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Facts
The appellant individual filed a return of income for AY 2014-15, which was assessed at a higher income by the AO after making an addition of Rs. 70,25,900/- on account of foreign remittance to the NRO account. The AO rejected the appellant's explanation that this represented sale proceeds of business, a car sale, and remittances from sons abroad.
Held
The Tribunal noted that the AO had not questioned the genuineness of the source of money but merely disbelieved the appellant's explanation due to a lack of supporting evidence. The CIT(A) had confirmed the AO's addition without independent findings. Therefore, the Tribunal found the CIT(A)'s order to be cryptic and lacking in reasoning.
Key Issues
Whether the addition made by the AO on account of foreign remittance to the NRE account was justified, and whether the CIT(A) erred in confirming the addition without proper consideration of the appellant's submissions.
Sections Cited
Section 40A(2) (Implied, due to related party transactions)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 27.02.2024 for Assessment Year (AY) 2014-15.
Brief facts of the case are that the appellant is an individual. The return of income for AY 2014-15 was filed on 30.10.2015 declaring total income of Rs. 4,28,640/-. Against the said return of Nadukkandi Kunhabdulla income, the assessment was completed by the by the Income Tax Officer, Ward-2(2), Kozhikode (hereafter “the AO”) at a total income of Rs. 75,59,703/-. While doing so, the AO made addition on account of foreign remittance of Rs. 70,25,900/- in NRO account at SHI and NRE accounts at SBT and Canara Bank, rejecting the explanation of the appellant that the said amount represents sale proceeds of the business conducted under the name and style “Tip Top Boutique” of Rs. 35,73,006/- and the amount of Rs. 8,88,655/- represents the sale proceeds of car, which was sold in Bahrain and the balance of Rs. 27,00,000/- was remitted by his sons from their earnings in the Kingdom of Bahrain.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
It is contended before us that the CIT(A), without adverting to the submissions made before him challenging the addition had merely confirmed the addition made by the AO. He further submitted that the AO has no jurisdiction to question the genuineness of the credits to the NRE account and there is no material to disbelieve the explanation made by the appellant regarding the source of credit in NRE account. Thus, he submitted that the order of the CIT(A) be reversed.
Nadukkandi Kunhabdulla 6. On the other hand, the learned Sr. DR, placing reliance on the order of the CIT(A) submits that no interference in the order of the CIT(A) is called for.
We have heard the rival contentions of both the parties and perused the material available on record. The solitary issue in the present appeal relates to the addition of Rs. 70,25,900/- on account of credits to the NRE account. On perusal of the assessment order it would be evident that the AO made addition on account of foreign remittance to the NRE account disbelieving the explanation of the appellant that the same represent the income earned outside India in the form of sale of business, i.e. the sale proceeds of business and car and remittance from sons settled abroad. The AO had not questioned the genuineness of the source of money. He merely disbelieved the explanation by giving a finding that the appellant had failed to give supporting evidence in support of the explanation given for the source of foreign remittance. On appeal before the CIT(A), the CIT(A) merely confirmed the addition made by the AO, without giving any independent finding nor adverting to the written submissions filed by the appellant. Thus, the CIT(A) has passed a very cryptic and non-reasoned order offending the principles of natural justice. Therefore, in order to meet the ends of justice, we remand the matter back to the file of the CIT(A) for de novo disposal in accordance with law.