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2023 (3) TMI 776 - AT - Income TaxIncome taxable in India - Addition of salary income from Nepal - cash deposits in Andhra Bank of same amount - cash been deposited in high denominations of Rs. 500 and Rs. 1000 - AO invoked the provisions of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 and has treated the amount of Rs. 2.16 Crs as income of the assessee - assessee argued same income cannot be taxed once again in India in the hands of the assessee it has already been taxed in Nepal - CIT-A deleted the addition - HELD THAT - Considering the restrictions in bringing high denomination currency from Nepal has rightly concluded that these cash deposits are unexplained and has rightly added to the income of the assessee. The argument of the Ld. AR was that it was converted into low denomination currency at the boarders of India and Nepal could not be accepted in the absence of any valid evidence substantiating such conversion. CIT (A) deleted the addition stating that the assessee has already paid taxes in Nepal. The Ld. CIT(A) has failed to consider that Rs. 500/- and Rs. 1000/- (higher denomination notes) should not be brought from Nepal which is a violation under FEMA regulations. CIT(A) has erred in deleting the additions made by the Ld. AO. We are therefore of the considered view that the Ld. AO has rightly considered Rs. 2.16 Crs as income of the assessee under income from other sources and we therefore uphold the order of the Ld. AO on this Ground and set-aside the order passed by the Ld. CIT(A) on this issue.- Decided against assessee. Unexplained cheque deposits made in the bank account of the assessee - DR submitted that these cheque deposits were not explained before the Ld. AO and hence the Ld. AO has rightly treated the same as unexplained income of the assessee - AR has demonstrated before us regarding the cheque deposits made into the assessee s accounts from the joint account of the assessee along with his wife Smt. N. Sridevi - CIT-A deleted the addition - HELD THAT - We find from the submissions made by the Ld. AR that these are cheque transfers either from the assessee s own account or from the joint account of the assessee along with his wife and we considered the sources being properly explained by the Ld. AR. No infirmity in the order of the Ld. CIT(A) on this issue as the Ld. CIT(A) has rightly allowed the same and therefore we do not wish to interfere with the order of the Ld. CIT(A) on this ground. Thus, this ground raised by the Revenue is dismissed. Unexplained income - difference amount received from the students on behalf of the Medical College in Nepal and the amount transferred to the Medical College in Nepal - HELD THAT - Admittedly the assessee has collected an amount of by way of cheque and cash deposits including bank transfers during the impugned assessment year and has paid only partial amount to the Medical College, Nepal. AR also failed to submit the bank account of the assessee where the cash deposits was made by the assessee and linking the same with the account maintained for the purpose of collection from students for transferring it into Medical College, Nepal. In the absence of any valid substantiating evidence, the claim of the assessee, we are of the considered view that the Ld. AO has rightly treated the difference amount as the income of the assessee and the benefit of telescoping shall not be granted to the assessee - Decided against assessee. Complete scrutiny OR limited scrutiny - Validity of issuance of notice U/s. 143(2) of the Act for the purpose of making assessment U/s. 143(3) - HELD THAT - From the plain reading of the above section we find that any return filed u/s. 139 or in response to a notice U/s. 142(1) of the Act can be selected for a scrutiny within six months from the end of the assessment year in which the return was filed by the assessee. Therefore, the issuance of notice U/s. 143(2) dated 24/1/2016 by the Ld. AO is well within the limits prescribed and hence the valid notice. It was also admitted by the Ld. AR that the assessee has participated in the assessment proceedings who has challenged only before the Ld. CIT(A) - CIT(A) has rightly dismissed the legal ground raised by the assessee. Unaccounted interest payment - AR submitted that the assessee has taken a secured over draft (SOD) from Andhra Bank, Tirupati and has paid interest on the same for the overdraft availed during the impugned assessment year - HELD THAT - From the submissions of the AR we find that the assessee has taken a SOD facility from Andhra Bank, Tirupati for the purpose of construction of a house. SOD account is like a running current account of the assessee where the amounts credited into the SOD is adjusted against the interest in the overdraft account. We also find merit in the argument of the AR that whenever the amount exceeds the credit balance available in the account, it becomes an overdraft account for a short period until credits into the accounts are made by the assessee to regularize the overdraft facility - CIT(A) has rightly considered the interest payment and we do not find any infirmity in the order of the Ld. CIT(A) on this ground - Decided against revenue. Interest income treated as income from other sources - HELD THAT - Interest earned by the assessee from the SB Account maintained by the assessee. This interest income was not disclosed while filing the return of income by the assessee for the impugned assessment year. CIT(A) has erred in considering the interest income as set off against the interest expenditure thereby giving benefit of double deduction to the assessee. We are therefore of the considered view that the AO has rightly considered the interest income as income from other sources and therefore we are inclined to uphold the order of the Ld. AO. Disposal of additional evidences by CIT-A - providing an opportunity to the Ld. AO as per Rule 46A of the IT Rules, 1962 for the additional evidence submitted - HELD THAT - In the instant case, these bank transfers are either from the assessee s own account or from the joint account with her husband or from the assessee s husband s account. Therefore, it does not require any further enquiry by the AO and the Ld. CIT(A) has exercised his powers u/s. 250(4) of the Act and has rightly disposed off the additional evidence submitted before him. We therefore do not find any infirmity in the order of the CIT(A) on this issue also.
Issues Involved:
1. Deletion of addition of Rs. 2.16 Crs. 2. Deletion of addition of Rs. 33,60,000/-. 3. Deletion of addition of Rs. 1,49,68,154/-. 4. Validity of issuance of notice U/s. 143(2) of the Act. 5. Deletion of addition towards cash deposits in bank accounts of Rs. 1,80,00,000/-. 6. Deletion of addition towards interest expenditure of Rs. 27,23,730/- and Rs. 48,17,402/-. 7. Deletion of addition towards interest income from savings bank accounts of Rs. 11,65,279/-. 8. Deletion of addition towards unaccounted closing bank balance of Rs. 3,67,544/-. 9. Admissibility of additional evidence without providing reasonable opportunity to the Ld. AO. Summary: 1. Deletion of addition of Rs. 2.16 Crs: The Tribunal upheld the Ld. AO's decision to treat Rs. 2.16 Crs as income from other sources, rejecting the Ld. CIT(A)'s deletion. The Tribunal emphasized the violation of FEMA regulations regarding the import of high denomination currency from Nepal. 2. Deletion of addition of Rs. 33,60,000/-: The Tribunal found no infirmity in the Ld. CIT(A)'s order, which accepted the assessee's explanation that the cheque deposits were from a joint account with his wife, thus dismissing the Revenue's appeal on this ground. 3. Deletion of addition of Rs. 1,49,68,154/-: The Tribunal reversed the Ld. CIT(A)'s decision, upholding the Ld. AO's addition of Rs. 1,49,68,154/- as unexplained cash deposits, citing the absence of valid evidence linking the deposits to the account maintained for the Medical College in Nepal. 4. Validity of issuance of notice U/s. 143(2) of the Act: The Tribunal dismissed the assessee's objection regarding the validity of the notice issued U/s. 143(2), confirming that the notice was issued within the prescribed time limits and that the assessee had participated in the assessment proceedings. 5. Deletion of addition towards cash deposits in bank accounts of Rs. 1,80,00,000/-: The Tribunal upheld the Ld. AO's decision to treat Rs. 1.80 Crs as income from other sources, rejecting the Ld. CIT(A)'s deletion, based on similar reasoning as in the case of Rs. 2.16 Crs. 6. Deletion of addition towards interest expenditure of Rs. 27,23,730/- and Rs. 48,17,402/-: The Tribunal found no infirmity in the Ld. CIT(A)'s decision to allow the interest expenditure, accepting the explanation that the SOD account was a running account and the interest was adjusted against the credits. 7. Deletion of addition towards interest income from savings bank accounts of Rs. 11,65,279/-: The Tribunal upheld the Ld. AO's decision to treat the interest income as income from other sources, rejecting the Ld. CIT(A)'s set-off against interest expenditure, thereby avoiding double deduction. 8. Deletion of addition towards unaccounted closing bank balance of Rs. 3,67,544/-: The Tribunal noted that this ground was not raised before the Ld. CIT(A) and considered it infructuous, requiring no further adjudication. 9. Admissibility of additional evidence without providing reasonable opportunity to the Ld. AO: The Tribunal found that the Ld. CIT(A) exercised his powers correctly under Section 250(4) of the Act and did not require further enquiry by the Ld. AO, thus dismissing the Revenue's ground on this issue. Conclusion: The Tribunal partly allowed the Revenue's appeals and dismissed the Cross Objections filed by the assessee. The Tribunal upheld the Ld. AO's decisions on several key issues, including the treatment of unexplained cash deposits as income from other sources, while supporting the Ld. CIT(A)'s decisions on other matters such as the deletion of interest expenditure and cheque deposits.
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