SHOBHNA DOSHI,LONDON V. THE AC/DC (INT. TXN.), RAJKOT., RAJKOT

ITA 135/RJT/2025

AI Insights

The case involves Shobhana Doshi, a non-resident Indian, who appealed against the orders of the Dispute Resolution Panel (DRP) and the Assessing Officer (AO) regarding the assessment of her income for the year 2018-19. The primary contention was the addition of Rs. 25,00,000 as unexplained investment under section 69A of the Income Tax Act, 1961, and Rs. 1,094 as interest income. The DRP upheld the AO's decision, which led to the appeal before the Income Tax Appellate Tribunal. The Tribunal examined the source of the funds for the fixed deposit in question and found that it was from past remittances, not taxable in the current assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712782 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA; LD.
• Assessee Lawyers: DEVINA PATEL; LD
• Keywords: Unexplained investment; Source of fund
• Section: 148; 144

Judgement Text

"ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER. & DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.135/RJT/2025 Ǔनधा[रण वष[ / Assessment Year: (2018-19) (Hybrid Hearing) Shobhana Doshi 68 Prices Avenue Kingsbury, London-NW99JD, United Kingdom-999999 Vs. The AC/DC Int. Txn. Rajkot. Room No.312, Income tax Office, Amruta Estate Building, Near Girnar Cinema, M.G. Road, Rajkot. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: BESPD0115G (Appellant) (Respondent) Appellant by : Ms. Devina Patel, Ld. AR Respondent by : Shri Sanjay Punglia, Ld. CIT. (DR) Date of Hearing : 16/07/2025 Date of Pronouncement : 28/07/2025 आदेश / O R D E R Per, Dr. Arjun Lal Saini AM; Captioned appeal filed by the assessee, pertaining to Assessment Year 2018-19, is directed against the order passed under section 144C(5) r.w.s.254/260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Dispute Resolution Panel-2 Mumbai, dated 21/11/2024, and read with order giving effect to the DRP-2, Mumbai, passed, u/s 143(3 ) r.w.s 147 r.w.s. 144C(13), r.w.s. 144C(5) of the Act by the Assessing Officer, dated 31.01.2025. 2. Grounds of appeal raised by the assessee are as follows: Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 2 “1. The learned CIT (DRP-2, M-3, Mumbai erred in upholding and in directing the assessing officer in making addition of Rs. 25,00,000/-, as unexplained investment u/s 69A of the Act, by failing to appreciate that source of fixed deposit of said amount was duly explained by the Appellant and thereby levying tax at rates specified u/s 115BBE of the Act. 2.The learned CIT (DRP-2), M-3, Mumbai erred in upholding and directing the A.O. in making addition of Rs.1,094/- as by way of interest income. 3.The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.” 3. The facts of the case which can be stated quite shortly are as follows: The assessee had not originally filed the return of income for assessment year (AY) 2018-19. Based on the information flagged in his case, notice u/s 148 of the Act was issued to the assessee. In response thereto, the assessee did not file any return of income. The Assessing Officer issued the draft assessment order dated 20.03.2023 u/s. 144C of the Act, proposing assessment of total income at Rs.5,43,76,660/-. However, the assessee could not file the objections within statutory time limit before the DRP-2, WZ, Mumbai. Thus, on account of failure of the assessee to adhere to the procedure, the Assessing Officer completed the assessment and passed the final assessment order dated 29.05.2023 u/s 147 r.w.s 144 of the Act with assessed income at Rs.5,43,76,660/-. In above case against order of DRP dated 29.12.2023, the assessee had filed writ application to Gujrat High Court. In its application, the assessee has taken plea that it has already communicated DRP on 18.04.2023 that it will file appeal against draft assessment order. However, intimation about DRP Filing by the assessee was found delayed by one day (1-day) and accordingly the DRP has rejected assessee's application and since the Assessing Officer had passed Final Assessment Order. The above Final assessment order as well as Direction of the Dispute Resolution Panel have been quashed by the Hon'ble Gujarat High Court. The Hon'ble High Court remanded back the case to DRP to pass fresh directions based on assessee's submission. Accordingly, the case has been taken into work flow, and has been Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 3 heard by Hon`ble DRP. In the course of proceedings before Hon`ble DRP, in response to the notice issued, the Authorised Representative, of the assessee, attended the hearing on behalf of the assessee and explained the stand of the assessee, with documentary evidence and filed paper book with relevant documents/ evidence. 4. The assessee is non-resident during the year under consideration and was residing in United Kingdom. In the course of draft assessment proceedings, the Assessing Officer held that the assessee has failed to explain the sources of funds for fixed deposit (FDs). Aggrieved with the variations, the assessee had approached the Hon`ble DRP. Before the Hon`ble DRP, the assessee provided explanations for related fixed deposit (FD) of Rs.25,00,000/-. However, Hon`ble DRP held that assessee had provided Account Nos. 0157051000020164 and 0157051000020169), but not for the account flagged by the Assessing Officer, that is, Account No. 0157101000014957. The explanation of transfer does not explain the source as GBP 25000 would not tantamount to Rs. 25,00,000/-, during financial year (F.Y.) 2017-18. Therefore, Hon`ble DRP found the explanation of assessee, unsatisfactory and therefore the addition of Rs.25,00,000 was upheld by Hon`ble DRP. Thereafter, the Assessing Officer passed the order giving effect to the Hon`ble DRP-2 Mumbai, u/s 144C(13) of the Act, dated 31.01.2025, therefore, the assessee is in further appeal before us. 5. Ms. Devina Patel, Learned Counsel for the assessee, begins by pointing out that on 13-05-2015, remittance of 25,000 GBP made by assessee, from HSBC Bank, London to South Indian Bank-India, for that she took the Bench on page No. 31 of the paper book wherein HSBC Bank statement is placed, which is reproduced below: Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 4 Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 5 6. Ms. Patel, further stated that on 14-05-2015, there is deposit of 25,000 GBP at the exchange rate of Rs.100.25 in A/c No. 147050000010164 with South Indian Bank, India, and to explain this, she took us through paper book page No. 34, which is reproduced below: 7. Ms. Patel, also stated that on 07-06-2017, there is transfer of FD amount with interest of Rs.29,41,713/- to South Indian Bank, Mumbai Branch with new number FD No.157101000014957 as against FD No.147101000021032, the Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 6 relevant evidence is placed on paper book page No.38, which is reproduced below: Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 7 8. This way, learned Counsel for the assessee, explained the Bench, the sequence of events, and stated that fixed deposit of Rs.25,00,000/- was made by the assessee out of definite sources and genuineness of the fixed deposit is not in doubt besides, this transaction is old and does not pertains to the assessment year under consideration, that is, it is not a fresh remittance by assessee, therefore addition made by the Hon`ble DRP may be deleted. 9. On the other hand, the Ld. CIT-DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld DRP/AO and other materials brought on record. We note that Assessing Officer identified a time deposit of Rs.25,00,000/-, credited on 09.06.2017 to Account No.0157101000014957, held with the South Indian Bank. As per Assessing Officer, the assessee failed to explain the source of funds, therefore, the Assessing Officer treated the amount of Rs.25,00,000/-, as unexplained u/s 69A r.w.s 115BBE of the Act. The assessee argued before the Hon`ble DRP that no remittance from the UK was made during the relevant year and asserts that funds relate to past remittances, as per assessee, this FD is transferred from South Indian Bank Pune to Mumbai branch on 07.06.2017 with new FD no. 157101000014957. However, Hon`ble DRP, did not accept the contention of the assessee and upheld the addition made by the Assessing Officer, therefore, assessee is in appeal before us. 11. We have considered submissions made by both the parties and observed that there is merit in the arguments advanced by the Learned Counsel for the assessee. We note that the fixed deposit of Rs.25,00,000/- was opened in the year Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 8 2015 out of Rs.25,000 GBP, received in the year, 2015, and was later on, transferred to South Indian Bank, Mumbai Branch, from Pune Branch, on 07-06- 2017 with new FD No.157101000014957 in place of FD No.147101000021032 and was maturing in the year 2020. Hence, there was no remittance during the year and no fixed deposit was made during the year by the assessee. It was only transfer of fixed deposit from one branch to another branch of the same bank. The ld. Counsel for the assessee, explained the bench that original source of the impugned fixed deposit is proved to be a remittance from UK, as NRI, in India it is a second receipt hence, not taxable under section 5 of the Act. Moreover, it was received in 2015 and hence in any case, it is not a receipt or an investment for current year, under consideration. Same evidence was filed before the Hon`ble DRP, but Hon`ble DRP had confused, FD number as bank account number, which is not so, hence, we are of the view that addition, so made, should be deleted. We also find that the entire amount is neither taxable during the year nor taxable at all, as it can be traced to funds from NRE account, received from abroad and it was not out of fresh remittance, during the year. Considering the above factual position narrated by the ld. Counsel for the assessee, we are not inclined to accept the contention of the Hon`ble DRP in any manner and hence the addition of Rs.25,00,000/- and interest Rs.1,094/-, so made, are deleted. Hence these ground Nos. 1 and 2 of the assessee are allowed. 12. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 28/07/2025. Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 28/07/2025 Dkp Outsourcing Sr.P.S Printed from counselvise.com ITA NO. 135/RJT/2025(A.Y.18-19 Shobhanaben Doshi, Page | 9 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Rajkot Printed from counselvise.com "