Case Law Details
Shri Duraisamy Shanmugasundaram Vs ITO (ITAT Chennai)
As per assessee’s submissions, the money deposited in NRE account was withdrawn by assessee’s parents in India. The same has been sourced to deposit the same in another NRO account from time to time. However, rejecting assessee’s explanation, Ld. AO held that the cash was not re-deposited within a reasonable time frame. Accordingly, Ld. AO worked out peak credit of Rs.15.08 Lacs and added the same to the income of the assessee.
During appellate proceedings, it was submitted that the assessee do not have any taxable income in India and the withdrawals were the only source of cash deposit. However, Ld. CIT(A) merely endorsed the view of Ld. AO against which the assessee is in further appeal before ITAT.
ITAT find that the assessee is a NRI and living in USA for past more than 20 years. The income of the assessee is not subjected to tax in India and accordingly, he has not filed any return of income. This fact has not been appreciated by Ld. AO since Ld. AO has treated the assessee as resident only. The assessee is maintaining NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, has no source of income in India. Therefore, the reasoning of Ld. AO that the deposits are not within reasonable time frame could not be accepted. In fact, Ld. AO has admitted correlation between these two accounts and added only peak credit to assessee’s income. On this fact alone, the impugned addition is not sustainable and presumption would arise in assessee’s favor that the only source which could be used to make deposits would be assessee’s NRE account only and nothing else. Therefore, delete the impugned addition.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 25-04-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s 147 of the Act on 27-12-2019. The sole subject matter of appeal is addition of cash deposits for Rs.15.08 Lacs.
2. The Registry has noted delay of 799 days in the appeal which arise due to the fact that date of impugned order has wrongly been mentioned as 27-12-2019 as against the fact that the impugned order has been passed on 25-04-2022. Considering the date of impugned order, there is no delay and accordingly, I proceed with adjudication of the appeal on merits.
3. The Ld. AR, at the outset, submitted that the assessee is a nonresident and this fact has not been correctly noted by Ld. AO. The Ld. AR further submitted that the assessee made deposits in its NRE account from foreign sources. The cash was withdrawn from this account which was sourced to make deposit in NRO account maintained by the assessee in India. The Ld. AR submitted that complete details of cash deposits and withdrawals were made available from the year 2007-08 onwards which has not been looked into by any of the lower authorities. The Ld. Sr. DR supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, my adjudication would be as under.
4. From case records, it emerges that the assessee is non-resident. As per assessee’s submissions, the money deposited in NRE account was withdrawn by assessee’s parents in India. The same has been sourced to deposit the same in another NRO account from time to time. However, rejecting assessee’s explanation, Ld. AO held that the cash was not re-deposited within a reasonable time frame. Accordingly, Ld. AO worked out peak credit of Rs.15.08 Lacs and added the same to the income of the assessee.
5. During appellate proceedings, it was submitted that the assessee do not have any taxable income in India and the withdrawals were the only source of cash deposit. However, Ld. CIT(A) merely endorsed the view of Ld. AO against which the assessee is in further appeal before me.
6. I find that the assessee is a NRI and living in USA for past more than 20 years. The income of the assessee is not subjected to tax in India and accordingly, he has not filed any return of income. This fact has not been appreciated by Ld. AO since Ld. AO has treated the assessee as resident only. The assessee is maintaining NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, has no source of income in India. Therefore, the reasoning of Ld. AO that the deposits are not within reasonable time frame could not be accepted. In fact, Ld. AO has admitted correlation between these two accounts and added only peak credit to assessee’s income. On this fact alone, the impugned addition is not sustainable and presumption would arise in assessee’s favor that the only source which could be used to make deposits would be assessee’s NRE account only and nothing else. Therefore, I delete the impugned addition.
7. The appeal stand allowed.
Order pronounced on 21st February, 2023.
