TMI Blog2021 (11) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise, and (b) the adoption of this meaning rendering the provisions of BMA becoming unworkable, the definition under Explanation 4 to Section 139(1) cannot be adopted in the context of the BMA. We reject this plea of the learned counsel as well. Levy of interest under sections 40(1) and (2) of the BMA, which, in turn, refers to interest under sections 234A, 234B and 234C - As submitted that the question of levy of interest under sections 40(1) and 40(2) is only with respect to tax on an undisclosed foreign income and not in respect of tax on an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the impugned assessments is undisclosed foreign income. On account of this factual aspect, even though learned senior counsel is correct in his legal plea, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1], and the inputs available to the investigation wing were analysed. The two undisclosed bank accounts reflect credit entries of US$ 122,011,244 and US$ 25,011,282 (equal to ₹ 999.74 crores, as computed by the Assessing Officer by adopting the rate of 1US$ as equal to INR 68), but then many of these entries were intra-bank and contra entries. The incorporation documents of the GJC-BVI, the documents regarding the opening of and operation of the bank accounts with UBS, AG- including beneficial owner declaration, correspondence, account holder s instructions and bank statements, the KYC documents- including passport copies of the beneficial owners, and several other critical documents were obtained by the investigation wing. It was also found that Portcullis Trust Net BVI Ltd, (described as its incorporator and its first registered agent) assisted the assessee, or rather its master client (a term used for the persons who coordinate the incorporation of an offshore entity, such as a banker), i.e. UBS AG s Singapore branch, in the incorporation of GJC-BVI, and the said entity was incorporated as a company under the BVI Business Companies Act, 2004. It was also found that duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inputs available with the investigation wing were investigated further and relevant information was gathered from the agencies in different parts of the world. Armed with the information so collected, the investigation wing took steps to conduct search and seizure operations to take the matter to a logical conclusion. 3. It was in this backdrop that a search and seizure operation was carried out, on 17th March 2016, on the residential and commercial premises of the assessee before us. During these search operations, some of the material so collected by the investigation wing was confronted to the assessee, but assessee feigned completed ignorance about the GJC-BVI and about the offshore bank accounts, as described above, with the UBG AG s Singapore branch. During these search operations, a statement of the assessee was recorded under section 132(4) and the assessee was specifically asked about the particulars such as name and address of offshore entities like companies, firm, proprietary concerns or trusts etc. in which, either you or any of your family members are the director(s), authorized representative(s) or beneficial owner(s) or trustee(s), manager(s) or master client( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign country in the last 10 years? If so, please state the detailed particulars of the same. Ans. To the best of my knowledge, answer is No. Q.44 Are you a beneficial owner or have any other interest in any foreign bank account? Ans. Personally No. However, Goldiam subsidiary in America and Honkong has foreign bank accounts. Q45. Did you have any business relations in any of your concerns with an entity M/s Hinkar Exports? Ans. I do not remember at this moment However, I can check and confirm the same. Q.46 Do you have any business connection or relation or any financial transactions of yours in your individual capacity or any of your family member or any of your entities in which you are having financial Interest in any manner whatsoever, with Hinkar Exports? Ans. No Q.47 Whether you had entered into any financial transactions with the Hinkar exports? Ans. To the best of my knowledge, answer is No. Q.48 Have you ever received any payments in India or out of India from Hinkar Export since the year 2008 in your personal capacity or in any of the entities to which you are associated in any manner whatsoever or having any financial interest? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s gone to UBS AG Bank, Singapore. Q.54 I am showing you the account Opening Form for Corporation/ Trust/ Partnership/ Association of total l5 pages of Account No.161753 whereas page No.5 reflects the name details of the Authorised E-mail like name: Bhansali Rashesh, ID/Passport No: F3687352 E-mail address: [redacted by us] Please go through the contents of page 5 of these total 15 pages of Mandate and confirm as to whose name, Passport and E-mail details appears. Please explain these documents. Ans. I am not aware and do not recall and I am surprised to see these pages. I think there is some huge mistake or conspiracy in this matter. Q.55 I am showing you Account Opening Form for Corporation/ Trust/ Partnership/ Association of total 15 pages of Account No.161753 whereat page No. 11 reflects Authorized Representatives, passport nos, and signature of Director. These details include Authorized Representatives as RasheshManharkumar Bhansali (Passport ID: F 3687352) and Ami Rashesh Bhansali (Passport ID: Z 1457657) with signatures in the presence of a witness named Arunabh Banerjee and the place is mentioned as Singapore and date mentioned is 26.08.2008 . Please go thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on it. Q.60 I am showing you Incorporation details/certificates related to Gold Jewel Corporation at BVI which consists of Resolution of opening of bank account with UBS, AG, Singapore, details of Register of Directors, Consent to act as Directors, Application for shares, Share Certificate which are duly signed by Sh. RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali. Please to through the contents of this document and explain? Ans: I have seen the pages that have shown to me and again state I don t have any comments to offer on the same. Q.60 Perusal of the bank statement of foreign bank account No.161753 with UBS AG, Singapore branch, standing in the name of Gold Jewel Corporation reveals the some of the credit amount as under: Date Name of Creditor Amount in US$ 08/06/2009 Gold Jewel Corporation 125,954 16/11/2009 Gold Jewel Corporation 20,645 22/02/2010 Gold Jewel Corporation 3,213,307 25/09/2008 Hinkar Exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am international Limited. Please explain the nature of these debit entries in the foreign bank account of Gold Jewel Corporation. Please explain whether these receipts are reflected in the regular books of accounts of M/s. Goldiam International Limited. Please provide ledger copies of these receipts in the books of accounts of M/s Goldiam International Limited. Also provide details of bank account to which these remittance are received by M/s Goldiam international Limited? Ans. I am not aware of these entries and will verify. I will verify by 20.04.2016. Q.67 Perusal of the bank statement of foreign bank account No. 161753 of Gold Jewel Corporation with UBS AG, Singapore branch there are outgoing payment of USD 21587, 36800 respectively on 12-06-2009, 28-08-2009 being transfer of amount to the account of M/s. Goldiam international Limited. Please explain the nature of these debit entries in the foreign bank account of Gold Jewel Corporation. Please explain how these receipts are reflected in the regular books of accounts of M/s. Goldiam Jewellery Limited. Please provide ledger copies of these receipts in the books of accounts of M/s Goldiam International Limited. Also prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not explained the sources of credits received in the said bank account. Please state as to why the sum of ₹ 829,67,64,592/- should not be treated as your income for these years in view of the fact that you are the beneficial owner of the said foreign bank account. Ans. As stated earlier these do not belong to me hence I have no comments for the same. Q.72 Please explain as to why your contention that you are not the beneficial owner of the assets, including foreign bank account of M/s Gold Jewel Corporation should be accepted in view of the contrary facts present. Ans. I believe there is some fraud and I am not the owner of this bank account. Q.73 The documents gathered from intelligence in respect of the foreign bank account No. 161753 with UBS AG Bank, Singapore branch, reveal your name as the beneficial owner and authorized representative along with copy of your passport. Please explain as to why you should not be held as the beneficial owner of this bank account. Ans. I believe there is some fraud and I am not the owner of this bank account. Q.74 You have denied that neither you nor your family members are beneficial owners or authorized represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the said bank account shows that there are credit entries of USD$ 2,50,11,282 during the FY 2008-09. Please explain the sources of these credit entries. Ans. I do not know and I do not remember. Date Name Credit in US$ Debit in US$ 04-08-2008 Asha Samir Bhansali [Sister of Rashesh M. Bhansali] 21,86,000 05-08-2008 Sahil Pravin Jain 21,86,000 25-09-2008 Gold Jewel Corporation 37,02,810 Q.81 Please explain these entries. Ans. I do not have an explanation as they do not belong to me. Q 82. The bank statement of Bank account no. 137274 in (UBS AG Bank Singapore in your name. Please explain as to whether the transactions in this account are reflected in you tax returns in India. Ans. These are not reflecting in my income tax returns filed in India. Q.83 You have not been able to explain the sources of credits in Bank account no. 137274 in UBS AG Bank Singapore in your n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish the list of all bank accounts held outside India and to furnish complete details of all such accounts right from the date of opening till date, a detailed note on the transactions carried out in these foreign bank accounts and their tax treatment. Instead of complying with this requisition, the assessee submitted that the BMA is not applicable in this case because it applies only from 1st April 2016 onwards, i.e. the assessment year 2016-17. It was also pointed out that somewhat similar requisitions were made by the income tax authorities on 19th July 2013 and 24th January 2014, which have been replied to, and a search operation was carried out on the assessee on 17th March 2016 for which post search assessment proceedings are being carried out separately anyway. It was thus contended that there can not be two parallel proceedings on the same subject, and that, in any event, the bank accounts in question pertain to the period prior to the BMA coming in force. The assessee thus denied the applicability of BMA on these facts. Without prejudice to this stand, the assessee further requested the Assessing Officer to give copies of the alleged specific information regarding forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt documents in respect of Overseas Bank Account No.161753 and 137274, maintained with UBS AG, Singapore, provided to your Authorized Representatives, vide this office order sheet noting dated 09-02-2011, which is as under: 1. Notification of Account opening (A/c No.161753) in the name of M/s Gold Jewel Corporation which mentions that the Account Opening form is duly signed by you on 26-08-2008. 2. The part-1 of Account opening form containing details and mandate as under: Name of the Corporation Gold Jewel Corporation Address British Virgin Island Date of incorporation 07-07-2008 Registration No. 1491607 Nature of Business Investment Holdings List of directors Name Rashesh Manharkumar Bhansali Ami Rashesh Bhansali Designation Director Director Passport No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India e-mail address [redacted] Mobile No. [redacted] The place on the documents is mentioned as Singapore and date of document is shown at 26-08-2018. The document is duly signed by Shri Rashesh M. Bhansali and Smt. Ami Rashesh Bhansali. 5. Copy of Passport of RasheshManharkumar Bhansali having the following details: Type of Passport P Country India Passport No. F3687352 Name RasheshManharkumar Bhansali Nationality Indian Sex M Date of birth 06-07-1968 Place of birth Mumbai MS Place of Issue Mumbai Date of issue 03-05-2005 Date of expiry 15-02-2020 Father's n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Share Certificate No.-001 issued by M/s Gold Jewel Corporation on 12-08-2018 whereby, the company has issued one share to Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali out of 50,000 shares authorized to be issued. The certificate is signed by Shri RasheshManharkumar Bhansali. 12. Appendix-2 which is a letter dated 16-05-2011 issued by UBS AG to M/s Gold Jewel Corporation for closure of account No.-161753 and transfer of any asset as per the instruction. 13. Application for shares dated 12-8-2008 made and duly signed by Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali. The letter is addressed to the Board of directors of M/s Gold Jewel Corporation. Amount of USD 1 is shown to have been paid for the shares. 14. Bank Account Statement for A/c No.-161753 reflecting all credit, debit and balance entries. 15. Bank Account Statement for A/c No.-137274 reflecting all credit, debit and balance entries. 16. Letter duly signed by Shri Rashesh M. Bhansali, requesting remittance of USD 71103.31 from Account No. 161753 to HSBC Mumbai account of Goldian International Ltd., USD 36,800 to HSBC Mumbai account owned by Goldian Jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147022526 9997531768 The Financial Year wise details of credits in the aforementioned accounts are as under: Account No. F.Y. Amount in USD 161753 2008-09 12,018,359 2009-10 10,99,92,885 Total 829,67,64,592 X 68 = INR Account No. F.Y. Amount in USD 137274 2008-09 250,11,282 Total 250,11,282 X 68 = INR 170,07,67, 176 Therefore the Grand Total of undisclosed credits detected in both the account numbers i.e. 161753 and 137274 are as follows. F.Y. Amount in USD 2008-09 3,70,29,641 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal entity and even a beneficial owner of the said company, which the assessee reiterated that he is not, can at best be taxed in respect of dividends. It was also pointed out that admittedly no dividends were paid by the said company. It was then pointed out that the expression Assessing Officer includes an Assistant Director or Deputy Director which includes an officer posted in the investigation wing, and since the existence of these bank accounts was in the knowledge of the officers in the investigation wing- as evident from the fact that the assessee was served a show-cause notice in respect of these accounts on 19th July 2013, the valuation date for the asset can at best be as on 19th July 2013. It was then pointed out that as per the bank statements furnished to the assessee, there are loan entries of as much as US$ 11,73,75,690.53, the loan availed cannot be treated as an undisclosed asset of the assessee. It was then submitted that the inter- bank transfers from or to loan account stand fully explained, and, to that extent, these amounts cannot be taxed in the hands of the assessee. On that day, i.e. 19th February 2019, the assessee had appeared in person before the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s signed by you and Smt. Ami Rashesh Bhansali as directors. Ans. I have reviewed the documents shown to me. I am seeing account number 161753 declaring the beneficial owner's identity. I would like to state that Ami Bhansali has not signed this document and her signatures are not there confirming she is not a beneficial owner of Account No.-161753 belonging to Gold Jewel Corporation, whereas the other signature looks like mine but, is it not signed by me. On reviewing another document, Corporation/Trust Signed by Some Arunabh Banerjee states that the place of signing the document was in Singapore on 26-08-2008. I would like to state that neither me nor Ami were in Singapore on 26-08-2008. Further, I would like to state that I have seen all the documents as, mentioned above and confirm that I am not at all aware of any of the documents and they are not signed by me. Q.10 From the documents is it is evident that you and Smt. Ami Rashesh Bhansali are the first directors of the company M/s Gold Jewel Corporation appointed by the first Agent M/s Portcullis Trust net (BV Limited. Please confirm the same. Ans. I am not aware of the company Gold Jewel Corporation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution dated 12-08-2008, is evident that the company, by passing a board's resolution of the aforesaid date, decided to open Bank Account in UBS, AG, Singapore. The document is signed by you and Smt. Ami Rashesh Bhansali as directors. Please confirm the same and comment of the same. Ans. As I have already stated in reply to the foregoing questions, I and Ami Bhansali have not signed any documents, and we are not aware of any such bank account in UBS, AG, Singapore. Q.16 In order to open a bank account No.-161753, in the name of M/s Gold Jewel Corporation, a copy of declaration of the beneficial owner's identity was submitted to the UBS AG, Singapore, mentioning that you and Smt. Ami Rashesh Bhansali are the beneficial owners of M/s Gold Jewel Corporation (BV). The document is signed by you on 26-08-2008. Please go through the same carefully and confirm the same. Ans. As replied earlier, from the documents shown on beneficial owner's identity: It may be noted that there is no signature of Ami Bhansali on this document and for me, the signature is not done by me. Q.17 Please peruse the copy of bank account opening form submitted in UBS, AG, Singapo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial owner' statement in account No. 161753 and I also confirm that none of the document is signed by me and Ami Bhansali. Q.21 I am showing you copy of notification of account opening of account No.-161753 wherein UBS, AG, Singapore has notified M/s. Gold Jewel Corporation vide notification dated 04-09-2019 for opening of bark account No. 161753. Please go through the same and comment on the same. Ans. We have not receive this notification and do not know anything about it. Q.22 Please state the business activities of M/s Gold Jewel Corporation with detailed modus operandi. Ans. I have no idea about the business activities of M/s Gold Jewel Corporation. Q.23 Please explain all the credit and debit entries in the bank accounts number 161753 and 137274. Ans. The entries appearing in the bank account statements for both the accounts are self explanatory in the wordings as loans and time deposits given by the bank. Q.24 Vide letter dated 05.02.2019 your Authorized representatives had requested for copies of bank account opening form and bank account statement in respect of Bank Account No.- 161753 (Gold Jewel Corporation) and 137274 (Rashesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction. Ans. I have not given any such instruction to the bank and the signature on the instruction is rot mine. Q.28 I am showing you copy of document instructing Anurabh Banerjee of UBS, AG, Singapore, by you and under your signature for Gold Jewel Corporation. As per the Remittance Instruction , you have instructed the bank to remit USD 13,000 to HSBC Mumbai at Swift Address MRMDUS33 on ABA route No.-021-001-088 with instruction for onward credit to HSBC Lokhandwala A/c No.-1 10 018397-001 of Goldiam International Ltd. Please go through the remittance instruction, confirm that the instruction was issued by you under your signature and explain the transaction. Ans. I have not given any such instruction to the bank and the signature on the instruction is not mine. Q.29 In your statement u/s 132(4) of the Income tax Act, dated 18-03-2016, in answer to Q. No. -35, you have stated that you are not owner of any offshore entity however from the MOA, AOA, Share application, Share certificate and bank account opening form shows that you are the beneficial owner of M/s. Gold Jewel Corporation and Bank account No.-161753 and 137274. All the aforementioned document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing No.- F3687352. Please comment. Ans. I have not signed any such documents. Q.33 You have denied to have signed any of the following document as shown to you. i. Memorandum of Association of M/s Gold Jewel Corporation ii. Article of Association of M/s Gold Jewel Corporation iii. Application for issuance of Shares of M/s Gold Jewel Corporation iv. Share Certificate of M/s Gold Jewel Corporation v. Bank account opening form for A/c No/-161753 and 137274 in the UBS AG, Singapore. vi. Beneficial owner declaration form. vii. Instructions given to the bank Please state what is your comments on the signature? If the signatures are not yours, what could be reason for somebody else for income for using you signature? Ans. I have seen the documents as being shown to me and I can only say that these are not my signatures. I have no further comments to offer. Q.34 Who is Ms. Asha Samir Bhansali and what is her profession? Ans. Asha Samir Bhansali is my elder sister. She lives in the USA with her husband and two children. I do not even know what her profession is. Q.35 Please describe the business of her h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited in the Account by Shri Karnawat Surya Prakash. What is your comment about this entry and what was this transaction for? Ans. I do not know anything about this transaction. Q.46 Who is Munish Anand and Sunish Anand? Ans. I do not know any of them. Q.47 I am showing you an entry in the bank statement for Account No.-161753 maintained in the name of Gold Jewel Corporation, BVI in UBS AG, Singapore. On 26-09-2008, an amount of USD 3702810.82 is shown to be debited by RasheshManharkumar Bhansali i.e. you. What is your comment about this entry and what was this transaction for? Ans. I do not know anything about this transaction. Q.48 Vide Order Sheet noting dated 07-02-2019, copy of Bank Statement in respect of Account No.-161 753 and 137274 maintained n UBS AG, Singapore in the name of Gold Jewel Corporation, BVI and you respectively have been provided to your Authorized Representative. Have you gone through the Bank Statements? Ans. More or less I have gone through the provided photo state copies of the Bank Statements as mentioned above. Q.49 I am again showing you the copy of Bank Statements in respect of Account No.-161753 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atures, declaration of beneficial ownership as declared, copies of passports, memorandum of charge, memorandum and articles of association of GJC-BVI, directors resolutions, register of directors, consent to act as directors, share certificates, account closing reference, application for shares etc. It was noted that the GJC-BVI was incorporated, through Portcullis TrustNet (BVI) Ltd and that vide directors resolution dated 12th August 2008, duly signed by the assessee and Ami Rashesh Bhansali, the assessee and Ami Rashesh Bhansali were appointed directors of GJC-BVI, and their application for shares was duly approved by the Board, one share of US $ 1 was jointly allotted as joint tenants with right of survivorship to the assessee and Amir Rashesh Bhansali, and that the books of accounts, records, resolutions and minutes of the company be kept at UBS Bank AG, Singapore, and that bank account of GJC-BVI be opened with UBS Singapore and operated by the assessee or by his wife, signing singly for an unlimited amount. All the details on records were analyzed and the Assessing Officer came to the conclusion that the assessee was operating the UBS Bank account under his signatures an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion the following diagrams is exhibited for a better understanding. 7.7 The linear chain of transaction in the foregoing discussions established the very fact that Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali incorporated offshore entity in the name of M/s Gold Jewel Corporation in the British Virgin Islands and they are the directors, equal share holders and beneficial owners of the aforesaid Company. Further Bank Account No.-161753 and 137274 were opened in the UBS, AG, Singapore and the Account No. 161753 was held in the name of M/s. Gold Jewel Corporation and Shri RasheshManharkumar Bhansali and Smt. Ami Rashesh Bhansali were the beneficial owners of this Bank Account. Account No. 137274 was held in the name of Shri RasheshManharkumar Bhansali. Instructions were given to the UBS, AG, Singapore by Shri RasheshManharkumar Bhansali for executing transactions. 7. On 28th March 2019, as the assessment proceedings under the BMA were on the verge of completion, the assessee finally owned up the bank accounts and submitted as follows: 1. This refers to the ongoing assessment proceedings under section 10 of the Black Money Act, 2015. 2. While I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so for reasons, which are particularly set out in Writ petition No. 40 of 2019 filed by me before the Hon'ble Bombay High Court, and which is pending. 7. I may add that there are good reasons why I did not own up the bank accounts in my statements under section 132 of the Income tax, 1961. One of the primary reasons is that the alleged accounts opening form shows that the bank account was opened in Singapore and the Bank opening form purportedly bears my signature having been made at Singapore, whereas my passport is proof of the fact that I was not in Singapore, but in India on the alleged date of opening of the bank account. I had for the first time, come across the photocopies of the bank papers of the alleged statements when they were shown to me and while my statements were being recorded during the period of search i.e. 17th to 19th March, 2016. It is only yesterday, while cleaning up the heap of papers recovered from my father, Shri Manharkumar Bhansali's old office which was sold recently, I found some papers pertaining to these bank accounts. These papers as now found are photocopies of papers which are being relied upon against me and my wife by the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued for an appearance on that day itself, and a formal statement of the assessee was recorded. Some of the questions and answers so recorded are as follows: Q.5 In continuation to your earlier submissions furnished with this office in connection with Assessment proceedings in your case u/s 10(3) of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, you have made further submission dated 28-03-2019. Please go through the same and confirm that the submission is made by you. Ans. I have gone through the submission dated 28-03-2019 furnished in your office by me and on behalf of Smt. Ami Rashesh Bhansali. I confirm that the same is made by me and duly signed by me and Ami Bhansali. Q.6 During the course of Search Proceedings, subsequent proceedings and in your submissions and statement u/s 8(b) of the Black Money Act, 2015 dated 19-02-2019, during the course of Assessment proceedings u/s 10(3) of the Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015, you have been denying the ownership of the offshore entity M/s Gold Jewel Corporation and offshore Bank Account Nos.-161753 and 137274 held and maintained in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter further with him. Q.8 Being the director in all of the group companies, you the person looking after the business affairs of the group. Why and with what motive would your father open offshore Bank Accounts and incorporate offshore entity in the name of Gold Jewel Corporation, BVI ? Ans. I was the director in all our Group Companies. My expertise/role was only limited towards production, marketing and purchase of Raw Materials. My father who was Chairman and Managing Director, was always in control of finance and investments. All the policy decisions of finance, borrowing, investment expansion of business etc. were taken by him only. In these departments, papers that were sent to me and Ami for signatures by my father were unquestionably signed by me and Ami. The motive behind having an offshore entity andbank accounts are best known to him. Q.9 Please furnish the explanation of each and every entry appearing in the Bank Statement in respect of Bank Account No. 161753 and 137274. Ans. Sir, I have appended the detailed explanation of each and every entry with my submission dated 28-03-2019 wherein, I have quantified an amount of US$ 7,15,538.58 and US$ 1,29,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VI. As a legal requirement for all companies, there needs to be at least two directors and therefore, I think, Ami being a housewife was also made director for the namesake purpose and for compliance only. She had no active role in operations of that company. Similarly, her name was added in the bank Account opening form for namesake purpose only. I think, her name was also included by my father in the Bank account to safeguard the interest in case of any eventuality. As you can see, her signatures are not there in the beneficial owner form, which is a part of the KYC documents. There is no records of her operating the bank account no. 161753 and she never issued any instructions to the bank for receipt and/or payments or any other operations from this account. Therefore, under no grounds can she be made as beneficial owner. Due to the above mentioned reasons, I would like to request you that the credits in both the bank accounts which are not supported by withdrawals may be added to my income and not in her income which would meet the end of justice. Q.15 When was the account No. 137274 which was held in your personal name, opened? Ans. Since, this is a very old matter, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned in the account statement is incoming payment: Gold Jewel Corporation'. Please explain what is this credit amount and where has this come from and how can Gold Jewel Corporation pay to Gold Jewel Corporation? Ans. Sir, In the Bank Account No. 161753. I will take you to Bank Account Statement on 18-02-2010, when a UBS-Callable Range Accrual Note of US$ 5000000 was taken from the Bank by M/s Gold Jewel Corporation. The Accrual; note was to be redeemed on 15-05-2018. However, it was prematurely redeemed and the redemption proceeds were again credited to the same account of M/s Gold Jewel Corporation. Q.20 Do you wish to say anything else? Ans. Yes sir. The above statement is given by me in a conscious and sound state of mind, without any undue pressure coercion, threat. I have read the statement and the statement is correctly recorded as per my say. I shall standby my above statement. Furthermore, I plead to give me immunity from penalty and prosecution proceedings under the Act. 11. As for the reasons as to why the UBS Bank account and the offshore company in GJC-BVI was being owned up at this stage, the assessee had an interesting explanation set ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th them in their own structural products, Callable notes, bonds etc.; that the same never went out of the account; that in reality the loan amount was held with the bank only and that on maturity or redemption, the Bank would take the loan back alongwith their interest and credit the difference to the account, which was the only actual gain. These statements reflect that there is no credit balance on closure of both the accounts. 4. I have now verified from the records in India that the remittances from the aforesaid accounts to the recipient Indian concerns were duly disclosed in the books of accounts of the recipients and offered to taxation. 5. I say that whatever I have stated above is true to the best of my knowledge. Solemnly affirmed at Mumbai, on this 29th day of March, 2019 12. The Assessing Officer then proceeded to conclude as follows: 9.1 The submission dated 28-03-2019, Statement of the Assessee recorded u/s 8(b) of the of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015, on 28-03-2019, and affidavit of the Assessee dated 29-03-2019 were considered carefully. In this regard, it is pertinent to mention th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore. The Assessee was also holding Bank account No. 137274 in the same Bank. The Assessee has signed various documents with regards to incorporation of the offshore entity and opening of bank Account. Further, the Assessee has not denied that the documents were signed by him. Therefore, the very fact is established amount of US$ 87500 being quarterly interest at 7% on Callable Range Accrual Note is credited periodically in the Bank Account No.161753. One of such credit was due between the periods from 12-06-2008 to 28-08-2008. However, entries are missing in the bank account for this period. Which is also required to be added in the total undisclosed income out of the Bank Account No. 161753. 9.5. It is pertinent to mention here that it was the onus of the assessee to bring material facts on the records of the assessing officer to establish the claim as to why she should not be considered as a beneficial owner of M/s, Gold Jewel Corporation, BVI and Bank Account No. 161753. Further, the assessee also failed to give proper justification, of the credit amount of US$ 3213307.60 and also remained silent on the amount of interest to the tune of US$ 87500. Thus the Assessee failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Imposition of Tax Act, 2015 since the same are neither attracted nor applicable to the assessee. 3) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in passing the impugned assessment order u/s 10(3) of Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015 which is bad in law and without jurisdiction. 4) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in taxing the amounts of ₹ 42,00,75,526/-(being equivalent to $.6323886.24). a) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in taxing the amounts of ₹ 2,37,67,078.59 / - (being equivalent to $357793.52) being the amount reflected in bank account no. 161753 belonging to M/s. Gold Jewel Corporation, in the hands of the assessee. b) On the facts and circumstances of the case and in law, the learned Assessing Officer erred in taxing the amounts of ₹ 86,14,820/ - (being equivalent to $ 129688.92) being the amount reflected in bank account no. 137274, in the hands of the assessee. c) On the facts and circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n precedent for taxation under the BMA that the asset must continue to be held at the point of time when it is being brought to tax. A reference was made to the clarifications issued by the CBDT, to the provisions of the BMA, and to the Hon ble Supreme Court s judgment in the case of Gautam Khaitan Vs Union of India [(2019) 110 taxmann.com 272 (SC)]. It was also held that while an officer working in the investigation, whether a DDIT or ADIT, is an income tax authority under section 116, it is the matter coming to the notice of the Assessing Officer which is relevant for the application of BMA. So far as the factual part is concerned, the learned CIT(A) accepted explanation of the assessee so far as credit of US$ 3,213,307.60, as amount received on redemption of investment was concerned. Learned CIT(A) was of the view that once it is not in dispute that the amount is received on account of investments held earlier, it cannot be said that the amount is unexplained. However, he confirmed the remaining addition in respect of the balance amounts approving the line of reasoning adopted by the Assessing Officer. Neither the assessee nor the Assessing Officer is satisfied with the stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t inasmuch as it does not take into account Section 2(15) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015? (e) Whether the authorities below were justified in assessing the amounts, represented by certain entries in the bank account, under the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015, even though the assessee had furnished due and reasonable explanations in respect of the same? (f) Whether the learned CIT(A) was justified in deleting the amount of US $ 32,13,307.60 in UBS Bank Singapore account no. 161753 on the ground that the related bank credit on 22.2.2010 stands reasonably explained by the assessee, whereas under section 2(11) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015, what needs to explained is the source of investment and not merely the accounting entry? Rival contentions: 16. Shri Pardiwalla, learned senior counsel appearing for the assessee, took pains to take us through various provisions of the BMA, and explained to us the scheme of the Act. One of the points he highlighted is that, according to him, what it covers is those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from the fact that if the assessee was to be assessed on income, only the net receipts (i.e. net of expenses) could have been taken into account while the Assessing Officer has simply taken into account the gross receipts. Learned counsel further submits that wherever lawmakers wanted to use the expression has been , as would probably cover the assets not existing at the point of time when BMA came into force, the legislature has specifically done so, for example in section 5(1)(ii) where the expression is as also has been used alongside. 17. It is pointed out that as on the point of time when the provisions of the BMA came in force, i.e. on 1st April 2015, the related bank accounts were already closed. The bank account no 134274 was closed on 8th October 2008, and bank account no. 161753 was closed on 16th May 2011. It is thus contended that under section 3 the charge of taxis in respect of his total undisclosed foreign income and asset of the previous year and when there is no undisclosed foreign income or asset, at the point of time when the first previous year under the BMA commenced, there cannot be any occasion for bringing the same to tax under the BMA. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s computed under sub-clause (i) has been charged to tax and penalty under that Chapter, the sum of all the deposits made in the account with the bank since the date of such declaration subject to the proviso that where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account . It is his submission that the said rule undoubtedly covers the valuation of an undisclosed foreign bank account as well, but, in doing so, the rule goes well beyond the scope of the related provisions of the BMA. If Section 2(11) does not cover a bank account, this rule is irrelevant and we must read down the same. On the question whether we have the powers to read down the provisions of the rules, learned counsel relies upon Hon ble jurisdictional High Court s judgment in the case of CIT Vs Bombay State Corporation [(1979) 118 ITR 399 (Bom)]. It is submitted that a bank account is not an asset even though it may represent assets, but since it is not an asset, whether a mechanism to value the same is provided or not, it cannot be brought to tax under BMA. We are urged to read down the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese bank accounts, and the Government as such aware and had received the information about these bank accounts much before the BMA came into force. It is thus submitted that the bank accounts in question, even if treated as foreign assets, cannot be treated as unaccounted foreign assets. 20. Learned senior counsel s next point is that the assessee cannot be said to be the beneficial owner of the bank accounts in question. Learned counsel submits that the expression beneficial owner is a well-defined expression under the BMA, inasmuch as Section 2(15) of the BMA provides that all words and expressions used herein (i.e. Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015) but not defined, and defined under the Income Tax Act, 1961, shall have the meaning respectively assigned them in that Act and inasmuch as Explanation 4 to Section 139(1) of the Income Tax Act, 1961, states that beneficial owner in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person . Learned counsel submits that, therefore, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the assessee. When it was pointed out that while the bank account shows interest income of US $ 4,36,527.78 but what is the position concerningthe taxability of the asset on which this interest income is earned, learned counsel submitted that the investments, on which this interest income is earned, was made out of the borrowed funds. He also points out that the asset in question, i.e. 7% UBS Callable Accrual Note 2008, for the US $ 5 million was acquired out of borrowed funds on 15th May 2008. It is pointed out that the early redemption of these securities, for the US $ 3,212,766, on 18th February 2010, was treated as unexplained by the Assessing Officer, but satisfied with the fact that these securities were purchased out of borrowed funds, and to that extent, this credit stands unexplained, this addition has been deleted by the learned CIT(A). Learned senior counsel thus justified the action of the CIT(A) on this point, which is a subject matter of revenue s appeal and is referred to in question (f) framed in paragraph 11 of this order. Learned counsel once again emphasized that what has been brought to tax is only the impact of unexplained entries but once all the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not the beneficial owner of these bank accounts. In case anything is to be taxed in respect of these bank accounts, the same should only be made in the hands of this assessee. It is also pointed out that, according to this affidavit, no collateral security was given for the loans availed by the assessee. In particular, our attention is invited to the statement made in the affidavit to the effect that loans taken from the bank were invested with them in their own structured products, callable notes, bonds etc; that, in reality, the loan amount was held in the bank only and that on maturity or redemption, the bank would take the loan back along with the interest, and credit the difference to the account which was the actual gain . It was explained that for this reason there was no credit balance on the closure of accounts. It is submitted that it is not open to us to disregard the affidavit on these issues when the same has been accepted for bringing the accounts in question to tax. 22. When we asked the learned counsel whether it makes any sense for any financial institution to grant any loans to a customer, without any margin, for investing in the products of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has not been made in respect of the same, such assets can also be subjected to assessment under the BMA. 25. Learned CIT(DR) then submits that no word in a statute can be interpreted in such a manner so as to make the entire scheme of the Act redundant. It is submitted that the scheme of the Act, duly supported by interpretations by Hon ble Courts above as also by CBDT in the circulars issued on the subject, clearly provides that the assets held in past can also be subjected to assessment under the BMA when these assets are undeclared ones, and that is how the provisions of the Act must be construed. He then submits that there is no question of rule 3 (e) being contrary to the BMA provisions, and quite to the contrary, the provisions of the Act and the Rules must be read in a holistic manner so as to bring out the true scope of the provisions of the Act. When we do so, according to the learned counsel, the inevitable corollary is that a bank account is also required to be treated as an asset, as it existed as an asset in past- which is what matters, and as it represented the assets reflected in the transactions. Our attention is then invited to rule 3 (e) of the Black Money (U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it only explains the scope of declarations to be made under the BMA. It is thus submitted that the circular is being quoted out of context. 27. As regards the explanation for the credit entry of US $ 3,212,766, on 18th February 2010, in the bank account, it is submitted that the entry may be explained inasmuch as it is a transparent manner, and, therefore, the investment does not remain unexplained. It is pointed out that the assessee has not given bank statements for the earlier period, and even this is not clear as to how margin monies are maintained for loans on these investments. Keeping all these factors in mind, according to the learned CIT(DR), learned CIT(A) has wrongly deleted this addition, and we are urged to restore the same. As regards other additions on the basis of credits, learned CIT(DR) relied upon the findings of the Assessing Officer. In particular, it was pointed out that the addition of US $ 2,186,000 is justified since the explanation of the assessee is not supported by any document, material or confirmation. Similarly, so far as credit of US $ 2,000,000 is concerned, it may be for redemption of securities but then the source of investment in the securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxed in respect of its balance earlier. It was then pointed out that what can be taxed in BMA is either an asset or an income, but credit entries cannot be equated with income and the bank account is not an asset anyway. The concept of beneficial ownership under the ITA was reiterated again, and it was submitted that the case of the Assessing Officer is that the assessee was the beneficial owner of the bank accounts but then the conditions precedent for establishing beneficial ownership are not satisfied. It was once again pointed out that not only the bank accounts were known to the assessee, these bank accounts were duly investigated upon as far back as in 2013 and, therefore, it could not be said that these are undisclosed foreign assets. In response to our specific question about funding of the investments, learned counsel filed a written statement which, inter alia, states that: On perusal of the entries in the bank accounts, it can be observed that the bank account reflect various entries in the nature of loans, investments, call deposits, interest, etc. The assessee has predominantly obtained loans from UBS bank on certain interest and has invested the same in cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int out our doubt that the assessee has not shared full facts even now: An indicative annexure based on the brief analysis of the contents of the statement of the account for the Account No. 611254 held by the GJC with the UBS AG, Singapore from the period December 2008 (account opening) to May 2011 (account closing) is enclosed. As per the information received, the account number 611254 is the margin account to the GJC s account number 161753 and no separate account opening form is required [Emphasis, by underlining, supplied by us] 32. Learned counsel submits that he has no idea about this account and that he will take instructions. He submits that he will need time to obtain a copy of the account and analyze the same. We do not think it is necessary to deal with this account on merits as we cannot enhance the scope of the proceedings. The additions in respect of the said account is not an issue before us as on now. We are not inclined to deal with those aspects of the matter or to broaden the scope of controversy before us. Suffice to note that this input suggests that the assessee has not been truthful at any stage of these proceedings, even before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings in the sense that in the event of Hon ble Bombay High Court upholding the challenge to the constitutional validity of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, the present proceedings will be rendered infructuous. Learned Commissioner (DR), on the other hand, prays that once the matter has come up for hearing, it is only appropriate that the matter be disposed ofat the earliest convenience. However, the learned Commissioner leaves the matter to the bench. 36. We are unable to accede to the request made by the learned senior counsel. There is no question of any parallel proceedings. As a final fact-finding authority, it is our bounden duty to place on record our understanding of the law and our understanding of the correct facts, and our reasons for having formed that opinion, so that Their Lordships can take appropriate judicial call thereon whenever the occasion arises. Our work is, in a way, is to put the things in proper perspective, whether legal or factual- and more so factual, and to facilitate superior judicial calls by Hon ble Courts above. Whatever we hold is, and shall always remain, subject to whatever Their Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to some legal developments and legal propositions. 39. The enactment of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 did not only reflect the beginning of the relentless efforts of the present Government to check the menace of undisclosed assets and income stashed abroad but it also provided a window to all the wrongdoers to come clean, to pay their taxes honestly and to enjoy being on the right side of the law. 40. Unfortunately, however, many in our citizenry did not take this opportunity seriously and with the respect it deserved. They were blinded by the perception that our preceding establishments and the foreign Governments as also the multilateral forums, while giving this cause a somewhat superficial support, have all along been seen as turning a Nelson s eye to such things, and by the hope that this approach will continue to hold good until the proverbial Nelson, as the phrase goes, got his eye back . [Incidentally, Horatio Nelson, the character behind these famous expressions, i.e. turning Nelson s eye (signifying turning a blind eye) and not until Nelson gets his eye back (signifying something to last forever) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration that 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 Indiaand 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; and (c) which has escaped assessment because 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 . In between the point of time when the inquiry concerning assessee s unaccounted foreign bank and the offshore company started and till the point of time when search and seizure operation was carried out, the assessee had an opportunity to come clean- the opportunity which the assessee never availed. 45. As early as 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration, though the documents state that we (he and his wife) are the first directors of the company. To the best of my knowledge, these documents are not signed by us . When asked about the bank account, he declined having signed the related documents and claims that he is not aware of any such bank account in UBS AG, Singapore . However, when asked about entries in the bank accounts, he states that the entries appearing in the bank account statements of both the accounts are self-explanatory in the wording as loans and time deposits given by the bank . It is not his account but he is wise enough to explain the entries as loans and time deposits given by the bank ; that is somewhat unusual. The assessee is then shown specific written directions to the bank, in his own handwriting, but once again, he denies everything. The assessee was completely in denial mode all along the assessment proceedings, but just three days before the time limit for framing the BMA assessment order is to come to an end, the assessee owns up the offshore company as also the UBS AG s bank accounts in Singapore. 46. Let us take a pause here and consider how bonafide is this act of owning up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing with immense clarity, he took the legal advice and even prepared the explanation for each entry. While the letter owning up the bank accounts was handed over on 28th March 2019, the heading of attachment as Annexure to letter dated 27th March 2019- Total transactions in account reflecting as per bank account , with six-page explanations for each entry in these bank accounts, shows that this elaborate statement was also drawn up on 27th March 2019 itself. The assessee accepts that these papers are nothing more than copies of the very same papers that were shown to him by set of copies. 49. That certainly is an outlandish explanation, and, if anything, it shows the contempt that the assessee has for the wisdom of those who are to examine such explanations. The assessee also appears to be inconsistent in his approach. It is interesting to note that while, even according to the assessee s admission, he realized on 27th March 2019 that these bank accounts are his own accounts but then, on 28th March 2019 he was in Hon ble Bombay High Court, to plead for interim relief his writ petition no. 40 of 2019 [which inter alia stated that at all times, the petitioners have denied and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, merit acceptance. As we will see a little later now, even on merits, there is reasonable uncontroverted and contemporaneous evidence, received through the Government of Singapore, to establish that the assessee did actually operate these accounts and that the assessee made clearly discernible efforts to withhold the truth. 50. That is, of course, besides the point that, as we will see a little later, the assessee did not enlighten the Assessing Officer anything that the Assessing Officer did not already know. The moment the assessee is asked about anything else, that is not known to the Assessing Officer, he once again feigns his ignorance, and amnesia hits him again. Coming back to the explanation given by the assessee, it is only elementary that when an asessee is required to give an explanation, it is not that his onus is discharged the minute he gives any explanation, howsoever improbable it is. Hon ble Supreme Court has, in the case of CIT v. Mussadilal Ram Bharose [(1987) 165 ITR 14 (SC)], although in the context of penalty, has observed, approving a ful bench decision of Hon ble Patna High Court , that it was plain on principle that it was not the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll my father about the questions asked but As I could see, the immense stress on him due to his old age and various age related ailments, I did not press on this matter further with him . Clearly, therefore, the father was told about all these papers, and yet he did not have anything to enlighten the assessee on. He had the papers and father together, yet he did not recall anything. Now you have the papers and memories of father, and everything is recalled to the extent planned. This admission is also incorrect and misleading when he says that It seems he (late father of the assessee) open the aforesaid bank account in our names and operated the same. As I have come to know about this yesterday and on taking legal opinion also, I now am able to own up these accounts opened and operated by my father in my name . This statement appears to beex facie incorrect in the light of the following instructions, including handwritten instructions, given by the assessee to the UBS Bank, Singapore (marked for the attention of Arunabh Banerjee, who is described as an employee of UBS AG, as evident from the rubber stamp marking in the account opening contract and at most of the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order, shows the entry for this remittance and the remittance charge of US $ 20. To add to this, a copy of the bank account of GoldiamInternational Ltd (HSBC India account no. 110-018397-001) at page 143 of the assessment order shows the credit to the Indian company controlled by the assessee. A copy of each of these bank instructions, debit to the GJC-BVI s account and credit to assessee s Indian company s account are placed below, exactly in that sequence: 53. It is also important to bear in mind the fact that these documents are received from official Government sources and these documents form part of contemporaneous records maintained by a bank. In view of our discussions above, the assessee has been untruthful all along and the explanation of the assessee does not inspire any confidence. 54. We may at this stage also take note of the fact that one more account of the assessee, i.e. margin money account no. 611254, has been mentioned in the supplementary appraisal report dated 14th August 2012- which was duly confronted to the assessee, but the assessee could not make any statement about the existence or otherwise of this bank account. The assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut these accounts and leaves it to the authorities to gather the information on their own? When the assessee owns up these accounts, he has to at least share the complete statement of accounts- if nothing else. We have also noted that, as evident from the material in the possession of the Assessing Officer, the books of accounts of GJC-BVI were kept at USB, AG, and the assessee could have therefore shared the same. However, there is not even a whisper about the financial statements of the GJC-BVI and other assets of, or transactions by, the GJC-BVI. The conduct of the assessee is thus indeed wanting, and non-cooperative. 56. This account also shows several entries with respect to the call deposits, such as on 8th April 2008, a debit of US $ 2,037,250 as transfer to call deposit and on 10th April and 11th April credits of US $ 397,619.24 and the US $ 382,188.19 as decrease of call deposits . Obviously, there has to be a call deposit account of the assessee but, despite our specific questions, no details are pointed out in respect thereof. All that is explained is that the credit from call deposit is explained by the call deposit being placed, but that does not answer the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sharing an analysis of bank account at the fag end of the assessment proceedings, knowing fully well that in the short span of 3 days available for framing the assessment and that the Assessing Officer cannot examine the same properly, could possibly be to create confusion in the process of assessment. If that was the object, the assessee does indeed appear to be successful. On the last few days available to the Assessing Officer, he was busy examining the explanations for the entries and rejecting the same wherever found to be incorrect. Rather than doing an assessment of unaccounted foreign income and assets, the Assessing Officer ended up doing an assessment on the basis of unexplained credits in bank accounts. As a matter of fact, when during the course of hearing before us, we asked learned Senior Advocate ShriPardiwalla whether he was explaining the credit entries in the bank accounts or he was explaining the unaccounted assets and income, learned senior counsel candidly pointed out that all that the Assessing Officer has done is to make an assessment on the basis of unexplained credits and it cannot be open to us to take any other approach at this stage. 58. Let us, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n old account and, as evident from the material on record- extracts from which have been reproduced earlier in this order, it was in existence at least on 31.12.2007 with a substantial net worth (i.e. investments minus loans) in excess of US $ 1 million and yet there is neither any explanation for credits to this bank account nor copies of the statement of account for the earlier period. One cannot, therefore, proceed on the basis, even if the purchase of the redeemed security from that account is established, logically come to the conclusion that the investment in the said property is out of accounted funds. As for learned CIT(A) s observations that a mere credit to the bank account cannot be treated as income, he ought to have appreciated the approach adopted by the assessee who has, on his own, proceeded on the basis that the unexplained entries in the bank accounts are required to be treated as income of the assessee, and the Assessing Officer has simply accepted that approach. It cannot, therefore, be open to the assessee to contend that even though the receipt is unexplained, it cannot be treated as income. Learned CIT(A), therefore, erred in deleting the impugned addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has, as per Annexure to letter dated 27th March 2019, offered unaccounted foreign income of US $ 1,29,688.92 to tax, by offering unexplained credits in the said bank account as unaccounted foreign income. In this computation also, the Assessing Officer has made two adjustments which have been confirmed by the learned CIT(A) as well. 67. The first adjustment made by the Assessing Officer is the US $ 2,000,000 which is a credit in the bank account on 7th April 2008 and bank account narration is given as Early Redemption of US$ 2,000,000 ANZ Callable Daily Range Note 2006- 5.10.2016@ 100.0 . Interestingly that is a bank account in respect of which the assessee has given bank statement only from 31st March 2008, starting with a negative balance of US $ 73.62, and it has just three entries prior to this investment redemption entry- two contra entries, cancelling each other, for a time loan, and time loan repayment, for the US $ 397,275.51 and one entry signifying receipt of US $ 87,250 on account of Interest received 7.45%ANZ Callable Daily Range Note 2006- 5.10.2016 . There are two things clearly discernible from this bank statement- first, that the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r husband and children . If such be statements made by the assessee on oath, either the assessee was knowingly untruthful then or he is untruthful now. A loan of more than US $ 2 million from one s sistercannot slip out of mind soeasily and for so long. Be that as it may, there is no documentation whatsoever to even indicate the nature of the transaction and that it is out of accounted assets abroad. There is nothing on record to show that it was a loan, that it was a genuine transaction and that the person giving US $ 2,186,000 as the loan had the means to give the same out of accounted funds. Even going by the methodology that the assessee has adopted, this amount of US $ 2,186,000 is required to be treated as income reflected in the UBS bank account in question. The authorities below were thus quite justified in including this amount in unaccounted income reflected in the said bank account. We approve the action of the authorities below on this point and decline to interfere on this count as well. 69. It is in this backdrop that, as against an unaccounted foreign income of US $ 1,29,688.92 disclosed by the assessee, the unaccounted foreign income, from this account, was asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income is not at all alien to the income tax jurisprudence, and, is rather an integral part of the income tax jurisprudence. The same principle, therefore, holds good in the present context, for the computation of income, as well. There is no provision in the BMA that comes in the way of these principles, as the variation from income tax law is only with respect to deduction for expenditure to earn the said income, whether allowable under the Income Tax Act or not, being declined. We may, in this regard, refer to the provisions of Section 5(1)(i) provides that In computing the total undisclosed foreign income and asset of any previous year of an assessee no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee, whether or not it is allowable in accordance with the provisions of the Income-tax Act . 75. A reference to the provisions of Section 5(1)(i) of the BMA also takes care of the point frequently raised by the learned senior counsel that if the impugned assessment was to be in respect of an income, the Assessing Officer should also have taken the debit entries reflecting expenditure, thus, in effect, taking into ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act; and (c) the value of an undisclosed asset located outside India . In effect thus, Section 4 (1) refers to three things- first, income earned from a source outside India which is not disclosed in the income tax return filed; second, income earned from a source outside India in respect of which income tax return is required to be filed but has not been filed; and, finally; third- the value of an undisclosed asset outside India. All the three segments are required to be taken together for the same treatment, taxable at the flat rate of 30% and subject to penalty at the flat rate of 90%, without any differentiation. As a matter of fact, when we see the wordings of Section 4(3), that aspects become more clear as this sub section provides that (t)he 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 . In effect thus, whether it is an undisclosed asset or an undisclosed income, it is treated as income included in the total undisclosed income and assets. Whatever is taxed under the BMA, thus has to get out of the taxation under the Income Tax Act. As regards the analysis of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee [Emphasis, by underlining as also be bracketing the words is available , supplied by us] It was in this context that Their Lordships had observed as follows: The word 'available' is preceded by the word 'is' and is followed by the words 'for a period not exceeding six years'. The word 'is', although normally referring to the present often has a future meaning. It may also have a past signification as in the sense of 'has been' (See Black's Law Dictionary, 5th edn. , p. 745). We are of the view that in view of the words 'for a period not exceeding six years' which follow the word 'available' the word 'is' must be construed as referring to the present and the future. In that sense it would mean that the interest is presently available and is to be available in future for a period not exceeding six years. [Emphasis, by underlining, supplied by us] 82. While learned counsel refers to Their Lordship s observation to the effect that (t)he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion does not appeal to us. The situations that Section 5(1)(ii) is dealing with is a situation in which the past situation, such as the fact of assessment of an income, is being specifically dealt with, alongside a situation of future, such as assessability of an income, and, therefore, the expression is and has been used. That situation is materially different from the definition of an undisclosed asset loan outside India, which includes the assets existing at present as also existing in past, and, therefore, the expression is here is in the sense of is and has been as well- a situation where the extended definition of is , as theorised by the Black s Law Dictionary and as implicitly approved by Hon ble Supreme Court in F S Gandhi s case (supra), will come into play. 84. It is anyway elementary, and has been reiterated time and again by Hon ble Supreme Court- including in the landmark judgment in the case of CIT Vs Sun Engineering Works Pvt Ltd [(1992) 198 ITR 287 (SC)], that a decision of Hon ble Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taxation, under the BMA, of an undisclosed foreign asset is the point of time when such an asset come to the notice of the Government, it is immaterial as to whether it existed at the point of time of taxation, or, for that purpose, even at the point of time when the provisions of the BMA came into existence. 88. In view of the above discussions, we approve the reasoning adopted by the learned CIT(A), and reject the contention of the learned senior counsel. 89. The question, therefore, as to whether a bank account abroad or any unaccounted asset abroad, which did not exist as at the point of time when the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015 came in force, i.e. 1st July 2015, can be assessed under the said legislation, is thus answered in positive and in favour of the revenue. 90. The next question posed for our consideration is whether an undisclosed foreign bank account per se, whether it existed at the point of time of the provisions of the BMA came into force or not, can be treated as an asset under section 2(11) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015?As we have mentioned ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel that rule 3(e) of BMR cannot go beyond the scope of section 2(11) is rendered wholly academic. We can only add that the valuation mechanism of the value of a bank account, as envisaged in rule 3(e), confirms the intent of the legislature, and understanding of policy makers, always was to include the bank account in the scope of undisclosed foreign assets. 94. As we part with this aspect of the matter, let us briefly deal with the scope of rule 3(1)(e) as well. Rule 3(1)(e) of theBlack Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules 2015,provides that for the purposes of chargeability of tax under section 3(2) , the fair market valueof an account with a bank shall be, (i) the sum of all the deposits made in the account with the bank since the date of opening of the account; or(ii) where a declaration of such account has been made under Chapter VI and thevalue of the account as computed under sub-clause (i) has been charged to tax and penalty under that Chapter, the sum of all the deposits made in the account with the bank since the date of such declaration subject to the proviso that where any deposit is made from the proceeds of any withdrawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same is not filed. While the investigation wing was indeed carrying out inquiries even before the point of time when the provisions of the BMA came into effect but that factor, as the above analysis of legal position indicates, is not a material factor. 97. Learned counsel, however, has more armoury in store. He now leans on a CBDT clarification in support of his plea. Our attention is invited to CBDT circular no. 13 of 2015, dated the 6th July 2015, which is in a question and answer form, and one set of question-answer given therein is as follows: Question No.13: How would the person know that the Government has received information of an undisclosed foreign asset held by him which will make the declaration ineligible? Answer: The person may not know that the Government has information about undisclosed foreign asset held by him if the same has not been communicated to him in any enquiry/proceeding under the Income-tax Act. After the person has filed a declaration, which is to be filed latest by 30th September, 2015, he will be issued intimation by the Principal Commissioner/Commissioner by 31th October, 2015, whether any information has been received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by issue of a circular in the form of questions and answers . This circular is not in the context of, or for the purpose of, the assessment, and its binding nature must thus remain confined to the compliance window, under chapter VI of the BMA, for which the circular was issued. In any event, neither it dilute the impact of sections 3 and 4, nor of any other statutory provision. Even going by the learned counsel s contention, it had restricted the scope of compliance window by excluding not only the matters in the knowledge of the Assessing Officer but also in the knowledge of the other functionaries of the Government of India. That circular goes beyond the scope of the statutory provision, and, even going by the argument of the learned counsel, imposes conditions tougher than the law envisaged. As is the well-settled legal position, such circulars do not bind the assessee. Nothing, therefore, turns on the circular. Yes, if the same logic is employed in the assessment proceedings, this could have been of some help, if at all, to the assessee, but neither this circular is issued for the purposes of assessment, nor it can have application for anything other than availing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations overlook the existence of Section 2(15) of BMA, the coordinate bench did indeed err. However, that by itself, does not mean that the decision of the coordinate bench is per incuriam; the reasoning may be per incuriam, that does not necessarily mean that decision is also per incuriam. While there is indeed an error is reasoning process, as noted above, we may add that, in our considered view, whether a term is defined under the Income Tax Act or not, we must bear also in mind the fact that such a definition comes into play only when the context does not require otherwise. When the definitions under section 2 of the ITA stand incorporated in the BMA, the rider of this definition that is In this Act, unless the context otherwise requires must stand incorporated. The context of the definition under the ITA and the BMA must therefore meet to invoke the definition, under the ITA, for the purposes of the BMA. In other words, the definition provided is subject to unless the context requires otherwise condition, and, therefore, merely because the expression beneficial ownership is defined under Explanation 4 to Section 139 (1), that definition would not automatically apply to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies invested are not out of legitimate earnings of the assessee, and, therefore, to expect that the Assessing Officer is required to prove that the assessee has paid consideration for these undisclosed investments before these investments can be said to be undisclosed, is wholly unrealistic. If someone has to invest in an undisclosed offshore entity or an undisclosed foreign bank account, he would not make the investments through official channels. To expect that when an undisclosed asset in the name of an assessee, or a company which is owned by him, is detected abroad, the Assessing Officer will also be required to prove that the assessee has paid, directly or indirectly, for that asset, before the provisions of BMA can be invoked is contrary to common sense. It will make the provisions of the BMA unworkable inasmuch as the Assessing Officer can never prove, let us say, hawala transactions, or account receivables being diverted to the offshore accounts, which are inherently outside the books of accounts of legitimate businesses. The Assessing Officer thus has to first find out the undisclosed assets, and then he has to prove that the assessee paid, directly or indirectly, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answered against the assessee and in favour of the Assessing Officer.Learned senior counsel for the assessee has fairly submitted that our answers to these six questions will decide all, but one, of the grounds of appeal of the assessee, to the extent, pressed, and the grievance raised in the appeal filed by the Assessing Officer. 107.. The only remaining issue is in respect of the levy of interest under sections 40(1) and (2) of the BMA, which, in turn, refers to interest under sections 234A, 234B and 234C. Learned senior counsel submits that the question of levy of interest under sections 40(1) and 40(2) is only with respect to tax on an undisclosed foreign income and not in respect of tax on an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equivalent to $43,750) alleged to be credited in the bank account no.l61753 belonging to M/s. Gold Jewel Corporation on an estimated basis, in the hands of the appellant. c) In the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Officer in taxing an amount of ₹ 13,28,53,600/- (being equivalent to $ 20,00,000) being the amount reflected in the bank account no.137274, in the hands of the appellant. d) ln the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Officer in taxing an amount of ₹ 14,52,08,985/- (being equivalent to $ 21,86,000) being the amount reflected in the bank account no.137274, in the hands of the appellant. e) In the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Officer in taxing the amounts of ₹ 86,14,820/-(being equivalent to $ 1,29,688.92) being the amount reflected in bank account no. 137274, in the hands of the appellant. Dismissed. 5) In the facts and circumstances of the case and in law, Learned CIT(A) erred in confirming the action of Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee owned up these two bank accounts and gave the explanation for various entries. It is submitted that the Assessing Officer did not have much time to examine the entries in various bank accounts, and there are certain aspects of the matter which he overlooked in the process. We are then reminded that as a last fact-finding authority, it is this Tribunal s duty to ensure that, on one hand, the correct income of the assessee is taxed, and, on the other hand, the Government is not deprived of its legitimate tax dues. In this backdrop, a prayer is made that a clear direction may be given to the lower authorities to further examine the related aspects under the Income Tax Act, particularly when there is sufficient time available for reopening the assessment under the Income Tax Act. Learned counsel for the assessee, on the other hand, submits that no such directions are warranted, and that will be beyond the scope of powers of the Tribunal. If any proceedings can be taken under the Income Tax Act, it is for the Assessing Officer to do so. We are thus urged to refrain from going beyond the scope of the issues raised in the appeal before us. However, we are of the considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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