Captain Vilas Waman Katre Vs ACIT (ITAT Mumbai)
Conclusion: Any addition made as undisclosed foreign income and asset under the Black Money Act (BMA), should not be repeated under the Income Tax Act. However, since there was no corresponding provision under the Income tax Act, ITAT clarified that additions made under the Income tax Act had no bearing under the BMA.
Held: Assessee was a resident engaged in the business of shipping and logistics. Based on the information received from the Singapore Tax Authorities, he had beneficial interest in an offshore entity, namely, M/s. ERSL, which had a bank account with Deutsche Bank, Singapore, where total credits and portfolio investments during AY 2008-09 to 2012-13, were USD 3,13,37,192.3 (approximately INR 2,00,55,80,307/-). As per document collected from Singapore Tax Authorities (STA), named Establishment of Beneficial Owner Identity – for Private Investment Corporation of Deutsche Bank relating to account number 8044349 in the said form, assessee had declared himself as the beneficial owner of ERSL as well as its account 8044349. On the above facts, the authorities held that assessee was treated as owner of the assets of the said bank account in Deutsche Bank, Singapore and income arising from there. The onus was on assessee to demonstrate the extent of such assets which could be explained as having been acquired through funds which had been disclosed to the Department. In absence of such evidence, the entire value of such assets was liable to be treated as income of the owner of the assets under BMA. It was held that the entire BMA revolved around taxing of undisclosed asset located outside India and undisclosed foreign income/asset, whereas under the Income Tax Act, all income were taxable, unless specifically exempt or excluded from taxable income. Having different scope of income, the findings given under the Income Tax proceedings might have a guiding force but certainly not a binding force under the BMA proceedings and, therefore, authorities grossly erred in following blindly the findings given by the Co-ordinate bench in the Income Tax proceedings. The Bench noted that Section 59 of BMA grants opportunity to declare undisclosed foreign asset, and pursuant to declaration the said amount is not included in the total income, subject to declarant making requisite tax payment. The Third Member observed that the Accountant Member should ought to have contested the issue within the four walls of BMA and has failed to render any findings on other issues, which stands decided by the Judicial Member, which should prevail. Hence, the ITAT allowed assessee’s appeal and directed assessee to submit requisite declaration pertaining to undeclared foreign assets.
