Swiss Bank A/c: Once assessee provides reasonable explanation, onus shifts to revenue

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

15. In this case, on perusal of details available on record, it is very clear that the assesse right from day one has disowned the bank account. Further, the brother of the assesee has filed a letter to the Ld. AO along with affidavit and claimed that the bank account is opened by him in his capacity as NRI and whatever money lying in bank account is belongs to him. Therefore, we are of the considered view that under these circumstances, the Ld. AO was erred in making additions towards amount lying in bank account as unexplained money of the assessee.

16. Insofar as, additions made towards return on investments @17% PA on year basis, once, it was established that bank account was not belongs to assessee and he was not a beneficial owner, then further additions towards estimated return of income on said unexplained money is arbitrary. As stated above, the account was opened by the Appellant’s brother with the British Bank of Middle East. Therefore, the reliance placed by the AO on the account opening information appearing on the website of HSBC Bank cannot be relied upon. Further, the account was opened by the Appellant’s brother in 1998, whereas the website information sought to be relied upon by the AO pertains to accounts sought to be opened at about the time of the assessment proceedings, i.e. around 2013. Such reliance on website information is impermissible as the same is merely based on fanciful presumptions. The AO has not brought any material on record to justify the use of account opening information as at time of assessments to presume and arrive at the conclusion that the same would be applicable to an account alleged to have been opened by the Appellant 15 years earlier. It may be pertinent to point out that since the assessment was made, the account opening requirements have been revised to require an investment or borrowing to be made amounting to an equivalent of USD 5 million. This goes to show that the account opening requirement undergo changes from time to time and the presumption that the account opening requirements stated at the time of the assessment would have been the same as those prevailing when the account was opened 15 years earlier, in 1998, is fallacious and cannot be sustained. The AO failed to appreciate that account was opened in The British Bank of Middle East, UAE. The same was subsequently merged / acquired by HSBC Private Bank. Hence assumption of USD 3 million is unjustified. Further, the AO has failed to appreciate that the appellant is nonresident in the year 1998 i.e. in the year of opening the account, residing out of India for past more than 20 years. Further, owning the bank account and the investment by Non Resident out of sources of funds available abroad is still not taxable in India. The AO has failed to point out any iota of evidence to prove that the funds of USD 3 million invested in opening bank account represent income from undisclosed sources earned/ accrued to appellant in 1998. The Appellant has no sources of income in India up to 2002 and the same has already been assessed on record in assessment proceedings earlier. The statement of Assets and liabilities and Income has been filed on record. Refer Page 66 to 66 We therefore are of the considred view that, having established that Appellant is NON-RESIDENT in AY 1999-2000 and complete absence of any source of taxable income in India, the addition u/s 69 made by AO in AY 1999-2000 on account of investment of USD 3 million in opening the bank account with HSBC and consequent estimation of return of investment @ 17% PA as Unexplained Investment is highly unjustified.

17. Considering the facts and circumstances of this case, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) were erred in not appreciating the fact in right perspective, even though the assessee has filed necessary evidences to prove that the bank account was not belongs to him. Therefore, we are of the considered view that an addition made towards bank account in the name of the assessee is incorrect. Accordingly, we direct the Ld. AO to delete additions made towards amount lying in bank account. Similarly addition made towards estimated return of investments @17% on said additions is also incorrect. Accordingly, we direct the Ld. AO to delete additions made towards estimated return of investments for all assessment years.

18. In the result appeal filed by the assesee for Asst.Years 2003-04 to 2007-08 are allowed and appeals filed by the revenue for Asst.Years 2006-07 & 2007-08 and 1999-2000 to 2002-03 are dismissed. Similarly cross objections filed by the assessee for assessment years 1999-2000 to 2002-03 are also dismissed.

Order pronounced in the open court on 10/09/2020.