TaxTMI 
TaxTMI 
2021 (3) TMI 664
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....erred in treating funds transferred through banking channel earned by a Non-resident outside India as unexplained cash credit or unexplained investment. 4. On the facts and circumstances of the case to leave, to add, alter, amend, modify and correct the grounds of appeal at or before the time of hearing." 3. Briefly, the facts of the case are that the appellant herein, is an individual and Non-Resident Indian. The return of income for the assessment year 2014-15 was filed on 29.07.2014 declaring total income of Rs. 12,25,000/. The appellant derives income under the head 'income from house property' and 'income from other sources'. Against the said return of income, the assessment was completed by the Income Tax Officer (International Taxation), Ward-1, Panaji, Goa (hereinafter called as 'the Assessing Officer') vide order dated 30.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 ('the Act') at a total income of Rs. 16,75,46,060/-. While doing so, the AO made addition of Rs. 16,42,21,550/- u/s 68 of the Act and Rs. 20,99,510/- u/s 69 of the Act. While doing so, the Assessing Officer made addition of Rs. 16,42,21,550/- disbelieving the explanation rendered by the appellant in....
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....on multiple businesses in United States of America viz. jewellery shops, hotels etc. The investments made in the two properties in Mumbai are entirely out of this tax paid foreign business income remitted through banking channel. I am assessed to tax as resident of USA in USA." 6. Thereupon, the Assessing Officer called upon the appellant to explain the sources of investments with reference to the financial statement etc and also copies of returns of income filed in USA etc. In response to which, the appellant had filed financial statement and copies of returns of income filed in USA for the last two years. Based on which, the Assessing Officer observed that the business in the earlier years was not making profit. At this stage, the appellant had approached the Joint Commissioner of Income Tax (International Taxation), Bengaluru seeking direction u/s 144A of the Act, who, in turn, gave certain directions to the Assessing Officer which are set out in para 3 of the assessment order. The Assessing Officer was further directed to satisfy himself as to the discharge of onus lying upon the assessee in terms of provisions of section 68 of the Act. 7. The appellant vide letter dated 27.1....
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....uisition of above two mentioned properties. Accordingly, the Assessing Officer brought to tax a sum of Rs. 16,42,21,550/- u/s 68 of the Act and a sum of Rs. 20,99,510/- u/s 69 of the Act. The Assessing Officer also relying upon the decision of the Hon'ble Supreme Court in the case of CIT vs. K. Chinnathamban, 292 ITR 682 and the decision of the Special Bench of the Tribunal in the case of Manoj Agarwal vs. DCIT, 113 ITD 337 held that the cash deposit in the bank should be explained by the assessee, otherwise it is unexplained income u/s 68 and section 69 of the Act. 10. Being aggrieved by the above assessment order, the appellant carried the matter before the ld. CIT(A) contending that the Assessing Officer ought not to have rejected the explanation tendered in support of the sources of money for acquisition of the properties. However, the ld. CIT(A) had confirmed the action of the Assessing Officer considering the evidence filed before him in support of the sources of money for acquisition of the properties and without assigning any independent reasons from that of the Assessing Officer. 11. Being aggrieved, the appellant is before us in the present appeal. 12. The ld. Counsel ....
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.... of the transfer of funds of Rs. 1 crore to M/s. M and M Legal Ventures placed at page no.141 of the Paper Book. In support of transfer of funds from SBI NRE Account, he placed before us the copy of the payment receipt issued by the developers i.e. M/s. M and M Legal Ventures. 13. As regards the sources for acquisition of property Unit No.3, Ground Floor, THE LINK, Jayaprabhat Co-op. Housing Society Ltd., Sahakar Nagar, Andheri West, Mumbai, it is submitted that the said property was acquired from M.N. Dastur and Co. Pvt. Ltd. vide agreement dated 14.12.2013 (Paper Book page no.142) for total purchase of Rs. 13,86,21,480/- breakup of which is as under :- (i) Purchase consideration - Rs. 13,12,15,500.00 (ii) Stamp Duty - Rs. 73,75,000.00 (iii) Registration charges - Rs. 30,980/- 14. The above purchase consideration was stated to have been discharged by the appellant as under :- Date of Payments Amount (Rs.) Details of payments 23-Oct-13 1,31,21,550.00 Rs. 1,31,21,550/- paid through swift remittance from Dubai UAE vide Reference No.9001ORTT2080513 to legal consultants M/s. M and M Legal Ventures client account and thereafter remitted to M.N. Dastur and Co. (vendor).....
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....ere placed at page no.132 to 137 of the Paper Book. It is submitted that the aggregate of the aforesaid deposits works out to a sum of AED 1,62,80,455/- which works out to Indian Rs. 26 crores. Out of the said amounts so credited, a sum of Rs. 12 crores was utilized for the purpose of remittance to SBI-Mapusa NRE SB A/c No.11020405694 held by the appellant. 16. It is submitted that the appellant had been carrying on the business of the jewellery, hotel in USA for the last 30 years. Simply because he incurred losses for last two preceding years, does not mean that he does not have means of making remittance to in India. He further submitted that the appellant had fully explained with evidence the source of money for the acquisition of properties in India. The explanation rendered by the appellant cannot held to be unreasonable, and not plausible. Finally, he submitted that the lower authorities had failed to appreciate the evidences and explanation in proper perspective, instead, had chosen to make addition in arbitrary manner without giving cogent reasons as to why the explanation deserves to be rejected. He finally submitted that no addition u/s 68 and section 69 of the Act can b....
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.... by the appellant and along with his wife. It is stated that the funds were remitted from the Bank of Baroda, Dubai account held by the appellant to the said SBI, Mapusa, Goa NRE SB Account. The appellant also filed explanation as to sources of credits appearing in the account held with Bank of Baroda, Dubai. It was explained that the sources for deposit in the Bank of Baroda, Dubai was sale proceeds of gold bars and maturity proceeds of FDs belonging to the Asia Pacific Investments INC, a company which is owned by the appellant along with his wife. The appellant also adduced evidence in the form of the copies of the invoices in support of the sale of gold, copies of cheques issued by the buyer of the gold bar. The appellant also filed confirmation letter from Bank of Baroda that the credit of the AED 99,83,455 appearing in the account of Bank of Baroda, Dubai represents maturity proceeds of the FDs held in the name of Asia Pacific Investments INC. 19. From the above facts, it is clear that the purchase consideration was paid by way of remittances from the bank account, Bank of Baroda, Dubai held by the appellant. A sum of Rs. 12 crores was transferred from the Bank of Baroda, Dub....
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.... case it could not be said that the Tribunal was wrong in having differed from the Income-tax Officer and the Appellate Assistant Commissioner in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. 3. Shri Ranbir Chandra, the learned Counsel appearing for the Revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of Section 69 of the Act. The submission is that once the explanation offered by the assessee for the sources of the investments found to be non-acceptable the only course open to the Income-tax Officer was to treat the value of the investments to be ....
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....of money out of which the properties were acquired, the burden lying upon the assessee stands discharged. It is open for the department to rebut, controvert the explanation by leading necessary evidence in rebuttal. In the present case, the Assessing Officer had not led any material on record in rebuttal of evidence led by the assessee. 22. To the same effect the decisions of the Jurisdictional High Court in the case of Babulal Borana vs. CIT, 282 ITR 251, the Hon'ble Madras High Court in the case of K.K. Seshaiyer vs. CIT, 246 ITR 351 and the Hon'ble Delhi High Court in the case of CIT vs. La Medica, 250 ITR 575. 23. In the background of the above legal position discussed, therefore, the question that requires to be examined is whether the sources of investments in the said two properties had been satisfactorily explained or not by the appellant herein. As noted by us (supra), the sources of the investment have been duly explained by the appellant before the Assessing Officer as well as the CIT(A). In fact, the appellant also explained the sources of source of the investment by explaining that the credits appearing in the bank account of Bank of Baroda, Dubai from where the remi....
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....in the opinion of the AO the explanation given by the appellant is not satisfactorily, no addition can be made having regard to the ratio laid down by the Hon'ble Supreme Court in the case of Smt. P. K. Noorjahan (supra). 24. There is yet another reason as to why the impugned addition cannot be sustained. Admittedly, the subject properties were acquired by the appellant by way of remittances from the appellant himself from abroad. From the material on record, it is clear that the deposits were made in Bank of Baroda, Dubai in the account belonging to appellant himself. Therefore, it can be said to be that money was received by the appellant for the first time in Dubai, and the income, if any, had accrued at Dubai only. Once it is received by the party entitled to it, in respect of any subsequent dealing with the said amount, it cannot be said to be received on that occasion, kindly refer to 14 ITR 10 (Bom.). Subsequently, the term "receipt" had been interpreted to mean that the first occasion when the recipient gets the money on his own control. Once an amount is received as income, any remittance or transmission of the amount to another place does not result in "receipt", within ....
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....to have been received by it when the entries were made in the books of account at Petlad. They had merely accrued or arisen to it and so far as the receipt thereof was concerned they were first received in British India when they were received by J or by the various banks or shroffs in British India through whom the railway receipts were negotiated. The first receipt of the moneys was therefore when they were paid as such by the merchants to J or to the various banks or shroffs as above. What were paid by the merchants to these several parties were the sale proceeds of the goods which had been sold and delivered by the company to them and they were received within the meaning of section 4(1)(a) of 1922 Act by these several parties on behalf of the assessee in British India at the time when these payments were made by the merchants to them." 25. The above ratio of the Hon'ble Supreme Court in the case of Keshav Mills Ltd. (supra) was reiterated in series of decisions like Smt. Tarulata Shyam vs. CIT, 108 ITR 345; CIT vs. Dharamdas Hargovandas, 42 ITR 427; State Bank Ltd. Vs. CIT, 75 ITR 167. This position of law also been accepted by the CBDT vide para 2 of the CBDT Circular No.5 i....
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....de Min. of Finance Press Note dated 22-5-1967). (ii)1-11-1963 (Sic.) Zanzibar, Kenya, Tanzania and Uganda (vide Min. of Finance Press Note dated 22-5-1967). (iii) 1-1-1964 East Pakistan and Burma (vide Min. of Finance Press Note dated 25-6-1964/22-5-1965). (iv) 1-10-1965 West Pakistan (vide Min. of Finance Press Note dated 3-2-1969). (b)He had sufficient resources in the foreign country. (c) He had no source of income either in India or in any foreign country, other than the country from which he migrated, prior to migration, and he was not assessed as 'Resident' in India, either for the assessment year preceding the year in which he migrated or for earlier years; and (d) The amount brought in has been duly introduced in the books regularly maintained in India and an intimation of such introduction is given to the Income-tax Officer within two months of the migrant's arrival. 4. Cases not covered by the preceding paragraph, namely, (a) where the money (in the case of Mozambique, Zanzibar, Kenya, Tanzania, Uganda, East Pakistan and Burma) and money and/or the personal jewellery (in the case of West Pakistan) claimed to have been brought exceeds Rs. 50,000; or (b) where....
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.... section 4 and 5 of the Income Tax Act. The relevant provisions of the Act are extracted as under :- "Charge of income-tax. 4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income- tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. ****** Scope of total income. 5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such per....
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....cular No.5 dated 20.02.1969 (supra) held the same view. 29. Admittedly, the appellant herein is Non-Resident Indian for income tax purpose for last 30 years. As noted by us (supra), an Indian resident is liable to tax in respect of income received or deemed to be received in India and income which accrues or arises or deemed to be accrued or arisen in India. In the preceding paragraphs, we held that 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. Therefore, rejection and acceptance of explanation given as to the source of credits in the b....