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Facts
The revenue appealed the deletion of an addition of Rs. 1,05,78,000 made by the Assessing Officer (AO) on credits in NRO accounts, which the CIT(A) had deleted. The AO considered these credits as unexplained money, while the assessee claimed they were from group concerns and reflected in the cash flow statement.
Held
The Tribunal held that the AO erred in recasting the cash flow statement without confronting the assessee. The Tribunal found that the credits in the NRO accounts were from group entities and loans against FDRs, supported by bank statements and FDR details, and thus could not be considered unexplained money.
Key Issues
Whether the CIT(A) erred in deleting the addition made by the AO for unexplained credits in NRO accounts when the assessee provided supporting documentation and the AO improperly recast the cash flow statement.
Sections Cited
143(3), 69A
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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा*रण वष* / Assessment Year: 2017-18) ACIT Sukumar Sunitha बनाम/ Central Circle 1, 32B, Halls Road, Egmore, Vs. Madurai Chennai – 600 008. �थायीलेखासं./जीआइआरसं./PAN/TAN No. FIRPS-0287-K (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ� की ओर से/ Appellant by : Shri Ashwin D. Gowda (Addl.CIT) – Ld. Sr. DR ��थ� की ओर से/Respondent by : Shri N. Arjun Raj (Advocate) – Ld. AR सुनवाई की तारीख/Date of Hearing : 30-01-2025 घोषणा की तारीख /Date of Pronouncement : 03-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax, Chennai [CIT(A)] dated 27-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 31-12-2019. The ground raised
by the revenue read as under: -
1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.
2. The Ld. CIT(A) erred in deleting the addition of Rs.1,05,78,000/- made towards credits in NRO accounts as these accounts have been considered in the cash flow statement filed by the assessee.
2.1 The Ld. CIT(A) failed to appreciate that the assessee claimed the above amount as included in the cash flow statement as withdrawal of Rs.1.87 Crores from group concern and shown as source of funds for the investment. 2.2 The Ld. CIT(A) failed to appreciate that the assessee had not furnished any evidence substantiating credit of Rs.1,05,78,000/- in the NRO account either during the assessment proceedings or during appeal proceedings. 2.3 The Ld. CIT(A) failed to appreciate that the assessee had simply claimed the source for credits in NRO account as withdrawal from group concerns without mentioning the name of the group company from which it was withdrawn, date, amount and mode of receipt etc.
As is evident, the revenue is aggrieved by deletion of addition of Rs.105.78 Lacs as made by Ld. AO in the assessment order. The Ld. AR placed on record bank statements to support the case of the assessee. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 The assessee being resident individual admitted income of Rs.7.98 Lacs which was subjected to scrutiny assessment proceedings. The assessee, inter-alia, furnished cash flow statements in support of cash deposited by her in various bank accounts during the year. The same has been extracted on Page-17 of the assessment order. The Ld. AO rejected certain unproved claims for Rs.438.76 Lacs in the cash flow statements. The Ld. CIT(A) deleted the same. However, the same is not the subject matter of appeal before us. 3.2 The Ld. AO also made another addition of Rs.105.78 Lacs which represent credit in assessee’s Savings Bank-NRO Power Account No.17884100000114 for Rs.90.28 Lacs and another transfer of Rs.15.50 Lacs from Beach Mineral Company in SB-NRO-General Account No.11000100095139. The same were held to be unexplained money and added u/s 69A of the act.
Appellate Proceedings 4. During appellate proceedings, the Ld. CIT(A) concurred that Ld. AO erred in recasting the cash flow statement. The same was not confronted to the assessee. The Ld. AO unilaterally re-casted the cash flow statement which had many defects. The assessee submitted that the impugned amounts were received from related group entities and included in the cash flow statement. Considering all these facts, the impugned addition was deleted by Ld. CIT(A) against which the revenue is in further appeal before us. Our findings and Adjudication 5. It emerges that the assessee furnished a cash flow statement to support the inflows and outflows. The Ld. AO re-casted the same without confronting the same to the assessee and without carrying out any independent examination of the same. The cash flow statement has been kept at Page No.2 of the paper-book. Upon perusal of the same, it could be seen that the assessee had furnished complete cash flow statement for the year. The same include opening and closing cash balances of impugned bank accounts also. The assessee had certain FDRs which were matured during the year and re-invested by the assessee. The interest on FDR has duly been offered in the return of income. The credits in SB-NRO-General Account No.11000100095139 for Rs.15.50 Lacs are received from group entity which is evident from the bank statements as placed on record. Similarly, the credit of Rs.90.28 Lacs represent loan obtained by the assessee against FDRs. Therefore, both these items could not be held to be unexplained money for the assessee. Therefore, the adjudication of Ld. CIT(A) could not be faulted with.
The appeal stand dismissed. Order pronounced on 3rd February, 2025