Tribunal holds that proceedings under Black Money Act jurisdictionally defective where the assets under an offshore trust structure were held to be not subject to Wealth Tax in the hands of the assessee
Yashovardhan Birla, the assessee, was one of the beneficiaries in an offshore irrevocable discretionary trust settled in 1989 by a non-resident relative (Settlor), in relation to the alleged foreign assets of the Settlor. The said offshore trust was executed by an offshore corporate trustee. The offshore trust comprised entirely of offshore assets, held through offshore corporate vehicles. The assessee voluntarily disclosed the details of beneficial interest in the trust from AY 2014-15 onwards in its income-tax returns when the scope of declaration in the income-tax returns was widened to include ‘Details of trusts created under the laws of a country outside India, in which you are a trustee, beneficiary or settlor’.
The assessee was served a Show Cause Notice (‘Notice’) on 22 November 2017 under section 10(1) of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (‘Black Money Act’ or ‘BMA’) to produce information and documents pertaining to allegedly undisclosed foreign income / assets on the basis of information received by the income-tax authorities vide the exchange of information under the relevant tax treaties. As per the information received by the AO, the assessee was named as the ‘beneficial owner’ of various foreign bank accounts of corporate vehicles and offshore trusts.