Dear Readers,
Hoping you all are good!
This article summarizes a recent judgment by Hon’ble ITAT whereby additions made by Assessing Officer (AO) on the basis of uncertified/ unauthenticated information received from Switzerland and British Virgin Islands have been deleted.
On another note, it is worthwhile to mention that details required to be filled in Foreign Assets (FA) schedule must be filled with utmost care so as to avoid penalties and action under the Income Tax Act and Black Money Act.
We trust that you will be enriched by reading this article.
Regards,
Samir Mahajan
Kolkata ITAT set aside Assessment order under Black Money: Assessee not the beneficial owner in respect of uncertified bank statements
Kolkata ITAT set aside CIT(A) order sustaining addition under Section 10(3) of the Black Money Act, 2015 and holds that the Assessee does not have any beneficial interest in the impugned four bank accounts nor did have any undisclosed foreign asset. Further holds that in the absence of any evidence indicating that any funds belonged to Assessee in his individual capacity, or that any of his income was taken abroad and not taxed in India, the addition could not be made.
Brief facts of the case are that the Assessee is an individual and a resident under the Act. The Assessee is a director in a company by the name M/s Anurag Intex (Chem) Pvt. Ltd. (AICPL) which is engaged in the business of acting as commission agent/trading in iron ores. The assessee derives income in the form of salary from the aforesaid company besides incomes under the head income from other sources like interest income etc.
Proceedings under the BMA were commenced against the Assessee by issuing notice u/s.10(1) of the Act dated 12.01.2018 in the light of the following information received by the Assessing Officer that the assessee and his wife are beneficiaries for 3 Bank Accounts and mother of the assessee is the beneficiary of the forth Bank Account as information received under Swiss Federal Tax Administration (FTA) under India-Switzerland Double Taxation Avoidance Agreements (DTAA) and Ministry of Finance, British Virgin Islands .
However, the assessee disputed the allegation of the Assessing Officer and disputed the information received under DTAA as uncertified and unauthenticated, contention of which are briefly mentioned below:
| Name of Bank | Submission of the Assessee |
| 1. Krims Investments Inc (KII) Bank A/C.N0.88393-5 | KYC Document given to this company was misused to open this account. The assessee denied any beneficial ownership in this company. |
| 2. Biscay Exports Ltd. (BEL) Bank Account No.88500-5 | There is no evidence that the assessee accepted to act as director of BEL on the strength of Power of Autorney allegedly given by directors of DML. |
| 3. Newington Group Trading Ltd.(NGTL) Bank Account No.87503-9 | As per BNP Paribas Geneva rules, presence of account holder in Geneva is MUST. However, the assessee was not in switzerland as per Passport at the time of account opening. This plea was to be rejected. |
| 4. Netstar Commercial Ltd. (NCL) Bank Account No.85877-8 | The revenue cannot claim that the assessee was the beneficial owner of the Bank Account in the name of NCL based on unauthorized documents received from Swiss Governement. |
LD. AO framed the assessment order holding that information received from a Soverign Authority cannot be disregarded and have to be held to have evidentiary value. Accordingly, the Ld. AO passed the order under Black Money with undisclosed assets of the assessee located outside India of INR 2,42,08,810.
Against the order assessment order passed by Ld. AO, the aggrieved assessee preferred an appeal before Ld. CIT (A), however the appeal of the assessee was dismissed after taking into account the contentions and arguments of the assessee.
On further appeal before Hon’ble ITAT Kolkata, it was noted that the Copies of Bank Account received are not certified copies as True Copy and some of the information in the Bank Statements were darkened beyond legibility. Moreover, Ld. AO had not carried out any further investigation into the issue but relied on these documents which were not even certified and authenticated.
Therefore, Hon’ble ITAT set aside the assessment order holding that the assessee was not the beneficial owner of the such assets since the Ld. AO relied on the information which were unauthorized and uncertified and no further investigation had been undertaken to check the authenticity of the same.
Author’s note: This judgment signifies the importance of professional support required in Black Money cases. The nitty gritty of documents received under exchange of information pacts, the nuances of arguments and the factual matrices – all are important for raising relevant issues before the tax authorities.
