The late Bhushan Lal Sawhney (now represented by his spouse), challenged the additions made to his earnings on two grounds. One, that the evaluation order pertaining to the six years from monetary 12 months 2005-06 to 2010-11 was time-barred. Second, no incriminating proof was recovered throughout a search that had additionally been carried out on the person taxpayer.
Thus, the additions made on account of unexplained deposits within the Swiss financial institution account and curiosity earned thereon had been unjustified. Based mostly on the details of the case, and because the Swiss authorities didn’t half with data pertaining to those years, the ITAT determined in his favour.
In its current judgment, the ITAT ordered deletion of this sum of about Rs 9.2 crore that was added to the earnings of the person taxpayer. It additionally ordered deletion of curiosity earnings allegedly earned from the abroad checking account that was assessed within the taxpayer’s palms in subsequent years. The ITAT famous that data could possibly be offered by the Swiss competent authorities solely from April 1, 2011. Earlier years (to which this litigation pertained) weren’t lined by the Trade of Data Article within the India-Switzerland tax treaty.
Whereas the I-T officer had sought to convey the financial institution steadiness (unaccounted abroad cash) to tax in India, the ITAT famous that — based mostly on the knowledge out there with the I-T division’s investigation wing — there was no incriminating materials out there on file to make additions to earnings in any of the evaluation years that had been beneath litigation. Curiously, whereas the taxpayer’s son had admitted to the existence of the Swiss checking account, this was denied by the taxpayer (checking account holder).
In keeping with authorities officers, the genesis of the HSBC-Geneva account instances, that are in litigation at numerous ranges, dates again to 2007 when an worker of HSBC Financial institution-Geneva obtained data on practically 30,000 financial institution accounts and have become a whistleblower.
It’s considered the largest financial institution leak in historical past, overlaying the interval 2005-07, with the combination sum of funds in these accounts amounting to $120 billion. The worker took refuge in France, and in 2011 the French authorities shared data of the checking account holders with authorities in India and different international locations by approach of what’s known as a ‘base notice’.
Even on this case heard by the ITAT, the knowledge was obtained by the I-T authorities from the French competent authorities. Nonetheless, the lack of expertise straight from the Swiss authorities for the years in query and lack of incriminating proof consequent to the search proved to be a stumbling block.