Income Tax Appellate Tribunal - Kolkata
Jt. Cit, Rg. 13, Kolkata, Kolkata vs Akhilesh Singh, Howrah on 25 June, 2024
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021)
Shri Akhilesh Singh
THE INCOME TAX APPELLATE TRIBUNAL,
'B' BENCH, KOLKATA
Before Shri Rajpal Yadav, Vice-President (KZ)
&
Dr. Manish Borad, Accountant Member
B.M.A. No. 3/KOL/2023
Assessment Year: 2020-2021
Joint Commissioner of Income Tax,........... Appellant
Range-13, Kolkata,
Room No. 705(A), NADTRC Building,
110, Shantipally,
Kolkata-700107
-Vs.-
Shri Akhilesh Singh,.................................. Respondent
Room No. 301, G.T. Road,
Block-'B', 3 r d Floor,
295, Belur Math,
Howrah-711202, West Bengal
[PAN:AKUPS0920P]
Appearances by:
Shri A. Kundu, CIT, D.R. appeared on behalf of the
Revenue
Shri Siddharth Agarwal, Advocate, appeared on behalf of
the assessee
Date of concluding the hearing : May 15, 2024
Date of pronouncing the order : June 25, 2024
O R D E R
Per Dr. Manish Borad, Accountant Member:-
The present appeal is directed at the instance of Revenue against the order of ld. Commissioner of Income Tax (Appeals) dated 18th July, 2023 passed u/s 16(7) of the Black Money 1 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for assessment year 2020-21, which is arising from assessment order under section 10(3) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 framed on 16.03.2022. The Revenue has raised the following grounds:-
(1) On the facts and in the circumstances of the case and m law, the Ld. CIT(A] erred m deleting the addition of Rs.133,20,62,815/- on account of undisclosed foreign income and asset, made by the AO under the Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015.
(2) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the investment in the shares of the foreign company, RH Global Pte. Ltd. was made out of declared income, without having regard to the fact that layering of funds was done through various paper companies as clearly established in the assessment order and hence the affairs of the company itself were not beyond doubt.
(3) On the facts and tin the circumstances of the case and in law, the dl. CIT(A) erred in holding that the alleged imports by various Indian entities were adequately explained without considering the facts that the assessee failed to prove the genuineness of imports with supporting books of account and other relevant documents.
(4) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in ignoring the fact that some of the alleged import parties could not be traced at the given address, some did not comply with the notices and some such parties did not have the creditworthiness to do import transactions and thus, the import by such parties were held by the AO to be non-
genuine as per the findings on pages 51 to 53 of the assessment order.
(5) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in not appreciating the AO's clear findings in para 7.4 of the assessment order that the alleged import parties were controlled by the assessee and also ignoring the assessee's admission on oath that Vivek Kumar Singh's concerns were controlled by him.
2B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh (6) On the facts and in the circumstances of the case and in law, the ld. CIT(A) while treating the imports as genuine, erred in placing undue reliance on the fact that the Singapore Tax authorities had accepted the return of income of RB Global Pte Ltd, i.e. t4he entity in whose account the credits of Rs.133,20,62,815/- were received.
(7) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in relying on the decision of the Hon'ble Madras High Court in the case of Srinidhi Karti Chidambaram
-vs.- PCIT (WA No. 1125 of 2018), disregarding the fact that in the said case, non-declaration of foreign asset was due to human error whereas in the present case, it was a willful non- disclosure.
2. Brief facts of the case are that the assessee is a resident individual and filing his income tax return regularly under section 139(1) of the Income Tax Act in India. As per the ld. Assessing Officer, credible information about the foreign asset/income of the assessee received from foreign authorities stating that the assessee is a Director and one of the shareholders of the foreign entities located at Singapore, namely R.B. Global Pte. Limited, Singapore (in short RBGPL). Credible information was also received that the assessee is Authorized Signatory of the Bank account bearing No.27600183120100 held with State Bank of India in the name of RBGPL, Singapore. The Competent Authority, Singapore shared the information about the Bank account held in the name of RBGPL in SBI, Singapore for the period 20.05.2011 (date of account opening) to 28.04.2015 (date of account closure), details of beneficial owner of the Bank account and Authorized Signatories, information regarding Certificate of Incorporation and Memorandum and Articles of Association, Letter of Consent signed by the assessee to act as a Director to RBGPL, a list of transactions confirmed between the assessee and RBGPL.
3B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
3. Based on all these documents, proceedings u/s. 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of tax Act, 2015 (for short, the Black Money Act) were initiated and ld. PDIT (Investigation), Kolkata vide order dated 05.05.2019 directed ADIT (Inv.), Unit-3(4), Kolkata to carry out the proceedings under the Black Money Act (hereinafter referred to as "the Act").
4. The ld. Assessing Officer during the course of proceedings issued notices under the Act to the assessee and noted that the assessee held 1000 nos. of shares as on 18.05.2011 and 13,13,372 nos. of shares in RBGPL as on 21.03.2015. Even in the year 2019, the assessee was still holding 21,17,567 nos. of shares of RBGPL, Singapore.
5. Thereafter the ld. Assessing Officer examined the income tax returns for A.Ys. 2012-13 to 2018-19 and found that the assessee had not disclosed the foreign income and assets in Schedule 'FA' of the Income Tax Return, which needs to be provided as per 4 th proviso of Section 139(1) of the Income Tax Act, 1961. The ld. Assessing Officer also noticed that the assessee being a resident other than not ordinarily resident in India within the meaning of section 6(6) of the Income Tax Act. The ld. Assessing Officer also noted that the assessee had not disclosed the undisclosed foreign income and assets to the Income Tax Department under the one- time compliance window provided under Chapter VI of the Black 4 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Money (Undisclosed Foreign Income and Assets) and Imposition of Tax, 2015.
6. Notice u/s 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of tax Act,2015 (B.M. Act, 2015) was issued through ITBA Portal on 18.12.2019, which was duly served on the assessee. Further, letters were issued on 25.08.2021 and 08.10.2021 through ITBA Portal seeking several details. It was observed by the Ld. A.O. that the total credits in R.B. Global Pte Ltd Singapore was USD 1,89,19,761.20 which he computed in Indian Currency at Rs. 133,20,62,815.07.
7. Ld. Assessing Officer issued a SCN to the assessee on 19.01.2022 asking the assessee as to why Rs. 133,20,62,815/- be not treated as undisclosed foreign asset and income as per the provision of the Black Money Act. The assessee submitted a reply vide a letter dated 25.01.2022, gist of which is given hereunder for the sake of convenience:-
"The assessment proceedings in the assessee's case for A.Y.: 2020 - 21 has been initiated in respect of transactions prior to the date from which the Black Money Act came into force, i.e., from 1st April, 2016. From the details of the transaction furnished, it can be seen that the transactions took place between 19.05.2011 to 22.04.2015 much prior to the coming into force of the Black Money Act. The assessee had declared all the details with regard to foreign assets in schedule: FA and had also declared an amount of Rs.7,08,07,054/-with 5 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh regard to the foreign income earned between AY: 2012 - 13 to AY.: 2019-20 in Schedule: FSI and Schedule: FA in the ITR filed for AY.: 2019-20. The detail of such income year-wise was also provided. The foreign income was duly disclosed and offered for taxation in the return of income filed in Singapore and evidence in this regard had been submitted before the A.O. It was submitted that the assessee was a mere businessman with basic level of education, who used to routinely file his Income Tax Return, but was not aware of the changes in various legal positions requiring disclosure of foreign assets or income. It was submitted that the Black Money Act was not applicable if asset was purchased outside the country from a disclosed source in India. The investment made by the assessee in RB global Pte Singapore by the assessee was from disclosed banking channels and had been done by following the prescribed guidelines of the RBI. Further, the details given in the table with regard to investment made in RB Global establish the source of funds used for investing in foreign asset.
Reliance was placed on the case of Srinidhi Karti Chidambaram vs. PCIT (W.A. No. 1125 of 2018 wherein the Hon'ble Madras High Court has held that the Black Money Act was enacted to deal with the problem of black money, i.e., undisclosed foreign income and asset. If the asset is purchased outside the country from a source 6 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh within the country which is disclosed then the Black Money Act cannot be attracted.
Reference was made to FAQ No. 17 of Circular No. 13 of 2015 dated 6th July 2015 issued by the CBDT wherein it was clarified that where a person holds certain foreign assets which are fully explained and acquired out of tax paid income but the same has not been reported in Schedule FA of the IT Return in the past, the assets will be treated as fully explained and the same will not be treated as undisclosed foreign asset.
It was further clarified that the assessee had, wherever made any declaration in any statement recorded on oath u/s. 131 of the Act, he always meant to convey that he was the director and shareholder of RB Global Pte Limited and was also one of the authorized signatories of the bank accounts of the said company. An affidavit sworn before First class magistrate was also attached.
The investment made in RB Global Pte., Singapore was from disclosed banking channels and the same had been done by following the prescribed guidelines of the RBI. The source of investment was also explained.
At the time of the recording of statement u/s. 131, due to misunderstanding of the question, the assessee 7 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh was confused when explaining his association with M/s. RB Global Pte Limited, wherein on one occasion (statement recorded on 26.09.2019), the assessee had mentioned about the closure of his association with the said company after 2012, instead of conveying that the business of the said company with his domestic companies had stopped as on the date of recording of statement. Moreover, on another occasion (statement recorded on 20.11.2019), due to misunderstanding of the question posed by the authority, the assessee had mentioned that the business of the said company with his domestic companies had stopped after 2012-13, instead of conveying that business of the said company with his domestic companies had stopped as on the date of recording of statement. Accordingly, the assessee meant to convey that the business of RB Global with his domestic companies had stopped as on the date of recording of his statement on 26.09.2019 and on
20.11.2019. The assessee further attached an affidavit sworn before the First Class Magistrate.
With regard to amount remitted to the said M/s. RB Global Pte Limited by various entities as mentioned in the notice, the same had been turnover transactions with various entities and the amounts remitted to R B Global Pte., Singapore by such entities were for the purpose of material procurement against invoices and through banking channels on account of genuine trade activity.
8B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Copy of the Ledger Account of the said entities along with confirmation of accounts, details of transaction and purpose of remittance was also enclosed.
It is important to point out that the Ld. A.O. examined all three bank accounts of RB Global Pte. Ltd., however, arbitrarily added the total credits of SBI, Singapore bank account of the company in the hands of the assessee. Extracts of the other two bank accounts were examined and reproduced by the Ld. A.O. in his order but finding no infirmity, he made no addition on account of the other two bank accounts.
8. Subsequently during the course of proceedings, ld. Assessing Officer firstly referred to the financial year-wise details of the amount credited in USD in the Account No. 27600183120100 of M/s. R.B. Global Pte. Ltd., Singapore maintained at SBI, Singapore and the same is as under:-
Sl. No. FY Total amount credited
in USD
1. 2011-12 4266227.87
2. 2012-13 3600465.27
3. 2013-14 8665721.87
4. 2014-15 2387346.14
Total amount credited in USD 18919761.20
9
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021)
Shri Akhilesh Singh
Average Exchange Rate for
the FY 2019-20 is
Rs.70.4059
Total amount credited in INR 133,20,62,815.07 as pe average Exchange Rate of Conversion from USD to INR for FY 2019-20
9. The ld. Assessing Officer further examined the details of entities, which have remitted the funds in the alleged SBI, Singapore account of RBGPL. The proceedings initiated by the ld. Assessing Officer only involved the funds remitted to the SBI Account No. 27600183120100 of RBGPL, Singapore. Even though there were other two Bank accounts, namely Citi Bank, Singapore bearing Account No. 0/860398/001 and UCO Bank, Singapore bearing Account No. 101072700, maintained by RBGPL, Singapore. However, since the Competent Authority only shared the information about the SBI, Singapore Account No. 27600183120100, the investigation and examination of the records only confined to the amounts credited in the said Bank account. The ld. Assessing Officer on examination of the details of the parties, who have remitted the funds in the said Bank account noted that most of the concerns are either owned by the assessee or his relatives or other connected persons directly known to the assessee. The ld. Assessing Officer has devoted much energy in taking all the details of such sole proprietorship concern/firms/Companies who have entered into the transactions with RBGPL. Summons under section 131 of the Act were issued by the ld. Assessing Officer to many of such parties to which only few replies came. The ld. Assessing Officer also discussed about 10 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh the Bank accounts of various concerns purportedly owned by the assessee or controlled by him, which were held with Bank of Baroda, Bank of India, UCO Bank, Indian Overseas Bank and finally prepared a chart appearing at page 68 of the assessment order giving a consolidated detail about the cash deposit in various bank accounts of all these concerns and the funds remitted. The ld. Assessing Officer also referred to the statements of Shashi Bhusan Singh and Vivek Kumar Singh along with the Inspector's report for coming to the conclusion that the assessee has floated several fictitious concerns in the name of his friends and family members with the intention of rotating /layering and siphonic of funds in the guise of imports and investments. The ld. Assessing Officer has only discussed about the credits appearing in the alleged Bank account held as SBI, Singapore and its connection with the Indian concerns but the purpose for which the funds were remitted, was not examined for lack of sufficient documentary evidences, which could not be filed by the assessee which were claimed to be the amounts remitted from various Indian concerns to the RBGPL, Singapore towards import of goods mostly timber and that the goods have been exported from Singapore to India and passed through the Custom Authorities. However, since the relevant documentary evidences were not filed, the ld. Assessing Officer was of the view that Shri Akhilesh Singh and its associate entities have routed the funds from India to abroad in the alleged SBI, Singapore account. Thereafter ld. Assessing Officer discussed about the credits in the other two bank accounts held with UCO Bank and Citi Bank but since the Competent Authority only shared the information about SBI, Singapore Bank account No. 11 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh 27600183120100, the ld. Assessing Officer treated the total amount of credits in SBI, Singapore during financial years 2011- 12 to 2014-15 at Rs.133.21 cr. (converted from USD 18919761.20 at the average exchange rate of 70.4059) as unexplained foreign income and assets.
10. During the course of assessment proceedings under the Black Money Act, ld. Assessing Officer shared the information about various Bank transactions entered into by Shri Akhilesh Singh with RBGPL regarding the investments made in the equity of RBGPL and that the said funds have been remitted through the disclosed Bank accounts held in India and has been remitted through the Banking channel after fulfillment of relevant formalities. However, since the assessee did not disclose the said information in the Income Tax return under the Black Money Act, the investment made by the assessee in the equity of RBGPL was treated as undisclosed asset. During the course of assessment proceedings, it was also brought to the notice of the ld. Assessing Officer that the assessee is receiving salary from RBGPL, Singapore and the same is being offered to tax as per the Income Tax Laws applicable in Singapore and due tax at source has been deducted by the employer. The ld. Assessing Officer has captured these details at page 35 of the assessment order showing the details of taxable income from 2013 to 2019 and the cumulative figure in Singapore dollars is 1478487, which is converted in taxable income at Rs.7,08,47,050/- and on such taxable income, the assessee had paid taxes of Rs.82,53,263/- in the income tax return filed in Singapore. It was also observed by the ld. Assessing 12 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Officer that RBGPL is also filing its tax return regularly. The ld. Assessing Officer concluded the proceedings under section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 on 16.03.2022 calculating the value of alleged undisclosed foreign income and assets (as discussed above) at Rs.133,20,62,815/-, which were the total of credits in the Bank accounts of RBGPL held with SBI, Singapore for the period 20 th May, 2011 to 20th April, 2015.
11. Aggrieved, the assessee preferred appeal before the ld. CIT(Appeals) under the provision of Section 17 of the Black Money (Undisclosed Foreign Income and Assets) Act.
12. During the course of appellate proceedings, the assessee furnished details about the shareholding with RBGPL, three Bank accounts being operated at RBGPL, Singapore. However, since the Competent Authority, Singapore only forwarded the details and one Bank account, the scope of examination of the transactions was restricted to the Bank Account held with SBI, Singapore bearing A/c. No. 27600183120100. It was submitted by the assessee that the transactions in the alleged bank accounts for the alleged period were prior to the introduction of Black Money Act and as per the filing of information in the income tax return, the assessee carried out the transactions of making investments in RBGPL through his disclosed Bank account but the tax filing intricacies are not known to the assessee and the Income Tax Forms were filed by the Authorized Representative and assessee was not aware as to why information in Schedule 'FA' was not filled 13 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh in the return for A.Ys. 2012-13 to 2018-19. However, the same were duly filed in the return for A.Y. 2019-20. It was also submitted that all the alleged transactions in the Bank account of SBI, Singapore of RBGPL were done before commencement of 2015 and it was also submitted that all the equity shares in the form of investment in the equity of RBGPL have been acquired by the assessee out of its declared source in India. The Hon'ble Madras High Court in the case of Srinidhi Karti Chidambaram -vs.- PCIT (W.A. No. 1125 of 2018) has held that "the Black Money Act, 2015, was enacted to deal with the problem of Black Money, that is undisclosed foreign income and asset. If an asset is purchased outside the country, from a source, within the country, which is disclosed, then Black Money Act, cannot be attracted. It is not the case of Department that there is any income from the source outside India, which has not been disclosed in the returns submitted by the assessee". During the course of appellate proceedings, when ld. CIT(Appeals) was informed that against the funds remitted from Indian concerns to RBGPL, there has been equal amount of imports of goods and the turnover of export sale of RBGPL, Singapore has duly been disclosed in the financial statements of the Company and also the imports have been received in India after passing through the Custom Authority verification and duly supported by documents, i.e. shipping bills, invoices, Bills of Lading, transport receipts, etc. to prove the genuineness of imports which have been made by the concerns based in India from RBGPL, Singapore and the normal business transactions have been carried out between Indian concern and RBGPL Singapore. It was also claimed that the assessee being a Director 14 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh of the Singapore based company RBGPL, the Directors fees/salary, which are taxable in Singapore and not in India as per Article 16 of Double Taxation Avoidance Agreement (in short 'DTAA') between India and Singapore. As regards the statements of Shashi Bhusan Singh and Vivek Kumar Singh, which have been referred to by the ld. Assessing Officer for making the impugned addition alleging that the Indian concerns are controlled by the assessee and funds have been routed through this concern outside India for calculating undisclosed foreign assets and income, it was claimed by the assessee that no opportunity was provided to cross examine the individuals making adverse statements, therefore, there is no evidentiary value. Reliance placed on the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries reported in 281 CTR 2004.
13. So far as the credit entry appearing in the Singapore was concerned, though the assessee has given information about the imports of goods from this company, it was further submitted that it is a legitimate trade/business activity and cannot be treated as Undisclosed Foreign Income and Assets) under Black Money Act, 2015 because RBGPL is incorporated in the Republic of Singapore under the Companies Act and filing income tax returns with Singapore Tax authorities. Even the assessee has also furnished income tax return with Singapore Authorities and paid taxes on the income from salary received from RBGPL. Against all the remittances, there has been export of goods from Singapore to India, which are duly supported by copy of invoices and bill of entries. Even the transactions/imports of goods are duly reflected 15 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh in financial statement of entities in India, where in few cases even the assessee is a Director/proprietor and that the respective bill of entries for goods imported have got Customs clearance. Reliance placed on the decision of Coordinate Bench, Delhi in the case of ACIT, Range-17 -vs.- Jatinder Mehra (2021) 128 taxmann.com 152 (Delhi-Trib.), wherein 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 Black Money Act".
14. The ld. CIT(Appeals) after going through the evidences, various documents filed by the assessee proving that the investments made in the RBGPL from 2011 onwards are through the Bank accounts duly disclosed in the income tax return/financial statements of the assessee, that RBGPL is duly registered with the Singapore Tax Authorities and paying regular tax that the assessee is also filing the income tax return in Singapore for the income from salary received from RBGPL and has paid due taxes. Ld. CIT(Appeal) also noted that the alleged funds remitted to SBI, Singapore Bank accounts by RBGPL are towards import of goods in the nature of timber and related goods that the transactions of import of goods have been carried out under the commercial expediency and funds have been remitted 16 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh against such imports and that the import of goods is proved by bills of entries, bills of Lading, Shipping Bills, Customs Clearance showing that genuine transactions have been entered into between Indian Concern and the Company RBGPL. Ld. CIT(Appeals) has observed that the ld. Assessing Officer ignored the fact that the assessee has to offer his global income in the ITR as per the Income Tax Act, 1961 being resident of India but the fact remains uncontroverted that the assessee is declaring income received in Singapore and paying tax thereon. The ld. CIT(Appeals) also observed that since the bill of entries were certified from Authorities and other documents providing the import of goods were not submitted before the ld. Assessing Officer, which could establish the genuineness of transactions of import of goods, the ld. Assessing Officer has treated the alleged sum as undisclosed foreign income/asset. However, since the assessee has duly explained the credit entries in the Bank account of SBI, Singapore of RBGPL and that the remittances to the foreign Bank account by the assessee are from declared sources in India, no adverse view should have been taken against the assessee. The ld. CIT(Appeals) also held that the ld. Assessing Officer has not pointed out a single instance of bogus activity before jumping to the conclusion that Indian entities doing transactions with RBGPL, Singapore are controlled by the appellant to siphon his undisclosed income through the account of RBGPL. Ld. CIT(Appeals) held that though some of the importers have not replied to the summons issued under section 131, that still could not establish that such concerns are controlled by the assessee. Most of the receipts in the Bank account of such concerns are through RTGS and cheques.
17B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Accordingly, ld. CIT(Appeals) deleted the entire addition of Rs.133,20,62,815/- holding that no case is made out for addition under Black Money Act, 2015. Aggrieved, the Revenue is in appeal before the Tribunal.
15. Ld. D.R. firstly referred his following written submission:-
"BEFORE THE HON'BLE MEMBERS, 'C BENCH, ITAT, KOKATA Submission in the matter of Shri Akhilesh Singh having PAN:
AKUPS0920P in BMA Appeal in. 03/KOL /2023 for the Assessment Year 2020-21.
Your Honours, With reference to the directions of the Hon'ble Bench vide order sheet dated 29/02/2024, it is submitted as under:
(1) A report has been received from the JCIT, Range-13, Kolkata vide Letter No. JCIT-13/BMA/2023-24, dated 06/03/2024, enclosing the copy of the report of DDIT (Investigation), Unit-3(4), Kolkata, dated 05/03/2024, i.e. from the jurisdiction in which the assessment u/s 10(3) of the BMA was originally completed. These reports, which are self-explanatory, are submitted herewith for kind perusal and consideration.
(2) The relevant assessment records in 2 (two) parts have been received from the present AO. These will be carried to the court on the date of hearing for production before the Hon'ble Bench. Besides, the AO, who had completed the assessment, has also submitted voluminous data in a PEN DRIVE, as stated to have been received from the assessee in a CD in course of proceedings before him. These are also ready for submission before the Hon'ble Bench, if so desired.
(3) The AO, who had completed the assessment, has clearly stated in his report that -
"Hence, in the Para no. 7.6 of the Asst. Order passed on 16.03.2022 under the BM Act, 2015 in the instant case, it is written that the bank statement along with KYC in respect of A/c No. 27600183120100 maintained at SBI, Singapore in the name of M/s R B Global Pte Ltd, Singapore has only been received from the competent authority, however, the details of other two bank accounts 18 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh have not been received till date from the competent authority."
Therefore, it is evident that the other two bank accounts viz. In the CITI Bank & the UCO Bank, Singapore were not received from the competent authority till the date of passing the impugned order.
(4) Regarding the status of any investigation/enquiry made by any Competent authority or any central government investigating agencies, the AO has stated that- "no action is pending on the part of central government agencies in the matter."
(5) With regard to the information on any ongoing proceedings against the assessee under Black Money Act, the AO has clearly mentioned in his report that "Prosecution proceedings u/s. 50 and u/s. 51 of the B M Act, 2015 are going on against the assessee."
(6) Extract from the above stated PEN DRIVE in the form of worksheets (5 pages) containing the information that was submitted by the assessee before the AO during the assessment proceedings in a CD, are also enclosed for ready reference [ Annexure-A], It would appear from these details that documentary evidences in support of the purported import transactions were not filed by the assessee before the AO, as recorded by him in para-7.7 of his order, as there is no mention of any such documentary evidence in the details. On the other hand, it appears that the CIT(A) was satisfied about the genuineness of the said transactions on the basis of materials produced/filed before him by the assessee and concluded that the assessee was able to establish that there has been genuine imports from M/s R.B. Global Pte Ltd and payments have been made against imports from the said company. However, the CIT(A) did not consider it necessary to remand the matter to the AO and obtain his views on these documents before deciding the issue in favour of the assessee. The decision of the CIT(A) was, therefore, grossly in violation of the principle of natural justice and the order passed by deserves to be set aside.
Enclo: as stated above.
Yours faithfully, Sd/-
[ Abhijit Kundu ] CIT(DR), ITAT-2, Kolkata"
16. Ld. D.R. further added that the assessee had not disclosed the information about the investments in equity in the Company 19 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh located at Singapore in the income tax return furnished in A.Ys. 2012-13 to 2018-19 and also has not used the one-time window available under the Black Money Act. He also submitted that most of the concerns, which have remitted the funds in the Bank account and with SBI, Singapore in the name of RBGPL are either owned by the family members of the assessee/HUF or other friends and relatives. The assessee as a beneficial owner is having interest in all these concerns and the purpose of remitting the funds have not been disclosed before the ld. Assessing Officer. He submitted that the assessee had filed various additional evidences before the ld. CIT(Appeals), who erred in calling for a remand report from the ld. Assessing Officer. Reliance placed on the decision of Coordinate Bench, Mumbai in the case of Rakesh Manhar Bhansali -vs.- Addl. CIT (2021) 132 taxman.com 20 (Mumbai-Trib.).
17. On the other hand, ld. Counsel for the assessee firstly referred to the following written submission placed on record, which reads as under:-
"It is humbly submitted that -
Detailed documents pertaining to the assessee (Shri Akhilesh Singh) and the foreign company (i.e., RB Global Pte., Singapore) along with corroborating evidence outlining all transactions and facts, in light of which the Ld. A.O. wrongly proceeded to frame the assessment and compute the total undisclosed foreign income and asset of the assessee at the astronomical and surmisal sum of Rs.133,20,62,815/-, have been compiled and made available for perusal of Ld. A.O. during the course of assessment.
It is humbly submitted that the investment made by the assessee in RB Global Pte. Singapore was from disclosed sources i.e. banking channels and had been done by following the prescribed guidelines of the Reserve Bank of India and applicable laws of the land. It is humbly stated that during the assessment proceedings under the 20 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Black Money Act, the source of the funds used by the assessee to invest in the foreign assets (Shares of RB Global Pte. Singapore) was unequivocally explained. It is also humbly submitted that the foreign income i.e. income from the said company located in Singapore was duly disclosed and offered for taxation in the return of income of the company filed in Singapore and the evidence for the same had been submitted during the course of the assessment proceedings. It is humbly submitted that the assessee had voluntarily declared all the details with regard to the foreign assets in Schedule FA and had declared an amount of Rs. 7,08,07,054/- with regard to the foreign income earned (cumulatively from A.Y. 2012-13 to A.Y. 19-20) in Schedule FSI and Schedule FA in the ITR filed for A.Y. 2019-20.
It is humbly submitted that at page 113 of Volume I of my Paper book at Annexure: 'E', we have reproduced and attached a date-wise detail of remittances made by your humble assessee from its bank account in India to RB Global Pte. Ltd, Singapore in its SBI, Singapore Bank Account towards the investment in equity shares of the foreign company. The Source of such funds remitted by the assessee from India through its Bank of Baroda bank account for the purchase of equity shares in RB Global Pte. Ltd., Singapore is also represented in a tabular format for the ease of Your Honour's perusal at page 113, Annexure: 'E' of our paper book, Volume I. which were presented before the Ld A.O. during the course of assessment.
It is humbly submitted that the ITRs & ITR Acknowledgments for A.Y. 2011-12, 12- 13, 13-14 & 19-20 of Shri Akhilesh Singh are marked as Annexures: 'A', 'B', 'C' & 'D' from pages 1 - 112 of our paper book, Volume I. It is also humbly submitted that we have marked and annexed the extract of the Bank Statement of Shri Akhilesh Singh maintained with Bank of Baroda (Kolkata) at pages 114 - 119 of our paper book, Volume I at Annexure: 'F* - this is the bank account of the assessee from which remittances were made to RB Global Pte. Ltd., Singapore for the purchase of equity shares from disclosed sources of funds of the assessee in India as shown in a tabular format at page 113, Annexure:
'E' of our paper book. Each and every remittance made from Shri Akhilesh Singh (through disclosed and accounted sources) to RB Global Pte. Ltd. Singapore for the purchase of equity shares has been made through banking channels and after due compliances as per RBI and FEMA Norms. Reflection of each remittance made by the assessee to RB Global Pte. Ltd., Singapore can be seen in the bank statement of Shri Akhilesh Singh maintained with Bank of Baroda (Kolkata) which is attached at Annexure: 'F' of our paper book, Volume I. The source of such funds remitted by the assessee to Singapore for the purchase of equity shares in RB Global Pte., Singapore, are also 21 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh corroborated vide the bank statement of the assessee maintained with Bank of Baroda (Kolkata) attached in the paper book, Volume I along with documents such as the Loan Confirmation Certificates from entities who had advanced loan to the assessee (Annexure: 'H', 'N' & 'P'), the assessee's statement of director's remuneration payable to him from companies (S.R. Timber Products (P) Ltd. & S.R. Worth Ltd.) in which he was a director (Annexure: 'J' & 'K') along with his Form 26AS from F.Y. 2009-10 to 2012-13 (Annexure: 'L') showing that tax had been deducted at source for such director's remuneration to the assessee by both companies registered in India.
v. Documents reflecting the remittances from Shri Akhilesh Singh through his bank account maintained with Bank of Baroda, Kolkata to the SBI bank account at Singapore of RB Global Pte. Ltd., Singapore including the communications made to Bank of Baroda and compliances as per RBI & FEMA norms is also categorically compiled and annexed in our paper book, Volume I, for each remittance made from India:
Documents showing remittance of USD 75,000 from Akhilesh Singh to RB Global Pte. Ltd., Singapore (along with communications to Bank of Baroda including Form A2 enclosing the Application cum Declaration & Declaration under FEMA 1999) at Annexure: 'G' of our paper book, Volume I. Documents showing remittance of USD 38,000 from Akhilesh Singh to RB Global Pte. Ltd., Singapore (along with communications to Bank of Baroda including Form A2 enclosing the Application cum Declaration & Declaration under FEMA 1999) at Annexure: 'I' of our paper book, Volume I. Documents showing remittance of USD 56,500 from Akhilesh Singh to RB Global Pte. Ltd., Singapore (along with communications to Bank of Baroda including Form A2 enclosing the Application cum Declaration & Declaration under FEMA 1999) at Annexure: 'M' of our paper book, Volume I. Documents showing remittance of USD 44,500 from Akhilesh Singh to RB Global Pte. Ltd., Singapore (along with communications to Bank of Baroda including Form A2 enclosing the Application cum Declaration & Declaration under FEMA 1999) at Annexure: 'O' of our paper book, Volume I. Documents showing remittance of USD 44,500 from Akhilesh Singh to RB Global Pte. Ltd., Singapore (along with communications to Bank of Baroda including Form A2 enclosing the Application cum Declaration & Declaration under FEMA 1999) at Annexure: 'Q' of our paper book, Volume I. 22 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh vi. In the case of Srinidhi Karti Chidambaram v. PCIT [W.A. No. 1125 of 2018], the Hon'ble Madras High Court had held that the Black Money Act, 2015, was enacted to deal with the problem of Black Money, from a source, within the countiy, which is disclosed, then Black Money Act, cannot be attracted. It is not the case of the Department that there is any income from the source outside India which has not been disclosed in the returns submitted by the assessees. An extract of the said judgment is extremely relevant in the facts of the instant assessee's case:
"214. It is an admitted fact that the foreign asset in each case was acquired with money that was disclosed in the books of account of the assessee (and tax paid) and which was remitted through banking channels under schemes approved by the RBI. There is no allegation of Black Money or unaccounted money or money that has escaped tax or money that was remitted through illegal channels. It is not disputed by the Income-Tax Department - that the source of investment was tax paid money remitted through banking channels in accordance with schemes approved by the RBI. "
Relevancy of the judgement of Madras High Court in Srinidhi Karti Chidambaram vs. PCIT [W.A. No. 1125 of 2018], with this case:
It is appreciated by the AO in page 44 of 85 of the order reading inter- alia "The Petitioner(s) in the said case had duly disclosed the foreign asset in the revised / original return filed for AY 2016-17 before the normal assessment under Income Tax Act could have been completed." (Fact is that in that case the petitioner(s) has filed revised return under 139(5) even after the initiation of proceedings under BMA which was allowed by the Hon'ble High Court).
Whereas the AO has failed to take note that in this case the Assessee has already disclosed the foreign asset in the original return filed for AY 2019-20 filed u/sec 139(4) before the normal assessment under Income Tax Act/BMA could have been initiated. (Reliance on para 200- 203 of the said judgement).
(vii)In the FAQ No. 17 of Circular No. 13 of 2015 dated 6 th July, 2015 issued by the CBDT, the Board itself clarifies this point:
"Question No. 18: A person holds certain foreign assets which are fully explained and acquired out of tax paid income. However, he has not reported these assets in Schedule FA of the Income-tax Return in the past. Should he declare such assets under Chapter VI of the Act?
Answer: Since, these assets are fully explained they are not treated as undisclosed foreign assets and should not be declared under Chapter VI of the Act."23
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh viii. It is humbly submitted that the retraction affidavit made by the assessee and sworn before the Hon'ble First Class Magistrate is marked and annexed at pages 157 - 159 of our paper book, Annexure:
'S', Volume I wherein at serial no. 6 of the said affidavit, the assessee has recorded his statement vide the affidavit on oath stating that the investments made in RB Global Pte. Ltd., Singapore by him was made from disclosed sources and had been done through banking channels after following the prescribed guidelines of the RBI and due declarations under FEMA Regulations.
ix. It is also submitted that the assessee was a director of the Singapore based company RB Global Pte. for which he received Director's Fees. As per Article 16 of the DTAA between India and Singapore, the director's fees received by Shri Akhilesh Singh (resident of India) in capacity of him being the director of RB Global Pte. Ltd., Singapore, a company formed and incorporated in Singapore (Certificate of Incorporation of the company in Singapore is marked and attached at Annexure: 'A', page 1 of Volume II of our paper book), was taxable in Singapore and not in India. Thus, the assessee had paid applicable taxes on such Director's Fees received from RB Global Pte. Ltd. in Singapore as per the Article 16 of the DTAA between India & Singapore and his income on such account was assessed by the relevant authorities in Singapore. Article 16 of the DTAA between India & Singapore is reproduced hereinunder for the sake of your honour's convenience:
"Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. "
(x) The Ld. A.O. in his assessment order framed u/s. 10(3) of the Act, the total credits of the SBI, Singapore bank account of the Singapore based company M/s R.B. Global Pte Ltd. in the hands of the assessee though the said company had made normal business transactions and had paid tax on the income arising out of the said transactions in Singapore.
(xi) In the assessment framed by the Ld. A.O. u/s. 10(3) of the Act, allegation was made against the assessee based on 'credible information' on record that he floated several proprietorship concerns and he rotated and layered funds before siphoning them off to Singapore. This can be placed at page 47 onwards of the Assessment Order framed u/s. 10(3) of the Act. At pages 48-49 of his order, the Ld. A.O. observes that summons u/s. 131 of the LT. Act, 1961 were made to proprietors of 14 concerns out of which, Shri Sashi Bhusan Singh 24 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh and Shri Vivek Kumar Singh (proprietors of Incredible Agency & Ajanta International) appeared and had their statements recorded.
Based on the statements of these two individuals and relying on the apparently vague 'information'/ 'investigation' (which was not confronted with the assessee at the time of assessment proceedings nor opportunity of cross-examination was given), the Ld. A.O. wrongly concluded that all 14 concerns were used by Shri Akhilesh Singh to rotate and siphon off funds to Singapore. In this regard, it is humbly submitted that such investigation/ information merely on conjectural extensions cannot establish the assessee to be the owner/ operator of the proprietorship concerns totally unrelated to the assessee. Also, based on the statements (later retracted) by Shri Sashi Bhusan Singh and Shri Vivek Kumar Singh, the Ld. A.O. wrongly deduced the assessee to be the owner and operator of 14 proprietorship concerns. The assessee was not afforded opportunity to examine the information nor cross-examine the individuals making adverse statements under duress. In this regard, we rely on the following judgments:
(xii) It is important to place on record the retraction affidavits of Shri Sashi Bhusan Singh and Shri Vivek Kumar Singh which has been marked as Annexure: 'T' & 'U' in Volume I of our paper book. Both individuals have categorically and unequivocally stated in the sworn affidavits before the Hon'ble First Class Magistrate that they were joint directors with the assessee in 3 & 5 companies, respectively.
(xiii) It is humbly submitted that the Ld. A.O. at page 70 onwards of his Assessment Order framed u/s. 10(3) of the Act, observed that funds were remitted to RB Global Pte. Ltd., Singapore through Shri Akhilesh Singh and his associate entities which were controlled and managed by him. In this regard, it has been humbly submitted that merely due to non-compliance of the proprietors of the concerns to the notice u/s. 131 issued under the I.T. Act, 1961 and unverified information, the assessee was conjecturally deduced as the owner and controller of all 14 proprietorship concerns.
In this connection, reliance is placed on the decision of the Hon'ble Supreme Court in Laichand Bhagat Ambica Ram vs. CIT [1959] 37 ITR 288 (SC) wherein it relied on its earlier judgement rendered in the case of Omar Salav Mohamed Sait [1959] 37 ITR 151 (SC) where it was held that no addition can be made on the basis of surmises, suspicion and conjectures.
Further, in the case of CIT (Central) Calcutta vs. Daulat Ram Rawatmull (87 ITR 349) the Hon'ble SC has held that the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences of a character, which would 25 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an interference to that effect.
(xiv) It is humbly submitted that at page 82 of the Assessment Order framed u/s. 10(3) of the Act, the Ld. A.O. held that as the sources of credits in the said proprietorship concerns and company are not disclosed by the assessee with documentary evidences during the course of proceedings, the entire credit in the bank account of 27600183120100 of RB Global Pte. Ltd. remains unexplained. Thus, the Ld. A.O. proceeded to treat the fictitious amount of Rs. 133,20,62,815/- as the undisclosed foreign asset and income of the assessee for the A.Y. 2020-21 under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
(xv) In this regard, it is submitted that the assessee during the assessment proceedings had already made elaborate submissions and vehemently denied having any control over the said 14 proprietorship concerns. It also explained the source of all remittances made through its Bank of Baroda (Kolkata) bank account to RB Global Pte. Ltd., Singapore on account of investments in equity shares. The assessee also explained that the director's fees it received from RB Global Pte. Ltd., Singapore was taxable in Singapore as per Article 16 of the DTAA between India and Singapore and that, he had paid taxes on it in Singapore.
(xvi) Regarding the entire credit in the SBI Bank Account, Singapore of RB Global Pte. Ltd., Singapore, it has been vehemently asserted that turnover transactions on account of legitimate trade/ business activities of the Singapore based company on account of which money was received by it, cannot be treated as the Undisclosed Foreign Income and Assets of the assessee under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
(xvii) It is alleged inter-alia in para 4.1 of the assessment order. In this regard, it is pertinent to point out that he has not submitted specific reply which has been sought by this office vide letter dated 25.08.2021 bearing DIN & Notice No. ITBA/COM/F/17/2021- 22/1035092518(1) and letter dated 08.10.2021 bearing DIN & Notice No. ITBA/COM/F/17/2021-22/1036257553(1) respectively. In response to the said letters, assessee has only referred his previous submissions, which does not completely and fully address the queries raised by these two letters dated 25.08.2021 & 08.10.2021 of this office Rebuttal:
That the assessee has duly responded to notice dated 25.08.2021 vide e-mail dated 10.09.2021and also that the assessee vide compliance 26 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh dated 25.01.2022, has fully addressed and clarified the queries raised in two letters dated 25.08.2021 & 08.10.2021.
(xviii) That in page 81 of the impugned order the Ld AO alleged inter-alia:
7.5. In view of the above discussion in para 7.3 & 7.4, it is clear that Shri Akhilesh Singh has siphoned off its undisclosed money to the three bank accounts of M/s R B Global Pte Ltd., Singapore maintained at SBI, Singapore (A/c No. 27600183120100), CITI Bank, Singapore (A/c No. 0/860398/001) and UCO Bank, Singapore (A/c No. 1010727002) in the mode of import remittance/ investment through its various fictitious companies and proprietorship concerns which are controlled and managed by him but operated in the name of his family members and other persons.
7.6. In this regard, it is pertinent to mention here that the bank statement along with KYC in respect of A/c No. 27600183120100 maintained at SBI, Singapore in the name of M/s R B Global Pte Ltd, Singapore has only been received from the competent authority, however, the details of other two bank accounts have not been received till date from the competent authority. Accordingly, Bank statement of A/c.
27600183120100 maintained at SBI, Singapore in the name of M/s R B Global Pte Ltd, Singapore for the period 20 May, 2011 (date of account opening) to 28 April, 2015 (date of account closure) has only been analysed and considered at the time of passing this order.
7.7. In view of the bank statement of A/c. 27600183120100 maintained at SBI, Singapore in the name of M/s R B Global Pte Ltd, Singapore for the period 20 May, 2011 (date of account opening) to 28 April, 2015 (date of account closure), it is noticed that most of the credits in the said account has been made from the account of aforecited fictitious proprietorship concerns and other companies which are controlled and managed by Shri Akhilesh Singh. As the sources of the credits in the said proprietorship concerns and company are not disclosed by the assessee with documentary evidences during the course of proceedings, the entire credits in the bank, account of 27600183120100 of M/s R B Global Pte Ltd. is remained unexplained.
Here it is pertinent to mention that the Ld AO has erred in not considering the following facts:
a) That R B Global Pte Ltd is a company incorporated in the Republic of Singapore for the purpose of carrying on business activities in accordance with The Companies Act, Cap.50b) 27 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
b) That the assesse has furnished before the ADIT/DDIT 3(4) vide compliance dated 28.11.2019 to letter No.lTBA/COM/F/17/2019-
20/1020882356(l) dated 21/11/2019 the copies of the Audited financials of R B Global Pte Ltd, for FY 2011 to 2018 showing the yearly sales and purchases of the company.
c) Also with that the assessee has furnished, the Bank statements of accounts maintained at SBI, Singapore (A/c No. 27600183120100), CITI Bank, Singapore (A/c No. 0/860398/001) and UCO Bank, Singapore (A/c No. 1010727002) showing the debit and credit entries during the assessment proceedings.
d) Also with that the assesse has furnished Extract of the Credit entry highlighting remittance made from India along with explanation for each credit entry (Trade/Investment) as seen in bank statement(s) above.
e) Also with that the assessee has furnished the copies of the Income Tax assessment order of R B Global Pte Ltd under Singapore Tax Authorities for AY 2012 to 2019.
f) Also with that the assessee has furnished the copies of Invoices and Bills of Lading of all trade related transactions of RB Global Pte. Ltd. along with Bill of Entries (denoting custom's clearance), etc.
g) Also that the assesse has furnished the party ledgers for the sales transactions.
h) Further that the assesse has furnished before the ADIT/DDIT 3(4) vide compliance dated 27.12.2019 to letter No. ITBA/COM/F/17/2019- 20/1021965057(1) dated 09/12/2019 the details of the imports made or any advances made in lieu of imports and also the sales details in prescribed format and also the Audited Balance sheet and ITR of the Indian entities in which your assessee was a director.
i) Also that the said imports and the corresponding sales of the Indian entities are duly reflected in their respective the Bill of Entries on which Custom clearances have been duly complied with and have been marked and annexed (on a sample basis) for your honour's kind perusal in Paper Book Volume III.
It establishes that the entire credit summations in the bank accounts are on account of trade turnover transactions therefore cannot be cannot be treated as the Undisclosed Foreign Income and Assets of the assessee under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
28B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh In this regard, we humbly also invite Your Honour's attention to Volume II of our paper book wherein we have marked and annexed all copies of Invoices and Bills of Lading of all trade related transactions of RB Global Pte. Ltd., Singapore and it has been annexed date-wise (Annexures: 'J', 'L', 'N' & 'P'). For the sake of clarity and better adjudication, we also have submitted a Ledger Account of Companies (based in India) in the books of RB Global Pte. Ltd., Singapore on account of turnover transactions related to trade (marked and annexed at Annexures: 'I', 'K', 'M' & 'O'). Thus, we humbly submit that a good part of the transactions on account of trade by RB Global Pte. Ltd, were with companies based in Singapore and other countries (such as UAE), and not just with Indian companies. We have also marked and annexed in Volume II of our paper book, the Memorandum and Articles of Association of RB Global Pte. Ltd., Singapore (Annexure: 'B') and its Annual Reports and Financial Statements from 2011 - 2014 (Annexures: 'C' to 'F'). Thereby, the conjectural and surmisal finding and subsequent addition of the entire credit summation (estimated by the Ld. A.O. at Rs. 133,20,62,815.07/-) of the SBI Bank Account, Singapore of RB Global Pte. Ltd., Singapore in the hands of the assessee Shri Akhilesh Singh was without all fours and is grossly in violation of the provisions of law.
In this regard reliance is also placed upon the judgment of the Delhi - Tribunal in the case of ACIT, Range 70, New Delhi v. Jatinder Mehra[2021] 128 taxmann.com 152 (Delhi - Trib.), wherein 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 Black Money Act.
xix. It is humbly submitted that the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, as its name indicates, is targeted only at the undisclosed foreign income and undisclosed foreign asset. Referring to the Statement of Objects and Reasons, and the Long Title to the Act, we humbly submit that the Act has been made to deal with Black Money, that is undisclosed foreign income and assets. The Act makes provisions for dealing with such income and assets, to provide for imposition of tax on undisclosed foreign income and assets and for matters connected therewith or incidental thereto. Thus, the provisions of the Act cannot be invoked or applied in a case where there is no undisclosed foreign income or asset.
Section 2(11) of the Act, defines "undisclosed asset located outside India". The asset must be located outside India, it must be held by the 29 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh assessee, and the assessee must have no explanation about the source of investment in such asset or the explanation is not satisfactory.
Section 2(12) defines "undisclosed foreign income and asset". It is submitted that the various provisions of the Act will apply, or can be invoked, only if there is an undisclosed foreign asset (or income) within the meaning of Section 2(11) and 2(12) of the Act.
xx. We humbly submit that the provisions of Chapter III (Tax Management) or Chapter IV (Penalties) or Chapter V (Offences and Prosecutions) of the Act can be invoked only, if there is an undisclosed foreign asset (or income) within the meaning of Section 2(11) and Section 2 (12) of the Act. Thus, in the absence of any undisclosed foreign asset or income, the Act cannot be applied or invoked.
Here it is pertinent to mention that the Ld. AO has erred in not considering following facts:
(a) That R B Global Pte Ltd is a company incorporated in the Republic of Singapore for the purpose of carrying on business activities in accordance with The Companies Act, Cap.50
(b) That the assesse has furnished before the ADIT/DDIT 3(4) vide compliance dated 28.11.2019 to letter No. ITBA/COM/F/17/2019-20/1020882356(l) dated 21/11/2019 the copies of the Audited financials of R B Global Pte Ltd, for FY 2011 to 2018 showing the yearly sales and purchases of the company.
(c) Also with that the assessee has furnished, the Bank statements of accounts maintained at SB1, Singapore (A/c. No. 27600183120100), CITI Bank, Singapore (A/c No. 0/860398/001) and UCO Bank, Singapore (A/c No. 1010727002)showing the debit and credit entries during the assessment proceedings.
(d) Also with that the assesse has furnished Extract of the Credit entry highlighting remittance made from India along with explanation for each credit entry (Trade/Investment) as seen in bank statement(s) above.
(e) Also with that the assessee has furnished the copies of the Income Tax assessment order of R B Global Pte Ltd under Singapore Tax Authorities for AY 2012 to 2019.30
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
(f) Also with that the assessee has furnished the copies of Invoices and Bills of Lading of all trade related transactions of RB Global Pte. Ltd.
(g) Also that the assesse has furnished the party ledgers for the sales transactions.
(h) Further that the assesse has furnished before the ADIT/DDIT 3(4) vide compliance dated 27.12.2019 to letter No. ITBA/COM/F/17/2019- 20/1021965057(1) dated 09/12/2019 the details of the imports made or any advances made in lieu of imports and also the sales details in prescribed format and also the Audited Balance sheet and ITR of the Indian entities in which your assessee was a director.
(i) Also that the said imports and the corresponding sales of the Indian entities are duly reflected in their respective Bill of Entries on which Custom clearances have been duly complied with and have been marked and annexed (on a sample basis) for your honour's kind perusal in Paper Book Volume HI.
It establishes that the entire credit summations in the bank accounts are on account of trade turnover transactions therefore cannot be cannot be treated as the Undisclosed Foreign Income and Assets of the assessee under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
In this regard, we humbly also invite Your Honour's attention to Volume II of our paper book wherein we have marked and annexed all copies of Invoices and Bills of Lading of all trade related transactions of RB Global Pte. Ltd., Singapore and it has been annexed date-wise (Annexures: 'J', 'L', 'N' & 'P'). For the sake of clarity and better adjudication, we also humbly submit a Ledger Account of Companies (based in India) in the books of RB Global Pte. Ltd., Singapore on account of turnover transactions related to trade (marked and annexed at Annexures: 'I', 'K', 'M' & O'). Thus, we humbly submit that a good part of the transactions on account of trade by RB Global Pte. Ltd. were with companies based in Singapore and other countries (such as UAE), and not just with Indian companies. We have also marked and annexed in Volume II of our paper book, the Memorandum and Articles of Association of RB Global Pte. Ltd., Singapore (Annexure: 'B') and its Annual Reports and Financial Statements from 2011 - 2014 (Annexures: 'C' to 'F'). Thereby, the conjectural and surmisal finding and subsequent addition of the entire credit summation (estimated by the Ld. A.O. at Rs. 133,20,62,815.07/-) of the SBI Bank Account, Singapore of RB Global Pte. Ltd., Singapore in the hands of the assessee Shri Akhilesh Singh was without all fours and is grossly in violation of the provisions of law.
31B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh In this regard reliance is also placed upon the judgment of the Delhi - Tribunal in the case of ACIT, Range 70, New Delhi v. Jatinder Mehra[2021 ] 128 taxmann.com 152 (Delhi - Trib.), wherein 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 Black Money Act.
xxiii. It is humbly submitted that the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 20L5, as its name indicates, is targeted only at the undisclosed foreign income and undisclosed foreign asset. Referring to the Statement of Objects and Reasons, and the Long Title to the Act, we humbly submit that the Act has been made to deal with Black Money, that is undisclosed foreign income and assets. The Act makes provisions for dealing with such income and assets, to provide for imposition of tax on undisclosed foreign income and assets and for matters connected therewith or incidental thereto. Thus, the provisions of the Act cannot be invoked or applied in a case where there is no undisclosed foreign income or asset.
Section 2(11) of the Act, defines "undisclosed asset located outside India". The asset must be located outside India, it must be held by the assessee, and the assessee must have no explanation about the source of investment in such asset or the explanation is not satisfactory.
Section 2(12) defines ''''undisclosed foreign income and asset". It is submitted that the various provisions of the Act will apply, or can be invoked, only if there is an undisclosed foreign asset (or income) within the meaning of Section 2(11) and 2(12) of the Act.
xxiv. We humbly submit that the provisions of Chapter III (Tax Management) or Chapter IV (Penalties) or Chapter V (Offences and Prosecutions) of the Act can be invoked 4 only, if there is an undisclosed foreign asset (or income) within the meaning of Section 2(11) and Section 2 (12) of the Act. Thus, in the absence of any undisclosed foreign asset or income, the Act cannot be applied or invoked.
Thus, we humbly pray before Your Honour that in light of the arguments advanced and precedents relied upon by your humble assessee, the appeal of the assessee may please be allowed".
18. Ld. Counsel for the assessee further concluded the submissions stating that it is neither a case of undisclosed assets 32 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh located outside India nor is a case of undisclosed foreign income and assets because the assessee has made the investment in RBGPL, Singapore through his declared banking sources/through unsecured loans/funds arranged from other concerns located in India and proper information has been given with the bank, which is authorized to transfer funds in the foreign exchange. He further submitted that the remaining portion of the alleged credits in the Bank account with SBI, Singapore is mainly on account of funds remitted from the Companies/concerns for importing goods from RBGPL. Goods which is mainly timber have been imported and all documentary evidences to prove the genuineness of import of goods into India and the proofs of imported goods having cleared through Custom Authorities are available on record. He also submitted that RBGPL not only exports goods to India but exports to other countries also. He lastly submitted that most of the concerns alleged to be bogus/accommodation entry providers referred to by the ld. Assessing Officer in the assessment order are firstly not bogus/shell companies/concerns and secondly only few of them have transacted with the RBGPL, Singapore and that too for commercial expediency. He thus prayed that the finding of the ld. CIT(Appeals) may be confirmed. Reference also made to various documents filed in the paper books and decisions referred and relied in the written submission.
19. We have heard the rival contentions and perused the record placed before us and carefully gone through the decisions referred and relied by both the sides. Revenue is aggrieved with the finding of ld. CIT(Appeals) deleting the addition made by the ld. Assessing 33 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Officer at Rs.1,33,20,62,815/- made on account of alleged undisclosed foreign income and assets under the provisions of Black Money Act, 2015. The proceedings under section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 were initiated in the case of the assessee on the basis of information from Competent Authority, Singapore about bank account held with SBI, Singapore in the name of RBGPL, Singapore. Though the facts have been discussed in details in the preceding paras but for the sake of convenience, we will take them briefly and note that the assessee is a shareholder and Director in RBGPL. Credit entries alleged to be undisclosed foreign asset and income being funds remitted from India to RBGPL during the period from 20.05.2011 to 28.04.2015 (i.e. date of account opening and closure) in the bank account held at SBI, Singapore bearing A/c. No. 27600183120100 are in challenge before us. Though there are two other Bank accounts held with Citi Bank, Singapore and UCO Bank, Singapore held in the name of RBGPL, but the information regarding the same was not received from the Competent Authority, Singapore. The assessee provided all necessary details about these Bank accounts also and the same are mentioned in the assessment order. However, the ld. Assessing Officer has confined the quantum of addition only with regard to the transactions carried out in the account held with SBI, Singapore. We take note of the fact that on few occasions, when the appeal came up for hearing, reference was made about the other two Bank accounts held with Citi Bank, Singapore and UCO Bank, Singapore, but since the ld. Assessing Officer has consciously discussed all the Bank accounts and dealt 34 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh with these details but has not referred to the credit entries appearing in the other two Bank accounts for making the additions, we are not inclined to deal with the transactions appearing in the other two Bank accounts held with Citi Bank and UCO Bank, Singapore and confine our adjudication to the alleged credit entries appearing in Bank a/c held with SBI, Singapore in the name of RBGPL.
20. Now so far as the transactions carried out in the Bank account held with SBI, Singapore in the name of RBGPL having a total credit amount of Rs.133.21 Cr. (approx.), which ranges during the period of Financial Years 2011-12 to 2015-16, transfer of amounts in this Bank account from India fall into two categories, namely (i) funds remitted by the assessee towards investment in share capital of RBGPL; and (ii) funds remitted by various business concerns based in India. The ld. Assessing Officer has been provided with the information that the investment made in the equity of RBGPL are through declared Banking sources/unsecured loans taken and the other credits are towards import of goods by various business concerns in India. The ld. Assessing Officer was of the view that firstly the assessee has not declared the investments in RBGPL in the income tax return or in one-time window provided in the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Secondly, no details provided for the purpose of remittances of funds by various concerns to RBGPL and also certain information were gathered indicating that the business concerns remitting funds are alleged to be either shell company or are managed and 35 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh controlled by assessee itself and finally concluding the proceeding, ld. Assessing Officer observed that the total credits appearing in the SBI, Singapore upto the period 25.11.2015 are undisclosed foreign asset and income of the assessee. We further notice that the ld. CIT(Appeals) after being made available with various details about the source of investment in equity by the assessee and also the purpose of remittance of funds, which was only on account of import of goods mainly timber from Singapore, found that the transactions carried out were genuine and are for the commercial expediency. Ld. CIT(Appeals) opined that it is not a fit case for invoking provisions of the Black Money Act, 2015 and deleted the impugned addition by observing as follows:-
"3.3(a) I have carefully considered the facts qf the case and submission of the appellant. All the credit entries in the bank A/c. of R. B. Global Pte. Ltd., Singapore have been considered as undisclosed foreign assets of the appellant and these have been added in the hands of the appellant under BMA, 2015. Appellant had explained that he had initially made remittances to the account of R. B. Global Pte. Ltd., Singapore, as per rules laid down by the RBI and in conformity with the FEMA, 1999. Thereafter, when the company started its commercial operations, it has received money from companies/conopms controlled by the appellant as well as from other Indian entities and these transactions are purely commercial, in nature. Indian entities, including those controlled by the appellant have imported timber and other forest products from R. B. Global Pte. Ltd., Singapore and made import remittances to the foreign entities through banking channels. However, A.O. is not convinced. He is of the opinion that the alleged import transactions are not genuine and the appellant has floated a number of proprietary concerns in the names of his relatives and friends and used these concerns to siphon off his undisclosed funds to the foreign entity. A.O. has further alleged that the appellant has siphoned off loans taken from bank and routed these funds to the bank A/c. of foreign entity in the garb of import remittances. As per the KYC, appellant was the beneficiary of that bank A/c., and this account was operated 'Singly' by the assessee. Hence, A.O. has considered all deposits made in that A/c. as undisclosed foreign assets of the appellant. In his submission, appellant has given point-wise rebuttal of A.O's contention and has also submitted supporting documents to back his arguments.36
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh 3.3(b) Appellant has submitted the details of initial remittance/ investment made in R. B. Global Pte. Ltd. All these remittances have been made through the declared bank A/cs. of the appellant and the sources of these remittances have been fully explained. Once the Singapore based company started its commercial operation, appellant has received salary/Directors remuneration. These income have been duly declared in the returns filed before the Singapore Tax Authorities in the relevant years and due taxes have been paid. In all these years appellant has earned income equivalent to Rs.7,08,07,054/- in Indian rupees and these were duly declared in returns filed at Singapore. These earnings have been mainly invested in shares of R. B. Global Pte. Ltd., and appellant has acquired more shares of the said company through these earnings. Appellant has submitted the copies of his returns filed before Singapore Tax Authorities which support his contentions. Thus, the initial investment/remittance made to the bank A/c. of the Singapore based company, as well as subsequent increase in the number of shares held by the appellant in that" company is fully explained.
3.3(c) Main allegation against the assessee is that he has floated a number of concerns with the help of his friends and relatives and used these concerns as well as the concerns controlled by him, to siphon off bank loans and other unaccounted funds available with the assessee to the foreign: bank A/c. of Singapore based company in the guise of bogus imports made from the said company. A.O. has discussed the role of 17 such proprietorship concerns which have been used to siphon off fund from India. However, it is noticed that 11 out of 17 concerns are filing separate returns of income. Further, A.O. has only pointed out certain discrepancies regarding addresses of such concerns and their non-compliance to summons u/s.131 of the LT. Act, 1961 blit he has failed to satisfactorily establish that these concerns are in any manner controlled by the asseSsee. Allegations are not backed by supporting evidences and the assessee has also refuted the allegations of the A.O. in this regard. Apart from the discrepancies regarding addresses and non-compliances to summons u/s.131, A.O. has given the picture that unaccounted cash has been rotated through the bank A/c. of the said proprietary concerns. However, perusal of the information given on page No.68 of the assessment order shows that over-all not more than 10% of the deposits in such concerns are in cash. Balance 90% are through cheques, RTGS etc. Further, in the case of proprietary concerns which have not filed their return of income (details given on page No.68 to 70) only around 5% of deposits are in cash. Thus, A.O. has failed to make a proper case regarding mis-use of import transaction.
3.3(d) In the order, A.O. has mentioned about import fraud and siphoning off of bank loans. But, neither the A.O. has given any details of the bank loans and the manner in which these have been siphoned off nor the A.O. has discussed anything about the alleged import fraud.37
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Whether no goods have been received against the import remittances or there were instances of under invoicing/over invoicing have not been made clear. Import remittances have been made through banks. Importers are required to submit copies of Bills of Entries with the banks after payments have been made to establish that goods have been received in India. In case of non-compliance in this regard, banks report this matter to DRI/FEMA Authorities. No such instances have been mentioned by the A.O. Imports are monitored by the DRI and Customs Authorities. Further all remittances of foreign exchange are monitored by FEMA authorities. It appears that DRI/FEMA/Customs Authorities have not raised any objections in respect of imports made by various Indian entities, including those under Direct Control and the Management of the appellant. A.O. has not mentioned even a single instance of bogus/irregular imports. On the other hand, appellant had submitted all the Bills to Lading issued by the R. B. Global Pte. Ltd., Singapore. But, A.O. could not find any discrepancies in those bills. Appellant had also submitted the bills of entries on sample basis in respect of actual receipts of goods by the concerns controlled and managed by him. These Bills of Entries have stamps of Customs Authorities which establish that imported goods were received on Indian ports. A.O. has not been able to point out any discrepancies in this regard.
3.3(e) Appellant has long been associated with the business of timber and related goods. He had floated various companies to deal with these businesses and has been regularly importing timber and other related products from other countries. It appears that for commercial expediency he had floated a company at Singapore and had thereafter routed his imports through Singapore basest company. During appellate proceedings appellant has produced most of the Bills of Entry or reference No. of the Bills of Entry in respect of the goods imported from abroad. Bills of entries are in the nature of certificate from the Customs Authority regarding receipt of imported goods in India. These documents/details were also produced before the A.O. In addition, during appellate proceedings, appellant has also produced other supporting evidences in the form of Inspection certificates issued by the Forest Authorities. Timber and other Forest products imported from abroad are subject to inspection by Forest authorities. These can be moved beyond the Ports only after receipt of certificate from the Forest Authorities. These certificates also mention the quantity of imported goods. Appellant has produced these certificates to further support bills of entries and to establish that imported goods were received in India as certified by two authorities, they-are, Customs Authority and Forest Authority of the State Government. They have independently certified the physical receipt of the imported timber and other forest products. Regarding imports by other Indian entities, appellant has clarified that he does not have access to the documents of those entities and he has vehemently denied any connection with those parties. Linder the 38 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh circumstances, bills of entries or certificates from Forest Authorities have not been produced in respect of imports by other Indian entities but the Bills of Lading issued by R. B. Global Pte. Ltd., Singapore have been submitted both before the A.O. as well as during appellant authority to establish the import of goods. After perusal of these documents it is apparent that the concerns managed by the appellant have imported goods from R. B. Global Pte. Ltd., and the payments have been made against those imports. Other Indian entities also appear to have made payment against imports from Singapore based company. A.O. has not been able to point out even a single discrepancy in respect of the imports made from R. B. Global Pte. Ltd. All the transactions with the Singapore based company appear to be genuine commercial transactions.
3.3(f) During the appellate proceedings, appellant has submitted the Audit Report of relevant years in respect of R. B. Global Pte. Ltd., Singapore. All the credit entries in its Bank A/c. are duly reflected in the books of accounts and after closure of the' books at the end of the relevant years, returns of income have been filed before the Singapore Tax Authority. The Singapore Tax Authorities appear to have accepted the book result (including the credit in bank A/cs) and no adverse views appear to have been expressed. Thus the tax authorities at Singapore have considered the book result of R.B. Global, Singapore to be genuine and as per their stated line of business. Hence, it cannot be said that R. B. Global Pte. Ltd., Singapore has not made genuine transaction with Indian- entities, including those controlled by the appellant. Further, neither the Customs Authorities nor the FEMA Authorities nor DRI appear to have raised any objection regarding the imports made from the Singapore based company or the Import remittances made from India in the A/cs. of the Singapore based company. Under the circumstances, it appears that A.O. has jumped to the conclusion regarding import fraud without any basis.
3.3(g) For invoking provisions of BMA, 2015, A.O. has mentioned two reasons, first, the Foreign Assets were not declared in Schedule-FA of the LT. Returns and secondly, assessee was the beneficiary of the Bank A/c. of the foreign company. However, from the above discussion, it is apparent that the initial remittances to the Bank A/c of the Foreign Company and subsequent remittances by various Indian entities on account of import from R. B. Global Pte. Ltd., were from disclosed sources. Remittances were made through banking channels and most of these persons were filing returns of income. Under the circumstances, not mentioning foreign assets in schedule FA of the Income Tax Returns is only a technical default. For this default appellant may be liable for penalty u/s.43 of the BMA, 2015 and A.O. may take necessary action in this regard. But FAQ No.17 of Circular No.13 of 2015 dated 06.07.2015 issued by CBDT comes to the rescue of the appellant and his foreign income/assets may not be considered undisclosed. In reply to question No. 18, it was clarified that when a person holds certain 39 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Foreign assets which are fully explained and acquired out of tax paid income then these would not be treated as undisclosed Foreign Assets, even if these assets were not declared in Schedule - FA of Income Tax return in the past. This view is also supported by the judgement of Hon'ble Madras High Court in the case of Srinidhi Karti Chidambaram vs. PCIT (WA No. 1125 of 2018).
The other contention of the A.O. that the appellant was the beneficiary of that A/c as per the KYC, it is noticed that the said A/c was used for handling Bank transactions of the Singapore based company. A.O. has not pointed out even a single instance when the personal banking transaction of the assessee has been made through this account. R. B. Global Pte. Ltd., Singapore was incorporated by the assessee at Singapore and he held most of the shares of that company and also acted as director of that company in the initial years. Hence merely because the assessee was the beneficiary of the Bank A/c. would not make commercial transactions of the company as his individual transaction. All the credit entries in that bank A/cs. are on account of receipt by the Singapore based company and all the credit and debit transactions are duly accounted in the books of the said company. Books of A/cs. were audited and returns of income have been filed on the basis of the Audited books of A/cs. before the Singapore Tax Authorities.
3.3(h) While arriving at the conclusion that deposits in foreign A/c. is covered under BMA, 2015, A.O. has also referred to FAQ No.26 of Circular No.13 of the BMA, 2015. However, the clarification offered therein is applicable when the foreign asset is acquired from Income chargeable to tax in India. In the appellant's case foreign income has been earned in form of salary and director's remuneration from R. B. Global Pte. Ltd./Singapore. As per the terms of DTAA between Singapore and India, salary and director's remuneration earned in Singapore was to be offered for tax in that country. This has been done by the assessee. The income earned in Singapore has been further invested in the shares of the said company. In compliance to the Provisions of DTAA, income earned in Singapore has not been offered for tax in India. Rather, it is declared in return filed in Singapore. Under the circumstances, clarification vide Query No. 26 of Circular No. 13 of the BMA, 2015 is not applicable in appellant's case. Rather his case is covered by clarification vide Query No. 17 of Circular No.13 of the BMA, 2015. Non-reporting of foreign assets in schedule-FA of the Income Tax Return was only a technical default and as per clarification issued by FAQ No. 17 of Circular No.13 of the BMA, 2015, the foreign assets acquired out of declared income in Singapore cannot be considered as undisclosed assets. However, A.O. may ascertain whether assessee was required to offer his global income in India as per I.T. Act, 1961, being a resident of India.40
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh 3.3(i) In view of the discussion in the preceding paras, it is apparent that the credit entries in the bank A/c. of R. B. Global Pte. Ltd., Singapore are fully explained. Initially, assessee had made remittances to the foreign bank A/c. out of his declared source in India. Hence, no adverse view can be taken in this regard. Subsequently, when the company started its commercial operations, it has received payments from India on account of material supplied to various Indian entities. Without pointing out even a single instance of bogus imports, A.O. has jumped to the conclusion that payment have gone from India to foreign bank A/c. without any genuine imports. A.O. has also jumped to the conclusion that all the Indian entities doing transaction with R. B. Global Pte. Ltd., Singapore are controlled by the appellant and appellant in connivance with proprietors of such Indian entities, has siphoned off his undisclosed funds to the bank A/c. of R. B. Global Pte. Ltd., Singapore. In the assessment order, A.O. has pointed out certain discrepancies regarding addresses of some of the proprietorship concerns. Further, there was no compliance from most of these concerns to summons u/s.131. But these facts alone cannot establish that defaulting concerns are controlled by the assessee. Most of the receipts in the Bank A/c. of such concerns are through RTGS and cheques. A.O. should have made enquiries to establish fund trail of these concerns before arriving at any conclusion. Most of these concerns have been regularly filing their returns of income. If any discrepancies were noticed in the accounts of these concerns, suitable remedial action could have been recommended against the concerns. As discussed above, A.O. has considered all credit entries in the Bank A/c. of R. B. Global Pte. Ltd., Singapore to be non-genuine receipts, without any basis. On the other hand, assessee has established that there has been a genuine imports from the said foreign entity and payments have been made against imports from the said company. A.O. has failed to make any case for bogus imports in respect of any of the Indian entities dealing with R. B. Global Pte. Ltd., Singapore and initial remittances to the bank A/c. of said foreign company are fully explained and from disclosed sources. All the receipts in the bank A/c. of R. B. Global Pte. Ltd., Singapore are part of its books of accounts and R. B. Global Pte. Ltd. has regularly filed Returns of Income in Singapore. Foreign income earned by assessee are declared by assessee in Returns filed in Singapore, as per the terms of DTAA. Further, investment in shares of the foreign company are made out of these declared income. Hence, no case is made out for addition under BMA, 2015. Therefore, A.O. is directed to delete the addition of Rs.133,20,62,815/-.
4. Appeal is Allowed".41
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
21. After going through the above finding of ld. CIT(Appeals) and various details before adverting to the adjudication of facts of the case, we would first like to peruse the relevant provisions of Black Money Act, 2015 applicable in the instant case. "Undisclosed asset located outside India" is defined in Section 2(11) and 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 ld. Assessing Officer unsatisfactory".
21.1. Further Section 2(12) of the Act defines "undisclosed foreign income and asset" means 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 computed in the manner laid down in section 5.
22. Section 4 of the Black Money Act deals with the scope of total undisclosed foreign income and asset and the said provision is reproduced below:-
"4. Scope of total undisclosed foreign income and asset (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be--
(a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub-
section (4) or sub-section (5) of section 139 of the Income-tax Act;
42B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
(b) the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the said Act; and
(c) the value of an undisclosed asset located outside India.
(2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C or section 57 to section 59 or section 92C of the said Act, shall not be included in the total undisclosed foreign income.
(3) The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act.
COMMENT This section deals with the scope of total undisclosed foreign income and asset. Total undisclosed foreign income and asset of any previous year of an assessee shall be the income from the source located outside India, which has not been disclosed in the return of income furnished under sub-section (1), (4) or (5) of section 139 of Income-tax Act, the value of any undisclosed asset located outside India and any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income- tax Act in accordance with the provisions of section 29 to section 43C or section 57 to section 59 or section 92C of the said Act shall not be included in the total undisclosed foreign income and the income included in the total undisclosed foreign income and asset under 43 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh this Act shall not from part of the total income under the Income-tax Act".
23. A perusal of the above provision, we find that the first and foremost thing, which we have to identify as to whether there is an undisclosed asset located outside India or not, and whether there is any undisclosed foreign income and assets located at outside India or not. In the above referred provision of section 2(11), one of the important elements is that the assets located outside India should be treated as undisclosed, if the assessee has not given explanation about the source of investment in such assets.
24. In the instant case, the alleged addition has been made towards undisclosed assets in the form of funds remitted from India to Singapore in the Bank account held with SBI, Singapore in the name of RBGPL. Admittedly, the assessee is a Director and shareholder of RBGPL. Various documentary evidences have been placed in the paper book, which are more than sufficient to prove that RBGPL is a registered company in Singapore and is regularly assessed to tax and filing the audited financial statement with the authority at Singapore. Secondly it is also an admitted fact that the assessee being a Director has been receiving salary from RBGPL and is regularly filing the income tax return at Singapore and is paying due taxes. The ld. Assessing Officer has taken note of this fact and has observed that the assessee has received income in INR 7,08,47,050 from 2013 to 2019 and had paid total income tax in Singapore at Rs.82,53,263/-. Though there is a mistake at the end 44 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh of the assessee that he being a resident of India should have declared global income in his income tax return in India, but apart from not disclosing the global income in the return, sufficient details have been filed to prove that taxes have been paid in the country where salary was earned and there is no prejudice caused to the revenue in terms of Double Taxation Avoidance Agreement (DTAA) with Singapore. We thus note that for the alleged period, income earned by the RBGPL as well as the income received by the assessee from RBGPL has been disclosed with the authorities in the country, where it is earned and due taxes have been paid.
25. Now coming to the part of credits in the account with SBI, Singapore in which funds were remitted by the assessee for making investment towards purchasing of equity shares in RBGPL. The details of such foreign remittances made to RBGPL in the SBI account from 2011 to 2024 are placed at page 113 of the paper book (Volume I), which reads as under:-
45B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
26. From perusal of the above sheet and all the details mentioned therein for which evidences have been filed in the paper book, it is apparently clear that the assessee has made investment in the equity shares of RBGPL from the funds held in India. These funds were either owned by the assessee or has managed to take unsecured loans/advances from his friends and other relatives or 46 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh has withdrawn the money from the Directors' remuneration account of the Companies of which he is a Director in India. The complete explanation and details of each and every remittance and the source of such remittances stands filed and is explained. It is an admitted fact that remittance in foreign currency from India to any other foreign country has to pass through the Banking channel and the Banks are authorized agent of Reserve Bank of India and they have to adhere to the relevant guidelines prescribed by the RBI before transferring any fund in foreign currency from India to abroad. All the details regarding sender and receiver including their addresses, PAN details, Swift Code, purpose of remittances have to be mentioned in the application/format prescribed by the bank. The assessee has adhered to all the guidelines and has transferred the funds for making investment in the equity of RBGPL through declared sources. In other words, the assessee has sufficient explanation about the source of investment in the form of equity shares of RBGPL held abroad. However, the assessee did not mention the details of such foreign assets in the form of equity shares in Schedule 'FA' in the income tax return. Even when the assessee, who was filing regular income tax return in Singapore and paying due taxes thereon on the salary earned from RBGPL and even when remittances made to SBI, Singapore to RBGPL for investment in equity of the RBGPL Company duly supported by source for making such investment, but still the assessee did not fill the column in Schedule 'FA' of the income tax return. Under the given facts, one cannot ignore the possibility that the person, who prepared and filed the income tax return for the assessee may not have asked for the relevant information, which was required to be 47 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh filled in the income tax return. It is not so that the assessee had no explanation about the source of investment in the assets in the form of equity shares of a Company in Singapore but bone of the contention is that the assessee has not declared the said asset in the income in the income tax return and has not opted for making declaration in the window provided under the Act. But barring these errors, so far as the issue as to whether the investment made abroad in the equity capital of RBGPL by the assessee is explained, we are of the view that the same does not fall in the category of undisclosed foreign income and assets as defined in section 2(11) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and also does not fall in the category of any "undisclosed foreign income and asset" located outside India as defined in Section 2(12) of the Black Money Act as complete explanation to our satisfaction have been filed by the assessee and the documents in support thereof are as follows:-
Nature of Documents ITR Acknowledgement and Income Tax Return for the A.Y.: 2011-2012 A.O. & CIT(A) at pages 1 to 22 ITR Acknowledgement and Income Tax Return for the A.Y.: 2012-2013 A.O. & CIT(A) at pages 23 to 46 ITR Acknowledgement and Income Tax Return for the A.Y.: 2013-2014 A.O. & CIT(A) at pages 47 to 71 ITR Acknowledgement and Income Tax Return for the A.Y.: 2019-2020 A.O. & CIT(A) at pages 72 to 112 Tabular Representation of the foreign remittance made to R. B. Global PTE Ltd. by Shri Akhilesh Singh & Source of such remittances.48
B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh A.O. & CIT(A) at pages 113 Bank Statement of Shri Akhilesh Singh for the bank account maintained at Bank of Baroda (Kolkata from 12.05.2010 to 11.04.2022 A.O. & CIT(A) at pages 114 to 119 Documents showing remittance of USD 75,000 from Shri Akhiilesh Singh RB Global PTE Ltd (Communications to Bank of Baroda & Procedural compliances as per RBI & FEMA Norms) A.O. & CIT(A)at pages 120 to 122 Loan Confirmation Certificate from Shruti Wood & Woods (P) Ltd to Shri Akhilesh Singh A.O. & CIT(A) at p[ages 123 Documents showing remittance of USD 38,000 from Shri Akhiilesh Singh RB Global PTE Ltd (Communications to Bank of Baroda & Procedural compliances as per RBI & FEMA Norms) A.O. & CIT(A) at pages 124 to 126 Statement of Director's Remuneration payable from S.R. Timber Products (P) Ltd to Shri Akhilesh Singh (31.03.2010 to 31.03.2013) A.O. & CIT(A) at pages 127 Statement of Director's Remuneration payable from S.R. Worth Ltd to Shri Akhilesh Singh (31.03.2010 to 31.03.2013) A.O. & CIT(A) at pages 128 Form 26AS of Shri Akhilesh Singh (F.Y.: 2009-2010 to 2012-2013) A.O. & CIT(A) at pages 129 to 144 Documents showing remittance of USD 56,500 from Shri Akhiilesh Singh RB Global PTE Ltd (Communications to Bank of Baroda & Procedural compliances as per RBI & FEMA Norms) A.O. & CIT(A) at pages 145 to 147 Loan Confirmation Certificate from Shruti Wood & Woods (P) Ltd to Shri Akhilesh Singh A.O. & CIT(A) at page 148 Documents showing remittance of USD 44,500 from Shri Akhiilesh Singh RB Global PTE Ltd (Communications to Bank of Baroda & Procedural compliances as per RBI & FEMA Norms) A.O. & CIT(A) at pages 149 to 151 49 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Confirmation Certificate from Shruti Wood & Woods (P) Ltd to Shri Akhilesh Singh A.O. & CIT(A) at pages 152 Documents showing remittance of USD 44,500 from Akhilesh Singh to RB Global PTE Ltd (Communications to Bank of Baroda & Procedural compliances as per RBI and FEMA Norms) AO & CIT(A) at pages 153to 155 „ Ledger Account of the Director ( Shri Akhilesh Singh) in the books of R B Global PTE Ltd (from 01.01.2014 to 31.12.2014) A.O. &CIT(A) at pages 156 Retraction Affidavit of Shri Akhilesh Singh filed before First Class Magistrate (Sworn on 21.02.2022) A.O. & CIT(A) at pages 157 to 159 Retraction Affidavit of Shri Sashi Bhushan Singh filed before First Class Magistrate (Sworn on 24.02.2022) A.O. &CIT(A) at pages 160 to161 Retraction Affidavit of Shri Vivek Kumar Singh filed before First Class Magistrate (Sworn on 24.02.2022) A.O. &CIT(A) at pages 162 to 163 Extract of Email application to obtain certified copies of the order sheet in course of proceedings u/s 10(3) of the Black Money Act for A.Y.: 2020- 2021
AO & CIT(A) at pages 164 to 165
27. From going through the above details of the source of funds available with the assessee for making investment in equity of RBGPL during the period 2011 to 2015, we are satisfied with the finding of ld. CIT(Appeals) that proper explanation has been given about the source of funds applied for making investment in the equity shares of RBGPL and the same have been channelized through the authorized banks and information about the sender and receiver have been provided by the assessee at the time of making payment. Therefore, the investment made in the equity of RBGPL is explained from the disclosed sources in India.
50B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
28. As far as the remaining amount remitted in SBI Singapore Account is concerned, the ld. Assessing Officer made the addition for lack of necessary details and assessee having not explained the purpose of remittance and confined its proceedings only to examine the various individual/firm/company/ concern, which remitted the funds to RBGPL and when the information called for under section 133(3) was not up to the mark or no information was received, it was presumed that all these companies are either shell company or are managed and controlled by the assessee.
29. When the matter travelled before the ld. CIT(Appeals), the assessee filed various details the outcome was different to what was presumed by the ld. Assessing Officer. These funds were remitted for import of goods from Singapore. RBGPL is a Company registered in Singapore and is carrying out the business of export of goods and the export is not only confined to India but other countries also. The assessee has furnished the following details about RBGPL including its Memorandum of Articles, Annual Report and Financial Statement for the alleged period along with copies of invoices and Bill of Lading, Bill of entries, Custom Clearance documents, etc. and the same are listed below:-
SI.
No. Nature of Documents Certificate confirming incorporation of company (R B Global PTE Ltd) in Singapore 1 A.O. & CIT(A) at page 1 Memorandum and Articles of Association of R B Global PTE 2 Ltd A.O. & CIT(A) at pages 2 to 24 Annual Report and Financial Statements of R B Global PTE Ltd 3 for the year ended at 31.12.2011 A.O. & CIT(A) at pages 25 to 37 51 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Annual Report and Financial Statements of R B Global PTE Ltd 4 for the year ended at 31.12.2012 A.O. & CIT(A) at pages 38 to 67 Annual Report and Financial Statements of R B Global PTE Ltd 5 for the year ended at 31.12.2013 A.O. & CIT(A) at pages 68 to 99 Annual Report and Financial Statements of R B Global PTE Ltd 6 for the year ended at 31.12.2014 A.O. & CIT(A) at pages 100 to 131 Details of Credit Summations from the Extract of Bank 7 Statement of R B Global PTE Ltd at SBI Singapore (2011 -2014) A.O. & CIT(A) at pages 132 to 142 Bank Statement of R B Global PTE Ltd at SBI, Singapore 8 A.O. & CIT(A) at pages 143 to 184
9. Ledger Account of Companies (based out of India) in the books of R B Global PTE Ltd - reflecting turnover transactions from 01.06.2011 to 31.12.2011 A.O. & CIT(A) at pages 185 to 191
10. Copies of Invoices and Bills of Lading of all transactions of R B Global PTE Ltd (from 01 06 2011 to 1.12.2011) A.O. &CIT(A) 192 to 261
11. Ledger Account of Companies (based out of India) in the books of R B Global PTE Ltd - reflecting turnover transactions from 01.01.2012 to 31.12.2012 A.O.&CIT(A) 262 to 267
12. Copies of invoices and bills of lading of all transaction of RB Global PTE Ltd. (from 1.1.2012 to 31.12.2012 AO & CIT(A) at pages 268 to 331
13. Ledger Account of Companies (based out of India) in the books of R B Global PTE Ltd - reflecting turnover transactions from 01.01.2013 to 31.12.2013. A.O. &CIT(A) at pages 332 to 350
14. Copies of Invoices and Bills of Lading of all transactions of R B Global PTE Ltd (from 01 01 2013 to 31.12.2013.
A.O. & CIT(A) 351 to 444
15. Ledger Account of Companies (based out of India) in the books of R B Global PTE Ltd - reflecting turnover transactions from 01.01.2014 to 31.12.2014. A.O. &CIT(A) 445 to 454 52 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh
16. Copies of invoices and bills of lading of all transactions of R B Global PTE Ltd. (from 1.1.2014 to 31.12.2014) AO & CIT(A) at pages 455 to 506
30. On perusal of these details, it is noticed that the Bank which has remitted the funds to RBGPL, Singapore, the purpose of the same is for import of goods, which is showing at Volume 5 of the paper book. We take note that S.R. Timber Products Pvt. Limited, Somnath Commosales Pvt. Limited, Incredible Agency Pvt. Limited have remitted the funds during the year 2011 for purchasing goods. The purpose of remittances to RBGPL is proved with the invoices issued by RBGPL, Bills of Lading/shipping bill, verification by Custom Authorities, where the value of goods is mentioned and the transportation receipts are available. Same is the situation for all the other remittances for the remaining period and remittances, which have been made from various concerns to RBGPL. Had the alleged concerns being fictitious or accommodation entry providers, then, there would have been no material in the form of bill of entry issued by the Custom Authorities, transportation documents, High Seas Sale Agreement by the concerns relating to importing goods. The assessee through the ld. Counsel for the assessee has furnished all the details regarding alleged concerns with the tax authorities, having PAN, filing regular income tax returns and duly assessed to tax. The list mentioned in the assessment order contains many names but only few which also includes Private Limited Companies have only dealt with the assessee during the said period and the transactions which are part of the Bank statement of SBI, Singapore, for each of such transaction, there is evidence which proves that against the funds 53 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh remitted outside India, goods have been received in India by registered business concerns. So, when against the funds which have been remitted outside India and there are goods which have been received in India, then practically no asset remains located outside India, because the profit, if any, generated by RBGPL, Singapore for carryout out such transaction, the same has already been offered to tax and the goods, which have been imported in India, have already become part of the regular accounts maintained by such importers, which mainly are Private Limited Companies/Limited Companies, who are having their Bank accounts in India and disclosing the transaction in the regular returns under VAT/GST/Income Tax and are assessed to tax. We, therefore, find that the ld. Assessing Officer erred in only focusing up the credit entries in the Bank account with SBI, Singapore and failed to take note of the goods received against such remittances and which have entered into the regular business cycles of the various business concerns. The ld. Assessing Officer also erred to take note of the fact that RBGPL, Singapore is not only exporting goods in India to the alleged concerns but other concerns in India and abroad also. Further importing of goods from other countries is a part of regular business activity. The ld. CIT(Appeals) has taken note of this aspect and on finding that it is not a case of creating asset/earning income outside India through undisclosed sources but it is merely a commercial transaction between two concerns of which one is in India and one is based on abroad has given relief to assessee. We would like to observe that the purpose of Black Money Act, 2015 is mainly to bring those cases into light where resident-assessees are having assets located abroad or having 54 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh income in abroad but the source of such asset is not coming from any declared source in India or the source is from any other income & assets located in any part of the world other than India or undisclosed source in any other part of the world. However, in the instant case, the assessee has made the investment in the equity of RBGPL from the declared sources and the funds are applied for making investment. The other remaining entries in RBGPL with SBI, Singapore are part of the regular business transactions and even though the assessee is a beneficial owner of RBGPL but he has paid due taxes in Singapore on the income earned, accrued and received in Singapore.
31. So far as the judicial pronouncements referred by both the sides are concerned, ld. D.R. has relied heavily on the decision of the Coordinate Bench, Mumbai in the case of Rakesh Manhar Bhansali -vs.- Addl. CIT (2021) (supra). We, however, find that the facts of the said case are different from the facts of the instant case. In the case of Rakesh Manhar Bhansal (supra), where there was information about the Bank accounts held abroad in the name of Rakesh Manhar Bhansali, the same was denied by Mr. Rakesh Manhar Bhansali and did not voluntary disclosure any information about such bank account held in British Virgin Island. However, in the instant case, the assessee has never denied to have an interest in the Company namely RBGPL Singapore and various transfers made from India to RBGPL, Singapore. In the instant case, the assessee has provided all the material information necessary to explain the source of investment in the equity in RBGPL, identity and creditworthiness of RBGPL and also supplied 55 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh the proof of filing income tax return in Singapore and paying due taxes on the salary earned. Therefore, since the facts of the decision of Coordinate Bench, Mumbai in the case of Rakesh Manhar Bhansali (supra) are different, the ratio laid down therein cannot be applied in the instant case.
32. As far as the decision relied upon by the ld. Counsel for the assessee in the case of Srinidhi Karti Chidambaram (supra), Hon'ble Madras High Court has held that "if the undisclosed foreign income and asset is purchased outside the country from the source within the country, which is disclosed, then the Black Money Act cannot be attracted". The said ratio laid down by the Hon'ble Madras High Court squarely applies on the facts of the instant case because the assessee has also proved that the source of investment made outside India are from the disclosed source in India. We would further like to take note of the clarification on tax compliance for undisclosed foreign income and asset issued by Central Board of Direct Taxes vide Circular No. 13 of 2015 dated 6th July, 2015 and specifically take note of Questions No. 17 and 18 and their answers referred in this Circular:-
Question No. 17: A person has some undisclosed foreign assets. If he declares those assets in the Income Tax Return for assessment year 2015-16 or say 2014-15 (in belated return), then should he need to declare those assets in the voluntary tax compliance under Chapter VI of the Act?
56B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh Answer: As per the Act, the undisclosed foreign asset means an asset which is unaccounted/ the source of investment in such asset is not fully explainable. Since an asset reported in Schedule FA does not form part of computation of total income in the Income-tax Return and consequently does not get taxed, mere reporting of a foreign asset in Schedule FA of the Return does not mean that the source of investment in the asset has been explained. The foreign asset is liable to be taxed under the Act (whether reported in the return or not) if the source of investment in such asset is unexplained. Therefore, declaration should be made under Chapter VI of the Act in respect of all those foreign assets which are unaccounted/ the source of investment in such asset is not fully explainable.
Question No. 18: A person holds certain foreign assets which are fully explained and acquired out of tax paid income. However, he has not reported these assets in Schedule FA of the Income Tax Return in the past. Should he declare such assets under Chapter-VI of the Act?
Answer: Since, these assets are fully explained they are not treated as undisclosed foreign assets 57 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh and should not be declared under Chapter VI of the Act. However, if these assets are not reported in Schedule FA of the Income-tax Return for assessment year 2016-17 (relating to previous year 2015-16) or any subsequent assessment year by a person, being a resident (other than not ordinarily resident), then he shall be liable for penalty of Rs. 10 lakhs under section 43 of the Act. The penalty is, however, not applicable in respect of an asset being one or more foreign bank accounts having an aggregate balance not exceeding an amount equivalent to Rs. 5 lakhs at any time during the previous year.
33. From going through the answers of the above two questions given by CBDT (supra) , so far as the Question No. 17 is concerned, we note that even if an assessee declares the assets in the income tax return in Schedule FA, mere reporting of such asset or income of the return does not mean that the source of investment in the asset has been explained. Therefore, explaining the source of investment is of prime importance which the assessee has successfully demonstrated before us. Similarly if we go through the answer of Question No. 18, we find that if a person holds certain assets, which are fully explained and acquired out of tax paid in India but not reported in Schedule FA of the Income Tax Act or not declared such assets under Chapter VI of the Black Money Act, then in such case, the assessee if explains the source of investment and also explains the details of credits if any made in an account 58 B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh held outside India to the satisfaction of the assessing authority, then he may be held liable only for a penalty of Rs.10 lakhs under section 43 of the Act and that too is not payable in respect of an asset one or more foreign bank account having an aggregate balance not exceeding an amount equivalent to Rs.5 lakhs at any time in the previous year.
34. After going through the ratio laid down by the Hon'ble Madras High Court in the case of Srinidhi Karti Chidambaram (supra) and also taking note of the Questions No. 17 & 18 of the CBDT Circular No. 13 of 2015 dated 6th July, 2015 and their answers, we under the given facts and circumstances, are of the considered view that since the assessee has successfully explained about the source of investment in the equity of RBGPL, to our satisfaction and has also explained the source and genuineness of remaining credit entries appearing in the Bank account held with SBI, Singapore in the name of RBGPL by way of placing documentary evidences that such funds remitted outside India through proper banking channel are for the purpose of importing goods from RBGPL and complete details to this effect has been placed before us and therefore, the alleged asset in the form of funds remitted to SBI, Singapore held in the name of RBGPL do not fall in the category of undisclosed assets located outside India as defined to section 2(11) of the Act and there being no undisclosed foreign income as per section 2(12) of the Black Money Act. Since in the given case, there is neither any undisclosed asset located outside India nor undisclosed foreign income, we fail to find any infirmity in the finding of ld.
59B.M.A No. 3/KOL/2023 (A.Y. 2020-2021) Shri Akhilesh Singh CIT(Appeals) deleting the impugned addition. Therefore, all the grounds of appeal raised by the Revenue are dismissed.
35. In the result, the appeal of Revenue is dismissed.
Order pronounced in the open Court on 25/06/2024.
Sd/- Sd/-
(Rajpal Yadav) (Manish Borad)
Vice-President (KZ) Accountant Member
Kolkata, the 25 t h day of June, 2024
Copies to :(1) Joint Commissioner of Income Tax, Range-13, Kolkata, Room No. 705(A), NADTRC Building, 110, Shantipally, Kolkata-700107 (2) Shri Akhilesh Singh, Room No. 301, G.T. Road, Block-'B', 3 r d Floor, 295, Belur Math, Howrah-711202, West Bengal (3) DDIT/ADIT(Inv.)-3(4), Kolkata;
(4) CIT- , Kolkata
(5) The Departmental Representative;
(6) Guard File
TRUE COPY
By order
Assistant Registr ar,
Income Tax Appellate Tribunal,
Kolkata Benches, Kolkata
Laha/Sr. P.S.
60