Case Details: Commissioner of Income-tax (IT) vs. Dipendu Bapalal Shah - [2026] 185 taxmann.com 654 (Bombay)
Judiciary and Counsel Details
- M. S. Karnik & Gautam A. Ankhad, JJ.
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Ms Shilpa Goel, Adv. for the Appellant.
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Rohan P. Shah, Rajath Bharadwaj, Advs. & Ms Vidushi Maheshwari for the Respondent.
Facts of the Case
The assessee was an individual and a non-resident for the relevant assessment year. The case was reopened based on information received from the French Government regarding deposits made by the assessee in its HSBC Bank, Geneva, account. During the assessment proceedings, the assessee was asked to provide the original CD of the HSBC Bank account statement or a signed and notarised consent waiver form. However, the assessee failed to provide the same. In the absence of a satisfactory explanation regarding the source of deposits, the Assessing Officer (AO) added the said amount to the assessee’s income.
On appeal, CIT(A) deleted the additions made by AO. The matter then reached the Mumbai Tribunal, which upheld the CIT(A) order. The matter then reached the Bombay High Court.
High Court Held
The High Court held that there was no dispute that the assessee was a non-resident under Section 6 of the Income-tax Act. AO had made additions based on the Base Note of the foreign bank account of HSBC Bank, Geneva, as income that had escaped assessment. However, the CIT(A) found that the HSBC Bank, Geneva, bank account was opened in 1997. The assessee was, in fact, a non-resident since 1979.
Thus, during 1997, the year in which the account was opened, and even before and after this year, the assessee continued to be a non-resident under the Act. It is a well-settled position in law that a non-resident having money in a foreign country cannot be taxed in India if such money has neither been received nor deemed to be received, nor has it accrued or arisen to him or been deemed to accrue or arise to him in India.
The CIT(A) referred to the provisions of Section 5(2) read with Section 9 of the Act. The assessee, being a non-resident, CIT(A) held that being a ‘non-resident’, having money in a foreign country, cannot be called upon to pay income tax on that money in India unless it satisfies the test of taxability under the provisions of the Act, which in the instant case was not satisfied. It is incumbent upon the Revenue to establish any tax liability strictly within the statutory parameters of the law. The department was unable to discharge the burden of proof. Accordingly, the additions made by AO were not justified.
List of Cases Reviewed
- Deputy Commissioner of Income-tax (IT)-4(2)(1), Mumbai vs. Dipendu Bapalal Shah [2018] 95 taxmann.com 171 (Mumbai)/[2018] 171 ITD 602 (Mumbai)[Para 14] Affirmed
List of Cases Referred to
- Soignee R. Kothari v. Dy. CIT [2017] 81 taxmann.com 340/386 ITR 466 (Bombay) (para 5)
- GVK Industries Ltd. v. ITO [2015] 54 taxmann.com 347/371 ITR 453/231 Taxman 18 (SC) (para 6)
- Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC) (para 12).
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