The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could not be made for deposit in Non-Resident External (NRE) account when the assessee had no source of income in india.
The assessee Duraisamy Shanmugasundaram was non-resident. The money deposited in the NRE account was withdrawn by the assessee’s parents in India. The same had been sourced to deposit the same in another NRO account from time to time. However, rejecting the assessee’s explanation, AO held that the cash was not re-deposited within a reasonable time frame. Accordingly, AO worked out peak credit of Rs.15.08 Lacs and added the same to the income of the assessee
Jharna Harilal on behalf of the assessee submitted that the complete details of cash deposits and withdrawals were made available from the year 2007-08 onwards which had not been looked into by any of the lower authorities.
Sanat Kumar Raha on behalf of the revenue supported the orders of lower authorities
A Single Bench of Manoj Kumar Aggarwal, (Accountant Member) deleted the impugned addition holding that, the reasoning of AO that the deposits were not within reasonable time frame could not be accepted because,
The income of the assessee was not subjected to tax in India and accordingly, he had not filed any return of income. This fact had not been appreciated by AO since AO had
treated the assessee as resident only. The assessee was maintaining an NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, had no source of income in India.
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