TaxTMI 
TaxTMI 
2025 (2) TMI 1418
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....ding the Trading License, MOA, and bank statements of Real Electronics Trading LLC, to support the legitimate source of funds from Dubai. 1.3 The DRP acknowledged that part of the investments did not pertain to the AY under consideration but failed to adequately examine and consider the evidence regarding the remittance of Rs. 1,00,00,000/- 2. Penalty Proceedings: As the assessment order is under dispute, the initiation of penalty proceedings under section 271(1)(c) is premature and unjust. 3. Solitary issue, as is evident from the grounds raised before us, pertains to the addition made to the income of the assessee of Rs. 1,00,00,000/- on account of investment in fixed deposits made by the assessee, source of which remained unexplained in terms of provisions of section 69 of the Act. 4. Orders of the authorities below record the fact that the assessee is a non-resident. No return of income was filed for the impugned year, and noting from the information available in the INSIGHT portal of the department that the assessee had made investments of approx. Rs. 2 crores in an immovable property purchased in Ahmedabad, the case of the assessee was reopene....
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....s. The DRP accordingly confirmed the addition to the income of the assessee on account of investment in FDs source of which remained unexplained to the tune of Rs. 99,99,999/- and directed to make addition of the same to the income of the assessee, which accordingly was made by the AO in the final order passed under section 147 read with section 144C(13) of the Act. 5. Thus, aggrieved by this addition of approx. rupees one crore under section 69 of the Act the assessee has come up in appeal before us. 6. The contention of the ld.counsel for the assessee was that the finding of the AO in his remand report, which was accepted by the DRP also, to the effect that the assessee had failed to substantiate the source of investment in FDs of Rs. 1 crore was grossly incorrect. In this regard, he drew our attention to the remand report of the AO at page no.17 of the order para 3.2 as under: 3.2 Comments on merits Before the Id. DRP, the assessee has submitted that, out of all the active Time Deposits (FDs), only on 1 FD (A/c. No. 200845210000205) pertains to the year under consideration; wherein, he has invested Rs. 99,99,999/- on 15.10.2014. The assessee submitted cop....
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....RP at para 14 of the order as under: 13.5. Applicability of Section 69 to the Facts of this Case: The unexplained investments are deemed income for the financial year in which the investments are made. However, in regards to the sum of Rs. 99,99,999/- which has been invested in FD A/c. No. 200845210000205 through the transfer of Rs. 1,00,00,000/- from the Bank of India NRE A/c. No. 200813110000136, the explanation of the applicant is not acceptable to the Ld. A.O. or this Panel. Upon examination of the NRE A/c it is observed that the remittance/repatriation of Rs. 1,00,00,000/- which has taken place on 09,10.2014 is not backed by supporting evidence. The assessee has not provided any details pertaining to these sums, including information about the accounted nature or otherwise of foreign bank from which the funds were remitted, and the copy of remittance advice/request. Therefore, the veracity of such claim is not acceptable. Notwithstanding anything as discussed above, in the landmark case of CIT v. P. Mohanakala [2007] 291 ITR 278 (SC), the Apex Court has laid down a novel approach to the issue of unexplained deposits. The Hon'ble SCI has observed ....
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.... investments in the proper and relevant A.Y. of investment. However, in respect of, the instant A.Y., the Ld. A.O. is directed to withdraw the relevant addition. The applicant assessee gets complete relief during instant A.Y. in respect of Rs. 1,56,99,999/-. 8. Referring to the same, the ld.counsel for the assessee pointed out that the DRP takes note of the fact that the amount of Rs. 1 crore is reflected in the NRE account of the assessee on 9.10.2014, but it is not backed by the supporting evidences of remittance or repatriation; that the assessee has not furnished any details about the accounting entry or otherwise of the foreign bank from where the funds were remitted, and he pointed out that the DRP noted that mere furnishing of trading licence and MOU done with the UAE Citizen's Bank, is not adequate to explain or establish that the same were emanated from the accounted sources/accounted business. 9. In sum and substance, therefore, the ld.counsel for the assessee contended that objection of the Revenue to accepting the assessee's explanation of funds having been sourced from his business carried out in the UAE was that though the money has been received in the NRE acco....
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....se of the assessee had been reopened for inquiring into the source of investment of rupees two crores in immovable property, which the assessee had explained - as one crore sourced out of money remitted from outside India from his business carried out in UAE, and rupees one crore sourced from loan taken in India; that the assessee substantiated his explanation of rupees one crore sourced from his business outside India, furnishing identical evidences as had been filed to the AO for explaining source of investment in FD's and the same was accepted. He therefore contended that there is no reason for the authority below to reject the identical explanation and evidences furnished with regard to the source of investment in FDs to the tune of Rs. 1 crores. 12. The ld.DR however relied on the orders of the authorities below. 13. We have heard contentions of the both the parties. The issue before us relates to the source of investment in FDs to the tune of one crores remaining unexplained. The fact that the assessee is non-resident and investment sourced from the amounts received in his NRE account in India, is not disputed. The assessee has explained the source of investment as s....