In a significant ruling the Delhi High Court observed that a non- resident Indian having source of income in India from interest on bank accounts and income tax refund not obliged to maintain books of account in India.
The respondent/assessee, Hersh Washesher Chadha, being a non-resident individual residing in the United Arab Emirates (UAE) filed his Return of Income for Assessment Year 2017-18, thereby declaring his income as Rs.1,02,288/-, which included savings bank interest of Rs.95,305/- and interest on the income tax refund of Rs.6,983/-.
By way of scrutiny proceedings, the Assessing Officer made additions under Section 69A of the Income Tax Act to the tune of Rs.1,40,09,733/- on account of unexplained credit entries in the accounts, a sum of Rs.1,64,219/- on account of under reporting of interest and an amount of Rs.4,69,335/- towards deemed dividend under Section 2(22)(e) of the Income Tax Act.
In the impugned order, the Tribunal took a view that the provision under Section 69A of the Income Tax Act does not apply in the present case since the respondent/assessee being a non-resident, whose only source of income in India is from interest on bank account and interest on income tax refund, one of the conditions of Section 69A of the Act is not satisfied, consequently the addition made by invoking Section 69A of the Act is not sustainable.
By way of the appeal brought under Section 260A of the Income Tax Act, the revenue has assailed order dated 13.04.2023 of the Income Tax Appellate Tribunal, whereby the appeal bearing no. ITA 123/Del/2021 pertaining to the Assessment Year 2017-18 filed by the present respondent/assessee was allowed. On advance notice, the assessee entered appearance through counsel.
Section 69A of the Income Tax Act lays down that where in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money etc. is not recorded in the books of account, if any maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the said money etc., or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the said money may be deemed to be the income of the assessee for such financial year.
A Division Bench comprising Justices Girish Kathpalia and Rajiv Shakdher observed that “In the present case, the respondent/assessee is a NonResident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund, he is not obliged to maintain any books of account in India.”
“In the impugned order, the Tribunal meticulously examined and elaborately discussed the documentary record in support of the said explanation of money ingress in the bank account of the respondent/assessee. In the absence of a stand taken by the appellant/revenue alleging perversity, this court while acting under Section 260A of the Income Tax Act cannot enter into the arena of appreciation of facts and documents” the Court noted.
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