Jaspal Singh Sahney as Executor of late Devinder Singh Sahney Vs ITO (ITAT Mumbai)
16-Year Reopening Period for Foreign Assets Applies Even to Non-Residents, but Foreign Bank Balance Cannot Be Taxed Without Indian Income Nexus: ITAT Special Bench
Summary: In a significant ruling concerning reassessment of foreign assets, the Special Bench of the Mumbai Income Tax Appellate Tribunal has held that the extended limitation period of 16 years under the erstwhile section 149(1)(c) was applicable to residents as well as non-residents.
The fact that a non-resident was not required to disclose foreign assets in Schedule FA did not prevent the Assessing Officer from invoking the extended limitation period. However, the Revenue must establish, at least prima facie, that income chargeable to tax in India in relation to the foreign asset had escaped assessment.
A foreign bank balance cannot itself be presumed to represent income sourced from India. Applying this principle, the Special Bench deleted an addition of ₹7.64 crore because there was no material showing that the balance in the alleged HSBC Geneva account arose from income received, accrued or deemed to accrue in India.
The decision was rendered in Jaspal Singh Sahney, Executor of Late Devinder Singh Sahney v. ITO (International Taxation) for Assessment Year 2007-08.
