Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI “G” BENCH: NEW DELHI
Before: SHRI R.K.PANDA & SHRI VIJAY PAL RAO
Appellant by Sh. Prakash Dubey, Sr. DR Respondent by Sh. Gaurav Jain, Adv. & Sh. Sanket Gupta, CA Date of Hearing 20.09.2021 Date of 21.09.2021 Pronouncement ORDER PER VIJAY PAL RAO, JM :
This appeal by the Revenue is directed against the order dated 12.05.2017 of the learned CIT(A)-23, New Delhi, relating to Assessment Year 2014-15.
The Revenue has raised following grounds:-
i. “The order of the Ld. CIT(A) is not correct in law and on facts. ii. On the facts and circumstances of the case, Ld. CIT(A) has erred in law in deleting the addition of Rs.6,51,15/- made by Assessing Officer on account of interest received in Ilora account. iii. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs.5,70,24,638/- made by Assessing Officer on account of unexplained deposits in ICICI Bank London.”
Ground no.1 is general in nature and does not require any specific adjudication.
Ground no.2 is regarding the addition made by Assessing Officer on account of interest in the HSBC Geneva bank account.
We have heard the learned DR as well as Ld. AR and considered the relevant material on record. At the outset, the Ld. AR of the assessee has submitted that this issue has been decided in favour of the assessee by this Tribunal for Assessment Year 2006-07 to 2009-10 and AY 2012-13, vide order dated 22.02.2016. He has pointed out that the Assessing Officer has made identical addition in all the preceding years, which were deleted by the Ld. CIT(A) and further the Tribunal has upheld the order of the Ld. CIT(A) in all those preceding years.
On the other hand, Ld. DR has relied upon the order of the Assessing Officer and submitted that the Assessing Officer has computed the interest on the last known balance in the bank account of the assessee with HSBC, Geneva. He has further submitted that the assessee has deliberately not produced the relevant evidence and particularly bank account statement for the current year.
Having considered the rival submissions and carefully perusal of the impugned orders of the authorities below it is noted that the Assessing Officer has made the addition on account of interest in the alleged bank account of the assessee with HSBC Geneva bank against entity ‘26810 Ilora’. The Assessing Officer has computed the interest by taking the last known credit balance in the bank account as on May, 2006.
Thus, after the May, 2006 there was no material available with the Assessing Officer to show whether any credit balance was available in the said bank account in the subsequent year and particularly for the year under consideration. The Assessing Officer has not disputed the fact that the there is no bank statement available or any other information to show the status of existence or foreclosure of the bank account as on 31.03.2014. Therefore, the Assessing Officer has made addition on presumptive interest income of the assessee. On appeal, the assessee contended that the issue is covered by the order of the Tribunal for the AYs 2006-07 to 2009-10 and 2012-13. The Ld. CIT(A) has deleted the addition in para 4.3.2.2., which reads as under:-
“4.3.2.2 The AO vide his letter F. No. ACIT/CC-3/2017- 18/88 dt. 08.05.2017 has sent the assessment folder and has submitted copy of the bank account statement of the appellant with HSBC Bank Geneva BUP_SIFI_PER_ID 9070144384 PERJD 17851 PER_NO 144384 wherein deposits in the nature of fiduciary deposits and liquid assets for the period November 2005 to February 2007 has been submitted. Admittedly, the AO is not in possession of the bank statement of this bank for the period after February 2007 and relevant to AY 2014-15. On perusal of the bank' statement submitted by the AO it is observed that there is entry related to interest credited even for the period November 2005 to February 2007. The AO, by applying the saving bank account interest rate of India of 4%, has computed interest for the FYs 2007-08 to 2013-14 at para-3.3 of the assessment order, compounded annually. Since there is no bank statement available for the period after February 2007 and, as mentioned above, there is no entry of any interest credited even for the period upto February 2007, the entire computation for the FYs 2007-08 to 2013-14 are presumptive and estimated sans any evidence. The AO has by applying a conversion rate of Rs.59.94 per Dollar made addition of Rs.6,51,158/- on account of notional interest though at para-3.4 page-4 of the assessment order the AO has worked out the interest at US$ 25044.5606 and at para-3.4 he has mentioned the interest imputed at Rs. 15,01,171/- (the mistake is because at para-3.12 of the assessment order he has computed interest @4% Rs.6,51,158/- instead of US$ 651158). The rate of 4% has been taken arbitrarily without there being any basis for the same and without bringing any material or evidence on record by the AO that interest was also paid on the deposits/balance in the account, particularly in the subsequent years after the years relevant to AY 2007-08 for which there is no statement of the said bank account or any information, as part of the information received under exchange of information or otherwise, in respect of these subsequent years. I have perused the assessment folder in 434 pages (correspondence side) and I could not find any bank statement of the impugned account with HSBC Bank Geneva. The addition on account of interest is notional, calculated by adopting the ad hoc rate of 4%. Even otherwise it is settled law that notional interest cannot be taxed as income. Hence the addition on this account in all the years made by the AO are deleted.”
The Ld. DR has not disputed the facts as recorded by the Ld. CIT(A) that the Assessing Officer has made the addition without any material to show any interest income of the assessee from the alleged HSBC Geneva bank account. We further note that this Tribunal in assessee’s own case for the AYs 2006-07 to 2009-10 and 2012-13 has considered an identical issue vide order dated 22.02.2016 in to 4806/Del/2015 in para 10 to 13, as under:-
10. It was also submitted that the issue involved for these years is even otherwise covered by the judgement of the Hon’ble Delhi High Court dated 25.02.2013, in 100/2013 and 87/2013 in the assessee’s own case for AYs 2001-02, 2002-03 & 2003-04, wherein the assessee was held to be an NRI and deleted the addition in respect of the assessee’s bank in Singapore holding that in absence of any evidence of accrual or receipt of income in India, foreign bank accounts of NRI cannot be subjected to tax in India. The relevant portions of the judgement of the Hon’ble High Court read as under:- “6. We are left to consider the addition of Rs.10,51,20,000/- made u/s 68 of the Act. In so far as the addition is concerned, the decision with regard to it would depend on whether the assessee is regarded as a resident or non-resident. In case he is regarded as resident, then, obviously, this addition would have to be made. But if he is regarded as a non-resident, then, this addition will have to be deleted. This is exactly what the Tribunal has done. The Tribunal considered the case of the Revenue as well as that of the assessee and determined that the assessee was a non- resident and, therefore, the said addition was deleted.
“13. In view of the fact that the Tribunal has correctly decided that the respondent/assessee was not a resident in India in the years in question, it is axiomatic that the addition of Rs.10,51,20,000/- u/s 68 would have to be deleted because it was a transfer from the respondent/assessee’s foreign account to the domestic account.”
11. The ld. counsel for the assessee has also relied upon various judgements/orders of the Hon’ble High Court/Tribunal, in the assessee’s own cases, in support of the assessee’s case. They are: (i) Order of the Tribunal dated 24.07.2012 for AYs 2001-02, 2002-03 & 2004-05 in ITA Nos.1428, 1429 & 1430/Del/2012 (ii) Order of the Tribunal dated 21.2.2014 for AYs 2004-05, 2005- 06 and 2006-07 in 2601, 2605/Del/2013, CO No.165/Del/2013, ITA Nos.2606/Del/2013 & CO No.166/Del/2013 (iii) Judgement of the Hon’ble Delhi High Court dated 27.5.2015 for AYs 2007-08 and 2008- 09, in ITA No.715/2014, CM No.19243/2014, ITA Nos.722/2014 & 723/2014 (iv) Order of the ITAT for AYs 2007-08 and 2008-09 dated 11.4.2014 in ITA Nos.2237,3718, 3431 & 4641/Del/2013 (v) Judgement of the Hon’ble Delhi High Court dated 23.9.2015 for AY 2009-10 in ITA No.741/2015.
12. The ld. DR though not leaving her ground fairly submitted that this issue is squarely covered in favour of the assessee by the judgements/orders cited by the ld. AR. Nevertheless, she submitted that the revenue has challenged the judgment of the Hon’ble High Court before the Hon’ble Supreme Court, both on the issue of residential status of the assessee as well as the deletion of additions on merits. She relied on the order of the AO and supported the same.
13. After hearing the rival submissions and perusing the material on record, particularly, the judgements/orders cited by the ld. AR, we find that the common issue as mentioned above, involved in the appeals for the AYs 2006-07 and 2007- 08 are squarely covered by the judgements/orders cited by the ld. AR (supra) in favour of the assessee. The ld. DR could not controvert the factual finding of the ld.CIT(A) that the AO had not brought on record any evidence to link the money brought into India or kept in foreign accounts by the assessee have a link with any Indian defence contract payment. The income has not accrued or arisen in India. We therefore, uphold the orders of the CIT(A) on this issue.”
Even the issue of status of the assessee being NRI for the AYs 2001-02 to 2003-04 has been finally decided by the Hon’ble Supreme Court as pointed out both the parties, therefore, following the earlier order of this Tribunal, we do not find any error or illegality in the impugned order of the Ld. CIT(A) and the same is upheld. Accordingly, the ground no.2 of the Revenue’s appeal is dismissed.
Ground no.3 is regarding the addition made by the Assessing Officer on account of unexplained deposits in the ICICI Bank London was deleted by the Ld. CIT(A).
We have heard the learned DR as well as Ld. AR and considered the relevant material on record. At the outset, the Ld. AR of the assessee has pointed out that this issue was also decided by this Tribunal in assessee’s own case for AYs 2006-07 and 2007-08, in favour of the assessee.
The Ld. DR has fairly accepted the fact that an identical issue was involved for the AYs 2006-07 and 2007-08 and this Tribunal has decided the issue in favour of the assessee, however, he has relied upon the order of the Assessing Officer.
It is manifest from the assessment order that the Assessing Officer has made the addition on account of unexplained deposits in the ICICI London account of the assessee by recording the fact that the opening balance is of this account were added to the income of the assessee in the relevant Assessment Years and certain balance were left which were proposed to be added for the year under consideration. However, the Assessing Officer was not sure about the year in which these deposits were made in those bank accounts. Finally, the Assessing Officer has held that in the absence of any required information amount appearing in the Column No.9 of the table showing the difference of the amount already added to the income of the assessee in the preceding Assessment Years to be added as income for the year under consideration. The Assessing Officer has also recorded the fact that the status of the assessee as NRI during those years is not finally settled as pending before the Hon’ble Supreme Court. Now the said dispute of NRI status is finally settled and the order of the Hon’ble jurisdictional High Court has been upheld by the Hon’ble Supreme Court as pointed out by the Ld. AR which was not disputed by the Ld. DR. The Ld. CIT(A) has deleted this addition in para 4.3.3. to 4.3.4 as under:-
As regards the addition of the alleged balance 4.3.3 in the ICICI Bank London vide his letter F.No.ACIT/CC- 3/2017-18/90 dt. 09.05.2017 the AO has informed that the UK tax authorities have not provided the copies of bank accounts of this account. On perusal of para- 4.1, table-1, of the assessment order the information available in respect of the five accounts is for the AYs 2005-06 to 2008-09 for the separate respective accounts (as mentioned in table-1 supra). Admittedly, there is bank statement for the period after the respective dates mentioned in table-1 (supra) and the balances have obviously no backing on any evidence. I have perused the assessment folder in 434 pages (correspondence side) and I could not find any bank statement of the impugned account with ICICI Bank London. 4.3.4 In any case, similar additions on both accounts have been deleted by the Hon’ble ITAT and the Hon’ble Delhi High Court, as detailed in the WS and mentioned herein above at paras-3 & 4.3. The additions made being purely presumptive sans any evidence available with the AO/brought on record the additions on both accounts in respect of the above two bank accounts, HSBC Bank Geneva and ICICI Bank London.”
We further note that this Tribunal for the AY 2006-07 and 2007-08, vide order dated 22.02.2016 (supra) has decided this issue in favour of the assessee in para 24-27 as under:-
For AYs 2007-08 & 2008-09 the common ground raised
by the Revenue is that the ld.CIT(A) has erred in deleting the additions of Rs.1,15,40,179 (AY 2008- 09) and Rs.3,61,47,562 (AY: 2007-08) made by the AO on account of unexplained deposits in ICICI, London.
25. The ld. CIT(A) held as under:-
“8.3 The seventh ground of appeal in AY 2007-08 and the fourth ground of appeal in AY 2008-09 is against addition ofRs.3,61,47,562/- & Rs.1,15,40,179/-, respectively, being deposits in the bank account of the appellant held with ICICI Bank, London. It has been held by Hon'ble ITAT in appellant's case in the earlier appeals that moneys kept in accounts held by him outside India could not be taxed as he is a non-resident. I have also held in the case of the appellant that unless it can be established that the money held by the appellant in his foreign bank accounts are proceeds of income accruing or arising in India or deemed to have accrued or arisen in India it cannot be brought to tax. Following these decisions I hold that as the appellant is a non-resident amounts kept in the account held by in ICICI Bank London, or for that matter any other foreign bank account, cannot be taxed in India unless it can be established that the moneys are proceeds of income accruing or arising in India or deemed to have accrued or arisen in India. As there is no evidence to establish that the money kept in ICICI Bank, London has accrued or arisen from a source in India, these amounts cannot be brought to tax. I hold accordingly and delete these additions. These grounds of appeal are allowed.”
26. The ld. AR made the same submissions and relied on the same judgements/orders as for the first common issue for AYs 2006-07 & 2007-08 in support of this issue also.
27. We find that this issue is also squarely covered by the judgements/orders of the Hon’ble High Court/ITAT cited above while dealing the first common issue for AYs 2006-07 & 2007-08. Respectfully following those judgements/orders, and consistent with our view on the issue of deposits in foreign bank accounts drawn from para 7 to para 13, we uphold the order of the CIT(A) on this issue also and dismiss the ground of revenue.”
15. Accordingly, in view of the facts and circumstances of the case as well as following the earlier order of this Tribunal in assessee’s own case, we do not find any error and illegality in the impugned order of the Ld. CIT(A) qua this issue and the same is upheld. Accordingly, the ground no.3 of the Revenue’s appeal is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order was pronounced in the open court on 21/09/2021.