Alok Gupta, New Delhi V. DCIT, circle-1(3)(1) (Internaqtional Taxation), New Delhi

ITA 4338/DEL/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9054 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.V. BHASKAR
• Keywords: Reopening of assessment; Business expenditure; Double taxation relief; Opportunity of being heard; Source of fund; Deemed to accrue or arise in india; Application of stay; Corroborative evidences; Reason to believe; Reassessment proceedings
• Section: 147; 68; 69; 5(2); 195; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI (Through Virtual Hearing) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA Nos.4338 & 4339/Del/2019 Assessment Years: 2010-11 & 2011-12 Stay Application Nos.312 & 313/Del/2020 (ITA Nos.4338 & 4339/Del/2019) Assessment Years: 2010-11 & 2011-12 Alok Gupta, C-31, Chirag Enclave, Ikoyi Crescent, New Delhi. PAN: APWPG6624H Vs DCIT, Circle 1(3)(1), International Taxation, New Delhi. (Appellant) (Respondent) Assessee by : Shri Prabhat Kumar, CA Revenue by : Shri E.V. Bhaskar, Sr. DR Date of Hearing : 12.08.2021 Date of Pronouncement : 09.11.2021 ORDER PER R.K. PANDA, AM: The above two appeals filed by the assessee are directed against the separate orders dated 28 th February, 2019 of the CIT(A)-42, New Delhi, relating to assessment years 2010-11 and 2011-12 respectively. 2. Since identical grounds have been taken by the assessee in both these appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order. ITA Nos.4338 & 4339/Del/2019 2 ITA No.4338/Del/2019 (A.Y. 2010-11) 3. Facts of the case, in brief, are that the assessee is a non-resident. A notice u/s 148 of the Act was issued to the assessee on 31 st March, 2017 after recording reasons for reopening of the case and after obtaining necessary approval u/s 151 of the IT Act. The assessee, in response to the said notice, filed his return of income on 25 th May, 2017 declaring the income of Rs.27,100/-. The assessee requested for supply of copy of the reasons recorded for reopening of the assessment and the AO suplied the same. The reasons recorded by the AO for reopening of the case has been reproduced in the assessment order which reads as under:- “An information has been received from ITO (Inv.) Unit-6 that Sh. Alok Gupta maintained savings account bearing No. 0005-119394100 with IndusInd Bank Ltd. where sh. Alok Gupta has received regular inward remittance from UAE amounting to Rs. 1.31 crore. Sh. Alok Gupta is based in Nigeria which raises suspicion on the source of the fund. Subsequently, out of total receipts of Rs. 1.31 crore in the bank account, there were, high value cash withdrawals amounting to Rs. 1.22 crore. The cash withdrawals were always kept below Rs. 10 lakh to avoid reporting. During investigation by the Unit, copy of the above bank account was obtained. When enquired with Sh. Alok Gupta in this regard, he has submitted that he is a non- resident Indian from birth holding Indian Passport and normally resides in Nigeria and United Arab Emirates. sh Alok Gupta has further submitted, that, the remittance of Rs. 1.31 crore were received from African Commodities DMCC towards expenses incurred, for travel related expenses of various employees recruited from India who are working outside India in his group companies. Sh Alok Gupta further submitted that Sh O.P. Mundra was authorized to operate the bank account in his absence in India and withdrawals were made for meeting travel related expenditure of employees recruited from India. However, it is important to mention that Sh. Alok Gupta has not submitted any documentary evidence in support of his claim with regard to the source of the fund. Under these circumstances, the source of the fund received in his above- mentioned bank account remains unexplained for which appropriate remedial action is called for under the IT Act, 1961 to tax the unexplained money/ undisclosed income in relevant A.Ys. He has also not ITA Nos.4338 & 4339/Del/2019 3 submitted any documentary evidence in support of his claim with regard to the utilization of the fund. Financial year-wise break-up of credits and withdrawals made during F.Ys. 2009-10 and 2010-11 in the above bank account are tabulated below:- F.Y. Total credits/deposits Total withdrawals 2009-10 Rs. 59, 45, 779/- Rs. 59,25,000/- 2010-11 Rs. 2,33,68,263/- Rs. 2,25,98,377/- Total Rs. 2,93,14,042/- Rs 2,85,23,377/- On perusal of bank statement of the assessee, it is found that during the financial year 2009-10, the assessee has withdrawn Rs. 59,25,000/ -in his bank account. The assessee has neither filed his return of income for the A.Y. 2010-11 nor offered, any income for taxation. Therefore, I have reason to believe that income amounting Rs. 59,25,000/-chargeable to tax has escaped assessment in A. Y. 2010-11. This is a fit case for initiating proceedings u/s 147 of the IT Act, 1961. Accordingly, notice u/s 148 needs to be issued to the assessee.” 4. The assessee filed his objections to the reasons so recorded for the reopening of the assessment which was rejected by the AO by passing a detailed order. 5. During the course of assessment proceedings, the assessee filed the requisite details as called for by the AO from time to time. It was submitted that the assessee is a non-resident and working with M/s African Commodities DMCC which is a limited liability company registered in Dubai Multi Commodities centre, Dubai, UAE. The assessee Mr.Alok Gupta is 50% beneficial shareholder along with 50% share being owned by his brother Mr. Raj Gupta who is also a Non- Resident. During the year under consideration, out of foreign remittances from M/s African Commodities DMCC, the assessee has made various salary and other travel related payments totaling to Rs. 4,51,21,822/- for various employees of ITA Nos.4338 & 4339/Del/2019 4 group company M/s African Industries Group Ltd. Nigeria. During the FY 2009- 10, the assessee has himself transferred Rs. 5,09,31,277/- from abroad to his Indusind NRE Account No. 0005119394-100 and Kotak Mahindra Bank NRE Account No. 01981040000040. Subsequently, he has made cash withdrawal of Rs. 94,30,000/- and Rs. 43,25,000/-[said household expense] and other said expenses for staff he has made withdrawal of Rs.4,51,21,822/-. 5.1 The AO, thereafter, specifically asked the assessee to furnish a statement specifying all the remittances made from abroad with date and bank account explaining the source of cash. The assessee submitted that it has received foreign inward remittances from M/s African Commodities DMCC, a UAE based company. The assessee filed requisite details and submitted that it has already proved the identity of foreign party and the source of the amount credited in the bank account of the assessee. It was submitted that the assessee and M/s African Commodities DMCC, both are non-residents of India. So far as copy of financial statement of M/s African Commodities DMCC is concerned, it was submitted that these documents which belong to the third party are confidential documents and are not available with the assessee for further scrutiny. It was submitted that the company is registered and a resident of UAE where no return of income is required to be filed and, hence, the documents named the return of income in the UAE does not exist and cannot be made available. So far as the proof of the amount utilized in India out of the foreign remittances received is concerned, it was submitted that ITA Nos.4338 & 4339/Del/2019 5 during the year under review, out of the foreign remittance received from M/s African Commodities DMCC, the assessee has made various salary and other travel related payments totaling to Rs.4,51,21,822/- for various employees of group company M/s African Industries Group Ltd, Nigeria. The details of the employees who have been appointed in the group company during the F.Y 2009- 2010 was filed before the AO. 6. However, the AO was not satisfied with the arguments advanced by the assessee in absence of proper documentary evidence to his satisfaction. He noted that the assessee has himself transferred to his bank account in India from his bank account abroad and withdrawn cash, the details of which have not been disclosed along with proper documentary evidence. Applying the provisions of section 69A of the Act, the AO made addition of Rs.5,09,31,277/- to the total income of the assessee being the amount received in the bank account and, thus, determined the total income of the assessee at Rs.5,09,58,380/-. 7. Before CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of reassessment proceedings. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee. So far as the validity of reassessment proceedings are concerned, the ld.CIT(A) dismissed the same by observing as under:- “Findings: 5.2 1 have gone through the facts of the case, appellant submission and assessment order of the AO. The relevant facts of the case are that the ITA Nos.4338 & 4339/Del/2019 6 appellant has challenged the reopening of the case on the ground that there is no reason to believe. The extracts of .the reason to believe are reproduced as under; "An Information has been received from ITO (Inv) Unlt-6 that Sh. Alok Gupta maintained savings account bearing no. 0005- 119394100 with IndusInd Bank Ltd. where Sh. Alok Gupta has received regular inward remittance from UAE amounting to Rs. 1.31 crore. Sh. Alok Gupta is based in Nigeria which raises suspicion on the source of the fund....during the investigation by the Unit, copy of the above bank account was obtained. When enquired with Sh. Alok Gupta In this regard, he has submitted that he is a non-resident Indian from birth holding Indian Passport and normally resides in Nigeria and United Arab Emirates. Sh. Alok Gupta has further submitted that the remittance of Rs. 1.31 crores were received from African Commodities DMCC towards expenses incurred for travel related expenses of various employees recruited from India who are working outside India in his group companies. ... However, it Is important to note that Sh. Alok Gupta has not submitted any documentary evidence in support of his claim with regard to the source of fund. Under these circumstances, the source of fund received in the above-mentioned bank account remains unexplained for which appropriate remedial action is called for under the IT Act, 1961 to tax the unexplained money / undisclosed income in relevant AYs. He has also not submitted any documentary evidence in support of his claim with regard to utilization of the fund." 5.3 The appellant contended that it was a case of suspicion only as per the reasons learned by the AO. I do not find merit in the plea of the appellant because the appellant has not filed income tax return to claim that the receipts are not chargeable to tax in India and on the other hand, the reasons clearly depict the fact of inward remittance in the bank account of the appellant (non- resident Indian), which is maintained in India and the same is chargeable to tax in India as per section 5 of the Income Tax Act. 5.4 It is a settled position that once any receipt is chargeable to tax as per the provision of income tax act, the recipient is required to file income tax return to disclose such receipts and after true income, if any. Therefore, it is a clear cut case of escapement of assessment. It is not a case of suspicion but clear cut case of escapement as no income tax return has been filed in this case. 5.5 It is important to note that the assessee could not submit any evidence to demonstrate the utilization of the funds received in India before the investigation unit of the department. There is no bar on reopening on the basis of third party information. The AO has made up his belief in the light of the ITA Nos.4338 & 4339/Del/2019 7 facts that a) the assessee has not filed income tax return for the relevant year b) the assessee is non¬resident and c) the assessee has not furnished documentary evidence before investigation unit to corroborate the fact of utilization of cash withdrawal. 5.6 In this regard, it may be relevant to take note of decision of Hon'ble Supreme Court in the case of Income Tax vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500(SC), wherein the court spelt out that if the AO, for whatever reason, has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. The relevant extracts of the same are reproduced as under: "firstly the AO must have reason to believe that Income profits or gains chargeable to Income tax have escaped assessment, and secondly he must also hove reason to believe that such escapement has occurred by reason of either(1) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the AO could have jurisdiction to Issue notice under Section 148 read with Section 147(a). But under the substituted Section 147 existence of only the first condition suffices. In other words, if the assessing officer for whatever reason has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment." 5.7 It is also relevant to note that in Income Tax Officer, Calcutta vs. Selected Dalurband Coal Company Pvt. Ltd 1997 (10) SCC 68, the Supreme Court held as follows: "At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have now to go on, we do not and we ought not to express any opinion on merits." 5.8 Thus, the challenge to the reason to believe for reopening in a case, where no return is filed, is without merit. Further, the appellant took a plea that necessary approval of Addl. CIT was not obtained in this case. I find that the AO has categorically mentioned in the first para of assessment order that necessary approval under section 151 of the act was obtained before issuing the notice. In this regard, the necessary clarification was sought from the AO. ITA Nos.4338 & 4339/Del/2019 8 As per information supplied by the AO, the necessary approval was duly obtained in this case by the AO. The evidence in this regard is pasted below: 5.9 in view of the above discussion, the ground of appeal is dismissed.” 7.1 So far as the addition of Rs.5,09,31,271/- made u/s 69A is concerned, the ld.CIT(A) dismissed the same by observing as under:- “6.2 I have gone through the facts of the case, appellant submission and assessment order of the AO. The relevant facts of the case are that during the FY 2009-10, the assessee has received Rs. 5,09,31,277/- from abroad in his indusInd NRE Account No. 0005119394-100 and Kotak Mahindra Bank NRE Account No. 0198100000040. Subsequently, he has made cash withdrawal for various expenses including travel related and salary expenses for staff. The AO asked the assessee to furnish a statement specifying all the remittances from abroad with date and bank account explaining the source of cash. The appellant submitted vide letter dated 18/12/2017 that the details of foreign remittance received In bank account in India and copy of relevant pages of bank statement of M/s African Commodities DMCC reflecting the payments made to the assessee were provided vide letter dated 16.11.2017.The assessee further submitted vide letter dated 18.12.2017 that the company making remittances is registered and a Resident of U.A.E. where no return of income is required to be filed and hence, such a document namely returns of income in the U.A.E. does not exist and cannot be made available. The relevant extracts of the submission are reproduced as under: "The copy of the financial statement of M/s African Commodities DMCC as sought by your Honour are of third party are confidential documents and hence same are not available to us for yours further scrutiny. Company is registered and a Resident of U.A.E. where no return of income is required to be filed and hence such a document namely returns of income in the U.A.E. does not exist and cannot be made available " 6.3 The appellant also submitted copy of confirmation letter from M/s African Commodities DMCC confirming the remittances made by them. The letter reads as under: "Our company, M/s African Commodities DMCC is a Limited liability company registered in Dubai Multi Commodities Centre, Dubai, UAE which is engaged in the business of General Trading in Steel, Chemicals and other commodities, Mr. Raj Gupta and Mr. Alok Gupta are the ultimate beneficial shareholders of the ITA Nos.4338 & 4339/Del/2019 9 Company. Mr. Alok Gupta is also the General Manager of our Company. We have been informed by Mr. Alok Gupta that his personal income tax assessment proceedings are ongoing in India for which we have been requested by him to furnish details in connection therewith. In this connection, we confirm that during the period April 2009 to March 2010, we have remitted USD 10,74,390 to his personal bank account In India. Copy of the relevant pages of remittance was made for the purpose of enabling Mr. Alok Gupta to incur various salary, travel and other related payments for various employees of our group company M/s African Industries Group Ltd., Nigeria." 6.4 Further, the appellant submitted that the foreign remittance received from M/s African Commodities DMCC, was utilized for making expenses like salary and other travel related payments. As per the appellant, total sum of Rs. 4,51,21,822/- was spent in respect of salary and other Travel related payments for various employees appointed in group company during FY 2009-10. The appellant contended that since the source of funds have already been proven by way of documentary evidence and thus, the onus cast upon the appellant has been discharged. The appellant also objected to the conclusion of AO that the appellant had transferred money into his Indian bank account from his own foreign bank account. "As regards the utilization of the funds, your Honour may note that no amount utilized has been claimed by the assesse as a deduction while computing his total income. Supporting evidence/documents as requested by the Ld. AO are the documents of third party (i.e. M/s African Commodities DMCC) as these payments are neither Appellant's expenditure nor payments from him and hence same is not available with nor has been thought to be relevant for him to preserve and hence were not furnished." 6.5 I find that there is no dispute regarding source of funds as it is documented that the funds in the account of the assessee were transferred from the bank account of M/s African Commodities DMCC. With this fact of receipt of funds in India, section 5 of income tax act charges such receipt subject to other provisions of the act. So the question arises whether such receipt of fund is in the nature of income or not? Going by the explanation of the assessee, the money withdrawn from bank was utilized to meet expenses in the nature of salary and travel of employers. So, it is a case of receipt and expenditure. ITA Nos.4338 & 4339/Del/2019 10 6.6 The appellant was confronted vide email dated 13.11.2018 as to why the receipt in question may not be treated as income of the assessee as per section 5 of the act. The content of the email dated 13.11.2018 reads as under: "Section 5 clearly provides that total income of any previous year of a person who is non resident includes all income from whatever source derived which is received In India. In this case, there is no dispute on the fact that funds have been received in the bank account of the assessee. Now the next question is whatever such funds are in the nature of income or not? In this regard, the onus is on the appellant to evidence that such receipts are not in the nature of income. The appellant has submitted that the funds were received to utilize the same for meeting out expenses in the nature of salary, travel related payments to various employees of Group Company. However, this claim is not backed by documentary evidence. Therefore, the appellant has failed to discharge his onus. Accordingly, you are requested to explain as to why the receipt in question may not be treated as income of the assessee as per the provisions of Income Tax Act? Further, it may be explained as to why the expenses claimed to have been incurred in India against such receipts may not be allowed in the absence of any documentary evidence/vouchers. Your reply in this regard must reach in this office by 23.11.2018." 6.7 In this regard the appellant submitted vide letter dated 23.11.2018 that any reimbursement cannot be treated as income. I have no objection to the plea of the assessee. However, the onus to prove, that the receipt is in the nature of reimbursement, is on the assessee only. 6.8 I find that the appellant's main argument on merit of the case is that the Appellant was in receipt of the said foreign inward remittances from M/s African Commodities DMCC, U.A.E., a Company in which the Appellant is the beneficial shareholder. The Appellant is also the General Manager of the said Company, Such amount was received for the purpose of making various salary & other travel related payments for various employees of group company M/s African Industries Group Ltd, Nigeria. The appellant submitted following documentation in this regard to substantiate the source of receipt: • Copy of all the bank statements and bank summary of the Appellant for the year under review highlighting the amount received from the aforesaid Company; • Copy of the relevant pages of the bank statement of M/s African Commodities DMCC highlighting the payments mode to the Appellant; • Copy of confirmation letter from M/s African Commodities DMCC confirming the remittances made by them. ITA Nos.4338 & 4339/Del/2019 11 6.9 Further the appellant took a position that since the source of the funds have already been proven by way of documentary evidence as stated above, the onus cast upon the Appellant has been discharged. 6.10 The appellant also highlighted that AO has erred in concluding (Refer Para No. 5 of his assessment order) that the Appellant had transferred money into his Indian bank account from his own Foreign bank account. 6.11 As regards utilization of funds, the appellant submitted that "no amount utilized has been claimed by the assessee as a deduction while computing his total income. Supporting evidence / documents as requested by the Ld. AO are the documents of third party (i.e. M/s African Commodities DMCC) as these payments are neither Appellant's expenditure nor payments from him and hence same is not available with nor has been thought to be relevant for him to preserve and hence were not furnished." 6.12 In this regard, the appellant submitted list of 120 employees without mentioning any specific amount of expenditure against the respective name. Further, the appellant also submitted confirmation of 44 employees regarding the fact of receipt of salary and travel related expenses without any date of receipt of such cash. It is also interesting to note that against the name of 25 employees, even their date of joining and date of birth are left blank. 6.13 I find that mere submission of confirmation without any mention of date of such cash payment cannot be entertained as corroborative evidence to demonstrate the fact of incurring such expenditure. The mode of payment being in cash, does put heavy onus on the assessee to demonstrate that it was utilized for the business of M/s African Commodities DMCC. Moreover, the appellant has failed to submit evidence of booking of such expenses in the books of account of M/s African Commodities DMCC. It is also interesting to note that it is not a case where such disbursement of cash to employees is made in routine manner for every month and over the years. It is a solitary instance where such disbursement in cash has taken place. In such a scenario, I find that with the available material on record as discussed above, the assessee has failed to discharge the onus to show that the receipt was truly in the nature of reimbursement. The plea of the appellant regarding the fact of making cash payment to employees for their travel and salary is not acceptable also because of the fact that why the appellant would not have arranged for travel tickets on his own through travel agent as against making cash payment to the employees in order not only to ensure better deal from travel agent but more importantly, to ensure that the cash has been used for the assigned purpose as against leaving it to the discretion of the employee. 6.14 The appellant further argued that the aforesaid addition has been made wrongly by the AO under provisions of section 6SA of the act. The provisions of section 69A of the act read as under: ITA Nos.4338 & 4339/Del/2019 12 " Where in any financial year the assessee is found to be the owner of any money, bullion, Jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, Jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.]" 6.15 The appellant highlighted that from the wordings of section 69A of the Act, what is necessary is the explanation of source of money which the Appellant is owning and which is NOT recorded in his books of accounts. The satisfaction of twin conditions is required for the purpose of invoking the provisions of section 59A. The appellant pointed out that it is clear that the provisions of section 69A can be invoked only when the Appellant is liable to and has maintained books of accounts. 6.16 I find that the provisions of section 69A nowhere mandate the existence of books of accounts. It only provides that if the assessee has maintained books of accounts, in that case, the provisions are invoked if such money, bullion, Jewellery or other valuable article is not recorded in the books of account. However, it nowhere mentions that the provisions would not be invoked if the books of accounts are not maintained. In other words, it only puts additional condition that if any books of accounts are maintained by the assessee, then such money etc. should not be recorded in such books of accounts. 6.17 The appellant has relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Bhaichand Gandhi [2013] 141 ITR 67/30 taxmann.com 220. However, I find that the aforesaid decision is in respect of provisions of section 68 of the act whereas the present case involves addition under section 69A of the act. The appellant is found to be the owner of money which has been withdrawn from the bank account as per the facts of the case. The appellant has claimed the nature of such receipt as reimbursement of expenses. However, in the absence of any evidence to incur such expenses, the aforesaid receipt is income from other source in the hands of the appellant. Therefore, I do not find any merit in the argument of the appellant. Hence, the ground of appeal is dismissed.” 8. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- ITA Nos.4338 & 4339/Del/2019 13 “1. On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in sustaining the action of the learned Assessing Officer in re-opening the Appellant’s assessment u/s 147 of the Income Tax Act, 1961. The learned Commissioner (Appeals) here more particularly failed to note that- (a) the assessment of the Appellant had been re-opened on basis of information from the Investigation Wing of the Income Tax Department - which information was not definite to support the re-opening and (b) the learned Assessing Officer had re-opened the assessment only on basis of such information and not on basis of his own belief that the income of the Appellant had escaped assessment. According to the Appellant, the re-assessment is illegal and deserves to be quashed in appeal. 2. On facts and circumstances of the case and in law, the learned Commissioner (Appeals) failed to note that the Appellant’s assessment has been re-opened by the learned Assessing Officer, without taking the mandatory pre-sanction of the concerned Commissioner u/s 151 (2). The re-opening action is without proper authority of law and deserves to be quashed in appeal. 3. On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in sustaining addition of Rs.5,09,31,277 made by the learned Assessing Officer u/s 69A of the Income Tax Act, 1961 in respect of remittances received by the Appellant in his bank account from one, M/s African Commodities DMCC, Dubai. In sustaining this addition, the learned Commissioner (Appeals) has disregarded the Appellant’s explanations that the remittances were not his income as the same were made by African Commodities DMCC, Dubai to reimburse him business expenditures incurred on its behalf. The addition of Rs. 5,09,31,277 u/s 69A sustained by the learned Commissioner (Appeals) is erroneous and deserves to be deleted in appeal. 4. Without prejudice to the above, the learned Commissioner (Appeals) also erred in sustaining the action of the learned Assessing Officer in taxing the Appellant on the whole of remittances amount of Rs. 5,09,31,277/- u/s 69A without allowing deduction for any expenditure incurred by the Appellant from the remittances. ITA Nos.4338 & 4339/Del/2019 14 This action of the lower authorities may be corrected in appeal by allowing appropriate deduction for the expenditure. 5. Both the lower authorities erred in passing their respective orders without granting the Appellant an adequate opportunity of being heard. The orders passed by them are in contravention of the principles of natural justice and bad in law. 6. The Appellant reserves the right to add, alter or delete any of the above grounds with permission of the Hon’ble Tribunal.” 9. The ld. counsel for the assessee, at the outset, drew the attention of the Bench to the two sets of reasons on record i.e., one supplied during the course of the assessment proceedings and the second, reproduced in the assessment order. Referring to the copy supplied during the course of assessment proceedings, he submitted that the AO in the said reasons had stated at third para of the order that the assessee has deposited Rs.59,25,000/- in his bank account whereas the reasons reproduced in assessment order and reasons supplied on 19 th August, 2019 which is certified as true copy states that the assessee has withdrawn Rs.59,25,000/- from his bank account. He submitted that there is difference between the total of credits/deposits and total withdrawal stated in the table reproduced therein and the similar figures appearing in the reasons supplied to the assessee. He submitted that there are also other inconsistencies in both the reasons. He submitted that the assessee was supplied with only proforma which has no signature of the superior authorities. It was accordingly argued before the CIT(A) that the approval given by the PCIT was not obtained. The ld. CIT(A) has reproduced the proforma in his appellate order, but, that contained approval of Addl. CIT only. ITA Nos.4338 & 4339/Del/2019 15 10. Referring to the decision of the Hon’ble Delhi High Court in the case of Sabh Infrastructure Limited vs. ACIT, vide WP (C) 1357/2016, he submitted that the Hon’ble High Court in its order dated 25 th September, 2017 has laid down the guidelines in relation to issuance of notice u/s 147/148 of the Act and held that “while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer with his name, designation and date.” 10.1 Referring to the decision of the coordinate bench of the Tribunal in the case of Sbs Realtors Pvt. Ltd. vs. ITO, vide ITA No.7791/Del/2018 (SB), he submitted that the Tribunal, in the said decision, has held that reopening on the basis of the report of the Investigation Wing is not permissible. Referring to the decision of the coordinate Bench of the Tribunal in the case of Key Components (P) Ltd. vs. ITO, vide ITA No.366/Del/2016, he submitted that factual error in reasons or conclusions based on information of Investigation Wing are not reasons. 11. He accordingly submitted that since there exists two reasons i.e., one supplied to the assessee and the one reproduced in the assessment order, there is complete non-application of mind by the AO as well as the approving authorities and, therefore, in view of various decisions, such reopening is bad in law. He submitted that the approval given by the superior authorities being not in accordance with the law and there is complete non-application of mind, the ITA Nos.4338 & 4339/Del/2019 16 reassessment proceedings should be treated as invalid. Referring to various decisions, he submitted that the re-assessment proceedings were initiated for withdrawal of Rs.59,25,000/- whereas addition has been made on account of some other reason i.e., deposit of money and, therefore, such a reassessment is not valid. 12. So far as the merit of the case is concerned, he submitted that the assessee had submitted the requisite details and explained the transactions in his bank statement. He submitted that the AO in the assessment order has made addition u/s 69A on the ground that the arguments made by the assessee are not supported by proper documentary evidence. However, the AO had also mentioned that the assessee has himself transferred the money to his bank account in India from his bank account abroad and withdrawn cash. Therefore, the conclusion of the AO is contrary to the facts and does not satisfy the conditions of section 5(2) which does not permit taxing of repatriation of income earned and received outside India. He submitted that the ld.CIT(A), without considering the various submissions made by the assessee has upheld the action of the AO by treating the receipt as ‘ income from other source’ in the hands of the assessee. 12.1 The ld. Counsel for the assessee submitted that the money in question cannot be taxed in the hands of the assessee u/s 5(2) r.w.s. 90 of the IT Act. He submitted that there is no finding as to how the AO has jurisdiction to assessee such receipts in the light of the DTAA with UAE where every income is taxable in country of residence only. Referring to the decision of the Delhi Bench of the Tribunal in the ITA Nos.4338 & 4339/Del/2019 17 case of Russian Technology Centre Pvt. Ltd. vs. DCIT (2013) 37 taxmann.com 400, he submitted that the Tribunal, in the said decision, has held that if the identity of the non-resident remitter is established and money has come in through proper banking channels, it cannot be treated as deemed income of the assessee u/s 68 or 69 of the Act. He accordingly submitted that both legally and factually the addition made by the AO and sustained by the CIT(A) is not justified. The ld. Counsel for the assessee has also relied upon the following decisions:- i) Sumanabandhyopadhyay & Anr. Vs. DDIT (IT), TS 281 HC 2017; ii) Decision of the Hon’ble Karnataka High Court in the case of Prahlad Vijendra Rao; iii) CIT vs. AP Kalyanakrishnan, 195 ITR 534 (Madras). iv) CIT vs. Jet Airways, 331 ITR 236 (Bombay) v) Ranbaxy Laboratories Ltd. vs. CIT, 336 ITR 136 13. The ld. DR, on the other hand, heavily relied on the order of the AO and the CIT(A). So far as the argument of the ld. Counsel regarding two sets of reasons are concerned, the ld. DR filed a clarification dated 20/23 October, 2020 from the AO regarding the two different versions. He submitted that this is only a typographical error and, therefore, no adverse view should be taken. The ld. DR, accordingly submitted that the order of the CIT(A) be upheld and the grounds raised by the assessee should be dismissed. ITA Nos.4338 & 4339/Del/2019 18 14. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the assessee, in the instant case, is a non-resident. During the impugned assessment year, the assessee had received inward remittances amounting to Rs. USD 9,44,530 and USD 1,29,860/- both aggregating to USD 10,74,390 (equivalent to Indian Rupees 5,09,31,277/-) from M/s African Commodities DMCC, UAE in his NRE account which was maintained with Kotak Mahindra Bank. From the details furnished by the assessee, it is seen that the assessee was working as General Manager with the remitter company i.e., M/s African Commodities DMCC, UAE, during the relevant year and was a 50% ultimate beneficial shareholder of this company. Since the assessee had not filed his return of income, the AO, on the basis of the report of the Investigation Wing, reopened the assessment after recording reasons and issued notice u/s 148 of the Act. Rejecting the various explanations given by the assessee, the AO made addition of Rs.5,09,31,277/- which has been upheld by the CIT(A). It is the submission of the ld. Counsel that since there are two sets of reasons i.e., one supplied to the assessee and one reproduced in the assessment order, therefore, due no non-application of mind while recording reasons and since approving authorities had given approval in a mechanical manner, such reopening of assessment being not in accordance with the law should be treated as null and void. It is also his argument that since the reopening was made for withdrawal of Rs.59,25,000/- as per the reasons ITA Nos.4338 & 4339/Del/2019 19 recorded in the body of the assessment order, but, addition has been made on some other issue i.e., on account of unexplained deposit u/s 69A, therefore, such reassessment proceedings are not in accordance with law. 15. We find some force in the above argument of the ld. Counsel for the assessee. There is no dispute to the fact that there is difference between the reasons recorded by the AO as reproduced in the assessment order and the reasons supplied to the assessee. The reasons recorded by the AO which has been reproduced in the body of the assessment order has already been reproduced in para 3 of this order according to which the assessment was re-opened for withdrawal of Rs.59,25,000/- by the assessee from his bank account. However, a perusal of the copy of the reasons supplied to the assessee shows that the assessment was reopened for deposit of Rs.59,25,000/-by the assessee from his bank account. The reasons recorded and supplied to the assessee are as under:- ITA Nos.4338 & 4339/Del/2019 20 ITA Nos.4338 & 4339/Del/2019 21 ITA Nos.4338 & 4339/Del/2019 22 16. We find, during the course of hearing, the previous Bench, vide order sheet entry dated 5 th July, 2021, had directed the AO to clarify regarding the two sets of reasons. We find, the AO, vide letter dated 20/23 rd October, 2020, addressed to the CIT, DR, had given the following clarification:- ITA Nos.4338 & 4339/Del/2019 23 17. A perusal of the two sets of reasons show that there is an error between the two reasons i.e., the one supplied to the assessee and the one reproduced in the assessment order. In the assessment order, the reason recorded for re-opening was on account of withdrawal of Rs.59,25,000/- from the bank account whereas in the reasons supplied to the assessee it is stated that assessee has deposited Rs.59,25,000/-. Thus, it is seen that neither there is application of mind by the AO nor there is application of mind by the two approving authorities i.e., Addl. CIT, Range-1(3), International Taxation and the PCIT, International Taxation-1. From a perusal of the two proformas we find, in the form for recording the reasons for initiating proceedings u/s 148 of the Act and for obtaining the approval of the PCIT which was the reasons recorded in the body of the assessment order, there is the approval of the Addl. CIT by mentioning as under:- ITA Nos.4338 & 4339/Del/2019 24 17.1 Similarly, the PCIT, while giving his approval has given his approval by observing as under:- ITA Nos.4338 & 4339/Del/2019 25 18. However, in the proforma given to the assessee which is reproduced at para 15 of this order, it is seen that there is no approval given either by the Addl. CIT or by the PCIT. All these mistakes on the part of the AO as well as the higher authorities while giving the approval show that there is complete non-application of mind by the lower authorities while recording reasons as well as giving approval and it cannot be said to be a typographical error. Approval, if any, has been given in a casual manner and there is complete absence of application of mind. We further find as per the reasons recorded in the body of the assessment order, the reopening was for withdrawal of Rs.59,25,000/- from the bank account. However, no addition has been made on such account but addition has been made u/s 69A on account of unexplained money/undisclosed income of Rs.5,09,31,277/-. Therefore, the decision of Hon’ble Bombay High Court in the case of Jet Airways ITA Nos.4338 & 4339/Del/2019 26 (supra) and decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. (supra) are squarely applicable and such addition cannot be sustained. In view of the above, we are of the considered opinion that the reassessment proceedings initiated by the AO and upheld by the CIT(A) is not in accordance with the law. We, therefore, quash the reassessment proceedings and the subsequent proceedings are held to be null and void. Since the assessee succeeds on this legal issue, the grounds challenging the addition on merit is not being adjudicated. ITA No.4338/Del/2019 is accordingly allowed. ITA No.4339/Del/2019 (A.Y. 2011-12) 19. The grounds raised by the assessee read as under:- “1. On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in sustaining the action of the learned Assessing Officer in re-opening the Appellant’s assessment u/s 147 of the Income Tax Act, 1961. The learned Commissioner (Appeals) here more particularly failed to note that- (a) the assessment of the Appellant had been re-opened on basis of information from the Investigation Wing of the Income Tax Department - which information was not definite to support the re-opening and (b) the learned Assessing Officer had re-opened the assessment only on basis of such information and not on basis of his own belief that the income of the Appellant had escaped assessment. According to the Appellant, the re-assessment is illegal and deserves to be quashed in appeal. 2. On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in sustaining addition of Rs. 1,74,06,350/- made by the learned Assessing Officer u/s 69A of the Income Tax Act, 1961 in respect of remittances received by the Appellant in his bank account from one, African Commodities DMCC, Dubai. ITA Nos.4338 & 4339/Del/2019 27 In sustaining this addition, the learned Commissioner (Appeals) has disregarded the Appellant’s explanations that the remittances were not his income as the same were made by African Commodities DMCC, Dubai to reimburse him business expenditures incurred on its behalf. The addition of Rs. 1,74,06,350/- u/s 69A sustained by the learned Commissioner (Appeals) is erroneous and deserves to be deleted in appeal. 3. Without prejudice to the above, the learned Commissioner (Appeals) also erred in sustaining the action of the learned Assessing Officer in taxing the Appellant on the whole of remittances amount of Rs. 1,74,06,350/- u/s 69A without allowing deduction for any expenditure incurred by the Appellant from the remittances. This action of the lower authorities may be corrected in appeal by allowing appropriate deduction for the expenditure. 4. Both the lower authorities erred in passing their respective orders without granting the Appellant an adequate opportunity of being heard. The orders passed by them are in contravention of the principles of natural justice and bad in law. 5. The Appellant reserves the right to add, alter or delete any of the above grounds with permission of the Hon’ble Tribunal.” 20. After hearing both the sides, we find, on the basis of the notice issued u/s 148 of the IT Act after recording reasons that the assessee has withdrawn an amount of Rs.2,25,98,377/- which has escaped assessment, the AO completed the assessment u/s 147/143(3) of the Act determining the total income at Rs.1,83,06,970/- wherein he made addition of Rs.1,74,06,350/- u/s 69A of the Act to the returned income of Rs.9,00,620/-. We find, before the CIT(A) the assessee challenged the validity of the reassessment proceedings as well as the addition on merit. However, the ld.CIT(A) upheld the validity of the reassessment proceedings and sustained the addition on merit. A perusal of the reasons recorded for reopening of the assessment as reproduced by the AO in the body of the assessment order for the impugned year reads as under:- ITA Nos.4338 & 4339/Del/2019 28 “An information has been received from ITO (Inv.) Unit-6 that Sh. Alok Gupta maintained savings account bearing No. 0005-119394100 with IndusInd Bank Ltd. where sh. Alok Gupta has received regular inward remittance from UAE amounting to Rs. 1.31 crore. Sh. Alok Gupta is based in Nigeria which raises suspicion on the source of the fund. Subsequently, out of total receipts of Rs. 1.31 crore in the bank account, there were, high value cash withdrawals amounting to Rs. 1.22 crore. The cash withdrawals were always kept below Rs. 10 lakh to avoid reporting. During investigation by the Unit, copy of the above bank account was obtained. When enquired with Sh. Alok Gupta in this regard, he has submitted that he is a non- resident Indian from birth holding Indian Passport and normally resides in Nigeria and United Arab Emirates. sh Alok Gupta has further submitted, that, the remittance of Rs. 1.31 crore were received from African Commodities DMCC towards expenses incurred, for travel related expenses of various employees recruited from India who are working outside India in his group companies. Sh Alok Gupta further submitted that Sh O.P. Mundra was authorized to operate the bank account in his absence in India and withdrawals were made for meeting travel related expenditure of employees recruited from India. However, it is important to mention that Sh. Alok Gupta has not submitted any documentary evidence in support of his claim with regard to the source of the fund. Under these circumstances, the source of the fund received in his above- mentioned bank account remains unexplained for which appropriate remedial action is called for under the IT Act, 1961 to tax the unexplained money/ undisclosed income in relevant A.Ys. He has also not submitted any documentary evidence in support of his claim with regard to the utilization of the fund. Financial year-wise break-up of credits and withdrawals made during F.Ys. 2009-10 and 2010-11 in the above bank account are tabulated below:- F.Y. Total credits/deposits Total withdrawals 2009-10 Rs. 59, 45, 779/- Rs. 59,25,000/- 2010-11 Rs. 2,33,68,263/- Rs. 2,25,98,377/- Total : Rs. 2,93,14,042/- Rs 2,85,23,377/- On perusal of bank statement of the assessee, it is found that during the financial year 2010-11, the assessee has withdrawn Rs.2,25,98,377/- in his bank account. The assessee has neither filed his return of income for the A.Y. 2011-12 nor offered, any income for taxation, therefore, I have reason to believe that income amounting Rs.2,25,98,377/- chargeable to tax has escaped assessment in A. Y. 2010-11. This is a fit case for initiating proceedings u/s 147 of the IT Act, 1961. Accordingly, notice u/s 148 needs to be issued to the assessee.” 21. However, a perusal of the reasons supplied to the assessee by the AO for the F.Y. 2010-11 reads as under:- ITA Nos.4338 & 4339/Del/2019 29 ITA Nos.4338 & 4339/Del/2019 30 “An information has been received from ITO (Inv.) Unit-6 that Sh. Alok Gupta maintained savings account bearing No. 0005-119394100 with IndusInd Bank Ltd. where sh. Alok Gupta has received regular inward remittance from UAE amounting to Rs. 1.31 crore. Sh. Alok Gupta is based in Nigeria which raises suspicion on the source of the fund. Subsequently, out of total receipts of Rs. 1.31 crore in the bank account, there were, high value cash withdrawals amounting to Rs. 1.22 crore. The cash withdrawals were always kept below Rs. 10 lakh to avoid reporting. During investigation by the Unit, copy of the above bank account was obtained. When enquired with Sh. Alok Gupta in this regard, he has submitted that he is a non- resident Indian from birth holding Indian Passport and normally resides in Nigeria and United Arab Emirates. sh Alok Gupta has further submitted, that, the remittance of Rs. 1.31 crore were received from African Commodities DMCC towards expenses incurred, for travel related expenses of various employees recruited from India who are working outside India in his group companies. Sh Alok Gupta further submitted that Sh O.P. Mundra was authorized to operate the bank account in his absence in India and withdrawals were made for meeting travel related expenditure of employees recruited from India. However, it is important to mention that Sh. Alok Gupta has not submitted any documentary evidence in support of his claim with regard to the source of the fund. Under these circumstances, the source of the fund received in his above- mentioned bank account remains unexplained for which appropriate remedial action is called for under the IT Act, 1961 to tax the unexplained money/ undisclosed income in relevant A.Ys. He has also not submitted any documentary evidence in support of his claim with regard to the utilization of the fund. Financial year-wise break-up of credits and withdrawals made during F.Ys. 2009-10 and 2010-11 in the above bank account are tabulated below:- F.Y. Total credits/deposits Total withdrawals 2009-10 Rs. 59, 45, 779/- Rs. 59,25,000/- 2010-11 Rs. 2,33,68,263/- Rs. 2,25,98,377/- Total : Rs. 2,93,14,042/- Rs 2,85,23,377/- On perusal of bank statement of the assessee, it is found that during the financial year 2010-11, the assessee has deposited Rs.2,33,68,263/- in his bank account. The assessee has neither filed his return of income for the A.Y. 2011-12 nor offered, any income for taxation. Therefore, I have reason to believe that income amounting Rs.2,33,68,263/- chargeable to tax has escaped assessment in A. Y. 2011-12. This is a fit case for initiating proceedings u/s 147 of the IT Act, 1961. Accordingly, notice u/s 148 needs to be issued to the assessee.” 22. Thus, a perusal of the reasons supplied to the assessee as well as the reason reproduced by the AO in the body of the assessment order are different. This was ITA Nos.4338 & 4339/Del/2019 31 also overlooked by the approving authorities i.e., the Addl. CIT as well as the PCIT. This indicates that there is no application of mind either by the AO or by the two senior approving authorities who are supposed to give their approval after going through the record. The statutory requirement of giving approval for reopening of assessment in the instant case has not been followed and a namesake approval has been given in a casual manner. Further, no addition has been made on the basis of reasons for reopening in the body of the assessment order i.e., for withdrawal of money but addition has been made on account of unexplained money/undisclosed income u/s 69A of Rs.1,74,06,350/-. Since the facts of the impugned assessment year are identical to facts in ITA No.4338/Del/2019 for AY 2010-11, following our findings for AY 2010-11 where the reassessment proceeding was quashed under identical circumstances, we quash the reassessment proceedings for the impugned assessment year also. Accordingly, the ground challenging the validity of reassessment proceedings are allowed. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated being academic in nature. SA Nos.312 & 313/Del/2020 (A.Ys.2010-11 & 2011-12) 23. Since the appeals of the assessee are heard and order pronounced, the Stay Applications filed by the assessee become infructuous and are dismissed. ITA Nos.4338 & 4339/Del/2019 32 24. In the result, both the appeals filed by the assessees are allowed and the Stay applications filed by the assessee are dismissed. Order pronounced in the open court on 09.11.2021. Sd/- Sd/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09 th November, 2021. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi