2016 (4) TMI 295 - AT - Income Tax

Status of the assessee as non-resident - period of stay - resident or non resident - Held that - The assessee furnished certain copies of documents, evidencing that during F.Y. 2002-03 to 2008-09, he was domiciled in U.K. The documents relates to school certificate of his daughter, son, electricity bills, club cards, property documents, etc. It is also noted that for A.Y. 2007-08, the contention of the assessee as well as other details, contention of the Assessing Officer were considered holding that the period of stay of the assessee in India was 173 days as against 178 days determined by the Assessing Officer, meaning thereby, the period of stay was less than 182 days, therefore, in view of the terms of section 6(1)(c) of the Act read with Explanation (b) his status was non-resident, therefore, the global income cannot be taxed in India Addition u/s 68 - unexplained cash deposits in Indian Bank Accounts - Held that - Commissioner of Income Tax (Appeals) himself examined the evidence with respect to remittance which were supported by FIRC, issued by bank in India, remittance advice of a foreign bank, confirmation of each companies, confirming that remittance were made at the instance of the assessee to whom substantial amounts were owed by them, certificate of incorporation of the said companies, confirmation that the amounts are not loans but were own funds, due from the said companies, thus, in the absence of any adverse material, we affirm the finding of the ld. Commissioner of Income Tax (Appeals). Even otherwise, addition u/s 68 can be made only when the three ingredients, contained in the section, are not satisfied by the assessee. The Revenue has not produced any material that the assessee violated the provision of the Act. Even otherwise, we are satisfied that the assessee has fulfilled the conditions enshrined in section 68 of the Act as identity, capacity and genuineness of the transaction has been satisfactorily explained by the assessee. The assessee has proved the source of receipt of the impugned amounts. We are aware that initial burden is upon the assessee to prove the source of such receipts but once it is discharged, no addition can be made u/s 68 of the Act. Even otherwise, if the Assessing Officer was still not satisfied with the explanation of the assessee, then the onus shifts to the Revenue to prove otherwise, consequently, we find no merit in the argument of the Department with respect to the impugned ground. The stand of the ld. Commissioner of Income Tax (Appeals), on this issue, is affirmed. - Decided in favour of assessee Status of resident but not ordinarily resident as defined u/s 6(6)(a) - Held that - The assessee was practically residing abroad, therefore, it can be concluded that the controlling management of the assessee during the aforesaid period remained abroad and further the factual finding recorded by the ld. First Appellate Authority was neither controverted by the Department nor any adverse material was produced before us, in support of the assertion made by the Revenue, consequently, the assessee is not an ordinary resident, thus, we affirm the stand of the ld. Commissioner of Income Tax (Appeals).

Issues Involved:
1. Residential status of the assessee.
2. Addition of Rs. 57,40,09,054/- by the Revenue.
3. Addition of Rs. 33,67,59,738/- under Section 68 of the Income Tax Act.
4. Addition of Rs. 15,44,72,906/- under Section 68 of the Income Tax Act.
5. Addition of Rs. 2,76,410/- on account of unsubstantiated liability.
6. Addition of Rs. 8,25,00,000/- under Section 69 of the Income Tax Act.

Issue-wise Analysis:

1. Residential Status of the Assessee:
The primary issue was the residential status of the assessee. The Revenue contended that the assessee should be treated as a resident, arguing that the assessee's original passport was not produced and that there was a contravention of Rule 46-A. The assessee, however, provided evidence of his non-resident status, including passport details and periods of stay. The Tribunal noted that the assessee was frequently abroad, and his non-resident status was accepted in previous years, including A.Y. 2005-06. The Tribunal upheld the assessee's non-resident status, confirming that the assessee stayed in India for less than 182 days in the relevant years, aligning with Section 6(1)(c) and Explanation (b) of the Income Tax Act.

2. Addition of Rs. 57,40,09,054/-:
The Revenue challenged the deletion of Rs. 57,40,09,054/- by the First Appellate Authority, arguing that the assessee's status as a non-resident was not properly appreciated. The Tribunal, however, upheld the deletion, noting that the assessee's non-resident status was consistent with the evidence provided, including the period of stay in India.

3. Addition of Rs. 33,67,59,738/- under Section 68:
The Revenue contended that the addition under Section 68 was justified due to unexplained cash deposits in Indian bank accounts. The assessee provided evidence of remittances from foreign bank accounts, including FIRC and confirmations from foreign entities. The Tribunal found that the assessee satisfactorily explained the source, creditworthiness, and genuineness of the transactions, and upheld the deletion of the addition.

4. Addition of Rs. 15,44,72,906/- under Section 68:
The addition of Rs. 15,44,72,906/- was made based on deposits in the assessee's HSBC Bank USA account. The Tribunal noted that the assessee was a non-resident and the income earned abroad was not taxable in India. The Tribunal upheld the deletion, emphasizing the principles of natural justice and the right to cross-examine evidence used against the assessee.

5. Addition of Rs. 2,76,410/- on Account of Unsubstantiated Liability:
The addition was made due to unsubstantiated liabilities. The assessee provided additional evidence, including ledger accounts and confirmations, which were examined by the First Appellate Authority. The Tribunal upheld the deletion, noting that the liabilities were substantiated with proper evidence.

6. Addition of Rs. 8,25,00,000/- under Section 69:
The addition was related to investments in properties abroad. The assessee provided evidence of loans and sources of investment, including loan sanction letters and details of property purchases. The Tribunal upheld the deletion, noting that the investments were made from accumulated savings abroad and were not taxable in India due to the assessee's non-resident status.

Conclusion:
The Tribunal upheld the First Appellate Authority's decisions on all issues, confirming the non-resident status of the assessee and the deletions of the additions made by the Revenue. The Tribunal emphasized the importance of proper evidence and adherence to the principles of natural justice in tax assessments.

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