RISHAB MANSINGHKA ,KOLKATA V. CIT(A)/ 20, KOLKATA. , KOLKATA

BMA 2/KOL/2023

AI Insights

The case involves appeals by the Addl. CIT, Range-4(Central), Kolkata against Rajendra Mansinghka and Rishab Mansinghka concerning undisclosed foreign income/assets for the assessment year 2018-2019. The revenue challenged the order of the ld. CIT(A), which had reduced the assessed undisclosed income/assets from Rs.221,84,08,176.54 to Rs.37.06 crores for each assessee. The assessees argued that they had no control or benefit from the foreign bank account in question, which was linked to them as beneficial owners. The tribunal found that the assessees had indeed operated the bank accounts and confirmed the reduced valuation of the undisclosed assets but modified the method of currency valuation to be applied for each financial year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313962 (ITAT-KOLKATA)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Tax Information Exchange Agreement (TIEA) between British Virgin Islands and India, Black Money (Undisclosed Foreign Income And Assets) And Imposition of Tax Act, 2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: RAJENDRA MANSINGHKA
• Keywords: Condonation of delay; Competent authority
• Section: 5(2)

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/2022 (निर्धारण वर्ा / Assessment Year : 2018-2019) Addl. CIT, Range-4(Central), Kolkata Vs Rajendra Mansinghka, P-36, India Exchange Place, 3rd Floor, Room No.48C, Kolkata- 700017 PAN No. :ADVPM 0120 H AND BMA No.02/KOL/2022 (निर्धारण वर्ा / Assessment Year : 2018-2019) Addl. CIT, Range-4(Central), Kolkata Vs Rishab Mansinghka, 81, Ambassador Apartment, 61A, Park Street, Kolkata-16 PAN No. :AFKPM 0195 B AND BMA No.01/KOL/2023 (निर्धारण वर्ा / Assessment Year : 2018-2019) Rajendra Mansinghka, P-36, India Exchange Place, 3rd Floor, Room No.48C, Kolkata- 700017 Vs Addl. CIT, Range-4(Central), Kolkata PAN No. :ADVPM 0120 H AND BMA No.01/KOL/2023 (निर्धारण वर्ा / Assessment Year : 2018-2019) Rishab Mansinghka, 81, Ambassador Apartment, 61A, Park Street, Kolkata-16 Vs Addl. CIT, Range-4(Central), Kolkata PAN No. :AFKPM 0195 B (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Rajendra Mansinghka & Shri Rishab Mansinghka, assessees in person रधजस्व की ओर से /Revenue by : Shri P.N. Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 08/05/2025 घोषणा की तारीख/Date of Pronouncement : 08/05/2025 आदेश / O R D E R Per Bench : The revenue has filed two appeals i.e. BMA No.01&02/Kol/2022 against the two assessees, namely, Rajendra Mansinghka and Shri Rishab BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 2 Mansinghka against the order of the ld. CIT(A), Kolkata-20, dated 10.12.2021, for the assessment year 2018-2019. The assessee Shri Rajendra Mansinghka and Shri Rishab Mansinghka, have both filed their respective appeals being BMA Nos.01&02/Kol/2023 arising out of the same order passed by the ld. CIT(A), Kolkata as has been challenged by the revenue in its appeals for A.Y.2018-2019 in the cases of both the assessees. 2. Shri Rajendra Mansinghka and Shri Rishab Mansinghka, both the assessees appeared in person and Shri Rajendra Mansinghka has argued the case on behalf of himself and Shri Rishab Mansinghka. Shri P.N.Barnwal, CIT-DR appeared on behalf of the revenue. 3. At the outset, on perusal of the appeal record, we find that both the assessees’ appeals are delayed by 574 days each. In this regard, the assessee has filed applications supported by affidavits respectively stating sufficient and plausible reasons for delay in filing the present appeals by both the assessees. Ld. CIT-DR did not raise any serious objection to condone the delay. Considering the reasons stated by both the assessees for condonation of delay in their respective appeals, which are not found to be false, the delay of 574 days each in both the appeals are condoned and the appeals of both the assessees are heard and disposed off along with the appeals of the revenue. 4. It was submitted by ld CIT DR that the Assessing Officer had received information about foreign assets/income in the case of the assesses from the competent authority of British Virgin Island on 18.08.2016 under the BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 3 “Exchange of Information” Article-5 of the Tax Information Exchange Agreement (TIEA) between British Virgin Islands and India. The information related to an entity under the name Century Cup Ltd., and its relations with two assesses herein. The assesses herein have been identified as beneficial owners of the entity Century Cup Limited. It was the submission that the said entity has opened bank account No.171315 with UBS AG Singapore. 5. Ld CIT DR drew our attention to the copy of the account opening form 04.10.2005 which reads as under :- BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 4 6. It was submitted by the ld. CIT-DR that the said account was closed on 15.09.2011 which reads as follows :- 7. It was submitted by the ld.CIT-DR that the Assessing Officer had examined the said bank account and had determined that the black money BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 5 transaction representing the undisclosed credit in the foreign bank account was to an extent of Rs.221,84,08,176.54 in case of each of the two assessees. It was the submission that this somehow was in respect of bank account from the date of opening to the date of closing. It was the submission that the assessee, Shri Rajendra Mansinghka having Passport No.E6362681, was the appointed Attorney with respect to the said bank account and his signature was also available in the account opening Form. Shri Rishab Mansinghka, one of the assessee and the son of Shri Rajendra Mansinghka was declared as one of the beneficial owners. His name along with his date of birth, nationality, permanent address, identity No. and country have also been provided. As both the assessees had not disclosed their foreign income/assets in their income tax returns, the Assessing Officer had passed the assessment order bringing to tax the entire credits in the said bank account equally in the hands of both Shri Rajendra Mansinghka and Shri Rishab Mansinghka. It was the submission that on appeal, the ld. CIT(A) had recomputed the credits in the bank account and had granted benefit of the credits of the term deposits which had matured in the bank account and were redeposited as term deposits. Consequently, the ld. CIT(A) had recomputed the undisclosed foreign income/assets in the case of each of the two assessees at Rs.37.06 crores. It was the submission by the ld. CIT-DR that the ld. CIT(A) erred in giving the benefit. It was the submission that the order of the ld. CIT(A) is liable to be reversed and that of the Assessing Officer be restored. BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 6 8. In reply, the assessee Shri Rajendra Mansinghka, who is present in person along with his son, who is also an assessee in the connected case, submitted that the ld. CIT(A) has erred in adopting the value of US Dollar as on 01.04.2017 at Rs.64.91. It was the submission that the bank account was operated from 2005 till September, 2011 and if at all the value of US Dollar is liable to be adopted then the actual value in those years was to be applied. It was the further submission that the assessee did not get benefit of even Re.1/-from the said bank account and that the assessee does not know anything about how this bank account was being operated. It was the submission that even the signatures in the account opening form are not remembered by the assessee and the signatures looked like scanned signatures, having been put in the account opening forms. It was the submission that the assessees have been treated as beneficial owners but the assessees have not received any benefit nor any income from the said bank accounts. Thus, the amounts in the said bank account should not be assessed in the hands of the assesses. It was the submission that even on the date of the alleged opening of the bank account, the assessee nor his son was nowhere in Singapore nor near Singapore nor British Virgin Islands, but were in India. The assessee also provided the copies of the passport to prove that he was in India when the alleged bank account was said to have been opened. It was the submission that the addition as made in the assessment order and as partly confirmed by ld CIT(A), is liable to be deleted. BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 7 9. We have considered the rival submissions. Here, we would like to draw attention to the paper book, which has been filed by the revenue in which there is a letter from the Finance Cadet International Tax Authority, dated 19.07.2016, which reads as follows:- BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 8 10. One of the claims of the assesses is that in para 1 of the said letter, it is mentioned that Century Cup Limited was struck off the register on the 1st of May, 2012. Further. Further, the correspondence also indicates that the company Portcullis Trust Net(BVI) Limited was wholly managed by the BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 9 Registered Agent and had no connection to the Indian taxpayer. It is the claim of the assessees that they have no connection to the bank account and they are unaware as to how they are being treated as beneficial owners of the said bank account. A perusal of the said letter shows that the said letter refers to Annexures 1 to 4. In para 7, there is reference to Annexure-4, which is claimed to be an agreement between one Suresh Kumar Banthia/Jitesh Kumar Banthia and Portcullis TrustNet (BVI) Ltd. Para 7 shows that there is no reference of communication between Rishab Mansinghka and Rajendra Mansinghka and Portcullis TrustNet (BVI) Ltd.. The Annexure-4 reads as follows :- BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 10 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 11 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 12 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 13 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 14 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 15 BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 16 11. The said agreement in Annexure-4 has been signed by the Principal as Rajendra Mansinghka and Rishab Mansinghka. The Passport Number of both Rajendra Mansinghka and Rishab Mansinghka are also referred to in the said agreement. Their signatures are on multiple pages. There is also the authorization to give instructions concerning the operation of the accounts, which is filed with UBS Bank and it contains a signature of Shri Rajendra Mansinghka. The same reads as follows :- BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 17 12. In regard to the documents produced by the revenue the assessee has made statements that the account could have been operated by the assessee’s late father M.P.Mansinghka. He expired in March, 2007. It is seen that on 1st August 2007, on 6th August, 2009, transactions have been authorized under the signature of Rajendra Mansinghka as follows :- BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 18 13. Thus, there is clear evidence that the said bank accounts are under the control and operations of the assessees herein, most specifically Shri Rishab Mansinghka. It must be mentioned here that there is no evidence produced by the revenue to show that Shri Rishab Mansighka has actually BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 19 given any instructions to the said bank in regard to the bank account, though he is identified as one of the beneficial owners of the said bank account. The transactions in the said bank account are seen to have been authorized and operated under the instructions of Shri Rajendra Mansinghka and the same have not been proved with documentary evidence. We are left with no other option but to confirm the order of the ld. CIT(A) in regard to the ownership of the said bank account. 14. Coming to the issue of valuation of the amount in the said bank account, it is noticed that the ld. CIT(A) has, after making detailed calculations, arrived at the figure of US $11419151.62. The revenue has not been able to show as to how this figure was arrived at by the ld. CIT(A) after detailed analysis of the said bank account is erroneous. Consequently, the finding of the ld. CIT(A), that the credit in the said bank account is to be adopted at US$11419151.62, stands upheld. 15. Coming to the issue of value of US dollar as adopted by the ld. CIT(A), it is noticed that the ld. CIT(A) has adopted the value as on 01.04.2017. In this regard, we would like to refer to the provision of Section 5 of the Black Money (Undisclosed Foreign Income And Assets) And Imposition of Tax Act, 2015(in short the Act, 2015), which reads as follows:- 5. Computation of total undisclosed foreign income and asset (1) In computing the total undisclosed foreign income and asset of any previous year of an assessee,— (i) no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee, whether or not it is allowable in accordance with the provisions of the Income-tax Act; (ii)any income,— BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 20 (a) which has been assessed to tax for any assessment year under the Income-tax Act prior to the assessment year to which this Act applies; or (b) which is assessable or has been assessed to tax for any assessment year under this Act, shall be reduced from the value of the undisclosed asset located outside India, if, the assessee furnishes evidence to the satisfaction of the Assessing Officer that the asset has been acquired from the income which has been assessed or is assessable, as the case may be, to tax. (2) The amount of deduction referred to in clause (ii) of sub-section (1) in case of an immovable property shall be the amount which bears to the value of the asset as on the first day of the financial year in which it comes to the notice of the Assessing Officer, the same proportion as the assessable or assessed foreign income bears to the total cost of the asset. 16. A perusal of the said provisions shows that Section 5(2) of the Act, 2015 of the said provision applies to immovable property. In the present case, what has been found is a bank account and the same dos not fall within the category of immovable property. This being so, as it is noticed that the bank account has been opened in October, 2005 and has been closed in September 2011, it is directed that the Assessing Officer shall adopt the value of the US Dollar as on the 1st of April of each of the Financial Year in respect of the credits relating to each Financial Year as determined by the ld. CIT(A). This issue is held in favour of the assessee. Thus, the order of the ld. CIT(A) stands modified with the direction to the Assessing Officer to recompute the value in Indian Currency in respect of the amount of US$11419151.62 relevant to each Financial Year by applying the value of US Dollar as on 1st April of each of the said Financial Year. 17. Since, we have upheld the order of the ld. CIT(A) in appeals of the revenue in case of two assessees, therefore, the appeals of the revenue BMA Nos.01&02/KOL/2022 & BMA Nos.01&02/KOL/2023 21 stand dismissed. Further, we have modified the order of the ld. CIT(A) thereby directing the Assessing Officer to recompute the value in Indian Currency in respect of the amount of US$11419151.62 relevant to each Financial Year by applying the value of US Dollar as on 1st April of each of the said Financial Year, therefore, the appeals in the case of both assessees i.e. Rajendra Mansinghka and Rishab Mansinghka are partly allowed. 18. In the result, appeals of the revenue i.e. BMA Nos.01&02/Kol/2022 are dismissed and appeals of both the assessees in the case of Rajendra Mansinghka in BMA No.01/Kol/2023 and in the case of Rishab Mansinghka in BMA No.02/Kol/2023 are partly allowed. Order dictated and pronounced in the open court on 08/05/2025. Sd/- (SANJAY AWASTHI) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 08/05/2025 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// "