The Income Tax Appellate Tribunal (ITAT), Mumbai held that Non- Residents are not required to disclose their assets situated outside India to the Income Tax Authorities.
The Assessee Manish Vijay Mehta is a non-resident. The information was received by the Government of India from the French Government that some Indian nationals are having foreign bank accounts in HSBC Private Bank SA, Geneva, which were not disclosed to the Indian Tax Department.
The information was received in the form of document stated to be ‘Base note’ wherein the various details of account holder that is name, date of birth, place of birth, sex, residential address, date of opening of the bank account etc. are mentioned .
In the case of Mr. Manish Vijay Mehta such ‘base note’ was received wherein assessee was found to be having bank account in that bank. The information regarding the assessee of the balance of USD Sixty Seven thousand Four Hundred and twenty one in that bank account was not disclosed to the Income Tax Department .The department issued notice under section 148 of the Income Tax Act 1961 for reopening the assessment in the year 2006-2007 .
Assessee challenged the reopening of assessment and filed an appeal before the Commissioner of Income Tax (Appeal) against the order of the Assessing Officer.
The CIT (A) after considering the contentions of the both side held that assessee is a non-resident since Assessment year 2001-02 and became a citizen of Belgium in 2007, he does not have any business communication and deleted the addition by the assessing officer. Against the order of CIT (A), the Assessing Officer filed an appeal before ITAT.
Ajay Singh counsel for the assessee submitted that Liability to pay tax in India did not depend on residential address nor on Nationality or domicile of the taxpayer but depend on his residential status under Income Tax Act. He was never a partner in any firm nor a partner in any diamond trading firm operating in India before he became Non Resident.
Furthermore, except the photocopy of Base note there is no such tangible material for the reopening of the assessment. Assessing officer intended to reassess the appellant only on account of an asset located outside India but there is no information about the income in relation to such an asset earned in India
Soumendu Kumar Dash,Counsel for revenue contented that, the appellant has his interest in India since his address as per the Base Note is in India and it is found that assessee “is a Director in a company engaged in the Diamond business .The deposits in his HSBC bank account were from the operations from his diamond business that is representing income sourced from India”.
After both considering the contentions of both sides the bench consisting of Prashant Maharishi, Account Member and Sandeep Singh Karhail, Judicial Member dismissed the appeal filed by the revenue and held that “A Nonresident is chargeable to tax in India only income falls under Section 5(2) of the Income Tax Act. The present case assessee is a non-resident is not obliged to disclose his assets situated outside India in the return of income filed in India”.
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