My name appears as beneficial owner on a foreign bank account opening form I never signed. Is that enough to tax the balance in my hands?
No. The Delhi Bench upheld deletion of an addition of Rs 5,66,47,000 where the account stood in the name of a British Virgin Islands company whose sole director and shareholder was the assessee's son, and the money had come from a trust. Beneficial ownership under s.2(11) requires that the person provided the consideration and exercises control; a name and a passport number on an account opening form, without more, does not establish it.
Decided by the ITAT (Sudhanshu Srivastava JM and Prashant Maharishi AM) on 2021-07-07, reported as BMA No. 01/Del/2020 and C.O. No. 26/Del/2021, assessment year 2016-17 (ITAT, Delhi Bench); cited in later orders as (2021) 128 taxmann.com 152. It bears on section BMA s.2(11), section BMA s.3, section BMA s.10, section 139(1) Explanation 4, section Companies Act s.90, section Benami s.2(12) of the Income Tax Act 1961, in Assessment & Scrutiny and Evidence & Burden of Proof matters.
Most Black Money Act assessments built on exchange-of-information material rest on exactly this - a name on an account opening form. This is the order that sets out what 'beneficial owner' means and puts the burden back on the officer to show who funded the asset.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
Information reached the Department under the India-Singapore Double Taxation Avoidance Agreement showing the assessee as the beneficial owner of a foreign bank account - account No. 806694 with Clariden Leu Ltd, Singapore. The account stood in the name of Watergate Advisors Ltd, a British Virgin Islands company, whose sole director and shareholder was the assessee's son, Rajneesh Mehra. Credits of USD 834,025.32, about Rs 5,66,47,000, had been deposited from the Rajvin Ltd trust during 2011 and 2012. The Assessing Officer brought that sum to tax under the Black Money Act for assessment year 2016-17. The Commissioner (Appeals) deleted the addition on the finding that the assessee was not the beneficial owner. The Revenue appealed on the grounds that the assessee was named as beneficial owner in the account opening form with his passport details, that he had not proved his son was the actual owner, that it was illogical for the son not to be named if the intention was to benefit him, and that the account had not been disclosed in the returns for assessment years 2010-11 to 2016-17. The assessee filed a cross-objection.
The Revenue's appeal and the assessee's cross-objection were both dismissed (para 42). At para 41 the Bench held that the assessee 'does not have beneficial ownership of the amount deposited in Watergate advisors Limited', that he did not hold that asset, that the Departmental Representative could not show any evidence that the assessee was the owner or beneficial owner of the sum lying in the company's bank account, that the assessee had given overwhelming evidence that the money belonged to his son which the Assessing Officer had not controverted, and that the Commissioner (Appeals) was correct in deleting the addition of Rs 5,66,47,000.
Section 2(11) requires that the asset be held by the assessee in his own name or be one in respect of which he is a beneficial owner, with no satisfactory explanation of the source of investment. The Act does not define beneficial owner, so the Bench drew the meaning from the statutes that do: Explanation 4 to s.139(1) of the Income-tax Act, under which a beneficial owner is the individual who has provided, directly or indirectly, the consideration for the asset for his own immediate or future benefit or that of another; s.90 of the Companies Act 2013, which turns on significant influence or control, including the right to appoint a majority of directors or to control the management; s.2(12) of the Benami Act, which identifies the person for whose benefit the property is held and whose consideration was provided or paid by another; and Rule 9(3) of the Prevention of Money-Laundering Rules 2005, with its controlling ownership interest threshold and control through management or shareholder agreements. Black's Law Dictionary was used for the equitable sense of the term. The common thread the Bench took from these is that the person must have a nexus to the source of the asset and must have provided the funds for it. On that test the material was one step short: the account opening form named the assessee and carried his passport details, but the company was the son's, the funds came from a trust, and the officer produced nothing to connect the assessee to the source. The Bench also took the coordinate Bench decision in Kamal Galani v. ACIT (ITA 138/Mum/2019), where naming in an account opening form, rebutted by affidavit, was held insufficient to make the assessee the beneficial owner.
we hold that assessee does not have beneficial ownership of the amount deposited in Watergate advisors Limited
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. The Delhi Bench upheld deletion of an addition of Rs 5,66,47,000 where the account stood in the name of a British Virgin Islands company whose sole director and shareholder was the assessee's son, and the money had come from a trust. Beneficial ownership under s.2(11) requires that the person provided the consideration and exercises control; a name and a passport number on an account opening form, without more, does not establish it. This was decided by the ITAT (Sudhanshu Srivastava JM and Prashant Maharishi AM) and bears on section BMA s.2(11), section BMA s.3, section BMA s.10, section 139(1) Explanation 4, section Companies Act s.90, section Benami s.2(12) of the Income Tax Act 1961. It is reported as BMA No. 01/Del/2020 and C.O. No. 26/Del/2021, assessment year 2016-17 (ITAT, Delhi Bench); cited in later orders as (2021) 128 taxmann.com 152. Most Black Money Act assessments built on exchange-of-information material rest on exactly this - a name on an account opening form. This is the order that sets out what 'beneficial owner' means and puts the burden back on the officer to show who funded the asset. If it applies to you, the first step is this: Ask what the Department actually holds beyond the account opening form, and put the officer to proof on who provided the consideration for the asset.
Information reached the Department under the India-Singapore Double Taxation Avoidance Agreement showing the assessee as the beneficial owner of a foreign bank account - account No. 806694 with Clariden Leu Ltd, Singapore. The account stood in the name of Watergate Advisors Ltd, a British Virgin Islands company, whose sole director and shareholder was the assessee's son, Rajneesh Mehra. Credits of USD 834,025.32, about Rs 5,66,47,000, had been deposited from the Rajvin Ltd trust during 2011 and 2012. The Assessing Officer brought that sum to tax under the Black Money Act for assessment year 2016-17. The Commissioner (Appeals) deleted the addition on the finding that the assessee was not the beneficial owner. The Revenue appealed on the grounds that the assessee was named as beneficial owner in the account opening form with his passport details, that he had not proved his son was the actual owner, that it was illogical for the son not to be named if the intention was to benefit him, and that the account had not been disclosed in the returns for assessment years 2010-11 to 2016-17. The assessee filed a cross-objection. The matter was decided on 2021-07-07 by the ITAT (Sudhanshu Srivastava JM and Prashant Maharishi AM). On those facts the ITAT held as follows. The Revenue's appeal and the assessee's cross-objection were both dismissed (para 42). At para 41 the Bench held that the assessee 'does not have beneficial ownership of the amount deposited in Watergate advisors Limited', that he did not hold that asset, that the Departmental Representative could not show any evidence that the assessee was the owner or beneficial owner of the sum lying in the company's bank account, that the assessee had given overwhelming evidence that the money belonged to his son which the Assessing Officer had not controverted, and that the Commissioner (Appeals) was correct in deleting the addition of Rs 5,66,47,000.
Section 2(11) requires that the asset be held by the assessee in his own name or be one in respect of which he is a beneficial owner, with no satisfactory explanation of the source of investment. The Act does not define beneficial owner, so the Bench drew the meaning from the statutes that do: Explanation 4 to s.139(1) of the Income-tax Act, under which a beneficial owner is the individual who has provided, directly or indirectly, the consideration for the asset for his own immediate or future benefit or that of another; s.90 of the Companies Act 2013, which turns on significant influence or control, including the right to appoint a majority of directors or to control the management; s.2(12) of the Benami Act, which identifies the person for whose benefit the property is held and whose consideration was provided or paid by another; and Rule 9(3) of the Prevention of Money-Laundering Rules 2005, with its controlling ownership interest threshold and control through management or shareholder agreements. Black's Law Dictionary was used for the equitable sense of the term. The common thread the Bench took from these is that the person must have a nexus to the source of the asset and must have provided the funds for it. On that test the material was one step short: the account opening form named the assessee and carried his passport details, but the company was the son's, the funds came from a trust, and the officer produced nothing to connect the assessee to the source. The Bench also took the coordinate Bench decision in Kamal Galani v. ACIT (ITA 138/Mum/2019), where naming in an account opening form, rebutted by affidavit, was held insufficient to make the assessee the beneficial owner. In the words reproduced by the source cited on this page: "we hold that assessee does not have beneficial ownership of the amount deposited in Watergate advisors Limited" The decision followed or applied Kamal Galani v. ACIT, ITA No. 138/Mum/2019 - followed, on a name in an account opening form not making the assessee beneficial owner.
It was decided by the ITAT on 2021-07-07 and is reported as BMA No. 01/Del/2020 and C.O. No. 26/Del/2021, assessment year 2016-17 (ITAT, Delhi Bench); cited in later orders as (2021) 128 taxmann.com 152. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section BMA s.2(11), section BMA s.3, section BMA s.10, section 139(1) Explanation 4, section Companies Act s.90, section Benami s.2(12), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal and the assessee's cross-objection were both dismissed (para 42). At para 41 the Bench held that the assessee 'does not have beneficial ownership of the amount deposited in Watergate advisors Limited', that he did not hold that asset, that the Departmental Representative could not show any evidence that the assessee was the owner or beneficial owner of the sum lying in the company's bank account, that the assessee had given overwhelming evidence that the money belonged to his son which the Assessing Officer had not controverted, and that the Commissioner (Appeals) was correct in deleting the addition of Rs 5,66,47,000. It arises in Assessment & Scrutiny and Evidence & Burden of Proof matters, on section BMA s.2(11), section BMA s.3, section BMA s.10, section 139(1) Explanation 4, section Companies Act s.90, section Benami s.2(12) of the Income Tax Act 1961, and was decided by Sudhanshu Srivastava JM and Prashant Maharishi AM. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Build the evidence on source of funds: who earned the money, through which accounts it moved, and whose returns or foreign filings show it. Where the account stands in the name of a company, produce the register of members and the directorship position, and show whose asset it is on ordinary company-law principles. Where another family member owns the asset, get that owner's own confirmation and, if appropriate, an affidavit on record before the Assessing Officer rather than at the appellate stage. Cite the definitions the Bench drew on - Explanation 4 to s.139(1), s.90 of the Companies Act 2013, s.2(12) of the Benami Act and Rule 9(3) of the PMLA Rules - to show a consistent statutory meaning of beneficial owner.
Still good law. Applied by the Kolkata Bench in Smt. Tara Kejriwal v. DDIT (Inv.)-3(3), decided 7 January 2025, which took from this order the requirement that the person said to be a beneficial owner have a nexus to the source of the asset and have provided the funds for it, and allowed the assessees' appeals on that footing; that order was read. No decision doubting or reversing this order was located, and nothing was found to show whether the Revenue carried it to the High Court. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The cause title as printed at indiankanoon runs 'Jatinder Mehra v. Addl. CIT Range-70', with the assessee named first, although the appeal disposed of is the Revenue's - BMA No. 01/Del/2020 - and the assessee's cross-objection. The order is commonly cited the other way round, as Addl. CIT v. Jatinder Mehra, which is how it is titled here. The account is with Clariden Leu Ltd, Singapore, not with BNP Paribas; a BNP Paribas account features in the Kolkata cases that later applied this order and the two should not be conflated. The taxmann.com citation is recorded because it is printed inside the later Kolkata order that was read; no reporter citation appears on the face of this order. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal and the assessee's cross-objection were both dismissed (para 42). At para 41 the Bench held that the assessee 'does not have beneficial ownership of the amount deposited in Watergate advisors Limited', that he did not hold that asset, that the Departmental Representative could not show any evidence that the assessee was the owner or beneficial owner of the sum lying in the company's bank account, that the assessee had given overwhelming evidence that the money belonged to his son which the Assessing Officer had not controverted, and that the Commissioner (Appeals) was correct in deleting the addition of Rs 5,66,47,000.
TaxSphere, “Addl. CIT v Jatinder Mehra”, https://taxnotice.vittsphere.com/caselaw/case/addl-cit-v-jatinder-mehra-bma-beneficial-owner/ (validity last checked 2026-09-16)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
A benami show-cause and attachment have come on the strength of one contractor's statement. Can I go to the High Court now?
They have taxed me on shares in a struck-off offshore company I paid nothing for. Can there be a charge at all if the shares have no value under the rules?
The assessment rests on bank statements the department got from a foreign tax authority. They are uncertified and parts are blacked out. Do they prove anything?
They have taxed the same foreign asset on a protective basis in three earlier years and substantively in the year of the search. Can they keep all four alive?
