ACIT Vs Paul Dhinakaran (ITAT Chennai)
The case concerns four appeals filed by the Revenue and four cross-objections filed by the assessee for Assessment Years (AYs) 2015-16 to 2018-19, arising from the orders of the Commissioner of Income Tax (Appeals), Chennai. The core issue was the determination of the residential status of the assessee under section 6(1) of the Income-tax Act, 1961, and the consequent taxability of foreign income. Due to identical facts and common issues, the ITAT dealt with the appeals collectively, taking AY 2015-16 as the lead case.
The assessee filed returns for all four assessment years as a Non-Resident. Following a search under section 132 of the Act on 20.01.2021, notices under section 153A were issued for filing returns. While the assessee declared the same income as originally returned, the Assessing Officer (A.O) treated him as a Resident, thereby taxing his global income. For AY 2015-16, the returned income was Rs. 75,69,540, which increased to Rs. 4,12,06,783 after including foreign bank deposits, foreign credit card expenses, and personal gifts. Similar additions were made in the subsequent years.
On appeal, the CIT(A) deleted the additions for foreign deposits and credit card expenses, holding that the assessee was a Non-Resident under Explanation 1(a) to section 6(1)(c), which applies to Indian citizens leaving India for employment abroad. The CIT(A) sustained minor additions for personal gifts of Rs. 3,13,507 in AY 2016-17 and Rs. 90,012 in AY 2018-19. The Revenue challenged the CIT(A)’s finding on the assessee’s residential status.
