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2014 (12) TMI 335 - AT - Income TaxValidity of reopening of assessment u/s 147 – tax haven banks - undisclosed income - income lying in the name of the trust - opportunity of being heard provided to assessee or not - Held that:- There was no substance in the assertion of the assessee that the reopening of assessment was bad, without following the due process of law or violation of principle of natural justice, more specifically when sanction was granted by the Additional Commissioner after considering the facts and due application of process of law - The AO provided the reasons for reopening of the assessment wherein it was specified that a tax-evasion petition (TEP) has been received from CBDT - in the return of income the assessee neither offered any income with reference to the trust nor disclosed any details to the effect that the appellant was a beneficiary of the said trust. CIT(A) was rightly of the view that the assessee has wrongly alleged that complete material was neither given nor opportunity to cross examine was given - AO has handed over complete set of documents received by him to the appellant during the course of assessment proceedings - as a part of the remand report, the AO had called the appellant and opportunity to cross examine the AO himself was available to the appellant, however, the appellant chose not to appear and hence cannot raise the bogey of cross examination here - Further, the right to cross examine is available when the department has already recorded the statement and is being used against the appellant. In the instant case, no such thing was done by the department or the AO - the information passed to the AO had been received as a part of the tax information exchange treaty and therefore, there could not have been any cross examination – thus, the AO rightly assumed jurisdiction to reopen the assessment – Decided against assessee. Addition of undisclosed income – Held that:- Not only the documents rather the English translated copy of such documents was also provided - another assertion made by the assessee was that the information was unvouched and not corroborated with any evidence - the documents were received officially by the Government pursuant to an investigation made by permanent subcommittee on investigation of United States Senate - the distribution to the beneficiaries as well as profits earned are not subject to any further tax and, further, the supreme authority is vested in the settler and is transferable - the Liechtenstein jurisdiction qualifies as an off shore financial centre due to a very modest tax regime, high standard of secrecy laws and further foreign investors had the opportunity to establish companies or trust with “HOST trust reg.” in the principality of Liechtenstein to enjoy the advantages of off-shore financial centre. As per the report Indian Investigating Agencies came across a number of cases where individual or entities from India were detected using banking channels of Liechtenstein to hide their illegal income or stash funds and it was only possible when India became signatory to a world-wide convention formulated by OECD an international policy advisory body which formulated global tax standards to fight tax evasion and concealment of illicit funds - It also provided option to undertake automatic exchange of information - It is a common knowledge that discretionary trusts are created for the benefit of particular persons and those persons need not necessarily control the affairs of the trust - still the fact remains that they are the sole beneficiaries of the trust - the deposit made in the bank account of the trust represents unaccounted income of the assessee, as the same was not disclosed by the these assessees in their respective returns in India, consequently, the addition was rightly upheld by CIT(A) – Decided against assessee.
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