2021 (12) TMI 595 - AT - Income Tax

Reopening of assessment u/s 147 - Addition u/s 68 - assessee not explaining the source of the credits appearing in his bank account of HSBC Switzerland - status of assessee being non-resident Indian - limited application in the case of a non-resident - receipts taxable in India - whether the provisions u/s 68 and 69 of the Act do not distinguish between the residential status of an assessee? - CIT-A deleted additions by holding that once the assessee took his stand that he a non-resident, he can have foreign asset and foreign accounts which is not required declared before the Income Tax Authority - whether it can be said that the credits appearing the HSBC bank accounts in question lead to the situation where the amount is includible in the income of the assessee, a non resident Indian, within the provisions of section 5(2) of the Act? - HELD THAT - A bare reading of provisions of section 5(2) of the Act makes it clear that that in case of a non-resident assessee, the total income that is liable to be taxed shall comprise of income, which is received or deemed to be received by or on behalf of such person or the same accrues or arises or is deemed to accrue or arise in India to such person. No such evidence to prove the fact that the remittance made by the assessee in his NRE Account or the credit allegedly appearing in HSBC has any source from income in India or routed from any business connection in India. We find that the CIT(A) clearly held that there is no material or evidence to say that the assessee was having any business connection in India so as to justify an inference that any income thereof was received or deemed to have been received or accrued or deemed to have accrued in India. Further on perusal of the Grounds of appeal raised by the revenue before us, we find that none of the findings recorded by the CIT(A) have been assailed on the basis of any material or evidence rather based on assumption. Therefore, we do not find any merit in the grounds of appeal raised by the revenue. Hence, we do not find any infirmity, illegality or perversity in the order passed by ld CIT(A), which we affirm. No merit in all the grounds of appeal raised by the revenue, resultantly all the grounds of appeal raised by the revenue are dismissed.

Issues Involved:
1. Maintainability of the Revenue's appeal based on the monetary limit.
2. Validity of reopening the assessment under Section 147.
3. Addition of ?57,37,619/- as unexplained remittance.
4. Addition of ?2,50,30,653/- as undisclosed income under Section 69A.
5. Onus of proving the source of foreign bank account credits.

Detailed Analysis:

1. Maintainability of Revenue's Appeal:
The Revenue's appeal for A.Y. 2007-08 was dismissed as the tax effect involved was less than ?50 lakhs, which is below the monetary limit set by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal. Consequently, the Cross Objections by the assessee were also dismissed as not pressed.

2. Validity of Reopening the Assessment under Section 147:
The assessee, a Non-Resident Indian (NRI), filed a return for A.Y. 2006-07 declaring an income of ?60,243/-. The case was reopened under Section 147 based on information that the assessee had a foreign bank account with HSBC, Geneva, with a peak balance of $562,739.52. The assessee contended that as a non-resident, he was not obliged to provide details of foreign income or bank accounts to Indian tax authorities. The Assessing Officer (AO) argued that the foreign account indicated potential income arising in India. The CIT(A) upheld the reopening of the assessment but deleted the additions on merit.

3. Addition of ?57,37,619/- as Unexplained Remittance:
The AO added ?57,37,619/- to the assessee's income, questioning the remittance's source. The CIT(A) deleted this addition, noting that the assessee was a non-resident and the remittance came through proper banking channels. The CIT(A) referred to CBDT Circular No. 5 of 1969, which states that no questions should be asked about the origin of money brought in through banking channels. The CIT(A) held that the assessee discharged his onus by showing that the remittance was from income earned outside India.

4. Addition of ?2,50,30,653/- as Undisclosed Income under Section 69A:
The AO added ?2,50,30,653/- as undisclosed income under Section 69A, based on the peak balance in the HSBC account. The CIT(A) deleted this addition, stating that there was no evidence that the amount was sourced from income accrued or arising in India. The CIT(A) emphasized that the assessee, being a non-resident, was not required to declare foreign assets or income to Indian tax authorities. The AO failed to provide any tangible evidence linking the foreign account balance to income generated in India.

5. Onus of Proving the Source of Foreign Bank Account Credits:
The Tribunal upheld the CIT(A)'s decision, stating that the onus was on the Revenue to prove that the foreign bank account credits were sourced from income accrued or arising in India. The Tribunal referred to the Supreme Court's decision in Parimisetti Seetharamamma vs. CIT, which held that the burden lies on the department to prove that a particular asset is within the taxing provisions. The Tribunal found no evidence to support the AO's claim that the foreign account balance represented income from India.

Conclusion:
The Tribunal dismissed the Revenue's appeal for A.Y. 2006-07, affirming the CIT(A)'s deletion of the additions. The Tribunal held that the Revenue failed to provide evidence linking the foreign bank account credits to income accrued or arising in India. Consequently, the Cross Objections by the assessee were also dismissed as infructuous.

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