PRALHAD VASANTRAO MULICK,PUNE, MAHARASHTRA V. THE ITO, (IT) WARD-3, PUNE, PUNE, MAHARASHTRA

ITA 452/PUN/2025

AI Insights

The case revolves around an appeal by Prahlad Vasantrao Mulick against the assessment order passed by the Income Tax Officer, Ward-3, Pune, which confirmed an addition of Rs.1,09,78,640 under section 69 of the Income Tax Act, alleging unexplained investments by the assessee. The assessee, a non-resident during the relevant period and employed in Malaysia, contested that all funds used for the investment were sourced from his salary abroad and deposited in an NRE account. The Dispute Resolution Panel (DRP) upheld the addition, leading to the appeal before the Tribunal. The Tribunal, after considering the evidence and submissions, including various judicial precedents, ruled in favor of the assessee, highlighting that the income accrued from foreign sources and was not taxable in India.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314606 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Other Referred Cases: Nitin Mavji Vekariya Vs. ITO, Shri Vinodkumar Hiralal Raja Vs. ITO, Vijaykumar Kanaiyalal Matta Vs. ITO, ITO Vs. Madhav Vasant Dalvi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATHADE
• Assessee Lawyers: C. H. NANIWADEKAR; KIRAN B
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Salary income; Residential status
• Section: 147; 69

Judgement Text

" आयकर अपीलीय अिधकरण ”सी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “C” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.452/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: 2015-16 Prahlad Vasantrao Mulick, U601, Meghmalhar, DSK Vishwa, Dhayary, Vadagaon Budruk, Pune – 411041. V s The Income Tax Officer, Ward-3, Pune. PAN: CMQPM2643K Appellant/ Assessee Respondent / Revenue Assessee by Shri C.H.Naniwadekar & Shri Kiran B. Sanmane– AR’s Revenue by Shri Prakash L Pathade –CIT(DR) Date of hearing 01/04/2025 Date of pronouncement 05/05/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the assessee is against the Assessment Order of Income Tax Officer(IT) Ward-3, Pune, passed under section 147 r.w.s 144C(13) of the Income Tax Act, 1961; dated 24.12.2024for Assessment Year 2015-16. The assessee has raised the following grounds of appeal : “1. The learned Assessing Officer acting under directions of leaned Dispute Resolution Panel erred both on facts and in law in confirming the addition of Rs.1,09,78,640 u/s 69 of the Act alleging unexplained ITA No.452/PUN/2025 [A] 2 investments made by the assessee by holding that the assessee could not submit further evidences in this regard. He failed to appreciate the fact that, the assessee had already submitted all the facts, details and documentary evidences to support his claim. He also failed to appreciate the fact that, the assessee was not provided with the sufficient opportunity of being heard for submission of additional evidences requested by the department. 2. The appellant craves leave to add, alter, delete or substitute all or any of the above grounds of appeal.” Brief facts of the case : 2. In this case, assessee is a Non-Resident during the period. Assessee had not filed Return of Income for A.Y.2015-16 under section 139(1) of the Act. The Assessing Officer(AO) received information regarding purchase of immoveable property by the assessee during the year. The Assessing Officer-ITO, Ward-6(5), Pune issued show cause notice u/s.148A(b) of the Act. As per the Draft Assessment Order, Assessee had not filed any reply, hence an order u/s.148A(d) of the Act was passed on 02.04.2022. Then, a notice u/s.148 was issued on 02.04.2022 after obtaining approval. In response to the notice u/s.148 of the Act, assessee filed Return of Income on 28.04.2022. Then, the case of the Assessee was transferred to the Income Tax Officer(International Taxation) on 10.05.2023. The Income Tax Officer(International Taxation), Ward-3, Pune noted that Assessee had not filed replies and therefore, made an addition u/s.69 of Rs.1,09,78,640/-, on account of ITA No.452/PUN/2025 [A] 3 investment in immoveable property i.e.Flat No.401, Pratham Apartment, Pune. Aggrieved by the assessment order, Assessee filed objections before Dispute Resolution Panel. Assessee made an elaborate submission before Dispute Resolution Panel(DRP). The DRP called for a Remand Report from the Assessing Officer. The Assessing Officer submitted Remand Report, DRP confirmed the addition. Then, the Assessing Officer passed an order u/s.147 r.w.s 144C(13) of the Act on 24.12.2024. 2.1 Aggrieved by the order of the Assessing Officer, Assessee filed appeal before this Tribunal. Submission of ld.AR : 3. Ld.AR for the assessee filed a paper book. Ld.AR submitted that during the period assessee was not a Resident of India. Assessee was working in Malasiya. Ld.AR invited our attention to copies of the passport and the appointment letter which is from page 8 to 44 of the paper book. Ld.AR invited our attention to the Remand Report filed by the Assessing Officer in which Assessing Officer has admitted that the entire payment has been made through Standard Chartered Bank NRE Account. In the Remand Report, AO ITA No.452/PUN/2025 [A] 4 has given all the Cheque Numbers and Dates. There are certain payments during F.Y.2013-14 and certain payments during F.Y.2014-15. Ld.AO has also accepted in the Remand Report that the deposits appearing in the NRE Account are from Foreign Inward Remittances from Malaysia. Ld.AR submitted that thus, the AO has accepted that the source of money is outside India i.e.Malaysia. The Assessee has been working in Malaysia during the period as can been seen from the appointment orders. Therefore, the amount is not taxable in India. The ld.AR relied on the following four case laws : I. Nitin Mavji Vekariya Vs. ITO - Special Civil Appln Nos.7636, 11052 & 11053 – [2023] 7 NYPCTR 1504 of Hon'ble Gujarat High Court. II. Shri Vinodkumar Hiralal Raja Vs. ITO in ITA No.50/RJT/2018 dated 20.12.2023, ITAT Rajkot. III. Vijaykumar Kanaiyalal Matta Vs. ITO in ITA No.52/MUM/2020 dated 31.05.2023, ITAT Mumbai Bench. IV. ITO Vs. Madhav Vasant Dalvi in ITA No.995/AHD/2019 dated 27.07.2022 of ITAT Ahmedabad Bench. Submission of ld.DR : 4. Ld.DR for the Revenue relied on the order of the DRP. Findings & Analysis : 5. We have heard both the parties and perused the records. It is an admitted fact by the ITO(International Taxation), Ward-3, Pune ITA No.452/PUN/2025 [A] 5 that Assessee is a Non-Resident during the relevant period. The ITO has also admitted in the Remand Report that the entire payment has been made through Standard Chartered Bank NRE Account. The Account Number is also mentioned in the Remand Report. The ITO has also admitted that entire deposits in the said Standard Chartered Bank NRE Account are through Inward Remittances from Malaysia in US Dollars. Thus, it is an admitted fact that the amount of Rs.1,15,79,342/- was sourced from remittances received from Malaysia. We have perused the appointment letters which are enclosed in the paper book to demonstrate that Assessee was initially working in Pacific Inter-Link SDN BHD, Malaysia, then from 18.12.2014, Assessee was working in GULF ASIA, Malaysia as Sr.Business Development Manager on a monthly base salary of USD4,500.00 effective from 18th December 2014.Thus, it is an established fact that Assessee was working outside India i.e.Malaysia and was earning salary outside India. The DRP confirmed the addition only on the basis that assessee has not submitted copy of the Bank Account maintained in Malaysia. However, we do not agree with the DRP as the other evidences filed by assessee, like Copy of Appointment Orders, Copy of Passports ITA No.452/PUN/2025 [A] 6 and Copy of Standard Chartered Bank NRE Account clearly demonstrates that the source of money was outside India and it was Salary Income. 5.1 Section 5 of the Income Tax is reproduced as under : “Scope of total income. 5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which— (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or (c) accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which— (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.—Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.—For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.”. ITA No.452/PUN/2025 [A] 7 5.2 In Shri Vinodkumar Hiralal Raja Vs. ITO in ITA No.50/RJT/2018 dated 20.12.2023, ITAT Rajkot held as under : “15. In view of the instant facts and the judicial precedents cited, above we are of the considered view that Ld. CIT(A) has erred in facts and law in confirming the additions made by the assessee received by way of wire transfer from NRE account of his son in UK to assessee's NRE account from which investments were made into Mutual Funds. In our considered view, in the instant facts, no addition is sustainable under Section 69 of the Act.” 5.3 In Nitin Mavji Vekariya Vs. ITO - Special Civil Appln Nos.7636, 11052 & 11053 – [2023] 7 NYPCTR 1504 of Hon'ble Gujarat High Court has held as under : “vi. assessee submitted copy of certificate of residence from Uganda, issued to him Above reply of assessee is duly considered. assessee did not submit copy of his passport Without that residential status of the assessee cannot be ascertained during year under consideration which is required as per provision of s. 6 of the IT Act. Therefore, reply of the assessee has not been found satisfactory\" 5. Undisputedly, the funds came from NRE Accounts and the source therefore was beyond the reach of the authorities. Even on reading the provisions of s. 10(4), it is apparent that such incomes are exempt from being included in the total income 6. The impugned orders dt. 29th March, 2022 in all these petitions are, therefore, without jurisdiction. The orders dt. 29th March, 2022 in the respective petitions are therefore quashed and set aside. Petitions are allowed, accordingly Rule is made absolute accordingly, with no orders as to costs.” 5.4 In this case, it is an admitted fact that assessee is a non- resident. We have also observed that the impugned income has not accrued or aroused in India. In these facts and circumstances of the ITA No.452/PUN/2025 [A] 8 case, respectfully following the juridical precedents, we are of the opinion that the AO has erred in making addition. Accordingly, we direct the AO to delete the addition of Rs.1,09,78,640/-. Therefore, grounds of appeal raised by the assessee are allowed. 6. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 05 May, 2025. Sd/- Sd/- (VINAY BHAMORE) (DIPAK P.RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 05 May, 2025/ SGR आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “सी” बᱶच, पुणे / DR, ITAT, “C” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "