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Facts
The assessee challenged additions made to his income concerning Rs. 10,50,41,824/- from an offshore trust and Rs. 57,00,000/- paid to his nephew. The additions were based on documents seized during a search, suggesting the assessee managed the trust and its funds.
Held
The Tribunal held that the Rs. 10,50,41,824/- addition was deleted as the offshore trust was opened by non-residents for non-residents, and the source of funds was traced to non-residents. The Rs. 57,00,000/- addition was also deleted as the payment was made from the assessee's HUF account as per a will, and the source was explained.
Key Issues
Whether the addition of funds from an offshore trust and payment made to a nephew were unexplained income of the assessee.
Sections Cited
153A, 271(1)(c), 132(1), 90, 26, 16
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Income Tax Appellate Tribunal, ‘D’ BENCH
Before: SHRI AMIT SHUKLA & MS. PADMAVATHY S & Shri Dilip J Thakkar
आदेश / O R D E R PER AMIT SHUKLA (J.M):
1. has been filed by the assessee against order dated 04/03/2024, passed by CIT (A)-54, Mumbai for the quantum of assessment passed u/s.153A for the A.Y. 2006-07; and ITA No. No.6408/Mum/2024 has been filed by the assessee against order dated 12/11/2024 in relation to penalty proceedings u/s. 271(1)(c) for the A.Y.2006-07.
In the quantum appeal on merits assessee has challenged, firstly, the addition of Rs.10,50,41,824/- as undisclosed income of the assessee on the ground that money in the bank account of an off-shore non-resident trust with HSBC private Bank belongs to the assessee; Secondly, addition of Rs. 57,00,000/- paid by the Dilip J Thakkar HUF by cheques to his nephew as per the Will of the late mother. Apart from that assessee has also challenged the assessment order dated 30/03/2015 being barred by limitation.
The brief facts qua the issue pertaining to the addition of Rs.10,50,41,824/- made by the ld. AO by treating the deposits in the foreign bank accounts with HSBC Bank, Geneva of Chagganlal Suchak Family Trust (CSFT) considered as undisclosed income of the assessee are that, assessee is a practicing chartered accountant in whose case, a search u/s.132(1) was carried out on 10/08/2011 and prior to the search, the Income Tax department was in possession of some information which was in the form of a base note that CSFT had bank accounts in HSBC Bank, Geneva and assessee’s name was appearing therein. During the search, it was found that assessee alongwith his wife Mrs. Indira D Thakkar was managing the affairs of the off-shore discretionary trust which had as many as eight bank accounts in HSBC Bank, Geneva which had the balance of US$31,29,878/- as on February 2007. Apart from that it was found that a sum of Rs.57,00,000/- was deposited in & 6408/Mum/2024 Shri Dilip J Thakkar the bank account No.163813 by Mr. Dilip Thakkar, i.e., assessee as karta of Dilip J Thakkar HUF.
4. In response to the show-cause notice assessee had stated that Chagganlal Suchak Family Trust (CSFT) was a private discretionary trust in the name of his late father-in-law, Chagganlal Suchak who was UK Citizen, expired in the year 1999 in London. The said trust was for the benefit of his family members (his sons and their family members) who all were non- resident Indian living outside India since several decades. According to the assessee the said trust affairs were controlled and managed by late Chagganlal Suchak’s three sons who were the principal beneficiary of the trust and they were only authorised for opening the bank account. The assessee’s role and his wife being family members were only advisory in fiduciary capacity to see that none of the three beneficiaries include or trespass on the funds of the other. It was declared that neither the assessee nor his wife had any control or management of the CSFT trust and he completely denied having any kind of interest in the impugned foreign bank accounts and also stated that trust has been closed and all the three principal beneficiaries had got their respective funds from the trust. The assessee had also explained the sources of funds settled into CSFT before the ld. AO and ld. CIT (A) and also before us and also placed relevant documents. The relevant chronology of dates and explanation is summarized in the following manner:- Sr No Particulars 1 Mr Suryakant Suchak (NRI), had made an application to & 6408/Mum/2024 Shri Dilip J Thakkar State Bank of India dated 19.08.1998 intending to subscribe 150 Resurgent India Bond -GBP Series bearing face value 10000 Pounds totaling to an Investment of 1.5 Million Pounds. The 1.5 Million Pounds which was proposed to be Invested belonged to Mr. Chagganlal Suchak (NRI) which was earned by him outside India from various businesses. However merely because of Mr. Chhaganlal Suchak's advancing age and for the sake of administrative convenience in the event of any exigency, the bonds were subscribed in the name of his son Mr. Suryakant Suchak. 2 At the time of making application, a demand draft dated 19.08.1998 of 1.5 Million Pounds was drawn on National Westminster Bank PLC (a Foreign Bank) in name of State Bank of India NRI Branch Mumbai A/c RIB's. The remittance from foreign bank account evidences that RIB's were subscribed using foreign funds and has no connection with India or Indian Income. 3 Subsequently SBI had issued 150 RIB's to the applicant Mr Suryakant Suchak on 31st October 1998. 4 The RIB's issued by SBI on 31.10.1998 matured on 01.10.2003 Chagganlal Suchak Family Trust was settled on 24.05.2001. At the time of settlement, no bank account was opened in India. The settlement of Resurgent India Bonds into Chhaganlal Suchak family Trust was already decided at the time of Formation of trust i.e 24th May 2001. As per Para 5 of Trust deed on Pg 3 and Para 10 of Trust deed on Pg 4, Mrs. Kantaben Chagganlal Suchak (wife of Chagganlal Suchak) had already intended that RIB's held by Mr. Suryakant Suchak will form part of trust fund because the funds always belonged her husband Mr. Chagganlal Suchak. Thus, all the maturity proceeds & 6408/Mum/2024 Shri Dilip J Thakkar would be automatically dwelled in the trust. The bank account of Chagganlal Suchak Family Trust was opened in HSBC Geneva on 20/102003. These facts form a part of trust deed and are also duly sworn by Mr Suryakant Suchak before Notary Public of London vide his affidavit dated 10.06.2015. 5 Further, the trust had invested maturity proceeds of RIB into various fiduciary deposits and liquid investments. These funds kept on increasing year on year due to return on investments. 6 In 2011/12 SCS Trust was formed for the specific benefit of Suryakant Suchak family and the funds were transferred from CSFT to SCS FT.
The flow chart reflecting the movement was as under:-
FLOW CHART REFLECTING THE MOVEMENT OF FUNDS TO CSFT Application for Resurgent India Bonds (RIBs) (19.08.1998)
Formation of Chhaganlal Suchak Issuance of Bonds Family Trust (24.05.2001) (31.10.1998)
Maturity of RIBs Settlement of maturity (01.10.2003) proceeds to CSFT (01.10.2003)
Fund distributed to the beneficiaries (All non residents outside India) (08.08.2011)
6. Thus, it was stated that source of funds belong to assessee’s father-in-law which was invested in Resurgent India bonds, and after creation of trust, CSFT, and after settlement of maturity of proceeds to CSFT and finally it went for the benefit of assessee’s brother-in-law. Suryakant Suchak. Thus, assessee was neither the owner of the fund nor the beneficiary of the fund.
However, the ld. AO held that Mr. Dilip J. Thakkar and his wife Mrs. Indira D Thakkar were managing the affairs of the off- shore discretionary Trust CSFT. The above Trust had as many as eight bank accounts in HSBC bank, Geneva and had a balance of USD 31,29,878/- as on Feb-2007. Ld. AO on perusal of the Trust deed noted that the Chagganlal Suchak Family Trust was settled on 24" May, 2001 and the trust was settled between Smt. Kantaben Chagganlal Suchak as ‘settler’ and Sh. Suryakant Chagganlal Suchak, Sh. Shirish Chagganlal Suchak and Sh. Madhu Chagganlal Suchak called as "Trustee" The assessee's wife Smt. Indira D. Thakkar was in fact the daughter of the settler of the Trust. The address of the above trust was shown as 256, Upper Palace, Orchards, Sadashiv Nagar, Bangalore. The stamp paper of the Trust was purchased in Mumbai. Further, the trust deed was signed in the presence of assessee Sh. Dilip J. Thakkar and Sh Indira D. Thakkar along with the three above mentioned Trustees. The administrative address of the Trust was the same as the office address of the assessee in Mumbai. This proved that not only was the Trust formed in India but it was also managed from India by Mr. Dilip J. Thakkar and Mrs. Indira & 6408/Mum/2024 Shri Dilip J Thakkar D. Thakkar who were also the signatories of the foreign bank account. Thus, the AO came to the conclusion that the taxability of the Trust lied in India as per the jurisdiction of the Income Tax Act 1961. Also, Mrs. Indira D. Thakkar and her two daughters were found to be the beneficiaries of the said Trust. The AO also noted that funds had been transferred from the Trust to the other family members on the instructions of Mr. Dilip J. Thakkar and Mrs. Indira D. Thakkar and his two daughters had also received the benefits. The AO observed that the Trust was a discretionary private trust with all the unlimited powers vested in the hands of the Trustees/Protector to apportion money, to make investment decisions or to increase or decrease the ratio of the benefits to the beneficiaries. The AO thus concluded that the Chagganlal Suchak Family Trust (CSFT) was created by Mr Dilip J. Thakkar in association with his family members and in-laws as a Special Purpose Vehicle to channelize the unaccounted income and park it outside the country in HSBC Bank Geneva. Therefore, the fund parked in CSFT was held to be belonging to Sh. Dilip J. Thakkar and was held to be his income which had not been offered to tax. The peak amount standing for FY 2005- 06 was USD 2361551.79 equivalent to Rs. 10,50,41,824/- which was added to the total income of the assessee for AY 2006-07.
8. The ld. AO has also referred to certain materials found during the course of search which are highlighted in the following manner:-
& 6408/Mum/2024 Shri Dilip J Thakkar “i) On page No. 134 of Annexure-3 of the loose papers seized from the appellant's residence during search, Smt. Indira D. Thakkar is mentioned as one of the principal beneficiaries. (ii) Page No.1 of the loose papers of Annexure A-1 Seized from the appellant's house during the search is a letter dated 08/08/2011 signed by the appellant and is related to transfer of Sig Pounds of 1 million for the benefit of HSBC Pvt Bank (Sussie) SA on 08/08/2011 for the benefit of SCS Family Trust (SCSFT) A/c: No 8213-513408-0001 from HSBC Pvt. Bank, Geneva, Switzerland (Client No. 1423320 A/c 1148 2341-2001). (iii) Page No.27 to 42 of Annexure A-1 of the loose papers seized from the appellant's house is account mandate form, which is signed by the appellant Sh. Dilip J Thakkar and his wife Sml Indira D. Thakkar (iv) Page No. 30 of Annexure A-2 of the loose papers seized from the appellant's house during search clearly states that the said trust was formed on 15/03/2004 at Mumbai, and Sh. Dilip J. Thakkar and his wife Smt. Indira Dilip Thakkar are named as the trustees It also mentions it to be private discretionary trust. (v) On Page No. 155 of Annexure A-3 found and seized from the appellant's house, it has been alleged by Madhu C Suchak, that distribution of Khoday funds to Smt. Indira D Thakkar and distribution of trust funds by the appellant to his family members have taken place without consent from the trustees. (vi) On page No. 79 of Annexure A-2 of the loose papers seized from the appellant's house during search action, the Suchak family Group Structure is drawn. (vii) Page No. 94 and 95 of Annexure A-2 of the loose papers seized from the appellant's house refers to RIB bonds. (viii) Page No. 6 of Annexure A-1 is again another letter dated 20" January 2011 to HSBC Private Bank (Suissee) Statutory Auditors, Geneva directing transfer by Swift GBP of Pounds. 1,00,075/- to the account of HSBC Private Bank (suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT)
(ix) Page No. 79 of Annexure A-2 of the loose papers seized from the premises of Sh. Dilip.J Thakkar shows the Suchak Family's Chart highlighting the interest of Sh. Dilip J Thakkar in various concerns of the Suchak family and Chagganlal Suchak Family Trust (CSFT) (x) Page No. 152 and 153 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J Thakkar show receipt of Resurgent Indian Bonds (RIB) in 2003 from Sh. Chagganlal M Suchak and Chagganlal Suchak Family Trust (CSFT) (xi) Page No. 174 of Annexure A-3 of the loose papers seized from the premises of Sh. Dilip J-Thakkur show certain 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 (xii) Page No. 33 to 42 of Annexure A-1 show the active involvement of Sh. Dilip J Thakkar and Smt. Indira D Thakkar in the affairs of SCS Family Trust (SCSFT), which in turn received benefits from Chagganial Suchak Family Trust (CSFT) (xiii) Page No. 25 of Annexure A-2 of the loose papers seized from the premises of Sh Dilip J Thakkar is a resolution passed during the meeting of the trustees of Chaggarilal Suchak Family Trust (CSF T) on 21/10/2004 signed by Sh. Dilip J Thakkar and Smt. Indira D Thakkar for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280 (xiv) Page 33 to 42 of Annexure A-1 are the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank-(Suisse) Statutory Auditors Hong Kong Branch / Singapore Branch / Nassau Branch dated 28/08/2010 signed by Dilip J Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also in INDIA. 11.3.1.3 Thus, the above material found and seized consequent to the search in the case of Sh. Dilip J Thakkar showed that the appellant and his wife were the Trustees and authorized & 6408/Mum/2024 Shri Dilip J Thakkar signatories/protectors of Chagganlal Suchak Family Trust (CSFT) and key controllers of the affairs of the Trust. Their daughters and the appellant's wife had admittedly been the beneficiaries of the Trust in the past.
9. AO has also referred to certain extracts of statement of Mr. Dilip J Thakkar recorded in 10/11.08.2011 u/s.132(4) wherein he has stated that some of his family members were beneficiaries in Carlton Corporation and CM Suchak Trust for some time but they never received any benefit nor they were beneficiaries later on. None of the family members were beneficiaries of any trust either in India or abroad. He admitted that he and his wife were authorised signatories as trustees in fiduciary capacity of two trusts and his wife was also an authorised signatory in non- resident brother’s account. There is also reference to certain paper of giving advice for transfer of funds from HSBC bank to the account of CM Suchak Trust to the account of SCS Family Trust with HSBC, Singapore. He further clarified that his two daughters were earlier beneficiaries, however, they were no longer beneficiary of the trust and neither did they received any fund or benefit from the trust. Assessee also referred to base document received from DGIT (Inv) which has been highlighted in the following manner:- CH 33 0868 9050 9114 8234 I CH 36 0868 9050 9114 8238 4 CH 48 0868 9050 9114 8924 9 CH 33 0868 9050 9114 9329 6 CH 33 0868 9050 9114 8928 1 CH 33 0868 9050 9114 8237 1 CH 33 0868 9050 9114 7666 1 Sr. No. Name ID Number 1. Dilip Jayantilal Thakkar 5090181752 2. Indira Dilip Thakkar 5090174141 3. Mitali Rohit Lakhanpal 5090174139 4. Deval Dilip Thakkar 5090174140 15.7. The following information also appeared in the base documents received from DGIT (Inv) Mumbai: i. That the name of the assessee Sh. Dilip J Thakkar is mentioned in the document. ii. Address- That the name of the assessee is appearing on this document along with his residential address. iii. That the name of assessee is appearing in the name of "Nom du profit client" as DJT/IDT as Trustee of Chagganlal Suchak Family Trust (CSFT). iv. That in the said documents in the heading "Lien personnel/profit client" - it is mentioned as account Holder and details "du lien" as trustee. v. That in the said document Sh. Suryakant Suchak, Sh. Madhu Suchak & Sh. Shirish Suchak is mentioned as Attorney in the subsequent pages in profiles clients concerns.
& 6408/Mum/2024 Shri Dilip J Thakkar vi. That in the said document the assessee Sh. Dilip J Thakkar is mentioned as beneficial owner/account holder in profit clients concerns.
Thus, AO concluded the fact that assessee is maintaining foreign bank account in HSBC Bank Geneva, Switzerland not only emerged during the course of search but also corroborated with the base documents received from the DGIT (Inv) Mumbai. Again he has referred to certain questions and answers of the assessee during the course of the search and concluded that the statement of the assessee reveals that Mrs. Kantaben C Suchak wife of late Mr. Chagganlal Suchak is the settler of the above said Chagganlal Suchak Family Trust (CSFT). The said trust maintains its bank accounts with HSBC Private Bank, (Susie)- Geneva. The relevant observation of the AO are as under:- “15.11. In his submission Sh. Dilip J Thakkar stated that, Chagganlal Suchak Family Trust (CSFT) was formed before 1998, but was funded only in 2008 by way of dissolution proceeds of M/s Carlton Corporation (Trust) and its subsidiary entities as a result of the consent decree awarded by the Royal Court of Jersey dated 02/10/2008, He maintained that he i.e. Sh. Dilip J. Thakkar and his wife Smt. Indira Thakkar are trustees and authorized signatories/ protectors of Chagganlal Suchak Family Trust (CSFT) that he and his family members have not derived any benefit from the trust although his wife and daughters are beneficiaries of Chagganlal Suchak Family Trust (CSFT). He was asked to substantiate his position by way of producing the trust) deed and the bank account 15.12 However the assessee has not produced the trust deed or the bank account statement of HSBC Geneva. On the contrary the documents seized during search show that funds have been transferred from the trust to other family members on the & 6408/Mum/2024 Shri Dilip J Thakkar instruction of Sh. Dilip Thakkar and Smt. Indira Thakkar and his two daughters had indeed received the benefits. 15.13 In the absence of submission of the trust deed and the complete bank account, proposal under Exchange of Information under DTAA u/s 90 of the IT. Act was sent to FT & TR- CBDT-New Delhi to seek information from the HSBC Bank Geneva. The Competent Authority vide its letter reference no. F No. 504/125/2012-FTD/I dated 4th March 2013 informed that the proposals have been sent to the Swiss Tax Authorities had been made on 5th December 3012 The assessee Sh. Dilip J Thakkar, his wife Smt. Indira Thakkar and his daughters Ms Mitali Lakhanpal & Ms Deval Thakkar submitted the consent waiver forms prescribed for seeking information under exchange of information under the DTAA with the Swiss authorities. 15.14 The information in regard to the references made to HSBC Bank, Geneva has not been received till date. However information from HSBC Bank Singapore in case of SCS Family Trust (SCSFT) has been received, which will be discussed in upcoming Para. 15.15 The assessee’s contention that he is not the account holder and that he and his family members have not derived any benefit from the above bank account and that the account was opened by his in lows in the name of Chagganlal Suchak Family Trust (CSFT) for the benefits of his children and grandchildren and he and his wife role is that of a protector/author and signatory? Trustee so that the distribution proceeds of the same is done equitably and fairly. The contention of the assessee is not acceptable on the following grounds as already discussed & again reproduced below. Reasons detailed herein above and reiterated as under 1. That the name of the assessee Sh. Dilip J Thakkar is mentioned in the document.
2. That the name of the assessee is appearing on this document along with his residential address & 6408/Mum/2024 Shri Dilip J Thakkar 3 That the name of assessee is appearing in the name of "Nom du profit client as DJTADT as Trustee of Chagganlal Suchak Family Trust (CSFT) 4 That in the said documents in the heading "Lien personnel profit client it is mentioned as account Holder and details "du lien as trustee 5 That in the said document Sh. Suryakant Suchak, Sh. Madhu Suchak & Sh. Shirish Suchak is mentioned as Attorney in the subsequent pages in profits clients concernes.
6. That in the said document the assessee Sh. Dilip J Thakkar is mentioned as beneficial owner/account holder in profil clients" concernes. 7 That in these base documents the assessee Sh. Dilip J Thakkar is appearing as trustee beneficial owner protector/account holder of the trust which is maintaining account in HSBC Bank Geneva 15.16. The assessee has not furnished the complete bank account, nor has the assessee submitted the purported trust deed neither the so called beneficiaries have come up to own up and substantiate the claims made by the assesee. Further the alleged beneficiaries are mentioned as "Anoney in the base document while Sh. Dilip J Thakkar is mentioned as the "Account Holder/Beneficial Owner/Trustee / Authorise Signatory/Protector" with virtual all powers to make decisions. Undeniably the impugned trust is a discretionary private trust with all and unlimited powers to apportion money, make investment decisions, increase or decrease the ratio of the benefits to beneficiaries being vested in the hands of the truster protector Thus it is evident that the account maintained by Chagganlal Suchak Family Trust (CSFT) is an Indian Trint created by Sh. Dilip J. Thakkar and the account in HSBC Bank Geneva in the name of the trust is maintained and controlled by Sh. Dilip J. Thakkar and therefore the submission of the assessee is of no help to him and is rather a fancy story woven by him to extricate himself out of the situation without appreciating the important attribute of property which include beside control, right to alienate and right to distribute and right to enjoyment. Here in this case assessee claims that he has & 6408/Mum/2024 Shri Dilip J Thakkar not enjoyed the benefits is not acceptable as he has failed to substantiate his claim that he has not enjoyed the benefits while essential characteristic of property le control, to alienate and right to distribute are very much present in and have been accepted and proved beyond doubt above on the basis of documents found and investigation made by the department. 15.17. Therefore from the above discussion the following conclusion emerges which clearly rebuts the contentions of the assessee Sh. Dilip J. Thakkar i. That the stamp paper for the creation of Trust ie. Chagganlal Suchak Family Trust (CSFT)was purchased in Mumbai. ii. That the Trust settled by Kantaben C Suchak is having address 256. Upper Palace, Orchandi Sadashiv Nagar Bangalore in. That the trust is settled in India. iv. That as a corollary of point no i, ii & iii, it is clear that the Chagganlal Suchak Family Trinit (CSFT) is an Indian Trust. v. That the assessee Sh. Dilip J Thakkar and his family members have derived financial benefits from the maturity proceeds of RIB. vi. That being an Indian trust Chagganlal Suchak Family Trust (CSFT) has to submit to the laws of the Republic of India which include IT. Act. vii. That being an Indian juridical person the Chagganlal Suchak Family Trust (CSFT) has violated law in not filing its return of income viii That the Chagganlal Suchak Family Trust (CSFT) has not only not filed the return of income but has also not disclosed the foreign bank account in HSBC Bank Geneva ix. That the submission of assessee Sh. Dilip J. Thakkar that investment in RIB was made by Sh Chagganlal Mulji Suchak through Chagganlal Family Suchak Family Trust (CSFT) settled by Smt. Kantaben Chagganlal Suchak is incorrect, Rather the & 6408/Mum/2024 Shri Dilip J Thakkar investment was made by Sh. Suryakant Chagganlal Suchak with c/o Dilip J. Thakkar x. That the submission of the assessee that maturity proceeds of RIB constitutes the corpus of Chagganlal Suchak Family Trust (CSFT) is incorrect. Rather the maturity proceeds of Resurgent India Bonds (RIB) went to Suryakant Chagganlal Suchak in Union Bank of India and State Bank of India and thus the maturity proceeds of the Resurgent India Bonds (RIB) do not constitute the corpus of the Chagganlal Suchak Family Trust (CSFT). Therefore the amount mentioned in the base documents of Chagganial Suchak Family Trust (CSFT) maintained with HSBC Bank Geneva received under exchange of information from French Authorities through DGIT (Inv) Mumbai is independent of the maturity proceeds of Resurgent India Bonds (RIB) contrary to the claim made by the assessee Sti Dilip J Thakkar And in fact the two have no correlation and are therefore separate amounts. And therefore are to be treated separately and independently for the purpose of taxation xi. That the Chagganlal Suchak Family Trust (CSFT) is created by the assessee Sh Dilip J Thakkar in collusion with his family member and in laws as special purpose vehicle to channelize the unaccounted income and park it outside India in the HSBC Bank Geneva xii. Therefore the fund parked in Chagganlal Suchak Family Trust (CSFT) belongs to Sth Dilip J Thakkar and is his income which has not been offered for taxation in his retum of income Hence, the peak credit deposit of US $ 31,29,878 in the bank account of Chagganlal Suchak Family Trust (CSFT) in Februnry-2007 is treated his undisclosed income. For the purpose of taxation the maximum balance standing ie. Peak amount standing for F.Y. 2005-06 is US $ 2361551.79 is therefore added as his undisclosed income in the relevant A.Y. 2006-07, Considering the conversion rate of UD $ to INR as prevailing in March 2006 at Rs.44.48/- the total deposit works out in INR at Rs.10,50,41,824/-, is added for the A.Υ. 2006-07 & 6408/Mum/2024 Shri Dilip J Thakkar The maximum balance ie. Peak credit standing in the account for F.Y. 2006-07 is US $ 3129878. However after giving benefit of US $ 2361551.79 which is added in F.Y. 2005-06 ie. A.Y. 2006-07, the balance amount US $ 768326.49 is added as his undisclosed income for F.Y. 2006-07 Le. the relevant A.Y. 2007-08. Considering the conversion rate of UD S to INR as prevailing in March 2007 at Rs.44.02/-,the total deposit works out in INR at R3,38.21.732/-, is added for the A.Y. 2007-08. Penalty u/s 271 (1) (c) is initiated separately (Addition For A.Y. 2006-07 INR at Rs.10,50,41,824/-)
11. Ld. CIT (A) has confirmed the addition made by the ld. AO in his detailed order and all his relevant observations; we shall discuss in the subsequent paragraphs.
Before us, the assessee representing himself, first of all submitted that the observations and the finding of the ld.AO are either incorrect or wrong conclusions have been drawn. The ld. AO’s certain allegations have been rebutted with reference to certain documents in the following manner:-
Page Allegation Reply/Remark No./Para 55/6.7 1. Page No. 134 of Annexure-3 of This paper relates to the loose papers seized from the Carlton Corporation and residential premises of Sh. Dilip J nothing to do with CSFT. Thakkar during search, Smt. The only common thing is Indira D. Thakkar is clearly both are settled by Suchak mentioned as one of the principle family. Appellant is neither beneficiary. trustee nor beneficiary ii. Page No. 1 to 22 of Annexure A- This paper relates to 1 of the loose papers seized from Carlton Corporation and the premises of Sh. Dilip J nothing to do with CSFT. Thakkar pertain to the affairs of The only common thing is overseas parties viz. Chalals both are settled by Suchak Holdings Ltd. belonging to Carlton family. Appellant is neither Corporation, which in turn is trustee nor beneficiary related to Chagganlal Suchak & 6408/Mum/2024 Shri Dilip J Thakkar Family Trust (CSFT Page No. 1: This is a direction In 2011 as per affidavit of given by Sh. Dilip J Thakkar in a Suryakant Suchak, 90 to letter dated 08/08/2011 to the 92B of PB, he wanted to HSBC Private-Bank. Geneva to create separate trust for his remit 1 million pounds by swift family and hence amount GBP to the account with HSBC was transferred as benefit Private Bank (Suisse) Statutory to beneficiary being SCS Auditors, Singapore, of SCS FT. Family Trust (SCSFT). Page No.6. This is again another Page 177 of PB; In 2011 as letter dated 20" January 2011 to per affidavit of Suryakant HSBC Private Bank (Suissee). Suchak, 90 to 928 of PB, Statutory Auditors, Geneva he wanted to create directing transfer by Swift GBP of separate trust for his family Pounds 1,00,075/-10 the account and hence amount was of HSBC Private Bank, (Suisse) transferred as benefit to Statutory Auditors, Singapore for beneficiary being SCS FT. the benefit of SCS Family Trust (SCSFT). Page 172 of PB is list of beneficiary of SCS FT which are family members of Suryakant Suchak and Dilip Thakkar and Indira Thakkar are not beneficiaries. Page 10- This is a letter dated This is benefit declared to 04/11/2009 addressed 10 Anish the Anish Suchak from S Suchak and Mrs. Bella Anish CSFT. They are children of Suchak, confirming transfer of Suryakant Suchak. GBP 1,000,000 by wire transfer, Appellant has not received from the trust account with HSBC anything from the trust. Private Bank (Suisse) Statutory Auditors to the account with Page 172 of PB Is list of Scotia Bank, Ontario beneficiary of SCS FT which are family members of Suryakant Suchak and Dilip Thakkar and Indira Thakkar are not beneficiaries. Iii. Page No. 79 of Annexure A-2 of Page 174 of PB. It shows the loose papers seized from the family chart of Suchak premises of Sh. Dilip Thakkar family and the respected shows the Suchak Family's Chart entities. Dilip Thakkar is highlighting the interest of Sh. just mentioned as protector Dilip Thakkar in various concerns and neither Trustee nor of the Suchak family and Beneficiary.
& 6408/Mum/2024 Shri Dilip J Thakkar Chagganlal Suchak Family Trust (CSFT) Iv. Page No. 128 to 134 of This paper relates to Annexure A-3 of the loose papers Carlton Corporation and seized from the premises of Sh. nothing to do with CSFT. Dilip J Thakkar show's details of The only common thing is some financial transactions both are settled by Suchak related to Carlton Corporation, family. Appellant is neither which in turn is related to trustee nor beneficiary Chagganlal Suchak Family Trust (CSFT). V. Page No. 152 and 153 of Page 178 of PB; it shows Annexure A-3 of the loose papers distribution of RIB which seized from the premises of Sh. was invested by Suryakant Dilip Thakkar shows receipt of Chhaganlal Suchak on Resurgent Indian Bonds (RIB) in behalf of his father and not 2003 from Sh.Chagganlal M on behalf of Trust. Infact Suchak and Chhaganlal Suchak CSFT was not formed in Family Trust (CSFT). 1998. vi. Page No.174 of Annexure A-3 of In 2011 as per affidavit of the loose papers seized from the Suryakant Suchak, 90 to premises of Sh. Dilip J Thakkar 92B of PB, he wanted to shows certain transactions of 1 create separate trust for his million sterling pounds between family and hence amount Chagganlal Suchak Family Trust was transferred as benefit (CSFT) and SCS Family Trust to beneficiary being SCS (SCSFT), in which Sh. Dilip J FT. Thakkar and Smt. Indira D Thakkar are trustees. Also, page Page 180 of PB No.33 10 42 of Annexure A-1 proves the active involvement of Page 172 of PB is list of Sh. Dilip J Thakkar and Smt. beneficiary of SCS FT Indira D Thakkar in the affairs of which are family members SCS Family Trust (SCSFT), which of Suryakant Suchak and in turn receives benefit from Dilip Thakkar and Indira Chagganlal Suchak Family Trust Thakkar are not (CSFT). beneficiaries. vil. Page No. 25 of Annexure A-2 of This was for normal bank the loose papers seized from the account operation premises of Sh Dilip J Thakur: This is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by Sh. Dilip Thakkar and Sim. Indira D Thakkar for opening a new bank account with HSBC. Geneva in & 6408/Mum/2024 Shri Dilip J Thakkar place of the existing account No. 13280 viii. Page 118 of Annexure A-2 of This paper relates to Kansu the loose papers seized from the Corporation and nothing to premises of Sh. Dilip I Thakkar: do with CSFT. The only This is a letter adressed by Sh. common thing is both are Dilip J Thakkar as director of settled by Suchak family. Kansu Corporation, Dated 11/03/2008 in the Director, Elkay Appellant is neither trustee Finance LTD., Jersey nor beneficiary acknowledging the debt and asking to set off the interest receivable by Kansu Corporation. ix. Page 26 of Annexure A-1 of the loose papers seized from the premises of Sh. Dilip J Thakkar related to C'hagganlal Suchak Family Trust (CSFT).
Assessee further submitted that time and again assessee had been explaining in response to all the queries raised by the ld. AO that the money in CSFT did not belong to him neither to his wife nor were they any kind of any beneficiaries. Further, highlighting various observations of the ld. CIT (A) in his entire order he has given his brief comments which are as under:-
No. CIT(A) Observations Our Comments 11.3.1 The appellant has firstly argued that the addition The addition of Rs. 10.50 has been made in his case only on the basis of Crore being peak balances unsigned unauthenticated stolen data of HSBC as per base note was Bank, Geneva, which was already available with the carried by search party search party and it was not the case that this data during action and not was found from the premises of the appellant found at the premises of during the course of the search. Thus, it was appellant. claimed that no incriminating material was found during the course of the search on the basis of which such addition was made 11.3.1.1 in this regard it is seen that while the data in The appellant was respect of HSBC Bank Geneva was the starting managing as Protector and point of the investigation, ultimately a search was not the owner. The funds conducted u/s 132 of the Act in the case of the belong to third party and appellant on 10.08.2011 where incriminating he was acting in capacity material in the form of documents, loose papers of Protector which he do etc. were found indicating how Sh. Dilip J. Thakkar act for other Trust as well. was managing and controlling the day to day affairs & 6408/Mum/2024 Shri Dilip J Thakkar of the Chagganlal Suchak Family Trust (CSFT) which were corroborated by the statements recorded 11.3.1.2 Some of such incriminating material found is mentioned below as illustrative examples: i) On page No. 134 of Annexure-3 of the loose These papers are of papers seized from the appellant's residence Carlton Trust and not during search, Smt. Indira D. Thakkar is CHHAGANLAL SUCHAK mentioned as one of the principal FAMILY TRUST (CSFT). beneficiaries Same can be verified No addition is made on account of Carlton Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAN FAMILY TRUST (CSFT) ii) Page No.1 of the loose papers of Annexure A-1 These papers are of SCS Seized from the appellant's house during the Family Trust Same can be search is a letter dated 08/08/2011 signed verified. by the appellant and is related to transfer of Stg Pounds of 1 million for the benefit of No addition is made on HSBC Pvt Bank (Sussie) SA on 08/08/2011 account of SCS Family for the benefit of SCS Family Trust (SCSFT) Trust. It has no relevance A/c: No. 8213-513408-0001 from HSBC Pvt. to the addition made on Bank, Geneva, Switzerland (Client No. a/c of CHHAGANL 1423320 A/c 1148 2341-2001). SUCHAK FAMILY TRUST (CSFT). iii) Page No.27 to 42 of Annexure A-1 of the loose These papers are of SCS papers seized from the appellant's house is Family Trust. Same can be account mandate form, which is signed by verified. the appellant Sh. Dilip J. Thakkar and his wife Smt. Indira D. Thakkar No addition is made on account of SCS Family Trust. It has no relevance to the addition made on a/c of CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). iv) Page No. 30 of Annexure A-2 of the loose These papers are of SCS papers seized from the appellant's house Family Trust. Same can be during search clearly states that the said verified. No addition is trust was formed on 15/03/2004 at Mumbai, made on account of SCS and Sh. Dilip J. Thakkar and his wife Smt. Family Trust. It has no Indira Dilip Thakkar are named as the relevance to the addition trustees. It also mentions it to be private made on a/c of discretionary trust. CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). v) On Page No. 155 of Annexure A-3 found and These papers are Carlton seized from the appellant's house, it has been Trust Chhaganlal and not alleged by Madhu C Suchak, that E Suchak Family Trust distribution of Khoday funds to Smt. Indira (CSFT). Same can be D. Thakkar and distribution of trust funds by verified. the appellant to his family members have taken place without consent from the No addition is made on trustees. account of Carlton Trust. It has no relevance to the & 6408/Mum/2024 Shri Dilip J Thakkar addition made on a/c of Chhaganlal Suchak Family Trust (CSFT). vi) On page No. 79 of Annexure A-2 of the loose It is a family tree. papers seized from the appellant's house during search action, the Suchak family Group Structure is drawn vii) Page No. 94 and 95 of Annexure A-2 of the These are documents loose papers seized from the appellant's relating to RIB Bonds. house refers to RIB bonds viii) Page No. 6 of Annexure A-1 is again another These papers are of SCS letter dated 20 January 2011 to HSBC Private Family Trust. Same can be Bank (Suissee) Statutory Auditors, Geneva verified. directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private No addition is made on Bank (Suisse) Statutory Auditors, Singapore account of SCS Family for the benefit of SCS Family Auditors, Singap Trust. It has no relevance Trust (SCSFT). to the addition made on a/c of CHHAGANLAL SUCHAK FAMILY TRUST (CSFT). ix) Page No. 79 of Annexure A-2 of the loose It is a family tree diagram. papers seized from the premises of Sh. Dilip J Thakkar shows the Suchak Family's Chart highlighting the interest of Sh. Dilip J Thakkar in various concerns of the Suchak family and Chagganlal Suchak Family Trust (CSFT) x) Page No. 152 and 153 of Annexure A-3 of the It is a maturity proceeds of loose papers seized from the premises of Sh. RIB Bonds Legacy of Late Dilip J Thakkar show receipt of Resurgent Mr. Chhaganlal Suchak. Indian Bonds (RIB) in 2003 from Sh. There is no relevance to Chagganlal M Suchak and Chagganlal Chhaganlal Suchak Suchak Family Trust (CSFT). Family Trust (CSFT) or addition. xi) Page No. 174 of Annexure A-3 of the loose DJT & IDT are trustees of papers seized from the premises of Sh. Dilip Suryakant Suchak Family J.Thakkar show certain transactions of 1 Trust (SCS FT) created for million sterling pounds between Chagganlal benefit of Suchak Family Suchak Family Trust (CSFT) and SCS Family who is brother-in-law of Trust (SCSFT), in which Sh. Dilip J. Thakkar appellant. The share of and Smt. Indira D Thakkar are trustees. Mr. Suchak in Chhaganlal Suchak Family Trust (CSFT) is transferred to Suryakant Suchak Family Trust (SCS FT). No relevance to appellant. xii) Page No. 33 to 42 of Annexure A-1 show the Suryakant Suchak Family active involvement of Sh. Dilip J. Thakkar Trust (SCS FT) & and Smt. Indira D Thakkar in the affairs of Chhaganlal Suchak SCS Family Trust (SCSFT), which in turn Family Trust (CSFT) are received benefits from Chagganlal Suchak two different Trust. CIT(A) Family Trust (CSFT). got confused by treating same. Chhaganlal Suchak Family Trust (CSFT) was & 6408/Mum/2024 Shri Dilip J Thakkar created for benefit of three sons of Chhaganlal Suchak. Hence some fund belonging to Suchak was transferred xiii) Page No. 25 of Annexure A-2 of the loose These papers are of SCS papers seized from the premises of Sh. Dilip J Family Trust. Same can be Thakkar is a resolution passed during the verified. No addition is meeting of the trustees of Chagganlal Suchak made on account of SCS Family Trust (CSFT) on 21/10/2004 signed Family Trust. It has no by Sh. Dilip J Thakkar and Smt. Indira D relevance to the addition Thakkar for opening a new bank account with made on a/c of HSBC, Geneva in place of the existing Chhaganlal Suchak account No. 13280. Family Trust (CSFT). xiv) Page 33 to 42 of Annexure A-1 are the Trust These papers are of SCS Account mandate for opening the account of Family Trust. Same can be SCS Family Trust (SCSFT) with HSBC Private verified. No addition is Bank-(Suisse) Statutory Auditors Hong Kong made on account of SCS Branch /Singapore Branch/Nassau Branch Family Trust. It has no dated 28/08/2010 signed by Dilip J Thakkar relevance to the addition and Indira D Thakkar. This said mandate made on a/c of form shows the country in which the trust is Chhaganlal Suchak resident as INDIA as well as the incorporation Family Trust (CSFT). also in INDIA CIT(A) got confused between Suryakant Suchak Family Trust (SCS FT) & Chhaganlal Suchak Family Trust (CSFT). 11.3.1.3 Thus, the above material found and seized How can paper of Carlton, consequent to the search in the case of Sh. Dilip J. RIB & Suryakant Suchak Thakkar showed that the appellant and his wife Family Trust (SCS FT) be were the Trustees and authorized used to come to signatories/protectors of Chagganlal Suchak conclusion that appellant Family Trust (CSFT) and affairs of the Trust. Their control Chhaganlal daughte key controllers of the affe had admittedly Suchak Family Trust been the beneficiaries of the Trust in the past (CSFT) 11.3.1.4 In this regard, the statements recorded of the appellant during and after search are also very important and the relevant extracts are reproduced below. 11.3.1.5 Extracts of Statement of Sh. Dilip J. Thakkar Already replied in recorded on 10/11.08.2011 under section 132(4) of 11.08.2011 and till date the Income-Tax Act, 1961 are as under: maintained the same stand Q.8 Kindly reiterate whether you or your family members were the beneficiaries of any trust registered in India or abroad? Ans. My family members were the beneficiaries in Carlton Corporation A and CM Suchak Trust, for sometime, but they never received any benefit and now they are not beneficiaries. At present my family members are not beneficiaries of any trust either in India or abroad. Q.9 Do you or your family members, in Admitted on 11.08.2011 & 6408/Mum/2024 Shri Dilip J Thakkar individual capacity or any other capacity that they are trustees of hold any foreign bank account or are Suryakant Suchak Family beneficiary or authorized signatory in any Trust (SCS FT) and not foreign bank? Chhaganlal Suchak Family Trust (CSFT). Ans. Me and my family members do not have any bank account of ours outside India, except my younger daughter Ms. Deval, who was in Canada for last 10 years who has comeback to India. She may have continued her foreign bank account when she was a non-resident. Further, me and my wife are authorized signatories as trustees in fiduciary capacity of two trust, namely CM Suchak Family Trust and SCS Family Trust (SCSFT) and my wife is also an authorised signatory in her nan-resident brother's account Q.10 From where was the Initial corpus for formation of Carlton Corporation (first trust to be established by Suchak Family) generated? Ans I am not sure but it must have been out of the savings of Late Sh. CM Suchak, the Settlor, who was a British Citizen Q.11 I am showing you pages numbered 128 to Carlton Trust was created 134 of Annexure A 3 found and seized from for benefit of Chhaganlal this promise. Kindly confirm the same and Suchak Family explain as to the locus of various companies like Chalais Holding Ltd. (Liberia), Elkay Finance Ltd. (Jersy), Boise Holding Ltd., Chalais Holding (Canada) Ltd. Akashi Investments Statutory Auditors (Bahamas), Kansu Corporation Ltd. (Bahamas) and Sumotec Ltd. (BVI) with respect to Carlton Corporation. Ans Yes, I confirm that the said papers were found at this premise. All the above mentioned companies are under the Carlton Corporation, the Trust. This is the recording of a meeting held with the trustees by two principal beneficiaries in Jersey on 23.01.2003. The two beneficiaries being Sh Suryakant Suchak and Madhu Suchak. It records the discussion that took place at the meeting. Q.12 I am showing you page number 152 of Annexure A3 found and seized from this premise. "Kindly confirm the same and also tell in whose handwriting is it written? Ans Yes, I confirm that the above said page was found from my residence and the handwriting is mine Q.13 This said paper denotes a letter written to Suryakantbhai (Suryakant Suchak) which mentions about the maturity proceeds of RIB and how the same were dealt with. In & 6408/Mum/2024 Shri Dilip J Thakkar this regard answer the following queries-
1. 1. What does RIB this for and what were its business precincts 2. In serial number 2 it mentions certain amount totalling to 1,73,24,680/- against the names of Indira (your wife) and Mitali (your daughter). In This regard explain on what pretext. This money was received by the above mentioned two persons and were This reflected in the accounts and Income Tax records of This two persons..
3. At Sr. No. 5 it is mentioned that around Pounds 5,04,597 would be kept in FCNR accounts for "my pay" Whether this amount was offered by you as your Income for taxation.
4. Below Sr. No. 5, there are two entries On date of search naming Deval, Indira and Mitali. Kindly admitted that these are explain these entries and their tax legacy from father in laws implication. to family members of appellant. Ans RIB means Resurgent India Bonds, My father in law Sh. C.M Suchak had set aside a corpus for the benefit of and children and grand children, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly my wife received Pound 1,36,000/-daughter Mitali received Pounds 90,000 and my daughter Deval, residing at Toronto received Pounds 90000 as legacy. These amounts have been shown as legacy received in 2003. As to the query raised at No.3, the FCNR deposit is for 'one year and not 'my pay. The next query about remittance of Pound to go direct to her in Toronto by wire transfer Mitali and Indira's legacy totalling Pound 2,26,000 will get converted into rupees @ Rs. 76.68 per pound. These payments being legacies were capital receipts and therefore were not taxable and were accordingly credited directly to the respective capital accounts ……….. ……….. Q.14 I am showing you Pages 153 of the On date of search Annexure - A 3 found and seized from this admitted that these are premises Kindly confirm the same On this legacy from father in laws page at serial number 6 to 9 certain funds to family members of in sterling pound have been mentioned appellant against then names of Mitali R. Lakhanpal and Deval E Anthony (your daughters) Indira D Thakkar (your wife) and yourself and against each entry certain funds have been mentioned as on 1.1.2003 and & 6408/Mum/2024 Shri Dilip J Thakkar subsequent accretion to entry is seen and finally the amounts standing to the credit of each of the above mentioned names are as under – Mitali Lakhanpal Sig Pound 90,000 Deva El Anthony Sig Pound 90,000 Indira Thakkar Sig Pound 1,36,000 Dilip Thakkar Sig Pound 14,400 This paper also mentions the names of other members of Suchak Family and denotes amounts Thising to the credit of their names as well. In light of this explain what is the above figures credited against your name and in the name of family members denotes. In the backdrop of the names of members of Suchak Family also appearing in the same vein. Also explain where was the above mentioned amount received by you and your family members and were they offered for Indian Income Tax. Ans This statement has to be connected with the page 152 of the Annexure A 3, wherein it is clearly shown that these are the amount of the legacy received by me and my family from Late Sh. CM Suchak on maturity of Resurgent Indian Bonds. Similar legacy was received Suchak Family as legacy. This being legacy it is recorded as legacy in our tax records and hence not tables. ……… ……… Q.17 I am showing you pages 26 to 38 of Explained on 11.08.2011 Annexure A3. Please confirm that the said pages have been found and seized from this premises. Also explain though contents therein Ans Yes, I confirm that the said pages are found and seized from my residence. Pg. 26 is the minutes of the meeting of the trustees of Chagganlal Suchak Family Trust (CST) recording the authorized signatory of the bank account of the trust. Page 27 to 38 is the minutes of the meeting of Mehta Family Board in London on 3.11.2006 wherein I was present, group belongs to my elder sister's family and he was invited to give my professional input. ……….. Q.21 I am showing you page number 174 of Explained on 11.08.2011 Annexure A-3 found and seized from this that this transaction was premises. Kindly explain the same done for Suryakant Ans Yes, I confirm that the said paper was Suchak Family Trust (SCS & 6408/Mum/2024 Shri Dilip J Thakkar found and seized from my residence. This is FT). an advice sent to HSBC Bank Geneva to transfer funds from the account of CM Suchak Family Trust to the account of SCS Family Trust (SCSFT) with HSBC Singapore. Q.24 I am showing you four bank records of Confirmed that no fund HSBC Bank Geneva (made a part of the was received from statement Annexure 2) relating to The Chhaganlal Suchak Chagganlal Suchak Family Trust (CSFT) Family Trust (CSFT). having following ids 5090274125, 5090174141 and 5090181752. You along with your wife Indira Thakkar and your two daughters Mitali Lakhanpal and Deval Thakkar have been mentioned as beneficial owner. Kindly explain the status in the backdrop of replies given by you in response to above queries wherein you have mentioned that neither you nor any of your family members hold any beneficial interest in any of the foreign trust. Ans Myself and my wife are trustees of the trust in fiduciary capacity and not as beneficial owner. My two daughters were beneficiary of the trust earlier, during which time they did not receive any benefit from the trust. As of now they are no more beneficiaries 11.3.1.6 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 19.09.2011 under section 131 of the Income Tax Act 1961 are as under: Q.3 Page No.1. This is a direction given by you in your letter dated 08/08/2011 to the HSBC Private Bank, Geneva to remit 1 million pounds by swift GBP to the account with HSBC Private Bank (Suisse) Statutory Auditors, Singapore, of SCS Family Trust (SCSFT). Please explain the complete nature of transaction stated in this letter and the source of fund involved, along with the accounting entry in the books of account of both the payer as also the receiver. This is also stated to be referred by one Mr. Sangram Singh, please give details of the involvement of said Mr. Sangram Singh Ans As decided by the settlor Smt. Kantaben C Suryakant Suchak Family SuchakThis amount is transferred from the Trust (SCS FT) was sub account of Sh. Suryakant Suchak with created for benefit of HSBC P Bank, Geneva to and account with Suryakant Suchak. So as HSBC PVT. Bank, Singapore, Sh. Sangram a Protector the said fund Singh is the Relationship Manager at HSBC transferred PVT. Bank, Singapore Q.4 Page No 4 this seems to be in your handwriting and appears to be a flowchart in connection with certain. shares of some company. Please explain the transaction along with supporting documents, if any, subsequent to 21/07/2011 when this chart & 6408/Mum/2024 Shri Dilip J Thakkar was drawn Ans This is a flow chart regarding companies of No relevance to current my NRI client. Sh Amitabh Himatsingka who case lives in USA. On 21.07.2011, I met my client. Sh Amitabh Himatsingka, for discussion in Europe. There is no supporting evidence, as this was only a discussion. Q.5 Page No.6. This is again another letter dated 20 January 2011 to HSBC-Private Bank (Suisse) Statutory Auditors. Geneva directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private Bank, (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT). This is referred by Vidya Viswanambaran /Sachin Jumani. Ans This is the draft letter to be addressed to Matter relates to HSBC Pvt. Bank, Geneva for transfer of Suryakant Suchak Family funds to SCS Family Trust (SCSFT)s Bank Trust (SCS FT) and not account with HSBC Pvt. Bank, Singapore. Chhaganlal Suchak The two names mentioned Vidya Family Trust (CSFT). Viswanambaran and Sachin Jumani are the Relationship Managers at HSBC Pvt. Bank, Singapore. Q.6 Page 10- This is a letter dated 04/11/2009 addressed to Anish S Suchak and Mrs. Bella Anish Suchak, confirming transfer of GBP 1,000,000 by wire transfer, from the trust account with HSBC Private Bank (Suisse) Statutory Auditors to the account with Scotia Bank, Ontario. Please explain this transaction with reference to the source of funds and accounting entries in this regard. Ans It is a letter myself and my wife has signed Anish Suchak is son of as trustees of M/s Chagganlal Suchak Suryakant Suchak. The Family Trust for distribution of 1 million fund was transferred as pounds to a beneficiary Sh. Anish S Suchak benefit to him. No money as per the decision taken by the settlor, I is received by appellant would like to clarify that Sh. Anish S Suchak, had declared This amount to tax authorities in Canada, where he is a resident Q.7 Page 26: This is again a similar letter dated 31/07/2009 addressed to Mr. Anish Suryakant Suchak, Canada informing the transfer of CAD 250,000 each to the account Nos 0284688 and 0347825 with Scotia Bank in Ontario. the beneficiaries being the addressee's sons Krish and Kunal. Please explain the details of the remitting bank account and the source of funds along with accounting entries Ans This is a letter signed by me and my wife as Letter is signed as Trustee trustees of M/s Chagganlal Suchak Family for benefit to nephew of Trust (CSFT) as distribution of two wife who stays abroad. beneficiaries. Master Krish Anish Suchak & 6408/Mum/2024 Shri Dilip J Thakkar and Master Kunal Anish Suchak as decided by the settior. This has also been declared to Canadian tax authorities. Q.8 Page 33 to 42 This is the Trust Account mandate for opening the account of SCS Family Trust (SCSFT) with HSBC Private Bank-(Suisse) Statutory Auditors Hong Kong Branch / Singapore Branch/Nassau Branch dated 28/08/2010 signed by Dilip Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also In INDIA. Please explain whether the said Trust, being Indian Trust, is filing the return of income in India, if not the reason therefor Please give details of PAN, details of returns filed, whether Income/ wealth offered. Where are the books of account of the trust maintained /audited Ans Page 33 to 42 are copies of bank account opening forms of SCS Family Trust (SCSFT) with HSBC Pvt. Bank, Singapore. This trust is based in Dubai and not in India. SCS Family Trust (SCSFT) is not ari Indian Trust and hence, returns of income is not filed in India. Since the Trust is not an Indian Trust, it has no PAN and its books of accounts are not maintained in India. Q.19 Page 79-This is a chart of certain companies and their holding You are a director in Chalais Holding Ltd & Kansu Corporation Ltd. You are also protector In Carlton Corporation. Kindly explain your and your family's interest in these companies and any income earned by you from the business of these companies. Ans This is a chart of Suchak's family holding in These are chart of Suchak family (in law of various company in June 2007. I was one of appellant). Holdings. It the protectors of their trust known as has nothing to do with Carlton Corporation which has since been appellant. closed after the order of the Royal Court of Jersey. As a protector of the trust I was also director of two companies underneath the trust namely Chalais Holdings Ltd. and Kansu Corporation Ltd both of which are closed since after the order of the Royal Court of Jersey. I had no monetary interest in any of these trusts/companies. My involvement was only because I am the son- in-law of Suchak Family & 6408/Mum/2024 Shri Dilip J Thakkar Annexure A-2 Q.26 Page No. 25: This is a resolution passed during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by you and your wife for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280. Please confirm whether such new account has been opened and if so give details of the new account and the cancellation of the old account. Copy of the bank statements shall be provided since you and your wife are authorized to operate the bank accounts. Also furnish the beneficiaries Ans This page is a copy of minutes of Chagganlal Suchak Family Trust (CSFT) regarding operation of its existing bank account with HSBC, Geneva. Since I do not control the bank accounts, I do not have the bank statements and the same are directly sent to the Settlor, Smt. Kantaben C Suchak. Q.27 Page 118 This is a letter addressed by you as director of Kansu Corp. Dated 11/03/2008 to the Director, Elkay Finance Ltd. Jersey acknowledging the debt and asking to set off the interest receivable by Kansu Corp. Please give full details of the transactions which involve mutual liability to and from the Elkay Finance Ltd Ans It is a letter written to Elkay Finance Ltd, Jersey on behalf of Kansu Corp. Ltd. In my capacity as a Director of Kansu Corporation for recovery of loan given to M/s Elkay Finance Ltd. 11.3.1.7 From the above, it is seen that the 90% of questions referred administrative address above are of of the Trust is Sh. Dilip Thakkar's office 1) Carlton Trust 2 address at M/s Jayantilal Thakkar & Co. Suryakant Suchak 111(A), M.G Road Fort Mumbai. As the Family Trust (SCS FT). authorized signatory of bank account Sh. Dillip J. Thakkar was actively involved in day None are of Chhaganlal to day operations and financial transactions. Suchak Family Trust Sh. Dilip J Thakkar alongwith his wife Mrs. (CSFT). Indira D. Thakkar were the trustees of the Chagganlal Suchak Family Trust (CSFT). Sh. CIT(A) has referred all Dilip J Thakkar and Mrs. Indira D Thakkar overseas entities name were the protectors of Cariton Corporation. and came to conclusion Further, Carlton Corporation Trust was for Chhaganlal Suchak reportedly dissolved in 2008 and funds were Family Trust (CSFT). deposited in Chagganlal Suchak Family Trust (CSFT). Carlton Corporation trust managed & 6408/Mum/2024 Shri Dilip J Thakkar three companies namely Kansu Corporation Ltd. (Cyprus), Kansu Corporation Ltd. (Bahamas) and Chalais Holdings (Canada) Ltd. Sh. Dilip J Thakkar & Smt. Indira D Thakkar were the protectors of Carlton Corporation. Sh. Dilip J Thakkar was' the Director of Chalais Holdings Ltd. (Liberia) and Kansu Corporation Ltd (Bahamas). Smt. Indira Dilip Thakkar was having interest with Kansu Corporation Ltd. (Bahamas). Therefore, it could be seen that the appellant and his wife Smt. Indira D Thakkar were involved in the management and affairs of the Chhaganial Suchak Family Trust (CST) and other related offshore entities 11.3.1.8 While Sh. Dilip J Thakkar had stated in his A Trust Deed is statement recorded on 10.08.2011 (continued declaration. a till 11.08.2011) under section 132(4) of the Income Tax Act 1961 and on 19.09.2011 Stamp Paper used of under section 131 of the Income-Tax Act. India does not make the 1961 that Chhaganial Suchak Family Trust Trust an Indian. (CSFT) was not an Indian Trust, the copy of Deed of Trust, obtained from Canadian Tax All assets in Trust are of Authorities, showed that the trust was abroad and all events established In India vide a Stamp Paper carried out were obtained in Mumbai and the address of the overseas. settlor of the trust namely, Smt. Kantaben C Suchak, was shown as 256, Upper Palace. No beneficiaries were Orchards. Sadashiv Nagar, Bangalore. Indian nor Se ttlor was Therefore, vide question No. 13 and 20 of the Indian. statement dated 16.04.2012 Sh. Dilip J. Thakkar was confronted with this issue. Sh. Without Prejudice If Dilip Thakkar maintained that though the Trust is Indian please tax deed was formed in India, trust did not have Trust and not appellant. any taxable income in India and after some time it was transferred out of India. Apart from it, settlors of the trust were NRIs and trust was not having any Income, so return of income was not filed in India. The relevant portion of the statement is reproduced hereunder Q.14 I am showing trust deed of The Trust Deed is not Chagganlal Suchak Family Trust registered. (CSFT) made on 24th May 2001, and registered in Mumbai (annexed to All trustees were Non This statement as annexure 3). Kindly Resident and sons of go through the same and comment on Kantaben Suchak. the taxability of Chagganlal Suchak Kindly refer Page 118 of Family Trust (CSFT) in India in light Paper Book. of the fact that it is a trust registered None of family members in India. of appellant were beneficiaries. Stamp Paper was used as it was settled in India. Thereafter same was transferred to Geneva.
& 6408/Mum/2024 Shri Dilip J Thakkar Hence same cannot be treated as Indian Trust. It is not a Charitable Trust. Moreover, Trust has no income and hence not taxable. Ans This trust was formed by the Mrs. Kantaben C Suchak while she was on a short visit to India and they had house in Bangalore, the address of which is provided al the 1st page of the said deed. It was formed with an initial corpus of GBP 100 and trustees were all family members who were and even today. NRI's. The trust had no fund and no income. Later the trust was transferred to Geneva when it received funds out of the dissolution proceeds of Cariton Corp oration, deposited in three sub- accounts of beneficiaries with HSBC Bank, Geneva. Since the trust is based in Geneva and is not managed and controlled from India, it is not taxable in India, In May 2001, when the trust was formed in India till it was shifted to Geneva, trust had no Income at all and hence there was no question of its taxability. The return of Income was not filed in India as it has no income." 11.3.1.9 In view of the foregoing discussion, it again The address can be used showed that the statements of the assessee for purpose were contrary to the fact that the trust was correspondence. of formed in India. The address of the trust as appearing in the records of the HSBC Bank, The Trust is not Geneva, was the office address of M/s registered in India and Jayantilal Thakkar & Co. at 111A, Karimji hence not a taxable Building, M. G. Road, Fort, Mumbai which entity in India. proved that not only the trust is formed in India but also was managed from India. Sh Dilip J Thakkar and Smt. Indira D Thakkar were the signatories of the Bank Account maintained with HSBC Bank, Geneva 11.3.1.10 Also while the appellant had stated that he Till date we have not and his family members had received benefits received copy of Trust from the corpus set aside by his father-in-law, Deed received from Sh. Chagganlal M Suchak, invested in RIB Canadian Authority. It is Bonds, and when these bonds matured in denial of natural justice. 2003, he along with your wife, and two Copy of Trust Deed is daughters, Smt Deval E Anthony and Smt. attached on Pg. 110-120. Mitali R Lakhanpal, received the proceeds as CIT (A) is confused legacy While on several occasions the assessee between RIB proceeds had stressed that neither he nor any of his received as legacy visa- family members received any fund out of vis the SUCHAK & 6408/Mum/2024 Shri Dilip J Thakkar Chagganlal Suchak Family Trust (CSFT), the CHHAGANLAL FAMILY Deed of Trust obtained from Canadian Tax TRUST (CSFT) fund for Authorities showed that RIB Bonds were part three sons. of corpus of Chagganlal Suchak Family Trust (CSFT). Therefore, vide Question No 11 and 12 of the statement recorded on 16.04.2012, the assessee was confronted once again with respect to these receipts. The relevant portion of the statement reproduced here under. Q.11 Did you or any of your family members received any RIB Bonds or any proceeds out of its maturity either from Chagganlal Suchak Family Trust (CST)or any other trust or from any of its trustees, beneficiaries or any relative of the trustees or beneficiaries? Ans My father in law Sh. C. M Suchak Please read answers on had set aside a corpus for the benefit left. of and children and grandchildren, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly, my wife received pound 1,36,000 daughter Mitali received pound 90,000, and my daughter Deval, residing at Toronto received pound 90,000 as legacy. These amounts have been shown as legacy received in 2003 Q No On page 4 Paragraph 10 of the trust deed of Chagganlal Suchak Family trust (CSFT) (annexed to This statement as annexure A-3) it is mentioned that -SBI Resurgent India Bonds (RIB) formed part of corpus of the trust and at the maturity of the said Resurgent India Bonds. (RIB), the same should merge with trust fund and be utilized for the benefit of the beneficiaries. If that be so and if your wife and daughters received proceeds out of the maturity of the said bonds, are they not supposed to be considered as beneficiaries and the proceeds be taxable in their hands? Ans The trustees of the trust- Chagganlal Legacy of Late Suchak Family Trust (CSFT), who Chhaganlal Suchak Was were also executors of Late C M distributed to the Suchak, who died in 1999, children as per the distributed the proceeds as legacy to directions. the children and grandchildren of Late C M Suchak Hence, my wife and daughters received the same as legacies" 11.3.1.11 This again showed that the appellant and his Once again I state that & 6408/Mum/2024 Shri Dilip J Thakkar family members had received payments out of my family received the corpus of CSFT being beneficiaries of the proceeds of RIB and no Trust. amount received from corpus of Trust of Chhaganlal Suchak Family Trust (CSFT) 11.3.1.12 Thus it can be seen that there was sufficient It is obseized that incriminating material in the form of documents of various documents and loose papers corroborated by other entities are statements of the appellant which showed that highlighted to the appellant and his wife were the Trustees demonstrate the and authorized signatories/protectors of operation of Chhaganlal Chagganlal Suchak Family Thrust (CST) and Suchak Family Trust I key controllers of the affairs of the Trust. Their was acting as protector daughters and the appellant's wife had the of Chhaganlal Suchak past. The administrative address of the Trust Family Trust (CSFT) and was Sh. Dilip J Thakkar's offictrative address carried out bank of the Trust Thakkar & Co. 113(A), MG. Road transaction as per the Fort Mumbal. Contrary to the claims of the direction in Trust Deed. appellant, the documents showed that the trust was formed in India. The address of the Correspondence address trust as appearing in the records of the HSBC in India is not a Bank, Geneva, was the office address of M/s conclusive evidence Jayantilal Thakkar & Co. at 111A, Karmiji when settlor and Building, M.G. Road, Fort, Mumbai which beneficiaries are all proved that not only the trust was formed in settled abroad. India but also was managed from India. Sh. Dilip J Thakker and Smt. Indira D Thakkar Incriminating material were also the authorized signatories. It was are nothing but the analysis of this incriminating material that correspondence with led the AO to the conclusion that the bank or account opening Chagganlal Suchak Family Trust (CSPT) was forms. created by Sh. Dilip J. Thakkar association with his family members and in-laws as a The conclusion of AO Special Purpose Vehicle to channelize the that fund belong to unaccounted income and park it outside the appellant is only on basis country in HSBC Bank Geneva. Therefore, the of surmises & fund parked in CSFT was held to be belonging conjectures without any to Sh. Dilip J. Thakkar and was held to be his documentary evidence or income which had not been offered to tax. The any money trail. Infact peak amount standing for FY 2005-06 was appellant have not USD 2361551 79 equivalent to Rs. received any benefit upto 10,50,41,824/-which was added to the total 2012 or till date income of the assessee for AY 2006-07. 11.3.2 As regards the claim of the appellant that the Swiss Government has communication received from the Swiss confirmed that the bank Federal Tax Administration by way of account with IBAN does notification dated 23.03.2015 states that the not belong to appellant. eight relevant bank accounts with HSBC Bank Geneva were not his accounts but were accounts of a Non Resident Offshore Family Trust, namely Chagganlal Suchak Family Trust (CSFT), whose beneficiaries were in England and Canada, it is seen that in this notification dated 23.03.2015 it is clearly stated that the request from the Indian Competent Authority is to be entered into for & 6408/Mum/2024 Shri Dilip J Thakkar the time period from 01.04.2011 to 31.03.2012. It is further stated that in accordance with Article 26 DTA CH-IN, administrative assistance for questions concerning the application of domestic tax law can only be provided for Information starting from the financial years 2011/12, as the prior years are not covered by the temporal scope of Article 26 of the amended Double Tax Agreement between India and Switzerland. Therefore, it has been stated that information can be provided only from 01.04.2011. Thus, information has been provided only for the period beginning 01.04.2011 to 21.02.2012 l.e. upto the date when the accounts were closed. 11.3.2.1 pertains to AY 2006-07 for which no The affidavit from information has been provided by the Swiss Suryakant Suchak Federal Tax Administration in view of the clearly state that Carlton prevailing Double Tax Agreement. Thus, the Trust was dismantled contention of the appellant that the Swiss and Chhaganlal Suchak Federal Tax Administration vide notification Family Trust (CSFT) was dated 23.03.2015 has given a clean chit to the created. appellant, cannot be accepted as no such information for the relevant period has been This was benefit of 3 provided. On the contrary, the Incriminating sons of SCS material found consequent to the search combined with the statements recorded and Whereas SCS FT was the other material available with the AO does created by Suryakant point out to the fact that Chagganlal Suchak Suchak for benefit of his Family Trust (CSFT) was created by Sh. Dilip family members. J. Thakkar in association with his family members and in-laws as a Special Purpose No documentary Vehicle to channelize the unaccounted Income evidences have been and park it outside the country in HSBC Bank produced by AO to come Geneva. Therefore, the fund parked in CSFT to conclusion that fund was held to be belonging to Sh. Dilip J. in trust belongs to Thakkar and was held to be his income which appellant. had not been offered to tax. The peak amount standing for FY 2005-06 was USD 2361551.79 equivalent to Rs. 10,50,41,824/-which was added to the total income of the assessee for AY 2006-07 11.3.3 In view of the above, it is clear that the claims Till date AO or CIT(A) has of the appellant that no incriminating material not confirmed as to what was found during the course of the search in is incriminating his case and that the additions have made in documents found in his case in respect of deposits made in third search. All papers found party's bank account with which he has no are duly explained and connection, have no merits and are hereby relevance are rejected. established. 11.4 As can already be seen from the above There is no iota of doubt discussion, the Incriminating maternal found that appellant is as a result of the search and the other connected to the Trust. enquiries made clearly show the close connection of Sh. Dilip J. Thakkar and his It was explained on wife Smt. Indira D. Thakkar in not only 10.08.2011 in written & 6408/Mum/2024 Shri Dilip J Thakkar creating the Trust but also managing and statement. The role of controlling its day to day affairs protector is to supervise which does not mean funds belongs to him 11.4.1 It is seen that the Chagganlal Suchak Family The in law family of Trust (CSFT) was settled on 24 May, 2001. appellant was in India The trust was settled between Smt. Kantaben and hence stamp paper Chagganlal Suchak as settlor and Sh. was obtained. The Trust Suryakant Chagganial Suchak, Sh. Shirish moved outside India and Chagganlal Suchak and Sh. Madhu all operation were carried Chagganlal Suchak called as "Trustee The from outside India assessee's wife Smt. Indira D. Thakkar was the daughter of the settlor of the Trust. The The foreign funds address of the above trust was shown as 256, operating from overseas Upper Palace, Orchards, Sadashiv Nagar, keep local address for Bangalore The stamp paper of the Trust was correspondence. Such purchased in Mumbai. Further, the trust deed communication address was signed in the presence of assessee Sh. does not make overseas Dilip J. Thakkar and Smt. Indira D Thakkar fund taxable in along with the three above-mentioned Trustees. The administrative address of the Trust was the same as the office address of the assessee in Mumbai. This proved that not only was the Trust formed in India but it was also managed from India. While initially the assessee kept on denying any Indian connection of CSFT, when confronted with the copy of the Trust Deed obtained from the Canadian Tax Authorities and the incriminating material found during the search, the appellant admitted about the Indian connection of the Trust in his statement recorded on 19.09.2011 and the relevant extracts of the statement of the assessee in this. regard are as under: Q.14 I am showing trust deed of Chagganlal Trust was never Suchak Family Trust (CSFT) made on registered in India. If AO 24th May 2001, and registered in can provide copy of Mumbai (annexed to This statement as same; the facts will be annexure 3) Kindly go through the cleared same and comment on the taxability of Chagganlal Suchak Family Trust (CSFT) in India in light of the fact that it is a trust registered in India. Ans This trust was formed by the Mrs. The whole structure of Kantaben C Suchak while she was on a formation of Trust has short visit to India and they had house been explained and there in Bangalore, the address of which is is no deviation from the provided at the 1st page of the said explanation given on deed. It was formed with an initial 10.08.2011 till date corpus of GBP 100 and trustees were all family members who were and even today, NRI's. The trust had no fund and no income. Later the trust was transferred to Geneva when it received & 6408/Mum/2024 Shri Dilip J Thakkar funds out of the dissolution proceeds of Cariton Corp oration, deposited in three sub-accounts of beneficiaries with HSBC Bank, Geneva. Since the trust is based In Geneva and is not managed and controlled from India, it is not taxable in India. In May 2001, when the trust was formed in India till it was shifted to Geneva, trust had no income at all and hence there was no question of its taxability. The return of income was not filed in India as it has no income 11.4.2 While Initially the stand of Sh. Dilip J. The family became Thakkar was that he was only a "Protector" or beneficiary for limited advisor of the CSFT, he later admitted that his purpose i.e. to receive family members were beneficiaries in the RIB Bonds towards the Chagganlal Suchak Family Trust (CSFT) for legacy Late Suchak. "sometime" in the past. Also, while initially he Chhaganlal tried to portray that he had of no other connection with CSFT other than being an The money standing in protector/advisor, he later also admitted on Chhaganlal Suchak the basis of the incriminating material that he Family Trust (CSFT) was and his wife were the authorized signatories never received by any as Trustees in the Chagganlal Suchak Family family member. Trust (CSFT) and SCS Family Trust (SCSFT). The relevant extracts of the statement of Sh. Dilip J. Thakkar recorded on 11.08.2011 are as under: Q.8 Kindly reiterate whether you or your Already replied family members were the beneficiaries of any trust registered in India or abroad? Ans My family members were the beneficiaries in Carlton Corporation and CM Suchak Trust, for sometime, but they never received any benefit and now they are not beneficiaries. At present my family members are not beneficiaries of any trust either in India or abroad. Q.9 Do you or your family members, in Already replied individual capacity or any other capacity hold any foreign bank account or are beneficiary or authorized signatory in any foreign bank Ans Me and my family members do not have any bank account of ours outside India, except my younger daughter Ms. Deval, who was in Canada for last 10 years who has comeback to India. She may have continued her foreign bank account when she was a non-resident. Further, me and my wife are authorized signatories as trustees in & 6408/Mum/2024 Shri Dilip J Thakkar fiduciary capacity of two trust, namely CM Suchak Family Trust and SCS Family Trust (SCSFT) and my wife is also an authorised signatory in her non-resident brother's account 11.4.3 Also, while initially Sh. Dilip J. Thakkar On the date of search it maintained that neither he nor any of his was informed by family members had derived any benefit from appellant that his family the Chagganlal Suchak Family Trust (CSFT), has received RIB the incriminating material found during the proceeds to extent course of the search showed that the appellant mentioned. However, no and his family members were the beneficiaries proceeds of the trust of the maturity proceeds of the Resurgent fund of SCS FT Is India Bonds (RIB) which were part of the received by any of Corpus of CSFT. When the issue was appellant family member confronted to the appellant in his statement recorded on 19.09.2011, the appellant tried in vain to portray these receipts as legacy of his late father in law Sh. CM Suchak. The relevant extracts are as under Q.11 Did you or any of your family Already replied. members received any RIB Bonds or any proceeds out of its maturity either from Chagganlal Suchak Family Trust (CST)or any other trust or from any of its trustees, beneficiaries or any relative of the trustees or beneficiaries? Ans My father in law Sh. C. M. Suchak had set aside a corpus for the benefit of and children and grandchildren, which was invested in Resurgent India Bonds. These bonds matured in 2003 which was distributed to and children and grandchildren as legacy. Accordingly, my wife received pound 1,36,000 daughter Mitali received pound 90,000, and my daughter Deval, residing at Toronto received pound 90,000 as legacy. These amounts have been shown as legacy received in 2003. Q. No. On page 4 paragraph 10 of the trust The RIB was invested by deed of Chagganlal Suchak Family Late Chhaganlal Suchak trust (CSFT) (annexed to This in the name of his son statement as annexure A-3) it is and kept as part of Trust mentioned that SBI Resurgent India so that proceed is not Bonds (RIB) formed part of corpus of appropriated individually the trust and at the maturity of the by him. As per RIB the said Resurgent India Bonds (RIB), the sale proceeds are exempt same should merge with trust fund in hands of recipient. and be utilized for the benefit of the Hence not taxable at all beneficiaries. If that be so and if your wife and daughters received proceeds out of the maturity of the said bonds, are they not supposed to be considered as beneficiaries and the & 6408/Mum/2024 Shri Dilip J Thakkar proceeds be taxable in their hands? Ans The trustees of the trust- Chagganlal Suchak Family Trust (CSFT), who were also executors of Late CM Suchak, who died in 1999, distributed the proceeds as legacy to the children and grandchildren of Late CM Suchak. Hence, my wife and daughters received the same as legacies. 11.4.3.1 Moreover, the enquiries made in respect of RIB RIB are not the foreign from SBI revealed that the investment in RIB assets. They are Indian was made neither by Late Sh. CM Suchak nor Securities issued by by Chagganlal Suchak Family Trust (CSFT). It Indian Bank Late was rather made by Sh. Suryakant C. Suchak, Chhaganlal Suchak who was the Trustee/Beneficiary of CSFT. As invested through his son per the reply dated 04.03.2015 of SBI and as and same was mentioned on page 98 of the assessment considered as part of order, interestingly the investment was made Chhaganlal Suchak in the name of Sh. Suryakant Chagganlal Family Trust (CSFT) so Suchak c/o Sh. Dilip J. Thakkar with his that it can be distributed residential address as 12 Acropolis, Little as per the wish list of Gibbs Road, Malabar Hills Mumbai, which Chhaganlal Suchak happens to be the residential address of Sh. Dilip J. Thakkar. This is a classic example of how the benefits accrued to the appellant and his family members using the Trustees of CSFT and this also shows why the version of the appellant cannot be relied upon. 11.4.4 Also, while the appellant initially claimed that Appellant transferred he was only an advisor and that he did not fund only in capacity of control any of the bank accounts, the Protector and as referred incriminating material found as a result of the for achieving object search proved to the contrary. It was clear towards the beneficiaries. from the Incriminating material found during the course of the search that not only the He was never the funds were being transferred on the express beneficiary of any trust. directions of Sh. Dilip J. Thakkar from one And his family was made account to another, he was also deciding beneficiary for limited important matters like opening of new foreign time to receive RIB bank accounts etc. The incriminating material Bonds. Operation of found was duly confronted to the appellant account of overseas and the relevant extracts of his statements are Trust does not make the as same as undisclosed or taxable in India. 11.4.4.1 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 10/11.08.2011 under section 132(4) of the Income Tax Act, 1961 are as under: Q.21 I am showing you page number 174 of Annexure A-3 found and seized from this premises, Kindly explain the same. Ans Yes, I confirm that the said paper SCS FT was created for was found and seized from my benefit of Suryakant residence. This is an advice sent to Suchak Family. The fund HSBC Bank Geneva to transfer transferred was for & 6408/Mum/2024 Shri Dilip J Thakkar funds from the account of CM benefit of Suryakant Suchak Family Trust to the account family and not the of SCS Family Trust (SCSFT) with appellant family. None of HSBC Singapore appellant family were beneficiary of SCS FT. Q.24 I am showing you four bank records Swiss Government has of HSBC Bank Geneva (made a part confirmed that these of the statement Annexure 2) bank IDs do not belong relating to The Chagganlal Suchak to appellant. Also the Family Trust (CSFT) having paper relating to bank following ids 5090274125, are not the bank 5090174141 and 5090181752. You along with your wife Indira Thakkar statement. and your two daughters Mitali Lakhanpal and Deval Thakkar have Once consent waiver been mentioned as beneficial owner. form was obtained and Kindly explain the status in the forwarded to Swiss backdrop of replies given by you in Government and got a response to above queries wherein confirmation that the you have mentioned that neither accounts do not belong you nor any of your family members to appellant, the matter hold any beneficial interest in any of stands closed. the foreign trust Ans Myself and my wife are trustees of the trustees of the trust in fiduciary capacity and not as beneficial owner. My two daughters were beneficiary of the trust earlier, during which time they did not receive any benefit from the trust. As of now they are no more beneficiaries. 11.4.4.2 Extracts of Statement of Sh. Dilip J. Thakkar recorded on 19.09.2011 under section 131 of the Income Tax Act 1961 are as under: Q.3 This is a direction given by The answer is replied you in your letter dated below. Page No. 1 08/08/2011 to the HSBC Private Bank, Geneva to The transaction was remit 1 million pounds by carried for SCS FT and swift GBP to the account not connected to CSFT with HSBC Private Bank (Suisse) Statutory Auditors, Singapore, of SCS Family Trust (SCSFT). Please explain the complete nature of transaction stated in this letter and the source of fund involved, alongwith the accounting entry in the books of account of both the payer as also the receiver. This is also stated to be referred by one Mr. Sangram Singh, Please give details of the involvement of said Mr. Sangram Singh.
& 6408/Mum/2024 Shri Dilip J Thakkar Ans As decided by the settlor Smt. Kantaben C Suchak. This amount is transferred from the sub account of Sh. Suryakant Suchak with HSBC Pvt. Bank, Geneva to and account with HSBC Pvt. Bank, Singapore, Sh. Sangram Singh is the Relationship Manager at HSBC Pvt. Bank, Singapore. Q.5 Page No. 6 This is again another letter Same as above dated 20 January 2011 to HSBC-Private Bank (Suisse) Statutory Auditors. Geneva directing transfer by Swift GBP of Pounds 1,00,075/- to the account of HSBC Private Bank, (Suisse) Statutory Auditors, Singapore for the benefit of SCS Family Trust (SCSFT). This is referred by Vidya Viswanambaran / Sachin Jumani. Ans This is the draft letter to be addressed to HSBC Pvt. Bank, Geneva for transfer of funds to SCS Family Trust (SCSFT)s Bank account with HSBC Pvt. Bank, Singapore. The two names mentioned Vidya Viswanambaran and Sachin Jumani are the Relationship Managers at HSBC Pvt. Bank, Singapore Q.6 Page 10- This is a letter dated 04/11/2009 addressed to Anish S Suchak and Mrs. Bella Anish Suchak, confirming transfer of GBP 1,000,000 by wire transfer, from the trust account with HSBC Private Bank (Suisse) Statutory Auditors to the account with Scotia Bank, Ontario Please explain this transaction with reference to the source of funds and accounting entries in this regard. Ans It is a letter myself and my This is a transfer of wife has signed as trustees benefit by Trust to of M/s Chagganlal Suchak beneficiary. Family Trust for & 6408/Mum/2024 Shri Dilip J Thakkar distribution of 1 million As already mentioned pounds to a beneficiary Sh. that CSFT was created Anish S. Suchak as per the for benefit of three sons decision taken by the and their family. The settlor, I would like to fund was rightly clarify that Sh. Anish S transferred to them. Suchak, had declared This amount to tax authorities in Canada, where he is a resident. Q.7 Page 26 This is again a similar letter dated 31/07/2009 addressed to Mr Anish Suryakant Suchak, Canada informing the transfer of CAD 250,000 each to the account Nos 0284688 and 0347825 with Scotia Bank in Ontario. The beneficiaries being the addressee's sons Krish and Kunal. Please explain the details of the remitting bank account and the source of funds alongwith accounting entries. Ans This is a letter signed by me Same as above. and my wife as trustees of M/s Chagganlal Suchak Family Trust (CSFT) as distribution of two beneficiaries. Master Krish Anish Suchak and Master Kunal Anish Suchak as decided by the settlor. This has also been declared to Canadian tax authorities. Q.8 Page 33 to 42 This is the SCS FT is a Singapore Trust Account mandate for Trust where appellant is opening the account of SCS just a trustee with other Family Trust (SCSFT) with trustee. None of his HSBC Private Bank (Suisse) family members are the Statutory Auditors Hong beneficiaries. Kong Branch/Singapore Branch/Nassau Branch dated 28/08/2010 signed by Dilip J Thakkar and Indira D Thakkar. This said mandate form shows the country in which the trust is resident as INDIA as well as the incorporation also in INDIA. Please explain whether the said Trust, being Indian Trust is filing the return of income in India, if not the & 6408/Mum/2024 Shri Dilip J Thakkar reason therefor. Please give details of PAN, details of returns filed, whether income/wealth offered Where are the books of account of the trust maintained/audited Ans Page 33 to 42 Page 33 to 42 are copies of bank account opening forms of SCS Family Trust (SCSFT) with HSBC Pvt. Bank, Singapore. This trust is based in Dubai and not in India. SCS Family Trust (SCSFT) is not an Indian Trust and hence, returns of income is not filed in India. Since the Trust is not an Indian Trust, it has no PAN and its books of accounts are not maintained in India. …….. Annexure A-2 AQ.26 Page No. This is a resolution passed 25: during the meeting of the trustees of Chagganlal Suchak Family Trust (CSFT) on 21/10/2004 signed by you and your wife for opening a new bank account with HSBC, Geneva in place of the existing account No. 13280. Please confirm whether such new account has been opened and if so give details of the new account and the cancellation of the old account. Copy of the bank statements shall be provided since you and your wife are authorized to operate the bank accounts. Also furnish the beneficiaries. Ans This page is a copy of Bank statements are minutes of Chagganlal sent to settlor/Trustee Suchak Family Trust Appellant was just a (CSFT) regarding operation signatory. of its existing bank account with HSBC, Geneva, Since I do not control the bank accounts, I do not have the bank statements and the same are directly sent to & 6408/Mum/2024 Shri Dilip J Thakkar the Settlor, Smt. Kantaben C Suchak 11.4.4.3 From the above discussion it is clear that the The conclusion drawn by incriminating material found and the CIT(A) is based on statements recorded duly corroborate that the surmises & conjectures. appellant Sh. Dilip J. Thakkar was the Only having access to authorized signatory and actively involved in account or carrying out managing and controlling the day to day transfer to beneficiary affairs of the Chagganlal Suchak Family Trust who are Non Resident (CSFT) and several other offshore entities. He does not make the Trust was taking important financial decisions like taxable transfer of funds, opening of bank accounts etc. 1.5 (CSFT) was formed in India and the CSFT Trust was being appellant's wife Smt. Indira D. Thakkar managed by Trustees happened to be the daughter of the settlor. who were all Non CSFT was being managed and controlled on Residents. day to day basis by Sh. Dilip J. Thakkar who was also the authorized signatory. He Papers found only had admitted that his family members were two to three transfer beneficiaries of CSFT in the past. He also instructions which was admitted that he and his wife were Trustees of done by appellant. the Trust in fiduciary capacity. It is also seen Two/three document that Sh. Dilip J. Thakkar was taking does not prove that Important day to day decisions like transfer of appellant is managing funds, opening of bank accounts etc. It is seen total affairs from India. that CSFT was a discretionary private trust with all the unlimited powers vested in the Appellant had power of hands of the Trustees/ Protector / authorized attorney to operate does signatories to apportion money, to make not make overseas Trust investment decisions or to Increase or taxable in India. decrease the ratio of the benefits to the beneficiaries. It can thus be concluded that The conclusion that the Chagganlal Suchak Family Trust (CSFT) Appellant created trust was created by Sh. Dilip J. Thakkar in to channelize association with his family members and in unaccounted money is laws as a Special Purpose Vehicle to pure conjectures and channelize the unaccounted income and park thought process of CIT(A) it outside the country in HSBC Bank Geneva. without any trail or Therefore, the fund parked in CSFT was evidence that any money rightly held by the AO as belonging to Sh. is received. Dilip J. Thakkar and was held to be his income which had not been offered to tax. I Without prejudice Peak see no infirmity in the action of the AO in balance cannot be taxed adding the peak amount standing for FY in A.Y. 2006-07. 2005-06 being USD 2361551.79 equivalent to Rs. 10,50,41,824/- to the total income of the assessee for AY 2006-07. The addition made is sustained and the grounds of appeal are dismissed.
14. Another very important fact which has been brought on record is that FT & TR division of CBDT had written a letter & 6408/Mum/2024 Shri Dilip J Thakkar to the Swiss Federal Tax Administration to seek the information and clarification on the various bank accounts of Chagganlal Suchak Family Trust with HSBC Geneva. Swiss Federal Authorities although have provided the information and the report for five cases related to ‘Chagganlal Suchak Family Trust’. However, one very important clarification by the Swiss Authorities which has been mentioned by the FT & TR letter as under:- “3. The Swiss Competent Authority in their letter had also stated that the beneficiaries of the trust are third parties with addresses in Canada and England but had not provided their details on the ground that they do not see an apparent nexus with India. This matter was taken up with the Swiss Competent Authority and it was explained that unlike in Switzerland, in India, the Income of a person who is a non-resident can also be taxed if it has a source or nexus in India. They promised to examine this matter and provide necessary assistance if a supplementary request is made clearly explaining the above and provide further details of the nexus of the beneficiaries of the trust with India and their potential liability for taxation in India if Information in this regard is received from Switzerland. A supplementary request should accordingly be made at the earliest.”
15. This has been stated by the FT & TR division in the letter dated 23/04/2015 in the letter to the Pr. Commissioner of Income Tax (Central)-3, Mumbai. This is with reference to the following letter issued by the Swiss Federal Tax Administration, FTA, wherein they have clearly stated that the beneficiaries are all Citizens of UK and Canada and assessee and his wife are not & 6408/Mum/2024 Shri Dilip J Thakkar 16. Accordingly, ld. Counsel submitted that once the Swiss Tax authorities themselves have categorically stated that beneficiaries are third parties with addresses in Canada and England and secondly, neither Shri Dilip J Thakkar nor Smt. Indira Dilip Thakkar are the beneficiaries of Chagganlal Suchak Family Trust, then where is any ground or reason to hold that assessee or his wife are the beneficiary of the trust for the amounts deposited in the HSBC bank, Geneva. Accordingly, in view of the rebuttals of each and every observation of the ld. AO and ld. CIT (A) and the clarification issued by the Swiss Federal Tax Administration, there can be no presumption that assessee was a beneficiary or the peak balance in the bank account which can be added in the hands of the assessee. Apart from that, he further drew our attention the deed of trust Chagganlal Suchak Family Trust dated 24/05/2001 wherein, there are clear cut name of beneficiaries which has been given in separate schedule and in none of the list of beneficiaries, assessee’s name is appearing nor of his wife. The lists of beneficiaries in the Trust were as under:- LIST OF BENEFICIARIES 1. Anil Madhu Suchak 2. Neela Madhu Suchak (London - U.K.) 3. Anish Suryakant Suchak 4. Deepa Suryakant Suchak (London - U.K.) 5. Monisha Shashi Devani 6. Sonia Shashi Devani 7. Promodini Shashi Devani (London - U.K.)
& 6408/Mum/2024 Shri Dilip J Thakkar 8. Geeta Shirish Suchak 9. Neha Shirish Suchak 10. Dev Shirish Suchak (Montreal - Canada) 11. Dina Suryakant Suchak (London) 12. Vandana Shirish Suchak (Montreal) 13. Doris Madhu Suchak (London) 17. Assessee also drew our attention to name of the trustees of Chagganlal Suchak Family Trust in the bank account of Chagganlal Suchak Family Trust, the scan copy of which is as under:-
& 6408/Mum/2024 Shri Dilip J Thakkar 18. The correspondence address mentioned is also of UK. Lastly, he drew our attention to the affidavit of Mr. Suryakant Chagganlal Suchak, wherein he has clarified everything that who are the beneficiaries and that sole beneficiary was himself 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 & 6408/Mum/2024 Shri Dilip J Thakkar Dar-es-Salaam and earned sizable wealth out of his business activities. 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 therefrom 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.Chhaganlal Suchak Family Trust (CSFT) was settled on 24th May 2001 by Mrs. KantabenChhaganlal Suchak and appointed herself and her three sons Suryakant, Shirish and Madhu as first & 6408/Mum/2024 Shri Dilip J Thakkar 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. 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 & 6408/Mum/2024 Shri Dilip J Thakkar members.None of them has ever been a Tax Resident of India during last 30 years.
10. SCS Family Trust was settled by Mrs. KantabenChhaganlal 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. KantabenChhaganlal 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.
& 6408/Mum/2024 Shri Dilip J Thakkar 3. Thereafter, further funds which were received from Chhaganlal Suchak Family Trust were invested in mutual funds etc. as directed by me.
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.
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.
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.”
This affidavit has been made in London on 10th day of June 2015. From the said affidavit it is clear that Suchak family had a very rich background and all the source of funds were from his late parents and he and his family were the beneficiary of the trust fund and assessee has nothing to do with it.
& 6408/Mum/2024 Shri Dilip J Thakkar 20. Before us, ld. CIT DR has referred to the various observations and the finding given by the ld. AO and ld. CIT(A) and based on these relevant observations, following gist of the arguments have been summarized by her.
Gr. No. Relevant para of Relevant para of Gist A.O. CIT(A) 1 -Para 12.3 on page Paras 10.1 to The assessment was getting time- 81 of assessment 10.5 of appellate barred on 31-03-2014. Reference order. order. seeking information under exchange of - Page nos information under DTAA u/s 90/90 A 20 to 22 of of the IT Act was made by the assessee's Competent Authority i.e FT & TR paper book Division, CBDT to Swiss Federal Tax containing Administration vide letter D.O.F. No A.O's 504/118/2012-FTD-1 dated 05-12- remand 2012 . This fact was communicated to report dated the A.O vide letter D.O.F. 16-11-2023 No504/125/2012-FTD-1 dated 04-03- 2013 . Hence, in view of Explanation (viii) of section 153B(1) of the Act, the time-barring date got extended by one year. The assessment order was passed on 30-03-2015 which was within the limitation date. Hence, ground of appeal no 1 may be dismissed. 2 -Paras 6.7 to 6.17.2 Paras During the search on the assessee u/s of the show-cause 11.3.1.1 to 132 of the Act on 10-08-2011, several dated 12-11-2014 11.3.1.12 incriminating material were unearthed on page nos 55 to of relating to the role of the assessee and 66 of assessment appellate his wife in the Chagganlal Suchak order order. 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. Hence, ground of appeal no 2 may be dismissed. 3 & 6 -Para 15.14 on Para The Swiss FTA Notification dated 23- page 90 of assmnt 11.3.2 and 03-2015 had not been received by the order 11.3.2.1 of A.O till completion of the assessment -Para 15.15 on appellate proceedings. He has commented page 91 of assmnt order. separately on it in his remand report order dated 02-01-2024. - Page nos The CIT(A) has noted that the said & 6408/Mum/2024 Shri Dilip J Thakkar 24 to 26 of notification clearly stated that the assessee's request from Indian Competent paperbook Authority for the time period from 01- containing 04-2011 to 31-OS-2012. Prior periods A.O's are not covered by the amended DTAA remand between India and Switzerland. Hence, report dated information can only be provided from 02-01-2024 01-04-2011 to 21-02-2012 ie date when account was closed. Thus, no information for the relevant period ie AY 2006-07 has been provided in the said Notification. Hence, ground of appeal nos 3 & 6 may be dismissed.
4. Paras 15.1 to 15.17 Paras 11.4.1 to i) Copy of the Trust deed received from on page nos 82 to 11.5 of appellate the Canadian Tax authorities revealed 93 of assmnt order. order. that the trust was formed in India. The settlor of the trust was Mrs Kantaben 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 settlor 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. ii) The assessee and his wife were Trustees and authorized signatories as Trustees in CSFT.They were managing day to day affairs of the Trust, iii) The administrative address of the Trust in the records of the HSBC Bank was the office address of the assessee. iv) Family members of the assessee were beneficiaries of maturity proceeds of RIB in 2003 which were part of corpus of CSFT as per paragraph 10 on page 4 of the trust deed. His wife and daughters received legacy proceeds from the Trust, v) 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, vi) All the four family members of the assessee submitted consent waiver forms to enable Indian government to receive information from HSBC Bank, Geneva. Hence, ground of appeal no 4 may be dismissed.
5 & 9 Para 15.03, paras Para 11.4.3& Family members of the assessee were 16.1 to 16.5 of the 11.4.3.1 of beneficiaries of maturity proceeds of assmnt order appellate order. SBI Resurgent India Bonds in 2003 . As per paragraph 10 on page 4 of the trust deed, the RIB were part of corpus of CSFT and at maturity the same should merge with the trust fund and be utilized for the benefit of the beneficiaries. His wife and daughters received legacy proceeds from the Trust. This goes on to prove that the assessee and his family members were beneficiaries of the CSFT . Hence, ground of appeal nos 5 & 9 may be dismissed. 7 - Para 13.1 & 14.1 No statement of a third party has been of appellate order relied upon by the A.O in the assessment order. It is not clear who the assessee wants to cross-examine. Further, the A.O had provided to the assessee copies of all the incriminating material sought to be relied upon for making additions. Hence, there is no denial of natural justice to the assessee. Hence, ground of appeal no 7 may be dismissed.
8. Para 19 of the Para 12.1 & 12.2 assessment order of appellate order The assessee has failed to provide documentary evidence regarding source of the payment of Rs 57 lakhs during the assessment and appellate proceedings. As per page no 148 of the paperbook before the ITAT, the assessee has explained the source to be his bank accounts held with Union Bank of India, UTI Bank and Bank of Baroda. Some bank statements have been enclosed from page nos 194 to 219. However, no supporting evidences were submitted before the lower authorities despite sufficient opportunities. No separate petition under Rule 29 of ITAT Rules for admission of additional evidence has been filed before the Hon'ble Bench. Hence, these documents, which are clearly in the form of additional evidence, may not be admitted. Hence, ground of appeal no 8 may be dismissed.
& 6408/Mum/2024 Shri Dilip J Thakkar 21. We have heard both the parties at length, perused the relevant finding and the observation given by the ld. AO and ld. CIT (A) and also various materials referred to at the time of hearing. By and large, we have captured all the relevant observations of the ld. AO and ld. CIT (A) which was incorporated in the tabular form in paragraph 13 wherein assessee has given his reply / rebuttal qua each of the observations.
The core issue involved here is, whether the addition of Rs. 10,50,41,824/- being the peak amount standing for F.Y. 2005- 06 of USD 2361551.79 in the bank account belonging to Chagganlal Suchak Family Trust (CSFT) in the various bank accounts of HSBC Bank, Geneva 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.
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 & 6408/Mum/2024 Shri Dilip J Thakkar 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 Mulji Suchak 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 & 6408/Mum/2024 Shri Dilip J Thakkar 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 alongwith 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 & 6408/Mum/2024 Shri Dilip J Thakkar 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 & 6408/Mum/2024 Shri Dilip J 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. Surykant Chagganlal Suchak who has clarified the source of beneficiaries of the fund and has categorically stated that the trust account in Geneva was closed in before & 6408/Mum/2024 Shri Dilip J Thakkar 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 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.
& 6408/Mum/2024 Shri Dilip J Thakkar 28. 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.
Now coming to the issue of addition of Rs. 57,00,000/- in respect of payment made to Mr. Jehil Ashok Thakkar, it has been stated that these funds were given to the nephew of the assessee towards compensation of value of flat as one of the flat belonging to the mother of the assessee which she was equally bequeathed to assessee and his brother Ashok Thakkar. The assessee has paid 50% of the value of the flat from his bank account through cheque, the source of which was duly explained. It has been stated that, this transaction was purely between family arrangements on account of inheritance. The ld. AO has brushed aside the explanation of the assessee on the ground that source of the payment was unexplained. Even the ld. CIT(A) has confirmed the addition holding that assessee has furnished fund flow statement to explain the source of the funds and the payments but in absence of bank account statement to support the source of funds, same cannot be accepted. He held & 6408/Mum/2024 Shri Dilip J Thakkar that, just because the payment has been made through cheque, it cannot be treated as explained.
From the perusal of the facts and material on record, we find that assessee’s mother, Late Mrs. Snehila Jayantilal Thakkar in her will dated 01/11/2000 bequeathed her only residential flat in Mumbai equally to her two grand children, Mrs. Mitali Rohit Lakhanpal (daughter of assessee) and Jehil Ashok Thakkar (son of assessee’s brother). The deceased mother’s estate was bequeathed to HUF of Dilip Jayantilal Thakkar and HUF of Ashok Jayantilal Thakkar. This is clear from the contents of the ‘will’ given in the paper book at pages 145-147. Her ‘will’ also stated that either of her two grand children can acquire one half of the share as per the valuation of the flat at the time of her death. After her death on 03/02/2005, flat was valued by the Approved Valuer at Rs.1,10,00,000/- and half of it (Rs. 55,00,000/- ) plus compensation for late payment aggregated to Rs.57,00,000/- which was paid to Ashok Jayantilal Thakkar through from Dilip Jayantilal Thakkar HUF in his mother’s bank account and there by paid by cheque as legacy to Jehil Ashok Thakkar. Thus, it was submitted that the payment was made from the bank account of the assessee as Karta of HUF through declared sources hence it could be held that the payment made was from undisclosed sources. The complete fund flow has been given at page 148 of the paper book which is reproduced hereunder:-
The assessee had also filed an affidavit of Mr. Jayhil Ashok Thakkar before the authorities below about the payment of Rs.57,00,000/-. Once assessee has given the source of funds as given above from his bank account, we fail to understand how the payment of Rs.57,00,000/- remain unexplained. Accordingly, the addition made by the ld. AO is deleted.
The other grounds which have been raised by the assessee have been rendered purely academic and infructuous because on merits only these are two additions challenged before us have & 6408/Mum/2024 Shri Dilip J Thakkar already been deleted. Other legal grounds raised that the assessment is time barred is also treated as academic and dismissed as infructuous.
In the result, appeal of the assessee is allowed on merits.
.6408/Mum/2024 34. The aforesaid appeal is in relation to the penalty proceedings u/s 271 (c) in respect of quantum of additions made with regard to Rs.10,50,41,824/- and addition on account of source of funds paid to Shri Jayhil Ashok Thakkar. Since we have already deleted the addition on merits in the quantum of proceedings, therefore, penalty levied on such addition stands deleted. In the result, appeal of the assessee is allowed.
In the result, both the appeals of the assessee are allowed. Order pronounced on 30th May 2025.