Non-resident foreign bank deposits cannot be taxed in India without proof of Indian source or taxable nexus.

Foreign bank deposits of a non-resident were held not taxable in India because the Revenue failed to prove that the amounts were received, accrued, or arose in India, or were otherwise within the charging provisions applicable to non-residents. The Court relied on concurrent factual findings that the deposits were in an overseas account and that the materials did not establish an Indian source or any sufficient nexus with taxable income in India. The addition was therefore unsustainable, and the Revenue's challenge failed.

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Issues: Whether the addition of foreign bank deposits in the hands of a non-resident assessee was sustainable under the Income-tax Act, 1961.

Analysis: The assessee was a non-resident during the relevant year and the deposits were in a foreign bank account opened abroad. The Court accepted the concurrent factual findings that the Revenue had not established that the deposits had a source in India or that the amounts were received, accrued, or arose in India so as to fall within the charging ambit applicable to a non-resident. It was also noted that the Revenue had not discharged the burden of proving taxability on the facts found by the appellate authorities, and the materials relied upon did not conclusively connect the foreign deposits with taxable income in India.

Conclusion: The addition was not sustainable and the Revenue's challenge failed.

Ratio Decidendi: In the case of a non-resident, foreign income or foreign deposits cannot be brought to tax in India unless the Revenue establishes that they were received, accrued, or arose in India or are otherwise taxable within the statutory limits applicable to non-residents; the burden to prove such taxability lies on the Revenue.

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