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TMI Blog2021 (12) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... effect involved in ITA No.677/SRT/2018 is less than the monetary limit of Rs. 50 lakhs as determined by Central Board of Direct Taxes (CBDT) for filing the appeal by the Revenue before the Tribunal, thus, the appeal filed by revenue is not maintainable and may be dismissed. After hearing, the submission of the ld.AR of the assessee and going through the grounds of appeal and the order of ld. CIT(A), the ld Sr DR for the revenue is agreed that the tax effect in the appeal is less than the monetary limit, however, the revenue may be given liberty to move appropriate application if on later stage it is discovered that the appeal is covered by any exception clause of Circulars of CBDT, or the tax effect is much more than the monetary limit of Rs. 50 lakhs. The ld AR for the assessee submitted that since appeal of the revenue in ITA No. 677/SRT/2018 is not maintainable as tax effect is less than the monetary limit fixed by CBDT for filing appeal by the Revenue before the Tribunal, therefore he is not pressing the grounds of appeal raised in his Cross Objections. Considering the submission of both the learned representative of the parties, the appeal for the A.Y. 2007-08 by Revenue as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.A., Geneva, Switzerland with code BUP 5090149787 and PerNo. 149787. The said account is stated to have been opened on 17.02.2000. The peak balance in this bank account in March-2006 was $562,739.52. The rate of exchange as on 31.03.2006 was Rs. 44.48 per dollar. Considering this, the total amount comes to Rs. 2,50,30,653/-. As such, the nature of above deposits are not clear from the return itself submitted by the assessee. The above deposits require deep investigation. In view of this, I have reason to believe and am satisfied that the income chargeable to tax of Rs. 2,50,30,653/- has escaped assessment within the provisions of section 147 of the Act." 4. After recording reasons, the AO issued notice under section 148 of the Act dated 11.11.2014. The AO recorded that in response to the notice under section 148 the assessee filed his reply/ letter dated 22.12.2014 and stated that return of income filed on 23.03.2007 may be treated as return in response to the said notice and filed copy of return, along with return of income, the assessee enclosed various documents and evidence of his being Non-Resident during the period and furnished the copy of passport. The AO after serving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was added to the Income Tax Return for the first time in Financial Year 2011-12, which requires reporting of foreign asset in the Income Tax Return. As per the provision of the Act, existence of foreign account is not relevant for Indian Income Tax Return. As such, the existence of bank account in HSBC, Geneva is not relevant in case of Non-Resident. On the basis of such information, the reassessment under section 147 of the Act cannot be initiated being beyond the jurisdiction of AO. The AO recorded that objection of assessee was rejected by speaking order. The AO after rejecting the objection proceeded for assessment. The AO recorded that on verification of Capital account of assessee it was noted that he assessee has credited a sum of Rs. 57,37,619/- by way of remittance, which is credited to his NRE account. The A.O. issued show cause notice to the assessee to explain the as to why the amount of remittance and peak credit in HSBC of Rs. 2,50,30,653/- should not be added to the income of the assessee. The assessee filed its detail reply on 18.03.2015, the contents of the reply filed by the assessee is recorded by A.O. in para-9 of assessment order. The assessee in his reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was remitted to NRI account. Mere through banking channel would not mean that funds from NRI to NRO account. The remittance made by assessee. The relevant documents are in possession of assessee. The onus on the assessee to demonstrate that source of credit was explainable. 6. Aggrieved by the addition as well as reopening under section 147 the assessee filed appeal before the CIT(A). Before CIT(A) the assessee filed detailed written submission, challenging the validity of reopening as well as addition of Rs. 57,37,619/- and addition of Rs. 2.50 crores under section 69A of the Act. The detailed written submission are duly recorded by Ld. CIT(A) in para-3 and 4 (pages 32 to 38) against the addition. On validity of reopening the submission of assessee are recorded in para-5 and 6 (pages 39 to 46) of order of ld. CIT(A). The Ld. CIT(A) after considering the submission of assessee upheld the re-opening by referring the decision of Hon'ble jurisdictional High Court in Ankit Financial Co. Ltd. vs. DCIT (2017) 78 taxman.com 58 and in Pushpak Buildcoin Pvt Ltd. Vs DCIT 85 taxman.com. However, the Ld. CIT(A) deleted both the additions on merit. While deleting the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India or through any property, or from any asset or source of income or through transfer of capital asset situated in India, is taxable in India. There is no evidence available before the Assessing Officer on the basis of which he could have deduced that the assessee was allegedly maintaining bank account with HSBC Geneva, Switzerland that peak balance appearing in the said account was transferred by the assessee from India to abroad and therefore the peak balance in the said amount represent his income escaping assessment. The only information available with the Assessing Officer was the Base Note. In absence of any tangible material there is no material before the Assessing Officer who believe that a sum of Rs. 2.50 course appearing as peak balance in the said account represent assessee's income for A.Y. 2006-07 which escaped assessment as per section 5 of the Act. The Ld. CIT(A) also held that once the assessee made his submission that he a non-resident, he can have foreign asset and foreign accounts which is not required declared before the Income Tax Authority. The assessee is cannot be asked to prove negative. The A.O. has not brought any evidence on record to go through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the assessee of not explaining the source of the credits appearing in his bank account on the ground of assessee being non-resident even though the assessee could prove that he was a non-resident only in the A.Y 2005-06 onwards and therefore deposit of huge sums in such a short span required deeper investigation by the CIT(A) and proper explanation by the assessee. e. That the order of the Ld. CIT(A)-13, Ahmedabad suffers from perversity since the Ld. CIT(A) failed to apply the provisions of Section 6(1)(c) of the Act to the facts of the assessee's case upto AY 2004-05 as the assessee would become resident in India if his stay in India is more than 365 days in the previous four years and more than 60 days in the A.Y 2004-05. f. That the order of the Ld. CIT(A)-13, Ahmedabad suffers from perversity since the Ld. CIT(A) failed to collate / collect the details of number of days presence of the assessee in India to determine his residential status before F.Y 2001-02 which were very vital for deciding the residency of the assessee. Therefore, the order passed by the Ld. CIT(A) is perverse to this extent. g. That the Ld.cita-13, Ahmedabad has erred in facts and in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe as to how income chargeable to tax has escaped assessment. The reasons for doing so are wrong, contrary to facts and position in law. 2. The CIT(A)/AO failed to appreciate that reopening merely for verification purpose and being based upon information received from the investigation wing in the form of a data sheets which were loose, unverified and unauthenticated without any independent application of mind is invalid and the same may be quashed as bad in law. 3. On the facts and circumstances of the case and position in law, the AO failed to appreciate that the notice under section 148 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] seeking to reopen the case of the appellant under section 147 of the Act, who is a non-resident, beyond a period of four years from end of the relevant assessment year without a valid sanction as mandated under section 151 of the Act is bad in law and consequentially the reassessment order is liable to be quashed. 8. We have heard the submission of learned Commissioner of income tax - departmental representative (CIT-DR) for the revenue and the learned authorised representative (AR) for assessee and have gone thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. The assessee furnish the details of bank account /and NRO account with Andhra Bank Opera House Navsari and NRE bank account with Bank of India Navsari branch. The assessee remitted the sum of Rs. 57,37,619/- with the permission of reserve Bank of India (RBI). 10. The assessing officer has not made any investigation to ascertain the fact that deposit in HSBC bank is having any nexus with any income accrues or arise in India and solely made addition only on the basis of alleged base note which is just a photocopy, unverified and unauthenticated document. The learned AR further retreated that assessee being non- resident is under no obligation to disclose his foreign account and asset and accordingly he never disclosed his bank account maintained anywhere in overseas countries. The learned AR further invited our attention by referring the income tax return form, prescribed for filing return of individual, and would submit that the moment a person choose his status as of "non-resident" the column provided for filing foreign bank accounts and asset details do not appears in the return of nonresidents and accordingly there is no occasion for disclosing such information to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of information, the Assessing Officer took his view that income deemed to accrue or arise in India and is liable to tax under section 5 (2)(b) r.w.s section 69. The AO further held that the assessee has not denied the HSBC bank or there was no fund in the said account. The AO held that there was deposit of Rs. 2,50,30,653/- in the month of March, 2006 and in absence of information, the AO held that income deemed to accrue or arise in India and is liable to tax under section 5 (2)(b) r.w.s section 69. 13. The ld CIT(A) deleted both the 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. The status of non-resident is not disputed by the AO. The assessee is cannot be asked to prove negative. The A.O. has not brought any evidence on record to go through that income in India has been diverted and remitted in abroad. From the bank account furnished by assessee it is clear that assessee has not diverted any income of remittance abroad from India. Therefore the assessee has discharged his primary onus. Moreover, the non-resident, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, such a situation has been examined by our co-ordinate Bench in the case of Shri Hemant Mansukhlal Pandya (supra). The bare provisions of section 5(2) of the Act bring out 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. Therefore, the moot question is whether it can be said that the credits appearing the three 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. For this purpose, what is relevant to decide is the burden on the assessee to disclose the details of the three bank accounts in question. This aspect was also gone into by our coordinate Bench in the case of Shri Hemant Mansukhlal Pandya (supra), and the following discussion is relevant:- "17. Having said, let us examine, non residents are required to furnish details of his foreign bank accounts and assets in India or not. The assessee has maintained only one bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as within the taxing provisions of the Indian Income Tax Act, 1961. The proposition has been arrived at, relying on the judgment of the Hon'ble Supreme Court in the case of Parimisetty Seetharaman vs. CIT [57 ITR 532]. Therefore, we proceed further on the premise that the onus was on the AO to establish that qua the three bank accounts in question assessee had the ownership and also the fact that the transactions therein have Indian connection. 14. In this background, we have examined the factual findings which have been arrived at by the CIT(A). In the earlier part of this order, a portion of the said finding has also been extracted by us. As per the CIT(A) there is no material or evidence to say that the assessee was connected with the bank accounts in question 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. A perusal of the Grounds of appeal raised by the Revenue before us reveal that none of the findings recorded by the CIT(A) have been assailed on the basis of any material or evidence. In fact, the entire case of the Revenue, which had been adverted to at the time of hearing bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the burden lies upon the department to prove that a particular asset is within the taxing provisions. As noted above that the assessee is non-resident, and that status of the assessee is not in dispute. 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. The moot question is 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. 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 ..... 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