NRIs Un­der I-T Glare may Have to Share A/C Info

No quick re­lief in site as Bom­bay High Court turns down the plea of an NRI lady who re­fused to share her for­eign bank ac­count in­for­ma­tion with In­dian tax au­thor­i­ties

The Economic Times - - Companies - Su­gata.Ghosh@ times­group.com

Mum­bai: Even NRIs with off­shore bank ac­counts can­not keep the tax­man at bay by ob­tain­ing a quick re­lief from the court of law. In or­der to prove their in­no­cence, such per­sons will have to in­struct the over­seas banks to share in­for­ma­tion on the ac­counts with the In­dian tax of­fice.

And, only af­ter the de­tails re­leased by the bank show that the money lying in the ac­count does not be­long to the per­son who has been pulled up (for hid­ing off­shore as­sets), can he es­cape the glare of tax of­fi­cials. The Bom­bay High Court re­cently dis­missed the writ pe­ti­tion filed by an NRI lady — an al­leged ben­e­fi­ciary of a trust linked to an ac­count with HSBC Geneva — af­ter she re­fused to sign the “con­sent waiver” form to let HSBC share the in­for­ma­tion on the ac­count. Gov­erned by rules and con­ven­tions of bank­ing se­crecy, banks in Switzer­land and tax havens di­vulge in­for­ma­tion only af­ter ac­count hold­ers give their con­sent.

The court, in its or­der dated April 5, said: “In the nor­mal course of hu­man con­duct, if a per­son has noth­ing to hide and se­ri­ous al­le­ga­tions/ques­tions are be­ing raised about the funds, a per­son would make avail­able the doc­u­ments, which would put to rest all ques­tions which seem to arise in the mind of the au­thor­i­ties.” Since the court did not al­low the with­drawal of pe­ti­tion, the or­der is likely to be used by the tax of­fice, which is try­ing to fish out bank ac­count and trans­ac­tion de­tails from those it sus­pects to have ac­counts with HSBC Geneva.

Ac­cord­ing to the base note that the French govern­ment had shared with New Delhi, the pe­ti­tioner Soignee R Kothari, along with six other in­di­vid­u­als and two trusts, are ben­e­fi­cia­ries of an ac­count held by one White Cedar In­vest­ments with HSBC Geneva; the seven in­di­vid­u­als in turn are ben­e­fi­cial own­ers of the two trusts. As on March 26, 2006, the ac­count had a bal­ance of more than $44 mil­lion. The de­part­ment had served Kothari a no­tice to re­open as­sess­ment for the as­sess­ment year 2006-07. She has later agreed (in a re­join­der be­fore the court) to sign the con­sent waiver form with a mod­i­fi­ca­tion — as ‘al­leged ben­e­fi­ciary’ rather than ‘holder or ben­e­fi­ciary’ of the ac­count in HSBC Geneva. “With this, the Bom­bay High Court has pre­cluded any al­leged holder of over­seas bank ac­count from seek­ing al­ter­na­tive rem­edy by way of a writ. How­ever, their right to con­test any ad­di­tion of in­come by the tax au­thor­i­ties would still sur­vive. Thus, while NRIs can prove that they are out­side the ju­ris­dic­tion of In­dian tax au­thor­i­ties, they can­not wrig­gle out of in­ves­ti­ga­tion by virtue of be­ing NRIs,” said se­nior char­tered ac­coun­tant Dilip Lakhani.

The other six al­leged ben­e­fi­cia­ries of the trust are Arun Ram­niklal Me­hta, Rus­sell Me­hta, Vi­raj Rus­sell Me­hta, Ri­hen Har­shad Me­hta, Naina Har­shad Me­hta and Priti Har­shad Me­hta. The court said this bank state­ment if ob­tained from HSBC Geneva “would re­veal and/or pos­si­bly give clues as to the source of amounts de­posited in the Ac­count No. 5091404580. If a per­son has noth­ing to hide, we be­lieve the per­son would have co-op­er­ated in ob­tain­ing bank state­ments,” said the or­der.

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