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Facts
The assessee, a non-resident individual, failed to file an income tax return for AY 2018-19. The AO initiated assessment proceedings based on AIR/TAS/26AS information, identifying several large transactions including Time Deposits, bank account balances, payments to non-residents, and foreign remittances. The AO added these amounts as unexplained investments/money under Sections 69 and 69A of the Income Tax Act, 1961.
Held
The Tribunal held that the CIT(A) rightly deleted the additions made by the AO. The tribunal found that the CIT(A) had properly appreciated the facts and evidence, including bank statements and certificates, which explained the sources of the funds for the investments and transactions. The grounds raised by the revenue were dismissed.
Key Issues
Whether the CIT(A) erred in admitting additional evidence and deleting additions made by the AO on account of unexplained investments and money, considering the assessee's explanation and supporting documentary evidence.
Sections Cited
250, 69, 69A, 147, 148, 151, 142(1), 285BA, 10(4)(ii)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 872/JPR/2025
vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This is an appeal filed by the revenue against the order of ld. CIT (A), Delhi- 42 dated 29.03.2025 passed under section 250 of the I.T. Act, 1961, for the assessment year 2018-19.
The assessee has raised the following grounds of appeal :- “1.1 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in admitting the additional evidences filed by the assessee in contravention to rule 46A of the Income Tax Rules which mandates Mr. Bharat Kumar Manghnani, Jaipur. that no additional evidence shall be admitted by the CIT (Appeals) without providing opportunity to the AO to examine the evidence or document or to cross examine the witness produced by the appellant ? 1.2 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) is justified in assuming the powers vested to the Assessing Officer to examine the evidence or document or to cross examine the witness produced by the appellant by admitting additional evidences without providing opportunity the AO ? 1.3 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 3,66,00,063/- made u/s 69 of the I.T. Act, 1961 and did not appreciate the finding of the AO that the assessee failed to furnish evidences relating to the source of time deposit of Rs. 3,66,00,063/- in his bank account maintained with SBI bank ? 1.4 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 34,53,197/- made u/s 69A of the I.T. Act, 1961 and did not appreciate the findings of the AO that the assessee failed to furnish corroborative evidences to explain and justify the source of a/c balance of Rs. 34,53,197/- in his bank account maintained with ICICI bank ? 1.5 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 76,845/- made u/s 69A of the I.T. Act 1961 and did not appreciate the findings of the AO that the assessee failed to furnish evidences related to the source of interest income earned of Rs. 76,845/- from his bank account maintained with the ICICI bank ? 1.6 Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 1,052/- made u/s 69A of the I.T. Act, 1961 and did not appreciate the findings of the AO that the assessee failed to furnish evidences relating to the source of foreign remittance received of Rs. 1,052/-?
2. The appellant crave, leave or reserving the right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
3. The brief facts of the case are that the assessee is a non-resident Individual and has not filed his return of income for the A.Y. 2018-19. As per information available in AIR/TAS/26AS details, it was observed by the AO that the assessee Mr. Bharat Kumar Manghnani, Jaipur. has entered into following transactions such as (i) Purchased Time Deposit of Rs. 3,66,00,063/- from SBI Bank, (ii) having account balance of Rs. 34,53,197/- with ICICI bank account, (iii) made payment to non-resident amounting to Rs. 76,845/- and (iv) received foreign remittance of Rs. 1052/- during the financial year 2017- 18. Assessee has entered into large transactions but has not filed his return of income for the assessment year 2018-19. On the basis of information, notice under section 148 of the Income Tax Act, 1961 was issued to the assessee on 29.03.2022 after recording reasons and obtaining approval from the competent authority under section 151 of the I.T. Act, 1961. Notices under section 142(1) dated 17.10.2022, 22.11.2022, 30.12.2022, 10.03.2022 and Show Cause notice dated 16.03.2022 were issued by the AO to the assessee to furnish requisite details. In response to the statutory notices, assessee did not make any compliance to the said notices and failed to furnish requisite documentary evidence regarding the source of funds to make above mentioned transactions. Since the assessee failed to explain the source of investment even after providing sufficient opportunities, therefore, the source of investment of Rs. 3,66,00,063/- remained unexplained and thus the AO added the same to the total income of the assessee on account of unexplained investment under section 69 of the IT Act, 1961. Further, it is also mentioned by the AO in the assessment order that the assessee had account balance of Rs. 34,53,197/- with ICICI Bank and received interest income of Rs. 76,845/- and received foreign Mr. Bharat Kumar Manghnani, Jaipur. remittance of Rs. 1052/- which is reported under section 285BA(1). As the assessee did not produce any justification or documentary evidence regarding source of funds used to do these transactions, therefore, these transactions of Rs. 35,31,094/- remain unexplained and added back to the income of the assessee as unexplained money under section 69A of the IT Act, 1961. Thus, the AO assessed the total income of the assessee at Rs. 4,01,31,160/- vide his order passed under section 147 read with section 144 of the IT Act, 1961 dated 26.05.2023. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT (A). The ld. CIT (A) after discussing the matter in detail, allowed the appeal of the assessee by deleting the additions. Now, being aggrieved by the order of the ld. CIT (A), the revenue has come in appeal before the Tribunal on the grounds reproduced herein above.
At the time of hearing before us, the ld. DR supported the order of the A.O. and submitted that the order of the ld. CIT (A) be set aside.
On the other hand, the ld. AR of the assessee submitted that the ld. CIT (A) passed a well reasoned order and the same be upheld. The ld. AR further submitted the following written submissions in support of her case :-
Mr. Bharat Kumar Manghnani, Jaipur. “ The ld. CIT (A) has passed a well-reasoned and speaking order, which deserves to be upheld. The grounds raised by the Department are devoid of merit. Our point-wise submissions are as follows :
Ground No. 1.1 : Admission of Additional Evidence under Rule 46A Ld. DR has contended that the ld. CIT (A) erred in admitting additional evidence under Rule 46A of the Income Tax Rules, 1962. However, no additional evidence was admitted by the ld. CIT (A). It is true that the assessee had initially filed an application under Rule 46A, but the same was voluntarily withdrawn on 27.03.2025, well before the disposal of the appeal. A copy of the withdrawal application is placed in the Paper Book at page no. 1. Therefore, the allegation that the CIT (A) admitted additional evidence is factually incorrect and Ground No. 1.1 deserves to be dismissed.
Ground NO. 1.2 : Opportunity to Examine the Evidence This ground is merely an extension of Ground No. 1.1. All evidence relied upon by the ld.CIT (A) was already on record and had been submitted before the ld. Assessing Officer (AO) well in advance – more than 40 days prior to the passing of the assessment order. These documents include : placed on page no. 2-25 of paper book - Copies of all NRE bank accounts, - Copy of the passport to establish NRI status, - Employee’s certificate demonstrating adequate income - Details of FDRs made from the NRE accounts, etc. The ld. AO failed to consider these documents despite being available on record. Hence, the claim that the Department was not given an opportunity to examine the evidence is factually incorrect and untenable in law.
Ground No. 1.3 : Addition under Section 69 – Unexplained investment in FDRs The ld. CIT (A) has dealt with the addition in detail in paragraph 8 of his order. In para 8.1, the ld. CIT (A) categorically holds that the assessee is an NRI for over 40 years. In para 8.2, the ld. CIT (A) finds merit in the assessee’s explanation and is satisfied with the capacity to invest, based on the foreign remittances and documentation submitted. In para 8.3, it is clearly recorded that the remittances in the NRE accounts were foreign receipts, and thus not taxable in India.
Mr. Bharat Kumar Manghnani, Jaipur. Out of the total addition, the ld. CIT (A) rightly observed that the opening balance of FDRs was Rs. 2,22,00,063, which was fully explained from the bank certificate placed on page no. 16 of paper book. The remaining amount of Rs. 1,44,00,000 was also found to be sourced from foreign remittances to the NRE account, duly corroborated with bank records.
Ground No. 1.4 Addition u/s 69A Unexplained Money
As regards the bank balance of Rs. 35,31,094/-, the assessee has satisfactorily explained that this balance represented maturity proceeds of FDRs and inward remittances in the NRE account. (ICICI bank certificate is proof of same submitted before AO as well as CIT (A). Ground No. 1.5 : Addition u/s 69A Unexplained Money
The addition of Rs. 76,845/- made by the AO represents a withdrawal from the NRE account, which is merely a movement of funds and cannot be treated as income under any interpretation of the law.
Ground No. 1.5 Addition u/s 69A Unexplained Money
Even the interest earned on NRE deposits, which is exempt under section 10(4)(ii), was wrongly added by the AO. The ld. CIT (A) has rightly deleted this addition.
Conclusion:
In light of the above, the order passed by the ld. CIT (A) is based on proper appreciation of facts and evidence, and in accordance with the settled legal principles. There is no infirmity in the order that calls for interference by the Hon’ble Bench.
We respectfully pray that the appeal filed by the Department be dismissed.” 5.1 The ld. AR further submitted the Paper Book index in support her case, as under : S.No. Particulars Page No. 1. Withdrawn Application 1 2. Proof of Evidences Submitted before the 2-4 learned Assessing Officer (AO) 3. Reply Filed before the Assessing Officer 5
We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities. The assessee is a non-resident Indian residing in Nigeria during the year under consideration and has not filed his return of income in India for the assessment year 2018-19. As per the AIR/TAS/26As information available with the Department, the AO noted that the assessee has made transactions such as (i) purchase of Time Deposit of Rs. 3,66,00,063/- from SBI Bank, (ii) having account balance of Rs. 34,53,197/- with ICICI bank account (iii) made payment to non-resident amounting to Rs. 76,845/- and (iv) received foreign remittance of Rs. 1052/- during the financial year 2017- 18 relevant to assessment year 2018-19, but the AO could not verify the above transactions as the assessee has not filed his return of income. Accordingly, the AO after recording reasons and obtaining approval from the competent authority under section 151 of the Income Tax Act, 1961 issued notice under section 148 of the IT Act, 1961 dated 29.03.2022. Statutory notices were issued to the assessee but no compliance was made by the assessee. Since the assessee failed to explain the source of investment, the AO made the above additions. At the appellate Mr. Bharat Kumar Manghnani, Jaipur. proceedings, the ld. CIT (A) while adjudicating the issue, taking into consideration the details supported by documentary evidences furnished by the ld. A/R of the assessee, discussed the matter at great length and accordingly deleted the additions. Now, we adjudicate the grounds as under :- The ground nos. 1.1 and 1.2 raised by the revenue relate to admission of additional evidence under Rule 46A and opportunity to examine the evidence. 6.1 In this regard, on perusal of the record, we find that initially the assessee had filed an application under Rule 46A for admission of additional evidence. Later on, the ld. A/R of the assessee vide letter dated 27.03.2025 has voluntarily withdrawn the application for admission of additional evidence well before disposal of the appeal by the ld. CIT (A). A copy of the withdrawal application is placed on record (PB Page 1). From the perusal of the first appellate order, we find that the ld. CIT (A) has neither admitted any additional evidence nor denied opportunity to examine the evidence. We, therefore, find no merit in the ground nos. 1.1 and 1.2 raised by the revenue. The same are dismissed. Ground no. 1.3 relates to deletion of addition of Rs. 3,66,00,063/- made under section 69 on account of Time Deposit in bank account.
6.2 The ld. AR of the assessee submitted that out of the total addition of Rs. 3,66,00,063/-, Rs. 2,22,00,063/- was opening balance of FDRs with Bank which is verifiable from the bank certificates. The remaining amount of Rs. 1,44,00,000/- Mr. Bharat Kumar Manghnani, Jaipur. are the foreign remittances to the NRE account of the assessee which also duly corroborated with SBI bank records submitted by the assessee. The ld. CIT (A) while deleting this addition, has dealt with the matter in para 8.1 to 9 of his order as under :- “ 8.1 It has been stated by the appellant in his written submissions that he is a Non- Resident Individual aged about 72 years, and that he has been staying outside India, i.e. in Nigeria, since last 40 years. It has been further stated that the assessee did not earn any income from any source in India, which was more than the maximum amount, nor chargeable to tax in India. Accordingly, assessee did not file his return of income in India. During the year under consideration, assessee earned, minimal income in India, in the form of Interest income from NRO Account. The said interest income, for the year under consideration was also Rs. 1,052. Assessee did not have any other source of Income in India, which is evident from Form 26AS of the assessee.
8.2 During the year under consideration it was stated by the appellant that he was working with the company “Beekays Design & Publishing Co. Ltd.” for last many years. It was further stated that the assessee, while working abroad, received salary from outside India and deposited the same in the bank account maintained in India. The salary income was earned outside India while working for M/s. Beekays Design and Publishing Co. Ltd. in Nigeria. The appellant has submitted that the company Beekays Design & Publishing Co. Ltd. was incorporated in November, 2009. The company paid to the assessee as a monthly gross salary and incentives of USD31,500 during the financial year 2017-18. The screen shot of the salary certificate is as under :-
// screen shot at page 15 of CIT(A)’s order to be reproduced // 8.3 During the course of appellate proceedings, the appellant has submitted a detailed chart along with copy of bank statement of his NRE Account no. 10402227750 maintained with State Bank of India. The chart shows the foreign remittance transferred by the assessee during the year under consideration. The details are as under :-
Date of remittance Amount (in Rs.) 10.04.2017 2887347 02.05.2017 594375 Assessee has clarified that during the year under consideration, he has remitted total amount of Rs. 2,05,00,690/- as against Rs. 2,45,88,548/- as specified in the earlier submission. Therefore, the total remittance received is amounting to Rs. 2,05,00,690/- during the financial year 2017-18. Assessee has submitted copy of bank statement of SBI bearing NRE Account no. 10402227750 in which amount of remittance was clearly reflected in the bank account statement. From this NRE Account no. 10402227750, assessee has purchased fresh STDR amounting to Rs. 1,44,00,000/- during the financial year 2017-18 whereas old STDR amounting to Rs. 2,22,00,063/- were renewed during the financial year 2017-18. The appellant has stated that he had renewed existing fixed deposits that were originally created in earlier years i.e. Fixed Deposit prior to 23.02.2012, amounting to Rs. 2,22,00,063. The assessee has submitted a detailed chart showing the fixed deposits which were made after renewal of his old FDRs, the chart showing the maturity amount of new FDRs is reproduced as under :-
S. Fixed Fixed Deposit Amount No. Deposit Renewed during the Account Year under Number consideration (Rs.) 1 10402271903 26,28,521 2 10402271914 23,22,161 3 10402271925 5,81,402 4 10402271936 5,05,384 5 10402271958 20,55,066 6 30099463879 4,99,228 7 30387068421 37,22,283 8 30532834948 43,74,787 9 30532835668 9,84,794 10 30835752517 8,65,412 11 32065203055 21,16,603 12 34714307871 15,44,422 TOTAL 2,22,00,063 Mr. Bharat Kumar Manghnani, Jaipur. In support of the above tabulated chart assessee has furnished copy of bank statement along with fixed deposits statements from 2012 which shows the maturity amount of each FDRs. On perusal from the bank statement and fixed deposit statements it is evident that the fixed deposits were created in preceding years and not during the year under consideration i.e. financial year 2017-18. The amounts for these fixed deposits were remitted by the assessee from the bank outside India to his bank account in India in earlier years. Subsequently, these fixed deposits were created, and during the year under consideration, they were renewed. In support of his claim appellant has submitted copy of bank statement along with fix deposit account statement to prove his contention. The appellant has also submitted a copy of certificate received from State Bank of India in which the bank also certified the facts as mentioned the assessee. The relevant screen shot of the is mentioned as below :-
8.4 From the fixed deposit statements, it is evident that the fixed deposits were created in preceding years and not during the year under consideration. The amounts for these fixed deposits were remitted by the assessee from the bank outside India to his bank account in India in earlier years. Subsequently, these fixed deposits were created, and during the year under consideration, they were renewed. Therefore, it is apparent that the existing fixed deposits that were originally created in earlier years amounting to Rs. 2,22,00,063/- were actually renewals and not fresh investments. Assessee has purchased fresh FDRs for Rs. 1,44,00,000/- during the year under consideration and the same was invested from income in forex transactions deposited into bank. Certificate issued by the SBI for renewed FDRs and fresh FDRs made during the year under consideration and amount deposited as forex transaction in his NRE Account no. 10402227750 with SBI has been reproduced above.
8.5 We regard to the source of investment in FDRs, it was stated by the assessee that while working abroad he received salary from outside India and deposited the same in the NRE bank Account no. 10402227750 maintained in India with SBI. The salary income was earned outside India while working for M/s. Beekays Design and Publishing Co. Ltd. Mr. Bharat Kumar Manghnani, Jaipur. in Nigeria. Accordingly, whatever amount was infused into the bank account in India, the source of same was the bank account outside India, and the origin of such income was salary earned while working outside India. The salary certificate issued by the employer of the assessee M/s. Beekays Design and Publishing Co. Ltd. in Nigeria has been reproduced above.
On the basis of detailed discussion held above and the documentary evidences filed by the assessee, the investment of Rs. 3,66,00,063/- made by the assessee, during the year under consideration, is verifiable. Therefore, the addition of Rs. 3,66,00,063/- made by the AO on account of unexplained investment u/s 69 of the Income Tax Act, 1961 has no force, hence, it is hereby deleted. Ground of appeal no. 4 is accordingly allowed.”
In the totality of facts and taking into consideration the detailed discussion made by the ld. CIT (A) reproduced hereinabove, we are of the considered view that the ld. CIT (A) has rightly deleted the addition of Rs. 3,66,00,063/- made by the AO. We do not find any infirmity in the order of the ld. CIT (A), which is hereby upheld. Ground no. 1.3 of the revenue is dismissed. Ground no. 1.4 to 1.6 relate to deletion of addition of Rs. 35,31,094/- (Rs. 34,53,197/- + Rs. 76,845/- and Rs. 1,052/-) made under section 69A as unexplained a/c balance in the Bank account, source of interest income earned and source of foreign remittance received respectively.
6.3 The ld. AR of the assessee submitted that the bank balance of Rs. 34,53,197/- are the maturity proceeds of FDRs maintained with the Banks and inward remittances in the NRE account of the assessee, which also duly corroborated with ICICI bank certificate submitted by the assessee. As regards the amount of Rs. 76,845/-, the ld. AR submitted that this is a withdrawal from the Mr. Bharat Kumar Manghnani, Jaipur. NRE account which is merely a movement of funds and cannot be treated as income under any interpretation of the law. As regards the amount of Rs. 1,052/-, it was submitted that this is the interest amount earned by the assessee on NRE deposits, which is exempt under section 10(4)(ii) of the IT Act, 1961. The ld. CIT (A) while deleting this addition, has dealt with the matter in para 10.1 & 10.2 of his order as under :- “ 10.1 During the course of appellate proceedings, it was stated by the appellant that he was working in Nigeria since last 40 years. With regard to the addition of amount of Rs. 34,53,197/- made by the AO on account of account balance of the assessee in the ICICI Bank, the appellant has stated that an amount of Rs. 22,53,263/- was remitted from SBI NRE A/c to the ICICI Bank on 15.02.2017 from which FD bearing Account no. 001201072365 was created whose maturity value was Rs. 24,02,040/-. The assessee has further stated that on 31.12.2017 the account balance in ICICI Bank NRE account no. 001201072365 was Rs. 10,39,600/-. Further, it has been stated that the account balance of the ICICI Bank NRO account was Rs. 11,545/-. In support of his claim appellant has submitted a certificate issued by the ICICI bank which is reproduced as under :-
Further, in respect of addition of Rs. 76,845/-, it is submitted by the appellant that a non-resident can make withdrawals or otherwise use funds lying in his NRE Mr. Bharat Kumar Manghnani, Jaipur. A/c. Thus, the amount of Rs. 76,845/- cannot be taxed under the provisions of Income Tax Act, 1961. Furthermore, addition of Rs. 1,052/- is in fact, the interest earned from NRO A/c and the same is not taxable in India, as the total income of the assessee is less than Rs. 2,50,000/- in India for the year under consideration.
10.2 On the basis of detailed discussion held above and the documentary evidences filed by the assessee, it is seen that the assessee is having a/c balance of Rs. 34,53,197/- (FD maturity account of Rs. 24,02,040/-, ICICI NRE account balance was Rs. 10,39,600/- & ICICI Bank NRO account balance was Rs. 11,545/-) in the ICICI Bank account and FD account and payment made to non- resident amounting to Rs. 76,845/- and interest received in ICICI NRO is verifiable from the submission and explanation filed by the appellant in the above paras. Therefore, the addition of Rs. 35,31,094/- made by the AO on account of unexplained money u/s 69A of the Income Tax Act, 1961 has no force, hence, it is hereby deleted. Ground of appeal no. 5 is accordingly allowed.”
Thus, it is manifest from the documentary evidences filed by the assessee that the assessee has clearly explained account balance of Rs. 34,53,197/- in his bank account with ICICI Bank, interest earned of Rs. 76,845/- from his bank account with ICICI Bank and the source of foreign remittance received of Rs. 1,052/-. 6.4 In the totality of facts and taking into consideration the detailed discussion made by the ld. CIT (A) reproduced hereinabove, we are of the considered view that the ld. CIT (A) has rightly deleted the addition of Rs. 35,31,094/- (Rs. 34,53,197/- + Rs. 76,845/- and Rs. 1,052/-) made by the AO. We do not find any Mr. Bharat Kumar Manghnani, Jaipur. infirmity in the order of the ld. CIT (A), which is hereby upheld. Ground no. 1.4 to 1.6 of the revenue are dismissed. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 29/09/2025.
Sd/- Sd/- ¼ xxu xks;y ½ ¼MkWa-,l-lhrky{eh½ (GAGAM GOYAL) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 29/09/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- DCIT, Circle (International Taxation), Jaipur. 1. 2. izR;FkhZ@ The Respondent- Mr. Bharat Kumar Manghnani, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File By order,
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