DCIT CC 1(1), MUMBAI vs. HARSHAD RAMNIKLAL MEHTA, WORLI

This is second round of proceedings. The addition made by the AO during the course of original assessment was related to the transaction to the tune of US $ 4,387,146 made in the account standing the name of M/s. Dryade Stiftung in a bank account maintained with Liechtenstein. The assessee along with three other Members were found to be the beneficiaries of the above said bank account. Accordingly, the AO reopened the assessment of the year under consideration and assessed 25% of the value of the above said deposit, which was equivalent to Rs.5.35 crores, adopting the conversion rate of 48.80. The assessee challenged the above said addition by filing the appeal before the Ld.CIT(A), but could not succeed. Hence, the assessee carried the matter to the Tribunal and ITAT vide its order dt. 04-09-2019 passed in restored the matter back to the file of the AO for examining the issue afresh. Accordingly, the AO passed the impugned assessment order making the very same addition.

We heard the parties and perused the record. The Ld A.R submitted that there was one more beneficiary of the above said bank account, viz., Shri Late ArunKumar R Mehta and the AO had also made addition of the share of above said person in his hands. The said addition has since been deleted by the Tribunal vide its order dated 09-06-2023 passed in ITA No.2743/Mum/2011. We have gone through the said order and notice that the co-ordinate bench has made detailed analysis of the surrounding facts and came to the conclusion that the AO has proceeded on the premise, which is by and large based on certain information contained in public domain and certain public perception around LGT Bank during that period that how these banks were acting as ‘tax haven’ for various persons to park unaccounted money in these accounts. The Tribunal has noted the fact that assesse’s brother Shri Dilip Mehta was a NRI since 1973 and was Citizen of Belgium, who has categorically stated that he alone has contributed to the trust which was created for the benefit of his children and his family and has been contributing to the trust out of his own funds from his business entities carried outside India. We further notice that the Tribunal has directed the AO to cross examine the above said Shri Dilip Mehta. He appeared before the assessing officer in the remand proceedings and filed a detailed reply dated 29th August, 2022, wherein he had categorically admitted that he alone has contributed to the fund of the foundation from his business interests and resources carried outside India. He has further stated that his other brothers had not contributed funds or received any distribution from discretionary trust. Further, he also furnished certain documents before the AO in order substantiate his submissions and the details of the said documents are listed in paragraph no. 14 of the order of the ITAT.

Another important point noted by the Tribunal is that the documents available with the department clinches preponderance of probability in favour of the assessee, i.e., the beneficial owner’s identity signed by proxy holder ABN Amro Trust Company (Suisee) SA, which belongs to Dryade Stiftung created on 2nd July, 1986, which had bank account with ABN Amro. It also noticed that the said bank account was having a credit entry of US $43,86,034.37 with balance at the end of the day at US$ 43,87,146.86 with narration “Bonification AA1452197 Rosy Blue FIN SA. Accordingly, the Tribunal observed that if the narration against credit entry mentions “Rosy Blue FIN SA”, then how the credit entry in the said bank account of Dryade Stiftung can be said to pertaining to assessee. The Tribunal also noticed that there was debit entry of US $ 43,87,146 as a payment with the beneficiary of the said amount mentioned as “Sundew Company Ltd”. Accordingly, the Tribunal observed that, once in the account credit entry is in the name of Rosy Blue Fin SA and in the debit entry, beneficiary has been shown as Sundew Company Ltd, then it cannot be said that the assessee has received part of that amount when this company was stated to belong to Shri Dilip Mehta earlier. Accordingly, the Tribunal held that the information itself does not even indicate that assessee had any interest or has received any fund from this bank account. Accordingly, the Tribunal deleted the addition.

Before us, both the parties admitted that the facts prevailing in the instant case is identical with the facts of Late ArunKumar R Mehta (supra) decided by the co-ordinate bench.

Accordingly, following the above said decision of the co-ordinate bench, we uphold the order passed by Ld CIT(A).

In the result, the appeal filed by the revenue is dismissed.