The DCIT, Central Circle-1(4), Ahmedabad V. Smt. Pratibha Pankaj Patel, Ahmedabad

ITSSA 278/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4635 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA M AGRAWAL
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Unexplained investment; Deemed to accrue or arise in india; Additional evidence
• Section: 143(3); 69

Judgement Text

IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR VICE PRESIDENT AND MAHAVIR PRA SAD JM] IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), AHMEDABAD. ..APPELLANT VS PRATIBHA PANKAJ PATEL, ..........RESPONDE NT 3-4, VITHALBHAI BHAWAN, NEAR SARDAR PATEL COLONY, RAILWAY CROSSING, AHMEDABAD 380 013. [PAN: ARFPP 1104 N] APPEARANCES BY APARNA M. AGRAWAL FOR THE APPELLANT MUKESH M. PATEL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 20, 2018 DATE OF PRONOUNCEMENT : OCTOBER 18, 2018 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE APPELLANT ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE LEARNED COMMISSIONER (APPEALS)S ORDER DATED 14 TH JUNE 2016, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2008- 09. 2. GRIEVANCE RAISED IN THE APPEAL IS THAT ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN LA W AND ON FACTS IN DELETING THE ADDITION OF RS 75,59,668 MADE UNDER SECTION 69 OF THE INCOME TA X ACT, BEING UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT. 3. THE ISSUE IN APPEAL LIES IN A RATHER NARROW COMP ASS OF MATERIAL FACTS. THE ASSESSEE BEFORE US, A KENYAN NATIONAL, IS A NON-RESIDENT IND IAN. DURING THE COURSE OF HER ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT SHE IS MAINTAINING A BANK ACCOUNT WITH BANK OF BARODA, AHMEDABAD, THIS ACCOUNT SHOWED A CREDIT ENTRY OF RS.75,59,668 ON 9 TH APRIL 2007 IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 5 AND ALL THAT ITS NARRATION IN THE ACCOUNT STATED WA S BILL ID 0849IRTT0062707. A LITTLE PROBE BY THE ASSESSING OFFICER REVEALED THAT THIS C REDIT REPRESENTED REMITTANCE OF GBP (BRITISH POUNDS) 90,000 RECEIVED FROM BARCLAYS BANK , UK. THIS AMOUNT, AS LITTLE PROBE INTO THE DETAILS REVEALED, WAS RECEIVED BY THE ASSESSEE AS A BENEFICIARY OF THE FAMILY TRUST SET UP BY HIS FATHER IN 1974 IN UK. IT WAS IN RESPECT OF THIS ENTRY THAT THE ASSESSING OFFICER MADE AN ADDITION OF RS.75,59,668 BY OBSERVING AS FOLLOWS: 4.1 IT IS UNDISPUTED THAT THE ASSESSEE IS AN NRI. IT IS ALSO NOT DISPUTED THAT THE MONEY HAS FLOWN FROM HER BANK ACCOUNT WITH THE BARC LAYS BANK OF UK HER AS SHE IS PERMANENTLY RESIDING AT KENYA. IN THE SUBMISSIO N MADE IN THE CASE OF ASSESSEE, IT HAS BEEN SUBMITTED THAT THE SAID BANK ACCOUNT WAS B EING OPERATED BY HER FATHER SHRI CHATURBHAI PATEL AND UPON THE DEATH OF HER FAT HER; THIS BANK ACCENT WAS BEING OPERATED BY HER MOTHER SMT. SARLABEN C. PATEL , WHO WERE LIVING IN INDIA SINCE 1980. THUS, SINCE THE DATE OF OPENING OF SAID BANK ACCOUNT IN THE NAME OF ASSESSEE, HER PARENTS WERE RUNNING & OPERATING THE SAID BANK ACCOUNT FROM INDIA. THEREFORE, THE SOURCE OF MONEY DEPOSITED IN THE SAI D BANK ACCOUNT BY THE PARENTS OF THE ASSESSEE IS REQUIRED TO BE EXPLAINED BY FURN ISHING INDEPENDENT EVIDENCE REGARDING THE NATURE OF ACQUISITION AND SOURCE OF H ER INCOME. HOWEVER, DESPITE GIVEN AMPLE OPPORTUNITY TO EXPLAIN THE SOURCE OF MO NEY DEPOSITED IN BARCLAYS BANK, NO SATISFACTORY EXPLANATION HAS BEEN FURNISHE D. HERE, IT IS SIGNIFICANT TO CONSIDER THE PROVISIONS OF SEC.69 OF THE ACT. THE C -PROVISIONS OF SEC.68 STIPULATES THAT, 'WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDE D IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NO T, IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY, THE VALUE OF THE IN VESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR.' 4.2 IT IS PERTINENT TO MENTION THAT, THE ASSESSEE HAS NOT FILED RETURN OF INCOME U/S.139(1) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE SOURCES OF FUNDS USED FOR DEPOSITS/CREDIT ENTRY IN THE ABOVE REFERRED BANK ACCOUNT THEMSELVES APPEAR TO BE DOUBTFUL. DESPITE THE ASSES SEE BEING GIVEN SUFFICIENT TIME IN CONSONANCE WITH THE REQUEST MADE BY HER VIDE WRITTE N SUBMISSION DATED 13/03/2014, AS REPRODUCED HEREINABOVE, THE ASSESSEE HAS FAILED TO FURNISH SATISFACTORY EXPLANATION WITH REGARDS TO THE SOURCE OF THE CREDI T ENTRY APPEARING IN HER BANK ACCOUNT OF RS.75,59668/-. UNDER THE CIRCUMSTANCES, THE UNDERSIGNED HAS NO ALTERNATE BUT TO TREAT THE CREDIT ENTRY OF RS.75,59 ,668/-REFLECTED IN BANK ACCOUNT NO.03410100007438 WITH BANK OF BARODA, AHMEDABAD, A S UNEXPLAINED INVESTMENT OF THE ASSESSEE. THUS, OWING TO FAILURE EXCLUSIVELY ON THE PART OF THE ASSESSEE TO SUBSTANTIATE THE CREDIT ENTRY REFLECTED IN THE ABOV E REFERRED BANK ACCOUNT, THE SUM OF RS.75,59,668/- IS TREATED AS DEEMED INCOME OF TH E ASSESSEE AND TAXED U/S.69 OF THE ACT. PENALTY PROCEEDINGS U/S.271(L)(C) OF THE A CT ARE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME. IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 3 OF 5 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) AND ALSO FILED ADDITIONAL EVIDENCES ABOUT THE NATURE OF RECE IPT FROM THE BARCLAYS BANK. LEARNED CIT(A) ADMITTED THE ADDITIONAL EVIDENCE, CALLED A R EMAND REPORT FROM THE ASSESSING OFFICER IN RESPECT OF THE SAME AND CONSIDERED THE SAME ON M ERITS. LEARNED CIT(A) DELETED THIS ADDITION BY OBSERVING AS FOLLOWS: 9. I HAVE GONE THROUGH THE SUBMISSION OF THE APPE LLANT AND THE FINDINGS OF THE AO. ADMITTEDLY, THE EVIDENCE RECEIVED FROM BARCLAYS BANK WAS NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. IN ORDER TO LOOK INTO THE REAL FACTS ABOUT THE CREATION OF THE KANISA FAMILY TRUST THE CONTENTS OF THE LETTER RECEIVED FROM THE ABOVE BANK WERE TO BE EXAMINED BY THE AO AT HIS END . THEREFORE, REMAND REPORT WAS CALLED FOR. 9.1 ADMITTEDLY, THE APPELLANT WAS A NON-RESIDENT O F INDIA RESIDING IN KENYA SINCE HER MARRIAGE IN 1978. THE PARENTS OF THE APPE LLANT WERE ALSO RESIDENT OF THE U.K. AT THE PARTICULAR POINT OF TIME WHEN THE KANIS A FAMILY TRUST WAS CREATED. THE TRUST WAS CREATED ON 18.10.1974 AND SHRI CHATURBHAI ASHABHAI PATEL WAS A SETTLER OF THE TRUST THE SOLE TRUSTEE OF THE TRUST WAS BARC LAYS PVT. BANK AND TMST LTD. AS OBSERVED FROM THE COPY OF THE SUBMISSION OF THE APP ELLANT MADE BEFORE THE AO, THE ASSESSEE WAS RECEIVING REMITTANCE FROM THE BARCLAYS BANK, U.K. IN THE EARLIER YEARS ALSO TO THE CREDIT OF HER NRE ACCOUNT WITH BANK OF BARODA. RELEVANT EVIDENCES IN SUPPORT OF THE SUBMISSION WERE ALSO FILED IN THE CO URSE OF ASSESSMENT PROCEEDINGS. COPY OF THESE DOCUMENTS WAS FURNISHED IN A PAPER BO OK IN THE APPEAL PROCEEDINGS. AFTER GOING THROUGH THE CONTENTS OF THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT IT WAS NOTICED THAT THE AO MADE SOME FACT UAL ERRORS WHILE MENTIONING THAT THE ACCOUNT IN BARCLAYS BANK BELONGED TO THE A PPELLANT AND THE SAME WAS MANAGED BY HER PARENTS FROM INDIA FROM THE DATE OF ITS CREATION. THE CORRECT FACTUAL POSITION WAS THAT, AS DISCUSSED ABOVE, THE TRUST WAS CREATED BY THE FATHER OF THE APPELLANT PRIOR TO HIS COMING BACK TO INDIA AND SETTLING HERE IN 1980. THEREFORE, THE TRUST WAS MANAGED BY HER FATHER FROM U.K. BEFOR E COMING TO SETTLE IN INDIA. THE APPELLANT DID NOT HAVE ANY ACCOUNT IN THE BARCL AYS BANK IN U.K. FOR THIS PURPOSE AND AS EVIDENCED FROM THE LETTER OF THE BAR CLAYS' BANK. AS A MATTER OF FACT, THE ACCOUNT IN THE BANK WAS THAT OF THE KANISA FAMI LY TRUST. THE APPELLANT WAS ONLY ONE OF THE BENEFICIARIES OF THE TRUST 9.2 THE AO DID NOT DISPUTE THE SUBMISSION OF THE AS SESSEE THAT SHE HAD RECEIVED SIMILAR REMITTANCE IN THE EARLIER YEARS ALSO FROM T HE SAME TRUST. AFTER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION, THE AO WAS NO HAVING ANY MATERIAL ON RECORD TO REBUT THE E VIDENCE FURNISHED BY THE ASSESSEE. 10. THE FACTS IN THE CASE OF SMT. SUSILA RAMASAMY (SUPRA) HAVE BEEN GONE THROUGH AND IT WAS OBSERVED THAT THE SAME WERE APPL ICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. THE HON'BLE ITAT RELIED ON THE CBDT CIRCULAR DATED 20.2.1969 WHEREIN CBDT HAD OBSERVED THAT MONEY BRO UGHT INTO INDIA BY NON- RESIDENTS FOR INVESTMENT OR OTHER PURPOSES IS NOT L IABLE TO INDIAN INCOME-TAX. THEREFORE, THERE IS NO QUESTION OF A REMITTANCE INT O THE COUNTRY BEING SUBJECTED TO IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 4 OF 5 INCOME-TAX. THE QUESTION OF ASSESSMENT OF TAX ARISE S ONLY WHEN THERE IS NO EVIDENCE TO SHOW THAT THE AMOUNT, IN QUESTION, IN FACT REPRE SENTS SUCH REMITTANCE. THE RATIO AS LAID DOWN BY THE ITAT TO THE EFFECT THAT IN THE CASE OF REMITTANCES BY BANKING CHANNEL, THE ONUS ON THE ASSESSEE UNDER SECTION 69 STANDS DISCHARGED, APPEARS TO BE QUITE SOUND AND LOGICAL. RESPECTFULLY FOLLOWING TH E DECISION OF THE TRIBUNAL (SUPRA) AD FOR THE REASONS MENTIONED ABOVE, THE GROUND OF A PPEAL IS ALLOWED. 5. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. IT IS ONLY ELEMENTARY THAT SO FAR AS SECTION 69 IS CONCERNED IT CAN COME INTO PLAY ONLY WHEN THE ASSESSEE DOES NOT OFFER AN EXPLANATION ABO UT THE NATURE AND SOURCE AN INVESTMENT MADE BY HIM OR IF THE EXPLANATION OFFERED BY HIM, I N THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISFACTORY. WE HAVE NOTED THAT BARCLAYS BANK, VIDE LETTER DATED 8 TH APRIL 2014, HAS CONFIRMED THAT A REMITTANCE OF GBP 90,000 WAS SENT BY WIRE TRANSFER TO YOUR NRE ACCOUNT NO. 0341010007438 WITH BANK OF BARODA, SP COLONY BR ANCH, AHMEDABAD, WHICH WAS ROUTED THROUGH BANK OF BARODA MUMBAI BRANCH ON 5 TH APRIL 2007, AND THAT WE FURTHER WISH TO CONFIRM THAT THE REMITTANCE REPRESENTED A DISTRIBUT ION MADE TO YOU AS A BENEFICIARY OF THE KANISA FAMILY TRUST SETTLED BY YOUR FATHER LATE DR CHATURBHAI ASHABHAI PATEL ON 18 TH OCTOBER 1974. A COPY OF THIS LETTER WAS PLACED BEFORE US A T PAGE 27 OF THE PAPER BOOK AND THE ASSESSING OFFICER HAS DULY BEEN CONFRONTED WITH THI S LETTER. HERE IS THUS A CASE IN WHICH THERE IS A CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE, WH ICH IS ON ACCOUNT OF A REMITTANCE FROM A FOREIGN BANK, ON ACCOUNT OF DISBURSEMENTS FROM A FA MILY TRUST, AND THERE IS NO DISPUTE ABOUT THESE FACTUAL ASPECT. THE INVESTMENT IS THUS REASON ABLY EXPLAINED AND THE APPLICATION OF SECTION 69 IS OUT OF QUESTION. WE, THEREFORE, APPR OVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) FOR THIS SHORT REASON ALONE. 8. WE MAY, HOWEVER, ADD THAT THIS CASE SHOULD NOT B E TREATED AS AN AUTHORITY FOR CONCLUDING THAT A DISBURSEMENT FROM OVERSEAS TRUST, PARTICULARLY WHEN IT HAS INCOME COMPONENT, WILL NOT BE TAXABLE WHEN RECEIVED IN IND IA. THAT QUESTION REMAINS OPEN FOR ADJUDICATION IN AN APPROPRIATE CASE. THE FACTS IN THIS CASE ARE RATHER PECULIAR. THE TAXABILITY OF DISBURSEMENT PER SE WAS NOT AT ALL EXAMINED BY THE AUTHORITIES BELOW, NOR WAS SUCH A DISBURSEMENT SOUGHT TO BE BROUGHT TO TAX. IT IS BEY OND CONTROVERSY THAT, IN TERMS OF THE PROVISIONS OF SECTION 5(2), EVEN IN THE HANDS OF A NON-RESIDENT AN INCOME WHICH ACCRUES IN, OR IS RECEIVED IN, INDIA WILL BE TAXABLE IN INDIA, AND THERE IS ALSO NO DISPUTE ABOUT THE FACTUAL ASPECT THAT THE DISBURSEMENT FROM HIS FAMILY TRUST WAS RECEIVED, BY THE NON-RESIDENT BENEFICIARY, IN INDIA. THE TRUST WAS SETTLED IN 19 74 AND THE DISTRIBUTION IS MADE IN 2007. ON THESE FACTS, IT ALSO APPEARS THAT ENTIRE AMOUNT OF GBP 90,000 MAY NOT BE THE PRINCIPAL AMOUNT AND A PART OF THIS MAY BE ATTRIBUTABLE TO ACCRETION TO THE CORPUS OF THE TRUST, AS THE TRUST MONIES WERE HELD BY THE BARCLAYS BANK FOR OVER THREE DECAD ES. ALL THESE DETAILS ABOUT THE NATURE AND IT(SS)A NO.278/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 5 OF 5 BACKDROP OF RECEIPT, I.E. DISBURSEMENT FROM A FAMIL Y TRUST, WERE BEFORE THE ASSESSING OFFICER, AND YET THE ASSESSING OFFICER DID NOT EXAMINE THE T AXABILITY OF INCOME COMPONENT, EVEN IF ANY, IN THE DISBURSEMENT, WHICH IS ADMITTEDLY RECEI VED IN INDIA, NOR A CASE WAS MADE OUT FOR TAXABILITY OF, IN PART OR IN ENTIRETY, DISBURSEMENT FROM THE FAMILY TRUST. THAT ASPECT OF THE MATTER THUS REMAINS UNEXAMINED. BE THAT AS IT MAY, THIS DECISION CANNOT BE AN AUTHORITY FOR WHAT HAS NOT BEEN DECIDED IN THIS CASE AND WE CANNO T IMPROVE THE CASE OF THE ASSESSING OFFICER AT THIS STAGE EITHER. IN ANY CASE, NO SPECI FIC PLEA TO THIS EFFECT WAS TAKEN BEFORE US BY THE APPELLANT-REVENUE. WE LEAVE IT AT THAT. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 18 TH DAY OF OCTOBER, 2018. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT ) AHMEDABAD, DATED THE 18 TH DAY OF OCTOBER, 2018 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD