Now, those hiding black money in foreign lands will find it difficult to escape

In a great boost to the fight against black money, the Income-Tax Department (I-T Dept) has become even more empowered now, making it ultra-difficult for tax evaders to hoard money in foreign banks.

If an earning individual puts impediments in the carrying out of a tax evasion and black money hoarding inquiry in foreign banks, then the I-T Dept will have the power to add that money in the person's taxable income. Photo: Reuters

In a great boost to the fight against black money, the Income-Tax Department (I-T Dept) has become even more empowered now, making it ultra-difficult for tax evaders to hoard money in foreign banks. According to a Zee Business report, if an earning individual puts impediments in the carrying out of a tax evasion and black money hoarding inquiry in foreign banks, then the I-T Dept will have the power to add that money under scrutiny in the person's taxable income. This became evident in the Mumbai Income Tax Appellate Tribunal or ITAT's latest verdict where it added Rs 196 crore of an 86-year-old lady into the taxable segment of the income. This Mumbai ITAT verdict can turn out as a precedent for further such cases and inquiries.

What was the matter

The matter is linked to the Renu Thadani case in which the lady had reported Rs 1.7 lakh annual income in FY 2005-06. But, the I-T Dept got her name in the list of black money hoarders in Geneva's HSBC Bank. The department come to know that Thadani deposited nearly $4 crore in her Geneva-based HSBC account. Converting this amount with the then dollar price the net amount being stashed in Thadani's Swiss bank account comes near Rs 196 crore. When the I-T dept came to know about it, it started a tax assessment process in 2014. Renu Thadani contested the department's re-assessment process decision in the Mumbai ITAT but the decision came in the favour of the I-T Dept.

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Thadani's Alibi

Renu Thadani tried to contest the I-T Dept re-assessment process by putting her alibi that the HSBC account under scrutiny is not her personal account but of the GWU Investments — a trust that belongs to her family. She even tried to claim benefit due to her NRI status after closure of the HSBC account. But, finally the Mumbai ITAT gave its decision in favour of the I-T Dept because the passport details being found in the bank account is of Renu Thadani and it was enough to establish the case in favour of Dept. The ITAT also looked at the impediments being posed by Renu Thadani in the money stashing case.

Impact of this ITAT Decision

Taking this Mumbai ITAT verdict as an example, now the ITD will be able to take such cases more strongly and efficiently. In fact, it will be an eye opener for those also who have stashed money in foreign bank accounts. Currently, near 300 such money stashing cases are going on.

Expert view

Commenting upon the Mumbai ITAT verdict in Renu Thadani case and its impact, International Taxation expert TP Ostwal said, "It's a big verdict which will have long-drawn conclusion. This verdict is a strong message to those tax evaders who develop trust structure through a third party settler. Now, ITD will feel empowered in handling such cases in future."

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