SANJAY MURARKA,KOLKATA V. ADDL. CIT, CENTRAL RANGE 4, KOLKATA

CO 41/KOL/2025

AI Insights

The case revolves around the protective addition of Rs.2,89,38,399 made by the Assessing Officer (AO) under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA Act) against Sanjay Murarka for the Assessment Year 2018-19. The addition was based on the suspicion that Murarka was the beneficial owner of foreign assets held by M/s Bilipack Ltd., a company registered in the British Virgin Islands. However, both the AO and the Ld. CIT(A) found that Murarka was not the beneficial owner, and the protective addition was subsequently deleted by the Ld. CIT(A). The Tribunal upheld this decision, noting that the AO's protective assessment was based on an error in the KYC documents and was not supported by substantive evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772557 (ITAT-KOLKATA)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2018-2019
• Laws Referred To: Black Money (UFIA) and Imposition of Tax Act, 2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Competent authority
• Section: 153A

Judgement Text

"आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member BMA No.3/Kol/2025 Assessment Year: 2018-19 ACIT, Range-4 (Central), Kolkata………………...............................……….……Appellant vs. Sanjay Murarka……………..............…..….…..….........……........……...…..…..Respondent 1/C, Mandeville Gardens, Ballygunge, Kol- 700019. [PAN: AJUPM0621Q] CO No. 41/Kol/2025 (Arising in BMA No. 3/KOL/24 for A.Y. 2018-19) Sanjay Murarka……………..............…..….…..….........……........……...…..…..Applicant 1/C, Mandeville Gardens, Ballygunge, Kol- 700019. vs. ACIT, Range-4 (Central), Kolkata………………...............................……….……Respondent Appearances by: Shri Jigar Mehata, AR, appeared on behalf of the appellant. Shri Bonnie Debbarma, Addl. CIT-Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 24, 2025 Date of pronouncing the order : August 28, 2025 ORDER Per Rajesh Kumar, Accountant Member: The appeal by the Revenue and cross objection by the assessee are preferred against the order dated 24.12.2024 passed u/s 250 of the Act by the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter referred to as the “ld. CIT(A)] which in turn passed in relation to the order passed u/s 10(3) of the Black Money (UFIA) and Imposition of Tax Act,2015 hereinafter referred to as ‘BMA Act’] dated 29.04.2020 for Assessment Year 2018-19. Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 2 02. The sole grievance of the Revenue in this appeal is against the order of the Ld. CIT(A) deleting the protective addition of Rs.2,89,38,399/- made by the AO on account of 50% of the value of foreign asset of Rs.5,78,76,798/-. 03. The facts in brief are that the AO received information that one foreign company M/s Bilipack Ltd., registered in British Virgin Islands held bank account(s) with HSBC Bank, Geneva of which the assessee was suspected to the beneficial owner. Pursuant to the summons issued u/s 8 of the BMA Act, the statement of the assessee was recorded under oath on 03.08.2018, in which he denied being the beneficial owner of the said company or the bank account held by such foreign company. The assessee also pointed out to the AO that, earlier a search and seizure operation was also conducted on the Murarka Group on 28.07.2011, covering the assessee, his father and other family members, in relation to the same information viz., concerning the bank account(s) held by M/s Bilipack Ltd. Pursuant thereto, assessments were framed u/s 153A of the Act, wherein though addition(s) were made in the hands of the assessee’s father, Shri Shyama Prasad Murarka and other beneficiaries, but no addition(s) was made in the hands of the assessee, as the assessee was found to be not associated with the said company in any manner whatsoever. The AO however have issued SCN dated 11.03.2020, in which he required the assessee to explain as to why the aggregate credits of USD 893,063.99 equivalent INR value of Rs.5,78,76,798/- appearing in the bank statements of the bank account held by M/s Bilipack Ltd. with HSBC Geneva should not be assessed as undisclosed asset of the assessee Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 3 situated outside India u/s 10(3) of the Act. The assessee in his reply dated 20.03.2020, which is available at Pages 24 to 26 of Paper Book has reiterated his denial of being associated with the foreign entity M/s Bilipack Ltd and the bank account Nos. 16684198, 16684180, 16684201, held by the said company in HSBC Private Bank (Suisse) SA, Geneva in any capacity whatsoever. The AO in the final order passed u/s 10(3) of the Act observed that the name holder of the foreign bank accounts in question was M/s Bilipack Ltd. and that one, Shri Shyama Prasad Murarka, was the beneficial owner of the said bank account. The AO further observed that, he was in receipt of a subsequent clarification from the HSBC Bank, Geneva, that the document ‘client profile’ contained an error and that the assessee was never the beneficial owner of the bank account as previously alleged by him in his earlier notices. According to the AO however, since he found the mention of the name of the assessee in one of the alleged KYC Document, and in case the assessee may be found to be one of the beneficial owner later, with a view to protect the interests of the Revenue, he protectively assessed 50% of the value of investment i.e. Rs.2,89,38,399/- as undisclosed foreign asset of the assessee. 04. Being aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A), who deleted the impugned protective addition, by holding as under:- “Having considered the above, in light of the submissions of the appellant, I find that the AO had categorically recorded a specific finding of fact that the appellant was not the beneficial Owner of the bank accounts of M/s Bilipack Ltd, BVI, The information obtained from the competent authority is noted to Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 4 have named Shri Shyama Prasad Murarka as beneficial owner 1 and the appellant as the beneficial owner 2. However, the same KYC documents, the bank itself had clarified that the client profile contained an error and that the appellant has never been the beneficial owner of the bank accounts. It is noted that this contemporaneous fact emanated from the credible information received from the same competent authority, who had shared the information in the first place. The AO had rightly taken note of the same and I am in agreement with his following observations: \"It was found from the documents received from the competent authorities that the Bilipack Ltd was the holder of the bank account No.1622528 at the bank HSBC Private Bank(Suisse) SA in Geneva. On perusal of the KYC documents it is found that Shri Sanjay Murarka is the Beneficial Owner along with Shri Shyama Prasad Murarka. In the same documents: the bank HSBC Private Bank (Suisse) SA has Specified that the document \"Client Profile\" contains an error and Shri Sanjay Murarka has never been beneficial owner of the bank account No. 1622528.Considering this caritication it appears that Shri SaniayMurarka is not the beneficial owner, only Shri Shyama Prasad Murarka shall be the Beneficial Owner.\" In light of the above, the admitted fact is that, the appellant is not thebeneficial owner of the bank accounts of M/s Bilipack Ltd, but it is only Shri ShyamaPrasad Murarka who is the sole beneficial owner of these bank accounts. The chargeof tax u/s 3 of the BMA is upon the appellant who is the beneficial owner of theundisclosed foreign income and asset. In the given facts of the present case, theappellant is clearly not the beneficial owner of these bank accounts, and the AO isalso noted to have accepted the same. Hence, when the information itself does not name the appellant to be the beneficial owner, the AO's action of assessing the appellant on a protective basis is unsustainable in law. The fact remains that the solebeneficial owner of the bank accounts was Shri Shyama Prasad Murarka andtherefore, the consequences, if any under the BMA, can be invoked and applied onlyto him. I agree with the appellant that, when he is not found to be associated with thebank accounts in question and he is not Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 5 the beneficial owner, he could not have beenassessed to tax even on protective basis. For the reasons aforestated, I thereforehold that the impugned order passed u/s 10(3) of the Act assessing the appellant totax under BMA on protective basis was unjustified and is therefore quashed and theprotective tax demand is directed to be vacated. Since, the appellant has beengranted relief for the above reasons, all other alternate contentions raised in the othergrounds taken in appeal stands rendered academic and is therefore not being separately adjudicated upon.” 05. During the course of hearing, the Bench had directed the Ld. CIT, DR appearing on behalf of the Revenue to verify the records and ascertain whether the assessee has been named by HSBC Bank, Geneva as the beneficial owner of the alleged undisclosed foreign asset, to which the Ld. CIT, DR fairly stated that the Bank had indeed clarified that the document ‘client profile’ contained an error and that the assessee was never the beneficial owner of the bank account(s) held by M/s Bilipack Ltd. According to him however, though the assessee was not the beneficial owner, but since the name of the assessee did feature in one of the KYC documents, the protective addition be retained until the substantive addition made in the hands of his late father, Shri S P Murarka attains finality. Countering the the Ld. CIT, DR, the Ld. AR for the assessee argued that when the Revenue has not disputed the admitted fact that the assessee is not the beneficial owner of the bank accounts of M/s Bilipack Ltd, the charge of tax as specified in Section 3 of the BMA of the Act fails and therefore irrespective of the outcome of the appeal in the matters of his late father, Shri S P Murarka, no addition was legally sustainable in the hands of the assessee Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 6 06. After hearing both the parties and perusing the grounds raised before us, we observe that the case of the Revenue is that, as the name of assessee was appearing in KYC documents, the protective addition made by the AO should not have been interfered with by the Ld. CIT(A). We note that both the authorities below recorded a finding of fact that, the subsequent clarification received from HSBC Geneva made it clear that the assessee was not the beneficial owner of the bank account(s) held by M/s Bilipack Ltd., which remained uncontroverted by the Ld. CIT, DR. We, accordingly ,uphold the appellate order which is a very reasoned , speaking and factually correct holding that the assessee is not the beneficial owner of the foreign bank account(s), which was expressly admitted by the AO in his impugned order, the impugned assessment framed u/s 10(3) of the Act. Consequently the appeal of the revenue is dismissed. 07. The assessee has challenged the legality and validity of proceedings conducted under the BMA Act in the cross objections filed by the assessee. In view of our decision in the revenue’s appeal, the issues in the cross objection have been rendered academic and are therefore dismissed as infructuous. Order pronounced in the open court on 28.08.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 28.08.2025 RS, Sr.PS Printed from counselvise.com BMA No.3/Kol/2025 & Co No. 41/KOL/2025 Sanjay Murarka 7 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "