Mere mention of name in account opening form of Foreign Bank does not establish beneficial ownership: ITAT

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  • Last Updated on 20 July, 2021

Beneficial Ownership

Case details: ACIT v. Jatinder Mehra - [2021] 128 152 (Delhi - Trib.)

Judiciary and Counsel Details

    • Sudhanshu Srivastava, Judicial Member, and Prashant Maharishi, Accountant Member.
    • S.K. Tulsiyan and Ms. Bhoomija Verma, Advs., Karan Kumara, for the Appellant.
    • Ms. Shivani Bansal, Sr. D.R. for the Respondent.

Facts of the Case

Assessee was an individual earning salary from Essar Services India Ltd. During the assessment year 2016-17, the Assessing Officer (AO) received information under India- Singapore DTAA. Information stated assessee’s name as the beneficial owner in the account opening form of a Bank Account situated in Singapore. Accordingly, he issued a show-cause notice to assessee as why sum laying in such bank account should not be considered as ‘Undisclosed Foreign Income and Assets’ under the Black Money (Undisclosed Foreign Income and Assets) Act 2015.

Assessee stated that AO supplied account opening form of Watergate advisors Ltd. for opening the bank account in Singapore. However, said document didn’t bear any of the signatures of the assessee and assessee had neither signed the form and nor gone to that bank anytime. Further, Watergate advisors Ltd belongs to the son of the assessee, who is a non-resident Indian since 1998.

Since he is not the owner of the money laying in Bank account but his son is the owner of the sum. Therefore, assessee contested that he was not required to submit/disclose these assets in schedule FA in the return of income. AO rejected assessee’s contention however, on appeal, CIT(A) ruled in favour of assessee. AO filed appeal before the Tribunal.


The Tribunal held that the Black Money Act 2015 does not define the term ‘beneficial ownership’. Thus, the beneficial ownership is required to be understood with respect to its dictionary meaning and also other provisions of other statute also keeping in mind the nature of the object and purposes of the Black Money Act.

Testing the instant case on the parameters laid down by the Companies’ Act, it is apparent that there was no arrangement, contract between Watergate advisors private limited with the assessee. There was no demonstration by the revenue that assessee exercises any control as a shareholder of Watergate advisors limited over that company.

Further, it is not also demonstrated that assessee exercises any control to appoint directors or control the management or policy decision of that company. This was also adequately narrated by the learned CIT(A). Thus, the test of beneficial ownership as per the criteria laid down under The Companies’ Act 2013 does not satisfy that assessee was a beneficial owner of the bank account owned by Watergate advisors Limited. Therefore, the order of CIT(A) deleting additions was justified.

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