AI Insights
The case involves appeals by Shri Anurag Kejriwal, Smt. Uttara Kejriwal, and Smt. Tara Kejriwal against the orders of the Commissioner of Income Tax (Appeals), Kolkata, which arose from the assessment orders under section 10(3) of the Black Money Act, 2015. The assessments were based on information received from foreign tax authorities indicating that the assessees were beneficial owners of foreign bank accounts and entities. The Tribunal examined the evidence, including bank statements and KYC documents, and concluded that the assessees did not satisfactorily explain the sources of the funds in these accounts, thus upholding the assessments.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 42105 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Black Money Appeal
Pronouncement Date
07-01-2025
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2018-2019
Judgement Text
" BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member & Shri Pradip Kumar Choubey, Judicial Member B.M.A. No. 04/KOL/2022 Assessment Year: 2018-2019 Shri Anurag Kejriwal,..............................Appellant 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 [PAN:AGBPK7660H] -Vs.- A.D.I.T. (Inv.)-3(3), Kolkata,....................Respondent Aayakar Bhawan Poorva, 110, Shantipally, Kolkata-700107 B.M.A. No. 05/KOL/2022 Assessment Year: 2018-2019 Smt. Uttara Kejriwal……..............................Appellant 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 [PAN:AJXPK6535G] -Vs.- D.D.I.T. (Inv.)-3(3), Kolkata,....................Respondent Aayakar Bhawan Poorva, 110, Shantipally, Kolkata-700107 B.M.A. No. 06/KOL/2022 Assessment Year: 2018-2019 Smt. Tara Kejriwala.……..............................Appellant 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 [PAN:AFTPK0513Q] BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 2 -Vs.- D.D.I.T. (Inv.)-3(3), Kolkata,....................Respondent Aayakar Bhawan Poorva, 110, Shantipally, Kolkata-700107 Appearances by: Shri Soumitra Choudhury, Advocate, Shri Jaydeep Chakraborty & Shri Pranabesh Sarkar, Advocate, appeared on behalf of the assessee Shri Abhijit Kundu, CIT(DR) & Shri Raja Sengupta, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: December 11, 2024 Date of pronouncing the order: January 07, 2025 O R D E R Per Shri Rajesh Kumar, Accountant Member:- Three different assessees are in appeal before the Tribunal against the orders of ld. Commissioner of Income Tax (Appeals), Kolkata-20 even dated 17.08.2022, which are arising out of the assessment orders dated 29.04.2020 passed under section 10(3) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax, 2015 for A.Y. 2018-19 framed by ld. DDIT (Inv.), Unit-3(3), Kolkata. All these appeals are being clubbed and heard together and are being disposed of by this common order for the sake of brevity and convenience. First of all, we shall take appeal in BMA No.4/Kol/2022 A.Y. 2018-19. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 3 BMA No. 4/Kol/2022 A.Y.2018-19 2. Brief facts of the case are that the Assessee in the present case is an individual and a resident under the Act. A company by the name M/S. Anurag Intex (Chem) Pvt. Ltd. (AICPL), is engaged in the business of acting as commission agent/trading in iron ores of which the assessee is one of the director. The assessee derives income in the form of salary from the aforesaid company besides incomes under the head income from other sources like interest income etc. Proceedings under the BMA were commenced against the Assessee by issuing notice u/s.10(1) of the Act dated 12.01.2018 in the light of the following information received by the Assessing Officer: (i) Information received on 8.5.2017 from Switzerland, Swiss Federal Tax Administration (FTA) under the “India- Switzerland Double Taxation Avoidance Agreement (DTAA) in the light of Exchange of Information clause of the DTAA. (ii) Information received on 7.6.2017 from Ministry of Finance, British Virgin Island, by virtue of the Agreement between the Government of the Republic of India and the Government of The British Virgin Islands (BVI), for Exchange of Information relating to Taxes. (iii) Information received on 26.10.2017 under “Exchange of Information” Article of India-Panama Multilateral Convention on Mutual Administration Assistance in Tax matters. 3. The nature of Information received from SWISS FEDERAL TAX ADMINISTRATION (FTA) was that there were four Bank BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 4 Accounts with BNP Paribas, Geneva in the name of the following entities a) Krims Investments Inc (KII) Bank A/C.N0.88393-5 b) Biscay Exports Ltd. (BEL) Bank Account No.88500-5 c) Newington Group Trading Ltd.(NGTL) Bank Account No.87503-9 d) Netstar Commercial Ltd. (NCL) Bank Account No.85877-8 3.1. As per information received, the Assessee and his wife Mrs. Uttarra Kejriwal were the beneficiaries of the first 3 bank accounts and the Assessee, his wife and his mother Smt. Tara Kejriwal, were the beneficiary of the fourth bank account as stated above in para 3 above. Copies of the KYC Documents and Statements of Account from the Banks were also received. Since the Assessee has been shown as beneficiary in these bank accounts, the monies lying in the said accounts are to be regarded as “Foreign Assets” i.e., in respect of which the Assessee is a beneficial owner. 3.2. The nature of information received from International Tax Authority, Ministry of Finance, British Virgin Island was as follows: a).BEL and KII were companies incorporated in BVI b).Both these companies were struck off the register on 1.5.2013 and 1.11.2013 respectively. c).Assessee was the beneficial owner of BEL and KII. d).As per the register of Directors and Shareholders Assessee was director of BEL from 1.1.2010 to 7.6.2010 e).An entity by name Directorship Management Ltd.(DML), was the sole director of BEL. DML has given a general Power BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 5 of Attorney to Assessee with individual signature rights. Thus Assessee was beneficial owner of BEL. 3.3. .Assessee was director of KII and copy of consent to act as director of KII was given. Assessee was appointed as President of KII. The Minutes of the first meeting of Board of directors of KII were also provided. An entity by name Prauk Foundation was shareholder of KII since 1.7.2010 3.4. A company, namely, M/s. Mussack Fonseca & Co. had raised invoices on another company MFT Services SA. MFT Services SA was acting as intermediary of the company KII and maintaining all its accounts. 3.5. The nature of information received from Competent Authority of Panama, was as follows: a) Prauk Foundation was a foundation. Foundation is a type of entity which the Swiss law allows for the purpose of allocating assets to a particular purpose. Unlike companies, foundations do not have any share capital or shareholders. b) Assessee and his wife are 24% and 76% beneficiaries, respectively of Prauk Foundation. c) KII is the foundation council of Prauk Foundation. 3.6. It is the case of the Assessing Officer that the Assessee was the beneficial owner of the Bank Accounts in the name of NGTL and NCL on the basis of the information obtained from Swiss Federal Tax Administration (Swiss FTA). BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 6 3.7. In so far as BEL is concerned, it was the case of the AO that as per information received from Swiss FTA the Assessee was the beneficial owner of the bank account in the name of BEL. Besides the above, according to the AO, International Tax Authority of BVI, the assessee was the beneficial owner of BEL . As per the register of Directors and Shareholders, the assessee was the director of BEL from 01.01.2010 to 07.06.2010. He had controlling interest in the form of power of attorney given by Directorship Management Ltd.(DML), which was the sole director of BEL. DML has given a general Power of Attorney to assessee with individual signature rights. Therefore the Assessee was the beneficial owner of the bank account in the name of BEL. 3.8. In so far as KII is concerned, it was the case of the AO that the Assessee was the beneficial owner of the bank account in the name of KII based on information from Swiss FTA. Besides the above, based on the information obtained from Tax authorities of BVI, the AO was of the view that Assessee was director of KII and copy of consent to act as director of KII was given. Assessee was appointed as President of KII. The Minutes of the first meeting of Board of directors of KII was also provided. An entity by name Prauk Foundation was shareholder of KII since 1.7.2010 and the Assessee and his wife were 24% and 76% beneficiaries, respectively of Prauk Foundation. KII was the foundation council of Prauk Foundation. Mrs.Uttara Kejriwal was holding 50,000 shares of KII and after she resigned, the shares were held by Prauk Foundation. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 7 3.9.The plea of the Assessee before the AO on each of the Bank Accounts, which was sought to be regarded by the AO as “undisclosed foreign Assets” of the Assessee, and the conclusion of the AO is set out in the succeeding paragraphs: A.NETSTAR COMMERCIAL LTD:(NCL) a) NCL had obtained contracts for export of Iron ore from India to China and the Assessee’s company AICPL in India arranged for export of Iron Ore to China. AICPL would get commission income for services rendered. The same is accounted as Commission income in the books of accounts of AICPL. Page 16 to 30 of the Paper Book is the Extract of the Commission income receivable from various parties in the books of accounts of AICPL for the period 1-4-2006 to 31.3.2016. There are several entries of commission receivable from NCL in the aforesaid ledger extract. Page 31 to 33 of the paper book is the ledger account of NCL in the books of accounts of AICPL for the period from 12.9.2007 to 31.3.2014. This ledger lists the commission income receivable from NCL . These transactions were duly reflected in the Balance Sheet, Profit and Loss Account and return of income filed by AICPL for AY 2007-8 to 2013-14. Copies of thse documents are placed at pages 35 to 127 of the assessee’s paper book. Thus when all details were already disclosed, there cannot be a charge of “undisclosed assets outside India” of which the assessee is a beneficial owner. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 8 b). The assessee was in Geneva from 15-5-2007 to 19.5.2007 where he met one Mr. Hui Li of China, who suggested to purchase the company NCL. Mr.Hui Li was known to the Assessee when he met him in china in 2006 when he had gone on a sales promotion tour to China. At his advise that Assessee’s business prospects would improve, if he has a company in BVI and he can get exclusive agency for export of iron ore to china, the Assessee sent US $ 15000 on 8.7.2007 through remittances from HDFC Bank Account in the name of AICPL as share application money for purchse of shares in NCL in the name of the Assessee and his wife. Pge-34 of the paper book is a copy of the share application money ledger account in the books of AICPL which would show the share application money was paid for investment in shares of NCL in the name of the Assessee and his wife. There was a liberalized Scheme of RBI which permitted remittances upto US $ 25000 for business promotion purposes, without approval of RBI. Copy of the RBI circular permitting remittances without permission is at page 183 to 189 of the paper book. The Assessee sent copies of his passport and that of his wife’s and mother’s passport and KYC documents to enable complete the transactions. Mr.Hui Li promised to arrange for resolution of Board of Directors of NCL in due course, which was a requirement under the laws of BVI. c). Subsequently, the Assesssee realized that he would not get exclusive agency for import of iron ore and therefore the Assessee asked for refund of share application money, which was given on 21.4.2008. The same is duly effected in the books of accounts of BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 9 the Assesse. Page 178 to 182 of the paper book is the confirmation from HDFC Bank regarding share application money having been remitted out of India and its receipt back into India upon refund. At Page 183 of the paper book is the Assessee’s share application ledger in NCL which reflects the payment and refund of money paid to/from NCL. d). At page 164 of the paper book is the information received from the foreign Government regarding the bank account in the name of NCL in which the Assessee and his wife are shown as beneficial owners. On a perusal of the said document, it can be seen that the date of the document is darkened/blackened. One therefore can not decipher the date of this document. e). In the course of assessment proceedings, the AO issued summons to the Assessee for his examination and was examined by the AO on 5.6.2018. In reply to question No. 20, the Assessee submitted that he, his wife and his mother had shares in NCL numbering 10950, 3750 and 300 respectively for the period from21.4.2007 to 26.2.2008. This was a reference to the share application money of US $ 15000 which was sent and subsequently refunded. In reply to Question N0.23 and 24 the Assessee denied having received any remuneration or having any bank account outside India. In answer to Question No.25, the Assessee also denied having made any other payments to NCL. f). The assessee submitted that on the basis of information in the form of unauthenticated documents which mention the BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 10 assessee and his wife as beneficial owner of the bank account, the revenue cannot claim that the Assessee was the beneficiary owner of the bank account in the name of NCL. NCL is a corporate entity and it has personality different from the Assessee. The AO cannot therefore conclude that the Assessee is the beneficial owner of the said bank account. g). The AO in Paragraph 6.2.1 of his order did not dispute the fact that the Assessee invested US $ 15000 in NCL and that this transaction was recorded in the books of accounts of AICPL through disclosed bank accounts of the Assessee. The fact that the money was received back is also not disputed by the AO. He however concluded that Swiss FTA has mentioned Assesseee as beneficiary of the Bank account and therefore the plea of the Assessee cannot be accepted. B.KRIMS INVESTMENTS INC:(KII). a). It is the case of the revenue based on minutes of the Board of Directors meeting held on 11.1.2010 (Page 274 of paper book )that the Assessee was a beneficial owner of the bank account of this company, apart from the information provided by the bank (Page 255 of the paper book) that the Assessee is the beneficial owner of the bank account in the name of KII. According to the assessee, the Board resolution cannot be true because on 11.1.2010, the assessee was not in Switzerland as per the endorsements in the passport, copies of which are given at pages 190 to 249 of the assessee’s paper book. A summary of assessee’s leaving India and coming back to India is placed before the BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 11 bench. The minutes of the meeting are certified by Mossack Fonsecca & Co. (BVI) Ltd., who are the Registered Agents of the company KII. The information provided by the Bank at page 255 of the paper book that the Assessee is beneficial owner of the bank account cannot be accepted for the reason that the said document does not have a date and place where it was signed and are unauthenticated copy. The place and date is darkened so that no one could read it. Such a piece of evidence has no evidentiary value. The bank’s statement of account for the period from 1.4.2011 to 31.12.2016 is placed at pages no. 256 to 273 of the PB. These documents have no relevance to the assessee when the Assessee has nothing to do with this bank account. In the statement recorded by the AO, the Assessee has denied having any dealings with KII. The Assessee however submitted that he was director of this company from 11.2010 to 7.6.2010. Thereafter one Mr.Maurice Taylore was director of this company. The register of directors was produced by the assessee before the AO (copy at page 15 of paper book) duly certified by the Registered Agent of KII viz., Mossack Fonsecca & Co. (BVI) Ltd. The documents sent for KYC at the time of investment in NCL., might have been misused to open this account. The Assessee thus denied any beneficial ownership in this company. b). In Paragraph 6.2.2, the AO accepted the fact that Assessee ceased to be a director of KII from 7.6.2010. According to the AO the Assessee had connections with KII in two capacity viz., (i) as Director and (ii) as beneficial owner. Mr.Maurice Taylor became director but Assessee continued as Beneficial owner of KII. He BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 12 therefore concluded that Swiss FTA has also mentioned assesseee as beneficiary of the Bank account and therefore the plea of the Assessee cannot be accepted. C. BISCAY EXPORTS LTD.(BEL). a). Originally this company was known as Biscay Overseas Ltd., and later renamed as Biscay Exports Ltd. and was incorporated on 12.2.2001. As far as this company is concerned, the assessee had business dealings with this company and received commission income which is duly reflected in the commission ledger of the assessee’s company AICPL as placed at page No.27,28, and 29 of assessee’s paper book. As per the information received by the AO, the assessee was director of this company. The basis of this assertion is that MFT Services was an intermediary of this company. A company by name Directorship Management Ltd. (DML) was the sole director of this company. The two directors of DML gave power of attorney to the Assessee to act as sole director of this company. This allegation of the AO is not acceptable because there is no evidence that the Assessee accepted to act as director of BEL on the strength of Power of Attorney allegedly given by directors of DML. Mr.Maurice Taylor is connected with DML. Therefore the Assessee’s name has been used by the same group of people without the knowledge of the Assessee. b). At page 300 of the paper book is the information allegedly given by BNP Paribas Bank, that Assessee is beneficial owner of the bank account in the name of BEL. The date of this document BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 13 is 3.3.2011 and the place is shown as Geneva. On this date the Assessee was not in Geneva and was in Singapore as would be evident from the endorsement in his passport. To corroborate ,the details of date of assessee’s departure and arrival from and out of India are placed on records. Therefore, the document is therefore not reliable piece of evidence. It is unauthenticated document and does not speak the truth. Pages 301 to 317 of the paper book is the bank statement of this bank account, which has no relevance to the assessee when the assessee is not the beneficial owner of this bank account. c). Another case made out by the AO was that the assessee and his wife held shares in Prauk Foundation and BEL was formed by Prauk Foundation and purak foundation held shares in BEL and therefore there was indirect ownership of Assessee in BEL. On this allegation, the assessee submitted that Prauk Foundation was a name suggested by Hui Li in the course of discussion of business interest in BVI and the name was accepted by the assessee but ultimately the assessee did not conclude any entity to be set up in BVI and hence the assessee had no occasion to invest any money in Prauk Foundation. Prauk Foundation has no bank account and there is no money trail from Assessee to Prauk Foundation. Thus there is no evidence to show that Purak foundation held shares in BEL. d). In Paragraph 6.2.3 of the assessment order, the AO has again gone by the fact that Pruak foundation was owner of BEL and the information obtained from the foreign authority BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 14 confirmed Assessee as beneficiary of the bank account and therefore the plea of the Assessee cannot be accepted. D.NEWTON GROUP TRADING LTD (NGTL). a) As far as this company is concerned, the evidence on which reliance was placed by the AO is the information given by the bank that the Assessee is beneficiary owner of this bank account (Page 318 of the paper book). Pages 319 to 338 are copies of the Bank statement of this bank account. Assessee had business dealings with this company and the commission income is duly reflected in the books of accounts of the Assessee. (Pages 16-33 of Assessee’s paper book). Except this there is no other relationship whatsoever between the Assessee and NGTL. Page 318 of the paper book comprised the information from bank, wherein the date is darkened and was stated to have been signed in Delhi. As per the BNP Paribas Bank Geneva rules, presence of account holder in Geneva is a must. Therefore this document’s authenticity is doubtful for the reason that it has not been authenticated by the Government providing information and that the contents are contrary to the rules regarding opening of bank account. b). In Paragraph 6.2.4 of his order, the AO held as per information received from a soverign authority, the assessee was a beneficial owner of the bank account and hence the same has to be treated as Undisclosed asset located outside India of the assessee. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 15 c). In Paragraph 6.2.5 of his order, the AO accepts the plea of the Assessee that physical presence of beneficiary is a must for opening bank account in Switzerland of BNP Paribas Bank and that on the dates claimed to be the dates of opening of bank account, the assessee was not present in Switzerland. The AO however was of the view that it is possible that the account would have been opened in a branch of PNP Paribas in India. Over and above that the AO again reiterated the fact that information received from a soverign authority cannot be disregarded and have to be held to have evidentiary value. 4. In paragraph 7 of his order, the AO has culled out the details of the bank account and the balances and has arrived at the Assessee’s share of the bank account and worked out “Undisclosed assets of Assessee located outside India” at Rs. 2,42,08,810/- in the order passed under section 10(3) of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act ,2015 dated 29.04.2020. 5. The aggrieved assessee preferred an appeal before ld CIT(A) however the appeal of the assessee was dismissed after taking into account the contentions and arguments of the assessee. The order of the ld. CIT(Appeals) is extracted as under:- “4.3(a) I have carefully considered the facts of the case and submission of the appellant. This assessment order under the BMA, 2015 is based on information received from the Competent Government Authorities of British Virgin Islands, Panama and Switzerland. Information has been received regarding the companies incorporated abroad which had connection with Mr. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 16 Anurag Kejriwal and his wife and mother. Information has also been received regarding foreign bank accounts in the names of the foreign entities where Mr. Anurag Kejriwal along with his wife, Mrs. Uttara Kejriwal are joint beneficial owners. In one of the bank accounts, even his mother, Mrs. Tara Kejriwal is joint beneficial owner along with Mr. Anurag Kejriwal and Mrs. Uttara Kejriwal. Information received from the Competent Authority of Foreign Countries clearly establish Mr. Anurag Kejriwal’s connection with foreign companies / entities such as Pruak Foundation, Biscay Exports Ltd. and Krims Investment Inc., Newington Group Trading Ltd and Nedstar Commercial Ltd. Even Mr. Anurag Kejriwal cannot deny his connection with these foreign entities. Regarding Pruak Foundation he accepts that he wanted to establish a company in British Virgin Islands for export opportunities of iron ore from India to different parts of the world through Panama. However, he denies that this plan actually materialized. He says that establishing Pruak Foundation was only a proposal which never happened. However, the documents received from the Competent Authorities of the Foreign Countries reveal the contrary. The information received from the Foreign Competent Authorities reveal that Pruak Foundation was established and it had substantial shareholding in Biscay Exports Ltd. and Krims Investment Inc. Shareholders of Pruak Foundation were Mr. Anurag Kejriwal (24%) and his wife (76%). Documents received from the foreign companies also reveal that Mr. Anurag Kejriwal was offered Directorship of the Company Biscay Exports Ltd. and he was appointed as President of the Company Krims Investment Inc. However, Mr. Anurag Kejriwal in his submission refutes these evidences and submits that he never accepted the directorship or the presidentship in the two companies. The information sent by the Competent Authority of British Virgin Islands reveals that Shri Anurag Kejriwal along with his family members remained the beneficial owners and shareholder in the companies named Biscay Exports Ltd. and Krims Investment Inc. till their names were struck off from Register in 2013. There is no reason to doubt the information provided by the Competent Authority of British Virgin Islands. Appellant further submits that the documents/information has been received in the form of documents submitted by M/s. Mossack Fonseca & Company Associates, SA. Appellant says that this is a private party and hence questions the authenticity of these documents. However, appellant's objections are not justified because these documents have been received through the Competent Authority of British Virgin Islands Panama & Switzerland and as Government Authorities they are expected to show due diligence and only when they must be sure about the authenticity of these documents they must have sent these. Further, it is also important to note that appellant had approached same Tax / Law professional firm for incorporating the foreign companies and opening the bank accounts. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 17 Now coming to the bank accounts in the names of (1) Krims Investment Inc., (2) Biscay Exports Ltd., (3) Newington Group Trading Ltd and (4) Nedstar Commercial Ltd., the documents / information sent by the Competent Authority of Switzerland i.e. Swiss Federal Tax Administration, FTA reveals that Shri Anurag Kejriwal along with his wife and mother have been the beneficial joint owners in one or more bank accounts. Copies of KYC documents and other documents submitted while opening these bank accounts have also been sent by the Swiss Tax Authorities. Appellant has not been able to refute these facts. Appellant has only made the excuse that his passport may be verified which can establish that he or his family members were not in Switzerland around the time when these bank accounts were opened. It is further submitted that the Memorandum / Rules of the Bank BNP Paribas (Swiss) SA Geneva requires the physical meeting of the would-be account holders with the bank authorities. This argument of the appellant is not acceptable. Neither is there any need to get into the rules regarding the opening an account in this bank. What is important is the fact that Mr. Anurag Kejriwal and his family members are the beneficial owners of the bank accounts, as mentioned above, and they have not been able to show that their names were replaced by any other person as beneficial owners of those bank accounts. The Swiss Federal Tax Administration, FTA would not miss out any such crucial information. According to their information, Mr. Anurag Kejriwal and his family members continued to be the beneficial owners since the beginning when these accounts were opened. Documents sent by the Swiss authorities clearly show that Shri Anurag Kejriwal and Mrs. Uttara Kejriwal are the joint beneficial owners in the bank accounts in the names of Krims Investment inc., Biscay Exports Ltd. and Newington Group Trading Ltd. In the bank accounts in the name of Nedstar Commercial Ltd., apart from these two persons Smt. Tara Kejriwal is also one of the joint beneficial owners. Documents sent by the Competent Authority of Switzerland, reveals the signatures of Mr. Anurag Kejriwal his wife and mother on account opening forms, as beneficial owners. Copies of their passports are also attached to Account Opening forms, as proof of identity. In view of the above discussion, it is apparent that Shri Anurag Kejriwai along with his wife Mrs. Uttara Kejriwal and his mother Smt. Tara Kejriwal have been the beneficial owners of the foreign bank accounts. They have not been able to prove the contrary. Although, they have denied being beneficial owners of their foreign bank accounts but the documents sent by the Competent Authority of Switzerland contradicts their claim. As per the established norms regarding the exchange of information between two sovereign Governments, it is expected that the concerned Competent Authority would do necessary verification and satisfy itself about the authenticity of the documents and only then pass on those BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 18 documents / information to the other Competent Authority. Under the circumstances, it is apparent that Shri Anurag Kejriwal and his family members were beneficial owners of the foreign bank accounts. Therefore, it was expected of them to explain the sources of the deposits in these foreign bank accounts. They were also expected to reveal these foreign assets / income in their return of income with effect from AY; 2012-13. However, they have not done so. They should not have missed the opportunity of one time compliance window provided under the BMA, 2015. As they have not complied with the requirements of law, the assets owned by them in the form of deposits in the bank accounts fall under the definition of undisclosed foreign assets / income under BMA, 2015 and such assets/income is liable to be charged to tax as per the provisions of BMA, 2015. 4.3(b) In support of his submission, appellant has relied on the decision of Delhi Tribunal dated 07.07.2021 in the case of ACIT, Range-70, New Delhi Vs. Jatinder Mehra (2021) 128 taxmann.com 152. However, perusal of the order shows that appellant's facts are distinguishable from the facts in this case. In this case, information was received from the Competent Authority of Singapore that Shri Jatinder Mehra was beneficial owner of an overseas bank account belonging to a foreign company whose sole shareholder and director was his son. During proceedings, assessee submitted that he had been named as beneficial owner only out of gratitude and respect and he had never contributed any funds either to trust or to his son’s company and had not received any money from that company. Out of respect and regards, assessee’s son wanted him to be nominal settler of the trust. Hence, assessee had agreed to become the nominal settler without having to invest, contribute or settle any amount as settlement amount of the trust. Further his son and grandson were beneficiaries of the trust and this was owned up by his son. Under these circumstances, the Hon'ble ITAT accepted that the money lying in the overseas bank accounts belonged to his son and additions made in the hands of the assessee was not justified. However, in the present case, appellant has failed to establish that money lying in foreign bank accounts belongs to some other person. Nobody has come forward to own up these bank accounts. Appellant has cited another decision of Mumbai Tribunal in the case of Kamal Galani Vs. ACIT, ITA No. 138 / Mumbai I 2019 to 142/ Mumbai / 2019. In this case, information was received from Government of France regarding bank accounts in HSBC Pvt. Ltd. (Suisse) SA, Geneva, Switzerland. The information said that assessee had a bank account in HSBC Bank, Geneva and the bank account was opened under the client name Dipak Varandmal Galani and/or Kamal Galani. During reassessment proceedings, assessee Shri Kamal Galani explained that bank account was BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 19 opened by his brother Mr. Dipak Varandmal Galani with the British Bank of the Middle East in the year 1998 and this bank was subsequently taken over by HSBC Bank. Assessee submitted that bank account was opened by his brother and allrights, interest in the said bank account completely belonged to his brother. Assessee’s name was included as a second account holder out of love and affection. Further, his brother Dipak Varandmal Galani owned up the account and stated that account is opened by him in the year 1998 and his brother’s name was included as a mark of respect but his brother didn't have any right in bank account. However, AO insisted that the assessee should produce evidences to prove that he was not the onwer of the fund/assets held in bank account. AO ignored the letter filed by assessee’s brother and held the assessee as beneficiary of that bank account and made additions in his hands. Ld. CIT(A) confirmed the additions. However, when the matter reached ITAT, Mumbai, it was held that the bank account belongs to assessee’s brother and this was made clear right from beginning by assessee’s brother. To support his contentions, assessee had filed a letter and affidavit from his brother, Dipak Varandmal Galani, who accepted that he is the owner of the bank account and this account was opened by him in his capacity as a non-resident Indian in the year 1998. Under the circumstances, the Hon'ble ITAT has held that AO made a mistake in making additions for amount lying in bank account as unexplained money of the assessee. It is apparent from the facts discussed above that appellant's case is different from that of Mr. Kamal Galani. In appellant's case beneficiaries are only the appellant and his immediate family members. Nobody has come forward to claim the ownership of these accounts. Neither has the appellant mentioned about any other beneficiary for those bank accounts. The documents sent by the Competent Authority of the Switzerland clearly establishes that Mr. Anurag Kejriwal, Mrs. Uttara Kejriwal and Mrs. Tara Kejriwal are the only beneficiaries in one or more accounts. Hence, the facts of appellant's case are distinguishable from those of Mr. Kamal Galani. 4.3(c) In view of the above discussions, appellant's contentions are not acceptable. AO’s action in assessing the undisclosed foreign assets of the assessee under BMA, 2015 is upheld in principle. During appellate proceedings, it was noticed that there was some arithmetical error in the assessment order at page No.29 where AO had worked out the share of assessee’s undeclared foreign assets/income. AO had worked out the undeclared foreign assets/income at Rs.2,42,08,812/- whereas correct amount should have been Rs.2,52,08,828/-. Hence, vide letter dated 26.07.2022, assessee was informed about the proposed enhancement and his reply was sought as per the provisions of section 17(3) of BMA, 2015 as under: BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 20 “………Sub: Enhancement of assessment - BMA, 2015 - AY: 2018-19 - regarding. Appeal against assessment order dated 29.04.2020 for assessment year 2018-19 is pending in this office. In response to notices for hearing, you have filed your written submission which has been duly considered. However, some discrepancy has been noticed in respect of your share of assets / income, as credited in the foreign bank accounts. There was some error in the assessment order regarding the total quantum of your share. Correct amount of your share is as per the table below: It appears that due to oversight, the AO has assessed Rs.2,42,08,812.96 as undisclosed foreign assets whereas the correct amount should have been Rs.2,52,08,828/-. Hence, I propose to enhance the assessment and this letter may be considered as notice u/s. 17(3) of the BMA, 2015 to present your case against the proposed enhancement. You are requested to send your reply on or before 08.08.2022 at 11.30 a.m.” However, neither anybody attended in-person on the appointed date nor the assessee has filed any reply till date. Hence, it is presumed that assessee does not have anything to say in this matter. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 21 In view of the above discussion, the additions made by the AO are upheld in principle and the assessment of undeclared foreign assets/income is enhanced to Rs.2,52,08,828/-. 5. Grounds of Appeal No(s). 7 : Consequential in nature. 6. In the result, the appeal is dismissed and assessment of undeclared assets/income is enhanced to Rs.2,52,08,828/-“. 6. We have heard the rival contentions and perused the material available on record including the provisions of Black Money Act and other Acts as referred before us during the course of hearing. First of all we would like to briefly discuss the provisions of Black Money Act. The Black Money Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015 is enacted on 26th of May, 2015 by Act number 22 of 2015 and which came into force with effect from first day of April, 2016. The charge of tax is provided Under Section 3 of the Act in respect of total undisclosed foreign income and assets of the previous year of the assessee at the rate of 30% of undisclosed income and assets to be charged on its value in the previous year in which such assets comes to the notice of the assessing officer. U/s 2 (2) the assessee is defined to mean a person being a resident other than NOR in India as defined in clause (6) of Section 6 of the income tax act. U/s 2 (12) undisclosed foreign income and assets is defined to mean the total amount of undisclosed income of an assessee from a source located outside India and the value of an undisclosed asset located outside India referred to in Section 4 and computer in the manner laid down in Section 5 of the act. U/s 2 (11) undisclosed asset located outside India means an asset including any financial interest in any entity located outside India held by the assessee in his name or in respect of which he is a beneficial BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 22 owner and he has no explanation about the source of investment in such a set or the explanation given by him is in the opinion of the assessing officer unsatisfactory. Section 4 deals with the scope of total undisclosed foreign income and assets and Section 5 deals with the computation of total undisclosed foreign income and asset. Thus on careful look at Section 3 of the Act it provides that irrespective of the year of investment, the undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the assessing officer. Therefore, the year of chargeability of such undisclosed assets located outside India shall be the previous year when it comes to the notice of the assessing officer. Provisions of Section 10 of the Act deals with the assessment of the undisclosed foreign income and assets and the sum payable by the assessee. There is no provision of charging of any interest over and above the tax at the rate of 30% provided u/s 3 of the Act. Provisions of Section 5 (1) (ii) provides for exclusion of the income already charged to tax under the Income Tax Act from the value of the undisclosed assets located outside India and furnishing of the evidence by the assessee to the satisfaction of the assessing officer. Provisions of Section 4 (3) provide that the income included in the total undisclosed foreign income and assets under this act shall not farm part of the total income under the income tax Act. Thus it can be stated that provisions of Section 10 (1) of the Act provides that an assessing Officer can issue a notice in the year in which he discovers an undisclosed foreign asset or receives information about an undisclosed foreign asset/income. Provisions of Section 72 (C) which provides that a foreign asset shall be BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 23 deemed to have been acquired or made in the year in which a notice u/s 10 is issued by the assessing officer and the provisions of this Act apply accordingly where undisclosed foreign asset was acquired or offshore income earned prior to the date of coming into effect of the Act and it is not taxed under the Income Tax Act, still under the black money act, tax at the rate of 30% and penalty at the rate of 90% of the value of the asset can be recovered from such taxpayer. Over and above, the taxpayer may also be liable for prosecution. Provisions of Section 81 of the Act provide that no assessment, notice, summons or other proceedings, made or issued or taken or purported to have been taken made or issued or taken in pursuance of any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such assessment, notice, summons or other proceedings, if such assessment, notice, summons or other proceedings is in substance and effect is in conformity with or according to the intent and purposes of this act. 7. Undoubtedly the assessee is a resident in India and was director in the Company M/s. Anurag Intex (Chem) Pvt. Limited (hereinafter referred to as “AICPL”), which was engaged in the business of acting as commission agent/trading in iron ores. The assessee used to derive income by way of salary from the said company and also from other sources like interest income etc. Proceedings under the BMA were commenced against the assessee by issuing notice under section 10(1) of the Act dated BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 24 12.01.2018 by the ld. Assessing Officer after receiving information on 08.05.2017 from Switzerland, Swiss Federal Tax Administration (FTA) under the India- Switzerland Double Taxation Avoidance Agreement (DTAA) in the light of exchange of Information Clause of the DTAA besides receiving information on 07.06.2017 from Ministry of Finance, British Virgin Island by virtue of the Agreement between the Government of the Republic of India and the Government of The British Virgin Islands (BVI), for exchange of Information relating to Taxes. Apart from the above, the ld. Assessing Officer also received information on 26.10.2017 under “Exchange of Information” Article of India-Panama Multilateral Convention of Mutual Administration Assistance in Tax Matters. As per the information in the possession of the AO, there were four bank accounts with BNP Paribas, Geneva. As per information received, the assessee and his wife Mr. Uttarra Kejriwal were the beneficiaries of the first three bank accounts and the assessee, his wife and his mother Smt. Tara Kejriwal, were the beneficiaries of the fourth bank account. We note that ld. Assessing Officer received KYC documents, statement of accounts from the Bank. We observe from the facts before us that BEL and KII were companies incorporated in BVI and both these companies were stuck off the register on 01.05.2013 and 01.112013 respectively. The assessee was stated to be beneficial BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 25 owner of BEL and KII and entity Directorship Management Limited (DML) was the sole Director of BEL. 8.Now the issue before us whether the assessee is beneficiary/beneficial owner of the above companies which he has not disclosed in the return of income and is liable for the proceeding under the Black Money Act, 2015. We have examined the information received from the Swiss FTA and the source of information to the Government providing information is the financial institution/bank. The copies of bank accounts as received from foreign Governments were available at pages no. 164,255, 300 and 318 of the paper book and none of them are certified by the Banks as true copy. We also note that some of the information in the bank statements were darkened/darkened beyond legibility which we failed to understand the motive behind. We note that the ld. Assessing Officer has not carried out any further investigation into the issue but relied on these documents, which were not even certified and authenticated. We note that the assessee has frequently requested the BNP Paribas Bank, Geneva regarding the procedure to be followed in opening the current/business accounts in BNP Paribas Bank, Geneva. However, despite several requests by the assessee, no response was received from the banker. The documents to this effect were placed before us during the hearing. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 26 9.We also note that as per the procedure of the Bank, the physical presence of the assessee is required for opening the Bank account. However, on the date of opening the bank account in the BNP Paribas (Geneva), the assessee was not present as evidenced by the copy of the Passport as placed before us and is available in the paper book. In other words, the assessee had not visited the above country on the date of opening of the Bank accounts and, therefore, the arguments of the assessee that how he could put his signature on the application form, which is a vital piece of evidence furnished by the assessee before us to rebut the finding of the Revenue. We also note that the assessee was in Geneva from 15.05.2007 to 19.05.2007 where he met Mr. Hui Li of China, who suggested the assessee to purchase the company NCL. Mr. Hui Li was known to the assessee when he met him in China in 2006 when he had gone on a sales promotion tour to China. Mr. Hui Li of China advised that assessee’s business prospects would improve, if he has a company in BVI, and he can get exclusive agency for export of iron ore to China and, therefore, the assessee sent US $ 15,000 on 08.07.2007 through remittances from HDFC Bank Account in the name of AICPL as share application money for purchase of shares in NCL in the name of assessee and his wife. Copy of share application money ledger account available at page 34 of the paper book which indicates that share application money was paid for investment in shares of BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 27 NCL in the name of assessee and his wife. Since the assessee was engaged in the business of export of iron ore to China, the assessee purchased shares in NCL in his name and his wife. It was also argued that there was a liberalized scheme of RBI which permitted remittances upto US $ 25,000, for business promotion purposes, without approval of RBI. It was argued that the assessee sent copies of his passport as well as that of his mother and wife and other KYC documents to enable complete the transactions. Mr. Hui Li promised to arrange for resolution of Board of Directors of NCL in due course, which was a requirement under the laws of BVI. Thereafter the assessee realized that he would not get exclusive agency for export of iron ore and, therefore, asked for refund of share application money, which was given on 21.04.2008 and the same is duly reflected in the books of account of the assessee. Copy of confirmation from the HDFC Bank regarding share application money having been remitted out of India is available at pages 178 to 182 of the paper book. The main argument of the assessee was that since he had not visited abroad during the period when the accounts in the name of these companies were opened in Geneva Bank and therefore, there was every possibility of fraudulently using his and his family members KYC documents to open the bank accounts. The fact has been admitted by the ld. CIT(DR) during the course of hearing that the assessee’s passport did not bear any stamp indicating the dates of visit BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 28 abroad, but the bank accounts were opened by the above said companies using assessee’s signature. When the ld CIT(DR) was asked as to how the assessee could open bank accounts without being present there , the ld. DR could not give any cogent reply or explanation. 10. Considering the above facts and circumstances, we are of the view that ld. Assessing Officer has simply relied on the documents received from the foreign Government under DTAA and exchange of information without verifying the authenticity and veracity of these documents. We note that during the course of assessment proceedings, ld. Assessing Officer examined the assessee on oath when he appeared in compliance to summons issued on 05.06.2018 where Mr. Anurag Kejriwal the assessee has totally denied to have any connection with the Bank and ld. Assessing Officer has extracted relevant questions and answers as recorded in the said statement in the assessment order. We note that Mr. Anurag Kejriwal has totally denied to have any interest whatsoever in the said entities qua which information was passed on by DDIT (Inv.), Ward-3(3), Kolkata. Under these circumstances, we are inclined to hold that the assessee is not a beneficiary of the assets abroad as has been noted by the ld. Assessing Officer. The case of the assessee finds support from the decision of the Addl. CIT -vs.- Jatinder Mehra reported in (2021) BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 29 128 taxmann.com 152 (Delhi- Trib.), wherein Coordinate Bench has held as under:- “22. In view of these facts it is necessary to determine that Under what circumstances the undisclosed asset located outside India can be taxed in the hence of the assessee Under The Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act 2015. Section 2 (11) defines undisclosed assets located outside India as Under:- (11) ―undisclosed asset located outside India‖ means an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the assessing officer unsatisfactory. 23. On careful analysis of the above provision it clearly says that there has to be an ‗asset located outside India'. It can also be any financial interest of an assessee in any entity. These assets must be held in the name of the assessee. It can also be held by assessee as its beneficial owner. These assets can be charged to tax if assessee has no explanation about the source of investment in such asset or if the assessee provides an explanation which is in the opinion of the assessing officer is unsatisfactory then such asset can be charged to tax in the hands of an assessee Under the provisions of Section 3 of this act. 24. Undoubtedly, in this case there is an asset located outside India. It is in the form of a bank account number 806994 of a company Watergate advisors Ltd with Clariden Leu Ltd (Presently Credit Suisse) wherein $ 834,025.32 has been credited. Therefore, naturally the first text of having an asset located outside India is satisfied. The second condition whether this bank account as held by the assessee in his own name or not is not satisfied as it is held by the Watergate advisors Ltd a company who shareholder is Mr. Rajneesh Mehra, son of the assessee. Mr. Rajneesh Mehra is also the director of that company. The third condition that now required to be tested is whether the assessee is the BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 24 beneficial owner in respect of such asset. The term ―beneficial owner‖ is not defined under the black money act. However, the income tax act defines this term with respect to the requirement of the filing of the return of income u/s 139 of the income tax act. The proviso to Section 139 of the income tax act provides that a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of Section 6, who is not required to furnish a return Under the BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 30 provisions of Section 139 (1) of the act and who at any time during the previous year holds as a beneficial owner or otherwise, any asset located outside India or has assigning authority in any account located outside India or is a beneficiary of any asset located outside India, shall furnish the return of income verified and in prescribed manner. Thus, the income tax act casts a burden on specified assesse, if he holds as a beneficial owner any asset located outside India or has assigning authority in any account located outside India to file his return of income. The explanation 4 of that Section provides that for the purpose of this Section beneficial owner in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person. Therefore, to identify a beneficial owner of an asset, the said person should have nexus, direct or indirect to the source of the asset and he must have provided funds for the said asset. Thus, in order to identify a beneficial owner, one must verify the source of the asset. Now on perusal of said Bank Statement reveals as per the show cause notice that the total credits in the account was as under: Date Credit (USD) Balance (USD) Particulars 21/12/2011 8,26,161.57 8,26,161.57 From ‗Rajvin Ltd.‘ –Trust 30/03/2012 7,712.50 3,18,580.07 From Interest 25/10/2012 151.25 0 Deposited for closing account Total 8,34,025.32 Thus, it is seen that the credit to the said bank account and thus the source of the said account, was by way transfer made from the Trust Company ―Rajvin Ltd.. Therefore now it is imperative to examine that where from Rajvin Limited has received the fund which are transferred on 21st of December 2011 into the account of Watergate advisors Ltd. Assessee has explained with the help of BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 25 memorandum of family understanding placed at page number 125 – 129 of the paper book that ―Rajvin Ltd. was a Trust formed by the son of the Assessee, Shri Rajneesh Mehra. The said Trust was conceived vide the ―Memorandum of Family Arrangement‖ (MOA) dated 01/11/2003 entered into between the family members of the Assessee, being himself, his wife and his two sons. The said MOA, which was signed by the Assessee as one of the parties, was duly laid out before the ld. A.O. for his perusal. Salient terms of The MOA‘s provides that Shri Rajneesh Mehra, an NRI, was to form a Trust in any tax free jurisdiction and the father of Sh. Rajneesh Mehra i.e. assessee would be made the nominal settler for the said Trust out of love and respect. No settling amount or any other sum was to be contributed by the Assessee in the said Trust. Purpose of the Trust would be the furtherance of education/vocation/technical BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 31 skills and for the furtherance of research on Hindu scriptures. Total Corpus of the Trust would be USD 250,000, out of which USD 50,000 was to be contributed by Shri Rajneesh Mehra and the balance USD 200,000 was to be raised from friends, associates, and affiliates. Beneficial ownership of the Trust, it was clearly laid out vide Clause V that the Assessee would merely be the Settler and the ultimate beneficiaries of the Trust would be the two sons of the Assessee and their grandsons. The Assessee clearly had no beneficial ownership in the said Trust. Function of the Trust, it was laid out in the said MOA vide Clause IV that the management and control of the Trust and all its earnings solely rested with the Shri Rajneesh Mehra, Further, it was laid out that the Trust would not have any bank account and all sums raised from prospective investors would be deposited directly in a Bank Account which would be opened in the name of a Company which would be set up by Shri Rajneesh Mehra. Thus it was provided that the control of the trust would be with Shri Rajneesh Mehra and revocation of such trust was also at the sole discretion of Shri Rajneesh Mehra was provided. Company formed in accordance therewith was ―Watergate Advisors Limited‖; it was laid out that such company being formed by Shri Rajneesh Mehra would solely be run by the Shri Rajneesh Mehra directly or indirectly. The Bank Account (here now being the A/C No. 806694) to be opened in the name of the Company would directly receive all the Trust funds and all sums raised would be invested by the Company on the directions of Shri Rajneesh Mehra. Further, it was provided that assessee and his wife would expressed not be involved in any of the affairs, day to day functioning and the management and BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page 26 control of the Company. At the time of revocation of the trust, the funds would not be distributed between the settler or any of the beneficiaries but would pass on to any other trust carrying on similar objects. With respect to the credits in the account were also explained and stated that those were all on account of business transactions of the Rajvin Trust. This was also demonstrated by submitting Confirmation of GS Impex Pte Ltd, Singapore, which shows that confirming party had business relation with Mr. Rajneesh Mehra and it had invested a total of USD 2,00,000 in Rajvin Ltd and out of the said sum, a total of USD 1,50,000 was yet due from Rajvin Ltd. assessee also submitted a confirmation of Mathew G Stock, a UK Resident, which shows that for the past 20 years and that he had business relationship with Mr. Rajneesh Mehra and wherein he invested a total of about 9,50,000 USD in his Company ―Rajvin Ltd.‖ between the years 2005 to 2008. He also stated that out of the said investments so made, a total sum of USD 8,18,580 was received back on 30/03/2012 from Rajneesh Mehra, out of which USD 3,18,580 was received from the bank account No.806694 of Watergate Advisors Limited (WAL) and the balance USD 500,000 was received in the form of certain securities. Thus from the above statement it was demonstrated that there is no BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 32 involvement of the assessee either in Rajvin Limited or in Watergate advisor private limited in providing any fund directly or indirectly in any of the above entities. 25. However, as the entity involved where the money is found credited, it needs to be examined whether the assessee has ‗beneficial ownership on these companies/entities. As stated earlier The Black Money Act 2015 does not define the term ‗beneficial ownership‘ and The Income Tax Act 1961 explanation 4 to Section 139 (1) defines the same. However, it is not necessary that to examine the provisions of The Black Money Act only the definition provided Under the Income Tax Act is required to be seen. According to provisions of Section 84 of The Black Money Act, only certain provisions of The Income Tax Act are made applicable to the black money act. This Section does not include the provisions of Section 139 (1) of The Income Tax Act. Therefore, the beneficial ownership is required to be understood with respect to its dictionary meaning and also other provisions of other statute also keeping in mind the nature of the object and purposes of the Black Money Act. BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 27 26. In Black‘s law dictionary the beneficial ownership is defined as ‗one recognized in equity as the owner of something because use and title belonged to that person, even though legal title may belong to someone else, esp. one for whom property is held in trust.‘ 27. Similarly the Webster‘s dictionary also defines beneficial owner as ‗one who is entitled to receive the income of an estate without its title, custody or control.‖ 28. The beneficial ownership concept is also dealt with extensively in the corporate laws such as The Companies Act and various circulars issued by SEBI. The Companies’ Act 2013 prescribes maintenance of a register of beneficial ownership. Section 90(1) of The Companies Act 2013 states that :- 90. (1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (herein referred to as \"significant beneficial owner\"), shall make a declaration to the company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 33 the beneficial interest or rights and any change thereof, as may be prescribed: 29. \"Beneficial interest\" has been defined under section 89(10) of the Companies Act as follows (10) For the purposes of this section and section 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to— (i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share.] 30. Section 2 (27) of The Companies Act says that (27) \"control\" shall include the right to appoint majority of the directors or to control the management or policy decisions BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 28 exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner 31. From the above the criteria to be considered for an individual to be considered as a beneficial owner where such person either by himself or in conjunction with others holds the a) Specified beneficial interest; b) has the right to exercise or exercises significant influence or control. 32. Testing the case before us on the above parameters laid down by The Companies’ Act it is apparent that there is no any arrangement, contract et cetera between Watergate advisors private limited or Mr. Rajneesh Mehra with the assessee. There is no demonstration by the revenue that assessee exercises any control as a shareholder of Watergate advisors limited over that company. There is no evidence that assessee has received any interest. It is not also demonstrated that assessee exercises any control to appoint directors or control the management or policy decision of that company. This is also adequately narrated by the learned CIT – A. Thus, the test of beneficial ownership as per the criteria laid down Under The Companies’ Act 2013 does not satisfy that assessee is a beneficial owner of the bank account owned by Watergate advisors Limited. 33. Another law, which deals with the beneficial ownership, is The Benami Property (Prohibition) Act 1988. Section 2(12) The Benami Property (Prohibition) Act, 1988 defines beneficial owner to mean a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar. Benami property has been defined to mean any property, which is the subject matter of a benami transaction and also includes the proceeds from such property. Further, a \"benami transaction\" (subject to exceptions provided therein) means, (A) a transaction or an arrangement— (a) BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 34 where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and (b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, with specified exceptions BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 29 (B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or (C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; (D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious 34. Considering the definition of beneficial owner read with benami transaction, the primary conditions for a person to be considered as a beneficial owner under the Benami Act, may be summarized as under: (a) Could cover ‗any person‘ (b) The consideration has been provided by such person other than the person holding/owning the property and such other person also hold the property. (c) Property of any kind 35. 'Beneficial owner' has been defined as \"an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person\". 36. Testing the above facts with respect to this law, here there is no evidence that the consideration has been provided by the assessee of the sum deposited in the bank account of Watergate advisors Limited. Contrary to that assessee has shown that above funds have been transferred from Rajvin Limited, which is owned and controlled by the son of the assessee. Similar to the provisions of the Companies act here also it is not demonstrated that assessee enjoys and exercises any control the Watergate advisors Limited or the owner of the Watergate advisors Limited. 37. It is also required to be tested the test of beneficial ownership in the context of Prevention Of Money Laundering Act where reference is made to the ultimate ownership or control of the entity. Provisions of Rule 9(3) of The Prevention of Money Laundering (Maintenance of Records) Rules, 2005 provides that : In the case of a company, \"the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical persons, has/have a controlling ownership interest or who exercise control through other means. BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 30 Explanation- For the purpose of this sub-clause 1. \"Controlling ownership interest ―means ownership of/entitlement to more than 25 per cent of the shares or capital or profits of the company. 2. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 35 \"Control\" shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements 38. Thus the above losses that the primary conditions for a person to be considered as an ultimate beneficial owner under the PMLA, may be summarized as under: (a) Covers an individual (b) Owns a client of the reporting entity, which should be more than 25% of the shares or capital of profits of the company/ 15% in the case of client other than a company (c) Controls a client by virtue of shareholding or management rights or shareholder /voting agreements (d) Shares in a company or interest in an entity other than a corporate 39. Testing the transactions before us it is apparent that assessee does not own any share capital in case of Watergate advisors Limited as well as it also does not controls the above company as he does not have any shareholding or management rights in that company. 40. With respect to the mention of the name of the assessee in the account opening form as beneficial owner, assessee has relied upon the decision of the coordinate bench in case of Mr. Kamal Galani V ACIT in ITA number 138/Mum/2019 dated 10 September 2020 wherein in para number 13 onwards the coordinate bench has held that merely mentioning the name of the assessee in the account opening form which is rebutted by the assessee by filing an affidavit and complete details of the ownership of the bank account, the assessee cannot be held the beneficial owner of such sum. Therefore, such solitary fact cannot lead to addition in the hence of the assessee where there is BMA. 01 (Del) of 2020 AND CO. 26 (Del) of 2021. Page | 31 no other evidence available with respect to the ownership or beneficial ownership over such bank account. In view of this it is apparent that the mere account opening form where the assessee is mentioned as the beneficial owner of the account mentioning is details of his passport as an identification document, does not necessarily, in absence of any other corroborative evidence of the beneficial ownership of the assessee over that for an asset cannot lead to taxability in the hands of the assessee Under the Black Money Act. 41. In view of above facts, we hold that assessee does not have beneficial ownership of the amount deposited in Watergate advisors Limited, assessee also do not held that asset. The learned CIT – A has also held so giving the detailed reasons as reproduced above. The learned departmental representative could not show us any evidence that assessee is the owner or beneficial owner of the sum lying in the bank account of Watergate advisors Limited. The assessee has given an overwhelming evidence of the fact that money BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 36 belong to the son of the assessee which were not at all controverted by the learned assessing officer. In view of this we hold that the learned CIT – A is correct in deleting the addition of ₹ 56,647,000/– in the hands of the assessee. Accordingly, we confirm the order of the learned CIT appeal and all the 4 grounds stated in the appeal of the learned assessing officer are dismissed. 42. Accordingly appeal of the learned AO in BMA 1/Del/2020 and cross objection of the assessee Co NO. 26/Del/2021 are dismissed 11. We further observe that the information/documents were supplied by the bank which were not even authenticated and how such unauthenticated documents can be relied by the AO to make the addition. The several Benches of Tribunal have commented on such approach and concluded that in such circumstances, there cannot be a finding that the assessee is holding beneficial interest in the foreign assets set out in the information received from foreign government by the Assessing Officer. In the case of Shyam Sunder Vs Jindal Assistant Commissioner of Income-tax, Central Circle-30, New Delhi, reported in [2017] 81 taxmann.com 123 (Delhi - Trib.), the coordinate bench had an occasion to consider the authenticity and reliability of the evidence in the form of information obtained from foreign government in the context of addition u/s.69 of the Act and it was held that information in the form of bank statement obtained by the AO was not signed and authenticated by the Bank and therefore it is not possible to come to a just conclusion relating to the authenticity of the document relied by the AO or to the facts as to whether these documents pertained to the assessee. In the case of Deputy Commissioner of Income Tax (IT), Mumbai v. Hemant Mansukhlal Pandya [2018] 100 taxmann.com 280 (Mumbai - BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 37 Trib.), the assessee was a non-resident individual living in Japan on a business visa since 1990. He had been a director in a company in Japan and had got permanent residency certificate from Japan since 2001. Assessment proceedings for relevant assessment years 2006-07 and 2007-08 in case of assessee were reopened by the Assessing Officer on account of a 'base note' received from the French Government under DTAA in exercise of its sovereign powers that some Indian nationals and residents had foreign bank accounts in HSBC Private Bank (Geneva). The Tribunal held that the AO cannot merely rely on base note received from French Government without conducting any independent inquiry and hence the addition was liable to be deleted. 12. The question therefore would be whether uncertified documents in the form of bank statements, would be admissible as evidence. It is no doubt true that in proceedings under the impugned Act, the provisions of the Indian Evidence Act, 1872 do not apply, but it does not mean that the revenue can rely on any piece of evidence without corroboration as proof of existence or non existence of a fact in the issue. The question therefore is as to the admissibility of uncertified foreign bank records, which might be submitted under DTAA. We have a legislation in India called the Banker's Book Evidence Act 1891. The said Act provides for conditions to be satisfied while submitting bank records as evidence in a court of law. Section 4 of Banker's Book Evidence Act 1891 provides that Bank records should be accompanied by a certificate in accordance with section 2(8) and BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 38 2A of the Act. A copy of the bank records duly certified as above constitutes a \"certified copy\". A certified copy, as defined under Section 2(8) of the Act, of any entry of banker's book, shall be admissible prima facie as Evidence. The foreign banks would, under ordinary circumstances, not part with certified copies of bank statements, as that would violate the contract of secrecy with their customers of details of bank accounts, which they have to maintain. 13. The position would be clear if one peruses the Agreement between the Government of the Republic of India and the Government of The British Virgin Islands (BVI), for Exchange of Information relating to Taxes. Article 5(3) of the said Agreement provides as follows: ARTICLE 5 EXCHANGE OF INFORMATION UPON REQUEST 1 1) …………….. 2) …………….. 3) - If specifically requested by the competent authority of the Requesting Party, the competent authority of the Requested Party shall provide information under this Article, to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of original records. 14. In the absence of authenticated copies of original records, it is for them to corroborate with other evidences whatever information in the form of unauthenticated copies of original records, to establish facts with regard to whether or not the assessee held as a beneficiary assets outside India. BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 39 15. The question as to whether the mere fact that the assessee’s name is mentioned as beneficiary in a foreign bank account is sufficient to hold that the assessee is beneficial owner of foreign asset, came up for consideration before the ITAT Delhi Bench in the case of Addl. CIT Vs. JATINDER Mehra (supra) and it was held that to identify a beneficial owner of an asset, said person should have nexus, direct or indirect to source of asset and he must have provided funds for said asset; mere account opening form of an overseas bank account where assessee was mentioned as beneficial owner of account, mentioning details of his passport as an identification document, did not necessarily, in absence of any other corroborative evidence of beneficial ownership of assessee over asset, lead to taxability in hands of assessee under BMA. 16. Another co-ordinate Bench of ITAT at Mumbai in the case of Rashesh Manhar Bhansali Vs. Addl. CIT (2021) 132 taxmann.com 20 (Mum) by way of an obiter dictum expressed doubts on the correctness of the aforesaid view but nevertheless did not give a conclusive opinion on the correctness of the view expressed in Jatinder Mehra’s case (supra). This would be clear from the observations of the Tribunal in Paragraph 105 of its’ order wherein it observed that the arguments of the assessee which were on the short point of applicability of the definition of 'beneficial owner' under the Income-tax Act, a plea that has been rejected, there is no need to deal with the broad question as to what will constitute 'beneficial owner' under the BMA, or to deal with the question whether the coordinate bench decision, on this BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 40 aspect, calls for reconsideration. In any event, as noted earlier, this issue is wholly academic in the present case because it has been categorically held that what is taxed, in the impugned assessments, is not the value of the undisclosed asset but undisclosed foreign income. Whatever be the connotations of 'beneficial owner' under the BMA, conclusions thus remain intact. Therefore the ratio laid down in the case of Jatinder Mehra (supra) remains intact. 17. In the case of Krishna Das Agarwal Vs. DDIT/ADIT(Inv) [2023] 150 taxmann.com 290 (Jaipur - Trib.), the ITAT Jaipur Bench has explained the law with regard to the approach to be adopted when the bank account is in the name of a corporate entity. The Assessee was a member of a group that incorporated a UAE-based company, Agrasen Polymers FZE. Following a search operation at Assessee’s premises in July 2018, the Revenue made an assessment under Section 10(3) of the Black Money Act, leading to an addition of Rs. 146.42 Cr in assessee’s income. This addition was based on alleged undisclosed credits in foreign bank accounts and investments outside India from Assessment Years (AYs) 2016-17 to 2019-20. The CIT(A), on appeal, deleted additions in part. On further appeal, the Tribunal held that that the UAE-company was a separate legal entity, having its Place of Effective Management (POEM) outside India, and that the taxability of any amount in Agarwal's hands would be unconstitutional and illegal. It was further held that foreign bank accounts and foreign investments were the assets of the foreign company, and Assessee was not the provider of the BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 41 consideration for these assets. Thus, the Assessee did not fall within the definition of 'beneficial owner'. It further held that in the absence of any evidence indicating that any funds belonged to Assessee in his individual capacity, or that any of his income was taken abroad and not taxed in India, the addition could not be made. 18. In the light of the above discussion and the decisions of various coordinate benches as referred to above, we are inclined to hold that the assessee does not have any beneficial interest in the above four bank accounts nor did have any undisclosed foreign asset. Consequently, the appellate order is set aside and the AO is directed accordingly. 19. The issues raised in BMA No.5 & 6/Kol/2022 are similar to one as decided by us in BMA No.4/Kol/2022, therefore, our finding in BMA No. 04/Kol/2022 would, mutatis mutandis, apply to these appeals as well. Consequently, both the appeals are also allowed. 20. In the result all the three appeals of the assessees are allowed. Order pronounced in the open Court on 07/01/2025. Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) Judicial Member Accountant Member Kolkata, the 7th day of January, 2025 BMA Nos. 04, 05 & 06/KOL/2022 (A.Y. 2018-2019) Shri Anurag Kejriwal, Smt. Uttara Kejriwal & Smt. Tara Kejriwal 42 Copies to : (1) Shri Anurag Kejriwal, 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 (2) Smt. Uttara Kejriwal, 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 (3) Smt. Tara Kejriwala, 1/2, Allenby Court, Elgin Road, 5th Floor, Kolkata-700020 (4) A.D.I.T. (Inv.)-3(3), Kolkata, Aayakar Bhawan Poorva, 110, Shantipally, Kolkata-700107 (5) D.D.I.T. (Inv.)-3(3), Kolkata, Aayakar Bhawan Poorva, 110, Shantipally, Kolkata-700107 (6) Commissioner of Income Tax (Appeals), (7) Commissioner of Income Tax-; (8) The Departmental Representative (9) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. "
Other Referred Cases
ACIT, Range-70, New Delhi Vs. Jatinder Mehra, Kamal Galani Vs. ACIT, Hemant Mansukhlal Pandya Vs. DCIT, Shyam Sunder Vs Jindal Assistant Commissioner of Income-tax, Central Circle-30, New Delhi
Laws Referred To
Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015
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Object Clause - Merchant Banking Business
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Initial LLP Agreement
₹0
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