The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that no addition shall be made under Section 69A of the Income Tax Act, 1961, for cash deposition into a Non-Resident Ordinary ( NRO ) bank account during travel to India.
The assessee filed an income tax return on March 31, 2017, declaring a total income of Rs. 470/-. The tax authorities selected the case for scrutiny to investigate cash deposits made by the assessee during the demonetization period. When asked to explain the source of the cash deposits, the assessee stated that they were made from withdrawals from their bank account.
However, the Assessing Officer was not convinced, resulting in an addition of Rs. 12,00,000/- to the returned income under Section 143(3) of the Income Tax Act, 1961. The decision was upheld by the Commissioner of Income Tax ( Appeals ).
The funds totaling Rs. 18,30,300/- were withdrawn from the NRO account between July 17, 2015, and September 22, 2016. Additionally, Rs. 12,00,000/- was deposited into the same NRO account due to demonetization. The assertion by the Commissioner of Income Tax ( Appeals ) that the odd amounts withdrawn were suspicious is erroneous. The remittances from Dubai to the NRO account were in round amounts of foreign currency, resulting in odd amounts in the NRO bank account due to currency conversion and bank charges
This amount was withdrawn to meet expenses in India. Moreover, the passport confirms the assessee’s travel to India on November 16, 2016, and the deposit of the remaining cash of Rs. 12,00,000/- into the same NRO bank account. As the withdrawals were made from the NRI’s own bank account, his absence has been established, and his arrival in India is not in question. Therefore, since the availability of cash on hand is not disputed
The two member bench of the tribunal comprising Saktiji Dey ( Vice President ) and Dr.B.R.R Kumar ( Accountant member ) concluded that no addition under Section 69A of the Income Tax Act, 1961, was warranted. In the result, the appeal of the assessee was allowed.
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