2022 (8) TMI 284 - AT - Income Tax

Unexplained money u/s 69A - assessee made deposit in Bank account which was stated to be funded out of lease rent advance and withdrawals from bank account / remittances from abroad - HELD THAT - Upon careful consideration, we find that the assessee is employed in Dubai and occasionally visit India to meet elderly parents. The assessee does not have any source of income in India. Therefore, the explanation that some cash was saved by the parents and it was deposited in the bank account could be considered as valid explanation of the source. This amount could not be considered as unexplained income of the assessee considering the fact that he is a non-resident. Therefore, by deleting the addition we allow the appeal of assessee.

Summary

Issues:
Confirmation of addition of Rs.2 Lacs under section 69A for Assessment Year 2017-18.

Analysis:
The appeal before the Appellate Tribunal ITAT Chennai pertained to the confirmation of an addition of Rs.2 Lacs under section 69A for the Assessment Year 2017-18. The assessee, a non-resident Indian employed in Dubai, was assessed under section 144 and faced the addition of Rs.6 Lacs, which was later reduced to Rs.2 Lacs by the Commissioner of Income Tax (Appeals) [CIT(A)]. The key contention was whether the remaining Rs.2 Lacs addition was justified, considering the source of funds for the deposits made by the assessee in the bank account.

During the proceedings, the assessee explained that the deposits were funded from earlier withdrawals, transfers from Western Union, and cash brought to India during visits. The CIT(A) acknowledged this explanation and allowed a deduction of Rs.4 Lacs, confirming the addition of Rs.2 Lacs. However, the Tribunal, upon careful consideration, found the explanation provided by the assessee regarding the source of funds to be valid. The Tribunal noted that the assessee, being a non-resident with no income source in India, could have saved cash from family and deposited it in the bank account. Therefore, the Tribunal concluded that the addition of Rs.2 Lacs could not be treated as unexplained income and allowed the appeal by deleting the said addition.

In conclusion, the Appellate Tribunal ITAT Chennai, comprising Hon'ble Shri Mahavir Singh, Vice President, and Hon'ble Shri Manoj Kumar Aggarwal, Accountant Member, allowed the appeal by deleting the addition of Rs.2 Lacs for the Assessment Year 2017-18, considering the valid explanation provided by the assessee regarding the source of funds for the deposits made in the bank account. The order was pronounced on 7th July 2022.