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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WRIT PETITION (CIVIL) NO. 4824/2017
Reserved on : 2nd May, 2018
Date of decision: 28th August, 2018
MOIN A QURESHI ..... Petitioner
Through: Mr. R.K. Handoo, Mr. Yoginder
Handoo, Mr. Aditya Chaudhary, Mr.
Manish Shukla & Mr. Nishant
Kumar, Advocates.
versus
COMMISSIONER OF INCOME TAX (CENTRAL)-II AND
ANOTHER ..... Respondents
Through: Mr. Ruchir Bhatia, Sr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
CHANDER SHEKHAR, J.:
This writ petition by Moin A. Qureshi (the petitioner for short) assails
the order dated 12th May, 2017 under Section 245D(2C) of the Income Tax
Act, 1961 (Act, for short) whereby the Income Tax Settlement Commission,
W.P.(C) No. 4824/2017 Page 1 of 52
New Delhi (ITSC, for short) has rejected the settlement application filed by
the petitioner as invalid.
2. This is the third round of litigation in the High Court from orders
passed by the ITSC. The petitioner had earlier filed Writ Petition (C) No.
4900/2015 challenging order of the ITSC dated 24th February, 2015 and
Writ Petition (C) No. 8101/2015 impugning orders of the ITSC dated 4th
June,2015 and 26th June,2105, which petitions were allowed by the High
Court vide the orders dated 18th May,2015 and 13th April,2017,
respectively, with remand to the ITSC for a fresh decision.
3. To curtail prolixity, we would refer to only relevant and material
facts. The petitioner, it is claimed and stated, was/is engaged in business of
manufacture and export of omasum and cattle casing, by-products of animal
husbandry, as a sole proprietor of M/s Abdul Majeed Qureshi. Petitioner is
also a director in AMQ Agro India Private Limited (AMQ Agro, for short),
in which he and his wife Nasreen Moin Qureshi, hold majority (85%)
shares. AMQ was/is entirely engaged in exports and its registered office
was/is the residence of the petitioner located at C-134, Defence Colony,
New Delhi.
4. On 15th February, 2014, search and seizure operations under Section
132 of the Act were conducted at various business and residential premises
of the petitioner. The search had concluded on 19th April, 2014. Survey
under Section 133A of the Act was also carried out at different premises.
W.P.(C) No. 4824/2017 Page 2 of 52
5. During the course of search, various documents, cash and jewellery
were seized. Statements of the petitioner, his family members, employees
and directors of associate companies were recorded under Section 132(4) of
the Act. The petitioner had surrendered Rs.20 crores before Investigation
Wing of the Income Tax Department on 21st April, 2014.
6. Consequent to search, tax cases of the petitioner, his family members
and associate companies were centralised before the Deputy Commissioner
of Income Tax, Central Circle-19, New Delhi, the respondent No. 2 before
us.
7. The respondent No.2 had thereupon issued notices under Section
153A of the Act dated 13th October, 2014, calling upon the petitioner to file
returns for the Assessment Years (AY, for short) 2008-09 to 2013-14. The
petitioner, it is stated, had filed returns on or about 4th December, 2014.
8. On 5th December, 2014, the petitioner, his wife Nasreen Moin
Qureshi, AMQ Agro and his two employees Mohd. Shahnawaz and Aditya
Sharma had moved applications under Section 245C(1) of the Act before the
ITSC. These applications were, however, withdrawn with liberty to file
fresh applications vide order dated 18th December, 2014 passed by the ITSC.
The petitioner and four others mentioned above had thereafter filed fresh
applications before the ITSC under Section 245C of the Act on 26 th
December, 2014 for the AYs 2008-09 to 2014-15, the period for which
notices under Section 153A of the Act had been issued.
W.P.(C) No. 4824/2017 Page 3 of 52
9. The applications filed by the petitioner and others were admitted by
the ITSC vide order dated 7th January, 2014 under Section 245D(1) of the
Act.
10. On 10th February, 2015, the first respondent, the Commissioner of
Income Tax(Central) II, Delhi had filed a report under Section 245D(2B) of
the Act asserting and praying that the settlement application of the petitioner
should be declared as invalid as there was failure to make full and true
disclosure of undisclosed income and the manner in which the undisclosed
income was earned.
11. On 19th February, 2015, hearing was held before the ITSC for the
purpose of passing of order under Section 245D(2C) of the Act. In the post-
lunch hearing, the respondents had filed before the ITSC a set of documents
running into 260 pages.
12. As per the respondents, arguments were addressed by the parties
before the ITSC on 20th February, 2015 also. The petitioner, however,
claims that arguments were heard in the cases of petitioner and AMQ Agro
on 19th February, 2015 and arguments in the remaining group of cases
including that of Nasreen Moin Qureshi were heard on 20th February, 2015.
13. The ITSC vide common order dated 24th February, 2015 admitted
applications for settlement filed by AMQ Agro, Mohd. Shahnawaz and
Aditya Sharma for further consideration, but applications filed by the
petitioner and Nasreen Moin Qureshi were rejected on the ground of failure
to make full and true disclosure of undisclosed income and the manner in
W.P.(C) No. 4824/2017 Page 4 of 52
which the undisclosed income was earned. This order in the case of the
petitioner had primarily referred to the documents relied upon by the
Respondents relating to property located at 4, Chesterfield House, South
Audley, Mayfair, London (London property, for short) and the records and
documents received from Singapore Tax Authorities and UK Tax
Authorities under the Double Taxation Avoidance Agreement. We shall
subsequently refer to these documents.
14. Aggrieved, the petitioner had filed Writ Petition (C) No. 4900/2015
before this High Court, which was allowed vide short order dated 18 th May,
2015 on the ground that the Respondents had submitted additional set of
documents running into 260 pages during the course of hearing before the
ITSC on 19th February, 2015. The ITSC, it was observed, had passed the
order dated 24th February, 2015 without further hearing apart from hearing
conducted on the next date on 20th February, 2015, which included hearing
in other group of cases. The Division Bench noted that in the order dated
24th February, 2015, the ITSC had relied upon the documents filed by the
Respondents on 19th February, 2015. However, the High Court also
observed that the documents filed on 19th February, 2015 constituted a part
of the report which the Commissioner, i.e. the second respondent, had
initially filed on 10th February, 2015. Nevertheless, the High Court felt that
as adequate opportunity had not been granted to the petitioner to respond to
these documents, an opportunity of hearing should be given. Accordingly,
the order dated 24th February, 2015 was set aside with direction to the ITSC
W.P.(C) No. 4824/2017 Page 5 of 52
to render its decision at the stage of Section 245D(2C) of the Act within ten
days from the date of first hearing, which was fixed on 25 th May, 2015.
Before the said date, the petitioner was to submit his response to the
documents. The petitioner did not take plea of limitation with regard to
additional documents filed on 19th February, 2015 and the documents, it was
observed, would be construed to be a part of original report dated 10 th
February, 2015. The Court had clarified having not expressed any opinion
on merits and that setting aside of the order dated 24th February, 2015 shall
not come in the way of the ITSC taking a view on the matter.
15. Thereafter, the ITSC vide order dated 4th June, 2015 under Section
245D(2C) of the Act held that the settlement application filed by the
petitioner was invalid for various reasons, including failure to make full and
true disclosure of undisclosed income with reference to the London property
and two foreign bank accounts of M/s Barro Holdings Limited and M/s
Bulova Holding Limited in the BSI Bank Limited, Singapore, of which the
petitioner was a beneficial and the de facto owner. The respondents had
thereafter filed an application for rectification in the case of the petitioner,
stating that there was a factual mistake and error in paragraph 15.10 of the
order dated 4th June, 2015. We shall refer to this order and the correction
made by the ITSC subsequently. Suffice at this stage, is to record and notice
that the application for rectification was allowed ex parte by the ITSC vide
order dated 26th June, 2015.
W.P.(C) No. 4824/2017 Page 6 of 52
16. Orders dated 4th June, 2015 and 26th June, 2015 became subject matter
of challenge in Writ Petition (C) No. 8101/2015, which petition was allowed
vide order dated 13th April, 2017 with an order of remand to the ITSC for a
fresh decision. We shall be subsequently referring to this order in some
detail as the assertion of the petitioner is that the ITSC has not complied
with the directions in this order and has misconstrued the same.
17. Pursuant to the second order of the remand, the ITSC has now passed
the order dated 12th May, 2017, which order holds that the petitioner had
failed to make full and true disclosure and, therefore, the settlement
application was rejected as invalid under Section 245D(2C) of the Act. The
case of the petitioner for the AYs 2009-10 to 2013-14 have been sent to the
Assessing Officer for adjudication and passing assessment orders.
18. We would first refer and examine the primary argument of the
petitioner, that the impugned order completely disregards and is contrary to
the earlier order of the High Court dated 13th April, 2017 passed in Writ
Petition (C) No. 8101/2015 by which orders of the ITSC dated 4th June,
2015 and 26th June, 2015 had been set aside. In order to consider the said
contention and decide the plea, we would like to reproduce relevant portions
of the judgment dated 13th April, 2017 passed in Writ Petition (C) No.
8101/2015, which reads:-
4. The matter then went back to the ITSC. It appears
that within four days of the passing of the above order
by this Court, the Petitioner tendered a written note of
submissions dated 22nd May, 2015 before the ITSC.
The Department appears to have objected to the ITSC
W.P.(C) No. 4824/2017 Page 7 of 52
considering this written note of submissions. This is
evident from para 13.2 of the impugned order. In para
13.3 of the impugned order dated 4th June, 2015 the
ITSC observed as under:
13.3. We have considered the submissions made
by the AR and the CIT. The Hon`ble High Court
has remitted the matter back to us to allow an
opportunity to the applicant to give his
submissions on the entire 260 pages (rest being
forwarding letters) which we find relate to the
bank accounts at Singapore and the Flat at
London. The Commission does not have to travel
beyond the directions of the Hon`ble High Court
referred at para 13.2.3 above which unequivocally
stated that the said writ petition is allowed to the
aforesaid extent....
5. Mr. Handoo, the learned counsel for the Petitioner,
submitted that the above written submissions were not
considered by the ITSC. This appears to be correct.
The Court is unable to find in what manner in the
impugned order has the ITSC considered those
submissions. The said submissions are significant in
view of the two factors adverted to by the ITSC in the
impugned order which weighed with it in reiterating its
conclusion that the Petitioner had not made a full and
true disclosure of all facts within his knowledge. In this
connection a reference needs to be made to para
14.3(a) of the impugned order where the ITSC adverts
to the two pieces of information that apparently was
received by the Department on 20th February, 2015
and 12th March, 2015. Para 14.3 of the impugned
order of the ITSC reads as under:
W.P.(C) No. 4824/2017 Page 8 of 52
14.3 (a) The issue before us is whether the
information received by the Department dated
12.03.2015 by the JS (FT & TR), CBDT and by
the DIT (Investigation) on 20.02.2015 relating to
the bank account opened/ operated by the
applicant is to be taken into consideration during
the present proceeding or not. It is the submission
of the Department that these two informations are
very vital to determine the truth in the matter and
it will be fatal on the part of the Commission to
ignore the same. It is also the submission of the
Department that these two letters relate only to
the issue of the bank account and the flat at
London which are in consideration and remitted
by the Hon`ble High Court to the Commission.
(b) We agree with the submissions made by the
Department that these two informations submitted
by the Department dated 25.05.2015 with the
Commission and received by the Department
subsequent dated 19.02.2015 helps the
Commission to determine whether the disclosure
made by the applicant is full and true or not.
Hence these documents require to be considered
and the applicant can very well give his
comments on these documents....
6. Then from para 15.1 onwards, both the pieces of
information are discussed in extenso by the ITSC. In
para 15.17 the conclusion drawn by it, as regards the
opening of an account, reads as under:
15.17. If there was a POA (Power of Attorney)
arrangement between Mr. Yusuf Mehboob Khan
and MR. Qureshi, it was a legal obligation of Mr.
Qureshi to provide the alleged POA to the bank,
W.P.(C) No. 4824/2017 Page 9 of 52
as the Bank was interested in knowing the profile,
background and business interests only of the
Real Client` and not of an attorney of a client.
Thus, the POA and the balance sheets of Barro
and Bulova produced in support of ownership of
these entities by Mr. Yusuf Mehboob Khan are an
afterthought. It is noted that these documents
have already been considered and not accepted by
the Commission in the earlier order dated
24.02.2015....
7. The next paragraph i.e. para 15.18 deals with
purchase of the property in London in respect of which
the conclusion drawn by the ITSC reads as under:
... 15.18. Another very important document
which is relied by the Department is an
Annexure-C of the submission dated 25.05.2015
of the CIT at page 55 which is an indemnity
signed by the applicant Mr. Qureshi to the Board
of Directors of Bulova authorising them to
purchase the property being Flat NO. 4,
Chesterfield House, South Audley Street, London
for purchase price of GBP 38,50,000/-. This
indemnity also authorized Board of Directors to
appoint Solicitor Mischan de Raya for purchase
of this property at London. This further
establishes that the applicant Mr. Qureshi is the
real owner of that flat. Besides that there are lots
of e-mails which are part of the submission made
by the CIT in their earlier submission and earlier
hearing on 10.02.2015 and 19.02.2015 where the
approval of artefacts and other furnishing
including the carpets have been done by the
applicant for which e-mails have been sent to
W.P.(C) No. 4824/2017 Page 10 of 52
employees of Sh. Qureshi for his approval. This
also corroborates the fact of Sh. Moin Akhtar
Qureshi being the real owner of the flat at London
and not a power of attorney holder only as it is the
real owner who normally approves/ decides, now
and with what his flat is to be furnished and not
the power of attorney holder....
8. What happened before the ITSC after the passing of
impugned the order dated 4th June, 2015 is interesting.
It appears that an application was filed, apparently,
under Section 154 read with Section 245D(2C) of the
Act` by the Pr. CIT- Central-II on 12th June, 2015
seeking correction of a factual discrepancy that
occurred in para 15.10 of the order dated 4th June,
2015. In order to appreciate what the correction sought
was, it is necessary to set out para 15.10 of the order
dated 4th June, 2015, which reads as under:
15.10. All the Bank Account opening forms
were signed by Shri Moin Qureshi and his
address mentioned is C 134 Defence Colony,
New Delhi 110024, India as seen from page 18
and 19 of pages marked as 7 to 49 received from
Singapore authorities. The copies of the passport
of Shri Qureshi were enclosed by Singapore
authorities.
The CIT(DR) argued that Shri Moin Akhtar
Qureshi is the beneficial owner of account No.
6CO3122 held by Barro Holdings Ltd. (Barro)
with BSI Bank Ltd. Singapore in Form A and that
this account was opened on 22.07.2011 and
closed on 19.04.2013...
W.P.(C) No. 4824/2017 Page 11 of 52
9. The correction now sought was that the
acknowledgement of the fact that the bank account
opening forms for both Barro Holdings Ltd. and
Bulova Holdings Ltd. were not signed by Sh. Moin
Akhtar Qureshi but by Arcas Holdings Ltd. the
authorized signatory and a director of Barro and
Bulova`. The important change which was sought by
the Pr. CIT himself was for the ITSC to now
acknowledge that there did exist a Power of Attorney
(POA) on record which is now enclosed by the Pr. CIT
with its application seeking the correction.
10. This application by the Pr. CIT was heard by the
ITSC in the absence of any notice to the Petitioner. The
ITSC accepted the application and by its subsequent
order dated 26th June, 2015 corrected para 15.10 to
read thus:
15.10. The power of attorney for the
management of assets was signed by M/s Arcas
Holding Ltd. and Shri Moin Qureshi and his
address mentioned is C 134 Defence Colony,
New Delhi 110024, Indas as seen from page 18
and 19 of pages marked as 7 to 49 received from
Singapore authorities. The copies of the passport
of Shri Qureshi were enclosed by Singapore
authorities.
The CIT(DR) argued that Shri Moin Akhtar
Qureshi is the beneficial owner of account No.
6CO3122 held by Barro Holdings Ltd. (Barro)
with BSI Bank Ltd. Singapore in Form A and that
this account was opened on 22.07.2011 and
closed on 19.04.2013....
W.P.(C) No. 4824/2017 Page 12 of 52
11. As a result of the above correction in para 15.10 the
conclusion that the Petitioner had not made a full and
true disclosure of the facts in respect of the above
account, completely changed. There was now an
acknowledgement by the ITSC that there was no
failure to make a full and true disclosure by the
Petitioner as far as the above bank account was
concerned.
12. The question that next arises is whether the above
change brought about to the order dated 4th June, 2015
by the subsequent order dated 26th June, 2015 would
have an impact on the main conclusion drawn by the
ITSC in its order dated 4th June, 2015, that the
Petitioner did not make a full and true disclosure of all
facts. It will be recalled that there were two pieces of
information which were brought before the ITSC by
the Department in the second round to persuade the
ITSC to hold that there was no full and true disclosure
by the Petitioner; one was regarding the bank account
and the other was regarding the property at London. As
regards the property at London, the case of the
Petitioner is that he offered further explanation before
the ITSC by his written submissions dated 15th May,
2015 enclosing certain documents and that was never
considered by the ITSC.
13. Neither the conclusion in para 15.18 of the order
dated 4th June, 2015 or in any other portion of the said
order, have the above written submissions of the
Petitioner dated 22nd May, 2015 been discussed.
14. The Court is of the considered view that the ITSC
ought to have, in the first instance, put the Petitioner on
notice if it was going to entertain an application by the
Department seeking correction` of its order. It is one
W.P.(C) No. 4824/2017 Page 13 of 52
thing to state that the said correction` was in fact
beneficial to the Petitioner since the allowing of the
application meant that the Petitioner's case that there
was no failure by him to make a full and true
disclosure of facts pertaining to the bank account was
in fact accepted by the ITSC. But there is also merit in
the contention of the learned counsel for the Petitioner
that had the Petitioner known of the application, the
Petitioner may have been able to persuade the ITSC
even as regards the other errors` which according to
the Petitioner vitiate the impugned order dated 4th June
2015. Whether in fact the ITSC may have been
persuaded or not is not the point. The fact remains that
an order passed by the ITSC cannot be sought to be
corrected` by it without putting both parties to the
order to notice. The procedure adopted by the ITSC of
passing an order ex parte, correcting an earlier order, is
not acceptable to the Court.
15. The Court is of the considered view that the ITSC
should again undertake the exercise that it was
expected to undertake pursuant to the order passed by
this Court on 18th May, 2015 in WP(C) No.
4900/2015. Accordingly, the impugned order dated 4th
June, 2015 read with the order dated 26th June, 2015
are hereby set aside. The result would be that the
exercise that was to be undertaken by the ITSC as a
result of the order passed by this Court on 18th May,
2015 will have to be undertaken by it afresh. This time
round there will be no further documents filed either by
the Department or by the Petitioner. On the basis of the
existing documents, the ITSC will, after giving
opportunity of being heard to both the parties, pass a
fresh decision on merits, in accordance with law. The
W.P.(C) No. 4824/2017 Page 14 of 52
ITSC will pass an order uninfluenced by any of its
earlier orders that have been set aside by this Court.
19. We have reproduced the entire reasoning in the order on record dated
13th April, 2017 in the aforesaid quotation so as to appreciate and understand
the contention raised and our reasons. Paragraph 5 of the aforesaid quotation
refers to the contention of the counsel for the petitioner that written
submissions had not been considered, which it was observed appeared to be
correct for the ITSC had not set out the manner in which those submissions
were considered. Thereafter, reference was made to the information received
by the Revenue and relied upon in relation to the bank accounts and the
property at London. Paragraph 6 of the said order states that information
received had been discussed in extenso by the ITSC before drawing their
conclusion and findings in paragraphs 15.17 and 15.18.
20. Thereafter, reference was made to the rectification application filed
by the respondents, purportedly for correction of factual mistake and error in
paragraph 15.10 of the order dated 4th June, 2015, which had recorded that
the bank account opening forms were signed by the petitioner, i.e., Moin
Akhar Qureshi and his address was mentioned as C-134, Defence Colony,
New Delhi as was seen from papers received from the Singapore authorities,
including the passport. Paragraph 9 of the order dated 13th April, 2017
observes that the account opening forms of M/s Barro Holdings Limited and
M/s Bulova Holdings Limited were signed by M/s Arcas Holdings Limited,
W.P.(C) No. 4824/2017 Page 15 of 52
the authorised signatory and director of the two companies and not by the
petitioner, i.e., Moin Akhtar Qureshi.
21. For the time being, we would skip the observations made by the
Division Bench in paragraphs 10 and 11, but refer to the reasoning given in
paragraph 12. Paragraph 12 of the order dated 13th April, 2017 refers to the
fact that the rectification application filed by the Revenue was allowed ex
parte vide order dated 26th June, 2015. The Division Bench felt that question
would arise whether the above change or rectification would impact the
main conclusion drawn by the ITSC in its order dated 4 th June, 2015 that
there was failure to make true and full disclosure of all facts. It was
observed that ITSC on two grounds had held that there was failure to make
full and true disclosure, namely, the bank accounts in Singapore and the
property at London. With regard to the property at London, paragraph 12
observes that the petitioner had made written submissions dated 15 th May,
2015 enclosing certain documents, which were not considered. Paragraph 13
states that the order dated 4th June, 2015 had also not considered written
submissions dated 22th May, 2015. Paragraph 14 thereupon states and
records that the ITSC ought to have, at the first instance, put the petitioner
on notice if it was going to entertain an application for correction filed by
the Respondents. It did not matter whether the corrections would have been
beneficial to the petitioner for it was observed that the petitioner could have
persuaded the ITSC with regard to other errors, which according to the
petitioner had vitiated the order dated 4th June, 2015. The Court felt that
W.P.(C) No. 4824/2017 Page 16 of 52
ITSC could not have corrected the order dated 4th June, 2015 without putting
both parties to notice and the procedure of passing an ex parte order
correcting an earlier order was unacceptable. Accordingly, both orders dated
4th June, 2015 and 26th June, 2015 were set aside with the direction that the
ITSC would undertake a fresh exercise in terms of the first order dated 18 th
May, 2015 passed in Writ Petition (C) No. 4900/2015. It was also directed
that parties would not file additional or further documents and the matter
would be decided on the basis of existing documents after giving hearing.
Fresh decision was to be on merits and in accordance with the law without
being influenced by the earlier orders, which had been set aside.
22. As noticed above, we have not, till now, referred to and elucidated on
paragraphs 10 and 11 of the decision dated 13th April, 2017 in Writ Petition
(C) No. 8101/2015. The petitioner relies on the observations made in these
paragraphs. In particular, our attention was drawn to the observations in
paragraph 11 of this order, which records there was now an
acknowledgement by the ITSC that there was no failure to make a full and
true disclosure by the petitioner as far as the above bank account was
concerned.
23. Having considered the said contention, we find that the petitioner is
misreading the aforesaid observations out of context for it was never the
case of the Revenue, i.e. the respondents, that the account opening forms
with BSI Bank Limited, Singapore were signed by the petitioner Moin
Akhtar Qureshi as the director of the said companies. The case set up and
W.P.(C) No. 4824/2017 Page 17 of 52
pleaded by the respondents was that bank accounts of M/s Barro Holdings
Limited and M/s Bulova Holdings Limited at Singapore were opened by
M/s Arcas Holding Limited as a director of these companies. However,
Moin Akhtar Qureshi, i.e., the petitioner, has been shown and declared as
the beneficial owner of these companies. He has signed and made
declaration on oath in this regard. Photocopy of his passport was also
enclosed with confirmation in the Know Your Customer documentation.
24. On the said aspect, it would be appropriate to refer to the first order
dated 24th February, 2015 passed by the ITSC, which had in paragraph 4.3
referred to the contention of the Revenue that M/s Bulova Holdings Limited,
a company incorporated in British Virgin Island, had purchased the London
property. However, the petitioner was a beneficial owner of M/s Bulova
Holdings Limited and he had given instructions for furnishing of London
property in his capacity as a beneficial owner. Similarly, order dated 4th
June, 2015 records that the petitioner was beneficial owner of M/s Barro
Holdings Limited and M/s Bulova Holdings Limited as well as the owner of
the flat at London. ITSC had relied upon Know Your Customer (KYC)
details in the account opening form. The petitioner had questioned the said
details with reference to the two accounts alleging discrepancies, which
contention was rejected in view of the fact that the details recorded in the
KYC included personal details, etc. The ITSC had also recorded that M/s
Barro Holdings Limited had executed a power of attorney in favour of the
W.P.(C) No. 4824/2017 Page 18 of 52
petitioner, which was signed by the petitioner and his signatures on the
documents with the BSI Bank Limited, Singapore were not disputed.
25. Therefore, it is clear that the stand of the Revenue, i.e. the
respondents, was that the petitioner was a beneficial owner of the two bank
accounts in Singapore and the London property though the bank accounts in
the name of M/s Bulova Holdings Limited and M/s Barro Holdings Limited
were opened by M/s Arcas Holding Limited. Further, the London property
registered in the name of M/s Bulova Holdings Limited, was belonging to
and was owned by the petitioner. However, there was a factual error made
by the ITSC in paragraph 15.10 of the order dated 4 th June, 2015 in
recording that the account opening forms were signed by the petitioner and
his address was mentioned as C-134, Defence Colony, New Delhi, whereas
the factual position was that the petitioner had signed and affirmed that he
was a beneficial owner of the accounts and given personal details though he
had not signed the account opening forms on behalf of M/s Bulova Holdings
Limited and M/s Barro Holdings Limited. Reference in paragraph 11,
therefore, was limited and with reference to the aforesaid correction made
vide order dated 26th June, 2015. We do not think that the aforesaid
observation can be treated as a final and conclusive finding given by the
High Court that the petitioner had made full and true disclosure in the
settlement application before the ITSC with reference to the two accounts.
There is no discussion in this order dated 13th April, 2017 on the said aspect.
W.P.(C) No. 4824/2017 Page 19 of 52
26. In the State of U.P. v. Synthetics and Chemicals Ltd., 1991 (3) SCR
64, the Supreme Court has held that any declaration or conclusion arrived
without application of mind or preceded without any reason would not
tantamount to a declaration of law which binds all Courts. The relevant
paragraph of the aforesaid judgment is reproduced as under:
"41. Does this principle extend and apply to a conclusion of law,
which was neither raised nor preceded by any consideration. In
other words can such conclusions be considered as declaration
of law? Here again the English courts and jurists have carved
out an exception to the rule of precedents. It has been explained
as rule of sub-silentio. "A decision passes sub-silentio, in the
technical sense that has come to be attached to that phrase, when
the particular point of law involved in the decision is not
perceived by the court or present to its mind." (Salmond on
Jurisprudence 12th Edn., p. 153). In Lancester Motor Company
(London) Ltd. v. Bremith Ltd. the Court did not feel bound by
earlier decision as it was rendered ,,without any argument,
without reference to the crucial words of the rule and without
any citation of the authority. It was approved by this Court
in Municipal Corporation of Delhi v. Gurnam Kaur. The bench
held that, ,,precedents sub-silentio and without arguments are of
no moment. The courts thus have taken recourse to this principle
for relieving from injustice perpetrated by unjust precedents. A
W.P.(C) No. 4824/2017 Page 20 of 52
decision which is not express and is not founded on reasons nor
it proceeds on consideration of issue cannot be deemed to be a
law declared to have a binding effect as is contemplated by
Article 141. Uniformity and consistency are core of judicial
discipline. But that which escapes in the judgment without any
occasion is not ratio decidendi. In B. Shama Rao v. Union
Territory of Pondicherry it was observed, ,,it is trite to say that a
decision is binding not because of its conclusions but in regard to
its ratio and the principles, laid down therein. Any declaration
or conclusion arrived without application of mind or preceded
without any reason cannot be deemed to be declaration of law or
authority of a general nature binding as a precedent. Restraint in
dissenting or overruling is for sake of stability and uniformity but
rigidity beyond reasonable limits is inimical to the growth of
law."
27. We would also like to reproduce a portion from the judgment of the
Supreme Court in Deepak Bajaj versus State of Maharashtra and Another,
(2008) 16 SCC 14, wherein it was held that decisions of the Court cannot be
read as Euclid`s theorem and the wording and the language used in the
judgment has to be read with care and caution with reference to
controversy/issue settled and decided. Relevant paragraphs in Deepak Bajaj
(Supra) read as under:-
W.P.(C) No. 4824/2017 Page 21 of 52
"7. It is well settled that the judgment of a court is
not to be read mechanically as a Euclid's theorem
nor as if it were a statute.
14. On the subject of precedents Lord
Halsbury, L.C., said
in Quinn v. Leathem [1901 AC 495 : (1900-
03) All ER Rep 1 (HL)] : (All ER p. 7 G-I)
[Now before]
discussing Allen v. Flood [1898 AC 1 : (1895-
99) All ER Rep 52 (HL)] and what was
decided therein, there are two observations of
a general character which I wish to make; and
one is to repeat what I have very often said
before--that every judgment must be read as
applicable to the particular facts proved or
assumed to be proved, since the generality of
the expressions which may be found there are
not intended to be expositions of the whole
law, but are governed and qualified by the
particular facts of the case in which such
expressions are to be found. The other is that
a case is only an authority for what it actually
decides. I entirely deny that it can be quoted
for a proposition that may seem to follow
logically from it. Such a mode of reasoning
assumes that the law is necessarily a logical
code, whereas every lawyer must
acknowledge that the law is not always
logical at all.`
(emphasis in original)
We entirely agree with the above
observations.
W.P.(C) No. 4824/2017 Page 22 of 52
15. In Ambica Quarry Works v. State of
Gujarat [(1987) 1 SCC 213] (vide SCC p.
221, para 18) this Court observed:
18. ... The ratio of any decision must be
understood in the background of the facts of
that case. It has been said long time ago that a
case is only an authority for what it actually
decides, and not what logically follows from
it.`
16. In Bhavnagar University v. Palitana
Sugar Mill (P) Ltd. [(2003) 2 SCC 111] (vide
SCC p. 130, para 59) this Court observed:
59. ... It is also well settled that a little
difference in facts or additional facts may
make a lot of difference in the precedential
value of a decision.`
(emphasis in original)
17. As held in Bharat Petroleum Corpn.
Ltd. v. N.R. Vairamani [(2004) 8 SCC 579 :
AIR 2004 SC 4778] a decision cannot be
relied on without disclosing the factual
situation. In the same judgment this Court
also observed: (SCC pp. 584-85, paras 9-12)
9. Courts should not place reliance on
decisions without discussing as to how the
factual situation fits in with the fact situation
of the decision on which reliance is
placed. Observations of courts are neither to
be read as Euclid's theorems nor as
provisions of a statute and that too taken out
of their context. (emphasis in original) These
observations must be read in the context in
which they appear to have been stated.
Judgments of courts are not to be construed as
W.P.(C) No. 4824/2017 Page 23 of 52
statutes. To interpret words, phrases and
provisions of a statute, it may become
necessary for Judges to embark into lengthy
discussions but the discussion is meant to
explain and not to define. Judges interpret
statutes, they do not interpret judgments.
They interpret words of statutes; their words
are not to be interpreted as statutes.
(emphasis supplied) In London Graving Dock
Co. Ltd. v. Horton [1951 AC 737 : (1951) 2
All ER 1 (HL)] (AC at p. 761), Lord
MacDermott observed: (All ER p. 14 C-D)
... The matter cannot, of course, be settled
merely by treating the ipsissima verba of
Willes, J. as though they were part of an Act
of Parliament and applying the rules of
interpretation appropriate thereto. This is not
to detract from the great weight to be given to
the language actually used by that most
distinguished Judge, ...
10. In Home Office v. Dorset Yacht Co.
Ltd. [1970 AC 1004 : (1970) 2 WLR 1140 :
(1970) 2 All ER 294 (HL)] Lord Reid said:
... Lord Atkin's speech ... is not to be
treated as if it were a statutory definition. It
will require qualification in new
circumstances.
Megarry, J. in Shepherd Homes
Ltd. v. Sandham (No. 2) [(1971) 1 WLR 1062
: (1971) 2 All ER 1267] observed: (All ER p.
1274 d)
... One must not, of course, construe even a
reserved judgment of even Russell, L.J. as if it
were an Act of Parliament;
W.P.(C) No. 4824/2017 Page 24 of 52
And, in British Railways
Board v. Herrington [1972 AC 877 : (1972) 2
WLR 537 : (1972) 1 All ER 749 (HL)] Lord
Morris said: (All ER p. 761 c)
... There is always peril in treating the words
of a speech or a judgment as though they were
words in a legislative enactment, and it is to
be remembered that judicial utterances are
made in the setting of the facts of a particular
case."
28. The controversy and issue in the Writ Petition (C) No. 8101/2015 in
view of the reasoning quoted above was predicated on two aspects. Firstly,
the correction to the order dated 4th June, 2015 was by an ex parte order
passed by the ITSC dated 26th June, 2015 without notice, which was
contrary to law for the reasons set out in paragraph 14 of the order dated 13 th
April, 2017. Secondly, the High Court felt that the ITSC had not considered
the written submissions filed by the petitioner.
29. We would turn our attention to the second contention raised by the
petitioner that the impugned order dated 12 th May, 2017 is erroneous and
wrong for it relies upon order dated 24th February, 2015, which was set aside
vide order dated 18th May, 2015 in Writ Petition (C) No. 4900/2015. It is
submitted that the ITSC has committed a grave procedural error in relying
upon and stating that they had become functus officio after passing of the
order dated 24th February, 2015, though this order had been set aside by the
Court in Writ Petition (C) No. 4900/2015 vide order dated 18th May, 2015.
It is also submitted that the ITSC had tried to justify its order dated 26 th
W.P.(C) No. 4824/2017 Page 25 of 52
June, 2015 in spite of the observations of the order dated 13th April, 2017
passed by the High Court in Writ Petition (C) No. 8101/2015.
30. In order to decide this controversy and contention, we would like to
reproduce relevant portion of the impugned order dated 12th May, 2017
passed by the ITSC, which reads:-
8. The Hon`ble High Court has now disposed of the
above writ petition (WP (C) 8101/2015 and CM No.
16773/2015) by an order dated 13.4.2017 in which
both the orders dated 4.6.2015 and 26.6.2015 passed
by the Commission have been set aside. The Hon`ble
High Court has observed in para 13 that submission
dated 22.5.2015 filed by the applicant have not been
discussed by the Commission in the order u/s
245D(2C) dated 4.6.2015 and that the said order could
not be corrected without putting both the sides to
notice. The Hon`ble High Court has accordingly
directed as under:
15. The Court is of the considered view that the
ITSC should again undertake the exercise that it
was expected to undertake pursuant to the order
passed by this Court on 18th May, 2015 in
WP(C) No. 4900/2015. Accordingly, the
impugned order dated 04.06.2015 read with the
order dated 26.06.2015 are hereby set aside. The
result would be that the exercise that was to be
undertaken by the ITSC as a result of the order
passed by this Court on 18.05.2015 will have to
be undertaken by it afresh. This time round there
will be no further documents filed either by the
Department or by the Petitioner. On the basis of
the existing documents, the ITSC will, after
W.P.(C) No. 4824/2017 Page 26 of 52
giving opportunity of being heard to both the
parties, pass an order uninfluenced by any of its
earlier orders that have been set aside by this
Court.
9. The case of the applicant was fixed for the hearing
on the 02.05.2017 to give effect to the above direction
of the Hon`ble High Court. In response to the notice of
hearing under section 245D(2C) of the Act, Sh. Niraj
Jain CA, Sh. Hiren Mehta CA, Sh. Deepak Gupta CA,
Sh. Ashwani Gupta CA, Sh. P.K. Mishra CA and Sh.
Dinesh Kumar Accountants attended on behalf of the
applicant. Sh. Vinay Kumar Karan, CIT(DR) appeared
for the Department along with Ms. M.V. Bhanumati,
DIT (Inv.), Sh. V.K. Jiwani JCIT, Sh. Gaurav Pundir,
DDIT (Inv.) and Sh. Santosh Kumar ACIT, Central.
10. At the outset of the fresh proceedings u/s
245D(2C), Sh. Niraj Jain, A.R raised the issue whether
the scope of proceedings before the Commission was
limited only to the two issues viz. the foreign bank
account and the London property of Sh. Moin Qureshi
or all the issues involved in the original order u/s
245D(2C) dated 24.2.2015 need to be considered
afresh. The A.R was of the view that the scope of the
fresh proceedings was not restricted only to the two
issues referred to above and that all the issues need to
be reconsidered again. To support this contention he
referred to paras 11 ans 14 of the High Court`s order
dated 13.4.2017. He stated that in para 11 the Hon`ble
High Court has given a clear finding that in view of the
correction made by the Commission in para 15.10 of
its order dated 4.6.2015 there was no failure on the part
of the applicant to make a full and true disclosure as
far as the bank account was concerned. The A.R
W.P.(C) No. 4824/2017 Page 27 of 52
further relied on the observation made by the Hon`ble
High Court in para 14 that had the petitioner been
given an opportunity at the stage of rectification order,
it might have been able to persuade the Commission to
the other errors which according to the applicant
vitiate the order dated 4.6.2015. On the basis of these
observations, the A.R contented that the Commission
needs to examine all the issues that formed a subject of
its order u/s 245D(2C) dated 24.2.2015.
10.2 Ms. Bhanumati who represented the Department
(referred to hereafter as D.R) strongly objected to the
above proposition made by the A.R. She stated that
the Hon`ble had only set aside the order accepting with
the applicant`s plea that full opportunity was not given
to him in as much as the submissions dated 22.5.2015
were not considered. She stated that the Hon`ble High
Court did not go into the merits of the case as it was
not the issue before it in the Writ Proceedings. She
stated that the para 11 of the order cannot be taken to
mean that the Hon`ble High Court had given a clear
finding that in view of the rectification made in the
order dated 4.6.2015 the discourse made by the
applicant can be taken to be full and true. According
to the D.R this should be read only as a reproduction of
the contention made to that effect by the applicant
during the Writ proceedings. She argued that if the
Hon`ble High Court has given such a finding than t here
would be no need to set aside the order to give another
opportunity to the applicant and to consider the
submissions dated 22.5.2015 made by the applicant.
10.3 The submissions made by the A.R. and the
D.R. were considered carefully by us. We have noted
that in para 15 of the order the Hon`ble High Court has
W.P.(C) No. 4824/2017 Page 28 of 52
directed that the Commission should again undertake
the exercise that it was expected to undertake pursuant
to the order dated 18.5.2015 in W.P. (C) No.
4900/2015. In the order dated 18.5.2015 the Hon`ble
High Court had observed as under;
We are of the view that the documents which
were filed on 19.2.2015 constituted part of the
report which the Commissioner had initially
filed on 10.2.2015. We also note that the
Settlement Commission had relied upon the
documents which were filed on 19.2.2015. In
this back drop, we are of the view that adequate
opportunity was not given to the petitioner to
respond to the said documents.
For this reason, we are setting aside the
impugned order dated 24.2.2015. We are
remitting the matter to the Settlement
Commission to the stage of consideration of the
Commissioner`s report and of giving an
opportunity of hearing to the petitioner.
Considering the fact that the primary prayer of the
applicant in Writ Petition (C) No. 4900/2015 was that
the Commission had not given adequate opportunity
before taking cognisance of the documents running
into 260 pages during the hearing on 19.2.2015 and
before passing the order dated 4.2.2015 and the above
directions were given by the Hon`ble High Court on
the ground of denial of natural justice, it is abundantly
clear that the scope of the present proceedings is to be
limited only to the issue agitated by the applicant in the
above Writ Petition. This concerns the 260 pages
field(sic) on 19.2.2015, which in turn relate to the issue
of foreign bank account and the property in London
W.P.(C) No. 4824/2017 Page 29 of 52
owned by the applicant. The other issues dealt with by
the Commission in its order dated 24.2.2017 are not to
be considered by us, as that would tantamount to a
review of the findings given by our predecessor which
is not permitted under the law because the Commission
becomes a Functus Officio after passing an order and it
cannot sit in judgment over an order passed earlier by
it. As regards the issue in the rectification order dated
26.6.2015, it is an admitted position that the relevant
facts had been placed before the Commission by the
Pr. CIT before the order dated 4.6.2015 and it was not
as if in the rectification application the Pr. CIT had
placed some fresh facts before the Commission. The
error in the order had occurred due to inadvertence at
the end of the Commission but that error had no
bearing on the conclusion arrived at by the
Commission as that decision was not solely or
primarily dependent on it. The conclusion was based
on a holistic appreciation of all the evidence contained
in the documents running into 260 pages.
10.4 When apprised of our view on the above
proposition, the learned AR prayed for an adjournment
on the ground that the applicant would like to seek a
clarification on this issue from the Hon`ble High Court.
Considering that the order giving effect to the
directions of the Hon`ble High Court is to be passed
within the limited time period prescribed under the law
an adjournment up to 9.5.2017 was granted to the
applicant. On 9.5.2017, the A.R. informed that on the
advice of their legal counsel they have not approached
the Hon`ble High Court for a clarification and instead
filed an opinion from the counsel, which has been duly
considered by us. For the reasons stated above we are
of the view that the scope of the present proceedings is
W.P.(C) No. 4824/2017 Page 30 of 52
limited to the issues arising from the 260 pages filed on
19.2.2017. Further, in view of the directions of the
Hon`ble High Court in para 15 of the order dated
13.4.2017, these issued (sic) need to be considered by
us on the basis of the existing documents ie.
submissions made by both the parties subsequent to the
setting aside of the order dated 24.2.2017 on 18.5.2017
and passing of the fresh order on 4.6.2015.
11. Submissions made by the applicant and the
Department : As directed by the Hon`ble High Court
the submissions made by the applicant on 22.5.2015
and 28.5.2015 have been examined.
31. Paragraph 8 reproduces the order dated 13th April, 2017 passed in
Writ Petition (C) No. 8101/2015 remanding the case to the ITSC for fresh
adjudication. Paragraph 9 refers to the attendance of counsel, who had
appeared for hearing on 2nd May, 2017 before the ITSC. Paragraphs 10 to
10.4 refer to the contentions that were raised by the parties on the scope and
ambit of the proceedings, and observations and findings of the ITSC in that
regard. In paragraph 10 of the order refers to the contention raised by the
petitioner that paragraph 11 of the order dated 13th April, 2017 passed by the
High Court had given a clear finding that there was no failure on the part of
the petitioner to make full and true disclosure as far as bank accounts was
concerned. Thereafter, reference was made to paragraph 14 of the order
dated 13th April, 2017 that the petitioner should be given an opportunity at
the stage of rectification order to enable the Commission, i.e. the ITSC, to
examine other errors. We have already dealt with and examined the order
W.P.(C) No. 4824/2017 Page 31 of 52
dated 13th April, 2017 and held that the said contention of the petitioner is
wrong and fallacious. We may note that the case propounded by the
petitioner, as set out in paragraph 10, was that on remand that the ITSC
consideration and decision was not restricted the two issues, i.e., the two
bank accounts in Singapore and London property, but all issues were to be
considered afresh. Paragraph 10.2 records the submission of the Revenue,
who had stated that the High Court had passed an order of remand as full
hearing was not given inasmuch as submissions were not considered and
paragraph 11 of the order passed by the High Court had not given a clear
finding on the question of full and true disclosure with regard to the bank
accounts. The sentence in the order of remand dated 13th April, 2017 passed
by the High Court in Writ Petition(C) No. 8101/2015, relied upon by the
petitioner was merely a reproduction of the contention raised by the
petitioner, and not a conclusive opinion expressed by the High Court. If the
High Court had reached and concluded that there was full and true
disclosure, there was no reason to set aside the order with remand to the
ITSC for a fresh hearing and decision. Paragraphs 10.3 and 10.4 refer to the
order dated 18th May, 2015 passed in Writ Petition (C) No. 4900/2015 and
that the remand was restricted to cognizance and examination of the
documents running into 260 pages, which were filed by the respondents
during the course of hearing on 19th February, 2015 and for which the
petitioner was granted and given adequate opportunity to respond. The
observation in paragraph 10.3 of the order were clearly with reference to the
W.P.(C) No. 4824/2017 Page 32 of 52
order dated 18th May, 2015 passed in Writ Petition (C) No. 4900/2015,
which had circumscribed and confined the scope of remand to the stage of
consideration of Commissioner`s report under Section 245D(2C) of the Act
after giving hearing to the petitioner. The Revenue was entitled to refer to
and rely upon the documents filed on 19th February, 2015, which was to be
construed and deemed to be part of the original report dated 10th February,
2015 filed by the Commissioner, i.e., respondent No.1 before us.
32. While we would agree that the order dated 4th June, 2015 could have
been better worded, but we would not hold that the failure to use better
words or language would itself vitiate the final findings recorded by the
ITSC with reference to full and true disclosure made by the petitioner with
reference to the London property and the two bank accounts. The ITSC has
complied with the directions of the High Court in the orders dated 18th
May,2015 passed in Writ Petition (C) No. 4900/2015 and the order dated
13th April,2017 in the Writ Petition(C) No. 8101/2015. On examination and
consideration afresh, the ITSC with reference the two bank accounts and the
London property has concluded that there was failure on the part of the
petitioner to make full and true disclosure and the manner in which the
undisclosed income was earned. This was the main and core issue that had
become the subject matter of the order dated 4th June, 2015 and subsequent
rectification order dated 26th June, 2015 passed by the ITSC. This was also
the subject matter of the Writ Petition (C) No. 8101/2015 decided vide order
dated 13th April, 2017. This fundamental issue was to be decided, for it is
W.P.(C) No. 4824/2017 Page 33 of 52
accepted and admitted that every assessee invoking and filing an application
for settlement must make full and true disclosure of undisclosed income and
on this there is no lis or argument. Interestingly, the ITSC had granted
adjournment and opportunity to the petitioner get a clarification from the
High Court, whether the issue to be determined and decided by them was
restricted and confined to whether the petitioner was the beneficial owner of
the London property and the two bank accounts. As per the ITSC, these
were the twin aspects to be considered, whereas the petitioner wanted and
had argued that the scope was wider and broader.
33. Even otherwise, the contention raised by the petitioner would not
matter and would be inconsequential, for the ITSC has recorded a firm and
categoric finding that there was failure and lapse on the part of the petitioner
to make full and true disclosure of undisclosed income. Till we set aside this
finding, the argument raised is irrelevant and of no consequence.
34. On the question of the two bank accounts and the London property,
the finding of the ITSC are to be found in paragraph 12, which are material
and relevant and are reproduced below:-
12. Decision: we have once again considered the
submissions dated 22.5.2015 and 28.5.2015 filed by
the applicant in pursuance of the directions of the
Hon`ble High Court, even though these were duly
taken into account by our predecessor Bench earlier
while passing the order dated 4.6.2015. It is seen that
in these submissions the applicant has raised various
objections that are of technical or peripheral nature:
W.P.(C) No. 4824/2017 Page 34 of 52
i. It is stated that on 23.6.2011 i.e. the date on which
the Bank representative of BSI Bank is stated to
have met Sh. Moin Queresh at his residence at New
Delhi, Sh. Quereshi was not present there. We are
not getting into the question whether this was on
account of any mistake in mentioning the date by
the bank employee or otherwise. What cannot be
denied is that this kind of a discrepancy alone does
not disprove the plethora of other KYC documents
provided by the BSI Bank Ltd. Singapore which
have been received by the Department through the
Singapore`s Competent Authority under the DTA
Agreement between India and Singapore.
ii. another discrepancy pointed out by the applicant
is that in the documents provided by the Bank, some
fact about his business like its turnover, number of
employees in the group and properties owned by
him are overstated/inflated. We have considered
this objection, but we tend to agree with the
Department that these kinds of discrepancies do not
have any bearing on the main issue at hand i.e.
whether Sh. Moin Quereshi was the beneficial
owner of the Bank account.
iii. with regard the issue of POA given by Sh.
Yousuf Khan the brother in law of the applicant in
the name of Sh. Moin Kureshi on 11.4.2011 the
A.R stated that the POA proves that Sh. Moin
Qureshi was only acting on behalf of Sh. Yousuf
Khan and it was Sh. Khan who was the real
beneficiary. However, a perusal of the document in
question shows it is a very general and wide ranging
power of attorney executed by Sh Mehboob Khan in
the name of Sh. Moin Akhtar Quereshi to do a very
W.P.(C) No. 4824/2017 Page 35 of 52
wide range of acts on his behalf in multifarious
jurisdiction including various tax havens. This
power of attorney does not refer to any specific
transaction or to any specific bank account. It the
context of the bank account in BSI Bank, the most
important factor is that in the KYC documents
provided by BSI Bank it is only Sh. Moin Akhtar
Quereshi who figures as the beneficial owner. No
mention whatsoever can be found of Sh. Yousuf
Mehboob Khan in the KYC documents. The
Bankers have categorically mentioned the name of
Sh Moin Qureshi as the beneficial owner. Also we
are in agreement with the contention of the DR that
the balance sheets are nothing but private documents
as they were never produced before any government
authority anywhere in the world.
iv The applicant has also cast doubt on the veracity
of the documents provided by the BSI Bank and
stated that merely on the basis of a statement by the
Bank it cannot be concluded that the applicant is the
beneficial owner of the account. However, we note
that the documents produced by the Department
have been procured by the Department from the
Competent Authority of Singapore under the Tax
Treaty between the Indian and the Singapore
government. We are unable to agree with the
applicant that the veracity of these documents is
doubtful and that the entire documentation regarding
KYC is an imaginary creation of the officers of the
Bank without any involvement of Moin Akhtar
Quereshi.
v. The applicant has stated that the Department has
not been able to provide the details of payment
W.P.(C) No. 4824/2017 Page 36 of 52
towards the purchase or furnishing of the flat at
London. While there may be some substance that
the Department has not produced specific details it
cannot be denied that the information provided by
the Competent Authorities of British Virgin Island
and Singapore and by BSI Bank contain enough
information to show that the applicant was the
beneficial owner of a bank account in which there
were substantial transactions of funds. Further the
information received from the Competent Authority
of British Virgin Island corroborates the assertion of
the Department about the nexus of the property at
London with the applicant.
12.1 As pointed out earlier, the documents running into
260 pages on 19.2.2015 pertained to the ownership of a
bank account and a property at London. These
documents have been considered by us afresh during
these proceedings, in the light of detailed submissions
and contentions forwarded by both the parties. Specific
question was asked by us at the end of the hearings
from both the parties weather any fresh issue other than
what arose from the documents already on record were
raised by the other party. To this the A.R. as well as the
D.R. replied in the negative. During the hearing held
on 9.5.2017 as a part of the present proceedings, while
responding to the objections raised by the A.R., the
D.R. explained that the banking procedures in Swiss
Banks are very different from those prevailing in India.
In India only natural persons are allowed to open a
bank account. The Swiss Banks allow even a company,
the directors of which are in turn not natural persons
but corporate or other artificial juridical entities, to
open bank accounts on behalf of a natural person. In
such a structure the identity of a natural person remains
W.P.(C) No. 4824/2017 Page 37 of 52
hidden behind a layer of artificial juridical entities. It
was pointed out by the D.R. that it was primarily to
counter the abuse of these kind of bank accounts and
check the menace of fund flows to terrorist, drug
smugglers and money launderers that Financial Action
Task Force (FATF) of which India is a signatory and
Foreign Account Tax Compliance Act (FATCA) came
into existence. Under these regulations the Banking
Companies are obliged to observe strict Know Your
Customer; (KYC) norms and identify the real or the
beneficial owner before opening a bank account. The
beneficial owner for the purpose of these regulations is
defined as under:
Beneficial owner refers to the natural person
person(s) who ultimately* own or controls ** and
/or the natural person on whose behalf a transaction
is being conducted. It also includes those persons
who exercise ultimate effective control over a legal
person or arrangement.
* Reference to ultimately owns or controls and
ultimately effective control refer to situations in
which ownership/control is exercised through a
chain of ownership of means of control other than
direct control.
** This definition should also apply to beneficial
owner or a beneficiary under a life or other
investment linked insurance policy.
12.2 It is in the above context that the confirmation by
the BSI Bank of beneficial ownership` of the account
in BSI Bank by Sh. Moin Qureshi assumes great
W.P.(C) No. 4824/2017 Page 38 of 52
importance. During the hearing before us the D.R. took
us through the detailed facts and evidences to establish
the beneficial ownership of the account in question by
Sh Moin Qureshi. After the presentation of the D.R.,
keeping in view the directions of the Hon`ble High
Court that no further document etc is to be filed by the
either side, the A.R. was specifically asked to point out
to us if the D.R. had brought any new fact on record.
The A.R. in all due fairness admitted that it was not so
and that these facts were already on record viz. in the
submissions dated 25.5.2015 filed by the Department.
As the submissions dated 25.5.2015 were filed by the
Department in response to applicant`s submissions
dated 19.5.2015, they need to be considered even
otherwise keeping in view the principle of natural
justice. The relevant portion of these submissions,
which are of importance to decide the issue at hand is
therefore reproduced below for the sake of
convenience:
"12.5. The Material evidence establishing Mr.
Qureshis involvement with Barro Holdings Ltd are
in the form of Power of Attorney executed in favour
of BSI Bank Ltd which was signed by Mr. Qureshi
himself under his signature. And Mr. Qureshi has
not disputed his signature on this document. The
only objection raised by Mr.Qureshi in this regard
was that on the date of signing of the document, he
was physically not present in Singapore. However,
the document doesnt indicate the place in which it
was signed. It has been observed that it is a common
practice for foreign banks to reach the client
wherever he is and obtain his signature on the
necessary documents.
W.P.(C) No. 4824/2017 Page 39 of 52
12.6. Thus the two objections raised above are
frivolous, immaterial and peripheral to the issue.
The clinching evidence of the identity of the
beneficial owner is the declaration by the company
Barro through its director Arcas Holding Ltd as to
who is its beneficial owner. In this declaration,
name of Mr. Qureshi was mentioned along with his
other details. It is to be understood that the bank
account is a contract between BSI Ltd and the
account holder Barro- the contracting partner.
12.7 The account holder is required by law of
Singapore to give verification of the beneficial
owner identity. In this case, Arcas Holding Ltd -
one of the directors and authorized signatory of
Barro has verified that the B.O. vs Qureshi Moin
Akhtar, 26.10.1958, India C-134, Defence Colony,
New Delhi-110024 as the beneficial owner. Qureshi
Moin Akhtar is none other than the applicant Mr.
Qureshi. This declaration is in Form-A and on page
24 of the additional documents provided by the
Singapore tax authorizes and produced before ITSC
on 19/02/2015. The director of Barro i.e. Aracas
Holdings Ltd, has given an undertaking to inform
the bank on its own accord of any changes. It has
also been notified to the Arcas Holding Ltd. that the
bank is required to cooperate with the law
enforcement agencies of Singapore and other
agencies and this may required the bank to disclose
the information provided by the contracting partner,
in this Barro, to the relevant authorities,whenever
required. Identity of Mr. Qureshi is further
established by the verified copy of his passport kept
in the record of the bank as part of the verification
form. (pages 25-28 of the additional documents
W.P.(C) No. 4824/2017 Page 40 of 52
provided by Singapore and presented on 19/02/2015
before ITSC). Mr. Qureshi cannot claim that the
documentation has been done behind his back as
copy of passport is accompanying the Form-A.
12.8 At various places in his averments, Mr.
Qureshi has questioned the authenticity of the
documents provided by the Singapore tax
authorities. He has stated that the information has
been provided by Orbis Advisory Pvt. Ltd,
Singapore a private company. This is a misleading
statement by Mr. Qureshi. This confirms that Mr.
Qureshi is not intending to come clean before ITSC.
He is indulging in giving half-truths and misleading
the ITSC into admitting his application. This is
exposed by the fresh information received from
Singapore and BVI authorities. By the above
averment, Mr. Qureshi has implied ignorance about
Orbis Advisory Pvt. Ltd and implied that Orbis has
nothing to do with Bulova and Barro. A reference
was made on 14/01/2015 to the Singapore
authorities asking clarification about, inter-alia,
who had engaged Orbis and under whose
instructions payments were made to Orbis, on what
basis payment etc.
12.9 The Singapore authorities have categorically
stated through their letter dated 12/03/2015
addressed to J.S. (FT&TR), CBDT, Ministry of
Finance, Delhi that Orbis was engaged by Mr.
Qureshi only. The letter is enclosed as Annexure- B
and most importantly, Singapore authority have also
supplied a copy of the indemnity signed by Mr. Moin
Akhtar Qureshi to the board of directors, Bulova
Holdings Ltd. authorizing them to purchase
W.P.(C) No. 4824/2017 Page 41 of 52
property in London at Flat#4,Chesterfiled House,
South Audly Street, London for GBP 3.85 million
and the appoint Mischon de Raya as solicitor for
purchase of the above property. He has indemnified
the board of directors against losses, if any, arising
in the transactions. This document fully and
completely establishes that Mr. Qureshi is the owner
of London property. The document is enclosed as
Annexure-C. This indemnity was executed before
date of purchase of property. This establishes
culpability and mens rea of Mr. Qureshi becuase he
was given opportunity many times by the revenue to
explain the ownership of this London property.
12.10 Now the revenue is in the possession of new
information/evidence regarding beneficial
ownership of the bank account No. 61128131. 2002
current account USD ..... Of Bulova Holding Ltd. in
BSI bank Singapore by Mr. Qureshi. Independent
information received from BVI dated 04/02/2015
received in the office DIT (Inv.2-), Delhi on
20/02/2015 provided Memorandum of association,
registers of members, directors and shareholders of
the legal persons, shareholding pattern, certificate
of incorporation etc. copies of all the material
received from BVI authorities is enclosed as
Annexure D. It contains, inter- alia of bank
account, copy of account opening form of Bulova
Holdings Ltd. held with BSI bank. Ltd. Singapore.
The information was provided by the competent
authorities of BVI under his signature.
12.11 Bulova was incorporated on 22/02/2012 in
BVI. The register of members shows that
Francantina Development Inc. holds 10,000
W.P.(C) No. 4824/2017 Page 42 of 52
ordinary shares of 1 USD each. The documents
show very clearly that the directors of Bulova are
Arcas Holdings Ltd. and somas Group S.S.,
incorpared in BVI. As per the MOA of the company
Bulova, the directors have, inter alia, all the powers
necessary of managing and directing the business
affairs of the company. The AOA of the company
empowered the directors to issue and sign cheques
and other financial instruments from time to time as
determined by the directors. The shares of Somas
Group S.A. and Arcas Holdings Ltd. and Francaina
are all held by Orbis Consulting Trust Kirchstrasse
79 PO Box 5436, 9490 vaduz, Principality if
Liechtenstein. The director of Francatina is Arcas
Holding Ltd. All the three entities are ultimately
held by Orbis Consulting Trust, Vaduz,
Liechtenstein.
12.12 It has been established that Bulova holds bank
account with BSI Ltd. Singapore. The documents
obtained through BVI authorities also prove that
Mr. Qureshi is the beneficial owner of account of
Bulova with BSI ltd. Singapore. The account
opening application was made by Arcas Holdings
Ltd, BVI the director of Bulova. Declaration of
the identity of the beneficial owner in Form A has
been provided by Arcas Holding Ltd. on 16/-7/2014
under its signature and seal indentifying the
beneficial owner as Mr. Quershi. This declaration
was the same as provided by the Singapore
authorities earlier. This corroborates the
declaration of identity of the beneficial owner as
provided by the Singapore authorities earlier with
regard to the bank account opened by Bulova. with
BSI bank Ltd, Singapore. It can be seen that the
W.P.(C) No. 4824/2017 Page 43 of 52
cancelled Form-A provided by the Singapore
authorities as dated 08/03/2012. In this form, Mr.
Qureshis India address C-134, Defence Colony,
Delhi-110024 was given. A change in address was
effected on 16/09/2014 wherein Mr. Qureshi was
changed to 9202, Princess Dubai Marina, Dubai
UAE-225831. It has already been brought to the
notice of ITSC in the Commissioners report
submitted on 10/02/2015 that Mr. Qureshi was the
beneficial owner of the bank account of Bulova with
BSI bank Ltd, Singapore. It was also pointed out
that Form A declaration of beneficial owner
submitted at the time of opening of account
mentioned Qureshi Moin Akhtar C-134, Defence
Colony, Delhi-110024 and vide revised Form-A
dated 16/09/2014 his address was changed to 9202
Princess Towers, Marina Dubai after the date of
search with the intention of hoodwinking the
revenue. When Mr. Qureshi was examined on oath
on 09/04/2014, he had stated this address is that of
the residence of his friend Mr. Himanshu Mehta
who owns the property. This shows that the
reference to Qureshi Moin Akhtar in the revised
Form-A was again to the Mr. Qureshi only. This
shows that he has given this address of Dubai to
mislead and hoodwink the revenue. It is reiterated
that the Singapore authorities have confirmed that
orbis was engaged by Mr. Qureshi and if managed
Bulova on fiduciary basis. Mr. Qureshi gave
instructions for furnishing the London property in
his capacity as beneficial owner of Bulova. This
was based upon copy of the declaration of beneficial
owner made by Bulova to BSI Ag. Another
significant fact to be noted is that the documents
obtained from BVI where Bulova and Francatina
W.P.(C) No. 4824/2017 Page 44 of 52
are registered dont even tangentially mention about
Mr. Yusuf Mehboob Khan."
12.3 From the above facts it is abundantly clear
that Mr. Moin Qureshi was the beneficial owner of the
bank account in question. This fact has come out
clearly during the due diligence done by the BSI Bank
under the KYC norm requirements before opening the
account in question. It is common knowledge that
Swiss Banks maintain strict confidentiality and are
extremely reluctant to part with information about their
clients. In the instant case it was only because the
bank branch was situated in Singapore and governed
by Singapore laws and because India has a Tax Treaty
with Singapore under which the Competent Authority
of Singapore is required to exchange information, that
the Department was able to obtain these documents. A
documents received under a Tax Treaty from the
Competent Authority of a Contracting State have the
force of an official document. We are not inclined to
agree with the applicant that such a statement by a
bank employee does not have any force of evidence.
12.4 From the facts discussed above it is further
established that the applicant did not make a full and
complete disclosure of all the material facts when it
filed its application u/s 245C(1) before us. The
applicant had denied owning any property or bank
account outside India during the search and even later.
Now that it is established that he is the beneficial
owner of a bank account in Singapore through which
substantial amount of funds had been transferred in and
out of the above denial is disproved. It is thus clear
that the applicant has not come out clean before us
while making the application for settlement u/s
W.P.(C) No. 4824/2017 Page 45 of 52
245C(1). It may be mentioned that the provisions of
Settlement under the Income Tax Act, 1961 were
introduced to allow an errant taxpayer who desires to
follow the path of rectitude to make a clean breast of
his affairs and file an application u/s 245C(1) for the
settlement of its tax disputes before the Settlement
Commission. However this once in a life time
opportunity is available to an errant taxpayer only if he
comes out clean. It cannot be allowed to a taxpayer
who fails to disclose such a material fact as ownership
of a foreign bank account. As Sh. Moin Qureshi is a
resident` u/s 6, his worldwide income is taxable in
India as laid down in sec 5(1) of the Income Tax Act,
1961. It is therefore necessary to examine the fund
flow in the Singapore Bank account of the applicant to
come to a conclusion whether income declared is full
and true. Thus his full and true income cannot be
determined unless he had disclosed the existence of the
account in question and explained the source of
amounts credited in it. Further, as the flow of funds
from this account and the purchase of property in
London are intricately linked on both the issues the
disclosure is not full and true.
12.5 It is established law that the Settlement
Commission has to examine the full and true nature of
the disclosure of income at every stage of the
settlement proceedings i.e. u/s 245D(1), 245D(2C) and
245D(4) and if at any stage it is found that the
applicant has not made full and true disclosure, the
Commission is required to reject the application at that
stage and send the case back to the Assessing Officer.
This view has been supported by a number of decisions
including:
W.P.(C) No. 4824/2017 Page 46 of 52
(i) Ajmera Housing Corporation vs CIT (2010) 326
ITR 642 (S.C)
(ii) CIT vs ITSC, (2014) 365 ITR 68 (Bombay)
(iii) CIT vs ITSC (2014) 360 ITR 407 (Delhi)
(iv) V.M. Shaik Mohammed Rowther vs ITSC
(1999) 236 ITR 581 (Madras)
We are therefore of the view that it is not a fit case to
be allowed to be proceeded with as the applicant has
not made a full and true disclosure of all the material
facts in absence of which it would not be possible for
us to determine the income of the applicant. We
therefore hold the settlement application filed by Sh.
Moin Akhtar Qureshi as invalid` u/s 245D(2C).
35. We have deliberately reproduced the entire decision and reasoning of
the ITSC, to set at rest any argument of lack of application of mind on facts
and documents. Indeed, there was a detailed and through examination of the
factual aspects, including the contentions raised by the petitioner on the
question of beneficial ownership. The petitioner had submitted that he was
not a shareholder of the two companies and, therefore, he had no interest in
the companies. The Singapore authorities had only made an observation that
the petitioner was a beneficial owner, but this confirmation, the KYC
documentations certifying that the petitioner was the beneficial owner, was
imaginary or creation of the officers of the bank. The plea and contention
that the petitioner's brother-in-law, Yusuf Mehboob Khan, citizen of
Pakistan, was the beneficial owner of the property in London and also
W.P.(C) No. 4824/2017 Page 47 of 52
beneficial owner of M/s Bulova Holdings Limited and M/s Barro Holdings
Limited was resoundingly rejected for cogent and good reasons. Reliance
was placed on the power of attorney executed by Yusuf Mehboob Khan in
favour of the petitioner, Moin Akhtar Qureshi, and discrepancies relied by
the petitioner with regard to the accounts was duly considered. The
contention of the petitioner that the acts attributable to him were on behalf
of Yusuf Mehboob Khan, it was observed was unacceptable in view of the
overwhelming evidence and material available and produced before the
ITSC.
36. The documents filed with the BSI Bank Limited, Singapore
specifically and categorically mention that the petitioner was a beneficial
owner. The veracity of these documents and the entire documentation
regarding KYC cannot be ignored and treated as imaginary creation of the
officers of the said bank and without knowledge and involvement of the
petitioner. The ITSC has made reference to the banking procedures
applicable, the strict KYC norms, the legal mandate and the requirement to
identify and record details and particulars of the real or beneficial owner. It
was noted that the petitioner had not disputed his signatures on the
documents. The objection was with reference to date of signing. The identity
of the petitioner was also established by verified copy of the passport.
37. We have also examined the documents, copies of which have been
placed on record, including the power of attorney executed by M/s Arcas
Holding Limited, the director of M/s Barro Holdings Limited in favour of
W.P.(C) No. 4824/2017 Page 48 of 52
the petitioner. They had certified and identified the petitioner as the
beneficial owner. M/s Barro Holdings Limited was registered in Republic of
Seychelles. As per the documents received from the Government of
Republic of Singapore under the Double Taxation Avoidance Agreement
and prevention of fiscal evasion in respect of taxes, M/s Barro Holdings
Limited had opened a bank account with BSI Bank Limited, Singapore on
22nd July, 2011, which account was closed on 19th April, 2013 and all assets
and cash balance of USD 384747.13 was transferred to the account of M/s
Barro Holdings Limited with the BSI Bank Limited, Hongkong. M/s Arcas
Holding Limited and Somas Group, SA, companies registered in British
Virginia Islands were authorized signatory of M/s Barro Holdings Limited.
Somas Group, SA was also acting as Secretary of Barro Holdings Limited.
Arcas Holdings Limited had executed a power of attorney dated 29 th June,
2011 for management of assets of M/s Barro Holdings Limited in favour of
the petitioner, Moin Akhtar Qureshi. The petitioner along with M/s Arcas
Holdings Limited was a signatory to the said power of attorney. Moin
Akhtar Qureshi had executed documents affirming and accepting that he
was a beneficial owner of M/s Barro Holdings Limited vide form signed on
29th June, 2011, before and for opening the bank account with the BSI Bank
Limited. Pertinently, this data and details regarding the beneficial owner
were required to be maintained by BSI Bank Limited, Singapore, in terms of
statute and law applicable. Noticeably, the said account does not refer to and
acknowledge Yusuf Mehboob Khan, brother-in-law of the petitioner, as the
W.P.(C) No. 4824/2017 Page 49 of 52
beneficial owner. BSI Bank Limited, Singapore had also conducted due
diligence vide Know Your Customer information. This information
pertained and was relating to the petitioner, Moin Akhtar Qureshi i.e.
beneficial owner. The information states that Ajit Prasad, father in-law of
the daughter of the petitioner, was an existing client of the said bank and
two employees of the bank had known Ajit Prasad for the last five years.
Ajit Prasad had introduced the petitioner, Moin Aktar Qureshi. Importantly,
in the Know Your Customer Report, on the question of expected volume
and type of transactions/products, it was recorded as under:-
"The account will be used to capture money that he
receives from off shore which will then be invested.
The client is also keen to buy London property and
may even invest on our third party fund structure at a
later stage. It is an investment holding company and
will have inwards and then smaller amounts in
investments. 2-3 inward transactions and 2-3 inward
payments in a month. All the transactions are for
investments largely and not commercial."
38. Information with regard to M/s Bulova Holdings Limited was also
received from the Government of Republic of Singapore under the Double
Taxation Avoidance Agreement and the provisions relating to fiscal evasion
in respect of taxes. M/s Bulova Holdings Limited had a bank account with
BSI, AG in Switzerland.
39. Letters received from the Singapore Authority had stated that
payments were received by M/s Bulova Holdings Limited from M/s Barro
W.P.(C) No. 4824/2017 Page 50 of 52
Holdings Limited's Singapore and Hong Kong bank account with BSI Bank
Limited. Lastly, and importantly, the petitioner i.e. Moin Akhtar Qureshi
has declared himself as beneficial owner of the bank account of M/s Bulova
Holdings Limited maintained with the BSI Bank, AG.
40. Moin Akhtar Qureshi, had executed and signed indemnity bond,
indemnifying the board of directors of M/s Bulova Holdings Limited. He
had authorized the board of directors of M/s Bulova Holdings Limited to
purchase the London property, i.e. 4, Chesterfield House, South Audley,
Mayfair, London, and appoint a solicitor. M/s Bulova Holdings Limited was
/ is the registered owner of the London property which was acquired in May,
2012. Details of the income, payments from M/s Barro Holdings Limited to
M/s Bulova Holdings Limited were available.
41. The aforesaid evidence is compelling and conclusive. It cannot be
ignored. It is in this context and in view of these documents specific factual
findings have been recorded by the ITSC. It was also recorded that the
petitioner had failed to adduce specific and clear evidence to show that he
was not the beneficial owner of M/s Barro Holdings Limited etc. and the
accounts and the London property were owned by his brother-in-law.
42. On the question of full and true disclosure and the statutory mandate,
reference can be made to decision of this Court in Ajmera Housing
Corporation and Another versus CIT, Commission of Income Tax versus
Income Tax Settlement Commission and Others, (2014) 360 ITR 407 (Del)
and Commissioner of Income Tax versus Income Tax Settlement
W.P.(C) No. 4824/2017 Page 51 of 52
Commission and Others, (2010) 326 ITR 226 (Bom) and Vishwa Nath
Gupta versus Principal Commissioner of Income Tax Central and Others,
(2017) 395 ITR 165 (Del).
43. The last contention raised by the petitioner was in respect of violation
of principles of natural justice and reference to the decision of the Supreme
Court in Union Carbide Corporation versus Union of India, (1991) 4 SCC
584 was made. We fail to fathom relevance of the said contention in the
context in question. There is no violation of the principle of audi alteram
partem in the said case as hearing was given as the impugned order refers to
the various contentions and issues raised by the petitioner and answers the
same.
44. In view of the aforesaid discussions and the reasons, we do not find
any merit in the present writ petition. Hence, the writ petition is dismissed.
However, parties are left to bear their own costs.
(CHANDER SHEKHAR)
JUDGE
(SANJIV KHANNA)
JUDGE
AUGUST 28, 2018
VKR
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