This case involved an appeal by Mr. Hersh Washesher Chadha against the addition of Rs. 1,32,25,533 under section 69A of the Income-tax Act, 1961, deemed as unexplained money. The appeal was filed against the order dated 31.12.2020 of the learned Commissioner of Income-tax (Appeals)-42, Delhi, for the assessment year 2017-18.
The appellant, a non-resident individual and a resident of the United Arab Emirates (UAE), filed his tax return in India declaring a nominal income comprised mainly of interest income. During the assessment, the Assessing Officer noted several credit entries in the appellant’s NRO/NRE bank accounts and deemed them unexplained, invoking Section 69A for a substantial addition to the appellant’s taxable income.
During the tribunal proceedings, the appellant’s legal representatives contested the applicability of Section 69A, arguing that as a non-resident, the appellant was not obligated to maintain books of account in India and that all transactions were duly recorded in his bank statements. Furthermore, they substantiated the source of the credited amounts, notably a significant transfer from the appellant’s Dubai bank account, which was thoroughly documented and traced back to legitimate sources, including dividends from the previous assessment year.
The tribunal, led by Judicial Member Shri Saktijit Dey, found that the conditions for Section 69A were not met and that the additions made under this section were unjustified. Detailed examination of the evidence presented, including bank statements and additional documents, supported the appellant’s explanations of the sources of the credits, leading to a decision in favor of the appellant.
The tribunal’s decision underscored the importance of proper evidence and documentation in tax assessments and the inapplicability of Section 69A when the prerequisites are not met. This case serves as a precedent for similar cases involving non-resident individuals and the interpretation of tax laws pertaining to unexplained money.
The final judgment was pronounced in the open court on 13th April, 2023, by Shri G.S. Pannu, Hon’ble President, and Shri Saktijit Dey, Judicial Member, effectively removing the tax addition and allowing the appeal.
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