2023 (8) TMI 1515 - AT - Income Tax

ITAT Delhi allows NRI appeal against section 69 addition for unexplained investment despite date discrepancies

Shalini Gupta Versus ACIT, Circle Int. Tax 1 (3) (1), Delhi

The ITAT Delhi allowed the assessee's appeal against an addition under section 69 for unexplained investment. The assessee, a Non-Resident Indian settled ... Validity of final assessment order passed u/s 147 r.w.s. 144C(3) in pursuant to the directions of DRP - unexplained investment addition u/s 69 - considering date of payment as per customer ledger - assessee is a Non-Resident Indian settled in Germany since her marriage in 1994 and prior to assessment year 2016-17 the assessee was not having any taxable income in India and not liable to file her income tax return u/s 139 - As for the present assessment year 2015-16 also her income in India comprised of interest income amounting to Rs. 968/- only which was much below the minimum income liable to tax in India therefore, she claims that she was not liable to file any Income Tax Return in India. HELD THAT:- Apparently the addition is made by Ld. Assessing Officer due to alleged difference in date(s) which assessee claims was inadvertent ‘typographical’ mistake. Ld. AO has fallen in error to say that same is ‘ex post facto explanation’ when something comes from assessee by way of explanation of an error of fact and not an excuse of conduct, it cannot be left of out of consideration on ground of ‘ex post facto explanation’. Further, before the Bench, Ld. AR sufficiently established that the loan transaction by RTGS is the same as per loan confirmation, copy of Ms. Shalini Gupta's account in the books as well as copy of bank statement of M/s. Ace Engineering Infratech (India) Pvt. Ltd., vis a vis customer ledger account of Ms. Shalini Gupta in the books M/s. Unitech Limited. As concluded that Ld. Tax Authorities have fallen in error in not appreciating the fact in correct perspective and while assessee has give sufficient information about the identity and the financial credibility of source. The error in mentioning the date would have stood explained if assessee was put to caution and asked to explain the same. Thus, there was no justification in the aforesaid circumstances to draw an adverse inference for the addition u/s 69 of the Act - Assessee appeal allowed. Issues:Assessment order under section 147 r.w.s. 144C(3) of the Income Tax Act, 1961; Alleged unexplained investment u/s 69 of the Income Tax Act; Discrepancy in dates of loan confirmation; Appeal against final assessment order for assessment year 2015-16.Analysis:1. Assessment Order under Section 147 r.w.s. 144C(3) of the Income Tax Act:The appeal was filed against the final assessment order dated 23.01.2023 for assessment year 2015-16 passed by ACIT, Circle Int. Tax, 1(3)(1), New Delhi under section 147 r.w.s. 144C(3) of the Income Tax Act, 1961. The appellant, a Non-Resident Indian settled in Germany, argued that she was not liable to file an income tax return in India for the assessment year 2015-16 due to her minimal income in India, mainly comprising interest income.2. Alleged Unexplained Investment u/s 69 of the Income Tax Act:The issue revolved around the addition of a sum of Rs. 74,12,618/- as unexplained investment under section 69 of the Income Tax Act. The Assessing Officer added this amount based on a discrepancy in dates related to a loan transaction. The appellant contended that the loan was given by M/s ACE Engineering Infratech India Pvt Ltd, supported by documentary evidence, and the error in date mentioned was inadvertent. The appellant argued that the transaction was genuine and verifiable through banking records.3. Discrepancy in Dates of Loan Confirmation:The discrepancy in dates arose from the confirmation of the loan by Mr. Munish Bhatia, where the date mentioned was different from the date recorded in the customer ledger account of the appellant in the books of M/s Unitech Ltd. The appellant's representative highlighted that the transaction was legitimate and supported by documentary evidence, including RTGS transactions and bank statements. The appellant's argument was that the error in dates did not affect the genuineness of the transaction.4. Appeal Against Final Assessment Order:The appellant raised multiple grounds in the appeal, challenging the addition made by the Assessing Officer and alleging procedural irregularities in issuing the notice under section 148 of the Income Tax Act. The appellant argued that the Assessing Officer erred in adding the sum as unexplained investment, emphasizing the genuine nature of the transaction and the availability of supporting evidence.5. Judgment and Conclusion:The Tribunal found in favor of the appellant, stating that the Tax Authorities had erred in not appreciating the facts correctly. The Tribunal acknowledged that the discrepancy in dates was inadvertent and did not impact the legitimacy of the transaction. The Tribunal held that the Assessing Officer should have sought clarification from the appellant regarding the date discrepancy before drawing adverse inferences. Consequently, the impugned addition was deleted, and the appeal of the assessee was allowed on 23rd August, 2023.This detailed analysis covers the issues surrounding the assessment order, alleged unexplained investment, discrepancy in dates, and the subsequent appeal against the final assessment order, providing a comprehensive understanding of the judgment delivered by the Appellate Tribunal ITAT DELHI.