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Money order: NRI asked to pay tax on Swiss bank account she denies owning

Non-resident Indian citizens are liable to pay tax in India only on India income, but they may still not be completely impervious to being asked to pay tax in the country on their global income, if they had, at some point, filed tax return in India as a resident. This is an intriguing prospect for a country with an exceptionally diverse diaspora, including a galaxy of billionaire corporate honchos.

The Income Tax Appellate Tribunal (ITAT) in Mumbai has recently affirmed an order issued by the relevant commissioner-appeal, asking an 81-year old woman, claiming to be a US resident post-FY06, to pay tax in India on Rs 196.5 crore purportedly held by her in the financial year 2005-06 in a now-disbanded Swiss bank account (HSBC Private Bank (Suisse) SA, Geneva), which she refuses to own.

The individual — one Renu T Tharani — had filed I-T return in India in 2006 for the relevant assessment year as ‘resident’, reporting an income of Rs 1.7 lakh, which was below the tax liability threshold. The tax department opened a reassessment proceeding in 2014 after it stumbled upon the Swiss account.

The taxpayer in her defence argued against the validity of the reassessment process and whether the assessee was indeed the beneficiary of the Swiss bank account in the name of a family trust. The tribunal held that the assesse’s conduct was akin to ‘running with the hare and hunting with the hounds’ as she had declined to sign a ‘consent waiver’ so as to enable the tax department to obtain all the necessary details from the Swiss bank.

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