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Facts
The assessee, a non-resident, failed to file an income tax return for AY 2018-19. Upon receiving information about financial transactions, the Revenue issued a notice u/s 148. The Assessing Officer (AO) made an addition of Rs. 2,28,14,293/- as unexplained money u/s 69A. The assessee filed objections before the DRP, which upheld the addition.
Held
The Tribunal held that the AO and DRP erred in making the addition as the assessee had adequately explained the nature and source of most bank deposits with supporting evidence. Only one entry of Rs. 63,133/- remained unexplained.
Key Issues
Whether the AO and DRP correctly treated the bank deposits as unexplained money despite the assessee providing explanations and evidence for the sources, and whether the additions made are sustainable in law.
Sections Cited
144C, 147, 148, 148A, 69A, 115BBE, 234A, 234B, 234F, 285BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:-
This is an appeal filed against the order dated 19-01- 2024 passed by Income Tax Officer, Ward-2, International Taxation, Ahmedabad for assessment year 2018-19.
The grounds of appeal
are as under:- “Ground No.1: The learned A.O. has erred in law and on facts in passing order us. 144C of the Income Tax Act read with directions of DRP without assuming jurisdiction as per the Law. Ground No 2: The order passed us.144C consequent to directions of DRP is submitted to be bad in law and without jurisdiction in as much as that the assessee is not an eligible assessee for assessment year under consideration in as much as that non-resident as eligible assessee has been substituted in section 144C with effect from 01/04/2020 being not applicable to A.Y. 2018-19. Ground No.3: The learned DRP has erred in law and on facts in rejecting the ground of the appellant for the order u/s, 144C(1) being without jurisdiction, Invalid and void ab initio in as much as that the re-assessment proceeding have been initiated by the Jurisdictional A.O. ward 5(3)(1) passing order u/s.148A, 148A(d) and issuing notice u/s. 148 dated 30/03/2022. Ground No. 4: Without prejudice to above legal ground, the order passed us. 147 r.w.s. 144C(13) making addition of Rs.2,28,14,293 is submitted to be bad-in- law and on facts passed in total disregard of the submissions explaining actual facts of the appellant with documents furnished in the paper book comprising 120 pages proving nature of source of money in bank deposits rendering the order to be erroneous factually as well as legally. Ground No. 5: He has grievously erred in law and on facts in sustaining the adverse findings u/s 69A of the A.O. by erroneously holding that the nature and source of money in bank deposits have not been adequately or satisfactorily explained ignoring the detailed submissions furnished with evidence proving the bank deposits. Ground No. 6: He has erred in law and on facts in sustaining additions of Rs.2,28,14,293 as detailed below without appreciation of material on record and other attending circumstances. Sr. Information Description Source of Information Amount Rs. No.
1. Time deposits (other HDFC Bank Ltd. 10,00,000 than a time deposit made through renewal of another time deposit)
2. Statement of reportable HDFC Bank Ltd. 1,97,14,873/- amount u/s. 285BA(1)
3. Statement of reportable SBI LIFE INSURANCE 20,99,420/- amount u/s. 285BA(1) COMPANY LIMITED. Total Rs. 2,28,14,293/-
Ground No.7: He has erred in law and on races in upholding the additions of Rs.2,28,14,293 u/s. 69A ignoring the credible explanation by the appellant discharging the burden of proving the nature and source or investments rendering the additions to be erroneous. Ground No.8: He has erred in law and on facts in applying provisions of section 115BBE to the facts of the assessee in as much as that the deposits in the banks have been satisfactorily explained with evidence. Ground No.9: On the facts of the appellant no such additions of Rs.2,28,14,293 u/s. 69A read with section 116BBE ought to have been made. Ground No.10: He has erred in law and on facts in levying interest u/s. 234-A of Rs. 80,89,928, u/s. 234-B of Rs. 1,23,10,760 and u/s. 234-F of Rs.10,000. Ground No.11: The appellant craves, leave to add, alter and or modify any grounds of appeal
.”
3. The assessee is a non-resident and had not filed return of income for the year under consideration. After receiving information and details, the Revenue observed that the assessee made financial transactions. Notice u/s. 148 of the Act was issued and in response thereof the assessee filed return on 01-06-2022 declaring total income at Rs. 3,86,620/- . The Assessing Officer issued draft assessment order dated 17-03-2023 u/s. 144C of the Income Tax Act, 1961 by making an addition of Rs. 2,28,14,293/- as an unexplained money u/s. 69A r.w.s. 115BBE of the Act and proposing assessment of total income at Rs. 2,32,00,913/-. The assessee filed objections against the draft assessment on 13-04-2023 before the Dispute Resolution Panel (DRP). The Dispute Resolution Panel called for the remand report which was placed on record by the ITO/Assessing Officer on 30-11-2023 and the second remand report dt. 21-12-2023 was placed on record. The DRP after taking cognizance of the remand reports held that the nature and source of money in bank deposits made by the assessee have not been adequately or satisfactorily explained and thus disposed of the application of the assessee vide direction dated 29-12-2023. Thereafter, the Assessing Officer passed assessment order dated 19-01-2024 thereby making addition of Rs. 2,28,14,293/- as unexplained money u/s. 69A r.w.s. 115BBE.
3.1 The assessee has taken additional ground but since the ld. A.R. is directly going on merits of the case, we are not adjudicating the additional grounds at this juncture.
3.2 The ld. A.R. submitted that the evidences related to time deposits (other than time deposits made through renewal of another time deposits), statement of reportable account u/s. 285BA(1) was submitted before the authorities. The ld. A.R. submitted that the remand reports dated 31-11-2023 and 21- 12-2023 reproduced in the order of the DRP categorically mentions in the remark column that these FD details have been explained by the assessee. In fact after perusal of the said remand reports, the Assessing Officer has categorically mentioned that the said details were verified from the assessee’s foreign bank account as well as the assessee’s bank statements in respect of SBI-NRE and HDFC Bank-NRI account. These remarks of the Assessing Officers were totally ignored by the Assessing Officer as well as by the DRP. Therefore, the Assessing Officer was not right in making addition as the assessee has explained the source in respect of the additions regarding the time deposits in these accounts.
The ld. D.R. relied upon the direction of the DRP as well as the assessment order.
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that on page 13 to 23 of the directions dated 29-12-2023 passed by the DRP, the Assessing Officer himself has categorically mentioned that the assessee has filed copy of fixed deposit summary, copy of bank accounts statements with the HDFC and SBI, copy of investment in time deposit HDFC and copy of SBI life Insurance company and in fact the first remand report has also been reproduced and in the remark column related to the transactions where the assessee has explained the source of the funds. The sources which have not been explained have been explained by the assessee which is reflected in the second remand report dated 21-12- 2023 which is reproduced at page 35 to 40 of the DRP’s directions. The assessee at that juncture has filed bank statements of various accounts and has also given the details of fixed deposits held by SBI and summarized explanation of credit and debit entries in his NRE/NRI held by SBI and HDFC bank. From the remark column thereon it can be seen that only one entry of 63,133/- was not explained but the rest of the entries and the transactions were totally explained and verified by the Assessing Officer. It can be seen in para 4 of the said remand report at page 39 of the DRP’s direction. Once, the assessee has submitted all the credit entries along with debit entries and also that of the submission of employment verification letter, doubting the genuinely of the said documents without any basis is not justifiable on the part of the Assessing Officer as well as by the DRP. Thus, the Assessing Officer as well as CIT(A) except the entry of 63,133/- should not have made addition u/s. 69A as unexplained money because the assessee has explained all the details of rest of the entries. Thus, the appeal of the assessee is partly allowed except the component of Rs. 63,133/-.
In the result, the appeal of the assessee is partly allowed.