RAVINDRA GAUR,JAIPUR vs. ITO WD 6(3), JAIPUR

3. That Ld. CIT(A) has further grossly erred in confirming the addition of ₹86 lakh made by Id. AO by treating the deposits made in the NRE account maintained with the State Bank of Bikaner & Jaipur (Now SBI) as being unexplained and Invoking provisions of sec. 68 of the IT Act. Appellant prays that such addition confirmed without appraising the legal provisions and true character of deposits made in a NRE account being most unfortunate, unwarranted, illegal and bad in law deserves to be deleted.

Ravindra Gaur. vs.ITO 4. That on facts and circumstances and in law the Id. CIT(A) has grossly erred in not holding the entire process of re-opening initiated in the case of assessee as being unlawful as well as void-ab-initio due to assessment initiated by Id. AO on a completely incorrect footing, without concrete legal evidence that suggest Id. AO that income chargeable to tax for A.Y 2015-16 has escaped assessment. Id. AO did not have any appreciation of legal provisions of NRE account and NRE fixed deposits, the assessment order passed deserves to be quashed.

“5.1 I have carefully considered the AO's viewpoint contained in the Assessment Order, the grounds of appeal, statement of facts made by the appellant and written submission provided by the appellant in the matter. 5.2 During the course of assessment proceedings, the Assessing Officer in his assessment order dated 15/03/2023 has stated that- "In the case the show cause notice u/s 148A(b) dated 15.03.2022 being furnished the information available with the department having cash deposit of Rs.86,00,000/- by the assessee in the SBBJ during the F.Y 2014-15, after prior approval of the PCCIT Rajasthan Jaipur dated asking the assessee as why should not be issued a notice in the case u/s148 of the I.T. Act. 1961 being given an opportunity to reply on or before 21.03.2022 through DIN &Notice No. ITBA/AST/F/148A (SCN) 2021-22/1040757483(1) electronically as well as by registered speed post dated 16.03.2022. But the assessee did not make any reply against this notice. Hence, a notice u/s148 of the I.T. Act, 1961 dated 26.03.2022 along with the Order u/s 148A(d) of the same date was issued to the assessee through electronically vide DIN & Notice No. ITBA/AST/S/148_1/2021-22/1041632785(1) as well as by the registered speed post dated 28.03.2022 with the prior approval of the PCCIT Rajasthan accorded on 25.03.2022. But this time also the assessee did not reply. Thereafter the notice u/s 142(1) issued on for compliance on 09.02.2023 but the assessee did not reply this time also. Thereafter a Final show cause notice dated 01/03/2023 issued through DIN & Notice No: ITBA/AST/F/144(SCN)/2022- 23/1050265766(1) dated for compliance on 09.03.2023 but the assessee did not reply this time also.

Ravindra Gaur. vs.ITO Matter of facts and conclusion The assessee is an individual and has not filed Return of Income for the A.Y. 2015-16 against the notice u/s 148 issued him as discussed in the above paras. He never filed the ITR for the A.Y 2015-16. As per the reasons/information recorded it has been found that the above named assessee has made unaccounted cash deposit of Rs.86,00,000/- in the SBBJ during the year under consideration. Total amount comes at Rs. 86,00,000/-. And the assesse did not compliance the notices issued till today. From the above facts it is noticed that assessee has not offered the income on the amount of Rs. 86,00,000/-, for the purpose of income tax This is the un- explained/ cash deposit, income of the assessee for the year under consideration. In absence of the reply/ compliance of the notices as mentioned in the above para, the above mentioned reasons/issues involved in the matter have been found unverifiable in such circumstances. Thus, there is no alternate except framing the ex-party assessment in the case u/s 144 of the 1.T.Act1961 having treated the 7 income computed/assessed as here under- Income as no ITR filed Rs. Nil Additions: The unexplained cash credit/deposit to be taxed u/s 68 read with the section 115 BBE Rs. 86,00,000/- Total Taxable income as other source Rs. 86,00,000/- Being Unexplained cash deposit/credit of Rs. 86,00,000/- u/s 68 read with the section 11588E as discussed above in the order for the year under consideration the assessee is liable to pay penalty u's 271 (1)(c) on the aggregate amount of Rs. 86,00,000/- for which separate proceedings are being initiated. Being not filing the (TR u/s 139(1) of the IT Act 1961 for the year under consideration the assessee is liable to pay penalty u/s 271F as discussed above for which separate proceedings are being initiated. Being not compliance made by the assessee in response to the notice issued on 03.02.2023 u/s 142(1) as stating show cause notice/ the last opportunity, therefore, the is liable to pay penalty u/s 271(1)(b) of the I.T. Act. 1961 for the default for which separate proceedings are being initiated. Assessed total income u/s 144/147 of the Income tax Act 1961 at Rs.86,00,000/-. Computation Sheet in ITNS-150 and the Demand Notice u/s 156 of the I.T. Act. 1961 are issued which are part of this Order. Charge interest u/s 234A, 234B and 234C as per the provisions Ravindra Gaur. vs.ITO of the I.T. Act 1961. Penalty proceedings for non-compliance of the notices issued u/s 142(1) to the assessee as discussed above in the order, for unexplained income/cash deposit as discussed above in the order, and non filing of ITR u/s 139(1) of the Act as discussed above in the order, are initiated by way of issuing show cause notice u/s 271(1)(b), 271(1)(c) & 271F as discussed above in the order, as per the I.T. Act 1961 separately. 5.3 Ground No. 1 is challenging the 147 jurisdiction of the AO and the granting of opportunity of being heard. 5.4 Ground No. 2 of the appeal pertains to investments in time deposit of Rs. 86,00,000/--being treated as unexplained by the AO.

In the case the show cause notice u/s 148A(b) dated 15.03.2022 being furnished the information available with the department having cash deposit of Rs.86,00,000/- by the assessee in the SBBJ during the F.Y 2014-15, after prior approval of the PCCIT Rajasthan Jaipur dated asking the assessee as why should not be issued a notice in the case u/s148 of the I.T. Act. 1961 being given an opportunity to reply on or before 21.03.2022 through DIN & Notice No. ITBA/AST/F/148A. (SCN) 2021-22/1040757483(1) electronically as well as by registered speed post dated 16.03.2022 But the assessee did not make any reply against this notice. Hence, A notice u/s148 of the I.T. Act. 1961 dated 26.03.2022 along with the Order u/s 148A(d) of the same date was issued to the assessee through electronically vide DIN & Notice No. ITBA/AST/S/148_1/2021-22/1041632785(1) as well as by the registered speed post dated 28.03.2022 with the prior approval of the PCCIT Rajasthan accorded on 25.03.2022. But this time also the assessee did not reply. Thereafter the notice u/s 142(1) issued on for compliance on 09.02.2023 but the assessee did not reply this time also. Thereafter a Final show cause notice dated 01/03/2023 issued through DIN & Notice No ITBA/AST/F/144(SCN)/2022- 23/1050265766(1) dated for compliance on 09.03.2023 but the assessee did not reply this time also. The assessee is an individual and has not filed Return of Income for the A.Y. 2015-16 against the notice u/s 148 issued him as discussed in the above paras. He never filed the ITR for the A.Y 2015-16. As per the reasons/information recorded it has been found that the above named assessee has made unaccounted cash deposit of Rs.86,00,000/- in the SBBJ during the year under consideration. Total amount comes at Rs. 86,00,000/-. And the assesse did not compliance the notices issued today. From the above facts it is noticed that assessee has not offered the income on the amount of Rs. 86,00,000/- for the purpose of income tax This is the unexplained/ cash deposit, income of the assessee for the year under consideration.

Ravindra Gaur. vs.ITO 5.5 Ground no. 1 The notices were all issued to the registered email-ID of the appellant and the appellant could have replied to these from anywhere in the world. He could also have authorised someone to represent him in the assessment proceedings If the assessee fails to comply with terms of a notice issued, the Assessing Officer has to gather relevant material and to make the assessment of the total income to the best of his judgment and determine the sum payable by the appellant on the basis of such assessment. Accordingly, Ground no.1 is dismissed. 5.6 Ground no. 2- I find that the appellant could not provide any satisfactory explanation with material evidence inspite of sufficient opportunity being provided at the appellate stage. It is an undisputed fact that the bank accounts stand in the name of the appellant, and that cash and other deposits were made into such accounts. In spite of repeated notices and even a pre-assessment show cause letter the appellant was not able to furnish a satisfactory explanation. The replies submitted are contradictory and the AO has clearly brought out then contradiction in the assessment order. 5.7 Keeping in view of the above, the AO in his order has explained the reasons for addition made in this case whereas the appellant has not furnished any documentary evidences/details in support of her case, the addition made by the Assessing Officer is hereby confirmed and ground of appeal raised by the appellant is dismissed. 5.8 Ground no. 3- No such additional grounds/submissions hence dismissed.

6. In the result, appeal is dismissed.”

5. Feeling dissatisfied from the above order of the ld. CIT(A), the assessee has preferred the present appeal on the ground as stated hereinabove. In the course of the hearing before this tribunal the assessee himself appeared and explained the facts stated in the written submission. The ld. AR of the assessee argued the reasons for not-attending the hearing as the assessee is senior citizen and is not techno savvy and living outside India for almost Ravindra Gaur. vs.ITO 30 years. The money so deposited in the NRE account by wire transfer and the assessee has not deposited any money from India. Even that the money is to be taxed is to be taxed by a country from where the assessee is tax resident. In support of these and other contention the ld. AR of the assessee has placed reliance on the written submission which is extracted herein below:-

“The assessee is an individual and a Non-resident Indian (NRI) for the past 30+ years. The assessee, also a senior citizen, was served a show cause notice u/s 148A(b) of the Income tax Act, 1961 on 15.03.2022 on the basis of information that the assessee had deposited cash amounting to Rs. 86,00,000/- in his bank account maintained with SBBJ during the relevant year and asked to explain its source. But since he was a NRI and had also retired, the assessee was not habitual of checking his mails, and thus could not respond to the above show cause notice. Later an order u/s 148A(d) was passed on 25.03.2022, and the case was earmarked as being a case fit for re- opening u/s 147. Notice u/s 142(1) of the Act was then issued on 03.02.2023 followed with a show cause dated 01.03.2023 seeking explanation for source of Time deposit amounting to Rs. 86,00,000/- made through bank account with SBBJ. In the meantime (i.e. on 18.04.2022) the assessee after receiving the order passed u/s 148A of the Act, responded to the same via email addressed to: Jaipur.ITO6.3@Incometax.GOV (PB page 11-13) duly explaining the facts and submitting that, the said bank account with SBBJ (now SBI) was a NRE Saving account and the time deposit of Rs. 86 lacs were made out of remittances made in foreign currency in the NRE account and it was not a case of cash deposit at all. It was thus explained that the notice issued seeking explanation for source of Time deposit made thru NRE saving account being without jurisdiction (the assessee being a NRI) the proceedings may kindly be dropped. But unfortunately, the said response of the assessee was not considered and an assessment order was passed ex-parte making addition of Rs. 86 lacs by invoking provisions of sec 68 of the Act treating the same as cash deposit by the assessee. Also the reply via email stated above did not find any mention in the assessment order passed on 15.03.2023. Subsequently an appeal was preferred before Ld. CIT(A) NFAC, Delhi wherein again the facts were duly narrated with complete documentary Ravindra Gaur. vs.ITO evidences and written submissions (copy at PB page 19-25) But again without appreciating the facts of the case and the complete set of evidences like, copy of passport of the assessee duly proving that the assessee was a NRI then and also now, copy of bank statements from SBI clearly showing that the account was a NRE Saving account and the TD was a NRE-TDR, the source of which was foreign remittances made in foreign currency which was not taxable in case of NRI, the appeal of the assessee was grossly dismissed alleging that the assessee did not file satisfactory evidences to support his contentions and without in any manner discussing the contentions or the shortcomings in documents filed by the assesee. Shocked with the manner in which the appeal was decided at the NFAC, the assessee approached Hon'ble Principal Chief Commissioner of Income Tax (PCCIT) Jaipur (PB page 14-17) once again explaining the entire facts and submitted his grievance regarding gross negligence in considering the case of assessee, which was simple and clear and deserved to be dropped at the initial phase itself. But looking to the manner in which such a simple and clear case was mishandled at both the assessment as well as appellate level, the assessee requested Hon'ble PCCIT to intervene. And as a result of the grievance so filed, directions were issued, to the department and asked not to enforce recovery of demand till the disposal of appeal by Hon'ble ITAT Jaipur Bench (copy of letter enclosed with this submission) Now as regards the grounds taken in the memorandum of appeal the assessee humbly submits as under:- Ground of Appeal

Nos. 1 and 2. In this ground the assessee has challenged the order of Ld. CIT(A)- NFAC being passed in the most gross manner without appreciating the fact that the assessee was a NRI since last 30+ years and the bank account in which the TDR was made was a NRE saving account. The assessee humbly submits that since the assessee was a NRI and there was no source of income either earned, accrued or deemed to be accrued in India, no ITR was liable to be filed as per Indian Income Tax provisions (copy of passport is available at PB page 18 and the copy of passport for the relevant year is enclosed with this submission) The bank account through which it has been alleged that TDR amounting to Rs. 86,00,000/- has been made and the source of which has been alleged as being unexplained, is a NRE Saving account with SBBJ (now SBI) in which the assessee has been remitting his income earned arose and accrued in foreign country. Treating the credits made in this NRE Bank account as being unexplained is therefore absolutely beyond the scope of Indian Income tax Act. The NRE account being an account maintained in Indian Rupees for overseas income, one can repatriate all the funds kept in NRE account.

Ravindra Gaur. vs.ITO It would not be irrelevant to mention that one cannot deposit cash or Indian rupees in a NRE account, thus the only way to fund a NRE account is through foreign currency remittance/ foreign currency deposit when visited India or through traveler's cheque. The bank statement submitted before Id.AO through email (PB page 3) showed credits in the NRE saving account that had narration as "Cash Deposit" just before the debit for TDR. Ld. AO merely based on this narration appearing in the bank statement made addition of the Rs. 86 lacs, without appreciating the fact of the case as well as basic characteristic of a NRE account. The fact that the assessee was a NRI and the account questioned by Id. AO was a NRE account were duly known and undisputed. Thus passing order merely on surmises without appreciating the facts being an act of gross negligence and misconduct by a quasi-judicial authority, it is humbly prayed that the order passed by ld.AO may kindly be directed to be quashed. Ground of Appeal

No. 3 and 4. In this ground the assessee has challenged the addition of Rs. 86,00,000/- confirmed by Ld. CIT(A) NFAC, made by alleging the source of TDR made from NRE saving account by the assessee (a NRI) as being unexplained. The assessee once again humbly submits that the fact that assessee is a NRI is not in dispute, and thus by virtue of provisions of sec 5 of the Act, that defines scope of total income of a particular assessee, in case of a NRI only income that is either received or is deemed to be received in India in a particular year by or on behalf of such person; or accrues or arises or is deemed to accrue or arise to him in India during such year, shall form part of his total income. Also, it is a fact that the addition of Rs. 86,00,000/- made by Id. AO is on account of Time deposits found invested in the name of the assessee in his NRE account maintained with SBBJ bank, the source of which has been alleged as unexplained. As is evident from the bank statement, the TDR in question has been made from the NRE saving account maintained by the assessee with SBBJ bank (now SBI). And the credits in this account as is evident is from forex repatriation, and therefore the source of TDR stands fully explained and no addition deserves to be made. It would be relevant to mention that during the course of appellate hearing the assessee submitted the following: a. Copy of passport (PB page 18 and passport for the relevant year is enclosed with this submission)) b. Copy of bank statement issued by SBI (PB Page 1 & 2)

Ravindra Gaur. vs.ITO c. Certificate issued by SBI confirming that the relevant bank account was a NRE account and the remittances / credits were from overseas only (enclosed with this submission). The addition made and further confirmed by Ld. CIT(A) NFAC without considering all of the above documents submitted by the assessee during the course of appellate hearing duly substantiating that one the account was NRE account second the deposits were out of foreign remittance but not cash establish the complete ignorance of facts as well as arbitrary determination of appeal by Id. CIT(A). It may please be appreciated that the assessee being a NRI was not required to provide any details about his income earned, accrued and received outside India. The position being so, the credit in the NRE account is duly explained as being re-patriation of foreign income and since the re-patriation of foreign income does not fall under the scope of total income as per see 5(2) of the Act. the same cannot be added as his income as per the provisions of see 5 of the IT Act Act. Reliance is paced on the following:-  DCIT Vs. Manish Vijay Mehta (ITAT Mumbai in dated 31.10.2022 held that, it is an undisputed fact that assessee is a non resident is not obliged to disclose his assets situated outside India in the return of income filed in India. If an income is to be taxed in the hands of non-resident assessee under Section 5(2) of the Act, then the burden is on the ld. AO to show that income of the non-resident assessee is falling within the definition of income chargeable to tax in his hands. • ITO (Intl) Vs. Madhav Vasant Dalvi (ITAT AHD) dated 27.07.2022 held that, What is not charged u/s 5 of the Act, cannot be taxed u/s 68 or sec 69 of the Act. The income of non-resident since not chargeable u/s 5(2) of the Act cannot be taxed u/s 69A, as sec 69A cannot override the provisions of sec 5(2). Further that provisions of sec 68 reads as under:- Cash credits. Sec 68. "Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year" In the case of assessee, the source of TDR made in India has been explained as being from re-patriation of foreign income in foreign exchange. The same has been duly substantiated by means of NRE Ravindra Gaur. vs.ITO saving account statement (PB page 3). Since the source of TDR made is from re-patriation of foreign income and the assessee is NRI, the assessee is not liable to prove the source of source as the foreign income earned by NRI does not fall under the scope of definition of total income by virtue of sec 5(2) of the Act. Also there could be no presumption of any illegality of any transaction, unless there is ample material on records to prove any illegality. There was nothing bought on records by Id. AO to suggest that such re-patriation or inward remittance from abroad resulted in accrual or receipt of income in India. Mere transfer of money by assessee from abroad to India could not constitute accrual or receipt of any income in India. Thus, there was nothing on records to suggest that explanation offered by the assessee was incorrect, and the addition so upheld by rejecting the bonafide explanation offered with documentary evidences, deserve to be deleted and the assessee prays accordingly. Reliance is placed on the following:- 1. CIT v. U.M. Shah, Proprietor, Shrenik Trading Co. [1973] 90 ITR 396 (Bom.) 2. Nemichand Kothari v. CIT (264 ITR 254)(Gau) 3. Divine Leasing ete Vs. CIT 299 ITR 268 (DEL) 4. 34 ITR 328 (MAD) & Ker HC in 117 ITR 371 5. Shri Vishnu Prasad, Jaipur vs DCIT (ITAT JPR) in ITA 1503/JP/2018 dated 15.02.2021 We also find it relevant to quote from letter dated 16.10.2023 (copy enclosed with this submission) issued to the assessee from the office of the Principal Chief Commissioner of Income Tax, Income Tax Department, Jaipur mentioning therein: "2. On verification of the facts stated in your complaints from the available records of the Department, it was found that information was received by the jurisdictional Assessing Officer which was required to be examined by him for ascertaining whether any income has escaped taxation………….. This substantiates that even CCIT, Jaipur has acknowledged the serious fault committed at the part of ld. AO in form of not considering the e-mail of assesssee and also affirms that same mistake was committed by ld. CIT(Appeals) even. Based on above it is once again summarised as under:-]  The assessee is a NRI, a senior citizen, does not have any income earned/ accrued/ arose or deemed to accrue / arose in India.  The source of TDR made from NRE Saving account maintained with SBBJ(now SBI) was duly explained as being from re-patriation of Ravindra Gaur. vs.ITO foreign income earned outside India even during the course of assessment by a specific mail written to the jurisdiction AO.  The present case of the assessee was not at all a case of cash deposit in the bank account.  Ld. AO did not make any inquiry from the bank to find out the exact nature of credit in the account of assessee.  The mere remittance of Rs. 86 lakh in a NRE bank account does not fall under the purview of sec 5(2) of the Act and also could not have been taxed by invoking provisions of sec 68 of the Act.  The addition made amounting to Rs. 86 lacs u/s 68 of the Act being invalid in law deserves to be quashed and prayed accordingly.”

Sr. No. Particulars Page No.

“I Revindra Gaur having PAN AQAPG8790R solemnly declare the following:-

1. 1. That I filed an appeal before CIT(A) against the order passed u/s 144/147 dated 15.03.2023 in may case for the AY 2015- 16 vide acknowledgement number 10884478004023 on 04.04.2023.

2. That during the course of appellate hearing before ld. CIT(A) I duly submitted a response on 5th September 2023 wherein I attached copy of the statement for the period 01.04.2014 to 31.03.2015 of may NRE Bank Account Number 61170253236 maintained with State Bank of India (then SBBJ) along with the certificate issued by bank confirming that the credits in said NRE bank account were out of the foreign remittances via wire transfers from outside India to India.

3. That the bank statement mentioned above was also filed by me at the time of filing appeal on 04.04.2023 in form 35 along with other documents as attachments.”

Ravindra Gaur. vs.ITO 8. As regards the finding of the ld. CIT(A) that the assessee has not supported any evidence in support of his case is incorrect and in support the ld. AR of the assessee filed the copy of the online screenshot which reads as under :

The fact that the account under dispute is NRE account and the same was submitted before the ld. CIT(A) based on the screen shot placed before us being the online attachment attached with the Form no.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open Court on 19/02/2024.