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TMI Blog2024 (10) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Co-ordinate Bench, held that the decision awarded in the Income Tax proceedings has to be applied in the present proceedings and decided the issues in favour of the assessee - JM was of the opinion that though the Tribunal has discharged the assessee from its liability in the Income Tax proceedings, the same will not have a binding effect on the BMA proceedings and went on to decide the appeal under BMA. HELD THAT:- The scope of total income under the Income Tax Act includes all income from whatever source derived unless specifically exempt from tax or not included in total taxable income whereas under the BMA only undisclosed asset located outside India and undisclosed foreign income and assets are considered. It would be pertinent to refer to Clause (3) of Section 4 of the BMA, which reads as under:- (3) The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act. Thus, any addition made as undisclosed foreign income and asset under the BMA, shall not be repeated under the Income Tax Act but there is no corresponding provision under the Income tax Act, which means that addition/s ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory; Section 2(12) provides that undisclosed foreign income and asset means the total amount of undisclosed income of an assessee from a source located outside India and the value of an undisclosed asset located outside India, referred to in section 4, and computed in the manner laid down in section 5. , and it can be seen that none of the above is a deeming provisions and have different implications than Section 68 69 of the Act. Therefore, we considered view that Ld. AM should have decided the quarrel within the four walls of BMA. As mentioned elsewhere, since the Ld. AM has not given any finding in respect of the other issues, decided by the Ld. JM, there is no question of any dissent and, therefore, the decision of the Ld. JM shall prevail. Whether the assessee is obliged to make any disclosure of his assets/income held overseas in any capacity whatsoever during the relevant Assessment years 2008-09 to 2012-13 in the Income Tax Return Forms where there was no specific column in the ITR to that effect? - The declaration has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee can it be held that the alleged oral trust be valid and even otherwise can the assessee contend that he is not the beneficial owner of the said trust? 3. Whether the undisclosed income/asset which is disposed off before the enactment of the BMA would be a bar on the Id. A.O. to assume jurisdiction u/s. 10 of the BMA? 4. In the absence of any documentary evidence could it be held that the assessee has discharged his onus even when he has not explained the source of money deposited in the account of the Trust vehicle, in which he is the sole authorized signatory and the trustee of the said trust ? 5. Whether the applicability of case laws relied upon by the assessee, none of which pertains to an oral trust be applicable in the assessee's case for discharging his liability under the Act? 6. Whether the undisclosed income/asset which was not declared during the relevant assessment year and which was disposed of before the enactment of BMA ought to have been disclosed by the assessee in the one time opportunity provided by the central government as per section 59 of the Act to make declaration in respect of such undisclosed asset/income, failing which the same is deemed to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid bank account in Deutsche Bank, Singapore and income arising from there. According to the lower authorities, the onus is on the assessee to demonstrate the extent of such assets which can be explained as having been acquired through funds which have been disclosed to the Department. In absence of such evidence, the entire value of such assets is liable to be treated as income of the owner of the assets under BMA. 7. The Ld. AM was of the firm belief that the additions made under the Income Tax Act and BMA, are almost the same and since the Co-ordinate Bench in Income Tax proceedings passed an order dated 03/01/2022, wherein the Bench considered the facts of the present case and decided the issue in favour of the assessee and since the Ld. AM was also of the view that information relied upon by the AO for initiating the proceedings under the BMA are similar to the Income Tax Act proceedings, the basic facts are unchanged in the proceedings initiated under BMA, the Ld. AM took a view that ITAT cannot take different view under different proceedings after evaluation of the same facts on record and following the order of the Co-ordinate Bench, held that the decision awarded in the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Judge, and the appellant realised the unsustainability of its claim in the law, it made a complete volte face from its earlier stand and surprisingly, contrary to its own pleadings, now contended that it had never sought the status of a secured creditor under the SARFAESI Act. 11. The contention of the appellant that it had never sought substitution as a secured creditor under the SARFAESI Act is additionally belied from the recitals contained in the order dated 07.09.2015. Time and again this court has held that the recitals in the order sheet with regard to what transpired before the High Court are sacrosanct. The learned Single Judge, in the review jurisdiction, has reiterated that the arguments addressed before him in Company Application No. 248 of 2014 were made specifically under the SARFAESI Act observing as follows: It is also required to be noted that learned advocate for the applicant in the said application, at the time of arguments, submitted that the applicant be substituted as secured creditor and given the benefit under the SARFAESI Act and therefore, learned advocate Mr. Rao appearing for the Bank of Baroda submitted in detail, after relying upon the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed foreign income and assets, the procedure for dealing with such income and assets and to provide for imposition of tax on any undisclosed foreign income and asset held outside India and for matters connected therewith or incidental thereto. 11.1. In the Statement of Objects and Reasons, it has been provided that:- 4. The new legislation will apply to all persons resident in India and holding undisclosed foreign income and assets. A limited window is proposed to persons who have any undisclosed foreign assets. Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 per cent. and an equal amount by way of penalty. Exemptions, deductions, set off and carried forward losses, etc., shall also be not allowed under the new legislation. Upon fulfilling these conditions, a person shall not be prosecuted under the Bill and the declaration made by him will not be used as evidence against him under the Wealth-tax Act, the Foreign Exchange Management Act (FEMA), the Companies Act or the Customs Act. Wealth-tax shall not be payable on any asset so disclosed. It is merely an opportunity for persons to beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Supreme Court on substantial questions of law have been provided for. (vii) Persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance have been protected from criminal consequences. (viii) The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA. 6. The enactment of the proposed new Bill will enable the Central Government to tax undisclosed foreign income assets acquired from such undisclosed foreign income, and punish the persons indulging in illegitimate means of generating money causing loss to the revenue. It will also prevent such illegitimate income and assets kept outside the country from being utilised in ways which are detrimental to India's social, economic and strategic interests and its national security. 12. Since the title and preamble form part of the context of the enactment of the Act, the same should play an important role in the interpretation of the provisions of the Act. 12.1. Further, one cannot now be oblivion of the fact that the preamble and statement of objects and rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) or sub-section (4) or subsection (5) of section 139 of the Income-tax Act; (c) the value of any undisclosed asset located outside India. It further provides that any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43-C or section 57 to section 59 or section 92-C of the said Act shall not be included in the total undisclosed foreign income. It also provides that the income included in the total undisclosed foreign income and asset under this Act shall not from part of the total income under the Income-tax Act. (Notes on Clauses). 13. The scope of total income as provided in Section 5 of the Income Tax Act, reads as under:- 5. Scope of total income. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act is only for the purpose of that Act. 16. Section 2(11) of the BMA, defines Undisclosed assets located outside India and Section 2(12) of the BMA defines Undisclosed foreign income and asset and the same read as under:- (11) undisclosed asset located outside India means an asset (including 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 investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory; 12) undisclosed foreign income and asset means the total amount of undisclosed income of an assessee from a source located outside India and the value of an undisclosed asset located outside India, referred to in section 4, and computed in the manner laid down in section 5; 16.1. Entire BMA revolves around taxing these two income whereas under the Income Tax Act, all income are taxable unless specifically exempt from tax or not included in taxable income. 17. Section 59 of the BMA provides for declaration of undisclosed foreign asset as under:- 59. Declaration of undisclosed foreign asset. Subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions are provided under the Income tax Act. This also goes to show that the proceedings under both the Act are clearly distinguishable and moreover, the proceedings under the Income tax Act, have no binding effect on the proceedings under the BMA inasmuch as the scope of income is totally different under both the Acts. 19. Section 70 of the BMA is produced as under:- 70. Applicability of certain provisions of Income-tax Act and of Chapter V of Wealth-tax Act. The provisions of Chapter XV of the Income-tax Act relating to liability in special cases and of section 189 of that Act or of Chapter V of the Wealth-tax Act, 1957 (27 of 1957) relating to liability to assessment in special cases shall, so far as may be, apply in relation to proceedings under this Chapter as they apply in relation to proceedings under the Income-tax Act or, as the case may be, the Wealth-tax Act. 19.1. Thus, wherever the legislators thought of providing specific provisions, it has been provided but no such corresponding provisions are provided under the Income Tax Act, which again go to show that the proceedings under Income Tax Act and BMA cannot be equated. 20. Considering the scope of income vis- -vis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Return Forms where there was no specific column in the ITR to that effect. The answer lies in Section 59 of the BMA, which is reproduced below at the cost of repetition:- 59. Declaration of undisclosed foreign asset. Subject to the provisions of this Chapter, any person may make, on or after the date 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 India and 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; (c) which has escaped assessment by reason 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. 22. The declaration has to be made after the date of commencement of BMA on or b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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