ITAT quashes Rs. 26 lakh foreign remittance addition under Section 68

The ITAT directed the AO to delete the addition of Rs. 26,31,257 as undisclosed foreign remittance, finding that the appellant had sufficiently proven the transaction's identity, creditworthiness, and genuineness. The appeal was allowed, and the addition under Section 68 was deemed baseless.

---

---

Issues Involved:
1. Addition of Rs. 26,31,257 to the appellant's income as undisclosed foreign remittance.
2. Non-acceptance of the appellant's alternative plea regarding the receipt of $46,000 from an outside party.

Detailed Analysis:

Issue 1: Addition of Rs. 26,31,257 as Undisclosed Foreign Remittance
The appellant's return declared an income of Rs. 32,54,510, which was assessed at Rs. 64,02,471. The Assessing Officer (AO) made additions on various accounts, including Rs. 27,46,531 as undisclosed income from foreign remittance. The CIT(A) confirmed the addition of Rs. 27,46,531 and noted that the appellant credited Rs. 26,31,257 to his capital account as remittance from overseas without explaining the source. The ITAT deleted the addition of Rs. 27,46,531 but remanded the issue of Rs. 26,31,257 back to the AO for fresh examination.

Upon re-examination, the AO maintained the addition of Rs. 26,31,257 under Section 68 of the Income Tax Act, 1961, citing the appellant's failure to provide the payer's bank account details and prove the creditworthiness and genuineness of the transaction. The CIT(A) upheld the AO's decision, emphasizing that the appellant did not satisfactorily explain the source of the credit.

The appellant argued that the amount was a return of a friendly loan given to Mr. Giang Tran, supported by various documents, including bank statements and affidavits. The ITAT found that the appellant had adequately demonstrated the identity, creditworthiness, and genuineness of the transaction. The ITAT concluded that the addition under Section 68 was not sustainable, as the amount was a return of an advance/loan, not income.

Issue 2: Alternative Plea Regarding Receipt of $46,000
The appellant's alternative plea was that only $46,000 was received from Mr. Giang Tran into the Singapore bank account, and any addition should be restricted to this amount. The CIT(A) and AO did not accept this plea, maintaining the addition of Rs. 26,31,257.

The ITAT reviewed the documentary evidence, including the appellant's bank instructions, confirmation from Mr. Giang Tran, and bank statements showing the transfer and return of the loan. The ITAT concluded that the appellant had sufficiently established that the amount received was a return of an advance/loan, not income. Therefore, the addition under Section 68 was unwarranted.

Conclusion:
The ITAT directed the AO to delete the addition of Rs. 26,31,257, finding that the appellant had adequately proved the identity, creditworthiness, and genuineness of the transaction. The appeal was allowed, and the addition under Section 68 was deemed baseless and on the wrong premise. The order was pronounced in the open court on 30.10.2015.

---