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2009 (4) TMI 554 - AT - Income TaxUnexplained investments - money brought by an NRI into the country through banking channel - assessee Smt. Susila Ramasamy had made substantial NRNR (Non-Resident Non-Repatriable), FCNR (Foreign Currency Non-Resident), and NRO SB deposits with Indian Bank, and State Bank of India - AO initiated proceedings u/s 147 for AY 1995-96 - issued notice u/s 148 - AO, while treating the said deposits as deemed income of the assessee u/s 69 - CIT(A) uphold AO’s action. HELD THAT:- It is necessary to note that once an amount is ‘received’ as income, any remittance or transmission of that amount to another place does not result in ‘receipt’ once again at the other place, within the meaning of section 5 of the Act. Therefore, if certain income, profit or gain was ‘received’ by the assessee outside India, it does not become chargeable to income-tax in India by reason of that money having been brought into India. This is because what is chargeable is the first ‘receipt’ of the money and not a subsequent dealing by the assessee with the said money. In that event, the money is brought by the assessee as his own money which he had already ‘received’ and had control over it and it does not take the character of income, profit and gain after being brought in India. In the cases of remittances through banking channel, the nature and source of the funds get explained and the onus on the assessee u/s 69 gets discharged and, consequently, such remittances cannot be taxed u/s 5(2)(b). Therefore, the argument of the ld Standing Counsel that, in the present case, the impugned money was taxable u/s 5(2)(b), r/w section 69, on the facts, has no merit and cannot be accepted. It is seen that, AO while relying upon the CBDT Circular, has committed an error of reproducing in his order from paragraph 4 of the Circular, which does not apply to the remittances through banking channels. He should have applied the paragraph (2) and the first part of paragraph (3) of the Circular. In the circumstances, therefore, his order has no merit and cannot be sustained. We have observed that because of the mode of banking channel, admittedly, used for the remittance in this case, the onus on the assessee u/s 69 stood discharged, and, therefore, it was not taxable in India u/s 5(2)(b). The CBDT Circular squarely supports the case of the assessee. The fact that the transactions and events narrated in the Annexure look curious and suspicious, makes no difference to the conclusions that we have drawn in this case, as per law. Therefore, CIT(A), confirming AO’s action, cannot be sustained. The impugned addition made by AO is, accordingly, deleted.
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