RAMESH CHINTAGUMPALA,USA vs. ITO., WARD INTERNATIONAL TAXATION, NELLORE

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ITA 337/HYD/2025Status: HeardITAT Hyderabad16 July 2025AY 2015-168 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal considered the rival submissions and perused the material on record, including FDR certificates, bank statements, and salary certificates. It was observed that the assessee had made only two FDRs aggregating to Rs. 33,00,000/-, whereas the AO made an addition of Rs. 52,39,633/- without providing detailed workings. The documentary evidence suggested that the source of investment in FDs was foreign salary routed through the assessee's ICICI Bank account. The Tribunal noted that the assessee's non-response was due to a communication lapse by the tax consultant. Upon receiving the draft order, the assessee promptly responded with evidence, which was not adequately considered by the DRP. Therefore, the Tribunal restored the matter to the AO for re-examination. The AO was directed to verify the FDRs made during the year (Rs. 33,00,000/-) and their source from foreign salary, giving the assessee an opportunity to be heard and file additional evidence. The AO was to pass a speaking order after proper consideration. The issue of interest income and double taxation was implicitly covered by the remand for re-examination of FDRs and their source.

What were the facts?

The assessee, Shri Ramesh Chintagumpala, a Non-Resident Indian (NRI) working in the USA, is in appeal against the order passed by the Assessing Officer (AO) under Section 147 read with Section 144 of the Income Tax Act, 1961. This order was passed as per the directions of the Dispute Resolution Panel (DRP) for Assessment Year 2015-16. The AO had made additions of Rs. 52,39,633/- as unexplained investment under Section 69 and Rs. 5,17,174/- as interest income. The assessee's case was reopened based on information regarding fixed deposits and interest income received from ICICI Bank. The assessee contended that notices were not properly served, leading to non-compliance. After receiving the draft assessment order, the assessee filed objections with the DRP, which were dismissed, leading to the final assessment order.

What were the issues?

1. Whether the DRP erred in upholding the addition of Rs. 52,39,633/- under Section 69 of the Act as unexplained investment, and whether the investment in fixed deposits was properly explained by the assessee? 2. Whether the DRP erred in confirming the addition of Rs. 5,17,174/- on account of interest income, and whether this would amount to double taxation given that TDS was already deducted? Assessee's Contentions: - The assessee is a resident of the USA and regularly files tax returns there. The investment in Fixed Deposits (FDs) was made from earnings in the USA repatriated to India, thus the source is explained. - Non-compliance during assessment was due to the tax consultant failing to inform the assessee about notices. Evidence of FDRs and source of investment (foreign salary) was provided. - The DRP passed the order without considering the assessee's submissions, violating principles of natural justice. - Tax was already deducted on interest income, so adding it again amounts to double taxation. Revenue's Contentions: - The revenue relied on the orders passed by the AO and DRP. - The assessee did not respond during the original assessment stage, leading to an ex-parte order. - The revenue fairly submitted that the matter could be remanded to the AO for proper verification.

Which sections of the Income-tax Act were involved?

Section 69,Section 147,Section 144,Section 144C(5),Section 148,Section 144C(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad

Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA

For Appellant: Shri Kumar Pal Tated, C.A
For Respondent: Shri Narender Kumar Naik
Hearing: 14/07/2025

आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Ramesh Chintagumpala (“the assessee”), feeling aggrieved by the order passed by the Learned Assessing Officer (“Ld. AO”) u/s. 147 r.w.s. 144 of the Income Tax Act, 1961 (“the Act”) dated 31.01.2025, as per the directions of Learned Dispute Resolution Panel (“Ld. DRP”) u/s. 144C(5) of the Act dated 23.12.2024 for the A.Y. 2015-16.

2.

The assessee has raised the following grounds of appeal :

1.

1. “ 1. The DRP erred in upholding the addition of Rs.52,39,633/- u/s 69 of the Act to the income of the assessee.

2. The DRP passed the assessment order without considering the submissions made by the appellant during the course of assessment proceedings. Hence, the order is not in accordance with the principles of natural justice.

3. The DRP erred in treating the investment in fixed deposits as unexplained investment u/s 69 of the Act.

4. The DRP ought to have appreciated the fact that the appellant is resident of USA and investment in FD was made by the appellant from his earnings in USA which were repatriated back to India. Henceforth, the source of investment is completely explained.

5. The DRP ought to have appreciated the fact that the appellant is resident of USA and regularly files his tax returns as per the applicable laws of United States for the income earned in USA.

6. The DRP ought to have appreciated the fact that since, the appellant is a non- resident the income earned by him abroad would not taxable in India. Further, appellant had no income which was arising from India and hence, the appellant did not file ITR in India for the year under consideration.

7. The DRP erred in confirming the addition of Rs.5,17,174/- on account of interest income.

8. The DRP ought to have appreciated the fact that tax had already been deducted in the form of TDS from the interest income and this addition will amount to double taxation.

9. The DRP erred by not giving credit of TDS deducted on interest income at the computation of total Demand payable.

10.

The Appellant may add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal

at any time before or at the time of hearing of the appeal.”

3. The brief facts of the case are that, the assessee is a non- resident Indian (“NRI”) working in the USA in the Information Technology and Software Sector. For the Assessment Year 2015–16, the Ld. AO on the basis of the information came to know that the assessee had made a fixed deposit (“FDRs”) of Rs.52,39,633/- and also received a payment of Rs.5,17,174/- from ICICI Bank as per the TDS statement. Accordingly, the case of the assessee was reopened under Section 147 of the Act and a notice under Section 148 of the Act was issued to the assessee on 15.04.2022. Since there was no compliance to the statutory notices, the Ld. AO framed a draft assessment order under Section 144C(1) of the Act on 15.03.2024, proposing additions of (i) Rs.52,39,633/- under Section 69 of the Act as unexplained investment, and (ii) Rs.5,17,174/- as interest income.

4. Aggrieved with the draft assessment order of the Ld. AO, the assessee filed objections before the Ld. DRP, which were dismissed. On the basis of the directions of Ld. DRP dated 23.12.2024, the Ld. AO passed a final assessment order dated 31.01.2025 making addition of (i) Rs.52,39,633/- under Section 69 of the Act as unexplained investment, and (ii) Rs.5,17,174/- as interest income, computing the total income at Rs.57,56,807/-.

5. Aggrieved with the final assessment order of the Ld. AO, the assessee has preferred this appeal before the Tribunal. The Ld. Authorised Representative (“Ld. AR”) submitted that the assessee is a NRI working in the United States in the IT sector and regularly files his return of income in USA. He maintained a bank account with ICICI Bank in India, from where the impugned FDRs were made. The Ld. AR invited our attention to the FDR certificates issued by ICICI Bank (page no. 79 of the paper book) and the relevant ICICI Bank statements (page no. 89 of the paper book), showing two FDRs made on 07.08.2014 amounting to Rs.13,00,000/- and Rs.20,00,000/-, totalling Rs.33,00,000/-. The Ld. AR also submitted that, the Ld. AO has alleged that the assessee has made FDRs of Rs.52,39,633/- without providing any details of such FDRs. It was also explained that the source of the FDRs was the assessee’s foreign salary, which was first credited to his US bank account and then transferred to his ICICI Bank account. The Ld. AR referred to the salary certificate issued by the assessee’s US employer (page no. 80 of the paper book), evidencing the foreign salary income.

6.

The Ld. AR further submitted that non-compliance before the Ld. AO was due to the fact that the statutory notices were sent to the email ID of the tax consultant of the assessee, who failed to inform the assessee about the proceedings. It was only upon receipt of the draft assessment order that the assessee became aware of the reassessment and filed a detailed response along with evidence explaining the source of FDRs. The Ld. AR also submitted that the Ld. DRP had called a remand report from the Ld. AO. During the remand proceedings before the Ld. AO, the assessee again filed his explanation before the Ld. AO. However, the Ld. AO failed to appreciate the assessee’s reply and documentary evidence in his remand comments. Thus, the Ld. DRP proceeded to dismiss the objections without adequate consideration of the evidence. Finally, the Ld. AR prayed that the entire matter may be restored to the file of the Ld. AO for proper examination of the FDRs and source of investment, after giving due opportunity to the assessee to explain the same.

7.

Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders passed by the Ld. AO and the Ld. DRP. It was submitted that despite multiple opportunities, the assessee did not respond during the original assessment stage, leading to framing of ex-parte draft order. However, the Ld. DR fairly submitted that if the Tribunal deems it fit, the matter may be remanded to the Ld. AO for proper verification of the FDRs and explanations provided by the assessee during Ld. DRP proceedings.

8.

We have carefully considered the rival submissions and perused the material available on record, including the Paper Book filed by the assessee. We have also gone through the FDR certificates (page no. 79 of the paper book), bank statement (page no. 89 of the paper book), and salary certificate of the assessee (page no. 80 of the paper book). It is seen that the assessee had made only two FDRs during the year aggregating to Rs.33,00,000/-, whereas the Ld. AO has made an addition of Rs.52,39,633/- under Section 69 of the Act without giving any details of his workings. From the documentary evidence filed before the Ld. DRP and again before us, it appears that the source of investment in the FDRs is duly explained to be foreign salary, which has been routed through the assessee’s ICICI Bank account. We further note that the assessee could not respond during assessment proceedings due to failure of the tax consultant to inform him about the notices. However, upon receiving the draft order, the assessee responded promptly with documentary evidence, and the same was placed before the Ld. DRP and the Ld. AO through the remand report mechanism. Despite this, the Ld. DRP has summarily rejected the objections without appreciating the merits of the submissions and supporting documents. In our considered view, this is a fit case where the matter requires verification and re-examination by the Ld. AO, particularly regarding the actual FDRs made during the year and the source thereof. Accordingly, we deem it appropriate to restore the matter to the file of the Ld. AO with the directions that the Ld. AO shall verify the assessee’s claim that only FDRs of Rs.33,00,000/- were made during the year and the source of such investment from foreign salary may be verified based on evidence submitted by the assessee. Further, the assessee shall be given due opportunity of being heard and to file any additional evidence in support of his claim and the Ld. AO shall pass a speaking order after proper consideration of all submissions and evidence.

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