TaxTMI 
TaxTMI 
2020 (4) TMI 95
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....hares of Indian Companies from foreign remittance is exempt in light of the Board Circular No. 5 dated 20-02-1969 without appreciating the fact that the assessee does not fulfill the conditions laid down in this Circular? 3. Brief facts of the case are as under :- The assessee is an individual and is Non Resident Indian. He has not filed Original return of income since as per him his total income is below amount not chargeable to tax and as per relevant provisions of the Income Tax Act, 1961. The case was reopened u/s.147 of the Income Tax Act, 1961 and notice u/s.148 of the Income Tax Act, 1961 was issued on 24.03.2015. In response to the said notice, the assessee filed return of income on 29.10.201 5 declaring Total Income of Rs. Nil and asked for the reasons for reopening. The reason for reopening was provided to the assessee. The reopening of the case was made on the basis of statement recorded u/s.132 (4) dated 11.04.2013 being a director of the M/s. Dar Media Pvt. Ltd. at the time of search action conducted u/s.132 of the Income Tax Act, 1961 on 10.04.2013 in case of Valuable Group. In the statement, assessee stated that he had provided consultancy services to Gulf Fina....
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....g Officer observed that there were foreign remittances in the assessee NRE account Chennai branch from HSBC Bank Middle East Ltd., Dubai totalling an amount of Rs. 1,56,84,464/-. The Assessing Officer noted that the authorised representative sought one week time for furnishing confirmation from M/s. Gulf Finance House (GFH) to the effect that M/s. Dar Capital Ltd. had not given the said sums during the year under consideration. However, the assessee has not furnished any confirmation from M/s. Gulf Finance House. The Assessing Officer show-cause the assessee that if the source of above credit is not disclosed it will be treated as unexplained credit in the hands of the assessee. The assessee in response submitted that they have submitted the FIRC certificate and it shows that funds have been transferred on capital account from his own bank account maintained overseas. Holding that learned AR has not furnished any confirmation from GFH and the assessee has failed to disclose source of credit. The Assessing Officer added the amount of Rs. 1,56,84,464/- as unexplained cash credit u/s. 68 of the Act. The conclusion remark of the Assessing Officer reads as under :- "As already ....
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.... UAF and thus failed to prove the genuineness of remittance in his NRE A/c in its HSBC Chennai Branch. After due consideration of the evidences produced, it believes that the details furnished by the Assessee are incomplete and deserves to be disregarded. In view of the above facts, amount credited in assessee's NRE A/c amounting to 1,56,84,464/- is assessed to tax as unexplained cash credit u/s 68 of the IT Act. 1961. Application of provisions of section 69 of the I.T.Act. Further, the investment made out of these funds amounting to Rs. 2,57,970/- is treated as unexplained investment of the assessee u/s. 69 of the I.T. Act, 1961. For making such disallowances I rely upon following section/ provisions of the I.T. Act, 1961." 7. Upon assessee's appeal learned CIT(A) as regards reopening confirmed the same by holding as under :- "I have gone through the reasons recorded by the Assessing Officer for reopening the case under section 147.1 find that the Assessing Officer had enough cogent material to have the belief that income has escaped assessment. From the perusal of reasons it is seen that a search action u/s.132 was carried out in the case of Valu....
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....me on the basis of his adjudication under the above ground. 10. Against this order the assessee has filed appeal before the Tribunal. 11. We have heard both the counsel and perused the records. Learned Counsel of the assessee relied upon the order of learned CIT(A). The submitted that from the FIRC, it is evident that the amount have been credited in assessee's NRE account was transferred to overseas account in Dubai. He submitted that the assessee being a NRI cannot be asked to prove source of credit in its overseas account. In this regard learned counsel placed reliance upon the following case laws :- • DCIT Vs. Hemant Mansukhlal Pandya (100 taxmann.com 280) (Mumbai-Tribunal) • Smt. Susila Ramasamy Vs. ACIT (37 SOT 146)(Chennai) • DCIT Vs. Finlay Corporation Ltd. (86 ITD 626)(Delhi) 12. Per contra, learned Departmental Representative submitted that the additions are based upon findings in search action carried out in the case of Valuable Group on 10.4.2013. That in a related action M/s. DAR Media Pvt. Ltd. was also covered u/s. 132 of the Act on 10.4.2013 and the statement of Shri Arun Rangachari was recorded. That during the search....
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....tted by the assessee can be reasonably attributed to the services rendered by the assessee in India. She submitted that learned CIT(A) has totally ignored the findings of services and the statement of the assessee and he has relied upon the case laws from the ITAT which were not rendered in the background as operating in the present case. She submitted that it is clearly established the source of assessee's income is originated in India as the substantial amount is received by the assessee from Gulf Finance House and Khaleej Bank of Commerce for the services rendered by the assessee in India. That there is no curtain left to state that the Revenue has no incriminating documents to ask the assessee for the source of money. Further she submitted that learned CIT(A)'s reliance on Board circular No. 5 dated 20.2.1969 is not correct in as much as in the said circular it was mentioned that it was applicable when there is no evidence for transfer of money. It is submitted that by no stretch of imagination it can be submitted that section 68 is not applicable in the case where the persons of India origin residing abroad but intending to return to India and settle here permanently, the mone....
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....ominantly pointed that assessee has received sums through its entities abroad as consultation fee received from GFH Bahrain for rendering services in India. The entries in the bank account did mention the name of GFH and Dar Capital. In these circumstances it was incumbent upon the assessee to give a confirmation from GFH that no fee was paid to the assessee through its entities during the concerned assessment year for services rendered to GFH in connection with projects in India. Since the assessee has failed to do so in our considered opinion the learned CIT appeals has totally erred in ignoring the detailed finding of the assessing officer .It is settled law from Hon'ble Apex Court in the case of Sumati Dayal Vs. CIT (1995 AIR 2109) and CIT Vs. Durga Prasad More (82 ITR 540) that revenue authority are not to put on blinkers and ignore the overwhelming surrounding circumstances. The learned CIT(A)'s reliance upon the case laws and the circular is totally not applicable on the facts of the present case. The facts of the case prima facie indicate that assessee has received sums abroad from foreign concern on account of services rendered in India. In these circumstances it was incum....