SHIR DILIP J. THAKKAR,MUMBAI V. ASSISTATNT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(4), MUMBAI

ITA 2175/MUM/2024

AI Insights

The case involves Shri Dilip J Thakkar, a chartered accountant, who faced additions to his income and penalties for the Assessment Year 2006-07, related to alleged undisclosed income from foreign bank accounts and trust funds. The Income Tax Department argued that the funds in these accounts were undisclosed income of the assessee. However, the Tribunal found that the Chagganlal Suchak Family Trust, which managed these funds, was a discretionary trust with no direct control or benefit to the assessee or his family, and the funds were not sourced from India. The Tribunal's decision was based on the examination of the trust's structure, the role of the assessee as a protector rather than a beneficiary, and the lack of any direct financial benefit to the assessee from the trust.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396888 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANYOGITA NAGPAL
• Assessee Lawyers: DILIP THAKKAR
• Keywords: Set aside; Additional evidence; Corroborative evidences; Income from undisclosed sources; Document seized; Peak credit; Documents seized; Capital receipt; Principle of natural justice; Source of fund; Loose papers; Competent authority; Charitable institution; Double taxation relief; Residential status
• Section: 271(1)(c); 132; 131; 90; 92B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.2175/Mum/2024 (Assessment Year :2006-07) & ITA No.6408/Mum/2024 (Assessment Year :2006-07) Shri Dilip J Thakkar 111A, Currimji Building Mahatma Gandhi Road Fort, Mumbai-400 021 Vs. Asst. Commissioner of Income Tax Central Circle-6(4) Mumbai PAN/GIR No.AACPT9000H (Appellant) .. (Respondent) Assessee by Shri Dilip Thakkar Revenue by Smt. Sanyogita Nagpal, CIT DR Date of Hearing 27/02/2025 Date of Pronouncement 30/05/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): ITA No. 2175/Mum/2024 has been filed by the assessee against order dated 04/03/2024, passed by CIT (A)-54, Mumbai for the quantum of assessment passed u/s.153A for the A.Y. 2006-07; and ITA No. No.6408/Mum/2024 has been filed by the assessee against order dated 12/11/2024 in relation to penalty proceedings u/s. 271(1)(c) for the A.Y.2006-07. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 2 2. In the quantum appeal on merits assessee has challenged, firstly, the addition of Rs.10,50,41,824/- as undisclosed income of the assessee on the ground that money in the bank account of an off-shore non-resident trust with HSBC private Bank belongs to the assessee; Secondly, addition of Rs. 57,00,000/- paid by the Dilip J Thakkar HUF by cheques to his nephew as per the Will of the late mother. Apart from that assessee has also challenged the assessment order dated 30/03/2015 being barred by limitation. 3. The brief facts qua the issue pertaining to the addition of Rs.10,50,41,824/- made by the ld. AO by treating the deposits in the foreign bank accounts with HSBC Bank, Geneva of Chagganlal Suchak Family Trust (CSFT) considered as undisclosed income of the assessee are that, assessee is a practicing chartered accountant in whose case, a search u/s.132(1) was carried out on 10/08/2011 and prior to the search, the Income Tax department was in possession of some information which was in the form of a base note that CSFT had bank accounts in HSBC Bank, Geneva and assessee’s name was appearing therein. During the search, it was found that assessee alongwith his wife Mrs. Indira D Thakkar was managing the affairs of the off-shore discretionary trust which had as many as eight bank accounts in HSBC Bank, Geneva which had the balance of US$31,29,878/- as on February 2007. Apart from that it was found that a sum of Rs.57,00,000/- was deposited in ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 3 the bank account No.163813 by Mr. Dilip Thakkar, i.e., assessee as karta of Dilip J Thakkar HUF. 4. In response to the show-cause notice assessee had stated that Chagganlal Suchak Family Trust (CSFT) was a private discretionary trust in the name of his late father-in-law, Chagganlal Suchak who was UK Citizen, expired in the year 1999 in London. The said trust was for the benefit of his family members (his sons and their family members) who all were non- resident Indian living outside India since several decades. According to the assessee the said trust affairs were controlled and managed by late Chagganlal Suchak’s three sons who were the principal beneficiary of the trust and they were only authorised for opening the bank account. The assessee’s role and his wife being family members were only advisory in fiduciary capacity to see that none of the three beneficiaries include or trespass on the funds of the other. It was declared that neither the assessee nor his wife had any control or management of the CSFT trust and he completely denied having any kind of interest in the impugned foreign bank accounts and also stated that trust has been closed and all the three principal beneficiaries had got their respective funds from the trust. The assessee had also explained the sources of funds settled into CSFT before the ld. AO and ld. CIT (A) and also before us and also placed relevant documents. The relevant chronology of dates and explanation is summarized in the following manner:- Sr No Particulars 1 Mr Suryakant Suchak (NRI), had made an application to ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 4 State Bank of India dated 19.08.1998 intending to subscribe 150 Resurgent India Bond -GBP Series bearing face value 10000 Pounds totaling to an Investment of 1.5 Million Pounds. The 1.5 Million Pounds which was proposed to be Invested belonged to Mr. Chagganlal Suchak (NRI) which was earned by him outside India from various businesses. However merely because of Mr. Chhaganlal Suchak's advancing age and for the sake of administrative convenience in the event of any exigency, the bonds were subscribed in the name of his son Mr. Suryakant Suchak. 2 At the time of making application, a demand draft dated 19.08.1998 of 1.5 Million Pounds was drawn on National Westminster Bank PLC (a Foreign Bank) in name of State Bank of India NRI Branch Mumbai A/c RIB's. The remittance from foreign bank account evidences that RIB's were subscribed using foreign funds and has no connection with India or Indian Income. 3 Subsequently SBI had issued 150 RIB's to the applicant Mr Suryakant Suchak on 31st October 1998. 4 The RIB's issued by SBI on 31.10.1998 matured on 01.10.2003 Chagganlal Suchak Family Trust was settled on 24.05.2001. At the time of settlement, no bank account was opened in India. The settlement of Resurgent India Bonds into Chhaganlal Suchak family Trust was already decided at the time of Formation of trust i.e 24th May 2001. As per Para 5 of Trust deed on Pg 3 and Para 10 of Trust deed on Pg 4, Mrs. Kantaben Chagganlal Suchak (wife of Chagganlal Suchak) had already intended that RIB's held by Mr. Suryakant Suchak will form part of trust fund because the funds always belonged her husband Mr. Chagganlal Suchak. Thus, all the maturity proceeds ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 5 would be automatically dwelled in the trust. The bank account of Chagganlal Suchak Family Trust was opened in HSBC Geneva on 20/102003. These facts form a part of trust deed and are also duly sworn by Mr Suryakant Suchak before Notary Public of London vide his affidavit dated 10.06.2015. 5 Further, the trust had invested maturity proceeds of RIB into various fiduciary deposits and liquid investments. These funds kept on increasing year on year due to return on investments. 6 In 2011/12 SCS Trust was formed for the specific benefit of Suryakant Suchak family and the funds were transferred from CSFT to SCS FT. 5. The flow chart reflecting the movement was as under:- FLOW CHART REFLECTING THE MOVEMENT OF FUNDS TO CSFT Application for Resurgent India Bonds (RIBs) (19.08.1998) Fund distributed to the beneficiaries (All non residents outside India) (08.08.2011) Formation of Chhaganlal Suchak Family Trust (24.05.2001) Issuance of Bonds (31.10.1998) Settlement of maturity proceeds to CSFT (01.10.2003) Maturity of RIBs (01.10.2003) ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 6 6. Thus, it was stated that source of funds belong to assessee’s father-in-law which was invested in Resurgent India bonds, and after creation of trust, CSFT, and after settlement of maturity of proceeds to CSFT and finally it went for the benefit of assessee’s brother-in-law. Suryakant Suchak. Thus, assessee was neither the owner of the fund nor the beneficiary of the fund. 7. However, the ld. AO held that Mr. Dilip J. Thakkar and his wife Mrs. Indira D Thakkar were managing the affairs of the off- shore discretionary Trust CSFT. The above Trust had as many as eight bank accounts in HSBC bank, Geneva and had a balance of USD 31,29,878/- as on Feb-2007. Ld. AO on perusal of the Trust deed noted that the Chagganlal Suchak Family Trust was settled on 24\" May, 2001 and the trust was settled between Smt. Kantaben Chagganlal Suchak as ‘settler’ and Sh. Suryakant Chagganlal Suchak, Sh. Shirish Chagganlal Suchak and Sh. Madhu Chagganlal Suchak called as \"Trustee\" The assessee's wife Smt. Indira D. Thakkar was in fact the daughter of the settler of the Trust. The address of the above trust was shown as 256, Upper Palace, Orchards, Sadashiv Nagar, Bangalore. The stamp paper of the Trust was purchased in Mumbai. Further, the trust deed was signed in the presence of assessee Sh. Dilip J. Thakkar and Sh Indira D. Thakkar along with the three above mentioned Trustees. The administrative address of the Trust was the same as the office address of the assessee in Mumbai. This proved that not only was the Trust formed in India but it was also managed from India by Mr. Dilip J. Thakkar and Mrs. Indira ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 7 D. Thakkar who were also the signatories of the foreign bank account. Thus, the AO came to the conclusion that the taxability of the Trust lied in India as per the jurisdiction of the Income Tax Act 1961. Also, Mrs. Indira D. Thakkar and her two daughters were found to be the beneficiaries of the said Trust. The AO also noted that funds had been transferred from the Trust to the other family members on the instructions of Mr. Dilip J. Thakkar and Mrs. Indira D. Thakkar and his two daughters had also received the benefits. The AO observed that the Trust was a discretionary private trust with all the unlimited powers vested in the hands of the Trustees/Protector to apportion money, to make investment decisions or to increase or decrease the ratio of the benefits to the beneficiaries. The AO thus concluded that the Chagganlal Suchak Family Trust (CSFT) was created by Mr Dilip J. Thakkar in association with his family members and in-laws as a Special Purpose Vehicle to channelize the unaccounted income and park it outside the country in HSBC Bank Geneva. Therefore, the fund parked in CSFT was held to be belonging to Sh. Dilip J. Thakkar and was held to be his income which had not been offered to tax. The peak amount standing for FY 2005- 06 was USD 2361551.79 equivalent to Rs. 10,50,41,824/- which was added to the total income of the assessee for AY 2006-07. 8. The ld. AO has also referred to certain materials found during the course of search which are highlighted in the following manner:- ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 8 “i) On page No. 134 of Annexure-3 of the loose papers seized from the appellant's residence during search, Smt. Indira D. Thakkar is mentioned as one of the principal beneficiaries. (ii) Page No.1 of the loose papers of Annexure A-1 Seized from the appellant's house during the search is a letter dated 08/08/2011 signed by the appellant and is related to transfer of Sig Pounds of 1 million for the benefit of HSBC Pvt Bank (Sussie) SA on 08/08/2011 for the benefit of SCS Family Trust (SCSFT) A/c: No 8213-513408-0001 from HSBC Pvt. Bank, Geneva, Switzerland (Client No. 1423320 A/c 1148 2341-2001). (iii) Page No.27 to 42 of Annexure A-1 of the loose papers seized from the appellant's house is account mandate form, which is signed by the appellant Sh. Dilip J Thakkar and his wife Sml Indira D. Thakkar (iv) Page No. 30 of Annexure A-2 of the loose papers seized from the appellant's house during search clearly states that the said trust was formed on 15/03/2004 at Mumbai, and Sh. Dilip J. Thakkar and his wife Smt. Indira Dilip Thakkar are named as the trustees It also mentions it to be private discretionary trust. (v) On Page No. 155 of Annexure A-3 found and seized from the appellant's house, it has been alleged by Madhu C Suchak, that distribution of Khoday funds to Smt. Indira D Thakkar and distribution of trust funds by the appellant to his family members have taken place without consent from the trustees. (vi) On page No. 79 of Annexure A-2 of the loose papers seized from the appellant's house during search action, the Suchak family Group Structure is drawn. (vii) Page No. 94 and 95 of Annexure A-2 of the loose papers seized from the appellant's house refers to RIB bonds. (viii) Page No. 6 of Annexure A-1 is again another letter dated 20\" January 2011 to HSBC Private Bank (Suissee) Statutory Auditors, Geneva directing transfer by Swift GBP of Pounds. 1,00,075/- to the account of HSBC Private Bank (suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT) ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 9 (ix) Page No. 79 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip.J Thakkar shows the Suchak Family's Chart highlighting the interest of Sh. Dilip J Thakkar in various concerns of the Suchak family and Chagganlal Suchak Family Trust (CSFT) (x) Page No. 152 and 153 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J Thakkar show receipt of Resurgent Indian Bonds (RIB) in 2003 from Sh. Chagganlal M Suchak and Chagganlal Suchak Family Trust (CSFT) (xi) Page No. 174 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J-Thakkur show certain transactions of 1 million sterling pounds between Chagganlal Suchak Family Trust (CSFT) and SCS Family Trust (SCSFT), in which Sh. Dilip J Thakkar and Smt. Indira D Thakkar are trustees (xii) Page No. 33 to 42 of Annexure A-1 show the active involvement of Sh. Dilip J Thakkar and Smt. Indira D Thakkar in the affairs of SCS Family Trust (SCSFT), which in turn received benefits from Chagganial Suchak Family Trust (CSFT) (xiii) Page No. 25 of Annexure A-2 of the loose papers seized from the premises of Sh Dilip J Thakkar is a resolution passed during the meeting of the trustees of Chaggarilal Suchak Family Trust (CSF T) on 21/10/2004 signed by Sh. Dilip J Thakkar and Smt. Indira D Thakkar for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280 (xiv) Page 33 to 42 of Annexure A-1 are the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank-(Suisse) Statutory Auditors Hong Kong Branch / Singapore Branch / Nassau Branch dated 28/08/2010 signed by Dilip J Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also in INDIA. 11.3.1.3 Thus, the above material found and seized consequent to the search in the case of Sh. Dilip J Thakkar showed that the appellant and his wife were the Trustees and authorized ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 10 signatories/protectors of Chagganlal Suchak Family Trust (CSFT) and key controllers of the affairs of the Trust. Their daughters and the appellant's wife had admittedly been the beneficiaries of the Trust in the past. 9. AO has also referred to certain extracts of statement of Mr. Dilip J Thakkar recorded in 10/11.08.2011 u/s.132(4) wherein he has stated that some of his family members were beneficiaries in Carlton Corporation and CM Suchak Trust for some time but they never received any benefit nor they were beneficiaries later on. None of the family members were beneficiaries of any trust either in India or abroad. He admitted that he and his wife were authorised signatories as trustees in fiduciary capacity of two trusts and his wife was also an authorised signatory in non- resident brother’s account. There is also reference to certain paper of giving advice for transfer of funds from HSBC bank to the account of CM Suchak Trust to the account of SCS Family Trust with HSBC, Singapore. He further clarified that his two daughters were earlier beneficiaries, however, they were no longer beneficiary of the trust and neither did they received any fund or benefit from the trust. Assessee also referred to base document received from DGIT (Inv) which has been highlighted in the following manner:- CH 33 0868 9050 9114 8234 I CH 36 0868 9050 9114 8238 4 CH 48 0868 9050 9114 8924 9 CH 33 0868 9050 9114 9329 6 CH 33 0868 9050 9114 8928 1 CH 33 0868 9050 9114 8237 1 CH 33 0868 9050 9114 7666 1 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 11 CH 33 0868 9050 9114 9723 1 And the Client ID of the assessee Sh. Dilip J. Thakkar and his family are as below; 15.7. The following information also appeared in the base documents received from DGIT (Inv) Mumbai: i. That the name of the assessee Sh. Dilip J Thakkar is mentioned in the document. ii. Address- That the name of the assessee is appearing on this document along with his residential address. iii. That the name of assessee is appearing in the name of \"Nom du profit client\" as DJT/IDT as Trustee of Chagganlal Suchak Family Trust (CSFT). iv. That in the said documents in the heading \"Lien personnel/profit client\" - it is mentioned as account Holder and details \"du lien\" as trustee. v. That in the said document Sh. Suryakant Suchak, Sh. Madhu Suchak & Sh. Shirish Suchak is mentioned as Attorney in the subsequent pages in profiles clients concerns. Sr. No. Name ID Number 1. Dilip Jayantilal Thakkar 5090181752 2. Indira Dilip Thakkar 5090174141 3. Mitali Rohit Lakhanpal 5090174139 4. Deval Dilip Thakkar 5090174140 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 12 vi. That in the said document the assessee Sh. Dilip J Thakkar is mentioned as beneficial owner/account holder in profit clients concerns. 10. Thus, AO concluded the fact that assessee is maintaining foreign bank account in HSBC Bank Geneva, Switzerland not only emerged during the course of search but also corroborated with the base documents received from the DGIT (Inv) Mumbai. Again he has referred to certain questions and answers of the assessee during the course of the search and concluded that the statement of the assessee reveals that Mrs. Kantaben C Suchak wife of late Mr. Chagganlal Suchak is the settler of the above said Chagganlal Suchak Family Trust (CSFT). The said trust maintains its bank accounts with HSBC Private Bank, (Susie)- Geneva. The relevant observation of the AO are as under:- “15.11. In his submission Sh. Dilip J Thakkar stated that, Chagganlal Suchak Family Trust (CSFT) was formed before 1998, but was funded only in 2008 by way of dissolution proceeds of M/s Carlton Corporation (Trust) and its subsidiary entities as a result of the consent decree awarded by the Royal Court of Jersey dated 02/10/2008, He maintained that he i.e. Sh. Dilip J. Thakkar and his wife Smt. Indira Thakkar are trustees and authorized signatories/ protectors of Chagganlal Suchak Family Trust (CSFT) that he and his family members have not derived any benefit from the trust although his wife and daughters are beneficiaries of Chagganlal Suchak Family Trust (CSFT). He was asked to substantiate his position by way of producing the trust) deed and the bank account 15.12 However the assessee has not produced the trust deed or the bank account statement of HSBC Geneva. On the contrary the documents seized during search show that funds have been transferred from the trust to other family members on the ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 13 instruction of Sh. Dilip Thakkar and Smt. Indira Thakkar and his two daughters had indeed received the benefits. 15.13 In the absence of submission of the trust deed and the complete bank account, proposal under Exchange of Information under DTAA u/s 90 of the IT. Act was sent to FT & TR- CBDT-New Delhi to seek information from the HSBC Bank Geneva. The Competent Authority vide its letter reference no. F No. 504/125/2012-FTD/I dated 4th March 2013 informed that the proposals have been sent to the Swiss Tax Authorities had been made on 5th December 3012 The assessee Sh. Dilip J Thakkar, his wife Smt. Indira Thakkar and his daughters Ms Mitali Lakhanpal & Ms Deval Thakkar submitted the consent waiver forms prescribed for seeking information under exchange of information under the DTAA with the Swiss authorities. 15.14 The information in regard to the references made to HSBC Bank, Geneva has not been received till date. However information from HSBC Bank Singapore in case of SCS Family Trust (SCSFT) has been received, which will be discussed in upcoming Para. 15.15 The assessee’s contention that he is not the account holder and that he and his family members have not derived any benefit from the above bank account and that the account was opened by his in lows in the name of Chagganlal Suchak Family Trust (CSFT) for the benefits of his children and grandchildren and he and his wife role is that of a protector/author and signatory? Trustee so that the distribution proceeds of the same is done equitably and fairly. The contention of the assessee is not acceptable on the following grounds as already discussed & again reproduced below. Reasons detailed herein above and reiterated as under 1 That the name of the assessee Sh. Dilip J Thakkar is mentioned in the document. 2 That the name of the assessee is appearing on this document along with his residential address ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 14 3 That the name of assessee is appearing in the name of \"Nom du profit client as DJTADT as Trustee of Chagganlal Suchak Family Trust (CSFT) 4 That in the said documents in the heading \"Lien personnel profit client it is mentioned as account Holder and details \"du lien as trustee 5 That in the said document Sh. Suryakant Suchak, Sh. Madhu Suchak & Sh. Shirish Suchak is mentioned as Attorney in the subsequent pages in profits clients concernes. 6. That in the said document the assessee Sh. Dilip J Thakkar is mentioned as beneficial owner/account holder in profil clients\" concernes. 7 That in these base documents the assessee Sh. Dilip J Thakkar is appearing as trustee beneficial owner protector/account holder of the trust which is maintaining account in HSBC Bank Geneva 15.16. The assessee has not furnished the complete bank account, nor has the assessee submitted the purported trust deed neither the so called beneficiaries have come up to own up and substantiate the claims made by the assesee. Further the alleged beneficiaries are mentioned as \"Anoney in the base document while Sh. Dilip J Thakkar is mentioned as the \"Account Holder/Beneficial Owner/Trustee / Authorise Signatory/Protector\" with virtual all powers to make decisions. Undeniably the impugned trust is a discretionary private trust with all and unlimited powers to apportion money, make investment decisions, increase or decrease the ratio of the benefits to beneficiaries being vested in the hands of the truster protector Thus it is evident that the account maintained by Chagganlal Suchak Family Trust (CSFT) is an Indian Trint created by Sh. Dilip J. Thakkar and the account in HSBC Bank Geneva in the name of the trust is maintained and controlled by Sh. Dilip J. Thakkar and therefore the submission of the assessee is of no help to him and is rather a fancy story woven by him to extricate himself out of the situation without appreciating the important attribute of property which include beside control, right to alienate and right to distribute and right to enjoyment. Here in this case assessee claims that he has ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 15 not enjoyed the benefits is not acceptable as he has failed to substantiate his claim that he has not enjoyed the benefits while essential characteristic of property le control, to alienate and right to distribute are very much present in and have been accepted and proved beyond doubt above on the basis of documents found and investigation made by the department. 15.17. Therefore from the above discussion the following conclusion emerges which clearly rebuts the contentions of the assessee Sh. Dilip J. Thakkar i. That the stamp paper for the creation of Trust ie. Chagganlal Suchak Family Trust (CSFT)was purchased in Mumbai. ii. That the Trust settled by Kantaben C Suchak is having address 256. Upper Palace, Orchandi Sadashiv Nagar Bangalore in. That the trust is settled in India. iv. That as a corollary of point no i, ii & iii, it is clear that the Chagganlal Suchak Family Trinit (CSFT) is an Indian Trust. v. That the assessee Sh. Dilip J Thakkar and his family members have derived financial benefits from the maturity proceeds of RIB. vi. That being an Indian trust Chagganlal Suchak Family Trust (CSFT) has to submit to the laws of the Republic of India which include IT. Act. vii. That being an Indian juridical person the Chagganlal Suchak Family Trust (CSFT) has violated law in not filing its return of income viii That the Chagganlal Suchak Family Trust (CSFT) has not only not filed the return of income but has also not disclosed the foreign bank account in HSBC Bank Geneva ix. That the submission of assessee Sh. Dilip J. Thakkar that investment in RIB was made by Sh Chagganlal Mulji Suchak through Chagganlal Family Suchak Family Trust (CSFT) settled by Smt. Kantaben Chagganlal Suchak is incorrect, Rather the ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 16 investment was made by Sh. Suryakant Chagganlal Suchak with c/o Dilip J. Thakkar x. That the submission of the assessee that maturity proceeds of RIB constitutes the corpus of Chagganlal Suchak Family Trust (CSFT) is incorrect. Rather the maturity proceeds of Resurgent India Bonds (RIB) went to Suryakant Chagganlal Suchak in Union Bank of India and State Bank of India and thus the maturity proceeds of the Resurgent India Bonds (RIB) do not constitute the corpus of the Chagganlal Suchak Family Trust (CSFT). Therefore the amount mentioned in the base documents of Chagganial Suchak Family Trust (CSFT) maintained with HSBC Bank Geneva received under exchange of information from French Authorities through DGIT (Inv) Mumbai is independent of the maturity proceeds of Resurgent India Bonds (RIB) contrary to the claim made by the assessee Sti Dilip J Thakkar And in fact the two have no correlation and are therefore separate amounts. And therefore are to be treated separately and independently for the purpose of taxation xi. That the Chagganlal Suchak Family Trust (CSFT) is created by the assessee Sh Dilip J Thakkar in collusion with his family member and in laws as special purpose vehicle to channelize the unaccounted income and park it outside India in the HSBC Bank Geneva xii. Therefore the fund parked in Chagganlal Suchak Family Trust (CSFT) belongs to Sth Dilip J Thakkar and is his income which has not been offered for taxation in his retum of income Hence, the peak credit deposit of US $ 31,29,878 in the bank account of Chagganlal Suchak Family Trust (CSFT) in Februnry-2007 is treated his undisclosed income. For the purpose of taxation the maximum balance standing ie. Peak amount standing for F.Y. 2005-06 is US $ 2361551.79 is therefore added as his undisclosed income in the relevant A.Y. 2006-07, Considering the conversion rate of UD $ to INR as prevailing in March 2006 at Rs.44.48/- the total deposit works out in INR at Rs.10,50,41,824/-, is added for the A.Υ. 2006-07 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 17 The maximum balance ie. Peak credit standing in the account for F.Y. 2006-07 is US $ 3129878. However after giving benefit of US $ 2361551.79 which is added in F.Y. 2005-06 ie. A.Y. 2006-07, the balance amount US $ 768326.49 is added as his undisclosed income for F.Y. 2006-07 Le. the relevant A.Y. 2007-08. Considering the conversion rate of UD S to INR as prevailing in March 2007 at Rs.44.02/-,the total deposit works out in INR at R3,38.21.732/-, is added for the A.Y. 2007-08. Penalty u/s 271 (1) (c) is initiated separately (Addition For A.Y. 2006-07 INR at Rs.10,50,41,824/-) 11. Ld. CIT (A) has confirmed the addition made by the ld. AO in his detailed order and all his relevant observations; we shall discuss in the subsequent paragraphs. 12. Before us, the assessee representing himself, first of all submitted that the observations and the finding of the ld.AO are either incorrect or wrong conclusions have been drawn. The ld. AO’s certain allegations have been rebutted with reference to certain documents in the following manner:- Page No./Para Allegation Reply/Remark 55/6.7 1. Page No. 134 of Annexure-3 of the loose papers seized from the residential premises of Sh. Dilip J Thakkar during search, Smt. Indira D. Thakkar is clearly mentioned as one of the principle beneficiary. This paper relates to Carlton Corporation and nothing to do with CSFT. The only common thing is both are settled by Suchak family. Appellant is neither trustee nor beneficiary ii. Page No. 1 to 22 of Annexure A- 1 of the loose papers seized from the premises of Sh. Dilip J Thakkar pertain to the affairs of overseas parties viz. Chalals Holdings Ltd. belonging to Carlton Corporation, which in turn is related to Chagganlal Suchak This paper relates to Carlton Corporation and nothing to do with CSFT. The only common thing is both are settled by Suchak family. Appellant is neither trustee nor beneficiary ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 18 Family Trust (CSFT Page No. 1: This is a direction given by Sh. Dilip J Thakkar in a letter dated 08/08/2011 to the HSBC Private-Bank. Geneva to remit 1 million pounds by swift GBP to the account with HSBC Private Bank (Suisse) Statutory Auditors, Singapore, of SCS Family Trust (SCSFT). In 2011 as per affidavit of Suryakant Suchak, 90 to 92B of PB, he wanted to create separate trust for his family and hence amount was transferred as benefit to beneficiary being SCS FT. Page No.6. This is again another letter dated 20\" January 2011 to HSBC Private Bank (Suissee). Statutory Auditors, Geneva directing transfer by Swift GBP of Pounds 1,00,075/-10 the account of HSBC Private Bank, (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT). Page 177 of PB; In 2011 as per affidavit of Suryakant Suchak, 90 to 928 of PB, he wanted to create separate trust for his family and hence amount was transferred as benefit to beneficiary being SCS FT. Page 172 of PB is list of beneficiary of SCS FT which are family members of Suryakant Suchak and Dilip Thakkar and Indira Thakkar are not beneficiaries. Page 10- This is a letter dated 04/11/2009 addressed 10 Anish S Suchak and Mrs. Bella Anish Suchak, confirming transfer of GBP 1,000,000 by wire transfer, from the trust account with HSBC Private Bank (Suisse) Statutory Auditors to the account with Scotia Bank, Ontario This is benefit declared to the Anish Suchak from CSFT. They are children of Suryakant Suchak. Appellant has not received anything from the trust. Page 172 of PB Is list of beneficiary of SCS FT which are family members of Suryakant Suchak and Dilip Thakkar and Indira Thakkar are not beneficiaries. Iii. Page No. 79 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip Thakkar shows the Suchak Family's Chart highlighting the interest of Sh. Dilip Thakkar in various concerns of the Suchak family and Page 174 of PB. It shows family chart of Suchak family and the respected entities. Dilip Thakkar is just mentioned as protector and neither Trustee nor Beneficiary. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 19 Chagganlal Suchak Family Trust (CSFT) Iv. Page No. 128 to 134 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J Thakkar show's details of some financial transactions related to Carlton Corporation, which in turn is related to Chagganlal Suchak Family Trust (CSFT). This paper relates to Carlton Corporation and nothing to do with CSFT. The only common thing is both are settled by Suchak family. Appellant is neither trustee nor beneficiary V. Page No. 152 and 153 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip Thakkar shows receipt of Resurgent Indian Bonds (RIB) in 2003 from Sh.Chagganlal M Suchak and Chhaganlal Suchak Family Trust (CSFT). Page 178 of PB; it shows distribution of RIB which was invested by Suryakant Chhaganlal Suchak on behalf of his father and not on behalf of Trust. Infact CSFT was not formed in 1998. vi. Page No.174 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J Thakkar shows certain transactions of 1 million sterling pounds between Chagganlal Suchak Family Trust (CSFT) and SCS Family Trust (SCSFT), in which Sh. Dilip J Thakkar and Smt. Indira D Thakkar are trustees. Also, page No.33 10 42 of Annexure A-1 proves the active involvement of Sh. Dilip J Thakkar and Smt. Indira D Thakkar in the affairs of SCS Family Trust (SCSFT), which in turn receives benefit from Chagganlal Suchak Family Trust (CSFT). In 2011 as per affidavit of Suryakant Suchak, 90 to 92B of PB, he wanted to create separate trust for his family and hence amount was transferred as benefit to beneficiary being SCS FT. Page 180 of PB Page 172 of PB is list of beneficiary of SCS FT which are family members of Suryakant Suchak and Dilip Thakkar and Indira Thakkar are not beneficiaries. vil. Page No. 25 of Annexure A-2 of the loose papers seized from the premises of Sh Dilip J Thakur: This is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by Sh. Dilip Thakkar and Sim. Indira D Thakkar for opening a new bank account with HSBC. Geneva in This was for normal bank account operation ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 20 place of the existing account No. 13280 viii. Page 118 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip I Thakkar: This is a letter adressed by Sh. Dilip J Thakkar as director of Kansu Corporation, Dated 11/03/2008 in the Director, Elkay Finance LTD., Jersey acknowledging the debt and asking to set off the interest receivable by Kansu Corporation. This paper relates to Kansu Corporation and nothing to do with CSFT. The only common thing is both are settled by Suchak family. Appellant is neither trustee nor beneficiary ix. Page 26 of Annexure A-1 of the loose papers seized from the premises of Sh. Dilip J Thakkar related to C'hagganlal Suchak Family Trust (CSFT). 13. Assessee further submitted that time and again assessee had been explaining in response to all the queries raised by the ld. AO that the money in CSFT did not belong to him neither to his wife nor were they any kind of any beneficiaries. Further, highlighting various observations of the ld. CIT (A) in his entire order he has given his brief comments which are as under:- No. CIT(A) Observations Our Comments 11.3.1 The appellant has firstly argued that the addition has been made in his case only on the basis of unsigned unauthenticated stolen data of HSBC Bank, Geneva, which was already available with the search party and it was not the case that this data was found from the premises of the appellant during the course of the search. Thus, it was claimed that no incriminating material was found during the course of the search on the basis of which such addition was made The addition of Rs. 10.50 Crore being peak balances as per base note was carried by search party during action and not found at the premises of appellant. 11.3.1.1 in this regard it is seen that while the data in respect of HSBC Bank Geneva was the starting point of the investigation, ultimately a search was conducted u/s 132 of the Act in the case of the appellant on 10.08.2011 where incriminating material in the form of documents, loose papers etc. were found indicating how Sh. Dilip J. Thakkar was managing and controlling the day to day affairs The appellant was managing as Protector and not the owner. The funds belong to third party and he was acting in capacity of Protector which he do act for other Trust as well. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 21 of the Chagganlal Suchak Family Trust (CSFT) which were corroborated by the statements recorded 11.3.1.2 Some of such incriminating material found is mentioned below as illustrative examples: i) On page No. 134 of Annexure-3 of the loose papers seized from the appellant's residence during search, Smt. Indira D. Thakkar is mentioned as one of the principal beneficiaries These papers are of Carlton Trust and not CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). Same can be verified No addition is made on account of Carlton Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAN FAMILY TRUST (CSFT) ii) Page No.1 of the loose papers of Annexure A-1 Seized from the appellant's house during the search is a letter dated 08/08/2011 signed by the appellant and is related to transfer of Stg Pounds of 1 million for the benefit of HSBC Pvt Bank (Sussie) SA on 08/08/2011 for the benefit of SCS Family Trust (SCSFT) A/c: No. 8213-513408-0001 from HSBC Pvt. Bank, Geneva, Switzerland (Client No. 1423320 A/c 1148 2341-2001). These papers are of SCS Family Trust Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of CHHAGANL SUCHAK FAMILY TRUST (CSFT). iii) Page No.27 to 42 of Annexure A-1 of the loose papers seized from the appellant's house is account mandate form, which is signed by the appellant Sh. Dilip J. Thakkar and his wife Smt. Indira D. Thakkar These papers are of SCS Family Trust. Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). iv) Page No. 30 of Annexure A-2 of the loose papers seized from the appellant's house during search clearly states that the said trust was formed on 15/03/2004 at Mumbai, and Sh. Dilip J. Thakkar and his wife Smt. Indira Dilip Thakkar are named as the trustees. It also mentions it to be private discretionary trust. These papers are of SCS Family Trust. Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). v) On Page No. 155 of Annexure A-3 found and seized from the appellant's house, it has been alleged by Madhu C Suchak, that E distribution of Khoday funds to Smt. Indira D. Thakkar and distribution of trust funds by the appellant to his family members have taken place without consent from the trustees. These papers are Carlton Trust Chhaganlal and not Suchak Family Trust (CSFT). Same can be verified. No addition is made on account of Carlton Trust. It has no relevance to the ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 22 addition made on a/c of Chhaganlal Suchak Family Trust (CSFT). vi) On page No. 79 of Annexure A-2 of the loose papers seized from the appellant's house during search action, the Suchak family Group Structure is drawn It is a family tree. vii) Page No. 94 and 95 of Annexure A-2 of the loose papers seized from the appellant's house refers to RIB bonds These are documents relating to RIB Bonds. viii) Page No. 6 of Annexure A-1 is again another letter dated 20 January 2011 to HSBC Private Bank (Suissee) Statutory Auditors, Geneva directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private Bank (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Auditors, Singap Trust (SCSFT). These papers are of SCS Family Trust. Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). ix) Page No. 79 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip J Thakkar shows the Suchak Family's Chart highlighting the interest of Sh. Dilip J Thakkar in various concerns of the Suchak family and Chagganlal Suchak Family Trust (CSFT) It is a family tree diagram. x) Page No. 152 and 153 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J Thakkar show receipt of Resurgent Indian Bonds (RIB) in 2003 from Sh. Chagganlal M Suchak and Chagganlal Suchak Family Trust (CSFT). It is a maturity proceeds of RIB Bonds Legacy of Late Mr. Chhaganlal Suchak. There is no relevance to Chhaganlal Suchak Family Trust (CSFT) or addition. xi) Page No. 174 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J.Thakkar show certain transactions of 1 million sterling pounds between Chagganlal Suchak Family Trust (CSFT) and SCS Family Trust (SCSFT), in which Sh. Dilip J. Thakkar and Smt. Indira D Thakkar are trustees. DJT & IDT are trustees of Suryakant Suchak Family Trust (SCS FT) created for benefit of Suchak Family who is brother-in-law of appellant. The share of Mr. Suchak in Chhaganlal Suchak Family Trust (CSFT) is transferred to Suryakant Suchak Family Trust (SCS FT). No relevance to appellant. xii) Page No. 33 to 42 of Annexure A-1 show the active involvement of Sh. Dilip J. Thakkar and Smt. Indira D Thakkar in the affairs of SCS Family Trust (SCSFT), which in turn received benefits from Chagganlal Suchak Family Trust (CSFT). Suryakant Suchak Family Trust (SCS FT) & Chhaganlal Suchak Family Trust (CSFT) are two different Trust. CIT(A) got confused by treating same. Chhaganlal Suchak Family Trust (CSFT) was ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 23 created for benefit of three sons of Chhaganlal Suchak. Hence some fund belonging to Suchak was transferred xiii) Page No. 25 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip J Thakkar is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by Sh. Dilip J Thakkar and Smt. Indira D Thakkar for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280. These papers are of SCS Family Trust. Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of Chhaganlal Suchak Family Trust (CSFT). xiv) Page 33 to 42 of Annexure A-1 are the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank-(Suisse) Statutory Auditors Hong Kong Branch /Singapore Branch/Nassau Branch dated 28/08/2010 signed by Dilip J Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also in INDIA These papers are of SCS Family Trust. Same can be verified. No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of Chhaganlal Suchak Family Trust (CSFT). CIT(A) got confused between Suryakant Suchak Family Trust (SCS FT) & Chhaganlal Suchak Family Trust (CSFT). 11.3.1.3 Thus, the above material found and seized consequent to the search in the case of Sh. Dilip J. Thakkar showed that the appellant and his wife were the Trustees and authorized signatories/protectors of Chagganlal Suchak Family Trust (CSFT) and affairs of the Trust. Their daughte key controllers of the affe had admittedly been the beneficiaries of the Trust in the past How can paper of Carlton, RIB & Suryakant Suchak Family Trust (SCS FT) be used to come to conclusion that appellant control Chhaganlal Suchak Family Trust (CSFT) 11.3.1.4 In this regard, the statements recorded of the appellant during and after search are also very important and the relevant extracts are reproduced below. 11.3.1.5 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 10/11.08.2011 under section 132(4) of the Income-Tax Act, 1961 are as under: Already replied in 11.08.2011 and till date maintained the same stand Q.8 Kindly reiterate whether you or your family members were the beneficiaries of any trust registered in India or abroad? Ans. My family members were the beneficiaries in Carlton Corporation A and CM Suchak Trust, for sometime, but they never received any benefit and now they are not beneficiaries. At present my family members are not beneficiaries of any trust either in India or abroad. Q.9 Do you or your family members, in Admitted on 11.08.2011 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 24 individual capacity or any other capacity hold any foreign bank account or are beneficiary or authorized signatory in any foreign bank? that they are trustees of Suryakant Suchak Family Trust (SCS FT) and not Chhaganlal Suchak Family Trust (CSFT). Ans. Me and my family members do not have any bank account of ours outside India, except my younger daughter Ms. Deval, who was in Canada for last 10 years who has comeback to India. She may have continued her foreign bank account when she was a non-resident. Further, me and my wife are authorized signatories as trustees in fiduciary capacity of two trust, namely CM Suchak Family Trust and SCS Family Trust (SCSFT) and my wife is also an authorised signatory in her nan-resident brother's account Q.10 From where was the Initial corpus for formation of Carlton Corporation (first trust to be established by Suchak Family) generated? Ans I am not sure but it must have been out of the savings of Late Sh. CM Suchak, the Settlor, who was a British Citizen Q.11 I am showing you pages numbered 128 to 134 of Annexure A 3 found and seized from this promise. Kindly confirm the same and explain as to the locus of various companies like Chalais Holding Ltd. (Liberia), Elkay Finance Ltd. (Jersy), Boise Holding Ltd., Chalais Holding (Canada) Ltd. Akashi Investments Statutory Auditors (Bahamas), Kansu Corporation Ltd. (Bahamas) and Sumotec Ltd. (BVI) with respect to Carlton Corporation. Carlton Trust was created for benefit of Chhaganlal Suchak Family Ans Yes, I confirm that the said papers were found at this premise. All the above mentioned companies are under the Carlton Corporation, the Trust. This is the recording of a meeting held with the trustees by two principal beneficiaries in Jersey on 23.01.2003. The two beneficiaries being Sh Suryakant Suchak and Madhu Suchak. It records the discussion that took place at the meeting. Q.12 I am showing you page number 152 of Annexure A3 found and seized from this premise. \"Kindly confirm the same and also tell in whose handwriting is it written? Ans Yes, I confirm that the above said page was found from my residence and the handwriting is mine Q.13 This said paper denotes a letter written to Suryakantbhai (Suryakant Suchak) which mentions about the maturity proceeds of RIB and how the same were dealt with. In ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 25 this regard answer the following queries- 1. What does RIB this for and what were its business precincts 2. In serial number 2 it mentions certain amount totalling to 1,73,24,680/- against the names of Indira (your wife) and Mitali (your daughter). In This regard explain on what pretext. This money was received by the above mentioned two persons and were This reflected in the accounts and Income Tax records of This two persons.. 3. At Sr. No. 5 it is mentioned that around Pounds 5,04,597 would be kept in FCNR accounts for \"my pay\" Whether this amount was offered by you as your Income for taxation. 4. Below Sr. No. 5, there are two entries naming Deval, Indira and Mitali. Kindly explain these entries and their tax implication. On date of search admitted that these are legacy from father in laws to family members of appellant. Ans RIB means Resurgent India Bonds, My father in law Sh. C.M Suchak had set aside a corpus for the benefit of and children and grand children, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly my wife received Pound 1,36,000/-daughter Mitali received Pounds 90,000 and my daughter Deval, residing at Toronto received Pounds 90000 as legacy. These amounts have been shown as legacy received in 2003. As to the query raised at No.3, the FCNR deposit is for 'one year and not 'my pay. The next query about remittance of Pound to go direct to her in Toronto by wire transfer Mitali and Indira's legacy totalling Pound 2,26,000 will get converted into rupees @ Rs. 76.68 per pound. These payments being legacies were capital receipts and therefore were not taxable and were accordingly credited directly to the respective capital accounts ……….. ……….. Q.14 I am showing you Pages 153 of the Annexure - A 3 found and seized from this premises Kindly confirm the same On this page at serial number 6 to 9 certain funds in sterling pound have been mentioned against then names of Mitali R. Lakhanpal and Deval E Anthony (your daughters) Indira D Thakkar (your wife) and yourself and against each entry certain funds have been mentioned as on 1.1.2003 and On date of search admitted that these are legacy from father in laws to family members of appellant ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 26 subsequent accretion to entry is seen and finally the amounts standing to the credit of each of the above mentioned names are as under – Mitali Lakhanpal Sig Pound 90,000 Deva El Anthony Sig Pound 90,000 Indira Thakkar Sig Pound 1,36,000 Dilip Thakkar Sig Pound 14,400 This paper also mentions the names of other members of Suchak Family and denotes amounts Thising to the credit of their names as well. In light of this explain what is the above figures credited against your name and in the name of family members denotes. In the backdrop of the names of members of Suchak Family also appearing in the same vein. Also explain where was the above mentioned amount received by you and your family members and were they offered for Indian Income Tax. Ans This statement has to be connected with the page 152 of the Annexure A 3, wherein it is clearly shown that these are the amount of the legacy received by me and my family from Late Sh. CM Suchak on maturity of Resurgent Indian Bonds. Similar legacy was received Suchak Family as legacy. This being legacy it is recorded as legacy in our tax records and hence not tables. ……… ……… Q.17 I am showing you pages 26 to 38 of Annexure A3. Please confirm that the said pages have been found and seized from this premises. Also explain though contents therein Explained on 11.08.2011 Ans Yes, I confirm that the said pages are found and seized from my residence. Pg. 26 is the minutes of the meeting of the trustees of Chagganlal Suchak Family Trust (CST) recording the authorized signatory of the bank account of the trust. Page 27 to 38 is the minutes of the meeting of Mehta Family Board in London on 3.11.2006 wherein I was present, group belongs to my elder sister's family and he was invited to give my professional input. ……….. Q.21 I am showing you page number 174 of Annexure A-3 found and seized from this premises. Kindly explain the same Explained on 11.08.2011 that this transaction was done for Suryakant Suchak Family Trust (SCS Ans Yes, I confirm that the said paper was ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 27 found and seized from my residence. This is an advice sent to HSBC Bank Geneva to transfer funds from the account of CM Suchak Family Trust to the account of SCS Family Trust (SCSFT) with HSBC Singapore. FT). Q.24 I am showing you four bank records of HSBC Bank Geneva (made a part of the statement Annexure 2) relating to The Chagganlal Suchak Family Trust (CSFT) having following ids 5090274125, 5090174141 and 5090181752. You along with your wife Indira Thakkar and your two daughters Mitali Lakhanpal and Deval Thakkar have been mentioned as beneficial owner. Kindly explain the status in the backdrop of replies given by you in response to above queries wherein you have mentioned that neither you nor any of your family members hold any beneficial interest in any of the foreign trust. Confirmed that no fund was received from Chhaganlal Suchak Family Trust (CSFT). Ans Myself and my wife are trustees of the trust in fiduciary capacity and not as beneficial owner. My two daughters were beneficiary of the trust earlier, during which time they did not receive any benefit from the trust. As of now they are no more beneficiaries 11.3.1.6 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 19.09.2011 under section 131 of the Income Tax Act 1961 are as under: Q.3 Page No.1. This is a direction given by you in your letter dated 08/08/2011 to the HSBC Private Bank, Geneva to remit 1 million pounds by swift GBP to the account with HSBC Private Bank (Suisse) Statutory Auditors, Singapore, of SCS Family Trust (SCSFT). Please explain the complete nature of transaction stated in this letter and the source of fund involved, along with the accounting entry in the books of account of both the payer as also the receiver. This is also stated to be referred by one Mr. Sangram Singh, please give details of the involvement of said Mr. Sangram Singh Ans As decided by the settlor Smt. Kantaben C SuchakThis amount is transferred from the sub account of Sh. Suryakant Suchak with HSBC P Bank, Geneva to and account with HSBC PVT. Bank, Singapore, Sh. Sangram Singh is the Relationship Manager at HSBC PVT. Bank, Singapore Suryakant Suchak Family Trust (SCS FT) was created for benefit of Suryakant Suchak. So as a Protector the said fund transferred Q.4 Page No 4 this seems to be in your handwriting and appears to be a flowchart in connection with certain. shares of some company. Please explain the transaction along with supporting documents, if any, subsequent to 21/07/2011 when this chart ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 28 was drawn Ans This is a flow chart regarding companies of my NRI client. Sh Amitabh Himatsingka who lives in USA. On 21.07.2011, I met my client. Sh Amitabh Himatsingka, for discussion in Europe. There is no supporting evidence, as this was only a discussion. No relevance to current case Q.5 Page No.6. This is again another letter dated 20 January 2011 to HSBC-Private Bank (Suisse) Statutory Auditors. Geneva directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private Bank, (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT). This is referred by Vidya Viswanambaran /Sachin Jumani. Ans This is the draft letter to be addressed to HSBC Pvt. Bank, Geneva for transfer of funds to SCS Family Trust (SCSFT)s Bank account with HSBC Pvt. Bank, Singapore. The two names mentioned Vidya Viswanambaran and Sachin Jumani are the Relationship Managers at HSBC Pvt. Bank, Singapore. Matter relates to Suryakant Suchak Family Trust (SCS FT) and not Chhaganlal Suchak Family Trust (CSFT). Q.6 Page 10- This is a letter dated 04/11/2009 addressed to Anish S Suchak and Mrs. Bella Anish Suchak, confirming transfer of GBP 1,000,000 by wire transfer, from the trust account with HSBC Private Bank (Suisse) Statutory Auditors to the account with Scotia Bank, Ontario. Please explain this transaction with reference to the source of funds and accounting entries in this regard. Ans It is a letter myself and my wife has signed as trustees of M/s Chagganlal Suchak Family Trust for distribution of 1 million pounds to a beneficiary Sh. Anish S Suchak as per the decision taken by the settlor, I would like to clarify that Sh. Anish S Suchak, had declared This amount to tax authorities in Canada, where he is a resident Anish Suchak is son of Suryakant Suchak. The fund was transferred as benefit to him. No money is received by appellant Q.7 Page 26: This is again a similar letter dated 31/07/2009 addressed to Mr. Anish Suryakant Suchak, Canada informing the transfer of CAD 250,000 each to the account Nos 0284688 and 0347825 with Scotia Bank in Ontario. the beneficiaries being the addressee's sons Krish and Kunal. Please explain the details of the remitting bank account and the source of funds along with accounting entries Ans This is a letter signed by me and my wife as trustees of M/s Chagganlal Suchak Family Trust (CSFT) as distribution of two beneficiaries. Master Krish Anish Suchak Letter is signed as Trustee for benefit to nephew of wife who stays abroad. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 29 and Master Kunal Anish Suchak as decided by the settior. This has also been declared to Canadian tax authorities. Q.8 Page 33 to 42 This is the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank-(Suisse) Statutory Auditors Hong Kong Branch / Singapore Branch/Nassau Branch dated 28/08/2010 signed by Dilip Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also In INDIA. Please explain whether the said Trust, being Indian Trust, is filing the return of income in India, if not the reason therefor Please give details of PAN, details of returns filed, whether Income/ wealth offered. Where are the books of account of the trust maintained /audited Ans Page 33 to 42 are copies of bank account opening forms of SCS Family Trust (SCSFT) with HSBC Pvt. Bank, Singapore. This trust is based in Dubai and not in India. SCS Family Trust (SCSFT) is not ari Indian Trust and hence, returns of income is not filed in India. Since the Trust is not an Indian Trust, it has no PAN and its books of accounts are not maintained in India. Q.19 Page 79-This is a chart of certain companies and their holding You are a director in Chalais Holding Ltd & Kansu Corporation Ltd. You are also protector In Carlton Corporation. Kindly explain your and your family's interest in these companies and any income earned by you from the business of these companies. Ans This is a chart of Suchak's family holding in various company in June 2007. I was one of the protectors of their trust known as Carlton Corporation which has since been closed after the order of the Royal Court of Jersey. As a protector of the trust I was also director of two companies underneath the trust namely Chalais Holdings Ltd. and Kansu Corporation Ltd both of which are closed since after the order of the Royal Court of Jersey. I had no monetary interest in any of these trusts/companies. My involvement was only because I am the son- in-law of Suchak Family These are chart of Suchak family (in law of appellant). Holdings. It has nothing to do with appellant. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 30 Annexure A-2 Q.26 Page No. 25: This is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by you and your wife for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280. Please confirm whether such new account has been opened and if so give details of the new account and the cancellation of the old account. Copy of the bank statements shall be provided since you and your wife are authorized to operate the bank accounts. Also furnish the beneficiaries Ans This page is a copy of minutes of Chagganlal Suchak Family Trust (CSFT) regarding operation of its existing bank account with HSBC, Geneva. Since I do not control the bank accounts, I do not have the bank statements and the same are directly sent to the Settlor, Smt. Kantaben C Suchak. Q.27 Page 118 This is a letter addressed by you as director of Kansu Corp. Dated 11/03/2008 to the Director, Elkay Finance Ltd. Jersey acknowledging the debt and asking to set off the interest receivable by Kansu Corp. Please give full details of the transactions which involve mutual liability to and from the Elkay Finance Ltd Ans It is a letter written to Elkay Finance Ltd, Jersey on behalf of Kansu Corp. Ltd. In my capacity as a Director of Kansu Corporation for recovery of loan given to M/s Elkay Finance Ltd. 11.3.1.7 From the above, it is seen that the administrative address of the Trust is Sh. Dilip Thakkar's office address at M/s Jayantilal Thakkar & Co. 111(A), M.G Road Fort Mumbai. As the authorized signatory of bank account Sh. Dillip J. Thakkar was actively involved in day to day operations and financial transactions. Sh. Dilip J Thakkar alongwith his wife Mrs. Indira D. Thakkar were the trustees of the Chagganlal Suchak Family Trust (CSFT). Sh. Dilip J Thakkar and Mrs. Indira D Thakkar were the protectors of Cariton Corporation. Further, Carlton Corporation Trust was reportedly dissolved in 2008 and funds were deposited in Chagganlal Suchak Family Trust (CSFT). Carlton Corporation trust managed 90% of questions referred above are of 1) Carlton Trust 2 Suryakant Suchak Family Trust (SCS FT). None are of Chhaganlal Suchak Family Trust (CSFT). CIT(A) has referred all overseas entities name and came to conclusion for Chhaganlal Suchak Family Trust (CSFT). ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 31 three companies namely Kansu Corporation Ltd. (Cyprus), Kansu Corporation Ltd. (Bahamas) and Chalais Holdings (Canada) Ltd. Sh. Dilip J Thakkar & Smt. Indira D Thakkar were the protectors of Carlton Corporation. Sh. Dilip J Thakkar was' the Director of Chalais Holdings Ltd. (Liberia) and Kansu Corporation Ltd (Bahamas). Smt. Indira Dilip Thakkar was having interest with Kansu Corporation Ltd. (Bahamas). Therefore, it could be seen that the appellant and his wife Smt. Indira D Thakkar were involved in the management and affairs of the Chhaganial Suchak Family Trust (CST) and other related offshore entities 11.3.1.8 While Sh. Dilip J Thakkar had stated in his statement recorded on 10.08.2011 (continued till 11.08.2011) under section 132(4) of the Income Tax Act 1961 and on 19.09.2011 under section 131 of the Income-Tax Act. 1961 that Chhaganial Suchak Family Trust (CSFT) was not an Indian Trust, the copy of Deed of Trust, obtained from Canadian Tax Authorities, showed that the trust was established In India vide a Stamp Paper obtained in Mumbai and the address of the settlor of the trust namely, Smt. Kantaben C Suchak, was shown as 256, Upper Palace. Orchards. Sadashiv Nagar, Bangalore. Therefore, vide question No. 13 and 20 of the statement dated 16.04.2012 Sh. Dilip J. Thakkar was confronted with this issue. Sh. Dilip Thakkar maintained that though the deed was formed in India, trust did not have any taxable income in India and after some time it was transferred out of India. Apart from it, settlors of the trust were NRIs and trust was not having any Income, so return of income was not filed in India. The relevant portion of the statement is reproduced hereunder A Trust Deed is declaration. a Stamp Paper used of India does not make the Trust an Indian. All assets in Trust are of abroad and all events carried out were overseas. No beneficiaries were Indian nor Se ttlor was Indian. Without Prejudice If Trust is Indian please tax Trust and not appellant. Q.14 I am showing trust deed of Chagganlal Suchak Family Trust (CSFT) made on 24th May 2001, and registered in Mumbai (annexed to This statement as annexure 3). Kindly go through the same and comment on the taxability of Chagganlal Suchak Family Trust (CSFT) in India in light of the fact that it is a trust registered in India. The Trust Deed is not registered. All trustees were Non Resident and sons of Kantaben Suchak. Kindly refer Page 118 of Paper Book. None of family members of appellant were beneficiaries. Stamp Paper was used as it was settled in India. Thereafter same was transferred to Geneva. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 32 Hence same cannot be treated as Indian Trust. It is not a Charitable Trust. Moreover, Trust has no income and hence not taxable. Ans This trust was formed by the Mrs. Kantaben C Suchak while she was on a short visit to India and they had house in Bangalore, the address of which is provided al the 1st page of the said deed. It was formed with an initial corpus of GBP 100 and trustees were all family members who were and even today. NRI's. The trust had no fund and no income. Later the trust was transferred to Geneva when it received funds out of the dissolution proceeds of Cariton Corp oration, deposited in three sub- accounts of beneficiaries with HSBC Bank, Geneva. Since the trust is based in Geneva and is not managed and controlled from India, it is not taxable in India, In May 2001, when the trust was formed in India till it was shifted to Geneva, trust had no Income at all and hence there was no question of its taxability. The return of Income was not filed in India as it has no income.\" 11.3.1.9 In view of the foregoing discussion, it again showed that the statements of the assessee were contrary to the fact that the trust was formed in India. The address of the trust as appearing in the records of the HSBC Bank, Geneva, was the office address of M/s Jayantilal Thakkar & Co. at 111A, Karimji Building, M. G. Road, Fort, Mumbai which proved that not only the trust is formed in India but also was managed from India. Sh Dilip J Thakkar and Smt. Indira D Thakkar were the signatories of the Bank Account maintained with HSBC Bank, Geneva The address can be used for purpose correspondence. of The Trust is not registered in India and hence not a taxable entity in India. 11.3.1.10 Also while the appellant had stated that he and his family members had received benefits from the corpus set aside by his father-in-law, Sh. Chagganlal M Suchak, invested in RIB Bonds, and when these bonds matured in 2003, he along with your wife, and two daughters, Smt Deval E Anthony and Smt. Mitali R Lakhanpal, received the proceeds as legacy While on several occasions the assessee had stressed that neither he nor any of his family members received any fund out of Till date we have not received copy of Trust Deed received from Canadian Authority. It is denial of natural justice. Copy of Trust Deed is attached on Pg. 110-120. CIT (A) is confused between RIB proceeds received as legacy visa- vis the SUCHAK ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 33 Chagganlal Suchak Family Trust (CSFT), the Deed of Trust obtained from Canadian Tax Authorities showed that RIB Bonds were part of corpus of Chagganlal Suchak Family Trust (CSFT). Therefore, vide Question No 11 and 12 of the statement recorded on 16.04.2012, the assessee was confronted once again with respect to these receipts. The relevant portion of the statement reproduced here under. CHHAGANLAL FAMILY TRUST (CSFT) fund for three sons. Q.11 Did you or any of your family members received any RIB Bonds or any proceeds out of its maturity either from Chagganlal Suchak Family Trust (CST)or any other trust or from any of its trustees, beneficiaries or any relative of the trustees or beneficiaries? Ans My father in law Sh. C. M Suchak had set aside a corpus for the benefit of and children and grandchildren, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly, my wife received pound 1,36,000 daughter Mitali received pound 90,000, and my daughter Deval, residing at Toronto received pound 90,000 as legacy. These amounts have been shown as legacy received in 2003 Please read answers on left. Q No On page 4 Paragraph 10 of the trust deed of Chagganlal Suchak Family trust (CSFT) (annexed to This statement as annexure A-3) it is mentioned that -SBI Resurgent India Bonds (RIB) formed part of corpus of the trust and at the maturity of the said Resurgent India Bonds. (RIB), the same should merge with trust fund and be utilized for the benefit of the beneficiaries. If that be so and if your wife and daughters received proceeds out of the maturity of the said bonds, are they not supposed to be considered as beneficiaries and the proceeds be taxable in their hands? Ans The trustees of the trust- Chagganlal Suchak Family Trust (CSFT), who were also executors of Late C M Suchak, who died in 1999, distributed the proceeds as legacy to the children and grandchildren of Late C M Suchak Hence, my wife and daughters received the same as legacies\" Legacy of Late Chhaganlal Suchak Was distributed to the children as per the directions. 11.3.1.11 This again showed that the appellant and his Once again I state that ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 34 family members had received payments out of the corpus of CSFT being beneficiaries of the Trust. my family received proceeds of RIB and no amount received from corpus of Trust of Chhaganlal Suchak Family Trust (CSFT) 11.3.1.12 Thus it can be seen that there was sufficient incriminating material in the form of documents and loose papers corroborated by statements of the appellant which showed that the appellant and his wife were the Trustees and authorized signatories/protectors of Chagganlal Suchak Family Thrust (CST) and key controllers of the affairs of the Trust. Their daughters and the appellant's wife had the past. The administrative address of the Trust was Sh. Dilip J Thakkar's offictrative address of the Trust Thakkar & Co. 113(A), MG. Road Fort Mumbal. Contrary to the claims of the appellant, the documents showed that the trust was formed in India. The address of the trust as appearing in the records of the HSBC Bank, Geneva, was the office address of M/s Jayantilal Thakkar & Co. at 111A, Karmiji Building, M.G. Road, Fort, Mumbai which proved that not only the trust was formed in India but also was managed from India. Sh. Dilip J Thakker and Smt. Indira D Thakkar were also the authorized signatories. It was the analysis of this incriminating material that led the AO to the conclusion that the Chagganlal Suchak Family Trust (CSPT) was created by Sh. Dilip J. Thakkar association with his family members and in-laws as a Special Purpose Vehicle to channelize the unaccounted income and park it outside the country in HSBC Bank Geneva. Therefore, the fund parked in CSFT was held to be belonging to Sh. Dilip J. Thakkar and was held to be his income which had not been offered to tax. The peak amount standing for FY 2005-06 was USD 2361551 79 equivalent to Rs. 10,50,41,824/-which was added to the total income of the assessee for AY 2006-07. It is obseized that documents of various other entities are highlighted to demonstrate the operation of Chhaganlal Suchak Family Trust I was acting as protector of Chhaganlal Suchak Family Trust (CSFT) and carried out bank transaction as per the direction in Trust Deed. Correspondence address in India is not a conclusive evidence when settlor and beneficiaries are all settled abroad. Incriminating material are nothing but correspondence with bank or account opening forms. The conclusion of AO that fund belong to appellant is only on basis of surmises & conjectures without any documentary evidence or any money trail. Infact appellant have not received any benefit upto 2012 or till date 11.3.2 As regards the claim of the appellant that the communication received from the Swiss Federal Tax Administration by way of notification dated 23.03.2015 states that the eight relevant bank accounts with HSBC Bank Geneva were not his accounts but were accounts of a Non Resident Offshore Family Trust, namely Chagganlal Suchak Family Trust (CSFT), whose beneficiaries were in England and Canada, it is seen that in this notification dated 23.03.2015 it is clearly stated that the request from the Indian Competent Authority is to be entered into for Swiss Government has confirmed that the bank account with IBAN does not belong to appellant. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 35 the time period from 01.04.2011 to 31.03.2012. It is further stated that in accordance with Article 26 DTA CH-IN, administrative assistance for questions concerning the application of domestic tax law can only be provided for Information starting from the financial years 2011/12, as the prior years are not covered by the temporal scope of Article 26 of the amended Double Tax Agreement between India and Switzerland. Therefore, it has been stated that information can be provided only from 01.04.2011. Thus, information has been provided only for the period beginning 01.04.2011 to 21.02.2012 l.e. upto the date when the accounts were closed. 11.3.2.1 pertains to AY 2006-07 for which no information has been provided by the Swiss Federal Tax Administration in view of the prevailing Double Tax Agreement. Thus, the contention of the appellant that the Swiss Federal Tax Administration vide notification dated 23.03.2015 has given a clean chit to the appellant, cannot be accepted as no such information for the relevant period has been provided. On the contrary, the Incriminating material found consequent to the search combined with the statements recorded and the other material available with the AO does point out to the fact that Chagganlal Suchak Family Trust (CSFT) was created by Sh. Dilip J. Thakkar in association with his family members and in-laws as a Special Purpose Vehicle to channelize the unaccounted Income and park it outside the country in HSBC Bank Geneva. Therefore, the fund parked in CSFT was held to be belonging to Sh. Dilip J. Thakkar and was held to be his income which had not been offered to tax. The peak amount standing for FY 2005-06 was USD 2361551.79 equivalent to Rs. 10,50,41,824/-which was added to the total income of the assessee for AY 2006-07 The affidavit from Suryakant Suchak clearly state that Carlton Trust was dismantled and Chhaganlal Suchak Family Trust (CSFT) was created. This was benefit of 3 sons of SCS Whereas SCS FT was created by Suryakant Suchak for benefit of his family members. No documentary evidences have been produced by AO to come to conclusion that fund in trust belongs to appellant. 11.3.3 In view of the above, it is clear that the claims of the appellant that no incriminating material was found during the course of the search in his case and that the additions have made in his case in respect of deposits made in third party's bank account with which he has no connection, have no merits and are hereby rejected. Till date AO or CIT(A) has not confirmed as to what is incriminating documents found in search. All papers found are duly explained and relevance are established. 11.4 As can already be seen from the above discussion, the Incriminating maternal found as a result of the search and the other enquiries made clearly show the close connection of Sh. Dilip J. Thakkar and his wife Smt. Indira D. Thakkar in not only There is no iota of doubt that appellant is connected to the Trust. It was explained on 10.08.2011 in written ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 36 creating the Trust but also managing and controlling its day to day affairs statement. The role of protector is to supervise which does not mean funds belongs to him 11.4.1 It is seen that the Chagganlal Suchak Family Trust (CSFT) was settled on 24 May, 2001. The trust was settled between Smt. Kantaben Chagganlal Suchak as settlor and Sh. Suryakant Chagganial Suchak, Sh. Shirish Chagganlal Suchak and Sh. Madhu Chagganlal Suchak called as \"Trustee The assessee's wife Smt. Indira D. Thakkar was the daughter of the settlor of the Trust. The address of the above trust was shown as 256, Upper Palace, Orchards, Sadashiv Nagar, Bangalore The stamp paper of the Trust was purchased in Mumbai. Further, the trust deed was signed in the presence of assessee Sh. Dilip J. Thakkar and Smt. Indira D Thakkar along with the three above-mentioned Trustees. The administrative address of the Trust was the same as the office address of the assessee in Mumbai. This proved that not only was the Trust formed in India but it was also managed from India. While initially the assessee kept on denying any Indian connection of CSFT, when confronted with the copy of the Trust Deed obtained from the Canadian Tax Authorities and the incriminating material found during the search, the appellant admitted about the Indian connection of the Trust in his statement recorded on 19.09.2011 and the relevant extracts of the statement of the assessee in this. regard are as under: The in law family of appellant was in India and hence stamp paper was obtained. The Trust moved outside India and all operation were carried from outside India The foreign funds operating from overseas keep local address for correspondence. Such communication address does not make overseas fund taxable in Q.14 I am showing trust deed of Chagganlal Suchak Family Trust (CSFT) made on 24th May 2001, and registered in Mumbai (annexed to This statement as annexure 3) Kindly go through the same and comment on the taxability of Chagganlal Suchak Family Trust (CSFT) in India in light of the fact that it is a trust registered in India. Trust was never registered in India. If AO can provide copy of same; the facts will be cleared Ans This trust was formed by the Mrs. Kantaben C Suchak while she was on a short visit to India and they had house in Bangalore, the address of which is provided at the 1st page of the said deed. It was formed with an initial corpus of GBP 100 and trustees were all family members who were and even today, NRI's. The trust had no fund and no income. Later the trust was transferred to Geneva when it received The whole structure of formation of Trust has been explained and there is no deviation from the explanation given on 10.08.2011 till date ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 37 funds out of the dissolution proceeds of Cariton Corp oration, deposited in three sub-accounts of beneficiaries with HSBC Bank, Geneva. Since the trust is based In Geneva and is not managed and controlled from India, it is not taxable in India. In May 2001, when the trust was formed in India till it was shifted to Geneva, trust had no income at all and hence there was no question of its taxability. The return of income was not filed in India as it has no income 11.4.2 While Initially the stand of Sh. Dilip J. Thakkar was that he was only a \"Protector\" or advisor of the CSFT, he later admitted that his family members were beneficiaries in the Chagganlal Suchak Family Trust (CSFT) for \"sometime\" in the past. Also, while initially he tried to portray that he had of no other connection with CSFT other than being an protector/advisor, he later also admitted on the basis of the incriminating material that he and his wife were the authorized signatories as Trustees in the Chagganlal Suchak Family Trust (CSFT) and SCS Family Trust (SCSFT). The relevant extracts of the statement of Sh. Dilip J. Thakkar recorded on 11.08.2011 are as under: The family became beneficiary for limited purpose i.e. to receive RIB Bonds towards the legacy Late Suchak. Chhaganlal The money standing in Chhaganlal Suchak Family Trust (CSFT) was never received by any family member. Q.8 Kindly reiterate whether you or your family members were the beneficiaries of any trust registered in India or abroad? Already replied Ans My family members were the beneficiaries in Carlton Corporation and CM Suchak Trust, for sometime, but they never received any benefit and now they are not beneficiaries. At present my family members are not beneficiaries of any trust either in India or abroad. Q.9 Do you or your family members, in individual capacity or any other capacity hold any foreign bank account or are beneficiary or authorized signatory in any foreign bank Already replied Ans Me and my family members do not have any bank account of ours outside India, except my younger daughter Ms. Deval, who was in Canada for last 10 years who has comeback to India. She may have continued her foreign bank account when she was a non-resident. Further, me and my wife are authorized signatories as trustees in ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 38 fiduciary capacity of two trust, namely CM Suchak Family Trust and SCS Family Trust (SCSFT) and my wife is also an authorised signatory in her non-resident brother's account 11.4.3 Also, while initially Sh. Dilip J. Thakkar maintained that neither he nor any of his family members had derived any benefit from the Chagganlal Suchak Family Trust (CSFT), the incriminating material found during the course of the search showed that the appellant and his family members were the beneficiaries of the maturity proceeds of the Resurgent India Bonds (RIB) which were part of the Corpus of CSFT. When the issue was confronted to the appellant in his statement recorded on 19.09.2011, the appellant tried in vain to portray these receipts as legacy of his late father in law Sh. CM Suchak. The relevant extracts are as under On the date of search it was informed by appellant that his family has received RIB proceeds to extent mentioned. However, no proceeds of the trust fund of SCS FT Is received by any of appellant family member Q.11 Did you or any of your family members received any RIB Bonds or any proceeds out of its maturity either from Chagganlal Suchak Family Trust (CST)or any other trust or from any of its trustees, beneficiaries or any relative of the trustees or beneficiaries? Already replied. Ans My father in law Sh. C. M. Suchak had set aside a corpus for the benefit of and children and grandchildren, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly, my wife received pound 1,36,000 daughter Mitali received pound 90,000, and my daughter Deval, residing at Toronto received pound 90,000 as legacy. These amounts have been shown as legacy received in 2003. Q. No. On page 4 paragraph 10 of the trust deed of Chagganlal Suchak Family trust (CSFT) (annexed to This statement as annexure A-3) it is mentioned that SBI Resurgent India Bonds (RIB) formed part of corpus of the trust and at the maturity of the said Resurgent India Bonds (RIB), the same should merge with trust fund and be utilized for the benefit of the beneficiaries. If that be so and if your wife and daughters received proceeds out of the maturity of the said bonds, are they not supposed to be considered as beneficiaries and the The RIB was invested by Late Chhaganlal Suchak in the name of his son and kept as part of Trust so that proceed is not appropriated individually by him. As per RIB the sale proceeds are exempt in hands of recipient. Hence not taxable at all ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 39 proceeds be taxable in their hands? Ans The trustees of the trust- Chagganlal Suchak Family Trust (CSFT), who were also executors of Late CM Suchak, who died in 1999, distributed the proceeds as legacy to the children and grandchildren of Late CM Suchak. Hence, my wife and daughters received the same as legacies. 11.4.3.1 Moreover, the enquiries made in respect of RIB from SBI revealed that the investment in RIB was made neither by Late Sh. CM Suchak nor by Chagganlal Suchak Family Trust (CSFT). It was rather made by Sh. Suryakant C. Suchak, who was the Trustee/Beneficiary of CSFT. As per the reply dated 04.03.2015 of SBI and as mentioned on page 98 of the assessment order, interestingly the investment was made in the name of Sh. Suryakant Chagganlal Suchak c/o Sh. Dilip J. Thakkar with his residential address as 12 Acropolis, Little Gibbs Road, Malabar Hills Mumbai, which happens to be the residential address of Sh. Dilip J. Thakkar. This is a classic example of how the benefits accrued to the appellant and his family members using the Trustees of CSFT and this also shows why the version of the appellant cannot be relied upon. RIB are not the foreign assets. They are Indian Securities issued by Indian Bank Late Chhaganlal Suchak invested through his son and same was considered as part of Chhaganlal Suchak Family Trust (CSFT) so that it can be distributed as per the wish list of Chhaganlal Suchak 11.4.4 Also, while the appellant initially claimed that he was only an advisor and that he did not control any of the bank accounts, the incriminating material found as a result of the search proved to the contrary. It was clear from the Incriminating material found during the course of the search that not only the funds were being transferred on the express directions of Sh. Dilip J. Thakkar from one account to another, he was also deciding important matters like opening of new foreign bank accounts etc. The incriminating material found was duly confronted to the appellant and the relevant extracts of his statements are as Appellant transferred fund only in capacity of Protector and as referred for achieving object towards the beneficiaries. He was never the beneficiary of any trust. And his family was made beneficiary for limited time to receive RIB Bonds. Operation of account of overseas Trust does not make the same as undisclosed or taxable in India. 11.4.4.1 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 10/11.08.2011 under section 132(4) of the Income Tax Act, 1961 are as under: Q.21 I am showing you page number 174 of Annexure A-3 found and seized from this premises, Kindly explain the same. Ans Yes, I confirm that the said paper was found and seized from my residence. This is an advice sent to HSBC Bank Geneva to transfer SCS FT was created for benefit of Suryakant Suchak Family. The fund transferred was for ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 40 funds from the account of CM Suchak Family Trust to the account of SCS Family Trust (SCSFT) with HSBC Singapore benefit of Suryakant family and not the appellant family. None of appellant family were beneficiary of SCS FT. Q.24 I am showing you four bank records of HSBC Bank Geneva (made a part of the statement Annexure 2) relating to The Chagganlal Suchak Family Trust (CSFT) having following ids 5090274125, 5090174141 and 5090181752. You along with your wife Indira Thakkar and your two daughters Mitali Lakhanpal and Deval Thakkar have been mentioned as beneficial owner. Kindly explain the status in the backdrop of replies given by you in response to above queries wherein you have mentioned that neither you nor any of your family members hold any beneficial interest in any of the foreign trust Swiss Government has confirmed that these bank IDs do not belong to appellant. Also the paper relating to bank are not the bank statement. Once consent waiver form was obtained and forwarded to Swiss Government and got a confirmation that the accounts do not belong to appellant, the matter stands closed. Ans Myself and my wife are trustees of the trustees of the trust in fiduciary capacity and not as beneficial owner. My two daughters were beneficiary of the trust earlier, during which time they did not receive any benefit from the trust. As of now they are no more beneficiaries. 11.4.4.2 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 19.09.2011 under section 131 of the Income Tax Act 1961 are as under: Q.3 Page No. 1 This is a direction given by you in your letter dated 08/08/2011 to the HSBC Private Bank, Geneva to remit 1 million pounds by swift GBP to the account with HSBC Private Bank (Suisse) Statutory Auditors, Singapore, of SCS Family Trust (SCSFT). Please explain the complete nature of transaction stated in this letter and the source of fund involved, alongwith the accounting entry in the books of account of both the payer as also the receiver. This is also stated to be referred by one Mr. Sangram Singh, Please give details of the involvement of said Mr. Sangram Singh. The answer is replied below. The transaction was carried for SCS FT and not connected to CSFT ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 41 Ans As decided by the settlor Smt. Kantaben C Suchak. This amount is transferred from the sub account of Sh. Suryakant Suchak with HSBC Pvt. Bank, Geneva to and account with HSBC Pvt. Bank, Singapore, Sh. Sangram Singh is the Relationship Manager at HSBC Pvt. Bank, Singapore. Q.5 Page No. 6 This is again another letter dated 20 January 2011 to HSBC-Private Bank (Suisse) Statutory Auditors. Geneva directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private Bank, (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT). This is referred by Vidya Viswanambaran / Sachin Jumani. Same as above Ans This is the draft letter to be addressed to HSBC Pvt. Bank, Geneva for transfer of funds to SCS Family Trust (SCSFT)s Bank account with HSBC Pvt. Bank, Singapore. The two names mentioned Vidya Viswanambaran and Sachin Jumani are the Relationship Managers at HSBC Pvt. Bank, Singapore Q.6 Page 10- This is a letter dated 04/11/2009 addressed to Anish S Suchak and Mrs. Bella Anish Suchak, confirming transfer of GBP 1,000,000 by wire transfer, from the trust account with HSBC Private Bank (Suisse) Statutory Auditors to the account with Scotia Bank, Ontario Please explain this transaction with reference to the source of funds and accounting entries in this regard. Ans It is a letter myself and my wife has signed as trustees of M/s Chagganlal Suchak Family Trust for This is a transfer of benefit by Trust to beneficiary. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 42 distribution of 1 million pounds to a beneficiary Sh. Anish S. Suchak as per the decision taken by the settlor, I would like to clarify that Sh. Anish S Suchak, had declared This amount to tax authorities in Canada, where he is a resident. As already mentioned that CSFT was created for benefit of three sons and their family. The fund was rightly transferred to them. Q.7 Page 26 This is again a similar letter dated 31/07/2009 addressed to Mr Anish Suryakant Suchak, Canada informing the transfer of CAD 250,000 each to the account Nos 0284688 and 0347825 with Scotia Bank in Ontario. The beneficiaries being the addressee's sons Krish and Kunal. Please explain the details of the remitting bank account and the source of funds alongwith accounting entries. Ans This is a letter signed by me and my wife as trustees of M/s Chagganlal Suchak Family Trust (CSFT) as distribution of two beneficiaries. Master Krish Anish Suchak and Master Kunal Anish Suchak as decided by the settlor. This has also been declared to Canadian tax authorities. Same as above. Q.8 Page 33 to 42 This is the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank (Suisse) Statutory Auditors Hong Kong Branch/Singapore Branch/Nassau Branch dated 28/08/2010 signed by Dilip J Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also in INDIA. SCS FT is a Singapore Trust where appellant is just a trustee with other trustee. None of his family members are the beneficiaries. Please explain whether the said Trust, being Indian Trust is filing the return of income in India, if not the ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 43 reason therefor. Please give details of PAN, details of returns filed, whether income/wealth offered Where are the books of account of the trust maintained/audited Ans Page 33 to 42 Page 33 to 42 are copies of bank account opening forms of SCS Family Trust (SCSFT) with HSBC Pvt. Bank, Singapore. This trust is based in Dubai and not in India. SCS Family Trust (SCSFT) is not an Indian Trust and hence, returns of income is not filed in India. Since the Trust is not an Indian Trust, it has no PAN and its books of accounts are not maintained in India. …….. Annexure A-2 AQ.26 Page No. 25: This is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by you and your wife for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280. Please confirm whether such new account has been opened and if so give details of the new account and the cancellation of the old account. Copy of the bank statements shall be provided since you and your wife are authorized to operate the bank accounts. Also furnish the beneficiaries. Ans This page is a copy of minutes of Chagganlal Suchak Family Trust (CSFT) regarding operation of its existing bank account with HSBC, Geneva, Since I do not control the bank accounts, I do not have the bank statements and the same are directly sent to Bank statements are sent to settlor/Trustee Appellant was just a signatory. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 44 the Settlor, Smt. Kantaben C Suchak 11.4.4.3 From the above discussion it is clear that the incriminating material found and the statements recorded duly corroborate that the appellant Sh. Dilip J. Thakkar was the authorized signatory and actively involved in managing and controlling the day to day affairs of the Chagganlal Suchak Family Trust (CSFT) and several other offshore entities. He was taking important financial decisions like transfer of funds, opening of bank accounts etc. The conclusion drawn by CIT(A) is based on surmises & conjectures. Only having access to account or carrying out transfer to beneficiary who are Non Resident does not make the Trust taxable 1.5 (CSFT) was formed in India and the appellant's wife Smt. Indira D. Thakkar happened to be the daughter of the settlor. CSFT was being managed and controlled on day to day basis by Sh. Dilip J. Thakkar who was also the authorized signatory. He admitted that his family members were beneficiaries of CSFT in the past. He also admitted that he and his wife were Trustees of the Trust in fiduciary capacity. It is also seen that Sh. Dilip J. Thakkar was taking Important day to day decisions like transfer of funds, opening of bank accounts etc. It is seen that CSFT was a discretionary private trust with all the unlimited powers vested in the hands of the Trustees/ Protector / authorized signatories to apportion money, to make investment decisions or to Increase or decrease the ratio of the benefits to the beneficiaries. It can thus be concluded that the Chagganlal Suchak Family Trust (CSFT) was created by Sh. Dilip J. Thakkar in association with his family members and in laws as a Special Purpose Vehicle to channelize the unaccounted income and park it outside the country in HSBC Bank Geneva. Therefore, the fund parked in CSFT was rightly held by the AO as belonging to Sh. Dilip J. Thakkar and was held to be his income which had not been offered to tax. I see no infirmity in the action of the AO in adding the peak amount standing for FY 2005-06 being USD 2361551.79 equivalent to Rs. 10,50,41,824/- to the total income of the assessee for AY 2006-07. The addition made is sustained and the grounds of appeal are dismissed. CSFT Trust was being managed by Trustees who were all Non Residents. Papers found only had two to three transfer instructions which was done by appellant. Two/three document does not prove that appellant is managing total affairs from India. Appellant had power of attorney to operate does not make overseas Trust taxable in India. The conclusion that Appellant created trust to channelize unaccounted money is pure conjectures and thought process of CIT(A) without any trail or evidence that any money is received. Without prejudice Peak balance cannot be taxed in A.Y. 2006-07. 14. Another very important fact which has been brought on record is that FT & TR division of CBDT had written a letter ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 45 to the Swiss Federal Tax Administration to seek the information and clarification on the various bank accounts of Chagganlal Suchak Family Trust with HSBC Geneva. Swiss Federal Authorities although have provided the information and the report for five cases related to ‘Chagganlal Suchak Family Trust’. However, one very important clarification by the Swiss Authorities which has been mentioned by the FT & TR letter as under:- “3. The Swiss Competent Authority in their letter had also stated that the beneficiaries of the trust are third parties with addresses in Canada and England but had not provided their details on the ground that they do not see an apparent nexus with India. This matter was taken up with the Swiss Competent Authority and it was explained that unlike in Switzerland, in India, the Income of a person who is a non-resident can also be taxed if it has a source or nexus in India. They promised to examine this matter and provide necessary assistance if a supplementary request is made clearly explaining the above and provide further details of the nexus of the beneficiaries of the trust with India and their potential liability for taxation in India if Information in this regard is received from Switzerland. A supplementary request should accordingly be made at the earliest.” 15. This has been stated by the FT & TR division in the letter dated 23/04/2015 in the letter to the Pr. Commissioner of Income Tax (Central)-3, Mumbai. This is with reference to the following letter issued by the Swiss Federal Tax Administration, FTA, wherein they have clearly stated that the beneficiaries are all Citizens of UK and Canada and assessee and his wife are not ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 46 beneficiaries of the fund. The said communication dated 23rd March 2015 is as under:- ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 47 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 48 ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 49 16. Accordingly, ld. Counsel submitted that once the Swiss Tax authorities themselves have categorically stated that beneficiaries are third parties with addresses in Canada and England and secondly, neither Shri Dilip J Thakkar nor Smt. Indira Dilip Thakkar are the beneficiaries of Chagganlal Suchak Family Trust, then where is any ground or reason to hold that assessee or his wife are the beneficiary of the trust for the amounts deposited in the HSBC bank, Geneva. Accordingly, in view of the rebuttals of each and every observation of the ld. AO and ld. CIT (A) and the clarification issued by the Swiss Federal Tax Administration, there can be no presumption that assessee was a beneficiary or the peak balance in the bank account which can be added in the hands of the assessee. Apart from that, he further drew our attention the deed of trust Chagganlal Suchak Family Trust dated 24/05/2001 wherein, there are clear cut name of beneficiaries which has been given in separate schedule and in none of the list of beneficiaries, assessee’s name is appearing nor of his wife. The lists of beneficiaries in the Trust were as under:- LIST OF BENEFICIARIES 1. Anil Madhu Suchak 2. Neela Madhu Suchak (London - U.K.) 3. Anish Suryakant Suchak 4. Deepa Suryakant Suchak (London - U.K.) 5. Monisha Shashi Devani 6. Sonia Shashi Devani 7. Promodini Shashi Devani (London - U.K.) ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 50 8. Geeta Shirish Suchak 9. Neha Shirish Suchak 10. Dev Shirish Suchak (Montreal - Canada) 11. Dina Suryakant Suchak (London) 12. Vandana Shirish Suchak (Montreal) 13. Doris Madhu Suchak (London) 17. Assessee also drew our attention to name of the trustees of Chagganlal Suchak Family Trust in the bank account of Chagganlal Suchak Family Trust, the scan copy of which is as under:- ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 51 18. The correspondence address mentioned is also of UK. Lastly, he drew our attention to the affidavit of Mr. Suryakant Chagganlal Suchak, wherein he has clarified everything that who are the beneficiaries and that sole beneficiary was himself and his immediate family. The affidavit of Suryakant Chagganlal Suchak is reproduced hereunder:- “I, Suryakant Chhaganlal Suchak, aged 76 years, residing at 3 Neela Close, Ickenham, Uxbridge, Middlesex, UB10 8NZ, United Kingdom, since last 29 years, hereby solemnly state and affirm as follows: - 1. My father late Mr. Chhaganlal M. Suchak who died in U.K. in 1999, was earlier residing in East Africa since his birth in 1912 was holding British Passport and was never a 'Resident' of India as per Tax and other laws. 2. My mother, Mrs. Kantaben Chhaganlal Suchak, aged 95 years is staying at above address in the U.K. since 1975. Earlier to that she was in East Africa with my father and other family members, since 1935. She holds British Passport. 3. All our family members, my two brothers, Shirish Chhaganlal Suchak (residing in Canada) and Madhu Chhaganlal Suchak (residing in U.K.) have been Non Resident as per Indian Tax and other laws for last 40 years. They both hold British Passports. 4. My two sisters, Mrs. Indira Dilip Thakkar was a Non-Resident as per Indian Tax laws till her marriage to Dilip J. Thakkar, who is Indian Tax Resident, in 1962. My other sister, Mrs. Pramodini S. Devani resides in the U.K. and has never been Tax Resident of India. She holds British Passport. 5. My father, late Mr. Chhaganlal M. Suchak was a Businessman in East Africa. He separated from joint family's business in 1954 and acquired as his part of family's assets as Sisal Estate in Dar- es-Salaam, Tanzania. He developed quite a few real estates in ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 52 Dar-es-Salaam and earned sizable wealth out of his business activities. a. After Tanzania got Independence in 1961, late Mr. C.M. Suchak sold his personal residential bungalow situated at Oyster Bay in Dar-es-Salaam to Indian High Commission. The funds realised therefrom were officially transferred to U.K. through Bank of India's Dar-es-Salaam Branch. The said bungalow is official residence of the Indian Ambassador to Tanzania even now. b. Mr. C.M.Suchak sold the Sisal Estate in Dar-es-Salaam in 1963 and officially remitted funds to U.K. to start business in the U.K. c. In U.K. our family got involved in real estate development and sold its first major development in 1985. d. In 1979, family-owned company in Montreal, Canada, was appointed as General Sales Agents (GSA) of Air India for whole of Canada which lasted up to 2001. e. Our family acquired a 180 bed-room Hotel in down town Montreal, Canada, in 1982. f. Thereafter, under the leadership and vision of our father, late Mr. C.M. Suchak, the family went into other businesses in Saudi Arabia, Germany etc. which increased the family's wealth considerably but none of it was generated in India. 6 During his lifetime, my father, Mr. C.M. Suchak invested GBP 1.5 million in 1998 Resurgent India Bonds, of State Bank of India, which was open for investments only by NRIs. Because of his advancing age, the said investment was made in the names of myself and my wife Mrs. Dina Suryakant Suchak. (Both NRIs) 7 In 2003, out of the total maturity proceeds of GBP 2.2 million, invested in said RIB Bonds, large part of the proceeds was deposited in Chhaganlal Suchak Family Trust account as per wishes of my late father who died in 1999. 8a.Chhaganlal Suchak Family Trust (CSFT) was settled on 24th May 2001 by Mrs. KantabenChhaganlal Suchak and appointed herself and her three sons Suryakant, Shirish and Madhu as first ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 53 Trustees, all of whom were together for a brief period at the family's summer home in Bangalore. The said Trust was settled with an initial amount of GBP £ 100.00 and not in Indian Rupees. The said Trust never opened any Bank account in India and it was never meant to be an Indian Trust. Since the original Bank account of Chhaganlal Suchak Family Trust was opened in Geneva, Switzerland, hence the address of the Trust has always been that of Geneva. b. As Indira Dilip Thakkar was the eldest sister of the family and as all the brothers respected her immensely and Dilipbhai J Thakkar, my brother-in-law, being a highly respected professional Chartered Accountant, all four original trustees agreed to resign and requested both Mr. Indira Dilip Thakkar and Dilipbhai J Thakkar to overlook the interest of our family as well as protect the operation of sub accounts which the three principal beneficiaries, i.e. Suryakant C. Suchak Shirish C. Suchak and Madhu C. Suchak, each of them who were operating and managing their own family's share of Trust. c. Periodically further funds, out of various businesses were also deposited in sub accounts by each principal beneficiaries in their respective sub accounts but no part of the any funds were ever credited or deposited by either Mrs. Indira Dilip Thakkar and/or Mr. Dilip J Thakkar. d. In 2012, all the three brothers being principal beneficiaries of CSFT decided to totally close the Chhaganlal Suchak Family Trust once and for all and deal with their own interests individually. Accordingly, the Trust account in Geneva was closed. No part of these funds were given to Mr. Dilip J. Thakkar, Mrs. Indira Dilip Thakkar or their two daughters and their families as the funds never belonged to them. 9. The entire funds which as a principal beneficiary I received from Chhaganlal Suchak Family Trust were deposited in a bank account in Singapore and credited into the account of SCS Family Trust of which sole beneficiaries were my immediate family members consisting of myself, my wife Mrs. Dina Suryakant Suchak, my son Mr. Anish Suryakant Suchak and his family members, my daughter Mrs. Deepa Jaitha and her family ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 54 members.None of them has ever been a Tax Resident of India during last 30 years. 10. SCS Family Trust was settled by Mrs. KantabenChhaganlal Suchak on 15th March 2004 for the sole benefit of myself and my immediate family. 11. I hereby solemnly confirm and reiterate on oath that no part of the funds were ever contributed or belonged to Mr. Dilip J. Thakkar, Mrs. Indira D. Thakkar, and/or their two daughters, Mrs. Mitali R. Lakhanpal and Mrs. Deval E. Anthoney and the said Chhaganlal Suchak Family Trust was never a Tax Resident of India as it had no taxable income in India.” “I, Suryakant Chhaganlal Suchak, aged 76 years, residing at 3 Neela Close, Ickenham, Uxbridge, Middlesex, UB10 8NZ, United Kingdom, since last 29 years, hereby solemnly state and affirm as follows:- 1. My mother, Mrs. KantabenChhaganlal Suchak settled SCS Family Trust on 15th March 2004 with GBP £75.00 while she was on a short visit to Mumbai to visit her daughter, Mrs. Indira D. Thakkar (my elder sister). This SCS Family Trust was settled by my mother for the benefit of myself and my immediate family members consisting of my wife Mrs. Dina Suryakant Suchak, my son Mr. Anish Suryakant Suchak and his family members, my daughter Mrs. Deepa Jaitha and her family members. None of them has ever been a Tax Resident of India during last 30 years. No bank account of SCS Family Trust was ever opened in India. 2. The bank account of SCS Family Trust in Singapore clearly shows that in July 2011 initial deposit of GBP £ 75.00 representing the settled amount was credited. Further, GBP One Million was deposited in the said bank account of the Trust in Singapore by transfer from Chhaganlal Suchak Family Trust's bank account in Geneva. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 55 3. Thereafter, further funds which were received from Chhaganlal Suchak Family Trust were invested in mutual funds etc. as directed by me. 4. The Trustees of the said SCS Family Trust were :- (a) Mr. Dilip J Thakkar(India) (b) Mrs. Indira D. Thakkar(India) (c) Mr. P. R. Shah(Dubai) 5. In 2012, entire balance funds received by me as my share from Chhaganlal Suchak Family Trust, as one of the principal beneficiary, was credited to SCS Family Trust's account in Singapore. 6. Ultimately the said bank account of SCS Family Trust was closed in June 2012 by distributing the entire funds to the beneficiaries consisting of my wife Mrs. Dina Suryakant Suchak, my daughter Mrs. Deepa Jaitha and her daughter Anika, my son Mr. Anish S Suchak and his wife Mrs. Bella and his two sons Krish and Kunal. 7. I hereby solemnly confirm and reiterate on oath that no part of the funds deposited in the said bank account of the Trust in Singapore belonged to or received from Mr. Dilip J. Thakkar and/or Mrs. Indira D. Thakkar. 8. The role of the three Trustees of SCS Family Trust were only fiduciary and none of them was the owner or beneficiary of the Trust.” 19. This affidavit has been made in London on 10th day of June 2015. From the said affidavit it is clear that Suchak family had a very rich background and all the source of funds were from his late parents and he and his family were the beneficiary of the trust fund and assessee has nothing to do with it. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 56 20. Before us, ld. CIT DR has referred to the various observations and the finding given by the ld. AO and ld. CIT(A) and based on these relevant observations, following gist of the arguments have been summarized by her. Gr. No. Relevant para of A.O. Relevant para of CIT(A) Gist 1 -Para 12.3 on page 81 of assessment order. - Page nos 20 to 22 of assessee's paper book containing A.O's remand report dated 16-11-2023 Paras 10.1 to 10.5 of appellate order. The assessment was getting time- barred on 31-03-2014. Reference seeking information under exchange of information under DTAA u/s 90/90 A of the IT Act was made by the Competent Authority i.e FT & TR Division, CBDT to Swiss Federal Tax Administration vide letter D.O.F. No 504/118/2012-FTD-1 dated 05-12- 2012 . This fact was communicated to the A.O vide letter D.O.F. No504/125/2012-FTD-1 dated 04-03- 2013 . Hence, in view of Explanation (viii) of section 153B(1) of the Act, the time-barring date got extended by one year. The assessment order was passed on 30-03-2015 which was within the limitation date. Hence, ground of appeal no 1 may be dismissed. 2 -Paras 6.7 to 6.17.2 of the show-cause dated 12-11-2014 on page nos 55 to 66 of assessment order Paras 11.3.1.1 to 11.3.1.12 of appellate order. During the search on the assessee u/s 132 of the Act on 10-08-2011, several incriminating material were unearthed relating to the role of the assessee and his wife in the Chagganlal Suchak Family Trust (CSFT) and operation of eight bank accounts held by the trust in HSBC Bank, Geneva. Further, corroborative statements of the assessee recorded on 11-08-2011, 19- 09-2011 and 16-04-2012 showed that the assessee and his wife created the above trust and used it as Special Purpose Vehicle to channelize unaccounted income and park it outside India in HSBC Bank, Geneva. Hence, ground of appeal no 2 may be dismissed. 3 & 6 -Para 15.14 on page 90 of assmnt order -Para 15.15 on page 91 of assmnt order - Page nos Para 11.3.2 and 11.3.2.1 of appellate order. The Swiss FTA Notification dated 23- 03-2015 had not been received by the A.O till completion of the assessment proceedings. He has commented separately on it in his remand report dated 02-01-2024. The CIT(A) has noted that the said ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 57 24 to 26 of assessee's paperbook containing A.O's remand report dated 02-01-2024 notification clearly stated that the request from Indian Competent Authority for the time period from 01- 04-2011 to 31-OS-2012. Prior periods are not covered by the amended DTAA between India and Switzerland. Hence, information can only be provided from 01-04-2011 to 21-02-2012 ie date when account was closed. Thus, no information for the relevant period ie AY 2006-07 has been provided in the said Notification. Hence, ground of appeal nos 3 & 6 may be dismissed. 4 Paras 15.1 to 15.17 on page nos 82 to 93 of assmnt order. Paras 11.4.1 to 11.5 of appellate order. i) Copy of the Trust deed received from the Canadian Tax authorities revealed that the trust was formed in India. The settlor of the trust was Mrs Kantaben C Suchak, mother of assessee's wife and trustees were his wife's three brothers.The stamp paper was purchased in Mumbai and the address of the settlor of the trust was that of Bangalore.The trust deed was signed in presence of the assessee and his wife. Thus, it is an Indian Trust. ii) The assessee and his wife were Trustees and authorized signatories as Trustees in CSFT.They were managing day to day affairs of the Trust, iii) The administrative address of the Trust in the records of the HSBC Bank was the office address of the assessee. iv) Family members of the assessee were beneficiaries of maturity proceeds of RIB in 2003 which were part of corpus of CSFT as per paragraph 10 on page 4 of the trust deed. His wife and daughters received legacy proceeds from the Trust, v) Several documents were found during the search which show that the assessee was taking day to day decisions for the Trust like opening of new bank accounts, transfer of funds from the bank accounts and giving directions for operation of the bank accounts of the trust, vi) All the four family members of the assessee submitted consent waiver forms to enable Indian government to receive information from HSBC Bank, Geneva. Hence, ground of appeal no 4 may be dismissed. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 58 5 & 9 Para 15.03, paras 16.1 to 16.5 of the assmnt order Para 11.4.3& 11.4.3.1 of appellate order. Family members of the assessee were beneficiaries of maturity proceeds of SBI Resurgent India Bonds in 2003 . As per paragraph 10 on page 4 of the trust deed, the RIB were part of corpus of CSFT and at maturity the same should merge with the trust fund and be utilized for the benefit of the beneficiaries. His wife and daughters received legacy proceeds from the Trust. This goes on to prove that the assessee and his family members were beneficiaries of the CSFT . Hence, ground of appeal nos 5 & 9 may be dismissed. 7 - Para 13.1 & 14.1 of appellate order No statement of a third party has been relied upon by the A.O in the assessment order. It is not clear who the assessee wants to cross-examine. Further, the A.O had provided to the assessee copies of all the incriminating material sought to be relied upon for making additions. Hence, there is no denial of natural justice to the assessee. Hence, ground of appeal no 7 may be dismissed. 8 Para 19 of the assessment order Para 12.1 & 12.2 of appellate order The assessee has failed to provide documentary evidence regarding source of the payment of Rs 57 lakhs during the assessment and appellate proceedings. As per page no 148 of the paperbook before the ITAT, the assessee has explained the source to be his bank accounts held with Union Bank of India, UTI Bank and Bank of Baroda. Some bank statements have been enclosed from page nos 194 to 219. However, no supporting evidences were submitted before the lower authorities despite sufficient opportunities. No separate petition under Rule 29 of ITAT Rules for admission of additional evidence has been filed before the Hon'ble Bench. Hence, these documents, which are clearly in the form of additional evidence, may not be admitted. Hence, ground of appeal no 8 may be dismissed. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 59 21. We have heard both the parties at length, perused the relevant finding and the observation given by the ld. AO and ld. CIT (A) and also various materials referred to at the time of hearing. By and large, we have captured all the relevant observations of the ld. AO and ld. CIT (A) which was incorporated in the tabular form in paragraph 13 wherein assessee has given his reply / rebuttal qua each of the observations. 22. The core issue involved here is, whether the addition of Rs. 10,50,41,824/- being the peak amount standing for F.Y. 2005- 06 of USD 2361551.79 in the bank account belonging to Chagganlal Suchak Family Trust (CSFT) in the various bank accounts of HSBC Bank, Geneva can be added in the hands of the assessee. The entire thrust of the department has been that; firstly, there were certain seized documents from the possession of the assessee during the search that assessee was managing the affairs of the trust and was one of the trustees in CSFT. Secondly, the trust was found in Mumbai wherein assessee and his wife were mentioned as trustees. Thirdly, certain transactions were undertaken in the said bank account under the instructions of the assessee and in the ‘base note’, the bank accounts have been mentioned in the name of the assessee as the trustees of Chagganlal Suchak Family Trust. 23. To tax any deposits or amount in the foreign bank account especially, if the account is opened in the name of any beneficiary trust or family trust in the hands of an Indian Tax Payer, what is most relevant is, firstly, what is the nature and ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 60 source of the funds deposited in the bank account or if the source of the deposits are not known then ostensibly onus is on the individual to rebut with proper evidence; and secondly, who are the actual beneficiaries of the trust and who has ultimately received the funds from the said bank account. Any trustee if in his fiduciary capacity is managing the affairs of the trust or his name is mentioned as trustee cannot be per se held to be the legal or beneficial owner of the bank account or beneficiary of the trust fund. Now whether the amount deposited in the impugned foreign bank account is liable to be taxed in the hands of the assessee, which we will discuss in light of facts and material brought on record in forthcoming paras. 24. First of all, from the perusal of the trust deed, the copy of which are appearing from pages 112 to 118, it is seen that deed of trust was made as Chhaganlal Suchak Trust on 24/05/2001; and Mrs. Kantaben Chhaganlal Suchak is the ‘settler’; and trustees of the trust are; (i) Kantaben Chhaganlal Suchak (ii) Suryakant Chhaganlal Suchak (iii) Shirish Chhaganlal Suchak and (iv) Madhu Chhaganlal Suchak. It has been declared by the settler that her late husband Mr. Chhaganlal Mulji Suchak has set aside before his death in June 1999 certain sums of money for the benefit of beneficiaries named in Schedule 1 to be utilized for the benefit at any time in future which sum of money was invested in the said bank of State Bank of India’s Resurgent India Bonds which will mature on 01/10/2003. The lists of 13 beneficiaries have already been incorporated above. Even in the trust deed neither assessee nor his wife Indira D Thakkar are in ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 61 the list of beneficiaries. The source of fund in the trust we have already discussed in the earlier part of the order that Mr. Suryakant Suchak who was a non-resident Indian settled in UK alongwith his parents since several decades had applied for resurgent Indian bonds in 1998 which was issued on 31/10/1998 and they got matured on 01/10/2003. After the formation of CSFT on 24/05/2001, settlement of maturity proceeds were credited to CSFT and later on this fund was distributed to the beneficiaries to all non-Indian resident beneficiaries residing outside India on 08/08/2011. The sources of funds have been clearly detailed in para 4. The relevant documents have also been placed in the paper book from pages 92-130. From perusal of the documents and material on record, it is quite evident that, firstly, neither assessee nor his wife Mrs. Indira D Thakkar was part of the list of beneficiaries in the trust. Secondly, the source of funds also came through inheritance of Mr. Chagganlal Suchak who was a UK Citizen (non-resident Indian) settled in UK till his death in June 1999. The main trustees of the trust as well as the beneficiaries were all foreign citizens. Late Shri Chagganlal Suchak and his wife Mrs. Kanteben Chagganlal Suchak had one daughter Mrs. Indira Thakkar who was married to assessee are only Indian citizens and their three sons Mr. Sirish Suchak, Suryakant Suchak and Madhu Suchak are all settled abroad and are citizens of UK and Canada. There is no dispute of these facts. 25. From the ‘Base Note’ forwarded by the Investigation wing, it has been informed that in Chagganlal Suchak Family Trust ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 62 which had bank accounts in HSBC Bank, Geneva, Mr. Dilip Thakkar and his wife Mrs. India Thakkar had been mentioned as trustees; and secondly, certain documents were found to show that assessee was somehow managing the affairs of the trust and also involved and instructions being given to the bank for investment purpose. First of all, simply being a trustee that does not mean that either assessee or his wife are the beneficiaries of the trust or managing the affairs of the trust as relatives of the trustees in fiduciary capacity can infer that the funds belong to the assessee when nothing has been found that the source of the funds has been routed through assessee or assessee was beneficial owner of the fund. We have already discussed the source of funds in the trust and who all were the ultimate beneficiaries of the fund. Then how a conjectural linkage can be drawn implicating the assessee without any nexus substantiating such presumption that amount deposited in the foreign bank account belongs to the assessee. 26. In any event, the department, invoking the provisions of Article 26 of India-Swiss DTAA pertaining to exchange of information, solicited details from the Swiss Federal Authorities. In response, the Swiss Authorities duly furnished the bank statements. However, in an unambiguous and unequivocal clarification, they have asserted upon being queried regarding the presence of beneficiaries of the bank accounts, have stated that beneficiaries are third parties resident of Canada and England and secondly, more significantly Swiss Authorities have categorically affirmed that neither Mr. Dilip Chagganlal Thakkar ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 63 nor Mrs. Indira Dilip Thakkar hold any beneficial interest with these accounts or are the beneficiaries of Chagganlal Suchak Family Trust. It thus defies logic and strains credulity that, in the face of such information, the department would still persist that the aforementioned bank accounts belong to the assessee and they are ultimately beneficiaries of the fund and treat it as undisclosed income of the assessee. This vital piece of information and clarification by a Sovereign Authority clinches the issue in favour of the assessee that neither he nor his wife is the legal or beneficial owner of the bank account or the fund. Simply because there is a foreign bank account in the name of the trust and assessee is linked in the fiduciary capacity, how can addition be made once there are other facts and material on record that neither the source of the funds nor the ultimately destination of the fund has any direct or indirect link with the assessee. In none of the material found from the possession of the assessee which has been referred extensively by the ld. AO and ld. CIT (A) in their respective orders, there is any evidence that assessee had made investment through an undisclosed sources in the foreign bank account or had received the money at any point of time upto the date of search. 27. Both the authorities have ignored the trust deed, list of beneficiaries, letter by the Swiss Federal Tax authorities which department itself has sought from the Swiss Government and the affidavit of Mr. Surykant Chagganlal Suchak who has clarified the source of beneficiaries of the fund and has categorically stated that the trust account in Geneva was closed in before ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 64 2012 and all the three brothers were principal beneficiaries of the CSFT and neither Mr. Dilip Thakkar nor Mrs. Indira Thakkar or their two daughters and the families have received any amount. He has given another affidavit and this SCS Family Trust was secured by his mother for the benefit of himself and his immediate family members and the funds which were received from Chagganlal Suchak Family Trust was invested in mutual funds as directed by him in that trust, he and his wife were the trustees, however, the said bank account also was closed and the entire funds were deposited to the beneficiaries for his wife Mrs. Dina Suryakant Suchak and his daughter Ms. Deepa Jaitha and another daughter Mrs. Anika and son Mr. Anish S Suchak. Another important fact which is that, there is ITAT order for A.Y. 1998-99 in the case of Suryakant Suchak who was UK citizen wherein the Tribunal while dealing with the issue of investment of Rs.1.5 million GBP in State Bank of India’s Resurgent India Bonds in October 1998, the Tribunal held that the assessee was a non-resident residing outside India since several decades, therefore, he qualifies the primary condition of being NRI individual for making the investment. Thus, it clearly shows that the source of funds in RIB was made by Mr. Suryakant Suchak. Accordingly, the source of funds was never made by the assessee or his wife. Once the source of funds is neither by the assessee nor he or his family were beneficiaries, we do not find any reason to hold that the peak balance in the foreign bank account should be added as taxable income of the assessee in India. ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 65 28. Thus, on perusal of facts and the evidentiary materials placed on record, incontrovertibly demonstrates that the bank accounts in question, held under the aegis of Chagganlal Family Trust were opened by non-residents, ostensibly and explicitly for the benefit of non-residents and the source of funds is irrefutably traced to non-residents and ultimately the accrual and aggregation of funds were repository/ credited in the accounts of non-residents. Hence no part of such deposits or peak balance can be taxed in the hands of the assessee in India. Accordingly, the addition of Rs.10,50,41,824/- made in the hands of the assessee is deleted. 29. Now coming to the issue of addition of Rs. 57,00,000/- in respect of payment made to Mr. Jehil Ashok Thakkar, it has been stated that these funds were given to the nephew of the assessee towards compensation of value of flat as one of the flat belonging to the mother of the assessee which she was equally bequeathed to assessee and his brother Ashok Thakkar. The assessee has paid 50% of the value of the flat from his bank account through cheque, the source of which was duly explained. It has been stated that, this transaction was purely between family arrangements on account of inheritance. The ld. AO has brushed aside the explanation of the assessee on the ground that source of the payment was unexplained. Even the ld. CIT(A) has confirmed the addition holding that assessee has furnished fund flow statement to explain the source of the funds and the payments but in absence of bank account statement to support the source of funds, same cannot be accepted. He held ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 66 that, just because the payment has been made through cheque, it cannot be treated as explained. 30. From the perusal of the facts and material on record, we find that assessee’s mother, Late Mrs. Snehila Jayantilal Thakkar in her will dated 01/11/2000 bequeathed her only residential flat in Mumbai equally to her two grand children, Mrs. Mitali Rohit Lakhanpal (daughter of assessee) and Jehil Ashok Thakkar (son of assessee’s brother). The deceased mother’s estate was bequeathed to HUF of Dilip Jayantilal Thakkar and HUF of Ashok Jayantilal Thakkar. This is clear from the contents of the ‘will’ given in the paper book at pages 145-147. Her ‘will’ also stated that either of her two grand children can acquire one half of the share as per the valuation of the flat at the time of her death. After her death on 03/02/2005, flat was valued by the Approved Valuer at Rs.1,10,00,000/- and half of it (Rs. 55,00,000/- ) plus compensation for late payment aggregated to Rs.57,00,000/- which was paid to Ashok Jayantilal Thakkar through from Dilip Jayantilal Thakkar HUF in his mother’s bank account and there by paid by cheque as legacy to Jehil Ashok Thakkar. Thus, it was submitted that the payment was made from the bank account of the assessee as Karta of HUF through declared sources hence it could be held that the payment made was from undisclosed sources. The complete fund flow has been given at page 148 of the paper book which is reproduced hereunder:- ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 67 31. The assessee had also filed an affidavit of Mr. Jayhil Ashok Thakkar before the authorities below about the payment of Rs.57,00,000/-. Once assessee has given the source of funds as given above from his bank account, we fail to understand how the payment of Rs.57,00,000/- remain unexplained. Accordingly, the addition made by the ld. AO is deleted. 32. The other grounds which have been raised by the assessee have been rendered purely academic and infructuous because on merits only these are two additions challenged before us have ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 68 already been deleted. Other legal grounds raised that the assessment is time barred is also treated as academic and dismissed as infructuous. 33. In the result, appeal of the assessee is allowed on merits. ITA No. No.6408/Mum/2024 34. The aforesaid appeal is in relation to the penalty proceedings u/s 271 (c) in respect of quantum of additions made with regard to Rs.10,50,41,824/- and addition on account of source of funds paid to Shri Jayhil Ashok Thakkar. Since we have already deleted the addition on merits in the quantum of proceedings, therefore, penalty levied on such addition stands deleted. In the result, appeal of the assessee is allowed. 35. In the result, both the appeals of the assessee are allowed. Order pronounced on 30th May 2025. Sd/- (PADMAVATHY S) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 30/05/2025 KARUNA, sr.ps ITA No.2175/Mum/2024 & 6408/Mum/2024 Shri Dilip J Thakkar 69 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "