If the assessee has not disclosed details of a foreign bank account & does not provide other details on requested by AO, the Department is justified in making the Estimate: Delhi HC
In an important judgement by Delhi High Court which can impact the foreign accounts of returning NRIs, the HC has held that if the assessee who has not disclosed details of a foreign bank account & does not provide authenticated statement for the account or other details on request by Income Tax Department during assessment stage, the Department is justified in “estimating” the amount of deposit in the account based on the available information.
This judgement should be an eye-opener for returning NRIs & highlights the importance of being prepared for an enhanced scrutiny of foreign incomes/assets by:
a) making proper disclosures in the Indian ITR for any foreign accounts after returning to India & becoming ROR &
b) fully co-operating with the Income Tax Department if you receive a notice/communication regarding undisclosed foreign bank accounts or investments & providing additional details wherever required.
Non-compliance of above creates a risk of very harsh penalties under the Indian Black Money Law & allowing Income Tax Department to tax the “estimate” of deposits as “unexplained money”.
It is also very important to preserve bank/brokerage accounts/statements & salary documents like W2, 1040, 1099s etc. properly to explain source of funds if asked by the tax authorities, which they are well within their right to.
The copy of the order is as under:
