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Facts
A search action revealed instructions to remit funds to the SCS Family Trust. The Assessing Officer (AO) added the peak credit in the trust's Singapore bank account to the assessee's income, contending the assessee managed the trust and was a trustee. The CIT(A) upheld the AO's order.
Held
The Tribunal held that the assessee was merely a trustee in a fiduciary capacity and not the beneficial owner of the trust funds. The source of funds was traced to non-residents, and the beneficiaries were also non-residents.
Key Issues
Whether the peak credit balance in a foreign bank account held by a trust, managed by the assessee as a trustee, can be added to the assessee's income when the beneficiaries and source of funds are non-residents.
Sections Cited
131, 142(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI ARUN KHODPIA
Per: Smt. Beena Pillai, J.M.: The Present appeal filed by the assessee arises out of order dated 07/11/2024 passed by Ld.CIT(A)-54, Mumbai for assessment year 2012-13 on following grounds of appeal:
“On the facts and the circumstances of the case and in law:-
A.Y. 2012-13 Shri Dilip J. Thakkar 1) The learned Commissioner of Income Tax (Appeals) erred in confirming a high pitched addition of Rs. 22,88,34,108/- as undisclosed income of the Appellant which in fact is the total peak credit in the Singapore Bank Account of a Non Resident Offshore Trust known as SCS Family Trust settled by a Non Resident for the benefit of his Non Resident Family Members.
2) The learned Commissioner of Income Tax (Appeals) erred in ignoring several evidences including an Affidavit by the Non Resident Settlor, Mr. Suryakant C. Suchak and relying on borrowed information.
3) The learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the Appellant acted in his fiduciary capacity as one of the three Trustees of the said SCS Family Trust Singapore in which one of the Trustees was a Non Resident based outside India.
4) The learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the Assessing Officer has included several pages in the Assessment Order which have no relevance to A.Υ. 2012-13”
Brief facts of the case are as under:
The assessee is an individual and filed its return of income for year under consideration on 08/01/2013 declaring total income of Rs.86,19,720/-. 2.1 A search action was carried out on assessee on 10/08/2011. During the course of such at the assessee’s premises certain documents were seized that related to certain instructions given to HSBC bank Geneva directing to remit certain funds to SCS family trust. The documents seized were marked as annexure A1. Statement of the assessee was recorded under section 131 of the act on 09/09/2011.
A.Y. 2012-13 Shri Dilip J. Thakkar 2.2 The assessee was issued notices under 142 (2). Various details were furnished by the assessee in response to statutory notices. The Ld.AO observed that, the assessee and his wife Indira Thakkar were protectors and trustees of Chagganlal Suchak Family Trust (hereinafter referred to as CSFT). It was submitted that, Smt.Kantaben C Suchak was the settler of the trust. The Ld.AO further noted that Shri Suryakant C Suchak, son of late Chagganlal M Suchak and Kantaben C Suchak was the beneficiary of the said trust. 2.3 The Ld.AO observed that, due to family dispute, family funds were divided equally and deposited in 3 accounts opened with HSBC bank Geneva. It was also submitted that Shri Suryakant C Suchak, settled his own trust named as SCS family trust (hereinafter referred to as SCSFT) for the benefit of his children and grandchildren. The SCSFT trust maintained account with HSBC Singapore and the registered office of the trust was in Dubai. It was noted that assessee and his wife Indira Thakkar were the trustees of SCSFT and that Shri Suryakant C Suchak was a non-resident and had no assessable income in India. It was also submitted that SCSFT was not an Indian trust. 2.4 The Ld.AO analysed the submission with respect to seized documents (A-1, Page 27-42) and found thatan application was made to open HSBC account either in Hong Kongor Singapore or Nassau. From Column 2 of the form it was noted that Suryakant C. Suchak Family Trust was incorporated in India and as per column 4 of the application, the trust was resident in India. Further column 7 of the application show the mailing address of the trust to be the residential address of Shri Dilip J Thakkar at A.Y. 2012-13 Shri Dilip J. Thakkar Flat No-12 Acropolis-B, Nepean Sea Road Mumbai-6. Further column 9 show the telephone number as residential telephone number of Shri Dilip Thakkar. Column 11 of the application show that the law governing the trust was Indian Law. Both the trustees Shri Dilip J Thakkar and Smt. Indira D Thakkar were Indian citizens and residents. 2.5 The Ld.AO made FT&TR reference to Singapore Tax Authorities under exchange of information under India-Singapore DTAA through FT&TR Division of CBDT to obtain the information regarding SCSFT trust. The information was received from CBDT vide letter dated 30.9.2014 that contained bank statement of SCSFT trust with HSBC Bank Singapore, account opening form, trust deed and copies of the passport of Shri Dilip Thakkar, Smt. Indira Dilip Thakkar and Shri Suryakant Chagganlal Suchak. 2.6 From the information received, the AO noted certain facts, which are mentioned in 17.5 of the assessment order. For ready reference, the same is reproduced as under: i. That Sh. Dilip J Thakkar and Smt. Indira D Thakkar are mentioned as trustees of SCS-Family Trust (SCSFT). ii. That as per Col-1 Trust is shown resident of the UAE and mailing address is shown that of Sh. Dilip J. Thakkar le. 12/22 Acropolis, Little Gibbs Road Malabar Hill Mumbal. iii. That it is a private discretionary trust and settled by Smt. Kantaben Chagganial Suchak. The Trust was originally formed in 15th March 2004. That the SCS Family Trust (SCSFT)in its meeting on 14th March 2011 held in Mumbai decided to shift the Trust from Canada to UAE.
A.Y. 2012-13 Shri Dilip J. Thakkar iv. That the account opening form was signed on 18-03- 2011 And the person signing on the account opening form are Dilip J. Thakkar, Smt. Indira D. Thakkar as Trustees, their signature is witnessed le. signed in the presence of Sh. Sachin Jumani Director HSBC Bank Singapore. v. That the account opening date is shown as 13 10 July 2011 and the account is closed with last transaction on 7th June 2012. And the account was officially closed on 19th June 2102 informing SCS Family Trust (SCSFT) at its Mumbai address vi. The bank statement is from 31st July, 2011 and up to 30.06.2012 which contains the inflow and outflow of the funds and the Peak balance is GBP 2809159. vii. That the HSBC Bank Account Singapore Account No. is- 8213-513408-0001." 2.7 The Ld.AO on analysing details gathered during the search proceedings, post search proceedings and information sought from various agencies, following facts regarding financial activities of SCSFT was observed: i. As per col-2 of the application to open the bank account SCS Family Trust is incorporated in India. ii. As per col-4 of the application, the trust is resident in India. iii. As per col-7 of the application, mailing address of the trust is the care of address of the residence of Sh. Dilip J Thakkar le 12 Acropolis Little Gibbs Road Malabar Hill Mumbai.
A.Y. 2012-13 Shri Dilip J. Thakkar iv. As per col-9, the telephone number given is of Mumbai and is the residential telephone number of Shri Dilip J Thakkar. v. As per col-11 of the application, it is stated that the law governing the trust is Indian Law. vi. Sh. Dilip J Thakkar and his wife Smt. Indira Dilip Thakkar are the trustees. vii. Account opening form was signed on 18th March 2011. viii. That the person signing the account opening forms are Sh. Dilip J Thakkar &Smt Indira D. Thakkar as Trustees and Sh Sachin Jumani Director HSBC Bank Singapore were in India on 18th March 2011. ix. That as a corollary of the above the SCS Family Trust (SCSFT) is an Indian trust and therefore has to submit to the laws of the Republic of India. x. It also mentions it to be private discretionary trust with Sh. Dilip J Thakkar and Smt. Indira D Thakkar as the only trustee. xi. That the peak amount standing in HSBC Bank Singapore GBP 28,09,159.19. 2.8 The Ld.AO accordingly called upon assessee to make further submission in respect of money deposited in the bank account at HSBC Singapore. The assessee’s vide reply dated 03/03/2015 and 11/03/2015 furnished submissions that are reproduced in the assessment order. The Ld.AO was not convinced with the reply furnished by the assessee. The Ld.AO noted that during the search proceedings the assessee was asked to furnish HSBC Geneva account details which were not provided for the reason A.Y. 2012-13 Shri Dilip J. Thakkar that assessee had nothing to do with the bank account of the trust and that assessee was not in possession of the bank account. 2.9 The Ld.AO thus concluded that assessee was maintaining the foreign bank account with HSBC bank Geneva and peak amount standing in HSBC Bank Singapore GBP 28,09,159.19 added in the hands of the assessee. Aggrieved by the order of the Ld.AO, assessee preferred appeal before the Ld.CIT(A).
The Ld.CIT(A) after considering various details furnished by the as well as the observations of the Ld.AO onthe basis of information received from the investigation being upheld the order of the Ld.AO Aggrieved by the order of the Ld.AO the assessee preferred appeal before this Tribunal.
The assessee argued / represented the present appeal before us in person. He submitted that on identical facts and circumstances assessment for the year 2006-07 was passed, based on the same investigation report and material seized during the course of the search. He submitted that identical material being annex’s A1 & A3 were considered therein for completing the assessment. He submitted that the year under consideration is the year of search and assessment year 2006-07 fell within the block period of search. 4.1 The assessee submitted that, based on identical documents received from the investigation wing assessment for assessment year 2006-07 was completed by making addition of the peak balance for the relevant assessment year. He submitted that this A.Y. 2012-13 Shri Dilip J. Thakkar Tribunal has considered the issue for assessment year 2006-07 at length. 4.2 The assessee reiterated identical arguments raised before this Tribunal for assessment in 2006-07 to rebut each document considered by the Ld.AO against him in the present appeal. He submitted that, the peak amount lying with the HSBC bank account in the name of SCSFT cannot be added in his hands, as he along with his wife are merely trustees SCS family of the Trust and the beneficiaries were Shri Suryakant C Suchak and his family members who were non- residents. 4.3 He submitted that, Ld.AO on incorrect appreciation of facts concluded that assessee was maintaining foreign bank account with HSBC bank and that assessee was the owner of peak amount standing in HSBC Bank Singapore at GBP 28,09,159.19. The assessee referred to the documents placed on record by the revenue being the Annexure A1. He submitted that, each of the document forming part of this annexure reveals the fact that the beneficiary of SCSF Trust are the actual owners of said account and that the assessee and his wife are acting in the fiduciary capacity as only trustee to the said account. He submitted that, all documents filed before the HSBC bank, by the assessee and his wife were executed on behalf of SCS family trust and therefore, the assessee and his wife are not owners of the account in any manner whatsoever. 4.4 He placed reliance on pages 37 to 27 of Annexure A1 and submitted that, these documents relate to all beneficiaries of SCS Family Trust. He placed reliance in the paper book on 11/08/2025, wherein assessee filed the trust deed and the A.Y. 2012-13 Shri Dilip J. Thakkar details of all beneficiaries. He submitted that assessee and his wife’s name appear only as trustees to the SCS Family Trust and not as beneficiary. 4.5 The assessee further submitted that, time and again submitted that SCSFT did not belong neither to him nor to his wife nor were they any kind of beneficiaries. Further, highlighting various observations of the Ld.CIT(A)/AO the assessee submitted as under:- • The addition of peak amount standing in HSBC Bank Singapore GBP 28,09,159.19 was not found at the premises of assessee. • Assessee referred to Page No. 174 of the loose paper of Annexure A-3 seized that show transactions of 1 million sterling pounds between Chagganlal Suchak Family Trust (CSFT) and SCS Family Trust (SCSFT), in which Sh. Dilip J. Thakkar and Smt. Indira D Thakkar are trustees. The assessee submitted that he and his wife are trustees of Suryakant Suchak Family Trust (SCS FT) created for benefit of Suchak Family who is brother-in-law of the assessee. The share of Mr. Suchak in Chhaganlal Suchak Family Trust (CSFT) is transferred to Suryakant Suchak Family Trust (SCS FT) and has no relevance to the assessee or his wife. • The assessee submitted that Page No.1 of the loose papers of Annexure A-1 Seized from the residence of the assessee during search is letter dated 08/08/2011 signed by the assessee relating to transfer of Stg Pounds of 1 million for the benefit of HSBC Pvt Bank (Sussie) SA on 08/08/2011 for the benefit of SCS Family Trust. It is submitted that A.Y. 2012-13 Shri Dilip J. Thakkar these papers belong to SCS Family Trust which has been verified by the authorities below. He submitted that no addition can be made on account of these documents in the hands of the assessee. • The assessee further submitted that, FT & TR division of CBDT wrote letter to the Swiss Federal Tax Administration seeking information and clarification regarding bank accounts of SCS Family Trust with HSBC Geneva. He submitted that, Swiss Federal Authorities provided information vide letter dated 23/03/2015 related to accounts held by Chagganlal Suchak Family Trust, wherein the Swiss authorities clarified that the beneficiaries of the trust are third parties with addresses in Canada and England.
• The assessee drew our attention the deed of trust Chagganlal Suchak Family Trust dated 24/05/2001 wherein, names of beneficiaries are given in separate schedule and in none of the list of beneficiaries, assessee or hiswife’s name is appearing nor of his wife.
4.6 The assessee relied on page 10 of the PB dated 13/02/2025, wherein Minutes of the meeting of SCS Family trust dated 10/05/2012 held in London is placed. He submitted that trustees being assessee and his wife decided to distribute the capital to all the beneficiaries mentioned therein. For sake of convenience, the said minute is scanned and reproduced as under:
A.Y. 2012-13 Shri Dilip J. Thakkar 4.7 The assessee also referred to page 11 of the same PB wherein further Minutes have been drawn on 22/06/2012, stating that, after the capital distribution to the beneficiaries, the account of the trust is closed since there is no asset left the trust is also dissolved. For sake of convenience the said minutes is scanned and reproduced herewith.
A.Y. 2012-13 Shri Dilip J. Thakkar 4.8 The assessee referred to his argument before this Tribunal for assessment year 2006-07, in & 6408/Mum/2024, wherein identical addition was made. The assessee placed reliance on the affidavit of Mr. Suryakant Chagganlal Suchak, filed before this Tribunal for A.Y. 2006-07 wherein it clarified that sole beneficiaries were Suryakant Chagganlal Suchak and his immediate family. The affidavit of Suryakant Chagganlal Suchak is reproduced hereunder:-
“I, Suryakant Chhaganlal Suchak, aged 76 years, residing at 3 Neela Close, Ickenham, Uxbridge, Middlesex, UB10 8NZ, United Kingdom, since last 29 years, hereby solemnly state and affirm as follows: -
1. 1. My father late Mr. Chhaganlal M. Suchak who died in U.K. in 1999, was earlier residing in East Africa since his birth in 1912 was holding British Passport and was never a 'Resident' of India as per Tax and other laws.
2. My mother, Mrs. Kantaben Chhaganlal Suchak, aged 95 years is staying at above address in the U.K. since 1975. Earlier to that she was in East Africa with my father and other family members, since 1935. She holds British Passport.
3. All our family members, my two brothers, Shirish Chhaganlal Suchak (residing in Canada) and Madhu Chhaganlal Suchak (residing in U.K.) have been Non Resident as per Indian Tax and other laws for last 40 years. They both hold British Passports.
4. My two sisters, Mrs. Indira Dilip Thakkar was a Non-Resident as per Indian Tax laws till her marriage to Dilip J. Thakkar, who is Indian Tax Resident, in 1962. My other sister, Mrs. Pramodini S. Devani resides in the U.K. and has never been Tax Resident of India. She holds British Passport.
5. My father, late Mr. Chhaganlal M. Suchak was a Businessman in East Africa. He separated from joint family's business in 1954 and acquired as his part of family's assets as Sisal Estate in Dar-es- Salaam, Tanzania. He developed quite a few real estates in Dar-es- Salaam and earned sizable wealth out of his business activities.
A.Y. 2012-13 Shri Dilip J. Thakkar a. After Tanzania got Independence in 1961, late Mr. C.M. Suchak sold his personal residential bungalow situated at Oyster Bay in Dar-es- Salaam to Indian High Commission. The funds realised there from were officially transferred to U.K. through Bank of India's Dar-es-Salaam Branch. The said bungalow is official residence of the Indian Ambassador to Tanzania even now. b. Mr. C.M. Suchak sold the Sisal Estate in Dar-es-Salaam in 1963 and officially remitted funds to U.K. to start business in the U.K. c. In U.K. our family got involved in real estate development and sold its first major development in 1985. d. In 1979, family-owned company in Montreal, Canada, was appointed as General Sales Agents (GSA) of Air India for whole of Canada which lasted up to 2001. e. Our family acquired a 180 bed-room Hotel in down town Montreal, Canada, in 1982. f. Thereafter, under the leadership and vision of our father, late Mr. C.M. Suchak, the family went into other businesses in Saudi Arabia, Germany etc. which increased the family's wealth considerably but none of it was generated in India. 6 During his lifetime, my father, Mr. C.M. Suchak invested GBP 1.5 million in 1998 Resurgent India Bonds, of State Bank of India, which was open for investments only by NRIs. Because of his advancing age, the said investment was made in the names of myself and my wife Mrs. Dina Suryakant Suchak. (Both NRIs) 7 In 2003, out of the total maturity proceeds of GBP 2.2 million, invested in said RIB Bonds, large part of the proceeds was deposited in Chhaganlal Suchak Family Trust account as per wishes of my late father who died in 1999. 8a.ChhaganlalSuchak Family Trust (CSFT) was settled on 24th May 2001 by Mrs. Kantaben Chhaganlal Suchak and appointed herself and her three sons Suryakant, Shirish and Madhu as first Trustees, all of whom were together for a brief period at the family's summer home in Bangalore. The said Trust was settled with an initial amount of GBP £ 100.00 and not in Indian Rupees. The said Trust never opened any Bank account in India and it was never meant to be an Indian Trust. Since the original Bank account of Chhaganlal Suchak Family Trust was opened in Geneva, Switzerland, hence the address of the Trust has always been that of Geneva.
A.Y. 2012-13 Shri Dilip J. Thakkar b. As Indira Dilip Thakkar was the eldest sister of the family and as all the brothers respected her immensely and Dilipbhai J Thakkar, my brother-in-law, being a highly respected professional Chartered Accountant, all four original trustees agreed to resign and requested both Mr. Indira Dilip Thakkar and Dilipbhai J Thakkar to overlook the interest of our family as well as protect the operation of sub accounts which the three principal beneficiaries, i.e. Suryakant C. Suchak Shirish C. Suchak and Madhu C. Suchak, each of them who were operating and managing their own family's share of Trust. c. Periodically further funds, out of various businesses were also deposited in sub accounts by each principal beneficiaries in their respective sub accounts but no part of the any funds were ever credited or deposited by either Mrs. Indira Dilip Thakkar and/or Mr. Dilip J Thakkar. d. In 2012, all the three brothers being principal beneficiaries of CSFT decided to totally close the Chhaganlal Suchak Family Trust once and for all and deal with their own interests individually. Accordingly, the Trust account in Geneva was closed. No part of these funds were given to Mr. Dilip J. Thakkar, Mrs. Indira Dilip Thakkar or their two daughters and their families as the funds never belonged to them.
The entire funds which as a principal beneficiary I received from Chhaganlal Suchak Family Trust were deposited in a bank account in Singapore and credited into the account of SCS Family Trust of which sole beneficiaries were my immediate family members consisting of myself, my wife Mrs. Dina Suryakant Suchak, my son Mr. Anish Suryakant Suchak and his family members, my daughter Mrs. Deepa Jaitha and her family members. None of them has ever been a Tax Resident of India during last 30 years.
SCS Family Trust was settled by Mrs. Kantaben Chhaganlal Suchak on 15th March 2004 for the sole benefit of myself and my immediate family.
I hereby solemnly confirm and reiterate on oath that no part of the funds were ever contributed or belonged to Mr. Dilip J. Thakkar, Mrs. Indira D. Thakkar, and/or their two daughters, Mrs. Mitali R. Lakhanpal and Mrs. Deval E. Anthoney and the said Chhaganlal Suchak Family Trust was never a Tax Resident of India as it had no taxable income in India.”
“I, Suryakant Chhaganlal Suchak, aged 76 years, residing at 3 Neela Close, Ickenham, Uxbridge, Middlesex, UB10 8NZ, United Kingdom, since last 29 years, hereby solemnly state and affirm as follows:-
1.
My mother, Mrs. Kantaben Chhaganlal Suchak settled SCS Family Trust on 15th March 2004 with GBP £75.00 while she was on a short visit to Mumbai to visit her daughter, Mrs. Indira D. Thakkar (my elder sister). This SCS Family Trust was settled by my mother for the benefit of myself and my immediate family members consisting of my wife Mrs. Dina Suryakant Suchak, my son Mr. Anish Suryakant Suchak and his family members, my daughter Mrs. Deepa Jaitha and her family members. None of them has ever been a Tax Resident of India during last 30 years. No bank account of SCS Family Trust was ever opened in India.
2. The bank account of SCS Family Trust in Singapore clearly shows that in July 2011 initial deposit of GBP £ 75.00 representing the settled amount was credited. Further, GBP One Million was deposited in the said bank account of the Trust in Singapore by transfer from Chhaganlal Suchak Family Trust's bank account in Geneva.
3. Thereafter, further funds which were received from Chhaganlal Suchak Family Trust were invested in mutual funds etc. as directed by me.
4. The Trustees of the said SCS Family Trust were :- (a) Mr. Dilip J Thakkar(India) (b) Mrs. Indira D. Thakkar(India) (c) Mr. P. R. Shah(Dubai) 5. In 2012, entire balance funds received by me as my share from Chhaganlal Suchak Family Trust, as one of the principal beneficiary, was credited to SCS Family Trust's account in Singapore.
6. Ultimately the said bank account of SCS Family Trust was closed in June 2012 by distributing the entire funds to the beneficiaries consisting of my wife Mrs. Dina Suryakant Suchak, my daughter Mrs. Deepa Jaitha and her daughter Anika, my son Mr. Anish S Suchak and his wife Mrs. Bella and his two sons Krish and Kunal.
A.Y. 2012-13 Shri Dilip J. Thakkar 7. I hereby solemnly confirm and reiterate on oath that no part of the funds deposited in the said bank account of the Trust in Singapore belonged to or received from Mr. Dilip J. Thakkar and/or Mrs. Indira D. Thakkar.
The role of the three Trustees of SCS Family Trust were only fiduciary and none of them was the owner or beneficiary of the Trust.” 4.9 The assessee submitted that the affidavit was made at London on 10/06/2015. He submitted that the said affidavit was reproduced in the order passed by this Tribunal for A.Y. 2006-07. He also submitted that the Affidavit makes it further clear that Suchak family had a very rich background and all the source of funds were from late parents of Suryakant C. Suchak Shirish C. Suchak. It is further submitted by the assessee that Suryakant C. Suchak Shirish C. Suchakand his family were the beneficiary of the trust fund and assessee and his wife has nothing to do with it.
On the contrary, the Ld.DR submitted as under: • During the search on the assessee u/s 132 of the Act on 10- 08-2011, several incriminating material were unearthed relating to the role of the assessee and his wife in the Chagganlal Suchak Family Trust (CSFT) and operation of eight bank accounts held by the trust in HSBC Bank, Geneva. Further, corroborative statements of the assessee recorded on 11-08-2011, 19-09-2011 and 16-04-2012 showed that the assessee and his wife created the above trust and used it as Special Purpose Vehicle to channelize unaccounted income and park it outside India in HSBC Bank, Geneva.
A.Y. 2012-13 Shri Dilip J. Thakkar • Copy of the Trust deed received from the Canadian Tax authorities revealed that the trust was formed in India. The settler of the trust was MrsKantaben C Suchak, mother of assessee's wife and trustees were his wife's three brothers. The stamp paper was purchased in Mumbai and the address of the settler of the trust was that of Bangalore. The trust deed was signed in presence of the assessee and his wife. Thus, it is an Indian Trust. • The assessee and his wife were Trustees and authorized signatories as Trustees in CSFT. They were managing day to day affairs of the Trust, and that the administrative address of the Trust in the records of the HSBC Bank was the office address of the assessee. • Several documents were found during the search which show that the assessee was taking day to day decisions for the Trust like opening of new bank accounts, transfer of funds from the bank accounts and giving directions for operation of the bank accounts of the trust, We have perused the submissions advanced by both sides in light of records placed before us.
The moot issue involved is, regarding addition of GBP 28,09,159.19 being the peak amount standing in the foreign bank account with HSBC bank Singapore. It is noted that identical arguments by the revenue has been considered by this Tribunal in assessee’s own case for assessment tear 2006- 07(supra) by observing as under:
A.Y. 2012-13 Shri Dilip J. Thakkar 6.1 The core issue involved here is, whether the addition of USD 2361551.79 in the bank account belonging to Chagganlal Suchak Family Trust (CSFT) in the various bank accounts of HSBC Bank, Geneva for F.Y. 2011-12 can be added in the hands of the assessee. The entire thrust of the department has been that; firstly, there were certain seized documents from the possession of the assessee during the search that assessee was managing the affairs of the trust and was one of the trustees in CSFT. Secondly, the trust was found in Mumbai wherein assessee and his wife were mentioned as trustees. Thirdly, certain transactions were undertaken in the said bank account under the instructions of the assessee and in the ‘base note’, the bank accounts have been mentioned in the name of the assessee as the trustees of Chagganlal Suchak Family Trust. On identical facts for Assessment year 2006-07 (supra) this Tribunal considered identical issue by observing as under : 23. To tax any deposits or amount in the foreign bank account especially, if the account is opened in the name of any beneficiary trust or family trust in the hands of an Indian Tax Payer, what is most relevant is, firstly, what is the nature and source of the funds deposited in the bank account or if the source of the deposits are not known then ostensibly onus is on the individual to rebut with proper evidence; and secondly, who are the actual beneficiaries of the trust and who has ultimately received the funds from the said bank account. Any trustee if in his fiduciary capacity is managing the affairs of the trust or his name is mentioned as trustee cannot be per se held to be the legal or beneficial owner of the bank account or beneficiary of the trust fund. Now whether the amount deposited in the impugned foreign bank account is liable to be taxed in the hands of the assessee, which we will discuss in light of facts and material brought on record in forthcoming paras.
First of all, from the perusal of the trust deed, the copy of which are appearing from pages 112 to 118, it is seen that deed of trust was made as Chhaganlal Suchak Trust on 24/05/2001; and Mrs. Kantaben Chhaganlal Suchak is the ‘settler’; and trustees of the trust are; (i) Kantaben Chhaganlal Suchak (ii) Suryakant Chhaganlal Suchak (iii) Shirish Chhaganlal Suchak and (iv) Madhu Chhaganlal Suchak. It has been declared by the settler that her late husband Mr. Chhaganlal MuljiSuchak has set aside before his death in June 1999 certain sums of money for the benefit of beneficiaries named in Schedule 1 to be utilized for the benefit at any time in future which sum of money was invested in the said bank of State Bank of India’s Resurgent India Bonds which will mature on 01/10/2003. The lists of 13 beneficiaries have already been incorporated above. Even in the trust deed neither assessee nor his wife Indira D Thakkar are in the list of beneficiaries. The source of fund in the trust we have already discussed in the earlier part of the order that Mr. Suryakant Suchak who was a non-resident Indian settled in UK along with his parents since several decades had applied for resurgent Indian bonds in 1998 which was issued on 31/10/1998 and they got matured on 01/10/2003. After the formation of CSFT on 24/05/2001, settlement of maturity proceeds were credited to CSFT and later on this fund was distributed to the beneficiaries to all non-Indian resident beneficiaries residing outside India on 08/08/2011. The sources of funds have been clearly detailed in para 4. The relevant documents have also been placed in the paper book from pages 92-130. From perusal of the documents and material on record, it is quite evident that, firstly, neither assessee nor his wife Mrs. Indira D Thakkar was part of the list of beneficiaries in the trust. Secondly, the source of funds also came through inheritance of Mr. Chagganlal Suchak who was a UK Citizen (non-resident Indian) settled in UK till his death in June 1999. The main trustees of the trust as well as the beneficiaries were all foreign citizens. Late Shri Chagganlal Suchak and his wife Mrs. Kanteben Chagganlal Suchak had one daughter Mrs. Indira Thakkar who was married to assessee are only Indian citizens and their three sons Mr. Sirish Suchak, Suryakant Suchak and Madhu Suchak are all settled abroad and are citizens of UK and Canada. There is no dispute of these facts.
From the ‘Base Note’ forwarded by the Investigation wing, it has been informed that in Chagganlal Suchak Family Trust which had bank accounts in HSBC Bank, Geneva, Mr. Dilip Thakkar and his wife Mrs. India Thakkar had been mentioned as trustees; and secondly, certain documents were found to show that assessee was somehow managing the affairs of the trust and also involved and instructions being given to the bank for investment purpose. First of all, simply being a trustee that does not mean that either assessee or his wife are the beneficiaries of the trust or managing the affairs of the trust as relatives of the trustees in fiduciary capacity can infer that the funds belong to the assessee when nothing has been found that the source of the funds has been routed through assessee or assessee was beneficial owner of the fund. We have already discussed the source of funds in the trust and who all were the ultimate beneficiaries of the fund. Then how a conjectural linkage can be drawn implicating the assessee without any nexus substantiating such presumption that amount deposited in the foreign bank account belongs to the assessee.
In any event, the department, invoking the provisions of Article 26 of India-Swiss DTAA pertaining to exchange of information, solicited details from the Swiss Federal Authorities. In response, the Swiss Authorities duly furnished the bank statements. However, in an unambiguous and unequivocal clarification, they have asserted upon being queried regarding the presence of beneficiaries of the bank accounts, have stated that beneficiaries are third parties resident of Canada and England and secondly, more significantly Swiss Authorities have categorically affirmed that neither Mr. Dilip Chagganlal Thakkar nor Mrs. Indira Dilip Thakkar hold any beneficial interest with these accounts or are the beneficiaries of Chagganlal Suchak Family Trust. It thus defies logic and strains credulity that, in the face of such information, the department would still persist that the aforementioned bank accounts belong to the assessee and they are ultimately beneficiaries of the fund and treat it as undisclosed income of the assessee. This vital piece of information and clarification by a Sovereign Authority clinches the issue in favour of the assessee that neither he nor his wife is the legal or beneficial owner of the bank account or the fund. Simply because there is a foreign bank account in the name of the trust and assessee is linked in the fiduciary capacity, how can addition be made once there are other facts and material on record that neither the source of the funds nor the ultimately destination of the fund has any direct or indirect link with the assessee. In none of the material found from the possession of the assessee which has been referred extensively by the ld. AO and ld. CIT (A) in their respective orders, there is any evidence that assessee had made investment through an undisclosed sources in the foreign bank account or had received the money at any point of time upto the date of search.
Both the authorities have ignored the trust deed, list of beneficiaries, letter by the Swiss Federal Tax authorities which department itself has sought from the Swiss Government and the affidavit of Mr. SurykantChagganlalSuchak who has clarified the source of beneficiaries of the fund and has categorically stated that the trust account in Geneva was closed in before 2012 and all the three brothers were principal beneficiaries of the CSFT and neither Mr. Dilip Thakkar nor Mrs. Indira Thakkar or their two daughters and the families have received any amount. He has given another affidavit and this SCS Family Trust was secured by his mother for the benefit of himself and his immediate family members and the funds which were received from Chagganlal Suchak Family Trust was invested in mutual funds as directed by him in that trust, he and his wife were the trustees, however, the said bank account also was closed and the entire funds were deposited to the beneficiaries for his wife Mrs. Dina Suryakant Suchak and his daughter Ms. Deepa Jaitha and another daughter Mrs. Anika and son Mr. Anish S Suchak. Another important fact which is that, there is ITAT order for A.Y. 1998-99 in the case of Suryakant Suchak who was UK citizen wherein the Tribunal while dealing with the issue of investment of Rs.1.5 million GBP in State Bank of India’s Resurgent India Bonds in October 1998, the Tribunal held that the assessee was a non-resident residing outside India since several decades, therefore, he qualifies the primary condition of being NRI individual for making the investment. Thus, it clearly shows that the source of funds in A.Y. 2012-13 Shri Dilip J. Thakkar RIB was made by Mr. Suryakant Suchak. Accordingly, the source of funds was never made by the assessee or his wife. Once the source of funds is neither by the assessee nor he or his family were beneficiaries, we do not find any reason to hold that the peak balance in the foreign bank account should be added as taxable income of the assessee in India.
Thus, on perusal of facts and the evidentiary materials placed on record, incontrovertibly demonstrates that the bank accounts in question, held under the aegis of Chagganlal Family Trust were opened by non-residents, ostensibly and explicitly for the benefit of non-residents and the source of funds is irrefutably traced to non-residents and ultimately the accrual and aggregation of funds were repository/ credited in the accounts of non- residents. Hence no part of such deposits or peak balance can be taxed in the hands of the assessee in India. Accordingly, the addition of Rs.10,50,41,824/- made in the hands of the assessee is deleted. 6.2 It is further noted that similar addition was made in the hands of the assessee for assessment year 2007-08 on identical documents. This Tribunal in vide order dated 24/06/2025 deleted the addition by following the observations of coordinate bench for assessment year 2006- 07(supra). 6.3 There is nothing on record to establish that the assessee and his wife were the beneficiaries to the SCS Family Trust. Merely because the trust is formed under the Indian trust Act and has been executed in India, it cannot be brought to tax unless the beneficiaries are taxable in India by virtue of their residency or through any other asset located in India. The documents relied by the assessee and revenue speak in volume that the assessee and his wife were merely trustees to the SCS Family and were acting on behalf of the beneficiaries who were non residents.
6.4 Based on the above discussion, we do not find any reason to uphold the addition made by the revenue in the hands of the assessee.