TaxTMI 
TaxTMI 
2025 (6) TMI 308
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....authorities erred in law and on facts in initiating and affirming the reassessment proceedings as there was no any escapement of income chargeable to tax when the appellant had made investment in purchase of property from his NRE account funds which facts were very much before them. The proceedings being illegal as settled by the judgments of Jurisdictional High Court, the order passed ought to be quashed, it be so held now. 3. Without prejudice to the above grounds, the proceedings initiated u/s 147 is also illegal and ALSO barred by time on the basis of records of the issuance of first notice without DIN and without proper approval of competent authority. It be so held now. 4. Without prejudice to the above, the ld. CIT(Appeals) also erred both in law and on facts in not deleting the addition of Rs. 52,25,625/-= made u/s 69 of the Act, when the facts regarding investment in property from NRE account of the appellant was not disputed and necessary explanations were duly furnished to the Id AO also. It be so held now and addition made by wrongly invoking section 69 be deleted. 5. The ld. CIT(Appeals) also erred both in law and on facts in not properly considering the submissi....
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....Appeals) upheld the AO's finding that the source of Rs.51,25,625/- remains unexplained. Consequently, the addition made by the AO under section 69 of the Act was confirmed by CIT(Appeals). 5. Before us, the Counsel for the assessee submitted the assessee is a Non-Resident Indian (NRI) with his income comprising of salary, rent, and dividend earned outside India, specifically in the United Kingdom. The same is evidenced by passport of the assessee (produced before us at page 28 of the synopsis filed by the Counsel for the assessee). It was submitted the assessee had no source of income in India and only earned interest income of Rs.23,184/- from a savings bank account in India. During the relevant year, the assessee purchased immovable property using funds transferred from his UK bank account (Bank of Baroda UK Account No. 9410-01-91005606 the bank statements were placed before us at pages 42 to 47 of the paper book). These funds were remitted to his NRE account with Bank of Baroda in India (Account No. 02900100015955 the bank statements were produced before us (at pages 8 to 9 of the paper book). It was submitted that from this NRE account, the assessee made two payments for the p....
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....ced on record copies of the bank account held by the assessee with Bank of Baroda, UK (Bank Account No. 9410-01-91005606), from which the amounts were transferred to his NRE account with Bank of Baroda, Nadiad, Gujarat (Bank Account No. 02900100015955). Further, we also see from the records is that it is from this NRE bank account, that the assessee paid an amount of Rs.25 lakhs on 15-05-2013 and Rs.26,26,625/- on 25-10-2013 for purchase of property and the relevant "Purchase Deed" has also been placed before us, for our records. Accordingly, from the facts placed on record, nothing has been brought on record to dispute that the assessee is a UK resident, filing return of income in UK, the amounts were transferred by the assessee from his UK bank account to his NRE bank account and it is from this NRE bank account that the assessee had made payments for purchase of property, through banking channels. There is no allegation that the assessee had paid any amount over and above the amounts which was paid through banking channels. Further, there is no specific finding that the assessee was earning any income from any sources within India. 7. In a recent decision, the Gujarat High Cour....
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....ring the impugned year under consideration, the assessee had received certain amount from a non-resident account of his son Mr. Binoy Raja into his NRE bank account in India as per RBI Guidelines. The son of the assessee Mr. Binoy Raja is also a non-resident and residing in UK. It was submitted that all the remittances were made through banking channels from the non-resident account of the son of the assessee's NRE account held in India, as per RBI Guidelines. The non-residential status of both the assessee and his son have not been disputed by the Department and it is not in dispute that all the transactions were made through banking channels. Accordingly, the submissions of the Ld. Counsel for the assessee was that since both the assessee and his son are non-residents, the transfers had been made into NRE bank account of the assessee held in India through another non-resident account of the assessee's son and no income arose in India and therefore, there is no question of invocation of Section 69 of the Act in the aforesaid circumstances. 8. In response, Ld. D.R. relied on the observations made by the Ld. CIT(A) in the appellate order. 9. We have heard the rival contentions a....
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....ained by him in India. The latter remittance would be outside the purview of provisions of section 5(2)(a), as what is remitted is not 'salary income' but a mere transfer of assessee's fund from one bank account to another which does not give rise to 'Income'. It is not clear as to whether the expression 'merely because' used in the Circular refers to the former type of remittance or the latter. To this extent the Circular is vague.[Para 11.1]" 10. In the case of Shri Vijaykumar Vasantbhai Patel in ITA No. 40/Ahd/2021, the ITAT Ahmedabad held that addition under Section 69 of the Income Tax Act as unexplained investment is unsustainable as the investment is out of the NRI Repatriation funds came outside India and which is not taxable in India. In this case, the assessee is an individual and Non-Resident Indian. For the Assessment Year 2009-10, the Assessing Officer came in possession of the information that the assessee had made investment of Rs. 23,06,83,200/- in Fortis Mutual Fund (later renamed as BNP Paribas Mutual Fund) and this was neither disclosed in the Return of Income filed by the assessee nor disclosed during the assessment proceedings. The....
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....ng effect order dated 04.11.2020 passed by the Assessing Officer deleting the addition made by him." 11. In this case of Iqbal Ismail Virani 128 taxmann.com 181 (Panaji - Trib.), the ITAT held that money brought in India by non-resident for investment or for other purpose is not liable to tax under provisions of Act and question of assessment to income-tax arises only when there is no evidence to show that amount in question in fact represents remittance from abroad. The ITAT made the following relevant observations in this regard: "24. There is yet another reason as to why the impugned addition cannot be sustained. Admittedly, the subject properties were acquired by the appellant by way of remittances from the appellant himself from abroad. From the material on record, it is clear that the deposits were made in Bank of Baroda, Dubai in the account belonging to appellant himself. Therefore, it can be said to be that money was received by the appellant for the first time in Dubai, and the income, if any, had accrued at Dubai only. Once it is received by the party entitled to it, in respect of any subsequent dealing with the said amount, it cannot be said to be received on that o....
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....t of the moneys and not a subsequent dealing by the assessee with the said amount. In that event they are brought by the assessee as his own moneys which he has already received and had control over and they cease to enjoy the character of income, profits or gains. In the instant case the moneys were neither received by the company nor could be deemed to have been received by it when the entries were made in the books of account at Petlad. They had merely accrued or arisen to it and so far as the receipt thereof was concerned they were first received in British India when they were received by J or by the various banks or shroffs in British India through whom the railway receipts were negotiated. The first receipt of the moneys was therefore when they were paid as such by the merchants to J or to the various banks or shroffs as above. What were paid by the merchants to these several parties were the sale proceeds of the goods which had been sold and delivered by the company to them and they were received within the meaning of section 4(1)(a) of 1922 Act by these several parties on behalf of the assessee in British India at the time when these payments were made by the merchants to ....
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....nd East African countries, instructions have been issued to the Income-tax Officers that such claims should be freely admitted up to the limit of Rs. 50,000 in each case provided the following conditions are satisfied:- (a) The assessee migrated to India on or after the dates mentioned below from the countries shown against each and had no source of income in India : (i) 30-7-1962 Mozambique (vide Min. of Finance Press Note dated 22-5- 1967). (ii) 1-11-1963 (Sic.) Zanzibar, Kenya, Tanzania and Uganda (vide Min. of Finance Press Note dated 22-5-1967). (iii) 1-1-1964 East Pakistan and Burma (vide Min. of Finance Press Note dated 25-6-1964/22-5-1965). (iv) 1-10-1965 West Pakistan (vide Min. of Finance Press Note dated 3-2- 1969). (b) He had sufficient resources in the foreign country. (c) He had no source of income either in India or in any foreign country, other than the country from which he migrated, prior to migration, and he was not assessed as 'Resident' in India, either for the assessment year preceding the year in which he migrated or for earlier years; and (d) The amount brought in has been duly introduced in the books regularly maintained in India and....
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.... appellant himself. The rational behind this legal proposition is that the word "receipt" implies two persons viz. the person who receives and the person from whom he receives; a person cannot receive a thing from himself. 27. Admittedly, the appellant herein is Non-Resident for the last 30 years for income tax purpose and citizen of USA. The scope of tax liability of Non- Resident is required to be considered in the light of sections 4 and 5 of the Income-tax Act. The relevant provisions of the Act are extracted as under :- "4. Charge of income-tax.-(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income....
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....to received in India or nor was accrued or arisen or deemed to be accrued or arisen in India, therefore, the question of chargeability to income tax in India does not arise. Therefore, the CBDT Circular cited supra also supports the case of the assessee. In the case involving identical facts, the Coordinate Bench of the Chennai Tribunal in the case of Smt. Susila Ramasamy (supra) referring to the CBDT Circular No. 5 dated 20-2-1969 (supra) held the same view. 29. Admittedly, the appellant herein is Non-Resident Indian for income tax purpose for last 30 years. As noted by us (supra), an Indian resident is liable to tax in respect of income received or deemed to be received in India and income which accrues or arises or deemed to be accrued or arisen in India. In the preceding paragraphs, we held that the impugned addition does not represent either income received or deemed to be received in India or income accrued or arisen or deemed to be accrued or arisen in India. The remittance brought to India which are subject matter of impugned additions are obviously income received at first instance outside taxable territories of India or accrued or arisen outside taxable territories of I....
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....in the hands of the appellant under more vigorous the provisions of section 68 of the Act than provisions of section 69 of the Act. In the circumstances, we are of the considered opinion that the addition made by the Assessing Officer cannot be sustained and the orders of both the Assessing Officer and the ld. CIT(A) are hereby set-aside. We direct the Assessing Officer to delete the impugned additions. 31. In the result, the appeal of the assessee stands allowed." 12. In the case of Hemant Mansukhlal Pandya 100 taxmann.com 280 (Mumbai - Trib.), ITAT held that where additions were made to income of assessee, who was a non-resident since 25 years, since, no material was brought on record to show that funds were diverted by assessee from India to source deposits found in foreign bank account, impugned additions were unjustified. 13. In the case of Madhusudan Rao 57 taxmann.com 262 (Hyderabad - Trib.), ITAT held that provisions of section 5 do not permit taxation of amounts remitted to India from sources outside India which are not incomes under provisions of Act. The ITAT in this case held that where assessee, an NRI, received a certain sum from his own account outside India th....