OMI was also deleted by ld. CIT (A) by holding that no notional gain was ever credited in the bank account of the assessee. Therefore, the said addition was not found to sustainable and in this way out of Rs. 146,42,44,881/-, substantial additions were deleted by ld. CIT (A) and on the remaining additions, the assessee has preferred the present appeal. 34.7. At the outset, we noticed that additions in the present case were made under the provisions of Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015, by holding that assessee has earned income on account of undisclosed credits in the foreign bank accounts and investments made by the assessee outside India. In this regard it has been specifically pleaded by the assessee that the alleged information, admittedly came to the notice of the AO during the course of search proceedings conducted somewhere in the month of July, 2018 i.e. during the financial year 2018-19 which is relevant to assessment year 2019-20. Therefore, taxability, if any, can only be made for the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019-20. Even otherwise, as per assessee, after coming to aware of legal compliances i.e. requirement of disclosures, even amended/revised his previous returns for assessment year 2017-18 as well and also made due disclosure about the bank accounts which he is a signatory on behalf of the company and his financial interest in that company. In this regard our attention was drawn specifically to paper book page 303 which is a copy of ITR acknowledgment filed under section 139(5) for assessment year 2017-18 and also at paper book pages 304-329 which is a copy of ITR Form filed by the appellant for the assessment year 2017-18, whereby in schedule FA (pg. 326 & 327) due disclosure has been made by the appellant in his return. 34.9. Now proceeding further, our attention was also drawn on paper book pages 376-377 which is a copy of revised return filed for the assessment year 2017-18 whereby due disclosure regarding the financial interest and details of signatory to the foreign bank account had been made by the appellant. Apart from this, appellant assessee had also filed copy of chart of dates of return filed original as well as revised which are at paper book page 844. After analyzing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to raise the ground no 9 to be dealt prior to the other grounds so raised. Thus, we deal with the ground no. 9 first. GROUND NO. 9 - THAT THE LD. CIT(A) ERRED IN NOT RECOGNIZING THAT THE COMPANY VIZ. AGRASEN POLYMERS FZE HAS SEPARATE LEGAL ENTITY AND THAT ALL THE FUNDS / INVESTMENTS ETC. BELONGED TO THE COMPANY ALONE. THEREFORE, THE TAXABILITY LEVIED IN THE HANDS OF THE APPELANTS IS WHOLLY UNJUST, ILLEGAL AND LIABLE TO BE QUASHED OUTRIGHTLY 38. The ld. AR of the assessee submitted that the ld. AO as well as ld. CIT(A) has erred in not recognizing that the company M/s. Agrasen Polymers FZE [ here in after referred as company ] is a separate legal entity. He has also submitted that all the funds / investment belonging to the company only and therefore, fastening the liability on the assessee ignoring this fact is just, illegal and the order passed ignoring this fact is required to annulled at this stage and no cognizance of the other finding be taken by the revenue. The revenue has not decided this important ground and has not addressed this issue as raised by the assessee while passing the order against it. As it is not disputed by the parties that the investment or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts attributed to the business of individual citizens. 38.1. The ld. AR of the assessee further relying on the definition given in the Income Tax Act, 1961 and for all purposes of the assessment, a company is treated to be a separate 'person' within the meaning of section 2(31) read with 2(17) of the Income Tax Act. In the case of assessee, company invested its own money and resources in the UAE to earn dividends, interest, gains, which cannot be taxed in the hands of the assessee in any manner. The taxability thereof in the hands of the assessee is not in consonance with the Black Money (Undisclosed Foreign Income and Asset) & Imposition of Tax Act, 2015. More so when, there is no iota of evidence that any funds belonged to and/or pertained to the assessee in his individual capacity. Nor is there any evidence to show that any income of the assessee was taken abroad, or earned in his individual name and was omitted to be taxed in India. Therefore, the taxability of any amount in the hands of the assessee will be unconstitutional as without bringing any evidence so as to prove that the assessee has directly, or indirectly earned any income. In the search, revenue has not found any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest/gains has duly been mentioned. PB 296 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 7,457,719 made by the Company are mentioned. PB 297 Copy of the Notes to Financial Statements for year ending 31st December 2015 whereby at point number 6, the bank accounts held by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks. PB 297 & 298 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 297) & point 12 (PB 298), the Financial Liabilities - in the form of Trade and Other Payables to the tune of 9,976,302/- (18.6 Cr INR) is duly mentioned to be belonging to the company. AY 2016 - 17 (01.01.2016 -31.12.2016) PB 422-438 Copy of Auditors Report, Director's Report & the Financial Statements of M/s Agrasen Polymers FZE audited & approved by M/s Ramesh Ramu & Audit Associates, UAE on 10.04.2017 which was even submitted to the authorities of the Free Trade Zone of Ras Al Khaimah PB 425 is the copy of the Director's Report prepared by the directors o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income/Loss is duly mentioned. PB 598 is the copy of notes to Financial Statements of M/s Agrasen Polymers FZE where at point 1 (b), the factum of the company being duly registered and undertaking activities of trading Plastic and Nylon raw materials and also the fact that the company has invested its own resources to earn dividend/interest/gains has duly been mentioned. PB 600 is the copy of the Notes to Financial Statements whereby at point no. 4, Investments to the tune of AED 5,530,785/- made by the Company are mentioned. PB 601 Copy of the Notes to Financial Statements for year ending 31st December 2017 whereby at point number 6, the bank accounts held by the company in its own name and also that of the two bank accounts held by the manager (Appellant) maintained for making investment and to take benefit of Leverage from banks, in fiduciary capacity on behalf of the company. PB 601 & 602 is the copy of the Notes to Financial Statements of M/s Agrasen Polymers FZE whereby at point no. 8 (PB 601) & point 12 (PB 602), the Financial Liabilities - in the form of Trade and Other Payables to the tune of 9,840,450/- is duly mentioned to be belonging to the company. AY 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of tea whose income was exempt to the extent of 60 per cent, receiving dividends from such company-Dividends arose to the shareholder due to investment in the company-Shareholder has no direct relationship with land as the same belongs only to the company, nor to its shareholders, nor directors BHARAT HARI SINGHANIA & ORS. ETC. vs. COMMISSIONER OF WEALTH TAX & ORSSUPREME COURT OF INDIA (1994) 207 ITR 0001 Held : Wealth being assessed is that of the shareholder and not of the company. The company may own agricultural assets and if company were to be liable to wealth tax, the said assets may be excludible in its hands. But that has no relevance to the case of a shareholder. The shareholder does not own and cannot claim any portion of the property held by the company of which he is a shareholder. The company is an independent juristic entity. An assessee holding shares in a company whose assets comprise wholly or partly of agricultural land, is not entitled to exclude such shares from his wealth.-Bacha F. Guzdar vs. CIT (1955) 27 ITR 1 (SC) : 1955 (1) SCR 876 SALOMON V SALOMON & CO LTD (1897) Mr. Salomon had a boot manufacturing business which he decided to incorporate int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 and for all purposes of the assessment, a company is treated to be a separate 'person' within the meaning of section 2(31) read with 2(17) of the Income Tax Act. In the present case, Company invested its own money and resources in the UAE to earn dividends, interest, gains, which cannot be taxed in the hands of the Appellant in any manner. The taxability thereof in the hands of the Appellant is not in consonance with the Black Money (Undisclosed Foreign Income and Asset) & Imposition of Tax Act, 2015. More so when, there is no iota of evidence that any funds belonged to and/or pertained to the Appellant in his individual capacity found during the search except the statement of the assessee. Nor is there any evidence to show that any income of the Appellant was taken abroad and was omitted to be taxed in India. Therefore, the taxability of any amount in the hands of the Appellant will be unconstitutional and hence illegal. 38.5. The ld. A/R further submitted that this is not just a company, even a partnership firm has a separate legal entity. In light of the same, reliance is placed on the judgment of the Hon'ble Delhi High Court in CIT vs. Nagpur Golden Transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for the year under consideration i.e. AY 2019-20. The ld. A/R of the assessee further contended that the assessee has made due disclosure as permitted in law prior to the issuance of notice under the B.M. Act, 2015 and no proceeding can be made under this Act. The assessee submitted that original return filed under section 139(1) of the I.T. Act, 1961 for the assessment years 2018-19 and 2019-20 wherein the disclosure of financial interest (in a fiduciary capacity) and details relating to authority to a bank account on behalf of the company was made. Therefore, even the case of non-disclosure cannot be made out against the Appellant. In support of disclosure, the ld. A/R furnished the following documents : PB 542 - 543 is the copy of the return filed by A.Y. 2018 - 19 whereby due disclosures regarding the Financial Interest & Signing Authority had been made by the Appellant. PB 605 is the copy of the ITR Acknowledgement of the ITR filed u/s 139(1), viz. on or before due date. PB 606 - 640 is the copy of the ITR Form filed by the Appellant for A.Y. 2019 - 20, whereby in schedule FA (Pg. 628 & 629-630), due disclosure has been made by the Appellant in his return. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of short points of law and an objective perception about what constitutes bona fide conduct of the assessee, within a narrow compass of the undisputed facts, and that it is a fit case for disposal on the basis of material on record and ex-parte qua the assessee. 5. As we look at the scheme of the BMA and the ITA, in conjunction with the binding judicial precedents from Hon'ble jurisdictional High Court, one of the possible analysis could possibly be as follows, and while we undertake this analysis of the legal position, we must also bear in mind the fact right now we are dealing with the validity of penalty under section 43 of the BMA, and this section comes into play only when a resident, other than not ordinarily resident in India under section 6(6), filing an income tax return under section 139(1), (4) or (5) of the Income-tax Act, 1961 [hereinafter referred to as the 'ITA'], "fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as come into force on 1st April 2016. As far as the question of non-disclosure after the commencement of the BMA is concerned, thus, the first assessment year in question is the assessment year 2017-18, i.e. the assessment year before us. It is also important to bear in mind the fact that the assessee was subjected to a search and seizure operation on 15th September 2017 and consequently the assessee had to file the income tax returns under section 153A for the assessment year 2017-18 on 21st April 2018. As to what happens as a result of such an exercise, we may gainfully refer to Hon'ble jurisdictional High Court's judgment in the case of Pr. CIT v. JSW Steel Ltd. [2020] 115 taxmann.com 165/270 Taxman 201/422 ITR 71 (Bom.) wherein Their Lordships noted, inter alia, that "section 153-A(1) provides that where a person is subjected to a search under section 132 or his books of account, etc. are requisitioned under section 132A after 31-5-2003, the assessing officer is mandated to issue notice to such person to furnish return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said foreign bank account was duly made- as noted by the Assessing Officer in the impugned order itself, and this income tax return alone has only been acted upon. Viewed thus, when it comes to examining any failure on the part of the assessee in not disclosing a foreign bank account for the assessment year 2017-18, i.e. the assessment year before us, it can indeed be said that what is to be seen is the return filed under section 153A and it is that return which, to borrow the words of Hon'ble jurisdictional High Court, is to be "construed as one filed under section 139(1) of the Act and the provisions of the said Act (Income-tax Act, 1961) will apply to the same accordingly". Essentially, therefore, it can indeed be said that non-disclosure of the foreign asset in the original return filed under section 139, even if that be so, cannot be put against the assessee, particularly when the said disclosure was admittedly made in the return filed under section 153A. As a corollary to the above position, the non-disclosure of the foreign bank account in the original return filed under section 139, for the assessment year 2017-18, may not be viewed as reason enough for the imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the considered view that for the short technical reason set out above, the impugned penalty imposed on the assessee under section 43 of the BMA does not stand the test of judicial scrutiny. We, therefore, support the conclusions arrived at by the learned CIT(A). His reaching this conclusion may have been fortuitous, and for altogether different reasons-, what really matters is that he reached the right conclusion, and we, therefore, must uphold the conclusions arrived at by the learned CIT(A). 6. There are, however, many other reasons as well for holding that it was not a fit case for the imposition of penalty under section 43, and, for the sake of completeness, we must set out these reasons as well. 7. It is only elementary that a mere non-disclosure of a foreign asset in the income tax return, by itself, is not a valid reason for a penalty under the BMA. While disclosure of all foreign assets is mandatorily required to be made in an income tax return, the penalty under section 43 of BMA comes into play only when the aggregate value of these assets exceeds Rs. 5,00,000. Clearly, therefore, even statutorily, it is not a simple cause and effect relationship between non-dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to examine the case of the Assessing Officer, we must also bear in mind the fact that the assessee is a high net worth individual (HNI), with aggregate payment of taxes around Rs. 2,350.66 crores in the last seven years by her, her husband and the private limited company she chairs- as noted by the Assessing Officer himself at page 8 of the impugned penalty order, and, when seen in the light of this financial position, the amount held in the alleged undisclosed foreign bank account is a small, if not trivial, amount of UK GBP 2,34,710, and that it is not, by any stretch of logic or imagination, a case of siphoning unaccounted wealth in India to the undisclosed bank accounts abroad. It is also important to bear in mind the fact that there is a categorical finding by the first appellate authority that even though the assessed may have been technically a signatory of the undisclosed foreign bank account, her and her husband's conduct all along has unequivocally established complete detachment with the said asset so far as any personal interest is concerned- a typical hallmark of someone holding an asset in a fiduciary capacity and in trust. When the beneficial owner of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strating the bona fides of such cases- the assessee or the revenue authorities, but once there is a clear finding of bona fides in conduct, irrespective of whether such conduct is lawful or not, the penalty is not impossible- unless, of course, the penalty is statutorily simply an automatic consequence, in cause and effect relationship. That's certainly not the case here. The very fact that the Assessing Officer has the discretion to impose a penalty puts him under a corresponding obligation to exercise the said discretion with proper regard to the facts and circumstances of the case in a holistic manner and in totality. The total amount involved in the undisclosed foreign account is UK GBP 2,34,710 (equivalent to Rs. 2,16,58,946 at the relevant point of time of assessing the said amount), which is relatively small considering the tax exposure of the assessee, as discussed earlier. The money in the said account did not belong to the assessee, was never used by the assessee and is part of the legacy left behind by her father in 1986- and this position is duly accepted by the revenue authorities. Not a rupee out of that bank account is held to be belonging to the assessee, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax return, and these consequences are provided under the Income-tax Act, 1961, and our observations hereinabove must not come in the way of those proceedings under the Income-tax Act, 1961. 9. The need to implement BMA in a strict manner, as learned Commissioner (DR) pleads for, can hardly be overemphasised. What it essentially means is that whenever any unaccounted income or undisclosed asset abroad is found, stern action, in accordance with the law, must be taken. Just as much as we must ensure that a guilty person does not go unpunished, we must also ensure that such tough laws, as the BMA is, do not inconvenience genuine people not falling in the category which is sought to be checked by the BMA. In the 2015 Union Budget speech, the then Hon'ble Finance Minister had said that "Tracking down and bringing back the wealth which legitimately belongs to the country is our abiding commitment to the country. Recognising the limitations under the existing legislation, we have taken a considered decision to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad" That is the background in which the BMA was introduced, and that is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, the use of the expression 'may' in Section 43 suggests. When the exercise of a statutory power is not warranted or justified on a well-considered appreciation of the facts of the case on which a reasonable conclusion would be that the lapse is bona fide and devoid of any ulterior motives, a public authority must not exercise that power just because it would be lawful for the said authority to exercise the same. That's why human discretion is involved in the exercise of such powers, and this discretion is to be exercised having regard to the facts of each case in a fair, objective and judicious manner and without losing sight of the bigger picture about the related state of affairs and the scheme of relevant legislation. Unless there are sufficient prima facie reasons to at least doubt bona fides well demonstrated by the assessee, an assessee cannot be visited with penal consequences. The bona fides actions of the taxpayers must, therefore, be excluded from the application of provisions of such stringent legislation as the BMA. In this light, and keeping in mind the object of the BMA, we do not subscribe to the learned Departmental Representative's perception tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'beneficial owner' qua the assets of the non-resident foreign company M/s. Agrasen Polymers FZE. The ld. A/R submitted that the Appellant has been illegally deemed to be the beneficial owner of the assets of the company, viz. M/s Agrasen Polymers FZE. There is no evidence of investment, withdrawal or any benefit derived by the assessee, there remain no taxability of any sum in the hands of the assessee. In this regard, the ld. A/R placed reliance on the order of ITAT Delhi Benches in the case of ACIT vs. Jatinder Mehra (2021) 190 ITD 611 (Delhi Trib.) rendered in the context of 'beneficial ownership under the Black Money Act, wherein it was held that : To identify a beneficial owner of an asset, said person should have nexus, direct or indirect to source of asset and he must have provided funds for said asset; mere account opening form of an overseas bank account where assessee was mentioned as beneficial owner of account, mentioning details of his passport as an identification document, did not necessarily, in absence of any other corroborative evidence of beneficial ownership of assessee over asset, lead to taxability in hands of assessee under Black Money Act. The ld. A/R sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though in the name of the appellant's director, it was purchased out of the funds of the appellant-company and it is also not in dispute that the motor car was purchased for the purpose of business of the appellant. Thus the motor car being, business asset of the appellant and purchased for the purpose of business and used as such by the appellant, in view of the decision in the case of Mysore Minerals Ltd. [1999] 239 ITR 775 (SC) referred to above and other decisions cited by the learned authorised representative, I hold that the disallowance made by the Assessing Officer on this ground is not justified and hence the same is directed to be deleted. The ld. A/R further stated that there were three directors in the Foreign Company viz. M/s Agrasen Polymers FZE. The company is established in the Free Trade Zone in UAE and two directors, who are locals, stay in Dubai. The appellant was one of the Directors and the signatory of bank account for and on behalf of the Company, and cannot be termed as a beneficiary as no amount has been received by the Appellant from the company in the form of remuneration or commission or profit or dividend in any manner and neither is there any evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ends received thereon have also been disclosed. PB 722-723 is the copy of the Financial Statement of M/s Agrasen Polymers FZE for the period ending on 31st December 2018 audited & approved by M/s Ramesh Ramu & Audit Associates, wherein the investments have been disclosed and dividends received thereon have also been disclosed. PB 885-888 is the copy of the Reply dated 08.08.2022 filed before the Ld. CIT(A) whereby the Appellant duly explained the transactions of credits in the bank accounts of the non-resident foreign company. The ld. A/R further submitted that from the investments made by the non-resident company viz. M/s Agrasen Polymers FZE, it had earned dividend income of Rs. 2.34 crores during F.Y. 2016 - 17 to 2018 - 19 which has incorrectly been added as the income of the appellant, whereas, the investments and the benefits therefrom, solely pertain to the Company. It is pertinent to note that not even an iota of any amount from the above-said amount has ever been received by the assessee, nor is there any such allegation made by the AO in the Assessment Order dated 31.03.2021 nor in the Remand Report dated 13.07.2022, nor the Ld. CIT(A) brought out any adverse evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, based on the finding given by us in ground no. 3, supra, we hold that interest of Rs. 16,76,574/- pertains to the non-resident company and the same cannot be taxed in the hands of assessee appellant. The ground No. 4 of the assessee is allowed. GROUND NO.5 - THE ADDITION OF RS. 1,42,67,290/- IS ILLEGAL AS THE SAME WERE MERE DEPOSITS MADE OUT OF THE WITHDRAWLS FROM THE BANK ACCOUNTS AND THEREFORE CANNOT BE ADDED AGAIN 43. In ground no. 5 the ld. A/R of the assessee submitted that addition of Rs. 1,42,67,290/- being the amount of deposit were sourced from the bank account and therefore, cannot be added again as an income or an asset. To support this ground the ld. A/R of the assessee submitted that as the ld. AO has taxed the total credits once and crediting the amount out of the withdrawal so made to meet the day to day expenditure will render the double addition on the same amount. To support this contention the ld. AR of the assessee relied upon the APB 775 being the Annexure 10 wherein the details of the cash deposits out of withdrawal after meeting expenses of the firm were categorically provided. He has also relied upon the chart extracted from the bank statement sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) wherein the details of the staff loan repaid to the non-resident company viz. M/s Agrasen Polymers FZE alone was categorically provided. The ld. A/R, without prejudice, submitted that the said amount pertains to repayment of loan by the staff to the non-resident company viz. M/s Agrasen Polymers FZE has already been considered, therefore, again making the addition of this amount will tantamount to double addition. The repayment of loan is not in the nature of income. Let alone that of the Appellant, who is only a director in the nonresident company, M/s Agrasen Polymers FZE gave the loan and received the repayment thereof. 44.1. In the totality of facts and circumstances of the case and the explanation furnished, we are of the view that the addition made deserves to be deleted. The ground No. 6 of the assessee is allowed. GROUND NO. 2 & 13 - CREDITS OF RS. 19,68,01,923/- APPEARING IN THE ACCOUNT BELONGS TO THE COMPANY, M/S AGRASEN POLYMERS FZE, AND NOT TO THE APPELLANT, AND THAT TOO IN THE NATURE OF A LIABILITY AND THEREFORE NOT LIABLE TO BE TAXED IN HIS HANDS OF THE APPELLANT. 45. The ld. AR of the assessee in ground no. 2 & 13 submitted that the loans and liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancials of M/s Agrasen Polymers FZE, whereby Trade and other Payables have reduced to 3,358,200 Dirhams (equivalent to Approx. 6.5 Cr) PB 801&802 are the Copies of Bank Statement of account no. ending with 2026, whereby amount of loan was returned (AED 8,25,000/- PB 801, AED 6,50,000/-, AED 600,000/-, AED 500,000/-, AED 750,000/-, AED 1,550,000/- & AED 1,150,000/- (PB 802)) by the non-resident Foreign Company viz. M/s Agrasen Polymers FZE. He has also summarized the details of the chart for repayment. Sr. No. Date Cheque No. Amount Currency Reference of PB 1. 12.09.2018 175294 8,25,000 AED 801 2. 07.08.2018 175288 6,50,000 802 3. 07.08.2018 175287 6,00,000 802 4. 07.08.2018 175289 5,00,000 802 5. 08.08.2018 175290 750,000 802 6. 29.08.2018 175291 1,550,000 802 7. 05.09.2018 175292 1,150,000 802 TOTAL 6,025,000 Thus, this amount, firstly and undisputedly was a loan (liability), which was taken by the non-resident foreign company and has been repaid back by the company alone. This unequivocally proves that the same did not belong or even pertain to the Appellant. It clearly belonged to the company and that too as a liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is personal capacity. The ld. A/R placed reliance on the following case laws :- CIT Vs. Harjeev Aggarwal 229 DLT 33, wherein it has been held as under :- "Statement recorded during the course of search, on a standalone basis, without any reference to material found/discovered during the search would not empower the AO to make block assessment merely because of any admission made by Assessee during the search operation." CIT vs. Naresh Kumar Agarwal in ITTA No. 112 of 2003 dated 09.09.2014 wherein it has been held as under :- "........................The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) AND LD. AO HAVE FAILED TO CONSIDER THE TRANSFER OF FUNDS FROM THE BANK ACCOUNTS OF THE FOREIGN COMPANY TO THE APPELLANT AND VICE-VERSA, WHICH CLEARLY ESTABLISHES THAT THE MONEY IN FOREIGN BANK ACCOUNTS AND INVESTMENTS (FOREIGN ASSETS) WERE OWNED BY THE FOREIGN COMPANY. 47. As regards ground no. 7, the ld. A/R of the assesses has not submitted any written submission but relying on the submissions made before the lower authorities submitted that once the ld. CIT(A) has accepted the inter transfer of money itself establish the money of the firm and not of the assessee, the addition sustained by the ld. CIT(A) is required to be deleted based on those arguments. Considering our decision in respect of ground no. 9, supra, we allow the ground of the assessee in terms of our observation made in ground no. 9, the ground no. 7 is allowed. 48. Accordingly, we have disposed off all the 16 grounds of the assessee and in terms of these observations the appeal of assessee in BMA 01/JP/2022 stands allowed. 49. Coming to the appeal of the revenue, in BMA No. 02/JP/2022, the revenue has taken following grounds of the appeal: 1. The learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disclosed. f) The assessee has already submitted that he has earned the commission income and addition is based on the cogent evidence found during the search. g) As regards the contention of the assessee that he has availed the leverage facility is not disclosed in the search and the assessment proceeding and thus, the contention of the assessee is nothing but an afterthought. h) Definition of undisclosed asset located outside India as per Section 2 (11) of Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015 means any asset, which is including a financial interest in any entity located outside India held by the assessee in his name or in respect of which he is a beneficial owner and he has no explanation about the source of such investment or the explanation given by him is not satisfactory, in the opinion of the assessing officer, then such income is required to be taxed according to the provisions of the law. Therefore, the assessee is the beneficial owner of the firm M/s. Agrasen Polymers FZE where is he owns 100 % stake in the company the learned assessing officer has correctly charged the above sum to the tax in accordance with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 - 20 were added in the hands of the Appellant on SUBSTANTIVE BASIS, vide Assessment Order dated 31.03.2021, passed u/s 10(3) of the Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 (hereinafter referred to as the "Black Money Act" or "The Act"). G. Aggrieved by the illegal action, an Appeal was filed before the Ld. CIT(A) whereby the claims of the Appellant were substantially accepted, however, additions to the tune of Rs. 23,74,26,443/- were sustained. H. For ready reference, the breakup of the additions so made, and the corresponding decision of the Ld. CIT(A) is tabulated as under: Sr. No. Particulars Addition made by AO Additions sustained by the CIT(A) Amount Deleted by the CIT(A) 1. Addition made on account of the credits in the following Bank Accounts of M/s Agrasen Polymers FZE and the accounts held by the Appellant in fiduciary capacity for the company during F.Y. 2015 - 16 and F.Y. 2018 - 19 INR 136,73,10,8555 INR 23,74,26,4433 INR 1,12,98,84,4122 AE470271226001850542017 Appellant - Fiduciary Capacity AE410271226001850542028 Appellant - Fiduciary Capacity AE920271161201822102010 Company AE61027116137182 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added doubly, which is evident from the remand report (PB 871). Therefore, the Ld. Assessing Officer / the Income Tax Department cannot blow-hot and cold at the same time. 1.1.4. Further, it is submitted that due evidences were submitted before the Ld. Assessing Officer as well as the Ld. CIT(A) and only thereafter the relief was granted. PB 97-160 Is the copy of reply dated 08.04.2021, whereby due explanation was given regarding the double additions (156-160) PB 767-770 Is the reconciled chart which shows a bird eye view of the double additions. Therefore, there remains no justifiable, legal basis to delete the rightful relief granted by the Ld. CIT(A). 1.2. Rs. 9,01,93,937/- IS A NOTIONAL ADDITION AS NO SUCH AMOUNT EXISTED. 1.2.1. That the said addition has not been discussed by the Ld. Assessing Officer in his order and has been made a part of the total credits in the bank account no. ending with 2039, whereas the said bank account no. ending with 2039 admittedly does not even belong either to the nonresident company, nor to the Respondent - assessee. which is an internal bank account of the FAB Bank. Secondly, it is an admitted fact (PB 873 - 874 - Remand Report) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no new amount was credited. This again transaction was again done on 24/05/2016 wherein 50000 USD were transferred through telex. We therefore state that the amount of USD 49975 equaling to Rs. 32,46,375/- is the amount credited due to a contra entry, which had already been taken into account. Thus, adding the same amounts to Double Addition. 1.3.2. The Ld. Assessing Officer while making the addition had added this contra entry which is incorrect as the original credits has already been added and the cancellation of telex amount, resulting into refund of Rs. 32,49,375/- could not have been added again as the same would result in double addition, as has been rightly recognized by the Ld. CIT(A) in his findings (Para 6.2 (xx - xxi at Page 40 - 41 of the Appellate Order). Therefore, it is prayed that the deletion of such a contra entry (double addition of an amount already considered) be sustained. PB 869 - 875 is the copy of the Remand Report dated 13.07.2022, wherein it is mentioned that the Ld. AO has stated that on verification of bank account, it transpires that no new amount has been credited in the bank account. (PB 874). PB 876 - 884 is the copy of the reply dated 18.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, such addition may kindly be deleted. (PB 878 & 879). In light of the submissions made above, it is prayed that the Departmental appeals be dismissed, and the order of the Ld. CIT(A) be upheld." 52. The ld. A/R of the assessee in addition to the above written submission submitted that the assessee has only submitted the chart and reconciliation based on the information already on record. The ld. CIT(A) has based on that chart and reconciliation given it for verification in the proceeding before the ld. CIT(A) and he in turn send it to AO. The learned AO after verifying the contentions reported the facts only and thus, there is no additional evidence submitted by the assessee. He has further submitted that based on the evidence submitted the firm M/s. Agrasen Polymers FZE is not a paper company as alleged by the revenue. As regards the objections to the remand report by the ld. AO and thereby the ld. DR the ld. AR of the assessee relying on the finding of the ld. CIT(A) recorded at page 39 para 6.2 (xv) to (xvii) wherein the ld. CIT(A) considering the fact allowed the submission of the assessee along with the presentation based on chart and reconciliation. Therefore, now revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these chart and reconciliation so submitted by the assessee in the appellate proceeding before CIT(A) and therefore, we do not see any merits in this ground of appeal taken by the revenue and in terms of these observations the ground no. 3 raised by the revenue is dismissed. 55. The ground no. 4 raised by the revenue is that the power granted to ld. CIT(A) is in accordance with the provision of section 17(1)(c) of BMA(UFIA) whereby the ld. CIT(A) was mandated to do inquiries herself or to get carried out further inquiries. Instead of doing the same the ld. CIT(A) choose to grant relief to the taxpayer. In this regard the bench has noted the ld. CIT(A) has granted the relief to the extent of Rs.103,64,41,100/- after considering the submission of the assessee and thereby seeking comments of the ld. AO and is supported by the remand report submitted by the ld. AO. The relief granted is after considering the fact that duplicate additions were made on account of interbank transfer, investment matured and maturity value of FDRs. The relevant finding of the ld. CIT(A) is reiterated here in below: (xiii) I have considered the facts of the case and it is observed that the appellant himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any material evidence for corroborating his contention that the funds lying in the foreign bank accounts of M/s Agrasen Polymers FZE are disclosed and accounted one. Infact the appellant has failed to provide any evidence that M/s Agrasen Polymers FZE was ever engaged in performing any actual business or fund generating activities. It is evident that the appellant had income in the nature of commission /incentive as well as proceeds from foreign investment from sources located outside of India and he was the beneficial owner and sole signatory in the company M/s Agrasen Polymers FZE. (xiv) In view of the above facts, the contention of the appellant that the investments made belongs to the foreign company only and any income arising therefrom will be taxable in the hands of the said company is for from truth since as per the definition of undisclosed assets located outside India under the Black Money Act, 2015, it is observed that it is an undisputed fact that the assessee is the beneficial owner and the sole signatory in the company M/s Agrasen Polymers FZE and therefore the assessee is statutorily bound to not only disclose the complete details of the aforesaid company in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, copy of remand report proceedings as well as the rejoinder comments to the report furnished by the Ld. AR of the appellant. I find that the contention of the appellant is correct as the amount of Rs. 9,01,93,937/- is the leverage facility provided by the bank. The same has also been confirmed in the email sent by the bank. Further the AO in the remand report has also confirmed that AE550271031591850542039 is an internal suspense account which is used by bank for their operation and internal investments and the said account does not belong to the appellant. In view of the above facts, the addition of Rs. 9,01,93,937/- made by the AO is not justified and I, therefore, delete the addition of Rs. 9,01,93,937/- so made by the AO. Contra entry of Rs. 32,49,375/- The ld. CIT(A) has also granted a relief of Rs. 32,49,375/- being the contra entry made at the instance of the bank and the same is deleted in the same bank statement. Based on the remand report submitted by the AO the ld. CIT(A) deleted that addition. The relevant findings of the ld. CIT(A) is reiterated here in below : "(xxi) In the remand proceedings, the AO has considered the argument of the Ld. AR of the appellant an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly treated as allowed." We find no infirmity in the findings of the ld. CIT (A), we thus dismiss Ground no 4 of the revenue. 56. Now we take up ground No. 2 of the revenue's appeal the granting relief of the following amount granted by the ld. CIT(A) : (i) by scaling down the addition of Rupees 136.73 crores by Rupees 103.64 crores (ii) by deleting the addition of Rupees 9,01,93,937/- as double addition (iii) by deleting the addition of Rs 32,49,375/- holding the same to be contra entry. (iv) by deleting the addition amounting to Rs 9,69,34,026/- as leverage facility. 57. We have already adjudicated the above matter while dealing with ground no. 4 above. We have agreed with the findings of the ld. CIT (A) and accordingly sustained the relief granted by the ld. CIT (A) by deleting the additions of above referred amount. Accordingly, ground no. 2 of the revenue's appeal is also dismissed. 58. In terms of these observations the appeal of the revenue in BMA No. 02, 03, 04 & 05/JP/2022 stand dismissed. The appeal of the assessee in BMA No. 01/JP/2022 stands allowed in terms of these observations. These appeals are accordingly disposed off. Order pronounced in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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