2023 (4) TMI 1338 - AT - Income Tax

Addition u/s 69A - unexplained money based on credit entries in the bank account - HELD THAT - In the facts of the present appeal, undisputedly, the assessee is a non-resident, hence, is not obliged to maintain any books of account in India, as the only source of income of the assessee in India is from interest on bank accounts and interest on income tax refund. Therefore, one of the conditions of section 69A is not satisfied. Even assuming that the bank statements are to be treated as books of account of the assessee, still, section 69A would not be applicable as the transactions are duly recorded in the bank statements. Thus, in our view the provisions of section 69A would not be applicable. Therefore, the addition made invoking the provisions of section 69A of the Act is unsustainable. Also we are convinced that the source of each credit entry appearing in the respective NRO/NRE bank accounts in India stands properly explained by the assessee. When the assessee has furnished additional evidences having crucial bearing on determination of the dispute, learned Commissioner (Appeals) should have examined them properly without rejecting them on flimsy ground. Considering the close proximity of the aforesaid withdrawal and the cash deposits, in our view, assessee s explanation that the cash deposit was made out of the earlier cash withdrawal is acceptable. The addition made u/s 69A of the Act is unsustainable on merits as well. Assessee appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the challenge to the addition made under section 69A of the Income-tax Act, 1961, and the levy of interest under sections 234B and 234C of the Act.

Addition under section 69A:
The appellant, a non-resident individual, contested the addition of Rs.1,32,25,533/- under section 69A of the Act. The Assessing Officer added back the amount as unexplained money based on credit entries in the bank account. The appellant explained the source of deposits, but the Assessing Officer was not convinced. The appellant argued that as a non-resident, he was not obligated to maintain books of account in India, and the credit entries were duly recorded in the bank statement. The Tribunal observed that one of the conditions for section 69A was not satisfied as the appellant was a non-resident and the provisions of section 69A were not applicable. The Tribunal further analyzed the merits of the issue and found that the source of each credit entry in the bank accounts was properly explained by the appellant. Therefore, the addition made under section 69A was deemed unsustainable on merits, and the Tribunal deleted the addition of Rs.1,32,25,533/-.

Levy of interest under sections 234B and 234C:
The appellant also raised the issue of the levy of interest under sections 234B and 234C of the Act. The Tribunal noted that the levy of interest is consequential in nature, and there was no requirement for adjudication on this issue. Consequently, the appeal was allowed, and the addition under section 69A was deleted.