Appellant is not a Mother Teresa that someone will deposit 4million USD*- Mumbai ITAT

Let us study this interesting and latest ITAT case of Renu Tharani (ITA No. 2333/Mum/2018): 

1. Funds of Rs 196 crores were held by a HSBC account in Switzerland in FY 2005-06 in the name of GWU investments (registered in Cayman Islands), which is a Tharani family trust. 

2. The only beneficiary of the Trust is Ms Renuka Tharani, who is the appellant in the case. 

3. The appellant claims that as per the passport records, she was outside India for more than 182 days during FY 2005-06 and in fact 2001 onwards she was a non resident and so any income earned outside India should not be taxable in India. She also states that she is neither a shareholder nor promoter of the trust and has nothing to do with the trust. 

4. The department has argued that appellant has not disclosed any source of this amount either in India or US where she was a resident then. She has not indicated ways in which she has earned this income. 

5. The department has also contended that there cannot be any reason for anyone, leave aside an entity of unknown people in a tax haven, leaving such a sum for her as a beneficiary. 

6. Interestingly, the return for FY 2005-06 was filed as a resident by the appellant. 

The ITAT has held as below:

1. The assessee is not a public personality like Mother Terresa that some unknown person, with complete anonymity, will settle a trust to give her US $ 4 million. 2. Cayman Islands is not known for philanthropists operating from there; if Cayman Islands is known for anything relevant, it is known for an atmosphere conducive to hiding unaccounted wealth and money laundering.

3. HSBC Pvt Bank has also been indicted by several Governments worldwide and how it has even confessed to be being involved in money laundering

4. The appellant refused to sign consent waiver form for extracting information from HSBC Switzerland. If she had nothing to hide, she should have given the consent. 

5. It is unrealistic to assume in a short period of a year, nearly Rs 200 crore at her disposal in the Swiss Bank account, reflects income earned outside India. Based on her previous income declaration, it would have taken her more than 11,500 years to earn the amount stashed in the Swiss bank account.

CA Aniket Kulkarni