TaxTMI 
TaxTMI 
2023 (9) TMI 601
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.... assessee himself has voluntarily disclosed an amount of Rs. 5,15,48,66s/- as exempt income in the return of income filed for A.Y.2017-18 and, therefore, it is the sole responsibility of the assessee to prove with supporting evidences to the ultimate satisfaction of the Assessing Officer that the amount disclosed is genuine and not taxable in India but the assessee has failed to do so. l.(ii) the assessee has failed to reconcile the income claimed as exempt in the return of income with the purported income earned from UAE. l.(iii) the exact amount of Rs. 5,15,48,663 cannot be derived without any basis while filing ITR and if the same income is earned by the assessee from M/s a bat ex General Trading LLC, then the net profit ned by the assessee as per the audit report in Financial year 2016-17 should match the amount of exempt income mistakenly shown in ZTR as claimed by the assessee. So, the exact calculation of how the amount of Rs. 5,15,48,663 is derived is of utmost relevance which the assessee has failed to do so. l.(iv) As per the agreement of 2012, the assessee's share in the profit is of 80%. However, as per the Audit report of M/s Babatex general trading LLC endin....
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....-19, we hereby condone the delay and proceed to adjudicate the issue on merit. 4. The interconnected issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 5,15,48,663/- and Rs. 4 crores made by the AO on account of disallowances of exempted income and unsecured loan respectively. 5. The facts in brief are that the assessee is a non-resident individual and holds tax residency certificate of UAE. The assessee claimed to be engaged in the business of general trading through a partnership firm, namely Baba Tex General Trading LLC, in which he is partner of 49% for the share of profit. 5.1 The assessee in the year under consideration filed return of income in India declaring taxable income at Rs. 4,11,500/- and besides this, the assessee also declared exempted income of Rs. 5,15,48,663/- representing the income earned outside India i.e. from UAE. The assessee in support of his claim also filed certain documentary evidence such as bank statement, Audit report, balance sheet etc of the firm based in UAE. 5.2 However, the AO found certain deficiencies in the documents furnished by the assessee, such as no partnership agreement, under which clause ....
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.... AO for remand report. The AO in remand report submitted that the assessee claimed that he earned income in UAE from the firm Baba Tex General Trading LLC which was shown as exempted income in the ITR filed in India. However, the profit of the impugned firm as per books and the amount of exempted income shown by the assessee is not matching. Likewise, the assessee has not provided any bank details of the firm, return of income and withholding receipt of the impugned firm. Furthermore, the amount of exempted income as claimed by the assessee has nowhere been found to be credited in the bank account of the assessee in India. The method or the basis of arriving at the amount of exempted income i.e. Rs. 5,15,48,663/- was not explained satisfactory. Therefore, the contention of the assessee should be rejected. It was the assessee who claimed exempted income in the return of income hence, it was the duty of the assessee to explain the sources of such exempted income. 9. Regarding foreign remittance of Rs. 4 crores, the AO in the remand report stated that the assessee out of the impugned sum has received Rs. 2.2 crores from his bank account maintained in UAE namely Emirates NBD A/c. Howe....
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....ct, the AO does not appear to have jurisdiction to inquire from the assessee/appellant about the affairs of a NR outside India. Under the circumstances the AO is not justified in insisting for various evidences as mentioned in the assessment order and the Remand Report. 5.8 However on the merits of facts and evidences it is seen that the Appellant is a shareholder having 49% shareholding in "M/s Baba Tex General Trading LLC" since 2008 which is into the business of Trading in Textile, Metals, etc. and was also a partner in M/s Brightview General Trading LLC till 31 January 2018 (no business carried on by M/s Brightview General Trading LLC since 2015). 5.9 As to the business income of Rs. 5,15,48,663/- wrongly claimed as exempt income it is the case of the appellant that he is an NRI since last 15 years, that as per the Audited Financial Statements, "M/s Baba Tex General Trading LLC" had earned net profits of AED 58,68,052/- & AED 64,18,170/- for the calendar years 2016 & 2017 respectively, that the appellant was rightly entitled to the profit of the company, that the Income earned outside India was wrongly shown by the Appellant in his Return of Income in India as Exempt from T....
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.... would not apply to the foreign bank a/c. in the case of the NR. Rather at one level the transactions being through the banking channel should suffice as far as Sec. 5(2) of the Act is applicable. The AO has never disputed that the income claimed exempt (in India) and the amount deposited in the NRE a/c were not of / from UAE. 5.12 Thus on the facts and on law the additions made by the AO in the assessment order impugned in appeal are not sustainable and the AO is directed to delete the additions made. 11. Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 12. The learned DR before us reiterated the findings contained in the assessment order. On the other hand, the learned AR before us filed a paper book running from pages 1 to 80 and reiterated the findings contained in the order of ld. CIT-A. 13. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the issues involved in the appeal filed by the revenue are interconnected. Undisputed fact is this that the assessee is non-resident Indian and based in UAE wherein he is partner in a partnership firm ....
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.... the onus lies upon the assessee to justify based on the documentary evidence. The assessee has furnished the necessary supporting evidence by raising his contentions during the appellate proceedings which have nowhere been denied by the revenue based on cogent material suggesting that the exempted income shown by the assessee represents the undisclosed income of the assessee taxable in India as per the provision of section 5(2) of the Act. In our considered view, the income of the assessee cannot be decided based on a mere piece of paper. As such, it should be corroborated by the material available on record. However, in the case before us, the AO has not brought any material on record to disprove the contention of the assessee. To classify any item based on paper as income, it is necessary for the party alleging so to pinpoint the specific instances and corroborative material. However, in the case before us no material has been brought on record by the AO. Besides the above the assessee admittedly is a non-resident and his income cannot be made subject tax in India until and unless the income falls under the following categories: i. Income received or deemed to be received in I....