ACIT, CC-4(2)/KOLKATA, KOLKATA vs. SHRI ASHOK PATNI, KOLKATA

All these three cases pertained to assessment year 2006-07. The Revenue’s former appeal along with assessee’s cross- objection CO No. 93/K/2018 arise against the CIT(A) - 21, Kolkata’s order dated 11.01.2017 passed in case No. 717/DCIT CC 4(2)/CIT(A)-21/2015-16 deleting unexplained investments in HSBC bank’s Switzerland based account amounting to Rs. 69,99,104/- made in the impugned reassessment framed on 20.05.2015 involving proceedings u/s 147/143(3) of the Income Tax Act, 1961; in short ‘the Act’.

We advert to quantum proceedings first in Revenue’s former appeal along with assessee’s cross-objection CO no. 93/K/2018.The former’s sole substantive grievance pleads that the CIT(A) has erred in law as well as on facts in deleting the impugned unexplained investments addition of Rs. 69,99,104/- made in latter’s HSBC’s swiss bank account. We proceed in this backdrop to find out that the CIT(A) has held the Assessing Officer to have wrongly proceeded against the assessee in violation of section 149(1)(c) of the Act as follows: “The main contention of the AR/assessee is that the provisions of clause (c ) of sub-section (1) of section 149 would not be applicable to the non-residents in as much as the said provisions are applicable to foreign asset of resident which is located outside India and hence, the assets of non-residents located outside India do not fall under this category since the non-residents are not required to disclose the details of assets held outside India. During the appellate proceedings the assessee has filed an Affidavit duly signed by notary public Singapore in which he has declared as under: That, I had left India on 24th July, 1993 for the purpose of employment in Singapore. That, the Immigration Authority of Singapore had issued me Employment Pass on 27th July, 1993; and thereafter, I was granted Permanent Residence on 25th July, 1995. That, I have been exployed and residing outside India since 1993 and my residnential status has been Non-Resident since 1993 till date for the purpose of the Income Tax Act, 1961 and Foreign Exchange Management Act, 1999. That, I am lawfully entitled to maintain accounts with any bank banks in any country outside India and that I am not required by law to disclose my overseas income in my income tax returns in India. That, I do hereby declare and further affirm on oath that no remittance and/ or payments made from my income accruing and arising in India has been credited to any of my bank accounts opened and maintained outside India & 793/K/2017 & CO 93/K/2018 Shri Ashok Patni Page 3 during the previous years relevant to the assessment years 2006-07 and 2007- 08. . That, I have been filing my Income Tax Return in India within duly prescribed period for a very long time and I am assessed to Income Tax in India under PAN: AFVPP3613A. That, in my Income Tax Returns in India, I have been truly, fully and faithfully declaring all my income accruing and arising in India and my investments in India as required by law. Along with the affidavit, the AR has filed a letter also in which it has been declared as under: "The appellant has confirmed that he stayed outside India from the year 1993 till date including assessment' year 2006-07 and during this time he carried out business in Germany, United Kingdom, Singapore etc. In this connection, the appellant has further confirmed that the business income earned by him in those countries was only deposited in various bank accounts outside India". I have considered above submission filed by the AR/ assessee. I find that in the assessment order passed on 20th May, 2015 for AY 2006-07, on the very first page the AO has mentioned/written the status of the assessee as non-resident. During the appellate proceedings the AR has filed photocopies of all pages of passport of the assessee w.e.f 1993 to 2016. ' From photocopies of the passport it is clear that the assessee has been and remained non-resident Indian (NRI) from 1993 to 2016 (continuously) without any break in any year. Thus, it is clear that once the residential status of the assessee is proved beyond doubt that the assessee is an NRI and it is also submitted by the assessee that the income earned outside India only was deposited in its foreign bank accounts as it has been submitted on oath by the assessee that no income earned in India was ever transferred outside India in any bank account, I think the applicability of section 149(1)(c) is not proper in this case. Accordingly, assessee's appeal on grounds no 2, 3, 4, 5 and 6 are allowed.”

Learned departmental representative fails to rebut the above clinching findings of fact that this assessee has been recorded as a non-resident in the assessment order itself. That being the case, we find no material on record indicating that the investments in issue are in any way taxable in India u/s 5(2) of the Act since the same had neither been received nor deemed to have sum received in India nor had they accrued or arisen or deemed to have accrued or arisen in India. The Revenue has also not raised any legal ground in its pleadings to this effect. We affirm the CIT(A) findings under challenge on this ground alone. Revenue’s main appeal fails therefore. The ITA Nos. 792 & 793/K/2017 & CO 93/K/2018 Shri Ashok Patni Page 4 assessee’s cross-objection no. 93/K/2018 is rendered infructuous. The Revenue’s latter appeal seeking to revive the impugned penalty has no legs to stand as the assessee as succeeded on quantum issue. The same is also declined.

The Revenue’s both appeals & 793/K/2017 are dismissed and Assessee’s Cross-objection C.O. No. 93/K/2018 in former appeal is dismissed as rendered infructuous. Order pronounced in the open court on 26/10/2018