HSBC Bank balance can’t be taxed, says I-T tribunal
HSBC Geneva, a tax order has questioned the very approach of the Income Tax (I-T) department in going after individuals whose names figured in the infamous list of information that was stolen by an employee of the Swiss private banking arm of the British bank.
In a decision that could have a bearing on other `HSBC account’ cases, a tax tribunal last week has ruled that the I-T department cannot go back 16 years to reopen old matters to tax the ‘peak balance’ lying in such bank accounts. Why? Because, according to the Mumbai bench of the Income Tax Appellate Tribunal — a quasi judicial authority — a bank balance reflects 'assets' and not ‘income’, and, under the law, only income can be taxed.
Till now, in many HSBC matters, tax claims have been raised on the maximum amounts that were lying in the bank accounts — primarily because that was the only information that the I-T department had in 2010-11 when it received the data.
Under the old law, which was invoked in this matter, the I-T department could go back up to 6 years to tax undisclosed local income (exceeding Rs 1 lakh) and up to 16 years to go after overseas income that had escaped tax. HSBC cases were reopened under both the provisions (6 years and 16 years) and both these provisions (under the old law) allowed taxation of income (and not assets).
Under the present law, the department can reopen an assessment up to 10 years if it suspects that the untaxed income is more than Rs 50 lakh. The 16-year provision (applicable earlier only in terms of offshore
