The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while quashing an addition made under section 69 and 69A, held that inter- account transfer and sale of shares for loss, are not income.
The aforesaid observation was made by the Delhi Bench, when an appeal was preferred before it by the assessee, against the order of the CIT(A), Delhi, dated 11.10.2021 for Assessment Year 2017-18.
The grounds of the assessee’s appeal being that, the Commissioner has failed to appreciate that any investment made in prior years cannot be considered as Income under Section 69 of the current year, as the provision deems as income , only investments made in the relevant financial year which could not be satisfactorily explained , and further that the Commissioner while observing that the Appellant could not rebut the claims of the AO that narration or nature of credit in the bank accounts were not filed , failed to take cognisance of the fact that detailed narration of the bank account sending with account number 807 , 797 and 396, were very much available in the bank statements itself and further that these were also extracted and set out in the re joinder to the remand report on 23 Jan 2021 before the Commissioner , all of which are on record ,the brief facts of the case were that the assessee was a citizen of UK , who was residing in the United States of America as a Green Card Holder.
Having been outside India for more than 40 years, he briefly came to India for employment for a little over 3 years and thereby he became a Resident of India for the tax purposes in the Assessment year 2017-18. Since the assessee owned foreign assets, he duly disclosed all his foreign assets in Schedule FA to the ITR. And, his assessment was done without the benefit of any explanations from the assessee, as all the email notices sent by the department had purportedly landed in his spam folder and eventually got autodeleted by the software.
The Assessment was completed with an addition of Rs. 14,30,65 ,720 being the total value of all his foreign assets, including assets jointly held with his spouse.
In First Appeal, the assessee was granted a relief of Rs. 12,44,51 ,196, sustaining thereby an addition of Rs. 1 ,86,14 ,524, and the assesseeis currently before the Tribunal against the additionssustained of Rs. 1,86,14 ,524/.
Hearing the opposing contentions of both sides as presented by Sh. G. Srikanth, CA, on behalf of the assessee, and by Sh. Sanjay Kumar, the Sr. DR, on behalf of the Revenue, the Delhi ITAT observed:
‘Before us it was submitted that the tax year in US is the Calendar year and hence the year under consideration is CY 2016 (1/1/6 to 31/12/16) and the assessee incurred loss on short term capital loss of US$ 641 as well as Long Term Capital loss of US$ 1 ,940. Evidences filed shows the date of purchase of each of the security from reflecting the investments were made in CY 2015. Hence, they are not amenable to tax/ evasion in the instant year. Hence, appeal of the assessee on this ground is allowed.”
“Before us it was submitted that the complete narration of each and every entry in the 3 accounts were produced before the learned CIT(A). Copy of the statement showing narrations has been perused by us. The original bank statement of all 3 accounts is examined. On examination it can be seen that almost all the credits were inter-account transfers including from wife’s account. Relevant parts of these bank accounts of the Appellant and that of his spouse is part of paper book. There were no items in the nature of income save and except sale of securities for US$ 37,000 (13/4/16 – US$ 19,000 and 10/6/16 – US$ 18 ,000) which has only resulted in a loss of US$ 1 ,940 as evidenced by the E Trade statement set out earlier. With regard to the US Tax returns the assessee filed his US Tax Returns and provided copies of the same. From submissions before us it can be observed that there are no entries in the nature of income”, considering the assessee’s ground with regard to Peak balance in Bank Accounts in HSBC Bank, the Coram of Kul Bharat, the Judicial Member and Dr. B. R. R. Kumar, the Accountant Member added.
Thus, the Delhi ITAT held:
“In view of the explanations provided, backed by bank statement of all 3 banks along with narrations, as well as the US Returns, we hold that no part of the balance in the banks should be added under Section 69 or 69A. In the result, the appeal of the assessee is allowed.”
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