The Income Tax Appellate Tribunal (ITAT), Chennai bench comprising Shri Mahavir Singh (Vice President) and Shri Manoj Kumar Aggarwal, (AM) has recently deleted an addition against a non-resident Indian by holding that the cash deposits made by him out of savings from his old aged parents cannot be treated as “unexplained” under the Income Tax Act, 1961.
The assessee, Mr. Natarajan Purushothaman used to bring cash during visits to India and it was customary to provide some cash to the parents during such visits. The CIT(A), on first appeal, observed that the deposits of Rs.3.45 Lacs were stated to be funded out of earlier withdrawals and transfer from western union. It was possible that some cash might have been saved by the family which was later on deposited in the bank account. Considering the documents, the Assessing Officer allowed a sum of Rs.4 Lacs could be granted to the assessee and confirmed the balance addition of Rs.2 Lacs.
Deleting the addition, the division bench of the Tribunal held that “Upon careful consideration, we find that the assessee is employed in Dubai and occasionally visit India to meet elderly parents. The assessee does not have any source of income in India. Therefore, the explanation that some cash was saved by the parents and it was deposited in the bank account could be considered as valid explanation of the source. This amount could not be considered as unexplained income of the assessee considering the fact that he is a non-resident. Therefore, by deleting the addition of Rs.2 Lacs, we allow the appeal.”
Smt. TV Muthu Abirami (Advocate) appeared for the appellants.
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