IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `G' NEW DELHI
BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
I.T.A.No.599/Del/2013
Assessment Year : 2001-02
I.T.A.No.600/Del/2013
Assessment Year : 2004-05
I.T.A.No.601/Del/2013
Assessment Year : 2006-07
DCIT, vs Shri Sanjeev Nanda,
Central Circle-13, 4, Prithvi Raj Road,
Room No.332, ARA Centre, New Delhi.
Jhandewalan Extn., New Delhi. (PAN: ACKPN7555K)
(Appellant) (Respondent)
Appellant by: Shri Ajay Wadhwa Adv.
Respondent by : Smt. Sunita Kejriwal
Date of Hearing: 20.10.2015
Date of pronouncement: 04.12.2015
ORDER
PER CHANDRAMOHAN GARG, J.M.
These appeals by the revenue have been filed against the orders of the
CIT(A)-I, New Delhi all dated 9.11.2012 passed in first appeals no. 74, 75 &
76/11-12 for assessment year 200-1-02, 2004-05 and 2006-07 respectively.
I.T.A. No. 599/D/2013 for A.Y. 2001-02
2. The revenue has raised sole ground in this appeal which reads as under:-
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"On the facts and in the circumstances of the case,
the ld. CIT(A) has erred in fact and in the circumstances of
the case in deleting the addition of Rs.50,00,000/- made by
Assessing Officer on account of unexplained deposits in
bank a/c of assessee."
3. Apropos above ground, we have heard arguments of both the sides and
carefully perused the relevant material placed on record before us. Learned
Departmental Representative supported the stand and action of the Assessing
Officer and submitted that the CIT(A) has grossly erred in deleting the addition
made by the Assessing Officer on account of unexplained deposits in the bank
account of the assessee. Ld. Counsel for the respondent/assessee strongly
supported the impugned order and contended that if the amount or proceeds are
found to be taxable in the hands of assessee's father Shri Suresh Nanda and also
taxed therein, then the question of taxing the receipts twice in the hands of
assessee does not arise and the CIT(A) correctly granted relief to the respondent.
4. On careful consideration of above rival submissions of both the sides, we
observe that the CIT(A) granted relief with following observations and
conclusion:-
"5.4 I have carefully considered the submissions of the
appellant and the facts of the case. It is not disputed that the
aforesaid amount of Rs.50,00,000/- was received by the
appellant from his father Sh. Suresh Nanda. These amounts
were received by way of account payee cheques drawn on
three dates, i.e. 10.5.2000, 11.5.2000 and 19.1.2001, from the
NRE account of Sh Suresh Nanda with Deutsche Bank, New
Delhi. On 29.4.2000, there is a credit of Rs. 1,04,44,617/- in
the Deutsche Bank account being proceeds of NRNR deposit
with SBI encashed by Sh. Suresh Nanda. The source of
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payment of Rs.25,00,000/- on 10.5.2000 and Rs. 15,00,000/-
on 11.5.2000 to the appellant Sh. Sanjeev Nanda is out of this
amount. On 18.1.2001, there is a credit of Rs. 17,50,000/- in
the in the Deutsche Bank account being proceeds of interest
on RBI Bonds invested by Sh. Suresh Nanda. The source of
payment of Rs. 10,00,000/- on 19.1.2001 to the appellant Sh.
Sanjeev Nanda is out of this amount. Thus, the source of
money is clear and undisputed. There is no provision under
the Income Tax Act, 1961 to tax an amount the source of
which has been explained or stands established. If the source
was not established, it could have been taxed u/s 68 of the
Act. However, as the source is established in the case, section
68 is not attracted. The only provision under which the
amount received can be brought to taxation is section 56.
Under this section, any sum of money received without
consideration is chargeable to tax under clause (v) or clause
(vi) and clause (vii) to section 56(2). However, receipt of
money from relatives is exempted under these provisions, and
these provisions are applicable only from A/Y 2005-06.
Section 56(1) can also be invoked provided the amount is
unexplained or not taxed in some other hand. In the present
case, the source of the amounts received stands established.
The only reason it has been brought to tax, presumably u/s
56(1), is that Sh. Suresh Nanda being a nonresident has
refused to disclose the source of his income abroad and,
therefore, the source of money remains unexplained. As
mentioned above, the source of these receipts by the
appellant are proceeds of NRNR deposits and interest on RBI
Bonds received by Sh. Suresh Nanda, father of the appellant.
If these proceeds are found to be taxable, and also taxed, in
the hands of the Sh. Suresh Nanda, the question of taxing the
receipt in the hands of the appellant would not arise. No
doubt, contrary to the stand of the revenue, the Hon'ble ITAT
has held Sh. Suresh Nanda to be a non-resident vide its order
dated 24.7.2012 in ITA Nos.1428, 1429 and 1430/Del/2012.
However, income accruing or arising from assets held in
India would still be taxable in India in the case of Sh.Suresh
Nanda. The ITAT has remanded the matter on several issues
to the file of the Assessing Officer in the case of Sh. Suresh
Nanda in the above appeals. The Assessing Officer is
directed to consider the taxability of proceeds of NRNR
deposit and interest on RBI Bonds in the case of Sh. Suresh
Nanda and bring it to taxation according to law. The amount
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can not be taxed in the hands of the appellant Sh. Sanjeev
Nanda. The ground of the appellant is allowed and the
addition is deleted. Appellant gets relief of Rs.50,00,000/-."
5. On logical analysis of above conclusion of the first appellate authority, at
the outset, we note that as per section 68 of the Income Tax Act, 1961, if source
of receipts was not established, then it could have been taxed under the said
provision. Per contra, there is no provision in the Act to tax an amount or
proceed of receipt the source of which has been explained or stands established.
In the present case, the source of impugned receipts by the assessee are proceeds
of NRNR deposit and interest on RBI Bonds received by father of the assessee
Shri Suresh Nanda and if these proceeds have been found to be taxable in the
hands of Shri Suresh Nanda, then the question of taxing the same u/s 68 of the
Act would not arise. Ld. DR could not controvert these findings of the ld.
CIT(A), thus, we are unable to see any infirmity, perversity or any other valid
reason to interfere with the order of the CIT(A) and we uphold the same.
Accordingly, sole ground of the revenue for assessment year 2001-02 being
devoid of merits is dismissed.
I.T.A.No. 600/Del/2013 for A.Y. 2004-05
6. The revenue has raised sole ground in this appeal which reads as under:-
"On the facts and in the circumstances of the case, ld.
CIT(A) has erred in deleting the addition of Rs.12,00,000/-
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made by Assessing Officer on a/c of unexplained deposit in
bank a/c of assessee."
7. Apropos above ground, we have heard arguments of both the sides and
carefully perused the relevant material placed on record before us. Learned
Departmental Representative supported the action and stand of the Assessing
Officer in making addition on account of unexplained deposits in the bank
account of the assessee. He further prayed that the impugned order may be set
aside by restoring that of the Assessing Officer as the CIT(A) granted relief to
the respondent without any basis and on incorrect premise. Learned counsel of
the assessee supported the impugned first appellate order and submitted that the
assessee received alleged amount from his father by way of account payee
cheque drawn on 10.6.2003 from NRE account of Shri Suresh Nanda with
Deutsche Bank, New Delhi and the source of alleged amount in question has
been properly explained by the assessee, hence the CIT(A) was correct in
allowing the issue in favour of the assessee.
8. On careful consideration of above rival contentions and vigilant
perusal of the operative part of the impugned order, we note that the first
appellate authority granted relief with following conclusion and findings:-
"4. I have carefully considered the submissions of the
appellant and the facts of the case, which are similar to the
facts for A/Y 2001-02. It is not disputed that the aforesaid
amount of Rs. 12,00,000/- was received by the appellant
from his father Sh. Suresh Nanda. The amount was received
by way of account payee cheque drawn on 10.6.2003, from
the NRE account of Sh Suresh Nanda with Deutsche Bank,
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New Delhi. On 9.4.2003, there is a credit of Rs.23,65,000/-
in the Deutsche Bank account, New Delhi, being inward
remittance from abroad received by Sh. Suresh Nanda. The
remittance is from Deutsche Bank, Singapore, belonging to
Sh. Suresh Nanda which has been credited to the capital
account of Sh Suresh Nanda, father of the appellant. With
this remittance, and after certain other debit and credit
transactions, the credit balance on 1.6.2003 in the aforesaid
bank account was Rs. 18,34,598.75p. The source of payment
of Rs. 12,00,000/- on 10.06.2003 to the appellant Sh.
Sanjeev Nanda is out of this balance in the account of Sh
Suresh Nanda. Thus, the source of money is clear and
undisputed. There is no provision under the Income Tax Act,
1961 to tax an amount the source of which has been
explained or stands established. If the source was not
established, it could have been taxed u/s 68 of the Act.
However, as the source is established in the case, section 68
is not attracted. The only provision under which the amount
received can be brought to taxation is section 56. Under this
section, any sum of money received without consideration is
chargeable to tax under clause (v) or clause (vi) and clause
(vii) to section 56(2). However, receipt of money from
relatives is exempted under these provisions, and these
provisions are applicable only from A/Y 2005-06. Section
56(1) can also be invoked provided the amount is not taxed
in some other hand. In the present case, the source of the
amounts received stands established. The only reason it has
been brought to tax, presumably u/s 56(1), is that Sh. Suresh
Nanda being a non-resident has refused to disclose the
source of his income abroad and, therefore, the source of
money remains unexplained. As mentioned above, the
source of these receipts by the appellant are remittances
from the Singapore account to New Delhi account of Sh.
Suresh Nanda, father of the appellant, with Deutsche Bank.
If these proceeds are found to be taxable, and also taxed, in
the hands of the Sh. Suresh Nanda, the question of taxing
the same receipt in the hands of the appellant would not
arise. The same amount cannot be taxed in the hands of the
appellant Sh. Sanjeev Nanda. No doubt, contrary to the
stand of the revenue, the Hon'ble ITAT has held Sh. Suresh
Nanda to be a non-resident vide its order dated 24.7.2012 in
ITA Nos. 1428, 1429 and 1430/Del/2012. Even if taxability
of this amount is not finally sustained in the hands of Sh
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Suresh Nanda, father of the appellant, it cannot be taxed in
the hands of the appellant - either as gift, being from a
relative and no law existing during the period to tax it as
such; or as unexplained receipt as its source stands clearly
established. The only way this amount can be taxed in the
hands of Sh Sanjeev Nanda, the appellant, is if it can be
treated as a business receipt or salary or perquisite in his
hands. This not being the case, the question of taxability of
this amount in the hands of the appellants does not arise.
The ground raised by the appellant is allowed and the
addition is deleted. Appellant gets relief of Rs. 12,00,000/-."
9. The aforesaid conclusion is similar to the order of assessment year 2001-02
(supra) and we clearly note that the assessee properly explained source of amount in
question that the same was received from his non-resident father Shri Suresh Nanda
from the deposits in his bank account by way of account payee cheque dated
10.6.2003 wherein there was a credit balance of Rs.23,65,000 on 9.4.2013 i.e. much
prior to issuance of cheque to assessee. These facts have not been controverted by
the Assessing Officer and the learned Departmental Representative and thus we are
unable to see any infirmity or any other valid reason to interfere with the impugned
order of the ld. CIT(A) and we uphold the same as the alleged amount cannot be
treated as unexplained receipt of the assessee and cannot be taxed in the hands of
respondent u/s 68 of the Act. Accordingly, sole ground of revenue for assessment
year 2004-05 being devoid of merits is dismissed.
I.T.A. No. 601/D/2013 for A.Y. 2006-07
10. The revenue has raised sole ground in this appeal which reads as under:-
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"On the facts and in the circumstances of the case, ld.
CIT(A) has erred in law, fact and in circumstances of the case in
deleting the addition of Rs.23,57,038/- made by Assessing Officer
on a/c of unexplained investment by the assessee."
11. Apropos aforesaid ground, we have heard arguments of both the parties and
carefully perused the relevant material placed on record. Learned Departmental
Representative supported the stand and action of the Assessing Officer and contended
that the CIT(A) granted relief to the assessee without any basis, hence, the impugned
order may be set aside by restoring that of the Assessing Officer. Ld. Counsel of the
assessee has drawn our attention towards para 5.4 of the impugned order and strongly
supported the first appellate order wherein the relief has been granted with following
conclusion and observations:-
"5.4 I have carefully considered the observations of the
Assessing Officer, submissions of the appellant and the facts
of the case. It is seen that for A/Y 2006-07 in the case of Sh
Suresh Nanda, father of the appellant, an addition of
Rs.7,44,07,498/- was made in respect of payments to
various parties with regard to various consultancy and
other services in respect of Sonali Farms. It is seen that the
these amounts, the break-up of which is available in the
table at para 9.1 (pages-34 and 35 of the assessment order),
includes the same payments made between 20.4.2005 and
16.7.2005 to Craig Roberts Associates Inc. against various
invoices towards consultancy charges and professional
services with regard to Sonali Farms. The total of these
amounts also comes to USD 54,599. It was submitted by the
appellant before the Assessing Officer that the remittances
are from Deutsche Bank, Singapore, belonging to Sh.
Suresh Nanda, father of the appellant, to which the
appellant is a co-signatory and signs on the cheques in the
absence of his father. The Assessing Officer disbelieved the
submissions of the appellant assuming that the appellant
held bank accounts abroad. The only reason for the
Assessing Officer to conclude so was presence of an Amex
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card issued in the UK. Significantly, no evidence of any
separate bank account belonging to the appellant was found
during the course of search. It is not disputable that the
amounts of payments totaling USD 54,599 made to Craig
Roberts Associates Inc., which have been added in the case
of the appellant as well as in the case of his father Sh.
Suresh Nanda, were the same and related to various
invoices towards consultancy charges and professional
services with regard to Sonali Farms. This fact emerges
from the two assessment orders passed by the same
Assessing Officer in the case of the appellant and his father
Sh Suresh Nanda. It has been submitted that these amounts
were paid out of the Singapore account of Sh Suresh Nanda
and also taxed in his hands. There is no evidence that there
is some other source for the payment of these amounts.
Thus, the source of investment is clear and undisputed. If
the source is not established, the amount can be brought to
taxation u/s 69C as unexplained expenditure. But as the
source of payment is clear from the assessment order in the
case of the appellant's father Sh Suresh Nanda, and also
taxed in his hands, it cannot be again brought to taxation in
the hands of the appellant. The amount could have been
taxed u/s 56 as residual income or gift. Under this section,
any sum of money received without consideration is
chargeable to tax under clause (v) or clause (vi) and clause
(vii) to section 56(2). However, receipt of money from
relatives is exempted under these provisions, and these
provisions are applicable only from A/Y 2005-06. Section
56(1) can also be invoked provided the amount is not taxed
in some other hand. In the present case, the source of the
amounts received stands established. As mentioned above,
the source of payments is from the Singapore account of Sh.
Suresh Nanda, father of the appellant, with Deutsche Bank.
If these amounts are found to be taxable, and also taxed, in
the hands of the Sh. Suresh Nanda, the question of taxing
the same amounts in the hands of the appellant would not
arise. The same amount cannot be taxed in the hands of the
appellant Sh. Sanjeev Nanda. No doubt, contrary to the
stand of the revenue, the Hon'ble ITAT has held Sh. Suresh
Nanda to be a non-resident vide its order dated 24.7.2012 in
ITA Nos. 1428, 1429 and 1430/Del/2012. Even if taxability
of this amount is not finally sustained in the hands of Sh
Suresh Nanda, father of the appellant, it cannot be taxed in
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the hands of the appellant - either as unexplained
investment, as its source stands clearly established; or as
gift, being from a relative and no law existing during the
period to tax it as such. The amount could have been taxed
in the hands of Sh Sanjeev Nanda, the appellant, if it could
be treated as a business receipt or salary or perquisite in
his hands. This not being the case, the question of taxability
of this amount in the hands of the appellants does not arise.
The ground raised by the appellant is allowed and the
addition is deleted. Appellant gets relief of Rs.23,57,038/-."
12. In view of above, when we proceed to analyze the facts and circumstances
of the present case, we note that in the case of assessee's father Shri Suresh
Nanda, an addition of Rs.7,44,07,498 has been made in respect of various
payments to various parties with regard to various consultancy and other
services in respect of Sonali Farms. In the case of Shri Suresh Nanda for
Assessment Year 2006-07, the Assessing Officer has given a chart at pages 34 &
35 wherein at page 35, last five entries include payments made between
20.4.2005 to 16.7.2005 to Craig Roberts Associates Inc. against various invoices
towards consultation charges and professional services pertaining to Sonali
Farms total of which comes to USD 54599. These facts have not been disputed
or controverted by the Assessing Officer.
13. It is also amply clear that the remittances are from Deutsche Bank
Singapore belonging to the father of the assessee Shri Suresh Nanda to which
respondent is a co-signatory and authorized to sign cheques in the absence of his
father. The Assessing Officer was incorrect and wrong in holding that the
assessee held and operated said bank account abroad whereas he could not bring
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any material or evidence to establish that the assessee solely or individually held
and operated said bank account abroad. The Assessing Officer has not brought
out any other evidence to support that there was any other source of payment by
the assessee and on the other hand, the source and purpose of investment is clear
and undisputed that the amounts paid to M/s Craig Roberts were from bank
account of Shri Suresh Nanda and also taxed in his hand, then it cannot be again
brought to tax in the hands of present assessee merely because he issued cheques
on behalf of his father as co-signatory from the funds belonging to his father.
Ld. CIT(A) was right in holding that if the source of expenditure or investment
is not established, then the amount can be brought to tax u/s 69C of the Act as
unexplained expenditure but as the source is established, then no addition can be
made in the hands of the assessee. The CIT(A) was very cautious about
application of other taxing provisions as he also considered the applicability of
section 56 of the Act and held that the amount could have been taxed u/s 56 of
the Act as residual income or gift, however, the receipt of money from relatives
is exempt under these provisions which are only applicable from Assessment
Year 2005-06 onwards.
14. We are also in agreement with the conclusion of the ld. CIT(A) that even
if taxability of this amount is not finally sustained in the hands of Shri Suresh
Nanda, it cannot be taxed in the hands of present assessee i.e. Shri Sanjeev
Nanda either as unexplained investment as its source is clearly established and
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the same cannot be taxed as gift being from relative. There was only situation
when the amount in question could be taxed in the hands of the assessee if it
could be treated as salary or business receipts or perquisites in the hands of
assessee and this is not being the case of the Assessing Officer. Finally, on
logical analysis of the conclusion of the Assessing Officer, we reach to a
fortified view that the CIT(A) was right in deleting the addition which was made
without any basis and we are unable to see any valid reason to interfere with the
first appellate order of the ld. CIT(A) and thus, we uphold the same.
Accordingly, sole ground of the Revenue for Assessment Year 2006-07 is also
dismissed.
15. In the result, all three appeals of the Revenue are dismissed.
Order pronounced in the open court on 04.12.2015.
Sd/- Sd/-
(L.P. SAHU) (C.M. GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 04th December, 2015
`GS'
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT 4.CIT(A)
5. DR
Asstt. Registrar
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