2018 (12) TMI 272 - AT - Income Tax

Addition u/s 69 - unexplained investment in the bank account - Held that - We have noted that Barclays Bank, vide letter dated 8th April 2014, has confirmed that a remittance of GBP 90,000 was sent by wire transfer to your NRE account no. 0341010007438 with Bank of Baroda, SP Colony Branch, Ahmedabad, which was routed through Bank of Baroda Mumbai branch on 5th April 2007 , and that we further wish to confirm that the remittance represented a distribution made to you as a beneficiary of the Kanisa Family Trust settled by your father late Dr Chaturbhai Ashabhai Patel on 18th October 1974 . A copy of this letter was placed before us and the Assessing Officer has duly been confronted with this letter. Here is thus a case in which there is a credit in the bank account of the assessee, which is on account of a remittance from a foreign bank, on account of disbursements from a family trust, and there is no dispute about these factual aspect. The investment is thus reasonably explained and the application of Section 69 is out of question. We, therefore, approve the conclusions arrived at by the CIT(A) for this short reason alone. - decided against revenue

Summary

Issues:
Challenge to correctness of Commissioner (Appeals)'s order under section 143(3) for assessment year 2008-09 regarding deletion of addition under section 69 of Income Tax Act.

Analysis:
The appellant, an Assessing Officer, challenged the order of the Commissioner (Appeals) regarding the deletion of an addition made under section 69 of the Income Tax Act. The issue revolved around an unexplained investment in a bank account amounting to ?75,59,668. The appellant contended that the CIT(A) erred in law by deleting the said addition.

The appellant argued that the credit entry in the bank account was unexplained and treated it as deemed income of the assessee under section 69 of the Act. Despite opportunities given, the assessee failed to provide a satisfactory explanation for the source of the funds deposited. The appellant initiated penalty proceedings for concealment of income. The CIT(A), after considering additional evidence provided by the assessee, deleted the addition. The CIT(A) noted that the appellant, a non-resident Indian residing in Kenya, was a beneficiary of the Kanisa Family Trust, established by her father in the UK. The Trust was managed by the father before settling in India, and the remittance received was from the trust, not the appellant's personal account.

The CIT(A) relied on precedents and the CBDT Circular to support the decision, emphasizing that remittances from non-residents for investment purposes are not taxable unless proven otherwise. The Tribunal found that the remittance from the family trust was reasonably explained, and the application of section 69 was unwarranted. However, it cautioned that the taxability of such disbursements remains open for future cases. The Tribunal dismissed the appeal, affirming the CIT(A)'s decision based on the factual explanation provided for the credit entry in the bank account.