Shri Rajesh Chandha c/o- kalani & Co. CA 5th floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur, Ajmer V. DCIT Circle (International Taxation) Jaipur, Circle, Jaipur

ITA 969/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0093 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 18-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Assessment record; Capital Gains
• Section: 69; 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 969/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2016-17 SHRI RAJESH CHADHA 25 B, KUNDAN NAGAR, AJMER- 305001 CUKE VS. DCIT, CIRCLE (INTERNATIONAL TAXATION) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACXPC6264H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/06/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 24/06/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 42, NEW DELHI DATED 29.05.2019 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING SOLE GROUND OF APPEAL:- THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION OF RS. 8,00,000/- BY TREATING THE CASH DEP OSIT IN THE NRO BANK ACCOUNT AS UNEXPLAINED BY NOT ACCEPTING THE EX PLANATION OF THE ASSESSEE AS TO THE SOURCE OF DEPOSIT ON SURMISES AN D CONJECTURES. 2. THE LD AR SUBMITTED THAT THE ASSESSEE IS A NON-R ESIDENT. HE IS EMPLOYED WITH UNITED NATIONS ORGANIZATION AT DEMOCR ATIC REPUBLIC OF CONGO, SOUTH AFRICA SINCE 15 TH JULY, 2007. HIS GROSS ANNUAL SALARY FOR THE YEAR U NDER CONSIDERATION WAS USD 1,14,941/- APART FROM OTHER A LLOWANCES. THE SALARY SO RECEIVED FROM UNITED NATIONS IS EXEMPT FROM TAXATIO N AS PER SECTION 18(B) OF THE CONVENTION ON PRIVILEGES AND IMMUNITIES OF THE UNITED NATIONS. THE ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 2 ASSESSEE REGULARLY FILED THE RETURN OF INCOME DECLA RING SAVING BANK AND FDR INTEREST EVEN THOUGH HIS INCOME IS BELOW TAXABLE LI MIT. FOR THE YEAR UNDER CONSIDERATION, HE FILED THE RETURN OF INCOME DECLAR ING GROSS TOTAL INCOME OF RS 1,86,076/- AND EXEMPTED SALARY INCOME FROM UNITE D NATIONS AND INTEREST ON NRE ACCOUNT AT RS 1,50,78,056. 3. THE LD AR FURTHER SUBMITTED THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE IS A CASH D EPOSIT OF RS.8,00,000/- IN THE NRO ACCOUNT OF THE ASSESSEE ON 27.05.2015 WHICH WAS CLAIMED TO BE OUT OF THE EXCHANGE OF THE USD THROUGH AUTHORIZED MONEY CHANGER BUT ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE BY WAY OF RECEIPT FR OM AUTHORIZED MONEY CHANGER FOR CONVERTING THE USD INTO INDIAN RUPEES. HE THEREFORE, TREATED THE CASH DEPOSIT OF RS.8,00,000/- IN NRO ACCOUNT AS UNE XPLAINED AND MADE ADDITION FOR THE SAME. ON APPEAL, THE LD. CIT(A) AC CEPTED THAT THE ASSESSEE HAS SUBMITTED EVIDENCE RELATING TO BRINGING OF FORE IGN CURRENCY IN INDIA. HOWEVER, HE OBSERVED THAT IN THE ABSENCE OF RECEIPT OF EXCHANGE OF DOLLARS INTO RUPEES, THE ASSESSEE HAS FAILED TO DEMONSTRATE THE NEXUS OF FOREIGN CURRENCY BOUGHT IN INDIA WITH THE CASH DEPOSIT IN T HE BANK ACCOUNT AND THE RECEIPT IS CRITICAL TO ESTABLISH THE NEXUS. HE FURT HER HELD THAT THE POSSIBILITY OF TAKING FOREIGN CURRENCY ON THE RETURN JOURNEY CANNO T BE RULED OUT AND THAT IN CASE OF ANY RELAXED APPROACH, THE BANK ACCOUNT OF T HE ASSESSEE CAN BE MISUSED FOR DEPOSITS OF UNEXPLAINED CASH BY THEIR K NOWN ONES. ACCORDINGLY, HE CONFIRMED THE ADDITION OF CASH DEPOSIT AS UNEXPL AINED INCOME. AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. IN THE AFORESAID BACKGROUND, THE LD. AR SUBMITTE D THAT THERE IS NO DISPUTE AS TO THE FACT THAT THE ASSESSEE BROUGHT TO INDIA USD 21500 WITH HIM WHEN HE CAME ON 22.05.2015. THIS WAS DECLARED BY HI M BEFORE THE CUSTOM AUTHORITIES AT IGI AIRPORT, NEW DELHI. THESE DOLLA RS WERE EXCHANGED BY HIM ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 3 IN INDIAN RUPEE THROUGH STAFF OF THOMAS COOK, AUTHO RIZED MONEY EXCHANGER, AND OUT OF THE SAME RS.8 LAKHS WAS DEPOSITED BY HIM IN HIS NRO ACCOUNT ON 27.05.2015. THUS, THE SOURCE OF DEPOSIT IS FULLY EX PLAINED AS INTIMATED TO THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS VIDE LE TTER DATED 11.12.2018. ONLY BECAUSE THE ASSESSEE HAS NOT KEPT THE RECEIPT FOR CONVERTING USD INTO INDIAN RUPEE WOULD NOT MEAN THAT THE AMOUNT DEPOSIT ED IN THE BANK ACCOUNT IS UNEXPLAINED INCOME BY IGNORING THE VARIOUS OTHER EVIDENCES AND WITHOUT BRINGING ON RECORD ANY OTHER MATERIAL THAT ASSESSEE HAS ANY OTHER SOURCE OF INCOME IN INDIA. 5. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE A SSESSEE HAS NO SOURCE OF INCOME IN INDIA EXCEPT INTEREST FROM SB ACCOUNT, FDR AND LONG TERM CAPITAL GAIN. HE HAS ONLY ONE NRO ACCOUNT IN INDIA MAINTAINED WITH ICICI BANK, GREATER KAILASH, NEW DELHI. IN THE RETURN ITS ELF, ASSESSEE HAS DECLARED THIS BANK ACCOUNT AND ALSO THE INTEREST FROM THIS B ANK ACCOUNT AT RS.18,144/-. THUS, THIS IS A DISCLOSED ACCOUNT. THE ASSESSEE DEPOSITED THE CASH IN HIS BANK ACCOUNT WITHIN FIVE DAYS OF ARRIVI NG IN INDIA AND THEREFORE, THE DEPOSIT MADE IN THIS BANK ACCOUNT CANNOT BE CON SIDERED AS UNEXPLAINED. RATHER THAN CONSIDERING THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS DISBELIEVED THE ASSESSEES EXPLANATION IN ABSENCE O F RECEIPT OF EXCHANGE BY PRESUMING THAT GIVING A RELAXED APPROACH WOULD LEAD TO THE NRO BANK ACCOUNTS BEING MISUSED BY THEIR KNOWN ONES TO DEPOS IT UNEXPLAINED CASH OR THERE IS POSSIBILITY OF ASSESSEE TAKING BACK THE FO REIGN CURRENCY ON RETURN JOURNEY. THERE IS NO BASIS FOR SUCH PRESUMPTION. ON CE THE ASSESSEE HAS GIVEN AN EXPLANATION WITH COGENT EVIDENCE, THE BURD EN TO PROVE OTHERWISE IS ON THE DEPARTMENT BY BRINGING ON RECORD SOME CONCRE TE MATERIAL / EVIDENCE. ONLY ON PRESUMPTION, THE EXPLANATION OF THE ASSESSE E CANNOT BE DISBELIEVED. FURTHER, SECTION 69 USES THE WORD MAY WHICH GIVES A DISCRETION TO THE AO NOT TO CHARGE TAX ON SUCH SUM EVEN IF THE EXPLANATI ON OFFERED BY THE ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 4 ASSESSEE IS NOT SATISFACTORY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN SUPPORT, RELIANCE WAS PLACED ON THE DEC ISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VS. SMT. P. K. NOORJAH AN 237 ITR 570. 6. PER CONTRA, THE LD DR SUBMITTED THAT THE ASSESSE E HAS FAILED TO SUBMIT PRIMARY EVIDENCE IN SUPPORT OF HIS EXPLANATION THAT THE MONEY SO DEPOSITED IN HIS BANK ACCOUNT IS OUT OF THE FOREIGN EXCHANGE BROUGHT-IN BY HIM IN THE COUNTRY AND EXCHANGED WITH INDIAN RUPEES AND IN ABS ENCE OF SUCH EVIDENCE AND ESTABLISHING THE NECESSARY NEXUS, THE ASSESSING OFFICER HAS JUDICIOUSLY INVOKED THE PROVISIONS OF SECTION 69 OF THE ACT. I T WAS FURTHER SUBMITTED THAT THE LD CIT(A) HAS RIGHTLY APPRECIATED THE FACTS OF THE CASE AND HAS CONFIRMED THE ADDITION AND OUR REFERENCE WAS DRAWN TO THE FIN DINGS OF THE LD CIT(A) WHICH READ AS UNDER: 5.5 DURING THE APPELLATE PROCEEDINGS, THE APPELLAN T HAS REITERATED HIS POSITION. I FIND THAT THE APPELLANT HAS SUBMITT ED THE EVIDENCE REGARDING BRINGING OF FOREIGN CURRENCY IN INDIA THR OUGH DECLARATION FORM. THE ONLY MISSING LINK IS THE RECEIPT ISSUED B Y M/S THOMAS COOK, AGRA GATE CIRCLE, AJMER. THE ASSESSEE WAS ASKED AS TO WHY THE EXCHANGE MONEY WAS NOT RECEIVED THROUGH CHEQUE. IN THIS REGARD, THE APPELLANT SUBMITTED THAT THOMAS COOK STAFF OFFERED HIGHER RATE OF EXCHANGE IN CASH AS AGAINST CHEQUE PAYMENT. IN THE GIVEN SET OF FACTS, I FIND THAT THE ASSESSEE HAS FAILED TO DEMONSTRATE THE NEXUS OF FOREIGN CURRENCY BROUGHT IN INDIA WITH THE CASH DEPOSIT IN BANK ACCOUNT. IT MAY BE RELEVANT TO ADD THAT THE EVIDENCE OF RECEIPT ISSUED BY THOMAS COOK IS CRITICAL TO ESTABLISH THE NEXUS OF CASH DEP OSIT WITH FOREIGN CURRENCY. THE APPELLANT ARGUED THAT THE RECEIPTS FO R EXCHANGE OF FOREIGN CURRENCY WERE NOT KEPT ON RECORD AS PER THE ADVICE OF BANK. HOWEVER, THIS ARGUMENT IS WITHOUT MERIT BECAUSE THE ASSESSEE IS ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 5 RESPONSIBLE TO EXPLAIN THE SOURCE OF CASH RECEIPT I N BANK ACCOUNT AS PER THE PROVISIONS OF INCOME TAX ACT. 5.6 IT MAY BE RELEVANT TO NOTE THAT THE POSSIBILITY OF TAKING THE FOREIGN CURRENCY BACK TO SOUTH AFRICA ON HIS RETURN JOURNEY CANNOT BE RULED OUT. IN CASE OF ANY RELAXED APPROACH TO ACCEP T THE CONTENTION OF THE ASSESSEE, THE BANK ACCOUNTS OF NON-RESIDENTS CA N BE MISUSED FOR DEPOSITS OF UNEXPLAINED CASH BY THEIR KNOWN ONES. T HEREFORE, I FIND FORCE IN THE ORDER OF THE AO TO HOLD THE CASH DEPOS ITED IN THE BANK ACCOUNT AS UNEXPLAINED INCOME. HENCE, THE GROUND OF APPEAL IS DISMISSED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSI DERATION IS WHETHER THE ASSESSEE HAS PROVIDED REASONABLE EXPLANATION EXPLAI NING THE SOURCE AND NATURE OF CASH DEPOSIT OF RS 9 LACS IN HIS NRO ACCO UNT MAINTAINED WITH ICICI BANK AND WHERE THE ANSWER IS NOT IN THE AFFIRMATIVE , WHETHER THE ASSESSING OFFICER IS CORRECT IN INVOKING THE PROVISIONS OF SE CTION 69 AND BRINGING SUCH RECEIPTS TO TAX IN THE HANDS OF THE ASSESSEE FOR TH E IMPUGNED ASSESSMENT YEAR. THE REASONABILITY OF EXPLANATION HAS TO BE S EEN IN THE CONTEXT OF FACTS AND CIRCUMSTANCES OF EACH CASE. 8. IN THE INSTANT CASE, THE EXPLANATION OF THE ASSE SSEE IS THAT THE SOURCE OF THE CASH DEPOSIT OF RS 8 LACS MADE IN HIS NRO BA NK ACCOUNT ON 27.05.2015 IS THE FOREIGN EXCHANGE OF USD 21,500/- WHICH HE BROUGHT IN ALONG WITH HIM WHEN HE ARRIVED IN THE COUNTRY ON 22 .05.2015. THE EVIDENCE IN SUPPORT OF SAID FACT IS THE DECLARATION FILED BY HIM BEFORE THE CUSTOM AUTHORITIES AT THE IGI AIRPORT AND A COPY THEREOF F ORMS PART OF THE ASSESSMENT RECORDS. THE ASSESSEE HAS FURTHER SUBMI TTED THAT HE HAS EXCHANGED THE US DOLLARS WITH INDIAN RUPEES THROUGH THOMAS COOK, ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 6 AUTHORIZED MONEY EXCHANGER AND THEREAFTER, OUT OF M ONEY SO RECEIVED, HE HAS DEPOSITED RS 8 LACS IN HIS NRO ACCOUNT. THE CAS E OF THE REVENUE IS THAT THOUGH THE ASSESSEE HAS SUBMITTED THE DECLARATION I N SUPPORT OF BRINGING THE FOREIGN EXCHANGE IN THE COUNTRY, HOWEVER, THERE IS NO PROOF WHICH HAS BEEN SUBMITTED IN SUPPORT OF EXCHANGING SUCH FOREIGN EXC HANGE WITH INDIAN RUPEES. 9. TO OUR MIND, WE FIND THE EXPLANATION OF THE ASSE SSEE AS A PLAUSIBLE EXPLANATION GIVEN THE FACTS AND CIRCUMSTANCES OF TH E PRESENT CASE. THE REASON FOR THE SAME IS AS FOLLOWS. FIRSTLY, SOURCE OF CASH DEPOSIT OF RS 8 LACS HAS BEEN CLAIMED TO BE OUT OF FOREIGN CURRENCY USD 21,500/- WHICH AT THE RELEVANT POINT OF TIME WOULD BE WORTH INDIAN RUPEES 13,65,680/- APPROX. (APPLYING EXCHANGE RATE OF 1 USD EQUIVALENT TO INDI AN RUPEES 63.52). THE LD AR HAS STATED AT THE BAR THAT SOURCE OF SUCH FOREIG N EXCHANGE IS THE SALARY INCOME FROM UNITED NATIONS AND FUNDS IN HIS NRE ACC OUNT. WHERE THE SOURCE OF SUCH FOREIGN CURRENCY AND THE FACT OF BRI NGING SUCH FOREIGN CURRENCY IN THE COUNTRY HAS NOT BEEN DISPUTED BY TH E REVENUE, THE EXPLANATION OF THE ASSESSEE THAT OUT OF SUCH FUNDS, HE HAS DEPOSITED RS 8 LACS IN HIS NRO BANK ACCOUNT WITHIN A PERIOD OF FEW DAYS IS A PLAUSIBLE EXPLANATION IN TERMS OF SOURCE, QUANTUM AND TIMING PERSPECTIVE. SECONDLY, WHERE SUCH SALARY INCOME AND INTEREST ON NRE ACCOUN T ARE EXEMPT FROM TAX IN INDIA AT FIRST PLACE, A POSITION WHICH HAS BEEN ACCEPTED BY THE REVENUE AND THUS, NOT IN DISPUTE, THEN IN SUCH A SCENARIO, SUBSEQUENT DEPOSIT OF THE SAME OR A PART THEREOF IN HIS NRO ACCOUNT MAINTAINE D IN INDIA CANNOT BE BROUGHT TO TAX IN INDIA. THIRDLY, IN HIS RETURN OF INCOME, THE ASSESSEE HAS DISCLOSED LONG TERM CAPITAL GAINS ON SALE OF PLOT O N 27.11.2015 AND THE DLC VALUE HAS BEEN SHOWN AS RS 17,82,707 WHICH IS SAME AS THE SALE CONSIDERATION OF RS 17,82,707/- RECEIVED BY THE ASS ESSEE AND THERE IS NO FINDING THAT THE ASSESSEE HAS RECEIVED ANY CONSIDER ATION OVER AND ABOVE ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 7 WHAT HAS BEEN SHOWN IN THE RETURN OF INCOME. BESIDE S, THE ASSESSEE HAS DISCLOSED INTEREST ON FDR, INTEREST ON NRO ACCOUNT, INTEREST ON IT REFUND IN HIS RETURN OF INCOME. THERE IS THUS NO ADVERSE FIN DING RECORDED BY THE ASSESSING OFFICER IN TERMS OF ANY SOURCE OF INCOME OVER AND ABOVE THE DECLARED INCOME IN THE RETURN OF INCOME. THEREFORE , WHERE THERE IS NO FINDING THAT THE ASSESSEE HAS ANY OTHER SOURCE OF I NCOME, OTHER THAN WHAT HAS BEEN DECLARED BY HIM, THEN IN SUCH A SCENARIO, THE EXPLANATION OF THE ASSESSEE CANNOT BE DISCARDED IN ABSENCE OF ANY ADVE RSE MATERIAL ON RECORD. NO DOUBT, THE AMOUNT HAS BEEN FOUND DEPOSITED IN HI S BANK ACCOUNT AND THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE NATURE AND S OURCE OF SUCH DEPOSIT. BUT, ONCE THE ASSESSEE HAS PROVIDED AN EXPLANATION WHICH IN THE INSTANT CASE, WE FIND REASONABLE AND PLAUSIBLE, THE DEPOSIT SO MADE CANNOT REMAIN UNEXPLAINED. IN VIEW OF THE SAME, WE FIND THAT EVE N THOUGH THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY EVIDENCE ISSUED B Y THOMAS COOK IN SUPPORT OF EXCHANGE OF FOREIGN CURRENCY WITH INDIAN RUPEES, LOOKING AT THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO BASIS FOR INVOKING THE PROVISIONS OF SECTION 69 IN THE INSTANT CASE. IN T HE RESULT, THE ADDITION SO MADE IS DIRECTED TO BE DELETED AND THE MATTER IS DE CIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/06/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/06/2020 ITA NO. 969/JP/2019 SHRI RAJESH CHADHA, AJMER VS. DCIT, CIRCLE (IT), J AIPUR 8 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJESH CHADHA, AJMER 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE (I.T), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 969/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR