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DCIT, Central Circle-13, Room No.332, ARA Centre, Jhandewalan Extn., New Delhi. Vs Shri Sanjeev Nanda, 4, Prithvi Raj Road, New Delhi.
December, 08th 2015
                 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:-




                                       1
            "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



                                        2
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








                                   3
     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/-




                                        4
     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,



                                        5
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



                                  6
         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:-




                                             7
            "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



                                             8
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








                                  9
      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



                                        10
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




                                        11
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




                                       12

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