2023 (12) TMI 656 - HC - Income Tax

Addition u/s 69A - respondent/assessee is a Non-Resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund - HELD THAT - Section 69A of the Act lays down that where in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money etc. is not recorded in the books of account, if any maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the said money etc., or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the said money may be deemed to be the income of the assessee for such financial year. Admittedly, in the present case, the respondent/assessee is a Non-Resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund, he is not obliged to maintain any books of account in India. It appears to us prima facie that the expression if any specifically used in Section 69A of the Act amplifies that where books of account are not maintained, it would not be possible to invoke this provision. But as mentioned above, learned counsel for appellant/revenue requested to keep this question open to be agitated in some better case. We accede to this request. The money in question can also not be treated as unexplained money insofar as the respondent/assessee gave specific explanation of a split up of the money in question as enumerated above. In the impugned order, the Tribunal meticulously examined and elaborately discussed the documentary record in support of the said explanation of money ingress in the bank account of the respondent/assessee. In the absence of a stand taken by the appellant/revenue alleging perversity, this court while acting under Section 260A of the Act cannot enter into the arena of appreciation of facts and documents. ITAT is justified in holding that Section 69A is not applicable to the present case - No substantial question of law.

Summary

Issues:
The issues involved in this judgment are:
1. Applicability of Section 69A of the Income Tax Act.
2. Deletion of addition made by the Assessing Officer.
3. Failure to provide documentary evidence related to credit entries.

Applicability of Section 69A:
The appellant/revenue challenged the decision of the Income Tax Appellate Tribunal (ITAT) regarding the applicability of Section 69A of the Act. The Tribunal held that Section 69A does not apply to the respondent/assessee, a non-resident individual whose income in India is solely from interest on bank accounts and income tax refund. The Tribunal further accepted the explanation provided by the respondent regarding the credited amounts in his bank accounts. The appellant contended that accepting the Tribunal's view would exempt Non-Resident Indians from the rigours of Section 69A, potentially allowing non-maintenance of account books. However, the Court found that the respondent, being a non-resident with income sources in India, was not required to maintain account books in India, and thus, Section 69A did not apply in this case.

Deletion of Addition:
The Assessing Officer had made additions under Section 69A of the Act, totaling Rs. 1,40,09,733, due to unexplained credit entries in the bank accounts of the respondent. The respondent appealed against this addition, and the CIT(A) partially allowed the appeal by deleting certain amounts from the addition. The ITAT, in the impugned order, completely deleted the addition made under Section 69A. The Tribunal examined the explanation provided by the respondent for the credited amounts, such as transfers from Dubai, cash deposits during demonetization, and funds received from family members. The Court noted that the respondent had provided a detailed breakdown of the credited amounts, supported by documentary evidence. As there was no allegation of perversity in the Tribunal's findings, the Court upheld the deletion of the addition.

Failure to Provide Documentary Evidence:
The appellant argued that the deletions made in the impugned order lacked evidentiary support. However, the respondent's counsel supported the order and contended that no substantial question of law arose for consideration under Section 260A of the Act. The Court observed that the Tribunal had thoroughly examined the documentary evidence provided by the respondent to explain the credited amounts, and in the absence of any challenge to the veracity of these documents, the Court could not interfere in the factual findings. The Court also referenced a previous case where the High Court declined to interfere in a similar matter due to lack of material explaining the influx of money in the bank account. Consequently, the Court held that there was no substantial question of law raised by the appellant/revenue, leading to the dismissal of the appeal.