ITO, Gurgaon V. Capt. Satish Sharma Prop., Gurgaon

ITA 3680/DEL/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61800 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: NIG HA GUPTA
• Keywords: Income from undisclosed sources; Salary income
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3680/DEL/2008 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, VS CAPT. SATISH SHARMA, WARD-5, PRO P. M/S LAST CHANCE, GURGAON. 303, SAHARA MALL, MEHRAULI GURGAON ROAD, GURGAON. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S. MOHANTY, DR RESPONDENT BY : SMT. NIG HA GUPTA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER DATED 29.9.2008 OF THE CIT(A), PANCHKULA, BY WHICH HE DEL ETED THE ADDITION MADE BY THE AO ON ACCOUNT OF FOREIGN REMITTANCE RECEIVED FROM M/S GORKHA AIRLINES, NEPAL FOR A.Y. 2005-06. 2. THE SOLE GROUND OF APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS.57,48,341/- ON ACCOUNT OF FOREIGN RE SILIENCE RECEIVED FROM M/.S GORKHA AIRLINES, NEPAL DISREGARD ING THE FACTS THAT THE ASSESSEE HAD NOT FURNISHED ANY E VIDENCE TO SUPPORT THAT THE INCOME HAS BEEN EARNED ABROAD A ND IS NOT TAXABLE IN INDIA. ITA NO.3680/DEL/2008 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND SUBSEQUE NTLY, THE CASE WAS SELECTED FOR SCRUTINY AND A NOTICES U/S 143(2) AND 142(1) OF THE ACT, ALONG WITH QUESTIONNAIRE, WERE ISSUED AND ON 29.8.2007, THE AS SESSEES REPRESENTATIVE ATTENDED THE PROCEEDINGS BEFORE THE AO. ON EXAMINA TION OF BOOKS OF ACCOUNTS, DETAILS, DOCUMENTS AND INFORMATION SUBMIT TED BY THE ASSESSEE, THE AO NOTED THAT THE ASSESSEE HAD RECEIVED REMITTANCE FROM ABROAD TO THE TUNE OF RS.57,48,341/- AND THE ASSESSEE OFFERED AN EXPLA NATION THAT THESE PAYMENTS HAD BEEN RECEIVED OUT OF EARNINGS OF THE A SSESSEE AS AN EMPLOYEE OF GORKHA AIRLINES AT NEPAL AND THE AO FURTHER NOTE D THAT THE ASSESSEE FILED HIS RETURN IN A STATUS OF RESIDENT AND HE DID NOT F URNISH ANY EVIDENCE TO SHOW THAT THE SAME INCOME HAD BEEN EARNED ABROAD AND WAS NOT LIABLE TO BE TAXED IN INDIA. HENCE, HE ADDED THIS ENTIRE AMOUNT OF RS .57,48,341 TO THE INCOME OF THE ASSESSEE. 4. THE AGGRIEVED ASSESSEE INVOKED THE CIT(A) AND HE DELETED THE ADDITION WITH A FINDING BEING REPRODUCED BELOW FOR THE SAKE OF CLARITY IN THE ADJUDICATION OF THIS APPEAL:- 4. I HAVE PERUSED THE FACTS AND CAREFULLY CONSIDE RED THE SUBMISSIONS. THE ONLY ISSUE FOR CONSIDERATION IS W HETHER THE SUM OF RS.57,48,341/- WHICH HAS BEEN ADDED BY T HE AO IS EXPLAINED OR NOT. IF, IT IS EXPLAINED, THE S TATUS OF ITA NO.3680/DEL/2008 3 THE APPELLANT WHETHER RESIDENT OR NON-RESIDENT WOULD BE IRRELEVANT AS NO OTHER ADDITION AHS BEEN MADE AS PER ASSESSMENT ORDER. THE MATTER WAS REMANDED TO THE A O TO VERIFY WHETHER THE DEPOSITS ARE FROM THE SALARY INCOME RECEIVED BY THE APPELLANT BY GORKHA AIR LINES. THE AO IN THE REMAND REPORT HAS MADE GENERAL REMARKS THAT THE ADDITION IN SAVING BANK ACCOUNT WAS MUCH MORE THAN NET EARNING/SAVINGS AND THAT THE INDIAN CURRENCY WAS FR EELY CONVERTIBLE/EXCHANGEABLE IN NEPAL. THE VERIFICATIO N AS DESIRED HAS NOT BEEN CARRIED OUT IN SPITE OF SUFFIC IENT OPPORTUNITY. THE AO COULD HAVE ASKED THE APPELLANT TO FILE THE SALARY CERTIFICATE AND VERIFY WHETHER THE AMOUNT DEPOSITED IN BANK WAS IN EXCESS OF THE SALARY RECEI PT AND IF SO THE EXPLANATION, IF ANY, REGARDING THE SOURCE OF THE BALANCE AMOUNT. THIS HAS NOT BEEN DONE. ON PERUSA L OF THE DETAILS I FIND THAT A SUM OF RS.69,90,135/- HAS BEEN DEPOSITED IN THE EVEREST BANK NEPAL DURING THE YEAR AS AGAINST THE SALARY INCOME OF RS.68,68,865/- AS PER DETAILS GIVEN BELOW:- NPR SALARY 22,98,545/- ALLOWANCES 5,13,274/- PROFIT IN LIEU OF SALARY 63,46,666/- TOTAL 91,58,485/- LESS TAX DEDUCTED AT SOURCE 22,89,620/- NET PAID 68,68,865/- 4.1 AS PER THE CERTIFICATE ISSUED BY GORKHA AIR LINES, THE APPELLANT WAS EMPLOYED AS SR. CAPTAIN DURING F.Y. 2 004 AND RETIRED ON 23.2.2005. FOR FINALIZING THE AIRCR AFT DEAL PERTAINING TO DONIAR AIR CRAFT AND FOR TRAINING THE PERSONALS TO OPERATE IT, HE WAS ALSO PAID PROFIT IN LIEU OF SALARY IN INSTALLMENTS AFTER DEDUCTION OF TAX AT SO URCE THE NET PAYMENT AFTER TDS WORKS OUT TO RS.68,68,865 /- WHICH HAVE BEEN DEPOSITED IN EVEREST BANK. ON COMPARISON OF THE BANK ACCOUNT OF THE APPELLANT IN EVEREST BANK VIS--VIS DATE-WISE RECORD OF SALARY I SSUED BY THE EMPLOYER, IT WAS NOTICED THAT THE DIFFERENCE WAS ON ACCOUNT OF DEPOSIT OF RS.12,00,000/- IN CASH AND ITA NO.3680/DEL/2008 4 RS.21,268/- ON ACCOUNT OF BANK INTEREST. THIS DEPO SIT OF RS.1,00,000/- ON 15.6.2004 HAS BEEN EXPLAINED THROU GH WITHDRAWAL OF RS.1,00,000/- MADE ON 7.6.2004 FROM T HE PNB ACCOUNT, ALAKHNANDA BRANCH NEW DELHI. THUS, TH E ENTIRE AMOUNT AHS BEEN EXPLAINED BY THE APPELLANT. IN THE LIGHT OF THESE FACTS, THE ADDITION OF RS.57,48, 341/- MADE BY THE AO IS UNJUSTIFIED AND IS ORDERED TO BE DELETED. HENCE, THIS APPEAL BY THE REVENUE BEFORE THIS TRIBU NAL. 5. WE HAVE HEARD AND CONSIDERED RIVAL ARGUMENTS OF BOTH THE PARTIES AND CAREFULLY PERUSED ENTIRE MATERIAL AND RECORD BEFORE US IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE. LD. DR SUBMITTED TH AT THE CIT(A) HAS GROSSLY ERRED ON FACTS AND LAW IN DELETING THE ADD ITION OF RS.57,48,341/- ON ACCOUNT OF FOREIGN RESILIENCE RECEIVED BY THE ASSES SEE FROM M/S GORKHA AIRLINES KATHMANDU NEPAL DESPITE THE FACT THAT THE ASSESSEE HAD NOT FURNISHED ANY RELEVANT AND COGENT EVIDENCE TO SHOW THAT THE SAID INCOME HAS BEEN EARNED ABROAD AND IT IS NOT TAXABLE IN INDIA. HE FURTHER SUPPORTED THE ACTION OF THE AO BY SUBMITTING THAT THE ASSESSEE FI LED HIS RETURN FOR THE YEAR UNDER CONSIDERATION IN THE STATUS OF RESIDENT. T HEREFORE, THE AO RIGHTLY ADDED THE SAME TO HIS INCOME. THE LD. DR VEHEMENTL Y CONTENDED THAT THE CIT(A) HAD NO REASONABLE GROUND TO DELETE THE ADDIT ION. HENCE, THE IMPUGNED ORDER MAY BE SET ASIDE RESTORING THE ORDER OF THE AO. 6. THE AR SUBMITTED THAT ACTION OF THE AO WAS ARBIT RARY AND ON UNREASONABLE GROUND AND THE LD. CIT(A) RIGHTLY DELE TED THE SAME ON ITA NO.3680/DEL/2008 5 VERIFICATION OF EVIDENCE SUBMITTED BY THE ASSESSEE. HE FURTHER CONTENDED THAT THE AO DID NOT AFFORD OPPORTUNITY TO SUBMIT RE LEVANT EVIDENCE TO SHOW REQUIRED EXPLANATION BUT THE LD. CIT(A) ADMITTED TH E EVIDENCE FOLLOWING RULE 46A OF THE INCOME TAX RULES 1962 AND AFTER CON SIDERATION OF REMAND REPORT OF THE AO AND REJOINDER OF THE ASSESSEE, THE LD. CIT(A) RIGHTLY DELETED THE ADDITION BY THE IMPUGNED ORDER. ACCORDINGLY, T HE AR FINALLY REQUESTED THAT THE IMPUGNED ORDER MAY BE CONFIRMED BY DISMISS ING THIS APPEAL. 7. ON BARE READING OF THE IMPUGNED ORDER, WE OBSERV E THAT THE ASSESSEE SUBMITTED FOLLOWING SUBMISSIONS BEFORE LD. CIT(A) A LONG WITH VARIOUS DOCUMENTS SUCH AS COPIES OF THE BANK ACCOUNT AND LO G BOOK ETC.:- 3.1 THE ASSESSEE HAS MADE FOLLOWING SUBMISSION I N THIS REGARD AS UNDER:- I) THE ASSESSEE IS AN EMPLOYEE OF GORKHA AIRLINES, WH ICH HAS ITS HEADQUARTER AT MAHARAJGANJ, KATHMANDU, NEPA L. THIS CAN BE PERCEIVED FROM ANNEXURE 1 ENCLOSED WITH THIS SUBMISSION. II) THAT THE GORKHA AIRLINES FLIGHT SCHEDULE VIVIDLY IN DICATES THAT THE GORKHA AIRLINES OPERATE ITS FLIGHTS ONLY I N NEPAL (FLIGHT SCHEDULE IS ENCLOSED AS PER ANNEXURE-II). THE GORKHA AIRLINES DO NOT OPERATE ANY OF ITS FLIGHT IN INDIA AND OTHER PARTS OF THE WORLD EXCEPT NEPAL. III) THAT THE ASSESSEE IS AN EMPLOYEE OF GORKHA AIRLINES , NEPAL AND HIS SALARY IS BEING CREDITED IN THE EVERE ST BANK WHICH HAS A JOINT VENTURE WITH PUNJAB NATIONA L BANK, INDIA. THE ACCOUNT NUMBER OF THE ASSESSEE IS ITA NO.3680/DEL/2008 6 000370 F. THIS CAN BE PERCEIVED FROM THE STATEMENT OF ACCOUNT OF EVEREST BANK LIMITED (ANN.-III). IV) THAT THE ASSESSEE SHOULD BE GOVERNED BY THE PROVISO TO SECTION 5(1) OF THE INCOME TAX ACT, 1961 AS HE IS W ORKING IN KATHMANDU, NEPAL AND HENCE HIS SALARY SHOULD NOT BE TAXABLE IN INDIA AND THEREFORE HIS SALARY EARNED/AC CRUED IN NEPAL SHOULD NOT BE INCLUDED IN THE TOTAL INCOME TO BE ASSESSEE IN INDIA. V) THAT THE REQUISITE DETAILS/INFORMATION WERE FILED A S PER THE DIRECTION OF THE AO. THE BOOKS OF ACCOUNTS WER E ALSO PRODUCED. THE AO MADE A CLEAR MENTION OF THIS IN T HE ASSESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VARIOUS DOCUMENTS WERE PRODUCED AND IT WAS CONTENDED THAT THE PAYMENTS HAVE BEEN TRANSFERR ED OUT OF EARNINGS OF ASSESSEE FROM GORKHA AIRLINES WH ERE THE ASSESSEE WANTED TO PURCHASE A HOUSE/FLAT/PLOT A T GURGAON. VI) THAT THERE IS AN OPEN BORDER BETWEEN INDIA AND NEPA L AND A PASSPORT IS NOT REQUIRED TO TRAVEL TO AND FRO M BETWEEN INDIA AND NEPAL. VII) THAT THE GORKHA AIRLINES LOG BOOK CLEARLY INDICATES THAT THE ASSESSEE WITH OTHER CO-PILOTS UNDERTOOK FLIGHTS IN NEPAL. VIII) THAT THE EMBASSY OF INDIA, KATHMANDU, NEPAL ISSUED A CERTIFICATE OF REGISTRATION AS INDIAN NATIONAL TO S HRI SATISH CHANDRA SHARMA, ASSESSEE VIDE REGISTRATION N O. 955/98 DATED 19.6.1998. IX) THAT AN AFFIDAVIT TO THE EFFECT THAT CAPT. SATISH S HARMA WAS A NON-RESIDENT DURING THE AY 2004-05 AND 2005-0 6 ALONG WITH DOCUMENTARY EVIDENCE WAS SUBMITTED TO TH E AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO.3680/DEL/2008 7 8. THE CIT(A) FORWARDED THE WRITTEN SUBMISSIONS AND DOCUMENTS ANNEXED WITH IT TO THE AO FOR EXAMINATION AND COMME NTS. THE AO SUBMITTED HIS REPORT THROUGH LETTER DATED 23.7.2008 WITH FOLLOWING COMMENTS:- FROM THE COPY OF BANK STATEMENT IT HAS BEEN OBSERVED THAT ASSESSEE WAS HAVING SAVING BANK ACCOU NT NO.0370F WITH EVEREST BANK LTD. IT HAS BEEN FURTHE R OBSERVED THAT ACCOUNT WAS HAVING OPENING BALANCE AS ON 1.4.2004 AT RS.4,83,693/- AND CLOSING BALANCE AS ON 31.3.2005 AT RS.15,53,800/- MEANING THEREBY NET ADD ITION OF RS.10,70,107/- IN HIS SAVINGS BANK ACCOUNT. IT H AS BEEN FURTHER OBSERVED THAT THE ASSESSEE HAS MADE HUGE CA SH DEPOSIT IN HIS ACCOUNT AND HAS FAILED TO GIVE ANY EXPLANATION IN RESPECT OF THE SAME. THE INDIAN CURRENCY (INR) IS FREELY CONVERTIBLE/EXCHANGEABLE IN NEPAL. ON THE COPY OF BANK ACCOUNT SUBMITTED IT IS CLEAR THAT ASSESSEE HAS OPT ED THIS ROUTE, IN ORDER TO RECYCLE HIS UNACCOUNTED INCOME B ACK TO INDIA. SINCE THE ADDITION IS SAVING BANK ACCOUNT IN MUCH MORE THAN NET EARNING/SAVING (GROSS INCOME TAX EXPE NSES) THE CONTENTION OF THE ASSESSEE THAT THIS AMOUNT IS NOT TAXABLE IN INDIA IS NOT CORRECT AND IS NOT BASED ON PROPER FACTS OF THE CASE. SINCE THIS MONEY HAS BEEN INVES TED IN INDIA AND ASSESSEE HAS FAILED TO GIVE ANY SATISFACT ORY EVIDENCE IN RESPECT OF THIS SOURCE OF INVESTMENT, T HE AMOUNT HAS BEEN RIGHTLY ADDED TO THE RETURNED INCOM E OF THE ASSESSEE. THE ASSESSEE HAS FILED HIS INCOME TAX RETURN IN THE STATUS OF THE RESIDENT AND HAS CHANGED HIS STAND IN COURSE OF APPELLATE PROCEEDINGS. THE ASSESSEE HAS FILED A FFIDAVIT ITA NO.3680/DEL/2008 8 AND OTHER DOCUMENTS IN SUPPORT OF HIS CONTENTION. SINCE ASSESSEE HAS FILED HIS RETURN IN THE STATUS OF RESI DENT IT IS NOW NOT OPEN TO ASSESSEE TO CHANGE HIS STAND AND CL AIM THE NON-RESIDENT STATUS. IT IS FURTHER WORTHWHILE TO M ENTION THAT THE IN THE ASSESSMENT ORDER U/S 143(3) DATED 3 1.3.2007 SALARY FROM THE GORKHA AIR LINES RECEIVED BY THE AS SESSEE HAS NOT BEEN TAXED IN THE HANDS OF THE ASSESSEE BUT ONLY THE INVESTMENTS MADE IN INDIA WERE ADDED ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE ADEQUATE EVIDENCE IN RESPECT OF THIS SOURCE. 9. ON BARE READING OF THE IMPUGNED ORDER IT IS REVE ALED THAT THE LD CIT(A) NOTED THE ASSESSEE WAS EMPLOYED IN GORKHA AI RLINES, NEPAL AS SR. CAPTAIN DURING AY 2004-05 AND RETIRED ON 23.2.2005 AND THE ASSESSEE WAS PAID FOR FINALIZING THE AIRCRAFT DEAL PERTAINING TO DONIAR AIRCRAFT AND FOR TRAINING THE PERSONNEL TO OPERATE AND MAINTAIN IT A ND THE ASSESSEE WAS ALSO PAID PROFIT SHARE IN LIEU OF SALARY IN INSTALLMENTS AFTER DEDUCTION OF TAX AT SOURCE. WE FINALLY OBSERVE THAT AFTER DUE CONSIDER ATION OF SUBMISSIONS AND EVIDENCE SUBMITTED BY THE ASSESSEE AND EXAMINED BY THE AO, THE LD. CIT(A) RIGHTLY HELD THAT THE ENTIRE AMOUNT HAD BEEN PROPER LY EXPLAINED BY THE APPELLANT ASSESSEE AND HE DELETED THE ADDITION ON J UST AND PROPER GROUNDS. ACCORDINGLY, WE ARE UNABLE TO SEE ANY JUSTIFICATION IN THE ACTION OF THE AO, PER CONTRA IN VIEW OF ABOVE, WE DO NOT SEE ANY INFI RMITY OR PERVERSITY IN THE IMPUGNED ORDER. CONSEQUENTLY, WE DECLINE TO INTERF ERE WITH THE SAME. FOR ITA NO.3680/DEL/2008 9 THE REASONS AS RECORDED HEREINABOVE, WE ARE OF THE VIEW THAT THIS APPEAL IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED AND W E DISMISS THE SAME. 10. IN THE RESULT, THIS APPEAL BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2012. SD/- SD/- (SHAMIM YAHYA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 20TH JULY 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR ITA NO.3680/DEL/2008 10 1. DATE OF DICTATION 17.7.2012. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.7.2012. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 20.7.2012. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.7 .2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER..