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2022 (8) TMI 619 - ITAT AHMEDABADAddition u/s 69A/68 - Unexplained investment from NRE account which was transferred from Mauritius Branch of Bank of Baroda - unexplained credit entries from undisclosed source - addition of unexplained investment u/s. 69A on the ground that the assessee failed to explain the source of credit entries in NRE account - assessee has failed to substantiate his source of income in India and abroad with documentary evidence, though multiple opportunities were provided by the AO during the course of assessment proceedings - HELD THAT:- NRE account refers to foreign funds deposited with a financial institution that allows for the efficient conversion and transfer of Indian and foreign currency both within and outside India. One can deposit Indian rupees into NRE account. The only way to deposit in NRE account is by way of foreign currency remittance. Thus entries in NRE account of Bank of Baroda, Satellite Branch, the Assessing Officer is not correct in invoking Section 69A as unexplained investment by the assessee. The assessee has earned the commission income from Mauritius and having Non-Resident status under section 6 of the Income Tax Act. The assessee has transferred such funds to India through NRE account at Bank of Baroda, Satellite Branch. Thus the income earned by the assessee accrues or arises or is deemed to accrue or arise into India is not covered under the charging Section 5 of the Income Tax Act. What is not charged u/s. 5 of the Act cannot be taxed u/s. 68 or 69A of the Act. In our considered view, the income of the non-resident is not chargeable under Section 5(2) and the provisions of Section 69A cannot override the provisions of Section 5(2). As relying on FINLAY CORPORATION LTD. [2003 (1) TMI 266 - ITAT DELHI-D] we have no hesitation in confirming the order passed by the Ld. CIT(A) and delete the addition being addition made u/s. 69A of the Act. - Decided in favour of assessee.
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