ACIT, Bangalore v. Sri. KPC Mohdammed Kunhi, Bangalore

ITA 1288/BANG/2011 | 2003-2004
Pronouncement Date: 12-07-2013 | Result: Dismissed

Appeal Details

RSA Number 128821114 RSA 2011
Assessee PAN ADKPM4871A
Bench Bangalore
Appeal Number ITA 1288/BANG/2011
Duration Of Justice 1 year(s) 6 month(s) 27 day(s)
Appellant ACIT, Bangalore
Respondent Sri. KPC Mohdammed Kunhi, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 12-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 12-07-2013
Date Of Final Hearing 22-05-2013
Next Hearing Date 22-05-2013
Assessment Year 2003-2004
Appeal Filed On 16-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NOS.1288 TO 1292/BANG/2011 ASSESSMENT YEARS : 2003-04 TO 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) BANGALORE. VS. MR. K.P.C. MOHAMMED KUNHI 5 TH FLOOR EMPIRE SUITES NO.35 CASTLE STREET OFF BRIGADE ROAD BANGALORE. PAN : ADKPM 4871A APPELLANT RESPONDENT ITA NO.954/BANG/2012 ASSESSMENT YEARS : 2008-09 MR. K.P.C. MOHAMMED KUNHI 5 TH FLOOR EMPIRE SUITES NO.35 CASTLE STREET OFF BRIGADE ROAD BANGALORE. PAN : ADKPM 4871A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) BANGALORE. APPELLANT RESPONDENT REVENUE BY : SHRI FARAHAT HUSSAIN QURESHI CIT-II(D R) ASSESSEE BY : SHRI S. VENKATESAN C.A. DATE OF HEARING : 09.07.2013 DATE OF PRONOUNCEMENT : 12.07.2013 ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 2 OF 24 O R D E R PER BENCH ITA NOS. 1288 TO 1292/BANG/2011 ARE APPEALS BY TH E REVENUE FOR THE ASSESSMENT YEARS 2003-04 TO 2007-08 AND ITA NO. 954/BANG/2012 IS AN APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2 008-09 AGAINST THE COMMON ORDER DATED 26.08.2011 PF THE CIT(APPEALS) MYSORE. 2. THERE IS A DELAY OF ABOUT 281 DAYS IN FILING THE APPEAL BY THE ASSESSEE. IN THE REASONS FOR CONDONATION OF DELAY THE ASSESSEE HAS SUBMITTED THAT AFTER THE RECEIPT OF THE ORDER OF CI T(APPEALS) FOR THE A.Y. 2008-09 THE ASSESSEE SENT THE PAPERS FOR NECESSARY ADVISE TO HIS CA SHRI S. VENKATESAN. THE ASSESSEE DID NOT HEAR ANYTHING FROM THE CA. THE ASSESSEE CONTACTED THE CA AND WAS INFORMED THAT HE WAS SICK AND BEDRIDDEN AND NOT ATTENDING OFFICE. IN FACT HE WA S CHRONICALLY DIABETIC AND HAD UNDERGONE BY-PASS SURGERY AND WAS NOT ATTENDING THE OFFICE REGULARLY. THE ASSESSEE RECEIVED NOTICE FOR APPEALS FILED BY T HE DEPARTMENT AGAINST THE ORDER OF THE CIT(A) AND WHEN THE SAME WAS TAKEN TO THE CA IT TRANSPIRED THAT THE ASSESSEE HAS NOT FILED APPEAL F OR THE A.Y. 2008-09 AND THEREAFTER THE SAME WAS FILED. IN THE PROCESS THE RE OCCURRED A DELAY OF ABOUT 241 DAYS IN FILING THE APPEAL. 3. WE HAVE HEARD THE SUBMISSIONS OF THE CA. IT WAS SUBMITTED BY HIM THAT THE FACTS STATED IN THE AFFIDAVIT PERTAIN TO H IS ILLNESS AND ARE TRUE. THE LD. DR OPPOSED THE APPLICATION FOR CONDONATION OF D ELAY. ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 3 OF 24 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE DELAY IN FILING THE APPEAL AS STATED IN THE AF FIDAVIT FOR CONDONATION OF THE DELAY HAS OCCURRED DUE TO REASONABLE CAUSE. THE D ELAY IN FILING THE APPEAL IS ACCORDINGLY CONDONED. 5. THE ISSUES WHICH ARISE FOR CONSIDERATION IN THE APPEALS BY THE REVENUE AND THE ONLY APPEAL BY THE ASSESSEE ARE INT ERLINKED AND CAN BE DEALT WITH TOGETHER. THE FACTS GIVING RISE TO THES E APPEALS ARE AS FOLLOWS. 6. THE ASSESSEE IS A PARTNER IN A PARTNERSHIP FIRM BY NAME HOTEL EMPIRE. THERE WAS A SEARCH ACTION U/S. 132 OF THE INCOME TAX ACT 1961 (THE ACT) CONDUCTED ON 12.3.2008 IN THE CASE OF THE ASSESSEE AS WELL AS OTHER ENTITIES BELONGING TO EMPIRE GROUP OF HOTELS. AS FAR AS THE ASSESSEE IS CONCERNED IN THE COURSE OF SEARCH IN HIS PREMIS ES DOCUMENTS WERE FOUND WHICH EVIDENCED REMITTANCES INTO NRE BANK ACC OUNT NO.9366 OF THE ASSESSEE WITH SOUTH INDIAN BANK LTD. BANGALORE. T HE TOTAL REMITTANCES IN THE SAID BANK ACCOUNT DURING THE PERIOD 2002-03 TO 2005-06 WAS A SUM OF RS.3 40 84 054 BETWEEN THE PERIOD 28.10.02 TO 23.06 .07. IN THE COURSE OF SEARCH CERTAIN PHOTOCOPIES OF DDS WHICH WERE PURCH ASED ABROAD AND DEPOSITED IN HIS NRE ACCOUNT WERE ALSO FOUND AND SE IZED. THESE DDS HAD BEEN PURCHASED BY MAKING DEPOSITS OF MONEY IN THE C URRENCY OF OMANI RIALS OF THE COUNTRY SULTANATE OF OMAN AND DEPOSITE D INTO NRE ACCOUNT OF THE ASSESSEE IN INDIA. IT MAY NOT BE OUT OF PLACE TO MENTION THAT BEFORE 30.06.2005 THE ASSESSEE WAS IN SULTANATE OF OMAN A ND HE CAME BACK TO ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 4 OF 24 INDIA AND SETTLED IN INDIA FROM 30.06.2005. AS ALR EADY MENTIONED OUT OF TOTAL DEPOSITS OF RS.3 40 84 054 IN THE ASSESSEES NRE BANK ACCOUNT IN BANGALORE BETWEEN 28.10.02 TO 23.06.07 A SUM OF RS .2 59 56 457 WAS RECEIVED BEFORE 30.06.2005 AND A SUM OF RS.81 27 59 7 WAS RECEIVED AFTER HIS COMING BACK TO INDIA AND SETTLING DOWN IN INDIA . 7. IN THE COURSE OF SEARCH STATEMENT OF THE ASSESS EE WAS RECORDED U/S.132(4) OF THE ACT WITH REGARD TO THE SOURCE OF FUNDS OUT OF WHICH THE ASSESSEE HAD PURCHASED DDS IN SULTANATE OF OMAN AND WHICH WAS DEPOSITED IN THE ASSESSEES NRE ACCOUNT IN BANGALOR E. IN HIS REPLY TO Q.26 WITH REGARD TO THE SOURCE OF FUNDS FOR PURCHAS E OF DDS BY DEPOSITING SULTANATE OF OMAN CURRENCY RIALS THE ASSESSEE SUBM ITTED THAT HE WAS EARNING CONSIDERABLE AMOUNT FROM HIS EMPLOYMENT AT SULTANATE OF OMAN AND HAD ACCUMULATED SAVINGS WITH THE INTENTION OF M AKING INVESTMENTS IN BANGALORE AND THEREFORE MONIES WERE SENT THROUGH LE GAL CHANNEL TO NRE BANK ACCOUNT IN BANGALORE. IN REPLY TO Q.30 WITH REGARD TO WHERE THE CURRENCY OF SULTANATE OF OMAN WAS KEPT BEFORE THE P URCHASE OF DDS THE ASSESSEE SUBMITTED THAT THE SAME WAS KEPT IN OMAN W ITH FRIENDS AND WAS REMITTED TO INDIA AS AND WHEN THERE WAS A NEED FOR FUNDS AND FOR EXPANDING BUSINESS IN INDIA. 8. ON 14.03.2008 STATEMENT OF THE ASSESSEE WAS REC ORDED U/S. 131 OF THE ACT. IN THE STATEMENT SO RECORDED ANSWER TO Q .5 & 6 IN OUR VIEW WILL BE RELEVANT AND THE SAME READS AS FOLLOWS:- ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 5 OF 24 Q.NO.5. PLEASE STATE THE SOURCE OF RS.2 59 56 457/ - RECEIVED FROM OMAN DURING THE FINANCIAL YEARS FROM 2002-03 TO 30/06/05. ANS.: I HAD RETURNED FROM OMAN ON 30/06/2005 AND A SUM OF RS.2 59 56 457/-WAS DEPOSITED IN MY NRE ACCOUNT AS I HAVE ALREADY STATED THAT THE SUM OF RS.2 59 56 457/- WAS OUT OF MY SALARY SAVINGS AND OTHER INCOMES EARNED AT MY STAY IN OMAN. I DO NOT HAVE THE DOCUMENTARY EVIDENCE FOR THE AMOUNT OF RS.2 59 56 457/-. HOWEVER I UNDERTAKE TO PRODUCE THE DOCUMENTARY EVIDENCE ON OR BEFORE 19/03/2008 IN SUP PORT OF MY CLAIM THAT I RECEIVED SALARY AND OTHER INCOME DURIN G MY STAY IN OMAN FOR THE SUM OF RS.2 59 56 457/-. OTHER WISE I WILL OFFER A SUM OF RS. 2 59 56 457/- FOR TAXATION IN ABSENCE OF ANY PROOF. Q.NO.6. PLEASE STATE THE SOURCE OF RS.81 27 597/- RECEIVED FROM OMAN DURING THE FINANCIAL YEARS FROM 30/06/05 TO 23.06.2007. ANS.: I DO NOT HAVE ANY SOURCE TO EXPLAIN HOW A SU M OF RS. 81 27 597/- WAS SENT TO MY NRE SAVINGS ACCOUNT NO.9 366 WITH SOUTH INDIAN BANK LTD BANGALORE CANTONMENT BRANCH. HENCE I OFFER A SUM OF RS.81 27 597/- AS MY UNDISCLOSED INC OME FOR TAXATION FOR THE RELEVANT ASSESSMENT YEARS I.E. AN ADDITIONAL INCOME OF RS. 65 60 373/- FOR THE A.Y. 2006-07 AN ADDITIONAL INCOME OF RS. 10 32 224/- FOR THE A.Y. 2007-08 AND RS.5 35 000/- FOR THE A. Y. 2008-09. I UNDERTAKE TO PAY THE TAXES ON THIS ADDITIONAL INCOME ADMITTED BY ME AND TO REV ISE MY RETURN OF INCOME FILED BEFORE THE INCOME TAX DEPARTMENT. 9. IT COULD BE SEEN FROM THE AFORESAID STATEMENT TH AT AS FAR AS THE SUM OF RS.2 59 56 457 WHICH WAS THE MONEY DEPOSITED IN THE NRE ACCOUNT OF THE ASSESSEE AT BANGALORE BEFORE 30.06.2005 THE AS SESSEE REITERATED HIS STAND THAT THIS WAS SALARY SAVINGS AND OTHER INCOME EARNED DURING HIS STAY AT OMAN AND THAT HE WOULD SUPPORT THE SAME WITH DOC UMENTARY EVIDENCE. AS FAR AS THE AMOUNT DEPOSITED IN THE NRE BANK ACCO UNT AFTER 30.06.2005 ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 6 OF 24 TO 23.06.2007 VIZ. A SUM OF RS.81 27 597 IS CONCER NED THE ASSESSEE OFFERED THE SUM TO TAX AS ADDITIONAL INCOME AND HAD CLAIMED THAT HE HAD NOT EXPLAINED FOR THE SOURCE OF FUNDS TO THAT EXTEN T. 10. HOWEVER BY A LETTER DATED 09.07.2008 I.E. WIT HIN FOUR MONTHS FROM THE DATE ON WHICH THE STATEMENT U/S. 131 OF THE ACT WAS RECORDED THE ASSESSEE RETRACTED FROM THE DECLARATION MADE BY HIM IN HIS STATEMENT U/S. 131 OF THE ACT. 11. THE ASSESSEE WAS AGAIN EXAMINED U/S. 131 OF THE ACT AND THE STATEMENT RECORDED ON 27.01.2009. HE WAS ASKED TO PRODUCE THE PROOF OF HAVING EARNED INCOME IN SULTANATE OF OMAN. THE ASS ESSEE GAVE A CERTIFICATE ISSUED BY OMAN CHAMBER OF COMMERCE & IN DUSTRY INDICATING THAT THE ASSESSEE HAD WORKED IN THE CAPACITY OF A T RANSLATOR WITH OMAN TELEVISION. CERTAIN OTHER EVIDENCES WERE ALSO FILE D WHICH WAS TO THE EFFECT THAT THE ASSESSEE WORKED AS PART-TIME TRANSLATOR OR HAVING DONE FREE LANCE WORK. THE ASSESSEE KNEW ARABIC AS WELL AS ENGLISH AND THEREFORE WAS WORKING AS A TRANSLATOR. 12. IN THE COURSE OF EXAMINATION THE ASSESSEE WAS ASKED AS TO WHY HIS EARNINGS WERE KEPT IN RIALS AND NOT DEPOSITED IN TH E BANK ACCOUNT. IN REPLY THE ASSESSEE SUBMITTED THAT THIS WAS THE NOR MAL PRACTICE IN COUNTRIES LIKE SULTANATE OF OMAN. TO A QUERY AS TO WHETHER H E COULD GET CONFIRMATION FROM THE FRIENDS WITH WHOM HE HAD DEPO SITED RIALS OF SULTANATE OF OMAN THE ASSESSEE ANSWERED THAT HE CO ULD GET THE ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 7 OF 24 CONFIRMATION. TO A QUERY AS TO WHETHER HE HAS REFL ECTED THE AMOUNT EARNED ABROAD IN THE INCOME TAX RETURNS FILED IN INDIA TH E ASSESSEE ANSWERED IN THE NEGATIVE. 13. IT IS ALSO RELEVANT TO POINT OUT THAT IN THE CA SE OF SEARCH OF HOTEL IN WHICH THE ASSESSEE WAS A PARTNER IT TRANSPIRED THA T THEY WERE NOT REFLECTING THE SALES DONE BY THE HOTEL PROPERLY AND WAS SUPPRE SSING THE SALES. THE AO WAS OF THE VIEW THAT SUCH SUPPRESSED SALES WERE ROUTED THROUGH THE ASSESSEE AND CONVERTED INTO OMANI RIALS WHICH WERE USED TO PURCHASE THE DRAFTS WHICH ULTIMATELY WERE DEPOSITED IN ASSESSEE S NRE ACCOUNT IN BANGALORE. TO A SUGGESTION ON THE ABOVE LINES MADE BY THE AO IN THE COURSE OF RECORDING STATEMENT U/S. 131 OF THE ACT O N 27.01.2009 THE ASSESSEE DID NOT AGREE WITH THE SUGGESTION MADE BY THE AO. THE ASSESSEE IN FACT REITERATED THAT THE SOURCE OF FUND S FOR PURCHASE OF DDS IN OMAN WAS THE SALARY EARNED IN OMAN. 14. A FINAL SHOW CAUSE LETTER WAS ISSUED BY THE AO ON 16.11.2009 POINTING OUT THAT DURING THE COURSE OF STATEMENT EA RLIER THE ASSESSEE HAS STATED THAT HE WOULD PRODUCE THE DOCUMENTARY PROOF FOR EARNING THE INCOME WHICH WAS NOT PRODUCED. IN REPLY TO THIS THE ASSES SEE FILED LETTER DATED 18.12.2009 ENCLOSING 12 LETTERS FROM DIFFERENT EMPL OYERS WITH WHOM HE WORKED DURING HIS STAY AT OMAN OR INVESTED MONEY WI TH THEM. THE AO TABULATED THE LETTERS AS FOLLOWS:- ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 8 OF 24 ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 9 OF 24 15. IT WAS EXPLAINED BY THE ASSESSEE IN THE LETTER THAT BEING A POST GRADUATE AND HAVING BECOME EXPERT IN ARABIC LANGUAG E AND ALSO BEING PROFICIENT IN ENGLISH LANGUAGE HE WAS IN HEAVY DEM AND AS TRANSLATOR. THERE BEING VERY FEW PERSONS WITH KNOWLEDGE IN ARAB IC AND ENGLISH HIS SERVICES WERE REQUISITIONED BY MANY PEOPLE COMPANI ES / ORGANIZATIONS WHOSE WORK HE USED TO ATTEND DURING EXTRA TIME AND WEEKENDS SINCE HE WAS ALSO REGULARLY EMPLOYED. IT WAS SUBMITTED THAT THE CERTIFICATES REFERRED TO ABOVE SHOW THAT HIS WORK WAS IN GREAT DEMAND AND HE WAS ALSO REWARDED HANDSOMELY. IT WAS ALSO STATED THAT THE CE RTIFICATES ARE ONLY A FEW AS SPECIMENS. IT WAS SUBMITTED THAT SINCE HE WAS RE GULARLY EMPLOYED HIS ACCOMMODATION TRANSPORT AND COMMUNICATIONS WERE TA KEN CARE AND ONLY FOOD AND CLOTHING WAS THE REQUIREMENT FOR HIM. HENC E THERE WAS SUBSTANTIAL SAVING WHICH WAS INVESTED BY HIM IN VARIOUS COMPANI ES VIZ. AI.HAYTHEM TRADING AND CONTRACTING CO. LLC FOR WHICH ALSO CER TIFICATES WERE ENCLOSED. IT WAS PLEADED THAT ALL THE PAYMENTS HAVE COME FROM EARNING ABROAD AND HAVE COME THROUGH BANKING CHANNEL ONLY AND SINCE HE WAS A NON-RESIDENT THIS INCOME IS NOT TAXABLE IN INDIA. THE CREDITS IN NRE ACCOUNT ARE FULLY ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 10 OF 24 SOURCED EXPLAINABLE AND NON-TAXABLE IN HIS HANDS. ANY OTHER CONTRARY STATEMENT MADE ON THE DAY OF SEARCH WITHOUT UNDERS TANDING THE EXACT PROVISIONS OF LAW AND THE LEGAL IMPLICATIONS WAS NO T BINDING. 16. THE AO WAS OF THE VIEW THAT THE CLAIM OF THE AS SESSEE FOR HAVING WORKED WITH ALMOST WITH 12 EMPLOYERS DURING THE SAM E TIME IS NOT BELIEVABLE. HE WAS OF THE VIEW THAT THE ASSESSEE HA S NOT FURNISHED SALARY CERTIFICATE OR THE BANK ACCOUNT REGARDING HIS SALAR Y FROM GOVERNMENT AGENCIES. HE THEREFORE CONCLUDED THAT THAT THE ASSE SSEE DID NOT HAVE ANY PROOF OR DOCUMENT TO SUBSTANTIATE HIS CLAIM OF EARN ING INCOME AT OMAN. IT WAS ALSO OBSERVED BY THE AO THAT AS PER GOVERNMENT OF OMAN LAW THE ASSESSEE IS NOT ALLOWED TO DO ANY FREELANCE WORK AN D IT IS CONSIDERED AS ILLEGAL IF THE PERSON IS WORKING WITH THE GOVERNMEN T. SINCE THE DDS WERE PURCHASED BY PAYING OMAN RIALS HE WAS OF THE VIEW THAT THE ASSESSEE DID NOT DISCHARGE HIS ONUS TO PROVE THAT THESE INCOMES WERE EARNED AT OMAN. 17. THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAIM THAT HE WORKED WITH AS MANY AS 12 EMPLOYERS DURING THAT TIME HAS MADE A REFERENCE TO FOREIGN TAXATION DIVISION (FTD) CBDT NEW DELHI TO CAUSE AN ENQUIRY REGARDING THE CLAIM OF THE ASSESSEE THAT HE HAD WOR KED WITH THE EMPLOYERS AND EARNED AN AMOUNT OF RS. 3 40 84 054. NO REPORTS CAME IN THIS REGARD TILL THE ASSESSMENT PROCEEDINGS WERE CONCLUDED AND FOR THAT MATTER EVEN TILL THE DATE OF HEARING OF THE APPEAL BY THE TRIBUNAL. ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 11 OF 24 18. MEANWHILE THE ASSESSING OFFICER CONCLUDED THE ASSESSMENTS BY TREATING THE ENTIRE FOREIGN REMITTANCES AMOUNTING T O RS.3 40 84 054/- AS UNEXPLAINED CREDITS AND MADE APPROPRIATE ADDITIONS FOR THE RELEVANT ASSESSMENT YEARS. WHILE MAKING THESE ADDITIONS THE AO HAS COME TO THE FOLLOWING CONCLUSIONS:- (I) ASSESSEE HAS NOT DISCHARGED HIS ONUS THAT THE FOREIGN CREDITS IN HIS ACCOUNT HAVE BEEN EARNED AT OMAN DUR ING HIS STAY ABROAD. (II) AT THE TIME OF SEARCH IN THE CONNECTED GROUP OF CASES THE ASSESSEE HAS ACCEPTED THAT THE INCOME HAS BEEN GENE RATED BY SUPPRESSION OF SALES IN HIS RESTAURANT BUSINESS IN M/S. EMPIRE GROUP OF HOTELS BY PUTTING A DEVICE CALLED RESTAURANT MANAGEMENT SYSTEM WHEREIN CERTAIN PERCENTAGE OF SALES HAS BEEN DELETED FROM BOOKS OF ACCOUNTS AT REGULAR INTERVALS. IT MAY BE ANOTHER DE VICE WHEREIN THE SUPPRESSED SALES MIGHT HAVE BEEN ROUTED THROUGH BANKING CHANNELS AS FOREIGN CREDITS IN HIS BANK ACCOUNT. 19. ON APPEAL BY THE ASSESSEE THE FIRST ISSUE THAT THE ASSESSEE CONTENDED WAS THAT HE WAS A NON-RESIDENT INDIAN FOR THE PERIOD BETWEEN 1.4.85 TO 31.03.07 AND THEREFORE ONLY INCOME WHICH ACCRUES OR ARISES TO HIM IN INDIA AN BE BROUGHT TO TAX IN INDIA. IT WAS SUBMITTED THAT SINCE THE AMOUNTS IN QUESTION WERE EARNED BY THE ASSESSEE IN SULTANATE OF OMAN THE AMOUNTS CANNOT BE BROUGHT TO TAX IN INDIA UNDER THE ACT. IN THIS REGARD THE ASSESSEE GAVE THE NUMBER OF DAYS OF STAY IN IND IA RIGHT FROM 1985 ONWARDS AS FOLLOWS:- ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 12 OF 24 ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 13 OF 24 20. THE ASSESSEE FILED COPIES OF PASSPORTS FOR THE RELEVANT PERIOD. THE CIT(A) CONFRONTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE TO THE AO AND THE AO IN HIS REMAND REPORT AGREED TO THE STATU S AS CLAIMED BY THE ASSESSEE AS GIVEN IN THE CHART ABOVE. THE AO HOWE VER SUBMITTED THAT THERE WAS NO EVIDENCE TO SHOW THAT THE MONEY USED F OR PURCHASE OF DRAFTS WAS EARNED BY THE ASSESSEE IN SULTANATE OF OMAN. ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 14 OF 24 21. THE ASSESSEE FURTHER RELIED ON THE DECISION OF ITAT CHENNAI C BENCH IN THE CASE OF SUSHEELA RAMASWAMY REPORTED IN 130 TTJ (CHENNAI) 363 AND CONTENDED THAT THE FACTS ARE SIMILAR. IN THAT CASE THAT ASSESSEE WAS ALSO AN NRI RESIDING IN MALAYSIA. DURI NG THE PREVIOUS YEAR SHE HAD MADE DEPOSITS AMOUNTING TO RS.4.69 CRORES I N NRNR FCNR AND NRO ACCOUNTS AT CHENNAI. THE ASSESSING OFFICER TREA TED IT AS UNEXPLAINED DEPOSITS AS IN THE CASE OF THE ASSESSEE FOR THE R EASON THAT THE DEPOSITS MADE IN INDIA ARE NOT SATISFACTORILY EXPLAINED. THE AO WAS OF THE VIEW THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT NEITHER SHE NOR HER HUSBAND HAD EARNED SUCH SUBSTANTIAL INCOME ABROAD. THE TRIB UNAL WHILE ANALYZING THE RELEVANT PROVISIONS OF THE ACT AND ALSO THE CBD T CIRCULAR NO.5 IN F.NO.73A / 2(69)-IT (A-II) DATED 20.2.1969 GAVE THE FINDING AS FOLLOWS:- IT IS SEEN FROM SUB-S(2) OF S.5 THAT A PERSON WHO IS A NONRESIDENT HAS TO PAY TAX ONLY ON THAT INCOME WHI CH IS EITHER RECEIVED BY HIM IN INDIA OR IS DEEMED TO BE RECEIV ED BY HIM IN INDIA OR ACCRUES TO HIM IN INDIA OR ARISES TO HIM IN INDIA OR IS DEEMED TO ACCRUE TO HIM IN INDIA OR IS DEEMED TO A RISE TO HIM IN INDIA DURING THE YEAR. THE WORDS IN INDIA APPEAR ING IN SUB-S (2) OF S. 5 ARE CRUCIAL. THE PRINCIPLE UNDERLYING S . 5 MAKES THE CHARGEABILITY OF INCOME DEPEND UPON THE LOCALITY OF ACCRUAL OR RECEIPT. A (NON-RESIDENT) PERSON HAVING MONEY IN A FOREIGN COUNTRY COULD NOT BE CALLED UPON TO PAY INCOME TAX ON THAT MONEY IN INDIA BECAUSE IN RESPECT OF THAT MONEY IT WILL NOT BE POSSIBLE FOR THE AO TO SAY THAT IT WAS EITHER RECEI VED BY HIM IN INDIA OR IT WAS DEEMED TO BE RECEIVED BY HIM IN IN DIA OR IT ACCRUED TO HIM IN INDIA OR IT ARISE TO HIM IN INDI A OR IT IS DEEMED TO ACCRUE TO HIM IN INDIA OR IT IS DEEMED TO ARISE TO HIM IN INDIA. IF A (NON-RESIDENT) PERSON HAVING MONEY IN A FOREI GN COUNTRY BRINGS THAT MONEY TO INDIA THROUGH A BANKING CHANN EL HE CANNOT BE CALLED UPON TO PAY INCOME TAX ON THAT MONEY IN I NDIA. FIRSTLY ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 15 OF 24 FOR THE REASONS STATED ABOVE AND SECONDLY BECAUSE THE REMITTANCE OF MONEY INTO INDIA THROUGH BANKING CHANNEL WILL MA KE THE ONUS ON THE ASSESSEE UNDER S.69 DISCHARGED. IT IS NECESSARY TO NOTE THAT ONCE AN AMOUNT IS REC EIVED AS INCOME ANY REMITTANCE OR TRANSMISSION OF THAT AMOU NT TO ANOTHER PLACE DOES NOT RESULT IN RECEIPT ONCE AGAIN AT THE OTHER PLACE WITHIN THE MEANING OF S.5. THEREFORE IF CERTAIN IN COME PROFITS OR GAINS WAS RECEIVED BY THE ASSESSEE OUTSIDE INDIA IT DOES NOT BECOME CHARGEABLE TO INCOME IN INDIA BY REASON OF T HAT MONEY HAVING BEEN BROUGHT INTO INDIA. THIS IS BECAUSE WHA T IS CHARGEABLE IS THE FIRST RECEIPT OF THE MONEY AND NO T A SUBSEQUENT DEALING BY THE ASSESSEE WITH THE SAID MONEY. IN THA T EVENT THE MONEY IS BROUGHT BY THE ASSESSEE AS HIS OWN MONEY W HICH HE HAD ALREADY RECEIVED AND HAD CONTROL OVER IT AND IT DOE S NOT TAKE THE CHARACTER OF INCOME PROFITS AND GAINS AFTER BEING BROUGHT IN INDIA. THERE COULD OF COURSE BE A SITUATION WHERE A NON-RESIDENT HAS MONEY IN INDIA TRANSMITS IT TO A FOREIGN COUNT RY AND THEN BRINGS IT BACK TO INDIA THROUGH A BANKING CHANNEL. IF THIS CIRCULAR MOTION OF THE MONEY IS CONCLUSIVELY PROVED WITH EVI DENCE THEN THE NON RESIDENT WILL SURELY DO THE EXPLAINING UNDE R S.69 DESPITE THE MONEY HAVING BEEN BROUGHT INTO INDIA THROUGH BA NKING CHANNEL. BUT MERELY ON SUSPICIONS OR DOUBTS CONJEC TURES OR SURMISES NO INFERENCE CAN BE DRAWN AGAINST THE ASS ESSEE. IT IS TRITE LAW THAT THERE CAN BE NO PRESUMPTIONS IN FAVO R OF ANY ILLEGALITY OF A TRANSACTION. IN FACT THE PRESUMPTIO N IS THE OTHER WAY ABOUT. - AS SIVAN PILLAI VS. CIT (1958) 34 ITR 328 (MAD) APPLIED. THEREFORE IN THE CASES OF REMITTANCES THROUGH BANK ING CHANNEL THE NATURE AND SOURCE OF THE FUNDS GET EXPLAINED AN D THE ONUS ON THE ASSESSEE UNDER S.69 GETS DISCHARGED AND CONSEQU ENTLY SUCH REMITTANCES CANNOT BE TAXED U/S.5(2)(B) THEREFORE THE ARGUMENT OF THE STANDING COUNSEL THAT IN THE PRESENT CASE THE IMPUGNED MONEY WAS TAXABLE U/S.5(2)(B) RWS.69 ON THE FACTS S TATED ABOVE HAS NO MERIT AND CANNOT BE ACCEPTED. BUT THE POSIT ION WILL BE DIFFERENT IF THE MONEY HAS BEEN BROUGHT INTO INDIA OTHERWISE THAN THROUGH BANKING CHANNEL BECAUSE IN THAT CASE THE O NUS ON THE ASSESSEE UNDER S.69 WILL NOT STAND DISCHARGED. IN S UCH A CASE THE PROVISIONS OF S.5(2)(B) RWS 69 WILL SURELY BE ATTRA CTED. IN THE PRESENT CASE THE AO WHILE RELYING ON THE CBDT CIRC ULAR NO. 5 DATED 20TH FEB. 1969 HAS COMMITTED AN ERROR OF RE PRODUCING IN ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 16 OF 24 HIS ORDER FROM PARA 4 OF THE CIRCULAR WHICH DOES N OT APPLY TO THE REMITTANCES THROUGH BANKING CHANNELS. HE SHOULD HAV E APPLIED THE PARA 2 AND THE FIRST PART OF PARA 3 OF THE CIRC ULAR. IN THE CIRCUMSTANCES THEREFORE HIS ORDER HAS NO MERIT AN D CANNOT BE SUSTAINED. CONCLUSION : IN THE CASES OF REMITTANCES THROUGH BA NKING CHANNEL THE NATURE AND SOURCE OF THE FUNDS GET EXPLAINED AN D THE ONUS ON THE ASSESSEE UNDER S.69 GETS DISCHARGED AND CONSEQ UENTLY SUCH REMITTANCES CANNOT BE TAXED U/S.5(2)(B). 22. THE CIT(APPEALS) ADMITTED THE ADDITIONAL GROUND S RAISED BY THE ASSESSEE. HE HELD THAT THE STATUS OF THE APPELLA NT IS TO BE TAKEN AS NON- RESIDENT FOR THE AY.2003-04 TO A.Y.2005-06; RESID ENT BUT NOT ORDINARILY RESIDENT FOR A.Y.2006-07 & 2007-08 AND RESIDENT FOR A.Y. 2008-09. 23. WITH REGARD TO THE TREATMENT OF DEPOSITS IN NRE ACCOUNT AS UNEXPLAINED INVESTMENT THE CIT(APPEALS) OBSERVED T HAT THE AO DID NOT TAKE THE LETTERS PRODUCED BY THE ASSESSEE REGARDING HIS EMPLOYMENT AND INVESTMENTS AS CONCLUSIVE EVIDENCE. TO VERIFY THE S AME THE AO REFERRED THE MATTER TO FOREIGN TAXATION DIVISION (FTD) OF CB DT NEW DELHI. UNDER THESE CIRCUMSTANCES THE CIT(APPEALS) WAS OF THE OP INION THAT EVEN BEFORE ANY FINDING IS FORTHCOMING REGARDING THE GENUINENES S OF THE CLAIM OF THE ASSESSEE THAT HE HAD WORKED WITH THE SAID EMPLOYERS IT MAY BE PREMATURE TO COME TO CONCLUSION THAT THE CLAIM IS FALSE. THE CIT(A) FOUND THAT THE TOTAL INCOME THAT THE ASSESSEE COULD HAVE EARNED WO RKED OUT TO ALMOST 5 840 RIALS WHICH WORKS OUT TO ALMOST RS.7 LACS A M ONTH AND RS.84 LACS A YEAR EVEN AT THE RATE OF RS.120 PER RIAL. THE CIT(A ) NOTICED THAT THE ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 17 OF 24 ASSESSEE IN HIS LETTER BEFORE THE AO HAS ALSO STATE D THAT HE IS QUALIFIED AND CONVERSANT WITH ARABIC AND ENGLISH AND WAS IN GREAT DEMAND IN THOSE COUNTRIES. THE CIT(A) WAS OF THE VIEW THAT EVEN IF THE ASSESSEE DOING FREELANCE WORK IN HIS FREE TIME WITH VARIOUS PERSON S AS CLAIMED IS NOT LEGAL AS PER THE LAW OF OMAN THE SAME CANNOT BE TREATED AS INCOME IN INDIA FOR THAT REASON. THE CIT(A) ALSO FOUND THAT THE ASSESS EE RIGHT FROM THE DATE OF SEARCH WAS CLAIMING THAT THESE DEPOSITS WERE OUT OF HIS SAVINGS ABROAD. ALL THE PAYMENTS ARE ROUTED THROUGH BANKING CHANNEL. EV EN WHERE THE DDS WERE PURCHASED BY DEPOSITING OMAN RIALS (FOREIGN CU RRENCY) THAT TOO OUTSIDE THE COUNTRY. 24. THE CIT(APPEALS) ALSO FOUND THAT THE ONE OF THE REASONS GIVEN BY THE AO WAS THAT THERE WAS SUPPRESSION OF SALES IN T HE RESTAURANT BUSINESS BY PUTTING A SOFTWARE DEVISE CALLED RESTAURANT MAN AGEMENT SYSTEM WHEREIN CERTAIN PERCENTAGE OF SALES HAVE BEEN DELET ED FROM THE BOOKS OF ACCOUNTS AT REGULAR INTERVALS AND THAT THE CASH GEN ERATED OUT OF SUCH SUPPRESSED SALES WERE SENT TO OMAN AND CONVERTED IN TO OMAN RIALS BY THE ASSESSEE AND USED TO PURCHASE DEMAND DRAFTS WHI CH WERE DEPOSITED IN NRE BANK ACCOUNT OF ASSESSEE AT BANGALORE. ON T HIS APPROACH OF THE AO THE CIT(A) FOUND THAT WHATEVER SUPPRESSED SALES WERE FOUND WERE ALREADY OFFERED TO TAX BY THE FIRM AND THERE WAS NO THING LEFT UNTAXED. HE ALSO FOUND THAT THERE WAS NO DEVICE DETECTED BY WHI CH CASH WAS SENT TO THE ASSESSEE TO OMAN. THE CIT(A) ALSO FOUND THAT FROM T HE PATTERN OF REMITTANCES TO INDIA SUBSTANTIAL AMOUNT WAS REMITT ED BEFORE HE FINALLY ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 18 OF 24 DECIDED TO SHIFT TO INDIA AND FOR THE IMMEDIATE PRE CEDING YEARS. THE REMITTANCES WERE PERIODICAL. THE ASSESSEE CATEGORI CALLY STATED AT EVERY STAGE THAT EXCEPT FOR HIS INVESTMENT IN FIRMS THAT HE DID NOT HAVE ANY OTHER BUSINESS OF HIS OWN IN INDIA OR ABROAD CONTROLLED F ROM INDIA. THE CIT(A) OBSERVED THAT NOTHING CONTRARY WAS FOUND AND THE MO NEY ACTUALLY SURFACED IN FOREIGN CURRENCY AND ROUTED THROUGH BANKING CHAN NELS TO INDIA. 25. THE CIT(APPEALS) FURTHER PLACED RELIANCE ON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SUSHEELA RAMASWAMY (SUPRA) AND CAME TO THE CONCLUSION THAT IF A NON-RESIDENT HAVING MONEY IN A FOREIGN COUNTRY BRINGS THAT MONEY TO INDIA THROUGH BANKING CHANNEL THE REMITTANCES OF MONEY TO INDIA THROUGH BANKING CHANNELS WILL ITSELF DISCHARGE THE BURDEN OF PROOF THAT LAY ON THE ASSESSEE U/S. 69 OF THE ACT. THE CIT(A) ALSO DERIVED SUPPOR T FOR HIS CONCLUSION FROM THE CIRCULAR OF CBDT VIZ. CIRCULAR NO.5 DATED 20.0 2.1969. THE CIT(A) FINALLY GAVE HIS CONCLUSION AS FOLLOWS:- IN VIEW OF BOARD CIRCULAR NO.5 AND THE DECISION O F HONBLE TRIBUNAL CITED ABOVE SINCE THE MONEYS WERE WITH TH E APPELLANT OUTSIDE THE COUNTRY WHICH WERE ROUTED TO INDIA THRO UGH BANKING CHANNEL THE ONUS ON THE APPELLANT STANDS DISCHARGE D U/S.69. IF IT IS TO BE PRESUMED THAT THE APPELLANT HAS INVOLVED I N CIRCULATING MONEY FROM INDIA TO ABROAD AND BACK TO INDIA THE O NUS WILL LIE WITH THE DEPARTMENT TO PROVE THE SAME AS OBSERVED B Y THE HONBLE TRIBUNAL IN THE CASE CITED ABOVE. THE TWO O BSERVATIONS MADE BY THE AO BEFORE MAKING THE ADDITION THAT THE APPELLANT HAS NOT DISCHARGED HIS ONUS AND THAT IT MAY BE ANOT HER DEVISE WHEREIN SUPPRESSED SALES MIGHT HAVE BEEN ROUTED THR OUGH BANKING CHANNEL AS FOREIGN CREDITS GETS ANSWERED I N FAVOUR OF THE ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 19 OF 24 ASSESSEE BY THE ABOVE ANALYSIS. HENCE THE GROUNDS OF APPEAL OF THE APPELLANT IS ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO TREAT THE APPELLANT AS NON-RESIDENT FOR THE A.Y. 2003-04 TO 2005-06 AND AS RESIDENT BUT NOT ORDINARILY RESIDEN T FOR THE A.Y.2006-07 AND 2007-08 AND AS RESIDENT FOR THE S UBSEQUENT YEARS. APPEAL IS ALLOWED PARTLY. 7. THE REMITTANCES ARE TO BE TREATED AS INCOME EAR NED OUTSIDE THE COUNTRY AND ASSESSED ACCORDINGLY IN THE ABOVE S TATUS. THE ADDITION FOR A.Y. 2008-09 STANDS SINCE THE APPELLAN T HAS NOT PROVED THAT IT REPRESENTS INCOME EARNED IN EARLIER YEARS. FOR OTHER YEARS THE ADDITIONS STAND DELETED. THE APPEAL IS AL LOWED FOR THE A.Y.2003-04 TO 2007-08 AND DISMISSED FOR THE A.Y.20 08-09. 26. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) DELE TING THE ADDITION MADE BY THE AO FOR THE A.YS. 2003-04 TO 2007-08 TH E REVENUE HAS PREFERRED THE APPEALS BEFORE THE TRIBUNAL. THE COM MON GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS:- 1. THE CIT(A) OUGHT NOT TO HAVE DELETED THE ADDIT IONS MADE U/S. 69 OF THE IT ACT AS THE ASSESSEE FAILED TO DIS CHARGE THE ONUS REGARDING THE GENUINENESS AND CREDIBILITY OF THE CA SH CREDITS APPEARING IN THE NRE ACCOUNT. 2. ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE DO THE REMITTANCES MADE BY DEMAND DRAFTS DRAWN IN CASH AND DEPOSITED IN THE FOREIGN ACCOUNT OF THE ASSESSEE FULFILL THE CONDITION THAT THE ASSESSEE SHALL DISCHARGE THE ONUS OF CASH CREDITS I N THE BANK ACCOUNT OF THE ASSESSEE? 3. ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE CONSIDERATION OF THE MODUS OPERANDI ADOPTED BY THE ASSESSEE GROUP ALONG WITH THE UNEXPLAINED CASH CREDITS REFLE CTED IN THE BANK ACCOUNT OF THE ASSESSEE CANT BE A GROUND FOR THE ADDITION BASED ON THE PRINCIPLE THAT HUMAN PROBABILITIES ARE TO BE APPLIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS? ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 20 OF 24 27. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) IN S USTAINING THE ADDITIONS MADE BY THE AO FOR THE A.Y. 2008-09. THE ASSESSEE HAS PREFERRED THE APPEAL ITA 954/BANG/2012 BEFORE THE TRIBUNAL. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLOWS:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW EQUITY W EIGHT OF EVIDENCE PROBABILITIES FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG AN ADDITION OF RS.10 32 224/- AS UNEXPLAINED INCOME BE ING THE FOREIGN REMITTANCES IN THE NRE BANK A/C.NO.9366 OF THE APPELLANT AT SOUTH INDIAN BANK SHIVAJINAGAR BRANCH BANGALORE UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANTS CASE. 2.1 THE ADDITION IS PURELY ON SUSPICION AND SURMIS E ASSUMPTIONS AND PRESUMPTIONS AND PURE CONJECTURES A ND CONTRARY TO EVIDENCE AND CONSEQUENTLY THE ADDITION MADE REQ UIRES TO BE DELETED. 28. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. D R REITERATED THE STAND OF THE AO AS REFLECTED IN THE ORDER OF ASSESS MENT. 29. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(APPEALS) AS FAR AS THE APPEALS OF THE REVENUE A RE CONCERNED. AS FAR AS THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2008-09 IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HAVING ACCE PTED THE SOURCE OF FUNDS FOR THE A.Y. 2003-04 TO 2007-08 THE REVENUE OUGHT TO HAVE ACCEPTED THE SOURCE OF FUNDS FOR A.Y. 2008-09 AS WELL. WIT H REGARD TO THE QUERY AS TO WHAT IS THE SOURCE OF FUNDS FOR THE PURCHASE OF DDS IN THE PREVIOUS YEAR ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 21 OF 24 RELEVANT TO A.Y. 2008-09 WHICH WERE DEPOSITED IN TH E ASSESSEES NRE BANK ACCOUNT THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE MONEY HAVING BEEN EARNED IN SULTANATE OF OMAN AND WHICH W ERE IN THE CURRENCY OF SULTANATE OF OMAN SHOULD BE TAKEN TO BE EARNED I N SULTANATE OF OMAN. TO A QUERY BY THE BENCH THAT SINCE FOR THE A.Y. 200 8-09 THE ASSESSEE IS TREATED AS A RESIDENT IN INDIA THE ENTIRE GLOBAL I NCOME WILL BE LIABLE TO TAX IN INDIA THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE IS NOTHING TO SHOW THAT THE INCOME IN QUESTION HAS BEEN EARNED IN INDIA OR OUT OF ANY BUSINESS CONNECTION IN INDIA AND THEREFORE THE SAME CANNOT BE BROUGHT TO TAX IN INDIA. 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS F AR AS THE APPEALS OF THE REVENUE ARE CONCERNED WE ARE OF THE VIEW THAT THERE ARE NO MERITS IN THESE APPEALS. IT IS NOT DISPUTED BY THE REVENUE T HAT THE STATUS OF THE ASSESSEE IS A NON-RESIDENT AS FAR AS THE A.YS. 20 03-04 TO 2007-08 IS CONCERNED. IN TERMS OF SECTION 5(2) OF THE ACT IT IS ONLY THE TOTAL INCOME OF THE PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT WHICH IS RECEIVED OR DEEMED TO BE RECEIVED IN INDIA OR ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA THAT CAN BE BROUGHT TO AX . THE ASSESSEE HAS PRODUCED EVIDENCE TO SHOW THAT HE WAS EARNING INCOM E IN SULTANATE OF OMAN. PRIMA FACIE THE EVIDENCE SO PRODUCED BY THE ASSESSEE IS CONVINCING. THE AO HAS HOWEVER SOUGHT TO MAKE ENQU IRIES BY MAKING A REFERENCE TO THE FOREIGN TAXATION DIVISION CBDT N EW DELHI BUT NO ADVERSE INFORMATION WHATSOEVER HAS BEEN RECEIVED BY THE AO. THE AO ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 22 OF 24 SEEMS TO RELY ON THE STATEMENT MADE U/S. 132(4) OF THE ACT AS WELL AS THE STATEMENT RECORDED U/S. 131 OF THE ACT. WE HAVE AL READY SEEN THAT AS FAR AS THE STATEMENT ON 14.03.2008 IS CONCERNED WITH RE GARD TO THE SUM OF RS.2 59 56 457 WHICH WAS MONEY DEPOSITED PRIOR TO 3 0.06.2005 IN NRE ACCOUNT THE ASSESSEE HAS CATEGORICALLY IN ANSWER T O Q.5 CLAIMED THAT IT WAS INCOME EARNED IN SULTANATE OF OMAN. AS FAR AS THE REMAINING SUM OF RS.81 27 597 WHICH WAS DEPOSITED AFTER 30.06.2005 THE ASSESSEE NO DOUBT ADMITTED THAT HE WAS NOT ABLE TO EXPLAIN THE SOURCE. THIS ADMISSION HAS HOWEVER BEEN RETRACTED LATER BY THE ASSESSEE. THE ASSESSEE IS A NON- RESIDENT AND THERE IS NO EVIDENCE TO SHOW THAT SOUR CE OF FUNDS FOR PURCHASE OF DDS IN OMAN CURRENCY AT OMAN WAS MONEY EARNED IN INDIA. IN THE AFORESAID CIRCUMSTANCES WE ARE OF THE VIEW THAT TH E CONCLUSIONS DRAWN BY THE AO THAT MONEY EARNED BY THE ASSESSEE IN HIS BUS INESS INDIA WAS ROUTED ABROAD AND USED FOR PURCHASE OF DRAFTS IS WI THOUT ANY BASIS. THE UNACCOUNTED SALES IN THE HANDS OF THE FIRM HAVE ALR EADY BEEN BROUGHT TO TAX IN THE HANDS OF THE FIRM AND THEREFORE THE CASE OF THE REVENUE THAT INCOME WAS EARNED BY THE ASSESSEE IN INDIA IS WITHO UT ANY BASIS. IN ANY EVENT AS ALREADY STATED THERE IS NOTHING ON RECOR D TO SHOW THAT MONEY EARNED IN INDIA BY THE ASSESSEE WAS REPATRIATED TO SULTANATE OF OMAN INTO RIAL CURRENCY AND USED FOR THE PURCHASE OF DRAFTS W HICH WAS DEPOSITED IN THE ASSESSEES BANK ACCOUNT. WE ARE ALSO OF THE VI EW THAT THE DECISIONS RELIED UPON BY THE CIT(APPEALS) CLEARLY SUPPORT HIS CONCLUSIONS. THE CIRCULAR OF THE CBDT ALSO SUPPORTS THE CONCLUSION D RAWN BY THE CIT(A). ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 23 OF 24 WE ARE THEREFORE OF THE VIEW THAT THE CIT(A) WAS FU LLY JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE AO FOR THE A.YS. 2003-04 TO 2007-08. 31. AS FAR AS THE A.Y. 2008-09 IS CONCERNED WHICH I S THE APPEAL OF THE ASSESSEE WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT MADE ANY ATTEMPTS TO EXPLAIN THE SOURCE OF FUNDS WHICH WERE USED FOR PURCHASE OF DDS IN SULTANATE OF OMAN. ADMITTEDLY DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 THE ASSESSEE WAS A RESIDENT IN INDIA. IN SUCH CIRCUMSTANCES THE ASSESSEE WHO WAS A RESIDENT AS FAR AS A.Y. 2008-09 IS CONCERNED HAD TO EXPLAIN THE SOURCE OF FUNDS. THE EXPLANATION OFFER ED BY THE ASSESSEE THAT THE EARNINGS WERE IN OMAN IS FOUND TO BE WITHOUT AN Y SUPPORTING EVIDENCE AND THE SAME IS LIABLE TO BE REJECTED. THE LD. COU NSEL FOR THE ASSESSEE PLACED RELIANCE ON CERTAIN DECISION IN SUPPORT OF H IS CASE. IN PARTICULAR OUR ATTENTION WAS DRAWN TO THE DECISION OF THE DELHI HI GH COURT IN THE CASE OF CIT V. SURESH NANDLAL 352 ITR 611 . IN THE AFORESAID DECISION THE ISSUE WAS WITH REGARD TO RESIDENTIAL STATUS AND HAS NOTHING TO DO WITH THE SOURCE OF FUNDS. REFERENCE WAS ALSO MADE TO THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. K.S. KANNAN KUNI 87 ITR 385 (SC) . THAT WAS A CASE WHERE THE HONBLE SUPREME COURT TOOK A VIEW THAT THE FINDING OF FACTS GONE INTO BY THE HIGH COURT IN A REFERENCE WAS JUSTIFIED. WE DO NOT FIND ANY SUPPORT FOR THE PLEA OF THE ASSE SSEE BEFORE US FROM THE DECISIONS BROUGHT TO OUR NOTICE BY THE LD. AR. WE THEREFORE CONFIRM THE ORDER OF THE CIT(APPEALS) FOR THE A.Y. 2008-09 AS W ELL. ITA NOS. 1288 TO 1292/BANG/2011 & 954/BANG/2012 PAGE 24 OF 24 32. IN THE RESULT THE APPEALS BY THE REVENUE AS WE LL AS THE APPEAL BY THE ASSESSEE ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JULY 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE DATED THE 12 TH JULY 2013. /D S/ COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT BANGALORE.