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Facts
The assessee, a Non-Resident, failed to file an Income Tax Return for Assessment Year 2015-16. Based on AIR information, a notice u/s 148 was issued. Subsequently, a draft assessment order proposed an addition of Rs. 2,70,00,000/- u/s 69 for unexplained investment in FDRs.
Held
The Tribunal held that the evidence submitted by the assessee regarding foreign remittance for the creation of FDRs worth Rs. 1,40,00,000/- established the source of investment. Therefore, it was not a case of unexplained investment attracting Section 69.
Key Issues
Whether the investment in FDRs made by the assessee, a Non-Resident, constitutes unexplained investment under Section 69 of the Income Tax Act, 1961, when the source of funds is claimed to be foreign remittance.
Sections Cited
144, 144C(13), 69, 148, 144C(1), 195, 142(1), 271(1)(c), 271F, 271(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
Appellant-assessee is feeling aggrieved by order dated 25.01.2024, passed u/s 144 r.w.s. 144C(13) of the Act, by the Assessing Officer, Circle (International Taxation), Jaipur, relating to the assessment year 2015-16, whereby total income of the assessee (who claims himself to be a Non Resident), has been computed at Rs. 1,40,00,000/- by making an addition of the said amount, on the ground that investment forr purchase of FDRs Sh. Vishno Motwani, Ajmer. by him, worth this much amount, remained unverified/unexplained, as provided u/s 69 of the Act.
Arguments heard. File perused.
The assessee-appellant is a Non Resident. As regards the assessment year 2015-16, the assessee did not file any Income Tax Return. The department had AIR Information/TAS/26AS details, which led to issuance of notice u/s 148 of the Act, on 31.03.2022. However the assessee did not file his return of income, even in response to the said notice. Ultimately, draft assessment order was issued to the assessee on 20.03.2023, u/s 144C(1) of the Act, proposing addition of Rs. 2,70,00,000/-, u/s 69 of the Act, as regards investment found to have been made by him in purchase of time deposits from Bank of India and because said investment remained unexplained by the assessee.
The details of the FDRs, as available in the impugned assessment order, read as under:- Sr. No. Date of creating FDR FDR amount 1. 12.05.2014 20,00,000 2. 14.06.2014 25,00,000 3. 17.06.2014 25,00,000 4. 25.07.2014 25,00,000
The draft assessment order reads as under:- “On perusal of the submission made by the assessee and the information available on record, it is noted that the assessee, during the year under consideration purchased time deposits of Rs. 2,65,43,033/-from Bank of Baroda and of Rs. 2,70,00,000/- from Bank of India. The assessee also received interest income of Rs. 1565/-on which TDS was deducted u/s 195 of the Act. During the assessment proceedings, the assessee was asked regarding the source of funds used to purchase the said transactions vide notice u/s 142(1) dated 19.09.2022 and show cause notice dated 01.02.2023. On perusal of the submissions made by the assessee, it is noted that the assessee did not produce substantiating documentary evidence and justification regarding source of funds used to purchased the time deposits of Rs. 2,70,00,000/- from Bank of India. 1. Therefore, in absence to supporting documentary evidence, the said transactions remain unexplained and falls under the purview of unexplained investment u/s 69 of the Income Tax Act, 1961. In view of the foregoing facts and circumstances, there is much evidence available on record which shows that during the year under consideration, the assessee has made investment of Rs. 2,70,00,000/- for purchase of time deposits from Bank of India. Since, the assessee failed to explain the source of investment even after providing sufficient time, therefore, the source of investment of Rs. 2,70,00,000/- remained unexplained and thus added to the total income of the assessee on account of unexplained investment under section 69 of the Act. Relevant provision of the section 69 of the Act is reproduced below:- ……………………… On basis of the discussion made above the total income of the assesse is computed as under- Income declare in ITR Rs. Not filed. Addition:as per i Rs. 2,70,00,000/- Total income Rs. 2,70,00,000/- Proposed to be assessed at total income of Rs 2,70,00,000/- (as discussed above).
Sh. Vishno Motwani, Ajmer. Charge tax and interest as per Provisions of the Income Tax Act, 1961. Detailed computation of tax and interest charged is given in the enclosed ITNS-150, which forms part of this order. Demand Notice u/s 156 of the Act & Penalty notice u/s 271(1)(c) and 271F of the Act to be issued along with the final assessment order. Penalty u/s 271(1)(b) of the I.T. Act, 1961 to be initiated separately for non- compliance of the notice u/s 142(1) of the I.T. Act, 1961 dated 19.09.2022 within the given time."
As is available from the record, the assessee filed objections before Learned DRP, challenging the above said draft assessment order. Those objections were disposed of vide order dated 08.12.2023 with the following directions:- “8.4 Directions of DRP: (i) Written and oral submissions of the assessee have been considered. Contentions of the Assessing Officer in the draft order have also been perused. (ii) It is observed from the draft order that third party information related to the assessee had been received for his time deposits of Rs. 2,65,43,033 in Bank of Baroda and of Rs. 2,70,00,000 in Bank of Indla. Based on submissions of the assessee, Assessing Officer concluded that source of funds for time deposits in Bank of India were unexplained and therefore, in draft order, made addition of Rs. 2,70,00,000 in hands of the assessee u/s 69 of the Income Tax Act, 1961. From the records, it is seen that, as per information available with the department, out of total of 13 FDRs of Rs. 2,70,00,000 with Bank of India, only 7 FDRs of Rs. 1,40,00,000 had been generated by debiting the bank account with Bank of India, and the remaining 6 FDRs of Rs. 1,30,00,000 were not generated by debiting the bank account with Bank of India. In this regard, assessee has submitted that during the year FDRs have been renewed and no new FDs have been generated. Source of FDRs were funds repatriated in NRE account from Oman, where he lives and carries out his business. Assessee has further submitted that his FDs are only of Rs. 1,40,00,000 and not of Rs. 2,70,00,000. He has requested Assessing officer to provide him details available with the Department for the remaining amount of Rs. 1,30,00,000 (Rs. 2,70,00,000- Rs. 1,40,00,000). Assessee has submitted evidence related to FDs of Rs. 1,40,00,000, the source of which is repatriation from abroad in NRE account.
Sh. Vishno Motwani, Ajmer. Repatriation in NRE account are not taxable, therefore, addition of Rs. 1,40,00,000 made in hands of the assessee, should be deleted, if it is found correct by the Assessing Officer that the same are renewed FDs of past years of the NRE account. With respect to the remaining amount of Rs. 1,30,00,000, Assessing Officer is directed to make additions in hands of assessee, If he has clear evidence in this regard and bring on record this evidence establishing that the same is not out of his declared sources of income. Assessing Officer is directed to pass a speaking well-reasoned order in this regard. Ground of objections, are accordingly disposed off.
9. Directions of DRP under section 144C of the Income Tax Act (i) The Assessing Officer is directed to complete the assessment as per the above directions of the Dispute Resolution Panel. (ii) The Assessing Officer shall place a copy of these directions as annexure to the final order, to be read as a part of the order. (iii) While passing the final order, the Assessing Officer shall incorporate the reasons given by the Dispute Resolution Panel in respect of various objections, at appropriate places.”
After passing of the order dated 08.12.2023, when the matter came up before the Assessing Officer once again, department claims that the assessee came up with the version that during year under consideration, FDRs were renewed, and no new FDR was generated; source to FDRs were founds repatriated to NRE account from Oman, where he lived and was carrying on his business; that the FDRs were only to the tune of Rs. 1,40,00,000/- and not worth Rs. 2,70,00,000/-.
Record reveals that before Learned DRP, the assessee produced additional evidences, which included copy of bank statement, as regards back account No. 666313110000159, maintained with Bank of India Branch, Ajay Nagar, Ajmer.
Sh. Vishno Motwani, Ajmer.
While passing the impugned assessment order, the Assessing Officer found that time deposits aggregating Rs. 1,40,00,000/- were made by the assessee during the year under consideration. The Assessing Officer was also of the view that before each FDR was made, exact amounts were credited in the said bank account through RTGS/NEFT by Manoj Kumar, Vishno Motwani and Geeta Motwani i.e. assessee. Taking into consideration this fact, the Assessing Officer was of the view that the assessee failed to prove its claim that the FDRs were renewed and no new FDR was generated.
At the same time, the Assessing Officer observed that in the information that was available with the department there were duplicate entries of the above said amounts/ FDRs. Accordingly, the Assessing Officer concluded that the FDRs were to the tune of Rs. 1,40,00,000/-.
Regarding further observation that the assessee had failed to establish source of the said amount of the FDRs, for want of any corroborative evidence i.e. documents and foreign remittance as well as sources credited entries in the bank account, it was a case of unexplained investment u/s 69 of the Act.
Sh. Vishno Motwani, Ajmer.
It may be mentioned here that in the course of arguments, before us, Ld. AR for the appellant has placed on record photocopies of certain documents in proof of transfer of money from out of India to the joint bank account of the assessee and his wife, i.e. A/c no. 666313110000159, with Bank of India, Ajay Nagar, Ajmer. Ld. AR for the appellant has further submitted that the assessee- appellant being nonresident, earlier these vouchers could not be produced and that same may be taken on record and considered in the interest of justice. Ld. DR for the department has no objection to the taking on record of the above said 5 vouchers. Ld. DR for the department also relied on copy of report dated 17.01.2025, claimed to have been collected from Bank of India, Ajay Nagar, Ajmer as regards the above said joint account of the assessee and his wife. Learned DR has pointed out that as per this statement of the operative account, during the period from 01.04.2014 to 31.03.2015, i.e. on 09.05.2014, 12.06.2014, 17.06.2014, 24.07.2014 and 18.11.2014, a sum of Rs. 1,20,00,000/- was transferred to the said account by one Shri Manoj Kumar by way of RTGS. The contention raised by Ld. DR for the Sh. Vishno Motwani, Ajmer. department is that in view of the RTGS transfers, it cannot be said that the said amount was transferred by way of foreign remittance, and as such the Assessing Officer was justified in making the addition.
As per record, abovesaid 5 vouchers are dated 08.04.2014, 10.06.2014, 15.06.2014, 23.07.2014 and 16.11.2014, and worth Rs. 20,00,000, Rs. 25,00,000, Rs. 25,00,000/- , Rs. 25,00,000, and Rs. 25,00,000/- .
Name of the assessee-appellant stands recorded in these vouchers as the beneficiary, having his above said bank account, with Bank of India Branch, Ajay Nagar, Ajmer. In the column of name of the Remitter, name of one Manoj Kumar finds mentioned. As per these vouchers, the above said amount came to be transferred by Telex Transfer from Dubai, through the agency named therein. In all the 5 vouchers, Name of the Drawee bank stands recorded as Axis Bank. Case of the assessee-appellant from the very beginning is that he is settled in Oman.
A perusal of ITR of above named Shri Manoj Kumar, for the assessment year 2015-16 would reveal that his status during the year under consideration was RES resident.
Sh. Vishno Motwani, Ajmer.
In view of the additional evidence submitted by the assessee before this Appellate Tribunal i.e. in the form of the five vouchers, dated 08.05.2014, 10.06.2014, 15.06.2014, 23.07.2014 and 16.11.2014, there remains no doubt about transfer of the total amount of Rs. 1,20,00,000/- by Telex transfer from Dubai, by abovenamed person Manoj Kumar to the above joint bank account of the assessee and his wife. Copies of documents establishing identity of said Manoj Kumar have also been submitted before us.
It may be mentioned here that in the course of arguments, no argument was raised on behalf of the department, as regards two FDRs each value of Rs. 10,00,000/- created on 24.09.2014 and 09.10.2014. First mentioned FDR of Rs. 10,00,000/- is stated to have been created on remittance of the amount by the assessee through RTGS on 29.03.2014 and the Second FDR of Rs. 10,00,000/- is stated to have been created in the Bank of India on remittance of amount by his wife Miss. Geeta Motwani through NEFT.
It is true that had the assessee-appellant submitted the above said version and the additional evidence, now presented before us, even in the assessment proceedings or before Learned DRP, decision could have been otherwise.
Sh. Vishno Motwani, Ajmer.
Be that as it may, in view of the corroborative evidence submitted by the assessee-appellant as regards the source of money remitted by way of foreign transfer, which led to creation of the FDRs worth Rs. 1,40,00,000/-, we are of the considered opinion that this is not a case of unexplained investment, attracting the provisions of section 69 of the Act. Result 20. Consequently, this appeal is hereby allowed and the impugned order dated 25.01.2024 passed by the Assessing Officer is hereby set aside. File consignment to the record room after the needful is done by the office. Order pronounced in the open court on 27/08/2025.