DEPTUY COMMISSIONER OF INCOME TAX vs. HEMANT MANSUKHLAL PANDYA – BOMBAY TRIBUNAL

I.T.A No.4679 & 4680/Mum/2016 (C.O.58 & 59/Mum/2018)

Nov 16, 2018

Asst. Year 2006-07 & 2007-08

Non-residents—Foreign income—Unexplained cash credits—Taxability—Assessee, a non-resident was living in Japan on business visa since 1990 and got permanent residency certificate in 2001—Assessee filed return of income for AY 2006-07 which was processed u/s 143(1)—Information was received by Indian Government from French Government that some Indian nationals and residents had foreign bank accounts in HSBC Private Bank which were undisclosed to Indian I-T Department—Details of account holders along with date of opening of said bank account and also balance in certain years were mentioned—Such information was processed with assessee’s return of income and found that details provided by French Government was matching with information provided by assessee in his return—Accordingly, DDIT(Inv) send such information to concerned AO—Based on this information, AO reopened assessee’s case u/s 147—AO held that since information received from two sovereign countries showed that assessee was having bank accounts in HSBC, Geneva, onus was on assessee to prove his innocence—AO held that details not furnished were unfavourable to assessee and source of money deposited in HSBC account was undisclosed and sourced from India—Assessee produced his permanent residency card—Assessee chose not to provide any details in respect with work permit prior to 2001—AO concluded that prior to 2001, assessee could not be engaged in any business, profession of employment in Japan and thus, credits found in HSBC Bank, Geneva were undisclosed to Indian I-T Department—CIT(A) granted relief to assessee—Held, assessee had maintained only one bank account in India in Dena Bank which was NRO account—In order to prove that amount in foreign bank account was not sourced from India, assessee filed bank statement of his only bank account in India from FYs 1998 to 2008 from which it was noted that there were no debits in such bank account which could have gone to foreign bank account—Balance in Indian account maintained was so less that it could not fund an amount which was added by AO as assessee’s income—Onus of proving that an amount fell within taxing ambit was on Department and it was incorrect to place such onus of proving negative on assessee—Therefore, when AO found assessee is a non-resident Indian, was incorrect in making addition towards deposits found in foreign bank account maintained with HSBC Bank, Geneva without establishing fact that said deposit was sourced out of income derived in India, when assessee had filed necessary evidences to prove that he was a non-resident since 25 years and his foreign bank account and assets did not had any connection with India and that same were acquired/sourced out of foreign income which were not accrued/arisen in India—No material was brought on record to show that funds were diverted by assessee from India to source deposits found in foreign bank account—Suspicion, howsoever strong, could not take place of proof and no addition could be made on presumption and assumption—AO failed to prove that impugned addition could be made within ambit of s. 5(2) r/w s. 68/69—Under s. 5(2), income accruing or arising outside India was not taxable unless it was received in India—Similarly, if any income was already received outside India, same could not be taxed in India merely on ground that it was brought in India by way of remittances—Assessee being a non-resident, having money in a foreign country could not be called upon to pay income tax on that money in India unless it satisfies tests of taxability of non-resident under provisions of Act, which in instant case was not getting satisfied—Thus, bank account of HSBC Bank, Geneva was outside preview of this Act—CIT(A) was correct in deleting additions made by AO—Revenue’s appeal dismissed.