TaxTMI 
TaxTMI 
2026 (9) TMI 691
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....enged. The assessee had originally filed his return of income on 29.12.2020 declaring total income of Rs. 3,47,470. Subsequently, information was received by the Assessing Officer from DCIT, Central Circle-8(4), Mumbai, emanating from a search action under section 132 conducted on 31.12.2021 in the case of Bhoomi Group, which included M/s Midas & Bhoomi Associates (AOP), the developer of the aforesaid project. During the search, certain loose papers/material were found recording unaccounted cash receipts against sale of various units. Insofar as the assessee is concerned, the material contained two entries relating to Flat No. C-1502, namely Rs. 21,00,000 dated 09.12.2019 and Rs. 9,00,000 dated 25.02.2020, aggregating to Rs. 30,00,000, containing the identifying particulars of the assessee including his PAN and the concerned flat. The agreement for purchase was thereafter executed on 20.03.2020 through the assessee's father acting as Power of Attorney holder. 2. Based upon the aforesaid information, notice under section 148 was issued on 26.03.2024. Though the assessee did not file a return in response thereto, he furnished replies dated 24.10.2024 and 16.01.2025 in response to ....
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....s and documents relating to professional qualifications. Thus, the explanation tendered by the assessee was not based upon any unidentified or subsequently introduced source; the source pleaded was the accumulated savings out of substantial foreign earnings of the assessee and his wife over several years immediately preceding the transaction. 4. The assessee had also furnished a year-wise working of the salary earned by him and his wife, remittances made to India and the amount remaining available towards expenditure and savings. As per the details placed on record, the assessee's salary was shown at US$78,000 per annum for financial years 2015-16 to 2018-19 and US$60,000 for financial year 2019-20. His wife's salary, wherever considered in the working, was US$42,000 in financial years 2017-18 and 2018-19 and US$48,000 in financial year 2019-20. Thus, the combined salary was shown at US$1,20,000 for each of financial years 2017-18 and 2018-19 and US$1,08,000 for financial year 2019-20. Against these earnings, the assessee had separately identified remittances to India of US$29,300 in financial year 2016-17, US$58,981 in financial year 2017-18, US$47,499 in financial year 2018-19....
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....ee, when the underlying foreign earnings were accepted as the source of the recorded payments, the availability of cash savings out of the same stream of earnings could not be rejected altogether merely because such savings had been brought and retained in cash. 6. The DRP rejected the aforesaid explanation principally on the ground that, though the salary material might establish foreign earnings, it did not establish the actual movement of those earnings into India and their utilisation towards the impugned payment. It emphasised that no customs declaration, foreign bank withdrawal record, encashment slip or other contemporaneous evidence showing transportation and conversion of foreign currency was furnished. It further observed that no confirmation or affidavit had been furnished from the relatives with whom the cash was allegedly kept and considered the claim that amounts brought during different visits remained accumulated for several years to be improbable. On this premise, it concluded that mere capacity to earn abroad could not establish the source of Rs. 30,00,000 paid to the builder and, accordingly, upheld the invocation of section 69A. The DRP also made certain obse....
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....assessee is found to be the owner of money not recorded in the books, if any, maintained for a source of income, and either offers no explanation regarding its nature and source or the explanation offered is found unsatisfactory; it is only then that the amount may be deemed to be income. Thus, the statutory enquiry is directed towards the acceptability of the explanation regarding the nature and source and not towards requiring an assessee, irrespective of the facts of a case, to establish an impossible mathematical identity between each unit of accumulated savings and its eventual utilisation. (Etds) Here the explanation has to be examined objectively against the assessee's known financial circumstances and the material contemporaneously available. 9. When examined from this perspective, there are certain facts which assume considerable significance. The assessee was residing and working outside India for several years immediately preceding the transaction. He is a qualified medical professional and had an identifiable employment in Congo. His salary particulars indicate earnings ranging from US$60,000 to US$78,000 per annum. His wife, also a medical professional, was ....
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....tion; but it is undoubtedly an important surrounding circumstance when the assessee has simultaneously established a known foreign source of sufficient magnitude. Thus, there is nothing on record to suggest that the impugned Rs. 30,00,000 necessarily represented some independent undisclosed income generated by the assessee in India, whereas there is positive material demonstrating substantial earnings abroad from which such availability could reasonably emanate. 11. We also find that undue emphasis has been placed upon absence of customs declarations. The assessee's consistent explanation is that he and his wife carried foreign currency during their respective visits in amounts which did not require declaration. If the amount carried on an individual occasion was below the prescribed threshold requiring declaration, non-existence of a customs declaration cannot logically be treated as affirmative evidence that no currency was brought at all. No doubt, an encashment slip or other contemporaneous record would have furnished a more direct evidentiary trail; and equally, the assessee has not been able to establish with mathematical precision the amount brought on each particular vis....
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....lars furnished by him show substantial foreign earnings and also substantial remittances made to India, leaving sufficient amounts available towards expenditure and savings. The Department has not disputed the employment of the assessee abroad or the salary particulars forming the basis of his explanation. Thus, there existed an identifiable and demonstrated source of foreign earnings from which the impugned cash could reasonably have emanated. 13. There is yet another significant aspect which, in our opinion, has not received its due consideration from the authorities below. The assessee was residing and earning outside India during the relevant period. Nothing has been brought on record by the Assessing Officer to show that the assessee was carrying on any business, profession or other income-generating activity in India from which undisclosed cash of Rs. 30,00,000 could have been generated. There is no identification of any undisclosed receipt, unexplained transaction or independent source of unaccounted income in India. On the contrary, the known financial profile emerging from the material is that of a medical professional employed abroad and earning substantial foreign inc....
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....s quite a different matter from determining whether there existed a credible source from which such cash could have been available. The two enquiries cannot be conflated. A deficiency in establishing the precise movement of every part of the cash may have evidentiary relevance, but it cannot, by itself, obliterate an otherwise demonstrated economic source. The details furnished by the assessee show that he and his wife had been visiting India during the relevant years and the explanation regarding periodic carriage of savings has to be appreciated in conjunction with their substantial foreign earnings and not in isolation. 15. In this regard, another circumstance assumes significance. The assessee had also made remittances from Congo to his bank account in India, and those remittances have been accepted as the source of the payments made through banking channels towards purchase of the very same flat. This circumstance does not, by itself, establish that the cash component of Rs. 30,00,000 necessarily came out of those foreign earnings; however, it provides an important corroborative link in appreciating the overall explanation. It establishes that the foreign earnings were real....
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....d by a demonstrated source must necessarily fail because every intermediate stage in the physical custody of accumulated cash cannot be reconstructed after passage of several years. The test cannot be one of mathematical identity between each unit of foreign currency earned, each amount carried on a particular visit, its exact date of conversion and the very currency ultimately handed over to the developer. Such an approach would substitute proof of an uninterrupted cash trail for the statutory enquiry concerning satisfactory explanation of its nature and source. 17. Thus, when the entire material is appreciated cumulatively, certain facts stand out clearly. The assessee was working abroad for several years immediately preceding the transaction; he had substantial and identifiable salary income in Congo; his wife was also earning there; the assessee's case is that salary was received in cash; substantial remittances from the same foreign earnings were admittedly made to India; the assessee and his wife visited India during the intervening period; and there is no material whatsoever indicating any corresponding generation of undisclosed income by the assessee in India. Against th....
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....improbable merely because cash savings were stated to have been accumulated and retained over a period of time. Human conduct in financial matters cannot be reduced to a uniform pattern, particularly when the person concerned was residing and earning in a foreign jurisdiction and, according to the unrebutted explanation regarding the mode of remuneration, was receiving his salary in cash. More importantly, there is no positive material brought by the Revenue to demonstrate an alternative source from which the assessee could have generated the impugned cash in India. The seized material found from the builder proves the application of Rs. 30,00,000 towards purchase of the flat, which the assessee himself accepts; but the seized material does not establish an independent or undisclosed source from which the assessee generated that amount. Once the application stands admitted, the enquiry under section 69A has to concentrate upon the explanation of source. On that aspect, the assessee has placed before the authorities a definite, identifiable and financially sufficient source in the form of foreign earnings accumulated over the preceding years. The Revenue has doubted the manner of ac....