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2024 (2) TMI 828 - ITAT CHENNAIBlack Money - Beneficial ownership - undisclosed foreign income/asset u/s. 10(3) of Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015 - CRS information in Insight portal with the Department, there is an investment outside India in Windsor Trust and Dalham Trust and assessee being a beneficial owner of the trust could not explain source for investment in both trusts - nature of 'account' for which appellant is alleged as beneficial owner - whether CIT(A) erred in confirming the additions made without being in possession of any basic details of alleged undisclosed asset and without any corroborative evidence in this regard? - assessee submitted that the ‘Windsor Trust’ and the ‘Dalham Trust’ were formed by him as a Settlor and also as the First Beneficiary in 2003. But, all contributions to the trusts, including initial contribution was made by his son. HELD THAT:- We do not find any merits in the findings of the Assessing Officer for the simply reasons that, except CRS information, the Assessing Officer does not have any other evidence to allege that the assessee has made contribution to the above trusts. The Assessing Officer neither having the bank statement of the assessee to allege that the assessee has made outward remittance of funds, nor proved that the assessee is deriving any income from above trusts outside India. Although, initial contribution of 3,500 GBP towards corpus of the trust was shown to have paid by the assessee as a Settlor, but the assessee has proved that even said contribution was made by his son, a citizen of USA. The allegation of the Assessing Officer and CIT(A) that, because the assessee is a settlor of the trust, he remains principal beneficiary is totally incorrect and devoid of merits, more particularly in the context when other trustee are managing the affairs of the trust and also beneficial owners of trust properties. For account balance in the Windsor Trust represented as an immovable property in London has been explained out of loan borrowed from bank. The assessee neither contributed any money nor received any benefit from the trust. Therefore, the findings of the ld. CIT(A) that the assessee is a beneficial owner of the trust, because of a Settlor and also certain clauses in trust deed with reference to revocation of trust is totally baseless and devoid of merits - The account balance in the Windsor Trust considered by the Assessing Officer for the purpose of assessment in the hands of the assessee u/s. 10(3) of Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015, stands fully explained by the trust with known source of income. Therefore, we are of the considered view that the Assessing Officer is erred in making additions As decided in the case of Central Warehousing Corporation vs Adani Ports Special Economic Zone Ltd (APSEZL), (2022 (10) TMI 465 - SUPREME COURT] in the context of dispute between two parties held that two ministries of Union of India cannot take diagonally opposite stand to each other. In the present case, AO has taken one stand and stated that the assessee is the beneficial owner of the trust and value of investment in said trust is taxable in the hands of the assessee, whereas, the Enforcement Directorate, Chennai Zonal Office, has stated that the investment in Windsor Trust has been explained out of loan borrowed from the bank and the assessee has not made any contribution to the Windsor Trust. We also referring to the decision of Joginder Singh Chatha vs ITO [2022 (6) TMI 1443 - ITAT AMRITSAR] where the Tribunal held that when the account was opened by a person as beneficial owner and the other person i.e, the assessee was named as Settlor out of love and affection, no tax can be levied towards value of account in the name of said person, unless the Assessing Officer prove with corroborative evidence that the assessee being an owner of alleged bank account and he has made any contribution to the funds of the trust. Coming back to the investment in Dalham Trust once investment in trust has been owned up and explained by a non-resident, then the question of making additions towards investment in said trusts in the hands of the assessee only on the basis of recitals of trust deed is incorrect, more particularly when the assessee is able to explain with necessary evidences that he has not made any contribution to the trust. In the present case, the Assessing Officer except CRS information in Insight portal, does not have any other evidence to prove his allegation that the assessee is invested in the trusts. Therefore, we are of the considered view, that the Assessing Officer is erred in making additions towards account balance in the Dalham Trust as unexplained investment in foreign asset/income of the appellant u/s. 10(3) of Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015. Non-disclosure of foreign asset/income in income tax returns filed by the assessee - As in our considered view, when assessee does not have any investment in foreign asset or does not earn any income from foreign asset, then the question of disclosure in ITR does not arise and thus, on that basis no adverse inference can be taken against the assessee. AO is completely erred in making additions towards account balance in the name of the Windsor Trust and Dalham Trust, in the hands of the assessee as undisclosed foreign income/asset u/s. 10(3) of Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015. CIT(A), without appreciating relevant facts simply sustained additions made by the AO. Decided in favour of assessee.
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