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TMI Blog2023 (5) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... of India-UAE DTAA that was examined in Rajeev Suresh Ghai [2021 (12) TMI 697 - ITAT MUMBAI] case. As per the provisions of section 90(2) of the Act, the assessee is entitled to benefit of treaty to the extent it is more beneficial to the assessee. Thus, provisions of India-Oman DTAA, the addition made u/s 69 of the Act is unsustainable and is thus, liable to be deleted. We hold and direct, accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.1 crores (at page 6 to 66 of paper book). The source of funds for the purchase of asset was his income from Muscat. The entire payment was made through banking channel. The Ld. Authorised Representative (AR) referred to bank statement of the assessee (at page 67 to 72 of the paper book). He contended that since, the assessee is resident of Muscat, the assessee does not have any taxable income in India, therefore, does not file return of income in India. Notice u/s 148 of the Act was issued to the assessee merely on the basis of statement recorded in search proceedings of a third party. He submitted that the reasons recorded for reopening would show that the reasons are recorded without proper application of mind by the Assessing Officer (AO). The assessment has been reopened merely on the basis of information received from Investigation Wing. The assessment has been reopened without any cogent material on record, hence, reopening is bad in law. 5.1 In respect of ground no. 2, the ld. Counsel for the assessee submitted that there is no substantive material except statement of Vipul Mangal to show payment of on-money by the assessee to the Developer of the housing project. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premise of Vipul Mangal loose paper files/note books/diary were found and seized. Statement of Vipul Mangal was recorded wherein, he had admitted to the fact of receipt of on-money in cash from the purchasers of flats in the project Silver Arch. He gave the list of purchasers of flats along with details of on-money received from each one of them. As per the request of assessee, Vipul Mangal was summoned after issuance of notice u/s 131 of the Act dated 04.12.2017. His statement was recorded on 12.12.2017 in the presence of Shri Umang Dedhiya, AR of the assessee. Vipul Mangal in his statement gave the details of amount received from assessee along with the dates and breakup of the amount received on each of the date. Opportunity of crossexamination was provided to the AR of assessee but he failed to utilise that opportunity. Onus is on the assessee to prove that no on-money was paid by him. The ld. DR prayed for upholding the impugned order and dismissing appeal of the assessee. 7. We have heard the submissions made by rival sides and have examined the orders of authorities below. The assessee in ground no. 1 of appeal has assailed reopening of assessment primarily on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia if the source of income is in India or the income is received or deemed to be received in India by or on behalf of NRI or accrues or arise or is deemed to accrue or arise in India during relevant period. The provisions of section 69 of the Act would get triggered if the investment is made from an unaccounted money having source in India i.e. received or deemed to receive in India or accrue or arise or deemed to accrue or arise in India. De hors, the source based taxation the assessee being NRI would be eligible for treaty benefit in respect of his income earned in Muscat. 9. The Tribunal in the case of ITO vs. Rajeev Suresh Ghai (supra) decided somewhat similar issue where the Revenue had made addition u/s 69 of the Act in respect of unaccounted money paid to the builder by the assessee, a resident of UAE. The relevant extract of the order of Tribunal giving the facts and the findings thereon is reproduced herein below: "5. Let us, first of all, consider as to what is the basic nature of the transaction, which has resulted in the impugned tax liability. The assessee is said to have, even going by the claim of the revenue authorities, paid some unaccounted monies to the build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t what it does highlight anyway is the economic activity nexus with the income, which can be taxed under Article 22(1). Of course, where revenue authorities can bring on record any material to demonstrate, or indicate, that the unexplained investments in question have been made out of incomes generated in India, the situation will be materially different, but that is not the case at present. xxxxxxxxxx xxxxxxxxxx 11. It is always useful to bear in mind the fact that, on the first principles, the trigger for taxation of an income in a source jurisdiction is either the economic activity or the linkage of an income with that jurisdiction, and that in the absence of such a linkage or economic activity nexus, there cannot be any source taxation. The assessee before us is certainly an Indian national, but he is admittedly resident in the UAE so far as his residential status, under the Indo UAE tax treaty is concerned, is of the UAE tax resident. The residuary taxation rights, in terms of the treaty provisions, belong to the residence jurisdiction, but even if that was not to be so, the residence rights can at best go to the source jurisdiction, which in turn refers to a jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State may also be taxed in that other State." The provisions of Article 24 of India-Oman DTAA are pari-materia to Article 22 of India-UAE DTAA that was examined by the Co-ordinate Bench in the above said case. As per the provisions of section 90(2) of the Act, the assessee is entitled to benefit of treaty to the extent it is more beneficial to the assessee. Thus, in facts of the case, the decision of Co-ordinate Bench (supra), and the provisions of India-Oman DTAA, the addition made u/s 69 of the Act is unsustainable and is thus, liable to be deleted. We hold and direct, accordingly. 11. In the result, appeal of the assessee is partly allowed. ITA NO.53/MUM/2020 (A.Y. 2014-15) 12. Both these sides are unanimous in stating that the grounds of appeal and the facts germane to the issue in appeal are identical to the AY 2013-14. 13. We find that in the statement recorded on 12.12.2017, Vipul Mangal has disclosed that Rs.47 lakhs was received in cash as on-money from the assessee. The details of the same are recorded in para 7 above. The amount of alleged on-money was received on various dates by Vipul Mangal Rs.25 lakhs was allegedly received by him in FY 2012-13 relevant to AY ..... X X X X Extracts X X X X X X X X Extracts X X X X
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