Amrita Jhaveri (Ms.) v. Dy. CIT

Case snapshot

Sections / provisions: See packaged judgment

Questions before the Court / Tribunal

• Non-resident foreign bank deposits: limitation for old-law reassessment and whether extended sixteen-year period can apply to offshore income of a non-resident.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

ITA No.6095/Mum/2016 (Assessment Year :2006-07) & ITA No.6096/Mum/2016 (Assessment Year :2007-08) Ms. Amrita Jhaveri Vs. The Deputy Commissioner 58, Hill Park of Income Tax(IT)-3(3)(2) A.G. Bell Marg Mumbai Mumbai- 400 006 PAN/GIR No.AAEPJ2724L (Appellant) .. (Respondent)

Assessee by Shri Madhur Agrawal Revenue by Shri Kunal Haver

The aforesaid appeals have been filed by the assessee against separate impugned order of even dated 30/06/2016 for the quantum of assessment passed u/s. 143(3) r.w.s. 147 for the A.Y.2006-07 and 2007-08.

3. The brief facts and the background of the case are that the assessee is an individual who is married to a British citizen and is settled in London. Undisputedly, she has been outside India since F.Y.1999-2000 to till date and had status of non-resident or not ordinarily resident of India. Even prior to that, from F.Y. 1989-90 to 1998-99, she was a non-resident or not ordinarily resident. As a non-resident, the assessee has been maintaining NRE account & NRO account in India. However, the assessee was filing the return of income in India in the status of non- resident in respect of income chargeable to tax in India in accordance with the provisions of Income Tax Act, which generally comprises of capital gains and income from other sources like dividend, interest, etc. For the A.Y.2006-07 assessee had filed return of income in India declaring income of Rs.15,86,134/- in the return of income filed on 30/03/2007 in the status of non-resident. And in the A.Y.2007-08, return of income was filed on 31/03/2008 in the same status of non- resident declaring total income of Rs.4,61,12,141/-.

4. Prior to the issuance of notice u/s.148 and recording of the „reasons‟, ADIT (Investigation), Mumbai had issued summons u/s.131 to the assessee on the basis of certain information

Appellant / assessee submissions

received from Government of India in the form of “Base Note” from French Government from which it was gathered that, assessee was the beneficial owner of HSBC bank account in Geneva for amount of 505262/- USD as on 31/12/2005 in the code of account opened on 17/08/2005 in the name of Amaya Ltd; and USD 607950 as on 31/12/2006 in the same account. The ADIT asked to file all the financial statements, profit and loss account, balance sheet, audit report alongwith annexure, return of income, bank book and cash book, all bank statements whether inside India or outside India and copy of passport. In response, assessee filed a letter dated 08/12/2011 giving all the requisite details. It was categorically submitted that she is a non- resident Indian and she had visited India on a very short visits for business and personal purposes. She had also given duration of stay in India and her residential status for the purpose of income tax. Apart from that, all the requisite details were filed. Thereafter, assessee again furnished all the information as was required from the ADIT which was submitted before him. The content of the letter in response to queries raised by the ADIT which would be…

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

13. We have heard both the parties at length, carefully considered the findings given in the impugned orders as incorporated above and also various materials referred to before us at the time of hearing. The entire edifice for reopening is based on some “Base Note” received by Government of India under Article 28 of DTAA from the French authorities, on the basis of which, belief has been entertained that assessee holds a bank account with HSBC Bank, Geneva and thus, the balance lying in the said bank accounts is taxable in India and therefore, income chargeable to tax has escaped assessment. As noted above, prior to the recording of the reasons, the investigation wing had issued notices u/s. 131 and asked for all the requisite details of the bank statements, accounts and the relevant information which was placed before the Investigation wing, as well as before the Assessing Officer also prior to the issuance of notice u/s.148. From the bare perusal of the „reasons‟ recorded, it is seen that nowhere these documents have been mentioned nor the bank statements as was supplied by the assessee to the Income Tax department. These bank accounts have been provided to the ADIT way back in…

Operative decision and relief

9. After receiving the notice u/s 148, assessee raised detailed objections before the ld. AO, which has been disposed of by the ld. AO vide order dated 17/03/2015. Thereafter, the ld. AO observed that assessee was given ample opportunities to provide bank account, however, assessee did not furnish the details called for nor she has produced any evidence to prove that money deposited in the foreign bank account does not have any source from India and based on some premise and hypothesis, he drew certain inferences based on some general information and perceptions in the public domain not relating to the assessee. For the sake of ready reference some of his observations are reproduced as under:-

21. In any case, we are not going into this aspect of the merits of the case, because in our opinion the reasons recorded by the ld. AO itself does not confer any jurisdiction to the Assessing Officer to reopen the case of a non-resident u/s 147 of the Act based on some vague and general information as noted in the reasons recorded and without ascribing how income chargeable to tax has escaped assessment in India. Therefore, on legal issue alone, the entire proceedings u/s.147/ 148 is quashed and consequentially entire re-assessment order is held as „null and void‟. Accordingly, on the legal issue both the appeals of the assessee are allowed.

20. In the result, both the appeals of the assessee are allowed. Order pronounced on 9th May, 2023

Ratio and legal principle

• The packaged judgment addresses Non-resident foreign bank deposits: limitation for old-law reassessment and whether extended sixteen-year period can apply to offshore income of a non-resident. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with non-resident foreign bank deposits: limitation for old-law reassessment and whether extended sixteen-year period can apply to offshore income of a non-resident. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• See the statutory provisions identified in the packaged judgment.

Case network

Similar issue / useful comparison

• NITIN NEMA VS ITO WARD 1(1) JABALPUR & ORS - Madhya Pradesh High Court - Jabalpur
• Uttrakhand Poorv Sainik Kalyan Nigam Ltd. vs. ITO - ITAT Dehradun Circuit Bench
• Jindal Exports and Imports Private Limited vs. DCIT - Delhi High Court

Different outcome / possible distinction

• JM Financial Asset Management Ltd. v. DCIT - Allowed
• Stewart Science College,Cuttack Vs ITO Ward 1(1), Cuttack - Operative order controls

Full judgment and source control

Read / download packaged judgment record

Source class: SANITIZED_LOCAL_FULL_JUDGMENT_COPY_PRIMARY_PENDING · Repository status: HOLD_SOURCE_OR_LATER_HISTORY