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2024 Supreme(Online)(ITAT) 2206
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
Shri Manjunatha. G, ACJ, Shri Mahavir Singh, CJ
Mr. Narayanaswamy Ramamoorthy – Appellant
Versus
The Deputy Director of Income Tax(Investigation), Unit -3(3), Chennai – Respondent
BMA No.: 01/Chny/2023 | Assessment Year: 2016-17
For the Appellants/Petitioners:Shri. B. Ramakrishnan, FCA, Shri. Shrenik Chordia, CA, Ms. N. Madusruthi, Advocate, Shri. K. Keshav, Advocate
For the Respondents: Shri. Nilay Baran Som, CIT
The status of a settlor does not inherently establish beneficial ownership in trusts if the evidence supports alternative contributions and ownership claims.
Headnote:(A) Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Section 10(3) - Assessment Year 2016-17 - Assessee challenged the addition of undisclosed foreign investments in Windsor Trust and Dalham Trust due to the absence of corroborative evidence regarding source of investment - Assessing Officer concluded that these were assessable under Black Money Act due to undisclosed assets, claiming beneficial ownership by the assessee as the Settlor of the trusts - The Tribunal ruled in favor of the assessee, determining that no contributions were made by him to the trusts and thus no basis for the additions - Thus, it was held that the revenue did not establish a case for the taxation of the described assets as undisclosed income. (Paras 11 to 16)
(B) Income Tax - Principles regarding beneficial ownership - The tribunal found that the settlor's status does not inherently confer beneficial ownership, especially when evidence contradicts the notion of contributions to incidental entities established for family purposes. (Paras 12.1 to 12.3)
| Table of Content |
|---|
| 1. jurisdiction and appeal details (Para 1) |
| 2. grounds of appeal raised by the assessee (Para 2) |
| 3. relevant facts about the assessee's investments (Para 3) |
| 4. assessing officer's conclusions about investments (Para 4 , 6) |
| 5. arguments of the assessee regarding trust contributions (Para 5 , 8 , 10) |
| 6. cit(a)'s views on beneficial ownership (Para 7 , 9) |
| 7. court's analysis and findings on the evidence presented (Para 11 , 14 , 15 , 16) |
| 8. final order and conclusion of the tribunal (Para 17) |
ORDER
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 31.03.2023 and pertains to assessment year 2016-17.
2. The assessee has raised the following grounds of appeal:
“1. For that the Order of the Learned Commissioner of Income Tax (Appeals)-18, Chennai is contrary to law, facts and circumstances of the case.
2. For that the Learned Commissioner of Income Tax (Appeals) and the Assessing Officer erred in invoking the provisions of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 without furnishing the alleged nature of 'account' for which appellant is alleged as beneficial owner to provide an effective rebuttal.
3. For that the Learned Commissioner of Income Tax (Appeals)-18, Chennai erred in confirming the additions made without being in possession of any basic details of alleged undisclosed asset and without any corroborative evidence in this regard.
4. For that the Learned Commissioner of Income Tax (Appeals)-18, Chennai erred in confirming the addition of Rs.24,09,00,431/- towards alleged investment in Foreign Asset being the Windsor Trust without considering the facts and circumstances of the
5. For that the Learned Commissioner of Income Tax (Appeals)-18, Chennai erred in confirming the addition of Rs.2,00,00,000/- towards alleged investment in Foreign Asset being the Dalham Trust without considering the facts and circumstances of the case.
6. For that the Learned Commissioner of Income Tax (Appeals)-18, Chennai erred in confirming the levy of interest u/s 40 of the Act r.w.s 234B of the Income-Tax Act in consequent to the above additions.
For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon'ble Tribunal may be pleased to delete the additions made and/or provide such other relief as this Hon'ble Tribunal deems fit.”
3. The brief facts of the case are that, the appellant is a resident senior citizen aged about 100 years and his son Shri. Balaji Ramamoorthy, residing abroad and is a citizen of United States of America. As per the CSR information in Insight portal, the Department has received information on account balance of 23,34,127.67 GBP (Rs. 24,09,00,431/-) in Windsor Trust and 2,38,856.2 GBP (Rs. 2,00,23,778/-) in Dalham Trust account relating to the appellant. On the basis of the above information, the Assessing Officer issued notice u/s. 10(1) of Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015, on 03.10.2018, and the assessee was asked to furnish bank statements relating to the above investment and also explain the source of funds for making investment in above trusts. In response to show cause notice, the assessee submitted that the ‘Windsor Trust’ and the ‘Dalham Trust’ were formed by him as a Settlor and also as the First Beneficiary in 2003. But, all contributions to the trusts, including initial contribution was made by his son Shri. Balaji Ramamoorthy. The assessee had also replied vide letter dated 22.02.2021 that, he has received inward remittance of Rs. 25,97,25,044/- from his son Shri. Balaji Ramamoorthy and also, made outward remittance of Rs. 24,53,76,000/- to various persons including his son during the financial year 2015-16 relevant to assessment year 2016-17. The assessee further submitted that, other than these remittances, he has not made a
