Disclosing Foreign Bank Account and Asset Details to Indian Tax Dept. Not Necessary for NRIs: ITAT

The Income-Tax Appellate Tribunal (ITAT) has said that Non Resident Indians (NRIs) are not required to disclose details of their foreign bank accounts or assets.

According to Hindu Business Line report, other than terming such disclosure unnecessary for NRIs, the tribunal also said that it is the responsibility of Income Tax department to prove that assessee has deposited his/her undeclared income generated from India in banks abroad.

The tribunal was pronouncing this ruling in a case involving Japan-based NRI Hemant Mansukhlal Pandya who has an account in the Geneva branch of HSBC.

Pandya has been holding NRI status since the financial year 1995-96. He is a director in a company in Japan and has been living in Japan on business visa since 1990. He got permanent residency certificate from Japan in 2001, according to details given on ITAT website.

“The assessing officer erred in making additions towards deposits found in HSBC Bank account, Geneva under Section 69 of the Income Tax Act,” said the Mumbai bench of the ITAT, according to the newspaper’s report.

The tribunal also said that the finance minister himself has clarified that all accounts in the foreign bank may not be illegal as they may belong to NRIs.

“Even the government has acknowledged the fact that an NRI foreign bank account is not illegal… Provisions of black money (undisclosed foreign income and assets) and the imposition of tax Act, 2015 is applicable only to the residence,” added ITAT.

Pandya’s case is related to reopening of his IT assessment of 2006-7 in 2014. In the assessment of 2006-7, Pandya had declared his income of Rs.5.51 lakh, which was not generated in India. However, his name was in the list of foreign account holders given by French government to India under double taxation avoidance agreement (DTAA), the publication noted.

The bench also said that the assessing officer relied only on the details received from the French government and didn’t inquire into the matter.