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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI SAKTIJIT DEY
ORDER PER SAKTIJIT DEY, JM: This is an appeal by the assessee against order dated 31.12.2020 of learned Commissioner of Income-tax (Appeals)-42, Delhi, pertaining to assessment year 2017-18.
2. Ground no. 1, being a general ground, does not require specific adjudication.
3. In ground no. 2, the assessee has challenged the addition of Rs.1,32,25,533/- under section 69A of the Income-tax Act, 1961 (for short ‘the Act’).
Briefly the facts are, the assessee is a non-resident individual and a resident of United Arab of Emirates (UAE). For the assessment year under dispute, the assessee filed his return of income electronically on 04.08.2017, declaring income of Rs.1,02,288/-. The income declared comprised of interest earned from bank account and interest on Income tax refund. As observed by the Assessing Officer, in course of assessment proceedings, the Assessing Officer issued notice under section 133(6) of the Act to two branches of the HDFC Bank, wherein, the assessee maintained separate NRO/NRE accounts. From the information received from the Bank, the Assessing Officer noticed that in the year under consideration there are number of credit entries in the bank account. He, therefore, called upon the assessee to explain the source of deposits. In response to the query raised by the Assessing Officer, the assessee furnished its submission explaining the source of credit entries appearing in the bank account. However, the Assessing Officer was not convinced with the submissions of the assessee. Accordingly, he 2 | P a g e added back aggregate amount of Rs. 1,40,09,733/- as unexplained money under section 69A of the Act. The assessee contested the aforesaid addition before learned Commissioner (Appeals). After considering the submissions of the assessee, learned Commissioner (Appeals) granted partial relief to the assessee by deleting an amount of Rs.7,84,200/- from the addition made by the Assessing Officer.
4. Before us, Sh. Ajay Vohra, learned senior counsel appearing for the assessee submitted that the addition made is not sustainable as the provisions of section 69A could not have been invoked. Drawing our attention to the said provision, learned counsel submitted, section 69A can be invoked in a case where the assessee is found to be the owner of any money, bullion, jewellery, which is not recorded in the books of account maintained by the assessee and the assessee does not offer any explanation regarding the source of such money, bullion, jewellery etc. He submitted, the assessee is a non-resident, hence, there is no obligation on him to maintain books of account in India. Further, he submitted, assuming that the bank account/statement can be considered to be the books of account of the assessee, then also the credit entries duely are recorded in 3 | P a g e the bank statement. Therefore, in either circumstances, provision of section 69A would not be applicable.
As regards the merits of the issue, learned Counsel submitted, an amount of Rs.1,25,16,533/- was transferred from his bank account at Dubai to NRO account maintained in India.
In this context, he drew our attention to the respective bank statements. He submitted, though, before learned Commissioner (Appeals), the assessee furnished further documentary evidences by way of additional evidence to explain the source of deposits in the Dubai bank account. Learned Commissioner (Appeals) declined to accept the additional evidence merely for the fact that the assessee has not made any application under Rule 46A. He submitted, it is well settled that there is no requirement for making an application under Rule 46A for admission of addition evidences. In this context, he relied upon the following decisions:
1. CIT Vs. Text Hundred India Pvt. Ltd., 239 CTR 263 (Del. HC) 2. CIT Vs. Virgin Securities & Credits (P) Ltd., 332 ITR 396 (Del. HC) 3. Mayur Batra Vs. ACIT, order date 28.11.2022 (Del. Trib.)
He submitted, there cannot be any doubt regarding the credit entries of Rs.1,25,16,533/- as it has been transferred from assessee’s bank account in Dubai to the NRO account in India.
Further, explaining the source of the funds in the Dubai bank account, learned counsel submitted, the assessee has received dividend of Rs.9,74,27,502/- in the preceding year, on which, dividend distribution tax has been paid. Out of which, the assessee transferred substantial amount to his Dubai bank account. To substantiate earning of dividend income, learned counsel drew our attention to the return of income filed for assessment year 2016-17 in India, wherein, the dividend income was reflected. Thus, he submitted, there cannot be any doubt regarding the source of Rs.1,25,16,533/-. He submitted, the cash deposit of Rs.2,42,000/- made by the assessee was out of the earlier cash withdrawals of Rs.5 lakhs made on 18.10.2016 and 28.10.2016 from NRO Bank account for his medical treatment and unutilized cash available was deposited in the bank account due to declaration of demonetization of Rs.500 and Rs.1000 notes. As regards deposit of Rs. 3 lakhs, learned counsel submitted, the amount was received from his daughter. As regards an amount of Rs.1,67,000/-, learned counsel submitted, it was received from Ms. Sugandha Saigal for hotel booking.
Since, the reservation was subsequently cancelled, an amount of 5 | P a g e Rs.1,67,000/- was refunded back to the assessee. Thus, he submitted, each credit entry appearing in the bank accounts was properly explained by the assessee. Thus, he submitted, no addition under section 69A could have been made.
Strongly relying upon the observations of the Assessing Officer and learned Commissioner (Appeals), learned Departmental Representative submitted, in the proceedings before departmental authorities, the assessee neither filed evidences or explanation to establish the source of deposits made in the bank account. Though, multiple opportunities were granted to the assessee to prove the credit entries, however, the assessee was unable to explain. Therefore, he submitted, addition made is justified.
We have given a thoughtful consideration to the rival submissions in the light of the decisions relied upon and perused the materials on record. Undisputedly, while completing the assessment, the Assessing Officer has made an addition of Rs.1,40,09,733/- under section 69A of the Act. Whereas, learned Commissioner (Appeals) has reduced the addition to Rs.1,32,25,533/-. The first issue which arises for considerate is, whether the disputed addition could have been made under 6 | P a g e section 69A of the Act. On a careful reading of the said provision, it is observed that the provision gets triggered upon satisfaction of the following three conditions:
1. The assessee is found to be the owner of money, bullion,
jewellery and valuable articles etc.
2. Money and assets are not recorded in the books of account.
3. Source of such money, bullion, jewellery etc. is not specifically explained.
In the facts of the present appeal, undisputedly, the assessee is a non-resident, hence, is not obliged to maintain any books of account in India, as the only source of income of the assessee in India is from interest on bank accounts and interest on income tax refund. Therefore, one of the conditions of section 69A is not satisfied. Even assuming that the bank statements are to be treated as books of account of the assessee, still, section 69A would not be applicable as the transactions are duly recorded in the bank statements. Thus, in our view the provisions of section 69A would not be applicable. Therefore, the addition made invoking the provisions of section 69A of the Act is unsustainable.
Having held so, for the sake of completeness, we proceed to decide the issue on merits as well.
As discussed earlier, learned Commissioner (Appeals) sustained addition to the extent of Rs.1,32,25,533/-. The assessee has explained the source of the aforesaid amount as under:
Rs. 1,25,16,533 - transfer from assessee’s bank account
in Dubai to NRO account in India.
Rs.2,42,000 - cash deposits made during
demonetization period out of earlier cash withdrawals.
Rs. 3,00,000 - amount received from daughter
4. Rs. 1,67,000 - amount received from Ms. Sugandha
Saigal on cancellation of a hotel booking.
It is necessary to examine, whether the aforesaid explanation of the assessee explaining the source of deposits in the bank accounts are supported by the evidence or not. As regards transfer of Rs.1,25,16,533/- from the Dubai bank account to NRO account in India, on a careful perusal of the respective bank statements of Dubai bank account and NRO account in India, it is observed that one to one correlation is established between the transfer of fund from Dubai account and 8 | P a g e corresponding deposit in the NRO account in India. Therefore, it is established on record that amount of Rs.1,25,16,533/- has been transferred from assessee’s bank account in Dubai to NRO account in India. As regards the source of fund available in the Dubai bank account, it is observed that in financial year 2015-16 relevant to assessment year 2016-17, the assessee had received dividend amounting to Rs.9,74,27,502/-, out of which, an amount of Rs.6,88,02,250/- was transferred to Dubai bank account. The fact that the assessee has earned substantial dividend income is established from the return of income filed in India for assessment year 2016-17 and also from the fact that the company distributing the dividend has paid DDT. Thus, it is very much clear, the assessee has established not only the source of fund in the NRO account in India but the source of source as well. It is observed, though the assessee has explained all these facts before learned Commissioner (Appeals) and produced additional evidences to support his claim, however, learned Commissioner (Appeals) has declined to admit the additional evidences on flimsy ground of non-filing of application under Rule 46A and furnishing photocopies of the account. In our view, these objections of learned Commissioner (Appeals) cannot be accepted. 9 | P a g e When the assessee has furnished additional evidences having crucial bearing on determination of the dispute, learned Commissioner (Appeals) should have examined them properly without rejecting them on flimsy ground. The decisions cited before us by learned counsel appearing for the assessee clearly support this view. Thus, in our view, the source of deposit of Rs. 1,25,16,533/- stands explained.
As regards cash deposit of Rs.2,42,000/-, it is the contention of the assessee that out of earlier cash withdrawals made in October, 2016, the amounts were deposited due to declaration of demonetization. We find the aforesaid contention of the assessee believable. It is seen from the materials on record that the assessee is having certain medical condition and is undergoing treatment. Therefore, in all probability, the assessee must be keeping sufficient cash with him for his medical treatment. It is observed, in October, 2016, the assessee has withdrawn cash of Rs.5,00,000/- from his bank account.
Considering the close proximity of the aforesaid withdrawal and the cash deposits, in our view, assessee’s explanation that the cash deposit was made out of the earlier cash withdrawal is acceptable. 10 | P a g e
As regards credit entries of Rs.3,00,000/-, on perusal of the respective bank statements, it is clearly discernible that the amount was received from Ms. Gauri Chaddha, assessee’s daughter. Therefore, there cannot be any doubt regarding source of this deposit.
As regards the balance amount of Rs.1,67,000/-, the bank statement clearly reveals that the amount was received from Ms.
Sugandha Saigal. It is the explanation of the assessee that the amount of Rs.2,00,000/- was remitted to Ms. Sugandha Saigal on 31.03.2013 towards hotel reservation charges. However, subsequently, since, the reservation was cancelled, Ms. Sugandha Saigal refunded back the amount of Rs.1,67,000/-, which was credited to assessee’s bank account on 05.04.2016.
Thus, on over all analysis of facts and materials placed on record, we are convinced that the source of each credit entry appearing in the respective NRO/NRE bank accounts in India stands properly explained by the assessee.
In view of the aforesaid, the addition made under section 69A of the Act is unsustainable on merits as well. Accordingly, we delete the addition of Rs.1,32,25,533/-
In ground no. 6, the assessee has raised the issue of levy of interest under section 234B and 234C of the Act. Levy of interest, being consequential in nature, there is no requirement for adjudication.
In the result, the appeal is allowed, as indicated above.
Order pronounced in the open court on 13th April, 2023