Shri Som Dutt, Kolkata V. ACIT, CIR-27, KOLKATA, Kolkata

ITA 1662/KOL/2009

• Counselvise Citation: 166223514 RSA 2009
• Duration Of Justice: 5 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUCHISMITA PALAI
• Assessee Lawyers: N K PODDAR SENIOR
• Keywords: Unexplained cash credit; Gift; Recovery proceedings; Business income; Residential status; Source of fund; Question of law; Capital receipt; Onus to prove
• Section: 68; 142(1)

Judgement Text

I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 1 OF 27 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER I.T.A. NO. 1662/KOL/ 2009 ASSESSMENT YEAR : 2004 - 2005 SHRI SOM DATT,................................. ................... ......APPELLANT C/O. A.S. GUPTA & CO., OLD POST OFFICE STREET, KOLKATA - 700 001 [PAN : ADSPD 5854 C] - VS. - ASSISTANT COMMISSIONER OF INCOME TAX,....... . RESPONDENT CIRCLE - 27, KOLKATA APPEARANCES BY: SHRI N.K. PODDAR, SENIO R ADVOCATE, FOR THE ASSESSEE SMT. SUCHISMITA PALAI, CIT, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MAY 20, 2015 DATE OF PRONOUNCING THE ORDER : JUNE 12 , 2015 O R D E R PER P.K. BANSAL: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XIV, KOLKATA DATED 20.07.2009 FOR THE ASSESSMENT YEAR 2004 - 05 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - . ( 1 ) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRE D IN CONFIRMING THE ADDITION OF RS.4,55,78,880/ - BY TREATING THE SAME AS REVENUE RECEIPT WITHOUT APPRECIATING THE SAME IS CAPITAL RECEIPT. ( 2 ) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF R S.4,55,78,880/ - BY CONSIDERING RECEIPT AS INCOME UNDER SECTION 5 WITHOUT APPRECIATING THAT RECEIPT WAS BENEFIT FROM THE TRUST AS ITS BENEFICIARY AND HENCE NOT CHARGEABLE TO TAX. ( 3 ) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) ERRED IN CONFIRMING LEVY OF INTEREST UNDER SECTION 234B. 2. THE ONLY ISSUE ARISING IN THESE GROUNDS OF APPEAL IS WHETHER A SUM OF RS.4,55,78,880/ - RECEIVED BY THE ASSESSEE FROM WHITE LABEL TRUST WHICH WAS CONSTITUTED UNDER THE LAWS OF THE ISLAND OF JERSE Y ON 20.07.1993 BY MAKING ANZ GRINDLAYS TRUST CORPORATION (JERSEY) LIMITED AS TRUSTEE. BUT SUBSEQUENTLY THE ASSESSEE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 2 OF 27 HAS TAKEN A PLEA BEFORE THE ASSESSING OFFICER THAT THE TRUSTEE HAS BEEN CHANGED AND NOW HSBC TRUST COMPANY (BVI) LIMITED WAS APPOINTED AS T RUSTEE OF THE WHITE LABEL TRUST ON 08.08.2003. 3. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS CREDITED IN HIS CAPITAL ACCOUNT A SUM OF RS.4,55,78,880.50. WHEN QU ESTIONED, IT WAS EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE HAS RECEIVED A SUM OF ONE MILLION US DOLLARS FROM ONE TRUST NAMED WHITE LABEL TRUST WHICH IS REGISTERED OUT OF INDIA AND THE ASSESSEE HAS PRODUCED A CERTIFICATE DATED 28.11.2003 FROM THE TRUSTEE HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED, IN WHICH THE SAID COMPANY CERTIFIED AS THE TRUSTEE OF THE WHITE LABEL TRUST THAT THEY HAVE REMITTED TEN LAKH US DOLLAR TO DR. SOM DATT TO HIS BANK ACCOUNT WITH SYNDICATE BANK, NEHRU PLACE BRANCH, NEW DELHI AND THE SAID MONEY HAS BEEN SENT FROM THE CAPITAL ACCOUNT OF THE TRUST AND IS TO BE REGARDED AS A CAPITAL DISTRIBUTION TO DR. SOM DATT. THE ASSESSING OFFICER SUBSEQUENTLY ASKED FOR CERTAIN MORE INFORMATION FROM THE ASSESSEE VIDE LETTER DATED 29.05.2003 NAMELY, (I ) NATURE OF WHILE LABEL TRUST - FOUNDER OF THE TRUST, (II) NO. OF YEARS FOR WHICH THE ASSESSEE IS ASSOCIATED WITH THE TRUST, (III) DUTIES AND OBLIGATIONS AS A BENEFICIARY OF THE TRUST, (IV) PURPOSE FOR WHICH THE TRUST WAS SET UP, (V) SOURCE OF INCOME OF THE TRUST, (VI) IDENTIFICATION PARTICULARS OF THE TRUST AS PER 11 ACT OF THE NATION, (VII) NAMES OF OTHER BENEFICIARIES RECEIVING BENEFIT FROM THE TRUST DURING THE YEAR, (VIII) WHETHER THE ASSESSEE RECEIVED GIFT FROM THE TRUST IN EARLIER YEARS, (IX) STATEMENT OF ACCOUNT OF TRUST BANK STATEMENT. 3.1. IN RESPECT OF ITEMS NO. 3, 6, 7 & 9, THE ASSESSEE EXPRESSED HIS INABILITY AND STATED THAT TRUSTEES OF THE SAID TRUST ARE BOUND BY THE SECRECY LAWS OF THEIR COUNTRY AND, THEREFORE, THEY ARE CONSTRAINT TO PART WITH TH E FINANCIAL STATEMENTS OF THE TRUST. EVEN THE TRUSTEES ARE RELUCTANT TO REVEAL THEIR NAMES DUE TO THE SECRECY LAWS. THERE ARE NO IDENTIFICATION CRITERIA FOR THE TRUST LIKE PERMANENT ACCOUNT NUMBER AS PER THE LAWS OF CHANNEL ISLANDS. SUBSEQUENTLY THE ASSESS EE SUBMITTED A LETTER FROM HSBC TRUST COMPANY (BVI) LIMITED IN WHICH IT WAS EXPLAINED THAT WHILE LABEL TRUST WAS ESTABLISHED ON 20.07.1993 UNDER THE LAWS OF THE ISLAND OF JERSEY AND IS DISCRETIONARY IN NATURE. DR. SOM DATT HAS BEEN A DISCRETIONARY BENEFICI ARY SINCE THE TRUST WAS ESTABLISHED, TOGETHER WITH OTHER DISCRETIONARY BENEFICIARIES. THE TRUST FUND CONSISTS OF SUBSTANTIAL CORPUS BUILT UP SINCE ESTABLISHMENT OF THE TRUST. HSBC TRUST COMPANY (BVI) I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 3 OF 27 LIMITED WAS APPOINTED AS TRUSTEE OF THE WHITE LABEL TRUS T ON 08.08.2003. WITH REGARD TO THE ADMINISTRATION OF THE TRUST FUND, THE TRUSTEE HAS ALL THE SAME POWERS AS A NATURAL PERSON ACTING AS THE BENEFICIAL OWNER OF SUCH PROPERTY AND MAY EXERCISE ITS DISCRETION ACCORDINGLY. ON 28.11.2003, THE TRUSTEE EXERCISED ITS DISCRETION IN FAVOUR OF DR. SOM DATT, IN HIS CAPACITY AS DISCRETIONARY BENEFICIARY OF THE TRUST, AND MADE A CAPITAL DISTRIBUTION TO HIM FOR A SUM OF USD 10,00,000 (ONE MILLION US DOLLARS). THE ASSESSING OFFICER NOTED THAT THE TRUST IS A PRIVATE DISCRET IONARY TRUST AND IN FACT A FOREIGN TRUST, NOT COMING UNDER THE PURVIEW OF THE INDIAN INCOME TAX ACT; AND ANY FUND DISTRIBUTED TO ANY RESIDENT OF INDIA, THEREFORE, UNDOUBTEDLY, IS CHARGEABLE TO INCOME - TAX IN THE HANDS OF THE RESIDENT ASSESSEE. THE QUESTION OF CAPITAL OR REVENUE RECEIPT IS IRRELEVANT AS IT IS INCOME IN THE HANDS OF RECEIVING PARTY AND THERE IS NO PROVISION IN THE INDIAN INCOME TAX ACT TO EXEMPT SUCH RECEIPT. THE ONLY SITUATION WHERE THE AMOUNT MAY BE LEFT OUT FROM CHARGEABILITY ARISES WHEN A N AGREEMENT BETWEEN THE GOVERNMENT OF INDIA WITH A FOREIGN STATE EXISTS, WHICH IS KNOWN AS DOUBLE TAX AVOIDANCE AGREEMENT. IT IS ONLY APPLICABLE WHEN ANY AMOUNT IS TAXED BY THE FOREIGN GOVERNMENT AND CANNOT BE TAXED AGAIN UNDER INDIAN INCOME TAX ACT. THE S ITUATION IN THE PRESENT CASE IS NOT ONE WHERE DOUBLE TAX AVOIDANCE AGREEMENT IS APPLICABLE. 3.2. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE OTHER SITUATION WHERE REMITTANCE FROM OUTSIDE INDIA IS NON - TAXABLE WHEN AMOUNT IS BROUGHT INTO INDIA THROUGH NON - RESIDENT (EXTERNAL) ACCOUNT. THUS HE WAS OF THE VIEW THAT EVEN IF IT IS ASCERTAINED THAT THE TRUST IN ISLAND OF JERSEY DISTRIBUTED ITS FUNDS TO ITS BENEFICIARY, WHO IS A RESIDENT IN INDIA, THE AMOUNT OF THE DISBURSEMENT CANNOT BE LEFT OUT OF TAX NET UNDER THE INDIAN INCOME TAX ACT IN ABSENCE OF ANY PROVISION TO EXEMPT SUCH INCOME OR A SITUATION WHERE DOUBLE TAX AVOIDANCE AGREEMENT IS APPLICABLE, AND, THEREFORE, THE SAID SUM IS LIABLE TO TAX UNDER THE INDIAN INCOME TAX ACT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE FINANCIAL STATEMENTS OF THE TRUST TO ASCERTAIN THE NATURE OF THE AMOUNT RECEIVED BY THE ASSESSEE BUT THE ASSESSEE DID NOT PRODUCE THESE DOCUMENTS. THE ASSESSING OFFICER, THEREFORE, OBSERVED THAT IN THE ABSENCE OF FINANCIAL STATEMENT S BEING PRODUCED BY THE TRUST, WHICH WERE SPECIFICALLY ASKED TO BE PRODUCED, IT CANNOT BE ASCERTAINED WHETHER THE DISTRIBUTION OF THE AMOUNT WAS MADE OUT OF THE INCOME OF EARLIER YEARS, I.E. OUT OF THE CORPUS FUND OF THE TRUST OR OUT OF THE INCOME OF CURRE NT YEAR. IT IS NOT ASCERTAINABLE AS TO WHAT IS THE SOURCE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 4 OF 27 OF INCOME OF THE TRUST, WHO WAS THE SETTLER OF THE TRUST, WHO ARE THE BENEFICIARIES AND HOW CAN ONE BENEFICIARY, I.E. THE ASSESSEE RECEIVED BENEFIT FROM THE TRUST ON MORE THAN ONE OCCASION. THE ASSE SSING OFFICER FELT THAT NOTHING HAD BEEN DIVULGED ABOUT THE WHITE LABEL TRUST, ITS SOURCES OF INCOME, THE RESOLUTION ADOPTED TO BENEFIT THIS PARTICULAR ASSESSEE, THE CAPACITY OF THE TRUST TO BENEFIT ANYBODY AND THE LEGAL STATUS OF THE TRUST IN THE COUNTRY WHERE IT WAS INCORPORATED AND ULTIMATELY HE CONCLUDED THAT THE FACTS OF THE CASE WERE DIFFERENT FROM THE FACTS OF THE CASE OF SMT. SHANTABEN M. PATEL IN ITA NO. 5000/MUM./2001 DATED 17.02.2006 ON WHICH THE ASSESSEE HAS RELIED. THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDING CONTENDED THAT THE AMOUNT RECEIVED IS CAPITAL DISTRIBUTION BUT DID NOT PRODUCE ANY DOCUMENT TO SUBSTANTIATE THIS EXCEPT A LETTER OF CONFIRMATION FROM M/S. WHITE LABEL TRUST. EVEN OTHERWISE ALSO, ASSESSING OFFICER HELD THAT ALL CA PITAL DISBURSEMENTS NEED NOT BE REVENUE RECEIPTS IN THE HANDS OF THE RECIPIENT. HERE, A RESIDENT ASSESSEE IS IN RECEIPT OF A CERTAIN SUM FROM AN OVERSEAS TRUST, WHICH IS REMITTED INTO INDIA THROUGH BANKING CHANNEL AND CLAIMED AS CAPITAL RECEIPT. THERE IS NO SPECIFIC PROVISION TO EXEMPT A RECEIPT EXCEPT FOR CASES COVERED UNDER DOUBLE TAXATION AVOIDANCE AGREEMENT OR MONEY BROUGHT INTO INDIA THROUGH NON - RESIDENT EXTERNAL ACCOUNT. THE OVERSEAS DISCRETIONARY TRUST MIGHT HAVE DISPOSED THE AMOUNT OUT OF HIS PAST OR CURRENT INCOME. THE TRUST HAS PAID NO INCOME TAX AS PER INDIAN INCOME TAX ACT. THERE IS NO EVIDENCE ON RECORD REGARDING TAX PAYMENT IN THE COUNTRY OF ITS INCORPORATION. THE ASSESSEE HAS NOT PAID ANY TAX ABROAD. THE AMOUNT RECEIVED BY THE ASSESSEE IN SWI TZERLAND DURING THE YEAR AND BROUGHT INTO INDIA CAN ONLY BE TREATED AS INCOME IN TERMS OF SECTION 5 OF THE INCOME TAX ACT, AND ACCORDINGLY HE ADDED THE SUM IN THE INCOME OF THE ASSEESSEE. 4. WHEN THE MATTER WENT BEFORE THE CIT, THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND RELIED ON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF LATE SMT. SHANTABEN M. PATEL IN ITA NO. 5000/MUM./2001 DATED 17.02.2006 AS WELL AS THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF PROV IDENT INVESTMENT CO. LTD. REPORTED IN 32 ITR 190 (SC), WHEREIN THE HON BLE SUPREME COURT HAS LAID DOWN THAT IF THE CASE WAS NOT COVERED WITHIN THE FOUR CORNERS OF THE LAW, NO TAX CAN BE LEVIED BY INFERENCE OR BY ANALOGY OR BY TRYING TO PROBE INTO THE INTEN TIONS OF THE LEGISLATURE. 5. BEFORE THE LD. CIT(APPEALS), THE ASSESSEE PRODUCED THE FOLLOWING DOCUMENTS WHICH WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER (I) TRUE COPY OF SETTLEMENT I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 5 OF 27 DEED, (2) TRUST LEDGER AND TRANSACTION HISTORY REPORT (2 PAGES); (3) WHITE LABEL TRUST FINANCIAL RESULTS FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 (6 PAGES). ULTIMATELY CIT(APPEALS) SUSTAINED THE ORDER OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. BEFORE US, LD. SENIOR COUNSEL ON BEHALF OF THE ASSESSE E DRAWN OUR ATTENTION TO THE SETTLEMENT DEED, COPY OF WHICH IS AVAILABLE AT PAGES 40 TO 60 OF THE PAPER BOOK AND ON THIS BASIS HE POINTED OUT THAT THE TRUST SETTLEMENT DEED WAS EXECUTED ON 20.07.1993 BETWEEN THE ASSESSEE AS WELL AS ANZ GRINDLAYS TRUST CORP ORATION (JERSEY) LIMITED. THE ASSESSEE HAS PAID UP A SUM OF 10000 DOLLAR. IT WAS POINTED OUT THAT AS PER CLAUSE (2) WHEN QUERY WAS MADE WHETHER THE SETTLEMENT GOT REGISTERED AS PER LAW OF THE COUNTRY WHERE IT WAS CREATED THAT THE SETTLEMENT HAS BEEN ESTABL ISHED UNDER THE LAWS OF THE ISLAND OF JERSEY AND SUBJECT TO ANY CHANGE IN THE PROPER LAW OF THE SETTLEMENT DULY MADE ACCORDING TO THE POWERS AND PROVISIONS DECLARED THE PROPER LAW OF THE SETTLEMENT SHALL BE THE LAW OF THE ISLAND OF JERSEY AND THE COURTS OF THE ISLAND SHALL BE THE FORUM FOR THE ADMINISTRATION THEREOF. THUS IT WAS CONTENDED THAT THE SETTLEMENT HAS BEEN CREATED IN ACCORDANCE WITH LAW OF THE ISLAND OF JERSEY. WHEN BENCH ASKED THE COPY OF THE TRUST (JERSEY) LAW, ISLAND OF JERSEY REGULATING THE SETTLEMENT. LD. SENIOR COUNSEL HAS EXPRESSED HIS INABILITY TO FILE THE COPY OF SUCH LAW OR TO EXPLAIN WHETHER THE SETTLEMENT IS REQUIRED TO BE REGISTERED WITH ANY AUTHORITY UNDER THE LAW IN THAT COUNTRY RELATING TO THE SETTLEMENT. OUR ATTENTION WAS DRAWN UNDER CLAUSE (4) UNDER THE HEAD TRUSTS OF INCOME AND CAPITAL AND IT WAS CONTENDED THAT THE TRUSTEE IS EMPOWERED DURING THE TRUST PERIOD TO PAY APPROPRIATE OR APPLY THE WHOLE OR SUCH PART OF THE INCOME OF THE TRUST FUND AS THE TRUSTEES MAY IN THEIR ABSOL UTE DISCRETION THINK FIT TO OR FOR THE MAINTENANCE OR OTHERWISE FOR THE BENEFIT OF ALL OR SUCH ONE OR MORE EXCLUSIVE OF THE OTHER OR OTHERS OF THE BENEFICIARIES IN SUCH SHARES AND PROPORTIONS, IF MORE THAN ONE AND GENERALLY IN SUCH MANNER AS THE TRUSTEES SHALL IN THEIR ABSOLUTE DISCRETION THINK FIT AND SHALL HAVE POWER IN THEIR ABSOLUTE DISCRETION TO HOLD SUCH DISTRIBUTED INCOME UPON TRUST TO PAY OR APPLY THE SAME TO OR FOR THE BENEFIT OF SUCH BENEFICIARY WITH POWER TO DECLARE SUCH OTHER TRUSTS IN RESPECT OF THE SAME FOR THE BENEFIT OF SUCH BENEFICIARY AND GENERALLY IN SUCH MANNER AS THE TRUSTEES MAY IN THEIR ABSOLUTE DISCRETION DETERMINE INCLUDING BUT WITHOUT PREJUDICE TO THE GENERALITY OF THE FOREGOING PROVISIONS FOR MAINTENANCE, EDUCATION OR ADVANCEMENT OR FOR ACCUMULATION OF INCOME WHETHER DURING I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 6 OF 27 MINORITY OR OTHERWISE AND WITH SUCH DISCRETIONARY TRUST AND POWERS EXERCISABLE BY SUCH PERSONS AS THE TRUSTEES SHALL IN THEIR LIKE DISCRETION DETERMINE. IT WAS FURTHER CONTENDED BY DRAWING OUR ATTENTION TO CLAUS E (B) THAT THE TRUSTEES WERE ALSO AUTHORIZED TO ACCUMULATE THE INTEREST INCOME OF THE TRUST FUND AND ADD THE ACCUMULATION TO THE CAPITAL OF THE TRUST FUND. 6.1. IT WAS POINTED OUT THAT AS PER RULE 5(D) THE TRUSTEES ARE AUTHORIZED TO PAY WHOLE OR ANY PART OF CAPITAL OF THE TRUST FUND TO ANY OF THE BENEFICIARIES AND ACCORDINGLY THE TRUSTEES HAVE EXERCISED THEIR POWERS AND MADE THE PAYMENT TO THE ASSESSEE, I.E. THE BENEFICIARY. IT WAS FURTHER SUBMITTED THAT POWERS OF THE TRUSTEES ARE MENTIONED IN THE SETTLEME NT DEED AND FOR WHICH OUR ATTENTION WAS DRAWN TO CLAUSE 8. IN RESPECT OF APPOINTMENT OF THE NEW TRUSTEES, OUR ATTENTION WAS DRAWN TOWARDS CLAUSE 15. BY REFERRING TO PAGE NO. 71, 72 & 73, IT WAS POINTED OUT THAT THESE PAPERS REPRESENT THE STATEMENT OF AFFAI RS OF WHITE LABEL TRUST AS ON 31.03.2004, THE AMOUNT PAID TO ASSESSEE HAS BEEN SHOWN AS WITHDRAWN AND AS PAID TO THE ASSESSEE. PAGE 72 CONTAINS THE CONSOLIDATED CAPITAL STATEMENT GIVING THE OPENING BALANCE AND THE CLOSING BALANCE OF THE CAPITAL A/C. THE FUNDS HAVE BEEN GIVEN TO THE ASSESSEE OUT OF THE CAPITAL ACCOUNT. COPY OF THE REVENUE A/C HAS ALSO BEEN BROUGHT TO OUR KNOWLEDGE, WHICH IS AVAILABLE AT PAGE 73 OF THE PAPER BOOK AND ON THE BASIS OF THIS IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY W ITHDRAWN. PAGE 78 OF THE PAPER BOOK SHOWS THE WITHDRAWAL OF AMOUNTS WHICH WERE GIVEN TO THE ASSESSEE. THIS STATEMENT CALLED THE TRUST LEDGER TRANSACTION HISTORY REPORT. OUR ATTENTION WAS DRAWN TO PAGE 79 OF THE PAPER BOOK WHICH CONTAINS A CERTIFICATE DATED 28.11.2003 THAT TRUSTEES OF THE WHITE LABEL TRUST HAS REMITTED USD 10 LAKHS TO DR. SOM DATT ON 28.11.2003 TO HIS BANK ACCOUNT WITH SYNDICATE BANK, NEHRU PLACE BRANCH, NEW DELHI. THIS CERTIFICATE ALSO CERTIFIED THAT THE SAID SUM HAS BEEN GIVEN OUT OF THE C APITAL ACCOUNT OF THE TRUST AND IS TO BE REGARDED AS CAPITAL DISTRIBUTION TO DR. SOM DATT. OUR ATTENTION WAS DRAWN TOWARDS A LETTER DATED 18.07.2006, WHICH HAS BEEN WRITTEN BY HSBC TRUST COMPANY (BVI) LIMITED TO MR. DILIP J. THAKKAR CLARIFYING THAT WHITE L ABEL TRUST WAS ESTABLISHED ON 20.07.1993 UNDER THE LAWS OF THE ISLAND OF JERSEY AND IS DISCRETIONARY IN NATURE. DR. SOM DATT HAS BEEN A DISCRETIONARY BENEFICIARY SINCE THE TRUST WAS ESTABLISHED TOGETHER WITH OTHER DISCRETIONARY BENEFICIARIES. THE TRUST FU ND CONSISTS OF SUBSTANTIAL CORPUS BUILT UP SINCE ESTABLISHMENT OF THE TRUST. HSBC TRUST COMPANY (BVI) LIMITED WAS APPOINTED AS TRUSTEE OF THE WHITE LABEL TRUST ON I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 7 OF 27 08.08.2003. IT WAS FURTHER STATED IN THE SAID LETTER THAT WITH REGARD TO THE ADMINISTRATION O F THE TRUST FUND, THE TRUSTEE HAS ALL THE SAME POWERS AS A NATURAL PERSON ACTING AS THE BENEFICIAL OWNER OF SUCH PROPERTY AND MAY EXERCISE ITS DISCRETION ACCORDINGLY. IT WAS FURTHER MENTIONED IN THE LETTER THAT ON 28.11.2003, THE TRUSTEE EXERCISED ITS DISC RETION IN FAVOUR OF DR. SOM DATT, IN HIS CAPACITY AS DISCRETIONARY BENEFICIARY OF THE TRUST, AND MADE A CAPITAL DISTRIBUTION TO HIM IN THE SUM OF USD 10 LAKH MILLION US DOLLARS. 7. RELIANCE WAS PLACED BEFORE US ON THE DECISION IN THE CASE OF THE TRUSTEES O F THE WILL OF H.K. BRODLE (DECEASED) VS. - THE COMMISSIONERS OF INLAND REVENUE (1933) 17 TAX CASES 432 (KB) FOR THE PROPOSITION OF LAW WHETHER THE RECEIPT IS CAPITAL OR REVENUE. RELIANCE WAS ALSO PLACED ON THE DECISION OF STEVENSON (H.M. INSPECTOR TAXES) VS. - WISHART & OTHERS (1987) 59 TAX CASES 740 FOR THE PROPOSITION OF THE LAW THAT IN THE CASE OF A DISCRETIONARY TRUST, PAYMENTS MADE BY THE TRUSTEES OUT OF THE TRUST CAPITAL ARE CAPITAL IN THE HANDS OF THE RECIPIENT. RELIANCE WAS ALSO PLACE IN THE CASE OF PARIMISETTI SEETHARAMAMMA VS. - CIT REPORTED IN 57 ITR 532 (SC) FOR THE PROPOSITION OF THE LAW THAT ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS EARNED THE INCOME. SIMILARLY RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - (I) CIT VS. - KAMAL BEHARI LAL SINGHA [82 ITR 460 (SC); (II) UDHAVDAS KEWALRAM VS. - CIT [66 ITR 462, 465 (SC); (III) CIT VS. - INFOSYS TECHNOLOGIES LTD. [297 ITR 167, 175 (SC); (IV) CIT VS. - CHRESTIAN MICA INDUSTRIES LIMITED [109 ITR 517, 523 (CAL.); (V) RAMAKRISHNA N (S.A.) VS. - CIT [114 ITR 253, 255 (MAD.); (VI) DILIP KUMAR ROY VS. - CIT [94 ITR 1 (BOM.); (VII) NIYATI B. YODH VS. - ACIT (2004) 4 SOT 941 (MUM.); (VIII) JYOTENDRASINHJI V. TRIPATHI (S.I.) [201 ITR 611, 625 (SC); 8. OUR ATTENTION WAS DRAWN TO TH E DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. - KAMALINI KHATAU REPORTED IN 209 ITR 101 (SC) AT PAGE 102 FOR THE PROPOSITION OF THE LAW THAT IN A CASE OF A DISCRETIONARY TRUST IF THE PROFITS/INCOME IS DISTRIBUTED WITHIN THE ACCOUNTING YEAR AND RECEIVED BY THE BENEFICIARY WOULD BE SUBJECT TO ASSESSMENT IN HIS HANDS AND TAX THEREON WOULD BE RECOVERABLE FROM HIM. THE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 8 OF 27 ACCUMULATED INCOME CANNOT BE REGARDED TO BE PART OF THE INCOME. THUS IT WAS CONTENDED THAT ITS ONLY INCOME EARNED DURING THE YEA R WHICH IS RECEIVED FOR THE BENEFICIARIES CAN BE TAXED IN THE HANDS OF THE BENEFICIARIES. ANY AMOUNT RECEIVED OUT OF THE ACCUMULATED INCOME CANNOT BE TAXED IN THE HANDS OF THE BENEFICIARIES. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. - ESTATE OF LATE HMM VIKRAMSINHJI OF GONDAL REPORTED IN (2014) 363 ITR 679 (SC) FOR THE PROPOSITION OF THE LAW THAT IN THE CASE OF A DISCRETIONARY TRUST EXECUTED OUTSIDE INDIA FOR THE BENEFICIARIE S IN INDIA, INCOME NOT DISTRIBUTED TO THE BENEFICIARIES IN THE RELEVANT ACCOUNTING YEARS IS NOT ASSESSABLE DURING THE IMPUGNED ASSESSMENT YEAR. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE DECISION OF H.H. MAHARAJA SHRI JYOTINDRASINHJI VS. - ACIT REPORTED IN ( 2010) 326 ITR 594 (SC) AT THE HEAD NOTES THAT IN CASE OF A DISCRETIONARY TRUST EXECUTED IN UK FOR BENEFIT OF PERSONS IN INDIA, IF THE TRUSTEES IN UK DO NOT DISTRIBUTE INCOME TO BENEFICIARIES IN THE RELEVANT ACCOUNTING YEARS AND TRUSTEES ARE ASSESSED IN UK, THE INCOME FROM TRUSTS NOT ASSESSABLE IN THE HANDS OF BENEFICIARIES IN INDIA. THUS IT WAS CONTENDED THAT IN THE CASE OF A DISCRETIONARY TRUST IF THE AMOUNT HAS BEEN PAID TO THE BENEFICIARY OUT OF THE CAPITAL FUND, IT CANNOT BE ASSESSED IN THE HANDS OF THE BENEFICIARIES UNTIL AND UNLESS IT HAS ARISEN AS INCOME IN THE HANDS OF THE TRUST DURING THE YEAR. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS: - (I) AMITAB BACHCHAN VS. - DCIT, [ITAT VOL. 2005 PAGE 189]; (II) JCIT VS. - LATE SMT. SHANTABEN M. PAT EL, L/H. SRI MANUBHAI K. PATEL [ITA NO. 5000/MUM./2001; (III) CIT VS. - BOMBAY CITY VS. - PROVIDENT INVESTMENT COMPANY LIMITED [32 ITR 190 (SC); (IV) UMA POLYMERS PRIVATE LIMITED VS. - DCIT, SPECIAL RANGE (2006) 100 ITD 1 (JODH.) (TM). 9. REFERRING TO THE DECISION OF LATE SMT. SHANTABEN M. PATEL, IT WAS POINTED OUT THAT THE FACTS INVOLVED IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF ASSESSEE. OUR ATTENTION WAS DRAWN TO PARA 7 FOR THE PROPOSITION OF THE LAW THAT IF THE DISTRIBUTION WAS MADE OUT OF TH E INCOME OF EARLIER YEARS OR OUT OF CORPUS FUND OF THE TRUST, THE INCOME IS NOT CHARGEABLE IN THE HANDS OF THE BENEFICIARIES. I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 9 OF 27 10. LD. D.R., ON THE OTHER HAND, VEHEMENTLY CONTENDED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THERE WAS A VALID DESCRETIONA RY TRUST ESTABLISHED OUT OF INDIA IN ACCORDANCE WITH THE LAWS PREVAILING THEREIN. ASSESSEE IS ONE OF THE BENEDFICIARY. AMOUNT DISTRIBUTED BY THE TRUST TO THE ASSESSEE BENEFICIARY IS OUT OF THE CAPITAL FUNDS AS WELL AS OUT OF THE ACCUMULATED INCOME OF THE TRUST. IT WAS POINTED OUT THAT THE ASSESSEE DID NOT FILE DOCUMENT BEFORE THE ASSESSING OFFICER. ON THE BASIS OF WHICH IT CAN BE SAID THAT THE ASSESSEE HAS DISCHARGED HIS ONUS TO PROVE. IT IS ONLY FOR THE FIRST TIME THE FOLLOWING DOCUMENTS WERE FILED BEFORE THE CIT(APPEALS): - (I) TRUE COPY OF SETTLEMENT DEED, (2) TRUST LEDGER AND TRANSACTION HISTORY REPORT (2 PAGES); (3) WHITE LABEL TRUST FINANCIAL RESULTS FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 (6 PAGES). 11. THESE DOCUMENTS WERE FILED FOR THE FIRTST TIME BEFORE THE CIT(A). THE ASSESSING OFFICER DID NOT HAVE ANY OCCASION TO EXAMINE THESE DOCUMENTS TO ASCERTAIN THE GENUINITY OF THE TRUST DEED, GENUINITY OF THE TRUSTEE AS WELL AS THE FINANCIAL STATEMENT SUBMITTED FOR THE FINANCIAL YEAR ENEDED 31 ST MARCH 2004. ATTENTION WAS DRAWN TO PAGES 71 TO 73 AS WELL AS PAGE 79 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ACCOUNTS RELATE ONLY TO THE YEAR AND IT IS NOT BEING APPROVED OR AUTHENTICATED BY ANY PERSON. THEY ARE NOT AUDITED. THE ACCOUNTS FOR THE EARLI ER YEAR WERE NOT FILED SO AS TO JUSTIFY WHETHER THE AMOUNT HAS BEEN PAID TO THE ASSESSEE OUT OF THE CAPITAL FUNDS. EVEN NEITHER THE MINUTES NOR COPY OF THE RESOLUTION WAS FILED SO AS TO JUSTIFY THE PAYMENT BEING MADE TO DR. SOM DATT AS BENEFICIARY OUT OF T HE CAPITAL FUND. INITIALLY THE TRUSTEE IS ANZ GRINDLAYS TRUST CORPORATION (JERSEY) LIMITED. SUBSEQUENTLY THE ASSESSEE HAS CLAIMED THAT THE TRUSTEE IS HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED. THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS RECEIVED THE M ONEY OUT OF THE CAPITAL FUNDS. ON THE BASIS OF THE DOCUMENTS FILED BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCHARGED HIS ONUS. 12. SO FAR AS THE DECISIONS RELIED ON BY THE LD. A.R. IS CONCERNED, IT WAS SUBMITTED THAT IN ALL THESE DECISION S THE ASSESSEE HAS DULY DISCHARGED HIS ONUS. THE QUESTION DOES NOT RELATE TO THE DISCHARGING OF THE ONUS. THEREFORE, THOSE DECISIONS ARE NOT APPLICABLE. I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 10 OF 27 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX A UTHORITIES AS WELL THE LEGAL LUMANARIES CITED BEFORE US BY THE LD. SR. ADVOCATE. THE ONLY ISSUE WHICH ARISES BEFORE US FOR ADJUDICATION IS WHETHER A SUM OF RS.4,55,78,880/ - RECEIVED BY THE ASSESSEE FROM M/S. WHITE LABEL TRUST AS A BENEFICIARY IS A CAPITAL RECEIPT NOT CHARGEABLE TO TAX IN INDIA. WE NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS RECEIVED A SUM OF RS.4,55,78,880/ - WHICH IS BEING CREDITED BY HIM IN HIS CAPITAL ACCOUNT. WHEN THE ASSESSING OFFICER ASKED FOR THE NATURE OF THE REC EIPT, THE ASSESSEE EXPLAINED THAT A SUM OF USD 10,00,000 (ONE MILLION US DOLLARS) WAS RECEIVED BY THE ASSESESE FROM ONE TRUST NAMED M/S. WHITE LABEL TRUST, WHICH IS ESTABLISHED OUT OF INDIA AND IN THIS REGARD THE ASSESSEE PRODUCED THE CERTIFICATE DATED 28. 11.2003 FROM HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED CLAIMED TO BE THE TRUSTEE OF THE TRUST. THIS CERTIFICATE READS AS UNDER: - CERTIFICATE THE WHITE LABEL TRUST TO WHOM IT MAY CONCERN 28 TH NOVEMBER, 2003 AS TRUSTEES OF THE WHITE LABEL TRUS T, WE CONFIRM THAT THE REMITTANCE OF USD 1,000,000 TO DR. SOM DATT, MADE ON THE 28 TH NOVEMBER, 2003 TO HIS BANK ACCOUNT WITH SYNDICATE BANK, NEHRU PLACE BRANCH, NEW DELHI - 110 019, INDIA HAS BEEN MADE FROM THE CAPITAL ACCOUNT OF THE TRUST AND IS TO BE REGAR DED AS A CAPITAL DISTRIBUTION TO DR. SOM DATT. YOURS SINCERELY, SD/ - HSBC REPUBLIC TRUST COMPANY (BVII) LIMITED THE COVERING LETTER ALONG WITH WHICH THE CERTIFICATE WAS ENCLOSED READS AS UNDER: - HSBC REPUBLIC HSBC REPUBLIC TRUST SERVICES (SUISSE) S.A. D R. SOM DATT, 55, COMMUNITY CENTRE, EAST OF KAILASH, I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 11 OF 27 NEW DELHI, INDIA 110 048 GENEVA, 28 TH NOVEMBER, 2003 DEAR DR. DATT, RE.: THE WHITE LABEL TRUST PLEASE FIND ENCLOSED THE CERTIFICATE CONFIRMING THAT THE USD 1 MILLION RECENTLY TRANSFERRED TO YOUR BAN K ACCOUNT BY THE TRUSTEES OF THE ABOVE TRUST, WAS A CAPITAL DISTRIBUTION TO YOU. WITH KIND REGARDS, YOURS SINCERELY, SD/ - BERNARD HESS QUAI WILSON 37 - P.O. BOX 2010 - CH - 1211 GENEVA 1 - TEL. [phone] - FAX [phone]. LD. SENIOR ADVOCATE BEFORE US CONTENDED THAT THE SAID SUM RECEIVED BY THE ASSESSEE IS OUT OF THE CAPITAL FUND AS WELL AS INCOME OF THE EARLIERYEARS OF THE TRUST. WE NOTED THAT WHEN THE SIMILAR PLEA HAS BEEN TAKEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE ASSESSING OFF ICER ASKED FROM THE ASSESSEE VIDE LETTER DATED 29.05.2003 THE FOLLOWING INFORMATION/DOCUMENTS: - (I) NATURE OF WHILE LABEL TRUST - FOUNDER OF THE TRUST, (II) NO. OF YEARS FOR WHICH THE ASSESSEE IS ASSOCIATED WITH THE TRUST, (III) DUTIES AND OBLIGATIONS AS A BENEFICIARY OF THE TRUST, (IV) PURPOSE FOR WHICH THE TRUST WAS SET UP, (V) SOURCE OF INCOME OF THE TRUST, (VI) IDENTIFICATION PARTICULARS OF THE TRUST AS PER 11 ACT OF THE NATION, I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 12 OF 27 (VII) NAMES OF OTHER BENEFICIARIES RECEIVING BENEFIT FROM THE TRUST DUR ING THE YEAR, (VIII) WHETHER THE ASSESSEE RECEIVED GIFT FROM THE TRUST IN EARLIER YEARS, (IX) STATEMENT OF ACCOUNT OF TRUST BANK STATEMENT. THE ASSESSEE IN REPLY THERETO IN RESPECT OF THE ITEMS NO. 3, 6, 7 & 9 EXPRESSED HIS INABILITY AND STATED THAT THE TRUSTEES OF THE SAID TRUST ARE BOUND BY THE SECRECY LAWS OF THEIR COUNTRY AND, THEREFORE, THEY ARE CONSTRAINT TO PART WITH THE FINANCIAL STATEMENTS OF THE TRUST IGNORING THE FACT THAT THE ASSESSEE IS INDIAN CITIZEN AND RESIDENT DURING THE IMPUGNED ASSESSME NT YEAR AND ASSESSEE IS CHARGEABLE TO TAX ON ALL THE INCOME EARNED OR RECEIVED BY HIM. WE WERE SURPRISED TO SEE SUCH A PLEA SPECIALLY WHEN THE ASSESSEE HIMSELF IS THE SETTLER AND HE HAS ESTABLISHED THE TRUST HIMSELF, SUCH INFORMATION MUST BE WITHIN THE DO MAIN OF THE ASSESSEE NOT OF THE ASSESSING OFFICER. THIS CLEARLY PROVES THAT THE ASSESSEE WANTED TO AVOID THE COMPLIANCE. HE HAS ALSO TAKEN THE PLEA THAT EVEN THE TRUSTEES ARE RELUCTANT TO REVEAL THEIR NAMES DUE TO THE SECRECY LAWS AND IT WAS ALSO EXPLAINE D THAT THERE WAS NO IDENTIFICATION CRITERIA FOR THE TRUST LIKE PERMANENT ACCOUNT NUMBER AS PER THE LAWS OF CHANNEL ISLANDS. SUBSEQUENTLY THE ASSESSEE SUBMITTED A LETTER FROM HSBC TRUST COMPANY (BVI) LIMITED, IN WHICH IT WAS EXPLAINED THAT WHITE LABEL TRUST WAS ESTABLISHED ON 20.07.1993 UNDER THE LAWS OF THE ISLAND OF JERSEY AND IS DISCRETIONARY IN NATURE. THE ASSESSEE IS ONE OF THE BENEFICIARIES SINCE THE TRUST WAS ESTABLISHED ALONG WITH OTHER BENEFICIARIES. THE TRUST FUND BUILT UP SUBSTANTIAL CAPITAL FUND SINCE ITS ESTABLISHMENT AND M/S. HSBC TRUST COMPANY (BVI) LIMITED WAS APPOINTED AS TRUSTEE OF THE WHITE LABEL TRUST ON 08.08.2003. THE TRUSTEE EXERCISED ITS DISCRETION ON 28.11.2003 IN FAVOUR OF THE ASSESSEE AND MADE A CAPITAL DISTRIBUTION TO HIM FOR A SUM OF USD 10,00,000 (ONE MILLION US DOLLARS). THE ASSESSING OFFICER ADDED THE SAME IN THE INCOME OF THE ASSESSEE AS THE ASSESSEE EVEN DID NOT PRODUCE THE FINANCIAL STATEMENT OF THE TRUST SO THAT THE ASSESSING OFFICER COULD HAVE VERIFIED WHETHER THERE IS A DI STRIBUTION OF THE AMOUNT MADE OUT OF INCOME OF THE EARLIER YEARS, I.E. OUT OF THE CAPITAL FUND. WHEN THE MATTER WENT BEFORE THE CIT(APPEALS), THE ASSESSEE BEFORE THE CIT(APPEALS) SUBMITTED THE FOLLOWING DOCUMENTS WHICH WERE NEVER PRODUCED BEFORE THE ASSESS ING OFFICER: (I) TRUE COPY OF SETTLEMENT DEED, I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 13 OF 27 (2) TRUST LEDGER AND TRANSACTION HISTORY REPORT (2 PAGES); (3) WHITE LABEL TRUST FINANCIAL RESULTS FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 (6 PAGES). 15. BEFORE US ALSO, THE ASSESSEE HAS SUBMITTED COPY OF THE SETTLEMENT DEED, TRUST LEDGER AND TRANSACTION HISTORY REPORT, WHITE LABEL TRUST FINANCIAL STATEMENT FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004. WE ASKED LD. SR. ADVOCATE DURING THE COURSE OF HEARING THAT FROM THE TRUST DEED IT IS APPARENT THAT M/S . ANZ GRINDLAYS TRUST CORPORATION (JERSEY) LIMITED IS THE ORIGINAL TRUSTEE. SETTLEMENT DEED READ IN THIS REGARD AS UNDER: - THIS SETTLEMENT IS MADE THE 20 TH DAY OF JULY, 1993 BETWEEN SOM DATT, C/O. P.O. BOX 16780, DUBAI, UNITED ARAB EMIRATES (HEREINAFTER CALLED THE SETTLOR ) OF THE ONE PART; AND ANZ GRINDLAYS TRUST CORPORATION (JERSEY) LIMITED OF PHILIP MALZARD HOUSE, 15, UNION STREET, ST. HELIER, JERSEY, CHANNEL ISLANDS (HEREINAFTER CALLED THE ORIGINAL TRUSTEES ) OF THE OTHER PART. WHEREAS THE SETTLOR B EING DESIROUS OF MAKING SUCH SETTLEMENT AS IS HEREINAFTER CONTAINED HAS HAD TRANSFERRED OR DELIVERED TO THE ORIGINAL TRUSTEES OR OTHERWISE PLACED UNDER THEIR CONTROL THE PROPERTY SPECIFIED IN THE SECOND SCHEDULE HERETO . THE NAME OF THE HSBC TRUST COMPAN Y (BVI) LIMITED IS NOT APPEARING AS TRUSTEE. HE EXPLAINED THAT M/S. HSBC TRUST COMPANY (BVI) LIMITED BECAME THE TRUSTEE ON 08.08.2003 BUT EXPRESSED ITS INABILITY TO FILE COPY OF ANY RESOLUTION OR MINUTES OR DEED OF APPOINTMENT WHICH MAY PROVE HOW HSBC TRU ST COMPANY (BVI) LIMITED BECAME THE TRUSTEE OF THE TRUST AND FROM WHICH DATE. ON A QUESTION WHETHER THE TRUST DEED, THE COPY OF WHICH IS AVAILABLE IN THE PAPER BOOK EXECUTED ON 20.07.1993, HAS BEEN REGISTERED IN ACCORDANCE WITH LAW OF TRUST (JERSEY) LAW, 1 983 AS CLAUSE 1(F) DEFINES THE LAW MEANS THE TRUSTS (JERSEY) LAW, 1984 AS AMENDED. EVEN THE COPY OF THE TRUSTS (JERSEY) LAW, 1984 WAS ALSO NOT FILED BEFORE US EVEN THOUGH WE SPECIFICALLY ASKED TO PRODUCE THE COPY SO THAT WE CAN ASCERTAIN WHETHER THE TRUST IS REQUIRED TO BE REGISTERED UNDER THE LAW OF THAT COUNTRY OR WHETHER THERE IS A RESTRICTION ON THE SUBSTITUTION OF THE TRUSTEE OR BENEFICIARY, BUT NONE OF THESE DOCUMENTS WERE FILED BEFORE US. I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 14 OF 27 CLAUSE (2) READS AS UNDER : - THIS SETTLEMENT IS ESTABLISHED U NDER THE LAWS OF THE ISLAND OF JERSEY AND SUBJECT TO ANY CHANGE IN THE PROPER LAW OF THIS SETTLEMENT DULY MADE ACCORDING TO THE POWERS AND PROVISIONS HEREINAFTER DECLARED THE PROPER LAW OF THIS SETTLEMENT SHALL BE THE LAW OF THE ISLAND OF JERSEY AND THE CO URTS OF THE SAID ISLAND SHALL BE THE FORUM FOR THE ADMINISTRATION HEREOF . 16. WE HAVE ALSO GONE THROUGH THE CONFIRMATION ALONG WITH THE COVERING LETTER FILED BEFORE US. WE NOTED THAT THE COVERING LETTER DATED 28.11.2003 HAS BEEN WRITTEN BY THE HSBC REPUBL IC TRUST SERVICES (SUISSE) S.A. NOT BY HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED, WHICH HAS BEEN CLAIMED TO HAVE BECOME TRUSTEE OF THE TRUST W.E.F. 08.08.2003. WE NOTED THAT ALTHOUGH THE ASSESSEE HAS FILED CERTIFICATE DATED 28.11.2003 TO HAVE BEEN ISSUED O N BEHALF OF THE TRUSTEE BUT FROM THE CERTIFICATE IT IS NOT APPARENT IN WHAT CAPACITY A PERSON HAS SIGNED IT MENTIONING M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED AS TRUSTEE AND WHAT IS THE LUCUS STANDI OF M/S HSBC REPUBLIC TRUST SERVICES (SUISSE) S.A. WITH REFERENCE TO THE IMPUGNED TRUST AND HOW M/S. HSBC REPUBLIC TRUST SERVICES (SUISSE) S.A. HAS COME INTO PICTURE. THE LD. SENIOR ADVOCATE ALSO EXPRESSED HIS INABILITY TO EXPLAIN THE SAME. 17. WE NOTED FROM THE TRUST DEED THAT THE TRUSTEES ARE EMPOWERED TO HAVE THE ACCOUNTS AUDITED AS PER CLAUSE 19 OF THE REGULATIONS. THIS REGULATION READS AS UNDER: - POWER TO HAVE ACCOUNTS AUDITED THE TRUSTEES SHALL HAVE POWER FROM TIME TO TIME AND AT SUCH INTERVALS AS THEY SHALL IN THEIR ABSOLUTE DISCRETION THINK FIT TO CAUSE THE ACCOUNTS KEPT BY THEM HEREUNDER TO BE EXAMINED OR AUDITED BY SUCH PERSON OR PERSONS AS THEY SHALL DESIGNATE AND TO PAY THE COSTS OF SUCH EXAMINATION OR AUDIT OUT OF THE CAPITAL OR INCOME OF THE TRUST FUND OR PARTLY OUT OF ONE OR PARTLY OUT OF THE OTHER . 18. LD. SR. ADVOCATE EXPRESSED HIS INABILITY TO TELL US WHETHER THE ACCOUNTS FOR THE TRUST GOT AUDITED BY THE TRUSTEE OR NOT AND WHY THE COPY OF THE AUDITED ACCOUNTS DULY APPROVED BY THE TRUSTEES WERE NOT FILED. 19. WE ALSO NOTED THAT IN THE T RUST DEED, 5 TH SCHEDULE IS THERE, WHICH GIVES THE DETAILS OF PERSONS FOR APPOINTMENT OF NEW OR ADDITIONAL TRUSTEES WHICH CAN BE APPOINTED TO BE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 15 OF 27 THE TRUSTEE IN VIEW OF THE POWER OF APPOINTMENT OF NEW OR ADDITIONAL TRUSTEES GIVEN UNDER CLAUSE 15(A). THIS CLA USE READS AS UNDER: - 15(A) IF ANY TRUSTEE HEREOF WHETHER ORIGINAL ADDITIONAL OR SUBSTITUTED SHALL DIE OR BEING A COMPANY SHALL BE DISSOLVED OR SHALL GIVE NOTICE OF DESIRE TO WITHDRAW AND BE DISCHARGED FROM THE TRUSTS HEREOF UNDER THE PROVISIONS OF SUB - C LAUSE (B) OF THIS CLAUSE OR SHALL REFUSE OR BECOME UNFIT TO ACT THEN THE PERSONS SPECIFIED IN THE FIFTH SCHEDULE HERETO IN ORDER TO PRIORITY MAY BY DEED APPOINT ONE OR MORE OTHER PERSONS WHERESOEVER RESIDENT BUT SUBJECT TO ANY EXCLUSIONS OR PROVISIONS SPEC IFIED IN THE SAID FIFTH SCHEDULE TO BE A TRUSTEE HEREOF IN PLACE OF THE TRUSTEE SO DECEASED DISSOLVED DESIRING TO WITHDRAW AND BE DISCHARGED REFUSING OR BECOMING UNFIT TO ACT . 20. FROM THE READING OF THE SAID CLAUSE IT IS APPARENT THAT NEW TRUSTEE CAN BE APPOINTED WHETHER THE ORIGINAL, ADDITIONAL OR SUBSTITUTED TRUSTEE EXPIRES OR IN CASE OF A COMPANY GOT DISSOLVED AND /OR IF GIVEN THE NOTICE OF DESIRE TO WITHDRAW FROM THE TRUSTEESHIP OR HAD BECOME UNFIT TO ACT AS A TRUSTEE OR REFUSE TO WORK AS A TRUSTEE, T HE TRUSTEE MAY BE APPOINTED OUT OF THE PERSONS IN ORDER OF PRIORITY AS SPECIFIED IN THE FIFTH SCHEDULE. THE TRUSTEE HAS TO BE APPOINTED BY DEED. THUS THERE MUST BE A DEED OF APPOINTMENT OF THE TRUSTEE AND THE TRUSTEE MUST BE OUT OF THE PERSONS AS IS SPECIF IED IN THE FIFTH SCHEDULE. THE FIFTH SCHEDULE WE NOTED READS AS UNDER: - THE FIFTH SCHEDULE HEREINBEFORE REFERRED TO: (APPOINTMENT OF NEW OR ADDITIONAL TRUSTEES) THE ABOVE NAMED BENEFICIARIES NUMBERED 1 - 8 IN THE ORDER STATED . FROM THIS IT IS APPAREN T THAT NEW OR ADDITIONAL TRUSTEES CAN BE APPOINTED ONLY OUT OF THE BENEFICIARIES NUMBERED 1 TO 8 IN THE SAME ORDER IN WHICH THEY ARE STATED. WE NOTED THAT THE BENEFICIARIES ARE STATED IN THE THIRD SCHEDULE TO THE SETTLEMENT DEED. THIS THIRD SCHEDULE READS AS UNDER: - THE THIRD SCHEDULE HEREINBEFORE REFERRED TO: (THE BENEFICIARIES) 1 . SOM DATT (2) USHA DUTT (3) ANJALI ANAND I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 16 OF 27 (4) SADHNA SINGH (5) ANURADHA DATT MUNJAL (6) LATIKA DATT ABBOT (7) CHARU DATT BHATIA (8) SOM DATT FOUNDATION THE NAME OF HSBC REPU BLIC TRUST COMPANY (BVI) LIMITED DOES NOT APPEAR IN THE THIRD SCHEDULE AND, THEREFORE, WE ASKED THE QUERY FROM THE LD. SR. ADVOCATE HOW HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED BECAME THE TRUSTEE BUT HE COULD NOT EXPRESS HIS VIEW FOR THE APPOINTMENT OF HS BC REPUBLIC TRUST COMPANY (BVI) LIMITED AS THE TRUSTEE. 21. EVEN WE NOTED THAT CLAUSES 15(F) AND 15(G), WHICH ARE RELEVANT FOR US FOR THE APPOINTMENT OF THE TRUSTEE READ AS UNDER: - 15(F) ON EVERY CHANGE IN THE TRUSTEESHIP A MEMORANDUM SHALL BE ENDORSED ON OR PERMANENTLY ANNEXED TO THIS SETTLEMENT STATING THE NAMES OF THE TRUSTEES FOR THE TIME BEING AND SHALL BE SIGNED BY THE PERSONS SO NAMED AND ANY PERSON DEALING WITH THE TRUST SHALL BE ENTITLED TO RELY UPON SUCH MEMORANDUM (OR THE LATEST OF SUCH MEMOR ANDA IF MORE THAN ONE) AS SUFFICIENT EVIDENCE THAT THE TRUSTEES NAMED THEREIN ARE THE DULY CONSTITUTED TRUSTEES FOR THE TIME BEING HEREOF . 15(G) ANY SUCH APPOINTMENT OF NEW OR ADDITIONAL TRUSTEES AS IS REFERRED TO ABOVE MAY AT THE DISCRETION OF THE PER SON FOR THE TIME BEING HAVING THE POWER TO APPOINT NEW TRUSTEES HEREOF TAKE EFFECT FORTHWITH OR ON SUCH DATE AS IS SPECIFIED IN THE DEED OF APPOINTMENT OR ON THE OCCURRENCE OF SUCH CIRCUMSTANCES AS ARE SPECIFIED IN THE DEED OF APPOINTMENT . 22. FROM THESE CLAUSES, WE NOTED THAT WHENEVER THERE IS CHANGE IN THE TRUSTEESHIP A MEMORANDUM HAS TO BE ENDORSED AND HAS TO BE PERMANENTLY ANNEXED TO THE SETTLEMENT DEED STATING THE NAMES OF THE TRUSTEES FOR THE TIME BEING AND IT HAS TO BE SIGNED BY THE PERSONS NAMED AS A TRUSTEE SO THAT ANY PERSON DEALING WITH THE TRUST MAY RELY UPON SUCH MEMORANDUM. BUT IN THIS CASE, WE HAVE GONE THROUGH THE TRUST DEED, BUT WE DO NOT FIND THE COPY OF ANY SUCH MEMORANDUM, EVEN THE LD. SR. ADVOCATE COULD NOT PRODUCE SUCH COPY BEFORE US. IN VIEW OF THIS FACT, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS HOW M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED HAD BECOME I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 17 OF 27 THE TRUSTEE OF THE SAID SETTLEMENT, IN OUR OPINION, THE ONUS IS ON THE ASSESSEE TO PROVE THAT HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED IS THE TRUSTEE OF THE TRUST DEED AS ON BEHALF OF THE ASSESSEE LD. SR. ADVOCATE ENTIRELY RELIES ON THE CERTIFICATE ISSUED BY HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED THAT THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE FROM THE DI SCRETIONARY TRUST AS BENEFICIARY OUT OF THE ACCUMULATED INCOME OF THE EARLIER YEAR AND THEREFORE THE SAID AMOUNT IS A CAPITAL RECEIPT. IT IS A CASE WHERE, IN OUR OPINION, THE ASSESSEE COULD NOT PROVE THAT THE TRUSTEESHIP OF M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED. THEREFORE, THE CERTIFICATE ISSUED BY M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED, IN OUR OPINION, DOES NOT BE ACCEPTED AS AN EVIDENCE IN THIS REGARD AND WE ARE OF THE VIEW THAT THIS CERTIFICATE DOES NOT HAVE ANY LEGAL SANCTITY. THIS CERT IFICATE CANNOT BE RELIED AND ON THE BASIS OF THE CERTIFICATE IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCHARGED HIS ONUS THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS OUT OF THE DISCRETIONARY TRUST AND OUT OF THE CAPITAL FUND OF THE TRUST DISTRIBUTED TO THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR. 23. WE ALSO NOTED THAT THE ASSESSEE BEFORE US HAS FILED THE STATEMENT OF AFFAIRS FOR THE YEAR ENDED 31.03.2004 I.E. FOR THE IMPUGNED ASSESSMENT YEAR, BUT NO ACCOUNTS RELATING TO THE EARLIER YEAR HAVE BEEN FILED SO THAT IT COULD BE ASCERTAINED WHETHER THE ASSESSEE HAS GOT THE INCOME ACCRUED IN THE EARLIER YEARS OUT OF WHICH THE AMOUNT HAS BEEN DISTRIBUTED BY THE TRUSTEE TO THE ASSESSEE AS BENEFICIARY OF THE DISCRETIONARY TRUST . THE ACCOUNTS ALTHOUGH HAS NOT BEEN AUDITED AND HAS NOT BEEN APPROVED BY THE TRUSTEES EXCEPT THAT CERTIFIED TRUE COPY HAS BEEN SIGNED AS A TRUSTEE ON BEHALF OF M/S. HSBC TRUST COMPANY (BVI) LIMITED. EVEN WE NOTED THAT NO DATE HAS BEEN MENTIONED ON WHICH DATE THESE ACCOUNTS HAVE BEEN SIGNED OR APPROVED BY THE TRUSTEES. IN OUR OPINION, WHEN ASSESSEE MAKES A CLAIM THAT THE AMOUNT RECEIVED BY HIM IS A CAPITAL RECEIPT AND HAS BEEN PAID OUT OF THE CAPITAL FUND, THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE AMOUNT HAS BEEN PAID BY THE DISCRETIONARY TRUST OUT OF THE CAPITAL FUND. IN A CASE WHERE THE ASSESSEE CLAIMS THAT THE MONEY HAS COME OUT OF A SOURCE OUT OF INDIA, HEAVY ONUS LIES ON THE ASSESSEE TO ADDUCE EVIDENCE AND PROVE THAT THE MONEY HAS COME FROM OUT SIDE INDIA NOT AS AN INCOME BUT AS A CA PITAL RECEIPT SPECIALLY WHEN THE ASSESSING OFFICER DOES NOT HAVE ANY JURISDICTION OVER THE SOURCE COUNTRY. WE ARE OF THE FIRM VIEW THAT THE GENERAL PRINCIPAL THAT THE REVENUE SHOULD PROVE THAT THE ASSESSEE HAS RECEIPT THE MONEY AS INCOME CANNOT BE APPLIED IN SUCH SITUATION AS ALL THE EVIDENCES AND MATERIAL IS IN THE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 18 OF 27 DOMAIN OF THE ASSESSING OFFICER. EVEN WE NOTED THAT IT IS A CASE WHERE A CREDIT OF THE AMOUNT WAS FOUND IN THE BOOKS OF THE ASSESSEE, THEREFORE , THE ASSESSEE IS BOUND TO PROVE THE NATURE AND S OURCE OF THE CREDIT. NOW THE QUESTION ARISE WHETHER UNDER THESE FACTS AS NARRATED BY US , CAN IT BE SAID THAT THE ASSESSEE HAS DISCHARGE HIS ONUS TO PROVE THE NATURE AND SOURCE OF THE CREDIT. 24. WE HAVE SPECIFICALLY DURING THE COURSE OF HEARING ASKED THE LD. SR. ADVOCATE HOW THIS ACCOUNT HAS NOT BEEN APPROVED. THE ACCOUNT HAS TO BE APPROVED BY THE TRUSTEE IN A MEETING AND AS A TOKEN THEREOF THEY HAVE TO SIGN THE ACCOUNTS. BUT THESE ACCOUNTS HAVE BEEN CERTIFIED TO BE A TRUE COPY AS A TRUSTEE OF M/S. WHITE LABEL TRUST ON BEHALF OF M/S. HSBC TRUST COMPANY (BVI) LIMITED. THAT CERTIFICATE ALSO WE NOTED IS JUST BELOW THE ACCOUNTS AND ON A SEPARATE SHEET. IN THE ABSENCE OF APPROVAL OF THE ACCOUNTS BY THE TRUSTEE IN A MEETING AND ALSO WITHOUT MENTIONING THE DATE W HEN THESE ACCOUNTS HAVE BEEN APPROVED, WE ARE OF THE VIEW THAT THESE ACCOUNTS CANNOT BE ACCEPTED AS AN EVIDENCE THAT THE ASSESSEE HAS RECEIVED THE FUNDS OUT OF THE CAPITAL FUNDS. WHETHER THE TRUST IS A GENUINE TRUST AND HAS COMPLIED WITH ALL THE LEGAL REQU IREMENTS OF THE COUNTRY IN WHICH IT HAS BEEN INCORPORATED CANNOT BE ASCERTAINED. THE BONAFIDE OF THE TRUSTEE ITSELF, IN OUR OPINION, IS NOT PROVED. MERELY STATING THAT M/S. HSBC TRUST COMPANY (BVI) LIMITED HAS BECOME THE TRUSTEE OF THE SAID TRUST W.E.F. 0 8.08.2003 AND CERTIFIED BY THE SAME PERSON AS TRUSTEE FROM 8 TH AUGUST, 2003 AND STATED BY THE SAID TRUSTEE IN A LETTER ADDRESS TO ONE MR. DILIP J. THAKKAR DOES NOT, IN OUR OPINION, PROVE THAT THE ASSESSEE HAS DISCHARGED HIS ONUS. IT IS AN UNDISPUTED FACT T HAT AS PER THE TRUST DEED, THE COPY OF WHICH IS FILED BEFORE US, THE ORIGINAL TRUSTEE IS M/S. ANZ GRINDLAYS TRUST CORPORATION (JERSEY) LIMITED. LD. SR. ADVOCATE APPEARED BEFORE US AND VEHEMENTLY CONTENDED BUT COULD NOT ADDUCE ANY COGENT MATERIAL OR EVIDEN CE HOW AND WHEN THE SAID TRUSTEE RETIRED OR STILL CONTINUED TO BE A TRUSTEE. WHETHER THE PROVISION OF REGULATION 15 HAS BEEN COMPLIED WITH WHILE APPOINTING THE NEW TRUSTEE. . 25. WE HAVE SPECIFICALLY ASKED THE LD. SR. ADVOCATE IN RESPECT OF THE EARLIER PE RIOD ACCOUNTS AND ALSO THE NATURE OF THE ACTIVITIES BEING CARRIED OUT BY THE TRUST, BUT THIS WAS NOT EXPLAINED TO US. IN VIEW OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE VIEW THAT THIS IS A CASE WHERE THE ASSESSEE HAS NOT DISCHARGED HIS ONUS THAT HE RECEI VED THE AMOUNT FROM M/S. WHITE LABEL TRUST OUT OF THEIR CAPITAL FUNDS OR OUT OF THE INCOME WHICH HAS BEEN EARNED BY TRUST IN THE EARLIER YEARS. ON THE BASIS OF THE EVIDENCE FILED BY THE ASSESSEE, IN I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 19 OF 27 OUR VIEW, THE GENUNITY OF THE TRUST, THE TRUSTEE AS WELL AS THE MONEY BEING WITHDRAWN OUT OF THE CAPITAL FUNDS IS NOT PROVED. WE ALSO NOTED THAT UNDER SECTION 142(1) OF THE ACT, THE ASSESSING OFFICER IS AUTHORIZED WHILE MAKING AN ASSESSMENT TO ENQUIRE OF FROM THE ASSESSEE OR ASK THE ASSESSEE TO SUBMIT THE INFORM ATION ON SUCH FILE OR MATTERS ON WHICH HE MAY DESIRE. THE ASSESSING OFFICER AS HAS BEEN POINTED OUT BY US EARLIER, HAS ASKED THE ASSESSEE TO SUBMIT THE INFORMATION AND ALL THE INFORMATION WHATEVER HAS BEEN ASKED BY THE ASSESSING OFFICER, IN OUR OPINION, AR E THE RELEVANT INFORMATION, BUT THE ASSESSEE DID NOT PRODUCE THOSE INFORMATION. PART OF THE INFORMATION WERE SUBMITTED FOR THE FIRST TIME BEFORE THE CIT(APPEALS). SINCE THE ASSESSING OFFICER, IN OUR OPINION, COULD NOT EXAMINE THE INFORMATION, WHICH WAS DE SIRED BY HIM FOR THE PURPOSE OF MAKING THE ASSESSMENT, WE CANNOT MAKE THE PROVISION OF SECTION 142 TO BE OTIOS. THE HON BLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS. - CIT REPORTED IN [1963] 50 ITR 1 HAS LAID DOWN VIDE ORDER DATED 08.02.196 3 THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY THE ASSESESE IS ON HIM. IF HE DISPUTES LIABILITY FOR TAX, IT IS FOR HIM TO SHOW EITHER THAT THE RECEIPT WAS NOT INCOME OR THAT IF IT WAS, IT WAS EXEMPT FROM TAXATION UN DER THE PROVISIONS OF THE INCOME TAX ACT. IN THE ABSENCE OF SUCH PROOF, THE INCOME TAX OFFICER IS ENTITLED TO TREAT IT AS TAXABLE INCOME . SINCE, IN OUR OPINION, IT IS A CASE WHERE THE ASSESSEE EVEN THOUGH CLAIMED THAT THE AMOUNT RECEIVED BY HIM IS A CAPIT AL RECEIPT AND HAS ARRIVED OUT OF A DISCRETIONARY TRUST, THE WHITE LABEL TRUST IN WHICH THE ASSESSEE IS A BENEFICIARY, BUT THE ASSESSEE COULD NOT ADDUCE THE EVIDENCE TO DISCHARGE HIS BURDEN, THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THE H ON BLE SUPREME COURT REFERRED TO SUPRA. ON THIS BASIS ITSELF, THE APPEAL OF THE ASSESSEE IS BOUND TO BE DISMISSED. 26. WE HAVE ALSO GONE THROUGH THE VARIOUS CASE LAWS AS HAS BEEN RELIED ON BY THE LD. SR. ADVOCATE. THESE CASE LAWS, IN OUR OPINION, WILL NOT APPLY TO THE FACTS INVOLVED IN THE IMPUGNED CASE AS IN THOSE CASES THE ASSESSEE HAS DULY DISCHARGED HIS ONUS. THERE IS NO SUCH FINDING IN THOSE CASES THAT THE ASSESSE HAS NOT DISCHARGED ITS BURDEN OF PROOF. IN THE CASE OF TRUSTEES OF THE WILL OF H.K. BRODI E (DECEASED) VS. - THE COMMISSIONERS OF INLAND REVENUE REPORTED IN 17 TAX CASES 432 (KB), WE NOTED THAT THE ISSUE INVOLVED DOES NOT RELATE TO THE DISCHARGING OF ONUS IN RESPECT OF THE CAPITAL RECEIPT. IN THE CASE OF STEVENSON (H.M. INSPECTOR OF TAXES) VS. - WISHART & OTHERS REPORTED IN (1987) 59 TAX CASES 740, WE NOTED THAT CHANCERY DIVISION TOOK THE VIEW THAT PAYMENT OF SUMS FOR I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 20 OF 27 BENEFICIARY S NURSING HOME EXPENSES OUT OF TRUST CAPITAL ARE TO BE REGARDED TO BE OUT OF THE CAPITAL. THIS CASE ALSO, IN OUR OPI NION, WILL NOT APPLY TO THE FACTS OF THE CASE. AS WE HAVE ALREADY HELD THAT IN THE PRESENT CASE THE ASSESSEE HAS NOT DISCHARGED THE ONUS ABOUT THE GENUNITY OF THE TRUST, TRUSTEE AS WELL AS THE FACT THAT THE MONEY HAS BEEN RECEIVED BY HIM OUT OF THE CAPITAL FUNDS OF THE TRUST. IN THE CASE OF PARIMISETTI SEETHARAMAMMA VS. - CIT 57 ITR 532 (SC), THIS DECISION, IN OUR OPINION, SUPPORTS THE CASE OF THE REVENUE FOR THE PROPOSITION OF THE LAW THAT WHERE THE RECEIPT IS OF THE NATURE WHICH IS NOT TAXABLE, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE LIES UPON THE ASSESSEE. IN THE CASE OF CIT VS. - KAMAL BEHARI LAL SINGHA REPORTED IN 82 ITR 460 (SC), WE NOTED THAT THE ISSUE RELATES TO THE PAYMENT OF DIVIDEND OUT OF SALAMI OR COMPENSATION FOR LAND ACQUISITION. THE HON BLE SUPREME COURT TOOK THE VIEW THAT THE SUM DISTRIBUTED AS DIVIDEND DID NOT CHANGE THE TRUE NATURE OF THE RECEIPT; A RECEIPT WAS WHAT IT WAS AND NOT WHAT IT WAS CALLED. THE FACTS OF THIS CASE, IN OUR VIEW ARE DIFFERENT FROM THE CASE BEFORE US AND THIS CAS E DOES NOT DEAL WITH THE DISCHARGING OF ONUS. IN THE CASE OF UDHAVDAS KEWALRAM VS. - CIT REPORTED IN 66 ITR 462 (SC), WE NOTED THAT THE HON BLE SUPREME COURT HAS CLEARLY LAID DOWN THAT INCOME TAX APPELLATE TRIBUNAL PERFORMS A JUDICIAL FUNCTION UNDER THE IN COME TAX ACT AND IT IS INVESTED WITH AUTHORITY TO DETERMINE FINALLY ALL QUESTIONS OF FACT. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDINGS ON ALL CONTENTIONS RAISED BY THE ASSESSEE AND THE COM MISSIONER IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. THIS DECISION SUPPORTS THE VIEW THAT THE TRIBUNAL IS FINAL FACTS FINDING AUTHORITY AND MUST GIVE THE FINDING ON THE BASIS OF THE FACTS ON RECORD AS WELL AS THE CONTENTIONS RAISED BY BOTH THE PART IES. ON THE BASIS OF THE EVIDENCE PRODUCED BEFORE US, WE HAVE ALREADY HELD THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS THAT THE MONEY RECEIVED BY THE ASSESSEE OUT OF THE SAID DISCRETIONARY TRUST HAS COME OUT OF CAPITAL FUNDS. IN THE CASE OF CIT VS. - IN FOSYS TECHNOLOGIES LIMITED REPORTED IN 297 ITR 167 (SC), THE HON BLE SUPREME COURT NO DOUBT TOOK THE VIEW THAT UNLESS BENEFIT OR RECEIPT MADE TAXABLE - NOT TAXABLE AS INCOME. THIS DECISION ALSO, IN OUR OPINION, WILL NOT ASSIST THE ASSESSEE AS THE ISSUE BEFO RE US WAS NOT DISPUTED THAT CAPITAL RECEIPT IS NOT CHARGEABLE TO TAX UNTIL AND UNLESS IT COMES UNDER THE DEFINITION OF THE INCOME AS GIVEN UNDER SECTION 2(24) OF THE INCOME TAX ACT. IN THE CASE BEFORE US, THE QUESTION IS WHETHER THE ASSESSEE HAS DISCHARGE D HIS ONUS AND ASSESSEE HAS PROVED THAT THE AMOUNT RECEIVED BY HIM IS A CAPITAL RECEIPT. I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 21 OF 27 27. IN THE CASE OF CIT VS. - CHRESTIAN MICA INDUSTRIES LIMITED REPORTED IN 109 ITR 517 (CAL.), IN OUR OPINION, THIS DECISION ALSO WILL NOT HELP THE ASSESSEE. IN THIS C ASE, WE NOTED THAT THE HON BLE JURISDICTIONAL HIGH COURT TOOK THE VIEW THAT THE QUESTION WHETHER A TRANSACTION IS OR IS NOT IN THE NATURE OF TRADE IS A QUESTION OF LAW THE ANSWER TO WHICH DEPENDS ON THE TOTAL IMPRESSION AND EFFECT OF ALL RELEVANT FACTS AND CIRCUMSTANCES THAT ARE BROUGHT ON THE RECORD BY THE INCOME TAX AUTHORITIES. ON THE BASIS OF THE FACTS ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT PROVED THAT THE AMOUNT RECEIVED BY HIM IS A CAPITAL RECEIPT AND IS A BENEFICIARY OF A GENUINE TRU ST CREATED OUTSIDE INDIAAND IS OUT OF ACCUMULATION MADE IN THE EARLIER YEARS. IN THE CASE OF RAMAKRISHNAN (S.A.) VS. - CIT REPORTED IN 114 ITR 253 (MADRAS), WE NOTED THAT THE HON BLE MADRAS HIGH COURT FOLLOWED THE DECISION OF PARIMISETTI SEETHARAMAMMA VS . - CIT REPORTED IN 57 ITR 532 (SC), WHICH WE HAVE ALREADY DISCUSSED IN THE PRECEDING PARAGRAPH. IN THE CASE OF DILIP KUMAR ROY VS. - CIT REPORTED IN 94 ITR 1 (BOM.), WE NOTED THAT THE HON BLE BOMBAY HIGH COURT TOOK THE VIEW THAT INCOME TAX ACT DOES NOT PRO VIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TAX. IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. THIS DECISION, IN OUR O PINION, WILL NOT APPLY TO THE FACTS OF THE CASE BEFORE US. IN THE CASE BEFORE US, THE ASSESSEE HAS SUBMITTED ON THE BASIS OF THE CERTIFICATE ISSUED BY M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED THE CLAIM THAT THE OTHER TRUSTEES OF A TRUST, IN WHICH THE ASSESSEE IS A BENEFICIARY, HAVE MADE THE PAYMENT TO THE ASSESSEE. WE HAVE ALREADY HELD THAT THE ASSESSEE COULD NOT PROVE BEFORE US THE APPOINTMENT OF M/S. HSBC REPUBLIC TRUST COMPANY (BVI) LIMITED AS A TRUSTEE, THEREFORE, HOW THIS CERTIFICATE ISSUED BY SU CH TRUST WILL ASSIST THE ASSESSEE. WE HAVE ALREADY REFERRED TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS. - CIT REPORTED IN 50 ITR 1 (SC), WHEREIN IT HAS CLEARLY BEEN LAID DOWN THAT THE SOURCE OF A SUM OF MONEY F OUND TO HAVE BEEN RECEIVED BY THE ASSESSEE IS ON HIM. IT IS FOR THE ASSESSEE TO SHOW THAT THE RECEIPT WAS NOT HIS INCOME. IN VIEW OF THE CLEAR - CUT MANDATE OF THE HON BLE SUPREME COURT, THIS DECISION, IN OUR OPINION, WILL NOT ASSIST THE ASSESSEE. 28. IN THE CASE OF NIYATI B. YODH VS. - ACIT REPORTED IN (2004) 4 SOT 941 (MUM.), WE NOTED THAT THE HON BLE TRIBUNAL HAS HELD THAT A PLAIN READING OF THE PROVISION OF SECTION 2(24) MAKES CLEAR THAT ONLY SUCH CAPITAL GAIN AS MAY BE CHARGEABLE TO TAX UNDER SECTION I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 22 OF 27 45 TO BE INCLUDIBLE IN THE SCOPE OF INCOME AND, THEREFORE, THE CAPITAL RECEIPT WILL NOT BE CHARGEABLE TO TAX. 29. IN THE CASE OF JYOTENDRASINHJI VS. - TRIPATHI (S.I.) REPORTED IN 201 ITR 611 (SC) WE NOTED THAT THE HON BLE SUPREME COURT TOOK THE VIEW THAT I N CASE OF A DISCRETIONARY TRUST, REVENUE HAS OPTION TO TAX INCOME IN THE HANDS OF THE BENEFICIARY OR TRUSTEE. THIS DECISION HAS DEALT WITH THE PROVISION OF SECTION 160(1)(IV), 164(1) VIS - A - VIS 166 OF THE INDIAN INCOME TAX ACT. THIS DECISION RELATES TO A TR UST WHICH HAS BEEN EXECUTED. THE QUESTION INVOLVED DOES NOT RELATE TO THE GENUINITY OF THE AMOUNT RECEIVED FROM THE TRUST CREATED OUTSIDE INDIA. NO DOUBT IN THIS DECISION THE HON BLE SUPREME COURT REFERRED TO PAGE 129 OF SNELL S PRINCIPLES OF EQUITY, 25 TH EDN. (1965) WHICH DEFINES A DISCRETIONARY TRUST IN THE FOLLOWING WORDS: - A DISCRETIONARY TRUST IS ONE WHICH GIVES THE BENEFICIARY NO RIGHT TO ANY PART OF THE INCOME OF THE TRUST PROPERTY, BUT VESTS IN THE TRUSTEES A DISCRETIONARY POWER TO PAY HIM, OR APPL Y FOR HIS BENEFIT, SUCH PART OF THE INCOME AS THEY THINK FIT.....THE BENEFICIARY THUS HAS NO MORE THAN A HOPE THAT THE DISCRETION WILL BE EXERCISED IN HIS FAVOUR . THERE IS NO DISPUTE SO FAR THIS PROPOSITION OF LAW IS CONCERNED, WE DO NOT DISPUTE THE SAID PROPOSITION OF LAW IN CASE OF THE DISCRETIONARY TRUST. IN THE CASE BEFORE US, WE HAVE ALREADY HELD THAT THE ASSESSEE HAS NOT PROVED GENUINEITY OF THE TRUST, TRUSTEE AS WELL AS THE FINANCIAL ACCOUNTS AND ON THAT BASIS WE HAVE EXAMINED WHETHER THE ASSESSEE H AS DISCHARGED THE ONUS OF PROVING WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE IS A CAPITAL RECEIPT. WE MAY KEEP IN MIND THE PECULIAR FACT OF THE CASE THAT THE ASSESSEE CLAIMS THAT THE TRUST HAS BEEN CREATED IN JERSEY TO WHICH COUNTRY ASSESSING OFFICER DOES NOT HAVE JURISDICTION AND THEREFORE ONUS CANNOT LIE ON THE ASSESSING OFFICER. THE CREATION OF THE TRUST, APPLICABILITY OF THE LAW PREVAILING THERE, APPOINTMENT OF THE TRUSTEE AS WELL AS THE FINANCIAL ACCOUNTS ARE WITHIN THE DOMAIN OF THE ASSESSEE AND THE REFORE THE ASSESSEE HAS TO FIRST PROVE THAT THE AMOUNT CREDITED TO HIS ACCOUNT HAS ARISEN TO HIM AS CAPITAL RECEIPT WITH THE NATURE AND SOURCE OF SUCH INCOME. 30. IN THE CASE OF CIT VS. - KAMALINI KHATAU REPORTED IN 209 ITR 101 (SC), WE NOTED THAT NO DOUB T THE HON BLE SUPREME COURT TOOK THE VIEW THAT THE INCOME OF A DISCRETIONARY TRUST WHICH IS WITHIN THE ACCOUNTING YEAR DISTRIBUTED TO AND RECEIVED BY THE BENEFICIARY WOULD BE SUBJECT TO ASSESSMENT IN THE HANDS OF THE ASSESSEE AND TAX I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 23 OF 27 THEREON WOULD BE RECO VERABLE FROM HIM. SUCH INCOME WOULD SQUARELY FALL WITHIN THE BROAD SWEEP OF TOTAL INCOME UNDER SECTION 5 AND THE BENEFICIARY WOULD BE LIABLE TO ASSESSMENT AND RECOVERY OF TAX THEREON UNDER SECTION 4. THE ISSUE ABOUT THE GENUINITY OF THE TRUST AND THE GENU INITY OF THE APPOINTMENT OF THE TRUSTEE AS WELL AS THE FINANCIAL ACCOUNT OF THE TRUST WERE NOT IN DISPUTE IN THAT CASE. THIS DECISION, THEREFORE, IN OUR OPINION, WILL NOT ASSIST THE ASSESSEE. SO FAR AS THE DECISION OF MOTI TRUST VS. - CIT REPORTED IN 236 I TR 37 (SC) IS CONCERNED, IN OUR OPINION ,THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE. IN THIS DECISION, THE HON BLE SUPREME COURT FOLLOWED THE DECISION OF CIT VS. - KAMALINI KHATAU REPORTED IN 209 ITR 101 (SC) AND THIS DECISION IS NOT APP LICABLE TO THE FACTS OF THE CASE OF ASSESSEE. 31. WE HAVE GONE THROUGH THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF H.H. MAHARAJA SHRI JYOTINDRASINHJI VS. - ACIT REPORTED IN 326 ITR 594 (SC), ON WHICH THE LD. SR. ADVOCATE HAS HEAVILY RELIED. W E NOTED THAT IN THIS DECISION THE HON BLE SUPREME COURT HAS TAKEN A VIEW THAT TRUSTEE IN UK IS NOT DISTRIBUTING THE INCOME TO BENEFICIARIES IN THE RELEVANT ACCOUNTING YEAR. THE TRUSTEES ARE ASSESSED IN UK. THE HON BLE SUPREME COURT HELD THAT THE INCOME FRO M THE TRUSTS NOT ASSESSABLE IN THE HANDS OF THE BENEFICIARIES IN INDIA. THE DECISION IN OUR OPINION WILL NOT ASSIST THE ASSESSEE. THIS DECISION WILL APPLY TO THE ASSESSEE ONCE THE ASSESSEE PROVES THAT M/S. WHITE LABEL TRUST IS A GENUINE TRUST AND HAS BEEN GENUINELY CONSTITUTED IN ACCORDANCE WITH THE LAW PREVAILING IN THAT COUNTRY AND HAS DULY COMPLIED WITH THE LAWS OF THE ISLAND OF JERSEY WHEREIN IT HAS BEEN ESTABLISHED, THE SUM RECEIVED BY THE ASSESSEE IS OUT OF THE ACCUMULATED INCOME OF THE TRUST, WHICH HAS BEEN EARNED BY THE TRUST IN THE EARLIER YEAR AND THE TRUST IS ASSESSED IN ACCORDANCE WITH THE LAWS OF ISLAND OF JERSEY. THE ASSESSEE BEFORE US HAS PROVED NONE OF THESE FACTS THEREFORE, THIS DECISION, IN OUR OPINION, WILL NOT APPLY TO THE FACTS OF THE A SSESSEE S CASE. 32. IN THE CASE OF CWT VS. - ESTATE OF LATE HMM VIKRAMASINHJI OF GONDAL REPORTED IN 363 ITR 679 (SC), THE FACTS INVOLVED IN THIS DECISION ARE DIFFERENT FROM THE FACTS INVOLVED IN THE CASE BEFORE US. WE DO NOT DENY TO THE PROPOSITION OF THE LAW THAT IN THE CASE OF DISCRETIONARY TRUST, INCOME OF THE BENEFICIARIES ARE NOT CHARGEABLE TO TAX IN CASE IT HAS COME OUT OF INCOME OF THE EARLIER YEARS. THUS THIS CASE IN OUR OPINION IS NOT APPLICABLE TO THE FACTS BEFORE US. I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 24 OF 27 33. IN THE CASE OF AMITAB BA CHCHAN VS. - DCIT REPORTED IN 2 SOT 189 (MUMBAI), WE NOTED THAT THERE IS A CLEAR - CUT FINDING OF THE TRIBUNAL THAT IN ANY CASE, FROM THE EVIDENCE ON RECORD, IT WAS FOUND THAT THE ASSESSES HAD FILED SUFFICIENT DOCUMENTS AND EVIDENCE TO SHOW THAT THE AMOUNT RECEIVED WAS NOT INCOME . IN VIEW OF THIS FINDING, THE TRIBUNAL TOOK THE VIEW THAT THE ASSESSEE HAS DULY DISCHARGED HIS BURDEN TO PROVE. THIS IS NOT THE CASE WHERE THE AMOUNT HAS BEEN RECEIVED FROM A SOURCE OUT OF INDIA WHERE THE ASSESSING OFFICER DOES NOT HAVE ANY JURISDICTION AS THE INDIAN INCOME TAX ACT EXTENDS TO THE TERRITORY OF INDIA. IN THE CASE BEFORE US, WE ARE OF THE FIRM VIEW THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN OF PROVE AS LIE ON THE ASSESSEE SPECIALLY THE FACT THE ASSESSING OFFICER C ANNOT HAVE ENQUIRY MADE IN JERSEY AND ALL THE FACTS WERE IN THE KNOWLEDGE OF THE ASSESSE. 34. WE HAVE ALSO GONE THROUGH THE DECISION DATED 17.02.2006 OF JCIT VS. - LATE SMT. SHANTABEN M. PATEL L/H SRI MANUBHAI K. PATEL IN ITA NO. 5000/MUM./2001 ON WHICH LD. SR. ADVOCATE HAS VEHEMENTLY RELIED AND CONTENDED THAT IMPUGNED CASE BEFORE US IS DULY COVERED BY THE SAID DECISION OF THE ITAT, MUMBAI BENCH. AFTER GOING THROUGH THE DECISION, WE NOTED THAT IN THAT DECISION THE HON BLE TRIBUNAL UNDER PARA 7 HELD AS UND ER: - 7. WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS DISCUSSED THE ISSUE ELABORATELY. THE RESOLUTION WAS PASSED ON 02.04.1997, I.E. THE SECOND DAY OF THE PREVIOUS YEAR AND SUCH HUGE INCOME COULD NOT HAVE ARISEN TO THE TRUST IN ONE DAY. WE AGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE DISTRIBUTION WAS MADE OUT OF THE INCOME OF THE EARLIER YEARS OR OUT OF THE CORPUS FUND OF THE TRUST. AS PER THE SECTION 5 THE BASIS OF CHARGEABILITY IS THE RECEIPT OR ACCRUAL OF INCOME OR NOT ANY RECEIPT. AS PER SEC TION 4 OF THE INCOME TAX ACT, THE TAX IS CHARGEABLE IN RESPECT OF TOTAL INCOME OF THE PREVIOUS YEAR. AS SUCH, THE ACCUMULATION OF THE PAST YEARS INCOME WHICH HAD ACCRUED IN THE HANDS OF THE TRUST IN THE RELEVANT PREVIOUS YEARS AND IT CANNOT BE SAID TO HAVE ACCRUED ONCE AGAIN IN THE HANDS OF THE BENEFICIARY IN THE YEAR OF ITS DISTRIBUTION. THE ORDER OF THE LD. CIT(A) IS WELL REASONED ORDER AND WE DO NOT SEE ANY REASON TO INTERFERE WITH THE SAME AS SUCH THE APPEAL OF THE REVENUE IS DISMISSED . IN THAT CASE, W E NOTED THAT THE ASSESSEE HAS GIVEN SUFFICIENT EVIDENCES THAT THE INCOME HAS BEEN DISTRIBUTED TO THE BENEFICIARIES OUT OF THE INCOME OF THE EARLIER YEARS OR OUT OF CORPUS FUND OF THE TRUST. EVEN COPY OF THE RESOLUTION PASSED ON 02.04.1997 WAS ALSO PLACED O N RECORD. THE GENUNITY OF THE TRUSTEE WAS NOT IN DISPUTE. THE CIT(A) WHO HAS THE I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 25 OF 27 CO - TERMINUS JURISDICTION WITH THE ASSESSISNG OFFICER HAS GIVEN CLEAR CUT FINDING ABOUT THE DISCRETIONARY TRUST AND THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE OUT OF THE EARL IER INCOME ACCUMULATED. THE QUESTION OF THE GENUINETY OF THE TRUST OR TRUSTEE HAS NOT BEEN IN DISPUTE. THE TRIBUNAL DID NOT EXAMINE THE FACTS AS WELL AS THE RULES AND REGULATIONS STIPULATED IN THE TRUST DEED EVEN THOUGH THE TRIBUNAL IS THE FINAL FACT FIND ING AUTHORITY. THE TRIBUNAL SIMPLY AGREED WITH THE FINDING OF THE CIT(A). IN THE CASE BEFORE US, WE HAVE ALREADY HELD THAT THE ASSESSEE COULD NOT PROVE THE GENUNITY OF THE TRUST AS WELL AS OF THE TRUSTEE, EVEN THE FACT THAT THE AMOUNT HAS BEEN DISTRIBUTED BY THE ASSESSEE OUT OF THE EARLIER YEAR S INCOME. IN VIEW OF THIS FACT, THIS DECISION, IN OUR OPINION, IS NOT APPLICABLE TO THE CASE BEFORE US. WE HAVE ALSO GONE THROUGH THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT, BOMBAY CITY VS. - PROVI DENT INVESTMENT COMPANY LIMITED REPORTED IN 32 ITR 190 (SC) AND WE NOTED THAT THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE INVOLVED IN OUR CASE. IN THAT CASE, THE QUESTION BEFORE THE HON BLE SUPREME COURT WAS WHETHER A PARTICULAR TRANSACT ION ENTERED INTO BY THE ASSESSEE - COMPANY IN 1946 RESULTED IN CAPITAL GAINS WITHIN THE MEANING OF SECTION 12B OF THE INCOME TAX ACT. THE FACTS INVOLVED IN THAT CASE DOES NOT RELATE TO THE RECEIPT OF THE MONEY BY THE ASSESSEE AS BENEFICIARY OF THE DISCRETION ARY TRUST. THIS DECISION, THEREFORE, IS NOT APPLICABLE TO THE FACTS OF THE CASE. SIMILARLY WE NOTED THAT THE DECISION IN THE CASE OF UMA POLYMERS PRIVATE LIMITED VS. - DCIT REPORTED IN 100 ITD 1 (JODH.) (TM) DOES NOT RELATE TO THE MONEY RECEIVED BY THE ASS ESSEE OUT OF THE DISCRETIONARY TRUST. 34. IT IS NOT DENIED BY THE LD. SR. ADVOCATE THAT THE MONEY HAS BEEN CREDITED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT AND, THEREFORE, IN OUR VIEW, ONCE AN AMOUNT IS CREDITED INTO THE BOOKS OF THE ASSESSEE, ONUS IS ON T HE ASSESSEE TO PROVE THE NATURE AND SOURCE OF THE SAID AMOUNT TO THE SATISFACTION OF THE ASSESSING OFFICER IN VIEW OF THE CLEAR MANDATE OF THE PROVISIONS OF SECTION 68. HON BLE SUPREME COURT HAS ALSO TAKEN THE SAME VIEW EVEN PRIOR TO THE INTRODUCTION OF SE CTION 68 UNDER THE INCOME TAX ACT, 1961 IN THE CASE OF KALE KHAN 50 ITR 1(SC) AS HAS BEEN DISCUSSED BY US IN THE PRECEDING PARAGRAPH. SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. - DEVI PRASAD VISHWANATH PRASAD REPORTED I N 72 ITR 194 (SC), IN WHICH THE HON BLE SUPREME COURT HELD AS UNDER: - I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 26 OF 27 THERE IS NOTHING IN LAW WHICH PREVENTS THE INCOME TAX OFFICER IN AN APPROPRIATE CASE IN TAXING BOTH THE CASH CREDIT, THE NATURE AND SOURCE OF WHICH IS NOT SATISFACTORILY EXPLAINED, AND THE BUSINESS INCOME ESTIMATED BY HIM UNDER SECTION 13 OF THE INDIAN INCOME TAX ACT, 1922, AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE AS UNRELIABLE. KALE KHAN MOHAMMAD HANIF VS. - COMMISSIONER OF INCOME TAX [1963] 50 ITR 1 (SC) FOLLOWED - WHERE THE RE IS AN UNEXPLAINED CREDIT, IT IS OPEN TO THE INCOME TAX OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE, AND NO FURTHER BURDEN LIES ON THE INCOME TAX OFFICER TO SHOW THAT INCOME IS FROM ANY PARTICULAR SOURCE. IT IS FOR THE ASSESSEE TO PROVE THAT, EVEN IF THE CASH CREDIT REPRESENTS INCOME, IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED. DECISION OF THE ALLAHABAD HIGH COURT IN DEVI PRASAD VISHWANATH PRASAD VS. - COMMISSIONER OF INCOME TAX [1963] 50 ITR 641 REVERSED . SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE SUPREME COURT IN THE CASE OF ROSHAN DI HATTI VS. - CIT REPORTED IN 107 ITR 938 (SC), IN WHICH THE HON BLE SUPREME COURT TOOK THE VIEW AS UNDER: - THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEE N RECEIVED BY AN ASSESSEE IS ON HIM. IF HE DISPUTES THE LIABILITY FOR TAX, IT IS FOR HIM TO SHOW EITHER THAT THE RECEIPT WAS NOT INCOME OR THAT IF IT WAS, IT WAS EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THE ACT. IN THE ABSENCE OF SUCH PROOF, THE REVENU E IS ENTITLED TO TREAT IT AS TAXABLE INCOME. TO PUT IT DIFFERENTLY, WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE OF MONEY OR OF OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN THE REVENUE TO HOLD THAT IT IS THE INC OME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INCOME IS FROM ANY PARTICULAR SOURCE. DECISION OF THE DELHI HIGH COURT IN ROSHAN DI HATTI VS. - CIT [1972] 85 ITR 370 REVERSED . 35. IN VIEW OF OUR AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT THE DECISIONS OF THE HON BLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS. - CIT (SUPRA); CIT VS. - DEVI PRASAD VISHWANATH PRASAD (SUPRA) AND ROSHAN DI HATTI VS. - CIT (SUPRA) ARE CLEARLY APPLICABLE TO THE FACTS OF THE CASE OF ASS ESSEE. THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE AMOUNT CREDITED IN HIS BOOKS OF ACCOUNT IS NOT THE INCOME OR WAS EXEMPT FROM TAXATION. IN THE INSTANT CASE, IN OUR OPINION, THE ASSESSEE COULD NOT DISCHARGE HIS I.T.A. NO . 1662 / KOL ./20 09 ASSESSMENT YEAR S 200 4 - 20 0 5 PAGE 27 OF 27 ONUS AND COULD NOT PROVE THAT THE MONEY HA S COME OUT OF THE CAPITAL FUND OF A DISCRETIONARY TRUST SITUATED OUT OF INDIA. BEFORE CONCLUDING WE MAY MENTION THAT THE SUBMISSION OF THE LD. SENIOR ADVOCATE THAT THE ONUS IS ON THE REVENUE THAT THE ASSESSEE HAS RECEIVED THE INCOME CANNOT BE APPLIED TO A CASE WHERE THE AMOUNT CREDITED BY THE ASSESSEE HAD BEEN CLAIMED BY HIM FROM A SOURCE SITUATED OUTSIDE INDIA SUCH AS SWIZERLAND ETC AND TO WHICH COUNTRY THE ASSESSISNG OFFICER DOES NOT HAVE ANY JURISDICTION AS THE INDIAN INCOME TAX ACT IS APPLICABLE TO INDI AN TERRITORY, IT CANNOT BE SAID THAT THE ONUS IS ON THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE HAS EARNED THE INCOME OUTSIDE INDIA. THIS IN OUR OPINION WILL BE THE MOCKERY OF THE INDIAN INCOME TAX ACT AND EVERY BODY JUST FILING THE DOCUMENTS WHICH W ERE OUT SIDE THE DOMAIN OF THE ASSESSING OFFICER CAN CLAIM THAT THE ONUS IS ON THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE HAS RECEIVED REVENUE RECEIPTS. WE, ACCORDINGLY, CONFIRM THE ORDER OF CIT(APPEALS) AND REJECT THE CLAIM OF THE ASSESSEE THAT THE SAID AMOUNT IS THE CAPITAL RECEIPT RECEIVED AS A BENEFICIARY OF A DISCRETIONARY TRUST. 36. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2015. SD/ - SD/ - MAHAVIR SINGH P .K. BANSAL (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, THE 12 TH DAY OF JUNE, 2015 COPIES TO : (1) SHRI SOM DATT, C/O. A.S. GUPTA & CO., OLD POST OFFICE STREET, KOLKATA - 700 001 (2) ASSISTANT COMMISSIONER OF INCOME TAX, C IRCLE - 27, KOLKATA (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.