ITAT Mumbai Bench Dismisses Revenue's Appeals Against Anil Ambani on Alleged Undisclosed Foreign Accounts

Tribunal rules BUP IDs as internal identifiers, not separate accounts; additions under section 69A deemed unsustainable.

In a significant judgment delivered by the Income Tax Appellate Tribunal (ITAT) Mumbai Bench "A", appeals filed by the revenue against Anil Dhirajlal Ambani concerning alleged undisclosed foreign bank accounts were dismissed. The bench, comprising Judicial Member Shri Anikesh Banerjee and Accountant Member Shri Girish Agrawal, pronounced that BUP IDs linked to HSBC Bank, Geneva, are merely internal identifiers and do not represent separate bank accounts. Consequently, the additions made under section 69A of the Income Tax Act, 1961, based on presumptive evidence, were found unsustainable.

The revenue had pursued substantive and protective additions for assessment years 2001-02 to 2006-07, stemming from alleged foreign accounts associated with BUP IDs and undisclosed income. These additions were challenged by Anil Ambani and led to the current appeals after being deleted by the Commissioner of Income-tax (Appeals).

The ITAT observed that similar issues had been previously adjudicated by co-ordinate benches of the tribunal in cases involving Late Shri Dhirubhai H. Ambani and Shri Mukesh D. Ambani, where it was established that BUP IDs are customer relationship numbers rather than account identifiers. The tribunal highlighted that the peak balance in the customer profile had already been assessed and taxed in the hands of Late Shri Dhirubhai H. Ambani for the assessment year 2006-07.

The tribunal emphasized the absence of independent material to support the revenue's claims, affirming that the reopening of assessments based on internal identifiers and presumptions lacked concrete evidence. It reiterated the importance of consistency in judicial decisions, upholding the principle of judicial discipline by following binding precedents set by earlier tribunal decisions.

The judgment further elucidated that allegations of undisclosed foreign accounts were addressed in compliance with provisions under the Indo-France Double Taxation Avoidance Agreement (DTAA), but lacked substantive backing. The tribunal, therefore, found the revenue's grounds for appeal untenable, leading to the dismissal of all six appeals for the respective assessment years.

This decision marks a crucial reinforcement of judicial consistency in interpreting the nature of BUP IDs and the assessment of alleged undisclosed income based on foreign accounts. The tribunal's judgment underscores the requirement for solid evidence in tax assessments, particularly concerning international financial transactions.

Bottom Line:

Income Tax - Additions based on undisclosed foreign bank accounts and BUP IDs - BUP IDs do not represent separate bank accounts, and peak balances already assessed and taxed cannot be reassessed - Additions under section 69A of the Income Tax Act, 1961 on substantive and protective basis merely on the strength of BUP IDs and internal identifiers are unsustainable.

Statutory provisions: Income Tax Act, 1961 Sections 69A, 143(3) r.w.s. 147

DCIT CC-8(2) v. Anil Dhirajlal Ambani, (ITAT)(Mumbai Bench "A") : Law Finder Doc id # 2820079