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TMI Blog2023 (9) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... piece of paper. As such, it should be corroborated by the material available on record. However, in the case before us, the AO has not brought any material on record to disprove the contention of the assessee. To classify any item based on paper as income, it is necessary for the party alleging so to pinpoint the specific instances and corroborative material. However, in the case before us no material has been brought on record by the AO. Merely the amount shown by the assessee under the head of exempted income cannot represent the undisclosed income of the assessee in the absence of corroborative material suggesting that the income earned by the assessee is taxable in India. Credit in the bank account of the assessee on account of foreign remittance - We note that the money was remitted from the foreign bank account of the assessee which can be verified from the details available - Such entry in the bank account of the assessee was not reflecting any business transactions in India and therefore the same cannot be treated as income of the assessee. It is also pertinent to note that the assessee being non-resident Indians has remitted the money in his bank account in India w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the audit report in Financial year 2016-17 should match the amount of exempt income mistakenly shown in ZTR as claimed by the assessee. So, the exact calculation of how the amount of Rs. 5,15,48,663 is derived is of utmost relevance which the assessee has failed to do so. l.(iv) As per the agreement of 2012, the assessee's share in the profit is of 80%. However, as per the Audit report of M/s Babatex general trading LLC ending 31/12/2017, the share of profit of the assessee is 49%. The assessee has failed to offer any explanation on the same. l.(v) On observation of the audit report prepared by the auditing firm SKM International chartered accountants with regard to the business concerned, it is seen that, the said report does not carry any signature, be it digital or manual, nor any authoritative stamp. Without signature the audit report cannot be treated as a valid report. 1. (vi) The documents originating in foreign country i.e. UAE such as bank statements of the appellant with Emirates NBD Bank bearing A/c No. 1014049822501, Telegraphic transfer vouchers 5 nos.. Agreements of M/s Babatex General Trading LLC 2 Nos. have not been certified by Indian Emb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome at Rs. 4,11,500/- and besides this, the assessee also declared exempted income of Rs. 5,15,48,663/- representing the income earned outside India i.e. from UAE. The assessee in support of his claim also filed certain documentary evidence such as bank statement, Audit report, balance sheet etc of the firm based in UAE. 5.2 However, the AO found certain deficiencies in the documents furnished by the assessee, such as no partnership agreement, under which clause or section of the Act the exempt income was claimed, no such amount credited in the NRE bank account of the assessee held in India. Thus, the AO rejected the claim of the assessee and added the same to the total income of the assessee. 5.3 Likewise, the AO founds that the NRE IndusInd bank account of the assessee was credited by Rs. 4 crores being foreign remittances from UAE and the same was treated as unsecured loan in the return of income. The AO in absence of necessary detail treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. 6. The aggrieved assessee preferred an appeal before the learned CIT(A). The learned AR of the assessee before the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- was not explained satisfactory. Therefore, the contention of the assessee should be rejected. It was the assessee who claimed exempted income in the return of income hence, it was the duty of the assessee to explain the sources of such exempted income. 9. Regarding foreign remittance of Rs. 4 crores, the AO in the remand report stated that the assessee out of the impugned sum has received Rs. 2.2 crores from his bank account maintained in UAE namely Emirates NBD A/c. However, there was cash deposit in the impugned bank account of the foreign country where from the money was remitted to the bank account of the assessee in India. As such, the assessee failed to justify the source of cash which was deposited in the UAE bank account namely Emirates NBD A/c which was transferred to the bank account of the assessee in India. Furthermore, the documents furnished by the assessee in support of the remittance of Rs. 4 crores being bank statement and other supporting documents were originating from a country outside India and therefore they should have been certified by the embassy of India based in UAE. But no such certification has been provided by the assessee of the documents the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,48,663/- wrongly claimed as exempt income it is the case of the appellant that he is an NRI since last 15 years, that as per the Audited Financial Statements, M/s Baba Tex General Trading LLC had earned net profits of AED 58,68,052/- AED 64,18,170/- for the calendar years 2016 2017 respectively, that the appellant was rightly entitled to the profit of the company, that the Income earned outside India was wrongly shown by the Appellant in his Return of Income in India as Exempt from Tax and that the rate of exchange between INR and AED was of no relevance for computing the taxable Income of the Appellant in India. 5.10 As to the deposit of Rs. 4,00,00,000/- in the NRE a/c in India, it is the case of the appellant that same were remittances of AED 21,74,115 from outside India (i.c. UAE) out of withdrawal of funds from M/s Baba Tex General Trading LLC (UAE) in which the Appellant is a shareholder. 5.11 It is seen that by making the submission before the AO during the assessment and the remand proceedings, the appellant has discharged his initial onus by producing various documents as original submission during the assessment proceedings and the additional evidences du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the learned AR before us filed a paper book running from pages 1 to 80 and reiterated the findings contained in the order of ld. CIT-A. 13. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the issues involved in the appeal filed by the revenue are interconnected. Undisputed fact is this that the assessee is non-resident Indian and based in UAE wherein he is partner in a partnership firm namely Baba Tex General Trading LLC. This fact can be verified from the tax residency certificate issued by the Ministry of Finance UAE which is placed on page 5 of the paper book. For making the income of non-resident Indian as taxable in India, the relevant provisions of section 5 of the Act are reproduced as under: Scope of total income. 5. (1) ********** (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O has not brought any material on record to disprove the contention of the assessee. To classify any item based on paper as income, it is necessary for the party alleging so to pinpoint the specific instances and corroborative material. However, in the case before us no material has been brought on record by the AO. Besides the above the assessee admittedly is a non-resident and his income cannot be made subject tax in India until and unless the income falls under the following categories: i. Income received or deemed to be received in India. ii. Income accrue or arises in India or deemed to be accrue or arises in India. 13.3 In view of the above and after considering the facts in totality, merely the amount shown by the assessee under the head of exempted income cannot represent the undisclosed income of the assessee in the absence of corroborative material suggesting that the income earned by the assessee is taxable in India. 13.4 Regarding the credit in the bank account of the assessee on account of foreign remittance for ₹4 crores, we note that the money was remitted from the foreign bank account of the assessee which can be verified from the details available ..... 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