CECIL CAESAR ROACH,MUMBAI V. INT TAX WARD 4(1)(1), MUMBAI

ITITA 1671/MUM/2025

AI Insights

Cecil Caesar Roach, a non-resident Canadian citizen, appealed against the final assessment order for the assessment year 2019-20, which included additions for unexplained investments and interest income. The Assessing Officer (AO) had made additions based on information suggesting multiple foreign currency transactions and unreported interest income. The Dispute Resolution Panel (DRP) partially relieved the assessee by deleting some additions but confirmed others. The Tribunal found that the AO and DRP had erred in interpreting the transactions and not considering the evidence provided by the assessee, including bank statements and declarations from South Indian Bank, which clarified that only one transaction had occurred.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712769 (ITAT-MUMBAI)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2019-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: ROOPA THOMAS
• Keywords: Unexplained investment; Principle of natural justice; TDS
• Section: 147; 148; 142(1); 69; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “I” BENCH : MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER IT(IT)A No. 1671/Mum/2025 Assessment Year : 2019-20 Cecil Caesar Roach, A-104, Chauhan Arch CHS, Kevni Gothan, Amboli, Andheri (W), Mumbai-400058. PAN : BYYPR9069K vs. Income Tax Officer, Int. Tax. Ward–4(1)(1), Room No. 629, 6th Floor, Kautilya Bhawan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra East, Mumbai-400051. (Appellant) (Respondent) Assessee by : Ms. Roopa Thomas (Virtually present) Revenue by : Shri Krishna Kumar, Sr.DR Date of Hearing : 23-07-2025 Date of Pronouncement : 29-07-2025 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Assessing Officer (AO) dt. 09-01-2025 passed u/s. 147 r.w.s. 144 of the Income Tax Act, 1961 („the Act‟), consequent to the directions given by the CIT(DRP-1)-Mumbai-3, pertaining to Assessment Year (AY) 2019-2000, wherein the assessee has taken the following grounds of appeal: Printed from counselvise.com 2 IT(IT)A No. 1671/Mum/2025 “1. Unexplained Investment u/s 69 of the Act Rs.51,02,120/- a. The learned AO has erred in stating that the Appellant had purchased foreign currency amounting to Rs.51,02,120/- through South Indian Bank. b. The Honorable DRP and the learned AO have failed to appreciate that the Appellant had undertaken a single transfer which had been aggregately considered as 3 different transactions in the draft assessment order. c. The Honorable DRP and the learned AO have grossly erred in concluding that \"Based on the facts presented and the lack of convincing evidence from the Applicant to refute the transaction suggested as per the Risk Management System of the CBDT, the objection regarding the unexplained foreign currency purchase of Rs. 51,02,120/- is rejected\" d. The Honorable DRP and the learned AO have failed to take cognisance of the evidence submitted by the appellant, viz, bank statements evidencing a single transfer and a declaration provided by the bank that the Appellant has made only one transfer of CAD 102042.4 (INR 58,26,130 converted @ 57.10 as per the bank records) and they have not done any other foreign transaction. e. Accordingly, the impugned Assessment Order which has been passed without taking into proper consideration the evidence provided, submissions made and arguments put forth, is against the principles of natural justice. 2. Interest Income-Rs. 78,344/- Considering that the income is below the taxable limit, the same would consequentially not be taxable 3. The learned AO has erred in computing interest under section 234A of Rs. 21,48,984/- 4. The learned AO has erred in computing interest u/s 234B of Rs. 27,85,720/- 5. The learned AO has erred in raising a demand of Rs. 89,24,358/- 6. The Appellant craves leave to add, to alter, or amend any of the foregoing grounds, if and when necessary.” 2. Briefly the facts of the case are that basis specific information available through insight portal that the assessee has purchased certain foreign currency, made foreign remittance and has also received interest income and given the fact that she has not filed her return of income, Printed from counselvise.com 3 IT(IT)A No. 1671/Mum/2025 proceedings u/s. 148A of the Act were initiated and order u/s. 148A(d) of the Act was passed on 30-03-23 as well as notice u/s. 148 was issued on 30-03-2023. In response to the notice u/s. 148 of the Act, the assessee did not file any return of income, thereafter, notices u/s. 142(1) of the Act were also issued which also remain non-compliant. The AO, thereafter proceeded and made an addition of Rs. 51,02,120/- u/s. 69 of the Act and an addition of Rs. 1,16,44,172/- u/s. 69A of the Act. Further, an amount of Rs. 78,344/- was also brought to tax and assessed the total income of the assessee at Rs. 1,68,24,636/- vide draft assessment order passed u/s 144C(1) dated 02-03-2024. The assessee thereafter filed objections before the DRP and the DRP u/s. 144C(5) of the Act, gave its directions dt. 10-12- 2024, allowing partial relief to the assessee deleting the additions u/s 69A amounting to Rs 1,16,44,172/-. Thereafter, the AO passed the final assessment order u/s. 147 r.w.s. 144 of the Act, dt. 09-01-2025, wherein following the directions of the DRP, has made an addition of Rs. 51,02,120/- u/s. 69 of the Act as well as made an addition of Rs. 78,344/- towards interest income and assessed income was determined at Rs. 51,80,464/-. Against the said order, the assessee is in appeal before us. 3. During the course of hearing, the Ld.AR submitted that the assessee is a Non-Resident Canadian Citizen, residing in Canada since June 2000. Pursuant to his mother's demise on 09-09-2017, the assessee and his siblings were entitled to inheritance from their late mother Mrs. Hilda Patrick Roach (Mrs. Hilda), which comprised of investments in NHAI Bonds and Fixed Deposits, made by Late Mrs. Hilda from the sale proceeds of her residential property in Mumbai, in the year 2015. 4. It was submitted that the assessee opened a NRO account with South Indian Bank Ltd, Sarjapur Road, Bangalore, on 01-06-2018, so as Printed from counselvise.com 4 IT(IT)A No. 1671/Mum/2025 to receive his share of inheritance for which he was the nominee. The appellant received a total sum of Rs. 58,04,401/- being the maturity value of the Bonds and FDs and the accumulated interest on the same. Accordingly, the assessee gave instructions to the bank vide letter dated 14-09-2018 to repatriate the balance in his account, after providing for Rs.11,800 towards professional fees and Rs.5,000 minimum balance in his account (total Rs.16,800). For the repatriation, he had obtained Form 15CA and Form 15CB for a proposed amount of Rs.57,90,000/-. Since he had wished to retain only Rs.16,800 and transfer the remaining amount, the Bank, based on his specific instructions, took into consideration the available balance and made the transfer on 05-10-2018 of Rs.58,31,429.79/- (i.e., CAD 102042.4 converted @ 57.10 as per the bank records = INR 58,26,130 plus exchange gain of Rs.5,300/-). 5. It was submitted that the AO, in the draft assessment order, had proposed addition of the following related transactions aggregating to Rs. 1,68,24,636/- for AY 2019-20 as follows: Sl. No Particulars Amount (Rs.) 1 Unexplained Investment under section 69 of the Act (Para 4 of the Draft Order) 51,02,120 2 Unexplained Money under section 69A of the Act (Para 5 of the Draft Order) held as under: \"The assessee has made foreign remittance amounting to Rs.58,54,172/- and Rs.57,90,000/- through The South Indian Bank Ltd. during the previous year 2018-19.\" 1,16,44,172 3 Interest income being income from other sources (Para 6 of the Draft Order) 78,344 6. It was submitted before the DRP that the same transaction had been aggregately considered three times in the draft assessment order. The assessee had made one single transfer on 05-10-2018. The assessee had Printed from counselvise.com 5 IT(IT)A No. 1671/Mum/2025 also furnished a declaration provided by the Bank that there has been only one outward foreign remittance for CAD 102042.40 on 05-10-2018 (Rs.58,26,130/-) and no other foreign transactions have been executed. 7. As far as addition towards unexplained money u/s. 69A of the Act amounting to Rs.1,16,44,172/- the DRP vide para 6.3.7 and 6.3.8 of the Directions observed that the documentation and explanation provided adequately addressed the findings from ITS, and the sums of Rs.58,54,172/- and Rs.57,90,000/- are similar transaction, being double counted. There was no finding/detection of the Learned AO pertaining to the remittance of Rs.58,54,172/-. Hence, the Panel was convinced that the sum is a double counting, comprising of the base remittance and other fees, interests etc. and held that the application of section 69A is not valid. Accordingly, the AO was directed to withdraw the addition on this ground. 8. It was submitted that as far as unexplained investment under section 69 of the Act of Rs. 51,02,120/- the DRP, vide para 5.4 of the Directions, held that based on the facts presented and the lack of convincing evidence to refute the transaction suggested as per the Risk Management System of the CBDT, the objection regarding the unexplained foreign currency purchase of Rs. 51,02,120/- is rejected and confirmed the addition made by the AO. 9. It was submitted that as far as interest income Rs.78,344/- the DRP vide para 7.3.5 of the directions concluded that the interest income of Rs.78,344/- is taxable under Indian law and confirmed the addition made by the Ld. A.O. under the head \"Income from Other Sources.\" The DRP also directed that the AO will give due credit to the TDS withheld. Printed from counselvise.com 6 IT(IT)A No. 1671/Mum/2025 Accordingly, the assessee preferred an appeal before us. 10. With regard to unexplained Investment u/s 69 of the Act Rs.51,02,120, the additions made by the AO and confirmed by the DRP, it was submitted before us that the AO has erred in stating that the assessee had purchased foreign currency amounting to Rs.51,02,120/- through South Indian Bank. It was submitted that the AO failed to appreciate that the assessee had undertaken a single transfer which had been aggregately considered as three different transactions in the draft assessment order, and the DRP has further erred by incorrectly confirming the addition of Rs 51,02,120/- as unexplained investment u/s 69 of the Act. 11. It was submitted that the DRP vide para 5.4 of its directions has grossly erred in concluding that \"Based on the facts presented and the lack of convincing evidence from the assessee to refute the transaction suggested as per the Risk Management System of the CBDT, the objection regarding the unexplained foreign currency purchase of Rs. 51,02,120/- is rejected\". 12. It was submitted that the DRP and the AO have failed to take cognisance of the evidence submitted by the appellant. The assessee has only one bank account with South Indian Bank Ltd, the statement of which was provided, which clearly demonstrates that only a single transfer was made and a copy of the Bank statement was enclosed as part of assessee‟s paper book. 13. It was submitted that the DRP and the AO have further failed to take cognisance of the declaration provided by South Indian Bank Ltd vide letter dated 25-10-2024 which states that \"As per our records, apart from Printed from counselvise.com 7 IT(IT)A No. 1671/Mum/2025 outward remittance of CAD 102042.4 at a rate 57.10 equivalent to Rs.5,826,621.04 excluding charges on 05-10-2018 we have not done any other foreign transaction.\" and a copy of the declaration is enclosed vide Annexure 2 of the paper book. 14. It was submitted that the DRP as stated in para 5.3.6.2 of the Directions, had required the AO to examine the source of the information and tender a clarification on the matter alongwith details of the (a) transaction, (b) date, (c) bank/exchange house involved, (d) Currency of transaction and the (e) Obtain clarification from the Source Bank of the information. The AO has merely quoted vide sub- 3 to para 5.3.6.2 of the directions (page 47-48 of the paper book), \"As regard to the addition of Rs.51,02,120/-, the source of information is Insight Portal wherein the said amount is reflected as purchase of foreign currency. The date of uploading is 28.05.2019 and the transaction reported by The South Indian Bank Limited as per information available on Insight Portal. The concerned screenshot of Insight Portal is produced as under\". The learned AO has failed to provide any clarification which was to be obtained from the source bank, as per the directions of the DRP. 15. It was submitted that based on assessee‟s subsequent enquiry with the Bank, we are given to understand that transfer of outward remittance is also reported as purchase of foreign currency for the purpose of SFT Reporting. In the instant case, the foreign currency transaction was reported under Notional Rate, hence the amount of Rs. 51,02,120/ was reported as purchase of foreign currency in the Insight Portal as against an actual outward remittance of Rs.58,54,172/- and a Letter from the Bank is enclosed vide Annexure 3 of the paper book. Printed from counselvise.com 8 IT(IT)A No. 1671/Mum/2025 16. With regard to interest Income of Rs.78,344/-, it was submitted that the interest income of Rs.78,344/-earned by the assessee for AY.2019-20 falls below the basic exemption limit of Rs. 2,50,000/- applicable to the assessee for the said assessment year and is therefore, not taxable in the hands of the assessee, as the assessee did not have any other taxable income in India for AY.2019-20. With regard to levy of interest u/s.234A/234B is concerned, it was submitted that that the same is consequential in nature. 17. It was accordingly submitted that there is no income escaping assessment in the assessee‟s case for AY.2019-20 and necessary relief be provided to the assessee by deleting the addition so made and confirmed by the DRP. 18. The Ld.DR is heard who has submitted that as far as multiplicity of additions is concerned, the DRP has already granted relief to the assessee and there is as such no dispute. On the additions sustained by the DRP which find mention in the final assessment order, the Ld.DR relied on the findings of the DRP as well as that of the AO. 19. We have heard the rival contentions and perused the material available on record. On perusal of the assessee‟s bank account maintained with South Indian Bank, we find that there is withdrawal entry of Rs 58,31,429 on 5/10/2018 and as per narration in the bank statement itself, the same relates to purchase and transfer of Canadian Dollars 1,02,042.40 converted @ 57.10. The bank has also confirmed the said fact vide its confirmation letter dated 25/10/2024 available on record and also the fact that no other foreign exchange transaction has been undertaken by the assessee. As far as the figure of Rs 51,02,120/- is concerned, the Printed from counselvise.com 9 IT(IT)A No. 1671/Mum/2025 Bank has further clarified vide its letter dated 13-05-2025 that the same again relates to transaction dated 05-10-2018, however, while reporting under SFT, it has taken notional exchange rate which has resulted in reported figure of Rs 51,02,120/- as against actual figure of Rs. 58,26,130/-. We therefore have a situation where there is single transfer and remittance of Canadian Dollars amounting to 102,042.40 by the assessee and an amount of Rs 58,26,130/- has been debited from the assessee‟s bank account. As far as source of such funds is concerned, we find that prior to said remittance, there are credits/deposits in the assessee‟s bank account of Rs 24,95,233/- on 01-06-2018 and Rs 33,09,168/- on 07-06-2018. The assessee has provided necessary explanation regarding these deposits being the amount received by way of inheritance after the demise of his mother on 09-09-2017, being the maturity proceeds of NHAI bonds and fixed deposits in name of his late mother. We therefore find that while the information in the insight portal has been taken as a basis for reopening the case of the assessee, the reporting entity, the South Indian Bank, in its own confirmatory letters issued subsequently, not once but twice has stated that the assessee has undertaken only one transaction of purchase and transfer of Canadian Dollars as so reflected in the assessee‟s bank account, there is no basis to sustain the addition merely basis the initial information available on the insight portal coupled with the fact that the source of such funds have also been satisfactorily explained by the assessee and no adverse finding has been recorded by the DRP in this regard. In the result, the addition of Rs.51,02,120/- is hereby directed to be deleted. 20. Given that we have directed deletion of addition of Rs.51,02,120/- and the fact that there is only interest income of Rs.78,344/- which remains taxable in the hands of the assessee, the same is clearly below the Printed from counselvise.com 10 IT(IT)A No. 1671/Mum/2025 prescribed threshold of Rs.2,50,000/-, hence, it will not suffer any incidence of taxation and no tax and interest liability which arise thereon. 21. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29-07-2025 Sd/- Sd/- [RAJ KUMAR CHAUHAN] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 29-07-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai Printed from counselvise.com "