TMI Blog2020 (10) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... a letter and affidavit from his brother stating that his brother Mr.Dipak V. Galani is the owner of the bank account and he was opened a bank account in his capacity as a non resident in the year 1998. Bank account was opened by his brother as a first account holder and the assessee was included in the bank account as a second account holder, which is very clear from the base documents relied upon by the Ld. AO, where the assessee name appears as a second account holder. Base documents itself clearly states the creation of identity of the assessee as date of 19/06/2003, and it is clearly stated therein that assessee account holder No.2. The passport detail of assessee as per base documents clearly shows him to be residing at Vienna (as place of having establishment) with place of birth as Baroda. The legal address in base documents is taken from the birth place mentioned in the passport as permanent address, otherwise the address of the assessee in Vienna is also mentioned in passport as taken is present address. Thus it is very clear that the bank account in the name of assessee and is brother and his brother as account holder No.1 is clearly established the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is impermissible as the same is merely based on fanciful presumptions. The AO has not brought any material on record to justify the use of account opening information as at time of assessments to presume and arrive at the conclusion that the same would be applicable to an account alleged to have been opened by the Appellant 15 years earlier. Owning the bank account and the investment by Non Resident out of sources of funds available abroad is still not taxable in India. AO has failed to point out any iota of evidence to prove that the funds of USD 3 million invested in opening bank account represent income from undisclosed sources earned/ accrued to appellant in 1998. The Appellant has no sources of income in India up to 2002 and the same has already been assessed on record in assessment proceedings earlier. The statement of Assets and liabilities and Income has been filed on record - having established that Appellant is NON-RESIDENT in AY 1999-2000 and complete absence of any source of taxable income in India, the addition u/s 69 made by AO in AY 1999-2000 on account of investment of USD 3 million in opening the bank account with HSBC and consequent estimation of return of inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in invoking the provisions of section 144 of the Act. 3) On the facts and circumstances of the case, the learned AO as well as the Commissioner of Income Tax (Appeals) has erred in Confirming the following factual assumptions: a)The AO has incorrectly assumed that the Appellant is the owner of the bank account; b) The AO has erred in assuming that an investment of USD 3 million was made in order to open the account; c) The alleged investment of USD 3 million was made out of income which originated from income chargeable to tax, but not disclosed in India; and d)That the bank had paid interest of 17 per cent per annum. The Appellant submits that additions of ₹ 2,34,35,316/- made based on such incorrect factual assumptions must be deleted. 4) The AO as well as CIT(A) has erred in relying on the base notes, without bring any cogent material on record to establish the authenticity or the veracity of the base notes. The AO has further erred in placing reliance on incomplete information extracted from the HSBC Private Bank website to justify the authenticity of the base note. 5) Without prejudice to the above, the AO as well as the CIT(A) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation further revealed that the assesse was a beneficiary of an account opened under code BUP 5090171854 with HSBC Bank. The account had been opened under client name Dipak Varandmal Galani and/or Kamal Varandmal Galani bearing Account Number 509-4077262. The said account was opened on 17/04/1998 and was active. As per the Base Document, the account had a maximum credit balance of USD 9,40,191/- in November 2015, a balance of USD 4,97,198 as on December, 2005 and USD 3,17,080 in September, 2006. Based on said information, the Ld. AO has recorded reasons for reopening of the assessment, on the ground that income chargeable to tax had been escaped assessment within the meaning of section 147 of the I.T.Act, 1961 due to non disclosure of existence of bank account in HSBC bank, Geneva. Accordingly, issued notice u/s 148 and called upon the assessee to file return of income. In response, the assesse vide letter dated 20/01/2014 stated that the return of income filed on 01/11/2004 may be treated as return filed in response to notice u/s 148 of the I.T.Act, 1961. Simultaneously, the assessee has requested for reasons for reopening of the assessment and the same was supplied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts, the assessee merely filed a letter from his brother to support his claim. Therefore, he opined that in absence of any corroborative evidences to prove his claim that account is belongs to his brother, an adverse inference could be drawn against the assessee, if he had suppressed the documents and evidence, which was exclusively within his knowledge. Therefore by taking note of various facts and also, by taking support from certain judicial precedents held that by virtue of a second holder in the bank account, the assessee is vested with rights/obligations connected with the accounts and therefore, it is incorrect on the part of the assessee to claim that he is not owner of the bank account. Accordingly, he was of the opinion that the assessee is beneficial owner of the bank account opened a HSBC Bank account, Geneva. The Ld. AO, further noted that by taking note of requirement of opening a bank account and minimum deposits needs to be kept, which is as per the Ld. AO is at USD 3 Million, he has made additions of USD 3 Million for Asst.Year 1999-2000 and thereafter, estimated return of investments @ 17% P.A, year on year for subsequent Asst.Years and added to the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, constrained to observe that despite the rights and obligations cast on him as the owner of the Numbered Client Account 4077262 the assessee has not co-operated and remained evasive so far. The assessee has chosen to defy the request to produce statements of accounts to buttress his case. His claim of having no connection with the above account carries no weight without corroborative materials. The assessee has been consistently defiant in complying with the legal requirement, The assessee has failed to comply with full terms of the notices issued u/s 142(1) from time to time. I am left with no option but to exercise powers u/s 144 income tax Act of resorting to best judgment and complete the assessment based on the materials available on record. QUNTIFICATION OF INCOME 16. In view of the discussions made above, I hold that that the assessee could open the bank account with HSBC Bank on 17-04-1998 only after making deposit of not less than USD 3 Million. It is seen that the Base Document shows balance in the bank account from 2005-06 to 2006-07 relevant to A.Yrs. 2006-07 to 2007-08. Therefore, I hold that the assessee has maintained the initial deposit of USD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The relevant findings of the Ld.CIT(A) are as under:- v. Conclusion on the grounds related to re-opening of assessment: i I have considered the submission of the Appellant and do not find merit in the same. The appellant has stated that the reasons to form the belief about income escaping assessment had not been recorded by the AO, who had issued notice u/s 148, but instead the reasons were furnished to the Appellant under the seal and signature of the new incumbent. On perusal of all the facts available on record, it appears that this issue is without basis, and the reasons have been duly recorded by the concerned assessing officer, and there appears to be no flaw in the same. Further the objection of Appellant that the copy of snapshot of web page, which is part of reasons have not been furnished to him, is also incorrect as the same has been furnished and forms part of the assessment orders for AY 2004-05 to 2006-07. There is no merit in the appellant's submissions and the same are therefore rejected. ii The appellant's challenge to the authenticity of the Base Note is baseless since the same has been received from the Government of France under the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) if four years, but not more than 16 years, have elapsed from the end of relevant assessment your unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. v) In the instant case the appellant is found to be owner of a Bank account / asset outside India and hence the extended time limit of 16 years would apply. The notice u/s 148 are clearly within the time limit of 16 years. Further, it is also to be kept in mind that the AO is not required to make a foolproof case for reopening of the assessment. Once, there are prima-facie reasons to believe that the income has escaped assessment, it is sufficient to invoke the provisions for reopening the assessment. In the present case, all these criteria have been fulfilled. vi. After due application of rind, jurisdictional Addl. CIT and the AO had reasons to believe that income of more than Rs, 1 lakh has escaped assessment during the year due to failure on the part of the appellant to furnish fully and truly all facts in the return of income for respective years. vii It is pertinent to mention here that nothing could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression cannot be read to mean that the A.O. should have finally ascertained the fact by legal evidence or conclusion. The function of the A.O. is to administer the statute with, solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. Vs. ITO [1991] 191 ITR 662 (59 Taxman 17), for initiation of action under section , 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice the question is whether there was relevant material on which a reasonable person could have formed a requsiite belief whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the A.O. is within the realm of subjective satisfaction (see ITO v. selected Dalurhand Coal Co. (P) Ltd. (1996) 217 ITR 597 (SC) Raymond Woolle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint holder of bank account and he is having a beneficial interest in said account. Once, the fact of having account jointly with his brother is established, the onus clearly shifts on the assessee that he was not the actual owner. Since, the assesee has not brought on record any evidences to prove his claim, there is no error in the findings recorded by the Ld. AO to conclude that the assessee is the beneficial owner of the bank account and accordingly, the additions made in the hands of the assessee is in accordance with law. As regards, taxability of initial deposits of 3 US Million Dollars, the Ld.CIT(A) observed that since appellant is NRI and NOR, there is no question of taxability of income, which was accrued or arisen outside India and thus additions made by the Ld. AO for the Asst.Year 1999- 2000 on account of initial deposits of USD 3 Million and return on investments @17% for Asst.Year 2001-02 2002-03 are incorrect and hence deleted. As regards additions made for Asst.Year 2003-04 to 2007-08 towards return on investments @17% PA, the Ld.CIT(A) observed that estimating return on investments @17% PA is reasonable, because the assessee has not filed any evidences despit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17.04.1998, and that it was opened with the British Bank of Middle East. The HSBC Private bank came into existence in the Year 1999, i.e subsequent to the opening of the impugned account. The appellant has also questioned the evidentiary value of the bank account details of other similar account holders, in his case. iii. The Appellant has stated that it is not clear how the balances maintained by Ms Janki Mukhi and Mr Kanu Bhai Patel, are relevant in arriving at the finding that the appellant had made an initial deposit of USD 3 Million. The bank balances and other investments maintained by any person are a factor of his net worth, his investment profile and his personal preference. Further, the balances in the case of these two individuals also do not throw light on the fact, whether these were initial deposits or accretion over the years. In any case, the balances maintained by the two individuals are no evidence of mandatory initial deposit amounts and the balances in these accounts cannot be the basis to affix liability on the appellant. The appellant also stated that the assessing officer has been unable to counter the valid objections raised by him regarding the gap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. Whether such amount should be taxed in the hands of the appellant for the A.Y.I999-2000 The second issue is regarding taxability of this initial deposit of USD 3 Million in the assessment year 1999-2000 in the hands of the appellant. It is an undisputed fact that the appellant was a non resident in India, for tax purposes, in the assessment year 1999-2000 and the years prior to it. There is nothing on record to suggest that the balances in the impugned account reflect income which was earned in India or accrued or arose in India. In fact there is not even a whiff of such suggestion in the assessment order or any report furnished by the assessing officer. In view of the same no addition on account of initial deposit in the bank account can be made in the hands of the appellant for the assessment year 1999-2000. III. Determination of return on investment @ 17% per annum, year on year. i. The appellant has contested the additions made in all the Assessment Years i.e from A.Yrs. 1999-2000 to 2007-2008, based on an estimated return of 17% per annum on the balance in the account. For this purpose, the balance has been assumed at USD 3 Million as discussed earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and is an impossibility. We enclose herewith the copy of Yield chart of US dollar denominated bonds and Swiss Government Bond Yields. The same are in range of 3 to 4 %. In fact in Switzerland the yields are negative. We therefore plead that assumed addition of 17% return on USD 3 Million amounting to USD 5,10,000/- in each of the years may be deleted*'. v. A remand report was called for from the A.O. vide letter No. CIT(A)- 34/Remand report/2018-19 dated 12/07/2018 regarding the above submissions of the appellant. The AO in his remand report has stated as follows : I further hold that the deposit resulted in accretion by way of interest income chargeable to tax in all the years. In this regard the details of deployment of fund by HSBC Bank out of the funds invested by Ms. Janki N Mukhi show that the funds were deployed in various assets such as fiduciary deposits, shares, liquid assets, mutual funds, stock, structured products etc on month to month basis. As illustration I scan below the Table giving details of investment in her individual active account which is annexed to her Base Document: The above document is enough evidence to rate the growth of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed. vii. Conclusion on determination of return on investment @ 17% per annum I have considered the submission of the Appellant, and the report submitted by the assessing officer. The issues that arise for adjudication are as follows; a) what is the amount of balance investment in the account of the appellant, for the period covered by A.Yrs. 1999-2000 to 2007-08, on which income has been earned by the appellant b) whether such income is taxable for all the assessment years under appeal. c) what is the rate of return on the investments / balances held by the appellant, which shall form income of the year d) whether the entire amount of return should be taxed in the hands of the appellant a. The first issue, has been decided in preceding para wherein it has been held that on the basis of evidence brought on record, the only view sustainable is that the initial deposit on 17-04-1998 was USD 3 Million. b. c. The second issue is with regard to taxability of such return on investment in each assessment year between 1999-2000 to 2007-08. As has been discussed and decide in preceding para, the residential status of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned account should be taxed in the hands of the appellant. It is an undisputed that the account is jointly held by the appellant and his brother Deepak Galani. The onus was on the appellant to explain the beneficial ownership, actual depositor and ultimately the share of the appellant in the joint account. Had the appellant submitted complete set of bank statement, probably many of the dispute would have been settled. The appellant has chosen not to respond and submit relevant specific evidences. The appellant has, therefore, clearly failed to discharge the onus cast upon him. The AO has elaborated and analysed as to how the appellant had enjoyed the right being a joint account holder. Hence, I do not find any .reason to deviate from the findings of the AO and hold that the addition of ₹ 2,31,08,100/- for the A.Y.2004-05, ₹ 2,24,91,000/- for the A.Y.2005-06, ₹ 2,31,03,000/- for the A.Y.2006-07 and ₹ 2,10,83,400/- for the A.Y.2007-08 made by the AO on account of return of 17% per annum on investment are confirmed. IV) Challenging the Assessment of Peak credit in the AY 2006-07 (USD 9,40,191 and USD 3,17,080 for AY 2007-08 It I. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is brother is solely owned by him, for which brother has filed letter before the Ld. AO along with affidavit and owned up account. But, the Ld. AO has discarded all evidences filed by the assessee and made additions in the hands of the assessee only on the ground the base note received from French Government contains name and address of the assessee. He, further submitted that the assessee never disputed fact that bank account is not opened by his brother with joint name, however he made it very clear that the bank account was completely operated by his brother Mr. Dipak. V. Galani and whatever money lying in bank account is belong to him. The Ld. AR for the assessee, further referring to various documents submitted that unless, the Ld. AO brought on record necessary evidences to prove ownership of bank account in the name of assessee, he cannot make additions only on the basis of base note, when the assessee has categorically denied of having any link to bank account. Further, the Ld. AO has disregarded all the evidences filed by the assessee and made additions, only on the basis of base note on pure assumptions that since, the assessee is second holder of bank account and he is v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently, the AO issued the notice u/s 148 of the Act on 30/04/2013. Likewise for AY 1999-00 AY 2003-04 the AO recorded the reason and sought approval from the JCIT and after receiving the approval issued the notices on 30/3/2015. Furthermore, important aspect requiring kind attention of your good selves is that during the AYs 1999-2000 to 2003-04 the appellant has also filed the objections to the reasons recorded and these were disposed off by speaking order. Therefore your honour in my humble opinion it is not correct to argue that no reasons were recorded when the appellant objected to the reasons recorded during the assessment proceedings and which were duly disposed by the AO. Overall it may be kindly appreciated your honours that considering the various facts discussed previously it appears to have no infirmity in the reopening proceedings so far as reasons were recorded by the AO and approval was granted by the JCIT after recording satisfaction and this was prior to the issuance of the notice u/s 148 of the Act. The kind attention of your honours is invited to the landmark judgement of Hon'ble Supreme Court in GKN Driveshafts (India) Ltd vs ITO (2003) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner [or Deputy Commissioner], unless the [Joint] Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice] : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall he issued unless the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (I), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of [Joint] Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the /Joint/ Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] [Explanation.-For the removal of doubts, it is hereby declared that the Joint Commissioner, the [Principal Commissioner or/ Commissioner or the [Principal Chief Commissioner or] Chief Commissioner, as the case may be, being sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of notice u/s 148 of the Act beyond limitation is concerned Ld. CIT (A) has mentioned in his order that the provisions of section 149 of the Act has extended the time limit for reopening of the case as the appellant was found to be owner of bank account/asset located outside India and income has escaped assessment. As has been mentioned previously that in case of bank account/asset located outside and the income has escaped assessment then the deeming provision gets attracted. Hence your honors it is humbly submitted there is no merit in the contention that the notices were issued beyond limitation. II. Issues of invoking provision under section 144, Reliance on the Base documents and Ownership of Bank Account: Your honours another common issue raised by the appellant is that the AO erred in invoking provision of section 144 of the Act. The appellant claimed that he has filed submission on numerous occasion and also stated that account was opened by the brother of appellant Deepak Galani with the British Bank of Middle East in 1998 (the bank was subsequently taken over by HSBC further that the name of appellant is named as a second account holder for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not discharged by signing the consent waiver form rather that could have been discharged only by the production of those documents and evidences which were called for from the appellant in the notices u/s 142(1). Your honours will appreciate that the consent waiver form is neither a statutory requirement nor a procedural one. It was only a facilitation mechanism for the benefit of the assessee vis-a-vis HSBC Switzerland. Further, the format of consent waiver form was prescribed by HSBC Switzerland and not by Income Tax Department. In fact it raises further a doubt on the appellant that despite signing the consent waiver from the appellant has not produced the various details which were required during the assessment proceedings. This is so because in as many as three cases of the different assessees the AO received the bank account statements and other details from them after they signed consent waiver form. Your honours are requested to grant kind attention on the issues in foregoing paragraph. Furthermore your honours kind attention is invited to the contents and features of Consent Waiver Form. Some of the important feature of the Form are as under- a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and privacy laws of Switzerland and gives the authority to Bank to provide the bank account statements of the account holder. Even this is also subject to the subsequent revocation. Your honours are requested to pay attention to the very fact that the Assessing Officer vide notice u/s 142(1) of the Act dated 12/01/2015 again raised specific query that despite of the appellant filing the consent waiver no bank account statements were provided by the appellant before him. In the notice supra the AO also mentioned that the of similarly placed assessees who gave consent waiver have produced the desired bank account statements and other documents from HSBC Bank. In response to the specific query raised the appellant has not filed the detailed response or the details which were required. Therefore your honours humble submission is that the appellant during the proceedings was largely evasive in so far as production of bank accounts and other documents are concerned. Another important aspect warranting attention of your good selves is that it is undisputed fact that the appellant is joint account holder of the HSBC Bank account. This fact is mentioned in the base note, in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the name of appellant is appearing as second owner hence clearly the appellant is also the second owner. More importantly the AO in the notice u/s 142(1) dated 12/01/2015 also gave the General Conditions of the bank which was finally named HSBC Private Bank (Suisse) SA these General conditions has various clauses which define relations between bank and the customers. On going through these general conditions it is clear that the customers keep on receiving bank account statements from bank from time to time therefore in order to discharge the onus the appellant ought to have furnished the bank account statements and other documents. Another important clause of General Conditions is clause 4 this clause is regarding the Several holders and joint account. The clause 4 of General Conditions clearly grants equal rights to the two or more joint account holders, it states that When two or more persons are holders of an account, each of (he account holders shall be vested with the totality of rights and obligations connected with the account. Further that Each of the account holders is authorized to accomplish, alone or jointly, in accordance with his relevant powers of signatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o different assessees have provided such form, these assessees whose names were also mentioned in the information received from the French Government and also their respective base notes were received and they also have accounts in the HSBC Bank Geneva during the period in which the appellant was having the bank account. Your honours kind attention is also invited to the fact that on basis of enquiries conducted by the AO from the internet and also analyzing the bank accounts statements and other facts of similarly placed assessees, the AO arrived at the fact that initial investment of 3 Million USD was made. The AO raised specific query in this regard long before passing the assessment orders. Finally in Assessment order AO relied upon the contents in the website of the HSBC Pvt Bank and also on the information received by him in the cases of other assessees. Hence on the entire factual matrix AO has made the best quantification of investment possible. Likewise the computation of interest is made on the rational basis mentioned in the assessment order. The appellant is making a claim without producing the bank account statements and other documents to prove otherwise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. In absence of anything contrary, the only logical conclusion that can be inferred is that that the amounts deposited are unaccounted deposits sourced from India and therefore taxable in India. This presumption is as per the provisions of section 114 of The Indian Evidence Act, 1872 which reads as follows: Section 114. Court may presume existence of certain facts. The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particulars case. The Court may presume- ...... (g) That evidence which could be and is not produced would, if produced be unfavrorable to the person who withhold it.... Section 114(g) of The Indian Evidence Act, 1872, thus clearly says that the Courts can presume existence of certain facts if the person liable to produce evidence which could be and is not produced, which if produced would have been unfavorable to the person who withhold it. 13.2 Further, the provision of Section 5(2) of the Act is reproduced as under:- Subject to the provisions of this Act, the total income of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in HSBC bank account, Geneva, on the basis of base note received from French Government by Government of India in accordance with double taxation avoidance Agreement and opined that the assessee is a beneficial owner of joint account held in the name of his brother. The Ld. AO has also made additions towards return on investments on initial deposits claimed to have made by the assesee to open bank account @17% on the basis of some comparable cases of similar nature. The Ld. AO has analyzed the facts of the case in light of base note and concluded that the assessee is the owner of bank account and whatever money lying in bank account is undisclosed income of the assessee for income tax purpose. It was contention of the assessee before the Ld. AO, as well as the Ld.CIT(A) that bank account was opened by his brother Mr. Dipak Galani in the year 1998 and his name was included in the bank account for convenience and as a mark of respect to his elder brother, but he is neither owner of the bank account, nor had any interest or right in money lying in bank account. To justify his arguments, and prove his claim filed passport and other details, including bank account details and arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money found in HSBC bank account is belongs to the assessee or his brother. In this case, the assessee right from beginning has made it very clear that the bank account belongs to his brother and he was named only as a second holder for the purpose of nomination and for the sake of convenience. To justify his claim, the assessee has filed a letter and affidavit from his brother stating that his brother Mr.Dipak V. Galani is the owner of the bank account and he was opened a bank account in his capacity as a non resident in the year 1998. From the above, it is very clear that the bank account was opened by his brother as a first account holder and the assessee was included in the bank account as a second account holder, which is very clear from the base documents relied upon by the Ld. AO, where the assessee name appears as a second account holder. Further, as stated above, the bank account was opened in the year 1998 and at the time of opening bank account, the assessee, as well as his brother both are NRI residing outside India. Further, the base documents itself clearly states the creation of identity of the assessee as date of 19/06/2003, and it is clearly stated therein that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in outside India for 30 years and had no intention to come to India at that time. Further, both of them have no source of income in India, during the course of their residence abroad. Therefore, we are of the view that entire motive as presented by the Ld. AO defines all logic of opening of a secret bank account in Geneva, by NRI to stash unaccounted income taxable in India fails. The ld. AO mechanically disregarding all explanations furnished by the assessee as to the ownership of the account along with the corroborative materials is contrary to the settled position of law, because, once assessee has provided a reasonable explanation about ownership, then the onus was on the Ld. AO to establish that account belongs to the assessee. This legal principle is fortified by the decision of Hon ble Delhi High court in the case of CIT vs Shivaprakash Agarwal (supra), where the Hon ble High court after observed that the assessee had time and again submitted before the revenue authorities that the documents belongs to his father and whatever additions have to be made in the hands of the father. The father of the assessee had owned up to the documents seized during the course of search an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made amounting to an equivalent of USD 5 million. This goes to show that the account opening requirement undergo changes from time to time and the presumption that the account opening requirements stated at the time of the assessment would have been the same as those prevailing when the account was opened 15 years earlier, in 1998, is fallacious and cannot be sustained. The AO failed to appreciate that account was opened in The British Bank of Middle East, UAE. The same was subsequently merged / acquired by HSBC Private Bank. Hence assumption of USD 3 million is unjustified. Further, the AO has failed to appreciate that the appellant is nonresident in the year 1998 i.e. in the year of opening the account, residing out of India for past more than 20 years. Further, owning the bank account and the investment by Non Resident out of sources of funds available abroad is still not taxable in India. The AO has failed to point out any iota of evidence to prove that the funds of USD 3 million invested in opening bank account represent income from undisclosed sources earned/ accrued to appellant in 1998. The Appellant has no sources of income in India up to 2002 and the same has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
