TMI Blog2023 (5) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... tended time limit of 16 years is available The reasons recorded by the AO are not only vague and general but without any application of mind on the records and the material which was filed by the assessee before the Income Tax department right from the year 2011 to 2014, till the issuance of notice u/s.148. The reasons have been recorded in a very mechanical manner without even ascertaining the facts and material available on record. Even going by the so called Base Note as mentioned by the ld. AO refers to account holder, Amaya Ltd. which is a separate legal entity and incorporated outside India. At the time of recording, the reasons or even in the Base Note, nowhere it has been brought on record that the said entity Amaya Ltd. is fictitious or some kind of transparent entity. Nothing has been brought on record in reasons recorded or there is any material on record that assessee has any business connection in India and therefore amount deposited in said foreign bank account is income arisen or accrued or deemed to have arisen or deemed to have accrued in India. If at all there is some doubt about the said entity and deposits made therein, then, it is the UK Tax author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had issued summons u/s.131 to the assessee on the basis of certain information received from Government of India in the form of Base Note from French Government from which it was gathered that, assessee was the beneficial owner of HSBC bank account in Geneva for amount of 505262/- USD as on 31/12/2005 in the code of account opened on 17/08/2005 in the name of Amaya Ltd; and USD 607950 as on 31/12/2006 in the same account. The ADIT asked to file all the financial statements, profit and loss account, balance sheet, audit report alongwith annexure, return of income, bank book and cash book, all bank statements whether inside India or outside India and copy of passport. In response, assessee filed a letter dated 08/12/2011 giving all the requisite details. It was categorically submitted that she is a non-resident Indian and she had visited India on a very short visits for business and personal purposes. She had also given duration of stay in India and her residential status for the purpose of income tax. Apart from that, all the requisite details were filed. Thereafter, assessee again furnished all the information as was required from the ADIT which was submitted before him. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Art works The credits in the account relate to transactions of sale of paintings or Art Work abroad or in respect of income earned by way of Commission for procuring Sale of art work abroad or by way of commission for sales or purchase of paintings effected outside India. Transactions originating in India are shown in her Bank Accounts in India. They do not appear in the Accounts held with HSBC Bank Geneva. No transactions which appear in the HSBC (Geneva) accounts have any nexus or relation or origination to a source in India. 7. Copies of Passport from 01.04.2004 till date Our client has submitted the Xerox copies of her passports from 1.4.2004 till date at the hearing on 12th December, 2011. 8. Copies of HSBC Bank Account from 01.04.2204 till date As stated in Col. 2 above, these accounts were opened on 17.08.2005. Copies of these Accounts from inception of the account till date are attached herewith. 9. Statement of Accounts in relation to transactions in HSBC Accounts: Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entirely relate to these transactions of buying and selling of paintings / art work and income received by way of commissions for facilitating sale of paintings/art work. These receipts or deposits did not originate or arise whether directly or indirectly through or from any business connection in India or through or from any property in India or through or from any asset or source of income in India or through the transfer of a capital asset situate in India. We wish to mention that Ms. Jhaveri has bought some of the paintings from Indian parties and has imported the same to territories outside India, for which she has made payments from these accounts. Income arising from such transactions do not come within the meaning of income deemed to accrue or arise in India and income arising from the sale of art work in a territory outside India, of art work bought or imported from India is not liable to be taxed in India, as at the time of sale she was a Non Resident. 3. Amaya Ltd.. This is a Limited Company registered in the Republic of Seychelles. Ms. Amrita Jhaveri is a sole beneficiary in the Company She is the only shareholder and Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Statements for Account with HSBC, Geneva in the names of Ms. Amrita Jhaveri and her husband Mr. CHRISTOPHER MICHAEL DAVIDGE Account No: 10906776 (USD). Account No. 11448879 (EUR) Account No. 10906601 (GBP). 5. Thereafter, assessee had also submitted her affidavit before the ADIT, reiterating the same things which are borne out from the records and giving the details of the accounts and the source of deposits made therein. After all these information been filed, ACIT (2) further issued notice u/s.131 on 19/07/2013 in the following manner:- 1. On the basis of information received, it is seen that you hold account No. 5090149151 with HSBC, Geneva. 2. The ownership of the aforesaid account was confirmed by you during the course of inquiries by the Investigation Wing, Mumbai. 3. In this connection, you are requested to furnish a complete copy of the statement of bank account right from its inception till date. In case, you are not in possession of statement of your bank account, you are requested to fill up the consent waiver form enclosed with this letter, get it notarized and forward the same to the undersigned within 7 days of the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S 147 OF THE IT.Act 1961 Information was received by the Government of India under Article 28 of Double Taxation Avoidance Agreement from the French authorities in exercise of its sovereign powers that certain persons in India held bank accounts in HSBC Bank, Geneva. The information is received in the form of a document wherein various details of account holders such as Name, Date of Birth, Place of Birth, Residential Address, Sex Nationality etc are mentioned in the case of the assessee also such information is received. The details of the assessee's bank account in HSBC, Geneva are as under:- Name Amrita Jhaveri BUP_SIFIC_PER_ID: 5090149151 Date of opening of account 25.11.1999 Balance shown for AY 2006-07 USD 505262 The Investigation Wing of the Income Tax Department has conducted enquiries and a large number of assessees have admitted to holding accounts in HSBC Bank Geneva and have disclosed the balances in these bank accounts to tax. Further, certain assessee who had denied having such account in HSBC Bank, Geneva later on submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sesses have confirmed the existence of the bank accounts in HSBC Bank, Geneva mentioned in the information received under DTAA, shows that the information received is credible The information regarding the assessee with the department shows a balance of In FY 2006-07 relevant to the AY 2007-08 The balance shown of USD 607950 in Assessment Year 2007-08 is not disclosed to Income-tax Department. In view of the above. I have reason to believe that the assessee holds the above mentioned bank account in HSBC, Geneva which is an asset located outside India and that the income in relation to such asset has escaped assessment for the assessment year 2007-08, for which as per Section 149(c), sixteen years time limit is available (KISHAN VYAS) Commissioner of income tax (OSD), I/C Range 16(2), Mumbai 9. After receiving the notice u/s 148, assessee raised detailed objections before the ld. AO, which has been disposed of by the ld. AO vide order dated 17/03/2015. Thereafter, the ld. AO observed that assessee was given ample opportunities to provide bank account, however, assessee did not furnish the details called for nor she has produced any evidence to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he base note issued by the French Authority it is undoubtedly concluded that this deposits has been made out of Indian income as per the IT. Act. The submission of the AR are mere time consuming tactics and to pose a stonewall before the eyes of the tax authority 8.3 Firstly, it must be understood that the assessee has her interests in India. As per the Base Note, the assessee is having an address in 80, Napean Sea Road, Mumbai - 400 008 which is her legal address. The assessee has not offered any explanation with regard to this address even after a specific question was raised. As per the Base Note 8.4 Secondly, the assessee chose not to produce the bank statements and the source of deposits made in the account even after various opportunities were given during the assessment proceedings. It is in the public domain that HSBC. Geneva has been inquired regarding its role in facilitating its clients to evade taxes. Also, the names of various individuals including the assessee herself have been mentioned in the list of account holders in HSBC, Geneva who has been suspected of tax evasion. Hence there is a prima-facie presumption of amounts in the said account being undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n used for illegal money transfer, money laundering and exploitation of credit facilities. The Income Tax (1-T), Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) have named diamond traders in at least 65 cases. It is alleged that they are key players in trade-based money laundering of an estimated Rs 60,000 crore. A February 2014 internal I-T paper on the diamond traders of Surat and Mumbai outlines how traders facilitate bogus entries through which black money is converted to legitimate money for other sectors such as real estate. h) A forensic report dated October 28, 2013, submitted by a consortium of banks to the Reserve Bank of India in connection with the credit facility used by a diamond trading company, underlines: It is very common for one family to have multiple companies under multiple names across geographies that receive exports from India so that companies can avail import duty allowances and letters of credit from banks (1) DRI investigations in the last two years have listed 41 instances of the involvement of Hong Kong-based diamond traders in high-value money transfer. A report by the GJEPC to the Commerce Secretary in October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arising from India and Income deemed to accrue and arise in India under section 9 of 1.T.Act, 1961, her case was reopened under section 147/148/149 of 1.T.Act, 1961 which is fully justified in facts and law. Hence the objections raised by the assessee are baseless and are rejected. 12. In so far as merit is concerned, ld. CIT(A) has confirmed the reasoning of the ld. AO which reads as under:- 5.4 Assessee is a citizen of India was a resident of India till F.Y.1998-99 and became not ordinarily resident from FY 1999-2000 relevant to AY 2000-01 and yet assessee regularly visited for periods ranging between 81 days in A.Y.2000-01 to 111 days in A.Y 2006-07 and 123 days in A.Y.2001-02, 136 days in A.Y 2002-03, 158 days in A.Y 2003-04 and 147 days in A.Y.2004-05 and 104 days in A.Y.2005-06 and the total number of days stayed always below 180 days in each Assessment Year. That means that she must be a resident of United Kingdom where she claims to have legal residence in London. The Base Note received from the Government of France is itself quite revealing. An ID Profile was created on 25/11/1999 in the name of Amrita Jhaveri under ID Number 509014915 and an accounts were creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Painters for an Indian Art auction house Saffron Art, Mumbai and has also organised several exhibitions and auctions under the name Amaya Collections during 2013 with Southbeys and Dubai fest in 2016 as per the information available from the internet. She has in her affidavit admitted she derives income by way of consultations and commissions from the sale of works of art and paintings. Entries in the bank account in the name of Amaya Limited with HSBC Pvt.Bank Geneva also point to the fact of payments and receipts for sale of paintings. Assessee is also a director of AM Art India Pvt.Ltd. which is registered in Mumbai, India with her relatives as directors. This fact and assessee's frequent visits for 111 days during previous year relevant to A.Y.2006-07 to India in connection with identification of Indian paintings and its selection for imports and sale of her own stock of two paintings of Natesan and M.F.Hussain for more than Rs.65 lakhs during the year and assessee's role as consultant in the field of paintings clearly establishes a business connection of the assessee with India through her sister Priya Jhaveri, Jhaveri Contemporary set up by her along with her sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the debits and credits in the three bank accounts of Amaya Limited with HSBC Bank Pvt.Ltd. and why was a company floated in tax haven Seychelles and a bank account opened in the name of Amaya Limited when she was living in London UK? 5.8: All these facts clearly and unequivocally indicate that Amaya Limited was nothing but a company solely and wholly owned by Amrita Jhaveri and all the assets owned by Amaya Limited were the assets of the assessee who wanted to avoid and evade Indian and/or UK/France income tax accruing and arising from her business activity of purchase and sale of paintings imported from India. All these facts clearly point to one single fact that assessee was engaged in the import of paintings from India over which she exercised direct and indirect control because of business operations conducted by her sister Priya Jhaveri in Mumbai, AM Art India Pvt.Ltd., a registered company dealing in art works in Mumbai and Jhaveri Contemporary, Mumbai which was set up by her and her sister Priya Jhaveri and also her father Diesh Jhaveri who is a diamond and gold jewellery merchant and an avid art collector. Another proof comes from the fact that her income in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to various entries appearing in the said bank statement. The reasons recorded are so general in nature which only mentioned about information received by the Government of India and how Investigation wing of the Income Tax department after conducting enquiries, found large number of assessee have admitted of holding accounts in HSBC bank and certain assessees have denied. Whether the balance shown in the bank account of the assessee with HSBC Geneva, leads to reason to believe that income is chargeable to tax in India and how it is income taxable in India or not has not even mentioned. 14. One very important fact which is relevant here in this case is that, assessee is a non-resident and from last several years she has been staying in London and earning income from various activities carried outside India. Whatever income, which has been accrued in India in the form of capital gain or interest or dividend has always been disclosed in the return of income filed in India. Fourth proviso to Section 139(1) of the Act requires that a person who is resident of India to disclose the details of foreign assets in the return of income and is not applicable to the assessees who a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. Thus, extended time limit provided u/s. 149(1)(c) will not be applicable in the case of the present assessee. 16. The ld. AO while recording the reasons has not disputed that assessee is a non-resident and even her return of income filed for the A.Y. 2006-07 and 2007-08 showed the status of non-resident and nowhere the ld. AO has held that assessee has no longer the status of non-resident. Once the Assessing Officer while recording the reasons has accepted that assessee is a non-resident, then how balance in the bank account with HSBC bank, Geneva represents income which is accrued or arising or is deemed to accrue or arise in India so as to come within the scope of total income in terms of Section 5 of the Act. At least, the ld. AO should have mentioned it in the reasons recorded before acquiring jurisdiction to reopen an assessment for an extended period of 16 years that, firstly, assessee is a resident in terms of Section 6; and if not then secondly, the balance lying in the foreign bank account represents income which has accrued or arisen or deemed to accrue or arise in India u/s. 5. Once that fact has not been brought on record, ostensibly there cannot be any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be inferred that any amount has been deposited from Income earned from India. The entries of these bank statements have already been incorporated in the ld. CIT (A) s order also and nowhere any finding has been given that any credit in the said bank account pertains to any income earned from India even in terms of Section 9. While confirming the order of the ld. AO, ld. CIT (A) has narrated various facts from Google search in order to draw presumption that; there might have some income earned from import of paintings, which might have deposited in these accounts and therefore, income might have deemed to accrue and arise in India. All these findings are based on certain hypothesis on which he has come to a conclusion. Even certain observations that Amaya Ltd was in fact belong to the assessee and assets owned by said entity is an asset of the assessee, but that does not lead to inference that assessee has evaded tax from India, because the said entity has neither been incorporated nor has any connection in India nor has any business connection or any place of effective management is situated in India. Further, nothing has been brought on record in reasons recorded or there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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