TABASUM MIR Vs. UNION OF INDIA

JUDGEMENT

(1.) i. Common questions of fact and the law: Since common questions of fact and the law are involved in all these connected six Petitions, therefore, same, after having been heard together, are being decided by this common order.

(2.) In the first 03 Writ Petitions, being WP (C) Nos. 594/2021; 596/2021; and 597/2021, the Petitioners have assailed the validity of the notices dated 6th of July, 2018 issued by the Respondents under Sec. 10 (1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (for short 'the Act of 2015') as also show cause notices dated 18th of March, 2021. Thereafter, by medium of Writ Petitions bearing WP (C) Nos. 802/2021; 803/2021 and 806/2021, the Petitioners have challenged the penalty notices dated 29th of March, 2021, assessment orders dated 31st of March, 2021 and demand notices dated 31st of March, 2021.

(3.) One Abdul Rashid Mir had three children, namely, Late Mujeeb Mir; Late Sabeha Mir; and Tabasum Mir. Late Mujeeb Mir is stated to have been a citizen of India who, however, primarily lived outside India since his childhood and his primary place of residence was at Bangkok, Thailand. The said Mujeeb Mir is claimed to be a Non-Resident Indian for the purpose of Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961') since 1990. On 22nd of March, 2002, without the knowledge to the Petitioners, the said Late Mujeeb Mir issued letter of instructions to M/s Trumax Nominees Limited for establishment of trust to be called the 'Mondale Irrevocable Discretionary Trust'. On 8th of October, 2002, without the knowledge of the Petitioners, the said Mujeeb Mir settled 'Mondale Irrevocable Discretionary Trust' with Trumax Company Limited, a Company incorporated under the Laws of Isle of Man to act as Trustees for the Trust. On 8th of October, 2002, without the knowledge of the Petitioners, the said Mujeeb Mir subscribed to the entire share capital of the Company Mondale SA that was incorporated under the laws of Republic of Panama and transferred the said shares to 'Mondale Discretionary Trust'. On 9th of October, 2002, without the knowledge of the Petitioners, the said Mujeeb Mir excluded the erstwhile beneficiaries (a Wildlife Sanctuary) and made his siblings, namely, Tabasum Mir (Sister); Ms Sabeha Mir (Sister); and his first cousin brother-Amir Mir as the beneficiaries of 'Mondale Discretionary Trust'. On 31st of January, 2005, the said Mujeeb Mir passed away and his father-Abdul Rashid Mir was appointed as the Manager of the Estate of his deceased son pursuant to orders passed by the Courts in Thailand. On 11th of September, 2007, a deed of appointment and indemnity was entered between Trumax Company Limited (Trustees) and Abdul Rashid Mir representing the beneficiaries. Through Abdul Rashid Mir, the Petitioners learnt that there were three beneficiaries. The deed, inter alia, stated that 'the Trustee hereby irrevocably appoints to the Beneficiaries in equal shares absolutely the appointed fund for their own absolute use and benefit freed and discharged from all the trusts of the Trust'. On 2nd of January, 2008, the Stabitrust Fiduciaries Limited were appointed as Trustee of the Mondale Trust as successor Trustee to Trumax. On 18th of January, 2010, beneficial interest in bank account of Mondale S. A. operating with Banque Baring Brothers Sturdza SA, Geneva was transferred to the beneficiaries of the trust. On 4th of March, 2010, the Petitioners wrote to the Reserve Bank of India and disclosed the creation of Mondale Discretionary Trust by Late Mujeeb Mir and apprised them about the inheritance on account of his demise. Furthermore, permission was sought under Sec. 6(5) of the Foreign Exchange Management Act, 1999 to hold securities in a foreign company (Mondale SA) and consequent beneficial interest in a foreign bank account. On 5th of April, 2010, the Reserve Bank of India replied to the letter of one of the Petitioners and referred to Master Circular No. 01/2009-10 which, inter alia, provided that a general permission has been granted to resident of India to hold foreign securities and to acquire shares by way of inheritance from a person resident out of India. On 28th of January, 2011, the balance lying with the foreign bank account (1/3rd share) was declared in the Wealth Tax Return for the Accounting Year (AY) 2010-11 and Accounting Year (AY) 2011-12 of the Petitioners. On 4th of July, 2011, Rs.5,92,64,869.00, being 1/3rd share of each of the Petitioner, was remitted from the bank account of Mondale SA to India. On 6th of July, 2011, the Jammu and Kashmir Bank Limited issued certificate of Foreign Inward Remittance specifying the remittance of money on account of the dissolution of the trust and 1/3rd of inheritance. In April, 2016, the Panama Paper Leaks Article was published in Indian Express newspaper giving names of various individuals reportedly having foreign assets. Thereafter, income tax proceedings under Sec. 131 (1-A) of the Act of 1961 initiated against the Petitioners seeking details of foreign assets. Information as called for was provided by the Petitioners. On 6th of July, 2018, notice under Sec. 10(1) of the Act was issued to the Petitioners seeking various details. On 2nd of August, 2018, the Petitioners submitted information in response to the documents called for by the authorities which, inter alia, included information about receipt of money from the trust settled by Late Mujeeb Mir. On 29th of March, 2019, notice under Sec. 148 of the Act of 1961 was issued to the Petitioners for reopening of assessment for Account Year (AY) 2012-13. On 19th of April, 2019, the Petitioners sought reasons for reopening of the assessment. On 7th of September, 2019, no response was received by the Petitioners, however, fresh letter was issued seeking further documents. On 18th of October, 2019, the Petitioners filed response to the above and again sought reasons for reopening of assessment. On 20th of November, 2019, notice under Sec. 10(2) of the Act was issued to the Petitioners asking to produce all relevant documents. The Petitioners sought two adjournments. On 16th of October, 2020, copies of wealth tax returns submitted by the Petitioners for Accounting Year (AY) 2010-11 as directed by the Deputy Director of Income Tax (Investigation), Srinagar. Thereafter, notice for personal deposition of the Petitioners issued by the Deputy Director of Income Tax (Investigation), Srinagar under Sec. 8 of the Act of 2015. On 9th of February, 2021, additional details as called for by the Deputy Director of Income Tax (Investigation), Srinagar were submitted by the Petitioners. On 22nd of February, 2022, the Petitioners filed a detailed reply to the notice under Sec. 10(1) of the Act dated 6th of July, 2018. On 3rd of March, 2021, clarification submitted by the Petitioner to Deputy Director of Income Tax (Investigation), Srinagar that the reply to RBI application received only for Mr Amir Mir and, on follow-up with RBI, they were informed that same guidelines apply to other applicants/ Petitioners. On 18th of March, 2021, show cause notice was issued to the Petitioners by the Deputy Director of Income Tax (Investigation) pursuant to filing of the reply dated 23rd of February, 2021. The Petitioners filed three separate Writ Petitions bearing WP (C) Nos. 594/2021; 596/2021; and 597/2021 before this Court challenging the notices issued under Sec. 10(1) of the Act dated 6th of July, 2018 as also the show cause notices dated 18th of March, 2021. On 29th of March, 2021, this Court passed order directing the Respondents to go ahead with the assessment, but not to proceed with prosecution and penalty proceedings. On 29th of March, 2021, the Petitioners received three notices each dated 29th of March, 2021 under Sec. 46 read with Ss. 41, 42 and 43 of the Act of 2015, respectively, for imposition for penalty. On 31st of March, 2021, vide the assessment Orders dated 31st of March, 2021, the Petitioners were assessed to tax under Sec. 10 of the Act of 2015 and the total value of undisclosed foreign assets was determined and total tax, accordingly, computed to be paid on account of said undisclosed foreign assets. On 31st of March, 2021, demand notice dated 31st of March, 2021 was issued directing the Petitioners to pay the tax determined within a period of 30 days. Thereafter, penalty notices dated 29th of March, 2021, the assessment orders dated 31st of March, 2021 and demand notices dated 31st of March, 2021 were challenged by the Petitioners through WP (C) Nos. 802/2021; 803/2021 and 806/2021.