RAJIV SAWHNEY,KOLKATA V. DCIT(INV.)UNIT 3(4), KOLKATA

BMA 2/KOL/2024

AI Insights

The case involves multiple appeals under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 (BMA, 2015) concerning Rajiv Sawhney and Kamini Sawhney, related to the assessment year 2018-2019. The primary contention was whether the provisions of BMA, 2015 were applicable to the foreign assets and income of the assessees, who were non-residents during the relevant period. The revenue challenged the non-disclosure of foreign assets and income by the assessees, while the assessees argued that the income and assets were not subject to Indian tax laws as they were acquired from income not chargeable to tax in India. The Tribunal examined the legal status of BWL, the nature of the income, and the procedural adherence in the assessment and found in favor of the assessees.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360830 (ITAT-KOLKATA)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Chhugamal Rajpal Vs S.P. Chaliha, Krishna Das Agarwal Vs. DDIT/ADIT(Inv.)
• Laws Referred To: Black Money (Undisclosed Foreign Income and Assets) Act 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASHNATH BARNWAL
• Assessee Lawyers: S.S. GUPTA; SUNIL
• Keywords: Opportunity of being heard; Reassessment proceedings; Corroborative evidences; Salary income; Principle of natural justice; Source of fund; Residential status; Bogus
• Section: 147; 148; 131; 139; 27

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER BMA No.01/KOL/2024 (निर्धारण वर्ा / Assessment Year : 2018-2019) Addl. CIT, Central Range-1, Kolkata Vs Rajiv Sawhney, C/o Ganeriwala & Ganeriwala, Vatika Apartment, 131, Bakul Bagan Road, Kolkata-700025 PAN No. :AHAPS 0814 K AND BMA No.02/KOL/2024 (निर्धारण वर्ा / Assessment Year : 2018-2019) Rajiv Sawhney, C/o Ganeriwala & Ganeriwala, Vatika Apartment, 131, Bakul Bagan Road, Kolkata-700025 Vs Dy. DIT(Inv.), Unit-3(4), Kolkata Assessing Officer under BMA 2015 PAN No. : AHAPS 0814 K AND BMA No.13/KOL/2024 (निर्धारण वर्ा / Assessment Year : 2018-2019) Addl. CIT, Central Range-1, Kolkata Vs Kamini Sawhney C/o Ganeriwala & Ganeriwala, Vatika Apartment, 131, Bakul Bagan Road, Kolkata-700025 PAN No. :AFOPS 1436 B (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri S.S.Gupta, FCA & Shri Sunil Gangriwal, AR रधजस्व की ओर से /Revenue by : Shri Prakash Nath Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 19/05/2025 घोषणा की तारीख/Date of Pronouncement : 19/05/2025 आदेश / O R D E R Per Bench : The revenue has filed two appeals i.e. BMA No.01&13/Kol/2024 against the two assessees, namely, Rajiv Sawhney and Kamini Sawhney, arising out of the separate orders of the ld. CIT(A), Kolkata-20, dated 24.11.2023 and 12.01.2024, for the assessment year 2018-2019. The assessee Rajiv Sawhney has also filed appeal being BMA No.02/Kol/2024 BMA Nos.01,02&13/KOL/2024 2 arising out of the order dated 08.12.2023 passed by the ld. CIT(A), Central Circle, Central Range-1, Kolkata for A.Y.2018-2019. 2. Shri S.S.Gupta, FCA & Shri Sunil Gangriwal, AR appeared on behalf of both the assessees. Shri Prakash Nath Barnwal, CIT-DR appeared on behalf of the revenue. 3. Ld. AR of the assessee at the time of hearing, has filed a written note in BMA No.02/Kol/2024, which reads as follows: Written Submissions Ground — 1: That the Ld. AO erred in law as well as in facts in complete disregard to the principles of Natural Justice in as much as in view of the facts and circumstances of the case the AO should have adhered to the principles of Natural Justice. The said ground is legal and general in nature and is covered by the following specific grounds. Ground — 2: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in applying the provisions of Black Money (Undisclosed Foreign Income and Assets) Act 2015 [herein after referred as BMA, 2015] to the case of the appellant, in as much as in view of facts and circumstances of the case the provisions of BMA, 2015 were not applicable to the appellant. Ground - 4: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in treating the non-disclosure of assets/investments of the Company incorporated outside India as a violation of the provisions of the BMA,2015, in as much as in view of the facts and circumstances of the case, the Ld. AO should not have taken such a view. Ground — 8: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in holding that the appellant did not make a declaration as required u/s. 59 of the BMA, 2015, in as much as in view of the facts and circumstances of the case the appellant was not at all liable for such declaration. Ground — 10: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in holding that there was undisclosed assets located outside India, in as much as in view of Sec. 2(11) of the BMA, 2015, no such view was at all called for. Ground — 11: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in holding that there was undisclosed foreign income and assets, in as much as in view of Sec. 2(12) of the BMA, 2015, no such view was at all called for. Ground — 12: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in applying the provisions of Sec 72(¢) of the BMA, 2015, in as much BMA Nos.01,02&13/KOL/2024 3 as in view of the facts and circumstances of the case no such view was at all called for. Ground — 13: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in treating the non-disclosure in schedule-FA in the Income Tax Return as a gross violation of the Provisions of the BMA, 2015, in as much as in view of the facts and circumstances of the case no such view was at all called for. Ground — 17: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in not following and complying with the CBDT Circular no 13 of 2015 dated 06-07-2015, particularly answers to ‘Questions No. 17, 24 & 32’, in as much as in view of the facts and circumstances of the case, such non- compliance was contrary to law. Submissions in relation to above mentioned grounds: The assessee was an NRI during the Financial Year 2005-06 to 2008-09 i.e. Assessment Year 2006-07 to 2009-10. He left India in the year 2004 and was employed with Hutchison Asia Telecom. From 19.11.2004 to 31.12.2005, Hutchison Wireless Multimedia Limited, Thailand as a CEO, based full-time in Bangkok. From 05.01.2006 to August 2008, he was employed by PT Hutchison CP Telecommunications [how known as PT Hutchison 3 Indonesia] as its CEO, based full-time in Jakarta, Indonesia at an annual remuneration of USD 5,70,000. (Refer Pg. 112 and 113, vol-1] of the Paper Book for the above details.) On 08.08.2005, the assessee was offered share option of 35,00,000 shares of Hutchison Telecommunications International Limited (HTIL) at a price of HK$ 8.7/share. (Refer Pg. 210 of the Paper Book Vol-2 for the above details.) Which were to be vested in favour of the assessee as follows: 11,66,667 Share one year after the offer date 11,66,667 Share two years after the offer date 11,66,666 Share three years after the offer date 35,00,000 Shares in Total While as a Non-resident, the appellant wanted to invest his savings from his salary income and sale proceeds from the ESOP shares. The appellant approached the reputed investment Banker M/s. UBS AG of Singapore. UBS had an advisory management company named M/s. Portcullis TrustNet (BVI) Ltd. (Portcullis). On 17.08.2007,Portcullis set-up Brookwood Worldwide Ltd. (BWL) in British Virgin Island as a special purpose vehicle to handle the appellant’s investments. BMA Nos.01,02&13/KOL/2024 4 Certificate of Incorporation and Memorandum of Association are enclosed in Pages 165- 190 of Paper Book Vol-1. Main source of investment in BWL was done out of salary received outside India and out of proceeds of sale of ESOP Shares i.e., out of the assessee’s savings in the foreign Bank Accounts. The above facts have been furnished to the Ld. AO and are found mentioned in Points 7,.8,9 & 10 of Para 7 (Brief Facts) of the Assessment Order: “1 was busy with employment with Hutchison Telecom Thailand. | have neither attended to the affairs of Brookwood Worldwide Ltd, nor | was required to because Portcullis Trustnet was acting as Investment Advisors and Manager. They made the investments and maintained the Company etc which is evident from the copy of Memorandum of Association of BWL.” “All investments into Brookwood Worldwide Ltd (BWL) were made out of my savings from my employment in Thailand and Indonesia and out of sale of shares of HTIL received by me as stock options. Since | was a Non Resident of India, | was not required to include my non-indian income in my Tax Returns in India and accordingly | did not do so.” “1 have Ist invested 75 Lakh Hong Kong Dollars in Brookwood Worldwide Lid. in Sept, 2007 out of income earned during the period 2005 & 2006 from Hutchison Asia Telecom. later on invested 18 Lakh Hong Kong Dollars in Sept, 2008 out of Income earned in 2007 from Hutchison Asia Telecom & Sale of shares of HTIL.” “All the Investments made by me has been remitted through the regular Foreign bank account when I was NRI & employed outside India.” It is also important and relevant to mention that even the Ld. CIT(A) on Page 15 of his Order has mentioned as under: “All the funds were provided by Mr. Rajiv Sawhney out of his Foreign Earnings” “Source of Funds, for investment in various financial instruments routed through BWL were the income earned in foreign countries and out of sale of shares received as ESOP of the foreign entity” The proceedings under the BMA, 2015 have been initiated mainly for the reasons as stated by the Ld. AO in Para 3 and 4 of the Assessment Order as mentioned hereunder: “On perusal of Rajiv Sawhney's Income Tax Return, it has been gathered that no foreign assets and income has been disclosed by him in the schedule FA Accordingly, he has failed to furnish the information relating to financial interest in entities located outside India held by him as a beneficial owner.” BMA Nos.01,02&13/KOL/2024 5 “Shri Rajiv Sawhney's kind attention was also drawn to the fact that Government of India had provided an opportunity to come clean with respect to undisclosed foreign assets and income in the form of compliance window under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 but Rajiv Sawhney had failed to disclose his undisclosed foreign assets and income under the same.” Further it is submitted that as per Sec. 59 of the BMA, 2015, declaration of undisclosed foreign asset is to be given in respect of any undisclosed asset located outside India and acquired from Income chargeable to tax under the Income Tax Act for any assessment year prior to assessment year beginning on 01.04.2016. Sec. 59 of the BMA, 2015 is reproduced hereunder: “Declaration of undisclosed foreign asset. 59. Subject to the provisions of this Chapter, any person may make, on or after the date of commencement of this Act but on or before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on Ist day of April, 2016— (a) for which he has failed to furnish a return under section 139 of the Income-tax Act; (b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Act; (c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise.” A perusal of the above provisions clearly states that the declaration in respect of the undisclosed asset located outside India is required to be given only if the same is acquired from Income chargeable to Tax under the Income Tax Act, 1961. In the case of the assessee the income which is earned outside India while as a Non- resident is not chargeable to Tax under the Income Tax Act, 1961, and as such there is no requirement of submitting any declaration u/s. 59. Further, it is submitted that the definition of undisclosed asset located outside India is given in Sec. 2(11) which is reproduced hereunder: “2(11) “undisclosed asset located outside India” means an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset _or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory; ” BMA Nos.01,02&13/KOL/2024 6 A perusal of the above provisions clearly demonstrates that only those assets can be said to be undisclosed assets in respect of which the assessee has no explanation about the source of investment in such asset. The assessee has made such investment out of his salary income earned overseas and out of the sale proceeds of the ESOP shares received by him while he was a Non-resident and the same fact has been mentioned by the Ld. CIT(A) on page 15 of his order as stated above. Further, it is submitted, that in CBDT Circular No. 13 dated 06.07.2015, the CBDT has clarified the provisions of BMA, 2015. (please refer Pg No. 337- 349 of the Paper Book Volume-2) Regarding the declaration as required u/s. 59 of the BMA, 2015, the following Question and Answer is relevant: “Question No.17: A person has some undisclosed foreign assets. lf he declares those assets in the Income Tax Return for assessment year 2015- 16 or say 20/4-15 (in belated return) then should he need to declare those assets in the voluntary tax compliance under Chapter VI of the Act? Answer: As per the Act, the undisclosed foreign asset means an asset which is unaccounted/the source of investment in such asset is not fully explainable. Since an asset reported in Schedule FA does not form part of computation of total income in the Income-tax Return and consequently does not get taxed, mere reporting of a foreign asset in Schedule FA of the Return does not mean that the source of investment in the asset has been explained. The foreign asset is liable to be taxed under the Act (whether reported in the return or not) if the source of investment in such asset is unexplained. Therefore, declaration should be made under Chapter VI of the Act in respect of all those foreign assets which are unaccounted/ the source of investment in such asset is not fully explainable.” Since, in the case of the assessee the source of investment is fully explained there is no requirement of furnishing any declaration under the BMA, 2015. Similarly, Question No. 24 is also relevant, which is reproduced below: “Question No.24: A person is a resident now. However, he was a non- resident earlier when he had acquired foreign assets (which he continues to hold now) out of income which was not chargeable to tax in India. Does the person need to file a declaration in respect of those assets under Chapter VI of the Act? Answer: No. Those assets do not fall under the definition of undisclosed assets under the Act.” A perusal of the above clearly reveals that since all the investments in foreign assets has been made out of income which was not chargeable to tax in India, the question of filing a declaration under Chapter - VI of the BMA, 2015 does not arise. Question No. 32 is also relevant which is reproduced hereunder: BMA Nos.01,02&13/KOL/2024 7 “Question No. 32: A person was employed in a foreign country where he acquired or made an asset out of income earned in that country. Whether such asset is required to be declared under Chapter VI of the Act? Answer: If the person, while he was a non-resident in India, acquired or made a foreign asset out of income which is not chargeable to tax in India, such asset shall not be an undisclosed asset under the Act.” A perusal of the above also suggests that if a Non-resident acquired a foreign asset out of Income which is not chargeable to tax in India shall not be an undisclosed asset under the BMA, 2015. In view of the facts, circumstances and submissions as stated above it is submitted that the provisions of the BMA, 2015 are not applicable to the appellant assessee. Ground — 3: That the Ld. Addl. DIT (Inv.) erred in law as well as in facts in granting approval of the Draft Assessment Order under the provisions of BMA, 2015 without proper application of mind and without generation of Unique DIN, in as much as in view of the facts and circumstances of the case, such action of the Ld. Addl. DIT (Inv.) is not in accordance with law. It is submitted that the draft Assessment Order running into 184 pages has been approved by the Ld. Addl. DIT (Investigation-3) within 4 hours of submission of the same by the Ld. DDIT Unit 3(4), Kolkata. The same was put up for approval on 31.03.2020 at 3:45 P.M. and the same has been approved by the Ld. Addl. DIT (Investigation-3) at 7:57 P.M. on 31.03.2020 i.e. within 4 hours, which is purely a case of mechanical approval and without application of mind, on the part of the approving authority. The Ld. Addl. DIT (Investigation-3) has not considered the provisions of the BMA, 2015 and also did not consider the CBDT Circular No. 13 of 06.07.2015 and as such it is a clear cut case of non-application of mind. (Refer page 335 of the Paper Book Vol-2) Non-application of mind on the part of the approving authorities is also evident from the following facts: The Ld. AO has passed the Assessment Order by addition of Rs. 84,91,71,130/- being alleged undisclosed credits in foreign bank accounts. Whereas the same AO in the remand report submitted to the Ld. CIT(A) has mentioned as under on page 20 of the CIT(A) Order: ““In the instant case, the assessee, Shri Rajiv Sawhney being aggrieved with the order framed u/s.10(3) of the Black Money Act, 2015 dated 31.03.2020, had preferred appeal before the Ld. CIT(A)-20, Kolkata contending the addition made in respect of certain credits found in his foreign bank accounts Before your good-self the assessee filed written submission explaining those credit entries against which the addition was made in the order passed u/s. 10(3) of the B.M. Act, 2015. In view of the above, vide the letter under reference your good-self has remanded the case to the undersigned with a direction to make necessary Verification on five types of entries viz. Contra entries, Inter-bank transfer, Reversal entries etc. and offer comment on the issue raised by the assessee. BMA Nos.01,02&13/KOL/2024 8 As directed, the assessee has been offered an opportunity of being heard on 20.07.2023. The claim of the assessee made before your good-self in respect of those credit entries have been verified on test check basis, with relevant foreign bank accounts submitted by the assessee. On such verification, no prima-facie infirmities could be detected. The desired report is placed before your good-self for your kind perusal.” It is apparent from the above that additions in respect of the credit entries mentioned at $LNo.1 to 5 of the table above were not justified. Assessee had offered satisfactory explanation, along with supporting evidences. A.O. is not justified in ignoring the submissions of the assessee without valid reasons. Credit entries in the bank account are fully explained by debit entries in the bank account of assessee/BWL. Thus credit entries cannot be termed as unexplained. Hence, addition to the extent of Rs.79,34,05,21&/- (Rs. 23,06,69,869 + Rs. 9,74,42,799 + Rs. 73,83,741 + Rs. 5,66,24,660 + Rs. 40,12,84,149) are deleted.” Reliance in this connection is placed on the following judicial decision: 79 ITR 603 (SC) Chhugamal Rajpal Vs $.P. Chaliha In this case Hon’ble Supreme Court held as under: “Section 148 read with sections 147 and 15] of the Income-tax Act, 1961 — Income escaping assessment — Issue of notice for — Assessment year 1960 — ITO initiated reassessment proceedings seeking to include certain cash credits appearing in books of account of assessee's income on suspicion that creditors were mere name lenders, though assessee had produced its books of account and also statement giving full particulars of creditors at time of original assessment — ITO had not even come to a prima facie conclusion that transactions to which he referred were not genuine transactions and conclusion arrived on a vague feeling that they might be bogus transactions did not fulfil requirements of section 151(2) — His conclusion that there was a case for investigating as to truth of alleged transactions, was not same thing as saying that there were reasons to issue notice under section 148 — Report conclusion that it was a fit case for issue of a notice under section 148 and Commissioner /mechanically accorded permission — Important safeguards provided in sections 147 and 151 were lightly treated by ITO as well as by Commissioner and, therefore, impugned notice was invalid and had to be quashed” Further it is submitted that the Ld. Addl. DIT (Investigation-3) has not generated any DIN [Document Identification Number] as is mandated by CBDT Circular 19 dated 14.08.2019 and as such on this ground also the approval granted is bad in law. In view of the facts, circumstances and submission as stated above, the approval granted is not in accordance with law. Ground — 5: That the Ld. CIT(A) erred in law as well as in facts in treating the company Brookwood Worldwide Ltd. [BWL] incorporated outside India as per the laws of the concerned country, as a proprietory concern of the assessee, in as much as in view of the facts and circumstances of the case no such treatment was at all called for. BMA Nos.01,02&13/KOL/2024 9 Ground — 6: That the Ld. AO and the ld. CIT(A) erred in law as well as in facts in treating the alleged income earned by the overseas company i.e. BWL, amounting to Rs. 1,03,10,696/- as income of the assessee appellant, in as much as in view of the facts and circumstances of the case, such treatment was not at all called for. The Ld. CIT(A) in Para 3.3(d) on page 14 of his Order has submitted as under: “BWL does not appear to be a separate entity, rather it has behaved like a proprietary concern of the appellant for managing his surplus funds. Hence, Income earned in BWL has to be assessed as global income in the hands of the assessee after assessee became resident of India.” In this connection it is submitted, that the company BWL has been incorporated under The BVI Business Companies Act, 2004 by agent of UBS AG Singapore i.e. Portcullis Trustnet, in British Virgin Islands (BVI) as per the laws of that country. It is important to note the provisions of section 27 of The BVI Business Companies Act, 2004 which is reproduced below:- “Separate Legal Personality 27. A company is a legal entity in its own right separate from its members and continues in existence until it is dissolved.” In this connection it is submitted that the said company is a separate legal entity i.e. it is independent from its members and enjoys its own set of rights and obligations, as held in the famous decision of the House of Lords in Salomon Vs A. Salomon [1897 AC 22]. Reliance is also placed on the following judicial decision:- 150 taxmann.com 290 (Jalpur-Trib.) Krishna Das Agarwal Vs. DDIT/ADIT(Inv.) In this case Hon'ble Jaipur Tribunal held as under:- \"Where assessee, a senior citizen, Incorporated a company in UAE and an assessment was made on assessee under section 10 based on alleged credits appearing in bank accounts of that company, since UAE company was a separate legal entity with its own assets and funds and foreign bank accounts and foreign Investments belonged solely to said foreign company, no tax liability under Act could be fastened on assessee in respect of said bank accounts \"Therefore, considering the facts and circumstances discussed above and various evidences produced by the assessee, the non- resident foreign company APFZE based at UAE is a separate legal entity and all the funds/investments, etc., belong to the company and no tax liability can be fastened on the assessee. [Para 38.8]\" \"The non-resident company is a separate legal entity and the non- resident company owns these assets and investments beneficially and, therefore, the dividend pertained to the non-resident company and cannot be taxed in the hands of the assessee. [Para 41.1]\" BMA Nos.01,02&13/KOL/2024 10 Therefore the assertion of the Ld. CIT(A) that the company is a proprietary concern is denied. Accordingly, the Income earned amounting to 1.03.10,696/- (details as given in page 22 of the CIT(A)'s Order) by the said company belongs to and relates to the said company and cannot by any reasoning or logic be said to be the income of the assessee. Even as per the provisions of Section 4 and Section 5 of the Income tax Act. since the said income or receipts are neither received by the appellant assessee in India nor accrues or arises to the appellant assessee in India, question of treating the same as income of the assessee is not as per law. Ground 7: That the Ld. AO and the Ld. CIT(A) erred in law as well as in facts in treating the appellant assessee as a Beneficial Owner of the Assets & Income owned and Earned by the Company BWL Incorporated outside India as per the laws of the respective Country in as much as in view of the facts and circumstances of the case, such treatment was not at all called for. In addition to submissions against Ground No. 5. it is again submitted that the assessee is a beneficial owner of the shares held in the Company BWL and is not the beneficial owner of assets owned by the said company and income earned by the said company. In this connection it is further submitted that the company BWL is a separate legal entity and all the funds/investments etc. belong to the company and the assessee clearly does not fall within the ambit of the term beneficial owner as he is only a shareholder and not the provider of the consideration of any asset. Reliance in this connection is placed on the following judicial decision:- 150 taxmann.com 290 (Jalpur-Trib.) Krishna Das Agarwal Vs. DDIT/ADIT(Inv.) In this case Hon'ble Jaipur Tribunal inter-alia held as under:- \"As it has already been held that the company APFZE based at UAE is a separate legal entity and all the funds/investments, etc., belong to the company and no tax liability can be fastened on the assessee, taking a consistent view of the matter. the assessee clearly does not fall within the ambit of the term 'beneficial owner' as he is not the provider of the consideration of the asset. [Para 40]\" Ground 9: That the Ld. AO and the Ld. CIT(A) erred in law as well as in facts in holding that the alleged undisclosed income of Rs. 1,03,10,696/-, pertains to Previous Year 2017-18 relevant to Assessment Year 2018-19, in as much as in view of the facts and circumstances of the case no such view was at all called for. BMA Nos.01,02&13/KOL/2024 11 Ground-14: That the Ld. AO and the Ld. CIT(A) erred in law as well as in facts in not considering the factual position of Authorities under the Income Tax Act having looked into the matter between January, 2014 December, 2016 even after the coming into force of the BMA, 2015, and assuming jurisdiction under the BMA, 2015, in January. 2018 by the same officer who had looked into the matter under the Income Tax Act, in as much as in view of the facts and circumstances of the case such assumption of jurisdiction is contrary to the provisions of BMA, 2015. In this connection it is submitted, without prejudice to our submissions, regarding the applicability of provisions of BMA, 2015 to the case of the assessee, the Ld. ADIT (Inv.) Unit 3(4) had issued a notice u/s. 131 of the IT Act. 1961 on 10.02.2016 (Page 133 of the Paper Book Vol-1) asking about the various details about the off- shore company which have been duly replied in the statement recorded u/s. 131 on 07.03.2016 (Refer page 137 of the Paper Book). Further, by way of a letter dated 16.03.2016 furnished to Ld. ADIT (Inv.) Unit 3(4). complete details of the foreign assets and about the off-shore company BWL were furnished. (Refer page 141 of the Paper Book Vol-1). All these information has been furnished after the enactment of the BMA, 2015. However, again a notice dated 12.01.2018 u/s. 10(1) of BMA, 2015 was received by the assessee on 19.01.2018 for asking about the incorporation of the company and details about its investments, bank accounts. etc: (Refer page 198 of the Paper Book Vol-2), as issued by the same authority namely Ld. ADIT (Inv.) Unit 3(4). Kolkata. Thus, there is no reason or basis to treat the same as undisclosed income of Rs. 1.03.10.696/- as income of the previous year 2017-18 relevant to assessment year 2018-19. Ground 15: That the Ld. AO and the Ld. CIT(A) erred in law as well as in facts in applying the provisions of BMA, 2015 Retrospectively in as much as in view of the facts and circumstances of the case no such retrospective application of provisions of BMA. 2015 was at all called for. In this connection it is submitted that the BMA 2015. has been enacted on 01.07.2015. however, in the case of the appellant the company BWL was stricken-off in the year 2013 and all the funds invested in that company were remitted back in the year 2012 and credited in declared bank account of the assessee maintained with HDFC in India. BMA Nos.01,02&13/KOL/2024 12 In view of the facts, circumstances and submissions as given above, it is submitted that the retrospective application of the BMA, 2015 to the transactions carried out in the F.Y.'s prior to 2013 is not called for and it is not as per law. Reliance is also placed on Article 20 of the Constitution of India which mentions as under: \"No one can be convicted for an act that was not an offence at the time of its commission. and no one can be given punishment greater than what was provided in the law prevalent at the time of its commission.\" Ground 16: WITHOUT PREJUDICE to the aforesaid grounds, even assuming but not admitting. the Ld. AO and the Ld. CIT(A) erred in law as well as in facts in applying the exchange rate prevailing as on 01-04-2017 instead of the exchange rate prevailing on the date of actual remittance in the Bank Accounts of the appellant assessee in India in as much as in view of the facts and circumstances of the case no such Treatment was at all called for. WITHOUT PREJUDICE to our submissions regarding the applicability of provisions of BMA. 2015. it is further submitted that, the Ld. AO erred in applying the exchange rate as on 01.04.2017 in respect of remittances received in F.Y. 2012-13. The said submission is without prejudice to our submission regarding the applicability of BMA, 2015 in the facts of the appellant's case. 4. It was submitted by the ld AR that the assessee Shri Rajiv Sawhney is an individual who left India in the year 2004 for a gainful employment as the CEO of Hutchison Wireless Multimedia Limited, Thailand from 19.11.2004 to 31.12.2005. He was employed in the said company based at Bangkok. From 05.01.2006 till August 2008, the assessee was employed with PT Hutchison CP Telecommunications as its CEO and was based in Jakarta, Indonesia. It was the submission that his remuneration was of USD 5,70,000 per year. Ld AR drew our attention to page 112 to 113 of PB which read as follows: BMA Nos.01,02&13/KOL/2024 13 BMA Nos.01,02&13/KOL/2024 14 BMA Nos.01,02&13/KOL/2024 15 5. The said exhibits show that the assessee was employed with the above mentioned companies with remuneration thereon. Ld AR further drew our attention to pages 201 of PB, which reads as follows:- BMA Nos.01,02&13/KOL/2024 16 BMA Nos.01,02&13/KOL/2024 17 BMA Nos.01,02&13/KOL/2024 18 6. It was the submission that during his employment the assessee had received employees stock option which vested with the assessee for a period of three years. In employees stock option, 35,00,000 shares of Hutchison Telecommunications International Limited (HTIL), were received by him from the parent company in which the assessee was employed. It was the submission that in the course of employment, so as to earn better income, the assessee had contacted an investment banker namely M/s UBS AG of Singapore. Through M/s UBS, the assessee dealt with one M/s Portcullis TrustNet (BVI) Ltd. (Portcullis). Consequent to the investment advisory management company the said investment banker set up Brookwood Worldwide Ltd.(BWL) in British Virgin Island as a special purpose vehicle to handle the assessee’s investment. The investment in BWL was done out of the salary received by the assessee from his employment as also the sale proceeds of the shares of HTL received in the form of SOP. The assessee and his wife Smt Kamini Sawhney were the Directors and the only share holders of the said company of BWL. It was the submission that the Assessing Officer initiated the Black Money Act against the assessee, as the assessee had returned to India during October 2008 and the assessee had not shown the assets/income/investments in the company BWL. It was the submission that the company BWL was wound up in 2013 but the funds were transferred to India in 2012 itself once the instructions were passed on for winding up of the said company in 2012 itself. Ld AR drew our attention to page 194 of PB, which reads as follows: BMA Nos.01,02&13/KOL/2024 19 BMA Nos.01,02&13/KOL/2024 20 7. Consequent upon the decision to wind up of the said company, the bank accounts were closed and all the funds were repatriated to India in 2012 itself. It was the submission that the total additions proposed by the AO in the assessment order was to an extent of Rs.84,91,71,130/-. It was the submission that the said amounts represented various contra entries and adjustment entries in the bank accounts. It was fairly agreed by the ld AR that the Assessing Officer has not treated the income received by the assessee during his employment with Hutchison Wireless Multimedia Limited as the amount as Black Money. The Assessing Officer only treated the entries in the bank account of the company BWL after return of Rajiv Sawhney to India, which is liable for Black Money Act applicability. It was the submission that as the assessee and his wife were the Directors and beneficial shareholders of the company BWL, the Assessing Officer had treated the entries in the bank account of BWL as the black money transaction in the hands of the assessee as the same related to the period after the assessee returned to India. It was the submission that the substantive addition has been made in the hands of Rajiv Sawhney and protective addition has been made in the hands of his wife Smt. Kamini Sawhney. It was the submission that on appeal before the ld CIT(A), a detailed submission had been given and the ld CIT(A) had also called for a remand report from the Assessing Officer. The remand report of the Assessing Officer has been extracted by the ld CIT(A) at page 20 of his order, wherein, the Assessing Officer has categorically mentioned that no prima facie infirmity in the explanation given by the assessee could be detected. Consequent to the remand report and considering the BMA Nos.01,02&13/KOL/2024 21 explanation of the assessee, the ld CIT(A) had deleted the addition to an extent of Rs.79,34,05,218/-. 8. In regard to the addition of Rs.1,43,29,774/-, the ld. CIT(A) at page 21 of his order gave the findings that the amount represented the cash balance with BLW and as no discrepancy in the amount transferred from UBS AG to Merrill Lynch bank in November, 2009 was found, deleted the addition. It was the submission that against the said addition deleted by the ld CIT(A), the revenue is in appeal in the case of Rajiv Sawhney. An amount of Rs.1,03,10,696/- remained after the order of ld CIT(A) insofar as he confirmed the addition to an extent of the income earned by BWL out of his investment. The ld CIT(A) held that the assessee being the beneficial shareholders of BWL, the same is liable to be taxed under the black money Act in the hands of the assessee. It was the submission that against the said addition of Rs.1,03,10,696/-, the assessee is in appeal. 9. It was the further submission that as the issue has been considered on substantive basis in the hands of the assessee, the addition made identically in the hands of Smt. Kamini Sawhney had been pursued before the ld CIT(A) and the ld CIT(A) had also called for a remand report from the Assessing Officer. The assessee had also provided all the explanation before the AO and the AO had given no adverse findings in the remand report but had basically accepted the claim of the assessee in his remand report. It was the submission that the order of the ld CIT(A) deleting the addition is liable to be upheld. BMA Nos.01,02&13/KOL/2024 22 10. In regard to addition of Rs.1,03,10,696/-, ld AR placed reliance on the decision of the Co-ordinate Bench of Jaipur ITAT in the case of Shri Krishna Das Agarwal vs. DDIT/ADIT(Inv.) - [2023] 150 taxmann.com 290 (Jaipur-Trib.), wherein, the Co-ordinate Bench of Jaipur ITAT had held that the assessee company was a separate legal entity with its own assets and funds and foreign bank accounts and foreign investments belonged solely to the said foreign company and black money Account. Thus, no tax liability could be fastened on assessee in respect of said bank account of the assessee. It was the submission that admittedly the assessee and his wife were the beneficial shareholders of BWL. BWL was a separate legal entity and until the said legal entity was wound up or declared any dividend, the assessee nor his wife would get any monies from the said company. It was the submission that said amount of Rs.1,03,10,696/- was the income of BWL and the assessee received money only after winding up of the said company on 1.5.2013. It was the submission that the said money had been repatriated to India by the assessee and consequently the Black Money Act could not be applied to the said amount in the hands of the assessee insofar as the said amount was not earned or accrued to the assessee. It was the submission that consequently, the appeal filed by the revenue is liable to be dismissed and the appeal of the assessee is liable to be allowed. 11. In the appeal filed by the revenue in the case of Smt. Kamini Sawhney, it was the submission that as no addition per se is itself called for in the hands of Rajiv Sawhney insofar as all the amounts had been explained, the additions are liable to be deleted and the addition deleted in the case of his wife is liable to be upheld. BMA Nos.01,02&13/KOL/2024 23 12. In reply, ld CIT DR submitted that the assessee and his wife were the beneficial shareholders of BWL and any income that is earned by BWL or accrues to BWL is to be treated as income of the assessee. The ld. CIT- DR further submitted that the order of the ld. CIT(A) in regard to the addition of Rs.1,03,10,696/- is liable to be upheld. It was further submitted that as the assessee had not given the explanation before the Assessing Officer in the course of the original assessment proceedings under the BMA, the addition as deleted by the ld. CIT(A) is liable to be reversed. 13. We have considered the rival submissions. A perusal of the undisputed facts as mentioned above, clearly shows that out of the amount of Rs.84,91,71,130/-, the assessee has admittedly given all the explanation justifying the deletion of addition to an extent of Rs.84,91,71,130 – Rs1,03,10,696 = Rs.83,88,60,434/-. The ld. CIT(A) has relied exclusively on the remand report which has been extracted by him at pages 19 & 20 of his order. Admittedly, other than mentioning that the assessee has not given the detailed explanation in the course of original assessment proceedings, no error in the remand report submitted by the Assessing Officer or the facts as extracted by the ld. CIT(A) and relied upon by him has been brought out by the revenue to dislodge his finding regarding the deletion to an extent of Rs.38,860,434/-. This being so, as it is noticed that the ld. CIT(A)has relied upon the remand report for the purpose of deleting the addition and the revenue has not able to dislodge the finding as arrived by the ld. CIT(A), the addition as deleted by the ld. CIT(A) stands upheld. Consequently, the appeal of revenue in BMA No.01/Kol/2024 in the case of Rajiv Sawhney stands dismissed. BMA Nos.01,02&13/KOL/2024 24 14. Coming to the appeal of the assessee in BMA No.02/Kol/2024, it is noticed that admittedly, BWL is a separate legal entity. Similar facts have been considered by the Co-ordinate Bench of Jaipur ITAT in the case of Shri Krishna Das Agarwal(supra) under the Black Money Act. The assessee is not disputing that the assessee and his wife are shareholders of BWL. Still it is understood that the shareholder can lay hand on the funds of the company only in the event that the assessee company is wound up, the assessee company has declared any dividend, or if the shareholder have taken any loans from the company. None of these three occasions have been shown by the revenue. In fact, the assessee has received the money entirely on the winding up BWL on 01.05.2013 and the assessee has also repatriated the full amount to India. As the alleged income is in the hands of the BWL and BWL is not an entity taxable in India, admittedly, the addition of Rs.1,03,10,696/- is not taxable in the hands of the shareholders, either Rajiv Sawhney or Kamini Sawhney. This being so, the order of the ld CIT(A) confirming the addition of Rs.1,03,10,696/- stands reversed and the addition as made by the AO and confirmed by the ld CIT(A) stands deleted. Thus, appeal of the assessee in BMA No.02/Kol/2024 stands allowed. 15. In regard to the appeal of the revenue in BMA No.13/Kol/2024 in the case of Kamini Sawhney, a perusal of the order of ld CIT(A) clearly shows that he has deleted the addition because this is only on a protective basis. As the additions have been deleted on substantive basis in the hands of Rajiv Sawhney, obviously no further protective addition remains in the hands of Kamini Sawhney. Accordingly, the addition deleted by the ld. BMA Nos.01,02&13/KOL/2024 25 CIT(A) which was made by the Assessing Officer in the hands of Kamini Sawhney stands upheld. Consequently, appeal of the revenue stands dismissed. 16. In the result, appeals of the revenue in BMA Nos.01&13/Kol/2024 in the case of Rajiv Sawhney and Smt. Kamini Sawhney are dismissed and appeal of the assessee Rajiv Sawhney in BMA No.02/Kol/2024 is allowed. Order dictated and pronounced in the open court on 19/05/2025. Sd/- (SANJAY AWASTHI) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 19/05/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : sआदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// "