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2021 (3) TMI 664 - AT - Income TaxUnexplained Investment u/s 68 / 69 - investment in residential properties by NRI - income received or deemed to be received or accrues or arises or is deemed to be accrued or arise in India - scope of tax liability of Non- Resident in India - treating funds transferred through banking channel earned by a Non-resident outside India as unexplained cash credit or unexplained investment - HELD THAT:- The position that emerges from the CBDT Circular No.5 in [F.No.73A/2(69)-IT (A-II)], dated 20.02.1969 as well as decision in the case of Keshav Mills Ltd. [1953 (1) TMI 5 - SUPREME COURT] is that the money brought in India by Non-Resident for investment or for other purpose is not liable to tax under the provisions of the Income Tax Act. The question of assessment to income tax arises only when there is no evidence to show that amount is question in fact represents remittance from abroad. Admittedly, in the present case, there is ample evidence on record demonstrating that the amounts in question represents remittance from abroad by the appellant himself. The rational behind this legal proposition is that the word “receipt” implies two persons viz. the person who receives and the person from whom he receives; a person cannot receive a thing from himself. Appellant herein is Non-Resident for the last 30 years for income tax purpose and citizen of USA. The scope of tax liability of Non- Resident is required to be considered in the light of section 4 and 5 of the Income Tax Act. In the present case remittance received from the appellant’s account Bank of Baroda, Dubai to appellant’s account to SBI NRE SB Account, Mapusa, Goa or remittance to the vendors of the properties is neither income received or deemed to received in India or nor was accrued or arisen or deemed to be accrued or arisen in India, therefore, the question of chargeability to income tax in India does not arise. The impugned addition does not represent either income received or deemed to be received in India or income accrued or arisen or deemed to be accrued or arisen in India. The remittance brought to India which are subject matter of impugned additions are obviously income received at first instance outside taxable territories of India or accrued or arisen outside taxable territories of India. Therefore, it is beyond the scope of jurisdiction of the Assessing Officer to go into the source of income earned outside taxable territories of India, once the Assessing Officer is satisfied that the source of money for acquisition of property represent remittance from the abroad from the appellant himself. Rejection and acceptance of explanation given as to the source of credits in the bank account of Bank of Baroda, Dubai is totally immaterial and had no relevance at all, as the Assessing Officer was not concerned about the taxability or otherwise of income received or accrued and arisen outside the taxable territories of India to Non- Resident. Therefore, the fact that the lower authorities had rejected the explanation as to the sources of credits in the Bank of Baroda, Dubai account does not come in the way of deleting the impugned additions. Lower authorities not accepting the explanation offered by the assessee is not based on proper appreciation of material on record and other attending circumstances available on record. It is needless to say that the opinion of the Assessing Officer is required to be formed with reference to the material on record and application of mind in sin qua non for forming the opinion as held in the case of CIT vs. P. Mohanakala, [2007 (5) TMI 192 - SUPREME COURT]). In the present case, there is total lack of application of mind, the Assessing Officer had not formed the opinion objectively with reference to any material on record and is merely based on the surmises and conjectures. We fail to understand as to why the Assessing Officer, having rightly taken note of the correct legal position governing the credits in the bank account i.e. he had chosen to bring the same to tax u/s 68 of the Act instead of section 69 of the Act. This itself goes to show the mala-fides on the part of the Assessing Officer, perhaps he intends to assess to tax in the hands of the appellant under more vigorous the provisions of section 68 of the Act than provisions of section 69 - Decided in favour of assessee.
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