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2022 (7) TMI 886 - AT - Income TaxAddition u/s 68 - unexplained deposits in Dubai bank account - specific information that the assessee entered into shares transactions and the bank account revealed that during the period from 01.04.2008 to 08.12.2008 there are huge debits and huge credits in the bank account were immediately Transferred to M/s. Ventura Securities - HELD THAT - As assessee has business in Dubai. It is undisputed that the assessee is NRI. The impugned sums have been transferred from his Dubai account to account in India. In these circumstances the assessee has duly discharged its onus. This has been duly accepted by the Assessing Officer in the remand report. AO has observed that the source of assessee s fund in Dubai was not examined by him being out of courty s transaction. We note that the assessee has discharged its onus and addition under section 68 of the Act is not at all sustainable in as much as identity, creditworthiness and genuineness of the transaction has been duly explained. CIT(A) has observed that taxability of sum in Dubai Bank account is beyond the jurisdiction of Indian tax authorities as the assessee is an NRI. Once it is clear and accepted by the Assessing Officer also that sums were sent to India from assessee s (an NRI) foreign bank account in Dubai the provisions of DTAA are attracted. Hence, the reasoning of the learned CIT(A) that sum in Dubai bank account are subject matter of taxation in Dubai and not in India is correct. Accordingly, we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same. - Decided against revenue.
Issues:
1. Acceptance of additional evidence by CIT(A) violating Rule 46A(1) 2. Addition under section 68 of the Income Tax Act, 1961 3. Source of investment amounting to Rs. 25.37 Crs. in M/s. Rajesh Exports Ltd. 4. Jurisdiction and taxability of income from foreign bank account in Dubai under DTAA Analysis: 1. The appeal by the Revenue challenged the CIT(A)'s decision to accept additional evidence despite objections. The CIT(A) justified the delay due to the assessee's non-resident status and issues with notice service. The Assessing Officer reviewed the additional evidence and found it relevant. The tribunal deemed the Revenue's objection baseless, upholding the CIT(A)'s decision. 2. The case involved an addition under section 68 of the Income Tax Act, 1961, related to unexplained investments. The Assessing Officer suspected income escapement due to large debits to M/s. Ventura Securities. The CIT(A) found the addition unsustainable as the funds were sourced from the UAE, supported by the assessee's business and financial details. The tribunal agreed that the onus was discharged, rendering the addition baseless. 3. The issue of the source of investment of Rs. 25.37 Crs. in M/s. Rajesh Exports Ltd. was raised. The Assessing Officer made the addition as unexplained investments, leading to penalty proceedings. The CIT(A) examined the remand report and the assessee's submissions, concluding that the funds originated from the UAE, beyond Indian tax jurisdiction. The tribunal upheld the CIT(A)'s decision to delete the addition. 4. The jurisdiction and taxability of income from the foreign bank account in Dubai under the Double Taxation Avoidance Agreement (DTAA) were crucial. The tribunal noted the assessee's NRI status and foreign income source, making it taxable in the UAE per the DTAA. The CIT(A)'s decision to dismiss the Revenue's appeal was upheld, emphasizing the correct application of DTAA provisions. In conclusion, the tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on accepting additional evidence, deleting the addition under section 68, and upholding tax jurisdiction under the DTAA for foreign income.
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