TMI Blog2018 (8) TMI 2069X X X X Extracts X X X X X X X X Extracts X X X X ..... he money transferred from Switzerland to India. In fact, Shri Anoop Mehta has given in writing to the revenue that he has informed the Executors about the HSBC bank accounts and also requested them to make arrangements for transfer of money to India. CIT(A) has also observed that it is the primary responsibility of the executors of the Will to clear all the tax dues of Shri Vrajlal Mehta as applicable on all the incomes/properties standing in his name before they are distributed. Hence, it is nobody s case that the deposit found in HSBC account was not forming part of assets of Estate of late Vrajlal C Mehta . The provisions of Indian Succession Act, which have been relied upon by Ld CIT-DR, deals with procedural aspects of dealing with the assets and liabilities of the Estate. As per the Will of Shri Vrajlal C Mehta, it is the duty of the Executors to distribute the assets in accordance with the directions given in the Will. Since the impugned income has accrued after the date of death of Shri Vrajlal C Mehta and since the Executors have taken responsibility to get the funds and distribute them, in our view, it may not be correct to contend that the same does not form part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Investment Lexcor SA. Besides the above, the assessing officer has initiated proceedings u/s 153C of the Act in respect of the above said account in the hands of Shri Rajesh Mehta and a specific query was also raised in this regard. The query raised by the AO and the reply given by shri Rajesh Mehta is extracted in the preceding paragraphs. After considering the reply, it is stated that the proceedings u/s 153C of the Act were dropped. CIT(A) has not duly considered above facts and he has been mainly influenced by the fact that Shri Anoop Mehta is also shown as one of the beneficiaries in the above said account. Further the Ld CIT(A) has also stated that Shri Anoop Mehta is entitled to residual assets of Late Vrajlal Mehta as per the Will. In our view, the reasoning given by Ld CIT(A) is not sustainable. Under the Income-tax Act, the income tax is levied on the person who earned the income. The fact that Shri Anoop Mehta may be entitled to the residual assets may not be relevant to determine the person on whom the income is required to be assessed. For the same reasoning, the details of beneficiaries are also not relevant for that purpose. Claim for credit of tax paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax for AY 2012-13. The Ld CIT(A) ought to have appreciated that the income in respect of which the self assessment tax paid has been assessed to tax by the AO for the impugned Assessment year. (d) The Ld CIT(A) has erred in confirming the action of AO in not taking cognizance of revised Return of income filed by the appellant vide letter dated 25.3.2015. The CIT(A) ought to have held that the revised return filed by the appellant was valid. 2. The facts relating to the case are discussed in brief. The assessee before us is Shri Vrajlal C Mehta, who expired on 24-04-2005. The assessment year under consideration is assessment year 2007-08. The Government of India received information from the French Government under DTAA in exercise of its Soverign Powers that late Shri Vrajlal C Mehta has held an account with HSBC Bank, Geneva. It was received in the form of Base Note, which contained various details relating to the account holder. The assessee held an account with number BUP_SIFIC_PER_ID 5090140302 PER ID 34610 PER No.140302. The above said account was linked with Code Profile Client 5090140302. The related concerns, in whose accounts the moneys were held, were also mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011, the existence of bank account in the name of Yeel Investment Inc., came to light. Since the said account belonged to Shri Vrajlal C Mehta, the same was brought to the notice of Executors, so that they could take necessary steps to bring the monies lying in the above said bank account to India. Accordingly, the Executors sought professional help from Shri Bimal Desai, C.A and M/s Desai and Diwanji, Advocates and Solicitors for bringing money into India. As a result, the Executors got remittances from HSBC Bank, Geneva, Switzerland out of the account standing in the name of Yeel Investment Inc to the account of Estate of Late V.C.Mehta . The executors offered the same to tax for assessment year 2012-13, being the year in which the remittances were received in India. The return of income for assessment year 2012-13 declaring a sum of ₹ 12,02,00,546/- as income of Estate of Late Vrajlal C Mehta was filed in March, 2012. The self assessment tax of ₹ 3,86,75,859/- was also paid on the above said income on 30-03-2012. 6. It is stated that when Shri Anoop Mehta received notice u/s 148 of the Act on 31.3.2014 for AY 2007-08, he informed the Executors about the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment tax of ₹ 33,40,490/- in AY 2007- 08 while filing revised return of income for AY 2007-08. 7. In the reasons for reopening for AY 2007-08, the AO had mentioned an amount of USD 21,51,725 equivalent to ₹ 9.46 crores, as the amount that has escaped assessment. In the Statement taken from Shri Anoop Mehta during the course of search on 13-09-2011, he had agreed to disclose the amounts lying in bank accounts to the extent of beneficial ownership standing in his name and in the name of his wife, children or any of his business entities. However, Shri Anoop Mehta retracted from his statement by filing a letter dated 19-01-2012, wherein he stated that the funds belong to Shri Vrajlal C Mehta. It was further stated that an amount of USD 24,68,070 (equivalent to ₹ 10.85 crores) shall be declared in the hands of Estate of Late Shri Vrajlal C Mehta . We noticed earlier that the assessee initially filed return of income declaring an income of ₹ 12.02 crores in AY 2012-13 in respect of moneys received from HSBC Account, Geneva, Switzerland. We also noticed that the assessee, then filed revised return of income for AY 2006-07 and 2007-08 thereby shifting p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant proof of payment. Accordingly he directed the AO to look into the issue in accordance with law and grant relief as per law. 10. With regard to the assessment of ₹ 1.51 crores, Shri Anoop Mehta submitted before the tax authorities that the above said income has been offered by Estate of late Vrajlal C Mehta in AY 2012-13 and later offered in AY 2007-08 in revised return of income. The said submission of Shri Anoop Mehta was rejected by both the tax authorities, as the AO had issued notice reopening the assessment for AY 2007-08 for assessing the above said income. The Ld CIT(A) also took note of the fact that Shri Anoop Mehta had agreed to offer relevant income in AY 2007-08 in his hands in the statement taken during the course of search u/s 132(4) of the Act. Accordingly the Ld CIT(A) upheld the assessment order passed by the AO. 11. The Ld CIT(A) further went on to enhance the income assessed by the AO. The facts that led the Ld CIT(A) to enhance the income are stated in brief. We have noticed earlier, the bank accounts of Vrajlal C Mehta were linked to three companies. Shri Anoop Mehta was questioned about these three accounts during the course of search. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure made by it in the above said returns of income. The Ld CIT(A) dealt with the contentions of the assessee in paragraph 30 of his order. We prefer to extract the same, as it is relevant to the legal ground urged before us by the assessee, which we will be dealing in later:- 30. In this regard a letter was sent to the Estate of Late Vrajlal Chandulal Mehta dated 20-10-2016 as per which it was clarified to them that assessment was made in the name of Shri Anoop Mehta as Legal Heir of Late Shri Vrajlal Chandulal for AY 2006-07 2007-08 against which appeals were filed vide ITA No. 51/2015-16 and 125/15-16 respectively and subsequently notice of enhancement vide letter dated 04- 07-2016 was issued in the name of Anoop Mehta being Legal Heir to explain as to why the income should not be enhanced by ₹ 27,92,21,467/- (sic.₹ 2,79,21,467/-) and ₹ 14,40,34,704/- respectively. It was further clarified to the assessee that there was no mention of name of Shri Rajesh Mehta in the base note as beneficial owner, contrary to the claim of the assessee and therefore claim that these accounts are owned by Shri Rajesh Mehta appears to be incorrect.... 13. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound No.1 urged by the assessee is a legal ground, which reads as under:- The ld CIT(A) has erred in confirming reassessment order passed in the name of Mr. Anoop Mehta (legal heir of Late Vrajlal Chandulal Mehta) instead of Estate of Late Virajlal Chandulal Mehta . The Ld CIT(A) ought to have held that reassessment order passed by the Assessing Officer is bad in law. We have noticed earlier that the assessee Shri Vrajlal C Mehta has expired on 24.04.2005. We have also noticed that he has written a Will and has also appointed Executors. The Will was probated in Hon ble High Court of Bombay on 28-11-2007. The Executors were filing return of income for the Estate of late Shri Vrajlal C Mehta . The details of HSBC Bank accounts maintained in Switzerland came to the notice of the Revenue only in 2011. One of the legal heirs of late Vrajlal C Mehta residing in India is Shri Anoop Mehta and he was subjected to search operations on 13.9.2011. In the statement taken from Shri Anoop Mehta u/s 132(4) of the Act, Shri Anoop Mehta admitted existence of a bank account in the name of Yeel Investment Inc., in HSBC, Switzerland and agreed to offer the peak amount of deposit in his h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased. Sec.168 (1) Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor- (a) If there is only one executor, then, as if the executor were an individual; or (b) If there are more executors than one, then, as if the executors were an association of persons; and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took plce. (2)......... (3) Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests. The Ld A.R submitted that the above said provisions clearly demarcate the liability of legal representatives and executors. The Ld A.R submitted that as per provisions of sec. 159 of the Act, the legal representatives are liable to pay tax on the income accrued to the deceased till the date of death of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld CIT-D.R submitted that the deposits found in HSBC bank, Geneva, Switzerland was assessed as undisclosed income of late Vrajlal C Mehta u/s 69A of the Act, as this amount would have been obviously placed in HSBC account by late Vrajlal C Mehta before his death. Hence it is income of late Vrajlal C Mehta and hence the assessing officer has rightly assessed the same in the hands of legal heirs of deceased assessee. The Ld D.R further submitted that the impugned HSBC bank account is not part of the Estate mentioned in the Will, against which probate was obtained from Hon ble Bombay High Court. Accordingly the Ld CIT-DR submitted that these HSBC bank accounts cannot be considered to be part of Estate of Late Shri Vrajlal C Mehta. 22. Further clause 6 of the Will specifically provides that the rest and residue of the estate which will consist of cash on hand and items of daily personal wear is bequeathed to his son Anoop Vrajlal Mehta and daughter-in-law Devaushi Anoop Mehta in equal shares. Since these HSBC bank accounts have not been mentioned in the will, even though they were deposited before the death of Vrajlal C Mehta, yet they will devolve upon the legal representatives o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment order in the hands of legal heirs of Late Shri Virajlal C Mehta. The Ld D.R submitted that the assessee cannot take support of various case laws relied upon by him, as they are distinguishable. 24. The Ld CIT-DR submitted that Shri Anoop Mehta did not object to the assumption of jurisdiction by the assessing officer. Hence, under the provisions of sec. 124 of the Act, he is precluded from objecting to the assessment. Further the provisions of sec. 292BB of the Act also saves the assessment. The Ld CIT-DR further submitted that it is Anoop Mehta as legal heir is the person, who can be considered as aggrieved by the orders of tax authorities and hence he alone could have filed appeal before the Tribunal. However, the appeal has been filed by Executor of late Vrajlal C Mehta , who does not have locus standi to file the appeal. Accordingly the Ld CIT-DR submitted that the present appeal is liable to be dismissed on this ground alone. 25. The Ld CIT-DR further submitted that the Tribunal has got a duty to correct the errors, if any, occurred in framing of assessment. Accordingly she submitted that tribunal should not annul the assessment and should restore it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the various case laws relied upon by the Ld DR are not applicable to the facts of the present case, as they have been rendered in different context. He submitted that in all those cases, right person was assessed and there were only procedural errors. In the instant case, there is no procedural irregularity, but it is a case of assessment on a wrong person. Hence the error is jurisdictional error, which goes to root of matter. 28. With regard to the contentions of Ld CIT-DR that the Estate of late Vrajlal C Mehta does not have locus standi to contest this appeal, the Ld A.R submitted, by placing reliance on the following case law, that any person aggrieved by the order passed by the tax authorities is entitled to file appeal:- (a) Kikabai Abdulali vs. ITAT (32 ITR 762)(Bom) (b) CIT vs. N.Ch.R Row Co. (144 ITR 557)(Cal). In both the cases, it has been held that the right of appeal to Tribunal is not confined technically to party who is party to appeal, but it is a much wider right which can be exercised by any person who becomes liable to pay tax by any order against which appeal is preferred. He submitted that, in the instant case, the Estate has receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be assessed? 31. The impugned income has been declared by the executors in the name of Estate of late Vrajlal C Mehta in the revised return of income. The original return of income was also filed in the above said name only against the notice received u/s 148 of the Act. We have noticed that the AO has, however, issued notice to Shri Anoop Mehta as legal representative of Vrajlal C Mehta. 32. We shall first refer to the arguments advanced by Ld CIT-DR in support of the assessment order passed by the AO. The Ld CIT-DR has contended that the amount of deposit assessed in this year was made by Shri Late Vrajlal C Mehta and hence it was rightly assessed in the hands of the legal heir. In our view, there is a flaw in this argument of Ld CIT-DR. We have earlier noted that Shri Vrajlal C Mehta has expired on 24.4.2005. As contended by Ld A.R, Shri Virajlal C Mehta can be considered to have made deposits only upto the date of his death only. Any deposits found in the bank accounts after the date of death could not have been made by him. With regard to the nature of deposit, there is no material available on record to show exact nature of the same. The Ld A.R submitted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Estate. As per the Will of Shri Vrajlal C Mehta, it is the duty of the Executors to distribute the assets in accordance with the directions given in the Will. Since the impugned income has accrued after the date of death of Shri Vrajlal C Mehta and since the Executors have taken responsibility to get the funds and distribute them, in our view, it may not be correct to contend that the same does not form part of the Estate. 34. Even if we accept the contentions of Ld CIT-DR that the HSBC accounts do not form part of assets of Estate as correct for a moment, then those assets shall devolve upon the legal heirs as per the law. Since the year under consideration falls after the death of Shri Vrajlal C Mehta, the income relating to the impugned deposits has to be assessed only in the hands of legal heirs in their individual capacity, since they have inherited the assets of the deceased in their own right. In that kind of situation also, the assessment in the hands of Late Vrajlal Mehta through his legal heir Shri Anoop Mehta could not be possible. 35. Now we shall deal with some of the relevant case laws on this legal issue. The decisions relied upon by the assessee deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit pertaining to the period during which he was minor) in assessment of his father as per the relevant provisions of the Income tax Act. Hon'ble Bombay High Court has held that, as per clauses found in the partnership deed, profit accrued to the partnership firm only on the last date of the accounting year. The revenue took support of provisions of sec.24B to contend that the said income can be assessed on the legal heir, as per the provisions of sec. 24B. Hence the question of applicability of provisions of section 24B (which is akin to sec. 159 of Income tax Act, 1961) was examined by Hon'ble Bombay High Court and relevant observations are extracted below :- The second aspect of Mr. Mehta's contention relates to the proper construction of the provisions of section 24B of the Indian Income-tax Act, 1922. On the one hand it has been contended by Mr. Mehta that section 24B was inapplicable to the facts of the present case for the simple reason that no income or profits could be slid to have accrued to Arvind at all till he was alive, for accounts were made up as at the end of S.Y. 2006 on the Divali day and it was only then that any income or profits could, be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to and the legal fiction created by the words if he had not died cannot be regarded as merely providing a machinery dealing with assessment or recovery of payment of tax from the estate of the deceased. According to him, subsection (1} of section 24B should be regarded as containing a charging provision, a provision which creates a liability, and as such it should be held that by the legal fiction created thereunder even the income that was received by the heirs of the deceased during the period after the death of the deceased till the end of the accounting year should be regarded as deemed, income of the deceased. In view of these rival submissions, which have been put forward before us, the narrow question, which this court is called upon to decide, is whether the fictional extension of the legal personality of the deceased as contemplated by sub-section (1) of section 24B could be regarded as having been enacted for the purpose of merely providing a machinery for dealing with assessment or recovery of payment of tax from the estate of the deceased or whether the same has been enacted with a view to create an additional liability to pay tax on that part of the income said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. In view of this discussion we are clearly of the view that on a proper construction of section 24B(1) of the Act the said provision is clearly inapplicable in regard to the amount of ₹ 2,61,821 and Arvind's heirs or legal representatives cannot be called upon to pay tax thereon, as the same was never the income of Arvind prior to or on 31st August, 1950, nor could it be regarded as his income by reason of the legal fiction created there under. 37. The assessee had also placed reliance on the decision rendered by Hon ble Kerala High Court in the case of K Kunhi Mohammed Hajee (supra). The assessee has submitted as under in respect of this decision:- Further, Kerela High Court in case of K Kunhi Mohommad Hajee vs State of Kerela and Another' held that Section 24 of Kerela Agricultural Income Tax Act permits assessment of income of the deceased person and recovery of tax that would have been payable by the assessee. It is only for this purpose that Section 24 has provided for the fiction of continuance of the deceased person. Further, it was held that the proper course would be to assess the legal representative sup to the period of his d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that legitimate field. In the present case the fiction is limited to the cases provided in the three sub-sections of section 24B and cannot be extended further than the liability for the income received in the previous year. These decisions, no doubt, lay down the rule that the legal representatives are liable to be assessed as if the deceased was alive not only in respect of the income received by the deceased person upto the date of his death, but also the income received by the legal representatives during that year but not in any subsequent year. It is on this that reliance is placed by counsel for the revenue. According to him these decisions must be read as laying down the rule that if the legal representatives derived any income out of the property of the deceased during the previous year in which the death took place they are liable to be assessed on that income in addition to the income of the deceased upto the date of his death under section 24 of the Agricultural Income-tax Act, 1950. We do not think that this is the purport of the decisions of the Supreme Court. The language of section 24 of the Act appears to us to be clear. It indicates that what is permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of executor does not leave any discretion to the I.T authorities in respect of assessing the income of the Estate of a deceased person to tax. Such income has to be taxed in the hand of the executor. The relevant extract of the headnote of the case is reproduced as under: Section 168(1) of the IT. Act, 1961, which provides that the income of a deceased person shall be chargeable to tax in the hands of the executor does not leave any discretion to the I.T. authorities in respect of assessing the income of the estate of a deceased person to tax. Such income is to be taxed in the hands of the executor. The term executor is not to be understood in the restricted sense as the Expln. to the section gives an extended meaning to the word executor so as to include an administrator or other person administering the estate of the deceased person, that is, one who is in de facto management of the properly of the deceased person. 39. The submissions made by the assessee on the decision rendered by Hon ble Supreme Court in the case of Mramreddy Sulochanamma (supra) are extracted below:- Further, Supreme Court in case of Income Tax Officer, Gudur and Another vs Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay High Court held that the sum derived from the firm could not be regarded as having accrued to the deceased partner at any time before his death on 31.8.1950 and therefore, after the accounts were made up at the end of the SY on a Diwali Day, the profits could be said to have accrued to the firm as also the individual partners thereof and therefore the deceased partner s heirs or legal representative would not be liable to pay tax thereon as this was never the income of the deceased partner prior to his death on 31.8.1950. The facts of this case are not comparable to the facts of our case. In the instant case, the assessee, Shri Vrajlal C Mehta had opened a HSBC bank account before his death and the peak credit balances in the bank account after his death were assessed as undisclosed income in the hands of the LR, Shri Anoop V Mehta, legal heir of Shri Vrajlal C Mehta. b. Kerala High Court in the case of K. Kunhi Mohammed Hajee vs. State of Kerala and Another: This case law pertains to sec.24 of the Kerala Agriculture Income tax Act, 1950. The instant case refers to the applicability of sec.159, the legal representative is liable to pay any sum which the deceased wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate have only furnished a will probated by the Hon ble Bombay High Court which does not mention this HSBC account and the Executors have not furnished proof of having submitted inventory of assets and liabilities other than those in the will to the Hon ble Bombay High Court (d) it is only the Executors who are asserting that they are the Executors of the Estate which includes the HSBC account and there is no direction from the Hon ble Bombay High Court that they are the Executors/Administrator of all the assets and liabilities of the deceased even though not mentioned in the will. 41. We notice that the Ld CIT-DR has sought to distinguish the case laws mainly on the reasoning that (a) Shri Vrajlal C Mehta has opened the HSBC account before his death. (b) Sec. 159 of the Act does not state that the liability of the LR shall stop with the previous year in which the person died. (c) The HSBC account is not part of the Estate (d) Only the Executors are claiming it to be part of Estate without disclosing those details to Hon ble Bombay High Court, which has probated the Will of Shri Vrajlal C Mehta. 42. We are unable to agree with any of the reasoning given by the Ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amount could not be included in profits of A's widow for the assessment year 1962-63 under section 41(1) as the amount was not received by the widow in the accounting year in which A died. This decision was later on confirmed by the Supreme Court in Commissioner of Income-tax v. Hukumchand Mohanlal. It would thus appear clear that in both these cases the question of applicability of section 24B was considered in this context of an income which had been admittedly received by the heirs and legal representatives of the deceased in years subsequent to the accounting year in which the deceased had died and the court took the view that the amount that was received by their and legal representatives could not be brought to tax under section 24B of the Act. In each, of these decisions the observations in Amarchand N. Shroff's case (quoted above) were relied upon and its ration was applied. The decision rendered by Hon ble Supreme Court in the case of James Anderson (supra) makes it clear that the income accruing to a person after his death cannot be taxed as per the provisions of sec.159 of the Act on the legal heirs. 43. Now we will advert to the decisions relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision rendered in the case of Sky Light Hospitality LLP. 46. In view of the foregoing discussions, we find merit in the contentions of the assessee. Accordingly we hold that the assessment framed on the Legal heir, i.e., on Shri Anoop Mehta as legal heir of late Vrajlal C Mehta in respect of income arising after the date of death is not in accordance with the provisions of sec. 159 r.w.s. 168 of the Income tax Act, 1961. Accordingly, shri Anoop Mehta cannot be asked to pay tax as legal representative of late Vrajlal C Mehta u/s 159 of the Act. We also hold that it is the Estate of late Vrajlal C Mehta , which is liable to pay tax in terms of sec. 168 of the Act in respect of impugned income. Since the assessing officer has assessed wrong person for the above said income and since the Ld CIT(A) has also confirmed the same, in our view, orders passed by them are not sustainable in law for the reasons discussed above. Accordingly we quash the orders passed by the tax authorities. 47. The second ground urged by the assessee relates to enhancement of income by the learned CIT(A) by an amount of ₹ 14.49 crores relating to HSBC Bank account standing in the name of a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished only an affidavit to claim the ownership of the above said account and hence the above said evidence, being a self serving document, cannot be relied upon. 51. We have heard the rival contentions and perused the record. The assessee furnished detailed submissions in respect of this issue and we prefer to extract the same, for the sake of convenience. 22. Now, coming onto Ground No. 2, the same is reproduced as under: The learned CIT(A) has erred in enhancing the income assessed by the AO by ₹ 14,49,34,704 on account of the credits appearing in HSBC bank account of a company called Investment Lexcor S,A 23. It is reiterated that during the course of search, Mr. Anoop Mehta was shown certain documents by which he was informed for the first time of the existence of a bank account with HSBC Bank in Geneva. The said base note gives details of the three accounts, i.e Yeel Investments Inc, Euros Invest Limited, Investment Lexcor S,A and the balances lying in these accounts as on December 2005 and December 2006 .The tax treatment of balances of the said accounts is as under: 1. Yeel Investment Inc- Offered to tax in the hands of Estate of Vrajlal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kindly confirm the same and state whether the data mentioned in these documents correspond to the data of you and your family members/ associates, State what these documents are about? Ans. I have gone through the papers shown by you. I confirm that my name, my date of birth and my address, names of some of the members of my family/associates in my business i.e., Mehta Vrajlal Chandulal, Mehta Suman Vrajlal, Mehta DevaunshiAnoop, Shah Asha Navin Chandra, Mehta Rajesh Vrajlal, Mehta Asha Rajesh, Mehta Sachiv R and Mehta Siddhi Appear in the said document Further, I would also like to state that am aware of the company Yeel Investments Inc, in which I am a beneficiary. I have some faint remembrance of the trust 'The Parrot Trust'. However, I have no idea about the concerns Euros Invest Limited, Investment Lexcor S.A., First Corporate Director Inc and Manacor S.A and the Fiduciare Equity Trust A.O. It appears from the documents shown by you that there are some balances in the bank accounts maintained by us with HSBC Geneva in the name of Yeel Investments Inc. As far as the rest of the data such as amounts reflected against the names of other concerns of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s belonged to him by an affidavit, which was filed with the Income Tax Department, Scindhia House, by his chartered accountant Mr.Bimal Desai. Q.13 Please produce the copy of the affidavit? Ans. If the affidavit is available with the CA and I will talk to him and furnish the same on 16.03.2015. Q.14 Since base note is in your name then why Euro Invest P Ltd should not be considered as relating to you? Ans. As, I have already stated, the following day after the search, I spoke to my brother and asked him about the three company shown to me. He immediately confirmed that Euros Invest Limited and Investment Lexcor S.A (Ex. Investment Funds S.A) belonged to him. About the third company (Yeel Investment Inc), he said, he is not aware but would make some enquiries and get back to me. I am aware that he clarified that the two companies belonged to him by an affidavit, which was filed with the Income Tax Department, Scindhia House, by his chartered accountant Mr. Bimal Desai. Q.15 There is one more accounting the name of Investment Lexcor S.A (Ex- investment funds S.A.), are you aware about it? Ans. As on today, yes, I am aware about it and this account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 3 days on receipt of this letter. From the information available to this office it is seen that you are beneficial owner in the bank account in HSBC Bank, Switzerland with following code BUP Name Code BUP MEHTA RAJESH VRAJLAL 5090112178 Further you aforesaid identification is linked to following bank account Investment Lexcore SA 5091230085 CH13 0868 9050 9109 10013 CH36 0868 9050 910931625 CH73 0868 9050 910905150 CH82 0868 9050 910910129 CH85 0868 9050 9109 40415 Further, through affidavit submitted to this office, you have admitted that you are beneficiary in the above mentioned account. However, from the perusal of your return of income for the year under consideration it is seen that you have not disclosed the same bank account in the return of income. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Resident Indian for the last more than three decades has earned and received income outside India from the sources outside India and therefore such income are not taxable in India, Accordingly, the bank account(s) of such Non-Resident Indian wherein the Non-resident Indian has deposited his income earned outside India are not required to be disclosed under the Income Tax Act, 1961. It is therefore submitted that you have no authority/jurisdiction under the Income Tax Act, 1961 to call upon the assessee to give details of his foreign bank accounts explaining the credit and debit entries therein. It is therefore respectfully submitted that the disclosure of foreign accounts in the return of income is applicable only to Resident Indians and not applicable to Non Resident Indian. 30. Thus, Investigation Wing, assessee's Ld AO and Rajesh Mehta's Ld. AO did not record an adverse finding with respect to claim of Shri Rajesh Mehta regarding ownership of Investment Lexcor S.A. However, without consideration of these observations of Investigation wing and Ld. AO, the Hon ble CIT(A) without any reason issued enhancement notice to which assessee replied vide letter dated 21.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that this HSBC account belongs to the late Shri Vrajlal C Mehta. Therefore, all the accounts in this base note of Late Shri Vrajlal C Mehta are to be assessed in the hands of the legal representative and legal heir of Late Shri Vrajlal C Mehta, i.e., Shri Anoop V Mehta as per sec. 159. The burden of proof shifts to Shri Anoop V Mehta, in his capacity as legal heir of Late Shri Vrajlal C Mehta to prove that the Lexcor Investment never belonged to late Shri Vrajlal C Mehta. Merely claiming that the beneficial owner of Lexcor SA is Rajesh Mehta does not discharge the burden of proof of establishing the ownership of lexcor SA. The filing of an affidavit by shri Rajesh Mehta (brother of Shri Anoop V Mehta), as alleged by the Executors, before the CIT(A) that this lexcor SA Investment belong to him does not establish how it belongs to him and not to late Shri Vrajlal C Mehta when the base note indicate a single HSBC account in the name of Shri Vrajlal C Mehta indicating various trust accounts. Thus, the logical conclusion is that all investments accounts indicated in the base note of Shri Vrajlal C Mehta pertain to his investments only and having not been included in the W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his earlier submissions. Accordingly the assessing officer did not make any addition in respect of these two accounts. Out of the two accounts, the account standing in the name of M/s Euro Investment Ltd was closed in 2003 itself and hence the dispute arose in respect of M/s Investment Lexcor SA. Besides the above, the assessing officer has initiated proceedings u/s 153C of the Act in respect of the above said account in the hands of Shri Rajesh Mehta and a specific query was also raised in this regard. The query raised by the AO and the reply given by shri Rajesh Mehta is extracted in the preceding paragraphs. After considering the reply, it is stated that the proceedings u/s 153C of the Act were dropped. 54. In our view, the Ld CIT(A) has not duly considered above facts and he has been mainly influenced by the fact that Shri Anoop Mehta is also shown as one of the beneficiaries in the above said account. Further the Ld CIT(A) has also stated that Shri Anoop Mehta is entitled to residual assets of Late Vrajlal Mehta as per the Will. In our view, the reasoning given by Ld CIT(A) is not sustainable. Under the Income-tax Act, the income tax is levied on the person who earned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and 2007-08. Accordingly it filed revised return of income for the above said three years. Since the assessee had already paid the relevant tax in AY 2012-13 and since part of income pertaining to that tax was shifted to AY 2007-08, the assessee sought credit of proportionate tax in AY 2007-08. The said claim was rejected by the AO as well as Ld CIT(A). 59. We heard both the parties on this issue. The Ld A.R submitted that the assessee has offered income in AY 2012-13, since the said income was received for the first time in India in that year only. The assessee has also paid the tax thereon. Subsequently, upon considering the views taken by the Revenue and also to avoid protracted litigation, the assessee has chose to offer part of that income in AY 2006-07 and 2007-08 making corresponding reduction in the income offered in AY 2012-13. The Ld A.R submitted that the CBDT has issued a Circular No.14 (XL-35) dated 11.04.1955, wherein the tax authorities are advised to guide the assessees and it is further reiterated that the revenue should not take advantage of an assessee s ignorance to collect more tax out of him than is legitimately due from him. The Ld A.R also placed relia ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
